City Council - workshop

Good evening, everybody. It is a beautiful summer evening in Minnesota. It is August 18th, 2026, and we are right at the 530 mark. We're going to call to order the Diana City Council work session for this particular date and time. And I'm going to ask Sharon Ellison to call the roll.

Council Member Agnew's absent. Council Member Jackson? Here. Council Member Pierce?

Here.

Council Member Lissett? Here. Mayor Huffman?

Here. We've got two meeting topics this evening. The first one is going to take us into closed session, which means that it'll just be city staff involved in that participation conversation along with city council members. So is there a motion to move into closed session? The purpose of this meeting will be, a portion of the meeting will be to discuss the evaluation appraisal for the potential naming rights for Braemar Arena. Mr. Zicker, you're welcome to take that chair next to Perry out there with you if you want. Thank you. Okay. All right. And so we're going to entertain a motion to move in the closed session as permitted by Minnesota Statute 13D.05, Subdivision 3, Subsection 2, to discuss the evaluation of appraisal for potential naming rights for Baymar Arena. Is there a motion to that effect?

So moved.

Second. We've got a motion and a second to move in the closed session. Do we have to do this by roll call, too?

I believe so, yes. Council Member Whisser? Aye. Council Member Jackson? Aye. Mayor Hovland?

Aye.

Council Member Peters?

Aye. All right, we are back in the open session.

All right, Manager Neal. Thank you, Your Honor and members of council. On June 23rd, we had a presentation to you, made a presentation to you, about my proposed budget for the upcoming year, 2027. We told you at that night, we welcomed your questions and your inquiry, and we've received some over that timeframe since then. We've responded to those questions, shared those responses with you, happy to elaborate on that tonight as well. We also told you at the June 23 retreat that on August 18 at this council meeting, we would have another update for you. If you had additional questions, we could receive them, maybe answer them, maybe not. And this on this evening. But that's what we're here to do tonight. We don't have an action for you to take, but we will have an action for you to take on September 15th. That's when we're going to ask you to certify our preliminary levy for 2027. And then we have built into our calendar additional updates, if necessary or if desired by council, on October 20th, November 17th, and December 1st would be our truth and taxation hearing And you have your first opportunity, if you wish, that night to approve the budget for the upcoming year. If you don't approve it that night, then we will meet our last council meeting of the year as December 7th, excuse me, December 15th, and we have to approve it that night. So that's where we are. We've got a brief presentation that Pa can walk through, just a few slides, and then be happy to answer any questions. All right. Thank you.

All right. Thank you, Scott.

All right, Director. Thank you.

So as Scott mentioned, what we have for tonight is, my computer got in here. We don't have anything much different other than receiving the questions that we got from you all at the June retreat and our proposed levy budget proposal for 2027 still remains at the six and a half percent. with goals of reducing the rate of growth for the city's total tax levy, reducing our debt service levy by retiring two past debt issuances, and then as well as spending, reducing the rate of growth for the city's general fund service through operational reductions and do not reduce the service level. AND SO WITH THAT BEING SAID, I JUST WANT TO SHOW THE SAME CHART THAT YOU'VE SEEN BEFORE, OUR PROPOSAL TO YOU FOR TOTAL TAX LEVY FOR 2027 AT 6.5. I DID ADD IN THE NEXT FEW COUPLE OF SLIDES TO GIVE AN ILLUSTRATION OF WHAT MAKES UP THE 6.5, RIGHT? SO WE'RE GOING TO START FROM THE STORY AT, OF THE 6.5, WHAT IS OPERATION? SO WITH THAT BEING SHOWN UP HERE, THE 4.96, YOU CAN SAY THIS IS YOUR OPERATIONAL BASE. YOUR NATIONAL INCREASE, AS WHAT YOU CALL IT. AND THEN WITH THAT, WE BROUGHT IN SOME REDUCTIONS THAT WE HAVE PRESENTED TO YOU AT THE JUNE RETREAT THAT MAKES UP ABOUT 1.30 PERCENTAGE. AND THEN THOSE PARAMEDIC FIREFIGHTERS THAT YOU HAD COMMITTED TO BRING IN IN 26. WITH IT COMING IN ON THE SECOND YEAR IN 27, 26, THEY WERE PARTIALLY FUNDED BY OUR PUBLIC SAFETY AID AT ABOUT 504,000 OR SO. AND SO WITH THIS .76%, THAT IS THE FULL CITY ABSORBING THE WHOLE ENTIRE COST WITHOUT ANY ADDITIONAL AID. AND THEN THERE IS, OF COURSE, THE FRED RICHARD STAFFING. YOU HAVE TWO STAFF WITH THE FRED RICHARD PARK MAINTENANCE. THAT MAKES UP .24%. AND THEN OUR COMPREHENSIVE PLAN THAT WE DO, WHICH IS .34%. SO THAT ENTIRETY MAKES UP THAT 5% OPERATIONAL INCREASE. NOW, If you were to take the operational increase of the 5%, what else makes up the 6.5%? Another component is the capital levy. We're increasing that back to the level that it was previously. As you recall, we took a few years off because the levy was getting higher, right? And so with this, we are increasing it by 3.15% to bring it back to the level that it was prior to take care of our assets that we have on hand. Debt services, we did not add any additional new debt. The last time you issued new debt that needs to be funded by the tax levy was back in 25 or 26. Therefore, there's a drop in our debt service of 1.67%. Again, with this scenario, it keeps in mind the fact that we are going to prepay or pay down the two proposed debt issuance, the 2016A and 2017C. And then, of course, our HRA levy of 0.01%, thus gets us to the 6.5%. This final slide here is just all of that together. This waterfall chart, as what they call it, is showing you operationally and all those different debt, sorry, all those different tax levy, what makes the 6.5 all in one slide. So what we're really here tonight is we want to gather any feedback, any thoughts you may have for us as we work on putting together the preliminary levy for you to adopt on September 15th. And then we have our tooth and taxation hearing scheduled for December 1st. And like Scott mentioned earlier, we have the final levy adoption scheduled for December 1st with the backup of December 15th if needed. And so these are all crucial dates that were intentionally picked due to a state statute that we need to report by. So with that, I just want to open up for any feedback, any questions you may have.

I brought with me the CIT 2025 to 2030 because I, are we receiving one for 20, I mean, are we going to get an update?

Yes, you're going to get one. So we print those every two years. SO THE LAST TIME, THAT ONE IS A 25-30. AND ONE THAT WE'RE WORKING ON RIGHT NOW IS 27-32. YOU'LL GET THAT ONCE THE BUDGET IS FINALIZED FOR A 27, BECAUSE THIS IS ALSO THE YEAR WE'RE FOCUSING ON CAPITAL IMPROVEMENT. SO YOU'LL GET A BOOK LIKE THAT ONCE WE'RE DONE.

SO WHAT'S FASCINATING IS LOOKING AT WHAT WAS PROJECTED FOR 2027 THAT'S NOT HAPPENING, LIKE 50 MILLION FOR FIRE STATION NUMBER THREE. AND SO THAT'S BEING MOVED TO 2030. THE ROOFING, WE'RE NOT GOING TO DO INVESTMENT IN ANY OTHER BUILDING ROOFS EXCEPT BRAEMAR UNTIL 2030. THE FIGURE THAT WAS PROVIDED WAS, I THINK, A TOTAL OF $12 MILLION. AND THEN THAT WAS FOR 2027, BUT 2020-30, YOU KEEP THE SAME FIGURE. THERE'S NO INCREASE IN what the cost is going to be. And I am feeling concerned about a lot of things, including, you know, going back to that April meeting, are we investing what we need to invest in fire station number one and the police station to take care of the dire needs that were referenced in April?

SO I HEAR A FEW QUESTIONS. I'M GOING TO TRY TO ADDRESS IT. AND, ARRI, FEEL FREE TO JUMP IN IF THERE'S ANY THAT I MISSED. BUT I'M GOING TO ANSWER THE LAST QUESTION FIRST. YOU TALKED ABOUT THE POLICE DEPARTMENT AND THE CITY HALL. WE HAVE THAT IN THE PACKET THAT WAS ATTACHED. I JUST DON'T HAVE IT UP. BUT WE HAVE THAT PLANNED OH, WE PROBABLY MUST HAVE NOT SHOWED IN HERE, BUT IN THE JUNE RETREAT, WE SHOWED IT AS A CIVIC CAMPUS PROJECT, AND WE DO HAVE IT IN THERE. NOW FOR THE CAPITAL... FOR 2027? NOT FOR 2027, BUT FOR A FUTURE YEAR, DUE TO THE AMOUNT THAT IT IS AND DUE TO THE TIMING OF ALL THE OTHER PROJECTS PRIORITY-WISE.

OKAY, AND I DIDN'T KNOW IF IT MEANT THE ENTIRE... BECAUSE WE'RE TALKING TWO VERY DIFFERENT THINGS. I GOT THE IMPRESSION BACK IN APRIL THAT THERE WAS REPAIR THAT NEEDED TO HAPPEN THAT WAS DIRE.

No, you've said that a couple times. Our city hall police facility is actually in very good condition.

Okay, so.

So we identified a few spaces in that April meeting. You mentioned fire station one. We've got some needs for the roofing there.

Okay, are we going to take care of that?

That would be part of that roofing bond that we're looking at at the later year. So we know we've got a few more years in the roof there. We're just trying to be proactive when we replace these roofs. But there are needs there where it's reaching the end of its useful life. I believe it was constructed in 2004, I believe. General rule of thumb is about 20 years with no maintenance for a roof. We're obviously at 22 years right now, but we have done some maintenance and repairs to that roof to extend its use for life.

And so we're confident nothing bad is going to happen by waiting until 2030?

I can't say yes or no to that, Julie, because at any point in time, a tree could fall on it, a hailstorm could come through, some other type of natural disaster could occur at that point. But I will say that based on current conditions and the reviews that we have done, that roof is still in fair to good condition at this point in time and we expect it to last until we're able to bond for that project.

What's the roof that's in the worst condition now? Is it?

Honestly, I would have to go back through and look. Okay. What it's going to end up being is there's smaller roof structures throughout the city for a while. So some of our larger structures or enterprise sites in particular have that larger cost when we have the biggest risk there. So, you know, when we talked about that in April, Edinburgh was really one of those structures that had probably the highest facility condition index number, and it has the highest number of costs for envelope, which is the roof, windows, walls. So that's one of the buildings that we said are really in dire needs. Braymar Arena, which was another one of those that we talked about at that time, I think we identified that had a high FCI number, so facility condition index number, the higher the number, the worse the building condition's in, but a lot of that is being addressed by part of the project that Perry just presented on earlier today.

Right, so why, okay, that's another issue. The other thing was tearing down the old fire station number two, because it's, okay, is that, when is that going to, BE BUDGETED FOR? BECAUSE THEN...

IT'S BUDGETED FOR, AND IT'S GOING TO HAPPEN IN THE NEXT TWO TO THREE WEEKS. OKAY, SO THAT IS...

OKAY, GOOD.

WE'RE WAITING ON SOME OF OUR UTILITY PARTNERS TO REMOVE POWER FROM THE BUILDING.

OKAY. I DO HAVE A LOT OF CONCERNS ABOUT RETIRING THE BONDING THAT THE 2016-A AND 2017-C EARLY. JUST GIVEN THE... INTEREST RATES ON THOSE. AND JUST TALKING TO EDINA RESIDENTS, IT'S CHEAP MONEY AND WE'VE GOT SUCH A SHORT PERIOD THAT REMAINS ON THOSE. IT SEEMS LIKE IT WOULD BE A MORE PRUDENT THING TO HANG ON TO, YOU KNOW, NOT USE OUR SURPLUS TO PAY THOSE OFF SO THAT WE COULD ADDRESS MORE OF THE $54 MILLION IN DEFERRED MAINTENANCE. You know, and I honestly feel like I have no idea what we're allowing to just slip. And, you know, walking here to this meeting and looking at the court flooring and how that appears, you know, are there situations we are not addressing in 2027 that are really serious?

you made the surplus recommendations that you made?

Well, I mean, there's a few reasons, but one of the most important ones is that it does allow us to do, to have some positive impact on the levy and not to decrease the levy because we don't have that debt that we have to pay with that levy. So you get the benefit of that, not just in this year, but in the following year as well. So though the interest rates may be

2.5% to 4% in that range.

It's such a short term that remains on those.

But their point is a different one. They don't dispute the fact that the interest rates are low. They just think that it puts less burden on the levy if we get rid of that debt obligation.

So I think what I'm hearing you say, Julie, is that I'm going to deconstruct it a little bit. Let me know if I'm wrong. We have this debt outstanding, and it's at a low interest rate. We're going to take cash to empty that out. Instead, we could decrease the construction levy of the amount of money for one time that we would be using to pay off the debt. So we could use that cash for... in place of the levy for the construction, so that we could still get the levy reductions, but that, once again, the amount of the budget that is put to the construction levy would be less than it has been historically, but we would use that surplus money in its place.

And complicating the issue is, I don't know, when is the next anticipated round of bonding going to happen for a project? YOU KNOW, WHEN ARE WE LOOKING AT THAT WITHIN, IS IT GOING TO HAPPEN IN 2027? AND I'M ALSO VERY THINKING ABOUT THE NEXT CITY MANAGER, YOU KNOW, WHO IS NOT GOING TO EXPERIENCE THE BENEFIT OF THE DEBT ROLLING OFF DURING HIS OR HER OR THEIR TENURE, WHICH IS SOMETHING THAT PROVIDES SOME RELIEF, ESPECIALLY AS WE'RE LOOKING TO BE PUSHING EXPENSES THAT WERE GOING TO BE TAKEN IN 2027 TO, 2030. So there's kind of this, it just, it seems as if, you know, you can say yes, it reduces the stress on the levy, but it really isn't particularly transparent. And if we're going to do that kind of analysis with, you know, paying off the debt sooner, I think we should do that analysis with all of the other expenses that WE'RE PROPOSING WITH THE SURPLUS. BECAUSE YOU COULD ALSO SAY IF WE DIDN'T SPEND TWO MILLION ON AI WITH THE SURPLUS, WE COULD LOWER THE LEVY EVEN MORE. AND WE'RE NOT HOLDING ANY OF THE OTHER EXPENSES TO THAT SAME KIND OF ANALYSIS.

SO I DON'T DISAGREE WITH WHAT YOU JUST SAID IF YOU APPLY THE SAME PRINCIPLE TO EVERYTHING IN THAT CONTEXT. Sure, we could do that. I don't disagree with that. I think, for me, this is doing what I asked for. Full stop. Two things. Get the levy to something that is more sustainable. And I wanted us to have some reasonable way to constrain spending. And that's what this does.

I THINK WE NEED TO DIFFERENTIATE BETWEEN THE LEVY AND THE BUDGET, BECAUSE WE'RE TALKING THE USE OF, YOU KNOW, 8 POINTS, WELL, $7.6 MILLION. AND SO THAT SKEWS THINGS A LITTLE BIT. IT WOULD BE REALLY HELPFUL TO HAVE THE OVERALL TOTAL BUDGET THAT WE'RE LOOKING AT. BECAUSE FOR 2026, IT WAS 22, WAIT, 224 MILLION, I BELIEVE. I don't know what that figure is proposed to be for 2027. You know, and I could have missed it. There's a lot of data, but I looked for it.

$320 million or something like that.

Okay. So that's true. Well, the point is to, if we're saying bringing the levy down means we're spending less, okay, we are, but it's skewed because we're using surplus to help bring it down.

But I don't, that's fine. So the way I manage a budget is I look at all of my revenue sources. And what I'm trying to say is if we generate additional revenue sources, the question I would be asking is if we have those surpluses, what do we get the most value out of spending those dollars on? And that's the analysis that I would want to see. And so, like, for example, if this proposed levy was a point higher, what would you do with that additional point? What would you do with the 1% higher? And so if the value of whatever the answer to that question is, we think is of value to the city, then to me, that's the conversation to have. And what you could say is, and I'm totally making this up, we should spend that on repairing the roof at Braemar. But we can't have an unconstrained conversation because we would throw a ton of things on the table to spend those dollars on. And so we have to have the same discipline to be constrained by something. And right or wrong, I chose initial constraint and then we have to learn how to operate within that level I'm not saying that's right and so the staff last year and the year before and will again this year if there's surplus they will use that surplus wisely across that to keep within that constraint and I think that that is the right thing to do and I think it is a healthy precedent So when this new city manager comes in, that construct is there. They can't come in and say, well, you've got $50 million on deferred maintenance. We need, like Minneapolis, an 11% increase in a levy. We won't operate that way because the constraint is already set. And I think it's healthy. It's healthier than... I mean, look at the slide. Go back a slide. One more. Go back to the chart. That chart, if we were to put the projected underneath the percent, the actual percent increase, that'd be 10%, 11%, 13%, 17%. If we were to add that. And there's no way we There's no way we would be operating with a 17% increase. It's just not healthy. It's not. Yeah. So in that context, this is the right direction, in my opinion. And we need to tweak things. I'm with you on that. But we can't start adding a bunch of expenses to it.

I do have concerns about the $2 million for AI. Because if I'm remembering it correctly, there was ambiguity in that figure. And again, we have a new city manager coming on. He, she, they may have a different opinion on how to go about it.

Is that in the levy? No. But the way you described it, it wasn't. I didn't think we were earmarking $2 million and spending $2 million. I thought we were doing project by project.

Yeah, so the idea was we were going to take the surplus, we were going to set it aside to build a futures fund, and then we would come back to you on a regular cadence with a work plan. But there's some infrastructure stuff that we'd have to be, to start preparing ourselves for what that looks like. So yeah, there would be expenditures. I don't know. But it would be $2 million out of the gate. No, it's a three to five year plan. It's really setting some money aside for us to invest over the next few years to get the organization ready for whatever changes may come.

And the way you do that is your projects, you set up your infrastructure. Projects come in. What is the ROI on this project for AI? It's XYZ. It's going to cost us a... Is this something we should do to get that value? Yes, we spend the money. And so that's the discretionary, not discretionary, the governance discipline that we would have around that tool.

And because of our spending limits, the governance means that you get to be pretty deeply involved in that process because the expenditures are pretty likely to be in excess of 1,000 hours in.

The question will go to Carolyn.

I guess I want to just make my comments, unless you were following up.

I was actually going to ask, on the Julie question, if Pa could tell us, what's the annual debt service on those two bonds?

I have that.

So that we can figure out what that represents.

I do have that up right now.

That represents as a potential percent of the levy, if you're in the family.

So, if you move them both from being paid right now with the surplus to being paid with the levy, the total for both issuance would be 8.67%. So, we would set the preliminary levy at 8.67%, which would give you the ability to continue this conversation if you wanted to do that.

So, is that?

Yeah. Okay. So, my comments are I, you know,

James went through a very deep analysis of cost drivers and everything and came up with a construct of 4% to 7%, if I remember correctly, was what a healthy levy increase would be. And I then went back and looked at it from a different angle, saying, oh, he's missed something, but he didn't. And the 4% to 7% was a healthy range. And so we're within that, which I really appreciate. My primary concern is to make sure that that construction levy continues on. And over time, I think we're going to have to increase it. You know, the needs are greater than what we've budgeted for, but the fact that it's restored back to a healthy level like this is good. You know, obviously I'd like to be bigger, but I also have the constraint of the levy increase. And then something that occurred to me when we were actually talking to the city manager candidates is when the state of Minnesota had that very, I think it was a $10 billion deficit, or 10, it was a huge deficit when Governor Dayton was in power. MnPOST put a tool together where you could build your own state budget. Now ours is much more granular and difficult, but If you could, if anybody has the ability to sort of go back to MnPost, find that tool, and steal it from them, or get it from them so that the public could kind of build their own budget, that was a really interesting exercise. Because how much tax increase do you have to do if you want to keep services the same? And then people in the public could play with that. So I don't know if that's accessible, if it's expensive to build, or if it's an easy thing to do. But I have really appreciated that tool back in those days.

One thing I thought of is those debts that we're talking about retiring are going to be retired naturally very quickly. And if we were to say we will put $500,000 toward AI in 2027, we could keep those going and not pay them off, and then we could you know, look at funding AI in future years, just kind of put a pin in it, and then the other city manager could take a look at that. But that way we could kind of have our cake and eat it too. And I think, you know, given the fact that they are going to cycle off, you know, so that'll be a reduction.

I know I sound like a broken record. I have no issue with that.

And I didn't think...

If that is a... proposal.

I was hoping, yeah.

I just fundamentally, as just from a leadership perspective, believe in setting the direction and then letting the staff run within that framework. And so we've done that with this. If this is an option that we think we should look at, then I would want you guys to propose that. But my Framework doesn't change. I'm still looking for us to be within a certain range because I do think this is a healthy range for us to be in. I think people broadly think about they get their tax bill, and it's a high tax bill. But when you look at the makeup, to the county. And so it's just complicated. And so I think all we can control really is the city portion of that. So my ask is going to be the same. If somebody says we should spend another $5 million on something, I'm not going to say, well, then the levy can increase by 3%. I'm going to say, well, how are we going to fund that and stay within the same constraint?

And so when we get to the roots, 2030 is going to be a heck of a year.

Yeah. We have to be thinking and planning about that.

You do.

I want to compliment all of you on this item report that you put together. I mean, you took what we talked about last year to heart. I guess, you know, property tax is probably one of the most significant issues affecting every state in the union. Pressure that people are feeling on their personal budgets. So to have you work so hard to come up with this item report and a framework, looking at the first page here in the third paragraph struck me that The proposal balances essential city services with targeted spending reductions, operational efficiencies, and debt service savings while preserving funding for critical capital investments. It maintains service levels through strategic efficiencies, supports long-term needs such as deferred maintenance and capital reinvestment, and adds capacity for process automation and AI initiatives to improve organizational performance. And, you know, That's a great way of capturing everything we asked you to do, and I think you've done a really effective job of it. Now, might there be some tweaking around that 6.5%? I'm open to talking about that, but we better be talking about it pretty quickly, as in September you want us to set a preliminary levy. We know we can go down from there. Julie's raised one issue of whether it's wise to pay these things off, and I kind of reiterate my prior question is, you've got on page two of this memo, you've got the surplus recommendation on what to do with those funds that we have in surplus without taking us out of the realm of where we like to be from an overall standpoint. At what, 46, 47 percent or so? So how did you go about deciding to do the, what is it, one, two, three, four, five, six, seven things that you're recommending there with surplus? What was the

Well, a couple of driving forces was the levy, was could we use this money to make a meaningful impact on the levy? Could we use this money in such a way that we can match kind of a one-time revenue and a one-time expense to the extent that a debt service can be considered that way? So those were two. Could we do this in a way that... It's easy to spend surplus money, but if you let it start drive operational costs that you then have to levy for in future years if you want to keep it, that's destructive. And we didn't want to put the council in that kind of situation.

Yeah, I'll just add that One of the things our financial advisors, Nick, brought forward the idea of paying off 2016A and 2017C to us, because you only have so much callable debt, right? So we hit that timeline. We do have some money that has accrued in those accounts anyway, which is why those numbers are smaller than the actual payoff amount is. So that was one other thing that kind of came from the outside, bringing that forward. The 1.5 for the cold storage site, I mean, Derek's team has worked really hard to be able to, I think that number was a lot bigger previously, and based off of plans and their due diligence, they were able to come up with a number that allowed it to be within something we could pay off without having to issue debt, which is great. So that was a component of wanting to do that. We looked at just trying to be... what would allow us to think long-term about the deferred maintenance and cut the biggest chunk out. So that was one of the reasons we did the public works and park maintenance facility, because there's not really a bigger project planned in that building, but allows us to really do some of the things that were needed. So as far as prioritizing that. it might not be the one that was the highest, but it allows us to really complete a project and to put us into a good step without needing to, you know, it's not Edinburgh, but Edinburgh, we're going to need more than $1.9 million in order to figure out what we're going to do there. So Lewis Park, that was based off of you guys. That was one of the things that you said that you valued is wanting to continue to make progress towards THAT PARTICULAR SHELTER FACILITY AND MOVING THAT FORWARD. AND THEN THE DESIGN FUNDS FOR THE ART CENTER, WE NEED TO DO THAT IN ORDER TO BE ABLE WITH THE COUNTY EITHER WAY, SO WE HAD TO KIND OF FIGURE OUT WHERE TO FIND THAT MONEY, SO THAT WAS GOOD. And then as far as the process automation and AI investment, I mean, one of the things that we heard from you all was that you really want us to continue to think long-term and to set ourselves up to be successful. There's some larger expenses in order to think that through, like moving our enterprise system, like our Tyler, our financial software to the cloud, which really would allow us to take advantage of some of those potential AI things. So really just thinking through what that might be, but to some extent, we just picked a number to set that aside so that you guys could continue to invest in that way. So that's really a little history of those specific projects, but yeah, there's a lot of other projects, and so any input or priorities that you have that maybe we missed, we're more than willing to have those conversations.

I did appreciate the analysis on the paid leave, but basic question, are we teed up so that we can... cover the costs, the additional staffing? I mean, what is it now for the number of police officers and firefighters?

Well, we actually haven't had any police officers that have used that leave yet. We have had firefighters. I actually did get one piece of data on there that has changed since that was set out is That actually currently includes the overlapping. 25 is like the worst year. 26 is because the people that were eligible in 25 and are also eligible in 26. So it's something we'll have to continue to monitor. But at this point, WE WILL HAVE TO CONTINUE TO MONITOR THAT IN THE FUTURE. I DON'T KNOW. IT DEPENDS ON THE AGE OF OUR WORKFORCE. I MEAN, I THINK THAT JESSICA TRIED TO ANSWER THAT TO THE BEST OF HER ABILITY. IT'S VERY HARD BECAUSE OF THE ADS AND FLOWS TO REALLY BE ABLE TO PREDICT WHEN SOMEBODY'S GOING TO GO OUT ON LEAVE.

OR TO COME UP WITH ANY KIND OF ESTIMATE OF HOW MUCH MORE THIS IS COSTING THE CITY. YEAH. SO RIGHT NOW, DO WE HAVE ANY INCREASE, YOU KNOW, OR IDEA? I MEAN, DO WE INCLUDE THAT IN OUR BUDGET?

YEAH, THERE'S FOR SURE AN INCREASE FOR THAT PAYROLL TAX AMOUNT. I THINK IT WAS LIKE 200 SOME.

250,000, SOMETHING LIKE THAT.

AND THEN THE OTHER STUFF, ME AND JESSICA TALKED A LITTLE BIT ABOUT THE CHALLENGES IS, LIKE, HOW DO YOU SAY THE OVERTIME IS CAUSED BY X, RIGHT? SO MAYBE WE HAVE AN EMPLOYEE THAT'S ON VACATION, MAYBE WE ACTUALLY HAVE A VACANCY AND WE'RE SHORT OF POSITION, AND WE HAVE SOMEBODY OUT ON PARENTING LEAVE. AND IF ALL THREE OF THOSE CIRCUMSTANCES WEREN'T HAPPENING, SO REALLY BEING, WE DON'T HAVE A GOOD TOOL RIGHT NOW TO TO THINK ABOUT REALLY BEING ABLE TO QUANTIFY THAT FOR YOU. BUT WHERE I DO THINK THAT THE DEPARTMENTS WILL BE ABLE TO DO A BETTER JOB OF THAT IS IN THAT LEAVE CALCULATION NUMBER THAT THE CHIEF TALKED ABOUT WHERE HE PUTS IN ALL OF THEIR ANNUAL LEAVE ACCRUALS AND IT GAVE YOU LIKE 3.7 EQUALS 1 OR WHATEVER THAT WAS, THAT FORMULA. WE'RE GOING TO PROBABLY HAVE TO TRACK IT ON THAT SIDE. AND SO I DON'T HAVE A CLEAN ANSWER FOR YOU RIGHT NOW. IT'S HARDER TO BE ABLE TO KIND OF DECIPHER THAT THAN YOU'D HOPE.

And none of the department heads, the police or the fire, are asking for additional employees in 2027? Not at this time.

I want to go back. Can I ask a quick question? What's 1% of the levy in terms of dollars?

It's about $650,000.

$650,000. Wow.

Okay. I want to go back, and thank you, Manager Otten, for resizing the public, the cold storage. That was a huge... That's a huge savings, and it's exciting to be able to pay cash for that rather than bonding for it. So I just want to acknowledge that it worked.

I do. So for me, in order for the way I think about this to work, it does rely on you broadly. And you can't hear us say, well, no, it's got to be seven. And know that there's a hole in the roof. And you don't say that because you think seven's the priority. Can you follow me? And so we definitely have to have that partnership where you can say, guys, we really do need to do this. Because if you say that, I have no issue getting the email, going to coffee with people, taking a phone call to explain, yeah, that number's higher this year for these reasons. I just don't want you to hide those things just because you're trying to hit a number. So every business has a CIP. And there are things on there that get deferred. That's day-to-day business. The city's no different. But if there are very critical things in there, and you have a way of articulating that, we have access to that. But definitely making sure that we're not missing something is super important as we go through.

Were there any other maintenance issues that were high on the list? Don't ask him.

You know, I think, as I stated with Andrew and April as well, too, building-wise, right?

I'm not talking Edinburgh.

No, no, no. I know. Just broadly, right? For me, it starts with the envelope of the building, right? So that's why I'm really pushing on those roofing projects that were happening. because if your roof leaks, the risk and your damage is huge. It injures buildings, in some cases, network controls and things like that operate in other areas of the city. So there's a huge risk there with that. So for me, I always push the envelope. So let's concentrate on that. And that's the infrastructure side of things for me. And then after that, it starts trickling into some of the major mechanical systems. And so what you've seen in the past, at least four or five years as we've been starting to make improvements to these buildings individually. Like this building just underwent about $4 million in mechanical and envelope improvements. This one that we're sitting in today over the last two or three years. But the intent is that we get another 20 to 40 years on this before we have to make improvements. I know we talked about that it doesn't Function, right? That's function over form type thing, that it doesn't function for the occupants of the building. But in general, we're trying to get ahead of some of these buildings with these major systems and make these improvements and repairs. They're not all $5 million, $4 million. In some cases, they're a few hundred thousand dollars. And part of our capital improvement levy accounts for those as smaller projects, especially like that asset preservation fund. We're able to deal with those projects preventative things, but also those proactive ones where we might need to repair a real kind of building and we're planning on doing in the next couple of years. So I think as long as we have funding coming forth soon to address some of those envelope needs and we can start picking away at some of the small things, in addition to these larger projects like you said with Edinburgh, the ice rangers one, I know we've got some other enterprise sites that we need to spend some money on. You know, we just did with the Aquatic Center, right? That that pool for many, many years. So I think that's our goal. You know, the next couple of years, you know, one of those things that's in that surplus is the public works building, right? So we've got mechanical, electrical systems there that are starting to reach the end of their useful life. We can no longer get parts for them, they're no longer serviceable, so that's why that's really important for us to spend that money on those two things. And that just sets us up for future use of that building for the next 15 to 20 years before we have to put it a large amount of money in there to repair other items that just have gone beyond the repair of the minor fixes.

So the key big projects for you outside of Edinburgh are addressed in this use of surplus funds. The rest of them, I agree, inferring that we're going to be able to deal with a lot of it in the capital approval plan over the next five years.

We are, yeah, yeah. That's entirely true. And I think there's, you know, a couple of the things that are coming up with, you know, one of the reasons it was really important for us to spend money as well as our public works building, and then entertaining the thought of paying our debt is, in the next two to three years, that money we would have been spending on those buildings as part of the CIP is now freed up because we're using surplus on it.

Also, just one point of clarity about the CIP book that I think is really important is when we do that, we spend a lot of time and attention on year one and year two, right? Because we know we might not get back around to being able to really hash that out. Year three through five ends up being a little bit more washy. And some of it is like when we go to reevaluate stuff like, oh, the roof's holding up or we have somebody come out and look at it and it's like, yeah, I can make it another two years and it's fine to push that back. So just don't want to take that as like we're for sure going to do things in year three. And honestly, to some extent, even year two, we're going to come back and we're going to have these same conversations. And one, we're going to make sure there isn't anything that we don't need to do. But two, you guys might have some pressure or whatever that ends up looking like, too. So we might end up moving something next year anyway. But really, those first two years are the ones that it's really important for us to get right. And the stuff after that is more of a projection based off of also assumptions that there's going to be a levy in the previous year. We don't really know fully what you guys are going to do in the year before, which means that the year after might be impacted by that. So that's just one thing as you're reading that book and thinking through is year three through five are a little bit more of a, I don't want to say necessarily like a wish, but more of a... They're softer.

Yeah, they're softer. They're placeholders. They've always been placeholders because we know that things are coming with respect to those items that need to be addressed. So, you know, another... Possibility, you're talking about the use of funds. It seems to me that in this time when households are really stressed, another possibility would be to think about cutting back on the AI investment, which I hear has some flexibility with it. If you cut that back to a million, you could take a point and a half off of the levy.

Could I, I understand that logic. I would like to make a plug for, AT OUR JUNE MEETING, YOU DID ASK FOR OTHER THINGS THAT, YOU KNOW, HAD BEEN CONSIDERED AND DIDN'T MAKE THE CUT, AND IT WOULD BE REALLY GREAT TO HAVE A LIST OF ERIC'S, YOU KNOW, $1 MILLION WORTH OF STUFF THAT PUT YOU UP AT NIGHT THAT DIDN'T MAKE THE FINANCING SO WE COULD LOOK AT THAT.

I THOUGHT I'D JUST SORT OF SAY THAT HE HAD THE MOST IMPORTANT THINGS ON HERE AND THE REST OF IT IS COVERED UNDER THE CIP.

RIGHT. $54 million. I have to believe there's still other things that are kind of concerning. And it would just be interesting to know what those were. I don't know.

Okay.

We should know.

I have a very good idea. I can tell you that most of them are large projects.

Large, large. There's nothing.

Okay. However, pay for the design in some cases.

If we have funds available, what do we spend them on? And again, I know I sound like a broken record. We should have that conversation. I have no issue with that at all. If we're creating funding someplace, then yeah, we should figure out, should we bother the maintenance? Should we... more staffing, should we do whatever. So I would for sure, I agree with what you're saying. I have no issue doing that at all.

One thing to keep in mind is that surplus money is a one-time use. So that is different than what we're levying for, right? And so just keep that in mind that we don't, I don't have, you're actually creating a deficit, right? An imbalanced budget. If I take a million dollars of surplus and plug it in, it doesn't mean that we won't have a million dollars next year in the surplus to do the same thing or that we might not be able to trim on the other side, but it's not a one-time use for one time, which is part of the reason that capital would probably be a better choice than just reducing the levy.

I would tweak what Mayor asked for and ask, of the 2 million, how much of that do we need to create the infrastructure, kind of the AI sandbox, so that we can run some of these projects? Just understanding what that number is, because that's coming out of the 2 million.

And the AI is... is less like a capital project, because it's not necessarily going to be an expenditure that has an end. It could go on and on and on. And so it's kind of an anomaly in all of these things.

I think that's what James was saying when he said the sandbox, though, was that he was thinking about moving Tyler to the cloud. That's a one-time investment, those types of pieces.

So just to feed off that, saying the same thing in different words is when we do the budget presentation, it would be nice to have a sketch of what the $2 million represents. Okay. So this is we want to be future ready, right? And so what does that look like in terms of this fund? And could it be not paying off the bonding and just having months?

This is all a use of funds conversation. point we're all making here. You can use it to take care of more of the things that you own. The reason I mentioned the reduction in the levy was because in 2008 or 9, we had a 0% levy increase because of the pressure in the economy. And that had some, I think, some very beneficial impacts. So it does defy the use of funds for a one-time purpose, but it does give people relief. And that's not a bad thing either. So as we think about, all of us, the next conversation around this, we've got a lot of things worth thinking about. All right. We've got six minutes. And adjourned.