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HomeMy WebLinkAbout03.07.11 Council Minutes 7a- COUNCIL MINUTES REGULAR March 7, 2011 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, Bartholomay, Donnelly, Fogarty, May None Joel Jamnik:, City Attorney; Teresa Walters, Finance Director; Kevin Schorzman, City Engineer; Brenda Wendlandt, Human Resources Director; Jen Dullum, Natural Resources Specialist; Cynthia Muller, Executive Assistant Mitch Faber, Rick Reichert Mayor Larson called for a moment of silence for Mr. Dick Siverson. 4. APPROVE AGENDA Councilmember May pulled item 7g) Draft 2010 Financial Report and 7h) January 2011 Financial Report for separate vote. Human Resources Director Wendlandt pulled item 5b) Introduce Promoted Employee for a future date. MOTION by Bartholomay, second by Donnelly to approve the Agenda. APIF, MOTION CARRIED. 5. ANNOUNCEMENTS a) Introduce New Employee - Parks and Recreation Parks and Recreation Director Distad introduced Mitch Faber, new Facilities Maintenance employee. 6. CITIZEN COMMENTS a) Response to Mr. Tim Thompson - Engineering Mr. Tim Thompson, 816 7th Street, at the last meeting he had a question regarding the contract for the utility companies. He has found no further information about it. City Engineer Schorzman explained the franchise agreements say the surcharge will be equal to the franchise fee. The surcharge is what the customer pays the utility company and the franchise fee is what the utility company pays to the City. In all the agreements it says those payments will be equal. That means there is no administrative charge. Mr. Thompson asked if that was a guarantee that they will not raise the rates. He has been told it will be a pass through to the City, but the companies will apply to the utility commission for an increase in the rates. One way or another we will pay more for it; whether it is 10% on the 4 Council Minutes (Regular) March 7, 2011 Page 2 franchise fee or on the monthly bill. City Engineer Schorzman stated the wording in the agreement says the surcharge will equal the franchise fee which means there is no administrative charge on top of it. They do provide that possibility if they choose to in the future, however, that would require the company going to the Public Utilities Commission and going through a public hearing process there for them to impose that fee. The argument would be, if they impose that fee on a tax in Farmington, are they going to impose that same fee on the State for collecting sales tax. We would have the option of discontinuing the franchise fee before that option is put in place. The City would receive notice of the public hearing. Mr. Thompson asked if anywhere in the contract it states they will not raise utility rates for a certain amount oftime, or as soon as we apply for the pass through will they apply to the Public Utilities Commission to increase gas and electric rates. The City may get a pass through, but the people will pay 10% - 15% more. There is no way they will receive $50 and pass through $50, it is not feasible. He asked if there was a guarantee in the contract for no increase for a certain period of time. Staff explained the guarantee is that they have to go through a public hearing process. Mr. Thompson stated he has done some homework and that is already in the works. City Attorney Jamnik stated the language in the contract says the surcharge is equal to the amount imposed. Mr. Thompson stated there is nothing stating from the utility companies that they cannot increase their rates through the Public Utilities Commission. It is an increase to the people if they raise the rates. Mayor Larson asked if they can only raise the rates for Farmington. Mr. Thompson replied the rates can be raised for the region. Councilmember Donnelly clarified there is no guarantee. They could raise the rates, but they have to go through the Public Utilities Commission to do so. He asked Mr. Thompson about his comment that they have already started this. Mr. Thompson replied the person he spoke to at Minnesota Energy said they are waiting to apply for it. There is no large corporation that is going to pass $50 through and get $50 back out. They are losing money. Councilmember Fogarty clarified he told you they are starting this process because we are doing a franchise fee. Mr. Thompson stated if the franchise fees are applied to Minnesota Energy. Councilmember Fogarty questioned that is the reason they are going for a rate increase. She asked Mr. Thompson if they told him because we are considering a franchise fee, they are seeking a rate increase? Mr. Thompson stated they are seeking a rate increase with all municipalities that are seeking a franchise fee. City Attorney Jamnik confmned they can do that. Finance Director Walters clarified with notice, so we would have the opportunity to stop the franchise fee. Mr. Thompson stated it is hard to vote on something if you do not have all the information. b) Response to Mr. Rick Reichert - Engineering A response was sent to Mr. Reichert. 5 Council Minutes (Regular) March 7, 2011 Page 3 7. CONSENT AGENDA MOTION by Fogarty, second by Bartholomay to approve the Consent Agenda as follows: a) Approved Council Minutes (2/22/11 Regular) b) Adopted RESOLUTION RI5-11 Approved Gambling Event Permit- Engineering Approved Joint Powers Agreement with Department of Public Safety - Police Department Adopted RESOLUTION RI6-11 Accepting Park Bench Donation - Parks and Recreation Adopted RESOLUTION RI7-11 Accepting Donation Rambling River Center Construction Project - Parks and Recreation f) Approved Pictometry Agreement - Human Resources i) Approved Bills APIF, MOTION CARRIED. c) d) e) g) Draft 2010 Financial Report - Finance Councilmember May noted under property tax it states although we did not receive 100% of our 20 I 0 taxes, we did receive $300,000 in delinquent taxes which are not considered revenue until received. Councilmember May asked what percent of the 2010 taxes we did collect. Staff will provide that information. Councilmember May asked what year the $300,000 was from. Staff explained the numbers are not broken down. Councilmember May asked ifwe have the amount of delinquent taxes yet to be paid. Staffwill provide that number. Councilmember May noted under EDA, they understand there was a negative balance in the HRA and asked if staff has learned any more about that number. Finance Director Walters explained the reason for the negative balance was because when the EDA was started, the HRA balance was left out there, so there were two separate funds. The majority of the negative balance in the HRA was due to the library. Councilmember May stated we are also dealing with a negative balance with the Ice Arena and asked ifwe ever received a commitment from the hockey association. Mayor Larson stated it was a percentage and he will talk with the hockey association. Councilmember May stated on the spreadsheet showing transfers in and out, looking at the different funds, she could not match up the numbers. Finance Director Walters stated we also transfer out to debt service funds, which are not shown. She has a spreadsheet showing where each transfer went and will provide that to Council. Councilmember May noted with the historical preservation, expenditures exceeded budget and asked if there was a grant. Finance Director Walters confIrmed there was a grant that goes into the general fund revenues, so you do not see the revenue side, just the expenditures. Councilmember May noted under Engineering, expenditures are quite a bit less than budgeted and asked if it was due to allocation of expenses elsewhere. City Engineer Schorzman replied yes, in particular to Walnut Street. We talked about doing a transfer from the engineering general fund to the project. That has not happened yet. Councilmember May noted in 2010 we exceeded budget for snow removal and will expect to have issues also in 2011. When the snow season ends, 6 Council Minutes (Regular) March 7, 2011 Page 4 she asked staff to provide information on where we will be short. Councilmember May asked ifwe will see a fmal draft of the 2010 financial report. Staff explained the fmal is the Comprehensive Annual Financial Report that is audited. Council will receive a copy. Councilmember Bartholomay asked if Council could receive a report with more detail and also with the budget. He suggested something that shows revenues and expenditures on one page. Finance Director Walters has a spreadsheet showing all the transfers and the reason. She will provide that to Council. Councilmember May stated regarding solid waste, there is an increase in the fund balance and so has to ask if we are charging too much. Finance Director Walters stated it is preliminary and does not include the capital asset entries or debt entries. Most of the enterprise funds will change quite a bit in the final report; the general fund and special revenue funds should not show much change. MOTION by Fogarty, second by Donnelly to accept the Draft 2010 Financial Report. APIF, MOTION CARRIED. h) January 2011 Financial Report Councilmember May asked if staff has the budge broken out by month so it can be compared on a monthly basis rather than a year end budget number. Finance Director Walters stated we do not budget by month; we budget annually because some areas will have higher revenue at different times of year. The budget is compared on a percentage basis. Right now we are at 8% of the year. We are at 6.5% ofthe budget. Councilmember Bartholomay asked if it was possible to break it out quarterly. Finance Director Walters could compare last year's quarterly report to see where we were then compared to this year. Councilmember Fogarty stated snapshots are not always reflective of how the budget is operating for the year. Councilmember May asked when the budget is prepared, do we not have a monthly calendar to use to reach a year end number? Finance Director Walters replied no, each department does their own budget and it is done annually. Councilmember Fogarty asked for a column showing where we were for that month in 2010. Staff will provide that information. Councilmember May was looking more for what we budgeted for this year. Councilmember Donnelly stated each department has a budget they manage during the year. Councilmember May noted the Rambling River Center operations states it is funded by $173,450 transfer from the general fund which was $155,000 last year. Staff stated we increased the number because the Rambling River Center borrowed money from another fund and the general fund is paying for that debt. It is passing it through to the Rambling River Center. The Rambling River Center holds the debt, the general fund transfers it to them, and they pay it off. Councilmember May noted under Rambling River Center donations, it says future 7 Council Minutes (Regular) March 7,2011 Page 5 donations have been pledged and will be received over the next four years. She asked for that number. MOTION by Fogarty, second by Bartholomay to accept the January 2011 Financial Report. APIF, MOTION CARRIED. 8. PUBLIC HEARINGS a) NPDES Phase II Annual Report - Natural Resources Natural Resources Specialist Dullum presented the annual report. Farmington is required to follow the phase II requirements because we have a population over 10,000. Under phase II, operators of municipal separate storm sewer systems need to obtain authorization to discharge storm water runoff to surface water. Staff was required to develop a storm water pollution prevention plan. The six minimum control measures include: 1. Public Education and Outreach 2. Public Participation/Involvement 3. Illicit Discharge Detection and Elimination 4. Construction Site Runoff Control 5. Post Construction Runoff Control 6. Pollution Prevention/Good Housekeeping There are 60 best management practices contained in these measures that the City is required to meet. MOTION by Fogarty, second by May to close the public hearing. APIF, MOTION CARRIED. 9. AWARD OF CONTRACT 10. PETITIONS, REQUESTS AND COMMUNICATIONS 11. UNFINISHED BUSINESS a) Approve Funding Source - Seal Coating - Engineering Mayor Larson felt the community was not ready for franchise fees. Once we are able to control them ourselves through a street utility, then we can look at it. So we have to go with a levy or assessments/levy. Councilmember May stated ifwe choose the levy option, is there any reason the amount has to be $400,000; could we determine that amount on an annual basis? City Engineer Schorzman stated the Council is free to fund this however they want. He suggested $400,000 because it is consistent with the amount year to year throughout the cycle. If you try to fund it year by year, there is a $270,000 jump from one year to the next in the future. MOTION by May, second by Bartholomay that we choose the levy option with the amount to be levied to be determined at a future date, perhaps at an engineering workshop. Mayor Larson spoke with some residents prior to the meeting and they would like to have a levy/assessment combination. City Engineer Schorzman stated one ofthe biggest detractors from the assessment 8 Council Minutes (Regular) March 7,2011 Page 6 process is that as the assessments increase over time, you have to substantiate them if someone challenges them. If a resident challenges the amount, and they lose, that process is after the work is done. Then where will we get the money. Councilmember Donnelly asked about the conversation with the residents. He was not in favor of the combination. Why go through all the legal work and challenges of the assessments and then levy for the other half. Mr. Tim Thompson stated the levy is based on overall area of the City. Staff explained the levy is based on the property value. Mr. Thompson confrrmed it is throughout the City, commercial and residential. He asked how much would be based on the levy and how much on the assessment. City Attorney Jamnik stated that is up to Council. Councilmember Fogarty stated traditionally for an assessment we have gone by residential unit divided evenly. Mr. Thompson felt that was fair. He asked if you strictly levied, would you have a prior number so the number would be fIxed at the time of budget so you levy for the exact amount. Councilmember Fogarty stated it would be an estimate. Mr. Thompson stated he received the paperwork from the last meeting, at a 10-year average including the crack fIlling it still averages $153,000/year. Councilmember Fogarty stated there is a percentage increase from one seal coat project to the next. Mr. Thompson received the past 10 years of seal coating and crack fIlling services. At the budget workshop it was stated the crack fIlling is not included in the $400,000. He used a 10 year average including the crack fIlling of$135,000 which comes to $150,000/year. Councilmember Fogarty asked in the year 2000 and 2007 that would have been the same group of people. In 2000 the project cost $78,000; in 2007 it cost $145,000. The reason staff says $400,000 is because that is a 100% increase. Mr. Thompson understood about increases and cost changes. He suggested the 7 -year period could be moved to ten years which would save money. Councilmember Fogarty stated the City's Engineer does not agree with that extension. We will not have an exact number prior to budgeting. Mr. Thompson stated it will be hard to levy, so he recommended setting a levy and assessing the rest. Councilmember Fogarty stated what ifwe decided to levy $250,000 for seal coating with the balance to be paid in assessments. Mr. Thompson stated that is foolish, because he did not think you would go through $250,000. He believes you could replace the streets for less in a shorter period of time, than you can adding the cost of seal coating twice in a 15-year period. Mayor Larson asked Mr. Thompson to explain why he wanted the levy/assessment combination. Mr. Thompson stated if you cannot come up with an exact fIgure for a levy, then you will levy and assess. It is hard to levy without an exact number of what you will pay at the end of the year. Councilmember Donnelly asked if we had an exact number when we assessed. City Engineer Schorzman stated at the assessment hearing we did. Councilmember Donnelly stated with the levy the more land you own you will pay more. Mr. Thompson agreed you could go with either option, but not franchise fees. 9 Council Minutes (Regular) March 7, 2011 Page 7 City Engineer Schorzman stated there was some discussion about the utility company charging a fee to collect the money for us. That is exactly what the county does to us during the assessment process. They collect a fee on top of what we assess and that is charged back to the residents. Mr. Thompson clarified that is only if the assessment is not paid upfront. Finance Director Walters stated with the levy/assessment combination, you do not have the money upfront to pay for the project. You would have to levy for the full $400,000 so we have something there to pay for the project until we receive the assessments. Then how long do we spread the assessments out, and you also would be looking at delinquent assessments similar to delinquent taxes where you may not receive everything. Councilmember Donnelly stated ifwe went with the levy, we would not collect any money until June 2012. Could we do seal coating in 2012 or fund it with fund balance money? City Engineer Schorzman stated you could seal coat in 2012 and the revenue would be received in 2012, but there would be a period of time between July and December where the fund balance would float it. Councilmember Fogarty did not think this is realistic. Looking at 2007, 2008, 2009,2010 there is not the constitution on the Council who will make the levy go from $145,000, drop it to $134,000 and the next year go to $236,000. In 2008, we would have skipped seal coating. Ifwe decide to levy this and not come up with a set dollar amount, this will be the beginning of the end of seal coating. There is not the constitution in this Council to make those jumps every year. Budgets are getting tighter and this will be one of the first things to go. In 2014 and 2016, it will be an increase of$200,000. It will be the end of seal coating unless we come up with a set dollar amount or go with franchise fees. It is a matter of determining how committed we are to seal coating and pavement management. There are fundamental basic things government is responsible for, and infrastructure is one of them. We have to fmd the fmances to do it. If you go with a levy, for example Flagstaff, the residents will be paying for a road which some use, but the road only exists because of a school who will not have to pay for the maintenance of the road; the residents will. The reason we did assessments was so properties that are tax-exempt had to pay something for the roads they use. Councilmember Bartholomay felt we will need to determine a set amount soon. Councilmember Donnelly stated this will be part of the levy, not a special levy. There is no category that says $400,000 is for seal coating. We are agreeing to increase next year's taxes by a certain amount to cover seal coating for 2012. City Attorney Jamnik stated if at a later date, Council wants to add an assessment element, you could do that, or if in a year Council wanted to go with franchise fees, you could do that. Tonight you are saying this Council plans to look at a general fund levy for seal coating for the foreseeable future. You are not binding anyone to anything. Mayor Larson stated in a year or two we can look at how close we are to the estimated costs. City Engineer Schorzman has received three 10 Council Minutes (Regular) March 7, 2011 Page 8 estimates that range between $320,000 - $360,000. Mayor Larson stated if estimates are coming in different, we can adjust the levy number. Councilmember Fogarty stated we have to think long term. Mayor Larson stated if staff figures $360,000 and it comes in $100,000 less then something needs to be adjusted. Ifwe come in close to that, then we know the system will work. Iffor two or three years we come in significantly lower, then we are charging too much. Councilmember Fogarty asked what is close? Ifwe are not banking some for 2016, then we will be really short. We need to be $100,000 off in 2012 and 2013 so we can afford 2016. You cannot evaluate it on a year by year basis. Councilmember Fogarty asked if the intent is to set up a separate fund for seal coating so we can track the month. Staff confirmed this. Every project will have its own fund. Councilmember May agreed with having a separate fund. She does not disagree with Councilmember Fogarty, but ifwe are going to decide on the levy option, she would like the public to have an opportunity to weigh in on what that number should be. Councilmember Donnelly stated part of the reason we are in this situation, is that over the prior years development helped pay part of the seal coating and we were able to assess less. The road and bridge fund was a byproduct of the growth of the City. City Engineer Schorzman stated when development comes, part of the fees paid by the developer are the first seal coating of the road. After that it was assessed. The growth was covered by the fact the developer paid for the first seal coating of the new roads. Councilmember Fogarty asked ifwe keep the current policy, with the same rotation, but instead we levy that amount and assess the remainder each year, is there any historical information that can help us determine ifwe will be okay legally with the 50%. City Attorney Jamnik suggested you will not be okay. In the years where we have spikes and have to sustain large assessments, we will fail to do that, especially if property values are dropping. When you have the spikes, we would have to determine a way to spike the levy side, rather than the assessments. Councilmember Fogarty stated ifwe decide to go with $250,000 with the idea of banking to buy down those years, how would the Council in those years determine what is sustainable? City Attorney Jamnik stated we would have to look at it on a year by year basis. Ifthe real estate market is depressed, or having more challenges that are difficult to sustain, we would have to evaluate whether we can sustain them. Councilmember Fogarty felt non-profits should contribute to maintenance of the roads. She felt we should formulate a policy where we come up with a set dollar amount and we do 50/50 in years it is sustainable and use the balance to buy down the years it is not. MOTION by May, second by Bartholomay to choose the levy option for the seal coat program with an amount to be levied to be determined at a future date, likely the engineering workshop. Voting for: Larson, Bartholomay, Donnelly, May. Voting against: Fogarty. MOTION CARRIED. 11 Council Minutes (Regular) March 7, 2011 Page 9 12. NEW BUSINESS 13. COUNCIL ROUNDTABLE Councilmember Fogarty: She received some calls regarding the increase in the street light utility from $6.00 to $6.90. There was discussion at Council meetings regarding this fund going negative for 2010. This change was approved for the 2011 fee schedule. 2010 was an unusually high year for street light expenses. Staff will monitor the funds. The Farmington Pageant committee is accepting applications for 2nd, 3rd, 6th, 7th, and 8th graders for Little Miss and Junior Miss Farmington and girls ages 17-19 for Miss Farmington. There is also a button design contest. Anyone K-12th grade can enter the contest. The deadline for Pageant applications is April 1 , and for the button contest the deadline is March 21. Councilmember Bartholomay: Thanked City Engineer Schorzman and staff for their hard work on the seal coating budget. He also thanked the residents for voicing their opinions. Councilmember May: Thanked those who are involved in the Grow Farmington initiative. The third meeting was held and there is a core group still attending the meetings. We are getting closer to action items. It has been mentioned about a Citizen Finance Council and she would like to see that started this year to help Council through the budget process. City Attorney Jamnik: Regarding the liquor compliance checks, we have resolved the criminal proceedings on both cases. One was a private licensee and the other public. Both will be brought to the next Council meeting. The proposed closure dates for both businesses are March 28 - 30, 2011. Human Resources Director Wendlandt: The Parks and Recreation Commission would like to meet with the Council on April 11, to discuss 2012 projects. Mayor Larson: Urged residents to shop locally. 14. ADJOURN MOTION by Fogarty, second by Bartholomay to adjourn at 8:26 p.m. APIF, MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 12