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HomeMy WebLinkAbout11-23-15 WSCITY OF LAKEVILLE CITY COUNCIL WORK SESSION MINUTES November 23, 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; David Olson, Community and Economic Development Director; Jerilyn Erickson, Finance Director; Chris Petree, Public Works Director; Monica Heil, Operations and Maintenance Engineer; Brenda Visnovec, Liquor Operations Director; John Hennen, Interim Parks and Recreation Director; Judi Hawkins, Deputy City Clerk 2. Citizen Comments: None 3. Discussion Items: a. Utilities/Liquor/General Fund Budgets Finance Director Jerilyn Erickson provided an overview of the 2016 proposed budgets for Utility, Liquor, and General Funds. Water revenues currently cover operations, acquisitions and a portion of major maintenance; however, projected fund balances indicate additional revenues will be needed for infrastructure replacement. As a result of the large number of utility replacement projects bonds will need to be issued in future years which will increase the debt service. Staff is recommending a 10% increase in water rates and a 5% increase in the sanitary sewer rates and base fees in order to maintain a steady working capital balance. Water infrastructure improvements are paid solely from the water fund and not from assessments or tax levies. A new Maintenance II position is proposed for 2016 and will be funded 60% by the Water Operating Fund and 40% by the Sewer Operating Fund. The Sewer Operating Fund includes infrastructure improvements and replacement of the Vactor. Staff recommends a utility rate study due to the number of significant projects in the CIP and to ensure equitable charges to customers. Erickson would like to have at least three months of operating costs in reserve. LaBeau stated that developer water connection fees are higher than some communities but are offset by lower water rates; she asked if higher rates would be an offset with lower developer fees. Erickson stated that funds for ongoing operations and infrastructure maintenance and replacement come from utility fees. Lakeville's water rates are currently in the lowest third of cities in the metro area. LaBeau would like to compare Lakeville's water rates and connection charges to those of other cities'. Miller stated that the wastewater fees are mostly determined by Metropolitan Council charges. Lakeville's last utility rate study was done two years ago and resulted in some City Council Work Session November23, 2015 Page -2 - changes to the structure. Rates were lowered during the recession to assist homeowners. The impact of the water rate increase would be $6.45 per quarter, based on 18,000 -gallon usage. Increases in street light operations are anticipated from Xcel Energy and Dakota Electric. Staff is recommending a 3.5% increase per quarter. There are no street light projects in the CIP; however, street lights could be included in the Holyoke Avenue improvements. Lights would be installed at the City's expense then would be the responsibility of the electric company. The Environmental Resources Operating Fund includes the addition of a part-time Forester position. Staff is recommending changing the name of the charge on utility bills from Surface Water Management Fee to Environmental Resources Fee for clarity. The fund reflects an increase of $.75 per quarter. Staff anticipates the forester would help put in place an emerald ash borer preparedness plan, respond to residents' inquiries, and evaluate trees within street reconstruction project areas. The forester could also explore grant opportunities for EAB. The position would use an existing City vehicle. Council members expressed support. Liquor Fund revenue projections are conservative compared to previous years; however, the profits have started to rebound. Net profits from the Liquor Funds have been used for administrative technology support from the General Fund, police station bonds, and significant Equipment Fund purchases. The fund balance has been declining in recent years due to purchase of land and other uses. The transfer from the Liquor Fund to the Equipment Fund in 2016 has been reduced from $800,000 to $500,000. Visnovec stated that liquor stores' gross profit has not declined as much as was anticipated. Anderson asked if the $1.1M estimate for 2016 is too conservative. Staff stated that competition and road construction have had an impact and the estimates need to remain conservative for the next two years. Staff provided General Fund year-end estimates for 2015. The fund balance needs to go up each year to maintain a level balance; staff is recommending adding $334,000 to the fund balance with an approximate 44.9% fund balance ratio. An increase of $1M in revenues is due to higher than expected building permits, grants, charges for services, and personnel savings. The preliminary property tax levy of $25,940,248 was adopted in September. This was an increase of $1,211,699 from the 2015 levy, or 4.90%. The proposed tax levy has been reduced by $260,629 from the preliminary tax levy. The Truth in Taxation public hearing is scheduled for December 7 and the 2016 budget, tax levy and 2016-2020 CIP can be adopted at that meeting. Erickson discussed several budget impacts due to personnel changes including new positions, employee turnover, changes in pay scales and delay of Maintenance II hiring. Additional opportunities to reduce the budget could come from savings on the City's fuel contract. Petree stated that the fuel contract runs from February through January rather than on a calendar year. Fuel is purchased through a cooperative purchasing venture through a consortium of cities, City Council Work Session November 23, 2015 Page -3 - counties and the State of MN. Recent lower oil prices will likely result in a lower bid for 2016 than was originally budgeted. Approximately 85-90% of gasoline and 75-80% of diesel fuel is purchased through contract pricing, the rest is purchased with spot pricing. Staff is recommending a 3.85% increase in the tax levy from 2015 to the proposed 2016. Proceeds from the sale of the 18314 Street property will relieve budget pressures in future years. Anderson stated that expenditure priorities need to be in line with resources and some timing adjustments might be needed in order to meet the substantial numbers. Little stated that they also need to plan for unexpected expenditures and put consistent long-term funding in place to plan for capital, equipment and facility needs. Lack of funding plans would put undue pressure on future councils. Little believes future priorities and future funding options should be considered in the current budget. Anderson would like the levy to increase by no more than $300,000. Little does not want to rely on the one-time revenue from the land sale and would like to set some of the money aside for future needs. Davis wants to look at future needs and both long-term and short-term funding sources. He also believes it is important to establish policies and funding priorities, i.e., sidewalks on both sides of the street. Swecker asked why a two-year preliminary budget isn't being proposed, as had been done previously. Miller stated that too many assumptions would be necessary in order to propose a two-year budget. Council commended staff on their budget preparation. LaBeau requested that excess funds be allocated to road improvements. Council directed staff to present the budget as discussed at the December 71 meeting. A resolution will be available for Council consideration of a 3.85% tax levy for 2016 as proposed. b. Fee Schedule Changes Staff has reviewed several areas of the fee schedule for possible updates and to make it more comprehensive and transparent. Miller clarified that some of the developer fees have not been addressed but those can be discussed at the January or February work session. Council members requested clarification on several items including escrows, water meter sales and room rentals. LaBeau stated that fluctuating prices of water meters make it difficult for contractors to know how much to charge the consumers. Petree stated that the meters are purchased in bulk but fluctuation of individual prices is not more than a few dollars. A Public Hearing to approve the fee schedule is scheduled for December 7, 2015 at which time residents may provide input. Any changes will be incorporated into the proposed fee schedule which will become effective on January 1, 2016. Council members directed staff to present the fee schedule for consideration on December Th. c. Downtown Lakeville Development Guide Update Community and Economic Development Director David Olson stated that the Downtown Development Guide was adopted in December 2006. The guide is often referred to in discussions City Council Work Session November 23, 2015 Page -4 - such as the recent outdoor patio ordinance amendments and the proposed Holyoke Avenue reconstruction project. At Council's request staff prepared a status report on the progress of the guide's recommendations including public and private development activities. Paul Haglund and Anne Kutzler of the DLBA were also present. The guide is based on the concept that the downtown is a unique, identifiable and thriving business district. There are five concept plan districts: Downtown Core, South Gateway, Iberia Avenue Extension, North Gateway, and North Holyoke Avenue. There have been $3.4M in improvements and renovations in the downtown over the past ten years and Olson highlighted several: Market Plaza was created as a community gathering place for Farmers Market, Pan-O- Prog, and other activities; storefront improvements have been made and setbacks standardized; a new Ace Hardware store was built; the former bank/city hall was converted to a coffee shop/ wine bar; the former Enggren's grocery store was converted to a hockey training center which brings families into the downtown; and a property at 210`x' and Holyoke was razed with help of the CDA to prepare for future widening of Holyoke. At the time the plan was designed there were discussions about the possible redevelopment of the single family homes along the north Holyoke corridor; however, it was determined that no changes would be made to that area. Several new businesses have been established in the downtown. An update of the downtown plan is needed; however, there are not adequate staff resources to complete the update internally. The cost estimate for a consultant to complete the plan is $30- 40,000. Olson believes that a combination of about $10,000 of CDBG and other grant funds would be available for the update. Anderson questioned whether the timing is right for this project and if it is beneficial to spend the money at this time. Changes to the Holyoke Avenue corridor should be considered as part of the street reconstruction project. He suggested getting input from the Downtown Lakeville Business Association (DLBA) regarding the time commitment available for planning. Staff will look into some other possible grant opportunities to assist with update costs. LaBeau asked about possible mixed use at the north end of Holyoke, south of 202°a Street. Kuennen stated that there were discussions that the single family homes might eventually be converted into boutiques and shops but current homeowners did not support that concept. The focus is to strengthen the downtown core and grow from there. Anderson asked how the City's comprehensive plan ties in. Miller stated that the Comp Plan update is due in 2018 but will be worked on during 2017. Kuennen stated that the basic business core in the downtown has changed in the last ten years with many new businesses who have not had an opportunity to offer their input into the downtown plan. Anderson added that this also raises other questions such as the possible need for buffer zones to accommodate new restaurants. Another major space in the downtown will become vacant soon with the closing of the Ben Franklin. Anne Kutzler, DLBA Executive Director, stated that the biggest challenge for business City Council Work Session November 23, 2015 Page -5 - owners is a need for directional signage to downtown. Paul Haglund, DLBA president, hopes that recent residential growth near the downtown will bring in additional customers. Little stated that it is important for repeat business if new residents receive a positive first impression. Davis agreed the study should be done before the streetscape plan. Olson stated that the scope of the update needs to be determined but there are some CDBG funds available. Council directed staff to work with the consultant to develop a scope and a funding plan and present options to Council for consideration. d. North Creek Trail Update Operations and Maintenance Engineer Monica Heil provided an update on the proposed North Creek Greenway Trail project. The portion of the project located in Lakeville is a 1.05 mile trail extension proposed to connect the existing regional greenway trails at 173rd Street in Lakeville to the shared Lakeville/Farmington border. The City of Lakeville and Dakota County were awarded $899,410 of Federal Transportation Enhancement grant funds in 2012. In addition Dakota County has budgeted $224,857 for easements and labor and Lakeville has budgeted $112,210 from the Park Dedication Fund for engineering associated with the trail. At the end of 2014 staff requested a grant extension when it was determined that the easements were not going to be obtained in time to proceed with the trail. To date the City has incurred $116,278 in preliminary engineering and design fees. The county is continuing to work to obtain the necessary easements. The grant extension required that trail construction begin by 2016. Based on 40% preliminary design completion, project construction is estimated at $1.186M. The bridge portion has not been designed, which could alter the construction and inspection costs. Total costs could exceed $1.54M; originally $1.24M had been budgeted for the project. Staff is asking Council to consider options and provide direction on whether to proceed. A total of $212,000 was budgeted for engineering fees; at this time the City of Lakeville has incurred costs of $356,000. The county has committed to 20% of the construction costs above the grant funds. The City's share of the project is estimated at $405,000 including construction of a trailhead facility within East Community Park. Satisfaction of all of the grant requirements would result in a $193,700 funding gap. The City could consider foregoing the grant and constructing the trail as development occurs in the area. If this option is chosen the City would be responsible for 3/8 of the trail material costs and some portion of the trail crossing the creek. The trailhead facility would not be required. Developers would then be responsible for grading components and some opportunities might be created for the trail crossing. The City's cost is then conservatively estimated at $395,000. Heil stated that the construction figures are estimates only and are subject to change. Miller stated that engineering that has already been completed would be beneficial to the City when the trail is built in the future. The completed trail would be maintained by Dakota County. City Council Work Session November 23, 2015 Page -6 - Council members directed staff to notify the State and the County that the City has decided not to move forward with the project at this time. e. Driver Feedback Sign Policy Council members had previously reviewed the DFDS materials and did not have further questions. Council directed staff to put this on a future regular agenda for consideration. f. Transportation Project Updates • Chris Petree stated that Bolton and Menk has completed surveying of Co. Rd. 50 and a design kickoff meeting is scheduled for December 7. All of the properties approved for purchase have been secured and winterized. Additional property negotiations will be handled by the County, including the potential backage road for the existing businesses. • Reconstruction of Co. Rd. 9 (Dodd Blvd.) will go out for bids early in 2016 and will likely begin in April or May. The County continues to negotiate on property acquisitions. • A meeting will be scheduled with affected property owners in the next couple of weeks regarding the realignment of 172nd Street and Co. Rd. 5. • Concerns expressed at the 2016 street reconstruction public hearing will be discussed at the December 141 work session, particularly the Southfork commercial area timing and access, as well as assessments in the north Lake Marion neighborhood. Other: Council members will check their schedules and let staff know if they would prefer the 11th or the 261 for the January work session to accommodate the January 25th annual Chamber dinner. If the budget is approved on December 71, and if Council is in agreement, the December 215 regular meeting will be cancelled and a special meeting will be held prior to the December 14th work session to consider any time sensitive items. 4. Adjourn The meeting adjourned at 8:55 p.m. Respectfully submitted, Judi awkins, Depu Clerk Matt Little, Ma Ior