2023-09-07 CC Meeting MinutesMOUND CITY COUNCIL MINUTES
September 7, 2023
The City Council of the City of Mound, Hennepin County, Minnesota, met in a special meeting on
Thursday, September 7, 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 Representatives Stacy Kvilvang and 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 Castellano, seconded by Larson, to approve agenda. All voted in favor. Motion carried.
3. Discussion on 2024 Budget and Financial Management Plan
Reisdorf started the discussion on the budget by stating the budget and levy consists of three parts;
capital expenses, general operations and debt.
Reisdorf presented a budget scenario at a 12% budget levy increase for 2024. Reisdorf said a 12% levy
would cause be an increase of $744,000 from the 2023 general operating budget.
Reisdorf said the drivers of cost increases include those related to inflation, increases in staff
compensation and benefit costs.
Reisdorf listed the areas of increase being
• $343K in staffing costs which includes adding a Full-time Public Works Director
• Other expenses include:
Contracts for services including with the Orono Police Department
Insurance Premiums
Elections
Fuel and Energy
Pugh asked about the special election in 2024 and if the costs of the Hennepin County (HC)
election will be covered by HC. Reisdorf said there could be a cost share for the HC Special
Election. Hoversten said the City has budgeted for three elections in 2024.
Hoversten said one of the increases in staffing is the addition of a City Mechanic in 2024.
Hoversten said the vendor who provided these services increased their hourly rate from $120 in
2022 to $150 an hour in 2023. Hoversten said the Mechanic vendor decided to not continue to
provide service to Mound in 2023. Hoversten said hiring an internal Mechanic will bring a $30K
budget savings with the benefit of staffed 40 hour a week Mechanic versus an 18 an hour a week
contracted Mechanic. Hoversten said the Mechanic position has been filled by a current utility
worker so the City will need to hire an entry-level utility worker.
Reisdorf presented three levy scenarios; 12%, 15% and 18% increases. Hoversten and Castellano
discussed the three levy scenarios and how the 12% levy increase would cover baseline (similar level)
services of those from 20223. They also reviewed the 15% and 18% scenarios which would essentially
Minutes — September 7, 2023 Special Meeting Workshop
cover baseline services and add additional funds for capital reserves which would support Capital
Improvements in the City.
Reisdorf said a large part of annual operating costs provide for staff salaries for services provided to
residents and the community.
Reisdorf said the Capital Schedule is for maintenance and preservation of equipment and infrastructure
and puts aside reserve funds to make one-time and big cost item purchases.
Reisdorf said staff are not recommending a lower levy than the 12% scenario because the
consequences would be the City providing less services and/or accumulating less capital reserves.
Reisdorf added that some City services are state mandated and some have been chosen to be provided.
Reisdorf added that the prudent action is for the City to be proactive and planning ahead so costs aren't
greater in the long run.
Reisdorf added the amount residents would pay in City property tax at each of the three scenarios.
Hoversten added that Ehlers showed a 56% increase in estimated market values in the past two years.
Hoversten said a 12% levy increase is going to be fairly modest impact on median home value property.
Hoversten said that there are about 200 homes in Mound, generally built since 2000, that will see a good
size increase due to increased market value. Hoversten added the highest value property along
lakeshore will see the greatest increase due to estimated market value increases for this type of
properties.
Hoversten listed the following statistics:
o There are 4000K households in Mound
o 30% of households are rental properties
o 700 households are in the Lakeshore category ($1.3 Million in value per property)
o 2000 households are at median or below in value
o 20% of properties taxes account for 50% of City operating costs
Holt asked for a graph of different household values and the estimated amount each property would pay
in property taxes. Staff and Council discussed the property tax payment impact of individual properties.
Larson said breaking out home values individually and estimating the property taxes as a demonstration
is highly offensive. Larson added that the Council is representing the City as a whole. Larson said HC
will have a 9.8% increase and the school district levy will also be a big increase to tax payers. Larson
added the Council is going to hear from constituents regarding the increases.
Reisdorf listed where City revenue is derived:
• Taxes
• Licensing and permits
• Intergovernmental (one-time revenue)
• Charges for services
Hoversten said 2024 will have a one-time lump -sum public safety allocation from the State of Minnesota,
but will also see a reduction in Local Government Aid. Holt said he has spoken to the City's state
representatives who said Mound experienced the largest LGA decrease in the state for 2023.
Hoversten said the City needs to diversify revenues through Franchise Fees and Dock Program
revenues to cover costs which are absorbed through the general fund. Hoversten said the Council can
work out these fees in the Fee Schedule by the end of 2023. Discussion ensued about looking at fee
increases and franchise fees to the budget revenue mix.
Minutes — September 7, 2023 Special Meeting Workshop
Larson asked about the water fund deficit. Hoversten said other funds are currently supporting and
covering the water fund deficit. Larson asked if the 3% increase in rates will continue. Hoversten said
the Council can do the analysis on options for the water deficit by the end of 2023 and plan for future
water infrastructure needs.
Hoversten said the City can now borrow funds through bonding at a good rate currently and decisions of
the past impact the current situation. Hoversten said planning ahead for water and street infrastructure
will impact present and future funding situations.
Larson asked about the $750K increase in general operating associated with the 12% levy increase.
Larson said the Artessa property which was valued at $2.2Milllion was sold by the City at $750K. Larson
asked about the $50K from the Northland land sale and the end of the bonding paid to build the Fire
Station.
Hoversten said the proceeds from the Artessa sale went into the Tax Increment Financing (TIF) bond
funds which were used to develop the Harbor District area. Hoversten said the debt service on the TIF is
being paid off due to previous Council decision in 2009 to levy to keep the City from defaulting on the
bonds for the development in the Harbor area.
Hoversten said the Northland funds went to the community Investment Fund which went into the Surfside
Park improvements and the City Entrance Monument expenses and other similar areas.
Larson asked where the $243K bond payment to the Fire Station is going now. Hoversten said the Fire
District partner communities pay for 43% of expenditures and the total amount for Fire and Public safety
Building was about $100K per year. Hoversten said that $100K was distributed to purchase the ladder
truck. Hoversten said there are other future costs due to deferred replacement of other fire apparatus
and other new requirements.
Reisdorf said the Council needs to make a decision on the preliminary levy by the end of September.
Hoversten asked the Council to make note of any questions regarding the budget documents.
Holt said the budget presentation should include the three scenarios impact on expenses and how the
change to fees could impact the levy increase.
4. Adjourn
Motion by Larson, seconded by Pugh, to adjourn at 8:45 a.m. All voted in favor. Motion carried.
Mayor Jason R. Holt
Attest: Ke in Kelly, Clerk