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2023-09-06 CC Meeting MinutesMOUND CITY COUNCIL MINUTES September 6, 2023 The City Council of the City of Mound, Hennepin County, Minnesota, met in a special meeting on Wednesday, September 6, 2023 at 7:30 a.m. in the Council Chambers in the Centennial Building. Members present: Mayor Jason Holt; Council Members Paula Larson, Sherrie Pugh, Kevin Castellano Members Absent: Kathy McEnaney Others present: City Manager Eric Hoversten, Deputy City Manager Maggie Reisdorf, Finance Director Noah Iverson, Ehlers Representative Stacy Kvilvang, and Ehlers Representative Kyle Sawyer. Public Present: None 1. Open meeting Mayor Holt called the meeting to order at 7:30 a.m. 2. Approve Agenda MOTION by Larson, seconded by Pugh, to approve agenda. All voted in favor. Motion carried. 3. Facilitated Discussion on 2024 Budget and Financial Management Plan Development Stacy Kvilvang introduced herself by saying she worked in local government for years and has also worked for Ehlers for a number of years. Kvilvang said she has helped many cities with financial and strategic planning. Kyle Sawyer stated that he worked for 15 years in local government as an auditor and with the City of Edina as Finance Director prior to working for Ehlers. He said he has been with Ehlers for the past two years. Kvilvang explained that generally cities can't achieve everything that a City Council wants at one time and therefore it is important that the City set strategic priorities by focusing on three to five goals. Kvilvang said the City should then develop a strategic plan to serve as a road map to achieve those goals through City policies and programs. Kvilvang said the Staff and Council are a team who work together for the benefit of the community to meet the City's strategic priorities. Kvilvang said the Council sets the priorities on where to spend City resources and City staff implements those Council priorities. Kvilvang explained that the current City Council will be paying for the priorities of past Councils and future Councils will be paying for the decisions made by the current Council. Kvilvang said every City does things differently due to specifics of the City and finances things differently and the idea is to do what is best for Mound. Kvilvang said the City has two general areas of the budget: • Governmental Fund — City Operations • Enterprise Funds — fees and revenues from utilities and liquor which are used for internal borrowing Revenue Sources: • Property taxes comprise 71 % of City budget • Franchise Fees — 5% Expenditures: Minutes — September 6, 2023 Special Meeting Workshop • 70% goes to staffing to provide services to residents • Public Safety is the biggest cost — 51 % Kvilvang said a resident of Mound pays property taxes for the following: • City • Hennepin County • School District • Other Taxing Districts • Other governments Goals of the City Financial Management Plan as established by the City Council: • Unified Direction • Address staffing needs • Lessen overall debt with minimal levy increases • Not increase water bill too much • Get an outside opinion on City Finances • Improve Service Level • Dock Program as an Enterprise Fund and to stay financially viable The City Council's long-term vision for the City of Mound: • Want Mound to be an attractive place to visit, do commerce and check out the lake • Improve outward appearance of the City to attract shopping and dining options for residents • Keep Small town feel and maintain walkability • Regain our identity Kvilvang condensed the City Council goals and priorities to four areas: • Communication • "Right Sizing" City Staff • Code Enforcement • Water fund and Water treatment issue Kvilvang asked the Council if they are committed to the goal and priority list she presented. Castellano said the City Council is committed to the water treatment issue. Castellano said he thought code enforcement was tied to the outward appearance of the City and making Mound an attractive place to be in and visit. Holt agreed that code enforcement and water treatment goals were important. Holt said that communication is very important and one of the reasons why Reisdorf was brought on to the City staff. Holt asked Kvilvang about right sizing staff and Kvilvang said the City may need to hire more staff to meet the goals and priorities of the Council. Pugh said the City needs to be more active and directive regarding economic development and building enterprise funding. Castellano and Holt agreed for the need to increase enterprise funds. Pugh would like the City to embrace home based businesses and help them move into commercial spaces in town. Hoversten said these businesses are supposed to not impact their neighborhood so if the City promoted these businesses and they expanded there could be an impact on the residential character of the areas these businesses exist. Kvilvang said she would add economic development to the goal priorities of the City. Castellano said he would like economic development to increase the commercial tax base of the City. Larson was asked about her opinion on the goals and priorities. Larson said she didn't think her opinion was important as she didn't vote for Ehlers' services and would wait to comment at a regular Council meeting. Holt said he would like to add economic development though the City doesn't own any land. Kvilvang said economic development can be addressed through other tools other than owning land. Minutes — September 6, 2023 Special Meeting Workshop Holt said he wants prioritize communication and transparency. Holt said this includes a social media presence that would include noticing city meetings. He explained that social media is where a lot of people get their news. Holt said he would like to see an upgraded website and an electronic newsletter. Pugh said there is mistrust in the community regarding the City but she doesn't know how social media moves the local community. Holt said he would like the City to push out information to residents. Castellano said there is interest in using modern communication tools to do this. Code Enforcement: Holt and Hoversten said the City is looking to increase the tools to get voluntary compliance with improving nuisance and abatement issues. Castellano said the Council doesn't know the budget impact of increasing code enforcement. Kvilvang said this can be addressed in the strategic planning process. Holt discussed the City getting in front of code enforcement issues and would like to use communication to address this area. Property Tax: Kvilvang said Mound's per capita market value of property has increased higher than neighboring cities. Kvilvang said this is mostly coming from residential lakefront property. Kvilvang said the tax levy per capita of similar metro and nearby cities shows Mound as the third lowest on the list. Kvilvang said the City property tax rate is in the middle of Hennepin County cities. City Debt: Kvilvang produced a chart which showed the City debt payments decreasing 61 % over the next five years. Kvilvang said 42% of Utility revenue debt will be paid off in the next five years. Hoversten said the City will need to incur new debt to pay for street projects and to relieve the water fund deficit. Kvilvang said the City Franchise Fees are at a flat rate of $2.75 and the median rate is $4.00. Kvilvang said the City charges Commercial and Industrial customers the same as residential. Kvilvang said a Franchise fee increase of $.50 would mean a $50K increase in revenue and a $1.25 increase would add $100K in revenue. Utility Rates: Kvilvang produced a five-year build out of water utility fees with increased fees based on increased water use. Kvilvang said the users of the system are currently not paying for the full share as tax payers are covering the shortfall in the water fund. Hoversten said residents need to be informed in a transparent manner of what residents will pay in fees and other charges instead of pushing costs down the road. Kvilvang said her experience is that there hasn't been a push back from residents on rate increases if they are explained to residents on the reason for the rate increase decisions. Holt asked Kvilvang if they are going to look at Dock Fees as the City is paying $804100K for year on tree removal on the commons. Holt said the fees need to keep up with the times and Hoversten said emergent costs are being caused by the Emerald Ash Borer. Holt said these should be incremental increases. Hoversten said the docks can be a revenue neutral source for the City. Sawyer said he has looked at the dock fund. Sawyer said he created a scenario in which he inflated fees by 2% a year and increased capital costs by 4%. Sawyer said in this scenario the fund would be exhausted in 10 years. Castellano said he feels the dock fees are too low. Castellano said the dock program is a community benefit. Hoversten said Ehlers' staff's vantage point is clearer than City staff and the Council. Hoversten said Ehlers can look at what the City is doing and offer what they believe are good business decisions for the City to pursue. Minutes —September 6, 2023 Special Meeting Workshop Hoversten said the 2024 budget discussion is going to be tough as the Council is working through decisions made by previous Councils which have impact on the current situation. Discussion ensued about the Dock Program and keeping it revenue neutral, as an enterprise fund or to sell this public property. Hoversten said there are changes since 2018 to the City budget and the cost pressures on the Dock Program. Hoversten said the City doesn't want to make decisions now that will cause the City to borrow money later. Hoversten said borrowing now will impact future budgets but can develop capital reserves. Hoversten said Franchise Fees and other potential enterprise areas can help alleviate those present and future budget pressures. Kvilvang said the City is at the cliff and the City is looking at two years of hard budget decisions. Larson said she thinks comparing Mound to other cities is mistaken. Larson said Mound's debt is highest in Hennepin County. Larson said the School District also has a levy referendum on the ballot. Discussion ensued about the 2023 budget increase level and the 5% which was approved by the Council for 2023 instead of the 7% which was also on the table at the time. 4. Adjourn Motion by Castellano, seconded by Pugh, to adjourn at 8:47 a.m. All voted in favor. Motion carried. A�- - /�� Attest.'K,evin Kelly, Clerk/ Mayor Jason R. Holt