City manager responds

Dear Editor,

I am writing in response to the February 9, 2016 opinion piece titled "A Variety of Thoughts," authored by Dick Trail. I have found Dick's writings to be divisive and I do not want to contribute to such negativity. However, I am not the type of person who will allow half-truths or untruths to go unchecked. As such, I would like to address three particulars from his article.

First, I would like to address LB 958. This legislation would remove the current exceptions from the State's restricted fund formula for municipalities and other taxing authorities. I am not a proponent of this legislation, not because I don't believe that property tax owners deserve a break, they do. However, it is my belief that this legislation harms the city in Three ways. It would potentially hamstring our municipalities' ability to purchase needed assets and save for construction projects; it would continue the trend of defunding our cities without providing alternate sources of income to ensure continued provision of services and it would strip our local democratic autonomy. Nebraska law states that a city can't adopt a budget containing a total of budgeted restricted funds more than the prior year's total of budgeted restricted funds plus allowable increases. The most common examples of restricted funds include property tax, payments in lieu of property tax, local option sales tax, motor vehicle tax and state aid. From one year to the next, the State allows the City to increase its restricted funds limit by 2.5 percent (or more if the City's valuation were to increase by more than 2.5 percent due to new construction or improvements to real property) and up to additional 1 percent if approved by at least 75 percent of the city council. There are also exceptions that provide political subdivisions the authority to exclude restricted funds budgeted for: 1) capital improvements; 2) sinking funds for the acquisition or replacement of personal property with a useful life of five years or more; 3) funds pledged to retire certain bonded indebtedness and 4) the payment of certain judgments. Under LB 958, the four exceptions listed above would be put into the restricted fund category. Any attempt to do one of the four listed items would require that the City (or other taxing authority) hold an election to determine whether or not these items would be allowable, assuming the formerly excepted item places the City over its restricted fund limit. The problem is that the legislation would remove the authority of our democratically elected council members to determine whether these types of activities should be included as a budgeted item during the City's regular budgeting process. We elect our council members to serve on our behalf. To remove this authority from our local officials would usurp the budget process and could lead to increased elections costs that are unnecessary. A specific example of negative LB 958 ramifications can be seen with the Village of Nelson. Nelson has been saving money in a sinking fund for years to provide for a new community building. This saving strategy has been approved by Nelson's elected representatives. The new legislation would require the City of Nelson, retroactively, to hold an election on whether to build despite the years of careful planning at the City level, as the additional money would put them over their restricted fund limit. A vote after the fact would be required. This would lead to additional red tape after the matter has already been decided by the Nelson community. A potential hypothetical example could see a duly elected municipal body frustrated in its ability to save and plan for the purchase of a fire truck. Regardless of the fiscal consideration given by our council members during the budget process, if the formerly excepted amount were to exceed our restricted funds, an election would have to be held and additional tax payer resources would be utilized. Democratic authority would be taken from the people we have entrusted to make these types of fiscal decisions. Another big concern with LB 958 is that it will add to the continued legacy of our State legislature to place economic burdens on our municipalities without providing our municipalities with additional financial assistance to provide valuable services to our citizens. When you couple the lack of State aide with the legislature's continued insistence of burdening cities with unfunded mandates, it promulgates the notion that our legislature wants to place burden after burden on our cities without care as to whether our municipalities have the resources to achieve their marching orders from the State. This mind frame is frustrating as it leads to resource shortages as well as serving to put strain on our ability to carry out our decreed responsibilities.

Second, Dick posits, "Why all of a sudden does McCook need another 100 new motel rooms? And where is the money coming from to give investors incentive to build new motels and subsidize housing? A $1,000,000 here and another $1,000,000 there where does all that money come from? No wonder property owners, those who pay taxes, are up in arms." I want to answer Dick's first question with an answer that he will appreciate. A private developer who wants to make money believes in the theory of capitalism (unlike those no good college kids Dick expresses his deep hatred for in his article)! Based on a hotel study and independent research, the developer believes a new hotel would be successful in McCook. The developer is willing to invest $7,492,000 of its own money to build a hotel. The developer is taking a risk that its business sense is correct and that this investment will prove to be a profitable venture. The pluck displayed by the developer should be celebrated by Dick as a victory for the free market system. The second question asked by Dick in this section of his article infuriates me. With his second question, Dick is suggesting that McCook's tax payers are putting up $1,000,000 of tax payer money in order to incentivize the development of a new hotel. Dick's assumption is negligently erroneous and is a flat out, passive aggressive lie!!! Had Dick bothered to pick up his phone and contact me or had he attended the February 8, 2016 Planning Commission meeting in order to conduct research necessary to pen an accurate article, Dick would have learned that a private investor is contemplating taking out a PRIVATE loan in the amount of $1,400,000 in order to finance a Tax Increment Financing Bond. In order to gain eligibility for Tax Increment Financing, the investor must enter into a contract with the Community Development Agency whereby the City of McCook sells the Bond to the developer. In return, the developer will purchase the Bond with it's privately financed loan (ie. the $1,400,000). The Community Development Agency will hold the $1,400,000 private investment and will pay the TIF eligible expenses that are outlined in the agreement. In order to pay the loan to the private lender, the developer or its assignee will receive the increase in taxes attributable to the new construction over a 15 year period of time. The lender is more apt to lend money in these types of TIF funding arrangements because the loan is secured by the property tax increases which is as stable a funding source as is possible. No other taxing source will be tapped for the repayment of the $1,400,000, so Dick can feel secure in the knowledge that none of his property tax will be going to loan repayments for the project. After the 15 years have expired, the building structure and the property will both be on the tax rolls, just like all other commercial and residential properties in town. When the property is placed on the tax roll in its entirety, McCook will potentially be the biggest winner. The current unimproved value of the property is estimated to be $68,824. With improvements, the value of the property is estimated to be $6,750,000! The valuation would increase 100 times over. The more assets there are to draw taxes from, the less need there is from the taxing entities to raise levy rates which serves to increase property taxes. This could be a huge win for McCook and its tax payers. In the future, I would ask Dick to take the time to check the facts before publishing his story, even if it is an opinion piece, as it will avoid misleading his readers. It also will spare him from the accusation that he is making up lies to advance his agenda. Continued negligence should not be tolerated in his opinion pieces. Improved accuracy would also establish Dick as a trustworthy and honest source of information for his readers.

Third, and for me the most important thing I want to stress, is that Dick's weekly name calling is counterproductive and juvenile. In his column, Dick opines that, "tax spenders, including our own city manager, are squealing like a pig under a gate about having to control their spending." I realize Dick is speaking figuratively, but this kind of comment is the type of comment that does nothing more than disparage other individuals and myself who dare to have a different point of view than himself. This notion is divisive and speaks poorly as to his character. From my perspective, Dick appears to value himself and his beliefs more than others, without considering there may be an equally valid reason for alternative tenets. Dick comes off as a self-important bully who is unwilling to acknowledge that we are no longer living in the 1950s. In doing so, he belittles anything he perceives to be "pro-government". Again, speaking for myself, I believe our locality has to look out for its own interests. No other entity, not the Feds nor the State, will put McCook or our surrounding communities and partners on their front burner. We are always going to play second fiddle to the Omahas, Lincolns and Kearneys. Despite this, there is reason for optimism. We have a talented population base who is willing to work hard to make McCook the best it can be. One reason I wanted the job of city manager was that I had come to the realization that if we, as Southwest Nebraska residents, want to keep our communities vibrant, we must concentrate our improvement efforts on ourselves. McCook needs to stay relevant in order to attract others to our community. While I am not advocating big spending (I'm sure Dick would not agree), I do believe we must invest in our community and keep as many in our toolbox as possible to continue McCook's growth. I'm assuming Dick wants to see McCook survive into the future. It's something that I want to see for my children and grandchildren. To accomplish this goal, we must be willing to invest in our community wisely.

With all of these things said, I would implore Dick to consider toning down the negative rhetoric. Respecting different points of view is important as it keeps our government on the right track while maintaining civility, peace and order. Derogatory and mean spirited cheap shots only serve to perpetuate the "us versus them" mentality that has held American politics hostage for so long. We need to have civil discussions and not fear sharing our opinions. The sharing of different view points allows for the best possible government. I'm sure that my words will not be heard by Dick as he has shown an unwillingness to change his tune over the years, but, you never know. I will hold out hope that maybe he will change his disrespectful and irresponsible ways. Dick has the opportunity to get his message across to others in a more constructive manner. More positivity and constructive criticism may lead to an increase in his readership.

I hope this is the case. Regardless, the ball is in Dick's court.

Nate Schneider

City Manager

McCook, Nebraska