Budget Committee October 15, 2024   10/15/2024

Good morning, my name is Aisha Chugtai and I'm the chair of the Budget Committee.

I'm going to call to order our regular meeting for Tuesday, October.

Before we begin the meeting, I want to offer a friendly reminder to all members, staff, and the public that these meetings are broadcast live to enable greater public participation.

These broadcasts include captioning the further input to increase the accessibility of our procedures to the community.

for all speakers to be mindful of the rate of their speech, so that our captioners can only capture and transcribe all comments for the broadcast.

We ask all speakers to moderate the speech and clarity of their comments.

Mayor Deville is at the roll.

Osman is absent.

Captain present.

Jenkins is absent.

Palmisano is absent.

Let the record reflect that we have a quorum.

I'll also remind colleagues that we're going to be using speaker management today.

Please make sure you sign in.

Colleagues, the agenda for today's meeting is before us.

Are there any amendments to the agenda?

Thank you Council President Chuck Tai.

I would like to motion to amend the agenda to include the motion that's before the body that is authored by myself as well as you and Council Member Chavez.

Alright, we're going to reconvene our regular meeting of the Budget Committee just to make sure that this was captured for the broadcast.

Thank you, Council Vice President.

Yes, I would like to motion to amend the agenda to include the item that is before the body right now.

That is authored by I, you, Council Vice President, as well as Councilmember Chavez.

Council Member Wonsley has moved to add to this meeting's agenda a resolution to the general appropriation resolution.

As there are three authors on this item, we do not need a second.

Is there any discussion on the motion to add this item to the agenda?

I'm not seeing any.

Mr.

Council Member Payne?

Aye.

Wonsley?

Aye.

Rainville?

Aye.

That motion carries and this resolution has been added as item number three to this meeting's discussion agenda.

With that, we will begin with discussion item number one, which is for the appointed position of Deputy Director of Civil Rights.

I will invite Brenda Miller, Compensation and Classifications Manager from the Human Resources Department to begin that presentation.

Thank you.

Chair Choctaw and members of the committee, I'm here to bring forward one appointed position.

That is the Deputy Director of Civil Rights.

The Deputy Director of Civil Rights is part of the Civil Rights Department and assists the Director of Civil Rights with managing the day-to-day operations of the Civil Rights Department.

The Deputy Director of Civil Rights has been evaluated at 685 points, grade 15.

The 2024 schedule for this position is between

The 24 and 25 costs are being paid through cost savings from replacing the director civil rights equity position with this position and from reallocating some money from the non-personnel budget in 2024 and 2025 Changes are effective October 17th of 2024 This position meets the criteria

This position meets the criteria section 2010-10 of the Minneapolis Code of Ordinances.

It reports to the Director of Civil Rights.

It's a member of the Civil Rights Department Executive Management Team.

It develops and implements city policy, goals, and strategic planning for the Civil Rights Department.

It requires leadership, vision, team building, and strategy implementation, and establishes policy, goals, and strategies that are consistent with the goals and priorities established by the Mayor, City Council, and the Director of Civil Rights.

Please find that the Deputy Director of Civil Rights meets the appointed criteria as defined in section 2010-10 of the Minneapolis Code of Ordinances and forward it on to Council for final approval.

Thank you for that presentation, Ms. Miller.

Is there any discussion or are there any questions from members of the committee?

I am not seeing any.

So with that, all those in favor please signify by saying aye.

Aye.

Those opposed say nay.

Any abstention?

The ayes have it and that motion carries.

Thank you for your presentation Ms. Miller.

Thank you Chair Chuktay and members of the Budget Committee.

My name is Abdi Warsamy, I'm the Executive Director and CEO of the Minneapolis Public Housing Authority and today we are here to give an update to the Budget Committee around our levy, capital deployment and proposed new funding.

So thank you for having us and with me are

our Planning and Development Director Laura Dykema who's going to do most of the presentation as well as Drew Hallinan who's our Assistant Director of Communications and Strategic Initiatives as well as our CFO Tim DeRose so thank you for having us and we'll start with

just giving you an overview of our presentation today we're going to talk about our MPHA's capital backlog we're going to cover 2023 agency accomplishments we're going to go over the housing levy and capital plan and deployment and then our proposed 1.3 million city investment for our 809 and 828 springs street northeast development

As you know, MPHA is the largest housing authority in the state of Minnesota, the largest housing authority in the city.

We take care of roughly around 5% of the city's population through our various programs and that's around 26,000 individuals.

and let me talk a little bit about the capital backlog because it's going to underpin a lot of our presentation today.

MPHA's housing stock comprises around 6,000 units located around 42 high rises plus 736 scattered site homes.

a 184 units in Glendale and a 16 unit town home development.

Most of our high rises of public housing was developed around the 1960s and early 1970s.

The age of our single family or family housing ranges from one year

to a hundred years.

We just had the new, 84 new development.

A majority of our housing stock are aging properties.

For example, our Glendale development celebrated its 70th anniversary in 2023.

so what this means is basically MPHA has old housing stock and there's also been disinvestment in federal funding for public housing across the country which has resulted in a capital backlog around two hundred and sixty million dollars so we estimate this is two hundred sixty million dollars keeps growing

and last year it grew for around 25 million dollars and this capital backlog is just to keep what we have so not adding any new units or updating units or adding any bells and whistles this is just to keep and serve the people that we're serving currently

Historically HUD has provided around 10% of the capital needs so 10 cents for every dollar that we need and recent historic inflation rates and volatility in the construction market has also impacted us as well.

If we can go a little bit around our

you know 2023 agency accomplishments and we know the capital backlog is huge but we're trying to tackle it through myriad projects.

We got five million dollars capital grant from the legislator to repair our deeply affordable family housing and this was the first direct appropriation to any housing authority in our state.

We also scored 98.5% on the HUD physical inspections.

This is a yearly inspection that HUD does on all housing authorities.

We got 98.5% on a hundred scale, which is the largest in the history of our agency.

We also got four million extra in new funding from the City of Minneapolis and Hennepin County to expand our stable homes, stable schools.

It's a program now that's in every single elementary school in the Minneapolis school district.

We're very proud of that and thank you to the City Council and the city leadership for that.

And we also gained 1.3 million from the Minnesota Housing Short Program to repair again our family housing.

and also and thank you to the City, City Council and the Mayor's Office for the reinstatement of the levy which is now five million dollars a year to go to our preservation of production work.

The levy was inactive for 14 years and even before then we only used to receive around a million dollars that used to go towards security guards.

So now this is going towards our preservation and production work and it's five times what we used to get in the past.

So thank you very much for that.

We also helped 450 MPHA families receive $800,000 in rent relief through Hennepin County's emergency assistance funds.

So not only are we housing families but we're also trying to make sure that our families stay in place.

And so that's some of the accomplishments.

And now what I'm going to do is I'm going to hand it over to Laura Dykema to talk a little bit about our levy budget.

Good morning, my name is Laura Dykema.

I'm the Director of Planning and Development for the Housing Authority.

So right here, this slide provides an overview of our 2024 approved levy budget which MPHA developed with consideration of our five-year strategic plan as well as our resident feedback.

The plan incorporates health, safety, code compliance, and quality of life improvements.

2.5 million has been earmarked for MPHA's next high-rise preservation and new unit production project which is located at two Northeast Minneapolis high-rises which we'll talk more about as we move through our presentation.

The scope of work contemplated includes addressing short and long-term capital needs, enhanced resident amenities and community spaces, energy efficiency upgrades, and a four-story building addition adjacent to the 828 high-rise building.

This addition will house 15 new units, all of which will be handicap accessible.

A total of $1.25 million is dedicated to two scattered sites infill projects both located in South Minneapolis.

These projects will replace two single family homes with a total of five new family units and at least two of those units will be fully accessible.

and then lastly 1.25 million will cover comprehensive elevator modernization at two elderly designated high rises in North Minneapolis.

These properties are homes to over 450 residents who rely on those elevators for safe transportation to the upper floors of those buildings.

On this next slide here talks about the deployment of those resources.

So as the Budget Committee is likely aware, tax levy proceeds are delivered in two yearly installments.

The first installment just recently received by MPHA in July.

While a portion of those funds were only recently received the agency has done significant planning work to ensure we can put these funds to work quickly and details of the pre-work are noted on this slide.

That said our three development projects have longer planning runways and therefore funds earmarked for those projects will not be utilized until financial closings and construction commencement.

All three projects are though on track to close in quarter two or three of 2025 at which time those funds will be fully committed.

Our two elevator modernization projects are however well underway.

We executed construction contracts for those buildings this winter and construction is nearly complete at one property.

We have deployed nearly 445,000 of those resources at that building and the second building is now under construction and both of those projects will be completed this year.

The agency is also hard at work deploying other resources that Executive Director Warsami mentioned that we were able to secure over the past couple of years.

This includes approximately 10 million in total resources for repairs in our CHR or family housing stock.

These homes are scattered across the city and make up the majority of MPHA's family housing stock.

Construction is well underway at multiple homes funded by the city's 3.7 million.

This includes extensive rehab of four long-term vacant homes, one of which will be made fully accessible, as well as roof, window, and siding replacements at 19 other homes.

This work is expected to wrap up by late 2024.

MPHA recently issued invitation for bids on the five million in renovations made possible by the state of Minnesota.

This includes the same types of exterior improvements so roofing, windows, and siding at over 50 homes.

We expect most of this work will be completed in 2025.

and we've essentially deployed all of the three point million in short funds also made available by the state of Minnesota for interior rehab at NCHR homes.

This is primarily kitchen and bathroom renovations and system updates completed at vacant unit turn.

and lastly I'm happy to report that all of MPHA's 42 high-rises are now fully retrofitted with fire suppression systems and this work was completed in August.

We just had a celebration recently to celebrate that work and it was made possible by the resources made available from city, state and federal government entities.

So this slide here summarizes our 2025 levy budget and five-year plan.

Details for each of these projects are on the following five slides.

I'm not going to go through all of those slides, but I will provide a summary of our proposed plan.

Highlights include additional resources to support the springs preservation and expansion project I mentioned earlier.

This is DEV 01 in 2025.

We did allocate some resources in 2024 and we're dedicating some additional dollars here 3.5 million.

to this project.

And we're also doing conversions and preservation work at two other high rises in 2026 and 27.

This is Dev 03 on this slide.

A total of 2 million will be dedicated to those projects.

This work would include addressing all property capital needs as well as enhanced amenities and community spaces for our residents.

We will also closely evaluate these buildings to see if there's any opportunity to add units as well as address accessibility or other needs of those communities.

DEV02 in 2026 is funds to support a scattered-site family upzoning project at five sites across the city with the goal of constructing 30 new units.

So this would be very similar to our family housing expansion project, just on a smaller scale.

And we actually intend to engage with residents who've moved into our family housing expansion new units to talk about what's working at those properties to help shape this next project.

We also have a number of major capital investments included at multiple high-rises CAP 01 includes funding in 2025 and 27 for a total of three million dollars to replace older windows with more energy-efficient assemblies at three high-rises CAP 02 funds for additional elevator modernization projects in 2026, 28, and 29 for a total of 1.5 million

And CAP 03 provides resources to replace three high-rise boiler plants with more energy-efficient systems, which would be a total of 2.5 million.

And lastly, we're dedicating significant resources towards our Glendale townhomes redevelopment.

This is DEV 04 on the slide.

Particularly in the out years this really illustrates a PHA's commitment to this property and that it is a priority for us and while we don't know yet what the vision is or their plans are for that community we do know that this will be a resource intensive project and whatever we do will be guided by extensive resident engagement

Our funding request starts in 2026 to support engagement and pre-development work and ramps up as we move into 2028 which is when we would hope to start on the first phase of a multi-phase project So a total of $10.5 million over 2026-29 we're dedicating towards Glendale

Again, the next five slides provide some more details on these plans, which are subject to change since we go through an annual process.

But we would like to talk a little bit more about our next RAD project, the springs.

Thank you, Laura.

So, Chair Choktay and Council Members, our next Rent to Assistance Demonstration project will be at 809 and 828 Spring Manor, which is, I believe, in Ward 3, Council Member Rainville's Ward, not far from Council President Payne's Ward.

And in 2022, NPHA celebrated the completion of our first RAD project, and that was in Elliott Twins, in Elliott Park neighborhood, in Ward 6.

That was a $27 million project.

We remodeled and rehabbed and preserved 174 units.

We also added 10 disability-accessible units.

And there was no involuntary displacement at the Elliot's.

So not a single resident lost their home because of this RAD project.

So we're very proud of that.

We also transformed and added 6,200 square feet of community

and office amenities and so this is our next project.

This is the next RAD or Rent to Assistance Demonstration Project and MPH is advancing 809 and 828 springs.

We aim to rehabilitate and preserve 221 existing units.

and we also want to add 15 new accessible deeply affordable units.

These properties mainly house senior citizens and we are looking for ways to make sure that our residents there can age in place.

So these 15 units will be for that.

The full project details will be available to everyone and we will have a celebration on October 22nd follow and we will make sure that you are all up to date with that announcement.

Thank you, Abdi, Chair, members of the committee.

My name is Drew Haldeman.

I am, first of all, I apologize to the closed captioning people.

I do have a tendency to speak quickly, so I apologize in advance to those folks.

But I'm here today to talk a little bit about a pilot program.

This is directly related to the $1.3 million investment from the city that supplements the $5 million ongoing levy.

In this 809-828 Springs project, MPHA is proposing to pilot a new HUD funding tool called Faircloth to RAD.

I'm talking a little bit about what Faircloth is.

The Faircloth Authority is the number of public housing units, which are as designated by section 9 by HUD, that a public housing authority is entitled to receive operating and capital funding for.

that number, that fair cloth authority is tethered to the number of units owned and operated as of October 1, 1999.

For political reasons, that's the number.

It is an arbitrary date, but it was just set for political reasons.

For MPHA, our fair cloth authority limit is 6,393.

So we talk about RAD, we've talked about Section 18, we've talked about using a couple programs that usually move units from

section nine public housing over to the section eight housing choice voucher program we have found in our family housing portfolio that's increased federal subsidy by about two and a half times for owning and operating the same home, serving the same residents, using the same staff, so we're just using a variety of federal tools.

When we use tools like that, we bring down our number of section nine units, but we remain entitled to receive that operating capital funding by HUD for those units.

So Faircloth, the RAD, so we have about 899 of those units for which we are entitled to that capital and operating funding but we are not currently receiving because we've shifted them to Section 8 or elsewhere.

And I also want to clarify that this shifting out of the Section 9 public housing to the Section 8 platform is not unique to Minneapolis.

This is something that is happening all across the country because it's just advantageous for funding purposes to do that.

and so HUD recognizes that and recently they developed a tool to try to provide housing authorities an opportunity to re-access or re-energize that funding that they're entitled to but not yet receiving and they call that fair clatharad.

I will say it is an incredibly complex program.

We have our CFO, our P&D director, among others, here to help supplement some questions.

But for the purposes of this presentation, we're trying to keep it pretty high level.

And we mentioned the event on October 22nd.

Concurrent with that event will provide a rather lengthy, detailed written explanation that can provide a little more nuance that explains kind of

the intricacies of faircloth to RAD, but at its core, at its most basic, it again enables housing authorities to unlock that unused faircloth authority to help build new deeply affordable housing.

So it helps us unlock that unused section 9 subsidy to create new deeply affordable housing.

But as with section 9 that that new subsidy that gets unlocked is still Inadequate it is still lower.

You know, we talked about the 260 million dollar capital backlog getting ten cents on the dollar from HUD It's still that funding subsidy level when you unlock it using this program So it requires us to supplement that funding with additional funding which is where the 1.3 million dollar investment request from the city comes from and

is to help us deploy this pilot and supplement it with the necessary funding.

And Laura's going to talk about in a moment kind of how the math worked out on 1.3 million and where that's going to go.

But I will just note that to date, HUD estimates fewer than 15 of these FTR projects have been completed around the country.

MPHA, whether it be Stable Homes, Stable Schools, the Family Housing Expansion Project, the Elliott Twins.

We've really been doing a, maybe not to toot our own horns,

We've been doing a pretty good job at some unique programming and some unique opportunities and taking advantage of some nation-leading work.

So we want to lean right into that here and that at our next major redevelopment project we do want to pilot this FTR subsidy structure.

Thank You Drew and I also would like to note that HUD does not provide any sort of resources to housing authorities for any new unit development so although this program allows us to get operating subsidy for those units there are no funds coming into this project from the federal government to build those those new units.

So MPHA is proposing to try this program again at the springs redevelopment because it is largely untested and it does provide us a very good opportunity to learn more with less risk and I'll explain why So the springs redevelopment includes the rehab of 221 existing units

and the HUD conversion tool that we'll use for those existing units will provide a much higher subsidy.

Thereby mitigating some of the impact of the lower subsidy we received for the 15 new Faircloth to RAD units.

And I'll just mention that it is

35 to 50 percent lower subsidy that we received for those faircloth to rad units versus the existing 221 units and the subsidies will receive by converting those properties.

This project will also be financed with bonds, low-income housing, tax credits, and debt.

While the higher subsidies we'll receive for the 221 existing units helps offset the lower faircloth to rad subsidies, we do still lose some debt capacity because of those lower subsidies which we're equating to about the 1.3 million dollars.

We did present this challenge to Mayor Frey during our annual summer budget meeting and requested that the city provide a one-time investment to cover this lost debt capacity which Mayor Frey subsequently proposed as part of his overall budget.

By testing this program with the Springs redevelopment, we'll be able to better inform how this tool may be utilized in the future and answer many of the questions that we have in our minds and many others have posed to us just only knowing about this program on a very limited basis.

Thank you, Laura.

So, as we mentioned, this is a pilot, and as Laura outlined, it is as a part of a much larger project, so the risk that we run is very much mitigated because of the larger subsidy that we get for the vast majority of the rest of the project.

So we saw this as a tremendous opportunity to explore this.

So on this slide, this kind of closes out our presentation.

This kind of outlines what we're hoping to understand, accomplish, and achieve through this pilot.

And first and foremost, does this work?

Because like I said, there are fewer than 15 of these completed projects around the country, according to HUD, and so it is largely untested.

So we're going to test it.

So first and foremost, does this work?

can we as an agency work through the variety of compliance and development requirements to build the 15 new units using this FDR subsidy structure.

And you know, if it's successful, I think, and this is a pitch that we made and what we talked about earlier this summer, if this is successful, it does have the opportunity to unlock millions of new dollars, new federal subsidy,

for the City of Minneapolis to build deeply affordable housing because we have 899 units of unused faircloth authority.

So if we can figure this out and get this to work, it does have the potential to lock on millions more in new federal subsidies, which I think is kind of why we were willing to to pilot it in this project because we see what the opportunity is.

But beyond the primary goal, we also want to explore a couple other questions.

So, you know, the FDR subsidy rates that we get.

Does that mean that only MPHA can self-develop, or could we award them similar to a project-based voucher to some of our non-profit development partners?

Is that something that we could do?

We don't know at this time.

Would this, you know, and would that process maybe pose some other unique challenges that a non-profit developer wouldn't want to take on?

So again, we only can self-develop.

how can we work with HUD to kind of revise or improve the overall requirements and subsidies of that of the FTR pilot to help not only MPHA but other PHAs around the country lean into this program and use this program and deploy new federal resources in a way that kind of works for them and meets them where they're at.

And then the last two here, you know, if feasible, what would the cost associated be with deploying this at a greater scale?

Like I said, we have 899 units of unused faircloth authority, so if we can kind of figure this out, if we can answer some questions here, what would the cost be associated to make a real large scale effort to deploy more of these resources?

And then finally,

You know, Faircloth Authority is not unique to Minneapolis.

In fact, almost every PHA and Housing Redevelopment Authority in the state of Minnesota has unused Faircloth Authority.

And so is there a role for city, local, state government to supplement some of the funding for these different PHA, HRA, Faircloth Authority units throughout the state?

So we'll be a leader around the country, but we'll definitely be a leader in the state

and from what we learned here we might be able to unlock new additional state subsidy resources not only for Minneapolis but jurisdictions around the state as well.

So I'll turn it back over to Abdi here for any remaining questions.

Thank you for your presentation.

Colleagues, are there any questions for the team here from the Minneapolis Public Housing Authority?

Thank you, Vice President Chuktai.

All of the topic of public housing is so complex because of so many entanglements with the federal government.

And I was just curious, I'm going to try to structure this in an understandable way.

Obviously there's a lot of barriers to building new housing.

I think chief among them is the Fair Cloth Act and the cap that that puts on us.

And then obviously it's just budget.

But I was just curious if you could give more clarity around, you know, even if we could wave a magic wand and get rid of the Fair Cloth Act, wouldn't we still be in a structural deficit in terms of the current funding level per unit for operations?

Or am I not understanding that correctly?

Yes, absolutely, yes.

And so as I think about our role, obviously part of our role is having you come to the city

year after year asking for additional funding to help close that structural deficit.

But I also see one of our roles is trying to advocate so that we don't have that structural deficit in this process.

Chair Tuktay, Council President Payne, you know the last couple of years the work that this council has done and the mayor's office especially our IGR committee and staff in terms of advocating for the needs of MPHA at the state has had you know great progress we've made great progress and I think continuing that

and for us the challenge has been to demonstrate these tools.

RAD was very controversial to demonstrate that we can use it, make sure that we can keep our residents whole, no displacement, do it within budget, on time.

I think

continue to do these taking these incremental steps will have a huge impact but there is a role for the local government jurisdictions the state the county and the city of Minneapolis in order to address not only the capital backlog but just the waiting list now you know it keeps increasing we just had and we will have more on this which is open one of our

We want to go back to HUD as well, to say to them, this is what we found.

The level of funding is not enough.

Let's get more.

Yeah, just know that we want to remain in close partnership with you as we fight for those resources and I definitely want you to work closely with our IGR chair Councilmember Chaudry because I know that this is a passion of hers as well.

Wonderful.

thank you council vice president more so not a question but a comment just wanted to say thank you all for presenting this information today as someone who's worked very closely with you all on securing that five million dollar levy as well as a five million dollar allocation from the state and the 1.2 for the sprinklers like it's been

is challenging to hear what are we doing with these resources that has been fought tooth and nail for our public housing authority.

And it's good to see the five year plan that you all just laid out in front of us on how you are using it to preserve our current

you know public housing stock but what I'm most excited to see is how we're leveraging that in addition to other tools around reaching their fair cloth you know port for that that minimum that we're able to to reach and I know that's been an ongoing conversation that I'm looking forward to have with Congresswoman Omar around what do we need to do again in

if it's legislatively, what is it when it comes to, you know, getting HUD on board with removing that cap but also providing you all more funding, especially through Section 8 and not just having to rely on RAD as a means for reaching that fair cloth minimum.

So I just wanted to say thank you for presenting a robust

Thank you.

And thank you for coming today.

You're doing great work.

I was recently out to the Springs, as you call them.

That's a very clever name.

And the residents there are so excited about getting the remodeling going and the fact that their needs are being met.

So thank you so much for that hard work.

In the chart you had showing your capital needs, it's just skyrocketing.

That graph is straight up.

And is that because the buildings are so old, lack of investment in the past, a combination?

Thank you.

Yes, it is a combination of those factors.

You know, buildings continue to age and we're only getting 10 cents on the dollar that we need to address these needs, but I'll say there's other things like code compliance issues that have changed.

Our buildings were built at a time where, you know, codes were, building codes were very different at that time and so we have to address new needs that come from those changes in code.

And we also want to address other types of needs like the sprinklers for example Those were you know those were a life safety system that wasn't required when those buildings were built, but it was a very important need to address nonetheless But yeah, it's just we have failing plumbing electrical systems are becoming obsolete Even some of the fire panels that we installed and replaced 20 years ago are already becoming obsolete and so we're having to go through and replace those again, so it's

It's a constant challenge to address things when things continue to evolve and I will say also that yes with the recent volatile construction market it costs even more to address these capital needs than it ever has.

Thank you Madam Chair.

This year the 13th ward welcomed one of the 16 scattered site family housing expansions and I'm thrilled for this to be in the 13th ward.

We are an area largely devoid of significant amounts of affordable housing.

On slide five, I think it was the second row, you mentioned three unit scattered sites infill demonstration project in an opportunity area.

Yeah, so the sites where these are located is 56th and Blaisdell and 46th and Portland, so Southwest primarily.

And so it's again areas that are more largely devoid of affordable housing.

So we're really excited about densifying those sites.

One site will be a duplex.

We actually lost a single-family home

to a fire.

This is also a little bit of a demonstration.

We're trying to develop a design that we could deploy at some of our other single-family sites.

And then at the 56th and Blaisdell site, this will be a triplex and we've just now picked up the design work again.

We had to pause a little bit for complications around 2040.

But our latest renderings look great.

We are able to, I think,

get two accessible units at the Blaisdell site and one at the Portland site.

So we're really excited.

Director, we've reached the end of questions and discussion related to your presentation.

Thank you for coming to talk to us about the 2025 budget along with an overview of the next several years beyond that.

Wonderful.

All right, with that, I will ask the clerks to file that presentation.

And we will now move to our final item, item number three, which is a resolution amending the 2024 general appropriation resolution, which was brought forward here today by Council Member Wonsley, Council Member Chavez and myself.

I will ask if there are any questions or discussion related to this item.

Thank you.

Council President Chek Tai.

So I just wanted to provide some context about this motion before additional questions and consideration.

So as this body is aware, we voted 9 to 4 to add carbon fees to the 2025 fee schedule.

And this fee was in line with the staff recommendation on

how to implement this policy.

We also know Mayor Frey vetoed the entire fee schedule on the grounds that he believes carbon fees create unnecessary legal risk for the city, but did mention in the legal memo attached to that veto letter that two other legislative actions needed to be completed in order to justify this policy as well.

So the resolution in front of you today is the first step towards addressing at least one of Mayor Frey's stated concerns in regards to implementing carbon fees where again that attached memo highlighted that we needed to justify the cost of this program before

we implement it and my work thus far has been to have implementation of a fee, a PCAR fee on carbon dioxide for 2025.

So this motion notes that it earmarks funds within the Health Department's existing 2024 budget for the establishment of the Pollution Control Annual Registration Fee Program for again carbon emissions.

The amount of the program which is $453,000 and $826

comes from sustainability's own report outlining the mitigation, staffing, and administrative costs for the program.

I think we've had many of these conversations in regards to how financial decisions are made within departments.

We know the health department

ultimately has a discretion to allocate this from anywhere in their department's budget of totaling about $40 million.

I do know as of August and as of last week, we heard some conversations around vacancies within the department.

We also know vacancy savings are always an option.

In August, the department did share in the report on FTE vacancies that we received that there were four, I'm sorry, eight vacancies.

of the city of

also has a robust pollution control program that administered fees for dozens of harmful technologies and air emissions.

So with the passage of this funding allocation, essentially they will have two months to add carbon dioxide to that program and thus address that concern raised in that memo of justifying the cost of the program.

And using the specific implementation guide that was laid out by the Health and Sustainability Department

report, specifically pages three to nine, they outline what would be needed to implement said program and the cost associated with it.

So essentially, again, this will allow them to start making progress on that implementation or those implementation needs, starting with hiring, you know, a staff person to start prior to these fees being charged to the polluters, which would be 36 on the P card list or registry as of now.

and again it helps to establish the fine and justify program costs and hopefully eliminating again the mayor stated concerns around this particular piece.

Thank you Councilmember Wonsley.

Thank you, Madam Chair.

My question is actually for the city attorney.

I'm curious if this action satisfies the concerns that were raised in the memo from October 8th from Ms. Anderson.

Specifically, it said, setting the new PCAR in advance of creation of a regulatory program and without full understanding of the city's involved expenses is premature.

Chair Chigtay, Council Member Palmisano, no, it does not change the City Attorney's Office's opinion.

The action today to earmark money within the 2024 Health Department budget, noting that we have two and a half months left in the year as the resolution states to essentially create a program is not what will occur.

Earmarking money does not create the program.

does not compel the Executive Administration, in this case the Health Department, to create the program.

And in fact, adopting a fee before the program is created, and it has not been created, it's still being created.

There's necessary staffing that Health Department has indicated they would need.

That has not occurred, as we all know.

The hiring process in the City of Minneapolis takes a very long time.

This particular position would require the creation of a J.A.Q.

Posting, hiring, onboarding, etc.

for a very specified position and so none of these actions in and of themselves make this program happen.

That will occur only when the administration is ready to proceed with the program and to implement it and I think they've been fairly consistent in saying that that is ongoing

Thank you.

This is also verified in an email from this morning from Director Hanlon.

He indicates that reappropriation in 2024, this year, is not possible within his division and it's not possible within the Health Department in general.

He also states what Mr. Nielsen said about the FTE required for this program

is yet to be defined.

The hiring process would generally take about six months to define, advertise, interview and hire somebody.

Thank you Madam Vice President and I just had a couple questions possibly for the authors and then maybe to Director Hanlon as well.

Mr. Hanlon chair council members Yeah, my understanding on Friday when the the request came out was that it was for 2025 for 2024 I'm understanding that's what the earmark is for.

There's no there's no budget available in 2024 in our division and from my understanding talking with our health leadership within the health budget to make that kind of room within our budget and then it also as we've

So we would still need to do an amendment for 2025 to make sure that we continue the work?

Correct.

Another question that I have, and I'm not sure if it's for you or for HR, and perhaps to the authors, I guess what I'm hearing is that

the policy makers want to move forward more quickly and want to make sure that you have what you need in place soon and so would want to make sure that at the beginning of 2025 you have what you need in order to make sure you can get the JQ going and hire as soon as possible.

I see from your email here that

So that's what I need is the appropriation that was what I would have to have is there would have to be something in the 2025 budget that says that this is a program for us to be able to justify a fee and I can refer to the attorney's office if I'm stating that correctly for us to pass a fee this year I would have to have something on the books and currently there is nothing

Right and we have we're going through our budget amendment process coming up and so this is something that we could move forward and for an appropriation for 2025 with that but if that's something that we are looking to do is there something that you would need from us in 2024 in order to at least get your

get going on what we're asking you to do?

Yes, Councilmember Koski, that's the issue on the books that there's a program in 2025 and we don't currently have that.

And that's all.

And we do have a, as was stated, we have a plan to move forward in 2026 to pass a fee and to be making a budget request to have a program.

Okay, thank you.

Director Hanlon, while you're here, just a quick follow-up question.

I'm sorry, Deputy Commissioner Hanlon.

Order of operations question for you.

That is probably maybe an HR question.

Yep, so I'm quite certain the answer to that is no.

I don't think you can willy-nilly go to HR and say, I want to create a new position.

I have no money for it, though.

So you couldn't begin the process of having an FTE in order to implement the program without the funding in place in the first place, could you?

Correct.

Excellent.

Thank you.

That's all.

Thank you Council Vice President and also thank you Vice Chair Koski for asking those questions.

So I believe it's not a surprise to this body that for several months I have actually talked about bringing forward a FTE position for this particular carbon emissions mitigation effort.

to get it added

One of the key components of starting your program in 2025 would be that FTE or to at least justify the cost of that FTE before anything is charged in January.

So we pull literally from page

of the joint PCAR report, where it says in evaluation of a potential CO2e, carbon dioxide pollution control annual registration program starting in 2025, including the cost of staffing, administration enforcement, and mitigation, we see that the total cost is $453,826 per year.

And specifically, it goes and says it's $180,000

So we brought an allocation that reflected the cost of the program as recommended to us by staff.

And we can only go on the information that's given to us by staff.

We can't make up anything.

So that is where this was reflected.

and this also addresses once again what was raised on page 3 of the legal memo sent by the city attorney's office that says the validity of a regulatory fee therefore hinges on close alignment between program design and fee amount.

A PCAR fee for carbon dioxide must be tailored solely to recovery of the City's regulatory costs related to processing the registration fees, inspecting covered facilities, and administering any regulatory programs specific to those facilities.

and literally the page nine of the PCART report responds directly to the very thing raised in the legal memo.

So we have very much been working in alignment with what has been provided to us from staff in terms of information and also some of the legal concerns raised by our city attorney's office around the programmatic needs.

Thank you and next I'll recognize Vice Chair Koski.

So you know we did receive this email from Director Hanlon about three minutes before committee and I feel I have a lot more questions just to make sure that we have

our ducks in a row here and so I think that there are we have a couple more days before committee so I'm not sure what the best route would be here if we could make a motion to move this without recommendation and then make sure that we have conversations

I am hearing that we want to move this forward more quickly perhaps than what you had anticipated from the staff but that is the role of the policy makers to make that decision of when we want to start this timing.

So I think there's more conversations that have to happen in order for us to I hear us having a common goal so I want to figure out how we can get there so I would make that motion to move this forward without recommendation so that we can have some

On that motion, are there any questions or discussion?

It's relevant to this idea of moving forward to Thursday, which is two days away.

As a result of this council's decision on Agate, the Deputy Chief Saray Garnett-Hohuli specifically mentioned that one of the ramifications of that action suspends job classification studies.

That is something that is

What she said was the ramifications of something that you did here.

So we're not doing those for the rest of the year.

That's a direct ramification of the agate action.

So how do we create new positions that require a J.A.Q.

like this one?

I don't think we're going to answer that by Thursday.

Council Member, I just point you to item number one that this body approved earlier in this agenda, which includes the appointed position in the Civil Rights Department creating a new position, which included a job classification study that was completed.

It was already in progress when that action was taken.

So if that, I mean, you know the long process of having an RCA.

Job classification studies have been suspended.

So is there any further discussion from you?

And Madam Chair, what I'm indicating is that I don't think there's a way to answer this critical piece of it

by Thursday, plus it would take months to hire this position.

Got it.

Thank you Vice President Chagatai.

I just want to ground this conversation in some realities that we're facing right now.

And one of those realities is that our federal FEMA employees are getting hunted by militias as they're trying to respond to hurricanes on the ground.

and I think it's just really important to remind ourselves that the reason that we're trying to move forward with this action is because we are seeing an escalation in the types of tragedies that climate change is bringing upon us and our governments are not

Council.

The climate crisis is not waiting around for our state government to figure out what the right order of operations is for cost capture.

The climate crisis isn't waiting around for

HR to figure out what the right capacity is to be responsive to this request.

And so I think there is actually a lot of alignment between both City Council and the mayor and our professional staff on meeting this moment with the urgency that it requires.

And so I think it's very wise of us to move this forward without recommendation.

Let's really

Thank you.

Councilmember Payne?

Aye.

Wonsley?

Aye.

Rainville?

No.

Vita is absent.

Ellison?

Aye.

That motion carries and this item has been forwarded to our council meeting on Thursday without recommendation.

With that we have dispensed of this item and we've concluded all business to come before the committee this morning and without objection we stand adjourned until October 21st, 2024 at 10 a.m.

where we will receive presentations from the Office of Community Safety, from Emergency Management, and from Public Works.