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09-26-2022 City Council Regular Meeting MinutesCHANHASSEN CITY COUNCIL REGULAR MEETING MINUTES SEPTEMBER 26, 2022 Mayor Ryan called the meeting to order at 7:00 p.m. The meeting was opened with the Pledge of Allegiance. COUNCIL MEMBERS PRESENT: Mayor Ryan, Councilwoman Rehm, Councilman McDonald, Councilman Campion, Councilwoman Schubert. COUNCIL MEMBERS ABSENT: None. STAFF PRESENT: Laurie Hokkanen, City Manager; Matt Unmacht, Assistant City Manager; Charlie Howley, City Engineer/Public Works Director; Jerry Ruegemer, Park & Recreation Director; Kelly Grinnell, Finance Director; Richard Rice, MIS Director, Lt. Lance Pearce, CCSO; and Ari Lyksett, Communications Manager. PUBLIC PRESENT: None. PUBLIC ANNOUNCEMENTS: 1. Chanhassen Lions Service Recognition Mayor Ryan stated the Chanhassen Lions Club was chartered in 1988 and is a member of Lions International, a service organization with more than 1.4 million members in 48,000 clubs around the world. The Chanhassen Lions have been active in the community and have made past donations and participated with following projects and events: Park Improvement Projects • Partially funding the ballfield lighting of Lake Ann Park Ball Field #4 • Purchased and installed a monument sign recognizing Lake Ann Field #4 as Lions Field • Purchased and installed a memorial bench at Lake Ann Field #4 (Lions field) • Purchased and installed five park benches at Bandimere Community Park • Purchased and installed the Chanhassen Lions drinking fountain at Lake Ann Park playground City Service Projects • Sponsorship of the Chanhassen Senior Center Summer Picnic for 20+ years and counting • Fishing Contest Marshals at February Festival • 100% Sponsored Senior Center Drive-In Concert • Participated in Chanhassen's "Great Stuff Food Drives" and helped deliver all donations to PROP Food Shelf • Volunteer at various city community events City Council Minutes – September 26, 2022 2 • Fire Department/Lions Pancake Breakfast Mayor Ryan stated the Chanhassen Lions have been providing service to our Chanhassen Community for 34 years. Their support and commitment to Chanhassen are very much appreciated and recognized. She invited Chanhassen Lions members Dave Hess and Greg Provo to come forward and presented them with a Certificate of Appreciation. CONSENT AGENDA: Councilman McDonald moved, Councilman Campion seconded that the City Council approve the following consent agenda items pursuant to the City Manager’s recommendations: 1. Approve City Council Minutes dated September 12, 2022 2. Receive Planning Commission Minutes dated September 6, 2022 3. Receive Senior Commission Minutes dated August 19, 2022 4. Approve Claims Paid dated September 26, 2022 5. Award Contract for Fox Hollow Drainage Improvement Project 6. Resolution 2022-69: Approve Interfund Loan for Tax Increment Financing District 12 - Lake Place Housing 7. Resolution 2022-70 Accept Donation from Kwik Trip in the Amount of $1,000 for the Parks and Recreation Department Senior Expo on September 29, 2022 8. Resolution 2022-71: Authorize Purchase of Replacement Network Server and Storage Array Located at Public Works 9. Ordinance 697: Amending the City Fees and Charges for 2022 10. Ordinance 696: Adopt Summary of Ordinance 696 for Publication Purposes - Avienda PUD Amendment All voted in favor and the motion carried unanimously with a vote of 5 to 0. VISITOR PRESENTATIONS: None. FIRE DEPARTMENT/LAW ENFORCEMENT UPDATES 1. Monthly Fire Department Update Mayor Ryan noted the department is currently hosting an open house and encouraged everyone to read the update in the packet. 2. Law Enforcement Update Lieutenant Pearce shared an August update noting they had 848 calls for service, 59 Group A crimes, 428 non-criminal calls, 222 traffic stops with 7 DUI arrests and 55 citations. Fraud and City Council Minutes – September 26, 2022 3 theft are consistent with previous months, and there was a spike in mental health calls for service due to some frequent callers and the department has been working with the crisis team on a better response plan for those individuals. The investigator currently has 23 cases, and Lieutenant Pearce spoke about the caseload including property crimes, coercion/sextortion cases, one follow up on an overdose, and one trespassing case. He shared that the County mental health co-responder position is currently vacant, and they hope to get that filled. Lieutenant Pearce noted that there was someone who passed away while mowing the lawn and he commended Sergeant Mueller for finishing the mowing when the call was over. PUBLIC HEARINGS: None. GENERAL BUSINESS 1. Resolution 2022-72: Adopt the Preliminary Tax Levy, Budget and Establish the Truth- In-Taxation Public Hearing Date Finance Director Kelly Grinnell noted this evening is the adoption of the preliminary levy. She shared about the preliminary General Fund budget for 2023 noting a balanced budget of $14,343,095. She noted both the budget and the levy link to the Strategic Plan adopted in 2021; some priorities addressed are Financial Stability, Sustainability, and Operational Excellence. Ms. Grinnell spoke about General Fund Revenues (8.7% increase), property taxes (5.4% increase), licenses and permits (17.7% increase), charge for services (7.4% increase), and other revenue. She compared revenues to the General Fund Expenditures which are increasing 6.6% and shared about a transfer in of expenses from the Communications Department, noting there is no significant change to the spending, but it is now moving to the General Fund from the CATV Fund. Ms. Grinnell spoke about and explained expenditure increases and decreases including public safety increases, a public works decrease, and a parks and recreation increase. Ms. Grinnell shared about the General Fund Balance and Revenue Stabilization, noting fund balance are the City’s assets subtracted by liabilities and is broken down into non-spendable, restricted, committed (set aside by the City Council), assigned, and unassigned. The City has a fund balance policy that they will maintain a minimum Unassigned Fund Balance equal to at least 50% of the following year’s levied property taxes and anticipated State aid. Ms. Grinnell suggests removing the State aid portion and creating a Revenue Stabilization Arrangement via amendments to the Fund Balance policy. This would formally set aside amounts for use in revenue shortfalls and the amount would be set aside as Committed Fund Balance in the General Fund in an amount up to the succeeding year’s budgeted building permit revenue and investment income. Ms. Grinnell gave an example of how the proposed Balance and Revenue Stabilization would work if the City chose to go that direction at the end of 2022. Ms. Grinnell shared about the preliminary Capital Improvement Fund 2023-2027, including the Capital Facilities Fund, Transportation Infrastructure Management Fund, Pavement Management Fund, Capital Equipment/Vehicle Replacement Fund, and unfunded or uncertain items including City Council Minutes – September 26, 2022 4 Park Renovation and Park Development Funds. Ms. Grinnell shared about each of the funds and spoke about line items, planned projects, recurring items within the plans including ADA transition improvements and trail/parking lot pavement. She noted sources for pavement projects including Municipal State Aid (MSA), non-MSA aid, franchise fees, and special assessments from benefitting properties. The Capital Equipment/Replacement Fund is used to replace equipment such as dump trucks, loaders, tractors, mowers, and a lease with Enterprise for smaller trucks, and Ms. Grinnell showed a slide regarding technology including a cloud-hosted service for building permit software. Ms. Grinnell shared some unfunded areas in the area of park renovation noting the City has a plan to replace playgrounds every 20-25 years and quite a few playgrounds are scheduled in the next few years. They also have batting cages, tennis courts, and Skate Park equipment. Currently the need is approximately $250,000 a year for those park projects; the City has also identified items for the Park Acquisition and Development Fund which has a dedicated funding source in park dedication fees paid as new development comes into the City. Ms. Grinnell spoke about levies and shared a slide showing the County Assessor’s Report for taxes payable in 2023. In 2022 the City had a tax rate of 22.4% and if the Council adopted an increase of 5.2% for 2023 that rate would be 19.9%, a 7.2% increase would result in a 20.3% tax rate. Ms. Grinnell showed examples on screen regarding the levy options, and she shared comparable cities’ preliminary levy increases noting Chanhassen is toward the lower end of the spectrum with the 5.2%-7.2% increase. Ms. Grinnell showed slides that explained the impact of the levy on homes and commercial properties of various market values. She spoke about State- wide averages and compared them to the City of Chanhassen noting the biggest difference in the property tax area; expenditures are also lower than State-wide averages. Ms. Grinnell closed by saying tonight the City Council needs to adopt a resolution to set the 2023 Preliminary Budget Levy, set the date for a public hearing, and noted Staff will continue to refine these numbers and bring them back to the City Council. On December 12 they will hold the Truth-in-Taxation public hearing and will adopt the levy, budget, and fee schedule. Ms. Grinnell noted whatever is approved tonight can be reduced but it cannot be increased. Mayor Ryan shared that the City Council has been working on the budget during work sessions and opened it up to the Councilmembers for discussion and feedback. Councilman Campion asked Ms. Grinnell what the new growth projection is for 2023. Ms. Grinnell replied for new growth such as building permit projections they are using a three-year average and they expect it will continue at its pre-2021 existing rate. Councilman McDonald noted the work that goes into putting this presentation together and would also be interested in seeing the new growth projections. He thinks the levy increase should be closer to the 5.2%; however, he understands the 7.2% and noted there are still discussions to be had about numbers and how they relate to items in the budget. He would support the 7.2% tonight with the understanding that the Council will work over the next two months to bring the levy down working towards the 5.2%. Councilman McDonald noted they are down to just a few City Council Minutes – September 26, 2022 5 items, and he thinks it shows a lot about Staff’s responsiveness in helping the City Council understand what is behind those numbers. Councilwoman Rehm concurred with Councilman McDonald and the 7.2% makes sense to her. She appreciates the presentation, especially the comparison of other cities. She would like some more wiggle room to figure out how to do some of the work on the trails and parks as that fund is not in place right now. Councilwoman Schubert noted many unknowns this year in the economy and people are struggling with inflation costs in their home budgets. For this reason, she will be asking the City Council to dig deep and get closer to that 5.2% and wants to be sure they do their due diligence over the next two months to bring that levy increase as low as they can. She understands the law enforcement cost increase and having employee increases in costs year after year, so she wants to look at other areas to cut costs to level that out and not put more burden on the citizens this year. Councilman Campion agrees that the 7.2% is a not-to-exceed and justified number for the preliminary levy right now. Driven by many factors including inflation, he would like to see the City Council end up closer at 5.2% or even lower, although they would need to dig in and go through the budget in more detail. He would support the 7.2% for the preliminary levy. Mayor Ryan agreed with her fellow Councilmembers. She noted the City Council works closely with City Staff to get the numbers, go through the background, have conversations, and they recognize what is happening in the world today. She noted the concern that residents have regarding finances and shared that the City Council recognizes the importance of every single dollar whether it is at 5.2% or 7.2%. Mayor Ryan spoke about lengthy discussions that took place in the work sessions to figure out how they can continue to invest in the City. Some challenges the City has faced were due to the focus on past levy increases being as minimal as possible and, in turn, the City did not plan for the future which puts them in challenging situations. She wants to make sure they are making that investment with public safety, fire service, and parks and maintenance, and they will continue to have those conversations to plan and prepare for the future beyond 2023. Mayor Ryan wants to be sure they get down from 7.2% but will support the preliminary levy being set at that number with the expectation that the City Council works hard to get it down from that number. Councilman McDonald moved, Councilwoman Rehm seconded that the Chanhassen City Council adopt a resolution approving the 2023 Preliminary Budget with a Preliminary 2022 tax levy increase of 7.2% collectible in 2023 and establishing the Truth-in-Taxation public meeting date on December 12, 2022. All voted in favor and the motion carried unanimously with a vote of 5 to 0. COUNCIL PRESENTATIONS. None. ADMINISTRATIVE PRESENTATIONS. None. City Council Minutes – September 26, 2022 6 CORRESPONDENCE DISCUSSION. 1. Southern Valley Alliance Letter dated September 13, 2022 2. League of Minnesota Cities Magazine September/October 2022 Issue-Gnomadic Gnome Scavenger Hunt Article Councilman Campion moved, Councilwoman Schubert seconded to adjourn the meeting. All voted in favor and the motion carried unanimously with a vote of 5 to 0. The City Council meeting was adjourned at 8:17 p.m. Submitted by Laurie Hokkanen City Manager Prepared by Kim Meuwissen City Clerk