Loading...
HomeMy WebLinkAbout08-11-14 WSCITY OF LAKEVILLE CITY COUNCIL WORK SESSION MINUTES August 11, 2014 Mayor Little called the meeting to order at 5:38 p.m. in the Marion Conference Room at City Hall. 1. Roll Call: Members Present: Council Members Swecker, LaBeau, Anderson, and Davis, and Mayor Little Staff Present: Allyn Kuennen, Interim City Administrator, Dennis Feller, Finance Director, Julie Werner, Senior Accountant, Tom Nesseth, Senior Accountant; Chris Petree, Public Works Director; Brett Altergott, Parks and Recreation Director, John Hennen, Parks Superintendent, Daryl Morey, Planning Director, Mike Meyer, Fire Chief, Jeff Long, Police Chief, John Kornmann, Deputy Chief, Diane Bastyr, Police Business Manager; Brenda Visnovec, Liquor Manager, Sue Palm, Communications Manager, Cindi Joosten, HR Manager, Gene Abbott, Building Official; and Judi Hawkins, Deputy City Clerk 2. Citizen Comments There were no citizen comments. 3. 2015 Potential Budget and Tax Levy Dennis Feller provided an overview of the Potential 2015 Budget which identifies basic issues. He stated that this is not a proposed budget since several line items in the document are not being recommended by staff. The document is focused primarily on the Operating Budget, General Fund, Special Revenue Fund, and Capital Improvement Projects which have a direct or indirect impact on the tax levy. The document does not include CIP funds which are not affected by taxes such as water and sewer trunk funds, storm sewer, enterprise funds, or liquor. Priorities are identified within five major categories: mandatory expenditures; efficiencies and initiatives; infrastructure maintenance; continuity of service levels; and service improvements. Under Operations, the General Fund has the largest increase proposed at $13M. 2014 will be the final year of debt for the Park Bond levy of $350,000; this amount is being proposed to be budgeted annually to park improvements. Information from the Dakota County Assessor's office shows increases in market value and tax capacity for 2015. Lakeville's increase in the tax base is 2.7% primarily from residential construction of $1.2M. Residential market conditions improved by $4.2M, a nearly 10% average increase. In recent years the tax burden was largely on commercial/industrial but it is shifting back to residential properties. The Potential Budget shows an overall tax levy increase of $2.1 M, a portion of which will be absorbed by four TIF districts that are being decertified at the end of 2014. There is also a 2.7% increase in new construction so the net tax impact on existing properties is about $1.3M, or a 5.6% increase in the overall tax levy. Of the 5.6%, 2% is due to the 2014 street reconstruction project. The remaining 3.6% includes all operations: general fund, levy increases for maintaining infrastructure such as parks, facilities, and equipment. Anderson asked what the amount would be without any adjustments for growth and TIF. Feller stated that the overall tax impact would be 9.1 % if there were no growth or tax increment taken into consideration. The overall tax levy increase was approximately 2.5% in 2010, followed by three years of decreases, then a 1.8% overall increase in 2014. With growth factored in for City of Lakeville August 11, 2014 Work Session Minutes Page -2- the past five years there was a negative net impact on existing taxpayers: (.5%) in 2010,(2.25%) in 2011, (1.8%) in 2012; (.5%) in 2013; and .5% increase to the existing tax base in 2014. Feller provided a summary of mandatory changes to the budget, including elections, increases in PERA pension contributions starting in 2015, increases in debt, contractual, regulatory compliance, and efficiency initiatives. Personnel changes included resignations, retirements, and reorganizations at the police and public works departments. Feller provided a summary of changes in expenditures compared to the amended 2014 budget in four categories: general government, public safety, public works, and parks and recreation. The largest department increase is in public safety, which includes both police and fire; the second largest is public works. Feller stated that if Council wishes to increase their salaries, they need to adopt an ordinance change prior to the November election. Feller reviewed changes to the General Fund budget. Mandatory general fund items include PERA increases, DCC contractual increase, collective bargaining agreements, LMC liability insurance, and fire fighter workers' comp insurance. Efficiencies and initiatives include three major components: cost reductions, improvements in quality, and improvements in productivity. Items identified are related to changes in cost reductions in one of these categories. Items include upgrades to technology resulting in cost savings and changing the status of seasonal employees from contractual to temporary. Other line item expenditures were highlighted: • The Street Dept. is proposing to purchase a scarcifier which will save the cost of frequent rentals of equipment. • A chemical control feature is proposed to be installed on snowplows which will reduce the amount of chemicals used on the roadways. • Infrastructure maintenance includes seal coating of parking lots, which was previously in the pavement management fund. • Under Parks Major Maintenance, Highview Park will need costly infrastructure improvements if the rink is to be opened. Staff and the Parks, Recreation and Natural Resources Committee are recommending opening rinks at Rolling Oaks and Quail Meadows instead, both of which were closed in 2010. Based on demographics there are over 900 school -aged children in each of those areas and Altergott would like to have rinks open in the more populated areas. LaBeau asked if the population numbers for Highview Heights included both school districts. Altergott stated that he would confirm the numbers. Mayor Little asked what the cost is to have a rink open for the season. Altergott stated that the operating cost is about $7,000 per year for sites with a permanent warming house; more if a rental is needed. Rolling Oaks Park has a permanent warming house; Quail Meadows would require a rental unit. Drainage improvements to Highview Heights would be about $23,000. • Under Continuity of Service, Fiscal management, a contingency fund exists for unforeseen expenses, which are most often weather related events. Over the past ten years, with the exception of 2009, the contingency fund has increased due to either revenues exceeding expectations, or expenditures being under budget. The contingency fund is also available for special unappropriated projects, such as traffic or economic development studies. Removing the contingency would require the fund balance to be used for those types of expenses. Swecker stated that 40% is the absolute minimum and $105,000 is being proposed to be used for Capital outlay. The projection is based on past history of revenues and expenditures. Swecker stated City of Lakeville August 11, 2014 Work Session Minutes Page -3- that in the past five years the fund balance has gone from 50% to 40% and she questioned reducing the contingency when the fund balance is at the established minimum of 40%. La Beau stated that the levy amounts have gone up also, and asked for a comparison to five years ago. • Expenditures at the Heritage Center are expected to increase by $20,000 but nontax revenues will offset the additional costs. • Additional revenues of $100,000 are anticipated from Fire State Aid as a result of legislation which funds fire relief and underfunded police pensions. • Volunteer firefighter pay -per -call is being increased from $11 to $12. • Continuity of Service includes several new positions, transfers between departments, reorganization of the public works and police departments, and new positions as prioritized by the former city administrator. The cost impact of new positions in 2015 is $460,000, in 2016 about $300,000. Proposed new positions include an Assistant Fire Chief who would be second in command/training officer, and a Duty Crew manager for daytime hours. The duty crew would consist of current personnel; cost is $19,000 in 2015 and $56,000 in 2016. Swecker asked why furniture and equipment is included in the cost for new personnel. Feller stated that this is the total amount that would be added to the budget if the position is approved. Anderson asked what will happen if these positions were not filled, i.e., the results of not hiring an additional building inspector. Is decreased public safety a consequence in certain situations? Can staff provide a brief summary of the result of not filling the positions? Anderson would like to look at all positions and make good risk/reward decisions. Anderson asked if there are ways to be more efficient with the current resources, possibly with improved technology. Little asked if each department could quantify the impact of additional personnel. Swecker suggested it would be helpful to know why the personnel are needed and whether the position results in a cost savings or greater efficiency. Anderson added that Council has a responsibility to insure that staff is operating most effectively and looking at alternative ways to be efficient. LaBeau stated that when the Heritage Center was approved, Council was told it would be self-supporting and she wants to insure that rental revenues will offset the facility manager position being requested. Swecker stated that it had been agreed that the capital for the building itself was to be non -tax dollars; however there are operating costs, staffing, and repairs that will need to be supported, possibly with taxes. Feller stated this information will be brought back at the next meeting. • Feller showed per capita employees by city compared to similar communities Lakeville has the lowest number of employees per thousand residents at 2.7. These figures are for general government across all departments and do not include enterprise funds such a liquor or community centers in other communities, with the exception of assessors in Hennepin County. Anderson asked to see figures related to the graph. • Cost of utilities is increasing due to gas and electric companies raising rates and increased demand as a result of recent harsh winters. • In 2016 the Arts Center is eliminating a software program which is used for seat reservations in the theater, resulting in reduced operating cost of $17,000. • Operating adjustments for existing programs include: overtime for Inspections, Police computer forensics, Police Reserves, rookie fire fighter program including protective gear, and Pan-O-Prog overtime: Police Chief Long stated that he was amazed by the behavior of the crowds and the amount of police personnel necessary to maintain control. He believes there is a great need for additional police staff and reserves during Pan-O-Prog, even with limited vacations allowed at that time and assistance from Dakota County Sheriffs Department. This issue will be discussed by City of Lakeville August 11, 2014 Work Session Minutes Page -4- the Public Safety Committee and brought back to Council at a future work session. Council would like to include the Pan-O-Prog Board in the discussions. • The budget identifies an increase in Street Dept. snow and ice control expenditures for chemicals, motor fuels, and overtime, anticipating similar weather patterns as the last two years. • The EDC is recommending a commercial/industrial market study to be financed by the economic development fund and staff is seeking grants to assist with the cost. • Finance Committee and staff have analyzed software which would assist with budget graphs and charts, but neither is recommending purchase of the software at this time. • Contract for maintenance of City Hall plants. • Mowing of County boulevards was turned back to the County several years ago. The County is willing to return it to a City responsibility; however, it would require additional seasonal staff and purchase of additional equipment. The cost to contract the mowing would be more efficient. • Staff is proposing to replace the native grasses in the roundabout at 175`h Street and Kenrick Ave. with low maintenance plant materials to improve aesthetics. The project cost estimate is $6,700 which includes traffic control during the operation. Revenue Sources: The largest source of revenue is general property taxes, followed by charges for services, licenses and permits. Primary funding source for intergovernmental revenues is Fire State Aid. Little asked if the lag in hiring additional officers can be measured into the Pan-O-Prog need for additional coverage. LaBeau asked if any downtown establishment contributed to funding for security. Deputy Chief Kornmann stated that the problems were not necessarily caused by or at the establishments. Fee adjustments will be discussed at a future budget meeting. Two new fees are proposed: police alarm fees which are currently only charged after the third false alarm call in a month are proposed to be charged for all false alarms. Swecker asked what other communities are doing. Chief Long stated that the trend is moving toward billing on the first false alarm, which encourages homeowners and business owners to be more responsible with setting off their alarms. Swecker would like to get additional information on how many alarms are residences and how many are businesses; she doesn't want to discourage people from using their alarms for fear of setting them off. LaBeau asked if the revenue is proposed to be coming from first, second, or third alarms and what percentage of the actual costs does this recapture. Long stated that false alarms take away from police resources and believes fees provide incentive and promote responsible use. Little asked if there would be a dispute resolution process. Proposed fees for fourth, fifth and sixth(+) false alarms are $50/$100/$150. Swecker supports the proposed Police Reserve fee and believes this is needed, since there is no cost recovery for the City. The Reserve program costs an average of $20,000 per year for equipment and operating expenses. Staff will identify direct and indirect costs and check on regulations on insurance coverage. Reserves are volunteers and are not considered employees. Revenues anticipate no significant increase in building permits in 2015. Single family building permits are down slightly, but average values are up, so they offset. Permit revenue from two upcoming large commercial projects is not included. Based on economic and geopolitical trends, residential permits are anticipated to remain relatively stable; however higher interest rates could change the projections. City of Lakeville August 11, 2014 Work Session Minutes Page -5- Staff recommends a one-time transfer of $720,000 from the General Fund to the Equipment Fund. This is the amount of the 2013 net increase in the fund balance and would return the fund balance to 40%. Staff recommends appropriating the unencumbered Communications Fund balance to expenses that are non-recurring or of a capital nature such as the equipment fund or the bi-annual community surrey. Mayor Little believes results of the community surrey have limited value and it is not a good use of funds. Staff recommends referring cable franchise fee rates to the Cable TV Board. As recommended by the EDC the Economic Development Fund includes $50,000 for an economic development study. Staff is seeking a grant for a portion of the funding. Swecker suggested the study be paid from the General Fund. LaBeau and Anderson have some questions about the study that they would like Dave Olson to answer at the next budget meeting. Little believes it would be useful for the downtown development if funds were separated from the general fund and tracked independently. Public Works Director Petree stated that maintenance of park system parking lots has been moved from the pavement management fund to the general fund. Staff is proposing to discontinue seal coating operations since current studies have shown it may cause premature deterioration. He recommends the funds be spent on patching and repairs. A new overlay technique is being used in some areas and more attention is being paid to crack -filling. Figures shown are for contracted work. The amount is a reduction compared to $550,000 that would have been proposed for sealcoating. Included in the Park Improvement Fund is a replacement for the Land of Amazement (LOA) at Michaud Park. The nearly 22 -year-old wood structure is becoming splintered and is nearing the end of its life. A structure made of more modern materials would be safer. Replacement with a similar playground would cost approximately $300,000. Other options would be to replace it with an exercise course, jogging track, etc., as discussed at the last work session. Little stated that Lakeville parks need to include desired features in order to be competitive with neighboring cities as destinations. Anderson asked whether a large playground expenditure would add additional value to the park system. A park survey could be considered to determine community priorities and would cost much less than a full community survey. He suggested a two-year break in park development would provide an opportunity for growth to catch up so needs could be determined. Feller suggested paring down the number of questions on the survey to cut costs. Anderson stated that parks and trails are a major reason that people live in this community but Council needs to be prudent and make the best use of funds. Swecker stated that the LOA is the biggest destination playground in the City and two years might be too long before it is replaced; a decision regarding the LOA as well as neighborhood park replacements needs to be made soon. Little asked if staff could provide figures on the financial impact of a referendum. Swecker asked what the referendum could include. Feller stated that there is a broad spectrum of what is allowed including maintenance and park improvements. Prior to cost estimates, the process would involve the Parks, Recreation and Natural Resources Committee and possibly a citizen task force to determine the scope of the referendum. Altergott stated it is both sustaining what exists and meeting citizens' expectations for available amenities and safety. LaBeau would like to see some quantitative data of demographics and usage numbers before replacing anything, including the Land of Amazement. Updated information is needed before routine playground replacements are made because demographics often change. Swecker suggested for budget purposes putting a dollar amount into the budget which would represent future bond referendum funds. LaBeau believes that would be premature without data. Davis agrees that with the City of Lakeville August 11, 2014 Work Session Minutes Page -6- retirement of the park bonds in 2014, those dollars could be reallocated to park improvements without any change in the tax levy. Feller encouraged Council members to visit the parks to survey conditions and needs. LaBeau asked if staff can request quantified data from the schools regarding demographics. Altergott will request the data but doesn't want to miss an opportunity to address the issues by replacing the park bond dollars in the budget. Anderson asked if there is any way with volunteer help to extend the life of the LOA. Altergott stated that funds would be spent on a short- term fix; safety will become an issue and replacement is imminent. Swecker asked that a $350,000 place holder remain in the budget, with the understanding that it can always be adjusted. Davis agrees but would also like to receive the quantified data. Little stated that he would support the $350,000 placeholder but would like to explore other options for the $76,000 budgeted for two playground replacements in 2015. Council members agreed that a decision does not need to be made now. LaBeau suggested that corporate sponsors for rinks might be an option. Under the Building Fund Feller discussed staffs recommendation for prioritization of projects, subject to available funding, and to reestablish a gradual tax levy over five to six years. The Finance Committee concurs with staff recommendations. Data for replacement of the concrete floor at the west side of City Hall, which is settling, is not yet available so is not included. Replacement of the parking lot on the north side is included. Other renovations are proposed to be completed in conjunction with these repairs which will increase City Hall efficiencies. Drawings are being prepared for the Heritage Center rooftop unit. Anderson advised negotiating with the manufacturer for the best price. LaBeau is frustrated that the additional cost for the rooftop unit was not included in the original cost of the Heritage Center project. The building is at risk for damage if the unit is not replaced. Equipment fund: Various options exist for financing equipment over a period of time including the use of debt, one-time revenues and a steady increase in tax levies. For purchase of a fire truck in 2016 staff recommends appropriating one-time revenues from a variety of funds, along with debt and annual increases of $76,000 in the tax levy. The Finance Committee requested prioritization of equipment and acquisitions, and possible options to buying new equipment. There is an annually increasing transfer starting with $825,000 from the Liquor Fund to the Equipment Fund. There are four Tax Increment Financing districts that are expiring this year, each under a different TIF statute. Economic Development staff will present Council with recommendations for appropriating these funds as outlined in each statute. Redevelopment of blighted areas and improvements would be typical of allowed uses for the funds. Another option is to return the funds to the County. The County would retain one-third, give one-third to the school district, and the other third to the City, $230,000 to each agency. There would be no expenditure restrictions. Council believed the funds should be appropriated toward their intended use of improvements. Staff stated there are several budget mandatory items such as PERA increases, utility rate increases, increases in street improvements, DCC membership, LMCIT insurance, etc. Swecker asked if there was a refund from the DCC in 2014. Feller stated there were refunds in 2012 and 2013 but not 2014. Refunds are based on CAD calls; past reimbursements have been allocated to the equipment fund. Feller asked if there are any changes needed to the budget as presented. Council members want to review demographics in the area of Highview Heights rink before making a decision on which rinks to City of Lakeville August 11, 2014 Work Session Minutes Page -7- open. Altergott will provide these figures at the next work session. LaBeau would like to pursue the idea of obtaining corporate sponsors for rinks. Anderson stated that the budget as proposed needs to be pared down before he would be comfortable with approval and needs additional information. Feller asked for direction from Council on a possible range of what Council could support. Council asked if the budget could be received in the same format as last year where staff starts with zero and moves from there with a prioritized list, showing the percentage impact on the budget. Feller stated that staff will prepare that information for review by the Council at the next work session. Anderson stated that he prefers the contingency fund remain in place. Swecker wants to insure that with the fund balance dropping from 52% to 40% there are adequate funds in the contingency to cover needs and emergencies. Feller stated that during the recession years the target was 45% due to so many unknowns; but with the improved economy staff is recommending 40%. Swecker also wants to insure that a low fund balance does not negatively affect the City's bond rating. Davis agrees with the importance of maintaining a contingency fund. Feller stated that personnel changes are listed in priority order. Swecker asked about the Fire Dept. increase in pay per call to $12 in 2015. Chief Meyer stated that training is also increased by one dollar in each 2014 and 2015. Fire fighters chose to have more emphasis on their fire relief benefits than pay per call. Little stated that he and the police chief have discussed initiating a Traffic Control unit which would focus more on residential neighborhoods. He asked if council would support exploring costs for this position. Chief Long will provide additional information. Swecker asked if that could be brought to the Public Safety and Personnel Committees first for possible consideration for 2016. Little asked about funding for eradication of the Emerald Ash Borer. Feller stated that $50,000 is committed from the fund balance. Council will review this further as part of environmental services. A possible fee on residents' utility bills was previously discussed. LaBeau asked about the Urban Reserve Plan. Morey stated that it is a placeholder for the regularly scheduled Comp Plan update. Further budget discussions will be held at the August 25, 2014 work session. 4. Transportation CIP At the June 23, 2014 work session Public Works Director Chris Petree presented the 2016-2019 Capital Improvement Plan related to transportation. At that meeting, Council prioritized advancing Dodd Blvd. reconstruction from 2018 to 2016. Reconstruction of Kenwood Trail is proposed for 2017. Council is being asked to consider installation of flashing yellow left turn arrow traffic control signals along Cedar Avenue. A commitment was made for these improvements as part of the Cedar Avenue BRT at a cost of approximately $8,000. Flashing yellow left -turn arrows would be added to existing semaphores at 164t1 Street, 170" Street and Glacier Ave. Transportation CIP funding would be with savings of approximately $400,000 from the Dodd Blvd. (183'd to Hayes) project, and would be contingent on the County's advance funding of $1 M. Funding could also be available from Southfork TIF district interest-free loan. Staff recommends proceeding with authorizing the identified projects to be funded with advance funding from the County. If the application for an interest-free loan from the County is successful the $2M becomes the contingency for other projects. City of Lakeville August 11, 2014 Work Session Minutes Page -8- Anderson asked if a signal could be placed at CSAH 50 and Cedar Ave. to improve safety while the roundabout is being built. Petree stated that a corridor study was planned for 202nd Street (CSAH 50) from Holyoke Ave. to Cedar Ave.; however, due to current traffic levels and upcoming development, at the City's request the County will forego the study and move forward with the preliminary engineering and design in 2015. Based on traffic counts the intersection at Cedar and CSAH 50 does not meet warrants for a traffic control signal; however, turn lane improvements are planned for 2015. Swecker added that the County should be urged to put that intersection on a priority list. Petree will continue discussions with the County regarding that intersection. LaBeau asked about reusing the traffic semaphore which will be removed as part of the CSAH 50/60 roundabout project at another location, or possibly getting credit for it from the County. Petree stated that the County contends that the cost of removing and reinstalling an existing traffic control signal is nearly as much as new equipment, and the old equipment is at the end of its useful life. S. Adjourn Mayor Little adjourned the meeting at 9:20 p.m. Respectfully submitted, Ju ' awkins, Deputy Clerk vl------- /;I — Matt Littl ; Mayor