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HomeMy WebLinkAbout2018 10-15 CCM Joint Work Session with Financial Commission 10/15/18 -1- MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA JOINT WORK SESSION WITH FINANCIAL COMMISSION OCTOBER 15, 2018 CITY HALL - COUNCIL CHAMBERS I. CALL TO ORDER The Brooklyn Center City Council met in Joint Work Session with the Financial Commission and the session was called to order by Mayor Tim Willson at 6:33 p.m. Mayor Tim Willson and Councilmembers Marquita Butler (arrived at 6:35 p.m.), April Graves, and Dan Ryan. Councilmember Kris Lawrence Anderson was absent. Also present were City Manager Curt Boganey, Deputy City Manager Reggie Edwards, Finance Director Nate Reinhardt, Community Development Director Meg Beekman, and Financial Commissioner Abate Terefe, Financial Commission Chair Teneshia Kragness and Commissioners Tia Hedenland and Dean Van Der Werf were absent. II. APPROVAL OF AGENDA Councilmember Ryan moved and Councilmember Graves seconded to approve the agenda. Motion passed unanimously. III. SPECIAL REVENUE FUNDS City Manager Curt Boganey introduced Finance Director Nate Reinhardt to present this item. a. HRA/EDA Finance Director Nate Reinhardt provided a PowerPoint presentation summarizing the Special Revenue Funds, Internal Service Funds, and Debt Service Funds. He explained how the Special Revenue Funds HRA/EDA are funded, initiate programs, and facilitates redevelopment opportunities to promote public and private investment. Mr. Reinhart presented the EDA strategic priority of Targeted Redevelopment and five targeted areas (Opportunity Site Development, 57th and Logan Redevelopment, Brooklyn Boulevard corridor, former Jerry’s Food site, and former Sear’s site) within the Master Development Plan. Mayor Willson stated yesterday, the news reported that Sear’s is going to Chapter 11 Bankruptcy. Mr. Reinhardt presented the EDA strategic priority of Resident Economic Stability through resident empowerment collaborative, entrepreneur support, job retention and expansion, and resident wealth creation and financial literacy. 10/15/18 -2- b. Tax Increment Funds Mr. Reinhardt explained that Tax Increments Financing (TIF) funds have the authority to collect tax increments for various redevelopment projects and for debt service payments of bonds issued for the same purpose. He then described TIF District #2 (Earle Brown) and TIF District #3 along with projected cash balances, budgeted revenues, budgeted expenses, and decertification dates for each. Councilmember Ryan stated his interest in TIF District #3 with 15% funds being eligible for housing activities including the ReMove and Rebuild Program. He asked whether funds from other Districts are eligible for those purposes. Community Development Director Meg Beekman explained that TIF District #6 was recently created and is eligible for those programs; however, 98.5% of that increment currently goes back to The Sanctuary so it will be several years before significant funds are available. She described other opportunities for creation and use of pooled funds for any number of eligible housing programs, including Move and Rebuild. Mr. Boganey noted the Move and Rebuild Program purchased a significant number of houses along Brooklyn Boulevard and the future use of those properties may not be housing. Once sold, those dollars will replenish the TIF fund. He stated TIF District #3 is unique as it is the only Fund where a specific amount of the repayment must be committed to affordable housing. He asked whether TIF increments from other Districts can also be used for eligible affordable housing. Ms. Beekman answered in the affirmative and described funds that are restricted and unrestricted for housing projects, noting the need far exceeds available funds. The City Council and staff discussed potential housing redevelopment sites, characteristics of Opportunity Zones, potential investor offers, and funding. It was noted that Hennepin County determines use of CDBG for public services and the allocation received by the City funds Code enforcement and the low-income housing grant program. In response to Finance Commissioner Terefe, Ms. Beekman explained the Opportunity Zone designation is part of the federal tax bill, a federal program, and while it offers a menu of what it could be it does not yet provide details on implementation. The concept indicates no timeline at this point. Mr. Boganey described the Promise Zone program that was created several years ago. Mr. Reinhardt continued presentation of TIF District #3; TIF District #4 (France Avenue Business Park); TIF District #5 (Shingle Creek Crossing); and, TIF District #6 (The Sanctuary) along with projected cash balances, budgeted revenues, budgeted expenses, and decertification dates for each. c. CDBG Grant Mr. Reinhardt stated Community Development Block Grant (CDBG) supports housing rehab, public service agency activities, City neighborhood stabilization, and Code enforcement initiatives. The City anticipates receiving CDBG grants funds of which $150,000 will be used to reimburse the City for Code enforcement related expenses. 10/15/18 -3- The City Council and staff discussed use of CDBG funds for Code enforcement, noting that use started at the height of the recession to address distressed properties. Councilmember Graves asked if there will be a point when the City’s CDBG funds can be used for things other than Code enforcement. Mr. Boganey stated he supports housing rehabilitations, but the disadvantage of using CDBG funds for that purpose is it takes a lot of money and impacts fewer residents. Mayor Willson stated if $150,000 of CDBG funds are not used for Code enforcement, then the City Council will need to find another funding source for that activity, which totals about 1% of the taxes received. Mr. Boganey explained that unlike an entitlement community, the City only has the level of flexibility that Hennepin County allows. Councilmember Graves stated her support to consider use of CDBG funds for preventative housing initiatives, especially considering the City Council’s strategic goals. Mayor Willson stated then cuts may need to occur to staffing, and while he is not opposed to shifting dollars, it will take a lot of analysis. He stated he looks forward to hearing Councilmember Grave’s suggestions that are tied to a funding stream. Councilmember Graves suggested City staff present their ideas for consideration by the City Council. Councilmember Ryan stated early in his service, the City funded a study in cooperation with Brooklyn Park and it was determined maintenance of neighborhoods has positive impact on public safety, which is strong justification for the Code enforcement program however it is funded. He observed when a practice is not traditionally part of the small city’s portfolio, Brooklyn Center should look at what Hennepin County is or isn’t doing so there is not duplication of services. He stated he supports resident economic stability but his sense is to look for resources beyond Brooklyn Center and to serve as a conduit to connect residents to that outside resource. Mayor Willson noted one of the Opportunity Site proposals was for townhomes with about $500,000 cash back. He asked whether those funds could be put into a revolving fund or fund initiatives mentioned by Councilmember Graves. Ms. Beekman stated those funds would be unrestricted and under purvue of the EDA. She described the City’s program to provide low- interest loans; however, noted the City has expended this year’s funds for that program. Mr. Boganey agreed there would be more creative options available for those funds through the EDA. But with CDBG funds, the scope of use is limited (i.e., Code enforcement, ‘bricks and mortar’ projects) in application. Finance Commissioner Terefe encouraged the City Council to consider new ideas and keep an open mind in how funds and resources can be re-allocated at a time in the future when those funds become available. Mayor Willson commended Ms. Beekman for her understanding in how TIF funds operate. d. Police Forfeitures Mr. Reinhardt stated the Police Forfeitures account relates to alcohol or drug crimes. He advised of available fund balances and how the Police Department has budgeted to use those funds. 10/15/18 -4- Councilmember Graves asked if they are civil forfeitures from convicted cases. Mayor Willson stated he was unsure but understands it has been affirmed the item forfeited was purchased with funds derived from drug sales. Councilmember Graves asked if the person is found not guilty, would those forfeitures be returned. She thought in most cases, the forfeitures were under $1,000 and she would be interested in seeing those details. Mr. Boganey stated he will look into this question and return with a response based on available data so the City Council knows what goes into the Forfeiture Fund. Councilmember Graves asked if the City participates in the Equitable Sharing Fund with the federal government. Mr. Boganey stated he will find out. Councilmember Graves stated in the interest of transparency she would also like to know the racial demographics and if comparable to the City’s population. She stated she supports using the forfeiture funds for body cameras but it is her preference to not use these funds to purchase a SWAT vehicle, noting some cities put those funds back into the General Fund. Mr. Reinhardt explained if an alcohol related forfeiture, then use is restricted to alcohol related crime expenses. If a drug related forfeiture, then use is restricted for law enforcement expenses. e. City Grants i. NW Cable Communications Grant Mr. Reinhardt stated as of September 30, 2018, the Northwest Cable Communications Fund had a balance of $36,319 and the City receives approximately $40,000 per year in grant funding. ii. Recreation Grants Mr. Reinhardt stated the Recreational Grant Fund accounts for a combination of donations, registration fees, and designated reimbursements for specific activities of the Community Activities, Recreation & Services Department. iii. Police Grants Mr. Reinhardt stated the Police Grant Fund accounts for local, state or federal grants for police activities. He advised of anticipated 2019 activities and funding. Councilmember Graves asked if the Police Department has a grant writer and why they receive so many more grants than the Community Activities, Recreation & Services Department. Mr. Boganey answered the Police Department does not have a grant writer, noting police grants may be more formula driven. He described the types of grants received by the Community Activities, Recreation & Services Department. Councilmember Ryan stated in his National League of Cities meetings and other discussions he has learned there are a lot of grant programs for law enforcement. He agreed more could be invested in prevention; however, the assets are still needed. Councilmember Graves stated she wished there was an opportunity to share some of the wealth with the Community Activities, Recreation & Services Department to write more compelling grants. Mayor Willson stated if the City Council wants someone more adept in grant writing, 10/15/18 -5- perhaps that is a new staff position. Councilmember Graves stated she thinks there is probably a lot of grant potential based on the City’s demographics. Mr. Boganey explained that many times grants create a pilot program with one-time funding and cautioned about relying on grants for on-going services. Councilmember Ryan stated with the blooming federal debt, there may not be as many grant programs offered so the City Council has to be judicious when thinking about increasing staff for the purpose of writing grants. He relayed comments from residents who are concerned with the City raising taxes. Councilmember Graves agreed the City Council needs to be smart in its decision making but also needs to determine how to address what is going on in their own community. IV. INTERNAL SERVICE FUNDS Mr. Reinhardt stated the Internal Service Fund accounts for services provided to other departments of the City on a cost reimbursement basis. a. Central Garage Fund Mr. Reinhardt stated the Central Garage Fund provides centralized management of fuel, preventative maintenance, repairs and replacement of City vehicles and equipment. Funding is provided through charges to individual departments. He reviewed the 2019 funding allocation, operating revenues, and expenses. V. DEBT SERVICE FUNDS Mr. Reinhardt stated the Debt Service Fund is used to account for and report financial resources that are restricted, committed, or assigned to expenditures for principal, interest, and other charges related to long-term debt. a. Improvement Bonds Mr. Reinhardt stated General Obligation Improvement Bonds are established to accumulate the collection of special assessments levied on properties that benefited from improvements constructed with proceeds of this bond. b. Tax Increment Bonds Mr. Reinhardt stated General Obligation Tax Increment Bonds were established to account for the collection of tax increment generated revenues that are annually transferred from TIF funds. Mr. Reinhart stated the City proposes a bond issue for infrastructure improvements identified in the Capital Improvement Program (CIP) for the Interstate Area (neighborhood reconstruction project) and Southeast Area mill and overlay. He presented revenue sources, estimated annual payments beginning in 2020, and estimated new Debt Service Levy of approximately $279,000 10/15/18 -6- required for 2020. c. Utility Revenue Bonds Mr. Reinhardt stated Utility Revenue Bonds are repaid from utility user fees directly from their respective utility funds, not included as debt service funds. Mayor Willson raised the need to improve the private road that serves the area of McDonalds. Mr. Boganey explained the City Attorney has been working with those property owners to determine if there is a mechanism whereby they can voluntarily agree to have their properties assessed for the cost of private road repairs. A majority of property owners would have to file a petition and the City would have to establish a district to facilitate a special assessment process. Since the project is too small for a bond issue, the City could fund the project with repayment through special assessments. Mr. Boganey stated the private street has to be constructed to Code regardless and the property owners can probably get the project done at a lower cost by hiring their own private contractor. Ms. Beekman explained this process would also require application for a Land Alteration Permit. She stated the City has written correction orders to fill the potholes. Staff approached the property owners this past spring about the need for a final solution and the property owners agreed and recognize the minor fixes are not solving the problem. In addition, there is no drainage or connection to storm sewers so the road elevation also needs to be corrected. A discussion was held regarding parcel ownership in that general area and condition of the private road owned by Cub Foods. Mr. Reinhardt continued presentation of the Street Reconstruction Fund with anticipated debt issues from 2019 through 2030. VI. FUTURE BUDGET DISCUSSIONS / CITY COUNCIL MEETINGS Work Sessions 1) Enterprise / Utilities Fund October 29, 2018 City Council Meetings 1) Public Hearing & Budget Adoption December 3, 2018 Mayor Willson invited staff and Councilmembers to tour the newest Charter School on October 25, 2018, at 9 a.m. He also announced the Crime Prevention fund raiser. With regard to drug forfeitures, Councilmember Graves stated even with restrictions, there may be ways those funds can be used outside of purchasing a SWAT vehicle, such as the DARE Program, safe treatment for substance abuse, or to track or improve the Juvenile Diversion Program to intervene with those at-risk youth. Mr. Boganey agreed there are options for other use of those funds but they are currently used as recommended by the Police Department. He stated staff will provide a report on the North Star Program. 10/15/18 -7- Mayor Willson recognized Communication Coordinator Angel Smith for scheduling the meeting with the Liberian journalist. VII. ADJOURNMENT Mr. Boganey stated following adjournment, Deputy City Manager Reggie Edwards will provide a City banner presentation. Councilmember Graves moved and Councilmember Ryan seconded to adjourn the Work Session at 8:32 p.m. Motion passed unanimously.