Great to have staff here, guests, and media who so faithfully report, council and city work. This is the first of three study sessions on the budget, the next of which will be nine days from today, Wednesday, September 3, at RPU. So not in this, room, but, a little ways north and, much closer to Ward 3. We're grateful to administrator Zelms for her wonderful work, that she has sent out prior to, and I turn this study session on the budget over to administration administrator Zelms.
To be here. I really can't take much credit for this other than it does take a lot of people to put the budget together. So special thanks before I get started to all the departments for, they've been working on this actually probably since October or November, as we, tried to bring a budget to you that is less than what we had anticipated. And then, of course, going through all the regular process of their baseline adjustments and decision packages. And, the people who do a whole lot of work are, Rachel Hollick in the finance department as well as Josh Duerr, Erin Parrish, Brian Anderson.
So it is a labor of many people in order to bring you, a budget. And they are still working on getting the flipping book version working for you, but you do have the detail, within the PDF that went out. So today, we are setting sort of a high level, trying to go through this with you. Please feel free to stop me if you have questions about something. For some of you, it's your first city budget doing this, from the dais. So, if you have questions or need clarifications, happy to do that. And the intent, as, acting president Wall pointed out, is, that we would, based on some of your questions,
information that you would like a deeper dive on, be able to come to you over the next few study sessions, and, be able to to do that for you. Your strategic priorities made, an appearance here and, obviously, you adopted those, midstream of us working on the budget. They are different than the prior strategic priorities but not drastically different. They are a little bit more focused than the prior strategic priorities and so we did, adjust, mid budget process to try to identify how some of the decision packages are fitting in with your strategic priorities and foundational principles that,
this body has acted upon. So you can see, it does say that we really start going in February or March, but, the team is sort of always working on the budget, so appreciate that. Also always managing to their budget and trying to make sure, that where they can, they don't spend every dime. They try to actually always bring this in under every year, and very happy to see that most of the time we're able to do that in most areas, but sometimes we can't. So we're here in August and September. We're We're at the bottom, steps of this with the, recommended budget. And then your next really important,
vote will be the preliminary levy on September 22. And so I'd like to point that out because that is the levy amount over you that you cannot go higher than after that public hearing or, excuse me, after that date. So, you have the option between September 22 and December to lower, the levy portion of the budget but not increase. So just important context there, for the city council as we're moving through the process. So something to be thinking of, it's do you have questions, or feedback for us about the recommended operating budget. I would note it's a two year budget,
but we do a supplemental budget in '2 in 2027. So we don't try to make significant changes then. But as things adjust, we still will come back to you with adjusted budgets if fuel prices increase significantly or something changes, and we need to make an adjustment for that future year. Does this effectively balance your foundational principles and strategic priorities? Sometimes those are a little bit in conflict with each other depending on, what we're looking, to accomplish. So dynamic tension there and sometimes trade offs. Is there anything specific in any of these decision packages that you want us to
bring back a lot more detail on? We're happy to do that. And then, is this where you want to be sitting as far as the preliminary tax levy for adoption on September 22? And the key there is if you would like it to be higher, we need definitely would need to know that now. It's rarely happened in my career, but there's an opportunity for anything. And of course, if you are looking for it to be less, it's helpful for us to have an understanding of where you would be, interested in cutting, but you don't have to accomplish that by September 22 in order to accomplish it by the public hearing in December.
So without further ado, we did start looking at how can we reduce what was sitting at one point at over 11% levy adjustment year over year increase. And then with the changes that the city council made last year to the budget, which carried forward, we were sitting down at that about 10.68% levy adjustment. And we looked at the budget, both the baseline and the decision packages, with sort of this financial eye. We try to use a financial eye when we're looking at the budget. Is there any strategic value? We don't really have ROI per se in, local government, but we do have the value on investment,
that can be returned to the community. And sometimes there are revenue sources associated, with an item. Does it present financial sustainability? Am I gonna be worried that I'm coming to you the following year to say, Actually, this costs more than we anticipated, or ten years from now and say, you know, we should have been working on this all along, and now we can't afford to buy vehicles, something of that nature. Is there efficiency included here? Are we being adaptable in how we provide our services and not just looking to add new, but think about how we are doing our work? Can we collaborate across departments in order to accomplish something or partner with another group?
Are we going to be having community impact and organizational impact? There are parts of our organization that have some pressing capacity challenges, and then, what kind of accountability and performance are we gonna have to ensure that as these investments are made that we're continuing to provide all of that value. So, the property tax rate slide, important slide, you can see that the estimated 2026, property tax net tax capacity or the local tax rate, is hovering right around around that 49.7%. So,
for the last, ten years, we have been between about 4652% in the levy, rate. And part of why that is something we can achieve is because we have broken our property tax base, both new construction and value. People tend to want their value to go up but not necessarily want the value to impact their property tax, but, that's not how that works here. So, this is still the preliminary estimates. You saw this earlier in the year. We will get refined estimates from the county. Unfortunately, it's a little farther into your budget process when we get that,
but we do have new construction, at 1.77%, that's estimated, as of their most recent estimates, and then valuation adjustments depending on the category of, property that you have. So that total growth in the estimated market value, sitting just above 6.5%, but a fair amount of that is coming from the construction. This is the biggest driver in what's going to impact somebody's property tax bill. If we didn't increase the property tax at all, it's still going your property tax bill would still change based on the value of your property and how it's, proportionately different than the other values of property in your class of property tax.
Kenneth, you just said something. You said that the most of the value is increased is with the new construction. That's at 1.77, valuation adjustment is 4.8. So isn't A significant portion. I mean, not at there are some cities that don't see any new construction value or barely any new construction value coming in. But it's because the valuation of our properties are going up. That's what's given us the most amount of increase. Is that correct? It's giving you the most amount of increase, but you do have a fair amount of new construction that's also influencing your total estimated market value. Okay. But and so any change or even the existing property tax first gets absorbed by
that new construction and then the remainder is spread across all of the other properties. Okay. And properties. And you can see, in the last few years that, probably not surprising to you if you're a homeowner, that the spread of the property tax and the share of property tax has been increasing on residential. It's been decreasing on commercial, but we saw in the newspaper recently that, that is going to be changing in this next year, that commercial is absorbing a fair amount of increase based on their assessed valuations. And apartment and manufactured homes has remained relatively similar, from 2021 to 2025.
So that also impacts the property tax bill depending on, what category, what class of tax, you're in. So, as the costs of city government have gone up, that has been absorbed more in residential in recent years. And then, of course, the beloved local government aid slide. We are, one of many cities that receives local government aid and when you think about how much we're receiving in aid per capita, it isn't super significant. And when you combine those two things together, the local, property tax burden and the per capita LGA,
you see that each person that lives here is approximately $945 but the lion's share of that is coming from local property tax. And local government aid, the formula for local government aid takes into account, different factors that the city of Rochester doesn't do well on. That's not necessarily a terrible thing because we don't have, declining property value like some cities. However, that means that more of the burden is being, put on local taxpayers and we're receiving less, aid. But we also rely less on the local government aid than some communities who see it being 40% to 60% of their total budget.
Another way of looking at that, and I know that a lot of you have looked at it this way, is to, think about the other, cities that are somewhat similar to us. If you look at this from left to right, this is based on population. So Minneapolis has a larger population than St. Paul, Rochester, Duluth, and St. Cloud, but they still receive significantly more local government aid than the city of Rochester. Based on those formulas, your population is a significant factor as the other formulas are. Duluth, again, has increased. We all increased slightly when there was the readjustment in 'twenty four and 'twenty five.
And when that adjustment happened, we dedicated that to capital because that's a less volatile, expense for us and we continue, with a formula that's not incredibly favorable to us. Mr. Palmer? Do you have a plan then to either get more government aid or what do we how are we working on that so that it changes? Or if it's not gonna change because of DMC and other funding, I mean, is this just a dog that's not gonna bark for us? Or Well, many cities across, the state receive local government aid and they're very reliant on that aid, some of the smaller communities.
And there are cities that don't receive any local government aid based on that formula. So considering the numbers that you would need to get to at the capitol, I think it's we can dream that something might change, but it's highly unlikely based on the last twenty years and how little has changed in the local government aid formula. We were, helped out in 2024. But what I would say is one of the things that we do try to do is weave this conversation into our conversations at the capitol and try to make sure that there are resources that can come to Rochester, whether that's funding or other, sources of funding so that it makes up to a degree for some of that
lack of local government aid. So Woodbury does not, I think, Bloomington does not, you know, is our plan a dream or a hope or are we just is we're just going to take and use it for once in a while expenses and not counting on it for budget? I mean, it's valuable to have the local government aid. I think it's probably unlikely that the formula changes significantly to really help because what the formula is telling us is that we are able to support the cost of government locally. Now having said that, we still, again, utilize this as part of the conversation for why we might be going to the
state and asking for other sources of funding or to make sure that we are, for example, eligible for bus rapid transit funding that primarily has gone to, the Twin Cities area. And so we have some differences to us than every other city, and every city likes to share their differences. But we do try to make sure that this is part of the conversation. For example, if we need to be able to grow and have new construction, we need to be able to have capacity in our sewer system. Some of the rapid growth that happened, in the, early two thousands and late nineteen nineties had us expanding our utility system significantly.
And now we have parts of town that would potentially like to develop, but we have aging sewer pipes that are not at their end of life, and they don't have the capacity to add some of that new construction. So that's one of the conversation points we have. If we're relying on new construction to absorb some of that property tax cost, then we might need some help in order to be able to free up capacity, whether that's infill or on the edge. But, primarily, that infill gets challenging, so that's why we had brought that, project to the legislature last year for sewer capacity. Mister Miller and then mister Keane.
Both Keane first. Yeah. Again, I appreciate that we're gonna I I'm not sure if we're gonna do these part by part, but I did wanna just add in because of the, the local government aid thing. We always had the capability of making this our legislative priority, but year in and year out, I I believe we don't because we don't think we have the leverage. There could be things changing, and there is a fairness thing here, but I think I as a budget meeting right now, I take this as a given and not as something that based on a budget discussion, we should be fighting it. But I I do wanna point out that we can make this our fight if we want to. I I wouldn't support that.
I just don't think because of as you say, there the other there's other places that are much more dependent on it. And to get us to change the formula it's a slog and it's not where we should spend our legislative time from my perspective. But from a budgeting perspective I think it's important to know this and I think residents do look at this and say why not us? But every city has its own bucket of pluses and minuses. You mentioned the bonding stuff. St. Paul looks at us with our VMC money and says why would we give them any more? So I'm more sensitive to that. I wish it were better and I know Councilmember Palmer has been pushing this. This. I wish it were better too,
but I don't see it as a priority or a budget statement that says this is where we should spend our time. Please proceed. Thank you. We also have a number of other significant, budget factors that are influencing, how this budget comes forward to you, whether those are revenue or expenses. So again, the local government aid likely continues, but, it's still at that lower amount than what some other communities receive. Communities receive. We have a significant number of transformational community and capital projects that show up primarily in your CIP, but also, there was the addition of teammates to be able to bring those projects to life and still do all the other projects that happen on an annual basis and for
other, private investment that's happening around the city. We have some inflation that we are absorbing, and some of that's in capital and some of that's in some of the other line items, as well as, labor cost adjustments. We have, 20 labor units in the city of Rochester, and nine of those are up for or maybe we have nineteen nine of those are up for, review. We've continued to chip away at the vehicle and equipment revolving fund. That has required additional funding because the way that the, fund was revolving wasn't actually keeping up with the cost of vehicles, which has increased significantly in recent years. But we are adjusting those formulas for some of that long term sustainability.
Paid family medical leave is implemented in this budget, which is a point 44% on all of the salary, for, positions. And we have introduced the idea of central service allocation, so costs that are, in a levy funded area also supporting non levy funded, services are having a cost allocation now in this budget. Otherwise, that would have been tax levy. In lieu, parking, storm, water, and sewer fees also, are recommended to be adjusted in this. You haven't adjusted that since 2020 based on a resolution from the council.
At that point, when we had the zero levy, we also didn't adjust any of those, in lieu fees. And then budget optimization that I had mentioned. So we have some one time increases in revenue by really combing through, and trying to still not over project, and then some decreases in expenses that we believe are sustainable for the long term. So continuing to really show our work. We do this every year, but we've had a target this year to really, have our departments look closely at what their opportunities were to, make adjustments. All of that rolls up to a recommended tax levy of $118,200,000
the total recommended budget, including Rochester Public Utilities, is setting at 663,850,000.00. And, of course, a lot of that is capital improvement projects, but some of it is operations. So 5.9%, that's the increase. So 6,589,000.000 is the increase in tax levy year over year. So last time I was here, we were looking at a tax levy of about 111 something million. Now we're looking at this new amount and that is a 5.9% increase.
It is not the tax rate. It is just the difference between last year's levy and this year's levy shown as a percentage. The dollar amount is almost $6,600,000 we also have, rates for our utilities. So, the sewer rates, as has been the trend with their current, rate study, are going up approximately the connection fees are looking at increasing at about 2.7% annually. Those are really adjusted based on, inflation and the cost of service and providing treatment, at the plant due to new construction. The electric utility, is, showing in their budget right now as a 6% year over year adjustment in the
rate. You can see that that's about $5.78 a month in 2026 and $6.12 in '27. There is an alternative, but a lot of things have changed, for Rochester Public Utilities and, Tim McCullough will, talk a little bit about that on slide 55. And so that is an alternative, but we always wanna carry the larger number to ensure that, we're building the budget around that. If there's a different decision that's made, there is a potential that it would be 4%. The water utility, based on their cost of service study, is coming in at a 9% increase,
which equates to about about $2 a month, in 2026 and a little over $2 a month in 2027. On the right hand side, you can see some comparison numbers, on the total budget, and usually the largest changes here are gonna capital improvement program. We do have some adjustments to operations this year as well, and you see that changes in 2027. A lot of that is related to, the service purchases and how the, debt comes online for Rochester Public Utilities. So where does the money come from? We talk about the tax levy a lot during the budget.
However, you can see that it is about 17.8% of the total, revenue coming in to support the budget. The largest, thing that actually supports all of our services is charges for service. So those are utility rates. There are some charges for service for recreation programming, things of that nature, but that is a large part of your budget, but that's also you kind of you need to have clean water, in order to be able to live in a community that is a quality community. So those are 20 fourseven services that are going on, in the city of Rochester. A bit of intergovernmental revenue at that,
14.5%, and then some miscellaneous revenue, that comes in a variety of different types of revenue, prior year reserves or revenues and fund balance, and that's also primarily related to capital projects where we've been building in dollars through rates that are charged and now a project is coming, to fruition and we need to build it. For example, the water reclamation plant has a $92,000,000 project going on. We've built that into the rates over time. We don't adjust your rate by 25% and then build something. We build up some reserve in order to do that.
So another way of looking at it, baseline budget. Excuse me. Yep. I know. You're getting used to it. Just for clarification, like, the enterprise funds, if you go back one slide, are those included in those charges for service funds or are those separate? That's a large part of that. That's the lion's share of that. Okay. Okay. So significant, changes that are happening in the baseline budget. We're addressing those equipment revolving, funds needed in order to continue to provide services, not on horses. Employee services, it's a significant amount of that increase every year.
We say on average, it's about 5.5%. Holistic budget stability funding, a little bit left this year, but in 2027, that goes away completely as we've built back from the pandemic. And then we actually built capacity to be able to include some decision packages there, run the gamut, and we'll go over those. And although, the outside agency requests that came in were 21% higher, than prior year, you've seen that a few times. The recommendation bill, provides about 5% in 2026 and a bit less in 2027. If we're asking our departments, to use a lot of caution in their expenses,
it doesn't seem like it would be reasonable to provide a 21% increase to the outside agencies. So this is a visual that gives you some perspective of how these costs break out. About 4% of the adjustment is in, employee services costs. Those are existing employees. Again, we are absorbing, the reduction of holistic budget stability funds, so that gets absorbed into the tax levy for services that we still need to provide. We have the adjustment that's a little less than 1% for equipment revolving fund stabilization that helps us in the long term.
We had, some other reductions that we made, that helped out the levy adjustment and then those decision packages, for new services or adjusted capacity. And you can see what we absorbed in, 2020, '6 for, holistic budget stability funding was about $400,000, that needed to come back onto the levy. And over time, we've been reabsorbing that into the budget. Miss Elms, going back to the previous two slides, it appears to me that the decision package slide 17 is part of the 5.9? It's part of the 5.9. The decision package previous slide kinda looks like it's an addition to the 5.9,
but It's not. It's supposed to be included. We're just denoting that that is the amount that is necessary in levy if those are approved as recommended. Another way of thinking about, the budget. So a a $10,900,000 increase in the general fund. General fund is very reliant on tax levy. You'll recall that the increase in the tax levy amount is about $6,890,000 so there's a lot of adjustments that happen in the general fund in order to be able to do this. Some of that's the allocation, number. But public safety, 20 fourseven service, those are there are a lot of people involved in that and a lot of
personnel costs that need to be adjusted there in order to meet our contractual obligations and, quite frankly, be as fully staffed as possible. General government, I'm in there. You're in there. Public works and then other includes things like the Central business district, some of the outside agencies, things of that nature. So the distribution of the property tax, couple of ways to look at this. The general fund, again, very reliant on the tax levy. About 70% of the tax levy is going to fund the services that are in the general fund. But we also are very reliant in parks and recreation, the library,
the capital improvement, program. It receives some property tax levy, not a huge amount, but, about eight or 7.9%. And then a very small amount goes to the airport. The city is obligated to pay for some of the customs control and then a portion of the utilities at the airport. But the lion's share of that is paid for by revenue at the airport. Oh, that service. Another way of thinking of it, if this is the entire, expenditure budget for police, fire, public works, the rec system, and library on the left in blue, and the tax levy support that's, necessary in order to provide those services is in yellow.
So very those are very reliant on the tax levy and those are the areas that you would be looking at if you were wanting to reduce the tax levy more or or increase it. You never know. Again, another way of looking at that. So the library, about 87% of the library services are reliant on tax levy and that doesn't include the tax levy that the county provides. Parks and recreation, again, they have some charges for service, and they have some, partnership agreements. But then the general fund, that's where you have public works, fire, police, some of those services. And then the debt service fund,
we are picking up some, debt service for the move of the maintenance facility north, but we also have other debt service that falls off over time. Airport, about 12% of that operation is reliant on tax levy and it's important to point out that the DMC capital projects do not come from tax levy. There's operational support, but even the operational support is coming from the DMC dollars. So, how did we get to 5.9%? Well, this chart used to say 11. We did a lot of changes across all of these different funds, but you can see as we project out, we're also projecting that there will continue to be adjustments and increases.
Personnel costs are really generally never less unless you are reducing personnel, which has an impact on your services. But this is what we're projecting out. This includes some assumptions in it of changes to inflation, cost of service, things of that nature. But this is a better trajectory than what you've seen in the past, but we're also not, trying to come back from a zero levy, which is actually less revenue. And we didn't need all the people during the pandemic, but when we reopened, there was a very high demand for services. So, that's where we're sitting in some of this, projection and that's the major drivers to your tax levy every year.
Another way of looking at it just in a chart. So, again, last year's long range plan included, a projection of 10.68% year over year levy necessary in 2026. And through this hard work of the departments, we were able to get that down to 5.9. Another way of looking at all your major revenue. And, I would say it's good that those are, generally increasing. Cable TV franchise fee regularly goes down. And so, that is part of how we are going to be, navigating the upgrades to this room, but, we do try to dedicate those funds because it's an enterprise that isn't increasing in
growth. Every day someone takes on a subscription service, there's less cable, service revenue coming forward. We did break out in the inspection permits, service fees, and the Bold Forward Unbound anticipated revenue in this chart. So you can see that there, which is going to support those positions that were added. And that's we anticipate a lot of those, building permits coming in in 2026. But again, we're holding that all sort of as a fund, and so we won't spend all of the 5,000,000 in one year. That spreads out over, the life of those projects. I have a couple questions for you.
Permit fees, the the trick on them is that the big dollar amount comes in today, then we do the work. And then two years later, we we think we have a lot of money, We really don't until the end of the project. Am I seeing that correctly? Well, for something like Old Ford Unbound, yes. And for some other things, we don't always know that we're getting the permit fee because someone magically decides to develop in an area. And obviously, there's quite a lot of process to that if it's going from Greenfield to actually developing. We do we have finance watches this very closely, the building permit revenue,
and I know that deputy administrator Steinhauser is also looking very closely at the bolt forward and bound specifically because we have, people and positions tied to that that are not intended to last forever. You you brought a bull Ford. So if I drive down the highway or down not highway anymore, down Third Avenue and I see two policemen staying there, is bull Ford paying for those wages? That is actually different. So the Mayo Clinic is paying for some. I mean, it depends on the day. It might just be coming from the police budget, but they actually have been,
Mayo Clinic outside of these dollars has been paying for the additional patrol and, traffic services. Okay. My next question on this page is and this is a discussion we have every year, is the gas in lieu of taxes. Why don't we have the gas tax on the, in lieu of taxes? I think you're speaking to natural gas franchise fee. We have never instituted a natural gas franchise fee. We talked about doing that, and started having that conversation probably a year or two before I arrived. And then when we were getting ready to have more detail of the conversation, there was a very large increase in the rates,
that were necessary for natural gas, like double digit increases. We moved forward with the sales tax that included, streets reconstruction. What we had been talking about was, the natural gas franchise fee for streets at that time, but that's something that the city council could initiate and it did come up as part of your, strategic plan and action plan. Ballpark what that would raise in funds? I don't have that off the top of my head. It depends on how you charge it and, what we had brought forward in a prior study session. There's trade offs to how you might charge that fee. So if it's a flat rate, some might say that's more fair because a larger entity would be paying,
but one of those entities is Rochester Public Utilities, would also see significant increases which would spread to the rate payer. There is a number of different ways that you could apply something like that, and I think I wanna say that the range was somewhere between 500,000 and 2,000,000, but don't quote me on that. We I can pull that information up and send it back out to the city council, or we can add a slide for the next study session. I just don't have it off the top of my head. Mister Miller. Yeah. I appreciate the question about the franchise feed. I'd be very interested to know what that might raise and especially thinking about some
of our broader goals, the conversation we'll be having about 2030 versus 02/1940, right, reliance on gas, our emissions. I think it's an important conversation. I'd love to know how much that might raise. A similar question I see in the hotel, motel tax or the lodging tax. Are there assumptions built into that growth related to the Rochester Sports Recreation Complex in this slide? Council, council member acting house president. We don't have that assumption built in here. We utilize a report that's provided, from I can't remember their name. JLL. I know their I know their acronym.
But also our STAR reports. So Smith Travel Research provides occupancy and information about how our daily rate, cost for each room night, is faring as compared to other, communities. So we've continued to see small increases in that. We didn't predict what that might be, but what we've done with the, the lodging tax is there's the four point I can't remember the number. There's specific dollar amount that goes to the Civic Center for Operation. There is an amount that goes to the sports, Rochester Sports, a specific dollar amount.
And anything beyond that, we're using to fund, capital replacement. But that could be a future conversation as that continue we do anticipate that it will continue to grow. I would say these are somewhat conservative projections, but while construction will help our room nights and, a new facility will help our room nights, we don't wanna over project that until we have some real numbers on what that is. Thank you. I I appreciate that. Final question or just note is that we are not able to assess a franchise fee on Internet only providers, although they operate in our right of way, and that has continued to be a priority of the League of Minnesota Cities.
And, hopefully, there may be some action on that, but I I would look forward to opportunities because, particularly, the cable, companies are not the only Internet service providers and there are fewer and fewer cable companies. So just noting as we see that challenge. Correct. Mister Keane. Yeah. Again, just commenting on this area, as opposed to the overall budget stuff. But on the permit accounting, when we do these permits either upfront or at the end, do we do accrual accounting on them? Or do we really just have a cash system that we assume the the when the money comes in, it's already, spoken for? We don't do accrual accounting.
But when we're building the budget, we assume based on some of the predevelopment meetings that have happened and, stages of development in different areas, what we think we will be bringing in. So it's a consideration for how much cost there is in community development. For example, I can't answer whether we do accrual accounting. I don't believe we do. But we are always measuring our costs relative to the expense, and we can do that based on the revenue that's on the already been paid. I I know it's difficult, but this is a normal business problem of do you do all your work and
then get paid at the end? And if you have an accrual system, it softens those blows or makes it more realistic for decision making. Whereas if you do a cash system, you can really make some decision making mistakes. Mistakes. I think you can probably do it either way because if you do the accrual system and somebody doesn't bring your building for an end, then you've Yeah. Accrued something that you'll never receive. Okay. And on this discussion with permits and cables and franchise or the, cable franchise fees fees going down. I I understand that. I think it reflects the the world we live in. My question is just on the access to our right of ways.
Do we benchmark how we charge for access to our right what right of way? Or when we had a franchise fee for cable, did we waive that because they were doing paying the franchise fee? But if they're doing other work in the, how do we charge for people who are doing other work in our right of way? Do we charge for that, or do we just assume they're doing community service? If you don't have a franchise in the city of Rochester, you have to get a permit. You should be getting a permit every single time that you're touching the right of way. But having the franchise and the fee associated with it does preclude you from charging
for certain things. Yeah. I believe that we can still charge for lane rental, but, even that gets questioned typically. Yeah. I I guess if, my observation is, that the if the cable is going away or that that's not a good you know, I'm I'm good with that. That we can't do that. And I know from the federal law, we can't charge on the Internet. But we can take on cost and charge for access to our our, right of way. And I hope we know the best practices on how to do that. And we do that for anything that doesn't Yeah. The problem I'm seeing is they have a franchise fee to do cable TV,
but 90% of their business is not doing cable TV. So it's it's sort of bothersome. And I'll creature of the federal law that you're mentioning. And as that started to change, nothing ever changed at the federal level to allow you to actually franchise it. And and just my comment on the gas, franchise fees. It was something we studied. And it it to me, it is not as clear decision that we should do it to raise more money because it really is it's very clearly the residents of Rochester paying those fees. And and those are fees coming back to us from our residents. So it's not like a free thing that we get new new revenue because they're
in the in the right of way. It is really charging our customers. And that's why I think we worked pretty hard to not use that a couple years ago and and I I appreciate that we're not there yet. It is in your strategic plan, but for a future decision. Are we ready to move on? Okay. So this is an updated version of this chart. You probably maybe you don't recall, but the green line used to say 17%. One thing that I would just note here is that, a lot of the increase from 17% to 22% is related to the 14 and I believe now we're at 15 positions related to both forward unbound.
So those are, not generally going to be ongoing. They're not intended to be ongoing. That would be a future decision if they continue beyond, Unbound, either one or all of them. So that would be a decision package that would have to come forward if it was going to come from a different funding source in the future. But again, keeping up with the growth of the city is important. A lot of this shows up in some of your capital plan, but there are costs of maintaining and day to day operation, related to how large the city is, how many miles of streets you need, the number of parks that we have. And so these are some policy items. This actually probably reflective of some of what showed up in your strategic priorities.
Is the number of park do you need a park for every single development or do you need to have better connections to parks, so that, the existing resources can get used more effectively, those types of things. This is dedicated to the cost allocations. So, again, cost allocation, it's really about assigning indirect costs that, are being provided, to different services. So it's what you would consider overhead in the business, HR. If they're not overhead, they're really important. But in a business model, they're considered overhead, so we have one department for that. It's paid for in the general fund, but it's providing services to, all of the other funds, not just tax levy funded services.
So there's it spreads those indirect costs, for support services to the other, for the most part, utilities. And, it helps to show that if, for example, HR didn't exist or if that was a stand alone service, they would need to have some of that overhead, whether it's contract or employees, etcetera. And so this is a pretty significant change to your budgeting process. It's common for many cities new for you in this twenty twenty six, twenty twenty seven operating budget. We did spread out the, the allocations over to sort of gear up over two years instead of doing that over one year, and the total in 2027 would be about $2,100,000
Now, as some of those services change it change, if there's cost increases, etcetera, those same formulas would apply. Or perhaps at some point, we'll do a review of all of our cost of service. So I have a question on that slide. We have a three eleven system that we implemented. Supposedly, it's better quality service for our residents, but also cost savings to us with all the departments. So how does that get, instead of having one department get 100 phone calls and they only get five, how do we get that back to how does that cost reflect back to us
as savings for us? I don't recall exactly how we reflected three eleven in the cost allocations, but we can bring that to you, in your future study session. But you can see here that it's they're all they're not all the same percentage, right, because we're trying to accurately reflect, like, I show up in some of these, but, like, 1% of me. Some days, it's, like, a 100% of me. But we're not trying to go for, you know, it being perfect. We're trying to implement this as sort of a structural shift to your budget. And there there may be a time in in the future where we'd want to
do a really specific review of some of those different services and understand where that value is. But again, the, service allocations are coming from these different services on the left and the value they provide, and they're going to the different services on the right. So it's sort of it is somewhat commensurate also with, like, how large their operation is and how many people they have. Have. If it's for HR, for example, if it's IT, you know, that's generally gonna be, like, devices and, the cost to support that. But if it's just a person and some of their time in supporting it,
then it's more of a straight percentage. We've always had a little bit of cost allocation, by, like, item by item, but this is a much more robust use of cost allocation. And it won't be drastic increases like that in the future. You would be adjusting based on how the budget adjusts in the future. Or if we think we need a change to how the allocation is being applied. Now cost allocations are different from in lieu, and so the, payments in lieu, come from parking, wastewater, stormwater. There will also be payment in lieu from, Rochester Public Utilities, water and and,
electric. And you can see that 0% is we haven't been increasing this, in the last few years, so we were looking at a 4% and a 2%. And it's not a drastic change, but if I'm stormwater, it might feel really like a drastic change in 2026 to be paying, about 40,000 more, than I had in the prior year. But again, the costs are going up in those levy funded areas. And now is where you start seeing that there's really different ways that you can apply payment in lieu of taxes. And the way that this works, for the electric and water utility is is a formula that you can ask Tim
McCullough about when he comes up. It involves standard deviations, etcetera, which is very different than how we apply that, in the parking, stormwater, and waste water utility. You could and so this is we've had some years of inflation, etcetera, and that was driving some increases in the past. And now you're seeing a bit of a more steady, year over year change for Rochester Public Utilities. Put them all on one side, and we maybe wanna look at how we apply payments in lieu of taxes, in the future. But it really is, depending on the formula that you're using, how you're gonna see those changes occur. So a few of the key operational investments,
and I like like to call them investments because we wouldn't be doing them if we didn't think that they would have value for the community, either through better service or, better, provision of different, services to different parts of our community. I could go through all of these, but I have a feeling that we will probably go through all of them or some of them at a future, meeting. But we did try to align these with, your new, your new strategic priorities, and you start to see very quickly that some of these could fit in more than one bucket. Or maybe some of them could fit in all of the buckets. But really a couple of things to focus on is the four library customer service support assistance. So those are we're intending to shift from part time to full time over a
period of time. So the full cost of the four library customer support assistants is in the budget and over time, if there isn't a reduction in the number of part time hours, that will happen through natural attrition. Looking at the personal protective equipment that's required, in order to meet the, National Fire Protection Association requirements for a fire, we need to have two full sets of turnouts. We did, the first set of those with the, public safety one time funding, but we do just continue to provide those over time. Every time we get a new firefighter, they're gonna need two sets of turnouts.
If something happens to a set of turnouts, it needs to be replaced. Some snowplow sweeping software, so trying to do things more efficiently, but also we wanna make sure that you can get to your this is maybe the most literal application of housing access that we've seen used here. Someone might also say that that would fit well with economic resilience, but, you do need to be able to get in and out of your street and go to work in the morning, whether it snows or not. So the maintenance service center is going to require some operations. If you've been to the existing recreation, operations center, it gets a lot of maintenance,
but it could never have enough maintenance to overcome its age. Development services, some contracted services there. We have some positions that are really difficult to fill. And so now we have to try something slightly different. You can see, shelter, shelter, restrooms, playground, and parks activation looking at trying to, make sure that there's more activity happening in places so that other activity that's maybe concerning to some, park users isn't happening as much. Again, while we have to operate the maintenance service center, we also wanna make sure we're maintaining a new investment appropriately over time. And then, a management analyst that's focused on ADA accessibility.
It's not solely focused on that. We will want to have a person that has a data skill set, etcetera. But a fair amount of their work will focus on that. I skipped the digital content assistant. Not exactly sure how this showed up in the decision package details that you received, but this is a good example of something where we talk through during the budget process. Adding a full time, digital content assistant is, like, dollars 140,000. But providing two part times is, like, less than half of that, and you get, you know, more coverage and more people over a period of time. So that's what,
a good example of of starting with an idea, iterating on it, and then applying some of those budget principles to come forward with additional capacity based on, what we're seeing people being interested in, which is graphical representations of things and not just words, and being able to do that cost effectively. Arborist position, this is the first arborist position that's been added in the city of Rochester in decades. And, it's related to being able to maintain the boulevard tree system as well as, trees that are in other public areas. The park and CSO, that is a seasonal CSO position that is intended to pair with the play,
ground and, restrooms and shelter, activity to be able to have a little bit more focus on some of our higher user parks. Two community service officers that also includes vehicles. So growing our community service officer program, the full time program, we've seen a lot of success, with that program turning into retention for, future officers. And they do a lot of they help a lot around that. And quick question on that. Are the vehicles added EVs or why is this environmental sustainability stewardship? That's really related to the fact that they will also be focusing a lot on parks and in the summertime when we have more activity happening there.
But you could probably put it in economic resilience or foundational principles. Okay. Yeah. I I was curious about the foundational principles. It seems like public safety is clearly there, and it seemed like a harder stretch to the environmental responsibility. We a lot of the conversation around this did focus on the park system and assistance there, that's beyond the capacity of parks personnel. But again, you could probably make arguments for all of these to be in a different place. And then the reclass of a transit project manager. I don't know if you want me to keep going through these or not, if it's helpful.
I can provide some context. Reprioritizing an existing, full time equivalent employee, to, to, through attrition to create, an artificial intelligence implementation strategist. So thinking about how can we work smarter but also to have some guardrails, in the city of Rochester, facilities, vehicle. That's just a new vehicle because as we centralize facilities, we didn't provide them vehicles, and that's kind of an important thing to be able to provide facilities management. Adding a building inspector that's directly related to, roofing, windows, and siding, so there is actually more revenue than the cost of the building inspector.
Adding a vehicle for the unbound, positions that are unbound across downtown. Re classing the DMC project manager for construction to an assistant director. So this isn't a new position. It's just changing, the position that they have, which, oftentimes results in a change to their salary. Technology forensic detective, this is really focused on child crimes, Internet child crimes. We've seen an unfortunate increase in that, across the country but also in Rochester. Adding a three one one customer service specialist, so making sure that we can we have two customer service specialists and a supervisor
right now. The supervisor position is answering calls. This is an effort to improve the response that you're getting, and to work with departments to make sure that how they're utilizing their piece of three eleven is as effective as possible. Two community connectors. We currently are, have been piloting, ten hour a week community connectors too, with some community connectors too, with some holistic budget stability funds, and we're recommending that those become, permanent within the city budget, well, permanent as the budget can be, and funded. They are, again, ten hour a week position, so it's not an incredibly costly position, but it really helps us connect with both the Somali and Spanish speaking communities.
And then an IT systems administrator that's focused on all of the growing technology that we we have in public safety. Would work out of IT, but a lot of focus there on public safety. Mister Doreen. Just going back to the economic resilience and the library customer support assistance, did I understand you correctly saying that those that's an addition of four full time employees without the reduction of part time at this point is what's being proposed? Correct. This budget does not include any of those reductions that were brought up on the slide for you to talk about because they would have implications to service,
but there have there already have been working through attrition to be able to if there's part times that are leaving, they're not necessarily replacing those hours at the library. Okay. Thank you. We have Miller, Palmer, and Keane. Okay. So I have a question related to a couple of weeks ago, we talked about the action plan, the draft action plan and how those are still developing into specific actions. One of those actions was or tactics was City Fleet Electrification. Are any of these vehicles in the decision packages for 2026 or 2027 proposed to be EVs?
Your Honor, at this point, I think what we do for vehicles is we we have, like, an overall request through the equipment revolving fund with all that, which is not here. So there's a few vehicles here, but, generally, our overall replacement. There are some EV vehicles included, with that, but we do try to assess, you know, the is it a good fit? Do we have the infrastructure on-site? I would still say we're, you know, still purchasing a fair number of non EV vehicles, but, you know, there is a strategy. And I guess that's what I'm trying to understand because we're talking about two years of budget, and we're talking about an action plan.
I'm just trying to understand how these two things interact, and just, again, like, looking at responsible environmental stewardship. See some stretches to try to put things in there, but I I I don't read these things as what we discussed in our strategic priority session, particularly around environmental stewardship. So We don't even have the funds to replace the existing vehicles. So we have to build the funds to replace the vehicles in order to also potentially have the BED. Okay. So the example, I think we had the, maybe this was last year, the transit's, vehicle conversation and the cost to go fully EV.
You needed something like $3,000,000 a year in property tax levy in order to do that. Okay. I'm I'm just re I'm just trying to understand how that's a a city or a potential action plan and then And I guess when we get to Rochester Public Utilities and there's, like, $1,500,000,000 of investment, that will also be maybe an example of Sure. Of that. But again, most of what we're doing is operating a city and trying to provide all of the services, whether that's police, fire, community services from the building inspectors and from our planners, etcetera. All of those things are not going to have a component of every strategic
priority. Lots of questions on this slide. Your DSIC contracted services, that is for people that we're hiring and That's the contract for the service versus hire position that we had trouble actually filling the position for a year and a half. So you got a building inspector in there. Why wouldn't you put that in that spot and and do that with contract, employees? That wasn't the recommendation, but we can give you more detail at a future study session about why we think this would be more cost effective. But you're gonna collect a permit revenue that's in excess of this position.
Connor, just on the the DSI contracted services, that's predominantly focused on snow removal. So it's a little bit of a Apologies. What do you mean by just in that location? Right. Contracts and removal. Currently, we've got a surplus vehicle that we're utilizing for snow removal on the site. We're gonna have to replace it or contract the services. We don't have the staffing on-site to do the kind of snow removal that the facility really demands and and needs, and so this would really just be for contracted snow removal for that piece. Okay. And so I'm trying to to lower the 5.8%.
And so I'm looking at the digital content assistant, not really knowing what that person's doing, but can't that be infilled with what we have now with our communications people? I mean, do we have a work plan for this, that this work plan is what we need to fill? Yes. We have an incredible work plan for communications and engagement, including a newly added item that's related to building better public meetings that probably will benefit from having graphical information for people who aren't necessarily gonna want to read our agenda. But this is all related to the existing capacity challenges that we have in being
able to deliver on what all of the different departments are looking for for making sure people are aware of program services, the open hours at the gym, etcetera. And it does take a special skill set to be able to do graphics and digital content. And before library customer support assistance, my understanding was that we were were not having the part time and these were gonna be full time. I don't get where the 193,000 if it's if it's a swap. But now you're saying that we're just hiring more of library? There's a recommendation to make the library more full time focused to get more efficiency
out of those positions and require less supervision and less logistics for all of the different people that are necessary to work a ten hour day and schedule them, etcetera, or ten hour week and schedule them or an eighteen hour week. And there is still an option for the city council to to remove funding for some of those part time positions. But if you and if you did that, you would be lowering the recommended levy. Yep. Okay. I wasn't I had never really quite heard if there were four people that were interested, but we are can certainly,
like, provide more information at one of your next two study sessions. And then the other thing on the library that you had put in there, taking one of the days off and and and closing the library either on a Monday or on a Sunday, and that was a cost savings. I don't see that in here. Is is that Correct. That conversation about the 193,000 and the part times is related to closing on a Sunday or a Monday. And so we can have that conversation. What I had explained is that I built a recommended budget that included funding for all of those things on that list. And if the city council wanted to change your service level
opportunities. We can discuss that further at a future council meeting and how that works together with the for library customer support assistance. Okay. And I'm in favor of doing that, so I'm one of those people that are, because I'd like to get this levy down even more. I'm looking at BRT maintenance personnel. Is that in here? That is in the Capital. There is BRT maintenance personnel. It's not levy funded. It's not levy funded? Correct. It's an enterprise fund. Okay. And then the maintenance person for the Forestry Building, if we are right now maintaining the building we have,
why would we need to add another person? We're just removing one building I would argue we haven't maybe been fully maintaining the building that we have. And if you're going to invest $40,000,000 in a new facility, you should probably properly support it with maintenance that is dedicated maintenance with our, centralized facilities process in order to make sure that you're gonna get the most value and life out of that possible. That's the reason that we're recommending it. Well, I I guess I'm I'm on the park and rec. There's probably still gonna be things that parks and rec and public works will do, but having an actual building maintenance person is different than having somebody,
you know, do things here and there, clean up the floor, etcetera. It's really about systems and the building envelope, things of that nature. I don't know if you have anything to add, Deputy Administrator. Your honor, I think this is also, impacted by the increased square footage. So if I recall, off the top of my head, I think you're going from 100 and or 60,000 to 115,000 square feet, and so you do need to accommodate the increase in footage. And I think I think we could all agree that the current facility may not be maintained, appropriately. But we're sharing that with with with public works and transit and, I mean, so so I would I would think that that would be an area to save.
And if it's not, then we can go back in a future budget year and say, we just can't make it work. So that would be my suggestion. Your shelter, restroom and playground and parks activation, what can you explain a little bit further for me? Certainly, I don't have it sitting in front of me. I'm hoping to phone a friend. But essentially, it's to be able to have some more seasonal, employees to be able to activate those areas. So you would be doing you would maybe be having certain activities there that typically we don't have. So it's not just sitting dormant. Also, it could be helping to open and close,
etcetera. I think Director Woodman may be in the best position to answer that or provide more detail. Thank you, council, President and, Council Member Palmer. That really addresses providing more, services in the parks. And then, high on that priority is keeping our restrooms open to the public. And that's, we we hear feedback from council that that is something we need to prioritize, and, that that would accomplish that as well as, providing, more access to other areas as well. So how does that correlate with your your two CSOs? Aren't they supposed to be closing your your your restrooms at the night?
And is is that what's my understanding? Well, there's a lot of cleaning and and other maintenance that goes along with that. Having them locked, just isn't effective, and, we need more people to rotate around to be able to accomplish that. The CSOs are not cleaning or maintaining, and we we would also be working with the COs, to to do the unlocking. So this group here would be daily going around at different times to clean up and make sure the park, shelters are clean. And then the CSOs, I'm assuming, are going to be closing or someone's gonna be closing them at night so they don't get distracted and then they either automatically open or someone's been around in the
morning opening them. Am I figuring that out? That that is correct. And and, we would also provide the service of making sure that when we have a shelter reservation, that that is clean, ready to go for the event that the, participant has paid for. Okay. That's helpful. Thank you. I'm going to go back to the, arborist position. I think we have six arborists right now. I'm assuming the arborists aren't, trimming the trees but they're doing the laborers are. Is that my assumption? The arborists do a variety of different things, including maintaining the tree canopy with their labor,
but they're also making sure to assess the trees and try to get them on the list of which ones are the most important priority, etcetera, making they also are selecting different types of trees that need to go into the system so we don't get all the same type of tree and all of the same type of diseased tree. At any one time, if you have more detailed questions for today, mister Woodman could come up, or we could get you more detail about what arborists do for a follow-up study session. I would just think if you had six of them, that would be enough to take care of that and you could hire laborers to trim and and take out dead trees. I mean,
it doesn't take an arborist to know it's a dead tree. I think it may take an arborist to know what kind of disease or what kind of issue the tree has, but it we have typically had six arborists for a 55 square mile city that requires boulevard trees at every new development and has a significant number of boulevard trees. I don't know off the top of my head how many thousands of boulevard trees that we have. Okay. We have a small amount here, but it's $32,000 for your snowplowing management system. Why don't they just absorb that into their their program now? I mean, you should have a surplus from last year.
You know, and we we bought them a new snowplow because of the surplus we had because of lack of snow. So that was a one time surplus, and so this would be an ongoing cost within the operating budget. So you wouldn't be able to fund it with a one time surplus forever. You You would get to be able to fund whatever amount you could fund from that onetime, and then we would be coming to ask you to include that in the operating budget. So that would be something every every year, we're gonna spend $32,000 on on software to see how we plow our roads. Software to make sure that we're plowing as efficiently as possible and potentially rebalancing the
snow routes, etcetera. But we've done that for twenty years without it, you mean? Correct. We've done that without this software for however long. We haven't had the software, which I assume is forever. So would you assume that there'd be a savings then in in I don't know if there would be a savings, but I think that you'd have a more efficient system. And perhaps it would show that you don't need to add more people, in the future if you're able to be more efficient with your routes or if there's areas that we're seeing that we're having significant problems. You might want to rebalance how you're doing sanding, salting. Maybe you wanna, purchase different type of equipment in order to be more efficient in a certain part
of town where you're seeing challenges. So then under under Reclass transit project manager to transit operations manager, how how does that affect the services our community is getting? You are doesn't necessarily affect the services that the community is getting, but if a lot of these happen throughout the year as we look at the, different skill sets and expectations that we have for positions that are pointed in a certain way and as we add different duties to different people's jobs, for example, if we add the duties to,
somebody's job at the park maintenance facility or the maintenance service center, to also be the facility's manager and that's not part of their job description, we'd probably be reclassing that position because we have to remain balanced within our system of, our classification system and with our, sorry. I'm hearing a lot of noise. And across our labor management system. But that doesn't come out of our levy? This does not come out of the levy. This is funded through your transit system. Thank you. Mister Keane. Yeah. I again, I've learned a lot from the presentation,
but this this questioning has been helpful to some things I wasn't picking up on. A couple, things I was trying to understand. I see the transformational capital reclassification of a DMC, and I'm trying to understand this as a decision packet. This is costing some money to move, change the position because it's probably moving up a class. Or what makes that a decision pack versus a management decision? I've received, like, 20 of these throughout the last year, and so I'm trying to make sure that we aren't drastically altering your budget without going No. No. This is this is what I'm trying to get to. It's like, is FTE the control point,
the communication between the staff and the and the council on far as what is allowed within a budget? Or is there other is your charter control point, and I am your I think you need to know about some of these changes because if you had 20 of these changes, they would add up to a $100,000. Yeah. Okay. Because that that's why again, I'm trying to get that like I said, the charter control point is the FTEs. But again, the difference between what makes it a decision pack versus a management discussion. And I think you put it together on this next chart where you show the dollar impact and how it adds up to the 1.54%
impact to the to the levy. Is that is that a correct way of reading it? That is a correct way of reading it. Okay. Then I did wanna make a couple other comments here. Just on the library thing, I I find this to be penny wise, pound foolish to have a $9,000,000 library and then save money by closing it from the residence for some days. I I just don't think it's a good policy. So I would not support, you know, the the closing the hours. I thought the Sunday thing has proven to be very helpful, for residents who couldn't get to the library other times. So I I would not support,
those kinds of changes. And, just on this thing with it being levy funding, it is interesting though that there are other impacts down there and below that are non levy. But I I guess I would make the point that there are other non levy spending and non levy decisions going on that don't make this chart. Is that accurate? Because there's That's accurate. Anything that's Rochester Public Utilities does not make this chart. Yep. Okay. Thank you. Mister Fredericks. Thank you. I support keeping the levy levy as low as possible without sacrificing safety of our community. With that said,
I'd like to see the use of contracted workers wherever possible. With benefits with benefits being $45,000 per year for a full time employee and an additional 2 to 25 k depending on the position, I just think it's wise to utilize those services where possible. Whether it be building maintenance, landscaping, cleaning work, work, what have you. I know you know the scope of work that we could entertain that doing that in. I think it just makes sense because there's peak times for these things. There's and when it's not a peak time,
you're carrying that full time employee all year round, you know, let's say you get caught up in a certain area, whatever, then you're, for lack of a better word, stuck with an employee and we're paying them, you know, a lot of money when it when you break it down, the wage might not be huge. But when you throw the benefits and everything, I think every full time employee is over a 6 figure position. So it's just important to be conscious of that. And you and I like the idea of supporting our private enterprises in this community. They like to have the work and they can do a good job and, you know, it can help them grow their businesses and provide jobs within their business that we
don't have to manage and and operate. So that's what I got. Thanks. Any others? Please proceed. Thank you. And I would just maybe add that we do take take a look at that on whether something maybe should be contracted or a position, and that's part of the nexus of analysis that we do in all of these. And sometimes when we contract, we also have have the benefit of needing the contractor to meet the letter of the contract, and that doesn't always work out for us. So strategic priorities for 2027,
again, you will have another look at this in 2027, but we ask ask the departments to look at the two year window of planning. So in 2027, we are looking at two community service, police officers. These are police officers, not CSOs, but in the, community service division, to focus on that homeless outreach. GIS technician for fire, police, emergency management, and parks. Again, this is somewhat related to emergency management response, so the concept of housing access is we wanna make sure that if something's happening that people can, access,
and have quick recovery. Custodial position for the Parks and Forestry facility. Again, you could look at contracting that, but we have not always had great success with doing those things. It's a significant facility, and if it's not, and and those have not been inexpensive contracts either. To transit attendants, again, this is not in the general fund, but transit attendants, added because of the expansion of the system. Another arborist position that would bring you to eight. And then so you you if you approve these this year, you still have the opportunity to look at them in 2027.
Reclass of a manager of and properties, again, to a director. We've continued to grow the central service of facilities management, to equipment operators for the sewer utility. We've not added equipment operators for the sewer utility in at least a decade, and it has continued utility, because they'll need to get to the different, parts of their job. Facilities and again, those are not funded in the general fund. A facilities vehicle request, so that's the second facilities vehicle for centralized facilities. The, implementation of the enterprise resource,
software system will require some additional staffing in order to be able to keep using the existing system, processing everything, and then in the foundational principles, we have two IT system support specialists. We do more and more and more and more things online at all hours of the day, to be able to meet that twenty four seven support, but we only just started working on last year, adjusting a Smartsheet digital asset management tool, so that we can have multiple people pulling, visual assets, in a functional way and then a police squad car and equipment,
which is related to the positions. Mister Doreen. I appreciate the, the inclusion of the two community service police officers for homeless outreach. I'm just wondering why not the inclusion of a full time social worker instead of, or in lieu of, officer. So I'm kinda wondering if the chief could talk talk about that. He is coming forward, so the answer is yes. I I'd appreciate that. Just because because the the social worker involved now is doing amazing work. So that's the only reason I'm asking.
Yeah. Thank you, council member, for the question, and and I appreciate the acknowledgment that she is doing amazing work, and and I believe that, we hope that we continue on that path. As evidenced by the report that we provided you, we are seeing some short term success. I think the short answer to that question is it quite may be a 2027 ask. We're still in the pilot project phase of working with this embedded social worker right alongside. We are seeing short success. I hope that it's long term success. And then also I think part of that conversation is, I'm not sure how long,
this particular person that we have in this position, desires to or wishes to work and continues to work and if it's not her, I think, some of the success we're seeing is quite frankly reflective of the person in that position right now. So we're still evaluating that. We have, some funding to continue this pilot project probably through 2026. And so we're still evaluating that pilot project, right now, and I hope to have more data for you guys. Mister Fredericks. Thank you, mister Wall. You're welcome, mister Fredericks. It goes without saying, but I I I feel like I have to state the obvious.
To go back to what we said when we were talking about the let's just talk about for, I call it forestry management, but, arborist position and such. Can you hire three more? Do we have the equipment for all those people? Do we have everything we need? Do we have vehicles? Or now are we gonna have to get more vehicles? More equipment? More this, more that? It isn't just the cost of the man, the man hours, it's all the stuff it takes to to run that too. Then there's the maintenance of all that stuff and the ripple effect of things like that. You know, I'm sure I have a lot of faith in mister Woodman.
I'm sure he's thought these things through. But I just know what it costs to do things like this and the and the maintenance and and vehicles and all that too that go with it. It's enormous. Council member council Esme? Just looking at the cost that's reflected here, it does not appear that there is a vehicle that would be using existing equipment. So you said I should read better? No. I had to go to the slide to see what the number said to feel confident that I was answering inaccurately. Mister Keane? Yes. I wanna just go back to this discussion that, chief Franklin had with council member Dohring.
I I I too am well aware of, some of the work that goes on there. But I I wanna clarify that I believe the social workers embedded with our police department are Olmsted County employees that were, you know, with train doing some training there as opposed to city employees that are now social workers within the police department? So we have that program where there's the co response. But with the public safety one time funding, you added a contractual arrangement with it happens to be a person that's retired from Olmsted County Yeah.
Okay. That is embedded in social work employees that go out when we report, say, an encampment or something of that nature. Okay. But this is this is a pilot that is funded through the public safety one time dollars that Chief Franklin's referencing and that, Councilmember Doring was talking to. Yeah. I I guess I'll just this is a budget meeting and it's not really a budget question here. But I just wanna make sure as we you know, when you're having pilots, you do one thing. But when you start talking about we're going to change how we do our staffing, I I wanna make sure I'm aware of what's happening there that if our police department has foreign officers and has some admin, and then it has a,
like, a a a department of Social. I I gotta get comfortable with that, and I I'm not there right now. And right now, it's one contractual employee. One contractual. Okay. Again, just wanted to clearly get it out there. Thank you. Mister Miller. Yeah. Thank you. Again, like, classifying these, I I appreciate mister Fredericks bringing up the point of the cost of growth, how we grow, and I think a lot of these are inclusive growth management. We're we're facing the pressure of a growing physical footprint of our city. And I I look forward to some of the action plan work, specifically to understand the cost of growth over the long term. I know mister Palmer brought this up of,
you know, street property taxes pay for the street and the maintenance, but there are other factors beyond that. So appreciate the opportunity to engage on this. I think the GIS technician is great, particularly as we've looked at how do we, understand our our parks and trails connections, and I've heard that staff time is such a limiting factor on understanding where those gaps are. So would look to I hope we can do that before 2027 in closing that plan. Additionally, I'll just echo comments of council member Doring. I would I've also heard the great success of, the social worker embedded. I I would love for us to figure out how to act sooner and even
expand upon that success. So whether that's that's through onetime funding. Right? But I think that's great, and I would love for us to build on that success and and understand the the sort of ceiling of of what investing in that area looks like. And then, finally, I'll just reiterate again. I think beyond the arborist, these aren't really responsible environmental stewardship items, and I would love to see them just move to growth management because I I think environmental stewardship items, and I'd love to see them just move to growth management because I I think that's more reflective of what they are, providing city services for equipment, operators for the sewer utility for a pickup truck, and then, facilities and Those are community service officers, which, are
Those are community service officers, which will do more than just focus on parks, but it will provide additional capacity to also address some of the park's challenges. There's also a somewhere up here. No. I lost it. Seasonal part time. Oh, park CSO is seasonal. So that there's some seasonal capacity seasonal capacity is what will be focused on parks, but there will likely be times where the community service officers, the full time community service officers might be necessary as we're seeing trends develop in order to be able to influence those trends.
This position these positions are these two positions and the seasonals are not sworn police officers. They're community service officers. These two positions are sworn police officers focused on the community outreach division that is primarily downtown, but a wide wide kind of wide swath of the downtown area and that community service outreach officer program that we have. But we currently have the one person that's retired from Alta County during the day. Right. But this is just the police officers we have.
I don't know how many officers, I can't recall, are in that unit. Okay. I know we got a grant for that one before, and I'm I support it and I've heard great things. I agree with everybody else on this. But where do you get to the spot that this is Olmsted County's responsibility and how do they not fund this? Or the state not fund this? I can't answer that question. Well, who could? You might want to talk to Olmsted County. I mean, I think Olmsted County has a lot challenges that they're trying to address, right? They provide supportive services to a wide demographic of the community, not just people experiencing homelessness.
And so they also are used to providing those services to a large demographic of people that aren't just people experiencing homelessness. So it's something that the county might need to look at. They also don't do the same type of policing that we do. If you're sheriff's deputy I mean, they do the similar type of policing, but they're around the entire county. That's a really different experience than a police officer working in a city of 125,000 people, which is the majority of the population of all of Olmsted County and has a densely populated downtown during the daytime. So it's a different I think they probably experience their role within people experiencing homelessness
differently than the city that's providing a park system, that provides a library, that provides that's a different mindset, potentially, than our chief Franklin who's got the calls for service at the at the dispatch center and has the information that shows how many times we're contacting the same people for pretty significant that shows how many times we're contacting the same people for pretty significant behavioral challenges. And I understand that. And the state of Minnesota gives the county a lot of money to do all the social services that they do. We don't get social service money from the state of Minnesota, correct?
Correct. And so, it's I'm not trying to get rid of that position because I think it's really important. I think that having somebody in social services talking to somebody other than a badge. So one other person talking to them might be helpful. I'm fully in support of that. I just don't want to be the one that I use the overnight shelter. 85% of the funding, I believe, is from the state. Not from the county, but from the state. And then we kick in some money. So, I don't want to be doing funding that the county should be doing. And yes, we can talk to the county commissioners, but I think we'd have to have some kind of a group talk to them
because at some point, they need to do a better job, in my opinion. Thank you. Thank you. So based on a conversation that, we had, a couple of months ago, and before this came out, I thought that perhaps the 2026 decision packages would be about fireworks and music and, libraries, some of those things. And the list, changed to be considerably, more, important, I think, to, the causes of the city. Then I look forward to 2027, and, with the rapid rate of change, in our world and our city,
how much of this do you really believe is is going to be the ask for 2027? I think all of this will end up in 2027. The question is, do people say they actually are concerned that they don't have the capacity without adding more. And perhaps some of these would get pushed out to the future, but it's very hard to it is difficult to predict two years into the future. But it's an important planning tool so that you can see, okay, if this is what was requested in 2026 and 2027, but then in 2027, something completely different comes forward from a department,
are we planning ahead enough? We also consistently hear from this dais, not necessarily this specific council, concerns about making sure that the property tax levy doesn't go up more than is necessary. We heard that today. And so that's the dynamic tension that we have within trying to provide services and do so in a cost effective manner so that people can afford to live here. And that is not an easy lift. So going through the decision packages every year, even combing through all of the baseline budget to say, okay, we haven't really been using this.
We can either take it out or apply it somewhere else. There's a whole part of this that you don't I'll I'll use the word have to see because it's painful, where folks are really looking closely at all of their ongoing operating budgets to say, do we really is this still really an effect effective use of these funds, or are we actually finding that we're doing things differently now? So there's that whole baseline process that happens and then you layer up to the decision packages that are reflecting new challenges that we're facing of either capacity,
changes of how we're doing our work, a lot of that being online teammates. And teammates. And I think you also have some capacity within there granted, it will mean a shift of revenue, to fund those where it's possible that those will iterate into something else as future requests. But right now, we're in the building phase. A lot of the things that you're seeing being built are not even going to be done in 2027 because it takes a long time to deliver them. So I would say that it's also a reflection of the the team understanding that there's gonna be discussion at the city council of,
you know, what what is reasonable, acceptable, politically acceptable from a tax levy perspective or the cost of service for utilities, and trying to be efficient and effective and really reflect what their needs are. One of the headlines that I think the community, needs to hear and, has been reflective reflected in our written, communications is the hard work that the staff has done to, reduce the budget by 4,000,000. That they really did do very good work to get it from that 11 something,
from the 10.69 down to, the 5.9, because I think it's not infrequently that we get, missives from, residents that say, well, don't they ever cut anything? Don't don't they ever review programs? And and I really appreciate what, the staff has done, in order to, reduce items that allow us then to more, strategically grow in ways that will, serve the citizens of Rochester. So thank you. Thank you. And we do this every year. We just we're really, really focused on not being at 11%.
So maybe the adage would be, like, we reuse, recycle, and then reduce local government because there's almost always something new coming that people have expectations for. So it's not necessarily that we're always reducing, but we're mitigating that increase by looking at how we're things and how we're providing services and trying to consider that at the baseline level. And then we're asking for additional when we think it's necessary for the service to operate well. Other questions before we move on. Oh, mister Palmer. So so we always have, if somebody says to me we wanna,
cut the budget, I always tell them that 1% of the budget is about $800,000 Is that the proper number or is that gone up higher? I think it's about 850,000. I'm a rounder. So let's say it's 900,000? Sure. It's not I don't think. I think it's, like, 806 Oh, no. It's more than that now. It's it's more like one point. Yeah. Yeah. It's closer to a million. One Rachel's gonna get the exact number here. Over a million. It's over a million. Sorry. Well, if our tax levy is 118, it would have to be a million Oh, $1,100,000 $1,200,000
$1,200,000 Okay? And so if I want to go down to 4.8 and some of the suggestions I've made would probably get us down to 4.8. I'm not saying anything. You need to give me more suggestions, Cynthia. And I'm not laughing about it, but we did have council members who said there's waste, fraud, or whatever in government and you figure it out. I'm not that person that wants to do that. I think that if we can make some hard decisions and four of us can say, yes, this is what we want to do, that makes sense. And so, I appreciate the hard work that's gone into this and I don't think that we
have waste in in in our city government. I think it's pretty well run, and so, you know, we have a lot of things we do twenty four hours, seven days a week, all the time. And so, that's, you know, so it's a it's not an easy business. That's why we love it. Thank you. Proceed. So we mentioned employee services being a lot of the cost of government, and this slide shows you, that is true, and it is still true. And when you think about the 20 fourseven service, the cost that it and some of this does reflect decision packages for CSOs, and, in in police,
but the lion's share of the increase of your, employee services is in police, fire, and public works. Those are twenty four seven services that happen in the city of Rochester that are funded primarily with property tax dollars. You can see that joint facilities, is centralizing. So we've had them centralized, but we had been hadn't, like, centralized the cost of their budget, until this year. So it's not a $1,100,000 increase. There's those decision packages are in there, but it's removing them from some of these other departments like the library, city hall maintenance,
and the PWTOC, and centralizing them in one place. The same for, 03/11, so that used to be picked up in city administration. I didn't cut the budget, dollars 396,000. Big part of that was moving, three eleven into it and housing it in its own, space so that communications engagement and three one one is all all in one place there now, so we can better track, the cost of those services. But, yeah, the cost of employees and providing that service to council member Frederick's point isn't insignificant. So we do look at contracting things out when we can,
especially if it's something that there is a a quality vendor that can do that. We now contract out the Civic Center, for example. We've done the million dollars when the DMC project managers went from being a bunch of funding of contracts to employees paid for, also still by DMC. That year, the cost of that service went down a million dollars. So it sort of depends on the service and the contract and whether or not, and different points in time, whether it makes more sense to contract out or to hire. We have a position in public works that's, like, perpetually impossible to fill, and we think we should contract that out,
partially because we cannot get applicants to apply for that job. So that wasn't really a cost perspective. It's that we need the work to get done, and we're not we're not getting candidates for the job, but we still have to do the work. Checking in with, the council and with the presenter, we've been at this for ninety minutes, a bit more than halfway through the slides. Do you wanna forge ahead, or do you wanna take a break? I could do budget all day. I took a joke. This is a But I do have a question. Yep. In in in talking to, one of the electrical inspectors, I ran into him on the street. And when he got hired,
there were 60 people who applied for his job. And the last time we had electrical inspector jobs that came up, I think five people applied for the job. How do we balance that out, that people don't seem to want to either work for the city, is it wages that's not there? Why are we not attracting enough applicants? It's a combination of things. I think in that case, we've found that wage was a concern and when the state changes how much they're paying, then it's $5 more than an hour than we are, then we have things to think about. Also, one of the challenges that we have with our labor contracts is it's not always
the same types of positions that are in the same labor unit. So that's why you see we have the, cost of living adjustment and in some cases merit or step adjustment, but we also sometimes have market adjustments. So if the market is dictating in a certain job category that we need to pay more in order to be able to provide that service, sometimes we have to make that adjustment and it shows up in your personal line. And so when you make a market adjustment in and if I remember right, and get me tell me I'm wrong, but we have a list of all the jobs that are all plotted out. And if we give a market adjustment here,
how does that affect the other jobs? The market adjustment is really specifically related to marketability of that type of job. So for example, last year there was a $5 an hour market adjustment for police officers and other, like things and police, sergeants, etcetera. That was not something that was provided to other positions within other labor contracts because they're not police officers. It comes up during negotiations, but that isn't the market that that that some other employee is in. So, for example, I'm not a police officer, so $5 an hour market adjustment for me isn't is not the same thing.
I don't have a licensed carrier. I'm not post certified. I can't do the same things that a police officer can do. Thank you. I can. I just use my de escalation skills. One more. I'm going back to one of your original, one of your original slides. In Mr. Palmer? Even though he's not here, Mr. Schoebring is counting your questions. That's good. I'm using his time. He said I could have it. Residential, of the tax levy went up 4% for residential and hotels or apartments only went up point five. Is that a state thing? Is that why you how does that point out?
That's based on how property is assessed. So it could be that they haven't, in that period of time, had a significant amount of adjustment to their assessed valuation. Maybe they aren't on that cycle of assessed valuation. We know that's part of what happened with the commercial, because they had a backlog of reassessment. That happened this year, so a number of commercial properties are seeing pretty large increases in their assessed valuation. It could be that as the new apartments are built, they've been assessed properly, and they aren't adjusting yet and appreciating in value beyond what their prior assessment was. It it's really going to be completely dependent on what's happening within the marketplace.
We've seen some apartments sell for quite a lot, apartment complexes. So I would think that you might start to see some of that adjustment considering, a lot of the change in, market value is going to be based on recent sales. And so I see commercial went down, but go back to apartments. I mean, that's surprising that commercial went down and but apartments, how much of does the TIF, on that affect that? We could get you those details but that could be that would be a component of new construction and the tax increment financing for some apartments. But we've had some apartments that will be coming line.
And for example, there's one near Soldier's Field that I don't believe has its certificate of occupancy yet, and so you won't see that hit that category until it's actually got its certificate of occupancy apartment versus something that's under construction. And is it typically two years behind? I would have to call the branch for that. Thank you. Mister Miller? Mister Palmer asked my question, so thank you. Mind meld happens. That's the cost savings right there. $11,200,000 increase for all funds, including our PO for, teammate expenses. You can see in the general fund,
heavy heavy levy funded fund, of that 5,400,000.0, 3,000,000 is for police and fire. So, those are cost of service that we absorb for 20 fourseven service. Library, is, dollars 300,000 increase, and municipal recreation department is $700,000 increase, for, teammate costs. Republic utilities, 3,600,000.0, for electric and water. And then other funds, so, stormwater, flood well, now I'm really stretching. Stormwater, waste water, park parking, transit, all of those other non general fund funds,
are sitting at a $1,200,000 increase. Mister Miller. So question about this, because I've had a series of conversations over months in the community where people tell me their top two issues are the tax levy and speeding or running a stop sign or running a red light. And I see that police is another increase here, which people are generally supportive of. Are there tack or traffic enforcement, additions to some of these services and and these increases? That really depends on how the, entire 150 police officers are deployed. It's a question for But in in the 2026,
but thank you. Like a transit task force in Traffic traffic enforcement. Traffic task there's not a traffic enforcement task force. We don't operate that way. Yeah. Council member, the the budget increase is more reflective of that, cost of living increase or one time increase is what you're seeing there, I believe. I can answer that question from an operational perspective. From an operational perspective, we take a look at our staffing on a daily basis and if we have enough staffing above and beyond what we feel we need for the calls for service or the anticipated calls for service, we actually do designate a car to go out there and do traffic enforcement. It's not a designated unit as as city administrator Zelens has said,
but it's more of an ancillary assignment when staffing, levels allow. In the same vein though, I do wanna know that, I hear from all of you quite frequently and other people in the city about speeding concerns, and so that it is a priority of ours that we try to allocate resources and additional equipment like the speed trailer and things like that to different locations and working with our partners in the city for maybe, speed mediation techniques as well, like speed humps and things like that. So, we take a comprehensive look at that, but no dedicated unit. Okay. I've worked in a city that had a dedicated unit. It was 11 officers looking at this.
You'd be talking about millions of dollars, which you could do, but that that would I think legislative action would be great too. Allow automated enforcement. So, yeah, we'll Lots of different ways to think about it. So, I was wrong. 19 bargaining units, eight labor contracts, not nine labor contracts being renegotiated. Congratulations, HR. Only eight. So we haven't, resolved any of those for, the current round of bargaining. We are carrying some projections there. Again, salaries not increased 7.1%. That's not like people get 7.1% across the board. We have I don't know how many wage grids across all of our different labor
units, and they're all slightly different. You hit a certain, you know, years of service in police, you get double step, things like that. It it really is based on experience, etcetera, depending on the type of job. I would say health and dental is a fairly positive, story. Having an eight percent and one and a half percent adjustment for health and dental actually is pretty low, for a city. We are taking a look at some of those and we're always trying to, patrol those costs where we can, but they're part of, again, part of our, bargaining. This is a slide you've seen three times. Well, twice. Now it's the third time. So again, there was a request,
from the outside agencies for a 21% increase across you know, not across the board but, varied depending on, the entity, tried to, be judicious and ply some of those same, considerations, that we did for, other city services and made some adjustments in different areas that seemed to align with, needs across the community. And, if you have any changes to this that you were interested in, we should talk about that soon, sooner than later. Well, nice that you said that, I do. Community building fund, I see we only have 50. I would like to see us go to 100 with that and then limit the top amount would be $10,
because right now I think our top amount for the big ones is 20 if we knock that down to 10. But I could see I think that's a really good program and helps out a lot of different, grant police and our staff do a really good job of working with the smaller grant people to help out little things. And so I would be in favor of of increasing that, to $100,000 You can put on that on a list to talk about at your future study session? Well, I'd be shaking yes, so We'll just make sure they get to say it twice if we have a person that's not here. Yes. Just wanna show you what it does to the budget,
you know. You have a sense. It's like point 002%. Yes. That was quick math. I could be completely wrong. So that equates to a 5% increase in 2026. Again, not across the board. Really, just like the rest of the budget, we're looking at, each service and entity for what it is and not just, we don't just apply a cost of living across every line item in the city. And then 3% in 2027. This is what they do. Expenditure categories. We always like to throw this on here because it says other and miscellaneous, and then I have to have a cheat sheet to tell you what that means.
So if you look at 2025, the currently adopted budget that we're operating in right now, you'll see that capital improvement plan and 2026 and 2027, there's always vacillation in that. Because we don't do the same project over and over again. Each project is different. We have some pretty significant projects coming up. Some of those are happening right now in 2025. You can see changes in other, other charges is comprised of judgments and penalties and settlements. Contribute Oh wait, no. That's the revenue one. I don't know what it is. Other
other charges. So these are gonna be things like, if you have some professional services services, things of that nature. Miscellaneous keeps going down. I would need to phone a friend to understand the miscellaneous because I didn't print that out. Employee services though, is it goes up by about 3% a year, and that's a relationship of cost of employees. Typically, it never goes down unless you're reducing the number of employees and changing your service level. Contractual services, again, that's more, contractual versus professional services, things of that nature.
And you can see that these are pretty much in alignment with one another. There's some, slight changes. Debt service changes, are going to be happening, with the RPU plan and also you're taking on some debt service, for the maintenance service facility. There's also debt that's falling off. So a little bit more detail here. General funds adopted, budget in 2025 was $126,000,000 The adopted budget in 2026 well, the recommended budget in 2026. There's a little Freudian slip there. Wishful thinking. Dollars 137,000,000, and so core government services are covered here. Some key operational and financial factors.
So this is influenced by that point 44% for paid family medical leave, things of that nature. Departments, in this area really worked hard to optimize the budget. This is where a lot of those changes happened, also in parks and library. And then, towards the end of this year, we will give you updated financial and accounting policies. So we will have those all in one place for the first time ever. And so, we have done all of this in order to try to maintain financial sustainability while still investing in important, priorities. Again,
where does the money come from for the general fund? 137,000,000 in the general fund. Vast majority of that is coming from the tax levy, but there are, other, types of revenue. This is where my other and miscellaneous services is for. Some tax and licenses, and other charges that are there and then, licenses and permits is also not a small amount. That's mostly gonna be funding your community development department. Our fund balance is important. We do not collect revenue and spend expenses on, an equal basis every two weeks. We have payroll to make every two weeks,
and the lion's share of our revenue comes in, twice a year. That is the local government aid and the property tax payments. So we need to be able to carry all those costs, throughout the year. And we have a 42%, floor that we should not go below in order to, be fiscally prudent and be able to cash flow. We have increased somewhat over the last few years. We don't see an increase, from '23 to '24 though, so we're sitting at about 48%. This is not a recommendation to go on a spending party, but every year that your budget goes up, you need to actually have more in your reserve in order to reserve in order
to maintain those percentages. But a good story to tell, there are some cities that are anywhere near their five months, of cash flow. Special revenue funds. We are now entering special revenue funds. So this is, accounting, practice that we use for any revenue that is specific and tied specifically to the expenses that it can be expended for. So thinking about library and parks, a lot of that is property tax, but it's held within the revenue fund once that has been approved by this body. The governing bodies of those charter boards are approving the expenses related to that.
So the 2025 adopted for, parks and recreation was sitting just over 16,000,000, and the recommended is just over, 17,300,000.0. So additional accelerated investment happening with the park related funding. We have that, dedicated $2,000,000 of market value for, parks projects. Again, the additional arborist position in 2026, combination of PD and some seasonal support to, activate the maintenance of picnic shelters and restroom facilities, improve the experience there. Some staffing adjustments for Silver Lake Pool,
being open next year. And some increased, seasonal hours for, city supported events and activities. The library, also a special revenue fund, so increasing by about $550,000 this year. The lion's share of that is going to be, the decision package for those four full time entry level positions. And we do not include a decrease in temporary salaries in this projection but could. That was one of the things that was discussed, and we can talk about that at a future meeting and really understand how much support there is to close on a Sunday or Monday.
One time charge of $42,000 for a new library vehicle. So sometimes we have shared vehicles that have ended their useful life in another location, and they migrate over to another department, and they become part of the operation, and then we've never set aside funding to replace them. One of the challenges with the vehicle replacement fund that we are overcoming with the structural changes that we're making to that, and then, more building, improvements to align with the rising cost of maintaining that building. That's not like a million dollar increase. Obviously, they're only increasing 546,000
on a budget of, 10,000,000. And then some contractual costs for, technology and software, those just continue to rise and the utilization continues to increase. Special revenue fund of the airport, increasing about $605,000 The vast majority of that is going to be funded with revenue increases that our airport generated. There is a small baseline increase, utilities, contractual services, things of that nature. And, there's a significant number of capital projects that are carried in this budget, that we know we're getting federal funding for and then others that we're going to ask for federal or state funding for.
It's really important to have it in your CIP, in order, that they know that you're prepared to utilize the dollars if they are to come to the city. I'd say this is pretty lean budget for, an international airport. They do a great job. Mister Keane. I am familiar with the concepts of the special revenue things and then the enterprise funds, which are slightly different. I guess I might not have noticed that transit is a special revenue versus an enterprise fund. Can you talk through why you would use one versus the other? I would say, they don't char they most of the revenue that's coming in to the transit fund
is not a charge for service. It's dollars that we're receiving from the state. And if if I could, is That the test? Is that that's really the test, whether it's a special revenue or Yeah. If you have a significant amount of funding that's restricted based on the revenue source, then it's going to be a special revenue fund, even though it might it operates similarly to an enterprise fund where the dollars stay within the fund. Right. Right. I I think that that that's helpful. That that's because we're gonna go through the enterprise ones next. And, yes, transit is a special revenue fund. So small increase there for 2026. Again, I think Rapid Transit not opening really until 'twenty seven.
We'll be doing some commissioning and, finishing the project in 2026, looking at the paratransit program and, continue to evaluate how to better, serve, those customers, and then some capital projects, forthcoming. We always are buying buses here. The bus stop, improvements and then the North Broadway Park And Ride, which is almost entirely funded by state, funding and a federal grant. Enterprise funds, self supporting government funds. They operate more like a business, so there were a lot of charges for service, related to these. Sometimes they will have grant funds, things of that nature, but realistically,
they're operating as a business with charges for service, supporting the line the vast majority, if not all, of their, of their expenses. So an increase of about 780,000, in the parking enterprise. Again, they've got those regularly scheduled, restoration projects. Two of those will be coming in 2026, the ones that are happening now, hopefully, will be done on time and on schedule. The, continued implementation of that rate study, doing some maintenance to our service lots, and then looking at metering and advertising, making sure people know we have lots of parking downtown,
free after five and on the weekends. Come join us. And then, there is, some Ramp six debt service that's impacting that fund. It was part of a tax increment financing agreement, and the value of that property hasn't increased as much as we had anticipated when that went underway, so that's something we're keeping an eye on. Wastewater fund, also an enterprise fund, charges for service the lion's share of those expenses. A difference, year over year of about 3,500,000.0 again. There will be two positions there, but we have that large liquid and solids treatment,
and water reclamation plant, upgrade happening. That's anticipated through, early twenty twenty seven. Major overhaul of $92,000,000. The debt is scheduled to be paid off in 2026 from some prior projects that will, carry on some new, significant amount of, public finance authority dollars also coming into that project. Mhmm. And, the debt payment will actually be about half of the current. So, again, we're paying the debt. We're building up also some additional fund balance for future, investment in in the facility and also in the collections of the system.
All the facility serves every property within the city of Rochester, and, being able to get through a sewer line to get treatment capacity is a challenge in some parts of town. Stormwater, again, we are actually seeing a slight reduction in what we anticipate there. There's a lot of capital projects or capital maintenance projects that happen within the stormwater enterprise fund. We do charge, we do have a stormwater charge, that is, included there. People pay for that specifically. We have some planned investments, and some retrofits, needed for some, large redevelopment downtown and, transitioning I fund for
Art thank you. Enterprise fund for parking. You made it mention that it's, you know, self funding. It's run like a business. Mhmm. But then what I my view is this group directed enterprise fund to give away parking free on weekends and evenings. How come we don't account for that? I don't know how well, I don't know how exactly you would account for it. I I don't either. But but my take would be as we should. Because we spent money out of an enterprise fund by directing an enterprise to give something away, and we don't keep track of it. It bothers me. We could probably determine how many parkers there are evenings and weekends and determine what
that would have been if you charged the same amount. So it's really lost revenue. I'll just make the observation. I don't know if my peers think this is silly, but I would like to monetize what it is that we're giving away, and have a way of saying that's what we did. Because I looked I sent some numbers people that I have votes on the city council back in 1996 where they quit doing that because it was too expensive. And it's within our power to do it. And I I'm not suggesting we do it, but I want to know what we did. And if it's what it cost us. So I I again, just one person's observation.
It's not something I want to do right now. But from a budgeting perspective, when we direct, I think we should know what we're costing. Sure. Thank you. Fredericks. Thank you, mister Wall. I know we haven't, got through this year's budget yet, but I'm I can live with a 5.9 for this year, but I do not support a 7.9 for next year. And this is a two year budget, and we haven't talked about that at all. So what you would be approving in December is the tax levy and the supported projects for '26. It's signaling something for 2027, so it's helpful to know that that's a concerning number for you for 2027.
And it's something that especially if there are new requests for 2027 supplemental budget, that we know that not only were you not comfortable with the original projection, but that you would be even less comfortable with something different higher. Probably be comfortable with something that was lower. I can vote and stomp my feet. Right? You can you can stomp your feet and not vote. That's outstanding. But, yeah. So all of those things are important. We're just really and this is why we project it in part is so that the teammates that are putting together the request have an understanding of what the concerns are. Thank you. Yep. Mister Palmer.
Yeah. I'm gonna go with mister Keane since you brought it up. My bug losing so much the weekends is that it is, north I'll give an example, the North Lot by Mail City of Outer Trail, we gave that away for free. The parking people are using it, they're gonna lose revenue. I don't know how we acquired that, but that to me is a parking fund. That should get money back into the parking accounting perspective, that makes more sense. I don't know on the weekends if it's worth the effort to, because I don't know how full the ramps would be in the weekends if we charged. Mr. Miller? I appreciate Mr. Keane bringing this up, but I think it's relevant too to the news that's been out about the library
master plan recommendations of pilot of two hours of free parking which would obviously have costs. So I would love to better understand the cost of providing an hour of free parking and free parking on the weekends. We already track free exits, so it might require some assumptions of how much those exits are worth. But I definitely think this is a a live conversation in public, about what it means to provide free parking, and we've talked about, being transparent about when we subsidize. And in that scenario, specifically, I would believe that the library would end up needing to either increase their budget or change their budget and absorb the cost of their free parking.
And I understand that. I just bring that up as a a tangible example of what I think mister Keane is bringing up as what does it cost to provide free parking. Please proceed. Alright. Thank you. Oh, that's right. I don't have to proceed. Good evening, council members. My name is Tim McCullough, general manager for Rochester Public Utilities. Presenting tonight on the, two enterprise funds of RPU. Actually, I should say three. We operate three distinct enterprises within the RPU, family, which would be water electric and the steam enterprise from the Silver Lake plant as well. What you see tonight is representative of the budget that was presented in concept to
the RPU board on August 5. It is our recommendation. It's built upon the same action plan that you all have, given direction to staff on. In addition, at RPU, we talk about our 5 Rs of level of service focused on reliability, rates, responsibility, relationships, and reputation. We do cost of service studies every three years. The electric cost of service study was last done in 02/2003. There's recommendations here as a result of that as well as a water cost of service study that will be presented to the RPU board tomorrow night to be finalized and placed on file.
We've talked about the enterprise funds. I just want to remind also the community. We look in nature very similar to other electric utilities, but there's a distinct difference with RPU against an investor owned utility that might be in other communities. There's no profit motive. We charge only cost of service. And those cost of service studies are very important because they help us distribute the cost of providing the services to the community equitably amongst our rate classes and within the rate classes. We group together like customers into rate classes and we work very hard to maintain
equity among those customers in charging only the necessary rates. You'll see that we're entering into a forward phase of large capital investment across RPU and the RPU enterprises. And we have a long view of investments. We build assets that are on the twenty, thirty, forty year life cycle and beyond. We're still operating assets today that are well over a 100 years old. The Lake Zumbro hydroelectric facility is a prime example of that. That. Investments that were made over a century ago in this community. They're still serving the community today. I'm gonna shift quickly to the water utility.
Water utility is one of our smaller enterprises, and there's really some large drivers here behind the rate recommendation. We are seeing moderate to very low customer acquisition customer growth and the consumption per customer is relatively low. So we're not seeing a lot of revenue growth opportunity through large increases of customers or large increases of consumption. That's not necessarily a bad thing. Conserving our products, both water and electricity, is a good thing for our community. So when there is a need to raise revenues to pay costs, it comes through the form of rate changes.
There's an earlier conversation about what is a 1% levy change impact in the water utility. 1% is about $190,000 of additional revenue. When we're dealing with capital investments in the scale of millions, it becomes a challenge then to raise the rate funded capital to accomplish those projects. The rate recommendation that is in front of the RPU board will be in front of council on December 5, has a net impact of about $2 of additional cost per month for the average residential customer. It's focused on investments in our core infrastructure,
water main replacement on citywide coordinated road projects. The, also some major capital investments, particularly the advanced metering project. This is a project that we've set out to build in 2023. And over the next two to three years, we'll have significant investments both in the water and the electric enterprise to the tune of about $16 -seventeen million dollars apiece. If you look at our annual revenue requirement of $19,500,000 this year, taking on a $17,000,000 capital investment over a three year period is a significant change there.
That is one of the drivers behind our rate trajectory that we're on. We've actually already adjusted rates in '23 and '24, building cash and we're cash funding the advanced metering project. But because of that spend down of cash reserves, we're also in a cash building phase in addition to some large capital investments elsewhere. Just a point of a talking point for you all, the water storage devices that you see around the community make up a key aspect of our infrastructure on the water utility. About three, four years ago,
we could assume that we could recoat repaint those water storage devices to the tune of about $300,000 annually. With inflationary pressures that we've seen, a full recoating of a tower costs over $750,000 now. And so that is just a cost of service that's loaded into our infrastructure, and we have to continue to maintain those storage devices. It's key for water quality. It's key for the structural integrity of the towers. Just an example, I think, of the cost pressures that we're facing across many aspects of the city but specifically
in the water utility and the water enterprise. That's an important thing to remember. In addition to the advanced metering project, you'll recall back in January we requested a budget amendment to launch the lead service line replacement program. In 2026, I believe that is anticipated to be about a $7,500,000 expenditure. Just wanna note that that's all externally funded from grants, at least reimbursable from grants. We are in a period of trying to manage cash balances where we're recommending short term debt in the water utility to manage cash flows in the next two years.
The combination of the advanced metering project and needing to front the dollars in the lead service line project is putting us in a position of needing to take on some short term debt. Water enterprise is well suited for that. We have no debt in the water enterprise today. So we have the debt capacity for that and the future proceeds we expect from the grant funds on the water utility. I think I already spoke to all my talking points here on this slide related to the fund balance. Just call your attention to the bottom of 2026 recommended and you can see the
fund balance difference between starting and ending in 2026. You'll see about a $7,000,000 drawdown in cash reserves. Maybe my mental math is a little bit off there. But that is one of the issues driving the need for short term debt there that will be coming back through reimbursements. Switching over to the electric enterprise, if I would have been here a year ago, communicating to you about our rate trajectory, I would have been reporting about a 2% annual rate need to develop revenues to support the enterprise.
Things have fundamentally shifted in the last twelve months in the electric sector. We are recommending a 66% rate change. That has an average customer impact of about six dollars a month for a residential customer in the first year. You'll see from the consumer growth, the consumption growth, we're not seeing any significant load growth in our jurisdiction. Actually, our average use per customers has been a per customers have been on a downward trajectory for about ten years and that's with significant, adds of new housing that we've seen over the last few years.
And so, again, that creates a challenge. We're not showing additional load growth. Part of that is our strategy of conservation. We invest significantly in conservation efforts and over the last, I think, fifteen years we've avoided the need to build 1.5 new power plants by those investments in conservation. You'll see some significant investments in the electric enterprise and some fundamental shifts that we're seeing in the next five years. Most notably, we are currently a member of SIMPA, the Southern Minnesota Municipal Power Agency. And as a member of SIMPA, we also have obligation our power supply costs are in excess of $100,000,000
a year. This year, you'll see in that top line cost of power, we're expecting some wholesale rate relief, but that's because the debt service on Sherco Unit 3 is retiring next year. The mortgage is finally paid off on that coal plant. It will continue to operate through the end of this decade. We will continue to have a membership in Simpa through the end of this decade. But that wholesale relief, that debt service reduction that will come back to us, our intention and recommendation of the RPU board is to reserve that for future debt service.
We have our own capital investments that we are seeking to make, most notably the Mount Simon Station. It's about a $175,000,000 anticipated project. We've already taken the initial few steps on that project. And you'll see some cash injections of capital that will start spending down reserves. And we are anticipating about a $240,000,000 debt issuance in 2027. It's primarily focused on our need to add generating capacity. In addition to that,
there are some operating expenses that we're anticipating. You've seen in earlier slides from the city administrator's recommended budget discussion about the enterprise resource planning software. We're working together with our other city colleagues to explore the possibility of a joint ERP. We currently operate on two separate systems. In RPU, we've been on the same ERP system for twenty five years, and we're coming to end of life by the end of the decade. So we need to make some investments to upgrade our current version. We're exploring that joint project.
These are, these are projects that are very challenging. They require significant capital expenditures for those major investments and you'll also see staffing recommendations in the limited term FTEs, there in the RPU recommendation, up to eight limited term employees to support core operations while we do the major data migrations as well. There's a note there about benchmarking. Just wanted to call your attention to that. That was a twenty twenty three state legislative session, requirement for commercial properties of over a 100,000
square feet. We have to report energy and energy consumption data. We as a municipal utility received a grant from the state of Minnesota supporting that benchmarking position for all of this year and half of next year, so that's a continuation of that grant funded position into the next year. The year. The benchmarking legislation requires commercial buildings above 50,000 square feet to start reporting data in 2026 that kicks in next year. So there's additional work ahead on that. As I mentioned,
some large capital expenditures to start building our new capacity in the electric enterprise. We also intend to make some early commitments to renewable energy projects. In front of the RPU board tomorrow night is a package of renewable energy projects seeking to try and secure renewable projects that still may be eligible for production and investment tax credits. That will be back in front of council, we believe, with RPU board support on September 8 for consideration. That is two years in advance of what our previous iteration of resource planning had anticipated.
There is some shorter term duplication of cost in bringing these projects on early, but we believe it will also preserve the opportunity for long term cost hedging of lower cost renewables. So that is another driver of the rate trajectory that you've seen in front of you is accelerating some of our investments. And overall, all infrastructure across the energy sector has gone up as a combination of tax policy changes, inflationary pressures on transformers, import tariffs on copper, aluminum, steel. These are very capital intensive and commodity intensive investments that we're making.
Also, I'll note our you've probably seen the headlines of our GT1 fire that we had, the failure of one of our gas turbines. So new news there where we believe there may be a rebuild pathway to restore the capacity of that engine, and so we anticipate exploring the rebuild option which would, if successful, and we can bring it back online through a rebuild option, would offload some future capital investment as as well and reduce that need for the debt issuance in 2027 considerably.
If there's any questions on the water or RPU enterprises, I'd be happy to take them now or I could pass it back to Allison to summarize. Mister Keane. Yeah. Again, I just again, we went through a lot of this stuff here and I I I I don't know if it's getting through here, but these are this is a really big things going on with RPU right now. And in a neighborhood like mine where the the house is a little more modest, the impacts that we're talking about at RPU are a much more dramatic impact to my affordability than the levy things are. And we will continue as we should do these compares to what we were the
year before or the year after or or the years going forward. And when you see numbers like $6 a month hit on some of these things, we ought to take notice. This is a big deal. But But I think the more important comparison, what we're really trying to work towards is how does Rochester ratepayers compare to somebody in Bloomington or to see somebody in another place, whether they're an investor owned or another working on a, off of another power source. The the other thing that I I just kinda slips by here, but we're going to take on a lot of debt that we have net we
haven't had in the city before. And I'm prepared for the fact that it may impact our our bond rating. I don't know that. I, and I'm hoping it doesn't. But when I look at the ratios of what we're gonna have out on debt, those are the kind of things that'll that'll do that. These are these aren't mistakes we've made. These are decisions we've made towards more independence. And we a lot of us were part of it back in 2019 that says we are going to, go away from simple. We think we have the ability within our utility to generate our own power, which we didn't do back in the seventies. And we got caught in a long term contract that we're now getting out of.
So, if if you really wanna spend more time with this, I spend a lot of time with this and I I think there's, really important stuff going on here and it's big. Thank you. Mister Palmer. Yeah. And I'm gonna go off with kind of what mister want to make sure we get from, RPU is dependability and reliability. And I know that you've preached that but I we have to be dependable. We got to be there 99.9% of the time. A question on GT1, you're talking about maybe rebuilding that. Is there I'm all in favor of doing that, but is there a plan to then replace it because it's as old as, you know,
when I was in high school. It's older than me. Yes. I was in high school when I was built. So I mean, do you do you get into this market of of wanting to to do that or is that a side note for you? No. It's certainly a valid point and it's part of our plan as well. If we have a rebuild option to restore that capacity in the short term, We believe that a replacement of that capacity probably about five years out, is, what we would place back in our CIP. So it would not we would not plan to run a 50 year old combustion turbine indefinitely. And so we are looking at,
in conjunction with the rebuild option, what the later ultimate replacement of that capacity would be. And it could come in the form of a similar type combustion turbine. It could come in the form of other capacity such as battery storage as well and we'll continue to evaluate what that capacity looks like and what options are in front of us, over the next few years. In my understanding, and I tell other people this, is that your thinking is the short term is ten years. Is that about right? Yes. Short term really is twenty years or beyond. We build assets for the long haul as all utilities do.
We're not planning on assets being replaced anytime soon. So we do have a long view of that. Ten years is a very short time frame for us. And we have the coal plant up in, Central Minnesota. That is going to be dismantled and we don't have any obligation on that. It's already funded to be dismantled. Is that correct? There is a, retirement obligation fund that's being built right now for its ultimate retirement. It's a joint owned facility between Xcel Energy and Simpa. Our membership of Simpa ends at the March in 2030 and that unit is intended
to run through the 2030. So the timing and our retirement obligation is really a combined conversation about both our exit from the agency, Simpa, and ultimately what the retirement obligation is there for the coal plant. But you think pretty much that that's already funded. Isn't that correct? There is a retirement obligation fund there. And I think over the next few years, that will continue to be a conversation of what the adequate funding needs to be there in that retirement obligation fund. My last question is Silver Lake plant. It's been there a long time.
My understanding is all the environmental issues have been taken care of. Is that correct? So the facility has been there for a long time. Completely agree with you there. As far as, it's still an active operating facility and will be through the '27. We have done some, ongoing investment in that plant to remediate asbestos and other things inside the plant, but the site itself, also has to be considered. I wouldn't say we've done all all activities there on the retirement ultimately of that plant. And as far as the determination of what is next for that plant is yet
to be determined. We have a major substation there adjoining that site, and there's other significant utilities infrastructure that will remain beyond the end of the steam enterprise there. So that's an active conversation both inside the walls of RPU and with the RPU board about what's next there for, the next phase of what's at the Silver Lake plant property. Thank you. Any other questions from Mr. Macau? Probably just a comment, maybe a question. I think probably one of the six Rs that we'll be talking a lot about is renewable energy, renewable energy credits and what that means in long term planning for RPU.
So I would agree with mister Keane that I think at some point, it's worth a much deeper dive on some of the long term planning because I I think it's likely that people are receiving a survey, seeing 2030 versus 2040 and saying, either way, okay. Great. We're moving to renewable energy. And yet, at the same time, we're talking about building new gas plants that are in service for decades. But I just think it's worth a deeper dive into what we mean by renewable energy and make sure that as we talk about sustainability, environmental responsibility, that that's all part of the conversation. And I would just add too,
I think, the long term planning of how we anticipate gas prices to fire those and what guarantees we have and what uncertainty there is versus other alternative, sources, renewables that continue to show that they're on a learning curve coming down in price and how we're planning for the long term for the best interest of the community, which have some really significant capital implications in the short term. So I would love to figure out how we have a broader conversation about that with the public beyond just the survey. And, I feel like I had another question, but I'll I'll pass for now.
Thank you, council member Miller. You're making very good points. It's a very active conversation happening in the RPU boardroom about renewable energy credits capacity and what the long, long term resource planning is. We will be back to city council for a study session at the September to have a more thorough conversation here. I'm also we are in the midst of kind of a tour talking to various community group stakeholder groups about this specific topic. We don't have the time tonight as a as a part of the budget conversation. But, yes, I agree with you and look forward to returning in September to have a more
robust conversation about that. Thank you. We invite miss Zelms back walking up the fairway to the eighteenth group. That's right. I'm headed to the nineteenth hole, actually. But, actually, when you have that conversation about the Power Resource Plan in September, Tim won't even have to come here. We'll just stay in his building. Great. So, again, we've been through a journey. Every, two year budget requires a lot of preparation before we get to this point, so appreciate your indulgence on that. Hopefully, you're taking a look at the budget document. We will eventually either bankrupt,
the flipping book company or get a flipping book. And, if you have only time to read through a few things, I would highly recommend the budget summary, transmittal letter, only because I spent a lot of time on it and it hopefully provides some insight on what I was thinking about with the budget. But again, if there if you feel like something hasn't been said yet this evening that you want us to talk about in, one of your upcoming study sessions about the budget, I'm sure that Mr. Parrish and others have been taking feverish notes. Please, now would be a good time or you know where to find me. We still have two more who will putt on the eighteenth green.
Mister Keane? Good. Nice to be back in sports analogy. So glad that he's not teeing off. No. I'm not. I'm not at all. And, you know, the question comes up as do you have other questions? And depending on what these meetings are, I mean, if I needed to understand the budget the way Rachel does or that you do, I'd have a lot more questions. But these sort of meetings make me feel comfortable that the right people are looking at it. And I think I I go back to what is my oversight responsibility, and then how do I get that material? And, you know, I've had six years of this. I really feel for these new guys coming in and saying, what's going on here?
And what what are my controls? And what what can I how can I impact this as one of seven? The one thing I guess I would like, a little bit of a warning just the staff is so good at this stuff. They move seamlessly from the big budget to something called levy impacts to something called general fund. And it's hard to follow sometimes, and it's something that's important for us to understand for for oversight. The site. The the other thing is as far as, I think there's two main metrics as a council member that I'm watching for this. And we kind of breezed by them. But this local tax rate and trying to keep it between this,
we've been as low as 46% and as high as 52, and we're at about 49 now. And there's like so many things, there's a lot of factors that come in here. But this is a critical metric that as you see this climbing up, that that's an impact that we should be aware of at least. It's not that it's a bad number when it gets over 50, but it is an indicator that it's more of a stress point. I I would recommend for my peers to go around and check what those numbers are in the surrounding communities or in the in the Twin Cities suburbs.
And you might get a better feel for where we're at in Rochester because we, you know, we get the benefit of the high the way this property values have been going up. It has given us relief on this on this local tax rate, but it's it's real and it's something that, as a council member, I think it's a good point for oversight. The other one, that, again, I'm gonna point out is this this new construction stuff. You had a good discussion here that, you know, a lot of this really is just appreciation growth, but 2% of it is real new I mean, it's basically there's new people coming into the pool and helping us pay the tax
bill. And it's real. When it's 2% in a in a community this big, that's a big difference. I look at that sometimes to say, if we have a 6% tax increase and we have 2% new 2% more capacity in the pool, it's not a 6% impact. And if I make the assumption that the 5% growth in assessment I mean, I could make the case that a property like mine, if it's valuations the same, that my taxes would go down year over year with a, you know, a 6.5% growth in market value and a 5.9%
impact. It does it's not that clean and it's I don't wanna get into the gorpiness, but that you know, that's where we're at with it. So, I again, I appreciate the goal of trying to take the those the changes and put them into the areas where you talked about the strategic, goals. But I also find it I mean, there's a lot of judgment that goes in there. It's not the kind of budget math that I'd I appreciated these meetings. With that, I'd again, I I feel like if on these questions, when I do have them, I feel like I've got the right, resources that I can ask. So, that's where I'm at tonight.
Thank you. Mister Miller. Yes. Thank you. Just a couple other comments, things we didn't really touch on. But as a new council member, I would love a deeper dive or it could be an email into what's in the council budget. I know they're professional services, printing, advertising, all sorts of line items that I I saw for the first time, and and I would just love a little more information about what gets charged there, what discretion we have as a council, and just more visibility. You know, overall, I think this has been a good presentation. I still feel like we've missed the mark on environmental responsibility.
About two years ago in the fall after the preliminary levy was set by the prior counsel, there was quite a few people who came to speak, and I remember comments at that time being that it was too late. And so I I recognize that we have not set a preliminary levy yet, that we're kind of two years past that cycle, and this is the prime opportunity to be talking about what it means to meet the community expectations for environmental responsibility in our programming and our budget decisions. And so I would maybe like a deeper dive on that. It could be an update from the, December 2023 integrated city sustainability spreadsheet that was presented,
something like that. How are we how have we adjusted because that's become a new strategic priority. And I think that that's a worthwhile conversation, especially in the broader resource planning for RPU and other things because franchise fee, right, is one way that Citi's fund, but that has a direct impact on how we generate power and the cost of generating power. Mr. Palmer? Well, as a runner, I see the finish line. I'm happy. This is I'm asking for advice or if other people see this as a need but, you know, we did the pilot program on the gym.
We're hearing from the community that there's some need for recreation, helping out kids going to our different recreation things. How would you scholarship that type thing? How would you suggest that we go about doing that? That is quite a broad question. I would suggest that if you want us to look at all of the there is existing scholarships that happen through the different, partners. Perhaps, parks and recreation teammates could come up with I know they're already gathering this information. Get some details on how that's working now and make some recommendations maybe on,
like, a dollar amount or a funding source that would help to provide additional support either to those existing scholarships or something new. I would suggest that if you wanted to do that, you would likely be adding to your levy, and unless you really wanna have a conversation about the trade offs that you would trade off for that, and and be able to maybe come back at the second or probably not in ten day in a week, but the following study session, that's about the budget, perhaps they could be bringing that to you there. Or we could provide you some information in between if we have a ballpark idea.
If we thought I go back to the pilot with the gym which came of our contingency fund for this year. If you wanted to do that starting this year, you do still have contingency left. But if you wanted to continue that on in the next year, you could again use contingency two years in a row. So there we build in a million dollars of not because we want you to try to find a way to spend it. In part, it helps to keep us at the 42% level at our fund balance, if we're really successful. But you do have opportunities with that to either start now, to, put something into the overarching operating budget, moving into the 2026 budget.
So you you have some options currently, within the 2025. You have that same option of using contingency 2026, but you could build something into the budget. We just need a little more information from the team. Okay. Thank you. So we're in a triathlon and Palmer is nearing the running, but, Mr. Doring is on his bicycle seeing the finish line. Not on my bike. Yeah. Way too soon. I have a very I have a very specific ask in regards to following up with, with what mister Palmer was just suggesting. At our last study session,
council president Schoebring asked about specifics about, about RCTC space, renovations to field house, dome space, all that kind of stuff. I would love to see those numbers, even very preliminary numbers of what that would look like and impact that those numbers could have on the levy for community activity space. I would love to have that information out there so as we are getting feedback from community about a desire for more indoor recreation space,
we are have the accurate information so we can respond to those requests, but also so we can evaluate moving forward with other big transformational capital projects in the community. And I know it's a very short time frame to turn that around but I think it's an important just to even have those very preliminary numbers or rough estimates in our decision making process. Thank you. Any others? Any final words from the administrator? Thank you. Then,
we will adjourn. Our next meeting will be in nine days at RPU on our same session. Thank you very much. I did think of something. I'm so sorry. It's very fast. I I did just wanna point out since the next study session is on a Wednesday, that we might wanna not put your study session item out until Friday just so we can answer as much of this as possible. And it's yes, Wednesday the third. Monday is a holiday. You'll be at RPU, and, we will try to get you as much of this as possible. But if we need,
to add things during the meeting, that also might be possible. So thank you. We're reconvening the meeting for mister Keane. I I just wanted to make a point. I mean, I it probably just hit me that this is our last time in this room for a while. Right? Correct. This is yeah. And I I just wanna make sure everyone knows that our next meeting is where the substitute room is RPU, and that's probably gonna go on for We believe that you will be there for two months. Okay. I I just wanted to get it said so the people who are watching our our replays or anything know that there's changes.
Thank you. And to all, a good night.