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HomeMy WebLinkAbout06-22-15 WSCITY OF LAKEVILLE CITY COUNCIL WORK SESSION MINUTES June 22, 2015 Mayor Little called the meeting to order at 6 p.m. in the Marion Conference Room at City Hall. Members Present: Mayor Little, Council Members LaBeau, Anderson and Davis Absent: Council Member Swecker Staff present: Justin Miller, City Administrator; David Olson, Community and Economic Development Director, Jerilyn Erickson, Finance Director; Chris Petree, Public Works Director; Monica Heil, Operations and Maintenance Engineer; Brett Altergott, Parks and Recreation Director; Joe Masiarchin, Arts Center Director; Judi Hawkins, Deputy City Clerk 2. Citizen Comments: None 3. Discussion Items: a. Post Consumer Brands Division Headquarters Project Dave Olson introduced representatives from Post: Chris Nuegent, former CEO of MOM Brands now head of the Post Consumer Brands division; Steve Smith, Senior Vice President of Human Resources for Post Holdings; and Randy Ridenhour, Senior Director of Corporate Tax Holdings for Post Holdings. They stated that many factors influenced and solidified Post's decision to retain their headquarters in Lakeville following their purchase of MOM Brands, including the welcoming attitude of the Mayor and City staff and the speed at which the City and State were able to propose an incentive package. They are excited to settle in Lakeville and thanked the City for their assistance. In addition to retention of existing jobs several new positions in marketing and technology are being created at this location as a result of the consolidation. Mr. Nuegent believes the merger will continue to be a good opportunity for their current employees. Employees from Post locations in Parsippany, NJ and Battle Creek, MI will be visiting the campus to explore the site and consider their options. Both the City and the Minnesota Dept. of Employment and Economic Development (DEED) offered incentives for Post to retain jobs in Lakeville rather than move the jobs out of state. Olson stated that Lakeville offered a job retention incentive of $1,500 per job and the State offered $3,000 up to 250 jobs. Staff is proposing the use of Tax Abatement as a funding source for the job retention incentive, which will be in the range of $300,000 to $375,000. With the current rate of property taxes on the two Post buildings, this would result in a four to five year abatement. Since the property is currently in the Fairfield Business Campus Redevelopment TIF District until December 31, 2022, the abatement would not begin until 2023. Staff is proposing an interim inter -fund loan from the Liquor Fund to be repaid with tax abatement beginning in 2023. City Council Work Session June 22, 2015 Page -2 - Staff is requesting Council enter into an agreement with Post in conjunction with the State to offer incentives for retaining 250 jobs for one year and continuing their operations in Lakeville. Jim Gromberg from Minnesota DEED outlined the terms of the State program and the process to be followed. Council is also being asked to authorize staff to work with Post to submit an application to the Minnesota Investment Fund (MIF) to secure a state funded incentive of $3,000 per job retained, up to 250 jobs. Staff will bring a final proposed agreement to Council for consideration. Anderson asked if the company would be expanding any of the buildings. Mr. Smith responded that the second building on the campus was an additional advantage of the Lakeville location as it offered the space they will need. Mayor Little expressed appreciation for the partnership and the opportunity to have a growth company in the community. City and school district staff will be on hand later this week at the business site to offer assistance and information to Post employees who could potentially transfer to this location. Council Member LaBeau thanked the Post representatives for the confidence they have shown in Lakeville. Council members directed staff to proceed with the agreements and to place them on a future regular agenda for consideration. b. Audit Update Finance Director Jerilyn Erickson presented the 2014 Comprehensive Annual Financial Report and Auditors Management Report to City Council for review and comment. The report was presented to the Finance Committee last week. Mr. William Lauer, Partner with the certified public accounting firm of Malloy, Montague, Karnowski, Radosevich & Co., P.A. (MMKR) presented an overview of the financial report. MMKR has audited the financial report and it is their opinion that the report, as presented, represents the financial position of the City of Lakeville and the results of operations and compliance for the year ended December 31, 2014. The City's financial statements were given the highest possible opinion for the third consecutive year. A significant change in the accounting standards for pension reporting for PERA and Fire Relief will begin in 2015. The City's portion of any underfunded liability will be reported in the enterprise funds and will not have a large impact on the General Fund. The General Fund is the City's primary operating fund. At the end of 2014 there was a total General Fund balance of $11.1 M; this was up by $1.4M from the previous year. The fund balance policy is for maintaining unrestricted funds equal to 40-50% of the next year's budgeted expenditures. The current unassigned/committed fund balance is $10.9M, or 44.8%. Revenues of $22.7M were received in 2014 which was over budget estimates by $660,414, mostly from higher than expected developer related revenues. City Council Work Session June 22, 2015 Page -3 - Anderson asked if it is common for cities to fund 100% of their utilities' depreciation. Lauer estimated about 25% of cities are able to budget for the expense. LaBeau asked if the Finance Committee had comments regarding the audit or budget recommendations for Council. Erickson stated that the Finance Committee members also had questions regarding the utilities' depreciation and Council's philosophy for options to cover costs in the budget or build them into the utility rates. They also discussed liquor sales and the recent purchase of land for a fourth store. Mr. Lauer stated that he has been impressed by the operation of the Finance Department, the accuracy and completeness of the records, and the ability of staff to respond to the auditor's requests quickly and efficiently. LaBeau commended the department for their ability to fill the roles during staff's transition. Erickson plans to continue to cross -train staff within the department to provide additional efficiency; Anderson stated that he appreciates recent advancements within the department. c. 2016 Budget Preview Staff provided a proposed timeline for the 2016 budget process and asked Council for feedback. Finance is in the process of compiling all of the departments' budgets and it is staffs intent to limit the number of budget work sessions needed. Council will review and discuss the 2016-2020 CIP at their July work session. A preliminary tax levy and budget proposal will be presented to Council in August. The deadline for approval of a preliminary budget has been moved from September 15 to September 30 which will allow the preliminary budget to be adopted at the September 215L regular Council meeting. Adoption of the final budget and tax levy will be scheduled for December 21st Finance presented the framework for the budget. Market values have increased by 5.3% for 2016. $131 M is new construction, or equal to 2.2% on top of the current levy. New debt being issued for the 2015 street projects will equal a roughly 1.5% increase in the 2016 levy. Personnel is the largest expenditure in the budget. All Union contracts are expiring at the end of 2015. Five new fulltime positions (one non -general fund) and two part-time positions are being requested. Miller will review the budget requests prior to making his recommendations. Little stated that he appreciates the forewarning of what will be requested for the three largest budget items: personnel, capital improvement and debt. Anderson asked to see the efficiencies outcome of the positions that were added last year, i.e., the fleet manager position. He would also like more information on developer fees and how they compare to other cities. He suggested hosting a developer forum similar to one that was held several years ago and stressed the importance of being a good steward of taxes. LaBeau would like to have a clearer understanding of the starting point of the budget in order be better able to provide an explanation when asked. Davis also believes that knowing what the starting number is will make the process more transparent and he appreciates having the timeline. LaBeau appreciates the Weekly Updates and feels that being cognizant of the departments' activities provides a good basis for the budget. City Council Work Session June 22, 2015 Page -4 - d. Impending Downtown Overlay Project Chris Petree and Monica Heil presented information to Council regarding the Holyoke Avenue Improvement Project from Heritage Drive, just north of 202nd Street, south to 215th Street (County Road 70). The project is in the current CIP for 2016 and includes turn lane improvements at 210th Street and Holyoke Avenue. Ms. Heil stated that the project will involve pavement removal and some curb and gutter replacement, but no sidewalk replacement. The downtown sidewalks are currently a mix of concrete, paver blocks and colored concrete and have been ground down and repaired in spots. The grates around the trees are heaving and causing more damage due to tree roots coming to the surface. Some of the streetlights need to be replaced with a model that can be maintained by Xcel Energy, which would be more efficient for the City. Staff is looking for direction from Council on possibly adding sidewalk improvements to the Holyoke overlay project and delaying the project until 2017. This would allow time to prepare specifications and bring the plan to the DLBA and the adjacent property owners. LaBeau asked if there is a species of tree whose size would be more suitable, or if it would be more efficient to replace all of the trees with some kind of tall planters. Heil stated that there are several options for smaller trees and suggested visits to other cities to view their streetscapes. Anderson would like to see consistency in the lighting and would support trees downtown. Little agrees and would support the historic light fixtures. Davis supported discussions with the DLBA regarding the potential to incorporate streetscape improvements into the project. Petree stated that some of the ornamental trees do stay small size but don't provide the shade or canopy that some might feel is important. Council appreciated the opportunity to consider this as part of the Holyoke overlay project. Petree stated that the drawback of putting the project off until 2017 is that the 210th Street turn lane project would also be delayed until 2017. Staff recommends leaving a placeholder in the 2017 CIP and discussing the overall downtown plan with the DLBA. Council members directed staff to delay the Holyoke Ave. overlay project to 2017 in order to allow more time to consider sidewalk improvements and streetscape alternatives. e. Information on 2016 Street Reconstruction Approximately 48 property owners attended a second neighborhood meeting on June 10, 2015 to discuss the 2016 Street Reconstruction Project. At the meeting staff discussed the corrosive soils findings, what that means for infrastructure, and how this differed from what was presented last fall. Monica Heil provided a summary of some of the property owners' concerns and questions regarding the project. One resident suggested that a second cost estimate be prepared and the residents be given the opportunity to vote on the project scope for their neighborhood. A feasibility report will be completed by fall and will be presented to the Council. City Council Work Session June 22, 2015 Page -5 - Council Member Anderson had also attended the June 10 meeting and believes that North Lake Marion residents might not understand what the water drainage improvements would be with the revised scope. Some residents feel they are being shorted because they aren't getting curb and gutter. It is important for them to have all the cost information and to be assured that the water issues will be resolved. LaBeau asked if the residents at the meeting understood the shared cost. Heil stated that the information provided at the meeting stressed that the cost for curb and gutter where none previously existed was 100% assessable, as opposed to spot repairs which is a different scope of work. Anderson stated that a majority of the neighbors he has spoken with would like to preserve the rural nature of the neighborhood and prefer the streets to be completed without curb and gutter. Council members directed staff to move forward with a feasibility report for the project and to prepare for a fall public hearing. f. LAAA Sound System Brett Altergott and Joe Masiarchin provided information regarding the failing sound system at the Arts Center. The system has been shutting down and intermittent volume is being experienced during performances. It has also been determined recently that some of the speakers are not working. The system was originally installed in 2001 at a cost of $100,000. Replacement of the system has been estimated at $55,000. Donations have been committed from several organizations which will pay for half of a new system: the Lions Club ($1,500), Expressions Theater ($7,000) and Friends of the Arts ($19,000). Staff is proposing to use $27,000 which is currently budgeted for waterproofing a portion of the basement for the other half of the funding. Building maintenance staff believes the entire building should be waterproofed when it can be budgeted and not just one portion. This would address the whole water problem for the health and safety of the patrons. A fund balance from another project will cover the remaining $500. Council members directed staff to move forward with the replacement of the sound system to be funded with donations and waterproofing funds. g. Quail Meadows Playground Replacement Brett Altergott stated that the Quail Meadows Park playground was installed as part of a joint powers agreement with ISD 192 in 1997. The playground is in need of replacement; however, it is not included in the Parks budget at this time. North Trail Elementary, the biggest user of the playground, has budgeted $50,000 to fund half of the replacement costs. The school has done some maintenance on the structure and more spot replacements could extend the life by two to four years. Anderson asked if the school would be willing to use the $50,000 for refurbishment. City Council Work Session June 22, 2075 Page -6 - The Joint Powers Agreement with the school allows the Park Department to schedule the fields for youth athletics. Altergott stated that the JPA language also encompasses the hockey rink and a portable warming house, which is not currently part of the ice rink system. Council members questioned whether it is actually a school or a city facility and believe the JPA language regarding financial responsibilities of both the City and ISD 192 regarding playground replacement and grounds maintenance needs to be clarified. Little believes the $50,000 is generous but maybe ISD 192 has greater responsibility than the City. He suggested creating a new JPA which clarifies cost sharing of future playground replacement and maintenance between ISD 192 and the City of Lakeville. Anderson asked if there might also be a way for field maintenance and park mowing to be shared in order to be most fair and efficient. Altergott stated that this park is used by soccer, baseball and softball. Even though residents on the west side of Pilot Knob Road have access to several parks, this is a unique situation. Little suggested matching the funds that ISD 192 is willing to spend on the playground and consider turning the park over to ISD 192 in the future. Anderson suggested staff bring back more specific ideas for sharing the costs for the entire park. h. Other Anderson stated that he will be leaving on Tom's Big Ride and will be out until mid- August. He intends to join the July work session via video conference. 4. Adjourn The meeting adjourned at 8:12 p.m. Respectfully submitted, Em mu—sm! CMWO, AlKee- JUVHawkins, Deputy City Clerk Matt Litfle, i