09-12-2022 Special City Council MinutesOTSEGO CITY COUNCIL SPECIAL MEETING
MONDAY, SEPTEMBER 12 2022
S:30 PM
OTSEGO PRAIRIE CENTER
Call to Order.
Mayor Stockamp called the meeting to order at 5030 PM.
Roll Call:
Mayor Jessica Stockamp; Councilmembers: Tina Goede, Brittany Moores, and Jeff Dahl. City Staff: City
Administrator/Finance Director Adam Flaherty; Human Resources/Assistant City Administrator Sabrina
Hilles Streets Operation Manager Kevin Lamson; Parks and Recreation Director Nick Jacobs: City Planner
Dan Licht; and City Clerk Audra Etzel. Council Member Tom Darkenwald arrived at 5:38pm.
1. Progress Report: Public Works &City Hall Facility Stud
City Administrator/Finance Director Flaherty reviewed the materials that were in the packet. Wold
Architects and Engineers representatives Jordan Medeiros and Jonathan Loose gave an overview,
reviewed the PowerPoint slides, and are looking for discussion and direction on how to move forward.
Mayor Stockamp asked staff how long it takes to transition equipment in and out of cold storage.
Streets Operation Manager Lamson said much of the equipment is used year-round and when they do
change out it takes about a week. CM Goede asked how many vehicles are currently stored outside?
Streets Operation Manager Lamson noted it varies on the season and projects, but at least one to two
vehicles are stored outside behind City Hall,
Mr. Loose said the market is still volatile and pricing needs to be checked every couple weeks. CM
Darkenwald asked where are they seeing flexing within in the cost? Mr. Loose said hard cost
(construction) vs. soft cost (office furniture), they are seeing uncommon material cost increases.
Jessica Green with Northland Securities, Inc. presented some handouts regarding financing. There are
two options to finance: Capital Improvement Bonds (carry City's general obligation) and Lease Revenue
Bonds (lease between the City and the EDA). Ms. Green is assuming CIP Bonds and explained the
process to move forward. CIP Bonds do have limitation on how much can be borrowed, tied to the debt
limit. Ms. Green said if the projects were funded with phases in 2023, 2026 and 2029 taking the
amortization balance over 20 years and looking at the debt margin only for these projects applied to the
debt limit, the City has a lot of room to borrow.
CM Darkenwald asked about the rates for the different bond types. Ms. Green said a 20-year bond
buyers index for general obligation bonds for an AA+ the market is flexible, but still anticipating
increases in the interest rate. It will depend on the market activity. Ms. Green said she has only seen
reverse referendum process once. Mr. Loose said they have worked on one project with a reverse
referendum, this is low frequency for projects. Ms. Green noted Lease Revenue Bonds add about 75
basis points over CIP Bonds. Ms. Green said 30 years is the maximum amortization.
City Administrator/Finance Director prepared some assumptions for financing options having a
conservative 4% tax base increase. Ms. Green reviewed the phased costs fora $300,000 home, the City
taxes for the debt service on these projects would be $282 for 20 years and $270 for a 25-year on
phased projects. For a single phase a $300,000 home, the City taxes for the debt service on these
projects would be $231 for 20 years and $206 for a 25-year amortization.
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MINUTES OF THE CITY OF OTSEGO SPECIAL CITY COUNCIL MEETING SEPTEMBER 12 2022
CM Dahl asked about seeing the savings of the phased terms vs. the single phased financing options.
City Administrator/Finance Director Flaherty said since the projects are a need, staff prepared for
inflation with the assumptions to calculate the estimates. The impact to the tax levy is felt at once
rather than over time. Ms. Green said the first levies would not be in effect until 2024.
Mayor Stockamp asked about future levies for a potential Fire Department. City Administrator/Finance
Director Flaherty said staff has not received the fire study, but prepared a hypothetical levy for future
projects going out 10 years which was included in the packet materials.
Mayor Stockamp acknowledged Wold, the facility group and stafF for their hard work and pulling
together all the information. City Council thanked Wold for all their work to bring the details to City
Council to discuss and consider moving forward.
The City Council discussed the phasing of the projects or single phasing. Mayor Stockamp said this has
been discussed for the past two years and studies have been completed showing the need. CM
Darkenwald noted the City has worked hard at financing. Ms. Green said the finance position is very
good, the City's tax rate is very low and they should be proud.
City Administrator/Finance Director Flaherty will regroup with Wold and Northland Securities to come up
with any additional project phasing and financing options.
CM Darkenwald at 6:52 PM motioned to table this special meeting following the 7 PM City
Council meeting, seconded by CM Goede. All in favor. Motion carried 5-0.
CM Darkenwald motioned to reopen this special meeting at 7:33 PM, seconded by CM
Goede. All in favor. Motion carried 5-0.
City Planner Licht, Streets Operation Manger Lamson and Parks and Recreation Director Jacobs did not
rejoin the meeting.
2. 2023 Budget, Tax Levy and Capital Improvement Plan Review.
City Administrator/Finance Director Flaherty reviewed the budget meeting #7 materials which included
the budget changes tracking, revenue & expenditure summary for the General Fund, and the property
tax levy calculations. The preliminary property tax levy will need to be approved by September 30tn
The final budget and property tax levy will not be adopted by the City Council until December, so
changes to the budget can still be made between now and then. Noted, the property tax levy can be
decreased, but the levy cannot be increased after preliminary levy adoption.
The tracking summary including the removal of the community survey, advisory commissioner training
and addition of public safety hours. The City Council concurred with these changes as requested from
the previous budget meeting.
City Administrator/Finance Director Flaherty reviewed the General Fund Summary page. The City
Council concurred as presented.
City Administrator/Finance Director Flaherty presented four funding options: maintain 2022 tax rate,
maintain 2022 taxes per Capita, reflect new construction, or maintain 2022 City taxes for a median value
home of $964 (8.68%). Staff is looking for direction to prepare the resolution for the September 261n
meeting.
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MINUTES OF THE CITY OF OTSEGO SPECIAL CITY COUNCIL MEETING SEPTEMBER 12 2022
City Administrator/Finance Director Flaherty was able to get preliminary numbers from Wright County
but does not have the school information at this time. Last Friday, Wright County calculated $31 million
net tax capacity, a 25% increase over 2022 due to new construction and valuation increases.
City Council discussed the four options and directed staff to move forward with the preliminary tax levy
that will maintain City taxes at the same amount as the current year, or the salmon colored column in
the provided packet materials.
City Administrator/Finance Director Flaherty said a resolution will be presented on the consent agenda at
the September 26th meeting and staff will complete the required documents to be submitted to Wright
County. The Truth -in -Taxation notices will include additional information this year as required by
Minnesota Statute, noting this is new, and staff will follow the format of information provided by Wright
County.
Staff suggested a closed session to discuss an offer to purchase property.
CM Darkenwald motioned to call for a Special Meeting on September 26, 2022 at 6pm for a
Closed Session to discuss a land purchase, seconded by CM Moores. All in favor. Motion
carried 5-0.
3. AdLurn.
CM Darkenwald motioned to adjourn the meeting at 7:57 PM, seconded by CM Moores. All in
favor. Motion carried 5-0.
ATTEST:
Audra Etzel, City Clerk
Jessitca Stc�ci�a�np
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