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HomeMy WebLinkAboutCity Council - 06/18/2024 - Workshop APPROVED WORKSHOP MINUTES CITY COUNCIL WORKSHOP & OPEN PODIUM TUESDAY, JUNE 18, 2024 CITY CENTER 5:00 – 6:25 PM, HERITAGE ROOMS 6:30 – 7:00 PM, COUNCIL CHAMBER CITY COUNCIL: Mayor Ron Case, Council Members Kathy Nelson, Mark Freiberg, PG Narayanan, and Lisa Toomey CITY STAFF: City Manager Rick Getschow, Police Chief Matt Sackett, Fire Chief Scott Gerber, Public Works Director Robert Ellis, Community Development Director Julie Klima, Parks and Recreation Director Amy Markle, Administrative Services/HR Director Alecia Rose, Communications Manager Joyce Lorenz, City Attorney Maggie Neuville, and Recorder Sara Aschenbeck Workshop - Heritage Rooms I and II (5:30) I. CITY CENTER/POLICE REMODEL Sackett provided an overview of previous police and city center remodel concepts considered by Staff. Four concept plans were researched and ultimately dismissed as they did not meet the needs assessment criteria or were more expensive than the final proposals. Sackett summarized the final two proposals. The first proposal is relocating the police department to the upper level and constructing lower level interior police parking for a cost of $21 million. The second proposal is relocating the police department, lower level City offices, and meeting spaces to the upper level and constructing lower level interior police parking for a cost of $26 million. To save on cost the City could pursue the second proposal and repurpose existing furnishings and technology into the new spaces. Toomey asked Sackett to elaborate on repurposing technology. Sackett stated for example meeting rooms would not initially have a built in monitor and computer, current technology would be piecemealed into the new spaces. Freiberg asked how accurate the $26 million cost estimate is. Sackett stated construction management firm Kraus Anderson continually updates the estimates. Multiple contingencies are built in. There is hope the bidding environment is improving. Freiberg stated inadequate technology would cause problems. He asked if the Garden Room is remaining at its current location. Sackett stated if all City offices and meeting spaces are relocated to the upper level, the Garden Room would be available for a future tenant to lease. City Council Workshop Minutes June 18, 2024 Page 2 Getschow noted there are no viable remodel options priced between $21 and $26 million. Freiberg asked if a referendum is needed for a $26 million purchase. Getschow answered the State does not require a referendum for public safety or city hall building expenses. Multiple surrounding cities including Minnetonka, Edina, and Chaska have approved public safety or city hall building expenses without referendum. The City has planned this expense for the past decade and timed the remodel to minimize debt levy impacts. Narayanan asked how a $26 million expense would affect the City’s tax levy. Getschow stated there would be a one-time increase of approximately $1 million in 18 months. The levy would remain flat in following years. Case noted the affect would be approximately a two percent additional increase. Case asked the Council to provide their opinion on relocating the police department, lower level City offices, and meeting spaces to the upper level and constructing interior police parking for a cost of $26 million. Freiberg stated he supports the $26 million expense as he does not want the Police to operate with inadequate technology. Narayanan noted he is in favor of the $26 million proposal. The City has strong fiscal management and should do the project right. Toomey noted her agreement with Freiberg and Narayanan. Case stated he supports the $26 million proposal. Surrounding Cities have spent between $60 and $80 million on new police department construction. The cost is reasonable and reflects an investment in providing the quality public safety services residents expect. II. 2025-2034 CAPITAL IMPROVEMENT PLAN Wilson explained the Capital Improvement Plan (CIP) is updated every other year. Departments assemble anticipated projects over the next ten years. This helps the City plan, schedule, and finance capital projects and provides a consistent investment in City infrastructure. As an outcome, the City maintains stable debt levels and a AAA bond rating. Wilson stated there are $363 million in proposed CIP projects for 2025 through 2034, an increase from $303 million in the prior CIP cycle. The largest drivers of the increase include $17 million of engineering road projects, $13 million of water utility rehab, building expansion, geothermal, and high service pump projects, and additional police remodel project costs. Case asked how the Police and City Center remodel will be funded. Getschow confirmed it will be funded by debt. Narayanan asked if there is State or Federal funding available for the police remodel. Getschow confirmed there is currently no State or Federal funding available for the Police remodel. The City Council Workshop Minutes June 18, 2024 Page 3 City is pursuing State and Federal funding for other projects to free up capital for the police and city center remodel. Wilson summarized the $61 million of CIP projects proposed for 2025 and the $31 million of projects proposed for 2026. The Capital Maintenance and Reinvestment (CMR) Fund is used to finance capital projects. The CMR Fund has a $15 million balance in 2025, decreasing to $2 million in 2034. Revenue sources for the CMR Fund include liquor profits, a tax levy, antenna revenue, and building rent revenue. Getschow added each time the CIP is prepared, the CMR Fund balance is projected to decrease over the ten years. The City budgets revenue conservatively and the annual general fund transfer is not budgeted as it is not guaranteed. Wilson stated over the next ten years the CMR Fund is financing projects of $3.5 million for Engineering, $9.7 million for Fire, $16 million for Parks and Recreation, and $769 thousand for Public Works. 2025 and 2026 projects include the Magnolia Trial connection, new fire engines, and maintenance for right of way, trails, and hard courts. Toomey asked if the City will receive fire engine funding. Wilson confirmed the City will receive State funding. Wilson explained the CMR Fund is financing $769 thousand of Police projects over the next ten years. The Mobile Command Center (MCC) will be funded by both the CMR Fund and Federal funding. Case asked why the MCC isn’t financed solely by Federal funding. Sackett confirmed the City applied for full funding, partial funding was awarded. Wilson stated the Park Improvement Fund is funded by park dedication fees and will finance $5.8 million in projects from 2025 through 2034. The Park Improvement Fund is partially funding the Shady Oak Road project. Narayanan asked if the Fund’s projected balance decrease is concerning. Getschow stated the City budgets park dedication fees conservatively. Actual revenue will likely be more than budgeted. Wilson explained the Economic Development Fund is funded by daycare center rent and will finance $1 million in projects from 2025 through 2034. Case stated the funding source may not last ten years if the daycare center area is redeveloped. Wilson noted if redevelopment occurs the building sale proceeds would be revenue for this fund. Wilson explained the City will receive $170 thousand annually from a new Larger Cities Assistance Program, an additional revenue source for the Transportation Fund. Narayanan asked if grant funding is available for ADA ramp improvements. Ellis confirmed no grant funding is available. Wilson explained Municipal State Aid (MSA) is used to fund road projects and will City Council Workshop Minutes June 18, 2024 Page 4 finance $33 million in projects from 2025 through 2034, including $4.7 million toward the 2025 Dell Road project. Case asked how MSA is allocated to cities. Ellis confirmed the State allocates based on population and total roadway mileage. Toomey asked if there is a timeline to spend funds. Ellis stated once a threshold is reached accrued funding must be spent. Wilson summarized County, Federal, and grant funding for projects including the Pioneer Trail and Eden Prairie Road bridges, Shady Oak Road, Richard T. Anderson Conservation Area erosion, and new trails and sidewalks. Wilson explained the Facilities Internal Service Fund (ISF) will finance $11 million in projects from 2025 through 2034. Case asked how the Facilities ISF is funded. Wilson confirmed it is funded by a user charge from benefitting departments. The Information Technology ISF is also funded by user charge and is financing $7 million in projects from 2025 through 2034. Narayanan asked if the City permit and inspection systems is available via mobile app. Rose confirmed there is an online, mobile friendly version. Wilson explained future projected debt levies. The debt levy for 2024 and 2025 will be $2.4 million. Police and City Center remodel debt will increase the levy to $3.5 million in 2026, where it will stay consistent through 2034. Getschow added the City issued debt to renovate the Community Center aquatics center in 2012. After that issuance, the debt levy as a percent of the General Fund budget has decreased every year through 2025. The Police and City Center remodel costs were timed to minimize the debt levy increase. III. 2025 BUDGET Getschow explained the City is in the second year of its two year budget. Council sets the preliminary tax levy in September. The budget is expected to increase 3.5 percent in the General Fund and 3.3 percent overall. Most budgeted expenditure changes are due to wages and benefits. The General Fund levy is expected to increase five percent next year. Combined with the capital and debt levies, the total tax levy increase would be 4.7 percent. The final levy is dependent on Tax Increment Financing and fiscal disparities, which are determined in August. Once those are finalized, the City will likely have a tax levy increase between 4.7 and five percent. The levy increased 5.5 percent last year, the lowest increase in the metro area. City Council Workshop Minutes June 18, 2024 Page 5 Getschow explained single family residential property values increased less than one percent. The City tax rate is projected to increase between one and 1.5 percent. The median tax increase will be less than five percent, and the 2024 and 2025 tax rates will be lower than both 2021 and 2022. Case asked why the adjusted net tax capacity is decreasing between 2024 and 2025. Getschow confirmed Staff will research and get back to the Council. The Council thanked Staff for their time. Open Podium - Council Chamber (6:30) IV. OPEN PODIUM V. ADJOURNMENT