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HomeMy WebLinkAbout08.12.25 Special Work Session Minutes City of Farmington City Council Special Work Session Minutes Tuesday, August 12, 2025 The City Council met in a Special Work Session on Tuesday, August 12, 2025, at Farmington City Hall, 430 Third Street, Farmington, Minnesota. 1. CALL TO ORDER Mayor Hoyt called the meeting to order at 10:00 am. Members Present: Mayor Joshua Hoyt Councilmembers Holly Bernatz, Jake Cordes, and Steve Wilson Members Absent: Councilmember Nick Lien Staff Present: David Chanski, Interim City Administrator/HR Director Kim Sommerland, Finance Director Matt Price, Fire Chief Peter Gilbertson, IT Director Josh Solinger, Liquor Operations Manager Kellee Omlid, Parks & Recreation Director Nate Siem, Police Chief John Powell, Public Works Director 2. APPROVE AGENDA Motion was made by Councilmember Bernatz and seconded by Councilmember Cordes to approve the agenda, as presented. Motion carried: 4 ayes / 0 nays 3. DISCUSSION ITEMS 3.1 Draft 2026 Preliminary Budget Director Sommerland highlighted notable changes in the proposed budget and provided an overview of the estimated tax levy and the resulting tax rate. This review will concentrate on levy-supported items to allow for timely Council feedback before the preliminary levy is finalized. Strategic planning was done in February and April and, since May, Staff have been working collaboratively on the budget to get us to where we are today. Special Work Session Minutes of August 12,2025 Page 1 of 8 At the Strategic Planning sessions in February and April, the City Council indicated their comfort level for a tax levy increase was between 7 - 9% with a general consensus of a 50% tax rate. City Council also reaffirmed the City's priorities: • Quality Business Growth & Retention • Community Engagement • Infrastructure Support • Employee Engagement/Culture/Wellness Project priorities (from highest to lowest priority) included: l . Police Department Expansion 2. Combination Full-Time/Paid-on-Call Fire Department 3. Street Reconstruction and Maintenance - and - Water Sewer Expansion 4. Building Maintenance and Upgrades 5. Trail Construction and Maintenance 6. Maintenance Facility Expansion 7. Ice Arena The interim budget included the following, which resulted in an estimated tax levy increase of 19% and a tax rate of 56%: • Base budgets, new requests, and CIP updates • Addition of six full-time Firefighters estimated at $1 million • Adjustments in alignment with the City's financial management plan o Internal service fund increases o Special levies for the following funds replaced transfers out of the General Fund: ■ Fire Fund ■ Recreation Fund ■ Building Maintenance Fund ■ Trail Maintenance Fund ■ Street Maintenance Fund ■ Capital Equipment Fund Director Sommerland said that all Directors sat down last week to make some adjustments to lower the tax levy and tax rate and put the following items on hold: • Staff Additions (not including six full-time Firefighters): • Assistant City Engineer • Engineering Technician • Senior Accountant/Assistant Finance Director Special Work Session Minutes of August 12, 2025 Page 2 of 8 • New Initiatives/Enhanced Programming: • Wayfinding • Speed Limit Study • Rambling River Center Furnishings (roller window shades, training tables, cappuccino machine, electric fireplace) • Rambling River Center Fitness Equipment (functional trailer, adjustable weight bench, elliptical, and treadmill) • Finnley Sport Ice Scheduling Program • CIP items: • Bucket Truck • Hydraulic Breaker (one of two requests) • John Deere Tractor • Skid Grader • City Hall Maintenance - replacement of variable frequency drives and water heater Interim Administrator Chanski said we wanted to list the things that Staff removed when we met last Thursday. These items are needs but, as a Team, we knew that some changes had to be made because we weren't comfortable at 19%. And part of the conversation, once we get to where we are actually at, the City Council can choose to move things back in, but we wanted to get a rate that Staff was comfortable with presenting to Council. With the above adjustments, the Draft Preliminary 2026 Tax Levy is: Adopted Preliminary 20262025 Increase Budget Budget (Decrease) General Operating Levy $15.321.211 $14,472,578 EDA Levy 250,000 250,000 Other Special Levies - 1,855,650 Debt Levy 1.677,692 1,985,369 Total Tax Levy $17-248,903 $18,563,597 7.62°o Fiscal Disparity Distribution 1 2,415,550) [ 2.567.707) Net Levy to Taxpayers $14,833,353 $15,995,890 7.84 °o Special Work Session Minutes of August 12,2025 Page 3 of 8 The 2026 Estimated Tax Rate: 2025 Actual 2026 Net Levy $14,833,353 $15,995,890 Net Tax Capacity 30,962,345 31,971,610 Tax Rate 47.908% 50.032% Director Sommerland said that the County tax capacity rates are not yet available so, when we calculate that number, we are including growth estimates from Community Development. It is only an estimate at this point. 2026 Estimated Property Tax on Average Home: City Portion -Tax 2025 $1,626 • Based on Taxable Market Value of $354,000 City Portion -Tax 2026 $1,717 • Based on Estimated Taxable Market Value of $357,500 Other requests not included in the CIP and total about $34,000 include: • Arena relief valve replacement • City Hall elevator panel upgrade • Scissor lift trailer • Auger attachment • Warming house benches Unresolved components that may impact the budget as to where we are today include, but is not limited to: • Union contracts currently being worked through with the Police Department • Benefit rates are unknown at this time for 2026 • Purchasing vs. leasing vehicles has been discussed internally; purchasing may be more affordable; four squads and one engineering vehicle are planned to be replaced; analysis shows no savings on leasing, but some leases may have a one-year extension option. o For the Fire Department, every time a leased vehicle is turned back in, they have to rebuild it back out. Body styles change, so all new items have to be purchased to Special Work Session Minutes of August 12, 2025 Page 4 of 8 outfit them, which is an additional cost and not a cost savings to the Fire Department. With trade-in, a portion is also lost due to price increases and not getting back as much in resale. A purchased truck could be kept for 20 years, compared to leasing and replacing it every five years. o For the Police Department, some items do not fit when outfitting a leased vehicle and need to be purchased new, also. o Outfitting vehicles internally can take up to two years, based on the number of vehicles purchased, and paying an outside vendor to do the work is an additional cost and can still be a six-month or more wait. Delays in getting some of the outfitting parts adds additional time to vehicles that are being paid for on lease but not in service. o Council directed Staff to also look at the option of lease to own. o Fleet management can be done in-house. • Architecture and design for Police Department expansion o There is a range from a cost perspective as to where this could land. Conservatively, this cost could be $1-2 million for design, and there are several ways to fund that. • Impact of financial management plan - this is the first year for incorporating it into the budget process: making sure we aren't missing anything and if it would impact our results Director Sommerland said we are looking at 8% but, because we have some of these variables, Staff are asking Council for a little more room on that percentage. As we go along, we may have a better idea on these variables. We may need to increase in order to have that flexibility, so we are looking for Council's comfort level is in order to do that. Mayor Hoyt: we have talked for the last three or four years about what was kicked down the road, what we weren't keeping up with, the demands of the community, the comfort level and what's palatable when it comes to finances. You cannot spend percentages and, as uncomfortable as it is for us to look at a number like 19%, we have asked our Team for what reality is, we have asked for the worst truth. This is not the last conversation, and each year will get more expensive, and more things will need to be added. Nobody wants a 19% increase, but this is the position we're in and what we Special Work Session Minutes of August 12, 2025 Page 5 of 8 need to do. We have to take a stand, and we cannot go backwards. I'm a yes - it's what you said we .needed, we trust you, I'm comfortable there, and we will spend out time telling our story. Our communication has to be better than it's ever been. We have to be so far out in front of this. Councilmember Wilson: I'm in complete agreement. Because the reality is this is why some Cities are afraid to go to a full-time Fire Department. We've actually got a really good story to tell with our Fire Department and, if this is the worst year of it, then that becomes our base. The idea of kicking stuff down the road after we've worked hard to get to this point, is something I'm not okay with. At the some time, I would also appreciate Staff going back to look for ways to find efficiencies. Councilmember Cordes: It comes down to doing what's right versus what's easy right now. It's not easy but let's do the right thing. I agree with Steve that there are items on the list where we may find efficiencies or find grants to fund them. We were elected to do these jobs and do what's right for the community and sometimes it's not the easy thing to do. Councilmember Bernatz: One of the first conversations we had that I distinctly remember is that you can't arbitrarily choose a percentage and then tell your team that they have to somehow make it work in that percentage. That stuck with me through this entire timeframe. Also, I understand that 19% looks scary. But when you break it down, we're talking about one cup of coffee a month. If it's 19%, it's two and a half cups at your local favorite spot. For most people, that's a reasonable shift and adjustment, based on what you're getting in return. Individuals, though, may not understand what it means to have a full-time Fire Department Staff or why it's so important to expand the Police Department because they're looking from the outside only. The other side is-if we come in at 19%, and then there's the County, and the School District with a levy. I know the District is not our responsibility, but it is our community. My opinion is that it cannot fail - not with people wanting to stay in Farmington, what it means to raise your family here, and have a good school district. I'm not saying I disagree -just that all these things come in together and more conversation has to be had, perhaps between us and the district, on what does this look like, so the community understands why both things are equally important. From a whole community aspect, I think there ought to be some amount of collaboration. We all, together in this room, are in a position where we don't want an Special Work Session Minutes of August 12,2025 Page 6 of 8 unacceptable level of core services, so we're doing what we need to do. To the points that were made, keep an eye on where we cannot overspend. And while it is not our responsibility, we have to do what we can do in order to give the School District the best shot at getting this levy passed. Chief Price: We should know between August 18th and September 30th whether the Fire Department will receive the SAFER grant we applied for and, when they start awarding them, they'll start putting them out on their site. They have until September 30th to have all of them published, so we will know by then whether or not we will receive an award. Mayor Hoyt: I believe we need to move the Grant Writer position from half to full-time. It has worked out very beneficially for us, and I think we should see what our agreement with Southeast Cooperative could be and whether or not we can make the transition to full-time. Interim Administrator Chanski: There were three Staff positions listed. One of the things I want to work on in the next year is - what do we see as needs in the next 5 - 10 years. As we move forward, not only will we then know what we need, but we can also go back to the financial management plan and better project. And in future years, we can see this is the position that was identified, and here is what we want this year. It's, essentially, building Staff positions into the CIP. Councilmember Wilson discussed the current phone system and whether calls could be answered by a live person versus the phone tree. Director Gilbertson said we can look at shortening the messaging that is currently in the system. Interim Administrator Chanski added that the phone tree system allows Karina to assist customers who come into City Hall and to also do her work, which is for five other departments. Councilmember Wilson would really like have a printed document that shows - here is what your City has done for the past five years and, when we pass the budget, here is where your money is going. This will allow Council to easily answer questions for our residents. Interim Administrator Chanski added that, with a future Assistant Finance Director, we would like to move our budget into more of a narrative form, so it's not just spreadsheets, but - here is what we're going to do, here is our vision and our values, and then for each department it is not just a number. Special work Session Minutes of August 12, 2025 Page 7 of 8 The City Council directed Interim Administrator Chanski to reach out to Superintendent Berg. Mayor Hoyt said we need to get our solid waste contract on a work session because our contract will end at yearend 2026. Director Powell is framing a list of questions that will guide us on which direction Council wants to go. A key thing is - do we need to continue going to Red Wing or can we go elsewhere. He will be meeting with Red Wing. It's on the list for a work session this year. City Council agreed to move forward with 19%. 4. ADJOURNMENT Motion was made by Councilmember Cordes and seconded by Councilmember Wilson to adjourn the meeting at 1 1 :18 am. Motion carried: 4 ayes / 0 nays espectfully submitted, e n'A Sh y R sler City Clerk Special Work Session Minutes of August 12, 2025 Page 8 of 8