City Council Study Session

City of Spearfish City Council Study Session Minutes July 10, 2024, 4:15 p.m. The City Council Study Session was called to order by Council President Jacobs at 4:16 p.m. in the Council Chambers of City Hall on Wednesday, July 10, 2024. The following c o u n c i l members were present: Clark, Hafner, Hourigan, Jacobs, Klarenbeek, and Rath. Absent: Mayor Senden. City staff present were: Finance Officer DeNeui, Public Safety Director Rotert, City Engineer Mathis, Public Works Director McMahon, Planning Director Koelbel, Assistant Planning Director Ecker, and Assistant Police Chief Dean. Rath moved, Klarenbeek seconded, and all voted to approve the agenda. Items for Discussion Purchase Options for Elkhorn Sewer Allocation – City Engineer Mathis lead discussion on the purchase of the sewer allocations with the new Elkhorn Ridge Lift Station. The city paid to upsize the Elkhorn Ridge Lift Station to allow for an additional 419 gallons per minute (GPM) to be sold for future development along the Colorado Boulevard corridor. Based on the cost of the upsize, the fee of $3,610 per GPM was established in 2023. No policy was adopted on the process to sell the allocation, but staff and council had discussed an upfront purchase of the allocation at the time of annexation and zoning. A current development (Eastside Acres) is requesting an alternative to this plan. Mathis requested direction from council to create a manageable policy to encourage strategic development along the Colorado Boulevard corridor. Staff prepared three options: 1) upfront purchase allocation at the time of annexation and zoning based on the intended use as determine by an engineer, 2) phased purchase to allow a predetermined minimum allocation (proposed at 1 GPM/gross acre) at the time of annexation and zoning and any additional capacity can be purchased in the future for added development as needed, if available, and 3) delayed purchase of allocation, as needed, at the time of construction design during development. Staff supported option 1 as it recovers the City’s investment in the upsize of the lift station in the fastest manner and lowers the administrative burden on tracking the allocation sales over multiple years on existing staff. Lori Riley, developer for Eastside Acres, noted that a percentage of total needed sewer allocation or purchase by project phasing is preferred so that developers have flexibility in development of projects and to prevent purchasing unneeded allocations if developments don’t proceed as initially planned. Joe Jorgensen, developer, noted that the upsize of the lift station was done for economic development purposes by the City so allowing for flexibility of development should be a priority. Following discussions, council recommended a policy to require sewer allocation purchase at time of construction design during development (option 3) but earlier purchase being recommended to prevent no allocation being available (option 1). Mathis noted a policy will be drafted for future consideration following the recommendations. FYI – Mattress and box springs will be removed from the permitted items accepted at the Restricted Use Site (RUS), effective July 15, 2024. This change is due to environmental, operational, and special restrictions. 2025 Budget Overview – Finance Officer DeNeui provided a brief overview of the 2025 budgets. Initial General Fund budget requests resulted in $7 million of General Fund cash balance being expended. Staff were directed by Mayor Senden to reduce that to around $3 million. Many of the department leaders have found savings, reprioritized projects, or reevaluated staff growth and budgets are currently showing a $5 million estimated use of cash for 2025. Staff will continue to work on changes to meet the mayor’s goal. DeNeui noted that revenues are conservative and with Initiated Measure 28 (elimination of sales tax on human consumption items), the City could see sales tax revenue decreases of approximately $3 million in 2025. This reduction is not being budgeted for but instead a listing of budget changes will be kept if the measure passes and the City is not able to collect sales tax on human consumption items. Overall staff increases are to add 2.5 full-time equivalent positions, a cost-of-living adjustment to the wage scale of 2.1%, and budgeting for staff to receive 2.5% merit step increases per the adopted personnel policy. Budgets also include a 15% increase to employee health insurance and the City’s property and liability insurance premiums. These amounts are estimates based on claim history as rates won’t be available until the 3rd quarter of 2024. DeNeui also noted that the grant committee met and recommended the grant amounts for outside organizations. These amounts have some changes to individual grantees but overall, no change to the budget total. Draft budget numbers will be ready for the departmental presentations of budgets to be held during the July 31st and August 14th Study Sessions. The first reading of the budget ordinance is planned for August 19, 2024, City Council regular session. Draft Agenda The draft agenda for the July 15, 2024, City Council Regular Session was reviewed. The time for public comment was opened at 5:16 p.m. and closed with no comments being received. No additional discussions were held, and with a motion from Hourigan and second from Hafner, the meeting adjourned at 5:17 p.m.