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HomeMy WebLinkAbout2025/08/11 - ADMIN - Minutes - City Council - Study SessionOfficial meeting minutes City council study session St. Louis Park, Minnesota Aug. 11, 2025 The meeting convened at 6:04 p.m. Council members present: Paul Baudhuin, Tim Brausen, Sue Budd, Yolanda Farris, Margaret Rog, Mayor Nadia Mohamed Council members absent: Lynette Dumalag Staff present: City manager (Ms. Keller), community development director and interim building and energy director (Ms. Barton), administrative services director (Ms. Brodeen), city assessor (Mr. Bultema), finance director (Ms. Cruver), facilities superintendent (Mr. Eisold), recreation superintendent (Mr. Friederich), public works director (Mr. Hall), fire chief (Mr. Hanlin), engineering director (Ms. Heiser), city clerk (Ms. Kennedy), deputy police chief (Mr. Nadem), communications and technology director (Ms. Smith), financial analyst (Ms. Stephens), park superintendent (Mr. Umphrey), HR director (Ms. Vorpahl), deputy city manager (Ms. Walsh), parks and recreation director (Mr. West), racial equity and inclusion director (Ms. Yang) Discussion items 1. 2026 Operating budget Ms. Cruver presented the staff report. The following policy considerations were presented and discussed: 1. Does the city council support the recommended general fund budget, one-time spending ($294,752), and levy increase ($556,685) as presented, with the understanding that capital projects will require additional levy increases? 2. Does the city council support a flat Housing Redevelopment Authority levy in 2026 of $1.19 million, with the understanding that additional external revenues are going to the Affordable Housing Trust Fund to support programs? 3. Does the city council support an Economic Development Authority levy of $375,000 in 2026, a planned increase of $187,000 from 2025, to cover non-personnel programming funded out of the development fund? 4. Does the city council support the recommended transfers between internal service funds to ensure each fund is meeting policy and best practice guidelines? 5. Does the city council support lowering the funding for public art for light rail stations from $175,000 to $75,000 to align with the current plans for the projects? 6. Does the city council wish to add $80,000 in the 2026 budget to add public art to the Dakota Park Pedestrian bridge? Docusign Envelope ID: F560D01B-4FFF-4EB9-B167-475CBAC4ADBA Study session minutes -2- Aug 11, 2025 On June 16, 2025, the council received an update to non-property tax city revenues and expenses forecasted in 2026. This report included recommended operating spending and reduction proposals in the general fund (the city's largest fund that supports core city services) and is supported largely by the property tax levy as well as recommendations for the development fund, Affordable Housing Trust Fund (AHTF), associated Economic Development Authority (EDA) and Housing Redevelopment Authority (HRA) levies, as well as the city’s internal service funds. Staff is seeking specific feedback on whether the council’s priorities have been accurately captured and reflected in the proposed budget, and whether the council is seeking additional investments in other city-adopted priorities. On Sept. 2, 2025, the city council will receive a report on forecasted capital expenses and revenues, as well as recommended new spending proposals for 2026. At that meeting, staff will present a more complete proposed 2026 budget and a comprehensive recommended levy increase for 2026. Ms. Cruver stated that on Sept. 15, 2025, the preliminary levy will be on the agenda for council approval. This is the maximum levy amount the county will use to estimate residents' property taxes. Ms. Cruver presented information regarding the three departments with the largest proposed budget increases for 2026. Ms. Cruver stated the parks and recreation department will offset proposed increases with an ongoing reduction of $76,800. This reduction comes from reducing underspent line items in their budget and ending a mulch service previously provided to residents at a loss. Regarding the mulch service, Council Member Rog asked if is the same location where residents currently have access to wood chips at no cost. Ms. Walsh stated yes, that is correct. Council Member Rog asked if residents would still be able to access free wood chips at the site. Ms. Walsh confirmed that free wood chip access will continue; the city will rent equipment to grind wood into chips. Council Member Budd asked about $265,000 in expected revenue for concessions services. Ms. Cruver stated that this would involve staff taking over concessions during the winter months. She stated that staff believe they will be able to offset expenses by raising enough money from staffing concessions in-house. Council Member Rog asked if the tree treatment program is now under the parks and recreation department and if this position is consistent with past practice. Ms. Cruver stated yes and noted that within the parks and recreation department, tree programs are under the natural resources division. Council Member Rog asked about concessions at the Recreation (Rec) Center and if credit cards would be the only accepted method of payment. Ms. Cruver stated concessions will accept cash or credit, which is the norm. Docusign Envelope ID: F560D01B-4FFF-4EB9-B167-475CBAC4ADBA Study session minutes -3- Aug 11, 2025 Council Member Rog stated that she was surprised and pleased to see that the Rec Center’s skate program serves over 5,000 people in the community and commended staff. Council Member Budd asked if there had ever been a demographic analysis of the 5,000 people the skate program serves. Mr. West noted staff does not currently have specifics, but the demographic comprises children and adults from St. Louis Park and surrounding communities. Ms. Cruver transitioned the discussion to the police department’s proposed budget. The department will offset proposed increases by $25,500 in reductions to several service expenses in their budget which are regularly underspent. New and expanded spending in 2026 includes overtime increases, three new drones, two new eBikes for patrol, and expanding the number pepper ball launchers to equip all squad cars. She noted the largest increase in the police department budget is overtime, equaling $250,000. Council Member Farris asked if the high cost in overtime is due to staffing shortages. Ms. Cruver stated that staffing is one reason for high overtime costs. At this time, St. Louis Park is not working with a greatly reduced staff. When turnover or retirements occur, the process of hiring new officers, including background checks, training and onboarding requires significant time. Deputy Chief Nadem stated that in 2024, seven experienced officers left the St. Louis Park police department. Though 13 more staff were hired, the process of training and onboarding officers takes about one year. This requires other officers to work overtime to cover gaps. Council Member Budd noted that in 2024, attrition was approximately double its historic rate. She asked if increased attrition was attributed to a specific reason. Deputy Chief Nadem stated it was an anomaly. Council Member Budd asked why the police department had budgeted low in the past, with increases proposed this year. Ms. Cruver stated that when the budget was set in 2025, staff was halfway through the year. At that time, they did not yet know the overtime costs for 2024. Staff are catching up with appropriate data so they can make more informed spending decisions going forward. Council Member Baudhuin asked what PepperBall launchers are. Deputy Chief Nadem stated that PepperBall launchers propel a chemical irritant that incapacitates a violent subject so they can be apprehended safely. The PepperBall launchers are a less lethal tool that allow officers to slow down the situation, create space and de-escalate a violent subject. Council Member Baudhuin asked if the police currently have PepperBall launchers. Deputy Chief Nadem stated no, officers are currently equipped with 40 mm launcher that are designed to physically strike a subject with a projectile. Council Member Baudhuin asked if any data shows that there is de-escalation in an event when using PepperBall launchers. Deputy Chief Nadem stated the use of a launcher will slow down the pace of a situation if the subject is armed. PepperBall launchers are an alternative to police utilizing a firearm against a violent and possibly armed subject, while also controlling the incident. De-escalation can then be conducted by crisis negotiation officers to help bring about a safer outcome. Docusign Envelope ID: F560D01B-4FFF-4EB9-B167-475CBAC4ADBA Study session minutes -4- Aug 11, 2025 Council Member Baudhuin asked if the racial equity and inclusion (REI) staff is consulted on the kinds of decisions the council is making around police tactics. Deputy Chief Nadem stated that an REI analysis is conducted on proposals and implementation of PepperBall launchers was discussed with the Police Multicultural Advisory Committee (PMAC) as well. He noted that PMAC has expressed support for the implementation of PepperBall launchers. Council Member Budd asked if the proposed amount of money equips all police officers or the Special Weapons and Tactics (SWAT) team only, and if other organizations could provide this equipment for the city’s police force. Deputy Chief Nadem stated the PepperBall launcher will not be issued to every officer but would be issued to every squad car that does not currently have a 40 mm launcher. Each squad car will be provided with either a 40 mm launcher or a PepperBall launcher as a less lethal option. Deputy Chief Nadem added that if officers waited for another agency to provide equipment, the process of coordination, availability and acquisition takes a great deal of time, which they may not have under these circumstances. Council Member Rog asked about police drones and what they are utilized for. For example, she asked if they can be used to view a resident's backyard without a warrant, or if they can be used to view school property. Deputy Chief Nadem stated drone deployment, use and documentation is strictly regulated by state statute. Drone deployment can only be conducted with a warrant or under exigent circumstances related to a warrant exception. He pointed out that drones are not used to view a private person’s property without a warrant or an exception to a warrant. Council Member Budd asked about staff members in the military and on long-term leave. She asked if long-term leaves would have an impact on police department staffing. Deputy Chief Nadem stated a military leave could be six months to one year and would impact police staffing. Council Member Budd asked if leaves are being factored into the costs related to the police force. Deputy Chief stated military leaves relating to overseas deployment cannot be factored in because the requests are made randomly by the United States Army. Ms. Cruver stated that this is something staff is working on, adding that the city already covers military leave and parental leave. However, she noted there is no existing data on the impact related to military leaves of absence and staff will continue to assess this. Ms. Cruver transitioned the discussion to the administrative services department’s proposed budget. Administrative services is offsetting proposed increases by reducing spending by $34,000 through more cost-effective software for meeting minutes, reducing the contractual services budget, and charging processing fees for credit cards. Ms. Cruver noted that the largest proposals in administrative services are for citywide initiatives directed by council. She reviewed one-time costs of $75,000 instead of $175,000 as council previously directed, to install public art in conjunction with light rail stops in St. Louis Park. This is due to subsequent conversations where murals were identified as the preferred art form at the stations. By design, murals are less expensive than many other types of public art. Additionally, in the 2026 budget there are funds for Vision 4.0 strategic planning, including a $50,000 one-time consulting fee. Ms. Cruver also noted a one-time increase of $40,000 for Docusign Envelope ID: F560D01B-4FFF-4EB9-B167-475CBAC4ADBA Study session minutes -5- Aug 11, 2025 temporary staff to assist with elections in 2026, which is a function of being required to administer two elections in 2026 versus one election in 2025. Council Member Brausen asked if the city will still ask developers to fund public art around the light rail station areas. Ms. Cruver stated yes. Council Member Rog noted that the council did approve a larger cost amount for public art. She asked if there is an opportunity to direct those allocated funds to public art at light rail stations, which leads to city beautification as well as decreased crime. Ms. Cruver stated that staff are thinking about how to formalize public art as a policy for the city. By reducing the cost of art at light rail stations, funding is freed up for uses such as the Dakota Pedestrian Bridge. Council Member Rog noted the strategic plan Vision 4.0 process and stated she remembered robust staff-led sessions that occurred in the last visioning process. She asked what factors led to the city requiring a consultant this time and asked her fellow council members to weigh in. Ms. Keller stated that in this vision process, staff are also considering how to operationalize the priorities created through a citywide strategic plan. The consultant’s role is to help staff examine what all departments are doing to live out these priorities. Council Member Rog asked if the strategic plan would have measurable goals. Ms. Keller stated that is her expectation, adding she envisions goals along with timetables to help drive the work. Council Member Rog stated at times she has felt limited by decisions of past city councils, so components of the plan are a concern. She noted the strategic priorities have been helpful for her in this regard. Ms. Brodeen stated that the Vision 4.0 process is intended to develop the strategic priorities on which the strategic plan will be built. The strategic plan will provide additional measures, goals and timetables that will let the council, staff and the public know how we are achieving and living the strategic priorities established through the Vision 4.0 process. Council Member Brausen stated that this seems like a one-time goal and would assist the administration of the city. He stated he is supportive and noted the goal ensures that staff and the city are utilizing the outcomes of the Vision of 4.0 work to the best of their ability. Ms. Cruver transitioned the discussion from the major changes in the general fund to the major changes in other city funds. She asked the council to note that in the 2025 state legislative session, extension of the city’s special Tax Increment Financing (TIF) legislation was not passed. Due to this, changes will occur with the city’s Affordable Housing Trust Fund (AHTF) program. She stated that the city will still be able to pool TIF for affordable housing but will lose the ability to deposit those funds into the AHTF, thereby significantly limiting the flexibility and impact of these resources. Ms. Cruver stated that staff recommends the city continue directing pooled TIF to the AHTF and maintain the current levy support for this work so that the city can maximize assets for affordable housing opportunities. Docusign Envelope ID: F560D01B-4FFF-4EB9-B167-475CBAC4ADBA Study session minutes -6- Aug 11, 2025 Mayor Mohamed asked what change the city would experience because the TIF legislation was not passed. Ms. Cruver explained that the change is that the city’s special legislation allowing for the deposit of pooled TIF for affordable housing into the AHTF is expiring and was not renewed by legislature. She stated that future pooled TIF funds for affordable housing will be able to be used on brick-and-mortar projects. However, the process will be more complicated as compared to the flexibility of how funds were used in the past. Ms. Barton added that these funds can be used on development projects and do not have to be used on city-led projects. The funds are not allowed to be used for city housing programs, as was allowed in the past. They can only be used for the construction of new development projects or renovation of existing affordable housing. Ms. Cruver stated this change is not reflected in the budget yet, adding that it will take effect at the end of 2026. She noted that funding will still be available for the city’s affordable housing program uses in 2025 and 2026. Council Member Rog asked what criteria staff use for purchasing land. She noted a parcel of land in Ward 1, which she had mentioned to staff a few years ago and was recently purchased for $1,000,060.00. At the time she mentioned the parcel to staff, the city elected not to purchase it. Ms. Barton stated there are a number of factors involved in the decision to purchase land. Factors include whether the land is in a strategic location that could facilitate a larger development or prevent an undesirable redevelopment project from occurring. Additionally, staff considers whether parcels of land are available because the free market will not purchase them for some reason. It is preferred to have the free market purchase and develop land. The city’s zoning code and comp plan provide the development guidance for free market purchase and development. Council Member Rog asked if there are properties within the city that are still available to purchase. Ms. Barton stated that there are always properties available, but city staff evaluate each opportunity to determine if a public acquisition is the right step. Ms. Cruver noted the Climate Investment Fund. She stated that, assuming expenditure trends plateau at approximately the current level of $200,000 per year, staff anticipates depleting the fund by year-end 2026. The city council gave staff direction at the June 9, 2025 study session to identify an ongoing funding source that supports the yearly investment of $200,000 into climate action incentive programs. Ms. Cruver stated that staff is currently exploring two funding sources for this annual investment: utility franchise fees and the general levy. She stated there is an opportunity to divert $200,000, which is approximately 4% of franchise fee revenues, to the climate investment fund. She also added that staff recommends increasing the levy by $50,000 a year over four years, utilizing fund balance to cover the difference until the fourth year. Ms. Cruver stated this would use approximately $100,000 of additional general fund balance and could be reviewed each year during the budget process as spending and revenue needs change. Ms. Cruver stated that council direction will be sought at the Sept. 2, 2025, city council study session on a final recommendation for supporting the Climate Investment Fund permanently. Docusign Envelope ID: F560D01B-4FFF-4EB9-B167-475CBAC4ADBA Study session minutes -7- Aug 11, 2025 Council Member Rog noted there will be a loss of federal funding on these goals of climate action, so it will be necessary to invest more, not the same amount, to incentivize residents. Ms. Cruver stated that the staff is considering options but does not have a new recommendation at this time on a specific amount. She added that staff will consider interest rates and other factors, adding $200,000 is the recommendation at this time. Ms. Cruver noted that staff is also looking closely at internal service fund considerations and fund balances. She stated recommendations on cash balances for this fund include reducing the property and casualty insurance fund and moving this back to the general fund. She stated that staff recommends the employee benefit funds should increase the funds' cash balance by $100,000 by transferring unobligated general fund dollars to meet the goal, in addition to the increase in levy discussed earlier by the council. Ms. Cruver stated that staff-recommended transfers, if implemented, are related to these three internal funds and would equal a net $400,000 increase to the general funds unobligated fund balance. Ms. Cruver also pointed out credit card processing fees, which have now become a burden to the city at an annual cost of $350,000 to $450,000. These costs are largely in the utility and general funds. Rather than increase the levy or fees to account for this budget shortfall, staff proposes to pass a 3% credit card processing fee onto the individual cardholder. Credit card fees would be paid by customers who choose to pay by credit card. Council Member Budd asked if there would still be high costs if residents pay by checks instead of credit card. Ms. Cruver stated changes in the city’s banking services have become more automated, so the costs would have a minimal impact on city operations. Mayor Mohamed asked if there is a communications plan in place to notify residents of these changes. Ms. Cruver stated yes and noted staff will work with the communications department to publish information prior to implementation of charging credit card fees. Ms. Cruver shared that staff is interviewing vendors for Paid Family and Medical Leave (PFML) policies, and this will come to the council for approval later this year. Costs will be included in a staff report to the council when a final vendor has been chosen. In collaboration with the city’s benefits consultant, a Request for Proposal was issued to identify a private vendor to administer PFML as an alternative to the State of Minnesota’s program. Council Member Rog stated council consensus showed interest in a community center feasibility study earlier this year, and she asked if there could be consideration for allocating funds to this study in the 2026 budget. Mayor Mohamed stated she is hoping for this conversation to be held in 2026, after the Vision 4.0 process is completed. Council Member Brausen asked if this topic could be part of the capital improvements discussion. Docusign Envelope ID: F560D01B-4FFF-4EB9-B167-475CBAC4ADBA Study session minutes -8- Aug 11, 2025 Ms. Keller stated that staff would do work to determine if a needs analysis, not a feasibility study, could be funded within the 2026 operating budget as proposed. If staff felt that additional dollars would be needed, staff would present their findings to the council at the Sept. 2, 2025 budget meeting. Mayor Mohamed reiterated her concerns, stating she wants to respect the results of the visioning process before doing a needs analysis. If the council pursues a community center, she wants to be able to point back to the visioning process that brings the idea of a community center forward. Council Member Rog stated, however, that a study does not mean there would be a commitment to build a community center. The study would only be for the council to gather more information before pursuing a community center. Council Member Rog asked what tools will be available for the public regarding tonight’s discussion. Ms. Cruver stated that the graphs presented tonight will be included in publications presented to the public by the finance department in the next few weeks. There will be information on spending by department and the information will be posted to the city website. Council Member Rog stated the public will be interested in the details of expenditures, such as pepper ball launchers being purchased by the police department. Ms. Cruver stated that those details will be included in the online budget book, along with the presentation and the minutes from this meeting. Ms. Cruver stated that the next steps will be presented at the Sept. 2, 2025 city council meeting. At that meeting, the council will receive a report on the 2026 capital improvement recommendations and will consider an all-inclusive levy recommendation for 2026. Council Member Baudhuin noted the city's priority pie chart and asked why spending on the racial equity and inclusion (REI) priority is so small by comparison. Ms. Cruver stated the pie chart represents all the new spending being proposed and not all spending by the city. She noted the biggest cost drivers in increases this year are setting up the brush site, city-operated concessions and police overtime costs. She shared that this is a year of maintenance while right-sizing the budget. Council Member Baudhuin stated that maybe the council needs to take a closer look at priorities and how city spending aligns with them. Ms. Keller noted she looks at city priorities, and she expects to infuse REI as a lens of the work across all city priorities. It was the consensus of the city council to approve all the policy questions noted below: 1. Does the city council support the recommended general fund budget, one-time spending ($294,752), and levy increase ($556,685) as presented, understanding that capital projects will require additional levy increases? Docusign Envelope ID: F560D01B-4FFF-4EB9-B167-475CBAC4ADBA Study session minutes -9- Aug 11, 2025 2. Does the city council support a flat Housing Redevelopment Authority levy in 2026 of $1.19 million, with the understanding that additional external revenues are going to the Affordable Housing Trust Fund to support programs? 3. Does the city council support an Economic Development Authority levy of $375,000 in 2026, a planned increase of $187,000 from 2025, to cover non-personnel programming funded out of the development fund? 4. Does the city council support the recommended transfers between internal service funds to ensure each fund is meeting policy and best practice guidelines? 5. Does the city council support lowering the funding for public art for light rail stations from $175,000 to $75,000 to align with the current plans for the projects? 6. Does the city council wish to add $80,000 in the 2026 budget to add public art to the Dakota Park Pedestrian bridge? Council Member Farris thanked Ms. Cruver and staff for the presentation, stating it was very helpful and easy to understand, and she appreciated the staff’s work. The meeting adjourned at 7:53 p.m. ______________________________________ ______________________________________ Melissa Kennedy, city clerk Nadia Mohamed, mayor Docusign Envelope ID: F560D01B-4FFF-4EB9-B167-475CBAC4ADBA