Lake Elmo City Council — Transcript

Wednesday, November 12, 2025

Highway 36 Lake Elmo Avenue Project Update

Short-Term Rental Discussion

Strategic Financial Plan Overview

CIP Future Project Discussion

Votes (4)

Highway 36 Lake Elmo Avenue Project Update: Keats Avenue Access and Allowable Working Hours

Discussion only. Staff (Washington County and MDOT) to follow up on Keats Avenue access discussion, considering council's feedback and alternative suggestions. Staff to return with cost/maintenance agreement and a proposal for allowable working hours for approval in December or January, potentially with limits on Sunday work.

Dissent: Mayor and Council Members Holtz, Jaguchich, and Kraus voiced strong opposition to the proposed closure of Keats Avenue's eastbound-to-southbound right turn lane without clear safety data or alternative considerations.

Andrew Geon from Washington County presented the project overview, schedule, preferred alternative, and funding details for the Highway 36 and Lake Elmo Avenue intersection improvements. A key discussion point was the proposed closure of Keats Avenue as part of the project, which MDOT linked to significant state funding for a new frontage road. The Mayor and Council members expressed strong reservations about closing the existing right turn lane from eastbound TH36 to southbound Keats Avenue, citing lack of crash data for that specific movement, resident concerns, and questioning the 'reasonable access' and 'safety first' justifications without objective performance measures. The discussion also covered requests for extending allowable construction working hours to ensure timely project completion, with Council generally open but suggesting limitations on Sunday work.

Short-Term Rental Discussion

Discussion only. Staff directed to take the council's feedback and questions to the Planning Commission for further review and deliberation.

Dissent: Council Member Jaguchich voiced strong opposition to allowing any changes that would permit short-term rentals.

City staff presented an overview of the current bed and breakfast ordinance, the city's prohibition on short-term rentals (STRs), and how neighboring communities and state/county regulations handle them. It was revealed that approximately 11 STRs are operating in the city despite being prohibited, with no complaints received to date. Council members debated the merits of allowing STRs, balancing property owner rights with concerns about residential character, potential nuisance, and the significant staff effort required for licensing, inspection, and enforcement. The prohibitive cost of R1 occupancy conversion under state building code was also a point of concern for potential STR operators.

Strategic Financial Plan Overview and Foundational Assumptions

Discussion only. Finance Director to proceed with developing the Strategic Financial Plan based on the foundational assumptions and council feedback, including prioritizing clear educational resources for future council members. The proposed 2026 infrastructure levy starting point ($250,000 with 10% annual increase) was not changed by the council.

Dissent: Council Member Jaguchich stated he voted against the levy previously.

Finance Director Hadler presented the initial framework for a strategic financial plan, aimed at guiding the city's fiscal decisions over the next 25-50 years. The plan integrates existing financial policies, staffing projections, capital project scenarios, and debt management strategies. The council was asked to provide feedback on foundational assumptions, potential additional priorities (e.g., clear educational materials for incoming council members), and the starting point for the 2026 infrastructure levy. No significant concerns or desired changes to the proposed approach or current assumptions were raised by the council, aside from reinforcing the need for clear communication and education for future council members regarding the plan's insights.

CIP Future Project Discussion

Discussion only. Staff directed to refine the CIP's financial analysis by moving to 'two sets of books' to track all projects but to exclude developer-driven projects and speculative/low-priority projects from cost tallies used for financial planning.

The Administrator facilitated a discussion on the Capital Improvement Program (CIP), specifically regarding the future street projects. The council acknowledged the city's 'catch-up' efforts on street reconstruction, with the initial five to six years of the 10-year CIP addressing current needs. Beyond that, projects become more speculative. Council members expressed concern about the overall magnitude of street-related spending (debt service, construction, maintenance) compared to other city operations. Direction was given to staff to refine the CIP's financial analysis by not including developer-driven projects or highly speculative, low-priority projects in the cost tallies, while still tracking them for planning purposes.

Notable Quotes (15)

I don't understand why you would eliminate the frontage road while maintaining that um because it it doesn't show any crash data. It's not any harm to that intersection other than past experiences that the state has had and where they have eliminated that right turn lane.

Mayor [0h15m22s]
Highway 36 Lake Elmo Avenue Project Update: Keats Avenue Access and Allowable Working Hours

Under the cost participation policy, improvement is funded under this cost participation policy where MINDOT will participate in local frontage cost, including rightaway costs when access to the trunk highway is being eliminated. The improvements provide safety and operational improvement benefit to the trunk highway. So, that's directly out of the cost participation policy, meaning we can participate in local frontage road construction and pay for those improvements with the elimination of of an access point.

Mr. Tamasovich [0h20m24s]
Highway 36 Lake Elmo Avenue Project Update: Keats Avenue Access and Allowable Working Hours

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 Holtz [0h29m31s]
Highway 36 Lake Elmo Avenue Project Update: Keats Avenue Access and Allowable Working Hours

By extending hours, it simply creates flexibility uh for extended hours or weekends as needed really just to help ensure um the project is completed on time.

Andrew Geon [0h32m31s]
Highway 36 Lake Elmo Avenue Project Update: Keats Avenue Access and Allowable Working Hours

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?

Mr. Stoopa, City Staff [0h43m51s]
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.

Council Member Jaguchich [0h48m39s]
Short-Term Rental Discussion

I 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 nothing. I don't want it everywhere. I would want it a specific limit, specific zoning.

Council Member Holtz [0h49m25s]
Short-Term Rental Discussion

So I kind of like to have some guard rails on it. But I also think sometimes that government should just stay out of some of those things.

Mayor [0h51m38s]
Short-Term Rental Discussion

This process is really meant to take all of those puzzle pieces and bring them together into our uh an overall look of the the city as a whole.

Finance Director Hadler [1h0m45s]
Strategic Financial Plan Overview and Foundational Assumptions

I want the city to be sustainable 25 years, 50 years from now. And a really large portion of that is going to be making sure that we plan ahead for those financial investments that are needed um especially for our infrastructure.

Finance Director Hadler [1h5m27s]
Strategic Financial Plan Overview and Foundational Assumptions

I think one thing to consider because I mean when the mayor and myself and a previous council member joined, you know, we were 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, two years to compile this. I I don't know what what you have then for moving forward. We'll 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. here's the reasons why certain decisions were made and here's how this affects this because usually when when I didn't run for council to be like I you know this topic we ran on for various reasons for but not necessarily to discuss the ins and outs of this exact topic.

Council Member Holtz [1h13m18s]
Strategic Financial Plan Overview and Foundational Assumptions

Councelor Hearn had a concern about just the overall magnitude of it, right?

Mayor [1h20m23s]
CIP Future Project Discussion

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, Engineering [1h21m54s]
CIP Future Project Discussion

We have almost $4 million in debt service, a great portion of which is related to streets. We have $4 million a year in street construction. That's $8 million for streets and we have $600,000 for maintenance. We have close somewhere between eight and n million we spend every year on streets one way or the other. and we have 6 million we spend to operate the entire rest of the city for operating people person. So it you know it it seems like there's this imbalance there somewhere.

Council Member Jaguchich [1h23m31s]
CIP Future Project Discussion

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 it's it's a high level placeholder.

Council Member Holtz [1h24m53s]
CIP Future Project Discussion

Ordinances & Resolutions (25)

City CodeOrdinance

Governs allowable construction working hours.

State StatutesOther

Protections for River Valley Church in property acquisition.

CIP (Capital Improvement Program)Plan

City's 10-year plan for capital projects and funding strategies, including $5M for TH36 project.

MDOT's Cost Participation PolicyPolicy

State policy governing MDOT's funding for local frontage road construction when trunk highway access is eliminated.

Zoning CodeOrdinance

City code currently prohibiting short-term rentals.

State Fire CodeCode

Governs occupancy classifications for lodging, impacting short-term rentals.

State Building CodeCode

Governs occupancy classifications (R1, R3) for lodging, impacting short-term rentals and ADA compliance.

Bed and Breakfast OrdinanceOrdinance

City ordinance allowing owner-occupied bed and breakfasts.

R1 Occupancy (Classification)Other

Hotel classification under building code, requiring ADA compliance.

R3 Occupancy (Classification)Other

Typical home classification under building code.

Hotel/Motel Definition (State Statute)Statute

Washington County uses this to license short-term rentals.

Performance Standards (Stillwater)Policy

Includes rules on private events, maintenance, parking, and a 'three strikes you're out' nuisance policy for STRs.

Transient Lodging Ordinance (Oak Park Heights)Ordinance

Oak Park Heights' approach to short-term rentals as Conditional Use Permits.

Strategic Financial PlanPlan

New city plan to analyze finances holistically and guide long-term fiscal health.

Vehicle and Equipment Replacement PolicyPolicy

City policy guiding replacement of city vehicles and equipment.

Pavement Management Plan and Street CIPPlan

Feeds into the overall Capital Improvement Program for street maintenance.

2025 2026 Strategic PlanPlan

City's strategic plan informing annual budget items.

Fund Balance PolicyPolicy

Dictates how much money the city holds in specific funds.

Compensation PlanPolicy

Guides employee pay within the city.

Public Works Staffing StudyStudy

Recent study informing staffing levels in public works.

Admin and Finance Staffing Study (2022)Study

Study guiding administrative and finance staffing, now fully implemented.

Utility StudyStudy

Basis for revising development projections related to water and sewer revenues.

Fund 409 (Infrastructure Reserve Fund)Fund

Specific fund analyzed in financial plan scenarios for infrastructure projects.

ULI Urban Lane Institute tab presentation on the 180 acresPresentation

Upcoming agenda item related to a large land parcel.

RLS number 132Other

Registered Land Survey, a continued item from a previous meeting.

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