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HomeMy WebLinkAbout2020 08-03 FCMMINUTES 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 3, 2020 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. The meeting was conducted via Zoom. Mayor Elliott thanked everybody who took the time to join this very important meeting. He added the City faces grave economic challenges as a community and as individual households. He noted there is an eviction moratorium at the State level, and mortgage forbearance program for federally backed loans, with private lenders extending the same courtesy to mortgage holders. He stressed the importance of crafting a budget that acknowledges these realities. ROLL CALL Present were Mayor Mike Elliott and Councilmembers Marquita Butler, April Graves, Kris Lawrence-Anderson and Dan Ryan. Also present were Financial Commissioners Teneshia Kregness, David Dwapu, Dean Van Der Werf, Taofeek Ishola and Emmanuel Kpaleh. Also present were City Manager Curt Boganey, Finance Director Mark Ebensteiner, Community Development Director Meg Beekman, and City Clerk Barb Suciu. APPROVAL OF AGENDA There was a motion by Councilmember Ryan and seconded by Councilmember Butler to approve the agenda as submitted. The motion passed. INTRODUCTIONS Councilmember Dan Ryan stated he is in his 14th year of service on the City Council. Councilmember April Graves stated this is her 6th year on the City Council. Councilmember Marquita Butler stated this is her 4th year on the City Council. Councilmember Kris Lawrence-Anderson stated this is her 8th year on the City Council. Commissioner Teneshia Kregness stated she has served on the Financial Commission for 10 years. Commissioner David Dwapu stated this is his 2nd year on the Financial Commission. Commissioner Taofeek Ishola stated this is his 1st year on the Financial Commission. Councilmember Kpaleh stated this is his 2nd meeting. Commissioner Dean Van Der Werf stated he has served on the Financial Commission since 2011. OPERATING BUDGET VALUES DEVELOPMENT Mayor Elliott stated this is the second budget meeting, and this meeting will focus on the operating budget. City Manager Curt Boganey stated City Staff is seeking the City Council and Financial Commission’s input and policy direction for the budget. He added he hopes there will be consensus around the City’s values for ongoing service needs, values related to strategic priorities, and values related to issues of tax and fee burden for residents and customers. BUDGET APPROVAL PROCESS AND TIMELINE Mr. Boganey stated the preliminary levy limit is required by State statute to be approved by the City Council no later than September 30, 2020. The City Council is also required to hold a public hearing on the preliminary budget and proposed levy between November 25 and 28, 2020, and approve certification of the final budget and levy on or before December 28, 2020. BUDGETARY CONDITIONS OVERVIEW Mr. Boganey stated this presentation will focus on the City’s General Fund, which receives 75% of its revenue from property tax; 8% from Local Government Aid (LGA); 7% from lodging and other taxes; and 5% from licenses and permits. He added the City is anticipating LGA of $2.2 million in 2021, with 50% reserved for capital funding and 50% for general operations. Mr. Boganey stated an increase in the debt service levy of approximately $86,000 is anticipated to help fund the City’s share of the neighborhood street reconstruction program, and those bonds have already been sold. He added an additional $220,000 is needed over the next 2 years, and $195,000 for 2024, to continue with the neighborhood street reconstruction program. Mr. Boganey stated the general levy increased from $14.1 million in 2015 to $18 million in 2020. A significant portion of the increase is related to inflation, but the majority of the increases are related to strategic investments that the City has made over this time period. These investments include youth development through Brooklyn Bridge Alliance and BrookLynk; expansion of City communications; and Community Engagement staffing. In this year’s budget, City Staff anticipated filling a new staff position in Human Resources that would be focused on staff development, specifically in the areas of equity and inclusion practices. These spending increases are in response to the strategic priorities and direction of the City Council. Mr. Boganey stated the general fund levy provides the major revenue source for the general fund, which pays for basic government services: Police, Fire, Code Enforcement, Planning, Zoning, Business Support, Inspections, Streets, Parks, Community Recreation, Elections, Building Maintenance and Administration. He added property taxes make up 75% of the general fund, and a commercial taxable market value of $383 million is anticipated for 2021. He noted this is a 6% increase over last year’s budget and is due to increasing market values. Mr. Boganey stated an industrial taxable market value of approximately $177 million is anticipated, or an 11% increase, and residential market value of approximately $1,541,000,000 or a 5.9% increase. He added the overall taxable market values are expected to increase by 7.1%. Mr. Boganey stated tax capacity, based on a specific formula, is the basis for tax payments. He added the residential share of tax capacity is 51.2% in 2020 and 50.7% in 2021; the commercial share of tax capacity is 25.1% in 2020 and 24.9% in 2021; apartments tax capacity is 12.6% in 2020 and 12.9% in 20201; and industrial tax capacity is 11.1% in 2020 and 11.5% in 2021. Mr. Boganey noted residential properties will pay less of the levy share and the median residential property value will increase to $207,000 in 2021. Mr. Boganey stated a 3-5% increase in utility fees is anticipated as bond payments will need to be made in 2021 to fund utility improvements. Mr. Boganey stated it is anticipated that 2020 taxes will not be paid at the same rate as they have been historically, due to the pandemic. He added the general fund shortfall was originally expected to be over $2 million, but the good news is that the shortfall is now anticipated to be closer to $1.1 million. He noted City Staff have made efforts to reduce budgeted costs in the general fund budget, and an allocation of $2.4 million was received from the federal government to offset Covid-related costs. Mr. Boganey stated TIF District #3 is scheduled for decertification in 2021, which will result in an increase in taxable market value of nearly 10% in 2022. The City will have the opportunity to reduce tax rates overall by 2023 and generate revenue at a higher rate. Additionally, the City’s current franchise agreements will expire in 2023, creating an opportunity for renegotiation. Bond replacement and special assessments can be significantly reduced, and the costs covered with renegotiated franchise fees. Mayor Elliott stated it would be helpful if the slide presentation had footnotes that indicate the data source. He added, for example, he would like to have information about projections for commercial and residential property taxes, and about market value forecasts. He asked whether the forecasts for property market values is based on the change in property values from 2018-2019, or 2019-2020. Mr. Boganey stated values for taxation lag by 1 year, so residents will pay taxes on the value of properties last year. Mayor Elliott stated he was asking how the change is calculated, and whether it is a forecasted change. Finance Director Mark Ebensteiner stated the term “forecast” is not used by Hennepin County, but rather they go through a process of evaluating properties to set taxes to be collected in 2021. The values are already set by the county for each of the property classifications. Mayor Elliott asked whether the County bases their projects on the previous year. Mr. Boganey stated it is not a projection, but rather a valuation, that is based on data previous to January 2, 2020. Mayor Elliott stated where he is going with this is that what happened before January 2, 2020 is very different from what happened after January 2, 2020. He added the question is what budgetary implications do these projections have for Brooklyn Center, as they are not reflective of the reality of 2020. Mr. Boganey stated the County’s valuations are part of a formula, and they are not projections. The property valuations are established on January 2, 2020 and do not reflect how property values will change in the coming year. Mayor Elliott asked whether it is reasonable to assume that the County increases valuations when market conditions improve and decreases valuations when market conditions worsen. He added this would include overall market conditions, the health of the economy, and people’s ability to pay taxes. Mr. Boganey stated there is not an attempt on the part of the assessor to determine anybody’s ability to pay. Mayor Elliott stated he knows that, but as a general economic condition, evaluations rise and fall based on the general population’s ability to pay. Mr. Boganey stated the levy, in the state of Minnesota, is established by the City Council, and the City Council has the authority to establish and take into account people’s ability to pay. Commissioner Kpaleh stated he understands property values are based on the County’s valuations. He added, with this situation the country is now facing, the market is going down, and people are losing their jobs. He asked whether values can be withheld for a period of time, so people can adjust to this kind of situation, or whether they have to go up. Mr. Boganey stated the City has very limited control over what the valuations are going to be. He added property value is determined by the County Assessor, using sales data and other variables to determine how much each property is worth, as of January 2, 2020. He noted the City must accept that information to determine tax capacity that will be used in the following year’s budget. Mr. Boganey stated the City Council has the authority to decide how much taxes they want to collect from property owners. He noted that is a different decision than determining property values. Community Development Director Meg Beekman stated generally speaking, property values are not tied to property taxes. She added the levy, rather than property valuations, have an impact on how much residents pay. She noted, as an economic development tool, the residential tax burden decreases in cities that have a higher percentage of commercial and industrial tax bases. DEMOGRAPHIC AND ECONOMIC CONDITIONS OVERVIEW Mr. Boganey stated Brooklyn Center has historically experienced higher unemployment than Hennepin County. He added the City currently has the highest gap since 1990, with unemployment at 13.5% in Brooklyn Center and 10.3% in Hennepin County. He noted single family home sales are strong, with the average home sale price in June at $225,000, representing a 12% increase over a 12-month period. Mr. Boganey stated a recent survey of local landlords showed that 16 of 61 landlords said they have tenants who cannot pay rent, while 37 landlords said that fewer than 5% of renters struggled to pay rent. He added 56% of the landlords reported that they have been able to work something out with their renters. Mayor Elliott asked whether this was a local landlord survey. He added he does not understand the data points. Mr. Boganey stated the deepest impact of the current recession is likely to occur in 2020 and early in 2021, based on the status of federal stimulus legislation and conditions related to the pandemic. He added CEAP has been providing hundreds of thousands of dollars for rent assistance. He noted many groups are affected differently, as 1 out of 2 black Minnesotans have applied for unemployment, compared to 1 in 4 white Minnesotans. City Staff believes Brooklyn Center is likely to be more affected by the recession than other communities. Mayor Elliott stated the City has a lot of naturally occurring affordable housing, as opposed to legally binding affordable units. He added this affordability is an economic competitive advantage. He noted it is important to understand how tenuous the affordability is in Brooklyn Center. Commissioner Kpaleh stated he is concerned about how apartment owners and renters, as there is no control and they have their own rules. He added the City loses tax income when people move away from Brooklyn Center. He asked whether the City has any control that they can leverage on property owners. He noted, for example, apartment complexes do not allow visitors, and cars will be towed. He asked what the City can do to give rights to tenants so there will be more occupants, and units will not be empty. Mayor Elliott stated Commissioner Kpaleh’s questions for City Staff are whether the City has control over landlords increasing rent, and not allowing visitors to park. Commissioner Kpaleh stated he is not asking about increased rent, but rather severe rules that landlords impose on renters. He added, because of this, people are moving to different cities and the population is decreasing. He asked what can be done to get more people to move to Brooklyn Center and boost the population. Mr. Boganey stated population growth in Brooklyn Center has been significant over the last 5-10 years. He added the City can influence the availability of rental properties by building more units, which is being done, and continues to be done. He noted he agrees that an increase in population can be good for the economy and livability of the City, but Brooklyn Center has not had difficulty in terms of population growth. Mr. Boganey stated, with regard to regulating management of rental properties, the City’s authority is limited. He added, however, the city can exercise regulatory authority when it is deemed necessary for health and safety. Ms. Beekman stated the Community Development staff addresses property issues and license complaints. She added anyone who has a question about a specific property can contact City Staff and it can be addressed separately. Ms. Beekman stated City Staff is undertaking a review of tenant protections within City Ordinance, in an effort to strengthen a tenant protection Ordinance adopted in 2019. She added cities are limited in their authority over landlords. She noted the City Council will be reviewing a naturally occurring affordable housing preservation program, and discussion around mixed income policy. Councilmember Graves stated she was thinking about community programs that the City Council has supported in recent years, that have been free and open to the public at the Community Center and in Centennial Park. She asked how to continue community engagement as a policy while ensuring that necessary services are provided to those most in need. Mr. Boganey stated that is a great question. He added the policies that are being discussed are goals or best practices, and financially conservative. He noted the City Council has other policy goals that sometimes have to take precedence over certain best practices. Councilmember Ryan stated he appreciates Councilmember Grave’s comments. He added the City Council should shift away from charges and user fees in the interests of equity, especially for recreation programs for low-income families. He noted this will be beneficial for building non-residential tax capacity. Mr. Boganey stated City Staff can take a look at that policy, as policy objectives can be amended based on the goals of the City Council. He added some new language could be added to balance that policy. Councilmember Graves stated she would be interested in seeing that language. COUNCIL VALUES, PRIORITIES AND GOVERNING FOCUS Mr. Boganey reviewed the City’s current policy statements, to assist in developing the City’s budget. He stressed the importance of ensuring that the policy statements are relevant and accurate. City of Brooklyn Center Vision Statement - We envision Brooklyn Center as 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. City of Brooklyn Center Mission Statement - The mission of the City of Brooklyn Center is to ensure an attractive, clean, safe, and inclusive community that enhances the quality of life for all people and preserves the public trust. Mr. Boganey asked whether there is anything in either of these statements that the City Council would view as harmful or problematic to the City of Brooklyn Center for the coming year. He added it is assumed that these policy statements are acceptable unless there is a consensus that they should be changed. Mayor Elliott stated it is too late for him to be engaging in doing mission and vision work. He added this is a process that is built around strategic planning and he will not comment on this as he does not have the energy to go through this right now. He noted there should be a process for reviewing and amending the policy statements. Councilmember Lawrence-Anderson stated she does not see anything offensive about the mission or vision statements. She added she is not opposed to revisiting these policy statements with the new Mayor at some point. She added, however, she truly believes in both the vision and mission statements that were adopted by previous City Councils. Councilmember Butler asked where this question is coming from, regarding whether the policy statements are harmful or problematic. She added the mission statement was adopted four years ago, during her tenure. Mr. Boganey stated the City’s budget should reflect the adopted values of the City Council. Councilmember Butler stated she is fine with the policy statements and does not have any questions or comments, nor does she feel that they are harmful. Councilmember Ryan stated he is fine with the mission and vision statements, as well as the stated values and strategic priorities. He added the priorities stated within them provide sufficient flexibility to rise to the challenges that are being discussed tonight. Councilmember Graves stated she does not find the policy statements problematic at all. She added they are really just statements about what the City Council wants to focus on, and how to support the community. She noted they are well-crafted, inclusive and wholistic. Councilmember Graves stated the real challenge is what the values will mean in the budget; how the City interacts with community members and business owners; and how quickly and efficiently the City implements these values. Mayor Elliott stated there is a lot of value in the policy statements as they are ow. He added the City Council should review them in a few years as a matter of practice, based on current conditions within Brooklyn Center. Mr. Boganey asked the City Council would consider customer service and operational excellence as important values. Councilmember Graves confirmed this, adding she has no objections. Mr. Boganey asked whether the City Council supports the six strategic priorities under which the City has operated for the past four years: enhanced community image; residential economic stability; inclusive community engagement; targeted redevelopment; safety, security and stability; and key transportation investments. Mayor Elliott stated he believes these strategic priorities need to be adjusted, but not at tonight’s meeting. Councilmember Graves asked whether Mayor Elliott can provide a few points for discussion. Mayor Elliott stated he is not prepared to do that tonight, as the facilitative process is not in place. He added he does not believe the six strategic priorities listed by Mr. Boganey are priorities of the current City Council and they should be reviewed. Councilmember Graves stated she looks forward to that discussion, as she agrees they should be reviewed. She added, however, she does not believe any of them are harmful, but maybe the wording can be reviewed. She added she has been involved in two strategic priority reviews in her 6 years on the City Council. She noted another review was starting when the Mayor was appointed. Councilmember Graves stated she would find it helpful to have a breakdown of the budget that shows how much money is being spent in each of the priorities. She added several priorities will overlap within City enterprises, and some will depend upon the market. She noted, other than that, she is fine with moving forward and having a discussion on this issue when time permits. Mayor Elliott stated he agrees that budgetary breakdowns would be helpful. He added he would also like to see measurable goals attached to strategic priorities. Councilmember Graves stated there are measurable goals, they are just not included in the Staff presentation. Mr. Boganey stated City Staff was working on an electronic report that could be generated upon request on a quarterly basis. He added this work was being done before the pandemic. He noted City Staff can continue to work on that and provide it more frequently if needed. Mr. Boganey stated each of the 6 strategic priorities are important, but it would be helpful in preparing the budget to get City Council direction on whether any priorities merit greater emphasis or resources. He added City Staff could include that information in the budget. Councilmember Graves stated resident economic stability will be a very important focus, given the current context of what’s going on in society and in the City. She added safe, secure and stable community is also important. She noted, however, she does not want that to come across as increased policing. She stressed the importance of continuing to increase community engagement, to implement priorities in an effective and sustainable way. Mayor Elliott agreed those are the two most important areas of focus. He added the City should invest in housing assistance as well as food and social service aid. He noted the City should make substantial budget allocations to those areas, which may mean making choices. Councilmember Ryan stated he agrees with Councilmember Grave’s assessment that residential economic stability, a safe secure community, and community engagement are the three priorities. Councilmember Butler agreed. Commissioner Kpaleh requested consideration of having a redevelopment process. He added there are a lot of vacant buildings in the City. He asked whether there is anything the City can do in the future to fill the vacant buildings and increase redevelopment in the City. Mr. Boganey stated targeted redevelopment has been a priority in Brooklyn Center for many years. He added the Community Development Director works actively with developers and other parties to look for ways to support redevelopment. He noted the City has had success with a number of projects in progress, including Jerry’s Food site, Brooklyn Boulevard reconstruction project, single family homes on 252, and housing proposals on 2 different sites on Brooklyn Boulevard. Mr. Boganey stated he would be happy to schedule a separate conversation with Commissioner Kpaleh to review redevelopment activities and provide additional information. Councilmember Lawrence-Anderson thanked City Staff and the City Manager for all their hard work on behalf of the residents of Brooklyn Center. Councilmember Lawrence-Anderson stated residential economic security is a key point, and a safe and secure community is paramount. She added she supports assistance for all of the City’s businesses, not just start-ups and entrepreneurs. She noted all local businesses help the community by generating tax revenue. She noted safety is critical. Mayor Elliott stated the City Council has identified resident economic stability and a secure, stable community as two priorities, but probably does not agree on what that means, as they are broad categories with a myriad of programs and solutions. He added, in terms of resident economic stability, there should be money in the budget to support mortgage and rental assistance, as well as assistance for nonprofit organizations that sustain residents in times of great unemployment and economic crisis. Mayor Elliott stated housing and food security and mental health issues are a crucial part of a safe, secure community. He added the City Council must grapple with the meaning of a safe, secure and stable community, and what meaningful adjustments are required within the budget to achieve it. Mayor Elliott stated the City Council is already committed to addressing these issues but should also specifically name the issues of racial justice, economic justice and addressing disparities within the community. Mr. Boganey asked what outcomes residents should be expected to experience next year for the City Council to feel that the City has been successful in making meaningful progress toward achieving priorities. Mayor Elliott stated historical data should be reviewed to have a baseline around evictions and foreclosure rates. He stressed the importance of keeping those rates low, however that is defined. Councilmember Graves stated she agrees a baseline would be helpful. She added the City would need to work in collaboration with Hennepin County as they already provide rental assistance, although not necessarily for homeowners. She noted she would not want to see a foreclosure problem, although that is how she was able to buy her home in Brooklyn Center. Councilmember Graves stated she would like to see an increase in the area of preventative programming initiatives within the Police Department budget. She added all of these strategic priorities are connected. She noted economic stability could mean support for businesses, homeowners and educational establishments that need financial assistance. Councilmember Graves stated there is a report in the meeting packet that shows details about residents who live below the poverty line, and what kind of households. She stressed the importance of being intentional about outreach and community engagement by getting ideas about tailoring support to what residents say works for them. The City should listen to the community and respond to that. Mayor Elliott stated support for small businesses and micro-preneurs is extremely important. Mr. Boganey requested input from the City Council regarding what they would like to see within the two strategic priority areas, to feel that the budget was successful. Councilmember Graves stated she supports consideration of strategic priorities from a public health perspective, with regard to the public health crises of racism and Covid-19, as well as mental health issues. She stressed the importance of being intentional with implementation of environmental, mental, physical, emotional and spiritual well-being initiatives within those priorities, which would be a successful outcome. Mr. Boganey quickly reviewed slides showing City Department goals, including CARS, Customer Service, Marketing, Community Development, the Fire Department, Finance, Police Department, and Public Works. Mayor Elliott requested that these slides be reviewed again at the next meeting. He added it is important to know more about departmental goals. Mr. Boganey agreed. Councilmember Graves stated domestic violence and reduction in youth crime, and overall crime, are important goals. She added the Police Department needs to have a goal around community accountability and transparency. She noted Police Chief Gannon is already working on this, but it should be a very specific goal stated in the strategic priorities. Mayor Elliott stated he would like to schedule another meeting to continue this discussion. He requested input from the City Council and Financial Commission regarding holding a meeting on Thursday or Friday of this week, August 6 or 7, 2020. Mr. Boganey stated the meeting could be a 90-minute meeting to address departmental goals and tax burden expectations. Councilmember Graves stated she is not available to join the meeting either Thursday or Friday due to a prior commitment. She added she can review the materials submit comments to City Staff before the meeting. There was a majority Consensus of the City Council and Financial Commissioners to hold a follow-up Work Session on Friday, August 7, 2020 at 6:30 p.m. Mr. Boganey stated the meeting would be approximately 90 minutes. He agreed to send meeting packets ahead of time for advanced preparation. Councilmember Graves requested that any items that require Consensus from the City Council be included in the information that City Staff sends to her prior to Friday’s meeting. Mr. Boganey agreed. ADJOURNMENT There was a motion by Councilmember Graves and seconded by Councilmember Ryan to adjourn the meeting at 9:21 p.m. The motion passed. 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: 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 3, 2020. That said meeting was held pursuant to due call and notice thereof and was duly held at Brooklyn Center City Hall. That the City Council adopted said minutes at its August 24, 2020, Regular Session. City Clerk Mayor