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110705 CC WS Min . . . CITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, NOVEMBER 7,2005 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:15 P.M. or Immediately Following Special Council meeting MINUTES 1. CONVENE CITY COUNCIL WORK SESSION Mayor Love called the meeting to order at 6:15 PM. A. Roll Call Present: Mayor Love; Councilmembers Callies, Lizee, Turgeon, and Wellens; Administrator Dawson; Engineer Brown; and Finance Director Burton Absent: Planning Director Nielsen B. Review Agenda Without objection from Council, Mayor Love proceeded with the Agenda for the meeting. 2. EMPLOYEE BENEFITS COMMITTEE RECOMMENDATIONS Administrator Dawson explained that a Benefits Committee was formed in March 2005 to improve communications to employees regarding benefits and to expand staff participation in the design of benefits offered by the City. The Committee represented every department and all levels of the City organization. Administrator Dawson explained the Committee began with a review of current benefits, recent changes affecting them, and the 5 types of insurance being offered to employees by the City. Administrator Dawson clarified the purpose of this meeting was to solicit Council feedback on these potential changes in benefits programming. Administrator Dawson explained that it has been the idea for many years not to have disruption in health care providers which is why the City stays with Medica. The Committee learned that Health Savings Accounts (HSA) with Medica are not an option because 100% participation is required. With regard to dental insurance, there was a change to Delta from MetLife on September 1, 2005. Employees were appreciative of long-term Disability (LTD), which was an employer-paid benefit at the initiative of City Council. In 2005 the life insurance benefit was changed to Ix salary. The Committee recommended going back to a basic life insurance policy of $20,000. Employees would like to be able to purchase additional life insurance through the City provider; the feasibility of this needs to be determined. The short-term disability (STD), was added as a benefit at the initiative of the City Council. There are differing opinions on whether STD is a benefit for those employees with a sick leave balance greater than 520:l:: hours. There was a lot of interest in having some type of cafeteria plan. However, after talking to a number of providers it was apparent it was difficult to do for an employer the size of the City of Shorewood. The Committee prefers insurance quotes be requested for optional participation so that elements of a cafeteria CITY COUNCIL WORK SESSION MINUTES NOVEMBER 7, 2005 Page 2 of 5 . plan could be possible. Administrator Dawson also noted the Committee conducted a quick survey generating feedback that employees were generally satisfied with current benefits, though there was some in disagreement with different parts of the benefits package. Administrator Dawson stated that the current vacation and holiday benefits were comparable to other cities. The Committee recommends changing the sick leave plan by: 1) establishing a wellness reimbursement benefit; 2) placing a cap on accrued sick leave hours; and, 3) making changes to sick leave severance. The "wellness reimbursement benefit" for eligible actives would be reimbursed up to $40/month, and deduction of 1 hour of sick leave for each $20 or portion thereof. There is still some work to be done on the wellness benefit but the committee wanted to bring the concept to Council. The sick leave accrual cap would be 800 hours which would limit the City's liability. At each year end, all accrued sick leave hours in excess of 800 would convert 50% to another benefit (e.g., deferred compensation, add to vacation balance, place in next year's Section 125 Plan account, pay as cash, use in combination, etc.). At termination, 50% of sick leave hours on balance would be paid with a minimum of 5 years of employment. On December 31, 2005, payout to those employees currently in excess of the 800-hour max with one-time use of City's fund balance. Three employees would be affected, and the City's payout to them would be approximately $60,000. The Benefits Committee remains a "standing committee" that would convene in the spring every year, review benefits, identify changes to research, identify recommended changes to place in the budget process in July, and serve as information liaisons to their departments. Members of the Committee suggested hiring a benefits consultant to review the benefits offered as well as any redesign of current benefits. . Councilmember Callies complimented the Committee on its efforts. She stated having a consultant with experience in the benefits field assess the benefits package would be prudent. Councilmember Turgeon agreed. Councilmember Callies went on to state it was good to review the benefits package periodically. She thought the vacation benefit generous and having a cap on sick leave accrual hours was good but perhaps the cap was too high. In many companies if sick leave isn't used it's lost. She expressed concern about the one-time payout option explained. Councilmember Wellens stated he had no objection to the life insurance benefit. His career experience had been that sick leave accumulates without limit but is lost at termination. He stated having a cap on sick leave encourages employees to use their sick leave and perhaps sick leave and short-term disability should be linked together. In response to a question by Councilmember Turgeon, Administrator Dawson stated sick leave and vacation "carry forward" with a cap was a very common practice. Mayor Love stated he appreciated all the hard work that was done by the Committee. In addition, he would appreciate having a benefits consultant review the recommendation. Councilmember Turgeon stated a benefits specialist should be hired to assess the impact of the potential change on employees before any change was made, conduct all employee information meetings about the change, and minimize disruption in benefits to the employees where possible. The benefits consultant should be the same individual annually, someone with the City's best interest at stake. . CITY COUNCIL WORK SESSION MINUTES NOVEMBER 7,2005 Page 3 of5 . Councilmember Callies expressed concern the benefits consultant had no loyalty to any insurance service provider to ensure objectivity. Administrator Dawson stated he will report back to Council within the next two meetings with ideas on a benefits consultant. 3. ENTERPRISE BUDGETS A. Water Budget Finance Director Burton explained the Water Fund budget was comprised of two parts: the Water Debt Service budget and the Water Operating Budget. The 2006 Water Debt Service budget included payments for the existing bond issues, including the 2005 issue for financing major water and well improvements in 2005 and 2006. These debt service payments were programmed at approximately $375,000 and would be paid for by a transfer from the Water Operating budget. She went on to explain the 2006 Water Operating Budget revenues were projected to be approximately $587,000, while expenses (including depreciation) were forecast to be approximately $1,900,000. Proposed capital expenditures to be funded from 2006 bond proceeds included the Amesbury Well enhancements, Badger Well House reconstruction, Woodhaven Interconnection, and Radio Read meter project. . Finance Director Burton also stated in order for the Water Funds to be self-supporting, to assure the system could provide for improvements, and to preserve fund balance at current levels, a three-year step approach to water rate increases was discussed and approved by Council several years ago. The rate increase for 2006 was the final year of the three-year rate increase approach. Based on that plan, the current rates were: $35 for up to 10,000 gallons: $2.95/1000 gallons for 10,000-50,000 gallons usage, and $3.75/1000 gallons for 50,000+ gallons usage. She noted there are approximately 1,225 water connections (this number is fairly accurate) using an average of 30,000 gallons per quarter. The 2006 budget includes $8,000 for possible feasibility studies. Council would like a more accurate connection and consumption data reflected in the budget. B. Sanitary Sewer Budget With regard to the Sanitary Sewer Budget, Finance Director Burton stated the City currently had about 2,800 connections to its Sanitary Sewer system. Engineer Brown stated there were currently three residences that are not connected to City sewer. Council requested more accurate connection figures be provided. Finance Director Burton went on to state the sewer fund had a substantial fund balance. Proposed operating revenues and expenditures for year 2006 were contemplated at approximately $890,000, with capital improvements $192,000 planned for the year as well. Capital improvements for year 2006 included refurbishment of two lift stations. Funds of $50,000 had also been designated for Inflow & Infiltration (1&1) Control and reduction projects. . Administrator Dawson explained that he, Finance Director Burton, and Director Brown met with the Metropolitan Council Environmental Services (MCES) on November 7, 2005, for a preview of a new CITY COUNCIL WORK SESSION MINUTES NOVEMBER 7,2005 Page 4 ofS . program they will be doing over the next five years at minimum. MCES is studying ways to maximize the capacity of the Metropolitan Sanitary Sewer System without making major investments. One option MCES studied was to anticipate future demand and build more plants, parallel pipes, etc. for a cost of approximately $1 billion for correction of 1&1 problems metro wide. The City was doing fine with 1&1 until 2005 Labor Day weekend when there was a heavy storm which created a 5,000,000 gallon overage of the 1&1 goal. MCES explained the way the policy is written the City has to mitigate the full amount of 1&1 which by MCES calculations is approximately $335,000 per year for five years. He stated there are two MCES plans that the City can follow. Plan A included a surcharge of $335,000 a year for 2007 through 2011 to the City; the City can do a number of activities and essential draw the money back. Plan B included negotiation of an agreement with MCES where the City can identify a number of programs that would help with 1&1, allocate capital dollars to implement these programs, and follow through on the programs. Administrator Dawson stated it would be prudent for the City to hire an Engineering Consultant to assess the current 1&1 situation and to establish additional monitoring practices to provide additional and/or more accurate data for determining responsibility of project cost. He recommended that the proposed budget 2006 budget amount of $50,000 for 1&1 be increased to $100,000. Engineer Brown explained his concerns with the 1&1 data provided by MCES. Mayor Love expressed his concerns with the accuracy of the data provided as he compared the Tonka Bay 1&1 increase to the City's increase and the sanitary sewer systems were installed approximately the same time for both cities. . C. Recycling Budget The Recycling Budget contemplated revenues and expenditures of approximately $118,200. The City anticipated receiving approximately $21,000 in grant monies from Hennepin County Grant Funds. Finance Director Burton noted the number of households participating in the recycling program remained stable. No rate increases were proposed at this time. Finance Director Burton explained that the 135% increase in supplies was a result of purchasing 300 recycling bins which would last approximately one year. These bins are, in turn, sold to residential customers. D. Stormwater Management Budget Finance Director Burton stated the 2006 Stormwater Management Budget contemplated revenues of $165,000 and expenditures of$210,899. E. Liquor Operations Finance Director Burton explained the City anticipated reasonable profit levels at its two current municipal stores; however, the 2006 budget had been prepared quite conservatively. . Council is supportive of a year-end transfer from Tonka Bay reserves to eliminate the Waterford (East) store deficit and transfer the remainder of the Tonka Bay reserves to Shorewood Plaza (West). . CITY COUNCIL WORK SESSION MINUTES NOVEMBER 7,2005 Page 5 of5 4. TIMBER LANE W A TERMAIN Administrator Dawson explained there was discussion held regarding the petitioned Timber Lane Watermain Project at the last Regular City Council meeting. He questioned, for the Council, what if any budget implications would result from the Timber Lane project, and how the process could be improved in the future. Engineer Brown explained the Timber Lane project was brought through a public bidding process, and rejected due to the high costs received. It was the intent of Staff that the project would be re-bid in 2006 in conjunction with the proposed SE Area - Amesbury Interconnect project currently under design - due to economies of scale with the project. Since that time Mr. Haskins, representing the residents affected by the project, requested the petition be formally withdrawn due to high costs. He went on to explain under current policy, the petitioners would be responsible to satisfy any and all cost for consideration of the feasibility and design portion of the project. The costs for the feasibility study, design and soil borings totaled $34,000. This did not include costs associated with public hearings and administrative costs, etc. Engineer Brown stated the City ordinance for petitioning projects was somewhat vague regarding petitioners bearing responsibility for the design costs. Staff recommends the City bear the design costs and the Timber Lane residents bear the cost of the feasibility study because of the lack of clarity in the City ordinance. Engineer Brown stated he would provide a breakdown of cost for the Timber Lane Watermain Project. . Discussion ensured regarding appropriate costs to petitioners of projects. It was the consensus of Council that the City may need to bear some project costs; however, petitioners should share in funding some of the costs for feasibility studies, etc. . Engineer Brown stated a more effective means of communicating the potential liabilities to the petitioner needed to be determined. Information should be added to the City web-site including brochures for all infrastructures, answers to frequently asked questions, and any other information that would be beneficial to City residents. 5. ADJOURN Turgeon moved, Wellens seconded, Adjourning the City Council Work Session Meeting of November 7, 2005, at 8:13 P.M. Motion passed 5/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder Woody Love, Mayor ATTEST: