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Paynesville Press - August 7, 2002

Council votes to end airport agreement

By Michael Jacobson

The city of Paynesville may be building an airport by itself.

The Paynesville City Council, in a special meeting meeting on Monday, Aug. 5, passed a resolution to dissolve the airport joint powers agreement with Paynesville Township. The agreement calls for a 365-day notice to terminate the agreement, which the city gave, but the city also asked the township board to consider terminating the agreement immediately.

The Paynesville Township Board of Supervisors also met in an emergency meeting on Monday, Aug. 5, at which board chairman Don Pietsch presented a letter (click here to view) from Jeff Thompson, mayor of the city of Paynesville to the board, along with the city's resolution, which was passed that same night.

"It has become increasingly clear that the city of Paynesville and Paynesville Township are unable to cooperate in a meaningful way with respect to the proposed development of a Paynesville Regional Airport," wrote Thompson in the letter. "The actions at the last township board meeting have made it abundantly clear that the view of the majority of the town board is to make proceedings regarding the regional airport as difficult as possible."

The city council passed Thompson's resolution on Monday by a 4-1 vote, with council members Dave Peschong, Jean Soine, and Dennis Zimmerman voting in favor and council member Harlan Beek voting against.

The resolution gives the township notice of the city's intent to get out of the airport agreement. According to the joint powers agreement, 365-day notice is required to break the agreement.

But the council resolution also asked the township to consider early termination of the agreement, saying it would be its preference to do so. This would allow the city to continue to build the airport, and pursue the condemnation proceedings in court, by itself.

In exchange for agreeing to terminate the agreement immediately, the council proposed that the city and township agree to three conditions: (1) That the township would be released from any further financial responsibility regarding the airport. The township's financial commitment to the project was capped at $200,000 in the spring of 2001, of which only $6,000 has been actually paid to the city so far, meaning the township could use the other $194,000 immediately. The township would not be billed for anything that has already been done, but not billed, including legal costs.

(2) That the city would be released from any commitment to debt reduction to the Koronis Civic Arena. Currently, the city pays $7,000 per year for debt reduction, an agreement which was to last for 20 years with 16 years remaining.

The township and the city had a tentative agreement on a plan to pay off the arena debt, which would have required both the city and township to make an upfront contribution of $160,000. That tentative agreement was being reviewed by legal counsel but was never formally approved by either board.

(3) The city of Paynesville would continue to contribute $5,000 per year toward the administrative expenses of the arena.

"It remains a goal of the city of Paynesville to work in cooperation with the township wherever possible," Thompson's letter continued. "However, I have come to the conclusion that with respect to the airport we are causing more friction by attempting to work together on this project, than we would by simply going our own ways."

Township response
Pietsch called an emergency meeting to share with them the information he had received from the city, both in Thompson's letter and in person. (Pietsch was appointed by the township board to negotiate both the new arena agreement and an expanded orderly annexation agreement with the city.)

He presented the township board with two scenarios: agreeing to the termination and refusing to do so. (Click here to view his presentation.) He intended the emergency meeting as an informational meeting only, but wanted the board to be ready to make a decision at their next regular meeting, which will be held on Monday, Aug. 12, at 8 p.m.

Terminating the joint powers agreement immediately, according to Pietsch, would retain the $194,000 in airport monies, which then could be used to pay down the ice arena debt, and make possible continued city-township cooperation on annexation, on a swimming pool, and on the Lake Koronis Recreational Trail.

If the township refuses to terminate the airport agreement, they would have to continue to pay for the airport project until the city's 365-day notice is up and the agreement is broken. Under the terms of the agreement, the township could get money spent on purchasing land in the next year back from the city but would lose any money spent on construction, legal expense, and engineering.

A future annexation agreement, though, would be in jeopardy, said Pietsch, and the city would likely start by annexing any property it buys for the new airport at the proposed site.

Fighting the city for another year on the airport would further strain the relationship between the city and township, said Pietsch, who also said it was personally disappointing to see decisions made by previous township boards go unsupported. He indicated that he believes the only fiscally responsible action of the township board is to agree to terminate the agreement immediately.

The township's emergency meeting lasted for 75 minutes, with a dozen public members discussing the issue with the township board and asking questions about the airport, the arena, and annexation.

The expressed sentiments seemed to favor immediate termination. Keeping the $194,000 for the airport was good business, said township resident Floyd Lang, and would make handling the arena debt alone manageable for the township.

"In a way, we might be better off not to be a part of condemnation," said supervisor John Atwood.

Supervisor Pat Meagher agreed that the township may not want to actively participate in condemnation, which would happen no matter what the township chooses. The questions about the airport raised in the last five months have been beneficial, he felt. "No matter what happens, I think we've helped the landowners," he said.

He suggested contacting their township attorney before the township board meets again on Monday to get answers about a few points, including: Would the township be clear of liability on the airport other than the $6,000 it has already spent if they agree to terminate immediately?; and How will this decision affect annexation?

Township resident Ray Lien said that paying off the arena debt was important; however, he called the city's reversal on that proposed agreement "childish" and wondered what triggered the crisis.

Strained relations
Since March - when Meagher replaced airport supporter Warren Nehring on the township board - the city and the township have clashed over the airport. Meagher opposes the current airport plan and has concerns about what he thinks is the insufficient compensation being offered to landowners, whose land the airport commission is in the process of obtaining through condemnation.

While Nehring was a steady supporter of the airport, Meagher has voted in favor of some airport measures and against others. Along with Atwood, also a critic of the current plan, this has reversed the vote of the township board at certain times from a 2-1 majority in favor of the airport.

Last spring, Atwood and Meagher replaced the township's representatives to the airport commission. Pro-airport Pietsch, representing the township board, and pilot Steve Brown, were replaced with Atwood, an airport critic, and Ed McIntee, who stated his opposition to the current airport plan while running for the township board.

The new township appointees have clashed with the other airport commission members over the appointment of the fifth member of the commission, who the city members maintain was reappointed in February and who the township representatives argue should have been reappointed in April.

In protest, Atwood and McIntee have taken to abstaining on votes at the airport commission, though they have yet to nominate a new fifth member of their own. Two months ago, McIntee recommended to the township board that the township should pull out of the airport agreement, but Meagher pledged he would not do so.

The airport commission continues to recognize Bert Stanley as its fifth member.

Two weeks ago, on Monday, July 24, the township board looked at two measures passed along for township approval by the airport commission.

One, permission to buy an additional 22 acres from Jason Mages, passed, with Meagher joining Pietsch, an airport supporter, in voting in favor. The other, raising the appraised value of the property needed for the airport from $1,300 per acre to $1,600 per acre (based on updated appraisals), failed, when neither Atwood nor Meagher would second Pietsch's motion to approve the new appraisals.

It was this refusal to approve the new appraisals that Thompson referred to in his letter as making it "abundantly clear that the view of the majority of the town board is to make proceedings regarding the airport as difficult as possible."

Atwood and Meagher defended their opposition to updating the appraisals on Monday. Atwood said that the offer of $1,600 per acre was not enough and that he didn't want to vote for it so the court would think he supported that price. "I think that maybe would hurt landowners and they would get less as a result of that, and I think you feel the same way," said Atwood on Monday.

Meagher responded, "I do."

While the court would ultimately decide the price for any land that is contested in the condemnation proceedings, updating the appraisals would have allowed to the airport commission to use the new price to reach agreements with landowners before reaching court. Some out-of-court settlements may have been possible using that new price.

At the township meeting on Monday, township resident Julia Atwood wondered why the township board needs to make a decision in a week. Beek, who attended the township meeting after the city council meeting concluded, said that he was told it was so the city could get the paperwork for the change done before the condemnation hearing, which is now scheduled for Stearns County District Court on Thursday, Aug. 29, at 1:30 p.m.

Arena debt
The township and the city have been working on a joint plan to address the debt at the Koronis Civic Arena for several months, but these negotiations appear now to have been in vain.

Currently, the arena has around $315,000 in debt for the building and equipment. Though a joint project, the debt - and the ownership of the facility - are entirely in the township's name.

The city, the township, and the PNLS Hockey Association each pay $7,000 per year for debt retirement, but this combined $21,000 barely pays for the interest, leaving little to pay down the actual debt.

In addition, a loan at 4.9 percent, currently for about $85,000, must be paid off in the next 18 months, meaning soon all the debt will be at a higher interest rate, which could get steeper if interest rates climb.

The tentative plan was for the city and township to each contribute $160,000 up front to pay off the debt on the arena immediately. In exchange, the city would get nearly 50 percent ownership of the arena.

An important part of this - the part Pietsch said he is most reluctant to lose - was to share in maintenance costs for the facility. Under the terms of a Mighty Ducks grant that was used at the arena, the township is legally committed to having an ice arena for 40 years, meaning it needs to start planning to maintain the capital equipment, including the expensive ice-making equipment. The facility has two cubes to make ice, each costing $50,000 to replace and having an expected life of 25 years.

Annexation agreement
An orderly annexation agreement was signed between the township and city before the airport joint powers agreement was first approved in 2000. While such an agreement identifies areas for annexation, it is meant to protect the township from unnecessary annexation by setting conditions and procedures, like the requirement that a majority of the residents must petition to have any parcel of land annexed.

The annexation agreement required property taxes to continue to be paid to the township over a five-year period. In the first year, the township would get 90 percent of the taxes, in the second 70 percent, in the third 50 percent, in the fourth 30 percent, and in the fifth year 10 percent.

In addition, if city sewer and water services (usually a driving force behind annexation) were not available after two years, the township would continue to receive 70 percent of the tax money for that parcel until the services were available.

All the areas identified for annexation in the original agreement have already been annexed, said Pietsch, who was charged with negotiating with the city to expand the agreement to include new land likely to be considered for annexation.

Fighting the city on the termination of the airport might preclude having a new orderly annexation, warned Pietsch. "I think this can be saved," he said, if the township opts for immediate termination.

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