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HomeMy WebLinkAbout10-26-15 WSCITY OF LAKEVILLE CITY COUNCIL WORK SESSION MINUTES October 26, 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 Swecker, LaBeau, Anderson and Davis Staff present: Justin Miller, City Administrator; Allyn Kuennen, Assistant City Administrator; Jerilyn Erickson, Finance Director; Daryl Morey, Planning Director; John Hennen, Interim Parks and Recreation Director; Chris Petree, Public Works Director; Judi Hawkins, Deputy City Clerk 2. Citizen Comments: None 3. Discussion Items: a. 183rd Street City Property At their September 21 work session Council discussed five revised proposals for the City - owned property on 183rd Street and directed staff to work with KRB on their proposed sketch plan. KRB's Option 3 included rezoning the northern portion of the property to RS -3 for the construction of 22 single-family homes and rezoning the southern portion of the property to a multi -family PUD for the construction of 27 detached townhomes. City ordinance requires 20 foot sideyard setbacks between detached townhome units; rezoning would require either reducing the setbacks to 15 feet or reducing the number of townhome units to 24 or 25. The KRB development team is considering a revised bid amount due to the financial effects of being able to build fewer units. KRB representative Dave Anderson stated that based on Council comments KRB had presented two offers: one for the preferred housing product of detached townhomes and one that would maximize the City's revenues for the sale of the property. KRB had calculated their offer on a total of 49 lots; however, the sketch plan review indicated that only 46 lots would be possible with the 20 -foot setback. There were also concerns with the long term viability of a homeowners association consisting of only 24 or 25 units. Finance Director Erickson provided estimates of future taxes based on the value and number of units from mixed housing styles and from single family only options. Due to their higher market value, single family homes would provide a higher tax base for the City. KRB's modified purchase price would be $1.464M for the property zoned for mixed single-family/ townhome units and $1.6M if it is zoned for single family lots only. City Council Work Session October 26, 2015 Page -2 - LaBeau suggested reviewing the sideyard setback ordinance in the future since many other cities require as little as five feet. Morey stated that 70 -foot single family lots on the south side would be consistent with a similar situation in Rose Creek. Council Member Anderson stated it is the City's responsibility to maximize revenues from the sale of the property and believes zoning for single family homes is the best option. Davis believes the detached townhome product was attractive but after seeing the revenue and tax base, he also supports Option 2. Morey stated that more of the detached townhome products will be available in the upcoming Kenwood Hills and Avonlea plats. Council directed staff to proceed with the sale of the 183`d Street property to be developed per KRB's proposed Option 2 and to place this item on the regular Council agenda. b. Land of Amazement Fundraising Plan At their August 24 work session Council directed staff to draft a fundraising campaign for replacement of the Land of Amazement that would run from now through March 31, 2016. The plan includes meeting with potential corporate donors, applying for grants, working with other City departments and soliciting donations from individuals in order to meet the goals. Staff was recently notified that a $36,531 grant has been awarded by the playground manufacturer, GameTime. Deducting the grant, $85,000 of 2014 unencumbered funds, and $50,000 pledged from Rotary, the remaining fundraising balance will be $221,000. As a requirement of the grant a check in that amount needs to be submitted by November 13; the playground structure would then be shipped by December 31. Miller reviewed the draft brochure and proposed donor recognition/sponsorship levels with Council. An extensive list of potential donors has been compiled and a marketing video has been produced. Current Dakota County Commissioner Mary Liz Holberg was instrumental in the successful construction of the original structure and has agreed to provide information from the previous construction effort. Council Member Swecker believes the commitment of the unencumbered funds indicates the Council's dedication to the project and supports advance funding of the structure. LaBeau suggested splitting the $350,000 naming rights level into two donors would make it more realistic and attainable and believes the Rotary is interested in being included. Council Member Anderson added that a crowd funding website such as GoFundMe should be utilized and some small token of appreciation given to individual contributors in return. It was mentioned that funding websites retain a certain percentage of donations. In December there will also be an opportunity for customers to donate at the Liquor stores' checkout lanes. The Rotary is also discussing a raffle as part of the Taste of Lakeville. City Council Work Session October 26, 2015 Page -3 - Council Member Davis asked how offers of in-kind donations would be handled. Mr. Miller stated that a list will be kept of anyone who is interested in making that type of donation. Ms. Erickson confirmed that playground donations to the City will be tax deductible and has confirmed with the IRS that establishing a 501c3 is not necessary. Mayor Little wants to ensure the fundraising goal is realistic and can be done in a certain time frame. If not, it might be necessary to commit additional dollars. Miller stated that in March an update will be provided and Council will make a decision on how to move forward. Little believes most funds will be raised from civic and corporate donors rather than individuals. Anderson agrees that fundraising shouldn't be prolonged and believes the on- line fundraising attempt will target a younger demographic. Swecker asked if the marketing video could be running in the liquor stores. LaBeau likes the option for donors to purchase certain pieces of equipment and believes that will be a popular choice. Miller believes the City's finances will be favorable this year and could possibly result in additional unencumbered funds to be allocated if necessary in March. LaBeau believes the fundraising might be easier if the sponsorships were realistic amounts. Options for funding levels and sponsor recognition were discussed. Council members directed staff to add the purchase of Land of Amazement 2.0 structure to the November 2 regular Council agenda and to begin fundraising efforts. c. Third Quarter Financial Report Finance Director Erickson presented the Third Quarter Financial Report which, at the request of the Finance Committee, was expanded from General Fund only to include Communications, Liquor and Operating Funds. The first half of the City's property tax revenue was received in June. Licenses and permit revenues are up as are revenues from development. This report covers expenditures through August but Council will receive updated estimates at the November work session. Anderson asked if property tax revenues received from the county are higher in the first half of the year. Erickson stated that first half is about 51% of the estimated total. There have not been any significant or unanticipated expenditures this year. Motor fuel prices are very volatile but savings are anticipated in some areas. Attorney fees shown in the Communications Fund reflect cable franchise negotiations. Anderson asked if the fees have been charged accurately since several cities have contracted the same or similar work. This fund is made up of only franchise fees. City Council Work Session October 26, 2015 Page -4 - Finance anticipates that the Liquor Fund gross profit will be slightly below budget, but not as much as was anticipated earlier in the year. There was a major savings on the Water Treatment Facility re -roof project; it was budgeted at $661,000 but due to installing a different type of roof the contract came in at about $311,000. The Finance Committee suggested enhancing the document by adding year over year comparisons in the Utility Fund and analyzing other factors such as weather fluctuations. Council felt that it would also be helpful to add project status reports related to budget and completion progress. Council appreciated the simple and concise format of the document and staff s work. d. CIP Facilities/Equipment Budgets Erickson pointed out some revisions in the Draft CIP. Cost estimates have been updated for document accuracy. County -led projects will show only the City's share of the costs; City - led projects will reflect the total estimated project costs and show the county contribution as a funding source. Funds from the sale of the 183`d Street land are shown as a funding source for the Avonlea Park acquisition and facility plan improvements. Miller added that $950,000 from the land sale has been placed in the Avonlea Park fund and the remainder in the facilities fund; the funds can be reallocated as the Council chooses. Miller reviewed the agreement with Mattamy Homes for acquisition of the Avonlea Park. Anderson requested clarification regarding the Transportation budget and the County's advance funding the City of Lakeville for the Highway 50 upgrade project. He believes it would be helpful to indicate on the page if it is a county or city -led project and the total project cost. Erickson stated that challenges with the CIP include future tax levies, fund balance reserve levels and fees. Figures include 2% inflation in the General Fund but do not include additional staffing. Some equipment fund items will require additional operating staff. Little clarified that under the current 2017 budget with no staffing increases the preliminary levy increase would be 7.9%. Anderson noted that these are estimates. The $640,000 remaining from the 183rd Street land sale will result in a reduction in the anticipated 2016 property tax levy and helps to get to the targeted 4.9% approved by the Council. Staff will continue to look at opportunities for reduction of the tax levy if possible. There were no changes in funding sources for the Equipment Fund. Davis asked if the 202nd Street and Hamburg Avenue intersection improvements would include reconstruction of Hamburg between 202nd and Lakeville Blvd. Chris Petree stated that Hamburg would be a separate project and would be urbanized at that time. Swecker believes that the extension of Kenrick Avenue from the north should be a priority and the connection would provide more traffic for the businesses in the Timbercrest area. The businesses and jobs are being lost and it might be helpful to know the reason the businesses City Council Work Session October 26, 2015 Page -5 - are closing. Mayor Little stated that some of the businesses have products that can easily and readily be purchased on line. Council and staff discussed various funds and potential issues including equipment and facilities, water trunk fund, MSA fund, etc. The Utility Fund balance indicates that debt will need to be issued for watermain replacement. Erickson suggested Council further evaluate whether that would be cost effective. Erickson pointed out that this draft document is intended for information and planning. With the final 2016 expenditures and funding sources being determined, Council is being asked to provide any additional direction for staff as soon as possible. Little is concerned about the budget structure and believes consistent funding for capital improvements is essential. LaBeau stated that one of the most common topics that people are concerned about is taxes and the increasing burden of city and school levies. She believes the city needs to look at the cost of services and amenities and associated staff needs. She is concerned about the cost of maintenance and believes possibly some decisions need to be made regarding some of the lesser -used parks. Little supports a pay-as-you-go method of funding. A growing community has needs and since 2007 there hasn't been a steady funding source for the CIP. The decisions made now will have a great effect on the future. The revenue from Southfork was a rare occurrence and the liquor revenues are unpredictable. Hoping for another TIF refund does not reflect good leadership. Miller stated that the CIP is being brought forward in December for approval at the same time as the budget. Anderson agreed that Council needs to show leadership, support staff, and set priorities on practices and policies. It is important to discuss topics that are brought forward such as parks and trails; residents have high expectations but they don't want to continue to pay more and more. Council needs to find a balance between needs and responsible use of debt. The economy has not fully recovered. Little stated that higher debt results in higher taxes. Growing cities require new roads and maintenance of existing infrastructure. Failing to fund capital improvements with taxes over the past several years has resulted in postponing payment of the debt to future years. He does not wish to "kick it down the road." e. Solar Garden Subscription Proposal Mr. Miller stated that several private companies have approached the city with offers to participate in a solar garden. Solar gardens are typically off-site facilities that are owned and installed by a third -party company who then sells electricity back to subscribers at a lower City Council Work Session October 26, 2015 Page -6 - rate. In this instance the third party, Metropolitan Council, is sponsoring the program and is offering to allow the City of Lakeville to participate which will result in a credit to the City from Xcel Energy. For cities that subscribe to the plan, Met Council will take 80% of the savings and split the remaining 20% with the three participating cities. That portion of the City's utility bills would be locked in at today's rates for 25 years. The only risk is if the rates go down over the next 25 years, which is unlikely. Lakeville would be subscribing to 6.7% of the energy produced, locking in at 8.9 cents per KWH, and receive a credit at the market rate, currently 9.9 cents per KWH. Over 25 years the net present value of savings would be $405,000. Several cities have already joined the program and the Metropolitan Council has now extended the opportunity to Lakeville. A letter of interest has been forwarded to Xcel Energy to secure the position. There are no costs to the City of Lakeville for installation of the equipment. The electricity used would be from City owned buildings which are on the Xcel Energy system. The agreements will also need to be approved by Xcel. Staff recommends approval of the agreements. Council members directed staff to place the Solar Gardens proposal on the next regular Council agenda. f. Transportation Project Update Mr. Petree provided a transportation project update beginning with Co. Rd. 50. Council has approved several purchase agreements for property between Ipava Ave. and Icenic Ave. The Dakota County Board also approved the purchase agreements and closings will take place on October 30. The County has also approved a JPA for the CR 50 project which will be on the November 2 Council agenda. The county has also recently approved a contract with Bolton and Menk for consulting engineering and project design. Final appraisals on remaining parcels are anticipated to be available by the end of the year. These will determine the final configuration of access for those remaining businesses. One single family home is still being negotiated. JPAs have been executed by both the City and County for the Dodd Blvd./CR 9 project scheduled for 2016. Design plans are about 90% complete and will be bid just after the beginning of the year. The County has completed appraisals on properties that need to be acquired and is in negotiations with property owners. Staff is working with S.E.H. on the realignment of 172nd Street at County Road 5 at Kenyon Ave. The intersection has been identified as needing to be reconfigured for safety purposes. This project will be discussed along with the CIP at the November work session. Anderson wants to make sure the business owners in the area are notified. City Council Work Session October 26, 2015 Page -7 - LaBeau said she has received a lot of comments regarding cost overruns on the roundabout and would like to reassure taxpayers that it won't happen again. Petree stated that future JPAs will contain additional language requiring budget checkpoints throughout a project. The County is also in the process of hiring additional staff to monitor projects. Anderson suggested inviting county staff back to further discuss the issues. LaBeau asked if the county planned to credit any overruns back to the City. Petree believes the advance funding by the county indicates their willingness to work with the city to provide payment options. The County and the City will share in the cost. Swecker questioned why the 172nd Street/CR 5 project has taken priority when businesses are closing in other areas. Mr. Miller stated that the purposes of the project are improved traffic safety and development opportunities. 4. Adjourn The meeting adjourned at 8:25 p.m. Respectfully submitted, Ju jiHawkins, Deputy City Clerk Matt Little, ayor