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021207 CC WS Min CITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, FEBRUARY 12, 2007 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 7:30 P.M. or Immediately following Regular City Council Meeting MINUTES 1. CONVENE CITY COUNCIL WORK SESSION Mayor Lizee called the meeting to order at 8:43 P.M. A. Roll Call Present. Mayor Lizee; Councilmembers Callies, Turgeon, Wellens, and Woodruff; Administrator Dawson; Finance Director Burton; Director of Public Works Brown; and Engineer Landini Absent: None B. Review Agenda Without objection from Council, Mayor Lizee proceeded with the Agenda for the meeting. 2. GOALS AND PRIORITIES Administrator Dawson reviewed the purpose of his February 8, 2007, memo to Council which identified a preliminary list for the City's Goals and Priorities for 2007 (as detailed in that memo). He stated the list was intended to serve as a catalyst for discussion between Council and Staff with regard to adding and removing items from the list and then prioritizing those items that remain. He explained the items on the list were meant to be of a one-time nature or steps of processes that are to be improved; the list did not include things that are part of the usual cycle of activities. Dawson then explained the approach taken last year was to identifY important values or strategic areas for the City to address. That broader view helped to focus on major things across the organization to accomplish, rather than on each individual department. He stated the items listed were not listed in priority order, and work on some of the items had been started. In response to a question from Councilmember Woodruff, Administrator Dawson explained some of the items had funding allocated for them and some did not. Councilmember Woodruff suggested an attribute be added to each item indicating if the task could be funded from available resources or if additional funding was needed. Director Brown explained that Engineer Landini was creating a matrix of all the City's roadways and assigned a numerical rating to each. For each roadway four criteria would be overlaid on a map of the roadways: the condition of the road; drainage concerns; the desire for watermain or the need for watermain; and sanitary sewer concerns. A point value was developed to assign each roadway based on the status of the four criteria. The end result would be a rating of all the roadways and that rating should help in prioritizing projects. Councilmember Wellens requested an item be added under category 2, with the objective of the task would be to make it possible to search all the minutes for a year on the City's web page with a single search command. CITY OF SHOREWOOD WORK SESSION MEETING February 12, 2007 Page 2 of6 Councilmember Callies stated Item 2.a, Implementation of Electronic Payments, was not a high priority from her vantage point. Director Burton stated the implementation of that capability should be relatively easy to do with the new financial software, and Deephaven currently had a 20% participation rate for electronic payment. Administrator Dawson stated the trend was toward electronic payment capabilities. In response to a question from Councilmember Turgeon, Director Brown stated a revised draft of a right- of-way ordinance had been prepared but it was never presented to Council. He stated it should be reviewed and revised, if need be, and then it should be reviewed by the City Attorney prior to it being brought before Council for consideration. Turgeon asked that item be added under category 3. After discussion, it was agreed that items that were mandatory and did not require prioritization by Council should be removed from the list. Those items could be placed in a separate category for awareness purposes only. Councilmember Wellens requested that deer management be added to the list. Councilmember Callies suggested that be expanded to wildlife management. Mayor Lizee suggested shoreline management also be included. With regard to the topic of wireless internet access, Administrator Dawson stated the previous Council had decided to take a "wait and see" approach. Councilmember Callies stated Minneapolis was able to get a more affordable rate for Wi-Fi because it was purchasing other services from the provider; a city the size of Shorewood would have more difficulty finding a similar rate it were to purchase the services as a single entity. Councilmember Woodruff requested an item be added under category 4, to review the City's Code with regard to digital billboards. Councilmember Turgeon suggested Items 3.e and 3.fbe removed from the prioritization list. With regard to Item 4.a, Community Celebrations, Director Brown explained the item was on the list because it was appropriate for Council to determine if it thought Staff should spend time on those activities. Councilmember Wellens requested an item be added to category 4 to review of the current minimum water charge rate. Councilmember Callies suggested that an item be added for Council to have a joint meeting with each of the advisory commissions where the goals and priorities could be reviewed, or it could just be a relationship building gathering. Mayor Lizee and Councilmember Turgeon agreed with the suggestion. In response to a question from Councilmember Turgeon, Administrator Dawson stated Item S.b was regarding the proposal by the SLMPD for 2007 to add two part-time community services officers (CSOs) to provide additional services, and would likely be proposed again for 2008. In response to a question from Councilmember Turgeon, Mayor Lizee thought whenever there was roadway construction the residents were approached regarding the desire to have a trail and was it feasible to do so. Turgeon referenced the Smithtown Road and Trail situation that had occurred. Lizee suggested a policy for submitting and processing trail requests could be adequate. Turgeon clarified she was not suggesting trail planning be added to the prioritization list. Director Brown suggested that the question of adding trails be added to any roadway feasibility study, but that would not imply a trail would be created. Councilmember Callies stated it was important to remember that creating new trails requires on-going maintenance of those trails. CITY OF SHOREWOOD WORK SESSION MEETING February 12, 2007 Page 3 of 6 Administrator Dawson stated he would update the 2007 Goals and Priorities list with the suggested changes, and he would distribute the updated list to Council for each member to categorize each item on the list as a high, medium or low priority and submit that information back to him. 3. FINANCIAL REPORTING AND EXPENDITURE DISCUSSION Administrator Dawson explained at the January 8, 2007, Council meeting, Councilmember Woodruff presented two motions related to City financial reporting and expenditures. Council then decided to move the discussion of the items to this work session so that staff could provide information regarding the motions. He stated the meeting packet included descriptions of the City's current financial practices, which included a draft internal controls policy and the City's investment policy, and its budgeting process. Also included in the packet was a report showing General Fund budget versus actual revenues and expenditures for 1996 - 2006. The report showed that the City had generally spent within the approved budget, and when it did exceed budgeted expenses it was the result of unanticipated one-time events which Council had approved in advance. Dawson then explained department managers were expected to manage to the bottom line. He also explained that City finances were not organized on a monthly work-plan of expenditures or revenues; therefore, the request for pre-approval of spending in excess of 95% of the monthly budget amount would prove extremely difficult. He noted the City received the majority of its revenue twice of year when Hennepin County distributed the property taxes it collected; therefore, monthly reports would show a potential deficit particularly in the early months of the year. Dawson stated the intent of this discussion was to determine what financial information Council wanted to receive on a regular basis. Dawson stated that a few years ago monthly reports to the line-item level were provided to Council, but the volume of the reports was considered excessive at the time. Similar monthly reports could be prepared if that was what Council preferred. Director Burton submitted a sample of the large financial monthly report package that had at one time been prepared for Council. She also submitted samples of summary reports that could be generated on the financial system. She stated the adopted budget was the legal document the City used to manage its spending. In response to a question from Councilmember Callies, Director Burton explained the verified claims list was included on the consent agenda for approval at each regular Council meeting. Most of the items on the list had been pre-approved through the budget process, and many of the larger items for projects had been pre-approved through the bidding process. Councilmember Woodruff stated the background information provided in the meeting packet was very helpful. He thought the adopted investment policy and the draft internal control policy appeared to be sound policies. He stated the draft internal control policy should be placed on a future Council meeting agenda for consideration of adoption. His concern was with the ongoing visibility of the City's current financial state to Council. Mayor Lizee stated if Council was to consider requesting that it receive a copy of the extensive monthly financial report, she suggested that Council consider the amount of staff time it would take to prepare and compile the reports prior to committing to that direction. Director Burton explained that the reports could be generated on the financial system without a great deal of effort; she did not recommend the reports be included in the meeting packets because of copying costs for 20 - 25 packets. CITY OF SHOREWOOD WORK SESSION MEETING February 12, 2007 Page 4 of6 Mayor Lizee and Councilmember Turgeon stated they would be satisfied receiving a summary report. Councilmember Woodruff distributed copies of two sample monthly financial reports he prepared showing budgeted versus actual expenditures - one for the General Fund down to the department level, and the other for a department down to the line item level. The reports also included a graphic display of the monthly versus actual versus budgeted expenditures. Director Burton stated that one of the sample summary reports she distributed provided department level spending to date, the percent of the total budgeted amount that had been spent, and a variance amount. Woodruff stated both his sample reports and Burton's sample summary reports were examples of traditional financial reports. Councilmember Callies questioned how Councilmember Woodruffs reports would be helpful to Council. She stated as a Councilmember it was her responsibility to have oversight of the budget; she did not think it was her responsibility or any councilmember's responsibility to oversee line-item specific spending at the department level. Woodruff stated he did not advocate the later. Councilmember Woodruff stated based on the 10-year General Fund report presented, the City generally under spent its budget; but under-spending the budget implied the property owners were over-taxed. If during the course of a fiscal year it appeared that expenditures would be under budget (based on information provided in reports similar to those he prepared), Council would have the opportunity to decide if it wanted to use the excess funds for additional projects. Administrator Dawson stated from his vantage point the goal would be to exceed budgeted revenues slightly and to spend slightly less than what was budgeted. The 10-year General Fund report shows that to be the City's track record. He then stated there are certain expenses which do not occur until late in the fiscal year. Administrator Dawson suggested it may be appropriate to establish what the City's Reserve Fund balance policy should be. If the goal was 55% then Council could decide if it wanted to use any funds in excess of 55% for one-time projects the next year; and in return if the 55% goal was not achieved then Council should implement a plan to reach that goal. Councihnember Woodruff stated he did not disagree with Administrator Dawson's comments. He did think it was important for Council to periodically review the City's performance against budget. Councilmember Woodruff stated he would like to see the Sample # I two-page summary report submitted on a monthly basis. Director Burton stated the currently financial system does not have the capability to produce graphic representations, and she was not sure about the graphical reporting capabilities of the new financial software system scheduled to be installed later this year. Councilmember Wellens stated he would like to see comparisons of the City's financial information to other cities' information on the City's web site and/or newsletter in graphical form so residents could see how the City was performing. Councilmember Woodruff stated the intent of his motion he presented at the January 8, 2007, meeting to limit spending to 95% of the budgeted amount was intended to reduce spending and allow that last 5% to be used for additional projects. He stated he wanted Council to have more control over the money paid by the taxpayers, and to more closely direct the spending ofthat 5%. Councilmember Callies stated Council provided direction on spending throughout the budgeting process. She was not sure what Councilmember Woodruff was trying to accomplish by the 95% maximum. She stated she interpreted his motion to mean the previous Council should have adopted a budget 5% less than what it did. She stated the 2007 budget preparation process was deliberate and thorough, and she did CITY OF SHORE WOOD WORK SESSION MEETING February 12, 2007 Page 5 of6 not think it was appropriate to reduce the 2007 adopted budget at this time. She then stated she had found the budgeting processes over the last few years to be very beneficial, and during each of them there were a number of work sessions held to discuss the elements of the budget. Councilmember Turgeon stated she interpreted Councilmember W oodrufr s request to say if the City under spent its budget then it should tax property owners such that there were no excess funds. Mayor Lizee stated that during the budget process Staff and Council identifY potential projects and Staff provides initial estimates of the costs for the projects. She stated she was confident in the Stafrs skills at preparing the budget. For Council to now decide to limit spending to 95% of the budgeted amount unless there was Council pre-approval was, from her vantage point, too much micro-management. She stated the 2008 budget process could be considered for modification. Discussion ensued with regard to the appropriateness of limiting spending to 95% of the budgeted amount and what the actual motion said. Councilmember Woodruff distributed and explained a document he prepared regarding his approach to bottom-up budgeting. He advocated establishing goals and priorities for 2008 during January 2007 - June 2007. During June Staff would prepare draft budget in two parts: I) maintenance of status quo with adjustments per Council's direction; and 2) by individual additional goals in Council's plan. Administrator Dawson stated when Staff prepares the draft budget during June - July it identifies potential major projects/programs that could be considered for the upcoming year. Council adds to or removes from that list as it deems appropriate. Director Burton stated the Staff presents the proposed Capital Improvement Plan (a five-year plan) during that same timeframe, and that includes a list of projects to be considered. Councilmember Callies stated there are different approaches to preparing a budget. It may be worthwhile for Councilmember Woodruff to experience the current budget process for effectiveness. She stated the current process addresses some of the same items identified in Woodrufrs approach, albeit it may be done differently. Councilmember Woodruff stated if the budgeting process would be changed for 2008, then the effort to change the process should begin now. Mayor Lizee stated it may be beneficial for Councilmember Woodruff to participate in the existing budget process (which occurs throughout the year), and then recommend changes based on his experience. Councilmember Callies stated it would be more helpful to her if Councilmember Woodruff would suggest areas for improvement while the process was occurring so she could better understand the purpose of his recommended changes. There was discussion with regard to 2008 goals, and the fact that many of goals identified to date were long-term goals and span into 2008 and beyond. There was discussion regarding when goals and priorities for a fiscal year should be finalized - should the task be completed by fiscal-year end, should it be finalized by the incoming Council, etc. Many of the goals and priorities are an outcome of the budgeting process. Council member Wellens stated a major part of the budget expenditures were reoccurring. CITY OF SHOREWOOD WORK SESSION MEETING February 12, 2007 Page 6 of6 Councilmember Callies stated that during the development of the C.I.P., the enterprise budgets, and the operating budget goals and priorities were identified. Mayor Lizee stated projects are identified as an outcome of goals and priorities discussed during the budgeting process. Administrator Dawson stated during the budget process items that are deemed important to do are identified as well as areas of change for the next fiscal year. Councilmember Callies stated when Councilmembers have significant items they would like Council to consider (such as Councilmember Woodrufrs motions at the January 8, 2007, meeting), it was important that Council had the opportunity to discuss the item in a work session setting prior to considering a motion on the item. Mayor Lizee agreed with Callies comments. Councilmember Wellens stated that was why he requested discontinuation of liquor store operations be placed on a future work session agenda. Councilmembers should contact Administrator Dawson ifthey want an item placed on a meeting agenda. Councilmember Woodruff stated he was satisfied that Sample Report #1 would satisfy his request for information, and he would request review of more in-depth information if he thought it was required. He also stated he would drop his request for a 95% spending cap. In response to a comment from Councilmember Wellens, Administrator Dawson explained the General Fund was used to cover operating expenses, not significant capital projects. Mayor Lizee stated it was Council's responsibility to determine what services they would want to reduce to achieve reduced General Fund expenditures. 4. OTHER There was no other business presented this evening. 5. ADJOURN Wellens moved, Callies seconded, Adjourning the City Council Work Session Meeting of February 12,2007, at 10:31 P.M. Motion passed 5/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder C~W Christine Lizee, Mayor