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HomeMy WebLinkAbout08-19-24-SWSCity of Arden Hills 1245 West Highway 96 Arden Hills Minnesota 55112 Phone 651.792.7800 Fax 651.634.5137 www.cityofardenhills.org Request for Special City Council Work Session A special meeting may be called by the Mayor or by any two Councilmembers. Reason for meeting: 1. Public Inquiries/Informational 2. Response to Public Inquiries 3. Agenda Items A. Public Work Staffing Discussion B. 2025 Preliminary General Fund Budget 4. Council/Staff Comments Adjourn Requested Date: 08/19/2024 Requested time: 5:00 pm Open meeting X Closed meeting Signature of person(s) making request: 08/16/2024 Mayor or Council Member Date Council Member Date This section to be completed by City staff- Date received: 08/16/2024 Date meeting to be held: 08/19/2024 Time of meeting: 5:00 pm Location: City Hall All necessary posting and notices have been completed. 08/16/2024 Signature of City Clerk Date Alk EN HILLS Approved: September 9, 2024 CITY OF ARDEN HILLS, MINNESOTA SPECIAL CITY COUNCIL WORK SESSION AUGUST 19, 2024 5:00 P.M. -ARDEN HILLS CITY COUNCIL CHAMBERS CALL TO ORDER/ROLL CALL Pursuant to due call and notice thereof, Mayor Grant called to order the Special City Council Work Session at 5:00 p.m. Present: Mayor David Grant; Councilmembers Tom Fabel, Brenda Holden, Tena Monson and Emily Rousseau Absent: None Also present: Interim City Administrator Jessica Jagoe; Finance Director Joua Yang; Public Works Director/City Engineer David Swearingen; and Assistant to the City Administrator/City Clerk Julie Hanson 1. PUBLIC INQUIRIES/INFORMATIONAL None. 2. RESPONSE TO PUBLIC INQUIRIES None. 3. AGENDA ITEMS A. Public Works Staffing Discussion Public Works Director/City Engineer Swearingen began the presentation on the proposed Public Works Department organizational chart modifications. The personnel committee was presented with this in July. It was supported to bring forward for council to consider Phase 1. The proposed organizational chart is in the packet. It is broken down to three phases. He has worked with the finance director to determine what the budget would be to implement Phase 1 and Phase 2. The discussion will focus on Phase 1. The proposed changes would create a Utilities Lead position and a Parks Lead position both reporting to the Public Works Superintendent. There would also be a Parks and Rec Manager position who would supervise the Rec Program ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 2 Coordinator. That position would be under the direct supervision of the Assistant Public Works Director. To help understand what the City's needs are today, and into next year, consulting services will be used. They will vary and change year to year as the needs fluctuate. The budget needs will be evaluated year to year. The proposed budget needs are for next year and that would likely change in 2026. The first year with the consultant there will be time needed to build these programs. Once the programs are established, they will be managed by city staff in future years. So, the need for consulting services will be reduced after the first year. Public Works Director/City Engineer Swearingen provided some primary duties for the Parks and Recreation Manager. This would give the City a true Parks Department. He provided the duties for the maintenance lead positions. A maintenance plan was attached to help understand the amount of work in each division. The division would work together to coordinate and determine how best to get the tasks completed. Public Works Director/City Engineer Swearingen said staff is asking for direction to implement Phase 1 in 2025. The recruitment process for the Parks and Recreation Manager would begin in September to have them start in January. Year 2025 looks to be a parks heavy capital project year, along with the Parks Master Plan. He would like to have that position filled at the beginning of that process. He would like to see the maintenance lead positions filled by the beginning of the year, too. This would give ample time for training and getting everyone up to speed before the projects will start up in the spring, as weather permits. Councilmember Fabel asked if the two lead positions would be promotions from within the current employees. Public Works Director/City Engineer Swearingen confirmed. Ideally, existing staff would be moved into those lead positions. The number of full-time employees would not increase. Councilmember Fabel clarified the Parks and Rec Manager position is a new position. Public Works Director/City Engineer Swearingen confirmed. Councilmember Fabel stated that in order to move forward with the visionary parks program that Council has recommended you need those people. Public Works Director/City Engineer Swearingen confirmed. The City will benefit from having someone who is very enthusiastic about parks. Councilmember Rousseau thought the presentation was thoughtful to set the City up for success for the projects we're looking at, for next year. She stated several years ago there were two people in a Park and Recreation role. She asked what that role used to be. Public Works Director/City Engineer Swearingen didn't think those roles had the same responsibilities that he is seeking for this position. This position would take the lead on park improvement projects,budgeting and planning for parks. Councilmember Rousseau stated there are a lot of residents who are passionate about trails. She wondered what he envisions happening with the trails development and improvements. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 3 Public Works Director/City Engineer Swearingen replied that the trail plan would continue. This person would coordinate closely with the consultant. He and Assistant Public Works Director Miller would still be involved from the technical level. The parks person will have the visionary enthusiasm to help produce the long-term planning for the trails. Mayor Grant summarized that the parks and rec position would take a fair amount of the work off current staff. Public Works Director/City Engineer Swearingen confirmed. He stated they supplement the parks department, as best they can. There is a quality of service that is lost when staff is spread so thin across other divisions. The service quality would be improved by adding this position. Councilmember Fabel pointed out that many cities similar in size have a full-time Parks Manager position. Public Works Director/City Engineer Swearingen confirmed. The list he provided was not cherry picked. Most cities have a separate Parks and Public Works departments. Councilmember Holden wondered if natural resource management would include buckthorn and evasive species management. She asked how he envisions this position taking on these duties. Public Works Director/City Engineer Swearingen said the latest parks maintenance policy was done in 2010. In that master plan each park is listed with what level of service each park requires. The person in this position would make sure that policy is followed. This would include working with Public Works staff to assist in managing issues such as buckthorn or contracting for services, as required per the parks maintenance policy. Councilmember Holden asked why rain gardens are listed under the parks. Public Works Director/City Engineer Swearingen said there is a cross connection between the basic functions of a rain garden. These are both a parks landscaping feature, as well as a Public Works storm facility. There are a lot of larger rain gardens within the parks. This position will lead the maintenance of the rain gardens. The City used to send out flyers and notices to residents to help guide them on how to maintain the raingardens in their yards. This position will ensure that program gets built back up and then manage it and get it back on a cycle. Councilmember Monson understands that Council is asking for a lot of things surrounding parks. It is time for the community to invest in the parks and natural resources. Having someone who can be focused and give their attention to those topics in a way that the residents want is an appropriate ask. The maintenance lead positions are appropriate, too. She thinks the cost for the consultants may be too much. She thinks it may need to be looked at closer and some of the items may need to roll to next year. Councilmember Holden is not against the proposed changes. She keeps hearing about a parks plan that council wants and she doesn't remember there being any real discussion regarding a master plan. She knows there have been piecemeal discussions on one or two items. She asked about the job description. It states, "manages recreation staff program". She would like to see the current programs enhanced and developed, for example, having a summer program at Arden Manor. Those kids can't get to Perry Park or Lake Johanna. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 4 Public Works Director/City Engineer Swearingen said that was great feedback. He stated it is not his area of expertise to know where to build that program. The idea will be that this position will come in and understand what the City is already doing and find where those programs need to be built up and facilitate those programs. He can make sure there is more of an emphasis on that as this position is being created. Councilmember Rousseau said during a meeting with Mounds View there ways a discussion about increasing some partnerships for some of the rec programs. There was also discussion of a mobile unit, and she thought that would be a great resource for Arden Manor. Councilmember Holden stated the City has always partnered with surrounding communities on these rec programs yet she is not satisfied with the level of programs. There are less programs now then there have ever been in the past. Mayor Grant stated the maintenance leads will be current employees. A few hours may be lost to the planning function we aren't losing the employee to the work function. He pointed out page two shows an additional maintenance worker. He wondered if that is a TCAAP maintenance worker. Public Works Director/City Engineer Swearingen stated it is proposed in Phase 2 to add a full- time maintenance worker. He reminded Council about the Fleet Lead position was established in 2021. While he was originally against the creation of that position, it has been a great addition. He has been able to track the person's time and about 30% of their time is focused toward maintaining the fleet. In prior years the county was utilized for that function. The addition of the maintenance tasks has taken 30% of time that position used to spend on general Public Works related tasks. He thinks the time that is spent on these lead positions justifies adding a full-time position to get that labor piece back. Mayor Grant asked if the county maintenance rate has gone down. Public Works Director/City Engineer Swearingen said it's still a reasonable rate but spending $90 on an oil change is not ideal. Mayor Grant wanted to know what has made that program successful. Public Works Director/City Engineer Swearingen stated it is more organized. We have the data firsthand and we are able to manage the workload from maintaining the fleet more efficiently without having to reach out to the county for the data. There is one dedicated person to organizing all that information. Transfer of information and scheduling of the actual maintenance is easier to do. Mayor Grant asked why he was originally against the suggestion of a Fleet Lead. Public Works Director/City Engineer Swearingen stated it was new. He thought it might be easier just to go to the county. Staff ended up really liking the addition. Councilmember Holden stated the only issue she has is with the Parks Lead. She said it looks like the Park Lead will be doing a lot of the Public Works tasks, including natural resource management, forestry and the whole list of items. She would prefer the Park Manager be hired ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19. 2024 5 before hiring the Park Lead. Those two roles need to be on the same page and the manager should have a say in who will be in that lead role. Public Works Director/City Engineer Swearingen stated technically there is already someone doing that role, to an extent. He thinks the Park and Rec Manager could learn from the Park Lead as to how the day-to-day maintenance functions go within the parks. Councilmember Holden summarized there will be someone coming in from the outside who will have all-encompassing knowledge from a lot of other places. Then someone from the City will tell them this is how we've done it. Public Works Director/City Engineer Swearingen clarified there are different types of maintenance. So, the manager is looking at improvements where the lead will focus on operations and maintenance. The Parks Lead will help develop the maintenance plan because they understand those smaller details. The Parks Manager shouldn't have to get down to that level of detail. Councilmember Holden pointed out that the manger will manage the parks maintenance policy so her assumption is that those two roles will work together to create that. Public Works Director/City Engineer Swearingen confirmed they would work together to make sure the tasks are successful. There are different levels of the projects. He said it is appropriate to have a Parks Lead position for what that person is doing. Mayor Grant stated this topic should be folded into item 3B as part of the 2025 Preliminary General Fund Budget discussion. B. 2025 Preliminary General Fund Budget Finance Director Yang stated the discussion will start with the 2025-2029 CIP Budget to wrap that up then move on to 2025 Preliminary General Fund Budget. Finance Director Yang reminded that the July 22 Special Work Session included initial discussions of the 2025-2029 CIP and since then, staff has made updates to various portions of the CIP plan. She presented a graphic showing the baseline and proposed fund balances that have been updated since the initial discussion. She noted the $188,483 change in the Sanitary Sewer Fund balance. She is proposing a 9%increase to cover the approximate$100,000 increase over 2024 to cover the Met Council wastewater charges. She has also included $136,436 of America Rescue Plan Act (ARPA) funding that was not included in the preliminary numbers. Per previous Council direction, staff is to utilize the remaining ARPA funding on sanitary/water infrastructure projects. That will offset some of the expenditures in the fund. Again, there is an increase on the wastewater charge, in addition to increases to other operating expenditures, for a total increase of approximately $560,000. Finance Director Yang noted a$175,000 increase for the sewer line rehabilitation project. There were some expenditure changes due to updated pricing assumptions. The 2025 number has been updated from $415,000 to $475,000, an increase of$60,000. The 2027 figure increased from $580,000 to $695,000, an increase of$115,000. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 6 Councilmember Holden asked if the sewer lining needed to be increased. There is no grant money for 2025. Public Works Director/City Engineer Swearingen stated the public improvements for that grant opportunity go through 2025. Councilmember Holden asked for clarification if the bid would be increased by $60,000. Public Works Director/City Engineer Swearingen stated he increased that number by $60,000 based off the pricing he received this year for material cost. He adjusted it based off what the market is right now. Councilmember Holden thought the number was lower when we put the bid out. Public Works Director/City Engineer Swearingen stated he's doing more lining. This is the Glenarden Neighborhood. There is more 10-inch pipe then there was in the last one. It could still change; he was being conservative. Councilmember Holden clarified, even if we don't get grant money from Met Council, Public Works Director/City Engineer David Swearingen will still want to spend this money. Public Works Director/City Engineer Swearingen confirmed. He is proposing the project as it is right now. He can be flexible, if necessary. Councilmember Holden asked if a request for I/I money has been made for 2025. Public Works Director/City Engineer Swearingen stated he put us in the program last year and that will be reimbursed in January of 2026. Councilmember Holden asked how much of the $475,000 would be reimbursed. Public Works Director/City Engineer Swearingen answered it would be roughly 25%. When he applied, he put in everything in the CIP he had planned for during that timeframe. He can monitor it and see how the funding is going before he puts it out for bid. Councilmember Holden asked if that was the only project for Glenarden. Public Works Director/City Engineer Swearingen confirmed that is the only lining project in 2025. There might be some minimal lining in 2026 with the PMP but it's a new neighborhood. Mayor Grant assumed this project could be pushed. He said lining projects are one after another. Public Works Director/City Engineer Swearingen would get authorization from Council before he went out for bid on a project like this. Mayor Grant asked if the approach is still to do the worst first. He asked if we are caught up. Public Works Director/City Engineer Swearingen confirmed. After the Arden View neighborhood, this Glenarden neighborhood and the Venus neighborhood are the last real clay ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 7 pipe neighborhoods that need to be sealed. There is a schedule for 2027, trying to line that schedule up for if Met Council does the program again. Councilmember Holden thought a lot of the pipes in the Venus neighborhood were replaced when the total reconstruct was completed. Public Works Director/City Engineer Swearingen said the water main was included in that reconstruction, the sanitary sewer was not. Councilmember Holden would not be in favor of this project unless Met Council money is received to help with the costs. Mayor Grant summarized the sanitary sewer fund, with the projects in 2025 and 2027, the 2029 fund balance would be $643,413. He asked if that was correct. Finance Director Yang confirmed that amount includes the sewer lining and the 9%rate increase. Mayor Grant thought it was supposed to be a 3% increase. Finance Director Yang stated it was 3% on the preliminary version. She adjusted to 9%based on the Met Council Wastewater charge increase. Mayor Grant asked if the increase was for the processing of the City's wastewater or if it is a fine for exceeding I/1. Finance Director Yang answered for processing. Public Works Director/City Engineer Swearingen said they are increasing their rates which has to be passed on. Councilmember Monson asked if direction was needed regarding the increases. Finance Director Yang confirmed. She stated if Council is ok with moving forward with the 9%. Met Council is also anticipating future years estimated at 4-6%increases. Right now, future years are set at 3% and the fund balance reflects the 3% increase, not the 4-6%. Councilmember Holden thinks it's difficult to look at each of these separate when in the past it was looked at as what the increase would be on the entire utility bill. It is hard for her to justify increasing the sewer by 9%because that's what the Met Council wants,but we have a healthy surplus balance. Finance Director Yang explained that if the 9% wastewater charge is included in 2025 but we don't increase the revenue rate, there would be a fund balance deficit. Councilmember Holden asked if that was in the sewer bill. Finance Director Yang confirmed. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 8 Councilmember Holden said people's water bills are going to go up by increasing every single item in the sewer bill. Mayor Grant said the sanitary sewer will go up. This also assumes both lining projects will be completed. He thinks our rate charges need to reflect what the City is being charged or risk running the surplus balance to zero. Councilmember Holden asked if we have an 1/I penalty anymore. Public Works Director/City Engineer Swearingen said no. We have been notified of some surcharges but the lining projects that are being done right now will satisfy any issues with the Met Council. Councilmember Holden asked if that is where the issue is. Public Works Director/City Engineer Swearingen said Met Council doesn't specify where you are to do the fixes. They just want to see that you are investing in that. Councilmember Holden stated if the 1/1 issue is somewhere else and there is leakage into the lakes, she didn't support spending money on Glenarden just for the sake of spending money. We aren't alleviating any of the I/I issues. There used to be a report that was broken out in sections, and it told where the problems were. Public Works Director/City Engineer Swearingen stated we receive notification when a meter exceeds a certain flow. The meter that is being exceeded is within the meter shed of this project. Councilmember Holden asked if there are other meters that are being exceeded. Public Works Director/City Engineer Swearingen replied no. Both projects are located within that meter shed. Through the televising, they have identified many areas that are contributing to I/1. He has projects planned through 2034 for I/I type rehabs. Mayor Grant asked what is next to be lined after the clay pipes are complete. Public Works Director/City Engineer Swearingen said there are old structures that are leaking in through the seams. Those will be addressed through the PMP, when they are found. Mayor Grant asked when the lining projects will be complete. Public Works Director/City Engineer Swearingen replied the lining is over$4 million. There is only a certain amount of linear feet to line. He has extended that through 2034. Councilmember Monson asked if the Council agrees that this project does not need to be done in 2025. We would only do it if we got the Met Council funding. She asked when we would hear about that funding. Public Works Director/City Engineer Swearingen stated last time, the process is you have to apply for whatever project you are looking to do. Say we'd like to be reimbursed for a certain quantity. You can get roughly 25% of the amount. It's a competitive process. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19. 2024 9 Councilmember Monson asked if this is something that should be included in the budget, or not. Or include a portion with the assumption that we may not actually go after it unless the Met Council funding is approved. Mayor Grant stated if something is in the budget, it's not a guaranteed approval. Council can always delay a project if the funding is not received. Councilmember Holden said we've always gotten what we asked for. Public Works Director/City Engineer Swearingen said the last go-around we did not because it was very competitive. He thinks the way it was applied for, initially did not account for all the projects. His final submission included all of the projects,but they weren't identified at the original application. Councilmember Holden stated there was no money left over this time? She said in the past they have called to ask if we want more. Her question is, is there a way to split Glenarden if we don't receive a certain amount from the Met Council? Public Works Director/City Engineer Swearingen said yes. With lining projects like this, it's easy to section them out. Councilmember Rousseau asked when the Met Council grant will go through. Public Works Director/City Engineer Swearingen said the program runs through January of 2026. Then it would be the fall of 2026 if they open up another round. He can reach out to Met Council and see if he can get a better idea of the number of applications they've received to better gauge how competitive it will be. He will reach out this week and will forward the response to Council when he receives it. He noted the actual reimbursement amount was not known until everyone submitted invoices. Mayor Grant said that if the City is being charged 9%more, then we have to charge 9%. The Council could back it off by a percent and make it up next year. He asked if Council is okay with the 9%. Councilmember Holden wanted to know what the percentage is for the water. Finance Director Yang said water fund will be 3%. Surface water is also 3%. Councilmember Holden calculated that everyone's bill will increase by 15%. Councilmember Monson asked if the reason for the 3% increase in the other funds is because that is what has been scheduled, making this a standard increase on water and surface water. The sanitary sewer is recommended at 9%to cover the Met Council wastewater charge. She clarified that staff is seeking direction on if the 3% increases should continue, knowing that Met Council said it will be 4-6% in the future, moving forward. Finance Director Yang confirmed. Mayor Grant added these increases are based off rates, with the exception of the increases from Met Council. Finance Director Yang confirmed. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 10 Councilmember Monson asked if the 9% is just a one-time increase. She asked what happens to the fund if we were to do 5% or 8%. Finance Director Yang said she looked at 5% for the next three years. We would have a deficit for the next three years. She proposed the 9%to avoid the deficit. Councilmember Monson said going to 9% to ensure that the fund is equal to what is being spent is important. She would prefer to increase the subsequent years' rates to 4% to ensure that the money is available. Councilmember Holden asked about the surface water funding and wondered when the ponds will be dredged. Public Works Director/City Engineer Swearingen said he has all the dredging projects programmed in the CIP. They should be accounted for in these figures. Councilmember Holden asked if we are still in the positive. She thought it looked like in 2027 there is $800,000. Finance Director Yang confirmed. Mayor Grant outlined that the water meter replacement was included in the water fund. In 2029, there would still be $1.6 million. Finance Director Yang confirmed. Councilmember Holden supports keeping the water fund and the surface water fund at 3%. Then next year all three funds could be 4%. She clarified this year the sanitary sewer would be 9%, because that's what's being charged. Councilmember Monson noted that the size of the water fund and knowing that includes the spend on the large water meter project, she asked is there a reason there is so much money in the water fund. Public Works Director/City Engineer Swearingen said the water meter replacement will be around $1.5 million, programed for 2025 and 2026. Councilmember Monson stated it looks like we have $2 million. Councilmember Holden said it is because we have been planning for projects. We were reimbursed by the legislature over $2 million on water projects so we haven't had to spend that money. Councilmember Monson wondered if there was a more efficient way to use the money rather than just letting it sit in the water fund. Could those funds be moved to the sanitary sewer fund? Mayor Grant stated this is an enterprise fund. So he would not support trying to put it someplace else. Councilmember Monson thought this is a lot of money for us to just sit on. Mayor Grant said it must stay in the enterprise fund. It is possible to move them around and pay back later. But they cannot be used outside of the enterprise funds. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 11 Councilmember Monson stated she was recommending moving water funds to sanitary sewer but if there is a payback cost, then that's not ideal. Finance Director Yang stated that would have a cost. You would be borrowing funds from one enterprise to spend it on another. Councilmember Monson doesn't think we should continue to increase prices. Mayor Grant said St. Paul water has sent information that rates will increase as a result of their project. He doesn't believe we've seen what the new rates will be. Public Works Director/City Engineer Swearingen said our contract with Roseville expires at the end of this year. He has just started engaging with Roseville. They have provided a rough draft that reflects their new contract with St. Paul. He hasn't had a chance to review that yet. There will be slight increases with the new contract, he doesn't have the exact numbers at this time. Councilmember Monson said she would like to get more information on the water fund to fully understand how that money will be used. Maybe borrowing it to the sanitary sewer fund is not a good idea. However, she is concerned about that much money sitting there. Councilmember Rousseau thought consideration could be given to not increasing the water fund by 3%. Councilmember Monson thought it was probably safe not to bump the water. Councilmember Holden asked if the estimate for the replacement water main was on the conservative side. Public Works Director/City Engineer Swearingen said he thinks the estimate is right on. Mounds View just did theirs last year and he has been watching it closely. His budget reflects what they just went through. Councilmember Holden thought there is a chance a bid could come in under as this is a competitive project. Public Works Director/City Engineer Swearingen confirmed. Councilmember Holden said if we do 9% on the sewer fund, she's comfortable doing 3% or less on the water. We've been fortunate to get all the money from the bonding bill and MNDOT on the water projects. Mayor Grant asked if 9% and 2% are agreeable. Councilmember Holden said the surface water should be 3%. Drudging and cleaning all the ponds is a big project. She would be comfortable with 9% for sanitary sewer, 3% on surface water and 0-1% on the water. Councilmember Monson would support 0% on the water. Council agreed. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 12 Finance Director Yang stated she will make the changes Council agreed to. She explained the changes to the other funds. Surface water has an $85,000 change in fund balance, primarily due to operating expenses over five years. Parks PIR fund had a negative impact of $123,125. The Hardcourt Rehabilitation Grant was adjusted down by $10,000. We included the parks master plan of$75,000 and included the City's match for the Hazelnut Park/Chantham NRMB and Floral Park projects through Great River Greening. Councilmember Holden asked where pickle ball nets would come from since they are so expensive. Public Works Director/City Engineer Swearingen wasn't sure what the PTRC is proposing. That discussion is forthcoming. Mayor Grant thought a medium net would be about $1,000. A more robust solution that is anti- theft and nicer to play with would come in around $2,000. Councilmember Holden said there needs to be something in the budget for the nets. We have gone through the trouble to paint the courts, we need nets. Mayor Grant agreed. It makes a bad statement to the public when we have painted the lines but there are no nets. People really want to play pickle ball. Councilmember Holden recommended budgeting $8,000 for 4 nets. Mayor Grant agreed. Discussion ensued regarding how many courts are in the City. Council agreed to allot funds for this discussion and see what the PTRC has planned. Finance Director Yang moved on to the equipment fund. There was a change of$35,350 all for project changes. Trade-in program Toro Z Mowers #473 and #474, an increase of$3,000 in 2025 and a decrease of$46,350 in 2028. Mayor Grant thought the Case 621 Loader was scheduled for 2025. Public Works Director/City Engineer Swearingen stated the chassis for the plow truck was pulled out. Mayor Grant asked how much that was. Public Works Director/City Engineer David Swearingen answered $180,000. Finance Director Yang said if an item is not on the CIP changes list, there were no changes to the preliminary discussion. Discussion ensued regarding maintaining and repairing an existing truck or the need for a new one. Councilmember Holden asked about Toros. They are from 2021 and the replacement cycle is 5 years, she asked why they are on this year's budget and not next year. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 13 Public Works Director/City Engineer Swearingen said the current models were on a 3-year warranty. The new models have 5 years. Councilmember Holden asked if this equipment is under warranty, why are the repairs so expensive. Public Works Director/City Engineer Swearingen the repairs stem from operators hitting things that may damage the deck vs. engine repairs. Councilmember Holden said if we get new ones, the cycle for replacement will be 5 years. Public Works Director/City Engineer Swearingen confirmed. Councilmember Holden asked what the trade in value for the equipment in the 3-year cycle is. Public Works Director/City Engineer Swearingen there was an issue with delivery in 2021 so the equipment wasn't delivered until 2022. Councilmember Monson would like to wait until there is further discussion on the Levy before deciding on the Case 621 loader. Mayor Grant agreed. He stated that there was a time when Toros were not being purchased. He wondered if the alternate didn't hold up. Councilmember Holden noted that in the write up of the Bobcat, that the reason for the costly equipment and down time was due to heavy load. She asked why we would buy the same thing if we know that the heavy load wrecks it. Public Works Director/City Engineer Swearingen can investigate options. He thought the next best piece of equipment is too expensive. Councilmember Holden said there is an F-450 on the list that says "corrosion". She's wondering if that just means it's rusty. Public Works Director/City Engineer Swearingen stated he doesn't know what pieces of the truck are corroding. He pointed out that if there is too much corrosion/rust it will affect the resale value. Discussion ensued regarding the timing constraints for the current work session. Finance Director Yang stated the Public Safety fund increased by $19,252 driven by $40,000 increase per year for 2024-2027 to help offset future captain salaries. This will be transferred to the operating budget in future years. This levy will be set back to $200,000 in 2028. Charitable Gambling increased $150,000 from 2024-2029. Expenditure increases of$250,748, primarily for the transfer of $160,000 for the four years of captain salaries. Another $100,000 from 2028 to 2029 to cover two additional years of captain salaries. A slight reduction of$9,252 for the City's cost share from 24.4%to 24.2%. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 14 Councilmember Holden noted the main increase for fire was due to the six captains. She thought there was a Safer Grant for three years. She asked if the levy increase of$120,000 is for fire only or does that include police/sheriff, too. Finance Director Yang answered it's for fire. Councilmember Holden asked how much the cost-of-livingadjustment COLA increase was. J (COLA) Councilmember Monson said we started putting money even though we had the Safer Grant. That's the $40,000 figure mentioned. There is a compensation increase on the captains, the part time officers, the part time firefighters and the full time, non-exempt overtime. Union negotiations have not been finalized. Councilmember Holden clarified there will be a COLA increase and a market adjustment. Councilmember Monson responded yes, for some of them. The full-time captains will have a COLA and a market adjustment. Part time officers is the hourly pay. Councilmember Holden asked if the increase is $40,000 in 2025. Finance Director Yang confirmed. Discussion ensued about the Public Safety budget and the timing of increases for new employees. Finance Director Yang stated the recycling fund assumed a 50% increase as a place holder. We will know more when the RFP is in process. Councilmember Holden asked if this would give us an increase in the SCORE Grant. Interim City Administrator Jagoe said it would be minimal. Finance Director Yang opened discussion for the EDA Levy transfer. There has been discussion regarding gateway signs. The 2025 budget includes $270,000 for gateway signs. She stated the EDC thinks that money could possibly be transferred to some other fund. The need is not now and discussions on the topic will continue. The balance could possibly be transferred to the equipment fund. Mayor Grant noted there would be no impact to the levy. A decision does not need to be made today. If the EDA went out and visited companies and they expressed an interest in the gateway signs, the money is there. He thought the transfer could be made mid-year, if the Council chose to do that. Councilmember Rousseau said this is one area with flexibility. The EDC will be reaching out to businesses with in-person visits to engage businesses. That would be a good time to discuss what businesses are wanting. Councilmember Holden thinks if we aren't doing the gateway signs, we should pull the $270,000 from the budget. Councilmember Monson would also be open to pulling the gateway sign funding off 2025 or transferring it somewhere else. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 15 Councilmember Fabel agrees. He attended the EDC meeting recently and didn't hear any enthusiasm for the sign on 96 and Lexington which is what that number was assigned to. Councilmember Holden thinks we should pull it. She said when she did site visits previously what she heard was mostly public works items like curbs, fire hydrants, etc. She thought if we pulled the money out of the budget for this year we can put it back in next year based on the findings of the EDC in-person visits with the businesses. Councilmembers agreed to push the item to 2026. Councilmember Holden asked about the operation and Public Works staffing update. She asked if the $138,000 is based on this year's number. Finance Director Yang confirmed. She said the $138,000 included salary and benefits. Councilmember Holden noted they haven't negotiated their raises so she thought the number was probably closer to $150,000. She thought they will expect their raises to fall in line with what City staff received. Finance Director Yang stated this number includes a 3% COLA increase. It also includes 10% increase in health insurance. Councilmember Holden said that number needs to be increased. Finance Director Yang said she would use a mid-range estimate there. She made Council aware that the Public Works staffing is not included in the preliminary budget. That topic will be addressed during the general fund budget discussion. Finance Director Yang discussed the baseline, estimated ending fund balance by year. It includes the CIP fund, the PIR fund, Old Highway 10 and Lake Johanna Trails. The Highway 10 Trail has a $1.3 million city share and the Lake Johanna Trail is $2 million city share. Those are impacting the fund balances starting in 2026 through 2029. We would see a negative fund balance in 2028. Council has still not agreed on whether these projects will move forward. Finance Director Yang said the public safety fund includes the new fire station starting in 2025. For this baseline scenario, it doesn't have any additional revenue sources to offset the new fire station bonding. Council direction is requested. Finance Director Yang moved to the proposed fund balance per year. Building replacement fund has a levy proposal of$210,000. This would be a $110,000 increase annually. Finance Director Yang said the public safety fund assumes the franchise fee revenue source to offset the new fire station bonding at $375,000 annually. There is also a levy proposal for $260,000 which is a $90,000 increase annually. This includes the $40,000 increase to offset the captain's salaries. Finance Director Yang reminded that during the April 20, in-house discussion and at the May work session, the $455,000 funding gap for the CIP was discussed. With these updated project ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 16 expenditures, the funding gap is now $575,000. If Council chooses to move forward with using the franchise fee to offset the $375,000 debt service payment, it will leave $200,000. Councilmember Holden asked when the bond for the fire station will happen. Councilmember Monson said the plan is spring of 2025. Councilmember Monson asked about the equipment building replacement fund. There is an additional transfer to the levy from the EDA. She noted we're still bringing in $100,000 a year for that. So, the proposals may push that and redistribute this money. Finance Director Yang confirmed. She asked if there is direction from Council on a transfer of the $100,000. She explained that by delaying the gateway project to 2026, there is a $100,000 levy that is going to EDA for 2025. She asked if Council would like to transfer that to offset the equipment replacement fund balance or would they want to keep it in the EDA fund. Councilmember Rousseau thought the EDA fund was also used to offset staff costs, as well. Finance Director Yang confirmed it is. There is a healthy fund balance in the EDA so transferring $100,000 wouldn't cause issues to the fund balance. Mayor Grant asked if Council would like to use $100,000 to offset the levy or leave it in the EDA. Councilmember Holden thinks it should be used to offset the levy. Until the EDC comes up with a plan, it would be nice to use those funds in other areas. Mayor Grant agreed. It would be a way to smooth out the levy increase. Councilmember Monson is open to that for 2025 and revisit for 2026. Finance Director Yang asked for clarification that the Council would support moving $100,000 from the EDA to the equipment replacement fund in 2025. Discussion ensued regarding which fund should receive the $100,000. Council agreed to move $100,000 to the general fund for 2025. Finance Director Yang asked if Council had direction on future equipment building replacement fund. She is proposing $110,000 per year, moving into the future to ensure a positive fund balance. Councilmember Holden asked where the 2025 levy is. Mayor Grant stated there is a mathematical error. The number is 18.6%, not 17.4%. Discussion ensued regarding completing the discussion items before deciding about moving the money to the general fund until the bigger picture is clearer. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 17 Finance Director Yang said the public safety fund assumes the franchise fee revenue source to offset the new fire station bonding at $375,000 annually. There is a levy proposal of$260,000. This is an increase of $90,000, to include $40,000 to offset captains' salaries and $50,000 to balance the fund balance. Councilmember Holden stated if we do the bonds and we get a really great rate, will we bond less than we need or are we going with the lower rate. Would it be ideal to keep it at $375,000 and pay it off early? Mayor Grant asked if$375,000 covers it. Councilmember Monson said it wouldn't impact the levy either way if we do franchise fees. Mayor Grant said we raise franchise fees or we could leave it at $375,000 and if it's short, you could use the cash fund for the rest. Councilmember Holden said she is trying to figure out how we'll pay for Lake Johanna. We have to wait to see if the county is going to do that. Public Works Director/City Engineer Swearingen said he received additional information regarding Lake Joahnna Trail. The county is going to do an RFP for design and public engagement in late 2025. They are budgeting to do that work late next year. Councilmember Monson asked about the $375,000 annually. This assumes the station will be $20-$25 million. We will pay roughly a quarter of that. Is the $375,000 for a$5 million bond? Finance Director Yang thought it was $4.1 million. She asked if Council is okay with the $90,000 increase annually to balance this fund. Councilmember Monson asked what percentage it is increasing by now. She understands that we need to pay more every year. She said she is fine with the$90,000. Mayor Grant asked for explanation on the levy proposal of $260,000 plus $90,000 from previous. Finance Director Yang said the levy was set at $170,000 in 2022. It was increased to $220,000 in 2023. Last year that amount was transferred to the equipment replacement fund. That left $40,000. We'd get it back to the base amount of$170,000, plus the $40,000 for the captains to get it back up to $220,000, and $50,000 more to get to the $260,000. Councilmember Monson doesn't see any other option. We have to pay our fire and police. She would like to see that fund healthy. Councilmember Holden asked what the transfer to the cable fund was. Finance Director Yang said that is similar to a transfer that was done in 2024. There are cable franchise fees coming in,but those fees are not enough to offset the operational expenditures. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 18 Finance Director Yang provided a Municipal State Aid (MSA) summary. We have anticipated $315,000 of allocation annually. We are up for advancement in 2025. She pointed to the balance and the projects that will use the funds. We are underfunded but will be wholly funded by the beginning of 2044. There are enough projects in the queue to utilize the MSA funds. Mayor Grant asked when we take an advance, do we have to be no more than five years in arrears. Public Works Director/City Engineer Swearingen wasn't sure what the current rules are. There have been some changes. He will look into it further. Councilmember Holden asked where we are now. She thought we borrowed up through 2026. Public Works Director/City Engineer Swearingen said we just started getting funds again this year. We are paid back. We will be able to use those funds towards eligible projects costs. Councilmember Holden asked how much we have. Public Works Director/City Engineer Swearingen stated if funds come in, we have a place to put them. Right now, the balance has been funded by the PIR account. Now that we're receiving funds, we can throw it at the balance because it's an MSA eligible item. Mayor Grant asked if there is a backlog to apply to. Public Works Director/City Engineer Swearingen confirmed. Basically, the MSA is paying back the PIR. Future projects are designed as if we're putting state aid dollars toward them. Councilmember Holden asked how we can be taking the 2024 $315,000 when we haven't paid back all the other MSA. She thought we used MSA for Glen Paul and the roundabout. Public Works Director/City Engineer Swearingen confirmed the right of way costs were eligible for that. We didn't use MSA dollars because we don't have any. We funded with PIR. Now we're paying ourselves back with the MSA. Discussion ensued regarding a table included in the presentation. Finance Director Yang explained the balance is underfunded. This means that our project expenditures exceed the MSA allocation. Finance Director Yang discussed the CIP funding update. The $575,000 is the updated funding gap. We will move forward with a franchise fee. She asked when Staff could anticipate an implementation date. She stated if the plan is to start collecting those fees in January 2025 an ordinance would need to be passed 90-days prior. So by October I". She asked if January 2025 is the timeline? Councilmember Monson thought maybe 2026. She wasn't sure when the bond payments are. She thought if we got the first bond payment, then Council can discuss if this will be done this year or wait until 2026. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 19 Councilmember Rousseau asked when the levy needs to be finalized. Finance Director Yang said the end of September. Mayor Grant clarified the preliminary levy is September and the final levy is in December. Finance Director Yang confirmed. She offered that Xcel Energy could be invited to give a presentation on the franchise fees. It is up to Council if we hold a public hearing. It's not required. Mayor Grant said he would like to hear back about the bond payment schedule. One thing was clear from previous discussion is that the franchise fees will be dedicated for the new fire station, only. Councilmember Holden didn't know if that was agreed to. Discussion ensued and Councilmembers agreed the franchise fee funds will be dedicated to the fire station, only. Councilmember Monson said she would like a separate public hearing along with some additional communication to the public. One of the concerns is that just because we can do this without a lot of public engagement, doesn't mean we should. She would like to see public engagement, even if it's not required by law. Councilmember Rousseau thought having the public hearing on a light agenda meeting is preferable. Discussion ensued regarding upcoming agenda items and the timing of the public hearing. Finance Director Yang presented the 2025 General Fund Budget. The City is required to adopt the maximum tax levy by the end of September. The tax levy for the City supports the general fund. She shared the overall general budget fund summary. Currently, there is a 13.9% tax levy increase. The general fund balance is not balanced. There is a net change in fund balance of negative $249,062. That is $7,000 over the 2024 budget. In order to balance the budget for 2025, the levy will need be 18.6%. Historically the City has underbudgeted in expectation of future projects. She shared a chart showing the sources of revenue. It is set to $6.4 million which is an increase of 8.6% or $514,000. The primary change is due to the tax levy increase of $580,349. Overall, licenses and permits and charges for services are expected to come in under budgeted revenue around $200,000. Councilmember Holden asked if the National Guard is going to start the permitting process in 2025. Interim City Administrator Jagoe confirmed we have been told 2025. She said in the past the federal government have always pulled permits but aren't required to. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 20 Finance Director Yang said licenses and permits are set to the 2024 budget, however, an adjustment for 2025 may be appropriate. Charges for services is set to the 2024 budget. Franchise fee is expected to come in at about $57,000. That's under budget by $70,000. An adjustment may be appropriate here, too. Councilmember Holden asked when will the North Heights project start. Interim City Administrator Jagoe anticipates that in 2025, given the timing of the land use reviews. Project review won't be until early 2025. Councilmember Holden thought that could make up some of the deficit in permitting. Mayor Grant didn't want to predicate anything on that project moving forward. Councilmember Monson said a takeaway is that the revenues for 2024 are unlikely to be as high as we thought. Finance Director Yang shared a chart showing the general fund revenues for the previous three years, current year budget and the 2025 proposed budget. The prior three years general fund revenues average $5.3 million. There was a dip in 2022-2023 due to fewer building projects . The primary change in 2025 is due to a tax levy increase of$580,000. Finance Director Yang shared expenditures by department. They are expected to be approximately $6.6 million. This is a 9.6% increase over the 2024 budget or$580,349. This does not include a$50,000 transfer to the cable fund. Finance Director Yang shared expenditures by type. There was a comparable increase in both personnel services and other services and charges, which are the police and fire contracts. Finance Director Yang shared a bar graph showing the general fund expenditures for the prior three years, current year and the proposed 2025 budget. The general fund expenditures have averaged $5.2 million. The 2025 expenditure is proposed to be a little over $6.6 million. Finance Director Yang discussed personnel services. For 2025, it is set at$2.2 million. This is a 9% increase or$181,000 over the 2024 budget. This includes a 4%market adjustment, equivalent to implementation into the grid for the comp study. That is about $50,000. Also included are step increases and allocation changes, which are about $54,000. A 3% COLA impact of about $50,000, along with insurance and benefits and work comp insurance. She reminded this does not include any public works staffing updates. Finance Director Yang said supplies and materials are in line with 2024 budget. Finance Director Yang said other services and charges are expected to go up by almost $400,000 or 10.2%. There is an $86,000 increase for general government, primarily for permit software conversions. The elections contract is going up by $21,000. That is due to increased participation in absentee voting, training, changes to the MN election law and extend hours. Councilmember Holden asked about a figure of 67%. She didn't think the calculation is correct. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 21 Finance Director Yang stated the item is not going up by 67%. That is the makeup of the total public safety changes. There is a total of$250,000 in total public safety changes. Finance Director Yang said public safety is going up $208,000. Ramsey County Sheriffs is going up by $140,000. Lake Johanna Fire contract is going up by $73,000. Ramsey County Dispatch is up by$3,200. Public Works is seeing an increase of$101,000 primarily due to street maintenance. No real change is happening in Parks and Recreation. Finance Director Yang shared a chart showing tax levy history. The City's tax rate has averaged about 25.73%over the last 10 years. This is due to the estimated market values on properties. She doesn't have numbers for 2025 yet. There is an upcoming meeting with city finance directors and Ramsey County. She will have additional information on preliminary numbers after that meeting. Finance Director Yang showed the proposed tax levy. The general fund levy is $580,349 or 12.5%. The CIP tax levy proposal is $160,000 or 28.6% change. Equipment, building replacement is set to decrease by $60,000. There is no change in PIR. The $75,000 parks master plan is accounted for in the fund balance change. Public safety is set to $260,000, an increase of $220,000 over 2024. Finance Director Yang stated this is an overall tax levy increase of$740,349. A 0.5% change in the tax levy equates to $26,550. Councilmember Monson asked if the $100,000 EDA money that was discussed, will move into the general fund. Finance Director Yang confirmed. Councilmember Monson asked if the equipment and building replacement amount of$210,000 might change depending on what they choose to do on the case loader. She asked where the Public Works staff will go. Finance Director Yang replied it is in the general fund. Councilmember Rousseau asked about the $270,000 for the gateway signs. Finance Director Yang replied that will be pushed to 2026. Councilmember Monson asked if that will decrease the general fund requirement. Finance Director Yang said it will adjust the CIP fund balance, but it would not impact the levy. This discussion is focused on the levy. Councilmember Monson asked if the PIR fund assumes two trails. Finance Director Yang said no. She shared an updated slide showing the tax levy assumption grid. This includes the CIP levy changes as well as the underfunded levy cost. Looking at the general fund costs, the impact to the levy is $580,349. This does not include Public Works staffing changes. Personnel costs impact is $181,000. The transfer to cable fund is $50,000. She showed the increase to the Ramsey County Sheriffs contract, increase to the Lake Johanna Fire Department increase in election services, and the increase to the Ramsey County Facility Maintenance. One time comp study savings at $17,500. The street maintenance program for seal ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 22 coating $105,000. Permit software conversion of$60,000 and other general fund budget areas with $38,000 of savings. All of those savings account for the $581,000 change from 2024. If we account for the equipment,building replacement savings of$60,000 and the public safety increase of$220,000 that gets the total general CIP fund change of$740,349. That total gets us to an underfunded balance of$249,062. The $580,349 levy will cover overall expenditures. It does not account for any of the anticipated revenue shortfalls. Finance Director Yang said to balance the budget we need to add the $249,062 to the $740,349 for a total balanced budget levy of$989,411. Finance Director Yang shared a handout showing a comparison of property taxes. She created four different scenarios to help show how these changes will impact the overall levy. Finance Director Yang shared scenario 1. That includes everything discussed tonight. Councilmember Holden asked if we pay the state annually for election services. She thought we pay the same amount every year under contract. Finance Director Yang said it has been stagnant but this year it increased. Finance Director Yang shared scenario 2 which includes everything in scenario 1 plus the Public Works staffing updates and the new station, if we were not to move forward with the franchise fees. Councilmember Holden wondered what it would look like if scenario 2 didn't include the fire station. Finance Director Yang didn't have a graphic but had those numbers. The tax levy increases for scenario 1 plus Public Works staffing would need $6.4 million; a tax levy increase of 21.1% to be fully funded. Councilmember Monson clarified that is to be fully funded. She asked what it would look like if we just funded the expenditures. Finance Director Yang said expenditures only would be 16.4%; a tax levy increases of $872,000. Councilmember Rousseau asked about the comp study, the Mounds View Hockey and the pickleball. Finance Director Yang doesn't have that scenario broken out. Discussion ensued regarding the items Council would like to see broken out in different scenarios. Finance Director Yang will calculate the scenarios and bring them back based on the feedback received during the discussion. Interim City Administrator Jagoe asked if Council wanted the consultant for the comp and class study to return for another presentation. She didn't remember there being any specific ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 23 information Council wanted her to bring back. She asked if there was direction the Council would like to give on moving forward with either of the options. Council determined they didn't need an additional presentation. Interim City Administrator Jagoe summarized no additional presentation is needed and Finance Director Yang will work the figures for Option 1 into the next preliminary budget numbers. Councilmember Holden asked if Council needs to approve an option. She remembers a conversation where the item would be on consent. She thinks it's important to tell the public how the decision was made and why. Interim City Administrator Jagoe thought we can break out the detail to show how Option 1 was selected. If we can show how Option 1 is captured in the preliminary budget numbers that should satisfy for discussion. Council agreed. Finance Director Yang asked if there was any further direction from Council on any of the items. Councilmember Holden asked when Option 1 would start. Interim City Administrator Jagoe understood that would be implemented on January 1, 2025. Mayor Grant asked if that would make every employee's anniversary date January 1. Interim City Administrator Jagoe stated the way it was presented is that the scales would be adjusted on January 1 and employees would have their annual step on the actual anniversary date. Discussion ensued regarding future work sessions for budget discussions and what items still need to be discussed. 4. COUNCIL COMMENTS AND STAFF UPDATES Councilmember Rousseau noted the upcoming Rib Fest Event. We are hoping the Beyond The Yellow Ribbon will help by placing signs around Arden Hills. She wondered if we can also get some signs outside City Hall or at some of the parks. They were talking about having signs out September 17-22. Interim City Administrator Jagoe said they asked to do this last year, but it didn't fit into the sign ordinance. They put the signs up for a day last year. There is no exemption to allow for that type of signage. Councilmember Holden shared that the Lions had their community event. It was well attended, and it was a nice event. She only saw a handful of people from Arden Hills and thought it should be better advertised next time. ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION—AUGUST 19, 2024 24 ADJOURN Mayor Grant adjourned the Special City Council Work Session at 8:00 p.m. ('V o xaj A j Ju e anson David Grant Ci Jerk Mayor