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09-15-03
CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 15, 2003 A comp/ete videotape of the City Council proceedings is retained for one year Mayor Johnson called the meeting to order at 7:00 PM. The .pledge of allegiance to the flag was given. Roll call was taken. Present: Council Members Bellows, Wulff, Rieb, Luick and Mayor Johnson. Also present: R. Erickson, City Administrator; R. Knutson, City Attorney; K. Nelson, City Engineer; D. Olson,. Community & Economic. Development Director; D. Morey, Planning Director; D. Feller, Finance Director; S. Michaud, Parks & Recreation Director; D. Martens, Chief of Police; J. Hawkins, Deputy Clerk. MINUTES The minutes of the September 2, 2003, City Council meeting and the September 3, 2003 Council work session were approved as presented. SPOTLIGHT ON BUSINESS: Economic Development Commission member Jack Matasosky provided information on the Crystal Lake Golf Club and Banquet Facility and introduced Group Sales Director Nancy Hefko and Diane Sprague, Director of Catering. STAFF ANNOUNCEMENTS ATTORNEY: None ADMINISTRATOR: None ENGINEER: City Engineer Keith Nelson provided a project update. Highlights included .the Barley Straw Installation Project; the Infiltration Garden Project at Springbrook; construction update for Crossroads Development; and Hamburg Utilities Project. Finally, Mr. Nelson announced a Vermillion River Watershed District open house at the Dakota County Western Service Center on September 17~". • .". ,L C] CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 15, 2003 PAGE 2 PARKS & RECREATION DIRECTOR: Steve Michaud presented the August monthly report of the Parks & Recreation Department.. Highlights included the Village Creek Neighborhood Park, Klamath Trail. Phase III project, greenway boardwalk Tree Trust. program. and recreation activities. POLICE CHIEF: Chief Dave Martens presented the August Police Department monthly report. Highlights included National Night Out, Safety Camp and the Car Seat Clinic. -FIRE CHIEF: Chief AI Braun presented. the second quarter report of the Lakeville Fire Department. Fire calls were up slightly in the second quarter. The department has logged over 4,000 hours of training to date .this year. The FEMA Grant funds will be used to purchase a "smoke house" for safety/education .training. The Fire Department open house will be held on October 6cn PRESENTATIONS/INTRODUCTIONS Jeff Larson of Center Point Energy/Minnegasco presented a check in the amount of $2,500 to the Lakeville Fire Department to be used for the purchase of drag bags for Lakeville's Rapid Intervention Team. The bags are used to aid in the rescue of fire victims. Mr. Larson stated that the City of Lakeville is one of the first recipients of Center Point Energy's new Community Partnership Grant. four individuals have recently completed their two-year probationary period as well as required courses and training to become regular members of the Lakeville Fire Department. Fire Chief Al Braun introduced three of the new members: Robert Barber, Chris Mogen and )on Pollock. Robert Oltman was unable to attend. Police Chief Dave Martens presented retiring Investigator Mike Server with a bronze. statuette and his badge memorialized in a plaque. Investigator Server began his career with the Lakeville Police Dept. in 1977 as a ]uvenile Resource Officer and is now working as a Special. Agent for the Minnesota Department of Revenue. Council Member Rieb read a proclamation proclaiming September 21-27, 2003 as Women of Today Week in Lakeville. Ellen Jorgensen, President of the Lakeville Women of Today, accepted the proclamation. i ~. • CITY OF LAKEVIL~LE COUNCIL MEETING SEPTEMBER 15, 2003 PAGE 3 CITIZENS' COMMENTS Peggy Glaub, 19320 Ireland Way, asked about the completion of a home that has been under construction for some time in their neighborhood. Mr. and Mrs. Glaub have been in contact with the City's Building Official and the City Administrator with their concerns. She stated that the home and yard conditions have improved. City Administrator Erickson stated that he would continue to monitor the contractor's progress. CONSENT AGENDA Council members added Item 11 to the. consent agenda. 03.100 Motion was made by Luick, seconded by Wulff to approve the consent .agenda items as follows: a. Claims for payment. b. Investment report. c. Receive minutes of the following advisory committee meetings: • Planning .Commission, September 4,.2003 • Lakeville Area Arts Center Board, September 4, 2003 • Economic Development Commission, August 26, 2003. • Telecommunications Commission, September 9, 2003 d. Special Assessment Agreement with Charles Loesch, 11094 - 181St Street W. e. Conveyance. of Permanent Easements to Dakota. County for Parcels B, C, I and K, County Road 60 (185th Street), Improvement Project 99-12. f. Change Order No. 2 with Valley Paving, Inc. for miscellaneous roadway repairs, Improvement Project. 03-04. g. Resolution No. 03-156 accepting donation from an anonymous donor to the Police Canine Program. h. Resolution No. 03-157 accepting donation from Kelleher Construction to the Police Canine Program. CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 15, 2003 PAGE 4 i. Resolution No. 03-158 accepting donation from Ladies Auxiliary to VFW Post 210 to the Police Canine Program. j. Gambling permit for Auxiliary to VFW Post 210 for bingo events on .October 18, 2003 and November 22, 2003. k. Resolution No. 03-159 accepting donation of $500 from Xcel Energy for the 2003 Safety Camp. I. Snowmobile trail performance based maintenance grant agreement and cross-country ski trail traditional grant agreement with the Minnesota Department of Natural Resources. m. Resolution No. 03-160 amending the 2003-2007 Capital Improvement Program and the 2003 Water Operating Fund Budget. n. Set a joint work session with ISO 194 School Board to be held on Monday, September 29, at 7:00 p.m. o. Set a budget work session to be held at Fire Station #2 on Monday, October 27, at 5:30 p.m. p. Amendment to Master Telecommunications Capacity Lease .Agreement for Network Services with Charter FiberLink, L.L.C. 11. Resolution No. 03-178 approving the final plat of Crossroads 3rd Addition, Roll call was taken on the motion. Ayes, Bellows, Johnson, Wulff, Rieb, Luick. ITEM 9 Council members opened the. public hearing:. The Deputy Clerk attested to the publication of the legal notice. Tom Wroblewski, Manager of Applebee's Neighborhood Grill and Bar, presented a -brief description of ;their operation. Their restaurant will .open this fall at 18404 Kenrick Avenue in the TimberCrest development and can seat up to 190 persons. Mr. Wroblewski stated that Applebee's conducts extensive liquor sales training for employees. CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 15, 2003 PAGE 5 Detective/Sergeant Dave Delmonico stated that he has conducted the required background checks of all officers with the corporation and all checks are clear. All the necessary documents including fees and insurance have been :filed. The Lakeville Police Department has no objection to the on-sale and Sunday liquor license being granted, contingent upon the proper Certificate of Occupancy being issued by the City of Lakeville. 03.101 Motion was made by Luick, seconded by Wulff, to.close the public hearing. Roll call was taken on the motion. Ayes, Johnson, Wulff, Rieb, Luick, Bellows. 03.102 Motion was made by Wulff, seconded by Rieb to grant an on-sale and Sunday liquor license to Apple American Limited Partnership of Minnesota d/b/a/ Applebee's Neighborhood Grill & Bar at 18404 Kenrick Avenue .contingent upon the proper Certificate of Occupancy- being issued by the City of Lakeville. Roll call was taken on the motion. Ayes, Wulff, Rieb, Luick, Bellows, Johnson. ITEM 10 Finance Director Dennis Feller provided information on the proposed 2004/2005 budget and tax levy. During their last session the legislature imposed. severe fiscal constraints on cities, especially high growth cities: These state aid cuts will require cities to pare back the level of local government services. A ~~Back to the Basics" approach is being adopted to assist with. difficult but .necessary decisions. Mr. Feller discussed the variety of funds from which the City operates. A copy of Dennis Feller's PowerPoint presentation is attached as part of these minutes. Minnesota statutes require that City Councils approve their budgets and tax levies on or before September 15t". City Councils are also required to certify to the County Treasurer/Auditor the date for their budget public hearing. Staff is recommending Monday, December 8, 2003 for a Truth in Taxation public hearing to present the budget. The Truth in Taxation law requires that the budgets and tax levy be adopted at a meeting following. the public hearing. Staff recommends the budgets and tax levy be adopted at the December 15, 2003 regular Council meeting. . , CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 15, 2003 PAGE 6 City Administrator Erickson discussed the increasing difficulty in meeting. the challenges as a growing community. He also stressed the importance of maintaining a fund balance to allow the City to operate prior to receipt of revenues that are dispersed to cities in the second half of each year. Mr. Erickson thanked department directors and staff for their team efforts in meeting the budget demands. He also acknowledged City Council members' efforts in recognizing the hard-working professionals on staff and avoiding a reduction of the current workforce. 03.103 Motion was made by Luick, seconded by Rieb, to approve the following: a. Preliminary budget resolutions: - Resolution No. 03-161, General Fund - Resolution No. 03-162, Cable N Fund - Resolution No. 03-163 Environmental Recycling Fund - Resolution No. 03-164, Employee Benefit Fund Resolution No. 03-165, GIS Fund - Resolution No. 03-166, Surface Water Management Utility Fund - Resolution No. 03-167, Oak Wilt Suppression Grant Fund • - Resolution No. 03-168, E-911 Fund Resolution No. 03-169, Economic Development Revolving Loan Fund - Resolution No. 03-170, Municipal Reserves Fund. - Resolution No. 03-171, Equipment Fund - Resolution No. 03-172,. Building Fund - Resolution No. 03-173, Liquor Fund - Resolution No. 03-174, Water Operating Fund - Resolution No. 03-175, Sanitary Sewer Operating Fund b. Resolution No. 03-176 approving the preliminary 2004 payable tax levy. c. Resolution Na 03-177 setting a Truth in Taxation public budget hearing date of December 8, 2003. Roll call was taken on the motion. Ayes, Rieb, Luick, Bellows, Johnson, Wulff. Mayor Johnson thanked Dennis Fellerfor his presentation and stated that it was the Council's desire to dedicate this year's budget to City Administrator Bob Erickson, in recognition of his dedication to sound. . fiscal management. CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 15, 2003 PAGE 7 • Council Member Luick read the dedication, recognizing the fiscal responsibilities and leadership that have been shown by Bob Erickson. His commitment has helped the City of Lakeville to become one of .Minnesota's premier communities. 03.104 Motion was made by Bellows, seconded by Wulff to approve the dedication of the budget to City Administrator Robert Erickson. Roll call was taken on the motion. Ayes, Luick, Bellows, Johnson, Wulff, Rieb. Mr. Erickson thanked. the City Council and stated that he is proud to have worked with City Councils over the years that are dedicated to effective budget initiatives and objectives. ITEM 12 Planning Director Daryl Morey presented information regarding the application of Richard LaMettry, d/b/a LaMettry's Body Shop, for a Conditional Use Permit to allow the construction of a major automobile repair facility at 210th Street and Cedar Avenue in the C-2 Highway Oriented Commercial District. The property was final platted in 1996 as part of the SuperAmerica 2nd Addition. Cedar Avenue, 210th Street and Glade Avenue border the property. Driveway accesses are proposed on 210th Street and Glade Avenue. The site plan identifies 90 parking stalls, .which meets Zoning Ordinance requirements. The .Planning Commission held a public hearing on the conditional use permit request and unanimously recommended approval subject to eight stipulations. There were no public comments received at the September 4, 2003 public hearing. Plans have been reviewed by the Engineering and Planning Departments and staff is recommending approval. Rick LaMettry was present to answer any questions from the. Council.. 03.105 Motion was made by Wulff, seconded by Rieb to receive the Planning Commission's Findings of Fact and Recommendation and approve a conditional use permit for LaMettry's Body Shop to allow the construction of a major automobile repair facility in the C-2 Highway Oriented Commercial District. Roll call was taken on the motion. Ayes, Johnson, Wulff, Rieb, Luick, Bellows. CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 15, 2003 PAGE 8 ITEM 13 Bruce Carlson, Vice President of Retail Development for United Properties, was in attendance to answer questions from City Council. Dave Olson, Community and Economic Development Director, stated that United Properties is requesting approval. of a Taco Bell/Long John Silver's fast food restaurant to be located at 17713 Junelle Path. City Council previously approved the acquisition of several properties. in the area as part of the redesign and improvement project by Dakota County.. Dakota County has reached tentative acquisition agreements with the owners of both the Taco Bell and SuperAmerica properties. The proposed conditional use permit would facilitate the relocation of the existing Taco Bell restaurant as part of the I-35/CSAH 50 Interchange .Interim Improvement project. The interim plan includes access onto Highway 50, but eventually this property, along with the remaining United Properties development, will be provided .access from interior roads and not directly onto CSAH 50. Dave Olson provided. material and color renderings of the proposed building for City Council to assess. . City Council will need to consider removing the proposed site from the moratorium area in conjunction with the conditional use .permit request.. City Attorney Roger Knutson has prepared. a draft Ordinance Amendment for Council consideration. Mr. Knutson stated that after the easements for this site are conveyed, there would be no reason to retain the site in the moratorium area. The Planning Commission held a public hearing on the conditional use. permit request and unanimously recommended approval. subject to the Findings of Fact adopted on .August 7, 2003. There were no public comments received at the public hearing. Additional stipulations have been added to the CUP to reflect. the City's negotiated purchase of the existing Taco Bell Restaurant from Border Foods. Plans have been reviewed by the Engineering and Planning Departments and staff is recommending City Council approve the Conditional Use Permit subject to the stipulations including the. revised report and recommendations of the Engineering Dept. Mayor Johnson asked if there would be more than one drive-through order window. Mr. Olson stated there would be one drive-through window as well as seating for 60 people. CITY OF LAKEVILLE COUNCIL MEETING , SEPTEMBER 15, 2003 PAGE 9 03..106 Motion .was made by Bellows, seconded by Rieb to approve the Conditional Use Permit subject to the Planning Commission's Findings of Fact and Recommendation for United Properties to allow the construction of a Taco Bell/Long John Silver's restaurant on property in the C-3 General Commercial District. Roll call was taken on the motion. Ayes, Bellows, Johnson, Wulff, Rieb, Luick. City Administrator Bob Erickson acknowledged Barbara Schneider from Border Foods, Inc. and thanked her and the owners of SuperAmerica for their cooperation in making the interim interchange improvements and the United Properties Development possible. ITEM 14 With the completion of Well #16, the City was required to submit a request to amend its water appropriation permit. The 2003 amendment request included increases in the daily and annual volume limitsthat had . been established in the 2002 permit. Mayor Johnson asked City Administrator Erickson if there were some regulations that were proposed. to the MnDNR previously or if there was any resolution to the application. that the City had previously submitted. Mr. Erickson responded that hopefully through some exchange of information with the representatives of the MnDNR who-are present this evening, we can learn of their intentions. Director of Operations and Maintenance Don Volk gave a brief historical background of the MnDNR water appropriations permits in the City of Lakeville. During the summer of 2001 the City experienced numerous well interference complaints from residents with private wells. Following those claims, the MnDNR imposed stricter limitations on the City of Lakeville's water appropriations and limited the amount of water that the City could draw to 17 million gallons per day. As a stipulation to approval of the 2003 water appropriations permit the MnDNR required several items: • An inventory of domestic wells within a 1.5-mile radius of Well #16 has been completed. • Three observation wells to monitor groundwater levels have been installed and the monitoring program has been put in place. CITY OF LAKEVILLE COUNCIL. MEETING SEPTEMBER 15,.2003 PAGE 10 • • Adoption of an ordinance that would establish water demand reduction measures, i.e., mandatory odd/even watering days for residents and restrictions on times of the day when watering can occur, is being considered by City Council. • Adoption of a policy to prevent and resolve future well interference complaints, should they occur, is also being considered. The proposed ordinance will establish the water demand reduction measures which would go into effect in 2004. Mr. Volk provided a synopsis of the ordinance and highlighted changes from the current ordinance. The proposed ordinance would have some exceptions to mandatory odd/even water restrictions such as limited hand watering of plants and watering of new sod and landscaping,. up to 30 days after installation. Mr. Volk introduced Jim Japps, Water Appropriations Program and Unit Supervisor, and Pat Lynch, Area .Hydrologist, who were present to answer questions regarding water reduction measures. Inresponse to Mayor Johnson's question regarding the current status of water usage, Mr. Volk replied that the recent rains have helped the city stay within the current limitations of the appropriations permit and usage is at approximately 8-12 million gallons a day. The City of Lakeville has implemented voluntary water conservation measures. City of Lakeville staff feels that residents have responded positively when asked to limit water use and take conservation measures and would like to continue water reduction efforts through education and voluntary means. A detai/ed discussion ensued with Jim Japps A transcript of that discussion is attached as ExhibitA, 03.107 Motion was made by Luick, seconded by Wulff, to table consideration of an ordinance amending Title 7, Chapter 5 of the Lakeville City Code. concerning emergency regulations and conservation regarding outdoor water use until the DNR has a chance to review our input and respond. Roll call was taken on the motion. Ayes, Johnson, Wulff, Rieb, Luick, Bellows. Mayor Johnson stated that the City looks forward to working. with the .DNR in getting .these issues resolved and adopting conservation methods that are fair and equitable to everyone. CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 15, 2003 PAGE 11 • ITEM 15 City Engineer Keith Nelson provided information from SEH .regarding preparation of an Irrigation Well Study. This proposal was prepared at the direction of the City Council at their July 23, 2003 Council work session. The study will determine the feasibility of installing individual wells to meet the .outdoor watering needs of various homeowner associations and institutions. To meet the demands of future growth it is estimated that water use demand will peak at over 45 million gallons per day (MGD). If it is found to be feasible to install irrigation wells at certain large complexes for lawn sprinkling purposes, the City could save $15 million dollars by avoiding the construction of a satellite water treatment facility and six to seven additional municipal wells. The City Engineer recommends the City authorize SEH to prepare the Irrigation Wells Study. Jim Norton of SEH presented the proposal and stated that future estimated maximum daily water demand needs to be considered in the design of the City's water system. The current water treatment facility can only be expanded to 30 million gallons a day, less than the future estimated maximum. Irrigation wells would reduce the amount of treated water for a homeowners associations. and large commercial properties. City Administrator Erickson stated that there are over two dozen homeowners associations, which collectively .represent the largest user of outdoor irrigation. According to recent projections by the Metropolitan Council, the City of Lakeville will have 91,000 residents by 2030, making it the fourth largest city in the state. Lakeville is different from other large cities since it is not situated near available river water. Council Member Wulff emphasized that this is not an attempt to get around the usage issues, but rather an attempt to eliminate the need to treat water that will be used for irrigation purposes. Plans for Lakeville High School #2 that is currently under construction include an on-site irrigation well 03.108 Motion. was made. by Rieb, seconded by Wulff to authorize SEH to prepare an Irrigation Well Study as outlined, at a cost not to exceed $55,000. Roll call was taken on the .motion. Ayes, Wulff, Rieb, Luick, Bellows, Johnson.. Jim Norton stated that the time line for completion would be four to six months. CITY OF LAKEVILLE .COUNCIL MEETING SEPTEMBER 15, 2003 PAGE 12 • UNFINISHED BUSINESS None NEW BUSINESS None .ANNOUNCEMENTS • Next regular Council meeting, October 6, 2003 • Joint City Council/School Board meeting on September 29, 2003 Mayor Johnson ,adjourned the meeting. at 10:05 PM. Respectfully submitted, w,/ Judi h Hawkins,. Deputy Clerk ~~ - Robert D. Joh n, Mayor • ExhibitA City Council Meeting September 15, 2003 Discussion with Department of Natural Resources Item #14 Counci/Member Wu/ff In our current appropriations permit, if there is a well interference claim made by someone with a private well, it is my understanding that we need to stop our outdoor irrigation. Is that correct? 1im Japps: That is correct. That is different from previous versions of permits. Usually we say that aN appropriation must stop immediately. In this situation we said all basically non-essential. usage must stop. We recognize that everything can't be just shutdown. That's something we may start for everyone.. Right now, that's unique to Lakeville. Wu/ff So if someone in Credit River has their well go dry we immediately have to stop all of our outdoor watering? Japps• That's the way it's written, but again. we knew that this would be a short- term permit and that you would be coming back with Well 16,1Nell 17, and as long as you could get some practices and procedures in place to address that, which is what we are working on now, then we can alleviate that situation. We want it to be preventive rather. than you. have to .shut off all. your lawn watering. Wu/ff So if we institute watering restrictions, you will remove that from our appropriations permit? Japps: I think the main concern right now, and the reason that we're here, is the well interferences. We need to address the well interferences.. We jusf received packets in the mail from the City of Lakeville. I received mine in the mail last Friday. We'll be reviewing that information and getting back to Don .and Keith and talking- more about those procedures because there are somethings in there we .might need to tweak. tNulff.• Tweak, meaning? Japps: Some of the procedures. We want to make sure it's a seamless process. I don't have all the information here to get into the details_but I'll be getting back to .Don and Keith. Wulff I just want to make sure I know what will-happen with our. citizens as far as watering their lawns. Are we still looking at imposing severe watering restrictions on Lakeville citizens if a private well goes dry? City of Lakeville Council Meeting: September 15, 2003 Item #i4 Discussion Japps I think what you need to look at is we have six statutory water use priorities in .the State of Minnesota .for times of limited water .supply. The first priority is .domestic water use and it goes down to the sixth priority, which is non-essential water use, which includes lawn watering. So we are here to protect those .domestic water .uses as the. highest priority in Minnesota. So that is our goal -.whatever we have to do to .achieve that is what we want to work with the City on. Wu/ff.• Are there any limitations placed on water usage by people with the private wells --like if somebody's neighbor's well goes dry do they have to stop watering. their lawns as well, or are they permitted unlimited water use? Japps• That gets into a technical discussion on how much impact they have on each other. We can get into that too if you would like. But if you don't exceed 10,000 gallons a day or 1,000,000 gallons per year you are not required to have an appropriations permit from the State. We're just looking at the high capacity wells in the state of Minnesota. What we see is high capacity wells impacting a domestic well. We have never really seen a domestic well impacting another domestic well where they were irr an out-of--water situation. Wulf`. So even if you had everyone in the-same neighborhood watering their fawns ... fiave you done studies to show that that doesn't affect them? Japps• Let me explain this. If there was interference among people wha were all in the same class -they were all domestic users - we wouldn't be involved atalL That would be a civil action between them. Wu/ff.• So you place no restrictions on them? Japps• We have no authority over domestic wells. Individual domestic wells that do not exceed 10,000 gallons per day or 1,000,000 gallons per year. As opposed to Lakeville, which. is using 2 billion gallons per year - we are involved in the management of that. Counci/ Member Luick: I understand at a recent meeting between City staff and the DNR, there was some discussion about a block or tiered invoicing scheme for water usage. I was wondering if you have any documentation to show that that is a viable method to institute within the City.. Japps• There are studies out there that do talk about seasonal rates or increasing block rates. It's an incentive-type conservation .program. Basically it increases the awareness to conserve water because the more water :you use the more you're going to be paying for that unit of water. But there are studies out there - I don't have any here tonight with me. Z- • City ofLakevi!le Council Meeting: September I5, 2003 Item #14 Discussion Luick.• I'd be interested in seeing some because I haven't seen that that's really a good system to put in place. Especially with what I heard earlier, when our voluntary reductions accounted for 3-3.5 million gallons of usage. I would. like to see some background information. Lapps: Look at the situation here in Lakeville. The real issue here is that you use about 3-4 MGD in winter compared to in 2001 you. used about 20.4 million gallons and that's when. we had a lot of people go out of water. And that's what we want to prevent. So we are. trying to reduce .that peak. The reason we have the limit of 17 MGD on the permit is because that's when we start seeing people .out of water.. And that could happen again. We both don't want to see that happen - it's a lot of work for both of us. Luick.• Are there any adjacent cities that have instituted the tiered or block approach? Japps: As a matter of fact there are a number of cities in the metro area and the state that have implemented that. _Again, that's intended to address the peak demand with theodd/even lawn watering ordinance that you're talking about. We • don't necessarily encourage thPat but it does. help reduce the peak .demand. because you don't have everyone pumping on the same day, when you get home after the long weekend. It helps to even out the demand. I think your water use will go up with that. People tend to think `Well, I have to water today because if I don't I .can`t water for another day. So people are more tuned-in to watering. I think you will probably see an increase in water use -it's not really a conservation measure but it's appropriate for. dealing with the well interference situation here. Wu/fF I'm confused. So you're saying that the odd/even would actually increase water usage .. . Japps: Quite possibly Wulff Are. you recommending that we don't have. an odd/even watering restriction? Japps: I think what you need to do is look at what you can do to .decrease peak demands.. And that's one method that's available there. You're talking about improving water use efFciencies which is water conservation- reducing the demand in water conservation, too.-but you may see an increase in overall water use because people may feel they need to water on this particular day. But what you're .talking about as far as the time of day ordinance - we do encourage that because there's less. evaporation. and .it's just better for your lawn. Counci! Member Rieb: So you don't encourage the even/odd? -3-- City ofLake~ille Council Meeting: September 15, 2003 Item #14 Discussion Japps• Not necessarily, no. In this situation I think. it's probably a good :way to address the peak demand in the City, which is something we want to see for the well interference situation... Rieb: So it addresses peak demand but it doesn't address overall water use? Am I understanding this? Japps.~ Yes. You understand. There are studies that see it both ways. but I think in general most people agree that it doesn't necessarily save water. Luick I'll. continue the confusion. I understood at that same meeting there was some agreement about allowing the City to drill Well #17 into the Prairie Duchene/Jordan unit, if the City agreed to drill Well #18 into the Franconia/Ironton/Galesville aquifer and if the City implemented an odd/even restriction and a policy to deal with well interference. Is that the right list of requirements? Japps; As long as you stay under that peak day, we don't really care how you get there. We're not mandating odd/even or anything else as long as-you can get and stay under there.. You could look at a voluntary thing like you have now then have a threshold, say, when. you get to 14 or 15 MGD it would implement something mandatory and eventually may have to go to amandatory water restriction-too..: That's your call.. The odd/even water restriction is easier to implement -people can remember it. A lot of cities use it year-round rather than just the summer .because people know -then. Luick.• I think one of the benefits of having this kind of discussion, it helps to get everyone to use the same vocabulary and understand the same requirements. Is there anything else from the DNR's perspective that we need to :address before we can move forward with either utilizing or starting installation of these additional wells? Lapps: The one thing that applies to all public water suppliers that serve over 1,000 population is that they must .implement demand reduction measures before requesting approvals for new wells or increases in the water volumes and those two things that are specified in .the statute are education and conservation rate structure - so the rate structure is something I would start looking at. Luick.• So you are telling. us that is something. that we'll need to have in place.. before we can move forward with our appropriations and additional wells? Lapps: Rate structures are something that are developed over time, and we recognize that. So as long as you have a plan to get to the end goal, that would be acceptable to us. -4- • n City ofLake~i/le Council Meeting: September I5, 2003 • Item #14 Discussion Luick.• So as long as we can show the Candyland shoots and ladders approach to get to that goal you're comfortable with moving ahead with our appropriations permit? Lapps: -Right now we're dealing with Well #16; then we'll have to deal with #17. By the time we deaf with #17 we'll want some discussion on rates. Luick.• So I understood that. there was some connectivity between 16, 17 and 18 long term in your appropriations discussions - is that incorrect? Japes: I think long-term that's true -we're looking at a plan to getto where the City wants to be with their wells and we need to address these demand reduction measures too. Luick So just to make sure I'm not hearing two hings, you're telling me that there's a roadmap spelled out with some. of the actions we're looking at tonight to move forward with 16 Japps• Yes • Luick.• And then there are some se arate feces to moveforward with 17 and 18? P p But they are separate? Japps• Separate but related.. We're following a process with Well #16 -we've been in discussion for some time now. We know (Well) 17 is coming down .the line - at our .last meeting we mentioned the demand reduction measures. Luick.• I`m just trying to make sure that we as a Council and City staff understand what the requirements are so we can move this process ahead rather than look at a substantial investment that you've-got: plugged in the ground and can't'turn on. Nor do I want to get shorted in the future on waiting to put in additional wells as the need develops and still not knowing the process. Japps• One of the reasons that the law on demand. reduction measures and. volume increase went into effect is because reducing demand is always a low cost alternative compared to the capital costs for new wells and treatment facilities. We want people to look at that for one in reducing cost, but also conservation of the resource. Wu/ff- I would think it is pretty clear that we've done that already in having a peak of 20 MGD a couple of years ago and now we have 4,000 more .people and the peak • was 17 MGD and we even got it down from there with additional reminders, education and voluntary measures. I'm not sure what the extent of our _5 City of Lake~i/le Council Meeting: September I5, 2003 Item #14 Discussion • requirements is beyond that for getting this well approved. Are we required to do the punitive. measures with the ordinances or can we continue with our voluntary standards as long as that keeps the demand low? Lapps; we would want to see something on the books just so we make sure the - demand is reduced and kept under the level where we see interferences.. Again, you are looking for another volume increase. We have been requiring this of every public water supplier that. they must implement demand reduction measures when they come to us for a permit increase or new well .How you get there -you could have it voluntary to a certain level, and then put it in .place. -but we would want to see that structure defined.. Wulff The goal here being'to eliminate-the out of water situation for. the private wells. Is there anything going on from that side of the equation to make sure they don't have any more of those in the future? Making sure thaf people maintain their wells properly, dig them deep enough or thatthere aren't too many of them for their aquifer? Japps• I think you are in a unique situation here with well #16 - I believe your consultant said there are 142 homes in the area that did not receive utility bills. So you have a iot of potential for well interference out there. (The wells) are all ages - • they went through a process to try to identify what the conditions of the wells are - how deep they are -you can't get all that information. They put some effort into it but it's a difficult task. We're going to have some unknowns out there. Even with the pumping this year you could have seen interferences occur.. We were probably within 15 feet of seeing it. Wu/ff Is there any work being done. by the DNR to limit how many more of those private wells come in for potential interference? Even though they are in Scott County, this last year added the potential of 1,200 new homes with private wells. Are. you working on anything to keep. their demand down so that their side lessens the potential for conflict? Japps• I know that Bob (Erickson) and John Stein, my boss, and the director met and .there .were some promises made with helping to address that issue, but T can't say for sure. It's more of an educational effort with Scott County. Bob Erickson; Please clarify one issue - of the 140 wells that were identified by Liesch (Associates), are they. all in our city? (yes) The good .news is that the well interference claims. in 2001 were predominantly outsidethe city limits. On well #16 which is drilled and ready to turn on subject to getting these issues addressed - we have pumped not 20 MGD but 17 MGD. The information I have seen recently shared by the. DNR with the person who previously .had well interference problems, Mr. Thomas, was that the aquifer is at a lower level today than it was in 2001. So _6 City. of Lakevi/le Council Meeting: September I5, 2003 • Item. #14 Discussion despite the fact that we are pumping less than the 20 MGD, the aquifer level is lower today than it was in 2001, due to the overall drought conditions and to the ever-increasing population in Farmington, .Lakeville, Rosemount, and Apple Valley. On the well interference scenario,. your questions are appropriate. There are several .thousand new homes that will be built in adjoining townships, one in particular that. we challenged. We did not have the support of the DNR because the regulations do not favor large public water suppliers like ourselves that draw large volumes out. of the ground -they favor all of the deep wells being drilled for the most part from the same aquifer in adjoining townships that we can adversely impact by well interference. through the draw-down that we make. The position that the City had was, why doesn't someone control that and in controlling that take away the impacts that we're experiencing, that we're having to pay for, that we're having to deal with, .that the DNR is having to deal with. And we lost. that and didn't succeed. The DNR's rules favor strong, intermittent development that is not controlled and does not. use a domestic water supply like we do. So they have great controls for urban water systems like ours and they are exerting their rights and privileges. with regard to our system, but the DNR is not seeking legislation to change`the rules to . change the course of history. Maybe the most fortunate thing is on our rules for time of day, since we have water pumped from Burnsville to Lakeville homes and vice-versa, we are proposing time of day rules that mirror each other so we don't have that problem. It's like our snowmobile or snow removal signs -.it's the same rules- it will work well We're fortunate that we don't have all those new homes in Credit River across the street from Lakeville residents, because our residents wouldn't be very happy about it. In reality they know that but they don't like it when they go to the Parade of Homes and see all eight homes in a neighborhood with sprinklers blasting away around the clock. And that's the issue we can't remedy.. The DNR is not pursuing a solution to that. We just have to do what we are required to do to continue to .provide the necessary water supply for the 1,700 new residents that come here every year and place that demand on us - we have to have a system in place so that we don't adversely affect all those new homes out there that don't have to drill a well to any level any depth to prevent the interference. They can do whatever they. want - no one is making them do anything -.the DNR is not making them do anything, the township .isn`t doing anything about it and Scott County isn't doing anything about it. There's the inequity but there's no one dealing with it. And those legislators who tried to do something about it have learned that that is a very powerful agency and we're .not going to change history as we learned in the last legislative session when we lost our efforts to change that process with. regard to • homes that have individual wells, or share a well between several homes. -7- City ofLake~i//e Council Meeting: September IS, 2003 Item #14 Discussion MayorJohnson: I'm curious. Obviously it's the DNR's philosophy and .its. purpose. is to conserve water, as theirtitle indicates. Why would you not be actively involved in trying to control several thousand .wells going in as to depth of wells, since that would be a controlling part of our natural environment? If there isn't any activity going. on (by the DNR) what do you see as a reason why you are not addressing this natural resource and why open abuse possibilities. Japps: First of all, I have to say that I do not agree with Bob in a couple areas - that we promote sprawl and all that. What basically you're saying is that we should be protecting. Lakeville's water use over other .domestic uses when the water use that is causing the problem is for lawn watering. You've got plenty of water for drinking water needs. These. people were out of water -they didn't have any drinking water,.theycouldn't shower. That's the issue. What's a higher priority, lawn watering. or someone's drinking water and sanitation water? If a well is put in after the City's well is put in and permitted, the domestic well owner is responsible for putting that well at a depth where they are not impacted. That becomes difficult when you don`t control any of your lawn watering and it peaks at 21 MGD. How could a homeowner. predict that? bl/u/ff I'm not suggesting that we shouldn't control our water use. ~ I think the measures that we have been taking are great and. if we have to go with a surcharge or a mandatory thing to get this well approved that's fine. I'm just curious as to why although. we are .doing everything the same as our sister cities,. the townships don`t need to do the same hing and encourage their residents to conserve water rather than just pumping it all day onto their lawns? They should. be on the same page as the rest of the .metro area. Japps• You can look at local ordinances there. The state doesn't have the authority there.. That's the only question. With downsizing the government, I just can't see us regulating single homeowners' water. use. I don't think it's realistic. Luick But I would assume you are using sound science to guide the direction of wells. Based on some of the comments that .Wendy was making I'm getting the impression that you are saying the deeper Jordan wells are interfering with the upper wells that the: private. residences may have. That strikes the question why would you look at us incurring significant additional-cost to go down to the Franconia without some sound science. telling me that we wiH not be draining the wells in Minneapolis or. Rosemount with a deeper well? I don't understand .how the science is being applied both ways.- If the aquifer levels are lower because of the drought we have had the last couple of years, but yet the upper aquifers are allowed to be tapped, taking water from approved systems, I see a conflict in the science. Do the well interference claims get evaluated simply on the basis that. S private residences have run out of water or are they evaluated using some. modeling _8_ City ofLake~ilie Council Meeting: September 15, 2003 Item #14 Discussion • and looking at the difference between the aquifers and some of the science that goes. into putting wells in. Japes• With the monitoring wells now you can chart where the water levels are in the aquifers; we know the depth of the well (chart on overhead) This is the Thomas well that Bob mentioned. On the left is where it was in 2001. On the right. is the new well and with the pumping just this year he is_within 15 feet of his new well going out. And that is an issue that needs to be addressed. Luick.• Where is the science that connects the drop in his welt to operating our wells? Erickson: We were unsuccessful in getting an administrative law judge to acknowledge the fact that we have a neighboring community pumping large volumes of water -and they wouldn't take that into consideration. Mr. Thomas had a substandard well Mr. Thomas' well in our opinion was affected by our pumping and was certainly affected by our neighboring. community`s pumping. The science is: we are a large customer. Our neighboring community is a large customer, growing and placing a demand on the same aquifer. We're sharing the aquifer at an equal distance between Mr. Thomas and our well field and Mr. Thomas and our neighboring community's well field. I think that would be the science. Luick: So it's not judged on modeling of aquifers it's judged on guilt by being. in the neighborhood and being on a .large production well? Japes: That's not the .case. You can read the administrative law judge's report on that. I don't think it's appropriate to get into that until the legal process is completed. Luick.• It seems likeit is appropriate because of our well appropriations permit and that being the basis for why we are being held up. Lapps: L don'tthink you are being held up. (showing graph on screen) This shows a direct correlation between the City's: water use and the. water level from the observation well Luick So then how do you superimpose the use of the upper aquifers onto our well performance? Lapps: You use the monitoring wells. If some of the wells were interfered with we actually put transducers down there to record the water levels. Wu/ff One would presume that during the same time periods when. our residents are using a lot of water the people in the upper aquifer. are also using a lot of water. -9- City of Lake~i/le Council Meeting: September I5, 2003 Item #14 Discussion • What modeling has been done to show what part of the effect is from. the watering in .the upper aquifer on somebody who is 200 yards away. vs. the high capacity well. that is a mile and a half away. Japps• The difference is comparing 2 billion gallons a year to whatever a home might use, which is miniscule. It's a scale difference. It's a regional policing of cones of depressions from all the wells that are pumping out there. .Erickson: They're not going to aggregate the wells in The Territory development together and count them as a single new drawdown. They are dealt with on an individual basis. They may have up to 3,500 wells in Elko, New Market and Credit River but they wilt not be aggregated together to count against the. issue that we are talking. about. It's certainly logical but it's not going to be considered as part of the .issue. MayorJohnson: It would certainly make sense to aggregate. ,It's an .interesting subject.- one that the Council and City staff wrestled with. There certainly seem to be in .inequities in it. Erickson: Mr. Lynch .made some appropriate comments at a recent Southwest Groundwater Task Force meeting. We have made great strides due to the voluntary • process. We know our community better than anyone and if (the DNR) would have imposed mandates, we wouldn't be where we are right now because our residents do not take well to that. They take very well. to sending out 70 volunteer firefighters. and the entire utility department, my assistant and others who went door to door. That's what the Lakeville residents react well to and that's whatthe DNR wants to see. I'm encouraged tonight hearing Mr. Japps say. we can look at the situation and not impose those mandates until the situation really warrants tt. I'm encouraged because that`s a better situation for us with our community, as proven by the work we have done this year. We can even do' better next year as people get. more in tune with. the odd/even -this. was our first year. We've dropped our peaks dramatically and now they fiave that information. So if Mr. Japps is saying we don't have to impose mandatory odd/even until we get to a certain level- that's much different than the ordinance reads now, that reads automatically go to mandatory odd/even -need it or not. Council discussed their concerns with .that in a recent work session.. Maybe there is a little bit of flexibility there that can be pursued. Japps• T do like the time of day in the ordinance because -that really does prove water use efficiencies but I think Council could look at more things to improve on that. .1©- City ofLake~//e Council Meeting; September 15, 2003 Item #14 Discussion Wulff I was mostly concerned withthe fine or surcharge aspect in making it punitive rather than voluntary, since our residents have been so accepting of the voluntary restrictions. So if we can get the flexibility from you to make it voluntary up to a certain level and then when it gets to a real drought situation then go to a mandatory one, that would be a big improvement for us. Japps: And we can see how that works. There was. a study last year in Colorado, comparing voluntary and. mandatory conservation, but it didn't work out in that particular situation. Rieb: But it does work in our city. Japps: I'm not saying. it doesn't. Erickson: I'm encouraged. I think if we can spend a little more time with the- DNR before you approve the ordinance maybe we could make some adjustments. I think the question you asked, Council Member Luick, is an important one for Mr. Japes and Mr. Lynch and others in the department, and that is how we need to get to the finish line. And the finish line is to get #16 turned on eventually and then get 17 • drilled. And they would cooperate in getting #16 in the Jordan aquifer. It would be nice if (the DNR) could be slightly more flexible where we would impose that requirement and do it based on the 16/17 scenario so we don't do 16 one way then with #17 it changes. And that's what you want to avoid. Maybe we can just spend a little more time with the DNR before you consider this final ordinance. It's what we were asked to do by the DNR, not what we wanted to do certainly. We thought we were required to do this by the DNR to get 16 turned on and 17 drilled, but if we could get a little flexibility like our neighbors have, it might be a nice,reward for our citizens who have really taken this odd/even seriously in the last 60 days. It's a good sign that people are listening and responding. Japps: We still do have quite a peaking issue. Erickson. You probably know there is a sod shortage problem with sod being brought in from outstate for the 1,000 new lawns. That's a challenge .during a peak time for people to keep those lawns going for two to four weeks. Mayor.• Do we still not have some agreement on the proposalthat is on the desk of the-DNR that we have not heard back on? Japps: We met on July 23rd and requested some information that was provided to us last week. So we .will be taking a look at that and reviewing it. -11- City of Lake~i/le Council Meeting: September IS, 2003 Item #14 Discussion i Mayor.• I am a little reluctant to enter into a new agreement until I see what's. in writing in the agreement that is already on their desk. We could get into some contrary terms if we have one agreement that hasn't been resolved and then attempt to enter into another agreement that might be proposed. I would suggest to the Council that we table this action until we know what. we are dealing with before we move to the next step. Wulff I would agree.. We need to resolve what is the point at which the mandatory. restrictions go into play and also your review of our well interference plans before we can finish this. Mayor.• I think we have some loose ends. Before we put another package:-on the table we should try to tie up the other package. Erickson: And Mr. ]apps has every right to spend quality time looking at what he received on Friday. Japps• I know you have all focused on conservation and it's. part of the permit process but it's not necessarily anything. you haveto hold back on for the permit. Pursuing water conservation for its own merits is worthwhile also There were a couple other things I would like to mention. Sometimes you see water running • down. the road from sprinklers that are offset. There are some water wasting ordinances and I think that is an easy thing to monitor and enforce. Everyone can support something like that. Also, on some medians there's a lot of overdraft :and water that ends up on the pavement. Also, look. at the turf. areas of new development. areas to see if there are some alternatives in the planning .process. Mulch or drought resistant plantings. Erickson: One of the reverse things that we have experienced is the number of swimming pool permits this summer. It decreases the sprinkling but increases the water. demand. Wulff Only the first year! lapps• What some communities have done is limit the developable space to 35% of the watered areas. There are a lot of things you can do, Mayor.- I want to thank Jim and Pat for being here and sharing all the information this .evening. • -12- • • • Proposed Budget and Tax Levy September 15, .2003 The Governor and 2003 Legislature, in their endeavors to address the State of Minnesota's $4 billion budget crisis,. imposed severe fiscal constraints on cities- especially on high growth cities- which requires the City Council and department directors to pare back the level of our services. 1 City of Lakeville State Aid Losses 2003 2004 ^ Local Gov't Aid (LGA) $ 499,158 $ 499,158. ^ Market Value H.Credit 656 230 656 230 Total $1,155,388 $1,155,388 State cuts, including Local Government Aid (LGA) and Market Value Homestead Credit (HVHC), which historically provided for property tax relief,' were reduced dramatically for 2003 and 2004.. Lakeville lost of its $499,158 in LGA and $656,230 of its Market Value Homestead Credit in both years. • • • • • 2003 General Fund Summary 2003 2003 ADOPTED AMENDED BUDGET ADJUST BUDGET REVENUES General property taxes 9,829,719 (656,213) 9,173,506 Licenses and permits 2,336.,201 - 2,336,201 Intergovernmental revenue 1,065,866 (499,158) 566,708 Charges for services 1,478,922 4,350 1,483,272 Miscellaneouslfransfers 1,005,255 4,000 1,009,255 Total r®venues 15,715,963 (1,147,021) 14,568,942 fXPENDIT ORES General Government 3,744,691 (33,738) 3,710,953 Public Safety 6,131,980 (19,616) 6,112,344 Public Works 3,41.5,059 (124,440) 3,290,619 Parks and Recreation 2,237,419 {22,427) 2,214,992 Other 402,528 (304,678) 97,850 Total expenditures 15,931,657 (504,899) 15,426,758 Net increase/(decrease) (215,694) (642,122) (857,816) Transfer to Employee Benefd Fund (50,000) (50,000) Fund Balance, January 1 7,616,278 - 7,616,278 Fund Balance, December 31 7,35Q,584 (642,122) 6,708,462 46.1 % 43.5% In reaction to the 2003 revenue losses, the General Fund budget expenditures -were reduced by $504,899 The budget adjustments, combined with the use of 2002 fund balance carried forward, enabled the City to maintain a strong fiscal position for 2003. 3 City of .Lakeville i Tax Levy Limits 2004 New Old Law Law Difference Levy Limit Base 9,754,611 9,754,611 - 60°~ of state aid losses 693,233 693,233 implict Price Index 335,756 (335,756) Household growth 485,629 > (485,629} Comm./Induct. Growth - 24,539 ` (24,539} Total $ 10,447,844 $ 40,600,535 $ (152,691) Further fiscal strain was imposed on municipalities when the Legislature authorized cities to only Levy back 60% of the state aid loss (Lakeville can levy back $693,233); however, in the process, the ability to levy for new residential, commercial-industrial growth and inflation factors was eliminated. This is especially punitive for high growth cities such as Lakeville. As a result, Lakevlle's tax: levy authority for operations was greatly reduced - perhapspermanently. • • • Proposed Budget and Tax Levy "Back to the Basics" i • • It's a significant challenge to maintain. current service levels -for our growing population and our business community while facing .dramatic reductions in state aids and levy limit authority The 2004 budget, therefore, required policy .changes relating to revenue enhancements and expenditure. reductions . The proposed budget establishes a funding level for providing "back to the basics" services in what has become a new paradigm for the level of local.. government services: Lakeville has always prided itself on a lean budget, .therefore reductions are extremely difficult. The following presentation provides an overview of the budget, changes in service levels due to state. aid reductions and levy limits and an explanation of how the proposed tax levy affects the typical homeowner. 5 • • The City has a number of funds, the largest and most significant of which is the. General Fund. The General Fund accounts for .expenditures relating to general government administration, public safety, public works, parks... and recreation. General fund 2004 estimated revenues are $16,133,534. The largest single revenue category is taxes in the amount of $9,900,557, which represents 61.3% of the total. Other revenue sources include intergovernmental revenues, licenses and permits, charges for services, other revenues and State-aid. • • • General Fund Significant Revenue Adjustments ^ Interfund Transfers Liquor Fund $ 711,468 • Cable TV $ 156,391 The proposed 2004 budget includes significant fiscal policy changes as it relates to appropriation of Liquor and Cable TV fund budgets The Liquor Fund profits have historically -been appropriated for construction and improvements of public facilities. For the first time since 1985, Liquor Fund profits will be transferred to the General Fund to finance operations. Long-term appropriation of Liquor Fund profits to operations rather than capital project improvements will significantly impact the City's ability to construct. -and maintain its facilities (e.g. new Public Works Maintenance facility) without future tax increases. In addition, Lakeville will, for the first time in its history, appropriate Cable TV franchise fees to .finance the .Public Communication program, which had previously. been financed from the General Fund. Lakeville is the only Dakota County city, which has accounted for Gable TV franchise fees in a Special Revenue Fund rather than the General Fund. 7 Proposed General Fund 2004 Expenditures Total Expenditures - $16,518,030 Community Development & Inspections Public Works General (9.5%) (20.3%) Government. $1,577,392 $3,353,774 (14.2%) $2,337,93 Parks Recreation (13.4%) $2,219,361.. Public S (40.1%) (2.5%} $6,619364 $410,202 Of the major city functions, public safety has the largest proposed expenditures in the amount of $6,619,364 or approximately 40.1 % of the total expenditures. In addition, General Government Services are. estimated to be $2,337,937, Community Development and Inspections $1,577,392, Public -Works $3,353,774 and Parks and Recreation and Arts Center $2,219,364 and Other $410,202. • • • • • General Fund Programs eliminated ^ New employee positions ^ Contract snow plowing ^ Contractual tree trimming ^ Water. Treatment Facility Community Room -evening use ^ D.A.R.E. ^ Beach lifeguards ^ Warming house Attendants ^ 4~' of July Fireworks ^ Biennial community survey ^ Out-of--state travel The proposed budget includes elimination of programs that have been considered by many as a part of the quality of life of this community. Services eliminated include: New employee positions. Contract snow plowing Contractual tree trimming water Treatment Facility Community Room -evening use D.A.R.E. Beach lifeguards Warming house Attendants 4~' of July Fireworks Biennial community survey Out-of--state travel 9 .City of Lakeville Expenditures Per Capita $zoo $180 ~ State-wide City Average $160 ^ City of Lakeville $140 - $120 '~ $100 ', $80 $60 $40 $20 $- ~~~{ ~~11c ~~1~c 4 ~~~ According to the State Auditor's office, Lakeville's per capita expenditures are significantly less than those. of other Minnesota cities. This is due is large part to the low number of employees per capita and a conscientious staff who has under spent their General Fund budget in nine out. of the last ten years. • • 10 • • City of Lakeville Proposed General Fund Balance 2004 Estimated ending fund balance $7,252,312 Operating expenditures $16,518,030 Percent of expenditures 43.9% It is,important that the City maintain adequate fund balances in order to insure adequate reserves for cash flows and minimize potential adverse impacts due to .future budget .cuts. Bond rating. firms, such as Moody's, take a city's fund balance into account when giving a city a rating. Depleting reserves could endanger the City's bond rating, making future borrowing more expensive for taxpayers. I The designated fund balance represents the amount required to operate during the first six months of the year. The City's most significant revenues sources- taxes and intergovernmental revenues-do not provide appreciable revenue until the second half of the year. The 2004 fund balance is projected to be $7,366,121 which is 44.6% of the operating .budget.. The 2004 ending fund balance is $434,496 less than the estimated 2003 balance. If the state continues to withhold the state-aids and impose arbitrary levy limits in 2005, Lakeville's fund balance. would be reduced an additional $1.5 million thereby resulting in a fund balance that is approximately 33% of the operating budget As such, budget constraints will pose a greater challenge in future years. 11 Special Revenue. Funds 2004 Proposed Expenditures and Transfers Cable TV $ 405,709 Environmental Recycling 47,525 Employee Benefit 89,799 Geographic Information Services (GIS) 152,575 Surface Water Management: 512,191 Oak Wilt Suppression Grant 10,500 Enhanced 911 33,797 Economic Development Revolving Loan... $1,252,096 Special Revenue Funds are used to account for the proceeds from specific revenue sources that are legally restricted to expenditures for specific purposes. Establishment of such funds also enables the City to more effectively manage its resources and minimize tax levies. Revenues from Cable TV .franchise fees finance the Cable TV fund operations, which of course provides services for Channel 16 and the live cable casting of City Council and planning .Commission meetings. The Environmental Recycling Fund. accounts for grants. that the City receives from Dakota County for the citywide recycling efforts. The Employee Benefit Fund accounts for severance pay for city employees. The City's geographic information computer system accounts for all activities related to maintaining the specific parcels data base within the City of Lakeville. The primary revenue sources are property taxes and G1S fees. that are collected as new .lots/parcels of record are created. The Surface Water Management Fund was created several years ago to help manage the City's surface water resources. The Oak Wilt Suppression Grant Fund .was created to account for grants received from the ...Minnesota Department of Natural Resources. The grant proceeds will reimburse Lakeville residents for 50% of their disbursements for oak wilt suppression. The E-911 Fund accounts for. the revenues from the telephone tariffs that are specially designated to operate the police, fire and ambulance dispatch emergency 911 system. The Economic Development Revolving Loan Fund was created to. account for loans to businesses that are either expanding or building within the City of Lakeville. • • • 12 • • • Internal Service Fund Municipal Reserves Fund 2004 Proposed Expenses Liability, Property and :Casualty premiums $ 247,858 Claims and deductibles 50,000 Administrative. 37,212 Total $ 335,070 The Municipal Reserves (Internal Service) Fund accounts for the City's general liability, excess liability, property, and casualty insurance costs. The 'City's primary insurance carrier is the League of Minnesota Cities Insurance Trust (LMCIT). Revenues are derived primarily from insurance rebates and transfers from the General, Liquor, ;Water and Sanitary Sewer Funds. The fund will have an estimated $478,530 fund balance in 2004 primarily as a result of self insuring the excess. liability coverage since 1993. The fund balance is encumbered for unanticipated expenditures. due. to natural disasters. 13 Capital Projects /Equipment Fund /Building Fund Capital Project Funds account for.. financial resources appropriated to'the acquisition of capital facilities. and equipment,. except those financed by Enterprise Funds • • 14 • • Capital Projects Equipment .Fund 2004 Police $ 294,694 Fire 469,572 Streets 252,905 Parks. 144,296 Other 28,263 Total $ 1,189,730 The Equipment Fund accounts for the purchase of police, fire, street and park maintenance equipment. The City Council, at its March meeting, approved the issuance of $2,280,000 Certificates of Indebtedness to finance the 2004 and 2005 equipment acquisitions. Property taxes, levied to pay the principal and interest on the Certificates, are exempt from levy limits. 15 Capital Projects Building Fund 2004 Expenditures City Hall $ 34,318 Fire. Station #2 75,164 Public Works Facility 38,050 Senior Center 13,763 Total $ 161,295 The Building Fund accounts for construction or improvement activity related. to public buildings. Due to levy limit impositions, future transfers from. the Liquor Fund to f nance public building improvements are endangered. • 16 • • • Enterprise Funds / Liquor Fund. / Water Operating Fund / Sanitary Sewer Operating Fund Enterprise Funds account for liquor, water and sanitary sewer operations for the City; they are self-supporting from retail sales and user charges. Operations are managed. in much the same way as private enterprises.. 17 Liquor Sales 1.995-2U04 $11,000,000. $9,000,000 $7,000,000 $5,000,000 $3,000,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 According to the Minnesota State Auditor, Lakeville ranks first in municipal liquor sales. Sales are projected to increase to $10.3 million in the: coming year. As a result, net income before transfers is estimated to attain $743,000 in 2004. The Legislature has for a number of years considered the "wine in grocery'.' legislation that would have authorized grocery stores to sell wine. Although the bill has not passed, the proposed legislation will likely be reconsidered in future legislative sessions. If this legislation were to pass, the Liquor Fund could experience a $200,000-$300,000 loss of net income. • • 18 • • • Water Operating Fund 2004 Total Revenues $ 1,930,092 Expenses (2,690,812) Net operating income/(loss) (760,720} Interfund transfers (84,979) Capital outlay acquisitions 4 122 Net increase/(decrease) $(849,821} The water fund accounts for the- operation of the water system including supply, treatment, storage and distribution for more than 14,000 customers. There are no proposed rate increases for 2004; however, the DNR has indicated that future water appropriation permits may require the City to institute a tiered-rate structure during peak water consumption periods. Lakeville has the lowest water rates of any City in Dakota County. The affordable water rates are due to the financial management foresight of the City Council whereby water infrastructure improvements such as wells, towers and the Water Treatment Facility are financed with water connection charges rather than water usage rates. 19 Sanitary Sewer Operating Fund 2004 Total Revenues $ 3,282,111 MCES sewage treatment (2,251,039) Expenses 566 534 Net operating income/(loss) 464,538 Interfund transfers (83,171) Capital outlay acquisitions 4 122 Net. increase/(decrease) $ 377,245 The sanitary sewer fund accounts for the treatment and disposal of system effluent.. The largest single expenditure is for Metropolitan Council Environmental Services Division sewage treatment costs in the amount of $2,251,039 which represents 65% of the total budget. MCES is increasing. sanitary sewer processing costs by approximately 5.0% in 2004. The proposed budget takes into consideration a proposed increase in sanitary sewer rates to offset the MCES rate increases. The sanitary sewer rate changes will result in approximately $1.50 per quarter {$ 6.00 per year) increase for the average family in 2004. • 20 • • • Water & Sanitary Sewer Fees Quarterly Water Sewer 'Total ~ Burnsville $42.75 $57.10 $99.85 ^ Inver Grove Heights $42.35 $53.05 $95.40 ^ Mendota Heights $47.52 $45.15 $92.67 ^ -Apple Valley $35.74 $50.74 $86.48 ^ Hastings $35.00 $48.50 $83.50 ^ Farmington $30.80 $48.50 $79.30 ^ South St. Paul $22.60. $56.00 $78.60 ^ West St. Paul $31.60 $46.23 $77.83 ^ Rosemount $29.30 $48.00 $77.30 /Lakevi1le-proposed $19.55 $50.90 $70.45 ~, /Lakevi1le-current $19.55 $49.40 $68.95 ~', • Eagan $28.00 $37.30 $65.30 In spite of the proposed modest increase insanitary sewer rates, Lakeville's utility fees are amongst the lowest in the County. 21 2004 Proposed Tax Levy Proposed 2003 2004 Change General Fund/GIS Ftwd $ .9,963,013 $ 10,499,398 $ 536,385. Cert. of indebtedness 854,591 1,071,016 216,425 Voter-approved debt 474,179 412,215 (61,964) Improvement bonds 632,406 832,971. 200,565 Total tax levy $ 11,924,189 $ 12,838,429. $ 914,240 Lakeville's proposed tax levy for 2004 is $12,838,429. The tax tax levy will increase .$536,385 for operations Increased $216,425 for equipment purchases Reduced by $61,964 due to the last payment on the Fire Station #3 bonds And increased $200,565 for interchange improvements. To help ensure .that crucial interchange improvement projects proceed in a timely manner, the "Interchange Financing Report dated November 2002" was prepared to identify the estimated costs and proposed financing for the coming years. The proposed tax increase for improvements. are appropriated to the General Obligation Street Reconstruction Bonds Series 2003 A ($14.88 million) which were issued to finance the 2002 - 2004 Improvements.. • 22 • • • O o Tax Capacity Rate calculation 0 0 0 0 ~ 2003 o Tax Capacity Rate calculation Actual o _ Tax levy $ 11,655,725 o Fiscal disparities (1,309,387) o Net tax levy $ 10,346,338 o Net Tax Capacity $ 31,404,713 o Tax Capacity Rate 0.32945 a 0 The tax -levy results in an approximate 7.8% decrease in the tax. capacity rate primarily due to a 16.8'% increase in the net tax capacity as a result of market value appreciation, limited market value increase from 10% to 12% and tax base increase due to new construction of residential, commercial and industrial property. 23 2044 Market Value Tax Rate 2004 Estimate Market Value $ 3_,703,861,000 Tax levy for 1994 Park Bonds $ 269,685 Tax rate based on market value 0.0000728 Tax levies for bond issues- approved by referendum after August 1, 1994, are based on market value rather than. tax capacity value. T'he only City of Lakeville levy based on market value is for repayment of the 1994 Park Bonds, • 24 • • • Limited Market Value • Taxes payable 2003 -limited to 10% • Taxes payable 2004.- limited to 12% i • Taxes payable .2005 -limited to 15% There are a number of factors that determine the taxes on your property: The process begins with the County Assessor establishing a market value for .your property. Property owners will receive a notice in March informing them of the assessors estimated market value which is used to determine the taxes payable in the subsequent year. The housing market has been very strong. with the average home values increasing at a rate exceeding 10% per year in each of the last several years. Homesteaded residential properties have some protection from significant tax increases due to the "limited market value" law.The purpose. of the limited market value is to phase. in significant market value increases (and taxes) over several years. The "limited market value" law states that taxable market value increases cannot exceed 10% per year for taxes payable 2003. However, the Limited. for takes payable in 2005. The limited market value does not apply to rental housing (with more than four units). or commerciaUindustrial properties or an increase due to improvements. 25 Market Value Homestead Credit 2043 2004 Increase Limited Market Value $ 200,000 $ 224,000 $ 24,000 Taxes Taxes levied by jurisdictions 2,288 . 2,288 - Less:Market Value Homestead Credit (192) (171) 21 Net Taxes $ 2,096 $ 2,117 $ 21 In addition, the .2001 Qmnibus Tax Law provided a market value homestead credit o residential properties. The credit is limited to a maximum of $304 on a $76,000 home. The market value homestead credit is phased in for homes in excess of $76,000 at a rate of .09% of the home's value in excess of $6,000. In other words, as the home appreciates, the credit is reduced. Irrespective of the amount the City tax levy, the property owner will have an increase in property taxes because the increase in taxable market value of the home due to the limited market value law will result in a decrease in the Mazket Value Homestead Credit thus resulting in an increase in property taxes, For example,. even if there was no tax levy increase by any of the jurisdictions, the property owner will still have a tax increase because of the combined effects of the Limited Market Value Law and the Market Value Homestead Law. • • 26 • • City of Lakeville Estimated Property Taxes on Residential Homestead 2003 Limited market value $ 200,000 2003 City property taxes $ 613 2004 Estimated city taxes $ 644 Increased city taxes $ 31 Increase due to: Reduction in MVHC $ 10 City tax levy for operations $ 17 ', City tax levy for interchanges $ 4 Increased city taxes $ 31 The average home in Lakeville, valued at $200,000, is estimated to have a $31 increase in the City share of taxes. Of that increase, $10 was due to the decrease in the Market Value Homestead Credit, $17 is for operations and $4 is for interchange improvements. 27 Lakeville's .low tax rate is due to: ® Prudent fiscal management ~- Long-term and short-term debt policies ~- Commercial/Industrial.growth o Increased value of new residential, commercial and .industrial construction ~ Fiscal disparities contributions ~ Strategic Growth Management Plan Historically, Lakeville has had one of the lowest tax capacity rates in Dakota County for cities over .5,000 population. Lakeville's low tax rate is due to: +~Prudent fiscal management Long-term and short-term debt policies ii CommerciaUindustrial growth iiIncreased value of new residential, commercial and industrial construction +~Fiscal disparities contributions Strategic Growth Management Plan • 28 • • a Lakevlle's low tax rate is due to: ® Economic Development Commission's Strategic Plan '~, ~ Two-year budget planning process ~- Five-year Capital Improvement Program Municipal liquor profits Effective risk management ~ Joint (shared services) Powers Agreements ~ Privatization -outsourced services with private firms Economic Development Commission's Strategic Plan- Q Two-year. budget planning process O Five-year Capital Improvement Program Q Municipal liquor profits Q Effective risk management , iiJoint (shared services) Powers Agreements ~iFrivatization -outsourced services with private firms 29 Proposed Budget and ...Tax Levy September 15, 2003 The 2004 budget and tax evy reflects the long-term .vision, prioritization. of services and .financial stewardship that are required to navigate our community through these challenging times. I • I 5 30 • • • Truth in Taxation Hearing December 8, 2003 Minnesota Statutes require cities to certify the proposed property. tax levy to the County Treasurer/Auditor and adopt a proposed budget on or before September 15. The County Treasurer/Auditor will mail parcel-specific Truth in Taxation notices on approximately. November 15. These notices inform property owners of the time and place of the budget hearings and the impact of the proposed property tax levy. City councils are also required to certify to .the County Treasurer/Auditor the date for the budget public hearing. City staff is recommending Monday, December 8, 2003, for a public hearing to present the budget. The .Truth in Taxation law also requires that the budgets and tax levy must be adopted at a subsequent meeting after the hearing is closed. The City staff recommends that the City Council adopt the budgets and tax levy at its regular meeting on Monday, December 15. 31