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HomeMy WebLinkAbout2021 10-25 CCM Work SessionMINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL/ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER 1N THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA WORK SESSION OCTOBER 25, 2021 VIA ZOOM The Brooklyn Center City Council/Economic Development Authority (EDA) met in Work Session called to order by Mayor/President Mike Elliott at 9:16 p.m. ROLL CALL Mayor/President Mike Elliott and Councilmembers/Commissioners Marquita Butler, April Graves, Kris Lawrence -Anderson, and Dan Ryan. Also present were City Manager Reggie Edwards, Community Development Director Meg Beekman, and City Clerk Barb Sue'lua CITY HALL FACILITY ASSESSMENT City Manager Reggie Edwards introduced the topic and invited Community Development Director Meg Beekman to make the presentation. Community Development Director Meg Beekman stated the City has begun a planning process for the Community Center by reviewing current facilities and recreation services and identifying opportunities to expand. The initial analysis of the work was presented to the Council/EDA along with preliminary schematic plans. She noted some of the plans would alter the City Hall size. In light of this work, the staff decided to conduct a facility assessment of City Hall. Ms. Beekman noted City Hall is undersized and unwelcoming. The City contracted with an architecture firm that specializes in city facilities, and staff asked them to review City Hall and create options for a facility that would better serve staff and the overall community. The architecture firm explored three potential options: a renovation, a new standalone building on a different site, and a relocation of City Hall to a mixed -use facility. Their exploration included costs, feasibility, and pros and cons of each of the options. Ms. Beekman stated the presentation will not require any voting from the Council/EDA in the current special Work Session, but staff had wanted to gauge Council/EDA's level of interest in a project. She stated it is a starting point of discussion rather than staff seeking out a consensus from the Council/EDA. Leo A Daly Project Manager Todd LeVold stated he looked at the project along with Leo A Daly Senior Designer Matthew Keenan and met with each of the department staff to assess the needs of the City. 10/25/21 -1- Leo A Daly Senior Designer Matthew Keenan shared a brief overview of the history of the City Hall. He noted there have been previous studies conducted on the facility, one of which was completed by Leo A Daly in 2013. They sought out to conduct a City Hall space needs assessment with substantive data, confirm square footage requirements and needs to better serve the community both today and 20-25 years into the future, evaluate potential approaches to achieve the established needs, and provide cost estimates. Mr. Keenan showed a few slides depicting the existing City Hall. He noted the spiral layout is an Ad existing building footprint which creates inefficiency, the current facility is lacking some modern efficiencies in movement and wayfinding or public understanding as well as a clear front door, and the connection to the existing Community Center limits potential expansion opportunities. Mr. Keenan stated they developed a space program and reviewed existing facility spaces and surveyed departments for current and future needs. The existing City Hall, excluding the mechanical rooms and Council Chambers as those spaces do not need renovation, is 19,288 square feet. The first option for a renovation and addition would be 22,908 square feet, option two for a new standalone City Hall would be 27,269 square feet, and the third option for a new City Hall condo tenant build -out would be 23,295 square feet. Mr. Keenan noted the square footage is without optional interior parking garage considerations for 16 vehicles. If they were to add interior parking, option one would not be able to consider indoor parking, and the other two options would include 6000-9000 additional square feet. Mr. LeVold stated there is also an option to remain in place with no construction. There was a 2016 assessment that concluded the minimum planned cost of remaining in place is $1.4 million over ten years to address current or future concerns. He emphasized that amount would be the absolute minimum to remain in the City Hall as is. Mr. LeVold stated option one of remodeling the existing City Hall creates a new dedicated public face and lobby area, creates a public entry plaza for the connection back to the community, adds m area for department expansions, creates opportunities for community rooms and dedicated public spaces, and provides better wayfinding for users and conference or meeting spaces. He showed a slide with an image depicting proposed remodeling and additions. Mr. Keenan stated option two includes creating a new standalone City Hall. For consideration, the review and layout opportunities were conducted using the nearby vacant target property as a site to test fit needs, and considerations were made on how the new facility could blend into a larger high -capacity housing development area. He showed a slide with spatial diagrams depicting a new standalone City Hall which includes an option for indoor parking. A majority of the public services would be on the ground level, and most of the offices would be on the upper level. Mr. Keenan noted the plan would allow for an atrium and community spaces. Mr. Keenan stated option three is to do a condo tenant build -out. They looked at the same side as option two, but this option would look at occupying a single story of what could be a multi -use development. He noted considerations were made on how this new facility could directly become 10/25/21 -2- a part of a larger high -capacity housing development. This option includes an opportunity for indoor parking and the community to see government at work. Mr. Keenan showed a slide with a findings matrix based on seven criteria: cost impact, phasing difficulty, functionality, identity or control over city image, community space and engagement, project development complexity, and energy efficiency. For option "zero" to stay in the current Facility with no changes would be the lowest cost but provide little to no improvement. Option one to renovate City Hall allows for improvements at a reasonable cost and is a compromise approach. Mr. Keenan noted this option limits the City Hall and Community Center for the future. He added option two for the standalone City Hall is the highest cost, but it provides the greatest longevity and the highest control over identity. Lastly, option three for a condo -type buildout is a moderate cost with high functionality, but it is the most complex and provides the lease control over identity. Mr. Keenan stated they had local contractors look at the initial images and plans to provide cost estimates. The remodel would cost about $8.1 million, a standalone building would cost $16.3 without a garage, and the condo tenant build -out would cost around $6.8 million without the optional garage. He noted a 5% inflation can be expected per year beyond 2022 based on recent trends. Mayor/President Elliott asked how they deteirnined the amount of square footage and relevant criteria for the potential spaces. Mr. LeVold stated they met with all of the departments to better understand space use. From there, they maintained square footage or increased square footage depending on the feedback from staff. He explained the firm took this high-level information to local contractors they have worked with before to create cost estimates for the various projects. Mr. LeVold noted they created the seven criteria considerations alongside staff and developed a Findings matrix with those criteria. Mayor/President Elliott stated he noticed the remodel would cost more than the condo build -out, and he asked now those costs are determined. Mr. LeVold stated the renovation costs are on the higher end because they are not looking at a very large addition, and the cost per square footage gets very high when it's a small addition like that. He added the addition encumbers all of the exterior skin such as glass and roof which they don't have in the condo build -out. Mr. LeVold noted the renovation costs also drive up the costs for the project. Mayor/President Elliott asked which projects are more likely to run into issues of going over budget. Mr. LeVold stated the cost estimates include a 15% design contingency factor because they are at the very early stages of the project. Within that, there is also a 5% contingency in the building portion of the budget. He stated they try to put as much cushion as possible into early estimates to protect against going over budget. Mr. LeVold stated they also overestimated the square footage. Mayor/President Elliott stated he likes the location of City Hall and its proximity to the Community Center, so he favors the renovation option. He added he does not think they should be a tenant of someone else. Mayor/President Elliott asked if they could have some cost savings by combining the renovations to the Community Center along with the renovations to the City Hall. 10/25/21 -3- Mr. LeVold stated there would likely be some efficiencies there due to the shared space and shared mechanics. He noted he does not know the specifics of the Community Center project, but he expects they could save some money by combining the projects. Councilmember/Commissioner Graves stated she tends to agree with what Mayor Elliott has said, but she would like to hear from Councilmember/Commissioner Ryan as he has an eye for being fim Fiscally responsible as well as other Councilmember/Comissioners. Councilmember/Commissioner Ryan stated he is in sticker shock for the various construction costs. He stated for the time being he would prefer the option to remain in place with no construction. If they were farther down the line with the Opportunity Site and receive benefits From the closure of Tax Increment Financing District Three, then they might be in a better position to spend a larger amount of money. He stated they could revisit this in 5-10 years when they are in a more favorable shape in terms of the growing tax base, and he noted they just put money into Council Chambers. Councilmember/Commissioner Ryan noted there are lots of issues to be resolved about how to sustain the capital commitments to the Community Center as requested by members of the community. Councilmember/Commissioner Butler stated she prefers the option to remain in place with no construction because they have a lot of other projects going on. She noted this project doesn't seem as urgent at this time and added she does not agree with the option of being a tenant of someone else. Councilmember/Commissioner Lawrence -Anderson stated they need to be careful with spending taxpayer money. She noted her initial interest is to remain in place with no construction, but she stated she is concerned about future staffing levels. She stated this is not a decision they should be making in the next year or two. Councilmember/Commissioner Graves noted her most intuitive feeling is to go with the renovation of City Hall to increase the space and also save money by doing it at the same time as the Community Center. She added the City has a lot going on, but she does want to give staff what they need to do their job and for them to feel supported by the Council/EDA. Mayor/President Elliott stated it sounds like the consensus is to remain in the cut7ent building with no construction. He added there might be a way to better use space by utilizing the remote world to complete City work. SALES TAX LEVY DISCUSSION UPDATE Mayor Elliott suggested that they adjourn the meeting and cover this topic at a later date. Dr. Edwards noted there are some time limitations on the matter. He asked Community Development Director Meg Beekrrian to speak to the time -sensitive nature of the process. 10/25/21 -4- Community Development Director Meg Beekman noted the presenters are ready to present this evening as a follow-up to previous conversations and asked Jason Aarsvold, the City's public Financial consultant with Ehlers, to speak more about the timing. Jason Aarsvold explained they could do a less -detailed version of the presentation in the interest of time. Councilmember/Commissioners Ryan, Lawrence -Anderson, Graves, and Butler stated they would be willing to continue the meeting despite the late hour. Mayor/President Elliott concurred and asked for staff to move forward with the presentation. Ms. Beekman stated the Council/EDA had several questions at a previous meeting, and this presentation is a response to those questions. Mr. Aarsvold showed a slide about how the sales tax would impact residents. He explained a 0.25% annual sales tax would provide $21,000,000, a 0.50% annual sales tax would provide $42,000,000, and a 1.00% annual sales tax would provide $84,000,000. They looked at state research to predict the potential impact on Brooklyn Center residents and used the median income for Brooklyn Center residents. Mr. Aarsvold noted the average household pays around $932 in sales tax throughout the year and Brooklyn Center residents spend around $9,288 in taxable purchases per household. With those numbers in mind, a 0.25% annual sales tax would add $23 to their annual amount paid for sales tax. The 0.5% annual sales tax would add $46, and the 1.00% sales tax would add $93 per year. Mr. Aarsvold presented a slide with a chart detailing the property tax impact if there were no sales tax implemented. If a median home in Brooklyn Center were taxed to accumulate $21 million in bonds, equivalent to the 0.25% annual sales tax, it would add $133.85 to property taxes. He explained the 0.5% equivalent would equate to $267.70 and a 1.0% equivalent would equal $535.40 for each residential homestead. Mr. Aarsvold noted another question was regarding the impact on local retailers. A 2017 University of Minnesota Extension Office study that analyzed 11 communities in Minnesota with sales tax in effect for at least eight years showed that in almost all cases taxable sales tax continued to grow without any evidence of a decline in local sales because of the local tax. Any communities that showed a decline in sales were part of greater Minnesota that was already facing a decline in sales. Mr. Aarsvold showed a chart depicting cities that recently implanted a sales tax project, what they plan to use the funds on, the sales tax percentage, and the bonding authority. He noted this was another question the Council/EDA had regarding the sales tax. Mr. Aarsvold stated he spoke directly with the Minnesota Department of Revenue to find out what that department would hold back for administrative costs. They would keep 1-2% from monthly collections. He explained it is not a fixed number because the Department of Revenue operates local sales tax on a fixed budget and the fixed cost is spread across all cities with a local sales tax. The amount is variable and different for each community depending on the amount of sales tax collections in each of the communities. The Department of Revenue did mention that there is a "start-up" cost of $15,000-$20,000 for setting up the tax, notifying retailers, and other administrative efforts. Mr. Aarsvold explained this cost would be netted out of the first few settlements to the City. 10/25/21 -5- Mr. Aarsvold stated community engagement is an important topic and explained engagement efforts to date are directing pursuit of the prof ects under consideration. Additional engagement should occur, but it makes the most sense to wait until after legislative approval if it is granted. He stated there will ultimately be a vote allowing for a significant number of residents to participate Erectly in the deacon about the enactment of the sales tax, and additional engagement should occur if legislative approval is granted but before the questions go on the ballot. Mr. Aarsvold stated the next steps are to document that the projects are regionally significant, have a bond attorney draft the legislation, meet with local legislators to garner support for and author the legislation, and then adopt a resolution supporting the legislation and terns of sales tax and projects. He noted they would also have to assemble a team to include the hiring of a lobbyist, with an estimated cost of $30,000-$60,000 plus Brooklyn Center staff time. Mr. Aarsvold asked for direction fiom the City Council/EDA in teams of staff proceeding with the next steps, which level of tax should be considered, which projects should be included, and the length of time for the tax to run. Mr. Aarsvold noted the potential projects include the Community Center and the regional whitewater destination park and the best options for tax level are 0.5% and 1.0% given the projects under consideration. He added the recommended length of time for the tax to run is 20 years. Mayor/President Elliott stated he wants to see a new Community Center. He asked if there has been a study on the distribution of impact on folks of varying incomes. Mr. Aarsvold stated the best data they can get on that is the study he cited earlier. The State of Minnesota does a study to determine the impact of annual sales tax based on income levels. He noted the table depicting these numbers has a line highlighted to include Brooklyn Center's median income. A 0.25% annual sales tax would add $23 to their annual amount paid for sales tax. The 0.5% annual sales tax would add $46, and the 1.00% sales tax would add $93 per year. Mayor/President Elliott stated his concern is on people of varying income levels. He stated there was a Bloomberg study done that local sales tax targets the poor and widens the income gap. He added out of the three main types of taxes, those being income, property, and sales tax, that sales tax hurt the poor the most. Mayor/President Elliott explained that sales tax is highly regressive and takes bigger chunks out of those with smaller portions of money. Considering that Brooklyn Center is already lower in the median income range in comparison to other cities, Mayor/President Elliott stated he is concerned about implementing a sales tax in the community. Mayor/President Elliott stated that he does not currently support a sales tax, but he is interested in pursuing other options to fund a Community Center renovation. Ms. Beekman stated she is familiar with that study, and noted the study was focused on national sales taxes. Ms. Beekman stated local sales tax does have that effect nationally because there are basic things that people purchase regardless of their income level which means that a high proportion of their income is paid to sales tax rather than other types of tax. She explained the repressive sales taxes are largely mitigated in Minnesota because the State does not tax necessities such as clothing, food, shoes, and things of that sort. This allows the sales tax proportion to level 10/25/21 -6- out because it does not require people to pay taxes on basic items. Ms. Beekman stated the Bloomberg study did not take that into account. Ms. Beekman explained to pay for the Community Center, the City would need to use property tax dollars, sales tax dollars which spreads the expense to people outside of the community, or apply for bonding to use state money which spreads the expenses to people throughout the State; there is also a potential to use a combination of those funding options. She noted the sales tax would be a lower impact on Brooklyn Center residents than property taxes because it spreads out the taxes to people outside of the community. Councilmember/Commissioner Ryan asked if they wanted to go to the State for bonding, the State would impose a match onto the City. Mr. Aarsvold confirmed Councilmember/Commissioner Ryan was correct. Councilmember/Commissioner Ryan stated they could be looking at tens of millions of dollars with that. He stated for the City to get the gross dollars in an amount similar to what Dr. Edwards pitched to the State for bonding, they would have to impose a sales tax of around 0.75%. He noted this would result in an 8.275% sales tax in Brooklyn Center which would be high. Councilmember/Commissioner Ryan stated for the City to qualify for state bonding is for the project at hand to have regional significance and, therefore, the City would have to present a larger project. He asked if they have been able to assess the potential financial risks to the City and the level of debt. Councilmember/Commissioner Ryan noted he has more questions, but he will forego them in the interest of time. He stated he understands the community's desire to have improved facilities, but he is concerned with the potential financial burdens there would be subject to. He ultimately wants to find a plan that is in line with the City's equity goals, and he is hesitant to move forward with an increase in the annual sales tax at this time. Stacie Kvilvang, Ehlers Senior Municipal Advisor, stated the thing for the Council/EDA to remember is they have a request for state bonding. If they are fortunate enough to receive dollars through that process, they need to show they have a project they can finance. She noted the state bonding money is extremely competitive, and if they receive those funds, the City should have a financing plan in place. Ms. Kvilvang stated, if they receive the bonding, the City has to have a plan to finance the rest of the project within one year of receiving those funds. She recommends spreading out the financing for the project beyond the City and its residents, especially considering that the facilities would hold regional significance. If they don't have a plan in place, Brooklyn Center could be at risk of losing bonding dollars due to the amount of time it takes to pass a sales tax or other funding strategies. Councilmember/Commissioner Graves stated she feels apprehensive, but they have already started the process in a few ways. She noted they don't get a chance to vote on the measure until they hear from the community. She added the staff have been taking this seriously and have been trying to provide funds for the projects in the best way possible. Councilmember/Commissioner Graves stated they should give it a shot to hear from the community though it does seem a bit high in the sky. 10/25/21 -7- Councilmember/Commissioner Butler stated she agrees with Councilmember/Commissioner Graves because they are just getting the process starting at this point. She noted that it is ultimately in the hands of residents to vote on. Councilmember/Commissioner Butler added the community deserves the amenities that other cities get funding for, so she believes they should take a shot at it. Councilmember/Commissioner Ryan stated he would be willing to go onto the next step after hearing further remarks. Councilmember/Commissioner Lawrence -Anderson stated she concurs on moving forward. She noted they should proceed and see what the legislature does. The majority consensus of the City Council/EDA was for staff to move forward with the next steps regarding the sales tax levy. ADJOURNMENT Councilmember/Commissioner Lawrence -Anderson moved and Councilmember/Commissioner Butler seconded adjournment of the City Council/Economic Development Authority Work Session at 10:37 p.m. Motion passed unanimously. STATE OF MII�]NESOTA) COUNTY OF HENNEPIN) ss. Certlficat lon 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 a Work Session of the City Council of the City of Brooklyn Center held on October 25, 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 November 8, 2021, Regular Session, City Clerk Mayor 10/25/21 -8-