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09.g City Administrator Report1 Staff Report Date of Meeting: May 20, 2025, City Council Meeting To: Mayor and City Council From: Kyle Morell, City Administrator Re: City Administrator Report ______________________________________________________________________________ Debt Issuance The 2025 budget was presented and passed with the understanding that debt would need to be issued to purchase the new fire department tanker and the new public works plow truck. The 2025 budget presentation for the equipment replacement fund (406) showed the City borrowing an estimated amount of $550,000. Based on the 406 fund's current financial situation, I do not believe we will need to borrow that much, but will look at $500,000 ($200,000 for the tanker and $300,000 for the plow truck) instead. The tanker is set to be delivered in June; the plow truck is scheduled for December. Additionally, the useful life of each is dramatically different; the tanker is 20 years, the plow truck is 12. I am currently working with our bank and bond council to see the best scenario for borrowing these funds, which may include two separate issuances. We will have bond documents for the Council to approve in June. I apologize for the short notice, but the tanker was not supposed to be ready until August. We were notified on April 30 that it would be delivered mid-June. Gateway Trail Project City Engineer Ryan Goodman and I met with Nathan Moe and Kent Skaar from the Minnesota Department of Natural Resources (DNR) on Monday, July 10, 2023. We discussed the next steps in the work plan, including the environmental review, soil borings, and topographical survey. Ryan and the DNR are working to complete these items before the end of the year. This group plans to meet monthly to ensure the project stays on schedule. The LCCMR funding has a hard deadline of June 30, 2027. All spending must be completed before that date. The City plans for 2026 construction to complete the project before the grant funding disappears. Our DNR Grant Administrator has also contacted me. LCCMR administers the project, and the funding comes from the DNR. 2 The latest funding updates are close to $1 million over previous estimates. This is primarily due to changes in unit pricing for the original estimates in 2019 and 2021 and changes to the project's scope. Project Engineer Isiah Bubany detailed this increase in a memo at the March 18, 2025, City Council meeting. A public information meeting will be held at the Community Center on Wednesday, June 11, 2025, from 6:00 to 7:30 p.m. Letters will be sent to those property owners who border the easement next week. The DNR and the County have committed to sending representatives to the meeting. Water Tower Barn Wetland Trail Project The City’s LCCMR proposal was selected to move forward in the review process. I presented it to the LCCMR committee on June 28. The Committee met on July 31 to determine funding amounts for all projects. The City received $907,000 of the $998,000 it requested. The request will now be moved into the LCCMR bill that will be presented to the Legislature for approval in this upcoming session. If approved, we have until 2028 to complete the project. The LCCMR bills are advancing through the House and Senate. Approval is expected before the end of the 2025 Legislative session. At the March 5, 2025, Work Session, the Council approved soil boring work for the wetland boardwalk. The SHA will be at the meeting to provide Council with an update for the project. Bliss Sewer Project The City’s presentation to the Senate Capital Investment Committee went well. The Committee Chairman, Senator Pappas, understood our unique situation. Senator Housley was also on the call. If a bonding bill is considered, she will continue to push for funding in the upcoming session. Staff will contact newly re-elected Representative Hill to affirm our desire to be included in any upcoming House bonding bill. Senators Housley and Pappas introduced Senate File 892 on February 3, 2025. A bill for an act relating to capital investment, appropriating money for capital improvements to wastewater infrastructure in the city of Scandia, and authorizing the sale and issuance of state bonds. The bill was referred to the Committee on Capital Investment. Representatives Hill and Anderson introduced House File 1081 on February 17, 2025. A bill for an act relating to capital investment; appropriating money for capital improvements to wastewater infrastructure in the city of Scandia; authorizing the sale and issuance of state bonds. The bill was read for the first time and referred to the Committee on Capital Investment. The latest project estimates from our engineer suggest the cost of the project may exceed the $1.6 million that is in both bills. In a presentation to the House Capital Investment Committee on March 4, 2025, City Lobbyist Les Heen notified the Committee that most recent cost estimate for the project is $2 million. 3 Below is an update from Les Heen, our lobbyist on the changes of a bonding bill. Will there be a bonding bill? That’s one of the big questions remaining for the 2025 session. House and Senate Capital Investment Committees continue to hold hearings, many of which focus on local infrastructure bills. Because the state constitution requires a 60% supermajority to approve debt issuance, a bonding bill require votes from both parties. With the House tied, and the Senate with a one-vote DFL majority, it is not clear what the path is to pass a bonding bill. House and Senate leaders have talked about a bonding bill spending target, but they are far apart on how much could be spent. In some years, a Capital Investment Bill will include a large general fund (cash) section. This would only require a regular majority. However, cash is very short this year so we should not expect a general fund alternative. We continue to work with the authors of the Bliss project bill, Senator Housley and Representative Hill. They are committed to this project. We will be working with them on a regular basis to do everything we can in the hopes that a bonding bill can pass. The session end on Monday, May 19. We should know by the meeting whether the City was awarded its 2025 LCCMR grant request. Cannabis Below is an update from our City Attorney on the latest from the Office of Cannabis Management Before the Office of Cannabis Management (OCM) can begin issuing licenses, they needed to have their rules, which are different from the statutes, approved by an Administrative Law Judge. That approval came on Monday, April 7th. These rules will be published at some point this month and can be found here: https://mn.gov/ocm/assets/Draft_Rules_AR4844_tcm1202-674242.pdf Importantly, this means that after the rules are published, OCM can begin issuing licenses for non- capped license types. As a reminder, the non-capped licenses include:  Microbusiness  Wholesaler  Transporter  Testing Facility  Delivery Service  Medical Combination License The licenses for capped licenses will proceed after OCM holds lotteries. Capped licenses include:  Mezzobusiness (100)  Cultivator (50)  Manufacturer (24)  Retailer (150) 4 OCM recently announced that lotteries for social equity and general applications will be held on June 5, for three types of licenses: cannabis cultivator, cannabis manufacturer, and cannabis mezzobusiness. The office will also hold a lottery for social equity applications applying for a cannabis retailer license on June 5. A lottery for general applicants for the cannabis retailer license, which includes a second chance for social equity applicants not selected in the first lottery, will follow this summer.