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Resolution No. 2021-124 Final Report of Public Finance Adv. Committee Resolution No. 2021-124 Receiving Final Report and Recommendations of the Public Finance Advisory Committee for the Park System Improvement Plan Whereas, the City of Fridley (City) began a process of understanding the needs and desires of residents for City parks improvements in 2019 called “Finding Your Fun in Fridley” by conducting public workshops with residents; and Whereas, Fridley residents expressed an interest in improving City parks by upgrading playgrounds and amenities; and Whereas, pursuant to Resolution No. 2021-51, the Fridley City Council (Council) directed the City Manager to implement a Park System Improvement Plan (Plan) to address the needs and desires of residents and stakeholders; and Whereas, pursuant to resident and stakeholder feedback received through engagement efforts, the Council determined that the project cost for the Plan should not exceed $30 million and 10 years to complete; and Whereas, on June 14, 2021 the Council adopted Resolution No. 2021-55, which directed staff to organize a Public Finance Advisory Committee (Committee) who would recommend financing method(s) for the Plan; and Whereas, through their deliberations, the Committee ultimately recommended a Final Report and Recommendation, attached hereto as Exhibit A, and several ancillary recommendations to support Plan implementation. Now, therefore be it resolved, that the City Council of the City of Fridley hereby receives the Final Report and Recommendations of the Public Finance Advisory Committee for the Park System Improvement Plan. Be it further resolved that a public hearing will be conducted by the City Council of the City of Fridley preceding any recommendation or implementation regarding the Park System Improvement Plan. th Passed and adopted by the City Council of the City of Fridley this 20 day of December, 2021. _______________________________________ Scott J. Lund – Mayor Attest: ________________________________________ Melissa Moore – City Clerk Exhibit A Final Report and Recommendations of the Public Finance Advisory Committee for the Park System Improvement Plan December 13, 2021 1 Exhibit A Public Finance Advisory Committee Members The City Council appointed the following residents to form a recommendation regarding the appropriate financing method(s) to implement the Park System Improvement Plan: Ron Ackerman Scott Brinkhaus Walter Smith Steve Schmit Rachel Schwankl Alesia Thompson Lee Pao Xiong. A special thanks to Ehlers and Associates, Inc. for preparing additional analysis and exhibits for the consideration of the Public Finance Advisory Committee. Department of Finance 7071 University Avenue Northeast Fridley, MN 55432 FridleyMN.gov 2 Exhibit A Introduction and Background In 2019, the City of Fridley (City) began a comprehensive park system planning effort known as “Finding Your Fun In Fridley.” After nearly two years of community engagement and more than 1,000 comments from residents and other stakeholders, the City developed the Draft Park System Improvement Plan (Plan). Generally, the Plan envisioned a park system responsive to the shifts in both the demographics and recreation trends of the Fridley community. It also proposed to address significant deferred maintenance and make an approximately $50.8 million investment in park system. Upon review of Plan and following additional feedback from the Fridley community at the Annual Town Hall Meeting, the City Council (Council) resolved to implement it at a cost not to exceed $30 million or a 10-year timeline (Resolution No. 2021-51). These parameters recognized the financial limits of the City and the desire of the community to realize affordable park system improvement as soon as possible. However, even at this reduced cost, the Council also recognized the need to use debt (i.e., borrow money) to accomplish the Plan. On June 28, 2021, the Council appointed two advisory committees, comprised of residents and business owners, to provide additional community input regarding Plan implementation. The refinements group would work to moderate the Plan and its costs, while the Public Finance Advisory Committee (Committee) would recommend the appropriate financing method(s) for the Plan (Appendix A). Both groups operated within the parameter set by the Council. This report outlines the efforts and recommendations of the Committee. Under the Council’s guidance, on a schedule determined by the City Manager and agreed to by the group, the Committee met five times over a three-month period to review the financial options available to the City. Options included the use of debt or similar instruments, the use of City fund balances and potential donation or fundraising programs. Upon the request of the Committee, the City also prepared five different financial plans, two preliminary series of bond issues, identified possible property tax abatement parcels, developed a potential franchise fee program and conducted property tax impact analysis for the various alternatives. As a result, this analysis and their discussions, the Committee formed the recommendations found in the following section. Recommendations Through their deliberations, the Committee ultimately recommended a Financial Plan and several ancillary recommendations to support Plan implementation. These recommendations reflected the consensus of the Committee. Financial Plan The Committee recommended a Financial Plan at a cost not exceed $20 million to support Plan implementation over a 10-year period beginning in 2023. The Committee also recommended the 3 Exhibit A Financial Plan include the use of debt, but such debt should not exceed a net amount of $20 million with the balance of the cost supported by the use of fund balance from applicable funds. The Minnesota Legislature allows cities to abate all, or a portion of property taxes levied by the City for a given purpose, such as redevelopment. Cities may use tax abatement to issue bonds in order to finance a project. To use tax abatement, the City must identify parcels whose value demonstrates the City’s ability to pay off its debt. The Committee recommends the City issue tax abatement bonds to fund the Plan. The specific parcels to be abated should be reviewed by City Staff and the Housing and Redevelopment Authority (HRA) to avoid as much as possible interruptions to identified redevelopment parcels in the City’s Comprehensive Plan or projects that staff are aware of and that are being presented as private development not identified in the Comprehensive Plan. The use of abatement is not chosen to avoid a referendum. The Committee noted in its debate that the proposed park improvements are modest, make no significant departure from the existing facilities, do not add buildings or plans that have been previously rejected by the community. In short, the plans represent a continuation of an essential service that have received favorable remarks from residents as noted in the recent survey. The Committee felt a significant investment is needed that requires debt financing. The use of abatement bonds is a decision that is reasonably in the discretion and responsibility of the City Council’s authority to use. The Committee also recommended the Council issue each bond series with a term not to exceed 15 years. The following analysis was the basis of the decision but notes that they are not guaranteed. 4 Exhibit A Other Recommendations During their discussions, the Committee identified several other practices and strategies to support Plan implementation and defray costs for the City. The Committee did not prioritize these recommendations: 1. Encourage the formation of non-profit organization (e.g., Friends of Fridley Parks) to support the park system, similar to the successful Springbrook Nature Center Foundation model. 2. Consider alternative funding mechanisms, including, but not limited to: a. Development of a Payments in Lieu of Taxes (PILT) program to allow exempt parcels an opportunity to support Plan improvements. b. Creation of easy-to-administer donation programs, such as through Fridley Liquor or utility billing system (e.g., “rounding up your bill”). 3. Create an internship program to research, draft and submit grant applications for applicable park system improvements. 4. Hire a civil engineer or project manager to reduce design, engineering and administrative costs associated with certain Plan improvements. 5. Consider regular and ongoing operating budget changes upon completion of Plan improvements to protect the substantial investment made by the City. In the spirit of these recommendations, the Committee also encouraged the City to be entrepreneurial and innovative as it attempts to finance and support the Plan. In addition, the Committee recommend the Fridley Charter Commission consider an amendment to Chapter 7 of the Fridley City Charter that requires a referendum for the City to establish franchise fees. Conclusion The Committee recognized the need for a significant investment in the park system. Through these recommendations, the Committee, in its opinion, balanced the financial impact for property owners with the need to invest in the future of the Fridley community. The Financial Plan, as recommended, also protected the financial position of the City while delivering the Plan on a reasonable timeline. 5 Appendix A Committee Charter Public Finance Advisory Committee Mission Pursuant to Resolution No. 2021–51 and Resolution No. 2021–55, the City Council (Council) authorized and created a Public Finance Advisory Committee (Committee) of interested residents to advise and recommend to the Council an appropriate financing method(s) to support implementation of the Park System Improvement Plan (Plan). Framework Under the guidance of this mission, the Committee shall: Consist of up to eight residents, interested in the Plan and Park System, and able to attend duly scheduled meetings; Consider and recommend an appropriate financial plan for the Plan, which may not exceed $30 million or a 10–year timeline; Promote further public participation and input in the Plan development process; and Receive facilitation and support from City staff, primarily through the Director of Finance/City Treasurer/City Clerk. Meetings To accomplish both this mission and framework, the Committee shall meet approximately five times to discuss various topics applicable to the public finance of a park system. Additionally, the meetings shall be: Open to the public, with public notice provided at least five calendar days prior to any meeting; Recorded, with meeting agendas, materials and minutes available through the City website; and Held at dates and times convenient for public participation, primarily on Tuesdays on or after 6:00 p.m., depending upon the availability of Committee members, in the Council Chambers. Committee members may also be asked to attend additional meetings as needed (e.g., City Council, Parks and Recreation Commission, Stakeholder Meetings). Role The Committee serves in an advisory capacity to the Council and provides recommendations to further inform Council decisions. However, the Committee does not formally approve or authorize any Plan actions. The Committee shall primarily focus on the financial consideration of the Plan and not otherwise consider Plan elements beyond their financial impact or related strategy. Consistent with the aforementioned resolutions, the Council also created a Plan Refinement Advisory Committee to further evaluate Plan concepts.