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HomeMy WebLinkAbout2016/09/06 - ADMIN - Minutes - City Council - Study Session%ff J St. Louis Park OFFICIAL MINUTES MINNESOTA CITY COUNCIL SPECIAL STUDY SESSION ST. LOUIS PARK, MINNESOTA SEPTEMBER 6, 2016 The meeting convened at 5:45 p.m Councilmembers present: Tim Brausen, Steve Hallfin, Gregg Lindberg, Anne Mavity, Thom Miller, and Susan Sanger. Councilmembers Absent: Mayor Spano. Staff present: City Manager (Mr. Harmening), Chief Financial Officer (Mr. Simon), Deputy City Manager/Human Resources Director (Ms. Deno), Director of Community Development (Mr. Locke), Finance Manager (Mr. Ebensteiner), Assistant Zoning Administrator (Mr. Morrison), Housing Supervisor, (Ms. Schnitker), Operations Superintendent (Mr. Hanson), and Recording Secretary (Ms. Pappas). Guest: Brent Wittenberg, Vice President at Marquette Advisors. 1. 2017 Budget Update Mr. Harmening stated the last time the budget was discussed, council directed staff to refine several items. Today the council will be asked to review the preliminary tax levy and the proposed utility rate adjustment plan, along with the solid waste and organics program. Mr. Simon noted that council had discussed a preliminary levy of 6.92%, and since that time staff has made adjustments to the building permit revenues to bring the overall levy down to 6.5%. As in past years, the 2017 preliminary property tax levy adopted by council on September 19, 2016 can be decreased but cannot be increased after that date. Mr. Simon noted that the city was recently awarded a grant in the amount of $380,000 (split over two years) in order to hire two additional firefighters. He added that staff will work on building this into the budget so that in year three, the council doesn't have the $190,000 increase once the grant funds expire. Some of the capacity will be built into the levy over the next two years. Mr. Simon added that based on current and future infrastructure needs, the HRA Levy is recommended to be set at the maximum allowed 0.0185% of estimated market value for the 2017 budget, which is consistent with previous years. This levy is earmarked to pay back a loan from the Development Fund that helped cash flow the city's obligation for the Highway 7 and Louisiana interchange project and is expected to be paid off by 2019. By law, these funds could also be used for other housing and redevelopment purposes, but considering the significant infrastructure needs within the city, the proceeds have not been used for housing. Therefore, staff has calculated the maximum HRA Levy for 2017 to be $1,086,461 based on valuation data from Hennepin County. This is an increase of $75,253 or 7.44% from 2016. Staff is recommending the 2017 Preliminary HRA Levy be set at the maximum. This information will be provided on the city's website, and an email provided for any questions that arise from residents. Mayor Pro Tem Hallfrn asked if these dollars could go into the SWLT project. Mr. Harmening stated the funds are restricted to only be used for infrastructure projects. Mr. Simon stated that enterprise funds, as related to a water project, could be repaid with utility rates in the 7t" year of a 10 -year rate plan, in order to increase the base charge and stabilize Special Study Session Minutes -2- September 6, 2016 revenue fluctuations. Mr. Harmening added that the city is pursuing state funding on water projects. Currently this is noted in the capital plan as unfunded. Councilmember Lindberg stated the city should be more aggressive on the water issue. Mr. Simon stated the city can have flexibility with the bond, and there are no bond issues anticipated related to storm water utility. Also, the city can do internal borrowing with funds related to the water issue. Mr. Harmening added this will include the storm water changes at Bass Lake. Mr. Harmening explained the organics program, stating the city is committed to having residents recycle and compost more as part of the waste program. He pointed out that there are one or two residents that utilize the 540 gallon container — the largest container available — for their waste removal. Councilmember Sanger asked if these residents have home-based businesses and happen to generate large amounts of waste. Mr. Harmening stated that is probably the case. Councilmember Mavity stated the city will charge residents for the containers they want for their waste removal. Councilmember Brausen agreed and stated he is in favor of the proposed rate structure. Councilmember Sanger noted that some residents may not have room for the large waste containers, and the city might want to adopt the use of smaller carts to help residents save space, adding this might be a bigger incentive. Mr. Hanson stated staff can look into this, but added that they have done the research and costs would rise dramatically. Mr. Harmening stated this is a great opportunity to look at waste removal contracts and make changes in the future. He added the council seems to be in favor of the organics program where the cost can be built into the rates. He added there is still an opt -in option and if residents need a yard waste cart, the city will provide it to them. Similar to the program Minneapolis uses, rather than distributing bags, the city would give bags through 2017. After that, residents would need to purchase organics bags. However, the city would also provide residents with a starter kit and an allotment of bags. Councilmember Miller noted the organics bags that can be purchased at retail stores are not as good as the bags provided by the city. He added we would not want residents to get frustrated with the bags and then quit the program. Mr. Hanson noted the city is looking at a bag voucher system for residents also. Councilmember Brausen added, at some point the city may want to make the organics program obligatory, rather than an opt -in option. Councilmember Lindberg added again there is a practical implication as some folks will have an issue with storing three waste containers in their garage, and containers can also block alleys. This will be a practical issue the city will need to be aware of. Councilmember Sanger added that the city may need to change the ordinance that states residents must keep their waste carts in their garage. The council agreed they were comfortable with reducing the levy to 6.5% on Sept. 19, 2016. Special Study Session Minutes -3- September 6, 2016 Councilmember Brausen stated he did not see anything in the budget about affordable housing, adding that now with the grant for firefighters, the city should start to look at housing issues and affordable housing for seniors. Councilmembers Lindberg and Mavity agreed. Councilmember Lindberg also asked about additional funding for the city to take over the removal of diseased boulevard trees. Mr. Harmening noted the city used to pay 100% of this cost, but now pays 50%. He said staff can look into this, but the council decided to lower this amount a few years back, and it is difficult to go back and forth on the issue. Councilmember Lindberg noted that Texas Avenue continues to be an issue. Councilmember Sanger stated further discussions on sidewalk snow removal have been requested by residents, adding this topic may also present cost implications for the budget. Councilmember Miller agreed. Mayor Pro Tem Hallfin added the city may want to look into having volunteer coordinators handle snow removal and offered this idea as a partial solution. Councilmember Miller added it would be interesting to see how many households would ask for this service. Councilmember Sanger added that the number of households would not be small and stated that of the non -profits that do provide this service, many are not available to shovel in St. Louis Park. She added she does not think the volunteer solution is the best, noting another solution may be special service areas within the city, where special districts of the city are plowed by the city along the whole block. Next steps related to the budget will be to have staff prepare information for the September 19 council meeting where preliminary levies will be adopted. The EDA and council will adopt the HRA levy. Again, levies can be decreased, but not increased, for final property tax levies at the September 19 meeting. The revised 2016 budget, 2017 budgets, final tax levies (city and HRA), and 2017-2026 CIP will be adopted at the Dec. 19, 2016 city council meeting. 2. Multi -Family Development Rental/Condo Market and 2016 Semi -Annual Housing Programs Activity Report Mr. Harmening noted that several weeks ago Mayor Spano suggested a discussion on multi- family rental housing and condo market reviews, including historical; program descriptions; affordable housing; current trends; and the outlook for the Twin Cities, as well as St. Louis Park specifically. Ms. Sehnitker introduced Brent Wittenberg, Vice President Marquette Advisors, to present a housing report which will inform the council as they consider future development of the city. Marquette Advisors specializes in development feasibility analysis, spanning all property types and serving both private and public sector clients, developers, lenders, and government agencies. Mr. Wittenberg stated the Twin Cities has one of the strongest markets in the county currently, with a strong economy, job growth, in -migration, demographics, and lifestyle of renters vs. buyers. He noted the Twin Cities continues to see a steady growth rate in rentals, with 11,000 new units, and is enjoying a healthy market overall, with steady rent growth. He added, however, a slow -down is coming, which will involve market adjustments. Special Study Session Minutes -4- September 6, 2016 Mr. Wittenberg stated that in the last 10 years, over 15,000 rental units have been developed, and people are starting to rent for a variety of reasons. Urban markets led the way initially, but now there are new units in the suburbs, also, with a high concentration in the southwest and south metro, where there are more jobs and connectivity, along with the potential of SWLRT soon. Mr. Wittenberg stated that renting makes more sense for some from an economic standpoint, especially people living a more mobile lifestyle. He added this also depends on the market and varies when people consider renting and buying. Currently, millennials are renting at high rates. Additionally, active baby boomers and empty nesters are noting that while they are interested in renting, the two-bedroom, low square footage units are not large enough for them, so many are opting to stay in their homes as long as possible. Councilmember Brausen stated that 40% will be 65 and over soon, and St. Louis Park does not have a product in place for them at this time. Councilmember Sanger stated, however, do not assume seniors want to live in senior living apartments. Mr. Wittenberg stated apartment demand is tied to job growth, and more young people are taking new jobs in the Twin Cities and renting. This, along with low unemployment, is fueling the rental boom at this time. The millennials continue to have a major impact on the apartment market, while 25-30 year olds are starting to want a quieter lifestyle and will begin to purchase homes. Also, young couples and families are renting larger homes and townhomes rather than apartments. Councilmember Sanger stated the city is not addressing demographic of people with children who may want to live in apartments. Councilmember Mavity added that with the major barrier on condos and the liability issues that sit with builders, developers are not building condos and townhomes. She stated the state law is prohibitive, and it needs to change in order to provide more choices for young families and others who want to purchase townhomes and condos vs. apartments. Councilmember Sanger added that if we don't have families with school age children living here, we won't be able to keep all of our schools open. And if we don't have a good school district, this community dies. She asked how the city can make our housing more attractive for families. Mr. Wittenberg added there are property developers and owners purchasing rentals, such as Meadowbrook, and remodeling B and C products, which runs the risk of cities not having affordable housing. This, along with a home ownership market slow down due to young people having college loans, will also warrant the need for more rental housing. Additionally, there is a preference for living in the city or first ring suburbs and a real demand for townhomes for rent and for sale. With the laws inhibiting new construction of condos, there are fewer than 200 new condos in the metro area over the last five years, and these are in high demand. Councilmember Mavity stated she hoped for more discussion on this topic, and there is also a group of affordable housing activists who would like an audience with the council. She noted we have asked the City Attorney to follow up with the Housing Justice Center and asked if the city can offer any financial engagement in order to hold rents down for the long term. She reiterated the need for further discussion on affordable housing. Special Study Session Minutes -5- September 6, 2016 Ms. Schnitker added that the SWLRT Housing Committee is discussing affordable housing in j the Twin Cities and that this is a regional and national issue. This group includes members from Hennepin County, Met Council, MN Housing, and MN Housing Preservation, and representatives from a number of other cities, all of which are bringing ideas to the table and exploring options. Councilmember Mavity added she is feeling a sense of urgency on this topic and wants the city to stay ahead on this as it is fast moving, especially as it relates to affordable housing at Meadowbrook. Mr. Harmening stated if the council would like housing advocates to come in and speak also, staff can set that up. He noted another conversation related to this topic will be set up in the next month or two. The meeting adjourned at 7:20 p.m. Written Reports provided and documented for recording purposes only: 3. Proposed Charter Amendments Related to Municipal Primary Elections and Candidate Filing Requirements 4 Meliss Kennedy, City Clerk �ak Span , yor