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HomeMy WebLinkAbout11.15.10 Council Minutes 7 a-. COUNCIL MINUTES REGULAR November 15,2010 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, Fogarty, May, Wilson Donnelly Joel Jamnik, City Attorney; Peter Herlofsky, City Administrator; Teresa Walters, Finance Director; Kevin Schorzman, City Engineer; Lisa Shadick, Administrative Services Director; Brenda Wendlandt, Human Resources Director; Cynthia Muller, Executive Assistant Beve Preece, Mary Scheide, Jason Bartholomay, Colin Garvey, Jeff Thelen, Gaye Smith 4. APPROVE AGENDA Councilmember May pulled item 7c) Approve Police Sergeants Amended Contract for discussion. MOTION by Fogarty, second by Wilson to approve the Agenda. APIF, MOTION CARRIED. 5. ANNOUNCEMENTS a) Deputy Registrar Office Presentation Ms. Gaye Smith, Director of Operations with Quick Serve which is a privately owned Deputy Registrar office operating out of the South St. Paul City Hall, provided Council with information on opening a Deputy Registrar office in Farmington. She stated Farmington has an enormous responsibility and opportunity and a wealth of knowledge and ability to service the residents. The most important item is having the Council onboard and is this something you want for the residents here. If Council is supportive and want to work with staff, this will be an overwhelming opportunity for the City. It can be revenue making, but it has to be run like a business. To start up you need the knowledge and the experience and the passion for what you do. The rest will fall into place. The community needs to support it. The City needs to look at the ages of the residents in the community and supply the services that they will need. The City will have the opportunity to give free services. Through this you collect the knowledge you give to Veterans and seniors that you have been able to supply the services normally they would have to drive a distance to obtain or do by mail or internet. There have been thousands of transactions done through the mail or internet that Council Minutes (Regular) November 15,2010 Page 2 people did not receive and had to come to the office to complete these face to face. You have a person in front of you which provides an opportunity to encourage them to do their business locally and bring traffic downtown. This can be a revenue stream. If you start in the winter, between 6 months to 1 year you could have enough revenue base to at least start breaking even and make some money. There are several offices that are not making money. Their office has grown in three years from 8 employees to 18 employees. They go out and look for their traffic and don't wait for it to come in. If you don't have experience and knowledge and a transaction is not done properly, the customer will not return. It is important the transaction is done right the first time to have return customers and generate a revenue stream. The South St. Paul Office provides drivers licenses, the DNR, game and fish, and motor vehicle transactions. You want to offer as much service as possible in the space you have. Driver's licenses and passports can no longer be issued in the same office. Offering driver's licenses here would be a huge opportunity, as Rosemount does not offer driver's licenses and Farmington could pull in that base. Due to the farms in the area, she suggested having the knowledge of the farming aspect of pro-rating. Many motor vehicle transactions can be done online, but title transfers need the hands-on experience. Law enforcement will check with Deputy Registrars regarding vehicle ownership to remove it from an impound lot. To bring in service, Ms. Smith suggested going to senior centers and veterans meetings and let them know we are here to help them. 6. CITIZEN COMMENTS Ms. Mary Schiede, Manager of the Dakota County Farmington Library, spoke about a collaboration between the Farmington Library and the Minnesota Creative Arts and Aging Network (MnCAAN). MnCAAN is coordinating Art of Aging projects which bring professional artists into senior housing sites in the metropolitan area. Last week, Trinity Care Center was an artist residency site. For three days last week, residents mostly over the age of 85 created memory tiles that tell their life stories. They shaped and glazed the tiles that represent significant people, places and moments in their lives. Volunteers from the DV AC and Trinity helped with the project. The Farmington Library will host a community celebration for this project on December 4. The community is encouraged to attend. The ceramic tiles and written stories will be on display. There will be a program to recognize their efforts and also music and refreshments. This celebration ties in with Downtown Dazzle Days also on Saturday. There will also be a holiday movie matinee in the afternoon prior to the Tree Lighting event downtown. The next Minnesota Mosaic program will be held December - February related to the Art of Aging project. On December 9, the Library will host a "Maintain Your Brain" workshop hosted by the Alzheimer's Association. Over the next eight months the Library will have brain fitness stations to help maintain mental capacity. Ms. Beve Preece, DV AC President, helped with the memory tiles. She was amazed at the creativity of the residents from those in their 90's to children for the Art Show. The DV AC will have their Holiday Art Show at the Library in conjunction with the display of Council Minutes (Regular) November 15,2010 Page 3 the memory tiles on December 4. On November 20, the DV AC will have ornaments at the Library for people of all ages to paint to be displayed on the holiday tree downtown. Mr. Lenny Hall, 714 8th Street, was pleased to receive the presentation on the Deputy Registrar office, however, this does concern him. He wanted two questions addressed as there are some people who are very anxious to get this started. He asked how this will not create debt for the City and if it does create debt, how much will it create. Mr. Colin Garvey, 22098 Canton Court, did not have his questions addressed yet. He would like the issue resolved regarding the assessments on Pilot Knob Road. Until it is determined where the money went and how the project was paid, approving franchise fees for seal coating should be tabled. Regarding the Deputy Registrar office, he heard gaming and fishing licenses and asked if the City would be offering that service. He wanted to make Council aware we have a local business that does offer that and to compete against them would be the wrong thing to do. Mayor Larson asked about the status of the answers for Mr. Garvey's questions. City Administrator Herlofsky stated this is still being worked on, staff has been working on the budget, but the answers will be provided as quickly as possible. Councilmember May had a general comment about Citizen Comments. She would like to see more consistency as far as when the Council sees the responses. For example, the Hoeppner's response. Sometimes responses are included in the next packet and sometimes they are not. Even if the response is staff is working on it, provide a summary in the next packet as to the status. She would like some consistency with follow-up to citizen comments. 7. CONSENT AGENDA MOTION by Wilson, second by Fogarty to approve the Consent Agenda as follows: a) Approved Council Minutes (11/1/10 Regular)(11/8/1 0 Special)(11/8/1 0 Workshop) b) Approved Various 2011 License Renewals - Administration d) Approved Minnesota Cities Stormwater Coalition Membership Renewal- Natural Resources e) Approved Bills APIF, MOTION CARRIED. c) Adopt Resolution - Approve Police Sergeants Amended Contract - Human Resources Councilmember May was aware this was brought up in a workshop, but this is the fIrst time Council has seen a document. She appreciated the Sergeants for reviewing their contract, but her concern was with the extension of the contract. She believes we have to make data driven decisions and Council does not have enough data to approve this. There are a few issues with this, such as extending the contract for a third year and taking an increase for next year and spreading it out over a third year. She asked how that affects where we will be in 2013. In Council Minutes (Regular) November 15,2010 Page 4 2012 there will be additional bond payments to be made. She was in a difficult situation to be approving a wage increase for one group of employees for the City. It puts the Council in a difficult situation in that this could have a potential negative effect on other City union negotiations we may have in the future. We have a difficult budget ahead for 2011 that we are still working on. She also has an issue with the sentence about contributing a flat rate equal to 50% of the increase for group insurance. There is no data to look at as far as industry estimates for increases. It looks good on the surface, but felt we need to be very careful with this document. All departments must be engaged in evaluating efficiency in cuts and expenses. She was not sure on the surface this constitutes a cut. Councilmember May does not think it does. Council has focused the budget workshops in trying to look long term and this does not do that. We have to get in the habit of making more data driven decisions. The initial purpose of them sitting down and doing collective bargaining may have been good intentions, but she was not sure we are accomplishing anything. She suggested honoring the contract we have and we will deal with what we have to in next year's budget cycle. Councilmember Fogarty asked ifthe language regarding the 50% of the increase is in the current contract. Staff confirmed it is. Councilmember Fogarty explained currently the Sergeants have a signed contract that gives them a 3.5% increase in 2011. They have re-negotiated with the City to split that between 2011 and 2012 with the agreement the City would also provide that amount in 2013. She felt this is a fair settlement agreement and agreed Council has been looking for long term and permanent cuts that will make future budgeting easier. At the same time, she felt these are fair increases. When they made the current contract it was in a very favorable economic climate. For all they know, they are giving up a favorable economic climate in 2013. She would approve the contract. Mayor Larson stated it comes down to paying them 3.5% next year and then negotiate maybe they would not get an increase the next two years. This would guarantee them an increase for the third year. This is a short term fix for 2011, but not for the following years. Councilmember Fogarty stated it does get us ahead for re-negotiating. Everyone does not negotiate contracts at the same time. It does take one negotiation off the table for 2013. Human Resources Director Wendlandt reminded Council the Police do go to binding arbitration if we do not come to an agreement and the arbitrator decides what will happen. This is unique to law enforcement. City Administrator Herlofsky stated if in a workshop we are going to determine a strategy for resolution of a contract, we need to have Council's concerns at that point in time. Staff is making agreements based on indications from the Council. For good faith bargaining on both sides, it is necessary there be confidence that both people have agreed to it. The reason Council is receiving the contract at this stage is we would not bring to the Council an unapproved contract. We have the Police Sergeants being very willing to talk to us. They did not have to and this is a good faith Council Minutes (Regular) November 15,2010 Page 5 effort on their part. Something similar is also in process with the Police Officers. Mayor Larson asked Councilmember May if this changed anything knowing it could go to arbitration. She replied no. MOTION by Fogarty to approve. MOTION DIED for lack of a second. Mayor Larson would prefer to have full Council present to vote. MOTION by Fogarty, second by Wilson to table this item for more information. Voting for: Larson, Fogarty, Wilson. Voting against: May. APIF, MOTION CARRIED. 8. PUBLIC HEARINGS a) Approve Various 2011 License Renewals - Administration A hearing was held to approve licenses for 2011 for On-Sale Liquor, On-Sale Sunday, On-Sale Wine & On-Sale Malt Liquor, Club Licenses and Therapeutic Massage licenses. Staff read a list of businesses requesting renewal. An extension of the public hearing was requested for Weng's Kitchen and the Ugly Mug for wine licenses. MOTION by Fogarty, second by Wilson to close the public hearing. APIF, MOTION CARRIED. MOT][ON by Fogarty, second by Wilson to approve the above licenses. APIF, MOTION CARRIED. 9. AWARD OF CONTRACT 10. PETITIONS, REQUESTS AND COMMUNICATIONS a) Approve Change Order #3 and Final Pay Estimate Dushane Parkway Extension Project - Engineering Mayor Larson thanked staff for including the pay items and what was used and not used. The first section of this item is for work necessary at both intersections of Dushane Parkway and Spruce Street regarding reconstructing a light pole because of some incorrect survey information. This is an addition of$I,820.70. The remaining section is balancing the estimated quantities that were included in the original contract back to the quantities actually used to construct the project. That section was -$85,447.87. The total change order amount is -$83,626.67, which including all of the change orders on the project, changes the final contract amount from the original of $697,329.20 down to $680,823.57. The final pay request is $46,197.98. This project was funded by developer funds. Mayor Larson asked if the funds for the difference in the contract amount were still available in case anything needs to be finished. City Engineer Schorzman explained the City spent $17,000 less constructing the project. To see the remainder left in the escrow we need to know how much interest was gained during the amount of time the money was in the fund as well as other project costs such as design costs, construction, inspection, material testing, etc. The $680,000 is the amount paid to the contractor. Councilmember Wilson stated we are seeing a credit to the City in the amount of $1,354 for a survey error. He asked why we are only given credit for this amount and not the full $1,820. City Engineer Schorzman explained the survey company Council Minutes (Regular) November 15,2010 Page 6 paid for the portion of the work that needed to be redone directly related to their surveying error. The remaining $466.70 is half of the labor to remove some new curb and gutter. The reason it is half, is because the contractor asked him if they could move forward using the new light bases as a known elevation in the interest of moving the project along. Staff approved this. If we would have waited for the surveyor, the curb would not have been placed so it was staffs fault, not the surveyor's. The surveying error was discovered after the new light poles had been installed. Councilmember Wilson stated the City should not be paying for incorrect work done by someone else and then paying labor twice. Staff explained the doubling oflabor was due to staff telling them to go ahead before we knew there was a surveying error. Councilmember May asked about the change order for $65,000. City Engineer SchorZffian explained there were alternate bids for the streetscaping. Because of how the contract was packaged, we decided to only do some things in the alternate so they were added as a change order. These were related to the sidewalk work by McDonald's as well as work on the trail. The alternates were rejected and we added the portions we wanted done to the contract. MOTION by Fogarty, second by May to approve Change Order #3 for the Dushane Parkway Extension Project in the amount of -$83,626.67, and approve the Final Pay request for the project in the amount of $46, 197.98. APIF, MOTION CARRIED. 11. UNFINISHED BUSINESS a) Franchise Fees for Seal Coating - Engineering At the November 8, 2010, workshop Council indicated they were interested in moving forward with the seal coat project for next year. However, we need to determine how to pay for it. Based on a conference call with the utility companies, Council was provided with updated information on franchise fees from the gas and electric utility companies. Council and staff wanted to have a long term sustainable revenue stream for the seal coating project which is done every year. Council requested staff to determine if there was a way to even out the fluctuations in the amount charged to residents and businesses for seal coating. Staff provided information showing historic costs for seal coating and a projection of costs for the next seven years. Councilmember May noted the historic numbers show a flat cost from year to year and asked for an explanation of why there are increases going forward. City Engineer SchorZffian stated the increases show twice the amount from past years because assessments will be 100% of the cost. Also, the makeup of each individual year changes according to the number ofREU's each year. In 2013 there is a dramatic jump because of the amount of work to be done and the number ofREU's. The original franchise proposal had a split of 65% residential and 35% commercial. The past history of the projects showed a split of 80% residential Council Minutes (Regular) November 15,2010 Page 7 and 20% commercial. Council preferred to continue this proportion. As a result of a recent conference call with the utility companies, the fee for residential and small businesses for gas and electric would be $2/month and non-residential would be $8/month. A small business would be a business that uses electricity similar to a residential use. Mayor Larson asked about apartments, ag land, schools, churches, City property, FAA, etc. City Engineer SchorZIDan stated franchise fees address some of the inequities in the existing program. Currently apartment buildings are charged by the area they occupy. With franchise fees they would be charged per meter. The schools, churches and City property in general will see a reduction with paying franchise fees. The peaks and valleys in amounts charged will even out. The FAA will pay a franchise fee because they have a meter. The ag land in the past has not been assessed for seal coating. Some ag properties will be affected by franchise fees if they have gas or electric service. In the past, if there was a home on the ag land, they would be charged one RED. Staff provided a spreadsheet showing the cash flow with franchise fees if approved tonight. Over the seven year period there will be a positive balance at the end of the seven years. The first year there will be a negative balance due to a 90-day timeframe between when franchise fees are approved and when we can begin collecting them. We will miss out on two months of revenue for 2011 as of now. That corrects itself in 2012 where there will be a positive balance. Staff also showed cash flow based on assessing 100% of the project. This shows a negative balance throughout the seven years. Unless there is an infusion of cash, there will never be a zero balance until the year after we stop seal coating. We would have to have $290,000 in cash to start with in order to not have a negative balance if assessing. Councilmember May asked if there was a balance in the road and bridge fund to make up for the negative $27,000 for the first year. City Engineer SchorZIDan stated right now, there are no unencumbered funds in the road and bridge fund. While there is cash available, it is encumbered for other things. If that is used, it would have to be made up in the future. Staff recommended not using that money. The franchise fees will be positive after the first year. Finance Director Walters is still working on the road and bridge fund. So far, the seal coat portion has gone negative for many years. The money designated for Pilot Knob has not come in. Staffwill go through all of the projects with Council soon. Councilmember Wilson stated any model predicting what expenditures will be will be off. Regardless of what Council does, if there is no plan to accommodate for underestimated costs, that will be a problem. In June 2016 there will be $360,000 in the franchise fee fund. Even though we are dedicating the money for seal coating, there could be the ability to move the money from this fund to somewhere else. Next year we have the potential of the street light utility being short, and this seal coat fund could be short. Staff also provided a spreadsheet Council Minutes (Regular) November 15,2010 Page 8 showing if there is no contingency expenditure and also a 5% contingency on the seal coat project. Staff was comfortable that for the first seven years, the franchise fees will cover the cost of the program even with the addition of new developments. As you get new developments, there are new homes and more meters. So as the project grows, there are people to pay for it. Mayor Larson asked about the possibility of moving funds out of this account to be used for things other than seal coating. City Engineer SchorZffian stated this is set up as its own account. If the only money coming in is from franchise fees and the only money going out is for seal coating costs, the transparency is the best defense against shifting money. This does not mean future Councils could not do this. Councilmember Wilson stated before this year, Council had considered borrowing from every fund in the City to payoff the debt. There is nothing preventing the City from using this fund for other purposes and then paying itself back. A future Council can use the money however they see fit. City Attorney J amnik agreed. Finance Director Walters stated if you take it out of the road and bridge fund and keep it separate, it is easier to monitor. It can be added to the monthly financial report so you can see everything that goes in and out of the fund. Councilmember Wilson stated with the increased cost of doing the maintenance on the road, to defend a benefit challenge, what makes it less defensible than paying $48/year for no benefit up until the time you gain the benefit. City Attorney Jamnik stated there is no basis to challenge a franchise fee. It is only a question of whether the fee is reasonably set. You do not have a benefit challenge available. Weare in a range now for residential units where we should not have any difficulty sustaining a benefit challenge. The problem we incur is with the larger institutions with multiple REV's where the current methodology seven years down the road could be difficult to sustain. Councilmember Fogarty asked if the project cost of $274,000 for 2010 has a contingency. City Engineer SchorZffian confirmed it does. He believes the cost of the seal coat project will fall in between the no contingency number and the contingency number with a positive balance. Councilmember Fogarty noted the final project number has always been less than the estimate. From 2002 to 2008, which is one seven-year cycle, the cost went from $.50 to $1.25, a $.75 increase. From 2009 to 2015 the estimate goes from $1.75 to $1.90, only a $.15 increase. It seemed staff does not anticipate the cost increasing at the same rate. Staff anticipates the same dollar amount change. Councilmember May stated regarding borrowing from funds, she was comfortable with this being a separate fund. Her concern is that there can be other things associated with seal coating like engineering costs, salaries, etc. She asked how staff can reassure Council that only seal coating costs will be taken from this fund and nothing else. She stated in the past only the seal coating has been assessed not salaries. City Engineer SchorZffian noted salaries are part of the assessment and always have been. The only things associated with the seal coating project that are not directly charged to the seal coating process are crack sealing ahead of Council Minutes (Regular) November 15,2010 Page 9 time and the amount of time our staff spends on sweeping afterwards. Councilmember May had a fundamental problem with paying salaries out of the franchise fees. Salaries should be in the budget as part of the general levy. Councilmember May asked what will be done with the surplus if the costs are lower. She asked if we should define a level of surplus that is in excess. City Engineer SchorZffian replied if you have a surplus, it draws out the time until you need to raise fees. Councilmember May would like it defined that the surplus cannot be used for any other purpose than to delay increasing fees or reducing fees. City Engineer SchorZffian advised staying away from reducing fees, because eventually you may have to increase fees. He has estimated in the ninth year there may need to be an increase. Councilmember Fogarty noted we cannot bind future Councils. She felt a separate fund forces that transparency. Councilmember May felt salaries should not be included as that is a gray area. Staff noted as far as salaries, only the time spent on the seal coat project is charged to the project. Councilmember May fundamentally disagreed with including salaries. City Administrator Herlofsky explained we have 60 employees paid out of the general fund. There are another 35 employees who are used in a variety of areas where we allocate the cost to the service. Councilmember Fogarty would be willing to have a discussion on that policy, but it will not change the amount of money we need. Councilmember May asked about the utility surcharge and noted the utility companies will pay the City quarterly, but the amount we receive will include adjustments to the total surcharge billed in the period for which the payment is made to account for uncollectibles, refunds, or error corrections. Staff explained the utility companies will pay us quarterly based on what they bill out. When they audit their books, they will determine how much they did not collect because people did not pay their bill. That adjustment will be made on the next payment they send to us. City Attorney Jamnik stated the utility companies will pay in advance, but if they made an error in billing or there is non-payment, their payment to us will reflect that amount. Councilmember Fogarty stated by going to franchise fees we are anticipating that because we will no longer be assessing, we will see a savings in not having to prepare the assessment rolls. She asked for an estimate of what that savings would be. City Engineer SchorZffian replied for the past seven years the cost has been a total of $58,000 - $59,000. Mr. Jeff Thelen asked for updated information which was received by Council tonight. Last Wednesday, he had a lengthy discussion with the City Engineer regarding the new fee structure. Tonight he read how small commercial businesses will only pay $2/meter rather than $8/meter that was completely different from the discussion on Wednesday. City Engineer SchorZffian stated he had a conference call with the utility companies on Friday with new information. On Wednesday the discussion was that all commercial would be the same price. There were a couple options from $8.50 up to $12/meter. He was surprised that things changed so fast. Mr. Thelen asked as a person paying this fee, how are we Council Minutes (Regular) November 15,2010 Page 10 supposed to have a chance to comment to Council when the information changes so often. It is on the agenda with a recommendation Council pass this. He did not know how the Council can even consider that since this is brand new information. It changes things considerably. If it will be an even amount across the board, at least there is logic to that, versus picking an unknown number of small commercial generators. We cannot tell anyone tonight how many that will be. We are relying on the utility companies to determine how much our tax will be. We have come full circle to where we have come to a different logic and thinking that it will be two rates - a residential rate and a commercial rate. Now we are splitting up commercial rates again. People in his category have a 15,000 sq. ft. building paying the same price as someone who has 120 acres with $50 or $60 million worth of buildings on it; for instance the schools on 208th Street. They would be paying the same amount as Mr. Thelen. His building will be paying four times the amount as an identical building across the street in the industrial park because of the demand meter vs. the non-demand meter. This is the part where there is no logic. Last week he was told by two people from the City that it is on the agenda because we need to know if we will continue seal coating, there will not be a discussion. Mr. Thelen found out there was a lengthy discussion and he would have been here last week to comment. He asked to keep residents informed and to not pass out new information at the meeting. Changes come so quickly in City Hall; it is not fair to the residents. We are back to the things he asked a month ago; things he thought were resolved last Wednesday. Mr. Thelen compared the schools on 208th Street. We have three different properties with two schools and possibly an additional meter for an athletic complex. On an REV basis they had 235 REV's x $108 rate. With the new version of paying $8/meter in seven years they are paying $6,000 - $7,000 vs. $67,000. Councilmember Fogarty stated no one knows how many electric bills they receive. Mr. Thelen stated once it surpasses the small commercial meter, we don't care because there is one rate. Whether you are the smallest of the demand meter or the largest of an industrial user, it is the same meter rate and that does not make sense. Weare not associating seal coating with the actual wear and tear the building has or the acreage they have or the demand they put on the public services for the street. Weare associating that rate with their electric bill and that does not make sense. Weare also relying on the utility companies to set the tax rate. Council's job is easier, because it is the utility company residents have to call to argue about the fee or the tax rate. Once a quarter, the City sends someone out to read the meters. In essence the City is doing an audit to make sure the amount shown on the meter is what is paid on the bill. The State audits the City every year and makes sure everything is in order. Where in any of this will there be an audit that the City, the County, the State, someone does of the utility companies to make sure what they are reporting is an accurate number. When they say 20% of their customers have not paid their bill so we will short you 20% of the payment for seal coating, is there an audit to verify this? City Engineer SchorZffian stated in the franchise ordinances there is a provision for the City to review the information, provided we do not give out private information. We can Council Minutes (Regular) November 15,2010 Page 11 verify what they have been collecting and passing on to the City. Mr. Thelen stated but that information cannot be shared with the people who set our tax rates. City Attorney Jamnik replied we would not give personal information, but we would provide summary information. Mr. Thelen hoped the information would be shared with Council as far as how many commercial people are paying the lower rate vs. the middle rate. Mayor Larson asked for the rationale for the small commercial paying the $2 rate rather than having a flat commercial rate. City Engineer Schorzman explained the utilities insisted on that so no one had a competitive advantage over the other. The utility companies have to agree between the three of them that what the City is proposing does not give a competitive advantage to one company over the other. They all three agreed that if we did not change the small non-demand meters to $2 that would create a competitive advantage. Mr. Thelen stated there is no one here from the utilities to make that case. He is paying four times more per month than the building across the street on a franchise fee for the same usage. That is not fair. That puts Mr. Thelen at a disadvantage if both buildings were up for sale. If everything else were equal, they would have to pay four times the tax at his building. Anyone that is more than % acre of land is being subsidized by someone else. Someone with hundreds or dozens of acres of land with commercial buildings, they are paying a miniscule amount compared to someone that has 100 ft or 300 ft of frontage. Mayor Larson stated that is where staff explained about bringing the peaks and valleys to a flat center line. Mayor Larson asked if all commercial buildings paid the flat $8 fee would Mr. Thelen be more comfortable with that. Mr. Thelen replied no, but by having a $2 rate and then anything above that at a higher rate, that is where he has a problem. There are many identical types of buildings that have a slightly different use on the inside, and that is what throws it from a demand to a non-demand meter. Mayor Larson asked what Mr. Thelen would be comfortable with. Mr. Thelen replied there has to be a top end fee. If you want to keep the small commercial the same as residential at $2, you need to structure more multiple steps. He recognized in the end the City has to have x amount of dollars per year to seal coat the roads. But just because we keep the split at 80/20, it is the 20% that is skewed. Of that 20%, there is maybe 5% that is paying 80% of that and the rest are paying a small portion. Take the rates of what they are paying now vs. what they will pay in the future. Do that on a variety of different businesses and tell him what that will be. Councilmember May noted there are disparities with residential properties that have more land. Mr. Thelen stated it comes down to the burden and wear and tear put on the streets. Right now, he only has four employees. R&L Trucking has hundreds of trips with vehicles that weigh 60,000 - 80,000 lbs. Their franchise fee would be identical to his. Councilmember May stated we cannot analyze each business and what we should charge them. Mr. Thelen stated right now you are doing it by RED. Maybe that is what we should stay with. Go back and fix the system you have. With the new system, there are more errors in that system than the old. He wants to stay with so much per acre. Councilmember May stated we Council Minutes (Regular) November 15,2010 Page 12 cannot use the utility fee we have and use the meter. Mr. Thelen suggested putting in some variables. He will keep working at it, but he cannot come to the meetings unprepared because staff keeps changing the information to be discussed. He asked to be kept informed. Mayor Larson asked if staff can work with the 20% and try to equal it out or is it based on what the utility companies say we need to do. City Engineer SchorZffian stated we have to keep in mind the fees need to be set to not create a competitive disadvantage with the utilities. Staff will not be able to convince the utilities to look at the size of a parcel and charge a fee based on the size. It has to fit into their current billing system. For every system we come up with, we can give examples of where people may feel they are being unduly burdened for the cost they pay in the system. City Engineer SchorZffian did not disagree that the amount of electricity used cannot be directly correlated to how much you use the road. That same statement could also be made about the front footage of a lot, the size of the lot in general, any system will have exceptions. If you take it down from the 80/20 split and try to make each individual business pay what they pay now, you will not be able to accomplish that. Mayor Larson asked where the competitive advantage would or would not be if all commercial paid $8. City Engineer SchorZffian explained from discussions, the utilities look at it as a certain percent increase in the smaller bills, that it would be unfair to those people to impose the fee. Mayor Larson asked what the utilities would say if we told them we want all commercial to pay $8. Staff was told by the utilities on Friday that we cannot do that. Mr. Colin Garvey had several things to talk about regarding this issue. Ifwe do not do any projects, staff gets paid. All these extra fees are just that, extra fees allocated to the projects. It is almost double taxing. Mayor Larson asked for an example. Mr. Garvey replied we pay 27% engineering on a project. No matter what, we pay 27% engineering costs. Regarding the chart on seal coating costs, Mr. Garvey stated the cost is $1.48/sq. yard. Staff stated it is $1.35 in 2009. Mr. Garvey stated in 2008 it was $1.08. City Engineer SchorZffian stated the $1.08 was the price we paid to the contractor. It did not include the administrative costs of the assessment process. We pay an administrative fee to Burnsville for the Joint Powers Agreement, we inspect the project when it is happening, we do work upfront and all this is included in the chart; it is not just the construction costs. Mr. Garvey stated in the JP A, we are supposed to get a better deal per square yard. We have had an increase, but other cities have not. Why did we have such a dramatic increase in the REV, and when the price came down the REV's stayed the same. City Engineer SchorZffian assumed it was a difference in the type of materials being used. Farmington is the only City in the Joint Powers group that assesses for seal coating. Mr. Garvey talked to Lakeville and they did not see an increase in their seal coating costs, but Farmington did. We are charging more money per household for seal coating. If Lakeville did not have to raise their price, why are we raising our price? Staff explained Lakeville has the same contract we do. Mr. Garvey stated Lakeville takes the cost out of their general Council Minutes (Regular) November 15,2010 Page 13 maintenance fund. On $500,000 worth of seal coating, they only allocate $1,000 for administration fees. Back to 1996 on a $44,000 seal coat, Farmington charged $17,899 in administration fees. In 14 years we have only spent $2,046,263 on seal coating, now we are being told we need to collect $2.8 million in seven years. Maybe the administration fees should be taken out of the equation. In 2009 the seal coat was $431,800 and it was $130/RED. Mayor Larson asked staff for the administration fees for 2009. Mr. Garvey stated to charge us for seal coating to make the electric and gas bills go up, because the City cannot figure out a way to pay for it and control the budgets is wrong. You have an assessment policy that is fair. Mr. Thelen has pointed out so many flaws and Mr. Garvey can show how the costs fluctuate too much. You cannot predict it will keep going up. If the costs go down, the City will take that money and will not keep it in the fund. Mayor Larson stated we have not voted on the franchise fees and are still gathering information. Mr. Garvey stated if people had not shown up tonight, it would have been passed. He suggested skipping a year in seal coating. Lakeville has changed their process and are now going to a two-year crack and seal and then start the seal coating. After their second round of seven-year seal coating, they will go out to ten years. Council has time to think about this and get the numbers in line. Councilmember May stated the problem with the assessment process is if we are assessing the full amount, people will not be able to afford it. She noted Mr. Garvey suggested skipping a year and she had also considered this. The assessment process is not feasible if we have to assess the full amount. She was also not convinced about franchise fees. Maybe it has to be included in the general levy, but we cannot do that now. Councilmember Fogarty was opposed to putting it in the general levy because it excludes too many properties. Councilmember May understood the longer the franchise fee process is delayed then we will have a bigger deficit at the end of the first year. She did not think we needed to decide tonight and allow more time for input. Councilmember Fogarty agreed and would like more time to process the information. She was not in favor of adding it to the general levy and was not in favor of skipping seal coating this year. The current plan has been very good for our roads. She had no problem with tabling it and asking more questions of staff. Councilmember Wilson was prepared to vote and would vote no. This is a good example with an issue he has had the past four years. There is no reason for government to feel it has to move quickly. The dynamic between administration and the Council of wanting to quickly rush things through; this is a good example. We have only debated this for two hours, it is not ready. Government should be slow and deliberative. We talk about speculating something at a workshop and then it is on an agenda to pass. That is not good government. Mayor Larson asked if Council wanted staff to work on this more and does Council want to have franchise fees. He was concerned about collecting 100% assessments. He would like to have more control over how this is billed. MOTION by Fogarty, second by May to table this to allow more time for Council Minutes (Regular) November 15,2010 Page 14 Council to consider this and allow residents more time to ask questions. Mayor Larson stated his concern is the $2 commercial fee. We do not know how the utility company will decide who is small and who is large. He did not understand how the competitive advantage works with lowering the amount to $2. Councilmember May asked if it can be a flat fee for all. Staff will ask the utility companies. Councilmember May asked if new information is received, how can the public obtain that information. City Administrator Herlofsky stated it will be in the agenda packet on the website. Councilmember Fogarty continued her MOTION to table this item until December 6, 2010, for further discussion. She asked staff to obtain the number of businesses we are talking about. She did not want a list of businesses, just a number of how many fall in to the $2 range and the $8 range. Mr. Thelen stated the commercial small non-demand meter accounts between Dakota Electric and Xcel is 287 businesses. He did not know how many are in the large category. Voting for: Larson, Fogarty, May. Voting against: Wilson. MOTION CARRIED. Mr. Thelen stated he was on the web site at 3:30 this afternoon to download the agenda for tonight. There was nothing in there about the charges we are talking about tonight. Mayor Larson stated looking back, we probably should have put out an addendum to the agenda. Mr. Thelen stated in the last 2 months we have been discussing this, there have only been four people at the podium. He asked staff to do him a special favor and call him if there is a significant change. City Engineer SchorZffian stated he was not able to reach Mr. Thelen on Friday, and the spreadsheet information was completed a half hour prior to the meeting tonight. Councilmember May asked if we can put the proposed franchise fees as a separate item on the website. Councilmember Fogarty noted they can go directly to the page in the agenda. Mr. Garvey stated since it is not available in the archives on the website, he asked staff to put together the actual estimated costs for seal coating for the last 14 years, administration fee each year, and the percentage of that fee. Councilmember May asked if we can see the numbers without the added costs, just for the seal coat materials. City Administrator Herlofsky stated staff will provide the construction costs, and each of the other costs associated. 12. NEW BUSINESS 13. COUNCIL ROUNDTABLE Counci/member Wilson: The Patriotic Day celebration was phenomenal. He thanked the Warrior to Citizens group, Farmington Community Education, and all those who participated in the event. He also attended the indoor Marching Band Concert, and Turkey Bingo. Council Minutes (Regular) November 15,2010 Page 15 Councilmemher Fogarty: The Patriotic Day was fantastic. She encouraged people to donate to Toys for Town and the local food shelf. At the budget workshop there was a comment about the microphones. She will keep the mic closer to her. Councilmemher May: The Knights of Columbus will be hosting its annual Turkey Bingo on November 20, at St. Michael's Church. A dinner will be served with bingo following. Proceeds will go towards the local food shelf. City Administrator Herlo/sky: There was an article in the Star Tribune regarding economic development in Farmington. The Mayor and staff attended the opening of the CDA housing in Apple Valley. The building will be similar to the facility located in Vermillion River Crossing. Staff was assured by the CDA this will be a 2011 project. In addition, the Twin Ponds housing on TH3 will come next year. Mayor Larson: Parking restrictions have started with no overnight parking on the streets. There will be a community celebration at the Library on December 4. He encouraged residents to sign up for Nixie and Twitter to receive City information. Donations are being accepted for Toys for Town. He asked residents to shop locally. The proceeds from the liquor stores are used locally. 14. ADJOURN MOTION by Fogarty, second by Wilson to adjourn at 9:55 p.m. APIF, MOTION CARRIED. Respectfully submitted, /! " f' ct?-.-::' -' /",' / }" '/"; L;;P"v"Ut42.... ,/ 7 7 ~ s: .:./ ~- ..." L..... Cynthia Muller Executive Assistant