[0:00] [Music] [0:19] [Music] **Mayor Luke Hellier:** Good evening and welcome to the June 17th city council meeting. If you'd join me in a moment of silence and the Pledge of Allegiance. [1:09] **City Council/Audience:** 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. **Mayor Luke Hellier:** Okay, Ms. Orlofsky, roll call please. **City Clerk Ann Orlofsky:** Michelle Volk? **Councilmember Michelle Volk:** Here. **City Clerk Ann Orlofsky:** Luke Hellier? **Mayor Luke Hellier:** Here. **City Clerk Ann Orlofsky:** John Bermel? **Councilmember John Bermel:** Here. **City Clerk Ann Orlofsky:** Dan Wolter? **Councilmember Dan Wolter:** Here. **City Clerk Ann Orlofsky:** Joshua Lee? **Councilmember Joshua Lee:** Here. **Mayor Luke Hellier:** Okay, very good. Moving on to item number three, citizens' comments. This is an opportunity for those here that would like to address the council about an issue that's not on the agenda. Typically, if there's an issue on the agenda, we'll have a public comment. Okay, moving on to item number four, additional agenda information. Mr. Miller? [1:56] **City Administrator Justin Miller:** Mayor, there is a revised item related to the PUD on the Kenyon Green plat. It's at your desk and it'll be addressed at that time when that item comes up, item E. **Mayor Luke Hellier:** Okay. Okay, moving on to item five on the agenda, presentations and introductions. This is related to the 50th anniversary for DARTS. And if Miss Bailey would like to come up and talk about DARTS, that would be great. [2:44] **Miss Bailey (DARTS Representative):** Good evening, Mayor and Council. Good to see you all. Thank you very much for having us here today. DARTS has been in the community, specifically Dakota County, for 50 years. We started up in Inver Grove Heights and have moved onward and upward. As many of you probably know, we run a loop here every Thursday which circulates through senior-dense housing and then stops where those riders want to stop, which is largely groceries and runs for places like Walmart and Target. So we are absolutely grateful for the partnership that we have with the city for the programs that we're able to provide, for the volunteer opportunities that we're able to provide for our older adults to remain engaged and connected in the community. And we are very grateful for the many, many years that we've had serving the Lakeville community. So thank you for this opportunity this evening. [3:29] **Mayor Luke Hellier:** Thanks for being here, and I will read a proclamation. So: Whereas the city of Lakeville is committed to providing residents access to a high quality of living as they age in their communities; whereas nearly one in three Minnesotans are above the age of 55; whereas since 1974 DARTS has served older adults, their families and caregivers with the mission of creating connections that enrich aging; and whereas 2024 marks DARTS' 50th year of providing services for thousands of older adults across the Southeast Metro including Lakeville—these services include housework, outdoor chores, home repairs, caregiving resources, resource connections, fulfilling volunteer opportunities, and transportation; whereas DARTS' partnership has provided vital services like the Lakeville Loop and home chores benefiting our community; whereas DARTS' ongoing commitment to collaboration, excellence, inclusion, responsibility, and service in its communities has helped ensure a 99% client satisfaction rate; whereas the volunteer dedication has created intergenerational connections which in turn result in learning buddies reaching more than 80,000 students and fulfilling aging journeys for our older community members; whereas the city of Lakeville celebrates the 50th anniversary of DARTS and recognizes the incredible role it plays in helping people age with dignity in their community of their choice. Now therefore, I, Luke Hellier, Mayor of the city of Lakeville, do proclaim June 17th as DARTS Appreciation Day. And I signed this copy for you guys to have. Thank you very much. [5:10] **Miss Bailey:** Thank you very much. **Mayor Luke Hellier:** Hopefully at least 50 more years, right? All right, moving on to item six on the agenda is the consent agenda. Anything to highlight, Mr. Miller? **City Administrator Justin Miller:** Thank you, Mayor and City Council. Two items of note tonight; both are donations. Item 6E is a resolution accepting a donation from the Lakeville Public Safety Foundation to the Lakeville Police Department for community engagement efforts, and that's an $8,100 donation. And then item 6G is our quarterly acceptance of donations to the Parks and Recreation Department. This is actually the first two quarters totaling just over $6,000, and we're appreciative of both those donations. [5:57] **Mayor Luke Hellier:** Very good. Council, any items that you'd like to discuss further? If not, I'll take a motion to approve the consent agenda. **Councilmember Dan Wolter:** I move to approve the consent agenda. **Councilmember Michelle Volk:** Second. **Mayor Luke Hellier:** Okay. And any further discussion? Okay, all those in favor say aye. **City Council:** Aye. **Mayor Luke Hellier:** Opposed? Okay, it passes. Moving on to item number seven, action items: Kenyon Green preliminary plat. I think we'll turn over to staff, or to Mr. Waldo from Ron Clark Construction first? Then... Good evening, welcome. [6:42] **Mike Waldo (Ron Clark Construction):** Mayor, members of the Council. Mike Waldo with Ron Clark Construction. We'll see if I can keep from screwing this up here... Oh, there we go. I'm going to probably read a little more than I normally would. I try to go, but then I last about 20 minutes and I'm trying to keep this down to the short version. So, what we've come before you tonight is our Kenyon Green project. We're looking at a 49-unit affordable apartment and 15 townhomes on the site. As you can see on the board here, and as you can see with this site, it's very difficult with the three roads surrounding it and the wetland on the west side. This is much more typical of an infill site that you very seldom see because you're doing so many greenfield sites, but these are going to become more and more common I think in Lakeville as there's little remnant parcels left over that have had rights-of-way taken away or other developments taken away. I think that's what we're here trying to find the highest and best use for this site. [7:29] Over time, of course, the site has been continued to be constrained every time the city has taken more right-of-way and then also the wetland on the southeast—or southwest corner. The project aligns with the current O zoning—make sure I do—which is a Residential Transition zoning, which would be normally allowed with an approved CUP. In discussions with staff, as we looked at the uniqueness of the site and kind of how everything needed to fit together to get to really what we think is a very good site plan, they felt the PUD was the best way to proceed. It gives the city a little more control over what's going on and allows us to have a few—very few—variances. I think we're down to four or five now; we started off slightly more than that as we got clarification. The project will be nearly the same as Lakeville Point. I don't know how many of you are familiar with the apartment we built in 2017, kind of kitty-corner behind Culver's, I call it. That was a tax credit apartment we built then. I think as if you talk to staff and police and everyone else, I think that's been what we'll call an excellent project. I think our management staff, which is Steven Scott Management, does an exceptional job. Christie leads that team. We do caretakers who live there, so we've got a caretaker that's on-site 24/7, which kind of gives you those little extra eyes on the street as you're looking at it over in the evenings and other times when there normally would be problems. [9:01] Ron and myself, as owners of the project, we stay involved. We have an affordability component where we're committed for 30 years on that project, and on Kenyon Green we will be committed for 50 years to meet the affordability, so it's not something we can walk away from down the road. We've got between the Dakota County CDA and Minnesota Housing; they oversee that and do inspections on it every one to three years, depending on how the project goes. So you get someone else besides the city with eyes on it consistently. The residents that will be served there meet the 60% AMI thresholds. An example being a family of four can have incomes up to $74,520, which in today's market makes it very difficult to find quality housing when you look at the rents at any other market-rate facility and what you're doing to buy housing; they can't even come close to that. We will be submitting for tax credit funding from Dakota County this fall. One of the things is, without additional funding from cities—which a lot of cities including Lakeville very much don't like to have to put money into affordable, they'd like to kind of see it be more generic—I think the minor variances we see here are kind of helping us not have to ask for money. Because with the 15 townhomes, we're able to offset the land value. Because a nice parcel like this with O is, we think, worth what we paid for it, if not maybe a little more, but I can't put that much into a 49-unit apartment. I need to get that number down to under $20,000 a unit, somewhere around $17,000 to $18,000, which then leaves me a gap. I think that's where we're looking at the townhomes as kind of filling that gap with what we'll call fairly minor variances. We believe that'll be for you to decide, but so that's one of the reasons why the townhome piece is so important. [10:33] Right now we're looking at probably doing those as rental, but we actually do all of them as full PIDs, so that may be a for-sale or rental on those townhomes. We haven't made that decision, but each one will be plated individually. So even if we decide to rent initially, they can be sold down the road. Again, we talked about the constraints required by the design. It necessitates the PUD to achieve the city's... to creative design adapts and meets the city's housing goals. As you know, affordable housing is a part of your goals in the city charter and so it's important we do that. The Kenyon Green—if you look here—Kenyon Avenue, of course, which comes down along the freeway and turns and gets away far enough so it can meet to that first stoplight... that curve, from a visibility perspective, we needed the access to be in the center of it. One of the original designs had us doing a separate access for the apartment from the townhomes, and from a staff perspective and everyone else, they didn't feel... our traffic engineers did the same thing. We really want that to be center; it gives you the maximum distance both ways. The setbacks we're requesting are driven kind of by the additional restrictions of the road. In most cases, that road would be a 30-foot setback; in this case, because it's considered a minor collector, I believe it's called, that's where the 50-foot setback comes from. We've talked about the fact we will have a fence along that road along with additional buffer plantings, which we can show here. And then one of the conversations that came up with staff—and I think it might have been pushed forward by one of the council members—that we had some additional boulders in along the fence line to kind of give some additional buffer if someone would happen to exit Canyon Avenue. I think the reality is that they probably end up in the parking lot, but there doesn't mean someone couldn't get a little bit farther. So we will look at doing probably six to eight boulders along there, you know, kind of in a size that can at least slow down or deflect a car before it kind of gets that direction. [12:51] We've worked with the Watershed and the city regarding the wetland. There was an old drainage area that kind of ran up into the project, so we've been allowed to fill that, which is where a couple of the townhomes go. That approval's been through the wetland and we'll be paying for wetland credits for that. We spent testing with engineering; we've done piezometers on the site because even though the wetland in the corner is down at 993, I believe it is, and our garage floor is up at a thousand, the wetland to the south of 185th is actually like at a thousand and two. And so we are seeing some perched water on the site where the apartment is. So we're going to have to—and working with the staff right now—we have readings of 1000.5 as our highest water table, so we're going to bring that up three feet, which is the city requirement ordinance. So that's why we're asking for that 3-foot height ordinance variance because of that additional water and bringing it up out of the thing. In many cities, we'd be very comfortable building at that same elevation because it's only once in a great while that it perches up to there. With the waterproofing system and drain tile and the fact that the wetland is so much lower, we would normally work that work, but it's something that's within your ordinance and no one—it doesn't make sense to change that, and I know staff's not willing to do that. So that's one of the reasons we're asking for it without having to regrade some of the back of the building where we'd like to keep the trees; we're just allowing for a slightly higher building. And I think as staff has said, if we're at 42 versus 45, the average person is not going to know the difference and it's going to fit the site better. [14:23] Talked about that... The townhome setback reduction for the driveway. One of the things we'll see is you've got 30 feet right now from the back of curb on the private road to the face of the garage. We're asking for 25. I know when we talked about it in Planning Commission, one of the planning commission members had actually went out and looked at multiple other sites in town where that's already been allowed. You know, a lot of your townhome sites that you'll see in some of the other suburbs are 22 to 20 feet; that's where you get really tight, you can't put a pickup on there. At 25 feet, pretty much anything you're going to drive comfortably fits in there for two cars, so we felt comfortable reducing that and did not want to go any lower than that. I think other than that, I know one of the variances went away because, again, as you look in the corner, we're like 400 feet from the drive aisles of 35 where the exit ramp is, and then there's a pond between us and the exit ramp. So originally we went to Planning Commission thinking we needed a variance for that. Once we got the letter from MnDOT, we did not need that, so the building fits with that corridor. I think other than that, there's all the things regarding management or any of this stuff; I'm happy to expand on it or come back later for questions, whatever works best for you. [15:55] **Councilmember Michelle Volk:** Yeah, I've got a couple questions. So I got a call from some folks in the business condos, if you will, in the western... Can you talk a little bit about how much of the trees will be preserved on that western side? If there isn't... Have you thought about any screening on the backside of those townhomes that are right there? **Mike Waldo:** The area to the... I don't have that look in the staff report. I know there's a tree removal plan in the staff report. The area behind the house there, you can see behind the townhomes up in that corner, that actually is part of the wetland buffer because their wetland is on the other side, about 10 feet away from our property line. So even though the wetland is not on our site, we have an additional 10 feet of wetland buffer there. So we're not aware of anything being removed in that. But I didn't... There is some on our actual sites or within a few feet of the back of our sites it will go. Maybe if... I can... There is a tree removal plan somewhere tucked away in the... [16:41] **Councilmember Michelle Volk:** Yeah, I was looking at it, but I couldn't... I was looking in the thing here, but I couldn't tell if it was going to actually remove any trees there or not. **Mike Waldo:** Okay. **Councilmember Michelle Volk:** I was curious about that. And then the other concern I had initially is the playground. That curve is dangerous. Can you move the playground not right on Canyon? **Mike Waldo:** There's... you have it there. I mean, it doesn't make sense... if I remember correctly, you climb up about five or six feet to get to that. [17:26] **Councilmember Michelle Volk:** Okay, so there's some elevation. **Mike Waldo:** So there's some elevation change, the difference there. And then we'll look at that, and if we need... we'll look at that with staff and if we need to, we could either add a couple bollards along that side or add something of additional boulders there too. I think it fits really well for it because it kind of keeps it tucked away and gets them into some of the green space, but we'll definitely look at that and make sure that we're not leaving it wide open from that road. **Councilmember Michelle Volk:** Okay. Well, I would just caution against boulders in a playground; that's like kid... **Mike Waldo:** We would do more at the edge of where, you know, where the fence is, because that'll be a fenced-off playground. **Councilmember Michelle Volk:** Okay. Well, yeah, my grandkid... seeing a boulder is what you jump off of. Like, you know, bringing home a refrigerator and they play with the box; you know, you put the boulders and they're going to play with that instead of the... **Mike Waldo:** That's kind of why I meant bollards is what my recommendation would be in that case, because it will be kind of in that tucked corner. We can do that as part of the fence, but there is enough elevation change that I think we'll be much less susceptible. **Mayor Luke Hellier:** He might be at the entry. **Mike Waldo:** Okay. [18:14] **Mayor Luke Hellier:** Other questions from Council, comments, or staff report? Okay, don't go away, we might have more questions. I hit your—I touched your keyboard. Sorry. All right, we're back. All right. [19:02] **Community Development Director Tina Goodroad:** Thank you, Mayor, members of the Council. I don't want to reiterate a lot of what Mr. Waldo shared, but as you know, the application is for a preliminary plat; it's also for a rezoning to PUD and the planned unit development stage approval. The property, just for some context for the audience since we didn't share the location map, the property is located immediately north of 185th Street, west of the interstate and south of Kenyon Avenue. It is zoned O, Office Residential. It is an allowed use in this zoning district according to the requirements of the RH-1 zoning district. And as Mr. Waldo explained, there are a lot of what we perceived as site constraints to the development, necessitating the request for the PUD to make the site the most easy to develop. And the PUD is also the tool at which to utilize for the joint types of housing, both the apartment as well as the townhomes. I just want to highlight just this page—or this slide. It just identifies where those different deviations are. He's already spoken to them, but the first one is along Kenyon Avenue. The rear buffer yard is required as the rear of the homes are facing Kenyon. So this is a major collector, so it has a wider buffer within this area. As you saw in the landscape plan, there is still 55 to 60 feet before you ever touch the road. In between that is right-of-way; there is the trail that will be built up to the driveway entrance to the site, as well as the landscaping, the boulders, and the fence. So there's still plenty of buffer within that area. The requirement is only because of that extra designation of the roadway and because in this design, the rear of the homes are facing that, so it's a rear setback. [20:36] The site, as you can see, the entrance... there is one single entrance. There is a private drive designed. That private drive will serve all of the townhomes, so the front door as well as the garage face that interior driveway. And so that's where you have that private drive setback. In this case, it's a little bit less than the 30 feet, but we believe a car or a truck will be able to appropriately fit within that space and there is no sidewalk that we're in risk of crossing over if a car were parked on the driveway, because it is a private drive. There is another small deviation; this one is real minor. Just abutting the buffer, there's a tiny bit of parking lot encroachment as well as retaining wall in these two locations. And then finally, this point of the guest parking touches the lot line. That lot line was put there to accommodate both sites—both development sites, if you will: the apartment to the townhome, so it has that single access and the sightlines were developed so that single access could be shared. So the same driveway that's providing access for the apartments and coming into their parking area and to their underground parking is the same driveway feeding into that private drive. And so that's a very minor setback; it doesn't impact the site, it doesn't impact the public, nor any structures. And the only other structural setback is the one abutting 185th, and just like Kenyon Avenue, this has a distance of over 60 feet to the actual roadway with right-of-way, the trail along 185th, buffer, as you can see on the landscape plan. [22:09] So we believe that in the end, these deviations are fairly minor in context of the benefits of the overall site and the type of housing that is being produced. So I just want to touch on... Mr. Waldo noted it... here are the elevations. I should point out that there are no other... all of the other setbacks are being met. All of the parking—they're providing underground parking as well as surface parking—and all of the guest parking for the townhomes are being met. The building design is high quality. Under our zoning ordinance, when you do have a project that is proposing affordable housing, they can request some leeway towards the design standards. In this case, they are not, so all of the elevations meet or exceed the minimum standards for the design. Our comprehensive plan and several other policy guidance documents really do guide the work that we do in our department and our interaction with developers on sites like this. So the Envision Lakeville 2023 has some content related to creation of workforce and affordable housing, as does our own comprehensive plan. One of the things that's not noted under the comprehensive plan up here is what our actual goal is. So we're at 1,044 affordable units by 2030, and they're supposed to break down into those different percentage categories. And so this development will help fulfill some of those percentage categories. [23:42] And then finally, last year we did our comprehensive housing needs assessment. This project was really driven from the Economic Development Commission; it's been a priority of theirs to make sure that we have affordable housing to serve our local workforce. While we can't guarantee that the folks that are going to be renting these units are going to be working in Lakeville—it would be nice if we could guarantee that, but we can't guarantee that—but what we can offer is this type of housing within the community to fit the needs that we have, particularly our industrial park, our manufacturing facilities. And we hear it all the time that there is a need for affordable housing. And so the study last year demonstrated demand for 400 rental units and 160 subsidized rental units, and so this fits within that portfolio, if you will, of need that's been identified in that study. I won't go into any more detail. I did find the landscape or the plan, and it does, as Mike said, show that as many trees as possible within those buffer areas abutting that area, and there's still quite a distance between this property and where those office suites are located. So they do have quite a bit of buffer because of that wetland, but those trees will be remaining. The Planning Commission did hold a public hearing last week on June 6th; they recommended approval with a 4 to 2 vote. And again, the developer did revise the landscaping plan—that was something that we really wanted a little bit more work on. The additional boulders... I heard a notation on the playground. And then the last thing that we edited, that's in front of you, is the actual PUD. After submittal of the packet, it became apparent that we needed to add a condition that if these units were to be sold, we wanted in this agreement to be very clear that an HOA would have to be established regarding the townhomes. And I would stand for any questions. [25:14] **Councilmember Michelle Volk:** Do you know—or maybe Mr. Waldo—some of the other rental townhomes handle their trash where they do daily pickup, some have each unit has their own trash pickup weekly... Do you have any idea how that would be handled yet? I just don't know if I saw like a community... **Mike Waldo:** They would all be... if they're rental, they would all be... either way, the association or the rental manager would take care of all the garbage and we normally do it once or twice a week depending upon the demand load. **Councilmember Michelle Volk:** Okay. **Mike Waldo:** In most cases, they'd have whatever how many gallon trash thing, and it would be taken out once a month... once a week, excuse me. **Councilmember Michelle Volk:** Got it. **Mike Waldo:** But it will all be coordinated, so it'd be one person doing all of it whether it was an HOA or whether it was for a rental. **Councilmember Michelle Volk:** Okay. [26:00] **Councilmember John Bermel:** John, quick question... Can you go back to the map that has like the sketch of the thing... the... keep going, keep going, keep going. Very first one. One... no, the one... that'll work. Yeah, that too. So the only thing I was looking at here, it's got the one-way in, so you come in and either go to the apartments or you go to the townhouses. And I'm just looking at the end of the road by the last townhouse there... how wide is that road? Because I'm just thinking if there's a fire truck or a trash truck or an ambulance there... **Mike Waldo:** We have done all the turning radius as are required for fire and safety, and that's why that hammerhead where we did pop out into the buffer, that's a back-around area for the fire truck. So that that was part of the meeting those turn radius guidelines to make sure we met all those. **Councilmember John Bermel:** Okay, thank you. [27:35] **Mayor Luke Hellier:** Questions at this time? So this is not a public hearing, but it's kind of tradition that if there's folks that have to weigh in, we offer kind of a couple minutes. So if you... yep, go ahead. State your name and address for the record, please keep your comments to three minutes. **Janet Labens:** Okay, I'll try. Hi, Janet Labens. My address is 18560 Knollwood Circle. I'm a Lakeville resident; I live on 10 and a half acres, a parcel that's zoned Rural Agricultural that runs along the entire 185th Street just to the south of this proposed development. The first thing I'd like to do is just acknowledge that I think I'm going to be able to keep my comments relatively brief because Frank Dempsey did a really good job over the last 10 days of responding to all... a lot of questions that I had, including around the wetlands, the landscape plan, the building colors, as well as computing the distance for me between the apartment building and my house, which I'm really interested in. I would like to say that I have no major concerns with the townhome portion of this plan. I think the space is... the planned use of the space is consistent with the adjacent properties in the immediate area and doesn't create any kind of a visual distraction. I am, however, concerned about the apartment building portion of this proposal, which I think is quite a deviation from all the surrounding space, including on my side of 185th Street. Further, I'm not yet fully understanding how I will be personally impacted by this development, either visually by a 45-foot tall structure that's oriented lengthwise along 185th Street that will be 600 feet from my house, and/or whether I'll experience any decrease in my property value as a result of the building. Frank has suggested I follow up with the Dakota County Assessor's office to discuss the property value issue, and I am currently waiting to hear back from them on that. I'm also in contact with a property attorney, but my understanding from them is that I would need to wait until after the fact to do any follow-up there. [29:54] Finally, I would like to express just my sadness over the removal of trees. I think I counted something like 70 of them, many of them mature, as part of this proposal. I anticipate that I may need to be out of town when the majority of the tree removal occurs on my side of the street. My late husband and I have tried to do everything possible over the past 28 years to save trees, including last year I spent $29,000 on oak wilt mitigation. So that's it for me. Thanks for giving me the opportunity to speak tonight. **Mayor Luke Hellier:** Thank you. Any other comments? Ms. Goodroad, could you talk a little bit about the height and how that compares to the Lakeville Woods, which is across the street? [30:39] **Community Development Director Tina Goodroad:** Thank you, Mayor, members of the Council. I'm going to come up short; I'm not sure the height of the existing... they're all single story, maybe with the pond they might be walkouts. Sorry, that's the apartment across the street? Oh, the apartment across the street... I think that's very similar. This property allows for office buildings, so whether it be an apartment of this number of stories in this height, it could be an office building in this case, and it's an apartment building. So I think from a use standpoint, it's kind of irregardless. Frank did talk to her extensively. We spoke about her concerns, the way her property is situated, particularly her home. She does have a lot of woods to her benefit. We do not believe that there will be any visible... be able to have any view of it from her property once she comes out into the roadway to 185th. Certainly, you will see it there, but the underlying zoning allows these uses and this height. [31:24] **Councilmember Michelle Volk:** I guess I only... I have one comment, and this could be off-base, so maybe I'm misinterpreting a little bit. If you're—you're concerned about safety, having an apartment building with the residents that are in there, I can honestly say that the property that is over by Culver's is really well-run. There really just isn't... I'm in that area every single day, and I've never—no matter if it's... well, I'm not there a lot at 2:00 in the morning—but I mean, I have... but there really isn't... there really isn't any concerns with the residents that are living in that facility. And the, you know, the kids walking to Walgreens or, you know, or Dollar Store, you know, there's some great little places for them to shop at to get key—real cheap. So, but there's just really never been any issues with that building and the residents that are living in there. Probably the biggest issue is if it snows too much, they can't get in and out of that property. [32:56] **Community Development Director Tina Goodroad:** We've had the same experience. We have had no phone calls to our office regarding any concerns. So it's a very well... Ron Clark does a great job with their facilities and their management. **Councilmember Dan Wolter:** Ms. Goodroad, can I just ask a question about the... you know, it's zoned O right now, and the determination was made to make this a PUD. The way I look at this, I see most of the aspects of this seem like they could work within the existing zoning, but it's just a matter of the number of townhomes. Was anything done to... I mean, I'm trying to figure out, you know, if we would require this to go under existing zoning, how many townhouses do you have to get rid of on this plan, or what—what—what are the trade-offs there? Because my big concern is the PUD usage here. [33:42] **Community Development Director Tina Goodroad:** Yep, I understand that concern. I think Mr. Waldo tried to express that, you know, every developer is dealing with cost of the land, and you try to work with an underlying landowner as much as you can on what that cost of land is, and you need to be able to make the project affordable from a development standpoint. In this situation, like he said, the townhomes is allowing that to happen in conjunction with the apartment building. So could the townhomes in that one row be eliminated? It would probably be a minimum of four or five. There's been—I don't know how many—numerous site plans Mr. Waldo worked through, but it would be a result in units to reconfigure that to not have some of those encroachments. He can testify as to how many in previous plans we've worked with him. Have made the same request in earlier iterations and when we were reviewing it, it became very apparent that for this project to be successful, these townhomes, in terms of the revenue that they'll receive from those, is necessary for this project to work. And so it was with that that we suggested considering a PUD, understanding that this is a great example of when a PUD comes into play, as a PUD can not only work just for the mix of uses, but it works really well on sites that are tricky sites. And we're going to have more of these; infill is going to be our future pretty soon. And when you look at the shape of this lot, when you look at the physical natural characteristics of the site, and the fact that we've got two major roadways abutting it and needing to be able to make the site buildable from a financial standpoint, it became very apparent that we needed to consider that. And through that, we worked very hard over the past several months to minimize those deviation requests as much as possible. And then whenever you do consider the deviation request, look at how we're mitigating it. And I think the developer has done a tremendous job in landscaping plan and design considerations, amenities added to the site to really help mitigate all of those deviations—three of which are very minor. [36:01] **Councilmember Joshua Lee:** Thank you, Mayor. I walked the site today as much as I could get to. It's a very wooded property and very wet, so I should have brought my waders. But in my mind, I was thinking about some of the concerns brought up at the Planning Commission about the number of deviations, but I wanted to take each one of the deviations for its own merit and reasonability, as well as the resident's concerned about visibility of this apartment building. And so checking off each one of these concerns, I really feel that the deviations are minor changes. And when you walk the site foot by foot, the changes that they're asking for, I think, are well in line with what one would reasonably expect this property to be—to be away from a roadway, from a sidewalk, from 185th. When you include the right-of-way on the other side of the trail, that is plenty of space between the roadway and the apartment building with the cover—the tree cover that exists already. Plus, from looking across the street, I can't see the resident's home from that point, so I don't think there's going to be a visual concern there. [37:35] The deviation on the height is a grading deviation and it's not a structural addition, so it's not like they're building a taller building; it's just that it's a little bit higher. And so I think because of that water table, and like I said, it's very wet, it makes sense that you would want that a little bit higher. It was a raging river going into that storm drain on the west side of the property today. To me, the only part that is maybe the bigger ask, potentially, is the townhomes and the rear yard setbacks on Kenyon, which by the way, the sightlines and the new driveway is great. I stood at the apex of that road and that was a great recommendation to have that driveway there. But I guess where I feel this is a reasonable deviation is because of the use and the speed of this road—it's a 40 mph road, traffic is very light, and in terms of where people will be coming in and out of this site, it seems as though safety is not necessarily a concern based on what I could see. So I guess all that to say, in summary, as I'm checking down the list of deviations, I see them as minor and necessary for this property to be developed for a product that our community needs based on many surveys. And so I appreciate everything that went into this project because I think it's very well done and would like to support this project going forward. [39:08] **Mayor Luke Hellier:** Any other comments, questions? **Councilmember John Bermel:** Yeah, John. I just two comments and I'll echo some of what's already been said. I mean, this fits the vision for our city; it also fits one of our goals. I, too... there's a number of deviations, but when you start to look at the significance of them, they are relatively minor. This is a unique piece of property. I'm a little curious on the history of the property; like, you know, have people tried before and it just doesn't work out? But it just seems like to make this kind of development work, those deviations are going to be necessary. And so I support the deviation. I don't think any of them are significantly major. For me, for multi-housing, I'm always asking the question about management. As I read, because of my experience in public safety and crime-free multi-housing living, and I'm... you know, the management company here is a reputable company. They have a crime-free, drug-free lease addendum. The thing to remember about these is trouble is attracted when things are managed poorly; when things are managed well, trouble isn't attracted because trouble doesn't like accountability. And I saw, you know, some waiting list data too, which is always healthy—a low vacancy rate, big waiting list, a solid company. For me, the management is right where it will need to be for me to think that this will work. So for those reasons, I'm in support of it. [40:40] **Mayor Luke Hellier:** Okay. With that, I'll... if there's any further discussion, otherwise I'll take a motion on the... **Community Development Director Tina Goodroad:** I can... yes, I wanted to note that I think there's one condition that maybe needs to be added to the conditions for preliminary plat approval: that a shared driveway easement be established over Lot 1, Block 2, serving Lot 1, Block 1. And that would be in the preliminary plat conditions resolution. **Mayor Luke Hellier:** Is that in this amended... no, okay. **Community Development Director Tina Goodroad:** That is separate, so that would be for the resolution approving the preliminary plat. **Mayor Luke Hellier:** So this would be F... but we're doing it all in one motion? **Community Development Director Tina Goodroad:** Yes. Yeah, we've got one and two motions. [42:04] **City Administrator Justin Miller:** You can get it from the staff report. And right now we have two motions: a resolution approving the Kenyon Green preliminary plat, and two, an ordinance rezoning the property. So in the resolution approving the preliminary plat, you would add that additional condition as number nine. **Mayor Luke Hellier:** Thank you. **Councilmember Dan Wolter:** Mr. Mayor? **Mayor Luke Hellier:** Yeah. **Councilmember Dan Wolter:** Can I have additional comment before the motion? **Mayor Luke Hellier:** Yeah, sure. [42:50] **Councilmember Dan Wolter:** So, my concern on this is the use of the PUD here. I think it looks like a really good project and the developer, I know, does really good work in our community and I appreciate that. The concern that I've got about—you know, somewhat expressed in my question—is to me the merits of this look like they could work within the existing zoning. My concern is the precedent that we're setting when it comes down to the developer economics and the number of units as being the reason to use the PUD. I mean, we've just approved a number of townhouse developments and other things that... I mean, what's to stop a future developer from saying "I need to put an additional 10 townhomes in here, so that's why I'd like to do, you know, make it—get a PUD." So I will be voting against it just because of that. [43:35] **Mayor Luke Hellier:** I'll take a motion with the caveat that we're adding in the ninth stipulation. Is that acceptable or do we need to say it out loud? **City Administrator Justin Miller:** I would say a resolution approving the Kenyon Green preliminary plat subject to the additional condition related to the shared driveway easement. [43:57] **Councilmember Joshua Lee:** Mayor, I move to approve a resolution approving the Kenyon Green preliminary plat subject to the additional stipulation related to the shared driveway easement and an ordinance rezoning the property from O Residential—Office Residential Transition District—to PUD, Planned Unit Development. **Councilmember Michelle Volk:** Second. **Mayor Luke Hellier:** Okay. Any further discussion? Roll call, please. **City Clerk Ann Orlofsky:** Bermel? **Councilmember John Bermel:** Aye. **City Clerk Ann Orlofsky:** Wolter? **Councilmember Dan Wolter:** No. **City Clerk Ann Orlofsky:** Lee? **Councilmember Joshua Lee:** Aye. **City Clerk Ann Orlofsky:** Volk? **Councilmember Michelle Volk:** Aye. **City Clerk Ann Orlofsky:** Hellier? **Mayor Luke Hellier:** Aye. Okay, thank you. Moving on to unfinished business, there is none. New business: a resolution authorizing issuance, awarding sale, prescribing the form and details, and providing the payment of GO bonds. And I will turn it over to Miss Stahl, I think, and Miss Green? No? Yes? Yeah, okay. [44:58] **Finance Director Julie Stahl:** Thank you, Mr. Mayor. So we did have the bond sale this morning. This is for our GO, General Obligation bonds, 2024A, the amount being $21,530,000. It is paying for the 2024 street reconstruction project and collector rehabilitation, as well as the last portion of the November 2021 bond referendum. So that bond referendum portion of this sale was roughly $15 million. Just note that Moody's did assign our AAA rating again, and so that's wonderful news. And we had a good bond sale this morning. We have Jessica Green from Northland Securities here to share the bid results with you. So I'll ask Jessica to come up. [46:31] **Jessica Green (Northland Securities):** Mayor, Council, good evening. As Miss Stahl just mentioned, we did hold a bond sale this morning at 10:00 AM, and the results are pretty great. Ten bids came in. Piper, out of Minneapolis, is the low bidder here. We do have a sale summary for your consideration, and then of course, we do have a resolution for consideration by the Council for the issuance of $21,530,000 in general obligation bonds. This will be considered series 2024A. And as Miss Stahl mentioned, we have two portions related to the bonds here: so street reconstruction activities along with your collector rehab program, and then of course the final issuance related to the park referendum. So we have a couple of different structures here, with the street reconstruction portion looking at 10 years for structure, which is consistent with what the city has done previously for street reconstruction bonds. And then for the park referendum portion, that's structured over 20 years, again consistent with how the city has issued bonds for those projects. In terms of security, we do have, of course, the general obligation pledge of the city, so we will see ad valorem taxes supporting the payment of the bonds. We do have special assessments with the street reconstruction; those are not pledged to the bonds, but they will be used to offset your debt service. [47:17] Julie mentioned the bonds were affirmed at a AAA rating, so the city continues to score very well against the Moody's methodology. Competitive sale today—10 bids again. Piper out of Minneapolis was the low bidder for the bonds. We have a final maturity here of February 1 of 2045, and then an optional call February 1 of 2032, so at that point, you are able to call the bonds in whole or in part. And then finally, at the bottom, we have just a quick comparison there between when we had gone over the finance plan back in May as compared to the results today. So again, $21,530,000 and nice results here with a decrease from 3.90% to 3.65%. On the following page, you will see the bid tab with all 10 of those bids, and as you'll see, they stack up really closely together—a difference of about five basis points between all 10 of them, which is kind of crazy. And then finally, you've got some schedules here related to the bonds, both on a combined basis and separated out. Of course, you receive all of that final information with the bond transcript. And then at the end of your sales summary, you've got some information about local issuance, national issuance that occurred today and later this week, and then some market information for both short-term and long-term, so you can see some of the information related to market history. With that, I am happy to take any questions that the Council may have. [48:50] **Councilmember Joshua Lee:** Joshua... do you happen to know what the difference was between the 3.90% and what we actually locked in at? **Jessica Green:** I knew you were going to ask me that. It's not an easy conversion, and the reason being is that in this case, the city chose to keep the premium. And typically what we're seeing, where we haven't had the park referendum pieces, is we've reduced the size of the bonds. In this case here, we're keeping the premium because obviously the costs of the park projects are more expensive than what was originally estimated. So it's not—there's not an easy crosswalk between the two. But I can say that if we would have simply downsized the bonds—which wouldn't have been a recommendation just because, again, you need that additional cash to complete the projects—you probably would have been looking at about $100,000 in savings, again, if we would have reduced the size of the bonds. [50:22] **Mayor Luke Hellier:** With that, I will take a motion to approve the resolution. **Councilmember John Bermel:** I move to approve a resolution authorizing issuance, awarding sale, prescribing the form and details, and providing for the payment of $21,530,000 in general obligation bonds series 2024A. **Councilmember Michelle Volk:** Second. **Mayor Luke Hellier:** Okay. And any further discussion? Okay. Seea, roll call, please. **City Clerk Ann Orlofsky:** Wolter? **Councilmember Dan Wolter:** Aye. **City Clerk Ann Orlofsky:** Lee? **Councilmember Joshua Lee:** Aye. **City Clerk Ann Orlofsky:** Volk? **Councilmember Michelle Volk:** Aye. **City Clerk Ann Orlofsky:** Hellier? **Mayor Luke Hellier:** Aye. **City Clerk Ann Orlofsky:** Bermel? **Councilmember John Bermel:** Aye. **Mayor Luke Hellier:** Very good, thank you. Appreciate it. And we'll stick with Miss Stahl on acknowledging receipt of our annual financial report. [51:09] **Finance Director Julie Stahl:** Thank you again, Mr. Mayor. Tonight we have Chris Kopic—sorry, his title: Principal with CliftonLarsonAllen—and Lucas Chase, also with the audit team who did the audit for the city and are here to present the results of the audit and the financial report. **Chris Kopic (Auditor, CLA):** Welcome. Sounds good. Thank you, Mr. Mayor and Council, and thank you, Miss Stahl, for introducing us. My name is Chris Kopic; I'm a Principal with CLA. I've been working with the city now for several years, probably five, six years, somewhere in there. This year, I also have Lucas Chase, who's the director on the city's engagement, and he's also been working with the city for several years. So similar to what we've done in the past, we do have a slide deck that we're going to go through: the audit results, some financial results, and then just kind of some things on the horizon for the city to consider. This year we did have to downsize some of our presentation because some of our comparative data that we've historically had in the past is just not available to us yet. So the state agencies that pull the information together just don't have the data out there for us for public consumption yet. So a slight decrease in what we've had in the past, but I think overall will still be a good representation. So as we go through this, there's... the Council received a couple of different things: not only a copy of the ACFR—the Annual Comprehensive Financial Report—as well as a governance communication letter. That's a letter that we are required to provide those charged with governance in regards to the audit. It has a lot of just required communications that we have to do in there. [52:41] And then also I just want to note that the city did receive an unmodified, clean audit opinion on your financial statements. That's the highest level of assurance that any type of entity can receive, whether it's government, for-profit, nonprofit, publicly traded. Unmodified is the goal we set out for. As part of your audit, we do look at the internal controls for the city. Our responsibility is not to provide an opinion on your internal controls; our responsibility is to let you know if we identify any deficiencies in your internal control processes. As you can see on here, those potential deficiencies are either classified as a material weakness or a significant deficiency, and as you see, there's none noted on both of those. So very positive there to note that even with some of the turnover that happened within finance over the past year, the internal control structure for the city still remains very strong. As part of the audit, we also do look at Minnesota legal compliance. This is a 25 to 30-page document that the State Auditor's office publishes every single year for us auditors that work with local governments. Divided into seven different categories that we have to look at... similar to other things, none noted, which means we didn't identify any legal compliance violations as well. I'm going to turn it over to Lucas now to go through some of the financial results. [54:13] **Lucas Chase (Auditor, CLA):** Thank you. So this first slide here, you'll be seeing your general fund revenues—a stacked bar graph with all your different types of revenues stacked on top of each other. Five years of data. You'll see kind of one outlier, the negative investment income that's grouped in that "other revenue" category in the prior year, which is then a large reason for that same category then having a large increase and then being above that negative, of course. So you'll see your proportion of property tax and other increased, if you're looking at as a percent. And that's a lot of times because your intergovernmental revenue went down, because we had $4.9 million of ARPA—the Fiscal Recovery Funds—recorded to your general fund last year in '21, in '22 excuse me. Your property taxes make up 69% of your revenues in your general fund. That's up a bit from last year, but there again we had those federal dollars kind of bring that down. So last year was 66%, this year 69%. But you're lower than if you look all the way back to '21; about 72% of your general fund revenues were from property taxes. Your total revenues remain very consistent when you're looking at it; you're down about $2,000 from the prior year. You're about $38.5 million total revenues both years. [55:03] Now this one's looking at your revenues, budget to actual. So you have your budget on top in kind of that yellowish-green, and then your actuals in blue there. You're relatively close to budget if you're looking at percentage-wise, you know, just a little over 1% difference, but in the right direction, right? You're over budget, so you had more revenues than budgeted. Other revenues, mostly investment income, were higher than budgeted. That's... you know, your budget conservatively there and that's—you know, that's a good thing. Also intergovernmental revenue was over budget about $236,000. We have a special funding entry you make each year due to State special funding to PERA; it's, you know, not budgeted for. And there also was a $110,000 forestry grant running into there that kind of make up almost all that variance. Licenses and permits were also over, just kind of the makeup of what made those up this year, I think, between single family, multi-family, and such. You did have a couple categories a little under what you budgeted: charges for services, some reduced engineering services, you know, in connection with whatever you had going on with developer construction. And then taxes, some slight variances in collection rates. But if you look at that $254,000 difference in taxes, it's less than 1% variance. [56:35] Now looking at general fund expenditures—stack bar similar to a couple slides ago on revenues. You can see we increased about 7.7% from the prior year, but this increase was less than your budgeted increase. You ended up $621,000 under budget, you'll see on the next slide. And just looking at your increase since 2019, you've increased expenditures 26%, but your revenues in that same time span from 2019 increased 24.5%, so pretty positively correlated and in line with the growth of the city. And here again, your general fund budget to actual. You can see your percentage-wise is very close to budget, 1.7% under budget. So they're in kind of the right direction. Public works had the largest proportion of this, followed by general government, and then parks and rec had about a 1% difference, and the public safety following that. Across all your functions or departments, most of it just personnel costs coming in a little under; there were some vacancies make up a lot of that budget difference. And then other charges were about kind of your next biggest area, mostly in legal fees, came in a little under budget. [57:43] And then we're looking at your fund balance here in your general fund, and you can see your unassigned fund balance, your cash expenditures, and then that green line is your unassigned fund balance as a percent of your expenditures. This is a little bit different than your fund balance policy because you basically look at everything except for non-spendable and restricted in your fund balance policy as a percent of next year's budgeted expenditures. But to be kind of comparable using actual ending amounts, this is the green line comparing your unassigned as a percent of expenditures. So just a note there, you're not exactly apples but a good comparable. Your policy with that in mind is 40 to 50%. Using actual unassigned compared to actual expenditures for '23, it's 51.5%, or about 188 days. Looking back at your budget and projecting out using ending amounts here, you'd be at about 42% projected, so you'd be right in your fund balance policy projecting for '24. [58:29] Now we're looking into your utility fund. So you covered your depreciation, so that's great, and then of course then you have positive cash flows. When you look at the green line on here, we're trying to more closely reflect your operating income after backing out kind of that non-cash depreciation amortization, and be kind of closer in line if you looked at your statement of cash flows and your cash from operations. So with that in mind, we covered depreciation both years. We had a little bit higher operating income in '22; operating revenues increased from the prior year for usage and rate changes there. Cash flows from operations: you had $6.2 million in '23, down just slightly from about $7.1 million in '22. Your cash and investments are total at $27.1 million and operating expenses at $22.6 million. You'll see your operating expense increased mostly due to about a $1.36 million increase in your "other charges" with some additional maintenance, some additional water main breaks in your utility funds. [1:00:02] Here's a slide on your liquor store. So you'll see on the top, that's the Office of State Auditor's gross profit percentage for the seven-county metro area. They actually, I think since I prepared this, they did—we do have the '22, because right now we just have through '21. That came out at 27.4%. So statewide from '21 to '22, they actually had a little bit of a decrease; from '21 to '22, the city had an increase and then you had another increase from '22 to '23. So you increased from 26.9% gross profit percentage to 27.4%. So pretty positive there. You're a little bit lower than some of your other metro area cities if you're looking at Apple Valley, Edina, Eden Prairie, but if you look at kind of your closer neighbors, you're higher or pretty comparable—like Farmington, '21 was at 25.4%, '22 when I looked today: 26%, so slightly higher than your neighbor. [1:01:34] This slide, switching slides here, is your taxable market values. So we had an increase in '23—so '23 is at $11.6 billion, or about a $2.1 billion increase from the prior year. '24 is about $12.5 billion, there again about a $1 billion increase. And then '23 was the previous peak, and of course each year is the previous peak so far. [1:02:21] Here's a slide on your tax capacity rates. Typically, this is an inverse relationship. Tax rate includes your operating and debt levies. You can see your tax rate there, of course, in orange. You had a nice little decrease in your tax rate, so your prior tax rate was 32.85% and you came down to 29.68%, or about a 3.2% decrease. Your tax capacity had an increase from '22 to '23 to about $23.7 million, or about 22%. [1:03:09] Here's a tax comparison with some assumptions included using that estimated median taxable value of the city—about $429,000. And doing some calculations, City of Lakeville ends up about right in the middle there for your neighboring cities. Now if we did end up keeping... it's pretty old data from the Office of Auditors now, and then giving you three years since that data is available. But we do have '21's... the Office's data there for comparison in the three years since. So just kind of keeping that in mind. But you can kind of see the trend of revenues per capita here. So looking that, you can see revenues per capita increased $125 per capita. Increases were in taxes, special assessments, and "other revenues." Keep in mind that "other revenues" is mostly the investment income you had kind of an odd year previous year and some improved market conditions in '23. 2023 per capita revenues, if you look back to our last comparable from the State, are about $32 more than 2021. For what that's worth for comparatives there, your largest differences would be in special assessments, charges for services, and "other revenues." [1:03:41] Here's a look at revenue per capita pulling in some neighboring comparable cities. Again, 2021 and 2022 are using 2021 data, as '22 and '23 is not quite yet available. Typically, when we look at this, the city's been below average in most of these revenues per capita except for licenses and permits when we're looking at '23's actuals compared to the '21 comparables from the Office of State Auditors. Also, intergovernmental revenues were above average, and then special assessments were additionally above average in '23. [1:04:28] Similar slide here looking at... last comparable '21, but now for expenditure per capita. Your per capita expenditure increased $244 per capita from '22. Capital—a lot of times you're a large driver with all the development going on in your roadwork. Per capita is about $488 more than other cities back in '21, so with that in mind, and a lot of times for the city, your drivers are your capital outlay in your debt service. Now here's a similar slide then pulling that into your line graph with your neighboring cities that we're using for comparables. You can see that you're below average cost per capita to fund these different functions, with the exception of capital outlay, principal, and interest. So similar results as looking at the prior table. And I'll pass back to Chris. [1:05:13] **Chris Kopic:** Sounds good. Thank you very much, Lucas. Any questions from any of the Council on any of those slides at all before I just kind of wrap up with two quick slides here at the end? Really just... **Councilmember Joshua Lee:** Joshua... I was going to wait to the end but... but on your first couple slides, you were talking about no findings in areas of deficiencies. Could you talk a little bit more about your audit process? Because one thing is reviewing statements and, you know, all those documents, but are there other pieces of this puzzle that you do to help ensure that there are no findings—interviews and all things like that? [1:05:59] **Chris Kopic:** Yes. And really to answer that, the planning process for this starts back in December, November, right in there roughly. So we start with meetings internally with our CLA team as well as city staff to just get an understanding of what's happened in the last year. You know, obviously we can see the development side of it, we see the bond issuances, we see that type of stuff that happens. But then from there, what we do is we set out a game plan as far as how do we want to approach this year's audit. CLA uses a risk-based audit approach, which really means that through these discussions internally and with city staff, we talk to typically one or two members of the council as well to get your perceptions, your understanding of fraud risks, where do you think there's risks within the city's operations—finance operations, I should say. And what that does is we come at it and say, okay, how can we approach the audit and kind of get, as we say, the most bang for the buck in our audit process. It's not feasible and economical for us to audit every single transaction of an entity; that's where we say an audit provides reasonable assurance as to your financial statements, not absolute assurance. [1:06:44] So what that entails outside of the interviews with staff, interviews with members of management, a member or two of the council—then we look at and go, okay, we start to pull in external data analytics as far as tax levy, what are other areas doing for liquor operations, for utilities. And we also do comparisons year-over-year. We also do test controls; we typically rotate every other year unless there's a risk that comes out that we think we should between either disbursement testing or payroll testing or a combination of both. So we are pulling, probably a few hundred invoices throughout the process, looking at everything. And that's including everything from legal compliance, internal controls, the testing, capital assets additions... we always have an element of unpredictability every year which we have to incorporate by auditing standards. So it's a lot of different moving pieces to get to the end where you get the nice bound financial statements at the end of the day. [1:07:31] **Councilmember Joshua Lee:** Sure. Thank you. I'm always pleased to see no findings, but also, you know, over many years with no findings, it just kind of made me perk my interest on, you know, where are the risks when there are no findings. And I'm... our finance committee also has input there too, or have you met with that group as well? [1:08:17] **Chris Kopic:** Yes, and that's where it comes down to is knowing that the city has an internal control structure. When there's turnover within finance and you can still maintain that no internal control deficiencies, no legal compliance... when we're pulling as many invoices as we can... the legal compliance item that normally gets a lot of local governments is one where you have to pay all of your bills within 35 days or less. When you start talking about that, 35 days isn't very quick. If that invoice sits on a department's desk for an extra week, it may miss a pay cycle and all of a sudden it's beyond 35 days. So some of those real—if you want to say—easy items that we see in other municipalities, we didn't have any of those here either, which is always great to see. [1:09:03] So really just to wrap it up, as Lucas had mentioned, the city is meeting your fund balance policy when you look at projecting it against your 2024 operating budget. No internal control comments, no legal compliance findings. Your enterprise funds are providing cash flows from your operations, which is your day-to-day transactions, and you're also fully covering your depreciation, which is great. That means current users are paying for the current system and infrastructure in place, which is great to see. The liquor fund transferred about $3.7 million out of the liquor operations to help offset other activities: capital projects, debt service, general fund operations. That's very great; that's... we'd like to see that coming from the auditor's point of view. And then really the last piece on this slide is the city each year submits your Annual Comprehensive Financial Report to the Government Finance Officers Association, and for 2022 the city received the award for that. That's 35 consecutive years that the city's received that. The city fully anticipates that it's submitted this year and it will be receiving that award for next year once again to get through the review process. [1:10:37] Then finally, just a couple of upcoming standards. The Governmental Accounting Standards Board—or GASB—remains very active. We just came out of two years where we had a leasing standard, a subscription-based IT standard that we adopted for local governments. Now we look at... we kind of get a slight reprieve because of the standards that are coming out. The next big one that's really on our radars is Statement 103 in the 2026 audit timeframe. Statement 100 really is only going to be if you have a prior period adjustment or some type of restatement; there's some additional note disclosures that go along with that, so nothing of concern there. Statement 101 is a little bit of additional work on the city's side, but not anything compared to what we just went through with the leasing standard and those ones. [1:11:22] Statement 101 is really relooking at what governments should be recording for what we call compensated absences there—that accrued sick and vacation leave. The current standard that local governments are using is Statement number 16; you can see we're all the way up to 103, that's probably 40 to 50 years between those two standards. And some of the things that local governments and employers are doing now for those accrued leaves and different types of leave banks didn't exist 40 years ago—think of paid time off now, everybody gets this Earned Safe and Sick Time within Minnesota, all of those different things. So what that's going to do is force local governments to look at that and say, do we need to record any additional liability related to these balances. A minor change to a GASB interpretation related to group asset purchases. It basically... they changed one word from "could" to "should." Auditing world, "could" and "should" mean two different things: "should" means you must, "could" means it's your choice. So a small change with that for group asset purchases. Group asset purchases for the governmental accounting side is, say you purchase 100 laptops at a thousand bucks a piece. Prior to this change, you could look at each one of those laptops and say they're below our capitalization threshold, so we don't have to record any of those as capital assets. With that change from "could" to "should," now it says you have to capitalize it if it's over your capitalization threshold. So instead of recording a thousand—at—or 100 laptops at a thousand a piece, you could record just one large computer purchase of $100,000. So a little change in that. [1:12:55] Statement 102 related to risk disclosures: that's really going to be looking at how governments and what they should disclose regarding concentrations, whether that's vendor concentrations, revenue concentrations. So really just some additional disclosures related to that. Statement 103 is that next big one that's on the horizon for local governments, and that's the changes to the financial reporting model. So they're calling it "improvements." Us on our side, kind of being satirical, we want to put quotations around "improvements" because they're not always an improvement. So there will be some changes coming to the city's annual comprehensive report coming in a couple of years around what's being reported, where it's being reported, what's going to be required to be in that management discussion and analysis and various things like that. So there's going to be a lot more information to come on that in the future. So outside of that, we're open to any other questions any of the council members may have. [1:13:43] **Mayor Luke Hellier:** Okay. Thank you, Chris and Lucas. Any other questions, comments? Thank you both. Appreciate it. **Chris Kopic:** Thank you very much, we appreciate it. **Mayor Luke Hellier:** And with that, we'll move on to... we're supposed to acknowledge... sorry, thank you. We have to officially acknowledge the receipt of the report. That would be great. And then I just want to add a little thing at the end after you do that. **Councilmember Dan Wolter:** I move to acknowledge receipt of city of Lakeville Annual Comprehensive Financial Report for the year ended December 31, 2023. **Councilmember John Bermel:** Second. [1:14:29] **Mayor Luke Hellier:** Any further discussion? Roll call, please. **City Clerk Ann Orlofsky:** Volk? **Councilmember Michelle Volk:** Aye. **City Clerk Ann Orlofsky:** Hellier? **Mayor Luke Hellier:** Aye. **City Clerk Ann Orlofsky:** Bermel? **Councilmember John Bermel:** Aye. **City Clerk Ann Orlofsky:** Wolter? **Councilmember Dan Wolter:** Aye. **City Clerk Ann Orlofsky:** Lee? **Councilmember Joshua Lee:** Aye. [1:15:16] **Finance Director Julie Stahl:** So, as Chris mentioned, the National GFOA gives this award out to entities that fit the parameters. They go through a vigorous testing of our report. But these... it's what it... this is putting the onus that is put on the cities that are applying for this where we have to publish an easily readable and efficiently organized annual—Annual Comprehensive Report. Not easy to do. The report must satisfy both our generally accounted—generally acceptable—I can't talk tonight—Generally Accepted Accounting Principles as well as those legal requirements. So this award program, it's very high measurement standards that they have in place, and it is the highest form of recognition in the area of governmental accounting and financial reporting. So the attainment of this award, it's nothing to be taken lightly and it represents a significant accomplishment by the government and its management. So I'd like to extend a special thanks and appreciation to Julie Wagner, David Lang, Laura Miller, and Tom Nessi for all of their time and effort in preparing the 2022 Annual Comprehensive Report—35th year we got the award. [1:16:02] And also, in addition to the finance team, I'd like to also commend the Mayor and the City Council for their support, because you're maintaining our high standards of professionalism in the management of the city's finances. So thank you. **Mayor Luke Hellier:** Thank you. Sorry, it almost seems routine when you get it 35 times in a row. Not to be taken lightly. Thank you for—for reminding us what—everything goes into that. So congratulations and thank you to your staff as well. Thank you. Very good. Okay, now moving on to announcements. Next work session is next Monday night here at City Hall. And our next City Council meeting is July 1st, back here at City—City Hall. And with that, I'll take a motion to adjourn. **Councilmember Michelle Volk:** I move. **Councilmember John Bermel:** Second. **Mayor Luke Hellier:** Adjourn. [1:17:04] [Music]