Budget Message

Fiscal Year 2024


Administrative Services Department

Kris Busse, City Administrator 507.774.7340 [email protected]


To: Honorable Mayor and City Councilmembers

From: Kris M. Busse, City Administrator

Re: 2024 Recommended budget and levy

Date: December 19, 2023



Pursuant to the Owatonna City Charter and Minnesota statutes, the City Administrator hereby submits to the City Council the 2024 recommended budget and levy for all funds of the City of Owatonna. This budget is the result of months of preparation and review by Council and City Staff. This budget reflects the City of Owatonna’s vision, to enhance the quality of life and follow the priorities set by the City Council through its strategic planning process.


Economic Outlook

Owatonna continues to demonstrate it is in growth mode, through its growing industrial, commercial, and housing sectors. The City had another strong year in terms of building permit valuation. At the end of November, the city had issued 1,655 building permits totaling nearly $108 million total valuation. Last year at this time the city had issued 1,783 building permits totaling $75 million in valuation. Many exciting development projects are under construction or will be completed in 2023. Redline Development broke ground on Owatonna’s first major mixed-use project. A key tenant will be Olmsted County Medical Center. Mineral Springs Brewery (MSB) will also occupy a significant portion of the facility. MSB will triple in size in comparison to their previous facility. Seventy luxury apartments will be in the top four floors of the complex. This is the first major development along the Riverfront.



In terms of industrial development, Climate by Design International is on schedule to complete their new 200,000 square foot facility in October. They will add approximately 50 employees. Kamp Automation is constructing a new 50,000 square foot manufacturing facility and hopes to have it operational by early next year. They will employ approximately 50 employees as well. Cemstone is completing a new cement plant in the industrial park. This plant was relocated from an existing commercial area. A new recycling center is also under construction. The city has also enjoyed a variety of commercial growth. Monson Eye clinic is now open downtown. Jersey Mikes sandwich shop is under construction with plans to be completed by the end of the year. Romas, a new Italian restaurant is scheduled to open at the end of the summer. This restaurant was part of the larger downtown hotel redevelopment project. A new dental office is being constructed on the north bluffs commercial area. Construction is also underway for an 88 room Home 2 Suites hotel in the Bridge Street commercial area.



In the housing sector, apartment construction continues at a brisk pace. The 75-unit Cedar Avenue apartments are nearing completion. West Lake Meadows is continuing to build apartment buildings for their 276-unit complex. For single family development, the city approved plans for Mineral Springs Estates. The total development plan includes over 300 lots. The first phase of the project will contain other housing types beyond single family such as twin homes and row houses. They plan to break ground in the fall.



Budget Highlights

The 2024 budget is reflective of the four key focus areas as determined by the city council during the strategic planning process. Priorities in the budget are aligned with these key focus areas, Infrastructure, Economic Vitality, Quality of Life and Efficient, Effective Government. Infrastructure is a particular emphasis this year. City staff and ICS consulting have been completing a review of all facilities to determine critical maintenance needs and a long-term facilities plan. The city owns more than 90 buildings and structures which support key services such as police, fire, streets, recreation, and library. Deferred maintenance must be addressed to continue to support these key services. Projects this year include pavement rehab and reconstruction, HVAC replacement at Social Commons, generator replacement at City Hall, tuck pointing at various city facilities, airport roof replacement, garage door replacements, ventilation project at the street maintenance facility, Library improvements, Runway pavement maintenance and Brooktree club house improvements. Issuance of a bond is planned to address crucial HVAC, roof, and electrical needs at Merrill Hall.



New this year was the establishment of one-time Public Safety Aid for cities. These funds are to be used only for certain public safety needs (equipment, training, mental health,) Staff is proposing to utilize this fund for police and fire radios and automatic park gates and to begin a Public Safety equipment replacement fund (PSERF).



Fostering Economic Vitality is critical to creating a diverse economic base that attracts and maintains quality jobs and continues growth in the city tax base. To carry on the success in this focus area, staff has again included funding for the collaboration with the Chamber of Commerce for the community wide branding initiative and implementation of the new brand. A $5,000 increase for the EDA and HRA levies is also included.


Quality of Life is a vital component to a healthy community. It helps facilitate growth and attracts the business community along with new residents. To help maintain Owatonna’s record of lowest crime rate in the region, this budget includes funding for one additional police officer. The budget also includes improvements and enhancements to community and recreational programs. Outdoor sports courts resurfacing, interior pool surface repairs, Central Park Bandshell improvements, pavement rehab and replacement in parks. This budget continues our efforts to improve public engagement (i.e., website, e-newsletter, PEG channel programing.) a new initiative this year will be a community survey/study. This will aid the city council and staff in addressing needs both current and future.



Efficient, Effective and Economical government has been addressed by focusing on the full roll out and promotion of on-line city services such as permitting, licensing, reporting maintenance issues. In addition, investments are included to continue the culture work outlined in the 3-year blueprint. Because personnel costs are such a large part of the overall city budget, ensuring that our employees are operating at their very best is a wise investment. Culture work is important to retaining and recruiting high performing employees along with a modest wage increase. Finally, the addition of an Assistant City Administrator will aid in managing the day-to-day responsibilities and succession planning.




Recommendation

I am recommending an increase in the levy of 8.00%. Preliminary estimates from the Steele County assessor indicate the city’s tax capacity increasing by approximately 6.7%. This growth will minimize the impact to the taxpayer. The city has a history of strong economic growth. The tax capacity growth over the last three years has exceeded the increase in the levy. The recommended 2024 budget reflects strategic investment to accommodate and continue economic growth. This budget closely follows and advances the strategic plan.



Special thanks to the finance department and Department Directors for their work developing the 2024 budget for their work on the budget and CIP documents and the department directors for their excellent work in developing the programs necessary to carry out the vision and strategic plan of the city council.