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2017-08-22 CC Meeting MinutesMOUND CITY COUNCIL MINUTES August 22, 2017 The City Council of the City of Mound, Hennepin County, Minnesota, met in regular session on Tuesday, August 22, 2017, at 7:00 p.m. in the Council Chambers of the Centennial Building. Members present: Mayor Mark Wegscheid, Council Members Ray Salazar, Kelli Gillispie, Jeff Bergquist, and Jennifer Peterson Members absent: none Others present: City Manager and Director of Public Works Eric Hoversten, Community Development Director Sarah Smith, Administrative Assistant Mary Mackres, Director of Finance and Administrative Services Catherine Pausche, Field Officer Stewart Simon, Public Works Superintendant Ray Hanson, Public Works Street Lead Brent Kress, Public Works Utilities Lead Ryan Prich, City Attorney Elizabeth Brodeen-Kuo, Joseph Schwebel, Jayne Quinnell, Michelle Olson, Hayley & Jeremy Nelson, Mark Hanson, Kari McReavy, Paul & Lori Snyder, Traci Mallonee, Scott Steele, Allan Moran, Brian Blake, Barb Fritsch, Mike & Cindy Palm, Joleen Stadsklev, John Range, Tom McDonnell, Susan Hoversten, Johann Chemin, Linda Cordie, and Kevin Boyle Consent agenda: All items listed under the Consent Agenda are considered to be routine in nature by the Council. There will be no separate discussion on these items unless a Council Member or citizen so requests, in which event it will be removed from the Consent Agenda and considered in normal sequence. 1. Open meeting Mayor Wegscheid called the meeting to order at 7:02 p.m. 2. Pledge of Alleaiance 3. Approve agenda MOTION by Salazar, seconded by Bergquist, to approve the agenda. All voted in favor. Motion carried. 4. Consent agenda MOTION by Salazar, seconded by Peterson, to approve the consent agenda. Upon roll call vote, all voted in favor. Motion carried. A. Approve payment of claims in the amount of $283,161.35 B. Approve Minutes: 8/08/17 Regular Meeting C. RESOLUTION NO. 17-115: RESOLUTION AUTHORIZING 2017 CENTRAL BUSINESS DISTRICT (CBD) PARKING MAINTENANCE ROLL TO BE CERTIFIED TO THE COUNTY AUDITOR AT 5% INTEREST, LEVY #19677 D. RESOLUTION NO. 17-116: RESOLUTION AMENDING AND RESTATING RESOLUTION NO. 17-104 RESOLUTION APPROVING STATE OF MINNESOTA JOINT POWERS AGREEMENTS WITH THE CITY OF MOUND ON BEHALF OF ITS PROSECUTING ATTORNEY Mound City Council Minutes —August 22, 2017 E. RESOLUTION NO. 17-117: RESOLUTION OF SUPPORT FROM THE CITY OF MOUND FOR THE MINNEHAHA CREEK WATERSHED DISTRICT WATERSHED MANAGEMENT PLAN F. RESOLUTION NO. 17-118: RESOLUTION APPROVING VARIANCE FOR 2025 LAKESIDE LANE G. RESOLUTION NO. 17-119: RESOLUTION AMENDING AND RESTATING RESOLUTION NO. 16-124 APPROVING VARIANCES FOR 4804-4820 NORTHERN ROAD H. RESOLUTION NO. 17-120: RESOLUTION APPROVING A VARIANCE FOR 2039 ARBOR LANE I. RESOLUTION NO. 17-121: RESOLUTION APPROVING A VARIANCE FOR 3231 GLADSTONE LANE J. RESOLUTION NO. 17-122: RESOLUTION APPROVING VARIANCE AND EXPANSION PERMIT FOR 2060 WATERSIDE LANE K. RESOLUTION NO. 17-123: RESOLUTION ACCEPTING BID FOR THE 2017 RETAINING WALL IMPROVEMENT PROJECT - PW -17-04 5. Comments and suggestions from citizens present on any item not on the agenda. Mark Hanson, 5555 Three Points, said there is an easement driveway owned by the City that leads into Harrison Shores townhomes and a City -owned well -house. Hanson said several years ago in the spring, the City's water department truck drove up that driveway while road restrictions were in effect and caused damage to the driveway which is now in need of repair. Hanson says this driveway is subject to getting ruined again if the City keeps using this road. Mayor Wegscheid asked if Hanson has had discussions with Staff and Hanson indicated he had spoken with Hoversten. Hanson shared pictures of the damaged road, which is east of Commerce, before Lafayette, which is an easement driveway that leads to a City well -house at the top. Hanson noted the damage is up and down the hill and that there are huge divots from trucks. Mayor Wegscheid informed Hanson that this item will be referred back to Staff to recap the conversations, make recommendations, and include on an upcoming Council agenda. Lori Snyder, 4789 Dorchester, said she is here because of Mound's water bills. Snyder says the group does not have a spokesperson but they know that the water bills are very high in Mound compared to other cities. Mayor Wegscheid said this is something that is part of the agenda tonight and will be discussed. 6. Catherine Pausche, Director of Finance and Administrative Services, with an overview of the 2018 Preliminary Budget and Lew and requesting action on related resolutions. Catherine Pausche presented the 2018 preliminary proposed budget and stated that in August of each year, the City typically focuses on the General Fund revenue levy and the total levy, which is what the county uses to produce the estimated tax statements that are Mound City Council Minutes — August 22, 2017 mailed oui in November. Pausche noted the total levy cannot go any higher than the amount set tonight. Pausche reviewed the General Fund highlights, noting Staff is recommending a 2.5% increase in the General Fund revenue levy and a 2% increase in the overall levy. Staff is recommending utilization of $189,000 of General Fund reserves which will produce an unassigned fund balance of 20% of expenses and $1.5M for inter -fund loans or transfers. The City's projected tax rate is about the same as this year at 47.4%. Pausche says that Staff is always keeping an eye on where Mound's rates are averaging and that Mound's tax rate hit its peak at 57% in 2014, which was a result of the recession and the declining tax capacity, but General Fund levy and expenditures were basically flat on average from 2009 — 2018. Pausche said General Fund expenditures are proposed to increase 2.2% which funds the essential city services of streets, parks, public safety, etc. Pausche said that when the City contracted for police services, savings of $200,000 per year where projected, but the contract is subject to inflationary increases tied to CPI. Pausche said Staff allocations were modified to better reflect how the positions spend their time, which meant more expense was moved to the General Fund for the Field Officer and a Public Works maintenance worker. Pausche said capital expenditure requests are up $130K from prior year, including two new trucks for Streets and the replacement of the remaining roof sections at the Centennial Building. Pausche proposed to create additional capital project related funds to help smooth the fluctuations from year to year and to plan for the future. Pausche said Staff is working on a 10 -year financial plan which would include both inventories and replacement schedules so the City Council could focus on priorities. Pausche said the plan will be a main topic at the October 17th workshop. Pausche reviewed the Mound property taxes, noting Mound's tax base is mostly residential and only 5% commercial, with off -lake properties making up 75% of parcels paying 47% of taxes, and on -lake making up 20% of parcels and paying about 43% of the taxes. Pausche shared a summary by fund of the 2018 proposed budget, noting General Fund capital expenditures of $341 K and use of reserves of $189K. Pausche noted the Area Fire Fund has also proposed to use some of their reserves for equipment this year. Pausche discussed what drives increases to tax and utility rates, saying the primary reason are investments in infrastructure, in addition to covering operating and capital expenditures. Pausche said Mound's rates are compared to other cities annually, but it is important to also compare the size and age of infrastructure, as well as the amount of investment that has been made. Pausche showed a breakdown of investments in infrastructure through 2016. Investments have included $32.3M in street and retaining wall reconstructions. $19M was invested in water system improvements associated directly with those street repairs, a new water tower and pump houses, and improvements to the distribution network to improve service volume and capacity. $9.8M in sanitary sewer system improvements included replacement of 19 of the 30 City lift stations, and lining of sewer pipes to reduce groundwater infiltration. $5.9M in bonds have been issued for storm water improvements most generally linked to the street Mound City Council Minutes — August 22, 2017 reconstruction efforts. An additional $8.8M in bonds have been issued for redevelopment related activities in the Lost Lake/Harbor Districts. Pausche said Mound's aging infrastructure required a response and topography/lakes caused unique challenges, including 30 lift stations and the need for watermain looping to improve water quality. Pausche shared the ratio comparison showing Mound as compared to cities with populations of 2,500 - 10,000 that is part of the annual management letter from the City's auditors. Pausche said the $75M investment shows that Mound is highly leveraged, with the debt to assets and debt per capita higher than the peer group average, but also noted Mound's operating expenses are less than the peer group average, which reflects a direct effort to be as lean and efficient as possible. Pausche showed comparisons of infrastructure with neighboring cities of St. Boni and Delano. For Mound, its infrastructure is 30-50 years old, which means that it was at the end of its useful life. Mound also has 60 miles of sewer line, compared to 10 miles in St. Boni and 30 miles in Delano. Pausche shared a chart with city comparisons showing three other cities and what they pay to the Met Council and how many miles of sewer and the number of lift stations they have. While Pausche acknowledged that Mound has high base utility rates, neighboring cities such as Delano get to a higher quarterly rate with a higher usage fee. Pausche highlighted the need for balance within the utility rate structure between base charges and variable meter charges in order to generate revenues sufficient to cover current operating expenses and repay the debt, noting more than half of the City's annual costs for utility services is linked to the repayment of debt/MCES charges. Pausche said when the tiered rates were implemented, the idea of a "per household" base fee made sense because of the level of fixed costs related to the debt. Pausche said every household pays a minimum $206 quarterly water bill, or approximately $70 a month, with a variable component based on usage that is meant to encourage people to conserve water. Pausche said there is some debate on whether the City should put these costs on the property taxes, which would be deductible. Pausche said Mound is considered a fully developed community and the population is not expected to fluctuate much in the coming decades, so the City can't rely on growth to fund infrastructure investments, like other cities may. Pausche said taxes based on property values do not necessarily bear any direct relationship to the benefit of government goods and services received, and therefore, cities typically charge utility rates in order to treat these services like commodities similar to electric, gas, garbage and communication services instead of taxing. Shifting utility operating and capital costs to the tax levy would shift more of the burden for utility services and system capital improvement to higher value properties instead of sharing the burden equally among all benefitting system users. Pausche said it is the Council's challenge to determine what constitutes a fair system of allocating the tax burden and that the City must balance how costs are distributed. Mayor Wegscheid noted that the City continued the investments even with the tax capacity fluctuations caused by the recession, so having fee-based utility bills insured a steady cash flow, which is just another piece to consider. Joleen Stadsklev, 4731 Manchester, questioned if the utility bill for 15K gallons is lower than Delano's but there is a higher minimum, then there is no incentive to conserve. Stadsklev Mound City Council Minutes — August 22, 2017 said people who are using a lot of water get an advantage because they get a lower variable rate. Pausche addressed the question stating that there are seasonal people who leave town in the winter who are still charged the minimum rate. Pausche said there are not that many pools or sprinkler systems in Mound and smaller lot sizes, meaning the majority of households use similar amounts of water, and therefore if the base fee was lowered the variable rates would need to increase dramatically. Pausche said the City is ahead of the curve regarding infrastructure improvements and she would expect the trends to look more like Mound in the long term. Mayor Wegscheid said that no plan is perfect and there is bound to be a downside for someone. Johann Chemin, 6039 Beachwood. Chemin noted that there are different rates for amount of usage and he thinks there should be more tiers to encourage people to save water. Mayor Wegscheid said that the Council will have a discussion at the upcoming workshop and revisit the usage rates. Council member Bergquist asked that with all the investments since the early 2000's, will things get cheaper or lower. Pausche stated that investments will diminish after the last street project in 2018, but that the City will need to consider other deferred needs that haven't been addressed while the City concentrated on infrastructure and street improvements. Pausche said October's workshop will focus on a comprehensive look at the City's buildings, infrastructure, capital equipment, parks, etc., but that the rate of increase in utility rates should definitely slow down. Mayor Wegscheid noted this is kind of an exciting time as the City can look 10 years out where previously the City had committed to all of these infrastructure projects and related debt. The City now has the opportunity to look forward, plan better, and consider options on how the City can pay for future improvements. Council member Gillispie said that in her time on the Council, she has noticed that there were never any 5-10 year plans, more year-to-year planning, but that the Council asked Staff to plan ahead and she gave credit for them doing so. Joleen Stadsklev asked about the upcoming workshop when further discussion will take place. Mayor Wegscheid said the workshop is on Oct. 16, 2017 at 6:30 with the final budget and levy approval on Dec. 12. A. Action on Resolution Approving Changes to Debt Service Levy Schedules and to appropriate funds in the debt service fund for Bond Series 2015B & 2016A MOTION by Salazar, seconded by Bergquist, to approve resolution. All voted in favor. Motion carried. RESOLUTON NO. 17-124: RESOLUTION AUTHORIZING CHANGES TO DEBT SERVICE LEVY SCHEDULES AND TO APPROPRIATE FUNDS IN THE DEBT SERVICE FUND FOR BOND SERIES 2015B & 2016A Mound City Council Minutes — August 22, 2017 B. Action on Resolution Approving a Levy not to Exceed $218,404 for the Purpose of Defraying the Cost of Operation, Pursuant to the Provisions of MSA 469, of the Housing and Redevelopment Authority of and for the City of Mound for the Year 2018 MOTION by Salazar, seconded by Peterson, to approve resolution. All voted in favor. Motion carried. RESOLUTION NO. 17-125: RESOLUTION APPROVING A LEVY NOT TO EXCEED $218,404 FOR THE PURPOSE OF DEFRAYING THE COST OF OPERATION, PURSUANT TO THE PROVISIONS OF MSA 469, OF THE HOUSING AND REDEVELOPMENT AUTHORITY OF AND FOR THE CITY OF MOUND FOR THE YEAR 2018 C. Action on Resolution Approving the 2018 Preliminary General Fund Budget in the amount of $5,614,463; Setting the Preliminary Levy at $5,704,456; and Approving the Preliminary Overall Budget for 2018 MOTION by Salazar, seconded by Gillispie, to approve resolution. All voted in favor. Motion carried. RESOLUTION NO. 17-126: RESOLUTION APPROVING THE 2018 PRELIMINARY GENERAL FUND BUDGET IN THE AMOUNT OF $5,614,463; SETTING THE PRELIMINARY LEVY AT $5,704,456; AND APPROVING THE PRELIMINARY OVERALL BUDGET FOR 2018 D. Mayor Wegscheid announcing: The 2018 Final Budget and Levy discussions and decisions will take place at the Dec. 12, 2017 Regular Meeting, at 7:00 pm, in the Council Chambers. Public comments will be taken at this meeting. Comments or questions on the 2018 Budget and Levy can be Directed to the Finance Director at 952-472-0633. 7. City Manager and Director of Public Works Eric Hoversten presenting discussion and recommendations of the Public Works Committee regarding removal of proposed pathway/trail elements from 2018 Street and Utility Improvement Project. City Manager Hoversten said that at the July 25 Council meeting, a public hearing was held regarding the financing and construction of a project along the Westedge corridor that included a recommendation to build a pedestrian and bicyclist pathway and trail into the right-of-way. Hoversten said following the significant amount of public comments received, a meeting of the Public Works Committee was convened that included Mayor Wegscheid, Council Member Salazar, City Manager Eric Hoversten, and City Engineer Brian Simmons, who discussed the trail in more detail and decided to recommend removal of the pathway from the project based on the incompleteness of the bikeway element. Hoversten said Staff would accept instructions from the Council to remove those elements from the plans and edits would be made to the feasibility study which would then be brought back to the Council as a consent item. Mound City Council Minutes — August 22, 2017 Motion by Saiazar, seconded by Gillispie, to direct Staff to make edits to feasibility study to remove pathway elements and to review trail components of the comprehensive plan for 2040. All voted in favor. Motion carried. Johann Chemin, 6039 Beachwood came forward to ask how the Wilshire Blvd. reconstruction was being assessed, saying he thinks it is unfair that people who live there have to pay as there are trucks that use the road and ruin it. Chemin added the project benefits the whole city and not just the people who live on it. 8. Conduct a closed session pursuant to the Minnesota Statutes, section 13D.05, subdivision 3(b) to engage in an attorney-client privileged discussion with the City's attorney regarding the 4837 Bedford Road hazardous building matter currently being litigated. Motion by Wegscheid, seconded by Salazar, to go into closed session to engage in an attorney- client discussion with the City's attorney regarding the 4837 Bedford Road hazardous building matter currently being litigated. All voted in favor. Motion carried. Closed session begins at 7:51 p.m. Motion by Wegscheid, seconded by Salazar, to reopen the meeting. All voted in favor. Motion carried. Meeting reopens at 8:09 p.m. 9. Information/Miscellaneous A. Comments/reports from Council Members Hoversten reminded all of the following: State Fair - starts Aug. 24, Labor Day - Sept. 4 - City offices closed, School starts - Sept. 5, Running of the Bays - Sept. 9 Last day to purchase trees for Tree Trust program is Sept. 1. Residents can purchase up to two trees. Interested residents can order on the City's website. Pick-up for the trees is on Sept. 16 at the Public Works lot, upper storage lot. Trees are 10 -gallon trees of about 1.5". Residents' cost is $30 per tree. B. Reports: Fire Department - July 2017 Liquor Store - July 2017 Finance Department - July 2017 C. Minutes: Planning Comm Minutes - July 18, 2017 D. Correspondence: CenterPoint Energy Rate Change Filing - August 8, 2017 10. Adjourn MOTION by Gillispie, seconded by Bergquist, to adjourn at 8:10 p.m. All voted in favor. Motion carried. N\VL) Mayor Mark Wegscheid Attest: Catherine Pausche, Clerk