[0:00] [Music] [0:22] **Mayor Clint Hooppaw:** Thank you. So let me double-check this assistant. Good evening. We'll call this meeting to order for the September 14th, 2023, Apple Valley City Council meeting. Welcome, everyone, this evening. If you would like to address the Council as your item is called, please come forward and state your name and address. The first item on our agenda is the Pledge of Allegiance, and I would ask everyone to rise and join us. [1:32] **All:** I pledge allegiance to the flag of the United States of America, and to the Republic for which it stands, one nation under God, indivisible, with liberty and justice for all. [1:47] **Mayor Clint Hooppaw:** Right. The next item on our agenda is to approve the agenda. And Tom, I don't believe we have any changes, do we? [1:55] **Tom Lawell (City Administrator):** Mr. Mayor, Council, good evening. No, no changes to tonight's agenda are recommended. [2:00] **Mayor Clint Hooppaw:** Great, thank you. Do we have a motion to approve the agenda? [2:03] **Councilmember Goodwin:** So moved. [2:04] **Councilmember Ruth Grendahl:** Second. [2:05] **Mayor Clint Hooppaw:** Motion from Councilmember Goodwin and a second from Councilmember Grendahl. All in favor indicate by saying aye. [2:11] **Councilmembers:** Aye. [2:12] **Mayor Clint Hooppaw:** Opposed? The agenda is approved. The next item is the audience participation portion of the meeting. This is for items not on the agenda. Do we have anyone in the audience who would like to speak? All right, seeing none, we will move on to the consent agenda. These items are considered routine and will be enacted with a single motion unless a councilmember or a citizen requests to pull an item. Councilmembers, are there any items you'd like to pull? Seeing none. Citizens, any items to pull from the agenda? All right. Do we have a motion to approve the consent agenda? [2:40] **Councilmember Tom Melander:** So moved. [2:41] **Councilmember John Bergman:** Second. [2:42] **Mayor Clint Hooppaw:** Motion from Councilmember Melander and a second from Councilmember Bergman. All those in favor indicate by saying aye. [2:48] **Councilmembers:** Aye. [2:49] **Mayor Clint Hooppaw:** Opposed? The consent items are approved. The first item on our regular agenda is item 5A, and that is our proposed 2024 City budget and property tax levy. And here with his riveting and nail-biting presentation—I saw him in the audience out there a second ago... Right to the end, it looks like. [Laughter] [3:33] **Ron Hedberg (Finance Director):** There are plenty in there if we want to explore things further. Thank you, Mr. Mayor, members of the Council. As the Mayor mentioned, this evening we are here to consider adopting a preliminary budget and property tax levy for 2024. What this does is it sets the maximum property tax levy for the coming year. It can be lower between now and December, but it cannot be increased. One of the other actions at the end is a motion to set the date for what used to be called the Truth in Taxation hearing. It's now a public invitation to the public to come in and discuss the budget and levy where the public is invited to attend, and we're recommending December 14th as the regular—which is a regularly scheduled City Council meeting—for that meeting. [4:37] There are some updates since the August informal. I did distribute those last Wednesday. We did receive updated fiscal disparity numbers, distribution amounts, which does impact the spread levy and the tax rate, which results in a four-dollar increase from the earlier amount that we saw in August. Some of the other changes included in the overall budget—a lot of these slides the City Council has seen, but mainly for the public information—in the upcoming budget, there is a change in the Emerald Ash Borer replacement/tree removal program. There is a new fund that is included in the budget, a special revenue fund for opioid settlement funds and tracking of those activities, along with a change in the Public Works Administration and the natural resources budgets have now been separated and are being budgeted separately. [5:54] Regarding the Emerald Ash Borer program, the existing practice is to remove and replace diseased boulevard trees as funding is available either through levy or grants. Currently, we're spending about 1,600 to 1,900 a tree, and currently there are 1,050 boulevard and park diseased trees that need to be removed. This coming year's budget proposes a use of one-time money from the future capital projects of 550,000 in 2024 and 650,000 in 2025 just to start addressing that at a much more rapid pace than we've been able to do; frankly, it's because the disease is spreading much more rapidly. We're estimating the removal cost at 1,200 to 1,500. One change in the practice, I guess, would be the City Council would be asked to create a program where the tree would be removed, and instead of the City replacing the tree and caring for that tree in the immediate months leading after the tree is planted, instead provide a rebate to the property owner if they plant a tree that is not in the public right-of-way, not in the boulevard. What that will do is that the property owner will become a stakeholder in that tree and hopefully that tree would be better cared for. [7:26] I mentioned the opioid settlement fund. The City of Apple Valley will receive 1,119,000 over the next 18 years, and one of the requirements is a separate fund. The identified uses so far are partial funding of the drug task force agent and investigation/enforcement of opioid-related events, in addition to some funding for the Community Impact Unit, which would connect community members to the appropriate resources for crisis follow-up. [8:08] I mentioned the Public Works and natural resources budgets being split. I want to mention that the budget has been restated so the numbers are comparable to the actuals and restated budget amounts for the prior years. At the start of the process every year, we start with property valuations. Overall property values for the coming year are increasing five percent. We can see that residential properties are going up 3.75 percent; this is a reversal or an extreme moderation from what we were experiencing last year at double-digit increases. Residential, commercial, industrial, and personal property are increasing 11.75 percent for the coming year. The other large increase here is in the apartment property classification at 9.56 percent. Overall, it results in an increase of five percent in property valuations. [9:06] When there is a large increase in one property valuation class due to appreciation, it will shift the burden onto that class from other classes. For example, commercial this year for the coming year is going up at 11.75 percent versus 3.75 for residential. This will shift some of the property taxes burden to the commercial industrial class, and this reverses last year's tax impact when it was just the opposite for the residentials. Apartments that experience the nine and a half percent increase overall will also experience part of that shift away from the residential single residential property class to the multi-family apartments. [9:51] We look at also the overall preliminary tax capacity. This actually is the tax base. We convert values into tax capacity, and that is really what is considered the tax base. We can see that new construction for residential is 0.37 of one percent; commercial industrial is up a little bit more at 2.37; and apartments at just under five percent of additional new construction tax capacity. Then if we look at appreciation, the appreciation of the commercial industrial class is higher than the other property classes at 9.4 percent compared with residential at 3.59 percent. We look at them together, and the overall tax capacity will be increasing 5.77 percent. We can see here that it really is shifting the tax base to the commercial industrial and apartment property classes. The median value home is increasing 2.8 percent for the coming year for taxes payable 2024, up to 362,300. [11:12] One of the things we're here tonight to do is talk about the budget as well as the tax base and levy. Overall, all funds that we budget total 98,412,000. The City is a service provider, so a good chunk—over one-third of the total budget—is in personal services, wages, and benefits. Because this is all funds, it does include the liquor store operations. For example, you'll see items for resale; most of that is related to the purchase of items for resale at the liquor stores. We do have capital outlay and depreciation at 27 million, which is the amount being reinvested in the City's assets. We did also have debt service this coming year of 1.5 million, and then we have transfers and administrative fees between the funds of 9.2 million. [12:35] We look at the expenses based on the fund or the fund type. The general fund is the biggest operating fund in our budget at 43,169,000. Enterprise funds (water, sewer, storm water utility, liquor store operations) make up another 40 percent or 39.2 million. Another large fund is the road fund at 9.4 million, and then all the other funds (cable TV and other special revenue funds) make up 8.5 million or approximately nine percent of the total budget. [13:06] We look at the funding sources of the total budgets. We can see the user and franchise fees—again, this is the Enterprise funds—at 36 million, approximately 40 percent of the total budget. Another big chunk of that is property taxes, which is one of the topics for this evening: 32,320,575 of property taxes being levied for the operating budget, which is approximately 36 percent. Again, the property tax levy is why we're here this evening. That share of the pie—the predominant share of that tax levy—goes to the general fund, which makes up 75 percent of the general fund's operating budget. Then it's all the others, whether it's licenses and permits, building permits, business licenses, franchise taxes, intergovernmental revenue, or park and rec charges at 3.5 percent. [14:14] Again, I mentioned the City is a service provider. In the general fund, 64 percent of the budget is just in wages and benefits as providing services: 27,664,000 for the coming year. Capital outlay within the general fund is 1,781,000. We do have transfers into the road improvement fund; this is the levy-supported portion of the street and infrastructure replacement program. Then we also have transfers through the municipal building funds—there's three of them totaling 545,000. [15:04] This brings us to the property tax levy, which is increasing 8.44 percent in total: 34,744,000 for the coming year 2024, an increase of 2,705,000. The predominant share of that goes to the general fund (2,061,000 increase). Street maintenance, I mentioned the 4,360,000 going to fund the street and infrastructure program, and then the municipal building fund or facilities funds increasing 164,000 for the coming year, leaving the remainder of approximately 90,000 for an increase in levy-supported debt service. [15:58] What is driving that increase? The increase in the road fund, facilities funds, and debt service—I would categorize all of that as capital outlay related. We also have the general election next year which will result in an increase of approximately 147,000. We have inflationary impacts throughout the general fund which includes wages, benefits, and everything: 1,315,000. There are about two full-time positions that are added in the budget for the coming year, of which 53,000 is supported by the property tax levy. And then we pointed out at the City Council informal that the cable franchise fees have been declining, so the levy will be going up to reflect that shortfall. [17:09] We look at the tax impacts to the median value home. Again, that median home is 362,300. We apply a market value homestead exclusion program to arrive at a taxable market value. It's that taxable market value times the state classification rate for homestead properties of one percent, which gives us the tax capacity. We divide the total levy by the total tax capacity to get a tax extension rate of 36.67. That, times the taxable market value, gives us the gross taxes payable of 1,312 dollars. In addition to that, there is still a parks referendum for park bonds giving a total property tax paid for just the city portion of the taxes of 1,362 dollars. When we compare that to the prior year, it's an increase of 89 dollars or 6.96 percent for 2024. [18:52] One thing we do each year is we compare how our levy increase compares to other communities of similar size in the metro area. We can see that we're at 8.4 percent; there's four in this survey that are higher. These numbers across the board are significantly higher than previous levy increases that we've been seeing. We also compare the preliminary taxes on the median value home. We can see that of these cities that replied to my survey, the city portion of taxes in Edina, for example, is 2,134; in Otsego it's 1,715; and Apple Valley is at 1,362. So we're in the middle of the pack again. [20:47] Again, let me point out that the City of Apple Valley's property tax levy includes support of the road and infrastructure replacement activities that other communities predominantly levy via special assessments. Another comparison is total expenditures per capita. According to the state auditor, Apple Valley had total expenditures per capita of 768 dollars; they are the lowest of this comparison. St. Louis Park was the highest at 1,628 dollars per capita. We are also the lowest of the 11 larger Dakota County cities. We do expect that as the fire station and police operations garage projects get built, those numbers will go up. [22:42] To recap: Levy increasing 8.44 percent; median value home is going up 2.81 percent. The tax impact on that median value home is going up 6.96 percent (88.68 a year or 7.38 a month) up to 1,362 dollars. This continues the City Council's goal to not specially assess for the infrastructure maintenance program. I mentioned some new positions: there is a new maintenance trainee program which will rotate between parks maintenance and water/sewer utility. There is also a new police sergeant position funded with state public safety aid. There are three interim positions in IT, city fleet mechanic, and recreation. Utility rates for water and sewer will be going up five percent, storm water up 15 percent, and streetlights up 10 percent. Total quarterly bill going up 12.44 a quarter or 4.14 a month. [24:59] Regarding the timeline: The action this evening would seek a motion setting a budget meeting for December 14th. The county would then use that to prepare notices sent out in November. December 14th at 7 p.m. is when the Council would consider adopting the final budget and levy. So with that, asking you to consider adopting the resolution and the motion to set the December 14th meeting. [26:01] **Mayor Clint Hooppaw:** Thanks, Ron. As you said, this sets the highest we can levy, but we still have the opportunity to continue to talk about and reduce from this level. Questions for Ron from Council? It's not the first time we've seen it. [26:15] **Councilmember Tom Melander:** It is not. [26:16] **Mayor Clint Hooppaw:** If there are no questions for Ron, we can take the two actions requested. The first one is to adopt a resolution approving the proposed 2024 City budget and levy. [26:30] **Councilmember Goodwin:** So moved. [26:31] **Councilmember John Bergman:** Second. [26:32] **Mayor Clint Hooppaw:** Motion from Councilmember Goodwin, a second from Councilmember Bergman. All those in favor indicate by saying aye. [26:39] **Councilmembers:** Aye. [26:40] **Mayor Clint Hooppaw:** Opposed? That carries. And the second action is to set a date for the public budget meeting on December 14, 2023, at 7 p.m. [26:50] **Councilmember Ruth Grendahl:** So moved. [26:51] **Councilmember Tom Melander:** Second. [26:52] **Mayor Clint Hooppaw:** Motion from Councilmember Grendahl, second from Councilmember Melander. All those in favor indicate by saying aye. [26:59] **Councilmembers:** Aye. [27:01] **Mayor Clint Hooppaw:** Opposed? That carries as well. Ron, thank you. There's a ton of work from you and truly all the staff to put this together. We'll move on to item 5B, which is Eagle Point Apple Valley Second Edition, and I think Tim's going to walk us through this. [27:27] **Tim Benetti (Community Development Director):** Thank you, Mayor, members of Council. Happy to present for your consideration tonight the Eagle Point Apple Valley Second Edition. This is a two-part request: subdivision for a preliminary plat and authorizing for site plan review and building permit authorization for Phase 2. This was the former Apple Valley Gardens golf course. The property is currently zoned LDF (Low Density Flex residential), which provides for single-family or multi-family up to three to eight units per acre. The Eagle Point Valley plat was originally approved with 16 villas and 33 townhomes. Phase 2 consists of about 10.3 acres. [29:00] The revised preliminary plat shows 31 total lots: 11 lots for villa-style residences, 19 for attached townhome styles, and one lot for common or open space. The site plan shows the layout along the cul-de-sac. Grading, drainage, and utilities are being established. On August 2nd, this item was presented to the Planning Commission. There were a number of concerns raised by residents regarding whether the developer tried to mislead the neighbors and concerns over parking. Although the requested additional three-unit building maintains the low density, the neighbors preferred open space on that area. [31:28] Back in June 2021, the developer showed a four-unit building here. During the Planning Commission recommendation, it was removed because the developer and the City were doing a joint project for storm water management and the final layout of the ponds was undetermined. The developer wanted to forge ahead with Phase 1, so they took it out with the assumption it would be used for ponding. Once they realized that area could be used for additional units, they decided to put in three units instead of four. The overall density is 4.2 units an acre, which is well within the three-to-eight range. On August 16th, the Planning Commission unanimously proposed approval. We are asking for approval of the subdivision and the site and building plan tonight. [33:15] **Mayor Clint Hooppaw:** Thanks, Tim. Questions from Council? [33:19] **Councilmember Tom Melander:** I was on the Planning Commission for a good share of this item. There was a lot of contention, a lot of neighborhood input. It was a bearcat. I used to talk about torches and pitchforks—a lot of angry neighbors. I lived in that neighborhood myself for a long time, and it's a tough site with a high water table. Any rain and there was standing water all over that golf course. I know this has been a horrendously expensive piece to develop. I'm always a little leery about shoehorning 10 pounds of stuff in a five-pound bag. It looks like Planning thought it was okay, but it's a tough fit. I don't know what will happen with storm water, but I think it's going to be a tough deal over there with standing water even with the ponds. [35:22] **Councilmember Goodwin:** Thank you, Mayor. I'm going to go back a little further than Councilmember Melander. I remember when this first came in; the developer wanted four five-story apartment buildings. I think we did a pretty good job. Let's keep in mind these are high-valued homes. These last three they put back in are as far away from the neighborhood as you can get. I remember the neighborhood coming unglued looking at four-story apartment buildings. I think we did a pretty good job compromising and getting a pretty darn good development for the city. [36:19] **Councilmember John Bergman:** Thanks, Mr. Mayor. To the developer and to the City, this originally started at eight units per acre. When I talked to staff, they noted it was 4.0 units per acre originally, and with this addition of these three townhouses, it only went up from 4.0 to 4.2. With that being said, it's still a tremendous project. There's still a lot of green space for the difficulties of it, and I think all parties involved did a wonderful job on a very restricted piece of property. [38:40] **Councilmember Goodwin:** Something I forgot to mention—another thing I think we did for the folks north: they used to have a fairway behind them; now they have a pond. We did what we could to help the neighborhood out. I think we did quite a good job of accommodating the neighborhood on that. [39:41] **Mayor Clint Hooppaw:** All right. If there are no other questions or comments, we will go ahead and take a motion to adopt a resolution approving the subdivision by preliminary plat. [39:53] **Councilmember Goodwin:** So moved. [39:54] **Councilmember John Bergman:** Second. [39:55] **Mayor Clint Hooppaw:** Motion from Councilmember Goodwin, a second from Councilmember Bergman. All those in favor indicate by saying aye. [40:01] **Councilmembers:** Aye. [40:02] **Mayor Clint Hooppaw:** The next item is 5B2, which is to adopt a resolution approving the site plan building permit for construction of 30 villa and townhome units. [40:07] **Councilmember John Bergman:** So moved. [40:08] **Councilmember Goodwin:** Second. [40:09] **Mayor Clint Hooppaw:** Second from Councilmember Goodwin. All those in favor indicate by saying aye. [40:13] **Councilmembers:** Aye. [40:15] **Mayor Clint Hooppaw:** And opposed? That item carries. Thank you, Tim. With that, we'll move on to staff and Council communications. Tom, I know we've got a couple items. [40:24] **Tom Lawell (City Administrator):** Yes, Mr. Mayor. We have two tonight. We'd like our Assistant City Administrator Charles Grawe to give us an update on the upcoming fall cleanup day, and Park and Rec Director Eric Carlson has a few updates as well. [40:33] **Charles Grawe (Assistant City Administrator):** Thank you. It's that time of year again where we have our fall cleanup day. That'll be a week from Saturday, September 23rd, between 8 a.m. and 1 p.m. at the Aquatic Center parking lot. It's an opportunity for residents to dispose of non-hazardous materials like appliances, tires, scrap metal, furnishings, and remodeling debris for a reasonable fee. We also have free paper shredding available. We do not accept hazardous items like electronics, paint, cleaners, pesticides, fluorescent bulbs, or batteries. Three things: One, Dakota County is discontinuing the practice of holding a hazardous waste cleanup in Burnsville at the same time, so there's only going to be the Apple Valley event that day. Second, the longest line is at 8 a.m., so don't feel the need to come at 7:30 and sit in line. Third, for shredding, we are allotted one truck, and that truck will leave when it's full—usually right at 1 p.m. [42:49] **Councilmember Ruth Grendahl:** I would just like to point out that we have Zubair Muhammad here tonight, who is the Apple Valley Boys State representative, and he was elected Lieutenant Governor from the group. Welcome. [43:24] **Zubair Muhammad (Boys State Representative):** Thank you. It's a pleasure to be here. I appreciate the opportunity to just sit in and listen to the affairs of the Apple Valley City Council and to learn more about local government and do my part as an upcoming citizen of Apple Valley. Thank you. [43:36] **Mayor Clint Hooppaw:** You're a senior at Apple Valley High School, correct? You're welcome back anytime as well. Great to have you. Eric, you've got some updates as well. [43:46] **Eric Carlson (Parks and Recreation Director):** Mr. Mayor, three quick things. One, the last time we'll have music in Kelly Park this year will be Sunday from two to four, and the band will be Five Speed. Second, regarding the parks referendum, the brochure started hitting homes today. Starting next week, we'll have a series of open houses, both virtual and in-person. Last but not least, we have the Family Fun Fest this Saturday at the Apple Valley Sports Arena from 4 to 8 p.m. It's a free event. [45:08] **Mayor Clint Hooppaw:** Great, thank you, Eric. Council, any other items? I think that's all we had. We will move on to the calendar. Our next regular City Council meeting is Thursday, September 28th, at 7 p.m. Do we have a motion to approve the calendar? [45:34] **Councilmember Ruth Grendahl:** So moved. [45:35] **Councilmember John Bergman:** Second. [45:36] **Mayor Clint Hooppaw:** Second from Councilmember Bergman. All those in favor indicate by saying aye. [45:41] **Councilmembers:** Aye. [45:42] **Mayor Clint Hooppaw:** That item carries. And the last item is to adjourn. Do we have a motion? [45:47] **Councilmember Ruth Grendahl:** So moved. [45:48] **Councilmember Tom Melander:** Second. [45:49] **Mayor Clint Hooppaw:** All in favor indicate by saying aye. [45:51] **Councilmembers:** Aye. [45:53] **Mayor Clint Hooppaw:** We are adjourned. Thank you. [46:14] [Music]