All right. Okay. We're talking about the old city hall tonight. Um, we give a quick background on the old city hall. Uh, city hall was built in 1986. It's uh almost 3,000 square feet on a 1.5 acre site. As you know, we've moved into the new building. It's been leased, but it's currently vacant. And there's an old space needs study that was sent out with the packet that discusses all the issues that we have with the building. So, last time we had some options. This time we kind of paired it down a little bit looking at option one, demolish the building, expand parking, two, lease the building to a business. Um, we could keep parking located in the back for city hall and build a new parking lot in front, keep the building and revisit next year or monitor the school site and partner with future developers on that site. So, the space needs study was was completed and kind of big picture, the repairs are over 800,000. We could talk about that a little bit later, but there's a list of repairs. There's there's a lot of repairs. I mean, one of the AC condensers is from 1986. So, you're looking at Hback, electrical, sighting, roof, almost everything to get this ready. And the early maintenance costs, we had this on the slide from last time. just kind of shows you what we're looking at. Electric gas and insurance staff comments for option one. Just wanted to be clear talking to administration fire finance really like more parking would like you know would prefer to see option one demolish the building. We looked at the current city hall and the spaces required for zoning. It's 81 and the existing is uh 71 which includes the 12 at the old city hall site. So, um, options, we just have the pros and cons. This is from last time for demolishing the building, expanding parking. Um, and then two, we're just kind of going through this. Uh, I think one of the things the cons for two would be uh just some of the issues with the access for fire when businesses would access the site and then revisiting the issue and monitor the school site. So monitoring the school site just just so everyone knows the EDA um requested that the council u go to a workshop over the fury site and take that to a September workshop. So that's something that we'll discuss in September also. So this is the option for the parking lot from HKGI gives us 40 parking spaces. It slopes near the school site. So, this is pretty much maxed out parking on the site with connections and landscaping. And then the cost, you have about 35,000 for demolition. Could be more, but that's that's an estimate. In total, 291,000 to demo the site and install a parking lot. This would keep the parking lot in the back, but a parking lot in the front and then repair the building. This is just for the exterior, not the exterior building. This is just the outside. So you're looking at landscape, hardscape, it's 217 to move forward. And then we looked at commercial value and leasing. So want to introduce Scott Kragnus from Metro East. He did a broker price opinion has looked at the values and what we think we can see from the building. So, we're looking at a building value was in your packet from 47 about 473,000 to 50 555,000. >> One thing that want to bring up with this is for new construction. Is it 450 a square foot to build brand new? So, you're seeing really high build cost right now. >> Really high build cost. Yes. >> Yep. So, and if you want as a you wanted me to jump in here Jason a little bit. Yeah. Go ahead. So when I taking a look at that building over there, one, it would be higher, highly desirable if it were on the market right now. If you were trying to lease it and or sell it for that matter, I think you'd find a lot of folks very interested in it. Businesses and whatnot just for that value. You know, you're coming in, it costs by the time you acquire some land, but acre and a half's probably about $500,000. You're going to put 450 a square foot. It doesn't take you long to get to $2.5 million, right? So it's small in size. For some people, that's good. We are finding users in that 4,000 and under. Lots of interest in that type of product. 7,000 when you get into that realm, maybe not so much. So then you ask yourself, you know, if you wanted to sell or lease either way, you would have you'd have some improvements to put in. Um, a lot of tenants, I think, because of that 450, we could get them along for the ride a little bit to help add in with some of the tenant improvements. Although, you know, some of the structural things and electrical things and mechanical things the owners would handle themselves, right? But then you get somebody else paying to improve it. I think in any case, shape or form, you'd start at about, you know, I'd say easily it'd be more like 52 to 54,000 in net income. And what that would be is it'd be an easy building to have if you leased it, a triple net lease where you bring in a tenant, they have it, they pay all the bills. You would get reimbured for tax and insurance. They'd handle their own utilities otherwise and away they go and they would have it 5 to 10 years. And early on it wouldn't pay you much as far as income because you you'd be putting 120 to $200,000 into it. However, over time it's just going to grow and grow and grow. your rents are going to increase by two and a half to 3%. Maybe even more in Lake Elmo. Highly desirable community. It's growing, things like that. Um, and it'll just keep growing and the building will keep appreciating. And if you look at it over a 30year continuum, the building runs up to about $2 million. Rents will be at about $95,000. So, all things being equal, at that point, you're in a much better position. Although, it takes a little while to get there. And it's that's no different than if you had a an investor doing the same thing. In the first 10 to 15 years, you really don't make a lot of money and you're hoping for the the big shoe not to drop, but then it starts to become your annuity for a retirement is what what we see a lot. But um currently on if you decided to sell that land, which you have many uses, I don't know if that would be in there or if you wanted to lease it for a while. I think there it would be quite attractive to a lot of people as improved andor as is. you're just gonna you're just gonna flex your price point based on what you're getting getting given. You know, >> one one thing just at the bottom of this this is looking at a tenant buildout that we discussed of 150, but with a deferred maintenance 500,000 minimum going into this. And one of the our concerns is if we do hold on to it and lease it and not put a considerable amount of money into the building, we could have issues, you know, two years from now and then we constantly are trying to fix the building. So it becomes a maintenance nightmare. So this is just operating income for the first year. So we're looking at rental income around 47,000. And this is kind of like the best case scenario. Um gross 43. Um once you get down to the expenses, we treated the debt service. you'll see net operating a little bit above 39,000 but the debt service basically what I took was half of the outside which is like 220 110 because some of it's going to go to the city hall so basically 610 of debt service treating it like debt service I believe it was at a 6% rate or five and it's amateurized over 30 years it gives you a yearly payment about 39,000 for the next 30 years so you can see the cash flow your negative cash flow in year one >> but >> that cash flow doesn't include any maintenance costs for the building. >> They would provide the maintenance, but we would have a reserve which I think is low for this, but it's putting a like a 2,000 a little bit over um 2,000 just reserve for the building per year. So, you know, we have some numbers that we probably want to address. So, >> but they don't have any maintenance costs, just reserves. The reserves are for large we that would all have to be negotiated. So like in this they would maintain maintain it through the term right but these are reserves for like large >> issues. So tenant would maintain >> I think we discussed like we could not have reserves and place all maintenance and repair >> it would I would in a triple net scenario and let's just say we get that tenant where they come in and they want to handle it. They would handle the maintenance. They do anything. If a window breaks, they fix it. They call their own contractors in, they handle it. They would even pay the maintenance fee. So, you would get that in there. But now again, >> they're in how every in every investor or every whoever owns a property. There's different ways they want to look at it. Do you you know, do you want to retain that and say we have reserves, we're going to hold it over here. how your the accountants will kind of tell you maybe how best to allocate a lot of that that you the kind of the funds you collect for those types of expenses because in your invoice you know you're going to have here's your base rent they're going to pay everything you're going to say I'm going to collect this much per month in a tax and we're going to pay this much a month for common area expenses such as lawn snow those types of things because the city will want to handle that and just kind of reimburse yourselves for that so you're going to fill your pockets and then which you know if you want however you move it from one to the other I think you you know, that's a way that the finance team would be able to help do that and handle the depreciation of the building then at that point too after the improvements. I'm not sure how that would work, but I think you would be able to depreciate these improvements, how they handle it on a capitalized basis. So this leasing structure is best case scenario through year 20 looking at a cash flow of uh net operating income of 68,000 and cash flow right under 30,000 but that gets to year 20 and you're still amateurizing through 30 in this scenario. So um yeah that's that's how we kind of looked at that for the best case scenario. Um, >> so then after year 20, your debt service is paid off. >> So you're 30. >> 30. >> Year 30. >> Year 30. >> Yeah. If you run this at a 20 year, you're not going to cash up for 20 years, >> right? >> Yeah. If in a 30-year type scenario, if that right there, though, that's at year 20, Jason, I looked. So, in a 30-year scenario, some rough numbers that I plugged in, if you you looked at it, if you I would look at the appreciation, if it trends like it has the last 30 years, the building value would go from 1.95 in this range, 1.9 to 2.2 million, depending on a few things. I think your your rents would go up to right around $94,000 in annual gross rent at year 30 is where that would be. Your expenses are going to go up with that too, but you're going to push most of those off to the in >> and I believe since it's a commercial property leasing, we would receive taxes at the normal rate for that is something we talked about. >> Yeah. We're we're different though because we're it's it's non- tax land and so the county creates a >> what's it called again? >> I don't remember. >> It creates a tax for the the solder. So we we would want that on that they just paid that >> because that's similar to what we're paying on the agricultural land that we're renting. >> So and that just got we didn't know that so it got weird. So I' I'd like to talk to Jason about if we do this we want to make sure we structure the lease appropriately and have it have them pay that uh property tax or not property tax personal property >> becomes a personal property tax set up under a completely separate P. It's really weird. >> All right. That's the chart and the recommend. We're just looking for input too. I mean, last time we came um definitely had questions, financial questions. So, two questions. So, uh the rental income increase there, was that based off of a 2% per year increase? to 3% >> 3%. >> And and then I guess this is kind of going into maybe just like some thoughts and discussion is if we're gonna if we would put this type of capital into improving this site, I don't think we would want to do that if we were also thinking about potentially having conversations with the school five years from now. Um and maybe you can speak to that too. You know, like often times when you buy a house, if you try to sell within the first 3 to 5 years, even if you make improvements, you come out under. You have to hold on to it for if you're looking at Yeah. If that's in the in the one to five year plan, I would definitely >> sit back. You could try to lease it as is. Don't put, you know, >> get it so it works. You turn the air on, it comes on. You turn the heat on, it comes on. You don't need to I mean, it's not bad the way it is. I mean, we lease a lot a lot, you know. It's not venting. I just you look at you can see you can see >> people know people they get a it's dated there's some parts of functional obsolescence about it but it's not in horrible shape. It doesn't leak. It doesn't stink. It's it's it's okay. >> You could get a little bit and just you know maybe put a little bit in here and get someone in there shortterm even on a year to year or three year with an you know give yourself some flexibility and figure this piece out. But I guess maybe >> I wouldn't spend a bunch of money on >> Yeah. But I guess my point is is if we're going to go this strategy, I think we have to be committed to it long term. This can't be a hey, we're thinking about, you know, possibly working with uh whatever happens at the school, whatever happens at Fury. If we want to potentially do that, then I think we need to just wait. I I don't think we put money into this thing. >> Can somebody talk me through what what that might look like with Fury or the school district? I just I don't can't visualize that working together. >> Doesn't the community group have a purchase agreement on the on the elementary school? >> Remember? >> Yeah, I don't think they do. I think they were talking, but I I believe they've so the community develop they do have the school site, I believe, locked up and in contract. I don't know that it's closed yet, but I do believe it's in contract. The fury site, I believe, is still not in >> right. I was talking just the school site itself. Yes. So yeah, I I can get jump in here. I talked to the school today and Brian Zeller. So we're going to meet um with all the parties. So when we have the workshop, everyone's on the same page. Uh what we're pitching in ter to the council is that it really makes sense only makes sense if we get the master plan component to it. So it would be purchasing both sites and then master planning that site and then having a area as an option for the valley community center. >> Okay. and they would have an option to purchase and then we would actively go find developers to purchase and develop the rest of it. That's that is what you're going to hear at the workshop. Did the district give an indication they still are pursuing the execution of their agreement? Because they've had they've had close sessions on it recently and the agreement still has not been executed and closed which >> they have a purchase >> they have a purchase agreement but it has not closed. >> Right. Right. We're meeting with BCC next week I believe so we can get an update from BCC. So with the after reading that building report with bathrooms aren't aren't code conforming. They're not handicap accessible as I recall. >> Correct. >> And there's some other things. Could we actually lease that building out with with the with the code violations that currently exist? >> It's been vacant for a while >> and so depending on on the length of vacancy, you know, if it's vacant for more than I think a year sits in my mind, you have to bring it up to code. >> Okay. So here's what and I'm not sure it varies a little bit. Um in some municipalities it could be grandfathered in. You know I I lease a lot of old buildings downtown Stillwater. Those are grandfathered in based on occupancy loads. They say you're you're going to be okay with these. If it's retail, it's different story. If it's office, this is not a retail building. >> Yeah. Okay. >> So I think you'd be fine. But like let's just say some fitness center or dance company wanted to come in. It probably wouldn't be a good fit. Although they may want to because of that reason. if you start changing that use. Although right now you could spot you could zone it however you want to you know I think right now it's kind of the last thing it was was automotive for that. You know the county right now is looking at it as something like that. So as long as it's kind of a low density office type situation I think it should be grandfathered in but I can't say that we're certain. >> So we can get back to you on this too. Like if you do that's the challenge with renovating once you start renovating you would have to bring it up to code. >> Then you have to bring it up to code. Yep. The other thing that was in there was it talked a lot about the outing being in bad condition, rotted in in areas and that um is there something we have to do there to protect the structural integrity of the building >> given we have cedar sighting that's rotted >> you can just take a look at they'll look at it you can take the siding off often times the underllayment's still there >> and the structure is probably fine >> I but we'd have to do something with the rotted sight >> we have do you'd replace it >> yeah and he ran he did some of that stuff right up there at Well, I think the the siding ended up being much better shape than they originally thought. So, they used a lot of it and replaced some of the rotted boards, which I think need to stick out. But that's pretty common, too. >> Very common in most of these buildings. Yeah. >> One of the underlying variables here was the the need for 10 additional 11 additional parking spots. I guess a question I have, we have no parking on Leverne >> momentarily. And that so that was my question like are we able to I guess the question would be for chief. I was under the impression that we added those no parking to help the turns of the engines. >> Is my memory terrible? >> No. I think when we uh got onto the site the I believe Leverne was already no parking. >> I think so. >> This is right around the time when I first got here. So I think Leverne was already no parking. But we made sure that at least there's I mean I I'd have I' now that the school's out of there advocate to have lever at least partial parking on one side but to try to keep our corners free so we have that truck movement in and out. >> Could we need that? >> Could we like paint 10 or 11 specific spots that can form and will not be a problem for you but to say here are 10 additional spots >> like there on Lake Elmo Avenue. >> Yes. where, you know, fits a minivan or a pickup truck, therefore it might fit everything else. Now, here's those T. I I mean, I have other thoughts with the building itself, but to me, if it if it works for public safety for our fire trucks, I think that is a very good pay for the paint. >> You're talking on Lever. >> Yeah. >> On the east, probably on the east west. I don't know which side would work better for turning. something I'd have to work with engineering and public works on to see what what side makes the most sense. The west side does. >> We kind of about 12 spaces. >> In terms of like the the site itself, I I have no interest in trying to go 20 years out to have a net cash flow of 29,000 when there's still there's always going to be other other variables that we can't control for during the next two decades. I don't see a substantial value gain there. I I am fine if there's someone who wants to lease it for yearly or for a three-year thing, but I I think the the thing that we don't know is what's going to happen with Fury. We don't know what's going to happen with the school district site because they have not closed on it. Um so I that's why I could see like a one to three year and if something happens where it's a group effort, then it does. But I would at least want to hold open that option to see, you know, because things take time. It might take two or four years for something to happen with Zeller, with the district. But I I would not want to enter into a long-term contract that prevents us from having an acre and a half site that's a part of it. >> If we were going to do even a a three-year lease, would we still need to do the improvements though? Some of the improvements that we talked about, >> the HVAC, electrical. >> Yeah. Basic. Yeah, to dubtail on what you said, you wouldn't want to do any remodeling, but you could do some, you know, replacing stuff. You could have an H HVAC work done, things like that. >> And then if the tenant with the triple net wanted to do stuff, they could do stuff. >> Yep. And then if they need to bring the bathrooms up to code, then that's on them. >> Or they can leave them as is. >> Or they could leave them as is. As long as their use works and they're not improving it to the point that it's going to require that. But if you have to pull a permit, get an inspection, I think they're going to say, "All right, EDA, here you go." >> Yeah. I think the other thing that's important to remember is if you go that route, it's not free because the parking lot is going to be around 220. >> Yeah. True. You need parking lot. >> So all those the the numbers that you initially drew up on the presentation are still we would have those expenses >> some of them. So, so if you did the 20 year, my estimation is like, yeah, it would be 610 because you you would cut that parking lot like value in half, but it's really 220. So, um you would end up spending 220 plus 500 in 20 years. And then if you go this route, you would just spend 220. >> You know, I look at and say, do we really want to be in the real estate business for 5,000 bucks a year of income? I mean, if we if we think the space could be used for office or someone could lease it, we should sell it. And if we want to hang on to it, you know, probably just demolish it and leave the site vacant to you determine what's happening with the other sites and then decide what you want to do. But I I don't see that there's that we we get a lot by renting something out. We get 5,000 bucks of income over, you know, over a year for the first five years. It just seems like a lot of anguish. In one of my previous positions, we had a 77,000 foot office building. We ended up inheriting basically and running. And I can tell you, it's no fun. Tennis can be great and tennis can be really difficult, but you know, you call you at 3:00 in the morning, you know, some there's alarm going off or whatever it is. And for 5,000 bucks a year, I just don't think it's worth it. So G given that we don't really know what's Fury and the school district site because the school district site basically owns that field and property behind between Fury and the the old office building. What would people think if we demoed that building? seeing that I'm hearing people not want to get into real estate, which is a valid point, um, but not put in the full parking lot, not knowing what's going on, >> right? >> But create some, you know, gravel type surface for some additional parking. And then when we know what's going on with the adjacent sites, if this plays into it or not, then we can So I have kind of a middle of the road thing until things get firmer uh to the to the south and the the west. >> Did I read right demo was like 35,000? >> That's the projection. It could be a little bit more though. could be. >> And as part of that, can it literally be like putting down class 5 over the demo part? >> Not dig it out, right? And then you just got to grade it and then put some class five >> because again, it's not a permanent parking lot. Might be. Probably might not be. So yeah, I I'm fine with that. >> Might be the smartest thing you've said all year, mayor. >> Really? >> Might be. >> Might be. >> Is that Jason? Is that allowed in our chambers though? We tried to do that in another city and they we couldn't because we'd be violating our own standards. >> I mean it would be temporary. So >> we'd grant oursel a variance, >> right? >> Another thing um that we should keep in mind is that um that old city hall is used for community use. So uh according to Julie, there were 24 reservations last year plus 26 additional reservations for the ski patrol last year. And so it'll probably impact the >> what ski patrol is doing like they were doing training teaching. >> Yep. So we'll probably see without that building. I would assume that we would see an increase in requests to use this room which we um balance with staff's availability to use it too. >> Yeah. >> We might have to at some point revisit the room use policy too. >> Yeah. And see how it works out. I'm not saying it's a perfect situation, but just trying to make sure we don't shortcut ourselves from an opportunity that could happen. And I'm in agreement. I don't I don't know that we want to be putting money into a building for, you know, for a budget that's in the 9 million and probably growing. that that's really worth uh sad to say worth worth the time or effort to to do that. Um so I don't know that's my thought. >> Another maybe short-term gap alternative would be to offer to lease it out for a three-year term while the school and the fury lot trying to figure out what they're going to do. Um if that would we're not going to make a lot of money but we could ev our out of pocket while we see what's happening. >> Well we minimize out of pocket just demo it for >> I agree. I agree. I just I'm listening though to the other things saying well maybe you know keep it for a couple of years and then see what happens. And >> somebody's going to have to call Steve Dap though and let him know if it does get demolished. It's not going to be me. Twothirds of this room does not understand what you said. >> Three4s. >> Three. Yeah, probably three. Oh, but maybe you and me. >> I don't know. >> I'm okay with just a demo, too. Yeah. No, I think it's a great idea. I think keeping as much flexibility as possible while Fury and the school figure out their their thing. I just >> I think that's the most important. Does that kind of get to your point of not doing anything permanent till we figure out what's going >> in agreeance of government shouldn't be in the uh business of running a business? >> Yeah. >> Right. Yep. Things you do well and things you let the professionals do well. All right. Cool. Is that enough to go on there? Sure. Great. >> So, thank you very much for your time. Appreciate it. >> Thank you for having me. >> Yep. Uh, next on the agenda, we have evaluation of requestbased parking restrictions. >> Oh, speaking of parking, thank you. >> All right. Uh, mayor and council members, uh, recently cities received several requests, uh, from residents asking to either install new parking restrictions or remove existing no parking signs. While cities establish a parking design standard based on street width and classification, those standards are primary applied during construction of new streets or when streets are fully reconstructed as part of the capital improvement program. Uh currently city does not have a formal process for evaluating residents requests on existing roadways. Uh in many cases, existing parking restrictions were installed years ago for reasons that are not always documented. Um they may have been related to traffic operations, emergency vehicle access, site distances, um concerns or nearby amenities such as parks or lakes lake accesses. As a result, it can be difficult for staff to consistently evaluate new requests. Uh to address this, staff is proposing development of a formal administrative review process. Under this framework, the public works director would evaluate requests using the city's current parking standard along with professional engineering judgment. For requests involving a limited area, such as a single intersection or location, with documented sight distance concerns, staff would review requests and make a determination administratively. For requests that affect a large area, such as entire block or neighborhood streets, where staff determines the request has merit, the proposal would require a petition from affected property owners and a public hearing before the city council prior to any changes being made. This process would provide a consistent, fair, transparent method for evaluating future parking requests with while ensuring a larger neighborhood impacts receive public input and council consideration. Tonight, we're just staff. We're seeking feedback from counsel in this proposed framework. >> So is that um from what I heard what I think I heard primarily occurred just during when things are being constructed. So, uh, I'm sorry. The first one came through was in Lake Jane, and that one there's construction going on right now, but I think there's other underlying issues there that the homeowner was requesting. Um, smaller big lot or I should say big house, small lot, no parking in the driveway. >> Got it. >> So, um, that was that particular one. The other one is um in my opinion is from construction a lot of construction vehicles because when you get into where particular areas there's contractors parking on both sides of the road >> which make it difficult for passing >> the areas of the neighborhood or the development where I've driven through you don't have the cars parked along the road like you do in the other areas. Okay. And right now these requests are coming by phone, by email, word of mouth saying city, we need you to either add parking restrictions in case of the construction where there be park on both sides or we don't like the rule that's was there since 1992, but we don't know why the rule was put in place in 1992 and it may or may not conform with our current standards. So yes, coming through email. Most of it through all of them been through email. Uh particularly like the one on uh Lake Jane, nobody can find any documentation or anything like that was we're just assuming that particular because the location of the boat launch that nobody wanted all the boat trailers and trucks and everything parked inside both sides of the road. >> You assumed correct? Uh, no, that was that's for there, but the other areas had just been everything's an email. I personally like the proposal. I think it makes sense and I would support it. >> I like the idea of if there is a concern um and that concern could be addressed by current code. I I think it's very reasonable. Um, I just want to have some sort of fail safe for maybe other residents around that area if for some reason they have the differing opinion. Um, and so I guess just to really understand like what that administrative process would be and does that include reaching out to properties >> that are adjacent? >> That included a petition from the the neighboring properties, right? >> Yes. Is that just for the long stretch areas? >> That'd be >> that'd be for the streets affected for the residents that be on that particular road. >> So if the if the request affects a small area such as a problematic sighteline or review by staff should be sufficient to make a recommendation for posting a restriction. So that would just be no petition needed. >> That is correct. And that would be brought up by staff finding that issue or because somebody emailed in that issue. >> It'd be a request from a resident. Then staff would go out and see if there is a sighteline for example issue. >> Got it. And so there would be no question about grandfathered because of previous variances when that decision was made. It would just it would happen. >> Yep. It'd be up to the staff. understanding if the resident was unhappy if your resident was happy with the staff's decision, they can always come to the council meeting and voice their opinion. >> Yeah. >> Nothing prevents that from happening. >> I'm just trying to think of the situations where I know like we've done that, right? Where we've >> said, "Hey, we're not going to put a a no parking location here even though it was recommended in the presentation." And for some reason, you know, during that discussion that maybe was or wasn't recorded why we made that decision, it was made. And so I'm just trying to think because I I I like it, but I just want to have some sort of protection there of well, if council made this decision for a reason. >> I don't recall us not agreeing to the no parking in the area. I think it was the amount of signage that was in like in uh the Fields of St. Croy where they got those one-way loops and like the plan had signs at the beginning and the middle and the end and the end and there was just a lot of signs and I think we limited the number of no parking signs and kind of the same thing with culdeacs say no parking starts here no park we don't need eight signs in the culdeac I don't remember us going against the I could be wrong >> didn't we in Tana Ridge for Culdeac say yes. >> Well, we stopped parking. We took parking to a certain where the chief said that our vehicles need to get to here without vehicles and then from there it was allowed. >> So, this would just be more for correcting errors that were maybe made in the past. Not even errors, just >> we didn't have these policies in place and so it just never was even put to council. There should be parking here. >> Yeah. I I don't I don't know why. >> Chief, >> you you grabbed the microphone. >> I was just thinking the the >> when we've gone through Fields and Tanner Ridge and some of these other ones, a lot of it too had to do with Washington County and their just enforcement actions, right? >> They didn't have the proper signage. They couldn't enforce parking because of the uh >> the types of signage there. So, I think us as staff, we're just looking for a formal process so we can address everyone's concerns. >> Yeah, I like the word. >> I mean, from a process standpoint, I guess I would be curious in your thoughts just to maybe objectify a bit more what constitutes a longer stretch. >> Yeah. >> X number of houses or X number of feet, whichever one is met. And again, is it a thousand feet, 2,000 feet, 5,000 feet? I can't speak to that because you you guys are the ones going out and observing and hearing what the complaints are. um or where that threshold should be where it becomes something where it goes through a petition with a public hearing. >> I think even coming up with that though is a fairly subjective >> criteria. >> Correct. But I would rather have it identified than to simply because then we can tell residents look this is the threshold. And I think that's at least I can I can say that >> has to be longer than the uh 90 ft in front of your house. >> Yeah. And I again I don't know if I necessarily care tonight what that is, but I would be interested in hypotheticals. You know, a quarter mile or five houses, whichever one it hits. >> Maybe make it certain number of parking spaces. >> Well, they're all 20 ft, right? So, if you want 100 ft, you have five parking spaces, but beyond five parking spaces or 10 or some number of parking spaces >> that that are being requested. >> Well, because there's be there's going to be a time, right? there's going to be a replacement for you at some point. You're going to retire and someone else may have a different perspective or view as to where that threshold should be. And I as a resident would want to be consistent from Pete one to Pete 2. And I I think that's fair >> because you don't want to repeat. >> Oh, dear God. >> That was that was probably your best joke all year. >> Yeah, that was your That's the smartest thing you said all year. Does uh council have any concerns about um if a request were to come through for adding no parking um and the neighbors in the sublength are all okay with it, how that might impact a street over if they don't have that no parking like now everyone goes and parks there. >> Well, I I hear that. I guess what I was thinking when was a gentleman that came from the Royal area and cars parking on both sides construction wise. Um mine's kind of locked on that. They're just can't have park further from the house they're working on as opposed to both sides. We don't have a lot of grid network streets in the city. few horseshoes. >> Mhm. >> Everything's really curve linear. It's really a geography of nowhere, if you will. But, uh, I digress. Um, I I I I guess I don't see that. It could happen like 32 if it's down near the lake or in the old village here area, but I think those are already pretty well established. And again, something could pop up that would totally destroy that theory. >> I mean, they go over the next street over and park. It's a public street. Parking >> is allowed. >> I mean, >> if it's allowed, go for it. >> Yeah. >> Yeah. >> Whereas this, we're talking about issues where it's a public safety issue for parking to occur when it shouldn't. >> Yeah. They can't just petition to have no parking because they don't want people parking. It has to be a concern. >> Yes. So then after let's say that construction is completed and the regular no parking. So are we going to >> would then I'm imagining in your professional judgment would put it at where it's expected to be no parking after construction is done. Right? >> You following what I'm saying? >> No, I'm not following you. So let's let's say the city say, "Hey, we want no parking here. Construction's done." Okay. The park no parking was kind of temporary during the construction portion. Does does the no parking stay in place or does it get pulled or how does that >> I'll kind of jump in here, Mr. Mayor. Um >> the parking we're talking about is not temporary. It's permanent. So, it goes in. It's an enforceable sign. >> Okay. >> To get a ticket. >> Yep. >> All right. Fair enough. Thank you. >> Just so I'm clear, um, what we're saying though is that anyone can do a request uh for a long stretch of a neighborhood road for say no parking. And then this process shows that there will be a petition and a public hearing, but it doesn't have to be relate. I mean, they don't have to cite their reason, right? They could just not want parking in front of their house and they could bring that. Is that >> No. Well, that's >> I think we'd want a reason. >> Yeah. >> Is that a reason? Well, I have a neighbor that doesn't like people parking in front of her h in front of their house >> and it's been explained multiple times. It's a public street >> there. At the time there wasn't a no parking. Now there is no parking there. >> So like but um did did that work for removing no parking as well? >> Yes. >> So it's it's both ways. I personally would need it to be it's a public safety reason why this change needs to occur. >> Yeah, >> that's the only because otherwise it's a public street. >> You leave it up to the professional judgment. >> Yes. >> Y I think that's what he's stating. >> Yes. >> That's the way I read it anyway. >> I think it makes sense. It explates the process and if there's a sighteline issue or a public safety issue, I don't know that we need to decide that no parking's right. This will be >> Oh, and as intellectuals for >> a sighteline being a type of public safety issue. >> Yep. >> Did that answer your question? >> Yeah, I can work with staff on it. >> But I was looking at as two separate things. Like if there's a sighteline issue, then staff can make a recommendation based on their >> judgment. But we do have a process for people that this would have a process for folks that just want to come in and site their own reasons for why they want to request either no parking be added or no parking be removed. >> And then that would be a petition amongst the residents in that area. >> Yeah. >> Right. Okay. We good? >> I believe so. All right. Let's move on to item four. draft capital improvement program and strategic financial planning related to CIP. Director Hadler. >> All right. >> I'm loving the Windows P action. Nick, thank you for that. I'm gonna pass. >> Good hockey around. Okay. So, we're talking about the >> draft of the CIP as well as some of the strategic financial planning mostly related to the CIP. And then at the end, we're actually going to throw in some discussion about the storm water funding for streets, which is related to kind of both of these issues. Um I'm passing around the list of items just for 2027 because that's one of kind of the pressing um one of the more pressing questions is do we want to change anything in the CIP here in the next few months. We don't adopt this until December. So we've certainly got time for additional discussions. Um I'm going to keep these discussions fairly high level. So feel free to interject with any questions if there's anything that you want to dive in deeper. Oh, first and foremost, hold on. Um you hopefully me uh noticed in your um packet that the CIP is now a website. >> Um and hopefully you were able to peruse through that site um before the meeting. So, we have it broken down very similarly to the PDF version of the CIP. So, we've got admin, finance, building inspections, fire, and then public works. And public works is broken down into um various segments from there. So, back to our presentation. Um, again, high level. Where's my uh we have a total of 156 projects totaling just over $137 million. This again, it's a 10-year CIP. So, that's over 10 years. Um, we obviously have one very large project in our CIP being the water treatment plant. So, I like to show what the CIP looks like without that. So that's 155 projects totaling just over or about 87.5 million. Um admin finance building city hall. We we kind of combined all of these because there's not a ton of uh of things and again I'm trying to keep it high level. So um we have a total of eight projects totaling 410,000. The only um purchase in 27 uh 28 is one vehicle replacement in the building department. Um I'll mention right now the city center um this building committee we are building out that CIP. Obviously it's a very new building. Um so the number of items will increase uh in the CIP as we move forward and are able to build that out. fire um typically is vehicle and equipment. Um so they have 10 projects totaling just over three million in the next 10 years in the 10 years and their major expenditures for 27 and 28 are the ladder replacement um and the turnout gear and I believe you were talking more about the ladder in August. >> Yeah. So, my intent is to come back in a future council meeting with kind of where we're at with the ladder one project. Um, now that we've had our um about eight months of our ladder truck committee to really talk with three manufacturers, get some current specs and current pricing and see where we're at with that project. So, I definitely be coming to you um sooner rather than later to hopefully get your approval on on where we're at with this project. Um where we stand now in ladder one. Last year at this time, we talked about a project price of 2.2 million. Right now, we're around 1.925. Um, and and that's given three truck manufacturers and our truck committee a lot of time to kind of dive into to the truck. So, that's kind of where we're sitting right now. Um, and that's the number we're using for for that >> this version, right? Um so while the latter one uh CIP uh date is in 20 28 to9 will he'll be coming to you for approval actually this year. So just a heads up on that. >> That gets us in line for a 29 delivery. Do you want me to talk about how we broke out? >> Okay. >> We're going to move on. >> Lots to talk about. Okay. And that brings us to public works. So, as you know, public works is really the combination of five departments. So, we've got streets slashgeneral public general public works, um parks, water, sewer, and storm water. So, when we refer to public works as kind of one of all of those for the CIP purposes, if we break out, we remove admin and finance, the building department, city hall, and the fire department, 96% of CIP dollars is in public works, one of those five departments. And that is even without the $50 million in the water treatment plant. So for the CIP breakdown, um this is the same I as I had done it last year. So we uh look at public works vehicles and equipment um public works buildings and I call it like facilities. So it's like the areas around those buildings and that is only the buildings that are not associated with utilities. So, if it's a utility structure like a um somebody give me an example, >> lift station, >> the little the wellhouse or you know something that's a building related to utilities that's in the utility department. Um parks kind of similar if it's a um a park pavilion that's in the parks. And then we have infrastructure. Infrastructure is divided out into streets, water, sewer, and storm water. So for the total CIP we're looking at uh almost 134 million and then for 27 and 28 close to 22 million. So quick checkin just regarding CIP project projects themselves or the CIP overall before I get into the funding and the C the uh strategic planning. >> Well, I'll just I'll give my feedback right away. um it's consistent with how it's been in the previous years and I've struggled with this every time we come to um the budget and CIP and I've kind of tried to go at it different directions as far as talking about line items when we get to the actual budget. Clearly that was not a good approach. Um last year I looked more at, you know, directing that um focus more to the CIP. Um and I think I'd still like to continue going more that direction. I feel like what we're doing here is we're saying, "Hey, these are all the projects and then let's raise a levy based off of that." I'd like to take a step back kind of like what we did with what you're presenting later here with the storm water where there's a percentage where you say, "Hey, you know, we're trying to catch up. We're going to look for this 8% increase over the year where the CIP is growing at a significantly higher than 8% per year rate." So I I my approach this year for staff or my hope would be that we could ask to have more of like a decision around well what are we as a council okay with accepting as that increase from year to year and then staff has to figure out what that is. Um I I I don't want to get in the business of looking through this line item by line item. I know that's been asked of us. Um, but every time that that is asked of us and then we give feedback, there's just push back on it of why each individual item is needed. So, I I understand that. I think it's just it's we got to find a way to balance how much increase we want each year in spending. Is that amount that we're currently doing reasonable or unreasonable? I think it's unreasonable. I think we need to bring it down. And so, my feedback would be this needs to come lower. My honest opinion would be is that we aim for um inflation rate, you know, maybe plus one or two percent is kind of the annual increase that we're looking for, how much we're spending in our CIP, and then staff has to figure out how to make that work. Um if there is something for some reason that that's not going to work, kind of like the discussion we've had in previous meetings, it's like, okay, well then bring that to us. Show us why everything why why it is absolutely necessary that we go above that amount this year. show us, you know, like a chief with the the um with the firetruck. It was a perfect example of it was brought to us and and yes, we did go and spend that money early, but there was a very specific reason for it. So, I'm not saying we never can go over it, but I think we need to have a cap because otherwise the spending is getting out of control. And so, that I guess that would be my feedback is the number needs to come down. If you want me to put a number of how much I want to see it come down by, I'd say, hey, whatever we spent in 2025 or 2026, we can go up by whatever the inflation was over the last year, maybe plus one or 2% just to compromise. If you want me to put a number on it, but I don't want to look at any of these individual line items and say this is the one I don't want. That's for we'll set the policy on how much can be spent and then with that amount of money that capital that's available to be spent staff can figure out how to spend it. If I could just provide just a little bit of feedback on that particular topic and I would love that in an ideal world um the struggle and part of the um reason that we really are trying to look at this strategically is that capital expenditures typically are not in a smooth uh you know incline across time. We we would expect actually that they go like this which is why we're segregating these all out into different funds. It used to be that so much of the capital stuff was built was um paid out of the general fund which meant our general fund expenditures were going like this. And so what we're trying to get is our operations. We know that in a growing community our operations are going to increase. So our strategy is really to like try and keep that increase as as even uh you know an even trajectory and not jumping all around and recognizing that capital purchases by virtue of being capital purchases are going to kind of pingpong up and down over time depending on the year. And so we can we can talk about how um we want our maybe not the expenditures but um the uh revenue side of that. So the tax levy to to be increasing at a slight pace and that's definitely the goal. So that comes back to that strategy um that we'll be talking about. We're trying to get to a point and it's and it's going to be a few years to figure out what that levy looks like so that it's kind of the I'm calling it the leveling out point where we're getting the capital levies to the point where we sort of there's this predictable revenue stream over time and we get to the point where we can hold that steady over the long term so that again we're not having to to jack up these levies over time. Um like I'm going to skip ahead. >> Well, and I mean because I and I didn't want to jump to that because I know we're talking about that, but I mean that is my feedback as well and we've had this conversation before. It's been all presented. You did great work with showing us originally, you know, based off of kind of the numbers that you were originally saying that you wanted to put in those funds each year and how much we wanted to grow, how quickly we could get to, you know, our debt goal. I asked you, hey, well, what if we decreased that a little bit? You ran those reports for us. And again, I mean, I guess it is um it's a policy decision, but I thought those numbers when we decreased how much we were increasing each year of of those those levies, I thought it was still moving us very in a a very responsible direction at a very reasonable rate. Yes. Not quite as quickly as if we if we um if we increased the to the amount that you had originally proposed. >> Yeah. I thought it was a good balance of moving us in the right direction without also having the 20%, you know, tax increase that we were originally looking at last year. You know, we were able to bring that down a little bit. I guess >> that's the revenue side of it. Yeah. So, just just to clarify the difference between the revenue side of it and the expense side. So, >> yeah, >> I think on the expenditure side, you know, we look at the capital expenditures, it kind of fall into couple of different places. One is we have to do it because it's failing. You know, we have a sewer line, a water line, um I don't know, a building roof. You know, they they either have failed or on the verge of failing and we need to do it because we don't have a whole lot of choice. Um the other ones are, you know, the street maintenance program, we do it because if we spend $1,000 today, we don't have to spend $5,000 six years from now. So, they're smart decisions. You get more into the fuzzy stuff. So we pick on public course. We want to buy a new dump truck. Okay. So if we need to cut our spending, can we make that dump truck go one more year? You know, I mean, I think that's that's kind of the logic you have to apply to it. If the dump truck is really, you know, the wheels are falling off and we're putting more money in to maintain it, you know, then make sense. And I think that's our staff to is make those evaluations for us and come back and say, we look at these line items. These are things we think we we actually need. We could say, "Well, we don't care whether you need it or not. We're only going to give you three million bucks. Do the best you can with it, but that may actually mean we spend more money than we would otherwise spend." So, I think our goal to the staff should be when you look at these expenditures, are do they really make are they really absolutely necessary in this year based on those factors? >> And if they tell us they are, I think they've done a good job and made good decisions for us. Um, we could still say nah, you only get three million bucks, but that's never good management in my book. >> So, are the >> are the uh equipment >> turned off? >> Yeah, I had it off because I was coughing. >> Um, just quick question. The equipment expenditures that are in this currently are on the schedule for fleet redo. There's nothing new added that's not on the re recycle. There are a couple new items. Uh skid skid loader and a bucket truck. The other items are in the forestry mulchure is new also. So those items total up to like >> $530,000. So that's a lot different than what we had in our fleet. So there should be some discussion about why those items are needed and why you think they need to be in this year moving forward would be my suggestion. Um, are there things that we have to do like uh what is the street light replacements? Are those ones that we own that aren't uh XL or what's the scoop on those? >> It's a $100,000 kicker. >> Watch us. We I think that's one of those issues we need to revisit. So um we had planned them based on their sort of expiration date that um do you recall what that program is called with Excel? So when a a community a neighborhood is developed Excel or they install the lights and then they last for so long >> and so there's a decision >> there's like a lease period. Right. >> Right. So there's this decision point that needs to to happen. Are we going to replace and go on the Excel program? Are we going to buy them and own them ourselves? So I would say that is a placeholder at this point. >> So we haven't had that conversation yet. Correct. >> Correct. >> The conversation we had last year, we asked council if um you were interested in us exploring a separate street light fee to help fund these and the answer was no. And so then we started planning >> for these. And then the is that you um up there's one house that crosses the upper 33rd. Is there have we figured out an alter? Do they access the culdesac then in eastern village to get out? >> So yeah there this project is um for that access closure. Yeah this this amount in here actually is for preliminary engineering. This is a new this is very new. >> Yeah. um this is for some preliminary engineering to pursue a grant. So um the 80,000 and is um to do that work. Um and then I' I've got it on my spreadsheet here. I don't think you you guys are seeing it right now, but there's an estimate and this is just a very rough estimate of half a million dollars to to do the work. And that's going to a large part of that's going to be um property acquisition. >> Okay. Um but that 500,000 is intended to be we're intending to pursue a grant that would cover 80% of that cost. >> Okay. >> So while the 500 is the >> that's some rail safety program. >> Yep. It is it is it's it's a it's a it's a a state state grant. So the 80 grand is proposed now because it takes typically at least two or three cycles to be successful um with that grant program. >> Why are we pursuing it to begin with? It was an agreement to have the act grade for Parkway. You needed to close one. >> I thought we had already closed one elsewhere. >> No, >> no, >> no. This is we were allowed to build that that crossing recently. >> No, >> that kind of is is currently stubbed. >> That is the access point for 300 houses into downtown for pedestrians and bikers. >> Well, it just won't be a graded access, John. Is that the plan or is the plan to close the access? >> Well, the plan would you have to remove the the access so a vehicle can't cross it? >> It's a vehicle, not a vehicle cross. >> No, no, cars can't. We have boulders there to prevent that. >> Yeah. >> But again, we're three years old. >> Correct. But again, we're saying that this is I this is the first I' I've heard this. We the two neighborhoods, Eastston and uh PE Northport, that's how they get to downtown for events to go get coffee to go get their back cracked. Like that's where they go. Um but to confirm they would still be able to. It's just making sure that cars can never use it. >> Um I mean it's technically illegal to cross the train tracks on foot. you know, you're not supposed to be in the right of way, but I don't think the police are going to be standing there, you know. >> Yeah. Because we're not eliminating the dirt road on the north side that goes all the way east from downtown. It goes from the warehouses because the sewer line is there that provides sewer to the 3 acres. >> No need to. Yeah. >> So, the dirt road is still there. >> If there's access for like through it for maintenance purposes, that would remain. So, if you got rid of that uncontrolled section for the railroad, would that allow the trains to not blow their horn at 2 in the morning through >> No, they got to blow it because of Manning on Lake Dumbo Avenue, >> but it's controlled, I thought. >> But it's not it's not a quiet zone. That's a different >> Okay. I thought it was only they were only blowing it because of that uncontrolled section right there. >> Got it. Okay. And Manning will never be a quiet zone. >> Yeah. >> And I they they don't have the rightway and whatever to make Lake Elmo Avenue a quiet zone either. So >> So with the 12 million for a treatment plant, that's just a first chunk of it. Like it's 45 million, correct? >> I think we've got 50 in the CIP. >> Obviously that's plan for grant funding. >> That's what I was curious like why is it only 12? Is that just the initial design and some construction? >> Correct. >> It's broken into kind of a year by year like we do with other big projects that are going to span multiple years. >> The um there's several the the one thing that kind of strikes me is uh Ridge Parking lot seems like a large expenditure for a park that gets minimal use. And I think it's gravel right now. Who did this come from? I'm assuming this came from the parks commission. >> That's my understanding is that that anything in the parks uh CIP comes gets does get reviewed by the parks commission. >> I think that's from their discussion. We had that one proposal where they were looking at updating Ridge Park >> with a with a like a a ball field in the picture. can >> okay those are the questions I had regarding >> most of that stuff >> kind of step back in here so I guess one I would just give the example of you know think about your personal finances you don't go out and say hey over the next year I want to do all these projects and then go to your employer and say hey all these projects I want to do cost me $200,000 that's what I want you to pay me and I feel like that's the approach approach that we're taking on this. We have to work this the other way. I think and this is where I guess I want the discussion more from the council of do you feel comfortable with how much our CIP is increasing? Do you feel comfortable with how much is being spent? Or do you think we as a council need to make some sort of guard rails so it's not just a this year uh impact that we're making with our decision where we can look at this more long-term and we're able to curb that increase of spending and have and again I'm not saying that we can't have years if there's a there is an emergency situation or we do need the fire truck because if we wait four years it's going to be double the price. I'm not saying that that can't be done, but I think again we need to have those guard rails. So if we're going to exceed the guard rails, it's a higher bar and there has to be more explanation. There has to be more reason to go above that. So I guess that's where I'd like to have more discussion is with the council is are you comfortable with just the bottom line number of how much the city wants to spend on these? And if so, I guess helping me understand why that process of figure out the expenses first and then go ask your employer for more money as a result of it. >> Well, I don't think it's one way or the other. I think it's a combination of both. I mean, why I asked some of these is because I didn't really understand. I think it's incumbent upon staff if something was not in the CIP or is not in the fleet program or it's new, there needs to be some explanation as to why that's in this year's CIP. So, um, yes, to keep budgets down, but as Council Member Draguch said, sometimes you spring a leak, you got to fix a leak whether like like our water main issue, right? Otherwise, it's going to end up costing you more in the long run. So, to those, yeah, it makes sense. Um years ago we had an asphalt um you know a pitch asphalt pitch for for pothole patching and it was asked for council to replace that and they denied it saying that you know hopefully they could get by with $5,000 of maintenance to fix it. Well the next year it crapped out and they ended up spending more than that on renting one. And I want to be clear, I I am complete agreeance of we want to have foresight. We want to be preventative where possible. We want to have those. >> What I'm trying to add in is that guard rail. I don't want that to just be it gets put in front of us without a guard rail. If again there I think we should have some sort of policy. So it's encouraging the city to grow responsibly with how much we're we're increasing our tax revenue. And that doesn't that absolutely does not mean we can't go over it. It's just if we are going to go over it, there has to be that explanation, right? We have that goal, and it doesn't even have to be, you know, it's not like it's a a requirement, but there's a a goal of we're aiming for no more than this percent increase each year. >> In our long-term financial, Clarissa, didn't we go through that last year on what the percentages would be yearbyear? I think >> I think we can we can talk about increases but if you would like I can continue on to the strategic financial planning that'll talk a little bit more about some of that like long-term >> I mean can I just get I from counts I mean is this are we comfortable with this amount >> my take would be when it comes to capital improvements because our infrastructure whether it's parks whether it's various the street aspects whether it's our equipment because it's been purchased and installed in varying years our costs are not going to be in any linear fashion and I I think our policy is if we are comfortable or not comfortable with the pickup the truck replacement our vehicle replacement plan and we had that discussion earlier I see our job if we don't like that we dictate to staff hey we want everything to be pulled out by this much more to extend the lifespan above and beyond what best practice is because we want to do that. If our policy is wow, Mike's coming in good. If our policy is that for uh street improvements that we want to change our thresholds for when we act on a street, then we say that I do. I have concerns about cost. Yes, as I always do. I am I'm still not convinced with say Ridge Park. I'm not convinced with those improvements. but it's been identified as something to have in here, but we had we certainly haven't approved it. So, I'll be curious when that comes to be. I I'm still very apprehensive about say uh what was the other one? We had the conversation about street lights Elmo and seven and 36. We've had the conversation on. I I guess that would be my my take. I I fully concur that we are the ones who are then responsible for telling our constituents here are the cost for the services that you're demanding. But one point I do want to make, thank you for putting that stuff on the website. Like I was going through it earlier. So it's the same information we have in our packet, but now it's in an interactive form that people can use, which is far more accessible than say going to our meeting agenda, going through a packet. So thank you for that. But obviously to your point, council member Hearn, the more information we can get in there, the better. Such as, you know, the additional additional item that was needed from public works. Well, why? I here's the reason. It was found out that this was the problem. This was cracked. This is old. That's the level of information that I would want to know. And I assume residents would want to know, too. I to the point of Ridge Park, that's going to be a conversation, but I I just I budget for things in knowing myself. If we want to talk about personal finances, I budget specifically knowing things are going to last a certain amount of lifetime. I put money away for it to plan for it. And also knowing that I can control for certain costs. I can't predict that something's going to go out, but I sure as heck can predict that washers and dryers or fridges are going to last a certain amount of time. So, I I agree with the mayor. There's some things we can predict, some things we can't. I would rather be more prepared, but we haven't approved anything on here. We haven't. And I I guess that would be >> I don't know if that answers your question. >> Well, you know, I think I think if you look at the expenditures for 2728, I mean, you at 20 roughly $22 million and streets and water are 19 million of them. I mean, if you're going to focus on are there areas to reduce, you know, those are probably we can't do much about the water. We need the water plant and that's we grant money anyway. I mean, but you know, streets are are are our biggest one. And so the question if you're going to look, you know, is there room there? I you know, you got public works vehicles 865,000 bucks out of 22 million. I guess not that, you know, a $50,000 truck isn't a piece of money we should look at, don't get me wrong, but I think, you know, if we're going to make reductions that be meaningful in the CIP, not that we should or we shouldn't, but we need to focus on where the dollar is going. Yeah, I I'm I'm happy focusing anywhere. And again, my focus is I think the number needs to come down and I think staff needs to figure out how to make that happen. And and if that if they come back and they say, "Well, you know, we we honestly cannot do this unless you change your your pavement policy." Okay. Well, then maybe we have to relook at that policy. Or they say, "Hey, we absolutely cannot do this unless we look at our vehicle replacement policy." >> Then I think we have to look at that policy. But I think we we've only moved in this direction. And I understand it's going to keep going in that direction. Inflation growing, but we've gone too far in that direction. I mean last year again with the increase that we had looking to to go at a higher increase even this year and then from last year we we we need to get it under control. >> So from what you're saying because I'm hearing from both sides that it goes up and down and up and down but all you've seen from your perspective is just up. Yes. >> Correct. >> Okay. >> Spending in government never goes down. >> Yeah. Have we had any down years in spending? I mean, if it's only going up, then I completely agree with Councilman Narn that, you know, it should only go up one or two% so we can kind of quell that spending a little bit. I will say that the years past the city limiting two to 3% has put us in an unfortunate uh financial situation and behind the eightball. >> Got it. Okay. >> That's my that's my opinion because I don't think that uh our assets were being maintained to the level that they should be maintained. um our staff wasn't at the level that it should be for representing the residents for their needs of whether it's permits or just general public works stuff or snow plows or any of that stuff. That's just my opinion and I don't I don't I think putting in a blanket 3% is being a little too rigid. Well, it's I don't think it's it's taking in the reality of what's happening. >> Sure. >> So, as an example, if you go 28 to 29, the projection in our wonderful website that has filters, again, this is awesome, is 65 million. The next year in 29/30, it's 42 million. Now, obviously, a massive driver of that is water projects. But that I guess that's the example like it is going to eb and flow. The next year after that we go from 42 to 23 >> but then projects get added between but not 30 million worth like it might be a park pavilion it might be a different truck but it's not varying by it's not we're not adding 30 well again we're sports >> example you're giving was specifically with the water treatment plant correct >> correct that is our single biggest That's probably an outlier where you take that out because that's coming from grand money. >> Correct. >> That's an outlier. Just like, you know, when we're getting this presented to us, we take it out. >> And even if you take that out right now for our 2027 to 28, our 57 million, you take out 12 million, that brings it down to 45, 4645, which is still more than years 20, 29, 2030, and 2031. So I I guess would it help to see like a a line chart yearbyear for how cuz I think that would help too, right? Cuz it to director's point CIP costs do eb and flow. I I don't I'll be honest. I don't agree with saying that there should be changed at this amount because the costs don't act like that. The costs don't obey that rule. the when we purchase stuff, when the road goes to crap, when a truck fails, when we need a new plant, that doesn't obey our that us wanting to act like that. So, I I'm fine with that for operating costs and having that expectation. I don't support that for capital improvements. >> I think we go back to again looking at the expenditure and see what's the need for it. um let's say a park pavilion that came up and well park is a nice thing to have but if we decide we don't want to spend quite that much money might be something say well let's delay this >> um it's an amenity it's not a you know we don't need it to operate the city on it's a nice thing to have so I think you look at look at the line items in that regard and say they're amenities um that add to quality of life we maybe if we want to restrain expenditures we have to look at those more non-essential things and say can we reduce those or delay them a year or two um to make it a little less impact. >> I think the pavilions are the prime example. They are very nice to have, but other than a couple emails here and there saying the sun really sucks right now. I am perfectly fine saying that is a cost that we don't need to have. I am perfectly fine with that. >> And that's as you go down the line, you look at each cost and say, do we really need this? You know, do we need it now? And you can make a decision that that would make sense. Uh, are we going to have discussion? >> That's half of it. It's do we need it and can we do it now? Again, just like if you think about your personal finances, it's not just do I need it, it's do I need it and do I have enough to do pay for this? >> And we don't just get to snap our finger and all of a sudden our salary increases. And I feel like again I I so I understand the reality of the eb and flow. I I think the reality that that we are missing though is that we are spending more and more each year and we need to figure out ways to get in control. And so I'm not again I'm not saying that there won't be years where we have that eb where it does need to be more spending and and that's fine, right? We can have that increase, but it shouldn't just be accepted that we can have a 10% a 15% increase each year. We should have a goal and it doesn't have to be two or 3%, right? It could be CPI plus 2 or 3% that we're aiming for. And if we go above that, then it it just it it >> it requires more explanation. >> I think we're we're we're on a little treadmill here. So, I think we're delving into some things that I expect Clarissa to get into on the strategic financial portion of it that gives us some insight as to moving forward. Right now, we're just looking at CIP. We're asking for questions and feedback. I'd like to move on to the the next portion because we're just repeating each other's statements. here. >> Well, before you move on, I just like to make one other comment to councelor Hearn. A week ago, you snapped your finger and your salary did go up. >> All right. I had to snap my finger with four other >> strategic financial planning. >> Nick, um, >> real quick, just to get out of my head, I'm because I'm going to lose my notes here. Um, department heads, um, there's I think everybody's familiar with Planet. Um, and I'm hearing from council that maybe we need to add just a little bit more to our justifications in certain things. So, like make sure it's clear that it's a replacement or a new um, item like you've got a few whatevers. Um, maybe just add something in that justification section about why it is that we need that. So, um, okay. So, moving on. Um, our strategic financial planning. Um, so what is it? Um, we're calling it a plan. Um, but it really is more of a guide or an informant. I was um envisioning informants and and sherpas and like what is this thing really? But so we're essentially um setting goals and trying to implement strategies to just put our financial trajectories on the right path. So when council member Hearn talks about a 3% increase, I would love to see revenues be able to increase at a 3% or whatever it is somewhere along inflation. We are decades away from that because as to the mayor's point, we are significantly behind the eightball. Um we are looking for um opportunities and problems uh well in advance. So we're going to map this out for 25 years so that we can see where our projected um jumps are going to lie. We know that there's been a ton of um development in the last 15 years. We know that we just added a whole bunch of water assets that are going to need to be replaced in 50 to 70 years. We just want to know what it is that we are facing. I'm not thinking about myself. I am thinking about the person three or four generations in my role down down the line. Um as well as our current residents. Um, and then we just want to provide some financial insight into some of the big decisions moving forward. Obviously, there's a lot going on. There's a lot of balls up in the air that we just don't know yet where those are going to land. And so, we just want to be able to see, you know, again, how does our financial outlook change when we make those decisions? Um, so I'd shown this uh my during my first um presentation. And I like to think of the city finances as a big puzzle and we're just trying to figure out how those all fit together to make the city of Lake Elmo. Um so our high level priorities and objectives um and there are sub priorities and objectives and each of these in your packet. Um so I'd encourage you to review those. Um so debt management and long-term fiscal health, levy strategy and revenue stability. So to council member Hearn's point, that's what we're trying to get to is that revenue stability, capital planning and infrastructure investment, budget sustainability and service levels speaks a little bit more to the operations side of this and then updates and strategic alignment. How do we keep this plan informing our decisions and vice versa? So strategic financial planning, this is kind of what I was trying to ex explain. We are managing money in, money out, cash and debt. So, we've got our blue line. We're trying to get our debt balances to decrease over time. These are not real numbers, by the way. This is for illustration purposes only. Um green line is our cash. We want that to slowly uh increase over time because again, this is 2050. We want to make sure that the um people that the city 30 years from now um has the money that they need to do the project that they need to do. And then our money in and money out. So our expenses and our revenues are gonna kind of vary over time. Sometimes our expenses will be higher than our revenues. Sometimes our revenues will be higher. Um and I would expect those um both to increase over time as a projection. Okay. So for the CIP discussion that was really this money out within within the framework up here. So, what is the money in for CIP items? It's our capital levies, our utility fees from the water, sewer, and storm water fund. We get some state aid. Um, we now have franchise fees that are split 50/50 between the infrastructure reserve and the park reserve. And then, um, potentially some transfers from other funds. We are, um, managing our cash balances and as well as our liabilities. So, as far as goals go, so our bonding, our debt issuance, we're just over 50 million at the end of last year. Um, I've done this on an annual basis. Um, I'll talk to you more actually um in my update and then again next month about a transition in the debt. So, that's every two years, but for projection purposes, this will work. So, our goal is to decrease our debt over time. Um, obviously again we're looking at trajectory. Um, but also I want us to really think about this the the the long term here. So my goal is to get a debt free by 2050 if not sooner because I know that 20 30 40 years from now this city is going to have a huge huge amount of infrastructure work that needs to be done. And so we're trying to build up those cash balances, but I know that they're going to have to take out debt. So I don't want us to have $20 million in debt and then have them have to take out 80, right? So we were at roughly $60 million in debt load a couple um when I came on board three years ago, I think. Um and it it's going to take time to to to get out of that hole. This is a chart. This is I want to explain how we got to the point that we are again we're behind the eightball because we have never we haven't had capital levies. So we just started doing capital levies a few years ago. We did have some transfers out of various funds for capital purposes. It was coming out of the general fund. We had money come out of the water fund for this building. So we are we were pulling it from other areas. there has not been a strategic outlook for capital planning that that I've been able to find. Maybe there was stuff on the books and it just wasn't carried forward. Council member, you're all nodding your heads. Um but there has not ever been a separate capital levy until um we started here a couple years ago. So this is the reason that we are paying debt and trying to save for cash and injection into capital projects at the same time. So we're trying to avoid this situation for future us. So the capital levies, our goals are to slowly increase to a point that fully funds the cash portion of capital projects. find that leveling off point. It is going to be a moving target. We're a growing community. We just started doing a 10-year CIP a couple years ago as well. We only had a 5-year CIP. The CIP was not very well built out. We did not know what we needed. Okay. So, the more planning we do, the more we're going to know about, the more stuff that gets put on the CIP. Um, and then we want to make sure that we're maintaining revenue sufficiency beyond the timeline of the projections. So here's a again rough projection of our capital levies. Um again I would point you to your packet. There's a fivepage um document that is the overview of draft projections and modeling that just kind of explains where I kind of came up with the numbers or and and um sometimes it's I can I can I can explain sort of what that looks like. But for I'm going to use a vehicle fund um as an example. We've it it's been around the longest. So um you know starting whenever it is that we upgraded planet, we've been able to do this. I can run a report that's kind of shows what our the balance of the fund is going to be at at the end of each year and I was adjusting and kind of trying to slowly increase our vehicle levy um up to the point where that fund was fully funded for that 10 years. And so I had started I think at 400 or 350 a couple years ago and um before there was the change in the latter one it was going to level off around 750. Um we got the input for the ladder one as being a lower cost. So I was able to lower that to I think 600 something like that. So that's how that works. So these are the what the capital levies are going to the in theory when I say this is what I'm I've drafted. Um this is a again projected tax levy um by type. So general fund is really rough at this point because we're not done with the budget and haven't had those discussions and there's some kind of big decisions or big um things that we need to talk about um that'll come next month. So the debt levy is um based on existing debt and new debt. So again kind of trying to decrease that over time and then the capital levy is trying to increase those overtime so that we can both decrease the debt as well as increase our cash balances. So um kind of the question of the evening that will help inform our our discussion. Um next month we will start talking about that you know when we're talking about the operations we will also be talking about um what we are we will be proposing for the tax levy. So these are the uh current so 2026 capital levies and these are what I had plugged in for 2027. Um I'm going to note so we've been trying to segregate these um funds for e ease of budgeting. Um so making sure that when we have a fund set aside we know exactly what that money was levied for and um we can budget that fund to the purposes within the CIP. So we added a general fund projects and miscellaneous because we have really expensive software. We took their software funds out of the general fund and the utility funds. Um, so I'd like to shift into saving some money for that and then whatever else we come up with from admin on the admin side. So just kind of penciling a small fund for that. Public works, buildings and facilities, same thing. We're um trying to shift those expenditures away from the general fund and into a capital fund. um city center CIP. We just built this beautiful building and um if you what did we calculate the depreciation of this building is something like $250,000 a year. Um so we would assume that when this building eventually gets replaced, it would be a mix of cash and funding. Um and we also have replacements of various systems. uh refrigerators. There's a lot of refrigerators in this building um that we need to save for the park reserve. Um there's a levy pencled in for that. We skipped it this this year for 26. Um if you look at the parks um page, there is a park dedication fund that is funded by development. Um that fund based on development is looking like it probably will go negative. Um however, we're relatively conservative with our development projections. We've got some big projects coming down the road. So these are future decisions that can be made. the fire and equipment and project fund um had started out as somewhere to put the state money, but now we're using it as um it's going to be a really good tool for setting aside things that are not vehicles. So, a lot of those fire vehicles get all of the fire vehicles get funded from the vehicle fund, but the turnout gear and tires and whatever else kind of these sort of in between projects. Um the street maintenance fund is specifically for the milan overlay lays and um seal coating projects. Infrastructure reserve is our main fund for street improvements. Vehicle and equipment obviously vehicle and equipment. The street lights again kind of planning for this long term. So the the uh next couple years has a couple small projects. Our biggest investments take place I don't remember exactly. It's probably we've got maybe 10 more years before we really start, but then it's like $3 million within the span of 10 years that we need to come up with crosswalk improvements. I pencled in a separate one because I didn't have a good plan for that one. Um, and we don't really know what that program is going to look like, but because there's a $140,000 proposed project, I needed to come up with some funding. And then the ballpark um is for the property. I'm calling it ballpark. We just called it something. So the um 77 78 >> 76 >> 76 so many acres that was purchased last year this levy is to pay for the interfund loan that we created to purchase that that so that's kind of a given. Um so that's that and that's our next checkpoint questions feedback on strategic financial planning. anything more I can go into as far as the ups and downs and >> so like as an example can you go back a slide in the case of and thank you that was amazing for the infrastructure reserve from going from 400 to 522 correct me if I'm wrong we are intentionally increasing that for that transition to try to do more cash for those projects instead of debt that is that is occurring because of our debt strategy >> correct correct um it's also occurring because We um we know based on the amount of streets that we have, we have hund00 million in street assets. And we're I mean, if you want to even very loosely say a street lasts 50 years, that's $2 million a year on average, right? And we're at 500 or what am I at? 522,000 for a levy. So, if we need to slowly get to two at least $2 million a year, I think it's actually higher than that, then then we need to we need to start now and we need to be actually is that our goal to pay for projects fully in cash. >> Um, not not fully because I I think that there's a strategy. Um, I think that that I think there's an opportunity to do that. I think that's the best way to do that. >> There is. Um, however, also the fact that we um you want to have a mixed strategy, right? You don't want to levy so much that it that that you're affecting your uh financial viability and and whatnot. And also, um you're you never know what interest rates are going to do. So, you want to be kind of flexible and you want to be able to, you know, if we can get a better if if we're better off taking out a little bit of debt and retaining the cash and and because we got a better return or whatever. So, you want to you want to have a balanced >> What? So, did the example that you just gave there, right, where you said it would be $2 million of Did I hear you right $2 million of depreciation per year in our >> On average? >> On average. >> Very, very, very rough numbers. >> Well, okay. I So on average, if you're saying that we need to get that fund up to where it's to $2 million per year, I disagree with that policy. And I that's coming from somebody who doesn't like debt. But in a in a city, you're that is an asset that's going to be used by people for 20 to 30 years. And that is where I I am okay with debt in this stance. And now obviously I want our debt numbers to come down. and and you showed us this last year that those numbers can come down even if we increase these numbers at a much more modest rate. >> So I would say when you're talking about infrastructure river reserves, it's not just the roadway. So every time a development goes in, whether it's the one over here on Chilton's old property or Limrich or whatever, they all have water main, sewer main, right? Those do need to get replaced at times. So actually the surface and the roadways are not really that costly, relatively speaking. When you got to start digging up pipe and replacing that in, let's say the lifespan's 40 years, 30 to 50 years, that's where cities now are getting in trouble not being able to do that. So like 2008 to 2015 when interest rates are down and your prime was at one one and a half%. cities, counties, state was bonding as much as they could because that's like darn near as close to free money as you can get for your infrastructure. With interest rates as they're going up now, you need to balance that a lot more in my opinion. >> Would the depreciation on those portions this the sewer would the depreciation be a one to one from the roads? So, if it's $2 million depreciation roads, it be $2 million depreciation. go up >> could be higher than >> could be. >> So it's half of the cost >> depending on the you know how deep it is um the material that's being used. >> So even if that was the case right so then we're saying we'd be paying 50% >> you're still going to end up bonding something going to have to >> if I may. So the pipes are actually covered in the utility fund. the $100 million in assets is put on our books when it is built. So that depreciation again I was using that as an example is a very very rough number. I would say that's the absolute minimum we need to do when we put it on our books. If there was a development built in 2008, 2005, whenever it was put on the books at $2 million, as an example, when we actually replace that in 50 years, we've got 50 years of inflation to put on there. So, our depreciation is in $28, but our street reconstruction is in $258. And so we, you know, if theoretically you had put away that exact amount, you would have, you know, when it was built, you would have and just let it increase with interest. You'd theoretically have close to what you need here. We haven't done that at all. So we haven't put any money away. We're 15 uh 15 years behind the eightball, if you will, and now we're trying to get to that that dollar amount there. >> Again, I'm not arguing. I I want to move in that direction. I want to move there slower. >> Sure. >> That's my that is my whole point. >> I think one thing we can >> do the numbers that we can do it. >> We don't need to get down to zero debt. You know, we could we can come up with a number. Maybe it's 20 million, you know, and our goal is to balance it out so we never have so we try and maintain a death of about 20 million. It's x% of our of our value, you know, and and then we say, well, if our if our streets are 5 million a year and we're going to have a $20 million debt, maybe we only need that 3 million in levy. I'm just making numbers up off the top of my head, but we don't have to go to zero debt either. That's not necessarily realistic. Um because we'll find times when interest rates are low. >> Yeah. But the plan, you're going in the right direction with the plan. You know, as we evolve, we're going to make changes. But I was we don't need to get to zero depth. But we 60 is an outrageous amount. You know, 20 is more manageable for a city. Our size as we grow, maybe it's 25, >> but we could bassage these numbers, but we're going in the right direction. Um and your point council Hearn is that yeah the you know when you build a new street if you pay for it with cash today the future users have no have no expense to it you know and so having the assessment policy provides them with an expense for the new street and kind of offsets that balance but again I think if we aimed somewhere in 20 to 25 million of outstanding debt uh and structured our our levies and everything to get there over a period of time. Uh I think we'll get there. >> She did. She did that exercise for us last year, >> right? And and I think the other thing, you know, that the mayor's pointed out earlier is we we have the unfortunate situation of inheriting a financial condition that for a while wasn't wasn't where it needs to be. You appreciation charges in our utility funds. We're not covering them. And you know, we're surviving on connection fees and sachs and wax to make those debt service payments. And but we have a plan to get there. And I think your plan to get there is well thought out because we're not trying to break our citizens as we get there. We're trying to inch it up every year and reach the goal at some point. Economic conditions change, growth changes or whatever. We're going to have to step back and say, "Okay, what do we do now?" But based on the best knowledge we have, your plan gets us there, you know, over a 10-year period, which is sustainable given our, you know, given where we at and our and our best guess. >> Would it be unsustainable to do it over 15 years? Well, I don't think it would be, but um >> and then that's my point. It's just we can do it over a different time period. And again, she did this exact exercise for us, >> but but one thing we have going for us now is and and going forward, we have a lot of growth going on. And so that growth provides us with additional support to make these changes. So if we add, you know, a lot of tax capacity, we can increase the levy without increasing taxes and get to where we need to be financially without causing a great deal of pain. But all we've seen is population increases is taxes increase. So I don't know if I agree with you on that. >> Well, it doesn't it just it doesn't pan out with what what we've seen >> because where we started from. But going forward, I think we have a better opportunity to do And again, I I agree. We have to step in this direction, >> but to the point of do we need to do it over 10 or can we do it over 15 years? >> We didn't have any capital levy and now we've got some in. And so you you know, unfortunately, we had to make a step that was greater than our growth. But as we go forward, we can we can taper that down. And that's the council's role to, you know, to to work with the staff and say, well, you know, we can live with a 3% levy increase and it may not get us as quick as we're hoping. Um, but if we get some big growth, maybe it's 6% because we had a a big growth, but our tax rate doesn't change. And so we have to balance out what's going on around us with our needs in a way that makes sense and doesn't, you know, penalize our our residents any worse than we have to. But, you know, if we don't have the levy and we issue the debt, now we're paying the interest costs and those are all levied as a tax. And so there's that balance between, you know, is we better to just pay the principal part through a capital levy or pay in principal and an interest cost through a debt levy. And so I think Clariss is trying to make those balances and and her best judgment given all the different things happening around us. >> I find it to be shocking depreciation for this building. The estimates quarter million a year. I mean that that is it's completely valid. It's shocking. So if we're is our job to be the communicators, right? That is a prime example of part of the job. This is why I appreciate having the staff that we do for identifying that piece. The street light thing is another piece. We had the discussion obviously that's why it's here now. There are places where they're not identifying that and it's going to end up being a sunk cost down the road and a place might not have the cash for it. So I I appreciate having this. Do I enjoy paying taxes? God, no. But I appreciate having a plan and I I I agree with both of you. What that plan looks like is going to eb and flow, right? Yes. A future council four years from now might say, "Yeah, we agree with that that council member Hearn. Gosh darn it, he was correct. We need to slow it down." And they might, and that's fine. More power to them. I And they or they might say, "You know what? >> Council member Dragoich was completely correct for once. We're going to speed it up." and and so that's the thing for staff like it's going to eb and flow. You're going to have different council members in here who are going to eb and flow on their priorities for the speed of this. I hope to God though that we'll always agree as a council from now for perpetuity on the importance of having a financial plan that's sustainable. >> That to me is that is the foundation and I I think all five of us are agreed. We're solid on that. It's just we're going to have our disagreements as to how best to get there. But we all agree that the fact that having a financial plan that is valid, that has been double checked, where the numbers are correct. Some of you weren't here. We had there was times where the budgets were not correct and there were gaps at the end of the year. >> Never correct. We're just >> we're talking like we're talking like six six figures mistakes at the end of the year. looks like. >> So that's where it matters having staff here that are here for the long term and that are competent and can communicate to us because then it's our job to communicate to residents unless they call you and complain. But so in that regard, my my point being I am happy seeing these numbers. I'm not happy in knowing that these are the costs. When this when this building was built, that was never discussed. Here's the long-term things you need to start taking into account. Just like it was never discussed when sewer was put in starting in the 2010s in downtown. By the way, here's the things you need to start planning for. So, I we are behind the eightball, but we're also not because we are doing the things that are necessary at a speed that's going to eb and flow. >> You know, about a year and a half ago, the Rob school district had a oops in their budget. $20 million oops. >> Yeah. >> And we don't have those kind of things here. Thank you, Clarissa. You know, but um you know, it it's it's very difficult. Council Hearn, I think as we get down the road and look certainly at the tax levy and the tax base growth and all that, we can take a look at what makes the most sense and make adjustments either upwards or downwards that you know don't cause great pain to our citizens. But we just don't know enough right now based on what we know if and I in a good world this where we'd like to be because it it fits our long range plan. But our tax base grows 20%. Maybe we can do a little faster. >> Um I keep losing my point. I was gonna make >> You're gonna say brilliant points by everyone. >> Oh, the 15 years. So um 15 years is a really really good point. Um we are in the prime um sort of point in time to be making these changes because we have so much development. If we were another city and we were this far behind, we would be struggling desperately to try and figure out how to make this work. But because we have development, those extra revenues are allowing us to turn this ship. >> Yeah. >> This ship stops turning stops developing in >> what are we thinking 20, 15 years, 20 years max. >> Yeah. And so if we don't get everything sort of in line and find that leveling off point in 15 years the next it becomes significantly more difficult after that. >> How do you think our tax rate goes in the next 15 years? >> It depends on development. Tax rate is only it is it is simply the ratio of levy to tax capacity. So I project based on what uh the numbers that I I'm given by development and levies that we are guessing at that that are would be you know acceptable to to council but based on I mean based on this round of projections I think we were at let me see if I had nope I think maybe it's in the packet on one of the things, but I think it was maybe right around 50%. >> So, you think we have to get to a 50% tax rate, which would absolutely put us at the top of the tax rate chart of all the cities around us? >> Nope. >> Second, >> um more like third, but again, you're comparing >> uh 2050 a 2050 or 2045 tax rate to today's tax rate. So Still Water is going to be in the same boat but worse off in 2050 because they don't have the level of I don't think they do. >> I just I cannot imagine a 50% tax >> 50% tax rate is actually significantly lower than the cities that I've worked in. We were at we were easily we were at close to 60% and looking at higher because they didn't have the cash state saved for improvements uh and they weren't able to develop. So, and again, it's it's the tax rate is just a ratio. So, that tax rate is going to change dramatically if there's a market crash. Nothing we can do about that unless we tank our our levies. >> Now, 50% sounds very scary with people watching like they don't understand a dollar amount with that. Could you break that down into like a a more digestible number of like what that looks like? >> Yeah. Well, our tax rate today is about 20 about 28%. >> Uh just over right around 30, I think. >> Yeah, right in that range, you know. And so if you so said if if your taxes were $1,000 today and and your cost, you know, increase at this inflation rate or whatever and is it 207 we talking about >> 2050? >> Yeah. your your your taxes would be, you know, 60% higher, 1,600 bucks instead of a,000. >> But it's on a house that's more expensive as well. >> Yeah. Based on house that's more expensive as well. Yeah. Assuming >> puts a higher tax rate on a house that's valued at more. >> Yep. >> So I that's a yearly cost. Correct. >> I've seen taxes in the last 5 years for residents double in the last five years for what they're paying over the year. >> I've never seen >> I can get you stubs to show it. I mean, it's I'll I'll bring I'll bring it to you. >> No, you don't need to. I believe you. I just haven't had that experience. >> I just think 50% sounds a lot scarier than a,000 to 1,600. >> That's if I could I don't know if anybody does anybody want a lesson on how we get to the tax impact. >> I don't want to be the only one in the room that wants a lesson. We could do it after the meeting, too. I mean, I can I can So, your your tax your house has a tax capacity that is based on Minnesota statute. So, if your house is worth $300,000, your tax capacity is your $300,000 times 1%. So, the tax capacity of your house is $3,000. we apply our tax rate to your it's technically it's to the taxable value, but let's say we apply our tax rates 30% to your $3,000 tax capacity brings you to $900 in city taxes. I would I would also um draw anyone's attention to the um where do our taxes go spreadsheet that I had put together for the last couple years. It tells you um kind of roughly what you might pay for city services. So if 50% of our budget goes to um public safety, so fire, police, building inspections, whatever, then that calculator takes your home value and calculates exactly what you pay for police. So you might you might see that you pay $471 for police, fire, and whatever. And and it's just a nice like, okay, is $471 and for fire worth it? Whatever. So we would be in 2050 at 50% of the one of that 1%. >> Correct. >> Okay. I just want to clarify. >> Yeah. >> The one point the finance director missed is the homestead exemption. >> I did mention the taxable value and blah blah blah blah blah. You know, I'm trying to simplify it. >> There's a little there's a little bit of a clip for if your house is worth less than 534,000 or something. There's there's a little bit of a reduction. >> It's a different class rate. >> Yeah. >> Right. >> So >> that that's the easy math version. Any other council? You know, we we talk property tax. It's a total tax and a lot of that tax increases for voted levies. You have $100 million bond that the people voted for the new schools and that gets, you know, levied out on a market value basis, not a tax capacity, which costs homeowners a higher amount. This tax is fairly complicated. But, you know, if you went back and said, you know, the city rate, it's a portion of your tax bill. As you know, it's just the toll tax was influenced by a lot of factors outside of the city's control. We get blamed for it, but a lot of factors outside. >> Okay. So, just to keep us on track, um any other questions, feedback? Um happy to take it. Again, this is sort of a the our first touch point in the levy discussion. We'll have additional discussions at the August workshop. So, we can certainly let this um concept percolate a little bit and we can revisit it. Then, I just have one more topic to run by you. Um while I have you here today, >> I would just like to suggest if you come up with a plan, we could cut our levy in half and double our cash. We'd be very grateful. >> I'm on it. We got We got some land for sale, right? Okay. So, our final um topic tonight is regarding um the use of storm water funds to fund streets. So, we've talked about this a few times um and council had requested some additional analysis um uh couple months ago. Um so, Nina ran some numbers and so our uh there's a few different things going on here. Um there's the question of what can the stormwater fund handle now? What kind of increases would need to be applied? And also there's the question of like what are the storm water costs in within a street project. So, we started I started with with that piece and um used some past projects to estimate some percentages and I applied some categories to our CIP moving forward and I came up with a really really really rough number of $480,000 average for the next 10 years that is only on the local street improvements does not include any of our transportation projects. So, we plugged that $480,000 into the utility model for storm water and Nina came up with um a Let's see. I'm sorry. I'm not probably going in order of your That's >> She made the slides and I'm talking. It's >> okay. Um so 480,000 was what we penciled in. If we added transportation projects, it would be closer to 750. >> Can you tell me the difference between a street and a transportation project? >> Sure. Um, do you recall what the engineering spreadsheet looks like? So like it's at the top portion has like 2027 street improvements, 2028 street improvements, 2029 street improvements. >> Yeah. The annual roads that we do. >> The next segment is um transportation projects and that's like city collector roads and county um >> the shared ones >> co-pays calling car shares. the ones that cost more. So like our collective some of them are on the MSAS Minnesota state aid system which we get a poultry sum from the state on gas tax dollars gets distributed and then um yeah our cost share with s >> so so going back our um we had updated the utility study um this winter and came back um with suggested uh increases of 8% per a year in order to get to where we are covering depreciation. And so that was already sort of like not not on the books but like incorporated into the plan. We're covering when we're covering depreciation, we're not increasing our cash out, right? It's just appreciation just depreciation. Um so that increase alone uh increase the amount of cash available to transfer out of the fund. if we were to uh maybe you should explain the 10% since I wasn't the one that did. >> That's okay. So, um how we came up with that is increasing to 10% doing a $480,000 transfer every single year starting in 2027 allows us to get to a net positive in 2033. And originally with the 8% it was 2031. So >> and that was without the 480. >> It was without. Yes. >> Right. So if we if we add in the 480 we need to up it to 10% and we're not achieving that solveny for another two years. >> Correct. Okay. Okay. Um so these are the rates. Is this the 10% or the 8%? So this is the 10%. So we're at 103 this year and it would be 267 in 10 years. This obviously does not take into account any type of restructuring. This is like as right now. >> Um this is just showing the cash flow. So we're dipping down and then we do start to build the fund. Um but it's still this looks like a big increase but it's still only $4 million after 10 years and we have you know roughly how many asset how many dollars in assets we have in >> in storm 40 million at the moment. >> So I like to keep track of that ratio between like cash and accumulated depreciation and total assets. >> Is that just using the straight line method? >> It is. >> Okay. Um, I would also mention that again we've we're really just in the last few years starting to build out the CIP. We have a new public works director will be building out, you know, we've got a lot of kind of new the newer developments. We've got storm water pond maintenance, these big projects that just have not hit the CIP yet. So, we're expecting the number of projects in the CIP to need to increase significantly as well. So, >> am I correct in presuming earlier numbers hours ago about roads and some of the things those cost do not include the hypothetical transfer of storm water funds to help with those road projects. >> Correct. So, and I just for for my own I because I have to model this and anytime we change things within our systems it gets it gets really timeconuming. So, what I did was >> for the modeling um you know we we looked a little bit more. We didn't truly look at the cash balances of the infrastructure fund just yet. So essentially like in my modeling, I would just build in a um a transfer over to the the 409 fund. So we're just using we'd be able to use more cash on that on that project. Or maybe the maybe the portion of the cash comes from the stormwater fund versus the whatever. I'll have to think better about how to better explain that later on. Um, okay. So, 10% a positive in 2033. There's lots of other discussions going on that we need to kind of settle down. And where's my options? Okay, so I proposed two options. Um, the annual transfer. There's a couple ways we could do that. Right now, the fund can handle starting at $100,000 and growing to that roughly $500,000 over five years. Five years. Um, we could theoretically increase that into more of and, you know, increase that faster and have the fund either go negative or do an inter fund loan. Um, from a uh, you know, time involved standpoint, this is just a little bit more straightforward. Um, option two is getting diving really deep into those project costs and and getting it as close to actuals a as as we can. There's there's a lot of effort that goes into that both from like determining what is in that and budgeting everything. So, from the time that we start budgeting for that project until the time I'm done paying off a bond, we'd those would be segregated. Uh, you know, kind of like two you're you're doubling up on on any time you have to enter a jail number. >> I think anybody would be really hardressed to know the costs of storm water for projects out beyond a year. Um, and given that we do have different storm water uses throughout the city being rural and urban in nature, obviously the rural roadways that we did say last year on the 53rd. I mean, there's some curb and gutter, there's some some uh storm water, but not nearly to the extent of what you would do if you had something on shoot in my neighborhood, air station or East Village Parkway. So, I I don't know that you can get that detailed further out, >> right? you'd essentially be we'd have we'd have to have some sort of a strategy that sort of does what I did and puts it in a rough category so that we can budget for it and and um you know try and project out the cash needs of the storm water fund etc etc and then it would be like when they do the fe feasibility study we'd have a little bit more of that like what the actual storm water costs are so in my mind there's I mean it's I I feel like we're accomplishing the same thing with a transfer as we are with trying to to separate it out perfectly, but we're saving a lot of time because we can still book the asset to the stormwater fund and depreciate it within the stormwater fund. So, I don't think that was done perfectly in the past. It had it was kind of a hit or miss, right, in in various ways. So, so I think we can still like properly account for those assets and the costs there without actually like from a cash flow standpoint forcing every transaction to be directly related to storm if that makes sense. >> I'm kind of confused because we we don't have a problem doing with the water, don't have a problem doing with the sewer. So, why is it such an issue with the storm water? We have two things. First the planning part as you say we're going to estimate for planning purposes it's 200,000 projects >> just be a rough number >> just be a rough number but we actually get to the project we know what the storm water cost >> you know it down to the well >> no don't so when so when for budgeting purposes we can use an average number we actually get to a project though the amount we transfer out of the storm water fund to pay for the project should be what those storm water costs actually are on that project rather than just making an annual transfer $500,000 there that just the problem I have with it is the storm water utility payers are different than the taxpayers and we want to try and treat these two >> everybody pays something for MS4 though right >> everybody pays for there are very very few >> people that pay that don't pay taxes that pay storm water the the the vast vast vast majority are the same people. They're charged different. So, we've got a flat fee going back to our, you know, our equity discussion. So, we have our flat fee for our storm water and um our streets are essentially paid by taxes. So, that's a property tax tax impact tax rate on your property of your home, right? So, it's it's charged differently. Um, but I had I had the numbers 20 properties maybe, you know, like like it's it's a different structure, but by and by and large most people that pay storm water also pay taxes. >> We have some large places like the schools, >> large impervious areas, imper the schools impervious areas. They don't pay prop but they would pay a very good storm water tax. >> We have you know government buildings we have exempt electricity. Grant there not a lot of them but to the extent that we transfer that to the taxpayer you know we charge them more than they than they should be charged. I just don't know >> I don't know why >> it's such a hard issue to take the t the storm water costs when we know what they are in a construction project and take it from the storm water fund. It's not rocket science. It's not >> part of what I see though is you got to have the storm water fund to a certain part. Certainly you could take >> the storm water piece just like um when we pay when when the county does their cost participation policy, right? A lot of our participation is based on amount of flow, number of pipe, linear feet of pipe, catch basins that gets associated with the city or municipality within their cost policy, right? So you could, but you got to have the money there to to pay for it. So that's where I'm saying I don't think you can get granular to say I need $300,000 this year and $250,000 next year and but if you have that fund there I agree you should be able to take when you have the project engineered with your SEQ statement of estimated quantities you should be able to know nut that number. Yeah. >> Uh what it is, but you got to have the pot to take it from. >> Well, and and let's just say we don't have the pot, right? >> Well, then you sell a bond just like we do with the street. We sell a bomb. We have a portion that's paid for the water utility, portion paid by the sewer utility, and a portion paid by taxes. Well, we'd have a portion now paid by the storm water utility. Because at that point, we know what we have the engineers estimate what those costs would be. We're not guessing. The only thing the only difference I would I would think we'd want to talk about on the storm water is what portion of the curving gutter should be charged to storm water. You know, I don't think a 100% should go there. >> Probably not. >> You know, but there's some portion that should go to it. Again, these are all costs we can identify and we go we structure a bond. We we're basing it based on the engineer's estimate. We're allocating to sanitary sewer and water off the engineer's estimate for that bond. Why wouldn't we allocate to the storm water portion? I just I feel I'm feeling let's see why this is so difficult. >> I'm not saying it's difficult. I'm saying it's more time consuming and if we and we need the revenues to support it and so if you guys are okay with increasing the fund the the storm water rate by 10% per year for the next 10 years and we can we can make it work on our end and I can I can adjust our practices and try and find efficiencies wherever I can. I'm not saying it's not doable. I'm just saying I'm I prefer efficient and path of least resistance where I can. >> Why is it more work on your end than the water and sewer part if they >> you're doubling the amount of uh accounting that I have to do on on any project. So now I'm tracking every time we get in an invoice. I'm I'm we're we're having to analyze where that where that gets paid out of. Normally it would just go out of a you you've got a lump sum and it gets paid out of the project fund. Now for every single invoice we have to go in and look at the detail >> groups. How do you do for water and sewer? Now >> you want to get into that >> the engineering does it breaks it out. >> So we just we just treat it the same as as the other enterprise fund. >> So it seems there's two questions. Do we want funds from this from this fund to go to road projects? That's really the first question, >> right? And if the answer is yes, we need to then say what percent increase are we willing to do because the money is not there to do that is what I'm hearing. >> But but if you don't do it, you're raising your your other levies to cover it. >> No, no, I'm I'm not I'm just saying I'm just saying if the answer is yes, we then have to say for this fund is going up in knowing that it will reduce the cost for the road cost that we're paying with our capital levies. So the net impact to all but 20 properties we can pennies on the dollar but we're shifting the buckets. >> So I the first question do we want to shift it? I would just add one perspective to that is that the the sh there's a there's a really big difference in a shift in someone's tax versus so like your tax increases by 10% whatever but when their storm water fee jumps by 10% like it's only $10 but you're you're going to hear about it probably. >> Yep. Correct. because we're it's not going to say by the way this likely is going to reduce what you're paying towards a capital levy on your property tax. It's just not it's not going to say that, >> right? Because it because it's not technically going to reduce their tax their tax is going to go up because we need to raise taxes. It's just going to go up slightly less, right? my perspective is charging the cost where the cost should go be charged to. I mean, if we're going to kind of ignore that, let's just let's let's just charge janitorial services in the building to the water utility because a lot has a lot of money. What difference does it make? I mean, you know, accounting for costs where they're incurred is kind of a basic principle. If we're incurring costs for storm water utility, it should be paid for from the stormwater utility fund, not from any other fund. From an accounting standpoint, if we're booking the asset to the storm water fund and depreciating it there, that is also an approp that's the way you're covering it. That's the way you account for costs. Your expense is actually the depreciation, not the cash flow itself, >> right? But we have a capital expense which you pay for from the from the fund that is incurred from. >> Sure. >> I mean, that's just logical. So, with the curb, is there an objective way to know how to determine what the cost would be for curb and gutter? Like, is there a best practice to say, well, 50% should be from storm water funds, or are we literally throwing a dart at the board to say? >> No, it depends on where your project's at. >> So, um I can weigh in on this a little bit. Every city, it's it's like having a policy, you know what I mean? Um this the the this the curb and gutter is part of the street structure. Yeah. >> Okay. We build it with curbon gutter on purpose because it it makes the street last longer and perform better. But it also serves as it's like a drainage chain, right? Brings the water to where you need to get it to go. I've seen 50% I've seen 33%, you know, in various communities, but it's it's almost like a like you got to have a a policy number for it. >> Yeah. Actually, I would have no problem at all without charging any of the curbing gutter to the storm water. Even in the street expense, keep it simple. Pipes, catch basins, you know, >> manholes, >> manholes. I mean, we don't need to, you know, measure measure with a micrometer either because you can have curb and gutter and >> we're going to have it because it serves other purposes generally. >> Like I said, it's part of the street structure. >> We have it in there first and foremost for that reason. >> Y I'd be okay with that. I think that would keep it extremely simple and then when we're looking at the invoice we don't have to guess what you know do pull our calc we got a catch basin we got a manhole we got a sewer pipe >> straightforward and easy >> I think it's the right thing >> so then it comes down to the percent change >> 8 8% is sustainable 10% gets it quicker to a cash balance because we also have other projects coming that are not currently even accounted for we're assuming in that some we're paying cash for all of these assets. If we look back and say which one of these projects are we going to be financing with with debt going forward, can we slow that down because we're going to be issuing some debt? Um we don't we won't have the the capital need to pull immediately. >> Yeah. We weren't paying cash for everything, right? We had one large project that we had to bond correctly park. Oh, okay. I mean the smaller the better. I vastly smaller the better. >> We do have depth planned for these for the road projects because we're talking about doing a bond every two years and it's going to be for street construction which includes the storm water. So, while we're trying to build this fund up, we could cushion a little bit of that through the, you know, through including those storm water costs and debt initially and then, you know, paying them out of future funds. I think the 8% is the right number. I actually really appreciate with this one where there is a percentage given of how we're trying to approach this. Um, again, I kind of wish we could have seen that for the others as well. Um, but I I think the 8%'s appropriate. It's again >> it's going to get us there a little bit slower than 10, but it's going to get us there. >> Yeah. >> And I I think that is my theme of the night of >> slow but >> I just want to get there a little slower. >> I get you a tortoise shirt. >> Yes. Yeah. Please give me give me a turtle shirt. >> Tortoise. >> Tortoise. Okay. Sure. >> I'm cool with that. >> Yeah. >> Do 7.99 just for Council Member >> Herd. 8.01 01 just to stick them a little. >> All right. >> I'm voting against. >> Is that all you have, Miss Hadler? >> I believe so. >> Yes, it is. Okay, great. Um, that's all we have for this evening. I'm just going to adjourn the workshop at this point. Thank you everybody for your contributions.