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09-09-24 CC WS MinutesCITY OF SHOREWOOD 5755 COUNTRY CLUB ROAD CITY COUNCIL WORK SESSION MEETING COUNCIL CHAMBERS MONDAY, SEPTEMBER 9, 2024 5:30 P.M. MINUTES 11 —11" .�_ 31`1L Mayor Labadie called the meeting to order at 5:30 P.M. A. Roll Call Present. Mayor Labadie; Councilmembers Callies, Maddy, and Sanschagrin; City Administrator Nevinski; Parks and Recreation Manager Czech; City Clerk/HR Director Thone; Director of Public Works Morreim; and City Engineer Budde Absent: Councilmember Zerby B. Review Agenda Sanschagrin moved, Maddy seconded, approving the agenda as presented. Motion passed 4/0. 2. BUDGET 2025 Finance Director Schmuck gave an overview of the proposed 2025 Governmental Funds Budget and shared details related to the General Fund, Property Taxes, SCEC, Capital Improvements, and Debt Service. She reviewed the proposed levy increase and the tax impacts for properties of various values. She explained that the Preliminary Levy needed to be certified and to the County by September 30, 2024, so the Council would need to take action at their September 23, 2024 meeting. She reminded the Council that once this was filed with the County the City could only decrease it and could not increase it. Councilmember Callies referenced the use of Planning Consultants and noted that the City had discussed for many years the importance of updating the zoning and planning code. She stated that Planning Director Darling had advised the Council that this was very important for the City and noted that it appears as though there would be some efficiency in using the same firm for the Comprehensive Plan update, so there could be some coordination of effort. Finance Director Schmuck noted that related to the planning and zoning the City is working on hiring a Planner which will give Planning Director Darling time to organize and orchestrate this work. City Administrator Nevinski stated that with the Comprehensive Plan, there are system statements that will begin coming out and noted that plans needed to be sent to the Met Council by the end of 2028. Councilmember Callies noted that was something that the City had to do because they are within the metro area. She stated that she understands that this is not work that could be done internally CITY OF SHOREWOOD WORK SESSION COUNCIL MEETING MINUTES SEPTEMBER 9, 2024 Page 2 of 9 without having to shut down all the other work that staff is doing so the City needed to hire consultants to do this work. City Administrator Nevinski confirmed that most cities hire outside consultants to complete this type of work. Finance Director Schmuck agreed and noted that the City also did not have the expertise to cover all the areas within the Comprehensive Plan because it is very in-depth. Councilmember Sanschagrin stated that there had been an additional twenty-five thousand dollars budgeted for this year and asked if the amount that went unused would just be factored into the new budget. City Administrator Nevinski clarified that the City had twenty-five thousand in this year's budget and the Council had just approved a contract for re -working the Subdivision Ordinance and explained that what was being discussed tonight was really just looking forward and did not include this year. Councilmember Callies asked where these things were detailed within the line items. Finance Director Schmuck explained that planning and zoning was shown on page seventeen and contractual services was shown under Professional Services on page sixteen. Councilmember Sanschagrin explained that of the twenty-five thousand dollars that he referred to earlier for 2024 it appeared that the City had only used one -thousand six hundred so far and asked if City Administrator Nevinski felt the remainder would be used by the Subdivision Ordinance project. City Administrator Nevinski stated that was correct. Councilmember Callies stated that she was comfortable with this, as proposed, because it was necessary. Finance Director Schmuck noted that the agenda software items can be found on page thirteen under Administration and noted that this was also an increase of six thousand dollars under contractual services. She noted that the software will allow for internal efficiencies and provide more availability to the public. Councilmember Sanschagrin asked if there may be a way to quantify what the cost/benefit would be of the software. City Clerk/HR Director Thone stated that she did not believe that they would be able to immediately quantify the cost/benefit but explained that she believed that the efficiencies and the paper costs savings would be significant. Councilmember Callies asked for clarification on the agenda software and if it meant that there would not be paper copies anymore. City Clerk/HR Director Thone explained that paper copies would always be available to those who needed them, but this software would essentially allow the system to be paperless. CITY OF SHOREWOOD WORK SESSION COUNCIL MEETING MINUTES SEPTEMBER 9, 2024 Page 3 of 9 Councilmember Callies stated that she did not believe the Council had voted to provide iPads to the Council and asked how this software would provide an advantage to the Council and if it meant that they would have to print things at home. City Clerk/HR Director Thone stated that it will be up to the Council if they want to have iPads, and noted that she believed they could find room for them within the City's IT budget. She reminded the Council that last year, in order to trim their budget, they had taken out the iPads and the agenda software. Finance Director Schmuck explained that she had used agenda software with other communities and found it very beneficial. She stated that after it is set up and being used, the Council can take a look at whether they want an iPad or laptop. She noted that it will take some time to get it all set up and the kinks worked out before they get to the point where they would need to make those kinds of decisions and noted that they could also just take up the possibility of iPads when they put together the 2026 budget. Councilmember Sanschagrin explained that he was in favor of investing in productivity improvement tools but felt it would be helpful for future investments if the savings and improvements could be quantified as much as possible. Finance Director Schmuck referenced the Public Safety Aid funds that the City had received in 2023 and the proposed transfers. Councilmember Maddy asked where the Public Safety Aid funds were currently `parked'. Finance Director Schmuck explained that the City pools all of its money, so it was not specifically `parked' anywhere. Councilmember Callies stated that the City had a substantial amount of reserve funds and asked where that would show up in the budget. Finance Director Schmuck explained that it did not show up within the budget and noted that the reserves are in the balance sheet. She stated that in 2023, the City had reserves of about one point nine million dollars and noted that later in her presentation she wanted to discuss the possibility of moving some of those funds into a Street Fund as part of a discussion around long- term financial planning. Councilmember Callies asked how much the City currently had in their reserves. Finance Director Schmuck stated that the City's fund balance policy is to maintain at least sixty percent of the next year's expenses. She explained that the City only gets financed with property taxes twice a year so they need to be able to cover all of their expenses through July when they get payment from the County. She noted that the budget is not exactly cyclical where each month they pay exactly one -twelfth of everything because there are months were certain things incur more costs for the City. Councilmember Callies asked if the City was levying a certain amount in order to have the reserve funds. CITY OF SHOREWOOD WORK SESSION COUNCIL MEETING MINUTES SEPTEMBER 9, 2024 Page 4 of 9 Finance Director Schmuck stated that they were not and explained that they are required by the State to have a balanced budget within the General Fund and the City was only levying the additional money that they need. Councilmember Maddy asked if that meant that the City was not contributing any extra money to the reserves. Finance Director Schmuck stated that some cities will have to levy for their fund balance to ensure that they meet their fund balance policy, but noted that Shorewood was not to that point. She explained that as the City starts doing some of the transfers that staff was recommending and using some of the surplus funds, they will need to be more cognizant of where this lands. Councilmember Sanschagrin stated that at some point she would like the City to have a conversation about whether sixty percent is the correct number and asked if it was higher than what other cities had. Finance Director Schmuck stated that the Office of State Auditor's recommends that cities have between thirty-five to fifty percent, but noted that most cities that she has seen have a minimum of fifty percent but noted that for smaller communities, sixty percent was more realistic. She noted that she had not found anything in City documents that has ever deviated from the sixty percent and believed that it had been the City's policy for at least the last twenty years. She moved the discussion onto the Shorewood Community and Event Center items including levy support, user fees, and future capital needs. Councilmember Sanschagrin stated that he felt the City should look at the user fees and noted that he felt their goal should be to have the facility be as self-sustaining as possible but also an asset for the City. He asked about other possible revenue streams and asked if it would be appropriate to encourage sponsorships or ways for businesses to come in and help support the facility. He noted that he also believed that the City has a much lower user fee for non-profit entities and suggested that perhaps the rate didn't need to have such a large discount. Parks and Recreation Manager Czech stated that staff has been diving into the fee structure and through his preliminary analysis, the non-profit rate seemed to be extremely low and noted that the City had a high percentage of users that fall into that category. He cautioned that his information was just in the preliminary stages right now, but noted that he felt that the non-profit groups that are using it were not necessarily what this may have been targeted for, such as local community groups such as the Boy Scouts. He stated that they have been seeing many out -of - the -area types of non -profits using the facility and noted that he has seen people have different rate structures for the local non -profits versus the out of City non -profits. He reiterated that staff was looking into this in order to put together a report for the Council to consider some possible changes. Mayor Labadie asked Parks and Recreation Manager Czech if he planned to present this information to the Council at the January retreat. Parks and Recreation Manager Czech noted that it would likely be around that time because the Civic Rec program was implemented in January 2024, so by January 2025, they will have a full year of data to analyze. CITY OF SHOREWOOD WORK SESSION COUNCIL MEETING MINUTES SEPTEMBER 9, 2024 Page 5 of 9 Mayor Labadie stated that she felt it would be a great topic for them to discuss at their annual retreat because it would also give the Council the opportunity to weigh in on what their overall vision is for that building. Parks and Recreation Manager Czech explained that they had also implemented asking people who use the facility to fill out a survey about things like the affordability of the space that they will be able to factor into their analysis. Mayor Labadie asked Parks and Recreation Manager Czech how he felt the Civic Rec software had served the City. Parks and Recreation Manager Czech stated that Parks and Recreation Specialist Vassar has estimated that the software saves her eight to ten hours of staff time per week in managing the rentals. He stated that in gathering their year-to-date data, it was about four times quicker to get this year's data than it was to get last year's data. He noted that they have gotten a lot of positive feedback from renters about having the ability for them to check availability online. He stated that he felt that the software really streamlined the whole process so it has become organized and efficient. Finance Director Schmuck stated that they could look into a few things like Councilmember Sanschagrin brought up such as sponsorships or even naming rights for some of the rooms at the facility. She moved the discussion onto the Park Capital Improvement Fund including levy support and the expected future capital shortfalls. Councilmember Callies noted that she had attended the Park Commission meeting when they discussed the long-range plan and the desire to be forward -looking rather than dealing with every crisis in the moment. She stated that there have been a number of things that have been pushed off and noted that one of the other things that arose was that some of the placeholders for certain things in the Parks and Trails Master Plan were unrealistic. She stated during the Park tours, there was concern raised about things that were still in the master plan that people did not want anymore and the fear that they would still happen just because it had been included in the plan. She stated that she felt it was time to revisit this and put together an updated plan because parks are one of the best resources the City has. She noted that this is another thing that the City would not have the capacity to do it internally and would require a consultant. She stated that she felt that parks were important and the City should spend some money on them. Councilmember Sanschagrin stated that he agreed and would like to see the City get more feedback and fine-tune the master plan. He stated that Cathcart Park is actually located in Carver County and wonders if there may be an opportunity to have Chanhassen participate in the investments for that park. City Administrator Nevinski stated that Cathcart Park was annexed into Shorewood, but agreed that technically it was located within Carver County. Councilmember Sanschagrin stated that he questioned whether the planned expense for playground equipment in 2025 for Cathcart Park should be deferred in favor of some other investments within the City to see if there may be some appetite from Chanhassen for them to participate in some of these costs, since many of their residents are enjoying this space along with Shorewood residents. CITY OF SHOREWOOD WORK SESSION COUNCIL MEETING MINUTES SEPTEMBER 9, 2024 Page 6 of 9 Mayor Labadie noted that historically, Shorewood was burdened with most, if not all, of the maintenance for this park and when they started discussions, it was agreed that it would be annexed into Shorewood. She stated that she did not think that Councilmember Sanschagrin's idea was a bad thing to pursue, but was not sure how receptive Chanhassen would be to cost sharing for improvements at the park. She noted that Parks and Recreation Manager Czech came to the City from Chanhassen and asked if he knew anything about their feelings related to this park. Park and Recreation Manager Czech stated that he came upon the agreement when he was putting things together for the most recent Park Tours. He explained that there was a statement made around 2015 that the City of Chanhassen did not have any interest in contributing funds. He stated that Shorewood could certainly bring it up and have a conversation about it, because there is different leadership now, but cautioned that the Council should not get their hopes up. Councilmember Callies noted that based on the City's own experience when the issue of SoHi Park came up, Shorewood was not very interested in contributing to it since it was located in Excelsior. Mayor Labadie stated that, as mentioned by Councilmember Callies, there are things listed in the Master Plan that the Council and staff know may not be happening, but the residents do not know this, so clearing those things up and getting the Parks Master Plan up to date, accurate, and more reflective of the direction the Council wants to take rather than what past Council's wanted to take, was a necessary step. Finance Director Schmuck stated that in updating this within the capital improvement plan software that the City has, the former five thousand dollar amount was only to update the Master Plan for two specific parks and not all of the City parks. She stated that she felt that doing a full update of the City's Master Plan for the entire park system will be beneficial and noted that she felt what was included in the most recent budget would be sufficient to do that work. City Administrator Nevinski stated that one of the distinguishing factors may be the amount of community engagement that is needed because that can drive up a budget. Finance Director Schmuck moved the conversation onto the Equipment Capital Fund including levy support and future facility needs. Councilmember Sanschagrin asked if there were any productivity improvement tools or machinery that had not been included. Public Works Director Morreim stated that they were continually looking at equipment. He noted that if they have the ability to combine purposes for some of the different maintenance needs into a single piece of equipment, it may be more expensive, but would also eliminate the need to purchase additional equipment. He stated that they are looking at upgrading some of those based on new requirements. He noted that they are always looking at ways to be more efficient, effective, and safe as they upgrade and replace existing equipment. He gave examples of equipment and accessories that they have been trying out to see their effectiveness and ways that they may be able to help with efficiency. Councilmember Maddy asked what the assumed rate of inflation was for the City's ten-year plan. CITY OF SHOREWOOD WORK SESSION COUNCIL MEETING MINUTES SEPTEMBER 9, 2024 Page 7 of 9 Finance Director Schmuck stated that the assumed rate of inflation was five percent. She moved the discussion onto the Street Improvement Fund including levy support, future bonding, and the General Fund balance. She reiterated that she felt that pulling together everything in one document with the long-term financial plan would be beneficial and noted that she believed this was a conversation that the Council needed to have in the near future. Councilmember Callies noted that the interest rates on the bonding in 2020 and 2021 were two percent or lower so it made sense to bond for those projects. Finance Director Schmuck stated that she agreed that it made sense to bond for those projects and noted that normally the percentages rates were just over four percent. She noted that interest rates have gone up, but there was no crystal ball that can tell anybody what they will be in the future. Councilmember Callies asked how much of the surplus funds Finance Director Schmuck was recommending be moved. Finance Director Schmuck explained that she was recommending that they move one to one to one point two million dollars into this fund so there would still be around two -hundred thousand dollars as additional surplus above and beyond the required sixty percent. She clarified that the one -point -nine million dollar surplus she mentioned earlier was above and beyond the required sixty percent. She stated that moving the one -point two million out of the surplus was not something that the Council has had a conversation about, so if they were not comfortable with that, it could stay within the surplus and reiterated that their Fund Balance policy says that they need to have a 'minimum' of sixty percent. Councilmember Callies stated that she felt it made sense to at least move of those surplus funds over since they are above the required sixty percent level. Councilmember Sanschagrin asked if this tied into the City's debt service and if that meant it would be good for them to start ramping this downward. Finance Director Schmuck stated that the debt service would level out in 2026 until the City issued new bonds and noted that a debt service levy is different than the operating/General Fund levy. Councilmember Sanschagrin stated that he agreed that it may be a good idea to get the surplus funds down closer to sixty percent. Councilmember Maddy asked if the question was related to putting money specifically into the Street Improvement Fund because he felt that was the least `popular' fund. Councilmember Callies noted that the City's streets are one of the basics of the quality of life and questioned whether they would just say that they would not be improving the streets. She stated that people object to going in debt, spending money, and also being taxed for it, but somehow the City needed to find a way to pay for these types of things. She stated that she felt a critical part of the Council's role was maintaining their infrastructure. Councilmember Maddy stated that his concern was that if they choose to earmark the money towards streets it would be perceived as `use it or lose it' money and that the City would just spend it because it was there. He explained that he would like to have a harder analysis done on every CITY OF SHOREWOOD WORK SESSION COUNCIL MEETING MINUTES SEPTEMBER 9, 2024 Page 8 of 9 new street project that comes up for consideration and believed that the Council could always decide to transfer the funds later next year. Finance Director Schmuck confirmed that it could be transferred later but noted that the current projections show that the City does not have enough fund balance for the street projects that were planned over the next ten years. She reminded the Council that Shorewood does not assess for their street projects or utilize franchise fees. Councilmember Callies stated that she felt that they could just leave things as they are and have the discussion about a possible transfer when they discuss the long-range financial plan. She asked when staff was planning to have the larger discussion about the creation of the long-range financial plan. City Administrator Nevinski stated that they were thinking that would also be a good topic for the January Council retreat. Finance Director Schmuck noted that was the end of her specific discussion items but noted that Councilmember Sanschagrin had indicated that he had some additional items he would like to bring up. Councilmember Sanschagrin referenced page nine for licensing and permits and noted that in the past this amount has been much higher and asked if it made sense to increase this line item by fifty thousand as a way to lower the levy. Finance Director Schmuck stated that licensing and permits are a revenue resource that can fluctuate. She explained that the City has had quite a few new developments within the last few years and was trying to make sure that they were conservative with this number so they did not jeopardize the fund balance. She noted that in pulling together information for the long-term financial plan, Planning Director Darling had also brought forward some documentation that showed that that future developments were going down. She stated that her concern is that if they do what Councilmember Sanschagrin has suggested for one year in order to bring down the levy by a small amount, they would have to turn around and ramp it up in future years and one of the things they want to do within the General Fund is try to get rid of the ebbs and flows. Councilmember Sanschagrin referenced page 11 and explained that he had a similar comment related to cellular antennae revenue and asked if Finance Director Schmuck had data to support the proposed reduction. Finance Director Schmuck stated that a few years ago the government implemented a new GASB standard so the City has to report their lease revenues and liabilities differently and explained that the budget number is the actual cash the City is going to physically receive and the other numbers were adjustments to offset with balance sheet items. Councilmember Sanschagrin referenced page 12 under the Council budget for Contractual Services and Dues/Subscriptions and suggested that these be reduced by a total of ten to fifteen thousand dollars. Finance Director Schmuck explained that one of the biggest components of that is an agreement with the Lake Minnetonka Conservation District. She noted that she had noticed that the amounts CITY OF SHOREWOOD WORK SESSION COUNCIL MEETING MINUTES SEPTEMBER 9, 2024 Page 9 of 9 have gone down over the last few years, but admitted that she did not know the details of the agreement. City Administrator Nevinski stated that he believes this number has been fairly stable and suggested that staff take a closer look at this area and see exactly what has been included and if it may make sense to make a reduction as suggested by Councilmember Sanschagrin. Councilmember Callies expressed her appreciation to Finance Director Schmuck for this information and her explanations. 3. ADJOURN Maddy moved, Sanschagrin seconded, Adjourning the City Council Work Session Meeting of September 9, 2024, at 6:48 P.M. Motion passed 4/0. ATTEST: -� J nifer L badie, Mayor Dsa Sahtie Thone, City Clerk