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HomeMy WebLinkAboutMinutes MINUTES COTTAGE GROVE CITY COUNCIL May 4, 2022 COUNCIL CHAMBER 12800 RAVINE PARKWAY SOUTH SPECIAL MEETING – 5:30 P.M. TRAINING ROOM 1. CALL TO ORDER 2. ROLL CALL 3. AGENDA ITEM A. Closed Workshop: Active Investigative Data and Security Briefings Around City Security Systems Staff Recommendation: Close the meeting pursuant to Minnesota Statute 13D.05, Subdivision 2(a)(2) and Subdivision 3(d) to discuss active investigative data and to receive security briefings and reports surrounding the City’s security systems. 4. ADJOURNMENT The meeting adjourned at 6:50 p.m. REGULAR MEETING - 7:00 P.M COUNCIL CHAMBER 1. CALL TO ORDER The City Council of the City of Cottage Grove, Washington County, Minnesota, held a regular meeting on May 4, 2022, at Cottage Grove City Hall, 12800 Ravine Parkway. Mayor Bailey called the meeting to order at 7:00 p.m. Mayor Bailey mentioned that Council Member Olsen was remote this evening due to COVID-related concerns. Also, Council Member Khambata will attend this meeting remotely from the following location: The Sheraton Old Town Suites, 801 North St. Asaph Street, Alexandria, Virginia, 22314, Meeting Room #1. Pursuant to Minnesota Statute 13D.02, Subdivision 1, it’s required by law that everybody know that Council Member Khambata is in a public place, and somebody could start a conversation with him. 2. PLEDGE OF ALLEGIANCE CITY OF COTTAGE GROVE  12800 Ravine Parkway  Cottage Grove, Minnesota 55016 www.cottagegrovemn.gov  651-458-2800  Fax 651-458-2897  Equal Opportunity Employer City Council Meeting Minutes May 4, 2022 Page 2 The audience, staff, Mayor, and City Council Members stood and recited the Pledge of Allegiance. 3. ROLL CALL City Clerk Joe Fischbach called the roll: Mayor Bailey - Here; Council Member Dennis - Here; Council Member Khambata - Here; Council Member Olsen - Here; Council Member Thiede - Here. Also present: Jennifer Levitt, City Administrator; Korine Land, City Attorney-LeVander, Gillen & Miller, PA; Ryan Burfeind, City Engineer/Public Works Director; Gretchen Carlson, Director of Economic Development; Christine Costello, Director of Community Development; Joe Fischbach, City Clerk/HR Manager; Pete Koerner, Public Safety Director; Brenda Malinowski, Finance Director; Mike Mrosla, Senior Planner; Emily Schmitz, Senior Planner. 4. OPEN FORUM Mayor Bailey opened the Open Forum. As no one wished to address the Council, Mayor Bailey closed the Open Forum. 5. ADOPTION OF AGENDA Motion by Council Member Dennis to adopt the agenda; second by Council Member Thiede. Clerk Fischbach called the roll: Council Member Khambata-Aye; Council Member Dennis-Aye; Council Member Thiede-Aye; Council Member Olsen-Aye; Mayor Bailey-Aye. Motion carried: 5-0. 6. PRESENTATIONS A. Eagle Scout Award: Matthew Mueller (Troop 286) Mayor Bailey asked the Council Members, along with Matthew and his family, to join him in front of the dais. He stated that all of Matthew’s family members have become Eagle Scouts. The City of Cottage Grove recognizes our youth when they receive the Eagle Scout Award or the Girl Scout Gold Award, as we appreciate the work that they’ve done to attain this level of leadership, so we present them with a plaque. In City Hall, there is also a placard with the names of all previous winners of the Eagle Scout Award and Girl Scout Gold Award, dating back many years. Due to supply-chain issues, Matthew’s nameplate for that has not yet arrived, but we’ll certainly let him know once it’s been added, as sometimes people like to take photos of that. Mayor Bailey read aloud the plaque, presented it to Matthew, and congratulated him on behalf of the Council, the staff, and the citizens of Cottage Grove. Matthew described his Eagle Scout Award project: He planned and prepared the construction of an American flag retirement collection box, located at the VFW in City Council Meeting Minutes May 4, 2022 Page 3 Cottage Grove. When American flags are no longer fit to be flown, they can be placed inside the collection box, after which they can be retired properly by either the Boy Scouts or the military. Photographs were taken, and Matthew was congratulated again. B. 2022 Public Works Spring Cleanup Event Presentation Public Works Director Ryan Burfeind stated that every first Saturday in May we have our Spring Cleanup Event at Cottage Grove Public Works, 8635 West Point Douglas Road. We’re excited to bring this back again this year; last year was a record-breaking year, as it wasn’t held in 2020 due to COVID. We added another station to move cars through faster, and that worked really well. He named the items that they accept: Household goods, tires and batteries, treated and untreated lumber, electronics, and shredding. He stated Adam Mosier did a good job of getting quotes from different vendors, so appliance drop-off costs have decreased this year: The electronics vendor will not charge to take microwaves, and it will also be free to drop off crib mattresses. In 2021, Washington County stopped accepting hazardous materials because they want people to use the Environmental Center in Woodbury, which is open year-round. If you have questions about what you can and cannot drop off, call Public Works at 651-458- 2808. You can also find that information on the City’s website. C. Public Works Week Proclamation Council Member Thiede stated May 15-21, 2022, is National Public Works Week; the motto is “Ready and Resilient.” He read aloud the Public Works Week Proclamation. Director Burfeind stated that on Wednesday, May 18, we’ll be having lunch for Public Works and Parks maintenance staff at Public Works. We’ll thank them for all of the work they did over the last year, as it was a very busy year; they’re a great group and really deserve that recognition. Motion by Council Member Thiede to approve the Public Works Week Proclamation; second by Council Member Dennis. Clerk Fischbach called the roll: Council Member Khambata-Aye; Council Member Dennis-Aye; Council Member Thiede-Aye; Council Member Olsen-Aye; Mayor Bailey-Aye. Motion carried: 5-0. D. Building Safety Month Proclamation Council Member Dennis read aloud the Building Safety Month Proclamation for May 2022. Christine Costello, Community Development Director, recognized the great Community Development staff, from those at the front counter who issue building permits to the staff in the field making sure your homes are safe. They do it behind the scenes and they really enjoy their work. Motion by Council Member Dennis to approve Building Safety Month Proclamation; second by Council Member Thiede. Clerk Fischbach called the roll: Council Member City Council Meeting Minutes May 4, 2022 Page 4 Khambata-Aye; Council Member Dennis-Aye; Council Member Thiede-Aye; Council Member Olsen-Aye; Mayor Bailey-Aye. Motion carried: 5-0. 7. CONSENT AGENDA A. Approve the April 6, 2022, City Council Regular Meeting Minutes. B. Adopt Resolution 2022-073 updating the Non-Represented Pay Plan with additional positions. C. Approve cooperative agreement between the City of Cottage Grove and the State of Minnesota DNR to purchase archery equipment for recreational programming at a cost of $1,800. D. Accept and place on file the minutes from the March 28, 2022 Planning Commission meeting. E. Adopt Resolution 2022-074 appointing Tamara Anderson, City Clerk, Brenda Malinowski, Treasurer, and Andrew McLean, Building Official. F. Approve the renewals of the Workers Compensation Policy and the Package Insurance Policy with the League of Minnesota Cities Insurance Trust for the 2022-2023 policy period in the amount of $1,190,495. G. Approve the issuance of rental licenses to the properties listed in the attached table. H. Authorize the City not to waive the statutory tort limits where an individual claimant would be able to recover no more than $500,000 on any claim to which the statutory tort limits apply per staff and City Attorney recommendation. The total all claimants would be able to recover for a single occurrence to which statutory tort limits apply would be limited to $1,500,000. I. 1) Adopt Resolution 2022-077 approving the plans and specifications and setting a bid date of May 26, 2022 for the Goodview Ravine Stabilization project. 2) Approve the Temporary Access Easements with Kate Snuggerud and Zachary Nelson and with Lisa Walsh. 3)Approve the Permanent Drainage Easement with Ronald W. Cozad, with minor modifications by the City Attorney. J. Approve the South Washington County Watershed District (SWWD) Coordinated Capital Improvement Program (CCIP) agreements for: 1) Stormwater Monitoring in the approximate amount of $50,145; 2) Goodview Ravine Stabilization in the approximate amount of $163,000; 3) TG-P14 Expansion in the approximate amount of $165,084. K. Adopt Ordinance No. 1056 amending the City Fee Table related to water meter and flange kit pricing. L. Adopt Resolution 2022-079 confirming the City Council’s support for the Park Grove Library to remain at its present location. M. Authorize the agreement with the Local #49 I.U.O.E. to provide training to City of Cottage Grove Public Service Workers. City Council Meeting Minutes May 4, 2022 Page 5 N. Adopt Resolution 2022-080 approving the plans and specifications and establishing a May 26, 2022 bid date for the South District Street & Utility Improvements. None of the Council Members wished to pull any Items on the Consent Agenda for further comment and/or discussion. Motion by Council Member Thiede to approve the Consent Agenda; second by Council Member Dennis. Clerk Fischbach called the roll: Council Member Khambata-Aye; Council Member Dennis-Aye; Council Member Thiede-Aye; Council Member Olsen- Aye; Mayor Bailey-Aye. Motion carried: 5-0. 8. APPROVE DISBURSEMENTS A. Approve payments for the period of 4/15/2022-4/28/2022 in the amount of $1,387,162.28. Motion by Council Member Dennis to approve disbursements; second by Council Member Khambata. Clerk Fischbach called the roll: Council Member Khambata-Aye; Council Member Dennis-Aye; Council Member Thiede-Aye; Council Member Olsen- Aye; Mayor Bailey-Aye. Motion carried: 5-0. 9. PUBLIC HEARINGS - None. 10. BID AWARDS A. Glacial Valley Park Staff Recommendation: Adopt Resolution 2022-078 awarding the Glacial Valley Park project to Sunram Construction, Inc. for the base bid amount of $2,562,073. Director Burfeind stated last Thursday, April 28, we accepted bids for the Glacial Valley Park Project on the north end of town, right along Keats Avenue, just north of Ravine Parkway. Two bids were received from Sunram Construction and Urban Companies; our total base bid was above the engineer’s estimate. There were no specific line-item parts of the project that were higher, it was really just across-the-board higher pricing; with the economy today, we tried to anticipate that, but bidding out full parks isn’t something that we do very often. Alternate 1 was for some additional conduit for lighting for the soccer and football field. Outside of this part of the project, there’s also the playground and the park building that Council is aware of; the lighting was a separate part of the project, so that will be bid separately. There were options for lighting of the hockey rink, the courts, the baseball field, and the football field. With these bids coming in higher, the recommendation tonight is to still award the base bid because this neighborhood is really largely built out, this park has been on our plans for quite some time, and the community is excited about it. We’re recommending the Parks City Council Meeting Minutes May 4, 2022 Page 6 Department go ahead with the hockey rink and court lighting, approximately $150,000, as lighting is integral to those sports. The cost of lighting for the football field and the baseball field, with a separate bid, was about $361,000, and many of our existing fields do not have lighting. So, we’re recommending we do not include the football field and baseball field lighting, as those costs would more than offset the additional cost, and this would still fit within the overall project budget. Council Member Thiede asked if not lighting the fields right now will take this underneath the engineer’s estimate or if that’s part of the $2.5 million. Director Burfeind stated that the park construction was one amount, the park building was separate, and the park lighting was separate; all of that was in a total project budget that we’d anticipated. By not doing that lighting, the actual construction of all of the fields and different parts of the park will take place; with the park lighting, we’ll just do the smaller components, and we won’t do the two large fields. The overall budget of the park is what we’re really looking at in terms of the Park Trust Fund and the funding that we have; that’s where you’ll see that cost reduction. Council Member Thiede stated that we know there are currently supply-chain issues and obviously a lot of construction; we’re actually $300,000 over the engineer’s estimate. He asked if it’s possible that that would come down at some point. Director Burfeind replied that’s always a possibility, but in the construction industry, we don’t like to count on costs ever dropping, but maybe costs will stay flat. Much of this is specialty work, like building the fields, so typical construction with paving and utilities is less. We have to see a pretty good cost reduction to make up for those extra costs. It’s always hard when we get into this position, but with the options that we have to save on the lighting, the main consideration is still having a good park for the neighborhood. Council Member Olsen stated he understood what Director Burfeind had said about bidding the various elements of the project separately; the grand total of each of those elements is really what we’re budgeting for, the total cost for this park. By not doing the lighting on the football fields and the baseball fields, it was mentioned that we could save some money. 1) Does it make sense to wait on the lighting for the football and baseball fields; do we get an economy of scale doing it at the same time as the rest of the project, as opposed to coming in and doing it next year or the year after? 2) If Council and staff chose to not do the lighting for the football and baseball fields, would all of the necessary infrastructure for the lighting still be done so that if and when the time came that we chose to do it, all of the infrastructure would already be completed? City Administrator Jennifer Levitt stated that we have a couple of options; right now, when we look at how this project element is bid out, we’re using our park dedication funds, so our Park Trust. We’ll also be looking at bonding for the building; at that time, you could consider additional debt to potentially fund the lights if you wish. We can talk about the timing of that debt issuance, look at the value of the building, and how that construction bid comes in. So, going forward, there are still a number of different ways to address the lights. She didn’t think it needed to be addressed tonight; in the future, Council can determine how to finance those lights and what mechanism to use. She City Council Meeting Minutes May 4, 2022 Page 7 doesn’t think we’re losing any economy of scale for those lights, so it’s not a disadvantage tonight to award as Director Burfeind has indicated. Council Member Olsen asked if that meant that we’d have a future opportunity to talk about whether or not we want to include the infrastructure for that lighting in the work being presented now for authorization. Administrator Levitt replied yes, we can consider that, especially as we go into the budget discussion and figure out how we want to prioritize it. Tonight’s award would not negate any of those decisions. Council Member Thiede stated this is on the northernmost edge of the City, and with all of the other building coming down from the north, he asked if we charge different rates for non-residents of Cottage Grove to use some of the fields and the services. Mayor Bailey stated that he thought there was a mutual program between the City of Woodbury and the City of Cottage Grove; he knew there was a hierarchy for our in- house leagues and our athletic associations to get first priority, then it moves to Woodbury, and then the other types of leagues. That’s actually the way that Woodbury does it on their fields, too, when Cottage Grove is over there, using them. Council Member Thiede asked with all of the houses that Woodbury put in, if there was any major park close by in Woodbury yet. Clerk Fischbach replied not directly close to this, but a little farther north of their border, they’re planning a little bit larger park to serve their southern residents, on a similar scale to this; we’ve seen that on their Master Plan, to cover each side of the border. Motion by Council Member Khambata to Adopt Resolution 2022-078 awarding the Glacial Valley Park project to Sunram Construction, Inc. for the base bid amount of $2,562,073; second by Council Member Dennis. Clerk Fischbach called the roll: Council Member Khambata-Aye; Council Member Dennis-Aye; Council Member Thiede- Aye; Council Member Olsen-Aye; Mayor Bailey-Aye. Motion carried: 5-0. 11. REGULAR AGENDA A. LeafLine Labs Expansion Staff Recommendation: Adopt Resolution 2022-075 approving an amended Conditional Use Permit and Site Plan for the addition of an approximate 70,000 square-foot addition and future approximate 67,000 square-foot expansion to the existing LeafLine Labs pharmaceutical manufacturing facility at 8235 97th Street South. Director Costello stated LeafLine Labs is before Council tonight for a Site Plan Review and Conditional Use Permit. They’re located off of 97th Street, south of American Agco Trading, and just north of Renewal by Andersen. In 2014, LeafLine Labs received approval for a 43,700 square-foot building; in 2020, they were back before Council for a greenhouse expansion. At that time, the pandemic began so the applicant put a halt to things. They recently returned for us to consider traditional construction, instead of greenhouse expansion, to better support their City Council Meeting Minutes May 4, 2022 Page 8 operation needs. They have a two-fold proposal: Phase 1 is 70,000 square-feet, and Phase 2 is 67,000 square-feet. Phase 1 will include grow and flower wings, irrigation, break rooms, restrooms, and additional storage. Director Costello further detailed: Parking: There are 102 existing on-site parking spaces; Phase 1 will add 15 spaces, and Phase 2 will add 133 spaces, with proof of parking of 55 spaces. They currently employ 48 individuals; with Phase 1, they’re estimating 60 employees, and Phase 2 will bring in 120 employees for the growth. They are on a shift schedule so they’re never all there at the same time. Landscaping: Mitigation was met in 2015, and they’ll be adding some parking lot landscaping to the new parking area, as well as some additional perimeter plantings. Odor Control: In 2014, they installed an odor mitigation system that included carbon filters within their exhaust system; they monitor three locations and provide those reports to the City. We can also request them to take additional readings at any time; to date, we’ve not received any complaints. Architecture: This will be traditional architecture, it will match the existing building, and meet our 65% Class I materials in the Industrial Park. Amanda Thomas, Civil Engineer with ISG, and John Dieter, Director of Construction Management with LeafLine, introduced themselves. Engineer Thomas stated they’re really grateful as it’s been wonderful working with City staff on the CUP and Site Plan. She asked if Council had any questions about the Site Plan. Mayor Bailey thanked them for being here tonight. He noted LeafLine has been an amazing partner in our Business Park for a number of reasons; he noted they initially used state-of-the-art equipment to address any possible odor concerns. He liked the fact that they’re expanding and would be creating some new jobs. There were no questions from the Council. Motion by Council Member Thiede to Adopt Resolution 2022-075 approving an amended Conditional Use Permit and Site Plan for the addition of an approximate 70,000 square-foot addition and future approximate 67,000 square-foot expansion to the existing LeafLine Labs pharmaceutical manufacturing facility at 8235 97th Street South; second by Council Member Olsen. Clerk Fischbach called the roll: Council Member Khambata-Aye; Council Member Dennis-Aye; Council Member Thiede-Aye; Council Member Olsen-Aye; Mayor Bailey-Aye. Motion carried: 5-0. B. Aggregate Industries - Final Scoping Decision Document Staff Recommendation: Adopt Resolution 2022-076 approving the Aggregate Industries Nelson Mine Backwater Final Scoping Decision Document. Director Costello stated this is beyond her scope of knowledge so she introduced Peter Miller from Stantec, who will walk Council through the environmental impacts of the Nelson Mine and where we are at this point. Mr. Miller stated Stantec was helping the City of Cottage Grove with the Environmental Impact Statement (EIS) for the proposed project, the Aggregate Industries Nelson Mine backwater project. Tonight, we’ll continue with the EIS process; City Council Meeting Minutes May 4, 2022 Page 9 we need Council to Adopt the Resolution for the Final Scoping Decision Document. Administrator Levitt and Planner Schmitz have been a great support to Stantec, and Beth Elliott, his colleague, is also here tonight. For some of the tough questions, we also used an environmental attorney from Larkin Hoffman. He stated in March we got approval to submit our Initial Scoping Documents for public review and comment. We also held a public hearing at the Planning Commission meeting to accept comments from the public. With an EIS, we’re looking at all the potential environmental effects from this proposed project; this is different from an Environmental Assessment Worksheet (EAW) because we also have to look at alternatives to the proposed project and what those impacts might be. Through that process, we can look at ways to reduce environmental effects; for those that are unavoidable, we look at mitigation options, so a mitigation plan is also part of the process. We’re doing this because it’s mandatory under State Rules; because of the size and the complexity of this proposed mine, we have to do a mandatory EIS, and Cottage Grove is listed as the Responsible Government Unit (RGU). Mr. Miller stated there are three stages to this process: Scoping is where we are right now. We’ve completed putting out a Draft Scoping Document, putting out a Draft Environmental Worksheet, and we received comments through a 30-day public review process. Now we’ve edited our document and are ready to publish that as our Final Scoping Document so we can move onto the Draft EIS. Approximately 15 different agencies and citizens submitted comments on the Draft Scoping Document to help give us substantial content changes that they felt were needed. We took all of those into consideration and created a response comment for each one. We didn’t hear anything too surprising. Some agencies commented about threatened endangered species that we might run into there; there are a lot of mussels in the river, some are threatened and endangered, and there’s also a cricket frog that could have habitat in this area. So, the proposer is going to do a few more studies. He stated there were also a couple of corrections and additions to some of the permits that are going to be needed; there are many agencies that will oversee this project. Once environmental review is done, permitting can happen, and the City will have to issue a Mining Permit for this project. Other involved agencies include the Army Corps of Engineers, the DNR, and Washington County. Mr. Miller stated tonight we’re here for approval of the Final Scoping Decision Document so we can move on in the process. On June 20, we’re anticipating that the EIS process will begin; so, it will be a while before we come back. It’s going to take some time, 280 days from June, but sometimes they take longer, so it might be a year before we’re back. He stated he’d take any questions, but our recommendation is to approve the Final Scoping Decision Document. Council Member Thiede stated there were a lot of local people, landowners, who had commented; he wondered what their comments were. Mr. Miller stated some were just comments indicating whether or not they were for the project, so those were noted. Others made comments about the river and what it meant to them and how it’s a great resource. There were some who asked what this would look like visually. There was nothing that really changed our scope; we took those into account, but we’re planning to City Council Meeting Minutes May 4, 2022 Page 10 look at all the different elements that are necessary to ensure there’s not adverse environmental effects. Council Member Thiede asked if this project would have any blasting done for the mine or anything that would really shake the foundation. Mr. Miller replied that at this point, they’re not proposing to do any explosives; it’s the same mining process that they currently do, a floating dredge that has a clamshell bucket that goes down and picks it up. The material is loose enough, it’s sand and gravel, so it doesn’t require any explosive excavation. Council Member Thiede stated he knew they’d look at this in their studies, but he knew there was kind of a historical piece of property out there or some buildings; he asked if anything was mentioned about that. Mr. Miller replied that yes, they’ll take that into account, including national historic places and cultural resources. From what he recalls, there’s a site on the island, but it’s not within the active mining area or the proposed mining area. Motion by Council Member Khambata to Adopt Resolution 2022-076 approving the Aggregate Industries Nelson Mine Backwater Final Scoping Decision Document; second by Council Member Olsen. Council Member Dennis stated this came before the Council in March, and there was much discussion that took place that night. This mining process has been going on for a long time; at some point we might like to move forward for the community, and he’d summarized that at the end of the previous meeting. Council Member Thiede also recalls that discussion. For the record, it’s not necessarily something that he wants to do, but we’re held legally accountable to do it. Clerk Fischbach called the roll: Council Member Khambata-Aye; Council Member Dennis-Aye; Council Member Thiede-Aye; Council Member Olsen-Aye; Mayor Bailey- Aye. Motion carried: 5-0. 12. COUNCIL COMMENTS AND REQUESTS Council Member Khambata reiterated the Spring Cleanup Event is on May 7, from 7:00 a.m. to 3:00 p.m. You can find information and fees for that event on the City website. Council Member Dennis stated this is Small Business Week, so it’s an opportunity for all of the members of the community to not only show appreciation for our small businesses, but to also help support them; they’re a vital part of our local economy, as they keep a substantial percentage of the money that is spent here revolving around our community, so that works for everybody. Council Member Dennis stated today is International Firefighters Day; he took a moment to recognize the fact that we have fantastic people who serve as firefighters right here in Cottage Grove to protect us. We can never share enough gratitude for the difference that they make here in keeping our community safe. City Council Meeting Minutes May 4, 2022 Page 11 Council Member Dennis stated that next week he and Mayor Bailey will be hosting an Economic Development forum through Facebook Live. We’re going to open that up to the community for questions and to tell us different businesses that they might like to see us recruit and work to bring here; we’ll be actively recruiting later in the month when we go to the ICSC in Las Vegas. We’ll also talk about the current state of what’s happening here in Cottage Grove; it should be a fun evening, so please watch on Tuesday, May 10, on Facebook Live. Council Member Dennis stated that work is being done for our Memorial Day ceremony, here at City Hall, on May 30, at 1:00 p.m. We invite everyone to come out, as it’s a wonderful, respectful ceremony for remembering those in our military who gave the ultimate sacrifice. Council Member Dennis stated last, but not least, he wanted to recognize Neil Belscamper, who retired from the City today; he gave over 24 years of service to the community and did a great job of serving as a humble public servant. Council Member Thiede stated for those of you waiting for Strawberry Fest, it’s only six weeks away. Get excited, go to the website, check things out. We’re still having our planning meetings; we need help and volunteers for different things, so he encouraged everybody to get involved because it’s a blast. It’s coming back after two years of being gone! Council Member Thiede stated that this Sunday is Mother’s Day, so he extended Happy Mother’s Day wishes to all of the mothers in our community. Mayor Bailey stated that Neil Belscamper retired today after working for the City for a very long time. Recently, Robin Roland, our Finance Director, retired. When those things happen, they open up opportunities for people to move up within the City or perhaps come back to the City. Brenda Malinowski is our new Finance Director, but previously worked in our Finance Department many years ago; she decided to return home as our Finance Director. He personally welcomed Brenda back; he knew that Woodbury was trying to get her, but we didn’t let them. We appreciate having Brenda here. Tammy Anderson is now going to be our City Clerk with Neil’s retirement; she had worked in a different position with the City, so he welcomed Tammy to her new role. Mayor Bailey stated that the City of Cottage Grove, along with the business community, held a Business Expo this last Saturday; he complimented the Chamber and everybody who put on that event. He noted there were photos there of what will be the new Strawberry Festival float. It’s almost done, and that float would not have been completed without the financial support of 3M and Renewal by Andersen, who funded the cost of that, although the City bought the trailer. Mayor Bailey stated that last Saturday we also held a Town Hall meeting here at City Hall with State Representative Angie Craig, who took questions from the public. He City Council Meeting Minutes May 4, 2022 Page 12 was honored to be the emcee for that event, and he appreciated the fact that she was able to help us get $3,000,000 for the road and infrastructure improvements for the future Shoppes at Cottage View. Just a couple days ago, she contacted him as we had submitted some City projects, hoping to get State funding to help reduce our overall taxes; she was able to put in the 2023 Appropriations Bill just over $8,000,000 for the future reconstruction of 80th Street, from Ideal to Highway 61. Though we’re not sure what the total amount given to us will be, he shared his appreciation and gratitude to Representative Craig for her continued support and help with road projects that we want to complete in Cottage Grove. Mayor Bailey stated Joe Fischbach is not leaving us, but for quite a while he’s worn a couple different hats, City Clerk and HR Manager. Tammy Anderson will now take the City Clerk hat from Joe. We want to recognize all the work that Joe has done as City Clerk/HR Manager, and he’ll continue his work as the Human Resources Manager. Mayor Bailey asked Council to join him in front of the dais, and he read aloud a plaque of appreciation and presented it to Joe. He told Joe that we appreciate all of the work that he does and knew he’d give Tammy lots of pointers. On behalf of the Council, the staff, and the citizens of Cottage Grove, he thanked Joe for all of the work that he’s done over the years, including on the various elections. We’re excited to have you staying on with us in Human Resources. Mayor Bailey noted that there was a workshop tonight, open to the public, in the Training Room, to begin budget discussions for 2023-2024. We will be adjourning this meeting from the Training Room. He wished everyone a Happy Mother’s Day. 13. WORKSHOPS - OPEN TO PUBLIC A. Budget Kickoff Workshop Mayor Bailey stated Council Member Olsen and Council Member Khambata would be participating remotely for this workshop. Administrator Levitt stated tonight will be somewhat of a continuation of our Strategic Planning meeting; in January and February, we spent a lot of time talking about how we had achieved one goal and now had another goal, Managing Sustainable Growth. We knew that we had to chart our path forward to be able to achieve that. In February, we went over our priorities; we looked at five-year staffing plans for each department, capital investments, equipment, and all the things we were combining and where we were going. That set the stage for tonight, so things Council will hear and see tonight will not be new, but we’ll be adding some more detail. She stated she’d speak first, then Director Dockter and Director Burfeind would give project details, and we’ll look at financing options as Council provides direction to staff. She stated we’re focusing on our four strategic initiatives: Managing Sustainable Growth, Continuing to Reform our Organizational Culture, Making Cottage Grove a Recreational Destination, Engaging the Community and Forming the Vision. Right now, City Council Meeting Minutes May 4, 2022 Page 13 we’re focusing on Making Cottage Grove a Recreational Destination, so we’re looking at which projects the public wants and what recreational amenities are missing. With Engaging the Community, we continue to focus on traffic and transportation and what a great job we’re doing, looking at clean water for Cottage Grove, and housing for everyone; those are the key message points that we’ve been advocating. We have challenges to overcome, but this team will stick together to develop that plan and that strategy, and the budget will be one of those things. Administrator Levitt noted inflation is very challenging; we see it with the price of gas, the price of groceries, and it’s challenging us in our construction bids. As we prepare the budget for 2023-2024, we have to recognize that inflation will be a challenge, specifically with commodities and contractual services. For the last five years, we’ve held commodities and contractual services at 2% so we’ve run extremely lean. This year, we have 3% for commodities, but there are already challenges with commodities at 3%. We know that ammunition, fuel, and fertilizer are going to be increasing at more than 3%. During the budget, we’re going to have to discuss what are needs versus wants; we need bullets, but maybe we don’t need as much fertilizer. We might have to make some tough decisions on commodities. Insurance premiums: We’re $130,000 over our budget for our insurance package. This isn’t our fault; our insurance modifier is actually doing quite well. When we look at property damage and worker’s compensation, we’re actually doing fairly well. PTSD claims are what’s killing us; the information from the League was provided in your packet, what’s driving the increased cost of that. We’re going to have to have a budget adjustment, probably in July, to adjust for some of these commodities and unanticipated things. We have to anticipate them going forward and what that will mean. Property Values: Increased dramatically for almost every residence in Cottage Grove; we know that we have rapid housing and industrial growth, but we have to be cautious and ask if we’re going to continue at this growth rate, is it going to level off, or is it going to start to decrease. There are many different market predictors and philosophies; we still have to be conservative regarding our anticipated growth, so as to not overestimate our proposed revenue. Staffing: We are struggling because we need to develop better recruitment and retention plans. Director Burfeind and Manager Fischbach held interviews for a Public Works service worker position; of the ten applicants, only five of them showed up for their interview. So, recruitment and retention are going to be critical, and we’ll discuss other strategies for that later on. Those are real challenges that we’re experiencing. Administrator Levitt asked Director Malinowski to highlight for Council the 2023-2024 budget and what she saw as our gross levy coming out of that. Director Malinowski stated that the positions identified in the memo for 2023 and 2024 were added, so those are included in the levy amount. With adding staff in 2023, we’d start to pay that in 2024, so there’s a change in the gross levy for 2023 at 9.92%. Because we’re adding that debt in 2024, it will be 8.92%. Administrator Levitt stated that’s your quick snapshot. She provided more detail on that: In our February workshop, Council prioritized staffing. The two levies include our union contact settled at 3% for three years, so the 3% COLA is in that number. City Council Meeting Minutes May 4, 2022 Page 14 Director Malinowski noted the staff budget additions per year: 2023  Fire Marshal, moved from parttime to fulltime, which was done effective April 1.  Associate Planner, who will be hired shortly.  Public Service Worker, Parks.  Public Service Worker, Streets, to have another plow driver for an added plow route.  Utility Billing Clerk, funded by the Utility Fund, doesn’t impact General Levy.  City Engineer, primarily revenue driven from development.  Criminal Analyst, went from parttime to fulltime, but also increased one level for reclassification of the positions. 2024  Police officer.  Sustainability Programs Engineer.  IT, which is funded through the Internal Service Fund.  Property Room Technician will be moving from parttime to fulltime.  Deputy Fire Chief.  Public Service Worker, Utilities, funded by the Utility Fund, not part of the General Levy.  Management Analyst for Public Works. EDA Trust Fund: Administrator Levitt stated this fund is actually going to become a big player in a lot of our discussions tonight. Right now, it has a current balance of $3.6 million, as we had the sale from Renewal by Andersen, which is $763,000, and we have approximately $2.4 million in additional land sales that we’re anticipating will close before the end of the year. We have an annual funds transfer out because our Economic Development staff is not fully funded in the General Levy. We also have to fund the South District infrastructure, the project that realigns 100th Street and Hadley Avenue; that and those nearby developments were discussed at the Planning Commission on Monday night. As that drives economic development, the EDA Fund has $1.2 million in there for the infrastructure. We would also propose that there are deferred assessments for that project; we’d use the EDA Trust Fund as the mechanism to float those deferred assessment waivers until those property owners sell. Given the fact that all of them are hopefully closing in the next four-to-five months, we’re not going to carry that weight because Director Burfeind is not going to be able to spend the money fast enough; just know that any deferred assessments would be funded by the EDA Trust Fund. The EDA Trust Fund balance could be used to provide an Interfund Loan to the golf course for improvements there. She wanted to highlight where the fund is at, what the fund balances are, as we move forward with projects. She asked if there were any questions about the EDA Trust Fund. Mayor Bailey confirmed the bottom line was $5.4 million by the end of this year. Administrator Levitt stated the $1.2 million is a given, and the EDA Trust Fund would City Council Meeting Minutes May 4, 2022 Page 15 pay for it because we don’t have enough utilities or other benefiting properties to assess it against. Proposed Debt: 2023-East Point Douglas Road, Glacial Valley Park, the 2023 Pavement Management; 2024-Shoppes at Cottage View and the 2024 Pavement Management. Administrator Levitt stated that we don’t know when the money for the Shoppes at Cottage View will have to be expended; so, without that, she can’t tell Council exactly when we would bond for it. Also, Director Burfeind has to secure all of the right-of-way for East Point Douglas Road before we’d go out for bid and start the bonding for that. Right now, we’re assuming that we are bonding in 2023 for East Point Douglas Road and bonding in 2024 for the Shoppes at Cottage View. We should be able to float internally even if we had to move the Shoppes at Cottage View forward, but we’d look for the bonds and the debt in 2024. Combining the Debt: Director Malinowski stated we really don’t have debt falling off until 2028, but when we put the 2023 debt and the 2024 debt for the projects just mentioned by Administrator Levitt, we’re increasing the debt levy in 2024. We seem to be comfortable with that, but we’re still working with Ehlers on those debt projections, so those very-preliminary numbers could change. Administrator Levitt stated in the packet you were provided with all of the debt that the City has, which showed incrementally when each would be falling off. Director Burfeind stated he would be talking about streets, trails, sidewalks, which we don’t have the area or utility funds to pay for; we like to break out landscaping, as some of the trees are paid for by the Public Landscapes Initiative Fund. There are also the Sanitary, Water, and Stormwater Area Funds; those are funds that we’re collecting from developers throughout the City to pay for large infrastructure up-front costs. The streetlights and signals are all in the Streetlight Fund, which doesn’t have enough to pay large costs out of that fund; that’s something that would typically be in the street bucket, so how do we pay for that. There is $3 million of Federal money that we have in the area funds that we definitely anticipate using for costs, with the other $4 million that’s shown in the packet under bonding needs; that’s an additional cost that’s needed for the project. Administrator Levitt stated we submitted two direct congressional applications to Senator Klobuchar and Senator Smith for this project, so Economic Development Director Larson and Director Burfeind worked really hard to get that done on some tight deadlines. It’s hoping that will bring some direct congressional funds to the project to help continue to bring additional support to reduce our debt on that project. East Point Douglas Road and Jamaica Avenue: Director Burfeind stated this is the big project. He displayed the breakdown of costs; you won’t see area funds on this because area funds are really for new, large trunk utilities. We talk about Water Utility, Sanitary Utility, Stormwater Utility Funds. This is reconstruction of components of our system. There’s the full streetlight-trail-sidewalk cost with all of the reconstruction through that area; it will also bring that down behind Target. This isn’t just fixing the intersection, it’s also fixing that last bit of roadway as you go south, towards Menards. City Council Meeting Minutes May 4, 2022 Page 16 Some of the landscaping improvements can be paid out of the Public Landscape Initiative. The right-of-way is a big point of discussion right now; based on the amount of right-of-way we need and the different properties we’re working with, we’re looking at a $1 to $1.5 million cost for the right-of-way. Our attorney thought worst-case scenario, that could be higher, but we’re taking a very one-on-one, coordinated approach to the businesses; we’ve been meeting with the key businesses (Cub Foods, Target, Grove Plaza shopping center), so they’re definitely aware of the project. We’re showing them our plans and working with them on how to improve the project to fit better with their needs. All of the businesses in this area got a letter a year ago; as we talked with all of our engineers and our right-of-way specialists, that’s how we can really drive down those right-of-way costs. If you can have a good negotiation for the right-of-way costs, and not get attorneys involved, we can keep the right-of-way costs more manageable. So, that’s been our approach and we’ll be working all summer on that. We have to do appraisals, and that work will start in May, so we’ll start making offers this fall, looking to expend money this year. With all of these costs, there’s $9.5 million in Municipal State Aid (MSA) available, including the pretty large grant of over $1 million that we got, so we’ll have about $1.5 million available this year, with this year’s MSA. We’re paying off the 80th Street advance that we did, so we’re looking to use that existing MSA this year to pay those right-of-way costs as we expend them in the fall, and then our design costs. Next year, we’re looking at a little over $2 million dollars in MSA, plus another $4 million in our advance at no interest; we can borrow $4 million ahead of time. Utility funds can pick up portions of that cost, but the rest will be the bonded amount that Administrator Levitt spoke about. We’ll be keeping Council updated on this as things progress and as we meet with the businesses and how things are going with them. Mayor Bailey confirmed with Director Burfeind in discussions with the businesses that they were told that we’re not assessing them; Director Burfeind stated we were very clear about that. Mayor Bailey stated if we’re asking them to give up some right-of-way, and we’re not going to assess them for this $13 million project, we’d ask them to work with us to donate the land. Director Burfeind stated this is a major project with a real problem; we’re not trying to fix a future problem, we’re trying to fix a current problem, and they’ve all acknowledged that. We’re trying to do this in a way that works well for everyone. Pavement Management, 2023: This area north of Hillside Trail, south of 80th Street, east of Ideal Avenue, is one of the areas that had thin overlays nine years ago; those usually last six-or-seven years. Once they start failing, they start to peel off, and we really can’t do another thin overlay, as that will cause it to just come right off again. We’ve been receiving a lot of complaints about this, as the residents want their roads fixed. It’s not a really big area, and the curb is in really good shape, which is a big factor; basically, we’re looking at replacing the pavement and doing some minor curb and utility work. On a per-foot basis, this is one of the more cost-effective projects. 2024: There are two areas, so it’s a larger project: It’s most of Hillside Trail and south of Hillside Trail, and west of Hillside Elementary. Then we also have that Jenner loop that’s up, off of 80th Street. This is one that’s been pushed off for a while because it’s a full curb replacement; it had a thin overlay done, but that’s on its last leg. It hasn’t City Council Meeting Minutes May 4, 2022 Page 17 started coming off yet, but it’s eight years old so we’re anticipating that will happen in the next year or so. This is another area that we get more calls on, but with the whole curb needing to be replaced, we incurred no additional cost by holding off to get the longest life out of that curb that we could. 100th Street and Hadley Avenue Realignment: Director Burfeind stated Administrator Levitt had mentioned this for EDA funding. The 100th Street alignment is a key part of the Southwest Arterial and serves the Business Park. The assessments are $3.8 million; a large chunk of that is Graymont Village and the Preserve at Prairie Dunes, both approved by the Planning Commission this last week. The Park Trust Fund has a little bit of work with the future park there, to create a parking area, and some of the utilities to serve that. We also have our area funds to have those large utilities that will serve all of this development in the area, but the sanitary sewer will serve all the way down to the Mississippi Dunes Golf Course and even down to Lower Grey Cloud Island in the future. This will actually be a two-year project; we’re bidding it out as one project, but the work by Preserve at Prairie Dunes will be this year. The X on the Zywiec property where 100th Street and Hadley realign will actually be next year because there’s quite a bit of utility work by Xcel Energy; they need lead time to get that work done so will be working on that this year. We’ll do the realignment work in 2023. Council Member Olsen asked regarding Pavement Management in 2023-2024, if Director Burfeind also had Mill and Overlay projects in those years, in addition to the reconstruction that needs to be done. Director Burfeind stated yes, they plan to keep doing the Mill and Overlays; there’s separate dedicated funding with our franchise fees. We would continue to finish out the Grove side neighborhood and then moving back up to the Timber Ridge area, north of 70th Street. Hardwood Avenue and Hardwood Court Signal: Director Burfeind stated we’d be taking a really hard look at this in Spring 2022; we have to meet warrants from MnDOT to install a signal, and up until now, we haven’t met the warrants for that area. We’re going to be doing a pretty comprehensive warrant analysis, looking at some tighter time windows; hopefully, we’ll meet those warrants so we can start planning for that signal project. There are some TIF funds available to help pay for that; otherwise, those signals are paid out of our Streetlight Fund. He stated just the signal itself is about $500,000, as steel is very expensive. With this intersection, we have to complete all of the ADA improvements because upgrading pedestrian ramps on the corners is a MnDOT requirement. There’s some infrastructure work to make sure that all of that aligns, and a little bit of work where Hardwood Court and Kohl’s come in is where that last bit of money is in actual pavement, concrete, and reconstruction. Council Member Olsen stated when Washington County did the signals at Hardwood and 70th Street, they did temporary wood-pole signals for a year or so before they actually put in the metal poles and final signal for that intersection. With the price of steel so high, would we consider doing a wood pole for a year or two to wait for the price of steel to come down? Director Burfeind stated for something like this, we would try to do the steel poles right away; Washington County has a different philosophy, and they leave the wood poles in for quite a while. Those also come with a pretty big cost because they also have the same equipment; if we can get the funding to work, we’d want to go with the steel poles to not have the extra cost of the wooden poles. City Council Meeting Minutes May 4, 2022 Page 18 Sometimes the wooden poles need guide wires, etc., and we’re pretty tight on space on that intersection; we’re going to need to get some easements from each of the property owners on every corner as it is now. So, guide wires when you get into a tighter commercial area can be a little trickier. Administrator Levitt noted at the time of the signal installation at Hardwood and 70th, we were responding to a fatality that had occurred there, so were working quickly to get that signal installed. We were working with the urgency of that situation to find that wood-pole system. Once everything got ordered and set up, it was then changed to the permanent system. MDH Lower Value for PFAS Chemical: Director Burfeind stated about a week ago, the Minnesota Department of Health (MDH) came out with a lower value for one of the PFAS chemicals they look at, although in December, they had added a new one that had very little impact to us. We’re still good with our system, and that doesn't have any major impact systemwide; we can still meet our water demands and do what we need to do. Well 1, which sits right by the Grange tank, has been about .6 on the health index; in December, it went to .7, and with the last test they did, it’s now right about 1. They’re coming out with a new method on how they do this testing, and it actually shows a little lower value, so MDH is thinking we’ll still be able to use that well if we can. As a system, we’re still okay. Well 10 is our main producer and serves the low zone, south of Highway 61. If we don’t have Well 1 on those peak days, we’ll actually feed from a higher zone through our press-reducing valves to meet our peak-day demand. With the modeling that we’ve done pretty quickly, there’s no real major concern systemwide. A treatment plant isn’t an option there because it’s stuck right in the middle of a parking lot. Even though we can definitely serve from higher zones, that’s not something that you want to count on forever; we want to have a good system in place. We have a low- zone treatment plant and Well 13; Well 13 is new, replaced Wells 1 and 2, and it will be treated by the treatment plant. At the joint workshop, he spoke about focusing on the intermediate zone first because it’s the largest plant and just made the most sense. Now that we could lose Well 1, we can still operate our system, but we’d rather have our full capacity in place knowing what’s coming with all of the residential development and NorthPoint. So, we’re going to switch gears and do this low-zone treatment plant first; that’s the one we’ll get bid out next year and start that construction just so we can have things in place as NorthPoint fully develops, and then we’re set. Next week, we’ll be doing a test for Well 13, and that will tell us if there’s PFAS there or not; we believe there will be, but there’s a chance it won’t be. Down in River Acres, when we connect all the 120 homes, about 100 of them had PFAS over the limit and 20 did not. There’s a chance that Well 13 won’t have PFAS; if that’s the case, we’ll drill it, build it as fast as we can, just so we have our full capacity. If not, we’ll work with that treatment plant and Well 13 concurrently to get that low zone back into place. There’ll be a little bit of a shift in the gears with the low-zone plan; they’re really going to be the same design, it’s just that one is bigger, and one is smaller. Director Burfeind stated the other complication of this is we recently awarded the Pine Hill tank-painting contract. When we take that Pine Hill tank out of service, that City Council Meeting Minutes May 4, 2022 Page 19 just leaves the Grange tank, which is what we expected; that’s how it was when we repainted it in 2000. But Well 1 is the well right next to that tank, and that’s what really keeps it at a good level. Well 10 can fill it, they’re all connected, but all of these pipes in the Grove neighborhood are quite small; so, if you don’t have Well 1 to fill that tank nicely, this well has to push pretty hard, and it can just cause some pressure issues down in the south end of town. We’d also just lose some of our flexibility. Unfortunately, the timing was not great with the PFAS, but we’re looking at this really closely right now, and we may not want to move ahead with the Pine Hill tower painting, even though we just awarded it; that contract hasn’t been signed yet, and there may be some cost to us if we cancel that now. It just might not be worth it; we want to paint that tower, it’s a little overdue for painting, but it’s not like it’s just going to fall apart on us. If we think there are any potential issues with taking that tank out of service for two months while it’s being painted, we’re just finishing up our analysis with our water modeler next week, we’re just not going to move ahead with that tank painting; it’s just not worth getting into a bind if we lose Well 1, and we don’t want to be in a bad position. There’s really no need for that type of project to put us in that position. If we’d known this a month sooner, we wouldn’t have gone ahead with that project, but the timing is what it is. We just want to do the right thing to make sure that we can meet all of our system needs and meet all our water needs versus doing that painting project. We’ll keep Council updated on what our decision is in about the next week or so. Mayor Bailey said we’d always talked about capping Well 1 in the future, but he asked if that was the case with Well 2; Director Burfeind confirmed that also was going to be capped. Mayor Bailey asked if Well 13 was going to take the place of both Well 1 and Well 2; Director Burfeind replied that it will, as both Well 1 and Well 2 are about 600 gallons per minute, and Well 13 will be 1,200 gallons per minute. Mayor Bailey asked if MDH had given any indication as to why that particular well’s PFAS level was increasing again. Director Burfeind stated it’s really the same thing as 2017; the actual PFAS in the well hasn’t changed, but MDH brought the limit down on us and it’s 20 times more restrictive than it was. We hadn’t anticipated that much of a restriction; Director Burfeind stated systemwide, we’re fine, but he doesn’t want to put us in a position where we’ll have an issue this summer with the tank painting. In the critical project bill, we have a new tank right here; once we have that new tank, then we can take the final tank out of service with no issues or concerns at all. Administrator Levitt stated the only problem with that one is we’re working to complete the plans and specifications, but with inflation, the cost of that tank is excessive. Right now, we don’t want to go to market to bid it given where the rates currently are. Council Member Khambata stated the bid process takes a little bit of time, so if we postpone this, can we go back to the contractor and ask them to potentially put this project at the back of the line without completely dismantling the current bid process. He fears that if we have to start over again that it’ll be a 25% increase in cost; is there any way to secure our current bid if we do have to postpone? Secondly, from talking with MDH, is there any indication that the PFAS levels will ever go down? Is there a City Council Meeting Minutes May 4, 2022 Page 20 way to ever start planning for the long term, a new well in a couple years to keep pace with regulation? Director Burfeind stated he’d speak about the regulations first. What’s really nice is whether we build a Gap plant or an Ion Exchange, they take everything out of the water. With our plant, even if MDH lowers the limits, it really doesn’t affect us because those treatment plants put out water that’s basically 0. Our current situation is that we can’t treat it, and there’s no way to temporarily treat it; that’s why we want to get this low-zone plant built. Once we do, Well 10 and Well 13 will go through that plant, and they can go as low as they want, and we’ll still be able to run them for just as long before we get what we call breakthrough and do a changeout. In the intermediate zone, because we have two temporary plants that put out clean water, even as some of those other wells’ health index goes up, we can still blend, and we can still meet all of our needs. Wells 11 and 12 have such low levels that even if they’ve gone up, they’re still under the health index. So, we’re pretty comfortable with our system as a whole; once we have a permanent treatment plant someplace, there’ll be no issues. Director Burfeind stated in terms of delaying that tower-painting project, unfortunately, it’s too long of a time; if we’re not comfortable doing it because of the unknowns with Well 1, that really doesn’t go away until we have a treatment plant and a new tower. Even with switching gears, we’re still talking about two-to-three years to do that. He spoke with Utilities Superintendent Rick Alt because these are his water towers, and he’s comfortable with delaying it, and we could do a pressure wash, etc. just to clean up the Pine Hill tower and help keep it in good condition for the next couple years. Paint is one of the most volatile commodities right now, so he doesn’t think a contractor would be willing to hold that price for that length of time. It’s unfortunate, but when he weighs painting a tank against our water system and public health, there’s just really no question on what’s the priority. Administrator Levitt stated with Attorney Land we could work an Act of God situation, as we couldn’t foresee this or know it existed. We may have to pay some potential bidding costs to get out of that contract, so that item might be on the Council agenda for May 18. It’s something we’ve never actually had to do before, so we’re working through that legal process. Utility Division Relocation: Director Burfeind stated the low zone was our planned area to move the Utility Division, as we have space needs issue with the Public Works and Parks building. A good solution was to move the Utility Division out and co-locate it with the water treatment plant, and hopefully have some synergies there to buy down our Utility Division costs; the State already has to run water and sewer there, and we need stormwater, a parking lot, facilities, and the treatment plant. The hope is by adding on the Utility Division building, we can actually see some cost savings in that building; that will really help with our space needs, as we’d move ten staff members down there, along with a front-desk person. Maybe we could make the storage space down there a little bit larger, too, for some of our off-season storage needs for things that we don’t need to keep at Public Works and Parks. We’re working with Wold right now to look at these things, as it’s really a joint effort with the treatment plant. We’ll see what the construction process is; we don’t know if the buildings will be physically attached or side City Council Meeting Minutes May 4, 2022 Page 21 by side, but we’ll be working to see how the Utility Division will be. We have the space needs figured out because we did the space needs study that looked at our growth and what we need for the Utility Division. We’re not sure if that’s something we can bid at the exact same time; we have to work through that with the State on how we can handle building both of those facilities and how we’d handle that contractually. We’ll also look at the campus as a whole, knowing it’s the future site of the full Public Works and Parks, so we want to have consistency in that campus with the well, the treatment plant, a building now, and a building in the future to make sure they all fit together. Mayor Bailey asked if Wold was also doing the treatment plant; Administrator Levitt replied that it would mostly be Stantec with their engineering and architectural team, but Wold will help with the architectural parameters. She thought the challenging part was we anticipated that this was going to be pushed off until 2025 or 2026; looking at this timeframe, we’re now maybe into 2024 if we need to do Utility Bonds to build the Utility Building there. It wouldn’t necessarily be a general levy, but we could do it with the Utility proceeds. Glacial Valley Park Improvements: Parks and Recreation Director Zac Dockter stated this came in at $2.6 million, about $250,000 over our anticipated costs. With others, like the ice rink dasher board system, we’re at $2.95 million construction costs. Soft costs were at 30%, which we think were very conservative, so we’re hoping that number will come down quite a bit. Conservatively, we’re estimating a total project cost at $3.8 million for the park portion. That number hasn’t gone up from the Council workshop on February 23; the only difference is that we removed the sports lighting from the soccer field and the baseball field. That wasn’t something that was promised to the public and it wasn’t specified in the Master Plan, so he felt comfortable removing those two to get us back down to where we need to be with the budget. There’s also an enhanced building sign for Glacial Valley; the total building project cost is about $3.5 million. The floor plan is laid out, and we’re currently going through security systems, lighting, so we’re getting into the design details. Council is scheduled to have more information on June 15 on design and schematics, so Council can pick and choose what should stay and what should go. For funding, right now, we’re suggesting $2.39 million for Park Dedication/Park Trust Fund fees, future park dedication of $1.1 million, and then Utility Funds for about $215,000. Council Member Thiede stated if this park was being built in the middle of Cottage Grove, he’d feel better, but it’s right up on the edge of town. Director Dockter stated we have service radiuses, so we try to abide by those. There’s going to be great need for recreational activities in that area, just like there are in Hamlet Park; north side community, south side, west side, so we hold pretty true to those service radius maps to make sure we’re not over investing or under investing in any of our areas. Royal Oaks Golf Course Improvements: Director Dockter gave the financial breakdown: Total Irrigation System Costs: $2,250,000 Total Golf Course Improvement Costs: $1,250,000 Total Project Cost $3,500,000 City Council Meeting Minutes May 4, 2022 Page 22 Those totals include design and engineering fees. Recommended funding sources at this time are Water Conservation Fund for $650,000, Stormwater Utility Fund $100,000, and an EDA Loan of $2,750,000, for which we’re proposing a 0% interest rate for the 15-year loan, with annual payments of $183,333.33. Director Dockter stated River Oaks General Manager Dennis Neitz would talk about the schedule should this project move forward. Manager Neitz stated they worked hard at trying to get some bids; there will be a price increase on sprinkler heads and valves. Talking with City staff, it might be a good idea to look at pre-purchasing those as there’s an anticipated 6% price increase on June 1. That’s part of the $250,000 estimate for May 13. We’re working with a firm to make sure that we get all of the plans and specifications together, so hopefully by mid- summer we can get this authorized if this is something that Council wants to approve. In the fall, we can work on our irrigation pond, since it would be frozen, and putting in an irrigation pump station. This will be going into 2023 with some tree removal in the winter, followed by breaking ground on some of the irrigation construction. The irrigation system is all on the golf course, so we might be closed one whole weekday but would be fully open for the weekend. Administrator Levitt told Council that is the irrigation project plus all of the renovation to the golf course itself. If Council is not comfortable with the Interfund Loan value and only want to proceed with the irrigation, Council needs to direct us on that. Manager Neitz stated the importance of doing both projects together is because of the new irrigation piping, it’s fused together, so bringing out a contractor at separate times is not cost effective; we wanted to look ahead at the next 30 years of River Oaks, which is why we’re adding tee boxes, bunkers, and other renovations to the course. If Council doesn’t desire us to do all of this, that’s fine, but if you want to do it, these things should work together. Council Member Olsen asked when the proposal for some of the course renovations was put together if there was any consideration for repair or replacement of the parts of the course that are in disrepair; there are probably some the Public Works teams can do some work on, but there are probably some others that have substantially outlived their useful life so need to be redone. He asked if that’s something that would be done at the same time. Manager Neitz stated part of it is putting in some different cart paths in different areas, but they’ve also started to be proactive about that; yearly, we’ll be investing to repair those cart paths. Some of these, yes, would be changed. Director Dockter stated if the irrigation project moves forward, we’re recommending that we purchase some of the hardware associated with the sprinkler system, valves, heads, and controllers; that cost is about $300,000. Our irrigation specialist has recommended that, as those costs just keep increasing, with another price increase coming in June. We’d recommend using the cooperative purchasing system to get those items in stock. Mayor Bailey asked if the pipe would be metal; Director Dockter replied that it would be high-density polyethylene. Manager Neitz stated the new piping has been used by Inver Wood, Eagle Valley, and they’ve not had to touch a pipe at all. It should be strong enough for 20 years; the only changes typically made are on sprinkler heads. City Council Meeting Minutes May 4, 2022 Page 23 Council Member Khambata asked if it’s normal for those Interfund Loans to be at 0% interest; he knows it’s money we already have, but it would otherwise be sitting in some sort of bond mechanism or something that would pay a specific interest rate. Is the alternative use of those dollars being budgeted for on the other side also? Administrator Levitt stated that Director Malinowski recalled we’d previously charged 1% interest. This is a philosophical question because we’re taking $2.75 million of opportunity from the EDA, and we’re reducing our opportunity to use that. We don’t know all of the projects that we might have to forego because that money has been tied up, encumbered in use for something else. That’s a philosophy and policy decision that Council needs to make; is that value something you’re willing to do without? Council Member Olsen stated if we don’t spend the money on the necessities of the golf course, including the irrigation system that’s obsolete, we run the risk of continuing to nickel and dime ourselves year after year. It’s almost like doing preventive maintenance on a car; you don’t have to put oil in it, but at some point, the engine is going to tell you that you should have put oil in it and then you’re going to have to replace the engine. The previous loan that the EDA made to River Oaks at 1% was 100% forgiven by the EDA; so, River Oaks did not have to pay that loan back. Council Member Khambata asked, from a percentage standpoint, how does that $2.7 million affect the EDA’s remaining operating capital or being able to use it towards other projects. He was advised there would be $2.2 million left. Mayor Bailey shared with Council Member Khambata that another time that we did a loan to ourselves and didn’t charge interest was for this City Hall/Public Safety building. We’ve been paying those funds back; Director Malinowski advised we’re down to only one fund that we’re still paying on, the Sewer Utility Fund. Mayor Bailey stated if we’re going to do this, it’s expensive, but rather than doing some things later on, he felt it was better to get it all done at once. Administrator Levitt cautioned Council that LSP has not been contributing the full $350,000; they only contributed $150,000 this year, so there’s not a set income. We only have a handful of land sales left in the Business Park, so we won’t be seeing a lot of other revenue proceeds coming into this fund. We aren’t levying for our staff at a full amount, so we always make the Interfund Loan out to fund staff out of this as well. Council Member Khambata just wondered how this would impact the other facets of our long-term vision. He understands there’s a need for it; he just wanted to make sure we weren’t robbing Peter to pay Paul. Council Member Olsen asked if Director Dockter needed direction from Council on making the purchase they want to make before June 1. Administrator Levitt confirmed that on May 18 we’d look for authorization for the acquisition and purchase of it; we’d use the Utility Fund or the Water Conservation Fund, but we’re buying the sprinkler heads, etc. with the anticipation that we’re moving forward. So, we’ll need to talk about structuring the debt based upon the bids and the next step in the project. She asked if Council was comfortable starting an Interfund Loan process. Council Member Khambata stated that he doesn’t have a strong background on the EDA, but if $2.7 million was still enough to achieve the EDA’s objectives, then he’s okay with it. City Council Meeting Minutes May 4, 2022 Page 24 Council Member Dennis stated that he felt the EDA needed to weigh in on this; it’s a separate entity, and there are members there who might want to have input. Mayor Bailey asked if it would be brought to the EDA in May; Administrator Levitt replied no, it would be in June or July, once the actual debt was structured in the policy. Council Member Thiede stated it’s a large amount of money that’s being spent; he doesn’t have any problem with the interest rate of 0% if we have the money to do it. Levy Director Malinowski stated included in the Council packet were the four sample properties that we look at every year: She’s concentrating this year on the three-year average. Based on the levy in front of you at 9.92%, the three-year average on those properties is between 3.54% and 4.17%. Council Member Thiede stated he thought we had to add another column to that table showing if we didn’t increase our levy, what effect the increase in market value would have; he wanted to see the pure effect of the amount of money we’re spending and what effect that has on the taxpayer. Just looking at this, at first blush, we’re spending too much money. There’s just not enough money. We’re supposed to fund new things with the growth, and we’re having substantial growth, but if we go back and tell people their City tax is going to increase 13%, they’re going to have a cow unless we have a very distinct explanation for why. We’re putting in this park and we’re paying for the whole thing; how long did it take for Hamlet Park because we understood we could only do so much at a time. It’s great to say if it’s cheaper, it would be better to do it all, but there are just not unlimited funds. In his opinion, there’s a bottom to the bucket, and this just looks like it’s way too much. Council Member Olsen asked Council Member Thiede if he was looking at the three- year average. Council Member Thiede replied that he’s looking at the percentages; with the three-year average, we’re kind of keeping it steady. They were happy when it was 2%, they were happy when it maybe went down a little bit, and now they’re going to look at the 12%, and unless we can say that it’s not because the City’s spending too much money, they’re just not going to accept it. Council Member Olsen stated last year Council Member Thiede had the opportunity to mitigate this year’s levy, and he didn’t want to do it last year. He didn’t want to go to 6% last year, like we should have. So, now we have to pay the piper this year or we have to cut services. Council Member Thiede stated he’s been raising concerns about we’re spending too much in terms of hiring, how much we’re paying people, and just all around how much money that we just keep spending. It’s black and white. Mayor Bailey stated when somebody looks at their eventual tax statement and they see 9%, they’re going to say, wow, that’s quite a jump from 4.2%. Council Member Thiede stated that it’s not so much the levy if we’ve got the new homes and the new taxpayers to pay for it. As we’ve seen with some of the changes in the City tax, it’s worked out. This year it’s boom, it’s higher. Council Member Olsen stated that it’s half of what the County is projecting as property value increase; what that means is an individual tax rate is going to drop significantly, even if you get a 12% levy increase, which I think we both know probably City Council Meeting Minutes May 4, 2022 Page 25 won’t happen. But because of the property values increasing so dramatically, the tax rate is going to go down; that’s the math that you have to look at. You have to look at what does operating the business cost and what does the property value look like, and then what are you going to charge for your levy. Property value increases and levy increases are two different things. Council Member Thiede stated that’s why we need to put another column on this table. If, in fact, we show what the increases would be if the market value didn’t take that significant jump, then that’s the message that we have to send to people. In reality, with the increase in new taxpayers, their cost would be going down if not for what the County and the appraisers did, saying that the market value was significantly higher. Council Member Olsen stated then we also need to compare our tax rate over the last ten years and our levy increases over the last ten years to the rest of Washington County and see where we land. Council Member Thiede stated people have short memories. Administrator Levitt stated to answer Mayor Bailey’s question about the actual tax rate that’s being referenced, right now for 2022 we’re at 37.15; based upon our projected levy at 9.92%, we’re decreasing the tax rate down to 34.14. Mayor Bailey asked if that’s the lowest it’s ever been and would like to have that information. Council Member Thiede stated at any rate, that’s the message that we have to deliver. Council Member Khambata stated for anyone who didn’t just purchase or sell their property, the increase in value is not realized. From an emotional standpoint, most constituents are going to say I haven’t done anything substantial to my house, yet my taxes went up or down based on what I as a consumer perceive as the standard. My house hasn’t changed, why are my taxes changing? So, when he’s looking at this, he’s looking at the year-over-year change and the actual charge; he thinks that’s what people fixate on. We had a year when it went down, which was nice, and a year where it’s come back up. So, he thinks that’s what people are going to say, as the majority of people probably just didn’t pump a bunch of money into their house to justify a huge increase. He’s at a real estate convention right now, talking to people who are experiencing 20% increases, year after year. When people who are selling houses are shocked, then the consumers are definitely shocked. Most people are going to have the perception, with the house being the known quantity, did my taxes go up or down; the simple answer is yes, they did. This isn’t even factoring in the County or School District levies; people are going to see a pretty direct increase in their year-over-year tax bill. Whether or not we raise the City portion, people are still going to come to us for answers. Council Member Khambata asked if we raise it this year and with the other unknown economic factors, can we go back and say to our constituents we’ve got this extra tax capacity coming online, so you saw an increase this year, but the next few years are most likely going to be flat? What’s our 2024, 2025 projection? He's visualizing the chart we had where tax capacity was going to increase higher than our levy for a couple of years; he asked if we were still in that position. Mayor Bailey stated the 2024 number had been displayed, and it was 8% or so. To Council Member Khambata’s point, anything above no taxes or reduction in taxes will City Council Meeting Minutes May 4, 2022 Page 26 not be accepted by the public. We have to be able to provide the public information on what they’re getting for the increase in taxes: Personnel, street projects, etc. Council Member Thiede stated that’s all good, but people really aren’t going to recognize that in terms of how much their taxes are going to go up. If there was a time to delay it a bit, now would be the time because of this enormous increase, the assessment that came in from Washington County. As we know, we’ve had supply- chain issues, so many items have increased costs; somehow, we’ve got to keep it from jumping that much. Council Member Dennis stated one of the most important things to be mindful of is keeping the level of service and response at the level people have come to expect and appreciate by living here. We just have to look at the numbers and ask how do we deliver? As we’re growing, there are additional costs to run the business. How do we deliver it and do it in the most effective way possible through that bottom line number; knowing that we have increased costs, there are just some things that we’re going to have to fund. Hitting upon that number and what’s reasonable, staff has made a lot of requests, and we had strategic planning and discussion about it, too. He thinks we just have to try to do the best with what we have and continue to do it in a way that makes people happy to live here and have pride in living here. We all know we’re doing a good job on behalf of the people, so that’s where he stands. We just have to figure out what that number is going to be. Mayor Bailey asked for the proposed tax levy; Administrator Levitt stated it’s at 9.92%. Administrator Levitt stated the important discussion tonight is providing staff with direction on the levy. Council Member Thiede stated if that was a 0% levy increase, it would be interesting to know what people’s taxes would be; to be able to deliver a message saying even if we didn’t increase our levy, here’s what your taxes would be because of the County increasing the market value of your home. Council Member Dennis stated that it doesn’t work that way; the assessed value of the property comes from Washington County, so it will hit the bottom line on their tax sheet. But just because they raised it doesn’t mean that it will raise our cost; we’re making the decision here on what we want to do. Council Member Thiede stated if people react to how much our levy is changing, we can say the valuation of your home increased from $330,000 to $420,000; here’s what your taxes would be even if the City portion had 0% change. Obviously, we have certain expenses, we have more people. Ideally, we like to have the growth, and we’ve had some substantial growth to fund some of these other things, so that if everything else was equal in terms of the value of the home, we’d be like we have been for the last five years, but it’s obviously not. Council Member Olsen stated every year when we go for the budget in November, we get a presentation from the Finance Department. At that time, there’s always a slide that he comments on; that slide shows the value the Cottage Grove resident receives for their per capita tax dollar versus the other communities in Washington County. And every year we are towards the bottom of what we charge for a tremendous amount of service that we deliver, and that hasn’t changed. We are not over spenders; we are not City Council Meeting Minutes May 4, 2022 Page 27 people who are throwing money around. We make sure that the residents of this community receive outstanding levels of service in all the core government functions that we provide at a tremendous value when you look at per capita tax dollars versus all of the other communities in Washington County. We can’t lose sight of that, and that’s our message; that always has to be our message. One of the reasons Director Malinowski put a three-year average on that slide is because if you look at the three- year average, that’s also a terrific message. When we had the budget conversation last year, his recommendation was if you’re going to put a message out to the public, it’s going to be the two-year average, and it would have been a great message that would have been well received. If we wanted a lower tax rate this year, we should have had a higher one last year, but we didn’t. So, now we have to pay the piper. When we vote on this budget in November, per capita dollars spent for the services we provide in the City of Cottage Grove are going to be right around the bottom of the County. And that’s something that we’ve always been proud of and should always be proud of. Mayor Bailey told Director Malinowski as she starts hearing from her local partners, it would be good to keep us updated on what she’s hearing. We liked when Director Roland kept us in the loop of what these other cities are doing, just from a comparison standpoint, because that also helps us understand where we are in the grand scheme of things. We’re always at the bottom, like Council Member Olsen said, and that’s okay. Mayor Bailey asked with the number from 2022 to 2023, the raw number, what’s the difference? Director Malinowski stated that would be 1.7. Mayor Bailey asked of that 1.7, what are we adding? Director Malinowski listed the additions: Staff positions that we discussed, approximately $391,000; City Hall carpet and flooring replacements, when we did the two-year budget last year, that was identified for 2023; we increased the transfer out to Equipment Replacement by $100,000 for 2023 (Administrator Levitt noted that was the additional plow truck); the Road Improvement Bond, so $224,000 for 2022, but to keep that levy with adding the new positions, we took that out for 2023. Administrator Levitt stated the rest of it is debt. Director Malinowski stated there’s also been the increase in commodities and contractual, another 2%, so that’s part of it, too. Administrator Levitt asked Mayor Bailey for a target to establish direction to staff in our scenarios; we need a levy number. Mayor Bailey stated that he did not want to go into the double digits. If you could keep it in the below 10% range, 8% to 9%, somewhere in there. We committed to the positions, and we’ve commodity issues that we have to deal with, and we have Pavement Management debt. Some of these are fixed costs. We’ll just have to make sure that we talk about the three-year average and what the citizens are going to get for their money. Council Member Khambata thanked staff for putting this together; every time we get into a conversation like this, we kind of get new leads on these things. He appreciates that we can have a healthy discussion about this. He thinks we all pride ourselves on being a fiscally-responsible community, and part of keeping that spirit and that process alive, though unpleasant for us sometimes, it helps us hold each other in check to make sure that we are spending money smartly. City Council Meeting Minutes May 4, 2022 Page 28 Council Member Olsen told Council Member Khambata that we always start with a Strategic Plan and get a sense of where we need to go. In May, when we sit down for this conversation and try to come up with a target to aim for, it’s always a little bit difficult because it’s still early in the year, there are a lot of unknowns, but we always land on a target. Then, when we go through those line-by-line budget discussions, which is really where the rubber meets the road, in June and July, we’ll whittle it down to where we need to be. Staff will continue to get more information from the County and from other communities in the area, which will help us make decisions. This is the process; it’s a good process, and he’s very grateful to staff for being honest and transparent with us. He thinks that’s the best thing you can do is just lay it on the table so that we can talk about it and come up with whatever answer we’re going to come up with. Council Member Olsen told Mayor Bailey he’s in the same boat with him; he thinks we want to avoid double digits, but we also have to be very understanding of the current market conditions and just the reality of our growing community and what that means in terms of infrastructure needs and stress on our staff. If we want to have those hard conversations about needing a golf course in the City of Cottage Grove or maybe we should sell it because it’s awfully expensive, we’ve had that conversation before; if that’s the case, then somebody needs to make that suggestion. The way he’s looking at it and tying into what staff presented earlier, he thinks we’re on the right track. He thinks it’s a very sound and reasonable plan; he doesn’t see a lot of fat in the budget, and he never does, so he’s comfortable with trying to stay right there, below that double-digit mark. We certainly need to provide the resources necessary for our team to continue serving our constituents at an extremely high level. Council Member Dennis asked if we had any idea of what Woodbury is going to be looking at. Administrator Levitt replied she’s anticipating that you’re going to see them at a very high level because last year they were at maybe 8%; most communities in Washington County match their growth rate, so she’d anticipate they wouldn’t change that number much this year. Council Member Dennis stated his number is 9.49%. Council Member Thiede stated we always talk about the levy percentage, and to a certain extent he doesn’t care about the levy percentage; he’s more interested in the actual effect that has on the individuals. He believes we want to keep great levels of service, and staff does a good job. So, he thinks we need to take a look at other cities, but in terms of a number here, he’s not as concerned about it as much as how we explain what effect what we’re doing is having on how much you pay to live in this city. If it’s going to be higher, we just have to have a good reason as to why. So, if we hadn’t increased the levy at all, we can tell people here's what would have happened to your City tax just because the value of your home was increased to that amount. He thinks that’s a better message than just saying well, just look at the last three-year average. They’re going to be looking at that one-year impact. We loved the fact that a couple years ago it supposedly went down. He just wants to know how we’re going to explain the actual impact to the individuals. Mayor Bailey told he’d been told Woodbury’s levy was going to be 12% to 13%; we’ll see if that comes true. 14. WORKSHOPS – CLOSED TO PUBLIC - None. City Council Meeting Minutes May 4, 2022 Page 29 15. ADJOURNMENT Motion by Council Member Dennis, second by Council Member Thiede, to adjourn the meeting at 9:28 p.m. Clerk Fischbach called the roll: Council Member Khambata-Aye; Council Member Dennis-Aye; Council Member Thiede-Aye; Council Member Olsen- Aye; Mayor Bailey-Aye. Motion carried: 5-0. Minutes prepared by Judy Graf and reviewed by Tamara Anderson, City Clerk.