Denouement, for now (updated)

[update at end]

Elizabeth Mohr writes in the 4/9/08 Pioneer Press: Maplewood's infighting raises insurance costs: City's insurer, citing lawsuit expenses, boosts its rates and delivers a warning

Fed up with the squabbling and rising cost to insure Maplewood, the League of Minnesota Cities gave the St. Paul suburb a stern and expensive reprimand Tuesday.

The league, which insures all but six Minnesota cities, had been considering dumping Maplewood's policies. On Tuesday, the league's board of directors agreed to offer a renewal to the city, but with stiff premium and deductible increases.

"The board's concern is the contentious and divisive situation out there," Pete Tritz, director of the League Insurance Trust, said, noting that the atmosphere at City Hall contributed to a spike in lawsuits.
...
League attorneys are upset the council has disregarded their warnings on such things as talking to the media about lawsuits and the people involved when told not to, said VeNita Schnebele, a Gallagher representative.
...

Maplewood Mayor Diana Longrie took issue with the idea the city's insurer was threatening to revoke coverage or penalize the city based on what it considered "uncooperative" behavior.

"A council member ... expressed their opinion of somebody. Is that OK? I don't know. Is that protected by the First Amendment? I don't know," Longrie said. "But they're saying, 'We won't insure you if you speak your mind.' What speech is allowed? I don't know."
...

The city's coverage is scheduled to expire June 30. Adjusted premiums under the new contract will be "123 percent* of what the average city would be paying" and Maplewood's deductible will increase from $50,000 per claim to $200,000, Tritz said.

...

The state auditor's office responded to calls for an in-depth look into the city's books by meeting with Ahl and Finance Director Bob Mittet last week.

State Auditor Rebecca Otto said Tuesday the state will "be monitoring their current situation," but won't perform an audit.

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[update 4/9 8:00AM]

* The 123% of average is actually about a 38% increase, since Maplewood's previous good loss control record had resulted in below average premiums (Thanks to an alert reader).

Documents from the April 7 workshop (updated)

[update at end]

The insurance agency presentation to the city council at the April 7, 2008 workshop was characterized by VeNita Schnebele, the Area President for Arthur J Gallagher, as a "come to Jesus" moment about Maplewood's insurance issues. Her discussion was supported by these letters and reports obtained via a Data Practices request.

Just prior to the 2007 primary election campaign, the League of Minnesota Cites Insurance Trust (LMCIT) was already communicating to the city that the both the loss experience and the lack of communication and cooperation between the League and the city would have premium and coverage implications. The letters, which Mr. Ahl reports were not in the City Managers files when he assumed his current duties, illustrate the communication issues. Here is an excerpt from a June 8, 2007 letter to Mr. Bethel.

[Please click on the image for a more readable view]

A chart of 20 years worth of premium and loss data was provided illustrating the significant change in losses during the first year of the Copeland council. Ms. Schnebele updated the printed chart, produced on 3/31/2007, from $690,927 for the 06-07 policy year to $1,099,000 to reflect current reserves for cases recently settled and not yet settled.

[Please click on the image for a more readable view]

The hard to read shaded numbers are
690,927 updated in discussion to 1,099,000
10,327
7265

Councilperson Juenemann reported this was all new to her. Ms. Longrie was quick to establish that insurance renewal presentations had not been made prior to 2007 either, but then as the chart shows up until that time losses had been more consistent with premiums.

Rather than dropping Maplewood, Ms. Schnebele is advocating with LMCIT to increase the deductible to $200,000 along with a substantial premium increase. She pointed out that, had that deductible been in place last year, Maplewood's direct settlement payments would have been $475,000 rather than $200,000. Any new deductible would apply to settlements currently being negotiated. She also defended the League as more than fair since they only charged a single deductible last year to cover all three reorganization settlements*, where the normal practice with other carriers would have been to charge separate deductibles, and then drop coverage the following year.


Ms. Schnebele's recommendation was for the city to work at improving communication and cooperation with the League and demonstrate that commitment to them. In her recent meeting with them, LMCIT officials were still concerned about communication and cooperation issues, citing comments made to the press after the Le decision. Ms. Longrie's commentary in today's Pioneer Press, coming on the day of the LMCIT Board meeting, might not put their concerns to rest.


Please see our editorial Opinions that matter for further information.

[Update 4/8 4:00 PM]

A specific request Ms. Schnebele made was for council members to write to the LMCIT Board expressing their commitment. Mr. Nephew has done so.
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* this may account for some of the confusion over total settlement costs involved in the Banick case.

Mr. Nephew does his homework

In her 2/28/08 Star Tribune article Maplewood ready to get back on track Jean Hopfensperger said

Longrie charged that "the path we're going down" would hurt the citizens of Maplewood, and predicted that recent council actions -- including the approval of several road construction projects -- would ultimately lead to higher property taxes.

In preparation for the council goal setting session scheduled for yesterday that did not happen, Councilperson Nephew examined Ms. Longrie's assertion about road project approvals. According to his spreadsheet, the Copeland council spent 3,992,275.00 general fund dollars on road projects, while the current council anticipates spending $847,577.00, about one fifth as much.

One fifth as much.

Depoliticization of the City News

The April Maplewood City News arrived by mail today, embedded in the Summer Parks and Recreation bulletin.

With the exception of Mr. Hjelle still publishing his Yahoo rather than city email address, there is no political content in this taxpayer funded newsletter.

Perfect storm*

The City has leased land for over two decades which it has used as a park. Area residents bought homes considering the park to be there for their children to access without crossing nearby busy streets.

The lease has expired.

The landowner plans to redevelop a portion of the land for senior housing, a portion of the housing to be 'affordable', and has requested Tax Increment Financing (TIF) for the project. It has offered to sell the undeveloped portion to the City for a price that would consume most of the available Park Fund, which lacks a fund replenishment source since it depends on fees from the sort of new development that is rapidly drying up. Using the Park Fund for this purchase would affect maintenance and improvements throughout the Maplewood park system already planned via the Capitial Improvement Projects (CIP) process.

An alternative funding mechanism is a bonding referendum. This approach would likely not happen until November, would add to the City's debt which is characterized in the agenda for the upcoming council goal setting session as 'staggering', and would ask all residents to accept increased property taxes for a purchase some would view as only benefiting the residents near the park. The idea of a bonding referendum has also surfaced in the south leg context.

After two recent Parks and Recreation Commission meetings at which this proposal has received significant attention, the council will take it up in the workshop format next Monday (packet pdf). Acting City Manager Ahl's staff report suggests TIF may not be the best idea.





Alex Davy's 3/19/08 Lillie Newspapers article 'Golden lease' arrangement ends: Maplewood hopes to buy church-owned parkland provides a good summary:

Since 1982, Gethsemane Lutheran Church in Maplewood has leased 9.6 acres of park land adjacent to its property to the city for $1 a year. The 25-year lease agreement expired in 2006, and now Gethsemane plans to build a senior housing complex on the western six acres of the park. The parks and recreation commission has been offered the chance to buy the remaining 3.6 acres.

"I'm going to be plain, it was a difficult decision," said the Rev. Richard White, church pastor, at the March 13 commission meeting. "But we felt it was the best decision."

Plans have been in the works for years, White says. "It's an act of synergy. We see this as an opportunity to become an intentional multi-generational church community, together with the church, school and now senior housing."

Gethsemane has partnered with Presbyterian Homes of Minnesota to construct 111 units of independent-living senior housing with heated underground parking and a small, above-ground parking lot.

A heavy burden
The park purchase would likely stretch parks and recreation funds to the limit. According to initial estimates, says Environmental Manager DuWayne Konewko, buying the park will cost the city approximately $800,000. About $200,000 could come from profits from the park access charge fund, while the remainder could come from the roughly $1.7 million fund itself. But much of that money is already committed, which means using the park-access charge fund to buy the park would nearly deplete it.

Money in the fund comes from developers and builders in Maplewood, who are charged a parks fee in order to provide green space when they introduce new construction. But with Maplewood 98 percent developed, Konewko says, that revenue stream is drying up.
...

Working though this situation may test the council's ability to function as a body.


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* Wikipedia: "perfect storm...the simultaneous occurrence of events which, taken individually, would be far less powerful than the result of their chance combination. Such occurrences are rare by their very nature, so that even a slight change in any one event contributing to the perfect storm would lessen its overall impact." The phrase was popularized in the book and movie of the same name.

Another critic of the Taxpayers League

Pioneer Press: 3/5/08: Susan Korf: Letters to editor

Burden shifting

Gov. Tim Pawlenty says the Democrats are out of touch with the people. I'd say he's in the same company.

Am I the only one who realizes that "no new taxes" makes cities and counties have to cough up their budget shortfalls with school levies and property tax hikes? I, for one, am tired of shouldering all the burden of the governor's "no new taxes" pledge in my property taxes.

It's time the people spoke up and set our state government straight on spreading the wealth of our shortfall more equitably. The sales tax needs to be hit to spread the responsibility among all Minnesotans, not just property owners. The people who have the most disposable income spend the most and thereby would shoulder the lion's share of the deficit.

If the income tax won't be raised, then the most reasonable solution is an increase in the sales tax.

Susan Korf, Maplewood

South leg development moratorium

With the end of the south leg moratorium and the CoPar lawsuit looming, Mr. Hjelle has sent an email to a group concerned about development in south Maplewood.

Mr. Rossbach has responded to the email on his website.

Mr. Nephew sent a responding email to the group, which he has now published on his website.

Budget squeezes union workers

This article describes the resolution of a health insurance budget squeeze between the city of Eau Claire WI and its union workers. A similar squeeze developed in Maplewood during the election. Once we have an actual budget, we can take a closer look at the costs Maplewood city workers were forced to pay by the Copeland council's assessment freeze.

Eau Claire Leader Telegram: 12/13/07: Julian Emerson: Union reaches accord with city

Thursday's agreement ends an acrimonious situation that placed the union and city leaders at odds. Local 284 representatives contested health care changes, saying the action violated terms of the group's existing contract. But on Thursday city and union officials praised the agreement - approved by Local 284 membership on Wednesday - saying it's time for the two groups to move beyond their differences.

"No one comes away from an agreement like this happy with everything," said Steve Day, an American Federation of State, County and Municipal Employees lawyer representing Local 284. "But this was the best possible resolution for our members, the city and taxpayers."

The accord isn't a win for either side, city Human Resources Director Dale Peters said, but is an example of "two groups working through a very difficult situation."

City Council member Bob Von Haden called the decision a "win-win" for the city and employees, saving job and program cuts necessary if the city had continued its previous health insurance plan.

Sunday economics

Scarcity is not the only source of value:

Internet: 11/29/2007: Daniel Hall: The progressivity of congestion pricing

Common Tragedies Blog:
...
As anyone who's ever relied on a bus transit system can attest, the value of the system is strongly related to the density of the service - both the number of routes and the frequency of service along routes. And as Leape points out, as the service becomes more valuable, more people flock to it, lowering unit costs and making it easier to provide even more and better service.

Mass transit systems are a network good with positive externalities - beyond reducing congestion, buses are a far less polluting alternative than cars - and hence should be subsidized to achieve the socially optimal level of provision. Public roads, on the other hand, are a common pool resource whose value is rapidly degraded when given away for free.
...

Some property tax guides

Pioneer Press: 11/15/07: Editors: PROPERTY TAXES, EXPLAINED, PART II

Pioneer Press:

Just in time for the season, the Citizens League and the Minnesota Taxpayer Association are knocking with more sober explanations of property taxes.

The Minnesota Taxpayers Association (not to be confused with the Taxpayers League of Minnesota) has released an updated version of its booklet called "Understanding Your Property Taxes." The nonpartisan, nonprofit association says the updated booklet "is designed to help taxpayers get involved in their local government budgeting process."

The booklet is available on the Taxpayers Association Web site at www.mntax.org/ cpfr/uypt.php. "Our goal with this booklet is to improve public policy by combining the good judgment of Minnesotans with a better understanding of how their taxes are determined," Lynn Reed of the Taxpayers Association said in a press release.

The booklet may be useful as taxpayers prepare for local budget hearings scheduled in coming weeks. "The combination of foreclosures and associated sub-prime mortgage problems, aid to cities and counties below historical levels, and the passage of many school referendum levies means that property taxes are on nearly everyone's mind," Reed's release said.

The booklet contains comparative spending data for cities and counties and "how-to" suggestions about monitoring tax and budget hearings, appealing property assessments and how to read the "truth-in-taxation" notice that comes out this month.

The Citizens League (www.citizens league.org), meanwhile, an independent, nonpartisan "good government" organization based in St. Paul, has expanded its annual study of homeowner property taxes and also examines school levies and special assessments.

In a series of tables, the Citizens League compares property taxes on average-valued homes in comparable communities and property taxes by level of government in comparable communities.

There's also other helpful tax-related information.