Village Board Checks and Balances Its Spending Power

Since news broke that the village would proceed with a foreclosure suit of the Radisson Hotel, there’s been no shortage of would’ve, could’ve, should’ve from residents regarding the village-backed loan.

But moving forward, residents will have to point fingers at themselves if development goes asunder – to a certain extent.

On Monday, the Village Board approved an ordinance yielding some of its approval power for future public works projects. For any village-funded public works project that is worth more than 0.25 percent of the village’s total value, residents will vote to approve it through a referendum. Based on the current value of the village, that would be any project with a price tag over $10 million.

Village President Randy Newman requested the ordinance be drafted in the wake of turmoil caused by the hotel. The ordinance was passed unanimously by the board.

“We are putting a cap, or a governor, on our spending abilities that gives citizen’s the confidence that we are using the funds for public works, and we are prudent in how we use them,” Newman said. “This will give the citizen’s confidence that they know what our limit is on approval of a project.”

Newman said the ordinance is fashioned after procedures that are already on the books in Sussex, Richfield, and Muskego. However, the number of projects that would actually make it to referendum would be rather small. In the past decade, the Village Hall and library renovation was the only public works project that surpassed the $10 million threshold.

A new public works building would have been a second, but Falls avoided construction of a new facility when they swapped lands with Kohl’s Corp. as part of the .

Most projects like road repairs, bridge construction, or sewer and water repairs fall well under the $10 million limit. The entire capital budget for all village public works project falls below the threshold as well.

The small number of projects that would go to referendum helped quell Village Trustee Sharon Ellis' concerns that Falls would simply pay more costs by holding referendums often.

"Any time we go to referendum there's a cost, or a price tag, that we pay for that," Ellis said. "That's not a reason to not go to referendum, but it's something we need to be cognizant of."

Power of Petition

The newly formed Menomonee Falls Taxpayer’s Association announced in that would require the Village Board to submit any capital expenditures of $1 million or more to a binding referendum. The petition was a catalyst behind the new ordinance.

The association said it needs 2,700 signatures to force the matter to binding referendum.

The organization was outraged that village leaders approved a loan to develop a former eyesore on Main Street. The village confirmed in mid-June that it has in Waukesha County Circuit Court involving the village’s mortgage on the Radisson.  The village holds the mortgage because it’s the primary lender on the property.

The village $14.4 million in principal that it advanced, as well as interest and other costs. In the suit, the village is seeking property and collateral from five members of the ownership group of the hotel.

However, Newman said holding a referendum for all spending more than $1 million would be overly constrictive to operating government in Falls. Simply purchasing a new fire engine, which can cost close to $1 million, would require a referendum.

“That would be very difficult for us to run the government,” Newman said. “But what (the petition) told me is that people want to know what our limits are. That’s why I asked the board to self impose something that a majority of communities in our area do not have.”  

Capping Village-backed Loans

To be clear, the village’s new ordinance does not apply to developer loans from the village. However, Newman said they are in the early stages of crafting an ordinance to cap that as well.

“An item such as the hotel would be something that would go to referendum, but we said all along that (the hotel) was a special case and we would never do that again,” Newman said. “I think this is putting the citizen’s money where our mouth is.”

Newman and Village Attorney Michael Morse are working collaboratively to bring a second policy to the board at an unknown point in the future. Although Newman didn’t want to put a specific dollar limit on a loan cap at this point, he said a referendum would likely be required for any loan over $1 or $2 million.

It would also be based on a certain percentage of the village's total value.

"We have said at the time that the hotel was a special case and we would never do it again,” Newman said. “But we hope this will give citizen’s the confidence that we are willing to put some restrictions on ourselves. We don't need to rush these things, but we need to do what's right."