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2005-12-05 MOUND CITY COUNCIL MINUTES DECEMBER 5, 2005 The City Council of the City of Mound, Hennepin County, Minnesota, met in special session on Monday, December 5, 2005, at 7:00 p.m. in the council chambers of city hall. Members Present: Mayor Pat Meisel; Councilmembers Bob Brown, Mike Specht, John Beise and Dave Osmek. Others Present: City Manager Kamdis Hanson, City Clerk Bonnie Ritter, Finance Director Gino Businaro, Varco and, Lola Rebiskie, Ted and Jeanette Metz, Bev Fulton, Lisa Stephenson, Dennis and Sandy Ring, Frank and Andrea Ahrens, John and Michelle Olson, John and Carolyn Turnacliff, John and Karen Babler, Jim Funk, Ray Salazar, Mary Berglund, Jimmie Hnltz, Greg Eurich. 1. Open Meeting Mayor Meisel called the meeting to order at 7:00 p.m. 2. Truth in Taxation Presentation and Public Hearing Kandis Hanson gave the timeline of the budget process, and stated that the final budget will be considered for approval at the December 13th regular Council meeting. Finance Director Gino Businaro reviewed the proposed budget figures that were included in the agenda packet. Mayor Meisel opened the pubic hearing at 7:15 p.m. John Turnacliff, 2560 Avon Drive, stated that by the information provided, it appears that the City portion is the only portion that's increasing in the proposed 2006 taxes. He stated that his proposed taxes for 2006 are going up 16.5%, and this is not a minimum impact for him, as was stated in the local paper. He went back a few years and looked at his tax statements and stated that if they continue to increase in the next five years as they have, his taxes will be $4400 per year for the city portion alone. He would like to see, and asked the Council that when looking at these kinds of budget increases and what is causing the increase, to take into account how it is actually affecting the people. The real picture is a lot different than the message in the paper, which led a lot of people to believe that there would hardly be an increase. He thinks those numbers need to be kept in line. Beverly Fulton, 5952 Idlewood Road, stated that her increase for 2006 looks like 9.3%, which she wouldn't be hollering about, but last year her taxes went from $2800 to $3200, which is a $400 increase, plus another $304 this year. She is a widow and retired and doesn't know how long she can stay in her home if taxes keep increasing. She wanted to make a phone call to someone to protest last year, but didn't. Meisel Mound City Council Minutes -December 5, 2005 suggested that she call he Hennepin County Assessor and was given their business card so that she could call them regarding the valuation of her home. John Babler, 2235 Langdon Lane, understands that his taxes would go up, but they went up 20%. He realizes expenses get higher every year and the value goes up. He questioned why the new homes in Langdon Bay and Lake Saunders don't offset an increase for others. Meisel informed him that the Saunders Addition is in Minnetrista. Osmek stated that our city has very little room for additional subdivisions. There is a new house going in on Shoreline, and a new subdivision request received, along with four new pads going in across from Mound Bay Park. The Lost Lake townhomes, because of Tax Increment Financing, won't contribute to the overall tax base for some time. At a certain point when the bonds are paid, the city will realize tax benefits from them. He also added that Commerce Place will come off of the TIF shortly and that additional revenue then will come into the city directly and help the overall tax picture. He stated that they are here to listen to public testimony tonight, not argue points. He feels there is a significant split in the council and wants to hear testimony from the public this evening. Andrea Ahrens, 4673 Island View Drive, stated she first wants to say please let's not put ,~ things off on the tax assessor as to why values are causing taxes to go up because the City of Mound has the biggest increase on all of our statements. Nobody is going up at the rate that the City's going up. She expects as a council they will all justify why the budget has to go up at the rate higher than inflation. She is terrified of these types of increases and asked to be told right now how they justify the increase. Brown answered that this budget was tough and not all of the council agrees with the proposed increase. Ahrens stated that the council members that do agree with it should be justifying why they need this type of increase and why there aren't cuts being made to offset the increases. She stated that it's ludicrous that taxes are going up almost 17% in a cost of living era of 2%. Something is wrong and she needs to hear justification as to why the council is advocating it. Ray Salazar, 4559 Island View Drive, stated he has talked to staff members and is perplexed about the increases in the proposed 2006 budget. Police is up almost 7% and can't say that's not reasonable, but the Planning and Inspections Department is increasing 26.6% and the Parks Department up 28%, which is the highest increase. He feels we have too many parks and if we can't handle them with the money we have we should sell them to a developer or adjacent property owners. Finance is proposing a 20.9% increase and he was told that's due to a CPA being hired that may eventually take over for Businaro when he retires. He stated that if that person isn't to take over, why can't the city use Account Temps? He continued that all in all, he questions the increase in two departments, Planning/Inspections and Parks. Kandis Hanson informed him that three things are included in the Planning budget, being re-codification of the City Code, Comprehensive Plan update, and next-up redevelopment. Salazar asked what was being redeveloped and was informed that the next redevelopment site needs 2 Mound City Council Minutes -December 5, 2005 to be planned so when developers approach the city there is a plan in place for what goes in specific locations. As far as the Parks, Beise informed him that during the same period of time the Greenway was opened and County Road 15 improved, along with all mowing and maintenance connected with downtown redevelopment, as well as the Skate Park and the new park at Village By the Bay. Salazar said again we have too many parks and too many duties, and the budget increase is a hefty increase with inflation being at 4-5%. He feels government should be at zero growth and he's looking at nearly a 20% increase on his property taxes for the city portion. Brown stated that as far as zero growth -zero growth in Mound got rid of a lot of our businesses years ago, and we have to have some growth to become a better town. Jeanette Metz, 1601 Bluebird Lane, stated that her and her husband represent many people in Mound and 12.5% increase in one year is a lot of money and these increases multiplied over a number of years creates a real financial burden. She stated they are on a fixed income and retired and live in a very modest home. She stated that the Assessor assured her that the multi-million dollar homes next to them would make her taxes to down when they pay their share, and what happened is she is paying the burden. Older adults like them purchase a lot of local services, use local businesses, bank in local banks and yet this kind of tax burden is going to start moving people out of their homes. A 12.5 increase, extended over the next 4 years, is a 50% increase in property taxes. That is a lot of money and she feels she is representing a lot of older people in the same position and would like the Council to take that into consideration. Jimmy Holtz, 5233 Bartlett Blvd., stated he has the same problem, he's retired on a fixed income and the property value increases drastically every year and taxes to up 12%, 10%, 7%, 8%, and that's his problem. He loves where he lives, has raised his family here and would like to live out his life here, but can't because of tax increases. He asked if there is a provision that would provide for them to make a moratorium on taxes when a person turns 65, to keep the taxes where they are until the home is sold, then they can take the taxes out. Jim Funk, 2940 Oaklawn Lane, stated he would like to echo what others said. These increases are unsustainable long term. He asked the Council to address the point of the fund balance as a percent of expenditures. It was stated that the auditors see a red flag when the fund balance goes below 35% and Mound's has been significantly below this for the past two years. To get to where the auditors are comfortable would mean more tax increases or significant expenditure cuts, or we could leave as is and risk a downgrade in bond rating. Osmek explained that the fund balance is a continuous issue, and why the Council is comfortable with a 20% fund balance is that we now have a more steady revenue stream. We are no longer dependent upon the state for LGA and know that income is coming in a more constant pattern, as the utility franchise fees that come quarterly. Also we only budget for 95% of property taxes, which usually comes closer to 88 or 90%. At the end of the year 20% fund balance usually comes to 3 Mound City Council Minutes -December 5, 2005 25% after audit. He doesn't guarantee that, but feels comfortable that taxes will be coming in higher. Andrea Ahrens, 4673 Island View Drive, asked if the lower fund balance has an affect on the city's bond rating. Osmek stated that the City's bond rating has been going up because the rating company also looks at the economic development taking place and the housing mix changes. They referenced the housing behind Jubilee as improving the housing stock of the City. Ahrens stated that she heard that the fund balance had to be at 35% or the bond rating would go down and Businaro informed her that our rating is better now than when our fund balance was at 35%. John Turnacliff, 2560 Avon Drive, stated it's easy to get wrapped up in the increase of an individual budget item or couple of items but thinks there's a bigger problem than just this budget, as this has been going on for five years. He stated that the County has been holding the line pretty well as far as budget increases, but the City is the problem. He doesn't think it's valuation, that's a part of it, but doesn't understand how the assessed value of houses goes up and up and yet they constantly need more tax money from the people. He asked if the Council sees the light at the end of the tunnel and Meisel explained that they've been playing catch-up for the past few years. The Parks and Public Works equipment is old and in the last few years they've been purchasing some replacement equipment and that's very expensive. She invited everyone to visit the Parks garage to see what condition their equipment is in. There is a need in the Parks Department for better equipment. Greg Eurich, 5585 Shorewood Drive, asked if any action would be taken tonight as far as the merging of the Parks and Docks Commissions and was told that this is strictly the truth in taxation hearing. Andrea Ahrens, 4673 Island View Drive, said she had a conversation with Councilmember Specht today and hoped to have a conversation with Beise but couldn't reach him. She also talked with Osmek over the week-end. She stated that she hates to be nit-picking, but when she was on the Council, the last time she checked, Mound was almost 99% built. She understands we have development going on, but when looking at things like contracting out for building inspection services vs. getting rid of the one we had, is that an even deal? Are we getting the same revenue and more by contracting out? To have a 26% increase in Planning and Inspections when we're 99% built seems awful ugly, and worth justifying. They did a comp plans for twelve years she was on the Council and didn't need 26% increase to do the plan. She stated that as a Council they should justify those kinds of expenditures because they are seeing an increase in property taxes. She remembers campaigning in 1988, talking to a resident that was worried that he and his wife bought a house and couldn't afford the taxes and would have to sell. She's glad they're not there now or they wouldn't even have enough money to get into a retirement home with these tax increases. She understands that 4 Mound City Council Minutes -December 5, 2005 Mound is trying to do something with redevelopment, but they need to cut. There are places, and the Council needs to find them. Telling people that taxes are increasing 26% when inflation is 2% is ludicrous and that's not what the Council's job is. She's not saying that there shouldn't be redevelopment, but they need to do more with less. Meisel stated that the upgrade of the Comprehensive Plan is mandated by the State and there is $20,000 in the budget for that. Kandis Hanson informed her that there was $700,000 cut from the budget in it's initial go-round and Ahrens stated that justifying that a decrease in the proposed increase is a cut, is going back to the Clinton days. Ray Salazar, 4559 Island View Drive, stated he wholeheartedly agrees with what Ahrens is saying, that there needs to be cuts and get the budget to the absolute necessities. He's talking about zero growth, not talking about the city not growing, but government not growing. He suggested that instead of hiring another person in the Parks Department, to contract those services out and he was informed by the Council that this has been investigated already and is not financially feasible. Kandis Hanson explained that with the addition of the public safety building, the Greenway, the CSAH 15 streetscape, etc., more manpower is needed for upkeep of these improvements. She put in front of the council that the City doesn't need more people if they want to cut some programs, like redevelopment, snow plowing, the skate park - a lot of things that people enjoy and are accustomed to. They can stop the programs to overcome the budget increases, for instance, don't plow snow on week- ends, only mow grass when it reaches 4-6" high, don't spray for weeds, and not doing redevelopment because it causes more maintenance. Programs drive the cost of government. Osmek stated that there have been two separate meetings on the budget and Tuesday night there will probably be a 3-2 vote on the adoption of the 2006 budget. He stated that we're not far behind Minnetonka and Edina and he doesn't want to get like Edina because he likes Mound the way it is. Meisel asked him if he wants to stop redevelopment and he stated that that there are some significant positions that he thinks are not in this particular budget climate and we could put off for an additional year. Osmek also stated that the HRA proposed budget is maxed out and he feels there is enough reserve in that budget to take care of the parking deck requirement. He stated he wants to continue development but should rephrase: He likes the way things are going but thinks there are ways to control the speed at how it hits taxpayers. Brown stated that he agrees with Osmek, in that we should go ahead with redevelopment but there are places in the budget that he disagrees with. He would like to shoot for an 8% increase. Meisel asked for any more public comment, and upon receiving none, closed the public hearing. 5 Mound City Council Minutes -December 5, 2005 MOTION by Osmek, seconded by Brown to cancel the public hearing continuation originally scheduled for December 12 at 7:00 p.m. because everyone that wished to speak had a chance to speak at this evening's hearing. All voted in favor. Motion carried. 3. Adjourn MOTION by Osmek, seconded by Brown to adjourn at 8:50 p.m. All voted in favor. Motion carried. ,i r ,~ _. Attest: Bonnie Ritter, City Clerk Mayor pat Meisel 6