Port focusing on staving off red inkDebt remains a concern for the Red Wing Port Authority.
By: Jon Swedien, The Republican Eagle
Debt remains a concern for the Red Wing Port Authority.
The city's economic development agency held its annual workshop Friday at Colvill Courtyard. Port officials tossed around numerous policy ideas and discussed a bevy of issues, but a recurring theme was the port's debt and how they might stop it from growing.
"Our big plan this year is we want to attack that red ink," Port Board President Tom Brown said Friday.
Over the past six months, the port has begun to address its $1.2 million in operating debt -- which stems from property taxes and assessments the agency has incurred over the last six years related to its ownership of land in the River Bluffs Development. Most of the port's debt is owed to the city; because the agency has been unable to pay some of assessments and property taxes, the city has held that debt on its books.
Port Executive Director Myron White said 2009 was a rough year, adding he was as happy as anyone to see the new year.
"We didn't have a heck of a lot of fun last year." White said. "I think we took the brunt of the recession."
On Friday board members mulled over ways the agency could recapture costs associated with owning land and that would improve accounting practices helping them better manage their ledger.
The policies discussed could help the port stave off future debt, but to take a big chunk out of the red already penned on its books the agency will need to make a land sale - something port officials aren't sure will happen in 2010.
In previous years the agency had budgeted $200,000 to $250,000 in anticipation of land sales, but there are no sales projected in this year's budget.
Even without a land sale, the port could chip $60,000 off its debt by staying true to its 2010 budget.
Over the past six months, port officials have said that while economic development and land sales help the city - they point to the success of river bluffs, which according to port figures has generated $1 million a year in property taxes and brought 859 jobs to Red Wing - those same land sales don't always result in a payday for the agency.
Sometimes the agency doesn't recoup money invested in a development property because, in order to attract a business, the agency may sell the property below market value.
Port Board member Ralph Rauterkus lobbied Friday to use a tax-increment financing to help the agency recoup money.
The idea being the tax dollars collected on a development property would be set aside in the TIF, and taxes on the property would rise when the business invested in the property. The port could collect those dollars in the TIF until it recouped the money invested in the property.
While placing a TIF on development land might help the port get back money after a sale, it wouldn't help the agency's cash flow before land is sold.
Port and city officials say the agency's debt problems stem largely from its small cash flow; the port's levy and other revenue can't support the costs associated with holding land and preparing it for future development.
In recent months, there's been talk of transferring port property over to the city.
That suggestion has earned mixed reviews.
"I've gone both ways," Port Board member Jim Kelm said. "Some days I think it makes sense. Some days I don't."
Port officials didn't say definitively that the idea had lost favor, but any momentum it may have had seemed to have waned Friday. They said the move wouldn't actually save money, and some feared it would add another layer of bureaucracy to development deals.
"Ownership isn't the real issue -- it's carrying costs," Kelm said.
City Council Administrator Kay Kuhlmann said the solution may come down to the city transferring money to the port to pay those carrying costs -- a practice that occurred prior to 2003.
The port's enabling resolution also came under scrutiny in 2009. Among port officials, Rauterkus -- also a city council member -- led review of the document that outlines the bylaws governing the agency.
As the resolution was given a closer look it was discovered the council had an ability to exercise more oversight of the agency, which had previously been regarded as all but autonomous. In particular the agency's levy and budget became subject to council approval.
In discussion with the city's attorney Friday, port officials said they didn't mind the oversight.
The discussion came about because the resolution is being cleaned up, as it contains nonsensical dates and some odd and confusing language.