KMU offered to lend for housing lots. Twice. The EDA president said there was no money. Two years gone, eight lots left.
Kenyon Municipal Utilities holds more than ten million dollars and twice said yes, unanimously, to lending the city money for housing lots. The EDA president said there was no money. Two years later the town has about eight lots for sale and the parcel is still unbought.
Kenyon's comprehensive plan tells its Economic Development Authority to "encourage the availability of housing to ensure an ample labor force." Goodhue County's rolls show 753 residential parcels inside the city, thirteen of them unimproved. In September 2026 one house was listed for rent in the whole town. The constraint on growth is not demand. It is lots.
The offer
On August 6, 2026 Doug Henke, mayor until the end of 2024 and since then a commissioner of Kenyon Municipal Utilities, stood at the open forum and asked the council how many buildable lots were for sale. A council member guessed four. Henke had asked a local realtor the night before and been told about eight 1:43.
Near the end of his term as mayor, he said, he had gone to the KMU commission and asked whether the utility would lend the EDA $2 million to buy property for housing. The commissioners said yes, unanimously. Then the new mayor and council took office, the EDA concentrated on the industrial park, which he credited them for, and the idea went to the back burner. After he was appointed to the commission he asked again in 2026, and again the answer was a unanimous verbal yes. Jerry Houglum, the KMU president, was in the room to confirm it 2:26.
When Henke asked EDA president John Mortensen this week where things stood, Mortensen said there was no money available. Henke's point is that KMU has the money and is willing to lend it, to be repaid over time, which changes the story.Transcript page, August 6, 2026, 4:17.
The property is the Hinderaker land on the south end of town. Engineer Derek Olinger has laid out a preliminary plat and City Attorney Scott Riggs has drafted a purchase agreement. What was missing was money, and the utility had been offering it for two years.
Do you know how many lots are available for sale in Kenyon today?Doug Henke, as recorded in the official minutes of Aug. 6, 2026, source
Where the money went
The utility can afford it. At the end of 2025 the electric fund held $7.3 million in net position and the water fund $2.8 million, against a general fund balance of $383,204. City Administrator Scott Lehner told the council the Hinderaker parcel was priced at $275,000, not $2 million; Henke said he had named the larger figure to gauge the response and to cover underground utilities 8:29. The topic went on the KMU agenda for August 18 and the EDA agenda after it.
Later in the same meeting the council learned why the city's own money for the parcel had disappeared. Jessi Sturtz of Abdo explained that the gain from selling industrial park land had originally been booked to the general fund; after a meeting with Kieffer, the EDA and Lehner, the proceeds were moved to the EDA fund and part applied to take the sold land off the balance sheet, leaving a net gain of about $140,000 in the EDA fund 47:10. Lehner drew the conclusion himself: the money earmarked for Hinderaker, together with an $82,000 county housing grant the city had applied for and been denied, "is no longer available. That is why Henke's point matters." If KMU agreed on August 18 to lend under a resolution, the purchase was back in play 49:44.
It is now two years later and still no progress has been made.Official minutes, Aug. 6, 2026, summarizing Henke, source
Two years
A council member said she remembered Henke's original request but it had faded amid other work and "the loan had not seemed real" 7:37. Another said the matter "has piled up and been forgotten but is very important." Henke's argument was the one the comprehensive plan already makes: every business in town, the grocery store, the restaurants, the schools, depends on people, and an industrial park needs residents to support it 6:25. Houglum, the KMU president, said the same in one sentence 7:21.
The same August night the council heard that the town's only grocery store had lost a tenth of its sales to a dollar store, that the one housing project underway still lacked $3 million in equity and might not proceed, and that the general fund reserve sat at 17 percent against a 40 percent policy. The one party at the table with cash and a unanimous willingness to lend it had been asking for two years. Nobody had written the resolution.
Before and after
- Late 2024As mayor, Doug Henke asks the KMU commission whether it would lend the EDA $2 million for housing land. Unanimous yes.
- January 2025A new mayor and council take office; the EDA concentrates on the industrial park.
- 2026Now a KMU commissioner, Henke asks the commission again. Unanimous verbal yes, again.
- July 14, 2026The administrator reports the city was not awarded an $82,000 county housing trust fund grant.
- Aug. 6, 2026Henke raises it at the open forum; the EDA president had told him that week there was no money.
- Aug. 18, 2026The loan goes on the KMU commission's agenda, 3:00 p.m.
- Sept. 8, 2026"Update on Loan from KMU" appears on the council's administrator update.
What the statute says
The commission shall have power to enter into agreements with the council for payments by the city for utility service, compensation for the use by either the commission or the city of buildings, equipment, and personnel under the control of the other, payments to the city in lieu of taxes, transfers of surplus utility funds to the general fund
The statute expects the utility commission and the council to make written agreements about money; a verbal yes, twice, is not one.
People in this story
- Doug HenkeMayor through 2024, now a KMU commissioner
- Jerry HouglumKMU commission president
- John MortensenEDA president
- Scott LehnerCity administrator since December 2024
- Derek OlingerCity engineer, Bolton & Menk
- Scott RiggsCity attorney, Kennedy & Graven
Sources
- City of Kenyon recording, August 6, 2026, at 1:43, 2:26, 4:17, 6:25, 7:21, 7:37, 8:29, 47:10, 49:44; meeting page.
- Utility fund balances, general fund balance, parcel counts and the comprehensive plan language: the open letter and the data pages, from the FY2025 audit and Goodhue County records.
- Council packet, September 8, 2026: administrator update listing the KMU loan.
More from the record
"We don't know what you're doing." Said by the council member who sits on the EDA.
In August the in-house finance director cost $130,000. By September, with no one hired, it cost $167,100.
A council member asked what a contract costs. Lehner said that's a closed meeting. The statute says it isn't.
All 27, in order · The open letter · Every packet and recording