CC WS 2021 09 13CHANHASSEN CITY COUNCIL
WORK SESSION
MINUTES
SEPTEMBER 13, 2021
Mayor Ryan called the work session to order at 5:30 p.m.
COUNCIL MEMBERS PRESENT: Mayor Ryan, Councilwoman Rehm, Councilman
McDonald, and Councilman Campion.
COUNCIL MEMBERS ABSENT: Councilwoman Schubert.
STAFF PRESENT: Laurie Hokkanen, City Manager; Charlie Howley, Public Works
Director/City Engineer; Kelly Strey, Finance Director; Ari Lyksett, Communications Manager;
and Jerry Ruegemer, Park & Recreation Director.
PUBLIC PRESENT: None.
AMERICAN RESCUE PLAN ACT (ARPA) DISCUSSION
Finance Director Kelly Strey provided an overview of ARPA and the documents included in the
packet. Strey shared that the city is not eligible for spending in the lost revenue category. She
noted that city staff has been focusing on uses under the category “investing in water and sewer.”
Mayor Ryan inquired whether using the funds that way would result in a benefit to residents.
Strey reviewed planned spending in the enterprise funds, which currently includes approximately
$1M in debt annually in future years. Using ARPA funds would reduce the amount of debt
needed to complete projects and maintain rates at forecasted levels.
Mayor Ryan asked for more information on how projects would be selected and Strey noted that
not all planned projects qualify but there are enough that would meet the ARPA guidelines. Strey
said that increasing the utility rates by 1% equates to $400,000 in revenue. Reducing the rates or
debt would result in lower demand on rates increases which residents and businesses would see
on their water bill. Rates would not go down, but could increase at a slower rate.
Mayor Ryan asked if we were obligated to spend ARPA dollars or if we could save them. Strey
responded they cannot go to fund balance, they must be spent over the next four years.
Councilmember McDonald asked if we could freeze rates for a year or two with the addition of
the ARPA dollars. After Strey shared that rates would still need to increase to accommodate the
new allocation models and planned projects, Councilmember McDonald observed that we could
hold the rates stable in the long term and Strey agreed. Strey said the rates are forecast to
increase around 6% per year going forward. ARPA funds could forestall the ½% increase that
was approved to implement monthly billing. In summary, rates will still increase as forecasted
in the 2020 rate study, but we will be able to fund administrative expenses from general fund,
implement monthly billing, and reduce the use of debt. Mayor Ryan asked what will happen to
the utility rates once the $2.7M is exhausted. Strey responded no, the reduced debt service and
interest costs will free up ten years of interest and lower long-term costs.
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Mayor Ryan recalled that CARES funds were used for one-time, big expenses and asked for
more info about the impact that residents will see of the $2.7M dollars. Strey responded that it
provides financial stability to the water and sewer funds. It also allows the general fund increase
to be lower and move to the allocations model.
Councilmember Rehm asked if the work that will be done is beyond what is currently planned.
Strey said no, it would be the same work that is currently planned. However, with the increase in
street reconstruction, there is more pressure on water and sewer and this money will alleviate that
pressure.
Councilmember Campion noted that residents and businesses have more control over water
usage than they do property taxes.
Strey talked a bit about the allocations approach that the city is attempting to move to. Some
water and sewer expenses are currently being funded by the general fund.
Members of the City Council shared how important it is to be able to be transparent about how
the money is being utilized.
Councilmember Campion inquired about the need to use ARPA funds for broadband expansion
in light of the MetroNet franchise and build-out plans.
Councilmember Rehm inquired about the interest in using funds for affordable housing. Strey
shared that Carver County is receiving $20M APRA and has designated $760,000 for housing
assistance in their first round, with another $1M in housing assistance for a future round of
allocation.
Councilmember Rehm asked about using ARPA funds to expand green space. Hokkanen
responded that is one of the eligible uses that must target Qualified Census Tracts.
Councilmember McDonald reiterated that he wants to be able to tell the public what the money
was spent on and the tangible benefit, which probably means that water and sewer infrastructure
makes the most sense.
Mayor Ryan noted that she is also supportive of water and sewer projects. She wondered whether
there is also opportunity to use some of the funds to support small businesses. Mayor Ryan
suggested creating a grant program, possibly to cover SAC and WAC fees to reduce barriers to
opening. Mayor Ryan also noted that staff has proposed creating a new Economic Development
Manager that could administer grants and programs created with ARPA funds.
Councilmember McDonald asked about the fees that a new business would pay and who do you
pay them to. A summary and comparison of those fees would help the City Council consider
assistance programs.
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Mayor Ryan said that she sees opportunity in terms of economic development using the ARPA
funds.
Councilmember McDonald shared his perspective on economic development activities and
approaches.
Councilmember Rehm shared that the best way to support businesses is to bring more residents
to town and encouraged the Council to keep thinking about housing and population density. She
mentioned veterans housing and other areas of housing needs.
Mayor Ryan asked staff to research further: more information about how Carver County is
planning to use their dollars specifically on housing, economic development programs / ideas /
fees / impacts. Council appreciates the information and conversation thus far and looks forward
to more in the future. Staff said to plan for more discussion in October 2021.
6:30 P.M. - ROUNDTABLE
Mayor Ryan handed out a guidelines document for the roundtable. The concept was introduced
last summer under Heather Johnston to address frustrations that new ideas and initiatives could
only be discussed during the January Key Financial Strategy (KFS) sessions.
Councilmember Rehm shared that she hears from a growing number of people who want to live
in Chanhassen but cannot afford to. This would include aging in place, housing for veterans, and
places for newly graduated college students to return home.
Mayor Ryan inquired about areas within Chanhassen that are currently designated for high-
density housing. She asked Councilmember Rehm what action she is seeking. Rehm replied that
she’d like the Council to schedule a work session and consider using ARPA funds.
Councilmember McDonald said that affordable housing is a challenging topic and you have to
pay attention to the definition. McDonald was supportive of an issue paper or potentially having
a commission look at it. He wondered where good locations would be and noted it would be a
controversial issue. Council should define what affordable housing is. Councilmember Campion
said he doesn’t hear from many residents on the issue and wasn’t sure what the city should do.
Campion was supportive of an issue paper. Councilmember Rehm asked if housing specifically
for seniors or veterans would be more palatable. Councilmember Campion observed that senior
housing has been coming to Chanhassen every year. Councilmember Rehm noted the work of
the Senior Commission to support aging in place. Mayor Ryan proposed an issue paper in
conjunction with the Senior Commission to provide the Council with more information.
Councilmember McDonald noted that the city should not be involved in the provision of services
to residents within the housing. Councilmember Rehm said she did not intend for the city to do
so, only to be involved in the building of the housing. Councilmember Rehm said she also wants
to push for housing in the center of city, where residents can easily access services and
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businesses. Mayor Ryan also proposed that housing could be discussed at the Strategic Plan
update.
Councilmember Rehm suggested that the Environmental Commission (EC) could be more
involved in providing feedback to the City Council. Councilmember Campion asked what
currently limits the EC from making recommendations. Councilmember Rehm said their role is
to educate and their scope has been limited. Councilmember Rehm shared specific items, like is
the city planning for Electric Vehicle (EV) charging in the future – either requiring them to be
built with new development or installing them as a city. Councilmember Rehm summed it up by
saying that she would like the city to put more emphasis on sustainability and environmental
issues. Councilmember McDonald said he does feel like the city has been focused on
environmental issues, with a great emphasis on green space and tree preservation. He was unsure
about putting so much focus on the Environmental Commission, when the Planning Commission
has historically considered ordinance and code issues. Councilmember McDonald wondered
whether we need to look at the charter of all commissions if we go down this road.
Councilmember Campion suggested that the Environmental Commission could look at any of
these items. Councilmember Rehm said she would bring the item back at the Strategic Plan
session for more discussion.
FUTURE WORK SESSION SCHEDULE
The meeting adjourned at 7:00 pm.
Submitted by Laurie Hokkanen
City Manager
Prepared by Kim Meuwissen
City Clerk