Good evening. This is the City of Northfield City Council work session for Tuesday, 07/15/2025. We'll have a roll call. Mayor Zweifel? Here. Councilor Dahlin? Here. Councilor Holmes? Here. Councilor Ness? Here. Councilor Peterson White? Here. Councilor Sohka? Here. Councilor Beamer? Here. Great. Thank you. So this is a work session, and we'll kick it off with a review of the proposed 2026 Northfield Area Fire and Rescue Service budget and capital equipment plan and related City of Northfield Fire Department
2026 contributions. Mr. Martig. Thank you, mayor. Members of city council. We have Tom Nelson, fire chief here to walk through the, budget, recommendation from the NAPRS board this year. Just a couple of things. The one change that occurred this year from the past is that the townships had requested to get budget proposals earlier in the year because in March is when they set their levies and budgets. And so Mr. Nelson and the NAFRS board did
meet that schedule that was helpful. So we have, in preparation of this meeting, I had recalled that and knew that we should have some time tonight to actually add the budget in for NAFRS with that. But I gave pretty late notice of Tom to get the documentation organized because normally this comes probably a month or two later from when we normally would get this. So some of the formatting and the transmission letters are a little bit, you know, maybe not as polished as they've done, but they look they look good now. But Tom will be walking through that. Basically, the ideas tonight is to primarily have the opportunity for his information.
We can certainly, come back and talk about it further, but I think we have till the September technically to set that preliminary levy or maybe August. It's in the memo. But this is kind of an initial opportunity with that, and so he'll walk through that. We did get a couple of questions that people had related to the materials. So Tom has some handouts, related to some of that to be supplemental. It wasn't in your packet materials, but it was in response to a counselor question that we received to be able to explain a couple of the things there as
well. So I'll turn it over to Mr. Nelson to present. Sorry. That's a start over. No. It gives us a good look at the whole budget operational and capital as well as the Northfield portion of it. And just a little bit the caveat about right now is the NAFRS joint powers agreement says every two years the percentage allocation between the member the parties Dundas, Northfield and the Rural Fire Association Protection District, They're recalculated every two years with a formula based on population,
fire calls, and estimated market value. That estimated market value, it does include all taxable, nontaxable, Rice and Dakota Counties, respectively. So we have I've tweaked the number and the 73 whatever percent is what we know right now. Past has shown us that it takes a lot to really skew that. So I think it's a plus or minus sum, but we won't harden that for '26 and '27 until later in '25. So that's the only caveat. What we've requested for '26 is basically a 3.5%
in operation operational budget and then, slightly lower capital request of $500,000 And part of that is we want we all agree on the NAFRS board and from all the member parties that we don't want our budget going like up and down and up and down. And that typically tracks, if you look at the the blue and gold chart is it's capital that changes that. The go to the chart next to that, the operational budget. I put a little call out box that said,
why did it go into 2018? Did it jump $300,000 That's when we did the remodel. And so that is debt service of about 300,000, for twenty years. And does that sound right? I think that's right. For the life of the project, for the remodel we did. And the other thing is in 2023, NAFRS moved to the full time fire chief fire code official. And there were a lot of incentives and initiatives that we did at that point, that brought that budget up. So, again, the goal would be that we can make our capital requests back to the parties
even if there isn't a significant there isn't a piece of equipment that we're buying that year. So, and again, we need to work the details out that with finance and city administrator and council for Dundas and rural to say, how do we do that? How can we put together a fund where, let's say, Northfield bonds for equipment? Well, the knackers want some cash out of that. So more to come on that. But I think we all agree that we need to get that stable. And the prices of equipment now are so crazy.
I know it's the same for Dave Bennett, whether it's a road grader or anything else. The whole fire, the whole fire, world is up in arms about, consolidation, basically, in my words, antitrust of, it takes so long and it costs so much money and there's so few people that you can buy them from. But that's something we talk regularly at the NAFRS board. I should say, Councillor Dolan and Councillor Ness are the appointees on the NAFRS board right now. I should have mentioned that. So a couple of things we're doing about these huge skyrocketing numbers,
one number that was a lightning rod or still is a lightning rod is, okay. Replace that aerial bucket truck that goes out a handful of times a year. But we still need that for readiness for various occupancies around, and it's not just the tower dorms at the college. We are looking at it's actually Thursday. Someone from the manufacturer is coming in to give us an estimate on how much would it cost to replace, like, hydraulic hoses, you know, all these different things that move and and wear out.
Let's squeeze another ten years out of that piece of equipment. So we, as well as other departments around the country, are looking at how can we keep stuff good and make sure it's safe and not have it be that it takes three years to get and it costs five times what it did ten years ago. So we're really trying to be prudent about that. But then also getting it that we're we're putting a kitty together that it's not like, okay, Northfield next year is 1,500,000.0 in capital. Your share is whatever. So that's something we're working really closely on.
Before I stop for questions, I also printed out a sheet, a couple sheets from our annual report from 2024 that Sean Simonson put together for us. One of the things that we really want to do is don't page out the fire department to calls that we're not needed at. So by doing that, because we still are very lucky that we have a vibrant, paid on call volunteer fire department. And we know there's a lot of cities around us that are either in the
process of converting to duty crews. Chief Schreepfer can certainly talk about changes in Lakeville. That doesn't make the budget go down. We are really lucky that we still in 2024 we had we did a hiring cycle and we got six solid members out of 25 applicants. And that's a problem that not many departments have of still having people that want to do this for the community. Every one of them said I want to do it because I want to give back. So we want to keep that going and one way to do it is to
lower the call volume so that people aren't just getting pounded all the time. One of the big benefits that we have that we wouldn't have to ask Faribault or other cities around us, Northfield Hospital and Clinics runs the ambulance, and they staff it very well in Northfield. Seldom does Northfield Rescue go on medicals anymore because the ambulance is there, Jeff's crew is there. I bet it's maybe five to 10% of those calls we may get called just
to help out. Cardiac arrest obviously crashes, things like that. But again, if we're not needed, don't page fire. And that helps the numbers. So we've had significant drop. I would call it significant drop since 2022 working with businesses, apartments, colleges everywhere else that have fire alarms to try to find out why did the fire alarm go off? Let's see if it was supposed to. What do we have to do? Sometimes it's correction orders. Sometimes it's this or that. We're still playing catch up on that from one hundred and fifty years of fire
not doing any fire code enforcement. What's really nice now is, I sit with the City of Northfield Development Review Committee every week. I work closely with Jake Riley's team in community development. So we stay ahead of this stuff during planning construction and not play the catch up game. So I'm really happy with some of the projects that we've done since 2022 where there's no surprises in the end. We've been through in the front. So I feel like we have a vibrant fire department. It's still a very good deal and we're working together to say how we can
address this capital stuff. How can we stretch life? A big thing change that we did make in 2023 is assistant chief Jesse Faust and I have take home vehicles. You've seen them. I'm sorry about the Ford Taurus that I gave back to the police department. But there are so many calls that we can get Jesse or me there first. A) To give a size up. What's going on? What do we need? Or hold the troops. So it's kind of like protecting on the chessboard. You're protecting your valuable pieces.
If we can prevent wear and tear, an accident or anything else in a million dollar piece of apparatus and members of the public, that makes a big difference to know what do we need and send that. So that part of it's working well. So, I think that's enough. I'll stand for questions. Questions from the council? Yeah, thanks for the all of this information, and thanks to Mr. Simonson, who I know isn't here. But I guess just a question about the statistics, specifically about response time. Looking at and average firefighters responding, obviously, we probably wanna have fewer,
right? I mean, just been thinking about staff time and but is there a is there a certain number that we want to hit that you all are trying to hit? Or is it more just kind of looking at trends over time? What what what what does that data? Yeah. And that's a really good question because some of the things are if one of the chief staff gets on scene and says, like today, we did it three times, respond routine. You don't need to come lights and siren. Well, that can slow your response time, but it's an appropriate response time. But the way that kind of the industry and ISO,
Brad, Nessa and I have talked a lot about that, Their big thing is if you have a structure fire, can you get, 10 firefighters there within fifteen minutes and we're hitting those numbers? There are still times where it's like, oh, there's a carbon monoxide alarm at someone's house at three in the morning, and we get four people to show up. Four people are fine for a car you know, so there's some self selecting and everyone can look and see who's responding or not. Marilyn said, are you not going to that CO last night?
No, it's fine. Because there are enough people. So we have to look deeper and say, what are our response times to the real deal? And look at those. One thing that does, you know, the average number of firefighters is a concern, especially during the day, because, you're limited. There are a whole bunch of people that just work out of town. COVID has helped that in a weird way because we had about five people that used to every day go in, you know, to the cities or whatever. They have certain days that they're home and they're available. But we also have a lot of people that just work out of town. So the big benefit here is we have,
I think six city employees right now. Whether it's a lot of them work on Dave's team, streets, utilities, wastewater, that and Sean, they all work for Dave, that are allowed to leave, and that benefits all of us, to be able to have that. So, we have folks that work at Malte O'Meel. We kind of they're opt down to post, dropped down to nobody. Now we've got a couple of people working there. They're always like, you go, you go, you go. So those are big benefits for our daytime response. Thank you. Councillor Dulles. Thanks, Chief.
Would you have an estimate of what you would expect the increase to be in 2026, 'twenty seven? The increase is 3.5% for capital on capital and operational. So three I would add three point So 1.8% for 2027? Oh, so for 2027? Yes. So what would you expect the annual increase to be in the next couple of years? My goal is that we just kind of do that cost of living. You know, I think we've got unless something significantly changes, we got a solid team. Again,
capital is the weird thing. But on the operational side, I feel like we have it really well dialed in right now. Okay. Thank you. Thank you. Councilor Beamer. Thank you, mayor. Chief, what would it mean to you if if, somehow we were able to get the colleges to contribute more to your to your budget, potentially, Chief Schreffer's budget, based off of the number of calls that that you guys have to those you know, to the campuses and, you know, the amount of effort that we have to put in helping helping the campuses out?
That's a really good question, and I've tried to quantify that, too. Like, we can we can obviously break down the number of calls at the colleges. Again, they're significantly less since '20 than prior 2022 and prior, But there still is overhead there. There's a readiness that we need to be able to handle, you know, huge, you know, they're considered our two multifamily, units. And that does come at a readiness cost that the rest of us that are living within basically Northfield and the larger district.
Pay I don't I can't really put a number. I mean, it would probably decrease or it would change the formula somewhat. And I think, you know, I've been working with the colleges on a couple initiatives to try to to say, here's here's a really good opportunity of potentially they had, I can't remember what year it is, but they put in money toward that aerial truck that we have now. So it's it's been, you know, kind of every twenty year kind of thing. But having some kind of commitment, I think,
would help all of us in that. So, again, there's still some doors that are not closed completely yet. What I will say about the colleges is both colleges, they don't always smile when I show up. Kevin Larson, if you know Kevin at Saint Olaf, said to me, Tom, I love you when you come on campus, but every time you do, you cost us money. But on the other side, I had a meeting with him and others at Iterable Hall on Monday,
where they said, we're gonna sprinkler Iterable Hall in 2027. I tell the story of Thor when I first started full time, Thorson Hall had the same fire alarm system when Arnie Nelson got out of the Navy in 1947 and opened Thorson Hall. And I met with them, like I said, three years ago and said, we've got to do something. And the next year, a complete fire alarm system was put in Thorson Hall. So those folks in the trenches and facilities have really got the ear of the
Mike Berthelsen's and, and the folks at Carlton the same way. So, we are making a lot of progress, I feel, on the safety of the students and people that work at Carleton. Thank you. Okay. I have a quick question. I know there's a change the batteries in your smoke detector national campaign you changed in Halloween. Is that right? Is that the holiday where you're supposed to? Time change, typically. Oh, time change. Okay. Well, what I do it at for some reason, Halloween is when I change the batteries in my smoke detector. I'm curious if there's a similar campaign for carbon monoxide meters and how how often
some of them I know plug in, some have batteries. How often should I get a new one? And is there some national campaign that we could amplify? Yeah. And what I found yeah. I talk about it every time I'm on the radio, the fourth Thursday of the month and try to get the word out. We do training sessions in various independent living, multifamily places. The big issue is just single family homes where, I can think of six calls in the past twelve months where sometimes Charlene will
say, Hey, I just got a call from so and so over at so and so. There's something going off, and I'll go over there and we'll start taking them down. Right? Because it beeps not, you know, just enough to annoy you. And then you find it's behind this cabinet is a carbon monoxide detector that someone gave them ten years ago. And at ten years, they starts literally beeping to tell you to replace them. Usually, it's three in the morning. So the you know, there's the great part about the new codes,
right? Building codes and everything. My house has nine smoke alarms. Most new houses do. And so we are giving correction orders to places to say put in more fire alarms. Right? So you get that thing where now all of a sudden you're responding to more false alarms. Some of that is just the nature of the business. Is, oh, I never knew this was from 02/2005. Well, that's why it's going off. So, there's materials out there. I just haven't known a good vehicle aside from maybe just sending out a postcard.
To get people to look and say, you know, but that and that's one of those things that we aren't really able to see a huge reduction in those kind of calls. But citizen assist calls. Alright. Thank you. Councilor Ness. Thank you. I just want to make a con congratulatory remark. Few months back, there was a house fire on Juniper right near Peter and my house, and I decided to walk over not to look at the fire, but to watch the fire crew. And it it just thrilled me that nobody was panicked.
They were determined when they had a piece of equipment or something needed other side of the house. They grabbed that and walked. They did not run, which is a whole lot safer if you're carrying a big piece of equipment. And it just gave me a big sense of pride for being on the board and being a Northfield resident knowing that that fire department is is doing their job. And, Tom, thank you, and let let the crew know too, please. Any other comments or questions on the NAFRs?
Great. Thank you so much. Thank you for the additional materials. Super helpful. Thank you very much for the opportunity. Next, up is a review of our fee schedule changes that would be effective 01/01/2026. And that is administrator Martig. Thank you, mayor, members of city council. The city clerk worked with department heads and staff on reviewing our annual fee schedule, and bringing back any changes for review that's outlined in your memo as a summary. I would say over the years since I've been here, back in 2016, there's often years that we haven't done any fee schedule changes at all.
But we are, have asked that regardless of whether there's changes or not that we would review it and do it earlier in the year. So the, proposed changes are coming to you now. One of the thoughts with this is that this would be proposed to be set at the September when we set the preliminary tax levy to also set the fee schedule for the upcoming year. We wouldn't have to do it then, but some things like annual license fees and things can be helpful to get notice out for businesses in advance, to get some advance warning if there are any changes or things so that we have more certainty kind of in the back half of the year.
So the proposed changes are included. Welcome. I don't have anything to add on the detail that was in the staff report. I did we did get some questions, which we responded to clarification. One item that we are gonna more add extra clarity related to the police department. We had a question about, what it meant by dance slash cabaret, and then there was a fixed $150, number on there. So the police chief can maybe elaborate, but my interpretation was for some of those events, like private dances for wedding parties or something, sometimes they have a a officer available,
and that's an hourly fee. Well, why don't you just answer the question? I think we're gonna work we have an update. We're gonna work on editing that to provide more clarity on this revision, but that's the only change from the staff report. But I'll let, mister chef chief Shreveford talk about that. Thank you, mayor and council. The mayor and I talked about it on our way in. So, I did some more research on it today. So if there's a dance cabaret type thing, there's a $150 permit fee. That's what that $150 is for. So then if an officer is required on top of that, then the officer rate would apply as well,
but there is a fee just for the permit. So Yeah. And yeah. I think we'll have some yeah. I councilor Peterson White, I think you're gonna ask the question that is in my mind. Are we licensing dances currently? And under what circumstances? In what venues do they need to be licensed? I don't know that I've ever participated in a cabaret in Northfield. I mean, maybe I have actually now that I think about it. But, but I don't know that anyone communicated that a license was needed for such an event. Can you just give us a little more detail on what sorts of events are being licensed? Like, if there's a band at the Armory and people are dancing,
is that a dance slash cab cabaret event that requires a $150 license? That is a wonderful question. And I don't know the exact answer. It's never been used in the ten months I've been here. So I think it's more of the private if you have a a wedding dance, for instance. If there's a location that would fit where then a lot of times there you can require, like, law enforcement presence at those. So you would submit for a permit for that or or to submit for officers to be present for that. So I don't think we've ever charged, in my knowledge, that cabaret fee.
So it's there. But Yep. Follow-up. Counselor Peterson White. I just wanna know that if we have some fee in there that it's meaningful. Right? So I definitely have participated in a wedding dance, my own. Also not licensed in Northfield. I don't think I think it would have been a stretch to say that we needed a public safety officer there. It was pretty chill. So, I I just think that if we have a regulation like this that isn't really being used, it leaves the opportunity for it to be applied selectively Mhmm. Which is not ideal from a sort of I mean, from an equity perspective,
from an administrative perspective. There are all kinds of reasons to make sure we know what it means. Does does anyone in administration have any awareness of this fee ever being charged? The no. I hadn't really picked this one out. And, the clerk is out right now of the office, so maybe she knows. But my thought were related to this one, especially hearing, with the question yesterday, and then I got a response from the chief today. And it sounds like maybe there's a little more research that happened since I talked to him earlier. So I would just say that I think this one requires us to go back, look at it, and report back to the council on what we learned.
And maybe it'll get amended for clarity or maybe we propose to eliminate it. I'm not sure. So I think let's just put this one under review. Right. Thank you. I I think there was a regular cabaret, but I don't understand. I don't know why we would charge a $50 fee for that type of event over a $150 over some other event. Yes. Councilor Beamer. I know growing up here, having attended probably 200 weddings at the ballroom at one point in time or another, They always had, reserve officer or even one of the one of the part time officers,
used to used to man the ballroom. I I know that, because I remembered talking with Lanny Gleason and and some of those those old older part time tops that would that would be over there. So I I I guess I understand the the fee for that particular service, but but the the permit fee, I guess, doesn't make a whole lot of sense to me. Yeah. Councilor Peterson White. Thank you. I actually recently had the opportunity to avail myself of the service of having an officer come to an event since we needed security for an event that my business
was holding at the Grand. And that was easy and great to do. And that's a service Like, we're paying hourly, right, for the service of an officer, which makes total sense to me. But that was certainly not wasn't required by the city that we do that. It was I called Jeff and I said, what do I do? I need some help with this. And he said, well, you can do this. And we did it. And it was very effective and great. And, so I think that makes sense. But that seems separate from this, like, licensing thing. Right? Yeah. Thank you. Yeah. And I'll have to check with my staff when the last I'm trying to look here right now to see when the last time it was used in files.
But, because what counselor Beamer and yourself are talking about is different too because that's more of a private contract rate with the police department for that staff time, whether it's reserves or or licensed officers kind of things with separate. So I don't know the last time the cabaret fee was was charged. Right. We don't need a footloose situation on our hands here in Northfield. So It's not a good idea. Yes. Let's figure this out. Any other questions about fees? Or, Ben, did you or administrator marching, did you have more to add about fees other than the dance?
I don't have anything to add other than, if you have questions, we might have staff that could answer the it tonight. Or if you have opinions, we could research this further. We could just add a follow-up on it at the August budget work session. Probably would be what we would do, if that works. Additionally, I would say we'll get into more on the next budget presentation about targets and detail that we're working for the August work session. But if we brainstorm other potential revenues or amendments to the fee schedule related to that additional work on cutting expenses or seeing if there are revenues,
we might come back with some additional changes. But this was kind of in a vacuum asking for updates. Just generally, this is what we got back for recommendations from staff. So I'd turn it back to you, Mayor, on any other questions to see if we could answer or do follow-up on it. Thank you. Councilor Beamer. Thank you. Looking through the arena fee schedule, I noticed that we we cut out the NHA tournament fee. I'm assuming that that is if they if they host the tournament, that's gonna be covered under the $180, weekend practice rate or or if it's during the week,
a $180 an hour fee. And I guess the second part of this question is would would, will those fees be adjusted once the new arena is built, to meet a better market a better market rate for the fees? Thank you. K. Mayor, members of council, so the the adjustments in the related to the ice arena would be, they would so for the NHA, the tournaments, they would just follow the prime rate at the $180 an hour. So the the current, I guess, highest rate that we're charging other than the high school game type fees.
And then, moving forward as we transition to the new facility, we would be, you know, transitioning the rates up. We we know where, like, South Metro's at, and then we'd move probably towards the upper part of the big nine and phase in that transition to the to increasing our fees over probably a few years to get them more, in line with the market. So that'd be 2728, you know, ramping them up. Yeah. Councilor Beamer. Thank you. Just a quick follow-up, Mr. Bennett. Are those fees significantly higher?
Is that why we're looking at phasing them versus just doing it? May I rest myself? One is we're we're not in the facility with the full operational cost. So one will have probably a good understanding of the annual operating expenses after we've operated a free year to make sure that we're, you know, close to trying to break even. And it varies. There are some that in the big nine that are lower than our fees right now. But the upper part of the big nine, I think the Mankato is at $2.25 right now an hour. I would have to check it if they've raised it,
but we're seeing, kinda in the low 2 hundreds to the $2.25 is kinda where, some of the South Metro rates are going to. But I don't think the upper part of the big nine, they're not all at the $2.25, though. So I think that'd be something we'd be working with counsel on what we established that at and what we're seeing for annual operating expenses in the new facility. Yes. Thank you. Other questions on the fee structure? Great. Thank you. We'll move along then. We'll move along to our, budget work session, which will be led by administrator Martig and miss Angleste.
Thank you, mayor. Members of the council, let's see if, the slideshow will work from my desk. I did activate it for the IT. Alright. Looks like it's working. Alright. I'll be giving the presentation this evening and and going through the slide deck. I'll explain some of that as we go. I would say it, so we'll go through some of the timeline that we have on the budget, some minor adjustments that we've got for the next couple of presentations that I'll talk about that I made on the slide deck.
Quickly, not really spending too much time on the strategic plan detail at this point, but we'll be ramping that up for another date. But briefly touching base on that as well as some pure comparison data that's included in here that I'm going to go through very quickly. And then the tax base changes and the big picture review, this evening that we'll go through primarily with where we're at on the presentation this evening. Departments have all gone through their individual budget details and, gone through and looked to see what things that maybe they're working on that aren't
anymore an expense or looking at detailed revenues and expenses, looking at changes in utility costs, basically line item by line item going through all of their budgets. Those are combined along with any of the capital equipment and improvement plans that we included with you before. Finance department has made sense of those. Maybe if there were issues in the system that weren't clear, those got cleared up, and then basically we're processing those through. So they're this stage of the game is primarily just passing along individual department budget requests based on what they've gone through by individual areas,
compartmentalized, but we haven't yet gone through looking holistically across the departments for, like, my review and then input related to the council about adjusting those. So this is the stage that we're in. We bring you along through that process after the complete part of the timing of it is getting the audit report completed from the prior year and then a good six months operating, give them good background information to prepare those budgets. So this is kind of what I would call the foundational kind of initial budget phase that's bringing you along, and this is historically how we've done this too,
where we kind of submit what's been requested at a high level. We actually have more information than we've included in past years where we actually have attached the preliminary, like, little more detail within the departments that are on the back end of the presentation. We aren't planning on going through those tonight. But because we have had the benefit too of a budget analyst that, has started now that has helped us on starting to accelerate a lot more of the work that we can get done. So we're trying to, like, get more information, more detailed analysis as part of that. So we've included that tonight, but not getting into those details.
So just wanted to emphasize to all of you that this is very preliminary. It's really the start of our discussion related to the budget this night tonight to get into those targets. We heard a little bit of feedback about some targets for upcoming potential preliminary tax levies that we heard, that we'll cover, but we're also open to more and we'll have a lot more opportunity for amendments, in August and September in particular before that preliminary levy is set. So very much, open conversation, but just wanted to level set kind of where we're at at an administrative level
for you too that there hasn't been a lot of group coordination around the budget just because of time doesn't allow us to do that at this stage, but really have made sense and clarified all the individual details with that. So this slide goes through a little bit. I'm realizing I might need to pick which glasses I use since I can't read without readers anymore on some of these the screen, but then it's a little fuzzy if I look over there. So the, I I kinda covered some of that on the, individual department request. We'll be working more holistically between now and August, and we've already started a lot of that work to look at to start to
look at alternative expense reductions or, service level changes, revenue enhancements to bring back to you a package of options. We're starting we're accelerated from prior years on that work to come back to you, but we weren't ready to disclose it, tonight. And we didn't wanna just do piecemeal even though we have some ideas already that are kind of in the works with that, but that's in the process of that. Again, key dates that we have, the preliminary levy has to be set by the September per state law and the budget as well. And, so the budgets can expenses and revenues can go up or down,
but the levy can't go higher than what we said at that date. We are still planning on utility rates, hopefully being set at the September at that same time, which has been in recent history a goal that we've moved to in recent years that also hopefully allows on those utility funds where we've done multi year planning to create more certainty on business community and other people on budgets and getting that set, whereas the tax levy takes a little bit longer on those. I'll talk about that a little bit more in the next slide. And then in December,
the final historically and what's planned currently would be to have the final budget adopted at the first meeting in December, which would also be the date that we'd have the hearing to present the the budget that's scheduled for adoption. So the September just a couple of things to call out on September and August adjustments that we've made. So, the, public works department, mister Bennett and mister Wagner are working with our external consultant on updating our new five year utility rate structure. So we do five year, rolling averages,
rolling rate study plan that's updated every five years. And then if there's any substantial changes, we make midyear changes within that five year schedule, but we've been pretty good at sticking with that. So the five year capital plans for our utility funds are planned to tie with, with those rates, and then we make assumptions on operating costs that might have some adjustments, but we don't typically have, you know, real substantial ones. So we're factoring things in, like some of the changes on the water plant is a is a change, and then we're working on some of the other capital items. So that's taking a little bit longer with our consultant right now,
which actually might help us in this year's budget process anyway. So we were looking at August of having that initial deep dive review on the utility funds, but I've made an adjustment on the slide deck to do it in at the September work session on the sixteenth. Too loud more time for the utility rate study, but I also think that might help us in the August work session to dig in more on the levy related funds, which is probably going to be the more challenging part of some of our conversations around budget and trying to work towards some of those expense reductions, revenue enhancements that we might look at with that. So that's a change.
I think the goal would still be if we're fairly comfortable at that work session to still roll ahead that next week and adopt the utility rates. But if it's slid a month, I think that would be fine too, by October. I know Dundas is an example who we work with on rates, likes to have it no later than the October. So I still think that would be reasonable that that might have a slight, shift if we need to on setting those rates. But hopefully, we'll be able to be in a good position to have that information in order at that time to kind of go through those utility rate studies at
that time. That September meeting also would be additional opportunity to follow-up from the August meeting based on feedback we might get on more refinement of the details hoping to hone in more on that preliminary tax levy. In an ideal world, over time, if we could get, I think, a best practice would be to actually have your preliminary levy that's adopted at the September to be pretty much your proposed levy so that in in budget so that you can get feedback between then and the end of the year from the public. We'll still work towards that goal.
We'll see this year if we make some strong progress on that or not. But I think those two work sessions will be telling whether we're there or not or if we need some additional feedback. But I feel like, comparative to recent history, we're in pretty good pretty good shape related to accelerating and and meeting some of those schedules as well. I'm not gonna go through, strategic plan summary, but I would say we're ramping up. At the August meeting, we'll try and tie more specifically some of our strategic where some of our strategic work plan might be, but also, Risi Karim, an assistant to the city administrator and staff,
have a scheduled has a scheduled meeting in, coming up, and I believe it's August or September where we'd have our initial kind of action plan discussion related to the strategic plan that would tie a lot of that in. But we will work to call some of those, priorities out a little more prominently both in the capital plan and related to our operational budgets to beef some of that information up on the future presentations. A lot of these ratios are the same things that you've seen before, but I think are just good foundational and a lot of times we will continue to share these every meeting just as a reference point. I won't necessarily have them in a long attachment every time,
but, you know, some of these like this slide does come in, from our audit report. Should we get updated information for years from our auditor that they get from other sources where we get 23 numbers, we'll add those in. But, we will just have some of these, ratios in here for you. And again, you're familiar with these where we these are broken out by cities in Minnesota that are slightly larger and smaller and then Rice County and Northfield to kinda give a trending on some of these. This is a peer group that we've used historically, which also is fairly similar to our labor peer group that we use for labor
work, negotiations and setting our targets related to, gross compensation. So the city's total tax levy has been shifting up where we were in the lower area, but the total levy has moved us closer to the middle of some of those pure cities. Again, the audit report gets other cities in for comparative that I showed on the earlier slide, so it's just different groupings on that. This this report stacks the total levies related to the city school, and county, and then some of those have miscellaneous, property taxes. But, 2024 is the most current data that we get from the state system related to
this one, and it shows again if you you stack all of these, Northfield is actually at the high end of the total taxes if you add our county and school district levies on from that same peer group from earlier. We did this has been asked in the past to show some more immediate communities, so we have shared some of the neighboring community comparisons, for data as well. And just to give an idea on property tax comparison valuations, of course, values might change on what type of house you might get from community to community, but there's still ultimately the same value in the end.
So for that purposes, maybe gives a little bit of sense of some some of those around how we might stack in. I would say again, if there's any requests related to different types of data analysis or things, we certainly have a lot of work to do still, but we do have a little more staff resource with a new full time budget analyst where we might be able to crank out some additional data if there's interest on different types of things that the councilors might want in the future related to different illustrations. Tax rate, comparison shows on Northfield. This is from our audit report.
I'm just gonna reference these. You've seen these before, so, you're pretty familiar with some of these. I'm not planning on going through some of these. If you need an explanation about what some of these mean, we can cover that. Current expenditures basically is, operating minus the debt related work that we do for comparisons. The finance director does, gather information related to the county who handles valuations and preliminarily, Rice County, which is where most of our, folks are impacted by, is looking at a 4.1% increase in overall values. And the, I would say one of the things to think with this is if you see
it's a little more stabilizing probably with the with the evaluation changes this year. One thing that maybe you just will get more detailed mapping that ties with this even on a parcel basis. Where this sometimes can be helpful is if there's big changes within values in different sectors, so like if ag lands going up high or residential is going up for certain residential, you can have individual classifications of tax property that can exacerbate budget chain impacts that even though your levy is fixed, if you have big shifting in valuations, let's say the downtown has seen a lot of increase in sales,
higher sale volumes, and all of a sudden their values go up, you might see a larger jump, and then they might have a compounding effect that they have related to those, tax rates. So that's how I look at this that sometimes that can be helpful to predict if there's certain types of entities. Of course, this slide doesn't show the breakout by type of property, but we'll dig into that a little bit more to find out if there's any shifting within individual types of classifications and taxes. But generally, it doesn't look like large, changes on valuations, for next year preliminarily. And Ms.
Angleste, when is it that the final numbers usually roll in? Thank you. The maps that you're talking about that show the individual properties comes out, it's not till, like, November. So we can get it in the last presentation, but I don't think we get it before. I can work with the county and as they get updates, I can update our numbers. But the final, again, is quite a bit later because there's, you know, people can have tax questions or things before they finalize everything. So it's it'll be done before December, but not much before. Okay. This is just another illustration of the growth over time,
related to market values in Rice County. Again, I'm not sure that these are super helpful specific to our budget, process, but we're including some of this in here just as reference. Sales price changes, decrease in valuation of new construction in 2025, again, probably driven by economic factors across the county, seeing a bit of a slowdown on that. These slides are from our current budget for 2025. And since we didn't do the roll up on the aggregated numbers from what the department requests submitted in at this time, We'll have that as well as some of the alternatives for the next meeting.
But just is helpful, I think, again, as a reminder where, overall where some of our larger expense categories come from on the general fund. So of the total levy, general fund is about 66% of that total levy, and debt service also is increasing. So just most of our citywide levy is related to that general fund and debt service make up a vast majority of that. So as we look at potential ways to make adjustments, keep that in mind on some upcoming detailed slides that we have. Again, and I would say on this slide, one takeaway I would have is that in Minnesota,
property taxes is the predominant way to fund local government. So we don't have a lot of other external opportunities. Northfield is a benefactor of, local government aid where the state has a formula where they collect, monies off things like state sales taxes and then it's redistributed across cities on a need basis in Northfield, gets a significant chunk of that. About 25% of our general fund makes up of local government aid, which I've got some slides referenced in the slide that that's pretty much flat, minor increase based on the legislator for next year within the current budget biennium that's planned,
is looking to be remain pretty flat on that one, which ultimately based on the state's budget forecast is maybe a positive thing right now because if those numbers start to change in the next budget biennium, we could face more challenges. But there's a lot a lot of things that are could happen between now and then that I think caution getting too specifically related into the current economic forecast that far out. But again, we'll we'll continue to look at if there's any alternative revenue options. But for the most part, we rely pretty heavily on property taxes with that. Related to operations,
of course, it's probably pretty well known. Personnel expenses represent 65% of the general fund. So that's a big part of that that we have for expenses, for operations. So as we look at cost savings, that'll be part of our solution related to those issues. Public safety is 39% of the general fund. Related to that. I believe that includes our fire contribution to which we could work on the graph of breaking that out if we'd like to show the police from the fire components of public safety. And then, we do receive some police aid funding,
to offset some of the expenses that we've been planning to use for reserve funds. We do have that included in our preliminary numbers to include using reserves one further year on that. We have been fortunate that we have been had favorable budget variances last year in our last audit reports. We ended up not dipping into that, but that's part of our overall unrestricted reserves that we've been planning on using some of that state funding for some wage acceleration that we used, the prior council had approved in an attempt to try and retain the officers that
we had, to try and discourage lateral movements to other communities that were offering bonuses and additional pay, that we use some of that state funding primarily to try and stay on top of that, for our existing officers that we have. I think it also helped with retaining some of those that were scheduled for for retirements that we had some that came back and some that extended their stay based on some of those, incentives that helped us with the challenging environment related to hiring in the police area. This is just a slide kind of summarizing some of the services we have,
some statistics that we could work on expanding on. So this hasn't been updated, but is references for you. This slide is probably just a reference for now for you to if you wanted to look big picture summary, that tie to the detail pages later in the presentation. This includes what the kind of larger revenue categories are in the initial roll up, budget detail that you've got. Again, that will be changing when we come back with a with some alternative options for you at the August meeting. And then by department areas gives you kind of a general show of the change
of the budget, on that as well. We can look to add also maybe a percent change to help maybe visually call out where there maybe what some of those changes are if that might be helpful in the future. The slide on the again, this is all on the detailed department roll ups. Just as a reminder, the the, it when we took all of the requests that came in and the revenues That we had. That number totaled up on the revenue sources based on our assumptions on the other fees and expenses that were submitted by the departments rolled up to a 17.8% total levy increase.
Again, that's all it's compares to the last time we did a budget forecast from the prior year where we've been using this year, we're estimating about 14.5%. So again, just an information that's where that landed based on the individual departments and not going back holistically and looking at this as we come into August. We do have the ICE Arena and our debt is increasing 8.4%. And then if you look at a breakout of all of the other areas within that levy supported fund, the general fund makes up would make up an 8% increase,
ED and HRA going to the maximum levy about 0.3%. And as you can see, the other debt that we had falling off actually was a slight decrease from the prior years with the exception of the ice arena that got added in. And then we have been proposing a phase in, related to capital maintenance funds that we've been slowly working with the council to increase some of the funding into the some of those funds that we'll talk about in a minute. But those were all assumed to be continued, which could be part of our discussions also in the future. So this is kind of a continuation breaking down from the prior slide a little
more detail. Capital maintenance fund levies, increases the total levy by 1.4%. So again, when I talked about those phase in opportunities, this would be the increase that we programmed in and we can come back to look at some of the solutions to say what if we pause some of those or decrease those amounts might be part of that. So we'll get more into the history of that at the next meeting and explain some of those issues. I already covered the ICE Arena project, debt increase that we had based on that. And then the general fund levy,
8% tax levy based on those costs. One thing to be aware is that's primarily driven by our labor contracts that are in place through 2027 currently. We have the council has, at this time, an adopted mid market compensation philosophy. So basically, gross compensation, including wages and benefits, we do check ins on our peer groups on a regular basis to check the market. And then as we have people come and go or if there are changes in positions, we work with a party to update the internal pay schedule to to try and be better on market with
where we are at. Some of you that have been on the council, historically when I came in 2016, the city hadn't been doing that on a regular basis and we were way off market that was causing a lot of operational challenges with retaining employees and recruiting people. And so there's been a commitment to continue to do every few years updated wage study to make sure we don't have that shift off schedule, to potentially have either pay equity implications of that or get into other challenges related to retaining and attracting talent. So again at the mid market for the two year contracts,
62% of the cost of the increase is driven by those labor costs that we have and the 38% is other discretionary changes that we've had. So again, I think realizing that I don't think in the current market related to other peer cities, unlike maybe budget crisis as of the past where local government aids maybe been dramatically cut or huge changes in the economy. We don't have a lot of other cities doing that. So I think for the most part, things like pay freezes or those things aren't gonna be really in the mix of
potential solutions that we see. Those are gonna be probably more fixed costs that we look at. And if there is a interest to change the compensation philosophy with labor contracts locked in for a couple of years, it's probably going to be a longer term challenge as far as that solution goes. So again, tonight's meeting is kind of foundational related to a little bit of prep for the upcoming meetings. Wanted to kind of prime prime you all for some of, some of the areas of cost and when they're coming in and where we might be focusing on some of the solutions with that. Even though overall the levy is like,
you know, point 3% increase, which isn't a huge part of the levy for the economic development authority and housing redevelopment authority, there is a formula that the state sets basically a maximum property tax levy that you can set based on market valuations. And, Northfield since I've been here has always gone to that maximum number. Not legally required to though, so that could be potentially a change to shift that. Money doesn't always translate to strategic priorities in I know housing and economic development is a priority, but sometimes you can do that in ways it doesn't necessarily always translate maximizing those
dollars. But, we had a little bit of 6.6% market growth and that has allowed those levies preliminarily on the budget request to go to that maximum on the initial submissions. So big picture as we start to prepare for August meeting and we're already again working on that. The option a basically is what's come in on the individual department request. I'm just titling that for that purpose today. And, again, we kinda called out some of those things to be aware of. We did get some preliminary feedback, from, counselors last meeting related to being under the 10%.
So I preliminarily put a target at 9.9% to show that we'd be coming back with a budget that would be amended from what was submitted from department request to comprehensively work together as departments to come up with solutions and options. And we expect probably to have a package plan and maybe some alternatives to look at to see what the impacts would be and our suggestions on how to approach that. I did note an option B on there that we would have it also as an option with that. As I mentioned earlier, the last budget forecast we used that we've been using this year including when we
were looking at the debt issuance with related to the ICE arena, we had been at that 14.5. Of course, we did have some cost increases related to the ICE Arena that really pushed that to probably would have been more of a 15.5% levy increase at that final number that we did with the ICE Arena. But just awareness that that's where we had been forecasting based on the operating debts at that multi year planning. Again, that multiyear planning is new and we're still trying to refine that. And I'll talk a little bit about that in a moment related to those options, as well because we'll be working on updating,
those five year forecast at these different targets as well. So just to put that in perspective from what's come in, if you just simply looked at expenses to get down to that 14.5%, we'd be looking at $575,000 in reductions or if we can find some revenue enhancements that could be offset or, you know, things like maybe if there's some reserve funds preliminarily the finance director has looked at even though we're above our, at the audit report above our, projected target for fund balance policies, at the at the higher number of the minimum balance that we have by policy.
When you look at the increase in expenses, even at these lower amounts, there probably is either no or little extra excess on reserve funds to work with for next year. But we will if there is the opportunity, that will be something we would look at as one time expenses potentially to utilize with that. Keeping in mind, we already were planning on that police aid being used, which is a significant chunk of some of that reserve fund. And again, we are brainstorming lots of ideas, so we have some, but didn't wanna disclose them piecemeal tonight on some of that that we're working on. And it did and the other one we said that we brought just under that
9.9, basically to 9.9%. That one would be looking at about a $1,400,000 reduction from what came in in department requests, if our goal is to stay under that. So these are the primary ones that we're working on related to prepping for, the August work session. A few things a little more detail maybe on the, personnel expense forecast that we have. As noted earlier, 65% general fund budget is related to personnel expenses. One of the things that's driving some of the increase that we have in the
personnel costs are one of the areas that we were out of market comparatively of our cities this last year on our wage that the council approved with the labor the three year labor contract that had been approved is we currently have an eight step scale, or excuse me, we have a 12 step scale, and that was way off market of what other cities had. There had been more compression over time of the of going through the steps, which is in addition to cost of living adjustments. Minnesota basically has a pay equity law in the public service sector.
You have to have a performance adopted wage schedule. And as part of the pay equity law, we have to we have to submit regular reports to show that schedule, which is based on the type of work that you do, experience required, those types of things, and places employees, in within the step schedule based on their, rating, based on the work that they do. And the theory is as you work through that, you become more math you become more of a master in the position where you when you're at the full level of the scale, you should be fully be able to fully perform in the job.
And then cost of living scale would adjust that annually. The state does require, reporting then based on sex of of the employees to verify that there isn't a disproportionate benefit to male classes versus female classes to verify that they're in compliance with pay equity related to sex of the of the individual. Anyway, we'll get it. I'm planning on a the council has had deep dive presentations, I would call it, on personnel, employment, practices related in Minnesota, how it works for public employees, which is common if you've been in other even in the private sector,
this is fairly similar to what they might do on, labor, environments. But we'll I I think it would be helpful to go through that detail with the council that we've done typically at labor contracts. So I'm gonna be working on scheduling a presentation that would go into a deeper dive that we would record and make available to I think just as a reference because it can get fairly complicated. Anyway, that compression of that schedule has exacerbated some of the costs that we have. But again, we are more competitive. The cost of living adjustments for '26 and '27 is 3%, which we're working on gathering to show actual other cities, I think this probably is I won't be surprised if we're maybe more on the
lower end comparatively once all the labor contracts have settled, but we'll learn more, I guess, as we see, some cities, but we're locked in with that. Preliminarily, our medical increase are assumed at fifteen percent based on some renewal information that we've got. We did have a maximum that was put into effect and I think there's some informational meetings coming up related to some of the preliminary renewal information. We are looking to see if there are any things we can do to potentially have some cost savings there, but more to come on that one right now. Minnesota paid leave,
laws are going into effect in January, and so we are in the process of proposing amendments. The city has our own that that happened a few years ago where we basically in without the state having paid family leave, the city had created a voluntary program of paid leave. So the plan would be to phase off the city plan and to transition to the state plan. Now that there is a state plan because when we initiated it, there was some discussion saying we expect that maybe someday the state will be implementing
something like this. So this was a stop gap plan to have our own paid family leave that was actually initiated by council, to do that. And so we'd be proposing to phase that out, And we're looking at some details related to some options like the split between the employee and employer, which is an option. So we're trying to see if there's a comparative in what other cities might be doing to again try and be comparative to what other cities might be doing with paid leave on whether or not they share, any of those costs, during this transition. Covered the deeper dive coming at a future meeting.
We'll work on calling out at the next meeting more specifics of things that might be changing in the budget. We certainly have a few kind of one time things. I did wanna call out just a couple of those. The plea because we don't have a lot of new, you know, in new changes for this next year. The we already talked a little bit about the Dakota County, trainings facility that we think is gonna be a very strong benefit related to accessibility, professionalism of some of our training, access to be able to guarantee access, fairly reasonable driving distance. That is a net increase of $30,000
though that we're looking at, based on the analysis of the existing training budget to what the new facility would have. And then we did have a large revenue reduction that's impacting that where the hospital had historically been giving funding for the recreation programming that covered most of the cost of the school district partnership that we have. We did just approve an extended three year agreement with the school district, but there is a termination clause that if we run into issues, I think my recommendation would be as we don't make changes probably for that first year so that they have more certainty starting this fall.
But if we need to look at changes in that contract, we could open that clause for the next, not this upcoming school year, but this school year after if we needed to. But that is a challenge. And again, the hospital was supportive of that funding historically, but with recent financial challenges, had requested not to make that. And that what we did not have a legal contract in place with them for that. But this is the first year that we'd actually be taking that out of the operating revenue side in our budget. Capital maintenance funds, again, the phase in, I kind of covered this. This just kind of puts that in perspective that
there might be some savings. Of course, Mr. Bennett's capital improvement plan ties to the assumption on some of these revenues. There could also be likely some impacts related to that five year plan that we'd probably need to make some adjustments if we made it some of those shifts. So as again, as we work on prepping for the August meeting, there is some complexity where sometimes if you just look at some expenses here, we have to also then look to see how does that impact the capital side of things as we work on that as well. Revenue opportunities, these are just a few we wanted to call out. I have been working, I've had an initial meeting with the colleges,
related to some of their economic impact analysis that they have some preliminary information related to that, related to, a study that the private colleges of Minnesota did, and then they specifically also paid extra for a deep dive into Olaf and Carlton. So we're, that information we're working on helping to make sense of and make it useful information. And then ramping up internally with our budget analyst and finance director about looking at maybe different metrics to use related to if there's maybe some formulas or other cities
as an example. Some of our interns, from Carlton that that are in the community development department are also helping with some research there. And then I've been in discussions with mayor the mayor preliminarily about some processes, maybe about having a a team set up of the council, maybe to help give some additional feedback from the staff. We've done that similar for the, negotiations we've had related to the, townships related to orderly annexation agreements. So I think we'll get into more detail later on that, but we are ramping up preparation for that to explore, some of those discussions with them about the amounts that they give.
We'll also talk a little bit, what we're prepping information to is that, the tax taxability laws are, restricted for nonprofits including the colleges. So anything that we work out with the colleges would be basically a voluntary negotiation that we'd work with them on. So we'd be working with them and we are ramping that up. But don't have anything yet to share on that, at this point. We do have, Mr. Bennett maybe would have more information on this. I don't or Ms. Angleste, I don't recall the details on this one, but there are some new revenues for our MSA funds related to MSA designated streets.
Apparently, there is some offset to how much we put in maintenance, so there might be some issues related to that. But it's it might give us some extra if I understand right, it might give us some extra money to do street projects, but it's gonna have to have an expense offset to it. You can't just collect the revenue and then save the decrease the tax levy from that. Looks like mister Bennett wants to say something on that one, so I'll let him cover that. Air management's counsel in I think in the the twenty three legislative session, there was a change, related to tax collection for auto parts sales.
So the first, we only received about 6,000 because it was partially implemented. And I think now we're projected to be at about $30,000 annual increase related to MSA. So that would be more of our has to go to our streets. It's discretionary use on street improvements, but, dollars 30,000 for more of our street maintenance work. Another area that there has been some interest expressed by counsel to look at this as a potential alternative revenue source, with the legislature, there had been a prior local option sales tax where communities could have a up to a half percent sales tax that could be authorized for regional
projects, capital projects, not to be used for operating, but only the construction side of things. There had been a moratorium in place. That moratorium ended, and the legislature did not approve a alternative, law change. And so it reverts back to the prior law speculation that there might continue to be disagreements at the legislature about a moratorium or about an amendment of the upcoming session. But I would say I can pretty much guarantee you there will be cities lining up at the door ready with cap, local option sales tax requests right away at the beginning of session to try and
run concurrent with whatever the state might be doing because that is the law reverting back. You have to itemize out. It has to go to voters. It does have to be, segregated in the questions related to projects that have to be packaged together with similar type projects. So you can't just group a whole bunch of unrelated projects together like you used to be able to do, prior to the last time they amended the laws. So I'm working on information for you all as background to that, and we have been gathering updated sales tax data for Northfield to estimate what kind of sales tax might it generate if we issued a bond for projects
to go to the voters, presumably next November if you wanted to as an option. And so that could include things that are in our current CIP if we felt like that could match it. There was some, I think, commentary about maybe the exterior library project that's starting to get some momentum on review that's up for review. Maybe like the state bonding request for the NCRC Building, potentially that could be part of that or others. I don't have today for you the par amount, but I did look back when we looked at this a number of years ago, the last time there was a sales tax solution to the ice arena,
when we went to that one. And we had worked with the University of Minnesota Extension at that time, and I it had left my memory banks. But at that time, it estimated that 30% of, sales taxes that would be generated in Northfield would come from non Northfield visitors. So just we're working on getting that report updated. But it might be something to think about. It is if you're gonna do a project anyway or is of interest, you might have help through a sales tax that's primarily a pass through. And basically anything that's taxed in Minnesota would be an added point 5% on top
of what's there that would be itemized on receipts that people have basically that would be paid for. But again, that have to go to the voters, have to be approved. The council might not have interest in doing that, but we at least are working on research to bring back to you as an option, for that, to consider. Small item, but things add up, and I do think there's benefits. Besides that, coming to the next council meeting, we have been working on, building inspections, intergovernmental service contract with Dundas. They had been contracting with a private entity. They were transitioning off of them, and we did offer that we felt we had the capacity within our staff.
There's certain kind of economy of scale that sometimes you might be able to expand your service level a little bit with the staffing that you have. Dundas' building permit revenue and inspections is, you know, not insignificant, but it's, you know, much smaller than ours. So we did feel that we had the capacity to to talk to them about expanding that. So we have drafted up an option for an agreement. Their council's actually approved it, and we're bringing that forward for you at an upcoming meeting to see if you wanna do that. It's a fairly small cost. We wouldn't have any initial operating,
you know, impact. We wouldn't have to increase staff or anything at this point. Down the road, if there's big fluctuations, we might have to, but presumably there'd be a revenue offset on the permit revenue. If there was some bigger permits or something, we could maybe supplement that with staff or outside consulting. But I think I see that as a positive one is, I think another benefit is we have the same builders a lot of times doing projects. And so sometimes some building official might interpret codes a little bit differently than the next, and we're basically right across the street. So I think it's a positive from that standpoint too to have a,
a good comparison. And I think, overall, I believe, we've got a pretty strong staff right now that I think is well respected. So I think it's good timing for that. We're continuing to brainstorm others. So if you can think of any two, we're gonna be looking at other ideas. And I know the council also had in the strategic plan a goal to see if we might be able to come up with three other alternative revenue sources as part of our strategic planning. So we'll continue to look at that more broadly as well. I don't know if there's any is the paid leave, is that pretty much covered already, Brenda? Or was I supposed to is there something else on that one?
So that one, we pretty much covered. I already mentioned LGA, no cuts, maybe a minor increase that we're seeing, but pretty pretty much flat. I don't remember what we're estimating. Maybe mister Schreepfer remembers, but I don't I think it was a fairly significant estimate that we were potentially gonna see as part of the cannabis, the prior sessions, and not last session, but the session before where they had the new cannabis law. Originally, it had been proposed to include tax sharing with municipalities where a lot of the revenue was gonna be sent to communities based on the formula. However, legislature got a budget surprise and challenges on the new forecast.
So part of their budget solution was to say, oh, we're not taking we're not gonna give cities that money anymore like we said we were gonna do. So that all got pulled back. So now that won't be additional revenue. We never actually programmed it to plan on it coming in. So it's not necessarily a loss that we have, but that would have helped us probably on some of our budget forecast. Do you remember, mister Schrepp, for what we might have seen in that case or not? I I don't remember, but you are correct that they pulled it back. So we'll see pretty much nothing out of it. I think it was in the tens of thousands of dollars. So it wasn't insignificant.
Might even have been almost up in the 6 figures potentially. But again, it would have been speculative at that time, not knowing exactly what kind of revenues come in. And I think it was also based on how many permittees you might have in your community. Ultimately, it was gonna be part of that formula, but that won't be that won't be distributed to cities anymore. I kinda covered this from the audit report, so I won't add anything there. This gives you a perspective of how that EDA levy total amount translates to. Again, we will have more detailed budgets. ED and HRA should be ramping up soon on their budget reviews if they aren't
already, on some of the feedback on that. The EDA is planning on using some of their or the staff, I should say, are recommending to dip a little bit into the special project fund that they have that, is a little bit different from the past to use some expenses on some of these interns and things. So there'll be a little more detail of that coming later. NCRC, I just wanted to go through and I'm gonna cover this, mister Bennett. I know we didn't get a chance to talk today, but Brenda and I met and they can fill in the mister Bennett's been working on this and, miss Angleste too. So I'll kinda cover this and they can help correct me if there's any details
here. And we'll ramp up on more information just as background refresher on this. But again, as a reminder, we we have preliminary, proposed to continue our larger, contribution levying towards the NCRC fund. Again, as the city has assumed that management responsibility back over now a few years, now that we've got total operating costs underway, that fund reserve that we've had has been basically brought down into a negative fund balance or breakeven close to that. And so we are gonna we do need to have, over time,
at least a positive, dollar amount in that fund. So our what we've been working with the council on has been to get the lease rates for the users more to level that would be breaking even on the operating costs now that we have a good picture of what the operating costs are. But could the city's contribution continue to help bring that reserve back up so that least if there's something that happens, we can help finance something that gets broken even if it has to get worked into the lease rates in the future? Right now, it looks like we'll probably need to keep that at the same amount even with our, lease changes that we'll share within a minute,
to be able to get that fund in the black still. But we're continuing to work on that. But over time, we'd like to build up a little bit of reserve and then back off and phase that out. Now could we, over time, decrease that to flatten out some of the levy impacts? That's something we'll continue to look at. We do have some maintenance work that we've been having, but we again, that's been some things that have just had to get taken care of, we've been working on at the building. Good news, the bonds paid off. Over all the buildings in good foundation, but it needs some improvements to that.
And we also have operating costs that we need to get right sized based on what was intended with our lease agreements in the past. So council did direct, we did start phasing in these rent rent rates last year. So $12 a square foot pretty much was what was estimated, for our current year's rents to get our tenants at to be able to cover the city's operating, pass through cost basically of the building. All of the users are at that dollar amount with the exception of 50 North. They're one of the bigger expenses. And, of course,
we also have a we had a side agreement that dates back to the original building that talks about on the wellness portion of the building, which has changed over time, that the city would pay half of that basically in perpetuity. It goes like a hundred years or something like that where they could have 50% of that portion of the building, but it's it's in one section of the building that wellness has actually grown over time, but we're still able to segregate those expenses off. So as you can see on the footnote, the others are at about the $12 per square foot, but 50 North currently is at $7.43
a square foot. In the operational, just to show you if we were if they were funded at a 100%, they would be at the 216,000, but that we would be basically paying half of this wellness amount of 103,000 is where it would be as if we followed those prior agreements. We have looked at a Mr. Bennett's been working with his staff to say based on what they're seeing on expense increases, how might those rents change over time. So we're roughly looking at about 6% for a couple of years and then dropping down. This does not include, capital increases that we're looking at in the capital plan related to like the HVAC
systems and things, so that would be in addition. We're trying to keep it simple on this slide. This is another illustration drilling down to 50 a little bit. So the 2026 cost actual cost predicted would be 230,000. So if the wellness, is estimated about 103,000 for '26, would get the total up to 330 total. This is 50 North current rent. So the city partnership subsidy that we have, is at a 100 and would be at about 100 and little over 190,000. Whereas if we only took that wellness portion that we're partnering with them,
the gap between the two of those is about 139,000 a year versus if we're at the full cost allocation to them. So one option, I think the council the last time we met, which I'm trying to remember if that was even in this new year or last year, basically directed us to say, we want to see what that full phase in cost would be, share it with fifteen North, see what feedback we got. These are new updated numbers. We need to meet with them and the users again with this new information. Pretty similar to what they've seen in the past. Unfortunately, again, we have had transition of the Executive Director.
So I think that might create some challenges on the work because we've been working very closely with Carrie on that. But the interim is here this evening and we'll be meeting with them in the future. We did just kind of pencil out well, if we wanted to if we felt certainly they have maybe challenges on raising rates or restrictions that they have. But as an alternative to a full phase in in '26, if you wanted to phase it in over three years to get to that 100% from where they're at now, that might be another option. Basically, the city would help,
cover that cost. It wouldn't be passed on to the other users. The city would basically help eat that cost during that time period to try and give them a little more time to increase that. That's all under the assumption that we stay under this long term relationship that was basically in effect in intent from day one. The only reason we got off was during that time period while this was, being managed by the NCRC corporation that no longer exists. These numbers weren't real clear and as we took over the building we now have more clarity on the leases and so we're now, able to at least get to the point where we can propose what those changes
would be over time. So a couple of other details. Don't get bothered with the detail on the upper part of that. I think that's just showing some detail. But what I would say is, as you know, we put a bonding request into the state of Minnesota to help cover some of those increase or some of those upper or, capital costs related to the NCRC building. If we got some of that state money, that could offset the cost to, those tenants that we would pass on some of those expenses to or if the city were to help out, would be a way for us to phase that out. Could be possibly one we throw in on a maybe a local option sales tax
question for the public, possibly on some of those improvements that could happen next November if the council wanted to do that maybe for this project. So we're suggesting to prepare for the rents, rates is that we do a two year lease agreement, for '26 and '27. Mister Bennett, in your updated capital plan that's attached shifted back one year to give time that if we got the state bonding dollars next year, we need some time to prepare bids anyway. So our thoughts would be as we we push out those improvements one more year to find out if we can get state money or if the council might wanna
entertain a local option sales tax or some other idea, so that we can at least have a two year agreement and then look to see how those capital costs get done then. But we would need to, get these numbers obviously to the other tenants in 50 North in particular since they're looking at some larger increases just because they're a bigger user in the building and there's also that wrinkle of the cost partnership. Working to get feedback from them to also get that into place and then to find out where those new lease rates come into effect. But if we if the council does wanna further get into some kind of expanded subsidy agreement that we haven't been in the past,
just keep in mind those levy impacts would be increased and some of those challenges on the cost savings would probably be increased as well as we work in August as well. So for right now, these are the two options that we're primarily going to share and bring back for council for further discussion and to share with our tenants. Maybe before I move on, since Dave's more in the weeds, anything I missed or anything you need to correct on what I said, Dave or Brenda? Mayor McCallum. The only thing I would add is, prior to Carrie leaving, we did meet with him. I think one of the it is one of the things with their with their
revenue is some of their challenges is how they collect their revenue. You know, and that so they they shared that, you know, they're using some money that they have in investments that they pull out to help subsidize their operating costs. So, you know, any they'd have to work through that, but not only are there you know, it'd be more burdensome on their on their operations. So just something that they wanted to share too, but we can get into more detail, as we move into August on that. Thank you. Administrator Martig, we've had a request for a break.
Would you like to take one now or after you cover communications, DMV, and liquor store before you go into departmental budgets? Or what's your preference? So mayor, here's my I was planning on not getting into the department budgets tonight anyway. So we're I'm probably these last slides are probably pretty minimal, and then I was gonna turn it back to you to see if there's feedback, on any of this. This is mainly intended to be a download for you tonight, but if the council had direction or other feedback, if you're okay, I could probably get through these in five, ten minutes at the most. Okay. Thank you. Okay. Alright. This is one I'm gonna bring back next meeting,
and I don't have a lot of detail on where it's at. But again, we have a stand alone fund, for communications, that primarily revenues come from our cable fees that we charge. And again, as new technology for Internet cable under current federal law and maybe under state law depending on how you interpret it, doesn't allow us to charge the same fee for Internet communications, like fiber lines comparatively to coaxial cable and cable programming. We've been working to try and advocate to the legislature that this is simply a
change in technology, and we should be able to transition from the old technology to the new because it's still a wire in a publicly owned right of way that cities own that land and have rights to it. So those providers should be able to have a pass through fee to charge them just like we did in the past with this new technology. Internet companies wanna not have any costs, you know, challenges, and they're also competing with satellites and other kinds of technology. So they're trying to get that changed. I would say, federally, under this current administration,
our Internet attorney, who is an expert, has advised that we're probably not in a favorable environment currently for cities and that the FCC, who regulates this, might be coming forward with regulations that might not help cities cases to do these types of things. I think there was some opportunity for interest at the state level a couple of years ago, but it was new and wasn't there wasn't a long history of educating them on it. And there was a a strong pushback by, providing companies to lobby against it during the session.
So it didn't work out, and I think they were focused on other priorities last session that they didn't wanna get, distracted with other details like this. So I think our recommendation will be to continue to use some of our staff time to lobby for this in partnership with others to give that option available. But in the meantime, revenue is continuing to decrease and a lot of our communications funded with the communications team. So this will be an area of focus that we'll talk a little bit more in the future about this one, that we're looking at. One side note that I won't get into a lot of details, I didn't have a whole lot of hope with MetroNet,
but when we negotiated the cable fee, part of that came with really great rates for the city as part of the cable franchise agreement. They can walk away from those cable agreements because they're using their other technology. They basically don't have anybody using cable, technology. But it appears in working with our attorney that they're open it looks favorable that at least with the city rates that we're paying at the city level, we might be able to maintain those for a fairly significant amount of time in order to cancel the franchise agreement that we have. That's the one benefit to them. It probably isn't real clear to you,
but the short answer is it looks like through work, that the IT manager, mister Wolf, myself, and our late and our, specialist attorney we're working with, It looks like we'll hopefully have a contract soon that will lock in very favorable rates because I think we were looking at triple increases in our Internet costs, had we not been able to negotiate something with them. So we haven't put in the higher rates in our budget. Because it looks like we're gonna be able to keep those done. And I'm hoping at the August 1 meeting that we have in August that we'll be able to have that contract locked in.
Anyway, the short answer on this one is communications fund is one area in our budget that I would say has a kind of red flag. We're monitoring this one. I would say the NCRC has been the other one that's been challenging over time that we've been trying to get our hands around related to the budget. Apartment motor vehicles, I think the short answer on that one is we can get into detail later, but it's self supporting and that the state has self supporting revenue to expense wise. It's a convenience factor for our residents. So as long as it's making money, generally, the state did increase some fee revenue sharing that has helped us.
We got a fairly decent cash fund balance in that one that we could maybe use for city hall improvements to dip into that fund a little bit. It's not restricted. I do think it's wise to keep a little bit of reserves in that fund though in case the state starts to lose we start to lose money based on changes in technology or people coming here. But Northfield does get fairly good traffic here, and people seem to like coming to our DMV. We draw from, like, the South Metro. So again, we probably assume as long as it's going well, probably doesn't need to make major changes to that one and it's a pass through.
Oops. Liquor store, not getting into a lot of detail on that one. It's been, you know, profit revenue annually transfers to the general fund. We're working on detail to show what that is. As you know, we have been looking at a potential expansion area at Fifth And Washington that has been delegated to the EDA to be advisory to the council based on past action. They're scheduled for an update with a new development partner at the end of this month. And, I'm also we're also been working on a separate discussion related to the liquor store just as a a standalone discussion with the EDA. So,
I would intend to come back at the August meeting, for a deeper dive on Fifth And Washington project. And in particular related to the council, probably specifically around the liquor store as well, to kind of go through some of that. So, I know there had been some past discussion about policy. Should we stay in the liquor business? Shouldn't we? The intent is we have the opportunity to give you a lot more data and information related to that in August, as a policy discussion for the council about what that might look like and mean both staying at the existing location or looking at other potential partnerships in that other
development. So next steps, again, this is kind of I would call just a foundational meeting. Certainly, if you had a direction or ideas, I'm open to it, but we aren't really prompting a lot of policy feedback from you tonight. I think that August meeting will give you a lot more idea of some of those detailed impacts with those reductions. I am planning on each of those options including what the staff roll up would be as to show how the new five year financial management summary would look like including the revised CIP CEP that's in your packet tonight.
We might also be changing a few things in that, as part of the budget solution because we might not only look at one year, but how does that look in multi years down the road too for potential financial planning. I mentioned earlier, local option sales taxes. I don't think I called out in the CIP and I'm not planning on getting any more detail tonight on that, but I think some of the changes we made, we moved back to Bridge Square based on council feedback, either off entirely or to year five. I don't recall, Dave, which one we did. The council probably knows. I Oh, it's year five right now, '26. So we moved it,
I think, just to keep it out there in case there was a discussion. We had debated, do we move it off to six, which would basically mean it's not on it at all. So temporarily, we just moved it to that year five. We did shift back the NCRC improvements by one year. I believe we added in the skateboard park, including a grant offset where we're getting a $500,000 grant. So that got added in as a 26 project. We showed grant matching related to the NCRC potentially with those bonding or local sales tax dollars. And then did you get the stormwater fee ones added in there, Dave? I'm trying to remember now are those ones we're gonna add.
I wanted to look at potentially a mobile added extra mobile pump for stormwater if we needed it and a sandbag, a dispenser machine that would help either for our own or responding with private response that might help. Do you remember? Those are in there now. Okay. Thank you. I think those were the only changes on the CIP, but we're open to more on that. I would say in closing before we go into break, sorry, it might have been a little longer than what I said for ten minutes, but, one of the things to think about is I'm really going to be ramping up to that target of the of the what a 9.9%
levy would look like. If the council did have other, alternatives that you know tonight that you'd wanna look at, I'd take that direction to kinda work with staff on another option or options. Or if you had general feedback on any of this, it's open. But again, I know we didn't prompt specific questions for you tonight, unless the mayor has other ideas. That's, kind of a thought. That sounds great. We'll take a five minute break and come back with general questions fee and feedback for staff. Thanks. And we'll now, I think we'll start with questions about the presentation, and then we can move into some feedback. So councilor Beamer, you have a question. Actually,
I have more than one Okay. Believe it or not. Mister Mardig, could you the 50 k that we that we present every year from the liquor store contributions, what does that what does that do because I know you apply that to the to the general fund. What does that do as far as levy impact, the the 50 k? What what what in a percentage point, what is that? I don't miss Angles said it's probably if you just look at the 50,000, it's a pretty small percentage probably.
It's just over 0.25%. Thank you. Do you have would you like anyone have another liquor store question? We want to stay on that theme? No? Okay. Do you want Councillor Holmes. I'll ask a question. The I know you didn't get into the specific departmental budgets, but I kind of looked in there just for clarity or I guess maybe we don't have to go deep in that. But over the past eighteen months ish, we've had a couple studies done in terms of looking at streets and parks and administrative, and looking at potential headcount changes.
Based on the numbers that we have here and and what I looked at there. Are we looking at in 2026 no change for those departments or bringing any of those project? What what do you call it? Not pro studies studies to life? Thank you, councilor, mayor, members of the council. So we are working on including a reference to all of the three studies that I think we identified both in the strategic plan that have been done in the last six years or something. The police study was the first one. It was actually done when chief Elliott first started. So that one will share,
the administration study and then the park study. So we'll have a slide showing what was recommended based on what we see as feedback from the council and budget challenges at least at this stage since it would have probably increased that dollar amount. No additional positions are being requested out of sensitivity to the property tax, potential increase. So we didn't feel that it was prudent to bring those forwards at this time based on the feedback that we have. But we will be showing what those studies said our peer groups or maybe what they're saying the levels should be at if if the funding was there,
but we're not proposing any. I would say one area that we're working on fine tuning is we do have one retirement. She's been open about that. Michelle Mahold, who does our HR and oversees IT communications and, HR, she's gonna be leaving. And so we did have as part of that a basically a reorg. And so that's the one where we're working on potentially the increase that we would have related to the renewal of the gas and electric franchise fees, which were a year or so behind where we were going to do an increase.
We think with those extra dollars, we could increase the sustainability coordinator position. And then as part of the reorg, we're looking at missus Kareem or miss Kareem to potentially then get into the more the head role of that department becoming more of a specialist in communications and then upping a sustainability coordinator. So if that revenue from those franchise fees are covered, there would be some increased cost through those fees. But otherwise, preliminarily, we're hoping that it will become revenue neutral on the reorg with that transition. And we're gonna work on showing you that for that department next year.
But otherwise, that's the long answer to your question to say we aren't requesting any positions at this time, but we'll we'll be showing that what what those studies did show, and then what's kind of where we're at. And, again, part of those budget solutions could include current staff positions too and having to look at some changes with those as well. So you you potentially could be going backwards on some of that. Thank you. Councillor Dahlmann? Mr. Amartic, there's a lot of discussion in Northfield about consultants. Is there a way that you could bring forth that information about up or down
numbers that go with consultants? I think so. Miss Angles said, do you have any thoughts on that? I think probably the question is, who are we paying for consultants and what are the costs of that and are they necessary or their discretion with that? We could probably put together some type of report for August that would summarize that. And then depending on whether that was enough information or if the council was looking for more, I think we could amend it to go back and get more information. Do you think we need anything more than that instead or thoughts on that? I think some of the questions, and we can put something together for August and look at it,
is the definition of a consultant. So a lot of the engineering firms that are doing project work that are in the projects and maybe bonded don't show up in the general operating levies. So different places, so we can and we may not budget pieces that way. So we know what the total project costs. But Dave, whether we could break out what remains of the project and how much is materials and how much is engineering work might take some more estimates. Yes. Are you think maybe one clarity too before Mr.
Bennett asks. It might help to know too. Are you I'm mainly thinking when that question's asked about soft costs, like things like professional services, maybe more than do you wanna see information on, like, that we contract out cleaning services. That's not really a consultant, though, so I'm assuming you're thinking more like an like, if we consult out attorneys or if we consult out an architect or an engineer for street projects, those are the those are the types of, consultants you're thinking about? Oh. I would it's probably best to look at it from what the public wants rather than what I want.
And I think then you end up with a one page or one paragraph summary of how consultants are used effectively. And this is their general cost because when we defend the budget, we have to defend that item because it's what I understand is you hire consultants to buttress and replace what you can't have in house. So I wasn't thinking of I was thinking professional services contracts. I think that's what people think of in that regard. Thank you. I think that makes sense. Do you have anything to add, Mr. Bennett, on clarity on that? Mayor, I think we could there's probably a way to show,
like, who the consultants are. It doesn't sound like, you know, our plumbing contract and our electrical contractor may be what we're looking for, but be more of our general consulting type services, unless I'm misunderstanding. But we could probably show that. I I think the you know, which ones actually come to the general fund versus a project fund if you wanna think about it from a strategy, from a budget perspective. I think maybe we I don't know if we have a good way to segregate that. That'd be something we'd have to look at too. But, I think we could show that. I mean, I I think I mean, state stat statute,
we do we it doesn't follow, like, the contract in that where it has to be the lowest price in some of those professional services, but we do get proposals, and a lot of times that's a key category in terms of pricing and the services too. So but, anyway, yeah, I think that we can grab that and get that information. Alright. Thank you. Counselor Holmes has a follow-up. I guess I just I I with the information that we get, I think it's important to while I think it's important to understand what the public wants, I think the public has very different definitions of what a consultant is. I am a consultant, and I think consulting is one thing project managing is another thing.
And so I think as best we can clarify the work that's being done because I think it's lumping it all under consulting is very different. And I don't think, and I don't think that the public I don't think anyone would understand that. I think it's just a vague term. So I think we I don't also don't want to direct staff to do too much of this work. So, but I but I think it's important to clarify what work we're we're cutting out there, whether it's, you know, project management, someone who's consulting on, helping bring ideas, or if it's someone who's actually doing work for us that we wouldn't be able
to do because we don't have the staff capabilities. So I guess I just wasn't really a follow-up, but it was more of direction, I guess, in what you bring back to us. Sounds good. Thank you. Councilor Beamer? Thank you, mayor. I noticed in one of the slides when I was going through there, and I'd sorry, mister Mardick. I I don't know that we really touched base much on it, but we did see, like, a nine and a half percent increase in legal fees last year. I kind of probably already know the answer to it, but it's more for the public benefit. Could you explain why we we had such a,
you know, significant Increase in legal fees last year. Thank you, mayor, members of the council. Our city clerk does the deep dive analysis on that, and, she couldn't be here this evening. I think I'm gonna need to probably punt on that one and come back to you with that information. I'm sure we could get it. In fact, I could not only on the increase, but we could break out on the up you know, in the current budget that's planned by what the dollar marks are and what it's kind of used, because there's various things, within that. We also have multiple attorneys. So Flarity and Hood kind of does multiple legal work,
but they have one some attorneys that specialize in labor issues. So you might have when there's labor contract negotiations, we work with one attorney that helps us on that. If there's problems with employees that we're working on disciplinary issues, we we consult with them. And then you have the civil side that you're probably more familiar with, like Chris Hood does a lot of our civil work for us, might be responsive to things like what's happening in departments. So if we're doing big code changes, contract law contracts are all reviewed by the attorney. Those are all up.
So we do have internal coding on the billing that we do on types of what it's being used for, and then we allocate it reallocate it out to the department. So if, like, the EDA is doing a loan and they're reviewing it. So my long answer is we'll need to do I think it might be helpful to segregate out some of that work to explain that, but I I think I would work with, Lynette and maybe that could be something our budget analyst helps with too to come back to you. Might email to get some of the stuff before the meeting even to send to you if we get it beforehand. But for sure,
at the next meeting, we can we can do that. But unless miss Angles did nose off the top of her head, but I think I'd need to do some follow-up on that one. Other questions from this side of the dais? Councilor Soukup. I'm curious between, this slide, the general fund increase is around 8%, and it said that 38% of that is other cost increases. And I'm just wondering if you can speak to what that is typically. And is that part of the way that you would get from the 17.8
that you presented tonight to option b, which is 14.5 because that's about 3% of that 8%. And so are those in your mind because the other 62% is personnel or fixed cost. Is that 30% really where the flexibility is? And then if that is the case, what does that consist of? I can take that one. Thank you, mayor and members of the council. That slide, was just showing that of the general fund,
roughly 60% is personnel related. So it's all related to the labor contracts that's already been settled. The 38% is all the other expenses in the general fund. So it could be professional services. It could be utility costs, gas, electric, any other street maintenance, those types of things that fall in the general budget. So it's just it's not the increase in the budget, but it's just the split like we saw in the one pie chart. Here's personnel and here's everything else. So if the contracts are settled and locked in, that means most of your savings have to come from the other expenses.
Councilor Peterson White. Thank you. I I know we all share an interest in keeping taxes as low as possible. And, but, of course, the trade offs are sometimes if we're artificially reducing the levy, then we're kicking the can and creating bigger problems for city councils down the road. So but I also know that we have some potential for, you know, increased tax base that in some of which might be fairly predictable in the next two to three years. I'm wondering if as part of this, staff would be comfortable
making some estimates about kind of known projects that are expected to come online and contribute to the tax base, if not in this, obviously, in this budget cycle in the next maybe two, three, five years, whatever kind of time frame you think is reasonable. I understand we can't be sure until things are built, but there are some things that are in progress that are anticipated. Some of them may be even permitted that we could know about that would help us understand whether if we make cuts at this time, if those are if those are stop gap measures or that that we might be able to or if those
are gaps that we're creating that we might be able to make up in the near future or if, we should be thinking more about cuts that we're willing to make more permanently, I guess, is what I'm saying. That was a really long winded way of saying that. But, thanks for your patience. Great. Have you exhausted your questions, councilor Beamer? The questions. Oh, the quest okay. Any other questions? Otherwise, open it up for feedback. Yes? Counselor Dolan. I am happy to defer to my friend and counselor Beamer. But quickly, I have to ask you this. So you did a lot of work going into your three options. I think we need in this economic environment,
which is new to all of us, a fourth option, and that's a budget scenario of 3% increase. Now I'm not just pulling that out of the thin air. 3% is what Social Security is giving to many of my residents in the Fourth Ward. That's their increase for next year. People who have moved into their homes fifty years ago and their budget is Social Security increase that goes into life. So it doesn't really matter to me what on what end you put it, but you've got the very high one and then we have nothing at the low
end that what I think is defensible at the low end. I can't defend it to anybody at the high end. I just won't be able to do it. And 9.9 just seems like not even a compromise between the four options. It just seems that, like, it's just a, we wanna get to double digit, and we just this is our quickest way to get there without without much discussion or something. So given the macro environment, I'll just quickly go through it. As you all know the numbers, property taxes in the city of Northfield have gone up 60% in four years.
So we're living with that history. Now we're talking about what we want households to pay more for. They've got increases in food. They've got increases in insurance. They're now saying that tariffs will increase the household budget in the thousands. And then the big one is the school bond referendum, which will add incredible hundreds of dollars to people's tax bill. Some are already at $600 more from that bond referendum. The school, our school, is laying off teachers. It is suffering a $5,000,000 reduction in cost.
So I know there will be pain. There's pain at the school. I don't see much pain in the three options. So that's why I asked for an option d. Now I know it takes work. I respect that. But I think this council wants to be the best council to have considered it. So even if it's not adopted that we actually talked about the ramifications of a 3% budget increase. It just seems that that's what we're hired we're elected to do is represent the people in our district who are wards, who, have to pay.
And so if I don't know if I can get a promise or hope or expectation from staff that you would do that, but I think it's actually owed to the citizens. And if we represent citizens, voters, businesses, they're going to be looking at us. And 3% is a good option D or make it 4%, 4.5%. The number is not what matters. It's what matters is taking into account the economic environment that we're all operating in. And that's thank you. Thank you. Yes, hold on. Yes, Administrator Martic. Thank you,
Mayor. My intent would be to honor any individual council member's request on an option like that. So we'll add a 3% levy, to the list of options and include that. Thank you. Councilor Peterson White? I guess I would just ask councilor Dolan. I I I understand the 3% that he's suggesting is benchmarked to the Social Security cost of living increase, think, maybe. But, anyway, it's indexed to a cost of living increase. So I would ask, is that three if the there's a forgive me if I'm asking an obvious question,
but I'd like to understand better if that 3% is what he wants to see for the effective increase in a household's property taxes from the city or the levy increase because those are two different calculations. The levy increases percentages that we see here are not the percentages by which individual households' taxes will be increased. Those are different and they might be higher due to increases in property value or they might be lower due to increases in the overall tax base. And we but that's a it's quite a different thing from the household budget increase.
And so I just want to be clear about what we're asking staff for. Thank you. Yes, would you my understanding is since the other options are levy options that you are suggesting requesting a levy option at 3%? I actually I don't wanna get hung up on the number. I think it's relevant that Social Security is going up by 3%, 2.7, actually. But then that's something that people have in their minds when they look at us making decisions. No. I think what what I'm asking is that we need to go through a process very much like the school board because costs do go up.
Revenue may stay the same. We have to make judgments. Now we may come out on the same page for something much higher than any number we choose tonight. I just think in the economic environment, it's it's an unusual one. It's the uncertainty is not even the word anymore. Because uncertainty is everybody knows it's uncertain of what's gonna come down the pike. I think we just have to go through the process by which we then can say to voters, we looked at it. We tried to do this. It doesn't even have to be a percentage in my head. I think I wanna be able to say we tried.
We thought about the impact this has on your household. We know, in the same way the school board must know, education is very important. Right? But they're laying off how many teachers are they laying off in the elementary schools? I mean, they're just I just want us to go through the process. I hope that answers the question. Thank you. Councilor Beamer, you have some feedback? I sure do. Thank you. First thing, you know, we for the last two years, two and a half years, I've been following, you know, a lot of what happens here. And one of the things that's always struck me as odd is is the the
cities that we choose to use as pure comparison cities. You know, looking through just real briefly, West Saint Paul's 20,000, New Hope's 20,000, Hastings 22,000, Stillwater's 19,000, Oatonna's 26,000. The big difference with those cities from Northfield is the 5,000 plus college students that are included in our census that those cities don't have in their census. And to me,
it would make more sense if we were to use cities like Red Wing, 16,000 Ham Lake, 16,000 Hugo, 16,000 Buffalo, 16,000 Anoka, 17,000 Albert Lee, 18,000. So we're getting a more accurate peer city comparison, for people that are here beyond the four years that the 5,000 college students are here. I know there's quite a few of them that decide to come maybe come back after a year or two or stay here right after college.
We have a couple of them sitting here sitting here on the on the council. I I understand that. But at at that point, they actually become tax paying citizens. And it just to me, it makes more sense, and it seems like we would get a much more a way better look to where we're actually sitting with with others in comparison to other cities. My guess is we'd have a completely different look on those charts than what we do now. My guess is we'd be way further to the left on those charts than what we are now.
You know, there are some pretty big cities there. I know, you know, Anoka, Hugo, those areas are are Ham Lake. They're all booming pretty pretty significantly as well, but, I think it would just give us a better act a better look. I'll just leave that one at that. I am I'm not saying that we should, you know, that that we need to do this, but just I I just urge staff to to look for cost savings wherever they can find it. You know,
how no matter how incremental that is, you know, a lot of small things add up to big things, throughout throughout the course of a year. And, you know, anything that we can do to help keep the levy as as low as we possibly can is is great. And I do appreciate all the work that they've done and and the presentation, the figures, and everything that they put in there. I do have, one kind of probably crazy request for staff. I'd like to see what the balance in the liquor store fund is,
and I'd like to see what see what what it would affect if we were to this is please let me finish because I know I'm gonna get some weird looks when I say this. But close the liquor store, apply that liquor store fund to perhaps the ice arena fund, and and bring to bring that levy down or because that's a that's a that's a long, you know, that's a long term levy. That's, you know, eight point four percent twenty years, pay that off. You know, if we can if we can apply that down,
the the $50,000 that quarter little over a quarter percent that that store generates doesn't it doesn't it doesn't affect the levy that much. And the the money the amount of money that we are that we are spending on on the hopes and dreams of moving this liquor store at $6,000,000 cost to Fifth And Washington, which in my opinion is a worse location than it has than it is now. It's further off the main the main area,
and it's and it's a big ask. I know I've been told that it would be self sustainable. I don't see it. I don't know how we're gonna look at adding that up there. So, you know, it would save us some consultant fees, and money that we keep throwing at a project that we, you know, in all honesty, we might not do. So it's I'd like to see I'd like to see something from staff as to how that could potentially affect affect how we how we move forward with with this budget
session, possibly applying that that money to to help buy down the, to help buy down the the ice area levy. I think that's about it. Thank you. Thank you. Counselor Holmes? If we're just gonna go down the line. I wanna be really mindful of what we ask staff to do, so I appreciate your willingness to to honor these requests. I feel like getting to 9.9 is a very difficult thing, and as at option C, and I think that's gonna require that would require a lot of cuts.
Huge cuts that that to get to anything below that, seems completely unrealistic and not anything that I could that I could, argue for. Knowing that I want to try to get our levy as low as we can while still providing the expected service level that that the community has for us. And I think at 3%, 4%, whatever that number might be, I think even at 9.9%, the expectations of service levels are gonna have to be greatly, greatly changed because I I think that just having the numbers up here,
without seeing the impact that I know you're gonna bring the next meeting will, I think be very telling. I appreciate the work that has gone into providing these three options. I feel comfortable with the fourteen point five percent one or option b and then looking at how can we even maybe get reduce that even a little more. But I feel like anything more than that is gonna be drastic. And maybe that's drastic as required, but I don't know that that's necessarily the case. I do wanna point out a couple things, or just comment on a couple things that while,
yes, we have 5,000 college students here who aren't technically paying property taxes, they are still, as we talked about earlier tonight, they are using our services. They are part of, they get public safety. So there so we do have to spend money on those those residents even though they might not be paying taxes. So I think to completely take them out of any of our any of our figures and anything that we think about and compare with cities that might only have 15,000 people who live in town, it's very different because those those students are using our services.
They're using almost I mean they're transportation, public safety, etcetera. So I think that we can't not factor them in. And I do appreciate that there's a new look in some of these the slides here tonight. One thing that I noticed that was interesting was the, neighboring comparison on the 35 W Corridor. And specifically when I was looking at those slides, yes, I'm looking at the overall levy or property taxes overall, but specifically because we're the city looking at those city taxes and looking at, Oh, Denison, city pays higher city taxes than we do. Morristown, on a $350,000
house, also higher city taxes. So while, yes, if we look at it, so I think it's just important to dig into those numbers a little more, and recognize that, that even some of these smaller towns have much higher, taxes than we might. Maybe their overall levy isn't, but, but what the city is trying to do and what we're trying to do. And I think that as we look at our strategic plan and we look at what we're trying to accomplish, we really need to to me, and I said this at the last time we had this conversation, I I can't I don't have a I don't have the philosophy of specific number
budget set. Like, we wanna get to this number because because I think we have to look at everything that we wanna do. And so I think that it's gonna be really important for us as a council as we look in October and September that we think about that strategic plan and what are the most important things that we want to try to achieve. What can we let go of to be able to achieve those things? And then what is it gonna take? And then maybe we get creative from there. But I think coming in with a set number limits us so, so far that, like, we can't even think about our strategic opportunities.
So that's how I'm gonna be approaching our meeting in August and September, and that's how I hope we can continue to have conversations to think about what are the most important things for us to achieve. So thanks. Thank you. Counselor Soukup? Sure. I think the first thing I wanted to comment on was related to, what counselor Peterson White was saying and with the numbers and the levy increase versus the tax rate increase. I think that's really important for all of us to communicate when we speak with
constituents because it is when we talk about the levy, and I thought this before I was on council, it sounds like that's what our tax rate increase will be, and that is not true. The numbers being high is still not something we hope for, but it's not, like, on the screen would show is not a 9.9 tax increase. So in August, when we have our next work session, I think it would be really helpful to have that. And I think it was it was stated that we'd have that kind of five
year long range plan and that chart that also shows what that tax rate increase then is with that levy increase because the levy increase is to compensate for the budget not being large enough for your next year's operating costs. So I and also really helpful information about what a 9.9 levy increase does to someone's monthly tax bill is also I think people understand that.
And I think talking about levy increases is, like, what we have to do, but it's confusing to, the general public who doesn't dig into a city budget every year. I also really when I've been having conversations with people that I know about the levy this year, I think whether you supported the ice arena or not, I think it's also important I find it really important to say that it let's say we have a 9.9 levy increase,
that our levy increase would be 1.5% if we didn't do the ice arena. Like, the with the school taxes going up, the school district increases, those are for tangible things. And sometimes when you talk about a city budget, it's not all of it sounds, like, very not tangible. A huge portion of our levy increase is for one project, And I think it's important for all of us to state that because even if we do get to 9.9, like I said when we were talking about the ice arena,
I was very worried about the things that we are going to be cutting because of this one massive project. And now we're at a point where I don't think there's enough people here comfortable even with 9.9 and the cuts that come with that that I think we have to be really clear what the what the number would have been if not for and I'm not saying that, therefore, the ice arena is bad. I'm just saying I think it's important for us to we have to pass a
budget. And so if we are communicating about what that means, monthly cost is important, tax rate is important, and the fact that, 8.4% of the levy increase is because of one project, and that just is the reality of it. I think I I like the idea of a fourth option being a much lower number, not in the sense and and I say this with the understanding that it's more staff time, but I think it's important to understand what the cuts would look like for a
number like that. I think it would help our conversation and our getting to the point where we can pass a budget in December to know what it would mean to get down to a a number like 3%, for example. Because then those I think those conversations help our discussion and also the discussions we're having with constituents. I think those are my only notes. Nice. Thank you. Okay. Oh, yeah. Sorry. No. Go right ahead. The last point, in terms of comparable cities, I've always found that, like, helpful information and also not helpful at the same time because we're not Northfield isn't
like any of the cities and neither of any of their cities like any of the other cities they're compared with. And so it's really tough to think about cities, but I like your point about the 5,000 students here. I wonder what how we compare to someone somewhere like Saint Peter. That is also a college town, but it's a small town. But I I don't know. It's it's like, you could pick that apart too. So, I find it helpful, but, also, it just adds some confusion too. Thanks. Administrator Martig. Thank you, mayor.
Oh, great feedback. I was kinda not gonna say anything about the, comparable cities, but I might just make a minor comment since there's been another comment on that is the comparison cities issue is probably a fairly complex discussion as we come back on that because it depends on probably how you're looking at it and what what application we're using, which is why sometimes I'm showing both, like, one set, but then also showing the audit report, which shows bigger cities and smaller cities. Every city thinks their city is unique, and it's true. No cities are ultimately comparable.
So you could look at those things. I would say one real tangible, use internally that ties directly to a lot of costs that we incur relates to labor. So I think one thing to and and again, I'm not going to get into the detail tonight, but I think as we come back in the future to talk about comparable cities, it's how we're using it and then how it's comparable. One of our biggest expenses we have again is labor. So when we look at other cities, when we do part of the labor analysis that we use to determine market conditions is based on working with our consultants and developing that.
That group that we had is used for a lot of our labor groups, and it originated from a combination formula around population, tax base, and labor mark where our labor markets maybe come from primarily for determining competitiveness as a piece of the compensation to evaluate. It's a bit of an art, so it's not like it's a black and white science with it. Because you when you look at making sure you're within variance, it might be plus or minus 10% or something to say whether you're in market or not on some of that.
But the fact is is that the vast majority of our competition related to labor is metro. For all intents and purposes, we are a metropolitan city as it relates to labor. Absolutely not Greater Minnesota. So I think the further that we go south in other directions, you know, Winona, you know, Owatonna, the less the less accurate is related to our true competition that we have, related related to what it takes to pay people in our location. But for other purposes, tax base or other operational things,
there might be justification to compare otherwise. So it's just it's a lot more complicated topic depending on how you're using it and then showing it with that group. But I I appreciate that that conversation, but I think that's we'll get into more of that. And I think even on that compensation discussion, if we have a meeting that might be helpful to us part of that to look at it. We also have some positions admittedly like the wastewater plant where the Met Council handles all wastewater there. So we don't use a comparable group there. We're actually looking at some cities that have wastewater plants,
but then also the Met Council is our peer group for wastewater operators and things because that's where the labor pool is. So anyway, it's way more it's a little more complicated issue to peel that onion. So I don't know that we can probably do a deep dive in August, but I'm putting it on the list for future conversations to look at that. Thank you. And it's one of the reasons I think we keep the class two and the Class three cities both on there when we're because, when I started on the council, we were under 20,000. Now we're over 20,000. And I think having that on some of the, graphs is helpful as well.
So, yeah, Councilor Peterson White? Well, I think a lot of a lot of insightful things have been said here already. I'll try not to repeat, too much. But, I think if there's one thing that I've learned in I think this is my twelfth time going through this process. And, I think if there's one thing that I've learned, it's to councilor Soko's point that, it is really challenging to think about, understand, and communicate how property taxes are levied. And we talk about percentage increases and the percentage increases are the headlines for most people.
And then they get their property tax statement and it's different from that for a bunch of reasons. Not just because it's it might be because their property value went up, their property value went down, because there's more tax taxable value in the community, and there are all these other bodies on their tax bill that are also levying that we can't control. But the city is in some ways the most visible and kind of central in most people's minds when it comes to property taxes. And, so I think one thing I've learned is that it is worth being very precise and very transparent with our constituents about what we mean when we use
these numbers and about the history that has happened and when we quote numbers that we should really know exactly what they mean as much as possible. Our staff are really supportive of that, in terms of their their work really supports that for all of us, I think. And, I think that that is one of the best ways to ensure that our constituents, as has been noted, know that we are trying. And I don't, I think that it I hope that it's obvious that every tax levy that has been passed in this community involved a lot of elected officials who tried really hard to figure out
the right way to move forward. And reasonable people can disagree about the right way to move forward with every single line item in our budget, probably. I think that, I agree that it's not it's not it's not a useful I have not found it to be a useful sort of problem solving tool. It's a problem that we're trying to solve here together. Right? And I haven't found it to be, a particularly useful tool in addressing this very complex problem that we need to solve together to decide on a number that we gotta hit. Though, we all have goals.
Right? I think it's useful to have some goals, but I think it's been rare to never in my experience that when a number like that is put out, that sounds palatable, That usually the palatability of that number is political. Not it is not almost never tied at this stage in the process to what's actually in that budget. And that's where the rubber hits the road. And that's what we're gonna do next together is look together at, what what those numbers might mean in terms of what our constituents expect, what they would like to have happening in their community,
what they are willing to see neglected or unfinished, what resources they think the community can do without, which things we should not maintain. And I I would I I've talked to a lot of I really like what the school district did. I've talked to a lot of people who were involved in that process, and I think people really did feel like they had a deep understanding of the difficult choices that were being made by the school board and administration. And I think if we can, if we can get to that level of I hope that we will get to that level of detail so that we can have conversations with our constituents with as
much detail as possible so that, if we're if we're putting out a goal or talking about the cost of a huge project that we've committed to like the ice arena, that we can lay that out in equivalency to, you know, if we wanna now get to 9.9 or three or whatever number we're gonna talk about, that we should be really specific about what that means. And if folks are gonna, you know, vote for those numbers, that we should know what the consequences are of voting for those numbers. And, I think as I said, staff will absolutely support that process.
And I I think most of these scenarios involve some really painful cuts that I think we would and I I think our constituents deserve to be engaged in that conversation, and to share with all of us what they expect to see from Northfield city government. There is not a lot of fat in this budget, if any. Every every dollar cut is something that someone really values and uses in our community. So we'll have to make painful choices, I think. And we've we've made some choices that have, that have set us up.
But also, I think that we're, I I believe genuinely that Northfield is poised for growth that will set us up to be able to afford more of the things that we want. And so I also hope that we can view this problem not just in the context of the next six months of what we know now, but what we are investing in for the future. And that we not cut so deep that we're not able to, build the future that we want for Northfield in which we can also afford more things. So that's part of the balance that I always try to strike in this process. And I would welcome any and all opportunities to really,
I I hope that there are ways that we can include the public in the conversation about, exactly which cuts they think we should choose in order to achieve these goals. Thank you. Thank you. Councilor Ness. Thank you. Everyone has to realize that city financing is a real catch 22. We set a levy and then look at the budget, how many dollars it is, and then come back and say, oh, nope. The levy is too high. So then we're stuck in the vicious circle. You know? I think last year, housing values went up approximately 8% in Rice County in Northfield.
So if we would have set a zero levy, people's taxes would have gone up roughly 8%, not quite, but, you know, so we set this at 9.9. And I think I saw a slide that they're saying 4.1 for this year. That'll be a 13% increase in the values of the or their tax dollars for the Northfield portion. So, you know, yes, we wanna keep it as low as possible, but a big chunk of it is because they can sell their house for you
know? Taxes may have gone up double in the last five years, but my guess is they can sell their house for probably triple. I bought my house in 2015, and right now I could sell it for three and a half times what I paid for it. So we're stuck in the vicious circle. So I appreciate all the time that staff puts into this, you know, in getting all these estimates and examples. It takes a lot of time to pull that altogether,
but I really appreciate what you guys do to show us all these numbers. So that's it. Thank you. Thank you. Yeah, I just have a little bit to add, which is that we have had the goal of increasing the tax breaks and improving and increasing our housing diversity and housing numbers, well, since I joined the council in 02/2009. And we've also gotten feedback that our previous strategic plans, and I'm saying plural, so that includes the one that that that that I worked on and not just
the previous council, were overly ambitious and set us on the path to do too much. So, I would I'm really open and curious about being strategic about what we defer and how we, decide not to do as much that so that which allows us to focus on increasing the tax base and working on the housing and and the other items that we've laid out in our strategic plan. So, I think I heard some of that said tonight, but that was just my, kind of,
I don't know, rolling that into my own words. Alright. We're good. Okay. Councilor Ness, you missed last week, so, maybe I should go to councilor Beamer. Motion to adjourn? Councillor Neves. Second. All those in favor? Aye. Thank you. We're adjourned.