2017-10-17 CC Meeting MinutesMOUND CITY COUNCIL MINUTES
OCTOBER 17, 2017
The City Council of the City of Mound, Hennepin County, Minnesota, met in special session on
Tuesday, October 17, 2017, at 6:30 p.m. in the council chambers of the Centennial Building.
Members present: Mayor Mark Wegscheid; Council Members Kelli Gillispie, Ray Salazar, Jeff
Bergquist, and Jennifer Peterson
Others present: City Manager/Public Works Director Eric Hoversten, Finance
Director/Clerk/Treasurer Catherine Pausche, Public Works Superintendent Ray Hanson, Field
Officer Stewart Simon, City Engineer Brian Simmons.
1. Open meeting
Mayor Wegscheid called the meeting to order at 6:30 p.m.
2. Approve the agenda
Motion by Salazar, seconded by Bergquist to approve the agenda. All voted in favor. Motion
carried.
3. Brian Simmons Cily Engineer with Bolton & Menk with an overview of Mound's
infrastructure and capital improvement needs
Simmons presented a history of the infrastructure improvement projects since 2000, noting
the 2007 Inflow & Infiltration Study and Water System Report helped to create the priorities
for utility projects. Mayor Wegscheid asked how much of the city has been inventoried and
Simmons said they have detailed knowledge of the areas that have been reconstructed, but
are missing some inventories under county roads or where the Met Council managed the
project. Simmons said removing the booster pump and stand pipe puts the city all on one
pressure plain thereby improving waterflows and reducing the amount of equipment needing
maintenance, in addition to increasing the size of the watermain. Simmons showed a map of
numerous watermain breaks on Bartlett and the Lynwood S-curve area that showed the need
for replacement.
Simmons noted it is very unusual to have 47 miles of shoreline and 97 feet of elevation
change, which makes for a lot of "up and down" which drives the need for so many lift
stations. Simmons noted Mound has 4,123 curb stops which is what is used to turn the
water on and off to a home. Simmons described changes in the water pumping and storage
capacities as a result of the improvements. Simmons said the bulk of the watermain was
cast iron which was the preferred material in the 1960s but has since been found to be brittle
and tuberculated (corrosive). Cast iron is being replaced by plastic PVC. Simmons showed
two real cast iron pipes two separate watermain breaks in Mound, noting water pressure and
flow vary depending on the location which can cause some cast iron pipes to break down
more quickly in some areas than others and, therefore, assessments need to be made.
Simmons described the design of the typical lift station, which exists to supplement where
gravity is not available to help keep sewage moving. Simmons showed two CIP scenarios,
one 5 year plan with an average spend of $965K and an average age at rehab of 28 years
and the other a 10 year plan with an average spend at $675K with the average age at rehab
of 32 years. Simmons showed a variety of charts and noted the pie graph of sewer pipe by
age was the original age of City owned sewer pipe and that it does not show what sewer has
been lined.
Mound City Council Minutes — October 17, 2017
Simmons said storm water projects have primarily been for upgrading catch basins and catch
basin collection tanks, since often the main was in good shape and not replaced. Simmons
said in addition to standard improvements related to the street improvement projects, known
swale and drainage issues were also targeted.
Simmons showed multiple before and after pictures of street projects since 2003, including
failed retaining walls. Wegscheid said although Council is familiar with these issues, he
thanked Staff for providing this summary for the benefit of the public.
4. Catherine Pausche, Director of Finance and Administration discussing past and
future funding of infrastructure improvement projects
Pausche presented a Power Point that summarized past and future efforts at long term
financial planning, stating that since 2000, the City has produced a rolling 5 -year Capital
Improvement Plan (CIP) for streets, water, sewer in storm while also building a new public
safety facility, liquor store, parking deck and investing in redevelopment. Pausche said now
that the major infrastructure projects are coming to an end, the plan is to build
comprehensive, detailed inventories of vehicles, equipment, buildings, and infrastructure,
including estimated useful lives and replacement cost and timing estimates. Pausche said
the goal will be to prioritize the needs, determine funding sources, with the goal to reduce
reliance on debt while balancing tax and utility rates.
Pausche said while the inventories are not complete, the basic principles of the financing
plan can be discussed. Pausche said the street improvement bonds are for 15 years and the
utilities are for 20 years and as debt service begins to peak in 2018/2019, funds will be freed
up to create reserves for future projects as well as help finance the remaining utility
improvements and hopefully avoid issuing more debt. Pausche said by issuing interfund
loans, the terms of repayment can be flexible, which will allow flexibility in the timing and
percentage of rate increases. Pausche said that when the utility funds reached a total deficit
of nearly $1 M in 2009, more aggressive rate increases were needed and the decision was
made to increase the base fees for water and sewer to help service the utility debt. Pausche
said at the same time, the housing market started to crash and the tax rate began to climb
due to the decrease in property values.
5. Catherine Pausche, Director of Finance and Administration discussing options and
considerations for the structure of utility billing rates
Pausche showed the current utility rates and noted that the water fund receives
approximately 50% from the base fees and 50% from the variable rates, while the sewer fund
receives 80% from the base fees and 20% from the variable because the first 10,000 gallons
of usage are included in the base fees and there is only one tier for sewer. Pausche said
82% of Mound households use between 1,000 and 20,000 gallons of water and any shift
between the base and the variable rates will most likely impact the majority of households.
Pausche said based on the current CIP, the sewer fund, which currently runs at a deficit and
still needs to replace 10 lift stations, is the one fund that should still have a rate increase.
Pausche showed two scenarios where the proposed rate increase was spread evenly
between the base and variable rates, and one where the base fee remained flat for the first
7,000 gallons (down from the current 10,0000 gallons) and the variable rate was increased to
generate the needed revenue increase. For the 10 year option for sewer CIP, a 3% sewer
rate increase is recommended. Pausche said if the 3% was not spread evenly, and the base
Mound City Council Minutes—October 17, 2017
fee was kept flat, the variable rate would need to increase 10% to $7.00 for each 1,000
gallons of usage over 7,000 gallons. Pausche said the total minimum bill would not increase,
but the bill with 15,000 gallons of usage would increase 10.7%. In comparison, if the 3% was
spread evenly between the base and variable rates, the minimum bill would go up 1.5% and
the 15,000 gallon bill would go up 1.3%.
Pausche said staff also made some suggestions on ways to provide relief to compensate for
Mound's high utility bills and the fact that we bill quarterly, including giving more time to pay
the bill before charging late fees and/or creating a cap on the maximum amount a single
residence could be billed in one quarter in case there was a unknown leak in the toilet or
water softener. Discussion ensued and the Mayor suggested making it easier for residents to
make monthly payments in advance of the current due date, similar to Center Point Energy's
budget plan. Gillispie asked if automatic payments could be initiated by the City each month
as part of the quarterly auto pay plan and Pausche said she would have to look into that as
right now the auto -pay is driven by the quarterly bill process.
6. Public comment period
Mayor Wegscheid recapped the purpose of the workshop and history of tax and utility rates
and said the objectives include determining how far we want to push the improvements out,
how to balance increases to the tax and utility rates and how to reduce our reliance on debt.
Mayor Wegscheid asked the public to listen to the comments and avoid repeating the same
message to respect everyone's time.
Pat Swenson, 3016 Highview Lane, asked if the Met Council pays for the sewer. Hoversten
said the Met Council Environmental Services (MCES) owns the backbones and some of the
lift stations and that they are completely responsible for that infrastructure. Hoversten noted
the City has partnered in some instances because MCES will pay to repair the portion of the
road they disturb, such as on Westedge, where they will cover $1 M of the project costs that
the City would have otherwise had to fund. Swenson said residents don't know if they are
with Met Council and she thinks her water bill is too high since her bill in Eden Prairie was a
fraction of Mounds. Mayor Wegscheid said every community is very different and can't
necessarily be compared on an apples to apples basis.
Ed Matheson, 2162 Centerview Lane, recalls paying a large lump sum when the street was
reconstructed and his utility bill still went up 73% from 2009 to 2013. Mayor Wegscheid said
the assessment was for the street portion only, and avoiding the assessment process in the
future is one thing the city would like to have options on in the future.
Ralph Kemp, 3675 Togo Road, Orono, said he wants to address taxes vs. utility rates and
whether it makes sense to change base or the tiers. Kemp said Mound is diverse with $1 M
homes and modest homes and it seems arbitrary to use sewer and water as a way to fund
road projects. Base rate raises is inequitable as it would have an equal impact on a small
modest home vs. a home on a million dollar lot. Kemp said infrastructure replacement should
be more progressive with people who have more expensive homes paying more.
Nick Wernimont, 4936 Island View Drive, said he is speaking on the behalf of a neighborhood
group and that he assumes no one in the room has paid the minimum. Wernimont said the
group is looking into monitoring water usage apart from the city's meter and says it is not
acceptable solution that funds were diverted from the property taxes to utility rates and that
this group is going to keep on this.
Mound City Council Minutes — October 17, 2017
Joseph Ostlund, 3121 Dury Lane, said water is a necessity and not a luxury and although the
City Council looks well intentioned, he resonates with the critics of the high water bills.
Ostlund said people are feeling oppressed and unwelcomed by the City and that this leaves
the realm of fair taxation and moves to social justice. Ostlund said he will stay with issue until
the $208 "fee" is removed from bill and that if projects can't be postponed, then he proposes
an across the board property tax increase.
Kathy Rice, 2044 Arbor Lane, said she sympathizes with those who are concerned and, as a
retiree, is trying to control expenses, but can't cut off water or control what the City charges.
Rice said her bill is comparable to her neighbor with 3 teenage sons and that the City is
pushing retirees out of town and that she is even considering moving to her inherited cabin
where she is on well and septic. Rice said she wants to know what is going to happen with
the next generation of streets and asked if the City is accruing and what is the city doing to
get more businesses in town. Rice asked what is the age distribution in Mound and asked for
mercy on the people trying to live off of fixed income. Rice said the water bill quadrupled
since moving into their home and that she has cut land line and cable and turns lights off.
Rice said her property taxes on 600ft lakeshore in Wisconsin are $2K.
Sarah Jensen, 1734 Wildhurst Lane, said she disagrees with the term "commodity" being
used for water when people can't control the bill/consumption. Jensen noted the graph on
her water bill has never appeared, and she uses the NSP and Xcel energy graphs to monitor
consumption. Jensen said she has a problem with paying the same no matter what she does
as there is no incentive to save. Jensen said there is a problem with the quality of water and
with prices increasing with no benefit.
Jim Larson, 4371 Wilshire Blvd, said he questions the 5 or 10 year scenario and said that a
10% increase would be unacceptable.
Karen Buffington, 4436 Radnor Road, asked for clarification of when the base fees went up
and said now she is being assessed for the Tuxedo project for people to speed past her
house. Buffington asked why residents have to pay for the road and the high utility rates and
why this is not just a property tax. Hoversten said the assessment method was used
because when the projects started in 2003, there were no reserves and the City made a
decision to see this phase of the projects through with assessments. Mayor Wegscheid said
he will be requesting information to give more reassurance that there are no issues with
meters. Wegscheid said the Council is trying to do a short term solution in passing the 2018
budget and then evaluate the 10 year plan with the entire inventory of needs. Wegscheid
said the goal is to balance the pace to make the next generation of repairs better spread over
the life cycle. Buffington asked if the base fee could be Y2 and asked what would it take to
have a referendum to put on the property taxes to put us more in the norm of the cities
around us. Wegscheid said the same way the high utilities would deter people from moving
here, high taxes can deter them as well as these funds have to come from somewhere.
Gillispie said this Council has heard the concerns but had to be more reactive because the
predecessors did not plan. Gillispie thanked the people for sharing their thoughts and hopes
that people will understand the predicament. Buffington asked again about the referendum
and Pausche said she has not researched it, but she does not think it is a referendum, as the
Council is elected to make the best decisions they can based on the information they are
given. Salazar asked if it is the norm to have utilities and Pausche said yes and noted that
the utility rates have only funded improvements to the utility funds. Pausche said she feels
the debate is what is reasonable and not that utility rates should not exist.
Mound City Council Minutes — October 17, 2017
Nancy Hackbarth, 3066 Dundee Lane, asked about the delinquent utility bill notification in the
Laker and when the amounts are paid back. Pausche said about $460K was on the
assessment roll in 2016, many of which paid down, and ultimately $295K was certified to tax.
Pausche said they are charged 15 months interest at 5% and that most pay their taxes.
Hackbarth asked if they are not paying water bill, why do we think they are paying their taxes.
Pausche said then it goes through the tax forfeit process, but the vast majority is collected.
Hackbarth said it is upsetting that people do not pay on time.
Mayor Wegscheid paused the meeting at 8:30 pm to change the media and reopened the
meeting at 8:40 pm.
Keith Berard, 1749 Jones Lane, said he likes what City is doing but is concerned about the
minimum bill and thinks the City should focus more on variable usage to give relief to the
snowbirds or minimal users. Berard said he understands that would raise his bill.
Suzanne Berg, 2230 Millpond Lane, said she would love to hear how prior to 2003 the
Council was not building up reserves and she said she is frustrated that she is paying more
because of something someone else did not do. Berg questioned whether a city sales tax is
an option and that she would like to see alternatives for different revenue sources and for the
City to be more creative.
Joe Bruns, 2630 Setter Circle, asked if there are state infrastructure grants that could be
looked at. Bruns asked Simmons when there is a watermain break could they send the
plastic liner through instead of digging up the road. Simmons replied the pipe has to be
repaired and is usually no longer intact. Bruns asked if the 400 ton truck limit has been
enforced and was told to contact the police at the non -emergency number. Field Officer
Simon said both 911 or the non -emergency goes to dispatch, so it really doesn't matter.
Bruns asked why the City does not lease or buy used equipment instead. Pausche said new
vehicles have longer useful life. Hoversten said there is a life cycle cost of vehicles and
City's approach to fleet management is to unload when there is still decent value for trade in
and maintenance costs are still low as well as taking advantage of new technology. Bruns
noted moving expenses to the tax base may be a mute point if the feds remove property tax
deduction. Bruns suggested having Senator Osmek create legislation for small cities.
Simmons said he does vet grant opportunities and the City has taken advantage in the past.
Melody Olsen, 4873 Cumberland Road, said she gets the impression the City is trying to
push the seniors out and is trying to tear down the little homes in order to put up the big
homes to increase tax base. Olsen said she can't afford the water bill or even afford the
deduct meter and that sometimes she has to let it go to taxes. Olsen said she is seeing more
fees and service charges because the Council did not want to increase taxes. Olsen said
she found out about the meeting by accident and that it should have been better advertised.
Pausche said it was posted on the website and announced at the meetings, but the editor
has not been coming. Pausche said the City is not required to publish and she did not think
to do so. Olsen she has lived here for many years and that this is unaffordable and Social
Security does not cover it. Mayor Wegscheid said the next time the rates will be discussed
is at the December 12, 2017 meeting. Olsen challenged that this is when they will be voted
upon. Joe Bruns suggested more frequent newsletters to keep people informed or perhaps
to publish a notification in the Laker.
Mayor Wegscheid closed the comment period at 9:05 pm.
Mound City Council Minutes — October 17, 2017
7. Council direction to Staff on how to proceed with preparing the final budget, including
the levy and utility rates, for consideration at the December 12th final meeting of the
year
Pausche summarized the areas staff is seeking direction on, including: (1) whether to
establish capital reserve funds & create interfund loans with deferred payments, (2) timing of
remaining improvements for Sewer - Scenario 1 (5 Year) or Scenario 2 (10 Year) Cl P, (3)
whether to increase the Sewer rates and how to spread between the base fees and variable
rates, (4) should late fees be delayed, (5) should there be a one-time not to exceed for
residential utility bills, and (6) should credits be given for signing up for ebill and autopay.
Mayor Wegscheid said he prefers Scenario 2 (10 Year) CIP because the City needs to get a
handle on spending and slow it down and be more intentional about it. Wegscheid said the
City can now stop being reactive as the street projects wrap up and now the City can begin to
be choosier. Peterson asked if the City should pause further. Wegscheid said this is a short
term plan until an inventory of projects can be created and a better long term map can be
created.
Joe Bruns, 2630 Setter Circle, asked what was the Met Council increase. Hoversten said 3.5
- 5.5% increase is projected and that the increase was 5.4% for this year. Bruns said the Met
Council needs to be an elected body instead of accountable only to the Governor. Salazar
said people are running on that platform and that he and the Mayor have attended meetings
regarding this issue.
Wegscheid said regarding the interfund loans, he is still in favor of Scenario 2. Gillispie
asked about the annual maintenance cost on the old lift stations. Hoversten said it varies,
and it is a bit of luck when we avoid pump rebuilds. Hoversten said we need to stay focused
while recognizing the costs need to be managed. Gillispie asked if they will get to the point
they have to be replaced. Hoversten said the replacement schedule will continue to be
reprioritized based on issues that come up.
Salazar asked if the funds would be available. Pausche said she is not guaranteeing we
won't ever have to bond again. Hoversten said two may have to be done in one year and
then we may skip a year. Salazar asked the life expectancy. Hoversten said the concrete
manhole will last over 50 years, but the pumps and controls vary, usually 25 years with some
repair/replacement inbetween.
Salazar said he likes Scenario 2. Gillispie agreed and said a 10% sewer increase is too
much. Bergquist agreed a slower approach is needed. Peterson noted the interfund loans
are higher in Scenario 2. Pausche said that is not as big of an issue and that the focus
should be on mitigating the rate increases. Peterson said she supports Scenario 2.
Pausche walked through Option A and B for whether or not to change the base and variable
or just the variable rate. Pausche said she did not show a scenario for reducing the total
base bill, just the impact of increasing the variable rates more that across the board
increases. Pausche said the majority (30%) of the households use between 10 - 15K gallons
and a very small percentage use over 25K gallons, so most everyone will be effected
anyway. Pausche said this was just a demonstration and these are not the only two options,
Staff was just looking for guidance on whether increases should be across the board or
pushed to the variable rates. Peterson asked when the base fees were increased. Pausche
said in 2010 - 2011 base fees increased due to the $1 M deficit in the utility funds. Pausche
Mound City Council Minutes — October 17, 2017
said people who use more water pay more, but the fact is most households use between 5
and 20K gallons.
Wegscheid said he would like to consider more options. Joe Bruns, 2630 Setter Circle, said
getting rid of the base fees would have a major impact. Pausche cautioned that there are no
simple answers because the majority of households use similar amounts of water. Bruns
asked if there is a discount for doing multiple lift stations at a time. Hoversten said not really.
Peterson asked why part of the expense can't go toward taxes. Wegscheid said he thinks it
is a fair balance and when you have real estate fluctuations it can effect cash flows versus
having a solid, reliable revenue stream from utilities. Wegscheid said it is good to diversify
and that similar to those concerned about utility rates, the room could fill as easily with those
concerned about tax rates. Wegscheid said we can look at reducing utility rates. Pausche
noted the preliminary levy has been set, so it can't go higher. Hoversten said the preliminary
levy is set in August and any change will need to be discussed then for 2019. Gillispie said
she does not agree with putting utility expenses on the tax base and Salazar agreed.
Wegscheid confirmed Scenario 2 was the preferred option.
Wegscheid said regarding late fees, he suggests accommodating monthly prepayments by
including extra pay stubs and possibly setting up monthly auto -payments. Pausche said a
December bill due in January would need to be prepaid monthly in November, December and
January. Salazar said he encourages households to sign up for ebill and autopay.
Wegscheid asked the Council if supports the credits. Salazar asked if the City could afford it.
Pausche said there are some offsetting costs. Wegscheid said it is a motivation to help the
City be more efficient. Council members agreed.
Wegscheid said he would like to implement these other changes before deciding to delay late
fees. Salazar agreed. Peterson said it depends on what happens with the increases impact
on revenue. Wegscheid said it sounds like that should be brought back at a later date.
Peterson asked if extraordinarily high bills are a common issue. Pausche emphasized that
this is a one-time deal and sometimes there are silent problems like a running toilet or water
softener, and this is not meant for an unmonitored vacant property where the pipe busted, or
properties with swimming pools, etc. Hoversten said it is more about optics and
compensating for the fact we only bill quarterly, but that the use is intended to be very limited.
Pausche said 54 bills were above 50K and 13 bills were above 70K gallons out of 16,000+
bills in 2016. Gillispie said there needs to be strict rules around the use of this. Wegscheid
asked if there was consensus to direct Staff to make a more detailed proposal and all agreed.
Wegscheid said the last issue is whether to use interfund loans instead of bonding. Pausche
noted that there is a public process to create reserve funds but that she feels it is a
responsible thing to do and we should learn from the past that has landed us in the current
situation of having to issue debt. Salazar said he likes the idea to give some relief to the
rates in the short-term and that it is good business in the long-term. Gillispie agreed as it is a
cost savings. Bergquist agreed. Peterson agreed but emphasized the need to be strategic
since we have hit taxpayers hard with all the projects. Wegscheid said that sounds like
consensus.
Mound City Council Minutes — October 17, 2017
8. Adjourn
MOTION by Gillispie, seconded by Peterson, to adjourn at 9:53 p.m. All voted in favor.
Motion carried.
Mayor Mark Wegscheid
Attest: Catherine Pausche, Clerk