Lake Elmo City Council — Transcript

Wednesday, November 12, 2025

Highway 36 Lake Elmo Avenue Project Update

Short-Term Rental Discussion

Strategic Financial Plan

CIP Future Project Discussion

Votes (4)

Highway 36 Lake Elmo Avenue Project Update

No formal action taken; feedback and direction were sought from the council during this workshop.

Dissent: The Mayor and Council Member Jraich voiced strong opposition to the proposed closure of Keats Avenue and MIDOT's rationale for it.

Andrew Geon from Washington County and Mr. Tomasovich from MIDOT provided a comprehensive update on the Highway 36 and Lake Elmo Avenue intersection project. The presentation covered the project's background, schedule, engagement efforts, preferred alternative (grade-separated intersection with a new frontage road), and funding mechanisms. A significant portion of the discussion focused on the proposed closure of Keats Avenue. MIDOT stated that its funding for the south frontage road extension is contingent on the full closure of Keats, citing safety and operational benefits. The Mayor and Council Member Jraich strongly questioned the necessity and justification for closing Keats Avenue, especially in the absence of specific crash data for the eastbound to southbound turn lane, and raised concerns about the impact on local residents' access. The topic of extended construction working hours was also raised, with council members suggesting creative contract language for limited Sunday work.

Short-Term Rental Discussion

No formal action taken; the item was for discussion to gather initial direction for staff to take to the Planning Commission.

Dissent: Council Member Dragus expressed strong opposition to any changes that would allow short-term rentals beyond the current bed and breakfast ordinance.

Director Stoa presented an overview of the city's current allowance for owner-occupied bed and breakfasts and the informal presence of approximately 11 prohibited short-term rentals. The discussion delved into various aspects, including the prohibitive cost of converting residential properties (R3) to commercial (R1) occupancy for non-owner-occupied rentals due to state building codes, and the challenges of city enforcement (e.g., tracking violations, working with rental platforms). Council members' stances varied, with Council Member Dragus firmly opposing any changes to preserve residential character, while Council Member Jraich and the Mayor were open to allowing short-term rentals with clear regulations, guest limits, and effective enforcement mechanisms to address potential nuisances.

Strategic Financial Plan

No formal action taken; the item was for initial discussion and feedback on foundational assumptions and objectives for the strategic financial plan.

Finance Director Hadler presented the initial framework for a strategic financial plan, envisioning it as a dynamic, long-term guiding document for city finances. The plan aims to integrate various financial elements, including existing policies (CIP, fund balance), staffing levels, major capital projects, and development projections, to ensure fiscal sustainability over 25-50 years. The discussion included examples of scenario planning, such as adjusting infrastructure funding levers to observe impacts on fund balances and debt. Council members acknowledged the complexity and importance of the initiative, with Council Member Jraich emphasizing the need for easily digestible educational materials to ensure continuity and informed decision-making for future council members. No significant concerns were raised regarding the foundational assumptions or the proposed starting point for the 2026 infrastructure levy.

CIP Future Project Discussion

No formal action taken; this was a discussion to gather feedback prior to the adoption of the CIP in December.

The discussion revisited previous council concerns regarding the scope and financial implications of the city's 10-year Capital Improvement Program (CIP), specifically street projects. The Engineer, Jack, clarified that the initial 5-6 years of the CIP are largely dedicated to addressing existing street reconstruction needs (a 'catch-up' effort), while projects beyond that timeframe are more speculative, based on pavement age. The Mayor highlighted the significant portion of the city's annual budget allocated to streets ($8-9 million, including debt service and construction), noting a perceived imbalance compared to other operational spending. Council Member Jraich suggested refining the CIP presentation by not tallying 'priority five' or developer-driven projects in the cost projections, though still tracking them, to offer a more realistic financial outlook.

Notable Quotes (18)

The main discussion item for today's workshop will be to discuss Keats Avenue. So we will spend some time talking about that area. Uh we will also begin discussions related to allowable working hours and close with next steps.

Andrew Geon/Project Manager, Washington County Highway Department [00:03:00]
Highway 36 Lake Elmo Avenue Project Update

The city of Lake Elmo through your CIP has programmed $5 million for this project. The total costs of the project are estimated at roughly $50 million, which includes all in cost for design, rightway acquisition, and construction.

Andrew Geon/Project Manager, Washington County Highway Department [00:09:44]
Highway 36 Lake Elmo Avenue Project Update

Bottom line, Minda can participate in the local south front construction under the cost participation policy because of the full closure access at Keats. This is opportunity to deliver a safer and more efficient corridor with a full state funding and no city cost participation.

Mr. Tomasovich/MIDOT [00:30:22]
Highway 36 Lake Elmo Avenue Project Update

Access is reasonable, consistent, and proactive. Mr. Tomasovich, last time we met, you did say reasonable several times and I mentioned you that to my constituents that live in that area is probably not reasonable. And you mentioned there's many people that go beyond their exit to double back. Well, many of those people haven't had to do that for teen years. This is not a high turnover area of apartments. This is long-term living residences that use that road consistently.

Mayor [00:32:00]
Highway 36 Lake Elmo Avenue Project Update

I fully agree it there's no discernable data to show there's a safety issue going eastbound to south. I see no reason for any tax dollars from a state, county, or city level to be used to eliminate something when the number one goal of this project is safety.

Council Member Jraich [00:39:46]
Highway 36 Lake Elmo Avenue Project Update

Has the county considered putting something in the proposal that allows X number of Sundays throughout the construction season as opposed to every Sunday in the construction season? We would be open to that because I think that would seem like it's um gets a little more complicated, but where you can even have the contractor rent Sundays for schedule expediency.

Mayor [00:43:40]
Highway 36 Lake Elmo Avenue Project Update

Currently, we have bed and breakfastes that are um allowed, but they have to be owner occupied. So we don't get too many requests, but we do get requests from time to time to people that want to essentially apply for a bed and breakfast, but they don't want to live there, right?

Director Stoa [00:47:04]
Short-Term Rental Discussion

The cost is pretty much prohibited to do that.

Director Stoa [00:52:16]
Short-Term Rental Discussion

I'm I do not support that any change. I think we should avoid short-term rentals as much as we can. We're a quiet residential community. That's part of our character. And I don't see what we get from benefit from short-term rentals as a community. Personally,

Council Member Dragus [00:57:38]
Short-Term Rental Discussion

I personally don't have an an issue itself with short-term rentals within a itself. But obviously in terms of scale and scope that's another thing. I don't want it everywhere. I would want it a specific limit, specific zoning. Um, and there are 20 different ways to do it. Uh, because the what it does have the ability to do is it actually can cause home prices to go up because you are restricting the supply of available housing stock.

Council Member Jraich [00:58:14]
Short-Term Rental Discussion

I'm also a person that says you should have opportunity to do with your property as you see fit as long as it's socially acceptable. Right. We have things that regard around lawn height and you know taking care of your property so it's not a nuisance to your neighbor and things of that nature. So I kind of like to have some guard rails on it.

Mayor [01:00:10]
Short-Term Rental Discussion

It becomes a lot of work, honestly, when you start licensing and then you have people that aren't following the process. A lot of times you would have to take them to court. Airbnb is hard to work with, too. I've worked with both platforms in the past.

Director Stoa [01:07:54]
Short-Term Rental Discussion

The idea is to look at city finances holistically and come up with I'm going to call it a plan but it's really more of a a a guiding document. So, we're going to have scenarios and we'll have some strategies, but it's not like a locked in plan.

Finance Director Hadler [01:16:34]
Strategic Financial Plan

And again, the strategic financial plan is really a decision support tool. We will be able to hopefully um be able to take a look at any um discussion that you guys are having and plug it in and kind of see where that might take us in years uh down the road.

Finance Director Hadler [01:21:40]
Strategic Financial Plan

I think one thing to consider because I mean when the mayor and myself and a previous council member joined, you know, we're told at a very high level, well, this is what the, you know, staff has, you know, one staff member has decided is is our fiscal plan, but we really have the plan. and the amount of work that you've done you and and Nina and others have done over the last year to two years to compile this I I don't know what what you have then for moving forward we're all be gone at some point but to make sure that there is something uh an easy to um consume educational feature for all incoming council members to say look this is where we're at this is kind of the the 20 year, 30-year picture.

Council Member Jraich [01:39:56]
Strategic Financial Plan

Your current CIP is a 10-year CIP. The first five years, maybe six years are already neighborhoods that need reconstruction as they stand today. The recommendation today would be so not five years from now, but today. So, they're still part of that catchup.

Jack/Engineer [01:48:38]
CIP Future Project Discussion

I just I think councelor Hearn was saying can we slow it down a little to bring a little less financial pressure. That's that was my understanding of what he was talking about. ... it it seems like there's this imbalance there somewhere.

Mayor [01:50:50]
CIP Future Project Discussion

And also my my two cents were just that again as the mayor mentioned when we are doing the the projections that if it is developer paid for that we're obviously not considering that in any of the the CIP costs but also I would be fine with even all cost for a priority five never be tallied as well would be my two cents because to me if it's number five it's not even something that we've it's literally not under actual consideration is it's a high level placeholder.

Council Member Jraich [01:52:10]
CIP Future Project Discussion

Ordinances & Resolutions (9)

CIP (Capital Improvement Program)Plan

City's 10-year capital expenditure plan, discussed for project funding and overall financial strategy.

State statutesOther

Governs protections related to church property acquisition.

Cost Participation PolicyPolicy

MIDOT's policy for funding local frontage road construction contingent on trunk highway access elimination.

City codeOrdinance

Regulates construction working hours and current short-term rental prohibitions.

Zoning codeOrdinance

Rules for allowing or prohibiting specific land uses, including short-term rentals.

State fire codeOrdinance

Governs fire safety requirements for lodging, affecting short-term rentals' classification.

State building codeOrdinance

Governs building classifications (R1, R3) for lodging, affecting short-term rentals' conversion costs.

Resolution of supportResolution

Previously received from City Council in May 2024 for the preferred design of the Highway 36 project.

Strategic financial planPlan

New guiding document being developed to holistically manage city finances for the long term.

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