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092506 CC WS Min CITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, SEPTEMBER 25, 2006 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. MINUTES 1. CONVENE CITY COUNCIL WORK SESSION Mayor Love called the meeting to order at 6:03 P.M. A. Roll Call Present: Mayor Love; Councilmembers Callies (arrived at 6: I 0 P.M.), Lizee, Turgeon, and Wellens; Administrator Dawson; Finance Director Burton; Planning Director Nielsen; Public Works Director Brown; and Acting Engineer Gurney Absent: None B. Review Agenda Lizee moved, Wellens seconded, Approving the Agenda as presented. Motion passed 5/0. 2. PROPOSED 2006 G.O. WATER REVENUE BOND SALE Administrator Dawson stated George Eilertson, from Northland Securities, was present to describe the proposed financing for the 2006 G. O. Water Revenue Bonds, and to answer any questions Council might have. The $1,450,000 bond issue would include the following projects: Woodhaven Interconnect to Chanhassen, Southeast Areal Amesbury Connection; and the water portion of the Wedgewood, Mallard, and Teal Project. Mr. Eilertson stated Northland Securities had prepared funding analysis scenarios for IS-year and 20- year bond issues. He noted October 23,2006, was the date the bond bids would be received. Mr. Eilertson explained the bond size for both scenarios was $1,450,000. The debt service would primarily be paid for with water rates, and a small amount would be paid for with assessments. He commented that a large part of the City's existing debt was amortized over IS years. He then explained the scenarios were prepared in a wraparound manner so they would blend in with the City's existing debt service in order to minimize any peaks and valleys with payments. He stated it was a good time to be coming to market because of the steady decline in interest rates. He noted the interest rates used in the scenarios were conservative; the actual rates would most likely be lower. Mr. Eilertson explained there would be slightly higher annual debt service for a IS-year issue. The blended average interest rate for the IS-year scenario would be approximately 4.17%, and it would be approximately 4.35% for the 20-year scenario. Administrator Dawson stated during discussions regarding the Wedgewood, Mallard, Teal Project the question of a IS-year bond issue versus a 20-year bond issue arose. He explained assessment bonds could be issued for the water portion of that project, but it was not very efficient to issue bonds for $300,000, as the issuance costs would be significant. If Council chose to move forward with a IS-year bond issue, owners of assessed properties would have to pay $150 more per year than a 20-year bond. CITY OF SHOREWOOD WORK SESSION MEETING September 25, 2006 Page 2 of7 Mayor Love expressed concern with a 20-year bond issue, because of the 8 - 10 year turnover rate of houses in the City. Director Burton stated a IS-year bond issue would result in hundreds of thousands of dollars in interest savings over a 20-year bond issue. There was Council consensus to move forward with a IS-year bond issue. Administrator Dawson explained residents would have the opportunity to pay their assessments in full at the start of the Wedgewood, Mallard, Teal Project or any time during the project; it was not possible to payoff only a portion of their assessment due to system constraints. Director Burton noted there was no prepayment penalty. Mayor Love commented if all residents paid their assessment early, the City would have to pay the interest. Councilmember Turgeon questioned what project(s) the existing $344,000 annual bond payments were for. Director Burton explained that amount was the payment for prior issues which included: the G. O. Water Revenue Bonds issued in 2005 for an amount of$1.5 million; a small amount that remained from the 1996 revenue bonds; and a small amount from bonds that had been refinanced in 2003 because of low interest rates. Administrator Dawson stated the projects funded by the 2005 bond issues included: the Badger Field Well Construction and Engineering; Radio Read Meters; Amesbury Replacement Controls; Amesbury Building Repairs; and the SE Area Water Tower Rehabilitation. Director Burton explained the City currently had approximately $2.7 million In outstanding water revenue bonds that were divided between three different bond issues. Mr. Eilertson stated the scenario for the IS-year bond issue was structured such that the principal payments on the bond issue were delayed until a significant portion of the existing debt service had been paid (i.e., only interest would be paid on the new bond issue until 2012). The City's overall annual bond payments would be more level. Council member Turgeon expressed concern with the $3 million level of water-bond debt service the City had. Director Burton stated Staff would be evaluating the water rates in the near future to determine how they should be adjusted. She noted the fiscal debt service total would be approximately $300,000 annually. Mayor Love stated it was important to be mindful of the water rates. He commented, from an interest rate perspective, now was a good time to invest in expansion of the City's water system. Director Brown stated there were a number of activities related to improving the water system that had been done: an expansion had been completed in the north east portion of the City; the quality of the water system facilities had improved significantly once the services were brought in-house; and residents had been provided the opportunity to connect to an improved water system. Unrelated to this agenda item, Dawson stated there may be consideration of refunding the 2002 and 2003 public safety bond issues. A reissue would result in an annual savings of approximately $36,000 for the fire bonds and $14,000 for the police bond beginning in 2009. He commented the interest rates were at a CITY OF SHOREWOOD WORK SESSION MEETING September 25, 2006 Page 3 of7 40-year low. He stated this topic would be presented to the EFD Board and the SLMPD Coordinating Committee for consideration. In response to a question from Mayor Love, Administrator Dawson explained approval from the EFD Board, the SLMPD Coordinating Committee, the EDA, and the Cities of Shorewood and Deephaven would be required to proceed with the refunding process. In response to a question from Director Burton, Mr. Eilertson explained Northland Securities would accept financing bids for a IS-year bond issue on the morning of October 23, 2006, and the bids would presented to Council that evening for review and award. 3. CHANGES TO SICK LEAVE AND SEVERANCE BENEFITS Administrator Dawson stated the sick leave and severance benefit was the final benefit that needed to be addressed, based on discussions at Council that had been started in 2005. Currently, when employees terminate their employment they are paid cash for one-third of the number of sick leave hours they had accrued in excess of 400 hours; that benefit was referred to as a severance benefit and the benefit was common in local government. He then stated the Benefits Committee agreed it would be prudent financial management to cap the City's liabilities; therefore, it considered several alternatives that would be fair to both employees and the City. Dawson's September 21,2006, memo explained several alternatives. He eXplained the proposal was to cap an employee's sick leave balance at 800 hours, convert 50% of the balance in excess of 800 hours into deferred compensation and/or grant of personal leave. At termination of employment, employees would be paid 50% of the balance of their sick leave hours after five years of service. He commented both the League of Cities and the City Attorney had stated the City had a wide degree of latitude with regard to the handling of accumulated sick leave in excess of the cap. The issue was for the Council (in this regard the employer) to determine what was fair to the employees. He also explained Staff had prepared several scenarios depicting the financial impact for cap and severance alternatives. He stated it was possible to implement a system for the three employees who had more than 800 hours of sick leave where those employees would work down their sick leave hours to the cap amount; he noted that option would be more cumbersome to administer. Councilmember Turgeon stated the liability would be incurred by the City when the employee terminated employment. She suggested another scenario would allow employees to accumulate as much sick leave as they wanted, but there would be a maximum amount of severance they would receive upon termination. Administrator Dawson explained the City had to record uncompensated absences as if the employee would terminate immediately. Councilmember Turgeon stated there was no cap on the accumulated hours; therefore, a severance cap needed to be established. She then stated the severance amount could vary based on years of service, with a cap on the amount of severance. For example, the cap could be 1200 hours and for 5 - 9 years of service the employee would be paid 25%, for 10- 19 years of service the employee would be paid 35%, for 20 - 24 years of service the employee would be paid 40%, and beyond that the employee would be paid 50%. She stated she did not have a problem with not having a cap on sick leave because there were extenuating circumstances where the hours could be beneficial to the employee (e.g., child care, spousal care, parental care, etc.). CITY OF SHOREWOOD WORK SESSION MEETING September 25, 2006 Page 4 of7 In response to a question from Mayor Love, Councilmember Turgeon stated she would prefer a severance approach based on years of service. Administrator Dawson stated the Benefits Committee had considered a graduated severance scale, but preferred 50% to keep it simple to understand. Councilmember Wellens stated with regard to the objectives of this benefit stated in the memo he was not aware of any employee using sick leave inappropriately. Administrator Dawson stated there were employees that had a very low number of sick leave hours in their balances compared to their years of serVIce. With regard to the statement in the memo "the City needs to be fair and respectful toward those affected by the changes", Wellens stated the employees needed to be fair to the taxpayers and be offered no more than comparable benefits. Councilmember Turgeon stated if an employee appeared to be abusing sick leave, management should address the issue. Mayor Love stated it was important to address the benefit at a policy level. There could be sound reasons for some employees to use more sick leave than others. He then stated it would be unfair to compare the employees' benefits to taxpayers' benefits because there was a wide range of benefits taxpayers received. He also stated he did not think a sick leave cap was required; the question at hand was the severance amount. Love then stated the approach for current employees and future employees could be addressed differently. Councilmember Wellens stated the sick leave balance for older employees could be misleading as those employees may use more sick leave in the future. Mayor Love clarified with Councilmember Wellens that Wellens had suggested the current policy would be acceptable. Administrator Dawson suggested the severance benefit be based on a graduated scale based on up to 960 hours rather than starting at 400 hours. Councilmember Turgeon stated that all cities whose benefits were reviewed had a cap on the amount of severance. Councilmember Callies stated the Benefits Committee's recommendation should be considered. Mayor Love agreed with Callies comment. Mayor Love suggested Council reach an agreement on the direction, and the Benefits Committee could refine its recommendation. Councilmember Wellens stated he would prefer the sliding scale approach. Administrator Dawson stated he strongly supported an approach that capped the severance amount, but not necessary the hours accumulated. Mayor Love agreed. There was Council consensus not to cap the sick leave hours but to cap the severance amount, and to ask the Benefits Committee to come back to Council with a recommendation for the severance benefit. CITY OF SHOREWOOD WORK SESSION MEETING September 25, 2006 Page 5 of7 4. REQUEST FOR DEER REMOVAL Administrator Dawson stated the City had received a written request from the Minnetonka Country Club to "issue a permit to eliminate the deer problem". He commented the City had received verbal requests before, but it was the first time the City had received a written request. Dawson explained that deer were resources of the State of Minnesota, and the management of deer was regulated by the Department of Natural Resources (DNR). The State managed deer populations through hunting, and anything that happened outside of hunting required a special removal permit from the DNR. Dawson went on to explain that a City-wide deer management plan submitted to the DNR for approval would have to contain the following key components: . The management plan must be developed Il1 a process that had public participation. . An aerial census must be conducted for a City-wide plan. The census must be conducted when the leaves were off trees, and would best be done when snow was on the ground. An aerial census was not required if the management plan called for localized control, such as removing deer from a specific area like a golf course. Dawson stated cities typically contract with private individuals or firms to dispatch the deer. He explained Deephaven live-trapped the deer, and then the deer were shot and removed from the live traps. Other cities had used sharpshooters to dispatch deer at baited sites. Dawson explained the City Code contained provisions that prohibited hunting or trapping, and prohibited the use of any gun or firearm except for law enforcement officers who were performing his or her official duties. Therefore, the City Code would have to be amended, and the SLMPD ChiefofPolice would have to be empowered to authorize individuals or firms to discharge weapons for a deer-management program. Administrator Dawson requested direction from Council with regard to the request. Councilmember Callies stated she was not in favor of firearms being used on the Country Club golf course. Mayor Love commented Deephaven and Minnetonka had netted the deer and then shot them at close range. Sue Davis, 5495 Valleywood Circle, stated she owned a house on a five-acre lot in Duluth located approximately two miles from the University of Minnesota Duluth Campus. The deer droppings on her property and around the area were extremely extensive. She explained an effort had taken place near her property last year to reduce the deer population using the bow-hunting method. She noted she did not allow that activity to take place on her property, and she did not support hunting on her property. She stated three bow-hunters hunted around her property, and there was an approximate 50% reduction in the deer population in that area. She commented the program did not reduce the overall deep population in the greater area around her property; the reduction program was focused on nine areas that had the greatest need. The 2005 reduction program covered an area 9,500 acres in size; and the 2006 program would cover an area that would be 20,000 acres in size, with the number of hunters participating the effort would double in size. Ms. Davis stated she has had dogs that have had Iyme disease, dogs that have had heartworm, and a dog that had leptospirosis. She explained the majority of veterinarians never had a patient with leptospirosis CITY OF SHOREWOOD WORK SESSION MEETING September 25, 2006 Page 6 of 7 during their entire career; and veterinarian she took her pets to saw a dozen animals per week with the disease. The veterinarians in that area were vaccinated to protect themselves against the disease. She went on to explain leptospirosis was borne in the feces, and it was an intestinal disease that caused kidney failure. She provided Council with articles from OSHA and the Center for Disease Control regarding leptospirosis. Ms. Davis stated the veterinarians had asked her if she had taken her dog to dog parks; the veterinarians called leptospirosis the dog-park disease because of the deer and raccoon feces. She commented she was surprised at the extensive measures the City's residents took to protect their plants from the deer population. She stated the deer population had doubled in the part of the City in which she resides. Councilmember Callies stated she had received complaints regarding residents who fed deer, geese, and other animals. She questioned if the Planning Commission could consider drafting an ordinance that would prohibit that type of activity. In response to question from Councilmember Turgeon, Councilmember Callies stated if there was a City regulation regarding the feeding of those types of animals the ordinance could prove helpful in attempting to stop residents from doing so, though it may be difficult to enforce. Mayor Love stated a resident had questioned if the City allowed deer-feeders, to which he responded he did not think the City had an ordinance regulating that, but the City did have an over population of deer. He stated he felt his response was enough to have encouraged the resident not to pursue a deer feeder. Councilmember Lizee stated the only deer predator that seemed to exist was the automobile. She then stated she also agreed the over-population of deer was a serious health and safety issue, and deer were destructive animals. She also stated the increasing deer population would eventually become a problem the City would need to address. She suggested efforts be undertaken to discourage feeding deer. Ms. Davis stated a deer-reduction effort was conducted every year between the Arboretum and Lake Minnewashta. In response to a question from Councilmember Turgeon, Administrator Dawson explained Council needed to decide if a site-specific or City-wide deer management plan should be pursued. Mayor Love suggested the City start with a site-specific plan, as it would be a learning experience for the City. He stated a "mild" City ordinance prohibiting the feeding of deer and geese could be used to educate the public. Council member Turgeon stated a site-specific plan for the Minnetonka Country Club would not address the problem area where the deer lived as the deer were not living on that property. Mayor Love stated the site-specific plan would be the first step toward having a City-wide management plan. Administrator Dawson stated once Council had provided direction, Staff would be in contract with the DNR regarding specifics of how to prepare and conduct the site-specific deer management plan. Councilmember Turgeon stated she preferred bow hunters be used to dispatch the deer. Mayor Love, on behalf of Council, directed to direct Staff to prepare a site-specific plan for review and discussion at a future Council Work Session. CITY OF SHOREWOOD WORK SESSION MEETING September 25, 2006 Page 7of7 5. ACTIVITY INDICATORS This item was moved to an October 23,2006, Council Work Session agenda due to lack of time. 6. OTHER None. 7. ADJOURN Turgeon moved, Lizee seconded, Adjourning the City Council Work Session Meeting of September 25, 2006,6:57 P.M. Motion passed 5/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder Woody Love, Mayor