Council to look into options for possible annexation

By Chad Koenen

Publisher

To annex or not to annex—that was the question facing the New York Mills City Council last week.

During its regularly scheduled meeting on Tuesday night, the council heard from Todd Hagen, of Ehlers, about what annexation of 32 properties in Newton Township could mean for NY Mills.

The 32 properties being discussed for potential annexation are located in Newton Township, just outside of the city limits. By annexing the properties into the city limits, the current city residents could see a slight decrease in the amount of taxes they pay in 2023 from what they would see without annexation. 

In his comparison for the council, Hagen said a median household value of $170,000 could see a decrease by about $40 in 2023 over what they could pay without annexation. He said this was due to the addition of a new tax base, without adding new expenses.

Annexation into the city limits could also result in a savings for the affected property owners who could see a slight decrease in the amount of taxes, assessments and utilities they currently pay. Hagen said 57 percent of the 32 affected property owners would see a decrease in the amount of taxes, assessments and utilities they pay, while 47 percent of the property owners would see a slight increase. 

While the tax base would increase, the amount of money the city receives in its public utilities will take about a $12,000 per year hit. That’s because the affected properties in Newton Township pay a premium for city utility services since they are not in the city limits, but still receive the services. 

“Because we wouldn’t have that premium on the rates and charges for that area the city would be reducing its revenues,” said Hagen of the premium rate. “They would pay less utility rates when they come and that means the city would lose some revenue on the utilities as well.”

While the utility revenue may decrease, the city’s tax base would increase if the properties would be annexed into the city limits. By adding the 32 properties to the city’s tax base, NY Mills would add $25,011 to the city’s tax capacity. Under the scenario presented last week, the city would pay $3,796 in annexation payments for two years to Newton Township. 

Annexing the properties into the city limits would essentially increase revenues by just about $9,000 per year when accounting for the decrease in revenue for utilities, payment to Newton Township and increase in tax base. 

“It’s a good scenario for the city that’s for sure. It’s a good time to consider the annexation as it is neutral for taxes, assessments and fees.”

Todd Hagen

In addition to creating more revenue, Hagen said annexation would result in a more cohesive tax base and keep the City of NY Mills healthy in terms of overall revenue. 

The council said the next step would be to meet with representatives from Newton Township to discuss future annexation options. 

In other news

• Heard the combined gross sales for Mills Liquors September were up 4 percent over prior year and the net revenues for the month of September were up 1 percent over prior year. 

• Heard the fire department responded to 44 calls in August and September, a majority of which were medical calls. The department also received a DNR 50/50 matching grant for $2,100. The grant will be used to help purchase four new pagers, 20 wild land shirts for grass fires, 200 feet of hose and wild land fire tools.

• Heard the police department responded to 141 calls for service in September and issued five citations and one arrest. The police department is still looking to hire one or two part-time officers. 

• Heard the Main Lift Station Project is nearing completion in the city with the contractors working on punch list items. The council also heard that the windows and railing was set to be installed at the Lund Park concessions building last week. 

• Heard an update about West Central Initiative from Rebecca Peterson, who informed the council that the organization has remained busy during COVID-19 with a number of financing and grant opportunities available during the pandemic. 

• Heard the city received 21 name suggestions for the Government Services building in NY Mills. A committee chose the name City Center. 

• Approved the purchase of a tax forfeited property at 105 South Main Ave in NY Mills from Otter Tail County. The sale was for $300 and city clerk Julie Roberts estimated it would cost approximately $7,000-7,500 to clean up the property.