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The Babbitt city council got through a meeting on Dec. 3 fairly quickly.
During discussion on what is usually a routine motion to approve the report on city funds, council member Paul Hoheisel voiced his concerns.
“I have a problem. I’m not confident with the numbers that we get from the summary of city funds. We got one in our email, then we get one in our packet that I did, and now we just got another one and none of the numbers seem to be adding up for me,” said Hoheisel.
“I definitely have a problem with it. I’ve had a problem with summary of city funds for the last six months and I will not approve the summary of city funds at this point in time until it gets straightened up. That’s the way I stand,” said Hoheisel.
The packet for the meeting had two fund summaries in different sections with different totals on the bottom line.
“Mr. Hoheisel you came into my office yesterday and asked the question and I gave you an answer and updated the funds and sent them to you,” said city clerk Robecca Jaeger. “But after audits and other things were done, I updated again this morning and sent it to everyone. So.”
“One is $300,000 off from one number to another. How can you approve this? How can this council approve it? When the numbers don’t even add up,” said Hoheisel.
“That’s just my stand on. You guys can do what you want. I’m not happy with it,” he added. “All year long they’ve been off by $300,000.”
“It would have been nice if you were asking me these questions yesterday when you were in my office,” said Jaeger.
“It takes me time to go through them to,” said Hoheisel. Jaeger said she forgot to transfer $100,000 to a campground account which changed a $10,150.91 negative balance to a $90,842.62 positive balance.
“That’s that’s one of the things that we were discussing at our campground meeting, which we will discuss when we get to it tonight to cut trees. Nobody knew what the balance was at all in there when we had our meeting. You had no clue. Jim and myself had no clue. I don’t know what’s in anybody’s account,” said Hoheisel. “Usually I track it from month to month and I know exactly where everybody’s sitting and lately I can’t track nothing.”
“You can always come in and ask questions,” said Jaeger. “If you’re confused about something or don’t know what it balances, come and ask. My door is always opened, everyone can come in.”
“That’s one reason I do not like the summary of funds the way it is. I’d rather give you a report out of my accounting software instead of one that is created on it Excel spreadsheet. There’s a lot more chance for error on that, and it’s not showing you exactly anything,” said Jaeger.
“We used to have a summary of city funds that was more detailed and it showed the line items and it also showed the percent of budget that remains,” said council member Jim Lassi.
“I can definitely put the expenditure and revenue guidelines that gives you a more detailed line item, show exactly where money is being spent or what revenue is coming in and what balances, and percent of the budget,” said Jaeger.
Lassi asked to go back to a more detailed report as was provided to the council prior to Jaeger taking over.
Mayor Duane Lossing said the council should be receiving the detailed reports every month.
The motion to approve the consent agenda with the city funds failed on a 2-2 vote with Hoheisel and Lossing voting no and Glenn Anderson and Lassi voting yes.
A second motion was made by Hoheisel to approve the consent agenda without the city fund summary. Lassi asked what the impact would be.
“You can go over it next month with the new council,” said Hoheisel.
Both Hoheisel and Anderson were defeated in the November election and will in essence be replaced by Andrea Zupancich and John Fitzpatrick. Zupancich will be mayor and Lossing will move to a council seat.
Instead the council will discuss the issue at the Dec. 17 meeting.
The motion passed with Anderson voting no.
The council did approve replacing some heat pumps in the Municipal Center and repairing others. Lossing said the city may be eligible for a federal rebate. He said maintenance neglect led to the current situation.
“Once we do this, the plan is to establish a better form of maintenance or a maintenance program that we will be responsible for in not having to have someone at a high dollar rate come and do this type of work for us,” said Lossing.
The total cost of the repairs totaled $50,268 through Iron Range Plumbing and Heating.
The city had received a $200,000 from the state for building repairs and there was a balance of $172,946.08.
The council approved the work on a 4-0 vote.
There was discussion on the tree problems at the campground including some Hoheisel called “life threatening.”
“There are big white pines. They need to come down or Mother Nature will take them down and just hopefully there’s nobody in the campground while it’s happening,” said Hoheisel.
He asked to spend $10,000 on tree removal.
Lossing asked which company, Tarzan and Jane Tree Service or Fenske Tree Service should do the work. Hoheisel said the city should go with the local company.
The $10,000 was approved along with having city crews remove the downed trees.
Starting design work on replacing the refrigeration system at the arena with an ammonia based solution was back on the agenda. The council had a proposal from B32 Engineering Recreation director Caitlyn Stern said the council had questioned if the IRRRB funds could be spent. Jaeger said she spoke with IRRRB staff and was told the $1.5 million grant could be spent prior to the money being received.
“We’ve got something in writing from IRRRB?” asked Lossing.
“Yes we do,” said Jaeger. Lassi noted there is also a projected shortfall in the amount of funding needed for the project.
Stern said if the work is approved now there is a $160,000 shortfall but that could grow to $300,000.
“We do not know where those funds would come from,” said Stern.”
The city would be on the hook for any project shortfall and there is only around $43,433.10 listed in the arena capital improvement fund. The council took $30,000 out of that fund last year to fund arena operations.
She said there is also an issue with a wall that is settling in the locker room portion of the arena.
Lossing said the city took over the arena in the late 1990s and the city didn’t set money aside over the years to pay for major improvements.
“Do we walk away from the opportunity of the $1.5 million and let the building go because we are wondering where we’re gonna come up with $160,000?” asked Losing.
Stern said the city had been spending $13,000 a year to replace leaking refrigerant. She said the operating costs will be lower with the new system.
The council discussed accessing other city funds to make up a part of the shortfall.
Lassi said he wants to get the arena fixed but is concerned about unknown expenses down the road.
“What if the arena sucks up a lot of these funds, what happens if we have a major situation in some other area? And we don’t have the funds and that’s my main concern in which is the priority?” asked Lassi.
Lossing made a motion to proceed with the project in hiring B32 Engineering at a cost of up to $99,800 in three phases.
The total project cost with contingencies was listed at $1,722,875.
“And Rebecca and Caitlyn will be working diligently to find money,” said Lossing. “I know that Hoyt Lakes is going through the same thing and they found some money.”
The motion passed 4-0. In other business the council:
• Accepted a request for a leave of absence from Matt Littler from the ambulance and fire departments.
• Held a public hearing on the 2025 budget and levy. The total budget is $2.7 million and the council approved a three percent levy increase. The council approved the resolution on the budget and levy after it had to be fetched from the clerk’s office. Lossing voted no and Joe White was absent.
• Approved hiring Michelle Hoffman to work at the recycle center.
• Submitted a grant application for $2 million in state bonding for the West Babbitt Development Project.
• Approved 2025 pet license rates with a change to $6 for one year or $15 for three years.
• Approved a 2025 tobacco license for the Smokey Moose at 10 Alder Drive which is the old bowling alley area.
• Approved sending delinquent garbage and water bills to the county to be put on the property tax bills. There were 49 properties for garbage totalling $21,549.05 and 14 homes where the water has been shut off with a total of $11,811.50.
• Approved an agreement with Northshore Mining for disposing of sludge from the wastewater treatment plant. The city’s new plant will greatly reduce the amount to be disposed of.
• Nominated absent council member Joe White for a seat on the board of the Range Association of Municipalities and Schools. Anderson previously held the seat.
