Letter to the Editor

City manager responds

Monday, February 15, 2016

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

Comments
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  • Just looking through the response gives you the impression that government is too active in heretofore private investment matters. What's wrong with this --- Someone wants to put up a motel -- they buy the land, get zoning approved and use 100% their own money to put it up. And, if nobody wants to do that - just leave it undone. Again -- if someone wants to build low cost housing units -- they should do this. Buy the land, get zoning and with 100% their own money build them. If nobody wants to do that , leave it undone. Why involve the government in so many things? The USA once did very well without having government involved in every conceivable thing. You don't want to make the center of people's lives the government. You don't want progress or improvement to turn always on the participation of government. This massive reliance on government is certainly going to come back and bite everyone on the ***.

    -- Posted by bob s on Mon, Feb 15, 2016, at 1:33 PM
  • Always amazes me how City Managers, as transient as they are, pontificate about what they want for the future of their children and grandchildren in their temporary positions, then move on to a bigger paycheck after a few years in McCook. Been happening for years, and will continue to happen. With all due respect, Mr. Schneider, there is little confidence your children or grandchildren will be in SW Nebraska more than a few years.

    -- Posted by allstar69 on Mon, Feb 15, 2016, at 7:08 PM
  • *

    Bob S, evidently you and Dick Trail come from the same mold. Without the incentives like TIF, McCook would still look like it did in the 50's and 60's. Incentives to help the investors is a fact of life in this world, without it, little or nothing happens. TIF is a little hard to understand but the city manager I feel did a decent job of explaining it. TIF is run by the "government" be it local or state. Just part of the deal.

    In the early 1990's the State of Nebraska thought they had the new BMW plant all sewed up, until South Carolina ambushed Nebraska with very large incentives to build the plant in S.C. After that the state realized that in order to at least be competitive they had to offer incentives. I can not remember if TIF was one of the incentives that came from that or not. TIF is one of those incentives need to lure new business.

    I do not really like the fact that incentives are needed to lure new businesses, but it's the way the business world is run now, and without incentives very few investors will even consider McCook. Do you think that "the Donald" would ever build anything, anywhere if it didn't receive incentives to do so? No he wouldn't.

    I applaud the City Manager in his response to Dick Trail, Dick is a lot like Donald Trump was in the last debate, somewhat of a bully, it's my way of thinking, or the highway. Thank you Mr. Schneider for your explanation of TIF and also telling Trail to put a lid on it.

    -- Posted by fit2btied on Mon, Feb 15, 2016, at 7:13 PM
  • *

    Hey allstar, guess you missed one of the reasons that Mr. Schneider was hired......he was the city attorney and had "roots" in our city. I do not remember how long he had lived in McCook before applying for the job, but he was already a citizen of McCook. The city council I thought made it pretty clear that not only did Mr. Schneider have the qualifications to be the city manager, he was also a local citizen that more than likely would be staying around here for more then " a few years" so they would not have to hire another city manager ever 2-3 years.

    -- Posted by fit2btied on Mon, Feb 15, 2016, at 7:19 PM
  • Fit - The idea that everything evolves around government is basically a Marxist idea. The USA ran for hundreds of years with minimal government. Why can't it now? The reason it cant is because , as you say, the Marxist have won. Now everyone plays according to their rules. Why do you say that's great? The USA in the 1950's and 1960's was nowhere near as disgusting as you say it was. It was actually better than now. One exception - medical advances. To say that the Marxist have won and that now nobody should look back or forward is ridiculous. Here are the 3 shining stars in the Marxist world. The countries with pervasive and all encompassing governments --- China, North Korea, Cuba. Why push the USA in that direction?

    -- Posted by bob s on Mon, Feb 15, 2016, at 7:49 PM
  • Nate's response is spot on. He is in the position to advocate for the city. The tools now available to improve the city should be used. To not use them would be a neglect of duty. We may not like the how government functions but these are the current rules of the game. I am glad Nate is our City Manager. I am glad McCook City Council and the MEDC are making positive strides to make the town a better place to live, work and play.

    -- Posted by dennis on Mon, Feb 15, 2016, at 8:50 PM
  • Dennis is always on the cutting edge of things. What he says here is that when the Marxists play their flute we need someone who understands their tune and can dance their dance the way they want it danced. Because, he says, if we have that kind of person the government will throw goodies our way. Clearly Dennis is in the know. Nate is just our guy , he says. Nate, if you are out there, Dennis means that as a compliment

    -- Posted by bob s on Mon, Feb 15, 2016, at 9:45 PM
  • Folks I think you are missing the point here. Nate's points are that 1. LB958 undermines local control and penalizes those who do careful advance financial planning and 2. TIF as it is being used in this case essentially allows the city to give the private developer their property taxes back to them for a time to help pay for the infrastructure needed. Restated, that's 1. less big government and 2. a reduced tax take so a private developer can afford to invest in the community. At the end of that time the public benefits from an increased tax base that they wouldn't have had otherwise. Number 3 is important too: insults don't help public discourse.

    -- Posted by meconomic on Tue, Feb 16, 2016, at 9:25 AM
  • It's about time someone speaks with facts to back up the propaganda Dick loves to throw out. He just enjoys stirring the pot with negativity which is exactly what Trump likes to do. We need leadership with sound mind, goals and someone who is looking out for us. Not someone who just throws around a bunch of crap and can't back it up.

    Congratulations Nate! Hope to keep you around for a long time!

    -- Posted by Rural Citizen on Tue, Feb 16, 2016, at 11:50 AM
  • WOOHOO!!!!! Way to go Nate!! So tired of his point of view. Very nicely counterpointed!! Hopefully he will see this and learn to be more informed and constructive!!

    -- Posted by ds3901 on Tue, Feb 16, 2016, at 3:25 PM
  • Using 15 years of a company's own increased property tax to finance their own project is the ideal way of providing an incentive for growth. The alternative is that business doing nothing in the community, which would hinder growth and opportunity in the community, or using other taxpayers' money to attract the same amount of growth. TIF is actually the conservative alternative to providing general tax revenue to finance community growth because it's not a burden on other taxpayers, only the company paying taxes on that property bears the burden and the city doesn't lose tax revenue because the improvements that generate the additional revenue, would never be realized without TIF.The city has an important duty to make sure they're not giving a blank check and all costs being funded are reasonable and accounted for, but their role is limited and doesn't grow the government. It grows the business at its own expense and the tax revenue that can be collected after that first 15 years.

    -- Posted by Aaron Kircher on Sat, Feb 20, 2016, at 10:52 PM
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