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1. Please explain in detail why the city has $83.5 million in debt?

The City issues debt for infrastructure and large scale equipment that has a lifespan at least equal to the length of the debt (in most cases much longer). A taxpayer today is paying for the maintenance and upkeep of existing infrastructure, it would be an unnecessary burden for today’s taxpayer to pay the full cost of a road or sewer that will last 40-80+ years all at once. Despite the lifetime of the infrastructure being decades long, the average city debt is issued for only 15 years which reduces the amount of interest that is paid. 

Philosophically, many factors go into the City’s determination to issue debt, these include: 

• Need - age and condition of infrastructure, staff impact, sustainability, safety and technology needs.
• Mitigating impact - reducing the length of projects whenever possible, to reduce resident/business disruption
• Outside opportunities - Partnerships (coordinating with other jurisdictions), funding sources - grants, state aid, bonding costs, interest rates, financial resources/costs being incurred due to failing infrastructure (examples of these opportunities include the Artery, Blake Road and the pavilion). 
• Economic development- We have seen infrastructure investments result in private development and investment (recent examples include Mainstreet, the Artery and Blake road).
• External mandates, requirements – State or Federal requirements or mandated environmental changes (the recent pavilion project is an example of this, there are also water quality concerns and requirements). 
• Interest Rates – In order to address all the factors above, the City began to take on more debt beginning in 2015, when interest rates have been at historical lows.  The interest costs for debt issued from 2015 until 2021 have ranged from 1.22 percent to 2.93 percent.   
• Other Debt or TIF Districts ending. When possible, the City tries to balance investment with debt coming off or TIF Districts expiring. 

The City has been focused on projects to reconstruct City streets and making sure our infrastructure is prepared for Southwest Light Rail and the development expected from it.  

All streets in Hopkins are planned to be reconstructed by 2030. Continuing this program and annual street surface improvement projects ensures the future preservation of our streets and helps maintain the quality of life Hopkins residents have come to expect. For more information on the Street Improvement check out this video on the pavement management program.

2. Please explain how the city will pay off outstanding debt? Will the City’s debt continue to rise?

The City will continue to pay off debt with tax levy, special assessments, utility fees and tax increments. The tax levy for debt is projected to decrease in 2022 and 2023. It is projected to increase from 2024-2026. The average increase projected for the five year period of 2022-2026 is 1.98 percent.

3. How will Hopkins utilize the funding received from American Rescue Plan Act?

Hopkins will receive $1.954 million in funding to be used by the end of 2024. Staff has proposed to use the funds for revenue losses experienced by the City. The City experienced $1.3 million of eligible revenue losses in 2020, and expects to continue to see revenue losses in 2021 and an unknown impact in future years. City Council will ultimately decide how to best utilize the funds.    

4. Where is the 5 percent increase in tax capacity expected to come from?

The projected 5 percent increase comes from valuation increases for residential, apartment, commercial and industrial valuations. The valuation date is January 2, 2021. It does not include any additions for redevelopment or decertified tax increment financing districts, any increases in those areas would be in addition to the current projected increase.  

5. The city seemed to function fine after the budget was reduced in during 2020/2021. Provided we are still in a pandemic, why have the cuts been restored?

During 2020/2021, the City reduced or delayed costs related to maintaining infrastructure and tree replanting. It is unlikely residents would notice a measurable difference due to these reductions in one or two years, however it is not possible to continue them indefinitely.

The City has also made reductions to the number of employees during the pandemic and some of those reductions were permanent.  

6. How do you model revenue around Tax Increment Financing projects to ensure there is sufficient revenue for increased demand on City services before the project is decertified?

The City of Hopkins is fully-developed with a 4-square mile footprint. In order to grow the tax base, the City must redevelop underutilized property into higher valued developments. Often, redevelopment is only financially-feasible if there is public investment. 

The City of Hopkins’ goal is to only provide the minimal incentive needed to make the project happen, realizing that the gain in tax base may not be realized for several years, but allowing marginal properties to continue unchanged will result in stagnant values and neighborhood decline, which also has a cost.   

Each TIF request is evaluated individually, which includes performing a fiscal impact analysis. The City believes that the community benefits of TIF developments have been greater than the cost of additional services.  

7. Have you run current cost recovery models for inspection services like rental licensing or fire inspections in comparison to other metro area cities?

Staff is currently reviewing the fee schedule compared to the actual staff costs related to the service provided. Any proposed changes would be brought to the City Council in the fall of 2021.  A previous effort to update the fee schedule was paused due to the COVID-19 pandemic.  

8. In order for Southwest Light Rail to be successful, people need to feel safe. How will the City ensure that people feel safe while riding? Will it be paid for by raising taxes? Should we ask busines

The City has been in communication with Metro Transit Police and our neighboring agencies to strategize and plan for additional resources for light rail security. We will continue to work together to ensure the safety of our community and the riders of the light rail system.  

Due to construction delays, passenger service on Southwest Light Rail is not expected to begin until 2024. There is not specific plan for additional costs for safety or plan to pay for it. However, any additional services provided by the Hopkins Police Department would likely be paid for with property taxes. Council has expressed interest in discussing future needs associated with both light rail and the proposed redevelopments at a future meeting.

9. How do we engage the community more in the budget process?

Historically, the City of Hopkins has engaged with the community. One of the goals in the City’s strategic plan is to “take it to them” and includes strategies and action steps to meet this goal. 

In, 2020 the City began incorporating engagement sessions as part of the budget process. During the pandemic, the options to engage have been limited. The City has provided virtual options as a safe way to engage.  As it becomes safer, the City will continue to evaluate the best way to engage with residents and taxpayers on the budget.  

10. What is the history behind the Fire Department responding to medical calls? They make up a large share of the work?

The Fire Department has been responding to medical calls since the early 1950s. Up until 1987, the fire department was a basic life support (BLS) transport, in which they would transport low level medicals to the hospital. The Fire Department did not renew their BLS license, but has continued to respond to medical calls.

Medical calls make up 75 percent of what the department does. This is a critical service provided to the residents of Hopkins. The Hopkins Fire Department is the first response before Hennepin Ambulance (HCA) arrives. In many instances, HCA is 10+ minutes away. In some events, it is critical to have the early intervention done by the Hopkins Fire Department to help save a person’s life.  

11. I would like more information on the amount of Tax Increment Financing (TIF) and its duration.

The City has five active TIF districts. Two of the five decertify in 2023, and of those one is no longer collecting TIF. 

View the City’s Annual Disclosure for the year ended December 31, 2020