City Council

ANDOVER CITY COUNCIL WORKSHOP MEETING – JULY 16, 2024 MINUTES The Workshop Meeting of the Andover City Council was called to order by Mayor Bukkila, July 16, 6:00 p.m., at the Andover City Hall, 1685 Crosstown Boulevard NW, Andover, Minnesota. Councilmembers present: Jamie Barthel, Ted Butler, Rick Engelhardt, and Randy Nelson Councilmember absent: None Also present: City Administrator, Jim Dickinson Finance Director, Lee Brezinka Community Development Director, Joe Janish Director of Public Works/City Engineer, David Berkowitz Parks & Streets Operations Manager, Jason Baumunk Others DISCUSS CITY TRANSPORTATION SYSTEM FUNDING City Administrator Dickinson reviewed the staff report in regard to the transportation system funding options. Finance Director Brezinka reviewed the funding options for paying for the road projects between bonds and levy increases. Mayor Bukkila asked how close they are to the guideline’s debt limit in the second option which would add $300,000 to the general levy. Mr. Brezinka said they would be at 24.4%, guideline is 25%. Councilmember Nelson noted in 2032, the debt for the Community Center will fall off. Mr. Dickinson explained they could parlay that money into the roads without having to increase the levy at that time. Councilmember Nelson stated this money could be used to cover the amount that they would be short if they went with the second option. Mr. Brezinka said yes; however, if they did this, they could be putting off roads that could potentially deteriorate more in the years up to 2032 and end up costing more to fix in the end. Mayor Bukkila asked what this does in terms of the five-year road maintenance plan. Mr. Brezinka stated lengthening this plan to eight years adds 10 miles of roads. He noted for the future, the eight- Andover City Council Workshop Meeting Minutes – July 16, 2024 Page 2 year plan would set the City up pretty well. He said this plan will get them back on track and will help the City to build the road fund back up. Mr. Dickinson added bond rates have been coming down. Mayor Bukkila asked how the differences between the two options impact the project. Mr. Brezinka explained if they lengthen the plan, then some of the roads that could have been a mill and overlay project may now have to be a full reconstruction or full depth reclamation which will cost more in the long run. Director of Public Works/City Engineer Berkowitz asked when they will know about the possibility of a one-time transfer and what this could look like for the remainder of the eight-year plan. Mr. Dickinson said they already know what this could look like, but there are other citywide priorities as well. Mayor Bukkila asked about the difference that the taxpayers will see between an increase in the levy versus the tax rate. Mr. Brezinka shared they are expecting a 3% increase in market values, which is why the market value will be absorbing the 2% difference between the levy and tax rate. Mayor Bukkila asked if they have done any calculations on what the tax impacts would be to the average taxpayer. Mr. Brezinka said yes and noted with a $1,000,000 levy the increase would be around $78 on a $400,000 home. Mr. Dickinson explained they are targeting low or limited fund balance deficits through the whole plan. He added there are cash flow opportunities depending on when the bond proceeds come in. He stated they wanted to present a rate increase of under 10% and above 10% for the Council to see the difference. Councilmember Nelson shared he believes it would be more palatable for the residents to have a tax increase of under 10%. Mayor Bukkila said if they are going to do a large tax increase, it should be a one-and-done situation. She explained they would be able to have an answer for residents as to why they needed such a large increase and that is because they need a solution for the roads. She noted it would not be a solution if they do not increase the levy enough to fund what they need to get done. She stated she would much rather have a large increase that will allow them to take care of the roads rather than have a smaller increase that will not be able to take care of all the roads that they need to and will cause roads that are just needing maintenance to become roads that need full reconstructions. She noted they will be able to justify an over 10% increase. Mr. Brezinka said to cover the gap they need to add $450,000 to the road and bridge fund annually. Councilmember Barthel shared his support for the second option. He noted these road projects need to happen, and the residents understand this. Mr. Dickinson stated this option will result in a Andover City Council Workshop Meeting Minutes – July 16, 2024 Page 3 close to 12.5% increase in the levy. Mayor Bukkila shared she has been seeing this coming for over 10 years. She noted when they began to rebuild the budget after the recession in the early 2000s, no one wanted to focus on spending money on the roads. She said at that time they just didn’t prioritize the roads. Councilmember Barthel shared his concerns with funding the roads slowly, as a future Council could come in and not fund them once again and the issue will only continue. He said he wants to get these roads done as soon as possible because they need to be maintained. Councilmember Butler said this is not an increase people will necessarily be happy with; however, it is necessary, and they should understand. Mr. Dickinson shared that Ramsey recently had to raise their levy around 25% to try to fix their roads. Mr. Brezinka reviewed an option that goes beyond the second option by increasing the levy to $2,300,000 to cover the $4,500,000 short fall from option two. Councilmember Nelson said he could be comfortable with this as it would take care of the short fall and would make sure that they are taking care of the roads. Councilmember Engelhardt agreed they need to take care of the roads and added that he would like to do one big increase now rather than having to go back and do it later. Councilmember Butler said he would not like to leave this decision up to a future Council as it needs to be taken care of. Mr. Dickinson said they will come back to the Council in August prior to setting the preliminary levy. Mayor Bukkila explained over the last four years they have increased the budgets across the board for parks and streets and now the money matches the maintenance needed. Councilmember Nelson noted the preliminary tax increase will come out in September, and they will still have time to amend it if needed. Mayor Bukkila said she would like to see something put out in the City newsletter explaining the levy increase prior to the tax increase coming out so residents can be aware. Councilmember Butler shared he believes it is important that they put some of the key pieces of information out there for the public so they know that the increase will allow the City to do a certain amount of projects over the next eight years to get the street maintenance under control and get the maintenance program on a rotating schedule. He said it is very important that they clearly spell Andover City Council Workshop Meeting Minutes – July 16, 2024 Page 4 this out for residents. Mayor Bukkila suggested putting together a chart that would show the increase that can be expected based on different home values. Mr. Berkowitz explained the mileage that they cover in the first year may not be as high while the dollar amount is high; however, this will even out as time goes on. Mr. Brezinka shared in the past 20 years they have done 102 miles of roads. He noted this eight- year plan will touch the remaining 97 miles of roads which will put them back on a regular cycle to maintain all roads on a 40-year replacement plan. He said this plan will give residents peace of mind that their roads are scheduled to be fixed. Mr. Berkowitz added people have positive reactions to hearing that their road is in the plan to get completed if they are able to find funding. He said this plan puts them in a very good spot and they will find a way to get everything done. He noted they do not want to burn their staff out, but they will find a way to get everything done. Councilmember Engelhardt noted they should also mention that the roads also have to do with water, sewer, and overall safety, rather than just pavement. Mayor Bukkila thanked all staff who worked on putting these numbers together. Council consensus was reached to direct staff to move forward with the eight-year road plan with a large levy increase in 2025 to ensure that they can get the road projects done. OTHER TOPICS Mr. Dickinson shared they have a request to amend the cannabinoid ordinance from liquor stores who are wanting to sell THC seltzers in liquor stores. Councilmember Butler asked if they are looking to add something to the ordinance to allow liquor stores to sell THC seltzers only and no other THC products. He asked if this is allowable under State law. Mr. Dickinson said yes and that they would still have to be licensed to sell these products. Councilmember Butler said he is supportive of this. Mr. Dickinson noted they could possibly get some pushback from the three licensed THC retailers in the City on this. Mayor Bukkila asked if the three licensed THC retailers could sell these seltzers. Mr. Dickinson said yes. Andover City Council Workshop Meeting Minutes – July 16, 2024 Page 5 Councilmember Barthel shared he has gotten quite a few calls about this recently. He said when they enacted the original licenses, the State said that they could not sell THC beverages and now that this has been changed at the State level, it is the City’s responsibility to change as well. Mr. Dickinson shared he has been offered a job at Anoka County and they will be acting on his contract approval at the County Board on July 23rd. He noted if this is approved, he will be submitting his resignation. He shared they would need to discuss how his position will be replaced and if they will want someone to fill the position in the interim while they look to officially fill the position. He added he would not be resigning until September 6th which will give them time to figure out a succession plan. He shared he will still be present at the meeting where they will present the preliminary tax levy. Councilmember Butler said he would be in agreement with having an interim City Administrator while they post the position for candidates to apply. Mayor Bukkila said she told Human Resources Manager Dana Makinen that she did not want the Council to review more than 10 candidates for this role. Councilmember Butler asked if there will be a screening process in place to determine which candidates will come forward to the Council. Mayor Bukkila said they would have to figure this out. Mr. Dickinson asked if he were to turn in his resignation on July 23rd, if the Council would want to authorize Ms. Makinen to advertise the job opening right away. Mayor Bukkila explained she had asked Ms. Makinen for a December 1st start date to give the Council time to make this decision. ADJOURNMENT Motion by Butler, Seconded by Nelson, to adjourn. Motion carried unanimously. The workshop meeting adjourned at 6:54 p.m. Respectfully submitted, Ava Major, Recording Secretary