CC WS 2021 07 12CHANHASSEN CITY COUNCIL
WORK SESSION
MINUTES
JULY 12, 2021
Mayor Ryan called the meeting to order at 5:30 p.m.
MEMBERS PRESENT: Mayor Ryan, Councilwoman Rehm, Councilwoman Schubert,
Councilman McDonald, and Councilman Campion.
COUNCIL MEMBERS ABSENT: None.
STAFF PRESENT: Laurie Hokkanen, City Manager; Charlie Howley, Public Works
Director/City Engineer; Jake Foster, Assistant City Manager; Ari Lyksett, Communications
Manager; Rick Rice, IT Manager; and Kate Aanenson, Community Development Director.
PUBLIC PRESENT: None.
Jake Foster introduced the new Communications Manager, Ari Lyksett, to the City Council.
2022 BUDGET AND FINANCIAL MANAGEMENT POLICIES
Kelly reviewed how the budget and financial policies are related to implementation of the
Strategic Plan. Kelly noted that budget will be based on the needs established by the City
Council and that estimates of revenues and expenditures will be as accurate as possible.
Kelly reviewed the array of financial policies that the city has and/or is updating. She gave an
overview of the need/purpose of each policy.
Kelly reviewed an initial projection for the 2021 budget, which forecasts a 4.9% levy increase in
2022. Budget changes are proposed to be incremental as the city works toward a fully funded
plan.
In response to a question from Mayor Ryan, Kelly explained that previously, park replacement
occurred as an “after-the-fact” budget item if there was surplus revenue. Kelly also responded
about how a park referendum bond would appear in the budget if one were approved. Kelly also
shared the different approaches to introducing a referendum bond, which may include adding a
smaller capital bond in the year(s) leading up to the bond payment to provide more incremental
increases.
Strey highlighted challenges, including: the age of city assets, the desire to maximize street
reconstruction and rehab, the increasing amount of special assessment amounts, no dedication
park renovation funding source, and a wish list for new parks/amenities. Resources and
opportunities include the franchise fee dedicated to street projects, the Pavement Management
Program (PMP) fund balance is high and provides stability, and the transition to bonding for
special assessments.
City Council Work Session Minutes – July 12, 2021
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Councilmember McDonald inquired about the approach to the CIP. Strey responded that the goal
is to incrementally increase the levy. In some years, spending may be less than budget and in
other years more, but the goal is to maintain the target fund balance.
Kelly noted that the city has the highest possible bond rating, AAA from Standard & Poors.
Kelly reviewed historical debt levels and uses of debts. Outstanding GO bonds are less than $4M
outstanding. The legal debt limit for Chanhassen is $142M.
Annual franchise fee revenues are $1.9M. City Council has expressed an interest in doing more
street reconstruction projects. A $930,000 tax levy for the PMP is proposed.
The Mayor asked Charlie Howley for an update on projected MSA funds. Charlie replied that the
fund was in the red, now is in the yellow. We had a 9% reduction in funds in 2021, but are not
anticipating a reduction in 2022. The yellow status of the fund does allow some level of
advancing MSA funds, although the city is not currently planning to advance MSA funds. Kelly
reviewed projections relating to the need to fund the 40% share of the special assessments. Staff
is proposing to issue debt to finance that portion of the special assessments, to be paid as
assessments are paid. The City Council asked numerous questions about the financing of the
fund and options. If we issued debt, residents could receive a lower interest rate as staff would
recommend charging actual rate of interest + 2%, rather than the present, higher rate of prime +
2%.
Kelly moved to the overview of the Transportation Infrastructure Management fund. The fund
includes preventative maintenance, ADA improvements, sealcoating and crack sealing, etc. The
fund projections do not include any large shifts in service level, but do show present services
funded adequately and with an incremental annual increase. Charlie noted that the fund could
use more money as we want to increase services like trail and parking lot maintenance and/or
bridge funding. Charlie recommended that we look closer at this fund in future years.
City Council emphasized their desire to prioritize adequately funding street maintenance.
The Council requested additional discussion at the July 26, 2021 work session.
The work session adjourned at 6:59 pm.
Submitted by Laurie Hokkanen
City Manager
Prepared by Kim Meuwissen