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2009 STATE OF THE COMMUNITY
WEDNESDAY, FEB. 18, 2009
EDINBOROUGH PARK
I. Introduction For months now, the nightly news and
front-page newspaper headlines have told the story of our nation’s economy. The situation was first labeled a “downturn
in the economy,” then “possible recession” and now “economic crisis.” For
awhile, it seemed the news was contained to Wall Street or Washington. Today, we know there are local businesses closing their
doors, neighbors losing their homes and people who have lost their life savings in the stock market. For
the past several months, one of the most commonly asked questions of me is, “How is the City faring? Are you making
any cuts?” I am here today to assure you that your local government is still strong. Yes, we are feeling the pinch in
some areas, but we are strong and not in any sort of “crisis” at the present time. We’re carefully monitoring
the effect of building permit declines and tax delinquencies, which could spark some mid- course corrections in 2009. II. State of the City As you know, the State has a
huge budget shortfall and has cut local government aid. Fortunately, Edina does not receive much in the way of local government
aid, so we are not in the dire position of other cities that rely on it for their operations. Those cities are scrambling
to cut hundreds of thousands or even millions of dollars from their budgets. In the past, Edina had
received Market Value Homestead Credit from the State. The State’s “unallotment” of $116,000 in Market Value
Homestead Credit for 2008 will be covered by the City’s 2008 budget, as building permit revenue was up and expenses
down. The City would have received $230,000 in the State funds in 2009. The City has planned for the loss, reallocating $100,000
of the 2009 fuel budget and part of the 2007 budget surplus. The $230,000 State Aid loss amounts to only about three-quarters
of 1 percent of our General Fund revenues. A. Property Values Edina seems to be more recession-proof than its neighbors when it comes to property values. The Minneapolis Area Association
of Realtors reported that the median sales price in Edina was $388,250 in 2008, an increase of 3 percent from 2007. This figure
includes single-family, condominium and townhome sales. Overall, the metro area saw a decrease of 13 percent in the median
sales price. Edina is the only city with more than 200 sales in the county that experienced an increase in the median sale
price. Edina also had the lowest percentage of lender-mediated sales in the county at 8 percent.
Lender-mediated sales include foreclosures and short sales. Short sales occur when the lender allows the property to be sold
for less than the outstanding mortgage balance. Some cities have shown a significant decline in housing values and have been
greatly impacted by the high volume of foreclosures. MAAR data for Brooklyn Center, for instance, indicates 66 percent of
home sales were lender-mediated and the median sales price decreased 33 percent. Condominiums and townhomes
comprise approximately 26 percent of Edina’s residential properties. For the 2009 assessment as a group, condominiums
and townhomes in Edina decreased approximately 6.5 percent from 2008 to 2009. Single-family properties decreased approximately
2 percent. Suburban Hennepin County single-family properties will experience decreases from 4 to 6 percent. Edina’s
commercial and industrial property values for 2009 remain relatively flat, increasing a modest 0.6 percent. In comparison,
suburban Hennepin County commercial and industrial properties will have decreases in the 3 to 5 percent range. While the shortfall resulting from the loss of Market Value Homestead Credit has been covered and property values here haven’t
taken the hit seen in other area communities, it does not mean that the City is unaffected by the downturn of the economy.
B. Building Permits Edina did not experience a noticeable decrease
in construction activity in 2008. We exceeded our budgeted 2008 revenue by about 4 percent. 5,758 permits were issued
in 2007 with a value of $190,034,460, compared to 6,076 permits in 2008 with a value of $194,213,682. Although permit activity typically decreases during December, January and February, there was a significant decrease in
December 2008 and January 2009. Staff hours have been reduced in response to decreased construction activity, and plans have
been made for additional reductions if necessary. C. Park & Recreation
Services Because people use disposable income for fun and entertainment, park and recreation programs can suffer
during poor economic times. The facility we are sitting in today – Edinborough Park – seems to be an exception
to that rule. Edinborough Park has not yet seen a change in business. At the start of the year, Edinborough
raised its daily admissions by 50 cents and 10-punch passes by $5 and have had no resistance or negative response to the increase.
2008 was a record year for birthday parties, park admissions and fitness center use. One area in which we saw a reduction
was in Group Admissions. During the summer months, we host a significant number of youth groups at the Park. During
the summer of 2008, we had more groups visiting the Park than in previous years, but the number of kids in the groups was
smaller than in 2007.
The Tri-City YMCA Skatepark also realized an increase in users in 2008.
Use of the off- leash dog area at Van Valkenburg Park has also increased in the past year, as has use of the City’s
one and only (and free) disc golf course at Rosland Park.
The Edina Aquatic Center will not open until June,
but has already responded to the conditions of the economy. Season tickets prices were not raised and have not been raised
since 2005. The Edina Aquatic Center not only froze season ticket prices, it froze concessions prices. In addition,
the Edina Aquatic Center will be cross training and cross utilizing its cast members in an effort to find efficiencies.
However, like the City’s other recreational facilities, the Edina Aquatic Center will continue to focus on quality service
and exceptional value.
The Park & Recreation Department currently reports fewer rounds of golf at Braemar
Golf Course and Fred Richards Golf Course. For the first time ever, Braemar Golf Course is selling non-resident patron cards
to fill its tee times. The construction of additional golf courses in the metropolitan area, general economic conditions and
the demographics of our customers affect our pricing structure. Pricing is a particularly important issue to our senior golfers
who display a keen interest in value and who are willing to travel to more distant facilities offering cheaper rates. With
the overbuilding of golf in the metropolitan area, we must continue to be particularly sensitive to our price point in the
market.
Braemar Arena is feeling some effects of the recession in all of its sale categories. We have
seen reductions in skating lessons, skate sharpening, public skating, and sales of items such as tape and laces. Ice rental
is not down drastically, but our main customers are feeling the pinch with fewer numbers in some cases (similar to the group
outings at Edinborough). We have not had to reduce programs or discount prices. Revenues are flat with a slight decline. The
off-season will dictate how our year there progresses.
Registration numbers at the Edina Art Center were
down in 2008, but winter registration is up over previous years. We are hopeful that the trend will continue. During bleak
times, arts in our community are especially important. Art brings beauty, joy, cultural richness, and an opportunity for our
residents to create and experience beauty in a warm, supportive atmosphere. The Gallery at the Art Center offers one of the
best deals in town, with free rotating exhibits that feature local and international artists. The Pat Van Valkenburg Scholarship
Fund, Kelm Foundation, Peggy Kelly Family Fund, Edina Rotary Foundation, Edina Art Fair and other private donations have assisted
the Edina Art Center in achieving the goal of offering art experiences to all ages and abilities at affordable rates.
The number of grant-in-aid requests for participation in Edina Park & Recreation programs continues to climb.
There are several large and expensive park improvement projects on the drawing board that will likely stay on the radar screen
as “unfunded park improvement plans” until the economy turns around. We will likely remain on a “maintain-existing-infrastructure-mode”
for some time. These larger park improvement items, such as shelter building replacements, development of the Van Valkenburg
Park neighborhood park plan, development of the newly revised Countryside Park master plan and so on, will have to wait until
the community is ready for another park referendum or a larger tax-supported Capital Improvement Plan.
D. Liquor
While the retail segment in general has struggled during the recession, customer
traffic at liquor stores, including Edina Liquor, has not. Sales at Edina Liquor increased 5 to 6 percent to more than $12
million in 2008.
Edina Liquor is the most successful of the City’s enterprise facilities, generating
a net profit of more than $1 million each of the past three years. The City operates three stores - Grandview
near Jerry’s Foods, 50th & France next to Lunds and Southdale next to Cub Foods.
It is especially
important that we continue to support Edina Liquor as the stores’ profits help support other parts of the City. For
the past decade, transfers have been made annually to the Art Center and Arena. Since 2000, transfers have been made to the
City’s Capital Improvement fund. Capital improvements made possible in recent years include improvements at Lewis Park,
a new fire truck and other life-saving equipment, construction of Adventure Peak and street improvements. Some money is retained
annually in the liquor fund for store improvements.
E. Closing/Introduction
of Ric Dressen
I hope you feel as confident as I do that our local government – including Edina Public
Schools -- will weather the storm of our economy. Now, please join me in welcoming Superintendent Ric Dressen to tell us about
what the school district is doing in response to recent cuts.
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