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ARDEN HILLS CITY COUNCIL WORK SESSION—MAY 13, 2024 3 Councilmember Fabel discussed how City employees would have to be paid well in order to be able to afford to live in the Arden Hills community. Dr. Melvin thanked the Council for their feedback. Mayor Grant thanked Dr. Melvin for her efforts on this project and stated he looked forward to reviewing this study again at a future meeting. B. Capital Funding Follow-Up Finance Director Yang stated at the August 21, 2023 worksession, the City Council discussed the use of franchise fees to help support capital projects for the City. Ehler's, the City's financial advisor, provided an analysis on electric and gas fee structures, in addition to information on other local municipalities who assess a franchise fee onto their residents and business owners. At the September 18, 2023 worksession, the City Council discussed the topic at length and decided that April 2024 would be a good time to have an Open House in order to gauge residents' opinions on capital funding mechanism including franchise fees. Finance Director Yang explained staff held a Capital Funding Update Open House on Saturday, April 20th at City Hall. Staff shared that there is an anticipated future gap in funding for the City (approximately $455,000 annually), largely due to increased costs for the Lake Johanna Fire Department Station project ($4.1M), the Old Hwy 10 Trail/Lake Valentine to Highway 96 and Lake Johanna trail projects ($3.6M), and a recently revised equipment needs schedule. Provided are two projected fund balance charts, one that includes the two trail projects and one that excludes them, as the City has not yet secured outside funding sources for the two trail projects. With the exclusion of the two trail projects, Staff anticipates the City will have the largest needs in the Equipment, Building, & Replacement Fund and the Public Safety Fund. If the two trail projects are included, the City would have an additional need in the PIR Fund. Finance Director Yang reviewed a one-page recap of the information provided at the Open House, which was shared on the City's website, along with a survey that was released, thereafter, for City residents and businesses to provide additional input through Monday, May 6th at Sam. There were 73 residential survey responses, with approximately 54% choosing a franchise fee option (22% - electric only; 32% - gas and electric), approximately 30% choosing a property tax levy option, and approximately 17% choosing the combination of property tax levy and franchise fee option. For those respondents who chose any combination of a franchise fee option, approximately 64% indicated the City should consider dedicating the fees for a specific purpose. Finance Director Yang reported some common themes included bike lanes, park and trail improvements; structures and road maintenance; storm water system maintenance and utility infrastructure; fire station. Respondents also provided their concerns and additional comments for Council consideration. Some common concerns shared is that an increase to property taxes would burden taxpayers and would remain in effect indefinitely. Additionally, some respondents shared that non-profits should be assessed a fee in lieu of taxes, which would mean assessing a levy increase on residents and imposing a franchise fee on nonresidential and non-profit organizations. Finance Director Yang stated in July, Council will review a proposed Capital Improvement Plan (CIP). Council may want to direct Staff on how it wants to see funding allocated for the proposal, or Council may want to see the updated draft plan and then decide how to allocate funding.