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HomeMy WebLinkAbout07-24-13 WSCITY OF LAKEVILLE CITY COUNCIL WORK SESSION MINUTES Wednesday, July 24, 2013 Mayor Little called the meeting to order at 6:30 p.m. in the Marion Conference Room at City Hall. Council Members Present: Swecker, LaBeau, Anderson, and Davis, and Mayor Little Staff Present: Steve Mielke, City Administrator; Dennis Feller, Finance Director; Julie Werner, Accounting; Tom Nesseth, Accountant; Judi Hawkins, Deputy City Clerk 2. Citizen Comments There were no citizen comments. 3. 2014 -15 Budget Review Steve Mielke described the budget process and how current events and conditions in the community will help to influence the budget. At this stage the budget discussion is more about the concepts and less about the actual numbers. Council members will be asked to focus on more budget numbers at the August budget work session for the adoption of the preliminary budget. An additional budget work session date of September 9 has been set aside for further discussions, if necessary, so the preliminary budget and tax levy can be adopted on September 16. Staff has been asked to consider department needs and current trends when preparing their draft preliminary budgets. At the September 16th meeting Council will adopt a maximum levy, which can go down from that point but cannot go up. Final budget adoption will take place at the second regular meeting in December. Finance Director Dennis Feller provided an overview of the 2014 -2015 Budget and Tax Levy. Several items make up a balanced budget including revenues and expenditures, taxes and services, short term and long term interest. Feller reviewed different types of statistics for measuring progress in the budget process: 1) General Fund expenditures per capita are the same in 2014 as they were in 2008. A 3.5% per capita spending increase is anticipated from 2013 to 2014, some of which is offset by charges for services and permit revenues. Current number of employees per 1,000 residents is 2.7, down from 3.1 prior to the recession. With the addition of the new positions being proposed, the ratio will remain at 2.7:1,000. Per capita taxes for Operations (general fund, equipment and building fund) are proposed to increase by 3.6% in 2014 and 3.2% in 2015. This equates to $294 per capita in 2014 and $304 per capita in 2015. At the beginning of the recession in 2008 the figure was $312. City Council Work Session July 24, 2013 Page (2 Feller discussed several themes which have emerged from the budget discussions thus far. The five external factors are: Resumption of growth, emerging trends, addressing aging infrastructure, inflationary pressures, and legislative mandates. The organizational themes include: Innovation and efficiencies, entrepreneurial efforts, and preparing for the future. Resumption of Growth: Lakeville is seeing positive economic indicators including an increase in new residential housing construction and median home prices. Unemployment is also decreasing. Growth raises demands for service delivery, impacts infrastructure needs and increases operation costs. Future capital improvements will include water system and treatment facility expansion, and several road upgrades. The budget currently proposes the addition of several new positions: Police Department: Investigator in 2014 and police officer in 2015. The positions are needed to keep up with the growth of the City. Two seasonal CSO's in 2014 to assist in the parks. Building Inspections: Part -time code enforcement employee in 2014. The Code Enforcement position was eliminated several years ago and the responsibilities were designated to the building inspections department. A 24 -hour per week code enforcer is being proposed in the budget, which would free up time for the full time inspector to focus on inspections. LaBeau believes the iPads being proposed will save the inspectors and office staff a considerable amount of time. Engineering Department: Engineering Technician in 2014. Engineering of the street reconstruction program is a major project. This position would assist with the reconstruction program and would assist with building construction inspections related work such as site drainage. Mielke added that the City's engineering cost for street reconstruction is offset by fees which are part of the project. Swecker asked if the pay grade for this position is at the higher or lower end of the scale. Feller stated that this is a highly skilled position, but is budgeted at the starting pay grade. Fleet Management: Fleet Supervisor in 2014. Personnel have not been added to this division for many years. This supervisor position will be responsible for inventory management and control. This will allow the Fleet Lead to spend more time doing mechanical work. LaBeau asked if there were any examples of when this type of position could have been financially beneficial to the City. Anderson asked if new vehicle technology has decreased the amount of time needed for maintenance. Fire Department: Assistant Fire Chief in 2015. Assistant Fire Chief Position is being proposed in 2015 and will assist with training volunteers, among other duties. This position will be a trained firefighter who will strengthen daytime call response. City Council Work Session July 24, 2013 Page 13 Anderson suggested more data and information would be helpful in understanding why certain positions are needed. He stated that with added technology and good use of resources a growing population might not necessary equate to a larger staff: Mielke stated that future discussions could focus on staffing levels and expectations of both the Council and residents. For example, several miles of new streets are being added and if Council wishes to continue the current level of snow plowing service, an additional employee may need to be added in the future. Council's role is to determine the level of service which is being delivered. Emerging Trends Additional forensics software is proposed to assist the investigator assigned to digital forensics in order to provide more timely crime investigating of cases, especially in technology- related crimes. Swecker suggested more employees need to be trained in this field. In order to address increased public activities under control at Antlers Park and Casperson Park, as well as the rest of the park system, it is being recommended to hire two seasonal CSO's for a uniformed presence in those areas. Little suggested a remotely monitored camera could be an option. Mielke believes it is important to have personnel at the boat launch. It was also suggested that parking fees could be charged at Antlers. Anderson also suggested rental of the concession stand or some other method of getting a presence at the park. Emerald Ash Borer. A full-time Forester is being proposed in Environmental Resources to assist with the EAB outbreak when it becomes active in Lakeville. Staff is also recommending $45,000 be committed for expenses which will be incurred for City trees. Mielke provided an overview of the Forester position which was taken out of the budget several years ago. Residents are currently being directed to various tree companies with their questions but would be better served with an on -staff forester. Swecker asked about sharing a forester through a HiPP initiative; Mielke stated that the larger surrounding communities each have a Forester on staff. Council expressed a desire to learn more about the disease and what can be done. LaBeau stated that long -range planning might be needed after the final results of Envision Lakeville are determined. Little stated that a process for responding to citizens should be put in place so concerns and resident issues and trends can be tracked and follow up ensured. This would be especially helpful when dealing with recurring issues. He is currently using a Google document but believes there is a better method. Mielke stated software tracking systems are available for such things as maintenance requests; however, if a constituent is lobbying a council member for a certain position, that is a different type of contact. If a central mailbox is created, Council members need to be cognizant of open meeting laws. Anderson asked about the marketing funds and stated that the Envisioning Process priorities include attracting new business and supporting current businesses. LaBeau asked if any new City Council Work Session July 24, 2013 Page: 14 businesses have come to Lakeville as a result of recent Positioned to Thrive marketing initiative. Mielke stated that at this time there is no measurable outcome identified. Todd Bornhauser, Lakeville Area Chamber of Commerce Executive Director, stated that because of different dynamics, it's difficult to make comparisons with other communities such as Shakopee. Mielke stated that more outreach is being done with businesses but would like to see development of relationships with landowners to enhance marketing efforts. Addressing Aging Infrastructure Facilities: The five -year plan is $1.4 M, financed from one -time revenues. These are major maintenance projects and the figure does not include any new facility construction. Maintenance was taken from the General Fund last year to keep the tax levy low. ADA improvements will be accomplished as facilities are expanded or paid with CDBG funds. A schedule showing the impact of interest rates on future tax levies to complete street reconstruction projects was distributed. Feller believes that higher interest rates are inevitable and should be built into the budget. If Council determines that the concept of pay -as- you -go financing is achieved, the interest rates would not be a factor. Council discussed the accelerated street reconstruction project and various scenarios for financing the projects. Swecker stated that previous Councils have attempted to keep the tax levy as stable as possible and spreading the costs over 13 years rather than 10 years would accomplish that stability. Anderson stated that deteriorating roads are detrimental to the community in several ways and there is significant value in accelerating the street reconstruction over a 13 year period. Council's agreed to move forward with the accelerated street reconstruction program and work toward a pay -as- you -go financing program. Little asked how feasible it is should the Council decide on an even higher annual reconstruction program should be considered for street reconstruction. Mielke stated that limited staff resources would be prohibitive. Water main replacements will be needed and will be partially funded by water rate increases. The last payment of $350,000 on the park bond referendum will be made in 2014. In 2015 it is proposed that these funds will be redirected to a revolving capital program for playground replacement. Unencumbered funds were set aside for a trail maintenance fund several years ago. Council will continue working on the Park Plan update following the Envision Lakeville process. Council would like to see an average cost per mile for maintenance of trails. Mielke stated that the Park Director is working on providing this information. Total estimated equipment acquisitions over five years beginning in 2015 is $12.7 million. The amount varies due to the replacement schedule. The major funding sources are Liquor City Council Work Session July 24, 2013 Page 15 Funds, unencumbered General Fund monies, and property tax levy. Anderson asked if there is a method of determining what would be eliminated from the budget if the funds were not available. Feller stated that if funds were not available it would be necessary for Council to look at projected life of equipment and make choices regarding purchases. Council would like to receive a copy of the full equipment replacement schedule. Inflationary Pressures The declining unemployment rates will create upward pressure on wages. A contingency has been included in the budget for potential wages adjustments. A contingency is also included for health care costs which will be influenced by industry trends and group experience. Employee incentives are being offered to help control costs. Firefighter pay for calls and training is proposed to increase in 2014 and 2015; funding will be from the General Fund. Sanitary sewer rates being charged by MCES are estimated to increase by 3.5 percent per year. Legislative Mandates and Changes Legislative changes regarding sales tax exemption, police pension financing and property tax levy limits as well as federal sequestering and the EPA storm water regulations will impact City finances. The sales tax exemption applies to purchase of goods and services only but does not apply to the purchase of motor vehicles or Liquor Store operations. Innovation and Efficiencies The current Computer Aided Dispatch (CAD) system is out of date and in danger of being unable to be maintained. Police and Fire are in the process of replacing the existing mobile computer and records management system to enhance technology tools. Police voice recognition recorders are being proposed by the police department to allow officers to produce reports in a more efficient manner. Swecker asked about water meter modernization. Feller stated that more advanced radio read technology is being used for non - residential accounts and is proposed to be installed for residential customers in the coming years, which will make the process more efficient. Park mowers are being proposed for purchase rather than lease, since it has become more cost effective. Entrepreneurial Efforts A Liquor business plan is being developed. There are no funds currently in the budget for either a new store or a store relocation. The Heritage Store lease is up in 2015. Electronic signage is being proposed for the corner of City Hall which would advertise upcoming events and community activities. Council member expressed that they are not in favor of this signage. City Council Work Session July 24, 2013 Page 16 Items proposed for the Heritage Center will enhance the facility for rentals and make it more functional for activities. Improvements would include AV equipment, ice machine, chairs and tables, and exterior lighting. Swecker stated that she is unable to support additional funding until the previous improvements are paid for. She will assist with trying to get some of the needed items donated. Mielke pointed out that the proposals are for operations rather than construction. Anderson would like to see more data. Preparing for the Future Funds are proposed to complete the Envision Lakeville strategic planning process and to establish specific steps to take as a result of the information that has been gathered. Dakota County will continue the County Road 50 study, phase 2, from Dodd Blvd. to Cedar Avenue. The City's share is estimated at $45,000 to be financed from general fund in 2014. Hydrological modeling of the North Creek drainage area will establish future storm water modeling and flood mitigation initiatives. The Urban Reserve Plan study is proposed for 2015 in preparation for the City's Comprehensive Plan update in 2016 -17. The budget includes an increase in professional development for continuing education and a succession plan. Volunteer firefighters will also have an opportunity to do on -line training. Budget Overview Feller stated that the budget is broken into three different components: Operations, Capital Investment, and Enterprise Operations. Feller provided a review of the 2012 and 2013 General Fund budgets. Revenues and other financing sources are based on projections of building permits through the end of the year. For the past five years a 45% fund balance has been recommended but with the improvements in economic conditions, Council could consider lowering the fund balance to 40 %, which would provide an additional $943,000 to be used for other purposes. Feller stated that fluctuations in growth could have an impact on the 2013 -2015 budgets. LaBeau suggested that the building permit estimates could be lowered to a more conservative number. Feller stated that they will provide information based on a lower building permit estimate. Mielke stated that Council needs to determine where unencumbered funds should be allocated. Swecker stated she would be willing to consider a fund balance of 42 -43 %. General Fund expenditures are anticipated to increase in each of the next two years, with the main factors being general government, public safety, public works, and parks and recreation. Feller briefly reviewed capital projects funds including the building fund, equipment fund, trail improvement fund, and pavement Management fund, which Council had discussed previously. Enterprise Funds are self- supporting from retail sales and user fees. Liquor Funds City Council Work Session July 24, 2013 Pa 17 of $1.2 million per year go into the equipment fund, to reduce future tax levies, and reimburse operations and offset general fund. Utility funds will be used for major maintenance such as watermain replacement. Feller broke the property taxes into three components: tax levy, tax base, and impact on taxpayers. Levy limits are calculated by taking the highest of 2012 or 2013, which was 2012, and then add 3% plus special levies which are not subject to levy limits. From 2013 to 2014 the biggest increase is for street reconstruction. Mielke stated that when levy limits were initially imposed, the City did not have enough reserves and needed to levy debt for equipment purchases, which was not subject to levy limits. Equipment is now financed on a pay -as -you go basis and it is the intent to continue that. Feller stated that if Council adopts levy limits below the maximum allowed, there is a risk that it will become the new base. Council received materials illustrating the outcome of various levy increase scenarios. Feller stated that the major drivers for the tax increase from 2013 to 2014 include operations (general fund and equipment fund), personnel transitions, PERA increase for police, new positions, etc. LaBeau asked about the contingency funds. Feller stated there are two contingency funds, one for personnel and one for unanticipated events such as natural disaster related expenditures. Reductions in sales tax and snow plowing are also reflected in the budget. Swecker clarified an earlier comment she is not opposed to operating costs at the Heritage Center, only the capital costs until previous improvements are paid for. Feller stated that due to the significant increase in new construction and various increases in market value of residential properties, it was difficult to arrive at an average for the purpose of explaining the tax levy. Due to various factors including new construction the tax base has risen by 4.7 %, which reflects the growth in the city in 2012. Future budget work sessions will be held on August 28 and on September 9th, if necessary. According to State statute, Council must adopt a preliminary tax levy on September 16 The final levy can be equal to or less than the preliminary, but cannot exceed it. That will be the number that the county uses to set taxes. Little believes it would be helpful and more efficient to know how staff sets their priorities for needs and proposed budget items. Davis agreed that it would give council an idea of what staff believes is important. Mielke suggested looking at the whole budget rather than individual departments. LaBeau stated that it might be more acceptable to start with zero and add things rather than start at the maximum and cut items from the budget. It might also be City Council Work Session July 24, 2013 Page 18 important to challenge departments to make recommendations for possible cuts. Mielke stated that department directors will be at the August budget work session to answer any questions council might have about their individual budgets. Anderson asked if there was a way to look at each department's priorities to get to a final levy amount rather than getting into the full details. Discussions could be more effective if they centered on larger budget items that are being added instead of where to cut. If there are items that Council agrees to support in order to get to the maximum levy they don't need to be discussed in detail again. Little agreed that understanding general guiding principles would be a good way to proceed with budget decisions. Mielke stated that inflationary factors that will increase the budget are an economic reality. Swecker stated that they also need to take into consideration the ramifications for everything that is eliminated from the budget. Little believes the residents would find it more palatable to raise taxes for items that are not able to be controlled, rather than for things that are. The Finance Department will provide information as requested. 4. Adjourn Mayor Little adjourned the meeting at 9:55 p.m. Respectfully submitted, QUA Ju i awkins, Deputy Clerk Matt Little, Mayor