Elkader Council approves property tax increase to pay off latest loan
By Willis Patenaude | Times-Register
The last time the Elkader City Council met, the agenda listed a public hearing for Resolution 2025-13, the purpose of which was to enter into a General Obligation Corporate Purpose Loan Agreement in an amount not to exceed $465,000 to be used for “acquiring and equipping a police vehicle, a fire truck and a snow plow.”
The resolution passed unanimously without public comment, joining a growing list of outstanding loans the city is already paying off, including a combined loan that includes High Street NE (from Gunder Road to Hwy 13); a sewer line from the west lift station to the wastewater treatment plant; the public works building that also had a police vehicle in it; Carter Street; the initial Keystone Bridge (for engineering) with a street sweeper, fire truck and a police vehicle; an ambulance; the remainder of the Keystone Bridge project; two sewer loans; and one water loan.
According to the State Treasurer’s Outstanding Obligations Report, as of June 2024, Elkader had a total debt obligation of $6.1 million, with the bulk of the loans listed remaining on the books past 2030 and beyond. The city is inching ever closer to its $5 million debt capacity with a little over $1 million of wiggle room remaining.
In surrounding communities and those of similar size, including but not limited to, Fayette, Manly, Tripoli, Central City, Alton, Buffalo, Lake Park, St. Ansgar, Clarksville, Strawberry Point, Calmar, Volga, Guttenberg and Melcher-Dallas, all had lower debt obligations. Additionally, Elkader’s per capita debt of $5,085 ranked 645th out of 733 reporting cities, making it one of the highest in the state.
The need for the loan is twofold. First, the vehicles listed all need to be replaced, which was mentioned by city council member Tony Hauber in a separate interview. Hauber stated, “These are operational vehicles whose purchases have been part of our fleet plan for a few years now. The vehicles we are replacing run a lot of hard miles, and this requires us to replace them on a schedule or else the maintenance charges start to diminish the general budget, interrupt services and burden our workforce.”
This is especially true of the 2004 snowplow, which will cost an estimated $210,000. Over the years, it has needed constant repairs to extend its life, including repairing the front wheel bearings, putting in a new rear end. Both axle shafts have broken, the jaws that hold the tailgate shut on the bottom side are getting to the point where they’re worn out and, two years ago, the snowplow broke down and had to be towed to Edgewood Auto to have the fuel injection system gone through.
Needless to say, it’s seen better days, but if that was the case, why wait so long to repair it? “We tried to make it last as long as we could. It is a big ticket item,” Cowsert said.
The 2008 fire truck was scheduled for replacement in 2027, as suggested by the National Fire Insurance Program, and will cost the city around $165,000 of the total $531,000, since the cost is shared between four townships. As for the police car, which is just a 2020 model, the reason for replacement and spending $62,000 is due to wanting to purchase new vehicles when they reach 100,000 miles.
Cowsert explained, “At a certain point of miles, you start needing to make more repairs and then you have to weigh the cost of repairs over a new car. With emergency vehicles, you can’t have a car that is having problems and always in the shop for repairs.”
Hauber added a lack of replacement and managing constant repairs could lead to potential cuts in services. He laid some of the blame for costs on inflation and supply chain issues.
The second reason for the loan is because the city is unable to fully fund the vehicle replacement schedule, which is in excess of “hundreds of thousands of dollars,” Cowsert said. The actual amount is somewhere near $400,000 to fully fund the replacements on schedule, but as Cowsert noted, the city doesn’t “have enough money in the general fund to do that.”
Still, the city will need to repay the five-year loan with a 5.49 interest rate through FreedomBank, and the method the city council voted for was to authorize levying property tax for it.
According to Cowsert, a home valued at $100,000 will see a yearly increase of $87, which will start “right away.” Property taxes in general have increased over the last year, with a 12 percent increase, as confirmed by Cowsert. Since 2020, property taxes have gone up every year.
Cowsert indicated taxable valuation, which increased by $11 million since 2020 from just over $39,000 to just under $51,000, is somewhat responsible. The cause for the increase is likely due to “new construction or revaluation,” she said.
Clayton County Assessor Andy Loan was reached for comment and clarification, but did not respond.
Cowsert suggested that, when taxable valuations rise, it “helps keep the tax rate down because there is more to spread the static cost over.” Since 2020, regardless of what happened with taxable valuation, property taxes increased.
The need to raise property taxes isn’t just linked to this loan, but also outstanding obligations, including the Keystone Bridge. As far as Hauber sees it, the costs associated with this latest increase in property taxes “were planned and are necessary.” Authorizing a loan in this regard, he said, “has been Elkader’s standard operating procedure for as long as I can recall. It’s no different than how my family operates. We purchase vehicles on debt.”
On the issue of property taxes, Hauber said, “I understand that, as the American economy falters, we can be wary of any increases to our taxes, [but] there is no way to save money by cutting these operational expenses.”
With the exception of Hauber and Elkader Mayor Josh Pope, who doesn’t vote, no other members of the city council responded with comments for this article.
