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HomeMy WebLinkAbout05.18.11 Work Session Minutes Council Workshop Minutes Engineering Department Budget May 18, 2011 Mayor Larson called the workshop to order at 3:05 p.m. Present: Absent: Also Present: Larson, Bartholomay, Fogarty, May (arrived 4:15 p.m.) Donnelly Kevin Schorzman, City Engineer; Todd Reiten, Municipal Services Director; Cynthia Muller, Executive Assistant MOTION by Fogarty, second by Bartholomay to approve the agenda. APIF, MOTION CARRIED. The big items for Planning, Engineering and Building Inspections are legal, IT, and professional services. Professional services have been reduced substantially due to the shift from using Bonestroo to City employees. Planning - Staffwill be updating the comp plan this summer and continue plat and plan reviews. We are busy with plan reviews. Council asked if we resubmit the comp plan to the Met Council every two years and is there any cost. The plan will be resubmitted every 10 years, but updated every 2-3 years. The City Planner has taken a more active role in the economic development side. Planning works with several groups within the City and staffwill prioritize requests based on the overall scope of things. Both Planners attend Planning Commission meetings. The City Planner is on the EFP AC and Eureka group; the Assistant Planner is on the Castle Rock group and handling the Heritage Preservation Commission. They are still trying to review ordinances as time allows and dealing with complaints. This is what the Planning budget supports. Building Inspections - Council should not be concerned with information on the quarterly reports as things tend to even out. Last year we had fairly steady housing coming in. This year we are getting lower housing numbers to start the year, but they are picking up. We will have some big commercial items. Just because we are starting slower this year, is not an indication that things are changing. The revenue is coming in different ways. The Building Official does a very good job of estimating and he is very conservative. His estimates have been accurate and never over reaching with projecting next year's revenue. He has the opportunity daily to talk to builders about what is coming up. Fees charged for permits are to provide a service. If you carry it too far, then you are going outside the general principle behind the fees. We manage the fees in a way to support the work being done. In a couple years Council should be prepared for staff to ask for part time help. We focus so much on housing that other things get lost, such as decks, siding, roofmg, etc. There are a lot of inspections not associated with new housing. The Inspectors are functioning as a part of public safety. The whole point of inspecting is to make sure things are built in a safe manner. The Building Official watches his budget very closely. If he says he needs help, he really does. Council noted the CDA housing will take a lot of time. Inspections wants to try to get through it without additional help. In the last four years, Inspections is down two people; the division has been cut in half. 17 Council Workshop Minutes May 18, 2011 Page 2 Engineering - A new technician started Tuesday. He will be a good addition to the department and will compliment the skill package we already have. The Administrative Assistant also provides support for the Fire Department. Enough time is spent there that some of her time should be allocated to that department. CIP - Last year staff shifted from the normal 5-year CIP to a 10-year CIP. After the evaluation of the road and bridge fund and after looking at the debt service, the current CIP is not sustainable from a debt service standpoint. Staff provided a spreadsheet showing ifwe had $500,000 to dedicate to projects how they could be spread out to 2030. For the 195th Street and Pilot Knob Road intersection, staff applied for a federal grant, but was not successful. Staffwill apply again for a second round of funding. The County is very interested in putting a roundabout in that intersection depending on the right-of-way. It may not happen until 2015 or 2016, but may be moved forward if the County fronts the money and we pay them over time. The project is in the CIP spread out over 2012 - 2014. The amount of money in the budget is the City's share of not only the intersections, but improvements from Flagstaff to Diamond Path. The federal funding would be only for the intersection. The CIP includes the rehabilitation work for Akin Park Estates in 2013, 2nd Street in 2015, and alternating bigger projects in the downtown area to 2024. The CIP shows a beginning balance, which is zero for 2012, total annual expenditure, total annual fIxed revenue, and an ending balance. It has been discussed to have each of these projects stand alone. Staff suggested we have a street rehabilitation fund to do the mill and overlay projects. Council suggested looking at franchise fees again and include a sunset for when we have the ability to do a street utility fee. Staff highly recommended this. The CIP shows the beginning balance as negative until 2020 with putting $500,000 in the budget for projects. The projects end at 2024. At the end of2024 we will see new development again. The existing debt service is everything we have in debt, City Hall, ice arena, everything; not just road projects. In 2022 the debt service is higher than now. The second option is showing $700,000 dedicated to projects. The defIcits are reduced to one year in 2014. This also builds up funds in the future. If a reconstruction project is needed, we would not have to bond for it. There is $400,000 in seal coating that is not part ofthis. By using this second option and maintaining the debt service, shifting the reconstruction projects out, there will be increased maintenance costs. Reconstruction projects will have assessments. The spreadsheets assume we bond for everything and there are no assessments. Staff is not suggesting doing this. The assessments would add to the balances. Eleven years from now we start dropping the debt signifIcantly. We cannot continue not doing things. Councilmember Fogarty stated the problem is these are big numbers and no Council has wanted to take this on. We can ignore it or take the hit and be part of the solution. There also has to be an education piece that Council will be responsible for setting up. When new Councilmembers are elected, they need an orientation with each department head and understand the plans we have laid out. This is good fIscal policy. We have to raise taxes this year and next year. It will take some commitment and people who are willing to put their election on the line and do what is best for the City. Councilmember Bartholomay said we need to explain this to residents, go door to door, and hold open houses. Councilmember Fogarty stated we have two years we are not doing seal coating. In the long run that will cost us more than the $800,000 we saved not doing it for two years. We do not have the finances unless we levy for it. It is too late in the year to get 18 Council Workshop Minutes May 18, 2011 Page 3 $400,000 in franchise fees. Staff stated that is not off the table because of a timing issue. We may operate in a slight deficit the first year, but it would correct itself and not come back. Starting sooner reduces the deficit sooner. It takes three months for franchise fees to turn around. We can still work with a levy or franchise fees. It will take developing a plan that all five Councilmembers are comfortable with. Then it will survive elections. Councilmember Fogarty felt new Councilmembers lack orientation. They need to meet with each department head for their priorities. Council noted we cannot raise the levy $2 million next year, but we have to do something. Rosemount is in a better position because their buildings are paid for. Council asked if other options instead of seal coating have been explored. Staff stated nothing gets the rate of return like seal coating. Another option is to start at $500,000 and do an inflationary factor each year. This can be reviewed further at the June Engineering workshop. Council asked ifwe get grants. Sometimes there are grants to get technical help. Staffwas not opposed to this, but there are two issues. One is having the people that have the time to do that and the second is if we can get 100% grants that is great; if they are matching grants, where do you get the money. Council would be willing to entertain the idea of a part time grant writer for the City because we will get back their salary in grants. Instead of searching out grants, look for our projects such as failing infrastructure and focus on a specific project. This would be across the board, not just engineering. Staff stated grants require a lot of follow-up and would need a separate person. Lakeville is in a better position to receive grants because of the functional classification of their roads. We may get smaller grants such as for sewer work which delays the amount of time for raising fees. Council asked ifwe can use funds for water or sewer to pay that person. Councilmember Bartholomay stated ifwe get a professional grant writer, they can write grants for anything. Staff suggested having staff do preliminary work with consultants fIrst and put people with the knowledge on a specific grant. Council also suggested sending staff to a grant writing class. Staff noted we do have an employee that is interested in writing grants. However, this employee has a lot of pressure from current duties. Council suggested maybe there are other duties that could be shifted. (Councilmember May arrived at 4:15 p.m.) Staffwill research the time commitment for staff to write grants internally plus training costs and compare that to consultants. It may be a combination of the two where staff works with a consultant on the first couple grants. Staff prepared the CIP spreadsheets to discuss the format and concept to finalize them for the Engineering workshop. At the workshop staff and Council can work with different numbers to determine the outcome. As Council goes through the individual budget meetings many things have come up that we should do. Not everything can be done. The list should be prioritized to a level Council is comfortable with. Councilmember May felt the CIP is one of the primary functions of the City. She was surprised we are moving 2nd Street out to 2015. Staff did this for a constant funding level and to maintain bottom debt service payment at or below what it was this year. When talking about increased maintenance costs, on 2nd Street we have bad sanitary sewer, but that is not the only thing wrong. Ifwe repair the sanitary sewer and it lasts for 10-15 19 Council Workshop Minutes May 18, 2011 Page 4 years, but the water line only lasts 5 more years, then we have paid for something and we only get a third of the life out of it. That is the struggle with maintaining things past the point we should. You will be spending money you will never recover. Council will have to prioritize. If we want to do certain things and not raise taxes, then we need to stop doing something else. We cannot take a little out of each department. Councilmember May felt ifwe are looking at raising taxes then we have to make sure we are creating efficiencies and looking at both sides; decreasing spending and increasing revenue. She asked if the number is $700,000 will the money be dedicated to these projects. Staff could not say yes. The current Council cannot tie the future Councils' hands. Council can create a way that they have to publicly address the issue before they can change it. Councilmember Fogarty asked ifwe approved $500,000 a year would it sit in the general fund. She wants it to be easy for Council to view, so it should be set aside as a separate fund within the general fund. She also wants to know how it will affect the fund balance when calculating the percentage. Staff will ask the Finance Director if the money can be reserved. Staff felt this would fall in the budget in the same place as the road and bridge fund; in the capital projects fund. Councilmember Fogarty recalled the way in which the funds are collected makes them untouchable. How Council wants to designate them they would be unreserved funds. If the City reaches a fund balance of35% - 50% that is good for our bond rating. She had been told in the past we should not deviate from that so would like more information on that. She wants the message to be clear to future Councils as to the intent. She wants them to have to answer to the public if they change it. Councilmember May would like to see a spreadsheet showing the projects done sooner. Staff explained the fIrst spreadsheet shows the impact of projects being done sooner. If Council is okay with the debt service going up, staff can shift the projects sooner. It will reduce maintenance costs and project costs, but it will create more debt service than we have now. Councilmember May asked if staff could estimate the savings in the project cost ifthey were done today versus 2013. Staffused an inflationary factor of2% per year between the fIrst spreadsheet and the other spreadsheets. For the June Engineering workshop, Councilmember May would like detail on how the consulting piece is working. Council was given a detail of costs a couple years ago. Based on the old model, she would like to know the savings. Staff stated the consulting costs have gone down substantially over the last three years. We still use the consultant for certain things. The City is not equipped to undertake reconstruction projects. We will need a consultant to design it, but the City can do the construction and inspection. Over the next few years staff would like to have money in the budget for testing supplies so we can do that ourselves. Staff is certified to do testing. In the future, staffwould like to set up a lab at City Hall for doing aggregate testing. There are two benefIts. The City Engineer trusts people that work for him more than others. The second benefIt is the turnaround. We could have results immediately. This would cost $10,000- $15,000. Council felt this would pay off in two years. Council noted when we are slower and things are cheaper, now is the time to plan ahead so we are ready when business does pick up. This type of thing should be done now while we have the time. Staff stated we are re- introducing institutional knowledge that resides within City Hall now. Doing what we are doing now is a fantastic way to move forward and not have to rely on someone else again. 20 Council Workshop Minutes May 18, 2011 Page 5 Before the budget workshop Council will meet on their own to review all this information and prioritize what is important to them. This will probably occur in July. Once staff receives what Council's priorities are, staffwill review them and come back with pro's and con's. Council will review the information and make a decision. The budget workshop would be with the Council and the department heads. MOTION by Fogarty, second by Bartholomay to adjourn at 5:18 p.m. APIF, MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 21