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082707 CC WS Min CITY OF SHOREWOOD CITY COUNCIL WORK SESSION AUGUST 27, 2007 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. MINUTES 1. CONVENE CITY COUNCIL WORK SESSION Mayor Lizee called the meeting to order at 6:02 P.M. A. Roll Call Present. Mayor Lizee; Councilmembers Callies, Turgeon, Wellens, and Woodruff; Administrator Dawson; Finance Director Burton; Planning Director Nielsen; Director of Public Works Brown; and Engineer Landini Absent: None B. Review Agenda Turgeon moved, Woodruff seconded, Approving the Agenda as presented. Motion passed 5/0. 2. DEER MANAGEMENT Administrator Dawson stated Bob Whiting, President of Metro Bowhunters Resource Base (MBRB), was present this evening to answer any questions Council may have regarding a proposed plan for a deer management program prepared by Director Nielsen and Mr. Whiting; the plan also included input from the Public Works Department staff. Dawson then stated if Council were to approve the concept plan at this meeting, Staff would prepare a contract for Council to consider at its September 10, 2007, regular meeting. Director Nielsen stated the original intent of the deer management program was to limit the effort to public land this year. There had been four property owners (one was the Minnetonka Country Club property) that requested their properties be included in the program; some of those properties were located in areas that had high levels of deer traffic. Administrator Dawson stated the City would coordinate any requests from private property owners. The names and locations of the property owners would be forwarded to the MBRB. Mr. Whiting made the following clarifications and comments: ~ The minimum property size the MBRB would prefer to conduct a removal effort was two acres. ~ The MBRB had experienced three accidents during its thirteen-year tenure of participating in removal efforts; those accidents were a result of archers falling out of their stands. ~ The archers did not shoot unless they had a perfect shot; they would be shooting down from their stands. The archers had the proficiency to place six of seven arrows in a four- inch circle at 20 yards. ~ The removal efforts would be limited to MBRB members who had a sharpshooter rating. CITY OF SHORE WOOD WORK SESSION MEETING August 27, 2007 Page 2 of 7 ~ The deer stands that would be used were portable and unobtrusive. ~ Oakdale was most similar type urban area to the City's proposed locations that the MBRB had conducted a removal program in. ~ If a deer that had been shot went on to resident's property, the police would contact that resident requesting the MBRB access the property to remove the deer. ~ The majority of the complaints that MBRB was aware of in previous efforts were from residents that were not aware of the removal effort. ~ The deceased deer would be removed from the properties on a cart that was pulled manually. ~ During an eight-person removal effort in Oakdale, thirteen deer were shot the first year and ten the second year. ~ The MBRB would like the City to identifY a location where the removed deer could be dressed; it was not an absolute requirement. ~ The deer would be removed during the regular hunting seasons; therefore all removed deer would be tagged. ~ The MBRB required a thirty-day lead time before it could conduct a removal effort. ~ Deer stands would be put in place on the Friday afternoon preceding a removal effort. The archers would be on site from early Saturday morning to mid-day; they would leave the area and return early Saturday evening for a short time. The same schedule would be followed on Sunday. The stands would be removed on Sunday. ~ Based on past experiences, the City should expect to receive numerous phone calls from residents who would like to participate in the removal effort. It was too late to apply for membership in the MBRB for this year's effort; they could apply in future years. ~ If firearm deer hunting was allowed in areas in close proximity to the areas selected for the removal efforts, the archers would need to wear blaze orange. If not, blaze orange was not required. Director Nielsen made the following noteworthy clarifications and comments: ~ The archers cannot shoot at anything but deer. ~ Public Works staff had suggested Freeman Park be considered for a removal program. Three Rivers Park District had posted signs advising users of its parks of the dates and times removal efforts would be conducted; it found it too difficult to close parks during those times. Staff thought it was not practical to close Freeman Park down during the removal effort. ~ The City-owned properties selected for the removal efforts would more likely be located on the west half of the City. The Minnetonka Country Club would also be a removal area. ~ A property owner near Christmas Lake was interested in a removal effort on her property; and she thought there was another property owner in the area with a prime site that may also be interested. The cemetery on the west end of Smithtown Road was also available for a removal effort. ~ The objective of the removal efforts was to remove as many deer as possible. ~ The removal efforts would occur during October, November, and possibly December (not necessarily each weekend). There was ensuing discussion regarding notifYing residents of the removal efforts. In addition to a brief notification in the September Shore Report, there was consensus to provide information about locations and dates in the October Shore Report, on the City's web site, and in a mailing to the private and property owners whose properties were adjacent to the removal areas. CITY OF SHOREWOOD WORK SESSION MEETING August 27, 2007 Page 3 of7 There was ensuing discussion regarding inclusion of private properties in the removal efforts, and if they were what the minimum size of the properties must be. Mayor Lizee suggested that the removal efforts be limited to the City-owned properties and private properties suggested by Staff and Mr. Whiting. Councilmember Woodruff suggested the City be added to the MBRB insurance policy. Mr. Whiting stated he would check on the cost. Council directed Staff to identify a location where the deer could be dressed. There was Council consensus to give concept approval to the proposed plan for a deer removal program. There was also consensus to follow the same special archery deer removal rules used in Oakdale. 3. SOUTHSHORE CENTER PROPOSAL Administrator Dawson stated prior to the August 13, 2007, meeting of the Southshore Center working group all five cities' councils had approved the concept for 2008-only funding arrangements between the cities and the Friends of the Southshore Center. He explained in 2008, the five cities would pay the Friends an amount totaling $17,600 (each city's portion would be based on its share of cost for the construction of the building). The cities would also proportionally match up to $25,000 in new net funds raised by the Friends. The total commitment could be as high as $42,600; the City's portion could be as high as $21,300. The Friends must use the funds for building maintenance or they must be placed in its building reserve fund. Dawson noted that although the Deephaven Council approved the 2008-only funding arrangements, the release of any funds for interim funding would be contingent upon changes to the "Shorewood Option". Dawson summarized the provisions of Section 6 of the 1996 Cooperative Agreement: a) Shorewood would have the right of first refusal and would pay the other cities back their initial contribution to the building (a total of $300,000); b) if a third party purchased the facility, the cities would share proportionately in the proceeds of the sale; and c) if Shorewood took possession of the building and subsequently sold it to another party within ten years, the other cities share proportionately in the proceeds of the sale. He commented item "a" above was often referred to as the "Shorewood Option". Dawson then reviewed the changes Deephaven had proposed to Section 6 of the Cooperative Agreement; the changes were specified in the draft agreement for interim funding prepared by Deephaven. The following changes would replace Items a, b, and c in the original Section 6 which were summarized above: "a) Any of the participating Cities may purchase the Center by repayment to each of the remaining Cities an amount equal to their original capital contribution plus a rate of return of 5.0% per year on their original capital contribution dating from July 1, 1996; and b) In the event the Center is sold to any entity other than one of the participating Cities, the proceeds of the sale shall be allocated and paid to each City proportionate to its original capital contribution". Dawson stated the cities of Excelsior, Greenwood, and Tonka Bay had not expressed any concerns with the other conditions stipulated in the draft interim funding agreement. Those cities were awaiting Shorewood's reaction to the proposed changes to the "Shorewood Option". Dawson noted a commitment to an interim funding agreement must be reached by all five cities prior to a Senior Community Services (SCS) Board meeting scheduled for September 10,2007, for the SCS Board to continue its staffing/programming services through November and December 2007. Administrator CITY OF SHORE WOOD WORK SESSION MEETING August 27, 2007 Page 4 of7 Dawson commented that there had not been discussions regarding what would happen if any of the cities did not commit to the interim funding proposal. Councilmember Woodruff expressed concern that the 5 percent per year valuation increase specified in the proposed changes did not specifY a maximum amount; therefore, it could be possible that the amount the purchasing city would have to pay the other cities would be greater than the value of their combined proportional amount of the appraised value of the building. He suggested it be changed to 5 percent per year or the appraised value of the building, whichever was less. He also expressed concern that the proposed changes did not give the City credit for the land it donated to build the Center on; the changes should be modified such that the City could recoup the value of the donated land should there be a change in ownership of the building. Councilmember Callies questioned if it would be possible to separate the value of the building and the value of the land if the Center were to be sold. She stated the time-value of money may not amount to 5 percent per year at the time of sale. Administrator Dawson clarified based on the discussion at the August 13, 2007, Southshore Center working group meeting, there was general understanding the change to the "Shorewood Option" would likely have been "The City of Shorewood may retain the Center by repayment to each of the remaining Cities at closing an amount equal to their original capital contribution percentage based on the value of the building, exclusive of the value of the land." The 5 percent per year change and the lack of credit for the land had not been discussed; those changes were included in the proposed draft funding agreement prepared by Deephaven. Councilmember Callies questioned why changes to the Cooperative Agreement were required as part of the interim funding agreement. She stated the funds that were being committed to and the uncertainty of the Center did not warrant a need for the proposed changes as a condition of the interim funding agreement. She also stated it would be more appropriate to change the Cooperative Agreement at such time that the on-going funding for the Center changed. She then stated that from her vantage point it was opportunistic to require a change to the 1996 Cooperative Agreement agreed to by the five cities as a condition of interim funding. She clarified she supported the proposal for interim funding; changes to the Cooperative Agreement could be considered at another time. Councilmember Wellens stated he shared Councilmember Callies's perspective. He stated from his vantage point Deephaven structured the interim funding agreement such that the cities (in particular Shorewood) would either agree to the changes in the Cooperative Agreement or there would not be any interim funding in 2008 for the Southshore Center; it was almost as if the City was being "blackmailed". Mayor Lizee stated the issue at hand was interim funding; changes to the Cooperative Agreement were not relative to that issue. Councilmember Turgeon stated she did not think the discussion about changes to the "Shorewood Option" by the South shore Center discussion group had been contentious. From her vantage point, it was a benefit to the City to have the stipulation regarding proceeds from future gain removed as part of the proposed changes. Council member Wellens stated he did not think the removal of that stipulation had any value to the City as he did not envision the City selling the property to a private company. Turgeon then stated she did not have any concern with the absence of a stipulation stating the City would receive credit for the land it donated. She thought the changes proposed by Deephaven were fair and equitable; it was not fair to ask the cities to continue to invest in the building without a return on that investment. CITY OF SHORE WOOD WORK SESSION MEETING August 27, 2007 Page 5 of7 Mayor Lizee stated the five cities invested in the community when the Southshore Center was built. The topic at hand was interim funding for 2008; that would allow the cities time to discuss how the space could best be utilized to serve the community. Councilmember Turgeon stated from her vantage point SCS was the only group holding anyone at threat. Councilmember Woodruff stated it was his understanding that if the five cities would commit to interim funding for 2008 then SCS would continue to provide services in November and December 2007 at its expense. If four of the five cities agreed to the interim funding proposal, then that proportionate level of funding could be provided. He questioned if SCS would still provide the services in November and December if all five cities did not agree to the interim funding. Administrator Dawson stated Councilmember Woodruffs understanding of SCS's commitment to provide services through the end of the year and the conditions of that commitment was correct. SCS would also provide services in 2008, and it would be paid by the Friends for providing those services. He stated to-date there had not been discussions regarding services if less than five cities provided funding. Councilmember Turgeon stated SCS was not committed to provide services at its cost beyond the end of September at this time. Administrator Dawson clarified that SCS had currently committed to provide services through the end of October 2007. He related SCS had stated it did not have the resources to provide services in November and December 2007; that was contingent on a commitment by the cities for 2008 interim funding. Councilmember Turgeon commented there was no difference between the potential commitment by SCS to provide services in 2008 and possible a commitment by Minnetonka Community Education to do the same. Councilmember Callies stated she was not in support of the proposed changes to the Cooperative Agreement at this time. She then questioned a condition of the interim funding agreement which stated if the Friends incurred a funding shortfall in 2008 it could not use the existing reserves of the Friends for covering the shortfall (the reserves were dedicated for building maintenance). Administrator Dawson clarified that the Friends would have to adjust the level of services provided to match what it could fund. Callies questioned if that seemed appropriate if there were more than adequate Friends reserve funds. Councilmember Woodruff stated the cities had committed to funding the maintenance and support of the facility, and the Friends had committed to funding services. Councilmember Wellens stated if the City chose not to approve any changes to the Cooperative Agreement, Deephaven could reconsider its position once it understood its demands were prohibiting the commitment of all five cities to interim funding. Councilmember Turgeon stated Deephaven's condition for changes to the "Shorewood Option" should not be a "deal breaker"; she did not believe Deephaven was being unreasonable. She also stated the proposed changes were not significant. Councilmember Woodruff stated he thought the interim funding agreement (which specified changes to the Cooperative Agreement) was fair; but he could either support or reject the condition regarding the Shorewood option. There was consensus to add this item to the Regular Council meeting agenda that evening to take action on it the item. Councilmember Turgeon stated being each Councilmember had stated their position on CITY OF SHOREWOOD WORK SESSION MEETING August 27, 2007 Page 6 of7 this item it was appropriate to take action on the item at the regular meeting; so that the City's official position could be conveyed. Mayor Lizee recessed the work session to a City Council Regular meeting at 6:57 P.M. Mayor Lizee reconvened the work session at 8:23 P.M. 4. 2008 BUDGET SUMMARY Administrator Dawson stated Council had been provided a document summanzmg the changes it recommended at its August 20, 2007, work session. As a result of those changes, the tax levy contemplated for 2008 would be a 9.34 percent increase over the adopted 2007 budget. He commented that the 2008 proposed tax levy must be certified by September 15, 2007; therefore, he hoped any additional concerns Council had about the proposed budget could be resolved at this meeting. Director Burton stated she had added the staffing allocations in the Enterprise Fund budgets to Councilmember Woodruffs staffing spreadsheet per his request. That document was distributed to Council. She stated the Enterprise staffing allocations would be reviewed more closely in upcoming months. Woodruff thanked Burton for her efforts. Councilmember Woodruff stated at the August 20 work session he had been in error when he thought 2008 was the first time staff was allocated to the Enterprise budgets. He later realized that been done in previous years. He did think the analysis was still valuable. He requested the $20,000 added to the Administrator's budget for potential staff performance salary adjustments also be added to the analysis. He explained once that amount was factored in, total salaries increased 1.1 percent over 2007 budget and that was not much of a change. He noted that if the 0.5 position budgeted for Finance in 2007 was removed the increase would be slightly more. He then explained the total salary and benefit increases over 2006 actual was approximately 13 percent; that increase included market rate salary adjustments. He stated he was reasonably comfortable with the staffing cost increases for 2008. Woodruff then stated he thought the reason for the $200,000 increase to the transfer to Street & Roadways was to fund the same level of "slurry" coating as could have been done with $445,000 previously budgeted for sealcoating and overlays. Councilmember Woodruff questioned how the proposed budget increase could result in a tax levy of9.34 percent, yet residents would pay less for the City portion of their property tax (based on the tax impact chart distributed to Council). Director Burton stated the chart was based on a few assumptions: there would be no change in the property values; the chart was based on the City portion of the property tax which was approximately 25 percent; and the very preliminary information from Hennepin County on the total estimate market value City wide and that the City's total estimated net tax capacity had increased (the increase was a result of new construction, the tear down and rebuilding of houses, and the increase valuation of existing properties). She emphasized the figures used were very preliminary. She then stated based on those numbers it was estimated that the City portion of the property tax would result in a slightly lower tax rate for 2008; that rate was used to prepare the chart distributed. Administrator Dawson commented if a property value increased 6.15 percent for 2008 there would be no increase in the City portion of the property tax in 2008 for properties valued at less than $500,000. Councilmember Woodruff stated he had asked Director Burton what amount of General Fund Reserves would have to be used to reduced the tax levy increase to 5 percent; it was purely a question of what possibilities existed to reduce the proposed tax levy. He stated he would support certifYing the proposed CITY OF SHORE WOOD WORK SESSION MEETING August 27, 2007 Page 7 of7 budget with the understanding that there would continue to be on-going discussions regarding the 2008 General Fund budget and the Enterprise budgets. Director Burton stated the draft policy regarding the General Fund balance (which was discussed at the August 6, 2007, work session) suggested the City maintain a balance of 55% - 60%, the reserves would be able to handle unexpected expenditures or emergencies. She explained if the 2008 funding for the Public Works addition were to be funded out of General Fund reserves for an amount of $170,000 and with the budgeted transfer of $100,000 from the reserves to the Streets and Roadways budget, the proposed tax levy would be approximately 5.47 percent increase over 2007; the undesignated fund balance would be reduced to approximately 55 percent. To bring the levy down to 5 percent would increase the $170,000 transfer to $190,000. The transfers of $100,000 and $190,000 from the General Fund reserves would reduce the undesignated fund to 53 - 54 percent of the 2008 General Fund proposed budget, and that would be the low end of what was recommended in the policy. She stated she did not think it would be prudent to reduce the balance to less than 55 percent; and reserves should be used for one-time purposes. Administrator Dawson stated the policy also stated if the undesignated fund balance fell below 55%, then that balance should be restored by budgeting no more than two percentage points annually until the 55% level was attained. The City could increase future tax levies in order to rebuild the undesignated fund balance to a minimum of 55 percent. Councilmember Callies questioned what Councilmember W oodrufr s reason was for maintaining a tax levy increase of approximately no more than 5 percent. Woodruff stated the residents reacted negatively to increases of 7 - 13 percent. Callies stated if the property owners' City portion of their property tax would not increase, she saw no reason to use General Fund reserves to reduce the tax levy. Director Burton commented that Staff would prepare a recommendation for Council regarding the use of the remaining funds from the 1993 Improvement and Refunding Bonds after funds were used to payoff the remaining debt service obligation due in 2008 for the Southshore Center. That recommendation would occur when the 2008 General Fund Operating Budget was approved in December 2007. Director Brown stated the Public Works addition was requested for ergonomic and convenience reasons; he would not be able to demonstrate a break-even cost on the investment. 5. OTHER There was no other business for discussion. 6. ADJOURN Wellens moved, Turgeon seconded, Adjourning the City Council Work Session Meeting of August 27,2007, at 8:44 P.M. Motion passed 5/0. Qk~ L-:~ Christine Lizee, Mayor RESPECTFULLY SUBMITTED, Christine Freeman, Recorder