Local business owners voice concern over tax proposal for library
Seven community members shared their feelings, mostly disapproval of the effect of a LOST tax on area businesses, during a special meeting Wednesday, Jan. 29, before the Wadena City Council.
Before opening the floor for public comment, City Administrator Janette Bower and Mayor George Deiss explained how the resolution is the first step in the process and emphasized that people in Wadena will get to vote on the tax before it would come into effect. Deiss also explained the two ways a bond can be paid for, through the LOST tax or through property taxes. The bond seemed to be set in stone by the way Deiss explained the options to pay for it. Throughout the meeting, people wanted to know how the city got to these two options and were concerned that if they voted no on the referendum that a property tax would come on residents.
The first to share was Rick Taggart from Fleet Supply, who was against the tax proposal. He talked about a customer who came from Perham to shop due to the 0.5% LOST tax there. With the 0.5% tax in Perham, Deiss said the council decided on the 0.25% tax to remain lower.
Taggart also questioned if it would default to a property tax if voters said no to the referendum. Deiss answered that that was the only other way to pay for a bond.
“OK, two bad situations in my opinion,” Taggart said.
“We’d have to come up with another plan,” said Bruce Uselman, council member. “Yup,” Deiss said.
Deiss also went on to explain that the LOST tax is an offer for the citizens of Wadena to not carry the entire cost of the library renovation, especially as Uselman and Bower noted that it is a regional library with 8,000 active card holders that are not all from Wadena. The people who come to use the library could also shop or eat lunch in town, Deiss said.
Jason Merickel from Merickel Lumber/Ace Hardware came up to the podium next to discuss the impact of the LOST tax on new home projects that can be “a couple hundred thousand dollars in material.” Merickel said he wants the LOST tax to be zero. Council members Mark Lunde and Wade Miller later added that they do not want more taxes either.
He questioned how many people the library employed and Deiss explained that as a regional library Kitchigami pays the staff rather than the city. When asked a second time, Deiss said that there is one full-time employee, a shared custodian and five or six part-time employees. Merickel also noted that he was unaware that the project had moved this far forward.
“I wish there would be this much effort on improving our local existing businesses versus just going up to try to save the library. So that’s my two cents, I don’t agree with it. I think there’s better ways to raise money. $3 million is insane,” Merickel said.
Julia Snyder from Signs & Designs Custom Advertising echoed her disapproval of the possible LOST tax or increase in property tax and the high cost of the renovation project. Snyder also said she talked to other business owners and zero of them were for the LOST tax. Deiss said he heard from 12 business owners who thought the LOST tax was a good idea so that the burden does not all fall on property owners.
“$3 million, I think, is a crazy amount of money to put in a building that’s going to cost more to heat, it's going to have more expenses. $3 million into something that generates zero. I mean that’d be like investing in a business that you get zero out of and I get that people supposedly come here to use the library. Do I believe all these cards are active? No,” Snyder said.
Merickel also questioned the amount of active card holders at the library. Uselman, Bower and Deiss had previously said there are 8,000 cards and Bower added the numbers are 2,286 active patrons in the city limits, 1,505 county-wide and 1,527 outside Wadena County, which equals 5,318.
Snyder said she doesn't think the library renovation project was intended for the taxpayers after quoting from a Pioneer Journal article.
“Frethem said the library board was not proposing that the taxpayers pay for this, rather they needed approval from the city to get the ball rolling on the project,” the Pioneer Journal article on October 24, 2018 read.
Near the end of the meeting, Curt Folkestad said the whole problem is that people thought the project was not a tax issue and the council lacks credibility for now deciding to use a bond. Folkestad said he would rather have the LOST tax than property tax.
Deiss mentioned during the meeting that he heard from 12 business owners in the community who supported the sales tax option.
As the question of an increase in property taxes continued to come up, in the last five minutes Deiss emphasized, along with Bower and other council members, that using a bond to pay for the library was not confirmed. However, council member Jessie Gibbs noted that taking out a bond to pay for the project was likely. Uselman and Bower also noted that if the LOST tax was not approved by voters they hope to find another way to raise the funds.
Another problem Snyder stated is how the new library building was purchased in 2017 and thus created a loss of a property tax base in a “prime retail space.”
“We also have an existing library building that is sitting in prime and there are people very interested in buying that,” Deiss said.
Snyder wanted to know about a cheaper option for the new building, such as one for $1 million. Miller and Deiss mentioned the high cost for adding onto the current building as $4 million.
Jim Kraemer shared his support for the LOST tax and thanked the council for their creativity on this option. He recognized the previous concerns listed, including the already high taxes, but wants to show that Wadena is moving forward as a town.
“In a small town, if you don’t move forward you end up going backwards, and so my thought is we are doing very positive things and a lot of that is due to some very creative business people in our community that have supported various projects so I just want to say I appreciate the creativity of what I understand this to be is just to open an option and that we have to do it at this time or that option is not available,” Kraemer said.
As one of the last to share, library board member Maria Marthaler asked how Kitchigami is supporting the project, to which Deiss said there are limited things they can do but they will help purchase new books. Uselman and Bower also noted it is the city’s building.
After the public comments ended and Deiss checked with council members about any other comments, the council unanimously approved the resolution in order to have the LOST tax as an option for voters to vote on.
While there's still a long way to go, the library fundraising efforts have picked up steam according to branch manager Renee Frethem.
“The fundraising has gained momentum really nicely lately since we’ve partnered with the Initiative Foundation, " Frethem said.
She said they've raised about $600,000 through the Initiative Foundation, with other funds from Friends of the Library fundraising and the city endowment. A fund tracker at the library shows $900,000 has been raised with a goal of $2.4 million.
If the LOST tax comes through, construction would start in January 2021, following the approval of voters in November 2020. It's estimated construction would be complete by December 2021.