July 31, 2023 Minutes

Agreeable with a call for a Special Meeting issued by Mayor Mahoney, the Board of City Commissioners of the City of Fargo, North Dakota, convened in a Special Meeting in the City Commission Chambers at City Hall at 12:00 o'clock p.m., July 31, 2023.
The Commissioners present or absent were as shown following:
Present: Kolpack, Piepkorn, Preston, Strand (via conference call), Mahoney.
Mayor Mahoney presiding.

Presentation of Preliminary Budget:
Mayor Mahoney outlined the Mayor’s 2024 Preliminary Budget for 2024, stating there would be a focus on major financial priorities and activities within the City’s General Fund. He said funds have been taken from the General Fund to supplement the budget and there is a need to recharge revenues. He said the budget team has done an excellent job working with the Commissioners and Department heads. Goals are a balanced budget, timely reports and formalized reserve policies, he said, plus ongoing communication. Operational objectives are to retain and recruit, optimize service charge revenues with City services provided, he said, and to explore and identify revenue options, seek efficiencies and cost saving, safety and advancement of FARGODOME expansion plans. Challenges include Fargo’s population growth, expectations and costs of City services, inflation and the tight labor market, he said, plus the City must continue to take care of its employees and to recruit staff. In striving to be an employer of choice, he said, family-friendly and wellness plans will be explored, such as evaluation of hybrid work from home options and more workable schedules. Optimizing service charge revenues with the related services provided and expected levels of service plus rising expenses require additional revenue offsets, he said. Public safety commitments are being achieved with the budget including 15 new firefighters, he said, and related expenses to open the new fire station toward the end of 2024. Funding is included to match federal grant requirements for 6 additional police officers, he said. A comprehensive remodeling expansion plan for the FARGODOME will be advanced to the City Commission and residents for consideration. Challenges ahead include significant growth in population and size, he said, and corresponding increases in construction permits, calls for service and miles of roadway to maintain. The end of Federal relief money post-COVID forces the return to a regular budget, he said, and the economy and job market affects the City of Fargo. Three themes stressed are to re-evaluate, honor commitments and hold the line, he said. Property taxes represent over a third of the general fund revenues, he said, with intergovernmental represented by 20% and other fees, transfers and miscellaneous make up the balance. The primary revenue sources in 2024 are property tax and franchise fee revenues, he said. The 2024 mill value is $802,300.00, up from $714,100.00, he said, and the current mill levy is 53.00 and the Airport mill is 2.00 for a total of 55.00 and he is proposing an increase of 2 mills with emphasis on community safety. Franchise fees are often overlooked, he said, and the fee has been at 2% for decades; however, if increased to 4% the revenue would increase by $5 million. A taxpayer with a modest home and a $150.00/month utility bill would see an increase of about $36.00/year, he said, while a large residence or moderate sized business with a bill of $500.00/month would have an increase of $120.00/year. Also, outside the General Fund, he said, he is proposing in 2024 charges for service increasing for Street and Traffic Lights from $3.50/month for a single family dwelling to $7.00/month and Forestry fees would increase from $4.48/month to $5.98/month. He said the impact to an owner of a $275,000.00 home would be $145.00 annually. The community wants excellent services and to provide that, extra revenue is needed, he said. Operating expenses are 24.3% of the 2024 General Fund expenses, he said, and 75.3% are for personnel. General Fund expenses total $120.28 million, he said, the same number as General Fund revenues generating a balanced General Fund for 2024. He said with the franchise fee change and what has been done to address revenue issues there should be a sustainable budget that can grow as Fargo grows. He said he would like to hold the mill levies; however, inflation has been difficult. He said the reason for the Special Meeting is due to a requirement for a 60-day notice before increased fees can be collected and he wants to advance that now.

Commissioner Preston said she appreciates addressing the community safety in a more broad perspective with a 2 mill increase which includes mental health and chemical dependency issues.

Mayor Mahoney said in light of the recent events, likely some mental health aspects will be looked at for enhancements such as crowd control or cameras; perhaps before the new budget in January.

City Administrator Michael Redlinger introduced the budget team. He said some capital projects will be revisited such as those community safety related. The additional mills may allow redirection of funds from Capital Funds, he said. Final approval of the budget will happen in September, and in the fourth quarter, he said, a plan of intended use for funds will be brought to the Board.

Commissioner Strand said he favors the mill increase for growing needs and the expectations for public safety. It is a higher priority to assure the community that public safety and employee support has been bolstered. He said he also supports Public Health being a component of Public Safety. While the numbers may seem like a lot to the community, he said, just in one day the police force was affected by three; two hospitalized and one who did not survive.

In response to a question from Commissioner Strand asking about increasing Police staff, Mayor Mahoney said a minimum of six officers are being considered; however, if a grant does not come through, it would be revisited.

Mr. Redlinger said the additional mills provide flexibility and it will be clearer in October if the Department of Justice Grant comes through. He said it will be funding for six officers or none and if unsuccessful, it will be revisited with the Commission.

Commissioner Piepkorn said workforce housing and affordable housing has been a theme and is a concern for people on fixed incomes, yet this raises property taxes and utility fees. He said it seems voting in favor of these increases makes the Commissioners hypocrites. He opposes the two mill increase and he opposes the franchise fees, he stated. He said in his opinion, the State and the Federal government should help with public safety.

Commissioner Kolpack said there was conversation addressing public safety prior to the July 14th event. This is right-setting the budget following the impacts of the pandemic, she said, and she appreciates the look at the reserve policy.

In response to a question from Commissioner Kolpack asking when the Commissioners will hear information on a Reserve Policy, Mr. Redlinger said Finance Director interviews are tomorrow and it will be a first order of business when the new Finance Director is in place this fall. Discussion on parking debt payments are in progress, he said, and a report on that will come to the Commission.

Commissioner Preston said she appreciates the transparency and engagement with the Commissioners on the budget.

Resolution Adopted Establishing Northern States Power Company (Xcel) Franchise Fee for Electric and Gas at 4% and An Amendment to Change Cass County Electric Cooperative Franchise Fee to 4% Approved:
Assistant City Administrator Brenda Derrig said the franchise fees are for utility companies that use the right-of-way for lines, pipes, poles, etc. Currently franchisees for electric pay 2% of gross revenue, gas is 2% of gross revenue, telephone 2% and cable services 5%. Northern States Power Company’s agreement is by Ordinance which may be changed by Resolution, she said. Cass County Electric Company’s is by agreement, she said and to change the agreement with Cass County Electric Cooperative requires an amendment.

Mayor Mahoney said there have been discussions with Xcel Energy and Cass County Electric Cooperative representatives.

In response to a question from Commissioner Preston asking how much of franchise fees come from Xcel and Cass County Electric, Ms. Derrig said Xcel’s share is about two-thirds with about one-third from Cass County Electric.

In response to a question from Commissioner Preston asking what happens if Cass County Electric declines the increase, City Attorney Nancy Morris said the agreement provides the City and grantee agree that the City, at its sole discretion, may raise or lower the franchise fee percentage.

Commissioner Piepkorn said he wants citizens to be aware that this impacts everyone’s utility bills, and if anyone has an electric vehicle, it increases that cost. He said the talk is to keep housing costs in Fargo low, yet this increases housing costs and he will be voting no.

Commissioner Preston moved to adopt the Resolution Establishing Northern States Power Company (Xcel) franchise fee for electric and gas at 4% and to approve the amendment to the Agreement with Cass County Electric Cooperative to increase the franchise fee to 4%.

Second by Kolpack. On call of the roll Preston, Kolpack, Strand and Mahoney voted aye.
Commissioner Piepkorn voted nay.
The motion was declared carried.

The time at adjournment was 1:00 o’clock p.m.