Minnetonka City Council — Transcript

Monday, December 22, 2025

Long-Term Asset Planning and Capital Improvement Strategy

Local Sales Tax as Revenue Source

Legislative Process and State Authorization Requirements

Fire Station Improvements and Regional Significance

Trails Funding and Safe Routes to School

Marsh Facility Options and Community Hub Status

2026 City Council Study Session Work Plan

Short-Term Rental Regulation Timing

Property Tax vs. Sales Tax Impact Analysis

Purgatory Park Off-Leash Dog Area Implementation

Votes (3)

Long-Term Asset Planning and Sales Tax Strategy

No formal vote taken; discussion item only. Council expressed general interest in pursuing sales tax exploration with direction to staff to return in January with refined project priorities and funding amounts.

Dissent: Council Member Brad Reome (Mayor) expressed personal skepticism about sales tax, noting it is regressive and that property tax increases allow voters to hold elected officials accountable. However, he acknowledged limited funding options and supported moving forward to maintain flexibility. Council Member Paul Rome emphasized preference for addressing short-term rental regulation sooner rather than later, expressing concern about delaying until zoning code rewrite completion.

City Manager Mike Fung presented comprehensive capital needs assessment identifying six major project categories: trails ($100M), Marsh facility ($15M-$41M), fire stations ($50M for four stations), Opus development ($30M), community center remodel ($4M), and Willis Center improvements ($250K-$26M). Staff proposed a sales tax strategy allocating $6M annual revenue as follows: $1M for trails, $5M for Marsh and fire stations (two stations at $12.5M each = $25M). Finance Director Darren Nelson compared property tax impact (9% levy increase) versus sales tax impact ($93 per household annually). Goff Public Affairs outlined legislative requirements: resolution submission by January 31, 2026, demonstration of regional significance, and potential complications from broader state sales tax reform legislation. Council discussed regional significance justification for fire stations based on Ridgedale service area (1M+ monthly visitors, 50K daily interstate vehicles) and Marsh's 90-city membership base.

2026 City Council Study Session Work Plan

No formal vote taken; discussion item with direction to staff. Staff directed to: (1) incorporate city manager performance review into November 23 or December 21 regular meeting agenda, (2) explore interim regulatory options (moratorium) for short-term rentals while zoning code rewrite proceeds, (3) refine budget presentation format to executive summaries (5 minutes per department), (4) maintain flexibility on Purgatory Park evaluation timeline pending signage completion and data availability.

Dissent: Council Member Paul Rome expressed strong preference for expedited short-term rental regulation, citing quality-of-life concerns and desire to prevent investment property purchases before regulations are finalized. Mayor Brad Reome acknowledged concern but proposed staff exploration of interim options rather than immediate decision.

Staff presented draft 12-month calendar of study sessions organized by topic: January (sales tax follow-up), February (trails and CIP), March (zoning code check-in and policy discussions), April (budget kickoff with department presentations and public safety/master plan review), May (budget and marsh operations), June (CIP and Purgatory Park evaluation), July (EIP, housing, zoning code deep dive, short-term rentals), August (general fund and levy), October (zoning code rewrite final review), November (budget approval and general/enterprise fund), December (staple conversation). Council requested additions: city manager performance review (November 23 or December 21), clarification on short-term rental timing relative to zoning rewrite, efficiency measures for budget presentations, and flexibility on Purgatory Park evaluation timeline. Discussion centered on managing multiple zoning-related initiatives simultaneously while addressing immediate community concerns about short-term rentals.

City Manager Performance Review - Closed Session

Approved unanimously (7-0). Roll call vote: Wilburn (Aye), Raley (Aye), Shack (Aye), Foster Balden (Aye), Calbert (Aye), Brad Reome (Aye). Council entered closed session for city manager performance review.

Dissent: None; vote was unanimous.

Moved by Brad Reome, Mayor [Timestamp] · Seconded by Council Member Kimberly Wilburn [Timestamp]

Mayor Brad Reome announced his final meeting and expressed gratitude to staff and council for their work. He noted pride in the city's professional operations and commitment to excellence. Council voted to enter closed session pursuant to Minnesota Statute 13D.05 Subdivision 3A for the purpose of reviewing City Manager Mike Fung's performance.

Notable Quotes (21)

Really, tonight's conversation falls within that realm of really looking at at our assets. And as you know, we have lots of assets ranging from water and sewer pipes underneath roadways to roadways themselves, our facilities, meaning our structures, our buildings, trails, parks.

Mike Fung, City Manager [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

We know cities own expensive assets and just like at our houses at some point we need to look at replacing and improving those assets.

Mike Fung, City Manager [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

Local option sales tax, which we've talked a little bit about, but it's been a while, is another funding source outside of property taxes.

Mike Fung, City Manager [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

If we're looking at our property taxes this year on the budget that we just passed, um it would have increased the levy from our 7.9% would have added 9% to that levy increase. So, we'd have been at close to an 18% levy increase.

Darren Nelson, Finance Director [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

You can kind of see the sales tax impact has a seems to have a little bit less of an impact per per resident or per um per household member on that end of it.

Darren Nelson, Finance Director [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

There's a maximum of five projects. So when cities have asked for sales tax, uh you can only note or can only ask for five projects.

Mike Fung, City Manager [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

Station two that station is the busiest just due to the activity in and around that area. Then at night that shifts to other other stations and other service areas just because people are leaving the city, the mall's closing down, uh workers are going home and then call volume lines shift to other parts of the community.

Kevin Fox, Fire Chief [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

Chair Rest would like to pass one of these large um reform bills as kind of the movement on sales tax this year. And she has made it very clear she feels really strongly that kind of her the way she has outlined things is what she wants to see cities do.

Rachel Suzic, Goff Public Affairs [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

Both of these proposals would kind of use the Department of Revenue as to serve in a little bit of like what the role the legislature was doing. So they would require a approval from the Department of Revenue the year before you put it on the ballot um in a referendum.

Ellen Larson, Goff Public Affairs [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

So, you know, Marsh makes sense. I know that we have people from many cities that belong to the marsh. Um trails probably same thing because people from all over the place use our trails. Um fire stations. I know that we have cooperative agreements with other um communities, but is it regional enough to pass muster at the legislature?

Council Member Deb [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

I just want to put my mind at ease is that we're not making the decision in January that we are going to have a sales tax. There's a lot of opportunity for us to change direction as we consider some of these things going forward. Is that right?

Council Member Rebecca Shack [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

It is not committing the city to a sales tax. It's or even to a referendum it is the first step in this kind of lengthy process. And so there are opportunities beyond that um to pivot, if you will.

Mike Fung, City Manager [Timestamp]
Long-Term Asset Planning and Sales Tax Strategy

I tried to do when working with staff on this is make these manageable in terms of a timeline. So, as you know, we start at six o'clock. The idea is to have a couple items um hopefully two hour kind of a two-hour meeting, two and a half tops.

Mike Fung, City Manager [Timestamp]
2026 City Council Study Session Work Plan

There's actually three check-ins that we need with you about the zoning code next year. Okay. So March would be one zoning check-in. That'll be a regular meeting, Julie. that uh no that would we could do that at March 2nd. That could just be a zoning update. Here's what we're doing. Here's what's happening.

Julie Wish, Community Development Director [Timestamp]
2026 City Council Study Session Work Plan

I know that there's a number, there's several, including one next door to me, but that shouldn't be the driver of of people who are specifically coming in and starting to buy um in Minnetonka to use for short-term rentals. And um and you know for for the few and there's not a lot of people who who you know live on lakeshore properties but a lot of them are paying incredibly high taxes um property taxes and um and not all of them are the Uber or the wealthy and you know people are buying up those places and then doing short-term rentals and you're having parties every single night next to you.

Council Member Paul Rome [Timestamp]
2026 City Council Study Session Work Plan

I think, you know, dealing with something like that sooner rather than later than waiting it from my perspective. Um, you know, and and I'm willing to listen and learn to why that isn't.

Council Member Paul Rome [Timestamp]
2026 City Council Study Session Work Plan

How about if we we agree that staff will look and see if there are any any options that would make sense legally to potent, you know, allow us to kick the can down the road to avoid the problem. That could be a moratorum, but but let's let's have the experts look at it a little bit more thoroughly before we make a decision.

Brad Reome, Mayor [Timestamp]
2026 City Council Study Session Work Plan

If if everybody can be disciplined because I like the I really like the idea of starting the budget conversation early. But but if there if you're going to have a bunch of three-hour budget sessions, I think that is counterproductive.

Council Member Doug [Timestamp]
2026 City Council Study Session Work Plan

I just was wondering um I'll follow up with you on this on our next sit down is just that I think the roll out for purgatory signs and things has not been you know kind of because of weather and other things and so my only concern um is maybe that we be open to seeing what you know that June 15th because I'm not sure we'll have enough time with full signage um for for for purgatory to be able to really evaluate.

Council Member Steph Calbert [Timestamp]
2026 City Council Study Session Work Plan

You know, I'm really proud of the city and I'm really proud of the opportunity to that I've had to work with all of you. Um, this this is truly a professionally um, uh, run organization that is committed to excellence and I'm proud that I've had the opportunity to be part of it.

Brad Reome, Mayor [Timestamp]
City Manager Performance Review - Closed Session

But I but this was not a this is not a me thing. This is a we thing. Um I couldn't have done it with all without all of you and I I just want you to know how grateful I am.

Brad Reome, Mayor [Timestamp]
City Manager Performance Review - Closed Session

Ordinances & Resolutions (8)

University of Minnesota Extension Sales Tax StudyPlan

Study issued August 2023 analyzing Minnetonka sales tax generation, showing 54% from non-residents and 46% from residents; estimated $41 per resident annual impact at half-cent rate; updated data for 2023-2024 expected early January 2026.

Trail Improvement PlanPlan

City plan documenting trail system buildout; estimated cost escalated from $55-60M in 2019 to over $100M currently; available on city website; current funding of $2M annually from franchise fees supports only 2 projects in next 5-year CIP.

Marsh Facility StudyPlan

Facility study conducted approximately 1.5 years prior to meeting; presented three options: Option C ($15M deferred maintenance), Option B ($32M with improvements), Option A ($41M with west-side additions); includes $6.275M inner fund loan repayment and $2M operational costs.

2026 City Council Study Session Work PlanPlan

Draft 12-month calendar of study sessions addressing long-term asset planning, zoning code rewrite (three touchpoints), budget processes, community survey, CIP/EIP reviews, and Purgatory Park evaluation; includes two 30-minute open discussion periods.

Community Survey ResultsPlan

Survey data on resident preferences for funding capital projects via sales tax vs. property tax; showed varying support: 55% for parks/Opus, 50% for trails, 47% for Willis Center, 44% for Marsh, 37% for fire stations; 24% more likely to support sales tax when informed 54% comes from non-residents.

Business Survey ResultsPlan

Survey of local businesses on sales tax support; showed 62% support (strongly support + support) and 16% opposition; businesses view sales tax as pass-through expense versus property tax as direct expense.

Minnesota Statute 13D.05 Subdivision 3AOther

State statute authorizing closed session for performance review discussions; cited for closing session to review city manager performance.

State Bonding AuthorizationOther

State bonding dollars of $725,000 received for Opus land purchase and planning; additional $30M estimated for Opus development pending 2025 engagement process.

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