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HomeMy WebLinkAbout09.20.10 Council Minutes 7a.. COUNCIL MINUTES REGULAR September 20, 2010 1. CALL TO ORDER The meeting was called to order by Mayor Larson at 7:00 p.m. 2. PLEDGE OF ALLEGIANCE Mayor Larson led the audience and Council in the Pledge of Allegiance. 3. ROLL CALL Members Present: Members Absent: Also Present: Audience: Larson, Donnelly, Fogarty, May, Wilson None Joel Jamnik, City Attorney; Peter Herlofsky, City Administrator; Teresa Walters, Finance Director; Randy Distad, Parks and Recreation Director; Kevin Schorzman, City Engineer; Todd Reiten, Municipal Services Director; Brenda Wendlandt, Human Resources Director; Cynthia Muller, Executive Assistant Ian Menoch, David Pritzlaff, Lenny Hal~ Larry White, Dick Ornberg 4. APPROVE AGENDA Councilmember Wilson pulled items 7g) Adopt Ordinance Amending Downtown Commercial Overlay District Design Standards for Screening and Fencing, and 7i) August 2010 Financial Report. Councilmember May pulled item 7d) Approve Game Ice Rental Agreement. MOTION by Fogarty, second by Wilson to approve the Agenda. APIF, MOTION CARRIED. 5. ANNOUNCEMENTS a) Recognize Retirement - Bill Weierke Council and Municipal Services Director Reiten recognized the retirement of Bill Weierke as Streets Supervisor after 26 years of service. He will retire effective September 30,2010. 6. CITIZEN COMMENTS Mr. David Pritzlaff: 20255 Akin Road, thanked Bill Weierke for his service to the City. Mr. Pritzlaff noted at the last meeting, Council approved the preliminary levy. Included in the list of reductions were two staffpositions. Now that the preliminary levy is approved, he asked what the positions are. Staffwill respond. Mr. Pritzlaff stated at the last meeting, he gave his opinion. He stated his opinions were demeaned by a Councilmember and the City Administrator. What he said about reducing fat in the budget should have been left alone as it was his opinion. In the future, he would like to have his opinion left alone, unless it is something different; there is no right or wrong. 4 Council Minutes (Regular) September 20, 20 I 0 Page 2 Mr. Dick Omberg, 617 Spruce Street, asked if the City has changed the policy on boulevard trees. His tree died, the City ground out the roots, and he was told the City would not replace trees. Today one block away, trees are planted all over in the boulevard. He asked if that meant he would get a tree now. He was aware there is an ordinance against parking on property without a hard surface. As he drives around town, he sees cars parked on easements, without concrete, and cars not moved for 3-4 years. Mayor Larson asked staff to provide Mr. Omberg with the boulevard tree ordinance and the minutes from the Walnut Street project regarding the trees. Trees that were removed by the City are being replaced, not trees that died. Mr. Omberg asked whose responsibility it will be when those trees die. He thought the City was not going to replace boulevard trees. Councilmember Fogarty asked Mr. Omberg to send an e-mail or call the Police Department regarding the specific properties. Mr. Omberg stated he has come to City Hall and told staff: but it does not work. He suggested Council drive around town. Councilmember Fogarty stated code enforcement is done on a complaint basis and she has never received any information. Council does not have the ability to follow-up without the information, but coming to City Hall should work. 7. CONSENT AGENDA MOTION by Wilson, second by Fogarty to approve the Consent Agenda as follows: a) Approved Council Minutes (9/7/10 Regular) b) Approved School and Conference - Engineering c) Approved School and Conference - Finance e) Received Information Hydrant Flushing - Municipal Services f) Adopted RESOLUTION R52-10 Accepting Donation Rambling River Center- Parks & Recreation h) Adopted ORDINANCE 010-628 Amending Erosion Control and Turf Establishment Regarding Installation of Sod on New Construction - Planning j) Approved Beer License Ugly Mug - Administration k) Approved Bills APIF, MOTION CARRIED. d) Approve Game Ice Rental Agreement - Administration City Administrator Herlofsky explained staff has worked with the School District to come to an agreement for payment of ice time for high school girls and boys hockey games. The school will pay $325/hour/high school event. This is for a four-hour event which amounts to $1300. Previous agreements had issues with the gate receipts which varied the revenue stream. Councilmember May recalled the old agreement had a difference between girls and boys games, but this agreement is the same for both. She asked how the hours are determined. Parks and Recreation Director Distad stated there is a block of four hours for the junior varsity and varsity games; a block for boys games and a block for girls games. The amount does include clean-up costs. Councilmember May noted the agreement also states the City shall provide and pay for admission personnel, concession personnel, one scoreboard operator, and one announcer. She asked if the concession is handled by the hockey association. Councilmember Fogarty stated there is one person at the table taking money and 5 Council Minutes (Regular) September 20, 2010 Page 3 tickets. Another person is in the office area to sharpen skates and sell miscellaneous skating items. That is considered the concession personnel. Councilmember May stated without any information on the ticket proceeds, does staff feel the $325 covers our costs as we have a large debt to pay as well. City Administrator Herlofsky stated this is not to cover the debt; it covers operations. Staff met with the school district to determine a fIxed cost for each event for the City and the school. There will be no issues with dividing the money. Staff stated the average gate receipts are $22,000/year gross. As part of the gate receipts we had to deduct the cost of the high school rental for four hours and the remaining amount was split 60/40 with the school. The amount the City received was not enough to cover our costs. City Administrator Herlofsky explained staff worked out this agreement to make sure all the costs generated at the event are covered. This agreement is fair to the City and the School District. Councilmember Fogarty asked who determines what groups can get into the games for free, such as the band so they can play. It is the School District who determines who can get in for free for performances. MOTION by Donnelly, second by Fogarty to approve the Farmington High School Game Ice Rental Agreement. APIF, MOTION CARRIED. g) Adopt Ordinance - Amending Downtown Commercial Overlay District Design Standards for Screening and Fencing - Planning Councilmember Wilson noted this issue was discussed previously and then it dropped off. He asked if there was a concern as he did not see anything different from what was discussed previously. City Engineer Schorzman stated there was not a specific event to bring it forward now, it has been in process. There has been some potential redevelopment in downtown lots so this should be in place. Any potential development will be made aware of the ordinances. Councilmember May asked if there was discussion with the Downtown Business Association in the creation of the document. Mayor Larson stated they were part of the process years ago when this started. Councilmember Wilson suggested bringing this to the DBA for comment and then bring it back to Council. City Engineer Schorzman stated the Planning Commission did hold a public hearing and it was noticed. If there were any concerns from the DBA, they could have been brought forward at that time. This was approved by the Planning Commission. Councilmember Donnelly noted it is not a completely new ordinance, it is only changing the fencing requirements. Staff confIrmed the DBA was notified of the public hearing. MOTION by Wilson, second by Donnelly to approve ORDINANCE 010-627 amending section 10-6-28 of the Zoning Code concerning the Downtown Commercial Overlay District Design Standards. APIF, MOTION CARRIED. i) August 2010 Financial Report - Finance Councilmember May stated many of her comments will be related to the budget discussion. 6 Council Minutes (Regular) September 20, 2010 Page 4 Permits - We are above the current budget number, but Councilmember May recommended keeping that number the same for 2011. Ifwe exceed the number next year, the general fund could use some shoring up. Anytime we are over on revenue, it is a bonus. Fines - Even the 2011 budget number of $70,000, which is $30,000 less than the 2010 number, is still overstated. She would like the Police Department to look at the number again. Currently we are at $40,000. She felt the number was way out of line. Charges for Services - Councilmember May asked about the status of the contract for Fire Services. She would not be able to vote on a specific number for revenues unless she saw the contract. City Administrator Herlofsky recently received some information from Castle Rock and a draft contract will be available at the next meeting. There has been a fIxed amount set in the contract for Castle Rock, and Empire and Eureka may continue with the current amount. Councilmember May asked for a general idea for the workshop. City Administrator Herlofsky explained they averaged the last three years of activity and added 3% for 2011,3% more for 2012, 3% more for 2013. Councilmember May asked why the Police charges number is going down for 2011. The detail is for ISD liaison so ifwe increased an SRO, why would it go down. Staffwill research this item. Investment Interest - Councilmember May noted this is a very sad number. She felt our projected 2011 budget number is too high. We have a budget number of $250,000. There was an adjustment in June of a negative $45,000. She wanted to know what staff anticipates the monthly income to be. Looking at the average of where we are, the number should be closer to $180,000. Special Revenue Funds - Councilmember May noted the Arena and Recreation funds have defIcit balances. She asked where we anticipate borrowing the funds from. Parks and Recreation Director Distad stated as far as the Rambling River Center renovations, there is a 5-year time period to pay that back. Regarding the Arena, staff is trying to generate more revenue to cover the costs and try to add some revenue to pay down the defIcit. Councilmember May asked about the defIcit for 2010. Staff explained we raised the Ice Arena rental rates starting last year. Hopefully, this will mean increased revenues. To make up $178,985 this year is not feasible. Councilmember May stated it is more a year end question and how are we going to balance the funds. Finance Director Walters will come back with a plan as far as whether there will be a transfer or borrowing from another fund, but we cannot end the year with a defIcit balance. Councilmember May asked about the fundraising for the Rambling River Center and how those funds are handled. Parks and Recreation Director Distad explained we collect the money and deposit it in either the miscellaneous or donation line item. Councilmember May asked ifwe are seeing the net number with the fundraising dollars accounted for in the defIcit balance. Finance Director Walters confIrmed they are included in the fund balance and used to pay off the defIcit 7 Council Minutes (Regular) September 20, 2010 Page 5 and not for operations. Parks and Recreation Director Distad stated the funds for the naming rights program will come in over five years. Liquor Store - Councilmember May noted we have six out of eight months with revenues under expenditures. She felt we need to look seriously whether we want to continue operating a liquor store as a City function. Street Light Utility - Councilmember May noted because we did not start collecting in January and February, how will we make that up? Finance Director Walters explained at the end of the year, the additional two months billed in February for November and December, that money will be included as 2010 revenue. It will show as a receivable at the end of the year. We should come out very close. With the current numbers we are two months behind, so two additional months will be almost $25,000. We may have $1,000 - $2,000 deficit at the end ofthe year. Councilmember Wilson asked about the street light utility. One of the suggested benefits was consistency in the revenue stream and we would be taxing residents equally for street light use. We are seeing expenditures across the board and revenues seem to be unpredictable. Ifwe are looking at foreclosed properties, where Farmington is higher than the average, that will have an impact. Finance Director Walters stated the banks are paying the bills, but there is a delay for a period of time. We count it as revenue when it is billed. He was concerned that if we do not break even at the end of the year, there will be a transfer from the general fund. He felt it should be discussed that this be brought back into the general fund rather than separated. Councilmember Wilson also noted in liquor operations, April and July were the only two months we had positive revenue. When we added the second liquor store, we knew revenues would be lagging. When he reads comments, which may be reasonable, that sales were off because of four Saturdays rather than five and that the weather was down, that is not a business model he is comfortable with. We need more predictability to the revenue stream. He asked if this will be the ongoing business model for liquor operations. Councilmember Donnelly noted we have always paid the street lights before; it is not a new expense, but a way to cover the cost. What is confusing is that it is not the same number every month. Finance Director Walters stated the number of people billed each month is different. They are not billed monthly, they are billed quarterly, and there are different entities in each group. City Administrator Herlofsky stated we have four areas that are billed, and there may not be the same number in each group. Finance Director Walters noted every third number is similar. Councilmember Wilson asked why there is such a big fluctuation and what happened in July vs. August with expenditures. There was some maintenance in July and it was explained in the July report. Councilmember May stated we need to remember why we did this. It was to reduce the budget in another area. Her concern with this type offee is that it becomes it's own 8 Council Minutes (Regular) September 20, 2010 Page 6 separate entity and this was to try to reduce the overall levy because we have a separate utility fee. Mr. David Pritzlaft: 20255 Akin Road, noted in the minutes from the last meeting, a resident had a concern with noise from the Legion. It was missing from the minutes that Mayor Larson would take care of the issue. Mayor Larson stated he had a discussion with the Police Department and the review is ongoing. City Attorney Jamnik stated no amendment to the minutes is necessary as they are not a verbatim transcript of the meeting. 8. PUBLIC HEARINGS 9. AWARD OF CONTRACT 10. PETITIONS, REQUESTS AND COMMUNICATIONS a) Adopt Resolution - Amending Schwiness Retail Center (Farmington Marketplace) Planned Unit Development Agreement - Planning City Engineer Schorzman presented the PUD Amendment for Farmington Market Place which is located along Pilot Knob Road. The amendment includes six items: 1. An increase in the square footage of the building by 200 sq. ft. for vestibules for two restaurants. 2. Parking was reduced by ten spaces to accommodate a playground area. 3. The playground is a maximum of3500 sq. ft. to the west of the building. The Planning Commission recommended that fencing, landscaping, bollards and signage be placed so people will not drive through the area. 4. Add outdoor dining. 5. Change in zoning to allow outdoor dining. 6. Regarding notices for the amendment. Councilmember May had a concern with how the retail centers are turning into daycare centers. The original plan agreed on had traffic flow. We have done this in another area and she felt we are creating one in and out. She did not like the playground area next to Pilot Knob Road. She recalled at one point the Ugly Mug wanted a drive through window and it was denied, and now we are going to allow the entire end of the building to be blocked off. The original purpose was for a retail center. She understood the Planning Commission approved it. There are other sections in the resolution she does not have a problem with, but she has a concern with the playground. Living in the area and being able to drive around the building, this will create a different dynamic to the center. Councilmember Wilson asked how the garbage trucks will go through the area. City Engineer Schorzman stated it was determined the garbage could be collected without circling the building by pulling into the parking lot and backing up. This is not an uncommon practice with the large containers. 9 Council Minutes (Regular) September 20, 2010 Page 7 Mr. Larry White, Grand Projects, they built the original center and are involved with the proposed expansion. Regarding the garbage, the collection area is on the comer of the building next to the driveway from English Avenue. Mayor Larson stated he was on the Planning Commission when this was built. One thing that was stressed was the ability to circle the building for fIre purposes. He asked if that was a concern. The Fire Marshal was comfortable with the access. Mr. Larry White stated the building and fIre codes are concerned with access to three sides of the building. The building also has a fIre sprinkler system. The center was constructed in 2002. Movie Gallery left the center and the space has been marketed since April. The daycare was ready to take the space. Mr. White stated the playground and garbage circulation have been discussed with Planning staff and there was no concern. Ms. Colleen Warner has been licensed to do daycare in her home for five years and she wants to expand to a larger facility. She will be licensed for up to 60 children, which will result in 12 new jobs for the City. This is an excellent opportunity to keep a business and revenue in town. Any inconvenience to drive around the building is mitigated by the fact of adding jobs and maintaining a vibrant center. The Planning Commission discussed having a non-climbable fence and protection from cars crashing into a fence. These items have been discussed for other projects, but did not result in putting up guard rails or posts, landscape screens, or buffers. Mr. White agreed to put up guard posts and signs on the north and south sides of the fence, and put reflective material on the fence for night. The proposed fence would be very difficult to climb and will be 6 ft. in height. Councilmember Wilson noted this is an exciting opportunity and we will have a good product. He asked about the other inquiries and would like to make them aware of other locations in town. He did not have a concern with mixing a daycare with retail. Councilmember May stated as a customer ofthis retail center, one ofthe nicest features was to be able to travel from the liquor store to Subway and Movie Gallery and this will affect the general flow. It gets very congested in the center area and people will go around the back side. This could have a detrimental effect on the current businesses and wondered how they felt about this. She felt it will change the dynamic in how the project was designed. Councilmember Fogarty stated she had similar reservations, but then realized her children went to a daycare along Hwy 3. What matters most about a daycare is the people working there and how they take care of the children. This person has a successful daycare already and feels they can have a successful business. She disagreed about the circulation. One of the things the businesses in the other retail center liked about having the daycare was the increase in foot traffic. She does not see a lot of circular activity to the back side of the building. 10 Council Minutes (Regular) September 20,2010 Page 8 Mr. White noted the row of parking where the playground will be located is the most underutilized parking in the whole center. That driveway as opposed to Subway, has much less traffic. Mayor Larson asked about the safety features and noted they have the non- climbable fence. He asked how they felt about the landscaping. Mr. White replied they were left with the impression from the Planning Commission that these items had been discussed with the last two daycares in town and were required. He drove around and noticed none of those conditions were in place so evidently were not required. The one along the railroad tracks has a 4 ft. high chain link fence. The one on Hwy 3 is the same way. There are no bollards or landscape buffers. He noted City Planner Smick agreed with eliminating the landscaping and changing the bollards to one on each side of the fence and put it where the drive lane is with a sign and reflective tape. They also propose a No Thru Traffic sign by the garbage collection area. Mr. White would like to amend their plan to have three bollards with signs and reflective tape, have the 6 ft. non- climbable fence and eliminate the nine shrubs on the embankment. City Engineer Schorzman suggested since the area has been open to circulation traffic, he felt having bollards on the north end would be appropriate. MOTION by Fogarty, second by Wilson to adopt RESOLUTION R53-10 approving the PUD Amendment removing the landscaping and the southern bollards. Voting for: Larson, Donnelly, Fogarty, Wilson. Voting against: May. MOTION CARRIED. b) Approve Purchase ofPIayground Equipment - Parks & Recreation Staff was contacted by the NRP A regarding the purchase of playground equipment to be displayed at the conference in Minneapolis. The equipment will be installed in Rambling River Park. The original cost ofthe equipment was $89,881; the discounted price is $59,427. The Park Improvement Fund balance is slightly over $178,000. Along with the cost of the sidewalk for the Depot Way Arts Park, the balance in the Park Improvement Fund will be $107,025. Councilmember Wilson asked what equipment will be removed. Staffwill remove a climber and a clown swing. The playground border will not need to be enlarged. Councilmember May asked if the Commission discussed the survey, because the survey put trails as number one. This is a large amount of money. Part ofthe survey did talk about maintaining what we have. She asked about the cost to purchase a couple of playground items vs. the cost ofthis castle. Parks and Recreation Director Distad replied in neighborhood parks they will spend $50,000 - $60,000 on equipment. This is a good deal for a larger piece of equipment for a community park. Councilmember May noted the Parks and Rec Commission will be spending 1/3 of their funds in an economy that is not replenishing those funds. She understood the savings, but on the tour they saw the condition ofthe trails and that was the number one priority that residents wanted. Councilmember May asked if vandalism was discussed. Staff noted that occurs on all equipment and they have ways of removing graffIti. 11 Council Minutes (Regular) September 20, 2010 Page 9 Mayor Larson asked if the equipment can sit in water. It can, as it is made from aluminum, steel and coated with a rubber material. Mayor Larson asked if this was not approved, when would the existing equipment need to be replaced. Staff replied some of the equipment should have been replaced years ago. It is in very bad shape and very old. As far as safety, it is still okay. MOTION by Fogarty, second by Wilson to approve the purchase of the playground equipment from Playworld Systems, Inc. and have it installed in Rambling River Park in 2011. Voting for: Larson, Donnelly, Fogarty, Wilson. Voting against: May. MOTION CARRIED. c) Approve Memorandum of Understanding with DARTS - Parks & Recreation The City has had a Memorandum of Understanding with DARTS for use of the bus since 2003. The bus needs to be replaced and DARTS has applied for a federal grant for a new bus. If the grant is approved, the City will enter into a rental agreement for use ofthe bus for Rambling River Center programs. The Memorandum of Understanding needs to be approved before applying for the grant. It identifies the costs and in-kind services the City will be responsible for if the grant is approved. The cost of the bus is $66,000, and the entire cost would be covered by the federal grant. The current bus will be used as a backup bus. Currently the City pays DARTS $200/quarter to cover a portion of the cost of the insurance. The City pays $150/quarter to cover the operation cost in exchange for the City having use of the bus every Friday for Rambling River Center programs. The City allows the bus to be stored in the Rambling River Center garage as an in-kind donation to DARTS. The new Memorandum of Understanding includes the following: - The City will pay to use the bus on the second and fourth Friday of each month at $35/time for a total cost of$70/month to cover a portion of the operational costs which equates to $210/quarter. - Insurance will be covered by the City during use for Rambling River Center programs and will be addressed in the rental agreement. The City has a provision in its existing vehicle insurance policy to cover rental of vehicles so there will be no additional cost for insurance. - The City will continue to store the bus at the Rambling River Center garage as an in-kind donation. - The cost for the City to use the bus will decrease. Rather than $350/quarter, the cost will be $210/quarter. Councilmember Fogarty stated we used to pay $350/quarter to use it every Friday. Now we will pay $21O/quarter, but only have it twice a month. Staff explained we were not using the bus every Friday, but still paying for it. On the second and fourth Fridays the DARTS bus will be used for smaller trips and on the fIrst and third Fridays the larger City bus will be used for larger events. Councilmember Fogarty noted this will be an 18% increase. Staff explained the costs to maintain the bus have gone up since 2003. 12 Council Minutes (Regular) September 20,2010 Page 10 Mr. Kevin Raun confIrmed the cost to maintain the bus has grown steadily each year and the maintenance becomes more significant. The maintenance cost was prorated over an annual basis to what it costs for five days. This way DARTS pays for the cost for four days and the City pays for one day. The agreement also allows for extra use ofthe bus for special events. Councilmember May asked if the current bus will serve as a backup and will it be stored by the City. Mr. Raun stated the grant says to keep the existing bus as a backup and two other 5310 buses owned by DARTS for that purpose. Only the new bus will be stored at the Rambling River Center. Councilmember May asked if the cost has been checked with the local bus company. Staff stated we do not need a special license as it is a 14-passenger bus. The number of people participating is 10-12 and fits our needs. Staff noted ifwe rented a bus from the bus company we would have to pay for the driver and the rental of the bus. With DARTS we have a volunteer driver and pay $35 for the use ofthe bus. Mayor Larson asked about fuel. Each party makes sure the gas tank is full at the end of the event. Councilmember May noted the insurance covers rental of vehicles. She asked if that covers transportation of others. Staff stated in the rental agreement with DARTS, insurance will be spelled out and there is a rider of provision in the City's existing insurance that covers the use of the bus. MOTION by Fogarty, second by May to approve the Memorandum of Understanding with DARTS. APIF, MOTION CARRIED. 11. UNFINISHED BUSINESS 12. NEW BUSINESS a) Adopt Ordinances - Utility Franchise Fees - Administration Earlier in the year Council and staff talked about options for covering the cost of seal coating which amounts to $400,000/year. Streets are seal coated once every seven years. The current payment method is to assess property owners 50% of the cost and the other 50% from the road and bridge fund. The road and bridge fund will soon be depleted and the City wants to continue seal coating to maintain the roads. The City could assess 100% of the cost to the residents. Council and staff also discussed initiating a franchise fee with local utility companies to cover the cost. Staff contacted Xcel Energy, Dakota Electric, and Minnesota Energy and worked out franchise agreements. The revenue would be outside levy limits. The other methods of collecting the revenue other than through franchise fees is through the levy or assess 100% of the cost to the residents. Councilmember May stated the word "surcharge" is all over this. She would like to table this and have it as part of the budget discussion to determine what it would look like ifwe did not move forward with this. Her biggest concern is the road and bridge fund that was covering the 50% and how do we get around that. The numbers stated in the agreements are not the numbers that will be charged because there is a surcharge from the utility company on top of our fee. She asked how the resident or the business is better off if we are paying a surcharge to the utility company instead of paying a higher levy amount or an assessment. 13 Council Minutes (Regular) September 20,2010 Page 11 City Attorney Jamnik stated the surcharge references a tariff the companies make over their normal service recovery amount. The amounts in the agreements are the amounts they would pass through as an approved surcharge to their regular rate tariff. The $1.60 in the agreement is the $1.60 that would be listed on the bill as a franchise fee. Mayor Larson asked if the utility companies will receive a cut to do this. City Attorney Jamnik stated it is a very small fraction of the fee and the amount is regulated. Councilmember May would like Council to think about this item. Councilmember Wilson stated he would rather vote on this tonight and does not support it. City Attorney Jamnik noted there are five ordinances. Two of them are renewal franchise ordinances with Xcel and Dakota Electric. The City would like them renewed at the same time to facilitate any changes in the future. Even if Council does not act on the franchise fee issue, City Attorney Jarnnik recommended Council act on the franchises themselves. By passing the franchises you do not affect the franchise fees. Councilmember Fogarty noted staff stated it would cost each resident roughly the same over seven years. She understood the City needs long term planning for seal coating and that is not optional. This is the plan we talked about. She did not think the utility companies would do this for free, and it sounds like it is a nominal amount. She is not a big fan of raising taxes and this is raising taxes, but it is absolutely necessary for the City to continue and it is good long term planning. She would approve the agreements. Councilmember Donnelly stated this is just a different way to raise taxes and we have to pay for the seal coating project. We cannot assess residents 100% of the cost; that would also be unpopular. We have to fund this either this way or through raising taxes. The streets have to be seal coated on a seven year cycle and someone has to pay for it. We have to generate the funds and this is a way to spread the cost. The only downside is there is a small fee to the utility company. We are all admitting it is a tax increase. It is a different vehicle for doing this and we are not the fIrst ones to do it. Councilmember Wilson found the timing interesting and that it was not brought up for additional discussion at the budget workshop. It was at the last Council meeting we reduced the general fund by $400,000, so we could have opted to leave $400,000 in, which he would not have supported, and this would have been taken care of. He also noted at a minimum we are looking at a $180 cost per business. We are trying to get business and then we are going to tax them. He realized the roads need to be fIXed, but he was fme paying the assessment and was not remotely interested in a new tax. Mayor Larson stated his issue is he wanted to make sure it is fair to residential and commerciaVindustrial customers. He had asked the Finance Director to do a comparison with one business and it was determined the amount including the 50%, would equal the seal coating costs vs the franchise fee. He asked why not 14 Council Minutes (Regular) September 20, 2010 Page 12 charge this through the City utility bill rather than electric and gas companies. City Attorney Jamnik stated the City does not have the authority for that type of fee. Mr. David Pritzlaff, 20255 Akin Road, stated this is a tax and a deterrent for businesses to come. The amount for businesses is $ IS/utility so that is $30/month. We will be lucky to keep businesses here and draw businesses here. There has to be a different approach. It will come back to haunt Council just as the street light utility fee. It is not a means of collecting money. Council needs to figure out a different way. If some of it is cuts, then it is cuts. He does not have a problem with the amounts assessed now for seal coating, but he would like to have it more even across the board from one year to the next. To see residents and businesses pay this amount, if you raise $400,000/year and the seal coat does not cost that much, where does the extra money go. It would probably go to the general fund and it will be extra money. We end up with a lot of extra and that is how we get fat in the current budget. The commercial interruptible is more money. Mr. Pritzlaff stated we wanted to take $350,000 from the budget for the street light utility fee. We did not take out a complete $350,000 and does not think we will take out a complete $400,000 from the budget to make up for this. This is a way for the City to make some extra money and overcharge the residents. We should consider a different way to make up this money. He suggested delaying the decision and have a public hearing so people can weigh in as to whether they want to pay $130 seal coat assessment every seven years or this. He would rather pay the assessment because then the money is in his pocket and not the City's. Mr. Jeff Thelen, owner of Thelen Cabinets, stated the City Engineer met with him prior to the meeting to explain this. He was told over seven years the amount would be the same for his business. Mr. Thelen stated that is assuming he has a small general, non-demand business being charged $2.25/month. In fact, he has a demand meter which is $25/month. He does not understand what his electric usage has to do with the streets and how he should have to pay for them. This is $25/month for the electric meter and $15/month for the gas meter compared to what he paid in 2007 for seal coat of$613. He has a 548% increase over seven years with these franchise fees. He recognized the oil rates were cheaper three years ago and there is inflation. Over seven years he will pay $3360. Finance Director Walters explained it is $25/month for the gas. She called the electric company and was told Mr. Thelen is under small general, non-demand for electric, so the fee is $2.25 for electric. Mr. Thelen stated there is a charge on his bill every month for demand which is $53/month times the charge. Finance Director Walters stated his business is demand for gas, but not electric. She called the electric company and was told he is on non-demand. City Administrator Herlofsky noted it is stated the fee is an account based fee on each premise and not a meter based fee. Mr. Thelen stated on a demand, there is the demand meter, the regular meter and the off-peak meter. This is only for one ofethose meters and he is on a demand meter. Mr. Thelen asked for an example of someone that would be on a demand meter or the difference between a demand and a small commercial/industrial. Finance Director Walters stated the cost to 15 Council Minutes (Regular) September 20, 2010 Page 13 seal coat in 2010 would be $1,735. What cost Mr. Thelen $650 in 2007, now in 2010 costs $1,735. City Engineer Schorzman stated the $1,735 is the total cost to seal coat. In 2007, the $613 was only half the cost. The true cost to seal coat in the industrial park for Mr. Thelen's portion was $1,227 in 2007 and based on bids for 2010 the same area would cost $1,735. Mr. Thelen recognized the City was not using the road and bridge fund to cover the costs, but does not agree with that. It does not make sense that the repair of the roads is not based on the usage of the roads, but on how much electricity and gas he uses. There is no comparison from one to the other. This is a way to grab a little more money and not have people corne to Council once every seven years to discuss what should be out in the open. If gas and oil prices are up, he is happy to pay the fee through an assessment. At least that gives the public an opportunity to discuss it with Council rather than these fees that have no correlation with street usage. City Administrator Herlofsky stated we explained it to the utility companies that this would be maintenance of the roadways and access to their facilities in our right- of-way. There is an attempt to establish a relationship to the current method of assessing, which is based on residential unit size. In the industrial park, a multiple of the residential unit is used. Mr. Thelen asked for examples of the type of businesses for the other classifications. He asked what type of business would be a small general non-demand. Staffwill obtain a list. He asked if all businesses in the industrial park are small general non-demand. He asked if the air traffic control center would be a large commercial industrial or small commercial demand? Mr. Thelen stated there are other people in the community that are not paying assessments because their streets are not seal coated. There are a couple gravel roads on the west side oftown that do not pay seal coat because they are gravel. He did not believe Ash Street pays seal coating and asked if they would now be included in the franchise fee. City Administrator Herlofsky stated every resident will be affected. Mr. Thelen stated then it is not all going to seal coating. City Administrator Herlofsky stated it will all go to seal coating. There will be a special fund set up for these revenues. If there is a year where there is some left over, it will stay in that fund. The volatility of the seal coat process is the price of oil and the pattern and uses of the street. This was an attempt at a fair way to approach the issue. Mr. Thelen asked Council to keep discussing it and not decide tonight. A lot of people will be taken by surprise that the cost they would pay on a seven year seal coat will double because the road and bridge fund will no longer make a contribution. A lot of businesses will be quite surprised if they will be paying an additional $2.25 or $75/month. Right now staff cannot tell us which category we fall into. Don't decide prematurely. Mayor Larson agreed to table this as it is a very confusing document. We need to get more information and he would like to see how this will affect the commercial and industrial businesses. Councilrnember Fogarty wanted to clarify that Mr. Pritzlaff commented about extra money being absorbed into the general fund. That is not how this will work. This money will be specifically for seal coating, in a fund for seal coating. Some years cost more, some cost less. This is not an expense where ifwe do not do this, we will have to raise taxes $400,000. The fund we have been using to pay 16 Council Minutes (Regular) September 20,2010 Page 14 50/50 will be gone. We have to come up with some type ofa permanent funding source. Whether it is a levy we put straight into that fund or a franchise fee, the reality is we have to come up with some long term planning to pay for these expenses. She has no problem paying an assessment. This was an attempt to equalize the payments. She was comfortable supporting that as long as there is a permanent funding source to do something that is critical for the maintenance of the roads. She would support continuing to discuss this, but the fact is the residents will pay double what they are paying now at some point. That fund will be empty. There is no money going into that fund on a continual basis that will support the $400,000 we need. She wants a plan in place. What we are doing now is not sustainable. Councilmember Donnelly asked staff to explain why the road and bridge fund is going away. City Engineer Schorzman stated the money that was used to pay the City's portion of the seal coat project was a one-time amount of money we received related to the Pilot Knob Road extension project. At that time it was decided the money will go to offset the assessment on the seal coating and it did that for several years. Now that money is gone. It has not been the City's practice to take other funds from the road and bridge fund that are acquired through MSA or other things, and use that as a consistent source of revenue for the seal coat project. Councilmember Donnelly stated because of that, people will see the cost double for the seal coat project. He assumed this was neutral to everyone; either they are assessed or they pay a franchise fee. Either way, what people pay for seal coating will double. We need to work more to explain this to everyone. He was expecting this would be the same as an assessment paid over time and would not cost more. An amount of$1256 vs. $3300 is not the same. City Engineer Schorzman stated based on the information received from the utility companies today, the reality is there may be some increases and decreases because of the new system. On Mr. Thelen's business property he looked at the cost in 2007, and equated it to today's dollars. The cost to seal coat in 2007 was $.76/square yard. The latest bid received for this year was $1. 19/square yard. He took the cost in 2007, divided it by $.76 x $1.19 for today's dollars. He applied a 5% increase which is what we see annually, to go out to the next four years. His estimate ifwe pay for it as we go vs. spreading out over time, is $2,335. Over that same time, based on information from the utility companies, over a seven- year period that property will pay $2,289 in franchise fees. We are comparing $2,289 to $2,335. Looking at residential, this year the cost for seal coating is $216.88. The estimate is that will go up to $338 by the end of the seven year cycle. The average resident will pay $268.80 in franchise fees. The purpose of this exercise was Council's request to figure out a way to make it comparable year to year and to get away from the fluctuations because of how the City developed and to fund the program. City Administrator Herlofsky noted Councilmember Wilson mentioned the $400,000 in reductions. The two were unrelated events. We brought this in this week, because he took time during the summer to get all three utility companies together and to agree to an amount. We received the documents within the last couple weeks and wanted to make sure they were correct. 17 Council Minutes (Regular) September 20, 2010 Page 15 Councilmember Donnelly stated it sounds like we came close to what he thought we would do. We have to allow some time to explain it to the people and see if there is a huge backlash. When we have assessments we have complaints also with people being charged different amounts. This way everyone pays the same every year and it should balance out. The intent is good and he agrees with the principle of it. The costs will go up and that needs to be explained because the road and bridge fund does not have the funds anymore. Councilmember Wilson stated ifwe are directly taxing someone to repair a road, he can justify the tax that year. The average resident is tired of having government tell them we are in dire needs and we need to tax. He does not disagree with Councilmember Fogarty about a long term solution, but maybe we should spend an equal amount of energy trying to reformulate the methods we use to look at the neighborhoods. Instead of once every seven years, take an average and project it out and set it on a fee schedule. He would rather directly tax someone for the event when it occurs as opposed to throwing out a fee. As we see with the street light utility it does have the ability to be short revenue. Councilmember Fogarty stated another goal we had and the reason the seal coat process was set up the way it was, was to include tax exempt properties which do use the roads. Whatever Council discusses, she does not want to lose that piece. We did not want to go to a direct levy, because it excludes the tax-exempt properties and puts the burden more on businesses and residents. Staffwas given a big challenge to equalize this and to include tax-exempt properties. If there is another way, it has to be long term and has to be set for this project. She was adamant the tax-exempt properties be included in the formula. Mayor Larson stated what he did not want to happen is what Mr. Thelen brought up. Staff says it will be a wash, Mr. Thelen says it will go up 500%. Councilmember Fogarty stated it will double. Mayor Larson stated we are not there yet. It is a very confusing document and we need to work on it more. He wanted to see this at a workshop. He wants to see in concrete numbers, this is what they would pay today under the current assessment policy and this is exactly what they will pay over seven years if done today. We need to know the difference between meters and who will pay what. City Engineer Schorzman clarified he wants to see under the current assessment at 50%? Mayor Larson clarified at 100% assessment. Mr. Jeff Thelen stated City Engineer Schorzman gave some figures for seven years from now that a residential seal coat bill would be $338. Over seven years the residential, at the current rates, are paying $268 over seven years. We know we are short $70 for that cycle. Ifit costs $338 and he has only paid $268 over seven years, you are short $70. City Engineer Schorzman stated on the seventh year you would be short $70. Mr. Thelen stated you have to increase the residential rate to equal that out, because now it has to be that the businesses are subsidizing that. Mayor Larson stated on the seventh year we will be short, but in the previous years we will be over. Mr. Thelen stated at a residential rate, over 18 Council Minutes (Regular) September 20, 2010 Page 16 seven years, his house would pay $268. In seven years it will cost $338 to seal coat. Mayor Larson stated on the seventh year. In years one and two it will cost $216 and you will pay $268. Mr. Thelen stated businesses are still subsidizing the residential. Mayor Larson stated that is why he wanted concrete numbers and we need to do more work. MOTION by Fogarty, second by May to table this item for a workshop. Voting for: Larson, Donnelly, Fogarty, May. Voting against: Wilson. MOTION CARRIED. 13. COUNCIL ROUNDTABLE a) Set Budget Workshop City Administrator Herlofsky suggested October 11. Councilmember May asked if the workshop would be with the City Administrator and Finance Director. Mayor Larson replied yes. City Administrator Herlofsky noted there is an EDA meeting next week and the following week is a Council meeting. Councilmember May noted the next workshop was to go over the line items staff brought forward. She would like to meet next week for a shorter workshop to discuss the line items staff presented. Ifwe wait until October 11, we will run out oftime for additional discussions. Councilmember Wilson suggested September 27, from 5:30 -7:00 p.m. prior to the EDA meeting. Councilmember May noted there has not been any discussion with the items presented; they were just presented with the preliminary budget. Councilmember Fogarty noted we knew we needed to discuss them. We did not approve the recommendations, just the number. Councilmember May stated if Council has an opportunity to voice their opinions on what was presented, then we could meet again on October 11, to give staff some time. We would just talk about the document already created. Perhaps there are items where we will say no and we need to let staffknow sooner rather than later. Budget workshops were set for September 27, at 5:30 p.m., and October 11, at 6:00 p.m. b) Neighborhood Tornado Recognition Ms. Mary Vanorny sent an e-mail recognizing her neighbor, Steve Borntrager, who alerted neighbors to a gas leak. Bachman's Cedar Acres is offering a discount for the purchase of trees to Farmington residents with tornado tree damage. c) Ice Arena Ribbon Cutting This event will be held on September 25, with a ribbon cutting at 12:00 and a free open skate from 12:30 - 2:30 p.m. Councilmember Donnelly: He spoke to a senior citizen who noticed on the list of reductions no toilet paper for the Rambling River Center. This person noted Homecoming is coming up and suggested collecting toilet paper from the trees. 19 Council Minutes (Regular) September 20, 2010 Page 17 Councilmember Fogarty: Hydrant flushing will occur October 4-8, with hydrants north ofHwy 50 and west ofthe railroad tracks and October 11-15, hydrants will be flushed downtown and east of the railroad tracks. Homecoming events start this Saturday which will tie in with the opening of the Ice Arena. Councilmember May: The Rotary Club will be hosting Rocktoberfest on September 25. There will be several bands and buses will be running throughout the community. Funds stay within the community. Parks and Recreation Director Distad: Staff is obtaining proposals from contractors to remove the tree stumps and repair the trail on 195th Street due to tornado damage. Mayor Larson: He noted the landscaping is done at the Rambling River Center. Staff stated it was an Eagle Scout project. The Haunted House for the troops will be held at the Fairgrounds October 8 and 9. The Walnut Street reconstruction project is almost done and it looks great. He encouraged everyone to buy locally. He thanked the City Council for their support last week and postponing the budget meeting. MOTION by Fogarty, second by Wilson to recess into Executive Session at 9:59 p.m. APIF, MOTION CARRIED. 14. EXECUTIVE SESSION a) Labor Negotiations Present: Larson, Donnelly, Fogarty, May, Wilson Also Present: Joel Jamnik, City Attorney; Peter Herlofsky, City Administrator; Brenda Wendlandt, Human Resources Director 15. ADJOURN Respectfully submitted, Cynthia Muller Executive Assistant 20