AUGUST, 2016

A DISCUSSION OF THE STEELE COUNTY DETENTION CENTER/
INCOME/EXPENSES/DEFICIT SPENDING


Steele County averages approximately 130+/- prisoners from surrounding counties & Steele Co. at the Steele County Detention Center at any given time from information derived from the Income and Expense Reports for the year 2015.  The income/revenue comes from the Department of Corrections.  In analyzing the income and expenses for 2015, I have rounded the amounts for ease of understanding for the reader.  Per this information, the expenses were $5,500,000 (debt service was $900,000).  Revenue was just under $2,000,000 with a net deficit difference of -$3,500,000.  The deficit figure of -$3,500,000 divided by 365 days is a deficit of $9,000 a day (this includes the debt service.) 

One possible solution I would propose to counteract this deficit is to discuss within our own county these losses and explain to the other counties which we have been subsidizing that we cannot continue this procedure.  It needs to be clearly stated this deficit situation bears no negative reflection on the Sheriff, the employees of the Steele Co. Detention Center, or the facility itself.  Simply put our expenses at the detention center are far greater than the income/revenue we are receiving at this time.  Either we have to require the other counties we are subsidizing to make up the difference in the deficit we are currently experiencing or we need to find out what  policies other counties in Minnesota or throughout the Midwest region have in place to offset these kinds of expenses and incorporate these into our own system. 

Last month as we dealt with the deficit spending taking place at KODA / SCCL  (Steele County Communities for Life) which is between $150-200,000 each year for SCCL to maintain the former (now vacant) Cedarview building per an article from the Owatonna People’s Press dated 7/16-17/2016 “Steele County Board Mulls Future of Old Cedarview Building,” and $1.4 million in 2015 and $1.5 million in 2014 for SCCL per an audit performed by a local CPA firm, I find it difficult, if not impossible, to justify how the three current incumbent county commissioners can state Steele County is financially prepared to take on a $12.6 million building project of a county highway facility which will bring in virtually no revenue whatsoever.  The county highway facility will have maintenance expenses, upkeep, utilities expenditures and insurance fees.  This will also result in added expenses for Steele County taxpayers to absorb.

THIS ARTICLE IS WRITTEN AND PREPARED BY THE COMMITTEE TO ELECT
RICK GNEMI FOR STEELE COUNTY COMMISSIONER – 3RD DISTRICT.
THIS ARTICLE REFLECTS THE VIEWS OF AND IS APPROVED BY RICK GNEMI.


JULY, 2016

A DISCUSSION OF CURRENT AND FUTURE SPENDING IN STEELE COUNTY

AND ITS IMPACT ON STEELE COUNTY RESIDENTS

Owatonna People’s Press Article dated 7/16-17/2016 “Steele County Board Mulls Future of Old Cedarview Building” 

According to this article, it is costing Steele County approximately between $150-200,000 each year for the Steele Co. Communities for Life (SCCL)-a nonprofit with equal representation from both Steele Co. & Benedictine Health System—to maintain the old, (vacant) Cedarview building.   If we use $175,000 as a midpoint cost factor and multiply this by at least a year or say close to 2 years, for maintenance costs, this comes out to approximately $350,000 or possibly as much as $400,000 if we lean toward the higher end of the cost. 

Nina Huntington states in the article, “There was a very big plan for that building……some things changed, some things were found out, like how much it’s going to cost to renovate that.” She noted the original plan didn’t capture everything.   I find it astounding the potential cost to renovate this building wasn’t in this “big plan.”    If renovation costs weren’t considered, then what WAS in this “big plan” for the building?   Another misstep was not finding out until after the fact (per the Steele Co. Treasurer) the building could not be used for non-health care purposes because of the bonds it was tied to, and further, those restrictions also applied to renting the facility, and if the entire building—Park Place Sr.Living as well as Park Place South were sold, it would have to cover the $2.8 million outstanding on the county’s bond.   So in point of fact, the cost of renovations were not considered and what the exact future use of the building wasn’t investigated BEFORE it was vacated.  So again I ask, what WAS in this “big plan?”  

The county has a vacant building that needs updating and no one bothered to find out what the renovation costs would be and no one took the time to find out what the future use of the building could be and if there were any restrictions?  This is mismanagement at its height, and it’s happening right here in Steele Co.  The buck has to stop somewhere; and I would submit it is at the feet of the Steele Co. Board of Commissioners.  To sum it up succinctly, Ms. Huntington has it right, “It is costing us----- TO DO NOTHING.”  It is costing “us” i.e. the tax payers as much as $175,000 each year---- to get absolutely nothing for our “ investment”----- for a vacant, unused county building, with seemingly no answers on the table.  Mr. Schultz summed it up correctly too, “…an investment is only as good as its return.”  Too bad, he didn’t bring up this point  BEFORE the “big plan” was approved.   In this case, we, the taxpayers are getting zippo, nada, nothing for a return.   Sounds like a great deal, right?   Just as a point of remembrance, the old Cedar view building was running in the black for its financials prior to its being vacated. 

And apparently that’s not all---last month according to the OPP article, the Steele Co. Board of Commissioners approved a 6-month extension to a forbearance agreement which had been put into place in June,2015, after SCCL defaulted on its debt service payment, due in part to 3 things per the article: low patient reimbursement rates, staffing & low occupancy at KODA, the supposed state-of-the art long-term skilled nursing care & short-term rehabilitative services facility (a facility that our former county administrator, Mr. Tom Shea, stated would not be a tax burden to Steele County.)  So not only are we paying for an empty, non-renovated , unusable county building at present, but  we also haven’t been receiving the agreed upon debt service from KODA which has now been given a 6-month extension to clean up their act, as it were.  

In my review of the audit of Steele County Communities for a Lifetime Inc. (SCCL) Statements of Cash Flows, Years ending June 30, 2015 and 2014, in point of fact, they were operating at a deficit to the tune of
$1.4 million in 2015 and $1.5 million in 2014.The tax auditors made the following statement in conclusion of their audit of SCCL:  “...the cash flow was inadequate to meet operating expenses and make its scheduled payments in accordance with loan agreements.  These conditions raise substantial doubt about its ability to continue as a going concern."   Looks like, acts like, smells like and feels like a tax burden to me, Mr. Shea and Commissioners,  to the tune of several million Steele Co. tax dollars.

Moving on to another topic from an article in the Owatonna People’s Press dated July 13, 2016 “Moving Forward...Steele County breaks ground on public works complex”---- The $12.6 million public works facility –a project according to the article which “has been in the works for years,” but which gathered momentum after the floods of 2010 damaged the Steele Co. Highway Maintenance Operations Complex located on Hoffman Dr, resulting in the highway department being displaced to a leased space on 30th Place.   Mr. James “Corky” Ebeling, Steele Co. Commissioner & board chair, stated in the article “the complex was the culmination of discussions dating back for more than 20 years; the flood accelerated the project.”  Just to give some history, the $12.6 million public works building was approved in August, 2015 in a 3-2 vote (not exactly a hands-down unanimous voice of the board of commissioners.)  The public was upset with the original $13.6 million price tag proposal, and so the board went back to the drawing board and cut the project back by a whopping $1 million. 

So it appears from the article, the board split the project into 2 phases (unanimously voting this time) in order to retain the $1.5 million FEMA reimbursement money which required work to be completed by the end of December, 2016.  Crunch time.   Phase 1 is to be funded by FEMA AND  SOME COUNTY RESERVES.   It consists of a salt shed, fueling station, parking lot, building pad, as well as the site work.  Mr. Ebeling  thanked the Minnesota Homeland Security & Emergency Management  for its $1.6 million contributions to the project.  Remember, taxpayer, those “contributions” come from your wallet in the form of a variety of state and federal taxes.   Contributions have the connotation of being voluntary/optional in essence; I just don’t recall my tax preparer telling me the taxes I owed were voluntary or at best, optional.

Phase 2-the 71,094 sq. ft. pre-cast building funded through
STATE BONDS, RESERVES, and STEELE COUNTY BONDING.   Construction is slated for 2017.   Mr. Ebeling went on to say in the article, “Those sources of funding, along with financing planning set in place many years ago, will provide “LITTLE TO ANY ADDITIONAL FINANCIAL BURDEN ON THE TAX PAYER.”  This sounds vaguely familiar (refer back to the Cedarview building, and what Mr. Shea told the Steele Co. taxpayers about KODA.)     Is it possible, the incumbents, Mr. Ebeling, Mr. Schultz, and Ms. Huntington have forgotten that buildings do not maintain themselves?  There will be additional costs to do just that.  And yet, I have to agree with something Mr. Ebeling said in the earlier article, “No option is going to come without a price tag.”  There’s always a price tag; and this works wonderfully as long as the other guy’s wallet doesn’t go empty.  Commissioner Glynn asks the question that begs an answer, “I understand we have an obligation to residents in Steele County, but at what cost?”  Bear in mind, taxpayer, when those Steele County Bonds come due, the county (that’s us) will have to pay the interest due along the way as well as paying the bonds back to the investors.  This, in point of fact, IS an additional financial tax burden on each resident in Steele County.


As a real estate appraiser in Steele County, I have a very good take on what commercial buildings cost to build, maintain and operate as I have done several appraisal reports in the past 40 years of some very large complexes in the county and surrounding SE Minnesota counties.  I am perplexed as to why a particular large industrial building in Steele County which has been up for sale was not even considered by the Commissioners.  This building would have been more than adequate in size and the price tag would have been considerably less.   In point of fact, the leased building the highway department is renting now could have been purchased much more reasonably than the $12.6 million project to be undertaken.  Why were these avenues not pursued by the Commissioners?

Given the mismanagement of the now vacant Cedarview building of which the maintenance cost of approximately $175,000 per year pales in comparison to the cost of the $12.6 million public works building, I have great misgivings if I can trust the Steele Co. Board of Commissioners to manage properly the costs involved of such a large undertaking and the future maintenance of this property.   There is a passage of Scripture which gives the principle of wise stewardship and money management.  The Bible speaks more about money than any other topic; so apparently, The Almighty thinks money management is worthy of consideration and study.  Matthew 25:21 “You have been faithful with a few things; I will put you in charge of many things.”  Conversely, it follows, if we have not been faithful (wise) with a few things, why should we be allowed to have responsibility for larger undertakings?  


This is a question that demands an answer on the part of the Steele Co. Commissioners, and in particular, the incumbents, Ms. Huntington, Mr. Ebeling, and Mr. Schultz.   Do you as a resident of Steele County believe your tax dollars have been wisely managed as Commissioner Glynn proposed should be the case?  If you are satisfied with the status quo, then keep the incumbents in office who will keep on doing what they have been doing: taxing and spending, with more taxing and spending.  Is it odd that suddenly just 4 months before the general election, the commissioners, specifically, the 3 incumbents have become greatly concerned about things “costing us to do nothing?”

If you want to have a board of commissioners who will prudently, carefully and wisely account for each tax dollar and find ways to save money in every possible way for the benefit of each resident in Steele County, then
I urge you to cast your vote on November 8th for the individuals challenging the incumbents: specifically, Mr. Greg Krueger for District 5,   Mr. Jim Abbe for District 4,   and myself, Rick Gnemi, for District 3 for the Steele County Board of Commissioners.

THIS ARTICLE IS WRITTEN AND PREPARED BY THE COMMITTEE TO ELECT
RICK GNEMI FOR STEELE COUNTY COMMISSIONER – 3RD DISTRICT.
THIS ARTICLE REFLECTS THE VIEWS OF AND IS APPROVED BY RICK GNEMI.


Tel. 507-451-3813

email: rgnemi@outlook.com

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 RICK GNEMI 

STEELE COUNTY

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3RD DISTRICT

RICK GNEMI