Informational Meeting

MINUTES Informational Meeting Tuesday, July 18, 2023, at 4:00 PM Carnegie Town Hall, 235 West 10th St., Sioux Falls, SD 57104 1. Call To Order Council Chair Marshall Selberg called the meeting to order at 4:00 P.M. 2. Committee/Commission Reports A. Siouxland Heritage Museum Board: Thursday, July 6, 2023 (Council Member Starr) An update on this Board Meeting will be heard on August 22, 2023. B. Urbanized Development Commission (UDC): Thursday, July 13, 2023 (Council Members: Barranco, Merkouris, Neitzert, Starr) Council Member Greg Neitzert stated this was the last meeting for Jim Feeney, who is retiring from SECOG after 30 years. He also stated the MPO is starting a market research study to prepare for the next MPO Master Plan. Neitzert also stated there was a well-done presentation on the Brandon Master Transportation Plan. 3. Councilor Remarks Council Member Curt Soehl reminded the public that August 27th is the date for the Sioux Falls Marathon. 4. Presentations A. June 2023 Monthly Financials Statement by Shawn Pritchett, Director of Finance Presentation: Approximately 10 minutes followed by discussion Pritchett began by stating that they continue to see an increase in employment, up 3.5% over this time last Year end, and the labor force is up 3.5% over April 2022. In May, City MSA unemployment was at 1.7%, which is slightly below the average of 1.8% over the past 18 months. Statewide, the unemployment rate is at 1.9% and nationally at 3.4%, in May. Inflation is at 3% for June, down from 4% last month and down from the peak of 9.1% they saw last June. May is the 12th straight month inflation has decreased since June 2022. The last time inflation was 3% or lower was 2.6% in March 2021. General inflation came in at 3% for the 12 months ending June. They continue to see decreases in food cost inflation which came in at 5.7%, compared to peak inflation of 11.4% in August 2022. The energy index dropped to - 16.7% in June compared to -11.7% in May. The presentation included the following updates: through June, the City has $570.6M in building permit valuations which is $297.9M less than last Year end at this time or -34%. It is important to note that the City is still up 16% in total valuations YTD when compared to 2021. It can become misleading to compare to 2022 as the City experienced an increase of 76% in total valuations compared to 2021 (which itself was also a record Year end). The City is experiencing decreases in new residential when compared to both 2022 and 2021, down 55% and 56%, respectively, while residential addition & remodel permit valuations are up 14% compared to 2022 and 57% to 2021. New Commercial is down 48% compared to 2022 and up 77% to 2021. The City permitted several large commercial projects last Year end including Cherapa II which is a large factor in the decrease from 2022 to 2023. YTD, the biggest driver for New Commercial categories have been down, Manufacturing is down $11.7M over last Year end. Apartments are down $79.5M YTD, Office/Institutional/ Educational developments are down $118.3M YTD and Other Commercial (Strip Malls, Hotels, Restaurants) are down $69.5M YTD. When compared to 2021, New Commercial is up in all 4 sectors by a total of about $133.9M. Permits for new housing units are down about 45% from June 2022. Through June, 181 single family units have been permitted, which is down by 253 units over this time last Year end, and 1,109 multi-family units have been permitted compared to 1,830 units last Year end, a 39% decrease. Overall,1,403 total residential units have been permitted YTD which is 1,130 units less than last Year end at this time. Sales tax collections month-over-month are up 4.1% over June 2022. YTD we remain up 5.1%. As was discussed last month, the 12-month rolling average continues to trend down from the high rates experienced in 2022, ending at 8.% through June 2023. We should continue to see this average decline as the 12- month average comes into line with what we we’ve experienced recently and would expect going forward. The Entertainment tax is significantly more variable from month to month. Entertainment tax collections showed a 17.4% increase over June 2022. We remain up 8.9% YTD. The 12-month rolling average was 10.4% through May (compared to 9.9% last month and 14.5% as of December 2022). Lodging tax revenue month over month is up 2.5% over June 2022, after experiencing a 28% increase last June. Up 8.1% YTD. BID Tax revenue, which follows the lodging tax to a great extent, month over month is down 2.7%, up 0.7% YTD. Pritchett referenced page 1 in the monthly financial packets and provided the following updates: The first major revenue source is Sales Tax. As they are moving into the last leg of the 2024 Budget Process, the Original Budget for Sales Taxes becomes irrelevant. It now becomes more about what they are forecasting the current Year ends ending growth rate. Our 2024 Budget will be based on a 2023 Sales Tax Growth Rate of 5%, bringing in $93.4M. ($4.4M above 2023 Original Budget not including audit adjustments); To hit this target, they will need to have an average monthly growth rate of 5% for July-December. In June, the State notified the City of an audit adjustment to our Sales Tax Collection based. The City’s total impact was returning almost $2M of sales tax revenues. This adjustment will be split evenly between the General Fund and Sales Tax Fund. Property Taxes – On-track Original Budget 3.2% Growth, 3% CPI. Licenses and Permits – Overall this category is running below the 2022 record Year end, but they are still having a very solid Year end. New Liquor Licenses at the base $240K will generate $1.7M, or $1.2M above budget. Building Permits running below last Year end but still a very favorable Year end. Estimate to bring in around $3.5M or an increase of $0.5M over budget. Mechanical, Plumbing, and Electrical Permits also having a favorable Year end. Estimate to bring in around $1.6M or an increase of $0.7M over budget. Intergovernmental; Bank Franchise Tax $2.9M, or $0.9M above budget. Investment/Interest Income: 2022 the City recognized a loss of $0.9M; 2023 projection to recognize a $2.7M gain; General Fund Pooled Cash; Interest 4-5%; Market Adjustments Positive; City holds to maturity no matter what. General Services (Mayor, Council, Attorney, HR, Finance Facilities, Technology, Communications): Currently they are running below budget expectations. Will recognize savings primarily due to vacancies. Public Safety: Police will recognize a rather large budget savings due to two main factors, officer vacancies and the City recognizing an asset for land vs. an expense for the 908 Building/Land swap with the County; Fire is on track to budget. However, the risk in Fire is a major mechanical breakdown of fire equipment; Highways and Streets – $5M supplement and a provisional supplement up to $2.0M (another two-three events); Winter Program: Year End Total projection is to spend around $14M - $15M in total, which is around $5M over Original Budget. Through September with normal run rates this program will be short $1.0M. Maintenance: Year End Total projection is to spend around $9M in total, which is $1.1M over Original Budget; Through September, with normal run rates, this program will have around $1M in savings. Combing Winter and Streets Programs, they will need a budget supplement by October; They will plan on using the $500K supplement passed by the Council early this Year end to support the maintenance program. Public Health: The Health department is trending ahead of last Year end. However, the majority of this is related to grant related projects. Culture and Recreations: Parks budget is trending higher than normal. As a precaution, they will likely be asking for a supplement of around $500K. This will ensure they continue to take care of what they have and ensure they are providing the best experience possible while living within our means; Recognized winter OT impacts, inflationary impacts for pool chemicals, utilities, misc. supplies, and seasonal wages early in the Year end; Emergency repairs when running a large business-like Parks and Rec. also have impacts on the budgets that they try to mitigate as much as possible. Library budget is on track to expectations. Planning and Development Services: On track to budget expectations. Lodging and BID Tax running above budget expectations. Supplement $300K: lodging running 8% increase over 2022 YTD. Trending this forward, would leave a budget shortfall of around $200K; BID Tax running around 1% over 2022 YTD. Trending this forward, would leave a budget shortfall of around $60K; Will need a supplement as it is required to pass these sources through; Continue to explore options for a continuous appropriations ordinance for these types of transactions that are already required by law or charter to pass onto another organization. TIF’s would be another example of this. The supplement of $5.8M is supported with the revenue increases. Overall, the target will be to land around 37% as shown currently in the monthly financial report on page 1. Discussion followed regarding: the use of contingent approvals; the supplement for Parks and Recreation; inflationary pressure; the sales tax recall from the State; land  accounting; bank franchise fees; managing snow removal funds; the 37% reserves; full scale master plan of the Events Center; master plans for individual projects; planning for growth and recessions; water main breaks and BID packages. B. Childcare Crisis Report to the Community by Sioux Falls Childcare Collaborative members Presentation: Approximately 10 minutes followed by discussion Michelle Erpenbach, President of Sioux Falls Thrive, provided an overview of the Sioux Falls Childcare Collaborative organizations, and provided possible solutions to the Sioux Falls childcare crisis. Erpenbach reviewed today’s agenda to encompass an introduction to Thrive and “Why We’re Here’; an introduction to the Sioux Falls Childcare Collaborative; the presentation of the report and recommendations and moving the work forward. Review was given to an increasingly low-income population with a growing percentage of limited-English-proficiency students challenges K-12 educators to effectively present career opportunities to these youth and train them for college and the workplace. A graph was reviewed showing children (age birth to 17 years) by poverty status and the need to optimize educational achievement from cradle to career. Thrive volunteers address three critical needs for Sioux Falls children: Affordable housing: to be a catalyst to influence, advocate for, and support funding for housing development on behalf of the most vulnerable populations in the Sioux Falls area. Food security: Create equitable and sustainable access to food in each neighborhood in a dignified and culturally appropriate manner; Out-of-School enrichment: Reduce by 50% the number of children aged 5 to 18 left unsupervised during out-of-school time. Erpenbach reviewed a listing of the Sioux Falls Childcare Collaborative Participants and issued a thank you to the organizations who have made this work possible. The statistics and needs for childcare workers were reviewed with the main focus being on the following core recommendations: invest more into workforce development; build a stronger childcare community infrastructure; financial support to fund the gaps; business activation; and multi-sector collaboration. Erpenbach reviewed the presentation regarding the solutions to the Sioux Falls Childcare Crisis and reviewed the following within the Community Level: the Core Recommendations; the need to create an office of child and youth development; increase pathways to the profession; childcare provider fund; shared services; partnership with Startup Ecosystem and Startup Sioux Falls; partnership with Low Income Investment Fund (LIIF); Care access real estate (CARE); and Upstart Fund. The business level can assist by creating a movement in the business community to strengthen the support of caregiving needs of working parents that also enhances workplace culture to attract and retain talent. Discussion followed regarding: the statistics of children requiring food assistance; the percentage of income being spent on childcare; the role the Council can play in improving wages for childcare workers; statewide need for childcare assistance; including childcare assistance in future legislative priorities; scholarships for lower  income families for childcare; and personal experiences with less childcare availability. 5. Public Comment There was none. 6. Executive Session A. Preparing for contract negotiations or negotiating with employees or employee representatives pursuant to SDCL 1-25-2(4) B. Discussing the qualifications, competence, performance, character or fitness of any public officer or employee or prospective public officer or employee. The term "employee" does not include any independent contractor pursuant to SDCL 1-25- 2(1) A motion was made by Council Vice-Chair Merkouris and seconded by Council Member Cole to enter Executive Session at 5:15 p.m for the purpose of discussing information pertaining to Consulting with legal counsel or reviewing communications from legal counsel about proposed or pending litigation or contractual matters pursuant to SDCL 1-25-2(3) and discussing the qualifications, competence, performance, character or fitness of any public officer or employee or prospective public officer or employee. The term "employee" does not include any independent contractor pursuant to SDCL 1-25-2(1). Roll call vote to enter Executive Session. 8 Yes: Barranco, Cole, Jensen, Merkouris, Neitzert, Selberg, Soehl, Starr; 0 No: (None). Motion Passed. Council Chair Selberg stated that the meeting would adjourn at the end of the Executive Session. A motion was made by Council Member Merkouris and seconded by Council Member Neitzert to amend entry into Executive Session to include preparing for contract negotiations or negotiating with employees or employee representatives pursuant to SDCL 1-25-2(4) as stated on Agenda Item 6A. Voice vote to amend. 7 Yes: Barranco, Cole, Jensen, Merkouris, Neitzert, Selberg, Soehl; 1 No: Starr. Motion Passed. 7. Adjournment Council Chair Marshall Selberg adjourned the meeting at 5:36 p.m. Tamara Jorgensen, MMC, Assistant City Clerk