OPENPUBLICA · PUBLIC MEETING RECORD
Record of Proceedings

Rochester City Council Meeting: July 14, 2026 - Audit, Budget, Indoor Recreation, Homelessness Update

City Council — Tuesday, July 14, 2026
BodyRochester, Minnesota
SessionCity Council
DateTuesday, July 14, 2026
StatusFILED
Video Record
0:00 / 3:49:29

Transcript — Verbatim
0:00

Indoor recreation financing options, and then we'll wrap it up with persons experiencing homelessness update.

0:06

So with that, I will uh turn it over to Jason Boynton, who is with uh Cohen Resnick, and uh to discuss our audit.

0:22

All right, well, Mayor Norton, Council President Schuberging, Council members, um Jason Boynton from Cohn Resnick here to uh review the results of the 2025 audit of the city's financial statements.

0:33

Um I've got a slide deck of about uh 50 slides or so here.

0:38

Um I'm gonna move pretty expeditiously through them.

0:41

We're gonna take kind of a real high level, you know, look at the activity for 2025.

0:47

Uh but certainly as we go through, if you have any specific questions, don't uh hesitate to stop me and uh we'll address those at the point.

0:53

I do have if anybody needs paper copies, I do have those as well if anybody would like.

0:57

So all right, so advance the slide here.

1:12

The clicker?

1:13

Yeah.

1:14

Yes, yes, sir.

1:15

Okay.

1:21

All right.

1:22

So we are issuing an unmodified opinion on the city's financial statements.

1:26

Uh many refer to that as a clean opinion, just it means that based on the work that we did, our team did.

1:31

Uh, we feel uh comfortable issuing or um saying that the financial statements are fairly stated in accordance with generally accepted accounting principles.

1:39

Uh just a reminder for council there are a couple elements within the city's financial report that our firm, Cone Resnik did not uh audit.

1:46

Uh that was the electric and water utility funds and the uh DMCC, which is a blended component unit by accounting standards.

1:53

Okay, so we uh they were audited by other auditors who issued unmodified opinions on their financial statements, and then we rely on that opinion that they uh on the work that they did in issuing our overall opinion on the financial statements.

2:06

Um the city does participate in the GFOA's certificate of achievement uh for financial excellence of financial reporting program.

2:14

So that was a program started by the uh GFOA many years ago to encourage governments to go up above and beyond the minimum reporting requirements to provide more information, more detail in their annual financial report.

2:26

And so the city participates in that.

2:28

Uh we are submitting that for the 2025 report, uh, but we also did for 2024 we received the award, uh, which I think it was the 54th year in a row uh that the city has received it almost back to the beginning of the program, I think.

2:42

So that just demonstrates, continues to demonstrate the city's commitment to quality financial reporting.

2:48

In addition to issuing the opinion on the financial statements, uh we are required to perform a special federal program audit.

2:54

So this is uh procedures that we have to do just on federal grant dollars based on the volume that the city gets of federal grant dollars and a specific procedures, making sure we're in compliance with federal requirements.

3:05

So uh we will do that in uh July August time frame, and then we'll issue that report prior to its due date at the end of September of 26.

3:14

And lastly, uh we did sit down last week, last Monday with the audit committee.

3:18

Uh we went over the results of the audit.

3:20

Um we talked about accounting standards, kind of both current and and future ones that are coming and reviewed the auditors responsibility letter.

3:28

And I want to thank the uh people that participate in that audit committee for for meeting with us.

3:33

Uh that's a quick summary of the audit.

3:35

Uh everything went fine.

3:37

We didn't have any issues that we feel like we need to bring to council's attention today.

3:42

So we like to take this opportunity then since um we've completed the audit procedures to then again take a look at kind of the high level uh review of the finances for 2025.

3:54

So we are looking back in the rearview mirror, right?

3:56

Uh but it'll give you some context and and uh uh some additional information as you move into your other discussions as we go on.

4:03

So we're gonna start out with uh governmental fund types and they're listed there.

4:07

Uh your general fund, your special revenue funds, which have specific purposes for tracking them separately, our CIP fund, and then our debt service funds for the bonds servicing of the bonds.

4:17

And then we'll switch over to uh proprietary funds, which are enterprise funds, which are the utilities, and the internal service funds.

4:24

Um these are both are accounted for differently, they're full accrual accounting versus governmental accounting on the governmental funds, and then enterprise um those types of funds are external customers, so the parking electric are all servicing for or providing services for external customers, whereas internal service funds as the employee uh name implies is is utilized within the government itself.

4:45

So just getting her to click forward here.

4:56

We can see the slide that internet spot frame.

5:02

Okay.

5:04

I'll trust it, and you'll tell me if it's not.

5:07

All right.

5:07

Um, so first chart we're looking at here, chart five, um general fund revenues and expenditures, and just a little housekeeping before we start uh getting into the numbers.

5:17

Um couple things.

5:18

The most of the charts that you're gonna see are going to be pretty similar, they're they're grouped by year with three different columns with multiple information in each column.

5:26

Uh and the columns are generally going to be your revenues or sources of funds, your expenses in the second column, and then uh the surplus or a deficit in any particular fund would be the last column.

5:35

Some of the charts we add a fund balance column on there as well.

5:38

Um the other thing you might notice if you've been in past presentations.

5:41

We did we used to present about 10 years worth of data, uh, but we added you can see there's a table, there'll be a table on every chart with the data underlying the chart.

5:51

Uh so that's the information, the numbers underlying the chart, uh, and to comply with the new digital accessibility requirements.

5:58

We had to add that, but that took up a little bit more real estate on each slide, so we we decided to uh reduce our presentation from 10 to 5 years.

6:07

All right, starting out with the general fund.

6:08

Uh so looking at 2025 funding sources uh we're about 133 million for 2025.

6:15

Uh that's made up of property taxes, uh, which was about 76 million in the purple and the blue is other revenues, things like intergovernmental revenues, grants we get from the federal and the state, um, license and permit, revenue, building permits, charges for services, uh, the lodging tax, investment income, those are all aggregated in that category.

6:36

And then the yellow at the top of the bar there is is in lieu of tax payments uh received from the utilities, and that's detailed out in the third bullet there in the in the descriptions.

Discussion Breakdown — Share of Meeting
Fiscal Sustainability████████████████████20%
Homelessness███████████████████19%
Budget Equity Analysis██████████████████18%
Public Engagement██████████████14%
Public Safety████████8%
Engineering And Infrastructure██████6%
Arts And Culture████4%
Procedural███3%
Technology and Innovation███3%
Summary of Proceedings

Rochester City Council Meeting: July 14, 2026 - Audit, Budget, Indoor Recreation, Homelessness Update

This meeting on July 14, 2026, covered four major items: the 2025 financial audit, the 2027 recommended supplemental budget, indoor recreation financing options, and an update on persons experiencing homelessness. The council discussed the city's financial health, debated levy increases and credit card fees, considered future indoor recreation projects, and received a detailed report on police outreach and homelessness reduction efforts.

Discussion Items

2025 Audit Results (Jason Boynton, CohnResnick)

  • The city received an unmodified (clean) opinion on its 2025 financial statements. The audit covered governmental funds, proprietary funds, and internal service funds, excluding electric/water utility funds and DMCC (audited by others).
  • General fund revenues were $133 million, expenses $126 million, plus $4 million in transfers out, resulting in a $3.6 million surplus. Fund balance increased from $54 million to $58 million (46% of expenditures, above the 42% policy).
  • Property tax levy increased 10% ($7.8 million) for the general fund. Police expenditures rose $8.5 million, including $2 million for a software contract and market adjustments. Fire costs increased $1.2 million.
  • Municipal Recreation Fund saw a surplus of $627,000, with fund balance rising to 23% of expenditures. Golf operations had a $243,000 deficit due to employee costs, software, and advertising. Councillors questioned the Graham Arena cost-sharing arrangement with the county and the overall levy support for recreation.
  • Airport commissions reached $2.5 million (pre-pandemic levels), but federal COVID funding will end in 2025, impacting future revenues.
  • The city's net pension liability (PERA) is over 90% funded.
  • Capital Improvement Plan (CIP) fund balance remained at $311 million, with significant activity: DMCC balance increased by $32 million.
  • Enterprise funds: Parking had a $1.4 million surplus; RPU had a $46.6 million surplus; Water had a $14.5 million surplus (including settlement income); Sewer had a $26 million surplus (but capital project spending reduced cash); Stormwater had a $6.7 million surplus.
  • Internal service funds: Equipment Revolving Fund increased to $12.3 million; IT Revolving Fund at $9.3 million; Self-Insurance Fund cash reserves increased to $38 million.

2027 Recommended Supplemental Budget (Ms. Helms)

  • The recommended tax levy is $124,901,338, a 5.59% year-over-year increase, lower than the 7.4% trend due to positive developments in employee costs and health insurance.
  • The general fund budget is $141.69 million, a 2.94% increase. The levy includes $150,000 max for golf operations and $200,000 for golf capital.
  • Decision packages within the levy include a police officer and community outreach specialist (replacing two officers), ERP project contingency ($700,000), and other items totaling 1.94% of the levy increase.
  • Councillors discussed two major policy questions:
    • Convenience fee on credit cards: The city currently absorbs about $175,000 in credit card fees for levy-funded departments. Councillors expressed support for passing a convenience fee to users, with the understanding that alternatives (checks, ACH, cash) exist. The fee would be set to cover costs, not generate profit. General consensus to implement a fee, with details to be developed.
    • Local Government Aid (LGA) reduction and street reconstruction: LGA is dropping by $1.2 million (24%), which had been allocated to street reconstruction since 2024. Staff asked whether to replace that with levy funding. Councillors generally opposed adding levy for this purpose, preferring to wait for the full 2028 budget process and consider a broader policy on street and trail maintenance funding. The existing $910,000 in reconstruction funding remains.
  • Councillor Palmer requested more information on support for community festivals (Fourth Fest, Rochester Fest) and a comprehensive review of arts and cultural funding.
  • The council did not finalize decisions on decision packages; further discussion is scheduled for August and September study sessions.

Indoor Recreation Financing Options (Aaron, City Administrator)

  • Staff presented options for financing a potential Phase 2 of the Rochester Sportsplex (now called Rochester Sportsplex) to meet indoor recreation needs, especially after the dome closure.
  • Options included: property tax levy, a “Cities of the First Class” sales tax extension (allowing collection for full 24 years, potentially generating $153 million beyond existing obligations), and lodging tax (which could fund civic center improvements).
  • The estimated cost for a dome or indoor facility is $70 million or more. The existing sales tax authorization covers $241.5 million for the current Sportsplex and other projects.
  • Councillors expressed fatigue with the sports complex discussion, noting that the community was promised a $65 million project and now sees costs doubling. They emphasized the need to complete the current project and demonstrate success before pursuing further expansions.
  • There was no support for using property tax for indoor recreation. The council generally agreed not to pursue the sales tax extension option at this time, preferring to wait and engage the community in a robust process (e.g., statistically reliable survey) before making any decisions. Staff were directed to focus on increasing visibility of existing recreational facilities.

Persons Experiencing Homelessness Update (Chief Frank, Captain Hodgman, Lieutenant Gerdo)

  • The Rochester Police Department (RPD) presented its 3E approach (Educate, Encourage, Enforce) and highlighted the work of the Community Action Team (CAT) and Homeless Outreach Navigator Terry Dose.
  • Key statistics:
    • From January 2025 to May 2026, 81 individuals cycled through the top 10 most contacted list. 54 (67%) transitioned off the list, and 41 of those (76%) sustained progress.
    • In May 2026, patrol officers spent 760 hours on homeless-related incidents (538 incidents, up 2.67% from April).
    • The camping ordinance has reduced the number, size, and mess of camps; enforcement is collaborative with the city attorney.
  • Success story: “Matt,” a long-term homeless individual, is now housed and employed, crediting persistent relationship-building with officers.
  • The budget request includes converting the homeless navigator from 0.5 FTE to full-time FTE (funded by police budget) and adding one additional police officer for the CAT team. Councillors expressed strong support for the program and the request, noting the importance of sustaining momentum and maintaining skyway presence.
  • Councillors praised the compassionate approach and asked about collaboration with the county and AnyPath Home. The chief noted increased collaboration but also highlighted challenges with service providers (e.g., The Landing) causing downstream issues.

Key Outcomes

  • Audit: Accepted the 2025 audit report with no issues noted.
  • Convenience Fee: Council directed staff to proceed with developing a convenience fee for credit card payments in levy-funded departments, with the goal of covering costs. Details to be brought back.
  • LGA/Street Reconstruction: Council chose not to add levy funding for street reconstruction at this time; will revisit in the 2028 budget process and consider broader infrastructure funding policy.
  • Indoor Recreation: Council decided not to pursue any financing options for indoor recreation (dome or Phase 2) at this time. Staff will focus on completing the existing Sportsplex and improving communication about available facilities. No further action on the sales tax extension or lodging tax changes.
  • Homelessness Budget Request: Council expressed support for the requested full-time homeless navigator and additional police officer. The decision will be included in the final budget adoption process, with further discussion at upcoming study sessions.
  • Next Steps: The next study session on July 27 will cover the Chateau Theater operating model and CIP update. The supplemental budget hearing is scheduled for December 7, 2026. Council will also consider a town hall on the community survey in November.

Meeting Transcript

Indoor recreation financing options, and then we'll wrap it up with persons experiencing homelessness update. So with that, I will uh turn it over to Jason Boynton, who is with uh Cohen Resnick, and uh to discuss our audit. All right, well, Mayor Norton, Council President Schuberging, Council members, um Jason Boynton from Cohn Resnick here to uh review the results of the 2025 audit of the city's financial statements. Um I've got a slide deck of about uh 50 slides or so here. Um I'm gonna move pretty expeditiously through them. We're gonna take kind of a real high level, you know, look at the activity for 2025. Uh but certainly as we go through, if you have any specific questions, don't uh hesitate to stop me and uh we'll address those at the point. I do have if anybody needs paper copies, I do have those as well if anybody would like. So all right, so advance the slide here. The clicker? Yeah. Yes, yes, sir. Okay. All right. So we are issuing an unmodified opinion on the city's financial statements. Uh many refer to that as a clean opinion, just it means that based on the work that we did, our team did. Uh, we feel uh comfortable issuing or um saying that the financial statements are fairly stated in accordance with generally accepted accounting principles. Uh just a reminder for council there are a couple elements within the city's financial report that our firm, Cone Resnik did not uh audit. Uh that was the electric and water utility funds and the uh DMCC, which is a blended component unit by accounting standards. Okay, so we uh they were audited by other auditors who issued unmodified opinions on their financial statements, and then we rely on that opinion that they uh on the work that they did in issuing our overall opinion on the financial statements. Um the city does participate in the GFOA's certificate of achievement uh for financial excellence of financial reporting program. So that was a program started by the uh GFOA many years ago to encourage governments to go up above and beyond the minimum reporting requirements to provide more information, more detail in their annual financial report. And so the city participates in that. Uh we are submitting that for the 2025 report, uh, but we also did for 2024 we received the award, uh, which I think it was the 54th year in a row uh that the city has received it almost back to the beginning of the program, I think. So that just demonstrates, continues to demonstrate the city's commitment to quality financial reporting. In addition to issuing the opinion on the financial statements, uh we are required to perform a special federal program audit. So this is uh procedures that we have to do just on federal grant dollars based on the volume that the city gets of federal grant dollars and a specific procedures, making sure we're in compliance with federal requirements. So uh we will do that in uh July August time frame, and then we'll issue that report prior to its due date at the end of September of 26. And lastly, uh we did sit down last week, last Monday with the audit committee. Uh we went over the results of the audit. Um we talked about accounting standards, kind of both current and and future ones that are coming and reviewed the auditors responsibility letter. And I want to thank the uh people that participate in that audit committee for for meeting with us. Uh that's a quick summary of the audit. Uh everything went fine. We didn't have any issues that we feel like we need to bring to council's attention today. So we like to take this opportunity then since um we've completed the audit procedures to then again take a look at kind of the high level uh review of the finances for 2025. So we are looking back in the rearview mirror, right? Uh but it'll give you some context and and uh uh some additional information as you move into your other discussions as we go on. So we're gonna start out with uh governmental fund types and they're listed there. Uh your general fund, your special revenue funds, which have specific purposes for tracking them separately, our CIP fund, and then our debt service funds for the bonds servicing of the bonds. And then we'll switch over to uh proprietary funds, which are enterprise funds, which are the utilities, and the internal service funds. Um these are both are accounted for differently, they're full accrual accounting versus governmental accounting on the governmental funds, and then enterprise um those types of funds are external customers, so the parking electric are all servicing for or providing services for external customers, whereas internal service funds as the employee uh name implies is is utilized within the government itself. So just getting her to click forward here. We can see the slide that internet spot frame. Okay. I'll trust it, and you'll tell me if it's not. All right. Um, so first chart we're looking at here, chart five, um general fund revenues and expenditures, and just a little housekeeping before we start uh getting into the numbers. Um couple things. The most of the charts that you're gonna see are going to be pretty similar, they're they're grouped by year with three different columns with multiple information in each column.

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