This transcript has been formatted with the appropriate speaker names based on the context of the Lake Elmo City Council Workshop held on March 11. [00:00:00] **Mayor Charles Cadenhead:** All right, I'm going to call the Lake Elmo City Council Workshop to order here on March 11th, 6:30. We’ve got a few things on our agenda this evening. Our first one being the Utility Finance Management Plan update. Finance Director Clarissa Hadler. [00:00:15] **Clarissa Hadler (Finance Director):** Thank you, Mayor and Council. Let's see... that's the wrong one... let's go here. Let the slide show up. There we go. Okay, so we are here to discuss the 2025 utility rates. Some of you may recall that we've done this a number of times in the past. So our objectives this evening are to review our long-term financial plan, determine what the utility rates for 2025 should be—those would be set at next week's meeting in time for the Quarter 1 bills to go out—and then just kind of a brief overview of where we came from. We had Northland Financial assist with this plan; they were kind of the original builders of the model. Since Nina Kramer came on as Finance Coordinator last year, we've been able to bring this model in-house, with the assistance of Council Member Dragisich, who has done a number of these reviewing and such for us as well. So it's been a really a team effort. So the model takes into account three-year historical typically and then it looks out 10 years into the future. Our goals overall are essentially just to achieve long-term sustainability in all of the utility funds. So we're talking about water, sewer, and storm water. So that includes looking for revenue sufficiency to maintain appropriate cash balances, decrease debt over time, and then make sure that we're recovering all of our expenses including depreciation. We are forecasting financials based on a lot of assumptions and predictions, so anytime we do that, we're going to have issues—things are going to change over time. There’s things that we can control, things that we can't, and change is inevitable. Some of our assumptions that we use are development connections—that is the new water connections. In the past, you guys would know better how many years we've had a lot of those new connections from the MPCA grants with those water extensions. They also come from new development. And then also our—I should mention—the MPCA funded new connections are ending after last year. And then of course fees. We are projecting long-term; we adopt them annually typically. While we can take a guess based on usage and number of connections and customers, our water sales are highly weather-dependent. We saw this in the last year. Our modeling from last year did not take into account the heavy rains we experienced last summer, so our sales were much lower than we had expected. Expense assumptions: we use existing operations, we increase just using an inflationary increase of 3% per year. We use the city's CIP projects, which we revisit annually. Those are projected for a 10-year period. I will note we are still building out our long-term maintenance CIP. So while we've done a lot in the last year moving from a five-year to a 10-year, we will be continuing to add projects to that. And then one of the largest impacts right now are the planned water treatment plants. These capitals will be funded through the MPCA grants, but the operations are still kind of up in the air. There's talk that they might be provided in full or in part, but we won't know that for quite some time. So right now we are assuming that they will not be covered at all. This is what our cash would look like if we kept our status quo with just a kind of a basic 3% inflationary increase over the next 10 years. So you can see in the water fund, it's kind of crashing and goes negative around 2033 or so. Same with sewer; it's in a pretty good standing right now but continues to decrease over time. So the suggested rate change, again based on—I don't know if I really fully touch on the fact that the water treatment plants actually will essentially double our operations expenses in the next three to four years depending on when those come online. So if we're doubling our operations expenses, obviously we need to make that up somewhere. [00:04:45] **Council Member Jeff Holtz:** What's the doubling based off of? [00:04:47] **Clarissa Hadler (Finance Director):** We used—you might need to help me with my assumptions—but we used essentially the numbers that Jack [City Engineer] had for O&M [Operations and Maintenance]. The first year for the first plant I think is six months—I think both of them came online next year? So we use six months of that year for that cost and then continued at 100% moving forward. And then the year that the larger plant comes online, six months of that year, and then 100% moving forward. [00:05:15] **Council Member Jeff Holtz:** So you're talking about the temporary—both the temporary and then the larger one? [00:05:18] **Clarissa Hadler (Finance Director):** Got it. [00:05:19] **Council Member Nick Dragisich:** Thank you. And as I understand, the increase in operating cost came from the engineers, correct? So that's something they—these are what you should expect for operating cost increases, and it does not include the possible third one? [00:05:32] **Clarissa Hadler (Finance Director):** It does not. And remember, engineers are usually always right. Maybe. So taking that into account, we are recommending 20% every year for the next five years, and that would essentially double the rate over a five-year period. The rates we typically adopt every year, we can adopt them preemptively multiple years in advance if you'd like. We can always revisit; it's just an option I wanted to throw out there. The other part that's really kind of dependent on all of this is development, of course. So we use development projections. Community Development Director [Michele] Soa and City Planner [Andrew] Jensen and I and Nina, we all sat down and were looking at all of the potential developments within the city over the next 20 years. There's a giant spreadsheet. We project out when they're going to, you know, pay their WAC and SAC [Water Access Charge and Sewer Access Charge]. We project out how many properties there's going to be, when they're going to pay for their water connections and sewer connection charges. Park dedication obviously is a separate model. So there's this kind of giant spreadsheet now. So if one of those developments doesn't go or goes early, then that kind of throws everything off from sort of that WAC and SAC kind of projections. This is what our cash looks like with the 20% rate increase for five years, climbing steadily. I'm going to note here that these rate increases do take into account depreciation. So we're going to bring on over $50 million in capital projects in the next three years with these water treatment plants. And depreciation—if we're charging for that, if we're covering that expense, we're able to set that money aside for those future capital needs for those projects. Otherwise, we get another 50 years down the road, we haven't charged enough, and now we're trying to rebuild these things at whatever inflation is over the next 50 years with no cash on hand. So it looks like there's a lot of cash, but when we add $50 million in capital projects, we're going to need that cash in the future. [00:07:35] **Council Member Nick Dragisich:** Clarissa, one thing to point out: some of this cash is restricted. So it's not all available to spend for operations. The availability charges and the connection fees have been restricted by city council policy fees only for capital assets or debt service, and not for operating expenses. So as I looked at these—and all of these funds right now—we're not covering our operating expenses with our fees. We're charging for services and in any of the cases, we're coming up short with the water and the sewer, or we're not fully funding depreciation in the storm water fund, which I know she'll get to. We're not even covering operating expenses excluding depreciation. So these utilities are in need of improvement. I did a quick calc myself—not trying to upstage—but in order to make the water fund cover all costs including depreciation, you'd have to raise the rate to about 83% this year, and about 80% of the sewer fund. That's how far behind we are on these. And obviously with the new plant coming on, the increase, we're going to have a lot of depreciation expense and operating expenses. Should the 3M fund or the consent decree provide coverage, we can probably back some of this down, but we're not going to be able to back it down a lot because we're very far behind in all these funds. And by taking the approach Clarissa has taken—20% each of the five years—we minimize the impact on people rather than doing it 80% the first year and making it whole. I just point out this has been a very difficult process for her and Nina to go through, and I've tried to provide some insight and assist. What she presented here tonight, she sent in the packet, I looked at it, it looked like it did what it needed to do, with the exception of the storm water fund. We’re not predicting a rate decrease—we can get to that later. But the water and sewer fund, this will put them on course over a five-year period. We will see, actually in year six by my calculations, the water fund will cover all expenses including depreciation, even if we don't get a penny from the 3M fund at all. And why is that important? Well, if development stops because of the economy, we would not have enough money to pay our operating expenses in these funds. So it's a difficult thing, but I think the timing is good because we're not in an untenable situation and we have a phasing approach to get us where we need to go. I usually would recommend my clients adopt the rates for three years with the understanding that it's revisited each year to verify that the rate increase is still needed. So it's not locked in stone, but it says this is our intent barring any unforeseen circumstances. Why do that? Because your businesses and your residents can look forward with some certainty as to where their rates are likely to go as they plan their own budgets. If you do it on a year-to-year basis, they don't have an idea until you actually adopt it. And for the businesses that use water in their processes, that can be kind of difficult for them to manage. So I think they presented a very good plan for us on the water and sewer and it will be successful over the long term in bringing these funds where they need to be to be considered well-run. When you look at it: what's a well-run utility fund? You cover all your operating expenses including depreciation and you have sufficient cash reserves to deal with emergencies. Our policy in the city was that the net unrestricted assets have to equal 50% of next year's operating costs, and we get there with this plan. So it's a well-thought-out plan and process that they went through and I compliment them for that. [00:11:30] **Mayor Charles Cadenhead:** Great. [00:11:32] **Clarissa Hadler (Finance Director):** Moving on, the next chart is just showing our debt decreasing. We've had a lot of discussions about debt here because of our current debt load, and so our goal is to remove all debt from the fund eventually, but we are 20 years out from that actually happening. These charts show revenues and expenses. Our goal here is obviously to get these little orange bars higher—sorry, the green bars higher than the orange bars. We do that in 2030. These really big green bars here are showing the MPCA grants for the water treatment plants. So that was water; here's sanitary sewer. Again, green kind of jumps up here a little bit and then ongoing higher revenues. We've got a little bit more flexibility within the sewer fund. If we wanted to do lower rates, I think our actual model dropped down from—I think it did 20% over four years and then 10% the fifth year, and then an inflationary increase over time. The quarterly bills: the next few slides will show quarterly bills. We look at quarterly bills on low, medium, and high. Our low volume bill is 6,000 gallons—these are just averages that we use as an example, the same ones that we used in years past. And so you can see with the 20% increase in water and sewer, no increase in storm, you would see an overall increase of just under 16%, which would be $18.35 per quarter or just $6 per month. Medium volume example for residential: we're looking at closer to $35 per quarter or $11.70 per month. Commercial is a little bit higher, so we're going to be at $39, almost $40 increase per quarter. And then our high volume is 107,000 gallons per quarter, and so they'd be looking at about $185 increase in a quarter or $215 for a commercial facility. We did look at comps. These are 2024 rates for the other cities and then we kind of plugged in our 2025 number. In the low volume example, we'd be around sixth out of this group of cities. For the medium volume, this got really small and I can't read it—I think that's fifth, and then fourth in the high volume. Some of the other issues that I mentioned in my memo were no change to the storm water. Nick's looking at it differently; I don't think I paid nearly enough attention to storm water, I was so worried about water and sewer. But we did add a new multi-family rate to storm water just to kind of clarify that process. Those are very different facilities and if I remember correctly, they're currently being billed as the same as commercial, but it just gets a little confusing when we're trying to enter these things into our system. So it's easier to just create a new rate. Water and sewer development and connection charges have not been changed since 2013. So they're $3,000 for an access charge or availability charge and $1,000 for a connection charge, and that's the same for water and sewer. And so there's an opportunity to probably reassess that. These fees vary widely from other cities, so it would be kind of a special study that we would want to do to do comparisons and such. [00:14:50] **Mayor Charles Cadenhead:** When you say widely, what are those ranges? [00:14:53] **Clarissa Hadler (Finance Director):** It's more the methodology changes. We can send you spreadsheets, but you know, Woodbury's got different areas of town. It's almost like they set the access charge depending on how much it costs to get the water from wherever over to that development area. I'm not even fully—I don't fully understand it. [00:15:15] **Mayor Charles Cadenhead:** For us, it's a flat rate no matter where? [00:15:18] **Clarissa Hadler (Finance Director):** Got it. [00:15:19] **Council Member Nick Dragisich:** Typically the way the connection and availability charges are established is they're based on the assets that the system has, but they're system-wide assets. The pipe that runs in front of my house doesn't do you any good, right? So the charges are based on the system-wide assets: interceptors on the sewer side, lift stations, trunk sewer mains, things like that. And the most prevalent I have seen is replacement cost less depreciation. [00:15:47] **Council Member Jeff Holtz:** Is that for the rates, not the hookup charges? [00:15:50] **Council Member Nick Dragisich:** We're talking about the connection fees and availability charges. Yep, yep. And so it's using replacement cost less depreciation and any assets where you got paid for with grants that didn't come from you or were contributed by developers, you don't charge that because you don't pay anything for it. I've done a number of those and the key typically is looking at those system-wide assets and making that projection. Why do you use replacement cost? Because at some point you've got to replace them. And these people that hook on are benefiting from what's there, but it's partially used up, and so that's typically the way it's done. It's a fairly complicated calculation; it's not the only way by the way, but it's the most typical way I have seen it done. [00:16:35] **Mayor Charles Cadenhead:** Okay, understood. [00:16:37] **Clarissa Hadler (Finance Director):** And then finally, multi-family rates—just clarifying again, it's more of a process issue than anything for us when we're entering these things into our billing software. So we did add some new proposed rates that align largely with residential. [00:16:53] **Council Member Jeff Holtz:** I see in the multi-family, the quarterly base fees is per unit? Sanitary sewer usage is per unit as well, or no? Can you remind me? [00:17:02] **Clarissa Hadler (Finance Director):** It is, yes. [00:17:03] **Council Member Jeff Holtz:** It just doesn't say per unit in the sheet. [00:17:05] **Clarissa Hadler (Finance Director):** Yeah, I wonder if it's just a—here let me look on the proposed rate table for 2025. Yeah, so the $5.99 is probably per—that’s usage. So the quarterly base fee is per unit for multi-family for sewer as well? [00:17:18] **Clarissa Hadler (Finance Director):** Yes. [00:17:20] **Clarissa Hadler (Finance Director):** Okay. Quick recap: goal is revenue sufficiency, positive net income. These are businesses; they're run by government, but these are businesses. We will be sharply increasing expenses with the new treatment plants. We have unknown revenues from development; we can guess what they're going to be, but we can't necessarily count on them going forward. And then just understanding that modeling will change annually based on that development as well as the 3M settlement if something comes from that. [00:17:50] **Council Member Jeff Holtz:** Couple questions. I mean, we've been here for five years and seen utility studies, and I'm just curious: what do you think was maybe not necessarily not done, but maybe what was something that was missing in some of the discussions? Because in the past it hasn't been this bleak. [00:18:05] **Clarissa Hadler (Finance Director):** We didn't have the water treatment plants. I mean, this is wholly the water treatment plant. There were—I mean we found, when we were reviewing the model, there's definitely things in there that maybe we caught. Again, you're always based on assumptions. Our revenues this past year in 2024 were—I suppose you don't know that number off the top of your head—but it was significantly lower than what we had projected. It rained a lot; we didn't have the irrigation usage. You will recall that we changed the irrigation rates two years ago, and I think at the time we kind of guessed that we might lose money by doing that. So that added to it as well. We also—I think I looked back, don't quote me on this—but the cash was still decreasing in those prior models if you look back. There was just enough cash to get us by based on what these assumptions that we had made. [00:19:05] **Council Member Jeff Holtz:** So in the hypothetical that there's no PFAS, there's no treatments, as compared to a 20% for five years, what would you see it potentially being? Would it still be an increase? Are we talking more in the 5% range or what? [00:19:18] **Clarissa Hadler (Finance Director):** I wouldn't be able to answer that without running the numbers. It would take a whole another calculation. [00:19:22] **Council Member Nick Dragisich:** But I also think one of the things—I don't recall paying such attention to the depreciation value, which is something that really needs to be done. It might have been factored in, but I don't know if it was factored into that degree. And I think for a lot of people that gets—I don't think it's... what was the word you used? Not scary, but alarming? I don't think it's that when you take into account depreciation. Because when I look at cities that are going through this process and they have not accounted for the depreciation of their system, they're running into huge cash flow issues to rebuild their sanitary or their water systems because they have not accounted for that depreciation over the last 20 years. And so they're trying to figure out how to put Band-Aids on it to get back up. This actually puts the city in the place to not be dependent on bonding. [00:20:15] **Council Member Jeff Holtz:** I guess that's, if people are asking, that's probably the one major selling point: "Look, yes, we've got to play a little catch-up here." I fully agree. And I guess my question would be more so: is this something that we never asked or we never looked into with Northland when they were doing the work? It just wasn't an item with them? [00:20:38] **Clarissa Hadler (Finance Director):** I think it's the downfall of a 10-year model, and we're new. I mean, our development is relatively new; we have a lot of new stuff. And so we don't have as much of the reconstruction. But if you don't start charging for covering that depreciation, in 50 years Lake Elmo is going to be really hurting. [00:20:58] **Council Member Jeff Holtz:** And I guess the other reason I was asking if you could even spitball: "90% of this is from the treatment" or something along those lines? The reason I'm thinking about that, given the letter that we saw today and that the trustees estimated 2027 for a date in which the settlement is gone and that we don't know what will happen with the consent agreement given that it does not list the County Landfill... I think a very good question that maybe work group members and city staff might want to ask is: "Can we apply and frontload O&M costs before they occur when we know they are going to occur?" And the reason I'm asking that is because no matter what, the consent agreement exists and it includes three sites of PFAS, but it can be argued—and it *will* be argued by 3M—that our costs are associated with the site that's not listed, which is the County Landfill. So I would be curious what the trustees would say, especially if they adjusted and moved 20 million over to Priority 1, if they know that we're incurring these costs and that they otherwise would be doing it from the settlement. Can we request it once construction is done? Can we request it when construction has been approved? Some sort of an agreement, because we are in a different boat than Woodbury and Cottage Grove and even West Lakeland Township. We are in a vastly different boat. So I would be very curious... do you know offhand the numbers Jack was estimating per year for some of those O&M costs? [00:22:25] **Clarissa Hadler (Finance Director):** I have them pulled up. [00:22:27] **Council Member Jeff Holtz:** Are we talking seven figures a year or more like half a million a year? [00:22:30] **Clarissa Hadler (Finance Director):** Let me see... because this would also directly influence how I would discuss the last item at the end of the meeting for it possibly moving Priority 2 to Priority 1 funds. [00:22:42] **Council Member Jeff Holtz:** I don't know what I'm looking at exactly. So that's construction cost and then O&M... what he sent us was 690,000 for each of them for the first year. If I'm reading that right? [00:22:58] **Clarissa Hadler (Finance Director):** It seems plausible because I know at the trustees' meetings in one of the work groups, they had mentioned that they expect O&M overall to be around 12 to 15 million a year that they're reimbursing for the region overall. [00:23:13] **Clarissa Hadler (Finance Director):** Sure. The first year that we accounted for 100% of the larger plant—the South treatment plant—we incorporated inflation and the total is 721,000. [00:23:25] **Council Member Jeff Holtz:** So that would be with inflation. Yeah, original 690. I think it'd be a worthwhile conversation. Even if we were only allowed to frontload three years of O&M or five years, it's more than nothing. And it forces them to say no. They don't have a policy for it, but I think it'd be a very worthwhile question, especially as... yeah, that would be my take. [00:23:48] **Council Member Nick Dragisich:** Agreed. A couple of other points: the utility funds for the City of Lake Elmo have operated with operating losses every year going back to 2019, which is as far back as the financial statements that I have. So 2019 through 2023, each one has had an operating loss, which meant we haven't funded depreciation over that period of time. The interesting thing—the fluctuation of water sales for a wet year versus a dry year—when I did Woodbury's rate study, it varied 20%. Revenues were down 20% in wet years just because there's no water to sell. So the city's policy of having 50% of next year's operating expenses in reserve covers that potential wet year dilemma that you might find. And I think, as I said, I think if we look at what the finance department has proposed, it puts us on track. It takes five years to get there, but I would not hesitate to share this plan with Moody’s if we were selling debt and say, "We have a plan for how we're going to make this pay for all these operating expenses, and we are on track to do it. We're doing it in a way that provides the least harmful impact to our residents and businesses, but we have a plan that gets us to where we need to be." And we understand that there's going to be changes that we're not going to be able to foresee as sure as we're sitting here. When we look at this next year, there's going to be changes that have occurred and we may be okay, or we may have to make an adjustment. But other than on the storm water piece, I think the sewer and water are well thought out and they've done a great job of coming up with a plan that works. On storm water, in my own noodling on my abacus back home, I thought if we did a 15% increase, it would take us 10 years to get even, but we'd come out of the woods over 10 years. That's just my calculation; there are many others who would disagree. But I think because it doesn't even cover its operating expenses if you exclude depreciation, not doing something with it, in my mind, is irresponsible. [00:26:10] **Mayor Charles Cadenhead:** I would agree, yeah. [00:26:12] **Council Member Nick Kragness:** I agree with the solutions that are necessary. I just... it's very disheartening to know that these past couple years, that's what's led us to this situation. But I appreciate the work that all of you did, including yourself, Nick. [00:26:30] **Mayor Charles Cadenhead:** In regards to storm water then, is additional review necessary to discuss that aspect? [00:26:36] **Council Member Jeff Holtz:** It's a little bit of a different animal in my perspective given that it's different types of materials, different types of depreciation, different quantities, things like clearing out your wetlands and things of that nature that get silted up or that need cleaning. Those look like operational expenses. [00:26:55] **Clarissa Hadler (Finance Director):** Yes, they're operating expenses, yes. [00:26:57] **Council Member Nick Dragisich:** I think it's a little bit different. I don't think you put it on the same percentage as you would your water and sewer because there are other engineering ways to address storm water than there are... typically you're digging up a street, but you can do different things with storm water. [00:27:12] **Council Member Jeff Holtz:** Yeah, I guess I don't know any other way around it. This is not an issue where you can say, "Well, maybe we should cut services," because that's not applicable here. The costs are the costs. If you're going to build a water treatment plant, that's going to double expenses. [00:27:25] **Council Member Nick Dragisich:** One point is: you never really get away from these costs. If you do 20% now for five years, or wait three years and do 40% for five years... I mean, this is a place where you're going to catch up at some point, and the question is when are you going to make that step and what's the pain that's going to be required to get there? [00:27:45] **Clarissa Hadler (Finance Director):** I probably should have added a slide in that memo looking for different perspectives—ways to illustrate the importance of charging for depreciation. In the memo, there's a number of charts showing the gap in the depreciation, what we would have if we were not charging for it, and you can see that gap growing over time. And I would just add that when we're charging for depreciation—sorry, we're charging for what that item cost when it was built. We do make an assumption about the length of the lifespan, and there's room for interpretation, but what we're *not* charging for is inflation for when we have to build that 50 years from now. So we're only covering what it cost to build 10 years ago or whatever; we're not actually charging that next 50 years of inflation. There's some argument that you invest those depreciation expenses and the interest covers some of that increased cost. [00:28:42] **Council Member Nick Dragisich:** With regard to the connection fees and availability charges, I think we should consider retaining an engineering consultant to run those calculations out because if we're dealing with replacement cost, replacement costs are a little trickier to estimate depending on what you're looking to replace. And you're looking at useful life, not accounting life. The accountants say, "Well, we depreciate our sewer pipes over 30 years or 40 years or 50 years," and the real service life is more like 75 or 80 depending on the material. And so when you're looking at the replacement cost less depreciation, you're looking at those replacement costs at the time reasonably expected to replace it, and asset by asset. [00:29:30] **Clarissa Hadler (Finance Director):** That might be good. We had talked about the long-term financial strategic plan as part of the larger strategic plan, so that might be a good tie-in. And as I've been talking with the engineers about just our street CIP, that might be just a good tie-in to just do everything at once. [00:29:50] **Mayor Charles Cadenhead:** Is that something we have the budget for this year? [00:29:53] **Clarissa Hadler (Finance Director):** Probably look at next year, I'm guessing. [00:29:55] **Council Member Jeff Holtz:** The only thing before it goes to a council meeting: I would just like to know more of the specifics as to the proportion that's based upon the treatments versus if that didn't exist to begin with. Especially when we're trying to have the conversations with the trustees to say, "Look, this is how it matters to our residents." [00:30:15] **Clarissa Hadler (Finance Director):** So you would use that information for a basis for the ask for the fund? [00:30:18] **Council Member Jeff Holtz:** Yes, that's the reason for the information. [00:30:21] **Council Member Nick Dragisich:** And I think from the engineer, they have what the increased operating expenses will be as a result of the PFAS treatment in the first year, and then of course you predict some increase each year depending on which model you were looking at. [00:30:35] **Council Member Jeff Holtz:** But does that increase our water fee by...? Right now we've got it at 17% say for low volume; if we didn't have that water treatment, would it be five or six? So what is the percentage difference of that increase due to the water treatment? [00:30:50] **Council Member Nick Dragisich:** I'm going to guess, just from what I've looked at, it’s probably in the 12% range just because we're so far behind funding depreciation. That’d be my wild... [00:31:00] **Mayor Charles Cadenhead:** Why would you even throw out a guess? Why not...? Because then the information's tainted. [00:31:05] **Council Member Nick Dragisich:** Well, she can go back and actually... you can go back. I mean, that's what we should do. [00:31:10] **Mayor Charles Cadenhead:** I'm going to disagree with you. Yes, we should go back and look at it and come up with what it really is. [00:31:15] **Council Member Nick Dragisich:** But based on what I saw, I'm guessing somewhere in that range. I'm giving it a swag. [00:31:20] **Clarissa Hadler (Finance Director):** A swag. Okay, let me take out my calculator, give me five minutes. [00:31:25] **Council Member Jeff Holtz:** No, I think that's a good number to have because I actually talked to [City Engineer] Jack [Strock] and asked him if there was any chance to get the increased operating costs, and he said it's an unknown at this point. But I think we could make a strong case, if not directly with those funds, then with our legislators: "Why should the residents of Lake Elmo or anywhere else be stuck paying 15% more in operating expenses to remove a chemical that someone dumped in the water?" [00:31:52] **Council Member Nick Dragisich:** I think it would also speed up conversations about the source of water long term. [00:31:57] **Mayor Charles Cadenhead:** Yes. Thank you for that, for work on this because I know it's a lot. [00:32:01] **Clarissa Hadler (Finance Director):** Could I clarify, Council Member Holtz? When you say "before we adopt it we want to see those numbers"—it comes to Council next Tuesday, that was the goal, so that we could incorporate these into the Quarter 1 billing. [00:32:15] **Council Member Jeff Holtz:** Well, we have time before the next work group meeting, so maybe that would be a goal the next time anyone from staff is talking with Kirk and Jess [from MPCA]. [00:32:25] **Clarissa Hadler (Finance Director):** Okay. So are you okay with us bringing the rate change to the meeting next week then, and then just doing that portion before we meet with MPCA? [00:32:32] **Council Member Jeff Holtz:** I am. I think we've got to do the rates to make it financially work. If we can, we can adjust the rate increase down in future years when we actually incur the expenses if we get some money from the fund. But I think we need to at least do the rate based on our best information now. [00:32:45] **Nicole Miller (City Administrator):** Remember, the next Priority 1 meeting isn't until May. So we have time in that regard for that conversation. [00:32:55] **Clarissa Hadler (Finance Director):** I'm just always bringing you guys great news. Who's their favorite Finance Director? [00:33:02] **Council Member Nick Dragisich:** For future discussion, if we were talking about the storm sewer fund, I'd like to know a little bit of what goes into those expenses—MS4 operational costs, new hard capital costs. I'd like to know what we're doing there because there are different ways to upgrade your system beyond replacement. [00:33:20] **Mayor Charles Cadenhead:** Thank you for this. Nick, do you have any questions? [00:33:23] **Council Member Nick Kragness:** No more questions for me now. [00:33:25] **Mayor Charles Cadenhead:** All right, so just direction for next week is to bring what I've presented this evening. Okay, thank you very much. Thank you. [00:33:35] **Mayor Charles Cadenhead:** All right, now we get into the exciting topic of trail and sidewalk definition discussion that we've all been awaiting on pins and needles. Very philosophical, can't wait for this. I'm excited to learn about it. You excited, Nick? [00:33:48] **Council Member Nick Kragness:** Yes. [00:33:50] **Pete Tholen (Public Works Director):** Okay, good evening Mayor and Council. Once again, the subject of snow removal on trails comes before us. I put together some information in the packet and I can review it in detail or summarize it, and then we can start determining how we would like to move forward. In any proposal, there's challenges of equipment, staffing levels, the time frame that's expected for a trail to get removed, contracting costs, and additional concerns that a resident might have with either lawn damage, irrigation, snow being left behind in their driveway, etc. I did have a new map added today in your packet; I hope it got to you. That just has asphalt trails in the city, and it's updated up to this year. If you don't see it, I do have it on the big screen up above. [00:34:45] **Council Member Jeff Holtz:** Yeah, we got one that looks different than this one. [00:34:48] **Pete Tholen (Public Works Director):** Okay, so I can definitely get you the one that we—but this is the one you were proposing to be in the packet? [00:34:53] **Clarissa Hadler (Finance Director):** Yes. [00:34:55] **Pete Tholen (Public Works Director):** Okay, yep. So this is new and updated as of today. Planning department helped us out with that. We have 26.3 miles of asphalt trails in the city. On the very bottom along Hudson Boulevard, there's a couple of small segments that probably do not quite connect yet, but here within the next year, we're hoping the majority of those do. [00:35:15] **Council Member Jeff Holtz:** So there’s not a paved trail from Keats to Manning along Hudson? [00:35:20] **Pete Tholen (Public Works Director):** Partial, not fully. Correct. It doesn't go past—there's a chunk in front of the warehouses, a decent chunk in front of the bus garage. But you are correct, it's not... [00:35:30] **Council Member Jeff Holtz:** But there's nothing between Inwood and Keats? Right where this shows what you have up on the screen? [00:35:35] **Pete Tholen (Public Works Director):** Not yet, no. Correct. Okay. Still, we're definitely missing probably four sections in there. One or two of those sections will likely be connected yet this year. [00:35:45] **Council Member Jeff Holtz:** You said this was updated today? Correct. Is there a "before and after" of your work here, like red lines almost? [00:35:55] **Pete Tholen (Public Works Director):** So you have the 2023 map with 34 miles—34 is unpaved and paved. And I believe that was like 23 miles back then. As far as equipment, we have the equipment that can do this snow removal on the trails. Pickups on V-plows are the most efficient for rural sections; we can quickly go through and clear those and then travel to the next development and plow those. [00:36:20] **Mayor Charles Cadenhead:** I think the main purpose of this is to get the correct definition in here, correct? [00:36:25] **Pete Tholen (Public Works Director):** Yes. [00:36:26] **Mayor Charles Cadenhead:** As opposed to talking about paving or plowing or not plowing? [00:36:29] **Pete Tholen (Public Works Director):** Okay. So the description that has been used in the past... there is no definition in the city code of "What’s a sidewalk?" It's just "sidewalk snow removal." We don't have a definition for "trail" as well in our standards, but it's maybe not as clear as it can be. Where the confusion comes in is we have an ordinance that says residents have to remove snow from the sidewalk within 48 hours, but we don't define what is a sidewalk anywhere. Is a sidewalk concrete anything less than six feet? Our standard says when you build a new development, you have to have a concrete sidewalk 6 feet with 4 inches on at least one side of the street if it's a collector and on both sides, but we don't follow that unfortunately. We don't follow that with our developers. If you look at the map I sent you of the Royal development—the stuff that's in green are sidewalks on one side of the street. Did you get that map as well? [00:37:35] **Mayor Charles Cadenhead:** I do, yes. [00:37:36] **Council Member Nick Dragisich:** And so, but there are sections where there are no sidewalks, just trails on one side of the street. And so these sidewalks that are cleared by residents or their associations come to an end where the trails are, and you can't proceed as a pedestrian because it's not clear. It's not clear because we have as a city defined those as trails, and we don't require residents to clear the snow off of trails. And so my thought was to make this consistent. It says we didn't require the sidewalks on both sides through the development for whatever reason—that's something that's happened and I don't know why—but to have a definition like: "A sidewalk is a hard surface, it could be bituminous, it could be concrete, it could be brick pavers on one side of the street." And I'd say... Sarah [City Attorney] would have to work with this, but to define, say, if it's only on one side, it's a sidewalk. If you have concrete on one side and something else on the other, the concrete is a sidewalk. But someone who lives on a section that's a paved trail—even though it’s the only pedestrian movement available on that area—doesn't have to clean it. [00:38:45] **Mayor Charles Cadenhead:** Would another process of thought maybe say: "If you have a hard surface in front of your residence, it's your responsibility to clear the snow"? That would be the simplest way. If you have a hard surface path adjacent to your property. [00:39:00] **Council Member Jeff Holtz:** Because we're on the corner, you have it on both sides. Like I—or you could just say a "hard surface." [00:39:10] **Mayor Charles Cadenhead:** That's where it gets... so you're saying that you'd want to clean and take care of an 8-foot wide trail that's connected to your property? [00:39:15] **Council Member Jeff Holtz:** No, he’s got sidewalk... it's a six-foot wide. Mine's a six-foot wide front and side. But if all I had was an 8-foot wide bituminous trail, then I should have to clean it if it functions as a sidewalk or functions as a pathway. As the street's only pathway, maybe? The response I gave to a constituent a couple months ago who was asking about this bituminous and concrete—I'm like, "Well first of all, no, we don't have it defined," but I'm like, "How I have come to understand is generally we've done the bituminous as a trail to get somewhere out of your development, it's your recreational thing. Your sidewalk is to get kids to the bus stop." But even that, I don't think is a universal way of thinking. [00:40:00] **Council Member Nick Dragisich:** Well, Royal... I mean, yours is absolutely an outlier. It shouldn't have happened to begin with. [00:40:05] **Council Member Jeff Holtz:** I like the purpose of the hard surfaces: it's for people to walk. Yes. Now I would then also—I think the next step is: is that for people to walk for a recreational activity, or is it for a different purpose? Because that's where I would start to differentiate when it comes to the choice to use it as your form of exercise versus: "No, this is how your kids are getting to the bus stop, this is how neighbors are going to each other's places during the winter." So I would consider those to be... one is a necessity, one is a choice. [00:40:40] **Council Member Nick Dragisich:** The way I was kind of trying to make that logic—maybe you give some thought as an engineer—I’d say "within the public right-of-way." So like the trail that runs behind the houses of my development, that's a city trail. It's not a sidewalk because it runs... but it's also in the public right-of-way then, right? [00:41:00] **Pete Tholen (Public Works Director):** It's on a city-owned property, yeah. It's not a right-of-way though. [00:41:02] **Council Member Nick Dragisich:** It's not dedicated right-of-way? [00:41:03] **Pete Tholen (Public Works Director):** Oh, got you. Yeah. [00:41:05] **Council Member Nick Dragisich:** So "within a dedicated public right-of-way"—within the 60-foot width of the right-of-way? For some, it might be different, but within a dedicated public right-of-way. Do we feel confident that is a similar standard that's been for all of our streets throughout the development? [00:41:20] **Pete Tholen (Public Works Director):** Well, there could be trails that are not within the right-of-way, but I'm trying to avoid having people clearing the trails like the ones that run behind the houses. You know, our association plows it anyway. We plow it anyway because we want our residents to be able to walk on it even though it's a city trail. [00:41:40] **Mayor Charles Cadenhead:** And that's kind of been the city stance, right? If homeowners associations want to clear the trails that are put around their developments at the time of construction, they can certainly hire that out. [00:41:50] **Pete Tholen (Public Works Director):** Correct. [00:41:51] **Council Member Jeff Holtz:** I think what we want to avoid—at least until we have enough businesses that participate as a tax foundation to help out our residents with some of these amenities, and given the stress that we have when we do have a heavy storm on the number of employees that we currently have (and maybe that's going to change given the study that we're doing)—is adding that to our plate currently. I think I'm just speaking out loud that there's some areas where there's a sidewalk—is it along Fifth where we have a sidewalk on one side and I'm just for the sake of discussion going to call it a trail on the other side? [00:42:25] **Pete Tholen (Public Works Director):** Right, right. And Easton and Easton Village also. Yep. [00:42:28] **Council Member Jeff Holtz:** So I would say we need to keep one... the city should make sure whether it's a resident or us clearing one side on that for pedestrian movement during the winter. And I don't... do you think we need to have a definition of "sidewalk" and "pathway" that we need, or do we need a definition of what residents are responsible for clearing and what Public Works is going to clear? [00:42:55] **Council Member Nick Dragisich:** Well, I think if you put an ordinance that says that you have to clear the sidewalk adjacent to your property, someone will come and say, "Well, what constitutes the sidewalk? You don't have that in the code." [00:43:05] **Mayor Charles Cadenhead:** What if you just change it to "the hard surface in front of your property"? That would work too. That then basically takes "sidewalk" and "path" out of the discussion. [00:43:15] **Council Member Jeff Holtz:** Well, I mean, the thought I had was because right now people think "sidewalk" is the concrete thing. It's the concrete whether it's in the front or the side. And we have this discussion with Hunters Crossing, we've had it with Easton Village because there's a sidewalk in people's backyard. I think it's a sidewalk that is to be cleared, and any hard surface that is in the front of someone's yard. So in the case of Royal, where you have the bituminous where it's in the person's front yard—but it's on their side yard actually, right there? That's a side yard. Yep. That's the street; that's the garage facing the houses there. They don't face Palmer Drive; they face to the green. The garage door-facing side of the street is off the green, really. They drive onto the green to get in the garage? Oh, on that side. Excuse me, yes. Sidewalks on the other side of the street. [00:44:15] **Mayor Charles Cadenhead:** Okay, so then that's not a great example. So then any... because again we have the places where there is bituminous in someone's front yard. [00:44:22] **Council Member Nick Dragisich:** Yeah, but then you come back and say: well if the sidewalk on the other side of the street's being plowed, why do we need to plow both sides? [00:44:30] **Council Member Jeff Holtz:** I agree it just should be one side. I completely agree that you don't necessarily have to do both sides, although I wouldn't be opposed to that. But you know, if we have a sidewalk on one side, at least pedestrian movement can happen within the neighborhood. [00:44:45] **Pete Tholen (Public Works Director):** I did review a good number of other cities and their policies for clearing, and I obviously didn't touch them all, but I couldn't find one in my search where they required a resident to clear a trail. That's a fairly substantial square footage. Now I did find a number of cities that selected sections of trails that *they* did clear, an asphalt trail. [00:45:10] **Council Member Jeff Holtz:** That's kind of where I was thinking. Long-term-wise, we're going to be having a conversation about the clearing by the city in a lot more than what is done now. I think that's a reasonable conversation that's going to happen. And I think my thought was we would start with a specifically designated design—like, here are the most common pathways where trails are being used because we can't do 34 miles. I don't think that's reasonable. But are there the "highways," the most commonly used ones? [00:45:40] **Pete Tholen (Public Works Director):** One spot I could start is—I did some high-level quick look to see if there's sidewalk in trail or street without a sidewalk, and I didn't see any that grabbed my eye, but I can spend a little more time on that. [00:45:55] **Council Member Jeff Holtz:** Is that a trail? The other thing is there's four houses that would be abutting this trail in Royal Golf. Two of them already have sidewalks. If our main concern tonight is just to make sure we have a walkable surface in this area, Public Works can easily tackle this, but we don't want to set ourselves up for another... so I definitely would want to spend a little... [00:46:15] **Council Member Nick Dragisich:** Can you scroll that map up a little bit or down? I mean, so where it gets to 10th Street—it goes from sidewalk to trail there to 10th? [00:46:25] **Pete Tholen (Public Works Director):** Yeah, if you keep going... [00:46:27] **Council Member Nick Dragisich:** Okay, so where it goes from the green sidewalk to the red trail again—our Home Association clears that all the way to 10th because actually we're the property owner of the Rose Lake area around the lake. The HOA owns the area property around the lake, so we see that as our responsibility to clear that trail because we think of it as a sidewalk for our residents. When we go to the part up on the North End where Lenar is, they don't see it that way. Because you have an 8-foot bituminous section that goes in those two cul-de-sacs? Is that what you're saying? [00:47:05] **Pete Tholen (Public Works Director):** No, the ones going are the sidewalks that go into the cul-de-sac. They were labeled green. [00:47:10] **Council Member Nick Dragisich:** Oh, the red that goes past the two cul-de-sacs is what you're saying? [00:47:15] **Pete Tholen (Public Works Director):** Yeah, it goes past the two cul-de-sacs and then turns to the west and goes to Lake Elmo Avenue. [00:47:20] **Council Member Nick Dragisich:** Right, so that red doesn't get cleared regularly. The one along Royal Boulevard, which is the east-west section, never gets cleared. Lenar did clear that little section from the trail that goes all the way up to Royal Boulevard one time this winter. And again, I know this gets complicated because of the way all things are laid out, but you know, if you're in Minneapolis or St. Paul or other cities, you have to clear the front of your house whatever is on both sides. They don't give just one side; they say both. I'm trying to make this simple and where we have a sidewalk on just one side and part of it happens to be incorporated into a trail, that we get that clean so residents have a path to walk on so they're not out in the street getting hit by cars. [00:48:10] **Council Member Jeff Holtz:** I agree. And so what's the... I'm always going to be of the "keep it simple" thought process here. So how do we achieve that? [00:48:20] **Mayor Charles Cadenhead:** I would hope Council maybe wouldn't combine "trail" and "sidewalk." No, I recommend keeping them separate and then just identifying... [00:48:25] **Council Member Jeff Holtz:** No, but say like Fifth Street is just a super long example of this, right? Where we have concrete on the south side that goes all the way from QuickTrip to QuickTrip for the most part, right? And on the north side of Fifth Street, we've got bituminous asphalt that goes from QuickTrip to QuickTrip, from Inwood to Keats. Now I would propose that we make sure that the south side is cleared until such time we have the resources—oh it’s not the QuickTrips, but to Keats—that the 6-foot section gets cleared and that the 8-foot is primarily summer use. [00:49:05] **Mayor Charles Cadenhead:** I would agree with that. I think that's reasonable. Now, what's the best way to articulate that? [00:49:10] **Council Member Nick Dragisich:** Well, I think we're first... I say where there's sidewalk or trail on one side of the right-of-way only, it all has to be cleared. Where there's sidewalk and/or trail on both sides, then only one side would need to be cleared, and in the case where one side is concrete, the concrete side would be cleared. Something along that line. I know we can't solve it tonight, but I just want to... we probably got all those emails from that resident up there. [00:49:45] **Council Member Jeff Holtz:** Well, and the hard part is: saying it involves "right-of-way"—that's not something we can communicate easily with residents. Because even the GIS map doesn't necessarily show where there is and is not right-of-way; it's not always perfect. So as much as I agree like that is a good threshold, I don't know if that's something that we can use for communicating. [00:50:05] **Council Member Nick Dragisich:** And I think we say "abutting the property." Abutting the side yard or the front yard. Buts in the back? That's up to them to clear, to my mind. I don't get a lot of heartburn over that because I know in that one area we were looking where the resident had complained and we look—there's a trail along behind the properties, and then whose responsibility is that? Are you suggesting...? I'm not being serious, that we wouldn't require that to be cleared. We would not, not if it's behind the property. In front or to the side of the property—abutting front or side, yes, but not abutting the rear. [00:50:45] **Council Member Jeff Holtz:** How are we defining front to back then? Because South Winds, Hunters—we have some corner lots that are on three sides? And Hunters Crossing trails on the east side of Lake Elmo Avenue. [00:51:00] **Mayor Charles Cadenhead:** Well like my house: it's a detached garage up against that alley of the library, and then you've got the back of the house which butts up against a sidewalk or trail across from Lions Park. So that gets fuzzy too because if it's in the back of my house, then I don't have to clean it? That seems... I don't know, because your house faces the street? [00:51:20] **Council Member Jeff Holtz:** Depends on which way you look at it. I mean, because where the garage is, is the alley. So I don't know which side it is technically, the back of my house. I don't know. [00:51:30] **Council Member Nick Dragisich:** Well I would say your front door is there, right? [00:51:32] **Mayor Charles Cadenhead:** We don't treat it as our front door, but... yeah, I don't know technically. I think that's what it's... I just... [00:51:40] **Pete Tholen (Public Works Director):** This was before my time when this was created, but I think it's fairly isolated and I can do some thorough investigation before I bring it back. [00:51:50] **Council Member Jeff Holtz:** Can you go back to your map really quick, Marty? The one that you updated today? Because it looks like you added a... because the red was what the city was responsible for taking care of the snow, correct? [00:52:00] **Pete Tholen (Public Works Director):** The red is a trail, so we don't... asphalt trails that we do not clear. [00:52:05] **Council Member Jeff Holtz:** Got it. [00:52:06] **Pete Tholen (Public Works Director):** But I think Royal is fairly isolated as not having a sidewalk when it clearly should have. Not sure how that got missed, but it did. Maybe if this is the isolated situation, Public Works just clears it? We'll add it to our sidewalk policy with a diagram of what we clear for trails. I can do a thorough search of the other trails to make sure there is a sidewalk on the opposite side if it's in the road right-of-way. [00:52:35] **Council Member Nick Dragisich:** Marty, the other solution would be to go back to the developers and say, "You're required to put sidewalks on one side of the street and these areas don't have them; you have to take that path trail out and put sidewalk in." [00:52:50] **Council Member Jeff Holtz:** Now, just not to throw a loop in this, but I know these trails only have like a foot and a half of city road right-of-way on the house side. Could that create a problem in the future potentially? Just know that if somebody really complains about us depositing snow... blowing or plowing... [00:53:10] **Mayor Charles Cadenhead:** So I'm going to make a suggestion: given the discussion we've had and given that the Community Development Group deals with some of our ordinances, I think it would be good for you guys to work together on coming back with something that speaks clearly about the fact that residents take care of pathways in front of their house or side of their house on their property line, and that the city will take care of it if it doesn't have a property owner on it. But I don't think we're going to solve this tonight, the language piece. But it looks like it revolves a little bit around this ordinance, and if that discussion with the Community Development Group comes up with a "Well, we'll define a sidewalk this way" or "We'll define a path this way," that's fine. [00:54:00] **Council Member Jeff Holtz:** I'm fine with that direction. My curiosity long-term-wise—because this is going to continue to happen—and I still have never understood (whether it's a Marty question, a Jack question, or anyone who's smarter than me): when we're in certain neighborhoods and we put a bituminous and a concrete trail on a street and there's houses on both sides, why? [00:54:25] **Pete Tholen (Public Works Director):** It has a lot to do with connectivity, right? Getting through a development to another location, kind of like you mentioned. We usually don't run trails on every single street; there might be a main corridor that'll get people through a development in and out at a typically faster recreational speed—bikes—and to have them then not be on the sidewalks and put them on the trails because their destination is probably out of the neighborhood. [00:54:55] **Council Member Nick Dragisich:** For the one that's on 33rd Street North in your development, I see that as a connector for the park to the trail to Reid Park or something that's supposed to connect in the future. So I think that would be—I'm surmising—that's the connection due to the trail. [00:55:10] **Council Member Jeff Holtz:** And I just don't know if there's necessarily a need to duplicate. Why can't they go on the sidewalk? It's not as if there's 5,000 people on there at any given moment. That's always been my curiosity—it seems just... and this isn't the most dense area of the city. [00:55:25] **Council Member Nick Dragisich:** Well, when you're talking specifically about crashes between pedestrians and bicycles, multi-use trails can be fairly hazardous. When—oddly enough—when you take a 6-foot sidewalk versus an 8-foot trail and you have people on inline skates, you start getting that width difference. Oddly enough, it makes a difference. And so if you have an opportunity where there's going to be bicycles and you can separate the pedestrians, your crash numbers will go down because there's some more room to move. Even in Minneapolis, you go along the River Parkway where they've indicated where walkers should be and bicyclists should be to separate those two modes because they move at vastly different speeds. [00:56:10] **Council Member Jeff Holtz:** On the same wide path? [00:56:12] **Council Member Nick Dragisich:** Well, they'll even make it wider or they'll separate. They'll say "pedestrian," there'll be a sign that says "bikes," "pedestrian." The speed differential can be a little bit of a problem when you're talking about pedestrians versus bicycles. [00:56:25] **Mayor Charles Cadenhead:** As far as a connection, I mean, if you were going to do something, I would say remove the sidewalk and just leave the bituminous trail if you didn't want to duplicate it. [00:56:35] **Council Member Jeff Holtz:** Why not have a sidewalk that's as wide as bituminous, and then it also fits with our standards of "this needs to be cleared because it's a sidewalk"? That's how—and it again, might just be my personal need to resolve that, but I've just never understood... [00:56:50] **Pete Tholen (Public Works Director):** Sidewalks a lot of times will have T-intersections at the corners—90 degrees—where a trail is designed for the faster bike flow and such. So if we're going to change it to 8-foot, then we should really encompass the whole design. [00:57:05] **Mayor Charles Cadenhead:** I agree with the Mayor's suggestion, and I think the intent was to have a continuous pedestrian path through these neighborhoods and not have it just come to an end or not have it at all. If all you have is a trail and nobody clears it, there should be a pedestrian path in the winter. And I knew it was not going to be a simple thing because of all the different situations we have, but I think if we put our best minds in the city to it, we can come up with something that will work in 95% of the situations, and the other 5% we'll just have to say... It sounds like it's finding those outliers such as the one that you have, and if there are other outliers. And then maybe not necessarily changing the definitions of sidewalk in the code, but there's no definition—there's no definition of sidewalk. That's the problem. [00:57:55] **Council Member Jeff Holtz:** Concrete thing, yes. Hard pathway. Hard surface. [00:58:00] **Clarissa Hadler (Finance Director):** Kind of off the top of your head? Hard surfaced. [00:58:05] **Mayor Charles Cadenhead:** So does that give you some direction? [00:58:07] **Pete Tholen (Public Works Director):** Let me sum that up: so staff will look for roads with only one pathway on them. We want to make... I think the bottom line is that for pedestrian movements, where we have concrete or bituminous, one side needs—whether it's us doing the clearing or the homeowners, preferably homeowners if it goes in front of their house—they should probably own that. But one side needs to be cleared for pedestrian movement through the winter. [00:58:35] **Mayor Charles Cadenhead:** I can make that happen. All right, is that clear, Nicole? [00:58:40] **Nicole Miller (City Administrator):** Yep. I got that. But also to work with Community Development? [00:58:45] **Mayor Charles Cadenhead:** I think because going forward: what are they requiring as well? And they're used to working in the ordinances and some of the language, and I think it would be beneficial for you guys to work together on that. Usually a couple of heads work better than one. [00:59:00] **Council Member Nick Dragisich:** And perhaps we could, as we look at it, come to some understanding that if the residents aren't getting them clear, that one day the City Hall staff could go out with shovels and do it too. [00:59:15] **Mayor Charles Cadenhead:** Right. As long as we're the only group in here tonight, we can have that happen. I do not... do you know what's on our next workshop agenda? I don't have that in front of me. [00:59:30] **Nicole Miller (City Administrator):** Sorry, there was just one item, but it's subject to change. [01:00:00] **Nicole Miller (City Administrator):** Okay, all right. But I do have one other thing. Late this afternoon, I forwarded the Council this letter that Hastings sent to the trustees for the 3M settlement fund encouraging them to reallocate the Priority 2 funds for clean drinking water. And so, just seeing if the Council supported sending a similar letter or not. And if you did, I could draft it and then have it ready for all of your signatures. [01:00:30] **Council Member Jeff Holtz:** Was Hastings one of the 14 communities cited in the...? [01:00:35] **Nicole Miller (City Administrator):** They are not explicitly, but it says "East Metro." The language doesn't exclude them; it is "which shall include but is not necessarily limited to." [01:00:45] **Council Member Jeff Holtz:** And so then they identified that one of their wells is due to Cottage Grove 3M, right? They found a tracer from the plant? [01:01:00] **Nicole Miller (City Administrator):** Didn't we just have one of our commissions put an application in for that fund for a trail? [01:01:05] **Mayor Charles Cadenhead:** Yes. [01:01:06] **Council Member Nick Dragisich:** And we had somebody come before the Council last meeting from the Lake Elmo Lake Association looking to try and find some money to help clean up the lake. [01:01:15] **Council Member Jeff Holtz:** I will give my two cents. So the way it's stated in the settlement as the second highest priority, and "after MPCA and/or DNR have reasonably achieved the goal set forth in paragraph 14a" which is clean drinking water, then the MPCA and/or DNR shall utilize the grant on projects that restore and enhance aquatic resources, wildlife... and that's the 20 million that Hastings is referring to? [01:01:45] **Nicole Miller (City Administrator):** Yeah. [01:01:46] **Council Member Jeff Holtz:** And my thing is: we have not reasonably achieved that goal. And the money, as we were informed of last week, will be gone in two years. So I think it is reasonable to say that 20 million needs to be focused on clean drinking water and that the other items are not as important—they haven't met that threshold. [01:02:10] **Council Member Nick Kragness:** I would say that. I don't think the funds to date have met the clean drinking water threshold. As much as it'd be great if there was enough money to take care of these other things that get affected, I think people would agree that clean drinking water is probably the top priority. [01:02:30] **Mayor Charles Cadenhead:** I could see having a letter probably more indicating more precisely the language in the document that Council Member Holtz just referenced. [01:02:40] **Council Member Jeff Holtz:** I would be curious how the Council feels if the language of the letter included: "And we think it would be smart-wise for that 20 million to go to known and expected future O&M costs that as of yet cities are not able to apply for or quantify." [01:03:00] **Nicole Miller (City Administrator):** Well, it's also supposed to go for O&M for single-resident homes that have GAC filters for a certain duration? [01:03:08] **Council Member Jeff Holtz:** Yes, that could be... yes, for O&M for upcoming expected but not yet applied for O&M costs for any recipient. [01:03:15] **Nicole Miller (City Administrator):** So just to clarify: right now those grants are all reimbursement grants. So you would be asking for them to change how they administer...? [01:03:22] **Council Member Jeff Holtz:** No, I would be asking... I think the 20 million... they put in slush funds, they have infrastructure, they have O&M, they have unknown, and they've shifted things around. I'd just be curious what everyone's thoughts are if the letter said: "We not only do we think we should... it should go to the Clean Water Priority 1, we think you should put the 20 million in the O&M fund." [01:03:45] **Council Member Nick Dragisich:** Well, maybe along that line and say, basically, that the funds that are available now or will become available should first be used to provide safe drinking water for all affected residents—residents and businesses. And say, should there be at some point additional funds available, then they could be considered for other purposes as in Section 14, which there won't be. [01:04:15] **Council Member Jeff Holtz:** Which there won't. But that way we kind of say we're supporting Hastings, but we're not looking foolish ourselves for having put in a grant application. [01:04:25] **Mayor Charles Cadenhead:** And that's my other question actually. Community Development Director Soa was going to bring forward the identified trail area next meeting. There's no indication that these letters are going to make them change their mind, so right now they're accepting those grants. So I think we proceed with that, but then also send a letter saying we think it should be addressing clean drinking water. I don't think you have to exclude one when you're addressing the other. The point should first be applied to clean drinking water. You can make a decision. [01:05:00] **Nicole Miller (City Administrator):** Got it. Thank you. [01:05:02] **Pete Tholen (Public Works Director):** One more quick update: Old Village Gardens. We've had meetings with the county; they had numerous concerns about the trees. So at first, it didn't sound like we were going to be able to add any, but I think we've got a plan that we can add a couple. They're going to have some limits on sizes and clearances and site vision, etc. So we have a plan there. And then the church actually owns the two North Gardens, and I've been communicating with them and I think we have a good goal in mind and we're going to be able to achieve that—might even be able to expand those a little bit to try and get a little better root system for a tree or two trees maybe up there. Tomorrow, Sarah [City Clerk Johnson] is going to meet with Lake Elmo Connect and kind of go over what we learned. There are no tree trenches in the sidewalk, so we're going to get what we can get for the trees. Hopefully, they will take off and do okay, but they probably aren't going to turn out fantastic. We're going to also recommend two additional trees in the future—I think one's in front of State Farm and one's just to the south a little bit—but those are going to take a little more work as there's no open space garden area for that, so the concrete would have to be removed. That would put us over budget. We'll itemize that separate and when it comes back to you guys, you can decide if you want to do that in the future. [01:06:40] **Nicole Miller (City Administrator):** Just a little update: so this conversation tomorrow will kind of come up with a community engagement plan with the landscape architect and utilizing the Connect. And then the community engagement should happen fairly quick—I would say the first week in April. [01:07:00] **Mayor Charles Cadenhead:** And I think when we talk about that community engagement, it's fairly focused, I think, on the businesses and the residents in the downtown area. I think that the way I was looking at this—because we’ve been getting some emails too—is that the city has the landscape architect as our staff person basically, because we don't have that. And so Sarah will work with Connect Lake Elmo to utilize them for the community engagement, but that doesn't mean that she's not going to be involved with that. And so I just want to set that expectation that it's not just handing it off and not being part of it. [01:07:45] **Nicole Miller (City Administrator):** I agree. [01:07:46] **Mayor Charles Cadenhead:** So that's why they're meeting tomorrow, and then we'll have an update from that. Great. All right, adjourning the meeting at 7:54. Thank you.