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06-27-2022 City Council Work Session MinutesCHANHASSEN CITY COUNCIL WORK SESSION MINUTES JUNE 27, 2022 Mayor Ryan called the work session to order at 5:30 p.m. COUNCIL MEMBERS PRESENT: Mayor Ryan, Councilman McDonald, Councilman Campion, Councilwoman Rehm, and Councilwoman Schubert. COUNCIL MEMBERS ABSENT: Councilman McDonald. STAFF PRESENT: Laurie Hokkanen, City Manager; Matt Unmacht, Assistant City Manager; Kate Aanenson, Community Development Director; Charlie Howley, City Engineer/Public Works Director; Don Johnson, Fire Chief; Jerry Ruegemer, Park & Recreation Director; Ari Lyksett, Communications Manager; Danielle Washburn, Interim Finance Director; and Kim Meuwissen, City Clerk. PUBLIC PRESENT: Dave Mol, Redpath and Company Mark Nordland, Level 7 Development, LLC Kendra Lindahl, Level 7 Development, LLC Josh Kimber, Park Referendum Task Force Member Mayor Ryan called the Work Session to order at 5:30 p.m. PRESENTATION AND REVIEW OF 2021 AUDIT Dave Mol from Redpath and Company presented the results of the 2021 audit. The goal was to plan and perform the audit to provide reasonable assurance that financial statements are free of material misstatement and presented in accordance with accounting standards. The City has participated in the National Government Finance Officers Association Excellence in Financial Reporting for 29 consecutive years. Mr. Mol reported on the internal control and found that reconciliation of financial investments wasn’t occurring on a regular basis but ultimately all the investments reconciled. Mr. Mol presented the next report on Minnesota Legal Compliance. One item noted that the payment of invoices were not being processed in a timely manner (within 35 days). Ms. Hokkanen reported that each instance was reviewed and identified that they all came from the same area. Generally, staff is well aware of this requirement and this is not an issue we expect to have moving forward. The last report was on communication with those charged with governance, which are certain things that are not covered in other reports. There were no difficulties encountered in performing the audit before the June 30 deadline. A new requirement in 2022 is how leases are reported. In conclusion, really good results were found with no overly negative findings. Mayor Ryan asked how this year’s report compared to years past. Mr. Mol reported that the City’s fund balance increased driven by the permit revenue so financially things look good. City Council Work Session Minutes – June 27, 2022 2 Mayor Ryan expressed her appreciation of the work Interim Finance Director Danielle Washburn has done in assisting with the 2021 audit and performing Finance Director duties in the interim. AVIENDA PRESENTATION Mark Nordland of Level 7 Development, LLC provided a construction update, development plan progression, and proposed PUD amendments on the Avienda project. He is looking to answer Council’s questions and obtain their feedback and thoughts. Mr. Nordland provided an aerial view of what the property looked like a year ago and also when the project was demobilized in December. They remobilized in May and are nearly done with mass grading on the site with the exception of the corner at Lyman and Powers Boulevards, where the elevation will be lowered to match the elevation to the south. Water is substantially installed along with quite a bit of sanitary sewer. They are waiting for the final plan approval on specifics for Bluff Creek Boulevard before they can starting laying utilities underneath the street. Supply chain is their biggest issue at the moment. Mass grading will be completed and they are hoping to get approvals within the next week or so then they can order the materials and get them installed by the end of October. Mr. Nordland presented a site plan showing a total of 8 larger homes and 32 single-family villa homes. Bluff Creek Boulevard will need to be completed before the final plat can be approved and construction can be started. They would like to be able to pull permits for these homes this fall. Concerning the PUD amendments, they have a senior housing developer that wants to take the original two senior projects and combine them into one larger project. They have also made some modifications in the layout in the center of the village including a public plaza surrounded by retail. Mr. Nordland next presented the approved plan and revised proposed plan. They have added 53 row homes in groups of four to be constructed by Cudd. They are also showing a five- story 400-unit apartment project in the center of the site developed and owned by Bahram Akradi. It will include one level of below-grade parking and it would all be built in one phase. Courtyards would be constructed in the center of the apartment buildings. The first level will contain retail space will full storefront glass along the front of the building. The inner perimeter of the plaza area would be surrounded by retail. They are also looking at some kind of open container area so that people can walk around the plaza area with their beverage. There is a 35,000 square-foot grocery store proposed on the north portion of the site along with some junior box space which would include stores like Ulta Beauty, DSW Shoe Store, Nordstrom Rack, a pet food store, etc. They are still showing two feature restaurants at the front of the project. There are currently no office users but there is interest in a hotel. Once retail sites are constructed there will be more interest in the office portion. As far as the senior housing, the original plan had a 55+ building of 150 units and a senior facility with services of another 150 units. The developer is proposing one facility of 270 units overlooking the wetland and woods. Mayor Ryan asked how much retail was lost by adding the housing. Mr. Nordland replied that they took out the movie theater and added more retail. Mayor Ryan expressed concerns by residents that this area would become more housing than entertainment. Mr. Nordland responded that the new plaza area would be significant in size. Ms. Aanenson commented that the PUD is very complex and that the City has clear expectations on the desired uses and wants to be transparent with any changes City Council Work Session Minutes – June 27, 2022 3 moving forward. Ms. Hokkanen asked about the possibilities of a public/private partnership for a facility in the southern corner of the site. Mr. Nordland said they are open to the idea and would like to start the discussion with the City. Mayor Ryan provided some resident concerns regarding environmental issues, landscaping, water reuse, and the entertainment component. Mr. Nordland replied the Watershed District approved construction of a full rainwater reuse program to be used for irrigation. Mayor Ryan invited comments from the Council regarding tonight’s presentation. Councilmember Rehm asked if our existing sewer and water infrastructure would be sufficient for the development. Mr. Howley responded that yes, the City was prepared and able to handle the additional impact on the infrastructure. Mayor Ryan recessed the Work Session at 6:50 p.m. Mayor Ryan resumed the Work Session at 8:00 p.m. PARK REFERENDUM UPDATE Park and Recreation Director Jerry Ruegemer reviewed Council’s discussion from the previous work session regarding all of the options to be included in the referendum. Staff has since pared down the options to focus energies on completing amenities within Lake Ann and Bandimere Parks. Mayor Ryan and Councilmember Schubert attended the June 20 Referendum Task Force meeting to share Council’s feedback. Ms. Hokkanen also presented the City Hall concepts which include a civic campus or plaza. There was also conversation regarding a possible public partnership with the Avienda project. Based on the presentations, the Task Force felt overwhelmed and rushed to move forward. The Consultant, WSB, created a FlashVote survey for Task Force members to complete individually the next day to determine if they should move forward with the referendum as well as include reasons why or why not. The questions included whether or not a referendum should be held in November and, if so, what amount of money would you be comfortable asking for? Which projects would they be in favor of including in the referendum? Mr. Ruegemer presented the survey results and 9 out of 12 members wanted to move forward with a referendum in November for a variety of reasons. Some of the reasons included concern about the economy and high inflation as well as the City Hall project that may compete with the referendum. The Task Force desires to see the referendum through and indicated they would be comfortable with a $10-$15M range of project costs. The top five priorities of the Task Force were Lake Ann Preserve, lights at Lake Ann Park, trail gaps, permanent bathrooms at the Klingelhutz Pavilion and at the ballfields in Lake Ann Park. Mayor Ryan stated that Lake Ann Preserve was at the top of everyone’s list. Councilmember Schubert added there was a lot of discussion about how much should we ask for now and should we ask for an additional amount for an ice rink a year or two later. Ms. Hokkanen also added that she thought the Task Force was very excited about moving forward with the referendum; however, they understand that this might not be the year to move forward and she doesn’t think this should be a mandate for the City Council. Ms. Hokkanen provided deadlines for the referendum and asked for Council priorities and how the Task Force should move forward. Mayor Ryan listed possible priorities to be considered are building a new City Hall/Civic Plaza, City Council Work Session Minutes – June 27, 2022 4 a referendum, and trying to do a component of both. Councilmember Schubert asked about competition between Avienda plaza and Civic Campus. Councilmember Campion said he could see the overlap between the two and expressed concern about needing more time to review and plan before moving forward. He thought the pared down list was more palatable; however, he had concerns about required upcoming maintenance needs with the Rec Center. Mr. Ruegemer said we are dealing with rooftop condensers, windows, and some cosmetic items. Councilmember Campion thought whatever happens to the Rec Center would hinge largely on potential sheets of ice or a fieldhouse in Avienda. Ms. Hokkanen responded that the Avienda Plaza will be privately owned and programmed and the City has not been asked or has any intention of moving our programming there. Mr. Ruegemer added that competition is healthy and if our program is of high quality it will get the numbers and if not, we would reassess. Mr. Howley interjected that the Rec Center future maintenance included replacing exterior pavements for the parking lot and skating rinks and replacing skating rink lighting as well as refurbishing the locker rooms and the gym floor. Councilmember Schubert talked about helping fund the potential partnership with Avienda for an ice rink with the local sales tax option outside of the referendum. Ms. Hokkanen explained that the City could impose a one-half of one percent local option sales tax for a regionally significant project for a term of 20 years. The Legislature would have to authorize the City to ask residents via referendum for permission to create the sales tax. The first opportunity that could happen would be in 2023 and we think that we could generate $38-$45M over 20 years. If Council would like to learn more about this process, the City would need to request the University of Minnesota Extension Office perform a study at a cost of approximately $3,500 that would project how much could be generated and who would pay it. Councilmember Rehm suggested that the City could delay the referendum for a year and use bonding for the Lake Ann Preserve and the permanent bathrooms. Mayor Ryan thought the priority would be to decide what to do with City Hall before the referendum. Ms. Hokkanen provided feedback from Councilmember McDonald that City Hall and a Civic Campus would be his main priority. Councilmember Campion asked why it is one versus the other. Ms. Hokkanen responded that providing city services is the core responsibility of the City rather than the want- to-have of the parks referendum. There is also a lot of concern about Avienda drawing people away from the downtown and that transforming the City Hall space will revitalize downtown and promote additional development. Councilmember Campion asked about the time schedule for the City Hall project. Ms. Hokkanen responded that if that was the direction Council wanted to go, a request for proposals (RFP) would need to be done in early 2023, bidding and issuing the bonds in 2024, with first bond payments in 2026. Construction of the Lake Ann project probably would also occur in 2024. Mayor Ryan commented that with that information if the referendum was held now but the City Hall project would not occur until 2024 that it no longer seems to be an either/or situation. Councilmember Schubert ask how much of the referendum would be able to start in the spring of 2023. Mr. Ruegemer responded that there are some components such as the field lighting that could be initiated in the spring; however, the Lake Ann Preserve would need to be approached in stages starting this upcoming winter when the wetlands are frozen. It also will take some time to get through the permitting process with other agencies. Boardwalk completion would likely occur in the spring or early summer of 2024. Mayor Ryan reiterated that she would prefer to bring new life into the downtown by constructing a Civic Campus which includes a new City Hall and delaying the referendum until next year after we obtain more information from Avienda on a possible partnership. Councilmember Campion commented that the Civic Campus seems to be the bigger priority; however, the referendum projects would start sooner. City Council Work Session Minutes – June 27, 2022 5 Councilmember Rehm commented that if the Council decides not to move forward with the referendum this year, the Lake Ann Preserve project should move forward with bonding, depending on the numbers. Councilman Campion commented that a referendum in an amount up to $20M seems palatable. Councilmember Schubert asked if the City would be able to bond a smaller amount of $6M and if it would adversely affect future bonding and the City’s credit rating. Ms. Hokkanen responded that yes, the City can bond for the smaller amount. If Council direction is to move ahead with the Lake Ann Preserve project Staff can provide funding options such as bonding, using cash on hand, and levying. Councilmember Schubert commented that she feels the referendum is being rushed as far as the dollar amount along with the uncertainty in the economy. The Council discussed the option to ask the athletic associations to fund raise for the permanent bathrooms and a concession stand at the Lake Ann Park ballfields. Mr. Howley suggested a referendum could include the Lake Ann Preserve and the remaining trail gaps in the City where the entire community can benefit. Mayor Ryan’s biggest concern is if a referendum is authorized this year, and then next year Avienda presents a partnership opportunity requiring a second referendum. She requested Staff create funding scenarios and timelines for Council to review at the next work session. Councilmember Rehm asked for more information on incorporating a labyrinth and nature play at Lake Ann Park. Ms. Hokkanen surmised that Council is looking to see additional planning and public input before Lake Ann Park is completely built out. FUTURE WORK SESSION SCHEDULE July 11: 2023 Preliminary Budget Financial Plan Discussion July 25: Traffic Safety Committee Presentation Short-Term Rentals August 8: 2023 Budget Overview and Initial CIP Discussion September 12: Preliminary Levy Discussion October 24: General Fund & Property Supported Funds Discussion November 14: CIP, Debt & Utility Rate Study Discussion The work session adjourned at 9:10 p.m. Submitted by Laurie Hokkanen City Manager Prepared by Kim Meuwissen City Clerk