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City Council Minutes Page 7 <br />November 7, 2005 <br />----------------------------- <br /> <br /> Councilmember Dietz stated that there are many golf courses within a 15-mile radius and <br />that Mr. Maertz told him that golf courses are down as an investment. Mr. Maertz indicated <br />that is true and that the golf course may not be the best investment but will be a great <br />recreational amenity. <br /> <br /> Councilmember Farber noted that the residents brought this issue to the Council’s attention <br />but that he is not in favor of buying it for their sake but rather because it is a great <br />recreational amenity for the city. <br /> <br /> MOVED BY MAYOR KLINZING AND SECONDED BY COUNCILMEMBER <br />FARBER TO DRAFT A LETTER OF INTENT TO MR. KRAUSE FOR THE <br />PURCHASE OF PINEWOOD GOLF COURSE ON A FIVE-YEAR CONTRACT <br />FOR DEED WITH THE FOLLOWING ITEMS NOTED: <br /> <br /> <br />? <br />PURCHASE PRICE $2.4 MILLION AT FIVE PERCENT INTEREST WITH <br />$500,000 DOWN AND $200,000/YEAR PAYMENTS WITH A BALLOON <br />PAYMENT IN THE FIFTH YEAR. <br /> <br /> <br />? <br />IF PURCHASED, THE COUNCIL WILL HOLD AN INFORMATIONAL <br />NEIGHBORHOOD MEETING EXPLAINING THAT THE CITY HAS THE <br />OPTION TO SELL THE GOLF COURSE AT ANYTIME IF IT BECOMES A <br />FINANCIAL DRAIN FOR THE CITY. <br /> <br /> <br />? <br />THE APPRAISAL MUST COME BACK WITH VALUE OF AT LEAST $2.4 <br />MILLION AS GOLF COURSE. <br /> <br /> MOTION CARRIED 3-2. Councilmembers Dietz and Gumphrey opposed. <br /> <br /> Ms. Johnson indicated that she will work with City Attorney Peter Beck to get appraisal on <br />the golf course and a letter of intent written to Mr. Krause. <br /> <br />9.4. Presentation from Steve McDonald – Abdo, Eick, and Meyers <br /> <br /> Finance and Administrative Services Director/Interim City Administrator Lori Johnson <br />introduced Steve McDonald of Abdo, Eick, and Meyers, the company that audits both the <br />city and Elk River Municipal Utilities (ERMU). Mr. McDonald stated that his goal is to <br />update the Council on the recent embezzlement from ERMU and answer any questions the <br />City Council may have. <br /> <br />(Councilmember Motin stepped out as this may be a conflict for him) <br /> <br /> Mr. McDonald explained how Ms. Patricia Hemza committed the embezzlement and how it <br />was discovered. Mr. McDonald indicated that the two key factors that allowed this to <br />happen were that the payroll system was not integrated with the financial system and that <br />one employee had control of all aspects of the financial operations. <br /> <br /> Mr. McDonald indicated that in response to this embezzlement, ERMU immediately made <br />changes to internal controls. He explained that the payroll system and general ledger are now <br />integrated and other checks and balances have been put in place to ensure this type of thing <br /> <br />