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ARDEN HILLS CITY COUNCIL WORK SESSION — JULY 17, 2023 10 Mayor Grant said that was the general consensus. Councilmember Fabel said he was willing to trust the judgement of staff who use the equipment on a daily basis. Finance Director Bauman reviewed the Estimated Ending Fund Balance by Year chart. She noted the CIP Fund includes the Old Highway 10 trail and Lake Johanna trail, and the Public Safety Fund includes a new fire station starting in 2026. Discussion ensued regarding state funding and grants. Councilmember Fabel asked if they had figured out what a local sales tax might yield in Arden Hills. He wondered if a dedicated local sales tax could pay for large trail expenses. Finance Director Bauman said based on 2019 taxable sales, a quarter percent tax would generate about $300,000 a year, a half percent tax would generate about $600,000 a year. Councilmember Holden said that's why she brought up local sales tax and franchise fees at the last meeting to help pay for fire department expenses also. Finance Director Bauman said franchise fees have been talked about as an additional funding mechanism. Council could direct staff to explore that or local sales tax. Councilmember Holden felt franchise fees could be dedicated to trails and might be more successful than a local sales tax. City Administrator Perrault cautioned Council about tying franchise fees to a specific project, some cities franchise fees go to support capital improvement road projects. He discussed other options for revenue sources and uses. Finance Director Bauman stated the Equipment Building Replacement Fund has an immediate need for a tax levy increase, as does the Public Safety Capital Fund which includes the new fire station. The MSA fund summary with all projects listed will not be positive again until 2042. If they don't do the two trail projects it will be positive in 2034. Finance Director Bauman posed the following questions: What increases, if any, should staff assume? Does Council have a preference on how to allocate the General Fund transfer? Should the new LGA Aid be included in the PIR Fund? How does the Council want to allocate the Public Safety Aid? Explore additional funding mechanisms? Mayor Grant suggested using the General Fund transfer for one-time items, and putting the Public Safety Aid against the fire department. Discussion ensued regarding franchise fee proceeds. Councilmember Fabel supported using bonds for trails to get them completed, then using franchise fees or local sales tax to repay the bonds.