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HomeMy WebLinkAbout2026/04/13 - ADMIN - Minutes - City Council - Study SessionOfficial minutes Study session meeting St. Louis Park, Minnesota April 13, 2026 The meeting convened at 6:15 p.m. Council Members present: Daniel Bashore, Jim Engelking, Sue Budd, Tim Brausen, Yolanda Farris, Mayor Nadia Mohamed Council Member absent: Paul Baudhuin Staff present: deputy city manager (Ms. Walsh), acting finance director (Mr. Olson), financial analyst (Ms. Stephens), administrative services director (Ms. Brodeen), community engagement coordinator (Mr. Coleman) Guests: Mr. Boyer and Ms. Shelland of PTMA Financial Solutions Discussion Items 1. PTMA Financial Solutions investment update and investment 101 Mr. Olson introduced Mr. Boyer and Ms. Shelland of PTMA Financial Solutions. Mr. Olson stated approximately one year prior, the city issued a Request For Proposals for investment management services and selected PTMA, which now manages both the city's long-term investment portfolio and its 4MS funds. Mr. Boyer provided an overview of public funds investing in Minnesota, noting that Minnesota Statute 118A governs allowable investment types for public entities. He described the statute as comparatively conservative, limiting investments to lower-risk instruments such as U.S. Treasuries, agency securities, municipal bonds and commercial paper. Commercial paper is capped at 270 days and corporate bonds are not permitted. Mr. Boyer noted the only mechanisms for increasing returns within these constraints are extending duration or adding modest credit risk by diversifying into non-Treasury instruments. Mr. Boyer explained that PTMA worked with city staff to develop a forward-looking cash flow projection using budget documents and the capital improvement plan. This projection guides allocation decisions across three tiers: the 4MS Multi-Class Fund (daily liquidity), the 4MS Limited Term Duration Fund (monthly liquidity, approximately one-year duration) and the long- term core reserve portfolio managed by Ms. Shelland's team. The city's banking activity through U.S. Bank sweeps nightly into the 4MS liquid asset class, keeping the bank account at a zero balance. Mr. Boyer described the 4MS Multi-Class Fund as a pooled money market program with approximately 450 Minnesota public entity participants, currently yielding approximately 3.59%. He noted that rates have declined approximately 70 basis points over the past year as the Federal Reserve implemented cuts, but that a 3.6% rate remains strong by historical standards. The Limited Term Duration Fund, with approximately $5 million of city funds invested since June 2025, targets a one-year duration and yielded 4.58% in 2025. Its current Study session minutes - 2 - April 13, 2026 market yield of approximately 3.53% is lower than the money market rate, reflecting the portfolio's positioning for a longer investment horizon. Council Member Brausen asked how the city covers expenditures if the U.S. Bank account is swept to zero nightly. Mr. Olson confirmed that the 4MS fund pulls funds back into the bank account as needed each morning. Ms. Shelland presented the core reserve portfolio, which holds just over $55 million in assets under management with a duration of approximately 2.5 years within a one-to-five-year target range. She noted the portfolio yield of 4.0% exceeds the benchmark index of 3.9% and that yields have risen modestly in recent weeks. She noted that performance is measured against the benchmark only from the point at which the portfolio was brought into alignment with the city's policy parameters, to avoid misleading comparisons. Council Member Brausen asked whether the firm engages in day trading. Ms. Shelland confirmed it does not, and that the goal is long-term growth of the portfolio. Council Member Budd asked what the inception date was; Ms. Shelland confirmed May 2025. Ms. Shelland provided a brief market outlook, noting the Federal Reserve remains divided between concerns about labor market softening and inflationary pressures from geopolitical events. She indicated the Federal Reserve is expected to hold rates at current levels for the near term, with a bias toward cuts rather than hikes. Corporate balance sheets remain strong and financial markets are well-positioned. Council Member Brausen asked why the city holds over $55 million in long-term reserves given a council policy of maintaining 45% of budget in reserve. Mr. Olson and Ms. Walsh explained that the balance reflects timing factors including large EDA expenditures associated with the Beltline development projects, the Minnetonka Boulevard Twinhomes project, and the cyclical receipt of property taxes in December which causes the balance to spike at year-end before declining. 2. Neighborhood funding discussion Mr. Coleman and Ms. Brodeen presented an update on the neighborhood grant program and facilitated a structured discussion to reach council direction on three policy questions: the primary priority of the program, the final funding formula for 2026 and beyond and how to address unspent program funds. Mr. Coleman recapped the special study session on Feb. 17, 2026, noting that council reaffirmed interest in a needs-based equity model but raised questions about whether the Tier 3 funding floor incentivizes participation. Staff were directed to return with additional funding structure options. Mr. Coleman also summarized several process updates since February 2026: departments including fire, police, environment and sustainability, solid waste and natural resources were engaged to support neighborhood events; updated training materials were distributed Study session minutes - 3 - April 13, 2026 informing neighborhood organizations that the IRS 1099 reporting threshold increased from $600 to $2,000; and a direct vendor payment process was established allowing the city to pay vendors on behalf of neighborhood organizations to reduce upfront costs. Council Member Budd asked for clarification on whether the city had previously paid vendors directly. Ms. Brodeen confirmed this was a new process established in response to concerns about upfront costs, noting it had already been used several times. Ms. Brodeen began to introduce the facilitated activity planned as a part of the council discussion and explained that prior discussions had surfaced competing priorities — maximizing spend, maintaining equity and expanding neighborhood participation — which can be in tension with one another. It will be helpful for the council to discuss their priorities around the funding formula before making a decision. Staff facilitated a brief individual and paired reflection activity to help council members identify and articulate their primary priorities before discussing the four funding formula options. The four options presented were: • Option 1: Double all tier allocations (Tier 3 floor raised from $1,000 to $2,000), preserving the equity model. Full utilization budget would require a program increase. • Option 2: Increase floors for Tier 2 and Tier 3 neighborhoods while increasing the Tier 1 grant maximum.. • Option 3: Retain the current formula. • Option 4: Equal distribution model providing the same allocation to every neighborhood. Council Member Bashore asked why the focus was on guaranteed floor amounts rather than treating the allocations as maximum caps subject to available funding, noting the program has historically spent well below its total allocation. Ms. Brodeen responded that the allocation model was developed following a racial equity impact analysis which found that wealthier neighborhoods with more organizational capacity had disproportionately utilized program funds. The allocation model was designed to ensure every neighborhood has access to reserved funding, regardless of organizational capacity. She confirmed the tier amounts basically function as the maximum for which a neighborhood may apply. Council Member Bashore also noted the program has never fully spent its allocation across approximately six years of data and questioned why the response to low utilization would be to increase funding rather than first demonstrating program success. Study session minutes - 4 - April 13, 2026 Ms. Brodeen acknowledged the valid tension and noted that simplifying the application process was a key rationale for moving away from a competitive grant model. Regarding the funding formula, Mayor Mohamed stated a preference for Option 3, the current formula, noting the program has not been given sufficient time to demonstrate results and that funding increases should follow demonstrated need and neighborhood activation rather than precede it. Mayor Mohamed shared that Council Member Baudhuin asked her to communicate his support of Option 3. Council Member Farris agreed with Mayor Mohamed's position. Council Member Engelking expressed a preference for Option 2 or Option 4. He noted that at least one neighborhood outside his ward declined to participate after the funding floor was reduced to $1,000, citing the administrative overhead as not worth the effort. He stated that organized official neighborhood associations provide value by ensuring events are held on public land and are inclusive, and that expanding participation was equally or more important than the equity model structure. He noted that Tier 1 neighborhoods received $0 in each of the past three years under the current model, making the equity rationale less compelling in practice. Council Member Budd stated a preference for Option 2 and suggested the program budget not be increased beyond 50% of the maximum possible spend, citing six years of data showing actual expenditures well below allocations. Council Member Bashore stated support for Option 1 or 2 and agreed the program should not be fully funded to the theoretical maximum. He expressed a preference for loosening the constraints now and moving toward a more restrictive equity model only after documented program success, which he noted was the inverse of Mayor Mohamed's preferred approach. Council Member Brausen stated support for Option 2 and expressed willingness to fund the program at a higher level if demand emerges, noting recruitment of neighborhood association leaders is critical and difficult. A majority of council members indicated support for Option 2. Mr. Coleman summarized three options for handling unspent program dollars: • Option A, allow neighborhoods to exceed their tier allocation if funds remain; • Option B, use remaining funds for city-supported activities such as neighborhood network training, welcoming week participation and other city initiatives; • Option C, return unspent funds to the general fund. Mayor Mohamed expressed support for Option B, favoring city-led or city-supported activities in under-activated neighborhoods to build engagement. She also indicated she would accept returning funds to the general fund. Study session minutes - 5 - April 13, 2026 Mayor Mohamed shared Council Member Baudhuin’s support for Option B. Council Member Farris supported Option B. Council Member Engelking expressed a preference for Option C, stating that the goal of building strong neighborhood cohesion is better served by neighbors organizing themselves than by the city taking charge of organizing events. He noted his experience as a former neighborhood association president and indicated $50,000 would be more than adequate for the program's current needs. Council Member Bashore supported Option B and proposed that if the program approaches its budget cap, Tier 1 neighborhoods should be prioritized for funding over lower-tier neighborhoods. Mrs. Brodeen clarified that Option B would involve using remaining funds for training and enabling neighborhood participation in existing city programs such as Welcoming Week rather than the city holding standalone neighborhood events. Council Member Budd supported Option B. Council Member Brausen supported Option B, indicating a willingness to find additional funds if demand exceeds $50,000. Council Member Engelking ultimately supported Option A when asked to choose between Options A and B. A majority of council members indicated support for Option B. On the question of whether the total program budget should be increased to match the theoretical full-utilization cost of the selected funding model, a majority of council members indicated support for Option B — maintaining the current $50,000 allocation and monitoring actual spending before committing additional budget. Council Member Brausen supported Option A, indicating he would seek to find funds if utilization exceeded $50,000. Ms. Brodeen noted that staff would monitor spending through the summer and have sufficient information by August 2026 to assess whether additional resources might be needed. Written Report 3. Advisory commissions communications to city council – workplan updates Mayor Mohamed noted this item was a written report requiring no formal action. Study session minutes - 6 - April 13, 2026 Council Member Budd asked for clarification regarding a reference in the Planning Commission's workplan to a new Item 6 on parking limitations, which cited a council consensus from October 2025. Mr. Coleman indicated he did not have an answer available but would follow up. Council Member Engelking noted the workplan referenced a housing audit activity and asked whether the commission was aware of the city's contracted five-year housing survey, last completed in 2023 and next scheduled for 2028. He suggested staff ensure the commission is aware of that resource so it can be leveraged for any interim analysis rather than duplicating effort. The meeting adjourned at 7:45 p.m. ______________________________________ ______________________________________ Melissa Kennedy, city clerk Nadia Mohamed, mayor These minutes were created with the assistance of a generative AI transcript service, then edited and finalized by a city staff person.