Six meeting to order of the Farbol City Council. First item is roll call. >> Barnes >> here. Dumbboya >> here. >> Ross >> here. >> Rowan >> here. >> VonLoo >> here. >> Teal >> here. >> Mayor Spooner >> here. And pledge allegiance
to the flag of the United States of America and to the republic for which it stands. One nation under God, indivisible, with liberty and justice for all. >> Our second item tonight is approval of
the agenda. Does anybody have anything they want changed? >> I'll entertain a motion. >> So moved. >> Second. >> Motion by Ran, second by Vance Loose. All those in favor of the agenda signify by saying I. >> I. I all oppose. The agenda is passed.
Item number three, presentation and introduction to oath of officers paid on call firefighters, Chief Deetsz and Jessica Kzer, city administrator. So, tonight is my honor to introduce Farbull's newest firefighters, and we're
going to swear them in before I introduce them. So, administrator, >> you can hold on to that one. I'll I'll use this one. >> Okay. Uh, the way we're going to do this is that you will each have to insert your own name, but you're all going to
say this at the same time. So, kind of the way it starts off is I and then you all say your name at the same time. But it sounds weird when when I say repeat after me. So, okay. I insert your name, >> do solemnly swearly
>> to support the Constitution >> of the United States >> of the United States >> and of the state of Minnesota >> and that I will faithfully discharge >> the duties of firefighter >> duties
>> of the city of Farbo, Minnesota >> of the city >> to the best of my judgment and ability. >> Congratulations. So, it's always exciting when we get new people to join our department and it's an honor to have these four young men to
join us. So, at this time, I would like their badge pinners to come up and we're going to pin their badge on firefighter Ben Finholt, Noah Bragg, Fabian Hernandez, and John Rivera. Come on up. She can't do
Thank you. Our newest firefighters. >> Congratulations. >> Hey, welcome. >> Congratulations. >> Congratulations. >> Welcome. >> Congratulations. Congratulations. >> Congratulations. >> Congratulations. >> Congratulations. >> Congratulations. >> Thank you to all of our firefighters
that are present here tonight. Um, next item is approval of the minutes of May 26. >> Second. >> Go ahead. >> Motion by Don Booya, second by Ross. All those in favor why I'm saying I.
>> All opposed. >> Those minutes are passed. Number five, request to be heard. Say we're going to go over the rules before we get started here tonight. Just a reminder of the rules moving forward. City council charter and rules apply
that the city council has adopted policies that prohibit audience from disruptions like clapping and shouting. We please ask that you be respectful to all people that are speaking. also policies that this shall not last more
than 15 minutes which is you get three minutes per person and there are four sign up so hopefully no one goes over if you see the sign 30 seconds please be aware that you are winding down
I would also like to add that there is nothing on tonight's agenda regarding the data center here okay we just simply received this court ruling yesterday morning. Um, we are presently working on having meetings with our legal counsel
about where we go from here. I believe we have a tenative date for a meeting set up. Nothing in stone yet, but so there's nothing on this agenda nor next week or possibly the week after. So, it's good to see you people coming. But
just so you know, we will not be taking any action on this tonight. Contrary to what is out there and I'm not going to say where I tell you what. >> Our first item is Deb Smith.
Please come forward. State your name and address for the record. >> Mayor Spooner, members of the council. Thank you. My name is Dev Smiths. I live at 415 Sunshine Lane. I understand about the data center, but I would like
to strongly encourage you to reconsider the environment that this is going to destroy, number one. And number two, is it going to create more jobs 35 years tax-free? I would take that. There's got to be a better use of that land like Chipotle.
Thank you. >> All right, Karen Zelner, our weekly guest. Yes, I'm back again. Um, each time I try to hit a different topic. This time though, I'm going to follow up on the noise pollution from last week. Remember I played that uh sound of a
data center running? Um, I did some uh research. I looked into and you have a copy of Environmental Protection Institute. >> Um, that address, please. >> What >> your address? >> Oh, yeah. Sorry. um uh 1901 Crystal Lane
and six you know n well whatever anyway um according to the environmental and protection institute deaf elderly heart of hearing and children are most affected by the impact of noise pollution. Now you say well deaf people
they can't hear. Well uh sound as you probably know is generated by pressure waves. So when pressure waves hit the psyia in your eard drums, it's translated by your brain to sound, to voices, to music, to whatever sound you
hear. Well, that doesn't happen for a person who's deaf. However, the pressure waves still hit them. It hits their brain. The so the pressure waves are what causes the issue. Um the the death
deaf pe persons experience pressure waves above anything above 65 dB increases the stress and the blood pressure typically in in the deaf and hearing impaired. Um data centers generally even the small ones uh will
have 60 to 95 dB. The one I played for you last week was above 95 dB which are larger units. 85 dB however is impacts everybody the hearing the hearing
impaired children. It affects all of us and that is um hopefully not the type of data center we would start with but the as I understand the plan is to increase it and make it larger and larger and
larger. Um the deaf deaf people have a higher sensitivity. Good thing I gave you copies of this. Um they it it can cause nausea, headaches, insomnia and anxiety. The low frequency
sounds are heard not cannot be heard the pressure by humans. It's heard though by animals and we still feel the pressure. That's the thing. And it decreases cognitive ability. And we our schools are criticized because the kids aren't
performing. Is that what we want to to have a problem with a worse problem in schools also? One last thing. One last thing. Um it also causes work a lower work performance and we have other industries out there.
>> Times up >> decrease work performance. >> So thanks everybody. Um I'll be back in two weeks. Mary Marian Wolf, please state your name and address for the record. Mayor, you might want to pull the microphone down to your mouth.
Toward your mouth. Thank you. >> Like that? >> Yes. Perfect. >> Hello. I'm Marian Wolf. I live at 887 Southwest 4th Avenue here in Farbo. And I am behind the train on this. I want to know first of all if I ask
questions will you answer them tonight or not? >> No, we're not going to give any input tonight. >> Okay. Uh is there going to be a time when you're going to answer questions? >> Once once we have a formal meeting on it, it will be on an agenda, but until
we have nothing planned. >> So what's the essence of tonight? >> You can speak. You have three minutes. But we can speak, but we get no answers and we have no I I just want to know where we're at. Is it, you know, are we just put our toe in
the water and we can do something about it? Are we up to our ankles or knees or is it just our eyeballs out or what are we at? >> That's what I want to know. So, we know where we're at. Can we reverse this? Can we not? >> That's what we're here for. I don't know
that answer. That's what we're going to take. This is not going to be a this is going to be a long process. Okay. We haven't even scheduled a formal meeting on this process. >> Okay. And are you going to have open >> correct? >> I guess all I want to know is are you
going to have open meetings to with people? >> Pay attention to the city website and look at every city council meeting and they will post when there's meetings on this subject. >> Okay. And it'll be a back and forth type of thing. >> No, not tonight. >> No, not tonight. But when you do post it
and you're going to have something, it'll be back and forth where you'll give an answer to a question or >> we at that point in time when there's public input, we will take all the questions at once and then we will answer them correctively. We will not get into a debate with the public.
>> Okay. Yeah. I think the thing to clarify, mayor, for those in the audience, this is a formal business meeting for the council to transact business. The public is welcome to comment on things that are on the agenda or not on the agenda under the section of requests to be heard, which is where
we're at. We allocate in our rules 15 minutes for this, but it is not a back and forth questioning. If you have questions, I would strongly recommend that you reach out to your elected officials, but this is not the forum for a back and forth. I guess then I just want to say that the little I have done
and it is I don't see anything positive at this point. I see a lot of negatives in 30 seconds. >> Yep. And I would like that consideration for the quality of life for everybody in the Farbo Rice County community because
I think it'll affect everyone. >> All right. On. We have time for one non-resident. Sodto Spring. Please come forward. State your name and address. >> Sodto Spring, 16922 Cabbat Avenue, 2 and
a half miles from the location. Um, I apologize. I made a mistake last time and so I'm being very careful this time and I'm reading things. what I'd like to talk about having already spoken about
how it's going to hurt our quality of life. I have uh run into people who are concerned about data centers but who thought that they were necessary and somebody had to do it so why not us. Um I did not work with those people
because I do not think data centers or hypers scale data centers are necessary. I mean the we're talking about something that's of a much bigger scale than the things that are already there. Um anthropic
has called for a global slowdown in the development of advanced artificial intelligence. It warned that increasingly powerful systems could eventually escape human control. The executives said that they would
support pausing work on more capable models if rival developers agreed to do the same. I'm not terribly impressed by that, but they said that the technology presents an arms control challenge similar to
nuclear proliferation. Now, my experience, I lived a long time without AI. I lived a long time without um cell phones and computers and the internet and um there are certainly
conveniences to having those things. I have not noticed any conveniences from AI. I've noticed lots of mistakes and of course I noticed the job losses. Um, so
see the company says AI may be approaching a stage where systems can help develop even more advanced versions of themselves, potentially triggering a rapid acceleration in capabilities. Now
we all know that there's some things that AI is useful for um researching medical records and so forth things like that. So I am not saying no we can't have any of that but
in a world where climate change is our most frightening problem and where the fears of fascism have some reasons and this technology
is designed to increase power in the hands of the most powerful. I think we should not be thinking that it's our obligation to help them. All right, that concludes our request to be heard for tonight. Moving on, uh
consent agenda items 6A through 6. Anybody would like ored on? Yeah, I would like to abstain from uh C. Item >> C. >> All right. >> And I was wondering if we can pull out
atm L resolution L. Yeah. Anybody want to get up and leave? I'm going to give you about 30 seconds. the neighbor. All right. Thank you everybody. We're Adama. What would you what is your question on 6? >> Uh 6 I was wondering because we have the
hing authority. So I was looking for some clarity on this. Um so what would be I know the key function is to research. uh according to the memo but so what's
the balance between this committee and the H because we have a housing authority already in charge so I see this more like an overlap I don't think they're going to overlap I
think this committee is going to focus strictly on the housing study that was just presented to us and where we're going to go from here far as uh future how do I say it u
that correct >> correct and working with a spectrum of community members um who work in real estate housing and >> contractors those type of things this has truly nothing to do with >> and how long would this committee exist
>> an ad hoc committee has a and an end and That will be >> so we don't know how long it would >> I don't foresee it being over 6 months maybe a year. Administrator >> I I was actually I would recommend that we just pull this item for further discussion and vote on the remainder of
the consent agenda. >> There we go. You are abstaining from 6C. Correct. >> Yes. >> Mayor. Yes. >> May I get a correction on that? Council member Dboya, we should abstain when we have a conflict of interest in
something. You have a conflict of interest in the item 6C. >> I have no conflict of interest. Um I just feel like uh um a letter of complaint at this time is
right thing to do. Stay away from this item. >> Mayor Spooner, >> we're elected to >> I can vote no on it if if that >> Yeah, we're elected to to cast votes. So abstaining should be done and >> No, you can abstain.
You don't only have to vote no. You can abstain for anything. >> Mayor Spooner, I would recommend that the consent ag be approved without C and L and that there be separate votes on those. >> Okay, we're going to approve. We have
I'll take a motion on six A and B D through K and M N and O. >> Second >> motion by Barnes. Who was that? >> All right. Second by Teal. All those in
favor of 6 A B C or excuse me D through K MN and O signify by saying I. I. All opposed. Those pass. Back to 6C. motion on 6C.
>> I'd still like more discussion. >> After the motion, but >> so what is your concern? You agree with the preliminary path as presented by Excel Energy or are you opposed to the preliminary path?
>> Because the PUC needs our collective input. Is this engineering proposal? >> Yes, it's an engineering proposal that the state uh regulatory board said submit multiple paths so that we can
have our board choose the best path based on the input from county commissioners and city councils along the path. >> I don't have no problem with that. I agree with what you're saying, but I just feel like uh
they complain about the new path. I don't know because the engineers took into consideration everything. There was a calculation whether this new path may increase
budget budgetary allocation. So we're looking at finance. What do you already have? What do you already plan for? So trying to propose something that would take an extra miles or two
change the trajectory of their project also probably increasing fees their budgetary allocation. So at this point I feel like uh
looking at the financial aspect of the project I don't know we don't have any proposal on um how much it will cost for the new route.
It's not included in the package. So that's why I choose to stay away because if if we are proposing another route from what has been proposed, we need to take into consideration
announcing the budget. >> Can I provide some clarification around this? So we discussed this um at our our last work session. So the public utilities commission has issued a route permit and so there are two proposed routes through Fairbow. The letter of
complaint is specifically addressing Excel Energy's preferred route which is cutting through residentially res property that could be used for residential development on the south side. The public utilities commission proposed an alternative route which follows an existing power line um
basically outside of city limits and through uh state wildlife management area. And so all the letter is doing is saying we don't want this power line to run through um property that has been set up for residential development where the city has made an investment in
infrastructure um for development to happen. So that is all that is is happening here. Uh anything else that would be related to this is not something that would come before the city council at all. No cost information will ever be provided to Excel or from Excel to us for any decision making.
Excel will be, you know, sing singularly working with property owners and the public utilities commission moving forward. We are a property owner along their proposed route and so there will be something else outside of city limits that we'll come back to at some point, but this is specifically addressing the route within city limits.
>> Correct. >> Yes. >> Um, just to clarify, uh, Administrator Kzer, there is no cost to the city. >> No, there there is no cost to the city. Yeah. And the route that was proposed originally was the opposite side of
where the development and housing was. And these are very large structures. So I I wouldn't want that in anyone's backyard. So I'm I'm for this. We need to pass this. And just a heads up to the public, if you live in this route, please sign this letter and get on board. um we can do so much but if they
hear from the public we have a better chance of them putting this the uh structures on the other side where there is not residential households. >> Any other comments? >> I I'll just help make it clear as black and white right now. The they're the
transmission lines would go right through the Divine Mercy complex and we can move it so they'll go through a cornfield. So I vote cornfield. No, I don't know what work. >> All right. >> At this time, I'll entertain a motion.
>> We need a second. >> Got a motion. >> Second. >> I made a motion. >> You got the motion. Who's got the second? >> Peter has the motion. Second. >> I'll make it. You're going to do the second. >> Yeah. Second. >> All right.
Is anybody up here? >> Oh, yeah. >> Motion by Ron, second by Teal. >> Oh. Vanloo. >> Motion. Motion by Vans. >> Alotion by Vance Sloo. You got to speak up today. Motion by Vans Slooh. Second by
all those in favor of 6C. Signify by saying I. >> All opposed. >> That passes on to 6L. >> The ad hoc committee. Hence the word ad hoc is Greek for with ending. >> I wanted to be a lawyer at one time in my life and so I know that. I don't know
why but hence the name ad hoc committee and typically at that point in time committee set up whether it could be one meeting or a year but ad hoc means with end so that is the length of that
committee any other discussion this time I'll entertain a motion >> so moved >> second >> motion by Ross second by Barnes all those in favor signify by saying I I I >> opposed. >> That passes. Thank you. Public hearings
seven. We have none tonight. Items for discussion. >> First item is resolution 2026-166 accepting a 2025 financial audit. Uh are we going to get this all in one or is this all together? >> Separate separate
>> separate each one is separate presentations. All right. 6A financial audit. Gentlemen, welcome. >> Good evening, uh, Mr. Mayor and members of the council. It's a pleasure to be back with you again here and present a
recap of the results of the work that we did uh for the audit of the 2025 year uh for the city. And uh what we've done again this year uh is uh in order to condense the information into a concise summary but yet hit on all the key uh
points within the various deliverables that we issue as as part of the audit process. I know there was uh it consumed much of your packet uh for tonight's meeting probably north of 250 pages or so of information uh that's in there in the various reports. uh but have that in
a slide deck here that I'll just go through at a at a good pace and hit on again those highlights. If there's anything that caught your attention uh if you had a chance to you know take a look through the uh deliverables that were in the packet um or based on what I
comment on here uh as I'm going through the slides uh feel free to bring those up and as as I'm going through too um certainly interject if you have anything you want to address uh on the spot. So uh with that uh we'll get started here with the slides. So if we advance uh so
this first slide here uh just provides a summary of the various reports that we issue. Uh some of these are uh for example the first one that's noted there the independent auditor's report on the financial statements. That's towards the front of the uh comprehensive financial
report. The length the lengthiest of the various documents uh that are issued. Uh within there uh there's a few pages of of uh various information. The key items to note uh uh relate to the opinion
section uh that comes first and it's a couple paragraphs and even though you you do not see the words unmodified or clean in those paragraphs, that is the terminology that's used for that type of opinion that is being uh provided with respect to the financial statements. So
that is the optimal result when it comes to um a set of financials uh that are subject to audit and that's looked very favorably at uh by um oversight bodies the uh the state at the state level federal grtors
uh bond rating agencies you name it. Uh so that's the uh good result there. uh the responsibilities of both management as well as us as the auditors are are detailed out in that report as well. Uh just from a very high level uh on the
management side, the duties are the fair presentation of the financial information to us uh as well as maintenance of appropriate internal controls. And then our duties as the auditors is to design and execute an audit approach that meets the relevant uh professional standards. That puts us
in a position where we can provide reasonable assurance that there would not be any material uh misstatements that would go undetected um throughout the process. So that reasonable assurance terminology is is used intentionally uh because of the fact that we're not testing every uh
transaction that occurred throughout the year affecting the city's finances. Nor would you want to incur the cost of having us do that. Uh but our approach we use uh brings in the concept of materiality. So there's much focus on the larger items and then sampling of
the the rest of the populations of of smaller items to get to what's considered a high level of confidence that again there wouldn't be anything material that would go undetected. Okay. So the other reports that we issue uh there's one on government that's required under government auditing
standards. This focuses in specifically on the internal controls over the over the financial system or uh of the city and uh through the work that we do uh we gain an understanding of the controls that are in place as far as segregation of duties having checks and balances
things like that and then also if there's uh items that surface as part of the audit process. Uh for example, if we were to identify the need for material audit adjustments or there's um over reliance on us for kind of uh the the preparation of the financial statements
without having a good understanding internally of of kind of what's included there. We would have to report those items as findings uh within that report. Uh but as it's noted here uh nothing in that regard uh for us to report. the city's got a great uh team in place uh
that's handling the finances and uh everything everything checked out well um and met our expectations on that front. So, okay. Uh then for 2025, uh it's it's been a number of years since the city of Farbo uh had the need for a
an additional federal awards compliance audit. probably going back to some of those uh pandemic relief years uh when some of that funding was coming in, but then there was a couple years where there was not a need for that separate audit for 2025. Uh that that that
requirement did kick in again based on some of the funding that was coming in for trail projects. Uh so it put the total spend on federal awards over the $1 million threshold that's established by the federal government. So, we did have to take a a deeper dive from a
compliance perspective at the uh federal funding that came through for the uh trail project. Um but again there everything checked out good uh checked out well based on what the federal agency requires us to look at. So no findings to report there. And then
lastly, uh, for Minnesota local governments, uh, there's a requirement, uh, to, uh, work through, in addition to our other audit programs on the financial statement areas and so forth and compliance to then, uh, work through a compliance guide that the state auditor's office publishes that touches
on all the various statutes that are applicable, uh, that have financial pertinance. Uh so things like contracting and bidding, uh conflicts of interest, uh those types of things just to make sure that they get a sense as to whether the city's got good protocols in place for following those statutes. And
there again, uh everything checked out well. So it's not too often where I can present a slide like this where it's no findings across the board. Um so um as I mentioned, kudos to to all involved in in uh driving that uh great result. So
okay. So then uh from there I'll that's the slide I'll spend the most time on. The the the next dozen or so are going to be pretty quick. So uh here uh we'll first take a look at the general fund and and we put these graphs in here just because it provides both a multi-year uh
trend uh kind of view but then also brings out some of the key items within the the details of the financial statements um for the current year. So here for the general fund, you can see that over the 5-year period presented uh a nice uh trajec trajectory there uh for
both the uh cash and investments position as well as the fund balance uh for the general fund. The one thing that's a bit unique is that you get to 2025 and you can see that the lines cross uh for cash and investments and
fund balance. Uh the driving factor there is the internal loan that was approved uh to provide 1.6 million in in funding that'll get replenished to the general fund over time. Uh that that going for capital replacement needs and
etc. Uh so that cash going out of the general fund is what caused that shift in 2025. uh for those it's still part of fund balance because the other fund uh will repay uh the general fund for that again over a multi-year period with
interest. Um then uh with the general fund as well um I did want to mention that looking at fund balance there's different categories and the the category that gets the most attention is the unassigned fund balance. That's how most fund balance policies are are
written is to establish a goal for a certain range of coverage to have in that unassigned fund balance as compared to the subsequent year's expenditures. And where uh that amount um landed for at the end of 2025,
uh it was about uh 44% so close to 6 months worth of coverage on the operating expenditures for the next fiscal year. And that's in line with the policy that the city has adopted to have it be in the range of 35 to 50% which then also aligns with this the guidance
from the state auditor's office as well. Uh so that that cushion there that that amount of cash or of fund balance at on hand at the end of the year is important because of the timing uh until that first significant property tax settlement comes through in the next year uh which gets to be closer to the
end of June by the time the county remits that uh to the municipalities. Okay. Uh we'll move forward to uh the next slide here. uh so just provides in numbers the trend on uh revenues and expenditures. I've got a bar graph uh
slide that'll come next uh so it's easier to kind of look at it in in that form rather than digging into the numbers. But uh overall uh during the four-year period presented or 5 years um revenues increased uh dur during that time by about 21% and expenditures
increased by about 24%. And that's very similar to what we're seeing in with most municipalities we're working with. uh the the uh the cost side of of of things uh the the increases that are happening to to be able to keep up with where wages need to be and and just other costs that are coming into play
and in inflationary factors etc. Uh for comparing 2024 to 2025, uh something that does look a bit unique is the expenditures jumped up quite a bit in 2024. the the item to remain uh aware of there is uh the uh cost associated with
the new ERP system that was put in place uh for the city uh had a had a substantial impact on the 2024 expenditures. So if you were to back that part out uh and look at the trend from 23 24 and 25 you'd see more of a kind of a expected um annualized
increase of about 6% or so. Okay, we can move forward. Well, for the general fund revenues, uh what I'll call out here is just Yeah. And as kind of as expected, the taxes and intergovernmental revenues make up the majority. It's about 85% in total, 50% for the taxes, 35% for
intergovernmental. The intergovernmental piece primarily is the local government aid uh coming from the state. Uh so significant um uh uh portions of that total uh allocation uh directed towards those two sources and the year-over-year
increase on revenues of about 1.2 million in total for the fund was really tied directly to the approved increase in the levy uh for for the general fund. Okay, just shy of 6%. Uh for the total revenue increase, okay, and then we can move to the next one
here. Uh so for uh general fund expenditures the the category that's uh for basically all municipalities that has the largest allocation here is public safety. Uh so for police and fire etc. Uh for the city of Farbo it's about 44% of the total uh mix of a uh
expenditures for the fund. Uh and that's right in line with what we'd expect to see uh for a city this uh size of Farbo. Okay. If you get into the Twin Cities area and some of the larger uh metro cities, you see you might see that number get a little bit closer to 50%, but uh given uh the u geography and the
size, uh mid40s is right in line. Okay. Uh year-over-year increase about 3% like I said skewed a little bit based on the the large expense in the prior year for the new ERP system. Okay. Then looking at budget to actual results
uh on the revenue side uh as far as comparing actual to the amended budget uh came out to be about as close uh to budget as as can be about 7/10 of 1% uh variance in in in terms of the total revenue uh side of things. Um a few
different offsetting factors there. Uh the one revenue line item that had the most notable variance from budget was that miscellaneous category within there is investment earnings. And it's common place for uh local governments to budget conservatively for the investment
earnings just because of the unknown as to what could happen with the interest rate environment as you get into uh that that next year uh that's been budgeted for. So that's where things landed there. On the expenditure side, a favorable variance of about 1.7%. Uh
most of that was in the public safety uh line item uh much tied to uh just um unfilled positions with the police department uh so forth. Okay. Board here. So then we'll take a quick look at the various enterprise funds for the water utility. Uh roughly 4%
increase in revenues going from 24 to 25. that was pretty much right in line with the approved rate uh or no sorry more of that was driven based on the increased water access charges uh that came through for 25. Uh on the expenses side the increase was u u notably more
significant about uh close to a million dollar increase roughly 35% uh much of that was due to um needs on the repairs and maintenance uh side of things. Okay. Uh looking at the next slide uh for the cash and investments position as well as
the unrestricted net position uh so the equity of that of that fund excluding the portion that's tied up in capital assets it's very those enterprise funds are very of course very capital intensive so the unrestricted portion looks more at here's what's here's what
uh available in terms of more liquid type of uh funds uh for that uh utility. So here you can see uh 2025 looks a bit odd because you've got that large jump in cash and investments. What does come into that line item in the financial
statements is the uh the debt that was issued in 2025 for the water utility. It was about $7 million. Um very little of that was spent as of the end of 2025. More of that'll happen here in 26 27. Um so that cash investments
that'll come down over the next couple years uh more in line with that unrestricted net position uh as it's been uh trending or as those have kind of trended closely together um for the past four years prior to 2025. Uh if you're to look just at the
multi-year period that unrestricted net position has increased about 25% over those u years presented from the end of 21 to end of 25. So nice growth there. Building up some reserves to help uh you know even though there's debt issuance to help limit the extent of the need for debt issuance of having some of those
reserves uh in place for the utility is very important. Okay. Uh next slide we'll look at the sewer utility. Uh here uh based on the results of the revenues and the expenses the the net result there uh provided for operating income of about 680,000.
That was a dip uh from where it was the previous year. Uh there was a decrease on the revenue side of things. Uh mainly tied to uh industrial usage discharge going down a bit from where it was in in previous years. That's happened the last couple years. Um and then on the expense
side, a slight increase just uh there again based on repair needs and so forth. Okay. Uh for the cash and investment position, uh again here things look a little bit unusual in 2025. As you're aware, the city did approve an internal loan uh between uh
from the sewer utility fund to provide uh funding that will get then repaid uh through uh over a eight or 10 year period. I can't recall off hand exactly what it is with interest back to the sewer utility uh but for costs associated with the vioaduct park
project. Okay. Uh then storm water. uh this this utility or this fund has has had a nice a very nice trajectory over the years uh both re on the revenue side and then being able to uh minimize uh uh expense
increases as well. So really building up a nice position there that you'll see on the on the next slide as it pertains to cash and investments as well as unrestricted net position. again being able to u address some of those future improvement needs without having to uh
issue debt um for those as they occur or at least limit the extent of that. Okay. Then I will wrap up here by just touching on this this slide that looks at the uh tax rate as well as the overall tax the tax capacity for the
city and in the levy. Uh so looking at how those have trended over the 5-year period. Uh as you can see here uh for the tax capacity there were uh very notable increases in 23 and 24. We were seeing that uh basically across all municipalities based on the assessed
values of property and so forth really jumped up came back a little bit in in in 2025. Um and then you looking at that compared to what's happened with the the tax levy over the multi-year period. uh the way it shook out if you went from 21
to 25 it's roughly a just shy of 27% increase for both. If you kind of back out the impact of 23 and 24 getting inflated go right to 25 um the percentages are almost identical as to what the increases have been over that
over that multi-year period. Okay. Uh and so that basically left the rate um as you'd expect with the numerator um numerator and denominator u uh increasing at the same clip over that period. Uh tax rate in essence um going
back to exactly what it was in 2021. Okay. So that is uh the information that I wanted to cover with you all tonight. Glad to address any questions that anyone might have with regards to what I touched on or anything you saw in the deliverables. questions.
>> Thank you, Mayor. Um, what do you think the co what do you think the cause of the decrease in tax capacity was? >> Um, it's >> this is kind of an odd one for me to >> wrap my head around. >> Yeah. You know, and it can vary uh from
one municipality to the next and county to county. It's the county assessor's office of course that is uh make coming up with those uh values. uh but just I I think some pullback with regards to um just the market uh rates interest rates
uh where they've been and causing I I think just uncertainty and just um resulting in folks um whether it be residential or commercial uh just um kind of staying put and and not um the extent of building and so forth
certainly slowed down a bit. So bringing also down um kind of that trend with with respect to market values as well. >> Thank you. Capacity questions. >> Thank you. >> Yep. >> Thank you staff. It's always good to see
that on report with uh no >> this time I'll entertain a motion. >> So moved. Second >> motion by Teal, second by Don Buya on resolution 2026-166. All those in favor signify by saying I.
I. >> All opposed. That resolution passes. Thank you very much. >> Thank you for the opportunity to serve the city. Appreciate it. >> Item B. >> Mayor Spooner, can I say one thing real quick because I didn't get a chance. I I would really like to recognize Kendra Papenfuss and Joyce Prom who um finance
director and assistant finance director. uh both have just over one year of experience and less than one year of experience and they took this on and I thought I was going to get asked questions and was kind of twiddling my thumbs and didn't get asked very much and so they really they really nailed
this one. They you have I I think the biggest thing I can say is that you should have um some some faith that we have staffing in the finance department now that has us in a much better position than we've been in in a long time. All right. On to item B, resolution
2026-168, awarding the sale of taxable general bonds. >> Uh, thank you, Mr. Mayor and Council. Let me introduce uh George Ellerson. >> Eerten from Northland Security. He's our
municipal adviser. >> Thank you, mayor, and members of the council. Uh, I've got items B, C, and D. So, um, it's actually nice to follow the presentation of your audit because I'll be talking a little bit about the bond
rating that was assigned relative to these two bond issues and the financial strength of the city. So, um, actually, uh, before I get into specifics about the bonds themselves, I I'll I'll do just that. talk about the bond rating
highlights and and I'll echo your administrator's comments about um about the well actually I'll I'll include your administrator in this comment that the administrator and finance team that's who we worked with preparing for the
bond rating call and um addressing the questions of the bond rating agency including any follow-up uh they did a great job um the outcome of the rating was that standard and pores who previously had a double A rating for the city of Farbo Farbo affirmed that
rating. And um so for both bond issues, the taxable bonds uh which is series A as well as the sewer bonds which is series Both have the underlying double A rating for the city. And then the sewer bonds and and you did this back in 2025
as well. The state of Minnesota has a program uh a state credit enhancement program that allows you to lift the rating on water, sewer or storm related bonds up to AAA. So those bonds were issued with a stronger credit rating as
well. I'll note uh a few highlights from standard and pores in the rating report. Uh the one and and again maybe it's kind of following right up with your audit presentation. They noted the city's robust reserve position uh near the high end of your city's fund balance policy
of 35 to 50% operating expenditures in reserve. And so that that's a very strong point for the city. Generally balanced governmental operations and then as well comprehensive policies and practices for
financial management. So that's notable because these are ones that you can control. Some of the others that um that they rate on the economy are a little bit more out of your direct control, but um having good policies and procedures,
those are things that got a strong check mark in that box and help to affirm that double A bond rating. So that's the uh bond rating itself. council. I'll hit the highlights of the first bond issue
which was uh series 2026A. That's the one for Vioaduct Park. They were issued as taxable general obligation tax abatement bonds. You may recall that um you worked through a couple of steps relative to the abatement bonds such as
a public hearing and then as well at the end of April you called for a bond sale to take place today. And so for this bond issue, we took financing bids at 10 this morning. We received and and council, if you have this bond sale summary in your packets,
I'll hit the high points just so you don't have to look away, but um we received financing bids from three firms. So these are investment banks that typically bid on bonds. Um truly a national audience comes to uh to
the plate when you issue your debt. The low bid was Robert W. Baird and company out of Milwaukee. The cover bid or second place bid was Bernardi Securities out of Northfield, Illinois, and Piper Sandler was the third place bid. We
award based upon what's called the true interest cost. Uh the low bid was at a 4.92%. The bonds were structured with a 15-year term and level debt service. So, these bonds will be paid for by a combination
of a debt levy and an abatement levy. And so, over that 15-year period of time, again, uh that will be the source of revenue to pay back these bonds. Both bonds, I'll just note, council, in case um you you've got to get a 15-year
financing term. about halfway through the term of the bonds, uh, you have what's called the call date and that's the optional redemption date for the city where you at the city have the ability to prepay bonds if you want prepaid principal highire or if the
market conditions are better, you could potentially refinance at that time. So again, about that time, you've got about 45% of your bonds that are paid. So a majority of your bonds still remain at that time. So, we we keep in touch with
your staff on all your existing debt if there's ever market conditions that allow you to potentially achieve a safe that mayor and council. And we could take these if you'd like one at a time. Uh mayor, I'll I'll uh defer to you on that.
>> Up to you. What would you like to do? >> Just keep going. >> Just keep going. >> Okay. Okay. Sounds good. >> It's going to sound a little repetitious here. Uh the second bond also issued with a 15-year term. Very close in size.
The first one 3,710,000. The second bond 3,610,000. So $100,000 difference. Uh these ones are again um issued for sewer projects that will be conducted in the city. 15-year financing term. Underlying
doubleA rating like I talked about previously. It's got that credit enhancement, so it lifts the rating up to AAA. Brought a couple more biders into the table here. Um, so we took financing mids a half an hour later at 10:30 on this bond with the low bid with
Bo Financial Services. That stands for Bank of Oklahoma. Um, coincidentally they're out of Dallas, Texas. Um, but uh, true interest cost 3.48% cover bid at Robert W. compared was the
low bidder on the first bond. They were an eyelash behind at 3.49% compared to the 3.48% for the low bidder. So, very close bids. We like to see that on your bonds. Again, for these 15-year level debt service, the
expectation is that your sewer utility and the um revenues of that utility will pay back the debt service on these bonds. similar call date or or optional redemption date as you had on the first series of bonds where again about
halfway through the term you could refinance or prepaid debt. I I'll note the closing date the date when the funny uh the funny the money rather is available July 9th of 2026. So that's the date that uh we wire funds to your
account. >> Any questions? Mayor not any questions? No. Cool. Next one, too. Or you want votes? >> All right. Um, let's let's go for the third one. Okay. Because this is bond
related, council, this is um we're not issuing new debt on this resolution. This is what's called a reimbursement resolution. This is actually relative to the sewer bonds. And what it it's a um the type of resolution where if you have
expenses that you've already incurred or will incur prior to that July 9th closing date that this is a resolution you should approve because it allows you to dig into your own reserve funds, pay some expenses, and then reimburse
yourself at a later date with tax exempt debt. Simply stated, mayor, that's the purpose of this resolution. And um I can address any questions you may have. All right, I'll entertain a motion on resolution 2026-168. >> Mayor
>> Spooner, I will make a motion to approve resolution 2026-168. >> I'll second motion by Ross, second by Rowan. All those in favor of that resolution signify by saying I. >> All oppose. That motion passes.
Resolution 2026-169. I'll entertain a motion. >> Mayor Spooner. >> Yes. >> I make a motion to approve resolution 2026-169. >> Second. >> Motion by Vans, second by Teal. All those in favor of resolution 2026-.
>> All opposed. That resolution is also passed. Resolution 2026-171. >> Mayor Spooner. >> Yes. I make a motion to approve resolution 2026-171. >> Motion by Donia, second by Barnes. All
those in favor signify by saying I. >> All opposed. Also pass. Thank you very much. We appreciate it. >> Thank you, mayor councel. >> Thank you. >> We are on to resolution 2026-170 adopting plans and policies for small
business development program. Jessica Kzer. Yes, that is that is this is my item. Um so uh the small cities development program was um init originally um funded with a grant in
2009 from the state of Minnesota. Uh what ended up happening there was a loans that were offered on that. And so when those loans have been repaid over time, the funds that come back are considered program income. So, what we're talking about tonight is how do we get the authority and what do we need to
do to be able to spend the program income which um in the 2025 budget process, so like about two years ago was discussed of using to retrofit the street lights in um downtown central business district specifically uh for um
LED as LED bulbs are no longer going to be available um for those lamps. So that's the project that we have. Uh the funding that is um available there in program income is 330,000 almost 331,000.
Um the money that actually exists in that fund is a higher amount because that fund has been collecting interest as we've gone along throughout the year since 2009 as well. So there is actually um more more funding there. There's also still one loan receivable that's
outstanding in that fund for $3,000 where we'll probably need to do some research on that eventually to figure out um if it's something we should be writing off um in the future. So these are considered federal pass through funds through the state um regardless of
whether it's program income or it's the original grant. So, the state is requiring us to um bring up to date a number of policy and plans um in order for us to use that program income. And so, I'll just briefly go over a few of the things. The last time these were
adopted was in 2018, which was the last time there was an approved spending plan, which did some streetscaping and some parking lot things as well as the banners um uh that are in the downtown area as well. So, um there's some different things in the past, but we've
got a plan for the future. So, citizen participation plan, there's nothing that has changed. Um ultimately on, uh June 23rd, we will have a public hearing um as part of our citizen participation plan because we state that public hearings are how we will gather input.
And so, I'll go through more of the program area, how the funds are to be spent, and more of that. at that time. We also have a residential anti-displacement plan which uh did not change. And to be clear, retrofitting street lights does not result in any um residential displacement. We also have a
certificate of a drug-free workplace uh which again doesn't change, but we had to identify the work area which is the central business district. Uh that's been on there as that's on there. The excessive force policy um form that is provided by the state and HUD for this
has also not changed um since 2018 and Chief Sherwin did affirm that the statements that are being agreed to are consistent with the department's excessive force policy. What is new is the section three plan um which was not required in um 2018 and now is an
emphasis um because we are going to be spending more than $200,000. we are having to put more of an emphasis on section 3 compliance, which is basically saying that um the contractor that will be hired for the work um as well as the city will do everything we can to ensure
that individuals um who are low to very low income are being included as part of the employment in the project. And so that that has a lot of things that go along with it. Um, I did develop that plan off of a template that was provided
by HUD. So, uh, it was one that we kind of had to work through as to how that would work, but ultimately there will be things that the contractor will have to comply with which will happen through a a bid process. The other thing that is is fairly new is the um fair housing
plan. Um, that this is also based off of a template. What was hap what was used in 2018 were just some bullet points of steps that the city would take to further fair housing. This actually has more of a statement but also lists some items of things that we'll do um to further fair housing. And then finally,
there is a program income reuse plan uh which basically is just restating what we would use the program income for, which is the retrofitting of the street lights. So, as I mentioned, uh we'll be having a public hearing at our next um meeting. This is getting out ahead of
things ultimately with Mckinstry being on board. when they are putting together the projects, we want to include this in the Mckin Street project knowing that there's funding for it because uh we'll be able to recognize those energy
savings to basically help pay down um any lease um payment that would be coming from a larger energy efficiency project in the city. So, uh this is something where I think we'll be hopefully ahead of the game. The other big step that still remains on this is
the environmental review process uh which will hopefully be back before you um within the next few months depending on where budget gets um uh at this point. So I'm recommending approval of resolution 2026-170 and the associated plans and policies
that are proposed as part of that resolution. >> Any questions for staff? >> Mayor Spooner. >> Yes. I'll make a motion to approve resolution 2026-170. >> Second. >> Motion by Ross, second by Don Booya to
approve resolution 2021 170. All those in favor signify by saying I. >> All opposed. That passes bids tonight. We have none. Boards and commissions, reports, announcements, project updates. shows. >> The the big one I just want to remind
everybody is tomorrow night is our June council chat and it will be um at Buckham West at 6 PM and it is one that uh we'll have some guest presenters from Ellers's um financial services who will be talking about tiff and tax abatement
um from a broad perspective and then provided providing some information as well as a handout on what that is meant in fair Right. This is the kickoff to Heritage Day is 5 to 7 Central Park is the mayor's reception.
>> You're welcome. Um, >> is there a cost to the public for that? >> Buy a button. You got to buy a button. >> Buy a button. >> Yep. >> Saturday night the parade 6 o'clock we will be leaving city council at our normal spot right by the
historical What are we in? >> Six o'clock. Don't be late. Don't be late. We're not waiting. We roll. >> What are we in this year? >> Same as last year. Float from the park and recck department. Thank you. Thank you to the park and recck department.
>> Mayor Spooner, I will not be there for the parade this year. >> Okay. All right. >> Spooner. Uh, the Paradise Center for the Arts is having a recycled arts sale June 17th through the 20th from 5:00 to 7:00 p.m. >> Right. >> And I have one item. >> Yes.
>> Um, I just want to make sure that the public uh we we recognize that buried in the consent agenda items we I guess appointed would be the proper term uh approximately 60 election judges. So, I'd like to thank them for
stepping forward. They're not quite volunteers. said you get paid us a little bit but uh uh it's a very important position uh for our election day to be an election judge so other citizens I hope will consider to do that but 60 of them step forward for this
year so thank you >> all right anybody else anybody else I'll entertain a motion >> second >> motion by second by Barnes all those in favor adjournment signify by saying I opposed of our journey.