HomeMy WebLinkAbout2006/03/13 - ADMIN - Agenda Packets - City Council - Study SessionCity Council Study Session
March 13, 2006
7:00 p.m.
Council Chambers
Discussion Items
Approximate
Times
1. 7:00 PM Investments
2. 7:30 PM Preliminary 2007 Budget
3. 8:15 PM Top 10 future Development Areas
4. 9:00 PM Historic/Architecturally Significant Housing and Architectural Design
Guidelines – Council Policy
5. 9:10 PM Paperless Agenda – Council Policy
6. 9:25 PM Agenda Planning
9:35 PM Adjourn
Written Reports for Council Review
7. Housing Improvement Area (HIA) Sungate Condos
8. Update on Fire Stations
Auxiliary aids for individuals with disabilities are available upon request. To make
arrangements, please call the Administration Department at 952/924-2525 (TDD 952/924-2518)
at least 96 hours in advance of meeting.
City Council Study Session
Discussion Item: 031306 - 1 - Investments
Page 1
1. Investments Finance
PURPOSE OF DISCUSSION: To review current investment practices and discuss the
utilization of a professional money manager to maximize investment yield s.
BACKGROUND: Over the last several months, Finance staff have been reviewing current
investment practices, the investment policy, and considering alternatives in order to maximize
investment results. As a result, staff requests Council consider using the services of a
professional money manager. Staff has met with three investment specialist companies and has
invited a representative from one of those companies, PFM Asset Management LLC, to give a
short presentation to Council about their firm, practices, and investment results. PFM Asset
Management LLC is a specialized component of PFM, which is devoted exclusively to providing
investment advice and portfolio management of funds for state and local governments. As an
investment manager, PFM brings a comprehensive spectrum of services to the business of money
management. PFM Asset Management LLC currently manages and advises clients on over $20
billion of investments.
The City of St. Louis Park and the Economic Development Authority have an investment
portfolio of approximately $60 million. The portfolio balances vary slightly throughout the year
due to property tax settlement dollars, construction season, and economic development activities.
Because PFM Asset Management LLC is in the business of doing investments, staff feels that the
return on investments could be much greater than the City and EDA are currently receiving. In
addition, all investment transactions and securities would be held in safe keeping with an
independent agent such as Wells Fargo or US Bank.
While neither staff nor PFM can guarantee a minimum yield on investments, staff feels that PFM
could significantly increase the return being experienced by both the City and EDA and assist in
managing the risk associated with making investments. The cost of this service is as follows:
$25M in investments 12 basis points or $30,000
Over $25M in investments 8 basis points
Minimum charge $15,000
Money market funds are not charged a fee
If the City and/or the EDA decide to proceed with a professional money manager, part or all of
the investments can be placed under their direction. Staff would still be involved with the
management of investments as they will be responsible for cash flow forecasting, monitoring
investments, reviewing compliance with the investment policy, and making decisions as to what
the money is invested in. Staff will be able to view on-line investments at any time and would
receive monthly reports that assist with compliance regulations. In addition, Council would be
provided with a quarterly report that details investments and show performance measured against
benchmarks.
City Council Study Session
Discussion Item: 031306 - 1 - Investments
Page 2
Staff has been provided with a list of references (see attached list) and has contacted three
organizations that utilize the services of PFM. The general comments are that PFM is good to
work with, informative, increased yields, which has more than covered the fees charged, and
decreased staff time necessary to manage investments. If the City decides to utilize the services
of PFM Asset Management LLC, a professional services contract would be entered into. The
terms of the contract would give the City the ability to cancel the contract with a 30 day notice.
David Baccile, a representative from PFM Asset Management LLC, will give a short
presentation of services and staff will be available to address questions.
Attachment: References of PFM Asset Management LLC
Prepared By: Jean McGann, Director of Finance
Approved By: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 031306 - 1 - Investments
Page 3
PFM Asset Management LLC Client References
Client Reference Contact Information
Client Reference Contact Information
Renville County, MN Renville County
Mr. William Wells
Chief Administrative Officer
410 E. Depue Ave., Room 315
Olivia, MN 56277
(320) 523-3710
St. Louis County, MN St. Louis County
Mr. Donald Dicklich
County Auditor
100 North 5th Avenue West, Room 214
Duluth, MN 55802
(218) 726-2380
Anoka-Hennepin ISD #11, MN
Chairman of Minnesota School District Liquid
Asset Fund (MSDLAF+)
Anoka-Hennepin ISD #11
Mr. David A. Buck
Director of Business Services
11299 Hanson Boulevard NW
Coon Rapids, MN 55433
(763) 506-1038
Marathon County, WI Marathon County
Ms. Lorraine Beyersdorff
Marathon County Courthouse
500 Forest Street
Wausau, WI 54403-5568
(715) 847-5241
City of Colorado Springs, CO City of Colorado Springs
Ms. Terri Velasquez
City Finance Director
30 S. Nevada Ave., Suite 202
Colorado Springs, CO 80903
(719) 385-5203
City of Fort Lauderdale, FL City of Fort Lauderdale
Mr. Bob Mays
Treasurer’s Office
100 N. Andrews Avenue, 6th Floor
Fort Lauderdale, FL 33301-1085
(954) 828-6572
City of Chandler, AZ City of Chandler
Ms. Cynthia Sneed
MS 702
P. O. Box 4008
Chandler, AZ 85244-4008
(480) 782-2250
City of Brentwood, CA City of Brentwood
Ms. Pamela Ehler
Director of Finance
708 Third Street
Brentwood, CA 94513
(510) 634-6900
City Council Study Session
Discussion Item: 031306 - 1 - Investments
Page 4
City of Modesto, CA City of Modesto
Ms. Belinda Duerkson
Senior Accountant
1010 Tenth Street, Suite 5200
Modesto, CA 95353
(209) 577-5458
City of Roseville, CA City of Roseville
Mr. Russ Branson
Finance Director
311 Vernon Street
Roseville, CA 95678
(916) 774-5320
City of Scottsdale, AZ City of Scottsdale
Ms. Janice Tanzer
7477 E. Indian School Road, Suite 210
Scottsdale, AZ 85251-3922
(480) 312-2663
City Council Study Session
Discussion Item: 031306 - 2 - 2007 Budget
Page 1
2. 2007 Budget Finance
PURPOSE OF DISCUSSION
To review the 2007 budget process, preliminary information for 2007, and begin discussing the
2007 property tax levy.
Background
In December of 2005 the City Council adopted the 2006 budget and it is now time to begin
discussions about the 2007 budget. There are several areas staff would like to review with
Council as we begin this budget process. At this time, topics are extremely broad as some areas
cannot be properly addressed until the legislative session is completed. Listed below are areas
staff would like to discuss with Council.
General information about the budget process (Budget 101)
2007 budget pro forma
Property Taxes
New Initiatives, 2007 Budget Considerations, and Legislative Actions
Utility Rate Impacts
Franchise Fees
Budget 101
Staff will give a short presentation about the budget process. This presentation is similar to the
one given to Council in 2005. The purpose in part is to assist new council members in
understanding the process and to receive input on any requested modifications to the process. A
budget calendar is attached for your review.
2007 Budget Pro Forma
Staff has prepared a snapshot of what the 2007 budget may look like using a variety of
assumptions. These assumptions will change as the budget process continues, the legislative
session closes, and initiatives are added, deleted, or modified. In preparing the 2007 Budget Pro
Forma, the following assumptions were used.
Wage increase based on a cost of living adjustment of 3%
Union contract –four of five contracts have been settled for 2006
PERA rates have been increased for both the coordinated and Police and Fire funds
creating an increase in contribution from the General Fund of $73,876
Equalization of benefits between exempt and non-exempt employees is completed in
2007
Increased utility costs were considered and adjusted accordingly
City Council Study Session
Discussion Item: 031306 - 2 - 2007 Budget
Page 2
Insurance costs were increased by 4% based on information provided by the League of
Minnesota Cities Insurance Trust
Inflationary adjustments were considered
Postage was increased 5.4% to reflect postal rate increases that went into effect after the
2006 budget was prepared, General Fund impact is $7,083
Property tax levy increase of 3% and debt service levy increase of 1.07%
Revenues outside of property taxes remain consistent
Staffing levels are consistent with 2006 (other than those paid for by other sources e.g.
Wi-Fi)
Based on the above assumptions, the General Fund shows a “gap” of $311,436. The “gap” is not
unusual when starting a budget process. As the process continues and real numbers are defined,
the “gap” will likely become larger before the budget is balanced. The attached spreadsheet
indicates a snapshot of the preliminary 2007 budget.
New Initiatives, 2007 Budget Considerations, and Legislative Actions
In addition to the assumptions listed above, there are many areas yet to address. Council may
have additional initiatives beyond what is listed below.
Municipal Building Repairs/Maintenance/Upkeep
Fire Stations – do these need to be remodeled or replaced
Infrastructure – Public Works is completing the remaining parts of the infrastructure
inventory. Public infrastructure such as retaining walls have not been addressed in the
capital improvement program
Comprehensive Plan Update (required by law to be completed in 2008)
Marketing/Branding Initiative
Alternative Energy Sources Initiative
Vision SLP related initiatives
Levy Limits
Other State Mandates
As the budget process continues there may be additional areas to consider.
Utility Rate Impacts
Utility rates impact the community and need to be considered when reviewing property tax levy
increases. During the 2006 budget process, a cash flow analysis was performed on each of the
Utility Funds. As part of the cash flow analysis, a 10-year CIP schedule was prepared to
determine the current and future costs associated with maintaining/improving our Water,
Sanitary Sewer, Storm Water and Solid waste needs. It was determined by the Council that being
proactive on maintaining and improving our system was a priority. In calculating the future rates
for the utilities, in addition to the 10-year CIP, a 3 month reserve would be maintained. As with
any repair or replacement, an adequate reserve should be maintained in case a significant
unexpected repair was to happen. Due to our detailed 10-year CIP planning for Utilities we hope
City Council Study Session
Discussion Item: 031306 - 2 - 2007 Budget
Page 3
to minimize the unexpected. As outlined in the 2006 Budget document, the future rates will have
the following effects on an average family of 2 and 4 in 2007.
Family of 2 Family of 4
Water 1.46 2.50
Sanitary Sewer 1.19 2.04
Solid Waste 2.50 2.50
Storm Water 2.00 2.00
Total Increase per Quarter 7.15 9.04
Total Annual Increase 28.60$ 36.16$
Beyond 2007:
With the analysis the Council went through in 2006, it was determined that a pay as you go
methodology made the most sense given the City’s rates and infrastructure needs. Here is an
outlook of the rates for future years which were estimated as part of the 2006 budget process.
These rates are just an estimate based on the 2005 cash flow analysis and will be continually
monitored and revised.
2006 2007 2008 2009 2010
Water Utility 0.90 1.004 1.154 1.362 1.362
Sanitary Sewer 1.702 1.787 1.966 2.104 2.230
2006 2007 2008 2009 2010
Storm Water 9.50 11.50 11.50 13.00 13.00
Cost per Residential Equivalency Factor
Estimated per unit cost
Franchise Fees:
On January 1, 2004, the City enacted a Franchise Fee that assists with funding the Pavement
Management Program. Xcel Energy and Centerpoint Energy collect a fee from customers and
pass this through to the City based on the Franchise agreement. Also, as part of the 2006 budget
process the Council apportioned part of the City’s levy increase to supplement the franchise fee
revenues for the Pavement Management Program in lieu of increasing the franchise fees.
At this time, Xcel Energy and Centerpoint Energy have applied to the Public Utilities
commission for a rate increase. Based on the Xcel energy franchise, if the Minnesota Public
Utilities Commission approves a rate increase, the City has the ability to amend the franchise
ordinance to increase the franchise fee. The Centerpoint ordinance allows for amendment by the
City at anytime.
Final rate increase approval is expected in September 2006. Xcel Energy will provide an
estimate in the next couple of weeks with the projected revenue increase if the City increased all
franchise fee rate classes to the maximum amount based on their filing with the MPUC. If the
City Council Study Session
Discussion Item: 031306 - 2 - 2007 Budget
Page 4
City were to decide to increase the franchise fee to fund more of the pavement management
program in 2007 (in lieu of the current property tax levy method), here is an estimated timeline.
July 2006 Work with Xcel and Centerpoint to finalize estimates
September 2006 Final Approval Minnesota Public Utilities Commission
October 2006 Formal notification to Xcel Energy and Centerpoint Energy
December 2006 Council Adoption of revised ordinance
Conclusion
As the budget process continues, there will be many additional areas to review and discuss. The
discussion this evening is primarily designed to inform the City Council of what staff is aware of
now and to determine as early in the budget process as possible what thoughts the Council might
have about the 2007 budget and related property tax levy.
Attachments: 2007 Budget Pro Forma
2007 Budget Calendar
Prepared By: Jean McGann, Director of Finance
Approved By: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 031306 - 2 - 2007 Budget
Page 5
2006 2007
AVAILABLE RESOURCES Adopted Pro Forma
Revenues:
General Property Taxes 13,001,118$ 13,481,764$
Licenses and Permits 2,483,600 2,483,600
Intergovernmental 1,779,366 1,779,366
Charges for Services 1,025,436 1,025,436
Fines, Forfeits, and Penalties 283,300 283,300
Investment Earnings 173,500 178,000
Miscellaneous Revenue 122,400 122,400
Transfers In 2,609,819 2,609,819
Total Revenues 21,478,539$ 21,963,685$
Expenditures:
General Government:
Legislative 104,400$ 106,575$
Administration 802,999 825,209
Communications & Marketing 219,262 224,846
Community Outreach 122,451 125,195
Human Resources 531,287 551,912
Technology and Support Services 1,384,839 1,441,635
Finance 1,041,138 1,167,184
Community Development 982,831 1,005,137
Facilities Maintenance 913,624 956,664
Total General Government 6,102,829 6,404,358
Public Safety:
Police 6,695,044$ 6,853,335$
Fire Protection 2,693,964 2,779,647
Inspectional Services 1,735,299 1,799,795
Total Public Safety 11,124,307 11,432,778
Department of Public Works:
Public Works Administration 828,648 855,792
Engineering 724,824 752,422
Operations 2,505,968 2,549,771
Total Public Works 4,059,440 4,157,985
Non-Departmental:
General Services/Contingency 191,962 280,000
Transfer Out - -
Total Non-Departmental 191,962 280,000
Total General Fund 21,478,539$ 22,275,121$
Revenues Over (Under) Expenditures - (311,436)
3.71%
City of St. Louis Park
2007 Preliminary Budget Pro Forma
As of March 8, 2006
City Council Study Session
Discussion Item: 031306 - 2 - 2007 Budget
Page 6
council/study session meetings
Due Date Responsibility of:Description
3/7/2006 Finance Department Director discussion
3/13/2006 Finance Preliminary Budget discussion with Council
End of March Finance
Discussion with Department Directors to provide update on Council budget
discussion and directives given
5/1/2006 Finance Salary Updates to Budget Worksheets
5/3/2006 Finance Revenue/Expenses (Actuals) updates to Budget Worksheets
5/8/2006 Finance
Distribute Technology Replacement, Municipal Service Center, Equipment
Replacement, and Enterprise Fund Electronic Budget worksheets, Begin process
of CIP analysis and completion of CIP information/ request forms
5/19/2006
Tech. Replace., MSC,
Eq. Replace. &
Enterprise
Technology Replacement, Equipment Replacement and Municipal Service Center
calculation due from departments
5/22/2006 Finance
Update budget worksheets with Technology Replacement, Equipment
Replacement, & Municipal Service Center charges
5/22/2006 Finance Fee Reporting- preliminary overhead calculation determined
5/22/2006 Finance Budget Report update to Council
5/30/2006 Finance
Budget worksheets and internal charges worksheet distributed electronically to all
departments
6/9/2006 All Departments CIP information/Request forms due to Finance for 2007 - 2011 CIP
6/9/2006 All Departments
Approval/response received to Finance from Department Directors on Technology
Replacement, Equipment Replacement & Municipal Service Center charges
6/30/2006 Finance Fee Reporting- final overhead calculations to be completed
7/3/2006 All Departments Proposed budget files completed
7/5/2006 Finance Departmental Access Secured to finalize budget
7/11/2006 Finance Department Head Meeting to discuss major budget & CIP impacts and ideas
7/17/2006 Finance Budget & CIP document compiled and presented to Department Heads
7/24/2006 Finance Budget & CIP discussion & review by Council
Beginning of Aug Finance Budget & CIP discussion with Department Directors
8/14/2006 Finance Complete Utility Rate analysis
8/28/2006 Finance Budget and CIP presentation to Council (include fees, rates, and tax information)
9/5/2006 Finance Preliminary tax levy, budget, and CIP approval by Council
9/15/2006 Finance Certification of preliminary tax levy to county -- reports due to state
Sept - Nov.Finance Study session(s) on proposed budget, CIP and related issues
10/27/2006 Finance Upload of proposed budget into JD Edwards
10/30/2006 All Departments Updated budget information in JD Edwards available
Nov Finance Presentation for Business Council, Neighborhoods and/or other community groups
12/1/2006 Finance Notice of Truth in Taxation (Budget Public Hearing) published
12/4/2006 Finance Truth in taxation (Budget Public Hearing)
12/8/2006 Finance PDF File completed & sent to printer
2007 BUDGET AND CIP SCHEDULE
City Council Study Session
Discussion Item: 031306 - 2 - 2007 Budget
Page 7
council/study session meetings
Due Date Responsibility of:Description
12/13/2006 Finance Receipt of completed bound budget document from printer
12/13 - 12/15 2006 Finance Review of Final bound budget document
12/18/2006 Finance Council adoption of budget, CIP, and tax levy
12/22/2006 Finance Certification of tax levy and other required forms
12/29/2006 Finance Budget and CIP published on Website
1/31/2007 Finance Completion and Publication of State Auditors Budget Report
2007 BUDGET AND CIP SCHEDULE (Continued)
City Council Study Session
Discussion Item: 031306 - 3 - Future Development Area
Page 1
3. “Top 10” Future Development Areas Community Development
PURPOSE OF DISCUSSION:
To begin the process of identifying and prioritizing areas of the City for which redevelopment
pressures may exist or occur in the future such that proactive planning may take place
Background
In order to proactively plan and anticipate sites that we expect may experience development
pressure, we were asked to identify the “Top 10” or possible future development areas. Staff has
reviewed multiple city sites and has identified “areas” versus “sites.” These are areas that will
likely need some city attention and experience some development pressure in the coming years.
Process
Attached are:
1. A map that shows 11 areas that Staff has identified as future development areas.
2. Descriptions and maps for each area.
3. A table that indicates information that directed us to these sites.
4. A second table that provides a 1 (lowest) to 10 (highest) staff ranking in 3 categories. An
additional ranking of the sites, with a column for additional ranking by the City Council,
is also included.
Analysis
As noted in attached Tables A and B, the top 3 development areas shown are currently in
progress: they are experiencing development pressure and being worked on today. The next 8
areas are those that have some development pressure or efforts, and need additional discussion
and ranking by the City Council. In addition, other individual sites are noted where we have
received inquiries or expect that they will be redeveloped in the future.
Resource Implications
As we go about making progress identifying and prioritizing possible redevelopment areas, we
will need to be mindful of resource implications associated with the efforts required to plan for
and address redevelopment opportunities. More discussion will need to occur on this as events
unfold.
Attachments: Future Development Areas Map
Descriptions and maps for each area
Tables A and B showing information and ranking of development areas
Prepared By: Meg J. McMonigal, Planning and Zoning Supervisor
Approved By: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 031306 - 3 - Future Development Area
Page 2
“Top” Future Development Areas in St. Louis Park
Table A. General Information for Development Areas
Development Areas Blighted or
underutilized
buildings
Vacant
land
Underutilized
land
Proximity to
(future)
transit
Future Land Uses Transportation
improvements
needed
1 Elmwood Area X LRT Comm, res $$$
2 Park Commons (incl. Park
Nicollet, Wayside and Bass
Lake site)
X X X Office, retail, res.,
park
$$
3 Duke Area X X X X Office, retail $$
4 Walker/Lake Area X X Ind., comm., school
5 I-394 South Area X X Comm., res.
6 Beltline Ind. Park/S. Hwy 25 X LRT Ind., comm.
7 Minnetonka Blvd east X X Comm., office
8 Interchange Office Area X X Office, res., comm.
9 Oxford/Cambridge Ind. Park X LRT Industrial
10 Excelsior Blvd. east X X X Comm., res.
11 Excelsior Blvd. west X Comm., office
Other Individual sites: Novartis,
Texa-Tonka, Old Theater,
27th + Louisiana, etc.
City Council Study Session
Discussion Item: 031306 - 3 - Future Development Area
Page 3
Table B. Ranking of Development Areas
Development Areas Development
pressure
- inquiries
- proposals
Effort needed
by City
- time
- financial
Redevelopment
potential
- create tax
base
- enhance
community
Score Council
ranking of
importance
(rate sites 1
to 10 – 10
is highest)
Combined
Score
1 Elmwood Area 10 10 10 30
2 Park Commons (incl. Park
Nicollet, Wayside and Bass
Lake site)
10 9 10 29
3 Duke Area 10 8 10 28
4 Walker/Lake Area 4 7 8 19
5 I-394 South Area 7 5 6 18
6 Beltline Ind. Park/S. Hwy 25 3 6 8 17
7 Minnetonka Blvd east 8 5 4 17
8 Shelard Area 5 2 8 15
9 Oxford/Cambridge Ind. Park 4 1 5 10
10 Excelsior Blvd. east 3 2 4 9
11 Excelsior Blvd. west 2 2 3 7
Other Smaller sites Novartis, Texa-
Tonka, Old Theater, 27th + Lou
varies varies varies
City Council Study Session
Discussion Item: 031306 - 3 - Future Development Area
Page 4
City Council Study Session
Discussion Item: 031306 - 4 - Historic Housing
4. Historic/Architecturally Significant Housing and
Architectural Design Guidelines
Council Policy Discussion
PURPOSE OF DISCUSSION: To discuss whether the City Council should direct staff to
research and prepare recommendations regarding protecting historic and architecturally
significant housing in the community and the implementation of architectural design guidelines.
Councilmember Susan Sanger will lead the discussion on this item.
BACKGROUND: Outlined below is information provided to staff by Councilmember Sanger
regarding this topic area:
1. Historic Housing – Should St. Louis Park find ways to preserve existing older homes (19th
century and early 20th century)? This includes protection against demolition (unless
condemned) and protection against exterior modifications similar to what the cities of
Minneapolis, St. Paul and others have enacted through ordinances and policies. Historic
housing, such as many in Elmwood and scattered elsewhere, can add character to a
neighborhood and help reinforce a sense of community history.
2. Architecturally Significant Housing – There is one home in the Lake Forest neighborhood
which was designed by Frank Lloyd Wright and presumably some others which were
designed by other prominent architects. Should St. Louis Park protect architecturally
significant housing from destruction or exterior modification similar to the city of
Chaska? Councilmember Sanger spoke with Tim Quigley, who is an architect and heads a
nationwide foundation in Minneapolis which is trying to preserve Wright's homes, and he is
willing to help St. Louis Park draft such an ordinance.
3. Architectural Design Guidelines - The city encourages residents to add on to their homes to
create move-up housing.
• Should the Council direct staff to prepare and distribute guidelines for new homes
and additions so that new builds and remodels are compatible with the surrounding
neighborhood, and in the case of additions, compatible with the original home?
• Should the Council direct staff to research the feasibility of imposing design
requirements when the city is providing something to the builder, such as we are
doing in the excess land program, variances, additions or TIF financing?
Prepared By: Marcia Honold, Management Assistant
Approved By: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 031306 - 5 - Paperless Agenda
Page 1
5. Paperless Agenda Council Policy Discussion
PURPOSE OF DISCUSSION: To discuss whether the City Council should direct staff to
research the feasibility of creating and disseminating agendas to the City Council and others
electronically versus the current paper format. Councilmember C. Paul Carver will lead the
discussion on this item.
Prepared By: Marcia Honold, Management Assistant
Approved By: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 031306 - 6 - Future Study Session Agenda
Page 1
6. Future Study Session Agenda Planning Administrative Services
PURPOSE OF DISCUSSION: To assist the City Council and the City Manager in
setting the next Study Session agenda.
Background: At each study session, approximately 10 minutes is set aside to discuss the
next study session agenda. For this purpose, attached please find the tentative agenda and
proposed discussion items for a study session prior to the March 20, 2006 Council
meeting and the regularly scheduled March 27, 2006 study session.
Attachments: Future Study Session Agenda Planning
Prepared By: Marcia Honold, Management Assistant
Approved By: Tom Harmening, City Manager
City Council Study Session
Discussion Item: 031306 - 6 - Future Study Session Agenda
Page 2
Future Study Session Agenda Planning
Monday, March 20
7 p.m. Discussion Item
A. Duke Realty Concept Plan – Community Development (15 minutes)
Introduction to the Duke Realty Corporation’s concept plan for a 35+ acre site in
the southwest corner of I-394 and Hwy. 100.
Monday, March 27, 2006
7 p.m. Discussion Items
A. Whistle Quiet Zones - Public Works (45 minutes)
Does the Council want staff to pursue the creation of whistle quiet zones?
If so, what type of public process should staff use?
B. Review 2006 Telecomm. Comm. Annual Report & 2006 Work Plan – TSS (30
minutes)
Discuss the Telecommunication Commission’s annual report and work plan with
Council.
C. Vision SLP Outcomes Committee Survey Results – Administration (30 minutes)
The Vision SLP Outcomes Committee will update Council on the results of the
survey undertaken by Decision Resources.
D. Review Human Rights Commission’s Proposed City Ordinance and Work Plan -
Admin Services (45 minutes)
Discuss the Human Rights Commission’s work plan and their proposed
“Separation” ordinance.
E. Future Agenda Planning – Administrative Services (10 minutes)
Reports
Financial Report - Finance
Update for CSAH 25 Pedestrian Bridge – Public Works
Aquatic Park Update – Parks & Recreation
City Council Study Session
Written Item: 031306 - 7 - Sungate One
Page 1
7. Sungate One Condominium Association - Housing
Improvement Area
Community
Development
PURPOSE OF REPORT:
Staff desires to update the Council regarding the Sungate One Condominium Association’s
interest in pursuing the Housing Improvement Area (HIA) finance tool to assist with common
area improvements. Sungate One Condominium Association submitted the preliminary
application for HIA financing in February 2006. Staff has provided a background description of
the HIA along with the City’s adopted HIA policy as attachments.
Background
Sungate One is located at 2551-2619 Alabama Ave S, see location map. There are four
single-story, five-unit buildings constructed in 1968
as rental and converted to condominiums in 1978.
All units are identical in size and features. The
units are owner occupied, primarily by seniors or
recent first time homeowners; both groups that
typically have more modest incomes. The City’s
HIA policy requires that only Associations with
modest valued units can apply for the HIA tool.
The value of these units is consistent with the
policy in that the 2005 estimated market value of
the units is $121,000 and a unit recently sold for
$140,000.
The preliminary application has been received and
favorably reviewed by staff and the City’s financial advisor, Ehlers and Associates. The
Association will be collecting the required petitions in time for a public hearing before the
Council on April 3, 2006.
Analysis of Application
The following analysis is intended to describe how the proposal meets the HIA policy and
intentions of the statute.
1. The Association contracted with a third party to conduct a reserve study.
The Association has worked with Gassen Company, a property management firm, since June
2002. The Association believes they have benefited from the direction provided by Gassen,
including a reserve study conducted by Reserve Data Analysis in October 2005. The study
includes a physical needs assessment, twenty year capital improvement plan and a financial
analysis of the current and projected financial situation. Based on the physical assessment,
Gassen Company compiled a scope of work, which has been reviewed and approved by the
membership.
City Council Study Session
Written Item: 031306 - 7 - Sungate One
Page 2
The goal of the HIA loan is to make needed improvements while building up reserves for the
future. The reserve study indicates that projected association fee increases will meet the
projected costs and that the Association will be capable of funding future needs with their
reserves.
2. Project Costs.
The construction estimate is $170,120 and includes the following improvements:
replacement of water line from curb to buildings and associated work, partial replacement of
sidewalks, replacement of some water heaters, boilers, a garage roof, and improvement to the
driveway, parking lot, lights, sidewalks and stoops plus miscellaneous landscaping. The
estimates are based on bids that have been received and reviewed by Gassen Management.
These improvements are consistent with HIA guidelines in that they are common area
improvements and improvements integral to the operation of the buildings.
The total loan amount would be $183,900 to cover all project costs, see table below. The
loan would include the fee to be paid to the City along with funds to cover the City’s legal
and advisory costs.
Sungate One HIA Project Costs
Construction Costs $170,120
City Admin Fee $5,000
Legal Fees $2,500
Financial Advisor $1,500
Construction Oversight $1,000
Capitalized Interest $3,779
Total $183,899
3. HIA and City Goals
The proposed improvements meet the City goals in that they will result in the upgrading of
the existing housing stock in a neighborhood, stabilization of the owner-occupancy level
within the association, and preserve existing housing stock.
4. Association Process and Timeline.
The Associations communication regarding the HIA has been efficient due to the small size
of the Association.
• Staff met with the Board and members to discuss the HIA tool and process at two
separate meetings during the preliminary process.
• A full membership meeting was conducted on January 18, 2006, at which a majority of
members were present and supported seeking the HIA designation from the City. This
meeting is a requirement of City policy.
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Written Item: 031306 - 7 - Sungate One
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• Petitions are currently being gathered, with a public hearing scheduled for April 3, 2006.
According to city policy and statutory requirements, the only time in which a city may
implement an HIA is when Association members petition to the city do so.
• Construction is scheduled to begin in June and would be completed this summer.
This timeline is reasonable considering the efficiency of Association communication, and
relatively small scope of work.
5. The HIA financing is necessary for this project.
Sungate One applied for credit from Wells Fargo and M& I Bank. Their requests were
rejected based on insufficient collateral and insufficient cash flow to cover the loan. The
HIA is designed to be a last resort finance tool for associations.
It is also designed to address obstacles some associations confront when applying for
financing.
• The City will lend the money to the association and be repaid by the owners, through
their property tax payments.
• Therefore the City’s risk is minimal compared to private lender as property taxes are in
the first position over any other mortgage encumbrances on the property.
• The HIA provides affordable payment options for owners that will allow association fees
to increase gradually to ensure adequate funds of operation and long term maintenance
Note. The Cedar Trails HIA was implemented in 2002. Of the 280 owners there has been
only one delinquent in payment of the fee to the County as of the end of 2004, we anticipate
updated 2005 information soon.
6. Fees.
The imposed fee per unit will be approximately $9,150, with an annual cost per unit of
$1,245.00 (payable over 10 years). Owners will be allowed to prepay the full amount
without interest until November 20, 2006 at which time the information will be provided to
the County for certification. Owners opting to make repayment will begin payments with the
2007 property tax payments. It is interesting to note that forty percent of the Cedar Trails
owners opted to prepay the fee amount.
Benefits of the HIA.
In addition to improving the City’s housing stock, encouraging volunteer associations to
implement fiscally prudent and disciplined management practices, the HIA actually generates
revenue for the City. The interest rate for the HIA internal loans is 1% higher than the rate of
twenty year Treasury Bonds, in this case it will be approximately 5.8%. This rate is as good as or
better than the yield on investments the City currently experiences with the funds/reserves it has
on had. When the HIA is financed through bonds, the interest rate to the Association would be
1% higher than the bond rate.
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The City’s Finance Director will provide direction regarding the City’s internal funding of the
HIA loan from the appropriate fund; Development Fund, Housing Rehab Fund, Permanent
Improvement Revolving Fund, and/or by issuing bonds.
Next Steps:
The Sungate One Condominium Association will be petitioning the City Council to hold a public
hearing on April 3, 2006 to consider an ordinance to establish the Sungate One HIA and a
resolution approving a housing improvement fee for the Sungate One HIA.
A second reading of the ordinance would be required and the Association would enter into a
Development Agreement with the City.
Attachments: HIA Background and City Policy
Prepared by: Kathy Larsen, Housing Programs Coordinator
Approved by: Tom Harmening, City Manager
City Council Study Session
Written Item: 031306 - 7 - Sungate One
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HOUSING IMPROVEMENT AREA BACKGROUND INFORMATION
Use of the HIA is an effective mechanism to help realize the City’s recently approved housing
goals which were an evolution of the Housing Summit, Vision St. Louis Park and the City’s
Comp Plan. The proactive preservation of modest valued owner occupied condos meets the
goals of:
• Promote & facilitate a balanced and sustainable housing stock to meet diverse needs both
today and in the future,
• Ensure housing is safe and well maintained.
• Preserve and enhance housing quality through proactive promotional and educational
activities and housing programs related to home rehab, code, and design and safety issues.
The City is implementing a comprehensive strategy to preserve and enhance the single family
detached homes, multifamily buildings and neighborhoods. The HIA tool addresses the aging
townhouse and condominium housing stock. Construction of townhouses and condominiums,
which compose 12% of the City’s housing stock, began in the 1970’s. The Comprehensive Plan
notes that “there is a concern that maintenance may be underfunded for some townhouse
associations and maintenance issues may arise in the future.” As most of the buildings are going
on 30 years, this is becoming a concern. Use of the HIA finance tool provides an additional tool
to assist in meeting the City housing goals.
Housing Improvement Area Description
In 1994 the Minnesota Legislature passed the Housing Improvement Area Statute that authorizes
cities to establish HIAs as a finance tool for private housing improvements. A HIA is a defined
area within a city where housing improvements are made and the costs of the improvements are
paid in whole or in part from fees imposed within the area.
• The HIA tool is similar to the commercial special service districts, in that cities may issue
bonds to pay for improvements and levies fees and assessments to the owners.
• Financing secured with assessment fees is considered the most secure type of loan since
under foreclosure, taxes and assessments are the first obligations paid.
• The primary intention of the HIA is to provide a financial tool for condominium and
townhouse associations to make common exterior improvements and other improvements
integral to the operation of the project, e.g. boilers. Currently, associations have difficulty
financing improvements because:
• Home rehab loans available to single family detached owners are very cumbersome to
apply to the common improvements required for condo and townhome structures.
• Very few banks have devised a lending mechanism and payment collection for condo
associations.
• Years of low association fees have not adequately funded maintenance and capital
improvement reserves.
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Written Item: 031306 - 7 - Sungate One
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The City’s first HIA –Cedar Trails Condominium
In 2001-02 the City, at the request of Cedar Trails Condominium Association established a
Housing Improvement Area and imposed fees to all 280 owners. The city then loaned the
association $1,365,000 for common area improvements. Repayment has been and is being made
by the unit owners with their property tax payments. The benefits of the HIA are: aging housing
stock is rehabbed, associations are required to conduct long term financial and capital
improvement plans; individual residents of modest priced units have affordable payments, and
the interest rate earned on the HIA generates revenue for the City. Construction was completed
according to schedule, and residents were generally very satisfied with the results.
City of St. Louis Park HIA Policy.
On July 16th, 2001 the Council adopted a Housing Improvement Area Policy which meets the
statutory requirements. In two areas the policy exceeds the State requirement.
• The Council determined that petitions must be received by a majority of the owners; 51% of
the owners must sign petitions rather than the 25% required by the statute. This ensures that
member support is strong.
• Only associations with units that are considered “modest value” could participate. The
average market value of units should be in-line with the market value of homes determined
affordable to first time homebuyers through the State’s 1st Tim Home this provides a
consistent guideline for affordability throughout our housing programs and ensures that city
resources are targeted to associations with low and moderate income owners.
The full policy follows.
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City Of St. Louis Park - Housing Improvement Area Policy
1. PURPOSE
1.01 The purpose of this policy is to establish the City's position relating to the use of Housing
Improvement Area (HIA) financing for private housing improvements. This policy shall
be used as a guide in processing and reviewing applications requesting HIA financing.
1.02 The City shall have the option of amending or waiving sections of this policy when
determined necessary or appropriate.
2. AUTHORITY
2.01 The City of St. Louis Park has the authority to establish HIAs under 1994 Minnesota
Laws, Chapter 587, Article 9, Section 22 through 3 1, and extended in 2000, M.S.
428A.21
2.02 Within a HIA, the City has the authority to:
A. Make housing improvements
B. Levy fees and assessments
C. Issue bonds to pay for improvements
2.03 The City Council has the authority to review each HIA petition, which includes scope of
improvements, association’s finances, long term financial plan, and membership support.
3. ELIGIBLE USES OF HIA FINANCING
3.01 As a matter of adopted policy, the City of St. Louis Park will consider using HIA
financing to assist private property owners only in those circumstances in which the
proposed private projects address one or more of the following goals:
A. To promote neighborhood stabilization and revitalization by the removal of blight
and/or the upgrading of the existing housing stock in a neighborhood.
B. To correct housing or building code violations as identified by the City Building
Official.
C. To maintain or obtain FHA mortgage eligibility for a particular condominium or
townhome association or single family home within the designated HIA.
D. To increase or prevent the loss of the tax base of the City in order to ensure the
long-term ability of the City to provide adequate services for its residents.
E. To stabilize or increase the owner-occupancy level within a neighborhood or
association.
City Council Study Session
Written Item: 031306 - 7 - Sungate One
Page 8
F. To meet other uses of public policy, as adopted by the City of St. Louis Park from time
to time, including promotion of quality urban design, quality architectural design, energy
conservation, decreasing the capital and operating costs of local government, etc.
4. HIA APPROVAL CRITERIA
4.01 All HIA financed through the City of St. Louis Park should meet the following minimum
approval criteria. However, it should not be presumed that a project meeting these
criteria would automatically be approved. Meeting these criteria creates no contractual
rights on the part of any association.
A. The project must be in accordance with the Comprehensive Plan and Zoning
Ordinances, or required changes to the Plan and Ordinances must be under active
consideration by the City at the time of approval.
B. The HIA financing shall be provided within applicable state legislative restrictions,
debt limit guidelines, and other appropriate financial requirements and policies.
C. The project should meet one or more of the above adopted HIA Goals of the City of
St. Louis Park.
D. The term of the HIA should be the shortest term possible while still making the annual
fee affordable to the association members. The term of any bonds or other debt incurred
for the area should mature in 20 years or less.
E. The association in a HIA should provide adequate financial guarantees to ensure the
repayment of the HIA financing and the performance of the administrative requirements
of the development agreement. Financial guarantees may include, but are not limited to
the pledge of the association's assets including reserves, operating funds and/or property.
F. The proposed project, including the use of HIA financing, should be supported by a
majority of the owners within the association. The association should include the results
of a membership vote along with the petitions to create the area.
G. The Association must have adopted a financial plan that provides for the Association
to finance maintenance and operation of the common elements within the Association
and a long-range plan to conduct and finance capital improvements therein, which does
not rely upon the subsequent use of the HIA tool.
H. HIA financial assistance is last resort financing and should not be provided to projects
that have the financial feasibility to proceed without the benefit of HIA financing.
Evidence that the association has sought other financing for the project should be
provided and should include an explanation and verification that an assessment by the
association is not feasible along with letters from private lenders or other evidence
indicating a lack of financing options.
City Council Study Session
Written Item: 031306 - 7 - Sungate One
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I. The homeowner's association must be willing to enter into a development agreement,
which may include, but is not limited to, the following terms:
establishment of a reserve fund
staffing requirements
annual reporting requirements
conditions of disbursement
required dues increases
notification to new owners of levied fees
J. The improvements financed through the HIA should primarily be exterior
improvements and other improvements integral to the operation of the project, e.g.
boilers. In the case of a homeowner's association, the improvements should be restricted
to common areas. The improvements must be of a permanent nature.
The association must have a third party conduct a facility needs assessment to determine
and prioritize the scope of improvements.
K. HIA financing should not be provided to those projects that fail to meet good public
policy criteria as determined by the Council, including: poor project quality; projects that
are not in accord with the Comprehensive Plan, zoning, redevelopment plans, and the
City policies; projects that provide no significant improvement to the neighborhood
and/or the City; and projects that do not provide a significant increase in the tax base
and/or prevent the loss of tax base.
L. The financial structure of the project should receive a favorable review by the City's
Financial Advisor and Bond Counsel. The review will include a review of performance
and level of outstanding debt of previous HIAs.
M. The average market value of units in the association should not exceed the maximum
home purchase price for existing homes under the State’s first time homebuyer program.
(In 2001, the metro amount is $175,591)
N. The association is to submit an application along with application fee as set from time
to time by resolution of the City Council.
Adopted by the City of St. Louis Park on the 16th day of July 2001.
City Council Study Session
Written Item: 031306 - 8 - Fire Stations Updates
Page 1
8. Update on Fire Stations Fire and Inspections Departments
Purpose of Report: To update the City Council on the status of the repairs to the apparatus
floors at the two fire stations and identify “next steps” staff is taking to more fully evaluate the
overall condition and facility needs at the two locations.
Background: The facilities planning discussion during the December 12, 2005 study session
identified several issues at Fire Stations No.1 and No.2 requiring action. Both stations were
constructed during the 1960’s and are displaying signs of deterioration and additionally
experiencing operational issues not present during the original design. A copy of the City
Facilities Planning report is attached for your reference.
Floor Reinforcement: Most significant and immediate of the issues at both fire stations was to
perform an engineering review of the apparatus floors load capacity. The architectural and
engineering firm of Krech, O’Brien, Mueller and Associates, Inc. completed the review based
upon vehicle weights, field evaluation of the floor condition and the original engineered design.
Findings indicated that the structural floors at both Fire Stations No.1 and No.2 do not meet the
design capacity necessary by the code to allow continued use.
Plans have been prepared for a relatively simple reinforcement of both floor assemblies. The
design calls for installation of steel beams, columns and footings to be installed in strategic
locations to effectively reduce the floor span in half. The engineer and staff collectively worked
on column spacing to maintain the usefulness of the office and locker area of the Utility Division
space beneath the floor in Fire Station No. 1. PCL Construction Inc. has been retained as the
contractor to provide the repairs on Fire Station No.1 at a cost of $29,976. The City is currently
in the process of requesting a price quote for the proposed work at Fire Station No. 2. Estimated
time for completion is mid to late April. Full fire vehicle storage may return once the steel is in
place.
Unfortunately, the floors have also shown signs of steel reinforcement corrosion in isolated
locations. This occurs due to the water and salt from the trucks going through minor cracks in
the floor and acting on the steel reinforcement bars. The engineer’s design took into account
some potential reduction in floor strength due to corrosion. However, we have not fully
investigated the extent of this corrosion or evaluated how it may continue in the future, leading
to more substantial repairs or possible replacement of the entire floor system.
Complete Station Analysis: A complete analysis of the physical condition and usability of the
fire stations must occur to evaluate the extent of needed work and how they will perform into the
future. It is important to take into consideration not just the physical building condition, but also
how the building design currently effects the operations and the ability to continue performing
the exceptional fire and medical response service in the community.
City Council Study Session
Written Item: 031306 - 8 - Fire Stations Updates
Page 2
The following are significant building and operational issues to be further investigated:
• Compliance with Federal American with Disabilities Act.
• Sleeping, bathing and dressing accommodations for multi-gender workforce.
• Ventilation systems capable of maintaining a healthy living environment.
• Biohazard equipment cleaning requires suitable isolated area.
• Paid on-call turn out gear and personal clothing/items requires storage space and locker
space on main levels.
• Parking at the facilities is insufficient to allow for personnel assigned and entire
department gatherings for practice and meetings.
• Aging facility has not undergone significant updating since construction.
• Additional storage for existing and future equipment needs.
To fully evaluate the options and develop various plans, staff is interviewing architectural firms
to enter into a professional service agreement. The study needs to include feasibility of
remodeling existing structures, building addition options and cost alternatives for new
construction.
We expect the study to be completed within 3-4 months for City Council review and discussion.
The information will be helpful in developing a long term facilities plan integrating City
operations and using the facilities as an important tool in our service delivery to the community.
Attachments: Facilities Planning Report
Stations No. 1 and No. 2 Main Floor Plans for Reference
Prepared By: Brian Hoffman, Director of Inspections
Luke Stemmer, Fire Chief
Approved By: Tom Harmening, City Manager
City Council Study Session
Written Item: 031306 - 8 - Fire Stations Updates
Page 3
Study Session December 12, 2005
Facilities Planning Report :
4. Facilities Planning Inspections
Purpose of Discussion:
The purpose of this discussion is to update the Council on current municipal building issues and
discuss future planning of our City facilities.
Background:
Aging structures, Federal requirements, and changing community service delivery have resulted
in several issues and concerns becoming evident in various city buildings. Initial review of our
entire operation and all our facilities revealed potentially significant issues which can be resolved
through a long term integrated plan.
Past maintenance and remodeling of some buildings has been successful but sometimes limited
to solving a single issue present at the time. Viewing the longer term needs of the entire City
services and facilities collectively will allow the most effective planning.
Identified Issues:
• Reallocated Positions and Staffing Responsibilities
To more efficiently and effectively meet the changing business needs of the City, staffing
changes and responsibilities have occurred in several departments. Building space
modifications need to be made to fully realize efficiencies and public service potential.
Expansion of Web-site development, changes in Administration and Finance
departments, and expansion of T.S.S. are driving the need to evaluate how City Hall
space is organized and utilized.
• Fire Stations
Stations #1 and #2 are experiencing significant operational issues not present when they
were constructed during the 1960’s.
Mixed male/female housing accommodations are not adequately being provided. The
stations are also not in compliance with the Federal A.D.A. requirements for public
facilities, have livability concerns (lack of ventilation, mildew, etc.), lacking
apparatus storage space, and are unable to accommodate all firefighters
simultaneously for meetings/training.
City Council Study Session
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Page 4
Indications of deterioration and the use of larger fire vehicles in recent years lead to a
staff review of the floors in both Fire Stations. The original structural design of the
reinforced concrete garage floors supporting the fire vehicles (above locker rooms,
office, and storage spaces) indicates that the loading may be in excess of the design
load. Maximum vehicle weights are now more then double what they were when the
Fire Stations were constructed. A structural engineer has been retained to perform a
complete analysis to determine the floors safe operating capacity.
• Storage
New voting machines to accommodate people with disabilities are being added, park,
street, and utility equipment needs to be stored in secure, easy to access locations, record
retention requirements, and a growing history of information require alternatives for
storage be considered.
The Parks and Recreation West Lake Park storage building is deteriorating. Repair work
or demolition is needed. This storage location is not effective, subject to vandalism, and
separated from operations at the MSC.
• City Hall Reception Area
The current reception location was a compromise and is not fulfilling the goal of
properly greeting or serving City Hall visitors.
• Fragmented Departments and Services
Both Public Works and Fire departments have portions of there operations and staffing
spread between three different city buildings on different sites. Both Administration and
Parks departments need to utilize remote storage locations.
• City Hall Elevator
Changing U.S. E.P.A. regulations will obsolete the elevator within the next few years.
A single wall hydraulic cylinder elevator was originally installed. Extending three
stories below the building, any leak of the hydraulic fluid could lead to ground water
contamination. New State Rules will probably require replacement of the elevator
with a double wall type. This is a situation similar to the State wide replacement of old
underground gasoline tanks that has occurred.
• Public Meeting Spaces
Many community groups and neighborhoods look to the City facilities for meeting
space. Public requests for meeting space during the day and evening times often exceed
the amount of available conference room space available.
City Council Study Session
Written Item: 031306 - 8 - Fire Stations Updates
Page 5
Next Steps
Continue an in-depth analysis of the issues and develop an integrated multi-year plan for all City
facilities. Work will be accomplished by using a combination of staff, professional design
consultants, and contractors.
Guiding principles to follow during all phases will include: effective use of available funds;
maintaining a long term perspective; limiting disruption to public and staff; integrating
operations for maximum effectiveness.
Results of the Fire Station structural review will be available for review within the next few
weeks. The first steps including rearrangement of third floor office partitions in Finance and
Administration could begin during early 2006.
Prepared By: Brian Hoffman, Director of Inspections
Approved By: Tom Harmening, City Manager