Committee to order.

Welcome, please.

Councilmember Bowie.

Council President Acre.

Here.

Councilmember Jost.

Here.

Councilmember Coleman.

Here.

Councilmember Kim.

Here.

Councilmember Yang.

Here.

Councilmember Johnson.

Seeing five present, two absent.

Great.

Good morning, everyone.

Um, we have two items on our agenda today.

Looking forward to both of them.

Um, the first one is a topic that has come up um many times, both recently in our council agendas, and also I will say in my tenure on the city council.

This has been like a topic that we have wrestled with many times.

Um, and the question relates to how we calculate um assessments when we do um infrastructure work, specifically often street maintenance work.

Um, and specifically the question has come up how we calculate the special benefit um for adjacent property owners to determine how much we can charge to adjacent property owners.

Um, I think this is going to be a really helpful and informative conversation for us.

I'm really grateful to the department for offering to bring in the third-party consultant we use to do those assessments.

Um, and my hope also is that this footage of today provides helpful evergreen information that we can share with our constituents.

We can share this link to say, hey, this is how this works.

This is the conversation we had about it.

So this is hopefully going to be important for today, and also um going forward.

So with that, there are a ton of people here to talk about this, and I'm not exactly sure all of their names.

So I'm gonna invite everybody who's here for agenda item one, some people's names I know, to come on up.

Including Bruce and Lynn and anybody else with you.

Yes.

Welcome.

Mr.

Engelbert.

Thank you, Council President, Council members.

We do have other folks, but mainly John Barclay, who is from Hosh Appraisal, who will be talking a little bit later.

The rest of us, I think we'll we'll just maybe wait in the wings unless there are some specific questions of other people.

So there is a PowerPoint.

I think you are probably aware of it, have a camera.

So I'll just walk you through that.

My name is Bruce Engelbrecht.

I'm the manager of the real estate section of the finance department.

Finance assessments is in finance, but it used to be part of real estate, and then a couple years ago I'd shifted over into uh finance treasury.

And so I had a lot to do with uh the assessments in the past and in the creation of the policies a couple of years ago, and so I'm kind of doing uh much of the conversation here.

Okay, on the presentation agenda, um, we want to give you just a little bit of background on assessments.

Hopefully, I can breeze through that pretty quickly.

Uh the cities uh then that led up to our response to the various lawsuits and challenges that we had, and so um when we get into that part of it, that's when John will speak primarily, and then I'll kind of wrap up that part of it.

Then we wanted to take this opportunity toward the end to um to tee up a couple of policy amendments that we'd like to make to the special assessment policies.

Um we we have already had um uh the mayor's office sort of review and understand what we're trying to propose, and they've expressed uh uh assistant mayor uh stuma langer has expressed full support from the mayor's office for what we're gonna suggest to you here today.

Okay, and then there will be time at the end for um questions, but certainly if you have questions as we go along, uh every time I'm sure you're not shy.

Okay, uh a little bit on assessment theory and then a little bit of history, and then we'll get into John's part.

Um special assessment, just a definition.

It's a charge that we put on property to help pay for a public improvement like a street improvement or or a mill and overlay.

Um the federal highway administration uses this definition of tax on land and buildings deriving direct benefits because of the transportation improvement.

Um I did a paper for the university here, um, the Humphrey School not long ago, and so I had to dig back into history just a bit, and I I um saw that it goes back to the 1600s in Europe, and then it came over to this country in in the 1600s and to New York initially, and then um and then uh it spread across the country by the late 1800s, and it was all um to try to recoup some of the cost of um of you know expanding streets or creating new streets through through private property.

Uh a couple of key concepts.

One is value capture, and then the other is special benefit.

Um, value capture is what I've come to understand is a term that is used more nowadays where uh people who research, like my advisor that you do a lot of research on how we can recoup some of the cost of public transportation projects.

And assessments is one way to do that.

Um, other ways are through fees and some different things, but that is kind of an important topic that people have been studying uh lately.

And in St.

Paul, we kind of operationalize that by looking at special assessments.

The the concept of special benefit is is similar to value capture.

Um, but it it does mean that that we, the government, the city, and and you know, other governments around the country do have the ability to capture some increase in the value of a property as a result of the the public improvement that was done, say on their street in front of their in front of their property.

Um we didn't really um directly address the idea of special benefit until probably about 10 years ago, and that's when John Barclay came on board to help us out.

Um, so we were assessing some portion of the cost of an overall project, some percentage, but we didn't directly say how do we operationalize or how do we calculate special benefit.

So we'll talk more about that as we go along.

Um legal authorization, it's in state constitutions and statutes in Minnesota, it's in the state constitution, and also chapter 429 that provides most of the uh kind of the the procedural requirements and things uh with the city.

The fourth bullet point here with the city, we do have it in chapter 14, a little bit in chapter 13 as well of our charter, and then chapters 60 through 64, the administrative code are the ones that mainly focus on how we kind of again operationalize uh our assessments, and it's similar to the state, the state statute.

Um special assessment law has been further developed and refined in case law, and I think what comes to mind I can't cite a particular case, but um the the idea of special benefit being defined as an increase in property value really became um clear, clarified through case law.

It wasn't spelled out in statute.

So a little bit of history, we got street maintenance and street improvements.

Street maintenance, um we have done um let's see, here we are.

Um it goes way back to 1909 when we had gravel streets and and dust came was collected, so we had either oil or water that was put on the streets so that people were charged for that.

Um various things happened that I'm not quite fully clear about between 1909 and 1974, but then we started a street maintenance program where we did, you know, charge people for um normal things we do in the summertime, uh like sweeping and pothole patching and other things.

And uh we charged a small fee, it was processed as an assessment, as a special assessment, but it was just you know a handful of dollars, it was much smaller than our storm source system charge, but it was kind of processed like an annual charge.

Um then we um we we expanded that in 2003 when the state had a lot of um uh reduction in revenues, so LGA to the city was cut, and we had to shift a lot of costs.

This is in the in the Kelly administration, we shift a lot of costs into the general fund.

So tree trimming and other costs, um winter winter maintenance costs were shifted into this summer program, and we called it the right-of-way maintenance program and the right-of-way maintenance assessment.

So it we had a significant increase to property owners because of that.

Um then in 2005 we added lighting as well.

Okay, on uh street, okay.

This should be street, yeah, just a little more in street maintenance.

Um, this is where in 2011 um as the cost went up, we we we had some appeals to our assessments, uh a couple of downtown churches.

It went through the whole court process and it went to um to the Minnesota Supreme Court, and they basically agreed with with the churches that said that we had not shown special benefit when we were charging for the street maintenance work.

And so um we we kind of lost that and decided then to rework, reframe, take some of the cost, some of the services, and push them back into the general fund, and then we we had the new street maintenance service program, which then um uh included uh citywide street and alley sweeping and some uh street light maintenance and then some millen overlay work.

And that went along for a few years until that was challenged again in court by the same attorney that won with the church case, and um and so the city in response to that um said that we we would shift those costs back into the general fund.

So tree trimming and and other maintenance costs uh are now part of the general fund, and that was part of why this the city's uh property taxes increased as much as they did in 2013.

So, Mr.

Engelbreck, just backing up and clarifying something.

So it seems like the difference between a tax, which is levied on everybody, and a special assessment is that a special assessment is only for when there's a benefit to a particular group of properties as opposed to everybody, and um that can be applied to anybody who's benefiting, including tax-exempt entities, right?

Correct.

Yeah, we don't charge as you as you all know, um uh tax property taxes to tax exempt properties, but we can charge um uh special assessments to tax exempts.

There are a few exceptions, the federal government, the metropolitan council, um, some uh public and private cemeteries, but for the most part, like the state of Minnesota and um and the school district and the county, they all are charged and pay special assessments.

And so the the concern from in this case the churches was you are charging us for something that really is a tax because everybody benefits, we don't get special benefit from it, and so actually we shouldn't have to pay at all because we're tax exam.

Right.

There they said it should be well, um they they thought it should be uh a part of property taxes, so then they wouldn't have to pay anything.

But I think what really prompted it was in the years that that led up to them um uh filing the lawsuit was that the cost was was growing so much that all property owners were becoming concerned, and downtown we charged a higher rate than we did outside of downtown because the level of services to sweep and plow and clean were higher downtown, and that was part of their argument that it was unfair compared to say other religious institutions outside of downtown.

So okay, um street improvements.

I'm gonna kind of breeze through this.

Um we I want in fact jumped to the to the 80s when we were doing the sewer separation program, and we had to separate our storm and sanitary sewers uh because of how they mixed in heavy rains and went into the river and the state of Wisconsin, sued the city, and we had to um to to do a program now where we separated the sewers.

So while we were digging that work up, then we decided to repave the streets in those areas, and then when that work was done after 10 years, we continued to repave in other places.

Um that was the street paving program, later the residential street vitality program.

Um we had received some appeals, but but um we we they were upheld, and then in um 2015 and 2016, some other other uh appeals where we settled and and we settled with an amount um of assessments that was much less than what we had assessed, and then um there was a streetscape one out in the highland area where we we decided to uh bring in John uh Barclay from Hosh Appraisal to help us understand how to address the the appeal and and think about calculating special assessment.

So that was kind of the start of the way that we do it now, even though we didn't codify it in policy until until some years later.

Um so I think I'll turn it over to John now, and he can talk about his process for um for uh calculating special benefit that we then plug into our calculations later.

And just before you go, Mr.

Engelbreak.

So at this point, can you list the services that we do the special benefit and a special assessment for, you know, it's mill and overlay, street reconstruction.

What would be the other yeah?

I mean, we'll cover it a little bit more later, but but it's essentially street reconstruction and mill and overlay work.

Um we do have a category for street rehabilitation, which would be kind of a something in between full reconstruction and mill and overlay.

I don't know that we've done those uh yet or recently.

Um, but but we we can also do some assessments for alleys and sidewalks and um and and uh kind of sewer main work that's that's uh that's a little tricky, but we'll talk about that.

So that's kind of the universe of what we what we do assess for now where we have to determine special benefit and get uh John Barclay's assistance.

Thank you.

Welcome, Mr.

Barclay, thanks for joining us.

Yes, thank you for having me.

Good morning.

Um I'll just do a quick introduction.

Um so my firm is called Hosh Appraisal and Consulting, my business partner uh Steve Hosh.

Um he's kind of retired at this point, and I've taken over operations of the company.

Um, but yeah, we've been involved with uh assisting the city with special benefit analysis uh since 2016.

Um the key component that we're looking at here is you know what is that incremental change in property value as a result of these assessment projects.

Um so yes, there's some you know legal wrangling that goes on in the courts from time to time.

We try to stay abreast of those situations and make sure that we're applying it correctly.

Um, but the the real topic is you know, you have a property before a project with certain conditions, those conditions can either improve or not improve the value of that property, what's that difference?

Um so we've done work for the city here, we've done work for other municipalities for similar projects.

We work for property owners from time to time with assessment appeals.

Um, you know, would we handle all sides of the equation and make sure we're taking an even-handed approach on determining those special benefits.

So the purpose, as Bruce mentioned, is for our work to provide a market-based opinion of maximum supportable special benefit.

Um, and we would say maximum supportable special benefit.

What we're talking about is what can the market support in general for a type of property or a class of property.

It would be much too intensive to appraise every single property along a project.

Sometimes there's five, six hundred or a thousand properties.

It just wouldn't work to appraise every single property.

So we look at in total what types of properties we have along a project, and you know, what does the market tell us about increases or lack thereof for different property types as a result of increased uh transportation and pedestrian amenities, things like that.

Excuse me.

So going off of what Bruce just mentioned, uh we look at street reconstruction projects, we look at mill and overlay projects, from time to time.

We'll look at more limited scope projects.

Uh that would be you know, maybe a segment of alley that is being paved for the first time.

Some of the alleys in the city are still gravel alleys or sidewalk or lighting, things like that, where it's not a full project.

Um we provide these conclusions, which then the city takes and uses them for their internal calculations and determining what rates to set across a certain project area.

So here's a breakdown of sort of the analytical framework that we employ for these types of projects.

Uh so the first step is to review the project data and the proposed assessment role.

So we'll usually get a summary of engineering recommendations from the city, outlines the history of that project area.

So it'll tell us when that road was first constructed, when was it last constructed, you know, what are the construction elements?

Does it have sidewalks?

Does it have lighting?

And then it'll be what's this project doing?

Is it replacing the lighting?

Is it re-landscaping boulevards?

Is it uh just a mill and overlay and the curbs remain?

Um, so it kind of provides the context for for where we start.

So then we look at site inspections in the project area.

Uh so we physically go out to each all each and every one of the project areas, drive the areas, um, you know, we're inspecting the types of properties along these projects, the conditions, and um, you know, that informs how we look at each one of these individually, because not every project has the same elements, so we're making sure that we're documenting those along the way.

Um, identifying and analyzing the property classifications.

Sometimes it might just be a residential neighborhood, and all of the properties are generally uniform, um, single family homes, things like that.

Other times it's a mixed-use corridor.

You might have storefronts or gas stations or uh retail with apartments above, you know, all kinds of different properties.

And after that, we look to the assessor's estimated market value to provide a baseline of property value.

So we're looking at valuation trends, uh, where the assessor has values, which by state rules has to be within a certain percentage of market value, so that provides a baseline for these different neighborhoods.

Um you might have a neighborhood of million dollar homes, you might have a neighborhood of 250,000 homes.

Those are different markets.

Excuse me.

Then we get into the market research side of things.

So we're looking at literature review, um, that can include journal articles, um, studies, things like that.

We're looking at sales data analysis and interviews with market participants.

Um, I kind of went through a little bit of this in my initial introduction, but this is just kind of a breakdown, so you have it.

If you can take it with you and read it, um, if you want to discuss it, we certainly can.

Um, but the project area inspection, kind of what we're doing and why.

Uh, the neighborhood trends analysis.

Again, we want to make sure we have a boots on the ground looking at what these neighborhoods are really like, um, not just poking through Google maps and making assumptions.

So the broad market research is really kind of the nuts and bolts of the analysis.

You know, this is where we're gauging what the impact is from the different types of projects.

Uh so we have sales and market data from similar projects, those can be within the city or elsewhere in other communities.

Typically, you want to stay as close to the subject market as possible.

But sometimes we'll look at similar projects in other communities, researching sales of properties, interviewing buyers and sellers, brokers, realtors, property owners, in some cases, developers, essentially property stakeholders that can provide insight and opinions as to what the benefits are to these public improvement projects and the various elements of these projects.

When I say various elements, I mean in some cases, you might have just a street reconstruction, it's a full tear out and repave.

Some will have an addition of sidewalk, some will have lighting.

So there's different levels of projects, and we want to make sure that we're accounting for those different levels of projects and not just blanket approach to everything.

Thank you so much.

Thank you, Council President.

Thank you.

This is a really extremely helpful.

I have a question about what you all find in your market research and the literature reviews that you conduct.

Where I get the most questions, you know, I think everybody understands that if the street in front of their house is in better condition, that that is an asset and will improve their property value.

I get a lot of questions about bike lanes and sidewalks and the ways in which those it makes sense to me that they would improve market value.

I get a lot of questions about whether or not that's true, and people feeling like actually, you know, the risk of reduced parking or um potentially decreased green space if you're adding in a sidewalk would actually really harm their property value.

So I'm just, you know, obviously, you know, what you're saying is that a lot of this is very site-specific and it's gonna be project dependent, but I'm curious how you see those play out, kind of when you do the more comprehensive reviews.

Yeah, the I mean the bike lane issue I know is a hot button issue, um, especially downtown where parking's at a premium.

Um there are a lot of studies out there that reference bike lanes and increased pedestrian amenities and bike amenities and the increases to property values for adding those features.

Um again, I'm I'm not saying that's a blanket statement across every property is gonna benefit, but certain property classifications definitely do.

Um, if you have a retail building, for instance, and you can facilitate additional traffic via bike traffic or a um, you know, it's it's popular for for people to bike to work more and more in the summers, you know, those can be reasons that you might have an increase in value.

Um as far as you know, sidewalks, if you're adding a sidewalk where where none previously existed, or if you have sidewalks that are deteriorating, you're bringing it up to a new standard, right?

People expect to have that a certain standard if you're purchasing a home.

So kind of the key component here that I think maybe a lot of property owners miss, you know, you have to freeze the date of when you're looking at a special benefit.

And that date is usually the ratification date of the assessment, but it's really irrelevant.

It just needs to be a static date.

Before that date, you have the previous condition, and after that date, usually you you've brought the property up or the street or the sidewalk or the lighting up to a new standard.

And if you were to sell your home, you're now selling a different package, right?

So I think when people have to, when they've lived at a property for a long time, these projects come and go, there's sort of a there's sort of a uh a ramp up and then a slow decline for anything.

It could be your roof, it could be your landscaping, it could be your driveway.

You install something new that's below standard, and that value increase occurs, and then slowly it decreases over time, and then you bring it back up to a new standard.

It's just the nature of depreciation.

So if you have a same thing with the street, if you have a crumbling street, your curb appeal, your marketability goes down, uh potential buyer drives into a neighborhood on a brand new street, you you notice that difference, just even approaching the property.

So these are the kind of smaller issues that maybe if you live at a property for a long time and you plan to continue to live there, aren't immediately apparent because that's just where you live.

But we're looking at under appraisal methodology and special assessment, excuse me, and special assessment policy at the difference between value at a certain point in time, and that value is predicated upon a hypothetical willing buyer and a willing seller as of that date.

So not necessarily just you own the home and it's benefited.

It's you're assuming that property sells and you have a different property before and after that project.

Ms.

Just.

Thank you, Council President.

Um thank you for that explanation.

I think that really helps because a lot of folks are not planning to sell their home in the near future, and so um I think they have a hard time understanding what that how that benefit works for them because it's it really is about before and after this point in time, and the like you said, the increase in um the standard of what is being provided.

And I think for folks that aren't gonna sell their home for a long time, there's gonna be a lot of other fluctuations in their value by the time that that by the time that that happens.

And so I just I don't have a question, but I think that that really helps explain how that works.

Great.

I have a question on sort of a similar vein.

Um I know you said that you don't look at each individual property necessarily, um, but you do more than just evaluate broadly the literature, because obviously that would probably not be worth paying for.

Um, what do you do in terms of specific impacts that might decrease a property value?

I'm thinking, for example, about tree removal.

Um we've heard a lot about this in some of our previous projects, and I know when trees are either removed along a broad swath of the corridor or in front of somebody's house.

Um I assume that that has a negative effect.

And so I'm curious how you would whether or not you would look at that granular of a level, and if not, how you would account for something that might be detrimental.

Thank you.

Um as far as negative impacts goes, um, I guess I would recommend talking to city attorneys uh on that one.

The special benefit um policy that I'm familiar with does not account for negative impacts to property, which would be similar to like a taking in eminent domain.

Um and typic typically in the eminent domain context, you're not looking at um an improvement to property, you're looking at what's being taken.

So it's kind of a two-step process.

So you could have hypothetically a project where you get a nice new street with all the bells and whistles, but the city also takes a portion of your property, for instance, and that devalues the property while at the same time you're getting an increase.

So as far as negative impacts as a result of the project, perhaps from a market perspective, that can happen.

Um, but from a special benefit analysis perspective, we have not typically applied negative factors.

But I guess maybe to ask the question a different way, if what you're trying to assess is how much a property's value changes as a result of the property, as a result of the change, is it an objective evaluation, and in that case it's possible that the change is negative, or is it always going to be a benefit?

I guess it could be zero.

Okay.

It could be zero if if you had some offsetting factors, and again, that's where it's important to you'd love to have you know look at every property on a case-by-case basis, it's just not really a feasible exercise.

Um, but you know, when we have a yeah, when you have a project, let's say you removed a bunch of trees, for instance, um, yeah, that could negatively impact a property, but if the if it's part of a street improvement project, there's also gonna be some offsetting benefit to that.

So the the question would be where in the middle is it?

Um, and does it break through the zero threshold?

So we've been directed in the past that we're not to include negative benefits.

We have in the past concluded to zero in certain instances.

Okay.

Thank you.

Ms.

Just um thanks, Council President.

I um it's a really good question.

I I was just thinking about, you know, we're talking about sometimes street reconstruction projects can mean there are sometimes trees that are being removed, or sidewalk project could mean that a tree also might need to get removed, but it sounds like what you're saying um is or if I'm understanding what you're saying, is that you don't factor in things that would be negative.

So does that mean that does that mean that you wouldn't come up with a special benefit that was negative, or does that mean that you are like taking no subtractions to the value in terms of like the net benefit you would end up in the end?

So, like if you get a street reconstruction gives you a benefit of like, you know, a thousand dollars, for example, but cutting down the trees was like negative 500, would you end up with $500 net benefit, or are you not even subtracting anything out in the first place?

Yeah, it's really a case-by-case basis.

Um, and if you're you know, you might have certain properties along a project that have slightly different benefits or impacts, and that's a little bit outside of the scope of what we do because you're getting into individual property impacts there.

But if you did that along the entire project, for instance, then that's something we're looking at.

So we have to be really careful when we're doing this not to we're not valuing individual properties, right?

So, you know, that's what would happen under an appeal.

If somebody were to appeal, you know, the city would come to us or another appraisal firm and say, okay, we have this appeal, what's the benefit to just this property, not in general, sorry, not in general along the project area.

Um I guess to get back to your question, if it did happen along the in the entire project area, yeah, we'd be trying to get to that net number.

You know, we're gonna we're gonna look at the change from before to after the project and and quantify that net number.

And then I guess one question I have, I don't know if you'll be able to answer this, but I'm curious.

Um, I don't have like a basis for this, but it feels like street road improvements would be you know an order of magnitude larger of benefit compared to like trees being removed.

But do you could you say anything about like how much that those trees could really even impact like a an increase in or a change to a property value relative to the road reconstruction project?

I can't comment on that.

Sorry.

I don't have it'd be so specific to a situation.

Okay, thanks.

But I I appreciate I think the line of questioning helps elucidate something that's important, which is that you are taking into account not an individual level but along the corridor things that might be good and things that might be bad, and coming up with a net number.

I think sometimes we um constituents ask us, you know, it's especially because it's called a special benefit.

Um, there's sort of an assumption written in that you're um only calculating the benefits, right?

And I think what we're hearing is that's not the case.

You would also take into account things that might be negative, although at the end of the day, likely the upshot is some net positive.

Typically, yes.

Thank you.

Okay, this this slide here gets to um just go back here.

Yeah, uh, use of the assessor's estimated market value as a baseline and why we do that.

Um, the there's a sales ratio study published by the state that analyzes the assessors' values in comparison to sale prices, and the assessors um have to stay within a certain percentage of that ratio.

So it usually provides a good current valuation basis, so that again, we're not valuing each and every single property along the way.

We're using that assessor's value as a proxy for market value, which is reasonably um useful in this scenario.

So this we've just kind of discussed this.

Um, you know, we at the end of the research phase, and you know, constantly we're updating our research from year to year or you know, project to project, um, you know, you you have these findings, you have ranges of impacts to value, um, you have market commentary, you have new sales, but you can't just look at you know, one data point you have to take everything into account and come to some reasonable conclusion.

Um, so that's kind of the last step, and this gets into the determination of special benefit at the bottom here, where you might have a measurable benefit, you might have an inconclusive or negligible benefit, or you might have zero benefit.

Um there's that's kind of the three ways that we would conclude uh for a specific property classification.

Now, again, that's not property specific, but across the whole project for a certain class of properties.

So then we aggregate all of the uh all of the the benefit conclusions by classification.

So we take all of the assessed values of a certain classification.

Um we'll get to a total property value and we'll apply our findings to that or our conclusions to that.

And then we look at all of those, and you add all of those together, and you get the total accessible amount that's supportable across the project.

And that's essentially what we hand off to the city to make their determinations on and final benefit conclusions based on you know their engineering estimates and things like that get factored into that.

I guess it's important here to point out too that this last bullet at the very bottom is the conclusions are not a prediction of value impacts to individual properties, and that's what I've been mentioning over and over is you know, we're looking at all properties of a certain type along the project and not your property, for instance.

Um, you know, each one could vary somewhat, but from a project-based and um market research perspective for that property type, we conclude to a supportable amount of benefit or no benefit in some cases along that project.

So I'm maybe over my time already, but um kind of the key takeaways is you know, we have an objective market-based approach where we're looking at multiple uh sources of research.

Um it's applied consistent consistently across all the project areas.

Um it's defensible and it's classification specific, and it provides independent arms-length perspective uh for the city, and it incorporates the neighborhood context and the market trends and provides for uh equitable and informed decision making.

Um I will say that if we were to handle this on a case-by-case basis, just kind of as an add-on.

Um, let's say we were working on an assent uh assessment appeal, it's essentially the exact same methodology that we would use for that, except for now you're just looking at a specific property, and you're valuing that specific property through a standard appraisal process.

So that's all I have.

If you want to ask any further questions, let me know.

Yeah, I think we have time for a couple of questions, and I know there's more for this presentation and also two other presentations.

Ms.

Just um thank you, council president.

I I did look ahead to the next slide, but I think also based on your um these takeaways, if I'm understanding correctly, the because you said you don't look at individual properties, you look at property classifications.

So all of the properties with the same classification would would see a special benefit that would be reported as like a percentage increase.

That's correct.

So if you had like an all residential um a project that was only residential homes, all same classification, their special benefit would be a percentage increase and it would be the same for everyone.

Is that right?

That's correct.

Okay, thanks.

Thank you, Council President.

I was curious if you can share how uh much time you're given to do the analysis.

Usually when these sort of items come up to us for vote, it's already the package that we're voting on, like the ratification of the assessments.

And so I'll make a great reference that I I love from Conservatory Kim, which is that you know, in making the BBM bop, you know, we want to know like from what does the starting timeline look like until it gets to us.

So do you have a time frame that you usually have to finish the analysis by?

Yeah, it's usually a few months.

Um, you know, typically we'll be in contact with Bruce and his team, and um we'll get some initial project information, you know, what they're thinking about doing for a certain construction season.

Um that's kind of where the timeline would start.

Um and then you know, there's a research phase.

Uh right now is not a great time to inspect properties.

We just got a lot of snow.

So you have to deal with the weather, make sure you get some dry days where you can go out to these neighborhoods.

Um, but you know, we we have to fit this in with our other workflow.

This isn't all we do.

So, you know, it's usually uh I'd say a three to six month uh process uh depending on when we first get the information.

Great, thank you.

Explain question.

All right, any other questions?

Uh for now, otherwise it doesn't look like it.

Thank you so much.

I'll stick around.

Yeah, we might have follow-ups.

Thank you.

Welcome back, Mr.

Engelbrand.

Thank you.

I should just note um that to venture into John's territory too much here, but um when we've received the the reports back from him and the various percentages.

Um, in some cases, for example, a railroad property where we're doing a street along a railroad line.

Um, is there any special benefit to that?

John has in in most instances with railroad properties said no, there's no special benefit.

The railroad is never gonna sell that property, there's no increase in market value.

There may not, I mean, Ramsey County, I assume has a an assessed valuation for that property, but it it's kind of meaningless, similar to a lot of our city properties where there is a value to all of our properties, but unless or until we're ready to dispose of it, it you know it doesn't have uh a lot of meaning in and of itself.

So there are instances where or even uh some larger schools or private schools where um where it may not be as high.

In other instances, we've had commercial properties uh like um uh commercial apartments or or in particular uh businesses, office buildings where the percentage has been uh higher than it would be for residential uh properties.

And and I'll show you here in the next slide a couple of examples as to how now we take that information from John and apply it.

This is a little bit funky to read here, but hopefully you can make some sense of it.

The uh this spreadsheet was something that we shared with the council back in 2024 when we were first talking about how we do the calculation.

So I'll go through it again here.

Um the the projects on the left, um, there's a some mill and overlay, sample mill and overlay properties in a mill and overlay project, and then also kind of the lower area is the is a street reconstruction project.

These are real projects and real properties where we assessed uh a few years back.

Um public work starts out by providing the the total cost of the project to us, and and then that's is the start of the of the calculation.

Um in the case of mill and overlay, it was 1.6 million and 2.8 for the reconstruction project.

Public works will, in some instances, back out some cost from the total project cost if it's if it's not if we say that we we we need to do that because we want to compare apples to apples.

So, for example, in a in a mill and overlay project where we have a wide um wider street that has signals and striping and other things, um, more pavement, that is a higher cost than other mill and overlay projects around the city where they're narrower.

So we try to factor out some of that higher cost, and in the case of this one, it's not much in the total project cost, but but it does it does reduce it a bit.

So then we have the revised project cost, and then as a according to our policy, it we assess 25% of that project cost, and that becomes the assessable cost.

So you can see it's 400,000 for one, 700 for the other.

Then we take that number and we divide it by the front, the street frontage.

In the case of the um of the mill and overlay project, it's 3800 uh lineal feet, and so that produces uh a per foot rate assessment rate of 104 bucks, and a much higher rate you can see below for the street reconstruction project.

So then we apply that rate to the frontage for those properties.

And you can see the um in the case of the mill and overlay, it's 40 feet for the residential and then more frontage for the others.

When you apply that, you come up with what is called the proposed assessment in that in that column.

Um, and that is typically where we would have stopped before we um kind of implemented the whole uh special benefit analysis part of our calculation.

And so then we we we set that number aside, and then we look at the special benefit method where we start with the property value, the assessed valuation of the properties based on Ramsey County, and then we apply whatever the percentage is that um John's analysis has produced.

It's typically lower for mill and overlay projects because there's less improvement, less treatment.

Um we're we're doing the the paving and maybe a few patching of side of sidewalk panels and things.

So um the impact or the improvement, the special benefit to the properties are less.

So it's it it hovers around 1%, sometimes more, sometimes less, as you can see here.

Uh for the street paving program or street paving projects for single-family homes, it has more often than not been around 3%.

Higher, I mentioned for some uh some properties and lower for others.

In some cases where it's um, I don't know if John said it was zero or indeterminable, but for example, along Wheelock Parkway some years ago, we have the roadway, we have city property that is a bluff that basically serves to hold up the earth that the road sits on.

That's all it does.

We have no programming, no nothing, and that um he said it was zero, but we internally said we will assess ourselves as if it was a single family home.

So we applied three percent of that market value so that public works could still get some benefit of assessment revenues going to the project.

Then when we we apply that percentage, we come up with a proposed assessment, and then we finally compare the proposed assessment under the traditional method to the special benefit method, and and more often than not, the special benefit amount is lower.

And so that's how we refer to the special benefit cap.

But in the case of the first one, you can see that the calculation under the traditional method was lower than the calculation under special benefit.

So in that sense, the um the traditional method served as a cap.

So we just want to have have you all understand that it's there's gonna be a cap one way or the other, but more often than not, um the the special benefit method provides a cap, which then also reduces the overall assessment.

So we're not gonna be able to assess 25% of a project.

It's going to be closer to, and I think public works is taking this into account as they're preparing their their financing.

It's somewhere between maybe 15 to 18 to 20 percent.

Um in some cases, even lower than that.

So we we know that because of our application of special benefit, we're receiving less assessment revenues than we might have in the past.

But we think that we're being uh more true to to what special benefit is and more compliant with the law.

And so far we've had a couple of appeals in downtown properties.

They did not argue with our method, they simply said, well, we appealed our assessed valuation, and it basically led to the county reducing our property value, and so we want you to use that reduced value in your calculation, which we did.

It lowered their assessment.

That was the amount that we agreed to um in the settlement with the property owner.

So the method was not challenged.

Ms.

Coleman.

Thank you.

Going back to when you started the slide, I I got a little lost on one piece, which is just about um the likelihood that a property will be sold and how that's factored in it.

Um is that were you saying that within that that's the primary differentiation between specific categories of like commercial versus single family residential, or would that be within those categories if it seems like I'm thinking about St.

Thomas, for example.

St.

Thomas seems really likely to stay around for a long time.

They're probably not gonna sell any land anytime soon.

Would that impact how they were assessed if they were a project that touched them?

I don't have a clear answer.

I mean, I think the answer is is no.

I mean, what um uh John could better answer that than me, but whether a property is held on to a long time or it is it is turned and flipped um you know a a year later um is is not the main factor.

Um I mean, when I mentioned the railroad property, yes, railroad property is held for a long time, but that isn't uh the the factors, the the main factor that John uses in determining that there's no special benefit, for example.

Got it.

Thank you.

Ms.

Just um Thanks.

So I and I've seen this with our assessments, um, council president.

Uh the so we typically we can assess up to 25 percent, but with the special benefit I've seen sometimes we're assessing sometimes more like say 10 percent.

Um, and then but we still you know have to be able to pay for the rest of the cost of the project.

Correct.

Um, and it sounds like public works factors that in when they're they have to really estimate what they think that's going to be because we're not gonna have this information until later.

Um so then if I understand correctly, the the rest of that cost is then is then paid for by the general fund, or can you talk about where that those funds come from?

I can speak to it just very generally.

Um, public works has all of that information, but I mean it varies, it depends if it's a street reconstruction project.

We typically sell street reconstruction bonds, and the assessment revenues that we get help to pay, not entirely, but help to pay debt service on those bonds.

So to the extent that the assessment revenues are lower, we need to use more uh uh debt um debt fund revenues, which generally come from property taxes to help to help cover that.

In other instances, we have MSA properties, municipal state aid, or we have um uh sales tax funded properties.

So to the extent that say that the assessment revenues go down, there's more MSA or more sales tax monies that have to be used to cover the full cost of the project.

Okay, Mr.

Peterson.

Council President, Council members, uh in a nutshell, making up that differential, it's whatever the predominant funding source is for the rest of the project.

So if it's gas tax funded municipal state, if it's a state aid funded project, we'd use that.

If it's a general fund funded project, we'd use that, and so on.

So it's just whatever that predominant funding source is, and it'll vary by type of project and eligibility.

Okay, thank you.

Absolutely.

Um the these are some of the key features.

I don't have to go through that in what is right now included in the special assessment policies that exist and that the city council approved here in 2024.

Um what we want to what we want to bring to you in the future here, hopefully the near future is kind of a uh a markup or or a uh uh uh a revision, an amendment to the to the document that makes a couple of changes, uh key changes.

One is that we're trying to clarify more uh the difference between city cost and assessable cost.

So to be kind of real simplistic, you've got the total project cost, the big chunk of that is what we call city cost, or what you might describe as the general pub uh uh benefit to the public that drives on the street that doesn't have any properties on there, and then the rest of that, the smaller portion is the accessible cost.

So we're trying to clarify that a little bit more.

In some instances, for example, um the the conversation we've had mainly with public works about this is that there is sewer and water main work that is often done in connection with the project.

If it is replacing an existing pipe, it doesn't have any real change to the use of by the property owners, but it's being done because the street is being torn up and it's separately financed with sewer or water revenues, then um we want to take that out of the mix of total project costs that we're going to apply the 25% against, and we just um we we we consider that to be city cost.

So that's the the main example.

There could be some exceptions to that, but um that's why we want to uh clarify the language there, and then on this exception three, the main thing there is that it affects corner properties.

We have a policy right now that applies to all properties where if you're on a corner and you have one street done one year and another street done another year, we never charge you any more than the most expensive of those two projects was.

And that had in the past been applied just to residential properties one to four units, um, but now it applies to all properties, all commercial properties and other institutional properties, and we we're not quite sure how we how we did that, but we would like to go back to our previous practice of saying that that sort of benefit or that cap, if you will, of not charging any more than the most expensive of the two, um, should should apply only to residential properties one to four, and so other properties would have to pay the full assessment for each side of the uh of for each street that abuts their property as it comes up.

And Mr.

Engelbrecht to clarify how far apart can those two projects be in order to get the corner benefit.

Like can the project happen if it if it happens 10 years later on this street, does this street count or how it could happen the the following year or the well that one makes sense, but um I guess how soon to the previous street does the next street have to be in order for you basically to not pay for one of the streets?

Um I think Lynn could probably answer that.

We used to have what we call the 20-year rule that she can maybe talk about um welcome.

So it's during the term of the assessment.

So if you have a seal coding or mill and overlay, say it's a 10-year millon overlay, if you're still paying that 10-year millin overlay, will reduce your second assessment by what you paid on that first one.

If that makes sense, so you still get assessed for the second street, but it won't be more than right.

You still get assessed.

It would be reduced by what you paid on the first assessment.

However, if the first assessment was higher than the second one, say we did a street reconstruction on the first one and then had to come through and do a mill and overlay while you were still paying that 20-year assessment, then you wouldn't be assessed for that second one because the first one was higher, and it's for however long that period of paying back is during your tenure majors.

Okay.

Thank you.

So the two asks, it sounds like our the policies that we might see coming in front of us after this policy discussion would be that revised definition to make the city cost more clear and put more on the city cost than on the assessable cost, and then re-including or taking out commercial and industrial properties from the corner benefit and just having that apply to residences.

Correct.

And and there will be some uh minor impact on revenues.

Uh we think that the first one could reduce assessment revenues by a bit as we're reducing the project cost by a little and shifting some over to city costs.

So now we apply a 25% to a smaller base.

So that can have some impact, and then the other the exception three could have a positive benefit in that some properties where we can now charge for both sides.

So the net we think might be close to a wash, maybe a slight reduction.

But overall, annually between the street reconstruction and the the mill and overlay, we we generate about four to six, we'll say on average five million dollars of revenues.

So if we didn't do all of what we do here, and other cities do not assess for street reconstruction at all, some other cities, Minneapolis does, but other suburban cities do not.

If we didn't do that, we'd have to make up that five million dollars some other way, likely through property taxes.

It all ultimately comes from us always.

Yes.

One quick question on exception three um for the residential one to four unit properties, would that also include property residential properties taking advantage of the density bonus?

So that are five or six units, or would the cap be at four units.

Well, we had conversation about all this uh a few years back.

Um I think with you know, some years back with the previous council, and um the discussion was that um those that should receive some benefit.

If I'm answering your question right, some the you know commercial properties can generate income and maybe can afford to pay uh more than say a single family home.

Okay, then we included um duplexes and and and say triplexes or three flats, and then um the limit was well, you've got own a lot of owner occupied four unit apartment buildings that operate kind of like a larger single family home.

So that's where we want to draw the line in terms of that benefit.

Everyone else beyond that um should be charged the full fare.

I would certainly um support us including up to six units now that residential zoning areas can have six units without becoming um without becoming defined into a higher bracket now that our zoning practices have changed, so we can talk about that as the policy emerges.

But I think it's a really good question.

Okay.

Um all right.

Well, thank you so much, Mr.

Engelbeck, for the time.

If there aren't any other immediate questions, oh there is from Mr.

I just one quick one.

Um I and it's sort of just something I'm thinking about, but the when you talk about the special benefit to the property um versus like you know the benefit to everyone in the city that drives on the road.

I'm I'm really curious about um the difference between uh houses that are on a arterial streets and hard houses that are on you know more residential streets and like the difference between um what that might look like because I think we've had folks come in that have been assessed and they live on a very busy street and they're having a hard time understanding those those differences, and I I don't have like a specific question, but basically, like what are the you know what are the differences in that special benefit analysis for for them?

Um in if it you know are the results different, um, or is there even a should we consider a different way to analyze those situations?

Yeah, I I think John would be better uh to answer that, but what I can say is that when we've applied the special benefit part of the calculation, um it has it has provided some benefit, maybe not to the city but to the property owners.

So for example, I live out uh between Payne and and our are between uh paying and greenbrier and north of Wheelock.

So when they redid Wheelock, um the homes alone there are probably around 300,000 dollars in value, and and the and the special benefit cap applied to nearly every one of them because this was a two you know two separate roads and a lot of and a trail and a lot of uh other boulevard work.

Um, and so there was the the cost was very high, but because we applied that that special benefit, um the the there was a significant cap on that.

Did that help?

Yeah, yeah, that was hopeful.

Um do you want to call up, Mr.

Are you?

Oh no, it's okay.

I don't I I do want to I know you're um Ms.

Bowie, and then we'll move on.

Thank you so much, Council President.

Thank you so much for this presentation.

I uh would definitely want to talk offline and learn more about just the revisions, um, but just for the sake of time, because you have mentioned several um moments in your slides that uh there will be some policy coming forth.

Um can you speak to the time frame of that just because I do see this as a really instrumental um change that I think you know that's gonna have impact across the city.

So just in terms as as a council member who wants to engage, you know, with my constituents about this change.

Do you um perceive this policy coming to us within like a month or is there a timeline that you can offer?

Yes, Councilmember Bowie.

Um we we could do it almost as soon as as you would like.

We've had many conversations with public works.

We are kind of trying to finalize some of the language that uh the amended language that would get at the points that we've talked about here.

Um so it could be it could be fairly soon.

I think it probably depends more on the kind of uh time frame that works best for the council.

Okay, thank you.

Thanks for the question, Ms.

Bowie.

And and just to remind all of us, um, as as typically happens with a policy session like this where there's a proposal coming from departments.

I think the default is for it to come to me to sponsor, but if there's anyone around this table who feels particularly interested or energized by this proposal and wants to be the lead council member on working with the department to author it and bring it forward, um maybe somebody does.

Um, just let me know, and that this is it doesn't have to be me.

Um, and if there's grave concern about doing this, uh also let me know because that's good information for the department to have.

Thank you so much for your time.

Um and we will now soft pivot to uh our second topic, which um is sort of has two parts.

One is about licensing and one is about contracts with solid waste haulers.

And this conversation was prompted.

Um, I asked for this conversation because of two factors.

One is that, as you know, we now have organized collection in the city of St.

Paul, but we also uh, as of recently have just one hauler that we're contracting with, um, as opposed to a consortium of haulers.

Um so that's a change, and also the siting of that hauler, the selection of that hauler led to a lot of community concern, um, as we probably all remember last year.

And so it prompted questions about how much community input and oversight and engagement is there currently with our processes for choosing haulers and licensing them, and how much should there be?

So this conversation is rooted in that, and the questions that we asked uh our presenters to talk about is sort of what's the current state, and um what are the options?

So, with that, I think Ms.

Haas, you're first.

Or maybe you're not.

Actually, I'm sorry, licensing is showing up here.

So maybe it's actually director we're either one can go first.

We've got this one loaded up.

Sorry, we'll go to you next.

Welcome, Director.

Thank you, Council President, Council members.

Um, so everyone's favorite topic, waste hauling, licensing.

Uh so there are I'd say roughly 300 different types of licenses throughout the city.

Um we're talking about uh waste haul or solid waste here.

There are some related ones, which I'll touch on as well.

Um, but the solid waste license is required to if you are going to collect, transport, transfer, treat, handle, salvage, utilize, compact, shred, compost, mill, bail, process, dispose of, or any combination thereof of any mixed municipal solid waste, including construction debris and compost uh materials.

And the reason why I wanted to highlight all of those is because it's um there could be we could have folks who are doing just any one of those things, and they would be licensed as um a solid for solid waste.

Uh so there's five different licenses here.

There's solid waste hauler and vehicle.

So essentially your your first vehicle goes with your solid waste hauler license, and then every additional vehicle after that is subsequently licensed.

Um the solid waste transfer station is a separate license, the recycling collection center and recycling processing center.

All of these are considered class R licenses, and as a reminder, the city has Class N, Class R, and Class T licenses.

Those T licenses are temporary licenses, and I'll get into the um differences between R and N in a second here.

So we have uh 38 current or active licenses in the solid waste hauler category right now.

26% are cited in St.

Paul.

Um, I did actually look up the other ones for waste transfer station, uh recycling center and uh processing center, and actually every one of those are cited in St.

Paul.

So for uh Solid Waste Transportation Recycling Collection Center and the Recycling Processing Centers, all of those are also cited in St.

Paul.

So for solid waste in particular, the requirements are to have insurance, and we have the the amounts specified in the ordinance.

Uh the license has to be displayed, the schedule of charges on record.

This used to be something where it would have to be mailed to people or but now with technology.

We have different ways to notify people of the charges.

Operation has to be carried on in a way that does not create excessive noise, dust, or odors.

Most two are not related to each other.

And then there's also permitted hours of operation.

For vehicles, they have to be durable, rust resistant, leak-proof, easily cleanable, tight fitting covers, which are method or approved by public works.

They have to be properly cleaned.

And again, this is to really prevent that kind of nuisance or blowing material or insect issues, rodent issues loaded and moved so that contacts won't fall, spill, or leak.

And for the containers, they shall be covered to prevent blowing material.

A few additional requirements, they shall be carried on in facilities designed for that purpose.

They also have to be approved by the county, Met Council, and the MPCA as required.

And those are in addition to any of the city licenses.

So all of those agencies also do their own inspections or adverse actions or licenses, depending on what category the waste hauling.

And then they have to have adequate equipment and facilities to do all of the things that we've essentially just stated.

So the cleaning, the dumping, so that it can be maintained in a sanitary condition at all times.

So the mixed municipal solid waste, which is where the final resting place has to be promptly removed to an approved site.

So we don't have any, I'll say final resting places.

We don't have any dumps here.

And again, they're almost always required to be in an enclosed area.

So as stated before, these are a class R license.

Here's some other examples of class R licenses.

And these are approved by staff without council approval if there are no conditions imposed.

And so the reason you see a lot of the tobacco licenses come through like change of ownership is because those licenses have conditions attached to them, which means council has to approve the license.

If there were no conditions, then they could be administratively approved.

Class N licenses can only be approved or denied by the city council, and they do require neighborhood notification and a hearing process if there are objections.

So we get the license application, the notice goes out to neighbors and with a deadline for comment.

If there are objections, then it goes to a hearing.

If there are no objections, then it would go straight to council.

So here are some examples of other class N licenses, the auto body repair shop, entertainment, gambling, gas stations, liquor off sale.

There is a process for revocation or suspension, adverse actions or the imposition of conditions.

These are also always seen by council, so I know that you're familiar with some of them that we've had.

The majority of adverse actions that have come past council recently are either related to tobacco product shops, folks that have entertainment or liquor licenses.

So it could go to revocation.

That's really the extreme suspension, which does happen.

Adverse actions, which are fairly common, and then the imposition of conditions.

And really the imposition of conditions is meant to have better management or or influence better management of that property.

And so those will look different depending on what really the issue we are seeing at the property is.

And director, just in the interest of time, I know that most of the next slides have to do with adverse licensing action.

Maybe you could sort of summarize sort of like you just did some of those to move us back to solid waste.

Yep.

So it's really, you know, if something something happened at the property, and and it was within management's control, is really what we're we're looking at as a broad term.

That's not that's not the legal definition, but it's really we're talking about something that was that was completely within their control that they should have had control over.

It's part of their license and part of their responsibility has occurred.

We always start with education every single time, no matter what the topic you're hearing from DSI, we're always gonna start with education.

We want people to manage their businesses responsibly.

We're not here to penalize.

But you know, it is a if we're not seeing that action or that correction, then we start with these uh uh escalating features.

And it could be based on an existing condition in their license or one of the licensing rules.

Uh the licensing rules also say that they have to adhere to other essentially every other ordinance in the city.

So, for instance, if there was a violation um of property maintenance violation, that could be considered a violation of their license.

Super fast.

Uh just a couple more slides.

So the wanted to also mention that there are other requirements from other agencies.

So the business registration, the liability insurance, obviously we've just covered the the waste hauler license for the city.

Um the metro county, there's a there's an agreement between the metro counties for the waste hauler license county or in the seven county metro area.

Uh Ramsey County has its own uh structure, and then the MPCA has a couple different reporting and permit mechanisms.

So the main difference between class R and Class N is that the business license, it's business licenses are a regulatory tool to ensure effective management.

It's not meant um to stop business, it's meant to promote the responsible uh management of business.

So class Ns are focused on those ones where the management has the greatest impact on the community.

Um and ours are just a little bit less impactful, is uh the general difference between the two questions before you have Sarah out of here.

Great.

Thank you so much, Director.

I appreciate the um acceleration at that particular point.

Ms.

Coleman.

A super cool question.

Thanks so much for this presentation.

Um just to make sure I'm understanding.

So if somebody, a construction company wouldn't be required to have a trust uh uh solid waste hauling license because they aren't presumably hauling things away from the site, they're just bringing construction material to the site.

But if a contractor was demoing a site, then they would be required to have a solid waste hauling license because they are presumably removing the construction debris or the demo debris.

I'm gonna have to I think it's more nuanced than that, so I'll have to get back to you on that.

And the nuance that I'm thinking of is are they um a company that is solely removing debris or are they a company that demos and removes the debris that they're demoing?

So I will um I'll get back to you.

Cool.

It is not time sensitive.

Thanks, Ms.

Coleman.

Um so director, I this kind of going back to the class R versus class N, you mentioned that the the key difference is class N licenses require public notice, and if there's an objection, then they require um they were they require a hearing, um, and it's up to the council to issue those licenses.

So those those are more about um, as you said, properties or uses that are likely to have more of an impact on the surrounding neighborhood.

What are, I guess, what are the questions that we should ask or the department should ask when trying to determine what's a use that should just be approved by the department versus what's a use that should have more oversight?

As I look at the different lists of examples that you've given here, it's it's sort of hard to tell which one is you know should be class N versus Class R.

Gas stations are class N.

You know, I guess I'm just trying to figure out what what should be the questions we ask ourselves as we try to determine whether it makes sense to move an uh a license into class N or Class R.

Thank you for the question.

Is as I look at them and particularly these examples that we're showing, um police calls are one of the biggies that that drive this discussion when we think about the the impact on community, and it's I look at the um if we look at the impacts of these, and it's it's typically around police calls.

Sometimes it's also I'll say the hours of operation.

So most of our businesses close what would we call business hours or or bankers hours, but the uh some of these more in the entertainment side are open uh longer and impact neighborhoods for a longer duration when people are at home or maybe trying to sleep.

And what about things like noise or um smells, things like the out of auto-body repair shop, for example?

Is that would that be the reason why that would find itself in the class N?

Yeah, it it also is related to police calls mostly about parking.

Um auto battery repair needs to have parking on their site.

We do get a fair amount of police calls related to people dropping their vehicles off on the street, and um they shouldn't be using the street for their business, the street is the public right of way.

Uh can be with noise, it's um also the the amount of um for like uh repair, there's a lot of grinding or um noise from sanding, grinding, those types of things, and it also requires them to have a fair amount of space to put dilapidated vehicles.

Okay, this vice president Yang.

Thanks, Council President.

Director Reasy, thank you for your presentation, the slide about clan class and licenses and the fees.

Can you remind us of those annual fees?

And uh do we like what is the cycle in which we we amend those fees at all?

I'm just asked because I didn't realize like the fee for gas stations that's 154 dollars.

And so that just strikes me as pretty low, but I'll just name that.

Those are my initial thoughts without much context.

Thank you for the question.

So the we do um routinely look at our fees and see what the cost of us administering the ordinance is.

So they are tied to really the amount of work that the ordinance dictates us to do.

Uh in some cases, they're capped by the state.

So a lot of the liquor um licenses are capped by the state and and we're either at or near that cap.

Uh the fees cannot be any more than what it costs us to do the work.

And that's a that's not just like a licensing inspector doing the work, but you know, HR technology, legal um opinions, all of those things that it costs us to administer the work.

And so we routinely review the costs um for these licenses and uh update where we're necessary.

You just recently heard the TNC change, and that was a result of us doing that evaluation in part doing that evaluation and seeing what it really costs us to do the administration of the ordinance.

Okay, and these are annual fees.

They are annual fees, sorry, I missed that part.

Thanks.

Um, Ms.

Johnson, and I think we'll try to pivot to our next speaker.

All right, thank you.

I'll be um I'll just move my both my questions until one.

Um, so just to be brief, but thank you, Director Weesee, for the for the differences in both uh the the different classes and class R license.

I guess I'm just wondering um from the class R license piece, you know, on the east side, I think to the piece of police calls.

Um I guess I'm just wondering around the tobacco shops and some of the tobacco shop pieces, if that's um if there's like a reevaluation of some of those spaces.

And I'm just wondering how often does that, you know, do you ever um do staff ever kind of look back at that and think about um is that the proper place once it's issued and maybe or if there's like a different need for some more consideration for that.

Um the other side of it, how often do Class R licenses get approved with no conditions that we may not see as council, but that get approved through the director.

Just wondering how often that happens.

Thank you for the question.

So I believe the recently, and I think council president, you were probably on the council when we did this.

We reevaluated all the class N and class Rs and took a look at them and re-divied them up, and that was I would say within the last 10 years, and said, you know, these are really the class ins, these are really the class Rs.

Um with tobacco product shops and tobacco shop.

I'll have to to get some clarification.

I believe though, this is because there aren't any new ones.

There is a cap on tobacco shops and tobacco product shops, and we are currently over the cap.

So the only ones that come here are change of ownership.

There aren't new licenses issued, so there wouldn't be a new location with a new uh owner and to have that like newly introduced to a neighborhood.

It's only changes of ownership that were processing and that are coming to council.

Uh as far as ones issued or any like class R licenses issued without um conditions.

I'll have to double check that.

I'm actually not sure our legacy 35 year old system is able to distinguish the difference between licenses with and without conditions, but I will I will ask anyways.

Thank you.

Thank you for the question.

And director, if you could also just as follow up in addition to that, provide just the full list of class N and class Rs.

I think it'd be helpful for all of us to be able to take a look at currently what are all the different license types in each of those two categories.

Uh I can certainly do that.

And the easiest place to do it is the fee table, because they are all listed.

So I will send that vice president's questions and concerns a little bit too about the piece, which are very variable amongst them.

So great catch.

Thank you, director, so much for your time.

And finally, we'll bring up Ms.

Haas and um five whole minutes to talk to us about contracts for plot waste dollars.

Council President, I talk fast.

I know you can do it.

Let me get it.

And Mr.

Siddhow, we might have questions.

I I might have a question for you too.

So you're here, but don't go down in here.

Yeah, it's it's it was right there, I think.

So yeah, my very uh oh, I just saw the first page.

Sorry about that.

That's right.

Okay.

So the Solar Waste and Recycling Contracts are professional service agreements.

Um I linked to the city's procurement manual, which I enjoyed reading all 50 pages of it uh recently.

Um because the amount is significant and there are other issues, you know, qualitative uh components into the RFP.

We did an RFP um process for this.

I did, I'm gonna jump to the more important stuff because you guys can read the policy on the city's website.

But um, here are the required signatures for professional service agreements.

Um, as you can see, over 50,000.

We've got the list of the four folks.

Um, city attorney, director of uh OFS, HERO, and the mayor's office are required signatures on those professional service agreements.

Um I'm gonna jump into the process of the solid wasteland because I think that's what you're most interested in.

Um, I start here on the slide with uh that we issued the RFP in 2023, but the engagement with the public actually started in 2021 when we convened a two-year committee of um garbage advisory members.

We met uh from January to June of 2022, um, every two weeks at the Rondo Library to discuss garbage and all um concerns that residents had.

The committee was comprised of multi-unit um homeowners, HOAs, and single family um uh homeowners.

Uh some love the program, some hated the program, and they are from all uh areas of the city.

Following that six month engagement, the we worked another six months with them um to develop a list of recommendations uh to be used in our next RFP process.

Um after that uh report was delivered, we met with individual council members and did a uh council policy meeting briefing on how we would take that information and incorporate it into the new RFP process.

Some of the changes that we've realized already from that are customer service coming into the city, cart management, so we can manage those assets, carts are expensive.

We go through a lot of them every year.

Um, having billing and one system instead of five uh different billing systems for residents, and then also having the 10% of the city uh collection.

So we issued the um RFP in November of 2023.

We had nine uh responses to the that request.

Um there was a panel that reviewed and scored those applications, including um procurement office, public works, uh St.

Paul Public Schools, and St.

Paul Regional Water.

We asked for representatives from um that work in the solid waste areas from each of those um organizations.

And then um, based on scoring, we invited uh respondents to come in and interview.

We in this case interviewed all nine um applicants and uh select based on the highest point value.

And then we began the negotiations that was with public works in the city attorney's office.

Um, and then once it was uh close to approval, we did meet again with a council president at the time was uh Brent Moen and discussed uh the aspects of the contract and then um submitted it for signature through the professional service agreement process.

So, Ms.

Haas, this is my kind of overarching question again, Mr.

Siddhav might be helpful to have you.

I believe that city council is required to approve contracts by our charter.

Um, and so I know this is being called a professional services agreement, not a contract, but it's um in this case a 44 million dollar contract that does not require council approval.

So I'm trying to figure out what determines when a contract does have to be approved by this body versus not um and when it can be called a PSA and therefore not.

Well, maybe um Angie Liger can respond about the PSA versus the contract, but I know um when we reached out to CAO about the approval process, we were advised that city council is not required to sign the contract.

So that's the process that we followed.

And like I said, I think that's probably more a question not for public works because I'm sure that was the advice you're giving.

Come on up, welcome.

Good morning, uh committee chair and council members.

Um, with regard to the professional service agreement process, as uh Ms.

Haas indicated, we typically in our procurement policies, not typically in our procurement policies, it indicates that any purchase for services of which trash and recycling are considered services.

Any purchase over 175,000 must go out to the request for proposal process.

You're familiar with that process.

It results in a professional services agreement, which is just a type of contract.

So we have other contracts, construction, et cetera.

Um, we have been advised, and this has been true since I've been with the city and probably uh long before that, that uh the signature process for contract approval is um indicated in the code.

Uh, and as Ms.

Haas indicated, that is typically the director of financial services, the director of HERO in some situations, and the mayor's office.

We also add a city attorney approval so that they have uh eyes on the contract.

There is not a specific role for the council in the approval process per the city attorney's office.

Um, your role comes in the budgeting process and allocating budget for the year for departments to spend that money.

That's the advice I've been given by city attorney.

Thank you.

Ms.

Johnson.

And I guess just for clarity, um, is that based off of what the code currently states?

So that's not necessarily is that based off of just simply what is stated right now in the code and how it's being interpreted, or is that um like does it have to be that way, or is that just based off of the language that is currently that way?

Um, Chair Naker and Councilmember Johnson.

The answer is that the code is silent as to like council approval.

And so, to the extent that uh there would be a change to the approval process, you would need to consult with the city attorney's office on how that would happen.

So, to be clear, there's no charter provision.

We can consult the city attorney's office.

There's no prohibition as far as I know, but I can't offer you legal advice.

But there are times when we do approve contracts, I guess.

That's true.

There are two instances that are specifically outlined that require your approval.

One is the lobbying contracts for the city, those have to be approved on an annual basis.

Another is um the any contracts for fundraising.

So, like in the past, when we've done fundraising, like for your inauguration or something like that.

Um, that requires council approval.

There are other contracts that have come to there are other types of contracts that require your approval.

Um, there are not procurement contracts, and so real estate agreements, joint powers agreements, um, there are things that require HRA approval, but not council approval.

So, but in terms of procurement, the only two types of services that I'm aware of that require council approval are lobbying and fundraising.

Thank you very much.

Some is just um thanks.

For professional service contracts, because those are those are, I guess those lobbying contracts, some of those are professional services, but there are so many besides the ones we're talking about here, there are so many other professional service contracts as well that you know the city enters into, and like you said, some of them have an RFP process, and I guess we can discuss this more as a council, but I would be really hesitant for us to get involved in approving professional service contracts.

I think we'd have to have a bigger discussion about that if that's what if that's what I'm hearing from everyone else around the table that they're interested in.

Thanks, Ms.

Joe's Ms.

Johnson.

Yeah, I think more so I think in response to that, there are some professional contracts that we initiate.

And so, you know, I think some of the process of where the council's involved, especially when it's a council-driven uh professional service priority, is one that um is of interest, I think, for me too, which is not necessarily in relation to our trash hauler contracts, but you know, we we do offer professional service contracts that we even we have in our own department and other departments um that the city authors and illustrates, and so I do think that there's a uh appetite and I think a space to talk about what I think what level you know um of professional service contracts.

I think that's by far maybe one of the larger contracts that we have at the city with 44 million dollars in it.

Um so I think that that's maybe a piece of it just as an initial response.

But I completely hear you know the feedback that's given, especially around legal advice and following what's the advice is in front of you, and so that makes a lot of sense to me.

Um I think that poses my question back just for the sake of this body in you know, not necessarily like getting involved in uh professional service contracts, but then being able to recognize 44 million dollars worth of a professional service contract, and or also being able to at least ensure, which in this case, you know, the involvement of council president at the time, all of that is like I think just that spirit of transparency.

And so I think even with you know, not needing the council's approval, I appreciate the fact that the council president was involved in the final pieces, and I would hope that that continued, especially with you know, all of the different services that we provide, because I think even in those cases, if we do have you know not in relation to your work at all, but like for professional service contracts, if we do have an issue regarding liability for the city that does come to this body, and so knowing about them, knowing the details around it, you know, that is where my brain goes is because then if something, you know, it's like we never hear we we don't hear about it if it's something it's going well, or if it's a personal service contract that's working really well, and then if something happens where a contractor or something that we are working with does not go well, the body does hear about it.

And so that you know, it's like rare, but those are some of the pieces that I just think of as from an oversight piece.

But um, yeah, I there are some professional service contracts that we even we prioritize and/or create by our budget.

Um, and so just making sure that we remain a part of that conversation is a priority.

But I don't think that like, do I want to be involved in every single professional service contract that our city does?

Absolutely not.

That's why I'm not in procurement.

That's why I don't work for right now.

Um, you know, but I have.

And so being a part of those works and process is really important.

Separately, you know, and I think the larger procurement question too is we have a process, we have procedures, but when we don't know about professional service contracts, we also don't know really how they're selected.

And so, you know, when I think about procurement questions that this body gets, um, you know, when I worked working at Hero, we did a lot on, you know, uh how we are equitably distributing that.

And so I think with some of the RFP process and some of the process and procedures, like it's hard to know who we contract with at the city at times without knowing the contracts we do have and the ones that we do have that's active.

So that's just something where I'm like, I don't know if it's warranted of a direct policy change or if it's really just continuing to have conversations with you all as you're going through these projects and being brought in.

And so it sounds like in this case the council was, and so I wasn't here at that time, so it's not saying that they weren't.

Just something that of interest to me that piques my brain when we um mention service requirements that are multi-million dollar contracts.

Thanks, Ms.

Johnson, and and thanks, Ms.

Joest.

I think that's that you both articulated the nature of the conversation, and we're we're over time, so we won't have it now.

But I think the question that I that sparked me to have this conversation that I think will continue is what are the parameters that determine whether or not we see a contract or not, right?

We're currently approving $50,000 legal council contracts or lobbying contracts, but we don't have to approve a 44 million dollar trash contract that affects every single person in the city.

What is the decision what is the decision point as to what we do see and don't see?

Um, and to your question, Councilmember Johnson, it if it's in the code, that's obviously a decision that's up to us to make.

Um so and I and I would also say I think there's I appreciate that the council president was brought into that decision, but I think if we think that the council needs a role, I think that that role should be formalized.

But I think if we think that the council needs a role, I think that that role should be formalized.

Rather than just one council member hearing about it, it's important for the body to hear about it and and ideally to have a role if there's any input needed at all.

So I guess those are some of my just background thoughts and responses to what you've both shared.

I know we're over time Ms.

Haas is there and I'm sorry that we got so into it with what you were sharing.

Is there any sort of final closing you want to give us in terms of the last two slides?

We're about six years into a seven year contract and the value of that total contract is 44 million dollars over the course of the seven years.

We have 10% we're one year into a seven year contract.

Yeah not six years remaining okay six years remaining five pants I guess I'm thinking about the end when we have to start doing the RFP.

There we go.

And then our one to four unit recycling contract is with Eureka um that was a five year contract and we're we have three and a half years remaining on that.

So we'll begin the process in about a year of starting to think about we're already kind of looking at what we want to change and how we would um propose that and the value of that contract over the course of five years is 61 million dollars.

And we also don't approve that contract.

Correct it's yep let's let her finish the last slide and then and then go to Miss Johnson sorry.

And then um FCC also has our multi-unit uh recycling contract um and that is also seven years so we're we have six years left on that as well and it's a 30 million dollar value value.

Thank you Ms.

Has Ms.

Johnson a quick note um for the recycling piece the um so the the project that is uh got a few years left not the six year left what can you say that again which one it is SCC uh one to four unit garbage and multi-unit recycling has six years left on it eureka has three and a half for the one to four unit recycling you know I think one of the things that I would just say that since that's probably gonna be something that is you know the this body as a council is a part of you know I just I really care about evaluation and what the staff is you know looking at and what goes into the decisions around contracting with the entity again or not and for changes and so I think from from at least from my office you know it's not really to I have no desire to get uh all up in the trash business or the recycling business um I I trust your you know and it's only because in the in the piece of just you know the trust that goes into staff I want to be briefed on it I want to hear about it but I don't necessarily it's not my expertise in being involved in it ex uh you know day to day I don't think that's the request that I have but I do think it's really important when it comes to just really learning and what factors you're taking because I know that we've made some significant changes in this area.

And so really taking up into the the piece of just not trash hauling but like recycling um Eureka's contracts like this is actually one of the things that so many of my constituents care about and so really just understanding what we what evaluation tools we're using when we choose to pivot if we are choosing to pivot in in any way like what kind of drives that that information will be helpful for me at a high level and really just to be able to explain as folks go through the process and so um and especially as not being a part of it in the past I would really value that type of transparency um across the board but for sure with our office and so just wanting to to share that because I don't my intent's not to be involved in everything that you do but it's definitely to be involved enough to understand.

Thank you.

I can talk about trash any time you want to I haven't even I will mention we do have a study being conducted right now to help advise us um from an independent um firm on what does that look like operationally what do we need changes we have our own ideas too and we um now have you know a year of hauling under our our own city services and you know we have the lowest miss rates we have the best collection rate so I'm we're able to see and what we are we doing differently that the haulers aren't and how can we shift the RFP in the future to bring that more in alignment I mean the simple thing is like rear load our trucks yeah you have to get off you have to physically touch it it's not an arm you know those kind of things are making that a requirement moving forward.

Yeah that that's what I'm kind of really interested in hearing so we'll definitely come and share that report when it's ready in about three and a half months and I heard the question specifically about recycling as we consider the Eureka contract as well.

So um want to apologize to my colleagues for going significantly over time.

I probably tried to pack too much into this and trash was always so fun um as our special assessments thank you both very much for your presentation and we'll be sure to follow up and with that public procurement month everyone yay we need a resolution with that we are joined