I think he's I think he's going to actually run late. >> Yeah. >> Okay, we're going to start now. Gotcha. >> Thank you. Let's call the Let's call the workshop to order. Roll call, please. >> Council member Nord is absent. [clears throat] Council member Woods >> here. >> Council member McKenzie, >> here. Council member Schwear is absent. Mayor Mongi >> here. Thank you very much. I have a motion to adopt agenda. So move. >> So moved. Council member Mackinsey. >> Second. >> Second. Council member Woods. All those in favor say I. >> I. >> I. >> Thank you, Mayor. We have one topic up this evening for the workshop. And that is the 2027 non-levy budgets and the 2027 to 2036 CIP. Dan's been really excited about this night. So, I'm going to turn it over to our finance director, Dan Winnick. Well, not really, [laughter] >> you know. >> Yeah. No. Uh, thank you, uh, mayor, council members. Um, last time we met, we went over the levy budgets. Um, tonight we'll go over the non-levy budgets and the CIP. We will not be going into the CIP in great detail. Um, so there's some questions for you at the end um of this uh uh presentation um in in addition to your normal questions that you will be asking. you know, really wants some direction on how deep we want to go into the capital improvement plan itself. Um, so we can schedule another meeting. Um, if you would like to have other department heads there and so forth, we'll kind of touch base on to that. Right now, where we're kind of looking at the the schedule is that um the next uh EDA meeting will be September 8th. Um, so I will be there to share the budget information with them, get their approval onto that, and then September 15th, we'll be back to certify our maximum levy. Um, doesn't mean that we can't still have discussions about the budget and everything else. Um, we certainly can, we just can't go above whatever we certify. We can actually, you know, we can go down, but we can't go up. Um, and we don't approve the the final budget until, um, sometime in December. Also on the 15th, u we'll set the truth and taxation date um and time and location and so forth part of protocol um regarding the budget. Uh so tonight kind of our agenda is going to be we're going to kind of go over one more time just kind of just to familiarize your um the city council with what budgets that the city council approves. Uh we'll take a look at the 2027 enterprise fund budgets, the 2027 internal service fund budgets, and then we have some special revenue or other budgets, just a few of those. Uh then we'll just at a high level, we'll look at the 2027 2036 uh capital improvement plan. Um I also have included the 10-year financial plans in this that we'll quickly go through and then we'll revisit the 2027 proposed levy. If you remember when we went through the levy, um the suggestion at that point in time was to to be able to hit that 6% levy was to take $40,000 reduce the levy for um economic development authority EDA by $40,000. Um there was some uh discussion that we should come back with uh you know a different option. And so I have an option um to uh propose um to um city uh council um tonight and then open it up for any questions and answers and have a a discussion. Again, you can stop me at any time through the presentation for clarification or if you have questions that come up. >> Sounds good. Thank you. Um so again uh the levy budgets which we have already gone over are the general fund um the housing redevelopment authority, the economic development authority, the park fund, um street maintenance fund and the asset preservation fund. Uh the enterprise funds we will be going over tonight are the water fund, wastewater fund, electric fund, surface water fund, solid waste fund, and the mayor's favorite fiber optic fund. uh internal service funds. Uh internal service funds um the charges and the revenue um come from uh our other departments um for uh services that are provided uh to them through these um these different funds and they're including the information technology uh internal service fund, the insurance equipment city mechanic and the building maintenance. And then we'll cover we just have three other permanent um special revenue funds uh community center community event and then the fire relief uh fund. So enterprise funds the first one in kind of a high level summary uh to remind I did attach all budgets line item details um with this packet and and in addition the whole complete capital improvement plan is al also attached. Uh but for the water fund, uh for the 2027 proposed budget, we're looking at revenues a little over $2 million, just a slight increase, um from um last year, um just below $19,000. That represents a 1% rate increase. Um and as we go through looking at the financial plans, um and I'll kind explain those a little bit more. I do also have a summary of what will um potentially have uh a need for a rate increase. Um and then the budgets uh just uh a little over $1.9 million. Um right now this would the way the proposed budget is is presented it would increase our fund balance $142,000. Uh wastewater fund uh we have revenues of just short of $2.8 million. It's of over a $100,000 increase. Um this one would um that that increase includes a 3.25% rate increase. Uh the budget's just below 2.3 million. That's a decrease of 300,000. Um a little less than 300,000 really. It's it's from the capital um where you're going to see that uh decrease. The rest of the line items are are pretty much um where they were in 2026. Uh fund balance on this would it would increase um just under $500,000. The electric fund has a revenue of just below $12 million. That's an increase of $160,000 from 2026. The budget of just over 12 million. Um an increase of a half a million from 2026. And the fund balance would decrease approximately $86,000. Uh there is no rate um proposed for 2027 in the electric fund. Uh surface water fund has revenues of about $1.1 million. That's an $80,000 increase from 2026. Basically, that's due to the 5.25% rate increase. When you think of a 5.25% rate increase, you think, well, that's a pretty hefty um increase. It only generates $80,000. What you're going to see right now, there's three utility funds that have rate suggestions or rate um requests of increases. And so far, you've seen the water, wastewater, and service water. The commonality and what the driving factor is to why those are being increased is because of your street projects. Um, every time you do a street project, there's the street component of it, which comes from your general fund or bonding. And then you have the water, wastewater, and surface water. Again, um, depending on if we're doing a uh a preservation project or we're doing a reconstruction, it'll be funded from either the fund or from bonds. Um, but even if you do bonds, then you have a debt payment that's going to be associated with it in the years uh in the years to come. Um, the budget has uh decreased $841,000 or $400,000 of that budget uh decrease. I'm I'm sorry. It's a $800,000 um budget. It's decreased about $367,000. The majority of that is all due to the fluctuations of of capital um needs that are based upon the capital improvement plan. Um this would increase the fund balance about 260,000. Um, solid waste fund has revenues about 1.1 million. Um, it's a $26,000 increase from 26. The budget's uh about 1,150,000. It's a decrease of about 123 um from 2026. And right now, this would decrease the fund balance about $47,000. Again, no rate increase in the solid um waste. Uh the big component to why the budget has decreased is due to the RFP that we did for the garbage hauler. Um and we got some really really good rates um from that. But some of that is offset because of tipping charges and tipping charges continuously go up. We pay the tip tipping charges that come from the Ramsey Washington Washington County uh recycling center. Um those are a significant um component to to the budget. Um even though it may suggest that we look at some sort of a rate increase in the solid waste, we're not going to do it until we get a little bit more information um and and historical information to see how this u free bulky pickup um will play out. Um even though it's free to our residents, there is a cost associated with it. um our uh hauler tennis um who got the contract again this year is providing their labor for free yet there'll still be associated tipping charges um that the city picks up. So depending on how how much it's utilized really don't have a real good handle on what that cost increase could be. Um, so we instead of changing a rate at this point in time, um, just like we've done for a number of years, um, we still have, uh, some fund balance, we'll we'll play, um, we'll utilize fund balance till we get a little bit more, um, historical data to, um, to make a recommendation on a rate change into the future. Um, and then we have the fiber optic fund. Uh, revenue is just under $200,000. um budget um of about 114,000. Uh it's a decrease from 60 or of 6,500 from 2026. It increases the the fund balance 80,000. Really, what it does is it reduces the negative fund balance that's in this fund by $80,000. >> Any questions with the enterprise funds at this point in time? So you're seeing that there's a request um out there for three rate increases um again for our enterprise funds. They're all related to uh street projects um because there is components in both the or in the water wastewater and the surface water internal service funds. We have the information technology. Uh the revenues are the same as they were in 2026 at about uh $524,000. We have a budget of about 622,000 increase of about $33,000 um from 2025. Again, the driving factor um to that increase is Metro Inet charges. Um this would decrease our fund balance about $98,000. Uh the fund balance that we had at the end of last year um was approximately $273,000. So we we're going to be buying down some of that fund balance. >> So that one in [clears throat] three years it's gone up over $200,000. >> Yeah. I believe um since the time I started um it's gone it's gone up about 260 270,000. It's over doubled. Um, from when I started in 2021, I think it was at about 221. It's now somewhere about 4 860 470. >> Yeah. Producted for 27 is looking like 621. >> Yeah, there's some other costs that are in there um for uh you know purchasing of uh computers >> um and and other things that are in there. So it's not all we'd have to go into the line item detail to see what is actually just the metro inet charge part to it. And then obvious and then there's other charges as far as you know we have a financial system we have the park system so it's software um we have a number of civic clerk um you know agenda uh for the agenda for um I think for there's a communication one um so this includes all of the software um that the city um purchases. [clears throat] >> So that's why you're seeing that $621,000 figure. I mean, that seems to be something maybe we have to try to focus on this year coming up to just try to get a handle on understanding exactly what we're paying for and seeing what uh you know where that comes because that just seems to >> be a budget that's quite >> quite a bit. >> Are we taking advantage of everything that we're paying for there? Yep. >> Appropriately. >> And I know some cities have, you know, one person that works, you know, for the city that does the run around and do things like that. You can do a mix and match of things just to kind of understand where we're at so we can feel comfortable because it's quite a quite >> um our city manager Frannle has already started looking at that how we we break that apart whether it would be some sort of a hybrid certain services that we would retain. Um that may be you know the internet connectivity the security component to it but maybe there's a breakout of either hiring an individual or hiring a company to provide you know more or less that day-to-day um >> normal tech support >> tech support piece to it right and you know you could hire a company and you know and part of their um agreement would be that there would have to be you know you know a two or a threeh hour response time um if you have some sort of issue. So he's um well aware um this is a sticking point for our city manager of all the increases and so he's already starting um to try to gather some of that information. >> Perfect. I just you know just to take a look and you might find out that things are good. You might find out there's a few things we can do. >> Absolutely. >> Perfect. Thanks. >> Um we have the insurance fund um revenues of about $524,000. That's a decrease of 227 for 2026. Um full disclosure, um the budget that's in there for and we will adjust it um by city council action um at a later date. Um the uh revenue that was put in was 751,000. It really should have been 620,000. That's all we're charging um for revenues um part of this. So, we will make a city council action to decrease the estimated revenues of this um fund. So, [clears throat] really hasn't gone up that much. Um it's really gone up probably about um you know, from a comparison or I'm sorry, a decrease of of about $96,000 versus the 227. Uh the budget of 531,000 is a decrease of about 89,000 from 2026. Uh the driving factor here to seeing the decreases um really comes down to our workers comp. Um insurance has gone down significantly. We had a big spike on that um in the last two years. It's been kind of dropping and stabilizing. >> Insurance and decrease in the same sentence is good. I like [laughter] >> it. It is absolutely. Um and so right now it would look uh for the 2027 budget that there would be a decrease in our fund balance of just $6,800. Um our equipment fund uh revenues um decrease about $10,000 from 2026 at about $528,000. Um per the capital improvement plan um we have scheduled uh you know just less than $2.3 million um of purchases. Uh the bigger component in there is that ladder truck. Um the ladder truck I do have a note on there um was approved by city council at the end of 2025. it was included in the 2026 budget. The reality to it is according to our our fire chief uh Jason Melinger um that we won't expend any of that until it's done and it won't be done until 2027. So I put it in the 2027 budget. It it is reflected in the 26, but it's not really going to be expended in the 26 budget. Um, and then, uh, this would be a decrease of about $1.7 million in our fund balance or, uh, in our fund balance. Fund balance at the end of last year was $3.6, uh, million. Uh, city mechanic budget, uh, revenues of about 44,000, same as 2026. The budget has increased to just under 60,000 um, at this point in time. um you know when we were building the budget uh not knowing what the city mechanic would would be in some of these internal service funds and to achieve that 6% levy we kept the revenues the same we will end up having to adjust them in future years uh because the budget is going up uh we have a very good mechanic who is doing a much very thorough job on on our vehicles um and does u things in a little different manner than have been done in the past. What does that mean? not contracting out a lot of the work. He's actually doing a lot of the work himself, which requires more supplies. Uh, excellent, excellent job he's doing. Um, so it does uh reflect an increase of a little over 15,000 in 2026. Um, this would decrease our fund balance about that $15,000. Uh, we do have just a small fund balance at the end of last year about $46,000. That's why we can't live off of that forever. That's why we will end up next in 2028 um adjusting the rate that we charge other departments. >> Uh the building maintenance um budget um has revenues a little over uh half a million. That's um just an increase of a little over $2,000 from 2026. Our budget is $444,000. Uh it's an increase of about 13.5,000 from 2026. Um, this would increase our fund balance $59,000. Our fund balance at the end of last year was $523,000. You can see I've shown you the fund balances in the past. You know, we those have increased. We're doing a pretty good job with the exception of um, you know, the the mechanic fund and uh, you're going [clears throat] to see the event uh, community event fund um, coming up here in just a couple of slides. And um I think there's one more that um that we needed to to kind of be aware of. Oh, I'm sorry. Uh the solid waste. Um and that's you know we'll we'll play that out even though we we are projecting a negativity to that. We want to project out and find out um how that bulky um pickup is going to play out for us before we make any adjustments to our residents. Um other budgets that we do um traditionally we've had the community center fund. Um, as of right now, we have no budget for the 2027 because we uh hopefully will have that uh property sold and we won't be responsible for any costs that are associated with that. Um, and then there's the community event fund. Um, and that has revenues of just below $14,000, just a $45 decrease from 2026. Has a budget of about $34,000. That's an increase of about $4,500 for 2026. It's a decrease in our fund balance of about 20,000. Our fund balance at the end of the year was 52. And so you can see that that that'll need to be adjusted in the 2028 um budget um component to it. Primarily what the community event fund is is it's all it pays for all the costs associated with with what Ava does and all of the wonderful community events that she plans and does an absolutely fabulous job. Um and then it's uh costs that are associated with the car show. um come out of this fund. And then there's the fire relief fund. And traditionally what this fund has been used for is it uh basically the revenues in the budget um it's a pass through. Um we receive uh fire aid u from the state of uh Minnesota and we end up having to transfer. We may not need this budget in 2027. Still looking into it a little bit. Um, if you are aware, city council um um had um approved that the fire relief is no longer its own association. It's now part of the uh Minnesota State Perra. Um and I I haven't gotten confirmation, but I believe that the payments will go directly to PERA versus coming to the city and then we would actually give it to the fire um relief association. Um, so I think we're no longer the the middle person on on on this, which would say we don't need to have a fire relief fund, but we'll know a little bit more. Any questions with our internal service funds or our special revenue funds that we have? >> Well, that fire fund then, is that what the uh part-timers get? Is that their base pay at the end of a season and that or their how they get paid for each caller? How is that? >> Um, it it's their pension. >> Pension. Yeah. So, there's a set dollar amount. I think right now it's set at for every year of service they get $7,100 um put into kind of a pot um and after I'm not going to know the exact amount. I think after 20 years they get 100% of that um um back. If it's after 5 years, I think it's 40. It r it ratchets up um you know I think after 10 years it's like 60% until they're fully vested into the um what's >> their full investment then what how many years of service >> I think it's 20 right now is I think >> so if they were only a firefighter part-timer for 10 years they would have would not draw out of it then >> uh they would get a percentage >> percentage >> yeah not 100% >> okay >> so um and uh the fire relief association has done a fantastic job of investing those funds throughout the years until they made the decision to turn this over to uh the state of Minnesota. Um so um the capital improvement plan just going to add a very high level um uh so you can see the different funding sources. Um we have the asset preservation, the street fund. We have bonding for streets. We have park dedication fund, bonding for water, water fund, bonding, bonding for wastewater, wastewater fund, electric fund, bonding for surface water and surface water fund, park fund, equipment fund, and then grant funding. Um the grant funding that's being identified here, the majority of it is the excellent work that the city um has done um in um getting the allocation of of the uh grant of the state's grant that was going to go to the community center moved over to the water tower. Um and so I've got a slide here to kind of in in a little bit to show you what impact um that had as far as a rate increase and it's significant. Um so from a financial position um that was one huge huge move for the city and putting it into a much better financial position. Um as you see over the uh 10-year period there's $101 million worth of work or equipment to be purchased. Um the bigger driving factors onto that is is our streets. Um not cheap to do street work. Um, and so there's a combination of bonds. Um, because we're on a cycle of every other year we do bonding and every other year we in the year we don't do bonding, we do a asset or we do a a street preservation um program which we doing this year. Next year in 2027 we would go out and do a bonding. Um, so that's kind of a high level of that. Again, like I've shown in the past, uh this is really our driver. Um that capital improvement plan is what really drives our our levy increases. And uh right now, street uh streets and street debt. Um at about $173,000 is what we're contributing. Have an increase in levy, which is a little over 2%. Um parks, um $76,000, which is a 89% of our levy. And then the asset preservation which takes care of our facilities of 142,000 which is a 1.65% um of levy increase from 2026 total just under $400,000 um or a 4.55% levy increase. So that's where we're at for starting levy when we look for building the next year's budget um that we're at 4.55% levy increase. I've attached um um 10-year financial plans. I am going to pull these up um in a spreadsheet. So hopefully you can see them a little bit better. If I can figure out how to do that. I think we've got it up. I don't know if it's going to show a little bit better here. Um probably not. Um so for the water fund so all of these 10-year financial um pictures there's a lot of assumptions that we make. We make assumptions um on what we think our annual increase in our expenditures will be usually using about a 3.5% increase. Um looking at things then um we can adjust our revenue based upon what we should be changing our rate. At the end of the day, the very bottom line is an over and under under our target working capital and that number in the 10th year really needs to be close to a zero or or thereabouts. Uh it's the financial plans are looked at it two different ways from fund balance and cash. Um and cash is more of a true reflection of what you really have to be able to purchase things. And as you can see here in the water fund that there would be 1% um increases. Now this gets adjusted every single year based upon how we perform. Um so uh you know the 2025 actuals are in we perform better and you've seen that information than we than we anticipated from a budgetary standpoint. So then it reduces our need. The bigger driving factor here is that in the capital line there isn't that you know $4 and a half million dollar expenditure coming out of the water fund. Um and that again is due to the switching of the grant from the community center to the water fund. Um which has a significant um uh you know impact um on what we would have had to ask for for water uh fund rate increases. Uh the wastewater same thing. Um that one's looking at about a 3.25% um rate increase. Again, we're looking at uh you know expenditures using that three and a half%. Um electric uh should not need a weight a rate increase for 27 28 29 and then based upon that performance it may even go longer than that. Um but right now with what we have um we'd be looking at in the range of about a 2%. Again, there's so many variables that play into that play into this. You know, we're we're utilizing about a 2.25% increase in from MMPA. If it were to go a lot higher than that, um obviously it would push the rate increase up sooner. Um if it doesn't go up then and we perform better, then we can lower that number down. Um and then surface water, that's the one that's at that 5.25%. And unfortunately, there just isn't a lot of revenue that's in there. You know, it's about a $1.1 million budget. You know, um five five and a4% increase is only generating, you know, you know, $60,000 in revenue. Yet, this one gets hit quite significantly um by street projects. um part of uh what we ended up seeing of of uh you know with Casey Lake pond um you know it's the runoff water in a in a project that ends up coming from the the surface water component to it. Uh and then our solid waste um right now we're going to hold it um our rates the same for 2027. Um but there is a potential that um as um the contract has rate increases um of 3% that we may end up having to have a rate increase of about the you know 3 three and a half% range. But again, let's play it out a little bit and see how the bulky pickup has an impact. And uh council member Nordby, I had said earlier about the the bulky pickup that there still is a cost associated with that for the city. It's free to our residents. the the six um acceptable bulky pickup items and then two acceptable um um appliances. Um the labor is not being charged by tennis yet. There's going to be tipping charges that would be associated and part part of our contract and we've always had it that way. We pay those tipping charges. Um so we just want to play it out to see how it's going to to go before doing any rate increase. And so [clears throat] we'll use some fund balance um to cover us through uh the 2027. And then fiber optics, there's not a lot to say about it. It's it uh you know, it's a negative fund balance. Um it's going to take many years to get back, if ever. Um because we do have some contracts from some cities um that prepaid um that will be coming up in about six, seven years. Um so whether they will charge or uh continue to use our fiber that's a question to be determined. Um but u and then uh we have the equipment fund. >> One thing when it comes to that is there any equipment that we need to upgrade? Is there stuff that has to happen with the fiber? Is there the backbone? Is there anything that we or somebody else take care of that? [clears throat] >> Sorry. Don't cry. It's just fiber. [laughter] >> You go ahead. Oh, that's fine. We're good. >> I'm not sure. >> Yeah, he'll he'll tell us later. [clears throat] >> We can go on to something. We go on next. >> We have in in my time here, we haven't paid any additional um costs onto it. Um >> sometimes, you know, the switches get old and different things like that. Absolutely. You know, you got to do some kind of a cleanup. >> Yeah. >> Okay. >> So, I'm unaware. I'm unaware of >> when they move. from the community center over to the public works. Will they be upgrading grading any of the connections in there? >> That again, I don't know. I do know that >> spice in the street. There's not going to be Yeah, there's not going to be anything in the building just going to be a splice in the street now. So, all that equipment that's in the community center won't be there anymore. It's just going to be splices. >> Yeah, I believe that's correct. Yeah. >> So, that will get rid of stuff. >> Uh and then we have the equipment fund. Um, and we're not anticipating any rate increases in 27, 28, and 29. Again, it's an internal charge that we do for the equipment. Um, and then after that, we'd be looking at about a 5% based upon the capital improvement plan. Um, and the needs um for equipment replacement. Um, building an asset preservation fund. Um again, you know, uh how this is built right now is to keeping that uh levy increase every year of $142,000. Um that would cover um the what's in the capital improvement plan. Um you know, there's one year in there that's uh 2031 that we would have a negative amount. Um that'll be something that we'll have to to look at and adjust what we're expending so we don't go into a negative component. that has not been put on um in these plans. Plans are really to determine if there's rate increases, how much of a rate increase, and so forth. Um but obviously when 2031 comes around, we wouldn't do what's being said in this plan. Um park dedication fund um is pretty stagnant fund. Um we um per only get money on on newer developments. They have a uh fund balance of 400 uh they have a fund balance of about $471,000. Um part of their CIP that they would need in 2029. Um per the C capital improvement plan about $450,000. Uh doesn't leave them much um doesn't generate a great amount of uh revenue. Um as you can see in 23 was about uh a little over 23,000. 2024 was 184,000. A big component of that um two pieces. One um you know brought it to city council. Um we um got the the funds from um the Sentinel um development and then from uh uh I call it the Lily development article number seven. Um and then outside of that we just get some smaller amounts. in 2025, we, you know, receive about 20,000. So, you probably can really only anticipate anticipate about 20,000 or less um that we're going to get from park dedication funds. And then, um the park fund um currently we're increasing the revenue about $76,000 a year. Um [clears throat] if we look on that based upon what their current requests are, uh they would run into a negative uh balance in 2030. So that means we need to adjust um that plan uh from 2030 and on. Um but at the end of the the 20 or the 10-year plan, they would end up having a positive uh fund balance over our target. Um so again, there's some work that needs to be done part of this plan um component to it. I think it was pretty loud and clear. Um last uh year we had a workshop. Um not all of the council members were in attendance. Um but we kind of talked about um do we keep chasing after and raising that levy for the infrastructural components? And the answer was pretty much no. Um that we needed to start prioritizing within what we were levying. Um and so that's kind of the direction that we're looking at. So again, we would end up having to adjust our plans to be affordable underneath what um we are levying um piece to it. Um and then we have the street maintenance fund. Um and that uh covers a lot of ground, a lot of expenditures that are that are in there. Um you can see in the capital improvement plan. So that it's going to be, you know, that's where we're going to be paying um debt um comes out of there from the bonding components to it. It's all the capital um plans um that are out there on that. Every other year we have uh that um preservation plan that we do. Um and and those are significant dollars that we're we're putting in there. Um I uh I I would I am gonna ask Ron Richie to come up here and speak for a second because in our department head meeting today uh Brian said that Ron was supposed to present this uh you know today. So, I am going to put him on the spot right now uh because there was something that uh the um our city manager um Brian Brandle, myself and and Ron were having a conversation and I kind of wanted to for him to kind of say it of what is his perspective on um you know how that um asset preservation or that preservation part of the road construction is is working for the city. Are we seeing any improvements? Um, and he made some interesting comments, but I'm going to let him kind of talk about that a little bit. >> Wow. I This is putting me on the spot. [laughter] Um, so yeah, the the pavement preservation, you know, part of the or that program is to try to get, you know, as much black top down as we can on on the roads. Um, with our road ratings being where they were when we looked at this from the beginning, um, just with the money that was being put in there, we would have never got that scale to go to go upwards. So, with this pavement preservation, we are able to get a lot more of the roads covered. Um, our we're done patching for the year right now, which it's a little it's about a month ahead of schedule where we normally are, and that, you know, has a lot to do with that that pavement preservation. Um, we probably will get to a point with this uh pavement preservation where we'll have to start making some decisions on uh do we cover this up or do we not, you know, not cover some of these utilities up, you know, for doing it. But we are heading in the right direction. Uh Morgan is going to give us an update on our road rating conditions. We do that every year. We rate rate our roads. So, we'll kind of see where our numbers will be at, but um we we are making, you know, a huge difference, you know, in our eyes with with this. And like I said, it's not the it's not the perfect plan, but I think it's a good enough plan to where, you know, we can get a lot more roads covered where when residents come out and uh ask us, hey, when when are we going to have a project in our area? And it's not even on the, you know, on the outlook yet. Um, at least something like, you know, this program can hopefully put us in some, you know, buy us the time that we we're going to need to do the full utility replacements down the road. I don't know if I hit on some of the stuff that you wanted me to or >> No, I I think he did an excellent excellent job and it's really the the the piece that I think is significant that the two pieces. One he didn't say that the f finance we'll we'll talk about but um is that our road rating is heading in the right direction. If you remember when that was presented the way we were doing it was every other year bonding. um we weren't taking care of that other component that um you know I think it was Randy, Ron and and Morgan um had come up with and through and our our city manager uh clearly supported and so did city council um to be able to to do um to do this other component to it. Um I I think I think the rating at that time we were in like the 50s and it and it wasn't going to change um by doing that every other year. Now, I think we're seeing and you know, I wouldn't be surprised if we're approaching that 70 um number uh coming up pretty pretty soon. Um and that from a pure f finance side to it is that we're paying that part in cash. Um we're not bonding for that every other year. Um again, city council was supportive enough that that's where we had transferred the the startup of it two years a Well, actually, yeah, two years ago, the $1.1 million to start it up. this year the fund has accumulated uh some money and that we're paying it now out of the the fund itself and we should be able to continue to do that into the future. Um so I think that's pretty significant and I know Ron just loves when you know we give them more uh money because it just means more work for them. And one thing I'll just say with this pavement preservation program, just for the public out there, when we go out there, uh, we we definitely work with or live within our budget when we go out there. So these pavement preservation, it's basically work in between the curbs. I know when we start doing these projects and going in there, um, I think a lot of people really look at it like it's a full project and, you know, they don't realize everything that's underground that we're not touching or not covering up or not disturbing. Um, so we get a lot of questions, hey, why aren't you replacing the sidewalk? Why why did you do just 10 feet of curb over there, then you didn't do anything for 100 feet? Um these roads get measured out many many different times to to try to stay within our within our budget uh with what we have to do. I know Dan spoke there's some utility work that we're doing um or I shouldn't say there's some there in the utility budgets. It's most of those budgets are for the catch basins uh the storm sewer structures or the manhole structures that we have out there. Um we we don't do full rebuilds of those unless one of them is totally shot. We try to get ahead of that by planning out a year ahead of time and what we're doing uh or if there's something we can replace just in a normal maintenance budget that we have um for the pri or for the next year coming up. So in this year 26, we're looking ahead to what we might do with our smaller pavement project for next year, which is like $400 some thousand right around in there, which do some little areas. Um, but I know a lot of people really question why there's just spotty curb, but the reason there is is we take the worst of the worst. We kind of grade that whole section that we're doing on a curve and we take the worst of the worst. Um, basically what we're looking for is if it affects water draining, drainage is a big thing. If there's some pieces of the curbs that are really broken up, there's still maybe some cracks in the curbs that we don't replace, but that is because we could blow the whole budget just on on curbs and trying to do that. And the the big picture of this is hopefully it's going to buy us, you know, 15 years um before we have to come and do like full replacements up there. So, if you get questions like that, you know, from the council, I I'm more than happy to, you know, talk to those people. But just so you guys understand, when you go into an area and you see some new curb and some not, um, a ton of work goes into kind of weighing out, hey, what are we going to replace? And the biggest thing is staying within our budget that we have. So, >> makes sense, especially for concrete. We still have some some asphalt curbs. >> We do. And them are the wor I mean they get you by but a plow is off for a little bit and they're gone. So [laughter] >> yeah, >> I'd like to jump in there a little bit. Dan, wonder if you can elaborate. You kind of glazed over but it's so important the paying the cash on some of these projects and what kind of funds that we're saving by doing it that way. >> Yeah. So, in our uh in our capital improvement plan, I think we're I think this past year we were at about what $2.5 million uh including streets, uh water, wastewater, and surface water. So, again, if you were to go out and bond that, you know, at a 5% interest, which is is probably about what you would pay on a, you know, on a 20-year um bond, it's $80,000 for 20 years that you'd be paying. So, you know, you'd probably be looking at about um $200,000 that you would be paying every year um for 20 years, which amounts to 4 million at the end of it versus paying the 2.5 now um with the cash. And so, um, that's one of the big parts that we had a discussion here at city council about how do we convert ourselves more over to that cash, um, management side to it and and being able to pay cash instead of all of the debt that um, that we have. Um, I think it was a year ago I I brought kind of a comparison that, you know, there's a lot of comparison to us in Mounds View and we've talked about some of the similarities and dissimilarities and one that they have, you know, much more commercial property than than we do. We're 90 plus um of our tax base is residential. Um, where that's not the case in in Mountains View. But one of the biggest pieces that I had showed and I actually had asked city council after I showed what the debt um like in uh what Mounds View was carrying in their general fund and then what their their um debt was in their utilities. And I'd show you and I I think that one of them, don't quote me on this, they had like $5 million of debt in their general fund. And then I asked city council, "What do you think ours is?" And ours was like 30 million. um you know and then we went to the utility and again a significant increase into it. So you know just like in our budget that we have here today or you know that's in our levy budget like we have uh $1.1 million of our levy is to pay debt um in our general fund. you know, at $90,000 for every levy increase if you didn't have that amount. Um, you [clears throat] know, you're you're looking at what a 12 13% reduction um in our levy as a percentage from one year to the next. So, at the end of the day, if we can move ourselves more to a cash basis, especially because we don't do um um special assessments um which um I think city council is in agreement with um that was the decision and I totally in in agreement with that um that um you know this is really a really good plan and um you know the credit for the plan and the for the creation of the idea and the implementation of it goes to you you know, Ron, Randy, and and Morgan for coming into this and they've done just an excellent job. And I think, you know, uh, when Morgan comes with the rating or the new rating and see where we're at, hopefully we're going to see that that needle's rising up and and that's really what we want to do for our residents. >> Agreed. >> Do I owe you something for calling you off [laughter] here now? >> Do you want to stay up here because you never know how I'm going to be. you can't leave. >> Okay. Thank you very much, Ron. >> So, again, all all of our our street projects uh really do have, you know, and in our capital component to it and the capital improvement plan really really does impact um you know, our need to do some utility rate changes. If you remember on November um 18th of last year where we were at before we got saw the performances of where um of things and this is how things can can change so quickly. We were anticipating that water fund would end up needing a 6.25% increase. Now we're down to 1%. And again that big big significant component to it is um paying for the water tower not through the fund itself but through the grant fund. Um so that's how huge that change is um on that water uh rate. Uh wastewater we were looking at a 6.75% um increase um last year. Um you know we still are going to require an increase. It's not as significant. It's 3.25 um starting in 2027. Uh the electric fund um clearly performed fantastic. Last year we were looking at a potential of having to do an increase. Now we're we're comfortable in saying we're not going to have a rate increase for three years. Um unless something totally bizarre um happens um as far as rates that we get from MMPA. Um our surface water um that one didn't change a great deal. We were at 6%. We're going to need a 5.25% and I think kind of explained that before. It's just a tougher one. there's just not as much revenue that uh that fund generates. And then the solid waste um we're going to hold that uh steady um for the 2027 um just from the standpoint that um uh we wanted to wait for the RFP. That hasn't changed. Um so here's where where the current um rates are at. Um and it uh what's included in the budget right now is a water fund increase of 1% on the rate wastewater 3.25 25 surface water 5.25. Um those are the three rates that would change in 2027 to kind of in the past 5 years what kind of rate increases have we done. Um in 22 and 23 we had electric rate increases. We have not had anything in electric um rate increases since that time. Uh wastewater um we saw uh increases in 23 and 24. um in surface water in 24 and 25 and no rate increases in 2026. Again, you know, outside of that water, which was going to be a big increase, um that's kind of gotten off the whole radar. It hasn't had any increases uh for quite some time. And then you see the other two components, the wastewater and surface water. And again, they're being driven because of the street projects. Um, so we're, you know, um, like to be able to see no rate increases, but that's just not the reality of of the world in which we live in right now. If we're we're [cough and clears throat] trying to Hey, Brian, I think it's catchy. Uh, [laughter] um, we're trying to play catch-up um, you know, um, on our road rating and so forth. And and again, um a lot of thanks to uh you know, Ron, Randy, and Morgan coming up with that next plan. Um because I could I'll never forget we were actually over in the Sandberg room u when we looked at uh uh there was a a letter and some graphs that Morgan had put together on our road rating and to watch city council's face looking at it going, "Are you serious? We're putting in these bonding and our rating isn't changing. Actually, it was decreasing slightly." Um and uh so um they came up with a different plan to try to move that needle and I think it's working. And um then uh we're going to revisit the proposed 2027 um levy um that we had talked about last time. We're at a 6% um and at that point in time we were looking at to make that 6% a $40,000 reduction in EDA um economic development authority. Um there was uh some um discussion on that that kind of said, "Hey, is there a different way that we could we could do that?" Um so Brian and I um took a hard look. Um and what we would um what we're proposing as an option is to increase our revenue in the general fund for investment income by $25,000 and then um to reduce the EDA levy only 15,000 instead of the 40,000. Um and I think we're we felt pretty comfortable with that investment income. Um looking in the back looking in the past and then looking at where uh bond rating and that's our bond rates right now are going. Um so they're right now they're over that 4% uh mark for you know five years. So I think we're see feeling very comfortable with that. Um so um question to um city council is is that the direction you want us to go into? Because again on September 15th, well September 8th, I'll be bringing um the budget um and I will incorporate whatever um you want or if you come up with something else um that there would be a $15,000 uh reduction in the EDA and then bring in the the EDA's budget and levy to them uh to get their approval on the ETH. and then the 15th um bring back um our levy budgets for uh certification for the maximum levy. Um >> would this affect our uh facade program that we've got going on to the EDA? >> I don't believe it it does if if when we looked at it the last time we had a we had a pretty significant fund balance in cash um available in the EDA. Um, and even at the amount I think we'd be sitting, you know, I think we levy a little over 200,000. So, cut it down to 185. It covers all the expenses and then some. Um, so I don't think we're even going to go negative um even with the facade program. And um there has not been to date a lot of facade requests um that we've um that we've paid out. I'm not saying that it doesn't pick up uh a thing, but I think we're pretty comfortable um in going through the at least the 2027 budget that way. >> Sounds like a good compromise. >> Good compromise. >> All right. And then I just wanted to um provide some related information, you know, when we look at um different things um that uh related information, you know, here's the assessor assessor's market values. Um and we're seeing that, you know, from 2021 that there was a a steady increase. Um we had some very significant increases uh percentage- wise um in the years. Um and now we're seeing that u market values are are starting to drop. Um you know, and um I think that we'll see them, you know, in the next few years we'll we'll see them holding or dropping again. Um, you know, I don't think anything real significant, but I think we'll we'll we'll see it dropping, you know, a percent or two. This this to me, market value is one thing. To me, it's really comes down to the value for the tax rate. So, um, how the, uh, state of Minnesota's property tax um, system works is that you take market value. Um, we'll talk residential. you take oh you take the market value um and then the they have passed that there's an exclusion a homestead exclusion uh goes up to aboutund or $517,000 it's a 40% reduction onto it so as values go down the exclusion goes up and we'll see that when we look at the tax impact that a 6% levy is going to create but um if you notice that in 2020 20 from the from 2024 to 2025. Even though our market value our market value is going up 24 to 25, our net tax capacity that used in the tax rate is actually going down. That's because there's changes at legislation as far as the exclusion component to it um for homesteads. Um and um so that's really what drives what our tax rate is. Um and you can see it went up in 2026. Now it's dropping down again in 2027. This is a little alarming for me when when I did the calculation for it and I know I know the mayor's pressed this almost from day number one um talking about you know the tax rates and when he first moved into the city versus where we're at now. Um even if we look back just the since 2021 we were at a 41 uh% tax rate. Um in 2027 we're going to be up to 55. Um, again, depending on what the city of St. Paul does, um, which we're second highest, we're closing in on them quickly. Um, but here's kind of an interesting, um, component that I kind of look at. You see, our value, our net tax capacity for the local rate is just under 13 and a half million. We do our comparison or we hear a lot of comparison to the city of Mounds View. Mountains View's rate is much lower than ours, but their net tax capacity for the value is much higher and because they get a lot of that commercial. And so instead of a 13.4, these are preliminary values for 2027 as of July 31st from Ramsey County. Um they're at just under 16.2. If we were to have their net tax capacity for what we're leing, our rate wouldn't be 55. it would be 45, but that's not us. Um, and so we're again in that tougher type of position and and um there's a lot of burden that's um you know being put upon our taxpayers um and something that we need to be fully aware of. Um and so even today in our department head meeting, you know, I'm asking um department, you know, brought a lot of this information for them to be on the same page. Um, and it's very easy to to want additional staff to do this, to do that. Um, but it's how does the city afford to do all those things? Um, and um, that's where when we have those council retreats, you really set those parameters for us as we're looking into the future. What are your top priorities? um for us to be able to to have that um to achieve those and and um and and to try to minimize the impact that we have on the residents. But um we we are having an impact on our residents. Um this slide you've seen before where it shows from 2021, it shows the levy, it shows the fiscal disparities, and it shows the net levy. So since 2021 um and I know uh council member Nordby Nord Nordby always talks about this um we went from just under 1.2 million in fiscal disparities to we're now at 1 point a little over 1.7 million. So you know we've raised a half a million dollars and you know that we're getting you know in certain ways free money through the fiscal disparities pool because we're a winner. um um but it doesn't necessarily offset the total, you know, levy by a long shot of of what we're we're doing. So, we've seen the net impact that's being transferred to our taxpayers through the property tax of just under 4.7 million to 7.4 million. And that's a significant increase. But since the time that I I've been here and and I shared um some information with um again with our department heads today, um when I walked in the door, um our city manager wasn't here. Um there was a state auditor investigation and um the city had done a 0% levy and to achieve that had to reduce our staff by four. Um first couple of years of me being here was to try to get our staffing right and so I showed them all the staffing of what the changes have been since 2021 to 2027. After that, city council gave us the top priority to our city manager, Brian Frandle, and myself that we needed to really work on our infrastructure. Um, love the love the terminology and I use it a a lot. Our mayor said, "What? Show me the good, the bad, and the ugly." Um, let's not kick the can down the road. And that's the path that we've been on. Um, so when we look at that levy increase, you know, $1.8 $8 million of it has been raised towards the towards our streets, our parks, and our facilities. Um so we're trying to improve those areas um just as city council has asked us to do. >> And then um I think this is getting close to the end. Um that wanted to show what uh as of again with the preliminary values um the fiscal disparity numbers are accurate. Those are final. Um, but values still can change. Um, right now the impact of uh a median value home in the city of North St. Paul and 2026 it was uh 310,600 and 2027 it's 307. You're seeing a 1 almost 1.2% decrease in the median value of of the city. with the 6% levy, total levy, um it results in about a 6.9% property tax increase for uh the me a median value home. Um with that reduction as we as we see here, if we have no value change, um that 6% levy is going to translate into an 8.34% increase on the property taxes for the city portion to it. Um when we when we look at different components and you see how that um you see where the market value is and you see how that market value exclusion changes as the value went down. It actually increased and so it netted even more of a of a of a reduction in the in the taxable market value. We're not the only city. I mean, from some of the preliminary um numbers that uh a number of the cities um definitely in Ramsey County were looking at, we're on the lower end with the 6% um levy request um in past. Um I read a few articles on like Dakota County, and I don't quote me on on the exact percentages, but um they were looking at like two different options. Um, a lot of it's because of the federal cutting SNAP program funding that um will fall to counties. Um, but they were looking at some options um that were uh in the one option was in the 20% levy increase. Um, and then the other one was like in the teens, low te, you know, middle teens. Um, and it would require some staffing reductions. That's kind of the reality. I think we're seeing, you know, St. Paul, same thing. Big big uh budget gap. and how are they going to address that? And I think the current mayor even, you know, spoke about some closings, at least an hour reductions for the libraries and so forth. And Minneapolis is is facing the same thing. And we're seeing a number of other cities that are are seeing double, you know, looking at double-digit um levy increases. Um I I think the city council was very wise in setting us at a 6% um for this year. that was our target that we were given. Um because you saw some of the of the reality of what the economy was doing and where things were heading. Um so I think that uh thing again it doesn't doesn't say that there's not going to be some sort of an impact there. There is an an impact for our residents. Um with that um I'll stand for any questions, clarifications. Um and then uh just to get final direction on what we will do on the 15th for for questions or clarification. I don't have any questions. Dan, thank you very much for putting these numbers together. I know it's a lot of work that you and your staff put in to get all this put together. I appreciate you going through it with us very meticulously. >> Thank you. Very thorough. >> I like it. So on the 15th um we we will um ma uh bring documentation with the resolutions for certifying our maximum levy at that 6% with 15 with a $15,000 reduction in the economic development authority. um unless something changes from the economic development authority, that's where we would would do what would give them on the ETH um that part to it. >> Um my final piece that I would like to say is that when we talk about staff, I've got some really good news about staff and and I have to say this in a public forum. um you know um I think you're aware that um Jackie had retired um and Melissa was promoted in that position and I think um she's done a a fabulous job on the payroll and accounts payable and she's she's doing fabulous. But here's the bigger piece to it uh that um you know as I wind down my career I couldn't be any prouder then um is that in the last two years she's been going to school at nighttime. So, she works full-time, does that, and then she has on on on some weekends a part-time job that she does. So, in two years, she she had an undergraduate degree. She went back and she now has an accounting degree. >> Um, not bad. Very, very proud of her. Um, that is not an easy task to do. Um, and she is a remarkable individual and she had to step in to fill some pretty big um, shoes from Jackie. Um, and she's doing a very good job and I think she has a very bright future with the with the city. Um, so I want to say congratulations to her in a public forum and I wanted our city council to know that uh, you know that we have some remarkable extraordinary staff. >> Good. So, and again, >> congratulations to her. >> Thank you. >> And again, I thank you all for the opportunity to present um and get your support um and your direction. Um so, thank you very much, mayor, city council members, and Brian Frandle for his leadership that he gives to us on a day in dayout basis. >> All right. >> Thank you very much. >> Much Dan, >> appreciate it. All right. That's a wrap. So, if I have a call for German and then we'll meet in seven minutes. >> So moved. >> So moved. Council member Woods. Second. >> Second. Council member Mackenzie. All those in favor say I. >> I. >> I. >> See you at 6:30. >> Thanks again, Dan.