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HomeMy WebLinkAbout2021/07/12 - ADMIN - Minutes - City Council - Study Session Official minutes City council study session St. Louis Park, Minnesota July 12, 2021 The meeting convened at 6:30 p.m. Councilmembers present: Mayor Jake Spano, Tim Brausen, Lynette Dumalag, Rachel Harris, Larry Kraft, Nadia Mohamed, and Margaret Rog Councilmembers absent: none Staff present: City Manager (Mr. Harmening), CIO (Ms. Schmitt), Interim Deputy City Manager (Ms. Walsh), Engineering Director (Ms. Heiser), Economic Development Coordinator (Mr. Hunt), Community Development Director (Ms. Barton), Planning and Zoning Supervisor (Mr. Walther), Senior Planner (Ms. Monson), Police Chief Harcey, Fire Chief Koering, Communications and Marketing Manager (Ms. Smith) Guests: George Sherman and team from Sherman Group and DKV Developers 1. Retirement recognition of Tom Harmening Mayor Spano read a statement in recognition of city manager Tom Harmening. On behalf of the city, he thanked Mr. Harmening for all his work over the years. The councilmembers each reflected on Mr. Harmening’s work and honored him for his years of service. Councilmember Brausen stated eight years ago when he came on council, he met Mr. Harmening and was a bit intimidated by him, especially as he held the highest city office next to the mayor. He stated ultimately, they became good friends and Mr. Harmening has guided the city and the many city councils wonderfully and encouraged the city in all their successes. He stated Mr. Harmening is the one who has put the city in the great and successful position that they are in today. Councilmember Brausen thanked Mr. Harmening for his part in that, as well as his many years of service. Councilmember Kraft stated he has been on council for a year and a half and noted the pandemic and civil unrest that came about. He stated he was very thankful to have Mr. Harmening as city manager, and thankful that the council was able to rely on him for anything that came the city’s way. He stated before he joined council, he worked in the non -profit world with students, and that is where he saw how unique St. Louis Park is and how the city works together, adding a large part of this comes from Mr. Harmening and the culture h e has set. He added Mr. Harmening is a hard act to follow and the biggest compliment one can give is that Mr. Harmening is a great act to follow, because when real leaders leave, they do not leave a void or a failing organization. They leave an organization that will flourish. He stated the council now has a unique opportunity to tackle the biggest issues of the day and how they do day-to- day work on racial equity and climate change. He is appreciative of what prior councils and staff have provided over the years. DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188 Study session minutes -2- July 12, 2021 Councilmember Harris noted she met Mr. Harmening about 9 years ago, has watched him cultivate leaders over the years, and when challenges arose for the council, Mr. Harmening encouraged them to rise to the occasion. She added it was not always easy, but over time the council has been able to address their primary concerns of racial equity and climate change and the city is forward looking. Mr. Harmening has helped them get there. She thanked him for his service over the years. Lt. Governor Flanagan stated she wanted to be here tonight to honor Mr. Harmening as well. She stated she lives in St. Louis Park and as a young person had the benefit of Mr. Harmening’s leadership then, and now as a mom as well. She and many others have benefited from his leadership as well. Lt. Governor Flanagan added the city’s AAA bond rating as well as affordable housing and race equity and inclusion work has all happened under Mr. Harmening’s watch and she is grateful for this work. She presented him with a certificate from the State of Minnesota signed by Governor Walz, in appreciation of Mr. Harmening’s work for the community and for setting up a solid foundation for the city to build on . Councilmember Rog stated Mr. Harmening is an excellent executive. She will miss his capacity to say in 10 words what she says in 100 words, his broad and detailed knowledge of St. Louis Park, his patience in managing all the questions and council’s learning curves, his impatience as a helpful indicator that things can feel unmanageable, that sometimes council needs to regroup and come back to items, and his love of his job, which is fulfilling to him. She stated he was made to be a city manager and added she will miss him and wished him all the best . Councilmember Dumalag noted how she met Mr. Harmening, and how he assisted her when she first came on council. She added Mr. Harmening knows how to lead teams and works well with staff and council. She thanked him for his years of service. Councilmember Mohamed stated when she first met Mr. Harmening, she was very intimidated by him, but later saw him in a more relaxed moment and realized he was not that at all . She stated he will be a missing piece and he has built something worth carrying on, adding every part of the city has his fingerprints on it. She stated in her culture, anyone who brings value or guidance to life – “without you is dry desert” – and without them all that you have known is gone or a piece is missing. She stated the legacy Mr. Harmening has built for the city – he should be proud of. She thanked him for all his work for the city. Mayor Spano stated this is a tough transition. He commented about when he first met Mr. Harmening and their discussion about Excelsior and Grand. He stated Mr. Harmening also talks about the council to provide direction and clarity to staff, and this is a partnership in many ways. He added Mr. Harmening has always understood the importance of council as decision makers and staff as implementers. Mayor Spano added there may not be anyone in the city who loves St. Louis Park more than Mr. Harmening, as reflected in his constant concern for the city. Mayor Spano stated he will always remember the relationship they built in the difficult times the city faced and how important Mr. Harmening has been both professionally and personally to the council. Mr. Harmening stated it has been a privilege and an honor to work for this community and he has been here the longest time in his career and the city council has always been very positive DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188 Study session minutes -3- July 12, 2021 and forward thinking. He added he wants to be sure he is clear when he says all the things, they have accomplished over the years is not about “I” but about “we” and “team” and “community”. He added the council and the community have allowed him to participate an d have a role in all of the things they have dealt with and difficult things as well . He thanked staff, adding they are topnotch, and things will be fine because the city is set up well for the future. He added the partnerships within the community help it be stronger with groups like STEP, Perspectives, and Friends of the Arts, allowing for great things to be done. He thanked the council and staff for the opportunity and the council for their kind words and thoughts . 2. 2022 budget update Ms. Schmitt presented the report. Councilmember Harris asked about temporary staff pay rate not being competitive and having trouble keeping seasonal staff. She asked what typical pay for seasonal staff is and what is needed for an increase. Ms. Walsh stated it has been increasingly difficult to hire staff the past couple of years and the city is falling behind market rate . She added there are several jobs the city has not been able to fill this summer and temp salaries are one of the bigger increases depending on the job and will have to go up $1 to $3 per hour to remain competitive next summer. Councilmember Rog stated she supports paying decent wages and she asked what the total increase of rates would be. Ms. Walsh stated it may be around $120,000 between all the divisions. Councilmember Kraft stated it would be useful when looking at home values to see rental and multi-family housing rates. Ms. Schmitt stated right now commercial is not stable so she did not bring that information this time but will in the future. Councilmember Kraft asked about valuations relative to taxes and the increases. Ms. Schmitt stated the market value went up less, but more in the residential areas versus other areas and that is where the bulk of new taxes will come from. Councilmember Kraft asked about the EDA levy, noting $200,000 for staff salaries, and asked where those get funded today. Ms. Schmitt stated they are funded by the development fund, but that is not a steady source, so the fund balance is used. Councilmember Kraft asked if the EDA levy will be used for climate and development . Ms. Schmitt stated yes. Ms. Schmitt stated the EDA levy can be used for commercial, within the climate investment fund. She noted it will be commercial programs and multi-family housing that is authorized, adding this will be discussed with the city attorney first . Councilmember Kraft asked if it can be used for residential programs such as solar sundown, or only commercial. Ms. Barton stated the EDA levy can only be used for commercial purposes, DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188 Study session minutes -4- July 12, 2021 and not single family. It can be used for multi-family rental only, which is considered more commercial. Councilmember Kraft asked if it can be used for a tree planting program . Ms. Barton stated that would be a stretch, depending on context, and would need to be run by the city attorney to interpret. Councilmember Kraft stated the EDA levy would be easily explainable for climate work, but for development staff salaries, it seems it would be more difficult. Mr. Harmening added the HRA levy is used for housing staff salaries to run the programs the city has and the same holds true for the EDA levy, so that is an allowable expense. He added the development fund is a precious resource and some of the funds are tied up in loans, or real estate the city owns. He stated it has no ongoing funding source, adding the fund for strategic property acquisitions, where capital is needed upfront and later returned . Mr. Harmening added they are proposing to slowly decrease the amount used for salaries and then use the EDA levy for salaries in 2023 so, over time, the development fund is not relied on for staff salaries. He also noted the council can make changes to that. Councilmember Rog referenced the general fund balance and asked if staff has clear direction from council on flattening the levy or making investments for the future. Ms. Schmitt stated she sees the council is comfortable with the preliminary 4.5%, using fund balance overages to offset, and also to flatten out the levy increase in 2024 and 2025. She is working on several options and will bring those forward. Councilmember Rog asked how much the city is looking at for the $6 million this year. Mr. Harmening stated $500,000 would be set aside for climate invest ment and the council will be asked to assign that $5 million in the next month. Staff will present where that will go. He added the fund balance can be used for projects to even out the levy increase, noting this is a good problem to have. Councilmember Harris referenced next steps, noting that by Sept. 25 the preliminary levy will need to be set. She asked over the next 9 weeks, can staff provide a list of what 0% levy would bring to the city and how would the city be impacted, and then at 3% and at 4.5%. She asked what would constituents get at those various levy percentages. Ms. Schmitt stated at 0% there would be big cuts, with lowering capital costs. She stated she can get this information for council at the Aug. 23 council meeting. Councilmember Harris noted the EDA levy is at .53% and asked about the HRA levy as well. Ms. Schmitt stated it is 1.4% approximately. Councilmember Harris also asked about the financial impact for residents on these as well for discussion points. Councilmember Brausen stated the council was committed to minimizing the tax increase because of concerns with the economy. He stated most single-family homeowners had a net reduction in property taxes as the county did not increase at all , and the city stayed at a 4.5% levy. He added the council knew it would have a greater impact this year with the hot real estate market. He asked constituents to suggest what they would like cut from city services in order to keep the levy low. He noted the 4.5% will be difficult to get to maintain the same city services and staff levels as well. He is supportive of staff increases noting they do a great job for DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188 Study session minutes -5- July 12, 2021 the city. He is also supportive of the EDA levy, but this is a necessary tax increase as well. He stated he supports staff recommendations and also the 6% tax levy increase, even though staff will look at ways to lower it. Councilmember Mohamed asked how the values of residential homes will be affected as we look at the levy. Ms. Schmidt stated the levy is based on home values, and tax rates are based on the total value of the whole city. Because residential values are higher than commercial properties, the percentages will apply to more dollars for residential than last year. Councilmember Mohamed stated she is supportive of the direction staff is taking this. She trusts staff will be able to find a balance here to bring back to council for further discussion. Councilmember Dumalag stated she would like to see impacts to rent al as well as commercial properties at the next meeting. She added she likes the direction also at 4.5% and is supportive. Councilmember Kraft stated he is interested in using some of the money for a transformative investment in climate or racial equity. He added this would leave about $3-4 million for something else and asked if this is correct. Ms. Schmitt stated that is correct, but there are some capital funds that need assistance and additional projects in 2022 that need assistance, such as Connect the Park segments. Mr. Harmening noted there is $5 million in the America Rescue plan, and that is good to have as well. He added it will be helpful to keep this in mind and to leverage both. Councilmember Kraft asked how council can be helpful here and contemplating a transformative investment. Mr. Harmening stated it would be helpful to have context here. The council will provide these ideas at a later meeting. Councilmember Rog asked how and when the upcoming TIF request will impact the city’s debt service. Ms. Schmitt stated it will not impact the 2022 budget, and it will not come back as a levy to taxpayers. Mr. Harmening explained the developer is requesting TIF and will find a lender, so the city is not obligated to take the debt or pay it back, but just share the incremental taxes with the lender . He added if the levy were impacted, it would be for services for the project if it demands more costs from the city. Councilmember Harris stated she supports both the EDA and HRA levies as proposed, adding it is important to begin the climate investment fund. Mayor Spano stated his primary interest is around minimizing any increases. He asked about restricting the fire program, noting he would like to see what the impact was, and some follow up. He asked what other cities are doing around revenue generation that St. Louis Park is not, and maybe why the city is not doing that, such as corporate sponsorships. He also asked if staff looks into grants and if there is staff that works on this. He stated he wants to be sure the city is as expansive as possible when looking at all opportunities. DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188 Study session minutes -6- July 12, 2021 Ms. Schmitt stated a local option sales tax and franchise fees are what other cities are working on. She stated she can look further into this and bring more information back to council. Mr. Harmening added the city is extremely aggressive on obtaining grants from government entities and is a leader in this area. He added more exploration could be done in non- government entities related to foundations that work on housing or climate. He stated Chief Koering uses his staff and outside sources to write grants also. 3. Developer presentation – Beltline Boulevard Station Mr. Hunt introduced George Sherman, CEO of Sherman Associates, and his team to present the report. Councilmember Rog stated she is appreciative of the developer’s signature and design to the project. She asked how you will decide on the project elements, what will work for St. Louis Park, and what goes into those decisions. The developer stated there will be an engagement process with the community, it will be a journey, many comments will come into play with neighborhoods, and they will all be taken into account. George Sherman added there will be more discussion and neighborhood meetings and they are hoping to begin construction by the end of the year or first quarter of next year. Councilmember Rog stated as neighborhood meetings are planned, she hopes they will work with staff and council and look at the best way to engage the most people as possible. She added there is a new development going in near this project and asked that the designs complement each other if possible. She noted elements that were mentioned in the staff report adding that fountains and gates do not feel like St. Louis Park. She asked about the setback on the second floor above the commercial on the 7-story building and if the 5-story building has a setback. The developer stated no, it will not. Councilmember Rog asked about the public space and if it is for residents only. George Sherman stated the area will be semi-private, such as the pocket park at Gold Medal in Minneapolis, and stated it is a more intimate space that both residents and the public can access. Councilmember Rog noted there are four grocery stores in this area, and while she would like to see a co-op in this area, she wonders about having another grocery store there since there are so many in the area already. She referenced the at grade crossing at Beltline, that it will be unsafe, and hopes this can be considered amidst all this new development. Councilmember Rog asked about the height of the park and ride . The developer stated it is 2.5 stories at this point. She noted some of the spaces are required by Met Council and some for the benefit of the commercial spaces. The developer stated that is correct, along with some surface parking as well, adding they are not wanting to build any more parking than absolutely needed. Councilmember Rog noted the parking ramp will shelter cars but building a parking ramp in this time feels a bit off, as does park and ride. She asked about financing of the parking ramp, noting DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188 Study session minutes -7- July 12, 2021 there are grants covering all but the TIF request. She asked staff if this was the expectation all along. Mr. Hunt stated there was always an expectation for a local contribution towards the ramp as the CMAQ grant requires a 20% local match, so the gap covers that and a bit more . Councilmember Rog stated to be investing in a parking ramp, at that level and at this time, is something she is not excited about, but she knows it cannot be changed right now. Councilmember Dumalag asked if there was any thought as to what a parking ramp 2.0 look s like, meaning if it could be turned into housing in the future. George Sherman stated that could work, but it would double the cost of the ramp for housing, needing higher ceilings and changing to flat versus sloped ramps. They stated the better approach might be to negotiate with the Met Council on shared parking right now and cutting down the number of parking spaces. The developer added economics of this plan does not work for converting the ramp to future housing. Councilmember Dumalag asked if the affordable housing will be in 2-3 years. George Sherman stated yes, it takes some time to obtain 4% tax credits, but they would start applying for those credits at the beginning of the project and are confident they will receive them. She asked if each of the buildings have their own underground shared or separate parking . The developer stated it will be separate parking. Councilmember Dumalag asked if they do third party management. George Sherman stated they do direct management of their properties and have a great staff with top inspection scores received on an ongoing basis. They added they have a great working relationship with cities as well. Councilmember Dumalag asked if there will be a master operating agreement . George Sherman stated there will be a shared easement agreement for parking with shared management . Councilmember Dumalag stated she would be interested in a co-op as well. George Sherman stated they are in discussions with two Twin Cities co-ops at this time, adding they are very interested. Councilmember Harris stated she appreciates that each building looks unique and has accessibility at ground level to create active spaces. She added having the retail at ground level and being accessible is also important and it looks like there are windows, which looks better than papered over windows at Excelsior and Grand. George Sherman stated they will provide visibility and cited the Trader Joe’s they developed in downtown Minneapolis as an example. Councilmember Harris asked if there is onsite property management. The developer stated yes, with hours of 8 a.m. – 6 p.m. typically, adding there would be a nighttime staff that is on-call and available as needed. They noted there will be dedicated office staff and some shared staff as well. Councilmember Harris noted one of the city’s affordable housing projects provides wrap around services and asked if they will do the same. George Sherman stated they engage with DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188 Study session minutes -8- July 12, 2021 Simpson House for these services and if needed, can provide it through direct contract with Simpson. Councilmember Harris stated while the city does not have many fountains, she does like the idea of a fountain and would support that. She also prefers a co-op and noted the western side of Ward 3 and Ward 4 would definitely be interested . Councilmember Brausen stated this is an exciting vision and incorporates all the design features the city is looking for. He likes fountains also and is happy to see the design and artistic elements being added. He encouraged the developers to contact Places to help develop public art at all the public stations. He added he loves the turquoise color, the large sign, and is excited the park and ride does not look like a park and ride. He added this is a beautiful rendition of the vision the council and city had. George Sherman noted they hope to also incorporate EV chargers and infrastructure now for future uses. Councilmember Brausen stated he appreciates the apartment mix and is supportive of the TIF request for the structure, parking, affordab ility, and environmentally friendly features. He asked what Sherman does related to the promotion of racial equity and inclusion. George Sherman stated their staff is over 50% minority, over 70% women, and they lead with their actual hiring. His company’s focus has been on mixed-income housing and they fund early childhood and adult education, especially in North Minneapolis with Dunwoody, and assistance with rebuilding Lake Street. They stated they work with minority builders to become developers as well and have a strong relationship with the Somali community at Riverside Plaza and their education endeavors. Councilmember Kraft stated he really like the affordability and number of 3-bedroom family units. He also appreciates the commitment to sustainability and how it was framed as a smart business decision as related to electric vehicles. He asked about the TIF request and the differences between the Rise on 7 project. Jason Aarsvold, Ehlers, stated the biggest difference in the two projects is that Rise on 7 is in a qualified census tract and there are more tax credits available for Rise on 7 versus the Beltline project. Jason noted it is a $35,000 difference in tax credits between the two projects, per unit . Jason explained in both projects they get grants and whatever is left over is going to be the TIF request. Councilmember Kraft asked if the TIF request will come for the market rate and a separate request for the affordable units. Ms. Barton stated the TIF request will be a packaged request for all of it. George Sherman stated it will be one TIF request and one agreement. Councilmember Kraft asked how confident they are that the tax credits will come through in the next year or two. George Sherman stated he has been doing this for 35 years and has confidence it will come through and noted he is familiar with the application process. Councilmember Kraft stated he appreciated their commitment to solar and asked if they plan to include roof top solar. George Sherman stated if the city expects it, they will do it, but added their existing off-site solar gardens are very efficient and are a bigger scale than those on the DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188 Study session minutes -9- July 12, 2021 roof. He explained they must follow current law about requiring residents to opt in with solar, noting that about 92% opt in, adding there is a 5% discount with solar. Councilmember Kraft asked if the buildings will be all electric or will move to all electric when feasible. The developer stated they are working with the contractor on this currently. Councilmember Kraft asked if the council does not approve the TIF, what will happen with the project. The developer stated without TIF the project does not move forward and is not financially viable. Councilmember Rog asked what determines a qualified area. Jason Aarsvold stated qualified census tracts are those in which at least 50% of households have an income less than 60% of the area median gross income. George Sherman stated it is dependent on household incomes in the area and the federal government decides it, not municipalities. Councilmember Rog asked specific to this project how it will further the city’s racial equity goals. George Sherman stated they help income qualifying households obtain high quality affordable housing as well as pay over minimum wage to their staff, which is over a 50 % minority staff along with minority hiring at the construction site. They also work with diverse subcontractors. Councilmember Rog added if there were an opportunity to support our city’s minority businesses through these commercial spaces, that would help the city meet their goals. She supports taking funds from the affordable housing trust fund to create housing opportunities for households at 30% AMI as well as 40-year affordability. She loves the fact there will be affordable family-size housing units close to transit and so many amenities. Councilmember Mohamed asked what the rent would be at 60% AMI for a one-bedroom unit. The developer stated it is about $960 per month , including utilities. Councilmember Mohamed stated she is excited there are 6 units at 30% AMI but that is a low number. To be more comfortable with TIF, she would want more affordability. The developer clarified it is 5 units, not 6. Councilmember Mohamed added she is happy about the affordable family units and does approve of the proposal. Mr. Hunt added it is difficult to get 30% AMI units in developments and staff was pleased the developer could incorporate five in this project . Adding this project would be among the first to have them. Ms. Barton added the city will also accept vouchers to allow them to assist households at 30% AMI. Councilmember Mohamed asked how many of the 5 units at 30% are 3-bedroom units. The developer stated it is equally distributed throughout the entire building. Mayor Spano stated this is a huge project and he is supportive of the project as a whole . He added he is happy to further discuss the crossing at Beltline and added people will use it how they want to use it, as well as at Highway 7. He shares the concerns about the parking ramp but has come to peace with it. He added he approves of fountains but thinks the developer can do DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188 Study session minutes -10- July 12, 2021 much more aesthetically with the site than what has been shown so far. Mayor Spano encouraged them to be as creative as possible as this is an entry point into the city. Mayor Spano stated if the city wants large affordable units in the community, this is the time to have more conversations around this. He asked staff to provide a breakdown on what cities are doing on affordability over the last 10 years, to use as a comparison. He added he supports this project. Councilmember Kraft asked what federal policy needs to be changed in order to provide more affordable housing. George Sherman stated tax credits are the only tool the federal government has for affordable housing, and states supplement. Mr. Hunt stated next steps will be to bring forward agreements related to right of way and easement vacations, the formal TIF process, and the redevelopment contract, hopefully this fall or winter. Councilmember Rog asked for as much notice as possible on meetings to be able to notify constituents. 4. Future study session agenda planning and prioritization Topics for future discussion:  Minnetonka Blvd.  Commercial activity in city parks  Former Holiday site The meeting adjourned at 9:51 p.m. Written Reports provided and documented for recording purposes only: 5. Application for medical marijuana dispensary ______________________________________ ______________________________________ Melissa Kennedy, city clerk Jake Spano, mayor DocuSign Envelope ID: 402C7C30-087D-4676-8909-28A20A44B188