City will give port $200,000

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Red Wing City Council approved a $200,000 transfer of taxpayer money from its coffers to the Port Authority on Monday, a measure aimed at helping the struggling economic development agency pay its bills in 2010.

Had the council had not approved the transfer, the three-person agency would've likely made staff cuts to make ends meet.

The transferred dollars will go toward paying the $71,000 needed to close a tax-increment financing district and the estimated $225,000 in assessment and taxes the agency will incur for holding property in the River Bluffs Development.

"It's got to get paid. They can't pay for it. We're liable for it," Council member Dean Hove said. "It's got to get paid."

The assistance is also intended to allow the port to pay down some of its $1.2 million operating debt.

Port staffing

The port, because it sought money from the city, also sought input into how it should arrange its 2010 budget. The arrangement the council approved includes cutting the port's manpower in half.

The agency won't make hard staff cuts, but rather will transfer a portion of its business developer director's hours to the city's payroll and its secretary's hours to the Ole Miss Marina — an enterprise operation that runs independently of tax dollars.

All three employees also will take 16 hours of unpaid leave a month.

Some council members, including Dan Bender, voted to approve the cash transfer but also said they'd like to see staff cuts.

"If they're not planning on a land sale, it doesn't sound like there's a whole lot of economic development going on," Bender said. "So why should we pay for something we're not getting?"

The Port Authority has not budgeted for a land sale next year, although in past years it has built up to $250,000 in revenue in its budgets in anticipation of sales. Port Executive Director Myron White said he's not confident a land sale will take place next year.

Land ownership

In the wake of the port's fiscal troubles, some city and agency officials have proposed transferring the port's land to the city.

Finance Director Marshall Hallock said this would give the city more oversight into the agency's operations and would improve its transparency.

Not everyone agreed.

Ralph Rauterkus, who serves on both the council and port, said he doubted it would improve transparency.

And Council member Carol Duff said, "The port is much better set up to hold and develop land."

Officials in favor of transferring the land disagree with Duff's point. They say the port is too small of an agency with too little cash flow to pay the carrying costs associated with holding land.

And at least one council member was ready to get the ball rolling Monday. Lisa Bayley voted against giving the port $200,000, not because of the money but because the measure didn't include a land transfer. Bayley was the lone dissenter.

Most council members, however, seemed to be on the fence and said they weren't in favor of pursing the policy change just yet, although they may call for it in the future. They said they'd like to hear feedback from Mayor John Howe's recently formed economic development panel.

The debt

Over the past six years costs stemming from holding land in the River Bluffs Development has helped drive the port's operating debt up over a million dollars. Because the agency hasn't been able to make the tax and assessment payments, the city has carried the debt on its books.

Meanwhile, the port's red ink has sparked criticism, largely from the agency's detractors, but also from its own ranks.

Rauterkus has questioned why the agency's staff didn't begin dealing with the debt before it ballooned over a million dollars.

The debate also has led agency and city officials not only to take a hard look at the agency's finances but also its relationship with the city.

Pep talk

Before the council dug into the specifics of the cash and land transfers and other issues related to the port's budget and debt, Port Board member Tom Brown delivered a quick talk to the council.

He urged the council to continue to invest in economic development, adding the River Bluffs Development has created jobs and tax base.

"That debt is not the result of squandered invest," Brown said. "We just need people to realize economic development has a cost.

"It does not cash flow."

Tags: local government, red wing port authority, red wing, red wing mn, news