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HomeMy WebLinkAboutMinutes 2022-07-27 MINUTES COTTAGE GROVE CITY COUNCIL July 27, 2022 COUNCIL CHAMBER 12800 RAVINE PARKWAY SOUTH SPECIAL MEETING - 6:00 P.M. TRAINING ROOM 5:30 P.M. DINNER - 6:00 P.M. SPECIAL MEETING 1. CALL TO ORDER Mayor Bailey called the Special Meeting to order at 6:00 p.m. 2. ROLL CALL City Administrator Jennifer Levitt called the roll: Council Member Khambata - Here; Council Member Dennis - Here; Council Member Thiede - Here; Council Member Olsen - Here; Mayor Bailey - Here. 3. AGENDA ITEMS A. 2023-2024 Budget Overview Administrator Levitt stated staff has done a tremendous amount of work for next year’s budget, which is never an easy task. In January, at the Strategic Planning workshop, she’d noted the mountain before us was going to be more challenging than the mountain we’d already summited, which was positioning for growth; we achieved that because we put a lot of energy and effort into it. Today she met with other cities within Washington County. She wished she had recorded it because the same challenges and issues we’re facing with growth and the growth rate are being felt throughout all of the communities. Regarding the Strategic Plan, we’ve achieved a lot; tonight, she asked staff to focus on the goals for 2023, as they relate to the Strategic Plan, so the goals and dollars start to align. They won’t be spending much time on the 2022 accomplishments but will be focusing more on the goals. Administrator Levitt told the Council to feel free to ask question at any time. Finance Director Brenda Malinowski stated tonight they’re looking for Council guidance on the 2023 levy and budget. When we last met in May, the target was 9.49%. Commodities and contractual were to stay at 3%; departments have done an excellent 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 Special Meeting Minutes July 27, 2022 Page 2 job of keeping those commodities and contractual at 3% except for things beyond their control: Increased fuel costs, the fleet, our IT budget, etc. Since the May workshop, inflation is now at 9.1%. We’ve had a deeper dive into the Internal Service Funds; with our PTSD claims, we’re now paying $45,000 per year for that health insurance. Our workers compensation premium increased 25%, so that’s also taking a hit on our budget. We’ll get into further detail about our IT budget, but we’re spending more than what we’re allocating. We’ll have budget proposals on Internal Service Funds, which we’ll detail further. There have also been Budget Additions by departments, and we’ll review those as needed. Director Malinowski stated just as a reminder, this is part of the long-term staffing plan; the positions that are in the 2023 and 2024 budgets are included tonight. She noted that in order to keep our levy at the 13.09%, we needed to move the Public Service Worker position in Parks to 2024; it had been identified early in the process as being in 2023, but now it will hit the budget in 2024. B. General Fund Revenues Governmental Funds, Revenue per Capita Director Malinowski reviewed (using 2020 data) how Cottage Grove compares to other communities statewide for those with populations between 20,000 and 100,000:  Property taxes, per capita: We’re at $438; statewide average is $537.  Special assessment revenue: We’re higher than others; that’s because we’re growing so we’re collecting those assessments from the developers.  Expenditures, per capita: We’re at $693; statewide average is $749.  Capital outlay and construction: We’re quite a bit more just because we’re growing, so we have those expenses.  Debt service per capita: We’re at $96 per capita, statewide average is $124. Council Member Thiede stated regarding what he’s read on the inflation rate, etc., they’re estimating price pressures and things like that will come back down. Some reports, like Morningstar, are projecting that we’ll go from inflationary to deflationary by 2023, and they’re saying only 1.5% from 2023 through 2026. He knows its been 9.1% since the start of 2022 but wonders if we’re overcorrecting because things are a little different now than what they’ve been in the past; they say inflation is high, but even with salaries, if we correct too much, there are certain things that we can bring back down and certain things that we can’t bring back down. He’s just looking for some discussion associated with that and if we’re overcorrecting to the 9.1%. Administrator Levitt stated all of the commodities in here are held at 3%. The ones that are on your Budget Add are commodities that are exceeding the 3%; those include fuel, ammunition, salt, etc. The Internal Service Funds are affected by inflation. She stated Washington County is thinking about using one-time cash to fund their inflationary factor; they’re betting that in 2024, inflation will come back down, so they’re not going to levy as much for the inflation, and they’re going to take one-time cash. That’s one model we could use, like Washington County; it’s risky because she asked Director Malinowski what are you holding for the price per gallon, and she replied we’re City Council Special Meeting Minutes July 27, 2022 Page 3 hopeful it stays below 3%. Administrator Levitt stated she has a hard time betting on hopeful. So, we’ve tried to be conservative; she doesn’t think we’re as conservative as maybe we need to be with the fuel because we’re just trying to strike that balance. Like you said, we don’t want to overcorrect, but at the same time, it’s hard not to be in shortfall. Director Malinowski stated we have fuel in the budget at $3.10 per gallon, which seems conservative but not ultraconservative. She told Council Member Thiede that our next fuel contract is in February 2023; he stated the price could be substantially down by then. Director Malinowski stated we kept commodities at 2% in 2022, 2021, and 2020; so, we’ve got three years of 2%, and so this is the first time we’re edging it up to 3%. Administrator Levitt told Council Member Thiede with his recognition of the 2022 budget, he’s right; we’re getting hit for some unexpected costs, which will probably eat into the projected excess revenue. We didn’t foresee all of those in this budget, so they weren’t projected. Christine Costello, Community Development Director, shared demographic information. With our population growth, over the years we really planned for slow and steady growth, which we’re seeing. Currently, the population estimate for 2021, through the Metropolitan Council, is 39,605. The census and Metropolitan Council have differing opinions; the census says it’s 39,926. When we look at 2030, the Metropolitan Council is saying 42,200; Director Costello stated she thought we’d bypass that very quickly. She took the growth percentage of 1.97% between 2020 and 2021, and used that until 2030, and our population will be over 47,000. So, the community is seeing that slow and steady growth, and we still have room for development. Council Member Thiede asked if we should control that growth a little bit more, too, with some of these numbers. Director Costello replied we do in terms of our Utility Savings Plan that’s in our Comprehensive Plan; so, we ensure that we are at least 80- to-90% developed in Staging Area 1 before we move to Staging Area 2. We only recently opened the Utility Staging Area at 70th and Keats, to work on the east side, as we’ve had developer interest there. Previously, that was further down the line, so the Utility Staging Area really kind of controls that growth. Commercial and Industrial aren’t interested unless there are City services and utilities, so that’s the mechanism we’re going to use. Mayor Bailey stated part of that, too, is being driven by the developers themselves; Director Costello absolutely agreed. Discussion ensued when Council Member Thiede stated we don’t have to give into all of the developers’ demands, and Mayor Bailey replied we’re not giving into any demands. Council Member Thiede noted we’ve done variances on some of them to reduce lot widths, etc., to which Mayor Bailey replied we’ve done that in every development. Council Member Thiede stated that’s what he’s saying; maybe that’s a way to control growth by not allowing some of those variances. Council Member Dennis stated that was an attempt to try to keep prices down, too, on the costs of building a home. Administrator Levitt stated as Director Costello pointed out, we had anticipated, as we’d planned with the Metropolitan Council, a very slow and consistent growth. With City Council Special Meeting Minutes July 27, 2022 Page 4 the households, you can see how fast we’ve adjusted; so, that’s where you’re seeing we’ve planned for slow and steady growth, and growth definitely occurred much more rapidly than what we had anticipated. That just means we also need to be able to react more quickly. Council Member Thiede stated we could also control it. Administrator Levitt stated they could add a moratorium to residential growth in areas; that’s the only way you’re going to be able to truly slow it down. As Director Costello said, we govern it by our Comprehensive Plan and which areas we phase for development. So, that’s our biggest control mechanism besides a moratorium. Mayor Bailey stated look at the earlier years where it was low growth, those were the years of the previous recession, 2008-2009. So, our goal back then was to prepare ourselves for growth, knowing it wouldn’t go through the roof, but we prepared and planned for this to happen. Part of it, too, is with the higher-density areas, and we really didn’t have anything like that in the past. Director Costello stated the 2021 does not include the 202 units of Oppidan and Pillai Builders for those market-rate units that are going in; Mayor Bailey stated those would be for this year, which Director Costello confirmed. She stated it’s a nice reflection of how the community has been positioning itself. Director Costello displayed the current lot inventory: She explained the numbers in blue are those that are developed, and those in red can be submitted. So, if a developer has somebody interested in purchasing a home, we have 514 lots for single family and 251 for multifamily, which are mostly townhomes. It’s important to keep in mind that this again does not include The Views and Oppidan. There are potential subdivisions that we could potentially see come back; those are Graymont, Preserve at Prairie Dunes, and Ravine Crossing by D.R. Horton, at 90th Street and Keats Avenue. They’ve said that they’re going to wait until next year instead of phasing it, and they’ll submit all at once. We’re hearing from national developers are concerns with the interest rate, difficulty finding trades, and the cost of materials. So, that’s another potential 528 lots for potential development. Administrator Levitt stated right now, you can see where our lot inventory sits with vacant lots at 765; so, if we are budgeting conservatively for next year, we’re maybe in about the 350 range, then taking into account probably three-or-four industrial buildings as part of that. So, we’d be maintaining the same amount of revenue projection as we did for this year but recognizing that it’s not going to happen as aggressively in the single-family market, but probably more in our industrial market because our four lot sales aren’t going to close until probably the end of the year. So, they won’t be pulling a Building Permit until 2023. Director Costello stated to add onto that, she’d given them the current Building Activity Report. At the end of June 2022, it was 241 single-family homes. It’s important to remember that the Building Division is still extremely busy, as all of those new homes from last year and the year before are adding decks and additions, so they’re busy in that regard. Besides new permits, they’re focused on that as well. Administrator Levitt stated she thinks it’s amazing when you look at that chart; they’ve done 10,637 inspections to date, which is a lot. City Council Special Meeting Minutes July 27, 2022 Page 5 Council Member Thiede asked as we look at Washington County and increasing property values, it looks like that’s around 20%. If we didn’t increase the levy, would our tax intake actually go up 20% if the value of the homes increased 20%, because it’s a percentage. Director Malinowski stated we’d have to look at the growth that’s coming on in the community, and she hasn’t done that. Council Member Thiede stated let’s say the growth was 0, but the home values increased 20%; if everything else remained the same, wouldn’t our revenue increase 20% from taxes? Director Malinowski replied you’d have to look at what percentage of the pie that home was; so, if it stayed in the same percentage of the pie, in comparison to the rest of the taxable values, then it would stay the same. Council Member Khambata stated what she’s saying is if the number of dwelling units doesn’t change, the levy is divided by the total number of dwelling units; Director Malinowski ed divided by the tax capacity. Council Member Khambata stated if we’re anticipating this year’s assessed value on a $300,000 house, we’re going to hit them for $1,100 for the year; if it goes up to $320,000 next year, we’re still only asking for $1,100 from a household of that value. So, if the value goes up, our levy has to increase proportionately; otherwise, next year’s levy would be less than the 20% increase in its assessed value. Council Member Olsen stated that’s why the tax rate gets calculated first as growth. Council Member Khambata stated the tax rate is relative to this year’s value, not next year’s assessed payable value. If it was like a sales tax, and the volume of the sales increased by 20%, then that would be a linear correlation, but our levy is divided by the number of homes, and we’re estimating the impact based on today’s value. Mayor Bailey stated he spoke with Woodbury’s mayor today. In Woodbury, their housing values increased 20%, but the commercial value was up approximately 5%; so, when you talk about the pie, that’s what we’re talking about. Not everybody is equal on what they’re paying. Director Malinowski noted that is no different than here. So, our residential shows them going up 22% in value, and commercial is 5%; so, we’re very similar to Woodbury. That’s shown on this two-page handout; on the front are the residential properties that are increasing 20% and the impact of the levy that we’re talking about tonight. On the back is Commercial-Industrial, and the top three aren’t having a change in market value; so, they’ll see a tax decrease for 2023. So, more of it is falling on residential than on commercial this year. Director Costello stated this last graph is one of her favorites; Council hasn’t received this yet. At the beginning of July, total Building Permits were down from last year; this morning, we were at 467, but at the end of the day, we were at 478. Total Building Permits, everything that comes before Community Development and the Building Division, which includes decks and sheds to new single family, new commercial, and industrial. So, as of today, we have outpaced last year. Internal Service Funds City Council Special Meeting Minutes July 27, 2022 Page 6 Director Malinowski stated Internal Service Funds are just a way for us to service our internal customers, so that’s the City, whether they’re General Fund customers or Enterprise Fund customers; it’s a way to allocate costs. A great thing about Internal Service Funds is when they have cash balances, and our costs have increased more than what we can fit into the levy, we can use the cash balances in those funds, so we don’t have to hit the levy as hard. The Insurance Fund pays for health insurance for our employees, our property insurance, and workers comp. We also have our IT Internal Service Fund, and that includes our computers and our software. Fleet is our gas, and when our pickups and trucks go to Public Works, to the maintenance shop, we allocate that out of the Fleet Fund also. New for the last couple of years is Building Maintenance; we have three Public Service workers who go between buildings, so when they’re at Public Safety/City Hall, their salary and their costs are coming to our budget from that Internal Service Fund. If we had health insurance increases of 14% one year, we could only allocate out maybe 12% of the cost and take 2% of cash balance in the Internal Service Fund. So, what has been happening in the Internal Service Funds, just for budget strategy, is we’ve been allocating costs there but not allocating it out to the departments. So, they’ve been having money deficits in the cash balances in those Internal Service Funds. In the 2023 budget, we’re proposing a staged approach to funding because we have two Internal Service Funds, IT and Fleet, that have negative cash balances today; we want to start to fund current operations out of IT for 2023. For 2024, we would look at either the Fleet Fund or the Insurance Fund and start to just fund those current operations. Right now, we’re not allocating enough of our costs back to our other funds; so, they’re having a decrease in cash. We’re not asking to fund these current cash deficits with our allocations; we’re saying when there are savings in our other funds, let’s just put those surpluses over to get positive cash balances. Mayor Bailey asked if we’re talking about the year-end cash; Director Malinowski replied yes, as things become available. Director Malinowski asked if there were any questions on the Internal Service Funds. Council Member Olsen stated with respect to Fleet, what you’re talking about is what we’re charging ourselves for fleet services; essentially, you’re saying we’re not charging ourselves enough. Administrator Levitt stated it’s difficult because we would have typically been budgeting out to those Enterprise Funds, but those funds that were picked up by the General Levy, we weren’t allocating as much, and that’s where you’re seeing the deficit. Now, we’re trying to re-proportionate it. He stated he’s not advocating that we do this, but it’s something we’ve previously done, so he’s asking if it makes sense: When we’re in a pinch, if somebody is injured, or we’re just overwhelmed with work, we outsource. The question is if outsourcing is less expensive than what we’re currently charging ourselves, because we want to raise the rate internally; can we enjoy a similar-to-today rate, or perhaps even a lesser rate, if we were to outsource that work? There are many needs there, as we have to find a shop that can handle it; we know some who can and some who can’t, because we’ve done it before. They have the same issues that we have regarding cost of parts, etc. City Council Special Meeting Minutes July 27, 2022 Page 7 It’s possible that they have a different labor model than we do. He just wondered if it’s something we need to think about. Council Member Olsen asked about the insurance budget; he wanted to confirm that he heard Director Malinowski correctly when she said the internal fund handles several different types of insurance, so asked her to repeat that. Director Malinowski stated those include the health insurance costs for our employees, including long-term disability, health insurance that we’re required to have for PTSD, workers compensation, which is allocated back out, and property insurance. She stated only two of those, the workers compensation and the property insurance, are provided by the League. Council Member Olsen stated the others are shoppable, which Director Malinowski confirmed. He asked if we need to think about shopping the market, and if there was a risk in doing that; we might not end up with any better rates but wondered if it would make sense to go to market and just ask. Administrator Levitt stated we shopped it last year, locked in rates for two years with that, and we’re very competitive with our health insurance. Council Member Olsen stated so the deficit is mostly due to the other two, but primarily PTSD. Director Malinowski replied yes, and also workers compensation as that budget has been taking a hit for a couple years, especially in 2022 where we had the 25% increase in our workers comp premium; so, the self-insurance fund has been taking a hit. Administrator Levitt stated we previously received a rebate of a few hundred thousand from the League, but there’s no rebate coming back. We did really well, with low claims, and they spread the money back out to all of the cities; now, there’s no money coming back to the cities because PTSD has just continued to drive our premiums through the roof. When you think about paying health insurance for someone that’s out until age 65, for single coverage that’s $510 a month. When we look at the self-insurance fund and where our tort liability is, we really don’t want to drop any lower in that self-insurance fund to be able to cover our tort liability. Mayor Bailey asked if the PTSD was coming out of the workers comp bucket; that was confirmed. Administrator Levitt stated we’ve been doing really well on property, etc., so it’s just some things that are completely out of our control. It’s like when your insurance premium comes due, and you wonder why it increased so much; we’re unable to negotiate that bill, though. Director Malinowski stated with the 2023 budget that we’re proposing for insurance, it will continue to go down a little bit; we’re recommending we look at our IT Fund first, let’s get that shored up, and then we’ll look at either Fleet or Insurance next year. Cash Balances Director Malinowski stated these are balances as of 12-31-2021, split up as follows: General Fund: At year end, we look at the designation of that fund balance and get the cash that isn’t needed in the fund balance transferred out, per the policy. City Council Special Meeting Minutes July 27, 2022 Page 8 Special Revenue Funds: We’ll be looking at tonight, and then again in two weeks, as we look at all the various budgets there. Closed Debt/Debt Service Fund: Closed Debt Fund: That’s assigned, and we commit it for debt, but it can be spent on whatever debt we want. The Debt Service Funds are reserved and restricted; they can only be used for servicing the debt that is in that fund. Capital Project Funds: We’ll be looking at those once we talk about the CIP next week and all the cash balances in those funds. We save money, we build our infrastructure, and that’s what that cash is for; we save it, and then we spend it in the next five years on those projects. TIF Funds: Are restricted, so the TIF Plans dictate what that can be spent on. We’re working with Ehlers right now as with TIF 1-12, there is a balance there that might be available for some pooling for some projects. Enterprise Funds: We’ll talk about those in two weeks, as we talk about Water and Sewer, and then a little bit with the CIP with the Utility Building. Internal Service Funds: We just talked about those. Developer LOCs: Those are funds that we receive at the City as we develop; we use those to pay for bills on their behalf, like engineering services in those developments, or we might hold it so that they do things, such as their grading, etc. Debt Issuance: We talked about in May, at the budget workshop, and some of the debt issuances are coming online; it’s just a listing of debt that is coming in 2023, if those projects move forward. It’s just important to note that that is not on the levy in 2023; it starts on the levy in 2024. The 2024 projects would start on the levy in 2025. 80th Street: There’s not a dollar value there because we’re not sure what that cost will be for the City on that project. Debt Levies, since 2021: The dark green are our existing levies; it shows that starting to fall off in 2029. 2023 Debt is the next color green, which starts to come on there in 2024 at $861,000. The 2024 Debt is the really light color, and that spikes up there in 2025, so maybe we could use that Closed Debt Fund to make that more of a linear curve going across to smooth out that debt levy going forward. This just shows the debt levies as they come on and go off. Tax Levy: Director Malinowski stated for 2023, we’re looking at 13.09%; since May, the only change has been to the top line, the General Fund line, and we’ll talk about that through the various departments. In 2024, the General Fund levy has got a lot of Budget Adds in there, so we’ll look at that in further detail. Also, for 2024, there is the 2023 debt issue coming up. She displayed another graph, which showed the tax levy from 2014 to 2023; in 2017, 2018, 2019, and 2020 we kept the operating levy, or the General Fund Levy, a little bit flat as we were able to put some of those debt levies on there. She looked at the past nine years on the four sample properties that we use and the average of the increase in their market value over that time period: The average was a 5.3% increase in market value per year and a 3.5% change in City taxes per year, including the 2023 levy. The change is $32 per year more in City taxes. As you can City Council Special Meeting Minutes July 27, 2022 Page 9 see, it fluctuates, and it’s no different among the four properties. Where the market value changed, that was higher than their change in their City tax percentage. Mayor Bailey asked if the $32 was per year; Director Malinowski confirmed that. City tax rate since 2014: We’re trending down again in 2023 from 37.15 to 35.28, based on the 13.09%. Looking at the 2022 levy, it shows what changes we made to get to the 2023 proposed levy tonight and what the percentage is of that 13.09%. She went back and identified the things that we were thinking about in May when we spoke with you; if it’s not in the far-right column, it’s things that have come up since, with our budget additions, our IT budget, and things that we hadn’t really looked at in as much detail as we needed to in May. The 2021 debt levy will also be coming on in 2023; some of it came on last year, and then the rest is coming on this year. Administrator Levitt stated on the second sheet are the Budget Adds that were cut; on the second sheet, you can see the percent of the dollars. Those include the Parks worker and other things removed from the Budget Adds; you can see the correlating dollar value and the percent levy impact on those cuts. Director Malinowski stated the General Fund is balanced tonight, both for 2023 and 2024, based on the levy proposal of 13.09%. The Building Permit revenue we’re leaving at the 2022 levels; we haven’t backed that down at all. Revenues for Building Section Services for the outside communities has been removed from the budget, as those revenues are pretty much static, neutral. Council Member Khambata asked if they thought that the increase in commercial building was going to offset the slowdown in residential building, in terms of permit revenue for next year? He asked if they felt confident leaving that number flat, rather than adjusting it downward, was the best course of action. Administrator Levitt replied at this time we know that there are three (the Ryan Companies, Syndica, Endeavor) Building Permits that would not be pulled until 2023. We also know that the Building Permit for NorthPoint’s Building 3, which was approved by the Planning Commission on Monday night, won’t be pulled until 2023. So, there are four large industrial buildings that are going to help buffer that if we see a slowdown; by no means is it conservative, but that’s kind of our best guess regarding our revenue. Mayor Bailey stated he thinks what we have to do is hope what Council Member Thiede was talking about earlier about this happens; Council Member Olsen stated the numbers that have been coming out the last week or so point to that, so hopefully that trend continues. Mayor Bailey stated the challenge is we have to deal with what’s before us. Council Member Thiede asked what would go if we had the levy stay under 10%. Administrator Levitt stated it’s kind of hard to decide at this time. Mayor Bailey suggested we let them go through their process and then we can discuss. Council Member Thiede stated he was just kind of putting that in their mind, but they probably knew he was going to bring that up anyway. C. General Government City Council Special Meeting Minutes July 27, 2022 Page 10 Administrator Levitt stated she’d just touch on some of these in the high level:  Mayor and Council: We’ve retained that at 3%; she added a little bit more money for travel and training, if any of you wanted to go to the League conference. Council Member Thiede stated we should set a good example, and it should be flat. She stated they could certainly remove the travel and training increase. She noted she’d attended this year, sat with many elected officials, and felt it had a tremendous amount of value, which is why she left that door open for Council to be able to participate.  Administration: From a commodities standpoint, we were at 3%. Salaries: Taylor is fulltime; Ashley did payroll, was at 32 hours, Chris now does payroll fulltime, 40 hours, so we had a shift there. Tammy is the new City Clerk, and Joe remains the HR Manager; some of those were adjustments in salary. When it comes to Clerk and elections, we’re proposing to use Washington County services to run our elections. We have a contract; even though those services are every two years with the elections, we’re proposing you levy half of it each year so that in year two you’re fully funded and carrying that forward. That’s why you’re seeing that increase in elections.  Legal and Assessing: Some of those are out of our control with Washington County and assessments and legal bills.  Finance: Director Malinowski reviewed: 2022 Accomplishments: Our bond rating and the GFOA Award. Transitioning our EMS medical billing to the new provider; you’ll see that at the second Council meeting in August. Successfully managing our 3M Settlement but that took some staff time. Proposing a half FTE in Finance be funded with that Settlement money, with which they agree; so, there’s a General Fund transfer over to the Settlement Fund for that staff time. Added three new staff members; she introduced Michael Hoppe, our new accountant. 2023 Goals: Increase our Bond Rating: Review strategies and what it will take to do that. Timely and Accurate Financial Information: Focus on that, as always, along with the CIP process, annual budget, and continue our internal controls. New Utility Billing Software: Continue to work on that to make it a reality in 2023. Focus on EMS billing in 2022: This is a priority as we’re transitioning to the new provider.  Community Programs: This is both community programs and employee engagement. It includes the volunteer banquet, the all-commission meeting, employee picnic, service awards, recognition; all of those activities come out of this category. We just increased that by 3%.  City Hall: That’s everything it takes to operate City Hall, including all of the utilities, printing costs, etc. When we look at Administration, one of our big goals is we still need to codify the actual City Code; we have to go out for proposals for recodification of that, probably one that’s more user friendly, online. At this point, we’re anticipating that cost will be about $25,000; we’re proposing that we take whatever savings we have this year and apply that to cover the recodification cost. As mentioned, we transferred the elections. You’ve probably noticed, especially with any of our large engineering plan sets, those are bogging down our Laserfiche; its struggling to be able to push out large plan sets. It looks like we’ll need some new software to be able to do that because we can’t push those large packets out very easily. That’s $25,000, and that’s what we’re also City Council Special Meeting Minutes July 27, 2022 Page 11 proposing if any budget savings would be applied to that software to help mitigate that issue. Council Member Thiede commented when everything was previously paper, he was happy when we finally went digital. All the information you put into the Council packets is kind of bogging things down. He suggested just putting in a summary; for those people who would want the additional information, you could actually put links in a number of places. That might be a cost savings but didn’t know if they’d even looked at having links in the packet to another site, internal or external, to actually be able to look at those documents. Administrator Levitt replied the only thing we have to be careful of is your legal Council packet; so, if engineering has a 500-page plan set, legally you are adopting and approving those plan sets. She legally has to ensure that you have seen them and have access; in our overall data retention, that has to stay together. There are some legal issues where we need to ensure that the packet is an actual representation of what Council is approving. There are some challenges with that to ensure that we’re legally compliant. That’s why sometimes when we send it out to you, we’ll send a separate link for a plan set, but we save it internally, and we legally need to ensure that we’ve saved that 500-page plan set in the packet. Administrator Levitt added that so far this year, we’ve already recruited and hired over 100 employees, including fulltime, parttime, and seasonal. We’ve been working aggressively on our workplace safety incentive; it’s saving us a bit of money on our workers comp policy, but we’re working hard on our workplace safety incentive program. We’re also reengaging with our wellness activities. Council Member Thiede stated previously agenda software had been listed and asked if that had been removed. Administrator Levitt replied that if Council is okay with it, we’re proposing that any financial savings in 2022 would cover that cost versus putting it in the actual levy for 2023. D. Economic Development EDA: Administrator Levitt stated information was provided to Council to determine if they wished to do an EDA levy. Originally, we thought the EDA levy would show up under the “Other” category on the tax bill; after further research, we found that the EDA levy would show up in the City of Cottage Grove’s line item so it would not break that out. LSP provided us with their $150,000 check; they said $150,000 is all they can provide until 2027, when they renegotiate with Xcel Energy. Therefore, we won’t be receiving $350,000 from them, as we previously did, but should only expect about $150,000. She stated we’ve been doing a great job engaging with our businesses and our Business Retention Program, our connections from ICSC and building off of those, looking at our hotel study to be able to attract that. The EDA Fund currently has a deficit of $313,000. That means the EDA Trust Fund has to do a transfer in to make the EDA whole; so, we’d continue to use our cash to fund that. Right now, there are ARPA Funds that pay 75% of Julie’s salary related to the Convention and Visitors Bureau. If you levied an additional $350,000, you’re buying down your debt to about $88,000 that City Council Special Meeting Minutes July 27, 2022 Page 12 you’d be transferring in. When you look at the cash balance sheet, the EDA Fund shows a negative balance just because that transfer from the EDA Trust hasn’t yet occurred. She wanted to be very clear that we’re using cash on that, and that’s been Council’s direction in the past. CVB: The Convention and Visitors Bureau is governed by its own Board; their Annual Report was included in the packet. The Board gave direction in May, and it’s very similar to the golf course; there won’t be expenditures that exceed revenue, so they’ll always be equal. At this point, we’re projecting about a $15,000 excess, but we’ll see how that goes. The ARPA Funds run out in 2024, so you’ll start to feel the burden of that position in 2025. She encouraged Council to start making a course correction in anticipation of that and levying some additional dollars into the EDA because you’re drawing down the cash at well over $300,000. Council Member Thiede stated that we need to find another funding source; Administrator Levitt stated we could get another hotel, as that’s our goal by 2025, which would help with that revenue. Administrator Levitt stated the problem is it’s not just her salary, it’s others as well. Council Member Khambata asked what we’re going to need to bring online to balance it, to make a difference. Administrator Levitt replied the hotel is key for the CVB because that’s where Julie’s salary is from, so we’d be able to offset that. At some point, we need to be budgeting or levying for the operational expenses within the fund, or we decrease expenditures. Council Member Thiede stated we created the CVB in 2021. He asked if we’d done a cost-benefit analysis, as we’d started this because it was going to bring more value to the City. Administrator Levitt replied we put a copy of the Annual Report in the packet; she would say based upon the Board’s direction and what the Board is seeing, there are positives for the community. Council Member Thiede asked if those are just words, or have we actually established a value factor that is more concrete than abstract. Council Member Dennis asked Council Member Thiede how he’d measure that value factor; he asked him to give specific definitions of what information he wanted. Council Member Thiede stated we could say if we hadn’t started the CVB, we wouldn’t necessarily have these businesses, or we wouldn’t necessarily have these funds. What would most likely be different if we hadn’t started the CVB and put money into it? Council Member Dennis stated he thought Council Member Thiede would recall the initial justification for enacting this process was that we had virtually every hotel that we encountered asked if we had this. So, what we’re attempting to do overall is not only utilize that as a mechanism toward attracting additional hotels, which we really need to have happen, but it’s also about putting our City on the map to a much larger degree. So, we don’t have access to sales data from a restaurant, so we can’t quantify anything that way; we have not had an investor come in yet to put a hotel here, but we’re working on that. What we have done is we’ve got intrinsic values that come off of certain things, tangible and intangible, so it’s hard to put a hard-core measurement on something so new. We have to give it a period of time to see if this actually helps us to land a hotel or City Council Special Meeting Minutes July 27, 2022 Page 13 two here. Then we need to continue to draw more people here for tournaments, business-related opportunities, and have them spend their time and money here in the community to build the brand awareness. That’s really where the value is. Council Member Thiede stated he’s not saying there’s not value, he’d just be interested in seeing a cost-benefit analysis. Council Member Dennis stated he didn’t know how that could be created. Administrator Levitt stated in the Annual Report it lists quantitative data related to nearly a half million people reached and 43,000 engagements, how many people were reached by all of our social media campaigns. She mentioned Strawberry Fest; how much higher were ticket sales, how much greater was the attendance? Council Member Thiede stated he wouldn’t attribute that to the CVB. Mayor Bailey stated that he would; he told Council Member Thiede that’s why Twin Cities Live was here because they heard about us at the St. Paul Saints game. Council Member Thiede stated then those are the kinds of things that would be part of this cost-benefit analysis. Council Member Khambata stated he’d equate the work that the CVB does much like finding a sales area. If you’ve got a target audience, your first of 12 marketing pieces isn’t going to net the exact impact you’re looking for; to Council Member Dennis’ statement, some of this is ancillary benefit, and some of it is harder to quantify with concrete data. We don’t have before and after data from all of the things that are benefiting from this; we don’t know how many people at the ICSC knew about us because of some of this marketing. Did they go on the website, did they know somebody who visited here? We unfortunately don’t get that kind of positive engagement for feedback with this type of grassroots marketing, but those are the long- term benefits, and they take time to really kind of take root. He said we have to look at this over a longer period of time to assess if there was or was not a dramatic difference. He didn’t think we were going to see a dramatic difference, but thought we’d see an incremental difference, and that will compound itself over time. Council Member Dennis stated right now its paying for itself; we’re floating the boat above the water line. He appreciated Council Member Thiede’s questions on it, but there are tangible and intangible factors. He thought the potential for the intangible factors and what that can do is a driving force here; that’s really where things are going to pop as we go into the future. Council Member Olsen stated especially after we have a full year of collecting revenue so that we have a pot of money to use. Council Member Thiede asked if all of the businesses in Cottage Grove contribute to the CVB; Administrator Levitt replied no, it was only the Lodging Tax. Council Member Olsen stated it was just the lodging facilities. Mayor Bailey added it was also the wedding venues. Council Member Thiede asked if all of the businesses in Cottage Grove, though, benefit from it; Administrator Levitt replied absolutely. Council Member Thiede stated at one point we were trying to have the Chamber of Commerce kind of start this, but we pulled it into the City; so, he asked with the potential drop in the ARPA, should the Chamber of Commerce, based on the businesses it has, be contributing at least something into the CVB? Council Member Dennis replied that the Chamber had a shot at this, and things did not go well; it wasn’t because of lack of quality people involved in the Chamber because City Council Special Meeting Minutes July 27, 2022 Page 14 we all value the folks involved in that. One of the greatest challenges for them is they’re always a transitional team; so, if you want continuity, if you want the horsepower that we can provide to that continuity and a sustainable future to move this forward in a cohesive way, this is the right thing to do. Right now, they’re just not prepared, and he didn’t anticipate that there would be a time where funding would be coming from them on that. Their purview is different. Council Member Thiede stated they’re all benefiting from it; Administrator Levitt stated she thought that was the purpose. When our royalty passes out 500 Frisbees at a parade with the Discover Cottage Grove logo and the link, they’re finding us. That’s what we’re out there doing; every single visitor station in Minnesota has it, we’re at the stand at the Mall of America, we’re everywhere. It’s that brand awareness that we’re trying to bring. The goal is that all the businesses benefit from the increased tourism that we bring in. Council Member Thiede stated he’s not disputing that; he’s just wondering if they should be paying into it. Council Member Khambata stated the other issue the Chamber had was there was no compulsory funding when they started, so they had two staff people trying to add this to their workload. He thought we should have more conversation on this at a later time. IT: Administrator Levitt stated we did a complete audit of our hardware and software, and we pared that down, in conjunction with all of the departments, to really ensure that we’re not paying for licenses or software that are not used. The CARES Act money was great because we were able to fund many things, but there are tails with all of that; we start to hit end-of-life situations with our software and hardware, upgrades, and licensing fees. One of our biggest accomplishments this year was the cybersecurity that we’ve done with Arctic Wolf; cybersecurity is actually on the list of budget additions at $88,000. We’ve responded to over 900 Help Desk tickets. We’re continuing to evaluate areas of risk and liability. We’re continuing to build onto the electronic plan, which is really important in Director Costello’s area for building services moving to Bluebeam, getting more things online, which will then correlate to our credit card charges. Administrator Levitt stated right now in all of the different funds, you’ll see that IT allocations were much higher; that’s because they’re being reallocated out now proportionately based upon the hardware and software that each department uses. That’s why you’re starting to see that increase because that fund was running negative and now we’re trying to get a little bit more recapture through that. Most of the burden was put on the utilities, and anything related to the levy was minimized through that recapture. E. Community Development 2022 Major Accomplishments: Director Costello stated those included Master Planning for NorthPoint, the former Mississippi Dunes Golf Course, the new market-rate apartments, etc. 2023 Goals: Subdivision Ordinance: A Budget Add for this, as that is still part of that overall Code update. We’re finishing up the Zoning Code and will have that done at the end of the year. The Subdivision Ordinance also hasn’t been touched City Council Special Meeting Minutes July 27, 2022 Page 15 since 1971, and that has had even fewer amendments to it; it’s really important that that be updated so it meets our current and long-term needs for subdivision and platting. Successful Facilitation of the Cedarhurst Mansion Redevelopment: It has potential to be really a great project, a key piece at that intersection. Mississippi Landing Project: Seeing that take off and having that river access. Maximize Development Opportunities: Continue to do that for projects that come forward to us. East of Keats and 70th Street: Development of that area, just being open to developers coming forward and working with engineering and Economic Development to make those opportunities happen. Building Division: 2022 Accomplishments: Transitioned from Senior Building Inspector to Building Official. There were 273 new homes built, compared to 249 at the end of 2021. Inspections are outpacing 2021, and those new homes are adding decks, etc. 2023 Goals: Use of Bluebeam: That will allow us to review plans online; the building inspectors are really looking forward to having that. End Contract Services: With Newport, St. Paul Park, Denmark, and Grey Cloud Island as of January 1, 2023; that will really allow the Building Division to focus on Cottage Grove residents and businesses. Maintain High Level of Customer Service: Always very important. They’re busting at the seams to get work out and get inspections done; they’re currently a week out, that’s how busy they are. They’re here early doing plan reviews, gone all day, and stay late to return phone calls. Proposed Parttime Building Inspector: 1,040 hours, if the housing market remains strong; that also plays into what happens with the School District referendum. Director Costello stated we discussed maybe analyzing some of our fees for service, just to ensure we’re capturing all of the revenues for permits as we go online, with the use of credit cards. We’re also reviewing development fees, to see where we compare to other growing communities. Additionally, a new thing this year, because we worked on Cedarhurst and other historical properties is New History Consulting, having that expertise for the historical element. None of us planners are historical experts, so having New History on board to help us develop guidelines, navigate the Department of Interior requirements, etc., will really be important for us to have. Council Member Olsen asked with the credit card fees if we passed along the cost of that service to the customer or do we eat it; Administrator Levitt replied our goal is not to eat it, but we have to increase the fees to cover it because we’re taking a loss on the credit cards. Council Member Olsen stated there are many businesses where if you pay your bill online and you use a credit card, they use a third party, and they charge you a convenience fee; you have the choice to either send them a check or pay with a credit card. Most people are used to that, it’s more common than not, and just wondered if that’s something we need to consider. Director Costello stated the larger companies are more used to it; with some of the smaller companies, we hear complaints, but they’ve all paid the convenience fee. City Council Special Meeting Minutes July 27, 2022 Page 16 Administrator Levitt stated that’s something we have to analyze is what percentage is utilizing credit cards; we underestimated this year, so we need to reposition our fees for that percentage going forward, especially since we’re trying to make all of the online things far more convenient. Council Member Thiede stated if you’re actually getting more people to pay on time or pay earlier, that’s a positive. It alleviates any check handling or paper handling when they mail checks. Council Member Olsen asked if we charge a fee for utility billing if you pay with a credit card; Director Malinowski replied, no, we don’t. Council Member Khambata stated many local places, including Washington County and Xcel Energy, charge you a separate fee if you pay by credit card. He didn’t know if that’s a policy change or if you can just do that up front. F. Public Safety Director Koerner acknowledged that this year we took an approach at all levels, got our Sergeants and Fire Captains and Command Staff involved with the budget process; he’s proud of all of their work as everyone came together. The theme was needs versus wants, so that in 2023 we weren’t coming in with all of the wants; we have a lot of those, but we really focused on the needs. HERO Center: It’s an outstanding facility; Officer Schoen presented the annual report at a previous Council Meeting. 2023 Goals: Fee Structure: We reviewed our fees and are pretty in line; if we raise them too much, the Feds go with the lowest, and we don’t want to lose any of our partners either. We’re trying to really stay competitive. Decrease or Maintain Utility Rates: With utility rates being higher, we didn’t know what to expect for the last couple years with a brand-new facility; we had some maintenance challenges, too. Director Koerner stated we’ll be receiving approximately $34,000 from Woodbury for administrative fees. That includes what we’re doing with finance, our staffing, and human resources. That will start in 2023. Public Safety: In 2022, we had quite a few successes but noted the Case Management division was originally through the COPS grant. 2023 Goals: Staffing: We’ll keep looking at that; we’ve heard Council loud and clear about the levels of service. We have a very high expectation for all services offered. Explorer Neighborhood/Crime Prevention: License plate readers for neighborhoods are being used in other communities if there is an area with car prowlers, etc., where we can review that data. Newer neighborhoods have already asked us about that. Fence Consortium: Should there be civil unrest, this would be a secondary fence; it’s where fences would be placed around designated places, including City Hall and the HERO Center. Public Works also participates in that. The fences are extremely expensive, and it’s basically an insurance policy. Continue Employee Wellness Initiatives, Resiliency: Administrator Levitt recently sent the Council information on PTSD. We’ve been one of the leaders in that area; we want to put together a plan and have a team. We’ve been doing neck-up checks, CIS, and the critical stress debriefs; our scheduling is based on people getting sleep and time off and a work-life balance. Traffic Safety: We heard it loud and clear in City Council Special Meeting Minutes July 27, 2022 Page 17 the surveys that people want us to focus on that, especially with developments. Find Technology to Enhance Public Safety: Adjustable LED RMR pistol optics with the red dot sight (RDS); our firearms instructors tested it out, were impressed, and 18 of us have purchased them. It’s a gamechanger for firearms; it improves officers’ capabilities during deadly-force encounters. The big thing is the subject focus; right now, we shoot with sights. With the red dot, now we’re focused out but can see everyone/everything else. It’s increased accuracy and makes officers that much more proficient. We’ll continue to look at this and how we can transition in the future to that. Ammunition: This is a Budget Addition; it’s not just bullets, but with all that civil unrest, we ended up adding some of the less-lethal platforms, including pepper ball and the .40-mm. munitions. It’s not just because of inflation; we’re hitting all the POST mandates. We previously spoke to Council about our training program: Officers shoot every other month, 45 minutes, while they’re on duty. Squad Replacement Schedule: In 2017, the cost of a Ford Explorer, for the vehicle, its setup, and graphics was about $35,000; now, it’s $68,000. A couple years ago they were cancelling our SUV orders, so we transitioned and did a couple pickups; now it’s not an Explorer, it’s a Charger, so now we have to buy a new cage. For six squads, last time we waited six-to-nine months; every time there’s a pursuit with a squad damaged, we’re down a squad for a long time. Council Member Thiede asked what if we didn’t get the squads? We’re not replacing just because the other ones are old, or are we seeing more maintenance? One thing he noticed in the packet were a couple places where we’re maybe getting away from more- focused justification for replacement of, or adding, some things. It says it will improve this or that, but by how much? It seems like it’s dropping off a bit from previous years when he was a more insistent and made more noise about it. He would still like to see that information, especially right now, because we know that new or used vehicles have a very high cost; so, with this price increase, he wondered if we could do any waiting. He knows it would seem like we’d wait forever, but we are seeing a little increase right now with lead times and everything else. Director Koerner asked Captain Greg Rinzel to speak about the fleet. He noted Fire Chief Rick Redenius has been keeping track of all of the costs, so we’re watching that. For some older fire trucks, we can’t even get replacement parts. He asked Captain Rinzel to speak further about the squad cars. Captain Rinzel stated there’s professional research on squads and how long they last; this isn’t something we created, we looked at national trends on resale value and secondary use. For squads that are in good shape, those are kept for secondary uses by our building inspectors, and that works out well. The ones that we sell are because it’s time. He cautioned that this is a 2022 bid; he has no idea what 2023 will bring. He could guess and increase it $5,000, but we’re trying to be really conservative and tell you exactly what we’re doing. Administrator Levitt previously spoke about the IT budget, which isn’t covering all expenses; in the past, when we got a squad computer, IT would pay for it. All of that is now in the Public Safety budget; that’s a big impact for an initial squad setup, as that includes WatchGuard, the Panasonic dock, and the Brother thermal printer. We’d previously never paid for those, but this is new, and we don’t have a choice because IT City Council Special Meeting Minutes July 27, 2022 Page 18 can no longer pay for it. So, we have to budget for that, which is part of this number, and that’s a really conservative number. Another big item is the radio system: Captain Rinzel stated we received COVID money, which we saved, and two years ago we had budgeted for replacement of all of our portable radios from the $270,000 that was in the budget, so those were paid for. This is now for in-squad radios that are compliant with FBI and CJIS. It’s a totally different radio system with a cost of $6,200, so we plan on doing that just as time goes by. When the new car comes in, we replace it with this new radio. When we insure a car with the League of Minnesota Cities and it’s destroyed, it's a $78,000 insurance claim. So, the $68,000 doesn’t include some of the other equipment. Captain Rinzel told Council Member Thiede that he would love to say we could do a cost-benefit analysis, but we know that a car generally lasts three years and 100,000 miles; after that time, the cost buildup outweighs that of selling it. So, if the value of it is $6,000 on a sellout, and if we hold it for another two years, the sellout decreases to $3,000. It all plays together, but those are trends that we look at. We’re not experts in that, there are fleet managers for LAPD, and this is what their recommendation is throughout the nation. You get three years or 100,000 miles, depending on how many drivers you have. If we had take-home cars, as an example, those can last longer than three years because you have one driver, and it can go 100,000 and will last seven years; so, you could hold equipment longer. We now have two drivers per car; so, on average, that’s 100,000 miles a year with the number of officers and fleet cars we have. Captain Rinzel stated to be honest, he wished he could say that this is something that we don’t have to do, that we don’t need them, but honestly, if we total out a car, he can’t go get another one. We don’t come in and ask for more than what we need; over the years, we’ve asked for three because we didn’t need them. We had fewer officers working, and we were budgeted for four or five, but we only asked for what we need. This is honestly the number that we need. Administrator Levitt clarified on the Budget Levy sheet, if you multiply six by $68,000, the total would be $408,000; so, the $183,000 shown on there is the amount of increase from the original number. Mayor Bailey asked if that was for all of the additional things Public Safety is now responsible for that was previously paid for by IT; Captain Rinzel confirmed that and stated sometimes they work, but computers don’t seem to last for more than three-or- four years when they get tugged, moved, and things get dragged over them. Emergency Management: Director Koerner stated we got a grant for the Thor Guard Lightning Prediction, now installed at Kingston Park. Camera trailers: We borrowed one from Woodbury and one from Washington County and had two of them at Kingston Park. There was some leftover grant money so we asked about getting a surveillance camera, and it looks like we’re getting a camera trailer for approximately $55,000; that will be presented for approval at an upcoming Council Meeting. 2023 Goals: Outdoor Warning Sirens: Obviously, there are some gaps especially with the new developments; especially near Mississippi Dunes, that’s a perfect place for an outdoor warning siren with the water access and the parks. Unfortunately, sometimes that’s not a grant City Council Special Meeting Minutes July 27, 2022 Page 19 opportunity. Threat-Hazard Identification/Mitigation Planning: An 18-month project that needs to get approval from 31 different cities and townships in Washington County. Fire: Our Fire Marshal is now a fulltime position this year. With supply-chain issues, we’re still waiting for the second set of turnout gear for our fulltime firefighters. 2023 Goals: Staffing Plan: This is really focused on level of service. There are core services, Fire and EMS, but there’s also community outreach. We specifically began that plan with the direction to keep a combination department; we don’t need 50 parttime, maybe we need 25, so some of those savings can go toward something else. We’re looking at comparison call volumes. EMS Revenue: Is still the big unknown; with our new billing company, we’re hoping we can get much better projections for Council. Mutual Aid: Adding good maps for mutual aid from Woodbury or M Health. How many do we have and long is that response time? How many mutual aid calls are we responding to? Staff Retention: Compiling data from the last five years for both recruitment and retention of staff. We plan to hold a workshop in September, so if there’s anything Council wants us to address in this plan, please let us know via email so we can incorporate that. East Metro Training Facility (EMTF): Staff from our agency have started attending the EMTF, as there were really some improved training opportunities with the live-fire environment. We’ve been fortunate in the past to have acquired structures, but know old farmhouses are numbered. The group putting the proposal together said it’s a gun range for firefighters. The possibility of putting a burn tower here wasn’t practical. The recommendation is to sign a Joint Powers Agreement (JPA); that’s much cheaper than renting the facility for fires. Reduce Community Risk through Increased Life Safety Inspections and Public Education: We had a storm with some injuries and some people out, but the Fire Marshal isn’t doing all those Life Safety inspections; he’s coordinating many of them with the firefighters. That falls into what kind of service delivery we want when we talk about our staffing plan. Community Outreach: This is still really important to us. Self-Contained Breathing Apparatus (SCBA): It’s a big ask, but they’re getting to their end of life. Previously, we got a grant, and we hope we’ll get another grant, but we don’t want to be stuck without letting Council know that this is a purchase that’s coming. Council Member Khambata asked how many equipment sets they had of the SCBAs. Koerner replied currently we have about 45, but as we evaluate what our service delivery looks like, especially with the number of fulltime and parttime staff we have, how many people are on a shift, etc., that number may change. Each fire-riding position needs to have an SCBA per national standards, so we need to prepare any of our trucks to respond. Administrator Levitt added half of the SCBAs were put in 2024 and half in 2025, so there’s no expenditure in 2023 for those at this time. EMS: Ambulance Replacement: Director Koerner stated that the previous cost was about $240,000. The next won’t be ready until 2024, and he asked Chief Redenius if its cost was approximately $305,000. Chief Redenius replied that’s the 2022 quote on the chassis; so, that’s an educated guess by the company that produces them. Improved EMS Billing Services: It was a challenge working with Expert T, as their service started declining. We’re excited a new company will be handling that. Heart Safe Community Designation: We actually just received a letter that we were accepted, and it tied in really well with our most recent life-saving award. Community Paramedics: We have four staff trained, so we’ll be ready to implement that and start working with Regions City Council Special Meeting Minutes July 27, 2022 Page 20 Hospital; it will continue our public outreach engagement and public education. Cardiac Monitors: They need replacement, but instead of replacing four, we’d replace three; we have a plan with the AEDs to get those in all of our squad cars. You’ll see more community donations from the Lions Club, etc. as people have requested they be in our parks; so, that will also be a big focus. Council Member Olsen asked why the EMS Fund showed a negative balance of over $250,000. Director Malinowski replied that’s because the EMS billing company wasn’t turning accounts over to collection, so that began to show negative, which is why we are changing services. Council Member Olsen stated he understood they’ve been deficient but asked if there will still be time to recapture that revenue. Director Malinowski replied we hope so; we’re working with them to get things over to collection and turning them over to revenue recapture. We’re being very careful with it; we don’t want to send people to collection or to revenue recapture that shouldn’t be, so are being very careful with how we do that when we make the transition to the new billing provider. Billing providers really aren’t interested in taking on some of those old accounts; so, we’ll be working with our current provider, getting those through the steps and working with them. We have a weekly call we’re doing with the current provider to see where they are in the steps. Council Member Olsen said then it has more to do with our billing process and our collections process than it has to do with fees that we’re charging. Director Malinowski stated that’s what they believe. He stated so it really boils down to being diligent with billing and collections; he asked if she was hopeful we’d see some increased revenue. She replied that yes, she’s hopeful. Council Member Olsen stated that fund is always a little bit on edge, but he’s never seen it with such a negative balance in his time as a Council Member, which makes him extremely nervous. Director Malinowski stated he’s seen it go up and down, as we purchase capital or as we bring in more staff. Council Member Olsen stated this fund pays for a portion of staff; hence, that’s why he’s nervous. Because if this fund can’t pay for it, then the levy has to. Director Malinowski agreed with him. Administrator Levitt stated Parks and Public Works would present on August 10 and we’ll also look at the CIP. She asked if Council had any questions or comments on what was presented tonight or if there was more information they needed, which staff could provide. Council Member Khambata stated he might be getting ahead of himself, but regarding the credit card processing fees, he asked if that’s something that would be easy to implement or if it would become a cumbersome aspect for staff to deal with that would negate any potential gains for taking such a step. Director Malinowski stated one of the reasons she understood we’re not charging for credit cards was it happened during the pandemic, and we wanted to encourage people to pay online. It made sense, as we didn’t want them coming into City Hall. She said they would reach out to US Bank and some of the other credit-card processing companies to see what they offer. We’ve noticed that there are several companies that City Council Special Meeting Minutes July 27, 2022 Page 21 we’re using for credit-card processing, depending on the software and where it’s at, so we can try to streamline that process. Council Member Khambata asked if there was an opportunity to call the credit card processing company’s competitor and ask what they’d do for us to retain us as a customer. It might be a lot and it might be nothing, but maybe that’s an opportunity to recapture some of our costs. In terms of what our processing fees currently are, is the cost of breaking that out into separate line items going to take more labor hours for staff. He wondered if it would bog us down more than it would help us. Instead of leaving things the way they are, the easiest outcome would be to consolidate to one or two processors that are going to offer us a better rate. Option two would be breaking it out and adding it as a separate fee, but then again, does that become prohibitive to the process that we want to try to streamline. If somebody is paying online, they’re not taking up 15 minutes of staff time; he wondered how it will adversely affect us if we incentivize them to come back in. Council Member Thiede asked if they had any idea what our average percentage is; Director Malinowski stated we’ve been working on figuring that out because it just depends on the processor. We can share that with you, but we’re not ready to share that with you tonight. Council Member Thiede stated it’s probably somewhere between 3% or 4% or asked it was more than that. Council Member Khambata stated typically he’s seen some that are more; it depends on the volume that we do. Processors want people that are doing a high volume; if you do a high volume, you get a low rate because they’re looking for a revenue source. If we’re doing low volume, then we’re going to pay a high rate. If we’re doing high volume, and he’s not aware of our volume, we can leverage that and get somebody who’s eager to bring on that business. Council Member Khambata stated regarding the CVB and the Lodging Tax, there was a process to get that Lodging Tax established. So, he guessed adding any additional type of sales tax or any type of incremental tax to help fund it would also require a similar process. He asked if that’s something we should think about, maybe a .125% tax on the general sales tax. Last time we did a general sales tax increase, it was a big deal. Council Member Dennis stated legally, we can only charge 3%, so we can’t do anything more than that. So, we need to have another player come to the field and join and then start producing revenue that way. Council Member Khambata stated in terms of being equitable, because as Council Member Thiede mentioned, if our other businesses are benefiting, why is it only a Lodging Tax that’s covering the cost. He asked if there was a more equitable fee structure to help fund it than just the 3% Lodging Tax. Council Member Dennis replied no, because that’s the law. Mayor Bailey stated we’ve discussed looking at other options in the future, like a local sales tax, but to do that, it has to go to referendum. So, we’d have to get approval from the State and then the referendum. So, that’s something that the Council will have to look at. Council Member Khambata stated he didn’t think we’d go to a referendum for $80,000 a year. City Council Special Meeting Minutes July 27, 2022 Page 22 Mayor Bailey stated what we’re talking about in relation to the Convention and Visitors Bureau is small potatoes, comparatively speaking, to everything else. Our big challenge is we just have to get one or two more hotel players in town, and then the revenue from that will more than suffice. Council Member Khambata stated we’re inching towards that because there was one who’d previously wanted the site that’s going to be Pizza Ranch. Mayor Bailey stated we’ve had a couple interested. Council Member Khambata asked if we were talking with our mutual aid agencies; he’s sure other Fire/EMS agencies are having staffing issues. He asked if there are any idle times; he knows people don’t plan house fires or a heart attack, but are there trends when there’s more activity or less activity where we need this mutual aid? Is there any way we could coordinate staffing with other agencies so that we can try to alleviate staffing pressures on both sides by coordinating with them? Maybe they have a little bit heavier day staff, and we might be a little bit lighter, so we could kind of compensate, see where the holes are, and maybe try to balance out the mutual aid needs a little bit. Director Koerner stated we definitely look at that. Council Member Khambata stated if we knew we had another agency that was going to back us up, maybe we’d want to communicate to them when we think we’re going to be short. He’s not saying that we’re not already doing that, that was just something that came to his mind when we were talking about mutual aid; he thought they probably have these same issues, so are we talking to each other about when those issues are occurring the most. The last thing we want is to be shorthanded and then our mutual aid isn’t there, and that’s when we’re going to get the longer response times. Director Koerner stated we definitely have those conversations; we look at those constantly. When one crew got COVID, we called Woodbury to make sure they had staff, and they do the same thing for us. We’ll put together more of that on mutual aid. Council Member Dennis stated he appreciated the information, he’ll have to digest everything, and think about this a little bit more in the coming weeks. He felt it was a good start tonight. Council Member Olsen thanked Council Member Khambata for bringing up the credit card charges; he thought we definitely need to look into that further and it sounds like they will. He didn’t realize that we had different rules for different billing software for different departments, so that sounds like an opportunity to him. It feels to him like there’s a chance to maybe bring some things together and enjoy an economy of scale, so maybe they should look into that. He stated he was just curious how much, if any, work has been generated for our Building and Inspections staff related to chickens, ducks, and food trucks. Administrator Levitt stated it’s all in Administration; Planning just looks for setbacks. He asked if Administration issues the permit, and that was confirmed. He asked if we had to have an inspection done; Administrator Levitt replied once it’s built, yes. He asked how much of that activity has taken place up to this point; maybe we can talk about that next time. Administrator Levitt stated a few months ago we had a map and a number in the City Council Special Meeting Minutes July 27, 2022 Page 23 Council Update; she stated we could run a new chicken and duck tally. Council Member Olsen recalled it was less than 20, which Administrator Levitt confirmed. Council Member Olsen stated we spoke a little bit about how growth helps our levy, and the general answer is houses typically don’t because they require so much additional maintenance with roadways, etc., but the commercial development does. So, it’s encouraging to hear that you’re confident commercial development next year will stay on pace; hopefully, we can continue to grow that number. The fact is all of the homes that we’re building require services, so that’s where we’re going to be behind the eight ball. Regarding Public Safety, it was mentioned they have a checkup from the neck up for the Police Department staff; he asked if they have that same policy in place for Fire and EMS. Director Koerner replied we don’t have all of them doing that, but they are allowed to go; some of them go and see someone through the contract that we have. What’s different for Fire and EMS is they also do the physicals. Council Member Olsen asked how many have we had to do without, whether temporarily or ultimately permanently, in the Fire Department and/or EMS relative to some of the mental health things that we’re dealing with in the Police Department; he knows that’s been expensive on the Police side. Director Koerner stated on the Fire side, some were back injuries, one was an ankle injury where they went out; we just recently had one go out for a mental health issue. We were trying to count today; for Police we’ve had three in the last two years that were PTSD. Council Member Olsen asked if it was as impactful on the Fire side as it is on the Police side, in a general way. Administrator Levitt stated she thought there were two on Fire and maybe one pending in Fire. Rinzel stated it’s an issue with Fire and EMS, like it is with Police; one interesting thing discussed with the staffing study was how does that impact individuals’ health and wellness. It’s not just adding staff; how do we create a culture that supports those sorts of things. So, that’s going to be a really big emphasis for us; how do we incorporate a comprehensive health and wellness, to not only fit in the City’s goals but really specific to the roles of firefighter, paramedic, and firefighter-EMT. Those are definitely things we identified and want to improve upon; fortunately, a lot of that stuff isn’t super expensive, it’s just how do we change that and adapt our culture to that, especially if there’s more shift-based staffing where we actually see each other more. We’re already looking at things to do either later this year or next year to incorporate some of that and give us some more of that peer support. Like Director Koerner said, they’re able to participate in that head-up check, etc. As of last year, we’re doing our full National Fire Protection Association physicals every year now; it used to be every other year, but we’re dedicated to doing that, and we got good results with that. That’s all part of a comprehensive health and wellness program that we’ll be seeing more of; it’s just a lot of that stuff already happens within our current budgeted amount and with our operations. He thought we could a better job of highlighting those successes that we’re having. Council Member Olsen thanked them for that very good information; he stated the reason he asked was twofold: 1) Clearly, it’s expensive; so, an ounce of prevention is worth the proverbial pound of cure. If there are things that we can do differently for all City Council Special Meeting Minutes July 27, 2022 Page 24 of our first responders, he thinks sometimes they push themselves and/or their peers further and faster than maybe they’re prepared to go at times. 2) The work-life balance, which is always a challenge, especially for paid on-call firefighters. He did a little bit of research in preparation for this meeting and looked at paid on-call firefighters around the Twin Cities. He came up with more than 10 departments in five minutes on a Google search that are paid on-call; some are larger cities than us, some are not. He looked at how they trained and their time commitment; do they actually provide the individuals with training if they walk in the door and say I really would like to be a firefighter, but I don’t have any experience? All of those elements play into that cultural piece that you’re discussing. It seems like the time commitments for most of these departments are less than ours, especially when it comes to how they incorporate their training time into their total monthly hours commitment. Some of them use a percentage, and he didn’t know how that was measured; some of them say as long as you’re available for 30% of our calls, or for 60% of our training, etc., you’re within your requirements, you meet the standard. If that gives somebody an extra night at home with their family, does that give them better balance in terms of their mental health and their time when they’re at the station? Because they’re not missing somebody’s soccer game, they’re not missing a birthday party, or whatever. He just hopes that as you continue this dialogue, maybe some of that gets factored in. Director Koerner stated it already is; we’re focused, too, on comparable cities that also run an EMS program. There’s a big difference from the ones that just do fire calls. Council Member Olsen told Director Koerner that he has access to much more relevant data than him, but it’s just that whole element of how do we provide the most opportunity without creating the most stressful environment where we end up actually having people crash. Because when they crash, we’re screwed, we’re done. Council Member Olsen stated he thought there was a lot of great information tonight. He’s not sure where we’re at in terms of the specific numbers, but it feels like they’ve really tried to dial in, especially on some of the fund balances, etc. So, he’s looking forward to the CIP, as he thinks that will be a big part of this. Mayor Bailey stated in a couple weeks Public Works and Parks and Rec will speak, and then we’ll talk about the CIP. Administrator Levitt stated if Council can reach a consensus on August 10, that’s great; otherwise, we’ve also penciled in August 31. That way, you’ll have time to see the final numbers, and see the details of how it shakes out. You can come up with your communication strategy and plan for that. 4. ADJOURNMENT Motion by Council Member Olsen to adjourn; second by Council Member Dennis. Motion carried: 5-0. The meeting adjourned at 8:00 p.m. Minutes prepared by Judy Graf and reviewed by Tamara Anderson (City Clerk).