In Clark County, people with developmental disabilities are gaining employment and proving to be business assets. Companies are benefiting from this workforce's equal or higher job performance ratings, retention rates, and lower absenteeism. Children are not allowed to just ride their bicycles like when I was younger and with TV and video games. It's a important time to be a heat teacher. Mom and dad followed Billy up and down every single aisle. What kind of bucket are you looking for, they asked. More than 500 boys and dudes, a just 10 to 18 came together from many of Boston's neighborhoods to celebrate the successful 2004 Metro La Crosse Spring season. Yeah, congratulations to you and your organization and to the young people here who have really taken a stand against under age drinking. David Brutteney has joined me on this set before to talk about living with HIV and now he's back in more ways than one. David, thanks for coming. Thank you, Jelen. Glad to be here again. We are honored to present the city of Boston's African-American Achievement Award for Community Service to Carol Bradley Moore, headmaster of the Jeremiah E. Burke School for Outstanding Educational Contribute. Hello, and welcome to Clark County Chronicles. I'm Kim Sherwood. And I'm Randy Swallow. Clark County is taking flight in the fight against Gozone Pollution. That's right air sample. Hello and welcome to Flight Path. I'm Elaine Sanchez Public Affairs Manager. We begin with a look at our push for airplane space. Go on, Jess. Las Vegas. The nighttime is energized in our nonstop city and so is this six busiest airport in the country And airlines have figured out an interesting phenomena with Las Vegas They can bring planes to what otherwise be idle say a plane that might park overnight in a airport say like Pittsburgh at eight or nine o'clock at night Speaking of animal people. I'm thrilled to have as a coobo's, Joe Batello, the chief animal control officer in Clark County. Joe, welcome. No kiddies or no canines in the show today. Another iron. And as I pulled up and I saw the front end of the car from the dash forward, literally torn away from the rear end of the car and the rear end of the car wrapped around. The 11th annual dog days of summer celebration. For win recycling, everyone's a winner as your cart gets pulled or your trash bag gets thinner. More than a game. It's a way of life, really, to those particular people who are a father. Oh I'm on one. We give guidance to the people on the other side on how to do CPR. Today was the first time I met him here and he really is a sincerely dedicated person. From all of us here at MTV Newsbreak, have a great Thanksgiving weekend and a good night. Public, educational, and governmental access channels empower individuals and groups to utilize television to educate and enrich communities on a broad scale. It is a critical tool for local government to provide emergency information to their community. It also allows the public to view its local government at work without this powerful tool. Communities may be deprived of the ability to provide these important communication services. I'm going to be a little bit be quiet And a few days to be cool My friends were my counselors And they told me what to do There's always a point A point of no time Always something to give up Always something to know It's in my brain circle Shred my bitter skin Still man I came home Can't set myself in motion. Just don't, just don't, no, no, no, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just don't, just just I'm going to do it. I'm going to do it. I'm going to do it. We'll begin with Councillor Forzman Finance Committee. All righty. Thank you, Vice President Tamanik. So we'll start with Resolution 703 proposing the sum to be raised by taxation for general purposes for the year 2025. Just reminder, Councillors, we have a committee of the whole meeting on Monday. Actually, a finance meeting to walk through this, so I would assume we would advise to hold questions on that one until Monday when we have an opportunity. But we have got a couple others here too. So resolution 705 proposing the sum to be raised by taxation for the special parks fund levy for the year 2025 and resolution 725 authorizing city officials to execute an amendment to the crime victim services prosecutorial Grant from the Minnesota Department of Public Safety Office of Justice programs extending the term of the agreement for one year and providing an additional $80,154 to partially fund the victim services specialist position in the City Attorney's Office for 2024, 2025. Thank you, Councilor Fores. But before we move on, we have a request to jump to Resolution 718 because our Interim Economic Development Manager, Chair Schafer, is be speaking to the council? That and she has another commitment this evening. Do we have consensus among the council? Thank you. Yes. Could we finish this since we've already read this in and then go to that? We certainly can. Are there any questions on what Councillor Forzman has read? I do. I have my hand raised. Councillor Kennedy. So I'm looking at the legislative details on the budget and looking, we're going to be voting on this on Monday but yet we have a meeting this Friday. Next. Next. So I'm not well confused. Should we be waiting until after we get the presentation would be my question. Go ahead, Mr. Montgomery. Vice President Randolph, concert candidate. In my experience here and I think concert forceman alluded to it. The general practice has often been on Monday the mayor will present his high level budget presentation to the council. It will be very high level. There will be a preliminary discussion by our finance director on some of those, again, high level. Historically, council is then tabled it. And then on Friday, following we have the budget retreat where council will go into a deep dive on a lot, a full week, and then that following last Monday meeting in September, Council will then discuss and not vote anything on the budget, but simply on setting of the max levy. And then over the next two and a half months after that, questions, comments, discussion around the budget, and the final budgets will be evaluated and discussed and reviewed in December. So that's sort of the overarching process. So while I don't presume what council is going to do here, I would assume that you will all decide to table this and then go through that remaining process and address it in the last meeting in September. Thank you, Mr. Montgomery. Councillor? That's helpful. I've been here for like four times now and it just feels like that process was like, wait a minute, but thank you. Thank you, Councillor Kennedy. Other questions? Councillor Forzman. Thank you, Vice President Tumonik. So I'll just request we pull 703 off of the consent agenda in anticipation of a likely tabling based on the timeline that Mr. Montgomery just laid out. Thank you. Thank you. Other questions? Do you want to say that out loud? You want me to? Councillor Mayo. Thank you, Any other questions before we jump to resolution 718? Great. Councillor Neffio will you read that in? 13, resolution 718, resolution adopted. the development project, municipal development district program plan, and establishing tax increment financing district number 38 therein and adopting a tax increment financing plan therefore. Questions, Councillors. I'm going to ask interim economic developer, Trisha Hobbs, if you'd like to speak. Vice President Tamanik, Councillors, thank you. I just want to call attention to some of the materials that you received as attachments in the agenda. There is obviously the resolution. We have the TIFF plan, which is a standard expectation, as we're establishing TIFF districts, as this agenda item will do. We also have a memo in there that will serve as the pro forma. I know there's been some questions about that document, because this project looks a little bit different. This is the form that we're utilizing, and it achieves the same means and includes all the same information that we would typically see in that performance. You also received a schedule of this project. There's been some actions in the past that you all have been involved in as it related to STPAPER, the previous owners, and so we just wanted to make sure we made that correlation clear and obvious, as well as any future actions that you will take. Most notably, I do want to call October 15th. There will be an agenda item to authorize data to enter into a development agreement with Sophie Dell. And so this is the point in which we determine how that tax increment financing from said district will be utilized in that amount that Sophie Dell gets. And so that will be provided to you all at that point. I also want to mention that this is an economic development tip district. So this is different than what you may have seen before you in the past. We have not had an economic development tip district here in Duluth in about the last 30 years, so this is unique. And the thing that distinguishes economic development tip districts as you may remember from your elders' presentation is the real focus on job creation. And so this particular project will be generating 160 new jobs with an average wage of $32 an hour and an annual payroll of $11 million, which is really a wonderful impact to our local economy and something we're excited to see. I would take any questions that folks have on any of these pieces, but before I do that, I do want to mention there's also a graphic that you have that shows the correlation between the tax abatement agreement that Sophia Dell did assume from ST paper and what that will look like to then enter into our TIFF agreement. You'll notice that before we establish that TIFF district or certify that TIFF district, we will then exit out of that tax abatement agreement and I will note that anything that was included there that would be necessary to move forward we have done so into that new tiff agreement which you'll see at a later date. Councillor Cainty. Thank you, Vice President Tumonic. Miss Hath, my question is of the 116 jobs. Is that in addition to the current jobs? Vice President Randolph. Thanks, President Tamanik. We've got to switch those names. Councillor Kennedy. Yes, so that is 116 new permanent jobs that would come in addition to what they have at the plant and also not including any jobs that would come from the construction. Thank you. Thank you, Councillor Kennedy. Councillor Mayo. Thank you, Vice President Smiley. It's my mic. There we go. And thank you, Director Hops. I had a question about project labor agreements. I think I noticed in one of the memos I talked about them but can you just verify that this will be covered under project labor agreements? Vice President Timonick, Councilor Mayo. Yes, those will be a part of our development agreement and again once that is ready and available You'll see that included. Thanks Mr. Montgomery, did you have a question or a comment? No, I did not other well, I will add one other thing as Andrew Hobbes indicated we have an existing abatement agreement whereby we are collecting of the total taxes that are now being generated from the prior expansion that ST paper did, we are collecting a layer of abatement taxes currently that are actually coming to the county and the city. And then there's another layer that they are keeping that is helping to pay off the prior investment that was made there. And because of the way TIFF works, where it starts at the existing valuations and the increment is only anything above, once the new TIFF agreement comes into place, the old abatement agreement goes away, we will then us in the county be collecting all of the abatement tax dollars that are currently flowing, some portion to us, some portion back to Sofidel. Now all of that will come and only the tiff, the classic tiff of, as the value goes up, that will be kept to pay off for that project. So over the next five years, we will actually be collecting more tax dollars, actual tax dollars into the city and county than we otherwise would have been. Plus we'll be developing the TIFF valuation increase for the past five years. We've been working on this for the past five years. We've been working on this for the past five years. We've been working on this for the past five years. We've been working on this for the past five years. We've been working on this for the past five years. We've been working on this for the past five years. We've been working on this for the past five years. We've been working on this for the past five years. as well as in the future. Thank you, Administrator Montgomery. Councillors, any other questions? Councillor Neffio. Tamanic, do you possibly know what the value of the property is just so that we can have that like where the tip will start? Vice President Tamanic, Councillor Neffio, I do have that like where the tip will start. Vice President, Tomonic, Councillor Neffu. I do have that. I do not have that in front of me at this moment, but we will pass that along. You will also see that laid out in the development agreement as well as that is a key piece to the functions around that tip administration. Thank you. I think that would be a good piece for everyone to see. For sure. Thank you, Councillor Neff you. Councillor Dure-Walker. I'm seeing a couple of different numbers in the materials that were sent to us. One is 14 million for the TIFF but then the plan is mentioning 24 million. Do you have an explanation for that description? Yes, Vice President Tamanik, Councillor Dervaucher. The TIFF plan itself is solely meant to set. That's where you see that higher number is set to set that maximum budget. That does not mean that's what we will be providing to a Sophie Dell. That $14 million is what we are negotiating currently with that development agreement that they would receive. This is a statutory required document the TIFF plan to set that max budget so then we can enter into negotiations with that development agreement and again 14 million is what we're driving towards with that number with the information that we were provided related to project costs. Okay, thank you. Yeah. Okay. Thank you for sending me the email with more information earlier today. I only just looked at it now. But I'm wondering if you can just point to me on the materials where it's illustrating the need that's what we do. Has for the tip. Vice President Tamanik, Councillor Diorwacher, yes. So you'll see in the sources and you says it does break out the numbers. You have all those ready and available below that. Ellers points out the cost per square foot that is typical of the industry. And so you'll see that that number is $1250 per square foot without assistance. What is typical is $873 per square foot without assistance. What is typical is 873 per square foot. Once they do receive assistance as proposed, it would be in line with what is of industry average. And so again, because this is a little different where it's a least situation, whereas in this past scene, housing projects and things like that, this is the way in which we were able to demonstrate what that impact would be. Okay, thank you. I have a follow-up. Go ahead. Thank you. My understanding of Sophie Del is a really healthy company. I've seen their numbers. I know they are growing quite rapidly. Is it common for a company to prove that they, not necessarily what is customarily done in cities with providing tips, but just that they need to prove that they have the financial need, that they would not be able to do this project without the tip. Vice President Tomannock, Councillor Dermott, your yes. This is what this is demonstrating in terms of the long term health of the project. We also had a financial analysis completed for the funding that they will be applying for through deed. That was an action that you all approved at the last meeting was allowing staff to apply for that grant as well. Both of those were done through our public finance consultant to demonstrate the need because that is a requirement that we do have in order to move move forward with this we have to prove the but for test. Okay. Thank you very much. Thank you Councillor Derwockter. Any other Councillor questions? Thank you manager hubs. We will go back to where we were before and we will continue with Councillor Duroctor. Oh. Okay, back up to the top. Sorry. Okay, item number seven, resolution 700, authorizing a first amendment to the Professional Services Agreement agreement C24713 with HKA Global LLC Increasing the contract amount by 40,000 and one dollar for a total contract amount not to exceed 120,000 and one dollar Next is oh Do I just read through them and then people ask questions. Item number 8, 719 resolution authorizing the purchase of two street sweepers from McQueen equipment incorporated for the amount of 649,000. Then item number nine, resolution 726 approving issuance of temporary on sale liquor licenses to various licensees. Thank you, Councillor Derello for your questions. All right then. We'll continue on and I will read in personnel. Resolution 701 confirming the appointment of Jason Vincent to the Duluth Entertainment and Conventions Center Authority. Councilor Mell. Councilor Thank you, Vice President Twanik. I was just curious, did we confirm with Mr. Ruland about availability and when those spirit-mount meetings were and I know we were kind of trying to find that the night of I Do not have an answer for that but I can talk to Ann Gloomack. Sounds great. Thanks Other questions We'll continue on with Councillor Neff you Thank you vice-pres President Tamanik. Item number 12, resolution 696, resolution vacating a retained utility easement in a vacated alley near 52nd Avenue West, north of Wadina Street and releasing said portion from a utility easement restoration agreement. Item number 14, resolution 724, resolution authorizing acceptance of a grant from the Center for Workforce Inclusion in the amount of $227,885 for the purpose of providing community service opportunities to older adults. Item number 15, resolution 698, resolution authorizing the proper city officials to request and accept from St. Louis County on behalf of the State of Minnesota, certain tax-for-fitted lands in the Irving neighborhoods for 16,500 plus associated fees. Item 16, resolution 699, resolution authorizing the proper city officials to accept a donation of real property in the central hillside neighborhood from Richard A slotness, Shirley slotness, Steven J slotness and Linda Sue slotness item number 17, resolution 720, resolution accepting a grant from the Minnesota Pollution Control Agency, MPCA for stormwater resiliency improvements to retrofit the Palm Street stormwater pond in the amount of 4,990 906 dollars and 48 cents item 18 resolution 722 resolution accepting a grant from the Minnesota pollution Constrahold agency MPCA for stormwater resiliency improvements to construct storm water drainage improvements in the 32nd Avenue, West Creek watershed and the amount of $2 million 226,710. $96. Thank you, Councillor Neff you. Are there Councillor questions? Then we will continue on with Councillor O'Hall. It's President Tumonic. Item 19, resolution 697, resolution authorizing a three-year license agreement with companies to classrooms to lose for the exclusive use of the Grant Recreation Center for Operations of its Services. Are there any questions? Councillor, do you want to read in that ordinance? Yes, Vice President Tamanik, thank you. Item 20, ordinance 41, ordinance dedicating a real property as park property. Questions? Councillor Mayo, do you want to read the ordinance for the second read? Certainly, thank you. Thank you Councillor Neff you for reading in my earlier or resolutions. But ordinance 40 is dedicating a perpetual easement for street purposes over city owned property. But ordinance 40 is dedicating a perpetual easement for street purposes over city-owned property Questions counselors Are there any other questions or or comments in the council? administration no Right then we are adjourned. Councillor Forzman will be taking over at now. the and so we get started at five forty two Sounds good? Thank you. Thanks. She put some on it there. Just a mess of them. Well, no, there's a reason. My son wants to see a picture. Will you turn in your mic? Yes, it's just bad habit. Keep it on. Keep it on. We used to have an issue with the old system to be able to get feedback. Not with this system. I'm afraid I'm going to swear. I don't have a swear button. No? No. I happen to start talking and I see it's not on and I hear that. And the problem is you're going to turn it off because it happens with these other ones. Right. I would suggest keeping on. I will. I don't. I don't swear. I don't. Well, I do, but I wouldn't hear. I always thought Renee would. Member of Councilor Vanette, did you respect to her not in the setting that women had the effort every other word? Oh, yes. She came by at my house one day, and I actually had a conversation. Yes. and actually the head of conversation. Yes, but she never messed up here. And the only time I've ever sat here, I'm running the personnel meeting, and that's when I'm doing this. And Alyssa said, I'm going to be in, I can't keep my fingers off of it, but now that you've... I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. you I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. you you I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. I'm going to go to the next room. you Councillor, we're going to get started here with our Finance Committee meeting. I see Director Jill Kepers from the HRA who's probably making her way up to the podium and talking about how this presentation is going to work technology wise so we'll wait for her. Thank you everybody. Welcome to our very first finance committee meeting this year and I'll turn it over to HRA director Jill Kepers unless there's any opening comments from the administration. No, we're good. All right. Miss Kepers, it's your show. Thank you chair for his men and members of the C council. It's my pleasure to be here today. I was saying this is my 10th tax levy presentation this year. I'm very excited to be here. I think I've learned a lot over the years and I hope I am prepared to touch on all the points that have been asked of me over the years. It might be some of your first time hearing from me so I generally start out with a little about us. So the Duluth HRA is an organization that has a Board of Commissioners, that is a seven member board. They are appointed by the mayor and approved by City Council. We have, of course, an executive director and deputy director with a general central office that includes our general counsel and administrator support. And then four primary departments are rent subsidy department, owned housing, rehab and real estate and our finance department. And I'll go over my, oops, my summary, pretty fast. We can get to the levy part that you're most interested in. Ms. Kepers, right before you get started, we've had a request. I don't know if we can turn the volume up on mics. Is that possible? I can try speak louder as well. That works too. That works, thank you. I will try that as well. I'm on my papers, okay. So HRE owned housing. We own 1,110 units of rental housing in the city. We have various subsidies. Public housing, project-based rental assistance, project-based vouchers, and some rent restricted, but unsubsidized units. Rental assistance through our housing choice vouchers and other rent subsidy programs. We offer about 1,750 housing choice vouchers in the community. 35 of those are set aside for non-elderly disabled households. 37 vouchers are emergency housing vouchers for people experiencing homelessness. We have assistance to help homeless veterans through 15 veterans administrative, our vash vouchers, veterans, administration, supportive housing vouchers, and we're hoping to get five more of those in the coming months. We also have assistance to end homelessness through the coordinated entry program, bridges, tenant-based rental assistance, and emergency solution grant funding. We have neighborhood stabilization and revitalization programs through our rehab and real estate department. So we have an emergency repair program for low and moderate income homeowners, things like fuel oil conversion programs to help people get out of fuel oil and get natural gas or solar, things that are market-nomical to help them with their utility costs. We have exterior repair programs, emergency repair. If your furnace goes out in the middle of the winter, if you have a sewer back up in your home and need something fixed right away We manage and disperse the cities revolving loan fund program for income qualified homeowners and small multi-family rental units We manage the city's housing trust fund and we do development Overall We house approximately 2800 households and families every day, bring in over $13 million of rental assistance that goes into the hands of local landlords, over $2 million in funding for capital improvement projects that is used in publicly owned housing projects, using local labor and products, up to 100,000 and state resources for rehab projects providing local construction work. So not only are we a housing agency but we're an economic development engine in the community. We support the city by providing funding for up to two full time police officers. We run three community centers here in town, the North Point Resource Center, formerly the Rainbow Center, the Lincoln Park Center, and the Harbor Highlands Community Center. And we support city staff through co-funding the senior housing developer position. Thank you for renewing that contract. As far as development and redevelopment community initiatives, I think you're familiar with a lot of these programs, the Fairmont Cottages program, 18 units in the Fairmont Neighborhood mixed in Convental Housing, Skyridge Flats. If you've driven by, I think it's looking pretty great. 70 units, 55 for 55 plus, 50% and 30% AMI, it's currently under construction. We hope to start leasing in December. The Harbor Highlands Phase Six Townhome Projects, 40 units of affordable family townhomes, also under construction. Hope to start opening and leasing that in June. Harbor Highlands Track B is the Home Ownership Phase up at Harbor Highlands in partnership with Wonder of Community Housing. Hopefully to provide about 22 units of workforce. How is Home Ownership up there? The Homeless Warming Center is a permanent site, substantial rehab at the Lincoln Park Center that opened in February of 2022. Our construction training program in partnership with Community Action Duluth. And then a newly formed partnership with the Union Gospel Mission for a potential engagement center and hopefully up to 40 units of supportive housing to address assistance for those experiencing homelessness. So now what we're here for tonight. To talk about our calendar, your 25 tax lady. So starting back in 2021, the HRA decreased its levy request from 0179% to 0169% of the estimated market value. This year the HRE Board has approved to keep our request at the lower rate of 0.01969%. The statutory maximum of our levy is 0.0185% of estimated market value. What we anticipate using this for, and you all can get copies of these slides from the C.C.C. clerk's office. We anticipate $458,000, $26 for our own housing and rent subsidy program support, $188,000, $0.26 for funding shortfalls in our section 8, small rental assistance programs and to help Harborview Phase 1. That's the one phase at Harbor Highlands that we actually own. Some people think we own all the phases at Harbor Highlands. We do not. We only own the first phase. $250,000 for our high-rise security contract to help keep our residents safe and do more for security at all of our high-rises. $20,000 for HUD housing preservation programs. Some of you may be familiar that over the last few years we've been repositioning our public housing to get from the public housing arm of HUD to the multifamily arm of HUD or the project-based voucher side of HUD so that we're in a more stable financial position long-term. So we have one more conversion left to do for our last few public housing units, and so we're putting a little bit of money aside to help with that. The second section for the warming center and other community center operations and maintenance, 121,748. We're looking to put about 25,587 towards the Lincoln Park Center operations. That includes the Homeless Warming Center and helping with the AEOA, with Meals on Wheel Support. AEOA uses the Central Kitchen in our Midtown Manor apartment building for their Meals on Wheels. And of course, the Warming Center's in the lower level of our Lincoln Park Center. We cover all the utilities maintenance on those on that property. The North Point Resource Center operations will require about 36,161 and the Harbourer Highlands Community Center operations about $60,000. I'm excited to announce that we have bids now and we're going to be replacing the basketball court with a new basketball and piggy-bogg court up at at Harbor Highlands, which will be great for that little community up there. The affordable housing programs and development, 1 million, 11,563, 258,000 of that for the construction training program, 200,000 for sustainability initiatives for low and moderate income housing to reduce utility burden for renters. What that is is that to put that's to put heat pumps out at Fairmont cottages. We found that those are all electric buildings up there and they need heat pumps to help lower those utility costs. So we've been working with also a solar provider out there to help with some sustainability that affect development. 75,000 for the city and HRA senior housing developer position. 132,184 for other programs including our single family housing rehab program. So that includes the healthy homes program and that emergency repair program. Managing the housing trust fund. We don't take any money from that housing trust fund. I always said that we would be willing to manage that trust fund for the city without taking a fee so that if ever that program evolves where we can take donations from foundations or anything else, they would know that all of their money actually went to the projects and didn't go to the administration of that program. And then landlord initiatives. And this is a safety net program that we have to encourage landlord participation in the Section 8 program. And I will mention, I think I sent this out a while back, that we did a study this year with UMD, the Bureau of Business and Economic Research on our construction training program to make sure it's some really good data. And if you lift one person out of poverty through this program, you save $606,355 in public assistance. If that one person has a child, you save an additional $750,000. So this $250,000 that goes into that program each year comes back multiple times over. And that's just with one person at a time. And then, of course, new affordable housing development activity, 346379, as we continue to work at putting new housing units in the community or supporting other housing development partners. And then, community housing support services, $220,090. And that includes the funding for two full-time community police officers, that $172.590. In addition to that money, we also include $30,000 of HRE-owned housing funds that are used to support the police. And then $47,500 for homeless prevention program support. And that's in partnership with OneRoof, the City of Duluth and St. Louis County, to help support the tenant landlord connection. So our total request at that .0169% is 1,811,427 dollars. So how does this fit into our overall revenues? So the total revenues for fiscal year 25 that we estimate for the HRA are 34 million to 84258 and most of our revenue comes from HUD and other government grants, 25 million dollars of it. The tax levy, TIF proceeds an income, an interest income, about $2 million, management and other fees, $2.9 million, and then rental income and other housing charges. That's what we collect from tenants, about $4 million. Landsales, you'll see a negative number there, $150,000, that's negative because we budget a loss of about $60,000 per house on our construction training program. So with three houses, we budget a loss of 180,000. And we anticipate a gain of about $30,000 on any sales we might have at Hockridge Estates. And then how we spend this money, our expenses are almost $30 million. You can see primarily how is in assistance payments. So most of those housing assistance payments, that $14 million is money that flows through us and then out to local landlords in the community. Also then salaries and benefits are a big part of our expenses, both the salaries for non-maintenance and for maintenance. Then of course management, bookkeeping and administrative costs, utilities and insurance, regular maintenance costs, rehab and other general expenses, tenant and protective services costs, and then also point out pilot and real estate taxes. So pilot is the payment and lieu of taxes. So that money that comes back then to the county city of school district. So the cash flow that we see we are looking this year to access revenue over expenses of 4 million to 84.8 51. So what happens with this money is we have an operating transfer to Harborview Phase, one of $100,000. We have replacement reserve contributions to our properties of 756,000 80, 16, 6, 69. We have debt payments because we have debt on our tri-towers and King Manor buildings as well as debt payments for fair amount cottages of 189,935 and debt interest payments of $2.93, 468, within that cash flow of $1,826,973. Of that $1.8 million, about $700,000, or about $800,000 of that, is in the housing buckets. Because of repositioning, the rental assistance demonstration that we've been doing the last few years We are no longer budgeting the use of reserves as we were under the public housing model We have a nice strong bottom line and are able to respond to unexpected issues and it is functioning as intended to preserve our Affordable housing assets into the future and to create Operating and replacement reserves for these properties. So I've had a request to talk about what happens if we go to our max tax levy. Because as you know, we've been looking for, we as a community, have been looking for options to try to raise funds for our engagement center through the stepping on a program and try to raise funds for our engagement center through the stepping on a program and try to address homelessness and encampments. So right now the impact on a $240,000 home the HRA's levy in 2024 was $34.34 a year. As currently proposed there'd be almost no change to the amount on the $240,000 home would go to $34.39 a year, so $5 a year difference. To go to the max tax levy of the .0185%, it would change that amount to $37.65 a year, so $3.31 a year for a $240,000 home. Going to the max, Levy would capture an additional $171,496 above what's currently being requested. That could be used to fulfill the HRA's mission as defined by statute. So currently the emerging needs I mentioned are funding for stepping on up initiatives to address encampments and homelessness. So the HRA has started, we are meeting with Union Gospel Mission and have established partnership agreements to start looking at what that looked like, what would engagements center and adding 40 units of efficiency housing to a new location to really start addressing all of this as HRA is a developer union gospel mission as the ultimate owner to start looking at a permanent new bigger site to address these issues. So this is an option. By the time a program like this is funded, if you did this for two years, maybe you'd cap her in additional $100,000 on top of this. Something that Council will be, we could think about to get some money to put towards these projects. As we're looking at that development and we're talking to our consultants to build a project like this, you need to essentially raise enough money to pay for the engagement center itself, and then probably about 10% of the actual cost of the housing. So in order to have competitive applications, if we're looking at what we need to really fundraise to make it happen. Those are really rough numbers as we're starting to put this together. So I know we've started really to gather ideas and where we're looking at money. This is an option as you start looking at this. So the resolution that's coming before you probably on Monday as they start putting that together will probably have the information with the .0169% on it. As I was talking to Ms. Attorney Freilich about the process, if this is something council's interested in, I believe the process would be to offer an amendment to go to Max Levy of .0185% to capture the Max Levy. If that was approved, then I would bring it back to my board right away, because our board meeting is early this month on the 19th. I've talked to St. Louis County. My board would then vote on that. If approved, go to St. Louis County. It need to be the county by the end of the month. So it is something that we could do. We can move it forward. I believe my board would probably be supportive of something like this. But that, of course, would then be up to counsel if this is something you would like to do to Put that money then we would put it aside for that particular purpose Looking ahead so housing developments in process we talked about skyridge flats We talked about phase six we talked about homeownership at Harbor Highlands, new housing developments. We've already applied for funding to do some home ownership for workforce home ownership projects in Morgan Park and in the Hillside. We should find out about that in December if we're fortunate enough to get funded for some home ownership projects. Our new partnership with Union Gospel Mission, we've discussed that. That is a new partnership, but you have to start early if you're going to apply for funding in July. Asset repositioning. Our final phase of that is happening. And we are going to be working on that here in our fiscal year 2025. Our city programs, housing trust fund management, revolving loan fund management, and disbursement. And we still continue to support our local housing developers, whether we're a conduit for land acquisition, whether we're awarding project-based vouchers, whether we're working with them on potential housing tiff districts. And then a new thing coming up is a state legislature passed to bring it home Minnesota state rental vouchers. And so we're anticipating Minnesota housing releasing their manual here this fall, hopefully an RFP bit somewhere between November and January and hopefully an award of those vouchers here in the summer. My intention with those vouchers is to project base them to make sure we have a permanent place for those vouchers to be used here locally. In summary, the HRA touches about 2,800 families per month through housing assistance of varying forms. The tax-level allows HRA to continue supporting its mission of creating housing opportunities and strengthening neighborhoods to a sustainably achieve a quality living environment for all. In 2025 the point 0169 percent tax rate will generate enough funding for us to continue our current and planned activities. If it's increased it allows us to put that funding towards new priorities that are important not only to the HRA but to the city to help with their priorities. Tax levy represents approximately 5% of the HRA's overall budget. But I always say that it's a really important 5% because most of the funding we receive is highly restricted. I always say when you look at our budget and all of its little columns, it's like ghost busters, and you can't cross the streams. You can't take money from the housing and move it over here into the general fund. It has to stay in its program And the HRA is committed to working with our partners and supporting development initiatives that not only creates housing opportunities But also stimulates the local economy Questions I try to go fast because I know I always have a lot to say That was great. Thank you, Director Kepers. I'm sure the Councillors have better eyes than I do, but since our technology crashed on us a little bit and I couldn't read some of the stats, I think just a good reminder if we could put the presentations out on the Council presentations page, I think Councillor a wall was the one who suggested that last year and it's been a good change. That should be available for not only Councillors as was previous but as last year to the general public as well. So we will open up to questions and Councillors just seen how I plan to run the finance committee meetings just because many times questions come up but then they get answered later in the presentation. We're going to let folks like miskeppers run through their whole presentation and then we'll do questions at the end rather than intervening during. So Councillor Tumonic, Vice President Tumonic has been patiently waiting as our first stop. Thank you chair for as my director, Kepers, that was very thorough and I appreciate looking at it again. Can you tell me if any increase monies were put in the budget to extend the warming center which has been being talked about at the meetings we have been having with the city and the county and the providers. I've talked to Joel Kilgore and we've looked at opening the warming center early by October 15th and running it at least through April 30th. So is there increased funding built into this budget? We'll definitely handle that. We can handle it. It's not necessarily... When we did the budget back in July, it wasn't put in the budget, but the HRA can handle that expense. Okay, without changing the budget, it's increasing. Yes. Okay. I have one other quick question if I might. Can you tell me what the HRA's role is in funding step in on up? We have not funded stepping on up yet. We are our role currently is to partner with Union Gospel Mission and be the developer for the Nutriage Engagement Center. If I'm not mistaken, and it was hard for me to see too, was there not a line item about doing some funding for Stepin' On Up? So I talked about Stepin' On Up if the council would like to move to our max tax levy, it would generate $171,000 that could be used to be put towards the stepping on up engagement center. Thank you. Thank you Vice President Tamanik. Next up is Councillor Mayo. You chair for us. Thank you Miss Kevers for the presentation. Follow up to Councillor Tamanik's questions about the extra $171,000 that could be generated with a max levy. Could that, could the council put in our amendment or resolution something that kind of binds that money more specifically to the stepping on up initiative, just knowing that if maybe it's not expended this year, that it would be set aside within the HRA budget for that, or would there be intention from your end to kind of keep it in that manner? I know you had talked about if there was a future year of a max levy could generate another 100 or so thousand. So just kind of pooling that together to see what could happen. What are your thoughts? We could work out some language and I'd like to talk to my attorney on how we would word that specifically so that it gives counselors good confidence on how that would work because I want you to feel confident that it would be set aside specifically for this project. But without having council dictate the HRE's budget if that makes sense. So as long as we can make language to make you comfortable, I think we could work that out. Fantastic. Thank you. And then just one quick follow up, which we might just get to with our questions. But I would be curious in particular from Councillor Neffi and Councillor Awele to hear your thoughts as HRA board members to about where you sit with this knowing that you're playing that role on the HRA board and what your thoughts are. Thank you. I don't want to take it now. Councillor Neffy, you want to go? Yes. Thank you, Chair forzman. Yes. Thank you, Jill. I think it was partially me that requested what the max levy would look like as far as taxes go. As far as the atre is concerned, I mean, and my role as being on that for a number of years now. I think we're not maxing our levy and if we could help, I think it help with the stepping on up program with another 171,000, my take would be it would be within the lines of business on what HRA is doing now. I mean, we are housing some of the most vulnerable dilutian, so take that in with homelessness. A lot of those people who are leaving homelessness are actually utilizing the HRA program. So I think it would fall in line with that. But I would hesitate with the council dictating it, the use of that budget because if I have to put on my HRA commissioner hat, I also have to think about their authority and maintaining their programming. So, restricting into future years, what if HRA needs the funds to maintain our housing as well? I would definitely not be in support of that for long term. So I would say for the coming year, just because our budget is set and we aren't meeting the funds, I think that is fine. But in the future, I think that's for future commissions to look at. And that would be my take on it. And I think that that was part of our conversation. So I appreciate the candor that you and I have had over the last weeks on that. Yes. Thank you, Councillor Neff. Nephew, Councillor Walden, did you have anything on this topic on that question? Thank you, Councillor Forzman. I think Councillor Neff you really summed it up very well, especially given our role on the HRA and then also as HRA commissioner. I would be in support of raising the max levied knowing the need that is present in our community and what we've heard from providers and community members over the last few months, especially as the public safety ordinances had come forward. I think this would, raising the max to the max levy, would be beneficial not just for HRA, but also our community and the ones in most need in our community. That being said, I also agree that I think we have to be, we have to work in partnership with HRA to really figure out the wording. I think many of us would like to see this funding be dedicated to stepping up up, stepping on up this year, but making sure that it's not restrictive in following years like Commissioner. Sorry, Councillor Neff you and Commissioner Neff you on the AJA had mentioned. Thank you, Councillor Awe. Next up for questions was Councillor Kennedy. Thank you, Chair. Forzeman, miskeppers, when you were talking about the next levy, you had laid out some of the other partners and I couldn't hear you when you were talking about the county. Could you just elaborate a little bit on how the county city and other partners would work together and what the county role is in that? You said something briefly but I couldn't hear it and you were talking softly and we've got some air back here. Sorry. Well I think with our tax levy the last line in our tax levy is doing it with homeless programs and so with the city and the county and the HRA we all co-fund the tenant landlord connection And so that part of the levy is a partnership between those three entities. Pretty good. Thank you, Councillor Kennedy. Councillor Neff you. Can you clarify the warming center and where the funding all comes from that and why it doesn't have to be a major? I know the answer to that, but I'm hoping that you can further clarify it. And then also, is there, I know, somebody is going to be a, finding employees to staff it, but is it possible to keep that more mean center open for 12 months a year if you can touch on all of that? Yes, I can. So thank you, Chair Forzman and Councillor Neff you. So with the Warming Center, so the county provides the funding for the operations and Chum runs the center. So there's what's called a cost and neutral transfer that the county does in order to find the funds to help pay for the staff and run the warming center. The HRA provides the space and pays for all the utilities at the center and any routine maintenance. If there's any major damage at the center, then the HRA builds that back to Chum who then has to pay for any major damage like if somebody rips the shower off the wall or something like that. But otherwise we take care of all the utilities and all the routine maintenance which is why you see that amount doesn't seem like it's very high. So we can handle any extra utilities in our regular budgets and in our reserves, so I'm moving some money around. That's why that doesn't worry me to keep it open a little extra. As for 12 months out of the year, so when we agreed and we had the idea to use some of our underutilized space with the lower level of the Lincoln Park Center when the special care's act money or was it care's act? COVID relief, the COVID money came out back then, kind of the deal was it was going to be a winter warming center six months out of the year and it had to be used for 10 years. That was the strings with the money. And so that's kind of the agreement we all made. The whole idea was then to have summer programming, working with the YMCA and ECO-3, and use that lower level space for some of that summer programming and make it available then to the neighborhood. We're hoping that summer programming get started here soon. And so I'm hesitant to open it 12 months out of the year for one for that reason. And two, it's already a bit of a hardship. I have to think of my 300 residents at Midtown Manor. It is a bit of a challenge when all of a sudden you're bringing in a really challenging population of people with a lot of challenging habits and oftentimes, you know, even though we have security in our buildings, it's not 24-7 and people trying to push their way into the buildings and some of the poor behaviors we experience in our stairwells and items like that. So I feel like my staff and my residents have given a lot to have this warming center connected to their buildings and offering a bit of an extension. From, I mean, this year we had it open till June 1st. So we opened it longer this year as well. And I'm willing to extend it again this year. I think keeping it open 12 months of the year is a real hard ask for my vulnerable residents at Midtown Matter. Thank you, Councillor Neff you. Director Kepers, last Councillor I have right now. Last Councillor I had right now was Councillor Derranger. Thank you, Chair Forzman. I know, so my question is about the two police officers that you fund. What is the difference between what they're doing and what our Duluth police force is doing? I was surprised that HRA is funding their own police officers. Kind of curious why HRA just doesn't just work with the Duluth police force. Thank you Chair Forzeman and Councillor Derwakter. That's a good question. So we do work with the Duluth Police Officers and these are DPD officers. We have a there's a special job description that a police officer can put in for or bid on that they want to be the HRA community police officer and so the special Duluth police officer, currently we only have one, because they've been short staff, but we always budget for two. And I say, as soon as you give me my second one, I've got the money right here. We used to have two all the time. They've been short recently, but we're budgeting for two again. They spend, they are assigned to our properties. So they walk through our properties, their cars get parked in our parking lots, they spend time in our properties, they can look at our cameras, they walk the halls, they get to know our residents, they develop relationships with our residents, Our residents can call their cell phones directly. They come to our resident meetings. It's community policing in a more targeted way. And it's helpful. I mean, you can imagine large buildings. I'll use try towers for example. Try towers has had a reputation for decades, right? Of being a challenging building, no matter how hard we try with fob security access and security cameras and security guards. Man, it's still people push their ways and people get into our stairways. It's a lot less with having FOB stairways and FOB elevators, it's a secure building. But having police presence deters unwanted behavior and the security officers are good, but they're not a police officer. But this police officer can also do regular community policing. So even though we pay for a full-time police officer, they're probably 80% deluth, HRA, and still 20% regular community policing. So it's kind of win-win. Thank you very much. If I may, I have a question. When has the last, have you ever had two of the police officers? When is that? It's probably been two years, approximately. And if you receive the funding but aren't able to get the full two police officers, then what happens with those funds? So all the tax, the entire tax that we go into our general fund, and it's used, this is the budget that I laid out. And so if some money is not used in the budget and line item like is laid out here, it could be diverted to another line item. So maybe we pay, so for warming center, for example, we've been paying for extra security guards at that building. So maybe instead of the 250,000 that I have Center for example we've been paying for extra security guards at that building so maybe instead of the 250,000 that I have for that high-rise security contract because I only have one police officer I'm spending 300,000 on that security guard or that security contract so money in a budget often just gets moved around if you're not spending it in one light item you might be spending it in a different light item or if it doesn't get spent, it goes into our general fund reserves and maybe it gets spent on development at a future date. For example, Skyridge flats. When we were building Skyridge flats, all of a sudden we had a gap. And the HRA put in a $500,000 first mortgage, a bit Skyward flat. We couldn't have put in a $500,000 first mortgage that skyward flat if I didn't have reserves. And so, and it had to be general fund unrestricted reserves. So, perhaps not having a police officer for a year, maybe I saved $75,000. And so, it went if it went into reserves. I mean, I can't tell you where that one dollar followed through from some budget, but that's what happens. It goes into reserves and it might be used in a different line item somewhere, or maybe it's used for a project somewhere else. Okay, thank you. You're welcome. Thank you, Director Kepers. So with that, I know counselors have your contact info and if you've got any other other questions we can follow up. I want to thank you for coming to any final comments before we wrap up. Nope, I sure appreciate all of your support for housing and please contact me if you have any questions any time or if you're constituents ever have any questions or complaints. Please reach out. Thank you. Did we have one final question? And just Councillors just so you know that default on these there wasn't a time is going to be a half hour so I'm going to we went a little over and that's okay for this one but just to keep us pacing our capital budget is going to be longer I'm sure when we get to that one but I don't see any other questions so if there's follow-ups after feel free but we'll roll right into our next one then so we've got our representation from Duluth Energy Systems who are invited up, and I'm sure we're gonna need just a minute to swap presentations and all that. Which it looks like Clerk Danum was pretty on spot there. So well done. So we're going to turn it over. And again, Mr. Montgomery, just please feel free. If there's any framing you want to do on any of these budget presentations before we get going and turn it over to the authority. Or in this case, the Duluth Energy Systems representatives. Feel free. Otherwise, we'll just dive in. I was excited when we're talking about district energy because I'm a big supporter of this effort in what we're doing. There's a lot going on but I will turn it over to Mike to run through things now and follow up on other issues later. Okay, good. Welcome. Chair Forzeman, Councillors, good evening. I'm Mike Burns. I lead the operation for evergreen energy and evergreen energy operates Duluth energy systems on behalf of the City of Duluth. And I have with me representing Duluth energy in case we have any hard questions that we need to field. have with me representing Duluth Energy in case we have any hard questions that we need to field. Chris Johansen, our operations manager here at Duluth Energy Systems. Steve Rambeck, who's our Director of Business Development for Evergreen Energy and Andrew Cassid, the CFO for Evergreen Energy. We're here to present the 2025 budget which informs our customer utility rates for the year and also talk about some of the accomplishments so far in 2024 and what we have planned to accomplish in 2025 so Start off with a little bit of background on the on the utility itself This is what our org chart has historically been, and I say historically because we recently experienced the resignation of our general manager. So as you'll see as we talk about the budget, that will affect our head count, we anticipate for a little while, but we are moving to, we're gonna play short into 2025. We're going to have a more collaborative management structure. Chris Johansson, our operations manager along with our project engineer and our office manager will be collaborating to manage the day-to-day operations. I'll be more involved to help support them from a leadership standpoint. And then Steve Ramback, who has been actively involved in many customer and account activities here as well as interaction with the, in leading the interaction with the city and city staff were necessary. So we're doing that for a little while, see how that works and in the meantime deciding whether we go back to the Sistorical org chart. What you'll see with our, so when we go through the budget, you'll see we actually are dropping headcount. Part of that is that anticipated shortfall in the general manager role. We just budgeted for that position for half of the year in 2025. We also, you see in the bargaining unit, we dropped a part of a full-time equivalent. That was, we actually are having one of our longest tenured employees who is the foreman for the plant and chief of the plant, retiring just next week. We actually had another individual shadow, our current operations fore form and yeah, plant form and so that he could get familiar enough to be able to take over and so that drops off that three-quarters of a full-time equivalent drops off as the retirement comes to fruition next week. So that gets us into the details of the budget, and I'll just try your attention to it. So our revenues closely match our expenses. And so our revenues are anticipated. We look at what we expect for fuel costs. That's one of the very large inputs to our budget. We also have some debt service, but we're expecting revenues of $11 million for 2025. And that, as you'll see, as we look at the expenses, we have a significant operations expense related to our energy inputs. That's that $5 million in the first gray bar. We've got the non-energy operating expenses. energy inputs, that's that $5 million in the first gray bar. We've got the non-energy operating expenses. That's labor, that's operations and maintenance of the equipment. And then we've got some of the other debt service and other related expenses that we expect to incur during 2025. The big changes are, this year we, in 2024, we've enjoyed a lower than budgeted energy expense. Our primary energy input is natural gas. Those costs have been significantly lower. We're expecting or we're projecting those to, or at least budgeting for higher natural gas costs. They're moving in that direction. It's hard to predict those, but we've, our rates on the energy side are passed through at costs. So you'll see that in the rates in the next couple of slides. So overall for 2025, we're looking at an appropriation of just under $16 million. We have our, our, our, our, O&M expenses. We've got debt service, as well as some additional capital improvements that we're planning to borrow for. In 2025, we'll go through those here in short order. So our total appropriation, again, just under $16 million for the year. What does, what rates do we need in order to meet those expenses? Well, it's relatively modest increase that we're anticipating. You'll see that the consumption charge, which is the energy rate and the capacity charge, which is more of the non-energy side of the business, are relatively equal, a little bit heavier I have your weighted on the capacity charge side. Each of those, the consumption charges are expected to go up 4.9 percent again. That's based on that projected natural gas cost. Capacity charges are going up 3.5 percent when you do that weighted average, end up with a 4.1% overall rate increase. Again, there's some question as to how that will actually end up driven by consumption charge and that the energy charges that we actually experience in real time. So for example, this year with natural gas costs is being low. Customers are seeing lower rates because we're not having to pass that higher cost through on the consumption charge. And then on the Canal Park Hot Water System, so this is a legacy hot water system implemented about 20 years ago, a couple of decades ago. They've enjoyed very low rates relative to the downtown steam and hot water rates that have been established. We've been incrementally on an annual basis working to close that gap. And so you'll see a 10 percent increase in the canal park hot water rates. Again, they're still enjoying a discount, but we're working on closing that discount. That was based on the way that that portion of the entity was formed over two decades ago and we're working on kind of getting all that aligned over time. And then chilled water, the chilled water operation again started a little over two decades ago is now sunsetting. It serves a few buildings in this area. The contracts, 20-year contracts ran their course, and so we are working on and the equipment has reached its useful life. And so while we worked on getting that to be an ongoing entity, it actually turned out that we couldn't get critical mass for customers. And so we're going to decommission the chilled water system and those customers that rely on Duluth Energy for that service will begin to provide their own cooling going forward. So what did we accomplish in 2024? Well, on the, some of the most important things that we pay attention to, we didn't have any injuries or accidents with our workforce and no lost time accidents, no environmental incidents, and 2024 was our lowest coal consumption for the operation in history, and I'll go through more detail as we go along here. But less than, it was 250 tons of coal. Sounds like a lot compared with historically, it's very, very low. And we'll show you some graphs. And this feeds into the other sustainability activities that we have been pursuing within Duluth Energy. So since 2012, we've reduced our coal usage by 98%. So essentially, we were just over 300 tons of coal use, but you can look back to some a decade ago when we were burning 30 to 40,000 tons a year, depending on what the weather was like. Because of that shift to a lower carbon intensity fuel and being natural gas, we've reduced greenhouse gas emissions by over 20%. We continue to grow, look for other alternatives of fossil fuels and our work and investing in the hot water system enables that. We've taken a couple of, made a couple of pursuits, including waste heat recovery, continue to be opportunistic and looking for opportunities to move further away from fossil fuels and improve our carbon profile going forward. And we've also been encouraging customers, and we've seen growth on the hot water system. We encourage customers to move from the steam system to the hot water system because of the efficiencies that we'll get into in more detail going forward here. So we've been through this and we're very far along in this fuel transition. Natural gases are primary fuel. We have two boilers out of four at the main plant, the land of Mark main plant, that are able to fire natural gas. The other two are only able to burn coal, but because we have those two boilers firing natural gas and because the St. Mary's Medical Center boilers are able to be dispatched on behalf of Duluth Energy, we may be able to meet the energy needs for the entire downtown using natural gas with just that limited fleet of boilers. We do still rely on coal for – it's necessary for backup. We don't have another fuel for backup. If natural gas is lost, there was a case about two years ago where natural gas line was severed and we were able to keep heat to the downtown community and in fact help the hospitals to meet their needs through that event by switching over to our backup fuel which is coal. So we've maintained that as a backup for reliability purposes. Also if we were to strip the capacity of those two natural gas boilers and essential we would need to rely on that on coal in order to meet that excess load. As I said in 2024 we've been able to manage that. We also benefited a little bit because it was a mild winter. But we were able to keep that coal usage for the winter down to 250 tons for the entire year. And we still have 5,000 tons in reserve to rely on, should natural gas become unavailable. We have some longer period of very cold weather. We can rely on that for those boilers that can only burn coal. We have, however, taken the next step towards sunset and coal altogether. We've issued an RFP or a request for proposal to engineering firms in the area to help us to design a system that helps us maintain reliability, but would shift us away from coal entirely and have a backup fuel in the form of number two fuel oil, which would only again be used if we needed to supplement. However, as part of that project, we would add natural gas burners to the two boilers that don't have those now, and that would increase as part of that project, we would add natural gas burners to the two boilers that don't have those now, and that would increase our capacity of natural gas, make less likely that we'd even have to fall back on fuel oil once that conversion happens. So why move people towards hot water? I talked about that in our sustainability pursuits. Well, what we've seen in the years since we've implemented hot water in a large scale, as the customers are saying, over 25% decrease in the energy used per building per square foot, because of the controllability of the hot water and because it's a closed loop, any heat that doesn't get used when we send that hot water out comes back to us for us to reheat that water. Those BTUs are not lost in the form of condensate after steam is used. So that's a big benefit. That enables us to reduce the demand on potable water system and reduce the utilization of potable water from Lake Superior to the tune of over 20 million gallons a year because of that closed loop scenario again. As I said we're because hot water is a lower energy density or lower you can use lower quality energy sources like waste heat recovery, we continue to look opportunistically for those sources that we can add that to our, use that to offset fossil fuels on our system. And we also are seeing and working with customers in a variety of ways, but including having them adjust their controls within their buildings. So reduce the building energy usage, reduce the rates, or reduce their cost to heat the building, but it also maintains comfort in the building when it's occupied, but allows the building to use less energy on a 24-hour basis. So we work with customers to optimize that. So part of the hot water transition that made that possible was a conversion in the plant. At this point, we're transmitting 35% of the total energy used in downtown Duluth in the form of hot water. So just five years ago, that was a negligible percentage. It's a full third of our energy delivery on an annual basis at this time. We, at the time we did the conversion of Wenzes-Perier Street and the hot water system went into Superior Street during that renovation. We put in enough capacity in the plant to serve St. Mary's Medical Center, which is now a reality in receiving hot water. We also now have hot water extended to St. Luke's building A and the expansion there. So that's what boosts that percentage up because hospitals have a very high energy use profile. And the system is performing very well, very high reliability. So the team didn't miss a beat in shifting over from decades of steam to a more recent conversion to hot water. Just back to the specifics around the medical district, a couple things related to St. Mary's Medical Center. They are using our hot water as their primary heating source. They also have been able to dispatch their boilers on behalf of the system. We've had them support us during maintenance activities at the plant, but it also helps to backstop and feed into the system on a continuous basis in the winter time to help push us a little bit further away from having to rely on coal if we get to more cold-wather operation. And then as I said, we were extended hot water to St. Luke's Building aid and their expansion there. So what do we accomplish in 2024 specifically? Well, we got a bunch of steam manholes. We continue to work to make sure those that part of the system continues to operate effectively. So we go through and renovate those and insulate the piping. We connected and completed the conversion of four customers that had been using steam now or on hot water. And we extended hot water to the aquarium as the construction in that area was going on. So that will allow us to sunset a significant piece of steam pipe that is operating fairly inefficiently because it's a long run with a small customer the aquarium, at the far end of that. What do we have before us as we look forward? Well, ongoing customer connection. So as we are able to finance and fund customer connections and the conversion in their mechanical rooms, we do that work. There are a number of customers that we anticipate and for in fact that we expect to be able to complete in 2024, I'm sorry, 2025. And we also are moving towards, as I mentioned, the elimination of coal is a backup fuel. First with the engineering RFP, we'll get a design, we'll get an indication of price, we'll start to pursue then see what we expect for the magnitude of that capital investment. And that will help us to figure out how we're going to finance that going forward without having a significant impact on customer rates going forward. And we plan to begin to implement this in 2025, based on what we find out from this engineering effort that we were embarking upon. So this was a graph that I shared last year or graphic that I shared last year. There are other benefits beyond eliminating coal. So if you look at the before or the current state, we've got the boilers one and four that are only able to fire coal and so they're deradi because coal production there's not as much output from those boilers when they're fired on coal. Boilers two and three are able to fire natural gas. They have a higher output because in natural gas fire increases the output of that boiler and up until this year we had not had Ascension St. Mary's Medical Center capable of delivering That now is changed and as we go through this transition adding natural gas to boilers one and four and now that Ascension is connected in we've increased our firm peak capacity from 250,000 pounds per hour steam equivalent to 350,000 pounds per hour steam. So significant benefit to the resilience of the system from these projects as well. And as I mentioned, we're being opportunistic. We're looking at opportunities to capture low carbon energy sources. We're looking at waste heat recovery from WLSSD, but there are a lot of other things that local, locally derived biomass. Again, we're being opportunistic because we want to make sure that we're staying within our ability to finance the capital improvements, but constantly looking for for funding sources and some of those may emerge through some of the carbon reduction grants from the federal government hasn't happened yet but we're continuing to pursue those. And we set some goals for 2025. So we have, we actually provide hot water to the convention center. Some of that piping has been in the ground. And I'll use the term ground loosely, because it's actually kind of underwater. When you go subterranean on Canal Park, you're underwater. So there's some piping that needs to be replaced in order to keep it in good, reliable shape. We are looking at a longer term contract with a deck that will allow us to invest in that and make that sure that asset is fully utilized going forward. We're going to replant and convert four buildings from steam to hot water. We're going to initiate that Coal Illumination Project. We're going to continue to do building Limination Project. We're going to continue to do building energy audits that make the end users as efficient as possible, which is beneficial to the whole system and to the customers and the amount they pay for our energy. We have a grant through the city to help with metering. What we anticipate doing is upgrading the meters for the hot water system to allow them to communicate back to our plant. And that way, that allows us to watch closely the performance of buildings, identify quickly if there's some solve problems quickly and then continuing to look at options for carbon reduction strategies. And with that, I'd be happy to entertain any questions and I'll defer the hard ones to these guys. Thank you, Mr. Burns, for the presentation. We do have a question. The queue will go to Councillor Mayo. Thank you, Mr. Burns, for the presentation. We do have a question. The queue will go to Councillor Mayo. Thank you, Chair. Thank you, Mr. Burns, for your presentation. As we continue to talk about the path to zero, I really appreciate all the touch points you add through the conversation about elimination of coal. But as you continue to look at natural gas and some of those other fossil fuels that are continuing to be used while they're more efficient, do you see a point in the future? And if so, could you identify a general range of when you might see dilute energy hitting a 0% fossil fuel usage? Acculate on when, but we have a number of strategies that we pursue. Much of them at this point revolve around electrification. So as electric utilities are driven towards being carbon-free over the next 15 or so years within the state of Minnesota? If we can move some of our load to electricity, that will move us in a direction towards carbon-free energy. Waste heat recovery also by its nature is very efficient and also carbon-free. And so we're working on opportunities to stay within a reasonable budget, both on the investment side as well as on the future energy cost side, because, frankly, electricity can be the most expensive energy source available, but done properly with high enough coefficient of performance is called through WAC, with Curry, for example, or for heat pumps. That can be more economical. What we've been focusing on is setting the backbone for that. This hot water network that we've put in that now serves 35% of the downtown and it traverses 24 plus blocks across the main business corridor. Enables us to implement those sorts of technologies as they become available, as they become feasible, or as grant money becomes available to drive those technologies. Fantastic, thank you. And I just have one quick follow up if it's all right. So as you talk about the waste water recovery, the heat recovery from that, are you kind of looking at the Lincoln Park project that's going on with WSSDS, one of those pilot projects to see if it would be feasible for dilute energy systems? That's right. Dilute energy was an interested party in that one. If there was additional energy, you know, the groundwork that was laid to serve that Lincoln Park community could have had additional energy recovery that could have then been brought over and served the hot water system in downtown Dilute as a secondary priority. Awesome. Thank you. Thank you, Ken you, Councillor Mayo. Other questions? If there are. Going twice. All right. Just beat the deadline, so we'll go to Councillor Derranger. This feels like a really silly question to ask, but your category for chilled water, can you explain that a little bit more being completely new to I've never seen anything about chilling water and we're known for having some of the coldest water on earth. Yeah, yeah. So we have several buildings right in this area, the federal building, the county building, government service center. And they're served from a small, chiller plant that's in the, they still call it the new distribute building. And so that was in put in place over two decades ago. It was actually designed to utilize steam from Duluth energy systems to make chilled water. So it's kind of a hard concept to understand, but you put steam in it, you get cold water out the other side. And we'd put a small chilled water network in this area in order to provide that chilled water to customers. As I said, those contracts ran their course and so the investment that it would have taken to get to a long-term reliable system, production assets and so forth, was too great to continue it as a district system. So we've, because we weren't able to get to critical mass on customer load, we decided to sunset that system. And it's so that when I'm filling my water bottle here, cold water will come out, and otherwise, it would be quite warm because of the heating pipes in the building. No, you're right. You do have the benefit of a large body of very cold water from which your potable water is drawn for your, but this is water that's used for air conditioning purposes. So we actually, it's like an air conditioner except instead of conditioning there directly, we make cold water. We send it in a separate set of pipes to the buildings. They use it solely for air conditioning. Okay. Return that water back to us. We re-chill it and send it back out. So it was a system that's used successfully in many cities. We have a system like that in St. Paul, Minnesota as well. But yeah, this one, we just, we fully utilize the assets and then some and realize that it was better for the buildings to do it on its ongoing forward. Okay, thank you. You're welcome. Thank you, Councillor Dure-Wakter. So before I turn it over to Mr. Burns for any final comments, I have one final question which I think will be helpful for Council as a reminder. So Mr. Montgomery can in two minutes or less you just give a quick synopsis of the relationship between the city and Duluth energy systems and how that contract works. Two minutes. You're on the clock buddy. Thank you. Duluth historically the city has owned all of the assets, its own the steam plant, owned all the pipes, owned all the operating equipment and historically prior to 2010 or somewhere around there, it was operated by a basically by the customers as a co-op. And they ran the system, they set the prices and they hired all the staff. At that point their staff was aging out, they were retiring, they didn't have good options. I got here, I engaged Evergreen and they are now managing the system on behalf of the city. The customers are no longer running it as a co-op. So we own the system, managed by district energy system, which has hired Evergreen, which also operates the energy system in St. Paul. So they're extremely familiar with these kinds of systems. There are other options for operating at some time in the future. One option is that it becomes a community-based nonprofit. That is the model that it operates out of St. Paul. And in that, if that were to come about where it would be a separate legal entity community based members selected by the city and the customers to be on the board, all those assets could then transfer to that nonprofit as a separate legal entity and the city would be out from under all of the liability that goes with owning this kind of asset but still have an engagement with the organization. That is down the road as a possibility but right now we own it. They operated on our behalf. I think you beat the clock well done. Yeah, very good. So, and I know we appreciate our partnership with Evergreen and thank you all for being here tonight. Mr. Burns, any final comments? No, their comments are safe. Thanks for the time. All right. Very good. Seeing no other questions, we are adjourned for tonight. See you Monday. Thank you.