St. Germain board mulls how to finance replacement of 74 roads

The St. Germain town board spent more than an hour of its May 21 meeting discussing how to pay for the total replacement of 74 roads in the community. While many questions were raised, few answers presented themselves.

Over the course of the last few months, the board has spent hours in public discussions regarding the condition of the town’s roads. In March, supervisors came to a consensus the scope of the problems is so significant they must consider asking permission from the town’s electors to raise the tax levy.

In all, 74 town roads will need to be completely replaced, according to observations which were cataloged and quantified by town board chairman Tom Christensen, supervisor Kalisa Mortag, and Department of Public Works superintendent Tom Stoltman.

Christensen compiled the data into a spreadsheet and presented it at a March 27 meeting. The focus of that meeting was largely how the road replacements would be prioritized and by what criteria they should be judged. Financing was only touched upon.

During that meeting, supervisor Jim Swenson asked Christensen if he’d totaled the cost of all road replacements based on an estimate from Pitlik and Wick, a local road-building firm.

“No, I’m scared to,” Christensen replied. “I can do that, but that’s just going to be horrendous.”

“Well,” Swenson said, “we’ve got to start somewhere.”

“It’s $6,172,000,” said Christensen after the calculation.

In 2022, electors approved a tax increase of $200,000 for a special (ongoing) road-maintenance program, and that amount will be included in the annual levy going forward. However, that money can only be used for roads which need repairs; not those which need to be replaced.

In the May 21 meeting, the discussion centered entirely around financing the project. 

“I’m going to try to be as broad as I can with this, because I know it can be a sensitive topic,” said newly-minted supervisor Patric Niggemeier shortly into the conversation. “I don’t want to see anybody’s taxes raised. If it is, it’s the nuke option; it’s the last thing we do. But have we looked into maybe liquidating some of the town’s assets?” 

“The answer to that is no,” Christensen replied.

“We haven’t looked into maybe selling some land, or equipment?” Niggemeier asked. “Or the golf course? Anything of that nature?”

St. Germain has operated a municipally-owned golf course since 1994.

“Well, the only asset that would be large enough to even put a dent in this would be the golf course,” Christensen said.

“Can we maybe discuss this?” Niggemeier asked. 

“The electors would have to approve it, but you’re welcome to discuss it,” Christensen said, referring to a statutory requirement of elector approval for the purchase or sale of any town structures and/or real estate.

“If it would avoid having to raise taxes,” Niggemeier asked, “Would putting it on the market help to pay for this ginormous project?”

“If there’s one thing I learned about asphalt,” he told Christensen, “It’s — unless these numbers you have on your spreadsheet are locked — that number only climbs per year.”

“I said right now it’s close to seven million,” Christensen replied, “But by the time we get done, we’ll probably have spent ten million easily. It could be more, but guessing that is going to be tough. Off the top of my head, I’m not sure what the price of the golf course would be; what we could start to think that the golf course would generate in revenue. Realistically, I think you’re somewhere in the four-million-dollar range. So, yes, that will make a dent in it, and once you’ve made that dent, you’re done.”

“That’s almost like a Band-Aid,” said Mortag. “You’re just going to get a chunk, and most likely, not enough to do the roads on this list, which aren’t even — what? — half of our roads?”

“It would be losing a wonderful asset for the town,” Christensen said. “In my book, it would be very similar to cutting your nose off in spite of your face.”

“Fair enough,” replied Niggemeier.

“That’s my opinion,” Christensen said. “If it was a vote as to put it towards the electors, I would vote no.”

“If we want to talk about increasing the amount of money the golf course puts back towards the town and having a chunk to help with the roads,” Mortag said, “I’d be willing to talk about that.”

The golf course returns a percentage of its profit each year to the town coffers.

“Remember,” Christensen said, “When the golf course was built, part of the sales pitch was that it was going to be this cash cow that was going to really help everybody’s taxes. And that’s just not true. It wasn’t true then, and it isn’t true now.”

“If you look at the Eagle River golf course, they’re constantly trying to take money from it, and it’s constantly having problems. If you look at the Rhinelander golf course, they’re constantly trying to take money from it, and it continues to have problems.”

“If you start taking more than what we’re talking now out of the golf course,” he said, “You’re going to delay the upkeep of the course. They tried to do that earlier in the life of the golf course, and they got $25,000 here or ten here, and it was pretty sporadic. At least now, we’re on a formula. It’s not a big formula, but it happens every year.”

“Do we want to continue to upgrade the golf course and make the strides?” Christensen asked. “It takes a lot of money to run a golf course.” 

“But if it’s not profitable for the town, why do we have it?” Niggemeier asked.

“It is profitable for the town,” Christensen replied. “It’s paying for itself and updating itself, and it’s a draw for tourists that come to our town and many of our residents take advantage of it.”

Mortag pointed out the recent upgrade of a half-million-dollar cart-barn at the golf course was paid for by course profits.

“So, it’s got the roughly $25,000 it brings back each year,” said supervisor Brian Cooper, “Depending on how much money they spend over there. And then that formula, you might as well throw it out the window. It’s not bringing a substantial amount back to the budget, but it’s paying for itself. Everybody wants to say it brings people into town. Well, it does, but they’re making money at the golf course that doesn’t come back to the town.”

“I feel like if we’re going to go to the electors and talk about needing this money over so many years to replace the roads,” Mortag said, “It would help to say ‘And to not increase your taxes as much, we’re taking out of the golf course budget this much per year to help with those roads’. I just feel like it would help a little, even though it’s going to be a big hit.”

“It should be something substantial,” Cooper said. “It’s an asset of the town, but it’s not acting like an asset of the town, because it’s not providing much.”

“But it’s doing a beautiful job of upgrading and maintaining itself,” Mortag replied.

“It’s finally debt-free,” Christensen said. “Boards in the past took money from it, then went out and borrowed money for it. Did that make sense?”

“If you really wanted to seriously consider that,” he said, “Again, I’ll point out that’s been disastrous for other municipal golf courses…So you’re heading down a slippery slope that’s detrimental to the golf course. I also think if you look at municipal golf courses across Wisconsin, they aren’t cash cows for any of the communities that have them. So you’re asking them to do something that — just down the road — is a failure. You’re asking us to put our golf course into that same path.”

“And it still isn’t going to put a big dent into the six-million-dollar project of replacing roads that need to be replaced,” Christensen concluded.

Sue Niggemeier — appearing via Zoom — asked for an explanation as to how the town got behind on replacing roads in the first place.

“Boards in the past would have had to increase the levy substantially in order to keep up with the roads,” the chairman answered.

“Two years ago was the first levy increase this town has had in anybody’s memory,” he said. “It’s been since the 1970s. So this town has operated very efficiently for many, many years. Unfortunately, everything is starting to catch up. When they did the roads in the early 1990s, they went out and borrowed — I think the number was — around three million dollars and did almost every road in town. And a lot of those roads are now ready for replacement.”

“The question is how do you want to do it,” Christensen said, “And the board now has to go and ask the electors how they want to do it. So that’s why we’re talking about it: what choices do we have?”

“I think it’s fair to ask the question,” said audience member Brian Siekierzynski. “I haven’t seen any golf courses sold in our area recently, but I think it’s something that should be entertained.” He also questioned whether money spent on golf course upgrades should be prioritized on roads instead.

“So, where does two million get us on roads here?” Cooper asked.

Per Christensen’s spreadsheet, that sum would replace roughly 10 roads. 

Cooper then asked whether the town should consider a five-year loan of two million dollars.

“Just over three million would get you 21 roads,” Christensen added.

“Does it make sense to talk about going out for a loan?” Mortag asked. “Does it make sense to talk about doing some levy increase and some loan, and the golf course pitches in more to make it all come together?”

“I think we should use a combination of everything in the toolbox,” Cooper said.

“An equal match from the golf course?” Swenson asked. “If we ask the people to do an extra hundred (thousand), then we expect the golf course to put in an extra hundred thousand.”

“I’ll caution you again about setting a number at the golf course: you don’t have a guarantee that it will be able to do that every year,” Christensen answered. “So that sets you up for failure if they can’t do it.”

“So if we increase the levy by $500,000 a year, that puts $70 on a $100,000 house,” Christensen said after some calculations. “The average house — of $315,000 — has a $220 increase in the taxes.”

“That’s a little more palatable, I think,” said Cooper.

“And then when you say where the other pieces are coming from…” Mortag began.

“It’s not all on you,” Cooper finished. “We’re getting some from you; we’re getting some from here; some from there.”

“I think the electors need to hear that we are going to get some more revenue back from the golf course,” he said, “Whatever that might be.” 

“If you raised the levy $500,000 and took $250,000 out of the $536 (debt-service) payment and borrowed money,” Christensen said, “You could start to make a dent in the roads. But you’re only making a dent. You’d probably push the project out to 15 years, at least.”

“I think in order to really put a dent in things — and to keep up with them — we need to be working with a million dollars a year on completely replacing roads,” Mortag said. “Where that million comes from, I don’t know.” 

“This is not an easy conversation or decision,” she said. “There’s no great way to go about it.”

“I really don’t think you want to go down the path of selling it (the golf course),” Christensen concluded. “The other thing, too, is that if we want to change the levy, we need to keep talking with the taxpayers.”

“I think it would be important to know — not that we’re thinking about putting the golf course up for sale, but since the question has been asked — what if we sold it?” Mortag asked. “It would be important for us to know that number that we could put it up for sale for.”

“If it’s only two million, four million, or six million, it’s not going to get us very far,” she said. “If it was $30 million, maybe that’s a different story. But it’s important for us to know what it’s worth.”

She said the board should look into the possibility of an appraisal or an opinion from a land-broker, as there is a great likelihood electors will ask what a potential sale would bring the town.

The board then voted to table the matter until its next meeting.