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HomeMy WebLinkAbout12.06.10 Council Minutes hL COUNCIL MINUTES REGULAR December 6, 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; Jim Murphy, Police Sergeant; Randy Distad, Parks and Recreation Director; Kevin Schorzman, City Engineer; Lisa Shadick, Administrative Services Director; Brenda Wendlandt, Human Resources Director; Cynthia Muller, Executive Assistant Chris Rosenthal, Kris Akin, Darrin Mercer, Jason Bartholomay, Beve Preece, Craig Davis 4. APPROVEAGENDA Councilmember May pulled item 7e) Fire Fighting Service Agreement for discussion. MOTION by Fogarty, second by Wilson to approve the Agenda. APIF, MOTION CARRIED. 5. ANNOUNCEMENTS a) Toys for Town This program brings toys and food to families in need. On December 18,2010, at 9:00 a.m. at Boeckman Middle School, volunteers will be wrapping and delivering items to families. Last year 100 families were served. As of today, with six weeks to go, we are at 64 families. At this pace, the need may outweigh the amount of toys we have. Volunteers are needed for wrapping and delivery. There are drop boxes throughout the City. Donations of cash or checks should be taken to the Police Department. Kris Akin, Farmington Food Shelf, will be helping Toys for Town this year by providing food and meals to families. Donations of food should be taken to the Food Shelf. Gift cards to the local grocery store will be accepted to fill bags of food for families. 6. CITIZEN COMMENTS a) Response to Lacelle Cordes b) Response to Lenny Hall Council Minutes (Regular) December 6,2010 Page 2 c) Response to Colin Garvey d) Response to Elsworth & Kay Hoeppner Responses were sent to the above residents. 7. CONSENT AGENDA MOTION by Fogarty, second by Wilson to approve the Consent Agenda as follows: a) Approved Council Minutes (11/15/10 Regular) (11/22/10 Workshop) b) Received Information October 2010 Financial Report - Finance c) Approved Tort Liability Limits - Finance d) Adopted RESOLUTION R63-10 Approving Application for 2011 CDBG Funding - Economic Development f) Approved 2011 License Renewals - Administration g) Adopted RESOLUTION R64-10 Approving Police Sergeants Amended Contract - Human Resources h) Adopted RESOLUTION R65-10 Accepting Donation Clarey's Safety Equipment - Fire Department i) Adopted RESOLUTION R66-10 Accepting Donations Rambling River Center- Parks and Recreation Councilmember Wilson thanked Don and Peg Davidson and Pizza Man for their contributions. j) Approved Bills APIF, MOTION CARRIED. e) Approve Fire Fighting Service Agreement Councilmember May asked if there was a minimum amount of service provided for the dollar amounts. City Administrator Herlofsky explained Eureka, Empire and Castle Rock all contract with the City for fire services. Previously there was a complicated 10-year agreement. Those contracts ended in 2010. Staff met with Castle Rock and Empire to develop new agreements. The townships did not like the uncertainty of how much they would pay each year because it was based on usage. It was also difficult for the City to predict the amount of revenue. The City and Castle Rock Township agreed to average the last three years, and add 3% each year to arrive at an amount to be paid to the City. This has been approved by the Castle Rock Town Board. Also, some sections of Castle Rock are closer to Hampton so Hampton will be providing fire services to those areas. The contract is for three years. If assistance is needed for a fire, there is mutual aid throughout the area. MOTION by Fogarty, second by Wilson to approve the Fire Fighting Service Agreement with Castle Rock Township. APIF, MOTION CARRIED. 8. PUBLIC HEARINGS a) Approve Various 2011 License Renewals (cont'd) - Administration Weng's Kitchen and the Ugly Mug have submitted applications for On-Sale Wine licenses. MOTION by Fogarty, second by Wilson to close the public hearing. APIF, MOTION CARRIED. MOTION by Wilson, second by Fogarty to Council Minutes (Regular) December 6, 2010 Page 3 approve On-Sale Wine Licenses for Weng's Kitchen and the Ugly Mug. APIF, MOTION CARRIED. 9. AWARD OF CONTRACT 10. PETITIONS, REQUESTS AND COMMUNICATIONS a) Approve Change Order #3 and Final Pay Estimate 195th Street - Engineering The change order consists of: . Storm Sewer work $312 Field access road along north side of 195th Street $4,050 Adjusting existing bid quantities to actual quantities used $45,692.99 Councilmember Fogarty noted this was a very big project and less than 1 % of the contingency was used. This project was very well run. It is beautiful, it went smooth and it is timely. She thanked everyone involved. Councilmember Wilson stated given only 1 % of the contingency was used, some people may ask where the extra money goes. City Engineer Schorzman stated the bonding amount was similar to the contractor payment. Even though we budget 10% for a contingency, that money comes from other funds such as the County, the City, or the developer. The effect of not using 10% of the contingency will reduce those contributions. MOTION by Fogarty, second by Wilson to approve Change Order #3 for the 195th Street Extension Project in the amount of $50,054.00 and approve the Final Pay request for the project in the amount of $14,362.00. APIF, MOTION CARRIED. b) Approve Change Order #2 Walnut Street Project - Engineering This change order includes: Adjustment of curbstops due to shallow service lines $2,063.04 Changing to low-profile castings on several catch basins $540 Installation of sod rather than seed on the house side of sidewalks $5,600 Councilmember Wilson asked about the responsibility if the sod does not take. City Engineer SchorZInan stated the sod will be evaluated in the spring. It was watered regularly because it was included in the contract. Anything that is dead in the spring will be taken care of according to the contract. Councilmember May asked if the price of the sod is offset by the price of the seed, why is the change order not $4600 vs. $5600? Staff explained when we add items to a contract we add the entire amount of the item, not just part of it. You will see the savings when we do the final change order for the project. MOTION by Wilson, second by Fogarty to approve Change Order #2 for the Walnut Street Reconstruction Project in the amount of $8,203.04. APIF, MOTION CARRIED. Council Minutes (Regular) December 6, 20 I 0 Page 4 11. UNFINISHED BUSINESS a) Adopt Ordinances - Approving Franchise Fees for Seal Coating - Engineering City Engineer Schorzman explained the spreadsheets included in the packet. Mayor Larson asked for an explanation in the differences in payments for the total expenditure, seal coat payment, crack seal payment, and engineering, legal and administrative (ELA) for the ten year history. Staff stated expenditures in the ELA column are realized throughout the year as we work on seal coat items. Historically, the assessment has been calculated based on the payment to the contractor plus the 27% ELA number. Comparing those numbers to the actual expenditures, there is a difference. The 27% used when calculated out comes to 13.6% for ELA. Some of the estimates presented use the 13.6%. City Engineer Schorzman gave examples of historic percentage increases, estimated costs based on 5% increases, and estimated costs based on 10 cent annual increases. Council was given four options for franchise fees. Option A was the same as presented at the September 20, 2010, meeting. Option B was the adjustment from the November 15,2010, meeting showing $2 for residential and $8 for commercial. Option C is a flat fee of $2.20 for all accounts. Option D is $1.10 collected in franchise fees and the other half collected in assessments. The utility companies will agree with any of these options. All of the options will cash flow. The caveat is Option D which requires us not to seal coat in 2011, but still collect the franchise fees. Assessments only will not work without seed money, and the franchise fees generate that money. Councilmember Wilson recalled the 27% ELA has been challenged in the past and now we find out it is 13.6%. Some may feel they have been overpaying, so the resident cost has been a little more and therefore, preserving the road and bridge fund for a longer period of time. Councilmember May stated the average ELA was less than what was assessed so those funds helped sustain the road and bridge fund longer. Staff stated the assessment was based on half the cost of the project, not the full cost. The difference between the 13.6% and the 27% went to offset the other 50% that did not have a revenue source identified. Councilmember May asked how the options all cash flow. Staff explained we need $400,000/year in revenue. Option C falls slightly short of that at $399,511/year. Staff used the 27% ELA. There is $8,000 difference in the annual collection when using 13.6% ELA. Mayor Larson noted our goal if we use franchise fees was to go seven years before we had to increase them. Mr. Jeff Thelen addressed the difference between the 13.6% and the 27% ELA. In the past seal coating costs have been on a 50/50 basis with the taxpayers. The City pays 50% and the other 50% is assessed to the residents. In 2010, the total amount of the contract including the ELA was $196,311. The amount assessed at the seal coat hearing was $222,938; approximately a $26,000 overcharge. That is the difference between the 13.6% and the 27% that has automatically been charged no matter what the actual costs are. He went back to 2005, but the most Council Minutes (Regular) December 6, 2010 Page 5 striking is in 2009. The actual cost of the project was $254,300, the amount assessed was $300,726; a $46,000 overcharge. Taking 11 years, from 2000- 2010, there has been a total overcharge of$109,000. It is not a 50/50 split. The people being assessed have been deceived. It amounts to a 65/35 split. There should be a positive balance in the seal coat fund of $109,000. City Engineer SchorZInan stated the $109,000 would have been applied to the other portion that was not covered by assessments. It does not exist. Councilmember Fogarty stated $109,000 less was taken out of the road and bridge fund over those years. As far as the 27%, while we were splitting the cost 50/50, the residents were paying 100% of the 27%. Mr. Thelen stated the residents have paid 65% of the seal coat and the road and bridge fund has paid 35%. Councilmember Fogarty stated it made the road and bridge fund last longer. Mr. Thelen agreed, but the residents were told one thing and assessed something different. There is $109,000 that the residents think should be available for seal coating. This could be seed money for a future seal coat project. So maybe it is not as immediate that we set something up for franchise fees because we have the $109,000 as seed money. Mayor Larson stated we do not have the $109,000. Mr. Thelen stated if there is not $109,000 in the seal coat fund, then there was a transfer out of that fund. City Engineer SchorZInan stated rather than a transfer out, there would have been less of a transfer into the road and bridge fund. Mr. Thelen stated the residents are still in the same situation. We paid the 65% share, not the 50% that has been reported to us for the last 25 years. There have been errors and it has taken this many years to figure this out. Once we get to the point where we do not have an assessment hearing, there will be no way to get these facts and figures out in the open to argue them before the Council. That is the major reason he is opposed to the franchise fee. Mr. Thelen stated regarding Option D, which is delaying seal coating for one year and assessing 50% and 50% from franchise fees, the comment was made it would be $132,000 additional cost for the same amount of work. We are also gaining one year on the project, so it really becomes an eight year project, not seven years. If we take an average for seal coating of$400,000/year we are saving $270,000, it is not costing us $132,000. Councilmember Fogarty stated you could also argue how much road damage will be caused with a one year delay. There is also a cost to not doing seal coating. Mr. Thelen stated it would not have been presented to Council if it were not a viable option. Mayor Larson noted another one of Mr. Thelen's concerns has been the ability of the franchise fees to stay in the fund for seal coating. Mr. Thelen stated this is not the only franchise fee we have. There is also a cable franchise fee. Residents were told there were fixed expenses that would be charged against that franchise fee. Within the last month we have had an attempt toward tapping into that franchise fee to subsidize some City salaries. That was turned down by the Council, but the attempt was there. We have no guarantee that if we set up this Council Minutes (Regular) December 6, 2010 Page 6 franchise fee for seal coating that those funds will stay for seal coating. It is a very tempting fund with what could be a very large balance. Mr. Colin Garvey, stated after all the attempts he made to get information from the City he only received a brief breakdown of historic expenditures for the seal coat project. He stated this is unacceptable and asked what the City is hiding. The information he requested should be easily accessible and he did not know why he cannot get it. Mayor Larson asked Mr. Garvey what information he was looking for. Mr. Garvey stated he has asked for the over bonding on the projects, the funding mechanisms, the true assessment costs from 1998 on the Pilot Knob Road project. Mayor Larson suggested setting up a meeting with himself, Mr. Garvey, the City Administrator, and the Finance Director to go over what Mr. Garvey wants to know. Mr. Garvey should contact Mayor Larson when he has time. Mr. Garvey stated regarding the seal coating, once again the City has been operating on over assessing residents and put it in the road and bridge fund. The residents paid 100% of seal coating for the last 12 years. The City has been operating on the over assessment of those who were assessed for Pilot Knob. In fact, the City has not come close to paying 50/50. You are using the funds from residents. Mayor Larson asked the status of the Pilot Knob Road report staff has been working on. Finance Director Walters stated she just completed it and the City Administrator and City Engineer are reviewing it. We want to make sure everything is accurate before it is presented. It has been a long process and a lot of work. Mayor Larson stated staff should let him know when it is ready, and then we can set up a meeting with Mr. Garvey. Mr. Garvey also had a conflict with the numbers he received from the City Engineer regarding the 2000 seal coat assessment. He found City documents saying the actual cost was $100,000 and the information given to Mr. Garvey says $78,000 with total expenditures of $84,546. He did not know why the numbers keep switching. Regarding the franchise fee, electric and gas has nothing to do with seal coating. It is a funding mechanism the City came up with. There is no reason people should have to pay extra on their electric and gas bills every month because the City did not think ahead. Mr. Garvey stated the cable franchise fee has been mishandled. He recalled that was supposed to be a temporary fix to obtain snow plowing equipment in 1994. There was an attempt to also use that fund for wages. If the current Council is gone, there is no guarantee in the future, the franchise fee will not be tapped into. It will be another slush fund. The defInition of a fund is set for an objective purpose. The defInition of a slush fund is a fund set up for illicit affairs. That is what we have been doing. We have been jumping in and out of funds all the time. This is not the time to charge people more. The City has to figure out a way to fund seal coating without coming to the residents. Keep it has an assessment policy. It is fair and people can see what they are being charged. Mayor Larson stated even if we do an assessment, we are still coming to the residents for the money. Mr. Garvey stated we have been Council Minutes (Regular) December 6,2010 Page 7 paying 100% of the assessment for 12 years. Mayor Larson stated we have recently discovered it has not been a 50/50 split. Once it was discovered, staff did make the adjustment from 27% to 13.6% ELA. Councilmember May asked for clarification on Mr. Thelen's issue regarding numbers being different. City Engineer Schorzman stated it is the difference between when we did the assessment historically, using the 27% at the assessment hearing. Councilmember May agreed with Mr. Thelen that if you go to the residents and say it is 50/50 and here is the number, the money should be in the road and bridge fund. She understood there were other uses for the money, but if there was an assessment charge, the $109,000 should be there. She asked what happens in 2011 if we continue with the assessment process. City Engineer Schorzman stated you have no money to pay the contractor other than borrowing it from somewhere. She asked what happens if we skip a year. Staff stated if we skip a year and do not change anything, we are in the same boat we are now. If you skip a year and implement some sort of revenue or seed money collection, then you could do that. Skipping a year increases the cost for the same amount of work by $132,000 because the price of oil does not stop going up. Mayor Larson stated if we decide to assess 100%, we need to fmd a funding source for the first year. Staff agreed and you would need to find a funding source for any year after that that costs more than the previous year. We pay the contractor in August, hold the assessment hearing in September or October. There are 50% of the people that prepay the assessment right after the hearing. The rest have it put on their taxes for the following year. We get 25% with our first tax payment in June, so you have 75% of the last year's cost received. The other 25% does not come until December. Any of the options will work. It is a policy decision. Councilmember May said we do not have an option, because this discussion should have happened 2-3 years ago. What is in front of us is not an option. We can't assess because we do not have another pool of money. She agreed with the comments that utilities have nothing to do with streets, but there are no other options right now. We have to continue the program and there is not another pool of money. We have been going back and forth for the last 3-4 months. Councilmember Fogarty was tom between Option C and D. She would never refer to any City fund as a slush fund. There was never any intent to deceive residents about a 50/50 split. She cannot speak to the Pilot Knob Road project as she was not on the Council then. Part of her wants to lean towards Option D because while we cannot bind future Councils, it does force them to answer the question if they do start to do something with this money other than seal coating. Because of the assessment portion of that option, there will be a public hearing every year. Her concern is that even the half portion will be contested. Mayor Larson stated his concern with Option D is that we are charging a franchise fee for a year before any work is done. So we would be charging residents for something they did not receive. Councilmember Fogarty stated the point is to hold future Councils accountable for that fund. We can set it up, but future Councils will have the power to change the rules. Mayor Larson stated Option C Council Minutes (Regular) December 6, 2010 Page 8 would be transparent through the reporting. Staff noted with any option chosen, a quarterly financial report can be done for this fund to make it as transparent as possible. Making it a regular agenda item will increase that transparency. Councilmember Wilson asked Mr. Thelen to speak to his concern regarding demand vs. non-demand and the huge disparity in the cost. Mr. Thelen stated Options C and D do keep everyone on a level field. Just because you exist you will pay a fee. The problem he has with these options is that there are some huge land owners, such as the School District, which probably equals $90,000 in a 7- year cycle. With the new system, that same property owner would probably pay $3,000. One concern is that everyone pays their fair share and he was not sure either of these options achieves that. Mr. Thelen suggested maybe we are better off levying for this with the understanding there will be some tax-exempt properties that will not pay as it is an insignificant amount. By levying you are spreading it out more across the taxpayers on value vs. what they are paying. Councilmember Wilson stated if he were to support this tonight he would vote for Option C. Since July the Council and staff have been working hard to reduce the tax burden. He did not think the streets will fall apart in one year. We are adding $50-$60 in new taxes to every homeowner in a year we have been fighting to reduce taxes. That is the reason he will not support franchise fees this year. Council and staff should continue to evaluate the information and do additional research. Councilmember Donnelly did not like the blended franchise fee and assessment. If we are going to do a franchise fee, let's just do a franchise fee. There is no slush fund. The money was spent on the project and it extended the time we could do the seal coating at a lower cost. If we are going to do this, we have to raise taxes and do a franchise fee. There is no money anywhere. On a $250,000 valued home it would be $420 in taxes over seven years. The franchise fee proposal is $369 for everyone. We are the only City in the Joint Powers Group that does assessments. Most levy for it. If we go with the franchise fee, he would approve Option C. Councilmember May agreed with Councilmember Wilson. Because of the hard work we have done to keep taxes down, this is a tax. If we have to delay it a year to straighten it out whether it remains an assessment or a levy, she could not add a tax and choose any of the options. Mayor Larson agreed we are not there yet. He suggested next year maybe we should look at levying for it. He asked the City Administrator to explain what could happen with the State and levy limits next year. City Administrator Herlofsky stated by keeping our levy at a lower amount, it is at a lower base. If the State sets a maximum amount of levy a City can have, and the lower the base the fewer revenues that are received. Mayor Larson would be in favor of postponing the seal coating for a year and work on this more. Seal coating is Council Minutes (Regular) December 6, 2010 Page 9 worth the money and needs to be done, we need to decide whether to do franchise fees or levy for it. City Engineer SchorZIllan stated delaying seal coating for a year will not be the end of the world, however, when these things are included in the levy the first thing to go in a budget crisis is maintenance. The fIrst step in things like this going away is to not do it for a year. Councilmember Fogarty felt this is a terrible decision. It is the beginning of the end of seal coating. This is the Council being indecisive. She did not have a problem with not seal coating in 2011 as long as we have a plan. We are making a plan to not have a plan and just continue to discuss it for an entire year. Inaction is a terrible decision. To say we will not do franchise fees and levy for it next year is at least a plan. MOTION by Larson, second by Wilson to delay seal coating for 2011 and continue working on franchise fees and discuss the positives and negatives of levying for it. This should be brought up for next year's budget. Councilmember Fogarty noted there are areas of the City seal coated two years after the primary road was put in. She asked if there are any roads in 2011 that are prepaid, because the developer is required to pay for the first seal coating, that we are obligated to seal coat. City Engineer SchorZIllan stated included would be Twin Ponds, and possibly Mystic Meadows. Councilmember Fogarty stated we will have to do seal coating then next year. City Engineer SchorZIllan stated if the decision is to delay seal coating for one year it will be okay. If the decision is to not do seal coating again, we may have to send them a refund. Voting for: Larson, May, Wilson. Voting against: Donnelly, Fogarty. MOTION CARRIED. b) Adopt Resolutions - Approve 2011 Tax LevY and Budget - Finance City Administrator Herlofsky stated we have reduced the budget by $425,000. This includes one lay-off, one retirement and one attrition due to retirement of the Streets and Utilities Supervisor. Council was presented with two options. Option A, as requested by Council, eliminates the Administrative Services Director position effective March 1, 20 II, to allow for notification. The original placeholder in the budget was $98,594. The management position with severance was $58,398. With the retirement of Mr. Weierke, Streets and Utilities Supervisor, and the filling of that position with Steve Arndt, then filling Mr. Arndt's position, affected the Parks Maintenance to provide services. There will be a re-organization of the Maintenance staff of $86,000. Also included is the reduced increase for the Police Sergeants, and a voluntary 32-hour work week for the HR/Payroll position. This will allow for a contingency of $50,839. This is with the recommendation to leave the levy at a 3.73 % increase. Option B does not include the management staff elimination, but does include the other reductions. Council Minutes (Regular) December 6, 2010 Page 10 Councilmember Fogarty stated at the last workshop staffwas creative with reducing staffhours. Unfortunately, that was the minority opinion of the Council. The majority of Council asked for a management position to be laid off. The City Administrator did give that option. Councilmember Fogarty feltOption B is viable, but Option A is what was requested by the majority of the Council, with the exception that Council asked the final reduction to be $425,000. MOTION by Fogarty, to approve Option A with the levy cuts being $425,000 vs. $400,000, leaving a contingency of approximately $25,000. Councilmember Wilson asked for an amendment to the motion that the effective date of the position layoff not be March 1,2011, but January 1,2011. Councilmember Fogarty was comfortable with that amendment. Second by Wilson. Councilmember Donnelly asked for clarification of the motion. MOTION by Fogarty, second by Wilson to adopt RESOLUTION R67-10 adopting the tax levy for the year 2011 collectible, RESOLUTION R68-10 adopting the 2011 budget with approving Option A, with the layoff effective January 1,2011, and levy cuts would be $425,000. Voting for: Larson, Fogarty, May, Wilson. Voting against: Donnelly. MOTION CARRIED. 12. NEW BUSINESS 13. COUNCIL ROUNDTABLE Councilmember Wilson: Urged residents with the ability to volunteer their time and donate to Toys for Town and the food shelf. Councilmember Fogarty: Attended the Warrior to Citizen Cookie Walk and donating a little time can make a big difference. This year there were 35 trays delivered to homes in the community. She also attended Dazzle Days and the Tree Lighting. It was a very successful event and thanked everyone who organized it. Mayor Larson: Reminded residents overnight parking is not allowed on City streets. Residents should shovel out fire hydrants in their yards. He urged residents to donate to Toys for Town and volunteer their time. He asked residents to support businesses and shop locally. 14. ADJOURN MOTION by Fogarty, second by Wilson to adjourn at 8:48 p.m. APIF, MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant