Oneida County launches study of ongoing HSC facility costs

The Oneida County executive committee has authorized county board chairman Scott Holewinski to execute a work agreement with the county’s municipal advisor to study costs associated with operating the building the now-defunct Human Service Center (HSC) used to provide its services.

Beginning this year, the county began providing those services in-house under the jurisdiction of a new Human Service Department. The old HSC building on Timber Drive in Rhinelander is owned by the county, but the question is how much it will cost the county to maintain the building if it chooses to continue to provide its services there under the new organizational scheme.

According to a proposal by Ehlers Public Finance Advisors, that firm will provide the analysis at an estimated cost not to exceed $23,895. 

The work will be billed hourly at $295 for actual hours worked and will be paid from the county’s contingency account.

In addition to the costs, Forest and Vilas counties, who partnered with Oneida County in the HSC, have also contributed to the building over the years and want to know what they will be getting for their past investments. The December 31 proposal to Tina Smigielski, the county’s finance director, came from Sean Lentz, Ehlers’ senior municipal advisor, and Kyle Sawyer, the director of fiscal consulting for the company.

“Forest and Vilas Counties have shared in costs to provide the services and maintain the building under the tri-county agreement and have inquired on how the residual cash and/or building value they contributed to will be disbursed,” the letter stated. “We recommend an analysis of the cost to operate the building to provide the in-house service; including routine maintenance and capital improvements needed.”

That analysis would be used by the county to determine shared costs with Forest and Vilas counties if they choose to have human services provided by Oneida County, and it could be used to offset and/or negotiate any disbursement of residual cash or contributed property value, Lentz and Sawyer wrote. The analysis would also calculate property tax impacts for providing the services in-house.

In addition, the letter continued, the county owns a second building located on Winnebago Street that is currently leased and that operates as Koinonia Residential Treatment Center. The lease revenue from that building has historically been used to offset the shared costs of the tri-county Human Services organization, the advisors wrote.

An analysis of lease revenue, maintenance, and capital improvements is recommended to understand how much net operating income will be available to offset costs at Timber Drive, they wrote.

The specifics

According to the scope of work provided to the county, Ehlers will complete a 10-year long-term analysis of operations, maintenance, and capital costs associated with the Timber Drive and Winnebago Street buildings. 

“The Winnebago Street building analysis will be incorporated in the Timber Drive analysis to understand the continued impact of the offsetting revenue stream; assuming one remains,” they wrote. “A second analysis of the Winnebago Street building will be completed assuming sale of the building to the current tenant as an alternative to continued leasing for the county to consider.”

Finally, the Ehlers team wrote, a summarized 10-year allocation of estimated costs to Forest and Vilas counties will be completed and provided to the county.

At a January 15 county executive committee meeting, Smigielski said she and county clerk Tracy Hartman had been meeting with the other county chairpersons and finance directors, and one of the issues that came up was how to resolve the ownership of the two facilities that are associated with what used to be the HSC board.

“So Tracy and I met with Ehlers and Kyle,” she said. “They provided the attached proposal to come up with some suggestions or proposals that Oneida County could make to Forest and Vilas regarding the future of those two facilities.”

Sawyer attended the executive committee meeting via Zoom and told committee members that the group talked through different options.

“Our proposal outlines a recommendation to look at the cost to provide human services in-house using the existing building on Timber Drive,” Sawyer said. “Those costs include day-to-day regular operating costs as well as looking at what capital or repair and maintenance expenses might be needed or incurred over the next 10 years.”

So the idea was to look at a 10-year plan and what the costs would be to provide those services in-house, Sawyer said, and he said Oneida County would then use that or, in conjunction with Ehlers, they could formulate a plan to determine the best path forward for the other two potentially participating agencies and what that might cost for them to have those services provided by Oneida County.

Sawyer said the other element in the assessment was a consideration of current investments that have gone into the operations and what assets may remain either in the form of cash or capital assets, and — with HSC being disbanded at the end of 2024 — how continued support could perhaps be combined with an offering of what assets may remain and how the counties might be able to continue those relationships.

Feds have rules

As for the future, Smigielski said the study would look at different scenarios.

“It could be that the other two counties maintain some sort of ownership interest in the facilities,” she said. “One county has indicated they would like to maintain ownership interest. The other county has initially said no. So we don’t know yet.”

Smigielski also clarified that the discussion was not talking about personnel and wages and program costs but specifically about facility costs. Supervisor Steven Schreier wanted to know if Oneida County would fund the study by itself or if Forest and Vilas counties would help out.

“We are [funding it] because it would be our proposal to the other two counties,” Smigielski said. 

At a meeting in December, Holewinski said, the other two counties were in favor of pursuing “something”: “ I would be assuming that all three counties would be paying for it in the end,” Holewinski said.

But Smigielski said there were a couple of issues with that, mainly that Ehlers’s relationship is with Oneida County and not with the other counties, and there were Securities and Exchange Commission rules that the relationship was specifically between the two entities, Ehlers and Oneida County.

“If Forest and Vilas participated in the cost of this particular consulting agreement, then they have to enter into that relationship with Ehlers as well,” she said. “I’ve discussed this with both [Forest and Vilas officials] and they understand this will be our study for us to generate a proposal to those two counties.”

They may decline that proposal, Smigielski said. 

“So it really is our study,” she said. “It’ll be transparent and we’ll share information with the other two counties, but it’s for this committee and then eventually our county board probably at some point to meet in closed session and then propose some kind of settlement to the two other counties.”

Smigielski confirmed to Holewinski that Oneida County would be footing the bill and that the contingency fund had enough to cover the cost. Supervisor Robb Jensen raised a long-term question about the county’s commitment to the facility.

“When I’m reading this, we’re going to conduct an independent and expert analysis of the public cost to operate and maintain the buildings,” Jensen said. “It’s our building and so we need to do that. But does this mean that we are committing ourselves to that building for … how long?”

When a previous discussion came up about Koinonia, Jensen said, the county owned the building but there were some significant things that needed to be improved.

“Also, looking at that particular building, it sits on a very attractive commercial site,” he said. “Are we going to stay there? What long-term options of that building may there be? Why don’t you sell it? Is this committing us to 15 years, or what does this commit us to?”

You say hello, I say goodbye

First, Smigielski said in response, it was only Jensen’s opinion that Oneida County owned the building.

“I don’t disagree with that, but other people have different opinions on that,” she said. “The building itself may be Oneida County titled, but there were significant capital improvements made while the board was in place. So 51 percent of the value of those improvements are ours. It’s kind of like trying to take the roof off the house. It’s all one house so the ownership is not clear.”

Then, too, Smigielski continued, conducting the analysis does not commit the county to anything.

“Selling one or both of the properties may in fact be an option,” she said. “That’s part of what Ehlers will be looking at. And part of it is, as I understand it, we got grant money based on three counties applying for tri-county. Even though it was in our name, they have a vested interest in this.”

Executive committee chairman Billy Fried said there were multiple perceptions and understandings, but he thought the study was important.

“I think this will give us some foundational information that allows us to bring a proposal together to hopefully clear the air on the subject,” Fried said. “Seems like we’ve gone round and round.”

But Fried said he had a concern and a question.

“The concern that comes up, though, is that you’re kind of doing this on the fly,” he said. “I sit on the buildings and grounds committee and we have a renter from one of those buildings already coming to us for this and that, and the Oneida County representatives don’t really have a clear understanding. From my perception, the county’s laid out six figures to do some initial updates and now we’re being proposed on some other things. Can you speak to what we should be doing as a county as you’re working on this?”

Sawyer didn’t answer directly but he said the study would be conducted forthwith.

“This is really a foundational study to really understand what it’s going to cost to operate and maintain the building and provide those services,” he said. “As far as what the county needs to do while we work through this, it’s our goal to work through it fairly quickly. Through talking with Tina, the close-out of the Human Services group won’t happen for a few months. So it’s our thought that we’d look at historically what it has cost to operate and run. Look at future capital needs, regular operating costs, and build that into the model to start to give this committee and the county some perspective on what that foundational cost would be.”

In a bit of a fog

Sawyer said he did not have any clear direction for what the county should do while that study is happening.  

And would Ehlers be giving the county recommendations as to how they see the possible vested interests of the other counties in the properties? Sawyer was asked.

“So you’re talking about existing vested interests with what they’ve contributed to previous capital and operations and maybe residual cash that remains,” he said. “We wouldn’t be really looking at all of that, and part of the analysis at the end will be what would it would cost for these counties to be provided the service from Oneida County. That would be combined with what residual value is left.”

Sawyer said he thought there were some existing percentages for those two counties that pay into these services now under the group agreement. 

“So those percentages would be considered, but our goal isn’t to go back and do a 10- to 15-year look back of what these other counties may have contributed for costs and those things and to come up with a complex calculation for allocating things,” he said. “But the idea is at the end that we have a realistic foundation for what it’s going to cost to run and what those cities or other counties would need to pay into to be viable partners and then use that as a tool for what residual asset value may be out there.”

Holewinski said the other counties were aware that Oneida County had injected $180,000 into emergency reserves.

“They realize that whatever’s fair, they want to be fair,” he said. “So they realize that the county has $180,000 that will come out of there. If building and grounds does any work between now and then, building and grounds is supposed to keep a detailed list of what they did and then that will all be charged against. And then my discussion with the other two counties is what’s money is left is what will be there. But we’re going to do the study so we can figure out how do we split this up.”

Schreier said he had a lot of potential questions he’d like to ask, but felt they would be better asked once the study is complete.

“So I feel it would just honestly be a waste of time to ask a lot of questions that the representatives from Ehlers team or anybody probably at this point really doesn’t have a particular answer to,” he said. “I think it needs to be done, personally, so we have some kind of actual foundation of resolution moving forward in developing those memorandums of understanding with the other two counties regarding the services we’ll be providing in the future.”

Schreier said he couldn’t speak to the cost they were proposing but assumed it was reasonable and responsible based on the scope of work they were proposing. Schreier said one issue of concern was ongoing references to things that require outlays, whether they’re categorized as emergency or otherwise.

“Do we have anything in writing between the counties saying ‘yes we will share in that cost or we will deduct that from the residuals,’” he said. “I don’t believe that anything exists. These all sound like just handshakes and promises. That concerns me a little bit. So again, getting this in place and having a more formal documentation of things historically speaking, that to me is a value and moving forward I actually feel a lot more confident about how we're perceived with the services we'll be providing to the other two counties.”

The committee unanimously approved execution of the agreement.

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.