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HomeMy WebLinkAbout2023/08/28 - ADMIN - Minutes - City Council - Study SessionOfficial minutes City council study session St. Louis Park, Minnesota Aug. 28, 2023 The meeting convened at 6:30 p.m. Councilmembers present: Mayor Jake Spano (arrived 6:40 p.m.), Tim Brausen, Sue Budd, Yolanda Farris, Lynette Dumalag, Nadia Mohamed and Margaret Rog Councilmembers absent: none Staff present: City manager (Ms. Keller), deputy city manager (Ms. Walsh), engineering director (Ms. Heiser), economic development manager (Mr. Hunt), finance director (Ms. Cruver), building and energy director (Mr. Hoffman), community development director (Ms. Barton), sustainability manager (Ms. Ziring), city assessor (Mr. Bultema), natural resources manager (Mr. Bahe), planning manager (Mr. Walther), race, equity and inclusion director (Ms. Guess) communications and technology director (Ms. Smith) Guests: Residents of St. Louis Park 1. 2024 budget: revised general fund, long range financial plan, capital improvement plan Ms. Cruver presented the staff report. She reviewed the policy considerations which contemplate support of the proposed 2024 budget with an “all-inclusive” preliminary levy increase of 7.7%. The preliminary levy includes: o General levies increase of $2.6 million (general fund, park improvement, capital replacement and employee benefits) o Housing Redevelopment Authority (HRA) levy increase of $275,793 o Economic Development Authority (EDA) levy increase of $377,000 o Use of excess obligated general fund dollars for transfers of $485,000 in 2023 and $360,000 in 2024 Mayor Spano thanked Ms. Cruver for the report and noted the state funds received for the Cedar Lake Road and Louisiana Avenue project (Cedar Lou). He stated if these funds had not been realized by the city, the budget for 2024 would look very different – “kudos to staff” for their aggressive work. He asked for clarification on the breakdown of $2 million from federal funding and $7 million that came through Met Council. Ms. Heiser confirmed that $2 million was earmarked from federal funding and $7 million was from Met Council’s regional solicitation. Councilmember Mohamed asked about market changes and virtual work, noting she is happy to see it going back to pre-pandemic levels in some cases. She asked if a trend with the city’s commercial and industrial workspaces is present. Ms. Cruver stated there is continued discussion about returning from virtual work, and the data shows what has taken place. In the future, she does not foresee the bottom dropping out on commercial and industrial values. DocuSign Envelope ID: 47BBAC52-6B0E-4D7B-AAB7-F8108933F6AC Study session minutes -2- Sept. 18, 2023 Councilmember Mohamed was also happy to see there will be no levy for service overall and noted specifically the Cedar Lou project. She was grateful for the discussion around alternative ways to fund infrastructure rather than financially burdening residents. She noted the “wreck and go” program and her own childhood experiences with community program participation. Councilmember Mohamed commended programs that are going to where kids are during times they might otherwise be unsupervised. She added the funding into behavioral health consultants is also very exciting. Councilmember Budd asked about the use of one-time funds and noted there is about $1.5 million in reserve. She asked for more details on this. Ms. Cruver stated the reserve amount is being held to apply to where costs may change along with future risk assessment. Councilmember Budd asked for a timeline on this risk assessment. Ms. Heiser stated that risk assessments are being done on the sewer and water system with results expected in January. She added this data will be part of the capital planning and prioritization in 2025. Councilmember Budd asked about the timing of the $3 million land sale. Mr. Hunt noted the closing of the sale to Sherman and Associates is scheduled to occur the week of September 15, 2023. He added there are still issues in the marketplace with interest rates. Mr. Hunt added that bid results for the parking ramp will also have a financial impact on the project. Councilmember Budd asked if the sale would change anything related to the budget. Ms. Cruver stated this sale will support the fund balance, but added the sale will not change recommendations. Ms. Cruver added the general fund can be identified as to what will be spent because revenues are fixed. She noted the upcoming systems discussions with the council to set specific goals. Councilmember Budd asked if there was guidance on setting a fund balance goal for EDA funds. Ms. Cruver replied that a standard is a good practice, the variability in spending includes factors like supporting ongoing programs and making strategic purchases. She reiterated that average fund balance goals are a great conversation topic for systems conversations later this fall, and staff felt that stopping the spend-down was a necessary first step. Councilmember Brausen noted the balance of $30 million in the past and asked what variables affected that result. Mr. Hunt stated there were exceedingly higher interest rates at that time, which helped to balance the general fund. Councilmember Dumalag asked for the total amounts of market values and the distribution of burden for taxpayers to create better awareness. Mr. Bultema stated the total value composition is apartments at 19% of city total valuation, commercial at 15.2%, industrial at 4.7% and residential at 61%. He stated related to tax capacity, Minnesota prefers residential uses and noted apartments are at 19%, commercial is at 24%, industrial at 7.5% and residential at 49%. He noted Minneapolis, Edina and St. Louis Park are known to be value-rich and very dense in their tax capacity and that is to St. Louis Park’s advantage. With markets shifting, he noted that annual measurement is based on assessments that take place before budgets are set. He added there are no huge red flags in the market currently, noting distinct shifts where commercial and industrial have bounced back reasonably well since the pandemic. DocuSign Envelope ID: 47BBAC52-6B0E-4D7B-AAB7-F8108933F6AC Study session minutes -3- Sept. 18, 2023 Councilmember Dumalag asked how hotels are classified. Mr. Bultema stated hospitality is within the commercial sector. He gave examples of industrial property such as the Edgewood and Louisiana Station area, which has potentially significant land use change potential because of the light rail market influence. Councilmember Brausen noted that industrial values are being driven higher because of the scarcity of that property in the city. Mr. Bultema stated that is true. He added that industrial value is not terribly high in the inner rings of the metro suburbs because most of that stock is outdated. There is more industrial valuation in the outer rings where land is cheaper. Mr. Bultema indicated that rather than growing out, the community of St. Louis Park is growing vertically. Councilmember Dumalag asked about construction permits, which are decreasing, and if fees are flat or related to the cost of a project. Ms. Cruver stated they are related to the cost of the project and fees are going down compared to 2023, signifying a return to normal. Mr. Hoffman added the city is not expecting the same high volume of construction that has been seen in the last few years. He noted the larger the valuation of a project, the larger the fees. Mayor Spano asked if some of this is tied to the completion of the West End. Mr. Hoffman stated since the Excelsior and Grand project, the community has done an incredible job of redevelopment. He stated there have been many apartments built in the last three years and this will start to taper down. He noted the goal will be to keep that redevelopment going over the years and bring vitality to the community. Councilmember Rog stated she appreciated Ms. Cruver using the all-inclusive amounts in the presentation, which is helpful. She stated she appreciated the friendly nature of the delivery, and it is the best she has ever seen. She added she appreciates the creative and strategic approaches Ms. Cruver is taking in funding projects that align with the city’s strategic goals, and that ease the burden on taxpayers. She is happy about the direction and feels it aligns with strategic goals. Given 2023 school district levies and inflation, she appreciates that homeowners will see lower impacts to taxes in 2024. Councilmember Rog stated she is concerned about quickly rising costs for law enforcement and believes this is the fastest growing department. She feels this growth is disproportionate to other departments, adding there may be more for her to understand here. She likes recreational activities and mental health innovations and would like to see more data on the results of those programs which might support further investments. Councilmember Rog stated residents look forward to the Webster Park redesign, the Minnetonka Blvd redesign and others that will benefit the city. She added she has concerns for impacts on businesses given their valuation increases are higher than residential, and it feels like they will take the brunt of this levy increase. She added she has concerns about future costs for delamination and the unknown factors. She is supportive of investments in sidewalks and the tree canopy and looks forward to TIF discussions as well. DocuSign Envelope ID: 47BBAC52-6B0E-4D7B-AAB7-F8108933F6AC Study session minutes -4- Sept. 18, 2023 Councilmember Rog asked for details about how the term “levy” is being used in reference to general funds. Ms. Cruver stated the general fund comprises the levies. She stated that each of the four levies has its own set of rules and maximums. Councilmember Rog asked how this information will be presented to residents this year. Ms. Cruver stated it will be the same as in past years. Ms. Smith added staff works each year with the finance department to communicate the budget in the October Park Perspective and other communication tools. She stated it can be presented in a different manner this year also if needed. Ms. Cruver added the goal is to make sure the bottom line is the same and is communicated clearly. Councilmember Rog stated she will support the EDA levy because the fund needs to be replenished. She added she sees a direct correlation between the debt forgiveness of $1 million provided to Sherman and Assoc. and the need to replenish the fund at a higher level as a result. She questioned if small businesses, as loan recipients, would get consideration if there were higher than expected labor or materials costs, and would the city be prepared to forgive their loans. Mayor Spano stated that seems to be a policy question about managing funds and the loan process and that the action to approve Sherman and Assoc. had already been taken. Councilmember Rog stated that she saw the question as related, and that councilmembers may or may not agree. Councilmember Rog stated that she is supportive of all four policy considerations. Councilmember Brausen noted the Cedar Lou project has increased about $8 million more from the $20+ million originally forecasted, now up to $29 million. He added that it is useful we have acquired $14 million in outside funding. He appreciated the staff’s creativity in their use of these funds to fund this type of construction, which is crucial, along with 60% of the water main replacements throughout the city. He stated residents need to understand this, and he appreciates this could be addressed without significant impact on the levy. Councilmember Brausen stated the budget seems very well thought out and the proposed spending seems thoughtful. He stated he shares Councilmember Rog’s concerns about higher spending in law enforcement, although the data does not show the city has more crime. He added this may be the result of the investment being made and that he would like more information. He stated he is also supportive of all four policy questions by staff. He commended the inclusion of inflation in financial planning. Councilmember Dumalag stated she is supportive of all four of the policy questions. Councilmember Farris stated that she is supportive of all four of the policy questions and thanked staff for the clarity of the information presented. DocuSign Envelope ID: 47BBAC52-6B0E-4D7B-AAB7-F8108933F6AC Study session minutes -5- Sept. 18, 2023 Mayor Spano asked about one-time transfers and why that has been so common for the city, noting he would prefer to move away from the practice. Ms. Cruver stated she does not have much real data, and that one-time transfers made sense in context of the specific planning challenges presented during pandemic time. Councilmember Brausen stated that under the former city manager, the policy had generally been to project expenses aggressively and project revenues conservatively. The policy has continued to be built in regularly, allowing for balance in a general sense. Mayor Spano stated rather than use one-time transfers, he prefers to estimate expenses higher and revenues lower and using that as an operating principle. He stated he is happy to see the projection numbers at this point at 7.7%, adding it is higher than he likes, but noted the funding through the EDA makes so much possible, specifically for small businesses within the city and how the city budget lifts up strategic priorities. He also asked for information on levy impacts to renters and for home values in the $250,000 price point as well. Councilmember Budd noted the Q & A discussion on delamination was helpful, and noted this seems to be manageable. Ms. Heiser stated staff plans to conduct an inventory of the streets at risk for delamination so that cost estimates and staff recommendations can be brought forward for discussion. Councilmember Budd noted the affordable housing sales tax and asked if it is being considered in the city’s 2024 budget. Ms. Cruver stated it is to be received in 2024 and it will be used to purchase more rental units and expand the city’s existing programs. Councilmember Budd asked the amount of funds expected. Ms. Cruver stated that an estimate of $622,000 is expected annually starting in 2024. Councilmember Budd asked about the fourth policy question. Ms. Cruver stated this includes 2023 as decisions need to be made related to the budget year. Councilmember Budd stated she also supports all four policy questions. Councilmember Rog stated her earlier comment on the EDA levy concern was that while she supports it at this time, she looks forward to digging deeper into the EDA at future meetings. Mayor Spano added the language of levy and funds and noted for the public, it would be helpful to use simplified language to differentiate the two. Ms. Cruver thanked him for those comments and stated they will work with the communications department on this. Ms. Keller asked if the council is supportive of this format used in the presentation this evening. Councilmember Rog stated she is supportive of this and added for some it might be helpful to see more detail while maintaining simplicity. Councilmember Brausen agreed with Councilmember Rog’s comments. 2. Tree preservation and planting strategies for setting and reaching a canopy goal Ms. Ziring, Mr. Bahe and Mr. Walther presented the report. They noted the policy considerations for council and asked if council supports: DocuSign Envelope ID: 47BBAC52-6B0E-4D7B-AAB7-F8108933F6AC Study session minutes -6- Sept. 18, 2023 o Staff’s recommendations regarding public and private tree inventories o Establishing a long-term tree canopy goal o Future increased spending for watering and disease treatment in trees o Updating the zoning code to better protect heritage trees as recommended by staff Councilmember Mohamed asked whether there is data on environmental justice and how benefits of tree canopy are experienced differently depending on equity factors. Mr. Bahe responded that city GIS staff could analyze whether identified Environmental Justice areas were experiencing lower canopy percentages in the city. Ms. Ziring added that on the climate map, they do identify inequities regarding tree canopy and that staff uses that data and it is available for council to review. Councilmember Dumalag asked if the city gets funding from the state for tree planting. Mr. Bahe stated the state does have funds for tree canopy and for emerald ash borer response, which are all competitive grants that would need to be applied for. He noted there are two grants available at $10 million and $6 million each. He noted there are restrictions with the $10 million bonding grant where trees need to be removed and then replanted in the same location, the $6 million general fund grant is more flexible with where money can be utilized. He also noted (Federal) IRA dollars may be available through the Minnesota Department of Natural Resources in the future as well. He stated staff is working on a proposal for a grant from the state. Ms. Ziring commended Mr. Bahe for organizing a large work group to prepare the grant proposal, which has been very helpful in meeting the short deadline and specific expectations for an attractive application. Councilmember Budd noted she has lost one oak tree and is treating another because of drought. She asked if drought plays into the current funding abilities, both with the city’s approach and grant funding. Mr. Bahe stated it is tough to maintain these trees without rain. He added state funds and relief funds are open to other species, but the state has directed cities to focus on emerald ash borer. Councilmember Brausen thanked staff for responding to his questions and for helping him manage his tree canopy as well. He asked if the tree inventories are online. Mr. Bahe stated yes and gave directions to the city website page. He noted the policy questions and asked the timeline for treating trees against emerald ash borer. Mr. Bahe stated it is a recommended two- year treatment cycle. He added they are also looking at how long the city will be dependent on treatment with an insecticide, the data shows it is currently cost effective. The cohort of newly planted and protected trees is balanced. Councilmember Brausen noted early information on diminishing effectiveness of insecticide. Mr. Bahe stated that is currently the same and not diminishing. Councilmember Brausen asked if monies from park dedication fees go to tree preservation and canopy efforts. Ms. Keller stated those monies do not go into the general fund. Mr. Walther stated park dedication fees go toward purchasing new equipment for parks, acquiring new park DocuSign Envelope ID: 47BBAC52-6B0E-4D7B-AAB7-F8108933F6AC Study session minutes -7- Sept. 18, 2023 land, etc. There is a separate fund for tree planting and replacement funded in part by tree replacement fees. It is the city’s practice to require replant first on the site of the removal, then the city uses the fees to plant trees on public property as close as possible to where trees were removed. Councilmember Brausen stated he is happy to see the environment and sustainability commission has been brought into the discussion, adding this is important. He supports doing the private tree inventory, and noted maybe drones could be used for this. Mr. Bahe stated he discussed this with the University of Minnesota, and noted while tree canopy is viewable, determining species is difficult. Hyperspectral review (thousands of bands of light) is another option, there is no industry standard at this time. Ms. Keller noted additional challenges to using drones such as privacy concerns and data retention. Councilmember Brausen stated it would be helpful to give residents instructions and detailed information for watering trees. He noted he is in favor of having increased fees for private heritage tree removal and education for residents on this. He stated he is supportive of the tree inventory on private properties and noted a tree protection ordinance should be enacted. He stated he believes in enforcement here and to change the public thinking about tree canopy. He added he supports all the policy questions. Councilmember Farris asked if the trees that were planted in the park were replacements. Mr. Bahe stated yes, the trees planted were replacements. Councilmember Farris supported all the policy questions and asked about the zoning code. Mr. Walther stated more details will be brought to the council on the zoning code amendments later and will be prepared based on the council’s discussion and general direction. Councilmember Rog agreed with Councilmember Brausen’s comments and asked with regard to tree inventory, how would a tree inventory guide the city’s investments. Mr. Bahe stated the city has a robust inventory already, and regarding expediting the inventory, he is not sure there would be any extra benefit. He added inventory also allows staff to note where there are too many of one species, also noting the city has a pretty diverse tree inventory. Councilmember Rog asked about watering her oak tree. Mr. Bahe stated trees need deep watering. She noted this would be an opportunity to educate on how much to water each tree. Mr. Bahe stated that it is difficult to quantify, and the city is developing an educational document on oak trees. Councilmember Rog noted she supports future increased spending on tree programs. She added also she supports education on watering and care which is critical and on compliance as well. She asked how common it is that landowners do not adhere to the landscaping plan. Mr. Walther stated there are generally only isolated and small deviations with some rare exceptions, but most comply fully. Councilmember Rog stated she supports annual inspections to keep on top of this. Councilmember Rog noted she supports working with the county on tree preservation projects and supports an ordinance for heritage tree preservation. She stated she would also like to learn DocuSign Envelope ID: 47BBAC52-6B0E-4D7B-AAB7-F8108933F6AC Study session minutes -8- Sept. 18, 2023 from surrounding communities. She stated she has concerns about implementing fees but is in support of all staff’s policy questions – apart from preferring stronger actions around preserving heritage trees on private property. Mr. Bahe stated staff does meet with the county on tree preservation projects. Councilmember Dumalag asked if trees in MnDOT areas are part of tree preservation actions. Mr. Bahe stated no, that is managed by MnDOT, this only pertains to city tree inventory. Councilmember Dumalag asked how trees on Excelsior Blvd are maintained because they are in a special services district. Mr. Bahe stated the city maintains those trees. Councilmember Dumalag stated she supports the recommendations of policy questions by staff but would like to be able to persuade residents to preserve heritage trees. She added she is curious about the zoning code and would like to see further definition there. Councilmember Rog stated that she supports future increased spending on watering and disease treatment, as well as tree protection during construction. Councilmember Mohamed stated she is in support of long-term goals, closing gaps, and is in support of future increased spending and the zoning code as well. She noted she is not sure about enforcement of restrictions on private property but is open to exploring that. Councilmember Budd stated she supports all the policy questions asked by staff. Mayor Spano stated he has not heard about a lot of issues over the years, but trees are an issue he does hear a lot about. He agrees with heritage tree preservation and added there is a need for balance as it relates to policy questions. He noted he did not see the ESC written report in the city council report. He also added the tree canopy goal was set for CO2 and heat reduction as well as other reasons, and he agrees with tree canopy goals. He added that the council will need to be intentional for the goal as well as tree inventory. He noted there are opportunities to develop inventories and work with residents. He added he is not opposed to future increase spending on watering trees, but stated the city may want to look at planting more trees that are drought resistant. Mayor Spano noted the Tree Trust and asked if there is a way to expand the program to have more trees available for residents to plant. He stated he is interested in the heritage tree concept, but it will need a very discerning eye. He supports the other policy questions and noted he would like more information on private trees and on legal boundaries of the city on the private tree questions. Mayor Spano stated he does not think the city will be able to go forward with this current program with the same resources. Councilmember Brausen agreed and stated he is in favor of allocating more resources to this program. Councilmember Rog noted an urban tree growth initiative and will send the link to staff. She added she is supportive of an ordinance that looks at private tree removal but not necessarily supportive of the inventory piece. She asked if having a fine would change how the property owners and developers deal with heritage trees. Mr. Walther stated he is skeptical about DocuSign Envelope ID: 47BBAC52-6B0E-4D7B-AAB7-F8108933F6AC Study session minutes -9- Sept. 18, 2023 additional fees would alter their decisions given the costs would still be low compared to the overall project. Councilmember Rog added there is a sense of urgency around tree canopy, and she is supportive of coming on strong for preservation. Mayor Spano noted green space requirements for developments. He would like to know about other ways to be more thoughtful, creative and flexible in this area. Ms. Keller summarized the discussion and stated staff will bring more information back to the council on specific areas requested. The meeting adjourned at 9:30 p.m. Written Reports 3. Proposed FOG and backflow prevention programs update 4. End uses of compost 5. Cedar Lake Road + Louisiana project update ______________________________________ ______________________________________ Melissa Kennedy, city clerk Jake Spano, mayor DocuSign Envelope ID: 47BBAC52-6B0E-4D7B-AAB7-F8108933F6AC