City Council - workshop

One more sidewalk such that I don't want to speak.

You're good.

OK, we are good.

Sorry about that. Technology wasn't quite ready for us here, but we're ready now. So we're going to go through post development infrastructure and these are the things that that. Typically plague us as a staff because we get developments that may have been in place for 20 or 30 years without all the infrastructure completed. You might recall a couple of months ago, we had some questions about fire hydrants where the city was a developer of a particular industrial neighborhood, and we didn't put in fire hydrants that met the spacing. So now somebody wants to develop property, and suddenly they're left with a $25,000 bill. And you could argue, well, that $25,000 should have been invested when it was originally developed. We don't have budget or a mechanism to handle those types of things. Similarly, we with our stormwater infrastructure have initial infrastructure put in when something is developed, but if there's any maintenance or expansion of stormwater infrastructure post development, it goes in and competes with the CIP. And finally, Justin next will take us through a deep dive into sidewalks. The third bucket is And we have neighborhoods that either developed with incomplete sidewalk networks or sidewalk networks that are deteriorating. Again, we don't have a funding mechanism to deal with that infrastructure as it needs to be replaced. And then secondly, we will go into the long-term capital plan, including council priority projects and a 10-year outlook. So I will turn it over to Justin, and feel free to ask questions as we go.

Okay. On the agenda of this, kind of go through the history, the benefits and purposes of Sidewalk, current policy, and then how costs are shared currently. The policy has been built over time. It actually started in summer of 2005. and with the sidewalk master plan, which was officially approved in 2002. In 2007, there was what's called an accessibility transition plan that focused primarily on ADA ramps and technical warning panels. Then in 2015, there was the start of the voluntary residential cost participation program. It started off as $2 per square foot. for residential properties and then in 2021, that was amended to $4 per square foot, which is where it's at now. The goal of that was to try to pay for roughly half the cost of the installation. And then in 2021, that was our most recent Transportation Master Plan, which discussed improvements to all the transportation system, including 148 miles of missing sidewalk. The Sidewalk Master Plan The vision that they had back then was that the city sought to sidewalk and bike lane networks that would strengthen the community and improve transportation safety. That was the stated goals. And the planning was based on the needs of the residents of all ages, so students getting school, pedestrians getting to places, senior citizens enjoying the outdoors and bicyclists separate from the vehicles. Next slide. The underlining assumption was that sidewalks would ultimately be provided. This criteria just helped determine where to start. And so there is a handful of criteria prioritized the street classification and traffic volume, pedestrian volume to safety and connectivity. So safety factors, residential densities and connection to existing sidewalks. It listed The 2000 plan listed 12 high priority areas, and they could be summarized in six bullet points there. Start near the schools. So they wanted to focus on sidewalk within six blocks of schools. That's the highest priority. They wanted to build continuity along collector roads and busier streets and Then repair what exists. So if there is sidewalk, there was a process to evaluate existing sidewalk and adjacent landowners would repair and replace it. Design areas for handicap accessibility and keep sidewalks clear of obstructions. On the network, they had a recommendation, remember this is 2002, of continued funding at $100,000 annually. We do have a fund in there. I think it's a little bit more than $100,000, but that doesn't get as far as we like. And then integrate projects into the CIP, and then revisit the plan after 10 years. The 2007 transition plan, the objective was to install, repair, curb, ramps, and sidewalks. It again prioritized the order, starting with government buildings around schools, hospitals, churches, and down the line to industrial areas. And this plan also had input from the mayor's committee for people with disabilities. In the 21 master plan, That discussed improvements in all types of systems for cars, buses, production, included sidewalk streets, included recommendations for sidewalk streets and bike trails. It noted there's about 148 miles of gap sidewalk and about 23 miles of shared bike trails. The priority recommended in this plan was, again, Tier 1 is sidewalks surrounding public schools, and then there was a Tier 2 of everything else. And I'll show a map here showing where those sidewalks are. The strategies they recommended was pairing sidewalk improvement with road neighborhood projects, which we do. Our street reconstruction projects, we try to include sidewalks. Use case-by-case replacement, which we do also with building permits as they come in, require sidewalk replacement and then the voluntary cost participation. And then they also suggested a possible third option was considered pedestrian lanes on roadways. That's one that we do have some in town, but not a lot. And the next slide, our goals are safety and that's trying to separate sidewalks from roadways. One of our goals. Sidewalk is infrastructure for all ages. So you don't get access to their children, adults, folks with disabilities, parents or soldiers, you know, all ages. Provide mobility to destinations, schools, parks, churches, other destinations, and then improve quality of life, facility health. So the next section, we're kind of looking at what our current policy is. Our current policy reflects the goals of these past studies. The ordinance is kind of noted at the bottom. Chapter 18 is a big one that deals with sidewalks. Chapter 24 deals with developments in sidewalks. And then there's South Dakota codified law that skills with assessments. And our policy requires to build sidewalks on both sides of the street, meet ADA requirements. The developer is responsible for public infrastructure, including sidewalks, install with construction, so like building permits when those are issued, and then responsible for maintaining sidewalks and sub-codified law, kind of, the city has that discretion as far as how to update and install sidewalks. The one exception is that ADA requirements cannot be waived. That's a requirement of the federal ADA law. So current standards, we try, this is a typical section where we have two fast lanes and parking spaces usually. On the outside, about four inches from the From the property line, we try to put sidewalk. Our standard width is five foot. The width can change depending on certain scenarios. If it's adjacent to the road, it can be wider. If there's higher pedestrians like downtown, they'd be even wider. You got 10 foot. And then sometimes when we're doing infill into the older part of town, there's four foot sidewalks that we're just connected to. We provide four foot. Just kind of a note, the five foot standard, there is kind of two pieces to that. One is an ADA requirement. If you have smaller than five foot sidewalk, you need to have passing lanes every certain distance. But it's more of a practical standpoint as well. A five foot sidewalk allows two people to walk side by side. So four foot, it gets a little tight. Sometimes you have to walk on the grass. And if it's a three foot sidewalk, you basically can't walk side by side. So that's the reason why our standard is five foot. Just kind of a little background on how we design the projects. There's a certain trigger for when sidewalks go in. If it's a building commit, the developer has Their engineer kind of lays out the sidewalk, but if it's a street project, that's a trigger for us to design it. We review the site corridor, and we look at a variety of different things, any obstacles in the way, trees, grades, driveway lengths. There's a variety of things that we look at, and it's really trying to find the right location of the sidewalk in the right way. We'd like to try to have it right next to the property line, but if we can't move it in a bit.

I think this would be a good one to maybe pause on. So City Engineer Peterson has laid out the history of the various policy decisions councils have made in the past regarding sidewalks. And it's this slide is really where sidewalks often fall apart. And it's really number three, it's the decision. And so this isn't as simple as implementing policy because most of our neighborhoods are very diverse in terms of how they were landscaped, how the streets were laid out, where the right of ways are at. And so on almost every one of these, we've reached the point where yes, there's a triggering event, whether it's a building permit or reconstruction, we look at the site, We can find ways to do the sidewalk. In many cases, they may not be popular. Just think about the 12th Avenue discussion and the 5th Avenue discussions of the last year and a half. And then a decision is made. And often the staff decision historically has been when we can't reach clear decision on the sidewalk, we go with a waiver of right to protest. And the waiver of rights to protest that have been executed in the past is rarely have an expiration date. They go on forever. They're difficult to track. And rarely do we get to the point of mandating the sidewalk be placed because if we didn't have the wherewithal to do it way back at the trigger, it's even more difficult to come back a couple of years later and say, okay, put the sidewalk in now. So it's almost like a free pass. And then we've got the ADA work and the network outcome. And so that's really why we still have 148 miles of incomplete sidewalk network. And as Justin takes us through some of the rest of this, there will be a couple of solutions, but these solutions are really temporary short-term fixes. And when we get into the actual CIP, you will see that our deficit of required sidewalks in the community is a $30 million problem in today's dollars. And I don't think any of us are naive enough to say that we're going to find $30 million in the next year and complete our sidewalk network. But that gives you some background in terms of order of magnitude of what we're talking about as we go through this. So are there any questions before Justin takes it back over?

We know how much sidewalk we have that is currently deficient, that needs maintenance. So we don't know really how big the problem is because there's probably sidewalks that are broken up as trip hazards and everything else.

Yeah. The way we've been handling that is if we get a complaint, that's the triggering event.

Okay. And earlier, the intent was to do some sort of assessment, and we probably didn't do that.

That was the question I had, like we do with the bridges. We have a bridge assessment. Do we do anything like that with the sidewalks?

Not currently. If we had a funding mechanism that we could find, it would be... I would think that we could just go walk a ward or something a year. So every five years we'd inspect the sidewalk and at that time determine which sidewalk needs to be replaced. Thanks.

A question on site review. So you've got to have a half more driveways if they're parked in the driveway. Is there a certain length that Trader's

that doesn't allow for sidewalk because a vehicle parked would not would be parked into the center of the way at the sidewalk well we try to have at least 18 feet some of the older neighborhoods that's sometimes difficult um like 10th avenue for example i think the majority i remember right there was all but like seven three i can't remember somewhere between four and seven driveways

met that and so we just dealt with we ended up putting sidewalk in there ended up being like four driveways that were didn't quite meet that and so that that's what so then that that what yeah how do you navigate through that decision because that's what comes to the council possibly sometimes is all sudden you're one of those four now you can't park your legal you can't park your vehicle in your driveway anymore because the sidewalk is there so how do we that's a tough one to address but how do we address that because if if

It may not be the case in every scenario, but one option is instead of putting it back by the property line, it ends up being or by the road to the driveway.

You know, Grant, like there's times when we haven't done that. We just put it where it is and... In a few cases, right? And so those are things we've got to think about in this decision. How do we make sure in our engineering side of things, because that's what muddies the waters when they come in front of the council. Then we have that. Well, it's going to be right where it might be parked. Well, you're one of a few that that's the case. Well, yeah, but how do we, then it's hard for us to approve a sidewalk when we know we're all of a sudden forcing them not to be able to park.

We spend a lot of time in our designs focusing on where to place the sidewalk. It's something that we take a look. Spend most of our time. It's not as easy as, we'll just move it here. I mean, you've got to tie in everything. Yeah, trees and other stuff.

I get it. But that's where I think why that's the impasse. Possibly one of the impasses when it comes to these neighborhoods, these older neighborhoods as we go through this.

Another area of impasse is often While it might seem like a good idea to place a sidewalk on the curb to avoid landscaping and trees and small rights-of-ways in older established neighborhoods, then that introduces the snow removal complexity. So it's not an easy answer in many of these, which is why it's been under discussion for a quarter of a century.

One other note with the waiver right to protest, I mentioned that it's hard to track, but the other thing about it is if it ever does get called in, a lot of times it's not necessarily the person that initially triggered it. So it's two, three landowners later. And so I shouldn't have to put sidewalk in if it wasn't signed by me. Maybe I'll point out this couple of maps up here. Feel free to come up and look at this. But the blue lines are what we call the gap sidewalks. So these are the missing sidewalks. There's two circles on the bigger green circle. That was the six block radius around the schools that's recommended by the 2002 plan. And then we added the four block circle just to see if, you know, prioritize that first before the six block. As you can see, I mean, a good portion of schools are spaced out pretty well, so a good portion of the city falls within that category. The other thing with, you know, development and these triggers, you never really know exactly how it's going to lay out. So we had the 12th Avenue project right here. We have pretty good north-south sidewalks, but we're still missing the 12th Avenue. There was a project over here by a school that was done shortly after that, and then next year we're talking about doing this stretch here. So you can see how three projects could really improve a particular area. On this side, this is really the same map. It's just... kind of broken down neighborhoods more than schools. And I guess I call this the Robey Creek area, the Lake Area Tech area. And you see there's a lot of sidewalk in those neighborhoods by the schools that could be building. So we look at kind of a complete street. Streets do a lot more than just cars. They have drainage. We look at it for transportation for everyone that uses it. So pedestrians, bicyclists, buses, motorists, and then emergency vehicles as well. The Residential sidewalk policy. So this is the cost petition. It's a voluntary program. Started back in 2015 at $2,000 per square foot. It's increased to $4 per square foot now. Just for residential. So if you live in the building, that's what we count. Commercial industrial churches, they don't qualify according to current policy. And then that $4 a square foot equates to $20 a linear foot for a five-foot sidewalk. And that's what we use for our street reconstructs. So when we bring the assessment to the council, we take into account that reimbursement right off the bat. So it's the difference between the actual cost and this reimbursement. And we... Back in March 2025, we kind of did an analysis of those assessments. There was five projects during that time period. The average footage, frontage footage for those slots, just about 100, a little over 100 feet, 102 linear feet. Those range between 55 and 228 was the largest. So then the average assessment was a little over $2,300. And that's, again, after the reimbursement was taken into account. It works out to be about 50, about 46%, or the other way around, 46% city, 54% landowner. So it's right about 50%. And that big number, the 53,000, that's because of the big lot, 228 million foot lot. Just another analysis. It's kind of curious for me. We typically take these assessments before their bid, and our estimates tend to be high, so there tends to be a slipper shock. So instead of $2,300, what ends up being the actual cost, it's closer to $3,000. So there's a bigger shock value. It's I think about that and evaluate it myself. It's good and bad. At least if it's higher, then that's kind of the worst case scenario. But it's also that shock value as well. Can you remind me how that's paid? How the $2,300 is applied? They have the option to pay it up front. They have three days to pay it up front. If they don't pay it, then it goes under tax rolls, 10 years, usually there's interest associated with that.

But that's allocated just to the city on the tax rolls?

Correct. And then, you know, right now, we're sitting roughly about 50% where we want to be. But as the cost of sidewalk concrete increases, that's going to adjust. we're kind of monitoring it. Right now, I don't necessarily think we need to change anything, but if we would kind of just maybe go into more of a 50-50 type split, it's customized to that. But either way, the ARAMs are always city-funded, and then the carriagewalks are the ARAM's responsibility.

So... Can I follow up? Yes. Okay. So... The cost share and the assessments and 10-year tax bill, there's an interest rate. So technically, we're forcing them, if you will, to put the sidewalk in, and they're forcing them to pay interest. I get the goal of interest. Maybe they'll pay it right away instead of putting it on the tax bill. Would there be a better way of saying a little bit of a discount if we talk about policy changes? A little bit of a discount for paying in the first 30 days versus forcing somebody to pay interest. It just doesn't seem right that we're forcing them to put something in, and we're going to force you to pay interest. It just doesn't seem right in my integrity book.

I will just say that the assessments are all done by a resolution, and the interest rate is established by the city council. So 10% has been our standard, but there has been a time when the council has not lowered interest rates.

And if we, I guess it's a part of the reason, though, so they made it and maybe they've been incentivized to pay it right away. So if it's free money, I guess we'll just pay it for 10 years. Is that part of the reason why interest or what's the point of interest?

I think it's a little bit to like establish more like if we were a bank, a loan type opportunity for them. You know, a bank is going to go take out a loan. We're charging interest now is 10%.

Those were going in there on our free will. The bank is enforcing.

I think there's some policy discretion we need to exercise, especially around the 10%. So today, if we were to look at putting these sidewalks in, the only mechanism we really have to fund it would be to reduce our unrestricted or unrestricted uh fund balance reserves and and those are reserves that today we invest at between four and a half and five percent per year so there is real cost to the city of borrowing that money um so we'd like to at least get the five and a half i i think we are already though giving the homeowner some compensation in the square footage allotment that we give. So it's a tough decision regardless of how you look at these sidewalks. I appreciate that, Kristen.

Also, just to follow up, Matt. The driving force for a sidewalk policy, is it to repair broken down sidewalks or was it more to get those 140 some miles, get more sidewalk put in? Or is that a fair question? Is there a driving force or is it both equally?

I think we have the 148 missing miles in the network is more of a staff priority than the fixing the sidewalks just because we have such a gap in the network today.

That's what I was thinking. But so my thought on that is now is there a way of looking to see where the money is being appropriated? Is it for our people without sidewalks put new ones in because of that incentive or is it more people replacing old sidewalks? So then if it's more people replacing old sidewalks, well then we're not really getting what we want out of that incentive. So then we got to review this a little bit as far as there are better incentives for putting new sidewalks and maybe we don't incentivize replacing new. That's just part of your home ownership.

just are we getting the right you know outcome i anecdotally i don't have any numbers to back this up but i would think that majority of the cost recovery or cost participation is probably replacement the majority of the new sidewalk comes with building permits so when someone's adding a garage or in addition to their house or something that's from the news about that okay thank you just thoughts i was thinking out loud here a little bit um we've already kind of started to dig into it but i mean this is kind of a policy question how do we build a connected sidewalk network fairly keeping these goals in mind of safer pedestrian travel, ADA accessibility. And Alan's kind of noted that already. It takes, if we were going to fill the entire gap, it'd be about $30 million. And I, this isn't a, in my mind, it's not necessarily we're going to do this in one year. It's having a 20-year gap.

thing 20 year 30 divided by 20 is roughly a million and a half a year to fill the gaps over 20 years it's a lot of money just to share some of the thoughts that i have similar to dance i feel like it's almost two different buckets where if we have a property owner come to us and say hey i want a sidewalk This policy applies where we share in that cost. But if we're going to do a project like this street or something where sidewalk or 12th Avenue or whatever, pick the project where we're coming in with a construction project and it's our project and we're going to put in sidewalks as part of that to come in and say, hey, you're going to foot half of this bill, even though it's our project. And if you don't pay it, we're going to charge you interest. I think that's where a lot of these conversations come from. the driveway concerns. So it'd be nice if we could figure out a policy or options or two different buckets almost. Or if it's a city led project, there's there's this option. It seems to make sense to me that we would pay for that, which isn't great from the tax dollar standpoint. But it's also hard for me to get around the idea of saying, hey, we're going to do this project and you're going to pay for half of it, even though we're going to force it on you.

That is similar, Deputy Mayor, to how we handle stormwater in modern developments. The property owner pays for the initial installation of stormwater improvements. The city pays for any replacements to the stormwater improvements over time. We could view sidewalks the same way. If it's a replacement sidewalk where we're putting in a street, perhaps the city pays a larger portion of that. In cases where there's a gap in a sidewalk network, though, I think we would likely want the property owner to pay for more or perhaps all of that if a sidewalk was never installed.

Maybe I should rephrase that because I'm thinking the same as you, which maybe there's still participation, but it's much smaller.

Yeah.

Much, much smaller. And maybe it's much larger on the volunteer side.

So it It's really the lack of any visibility in our long-term funding is the problem. If we were to look at this to put it into perspective, this would be about one and a half years worth of sales tax revenue on the second penny. If we were to look at a cap program and do a temporary raise in sales tax of 1%, it would take us a year and a half to raise enough money to fund completion of our sidewalk network. And so when we make the transition from sidewalks into long-term capital planning, I'd like you to just keep this in mind. And this is one of several areas of infrastructure that we don't have a funding mechanism on. This is perhaps the largest, but we do have others. Any other questions on sidewalks?

Well, that $30 million, is that total cost? Right? So a percentage of that would be homeowners.

Correct.

So that's total cost. Yep. And we could save years and that for the sales tax revenue. Is that for our half or whatever our percentage is? Or is that for the $30 million?

That's for the $30 million? I look at it this way, whether... whether we're forcing a homeowner to put a sidewalk in, paying for it immediately or run an assessment or sharing it across the sales tax, it's still an ask from the residents of the community that we're not making today. Anything else? Well, at least the e-bikes Don't have complete run of 148 miles of our city. I want to move into the long-term capital plan. I'm going to start with the council priority projects that we looked at a year ago. And this is the council priority project list that some of you helped develop the year before that. And I provided some updates where you see the yellow highlights. First of all, there are two updates on here. Number one, you might recall last year we had the list, but very few dollar amounts. So over the course of the last year, we've been filling in some of the dollar amounts on these these council priority projects. Secondly, we've made progress and in some cases substantial progress on many of these where you see it highlighted in yellow. Those are areas where we have found ways to accomplish what we believe you wanted accomplished, or we found funding for the project. So just going down those yellow items, you can see the street maintenance facility. You will see later in the presentation, we have $11 million sitting ready for that project. And that is the only project on this list that's included in the CIP. Housing through third-party endeavors and some TIF investment, we have largely tackled many of the housing obstacles that we were talking about a year ago. There's momentum on all of them. City hall redevelopment, there's a redevelopment going that doesn't involve city dollars. Baseball stadium, the Watertown Baseball Association is actively working on a project there that should not require significant city dollars. Gravel roads in the community. We talked a few council meetings ago about doing some blotter tops on one of the roads. We do know that we still have 31st Street and Third Avenue Northeast that remain open, so they are still on the list. Repurposing the water treatment plant. Again, we are soliciting solutions from private people that don't involve the expenditure of city dollars. So I'd like to do with the items that are still gray on the list is get some feedback from you on whether or not they all remain on the list, or should we take some off and focus on a smaller list of projects? Anybody have any thoughts or anything we maybe should look at adding to the list or replacing?

Do we really need an east side fire station?

No, we don't. And the reason why we don't need it is we don't have a mechanism to staff it yet, so. There is not. It just provided some visual contrast before we added the yellow.

Is there a question on any of these projects that would require construction about taking advantage of the capital project avenue that the state has given us?

I think that's a great way to look at it, Councilman, that perhaps the Eastside Fire Station, the Cattail Crossing Clubhouse, And the downtown improvements would be ideal for a CAP program. I think we should hold off on some of the sport facilities. We're having some traction and good luck with the baseball association. Let's wait until the other associations come forward for flat floor space or an additional pool before we would would look at making investments in them.

Yes.

Yeah. Out of the ones in gray, what do you, and this would be just guessing, what do you think there would be possibly federal grant money that we could pursue?

I would say an east side fire station. There could be federal grant money. The flood control in the Big Sioux River, this number is already net of substantial state and federal money. There could be some urban renewal grants available on the downtown improvements and possibly something on Compesca weeds, but I don't even know what would be involved in Compesca weeds. That's a That's something we know is a problem that's getting worse, but we don't have an identifiable or quantifiable solution.

Yeah, and the only other thing we're looking at here is the auditorium. At some point in time, we're going to have to make a decision with that.

We are.

Remind me again, that wasn't part of the assessments that they just did?

It wasn't part of the assessment we just did because it was assessed a year earlier. And if it had been included as part of the assessment, it would have been ranked way low on the score.

So Foundation Plaza, was that for ICE idea?

I think it was.

I just remember when we had, it's only been a couple of years since we finished that. And it was, that was kind of the time to decide. It was decided not that one way or the other. I just know if it's a little soon to try to add, throw more money into something that I don't know, is that fresh and just got done. And I can see someday down the road, maybe, but I don't know. I just think that's because it's going to cost a lot more to do. And now adding it, they warned us of that, doing it later, sooner than later. I just think that'd be a, waste of taxpayers money trying to add another improvement already in going two years and do it.

Yeah, I would like to get to the point where we take some off of this list and maybe work with a list of 10 projects or fewer. And some of them will come off because they're in the yellow category. But there are some that maybe need to come on as well. That would help us a lot as we go into the CIP because today our CIP plan is really a persistence plan. We look at the amount of money we've spent in the past and what needs to be replaced and we carry that forward. There isn't very much at all in the CIP plan that brings the community forward. This list of priorities brings the community forward and the way we do that is through enhanced or additional funding. The way to get additional funding is to either grow population Or tax people more? Or grants?

I wouldn't have any problem striking some of these from the list, but I didn't create it. I had no input into it. There's some people here who did, and maybe they have a better understanding of why things are on there. I don't get a 50-meter pool, for example. I don't understand. I don't see a need for it. One more outdoor pool or indoor pool? Really? I don't get that. So maybe Kyle and Dan can share why that was on the list or how they feel about, you know, somebody like me as the new cube just coming in and saying we're striking that because maybe it doesn't work. You know, I mean, I wasn't here for that discussion.

Yeah, I can take a stab at that. So we had a work session where everybody threw out their ideas of what they wanted. The 50-meter pool came from getting more swimming tournaments here in town because apparently the pools aren't long enough. I don't know how long the pools are. He's trying to get funding for the fire station. That was all on the ground. So then there's the weeds. These all come from just almost issues that need to be addressed that are not in the normal plan. So I agree with you. Some of these, this list is a little bit deceiving to look at because there's still things that are on here that are currently funded but not done yet. So I think we almost need to take them, take the funded projects off this list and kind of come back to the drawing board of what we need. And I think that there's some things that have come up even recently that aren't even on the list yet. So I hate to say let's have a meeting to schedule another meeting, but we probably need to have, dare I say, strategic planning to go through this.

And how this list got put together, some of the items might have just been one councilman brought it up and we thought, well, let's put it on the list. That's why now's a good time to review as you're bringing up and talk through what really needs to be on there.

I would suggest... And I think it's a good idea to get the next step in strategic planning with the council. But as part of that, and this is really hard to do, I think you and your colleagues who aren't here would benefit in having a discussion on what is the role of local government. Because there are projects on here that we have groups in user communities that are very passionate about. but it may not be the role of government to fulfill the need of their passion. And we can't, on one hand, celebrate the fact that we've got the lowest property tax levy of any significant city in the state, the lowest utility rates of any significant city in the state, and then at the same time say we want to fill a list full of things that we don't have funding to pay for. So that's a fundamental question I think you as a team need to have.

I think from my perspective, what impacts the community health? And I think of community health in a broad sort of sense. You know, so what improves the overall viability of the city? And I don't mean like health in terms of recreation and stuff like that, but health in terms of our infrastructure, sewer and water, broadband. I mean, some of the things that I think are part of what constitute a healthy community that will help fuel the growth that you're talking about. Because we already know from the discussions we've had about industrial development, for example, you know, and we realized, well, we need a lift station or whatever it is. We're not going to get to the growth unless we have the infrastructure. And those are the things that I think ought to be prioritized as a government entity rather than, as you said, some of the things that people are very passionate about. And I get it, you know, but it's like baseball. Yeah. America's sport, it's great. We have a long legacy in Watertown of really great baseball teams, but I don't think it's our job to build a baseball stadium. I mean, I don't think that's what the priority ought to be. We can assist, we can do various things, but I hope that's helpful.

This is very helpful.

Absolutely. Just one quick question. And basically, just for the benefit of the public, With your experience, and I know we've talked a little bit about interest rates and stuff, looking at just the basic Dave Ramsey-type principle of buying down debt, if we focused on paying more debt down quicker, would that open up the door to working on a lot of these other things?

It would, and that's a great transition to the next slide, if that's okay.

Sure, exactly.

So the next slide that is up in front of you is looking at the debt that we currently have that we service with the second penny sales tax. This is not the entire debt of the city because we also have, Christian, you have to help me, probably 50 million in loans related to our wastewater utility and solid waste. And those are financed through user fees on liability bills. So this future debt service obligation, as of the beginning of this year, you can see way over on the bottom right, will total $86 million. That's $86 million on about $55 million of debt. So to Councilman Mormon's point, if we suddenly could pay off all of that $55 million tomorrow, we would say obligation of 55 minus 80, about 31 million. 31 million would fund quite a few projects on that list. So the concept is great. Now the question is, how do we do that? Looking at this and across the bonds, we will see in a couple of future slides, One way that we will do that is just by the passage of time, because you can see especially the bonds over the four on the left side of the chart. By 20, roughly 2032, several of those are going to start to fall off. So we will have completely extinguished that debt, which will leave us more of the second penny. available for new investment or pay down of debt early. So just as you look at this, if you have any questions, we'll try to answer them. But hopefully this sets that framework for you in terms of the debt level that we have and where we're coming from as we look at the CIP. Any questions? I have a question.

So the only thing that I will say is with the bonds, you know, we always have to wait until they're callable, but we do, I do constantly work with colliers. Anytime that an interest rate would be able to be refinanced, we will look into that. So like a lot of the older ones there, the interest rate was pretty low, like the 2020, that was pretty good. But our two newest ones, the, for the ice arena, those are a little bit higher interest rate than we're used to. So if at any time it does trigger that we could refinance and do so, we would. So just so you know, we do kind of watch for that, too.

What are we getting for interest rate right now just on our money we have in the bank?

I think we're sitting, I think the last time it was 4.8. Is that, Kim, bank statement? Was it 4.8, 4.8? 4.4, I think. Okay.

What's the rate of the bonds?

Those last ones were an average coupon of about 5.5%.

The overall portfolio, though, is quite a bit less. So if you look in your package, you also have the comprehensive annual financial report as of December 31st. There's a debt schedule in there that shows you the rate on each bond. I think it's age 70, I don't know. It's in there, it's in the table of contents.

The $5 million with bonding that we were looking at for the street maintenance facility, what's our timeframe before we would have to spend that?

That's already bonded, but I believe we have until the end of 27. Okay. And we do have ways to spend that, Councilman. We could spend that on existing CIP and then take CIP dollars and move back to streets. So you're not at a compliance risk there. Looking at the revenue outlook of the second penny, we anticipate next year being right around 11.7 million on the second penny. We're growing that at 3% annually. The other aspects of our funding for the CIP are relatively flat, including some state funds, the STIP program, and we keep our interest earned pretty conservative in here as well. I think we're at about $660,000 in interest earned. Because we've been in a higher interest rate environment today, I think in the last 12 months it's closer to $1.1 million. that we've earned on our CIP dollars. So we are conservative in this view. Looking at the capital expenditures that have been proposed for 2027, we're proposing 14.8 million, and that excludes the street maintenance facility. This is very similar to what we do most years in terms of how we've allocated it. You can see public works down on the bottom, the largest share. Most of that is generally street reconstruction of about three and a half to 4 million per year. Debt service is a little over 5 million a year. That is the bond payments we talked about at four point something on the earlier slide, plus some long-term capital leases that we do have in place. You can see culture and rec, public safety, various transfers make up the rest. of our spending plan for the next year. As we continue with this forecast, um, we would like to maintain a $5 million reserve target. You do see with the street facility, we will dip a little bit, a little bit beneath that target. However, when we consider that our capital spend plan after 2032 is continuing with just replacement cycles and the same type of equipment, and we've retired some debt, you can see that the reserve starts growing and starts growing at a rather steep rate. And that is really recognizing that the debt service goes down. So after 2033, we will have the ability to invest more in some of the council priority projects that we have. This is an additional look at the debt service level by year, and you can see where things start to fall off and even more so in the year 2035. You can also see here that we have a ladder truck in our fire department that is the largest single item in our CIP that is coming up on a replacement cycle. And that's actually required by the National Fire Protection Act on an apparatus over 20 years of age. This is a critical piece of equipment and it really reflects the inflation we've seen. When this asset was procured 20 years ago, it was a $750,000 fire truck. Today it is a $2.1 million fire truck. but really critical to our firefighting operations. And we will get at least a 20-year life out of the next one. So that is a large item here. We recommend that we do a capital financing program on it for the initial several years and then go on to recurring CapEx. Any questions up to this point? So this plan, and in your books, you will have the detailed project by project. This plan, we have it balanced for the 10-year period of time, meaning by balanced, we mean we've got enough revenue coming in through the second penny sales tax to fund the debt service requirement as well as the CapEx and maintain a reserve balance of about $5 million. It's really a discretionary reserve balance. That's what Kristen and I have discussed we think is prudent. You do see that we dip to about $4 million in 2032, so we're slightly under, and it's the street facility and the fire truck combination that drives that dipping below. Some of the Priority projects, as we discussed, they still need to be sized and included in the capital improvement plan. Here is where the 11 million for the street facility is currently at. We currently have just under 7 million of cash from earlier bonds. that is currently invested that's available for the street facility. In addition to that, we plan on allocating about a little over $3 million of unrestricted fund balance to the street facility, and then through normal CIP in the 212 fund, we will fund the balance of about $800,000, which makes up some of the land improvements and other items that we would need associated with a purchased facility.

Any question on this?

It's still moving forward well. Just an update. One of the enabling pieces of that old domino plan is a storm sewer in Kelvin, which we've got good news on schedule that Kelvin storm sewer should be completed in April of next spring, which is about six months earlier than planned before. And that's one of the pieces that allows the other pieces to come together. I did mean sanitary, thank you. Next, we can take a look at where this breaks down by department or function. You can see street improvements is the biggest use of the second penny over the course of the next decade. Park and rec and public works tie for the rest or tie for the next highest, and then fire and ambulance and police. really are at the lower end where it's typically vehicle replacements each year in the CIP. Some detail on some of the larger projects over the 10 years. You can see the mill and overlay plan is funded quite heavily. We do believe that's been a very fruitful plan in the community to do the mill and overlay to get future life out of our streets. We do have some complete reconstructions as well as the chip and fog seal. On the police side, it's primarily patrol vehicles. I think we replaced three to four of those per year. And then rec trail restoration. Within the next year, our trail system should be complete. And then we begin the process of maintaining the trail system in coming years.

Streets, is that, that looks like to me, like four million a year, is my math right on that?

That's about right.

Okay, so is that factoring, are we doing a little less, because there's interest, right? Five years from now, we're not going to get as much bang for our $4 million. Is that, are we doing less roads five years from now?

We do have an inflation factor in. I think we take project costs up at about 3% per year. We hold our sales tax to 3% or less per year so that there's some breathing room in this plan. However, the difficulty that we have, especially with road projects, they don't always follow the typical rates of inflation. So general inflation could be 3%, but due to petroleum being a larger portion of that, could go up 6% or 8% per year, which is just less work that we can get done.

Doesn't mean we're doing formula 27. We might be doing three. Correct. I think there's extra makeup.

On the wastewater side, we will be completing the major investments in the treatment plant over the course of the next year. We still have rather large investments that we need to make on the collection system side. And I don't know that all of those investments are fully funded in the rate case yet. But as they need to be made, these are the type of things just absolutely they need to be done. And so we can't say, well, let's have a sanitary sewer problem. So when these happen, we have to make the investment and increase the rate to cover. Solid waste, similar. We do have some mandatory investments. I believe in 2030, we are replacing two sanitation trucks that year. That's why it's so much higher. And here again, we look at the rates every year, and not only do we build the rate structure to cover the capital expenditure, we cover the reclamation of the land fill cells in the future as well. So we're building a fund for when those cells are done, we're able to appropriately close them. And so that's the biggest driver in solid waste outside of the collection side. Airport projects are largely driven by state and federal grants. We do have some investment projects in the CIP, including making some investments that are not federally funded in in developing a hangar taxiway area that will be a catalyst for business development at the airport. So view it as an industrial park, not near the airport, but an actual industrial park for aviation related businesses right on the airfield. Ian has been working on that and we will share his strategic plan with you, but some good momentum going on there with some good investments in the airfield. Final slide looks at the full plan over a 10-year period. Over a 10-year period, we're planning on making $226 million of investments and funding those investments $155 million through the capital improvement plan, which is the second penny of sales tax. The airport largely funded through state and federal grants with $40 million of investment. Solid waste funded through the utility user fee at $21 million. And finally, wastewater funded through the rate case at $10.1 million over this planning cycle. Any questions on the CIP?

Flood control, that's kind of a caveat. It's a tough one to work through, right?

It is. We now have the final plan. And City Engineer Peterson and I have had a discussion about the core of engineers' work in the northern part of the Big Sioux watershed and how draining some of the closed lakes through the Big Sioux River could impact the flood study that we have. So we'd like to go back to the core and say, is there a redo of this when you guys complete your work in the northern part of the watershed? Because I don't think it'd be responsible for us to come to you today and say, let's start planning for a big project to handle floodwater through the city of Watertown when we know there's another project in place that could greatly increase the amount and the volume of water that comes from the community so it's a long way of saying we're at a bit of a pause until we see what's happening in the corps other projects so they may view them as independent projects i don't think we can you know it makes complete sense because there's no sense spending a ton of money going through town on projects

for flooding if whatever the Corps is going to do up north alleviates the bulk of what we would need to do.

Or it could mean that the work that we do is for nothing because more water comes through that the enhancements can't handle. That concludes the formal presentation. Any questions we can answer?

Is there anything that we ought to think about doing in the interim before we get to a strategic plan? We want feedback, for example, on that list of 21 priorities of what we would speculate could be taken off the list.

Councilman, I think that would be helpful. And I can put out a maybe a document with a few questions to think about too, but I really think one of the most helpful things that we could all think about before we do strategic planning is what do we want to do as a local government? How do we want to raise money as a local government? What are the types of things that we do today that nobody else can do? Similarly, what are the things we do today that private sector could do instead? Those I think would be some good framing discussions.

I also think that we should probably do an informative session on CAPS and what it means and how to implement it. That was obviously highly talked about in session, but I didn't get a lot of publicity here, I don't think.

No, there are really only two cities. I was on a Municipal League call last week, and I can't recall which two cities, but there's two cities that have formed a CAPS committee that are giving it serious consideration. This is one thing I've mentioned in another forum, and I'll mention here as well. When it comes to things such as caps or local county sales tax option or changes in the property tax mix, I think we as a city need to be at the table with the county and school all at the same time to talk about who's doing what. I don't think we can do these things in a vacuum or the taxpayer just shuts down. So we're at a bit of a bind there. And we also have discussions on what do we do with emergency medical services funding as part of that mix too.

I would agree with that because I think the recent discussion about property tax relief and those kinds of things, I think people generally don't understand very well how that works. And I think it would be good to have everybody at the table having a conversation about it.

I think that'd be very helpful. Perhaps we could get together and do a local taxation 101 course of some sort.

Anything else? Okay. I think we need to open it for public comment. Anybody here? I don't think so. Okay. We need a motion to adjourn. Moved by Shadi, seconded by Mormon. All those in favor, please say aye. Aye. Opposed? Thank you guys very much. So on the caps, so going, the stuff like the county that have this increase, I think find themselves in a very similar situation.