[0:00] uh okay here we go it is um Wednesday April 16th 2025 the day after tax day [0:08] 5:30 p.m this is a city council work session uh and we have a two-part agenda [0:13] this evening uh one part dealing with franchise fees and another part dealing with our legislative update from Katie [0:20] Senate Measelian Kramer who's doing a great job for us over there at the state capital uh but let's first call the [0:26] meeting to order and ask our clerk Sharon Allison to call the role council member Agnu here council member Jackson [0:32] is absent council member Pierce is absent also council member Risser here mayor Hublin here all right um so I [0:41] think we're going to take things in sequence as they are in the published agenda and we're going to deal with the franchise fee or continuation of the [0:47] franchise fee discussion that we started at the work session that Saturday so you want to go [0:55] to set it up or you that was all the setup I was going to give it so we've got you know it's up to 350 and Chad and [1:02] Marissa and uh if we need to we need to So yeah we'll continue that discussion [1:08] from the council retreat about a month ago so little background uh this state statute allows cities to do the [1:15] franchise fee and franchise agreements how we collect that revenue and then the history in Edina we started in 2012 by [1:23] establishing the pedestrian and cyclist safety fund the PAX fund then in 2016 we [1:28] added the conservation and sustainability or the CASS fund 23 I was before the council and we updated the [1:35] rates we increased the rates and added street lights as an eligible use and updated those fees and those took effect [1:40] in early 2024 and as part of that report in August 23 we said we'd be back in 25 [1:46] and 27 to consider uh additional increases and then we also had some [1:51] comments about whether we're doing the flat rate or the percentage based uh fees at that time [1:57] so again we're at that point where we said we'd be back so at the council retreat directed staff to proceed with [2:03] with a couple options to generate an additional million dollars for street reconstruction and we again noted the [2:09] importance of the PAX fund the cast fund and street lighting so tonight and in the packet you'll see option one was is [2:16] for discussion to adopt an updated flat fee model effective January of 26 with a [2:22] larger increase for commercial and industrial sector and I'll show you the tables and the rates on those and the [2:28] option two that we provided you was to adopt a new percent fee model effective [2:33] that same January 2026 establishing a 4% fee for all customers and in both options results in [2:40] approximately a $4 million annual franchise revenue which is about $1.3 [2:46] million additional than what we collect today cuz today we collect $2.7 million [2:55] [Music] there was something that was [3:00] okay so today we estimate we generated uh [3:06] $2.7 million of revenue and it's broken out 50% packs at 1.3 39% at a million [3:12] and then street lights just under 300,000 at 11% and this is the current fee [3:20] structure uh the arrow shows the monthly fee those are the numbers we always kind of report out to the council and [3:25] residents we got natural gas or centerpoint energy for the top five uh [3:31] rows and then Excel Energy for the bottom four they all have their own customer classes each one has a [3:37] residential class and that's typically the one we we talk about so in both cases here with our flat rate model we [3:43] have $355 on each one of those utility services for a total for customers of [3:51] $710 and then the commercial just falls in line with different rates so that one [3:56] column with the monthly fee you'll see that common in these next few tables we just showed annual fee meter counts and [4:02] estimated revenue just as if we ever get that deep into the details uh one of the things we hear from residents and [4:09] commissions is that the residential customers account for about 67% of that revenue so you can see we have 700,000 [4:16] residential for gas and over a million residential for electric so that's 67% of that revenue [4:22] today and then we thought we'd do some peer city comparisons uh on that residential customer class so you can [4:30] see here we have Brooklyn Park is at the top end of that at $7 for electric and [4:35] $7 for gas so this is just per each and Plymouth is on the low end of [4:41] $353 so Edina is towards the end of these comparison cities at $355 [4:48] uh per month for each electric and natural gas and then the uses there on their column on the right hand side how [4:54] those other agencies use this funding some similar to what we do and some [4:59] not and then we compared the commercial class and this we had we had to kind of estimate ranges a question for you can [5:06] we go back to that um we really kind of are an outlier in terms of our uses it [5:12] appears to me most people are or most cities are using it for pavement management correct yep minnetonka the [5:18] street lights too that similar but yeah we've and Scott could probably speak to this we saw a need for not assessing for [5:24] sidewalks and that was a difficult conversation assessing for sidewalks and Scott proposed this use and then the [5:31] cast to do climate action was a difficult conversation we didn't have a funding source so we use this as a [5:36] method to fund those two high priorities that residents and council had uh and still have today when other cities say [5:44] pavement management are they talking sidewalks or are they talking roads typically streets to streets okay and [5:50] they may use it for reconstruction and maintenance i guess we'd have to dig in well here it says reconstruction so it's [5:56] both like the mill and overlays and I'd guess a lot of them are in lie of special assessments right so they maybe [6:03] had special assessments and then they adopted these and replaced them that was Brooklyn Park's example for sure okay [6:10] okay sorry I didn't see your question um and then comparing those peer cities and [6:15] then a commercial class and again we had four different classes four or five different classes of commercial buckets [6:24] in that table so this just shows the minimum and maximum so Edina is at $6 for one commercial class all the way to [6:30] $71 you can see we're towards the bottom again whereas Bloomington's at almost $12 to $182 so this is just giving you [6:37] an idea of where we land with comparable cities near and around us on the commercial [6:44] side there's also cities that do the percentbased fees and that was one of the options we'll discuss tonight so [6:50] these are some of those cities uh Hopkins Minneapolis are the two closest um again they break it out by electric [6:57] percent and natural gas on the residential side which is column two and three and then the last two columns are [7:04] that commercial industrial rates this just shows a little bit easier breakdown [7:09] where they range from about 3% to 5.25% on the residential side which is on the [7:15] left hand side and on the right hand side on the comm customer or commercial customers it goes from 3 to 6.75% [7:23] so we're going to talk about about a 4% rate for you this evening and it falls kind of in the middle of these ranges of [7:29] other agencies so if we get into the various options so option one is a updating the [7:36] flat fee model so this maintains our current model it increases fees across [7:42] all customer classes we would we're recommending to increase the residential customers per the memo we put together [7:48] in 2023 but then doubling the rates on the commercial industrial customers to [7:53] get closer to uh to change that percentage and and address some of those comments we heard from residents and [7:59] commissions that today that 67% is too high if we followed this I think we'd be at about 50% residential commercial it [8:08] would generate 4 million which is an incremental increase of 1.3 million from today [8:14] similar table but this is with the new rates so on the residential side we'd go from $355 to [8:21] $4.40 and then as an example the second row commercial A would go from $6 to 12 [8:27] and all those would would double from their current rates and then we again show the annual fees meter counts and [8:33] estimated revenue why would we or would not consider this or consider the flat fee [8:40] model why would we support this it creates a approach that's predictable revenue and the same fee for all [8:45] customers within that same class and it's predictable for the customers regardless of the utility rates or [8:52] consumption why wouldn't we this flat fee is the same regardless of energy use so a high energy user pays the exact [8:59] same fee as a more energy conscious user now going into option two we'll [9:07] talk about the percent fee model so we could adopt a new percent fee model uh establishing a 4% fee for all customers [9:15] option two creates that on the utilities gross revenue so it's based on revenues [9:20] each individual customer fee would vary depending on consumption so the monthly and annual fees estimated or averages [9:28] based on the 202 2024 gross revenues of those utilities with their customer [9:34] counts in each customer class so their estimates again we're generating about the same amount of money the $4 million [9:41] with an incremental of 1.3 million and this is again based on 2024 numbers and [9:47] actual revenues would vary uh by customer and by [9:53] utility if we took the average of what we do today if we converted that flat rate today we'd be at about a 2.7 [9:59] average but we showed a little different way to show that too so we took that current flat rate fee in that first [10:06] column and tried to convert it to a a percentage fee just so you guys could see where we're at so on the residential [10:11] side we're at a 4% commercial eight commercial B is one so it gives you some [10:16] ideas of where we land and again if you took all those and the meters and the revenue it averaged about 2.7% today [10:24] we're proposing that 4% and this was how that the estimated [10:29] monthly fees would change so on the gas service you'd go from $355 to [10:36] $3.39 and I'll we have a table at the end that summarizes all these changes this just gives you an idea of how that [10:43] those rates would change per customer class with the 4% monthly fee so why would we consider this uh [10:51] this approach creates based on consumption so higher energy users pay [10:56] their fair share of the fee it rewards efficiencies and energy conservation why [11:03] wouldn't we support this there's a risk of not meeting revenue uh the flat fee guarantees the same amount each year [11:09] whereas the percent model is based on utility revenues so if we have a really warm winter when they're not using as much gas or a cool summer when we're not [11:18] using as much electricity the revenues will be lower in that case uh some of the predictability goes away with those [11:24] high use months and rate increases and certain customers we'll show you in a table coming up will see very large [11:30] increases in their bills so here's that table I think we'll probably talk about a lot here it's the [11:37] second to last slide um this shows the first column is the current monthly fee [11:42] for those customer classes the second column with the orange arrow is that monthly fee increased and again we [11:49] increased the residential per the memo we did two years ago the other customer classes are just doubled from what they [11:55] are today to try to shift more on that commercial industrial for the revenue [12:01] and then if you jump one over to the other orange arrow pointing over here here's the percent change from what it is today so 355 to 440 is a 24% increase [12:11] and then you can see all the commercial ones are 100% and then it's the same for Excel Energy on the bottom i think the [12:17] last column is probably where your interest is is if we do that 4% flat or 4% fee model here's where we [12:26] the estimated number we generate per month and the change from today so for [12:32] the gas service on a residential it would go down 5% roughly estimates again [12:38] this one would go down 52 this class of customer would go up 179% [12:43] and the small uh this customer class would go up 194% and the same percentage changes we [12:51] calculated for those four classes under XL Energy um we're estimating [12:57] there so just give you a last kind of wrap up is we need direction from the council in May to complete the [13:04] regulatory process so if we get enough direction tonight maybe we don't have another discussion if we need another [13:10] discussion because we have two members missing and come back in May and have that discussion at a council meeting we need we need know enough to what to move [13:17] forward with so we can have the ordinance approved in July and August because the utilities need time to do [13:22] their calculations go through the public utilities commission and get approval by the end of the year so those new rates [13:27] would start in January of 2026 so we'd love to discuss option one [13:32] and option two uh with the council this evening i think [13:38] we could uh have that discussion but I'd like to have a decision to emanate from all five council members not three of us [13:44] i agree okay so we kind of intended to bring this back on May 6th at an open council meeting and have almost a [13:50] similar presentation and get their feedback so can you talk a little bit about uh talk about sources and then [13:56] talk about uses again and allocation of use of funds yep so we'll go back to that slide helps us think through the [14:03] commercial versus residential aspects of it so any changes to the fees and rates we [14:10] would um this is our current breakdown but we would add in uh this the million [14:16] dollars for street reconstruction so I think I had a slide hidden with that hidden and I didn't [14:24] update the percentages we're at 38 29 8 and 25 is that right that is right yeah [14:30] that is right oh they can't so that million represents the amount of shift [14:35] you've been doing each year over that 16 years does that make sense um the million [14:41] dollars was the number we heard from the council we just the the general tax levy [14:46] is supporting street reconstruction at a total of I don't remember the total amount but we said we wanted to [14:52] potentially take down a million dollars which is x% of a general levy then [14:58] continue to be the 16-year plan exactly still be this but it would be a reduction in levy an in allocation in [15:05] levy on on those people that are receiving an assessment yeah the whole policy would be the same the people [15:10] wouldn't see any difference it's just how do we fund it in the background instead of going all from taxes you [15:16] would use some of the franchise fee to cover street reconstruction so this would be the the [15:21] breakdown with the $4 million that we would look at we feel PAX should still [15:27] get more because PAX works ties directly to the climate action plan of creating more multimotal transportation options [15:34] to get people off the road so if it's a little higher that seems all right to us so [15:41] So I'm still trying to kind of mentally wrestle through this notion of um uh you know where most of the benefit [15:48] goes seems like it goes to to to neighborhoods single family neighborhoods as opposed to commercial [15:55] districts so when I think about the fact that some folks thought it was unfair that [16:01] residential accounted for about 60% of the franchise fees seems for that's where most of the benefit goes too so I [16:08] don't know if you have a different view of the world on that but it would be good to talk that through because the [16:13] the flat model increases the obligation of commercial industrial right [16:20] doubles and we we don't have to that was what we thought we heard from commissions and residents in the past um [16:27] yes the packs build out sidewalks the majority of our land use is residential so yes it's going to be through [16:34] residential neighborhoods more than commercial just because it's It makes up more of our land [16:41] but street reconstruction is everywhere throughout the city yeah but again we [16:47] you know you look at 50th in France it's only those little very short streets compared to your neighborhood you live [16:53] in so still even there it's a short piece [17:00] so I really appreciated including all of the data of neighboring cities um I felt [17:05] that that for me was really influential and I I know we always appreciate making kind of data driven decisions and I was [17:13] surprised that we were lower um in the lower edge uh with both of [17:20] those comparisons so thank you for including that um one thing that I was reflecting on [17:27] especially in comparing option one and option two is it also feels like we [17:32] would remain in the lower end in the percentagebased model i forget exactly [17:39] which slide it was in our report but you included I think some of that comparison information as well and yep neighboring [17:47] cities went anywhere from 3% on some to 5% to 5.25% 25% up to [17:55] 6.75% so it it kind of did range as well [18:00] um what I and I think it like I'm not saying we need to go jump to the highest [18:06] but I do I like kind of remaining in that middle ground um which is I is how [18:12] I'm assuming we ended at the 4% um but I'm curious if you could talk a little bit more about why you're recommending [18:18] 4% especially when that leads to a decrease from the residential component [18:24] and if you were to recommend a percentage that would keep that more on [18:29] par potentially small incrementally increase that I think like we had initially suggested what might that [18:35] percentage be uh so we'll start with how the 4% because when we ran numbers two years [18:43] ago we were looking ultimately in 28 to be about $4 million of revenue so we thought if we're going to make changes [18:48] now we do it one time and we're done we don't have to come back in two more years um the second [18:55] question can you repeat the second sorry right before you're going if we were to [19:01] in like suggest a different increase for the residential that [19:08] would slightly increase it similar to how we had been planning on increasing [19:13] it approximately 24% do the math for me but like what would that increase [19:18] actually result in from a percentage standpoint sure so what so we do like a [19:24] four and a half yeah so like what percentage would you set could accept for the residential class [19:31] so yeah we're almost there right now so right now it's totaled at [19:36] $710 option one we go to $8.80 option two we're at $8 so we're basically at um [19:44] because it's an interest you're adding them together when you add them together the gas one's going down yeah the [19:51] natural gas is going up so there is an increase already in both models with residential and it's not that different [19:57] so it's about 80 cents different between option one versus option two on a residential customer so we could tweak [20:03] it just to get that 80 cents between the two if you wanted but then we'd have what the public utilities are don't want [20:10] some weird well you can set um you said the percentages you can residential [20:16] customer class could be 0.25 25 and then the commercial classes could [20:22] be another a different percentage it's just you wouldn't be able to separate within like the residential class beyond [20:28] that it would just be amount for all residents you can't make additional customer classes than what they have here could we do it by line item though [20:36] like let's say we did making all those up but for commercial industrial C they could be at 5% instead okay um thank you [20:45] for that just helping me understand the the percentage base a little bit more i think it might have been actually um [20:52] Council Member Pierce that brought up this point at our budget discussion but in general I like the idea of going to [20:58] the percentage base um because I think it it gives residents [21:03] in particular but also our commercial um parties the opportunity to decrease [21:11] if needed and I want to give that agency and I want to allow them to to decrease [21:18] if they want to right like this is something that is partially within their control um and I like especially when [21:26] we're talking about electricity correlating it um to drive [21:33] down use because I think that that's something that we want to see across the board anyway um so I like the [21:40] percentagebased model i'm just thinking through can we tweak the numbers a little bit to not have such wild swings [21:47] like I also like some are going up 180 190% some are decreasing 90% just [21:55] thinking through is that our desired outcome or is there a way to even that more um but I know that with some of [22:02] those that would actually mean telling them they're paying a 34% rate which probably isn't what we [22:08] want so just that's where I'd like to see maybe a little bit of flexibility is what might be [22:14] more appropriate percentages that are still within an a reasonable range well [22:20] and to generate enough revenue so I think it's important to keep in mind a residential customer at [22:26] $8 what's their income in that home versus some of our businesses [22:31] $400 not as a blip in the screen they're not even going to notice that at all even though it's a 500% increase yeah so [22:38] the the information we have we think those large ones aren't even going to notice this either right and [22:44] that's a good point just keep in mind it's relative in scale of their operations yeah and I would just know a [22:49] percent changing to a percent model no matter what will result in a swing because the range of energy use both on [22:56] the residential side and commercial side is very large a 1,200 foot home consumes [23:01] a lot different electricity and natural gas use than a 10,000 foot home just by [23:06] nature of the size of the building and then same with businesses you could have a really small business but a very intense energy use on site there versus [23:13] a really large building like a warehouse that only has lighting demand so it the swings are just really hard to manage in [23:20] a percentbased model um whereas like with a flat fee model it's truly you are [23:25] setting that so you don't have as much swing regardless of the the users across the board [23:31] hey be careful because we're saying 500% increase on this last one we go back [23:36] that's generating $1.1 million so if we want to flatten that out it's got to be made up somewhere else so [23:45] did you ever run a mix and match model i mean maybe that's the wrong term but you know let's say one of the things [23:52] I think has been appreciated by residents is that we kind of tiptoed into this franchise fee issue and and [23:59] we've said "Okay it's only going to be a dollar and a half per utility per month." And now it's what is it 350 yep [24:07] 355 each $7 a month real predictable yep and uh so I've liked that predictability [24:15] and I've liked for residential customers know that not only is it predictable but [24:21] it seems modest percentage could make some people anxious i I see the [24:30] the DHD benefits of it or it's like water usage you know trying to encourage people to be more cautious in their [24:37] usage but on the other hand they don't feel that same sort of concern for the [24:44] commercial customers for a percentage might be just fine because [24:50] those are the the biggest producers of greenhouse gases anyway [24:56] can you mix and match you know to answer that question Marissa could [25:02] you talk a little bit about the role of the utilities and the PUC in this [25:07] process right so we would uh pass our ordinances uh submit them to the [25:13] utilities who would then have to go through a regulatory process with the public utilities commission to get approval and then there's a notice [25:19] period to customers that that fee is changing um in terms of setting like a [25:25] flat fee fee for residents and then a percent fee for commercial customers we [25:30] could look to see if other cities have done that but I don't I'm not familiar with any that do it they kind of all go [25:36] all in either everyone's a flat fee or everyone's a percent based fee so we don't know if it's legal [25:43] can you go back to the slide with the um that shows the range of what the prices [25:49] would be uh for all of them percentage this one um no it was like a bar graph [25:56] it had Well that was just current stuff oh we didn't but I can show a lot of bar [26:03] chart this is This is currently what these cities have for residential on the [26:08] left hand side commercial on the right hand side you know I'm saying it wrong with that showed the range of use or [26:15] whatever it was yeah the uses there we go this Yeah these are for flat rate [26:21] cities okay i agree with a lot of what Kate was [26:27] saying and that it would incentivize potentially [26:33] um being mindful of how much electricity you were using and actually I was [26:38] thinking about our water rates and whether there would be an opportunity to say once you've gone past [26:46] X amount of gas usage or electricity usage then it bumps up to an even higher [26:52] rate you can't you can't do that okay all right you can't do that you can't [26:57] cap it oh okay but I think you know as we're [27:03] seeing more and more electric use it really does make sense to try [27:09] to get people to think about conserving so yeah if you look at I mean [27:17] another thing just to think about is the total number of meters right we're a residential city [27:25] 16,000 on gas meters and 23 almost 24,000 electric meters [27:37] it's less predictable on the percentage it is y and if people are reactive in [27:43] the way that Kate and Julie are thinking could be even more unpredictable [27:49] that' be much less it would uh [27:54] brings us to that mixed bag a widespread adoption um for like a very [28:04] significant portion of like residents or businesses to substantially reduce their use like the the larger impact here is [28:10] often weather so really warm winters we'll see a drop in gas use and so a [28:16] drop in that revenue versus a super really really cold winter people are using a lot more gas and so that will be [28:21] a high revenue year and then even vice versa on the electricity side really really warm summers which we're seeing [28:27] more of and we're seeing warmer winters with just climate change that you know those are environmental and like larger [28:32] economic factors versus truly a thousand residents adopt really great efficiency [28:38] behaviors would it have a significant impact on revenue as much um they'd really see it on their own bills versus [28:44] the the citywide total revenue it seems like it would be less [28:50] regressive if it was also the percentage [28:58] i mean one thing you try to do cities try to do with with this rate structure is to try to not pick a fight with the [29:05] utilities right so if you can be if you can be in the middle or close to the median uh wherever your rate structures [29:13] are that's it's they won't pick a fight with us and we don't pick a fight with them [29:21] is there anything else you'd like to see when we have the discussion well May 6th [29:28] aren't here but if I were I would want to know [29:33] the total cost of road um that's coming out of the general fund so what that million dollars means what it like just [29:41] how much from the general fund we are right now it's maybe 2.2 2 million [29:46] something like that mhm yep all right in terms of levy that's dedicated to the [29:52] 16-year program taking out of it 40% yeah for [29:58] this coming year um for this coming year but as we take [30:03] on more we would keep it at the 1 million and so the percentage would be decreasing every [30:09] year as we as a city are taking on more of the street reconstruction yes would [30:17] be just resetting the bar dropping back down and there would be these small half percent every year for recon for that [30:23] 15 16 year cycle again that's decision that council could you could raise the [30:29] rates again uh in five years and we could watch models and revenues and stuff like that [30:37] yeah if we had this conversation on the sixth then we'd want to we wouldn't have member ritster at that point but we [30:43] understand that kind of leaning towards that percentbased model and you're only adopting the amount of revenue you guys [30:50] could choose at any point in time how you want to reconfigure how to use the revenue right [31:01] okay anything else you'd like to see on the on the sixth we'll probably just bring the same I think you got a pretty [31:08] complete set of information needed there do an RNR and just have a discussion at that point when member Jackson and [31:14] member Pierce are back okay just a matter of coming up [31:19] with opinion well thank you appreciate that [31:27] you're welcome hey get my open my computer a week or so i know yeah [31:32] exactly i've seen a lot of the people around this going to see you a lot that means we got some stuff going on there right [31:38] scott get I need an answer in the next 10 minutes no pressure calls this time [31:45] of year just kick it off yeah go ahead all right um hi everyone you're on break you're [31:51] theoretically on break this week right yeah it's a little quieter which is this is actually good timing because I don't have to worry that I'm going to get [31:58] stuck at the cap on an evening that I'm going to come see you all um I'm if I think I've met everyone but [32:04] I'm Katie Sun with Messer Lee Kramer i'm the contract lobbyist for City of Edina i think I'll just kind of start out with [32:10] an overview uh where we're at in the legislative session and kind of what's happening and then what to expect [32:17] between now and May 19th when they adjourn um as Mayor Hlin mentioned [32:22] they're on legislative recess this week and then when they come back there's four weeks until May 19th which is the [32:28] constitutionally required adjournment date if they if they miss that date and can't get a budget agreement they would [32:35] have to be called back into special session um and get an agreement before July 1st in order to prevent a shutdown [32:42] this is the every other year they have to pass the state budget and that is this year so they need to pass budget [32:48] bills in all the different areas um the last two weeks before recess were the [32:55] week of policy bill deadline and finance bill deadline for everything except for taxes and bonding which are taxes and [33:01] bonding are two of the areas we're most focused on so we haven't seen those bills yet but what the policy and [33:06] finance bill deadlines essentially mean is any policy bill has to meet the policy deadline has to be heard in all [33:12] the appropriate committees in both bodies or it dies and on the finance deadline same thing [33:18] it has to meet all the um deadlines it has to be two ways and means by finance deadline or it dies um there's always [33:25] other ways to get bills passed they can go through rules they can get added by amendments they can you know get added [33:31] in conference committee if you can make an argument it's somehow gerine which there's a lot of creative ways to do [33:37] that so as you all probably know nothing is ever really dead but a lot of things um fall by the wayside and they kind of [33:44] focus on what's left so when they come back from session committees will essentially be done meeting except for [33:49] taxes bonding rules um ways and means and finance so most committee work will [33:55] be totally done and they'll they'll turn towards being on the floor most of the time um the bills that we're really [34:00] focused on this year for Edina are in the taxes and bonding areas so in the in the bonding side um the Senate has a [34:08] target of a bonding bill of 1.3 billion essentially if they did if the legislature passed a bill that size that [34:14] would mean they would probably not have capacity to do a bill next year unless interest rates or other things changed [34:21] the guidelines but under the current guidelines and economic forecast that would be kind of that would use all [34:28] their capacity for the next two years on the House side they have a target of 700 million for their bonding bill um which [34:36] is the capacity that the current forecast says for this one year so they could do another bill next year 700 [34:42] million is a relatively small bill it's at least two two50 million less than the [34:47] bill they were talking about last year um and at some point it gets hard to pass a bill the smaller it gets because [34:53] it has some state agency stuff but not as much for local projects and it's just [34:59] harder to get legislative support for a smaller bill so for the bonding bill um [35:04] you need two-thirds majority so you need bipartisan support so those bills sometimes are not released until there [35:10] is an agreement between Democrats and Republicans which sometimes happens at the very end of session other times the [35:17] majority caucus will put out a bill the sort of the starting point but then they keep negotiating until they can pass it [35:22] off the floor but um that is a bill that often pops out at the very end of session um on the tax side taxes bill [35:30] does not have a deadline either but I anticipate we would see the tax bill um next week or the week after most likely [35:37] the week after because the Senate has already posted hearings for next week and they they've not indicated that the [35:42] bill is coming out so um we'll be watching those deadlines um and I think [35:49] you I'm sure you've read in the paper that the state is facing a deficit they're actually facing a deficit for [35:54] what are the outy years or the tales so not this current bianium but the next bianium and so the current bienium there [36:01] is about a $450 million surplus um and if you don't assume they're going to do [36:08] inflationary increases which they have to pass legislation to do so if you don't include inflation which kind of go [36:13] back and forth on whether they should or not they actually have a $1.6 billion surplus so there is funding this session [36:20] one-time funding the problem is in the planning years they're facing uh either [36:25] four billion or $6 billion shortfall depending on whether you include inflation or not and so the reason that [36:31] they're really they're they're focused on reducing those outyear deficits which [36:37] essentially equates to cutting right now so even though there's technically a surplus this current session um in the [36:43] long run there is not and so there been a the governor had a goal of trying to cut that deficit in the next benium by [36:49] half so a lot of the cuts that you're reading about in the paper revenue raisers are really trying to reduce that [36:55] there's also uncertainty just about the economy and tariffs and if there could be more federal cuts and so I think [37:01] that's making legislators not want to do a lot of spending until they know more about what might happen um just a [37:08] reminder that it's been a little bit of a rocky session just from a you know members standpoint we started after the [37:16] election the Senate was had a one seat DFL majority senator Carrie Dick passed [37:21] away in December who obviously was a a big leader in the Senate um but after [37:26] that happened then they went to a tie briefly until that seat was filled then they went back to a one seat DFL [37:32] majority and then Justin Iicorn was arrested um and ended up resigning his seat and [37:39] so now they're at a 3432 still down one member and there'll be a special [37:45] election on April 29th and then the House started out as a at a tie after [37:50] the election but one of the members was found to not live in the district um and stepped down there was a special [37:56] election so then they were the Republicans briefly had a one seat majority but not enough members to pass [38:02] a bill um and so that was very messy on the House side until there was a special election to bring them back up to a tie [38:09] so Senate still not at full capacity but they will be after the April special April 29th special election house at [38:17] full capacity but in a tie so having co-chairs every bill to even get out of committee needs bipartisan support so [38:24] that just as a frame of a very unusual session especially just to have such a such tight majorities or ties in both [38:32] bodies um so I'll talk a little bit about the bills we are following i'm going to talk first about just the Edina [38:39] specific bills which is what I spend most of my time on and talk a little bit about housing um obviously you've got [38:45] the league and metro cities and MLC that follow a variety of other bills so at the end if there's questions I can't [38:52] answer about other specific bills let me know i can add them to my tracker to make sure I'm following them um so our [38:59] bonding bill um the Vernon Avenue Bridge Highway 100 project is kind of been our [39:04] top priority we had we've had a bonding tour out here we've had met with kind of all the key um chairs and co-chairs and [39:12] and leads um we had a hearing on the House side the Senate is not doing any [39:18] hearings on individual bills um and so they have not heard any bills on that [39:23] side um which is fine because Sandy Sandy Papus knows all about our project [39:28] and they've been out for a tour and so we're kind of covered from that perspective i know our um our authors [39:35] Representative Julie Green and Elise Man have both been talking to the bonding chairs and pushing really hard to be [39:40] included in the bill like I said the House bill is about currently about half the size as the Senate bill so the House [39:47] in particular is one where the local projects in that bill for the entire state may add up to 70 or 80 million [39:54] total for the whole state so it's it's going to be very competitive but I think um I think we're as well positioned as [40:00] we can be very much thanks to our legislators um and then on our on the [40:07] tiff bill that would we had last year but there wasn't there wasn't a tax bill [40:12] um but we were included if there had been a broader tax bill I think it would have passed um that's the tiff the tiff [40:18] projects at 72nd in France and 70th in France um we were we've got a we had a [40:24] hearing in the Senate senator Rest who's the tax chair signed on to our bill because she she said if if it was in a [40:31] bit her bill last year she would sign on this year and support it and so that's great to have her on the bill and then [40:37] on the House side um Representative Gomez who's one of the co-chairs in the [40:42] House along with Greg Davids presented sort of a mini omnibus bill for provisions from last year that she [40:49] wanted to make sure passed and we were included in that so we sort of were heard as part of a broader bill so I [40:55] feel like that that provision also well placed there's no state cost to that one [41:00] um so hopefully if they they sometimes create like a tiff subgroup but we've not heard concerns about that bill at [41:07] all um and then on the construction sales tax exemption for materials at [41:14] Braay and Fred Rogers that is the one that has a state cost so more of an uphill battle for anything that has a [41:21] cost mayor Hland came over and did a great job testifying um the way they [41:26] treated a lot of the construction sales tax exemption bills last year was instead of doing all of them fully they [41:32] did a percentage of all of them and so if it had the bill had passed last year I think we would have gotten about half [41:38] of what our sales tax would be there's a lot more this year and there's less money so I would say that's the one [41:45] where just kind of uncertainty around all those construction sales tax bills and how they'll treat them um that bill [41:51] has about $1.9 million cost to the state or benefit to the city um so it's it's [41:58] significant um and I would also just say it's been a group effort at the capital [42:03] mayor Hlin's been over there Scott's been over there Chad's been over there Bill Newondorf's been over there they've [42:09] been taking my calls and last minute you know send can you send me what's happening with this all the different [42:14] funding sources so really appreciate that and the quick responsiveness especially the next month as you all [42:21] know things happen quickly and the decisions couldn't get made kind of at [42:27] the last second so I think we're in a good position for all those three um [42:32] bills that we're working on on the housing front and Mayor Hland is is is [42:37] even more involved in this than I am as kind of a go-to person so please weigh in um there were kind of three major [42:44] bills that were moving and I won't go into a lot of detail on all of them but um there was a starter home bill this is [42:52] this is what the authors call them the transforming main street act and the more homes right places bill that did a [42:59] variety of different things um none of those bills met deadline they all were [43:04] heard in the housing committees and then referred either to state gov in the house or gov ops or sorry state gov in [43:10] the senate or gov ops in the house and then never got hearings in those committees so from a standpoint of not [43:17] of meeting deadline they are dead but this is an example of I'm there's definitely still discussions happening [43:24] especially with the um people who really support these bills and want to see something pass so I think you know would [43:31] not surprise me if there's attempts to kind of move some of these pieces forward um there's a bill related to [43:38] PUDS that also did not meet deadline but potentially with some changes could get [43:44] a little bit more support um so I've been in close contact with Daniel Lightoot is really the lead for the [43:49] League of Minnesota cities on this and I'd say he's done a really great job working on this and it's put all the [43:55] city groups in kind of a tough position especially because I think cities want more affordable housing they just and um [44:02] they just don't agree that these bills are either going to achieve that or are going to do it in the right way and so [44:08] it's it's a hard position um for the league to be in but they've done a really good job um so I do think you [44:14] know there will there could be an attempt to try to move something forward it would either have to be something that would then go through a rules [44:20] committee or could be tried to put on as an amendment um I think some of the [44:26] supporters have been that are frustrated that it's not moving forward have kind of lashed out in ways that I don't think [44:33] will be successful but um Senator Port who's the housing chair like for example [44:38] amended one of her bills to take away affordable housing the local affordable [44:43] housing funding funding from cities and have it all go to counties that she laid the bill over and it hasn't moved out of [44:49] her committee because I don't think it would have support but there is there is real frustration And so I think we're just you know the [44:56] league's done a good job of being open-minded and saying we really want to work with you and find something um so [45:02] we'll see if that pans out the other um I'm gonna put on my glasses so I can read the other the other um housing [45:09] related item that I think is helpful to know about is that there was an amendment on the housing bill in the [45:15] house that that would priorit it would make the Minnesota Housing Finance [45:20] Authority prioritize projects that do some of the things that these bills do for example allowing housing in [45:27] commercial districts allowing duplexes and accessory dwelling units um in [45:33] residential zones and not having a separate approval process requiring that [45:38] if cities don't require more than one parking stall per residence and a couple of other sort of list of things don't [45:44] have aesthetic mandates it would essentially have Minnesota Housing Finance Authority prioritize those [45:51] giving funding to those projects i don't know if that will fly once it gets to [45:57] conference and kind of with the broader um you know interests of and there are a lot lot of legislators that I think have [46:03] roots in local government that have concerns about those types of restrictions but as of right now that is [46:09] in the housing bill and by doing it that way that bill didn't have to go to some of the other committees where I think it [46:14] didn't have support so the bunch of housing stuff is definitely something keeping track of um Mayor Hufflin I [46:22] don't know if you have anything you want to add good explanation i think a good summary yeah so maybe I think the league [46:28] probably expects that there'll be an attempt to do something in conference committee or like you said rules and at [46:34] least in one one of the branches you can bring it up on the floor can't you either the House or the Senate yep try [46:41] to get something moved in on the floor itself yeah yeah and I think um on the [46:47] House side it's more likely that that could pop up so once once the housing bills come to the House floor probably [46:54] next week or the week after we may see some related amendments and see if there's pieces that they can um add on [47:02] so we'll be watching that i think you really framed it well that we are all [47:09] thinking about ways to achieve housing affordability and production but it the [47:15] the pathways that have been chosen just don't work you know from the city perspective so [47:22] was in a meeting with some mayors in West Metro with um Kelly Morrison on [47:27] Monday and um I think one of the mayors there had said that there were [47:34] like 10 cities in some particular part of West Henipin County that was represented by one rep and every one of [47:41] them was opposed to the bills and so they didn't you know that person wasn't [47:46] offering any support to the people that were supporting the housing bills because of the fact all of their cities [47:52] were opposed to illustrative of the situation we're in [47:58] whether you're in the metro area or in greater Minnesota [48:04] so maybe I'll stop there and see if there's questions or other bills talk a [48:09] little bit about Senator Rest bill on the sales tax where's that at that one [48:14] has gotten so there she has a bill that would both Senator Rest and Representative Gomez have bills that [48:21] would impact local sales taxes it would only their way they're currently written it would only impact new sales taxes or [48:29] for example if we wanted to change tax or extend it then we would kind of be under the new rules but we wouldn't be [48:36] under what's currently passed it wouldn't impact the bel what's currently already passed but essentially um they [48:42] do kind of take a couple of different tax that Aisha Gomez's bill would require the cities surrounding a city [48:50] that wants to get have a local option sales tax to provide approval or support [48:56] i'm not exactly clear like what that means if it's like a resolution or something um and it would also I mean it [49:02] starts out sort of saying cities will be able to impose a sales tax without legislative approval you have to have [49:09] voter approval still but for certain types of projects and so for certain types of projects you wouldn't have to [49:15] come to the legislature you could go ahead but the caveat is you have to get support from surrounding communities and [49:22] um you have to there's a there's a formula that essentially you share a portion of it of it with other [49:28] communities nearby that are surrounding you who essentially the thought is like if those people are coming into your [49:33] community and paying the sales tax um then they would get a portion of it back i think the mechanics of it are still [49:41] like probably hard to figure out exactly how all the pieces work together i know the city groups have said they support [49:46] the idea of allowing more flexibility but um some of the specifics on how [49:51] exactly that would work and especially for smaller communities where maybe you [49:57] need the entire sales tax to build your community center or whatever the case may be if you're sharing 20% of it with [50:05] surrounding counties it might make that project harder to do that's probably maybe less of a big deal for cities with [50:10] significant commercial base in the metro um there's been a lot of discussion kind [50:16] of throughout interim between both Senator Rest and Representative Gomez in particular i'm not sure this session if [50:22] they'll get to agreement on anything i mean I would say everything as I kind of walked through what's been happening [50:29] since session started you know it's it's a hard year to get agreement on stuff [50:34] other than kind of the what you have to get agreement on so I think the closer we get to the end of session the more [50:39] focus is just on the budget and getting out of there before the something [50:45] happens at the federal level that they have to react to that could be very significant but I do think the con the [50:50] so I think the conversation is likely to continue even if they don't do anything this session um and I mean I've been [50:57] watching to make sure nothing is going to be retroactive which I don't think it would be because cities have based their [51:04] capital plans on the amount of money they were planning to correct and borrowing plan so I just do not imagine [51:10] that they would i've not heard anybody propose that but it would impact it if you wanted to extend it or use it for [51:15] something different then it would click on so [51:23] great questions for Katie anything else you think you should be uh letting our [51:29] council know about you're concerned about or from the observation standpoint [51:35] not the right now i mean I think the um the housing pieces is the one that seems [51:41] like it could be a surprise at the end potentially popping up but [51:46] It's been a quieter year in a lot of other ways katie how does the difference [51:51] between the Senate bonding bill and the House bonding bill get resolved does that get resolved in conference or does [51:59] it get resolved ahead of that it's gone a lot of different ways in different years typically in a normal year you [52:06] know the House and Senate would each pass different bonding bills and then go to conference committee and then resolve [52:11] it in conference committee or behind the scenes um some years especially if they get crunched at the end it's actually [52:18] almost it's almost just been a four-way negotiation right away between all four caucuses so that they can move quickly [52:26] and pass something so the you know the Senate Republicans are the only caucus that doesn't have any gavvels and so [52:33] they want to le I mean as as any minority caucus typically does they want to leverage their bonding bill votes for [52:40] things in other bills so then it becomes not only a negotiation about the bonding bill but somebody needs something in [52:46] education or somebody needs something in the tax bill which is the other reason often it gets pushed to the end because [52:52] those things kind of get collected and and moved at the end so depends a lot I [52:57] would say especially on the Senate Republican caucus and what they need and whether the other three caucuses can [53:04] feel like it's stuff they can give them so it's been rare that they form a conference committee and have a really [53:10] like back and forth [53:17] we had an online conversation with uh Chair Gomez in the house on [53:23] our sales tax issue you know the request to be alleviated from the responsibility [53:28] to pay back a million nine in sales tax to the state for equipment materials and supplies [53:34] and the response was basically well we need the money you know I mean from a [53:40] policy standpoint to have one unit of government charging another unit of government sales tax doesn't seem like it makes a lot of sense but we need the [53:47] money yeah and I do think there's a general agreement that the policy it [53:53] doesn't the policy doesn't make any sense for and I mean there cities are exempted from all other sales taxes and [53:59] the intention was to exempt construction materials just the way that the law was [54:04] written it's actually just not workable for cities to do that but that was always the intention and so when they've [54:10] had money there's been a willingness to do the exemptions but I think this year [54:15] when there isn't money and they're they're trying to do cuts it is going to be harder even though I [54:20] think from a policy perspective they agree [54:26] it also doesn't make a lot of sense for cities to have to foot the bill for rebuilding the bridge over the highway [54:36] is was there any movement on the increased local bridge replacement program funding i think once the bonding [54:42] bill comes out we'll have a little bit more information yeah the um I haven't seen any proposals to [54:51] increase that okay [54:56] yeah i mean the transportation bill I can look and see if there's anything in the transportation bill related to that [55:02] since the transportation bill is a little more separated from the general fund because so much of the revenue in [55:08] transportation you know is sort of self- sustaining the gas tax and and tab fees and a lot and those all increased in [55:14] 2023 so the transportation committee has additional funding that other committees [55:19] don't have but most of that kind of has a process through mind already um and so [55:25] le it's less impacted by the legislature typically um but I'll look and see if [55:31] there's anything in the transportation bills related to that because that is one area where there is there is additional funding okay so thank you [55:38] yeah and they actually there part of the fire drill when I was calling Chad and Scott was there was some question of [55:45] whether our project could be in the transportation bill which would have been nice because we wouldn't have to [55:51] worry about whether they pass a bonding because they have to pass a transportation bill but because it doesn't really use trunk highway funds i [55:57] mean they don't have any general fund money in transportation they only have trunk highway funding so they were [56:03] really just looking at projects that could get funded with trunk highway which is just you know [56:09] stateowned but not bridges over trunk bridges over it should be bridges over I [56:14] thought they were a partner that's going over a trunk highway make a definition for that [56:19] funding why not it should if it falls apart and it's in the constitution so we [56:25] can't do like a notwithstanding it's they're constitutionally dedicated [56:31] so they're very They have a lot of rules about that funding they know right off the bat what can and can't be um but we [56:37] we tried julie Green tried cuz she's on the transportation committee so she's been very involved in a lot of these [56:44] discussions they've had an acute interest in bridge funding since the 35W collapse years ago [56:51] and they've continued every year i think our project is looked upon very favorably i would say I mean I never [56:57] want to get hopes up when you're going to have such a small bill but we've most just gotten really good feedback about [57:03] it i mean the fact that we have federal funding that hasn't been pulled back there's multiple partners it's ready to [57:08] go i mean it's very much like a breadandbut type of project i mean the helps with bike ped um I mean so it's it [57:16] has a lot of attributes that I think make it a really strong project so I [57:23] like that multiple partners part of it local county state it's a big deal [57:28] absolutely other things that you might be [57:34] interested in hearing about even if it doesn't affect us directly or that you've been curious about from a [57:40] legislative standpoint can [57:48] not one of my partners that does Patrick yeah [57:55] i can definitely get you an update on it if you're curious did anything happen with the hearing aid [58:02] bill maybe it never even became a bill but one of our items was supporting [58:10] um where is it [58:16] hearing aid affordability oh I don't know i can look into that i can see I've been digging through the omnibus bills [58:22] since they all came out last week yeah that was 1.9 [58:32] yeah I can look into that it's not they're not covered under [58:38] a lot of health insurance plans so you get kids who age out and it's really [58:44] hard you know they got one they lose one they're trying to make it without so [58:50] anyhow yeah I can look into that i know for um for items that you're if [58:58] it's a requirement that insurance cover something there's a new process that they implemented two years ago called [59:04] the 62J process where you have to you have to submit a proposal to Department [59:10] of Commerce and then they kind of figure out what the cost is going to be what the impact on insurance companies [59:15] because they were getting so many bills to require insurance companies to cover items that they wanted to sort of [59:21] streamline it and figure out how to prioritize guys so um I think this year there were only a couple additional [59:28] requirements for insurance coverage um but I'll double check on that one but [59:34] it's it's gotten a little bit harder for that reason or at least extends the process you have to go through it the [59:39] year before [59:46] yeah there's been discussion over there about what happens if the federal government cuts off Medicaid [59:53] i mean I think I think a couple a lot part of it well part of the discussion is at least was about timing and whether [1:00:01] if if the federal government made decisions in time for the legislature to deal with it before May 19th could they [1:00:09] actually do that because I think the thought is it it's about 1.8 eight 1.7 [1:00:15] billion dollar hit to the state of Minnesota if they were going to fill if they were going to fill it in like [1:00:22] replace the gap so versus if they pass a budget and then they adjourn and then it [1:00:28] happens there potentially have some more time to talk offline and figure out i mean I think it's I think it would be [1:00:34] hard to convince Democrats to cut that much out of other things and you know [1:00:40] it's always a discussion are you going to raise revenue or are you going to do cuts and I think right now the um numbers they're talking about for this [1:00:47] current budget they could do with pretty minimal revenue raisers i think it'd be hard to I think from a DFL perspective [1:00:54] very hard for them to swallow the cuts they're doing now plus another two billion in cuts with no additional [1:01:01] revenue and so then obviously it's a very different more controversial discussion about what revenue reserves [1:01:06] do you potentially look at if that happens or do you not backfill it and what are what are the impacts um so I [1:01:13] think it's something that it feels like it's kind of a cloud over everything else and they're not wanting to do [1:01:20] things like you know we have $3.5 billion in the rainy day fund it's one-time money so you can't use that to [1:01:26] permanently backfill Medicaid but there are some tools they have at their disposal for some that they're not [1:01:32] wanting to use now for the current deficit sort of in anticipation that they might need it later so it's [1:01:40] absolutely like something they're thinking about and it's I think the uncertainty is making everyone just um [1:01:46] not want to spend any additional money this year kind of on both sides of the aisle [1:01:54] okay all right thanks for being with us yeah reach out at any time if you have [1:02:00] questions we'll be in touch because probably a lot will happen next month [1:02:07] hey we're comfortable adjourning manager we are okay standure