HomeMy WebLinkAbout2008/05/27 - ADMIN - Minutes - City Council - Study Session 11fSt.NLouis Park OFFICIAL MINUTES
MINESOTA CITY COUNCIL STUDY SESSION
MAY 27, 2008
The meeting convened at 6:30 p.m.
Councilmembers present: Mayor Jeff Jacobs, John Basill, Phil Finkelstein, Paul Omodt, and Loran
Paprocki.
Councilmembers absent: C. Paul Carver and Sue Sanger.
Staff present: City Manager (Mr. Harmening), Finance Director (Mr. DeJong), Director of Public
Works (Mr. Rardin), Assistant Finance Director (Mr. Swanson), Accountant (Ms. Monson), and
Recording Secretary (Ms. Hughes).
1. Future Study Session Agenda Planning—June 2, 2008 and June 9, 2008
Mr. Harmening presented the proposed agenda for a special Study Session on June 2, 2008, to
discuss the proposed dangerous dog ordinance and community open house concept. He stated the
City Attorney has received all comments on the dangerous dog ordinance and Mr. Scott and Police
Chief Luse will present another draft of the ordinance. He indicated staff will also present the
concept of conducting a Community Open House event in 2009 to coincide with Parktacular and
the Fire Department open house; he added the event is intended to make a special effort to invite
those residents and businesses new to the community.
Councilmember Finkelstein encouraged staff to have invitations for the event printed in Hmong and
Spanish.
Mr. Harmening presented the proposed agenda for the Study Session on June 9, 2008. He stated
the auditors will be in attendance to present the 2007 audit; other agenda items include Al's TIF
application and a Highway 100 reconstruction update.
2. Financial Management Plan and Planning for 2009 Budget Update
Mr. Harmening outlined the benefits of long range planning, including a shared understanding of
priorities, stabilized financial decision making, enhanced communication with the public, and
instilling confidence that the City is addressing its most urgent priorities.
Mr. DeJong presented a detailed overview of assumptions in the financial management plan and
noted the projections are based on the best information available at the present time. He added that
no new staff or programs are included in the assumptions.
Councilmember Paprocki stated he felt it was important to have a plan for getting rid of old
programs that may be under-performing or that are not cost-effective and to retain the ability to add
new programs.
Study Session Minutes -2- May 27, 2008
Mr. Dejong stated the rate of inflation is estimated at 3% and interest earnings are set at 4%; he
added the fund balance is targeted at 40% of expenditures. He indicated that debt service includes
$14 million for fire station bonds wrapped around existing debt and assumes that no new GO bonds
will be issued; in addition, any revenues not under the City's control are assumed to be static (e.g.,
franchise fees).
Mr. Dejong stated all the projections assumed that budget and actual match exactly with no budget
surplus transfer to other funds. He noted that given the current economic environment, a
reasonable allowance for doubtful accounts has been built into the assumptions. He stated there
may be a structural imbalance between CPI and IPD that is not included in the model and the only
"unwinds" are the police and fire transfers. He indicated the model does not include expending PIR
or development fund balances.
Mr. Harmening noted that in 2003, the City lost local government aid and used cash from other
sources to fill that gap, e.g., the police and fire fund, housing rehab fund, and cable TV fund; this
plan does not assume any further unwinding other than the police and fire fund.
Council discussed the housing rehab fund and cable TV fund and ways to reduce the potential
negative fund balances in these accounts.
Mr. Dejong stated that staff has balanced expenditures to smooth the change in the tax levy; he
added in order to eliminate individual fund deficits, maintain adequate fund balances, and meet all
current program needs, the tax levy needs to be raised modestly faster than inflation with a range of
2.43% to 4.68%. He noted that a large increase is necessary for 2010, which is offset in large
measure by the increase in tax capacity from the Excelsior Boulevard TIF district.
Mr. Dejong stated the transfer of the MSC fund balance to vehicle maintenance was completed as of
2007 so the tax levies in park and recreation will increase by $25,000 per year plus inflation to
balance revenues and expenditures by 2011; the park improvement fund will have a healthy balance
because current park dedication fees are added directly to the bottom line. He stated the pavement
management fund requires significant increases in the tax levy or franchise fees to maintain the
pavement condition indicator level; he noted the model shows a doubling of the tax levy to support
this fund and maintain the same level of service.
Mr. DeJong stated the employee flexible benefits fund balance becomes positive at the end of 2016;
this fund consists of workers' compensation costs, unemployment costs, educational benefits, and
other items that are difficult to predict from year to year. He noted these are general operating costs
and staff plans to place these items into the general fund budget when revenues and expenditures are
in balance.
Mr. Dejong presented the proposed recommendations, including increasing the tax levy gradually,
carefully considering the impact of adding new programs and staff, adding a debt service levy for the
2004A TIF (Rec Center) bonds to use the added tax capacity from expiring TIF districts outside of
levy limits, and fully funding ongoing expenditures with ongoing revenue sources.
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Mr. Harmening stated the Excelsior Boulevard TIF district amounts to approximately $700,000 per
year in new tax capacity, which means the levy could be increased by that amount and would be
absorbed by all the new taxes coming online from the new TIF district; staff is proposing to use that
revenue to pay for the Rec Center bonds.
Mr. Harmening outlined the unfunded projects, including Highway 7 and Wooddale, Highway
100, Highway 7 and Louisiana, other miscellaneous roads, and sidewalks and trails; these projects
represent major infrastructure with no mechanism in place to pay for other than issuing debt and
raising property taxes. He stated staff is recommending issuing TIF bonds, using the development
fund balances, HRA levy proceeds, and using state and/or federal funds for the major infrastructure
improvements. He noted the City will receive $7 million from the federal government for the
Highway 7 and Louisiana project.
Mr. DeJong presented an overview of the budget process and noted there fixed timelines pursuant to
state statute which require the adoption of a preliminary budget by September 15, 2008; if a Truth
in Taxation hearing is to be held, that meeting must be held during the Council's first meeting in
December.
Councilmember Finkelstein asked if the budget will incorporate any of the results from the energy
audit, particularly related to fuel costs.
Mr. DeJong stated staff is currently working with the top fuel users to review fuel inventory and
usage; fuel costs are obviously higher than last year and he noted some of the increased consumption
is due to a number of late snowstorms this year. He stated they will determine the average use per
vehicle and make predictions based on that data.
Mr. DeJong stated City staff is working to communicate more with department directors, to
simplify the spreadsheet structure to allow Finance to more easily manipulate the data, and to adhere
to stricter time limits to make sure the Council sees pertinent information in a timely manner.
Councilmember Paprocki requested the budget include brief footnotes on why a particular
expenditure has significantly increased.
Mr. DeJong presented information from the League of Minnesota Cities on estimating the 2009 tax
levy limit and stated the City can increase the 3.9% levy by one-half of the percentage increase in
new commercial industrial construction and by one-half of the percentage increase in the number of
households; in total, the City would be at 5.5-6% for its total allowable levy increase above and
beyond any debt levies. He added the Council has the ability to set the levy.
Mr. Harmening stated another way to present the budget is to ask department heads to prepare a
budget at the same levy of service, as well as a budget, which incorporates reductions; at that point,
the Council could review both budget scenarios to help in its decision-making process.
Mayor Jacobs stated he preferred to see the budget presented on a case-by-case basis.
Study Session Minutes -4- May 27, 2008
Councilmembers Basill and Paprocki concurred. Councilmember Paprocki reiterated his request
that the assumptions include an amount for new programs and felt the Council can make decisions
based on programs and not just by dollar amounts.
Mr. Dejong presented the "wish list" presented by the School District following the recent joint
meeting.
Mayor Jacobs stated he did not agree with item #6 on the School District's wish list relative to field
artificial turf and building. He also did not agree with item #3 for utilities and the custodian at
Lenox; he added the City already spends $165,000 per year for Lenox and did not feel any
additional funds should be supplied. He stated he did not agree with item#4 for the social workers.
He stated with respect to sidewalk installation, that item should be a City expense. He noted the
police liaison officer program has been very successful and should continue to be funded.
Councilmember Basill stated the Lenox is the City's community center and felt if the City could
help in this regard, he would not have a problem with it. He indicated the artificial turf and
buildings represent a significant expense for the School District and he felt if the City can provide
some funding assistance, the entire City will benefit.
Councilmember Omodt stated he was in agreement with item #2 regarding the police liaison
officers. He stated he felt the City did a better job on lawn care than the School District. He stated
he was in agreement with item #3 with respect to Lenox. He stated he was not in agreement with
item #4 regarding social workers. He indicated the election costs (item #5) could be covered by the
City. With respect to the artificial turf and buildings (item #6), he concurred with Councilmember
Basill's comments and stated this location represents a gathering spot and he is open to exploring
this with the School District. He indicated he would like to see a proposal regarding junior high
athletics (item #8). Finally, he stated he did not feel the sidewalk installation (item #9) should be
the School District's responsibility.
Mr. Harmening stated he reviewed the wish list with Mr. Scott and noted that the City is authorized
to spend dollars for certain public things that benefit the community. He stated that Mr. Scott
indicated the City could cover the police liaison and the Lenox as long as it is a community center
type of facility; Mr. Scott indicated the social worker expense is likely not something the City can
cover. He stated that Mr. Scott felt the election costs and junior high athletics could probably be
covered, and the field artificial turf could probably be covered if the community benefit could be
demonstrated. He stated that Mr. Scott opined that the custodian at Eliot (item#7) likely could not
be covered. He stated that the sidewalk installation should be a City expense, and finally, Mr. Scott
wanted to give further consideration to item #1 with respect to snow plowing and lawn care on
School District property.
Councilmember Finkelstein stated his agreement with items #2 (police liaison officers), #3 (Lenox),
and#9 (sidewalk installation). He stated he was not yet sure about items #6 (field artificial turf) and
#8 (junior high athletics).
Councilmember Paprocki stated he felt the City should help where it can and added if the City can
run their programs cheaper, it should. He stated he appreciated the comments about the field
Study Session Minutes -5- May 27, 2008
artificial turf and buildings, but this represents a significant cost and the City has to say no
somewhere, adding it is difficult to explain to residents that there is not enough money to build an
overpass while the City provides money to the School District for turf.
Mayor Jacobs concurred.
Mr. Harmening stated it is clear that Council has expressed a desire to work with the School District
and to provide funding where appropriate and to continue the conversations with the School
District. He stated the School District has indicated their fiscal year begins July 1st and suggested if
Council wants to do something short term, the police liaison officers would be an appropriate
expenditure at this time, as well as funding for election costs. He added the sidewalk installation
could be reviewed in the context of the overall sidewalk and trails plan.
Councilmember Omodt left the meeting at 8:04 p.m.
It was the consensus of Council to direct staff to provide the School District with funding for the
police liaison officers (item #2) and election costs (item #5) and to continue discussions with the
School District with respect to the remaining items on the wish list.
The Council expressed their appreciation to Mr. Dejong and his staff for their work on the financial
management plan and 2009 budget.
3. Hwy. 7 and Wooddale Avenue Grade Separated Crossing Schedule and Financing/
STEP Lease
Mr. Harmening presented the staff report and requested feedback from Council on timing of the bid
letting and financing for the project. In addition, the City received a request from STEP for an
extension of their lease pending completion of their permanent space at Lutheran Church of the
Reformation in fall 2009. He stated if STEP is required to vacate their current space by January
2009, they will require temporary space.
Mayor Jacobs stated one option for financing the project is using existing City funds and then
having Mn/DOT reimburse the City for $1 to $1.5 million. He added that the County will also be
requested to provide some funding.
Mr. Harmening noted that in terms of Mn/DOT funds, Mn/DOT would ask the City to front end
their funding (currently being considered at about $1,000,000) and Mn/DOT is also considering
providing construction engineering and administrative services for the project (equivalent to possibly
$1.5 to $2 million) .
Councilmember Finkelstein stated it did not make financial sense to delay the project and felt the
City could work with STEP on finding them a temporary location.
Councilmembers Basill and Paprocki concurred.
Study Session Minutes -6- May 27, 2008
Mr. Rardin explained the timing of the bid letting and access to federal funds.
Council and staff had discussion about the construction schedule and lease with STEP.
Mr. Harmening stated that a lease amendment with STEP will be presented for Council review in
June.
4. Communications (Verbal)
None.
The meeting adjourned at 8:26 p.m.
Written Reports provided and documented for recording purposes only:
5. April 2008 Monthly Financial Reports
6. Fire Station Site Acquisition Process Update
'.)1a4,161 .a/ ✓Nancy Stroth, City Clerk Jeff Ja•.bs, a i•r