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07-17-2023 City Council Work Session MinutesCHANHASSEN CITY COUNCIL WORK SESSION MINUTES JULY 17, 2023 Mayor Ryan called the work session to order at 5:30 p.m. COUNCIL MEMBERS PRESENT: Mayor Ryan, Councilman McDonald, Councilman von Oven, Councilwoman Schubert, and Councilman Kimber. COUNCIL MEMBERS ABSENT: None. STAFF PRESENT: Laurie Hokkanen, City Manager; Matt Unmacht, Assistant City Manager; Eric Maass, Planning Director; Charlie Howley, Public Works Director/City Engineer; Jerry Ruegemer, Park & Recreation Director; Kelly Grinnell, Finance Director; Bob Generous, Senior Planner; Ari Lyksett, Communications Director; Samantha DiMaggio, Economic Development Manager; and Kim Meuwissen, City Clerk. PUBLIC PRESENT: Andy Hering, Redpath and Company Jonathan Ingram, Raftelis Nick Asta, Roers Companies Andy Bolig, Roers Companies Bob Loken, ESG Architecture & Design Mayor Ryan called the work session to order at 5:30 p.m. PRESENTATION OF AUDIT RESULTS, REDPATH Finance Director Kelly Grinnell introduced Andy Hering from Redpath and Company. Mr. Hering presented an overview and results of the reports the auditor issued: Report Result Opinion on Financial Statements An unmodified or “clean” opinion was issued on the 2022 financial statements (highest level received) Report on Internal Controls over Financial Reporting No internal control findings (1 finding in prior year audit) Report on Minnesota Legal Compliance No internal control findings (1 finding in prior year audit) Communication with those charged with Governance No Corrected or Uncorrected Misstatements Mr. Hering added that the Minnesota Government Finance Officers Association (MGFOA) awarded the Certificate of Achievement for Excellence in Financial Reporting in 2021 for the 30th consecutive year. Mayor Ryan congratulated the Finance Department on an excellent report. City Council Work Session Minutes – July 17, 2023 2 ORGANIZATIONAL STUDY/STAFFING STUDY PRESENTATION, RAFTELIS Assistant City Manager Matt Unmacht provided a background of the organizational study. There were three reasons for the study: 1) to understand the staffing needs of the new city hall facility; 2) in response to the request for additional staffing from the Carver County Sheriff’s Office (CCSO); and 3) to respond to recent retirements and recent attrition. Mr. Unmacht introduced Jonathan Ingram of Raftelis via video conference. Mr. Ingram shared a presentation on screen entitled Organizational Assessment. He stated that Raftelis has a niche expertise in strengthening local government organizations and 28 years of experience serving local governments and utilities. The project’s purpose was to assess whether the city is structured and staffed effectively to deliver services to the community and position the city effectively to meet anticipated growth. Mr. Ingram began with a high-level project overview starting with their engagement with staff following the Six R approach: Responsibilities, Resources, Requirements, Results, Recommendations, and Roadmap. General observations from staff engagement were that staff takes pride in their work and are dedicated to the community, they see the recent staffing and structure reorganization as a positive change, determined that defined metrics can be created to analyze future staffing needs and responsibilities and that there is a need for efficient technology and integration of software programs across divisions. Mr. Ingram presented performance management results, which define service standards for city functions and establish metrics to track performance. Strategic plan metrics exist, but there is a need for a broader performance measurement program. The city should also establish clear service level standards metrics for each functional area, and metrics will help the city make data- driven decisions about resource needs. Mr. Ingram recommended changes to the organizational structure, city hall, and future staff needs. Each city department was then reviewed with recommended changes. Mr. Ingram provided a summary of recommended staffing and the potential cost. Mayor Ryan thanked Mr. Ingram for the report and asked the council if they had any questions. Councilman von Oven asked for two or three recommendations that should be prioritized. Mr. Ingram responded that the reorganization should move forward quickly and focus on adding facilities management resources and law enforcement recommendations. Councilman von Oven asked if there are ways staff and or council can engage the community thoughtfully and positively regarding public safety priorities. Mr. Ingram responded by building relationships outside of incidents and public safety priorities. Mayor Ryan asked staff what should be the next steps. Ms. Hokkanen responded that each department head had seen the draft report, and staff would be working on implementation reports provided by Raftelis. Mr. Ingram responded that they would formulate recommendations working in conjunction with staff. Ms. Hokkanen added that the data and analysis provided in the report do not match current law enforcement efforts from the CCSO. Mayor Ryan mentioned the Strategic Plan and how the recommendations relate to the plan and the council evaluating the city’s partnership with the CCSO and understanding what is included in the contract in relation to the city’s expectations. Mr. Unmacht stated next steps are to take the recommendations and implement them. Mayor Ryan asked that council be made aware of changes as they are implemented. Ms. Hokkanen added that the report and the presentation represent the conclusion of the work with Raftelis. Mayor Ryan thanked Mr. Ingram again for the report and presentation. City Council Work Session Minutes – July 17, 2023 3 2024 PRELIMINARY BUDGET AND LEVY DISCUSSION Finance Director Kelly Grinnell reviewed the 2023 adopted levy as well as levy projections for 2024 and beyond. At that time, levy increases were anticipated to be between 7% and 7.5% for years 2024-2026 to fully incorporate the new debt payments that will be becoming on board. A major factor driving the General Fund budget increase includes a shift in expenses for street maintenance from the Transportation Infrastructure Management (TIM) Fund. Other factors include overall inflation resulting in several expense increases, the labor contract, health insurance rate increases, police service contract increases, updating the Strategic Plan, lobbying expenses, and election expenses. Public Works Director/City Engineer Charlie Howley provided an update on the Enterprise leasing program. Ms. Grinnell added that since we are technically leasing, an interest rate is associated, and our projections included much lower interest rates than what is currently. Ms. Grinnell added some good news; recent legislation authorized a one-time public safety aid of $1.134 million that will be paid to the city in December. Another item to consider is spending the remaining American Rescue Plan Act (ARPA) funds of $1,288,849, which must be obligated by December 2024 and fully spent by December 2026. Ms. Grinnell requested council feedback on the preliminary projections for the levy and general fund budget and ideas for the public safety aid and remaining ARPA funds. Mayor Ryan directed the council to contact Ms. Grinnell directly if they have further questions regarding the budget. Mayor Ryan recessed the work session at 6:55 p.m. Mayor Ryan reconvened the work session at 7:45 p.m. DOWNTOWN REDEVELOPMENT WORKSHOP Mayor Ryan iterated that this is an opportunity for the council to provide feedback regarding the proposed redevelopment on the southeast corner of West 78th Street and Market Boulevard. Planning Director Eric Maas reviewed that the council adopted a development moratorium in this area. Recent changes include the purchase of the movie theater and the Country Inn & Suites properties by Roers Companies, and they would like to present their development ideas. Senior Development Associate Nick Asta from Roers Companies introduced himself and Development Partner Andy Bolig. Mr. Asta reminded the council that Roers also developed the Venue project in downtown Chanhassen and added that he also lived there for two years. Bob Loken from ESG Architecture & Design introduced himself and provided a company overview focusing on urban or suburban repositioning. An aerial location map of the site was presented, showing the boundaries of the proposed project which includes six parcels and three buildings. Mr. Loken reviewed the current site layout and existing buildings and amenities and presented multiple photos showing different views of the existing properties. The project goals are to increase housing within the downtown core, redevelop several auto-oriented sites to help create a walkable, mixed-use neighborhood and divide development into two separate buildings to allow for a future north/south street extension connecting West 78th Street and Market Street. The west City Council Work Session Minutes – July 17, 2023 4 building is proposed to have 185 apartments, 15,000 square feet of retail facing West 78th Street, and structured parking serving residents and retail guests. The east building is proposed to have 150 apartments, 8,000 square feet of retail facing the parking lot, structured parking serving residents, and surface parking serving retail guests. Mr. Asta presented the proposed site plan overlaying the existing site, showing the apartment buildings' location, retail space, parking areas, street connection, and the different building levels. ESG-designed architecture precedents and precedents from the City of Victoria were presented for consideration. Mr. Maass added that there is a potential for the future extension of Laredo Drive through the property. Mayor Ryan asked if the abutting property owner Kraus-Anderson (KA) is familiar with the proposed development. Mr. Maass responded that KA is aware of the plan and happy to see that something is proposed; however, they are not in a position to redevelop their property at this time. Mayor Ryan stated that it is important for the council to understand the development of multiple blocks while providing feedback and looking at the inclusion of green space. Councilman Kimber asked about the height of buildings. Mr. Asta responded that they would be similar in height to the Venue building. Councilwoman Schubert asked how many apartments were in the Venue and if the underground parking was sufficient for the residents. Mr. Asta responded that the Venue contained 34 apartments and, from his experience living in the building, had plenty of underground parking spots available. Councilwoman Schubert asked if condominiums were a possibility. Economic Development Manager Samantha DiMaggio responded that Minnesota laws are not favorable for condominium developers. Additionally, almost every unit must be sold before construction to maintain a cash flow. Councilman Kimber asked if there would be retail along Market Boulevard. Mr. Loken responded that there could be, but retail needs to have accessible access from a sidewalk it would be trickier. The current plan expands the retail along West 78th Street all the way to Market Boulevard. Mayor Ryan asked if there was a possibility to move the easterly building closer to West 78th Street in order to maintain a corridor feel with the westerly building. Mr. Loken responded that it could be considered if that is what council and staff desire. Mayor Ryan stated that she prefers a tiered look to a flush front. Councilman von Oven asked if the restaurant patio was at ground level and are patios proposed on the roof. Mr. Loken responded that the restaurant patio was at ground level, but there could be resident terraces on top of the retail. Councilman von Oven asked how the retail parking would work with the retail businesses. Mr. Loken described how the retail parking would work, including a couple of paseos (walkways) which are common in southern states, that would bring customers to enter at the front of the building. Rear entrances are challenging for retailers to monitor two entrances. Mayor Ryan asked about the timing of the Market Boulevard reconstruction and the associated roundabout. Mr. Maass responded that staff provided the Market Boulevard design consultant with the sketch site plan. Mr. Howley added that the developer is the same consultant as the street project so the information exchange will be pretty seamless. The consultant for Market Boulevard is performing an overall downtown traffic study, envisioning redevelopment in other places so that we can get the numbers right and plan for most of the intersections and access. The Downtown Design Guidelines are also being updated, so all of these things are coming together at the same time. Councilwoman Schubert expressed concern regarding the Prince mural on the side of the movie theater building. Mr. Loken responded that they were looking at ways to preserve the mural, if possible. Ms. Hokkanen expressed that the city council would like the developer to keep considering ways to preserve the mural. Mr. Maass added that a Tax Increment Financing (TIF) request would be submitted with this proposal, but exact details and eligibility need to be determined. City Council Work Session Minutes – July 17, 2023 5 Mayor Ryan encouraged community outreach to the surrounding residents regarding the proposal, considering the public comment that was received when the Venue was developed. Mr. Asta responded that they didn’t have enough information to reach that point. Councilman von Oven appreciated the examples of different architectural styles. Councilman Kimber agreed with the Mayor’s comment about moving the easterly retail closer to West 78th Street. Councilwoman Schubert asked when the downtown traffic study would be completed. Mr. Howley responded that he would receive a draft at the end of this month. Questions were asked concerning the surrounding parking. Ms. DiMaggio stated that Mr. Asta was introduced to SouthWest Transit as transit parking is available downtown. Mr. Maass stated that the next step is fine-tuning the site plan based on tonight’s feedback and the Central Business District moratorium results. Mr. Maass responded that the developer may provide a sketch plan review to the Economic Development Commission to inform them of the proposal. Councilman McDonald suggested that Buy Chanhassen should be made aware of the proposal. Ms. Hokkanen responded that effort has been put into engaging businesses to become involved with economic development. FUTURE WORK SESSION SCHEDULE July 24, 2023 • Joint Meeting with Planning Commission and Economic Development Commission to discuss the Downtown Design Guidelines project with HKGi (Senior Center) • Residential Single Family (RSF) Zoning District Lot Cover Discussion • Update on Civic Campus with BKV Group and HKGi • Adult Use Cannabis August 14, 2023 • Interview Youth Commissioner Applicants • Review Early Draft of the 2024 General Fund Budget & Level August 28, 2023 • September 11, 2023 • Presentation of Preliminary 2024 Levy and Gov Fund Budgets; 2024-2028 Gov Fund CIP September 25, 2023 • City Council Roundtable The work session adjourned at 8:50 p.m. Submitted by Laurie Hokkanen City Manager Prepared by Kim Meuwissen City Clerk