During the June 8 Canton City Council meeting, property owner Karl Butenhoff came before the council to discuss the city’s current utility billing practices for housing units. Butenhoff purchased the Canton apartments located on Highway 52 earlier this year.
He began his discussion with the council by introducing himself and giving a brief background and progress he has made on cleaning up and remodeling the apartments.
While he pointed out the exteriors still need a lot of work, several of the units’ interiors have been upgraded.
Butenhoff said he grew up near Winona and has worked and lived in small farming communities in Minnesota and Wisconsin. “I don’t want to come here and make it seem like it’s me against the city,” he said. “I want to have a good relationship with the city. I’ve been putting in a ton of time and money into fixing (the apartments) up.”
The current billing practices, however, are “the biggest hindrance” for Butenhoff and for other investors and property owners in town.
“I really want to make the apartments a clean, safe place to live and an asset to the community, but the excess cost of water/sewer is currently the main hurdle in continuing to invest into the properties,” he said.
With the eight apartments in his property, Butenhoff is billed for eight separate base fees and water usages for his complex. “This disincentivizes further investment into the properties,” he said.
In a memo to the council, sent prior to the meeting, City Clerk Brock Bergey explained Canton’s current billing practice for the three multi-unit buildings in Canton, which include the two owned by Butenhoff as well as the Canton Manor.
Each of these three buildings is served by one water meter. In Butenhoff’s case, each of his two buildings has four units – meaning four units are being serviced by one meter. Currently, the monthly water service (base) charge of $38 is multiplied by four to account for each of the four units per building. The same is true of the $35 monthly sewer charge. Bergey pointed out this methodology is also in place for the monthly billing at Canton Manor, with eight units in that building.
Butenhoff told the council he has spoken with the manager of the Canton Apartments and found he was unaware of these billing practices as the utility bills are not itemized to explain those multiple base charges, but appear as one lump sum.
He also explained that he did his due diligence before purchasing the property and has worked with Bergey to gather information regarding his utility billing. “He’s been awesome to work with, I want to make that clear. But, with the current set up, we pay eight base fees and water usages. This is extremely rare,” he said.
Butenhoff presented information on billing practices by other nearby cities, pointing out that Harmony, Spring Grove, Preston, Winona and Mabel all charge based on a single meter, regardless of the number of units served.
Bergey told the council in a memo, “I have concluded that our current billing practice for multi-unit buildings is not unique. Locally, Lanesboro charges a monthly water and sewer base fee based on units rather than meters.”
Both Bergey and Butenhoff provided information from three other cities in Minnesota that charge multiple service charges, similarly to Canton.
Butenhoff noted that all three of these other cities lack clean, affordable housing. He also pointed out that Canton’s billing practices also place a higher burden on the property owners than these other cities.
Mathematically, Butenhoff is paying for eight service charges a month for water, totaling $304 a month; eight service charges for sewer service, totaling $280 a month; plus the actual usage fees for both services.
He explained that utility expenses typically make up about 3% of a total operating budget for a property. “We pay 26% on water and sewer,” he said. “We want to continue investing, gutting and rehabbing those units and finding quality tenants.”
Butenhoff proposed the city change its billing practices for multi-unit housing complexes to a one-meter system. He recognized, however, that this would result in an $11,000 loss in annual utility revenue for the city. He explained the change was needed to make sure the city’s billing practices were “just and equitable” for all the residents.
Mayor Nick Prestby thanked Butenhoff for investing in Canton. However, he said, Butenhoff must have known what those utility charges were when he bought the property. “We can’t change things mid-stream,” he added. “We worked those fees into our budget for the year. We can’t budge on it right now, but as we look at our budget for next year, maybe we can take a look at it again.”
Butenhoff said he understands how city government works and added, “I’m a very reasonable person. I like data and data talks. I just want to be treated like everyone else. I understand the need for a raise in fees, due to the city infrastructure. I want to help pay for my portion of that. But this is not just, it is not equitable. It’s a bad look, I hate to say that, but it is.”
He concluded by asking the council discuss the matter again when it is planning the 2023 budget. “I understand that raising another $11,000 may seem like a lot, but you could adjust formula,” suggesting the city put more of the burden on those who are using the most water.
“I don’t think those additional costs should be passed on to our residents,” interjected Carl Ernst. “Personally, I think you can take your costs and divide it among the number of tenants you have.”
Butenhoff didn’t feel he could do that, again arguing that the billing practices are not supportive of providing affordable housing. He thanked the council for its time and once again implored them to discuss the matter further as it looks at the budget.
Reports
In his monthly report, Prestby said MiEnergy will be beginning work in town to run electrical lines underground. Property owners will be responsible for costs to hook their services to the main lines and upgrading meters.
He pointed out that the Canton American Legion had held a great Memorial Day program and the dedication of the Canton Veteran’s Memorial was “awesome.”
Prestby also noted over 150 flags were placed throughout the community as part of the Avenue of Flags program.
At last month’s meeting, the council had discussed holding a day when volunteers could help fellow residents with some clean-up efforts if needed. Prestby said the city advertised it on social media as well as in the newsletter, but there was little response, so the city will not pursue the service.
The Canton ball field is being used again and it looks nice, Prestby reported.
Property inspections will be held on June 15 with a deputy joining Councilman Josh Nordsving and himself on a tour of town.
In regards to the conflict resolution process the city is undergoing through the League of Minnesota Cities, Prestby noted their representative will attend the July council meeting to observe how the city conducts business.
In his clerk’s report, Bergey told the council the application for funding for the street and utility project has been submitted. “Now, it’s just a waiting game,” he said.
He is working on a grant application through the Southern Minnesota Initiative Foundation to help expand the city’s identity and brand – for promotional and marketing dollars. The grant would be for $10,000 and the city would be informed of the grant success or denial in August.
In regards to nuisance property cases, one property owner had his first day in court while another case regarding a car being parked on the street this winter had been dismissed. Bergey noted this dismissal was due to a question of whether the car was parked on the street or in the right of way.
As a result of Canton’s investment into the summer recreation program, Bergey noted it is now known as the Mabel-Canton summer recreation program and the shirts reflect that as well.
Citywide garage sales will be held August 19 and 20 in Canton and residents should contact city hall if they are interested in participating.
In the public works report, Jon Nordsving noted that the ash tree in the park will be removed for safety reasons and noted there are also a lot of dead ash trees in the city boulevards. Residents are responsible for removing those trees.
Other business
The council tabled the issue of purchasing carpet to be installed at the town hall, in the entry way and around the stage. Other flooring options were discussed for ease of cleaning and practicality. The council will get prices for other options and discuss the matter in July.
The city approved a request to close Main Street on August 20 for a pop-up market, from 8 a.m. to 4 p.m. The request will now have to be approved by the county as Main Street is also a county road.
The council approved a request from the Canton Community Association to use the town hall on October 29 for a Halloween dance.
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