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HomeMy WebLinkAbout2021 08-02 CCM Work Session Joint Financial MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL/FINANCIAL COMMISSION OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND STATE OF MINNESOTA JOINT WORK SESSION AUGUST 2, 2021 1. CALL TO ORDER The Brooklyn Center City Council/Financial Commission Joint Work Session was called to order by Mayor Elliott at 6:30 p.m. ROLL CALL/INTRODUCTIONS Mayor Mike Elliott and Councilmembers April Graves, Kris Lawrence-Anderson, and Dan Ryan. Councilmember Marquita Butler was excused. Also present were Financial Commission Chair Taneshia Kragness and Commissioners David Dwapu, Taofeek Ishola, Emmanuel Kpaleh, and Dean Van Der Werf. Not present were Financial Commissioner Abate Terefe Also present were City Manager Reggie Edwards, and Acting Finance Director Andy Splinter. 2. WORK SESSION OBJECTIVES Mayor Elliott reviewed the topics that will be covered at tonight's Work Session with the Financial Commission. 2a. OPERATING BUDGET/REVENUE POLICIES City Manager Reggie Edwards introduced the item and explained this meeting will not get into the depth of budgets by departments. Instead, it is a simple table setting and will provide direction to staff as they go back and work with the departments to develop a budget. That will come back to the City Council in September with the preliminary levy. The City Council will also discuss how they feel about property tax levy increases. Dr. Edwards stated staff will start with core policies in place to help provide a framework for how to do the budget and policies the Council established to maintain some sense of focus and form parameters around the budget. He invited Mr. Splinter to make the presentation. Acting Finance Director Andy Splinter reviewed the topics he will be presenting tonight. He stated the City Council will adopt a balanced budget when we are finished. Current revenues will pay for current expenses with a contingency of about 5% of the budget for expenditures, adequate funding will be provided for capital replacements, and maintenance through the Central Garage charges. The budget describes goals, services, and programs. There is a targeted unassigned general fund balance of 50%to 52% of next year's general fund budget. When the City goes over that amount, it is transferred to capital funds to reduce future bonding. Mr. Splinter presented revenues, noting they are kept as diverse as possible and staff looks for other revenue sources, with the tax levy being the last resort. Annual revenue estimates are completed through an objective, conservative, analytical process with staff looking at revenue sources from the years before, the current situation, and the current budget. He noted it is more difficult, with COVID, to forecast what 2022 will look like based on what 2020 looked like and so, for this year, staff has been conservative with revenue estimates on user fees. Mr. Splinter stated user fees are reviewed on an annual basis. Fees with user charges for enterprise funds should fully support the direct and indirect costs of the enterprise fund. The staff tries to assure that water-related expenditures are coded for the water fund to make sure the water fees are enough to pay for those uses and they are not being supplemented by the tax levy. User fees for city services will generally be established at a level that will recover the full cost of providing the services. So, if something new is done, the staff wants to assure if it only benefits certain users, the fee is at a level where it is not being paid for on the back of the property taxes. 2b. CITY VISION, VALUES,PRIORITIES & OUTCOMES Dr. Edwards shared the direction and vision that Brooklyn Center is a thriving, diverse community with a full range of housing, business, cultural and recreational offerings. It is a safe and inclusive place that people of all ages love to call home, and visitors enjoy due to its convenient location and commitment to a healthy environment. Dr. Edwards stated that is the City's aspiration. As it relates to what the City is in the business of doing daily, the mission is to ensure the City of Brooklyn Center is an attractive, clean, safe, and inclusive community that enhances the quality of life for all people and preserves the public trust. Dr. Edward stated this is important because it sets the table for going through the budget and not only looking at the numbers, but what we are trying to do, what we are in the business of doing, and how do we use the budget and dollars to help us achieve this. Dr. Edwards stated there are a couple of strategic priorities that the City Council has set and been in place for several years and this year is when the City would typically look at its strategic priorities again. This will carry over and the City will look to do that in the coming year. As of this point, what guides all staff and departments is the focus on six core areas. Strategic priorities are to enhance community image; resident economic stability; inclusive community engagement; targeted redevelopment; safe, secure, stable community; and,key transportation investments. For new Commissioners, there are details for review in each of these areas but again, whatever work is being done in the organization and presented to the City Council are framed within the context of these six core areas. Dr. Edwards noted that not everything we do falls into these six areas but they are the primary big focus areas. Dr. Edwards explained that resident economic stability is essential to vibrant neighborhoods and retail,restaurant, and business growth and the City will lead by supporting collaborative efforts of education, business, and government sectors to improve income opportunities for residents. This may be job creation or employment opportunities for residents throughout our community. 08/02/2021 Page 2 Dr. Edwards explained that targeted redevelopment involves redeveloping properties to the highest value and best use to accomplish our goals regarding housing, job creation, and growth of the City's tax base. This reverts to the notion of resident economic stability. Dr. Edwards stated inclusive community engagement is a two-way street and not simply about the City pushing out but about engaging the community and residents at various levels. To provide effective and appropriate services, the City must clearly understand and respond to community needs. The City will consistently seek input from a broad range of stakeholders from the general public, non-profit, and for-profit sectors. Dr. Edwards stated enhanced community image, our ability to attract and retain residents and businesses, is directly influenced by the perception of the City. This is something we always address, not only from the inside but also how the rest of the world views us. We pay attention to that and while it is not the end-all, be-all, it is one of our driving forces and we want to make sure we put out a positive message. Also, that the residents and businesses of the City feel good about the place in which they live and work and the place they call home. Dr. Edwards stated we want a safe, secure, and stable community, which can range from a variety of services from community development to housing to public safety to the Fire Department, policing, etc. It is fairly broad when you speak of safe, secure, and stable. This does not mean law enforcement. It pertains to the well-being and safety of all residents. For residents and visitors to fully appreciate and enjoy a great quality of life, all neighborhoods must be safe, secure, and stable. We are committed to assuring compliance with neighborhood conditions and building safety standards,providing proactive and responsive public safety protection, wise stewardship of City resources and policies that promote safety, security, and a lasting stable environment. Dr. Edwards stated key transportation investments, again, are provided collectively, and by maintaining an efficient and effective infrastructure we will meet the high level of community expectations. We will plan and do this over the long term to invest in critical infrastructure improvements that enhance safety, improve life quality, and support opportunities for redevelopment while sustaining the natural environment. Dr. Edwards stated these are the strategic priorities and staff will review, as we go along, the 13 priorities the City Council established in 2020-2021 that guided some of the initial work of the departments. Staff will hone in and prioritize the focus of the City Council and Commissioners, noting much of those efforts focused on 2020 and 2021 were interrupted by COVID and civil unrest so there is still much work to be done moving forward. Councilmember Graves stated in the past she had asked about having a budgetary breakdown by strategic goal area. She stated that may be difficult as there may be overlap between departments but it would be a good way to assess how much money is being assessed to each of the different priorities. This would be helpful in the budget process. She noted if not too tedious, maybe the staff could provide a range of the current budget being presented. Dr. Edwards stated staff will put something together and as departments present, they will try to 08/02/2021 Page 3 give some type of estimate of what would be expended in those areas. 2c. LOCAL GOVERNMENT AID Mr. Splinter displayed a chart showing the last 20 years of Local Government Aid (LGA), which is funding received from the State. The City currently uses about half of it in the general fund and the other half in the capital fund to reduce bonding. For 2022, there would be an increase to the general fund of about $44,000. He noted as you look back, there were several years where the State froze the amount down at$411,000 and there were fears, at that time,this program would be completed eliminated, which is always a possibility going forward so the City does not want to count on the money too heavily long term. Mr. Splinter displayed a chart showing LGA as a percentage of general fund operations, noting in 2001 that the same value was 15% of the City's general fund expenditures. During the low years from 2010 to 2013, it got down into the 2% range and now it is back up to 5% of the general fund being funded by LGA. Councilmember Graves asked even though the amount swung back up, why is a lower percentage being used now. Mr. Splinter stated in 2002, the $2.2. million would be worth close to $3.5 at this point, so that's a large part of it. Councilmember Graves stated she understood it was inflation. 2d. DEBT SERVICE LEVY Mr. Splinter displayed a chart showing debt service paid from property taxes. He stated the City has been issuing bonds to pay for a large part of construction projects. This was discussed during the CIP meeting about a month ago when the City was looking at potentially involving franchise fees to help reduce this burden on the tax levy. He noted it is going up in 2021, 2022, 2023 and the City is not currently considering issuing a bond in 2023 so there would be a dip in 2024. He stated there will be a large bond in 2024 for Highway 252 so it would go up significantly in 2025. City Manager Edwards asked what is anticipated for afterward. Mr. Splinter stated staff has this projected further but a lot of times the CIP for years further out tends to get larger as it gets closer. So, staff stops this at 2025 to temper expectations on this going down too much in the long term and having questions about it going up as it gets closer. 2e. MARKET VALUE & TRENDS Mr. Splinter presented a summary of taxable market value compared to the prior year, noting commercial properties in the City went down about 5.5%from 2020 to 2021, industrial properties were up 3.6%, residential saw a significant increase of over 17%, and apartments were at 11.5%. Overall, the City is looking at an 11.8% increase in taxable market value for 2022. Mr. Splinter explained that converts into tax capacity and commercial go down about the same percentage as they did in value. Industrial went up about the same percent and residential only goes up 8.6% as opposed to 17% because a lot is eaten up by the market value exclusion and as those properties become worth more, it is not all directly converted into tax capacity. Apartment 08/02/2021 Page 4 buildings went up 9% and the property listed as `other' is the American Legion property. Mr. Splinter referenced the adjustments shown at the bottom of the chart, which relates to Tax Increment Financing(TIF) District#3 coming back onto the rolls. The payable 2021 column ends up with-$200,000 for adjustments. He explained that fiscal disparities are a calculation of all the metro cities and give a credit of about $8.5 million. That is then reduced by the tax increment in the different TIF Districts and contribution back to fiscal disparities. He stated those netted out to zero for 2021 but for next year when TIF District#3 comes back on the general levy,the City gets to add that tax capacity back in, which will bring in about $4.5 million in tax capacity, and put the City at a 19% increase in tax capacity on the 11% increase in value. Mr. Splinter stated TIF District#3 was collecting about$4.5 million to $5 million in tax increment revenues each year and 2021 is the last year the City will receive that. When that goes away, it makes the 'pie' larger in the general fund that we have to tax. Dr. Edwards asked if there are questions about TIF Districts or increment. Councilmember Lawrence-Anderson asked where is TIF District#3,or if it scattered. Mr. Splinter stated it was scattered and comprised of a lot of the commercial properties and larger properties throughout the City. He explained the value is frozen when a TIF District starts,the properties are approved in the District, and for any increase in the value of those properties, the City collects all the tax dollars rather than spreading it between the School District and County for the increase because it is a project the City wants to do that increases the property value. Then, when the District ends, it all comes back onto the regular tax rolls and the City will only get our share of that increase. Commissioner Ryan stated the City has been looking forward to the decertification of TIF District #3 for some time. It is the 100-pound gorilla,' the FBI building and Top Golf are in that District, and all that value was no longer used by the City to pay down bonds and borrowing through the TIF District, which greatly increased our tax capacity and especially now that the residents have demanded of the City Council do more. He stated that is encouraging and he appreciates staff providing figures on that. Councilmember Lawrence-Anderson asked what does the City expects to receive in property tax revenue from Top Golf and the FBI building, both large entities. Mr. Splinter stated he will look up that information and report back. Councilmember Lawrence Anderson stated if she understands correctly, the City will receive property tax revenue from them. Mr. Splinter stated that is correct,the City receives it through the TIF District. Councilmember Ryan stated what has been referred to in our project briefings is `excess increment' so once the TIF District generates enough tax capacity above what is required to service the TIF District debt, some of those funds are netted to the City and can be used in the general fund. Mr. Splinter stated that is correct and some of that was flowing into the general fund. 08/02/2021 Page 5 Councilmember Lawrence-Anderson noted now the City will get the full amount. Councilmember Ryan stated it will help with Brooklyn Center Independent School District's tax base too because they cannot glean any of that value until the TIF District ends, which is a disadvantage and should be addressed by the Legislature. Dr. Edwards explained that if you have a piece of property that is undeveloped, that 'but for' TIF it would not be developable, so it provides incentives and benefit to develop. It is not collected over that period and when it is fully developed, then it pays in. Commissioner Dwapu noted the residential taxes are more than industrial. He asked if that is not too much on residential people. Mr. Splinter stated the chart on display is the capacity based on the value of the property. He referenced the previous slide that shows closer to the values, noting there are$360 million of commercial properties in the City and$1.8 billion of residential property. Dr. Edwards noted an upcoming chart will provide a breakdown of taxes by classification. He explained residential property does pay a different rate and amount than industrial, which goes to the makeup of the tax base in Brooklyn Center. He stated it is important to diversify the tax base because some deliver more in revenue than others. Mr. Splinter displayed a pie chart depicting tax capacity estimates for 2022 and 2021, noting the residential portion shifted from 50.7%of the total liability to 52.6%. The commercial has dropped by 2.5%, industrial stayed flat, and apartments went up by .6%. The commercial portion of the City has shrunk slightly and that has been taken up by residential and apartment values. Financial Commissioner Chair Kragness asked if that was a result of dropping property values for commercial or the loss of actual commercial properties. Mr. Splinter stated it would be a combination of both. 2f. PRELIMINARY PROPERTY TAX IMPLICATIONS Mr. Splinter displayed a bar chart of median home values back to 2008, which was the previous peak of these values. He noted during the recession the low-to median-home value was $114,200. For 2022, it has gone up from $207,000 to $223,0000. Mr. Splinter reviewed a table of preliminary estimates for property values taking the median value home from last year, rolling it forward to the value it would be at this year, and then looking if the City levied the same taxes, what would happen to that property's taxes. He noted that $188,390 was the median market value last year after the property tax exclusion. That went up to $205,830, or about 9.3%. Last year, that property would have paid $1,276. This year if the levy is not changed, that property would pay $1,193, a reduction of$84, or 6.6%. If the City went with a 1% increase in the total levy, it would increase taxes on that property to $1,203, up from $1,193, a difference of$10. This is largely due to the decertification of TIF District #3 and the increase in value of the overall City and tax capacity. Mr. Splinter stated for an average apartment building of $2.2 million, given the percentage 08/02/2021 Page 6 changes, it would probably go up to $2.4 million, an increase of$250,000. If the same amount is levied,that apartment property would have a reduction in taxes of$538. Each 1%levy would add $154 to their tax bill. Mr. Splinter stated with commercial, their property probably decreased in value slightly and would have a$3,942 reduction in property taxes. Each 1% increase would cost them $158. For industrial property, they would have a reduction of$2,400 and each 1% would cost them $194. Mr. Splinter presented a chart showing the incremental impact for every 1%of levy increase. Each 1% increase would provide $184,000 into the general fund and cost a median-valued home $10, apartment $154, commercial $158, and industrial $194. He noted an 8% levy increase would add $80 to the residential taxpayer and just about bring the tax level to what they paid last year. He noted this shows the impact of TIF District#3 coming back on. Financial Commissioner Chair Kragness stated it will be nice to have more breathing room. Dr. Edwards noted if the levy is increased by 8%, properties would not see an increase in taxes except for apartments properties. Residential, commercial, and industrial would not see an increase in taxes paid because of the impact of TIF District#3. Financial Commissioner Chair Kragness noted because that tax capacity will be coming back online,the City can increase the levy at a larger rate than done in the past without having an impact on residential property taxes. Mr. Splinter stated that is correct. Councilmember Ryan pointed out if we can satisfy the City Council's priorities at a lesser levy increase,there could be a net reduction in homestead property taxes,which would be a good thing because we want to come to a resolution on our priorities and what we need to accomplish. He stated this will come out when we seek comparisons of peer group cities. Councilmember Ryan stated if he remembers correctly, we are about in the middle of taxes paid relative to evaluations and that is a good comparison because of the age of the City's housing stock. Councilmember Ryan noted it is important to realize it is still a heavy burden on some of our homeowners, especially with those just able to make ends meet and are hard-pressed to come up with an extensive amount of cash to do home improvements. He stated he realized that this year when he had to reside a couple of walls and learned the cost of the original cedar siding has gone through the stratosphere. Two boxes to cover 100 square feet were over$325. He stated we need to be mindful of what we can do to give our homestead property taxpayers a bit of a break, especially in this fiscal economy. Commissioner Dwapu noted for the apartment owners, raise the prices every year for the people who are renting. He asked if this was based on the tax(inaudible). Mr. Splinter stated the average apartment building is paying $18,000 a year in City taxes. He does not know how it would work out on a per unit basis or the size of the average apartment building but does not imagine that is a huge portion of their expenses that would dictate them raising rents. But if it changed significantly, they would have to adjust their rates. Mr. Splinter stated if looking at several hundred dollar changes for a property of that size, he does not think it would be something that would trickle down that far. 08/02/2021 Page 7 Councilmember Graves noted the property owner may say that and use it as an excuse. Councilmember Ryan noted as Councilmember Graves had mentioned, it is relative to the total evaluation of the property but especially relative to the cash flow of the property, what they are generating. So, of course,the biggest issue is supply and demand,and the cost of new construction continues to go up to the stratosphere. As long as there is a limited supply in the market, like any other necessity, the prices will go up. In the past, like in the 1970s and 1980s, large multi-family apartment buildings were overbuilt, which had a good effect on renters because there was more product and rents were dropping. He stated property taxes still contribute as an expense so if in a city with little or low industrial and most apartments and single-family, a big boost in the levy would have an impact on rents. Councilmember Graves asked if they escrow property taxes and insurance for commercial properties. Mr. Splinter stated he is not sure. Dr. Edwards noted there are cities with single-family homes almost exclusively, outstate especially. Councilmember Ryan agreed, noting it would be tough on them. He stated the Legislature has done some property tax circuit breaker assistance because that is tough and average wages in the outstate are lower than in the metro area. Dr. Edwards stated when thinking about diversification of the tax base, and in particular, as it relates to when there is an increase in market value and perceived lowering of taxation in the 1990s, there were cities that increased diversification of their tax base and businesses in their city, resulting in a significant windfall due to that increased market value. The message to the public was that the city was holding the taxes down. Their taxes went up,the levy went up significantly, but people didn't experience it so it was misrepresentation and that was the beginning of Truth in Taxation. Dr. Edwards stated even if the taxation does go down, what everyone is paying, it is still important, to tell the truth about levies going up. 3. NEXT STEPS Mr. Splinter outlined the next steps as follows: August 16, 2021, General fund budget requests (Public Works, Community Development, Finance, Administration) September 1, 2021, General fund budget requests (Fire, Police, Recreation) September 13, 2021, City Manager's recommended preliminary levy Mr. Splinter clarified that once the preliminary levy is approved, it can go down but cannot be increased. 4. CITY COUNCIL/FINANCIAL COMMISSION—INTERACTIVE ACTIVITY 08/02/2021 Page 8 Dr. Edwards asked if there were questions around an increase in the tax levy or any of the budgetary information presented by Mr. Splinter. Mayor Elliott asked about the classification of non-homestead single-family homes that are rental properties. He also asked if they get counted in the apartment classification. Mr. Splinter stated they have to be multi-family for an apartment classification. Mayor Elliott asked if they are taxed at the same rate. Mr. Splinter stated they are not homesteaded and that is where the exclusion comes into play. Councilmember Ryan stated he closed on his house in November of 1991 and they had not owned a home before. They had not planned to buy a house until January because they had remodeling done and could live somewhere else while that work was being done. Because of the closing and rules that applied, they could not get a homestead on the property for one year and their taxes on their house were substantially higher. He stated that gets to classification and one thing that is daunting in explaining to the public about how the City gets their money and uses it is that our property tax system in Minnesota is very complicated. As shown in the pie chart, the total valuation of different classifications is where tax capacity comes from. That is the advantage of having a lot of commercial and industrial and apartments because it takes some of the load away from property taxes on single-family homesteads. Councilmember Ryan stated he did a comparison on a property in Maple Grove and while a different housing style and type, a free-standing townhome had an estimated market value almost exactly twice what his house was and it was in the same school district. He stated Hennepin County and school district taxes are almost twice as much as his but the City portion of the property taxes was less than $300 more because of Maple Grove's major commercial Arbor Lakes plus more homes have a higher evaluation so Maple Grove has a much richer tax base. He stated it tells a great deal about building a tax base and that it is in the universal interest of residents because then they don't have to pay as much for the services they get when compared to what they own with their property. Councilmember Graves stated there was an earlier conversation about the coming on line of TIF District #3 and our responsibility to still be fiscally responsible and conscious of the tax burden not only because people are struggling but because in Brooklyn Center, relative to our kind of city versus Maple Grove, we pay more than people would expect in taxes. Councilmember Ryan stated there has also been a commercial shift and perhaps it had some measurable impact on the industrial tax base. He worked for TCR Corporation, an industrial company here in Brooklyn Center, for 19 years. They had about 150-180 employees at the peak of their operation and closed in the spring of this year. He noticed at the Board of Equalization this last April that one of the commercial properties appealing their evaluation was TCR because the building is mostly vacant with only 10% of the building being occupied. He noted that would take a good slice out of the tax base. At one time, before Luther built out all their dealerships, TCR was the 8th or 9th largest property taxpayer in the City. He stated this will happen and is not the City's fault because there are all kinds of shifts in the international market for precision machine tools products and large competition. It happens that companies fail and the city will lose businesses. 08/02/2021 Page 9 Dr. Edwards stated this also speaks to the value of diversifying the tax base, not only as it relates to spreading taxes out so they are not particularly low on any one type of taxpayer but also speaks to the sustainability of the economy and it allows the economy to have elasticity because it is not a one-economic focus industry. He stated when you have a housing bubble and a large portion of the city's tax base is residential, then they are heavily impacted. Or, during COVID, States that were tourist-based and visits are restricted,then the economy tanks. He noted every economy and, in every place, it is always cyclical and, as Councilmember Ryan said, there will always be something so Brooklyn Center wants to build a diversified tax base and economy so it can weather storms, ones that can be predicted and ones that cannot be predicted. Councilmember Graves commented on the agricultural property. Ms. Splinter stated the less than 1%of agricultural property that was in the City is no longer there,which was Malmborg's Nursery. Presentation and Discussion of Focus Areas Dr. Edwards stated with the steps between 2020 and 2021, there are 13 focus areas, which he will summarize and then ask the City Council and Commissioners to identify three that may be a focus. He stated clearly, as we go through the year, staff will attempt to address the priorities, but as staff formulates the budget if they need to sharpen the pencil,they will. This allows staff to be focused on where they need to make particular impacts. Dr. Edwards first addressed accountability of policing, noting we live in a time of civil unrest and public concern is given the history and general role of police in local communities. There are specific strategies and actions taken in this area so when departments present, they will speak to the things they did do. At this time, he is speaking to more of the 30,000-foot level than thinking about direction. Dr. Edwards stated with beautification and cleanliness, the staff is putting together an effective new program to approach and address litter, cleanliness, and promote unity throughout the City including public art initiatives. With economic stability for businesses, expansion of existing programs to support the growth and development of local businesses, particularly small and immigrant-owned and micro businesses. This is about helping intrapreneurs and getting them started and involves issues that come before the Council relating to the use and leasing of space, providing grants, and microloans. Dr. Edwards stated for economic stability for residents, the City will promote and support collaborative efforts to provide economic stability, eliminate racial disparities, help individuals and residents who want to potentially start a business, buy resources where they can do that, grow assets of residents, and also hire when there is opportunity to hire residents and create opportunities. Dr. Edwards stated with emergency response for the current pandemic, we are in a different phase of the pandemic but never the less, this was a focus at the beginning of the pandemic and responding to the CARES funding and beyond COVID innovation projects. The City does have ARP funding and is still dealing with COVID, again wearing masks as the Delta variant and COVID is still alive. Staff will continue to focus on that. 08/02/2021 Page 10 Dr. Edwards stated there continues to be an effort with engagement. Three years ago, the City created a Communication and Engagement Division within the Administration with the intent of engaging and communicating with residents. This involves inclusive engagement and the City Council just heard a presentation around types of engagement that is informative, collaborating, and co-creating. The City wants to ensure that our diverse and multi-faceted communities are consistently engaged as appropriate for the development of all City programs and policies. Dr. Edwards stated with equitable City spending enterprise, the City spends tens of millions of public dollars to meet various City goals so this is about the equitable opportunity from contractors to not only bid but also win some of those contracts and provide services. This relates to access to City services as well as contracting that is equitable and accessible to all. Dr. Edwards stated equitable operations are how we conduct our business and how all residents, customers, and employees are treated with dignity and respect, provided knowledge and skills necessary for the needs of residents and customers, and also about accessing services. When we think about recreation services and the cost of them and of being able to access services. Those are some of the things staff thinks about as it relates to equitable operations in how the City equitably provides services. Councilmember Lawrence-Anderson noted some of the information is in multiple languages and asked if the website offers links to receive information in multiple languages. She also asked about the City's newsletter is in multiple languages. Dr. Edwards stated the new website has the ability for some translation in the top multiple languages that are spoken in Brooklyn Center. He stated we do have that capacity and he can provide the City Council with specifics on how that works. Dr. Edwards stated with innovation and enterprise, staff responds to challenges in a way that is most effective and learns to use creative and innovative approaches. He noted when COVID and civil unrest were experienced, staff had to do things they had never done before to address those issues. Staff needed to be enabled to think in a way that may be different than previously because COVID dictated staff do so. He stated having that capacity and ability to innovate, create, and respond to challenges in the most effective way. Dr. Edwards stated public health was another and the City established a new division in the Recreation Department that can start us on the path of public health and looking at the organization. Without health and wellness, individuals and communities are unable to grow and thrive so it is known that health impacts all areas whether economic, road construction, public safety, and how we think about the health of individuals and quality of life for residents. Public health involves emotional, mental, and physical health, not simply physical health. He explained that beautification and public art may be one mechanism to do that. Dr. Edwards stated we were going to focus on the leadership role as a City Council. The City Council worked with Common Sense to do some work around being a team and operating as a team. A retreat has been scheduled on August 14 so that may be something the City Council will consider doing along with those efforts and initiatives as a priority. 08/02/2021 Page 11 Mayor Elliott stated in terms of appointing, if the Council Members have ideas about its function, please make those known so we can reimagine what those look like, noting there may be a need we have not identified at this point. Councilmember Ryan stated he thinks there will be a more robust discussion on August 14th on that matter because it may necessitate being a little more lengthy than we have tonight. He stated we will be meeting for the retreat from 8:30 a.m. to noon at the Heritage Center. Dr. Edwards stated that is correct. Councilmember Ryan stated as a passing comment, having a very long history with the City and observing the City government as a citizen outsider and an insider on the City Council, the City shifted significantly away from the post-World War II suburban bedroom community with great shopping and good tax base into other functions. He stated he voted for a budget he thought he would never see but necessity is the mother of invention. He thought we tried to do the greatest good for the greatest number within our means. Of course, we had a lot of outside support too through CARES funding. He stated the point is that he thinks we have to send a message to the public that we are always, first and foremost, concerned about the cost of government. At the local level, being closest to people, a number of these health and wellness functions are wonderful, and we have a minimum staff. In the future, he thinks we should transition to where those closest to the people, local government, assist the County to identify needs. Then it is up to the County to provide those. That is the division of labor,if you will,under our governmental system. He stated we can continue to do a lot of these things that are just great if we get enough support. Or now, of course, TIF District#3 may put a different cast on it. But, at all times,the City must communicate to the public they are good stewards of their limited resources. He noted even though the City has seen this windfall, the resources are still limited. Mayor Elliott stated it is incredibly important that in many ways we are entering uncharted territory and the need we are seeing in the community for municipalities to provide support in ways they did not provide support before or even imagine. He stated it is interesting that after the 1918 flu everything changed in so many ways and we are seeing that as well in this pandemic and so much is evolving and changing. He shares Councilmember Ryan's sentiments and idea we should be fiscally prudent and minimize the impact on taxpayers always, even as we are looking at more ways to step in and help support the community. Dr. Edwards stated transparency is essential in building trust and trust in government is important in a democracy and shared responsibility. We want to promote and provide opportunities to share public information. He noted the new City website is under work and part of the thought of sharing and transparency. We also, at some point, will have performance measures as it relates to broad strategic priorities. The staff has been working, for the last three years, on strategic priorities and putting that into an electronic system that would allow reporting and articulates what staff is doing in those particular areas. That will be something staff can put out to the public on priorities, the movement being made, engagement, and community image, pubic safety, etc. He stated it is the intent to develop matrix indicators that can be put on the website including newsletters and other communications. He explained there will be annual impacts and long-term systemic impacts over time. 08/02/2021 Page 12 Councilmember Lawrence-Anderson asked Councilmember Graves if that is what she was asking about before as far as transparency and enterprise and wanting to know how much of the budget was allocated to various goals, which the software program will allow us to do. Councilmember Graves indicated in the affirmative. Dr. Edwards explained it is not a direct budget it is more about indicators of effort and work and output. But, it does allow some ability to align where we are spending dollars. He stated we can do major efforts but not 'pens and pencils' at this point. Councilmember Graves stated she thought he was speaking more to specific outcomes with Visio so basically with every one of the goals, how much did we spend, and what were the specific outcomes of that spending. That is what she is looking for to see if we gave enough money to make a significant impact or did we give too much money for too little impact. That is why she asked that question. Dr. Edwards stated there are conversations about how to include some of those outcome and performance measures in our budget and how our budget process may assist us in being able to assess outcomes and also pay attention to a fiscal analysis. That will be forthcoming. Dr. Edwards stated the last focus area is preservation and protection of the natural environment, relating to stewardship responsibilities as a community and the obligation to preserve the environment for productive use of future generations. He noted when the City did its branding several years ago, one of the assets focused on by the public and community that they are most proud of is our green and natural spaces. It is an asset of the City, and particularly on a per capita basis,we have quite a bit of foliage throughout the City. He stated our green spaces and trails and parks are significant for a City of our size. City Council and Financial Commission Discussion of Focus Areas Dr. Edwards stated that this is a high-level review of the 13 focus areas. He asked the Council Members and Commissioners if there is anything they have heard with the vision statement, mission,6 strategic priorities,and 13 focus areas that they would view as being no longer beneficial or valuable to the City for the coming year. Dr. Edwards asked given what is happening now and as the City Council and Commission sees in 2022,is there something they should let go of because it is not applicable, valued, or needed. Councilmember Graves stated she thinks this question is setting staff up for the same answer every time because saying something is not beneficial or valuable is a pretty strong statement in and of itself, so maybe it should be more gentle wording. Dr. Edwards suggested 'no longer applicable' because there could be things in the time that change that. Councilmember Graves stated her initial reaction is that all of this stuff is important, beneficial, and important in some way. She stated several of the budget goal focus areas definitely could fall under some strategic priorities already so she is thinking of them as not necessarily goals but how they fall under the goals we already have as some are almost the same, such as community engagement, but is the extra focus for the budget. She was thinking about how to move some of 08/02/2021 Page 13 those budget focus areas to be more specific under our strategic priority so this is where more funding needs to go, which was the decision last year under that specific strategic priority. She thinks some go together beyond going under a specific strategic priority and some within the goals/focus areas from the budget of last year that kind of go together as well. She stated we talked about transparency and accountability but those two go hand-in-hand because you can't hold people accountable if you don't have some transparency to know what they are doing in the first place. For her, those focus areas go together. Councilmember Graves stated she feels similar, due to her experience in public health, in talking about the social determinants of health in public health that have to do with things like economics and environment. She thinks economic stability of residents and economic stability of our businesses directly impacts our residents through tax capacity and/or providing a job to make money, kind of is connected to public/community health and so is preservation and protection of our natural environment which is connected to beautification and cleanliness. She stated if she picks one, it is picking three at one time. Dr. Edwards stated he will be giving Council Members and Commissioners dots that they can then place on priorities they find to be important. Councilmember Ryan stated all are worthy but it gets back to the most appropriate focus where we can get the greatest bang for the buck and being appropriate to operate at the local level. He stated as much as he has a broad spectrum of environmental goals if we go off on a potentially expensive program to repair our fleet but if Crystal, Robbinsdale, Brooklyn Park, Minneapolis, don't do the same thing, it is not going to have a significant impact because we are talking about issues on a world scale. However, our groundwater, preservation of our green spaces, and those things that are local,the local environment,as engaged citizens we address those issues at the local level and only support leaders that are willing to go to the international level and pursue climate change issues because if China and the rest of the federation and Brazil do not get on board,climate pollution will continue and not be abated. So, those are difficult things and he only uses them to illustrate. Councilmember Ryan stated the other thing we can do,which he finds interesting and challenging, is how to balance equitable contracting. He noted that sometimes, under well-defined circumstances, it may favor businesses of color but at the same time we need to ensure the highest and best value and most competitive pricing and terms for goods and services purchased by the City. He stated if we just buy green cleaning products from a local distributor, that is a good example of supporting a local small business but if a major purchase for the City and an impact on the taxpayer, we have to apply the time-honored lowest qualified bidder. He stated it is a matter of focus. Mayor Elliott noted that sometimes, even if it costs a little bit more,putting the dollars into a local business you might find the numbers are that those dollars circulate seven times in the local economy. So upfront, it might cost more for a higher ticket item but economically the impact could be the dollars circulate locally more than paying for the same product with a company that is Kentucky or somewhere and those dollars leave. The overall economic impact might be different if the money is spent outside. He stated it will not always work out that way and what 08/02/2021 Page 14 Councilmember Ryan raises is important as well because that is an investment of an economic outlay. All of those factors must be considered. Councilmember Ryan stated it is very difficult to make that kind of measurement economically. He wanted to put that issue out there and this is something that has to be addressed by the administration given there is consensus that we have a concern. Mayor Elliott added one of these objectives should be enhanced community health and wellbeing. He stated especially now with the health pandemic, issues faced, and different health indicators, it is important to have a goal around the overall health and well-being of residents. In terms of how we articulate that and how that translates into a priority, can be discussed. Councilmember Graves stated she does not necessarily disagree but does not think we need to add a new strategic goal. She is not interested in having that conversation right now and just wants to try to move forward with the City Manager's agenda the best she can and have that conversation at a later date. Councilmember Ryan stated his only concern is that perhaps the City Council has too many goals and we may try to roll up several issues into fewer goals. His ongoing concern, while it is somewhat checked by the lingering Delta variant and pandemic that does not seem to want to go away because people are not getting vaccinated, but a lot of the functionality belongs with the County. Otherwise, we may use City resources in duplication of effort and it should be a constant effort by citizens and, at a minimum staff needed, to direct the County to needs and ask why more is not being done. That could also be part of a logging effort by the City with the assistance of groups like Metro Cities and the League with other cities like us in the metro going to the State and saying we have these unmet needs and there should be support from the State government and counties should administer those things. Mayor Elliott stated he shares the idea that we need to minimize the impact to our residents on the tax base, noting he has often called for zero increases in taxes. Councilmember Ryan noted that is not always practical if we are continuing to demand more resources and functions. Mayor Elliott stated his point is that it can be set as a goal and then go after getting resources from the County, State, and federal governments, even if in combinations, to help us achieve our priorities. Councilmember Ryan stated again, it gets to functionality and organization, and the County has the expertise and focuses on that. He asked why should the City duplicate what they are doing when they should be doing it. He noted through CARS and healthy living, that is something he wants to look at more carefully but it is probably practical, doable, and within our reach to provide resources for individuals and families and have good facilities so they can be active and programs/videos/information for healthy activity. That could be done at a reasonable cost but to pursue some other health and human services are things done by the County and he respects that division of labor. 08/02/2021 Page 15 Dr. Edwards stated#10,health and community,is more attended around wellbeing and the County traditionally delivers public health. He stated staff can look at the verbiage and being clear about what it means, which is around wellbeing and not replicating County services. Councilmember Graves stated we can get rid of emergency response, not because she thinks it does not need to be a focus still but,in her opinion,it does not sound like a huge budgetary expense, and delegating it to appropriate staff would be a way to remove it from the focus area. Councilmember Lawrence-Anderson stated due to the pandemic, the Fire Chief and others have stepped up their game and to Councilmember Graves' point, it is now an administrative function, been dealt with, and no longer something the Council needs to focus on. Those resources and staffing have already been allocated to handle emergency response. Dr. Edwards stated as we go forward, staff will talk about where we will allocate resources. Now, the staff knows a couple of key areas and there is still work to be done as COVID remains. Mayor Elliott stated he thinks the City Council needs to keep emergency response because the staff is focusing on it. He stated he read the emergency response plan and it needs work. Councilmember Graves stated all of these items could be kept but Dr. Edwards is asking what is the highest priority. Councilmember Lawrence-Anderson stated it is a City goal but the City Council does not need to focus on it as the staff has been directed to stay on it. Mayor Elliott suggested making that distinction. Councilmember Graves stated the other one she would remove is the leadership role, which does not need to be a budgetary focus. She thinks we have sufficient funding and are effective in our duties. Councilmember Lawrence-Anderson agreed and stated using common sense we'll utilize them as needed. Councilmember Graves stated if the need arises and we need to hire a consultant for team building, there is enough in the contingency fund to cover that. Or, if someone wants to take one additional trip, the City Council can consider it. City Council and Financial Commission Discussion of Priorities Dr. Edwards moved the discussion to one of prioritization and asked, given the context of the coming year,what is happening in the world, given the City's tax capacity and financial condition, what are the top three strategic priorities where the City should target its resources. He asked the City Council Members and Commissioners to place the four green dots provided on the strategic priorities they find to be the most important. 08/02/2021 Page 16 The City Council Members and Financial Commissioners spent several minutes talking about the priorities and placing their dots indicating which they found to be a priority. Dr.Edwards stated he appreciated the conversation,which builds shared understanding that allows staff to be more accurate in executing the City Council's direction. Councilmember Lawrence-Anderson noted that even transparency, other than its oversight, could be removed as the City Council has already tasked staff to take care of it. Mayor Elliott stated transparency could go under accountability. Councilmembers Graves and Lawrence-Anderson agreed. Councilmember Ryan stated transparency, accountability, and innovation could be combined, noting that for many years the staff has done that, in part because the City Council has demanded more services every year. Mayor Elliott stated he did not see how you got to accountability or engagement without transparency and innovation. Councilmember Graves agreed and stated you don't. Mayor Elliott noted essentially, we are innovating our way through all of this stuff and creating new things that didn't exist before. Councilmember Lawrence-Anderson referenced goal 2, beautification, cleanliness, community image, noting it relates to code enforcement and community standard. Councilmember Ryan stated that is why he had placed one of his green dots there. He stated it is his experience from years before, during a major upswing in crime when Brooklyn Center and Brooklyn Park partnered with a public safety study done by a world premiere research organization on policing and public safety. Professional Law Enforcement Federation concluded part of what contributed to improved public safety in Brooklyn Center envisioned policing practices and staffing would be to improve the appearance of the community because it demonstrated that in larger and smaller cities when neighborhoods went into a physical decline, there was the correlation between that and crime. So, cleanliness, community image, can be in support of improved public safety. Councilmember Ryan stated we have seen an uptick in gun violence, which is a national trend and just about every night there is a shooting incident in Brooklyn Park, and every three days we get a note through the City e-mail and that has to be addressed through the police. He stated he thinks we can do police reporting and get the needed resources and staffing level for the Police Department because they have to deal with that. He stated there is a correlation between the increase in violence, increase in shooting incidents, carjacking, properties, and we're doing police reform at the same time. Several comments were made at the same time, overlapping and inaudible. Councilmember Ryan stated to have confidence in public safety, we have to be clear about focusing on the right resources. And, we want the whole community to have confidence in our police officers, that they are going about it in the right way. He stated that needs to be a clear message and not be politicized. Councilmember Ryan stated he will not support a budget that defends the police. Dr. Edwards stated the next question relates to the vision of the City, where the City is trying to 08/02/2021 Page 17 go,and the mission that the City Council has developed and designed. He stated given the financial landscape of the City, here is what our capacity is. He noted there are several focus areas of the City but if we had to narrow it down to a couple of impact areas to pay attention to in 2022, it is accountability on policing, economic stability for our businesses, equitable City spending in how we utilize our resources, community health and well-being and public health, and infrastructure. Those are the key areas of focus including engagement and transparency. City Council and Financial Commission Discussion of Levy Increase Dr. Edwards stated if we want to impact those areas, based upon the landscape described, the question is what is acceptable as it relates to levy increase. He asked the City Council to think about increasing the levy to address any of the issues identified as a priority given the financial landscape and knowing that 8% adds zero increase in taxes but there are things, such as cost of living and other things, that will come along and be more costly than last year. Dr. Edwards asked, given those factors, what is the City Council Member's and Commissioner's threshold and thoughts about an acceptable increase in the property tax levy. He noted it can change and by the time it is presented in September, it will be fine-tuned so this is not the end-all or only chance to speak to the levy. Rather, this provides a framework and staff will come back in September when the City Council will hear from the departments about the way to deliver on current operations in addition to these items assigned within the parameters set by the City Council from a levy and budget perspective. Dr. Edwards asked the City Council Member's and Commissioner's to place additional dots on the levy increase they are comfortable considering given the City's financial landscape, direction to the City, and areas identified that the City should continue to work on. Mayor Elliott stated this is difficult because he would like to see what a 0%, 2%, 3%, 5% levy increase would buy you. He stated if a 3% increase would buy the City a really good value and accomplish this,this, and this, then he might be more willing to 'bite that bullet.' Councilmember Ryan noted at a certain levy, it pushes impacts relative to few in the City, such as water properties, that will take a pretty good bite while the medium value, at a certain levy rate, gets a modest increase. He stated property along with the River and Twin Lake pay almost a different class rate so there will be tax reduction at a 3% to 5% levy increase and a lesser tax reduction still at a 6%to 9% levy increase. Councilmember Graves stated that is what she wondered if people remembered from that conversation. Councilmember Ryan stated we may need an increase in certain department budgets if for no other reason than to keep up with inflation, noting there will be a 2% to 3% net increase on salaries, which is 75% of the City's budget because it is a service organization. Councilmember Graves stated you can expect, at a 0%to 2% increase, nothing super innovative. Mr. Splinter noted there are also issues of revenue loss in other areas, such as building permits, 08/02/2021 Page 18 lodging tax, community center revenues, and recreation programs. Dr. Edwards agreed and noted a 0% increase would translate into some reduction in goods and services. Mr. Splinter agreed. Councilmember Graves stated a 0%-2% levy increase would be great if it could happen. Councilmember Ryan stated it is incumbent upon us to set the levy a bit higher and offer only a modest small reduction to the median value home property taxes. He noted by that date certain, it cannot be raised but the City Manager can come back with a lower levy recommendation. Mayor Elliott noted, however, that once it comes back, the City Council never lowers it. Councilmember Ryan stated the City Council has lowered it and that speaks volumes about good staffing. Councilmember Graves agreed it had been lowered, but not significantly. Dr. Edwards stated the levy has gone down every time from where it was originally set. Dr. Edwards referenced some of the fiscal plans and policies, stating he is fairly fiscally conservative so they do `sharpen their pencils' but the departments operate fairly frugal as it is so there is not a lot to cut. He stated his appreciation for the feedback provided. Mayor Elliott stated for him, and not faulting staff, but the missing piece in this exercise is that this is like trying to put a dart on aboard. If he knew what an increase would buy him in terms of improvement in services, then he would be more likely to support a 3%to 5% levy increase. But starting off and not knowing what an increase buys him, it is hard to consider. Mr. Splinter explained it is more likely we are looking at somewhere like 8% to maintain the services we provided last year as opposed to adding additional services and features. Staff is just trying to maintain City services and that is what department heads try to do when they bring him those numbers and then they cut it from there. Mayor Elliott asked why an increase of 8% is needed. Mr. Splinter explained it is because of loss of revenue, things get more expensive every year, and beyond the cost of building adjustment, health insurance costs are up more than 2%and more likely 5%if split with employees. Otherwise, it is 11% to 12% in total. Beyond that, there are things like fuel, repairs to aging buildings, maintenance costs, a large fleet of vehicles, police cars that get into accidents, and fire trucks that need to be replaced very soon. Mayor Elliott stated that is due to the increase in the cost of goods and increases related to health insurance. Mr. Splinter stated that is correct as well as a decrease in revenues outside of the tax levy such as building permits, lodging taxes which is a huge revenue source and has been decimated by COVID. Councilmember Graves stated she hears what Mayor Elliott is saying and that is part of the reason 08/02/2021 Page 19 why,early on,she said she'd like to have,later in the budget process,a cost breakdown by strategic priority and specifics on outcomes that came out of that funding and within that strategic priority. This would help the City Council see where funding has been and working and where it has not been working. To her, she is thinking as Dr. Edwards said, a 1%to 2%increase in levy may mean firing or laying off employees or reducing City services. A 3%to 9% levy increase is probably in the area of maintaining staffing levels and service levels and addressing some of the focus areas of last year, which have now been prioritized budgetary-wise moving into the next fiscal year. Councilmember Graves noted this information gives us some idea about what you get for the percentage and where we would like to see some of that money be focused based on priorities. Mayor Elliott stated that context is helpful and to Councilmember Graves' earlier comment, we can cut some stuff but the City Council has not necessarily talked about that yet. This brings him to ask about the process some cities use with zero-based budgeting that considers what is needed to maintain what the City is doing but we take everything off the spreadsheet and then start putting things back on one by one by answering the question mentioned earlier such as: has this been effective or not; do we want to take off; or, do we want to put it back on. Mayor Elliott stated he would be better informed in thinking about arriving at a point that these are the things we want, they will cost an additional 3%to 5%, and we are committed to that. He does not feel like the City Council has enough context or information to choose how much we are going to tax. Councilmember Graves stated she does not disagree with Mayor Elliott but thinks we can do that when the departments bring their budgets before the City Council, noting it is the role of the City Council to approve the final budget but staff will implement based on that budget. She thinks there needs to be some autonomy and agency in deciding what their budgets should be like and then bring it to the City Council and get feedback on whether this is an effective use of funding within their budget. If the City Council does not think so, then asking questions and indicating why they do not think so. Councilmember Ryan stated he thinks what Councilmember Graves is getting at,essentially,what we have done, even if not a formal declarative evaluation, because we are always pushing our department heads to deliver more without increasing their budgets. In the past staff has said they have accomplished a lot of this. He noted it is especially difficult for the Police and Fire Departments because they purchase very large and expensive pieces of equipment that have to be replaced. He stated we have a Fire Department that has gotten 30 years of use out of 20-year equipment and done a lot to save on that by emphasizing fire prevention. He noted what we hear from our department heads, and if we make good decisions, it will get us there. Dr. Edwards stated the information is appreciated and gives direction and perspective. He explained when staff comes back, the City Council will hear from department heads and in September they will consider a levy that is justifiable. Dr. Edwards noted the City Council may not agree and have an opportunity to change and adjust, but he will bring what he thinks is in the best interest of the City based upon the direction in which the City Council set. Mayor Elliott stated he does have some thoughts about the City Council's budget and will be making proposals on that portion of the budget. He stated if the City Council has any thoughts on the Council's budget, he may include that in what he will be proposing. 08/02/2021 Page 20 Mr. Splinter mentioned that Top Golfs total tax bill is $808,000 and the FBI's total tax bill is almost $1 million. He estimated the City's portion is about one-third of that total. Councilmember Ryan stated approval of the FBI building passed by a 3/2 vote. Mayor Elliott stated, for the record, that Councilmember Butler has indicated she was on her way but not doing well and would not make it to tonight's meeting. 5. ADJOURN There was a motion by Councilmember Ryan and seconded by Councilmember Graves to adjourn the meeting. The motion passed. The Brooklyn Center City Council/Financial Commission adjourned at 8:31 p.m. STATE OF MINNESOTA) COUNTY OF HENNEPIN) ss. Certification of Minutes CITY OF BROOKLYN CENTER) The undersigned,being the duly qualified and appointed City Clerk of the City of Brooklyn Center, Minnesota, certifies: 1. That attached hereto is a full, true, and complete transcript of the minutes of the City Council from the City of Brooklyn Center Joint Work Session with Financial Commission held on August 2, 2021. 2. That said meeting was held pursuant to due call and notice thereof and was duly held at Brooklyn Center City Hall. 3. That the City Council adopted said minutes at its August 23, 2021, Regular Session. City Clerk Mayor 08/02/2021 Page 21