City Council

HOPKINS CITY COUNCIL WORK SESSION AGENDA Tuesday, July 13, 2021 6:30 pm Hopkins City Hall – Council Chambers 6:30 p.m. Organics Recycling Update; Stadler 7:00 p.m. Blake Road Station Financial Assistance; Elverum 8:00 p.m. 2022 General Fund Budget and Tax Levy; Bishop Other Adjournment  Public Works CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Pam Hove, Solid Waste Coordinator Date: July 13, 2021 Subject: Organics Recycling Update _____________________________________________________________________ PURPOSE Staff would like to update Council on the status of the upcoming Hennepin County mandated residential curbside organics recycling program. INFORMATION Staff have met with Hennepin County and Republic Services staff to discuss the January 1, 2022 deadline to make available residential curbside organics recycling, and what approaches to meeting that mandate are viable to Hopkins. Hennepin County Ordinance 13 reads: “Subsection 2: Organic material collection requirements A. Curbside collection of organic material By January 1, 2022, Cities shall provide the opportunity to participate in Curbside Collection of Organic Material to residential households that are single family through fourplex and other residential households where each household has its own Collection Container for Mixed Recyclables. Curbside Collection of Organic Material must be provided year round on a weekly basis. A City may adjust Collection Service frequency with prior approval by the Department. Cities shall make Curbside Collection of Organic Material available by contracting for citywide service or by requiring Haulers to provide the service. If a City does not provide Curbside Collection of Organic Material by contracting for citywide service, the City shall require Haulers to provide it. Haulers shall provide Curbside Collection of Organic Material upon request to households that have Curbside Collection for Mixed Recyclables.” Hopkins is unique since we provide in-house waste services for all single family, duplex, triplex and fourplex residential properties. Minneapolis is the only other city in Hennepin County that operates in this manner. This unique position leaves Hopkins with two options to comply with Hennepin County Ordinance 13:  1) We, as the hauler, provide the opportunity for residential curbside organics recycling collection by driving co-mingled MSW and Blue Bag loads to the Randy’s transfer station in Delano, a 25-mile one-way trip. The current drive to the Brooklyn Park Transfer Station is 15 miles one-way. The Delano transfer station is located outside Hennepin County, in Wright County. Waste haulers in Hennepin County are bound by certain conditions in which waste is handled. By currently taking our waste to the Brooklyn Park Transfer Station, all Hopkins waste is incinerated. Hennepin County’s response to the scenario of Hopkins delivering waste to Randy’s transfer station in Delano is this: “It is the county’s expectation that cities manage waste according to the preferred practices established in state law. Resource recovery through incineration is preferred over land disposal (115A.02, 473.848). If a public entity chooses to manage MMSW through land disposal rather than resource recovery, that public entity must determine the potential liability of doing so, develop and implement a plan to manage the potential liability, and submit the information to the PCA (115A.471).” 2) Amend our contract with Republic to include the provision of residential curbside organics recycling service to our customers. Most communities in Hennepin County are allocating the expense of this opportunity for service by universally applying a base fee to all service addresses. This is the same approach as, and similar price point to, the current recycling fee of $5.00 per dwelling unit per month. Whether residents choose to use it or not, everyone is required to have it and are billed as such. There may be an additional subscription fee applied to those addresses who chose to receive a cart and participate in residential curbside organics recycling. Staff are considering incentives such as every-other-week refuse service at a discounted rate for those who have a 35-gallon garbage cart and sign up for curbside organics service. St. Louis Park has been offering this option for a number of years and it could be a valuable incentive to get resident participation in organics. Staff have asked Hennepin County, if given our unique position as the waste hauler, an extension to the January 1, 2022 deadline would be considered. This is their response: “We cannot grant extensions to the requirements in Ordinance 13, including the January 1, 2022, requirement for cities. That date stands as is.” FUTURE ACTION Staff recommends moving forward in negotiating terms of an amendment to the City’s contract with Republic Services, to include residential curbside organics recycling service. Staff will present an implementation plan to Council at the September 14, 2021 work session.  PLANNING & ECONOMIC DEVELOPMENT CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Kersten Elverum, Director of Planning & Development Date: July 13, 2021 Subject: Blake Road Station Financial Assistance _____________________________________________________________________ PURPOSE The purpose of the discussion at the July 13, 2021, City Council work session is to consider a financial assistance request from Trilogy for the Blake Road Station development. Specific considerations include: • What is the financial assistance request from Trilogy? • Is the assistance necessary for the project to move forward? • What is the appropriate level of assistance and what are the recommended terms? INFORMATION The Blake Road Station project is the redevelopment of 7.4 acres of land located at the intersection of Excelsior Boulevard and Blake Road South. Trilogy Real Estate Group has proposed to develop the site in a three-phase, multi-modal transit-oriented development adjacent to the Blake Road Southwest LRT Station. Each phase will build upon the improvements of the previous phase and will ultimately result in an increasingly connected, pedestrian friendly, and transit-focused community. The project will add to the mix of housing choices for area residents, providing a new opportunity to live immediately adjacent to the light rail transit station. The development also includes some retail space, with tenants yet to be identified. The development will substantially increase the taxable market value of the property. The first phase alone will result in an estimated annual increase in local property taxes from $28,000 per year to approximately $456,000. The expectation has been that this development proposal would not rely on a City financial subsidy and therefor conversations have not focused on what community goals could be achieved through financial participation by the City. However, over the time it has taken to put the project together several factors have caused an increase in project budget to the point the developer has indicated it is not financially feasible without City assistance. What is the financial assistance request from Trilogy? Trilogy Real Estate Group has submitted an application to the City of Hopkins for financial assistance to support the Blake Road Station development. The request is for $1.831 million for the first phase; $7.758 million for all three phases. There are several factors that have contributed to the financial gap in the project including environmental remediation, escalating lumber costs, design changes and other project changes. The specific request is as follows: Environmental and Demolition Grant(s) are requested as the work & costs associated with abatement of regulated materials, remediation of contaminated soils and the resulting additional building controls and construction premiums added to the funding shortfall. Non-City grant opportunities were pursued and a $340,521 Environmental Grant from DEED was awarded to the project. Park Dedication Fees: Currently the intention is not to re-plat, therefore not triggering park dedication fee collection. Replating may be beneficial at a later time and allow for the conveyance of the interior site improvements and conformance with established zoning requirements. The request is to hold park dedication fees at current rates to ensure later development phases are not further burdened. Traffic Signal at Pierce Avenue The applicant wants assurance that they will not be responsible for any aspect of the installation of a traffic signal at the intersection of Pierce Avenue and Excelsior Boulevard, if one is warranted in the future. Rent Subsidy for Retail: The subsidy will assist the development to sustain the retail component and lower rents for create community serving retail. At the City’s request, retail has been added into the program for Building A (previously only Site B had a retail component). Building C is currently not programmed to have a retail component as, determined by a retail study conducted for the development, a lone retail use was not viable. Is the assistance necessary for the project to move forward? City staff, and our financial consultant, Ehler’s, believe that some additional financial assistance is necessary for the project to move forward (see attached memo.) It is staff’s recommendation that the basis for the assistance be tied to the environmental remediation necessary for development. The City and developer were successful in obtaining a clean-up grant through DEED totaling $340,521, but were not successful in applications to Hennepin County and the Met Council. The total costs of remediation, demolition and related costs for phase I are $1,111,188, leaving a balance of $685,000 after adjustments are made. Providing assistance to the developer for these costs will bring the site into a level field as greenfield sites or sites without significant environmental issues, and staff supports assisting with the environmental clean-up costs. The developer and the City of Hopkins will pursue environmental clean-up funds for phase II and phase III, estimated to cost $1.95 million. If they are not successful in obtaining grant funds for the total cost, less required developer match, the developer has requested City assistance to bridge those potential future gaps. Staff is supportive of assistance for future environmental costs, if needed. Currently Park Dedication Fees are $3,000 per housing unit constructed and 5% of the value of the commercial space. Staff supports capping the park dedication fee at today’s rate in order to eliminate the unknown impact of future increases which are possible given that park dedication fees have not been increased for several years and are currently being analyzed for an increase. The Traffic Impact Analysis referenced in the Environmental Assessment Worksheet notes a traffic signal to be installed to mitigate delays at Excelsior Blvd and Pierce Ave. It further details that the signal requirements will occur with omitting the proposed development from the analysis. The signal is recommended to be installed by 2030 and expected to provide benefit to the transit lines and commuter traffic that will use Pierce Avenue to access bus stops and the Green Line Extension. The city can give assurances that the traffic signal and related infrastructure costs are not to be assessed in part or whole to the Trilogy project. The retail subsidy was a new concept that has not been previously discussed with the developer and the benefits to the community are not understood at this time. The first phase of construction, which is the only phase of the project that is being considered for site plan approval, only has 2000 square feet of retail space which is anticipated to be leased at market rates. As the second and third phases of the development are brought forward for site plan approval, the developer may revisit the opportunity to work with the City to shape a development that meets community goals and as a result, revisit a request for assistance for affordable commercial space, as it is merited. What is the appropriate level of assistance and what are the recommended terms? Based on the information provided, it is staff’s recommendation that the City, through the Housing and Redevelopment Authority, provide a forgivable loan to the developer of $685,000 for phase I and a commitment for future phases with conditions that will be identified in the agreement. Funds for the loan would be provided through excess Tax Increment Financing (TIF) from the 2-11 TIF District. These funds are eligible expenditures for redevelopment. It would also be conditioned on the project receiving its land use approvals (the project will be presented to the Planning Commission and City Council in July/August) and moving forward. It is suggested that the loan would be forgiven after 10 years, but would be required to be paid back if the property was sold or transferred within the 10-year period. FUTURE ACTION If the Hopkins City Council is supportive of providing public financial assistance to the development, staff will work with the developer and City Attorney to draft a development agreement outlining the terms suggested through the work session discussion and bring it back for future action. MEMORANDUM TO: Kersten Elverum – Director of Planning and Development FROM: Stacie Kvilvang - Ehlers DATE: July 13, 2021 SUBJECT: Trilogy Request for Assistance Trilogy is planning on constructing approximately 770 apartment units and 11,000 sq/ft of retail at corner of Blake Road, Excelsior Boulevard and Pierce Avenue. They initially requested approximately $13.9 million in TIF assistance for environmental clean-up, site preparation, commercial lease subsidy and parking for all three phases of the proposed development. They revised their application and are now requesting $7.758 million. Staff recommendation is to address the gap in environmental clean-up and demolition costs for the three phases. The amount of assistance would be net of any current or future grants received for these costs and based upon review of future proformas to determine if assistance is warranted on those phases. Based upon estimates provided by the Developer and their environmental/demolition consultants, these costs are approximately $3.1 million as noted in the table below. Phase Demo Env Pre Dev Env Total I $ 360,000 $ 642,560 $ 108,628 $ 1,111,188 II $ 375,924 $ 835,256 $ 26,500 $ 1,237,680 III $ 647,405 $ 91,304 $ 11,900 $ 750,609 TOTAL $ 1,383,329 $ 1,569,120 $ 147,028 $ 3,099,477 Trilogy intends to move forward with Phase I this year, which consists of approximately 220 apartments and 2,000 sq/ft of retail. The costs associated with environmental clean-up and demolition are detailed below: Use Amount Pre-Development Environmental Work $ 108,628 Contaminated Soil Removal $ 66,600 Remedial Action Plan Implementation $ 60,000 Vapor Mitigation $ 215,800 Asbestos Abatement $ 125,160 Demolition $ 360,000 Stormwater System per MPCA $ 170,000 MPCA Fees $ 5,000 TOTAL $ 1,111,188 The City and Trilogy applied for grants from Hennepin County, DEED and Metropolitan Council to cover these costs. The City only received grant funds from DEED in the amount of $340,521, which is $770,667 less than the total costs. Staff reviewed the costs not covered by the grants and determined that the City could provide $685,000 in up front assistance to cover these redevelopment costs. The remaining difference of $85,667 is to be paid by the Developer as noted in the table below:  Source Cost Environment Remediation/Demolition $ 1,111,188 DEED Grant $ (340,521) Net Costs Not Funded By Grants $ 770,667 Developer Paid $ (85,667) Net City Contribution $ 685,000 The environmental and demolition costs for Phase II and Phase III total approximately $1.95 million ($1.2 million and $750,000 respectively). The City and Trilogy intend to apply for grants for these Phases as well, but if unsuccessful, Trilogy is requesting that the City provide up-front assistance for these costs, just like in Phase I. The funding source for these costs will come from TIF District 2-11 (Super Valu), which is a redevelopment TIF District that the City/HRA has cash available for use on qualified redevelopment expenditures like these (these are restricted funds per State Statute and can only be used for qualified purposes). The District currently has enough funds in the account to pay the $3.1 million in costs as they arise, without impeding the City from having dollars available for other qualified redevelopment purposes in the future. Overall, investment of $3.1 million into the various Phases will net significant returns to the City in the form of future tax base and taxes. Currently the pay 2021 taxable value of the three parcels is $6.93 million and generates approximately $252,000 in annual taxes, of which the City’s portion is approximately $63,000. Upon completion, the value of each Phase and future City portion of taxes is noted in the table below: Future Taxable Value Total Taxable Phase Sq Ft/Units Market Value 1 220 53,900,000 2 250 61,250,000 3 300 73,500,000 TOTAL 770 188,650,000 Tax Calculations City County School Total Local Mk Value New Use Portion Portion District Misc Taxes Taxes TOTAL Phase I Apt $455,886 $257,440 $178,396 $62,221 $953,942 $77,390 $1,031,332 Phase II Apt $518,053 $292,545 $202,722 $70,705 $1,084,025 $87,943 $1,171,968 Phase III Apt $621,663 $351,054 $243,267 $84,847 $1,300,831 $105,531 $1,406,362 TOTAL $1,595,602 $901,040 $624,384 $217,773 $3,338,798 $270,864 $3,609,662 As shown, Phase I will provide approximately $456,000 in annual taxes to the City (currently receiving only $28,000) and all Phases combined will be approximately $1.6 million. This is an overall increase of 2,600% in valuation growth. Based upon these factors and preliminary “high level” review of the development proforma, the request is reasonable and will not unduly enrich the developer. Please contact me at 651-697-8506 with any questions. DocuSign Envelope ID: 15E6D28A-E474-4D5E-93BA-004228BE2E24 1010 1st Street South • Hopkins, MN 55343 • Phone (952) 935-8474 • www.hopkinsmn.com APPLICATION FOR PUBLIC FINANCING Applicant Information 1. Applicant Name: TF Hopkins, LLC, a Delaware limited liability company (Name should be the officially registered name of the business entity.) Address: 520 W. Erie Street, Suite 100, Chicago, IL 60654 Telephone: (312) 750-0900 Email Address: tbiere@triologyreg.com 2. Name of Person Completing the application: Justin P. Weinberg, Taft Stettinius & Hollister LLP Address: 2200 IDS Center 80 South 8th Street, Minneapolis MN 55402 Telephone: 612-977-8780 Email Address: jweinberg@taftlaw.com 3. Names and Addresses of Architect, Engineer, and General Contractor for this project: Attorney Name: Justin P. Weinberg, Taft Stettinius & Hollister LLP Address: 2200 IDS Center, 80 S 8th Street, Minneapolis, MN 55402-2157 Telephone: (612) 977-8780 Email Address:jweinberg@taftlaw.com Architect Name: Elness Swenson Graham Architects, Inc Address: 500 Washington Ave S, Minneapolis, MN 55415 Telephone: (612) 501-0308 Email Address: heather.whalen@esgarch.com Engineer Name: Kimberly Horn Address: 767 N Eustis St #100, St Paul, MN 55114 Telephone: (651) 645-4197 Email Address: trish.sieh@kimberly-horn.com General Contractor Name: TBD Address: Telephone: Email Address: 4. If the applicant is a corporation, please name officers, directors, or stockholders holding more that 5% of the stock of the corporation. If the corporation is not formed, provide as much information as possible concerning potential officers, directors, or stockholders: 13358894v7 DocuSign Envelope ID: 15E6D28A-E474-4D5E-93BA-004228BE2E24 Applicant is a single member Delaware limited liability company. 4a. If the applicant is a general partnership, name of the general partners and if a limited partnership, state the general partners and limited partners with more than 5% interest in the limited partnership. If the partnership is not formed, provide as much information as possible concerning potential officers, directors or stockholders. N/A 4b. Has the applicant ever been in bankruptcy? If yes, please describe the circumstances. Yes (please Explain): No: X 4c. Has the applicant ever been convicted of a felony? Is yes, please describe the circumstances. Yes (please Explain): No: X 4d. Has the applicant ever defaulted on any bond or mortgage commitment? Yes (please Explain): No: X Project Information 1. PID#’s, legal description, address, and size of project site: PID#: Parcel 1: 1911721420044, Parcel 2: 1911721420045, Parcel 3: 1911721420046 Address: • Parcel 1: 1009 Hill St, Hopkins, MN • Parcel 2: 8594 Excelsior Blvd, Hopkins MN, 55343 • Parcel 3: 8490 Excelsior Blvd, Hopkins MN, 55343 13358894v7 DocuSign Envelope ID: 15E6D28A-E474-4D5E-93BA-004228BE2E24 Legal Description: • Parcel 1 - Lot 1, Block 1, Hopkins Commerce Center Addition, Hennepin County, Minnesota. Registered Land -Certificate of Title No. 866673. • Parcel 2 - Lot 2, Block 1, Hopkins Commerce Center Addition, Hennepin County, Minnesota. Registered Land -Certificate of Title No. 866674. • Parcel 3 - Lot 3, Block 1, Hopkins Commerce Center Addition, Hennepin County, Minnesota. Registered Land -Certificate of Title No. 866675. Size of Project Size (Acres): 7.4 Acres 2. Current ownership of the site: Hopkins Commerce Center LLP; Michael Launer, 7000 Gleason Rd, Edina, MN 55439 3. Do you have current control of the site: Yes: X No: 4. Project description. The Blake Road Station project is the redevelopment of 7.4 acres of land located at the intersection of Excelsior Boulevard and Blake Road South in Hopkins, MN. Trilogy Real Estate Group is working with the City of Hopkins to develop the site in a three-phase, multi-modal transit-oriented development adjacent to the Blake Road Southwest LRT Station. Each phase will build upon the improvements of the previous phase and will ultimately result in an increasingly connected, pedestrian friendly, and transit-focused community. The project will add to the mix of housing choices for area residents, providing a new opportunity to live immediately adjacent to the light rail transit station. 5. If property is to be subdivided or replatted, please describe. Yes, currently planning to replat once phase III of the project is complete. 6. Estimated project costs: (Please enclose detailed sources and uses, unit count with rents and sq/ft, detailed operating expenses and 15-year operating Pro Forma). SEE ATTACHED EXHIBIT 7. Source of Financing SEE ATTACHED EXHIBIT. In addition, to support retail tenants, the City must provide either a rent subsidy, grants or low-cost financing the bridge a gap of market rates and the rates needed to sustain the project. That gap is up to $19.00 per square foot. Such funding can be provided directly to the landlord; or, to the tenants. 8. Project Construction Schedule: 13358894v7 DocuSign Envelope ID: 15E6D28A-E474-4D5E-93BA-004228BE2E24 Phase 1: August 2021 – April 2023 Phase 2: Spring 2022 – Fall 2023 Phase 3: Depending on current tenants exercising options, 2026-2027 or 2031- 2032. 9. Total Estimated Market Value of Project upon completion Phase 1: $68,568,744 Phase 2: $82,612,497 Phase 3: $100,221,505 10. Please indicate whether or not the project meets one or more of Hopkins’ Eligible Uses as identified in section 4.01 of the City’s Tax Increment and Tax Abatement Policy (identify eligibility and state reason): Yes, the project will meet the Eligible Uses. Those would include, without limitation, redevelop blighted or underutilized areas of the community; promote neighborhood stabilization and revitalization by removal of blight and upgrading in existing housing stock; removal or blight and encouragement of redevelopment in a commercial and industrial area of the City to encourage high levels of property maintenance; increase in local business potential; and, acceleration of the development process and achieve development on ths site that would not be developed without this assistance. The last point cannot be emphasized enough – this development must have assistance in order to meet market viability. 11. Will any public official of the City, either directly or indirectly, benefit from the issuance of public assistance within the meaning of Minnesota Statutes, Section 412.311 or 471.87? If yes, please explain the circumstances. Yes (please Explain): No: X Public Assistance Request 1. Amount of public assistance. a. Grants, freeze of park dedication fees and no infrastructure costs for intersection. 2. Form of assistance. a. Grants for the demolition, environmental and basement for building 1 – all as set forth in the attachment. 13358894v7 DocuSign Envelope ID: 15E6D28A-E474-4D5E-93BA-004228BE2E24 b. Applicant is requesting an abatement or forbearance of park dedication fees for an indefinite period of time to allow for the future conveyance of the parcels; and, to provide some flexibility to address future sites without any additional burden to the development. c. Applicant will not be responsible for any aspect (e.g. design, permitting, construction, costs), in whole or in part, for the traffic signal or related work at the intersection of Excelsior Blvd. and Pierce Ave. Supported by the Traffic Impact Analysis referenced in Exhibit C of the Environmental Assessment Worksheet prepared by Kimley- Horn, which is attached hereto. d. City would provide like-in-kind assistance for subsequent phases of the development. 3. Describe the purpose for which public assistance (TIF, Tax Abatement, etc.) is required. Grants - demolition, environmental and basement in building Park Dedication Abatement/Forbearance - offset the financial burden on an otherwise economically unfeasible project. Traffic Signal - offset the financial burden on an otherwise economically unfeasible project. 4. Please submit an itemized list of project costs for which public assistance is being requested. See attached. 5. State specific reasons why, “but for” the use of public assistance, this project would not be possible. The project, which includes all 3 phases, simply is not economically viable without the assistance. In addition, it should be noted that the Applicant is significantly reducing its proposed fee in order to make the project viable. It was never the intention of the Applicant to maximize both the public assistance and a development fee for profit. Rather, there is a back office of more than 140 people and third parties working on this project, who are paid from the developer fee. However, in recognition of the City’s anticipated partnership with the Applicant through public assistance, the Applicant is demonstrating its partnership and taking a share of the shortfall through this reduced fee. 13358894v7 DocuSign Envelope ID: 15E6D28A-E474-4D5E-93BA-004228BE2E24 Application Process 1. The following documents must accompany the Application: A. A detailed sources & uses statement, unit mix with rents and sq/ft, detailed operating expenses and 15-year project Pro Forma B. Parcel Map depicting the proposed redevelopment area C. Site plans and floors plans (as available) D. Significant additional information may be requested at any time by the City/HRA and may be in addition to the materials outlined in this application. The Applicant shall be required to submit any and all information as requested by the City/HRA. 2. Applicant acknowledges and agrees to pay the $1,000 Public Assistance Application Fee and is non-refundable. 3. At the time of acceptance by staff of the Public Financing Application, the applicant shall deposit $10,000 with the City/HRA to cover attorney and consultant costs incurred as part of conducting any fiscal analysis that may be required to meet the requirements of utilizing any public financing, drafting and negotiating a development agreement, and establishing a TIF district or abatement. If additional expenses are incurred beyond the $10,000, prior to the execution of a development agreement, the City/HRA shall notify the applicant in writing and the applicant will be required to deposit additional funds upon notice. 4. The Applicant shall hold the City/HRA, its officers, consultants, attorneys, and agents harmless from any and all claims arising from or in connection with the Project or Public Assistance Application, including but not limited to, any legal or actual violations of any State or Federal securities laws. 5. The Applicant recognizes and agrees that the City/HRA reserves the right to deny any application for Public Assistance at any stage of the proceedings prior to adopting the resolution approving the public assistance, that the Applicant is not entitled to rely on any preliminary actions by the City/HRA prior to the final resolution, and that all expenditures, obligations, costs, fees, or liabilities incurred by the Applicant in connection with the Project are incurred by the Applicant at its sole risk and expense and not in reliance on any actions of the City/HRA. The undersigned, a duly authorized representative of the Applicant, hereby certifies that the foregoing information is true, correct, and complete as of the date hereof and agrees that the Applicant shall be bound by the terms and provisions herein. 13358894v7 DocuSign Envelope ID: 15E6D28A-E474-4D5E-93BA-004228BE2E24 TF Hopkins, LLC, a Delaware limited liability company By: ________________________________________ K. Shaylan Baldwin, Secretary 6/24/2021 Date:__________________________________ 13358894v7 DocuSign Envelope ID: 15E6D28A-E474-4D5E-93BA-004228BE2E24 ATTACHMENT 1 13358894v7 DocuSign Envelope ID: 15E6D28A-E474-4D5E-93BA-004228BE2E24 ATTACHMENT 2 13358894v7  Finance Department CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: July 13, 2021 Subject: 2022 General Fund Budget and Tax Levy _____________________________________________________________________ PURPOSE To provide input and guidance for the 2022 General Fund budget and Tax Levy INFORMATION 2022 General Fund Budget Staff has been working to put together a 2022 General Fund Budget that meets the needs of the community and the services they have come to expect. The budget being presented restores previous reductions made for crack sealing, tree re-planting and pole painting. The General Fund budget is balanced. Revenues and expenditures are both set at $16,210,954, a $460,116 or 2.92% increase from 2021. The general fund tax levy needed to support this budget is $13,283,468, a $474,916 or 3.71% increase from 2021. 2022 Tax Levy The 2022 Tax Levy has been prepared based on debt service needs, prior year ERP/CIP documents and initial budgets for special revenue funds. The levy being presented restores reductions made for Burnes Park debt service, capital improvements and equipment. The total tax levy is $18,436,103, this is a $647,719 or 3.64% increase from 2021. Based on preliminary tax capacity information, a median value home increased from $291,000 in 2021 to $315,000 in 2022. The levy and the value increase bring the city tax increase on a median value home to $158 or $2,012. American Rescue Plan Act The American Rescue Plan Act will provide needed relief to state, local and Tribal governments through Coronavirus State and Local Fiscal Recovery Funds. Eligible uses of the funds are: • Support public health expenditures • Address negative economic impacts caused by the public health emergency • Replace lost public sector revenue • Provide premium pay for essential workers • Invest in water, sewer and broadband infrastructure The funds must be used for costs incurred through December 31, 2024. The City is projecting that it will receive approximately $1.94 million. Funds will be received in two payments in 2021 and 2022. Staff is currently recommending using the funds to address revenue loss caused by COVID-19. The City has approximately $1.3 million in eligible revenue losses from 2020 and can utilize the funds for losses in 2021-2024. Additional revenue loss is expected. FUTURE ACTION A budget engagement session will be held on August 16 from 6-7:00. Interested parties will be able to participate virtually or in person at City Hall. Details will be posted on the City’s website: https://www.hopkinsmn.com/466/City-Budget-Process. A preliminary levy must be adopted by September 30th of each year. The preliminary levy is planned to be approved at the September 21st City Council Meeting. The preliminary levy will be the maximum allowable amount for 2022 and can only be reduced. A final levy must be adopted by December 31st of each year at or below the preliminary levy amount. A Truth and Taxation hearing is planned for Monday, December 6th. The final levy can be approved on December 7th or 21st.  City of Hopkins DRAFT DRAFT General Fund Revenue Budget July 13, 2021 For the Year Ending December 31, 2022 % Increase Department 2021 Budget 2021 Budget (Decrease) Property Taxes 12,893,552 13,368,468 3.68% Intergovernmental Revenue Local Government Aid 853,671 853,671 Intergovernmental Revenue - Other 621,000 622,000 Total Intergovernmental Revenue 1,474,671 1,475,671 0.07% Licenses, Permits & Fines Court Fines & Penalties 176,000 176,000 Building Permits & Inspections 479,300 475,500 Inspection Fines & Citations 6,000 2,500 City Clerk - Business Licenses 7,000 7,000 PD - Liquor, Animal Licenses & Penalties 97,800 98,300 Fire - Licenses & Permits 300 2,300 Public Works - Licenses & Permits 19,415 19,415 Planning & Zoning - Licenses & Permits 1,000 1,000 Total Licenses, Permits & Fines 786,815 782,015 -0.61% Charges for Service Finance Department 5,500 5,500 Assessing 3,000 3,000 Inspections 103,900 109,400 Police 35,000 35,000 Fire 10,500 10,500 Public Works 3,150 3,150 Activity Center 67,500 90,000 Total Charges for Service 228,550 256,550 12.25% Miscellaneous Revenue Franchise Fees 296,200 296,200 Miscellaneous 15,250 15,250 Finance Department 2,000 3,000 Police 500 500 Fire 3,500 3,500 Public Works 5,300 5,300 Activity Center 14,500 4,500 Community Development 30,000 - Total Miscellaneous 367,250 328,250 -10.62% Total Revenues 15,750,838 16,210,954 2.92%  City of Hopkins DRAFT DRAFT General Fund Expenditure Budget July 13, 2021 For the Year Ending December 31, 2022 % Increase Department 2021 Budget 2022 Budget (Decrease) City Council 102,095 104,699 2.55% Administrative Services 866,311 920,069 6.21% Finance 426,278 454,887 6.71% Legal 200,000 225,000 12.50% Municipal Building 390,560 383,927 -1.70% Assessing 245,920 267,914 8.94% City Clerk 176,656 217,382 23.05% Inspections 879,588 908,710 3.31% Police 6,242,453 6,388,375 2.34% Fire 1,566,528 1,615,798 3.15% Public Works 3,469,191 3,551,941 2.39% Recreation 291,339 295,457 1.41% Activity Center 456,798 465,998 2.01% Planning & Zoning 233,000 203,108 -12.83% Community Development 114,921 118,489 3.10% Tuition Reimbursement 19,200 19,200 0.00% Contingency 50,000 50,000 0.00% Transfer to Other Funds 20,000 20,000 0.00% Total Expenditures 15,750,838 16,210,954 2.92%  City of Hopkins DRAFT Draft Tax Levy July 13, 2021 For the Year Ending December 31, 2022 Actual Draft % Increase Purpose FY2021 FY2021 (Decrease) General Operations General Fund 12,808,552 13,283,468 3.71% Capital Levy - 200,000 100.00% Arts Center 331,182 339,317 2.46% Pavilion Fund 340,000 340,000 0.00% Equipment Replacement 200,000 250,000 25.00% Total General Operations 13,679,734 14,412,785 5.36% Debt Levy 4,108,650 4,023,318 -2.08% Total Levy 17,788,384 18,436,103 3.64%  City of Hopkins 2022 Budget Preparation Schedule for City Council The following table outlines the tentative schedule for discussions on important aspects of the City’s Budget. Meeting Date Meeting Type Subject Details January 19 Regular Meeting Finance Update -Overview of Community Engagement Plan and Budget Preparation Schedule for 2022 Budget January- Regular Department Updates -Planning and Development February Meetings & -Police and Fire Work Sessions -Public Works -Community Services and Administration March 16 Work Session Financial Management Plan -Presentation on FMP -Decision on Infrastructure Projects in 2022 -Decision on Burnes Park Debt Service in 2022 April-July N/A Internal Preparations -2020 Audit Ongoing -Departments Prepare Budgets, Equipment Replacement and Capital Improvement Schedules July 13 Work Session Review 2022 Tax Levy and -First Draft General Fund Budget August 10 Work Session Review Capital Improvement Plan -Park Dedication Fund (CIP) and Equipment -Permanent Improvement Revolving Fund Replacement Plan (ERP) (Street Projects) -Equipment Replacement Levy  City of Hopkins 2022 Budget Preparation Schedule for City Council Meeting Date Meeting Type Subject Details August 16 Budget Review 2022 Tax Levy and -Presentation (Monday) Engagement General Fund Budget -Question and Answer Session Session September 7 Regular Meeting Review 2022 Tax Levy and -Preliminary for approval on September 21 General Fund Budget September 21 Regular Meeting Approve Preliminary Tax Levy -Must be approved by September 30 and General Fund Budget October 12 Work Session Review Enterprise Fund Budgets -Water -Sewer and Utility Rates -Storm Sewer -Refuse -Pavilion November 3 Regular Meeting Approve CIP, ERP and Utility Rates November 9 Work Session Review Special Revenue Budgets -Chemical Assessment -Parking and Activity Center Budget -Economic Development -Depot -Communications -Arts Center -Activity Center December 6 Special Meeting Truth in Taxation Hearing -Overview of 2022 Budget and Tax Levy (Monday) -Public Comment December 7 Regular Meeting Approve Final Budget & Tax Levy December 21 Regular Meeting Approve Final Budget & Tax Levy -Last scheduled meeting to approve