Council reviews $45 million capital-improvement plan, asks members to rank projects

City Council members heard a presentation on the city—s capital improvement plan and were asked to rank 11 projects so staff can analyze cash-flow and borrowing implications.

Speaker 2, a staff member, told the council, "We want to take a step back because, if you look on that page we've got $45,000,000 worth of projects. And depending on how they are prioritized and how they are placed it has a direct impact on cash flows and future projects." The staff presentation walked council members through individual project scopes, timing and funding options and highlighted legal and fiscal constraints.

The council was asked to return written rankings (1 through 11) so staff can plug priorities into a model and show when projects could be designed, bid and built. "Why don't you just rank them?" Speaker 3, a presiding councilmember, said. Staff said it will compile members' rankings and publish a consolidated priority list at the next packet; members agreed to provide rankings by Thursday or by the end of the week.

Why it matters: The order in which the council prioritizes projects will affect whether items are paid from fund balance, bonded against sales-tax revenues, or delayed. Staff warned that statutory rules and prior referendum language limit what the council can approve in the near term for some projects.

Key points from the discussion

- Process and timeline: Staff asked each councilmember to rank the 11 listed projects; staff will model the effect of those priorities on cash flow and bonding capacity. Staff said typical infrastructure projects are two-year efforts (year 1 design, year 2 construction).

- Legal constraints: Staff said state law and the wording of a recent petition prevent the council from expending money for the Aspen Park paving project for one year after the referendum. "You can't make a motion to expend money. You can't approve a design contract. You can't approve construction," Speaker 2 said. Staff said the council may include Aspen Park on the CIP and prioritize it, but cannot sign contracts or expend funds until the statutory restriction expires.

- Funding limits and capacity: Staff noted the city—s bonding capacity is constrained by rules that limit annual debt service to a share of sales-tax revenue (staff cited a 75% cap on annual payments relative to sales-tax receipts). Staff said the city—s current debt-service ratio is roughly 40% to 45% of sales-tax receipts and said staff uses conservative sales-tax growth assumptions (3% in their baseline projection versus recent growth of about 5%).

- Projects called out during the presentation: Ironwood (a project voters approved and for which staff expects to use fund balance and proceed to bid), Rushmore Area Phase 3 (in design and scheduled for construction next year), Aspen Park (divided into the pool parking lot and remainder; total Aspen Park estimate presented as about $3.2 million with curb-and-gutter cost shown as $690,000 and the pool parking-lot cost shown as $455,000), core-area reconstruction phases 3A/3B and other neighborhood street and utility projects, Richland Park, and reconstruction of Redwood and Sioux truck routes.

- Parks and phasing: Staff discussed phasing to reduce impacts to park users and athletics schedules. For Aspen Park, staff recommended first completing pool parking to minimize seasonal conflicts and then phasing the remainder of the park work.

- Public- safety / facilities: Council reviewed options for a new city hall and consolidation of Public Works facilities. Staff said building a new city hall or renovating the existing complex will be expensive and that the city is evaluating sites, zoning constraints and possible redevelopment proposals (staff mentioned using a request-for-proposal approach for off-site redevelopment).

- Fire department funding request: Staff said the fire department has requested an additional $212,000 in 2026 for on-call pay and that discussions are underway about longer-term staffing models, including a hybrid or full-time department. Staff explained multiple revenue sources for fire operations: direct city contributions (about $305,000 this year, per staff), a township contribution (about $16,000), a county fire levy (approximately $130,000 as discussed in the meeting), and a 2% fire-insurance premium tax (roughly $60,000). Staff said the total approximate support to the department this year is about $375,000.

What the council directed/staff will do

- Council members were asked to individually rank the 11 CIP projects (1 highest to 11 lowest) and return rankings by Thursday/end of week; staff will compile the scores and present a consolidated ranking in the next packet (staff mentioned preparing materials for the June 2 meeting).

- Staff will use the rankings to model cash-flow, bonding capacity and timing for design and construction. Staff flagged statutory timing limitations that affect when the city can enter contracts for projects subject to a referendum.

Votes and formal action

The only formal recorded motion in the transcript excerpt was approval of the meeting agenda. The presiding councilmember called for the vote; the motion carried with the clerk noting the motion "carries." The transcript shows speakers saying "Aye" and "All same sign. Motion carries." Exact vote counts were not specified in the record provided.

Next steps and outlook

Staff emphasized that bids, actual costs and sales-tax performance will determine whether projects can proceed as currently scheduled. "If you think that someone thinks that Rushmore area phase 3 is number 1 and core area 3b is number 2, then Christina can start putting those in her spreadsheet," Speaker 2 said. Council members agreed to return rankings so staff can present modeled outcomes for different priority orders.

The presentation included cost estimates and sequencing guidance but did not include final contract approvals; staff repeatedly advised that some projects cannot be advanced to design or construction until statutory or referendum restrictions expire.