HomeMy WebLinkAbout07.17.23 Work Session Packet
AGENDA
Work Session Meeting
5:00 PM - Monday, July 17, 2023
Farmington City Hall
Conference Room 170
Page
1. CALL TO ORDER
2. APPROVE AGENDA
3. DISCUSSION ITEMS
3.1. Utility Rate Study
Listen to the presentation, ask questions and provide guidance to Staff.
Agenda Item: Utility Rate Study - Pdf
2 - 31
3.2. Pavement Management Program (PMP) Update
Update and discussion only.
Agenda Item: Pavement Management Program (PMP) Update - Pdf
32 - 35
Adult Use Cannabis Legalization
Not applicable
Agenda Item: Adult Use Cannabis Legalization - Pdf
36 - 63
4. CITY COUNCIL COMMITTEE UPDATE
5. CITY ADMINISTRATOR UPDATE
6. ADJOURN
Page 1 of 63
WORK SESSION AGENDA MEMO
To: Mayor, Councilmembers and City Administrator
From: Chris Regis, Finance Director
Department: Finance
Subject: Utility Rate Study
Meeting: Work Session - Jul 17 2023
INTRODUCTION:
Presentation by Ehlers, Inc. of Utility Rate Study.
DISCUSSION:
Staff has hired Ehlers to undertake a rate study of the Sewer, Water and Storm Water Funds.
Operating costs continue to increase in the three funds, specifically Met Council charges in the Sewer
Fund. Fund General the supporting are funds the addition, In capital finance helping and
improvements which puts pressure on the cash balances of each fund.
A rate study will look at the current rates, operating costs and cash balances and project future rates
that will provide positive operations and support minimum cash balances.
BUDGET IMPACT:
The outcome of the rate study will affect the operations of each utility fund.
ACTION REQUESTED:
Listen to the presentation, ask questions and provide guidance to Staff.
ATTACHMENTS:
Farmington URS Draft
Work Session 7-17-23 URS Presentation
Page 2 of 63
City of Farmington , MN
Utility Rate Study
Base Model
Preliminary Budgeted
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
2031 2032 2033
Rates Inflation 1.00% 1.00% 1.00% 2.00% 2.50% 3.00% 3.00% 3.00% 3.00% 3.00%
Non-Rate Revenue Increase - Other 1.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Non-Rate Revenue Increase - Interest 1.00%2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Expense growth - operating 3.00%3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Expense growth - personnel 3.00%5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Expenses - admin transfer 2.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Expense growth - MCES 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5.00%
Beginning net assets 29,764,930 30,607,578 31,291,703 32,335,286 31,395,742 33,030,771 32,539,002 32,632,884 32,893,403 33,162,712 33,450,983 33,769,202 34,115,748 34,490,616 34,893,740
Operating Revenues
Water revenues 2,038,703 2,270,175 2,908,352 2,238,210 2,326,548 2,270,651 2,293,358 2,316,292 2,362,617 2,421,683 2,494,333 2,569,163 2,646,238 2,725,625 2,807,394
Sanitary sewer revenues 0 00000000000 0
Storm sewer revenues
Total Operating Revenues 2,038,703 2,270,175 2,908,352 2,238,210 2,326,548 2,270,651 2,293,358 2,316,292 2,362,617 2,421,683 2,494,333 2,569,163 2,646,238 2,725,625 2,807,394
Operating Expenses
Personnel Services 10,495 5,901 5,473 8,540 19,301 20,266 21,279 22,343 23,460 24,634 25,865 27,158 28,516 29,942 31,439
Other Services and Charges 545,979 607,240 750,024 797,369 747,093 772,506 795,681 819,551 844,138 869,462 895,546 922,412 950,085 978,587 1,007,945
MCES 0000000000 0
Depreciation 837,094 991,651 990,949 993,281 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000
Total Operating Expenses 1,393,568 1,604,792 1,746,446 1,799,190 1,816,394 1,842,772 1,866,960 1,891,895 1,917,598 1,944,096 1,971,411 1,999,571 2,028,601 2,058,529 2,089,384
Net Operations 645,135 665,383 1,161,906 439,020 510,154 427,880 426,398 424,397 445,019 477,587 522,922 569,593 617,637 667,096 718,010
Non operating revenues (expenses)
Investment Income (Loss) 303,877 223,255 (33,693) (298,496)0 0 0 182,254 184,708 186,530 187,888 189,064 191,687 194,017 196,008
Intergovernmental 5,787
Gain (loss) on sale of asset (13,179)
Interest on existing debt (32,431) (21,487) (18,462) (15,164) (23,175) (19,800) (16,300) (12,675) (8,800) (5,100) (1,700)000 0
Hookups and Miscellaneous Income 246,412 267,827 4,670
Other income (expense) 343,101 295,012 250,246 235,502 244,922 254,719 264,908 275,504 286,524 297,985 309,904 322,301 335,193
Capital contribution 787,191 168,789 1,365,703 0 630,000 661,500 694,575 729,304 765,769 804,057 844,260 886,473 930,797
Transfers in 11,149
Transfers out - Admin Charges (94,002) (97,960) (101,878) (105,954) (110,192) (114,599) (119,183) (123,951) (128,909) (134,065) (139,428)
Transfers out - PW Staff Time (373,897) (407,390) (427,760) (449,147) (471,605) (495,185) (519,944) (545,942) (573,239) (601,901) (631,996)
Transfers out - Capital (1,105,506) (450,853) (582,728) (1,365,703)0 (630,000) (661,500) (694,575) (729,304) (765,769)(804,057) (844,260) (886,473) (930,797) (977,337)
Total non operating revenue (expenses) 197,513 18,742 (118,323) (1,378,564)1,124,875 (919,648) (332,516) (163,878) (175,710) (189,316)(204,704) (223,046) (242,769) (263,972) (286,763)
Net increase (decrease) in resources 842,648 684,125 1,043,583 (939,544)1,635,029 (491,769)93,882 260,519 269,309 288,271 318,218 346,546 374,868 403,124 431,247
Restricted assets 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488
Ending net assets - Unrestricted 28,146,090 28,830,215 29,873,798 28,934,254 30,569,283 30,077,514 30,171,396 30,431,915 30,701,224 30,989,495 31,307,714 31,654,260 32,029,128 32,432,252 32,863,500
Water
Actual Projected
Pa
g
e
3
o
f
6
3
City of Farmington , MN
Utility Rate Study
Base Model
Preliminary Budgeted
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
2031 2032 2033
Rates Inflation 1.00% 1.00% 1.00% 2.00% 2.50% 3.00% 3.00% 3.00% 3.00% 3.00%
Non-Rate Revenue Increase - Other 1.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Non-Rate Revenue Increase - Interest 1.00%2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Expense growth - operating 3.00%3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Expense growth - personnel 3.00%5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Expenses - admin transfer 2.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Expense growth - MCES 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5.00%
Water
Actual Projected
CIP Funding
Purchase of Capital Assets (3,342,527) (110,494)0 (15,803)0 (6,852,678) (44,100) (46,305) (48,620) (51,051)(53,604) (56,284) (59,098) (62,053) (65,156)
Bond Proceeds 816,638 3,360,000
Bond P&I - Future 000000000 0
Bond P&I - Future (405,030) (405,030) (405,030) (405,030) (405,030) (405,030) (405,030) (405,030) (405,030)
Bond P&I - Future 0000000 0
Bond P&I - Future 000000 0
Bond P&I - Future 00000 0
Bond P&I - Future 0000 0
Bond P&I - Future 000 0
Bond P&I - Future 00 0
Bond P&I - Future 00
Bond P&I - Future 0
Bond Prin - Existing (65,000) (60,000) (65,000) (65,000) (70,000)(70,000) (75,000) (80,000) (85,000) (85,000)000 0
Beginning Cash 9,388,311 7,884,766 9,275,415 10,781,288 10,868,091 12,122,417 9,117,970 9,112,722 9,235,406 9,326,490 9,394,377 9,453,192 9,584,367 9,700,847 9,800,415
Add net operations 645,135 665,383 1,161,906 439,020 510,154 427,880 426,398 424,397 445,019 477,587 522,922 569,593 617,637 667,096 718,010
Add back depreciation 837,094 991,651 990,949 993,281 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000
Add net non operating (589,678)18,742 (287,112) (1,378,564) (240,828) (919,648) (962,516) (825,378) (870,285) (918,620) (970,473) (1,027,104) (1,087,029) (1,150,445) (1,217,559)
Add capital and bond (2,525,889) (175,494) (60,000) (80,803) (65,000) (3,562,678) (519,130) (526,335) (533,650) (541,081) (543,634) (461,314) (464,128) (467,083)(470,186)
Net change in balance sheet items 129,793 (109,633) (299,870)113,8690000000000 0
Other investments
Ending Cash 7,884,766 9,275,415 10,781,288 10,868,091 12,122,417 9,117,970 9,112,722 9,235,406 9,326,490 9,394,377 9,453,192 9,584,367 9,700,847 9,800,415 9,880,680
Restricted Cash - Drinking Water Treatment 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488 2,461,488
Ending net assets - Unrestricted 28,146,090 28,830,215 29,873,798 28,934,254 30,569,283 30,077,514 30,171,396 30,431,915 30,701,224 30,989,495 31,307,714 31,654,260 32,029,128 32,432,252 32,863,500
Target minimum working capital 1,344,618 1,463,586 2,334,893 987,770 5,354,625 2,370,991 2,431,884 2,495,252 2,561,647 2,626,331 2,610,843 2,685,333 2,763,254 2,844,770 2,877,926
Actual working capital-cash balance 5,423,278 6,813,927 8,319,800 8,406,603 9,660,929 6,656,482 6,651,234 6,773,918 6,865,002 6,932,889 6,991,704 7,122,879 7,239,359 7,338,927 7,419,192
Over (Under) target working capital 4,078,660 5,350,341 5,984,907 7,418,833 4,306,304 4,285,491 4,219,350 4,278,666 4,303,354 4,306,557 4,380,861 4,437,546 4,476,105 4,494,157 4,541,266
Pa
g
e
4
o
f
6
3
City of Farmington , MN
Utility Rate Study
Base Model
Rates Inflation
Non-Rate Revenue Increase - Other
Non-Rate Revenue Increase - Interest
Expense growth - operating
Expense growth - personnel
Expenses - admin transfer
Expense growth - MCES
Beginning net assets
Operating Revenues
Water revenues
Sanitary sewer revenues
Storm sewer revenues
Total Operating Revenues
Operating Expenses
Personnel Services
Other Services and Charges
MCES
Depreciation
Total Operating Expenses
Net Operations
Non operating revenues (expenses)
Investment Income (Loss)
Intergovernmental
Gain (loss) on sale of asset
Interest on existing debt
Hookups and Miscellaneous Income
Other income (expense)
Capital contribution
Transfers in
Transfers out - Admin Charges
Transfers out - PW Staff Time
Transfers out - Capital
Total non operating revenue (expenses)
Net increase (decrease) in resources
Restricted assets
Ending net assets - Unrestricted
Preliminary Budgeted
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
2031 2032 2033
N/A 20.00% 17.00% 15.00% 15.00% 8.00% 7.00% 6.00% 6.00% 6.00%
1.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
1.00%2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
3.00%3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
3.00%5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
2.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00%
5.00%
20,554,396 20,258,195 19,819,444 19,325,404 18,677,310 18,706,719 17,756,439 17,610,789 17,829,395 18,377,359 19,325,442 20,345,035 21,367,682 22,307,918 23,134,737
0 000000000000
2,116,965 2,158,807 2,260,523 2,607,594 2,674,762 3,169,821 3,803,786 4,450,429 5,117,994 5,885,693 6,356,548 6,801,506 7,209,597 7,642,173 8,100,703
2,116,965 2,158,807 2,260,523 2,607,594 2,674,762 3,169,821 3,803,786 4,450,429 5,117,994 5,885,693 6,356,548 6,801,506 7,209,597 7,642,173 8,100,703
3,326 1,698 2,070 1,265 13,038 13,690 14,374 15,093 15,848 16,640 17,472 18,346 19,263 20,226 21,238
368,779 156,380 153,742 155,036 179,171 187,546 193,173 198,968 204,937 211,085 217,417 223,940 230,658 237,578 244,705
1,324,645 1,528,569 1,661,104 1,789,024 1,994,927 2,251,005 2,498,616 2,773,463 3,078,544 3,417,184 3,793,074 4,210,313 4,673,447 5,187,526 5,758,154
613,562 645,288 657,780 659,087 690,000 690,000 690,000 690,000 690,000 690,000 690,000 690,000 690,000 690,000 690,000
2,310,312 2,331,935 2,474,696 2,604,412 2,877,136 3,142,241 3,396,162 3,677,524 3,989,329 4,334,909 4,717,964 5,142,598 5,613,368 6,135,330 6,714,097
(193,347) (173,128) (214,173)3,182 (202,374)27,580 407,623 772,905 1,128,665 1,550,784 1,638,584 1,658,908 1,596,229 1,506,842 1,386,606
100,386 61,985 (5,267) (67,170)0 0 0 25,619 27,154 34,445 48,865 63,797 77,828 89,200 97,241
(14,277)16,970
(2,041) (2,065) (1,911) (1,876)00000000000
969 2,002
3,483 3,608
786,989 151,277 585,838 0 472,500 496,125 520,931 546,978 574,327 603,043 633,195 664,855 698,098
11,149
(94,002) (97,960) (101,878) (105,954) (110,192) (114,599) (119,183) (123,951) (128,909) (134,065) (139,428)
(260,053) (407,400) (427,770) (449,159) (471,616) (495,197) (519,957) (545,955) (573,253) (601,915) (632,011)
(986,029) (327,545) (444,419) (585,838)0 (472,500) (496,125) (520,931) (546,978) (574,327)(603,043) (633,195) (664,855) (698,098) (733,003)
(102,854) (265,623) (279,867) (651,276)231,783 (977,860) (553,273) (554,299) (580,701) (602,700)(618,992) (636,261) (655,993) (680,023) (709,103)
(296,201) (438,751) (494,040) (648,094)29,409 (950,280) (145,650)218,606 547,964 948,083 1,019,592 1,022,647 940,236 826,819 677,504
20,258,195 19,819,444 19,325,404 18,677,310 18,706,719 17,756,439 17,610,789 17,829,395 18,377,359 19,325,442 20,345,035 21,367,682 22,307,918 23,134,737 23,812,241
Sanitary Sewer
Actual Projected
Pa
g
e
5
o
f
6
3
City of Farmington , MN
Utility Rate Study
Base Model
Rates Inflation
Non-Rate Revenue Increase - Other
Non-Rate Revenue Increase - Interest
Expense growth - operating
Expense growth - personnel
Expenses - admin transfer
Expense growth - MCES
CIP Funding
Purchase of Capital Assets
Bond Proceeds
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond Prin - Existing
Beginning Cash
Add net operations
Add back depreciation
Add net non operating
Add capital and bond
Net change in balance sheet items
Other investments
Ending Cash
Restricted Cash - Drinking Water Treatment
Ending net assets - Unrestricted
Target minimum working capital
Actual working capital-cash balance
Over (Under) target working capital
Preliminary Budgeted
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
2031 2032 2033
N/A 20.00% 17.00% 15.00% 15.00% 8.00% 7.00% 6.00% 6.00% 6.00%
1.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
1.00%2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
3.00%3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
3.00%5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
2.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00% 11.00%
5.00%
Sanitary Sewer
Actual Projected
(109,192) (157,378)0 (400,000) (342,678) (319,725) (335,711) (352,497) (370,122) (388,628) (408,059) (428,462) (449,885) (472,379)
0000000000
000000000
00000000
0000000
000000
00000
0000
000
00
0
00000000000
2,975,577 2,572,214 2,471,496 2,368,223 2,398,203 2,131,774 1,528,816 1,280,941 1,357,710 1,722,246 2,443,230 3,189,868 3,891,413 4,459,992 4,862,071
(193,347) (173,128) (214,173)3,182 (202,374)27,580 407,623 772,905 1,128,665 1,550,784 1,638,584 1,658,908 1,596,229 1,506,842 1,386,606
613,562 645,288 657,780 659,087 690,000 690,000 690,000 690,000 690,000 690,000 690,000 690,000 690,000 690,000 690,000
(889,843) (265,623) (431,144) (651,276) (354,055) (977,860) (1,025,773) (1,050,424) (1,101,632) (1,149,678) (1,193,318) (1,239,304) (1,289,188) (1,344,878) (1,407,200)
(109,192) (157,378)00(400,000) (342,678) (319,725) (335,711) (352,497) (370,122) (388,628) (408,059) (428,462) (449,885) (472,379)
175,457 (149,877) (115,736)18,98700000000000
2,572,214 2,471,496 2,368,223 2,398,203 2,131,774 1,528,816 1,280,941 1,357,710 1,722,246 2,443,230 3,189,868 3,891,413 4,459,992 4,862,071 5,059,097
20,258,195 19,819,444 19,325,404 18,677,310 18,706,719 17,756,439 17,610,789 17,829,395 18,377,359 19,325,442 20,345,035 21,367,682 22,307,918 23,134,737 23,812,241
1,642,144 1,612,298 1,825,062 1,702,206 2,430,774 2,639,651 2,819,548 3,015,793 3,230,017 3,464,024 3,719,806 3,999,569 4,305,748 4,641,037 4,948,150
2,572,214 2,471,496 2,368,223 2,398,203 2,131,774 1,528,816 1,280,941 1,357,710 1,722,246 2,443,230 3,189,868 3,891,413 4,459,992 4,862,071 5,059,097
930,070 859,199 543,161 695,997 (299,000) (1,110,835) (1,538,607) (1,658,082) (1,507,770) (1,020,794) (529,938) (108,156)154,244 221,034 110,948
Pa
g
e
6
o
f
6
3
City of Farmington , MN
Utility Rate Study
Base Model
Rates Inflation
Non-Rate Revenue Increase - Other
Non-Rate Revenue Increase - Interest
Expense growth - operating
Expense growth - personnel
Expenses - admin transfer
Expense growth - MCES
Beginning net assets
Operating Revenues
Water revenues
Sanitary sewer revenues
Storm sewer revenues
Total Operating Revenues
Operating Expenses
Personnel Services
Other Services and Charges
MCES
Depreciation
Total Operating Expenses
Net Operations
Non operating revenues (expenses)
Investment Income (Loss)
Intergovernmental
Gain (loss) on sale of asset
Interest on existing debt
Hookups and Miscellaneous Income
Other income (expense)
Capital contribution
Transfers in
Transfers out - Admin Charges
Transfers out - PW Staff Time
Transfers out - Capital
Total non operating revenue (expenses)
Net increase (decrease) in resources
Restricted assets
Ending net assets - Unrestricted
Preliminary Budgeted
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
2031 2032 2033
7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75%
1.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
1.00%2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
3.00%3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
3.00%5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
2.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5.00%
14,419,468 14,861,023 15,129,294 15,332,726 14,755,806 16,028,551 15,796,689 16,093,043 16,513,545 17,024,838 17,636,061 18,357,176 19,199,047 20,173,509 21,293,453
0000000000000
0000000000000
1,130,563 1,149,585 1,158,564 1,227,091 1,323,263 1,425,816 1,536,317 1,655,381 1,783,673 1,921,908 2,070,856 2,231,347 2,404,276 2,590,608 2,791,380
1,130,563 1,149,585 1,158,564 1,227,091 1,323,263 1,425,816 1,536,317 1,655,381 1,783,673 1,921,908 2,070,856 2,231,347 2,404,276 2,590,608 2,791,380
6,160 762 359 780 9,227 9,688 10,173 10,681 11,215 11,776 12,365 12,983 13,632 14,314 15,030
109,424 89,255 129,847 255,507 160,689 168,510 173,565 178,772 184,135 189,659 195,349 201,209 207,246 213,463 219,867
00000000000
438,000 440,421 451,196 462,938 475,000 475,000 475,000 475,000 475,000 475,000 475,000 475,000 475,000 475,000 475,000
553,584 530,438 581,402 719,225 644,916 653,198 658,738 664,453 670,351 676,435 682,714 689,193 695,878 702,777 709,897
576,979 619,147 577,162 507,866 678,347 772,618 877,579 990,928 1,113,323 1,245,472 1,388,142 1,542,154 1,708,398 1,887,831 2,081,483
44,925 45,195 (5,643) (58,734)0 0 0 38,841 36,641 35,252 34,805 35,448 37,342 40,666 45,616
(4,115)
(50)00000000000
81
531,628 156,864 1,026,052 0 472,500 496,125 520,931 546,978 574,327 603,043 633,195 664,855 698,098
5,575
(94,002) (97,960) (101,878) (105,954) (110,192) (114,599) (119,183) (123,951) (128,909) (134,065) (139,428)
(337,652) (434,020) (455,721) (478,507) (502,432) (527,554) (553,932) (581,628) (610,710) (641,245) (673,307)
(713,387) (396,152) (524,951) (1,026,052)0 (472,500) (496,125) (520,931) (546,978) (574,327)(603,043) (633,195) (664,855) (698,098) (733,003)
(135,424) (350,876) (373,730) (1,084,786)594,398 (1,004,480) (581,224) (570,426) (602,030) (634,250)(667,026) (700,283) (733,936) (767,887) (802,024)
441,555 268,271 203,432 (576,920)1,272,745 (231,862)296,354 420,502 511,293 611,222 721,115 841,871 974,462 1,119,944 1,279,459
14,861,023 15,129,294 15,332,726 14,755,806 16,028,551 15,796,689 16,093,043 16,513,545 17,024,838 17,636,061 18,357,176 19,199,047 20,173,509 21,293,453 22,572,912
Storm Sewer
Actual Projected
Pa
g
e
7
o
f
6
3
City of Farmington , MN
Utility Rate Study
Base Model
Rates Inflation
Non-Rate Revenue Increase - Other
Non-Rate Revenue Increase - Interest
Expense growth - operating
Expense growth - personnel
Expenses - admin transfer
Expense growth - MCES
CIP Funding
Purchase of Capital Assets
Bond Proceeds
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond P&I - Future
Bond Prin - Existing
Beginning Cash
Add net operations
Add back depreciation
Add net non operating
Add capital and bond
Net change in balance sheet items
Other investments
Ending Cash
Restricted Cash - Drinking Water Treatment
Ending net assets - Unrestricted
Target minimum working capital
Actual working capital-cash balance
Over (Under) target working capital
Preliminary Budgeted
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
2031 2032 2033
7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75% 7.75%
1.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
1.00%2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
3.00%3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
3.00%5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
2.00%4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5.00%
Storm Sewer
Actual Projected
(2,166) (90,367) (117,239)0 (175,000) (815,178) (485,100) (509,355) (534,823) (561,564) (589,642) (619,124) (650,080) (682,584) (716,714)
0000000000
000000000
00000000
0000000
000000
00000
0000
000
00
0
00000000000
1,033,653 1,285,003 1,910,767 2,271,474 2,153,620 2,700,313 2,128,273 1,942,027 1,832,049 1,762,588 1,740,269 1,772,415 1,867,119 2,033,306 2,280,810
576,979 619,147 577,162 507,866 678,347 772,618 877,579 990,928 1,113,323 1,245,472 1,388,142 1,542,154 1,708,398 1,887,831 2,081,483
438,000 440,421 451,196 462,938 475,000 475,000 475,000 475,000 475,000 475,000 475,000 475,000 475,000 475,000 475,000
(667,052) (350,876) (530,594) (1,084,786) (431,654) (1,004,480) (1,053,724) (1,066,551) (1,122,961) (1,181,228) (1,241,353) (1,303,326) (1,367,131) (1,432,742) (1,500,122)
(2,166) (90,367) (117,239)0 (175,000) (815,178) (485,100) (509,355) (534,823) (561,564) (589,642) (619,124) (650,080) (682,584) (716,714)
(94,411)7,439 (19,818) (3,872)00000000000
1,285,003 1,910,767 2,271,474 2,153,620 2,700,313 2,128,273 1,942,027 1,832,049 1,762,588 1,740,269 1,772,415 1,867,119 2,033,306 2,280,810 2,620,458
14,861,023 15,129,294 15,332,726 14,755,806 16,028,551 15,796,689 16,093,043 16,513,545 17,024,838 17,636,061 18,357,176 19,199,047 20,173,509 21,293,453 22,572,912
763,311 907,409 1,316,753 534,613 1,825,963 1,573,814 1,638,455 1,706,258 1,777,378 1,851,979 1,930,234 2,012,321 2,098,430 2,188,760 2,211,032
1,285,003 1,910,767 2,271,474 2,153,620 2,700,313 2,128,273 1,942,027 1,832,049 1,762,588 1,740,269 1,772,415 1,867,119 2,033,306 2,280,810 2,620,458
521,692 1,003,358 954,721 1,619,008 874,350 554,459 303,572 125,791 (14,790) (111,711) (157,819) (145,202) (65,125)92,050 409,426
Pa
g
e
8
o
f
6
3
Capital Project
Project
Number
Project
Year Cost 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Street Projects PW-24-001 2024 600,000 - 630,000 - - - - - - - - -
Mill & Overlay PW-24-002 2024 40,000 - 42,000 - - - - - - - - -
Water Storage Facilities PW-24-003 2024 6,400,000 - 6,720,000 - - - - - - - - -
Well 1 Abandonment PW-24-011 2024 50,000 - 52,500 - - - - - - - - -
LOGIS UB System 2024 36,360 - 38,178 - - - - - - - - -
Street Projects PW-25-001 2025 600,000 - - 661,500 - - - - - - - -
Mill & Overlay PW-25-002 2025 40,000 - - 44,100 - - - - - - - -
Street Projects PW-26-001 2026 600,000 - - - 694,575 - - - - - - -
Mill & Overlay PW-26-002 2026 40,000 - - - 46,305 - - - - - - -
Street Projects PW-27-001 2027 600,000 - - - - 729,304 - - - - - -
Mill & Overlay PW-27-002 2027 40,000 - - - - 48,620 - - - - - -
Street Projects PW-28-001 2028 600,000 - - - - - 765,769 - - - - -
Mill & Overlay PW-28-002 2028 40,000 - - - - - 51,051 - - - - -
Placeholder - Mill and Overlay 2029 40,000 - - - - - - 53,604 - - - -
Placeholder - Street Projects 2029 600,000 - - - - - - 804,057 - - - -
Placeholder - Mill and Overlay 2030 40,000 - - - - - - - 56,284 - - -
Placeholder - Street Projects 2030 600,000 - - - - - - - 844,260 - - -
Placeholder - Mill and Overlay 2031 40,000 - - - - - - - - 59,098 - -
Placeholder - Street Projects 2031 600,000 - - - - - - - - 886,473 - -
Placeholder - Mill and Overlay 2032 40,000 - - - - - - - - - 62,053 -
Placeholder - Street Projects 2032 600,000 - - - - - - - - - 930,797 -
Placeholder - Mill and Overlay 2033 40,000 - - - - - - - - - - 65,156
Placeholder - Street Projects 2033 600,000 - - - - - - - - - - 977,337
- - - - - - - - - - -
- - - - - - - - - - -
Total Capital Projects 0 7,482,678 705,600 740,880 777,924 816,820 857,661 900,544 945,571 992,850 1,042,493
Water
Pa
g
e
9
o
f
6
3
Capital Project
Project
Number
Project
Year Cost 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Jetter PW-25-005 2023 400,000 400,000 - - - - - - - - - -
Street Projects PW-24-001 2024 450,000 - 472,500 - - - - - - - - -
Mill & Overlay PW-24-002 2024 40,000 - 42,000 - - - - - - - - -
Sanitary Sewer Lining PW-24-012 2024 250,000 - 262,500 - - - - - - - - -
LOGIS UB System 2024 36,360 - 38,178 - - - - - - - - -
Street Projects PW-25-001 2025 450,000 - - 496,125 - - - - - - - -
Mill & Overlay PW-25-002 2025 40,000 - - 44,100 - - - - - - - -
Sanitary Sewer Lining PW-24-012 2025 250,000 - - 275,625 - - - - - - - -
Street Projects PW-26-001 2026 450,000 - - - 520,931 - - - - - - -
Mill & Overlay PW-26-002 2026 40,000 - - - 46,305 - - - - - - -
Sanitary Sewer Lining PW-24-012 2026 250,000 - - - 289,406 - - - - - - -
Street Projects PW-27-001 2027 450,000 - - - - 546,978 - - - - - -
Mill & Overlay PW-27-002 2027 40,000 - - - - 48,620 - - - - - -
Sanitary Sewer Lining PW-24-012 2027 250,000 - - - - 303,877 - - - - - -
Street Projects PW-28-001 2028 450,000 - - - - - 574,327 - - - - -
Mill & Overlay PW-28-002 2028 40,000 - - - - - 51,051 - - - - -
Sanitary Sewer Lining PW-24-012 2028 250,000 - - - - - 319,070 - - - - -
Placeholder - Mill and Overlay 2029 40,000 - - - - - - 53,604 - - - -
Placeholder - Street Projects 2029 450,000 - - - - - - 603,043 - - - -
Placeholder - Sanitary Sewer Lining 2029 250,000 - - - - - - 335,024 - - - -
Placeholder - Mill and Overlay 2030 40,000 - - - - - - - 56,284 - - -
Placeholder - Street Projects 2030 450,000 - - - - - - - 633,195 - - -
Placeholder - Sanitary Sewer Lining 2030 250,000 - - - - - - - 351,775 - - -
Placeholder - Mill and Overlay 2031 40,000 - - - - - - - - 59,098 - -
Placeholder - Street Projects 2031 450,000 - - - - - - - - 664,855 - -
Placeholder - Sanitary Sewer Lining 2031 250,000 - - - - - - - - 369,364 - -
Placeholder - Mill and Overlay 2032 40,000 - - - - - - - - - 62,053 -
Placeholder - Street Projects 2032 450,000 - - - - - - - - - 698,098 -
Placeholder - Sanitary Sewer Lining 2032 250,000 - - - - - - - - - 387,832 -
Placeholder - Mill and Overlay 2033 40,000 - - - - - - - - - - 65,156
Placeholder - Street Projects 2033 450,000 - - - - - - - - - - 733,003
Placeholder - Sanitary Sewer Lining 2033 250,000 - - - - - - - - - - 407,224
- - - - - - - - - - -
Total Capital Projects 400,000 815,178 815,850 856,643 899,475 944,448 991,671 1,041,254 1,093,317 1,147,983 1,205,382
Sewer
Pa
g
e
1
0
o
f
6
3
Capital Project
Project
Number
Project
Year Cost 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Jetter PW-25-005 2023 175,000 175,000 - - - - - - - - - -
Street Projects PW-24-001 2024 450,000 - 472,500 - - - - - - - - -
Mill & Overlay PW-24-002 2024 40,000 - 42,000 - - - - - - - - -
Storm Water Mgmt Maintenance PW-24-003 2024 400,000 - 420,000 - - - - - - - - -
Street Sweeper PW-24-008 2024 300,000 - 315,000 - - - - - - - - -
LOGIS UB System 2024 36,360 - 38,178 - - - - - - - - -
Street Projects PW-25-001 2025 450,000 - - 496,125 - - - - - - - -
Mill & Overlay PW-25-002 2025 40,000 - - 44,100 - - - - - - - -
Storm Water Mgmt Maintenance PW-25-003 2025 400,000 - - 441,000 - - - - - - - -
Street Projects PW-26-001 2026 450,000 - - - 520,931 - - - - - - -
Mill & Overlay PW-26-002 2026 40,000 - - - 46,305 - - - - - - -
Storm Water Mgmt Maintenance PW-26-003 2026 400,000 - - - 463,050 - - - - - - -
Street Projects PW-27-001 2027 450,000 - - - - 546,978 - - - - - -
Mill & Overlay PW-27-002 2027 40,000 - - - - 48,620 - - - - - -
Storm Water Mgmt Maintenance PW-27-003 2027 400,000 - - - - 486,203 - - - - - -
Street Projects PW-28-001 2028 450,000 - - - - - 574,327 - - - - -
Mill & Overlay PW-28-002 2028 40,000 - - - - - 51,051 - - - - -
Storm Water Mgmt Maintenance PW-28-003 2028 400,000 - - - - - 510,513 - - - - -
Placeholder - Mill and Overlay 2029 40,000 - - - - - - 53,604 - - - -
Placeholder - Street Projects 2029 450,000 - - - - - - 603,043 - - - -
Placeholder - Storm Water Mgmt Maintenance 2029 400,000 - - - - - - 536,038 - - - -
Placeholder - Mill and Overlay 2030 40,000 - - - - - - - 56,284 - - -
Placeholder - Street Projects 2030 450,000 - - - - - - - 633,195 - - -
Placeholder - Storm Water Mgmt Maintenance 2030 400,000 - - - - - - - 562,840 - - -
Placeholder - Mill and Overlay 2031 40,000 - - - - - - - - 59,098 - -
Placeholder - Street Projects 2031 450,000 - - - - - - - - 664,855 - -
Placeholder - Storm Water Mgmt Maintenance 2031 400,000 - - - - - - - - 590,982 - -
Placeholder - Mill and Overlay 2032 40,000 - - - - - - - - - 62,053 -
Placeholder - Street Projects 2032 450,000 - - - - - - - - - 698,098 -
Placeholder - Storm Water Mgmt Maintenance 2032 400,000 - - - - - - - - - 620,531 -
Placeholder - Mill and Overlay 2033 40,000 - - - - - - - - - - 65,156
Placeholder - Street Projects 2033 450,000 - - - - - - - - - - 733,003
Placeholder - Storm Water Mgmt Maintenance 2033 400,000 - - - - - - - - - - 651,558
- - - - - - - - - - -
Total Capital Projects 175,000 1,287,678 981,225 1,030,286 1,081,801 1,135,891 1,192,685 1,252,319 1,314,935 1,380,682 1,449,716
Storm
Pa
g
e
1
1
o
f
6
3
Utility Rate Study
City of Farmington
July 17, 2023
Pa
g
e
1
2
o
f
6
3
2
Purpose of the Utility Rate Study
Maintain Financial
Health of Utility
Funds
• No property tax support
• Ensure utilities are self-
sufficient
• Maintain healthy
reserves
Inform Capital
Planning
• Determine how Capital
Improvement costs
(CIP) will be funded
Estimate Bill Impacts
• Look at user impacts
and overall affordability
Pa
g
e
1
3
o
f
6
3
3
• 95% of 2022 consumption used
• Personnel costs increase 5%
annually
• Non-personnel operating costs
increase 3% annually
• Capital costs inflated 5% annually
• MCES charge increase 11% annually
Key Assumptions
Pa
g
e
1
4
o
f
6
3
4
Utilities are Capital Intensive
Operating
20%
Capital
9%MCES
71%
Sewer Expenditures 2022
Operating Capital MCES
Operating
56%
Capital
40%
Debt
4%
Water Expenditures 2022
Operating Capital Debt
Operating
53%
Capital
47%
Storm Water Expenditures
2022
Operating Capital
Pa
g
e
1
5
o
f
6
3
5
Utilities are Capital Intensive
2023‐2033 Capital CostsUtility
$15.3 MillionWater
$10.2 MillionSanitary Sewer
$12.3 MillionStorm Water
• 2023 costs provided by City inflated 5% annually
• 2029-2033 costs are placeholders
Pa
g
e
1
6
o
f
6
3
6
• Volumetric Charges for Water and Sewer
Rate per 1,000 gallons
For water, rate increases for higher consumption (“tiers”)
• Sewer Base Fee
Customers pay for a minimum amount of use even if actual is less
Customers billed on winter quarter’s average water consumption
• Water Base Fee
Fixed fee per quarter
Rate Structure Components – Water and Sewer
Pa
g
e
1
7
o
f
6
3
7
• Conservation/Tiered Rates
Statute 103G.291 – “If a conservation rate is applied to multifamily dwellings, the
rate structure must consider each residential unit as an individual user.”
• Changes to Billing
Each residential unit is charged a water and sewer base fee
Less usage at higher tiers
Example: 10 residential units and 100,000 gallons of usage
Current Billing: 1 base fee charge + 20,000 gallons at Tier 1 + 20,000 gallons at Tier 2 +
60,000 gallons at Tier 3
New Billing: 10 base fee charges + 100,000 gallons at Tier 1
Multifamily Billing – Residential Units
Pa
g
e
1
8
o
f
6
3
8
Water Utility – Rate Recommendations
Recommended Annual Increase*Year
1%2024‐2026
2%2027
2.5%2028
3%2029‐2033
*Same annual increases recommended for irrigation rate
Pa
g
e
1
9
o
f
6
3
9
Maintains Healthy Water Fund
• Ending cash excludes restricted
cash for drinking water treatment
plant of $2.4M
• $6.7 million water storage facility
completed in 2024 – 50% funded via
debt
• Maintains high level of cash for
unexpected maintenance and capital
spending
• Lower rate increases in early years
to offset high sewer rate increases
Pa
g
e
2
0
o
f
6
3
10
• Municipal Wastewater Charge
• 2023 total charge for all
communities $264M
• Allocated based on prior years
percentage of total flow
Farmington - .76% or $2M in
2023
• 71% of 2022 expenditures –
excluding depreciation
Sewer Utility – MCES Charge
MCES FeeCity Sewer RateYear
9%0%2014
18%0%2015
15%13%2016
4%0%2017
-14%0%2018
15%4%2019
15%0%2020
9%4%2021
8%39%2022
12%5%2023
9%6%Average
Pa
g
e
2
1
o
f
6
3
11
Sewer Utility – Rate Recommendations
Recommended Annual IncreaseYear
20%2025
17%2026
15%2027‐2028
8%‐6%2029‐2033
Recommended 2024 Rate2023 RateFee
$51.00$41.94Residential/Multifamily Base Rate (includes first 10,000
gallons)
$102.00$90.23Commercial Base Rate (includes first 20,000 gallons)
$6.63$5.66Residential/Multifamily Volume Rate (per 1,000 gallons)
$6.63$5.99Commercial Volume Rate (per 1,000 gallons)
Pa
g
e
2
2
o
f
6
3
12
Maintains Healthy Sewer Fund
Pa
g
e
2
3
o
f
6
3
13
Storm Water – Rate Recommendations
• Quarterly fee based on residential
equivalency unit (REU)
• 7.75% annual increase recommended
• $490,000 equipment replacement
expenses in 2023-2024
• $1M annual capital improvement plan
budget for street projects, mill and
overlay, and maintenance
Pa
g
e
2
4
o
f
6
3
14
Putting it All Together – Residential Bill Impact
Actual Actual
2022 2023 2024 2025 2026 2027
Quarterly Low Volume Residential Bill
10,000 gallons water and 8,000 gallons sewer
Water 32.90$ 34.58$ 34.93$ 35.28$ 35.63$ 36.34$
Sewer 39.94 41.94 51.00 61.20 71.60 82.34
Storm 22.31 23.43 25.25 27.20 29.31 31.58
Total 95.15$ 99.95$ 111.17$ 123.68$ 136.54$ 150.27$
Percent Increase 5.0% 11.2% 11.2% 10.4% 10.1%
Amount Increase- per quarter $4.80 $11.22 $12.51 $12.86 $13.72
Actual Actual
2022 2023 2024 2025 2026 2027
Quarterly Medium Volume Residential Bill
24,000 gallons water and 12,000 gallons sewer
Water 60.56$ 63.66$ 64.30$ 64.94$ 65.59$ 66.90$
Sewer 50.72 53.26 64.26 77.11 90.22 103.75
Storm 22.31 23.43 25.25 27.20 29.31 31.58
Total 133.59$ 140.35$ 153.80$ 169.25$ 185.12$ 202.24$
Percent Increase 5.1% 9.6% 10.0% 9.4% 9.2%
Amount Increase- per quarter $6.76 $13.45 $15.45 $15.87 $17.12
Proposed
Proposed
Pa
g
e
2
5
o
f
6
3
15
Putting it All Together – Multifamily Bill Impact
Actual Actual
2022 2023 2024 2025 2026 2027
Quarterly Low Volume Multifamily Bill
Water 126.15$ 132.52$ 169.11$ 170.81$ 172.51$ 175.96$
Usage 110.55 116.14 86.40 87.26 88.13 89.89
Base 15.60 16.38 82.72 83.55 84.38 86.07
Sewer 239.37 251.36 255.00 306.00 358.02 411.72
Usage 199.43 209.42 - - - -
Base 39.94 41.94 255.00 306.00 358.02 411.72
Storm 96.83 101.69 109.57 118.06 127.21 137.07
Total 462.35$ 485.57$ 533.68$ 594.86$ 657.74$ 724.75$
Percent Increase 5.0% 9.9% 11.5% 10.6% 10.2%
Amount Increase- per quarter $23.22 $48.12 $61.18 $62.88 $67.01
Actual Actual
2022 2023 2024 2025 2026 2027
Quarterly Medium Volume Multifamily Bill
Water 281.40$ 295.42$ 334.55$ 337.90$ 341.28$ 348.10$
Usage 265.80 279.04 169.11 170.81 172.51 175.96
Base 15.60 16.38 165.44 167.09 168.76 172.14
Sewer 481.92 506.06 510.00 612.00 716.04 823.45
Usage 441.98 464.12 - - - -
Base 39.94 41.94 510.00 612.00 716.04 823.45
Storm 114.90 120.66 130.02 140.09 150.95 162.65
Total 878.22$ 922.14$ 974.57$ 1,089.99$ 1,208.27$ 1,334.20$
Percent Increase 5.0% 5.7% 11.8% 10.9% 10.4%
Amount Increase- per quarter $43.93 $52.42 $115.42 $118.28 $125.93
92,000 gallons of water and sewer, 10 Dwelling Units, 5.15 Storm REU's
Proposed
Proposed
47,000 gallons of water and sewer, 5 Dwelling Units, 4.34 Storm REU's
Pa
g
e
2
6
o
f
6
3
16
Putting it All Together – Commercial Bill Impact
Actual Actual
2022 2023 2024 2025 2026 2027
Quarterly Small Commercial Bill
10,000 gallons water and sewer, 3 Storm REU's
Water 32.90$ 34.58$ 34.93$ 35.28$ 35.63$ 36.34$
Sewer 85.93 90.23 102.00 122.40 143.21 164.69
Storm 66.93 70.29 75.74 81.61 87.93 94.75
Total 185.76$ 195.10$ 212.66$ 239.28$ 266.77$ 295.78$
Percent Increase 5.0% 9.0% 12.5% 11.5% 10.9%
Amount Increase- per quarter $9.34 $17.56 $26.62 $27.49 $29.01
Actual Actual
2022 2023 2024 2025 2026 2027
Quarterly Large Commercial Bill
669,000 gallons water and sewer, 32.4 Storm REU's
Water 2,272.05$ 2,384.16$ 2,408.00$ 2,432.08$ 2,456.40$ 2,505.53$
Sewer 3,671.23 3,857.94 4,272.27 5,126.72 5,998.27 6,898.01
Storm 722.84 759.13 817.96 881.36 949.66 1,023.26
Total 6,666.12$ 7,001.23$ 7,498.24$ 8,440.16$ 9,404.33$ 10,426.80$
Percent Increase 5.0% 7.1% 12.6% 11.4% 10.9%
Amount Increase- per quarter $335.11 $497.00 $941.93 $964.17 $1,022.47
Proposed
Proposed
Pa
g
e
2
7
o
f
6
3
17
Community Comparison - Neighbors
Pa
g
e
2
8
o
f
6
3
18
• Council feedback on proposed rates
• Refine study based upon Council direction
• Future meeting to review rates for 2024 and beyond
Next Steps
Pa
g
e
2
9
o
f
6
3
19
AQ
&
Pa
g
e
3
0
o
f
6
3
20
Ehlers is the joint marketing name of the following affiliated businesses (collectively, the “Affiliates”): Ehlers & Associates,Inc.
(“EA”), a municipal advisor registered with the Municipal Securities Rulemaking Board (“MSRB”) and the Securities and Exchange
Commission (“SEC”); Ehlers Investment Partners, LLC (“EIP”), an SEC registered investment adviser; and Bond Trust Services
Corporation (“BTS”), a holder of a limited banking charter issued by the State of Minnesota.
Where an activity requires registration as a municipal advisor pursuant to Section 15B of the Exchange Act of 1934 (Financial
Management Planning and Debt Issuance & Management), such activity is or will be performed by EA; where an activity requires
registration as an investment adviser pursuant to the Investment Advisers Act of 1940 (Investments and Treasury Management),
such activity is or will be performed by EIP; and where an activity requires licensing as a bank pursuant to applicable state law
(paying agent services shown under Debt Issuance & Management), such activity is or will be performed by BTS. Activities not
requiring registration may be performed by any Affiliate.
This communication does not constitute an offer or solicitation for the purchase or sale of any investment (including without
limitation, any municipal financial product, municipal security, or other security) or agreement with respect to any investment
strategy or program. This communication is offered without charge to clients, friends, and prospective clients of the Affiliatesas a
source of general information about the services Ehlers provides. This communication is neither advice nor a recommendation by
any Affiliate to any person with respect to any municipal financial product, municipal security, or other security, as such terms are
defined pursuant to Section 15B of the Exchange Act of 1934 and rules of the MSRB. This communication does not constitute
investment advice by any Affiliate that purports to meet the objectives or needs of any person pursuant to the Investment Advisers
Act of 1940 or applicable state law.
Important Disclosures
Pa
g
e
3
1
o
f
6
3
WORK SESSION AGENDA MEMO
To: Mayor, Councilmembers and City Administrator
From: John Powell, Public Works Director
Department: Engineering
Subject: Pavement Management Program (PMP) Update
Meeting: Work Session - Jul 17 2023
INTRODUCTION:
Late last year, we discussed our city pavement assets, current pavement conditions, and how
bituminous pavement conditions can be quantified via the use of a Pavement Condition Index (PCI).
This spring, Goodpointe Technology, the consultant that supports our pavement management
software, rated the condition of bituminous pavement throughout the city. Their findings on roadway
conditions are presented on the attached draft map.
DISCUSSION:
At the Work Session, Staff will review the draft map, explain how the map is being vetted, describe
how the map and related database will be maintained, discuss project scoping for the Capital
Improvement Plan (CIP), and layout next steps. The bituminous p avement conditions for city trails
have also been rated, but the Work Session focus is on the roadways. The goal is to realize the full
value/life of the pavement, to meet a desired level of service, in the most cost -effective manner.
Draft Map
When rating the pavement conditions, each segment of roadway is assigned a numerical value from
0 to 100; 0 pavement being in extremely poor condition and 100 representing a new roadway. For
purposes of presenting this information, the data has been broken up into deciles, with each decile
assigned a different color. When you review the map, the roadways in the worst condition are those
shown in red, orange, and light pink. The “feature count” simply indicates how many roadway
segments fall into that decile.
Vetting
Various criteria are used to rate the pavement such as transverse cracking, block cracking, alligator
cracking, etc. Multiple Staff are reviewing the draft map for consistency between segments, to make
sure segments weren’t missed, and to ensure that it accurately represents the system conditions in
their view.
Map Maintenance
To maintain the map usefulness, the data must be kept current despite changing pavement conditions
over time. So every year, the data will undergo an updating process. The process includes adding
new roadway segments due to development; and also re -rating 1/3 of the roadways on an annual
basis. Using this approach, none of the map data will be more than three years old.
Page 32 of 63
CIP Project Scoping
Even though a roadways PCI is a key component in guiding pavement maintenance and replacement
planning, many other considerations enter the decision -making process when planning pavement
work. These considerations include safety, risk, curb and gutter conditions, utility needs, drainage ,
traffic volumes, funding, sidewalk/trail needs, etc. All these factors and more will be considered when
identifying the annual Street and Utility Improvement and Mill & Overlay (M&O) project areas. The
goal is to develop a 10-year plan which is reviewed and updated each year. Knowing what roadways
are intended for reconstruction or M&O will allow Public Works Staff to much better plan annual
operation and maintenance activities.
Next Steps
After considering all of the available information, and before the full 10 -year plan has been developed,
Staff will identify the proposed 2024 Street and Utility Improvement, and the 2024 Mill & Overlay
project areas. The 2024 Street and Utility Improvemen t project schedule is outlined as follows:
July-August 2023 Project scoping
August 2023
Selection of design consultant; sanitary and
storm sewer televising; initial neighborhood
meeting; wetland delineation (as needed)
August-September 2023
Prepare feasibility report; geotechnical
tree surveys; investigation; topographic
condition review, identify easement needs (if
any); initial inter-agency coordination (as
needed); evaluate sidewalk/trail/ADA needs
October-November 2023 Final design; preparation of plans and
specifications; final utility coordination
November 2023 Final plan review; preparation for bidding;
permits
December 2023 Advertisement for bids
January-February 2024 Open bids, award construction contract
February 2024 Pre-construction meeting
March 2024 Neighborhood meeting
April-May 2024 Begin construction
September, 2024 Substantial completion of construction
September, 2026 Two-year warranty inspection
The 2025 Mill & Overlay project will follow a similar, but more abbreviated, schedule. We expect to
follow a similar schedule each year to allow adequate time to scope the projects, gather data on utility
conditions, complete topographic surveying before snow, and bid projects early in the year.
BUDGET IMPACT:
Beginning in 2024, in the Capital Improvement Program (CIP), Staff is requesting $3,000,000 per
year for street reconstruction projects, and an additional $1,000,000 per year for mill & overlay
projects. The requested Engineering operating budget includes $14,000 per year to re-rate 1/3 of the
pavement conditions, and update the system data, each year.
ACTION REQUESTED:
Update and discussion only.
Page 33 of 63
ATTACHMENTS:
Farmington Streets PCI DRAFT 070623
Page 34 of 63
Page 35 of 63
WORK SESSION AGENDA MEMO
To: Mayor, Councilmembers and City Administrator
From: Leah Koch,
Department: Administration
Subject: Adult Use Cannabis Legalization
Meeting: Work Session - Jul 17 2023
INTRODUCTION:
Overview of new 2023 laws legalizing adult use cannabis in Minnesota.
DISCUSSION:
Presentation on three main effects of new laws including legalization of purchase, possession and
use of cannabis, creation of Office of Cannabis Management, and expungement of prior convictions
for cannabis use and possession. Presentation will also disc uss employment considerations, what
the City can regulate, and next steps the City should consider.
BUDGET IMPACT:
Not applicable
ACTION REQUESTED:
Not applicable
ATTACHMENTS:
DOCS-#227157-v1-FMT_Memo_re_Cannabis_Legalization
DOCS-#227165-v1-FMT_PRESENTATION_RE_MN_CANNABIS
Page 36 of 63
Document Number: 227157 Version: 1
M E M O R A N D U M
TO: FARMINGTON CITY COUNCIL
FROM: JACK BROOKSBANK, LEAH KOCH
DATE: JULY 12, 2023
RE: ADULT USE CANNABIS LEGALIZATION
On May 30, Governor Walz signed 2023 Session Laws Chapter 63 legalizing adult use
cannabis in Minnesota. The law created a new chapter of the Minnesota Statutes, Chapter 342. The
new law has three main effects. First, it legalizes personal purchase, possession, and use of
cannabis and related products by adults over the age of 21. Second, it creates a new administrative
agency, the Office of Cannabis Management (OCM), which is tasked with regulating the
commercial production and sale of cannabis and related products. Third and finally, the law
provides for the expungement of prior convictions for cannabis use and possession. This
memorandum provides a brief overview of the new law, with a focus on the powers and
responsibilities left to municipal government.
This memorandum is meant to be a primer in the new law, and cannot answer every
question about these expansive new laws in detail. There is also a great deal of ambiguity left in
how the new law will be applied. OCM has been granted substantial rulemaking authority and a
mandate to enact regulations to fill out the practical details. However, these rules have not yet been
proposed, let alone finalized. In fact, the state is working on hiring the Executive Director of the
OCM. If there are any specific questions, feel free to address them to the City Attorney’s office.
Finally, the law creates a state-level board to process the expungements. Since there will be no
involvement by local governments, this memorandum does not address the expungement process.
I. Terminology
The terminology used here is slightly different from prior laws. It uses “cannabis” and not
“marijuana,” and does not use the prior “cannabinoid product” language. The new law defines
“cannabis” as hemp plants with greater than 0.3% THC (dry weight). “Cannabis concentrates” are
any extracts or resins prepared from cannabis. “Cannabis flower” means dried cannabis plant used
for smoking. “Hemp” means hemp plants with less than 0.3% dry weight of THC. Edible products
are regulated by both potency and source of THC. The law redefines the previously-legal edibles
(cannabinoid products) as “lower-potency hemp edibles.” These must contain less than 5 mg of
THC per dose, and the THC must be derived from hemp plants. These edibles can be produced
using “hemp concentrate,” that is, lower-potency hemp plants will be processed into stronger
concentrates, which will then be measured out to make the final product. The original source for
these hemp concentrates, however, will have to be from hemp plants and not cannabis.
This memorandum will use “cannabis and related products” to mean cannabis, cannabis
concentrate, edible cannabis products, and lower-potency hemp edibles as many of the regulations
on use and possession apply to all these categories equally.
Page 37 of 63
Document Number: 227157 Version: 1
II. What Hasn’t Changed
An important note is that, although the new Minn. Stat. Chapter 342 legalizes cannabis at
the state level, there have been no changes to federal law. Under federal law, cannabis (and THC,
the active ingredient) remains a Schedule I controlled substance. Although federal enforcement
has been extremely limited, the conflict between state and federal law remains. Keep in mind,
federal enforcement priorities could shift, even if criminal cannabis enforcement does not currently
appear to be a priority.
This is a particular risk for city employees who hold federal licenses or who carry firearms
in the course of their duty. Federal licenses, such as the Class I driver’s license required for many
public works duties, still classify cannabis use as illegal and as a reasons for license denial or
revocation. Further, federal law prohibits cannabis users from purchasing or possessing a firearm.
The St. Paul Branch Office of the federal ATF recently released an open letter reaffirming its
position that it is illegal for cannabis users to purchase or possess firearms. Thus, although the City
likely cannot prohibit cannabis use by employees off the clock, any employee with significant
federal exposure should be counselled of the risks. This especially includes police officers and
public works employees with class I licenses.
The new law also allows for cannabis drug testing for employees in seven listed categories:
1. Safety sensitive employees
2. Peace officers
3. Firefighters
4. Counselors or careworkers who treat children, vulnerable adults, and those in need of
emergency mental health assistance
5. Positions requiring a CDL
6. Positions funded by federal grants; or
7. Any position specifically requiring cannabis drug testing under law.
Although there are no longer criminal penalties associated with its use, city employees in
these positions could face employment action if they choose to use cannabis.
III. Adult Purchase, Use, and Possession
Taking effect July 1, adults over the age of 21 will be able to purchase, possess, and use
cannabis and related products. Although purchase and possession will become legal, sale remains
illegal. This includes even giving away cannabis depending on the amount—a gift of more than 2
ounces of cannabis flower, 8 grams of cannabis concentrate, or an edible with more than 800
milligrams of THC is still illegal. Possession is also limited. An individual over 21 may possess
no more than 8 grams of cannabis concentrate, or edibles with no more than 800 mg of THC.
Individuals may also possess not more than 2 ounces of cannabis flower in public, and not more
than 2 pounds in a private residence. Individuals may also grow their own cannabis, with a
maximum of 8 plants (no more than 4 of which are mature at any time) per residence. Plants must
also be kept in an enclosed, locked space that is not open to public view—whether that be indoors
or in a locked outdoor enclosure.
The new law also legalizes use in limited circumstances. Use is allowed in private
residences, or on private property that is not generally open to the public. Thus use on public streets
or sidewalks, in public parks, or in restaurants is generally not allowed.
There are also specific restrictions on use. Smoking cannabis is prohibited anywhere that
smoking tobacco is prohibited under the Clean Indoor Air Act, such as bars and restaurants. Use
and possession is also prohibited in schools and prisons. It is also a crime to use cannabis and
Page 38 of 63
Document Number: 227157 Version: 1
related products while in a vehicle, or to operate a vehicle under the influence of cannabis and
related products. It is further illegal to possess open packages of cannabis and related products
while in a motor vehicle—similar to alcohol, cannabis and related products must be transported in
sealed containers or in a part of the vehicle not accessible from the passenger compartment.
Finally, it is illegal to use cannabis where “the smoke, aerosol, or vapor would be inhaled by a
minor.” The city may adopt an ordinance making the use of cannabis or lower-potency edibles in
public a petty misdemeanor.
IV. Commercial Regulation
The commercial market for cannabis and related products will be regulated by the new
state agency, OCM. The central regulations will involve licensing through the state agency. The
law creates 16 different license categories, from cultivation to manufacture to retail. The licenses
are also divided between “full strength” cannabis licenses and “lower-potency hemp” licenses.
Medical cannabis will remain its own category and will be regulated separately. The
existing medical cannabis regulations will continue largely unchanged and administered by the
Department of Health. Regulatory authority will be gradually shifted from the Department of
Health to OCM in 2025.
The retail sale of cannabis and related products will be divided into cannabis dispensaries
and lower-potency hemp retail. Cannabis sales will be through separate businesses, analogous to
liquor stores. These businesses will be tightly regulated, particularly with respect to the types of
product available. These businesses may sell cannabis and related products, cannabis plants and
seeds, paraphernalia, nonalcoholic drinks, books and magazines about cannabis, bags to carry
purchases, branded clothing, hemp fiber products, and products that detect the presence of
fentanyl. Dispensaries will not be able to sell any other products. Customers may smell the
products before purchase, but may not sample or smoke the products on site.
Lower-potency hemp edibles will be separately licensed, and will be much less restricted.
Lower-potency retailers must ensure that there are no sales to any individual under 21, but may
generally sell any other products as well as lower-potency edibles. There are also license
endorsements available to permit lower-potency consumption on-site, within certain limits. This
will allow bars and restaurants to serve lower-potency seltzers alongside alcohol.
Although legalized under the new law, cannabis dispensaries cannot operate without a valid
state license issued by the OCM. However, OCM will not be able to issue licenses until it finalizes
its regulations and licensing process. OCM has stated in press releases that it does not anticipate it
will be ready to issue licenses until early 2025 at the earliest. Retail cannabis sales will not be able
to begin in practice until then. Lower-potency hemp edibles are currently legal, and will remain
so. Retailers will have to register with the Minnesota Department of Health beginning October 1,
2023. OCM will then be implementing licensing for lower-potency hemp edibles, likely around
the time that it begins licensing for cannabis.
V. Municipal Role
The law generally preempts municipal regulation. Cities may not enact their own licensing
ordinances or prohibit possession, use, or transportation. Cities also may not prohibit businesses
from operating if properly licensed by the state. This limits the control cities can exercise. There
are still three areas where cities have authority: zoning, local registration, and enforcement.
Page 39 of 63
Document Number: 227157 Version: 1
1. Zoning
Cannabis and hemp businesses are still businesses, subject to zoning requirements. They
will be restricted to retail districts. Some communities have specific zoning requirements for liquor
stores—we feel this is a good analogy for these businesses, and that cities could decide how to
zone such retailers specifically. The city could also consider regulating lower-potency sales as an
accessory use, restricting sales to certain zoning districts. However, the city may not enact zoning
requirements that duplicate or contradict the state license requirements.
Cities are specifically authorized to impose “reasonable restrictions on the time, place, and
manner of the operation of a cannabis business.” This includes imposing distances from schools,
day cares, residential treatment facilities, or “an attraction within a public park that is regularly
used by minors” (such as a playground or athletic field). Cities may also impose limited restrictions
on the hours of operation.
During the state licensing application, OCM will contact the city to ensure that the
proposed new business complies with all local regulation. This specifically includes building,
zoning, and fire codes. The city will also be asked to provide any other information it feels is
important. Thus if there is a particular concern with a location or an applicant, the city may share
that information.
2. Local Registration
Any retail business selling cannabis and related products, including the lower-potency
hemp edibles, must register with the city in which they operate. No business may sell cannabis or
related products without a valid local registration. The city may collect a registration fee to cover
the cost of investigation, and may perform initial compliance checks to ensure that the proposed
business will follow all applicable regulations. However, the city will not have discretion in
whether to issue the registration. If the business has a valid state license, passes the compliance
checks, and has paid all fees and taxes, the city must issue the registration.
Cities may restrict the number of registrations issued to full strength cannabis businesses.
The city must issue at least one registration per 12,500 residents. For Farmington, this means at
least 1 registration. The city may also decline to issue a registration if there is at least one
registration per 12,500 residents countywide. This works out to 36 registrations across Dakota
County. It is not clear how the city will find out the number of registrations in the county; it is
likely that OCM will keep a list.
3. Enforcement
Cities will be required to conduct compliance checks. These are similar to existing
compliance checks for liquor and tobacco license holders. They ensure that businesses will not sell
products to persons who are underage and do not stock illegal products. OCM has been charged
with developing compliance procedures and documentation for use by local governments. There
is substantial state money available to support local enforcement efforts, supported by a state sales
tax on all cannabis and related products sales. Compliance checks must be performed at least once
per year.
If the city discovers licensing violations, or if a business constitutes “an immediate threat
to the health or safety of the public,” the city may suspend the business’s local registration for up
to 30 days. The city must notify OCM of the suspension immediately. OCM must then review the
action, and may decide to impose a longer license suspension or license termination. If a business
Page 40 of 63
Document Number: 227157 Version: 1
continues to sell products despite the suspension, the city may impose a civil penalty of up to
$2,000 per violation (per sale).
The statute contains an appeals mechanism for state licensing actions through OCM. It
does not mandate appeals for local actions imposing a less than 30-day suspension. However,
shuttering a business for 30 days is still a hefty penalty power. To avoid constitutional due process
or takings claims, we recommend that the city adopt a local appeal mechanism.
Page 41 of 63
Minnesota Cannabis
Legalization 2023
LEAH KOCH
FARMINGTON COUNCIL WORK SESSION -JULY 17, 2023
Pa
g
e
4
2
o
f
6
3
2023 is the year!*
▪Governor Walz signed a bill legalizing cannabis into law on May 30, 2023
▪This presentation provides an overview the legislation
▪Note that there are lots of practical details to be worked out by regulators
▪Several provisions make explicit reference to upcoming regulations
Photo: Ken Lund, https://https://www.flickr.com/photos/75683070@N00/42263186440, via Creative Commons
Pa
g
e
4
3
o
f
6
3
High-Level Plan:
1.Legalize private individual purchase, possession, use, and limited growing
◦Starting July/August 1, 2023
◦It appears possession is legalized July 1; however, the statutes imposing criminal penalties for possession are not changed u ntil August 1
◦Reporting indicates August 1
2.Commercial growth, processing, and sales under regulation of new state Office of Cannabis Management
(OCM)
◦Starting when rulemaking complete
◦Draft bills said January 1, 2024. Date since removed, but agency indicates it is targeting first quarter 2025
3.Expungement of convictions under previous laws
◦Handled through BCA and new expungement board, likely limited or no city involvement
NOTE: STILL NO CHANGE TO FEDERAL LAWSPa
g
e
4
4
o
f
6
3
Use
Broadly permits adult (21+) use and possession
◦Limits on potency, quantity possessed
◦May possess larger amount in home than in public
◦May give without payment up to limited amount
◦May grow plants at home buy may not make concentrates at home
Limited restrictions on use
◦May use in private residences, on private property NOT generally open to the public, or at a licensed premises
◦Subject to general smoking prohibitions
◦May not use or possess open packages in motor vehicle
◦May not use or possess in schools or correctional facilities
◦May not use where secondhand smoke could affect minors
◦May not vaporize or smoke cannabis or hemp in a multi -family building
City may adopt ordinance making use in public a petty misdemeanor
Photo: Cannabis Culture, https://www.flickr.com/photos/42890798@N04/15263317230, via Creative Commons
Pa
g
e
4
5
o
f
6
3
Use by City Employees
Use is generally legal to all adults. However, the law exempts certain categories of employees as it
relates to drug testing:
1.Safety sensitive employees
2.Peace officers
3.Firefighters
4.Counselors or careworkers who treat children, vulnerable adults, and those in need of emergency
mental health assistance
5.Positions requiring a CDL
6.Positions funded by federal grants; or
7.Any position specifically requiring cannabis drug testing under law.
Although there are no longer criminal penalties associated, city employees in these positions should
refrain from cannabis use.Pa
g
e
4
6
o
f
6
3
Office of Cannabis Management
State administrative agency
◦Formally creation July 1, 2023
◦Reporting, agency website, legislation’s author all indicate that will be unlikely to start sales until as late
as 2025
Agency will conduct studies and provide reports
◦Including recommendations for need to change transportation laws
◦Pilot programs for new testing methods
◦Use prevalence, adverse events
◦Recommendations to reduce use by underage individuals
Responsible for regulating cannabis industry
Will take over medical cannabis program starting March 2025Pa
g
e
4
7
o
f
6
3
Commercial Regulation
Cannabis businesses split into categories
◦16 license types
◦Split between cultivation, manufacture,
distribution, and retail
◦Further split between “full strength,” “lower-
potency,” and medical
◦Also includes “microbusiness” and
“mezzobusiness”
◦Think craft brewery, more “farm to table”
This presentation mainly focuses on retail
regulations
Note that cannabis businesses are still subject
to general business regulations such as zoning
◦A cannabis cultivator is still an agricultural
business and regulated as such
◦Food and beverage production still requires food
handler permits and must contain food-
approved ingredients
◦Etc.
Pa
g
e
4
8
o
f
6
3
Retail Sales
Will create separate businesses for cannabis sales
◦Think liquor stores
◦City may operate own store, like a municipal liquor store, but not exclusively
Subject to State Licensing and Regulation
◦Some home growing allowed, but no sales of any products without state license
◦Initial license fees and renewal fees
◦Restricted on size of operation
◦Maximum number of retail locations
◦Restriction on concurrent licenses held
◦Limitation on types of products sold
◦Includes specific restrictions preventing products that appeal to children
◦Restriction on display and storage of products
◦Compliance requirements
◦Age verification, etc.
State will issue licenses based on demonstrated compliance with regulations and equity score
◦Including consideration of applicant, proposed location, and market conditions
Photo: Rick Obst, https://www.flickr.com/photos/46052415@N08/33830584393,via Creative Commons
Pa
g
e
4
9
o
f
6
3
What about the current products?
Will remain legal without change for now
Will eventually also be governed by State licensing
◦Includes manufacturing, retail
◦Exempted from most local control
◦Enforcement under MDH until 2025, then transfer to OCM
◦Must register with MDH until OCM takes over
May sell other products without restriction
◦If have proper licensing, e.g. tobacco
◦May sell for on-premises consumption if licensed
◦Extra license endorsement, requires separated designated consumption
space
Photo: Elsa Olofsson, https://www.flickr.com/photos/elsaolofsson/52443206175/in/photostream /, via Creative Commons
Pa
g
e
5
0
o
f
6
3
Municipal Regulation
Municipal regulations are generally preempted
◦May not ban use, possession, or transportation
◦May not prohibit businesses from operating if licensed by the state
So what role is left? Four areas:
1.Zoning
2.Reviewing the application from OCM for code compliance
3.Local Registration
4.Enforcement and compliance
Pa
g
e
5
1
o
f
6
3
Zoning
Cannabis businesses will simply be another type of legal business, subject to the City’s general
zoning regulations.
◦An explicit condition of obtaining a full-strength retail license will be demonstrating compliance with
local zoning regulations.
◦Lower-potency sellers are still explicitly directed to comply with zoning code
Note: while the City may choose which zoning districts will allow cannabis businesses, the City cannot ban those businesses. The City
should therefore designate at least one zoning district allowing cannabis businesses.
Pa
g
e
5
2
o
f
6
3
Note: Moratorium
Local governments may adopt a moratorium on cannabis businesses
◦Provision to conduct study on best way to handle zoning
◦Can be internal staff review, but must be a study
◦Could be passed in conjunction with existing moratorium
◦Requires public hearing before going into effect
This power is limited to the full-strength licenses, and may last until January 1, 2025
However, OCM has indicated it will not offer licenses until Q1 2025 anyway
It is not clear that a moratorium will have much practical effect
Pa
g
e
5
3
o
f
6
3
Specific Zoning Requirements
May adopt ordinances adopting “reasonable restrictions on the time, place, and manner of the
operation of a cannabis business”
◦Not entirely clear what this will mean beyond generally applicable zoning and business regulations
◦Specifically mentions setbacks:
◦1000 feet of a school
◦500 feet from a daycare, residential treatment facility, or “attraction within a public park that is regularly used by minors ” like a playground
◦Specifically mentions hours of operation
◦Businesses can sell between 10:00 am and 9:00 pm; cannot sell between 2:00 am and 8:00 am (10:00 am Sundays)
◦City may restrict the hours not listed above
City will be involved in state licensing process:
◦After application, City will be asked to certify if proposed business complies with zoning, fire code, and
building code
◦City may provide “any additional information it believes is relevant” to application such as concerns about
location or specific applicant
Pa
g
e
5
4
o
f
6
3
Local Registration
Businesses making retail sales, including low-potency hemp, must register with the city
City must issue registration if
◦Applicant has valid state license
◦Applicant has paid registration fees
◦Applicant passes any initial compliance checks
◦Applicant is current on local taxes and assessments
City may impose registration fees for initial registration and registration renewal
◦Initial application: lesser of $500 or half state license fee
◦Renewal: lesser of $1,000 or half of state license fee
City may limit number of full-strength registrations available
◦Not fewer than 1 license per 12,500 residents
◦May decline registration if one active registration per 12,500 residents countywide
Pa
g
e
5
5
o
f
6
3
Enforcement and Compliance
May make use in public a petty misdemeanor
Cities are responsible for conducting compliance checks assessing:
◦Age verification
◦Like with liquor, will do unannounced checks by having an underage person attempt to purchase cannabis
◦Operation requirements
◦Types of products sold, hours of operation, age of staff, etc
These compliance checks must be done at least once per year for each license holder
City may also continue to ensure compliance with all local ordinances such as zoning, sign
ordinances, snow removal, etc.
Pa
g
e
5
6
o
f
6
3
Enforcement Powers:
OCM will set up complaint process to report license violations; must give cities “expedited” process,
response in less than 1 business day if safety issue
Potential registration suspension:
◦If the city determines that a business is in violation of its state license, or
◦If the business is “an immediate threat to the health or safety of the public”
City has limited suspension power
◦Suspension may be for no longer than 30 days
◦Must immediately notify state office
◦State may then impose longer license suspension or cancellation
◦City may reinstate registration early if problems are addressed
◦City may impose civil penalty of up to $2,000 per violation if business continues to operate during suspension
Appeals: maximum 30-day suspension if City suspension, then becomes State action. But, likely still
needs city appeal mechanism to avoid constitutional due process or takings issuesPa
g
e
5
7
o
f
6
3
Finance: How is this all being paid for?
Law contains about $70 million in state appropriations for initial funding
Long term funding by 10% sales tax on all sales
◦Comparatively low
◦Other states legalizing have started with lower initial rate to quash black market
◦Could increase
Of tax money collected:
◦80% to general revenue
◦20% to dedicated local government aid account
◦50% of this account to counties, 50% to cities
◦Will be distributed based on share of total cannabis businesses located in each city
Pa
g
e
5
8
o
f
6
3
State Aid/Assistance
State OCM charged with compiling informational reports and setting initial regulations
OCM also tasked with drafting model ordinances for cities
◦We expect the office will work closely with the League of Minnesota Cities on these model ordinances
◦Will likely cover licensing, enforcement; may not address zoning of business controls as those are more purely
local issues
State aid for local law enforcement
◦Training for compliance enforcement
◦Financial aid for local law enforcement training
◦Impaired driver assessment
◦Field testing/evaluation
◦Drug recognition expert assistance
◦State support for enforcement activities
Pa
g
e
5
9
o
f
6
3
Next steps for the City:
1.Start thinking about zoning:
a.Where should cannabis businesses be located?
b.Permitted vs. Conditional or Accessory use
2.Review general regulations
a.Loitering
b.Smoking in public
c.Public nuisance (noise, odor)
3.Business regulations
a.Registration
b.Time, Place, Manner (hours of operation, distances from schools etc.)
c.Number of licenses in city and county
d.Fees (up to ½ State fees or $500 whichever is less)
e.Suspension of registration process
f.Enforcement/Appeals
Pa
g
e
6
0
o
f
6
3
Next Steps Cont.
4.Model ordinances from OCM
a.We will follow these as they develop
5.Police
a.Research available trainings
b.Reach out to state associations etc. about potential funding for training
6.Internal Policy
a.Consider amending employee handbook
b.Clarify expectations for employees
c.Prohibit possession on the clock/on City property, in City vehicles
7.Use Regulations
a.Penalty for use in publicPa
g
e
6
1
o
f
6
3
Ordinances
1.Zoning Ordinance regarding cannabis businesses
•Will require notice, public hearing
•Likely need to permit businesses in at least one zoning district
•Setbacks
2.Business regulations
•Likely best to set up new section
•Set desired maximum number of licenses
•Hours of operation
•Distance from certain uses
•Local registration
•Compliance checks
•Registration suspension and appeal
3.Fees
4.Use
•Penalty for use in public
5.Moratorium if desiredPa
g
e
6
2
o
f
6
3
Questions?
Pa
g
e
6
3
o
f
6
3