HomeMy WebLinkAbout2010/01/25 - ADMIN - Minutes - City Council - Study Session f/fSt. Louis Park OFFICIAL MINUTES
MINNESOTA CITY COUNCIL STUDY SESSION
ST. LOUIS PARK, MINNESOTA
JANUARY 25, 2010
The meeting convened at 6:30 p.m.
Councilmembers present: Mayor Jeff Jacobs, Phil Finkelstein, Anne Mavity (arrived at 6:33 p.m.),
Julia Ross, Susan Sanger, and Sue Santa.
Councilmembers absent: Paul Omodt.
Staff present: City Manager (Mr. Harmening), Chief Information Officer (Mr. Pires),
Communications Coordinator (Mr. Zwilling), Civic TV Coordinator (Mr. Dunlap), Public Works
Director (Mr. Rardin), Planning/Zoning Supervisor (Ms. McMonigal), Utilities Superintendent
(Mr.Anderson), Controller (Mr. Swanson), and Recording Secretary (Ms. Wirth).
Guests: Tom Pavek (Elert & Associates), Carl Torarp (LocaLoop), Toby Keeler and Bruce Browning
(TAC), Brian Ross (CR Planning, Inc.), Mark Ruff and Elizabeth Diaz (Ehlers &Associates).
1. Future Study Session Agenda Planning— February 1 and February 8, 2010
Mr. Harmening presented the proposed special study session agenda for February 1 and the
proposed study session agenda for February 8, 2010. He advised that Congressman Ellison will
attend the February 1, 2010 meeting.
Councilmember Sanger requested future Council discussion regarding potential land uses, zoning,
and other issues under the Council's prevue since the school board may close some schools.
2. Telecommunications Advisory Commission Follow-Up Regarding Wi-MAX Services
Mr. Pires presented the staff report.
Councilmember Mavity asked staff to provide additional details regarding the lease of fiber lines and
capacity.
Mr. Pires explained the City built about 26 miles of fiber in conjunction with the school district and
LOGIS as a collaborative. This fiber provides high-speed robust Internet connection and now
connects all major school and City buildings, yet a lot of fiber capacity remains unused.
Councilmember Santa asked how LocaLoop's service differs from Wi-Fi.
Mr. Pires described Wi-Fi as being indoor technology tweaked to use outdoors; whereas, LocaLoop
WI-MAX is designed for outside use with a stronger signal to penetrate buildings and, theoretically,
should be a more robust signal than Wi-Fi technology.
Councilmember Sanger asked if assurance has been provided that once the system is built subscribers
will be able to access the LocaLoop system indoors and outdoors.
Study Session Minutes -2- January 25, 2010
Carl Torarp, owner of LocaLoop, answered in the affirmative. He assured the Council this was
proven technology being deployed in the metro area and all over the country.
Councilmember Finkelstein noted the last vendor had made the same assurance and he was
concerned about the impression that this is a City-run system since the City would lease the fiber
lines to LocaLoop.
Mr. Pavek noted the City leases space on its water towers for cellular service yet there is not the
impression it is a City-run system. He explained the City has additional fiber capacity, a City asset
the City will never use, so it can be leased.
Councilmember Finkelstein commented on the need to assure the City treats all companies the same
and not offer something to LocaLoop that is not offered to others. He questioned how the
LocaLoop business model would work.
Mr. Torarp stated they are a locally-owned service provider that sells high capacity internet
broadband service for both fixed and mobile applications in the coverage area so consumers can
connect to the internet wherever they are.
Councilmember Finkelstein questioned the status of the City's fiber system should LocaLoop go out
of business.
Mr. Pires stated the City owns its fiber system so the status would not change; the City is just leasing
an asset as it does with water tower space. He explained the City Attorney will draft an agreement
that includes language to address those points.
Councilmember Ross asked about potential liabilities should there be a major mechanical failure or
emergency.
Mr. Pires advised the agreement will contain language to protect the City so it is not liable for acts of
nature or standard maintenance issues and provide other companies with the same arrangement as
long as the other companies are willing to do the same things done by LocaLoop. He noted that
Clearwire has made application to mount antennas on the City's water towers; however, not offered
to build fiber or provide subscriptions that have value, as being offered by LocaLoop.
Councilmember Ross asked if a cost analysis had been conducted or if there would be an advantage
to work with Clearwire to make service more affordable.
Mr. Pavek noted that LocaLoop and Clearwire would be in competition, which should drive down
the cost, and the City will be careful that the agreement is not exclusive.
Councilmember Sanger asked what a residential subscription would cost.
Mr. Torarp referenced Page 11 of the report that identified their consumer pricing. He indicated
that if they get a definition of low income residences, they would give better pricing to them.
Study Session Minutes -3- January 25, 2010
Councilmember Sanger stated her support to expand Internet service and disappointment with the
past Wi-Fi project. Because of the City's last experience, she wanted the agreement to require a
commitment from the vendor that the system will work, be maintained, and provide customer
service. She asked if there is a bonding requirement to back up the company's commitment.
Mr. Pavek explained there is not a bond requirement since it is a private enterprise, and the company
will either be successful or not based on the service provided and cost of the service.
The Council agreed with the importance of constructing a non-exclusive arms-length agreement so
the impression is not given that this offering is City-based.
Mr. Torarp explained their first offering will be in St. Louis Park because one of its early investors is
a resident, owns a business in St. Louis Park, and has a tower on the property. It is the intention of
LocaLoop to expand from the St. Louis Park area. He described how their delivery system platform,
the Wi-MAX global standard, will provide service to under-served and under-developed areas
through roaming agreements between different carriers. Mr. Torarp explained the timing for
roaming agreements will depend on the length of time taken for the build out.
Councilmember Mavity stated this appears to be a fine business plan as long as the City is non-
exclusive.
Mr. Pires agreed and indicated the lease agreement would meet that test and another provider would
be treated similarly if that provider is willing to turn over a similarly desired asset. If the provider
only wants to use fiber, the City would look at market rates to lease fiber to assure consistent it
charges market rates.
It was the consensus of the City Council to direct the Telecommunications Advisory Commission
(TAC) to continue to pursue a lease agreement with LocaLoop using the principles discussed on
October 26, 2009 and deliberations of TAC, and return with a non-exclusive arms-length agreement
in February for Council's consideration. The Council asked that the TAC be invited to the
February meeting when this will be considered.
3. Draft Ordinance— Wind Energy Conversion Systems (WECS)
Ms. McMonigal presented the staff report and introduced Brian Ross, the City's consultant from
CR Planning, Inc.
Mr. Ross provided a description of the types of wind turbines.
Councilmember Finkelstein noted turbines are not proposed to be allowed in residential
neighborhoods but there is residential property that abuts industrial.
Mr. Ross stated turbines would be limited to Commercial, Industrial, and Office Districts, and the
ordinance includes setbacks from other properties.
Study Session Minutes -4- January 25, 2010
Councilmember Sanger stated that she and Councilmember Ross attended the Planning
Commission meeting and observed their deliberations on this matter. She noted the residential
restriction is because the towers have to be above the tops of trees to capture wind and the size
allowable was useless in generating electricity.
Mayor Jacobs explained wind turbines became a point of discussion after hearing of a residential area
in Iowa that was objecting to a wind tower and the need for St. Louis Park to have regulations in
place to deal with the issues of safety, noise, and visual impacts.
The Council and Mr. Ross discussed potential impacts from wind turbines on surrounding property
from a constant hum, vibration, and light flicker. It was noted that as technology improves, the City
will consider ordinance revisions.
It was the consensus of the City Council to direct staff to continue its work on the draft ordinance.
4. 2010 Utility Rate Study Discussion Continuation
Mr. Harmening reviewed for Council's consideration the 2010 Utility Rate Study and the City's
enterprise funds and presented staff's recommendations for rate increases within the utility funds.
Mr. Rardin presented graphs identifying estimated residential and commercial water usage and
sprinkling volumes. He noted commercial usage is consistent throughout the calendar year and
advised that the high capital cost to provide enough water capacity to sprinkle is not captured in
everyday operating costs.
Councilmember Santa agreed the system is designed to operate to the highest usage days rather than
the average usage days.
Mr. Rardin agreed that is how it is operating and additional development may increase usage to the
point the system would not have enough capacity to meet high summer demand.
Councilmember Sanger noted if residents can be encouraged to moderate sprinkling, the City could
potentially save future capital costs or not face future capital costs. She requested that the City
consider adoption of an ordinance that would ban sprinkling during rain storms as a way to control
residents who run their sprinklers during rain storms.
Councilmember Mavity suggested that this issue be discussed as part of any development project.
Mr. Harmening stated that is why the City promotes conservation measures. He indicated staff was
trying to determine the most appropriate or fair way to set rates in terms of residential versus
commercial because the driver in terms of capacity demand is irrigation.
Councilmember Santa noted that commercial and residential water use is stable year round but
sprinkling and irrigation for five months causes the peak.
Study Session Minutes -5- January 25, 2010
Mr. Rardin indicated that is correct, noting commercial sprinkling is 3.4% and residential sprinkling
is 10.2%. He presented a chart identifying the average annual expenses for the water treatment
plant, noting the cost for sprinkling water is estimated at $88,571.36.
Councilmember Mavity asked about the billing rate structure.
Mr. Rardin explained the City is charging $1.21 per unit but the actual cost is $1.38 per unit so the
City is not capturing all of its costs at this time.
Councilmember Sanger stated the City has had the historical philosophy to charge utility rates that
do not make or lose money for the City. However, the proposed rate still does not come close to a
break even point.
Mr. Ruff of Ehlers &Associates noted the Council is reviewing the first tier rate but when you add
all revenue together, the cost is covered. He explained they are not trying to say higher users are
subsidizing lower users but are trying to bring all down to an average and to give an incentive to
reduce usage.
Councilmember Sanger asked whether it had been factored in that tiered rates will give some people
the "message" and they will decrease usage of water, which may impact the ability to break even.
Mr. Ruff explained that addresses the elasticity of demand issue, which is slower than all want it to
be. He stated this is why the City needs to look at rates every few years, to make needed
adjustments.
Mr. Harmening asked if staff's recommendation for utility rate adjustments were satisfactory, with
the understanding that more work is needed on the commercial rates.
Councilmember Finkelstein referenced staff's recommendation for bonding, which he felt was a
good idea given the current situation. He did not support a sole pay-as-you-go system based on
current interest rates and the City's bond rating.
Councilmember Sanger supported a blended approach that included bonding and a rate increase
that is a bit higher than recommended to build back and create reserves for capital costs.
Councilmember Ross pointed out this is a tough economy for many of the City's residents, some
who are out of work, so she was reluctant to consider a rate increase that would add to their burden.
Mr. Harmening noted the rate adjustment being proposed for 2010-2011 is one in a series of rate
adjustments to be made over a number of years. This will not be the only rate adjustment. In
addition, the City needs to issue debt in 2010 because a cash infusion is needed in the water utility
fund to build capital improvements and run the water enterprise. Mr. Harmening stated staff is
recommending a blended approach but bonds have to be issued for a cash infusion.
Study Session Minutes -6- January 25, 2010
Councilmember Sanger expressed concern about putting the City in same position as the State
Legislature by not raising rates, depleting reserves, and then not being able to pay for expenses.
Mr. Swanson described the hybrid approach being recommended to issue debt to cover capital costs
and advised that to assure adequate cash reserves it is also imperative to increase rates.
Mr. Ruff explained that commercial tiering would generate a lot of revenue but it is not just a
decision about how much to increase rates. He noted that if not as much revenue is generated from
commercial, there will have to be a larger increase from residential.
It was the consensus of the City Council to have staff proceed with its recommendations for Council
action.
5. Planning Commission Annual Report and 2010 Work Plan
Mr. Harmening presented the staff report.
The Council agreed that the Planning Commission's actions are in alignment with the expectations
of the Council.
Councilmember Finkelstein expressed an interest in discussing the City's business corridors, plans
for new businesses, and what is being done to assure continued success for existing business.
Mr. Harmening referenced the Planning Commission's 2010 Work Plan, Page 8, regarding special
studies proposed for the Lake Street area from Louisiana to Wooddale Avenues.
Councilmember Mavity agreed such a discussion is important given light rail transit and that some
space may become available if the school board closes schools. She questioned the role of the
Council to attract business and be proactive in creating a zoning structure to facilitate what the City
wants in a locally-owned business community
Councilmember Sanger noted there are broader impacts with freight rail to be addressed than
circulation, such as noise, safety, and vibration that could involve a role by the Planning
Commission.
Mayor Jacob agreed that all on the Council are, to some degree, salespeople for the City. He felt it
would be beneficial to have an overall business policy presentation by staff. He noted the City's TIF
policy allows the City to articulate what it wants for job generation, higher use of the land, etc.
Mr. Harmening advised the City has a fair amount of business policy and planning in place in the
Comprehensive Plan and Elmwood Land Use Plan that will be refined. He suggested staff provide
the Council with a primer on ordinances currently in place. The Council can then identify
standards that should be added.
Study Session Minutes -7- January 25, 2010
It was the consensus of the City Council to schedule a work session with the Planning Commission
following a staff overview and discussion of the Council's vision regarding additional standards for
building appearance, streets, walkability, and transit nodes to assure areas are more inviting.
6. Communications (verbal)
Councilmember Ross suggested a Council discussion on "hot topics" and questions that are asked of
Councilmembers. Following discussion, the Council determined that such questions would be
referred to staff.
Councilmember Ross requested a Council discussion at a future study session on the City's policy
for contract awards to minority-owned businesses to assure the City is being fair and equitable. She
also recommended that the City expand its policy to include businesses owned by women and
veterans.
The meeting adjourned at 8:45 p.m.
Written Reports provided and documented for recording purposes only:
7. November-December, 2009 Monthly Financial Reports
8. Fourth Quarter Investment Report (October— December, 2009)
9. 2010 Grant Year Community Development Block Grant (CDBG) Funds — Proposed
Allocation
10. Redevelopment Project & EDA Contract Status Report: 4th Quarter 2009
11. Operation Mayday Overview
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Nancy Stroth, City Clerk Jeff Ja'o. , M. or