Duluth City Council Agenda Session and Committee of the Whole – September 19, 2024

The Duluth City Council held an agenda session on September 19, 2024, to review resolutions and ordinances for the upcoming regular meeting on Monday, September 23, 2024. Discussions focused on budget amendments, property tax levies, crisis response team funding, a TIF district issue, and a proposed overhaul of the snow emergency ordinance. No final votes were taken; items were set for action on Monday.

Consent Calendar

• Items 1-2 (no discussion of specific items) and several routine resolutions were included in the consent agenda. The council agreed to pull all finance-related proposals (Items 3-8) for separate votes.

Discussion Items

• Item 3 – Crisis Response Team Funding Amendment (Motion by Councilor Owell): Councilor Owell was absent. The motion proposed increasing the levy by $297,000 to provide an additional $600,000 for the crisis response team in 2025. Councilor Swenson noted that on May 21, 2024, she and Chief Kerge informed the crisis response board that the city contract would end, but the board did not reach out until September. Councilor Kennedy expressed confusion over multiple amendments. Councilor Mayo stated Owell intended the motion for discussion only, with a separate resolution (Item 8) to be considered Monday. Attorney Freilich clarified the motion has no legal weight until actioned Monday. Councilor Nephew confirmed Owell will likely not move the amendment due to alternative funding sources.
• Item 4 – HRA Special Taxing District Levy Amendment: Councilor Nephew read the resolution proposing to increase the HRA tax rate from 0.0169% to 0.0185% of estimated market value, capturing $276,656 (a 16.2% increase). He noted the initial ask was for $171,496, but the total increase is $276,656. For a $240,000 home, this equates to roughly $4 per year. Councilor Kennedy raised concerns about public perception of a 16.2% percentage increase. Councilor Nephew explained the funds would support Union Gospel Mission's Mission Heights project, helping to score higher for state tax credits. The HRA passed a related development agreement earlier that day.
• Item 7 – Interfund Loan for TIF District 22 (First Street Medical Facilities): Mr. Montgomery and Director Carlson explained that a 2021 Minnesota Supreme Court ruling on hospital property tax exemptions led to Essentia Health's clinics being deemed non-taxable, eliminating the tax increment that backstopped the TIF bonds. The resolution authorizes an interfund loan of up to $3 million from the parking fund to cover bond payments, preserving the city's options. The TIF started around 2004; final payment is February 1, 2026. Current annual bond payments are ~$958,000, while collections are only ~$162,000. Director Carlson stressed the resolution must be passed within 60 days of the August 1 payment to retain the option.
• Item 8 – Resolution for Crisis Response Program (Sponsors: Councilors Nephew, Forman, Owell, Monick): Attorney Freilich noted the resolution expresses intent to continue the program but does not earmark funds. Councilor Swenson asked about HDC's engagement; Councilor Mayo shared that HDC said losing city funding would cause loss of 5-6 FTEs. Mr. Montgomery reported the program spent less than $600,000 in each of its first three years. Councilor Nephew mentioned a potential funding source: $1.6 million in misallocated TIF funds from Hawks Ridge, with the city's share estimated at $489,000, pending confirmation from St. Louis County.
• Items 11-13 – Downtown Waterfront Special Service District Renewal: Christy Stokes (Downtown Duluth) described the three-year renewal (instead of the usual five) to align with the "Imagine Downtown" visioning process. Petitions of approval reached 61% (above the local 50% threshold). Mr. Montgomery confirmed the shorter term allows flexibility for new directions from the reimagining project.
• Items 14-15 – Street Preservation and Easement: Councilor Mayo asked about the TKDA engineering contract ($369,072) for the 2025 street preservation project. Mr. Montgomery said the street list will be determined in November.
• Item 21 – City Hall HVAC Project Amendment: Councilor Mayo asked about the $47,950 increase (final amendment). Director Philby Williams confirmed it is the last amendment for general construction work associated with HVAC installation.
• Item 26 – Snow Emergency Ordinance Amendment (Committee of the Whole): Mr. Dukich presented a proposal to replace the existing snow emergency model with a parking-event approach that aligns with Sunday alternate-side parking. Key changes: eliminate amnesty lots, use Northland Alerts for notifications, and have residents move cars from one side of the street to the other after plowing. Kelly outlined a comprehensive public education plan including social media, press releases, a redesigned mailer, and university outreach. Ryan Morris confirmed enforcement would include towing for non-compliance, consistent with current practices. The ordinance would take effect November 5 or 6, 2024.

Key Outcomes

• All finance items (Items 3-8) were pulled from consent for separate votes on Monday.
• Items 11-13 were tabled to be considered together with the second reading of the special service district ordinance.
• No final actions were taken; all items are set for the September 23 regular council meeting.
• The committee of the whole received the snow emergency ordinance presentation; no vote occurred, but the council expressed support for the education and enforcement plan.