IRONWOOD, MI - Tuesday, December 23, 2008 - The regular meeting of the Ironwood City Commission took place at 5:30 PM yesterday evening in the Commission Chambers, on the second floor of the Ironwood Memorial Building. All five of the City Commissioners were present: Bob Burchell; Tom Laabs; Mayor Bruce Noren; Gemma Lamb; and Suzanne Toth. Several City Staff members were also present at the meeting: Karen Gullan, City Clerk; Scott Erickson, City Manager; Dennis Cossi, City Attorney;  Dan Petersen, Community Development Director; Bob Erspamer, Ironwood Public Safety Department Director; Dennis Hewitt, City Assessor/Building Inspector; Bob Tervonen, Utilities Director; Julie Frederickson, Financial Director; and Joe Magdziak, Department of Public Works Foreman. Representing the press at last night's meeting were Ralph Ansami, photojournalist for the Ironwood Daily Globe, Steve Frank and yours truly for the Superior Chronicle.

At 5:30 PM, Mayor Bruce Noren called the meeting to order. Following the opening prayer and the Pledge of Allegiance, Karen Gullan recorded the roll. Noren asked the Commission and the citizens in attendance if anyone wished any Consent Agenda items to be moved to the regular docket for discussion. Hearing no such requests, the Commission unanimously approved the Consent Agenda as presented. In so doing, the Commission took the following actions:

• They approved the Minutes of the December 8th, 2008 Regular City Commission Meeting.
• They reviewed and placed on file the:
• Ironwood Carnegie Library Meeting Minutes of October 21, 2008, and the
• Pat O'Donnell Civic Center Special Meeting Minutes of October 31, 2008 and November 12, 2008.

FINANCIAL STATEMENTS

Financial Director Julie Frederickson then presented the Statement of Revenue and Expenditures and the Monthly Cash Reports to the Commission. Bob Burchell asked when the next payment for the City assessment was due, and Dennis Hewitt informed him that it would be made after July 1st.  Mayor Bruce Noren complimented the Civic Center for showing improvements in their operation. Without further questions or comments being made, the Commission unanimously voted to place the reports, as presented, on file.

2007-2008 FISCAL YEAR AUDIT

Mr. Dean Beaudoin, representing Joki, Makela & Pollack PLLC, presented the 2007-2008 fiscal year audit to the Commission. Beaudoin explained that he was only going to give a brief overview of the audit at last night's meeting, and that further discussion of the audit would take place when the Commission holds its workshops on the budget. He pointed out that the "most important" item in the audit was found in the bottom paragraph on page four. According to Beaudoin, the statement found there gives the City a "clean audit opinion" which is "they best you can do!"

Beaudion then pointed out the "Management Discussion Analysis" portion of the audit. He explained that this section of the audit should give an outsider a quick overview of the City. He then brought the "Future Considerations" section of the audit to the Commission's attention. He told the Commission that the section was prepared by Julie Frederickson and approved by City Manager Scott Erickson. According to Beaudion, the section discusses issues that the City will need to contend with in the near future -- including reduction in revenue sharing from the State, due to the economic woes of Michigan; reduction in value of the invested pension funds, due to fluctuations in the stock market; and street projects and the five-year capital improvement plan.

Beaudion then brought the "General Fund Balance" to the Commission's attention. He pointed out that the bottom line fund balance a year ago was $1.3 million; on June 30, 2008, it was $1.1 million; and now it's $926,000. He explained that the reduction was due to the "unreserved fund balance" and funds that were transferred to the "Street Funds" for various street projects. A year ago, the "General Fund" had a profit of $341,000. This year there was a loss of $175,000. "That's quite a swing in one year!" Beaudion said.

Beaudion explained to the Commission that $949,000 was transferred out of the "General Fund" to the "Street Funds" and that accounts for the loss.

Mr. Beaudion then pointed out to the Commission the "Business Type Activities" (pages 24-28) section of the audit. According to the figures represented on page 26, the Water Utility had a net profit (profit after expenses) of $339,000 and the Sewer Utility had a profit of $261,000.

The Civic Center, according to the audit, had a small profit of $1,300. Beaudion was quick to remind the Commission, however, that the Center's bottom line included property tax levies totalling $75,000. "Without the property tax levies of $75,000, there would be a large loss at the Civic Center." Beaudion remarked.

According to Beaudion, as of June 30th, the Civic Center's debt to the City was reduced to $21,000. The tax levies have been used primarily to reduce the Center's debt, as designed.

Beaudion then went on to discuss the "Fiduciary Funds" section of the audit. According to the report, the net assets for the "Pension Fund" were reduced by approximately $1 million as a result of the decline in the stock market values. He said, the reduction shouldn't exactly be a surprise, but it is a reason for some concern.

Beaudion continued by pointing out the "Notes" section of the audit. He told the Commission that there was nothing particularly unusual about the Notes, but he did point out the "Capital Assets" and the "Construction" notations on pages 46 and 38. He also brought up "Inter-fund Payables." (page 64) He said it is often interesting to see what fund owes other funds. According to the report, the "General Fund" has $252,000 owed to it from basically five other funds. Of that total, $151,000 is owed by the "Water Utility Fund" and $65,000 is owed by the "Sewer Utility Fund."

The report also states that the "General Fund" owes the "Major Street Fund" $390,000 and the "Local Street Fund" $454,000.

According to Beaudion, the "General Fund" has a reserved fund balance for inventory, prepaid expenses, and special projects of $224,000. The remainder of the balance is unreserved. He explained that the Library has a reserved fund balance of $109,000 for the building and that the Ironwood Economic Development Corporation has its own fund balance that is reserved for their purposes. Both the Major Streets and the Local Streets also reserve funds for projects and the salt building.

Beaudion then pointed out how much money was transferred out of the "General Fund" to support the other funds. According to the report the "General Fund" paid out: $417,000 to the "Major Street Fund;" $512,000 to the "Local Street Fund;" $22,000 to the "Cemetery Fund" and $26,000 to the "Building Inspection Fund." These transfers resulted in a reduction of the "General Fund" by $979,000. That accounts for the large reduction in the "General Fund" balance. Beaudion told the Commission that the "General Funds" loss was to be expected due to the various road projects throughout the City.

In closing, Beaudion pointed out that his company only found one problem, called a "Significant Deficiency," which really isn't a problem at all. He said that cities are supposed to prepare their own audit reports and notes. He pointed out to the Commission that it wouldn't be practical for a city of Ironwood's size to hire more people to perform these tasks. He explained that the "deficiency" was nothing to be concerned about.

The Commission was then asked if they had any questions. It was the general consensus that the Commission would fully examine the audit report and ask any questions during the budget workshop. The Commission unanimously approved acceptance of the audit as presented.

JESSIEVILLE WATER & SEWER PROJECT

Mr. Jeff Sjoquist, P.E., Senior Project Manager and representative for Coleman Engineering addressed the City Commission with an update of the Jessieville Water and Sewer Utility Project. Before he made his address, he handed a very thorough outline to each of the Commissioners and to the media. The outline below does a good job explaining the status of the project. According to the outline:

Project Overview: The Jessieville/Norrie Area Utility Project is the first phase of a multi-phase program. The program was initiated in response to a draft consent order from the Michigan Department of Environmental Quality (MDEQ). The goal of the project is to replace aging sewer and water lines in the Jessieville/Norrie areas. The project scope was established in Preliminary Engineering Reports from 2006. Project funding will be from the United States Department of Agriculture (USDA) Rural Development. In addition to utility improvements, the project will refinance $349,000 in existing Sewer bonds and $615,000 in existing water bonds.

Project Budget: There will be separate bonds for water and sewer. As such, separate budgets have been established for both water and sewer items. Project budgets are as follows:

BUDGET ITEM	SEWER	WATER
Construction	$1,397,500	$997,000
Legal, Administration, & Engineering	$222,500	$162,000
Contingency	$140,000	$100,000
Bond Refinance	$349,000	$615,000
BUDGET TOTALS	$2,109,000	$1,874,000

Tentative Project Schedule: This tentative schedule is subject to change based on several regulatory and funding agency issues including review times.

PROJECT PHASE	PROJECTED TIME
Design Plans to Permit Agencies and Rural Development	Mid January 2009
Right-of-Way Map to Rural Development	End of January 2009
Advertise for Bids	March 1, 2009
Receive Bids	March 31, 2009
Loan Closing	May 29, 2009
Start Construction	June 1, 2009
End Construction	November 14, 2009

Notes:

1. A public informational meeting should be scheduled for mid to late January 2009.
2. Rural Development will not authorize advertising for bids until Design Plans are approved and Right-of-Way map is approved. It was pointed out that the Right-of-Way map that Rural Development requries is to encompass the entire City of Ironwood, not just the areas affected by the project.
3. Project scope may be adjusted after bids have been received. Depending on economic conditions, bids may be higher than the allotted budget. If bids are higher than the budget, certain segments may be eliminated from the project scope after bids.
4. Interest Rate will be the lower of the rates in effect at the time of loan obligation (4.5%) or loan closing. Currently, the rate for January 1 to March 31, 2009 is 3.125%. This may change for a May 29, 2009 loan closing.
5. Rural Development funding is aimed at utilities. Incidental paving will be eligible for funding, but sidewalks/curb will not be included unless directly affected by utility work.

Howard Aspinwall made a few comments and asked a few questions of the Coleman representative. First of all, he pointed out that there is a City ordinance that requires any contractor to replace any existing concrete or pavement whenever construction is done. He then asked if there would be any blasting done during the project. He was told that it is very possible for blasting to occur. He asked it the blasting contractor would be licensed. He was told that the specifications for bids will set the requirements for a licensed blaster to have adequate insurance and monitoring. Aspinwall asked specifics about the drilling and was told that those issues would be addressed by the selected blasting contractor.

CITY EMPLOYEE GRATUITY

City Manager Scott Erickson addressed the Commission explaining that the City has, in the past, always given a "holiday" gratuity of $50/employee. The City Commission voted unanimously to authorize the gratuity to the City employees.

LIQUOR LICENSE TRANSFER

IPSD Director Bob Erspamer explained to the Commission that the State requires a local approval of a license transfer before they will approve the transfer. Erspamer told the Commission that the request made by Carl J. Lahti and Christine J. Lahti was for the license at the Gogebic Country Club. The Commission voted unanimously to approve the transfer.

2007 HOME GRANT AGREEMENT

Community Development Director Dan Petersen explained to the Commission that the $222,200 grant was originally submitted to MSHDA. He said that the original grant was for the MPP district first, and secondly for the Norrie area. He explained that MSHDA was willing to allow some Norrie households to participate in the grant if the City shows real effort to first improve the MPP district (North and south between Ayer Street and Cloverland Drive and East to west between Luxmore and Lake). The City Commission voted unanimously to approve the grant acceptance, thereby authorizing the Mayor to sign the appropriate paperwork.

WASTE COLLECTION AND DISPOSAL BIDS

Scott Erickson explained to the Commission that the contract with Waste Management Services is expiring on May 1, 2009. He told the Commission that he has prepared a bid specification list, and that he would like any input from interested Commissioners to tweak the list before a call for bids is made. Commissioner Lamb asked Erickson if there would be a provision drafted into the new contract to allow for two City-wide clean-ups instead of one. Erickson explained that a new contract would certainly give the City the opportunity to request that. He suggested that a workshop be organized to further discuss options.

Noren asked if a workshop would occur before any ad for bids is placed. Erickson said that would be appropriate. The City Commission unanimously authorized the advertisement for bids on the Waste Collection and Disposal.

MAYOR'S APPOINTMENTS

Mayor Noren reminded the Commission that he had previously agreed to allow the Commission to consider each and every appointment individually, however, he suggested that he read through his recommendations and then decide if they can all be appointed together or if there needed to be a discussion on them individually.

These were the Mayor's recommendations:

• Parks and Recreation (1 vacancy) - Appointing Marcy Kusz
• Planning Commission (4 vacancies - 3 expired, 1 unexpired, two applicants) - Re-Appoint Eric Lytwyniuk and appointing Leroy Johnson.
• Carnegie Library Board of Trustees (2 vacancies, four applicants) - Appointing Kateri Kormann and Dawn Wolfe
• Board of Review (2 vacancies) - Re-appoint Marilyn Nygard and Charles Lorenson

Commissioner Lamb requested that each appointment be considered individually. She suggested that the City reduce the number of members to the Planning Commission. And asked if any appointments to that Commission be considered after the City has adjusted the number of members. According to State Law, the Planning Commission can have five, seven or nine members. Four current Planning Commission seats will soon be vacant: Bob Schonberg; Eric Lytwyniuk; Mark Fitting; and John Kasieta.

The Commission unanimously approved the appointment of Marcy Kusz to the Parks and Recreation Committee.

After some discussion regarding quorums and attendance the Commission voted four to one to postpone any appointments to the Planning Commission, pending possible changes to the number of members to that commission. Commissioner Toth voted not to postpone the appointments.

The Commission voted 3 to 2 to appoint Kateri Kormann and Dawn Wolfe to the Carnegie Library Board. Commissioners Burchell and Lamb voted against the appointments. Kormann and Wolfe will be replacing Marianne Andresen and Margaret Rayer on the Board.

The Commission voted unanimously to re-appoint Charles Lorenson and Marilyn Nygard to the Board of Review.

MANAGER'S REPORT

• 3rd Annual Comprehensive Deer Management Hunt - According to City Manager Scott Erickson, 47 anterless deer were harvested in this year's hunt. Twenty-seven hunters participated in the management bow hunt this year. Last year the total harvest was 70 doe with 23 hunters participating. This year's harvest represents a 33% drop in yield. Erickson thanked Justin Lehto for compiling statistics regarding the deer management hunt. He said his documentation could be very helpful in the future. He also stated that the Norrie Club helped the City greatly by being the registration station for the hunt.
• Community Input on City Website - Tuesday, December 23, 2008, 5:30 PM, Women's Club Room - Erickson explained that the City plans on rebuilding the City website and would welcome any suggestions to improve it.
• Downtown Blueprint Program - Early January will be the first contact with MSHDA's consultant since signing up. Erickson explained that the bulk of the community's involvement will begin in April.
• Reappraisal of the City - Erickson explained that Accurate Appraisal has completed their reappraisal of the City, but the company will be having an open house in January which will give property owners an opportunity to examine and adjust the appraisals done. The date and time for the open house will be announced.
• Parks and Recreation Sub-Committee for Trails - Erickson explained that several members of the Parks and Recreation Committee and other concerned citizens have been working towards creating a trail system throughout the City.
• Proposed Cross Country Ski Event - Erickson explained that a group of area citizens has been working hard to organize a major cross-country skiing event in Ironwood. He explained that it will take a lot of work and dedication by those involved, but he praised their efforts. One of the ideas was to have a "ski marathon" similar to the running of the Paavo Nurmi only on skis. Erickson said more information will be shared as it becomes available.

OTHER MATTERS

Mayor Bruce Noren wished all of his fellow Commissioners, City Staff and citizens a very Safe and Happy Holiday season.

CITIZENS COMMENTS

Howard Aspinwall asked the Commission if there would be a call for more applicants to the Planning Commission at a later date. Noren said he would keep the existing applications on hand and those people would not need to reapply, but another advertisement for the open seats would be placed at that time.

CONTRACT NEGOTIATIONS & CITY MANAGER'S CONTRACT

In closed session the Commission discussed contract negotiations with AFSCME, Local 1538 and the Ironwood Professional Police Association Unions. They also discussed the City Manager's review and the status of his contract.

When the Commission returned to open session they announced that Scott Erickson's contract was extended for two years.

With that, the Commission voted to adjourn.