City unveils 5-year CIP; pavement management dominates $125M plan, community center compressor remains partially unfunded

Finance Director Amy Hov (packet materials listed as Amy Holt in places) and Public Works Director Brian Connolly presented the city's draft five-year capital improvement plan (CIP), showing just under $125 million in proposed projects through 2030 and asking council for feedback on priorities and timing.

Pavement management: the biggest line item. Connolly said local-street pavement-management initiative (PMI) projects are the largest single component: about $20 million is shown for 2026 PMI work and pavement projects account for roughly 75% of the five-year total. The 2026 PMI list reflects feasibility studies accepted by the council in May and includes a mix of thin overlays, full-depth reclamation and mill-and-overlay projects across nine project areas totaling 7.12 miles of streets.

Funding and assessments: Connolly and Hov explained the typical funding mix for PMI projects: pavement-management fund dollars, special assessments to affected property owners, state aid and the city's utility capital funds for work tied to water, sewer or stormwater repairs. Hov said staff are examining bonding special-assessment amounts so the city can cash-flow large annual assessment obligations rather than relying solely on available cash reserves.

Community center and arena refrigeration: Adam Ottis, Park & Recreation Director, described a major longer-term project to replace arena refrigeration compressors (conversion away from R-22 refrigerant) that staff now estimate may cost about $4.5 million rather than the earlier $2.5 million number. Ottis said the updated estimate reflects vendor input, possible need for expanded mechanical space and uncertainty in equipment and construction costs; staff currently show roughly $2.5 million of that project as unfunded and are exploring partner contributions and grant opportunities. Ottis said the city has been setting aside capital in prior years to help fund a conversion and that the city has also stockpiled recycled R-22 as a contingency while planning for compressor replacement.

City facilities, parks, golf and utilities: the CIP packet includes multiple city-facilities items (roof, heat-pump replacements, generator studies and repairs at fire stations and City Hall), parks capital (playground and trail repairs, Rich Valley parking and trail planning in coordination with Dakota County), golf-course capital (clubhouse retaining-wall work and cart-fleet replacement), and utility projects (water-tower painting and mixers, well-pump rehabs, automated meter infrastructure, sewer cleaning/rehab, and stormwater pond/outfall work). Hov said 2026 CIP capital outlays are about $29.5 million across funds and noted 15 different funding sources shown in the packet, including grants, special assessments, internal service funds, and partner agency shares for county and MnDOT projects.

Partnership projects and timelines: Connolly highlighted partnership projects that will be managed by other agencies (Dakota County and MnDOT). He noted the Seventieth Street county project and a MnDOT-funded noise wall project adjacent to a neighborhood and said staff will adjust the CIP to avoid double-counting MnDOT-managed construction costs while showing the city's cost share.

Next steps and council feedback: staff asked the council to flag projects that should be reprioritized, removed, or further refined, and to provide feedback so staff can refine budgets and rate impacts before modeling user-fee changes tied to utilities. Hov emphasized that the CIP's projects feed the operating budget and user-fee forecasts and that staff will return with refined cash-flow and rate implications, including the stormwater-rate study expected by year-end.

Ending: staff scheduled additional work sessions on non-general funds and the CIP and asked for council guidance on the 2027 PMI feasibility studies (staff said they will invite public outreach once feasibility work begins).