Cottage Grove is about to have a new itemized tax line, but without a corresponding tax increase for 2025.
Meeting Dec. 3 in a special meeting at the St. Croix Room in City Hall, the Cottage Grove Economic Development Authority (EDA) approved a new HRA levy via Resolution 2024-13, split off and set apart from the current EDA levy, with each levy amount of $137,500 together representing half of the old EDA levy of $275,000.
City Finance Director Brenda Malinowski presented to the commissioners, recommending no increase in the 2024 levy amount but the creation instead of two levies, one for the EDA and a second for Housing and Redevelopment Authority (HRA), both set at 137,500 or $275,000 together, and totaling around 25 percent of the allowable EDA levy.
“What we are recommending for 2025 is that we take the $275,000 that we are levying in 2024 and create two separate levies,” Malinowski said. “The first will be the EDA levy and then the second portion of 137,500 will be utilized for the HRA levy.”
Considered more transparent as a separate line on the property tax bill, the new $137,500 HRA levy is subject via statute to a .0185 percent estimated market value limit, based on taxes payable in 2025. The amount asked is 12.5 percent of the allowable limit.
Among allowable HRA levy uses are the following:
• Provide a sufficient supply of adequate, safe, and sanitary dwellings to protect the health, safety, morals, and welfare of the citizens
• Clear and redevelop blighted areas
• Perform those duties according to comprehensive plans
• Remedy the shortage of housing for low and moderate residents, and to redevelop blighted areas, in situations where private enterprise would not act without government participation or subsidies, and
• In cities of the first class, to provide housing for persons of all income
“For 2025 we have a budget that’s in the packet,” Malinowski said. “What we’re recommending is that we use that HRA levy in 2025 to pay for staff salaries. We’ll move a portion of staff salaries that are currently budgeted in the EDA fund over to the HRA fund. We’ll set up a new fund. And then about $25,000 for professional services for housing and redevelopment type activities for Cottage Grove.”
Next comparing the proposed Cottage Grove HRA to other municipalities in the Twin Cities area, Malinowski showed the proposed Cottage Grove HRA to be the second lowest in 2025, after North Saint Paul at $50,000. Woodbury’s HRA figure for 2025 was $250,000. The exact HRA levy amount can fluctuate from year to year.
“With that I’m happy to answer any questions you have,” Malinowski said.
Commission member Thomas Tschida went first.
“How did we arrive at that 50-50 split for EDA and HRA?” Tschida asked.
“We looked at half the salaries that were in the EDA budget and we moved a portion of staff time over, so it was a way to start utilizing those funds which are the EDA funds currently over for the HRA as we determine those costs we need in the future for housing and redevelopment activities,” Malinowski said.
Tschida next had a follow-up question.
“Is there something more they can work on now that they’re under the HRA umbrella as opposed to the EDA? Are they going to be working more specifically on housing policy versus EDA? I guess how are we arriving at who’s going where?”
“Right,” Malinowski said. “We haven’t looked at staff members, we looked at city budgets each year. Some staff members, they might be budgeted in the general fund but they might be doing EDA activities and vice versa. We haven’t looked at specific staff salaries that we’ll be doing that, but as a reminder we have that housing study that’s coming back here early in 2025, so there will be staff time as we work through that housing study for that affordable housing component.”
Among staff salaries to be paid in the new HRA levy would be the EDA Director, Community Development Director, and City Administrator.
“Fair enough,” Tschida replied. Commissioner Obed John-Baptiste was next.
“So previously they were under both the EDA and HRA and correct me if I’m wrong, but I believe you mentioned that the maximum levy for the EDA had been $1.7 million or something along those lines? But now that they’re split into two, do they each have a maximum levy of $1 million so the maximum they could raise together could be like two point something million?” he asked.
“That is true,” Malinowski said. “When I did a financial management plan for the city just recently in 2023 there wasn’t the thought that we would be levying that amount of money. But yes, they do both have separate authority to levy up to those amounts, yes.”
Tschida had a follow-up question.
“Does a levy increase to either the EDA or HRA come to the EDA itself or is that just a City Council question?” He asked.
“Good question,” Malinowski said. “The HRA levy would come in front of the EDA. The EDA levy is set by the City Council.”
Cottage Grove Mayor and Economic Development Authority President Myron Bailey next spoke up.
“One of the interesting things that brings up and I think it makes a good point is that our intent—at least that I can see in the foreseeable future—has not been to levy to the max,” he said. “The whole idea here I think is a little bit more on the transparency side as we go forward.”
Motion to approve the new HRA levy as split from the EDA levy was then made by EDA Commissioner Sandi Scott, seconded by Commissioner Jean-Baptiste. All but Tschida voted in favor, with Tschida giving his reason for a “no” vote.
“I’m concerned that we’re going to come back next year and double this $137,500 and we’re going to pass it now because it’s not an increase, but next year it will be twice what it is, and the following year it will be twice what it is, and it’s going to snowball, and snowball, and snowball. Not something I’m interested in,” he said.
Cottage Grove EDA meetings are held the second Tuesday of each month at City Hall at 7:30 a.m. The public is invited to attend.