By Kellen Olshefski
Correspondent
In a reconsideration of its previous decision, the City of Elkhorn Common Council voted in favor of two separate motions Monday night after some discussion, opting to both drop the interest component from the city’s memorandum of understanding with the towns provided fire service by the Elkhorn Area Fire Department and purchase a fire truck now rather than wait for signed MOUs.
City Administrator Adam Swann explained Monday that the towns were given the original cost that they would owe on the used ladder truck previously discussed, and then the new MOU was only for the additional cost of the new ladder truck most recently discussed.
That MOU, he said, allowed the towns to pay the city back over the course of 2025 and 2026, but the towns would start being charged interest on any outstanding balance in 2026.
Swann said that Fire Chief Trent Eichmann told him the Town of Geneva opposed the interest provision in the memorandum and that the city had heard from one member of the Town of LaFayette board, who was also in opposition of the interest component. He said LaFayette was scheduled to meet to discuss it Wednesday night, and the Town of Sugar Creek was meeting Monday night.
Alderman Peter Harvey initially made a motion to drop the interest component from the MOU and purchase the truck as soon as possible, noting “tomorrow would be perfect,” and that the city could work with the towns to get the MOUs signed as the towns have all indicated they would sign the MOUs without the interest component.
“We need to do what’s right for the fire district, get this truck, get this truck in service,” he said. “I think we’re letting this die because of a couple thousand dollars. I think we just need to say we’re going to take the bull by the horns and do this and we’ll work it out with them.”
While seconded by Alderman Kurt Harkness, Mayor Tim Shiroda noted that the purchase of the truck was a separate item on the agenda.
Alderman Scott McClory asked what the protocol is if the city doesn’t have a signed MOU and then has a township that says it’s not going to pay.
City Attorney Chris Geary of Pruitt, Ekes & Geary said that at this point, only one of the three entities has taken up the MOU officially, and he isn’t sure if they had indicated whether they would approve it if the interest component was removed or if they had just indicated they wouldn’t approve it in its current condition in their motion.
If the former, he said removing the interest provision would mean they’d have the authority to sign off on it right away. If their motion was to the latter, the township would have to take some action to get the MOU approved.
Geary said the question is ultimately two-fold and was split up on the agenda Monday evening. Previously, the idea was that the terms were set out by the council in advance and if the towns approved it the city was authorized to go out and buy the equipment.
Monday night, Geary said the question was now whether the council was going to purchase the truck if the towns sign off on the MOUs if the interest component is removed, or if it’s going to purchase the truck regardless and proceed with trying to get the MOUs in place.
McClory asked about the outcome of a potential situation where a township could refuse to sign the MOU and not pay its share of the equipment cost for the needed fire service equipment.
Geary said they would need to review the city’s contract and see whether that counts as a breach or not, but noted the towns had given their blessings to buy it at the lower price and where they’re at now is the disagreement about the additional cost and how that’s going to be recouped and whether that excess cost makes sense.
Harvey said he thought that, while it wasn’t a signature, the city had gotten commitment from the towns on the additional cost before the council added the interest component to the MOU.
“I can’t imagine that they would want to go back on their word or would want to get in a battle about fire service for their townships,” he said.
Harkness also noted that the ladder truck is on the open market, and while it may or may not get sold before the city can buy it, this is the city’s shot to fix the problem.
Shiroda noted that he’d like to see the council make a decision about the interest component.
Alderman Harvey made a motion to drop the interest component from the memorandum of understanding, seconded by Harkness.
Alderman Gary Lee Payson Jr. asked what they’re supposed to tell Elkhorn residents who will be paying the interest on the EMS fund loan while the townships do not, as he has already heard about it as an alderman and those he’s heard from have said it’s only fair since Elkhorn has to pay and others should have to pay since it’s money out of Elkhorn’s pockets.
Harvey said while he agreed, he doesn’t think the townships understood that the city was trying to split the interest costs with them and that time is of the essence for trying to get the vehicle to the department.
“We can cross that bridge with them later and show them, look this is fair and we are trying to work with you on this, we just want to split this cost with you,” he said.
Harvey said he thinks that if the city can talk with the towns in the coming months, they can probably get the towns to understand why the interest component was initially included.
Payson asked if they were in Elkhorn’s shoes if they would be charging interest for loaning their own money to another township.
Shiroda said he doesn’t disagree with Payson, but the city does run the risk of losing the truck, which would lead to incurred costs in renting a truck while waiting on the purchase of another truck, and he was also recently told that emissions standards for new trucks are set to change in coming years, which would cost upwards of an additional $100,000.
“I don’t disagree with you at all, and I get what you’re saying, but to give away $4,000, $5,000 and save $100,000 for the taxpayers makes a little sense to me,” he said.
Payson asked if anyone did a calculation on the interest costs, and Shiroda said on the about $170,000 loaned at 4% it would be about $6,800 a year, if the townships don’t pay until the end of 2026, and chances are they’ll pay on it.
Shiroda also asked how the townships pay on their fire protection, which City Finance Director Corrie Daly said the townships are billed quarterly for the services. As for vehicles, Daly said the townships are billed in the quarter during which the vehicle is purchased.
The motion to drop the interest component from the MOU was approved 6-0 by the council.
Purchase of the truck
Up next on the agenda was the actual purchase of the truck.
The council’s motion at its previous meeting had provided for the truck to be purchased once the MOUs were signed, according to Geary, which was still the case, unless the council were to vote differently.
Asked how soon he could get the MOUs signed, Eichmann said the toughest would be the Town of Geneva, with the town chairman being a traveling salesman, while the leader in Sugar Creek is retired and he’s attending LaFayette’s meeting on Wednesday night.
If the MOU was ready on Tuesday, he said he could present it to LaFayette on Wednesday.
Harvey said that the towns have already given a verbal commitment and the council has voted to drop the problem they had with the MOU – the interest component. Personally, he said doesn’t see a problem with the city purchasing the truck the next day and the towns signing the MOUs at a later date.
Shiroda said the question was if the council was comfortable purchasing the truck right away on good faith that the townships will honor their verbal commitments.
Payson asked Daly if the city could cover the $400,000 if none of the townships decided to approve the MOUs.
Daly said the funds were going to be borrowed from the EMS fund.
“But if nobody approves it, now we have to pay back the EMS ourselves,” he said, “which means the City of Elkhorn takes it all on the chin.”
Daly said she was sure there would be some legal agreement, and McClory said he assumed the towns would be in breach of contracts with the city in relation to fire service.
Payson said the towns could argue this is for the additional cost, and they could agree to pay the original cost but not the additional, to which McClory noted the original motion as passed requires signed MOUs before purchasing the trucks.
Harvey made a motion to purchase the aerial truck and pursue getting the MOUs signed later, seconded by Harkness for discussion’s sake.
Harkness asked what the real likelihood is that the MOUs won’t get signed.
“It sounds like it’s stacked up against them to break a contract with us for fire service,” he said. “And because we’ve taken out the interest component of this, the people we’ve spoken to, they’ve all said, yeah, we’ll sign it.”
Harkness also noted the city doesn’t want to lose the truck.
While he understands they’re taking a risk by waiting another week, McClory said the truck has been for sale for months and no one has bought it.
Harkness said he understands McClory’s point as well and is just asking the question if there is enough in the fire service contracts that it would be the wrong move for the townships not to sign the MOUs.
Swann said that the city has a fire contract with the towns and there was an amendment in 2022 that states the city and towns will share fairly the operating, capital and maintenance expenses for fire protection and emergency medical services, which includes all necessary costs, such as replacement of equipment and vehicles.
With that said, Swann said the MOU is more done as a courtesy, as the city didn’t give the towns advance notice on the cost at the time of the budgeting process.
Geary said that expense allocation language is a pretty strong argument and he thinks a judge would agree, but he also noted that if the towns were to fight it, they would be “really kind of cutting off their noses to spite their face” when it comes time to renew the fire services contract with the city, considering there aren’t a lot of communities offering fire protection services.
“There’s a lot there that they don’t want to break,” Harkness said. “Signing this MOU, we’ve already gotten verbals on this stuff, obviously I’d rather have a signature myself, but considering the circumstance and considering what you just said and how tight that contract is written, I can’t see how they can’t pay us.”
The motion to order the truck and work with the townships to get the MOUs signed later was passed unanimously by the council.
