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Merger of 2 Minnesota cities recommended by consultants

Outside consultants reported to the Cloquet City Council last week that they "strongly recommend" a merger of the city with neighboring Scanlon, saying it would bring benefits to residents and businesses in both communities.

Outside consultants reported to the Cloquet City Council last week that they “strongly recommend” a merger of the city with neighboring Scanlon, saying it would bring benefits to residents and businesses in both communities.

The question of whether Scanlon should merge with its much-larger neighbor has been debated on and off for decades. Last year the city councils in both communities voted to move ahead with a study of the idea.

Mark Ruff of Ehlers, a Twin Cities municipal financial advisory company hired by the two cities, presented a preliminary merger plan and recommendations to the Cloquet City Council work session Tuesday.

“The purpose is to get feedback from both councils,” Ruff said. “Are we headed in the right direction? Are there questions we should be addressing?”

Consolidation is the logical next step in existing cooperative efforts between the two cities, Ruff said. He said it is also the right thing to do for the long-term health of both communities.

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The study listed how both cities would benefit from a merger. The utility rates for Scanlon residents and businesses would drop, the study said, and Cloquet would see lower property tax rates.

Residents from both cities would benefit from lower operating costs, greater staff capacity and a larger tax base.

Both Scanlon and Cloquet already are served by Carlton County, the Cloquet school district, the Cloquet Area Fire District, the Western Lake Superior Sanitary District and the Arrowhead Regional Development Commission.

Cloquet supplies Scanlon with police services and wholesale water, and the cities already share many of the same vendors.

Ruff pointed out that the communities have similar home values and incomes.

Tax rates in both cities also are similar - slightly higher in Cloquet. If combined, the tax rates would change a small amount for both cities. Cloquet residents would see a slight drop in rates, while Scanlon residents would see a slight rise.

The biggest differences between the cities are the populations - in 2014 Cloquet had a population of 12,258 to Scanlon’s 987 - and the half-percent city sales tax in Cloquet. Ruff suggested expanding the sales tax to Scanlon residents in the merger to keep things simple and unified.

Another difference is that utility rates are substantially higher in Scanlon. If the merger were to happen, Scanlon residents could see a drop in utility costs of up to $40 per month, while Cloquet residents would see a small increase in utility rates.

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Neither city has high debt levels

“Non-utility debt load is very, very low,” Ruff told councilors. “You both should be very proud of yourselves for that.”

Ruff said that in a merger, Scanlon staff would be incorporated into Cloquet with an anticipated loss of one part-time utility position in Scanlon. A plan for merging the city councils would need to be worked out.

Ultimately, it’s voters who will decide whether the merger will go through; a vote is likely during the general election in November. Public meetings would be held in the coming months as the two city councils further discuss the plan, according to a proposed timeline.

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