HomeMy WebLinkAbout2012/06/18 - ADMIN - Minutes - City Council - Study Session Jif St. Louis Park OFFICIAL MINUTES
MINNESOTA CITY COUNCIL SPECIAL STUDY SESSION
ST. LOUIS PARK,MINNESOTA
JUNE 18,2012
The meeting convened at 6:30 p.m.
Councilmembers present: Mayor Pro Tern Susan Sanger, Steve Hallfin (arrived at 6:44 p.m.),
Anne Mavity, Julia Ross (arrived at 6:36 p.m.), and Jake Spano.
Councilmembers absent: Mayor Jeff Jacobs and Councilmember Sue Santa.
Staff present: City Manager (Mr. Harmening), Deputy City Manager/Director of Human
Resources (Ms. Deno), Communications Coordinator (Mr. Zwilling), Controller (Mr. Swanson),
Finance Supervisor (Mr. Heintz), Director of Public Works (Mr. Rardin), Environmental
Coordinator(Mr. Vaughan), Utilities Superintendent(Mr. Anderson), Administration Intern (Mr.
French), and Recording Secretary(Ms. Hughes).
Guest: David Mol, CPA (HLB Tautges Redpath, Ltd.).
1. 2011 Financial Statements—Auditors Discussion and Review
Mr. Swanson presented the staff report and introduced David Mol, CPA.
Mr. Mol presented the City's Comprehensive Annual Financial Report for 2011 together with the
accompanying reports issued at the conclusion of the audit, including an opinion on the fair
presentation of the financial statements, a report on internal controls, a report on compliance with
the Minnesota Legal Compliance Audit Guide for Political Subdivisions, and a report on
communication to those charged with governance. He advised the audit resulted in a clean, or
unqualified, opinion on the 2011 financial statements. He indicated the City received a
Certificate of Achievement for Excellence in Financial Reporting in 2010 and the 2011 financial
statements will also be submitted. He reviewed the report of internal controls and stated one
item was noted requiring adjustment related to revenue recognition. He explained that this was a
timing issue related to grant monies received in 2011 that had not been earned requiring the
revenue to be backed out to match with earnings and the auditors were not overly concerned
about this issue. He then reviewed the report on compliance with the Minnesota Legal
Compliance Audit Guide and explained the auditors selected a sample of transactions to test for
compliance and there were no findings of non-compliance. He discussed the communication
with those charged with governance and explained the auditors are required to communicate
certain items not included elsewhere in the CAFR and stated the most significant finding related
to the City's OPEB obligation based on actuarial valuation. He stated the auditors are also
required to communicate misstatements or adjustments as a result of the audit and one material
item was found related to grant revenue as well as two immaterial misstatements that do not need
to be corrected in order for the auditors to issue a clean opinion. He added there were no
disagreements with management during the audit and no difficulties were encountered in
performing the audit. He presented a summary of financial activity in each fund and a summary
of constraints on the City's fund balances, noting that the fund balance of$63 million includes
restricted funds. He also presented a summary of the City's General Fund monthly cash balances
and advised the City's fund balance policy requires the City to maintain unassigned funds in the
range of 35-50% and the City's unassigned fund balance was 46% during 2011. He presented a
summary of the City's debt service funds, sewer utility, water utility, and solid waste funds, as
well as a history of the City's tax levy and tax rates, noting the City's 2012 levy increase was
1.7% compared to 3.9% in 2011. He explained the City's tax rates are dependent on valuations
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resulting in tax rates going up because valuations went down. He stated the City's net
contribution to the fiscal disparities pool was 5.1% or $3.2 million. He added the unallotment
for the Market Value Homestead Credit was $755,000 in 2011 and the City has not received
Local Government Aid since 2003.
Councilmember Mavity noted that sewer utility revenues have been trending above expenses and
asked if the City anticipates any large expenses that will require adjustment to these rates.
Mr. Heintz explained that Council will further review the utility funds in August and staff is
currently looking at the sewer fund to help out the water fund consistent with the City's long-
range financial plan for all four utilities. He stated the Met Council charge represents the biggest
expense in the sewer utility fund and assumptions regarding future increases are being reviewed.
Council discussed the City's tax levy and corresponding tax rates.
Mr. Swanson indicated changes in the Market Value Homestead Credit program resulted in a
loss of 3.5% of the City's tax capacity and increased the City's contribution to the fiscal
disparities pool; those changes, coupled with the valuation decreases, resulted in a 10% change
in the City's tax rate.
Mayor Pro Tern Sanger requested an update on the State's analysis of the fiscal disparities
program.
Mr. Harmening advised the State's report was submitted to the legislature in February but was
tabled until the next legislative session.
Mr. Harmening requested the City Council recognize the efforts of Mr. Swanson, Mr. Heintz,
and the Finance Department staff for their great work.
Mayor Pro Tern Sanger recessed the Special Study Session at 7:02 p.m. in order to convene the
Economic Development Authority and City Council meetings.
Mayor Pro Tern Sanger reconvened the Special Study Session at 9:17 p.m.
2. Storm Water Follow Up—Bass Lake Improvements
Mr. Rardin presented the staff report, history regarding Bass Lake, and proposed improvement
options for Bass Lake. He indicated that option #2 provides restoration of the functional needs
of the water body.
Councilmember Mavity thanked staff for their report and asked if option #2 represents the most
viable and feasible option for Bass Lake. She also requested that the goals reflect the
environmental goal of clean water.
Mr. Rardin replied that option #2 is the most viable option for managing the quantity and quality
of the storm water system.
Councilmember Mavity indicated the remeander of Minnehaha Creek is currently underway and
noted that in the past, the creek was straightened to accomplish the goal of a functional
waterway, but the straightening did not accomplish the intended environmental goals. She urged
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the City to make sure the improvements at Bass Lake do not result in a similar situation in
twenty years and to make sure the project is managed in way that works best so the City does not
have to come back and fix it later.
Mr. Rardin stated there is no guarantee that improvements will last indefinitely but as long as
routine maintenance is performed, the improvements should be sustainable. He added the City
has done a significant amount of work with respect to erosion control and prevention of sediment
for both quantity and water quality. He indicated this project is not currently in the CIP and will
require further discussion with Council, including a discussion regarding rates.
Mr. Harmening indicated the soonest this project would begin is 2014.
It was the consensus of the City Council to direct staff to pursue Bass Lake improvement option
#2—functional restoration.
The meeting adjourned at 9:35 p.m.
"Y? G(ivL /j
Nancy Stroth, ity Clerk Susan Sanger, ayor Pro em