Posted: 12/18/07
County takes out $3 million loan; flood repairs have emptied coffers
By Charlie Warner
Argus News Editor
Even though it's been a full four months since the flash floods of August ravaged Southeast Minnesota, the effects of the massive damage to private and public property are still being felt. That was quite evident when Houston County Treasurer Audrey Petersen brought some disturbing news to the county board.
"I've used all the property tax money that has come in this past fall, cashed in money market certificates, and still won't have enough money to make payroll," Petersen told the commissioners during the Tuesday, Dec. 11 meeting. The reason for the county's shortfall is the more than $5 million the county has paid out to repair roads and bridges damaged by the August floods, while not receiving any of the millions of dollars in flood relief promised by the state and federal governments.
Petersen requested the commissioners approve a motion to enter into a financial agreement with Eitzen State Bank for a $3 million line of credit. The money would be loaned out in $1 million increments. The board approved Petersen's request Tuesday morning, and according to the county treasurer, the county made the first $1 million draw Tuesday afternoon.
Petersen, who has worked in the county treasurer's office for more than five decades, said this is the first time she can remember the county actually had to go to a bank and take out a loan. There were several times during the 1950's when the county was forced to sell warrants until enough money was brought in to pay back the warrants. But it's been well over 50 years since the county's coffers have been this low.
County Highway Engineer Marcus Evans informed the county board two different payments from FEMA are on their way- one for $1,056,660.75, which covers completed projects and the other for $4,150,577.83, "but we just don't know exactly when we will receive those checks," Evans said. Due to some errors in FEMA's calculations, Houston County will be receiving additional money than the $5.2 million Evans was told has been approved by the federal government.
During a special session, the Minnesota State Legislature approved a $157 million flood relief package for seven counties in Southeast Minnesota affected by the August floods. But like the federal money "the check's in the mail," when it comes to the proposed state flood relief.
"I was on pins and needles during the past two weeks, wondering what we were going to do," Petersen said during an interview Wednesday morning. "When the county receives the property taxes, we send payments out to the various cities, townships, and school districts in the county. But I could see we were going to be coming up short with our final payments this month.
"There was no county board meeting on Dec. 4 (due to a county board conference) and County Attorney Rick Jackson was out of the office," Petersen continued. "I checked with the State Auditor's office to see if it was legal for a county to set up a line of credit with a lending institution. At first they said no. But then, after doing some checking, they found a law that would permit this if it was due to a natural disaster."
Before Petersen could get everything in place and get county board approval Dec. 11, she had to notify the Caledonia School District their property tax payment would have to be delayed one week. Petersen said she was able to make that payment Tuesday afternoon, after making the loan transaction with Eitzen State Bank.
"This has been a very difficult situation," the county treasurer added. "The county is required to pay for all the materials and labor up front, and then send in the bills to the state and FEMA. Then, we must wait. We have money in reserves, but I really didn't want to tap into that. It's at six percent. We couldn't make that kind of interest now if I had to pull that money out. Hopefully, the money from FEMA and the state will arrive soon, so we don't have to make another draw."
When asked if the county would be reimbursed for the interest incurred on the $1 million draw, Petersen replied she did not think so.
Caledonia Argus
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P.O. Box 227
Caledonia, MN 55921-0227
507/724-3475
E-Mail: editor.argus@ecm-inc.com