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07-11-2022 City Council Work Session MinutesCHANHASSEN CITY COUNCIL WORK SESSION MINUTES JULY 11, 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, Councilman McDonald, and Councilwoman Schubert. COUNCIL MEMBERS ABSENT: None. STAFF PRESENT: Laurie Hokkanen, City Manager; Matt Unmacht, Assistant City Manager; Charlie Howley, City Engineer/Public Works Director; Don Johnson, Fire Chief; Jerry Ruegemer, Park & Recreation Director; Kelly Grinnell, Finance Director; Danielle Washburn, Interim Finance Director; Rick Rice, IT Manager; and Kim Meuwissen, City Clerk. PUBLIC PRESENT: None. Mayor Ryan called the Work Session to order at 5:30 p.m. 2023 PRELIMINARY BUDGET FINANCIAL PLAN DISCUSSION City Manager Laurie Hokkanen presented a slide showing the 2022 assessment summary, followed by future projections from the 2022 budget as well as an estimated impact of the projected 2023 levy. Ms. Hokkanen explained that employee services is the bulk of the levy impact, which includes implementation of the pay plan, health insurance costs, and adding three firefighters. Funding Major Projects Ms. Hokkanen reviewed possible timelines for constructing the Lake Ann Preserve, construction of a civic campus, a Local Option Sales Tax (LOST) Referendum, and programming of identified park priorities. Lake Ann Preserve – 2023-2024 Ms. Hokkanen presented the potential design and construction schedule for the project as well as proposed funding sources which included the Pavement Management Program (PMP) Fund for bituminous trails, American Rescue Plan Act (ARPA), Fund Balance, and Park Dedication Fees. An alternative would be a $10M bond issue for a 10-year term with first payment in 2024. Chanhassen Civic Campus (new City Hall and associated park improvements) Ms. Hokkanen presented a potential design and construction schedule of this project as well as a 2026 levy increase and debt payment scenario. Another option would be to pursue a Local Option Sales Tax (LOST) referendum for 2023. City Council Work Session Minutes – July 11, 2022 2 Following her presentation, Ms. Hokkanen provided the following list of questions for Council to consider and provide staff with direction: • Does this plan fund the major priorities in a desired time? • Are the financial impacts acceptable? • Should we move forward with the Lake Ann Preserve Project I the near term? • Should we schedule a design workshop with our commissions to further consider and refine civic campus plans? • Should we engage the University of Minnesota for a LOST study? • The next Parks Referendum Task Force meeting is Monday, July 18. What direction should be given for next steps? Mayor Ryan asked Council to provide comments or concerns to the increase in Employee Services. Mayor Ryan started the discussion by asking if the predetermined Cost of Living Adjustment (COLA) amount of 2.5% should be reconsidered. Councilman Campion asked what the 2022 COLA amount was. Ms. Hokkanen replied that it was 2.5%. Councilman McDonald asked for clarification of the $800,000 CIP savings. Ms. Hokkanen explained that the primary response engine at Fire Station 2 is at the end of its useful life and needs to be replaced in 2023; however, if we were to transition Fire Station 2 from an active fire station to leasing to Ridgeview for an ambulance bay, we would not have a need to replace the engine. Fire Chief Johnson added that the amount to replace the engine at Fire Station 2 was actually higher than $800,000. Laurie also addressed the cost of the deferred maintenance that would be needed at Fire Station 2. Mayor Ryan reiterated her desire to discuss the proposed COLA. Councilman Campion asked about the surplus reported in the 2021 audit and where it came from. Ms. Hokkanen replied that the surplus was to some degree a result of building permit revenue. Councilman Campion to see a summary of the building permit projections for 2023. Ms. Hokkanen stated that right now we are forecasting to be on target. Councilman Campion also stated that he is open to considering increasing the COLA. In addition to the COLA Mayor Ryan asked the Council about the $30,000 to hire three new captains. Ms. Hokkanen stated that the Council doesn’t need to provide detail at this time, but do they support seeing the plan in a draft budget. Councilman Campion asked for clarification that hiring three new firefighters would need to be hired in order to close Fire Station 2. Ms. Hokkanen replied yes. Councilman Campion asked how our Fire Department compares in size to neighboring communities. Chief Johnson responded that we are right in the ballpark. The more full-time firefighters we have, the more stable Fire Department staffing will be. Councilman Campion asked would there be future adjustments to the number of full-time firefighters needed in the future. Chief Johnson replied that employee stability would reduce response time and increase longevity and that it would be years before we would have to worry about adding more firefighters. Also, paid-on-call local part-time firefighters are hard to find and retain. Councilwoman Schubert was in favor of doing what needs to be done to close down Fire Station 2 but is unsure of a larger COLA increase in addition to step increases; however, she understands City Council Work Session Minutes – July 11, 2022 3 we need to be competitive in order to retain employees. Councilman McDonald would like more information on what comparable cities are offering for COLA. Ms. Hokkanen said staff would gather that information and present it at a future work session. Councilman McDonald asked about the 15% increase for health insurance. Ms. Hokkanen responded that our current carrier has paid out more than what it has received in premiums. Councilwoman Rehm also supported the Fire Department staffing plan and transitioning out of Fire Station 2. Councilwoman Schubert asked about the funding sources for the Lake Ann Preserve project, specifically using Pavement Management Program (PMP) funds for trails not adjacent to streets. Will we risk future street improvement projects not being fully funded. She likes the idea of using ARPA funds for the project. Mayor Ryan expressed appreciation of looking at all the funding sources but is also concerned about using PMP funds for the Lake Ann Preserve trails, especially with our current road rehabilitation needs. Mayor Ryan is reluctant to move forward with a referendum this year. If we are going to do a park referendum, there needs to be more robust and their needs to be further discussion; however, she supports using ARPA funds to move forward with the Lake Ann Preserve project. Councilwoman Schubert agreed that we should use the funds we have to get started and postpone the referendum to allow more time for options. Councilman Campion agreed that the referendum should be postponed a year or two. Councilman McDonald is in favor of taking care of the Lake Ann Preserve but it needs to be prioritized with other City needs. He asked about how ARPA funds can be spent. Ms. Hokkanen replied that we can use it for a wide variety of things, but the Lake Ann Preserve would definitely qualify. Councilman McDonald also thought the referendum should be delayed. Could ARPA funds be used to offset employee services. Ms. Hokkanen replied yes. Councilman McDonald doesn’t think we can ask residents for $5M just for Lake Ann and we should prioritize what is really needed. Councilwoman Rehm agreed that the referendum this year would be rushed but believes that people really want to see the Lake Ann Preserve project proceed and is in support of getting the project started. Ms. Hokkanen asked Council about moving forward with the civic campus plans. Mayor Ryan brought up the local sales tax option and Council agreed to move forward with the study. Councilman Campion asked if there is a large cost to produce the plan. Ms. Hokkanen replied that that the study costs $3,500. If the Council chooses to move forward with the LOST, staff will contact the University of Minnesota to start the study and recent trends show that there would be a good chance that the voters would go for it and that the legislature would approve it. Mayor Ryan asked Council if we should move forward with a design workshop to further consider and refine civic campus plans. Ms. Hokkanen suggested bringing all of the commissions together with the City Council and a consultant for a design workshop before presenting it to the public. Councilman McDonald is in favor of moving forward with this. Councilman Campion agreed and suggested creating a separate task force and engaging commercial aspects and partnerships. Councilwoman Rehm concurs with Councilman Campion. Councilwoman Schubert concurs as well. Mayor Ryan directed staff to move forward with scheduling a design workshop for a civic campus with the City Council and all of the commissions. PARK REFERENDUM UPDATE Item discussed as part of the previous item discussion. City Council Work Session Minutes – July 11, 2022 4 FUTURE WORK SESSION SCHEDULE July 25: Traffic Safety Committee Presentation Short-Term Rentals City Council Roundtable 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 6:53 p.m. Submitted by Laurie Hokkanen City Manager Prepared by Kim Meuwissen City Clerk