Serving Northern St. Louis County, Minnesota

Echo gouged Ely taxpayers for legal publishing

Newspaper increased rates by 365 percent over three years; state law limits increases to ten percent a year

Keith Vandervort
Posted 2/14/19

ELY— When the Ely Echo raised its legal publishing rates for the city of Ely by 100 percent in 2018 alone, it not only caught the attention of some city officials, it may have also violated state …

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Echo gouged Ely taxpayers for legal publishing

Newspaper increased rates by 365 percent over three years; state law limits increases to ten percent a year

Posted

ELY— When the Ely Echo raised its legal publishing rates for the city of Ely by 100 percent in 2018 alone, it not only caught the attention of some city officials, it may have also violated state law, which appears to limit rate increases for public notices to ten percent per year.

For more than two decades, competition between the Echo and the Ely Timberjay had kept the city’s publishing rates in check. As recently as 2016, the Echo had bid just $5 to publish a small sample ad that the city has used each year in an effort to get apple-to-apple quotes from the city’s two newspapers. The Echo, not surprisingly, won the business that year, having undercut the Timberjay’s quote of $8.58.

But just two years later, after the Timberjay had declined to bid in 2017, the Echo raised its rates dramatically, charging $17.40 for the same sample ad. The paper hiked that further, to $18.27, in their bid submitted to the city in January of 2019. That’s a 365-percent increase over the past three years. Minn. Stat. 331A.06, Subd. 2, states that “no newspaper may increase its rates for publication of public notices by more than ten percent per year, as compared to the maximum rate actually charged by the newspaper in the previous year for publication of public notices.”

Concerned about the astonishing rate increases from the Echo, some city officials urged the Timberjay to offer a bid. The Timberjay submitted a bid that was largely in line with previous years. That same sample ad that the Echo wanted $18.27 to publish would cost the city taxpayers just $8.85 in the Timberjay.

The Echo’s owners and managers have cried foul, arguing that the Timberjay can’t serve as the city’s official newspaper, suggesting that a newspaper can’t operate what’s known as an “office of issue” from a private residence. “That’s what this is really about,” said Echo general manager Nick Wognum, in comments to the Ely City Council last week.

“I’ll tell you what this is really about,” said Timberjay publisher Marshall Helmberger. “Money. Let’s be honest, this has turned into a gravy train for the Echo and they don’t want to see it derailed by competition.”

The last time the Timberjay served as Ely’s official newspaper, back in 2014, the newspaper billed the city a total of $4,766 for legal publishing for the year. In 2018, with its newly jacked-up prices, the Echo billed the city just over $21,000, and that didn’t include the cost of printing things like city envelopes and stationery. With the Echo’s latest rate hike instituted for 2019, the city’s taxpayers could expect to pay more than $22,000 for the same amount of publishing with the Echo.

Taxpayers could expect to pay about $6,000 with the Timberjay based on the newspaper’s 2019 quote, a difference of $16,000.

Echo representatives have made several claims to suggest the Timberjay can’t serve as the city’s official newspaper, despite the fact that the paper has served in that capacity on several occasions over the past 20 years.

The Echo argued that the Timberjay falls short of the state law requirement of having paid circulation of 400 within the city limits.

“Our circulation is actually higher today than it was the last time we served as official newspaper for Ely,” said Helmberger. “Where were the complaints about circulation then?”

Helmberger called the Echo’s argument “a farce.”

“By the Echo’s own interpretation, they couldn’t serve as official newspaper of Winton because they don’t have enough subscribers within the city limits. But there aren’t enough households to even meet the law, in places like Winton, Orr, or Tower or Cook for that matter.”

The circulation language in the statute is largely dismissed by lawyers familiar with the issue because, as written, it leads to absurd results.

“When an interpretation of the law leads to absurdity, lawyers recognize that they have to look at the underlying intent,” Helmberger said. “In this case, it’s quite clear that the Legislature is trying to ensure that councils not use a little-known paper in an effort to limit the public’s awareness of what’s going on. Both the Timberjay and the Echo easily meet the criteria for a newspaper with sufficient circulation to comply with that intent.”

While the Echo has questioned the Timberjay’s bid, Mayor Chuck Novak said that both bids had raised questions. The Echo’s 2019 bid appears to be out of compliance with state law, which sets a minimum text size for legal publishing. The Echo’s stated text size is smaller than allowed by law, which has the effect of making its bid appear cheaper.

Yet city officials have had concerns in the past couple of years that the Echo has not only increased its rates dramatically but has run city display ads noticeably larger than the specifications set by the city, adding to increased costs to city taxpayers. An example of the discrepancy in the size of the notice text is demonstrated elsewhere on this page.

“I asked [Nick] Wognum why the city of Ely ad was larger in type size,” Mayor Novak told the Timberjay. “He said that I didn’t tell him what size to make it.” But, in fact, the city does provide a set text size in its sample ad and asks the newspapers to bid based on those specifications.

At the Feb. 12 Ely City Council meeting, new council member Angela Campbell attempted to introduce two resolutions for council action, one to rescind the Jan.15 council action declaring the Timberjay as the city’s official paper for 2019, and the other to direct the city attorney to investigate the matter.

Mayor Novak corrected her and indicated the call for the actions should be made in the form of a motion. He also rebuked her effort to rescind her original Jan. 15 vote supporting the Timberjay, which was a unanimous vote.

“I respect Angela, but I think her inexperience in government is showing here,” Helmberger said. “When you take the oath, you’re supposed to represent the public interest, not private, special interests.”

Following a motion to revisit the legal newspaper issue at their Feb. 12 meeting, city council members directed City Attorney Kelly Klun to investigate the state statute language on “home office” issues and work with a task group of three city council members to make a recommendation to settle the matter.

The Timberjay vacated their previous business office, located in the basement of the Frandsen Bank building, in 2016.

“Our previous office was out-of-the-way and we determined with our editor that it was just as easy to have him work from a home office,” Helmberger said. “There’s nothing in the law that suggests a home office can’t meet the criteria of the law. We have a legal right to make a home office our office of issue.”

The Timberjay maintains a home office, business telephone number, Internet access and post office box (No. 718) in Ely. The editor is available to the public six days a week, except on Wednesdays when that week’s edition is prepared for printing at the Timberjay’s Tower office. Ely Editor Keith Vandervort suggests that people call ahead at 365-3114 if they want to stop by the office, since he is frequently out on assignment.

Klun may have a recommendation to make at the next council meeting on Tuesday, Feb. 19.

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