WEBVTT

METADATA
Video-Count: 1
Video-1: youtube.com/watch?v=jUESfu58xjA

NOTE
MEETING SECTIONS:

Part 1 (Video ID: jUESfu58xjA):
- 00:01:24: Meeting Call To Order and Pledge of Allegiance
- 00:02:19: Resolution 2870: Certifying Unpaid Utility Charges For Taxes
- 00:02:33: First Call - Public Input on Resolution 2870
- 00:02:35: Second Call - Public Input on Resolution 2870
- 00:02:37: Third Call - Public Input on Resolution 2870
- 00:02:50: 2025 Library Annual Report Presentation by Nicole Miller
- 00:06:22: Tax Increment Financing (TIF) Primer by John Rodmacher
- 00:21:02: Council Questions and Discussion on TIF Financing
- 00:36:12: TIF's Impact; Taxes, Community, and Project Justification
- 00:41:38: Consent Agenda Items Approved, Council Reports Begin
- 00:43:15: Library Board Meeting Update - Funding and Budget
- 00:47:19: Potential Funding Cuts - County & Prudent Spending
- 00:49:16: Joint Powers Trail Board Update & Project Status
- 00:50:19: Active Transportation Plan & Temporary Crosswalk
- 00:52:34: Chief - Springtime, Walk to School Day Reminder
- 00:54:59: Auditors Present and Grant Writing Update
- 00:56:09: John - Acknowledgement for Employee Chuck Peterson
- 00:57:33: Remember to Take Care of Yourself
- 00:58:37: Kids and ebikes - Be Cautious!


Part: 1

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[snorts] kids. >> A lot of kids. Call to order for the city of Canon Falls City Council meeting, Tuesday, May 5th, 2026. If I could get a roll call, please. >> Diane Johnson >> here. >> Zimmerman >> here.

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>> Chad Johnson >> here. >> Jeepson absent. Novach >> here. >> Croninburgger absent. Montgomery >> here. Uh, please rise for the pledge of allegiance. >> I pledge algiance to the flag of the United States of America and to the republic for which it stands, one nation

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under God, indivisible, with liberty and justice for all. If I could get a motion to approve tonight's agenda. >> Motion. >> Motion from Lisa. >> Second. >> Second from Chris. All those in favor? >> I opposed. And it carries uh public

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input. Nobody has signed up, so we're going to skip that. Go directly into our public hearing. The public hearing is resolution 2870 certifying unpaid utility charges that will be collected with taxes. Public hearing is open.

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First call. Anybody'd like to speak? Second call. [snorts] Third and final call. Talk about taxes. All right. Public hearing is closed. Uh to the council. I would uh seek a motion to approve resolution 2870.

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>> So moved. >> Motion from Diane. >> Second. >> Second from Lisa. All those in favor? >> Opposed? That carries. Gets us to our presentations tonight. We've got two of them. We're going to start off with the 2025 library annual report from our library director, Nicole Miller. And she

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has a a bad foot, so we're going to let her stay seated there. Uh, no slideshow. >> Um, >> just the >> the there's the infographic that I gave to you in your um >> perfect. >> So, um, just this is going to be really

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brief. Uh I just kind of wanted to highlight from this data about three libraries but also other libraries across the state of Minnesota through Midlink and what we receive from those other libraries. So our library is even

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being used across the state. Our materials are being used across the state. And then uh the digital checkouts accounts for what is borrowed through the Libby app. And we've talked about Libby a little bit.

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Um, as far as library programs, an average of 15 people attended each library program last year. Um, we had 372 library programs and 5,538 attendees. So, that's that's good.

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People are coming to our programs. Um, and we hosted an average of 31 library programs a month. Those programs include story times, Pokemon Club, Library Tales, Lego and Duplo Club, book club,

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health and physical literacy classes, musical performances, author talks, and more. So, people appreciate what we're doing. Uh, we have self-directed activities. Those

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include winter reading program, summer reading program, um I missed and other activities like make and take crafts and and other activities. These are all designed and organized by our library staff.

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And uh visits to the library averaged about 3,031 per month to use our myriad services including Wi-Fi, using our computers, making copies, sending faxes, making prints, reading, working on the

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puzzle that's over by the fireplace, having Zoom meetings, interviews, um other kinds of meetings with the county, attending library events, reading news, newspapers, borrowing materials.

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So then what all of that comes down to is our library is very much loved and very much used in our community. And the highest use as demonstrated by the data is our library collection and our

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library programs. All of which really require our skilled, knowledgeable, and dedicated staff. And I want to thank everybody for using our library. And that's my presentation. >> Awesome.

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>> Uh, council, any questions or discussion with Nicole? [clears throat] >> All right. Thank you, Nicole. All right. Our other presentation tonight, tax increment financing, John Rodmacher. >> Okay. Thank you.

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the screen projector on. >> There it goes. >> Got it. All right. Thank you all. Uh so I'm um just wanted to do kind of a primer for workforce housing grant. Uh the deadline for the this year's financing is in June and unfortunately that doesn't line with our timelines,

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but the this is a program that does look to like it's going to receive funding in 2027 and would be something that we'd be likely eligible for uh in that uh following year. So, um, talking with the developer, we're looking at trying to align that with the timeline for the

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2027 grant application as well, uh, for that project and gives us a lot more time to kind of evaluate, uh, and learn everything. But likely we'll see some land use applications coming up, uh, related to that project as they have a an agreed upon purchase agreement to uh,

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with two different property owners, which in in an area just south of the existing Cannonball apartment. So um with uh actually Keller Bartman apartments. So they would be looking at doing another one. So going going into that uh just kind of quick overview of

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what is tax increment financing. Um so in the state of Minnesota we have a what's called tax increment financing. It's a it's a tool in our toolbox for economic development that exists in a lot of different uh states as well. in Minnesota. You know, our purpose it can

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be used for uh both for private development but also to help finance infrastructure and redevelop areas uh as well as ensuring that we can build affordable housing. Uh so in this instance we're looking at project that you know the last tiff district that we did was for affordable housing. Uh

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likely this would not and as I say affordable I want to quantify that term. There's multiple definitions of affordable. What affordable means in this instance in regards to tiff districts is bringing a project into um

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either 50% or 60% of an area median income. And for us that is that as as the state says that has to be applied to the Goodyu County area median income. So just as a in context, 60% of the area median income for Goodyu County for a

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single person household would mean affordable rents that don't exceed $1,188 per month. So that that would be kind of what they at 60% of the AMI, they could afford rents up to $1,188 a month. So

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that's not, you know, you're not talking hugely subsidized or, you know, very low uh low dollar rent or something else that's coming in. These are not subsidized rents. They are they're not section 8. They are paid for by the by

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the tenants. They're just required because they're receiving this tiff district to make sure that though they have 40% of their units available for at 60%. if they're going to make sure that they go down to 50% then that uh

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requirement go drops down to 20%. Um but in this instance the project before in this project would look be looking at that 60% AMI maintaining 40% of the units at at um at that level or below.

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So what happens is that uh when a project is identified you you create the area in which the tiff is going to exist. may be for a single part project and a single parcel. Could be for multiple project or multiple parcels that may not all have projects associated with them but may have

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impacts. Those are some of your redevelopment tiffs. Uh there's there's some different varieties of how that's created. But once it's established, what you're doing is understanding setting that the value is within that district. So that happens at the county auditor's level. So they're determining. So if

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it's bare land, there's a taxable value for what bare land is for that area. And as everything is improved upon it, that increases the taxable value. So as that taxable value is increased, if you have a tiff district established, what is

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paid in taxes on that increase is then uh captured and then can be returned to either the developer or the city, whomever is uh is choosing to do that in the terms of the development agreement. In common practice for for us and what

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we did on the previous project was what we we did as a pay as you go. Um so that is money that's then paid back to the developer as the taxes are paid. So the original bare level taxes will come back and paid every to every jurisdiction as they normally would have been but those

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increases are captured and they're captured up to a certain dollar amount and a certain time frame. So whichever one of those and um things come first is when ultimately a district can be descertified or or closed. So there's a

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few different varieties of of districts that the state allows to do redevelopment, housing, economic development, renewal, renovation, soils, um corrections, uh hazardous substances. So these are all going to have different time frames in which they can go out for. They have different uh qualifying

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expenses in which they can be used. But I'd say in general what you're going to see is that the most um broadest and longest is going to be related to housing because in in housing project costs especially greater Minnesota what

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you're seeing is that the cost for construction nowadays is so much higher that in order to get these rents ultimately to the level in which they can become affordable um these tiff districts help to to ensure that and by doing the tiff district then they're

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they're the developer is guaranteeing that during the life of this tiff that they're going to maintain those those AMI levels um to be affordable for those units. So they can go up to 25 years. They don't have to. Uh typically you do see 26 as a number listed and that's I

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think just in terms of your development agreement when those tiff payments and the agreements start when the payments actually come into fruition the cycle goes 26 years but you're you know the as the state says it's it's a 25-year payment and then the valuations are going to be determined largely on what

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you actually what the tiff is actually going to generate. So that's going to go into uh you know how how much the valuation actually is going to be on the property and you know we can estimate the developers can kind of give us an estimate. We have worked with uh Mike

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Bubani from David Drown Associates to to kind of establish um you know verify what those numbers are going to be. Um you can try to set those numbers higher but ultimately in the end you're only going to capture what the value is that are assessed and what the tax rates that

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that you have in place. um what those you know ultimate taxes are going to pay be paid and what that difference is between the base level increment. So you can try to say well yeah we'll get 5 million but if you don't like that's you're not going to capture that and it's not actually going to come to

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fruition for that true dollar amount. So that's where it comes back to those two different mechanisms for payment. the city paying either the city paying the developer upfront and then financing it as a loan u by capturing the tiff and paying themselves back or paying as you

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go to the developer who's assuming that risk. So in a pay as you go the developer is assuming the risk that if these don't come to fruition then and the values don't increase as much as they had hoped then they're assuming that that cost if the you know they don't get all of it. If it was the city

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and we were financing in a loan and they didn't come to fruition, then you know we may be the ones at the end end of the day being left um short. So I just wanted to kind of touch base on what the last with the cannonball. So the tiff value from the development agreement was

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3.6 million. It did have a duration of uh 25 years. Ultimately it went into effect in 24 [snorts] um and is going out to final payments in 2020 in 2050. And with that, there's an interest rate. And I want to be transparent because this is the thing I don't think a lot of people understand,

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but it exists in almost every tiff district that that I've experienced. So in this instance, in a pay as you go, or if we would have done an upfront, um, you establish an interest rate on that TIF collection. So the original TIF value is going to be 3.6 million. So

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that's going to say, oh, we believe that without interest, we would capture 3.6 million just on the base level. and and no increased you know the base level increase from the base level to the increased value at the at the you know by the time it got to full valuation you

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know those values are going to increase over time so therefore there's going to be additional amount there's going to be interest captured on that and that's going to get paid back to whomever is assuming the risk the upfront that would be the city the de pay as you go is going to be the developer in the end you

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know developers are only going to sign up for this if they're going to be collecting that interest rate because they're not going to get financing. Otherwise, the, you know, the banks aren't going to finance their projects if they're not, you know, capturing this full amount to be able to pay this back in time because they're paying interest on that debt, too. So, either way, it is

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a it is a functioning component of it. It doesn't get mentioned a lot. Um, but in the end, you know, with the Canon ball apartment that that interest rate is paid so long as the tiff district is going. So, if it gets paid off early, well, those last five years of the

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payment, if you've captured all your TIFF early, well, they're not going to pay that interest. So, it it in effect there's a it kind of sets a cap what you might total pay. Um, in this instance, the cap based on the development agreement was about 2 just under 7.3

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million, excuse me, um, of what ultimately would be paid back to the developer over the full 25 years of that. So where does that money come from is kind of the next next level of these. And also I just I think this was important because this kind of came up in a in a earlier conversation I had

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with someone is that this isn't paying for the whole project. This is only paying for a portion of the project and it's only helping then to get the rent levels down to a point which they become affordable and people in our community would pay that rent for this project. If they didn't have the tiff district and

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the developer had to go and do this all entirely on their own and sell, you know, finance it through a bank and what whatnot, you'd see rent levels so high that they wouldn't the banks aren't going to finance them because there's no evidence to say, "Hey, we can support $2,000 a month rent in Canon Falls for a

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one-bedroom studio apartment." Uh, and that's not true. Like that nobody nobody has or not I wouldn't say true. Nobody has evidence to say that that's going to happen. So the bank's going to say, "Well, I don't like the risk of this, so I'm not going to finance that." So in order to to get the project into into an

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area where it can be financed at a level that the bank's satisfied and the developer can can actually achieve this and bring the rents into where the market can afford, the tiff districts really help kind of build that formula and put all the pu piece puzzle pieces

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together. So, back to what we were, you know, originally, uh, the original estimates on the Cannonball apartment were about 15 to6 million for the total project cost. Now, that's everything. That's not just the construction cost. That's all the developer costs that they're going to have and their legal

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and financial fees. That's all the other ancillary soft costs that are going to happen related to the project, not just the building itself. So, I wouldn't say the building itself totally cost 15 to 16, but back to trying to compare apples to apples. Developer comes in and says, "Hey, I'm going to build this project. I

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don't need a tiff district." Well, they're going to have those costs, too, right? Just because you have a tiff district, those costs don't go away. So, it's really fair to kind of assume that all of those things will be a part of it. So, who pays it? Back to back to this uh

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just to en ensure where we get how we get there. The county assessor is the one that values the property. We don't have the assessment. We don't we don't do that here. Some local jurisdictions do if they're bigger. Um but the county does that for us. Uh apartments are unique. Um they have a couple different

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ways they can value the apartments. They can do it on a rent model. Uh where they actually look at what the rents generated are going to be and establish a a valuation on that front. I'm not exactly sure of how they did it here. I haven't had that conversation with anybody. But then the developer, you

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know, pays their tax bill just as they normally would. On their tax statement, it does say, "Hey, this is how much is being, you know, captured as TIFF. Um, and then that gets and then that dollar amount gets sent to us in a report, uh, the city. So then we look at it and say,

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okay, what are we obligated to pay back this year um based on this tiff collection uh to the developer?" So we send that back to them. any excess, we do have to uh divvy that out back to the jurisdictions that had tiff captured. Um, and we have to do that at the end.

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But we also have the ability to capture a certain uh administrative percentage. So, you know, there's costs to the city for doing this because we got to hire Mike Bulani. We got to get development agreements. Those are attorney costs. If those aren't built into the development agreement where the developer might be paying it, um, we can be reimbursing

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ourselves through the tiff. So that that max uh capture is is 10%. So we can we can keep a portion of it. Um so not all of it um goes back straight to the developer. And then every year that valuation changes it it gets

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recalculated to determine hey is the tiff still going to be valid this year, this coming year after the tax payment. Um we also get reporting on those income levels. So, we were getting quarterly reports on who's actually renting um at the Cannonball Apartments and what

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income levels they have. Uh full disclosure, I just moved in there to um you know uh to have a larger larger space for myself and my family when they come to visit and I had to sign an income form. So, I know that that's happening on every unit that they rent

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out. So, that information gets ga captured or gathered and then the reports are sent to us to to verify are they meeting that 40%. So, and in this instance, they've met that every every period in which we've done the review. So, back to who pays it, developer. We

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pay it back to to them based on the based on the agreements, but in the end, everybody's getting a portion of it from the original one and then um you know, we're ultimately uh trying to calculate on when those are paid back. >> We ask questions.

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>> You can ask questions at any time. I'm almost done. But >> when um the last number four >> the district limit if >> oh >> if the tiff if the 26 25 year >> yep >> if that ends

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>> before the amount has been repaid does a developer then lose out on that? >> Yes. Yep. Then Yep. So if they get to, so in this instance, if it was 7 roughly, let's just say $7 million that they had and they only were able to capture 6.5 by the year the 25th year

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came, then they're short. I mean, they just don't get they don't the TIFF will get closed. It doesn't get to be extended and they will be left short of that that >> and if it reaches that amount say in 20 years, does that just they don't get the

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additional money? >> Then it gets No, they don't get any additional money. it gets desert. Yeah, they'll get they'll get their full amount uh for the for that payment year, but then any excess that we capture, then we have to pay it back and then um we descertify those districts. So, so

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that's in an instance of, you know, say we projected the valuation to be in the TIFF agreement to be $1 amount and then all of a sudden valuations increase a lot and then, you know, so the taxable value is a lot higher. So, they're actually end up paying a lot more in taxes than we anticipated. they're still

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going to get that during the life of the tiff, but if it gets descertified early, then they, you know, essentially they could be losing out on those interest payments. >> And I I wanted to add also is that if they don't, we get the reporting twice a year. Um so if they don't provide that

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reporting to us Oh, yeah. >> by a certain benchmark. Um then they don't um they don't receive their >> Yep. >> their payment for that six-month period. >> Yeah. What if they don't hit their goal, that 40% goal?

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>> They have to leave those um units open. >> Okay. >> So, they have to reserve a certain So, they have to keep 40% of the units available at a certain rent level. >> Um so, and >> even if they're not filled, it's not like they don't disqualify themselves or

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anything like that. >> They can leave them vacant, but if they were to fill them up with people that exceeded that threshold, then they would forfeit that tiff collection or tiff payment. >> Yep. So, they have to leave those units either open um or um like I said, if

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they don't provide that reporting um then they don't collect it, but then they can provide the reporting for the next payment cycle and then they'll collect their tip, but they can't go back and collect >> one for a previous payment. So, I just wanted to let that be

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>> and that um I can't remember the letters you use on the income level that changes yearly based on >> Yep. So [clears throat] that is that that is yeah that that fluctuates as it as it goes. >> So if it goes up they're not going to be penalized for having >> correct.

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>> Um one other factor and I'm not as [snorts] strongly versed in this and I didn't include it in my slide so I didn't research it as fully. Um, but when we set that tax rate that minimum at the first year of the tiff, if say all of a sudden our tax rate goes way

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down and all we're not collecting as there, they actually held to that original tax rate. If it goes down, it's it stays there. If it goes up, it still goes up, but it doesn't it doesn't go below. So, right now, we're at like 54% for our city taxes. If we went down to

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40, then they would still pay the 54%. I do believe that's uh that [clears throat] that's you know um protection in there so that you're not you know just because hey all of a sudden we got gang busters in development of other things and that we didn't anticipate and you got this 25

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year tiff going on and tax rates plummet like you're still going to be able to collect that. So the developer is still going to pay it. they're arbitrarily high and like there's ways to put that in language in there so that they can't they agree to this that they can't challenge those valuations and appeal to

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have their rate those things changed. >> So John just quick question so maybe I missed it. So is it is it in state statute that it has to be a 25 year for a housing or anything that's okay there can be there can be discussion. So say

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the project in order to make the project viable they only you know round numbers say like if if a 25-y year would yield them $2 million but they really only need a million dollars. You don't have to go to the full 25 years.

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You could shorten it to to fit within what's finance. >> The number or the valuation not not the tax valuation but like the total tiff amount valuation. Is that a back and forth number two or is that >> that that can be yeah that that can be determined but it's ultimately going to

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kind of be that you know negotiated amount but with a strong understanding is like hey this is really what is going to make this project viable. >> There's probably a sweet spot >> and a tricky it's it's trickier in housing where there's so many things that are eligible expenses. If you were

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going to an economic development one there's very limited things. It's as as I'm the over simplified answer is this. It's on the ground or in the ground. Those are the only things. It's nothing construction cost coming out of the ground for that you can use. So you're going to be very limited just even on

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the actual expenses that could be captured. So so that's a limiting factor, but then they're also shorter. Um whereas in housing so many things are it's it's going to be unusual that you have a project that couldn't meet the

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justifiable expenses to capture the most tiff that they could. It just comes down to all right so what is really needed to get this project to viable to be financed and and move forward. So, I mean, there's some factors into that on who the developers are and and what they're they're trying to do. But in

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this case, like, you know, I think the one that been working with has, you know, by going to the 40% holding 40% of their units, the 60% AMI, that's a good testimony to say, hey, we want to we want these to be accessible to a lot of

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the marketplace. And then on a quickie interest rate on the TIFF is set. >> That's that can be negotiated as well. >> Okay. >> It's going to be it's going to >> it's fixed for the life of the tiff or it is okay. >> Yep.

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>> Yeah. And that's going to fluctuate to kind of what they're borrowing. If they have to, you know, borrow to private loan or Yeah. bank finance to get the project done, they're you try to align it to their bank financing. [snorts] So, okay, moving on to this. So, I think

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in the end, you know, it's it's really important to talk about the gains and losses here cuz I mean it that's to me some of the UN un that's that's to me like what what are you trying to accomplish by doing these? Um, and in

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the end, you know, with this project especially since it was very uh new, there hadn't been a lot of market rate apartment complexes built in Canon Falls. My previous community I worked for, we had a very very similar project to this. Um, similar circumstances where we did not have market rate. There's a

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lot of risk, a lot of uncertainty, and a lot of unknowns in terms of what is the valuation even going to be on a on a project like this. What is the, you know, are you going to get them filled? Like, you know, what what are those things? You can do all the housing studies you want, but in the end, it's going to come down to the reality of

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what, you know, what people are actually going to, you know, buy and forward. And I think in this area, it was great success. you filled it up really fast. Um, you do have this tiff district. The valuations are coming in um, you know, maybe a little bit under where we original projections, but they're

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they're comparable. Um, so I think that's that's in alignment and that having that information is going to be great moving forward and into the next one. We're going to have much better data to know, hey, what what will the tiff support? What will the valuations be? and uh you know a lot more

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confidence knowing that there's still a lot of demand in the market for this type housing. So while you're foregoing that tax base increase uh to everybody else and you're paying that back to the developer, you are gaining, you know, 79 units of of residents. In this instance,

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about half those units are studio apartments, so one bedroom. So you're not getting a lot of people in that. The rest are going to be one and a couple two bedrooms. What they are looking at in the next project is something that's more there's no studios more um and then

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then a mix of one and two bedrooms and with a um a few amounts of three-bedroom apartments even within the next one and that's going to be in a 69 unit project. So, so that's even, you know, additional added value. They're buying things in

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the community. They're going to the grocery store. They're going to the gas stations. They're, you know, shopping, you know, going to the restaurants. These are people that are are living in your community. Yes, maybe they're commuting to other places, but that's the nature of Canon Falls. Like we're located in an area where people can do

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that. Um, you're going to gain workforce. I know that's a huge factor in terms of uh a lot of our employers needing people that are here. That was a big part of what sparked wanting to do an apartment complex, I think, in the first place here. It sparked it in my

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previous community. um having large employers that were saying, "Hey, we can't get people here because there's no place for them to live." So, they can't they're just not willing to commute more than the 60 miles. Um you potentially are adding students. Uh I did ask that question of our of the apartment owner

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today. Um you know, so he's going to trying to put some more together. I'd say in this existing apartment with studios, you're probably not getting a lot of kids that are student age um in there unless they're single parents or something uh because they're that's not a unit that a family dynamics can be.

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But when you go to the next one, one two-bedroom, threebedroom, you're going to see a lot more families. Um did talk about project or a comparable apartment in Redwing that does have a lot of families in it that do have school age children that are that are participating. And then I think in terms

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of what the school district talked about when they're doing the referendum tour was butts and seats is a is their number one uh revenue resource. Like how many kids we get into the school is going to determine how much um they're they're available to to receive in revenue from

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the state for those kids. So and that's and those declining numbers are a challenge for them. So if we can do things that reverse that, I think that's good for the school district. We're also getting uh you know water and sewer utility payments because these are connected to our our systems. Um so

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they're pretty high you know or individual location that's going to be some pretty high use. Um but as we talked about in the data center uh we do have capacity for that. we do have the means that if we're selling more water and treating more sewer, um it's not the

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the revenues that we're making on that increase are not parallel to the costs of those operations. The revenues exceed the costs. So you see that chart where the you know revenues are going up faster than the costs are going up. So

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it makes our cost it makes those things more more costefficient for us um in terms of those uses up to a certain point in which then you know we'd exceed our capacities and then we'd have to make new investments uh and you know or different additional operations but in this case it's you

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know we're not needing to add more staff to serve things like this and then back to what I talked about you know we're reserving the in this project 40% of those units are reserved for people to ensure that they're going to be in um area median income. So that's making

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sure that they're accessible. It just so happens that for this county I would say that that's you know targeting to where the market can afford like it's not it's not putting things you know so far under um that where you're struggling to get people that are qualified and you're as

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you know was asked before are you leaving apartments vacant because you don't have qualified people to rent them. Um I don't think that's the case with the existing Cannonball. It seems like it's been had a pretty good cycle of of uh lease out and I don't think

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their their occupancy rate is is very uh their occupancy rate is very high vacancy rate very low. All right. So I wouldn't be it would be fair to tell you like what are you losing? Um in the end you don't get a productive district if

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you can't justify the project. So I mean there's a lot of things that have to go into that. There's a lot of factors that that happen. Housing projects definitely have the probably some of the easiest thresholds to to justify because there's so many eligible expenses. But if you didn't have the tiff district, you're

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not gaining that tax base. So if the project can't exist without a tiff district, there's no tax base to be lost. Um and it's not necessarily lost. It's just delayed. So for me, the tiff district just delays the increased

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taxable value of your of the property um from entering the general tax rules. So what does that mean? So overall, every year counties and you just got these notices probably end of March, April, what your 2027 valuation is. So the county the assessor is valuating all the

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taxable property in town and that's called the net t and then within that taxable property there's a market taxable value and then there's a net tax capacity. So net tax capacity says well what kind of pro property is it? Is it residential, industrial, commercial

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apartments? So there's different ways that those rates are calculated. So what they do is they take all those net tax capacities, they add all those up and that's your pi. So as that pie gets bigger the everybody else even if your valuation goes up but our tax rate stays

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the same you actually may see your taxes decrease a little bit even with the valuation going up if we're keeping our tax rate the same which we could be because now our tax capacity is higher even if our levy is going up the tax capacity increase might exceed our the

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rate of increase of our levy. So if you know let tax rate or tax capacity goes up 10% but our levy only goes up five well that's that's a gain like we're gonna see people's if your value didn't increase more than 10% well you actually might see some decreases

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that so everything you're adding into that pie and making that pie bigger is you know potential for helping to reduce property taxes for everybody else. What this does is it prevents it goes in there, but it's kind of kept off to the off to the side up until a certain point

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when the district is descertified or it ends. Then it gets throwback in the pie and the pie gets bigger again. So, they're still paying those taxes. That's kind of all kept over in its own little pie and then our pie just kind of stays same without this project. But in the end, like I said before, you're gaining

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all those other ancillary things that aren't necessarily directly related to property taxes, but you are getting um you know, you are getting benefits to the community for a project that would not exist if not for doing a tiff district.

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>> Wouldn't we have to raise the taxes to then pay out the part that's the tiff part? How they get it back every six months? >> Nope. You don't uh not on a pay as you go because they're paying those taxes first and then we're reimbursing. what they pay they >> so if you did and then the instance if

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we did upfront what typically would typically is done is then you go and borrow that money that you're paying the upfront so you're not raising your taxes to collect it and pay it out to them you're borrowing it from a bank set they're setting an interest rate or you know whatever lender it is they're setting an interest rate we're setting

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that interest rate to ensure that we're made whole and do our best to be made whole in the end >> so it's not it's it's I said it's kind of keeping everything out of It's not getting all mixed into the same pie at the same time.

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So, you're not raising raising costs. You're not spending other taxpayers dollars when these projects go into effect. >> Any other question? >> I was just going to thank you. It's been very helpful. >> Yeah. >> To understand it. >> It's it's a complicated thing.

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[laughter] I I've I've been working this for 16 17 years and I still you know obviously there's lots of things I don't totally understand about it but um that's the you know that's the meat like in the end there's a lot of nitty-gritty details

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that are going to come out and be you know change those those different variables but um you know the projects don't go back to what I said before projects do not exist do not happen unless they can justify that they they need the tiff district to make them

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happen. And we know what the factors are to make them happen is to ensure that you can get those rental rates within what the market can afford. >> And by doing the tiff district, you are you're setting a a guarantee because if they're not, like you said, if they're not meeting the expectations of tiff,

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we're not obligated to pay it back. So then that, you know, we get to reimburse that to everybody else. >> Yeah. And obviously tiff districts are uh they work in other communities as well because on one of your first slides I think what did it say 599 projects >> go back um yeah and this is one of yeah

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599 current tiff districts in the state um 799 in redevelopment so I mean that's even >> right >> that's even where you're seeing those can go out 20 but those are there's a lot more restrictions and what are eligible uses in a redevelopment you're

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not as and and that's where you generally neighborhoods kind of affected. >> Mhm. >> And they're using those redevelopment districts. So, you're trying to take like one good project to then help um these other areas, blighted areas or dilap, you know, things that are

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undervalued to give them an opportunity to get some funding to to make improvements throughout the entire district. So, it is there's there are definitely projects throughout the state that that leverage that. Yeah, I think it's helpful to see that this is so common that there's, you know, 599 729

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>> 36% of the >> Yeah, it's it won't be the it won't be the first one. It's not shouldn't be the last one. Now, do you do them for every single project? No. No, not every single project is a warning, but these bigger ones that are going to have, you know,

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until until the point where all of a sudden our market grows and the the the rate that tax rate is or that market rate for rents is a lot higher. >> I mean, it's going to be necessary and maybe at that point you want a tiff district because you want to ensure that

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people have access to some more affordable rents. >> I'd be curious on that 599, how many are actually going 25 years like Yeah. Um I I can speak a little bit to that because we had there's like six of them in Little Falls in my time, not in

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my time, but in the history of of doing them and they were doing them from the late 80s on. Um there's six projects and only one of them actually made the full 25 years. >> Where can I go to get that kind of data? >> Uh that one came from the house research

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uh and state auditor. So I I Googled this too. I I did pl a slide. I I did use co-pilot to help me draft this, but >> um I verified it with my own research. >> So, the state legislature has some good information. Uh the League of Minnesota Cities also is really great. They have a

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great uh couple primers on TIFF districts. Um so, for you know, what how they work, what they do. Um but it can get a little technical at times. I I think so I'm trying to simplify it a little bit more.

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And I'm extremely glad we're not trying to get this done by June 2nd. >> Exactly. Me, [laughter] too. I think we all breathe the sigh of relief and and the fact that uh we're we're kidding ourselves if we think this is going to work to to meet those deadlines. >> We don't want Izzy to quit too soon.

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>> [laughter] >> Um I will say there you know we will have things to do because um as we did with the data center um you know the land use eligibility you know making sure that the land is eligible for use for the buyer is a component of the purchase agreement. So you know not to

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say that we just roll over and do say do whatever you want. No we do what we did before and we follow process and we go through and ensure that what can be developed is going to be what's good for our community. Okay. >> All right. Thank you, John. Appreciate that.

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>> All right. That gets us to our consent agenda. Uh consent agenda items may be adopted under one motion as presented or may be removed for discussion and resolution as council business. Tonight we have item A, adjust and correct claims accounting period ending April 29th, 2026. Item B, meeting minutes,

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April 21, 2026, city council. Item C, resolution 2871, accepting a monetary donation of $361 from Selco. Item D, approve posting for a part-time police officer. Item E, approve acceptance of project and final pay request for 72nd

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Avenue Way project. Item F, approve acceptance of project and final pay request for Hardwood Estates second subdivision. Item G, approve acceptance of Chuck Peterson resignation. Item H, approve posting of public works vacancy. Item I, approve seasonal part-time

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public works employees. Item J, approve Blandon Foundation grant application for the master streets, parks, and trails plan. Item K, introduction and first reading of ordinance 415, an ordinance approving the purchase agreement to convey city property to the Canon Falls VFW. Item L, approve museum roof

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replacement proposal. Item M, resolution 2872, authorizing application for grant navigator support for the city. And item N, resolution 2873, accepting a a donation of $125 from Sue's garage sales to the police department. Is there

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anything the council would like to pull down? Hearing none, I would take a motion to approve tonight's consent agenda. >> So moved. >> Motion from Chris. >> Second. >> Second from Diane. All those in favor? >> Opposed? Carries. Gets us to uh our

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reports. If anybody would like to talk about the library board meeting that was in late April. >> Um it was we got to hear the update uh on the annual report. >> Yeah. >> Um and also you know the potential um

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cut in funding on the county level >> uh what our director Oh >> I had a good conversation with Brad last week. So he's going to fight to keep the funding >> okay >> as is. >> Okay. But if that if that's not

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possible, the nice thing was >> between our director and our city administrator um and some staff reorganization at the staff's request, not our, you know, risk that that might actually turn out where we would be able

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to absorb that loss of funding if it comes to it without curtailing in services. So that was good news. And Nicole, I don't know if we've made it I I wouldn't say public, but like we just haven't talked about it up here, but it it was a 10% cut, right? That that was the proposed cut.

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>> So, my conversation with Brad, um he said that [snorts] the the county is going the preliminary levy is at 20%. And none of the commissioners really want to [snorts]

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raise the levy that high, right? So, um, a few of the commissioners are are [snorts] his take was they're they're just antsy and they just kind of want to make some cuts across the board. That's what he told me. But he also um looked

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at our agreement and it is a contract that Selco has with Good Hugh County and he said we can't breach the contract. So, he's really

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working to make sure that the rest of the commissioners understand that they have a contract, a contractual obligation to fund us at a certain level. >> Perfect. And then just so if I understand it correctly, they fund is it

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25ish% of the library fund and the city takes on 75%. >> Yeah. >> So, yeah. Can I add a little? >> Go for it. That's just the back. I just wanted some background because we cover that in library board meetings but we haven't switched it up. >> Yeah, that's so that's what it equates

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out to. So the county has a formula for how they distribute the funds throughout the libraries within the county. So that can vary based on changes in the formula right as I understand it >> the Okay. So, our contract is um from

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last year, the county was paying $66,000 to all of the Good Hugh County libraries and then our um the our the money gets divvied up between the libraries based on circulation of county residents

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and the percentage among the different libraries. So, um, Redwing and Zimroda have the highest circulation. We have the the the next highest. Like, we're the three of us have the highest county circulation in the county.

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>> And then it's Kenyon and then Lake City and Pine Island with only like a few thousand. >> So, we the three of us get the bulk of them. >> And then just the way the county budget works, they work on two-year budget cycles. So they were, you know, their last year's budget was like a 6% and

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then next year was going to be in this 20% because they they knew and a lot of that is much more I don't know I guess I shouldn't speak to that. That's the county's world. But they were trying to offset they knew they needed both for

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both they knew they needed that amount for both years. So they tried to backend it and that's where I think the conversation is coming like what can we lower >> right >> and I think that was one of the ideas. So a message went out to the county libraries earlier this year saying hey

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look at you know there's potential that we might lower this by 10%. So obviously it's great that Brad's um advocating for the library systems and trying to ensure that that isn't going to happen. Um, but knowing that we received this information, we just are trying to also

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be prepared and and prudent with our dollars and and trying to keep what in the end we want to try to keep our balance of those funding ratios equivalent too because >> that's you know we're we have a lot of [clears throat] we get Dakota County residents I'm sure that use the library

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but we have a lot of good U county residents that are using our library services. >> Yeah. And >> so not city that are not in the city of >> canals. Right. they um we in Evergreen we um and that's our ILS we divide

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people not really divide but every single card holder we have their funding source so like if they live out in if their address is a good hue county rural address then they're good hugh county if

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their address is a city of Cannon Falls address, it is city of Canon Falls. If it's um if it's a Kenyan address, then it would be Kenyon.

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But if it's any place outside of Celco, then it's other funding source, which is really annoying to me because then I can't tell. [laughter] So, >> all right. Yeah, I had good conversations and and the other library directors and I have been talking. We

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had a um we had a meeting last week. I talked to Brad. We've been emailing other directors and I have been emailing each other a lot and then we're meeting again next Monday to discuss it all. >> All right. >> But just so everybody knows, we're on top of it.

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>> Good, good, good. Uh Joint Powers Trail Board, any updates there? >> Uh yeah, [clears throat] I got one. It was uh mile 14 and 16. The uh primary structures were repaired and that project's complete and they're on the final phase of shifting toward degrading

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and the final cleanup. Um and there's going to be more projects here in the summer. We probably expect them, but they're kind of closer down to Welch and Redwing. So if you're going the whole way from Canon Falls to Redwing, you're going to run into some issues. There's going to be some areas where you could just walk through it and others where

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just for safety, we're going to be trying to close it off. >> Okay. So, >> yeah, they've done a good job. I've seen the signage by the uh >> Yeah, and I was told that if it's not fully open that they probably aren't even going to have the machines there to charge people for that because you don't get to use the full trail. So,

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>> Right. Right. >> Yeah. >> All right. Uh we'll go around the horde, Jed. >> All right. real quick. Um, back in uh was it January of 24, we uh the received

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a grant for the active transportation plan um and a demonstration project from the department of uh transportation. Uh through a lot of meetings, we were able to develop an active transportation plan and through Lauren and I had other plans,

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but we we finally def um were able to uh nail down a demonstration project. we wanted to put our demonstration project up at 72nd Avenue Way and put a crosswalk for that new community to the school. >> Uh Mandot shut that down. U they actually wanted us to put like a bike

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lane down Minnesota Street. Um and so we we finally kind of came to an agreement and we're putting a crosswalk, a temporary crosswalk at 7th Street and 19 right by John Burch Park. Um this is also going to have a pedestrian island. There's going to be a bunch of

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delineators. It is temporary. Um, and so the hopefully the farm equipment when it comes through can they'll lay down as we go. But this will actually be installed next Wednesday, May 13th, >> finally. [laughter] >> So, um, we got Mindot is going to

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provide traffic control and then, uh, uh, Will from the active or the grant administrator, help me out there, Lord. >> Part of the Yeah. Um, and then my public works will get this installed and we'll

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see how it it goes uh for the summer. >> It It's just for the summer then. >> It is just temporary. It's just for the summer. Um, >> hoping that it'll go >> We're hoping that it'll go through the summer. So, like during um, you know, kind of baseball game season and then hopefully even through the football

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season to kind of test that. Um, the purpose of it also is to help with the senior living facility to give them a safe crosswalk so that they don't have to go up to the stop lightss across and then backtrack to the post office or the

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grocery store. So, we're trying to kind of take this as an opportunity to test drive this so that there could possibly be a permanent change going forward. So hopefully they'll utilize this and then we can kind of do some survey or

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community engagement afterward and see that if people are using it then we can maybe make some change going forward. >> Thanks. So it is going to shift the westbound lane over. So a lot of the parking lot John Burch Park there is going to go away. There's going to be

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the westbound lane as it puts that pedestrian island in. Again, this is just temporary. It is just to see how it goes. Okay. >> All right. Thank you. >> Thank you, >> Izzy. >> Go ahead, Chief.

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>> You're indicating the west side of or westbound traffic >> uh east of 7th is going to be impacted. Is that going to change things for like uh the games and stuff where they're parking the buses? >> Um

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probably it's going to Yeah. from communicated it to the the school district yet so they know that what's coming. >> I will thank you. >> Nothing cool. Anything else, Chief?

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>> Forgot to lean forward for the microphone on that. [sighs] Sorry. Um we have uh you know I think gotten completely out of winter. Um I heard there were some possible snow flurries uh up north. uh but uh no accumulation.

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Uh fortunately, all we saw were some sprinkles on the dry pavement. Uh so we're shifting gears. Uh tomorrow is uh walk to school day uh for the uh the schools. Uh we'll be uh helping them go from 7:00 to the schools. So there will

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be some impact on people that may be taking the the route. Uh the route will be city lot uh using the sidewalks uh down to second to Minnesota uh to the

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school district. Uh any uh hold up on traffic will be kind of minor, probably you know a couple of minutes at best. Um and the nice thing is is as they cross Highway uh 20, they're still pretty tight because they

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just started out. um it's when we get up into the the neighborhoods that they get kind of stretched out over the course of a couple of blocks. So, we just appreciate the uh the patience of any of the residents that may be infected by the uh the delays. >> That's all I got. >> Thanks, Chief Sarah.

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>> Um we this week have been having our auditors here. So, um we've been conquering that. They be very tired every night. Um, so, uh, they're here this week and they'll be, I think, reporting sometime in June with a fall

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audit from 2025 and, uh, start on 26 now. So, that's >> all right. Thanks, Sarah. Laura, >> um, just been very heavy in the grant writing world lately. Um, and then they've gotten the, um, the underground

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infrastructure in at, um, Hardwood Estates. So, they'll be getting the stakes for the lots done and getting that done. So, I mean, it's moving right along. Um, we'll be closing on a couple lots in that new subdivision in the next

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week or so. So, that is progress, I would say. >> It's exciting. >> It is. Yep. >> John, >> thank you. [clears throat] Um, I I want to share an extra acknowledgement for uh Chuck Peterson. He's uh been very loyal

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employee with the city for for a long time. One of our I think longest tenure one of the longest tenur employees we've had. So it's really um very very much appreciated the work and commitment that he's given for for that in the parks department and streets. So it's he's

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ready though and I think he kind of figured [clears throat] out his retirement things and um he's he's ready to go. So, uh hopefully uh the process for for filling that that role will go smoothly. But just wanted to to acknowledge that I'm very appreciative of the work that he's given. Uh didn't

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just I think a a recap quick of my conference last week, our MCMA conference. Um the theme was was on uh how do we thrive and that was in a lot of the focus areas were putting you [clears throat] know information and things on what can we help to do for

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ourselves to to be our be there because we can't give what we don't have. If you don't you know you don't have the energy, you don't have the the means, it's hard to kind of deliver and give for for those others. So making sure that we're doing things that we're taking care of our own well-being, including up to, you know, the last

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speaker that talked about as a sleep, you know, specialist and talking about how do we do better to get better sleep. So I think that's a a really good theme and I think something that applies to to everybody. So, you know, just kind of going through all those as life is busy and crazy and challenging. Um, you know,

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remember to to do those things to take care of yourself, too. uh because that can be what you need to to be able to support yourself, your family, and um those around you, the work that you do. And then just uh very pleased uh that we have Erica here. Uh didn't, you know,

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got to acknowledge that we're hiring her and she's starting so she started last week. Uh so it's been been great to have her on board. She's I think going to be a great fit for our organization. >> Wonderful. Thank you, Chris. Sitting on an island over here tonight. >> Uh yeah. Uh, shout out to Diane for

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covering me at library board. Appreciate it. Thank you. >> Haven't gotten the bill. [laughter] >> It involves uh shoveling her driveway in the winter. That's what I was told. >> That was the mayor. >> Yeah. Oh, no. I'm going to pass that on to Chris. Uh Diane, >> I have nothing. But again,

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>> thanks to Chuck Peterson. >> Yeah. Lisa, >> I'm good. >> Chad, >> uh, thanks to you guys for your presentations tonight. I appreciate it. Got a lot to learn about tiffs. Yeah. Yeah. [laughter] Uh I'm just going to be real quick. It is springtime, almost summer. The

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activity level seems to be picking up a lot. Uh nothing official, but I know some residents are complaining. Kids on ebikes, scooters, those things. Like, let's be cautious. Get to where you're going safely because the uh the sidewalks are are not roads, but they're kids. So, we have to be looking out for

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them. I think there's been uh more close calls than we'd like to uh we don't want there to be any close calls. So, just be be careful. And like you said, uh, National Walk to School Day tomorrow. That's a good reminder of watch out for pedestrians, especially around the school. All right. Uh, I would accept a

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motion to adjurnn. >> Motion. >> Motion from Lisa. >> Second from Chad. All those in favor? >> Opposed? We're adjourned. Thank you, everybody.