Anoka City Council

November 18, 2024 (Regular) Page 1 of 15 REGULAR MEETING OF THE ANOKA CITY COUNCIL ANOKA CITY HALL CITY COUNCIL CHAMBERS NOVEMBER 18, 2024 1. CALL TO ORDER Mayor Rice called the regular meeting of the City Council to order at 7:00 p.m., followed by the Pledge of Allegiance. 2. ROLL CALL Present at roll call: Mayor Rice, Councilmembers Scott, Skogquist, Weaver, and Wesp. Also present: City Manager Greg Lee; Police Captain Andy Youngquist; Public Works Director Mark Anderson; Community Development Director Doug Borglund; Senior City Planner Clark Palmer; Finance Director Brenda Springer; Golf Course Manager Larry Norland; HRA Executive Director Darin Berger; Assistant City Engineer Ben Nelson; City Attorney Scott Baumgartner; and Utility Director Del Vancura. Absent at roll call: None. 3. COUNCIL MINUTES 3.1 October 28, 2024, Worksession. November 4, 2024, Regular Meeting. November 13, 2024, Special Meeting. Motion by Councilmember Skogquist, seconded by Councilmember Scott, to approve the minutes of the October 28, 2024, Worksession, November 4, 2024, Regular Meeting, and the November 13, 2024, Special Meeting as presented. Vote taken. All ayes. Motion carried. 4. OPEN FORUM 4.1 Police Activity Update. Police Captain Andy Youngquist shared the entertainment district will likely be busy with the upcoming holidays. He said holiday events typically include adult beverages and encouraged everyone to not drink and drive then shared there had been 90 DWI arrests year to date. He spoke about upcoming events in December that included House of Worship Emergency Preparedness and the Christmas Tree Lighting events. November 18, 2024 (Regular) Page 2 of 15 Councilmember Skogquist asked about the upcoming department turnover and plans for transition. Captain Youngquist shared they were losing one officer to Anoka County and two officers Sherburne County but were prepared to replace and already received 11 applications for the positions. OTHER INFORMATION UNDER OPEN FORUM Diane Lunken (did not sign in), Anoka, shared concerns about Van Buren Street the impacts should the jail expansion occur, and if the street will remain open. She commented about the property available for sale across the street from her coop and suggested the City work to envision a grocery store or senior center instead. Mayor Rice commented on how the City was working with Anoka County about the jail expansion and how the City does not want to see the closure of Van Buren either. Ed Evans, 1186 Benton Street, suggested the newly-elected County Commissioner be seated to provide resident representation which has not occurred since March. Councilmember Skogquist shared the Board recently met to canvass the elections results which was followed with a ceremonial oath of office. Angie Eaton and Brianna Opperding (did not sign in), Anoka Halloween, shared their thanks to everyone for their support of Anoka Halloween. They commented about the many people who enjoyed the parade as well as all other events and said the event was outstanding. They invited anyone interested to serve to attend their monthly meeting beginning again in January. Mayor Rice thanked Anoka Halloween for all the work they do to create a successful event each year. Captain Youngquist thanked Public Services for all their work at these events as well. Jerry Boettcher, 541 Madison Avenue, asked for reasons why he was being issued citations for parking his vehicle on his property and for garbage being thrown in the back of his property. He shared concerns with staff and said Code Enforcement needs to do their job. City Manager Greg Lee said staff will meet with Mr. Boettcher and follow up. Councilmember Skogquist asked that the follow-up be shared with Council afterward. November 18, 2024 (Regular) Page 3 of 15 An audience member said a code enforcement person sent a letter stating the house was inhabitable and had to leave. She said she observed staff looking into their windows and asked why they could not shut off their water. Mayor Rice encouraged the speakers to speak with staff to follow up. 5. PUBLIC HEARING(S) None. 6. CONSENT AGENDA Motion by Councilmember Wesp, seconded by Councilmember Weaver, to approve the Consent Agenda as presented. 6.1 Approve Verified Bills. 6.2 Revising and Setting Council Calendars. 6.3 Approval of Anoka County Contract; 2025 Agreement for Residential Recycling Program. 6.4 U.S. Highway 10/169 Improvement Project; Approve Change Order Number 86. 6.5 Issuance of a Massage Therapist License for Xueong He of Lin Health Care, LLC, dba; Better Life Wellness Massage and Reflexology, 3841 St. Francis Boulevard, Suite 102. 6.6 Issuance of a Massage Therapist License for Alexandra Shelton of Eskelson Enterprises, Inc., dba, Anoka Massage and Pain Therapy, 710 E. River Road. Vote taken. All ayes. Motion carried. 7. REPORTS OF OFFICERS, BOARDS AND COMMISSIONS None. 8. PETITIONS, REQUESTS AND COMMUNICATION None. 9. ORDINANCES AND RESOLUTIONS 9.1 ORD/Amending Chapter 22 Business and Service; Establishing Article XIV Regulation of Adult Use Cannabis Businesses. 1st Reading November 18, 2024 (Regular) Page 4 of 15 Community Development Director Doug Borglund shared a background report stating that the 2023 MN State Legislature adopted State Statute 342 legalizing Cannabis in Minnesota as of August 2023 and amended in 2024. The legislation creates the framework for adult-use cannabis in Minnesota and establishes a new Office of Cannabis Management (OCM), which will regulate cannabis, issue licenses, and develop regulations outlining how and when businesses can participate in the industry. Under State Statute 342 local governments play a critical role in the licensing process, serving as a near-final approval for a cannabis business nearing the award of a State license from the OCM. Once the applicant is vetted and the OCM and is selected to proceed in the verification process the applicant is then required to receive the City’s certification of zoning compliance and approval of local registration before operations may commence. The proposed amendment to Chapter 22 would create a local registration process that refers to the purpose, imposes limits on privately held cannabis retail businesses licensed in the City based on population, creates registration fees, outlines the registration process, business relocation, and renewal process, establishes retail business hours of operations, building conditions, compliance checks, license, and civil penalties. Motion by Councilmember Skogquist by Councilmember Weaver, to hold first reading of an ordinance Amending Chapter 22, Businesses and Services; Establishing Article XIV Regulation of Adult Use Cannabis Business Operations of the Code of the City of Anoka Minnesota. Councilmember Weaver asked how many licenses we intend to allow and suggested the topic be included on an upcoming worksession. Mr. Borglund explained we have to have one license and that Council would have to provide direction if they wanted to limit after the required one license. City Attorney Scott Baumgartner clarified that one license cannot include the City license towards the total. Upon a roll call vote: Mayor Rice, Councilmembers Scott, Skogquist, Weaver, and Wesp voted in favor. Motion carried. 9.2 ORD/Zoning Text Amendments Related to Cannabis Business Retail Use; Amending Chapter 78 – Zoning, Sections: 78-2 – Definitions, 78-265 – B-1 Highway Business District, 78-266 – B-2 Shopping Center Business District, Section 78-269 – B-5 Regional Business District, Section 78-270 – B-6 Neighborhood Business District, 78-216 – Main Street Mixed-Use District 1st Reading Senior City Planner Clark Palmer shared a background report stating the City was working to amend its City Code to comply with the new adult-use cannabis law. Associated with Agenda Item 9.1 Regulation of Adult Use Cannabis Businesses, said the City needs to make zoning changes allowing retail cannabis business November 18, 2024 (Regular) Page 5 of 15 within the city. City Council has previously directed staff to prepare a zoning ordinance that includes a 500-foot buffer consistent with State law. Staff has since created a buffer map and identified areas of the city and portions of specific zoning districts unencumbered by the proposed buffer restrictions. The districts include: • B-1 Highway Business • B-2 Shopping Center Business • B-5 Regional Business • B-6 Neighborhood Commercial • Main Street Mixed Use, West Main Street Subdistrict and East Main Street Subdistrict 3 In preparation of this ordinance, staff worked with legal counsel to create a specific definition of “Cannabis Retailer” as well as text for inserting into the use regulations of each of the respective zoning districts. “Cannabis Retailer” is proposed to be defined as follows: Cannabis Retailer is a business licensed by the State of Minnesota and registered with the City to sell cannabis and cannabis products directly to consumers, including medical cannabis. Cannabis Retailer does not include any other State-licensed cannabis types, including those who may have a combination license which includes retail. These zoning districts are proposed to be amended to include the follow use: Cannabis retailers subject to the license limitations and location ineligibility limitations set forth in Chapter 22, Article XIV In addition to cannabis retail use, as part of the ordinance the zoning code is proposed to be amended to allow liquor stores in the Main Street Mixed Use, East Main Street Subdistrict 3 (7th Ave and Main Street area) and the B-5 Regional Business District (7th Ave and Bunker Lake Blvd area), as these areas have been identified as potential locations for future municipal liquor stores. Lastly, the current Main Street Mixed Use, East Main Street Subdistrict 1 (EM-1/downtown area) currently prohibits “Medical or recreational marijuana dispensaries.” This text should be amended to be consistent with the new proposed language. “Medical or recreations marijuana dispensaries” could be replaced with “Cannabis Page 123 of 309 Retailer.” Although the downtown area is almost entirely encumbered by the proposed buffer restrictions, there is one small area of the downtown that is not. As part of the first reading of the ordinance, staff will ask the City Council to consider whether cannabis retailers should continue to be prohibited in the EM-1. The Planning Commission reviewed the proposed amendments at their regular meeting held on November 6 regular meeting. The Planning Commission recommended approval of the proposed amendments. Councilmember Weaver asked if the area includes the Wheelhouse Bar can obtain a license. Mr. Baumgartner said cannabis licenses can only be issued to standalone businesses and then explained the definition of retailer in Statute was all-encompassing for the 13 different types of licenses and could open the City to have to allow all license types so staff was suggesting narrowing the definition to retailer selling directly to a consumer then recommended paraphernalia be associated only with a cannabis retailer. Councilmember Skogquist suggested reviewing City code to ensure consistency for items such as cannabis retailer. November 18, 2024 (Regular) Page 6 of 15 Motion by Councilmember Weaver, seconded by Councilmember Scott, to hold first reading of an ordinance Amending Chapter 78 – Zoning, Sections: 78-2 – Definitions, 78-265 – B-1 Highway Business District, 78-266 – B-2 Shopping Center Business District, 78-269 – B-5 Regional Business District, 78-270 – B-6 Neighborhood Commercial Business District, 78-316 – Main Street Mixed-Use District. Upon a roll call vote: Mayor Rice, Councilmembers Scott, Skogquist, Weaver, and Wesp voted in favor. Motion carried. 9.3 RES/Approving Lease for Golf Carts at Green Haven Golf Course. RESOLUTION Golf Course Manager Larry Norland shared a background report stating the current golf carts are nine years old and are requiring quite a bit of maintenance and are worn out and ready for replacement. He outlined the golf carts staff was recommending that would include full course GPS, geo-fencing, food and beverage ordering, cart auto-lock, and shut down for security. The proposed 5- year lease will be $120,074.40 per year for a 72-cart fleet. Yamaha came in with the lowest quote and after testing the carts and the GPS system, staff is satisfied they will provide the necessary functionality. He stated the new carts will generate additional revenues: • Increase cart rentals $2.00 for 18-holes and $1.00 for 9 holes for a total increase of approx. $49,000 • New carts with GPS have typically increased ridership at Green Haven by 3 to 4% or between 850 to 1,100 rounds. At an average of $18.50 per round, that would translate into approx. $15,725 to $20,350 in additional revenue. With this lease we will save the following expenses: • Seasonal rentals = $17,500 annually • Regular battery maintenance = $4,725 annually • Miscellaneous repairs = $8,000 annually with total additional revenue directly tied to this lease of approx. $64,000 and annual savings of approx. $30,225, the financial impact will be just over $25,000. Yamaha will give us a trade-in credit of $2,250 per car for our existing fleet for a total of $135,000, which will more than pay for the first year of the lease. Councilmember Skogquist commented on the balance between maintenance costs and the need for new and said maintenance at $80,000 per year is very high. Mr. Norland commented that even though they stretched the usage in the end it likely didn’t save a lot of money. Councilmember Weaver spoke about lease versus buying and the dollar savings a lease presents which will provide funding for other equipment requests and is a great first step to reorganization of the course. Finance Director Brenda Springer said if approved the savings will provide for an additional greens mower which was desperately needed. November 18, 2024 (Regular) Page 7 of 15 Councilmember Wesp spoke about the need to keep Green Haven relevant and while offering popular carts won’t likely increase the number of rounds it allows us to consider possible green fee increases. Mr. Norland said these carts will allow them to increase rates $2 a round for 18 holes and $1 a round for 9 holes, adding more people to lease carts when new which will result in more revenue. Motion by Councilmember Wesp, seconded by Councilmember Scott, to adopt a resolution authorizing an equipment lease between Yamaha Golf & Utility and the City of Anoka. Councilmember Scott said these carts will provide for a much better experience as they will be of more consistent quality and be dependable and thanked everyone for the idea. Mayor Rice said he consistently hears positive comments on the shape of the course already but agreed the carts will add to the overall experience. Upon a roll call vote: Mayor Rice, Councilmembers Scott, Skogquist, Weaver, and Wesp voted in favor. Motion carried. 9.4 ORD/Accepting Offers for Vacant Lot at River Avenue and Madison Street. 1st Reading HRA Executive Director Darin Berger shared a background report stating the Council gave staff direction to begin marketing the long-vacant City lot at the corner of River Avenue and Madison Street in August. Nathan Gunn, Foundational Realty, listed the lot on the MLS on September 12 with an offer deadline of November 1. The $200,000 list price included some additional stipulations set forth by the City. The buyer must build a single-family, owner- occupied home on the 99’x99’ (.22 acres) lot, which must fit architecturally into the neighborhood. Construction to meet all Zoning and State Building Code requirements. A 10-year rental restriction will also be enforced on the home to be built. Buyer will be required to enter into a Development Agreement confirming adherence to conditions set forth by City of Anoka. He said the three offers from Guimont, Baker, and Freeburg were included in the Council packet then shared the offers in detail. Councilmember Skogquist said it was great to see multiple offers coming forward and thanked everyone for their interest and said because of the uniqueness of the second offer felt the project would fit well. Councilmember Scott thanked everyone for making a bid on this prime property across from a park in a vibrant and active area and said while the Freeburg offer was the highest the Baker plan fit the neighborhood better and would retain the historic charm of the neighborhood. November 18, 2024 (Regular) Page 8 of 15 Councilmember Weaver said the Council defined a process to generate the highest bid but also ensure that the project fits architecturally. He suggested instead of moving to the second bid and bypassing the intent for a portion of proceeds to be directed into the park capital and fund a public services employee that we accept the Freeburg offer with contingencies to review and amend the proposed architecture. Councilmember Wesp shared how in 1998 he and his spouse purchased a vacant lot on 3rd Avenue and built their home which fit well into the neighborhood and agreed with trying to generate the best bid and return on the lot but said he supported the Freeburg offer as it was the highest but allow an opportunity to amend the presented plan. Mayor Rice said since this was only first reading the action will allow us to have that opportunity and said he liked the two-story look as it better fit the historic vision. Mr. Baumgartner said the action shouldn’t be to approve the offers but instead acknowledge receipt of the offers with approval of the final offer at second reading. Motion by Councilmember Weaver, seconded by Councilmember Wesp, to acknowledge the receipt of the offers and hold first reading of an ordinance to convey real property at 18XX River Avenue and Madison Street. Councilmember Weaver amended the motion to request that second reading be moved to the December 16 meeting as he will be absent. Upon a roll call vote: Mayor Rice, Councilmembers Scott, Skogquist, Weaver, and Wesp voted in favor. Motion carried. 9.5 RES/Minnesota Municipal Powers Agency (MMPA) Agreement. RESOLUTION Utility Director Del Vancura shared a background report stating AMU has grouped with 12 other Minnesota Municipals to form MMPA. MMPA has been empowered to purchase generated power with Purchase Power Agreements with each member city. Avant Energy is our managing partner at MMPA. Avant Energy is requesting each member city approve Weighted Member Voting Amendment. MMPA uses a weighted voting system determined by each members’ electric demand usage and is used for large projects including land purchases and generation such as solar, wind, and other renewable energy generation facilities. He shared about large-scale transformational loads such as very large data centers will drastically change the weighted scale and recommended Council accept and authorize MMPA to Amend the Agreement to November 18, 2024 (Regular) Page 9 of 15 eliminate large-scale transformational loads from changing the original intent of the weighted member voting scale. Councilmember Skogquist shared comments about large data centers such as Google, Microsoft, Amazon, and others and how if a city has a large data center can they control the entire agency’s vote and if so the impacts to that and the need for percentage representation. He said this amendment keeps the status quo with MMPA as a group and keeps the balance intact. Councilmember Weaver asked if this is the first time for weighted voting and wondered if all scenarios have been thought of. Mr. Vancura responded the agreement has been this way since the beginning and the change is in anticipation of potential data centers. Councilmember Skogquist stressed the importance of having a say and when large projects happen MMPA is the one who invests in the infrastructure. He said MMPA is voting as a 12-member group and a data center would purchase the power from MMPA and not the specific city they were located in, adding this language provides as much of a buffer as possible. Mr. Vancura added MMPA voted unanimously to support the amendment. Mayor Rice referred to cities that have the top megawatt users such as a medical or manufacturing use already in their city and said we need to be as much of a beneficiary as we can be. Dr. Evans said he was on the MMPA for 12 years and that data centers will purchase power from MMPA and what was advantage to having these uses in the City because of their noise impacts. He said the City should then get the credit for the purchase and commented about the need for infrastructure if a data center comes in and who pays for that, adding if data centers can negotiate then all businesses should. Councilmember Skogquist stated Anoka was likely not set up for a data center but added the benefit was the tax revenue then shared how there is a conduit of work through MMPA and the risk to build a high-use business who was responsible for buying the power needed with MMPA getting a cut, adding infrastructure was typically negotiated. Motion by Councilmember Skogquist, seconded by Councilmember Scott, to adopt a resolution for approval of the 2024 MMPA Weighted Member Voting Amendment. Upon a roll call vote: Mayor Rice, Councilmembers Scott, Skogquist, Weaver, and Wesp voted in favor. Motion carried. November 18, 2024 (Regular) Page 10 of 15 9.6 RES/2025 Street Surface Improvement Project – Lund Boulevard and McKinley Street; Authorize Feasibility Report. RESOLUTION Assistant City Engineer Ben Nelson shared a background report stating in 2009 the Anoka City Council began the Street Surface Improvement Program (SSIP) for city streets showing accelerated deterioration in order to create longer-term benefits than just with roadway maintenance. The main construction component of the Street Surface Improvement Program is the reconditioning/resurfacing of city roads. Reconditioning of a road comprises of a full-depth reclamation of existing bituminous pavement and paving a new bituminous asphalt surface. Since this program began, over 2,300 properties have benefitted and 24.1 miles of city roads have been resurfaced or 34% of the 70.8 miles of city roads. To date, the total investment in our roadway system with this program is approximately $14.8M. This proposed project will involve the reconstruction of the street surface, including the bituminous pavement, minor replacement of the concrete curb & gutters, sidewalks, spot watermain repairs, traffic control, and storm sewer drainage improvements only as necessary. As part of the sidewalk work, all pedestrian ramps will be reconstructed to meet current Americans with Disabilities Act (ADA) Standards. The spot watermain repair work is for the malfunctioning gate valves and broken access valve boxes. He reviewed the proposed project in detail and the project costs and available funding sources, and proposed project schedule in detail. Councilmember Weaver said the SSIP program began in 2009 from combining a project at Green Haven with nearby roads at Sunny Acres that were in poor condition. He said he was pleased this program still works in the City then asked for the typical lifespan of a road. Mr. Nelson a new road 25-30 years lasts longer. Motion by Councilmember Scott, seconded by Councilmember Weaver, to adopt a resolution for the 2025 Street Surface Improvement Project – Lund Boulevard and McKinley Street; Authorize Feasibility Report. Upon a roll call vote: Mayor Rice, Councilmembers Scott, Skogquist, Weaver, and Wesp voted in favor. Motion carried. 10. UNFINISHED BUSINESS None. 11. NEW BUSINESS 11.1 Presentation by Proposed Developer for City-Owned Property Along Harrison Street Between 2nd Avenue and 3rd Avenue. November 18, 2024 (Regular) Page 11 of 15 Mr. Borglund shared a background report stating on August 26, 2024, the City Council at its regular work session meeting had a discussion with two interested development groups who have an interest in the 2nd Avenue and Harrison Street City-owned redevelopment site. The purpose of the discussion was for the City Council to share with the interested parties their hopes for this redevelopment area. On September 24, 2024, an RFP was issued to two interested parties with a due date of October 25, 2024. He said the City received one proposal from Gramercy Development and that Mick Conlan on behalf of Gramercy Development will present their proposal. He shared that the property appraisal for the larger parcel was $1.14 million and $200,000 for the smaller parcel, adding the offer included a letter of intent based on those appraisal amounts. Mick Conlan, Gramercy Development, shared about their past development and appreciated the time, adding he felt the time was right to do another project. He shared about their family-owned company and their first project in Anoka with their second in Maplewood. He shared the vision for this new site that would include brownstone for sale villas and a 72-unit senior cooperative that would incorporate the historic façade and have underground and surface parking, a terrace overlooking the Rum River, and other features. He outlined the square footage, monthly fees, and master mortgage payments in detail then reviewed floor plans, amenities, and other elements, including the brownstone plans in detail. He said this project would reactivate the vacant land, rebuild family ownership downtown, and would be non-age restricted. He highlighted some of the challenges with third-party ownership and the jail expansion and offered to answer any questions. Ms. Lunken asked about traffic patterns if constructed. Mr. Conlan outlined the proposed plan for surface parking for the project and the entrance off 3rd Avenue with the small guest parking off Harrison Street. He noted this project would differ from other service buildings as there were no staff or meal services then said shares would range from $185,000 to $400,000. Councilmember Scott said he felt the project would fit well in downtown and said the concepts for Sites B and C with underground parking for townhomes were good as it would take extra traffic out of the equation and provide a better streetscape for pedestrians. Mr. Baumgartner asked about Sites A and B and if marketing both at the same time, what was the contingency for marketing and percentage of sale. Mr. Conlan said Sites B and C were non-age restricted and that people who want to live in a coop understand how they work. He said Sites B and C would be market-rate housing with multiple-story living and that units along the river will go first and that the vacant land likely won’t compete for that because of the different housing styles. November 18, 2024 (Regular) Page 12 of 15 Councilmember Skogquist thanked Mr. Conlan for listening and said Sites B and C have third parties including the Anoka County Historical Society and a possible hotel and if they are contingent upon these possibilities. Mr. Conlan explained they are not contingent on each other and that Site A will do well as a coop in Anoka and that they expanded this to bring an ownership option in Anoka. He said redevelopment was needed in this area and there will be expectations for views and other amenities and that this presents an opportunity, adding if the vision was not correct for Sites B or C they would need to know the vision so they can plan to sell. He said he was concerned about the southeast corner of Site A and its current condition as the area was at the end of its development cycle. Mr. Baumgartner asked if the proposed jail expansion would be an impediment to vision and if the project is done we may not know the outcome of the expansion for another 24 months. Mr. Conlan said they know the expansion is an ongoing discussion and shared his concern about building the project if a jail expansion occurs as a for-sale option across the street would not work. Mayor Rice said streetscape and landscape are part of the County’s negotiation and said staff will work to soften the impact on the neighborhood. Councilmember Wesp asked that the Council stand firm against the jail expansion, adding we shouldn’t close Van Buren Street for any expansion. He referred to Hennepin County’s jail currently overpopulated and said this expansion was not appropriate for the downtown area but if they do move forward we even more importantly miss out on the tax revenue longevity. He said maybe Site A won’t happen but Sites B and C certainly will and if not this will be determinantal to the City. Mr. Borglund said staff is seeking direction on the item. Councilmember Weaver said based on the letter of intent from Gramercy he would support accepting their offer. Motion by Councilmember Weaver, seconded by Councilmember Scott, to accept the proposal from Gramercy Development as the Proposed Developer for City- Owned Property Along Harrison Street Between 2nd Avenue and 3rd Avenue following legal review. Upon a roll call vote: Mayor Rice, Councilmembers Scott, Skogquist, Weaver, and Wesp voted in favor. Motion carried. Councilmember Wesp said this project is moving in the right direction but encouraged staff to work with Gramercy to educate them on the direction of the jail expansion and how Gramercy could be a voice in this as well and this jail will really affect how downtown Anoka will look over the next 40-50 years. November 18, 2024 (Regular) Page 13 of 15 Mayor Rice this property has been on the redevelopment list for the past 20 years and that the City made a big investment in the area for redevelopment and we still want more and shared his appreciation to Gramercy for offering another quality project. 12. UPDATES AND REPORTS 12.1 3rd Quarter Financial Report. Finance Director Brenda Springer shared a background report highlighting the 3rd quarter financial reports. She reviewed total general fund revenues which were down approximately $620,000 primarily as a result of a reduction in building permits and police services. She reviewed expenses which were down $474,000 compared to last year due to the need in 2023 for emergency street repairs. She reviewed governmental funds that included assets of $12.2 million and liabilities of $12.3 million. Councilmember Skogquist asked about negative $7.3 million in cash. Ms. Springer explained the Highway 10 and SRF funds were both negative and that TIF funds are negative until we get the TIF revenue paid and completed. Ms. Springer reviewed the positive fund balance and outlined the proprietary funds in detail, then reviewed the City’s various enterprise funds and operating income in depth. She then shared the City’s cash and investments. She reviewed the five-year debt projections and said the City continues to plan and prepare for the future and finances are in good condition. 12.2 Cost of Service and Electric Rate Study Report. Assistant Finance Director Liz Douglas shared a background report stating as part of the financial management plan, the City contracted with Dave Berg Consulting LLC to provide an analysis of operating results for 2023 and 2024, and projections for future fiscal years through 2028 for the electric utility fund. The goal of the study is to ensure that rates and non-operating revenues are sufficient to provide service to Anoka’s customers, and to meet goals related to cash reserves. Anoka currently has a target cash reserve policy for the electric utility fund that consists of the next year's capital improvements plus one-third of the next year’s operating costs. Dave Berg attended a work session in October to provide preliminary study outcomes and discuss the Council’s position on rates. He will explain the study and recommendations and answer any questions related to the study. The study recommends that a 1% increase in each year starting in 2025 and ending in 2028 be enacted. In order to enact an electric rate increase, the utility must set a date for a public hearing of proposed rate increases, advertise the public hearing in the local paper, and mail notice of the proposed rate increase to utility account customers that gives examples of the proposed changes. November 18, 2024 (Regular) Page 14 of 15 Dave Berg, Dave Berg Consulting LLC, shared the report and recommendations in detail based on feedback from the Council at worksession. He reviewed the capital improvements, operating results at existing rates, reserve levels, cost of service, rate recommendations, and operating results and reserves at the proposed rates. He recommended the City consider a 1% increase each year, maintain the current EV charging rate, adjust lighting rates for certain wattages, maintain current energy adjustment clause (EAC) and monitor for changes in MMPA wholesale rate structure, begin considering time-of-use rates, and implement solar grid access charge. Councilmember Skogquist said it made sense to have the fixed charge on commercial customers because they have more infrastructure. Mr. Berg explained the impact on the monthly bill and residential electric rate impact of approximately 1% then reviewed time-of-use rates and solar grid access charges in detail. He explained the reserves and operating results at proposed rates. Councilmember Skogquist thanked Mr. Berg for his report, then asked further questions about maintaining our reserve and position and if we are anticipating gaps and budgeting for either worst-case/best-case scenarios or more real-time scenarios such as this year with the cooler summer. Mr. Berg noted energy sales were actually down this year due to the cooler summer weather. Councilmember Weaver suggested a funding source for park capital which has been reduced since we closed one liquor store and suggested dedicating 1% of the City’s electric rate to the park capital fund on a renewal cycle every five years. He said if done it could potentially bring in $275,000 which could fund much- needed repairs and maintenance of City parks. Councilmember Skogquist suggested seeing comparison bills to see the anticipated impact as we consider any rate increase. Ms. Springer added including a sunset clause would be good as it would allow the new liquor store to be constructed and established and hopefully generate enough revenue for the park capital fund which then would result in us removing the electric rate increase. 12.3 Tentative Agenda(s). The Council reviewed the tentative agendas of the upcoming Council meetings. 12.2 Staff and Council Input. None. November 18, 2024 (Regular) Page 15 of 15 ADJOURNMENT Councilmember Skogquist made a motion to adjourn the Regular Council meeting Councilmember Scott seconded the motion. Vote taken. All ayes. Motion carried. Time of adjournment: 9:58 p.m. Submitted by: Cathy Sorensen, TimeSaver Off Site Secretarial, Inc. Approval Attestation: Amy T. Oehlers, City Clerks