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VII.4. Special Revenue Fund Budgets and Activity Center Budget Review; Bishop CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: November 18, 2025 Subject: Special Revenue Fund Budgets and Activity Center Budget Review _____________________________________________________________________ PURPOSE No formal action is required at this meeting. Staff is requesting input on the proposed budgets for special revenue funds. The proposed Activity Center fund budget is shown for informational purposes. INFORMATION Chemical Assessment Team Fund (Special Revenue) The State Chemical Assessment Team provides emergency response for assessment of chemical hazards, the maintenance of state owned equipment and training of personnel. The response area includes Hennepin, Scott, Carver, McLeod and Renville Counties. The State of Minnesota reimburses the City quarterly for actual costs. The Chemical Assessment Team does not receive any tax levy support from the City. Proposed 2025 2026 Percentage Budget Budget Incr (Decr) Revenues 65,000$ 65,000$ 0.00% Expenditures 65,000$ 65,000$ 0.00% Revenues over (under) Expenditures -$ -$ Finance Department Economic Development Fund (Special Revenue) The Economic Development Fund coordinates the economic development process not directly funded by specific project budgets. The major budgeted expenditures of the fund are salaries, benefits and grants. In 2026 the Economic Development Fund will support: •Arts Center •Art Street •Elevate Hennepin •Façade Improvement Program •Marketing •Public Art at Shady Oak & Downtown LRT Stations •ACE Program •Think Hopkins The main revenue sources of the fund are the Hopkins Housing and Redevelopment Authority (HRA) property tax levy and excess tax increment financing (TIF). A preliminary HRA levy of $551,750 was set on September 16th, excess TIF is budgeted at $50,000. Through the Economic Development Fund, staff has been able to secure many grants that support Public Art & Placemaking, Development and Housing. Grants are not included in the operating budget. Please see the attached memo “2025 Economic Development Fund Summary” for a summary of 2025 accomplishments. Proposed 2025 2026 Percentage Budget Budget Incr (Decr) Revenues 591,646$ 656,750$ 11.00% Expenditures 555,646$ 692,520$ 24.63% Revenues over (under) Expenditures 36,000$ (35,770)$ Parking Fund (Special Revenue) The Parking Fund accounts for activities related to parking enforcement and parking operations in the City. The major sources of revenue are parking permits, parking leases, fines and property taxes. The major expenditures are salaries and benefits. The revenue budget for parking permits has been reduced based on a decrease in permit sales due to trends caused by COVID-19. In 2026, the fund will rely on a $100,000 tax levy to balance the budget. Proposed 2025 2026 Percentage Budget Budget Incr (Decr) Revenues 164,000$ 173,000$ 5.49% Expenditures 161,185$ 171,932$ 6.67% Revenues over (under) Expenditures 2,815$ 1,068$ ______________________________________________________________________ Communications Fund (Special Revenue) In 2025 the communications functions were transferred into the general fund along with unrestricted cable franchise fees. The remaining revenue and expenditures in the special revenue fund are derived from Public, Educational, and Government (PEG) franchise fees. The revenue and expenditures are restricted for the purchase of equipment used by the City to support PEG access television. Proposed 2025 2026 Percentage Budget Budget Incr (Decr) Revenues 30,961$ 40,000$ 29.19% Expenditures 30,961$ 40,000$ 29.19% Revenues over (under) Expenditures -$ -$ Sustainability Fund (Special Revenue) The Sustainability Fund was established in 2024. The fund will continue the Hopkins Climate Solution Fund grant program which offers incentives to residents and businesses to accelerate the transition to cleaner and more efficient energy. Grant funding available in 2026 is budgeted at $125,000. The fund will continue to support one full-time employee and add 1/3 of the planner position focused on the Partners in Energy Plan and Sustainable Building Policy. The source of revenue from the fund is gas and electric franchise fees. The City increased its franchise fees on 1/1/2024 to support sustainability. Proposed 2025 2026 Percentage Budget Budget Incr (Decr) Revenues 345,000$ 366,000$ 100.00% Expenditures 345,000$ 363,745$ 100.00% Revenues over (under) Expenditures -$ 2,255$ ____________________________________________________________ Depot Fund (Special Revenue) The Depot Fund continues to operate under the new model in 2026. The Depot Youth Board will still exist to fulfill the mission of providing a place of community and learning in which student involvement and youth development are encouraged in a chemically- free environment. The ACE program will continue to operate as a youth workforce development program with the City of Minnetonka as a participant. During its fourth year (2025) the ACE program provided fourteen young adults with resume-building professional experience through internships. The 2026 budget includes support from Hopkins General Fund ($63,500), City of Minnetonka ($63,500), Hopkins School District ($50,000) and Three Rivers Park District ($19,500). As a result of issues stemming from the Green Line Extension and COVID-19 Pandemic, Depot Coffee operations were suspended in early 2023. The City has been unable to find an interested business operator for the Depot. The City remodeled the Depot in 2024 and the reopened facility has been operated by the Hopkins Center for the Arts. Operations will include expanded programming, revenue generation through rental reservations and a re-opened trailhead with concessions, with steady increases in both rental and concession revenues. Proposed 2025 2026 Percentage Budget Budget Incr (Decr) Revenues 285,611$ 322,700$ 12.99% Expenditures 270,611$ 304,051$ 12.36% Revenues over (under) Expenditures 15,000$ 18,649$ Arts Center Fund (Special Revenue) The Hopkins Center for the Arts is a premiere cultural and artistic destination drawing over 250,000 visitors annually. Its amenities include a 715 seat theater, black-box theater, art gallery, dance studio, classroom, meeting and multipurpose spaces. The main revenue sources are property tax levy, rents, leases, ticket sales, grants, and transfers in. The preliminary tax levy amount is $380,000. Major expenditures include salaries, benefits and payments to artists. Between 2020-2024, City Council has worked to eliminate a $1 million deficit fund balance through both a tax levy and federal grant allocations. The fund is expected to continue to operate with a positive fund balance in 2026. Proposed 2025 2026 Percentage Budget Budget Incr (Decr) Revenues 1,232,470$ 1,290,784$ 4.73% Expenditures 1,219,259$ 1,240,434$ 1.74% Revenues over (under) Expenditures 13,211$ 50,350$ Activity Center (General Fund) The Hopkins Activity Center is a community facility with a gym, kitchen and meeting rooms. The Activity Center’s mission is to provide pathways to “Experience the Upside of Aging”. It is a gathering place for mature adults to participate in recreational, social, educational, fitness and volunteer activities. The main sources of revenue are member fees and facility rentals. The main expenditures are salaries, benefits and payments to instructors or for other programming. Program revenues are $487,366 less than program expenditures. The indirectly funded amount is provided through property taxes, local government aid, franchise fees and interest. The Activity Center is part of the City’s General fund. Proposed 2025 2026 Percentage Budget Budget Incr (Decr) Revenues 168,500$ 191,500$ 13.65% Expenditures 609,694$ 678,866$ 11.35% Indirectly funded amount (441,194)$ (487,366)$ CITY OF HOPKINS 2025 Economic Development Fund Summary The Economic Development Fund supports a variety of economic development, housing, public art, and marketing efforts for the City. A summary of 2025 accomplishments include: Economic Development • 8 ribbon cuttings celebrating new and reopened Hopkins’ businesses. • 18 businesses utilized Elevate Hennepin, a program in partnership with Hennepin County offering no-cost business assistance, in Q1-Q3 of 2025, amounting to 295 hours of assistance. • Elevate Hennepin’s Thriving Thursday was hosted in Hopkins in September 2025, and 11 businesses attended including 5 Hopkins businesses. • Staff continues to support the Hopkins Business and Civic Association (HBCA), with Revee Needham as the HBCA liaison. For her efforts in the Think Hopkins campaign, Katy Pence was recognized as HBCA’s Person of the Year in 2025. Public Art & Placemaking • In 2025, 8 ArtStreet sculptures were installed and three mini bird murals were completed, with support from the Economic Development Fund. The mini bird murals also garnered $3,820 in public donation support. • Staff secured a $50,000 grant for Artery pedestrian lighting and a social media influencer campaign to be realized in 2026. Development • In 2024, the City issued a Request for Proposals for development on City-owned properties downtown. The City has been working with the selected developers in preparation for land use approvals and construction. Footprint’s development at 501 and 525 Mainstreet has received $1.6 million in grant support from Hennepin County, Minnesota Brownfields, and the Metropolitan Council. • In 2024, the City received a $50,000 Planning Grant from Hennepin County to complete an update to the Shady Oak Station Development Strategy, which was completed in 2025. The City also worked with MetroTransit to complete a market study in preparation for the disposition of excess land. CITY OF HOPKINS Housing • In February, the City Council created the City’s first Affordable Housing Trust Fund. The City received a $150,000 local housing trust fund matching grant from Minnesota Housing, with matching funds provided from the Economic Development Fund. • Additionally, staff supported the creation of the Summit on 7 Housing Improvement Area. Hennepin County staff continue to administer home rehabilitation loans using the City’s Community Development Block Grant funding. Staff also coordinate with the Police and Fire Departments to organize the Hopkins Apartment Managers Association. Staff supported through the Economic Development fund have secured over $1.8 million in grants in 2025 to date to leverage our investment in the community. In 2026, the Economic Development Fund will continue to support many of these same efforts. In addition, the Fund will support a Housing Assessment utilizing grant funds from the Metropolitan Council, Façade Improvement Program, and preparation for the future of 907 Mainstreet.