Cannabis ordinance to follow county’s lead
By Robert Williams
Colleen Hoffman, managing partner at Hoffman, Philipp, & Knutson accounting firm in Thief River Falls, Minn., presented the 2022 audit of the city of Vergas to the city council on Tuesday, Aug. 8.
“You have very little debt relative to other cities I audit,” Hoffman said.
Hoffman highlighted Vergas’ total net worth of nearly $4 million ($3,740,876) taking into consideration the city’s net investment in capital assets. At the end of the current fiscal year, the city had total debt outstanding of $1,182,000.
Minnesota Statutes limit the amount of debt that the city may have to three percent of its total market value, excluding revenue bonds. At the end of 2022, overall debt of the city is below the three percent debt limit.
Hoffman also praised the work of city clerk-treasurer Julie Lammers, with whom she works to complete the annual audit and lauded the efforts of liquor store manager Kyle Theisen.
“I can tell you what you get from Julie for your planning and budgeting and making your decisions monthly is accurate and good information,” said Hoffman. “I don’t have to fix stuff and that’s not always the case. It’s a pleasure to work on the audit with Julie. She knows what she’s doing and her numbers are correct.”
The Vergas Liquor Store was able to transfer $25,000 to the general fund, despite the Liquor Enterprise Fund reporting an operating loss in 2022 of $7,946, due to an increase in personal services.
“Wages went up significantly,” said Hoffman.
Hoffman noted the loss is partly due to adding a store manager and an assistant that increased wages, but she also commended the excellent job Theisen is doing managing the liquor store.
“That should level out,” Hoffman said. “With your off-sale and the community supporting it, you’re doing quite well.”
Both Mayor Julie Bruhn and councilwoman Natalie Fischer expressed a need to utilize a monthly tracking spreadsheet provided by Hoffman to the liquor store to keep closer tabs on the budget.
“I wouldn’t want to find again, in the 2023 budget, that we are at an operating loss,” said Bruhn.
Hoffman also stated that the liquor store and city hall sharing the same building created a depreciation of $22,928 as the store paid for renovations.
“When you look at you lost $8,000, $22,000 of that is depreciation and that is not even a cash number,” she said. “There are some ways to maneuver around that. If a fund has an external source of revenue, like sewer, water and liquor have a revenue source, you try to have those be as break even as you can because you can allocate the wages to them that are appropriate for maintenance and things like that. The general fund really has no general source of revenue other than taxes.”
In other proprietary funds, the Sewer Enterprise Fund reported an operating income of $16,686, indicating they are collecting for services at a rate exceeding cost.
The Water Enterprise Fund reported an operating loss of $15,420, primarily as a result of interest expense and depreciation.
Results from the audit are available on pages 6-7 of this issue.
Mayor Bruhn noted a timely need to address public use of cannabis since it has been made legal. The issue is also compounded by Vergas not having a general smoking ordinance beyond the provisions laid out in the Minnesota Clean Indoor Air Act.
The Otter Tail County Board of Commissioners adopted a proposed ordinance earlier in the day that will be put up for public comment.
Bruhn introduced a proposed ordinance for Vergas regulating cannabis and cannabis-derived products in public places. The ordinance effectively bans the use of those products in a public place, based on the legalization law that declares use legal in private spaces.
“We’re proposing what is consistent with the Otter Tail County Board of Commissioners and what the county is proposing so there is some consistency among communities,” said Bruhn.
Public permits will eventually be available when the Office of Cannabis Management opens in January.
A public hearing for the Vergas ordinance will be scheduled in September after the county’s public hearing.
Veterans Memorial committee members John Lotzer and Lyle Krieg got board approval to add three maple trees located between the baseball fence and the memorial. The trees will be placed so they do not interfere with either venue after verification of the planting location by the Vergas Park Board. The project also includes more landscape edging and decorative rock.
A 22-foot concrete pad will also be installed to hold a 20-foot gazebo. That project was already approved by the council, but the area has yet to be excavated. Timeline on that project is next spring.
CornerStone Youth and Community Center Executive Director Mackenzie Hamm gave the council a presentation of the history of CornerStone and an update to its present day status. Hamm was accompanied by youth members of CornerStone, who shared their thoughts on the benefits of the center while inviting more kids from Vergas to be part of the youth center. More than 170 kids are registered with the center and over the past month there have been 50 different kids attending with more expected as CornerStone gets more promotion.