[0:00] Mayor Charles Cadenhead: Okay, Joy's Grandpa. All right, going to call the city council meeting for Tuesday, June 19th, for the City of Lake Elmo to order. Please stand with me for the Pledge of Allegiance. [0:08] 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. [0:24] Mayor Charles Cadenhead: Okay, so Item B on our agenda is approval of agenda. Is there anything anybody wants to change or is everybody okay with it? And if so, I'll entertain a motion. [0:34] Council Member Nick Dragisich: So move. [0:36] Mayor Charles Cadenhead: We have a motion. Is there a second? [0:37] Council Member Jeff Holtz: Second. [0:38] Mayor Charles Cadenhead: A motion and a second to approve the agenda. All in favor please signify by saying aye. [0:41] All: Aye. [0:42] Mayor Charles Cadenhead: Agenda is hereby approved. Uh, then we have item C is approval of the minutes from May 21st, 2024 and June 11th, 2024. I’ll entertain a motion unless somebody has some information that's not correct. [0:55] Council Member Nick Kragness: Move to approve minutes from the 21st and the 11th. [1:00] Council Member Matt Hirn: Support. [1:01] Mayor Charles Cadenhead: All right, so we have a motion and a second for approval of the minutes on May 21st and June 11th of 2024. All those in approval please signify by saying aye. [1:10] All: Aye. [1:12] Mayor Charles Cadenhead: Hearing none opposed, minutes are hereby approved. Next we have public comments and inquiries. So, currently I have two people that want to speak. If there's other people that want to speak, there are sheets of paper in the back and you fill them out with your name, address information, hand them to Miss Julie Johnson our Clerk and she'll hand them to me. So during this time you'll have six minutes to speak. This is a time where the public has an opportunity to convey concerns or questions to Council. However, Council does not respond during this time. If there are questions and we need to get an answer back, then staff will do that appropriately during the next week. So first of all, I have Mr. Tom Seaford. If you would approach the podium and then state your name and address for the record, please. [2:03] Tom Seaford: Yes, my name is Tom Seaford. I live at 4849 Ola Lake Trail in Lake Elmo. I'm here to talk with you about PFAS and well contamination. For as long as residents can remember, the PCA told us that the PFAS contamination was south and east of lakes DeMontreville and Lake Olson, and so we didn't have to worry about it. Recently we've learned the location of the plume of PFAS contamination has changed and the PFAS contaminants have now been found in private wells north and west of Lake Jane in the Lake DeMontreville and Lake Olson areas. The PCA says the maps on its website of sampling are no longer accurate. In January of this year, the EPA, the federal EPA, lowered the standards for PFAS. There's been no correspondence, no public meeting, and no communication to the residents by the city, the PCA, or the Department of Health regarding these changes. All the residents of this area have private wells and the EPA changes increase the number of potentially contaminated wells and the number of residents who are drinking contaminated water. We recently learned that six wells that are contaminated—at least one of those wells in December got a letter from the PCA saying there's no problem, and in January got a follow-up saying "Oh, your well is contaminated, don't drink the water." In 2018 the state settled its lawsuit with 3M for $850 million. The website that describes the settlement says that the top priority is to ensure safe and sustainable drinking water. There should be plenty of money available to fix this. Many of us have asked the PCA to test our well. They've advised to be patient because they cannot estimate when testing will be done because they are only able to test 30 wells per week. The PCA told me that they estimate there’s 7,000 to 8,000 wells in Lake Elmo that need to be tested. At that rate it's going to take about five years. That's not acceptable, I don't believe. And after water sampling takes place, it's several months before the analysis comes to the home water. And if it's contaminated water, then the state begins supplying bottled water and they wait for water filtration devices to be put into their house. It takes several months. There's only two contractor people who install the filtration in the state. It sounds unbelievable, even. I think Lake Elmo residents, we all need safe drinking water and because of the lengthy wait, we're asking that the city provide all residents in the Lake DeMontreville and Olson area with bottled drinking water until the water is tested and determined to be safe. We also would like to see the city ask the state to start moving up the timelines on getting these testing done and getting the filtrations plants installed. Thank you. [4:18] Mayor Charles Cadenhead: Thank you. Next we have Miss Debbie Dean. [4:21] Debbie Dean: Good evening. Debbie Dean, I live at 8028 Hill Trail. Thank you Mayor, council members, and everyone else for allowing us to speak and I apologize that this is such last minute but we just found out about it. We feel that it is an urgent public health matter and that's why we're here to try to get the ball rolling. So my first request that I'm asking is that you notify all of the people in this general area of DeMontreville, Olson and such that they have a potential hazard of a contaminated well and that they should sign up for the free well testing through MPCA as soon as possible. We tried to get the word out but my method was flyers and walking door to door, and I know we missed people. And since this is a health issue, we should notify everyone that they need to have their wells tested. Secondly, I would like you as a city council to give us, if we ask for it or if we request, bottled water. I don't want to drink my water. I'm sure if I brought you a picture of my water and gave it to all of you, you probably would hesitate to drink it. I considered doing that but I didn't. So I have a request from—we had a meeting last week at my house and with a little more than a day or two days' notice, we had over 40 residents at our house. They signed a petition requesting that you give us bottled water until we can have our wells tested. So can I present that to you or do you want me to give it to Julie? [5:45] Mayor Charles Cadenhead: You can give it to Miss Julie Johnson. [5:47] Debbie Dean: I'll do it when I'm done. And then the third thing that we're requesting is that you as a city go on our behalf to the MPCA or the state, whoever controls the strings, to get them to do testing in a more expedient manner. 3 to 6 months is not acceptable. When I called them on June 4th when I learned that there was a potential that my well was contaminated, they said to me "Please be patient, if we don't contact you by the end of the summer, call us back." And they said that to more than one of us as we called. And with this recent plume or this recent cluster of six wells, everybody wants their wells tested. So I understand that you can't take any action tonight. I would be happy to come back at a future meeting when you do, if you want to discuss it and present it again, because I think this is an urgent matter that you need to act on as quickly as possible. And again, this is not a new problem. Lake Elmo has dealt with pollution for over 20 years. It's new to us because we've been told for the last 30-some years that the plume was moving south and east. It's moving—we think it's moving north and west. So we need to do something and we need to act quickly for the health and welfare of all of our residents in the City of Lake Elmo. Thank you. [6:36] Mayor Charles Cadenhead: Thank you Miss Dean. Okay, we do not have any presentations this evening. I assume that we don't have any more people that want to speak. Okay, so can I get a volunteer to read through the consent agenda please? [6:52] Council Member Jeff Holtz: I can do that. Thank you. 2. Approve payment of disbursements. 3. Approve DPS Lake Elmo Third Edition final plat extension, Resolution 2024-073. 4. Approve MnDOT limited use permit for Hudson Boulevard Trail, Resolution 2024-079. 5. Approve professional services agreement for Inwood Avenue and 30th Street. 6. Approve professional services agreement for Lavender Street and utility project. 7. Approve pay request number eight for the tapestry sanitary sewer extension. 8. Accept second donation to the fire department from Don Raleigh memorial fund, Resolution 2024-076. 9. Approve second amendment to purchase and sale agreement for Lot 1, Block 1 of the civic complex. 10. Approve hiring of accounting technician. 11. Approve fireworks display license for July 5th at the Royal Club. [7:36] Mayor Charles Cadenhead: Motion to approve the consent agenda. [7:38] Council Member Nick Dragisich: So move. [7:39] Mayor Charles Cadenhead: Is there a second? [7:40] Council Member Nick Kragness: Second. [7:41] Mayor Charles Cadenhead: We have a motion and a second to approve the consent agenda. All those in favor please signify by saying aye. [7:46] All: Aye. [7:48] Mayor Charles Cadenhead: Consent agenda is hereby approved. Under G, number 12, we have a public improvement hearing. Order for the improvements, accept bids and award contract for the Hudson Boulevard Segment A improvements, Resolution 2024-078. Presenting Mr. Jack Griffin. [8:05] Jack Griffin: Apologies, just trying to... for... what I hit here... what are you trying to do? Yeah, I'm trying... oh, now it's up there. It was up there. It was... oh, sorry. Apologies. Tonight we're here for the public improvement hearing for the Hudson Boulevard improvements. As you may recall, last time the Council saw this was on May 7th, when the Council accepted the feasibility report and called the hearing to be held tonight. At that same meeting on May 7th, the Council also approved the plans and specifications and we authorized the advertisement for bids. So since May 7th, we have received contractor bids. We also had a property owner meeting on the project to present to the property owners the same presentation the Council saw on the feasibility report. We did only have one attendee at that meeting, however it's still a 10% showing since there's only 10 properties that were being assessed. But we did have that neighborhood meeting, and that brings us here tonight. So I'll do a brief presentation reiterating the findings of the feasibility report and the preliminary assessment role, and then I'll present to you the bids that we received and where we stand on the overall project. At the end of the public improvement hearing, we'd ask the Council if you're moving ahead with the project to order the improvements and accept the bids and award a contract. The improvements again are Hudson Boulevard. On the top image there you see the two segments in red which is basically the corridor that's part of this project. The lower segment here is kind of piecing together showing how we're trying to put together the entire corridor from Inwood Avenue to Keats, with the various segments being built by private development projects or previously completed projects. So the blue segments are the ones we're sort of trying to complete today. The one change that's been happening since we instituted this project last fall was that there's been a delay in the Hendrix Apartments project, so we will likely finish the improvement here this year and there still may be a small gap until that development goes forward. In the feasibility report, we do identify the existing conditions. We looked at our PCI ratings that were done in 2021. That shows basically the whole corridor that's in question is in that 40 to 54 range, which is in the pavement rehabilitation range of the CIP. Partly why the corridor was slated for the Capital Improvement Plan for this year. And then this is just the typical section—very small print, I don't really expect you to read it—but what it's really showing is this is the side toward the freeway. So when you're adjacent to the freeway, it's going to stay a rural section roadway. There's no developable property on that side. But the change is that it used to be a rural section on the north side as well, and we're urbanizing that section and putting in that 8-foot bituminous trail on the north side. So it changes some of the drainage there, it puts curb and gutter on there, and then we're adding right and left turn lanes at different intersections along the corridor. This is more of the plan view map looking down at the roadway. This is Inwood Avenue here, so we're on the west side of the project. You have the Holiday Inn / Machine Shed property right here. This lane configuration is largely as it is in place today, so there's no widening or changing, but we will be redoing the entire pavement section through a reclaim, a full depth reclaim. The new piece is really the pink line here, which is the 8-foot bituminous trail that we're putting in. You see it sort of meander a little bit because there's a lot of existing condition corridor things going on there with trees and utilities and drainage and things like that. So it's really been carefully surveyed and it sort of meanders a little bit to best fit that in there with minimal impact. As we then continue to move east, we're moving now to Eagle Point Boulevard right here. And you see we're sort of tying in the pavement here. This piece of the project is being done by Amira, which they've now—they're now in construction. They haven't quite started on this segment; they're scheduled to start the week of July 8th on their portion of Hudson Boulevard. So we'll be collaborating and working together with them. And as we continue to move through across their property, this section is getting completed by Amira until we get to the private drive just on the south side of their property, and then our project picks up again and again is rehabilitating all of the pavement and adding the trail on the north side. And as we continue further east again, we're now getting to Jade Trail. This is the boulder entrance. Jade Trail is the new road at the Boulder Pond subdivision, so bringing the trail into that corridor and across those properties and then continuing to the existing commercial properties that are east of Jade Trail. And what you see here is we start the darker gray; we're starting to widen the road so that we're creating a three-lane section because we have a lot of very quick existing commercial driveways. We have three in a row between... so we have Jade Trail and then three commercial driveways with all of these driveways here, and so we're creating sort of a continuous left-turn lane by widening the road there across that piece of the corridor. And then this is where we end the project to match into where the Hendrix developer will pick that up. We have some transitioning work that we do to set this up for temporary until they come back and do their portion of the project. We did look into just trying to, since they've designed this piece, trying to grab their design and add it. It became far more complicated due to stormwater management. They're handling a lion's share of stormwater management across their section which takes it internal to their property, so would have been difficult for us to grab that piece as part of this project. At that scope of work, we walked it through the city's assessment policies. We identified 10 properties with direct access to Hudson Boulevard across that corridor that hadn't been previously assessed large amounts for other projects, or they're like this piece here is building their own corridor across there for instance, so that's being handled by the Amira project. So those are the properties that were identified to be assessed for the improvements. And then we walked it through the assessment policy and we used commercial properties being assessed on a lineal front footage based on adjusted front footage based on 100% of the total projects being assessed. We did contribute 1,436,000 of Municipal State Aid funds toward the project to buy down based on the—really what we call the oversizing for the roadway corridor being used by the larger community—and then took the remaining cost and assessed it to those 10 properties on the lineal foot basis. We came up with $132 per lineal foot. With that, those 10 properties are being assessed in a preliminary assessment amount—they range from $26,400 at the low end to $81,444 on the north end. And so the total project is having state aid funds of the 1,436,000. With these 10 properties assessed, we'll be collecting just under 440,000 in assessment revenue, and then the remaining funds would be coming out of the general tax levy funds for the city. And I put a range in here now because when we took bids—I'll present this in more detail—but we're running about 35,000 high on the project right now, so that piece goes up a little bit. That's also carrying about a 55-60,000 dollar contingency fund. So we're still within that, so there's still a chance we come in on this budget number but still trying to hang on to a 2.5% contingency going into construction. In the feasibility report, we do have the preliminary assessment role which details each property, property owner, and what their individual assessment amount is on a preliminary basis. And then we have our findings and recommendations of basically: the street pavement services are beyond their useful life and require improvements as we recommend in the report or doing additional turn lane improvements to accommodate the existing commercial access spacing. It's recommended to urbanize the north side with new concrete curb and gutter, storm sewer, and the new 8-foot wide bituminous trail so that we get that continuous pedestrian trail from Inwood to Keats Avenue. We did complete a geotechnical investigation early in the project that recommended a 12-inch full-depth reclamation that will provide us a 10-ton roadway design. And then we have full reconstruction where we're widening the pavement. It's recommended that we implement the stormwater management improvements that are in the project. We're doing minimum improvements just to meet the state and watershed rule. As a designated Municipal State Aid road, we're recommending 1,436,000 be applied from the state aid construction account. It's recommended the assessments be levied in accordance with the preliminary assessment roles provided in the report, and the assessments be levied over 15 years at a rate of 1% over the bond rate. And then the project as proposed is technically and financially feasible, is necessary, cost-effective, and will result in benefit to the properties to be assessed. And I don't have—sorry, don't have the slide—we did take bids on June 13th and we received four bids for the project, with the low bid being Dressel Contracting in the amount of 2,753,337 dollars. Second low bid was 2,775,000 dollars—so only 22,000 higher than that—and then about another 80,000 above that for the third bidder. Dressel Contracting—we have had them working in town before so we are recommending award of a contract to Dressel Contracting in that amount. Not sure where my slide went for that presentation so I apologize on that. So I will stand for questions. [15:52] Council Member Nick Dragisich: Yeah, just maybe more of an observation, but the project costs that were listed do not include the interest cost and the financing. So those are just the hard costs, but for the assessment portion and the city levy portion there will be... well, there'll be increased costs because of interest on the debt. [16:11] Jack Griffin: We don't include interest costs on the debt. At the time we're doing the estimates, we don't know exactly how much we're doing cash, how much we're doing... we do have a 2% budget for legal fiscal administration cost so there is some city cost associated in that total project cost. [16:26] Council Member Nick Dragisich: Like for instance you have $741,000 in tax levy money, but in reality we have to put the interest on there—it's more like $860,000. So I'm just—just so the Council understands that there are costs to this project in addition to the construction and engineering costs we're looking at here. [16:41] Jack Griffin: Yeah, it's not a good or a bad by the way, it's just a fact. [16:44] Mayor Charles Cadenhead: Any other questions for Jack? Was Dressel the same contractor that was working on the roadways in Wildflower? [16:53] Jack Griffin: I don't think so. I don't think so. It's actually been a little while since they've been in town. They generally stay a little farther north in the Lake Elmo area. [17:01] Mayor Charles Cadenhead: Right. Thank you for explaining the tie-in for the apartments that aren't there yet. I was kind of wondering if there was a way to do that and then have them pay that portion of it, but you explained that and I appreciate that. If there aren't any more questions, I'll entertain a motion to go into a public hearing. [17:15] Council Member Nick Dragisich: Motion to go into the public hearing. [17:17] Mayor Charles Cadenhead: Can I get a second? [17:18] Council Member Matt Hirn: Second. [17:19] Mayor Charles Cadenhead: All those in favor of going into a public improvement hearing for Resolution 2024-078. It is 7:27 PM. Is there anybody here that wishes to speak on the public hearing? Okay, I'll entertain a motion to close the public hearing for Resolution 2024-078. [17:39] Council Member Jeff Holtz: So moved. [17:40] Council Member Nick Kragness: Second. [17:41] Mayor Charles Cadenhead: We have a motion and a second to close a public hearing for Resolution 2024-078. Those in favor please signify by saying aye. [17:48] All: Aye. [17:49] Mayor Charles Cadenhead: Public hearing is closed at 7:28. I'll now entertain a motion to accept bids and award contract for the Hudson Boulevard segment... oh yeah? [17:58] Council Member Matt Hirn: Who's going to be doing the C&I on this—the construction engineering inspection? [18:01] Jack Griffin: It'd be KLJ. [18:04] Council Member Matt Hirn: KLJ. Can I ask a quick question on that? [18:06] Mayor Charles Cadenhead: Sure. [18:07] Council Member Matt Hirn: I just... that number, if I'm just not recalling it correctly, the 200,000 number does seem higher than what it's been for some of the previous projects. Is that on par with what that it is? [18:18] Jack Griffin: When you look at it on a percentage basis for the size of the project, it's on par. And it's also on par for the same type of project. So this is a state aid project, so you do have—whenever you're using state aid funds, there's added reports, added reporting, and the inspector has to be state aid certified. So there are a few added additives that you have to put on the project by using state aid funds as well. They have MnDOT certifications for testing and inspection. Everything has to be reported in through state aid and they check and make sure that everything meets the mustard before they give you the money. Because if you miss that, then they can withhold the money and then you're sitting there holding the bag. Geotechnical testing requirements are also more robust. So everything's just a little bit more. [19:03] Council Member Matt Hirn: Okay, that makes sense. Thank you. [19:05] Council Member Jeff Holtz: Move to approve Resolution number 2024-078 ordering the improvement, accepting bids, and awarding a contract to Dressel Contracting Inc. for the bid amount of 2,753,337 dollars for the Hudson Boulevard improvements Segment A from Inwood Avenue (CSAH 13) to 1,400 feet east of Jade Trail. [19:25] Mayor Charles Cadenhead: Is there a second? [19:26] Council Member Nick Dragisich: Second. [19:27] Mayor Charles Cadenhead: All those in favor of approving Dressel Contracting for bids and award contract for the Hudson Boulevard Segment A improvements please signify by saying aye. [19:34] All: Aye. [19:35] Mayor Charles Cadenhead: Approved. [19:36] Council Member Jeff Holtz: Move to authorize the City Administrator to enter into a construction support services contract with KLJ in the amount of not to exceed 200,000, and a material testing contract in the not to exceed amount of 45,000 as recommended by staff for the Hudson Boulevard improvements Segment A. [19:54] Council Member Nick Kragness: Support. [19:55] Mayor Charles Cadenhead: We have a motion and a second. All those in favor of the motion to approve authorizing the City Administrator to enter into a construction support services contract for the project with KLJ please signify by saying aye. [20:05] All: Aye. [20:06] Mayor Charles Cadenhead: And so approved. Thank you. [20:08] Jack Griffin: Just a quick update on that: we did get both proposals. We haven't gotten through the evaluation, but they're both under the 45 at this point, so that'll come in a little less. [20:15] Mayor Charles Cadenhead: All right. Next we have audit presentation. Is the presentation up already or...? [20:20] Clarissa Hadler: Well, while they're working on that, if you don't mind, I'm just going to throw a quick thank you out. I don't know if you guys realize the amount of preparation that it takes for audit prep. Ryan and his team are wonderful to work with. I don't know how many of you have met Nina Kramer, our new Finance Coordinator—she did a lot of work on this. And due to some change over in staff, we leaned on our department heads and other staff quite a bit this year, maybe more than they're used to in the past. So huge shout out to everybody that pitched in for this. So, just an introduction to Ryan Schmidt of Schlenner Wenner, our auditing firm. [20:53] Ryan Schmidt: Thank you very much. Moment you've all been waiting for, right? The audit presentation. [20:58] Council Member Matt Hirn: On the edge of my seat. [21:00] Ryan Schmidt: That's the spirit! All right, so we have a summarized version here, you'll be happy to see. So we did also provide you with the full audited financial statements and report to members of governance, but we're going to take kind of a high-level look this year as usual and go through the presentation. As in the past, I like to start out with a little bit of an overview of what exactly is the audit process, what does it involve, and what is the purpose of an audit? So just a quick reminder here: an audit essentially consists of us obtaining your financial records and information from throughout the past year and we perform a number of procedures over this information—various inquiries with people inside the city, various analytics where we compare to other cities, to your budget, industry trends, look for any strange unusual activity or deviations, and then lots of detailed testing sampling procedures looking at reports from the state, bank statements, invoices, etc. all for the purpose of verifying the information that's in your accounting system. Because that's what comes together and makes up the financial statements. Based on the results of these procedures this year, we've given you what's called an unmodified opinion. So that is a clean opinion, and that's what you are hoping to achieve. Next page here we just have some other required communications. Basically this is where if there were any problems during the audit, we would like to know about it. So yes, you did get that clean opinion, but did we have any difficulties getting information from management or did we see any unusual accounting transactions or strange accounting policies? This is where we would tell you about those things. As you can see though, nothing along those lines—everything went very smoothly. As Clarissa said, I really don't think it could have gone any smoother. The city was very well prepared for us, very responsive, and it went very well. There was one new accounting standard that was put into effect this year—that's GASB 96 listed at the bottom there. Basically it's very similar to the leasing standard that went into effect last year. The idea here is that when you have a subscription contract for an IT software, then you have to treat that like debt where you look at what are the required payments over the term of the agreement, record a liability for that, and then also an offsetting subscription asset. Unlike the leasing standard, this had a very minor impact on the financial statements, but it could have more of an impact in the future. All right, as part of the audit, we don't only look at the numbers but we also look at the processes and procedures that are behind the numbers and we have a few items here that we always need to walk through. First one on the left there relates to audit adjustments. So a lot of the cities we work with, audit adjustments are actually a big part of the audit. So what this means is that during the audit process we find errors and we make corrections. In some cities we work with, that's very pervasive and we have to give a finding for material or significant audit adjustments. Now here we didn't really have any corrections that were significant; we didn't find any errors that rose to that level, so we didn't have to give that finding. So that should make you feel pretty good about the accuracy of the information that you receive throughout the year. In the middle there, we have a section for internal controls. Just one internal control related finding here—you've seen this one in the past, it relates to lack of segregation of duties. You actually do, in my opinion, have pretty robust, pretty good controls in place. There's just a few areas where things aren't fully segregated to the extent that would be considered ideal related to the bank reconciliation process, journal entry posting, etc. So something to keep in mind, maybe look at areas where there could be improvements there. And then finally, during the audit we also look at your compliance with Minnesota statutes. The state gives us various checklists related to: how do you go about contracting and bidding, where do you keep your investments, how do you handle conflicts of interest, etc. No findings along those lines this year; everything went clean. With that we'll move into the numbers, starting out with the general fund here. Pretty high-level picture of 2019 through 2023 and then also the 2023 budget on the right-hand side there. Really big picture for starters here: looking at revenues compared to the budget, you were over budget by about 345,000 for the year. Expenditures were below budget though by about 1,035,000. So overall you had budgeted for an increase in your fund balance of about $177,000 and you actually had an increase of about 1.38 million in your general fund for the year. The next couple pages break this out into a little more detail. The first page here breaks out those same revenues into smaller categories, then we have a similar slide coming up for expenditures. Overall pretty close across the board in each one of these revenue categories when comparing to the budget. You can see of course the vast majority of your revenues in the general fund do come from property taxes, and property taxes were very close to budget. Looking at a couple areas where you did deviate either from the prior year or from budget a bit: we see under licenses, permits, and fees there you were down about $500,000 from that of the prior year, mostly due to fewer building and roof permits being issued. And then under investment income in 2022, just due to changes in market values of the securities that you hold, you had some unrealized losses. Now in 2023, you actually swung significantly back in the other direction with investment income and unrealized gains, so you had a bit of an excess earnings there as well. Next page, expenditures. Same layout. A few categories here where you were under budget a little more significantly: first one being General Government, you were under about 323,000 mostly related to salaries and contracted services. Public Safety category, you were under here as well by about 346,000—looked like that was primarily due to building inspection costs as well as firefighter costs. And then under Public Works, you were under budget around $397,000; that appeared to be primarily related to less seal coating and road patching and related costs. Next slide here, we take a look at your fund balance at the end of the year. This is a pretty commonly used ratio to keep track of your fund balance and kind of benchmark it against industry standards and other cities. This is your unassigned fund balance—the unassigned portion of it as a percentage of next year's budgeted expenditures. You actually have a policy in place to keep this approximately 50 to 60 percent as more of a minimum, and you can see that you're well in excess of that threshold. You're actually up to about 109 percent at the end of the year—so pretty healthy fund balance. And if you just want to know what's happening with your cash over the past five years, here's a slide that'll show you that as well, kind of reflects the increases in fund balance. Okay, with that we'll move away from the general fund and take a quick look at some of your other governmental funds. Here we have your debt service fund and then we wrapped all of your capital project funds together rather than going through all of them individually. Debt service fund—pretty standard activity here what you would expect: revenues from property taxes and assessments, payments of principal and interest on debt. Overall an increase in fund balance there of about $491,000 for the year. And your capital project funds: various revenues here from charges for services, grants, etc. The biggest activity is of course the capital outlay expenditures of around 11.4 million. About 5.8 million of that related to the city hall and fire station project, about 2.2 million related to the 2023 street improvements, and then various other projects as well. Next page just shows the cash for both of these categories over the past five years. Debt service, you can see, has held pretty steady as expected. And capital projects jumped up a bit in 2021 with some of those larger debt issuances, and then you've been working that cash balance down as you've been expending those bond proceeds over the past couple years. And with that we'll move into your proprietary funds. Take a quick look at each of your three proprietary funds. The graph at the top focuses on operations: operating revenues in the blue versus operating expenses in the red. And as with the prior slides, we have a 5-year trend here, but I'm going to focus on changes in comparison to the prior year. Operating revenues in your water fund increased about $171,000 compared to the prior year. Operating expenses also increased about $695,000. Now about half of that increase relates to an increase in depreciation expense, which is non-cash. You can see there's also significant activity under non-operating revenues and non-operating expenses. The full breakout for that can be found on page 35 of the audited financial statements, but a good chunk of those non-operating revenues—about 2.7 million—is grants from the MPCA and about 2.2 million is capital contributions from developers turning infrastructure over to the city. So overall an increase in net position of about 3.8 million for the year. Same layout on the next page for the sewer fund, and fairly similar story too. Increase in operating revenues here about $89,000 from 2022 to 2023. Also an increase in operating expenses of around 43,000. What, 160,000 of that increase was additional depreciation expense this year. And then once again, the non-operating revenues—about half of that relates to capital contributions from developers and the rest being connection fees, special assessments, etc. Overall an increase here of about 2.3 million for your net position. Last fund is your storm sewer fund. So here you had an increase in your operating revenues of around 71,000 for the year, and operating expenses were also up about $109,000 and nearly all of that was related to an increase in depreciation expense. So overall an increase in your net position here of about $2 million. Those non-operating revenues, once again, capital contributions from developers. And the next slide here, you can see the change in your cash in all three of these funds over the past five years. You can see either slight increases or maintaining pretty flat over the last couple of years. Sewer fund ended at about 11.6 million, water fund at about 5.8, and storm sewer at about 1.4. All right, so that does it for each one of the individual funds of the city. I've got a couple of final slides on here that kind of wrap everything together and look at it big picture. Here we have a slide that's focusing on the entire city government-wide assets, broken out between current assets in the blue (which is your cash, short-term liabilities, things that are more liquid) versus your capital assets in the red (your infrastructure, buildings, etc.). You can see overall current assets held pretty steady, a little bit of a decrease there as you've spent some bond proceeds, but it's your capital assets that is where you've had the growth between the amounts that you've invested into those capital assets and then also the infrastructure that you've been receiving from developers. [31:37] Council Member Nick Dragisich: Question on the capital non-current assets: Is that a straight-line method or is that modified straight-line? [31:43] Ryan Schmidt: Straight-line method of appreciation, yep. So a lot of estimates involved. You know, just to clarify for everyone, basically that means that you get a street turned over to you and you estimate that it's going to last 30 or 40 years, and if you had a value assigned to that of $2 million, then you divide that by 30 years and that's how much depreciation expense you take each year. So a lot of estimates involved in figuring out the deterioration of those assets. Same layout on the next slide here looking at liabilities. You can see these actually held pretty steady across the board compared to last year. Current liabilities in the blue, debt and non-current liabilities in the red. And then we break off that net pension liability which jumps around a little bit, but overall pretty comparable to the prior year, I should say. Now the next slide does a brief comparison between the two. Here we have those same assets from two slides ago, the same liabilities from the previous slide, and then we have the green being the net between the two. You can see the trend of the difference between your assets and liabilities over the past five years—how you have had a steady trend of increase there on a net basis. Finally, because I thought it might be useful, we've got a couple slides here showing future debt payments. So this is not the balance of your outstanding debt at the end of the year; this is the amount that's due each year as a debt payment going forward. So we have two slides here breaking out the future debt payments that are required for your governmental funds versus your proprietary funds on the next slide. Governmental funds—these are the debt payments that are being financed via property taxes and assessments. And then the next slide, same layout but being financed via the water, sewer, and storm sewer funds. So you can see this drops off pretty steadily, the amount that's required each year. And then looking at the next slide, it holds pretty steady until about 2030 and then starts to drop off. Any questions? [33:57] Council Member Matt Hirn: Just to be clear, the debt slides are just the current outstanding debt, not any planned future debt? [34:02] Ryan Schmidt: Correct. Yes, that's a good clarification. Based on the debt that was outstanding at the end of 2023, that's what the future requirements were. [34:10] Council Member Jeff Holtz: Thank you. On that net pension liability, just in 2022 when it bumped up to 2.9, which is a complete outlier compared to this year and prior years, what was that jump? [34:21] Ryan Schmidt: That's a good question for the state. So, a little recap on what the net pension liability is: Every year PERA undergoes an actuarial study and basically they look at what do they have for assets, what do they have for projected liabilities for the pension plans, and they have all these actuarial inputs on how they think their investments are going to perform and you know, longevity of the retirees and that sort of thing. And they come up with on a statewide basis what is the overall net pension liability of the entire plan—and it's in the billions, it's a huge amount. And then basically they take a portion of that and they allocate it out to all the cities, all the different entities throughout the state, and they have you put it on your books. So we basically get those numbers from PERA and then we put them into your financial statements. You know, we worked with smaller entities that have had to do this and they've actually had to close up shop—we had a couple schools that had to close their doors. They don't pay the net pension liability if they close, so it's—we call it an on-paper liability where it's something that you couldn't even pay off if you wanted to. You're just going to keep making your regularly scheduled contributions with your payroll like always. [35:36] Council Member Jeff Holtz: Got it. Thank you. [35:37] Mayor Charles Cadenhead: Any other questions for Mr. Schmidt? Thank you. [35:40] Ryan Schmidt: Thank you. [35:41] Council Member Jeff Holtz: Motion to accept the 2023 Annual Comprehensive Financial Report. [35:45] Council Member Nick Dragisich: Support. [35:46] Mayor Charles Cadenhead: We have a motion and a second to accept the 2023 audit report, or the Annual Comprehensive Financial Report as it's stated on the front cover there, excuse me. Is there any discussion? [35:58] Council Member Jeff Holtz: I was just going to say the same: thank you back to staff for not only obviously cooperating, but the results are the results. And this shows that staff are on top of it and are doing what is right for the city. So thank you for all of that work. [36:11] Council Member Nick Dragisich: You know, I have to say something because I'm kind of the nerd. But what I found interesting is after going through all the financial analysis and fund balances and things like that, if you go to the back—the statistical section—and you look at where we've gone over the last 10 years in terms of employees... total employees in different categories of operation: Public Works, Public Safety, Administration. How our assets have changed—miles of streets, miles of sewer, miles of water, population. You start looking at that in some detail, there's a lot of good insight for future discussion about: Are we moving in the right direction? And that's a whole another discussion, but I encourage you to take a look at those trends over the last 10 years and see what they tell you. [36:53] Mayor Charles Cadenhead: Is that in this one or the thick one? [36:55] Council Member Nick Dragisich: It's actually in the thick one. [36:56] Mayor Charles Cadenhead: Son of a... [36:57] Council Member Nick Dragisich: But it's available online. What's that, page 120 or so? Yeah, it's available online—that's where I actually looked at it in our agenda packet today. But it's very insightful to see where we've gone and all the increases we've had and how they interplay. [37:11] Mayor Charles Cadenhead: Okay. Thank you. Council Member Hirn, anything from you? [37:15] Council Member Matt Hirn: I guess maybe just for future discussion: I found the unassigned fund balance—we have the minimum that we aim for—I guess I just... is there a point where it gets too high? From a business standpoint, you know, I think no, but from a people paying taxes standpoint, yes. So I don't know if any cities have a set maximum for that. Sounds kind of crazy saying that, but just something that kind of was going through my head with it. [37:42] Mayor Charles Cadenhead: I hear you. All those in favor of accepting the Annual Comprehensive Financial Report for 2023 please signify by saying aye. [37:51] All: Aye. [37:52] Mayor Charles Cadenhead: All those opposed same sign. Hearing none, motion passes. Thank you. Council reports. Council Member Dragisich? [38:00] Council Member Nick Dragisich: No report. [38:01] Mayor Charles Cadenhead: Council Member Holtz? [38:02] Council Member Jeff Holtz: Kudos to sports teams across the area. I know in Lake Elmo we send kids to many places, but including Mahtomedi and Tartan and Stillwater, and there are teams in all these high schools that have been sending successful athletes to the state tournaments the past couple weeks. So kudos to all them and also congratulations to all those residents who had a high school student graduate this year. So, thanks for that. I do need to give a shout out to the Lake Elmo Fire Department. Somebody that I know called them a little over a week ago indicating that there were some trapped raccoons in a storm sewer, and they responded to that call and saved some baby raccoons out of the storm sewer. That person shall remain unnamed, but I did say I would give them a special shout out for their care of the wild animals. I think that's all I've got. [38:52] Mayor Charles Cadenhead: So, Council Member Hirn? [38:54] Council Member Matt Hirn: Two quick ones. One, just for the Farmers Market this weekend—it was good to see that and the businesses and the booths out there. So definitely go check that out. Then the second one was I got to go to the Old Village business owners meeting this past week. A lot of really good discussion. It seemed like a pretty good turnout. Everybody was a little hesitant to write on the maps with the pens, but there were a lot of good ideas. [39:18] Mayor Charles Cadenhead: Though I did forget one thing: On Saturday they had the ribbon cutting also for... you know, I saw you at the Farmers Market which was great, but prior to that Council Member Holtz and I went to the ribbon—quote unquote ribbon—cutting. There was no actual ribbon to cut! Dog park. And there were a lot of people that showed up and the dogs looked like they were having fun and running around, and certainly something that I'm going to make sure to use with my dogs. So it's open and available and I've heard nothing but good comments. So thanks to the Public Works staff that put a lot of time and effort into that; it's been great. Staff reports. Administrator Miller? [40:00] Nicole Miller: No report today. [40:01] Mayor Charles Cadenhead: Miss Johnson? [40:02] Julie Johnson: No. [40:03] Mayor Charles Cadenhead: Chief? [40:04] Fire Chief Dustin Kalis: On top of rescuing raccoons—we got some good photos out of that one too, so we appreciate the cookies that were dropped off. I know the guys ate those up. No, we're actively recruiting for paid-on-call firefighters. We kicked that off here last week. So we're spending the summer recruiting trying to get paid-on-call firefighters to join our ranks. So spread the word. Got information on our Facebook page, on the city's website, and we'll be participating in... I think this weekend we'll be at the Farmers Market with a table and booth and have the crew out there talking to folks and just trying to spread the word, looking for more people to join our team. So that's it from fire. [40:48] Council Member Jeff Holtz: Just like we did a couple weeks ago—and I missed it—but if you could just draw attention to the consent agenda item for the... this is a little more substantial donation than two weeks ago. [40:59] Fire Chief Dustin Kalis: Yeah, the Don Raleigh Memorial brought in nearly $3,800 into the fire department, and extremely grateful for the Raleigh family and Lake Elmo Bank to think of us in this time. We responded to the call and I'm proud that our crew, like they always do, you know, did a great job and left that family with at least a positive interaction with us in a very difficult time. We're going to try to, you know, really utilize those dollars for something a little different for that directly benefits our staff. You know, you guys treat us very well, we're very well cared for in this city, and I want to do something a little more meaningful with those dollars and we'll brainstorm that. We do have a couple equipment needs that we'll put that towards and talked to the Raleigh family about that already. But beyond impactful and we're very fortunate to have that type of and level of support in the community. [41:51] Mayor Charles Cadenhead: That's great. Clarissa? [41:52] Clarissa Hadler: Just my bi-monthly reminder to sign up for the new utility billing portal. We will be sending out utility bills here in two weeks or so. We do have a very good response at this point, but we do have a few stragglers we still need to get over. And we are still working on getting the meter readings—meter readings, so stay tuned on there but we're nudging. [42:16] Mayor Charles Cadenhead: Thank you. Jack? [42:17] Jack Griffin: Yeah, the update on the Stillwater Boulevard road closure which started on September 12th—it was scheduled for two weeks. The report as of today is that they are still on schedule, so it's still moving toward being next week. They are moving into road building, kind of getting to the point where they're building it back up. If we get continued rains like we've had before, it's likely to cause delays, but as of right now they're reporting they're still on schedule. The 30th Street road closure—my apologies, at the last council meeting I reported there wouldn't be a hard closure and that was premature and information I didn't have at that time. It is a hard closure to get through the corridor, and they're scheduled to be back up before July 4th, but it is running tight. So we'll be monitoring that closely to make sure that we try to keep that on schedule as well. [43:10] Mayor Charles Cadenhead: Yeah, I think it's noted that construction happens when the... it happens more quickly when the sun is shining rather than when the rain is falling. So that does delay some work—they're not working under a big tent or a dome. And different facets of construction can move through the rain and others can't. [43:29] Jack Griffin: Yep, depends on what they're working on too. And then lastly, I just wanted to give the Council... we did reach out to the MPCA regarding the PFAS testing just to inquire what was going on. My previous contacts had been with the Minnesota Department of Health and both of my contacts had retired. So I learned that with those retirements they did move the testing program to be managed by the MPCA. Reached out to our contacts there to find out what they know, and they immediately offered and wanted to have a Lake Elmo host an open house to try to get push communications out. So I'm in the process of trying to find some dates and try to get that scheduled and set up. [44:17] Mayor Charles Cadenhead: Sounds like a really good idea given some of the news that we received from residents tonight. Miss Nala? [44:23] Nala: No report. [44:24] Mayor Charles Cadenhead: All right. Well, with that we will adjourn tonight's meeting at 8:00 sharp.