The most topic discussed was the presentation and acceptance of the 2024 audited financial statements by Ryan Inglestead from the audit firm Bergen KDV. The city received an unmodified, or clean, opinion on its financial statements. The audit did not identify any material weaknesses or deficiencies in internal controls. This outcome is particularly reassuring for bond rating agencies and stakeholders who rely on the city’s financial health to make informed decisions.

Inglestead elaborated on the audit process, explaining how the team designed and executed an approach that meets professional standards. The audit confirmed compliance with Minnesota’s legal standards, further underscoring the city’s fiscal responsibility.

Financially, the city witnessed a substantial increase in the general fund balance from approximately $10.5 million to $14.5 million by the end of 2024, with $12 million classified as unassigned fund balance available for day-to-day operations. This level of fiscal prudence aligns with the state auditor’s recommendations and results in a healthy financial position that covers about 52 percent of budgeted expenditures for the following year.

Alongside the audit, the council deliberated on the parking infrastructure, specifically focusing on a proposed standalone parking lot at the corner of Fourth Street Northwest and Second Avenue Northwest. The parking lot, intended to serve an adjacent office use and benefit nearby public and government properties, received both a conditional use permit and a variance approval. The permit was necessary for constructing a parking lot without a principal use, while the variance was sought due to the proposed use of metal architectural panels, which typically do not conform to the Central Business District’s standards.

While the conditional use permit gained unanimous support, the variance faced some opposition, with one planning commission member questioning the justification for its approval. Nevertheless, the variance was granted with a 4-1 vote, recognizing the design’s appropriateness and the city’s ownership of the lot as advantageous to the community. The parking facility is planned to be public, operating on a first-come, first-served basis, and not exclusively reserved for the adjacent office or police department.

The council also navigated through budgetary challenges, discussing preliminary tax levies and future fiscal projections. A proposed tax levy of nearly $17.9 million for 2026 reflects a 10.3 percent increase from the previous year, translating to a 4.39 percent hike for property owners. This increase is equivalent to an average $45.91 rise for a residential property valued at $223,900. The discourse highlighted that the percentage increase in revenue does not directly correlate to individual property tax changes due to market value fluctuations.

Concerns about personnel costs were a recurring theme, as they comprise a portion of the general fund’s $24.7 million expenditures. Public safety alone accounts for nearly 46 percent of these expenses. The council recognized the necessity for strategic financial planning, especially considering upcoming infrastructure needs like a community center and a new fire station.

Further complicating the budgetary landscape is the ongoing management of tax abatements and debt service. The council reviewed tax abatement bonds related to Vioaduct Park, acknowledging that the city is well below the $2.8 million cap for tax abatement requests. The dialogue also addressed the absence of new borrowing for capital equipment, contrasting this with previous years where internal loans were required. The discussion anticipates a peak year for debt service in 2026.

Amid these fiscal discussions, the council approved several resolutions, including the adoption of the 2026 property tax levy and a resolution addressing the abatement of a hazardous property on First Avenue Northeast. The city attorney elaborated on the abatement process, emphasizing the property’s significant violations and the city’s responsibility to rectify these conditions.

In addition to financial and infrastructure matters, the meeting covered community engagement initiatives, such as an open house by the fire department and a remembrance day event organized by Iris.