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HomeMy WebLinkAbout2024/08/12 - ADMIN - Minutes - City Council - Study SessionOfficial minutes City council study session St. Louis Park, Minnesota August 12, 2024 The meeting convened at 6:03 p.m. Council members present: Mayor Nadia Mohamed, Paul Baudhuin, Tim Brausen, Sue Budd, Yolanda Farris, Lynette Dumalag, Margaret Rog Council members absent: none Staff present: City manager (Ms. Keller), deputy city manager (Ms. Walsh), administrative services director (Ms. Brodeen), finance director (Ms. Cruver), deputy finance director (Mr. Olson), facilities superintendent (Mr. Eisold), recreation superintendent (Ms. Friederich), public works director (Mr. Hall), engineering director (Ms. Heiser), building and energy director (Mr. Hoffman), Police Chief Kruelle, interim Fire Chief Scott, housing supervisor (Ms. Olson), deputy city clerk (Ms. Scott-Lerdal), communications and technology director (Ms. Smith), park superintendent (Mr. Umphrey), human resources director (Ms. Vorpahl), planning manager (Mr. Walther), parks and recreation director (Mr. West) Guests: Rebecca Petersen, Redpath Discussion items. 1. Capital budget and levy recommendation. Ms. Cruver presented the staff report. Council Member Brausen asked about Tax Increment Financing (TIF) projects and how they will impact taxpayers. Ms. Cruver stated that when TIF districts are decertified, they add to the tax base of the city. More tax base to pay for the levy means the payments will be more spread out over more payers, lowering individuals’ bills. Before TIF districts are decertified, the owners continue paying the property tax rate they paid before the project started. Council Member Dumalag noted capital versus operating funds. She asked about it being any expense over $10,000 and non-recurring and stated there are some recurring items in the report. She asked if this relates to municipal or IT items. Ms. Cruver stated yes, that is correct and added this should be reviewed and possibly moved into the operating fund in the future. Council Member Dumalag asked if departments negotiate their own contracts and how assumptions are built in. Ms. Cruver stated staff wants IT involved in anything related to IT contracts or needs. She added data privacy would also be included in any IT contracts. Council Member Dumalag stated in the CIP there are larger expenditures in sanitary sewer utility and asked if that is the negotiated price. Ms. Cruver stated that is inflation-related pricing. Ms. Heiser added there are cost increases every year and there is budgeting completed each year and it is an escalator each year, based on past performance. She added all sanitary sewer projects need to be part of the bidding process. Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33 Study session minutes -2- August 12, 2024 Council Member Dumalag noted the park improvement fund. If the pipeline of projects is slowing, she asked if staff anticipates having to adjust next year so as not to deplete that fund. Ms. Cruver stated yes, staff would work on estimates and if it comes in under revenues, there would be adjustments, but added 2025 should be fine for this fund. Council Member Rog about hydraulic rescue tool at $85,000. Interim Fire Chief Scott clarified it is a fire rescue tool for extractions. Council Member Brausen asked if there is a resale market for updated tools like this. Mr. Scott stated there is very little market for resale. He stated old fire engines are included in trade-ins and some smaller out-state areas do want used fire engines, so they are put to good use. Council Member Rog asked about police body and dash camera costs, noting $250,000 for storage per year. She noted the 2025 and 2026 costs at $490,000 and how that was budgeted. Ms. Cruver stated the remaining years are in the IT fund. Council Member Rog noted playground equipment and areas that will be having work this year. She asked what the shelf life is for playground equipment. Mr. West stated there is a shelf life of 15-18 years and then it is donated and repurposed for children in other parts of the world. Council Member Rog asked then if the equipment is not good enough for us, why is it ok for those in other countries. Mr. West stated it might be good enough, but safety standards in the United States are more stringent than in other countries. He added there are evaluators who are licensed installers who come in to inspect, and several in St. Louis Park are due to be updated this year. Council Member Rog asked if the public is still asked to give input on playground equipment. Mr. West stated yes, adding staff reaches out to area residents around the playgrounds. Council Member Rog asked about replacement of the water park and an investment of $275,000 in gutters. Ms. Cruver stated that is for pool gutters and the aquatic park study is focused on the replacement of the pool. Ms. Friederich said the study results will be back at the end of August, and the results will be reviewed while direction and bids would need to be in place before the pool is replaced. Ms. Cruver added this item is funded by the levy so there could be discussion on this about funding it with excess fund balance instead of the levy. Council Member Rog asked about Water Treatment Plant #8 with rehab costs of $400,000 and if there is anything wrong at that facility. Mr. Hall stated that is for routine maintenance and filter media replacement, inspection of the filters, and then repainting of filters. Council Member Rog asked about Webster Sanitary Sewer costs of $800,000. Mr. Hall stated this is a lift station with new pumps, wet and dry well, new force main, and with 34 lift stations in the city, the plan is to do one each year to spread the costs out. He added the pumps wear out as well as the force main and the wet wells deteriorate and all need to be replaced over time. Council Member Rog stated that is expensive, and Mr. Hall agreed. Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33 Study session minutes -3- August 12, 2024 Council Member Rog asked about $150,000 for security support and body cams. Ms. Cruver stated that is part of IT items and is more closely aligned with cyber security. Council Member Rog asked about costs of public safety noting this is good to keep track of. Ms. Cruver stated that will be part of the next discussion. Council Member Budd asked about handgun optics. Police Chief Kruelle stated this is an accuracy enhancement and an actual optic on top of a gun. Council Member Rog stated that is $67,000 for handgun optics. She asked about the canine purchase. Police Chief Kruelle stated the city will look at purchasing another canine in 2025. Ms. Cruver stated there is a fund balance currently and in the past donations have gone into the general fund, and earmarked and some of those funds will be used to cover the cost of the canine purchase in 2025 and future expenses related to it. Ms. Cruver added the city also regulates these past donations, so the money is earmarked to be spent as it was intended originally. Council Member Rog asked about license plate readers and if the city has always had them. Chief Kruelle stated the police have had them for the last two years, so this will be an expansion. He stated it is used for solving stolen auto crimes and proactive response. She asked if they were mounted on police cars or mounted around the city. Chief Kruelle stated they are mounted around the city. Council Member Rog asked if artificial intelligence is being used. Ms. Keller stated this scans license plates to see if the car is stolen, but not for facial recognition. Council Member Dumalag asked about some of the high-level plans related to redesign in the police department. Ms. Keller stated it is not developed yet, but there are several needs. Council Member Budd asked about the impact the budget will have on city taxes. Ms. Cruver stated staff does not have a precise number yet as there are several policy changes and staff is seeking council direction, but the scope of impact and projections will be provided before the Sept. 16 meeting. Council Member Budd asked about $320,000 for overlay and GO bonding. Ms. Heiser stated there are 43 miles total of at-risk streets, with 17 miles actively delaminating. Of that, there are 4.5 miles of street that are less than 15 years old, so the recommendation is to do in-house overlay on those streets. Starting in 2026 through 2030, the streets over 15 years old would be scheduled for a mill and overlay, in preparation for that, the sidewalks on the streets will need to be updated to meet ADA requirements the year before mill and overlay. Council Member Brausen asked if the $320,000 is for prepping streets for mill and overlay. Ms. Heiser stated that no, it is to buy asphalt and utilize 4 weeks of staff time to put in a one-inch overlay on streets less than 15 years old, to address delamination that has occurred. Council Member Brausen also asked Ms. Heiser to confirm if delamination is mostly a cosmetic issue that does not cause structural problems. Ms. Heiser stated it can cause premature aging, but it is not structural. Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33 Study session minutes -4- August 12, 2024 Council Member Baudhuin asked about snow removal in lighter winters vs. heavier winters and costs related to this. Ms. Cruver stated it is always a mixed bag, but in 2025 those funds will be appropriated in its own fund, so the funds will stay there for that purpose. Council Member Rog asked what the staff salary increase was that the council approved. Ms. Cruver stated in 2024 it was a 3.5% increase, which has been the historical average. Council Member Rog asked how many staff the city has. Ms. Cruver stated it is around 300. Council Member Rog asked if that is typical for a city of St. Louis Park’s size. Ms. Cruver stated she would have to research other cities to determine staffing levels. Council Member Rog asked if the city still pays at the 85th percentile. Ms. Cruver stated the city’s compensation plan does target at that range. Council Member Rog asked what new positions were added in 2024. Ms. Keller stated she would get that information to council later. Council Member Rog asked about the Safer Grant and how long the commitment is to maintain those 3 firefighters. Interim Fire Chief Scott stated there is an expectation but no set time for keeping them. He stated they are being fully utilized and are helping the fire department enormously. Council Member Rog asked if website design is still in the works for 2025. Ms. Cruver stated yes. Council Member Brausen stated he is supportive of the policy questions and the proposed budget as drafted. He added he was not at the delamination discussion which had a clear majority, and stated he is not sure that is worth adding to the budget for this coming year. He stated the cost is not about structural integrity of streets but is about being proactive, and given the large levy increase coming, he would not support that. He added he also supports the 5-year projected CIP as well. Council Member Budd stated she also supports the proposed budget but is concerned about a 9% levy. She stated she was part of the delamination discussion and has residents in her ward that are concerned. She stated she understands the difference between structural and aesthetic, but it is starting to look like a gravel road and when plowed in winter it gets worse as well as affecting market value and the $20,000 cost is reasonable. She added she appreciates the clean-up of salaries, and she is supportive of all the policy questions and the proposed budget. Council Member Dumalag stated she is supportive of policy questions 1 and 2 and was also part of the delamination discussion. She noted there are residents in her ward concerned about their roads as well. She stated she is supportive of delamination and would also approve it as a policy as well. Council Member Baudhuin asked about the $300,000 for delamination and if that were eliminated, and how would it affect the levy. Ms. Cruver stated it would then be at 8.3%. Council Member Baudhuin stated he is supportive of moving forward but is deeply concerned about a 9% levy. He stated he would like to look at various scenarios. Ms. Cruver stated she will Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33 Study session minutes -5- August 12, 2024 provide those at a future meeting for discussion. She stated it is helpful for her to understand the council’s comfort level to prepare those options. Council Member Baudhuin stated residents have expressed concern about levy increases and he wants to be sure that staff and council do their due diligence on this to bring the levy down as much as possible. He stated residents also tell him they love living here, and that is because of all that is offered and paid for through taxes. He also stated he would like it messaged better to residents to make the services and value they are receiving in exchange for their tax dollars understandable. Council Member Farris stated she also supports the proposed budget and asked if it passes at a 9% levy, is there a way for seniors and others to get assistance. Ms. Cruver stated there are programs available through the state and that information is included in all communication. Council Member Farris added she supports the proposed 5-year CIP as well. Council Member Rog stated she would not support the 9% levy as it is too high. She stated she has a proposal for subbing out the alley project for delamination, adding there is only so much to spend. She stated the alley reconstruction costs are significant, and when looking at these costs, it feels like roads are more important than the alleys. She stated this would allow delamination work and get the levy increase lowered. Council Member Rog added it feels like some funds have higher balances than needed, so there could be wiggle room there as well. Ms. Cruver stated there is a balance in the park improvement fund, and while she agrees, there should be caution on reducing that balance too far, so there is not a spike later. Council Member Rog stated the city has invested a lot in affordable housing, and while she wants to continue this, there may be a time and place to pause as well, especially when considering the huge investments being made in market-rate housing. She stated TIF is on the back of folks paying taxes since those are not collected for 10 years. She added at this time she is not supportive of a preliminary levy of 9%. She stated for the 5–10-year CIP, she will not support that either, adding there are lots of needs and the impact on residents is high. Ms. Cruver asked if there is a target on levy or CIP changes. Council Member Rog stated she would like to see it under 7% but is not sure that is realistic. She added she is not prepared to give a number. Council Member Dumalag added when talking about the cost to residents, the city has aging infrastructure, and it is all a matter of sharing in those costs. She noted the city could borrow the $36 million to pay for improvements or we could use the TIF districts to do that and there is an opportunity cost there. Council Member Dumalag added these are policy decisions made by this council or previous councils on the use of TIF. She added for the purposes of discussion and budget, these are things we need to talk about. Ms. Cruver noted the alley improvements are paid for by franchise fees and everyone pays those fees. Ms. Heiser stated franchise fees are being maxed out and added they are also used for parking lots, replacing sidewalks, ADA improvements of sidewalks and roads. Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33 Study session minutes -6- August 12, 2024 Council Member Brausen asked if the city is at the end of alley projects. Ms. Heiser stated yes and noted they should be completed by 2030. She added the program to reconstruct alleys was directed by the council and there were 20 miles of alleys total, with 5 that were gravel. The council directed this because it is an erosion control concern, gravel gets into storm sewer and there are drainage issues on many of these alleys. She noted reconstructing them is necessary for safety, solid waste vehicles, and they are used by bicyclists and pedestrians. She added that there is an annual operation and maintenance cost as well. Once constructed in concrete, it eliminates this annual cost and is a long-term investment. She stated they do ½ mile per year. Council Member Brausen asked if the delamination can be postponed one year. Ms. Heiser stated that it would be ok to postpone until there is funding available. She went on to say that she does not recommend reallocating funding from other projects to focus on delamination. Council Member Brausen stated he would suggest holding the project until there is a 5% levy vs. this year when there may be a 9% levy. Council Member Baudhuin asked if examples of streets and alleys can be forwarded to council members, so he can go look at the areas of need. Ms. Heiser stated she would get back to the council on this. Council Member Rog asked about sidewalk shaving and if that is something new the city is investing in. Ms. Heiser stated the city has done this as part of annual sidewalk projects, noting it has been stepped up now. She stated it takes care of a tripping hazard by shaving vs. taking out and replacing a sidewalk. Council Member Rog stated she feels good about this, because it addresses city priorities of biking, walking, and mass transit, which she added does not always feel like it is meeting these goals. Council Member Brausen stated he would like to see communication to residents that fees are going up also, and then alleviating some impact on homeowners. Ms. Cruver stated residential properties will pay less and will be as favorable as last year. Mayor Mohamed stated 9% is high compared to past years, but it only keeps getting higher and higher due to inflation and the cost of living. She added with this in mind, she was not surprised about this estimate. She stated she is happy about the new mattresses in the fire station. She also noted the body cameras, and the goal is for safety of the officer and the resident, and it is worth it to accomplish that goal. Mayor Mohamed stated she would love to see the 9% levy reduced, and she is hopeful that staff can work to lower this, while still considering the city’s priorities. She stated she would support delamination delay and pushing it back a year which would bring the levy down to about 8%. She continued that she also supports the 5-10-year CIP. She added people love living here and they know what they are paying for. She stated any monies that are collected in levies go back to providing for residents and those who do the services and she is happy about this. Ms. Keller summarized that staff heard a majority of council is not comfortable with the projected 9% levy. She noted that staff is presenting very real numbers that will most likely not Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33 Study session minutes -7- August 12, 2024 be adjusted. Ms. Cruver stated that pushing back delamination would lower the levy a bit, but she has not heard clear direction from a majority of the council that they want to delay this work. Mayor Mohamed stated the delamination should be held for one year. Council Member Brausen stated he would also like to postpone the delamination. Council Member Rog asked if there is flexibility on the aquatic center gutters. Ms. Cruver stated she would prefer more conversation on this item but added it could be looked at. Council Member Baudhuin stated it is helpful for this all to be clarified. He stated he would vote against a 9% levy right now. He asked how many things are more negotiable with timeline and can some of those scenarios be presented to council. Ms. Cruver stated if the council does want to hold off on delamination, it would be helpful for staff to know. She added staff has tried to be more precise and accurate with budgeting so she is not convinced she can find large savings this time. Ms. Keller added the aquatic gutter project would not be impacted by the levy as it comes from the park improvement fund. Ms. Cruver clarified that a reduction in spending in the fund would in fact impact the levy since the fund is supported by the levy in addition to other revenue sources. Ms. Walsh agreed and noted there is a decent amount of funding available in this fund, but the project will need to happen at some point. She added the study will show us how to proceed and when. She added this will not impact the levy. Council Member Budd added with delamination she encourages council members to go look at the areas and noted it is difficult to bike on these roads. Mayor Mohamed stated the 9% is uncomfortable, and she is hearing the council is not willing to de-prioritize any projects, adding it will not make much of a difference with the 9% levy. Council Member Baudhuin stated he is open to delaying projects and would like to see more scenarios on this. Council Member Brausen stated he is in favor of an 8.3% levy and delaying the delamination project. Council Member Budd stated she would support a 7.7% levy which is what it was last year. Council Member Baudhuin added he would support an 8% levy with eliminating some items. Ms. Cruver stated she is hearing council support for a levy closer to 8%, so she will look at that and present those items to the council that have the least impact on city priorities if they are delayed. Council Member Dumalag added the council has made promises to residents, and now if projects are delayed, and changes to decisions on policy, this will need to be addressed. Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33 Study session minutes -8- August 12, 2024 2. Review of 2023 annual comprehensive financial report. Mr. Olson presented the staff report. Ms. Petersen from Redpath was available to answer questions. Council Member Rog asked why there was no revenue seen. Ms. Cruver stated this relates to large capital projects and one factor is the Cedar Lou project, being funded by multiple sources and timing to projects. Council Member Rog noted an interactive website that the council used as a tool for budgeting in past. Ms. Cruver stated there are several tools available to help present the data. Council Member Baudhuin stated a video might also be helpful to residents about budgeting as well. Council Member Baudhuin noted that 67% of the general fund is property tax and in a similar report it said it was property tax and TIF. He asked for a breakdown of this. Ms. Cruver stated that can be found on pages 41-43 of the report. Mayor Mohamed asked about dollars in use and if this is related to public safety. Mr. Olson stated yes. Ms. Petersen presented an audit report to the council. She noted a contract was paid, but not signed in advance which poses a problem. She also noted there was a conflict-of-interest issue, which has now been addressed. She added there were also some issues with MN legal compliance including items of non-compliance related to public purposes of expenditures. She added there was also an issue with prompt payment of bills. She noted a contribution that was not made timely and exceeded the threshold. Ms. Cruver stated a temporary employee has been hired now to assist with keeping up with accounts payable. Ms. Petersen stated implementation of accounting policies was something that cities needed to do this year. She noted these are time-intensive for cities to implement, and with the city’s triple bond rating, this standard needs to be followed. She noted there is a liability with the future obligation, but there is no significant impact on bond ratings. She added that rating agencies are aware of this. Ms. Petersen noted unrealized gains on investments, which has an impact on cities as a whole. She noted also there are some uncorrected items in the financial statements, but they do not affect the audit. She stated staff was helpful with the audit and if any issues came to light during the audit, they were reported to the council in the letter. She added there will be more impact to staff time on accounting standards that are changing also. Council Member Budd asked about the contract findings and if this was the city reporting this item to auditors, or if the auditors found this item. Ms. Petersen stated audit adjustments are items that auditors find during their investigations and items found by the city itself are not held against it. Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33 Study session minutes -9- August 12, 2024 Ms. Keller asked for more detail on when discrepancies are found. Ms. Cruver stated staff does work closely with the auditors on issues and asks the auditors to weigh in on items if needed. Ms. Petersen added auditors must talk to staff in other departments, and even to council, about fraud or any accusations of fraud, and not only talk with the finance department. Mayor Mohamed thanked the auditors for this report and stated it is important the city is transparent and follows these standards on all services, programs, and initiatives. She stated council has had many discussions on public purpose over the years as well and will continue to do so. Council Member Dumalag asked about authorization for an expense and asked staff if documentation is consistent with city policy. Ms. Cruver stated yes, noting contracts now have a central portal where all are stored to be consistent and make sure they comply with city policies. She added regarding payments, there has been much revamping of the process, and that all W9s are stored appropriately, and all tax information is available. Ms. Keller added individuals have also been trained in processes to ensure compliance in areas of concern. Ms. Cruver stated the most important piece is the execution of this and staff will continue to work on these corrections. Council Member Rog noted on public purpose there was no law change, and the city has been earning this AAA rating and we are looking at changes in neighborhoods. She asked what changed and why were these items not called out in the past. Ms. Cruver stated one thing is new leadership in the finance department, noting she does not think the way the city is spending money related to the neighborhood grant program meets public purpose and she is not comfortable moving forward with something that is not in line with public purpose standards. She added there are also new eyes in the auditor’s seat as well with Ms. Petersen coming on board the same year as Ms. Cruver. Council Member Brausen added funding for neighborhood associations is a flashpoint and asked if we can ask the state auditor if the city can continue to make these grants to the associations, which is about community building. Ms. Cruver stated the response from the auditor would be that statutory changes would be required and that is possible. Council Member Dumalag stated the city has never been compliant ever with this issue. Ms. Cruver agreed. Council Member Rog stated that is open to interpretation, however, other cities do make grants to neighborhood associations. Ms. Cruver stated she, the city attorney, and the auditor are all in agreement on the interpretation of this issue. Ms. Cruver pointed out the 2022 report was delivered in December last year, and this year the audit report for 2023 was delivered on time, and the city is now on a good track to ensure this process is completed on time annually. Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33 Study session minutes -10- August 12, 2024 Written Reports. 3. Development proposal for 5401 Gamble Drive – Ward 4. Council Member Brausen stated he sent his concerns to staff and noted he has concerns about the drive-thru at the coffee shop and questioned the necessity. Council Member Dumalag stated this segment of West End could use some revitalization and the retail segment has been struggling. Mayor Mohamed noted impacts that may occur in the West End and what is allowed and not allowed, what applications are needed by developers and TIF request information. Ms. Keller stated if there should be more discussion on this, she would prefer to have the appropriate staff available for the discussion. Council Member Rog stated she feels there should be more discussion on this. The other council members agreed. Communications/meeting check-in (verbal) The meeting adjourned at 9:14 p.m. ______________________________________ ______________________________________ Melissa Kennedy, city clerk Nadia Mohamed, mayor Docusign Envelope ID: 33875C30-09DD-46AA-8992-81D17B0F4F33