Anoka City Council

October 28, 2024 (Worksession) Page 1 of 5 WORKSESSION OF THE ANOKA CITY COUNCIL ANOKA CITY HALL CITY COUNCIL WORKSESSION ROOM OCTOBER 28, 2024 1. CALL TO ORDER Mayor Rice called the worksession meeting to order at 5:00 p.m. 2. ROLL CALL Present at roll call: Mayor Rice, Councilmembers Scott, Skogquist, and Weaver. Staff present: City Manager Greg Lee; Assistant Finance Director Liz Douglas; Police Chief Eric Peterson; Public Works Director Mark Anderson; Community Development Director Doug Borglund; Utility Director Del Vancura; and City Attorney Scott Baumgartner. Absent: Councilmember Wesp. 3. COUNCIL BUSINESS and/or DISCUSSION ITEMS 3.1 Discussion; Electric Utility Cost of Service and Rate Study. Assistant Finance Director Liz Douglas shared a background report stating Dave Berg, Dave Berg Consulting LLC, will present information from his initial review of Anoka Municipal Utility electric rates and cost of service. She said he will discuss projections based on the 2024-2028 capital plans with existing rates, review allocated costs to serve the different customer types, and discuss guidance for future rate design. She stated discussions from this meeting will be factored into rate decisions. Dave Berg, Dave Berg Consulting LLC, shared opening comments regarding rates, cost of service, and capital improvements that resulted from the AMI system. He spoke about benefits of an AMI system such as time of use rates, $21 million worth of capital and how that impacts reserve levels. He shared projected operating costs and how to measure the need for additional revenue then spoke about the recent expansion of Graco which helps. He commented on how operating costs increase faster than revenue due to inflation, salary increases, and other factors then reviewed current reserves and depreciation rates and asked for Council’s thoughts regarding operating results and potential for rate increases. Mayor Rice commented how over the next five years we will need to cover our long-range goals so a modest increase now would be good. October 28, 2024 (Worksession) Page 2 of 5 Councilmember Scott agreed that it would be important to raise the rate to be at the goal or even slightly above. Councilmember Skogquist asked about assumptions of costs over time which should be modest or more and if we are more comfortable meeting our goals this way rather than in three years. He said we can have a lower increase in the beginning and can always level out as we get closer. Mr. Daly said they used CIP estimates provided through staff assumptions as that was not his area of expertise but added outlying expenses for non-purchase power expenses included inflation of four percent and complimented the Council for considering moderate increases now instead of a larger, one-time increase later. He reviewed rate increases based on industrial, commercial and residential in detail and said 90% of Anoka’s customers are residential and suggested a cost of service analysis could be manipulated as he felt the analysis was reasonably fair within the classes as presented. He shared further comments about the rates and stated overall customer charges are lower than allocated costs and energy costs are higher and if the Council wanted to raise rates, he suggested raising customer costs and leaving consumption rates in place. He shared comments about rates and policy comments and impacts to those that may be lower to those who need. Councilmember Skogquist said we still have to provide all the infrastructure to those on solar or EV for use when needed and felt those customers should still pay and while usage decreases for those customers the increases could be more towards those to spread out costs. Mr. Daly shared comments regarding solar energy and an additional fixed charge for only solar customers to help address those who may need to use the infrastructure at times but then take off their use during other times. He felt it may not be the time to implement use rates but would share data to assist the City with that decision. Discussion was held on EV charging in the ramps. Utility Director Del Vancura stated they reviewed offering EV but felt they could no longer support that option and that stations should be removed. Mr. Daly commented on day of use rates and on- and off-peak rates and if people shift in off-peak the City will see a resulting decrease. Councilmember Weaver said the projected operating results and less transfers out were due to park capital which is higher now that liquor revenue is not coming in like it used to and if could would bring 1% or $270,000, we could dedicate those funds towards park capital which would be good. He spoke about how one-third of revenue goes into a municipality and the possibility of having a different municipality help fund Anoka’s parks. October 28, 2024 (Worksession) Page 3 of 5 Councilmember Scott spoke about how he would like to see the City’s reserves goal of $16 million and take a portion of that which could be easily moved towards our reserves goal and be responsible for the entire amount. Councilmember Weaver said we need to offset the funds because the funding from the liquor store will not be there for a long time and we need to find a dedicated source of income. Mr. Vancura suggested with the residential rate and AMI we’ll have demand readings for each resident and suggested reviewing the demand times for high electricity as we review time of use rate. Councilmember Weaver said we can have one-third of revenue funding come from non-residents to put towards park capital. Mr. Berg suggested assumptions could be made around rate adjustments going forward and the Council could decide what to do with those dollars such as park dedication. Ms. Douglas confirmed the Council was interested in slight increases over time to build for additional needs for transfers. Mayor Rice cautioned about getting more aggressive then we have to, adding reserves can be built back up quicker than we anticipated. Mr. Berg suggested Minnesota Municipal Power Agency (MMPA) has a rate for wholesale and an adjustment charge of two cents and said the City should be aware of moving those two cents into the rate and include an adjustment clause back to zero to lower that because MMPA bills would be adjusted and rates would have to be raised by an additional two cents. Discussion was held on the benefits of rate increases, revenue goals, demand charge, energy requests, and the amount of undeveloped land in the City and impacts of electrical service. Ms. Douglas asked if we keep everything above 10% what would be the recommendation. Mr. Daly said he felt 10% was ambitious but most cities don’t have an annual 10% position which would be $2 million more and in 2027 would be $1 million more and felt consistently being at 10% is more aggressive than needed. He said he felt the City was fairly healthy to date but added most clients don’t pay that much attention to this factor. 3.2 Discussion; Anoka County Jail Expansion Project. City Manager Greg Lee shared a background report stating the deadline for completing the Legislature-directed study on jail consolidation and alternatives to October 28, 2024 (Worksession) Page 4 of 5 incarceration was extended from October 20, 2024, to February 1, 2025. He said staff met with Anoka County Administrator Jim Dickinson on October 16, 2024 who reiterated the County’s position based on their current resolution adopted on July 9, 2024, to move forward with a tripling the current 180-bed capacity by constricting a new 540-bed facility in downtown Anoka. The County published their plans to move forward with the jail expansion project in downtown Anoka in their latest News Report – Volume 2-2024. He shared comments about how Anoka County felt they needed a 540-bed facility and how that need should be reduced based on the recent legalization of cannabis as well as their projections to reduce incarceration rates. Councilmember Weaver asked if the County would be bringing an application forward to the Planning Commission soon. Mr. Lee said he thought the County needed more time to plan, adding they had submitted an application to the City which was rejected and have not seen anything since. He said they are continuing with the traffic and parking study and expect an application after likely after the election. Councilmember Scott referred to the agenda packet and how the selected option was the lowest cost but felt compared to a justice center and jail the options were not comparable and said instead the decision should have been what was the best option for all stakeholders, especially for the host city. Mr. Lee said he pushed back on the 540 beds and wagon-wheel design and suggested other options be considered such as moving the jail to East Bethel, Andover, or other cities. Councilmember Skogquist thanked staff for trying all different angles, adding the County knows our position through both the resolution and letter and felt it was worth the effort to continue the discussion. Dave Bonthuis, Housing and Redevelopment Authority Chair, asked if the Anoka County Board have agreed to a final location and even interested in meeting with the Council. Councilmember Weaver said not at this time. Mr. Lee said a meeting will likely happen early in 2025. Borgie Bonthuis, Planning Commissioner, asked if staff can confirm if the new County Administrator read the letter, adding the new ramp would have less space than the other. Mr. Lee said the letter was sent to the Administrator certified mail but acknowledge his hands were tied, adding the ramp is never more than one- third full and that a traffic study still needs to be done. He noted this issue has been going on for decades and is now being used to construct a new ramp. Ed Evans, Anoka, commented about adding residential parking signs only in downtown areas to deter others from parking. October 28, 2024 (Worksession) Page 5 of 5 Audience members of the American Coop shared concerns regarding the expansion and impacts to them as residents wondered if that will change after the election. Councilmember Scott said having representation could result in compromise and stressed the importance of having another Boardmember in place. Councilmember Skogquist said the County Chair in the past has recognized the City during meetings but not often, adding difficult votes have occurred since not having a full County Board. Ms. Bonthuis noted the City recently had two developers say they would not be interested in developing on the 2nd and Harrison site should the expansion move forward and felt the County had not worked with the City at all during this process. Mr. Lee said the County had offered an alternative of building to the maximum for the exterior but not completing the interior for now but felt that this option would not matter going forward because the infrastructure would be there to expand then spoke about a possible release program but felt this was just a way to sell the expansion. He suggested the jail include a lobby area that would be open 24/7 to allow those experiencing homelessness get out of the cold during the winter months. Mayor Rice said he didn’t believe the County will ever need the expansion size they are suggesting anyway. UPDATES/REPORTS/COUNCIL SUGGESTIONS FOR TENTATIVE FUTURE AGENDA ITEMS Councilmember Weaver thanked Public Works staff for their remarkable clean-up efforts early Sunday after the Anoka Halloween parade. 4. ADJOURNMENT Motion by Councilmember Weaver, seconded by Councilmember Scott to adjourn the Worksession at 6:27 p.m. Motion carried. Submitted by: Cathy Sorensen, TimeSaver Off Site Secretarial, Inc. Approval Attestation: Amy T. Oehlers, City Clerk