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080408 CC WS MinCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, AUGUST 4, 2008 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. Mayor Lizee called the meeting to order at 6:00 P.M. A. Roll Call Present: Mayor Lizee; Councilmembers Bailey, Turgeon, Wellens and Woodruff; Acting Administrator/Director of Public Works Brown; Finance Director Burton; Planning Director Nielsen; and Engineer Landini Also Present: Deputy Clerk Panchyshyn and soon-to-be City Administrator Heck Absent: None B. Review Agenda Councilmember Bailey requested Item 2 be discussed after Item 3. Councilmember Wellens requested Bayswater Road be added to the agenda after Item 4. Wellens moved, Woodruff seconded, approving the agenda as amended. Motion passed 5/0. 2. SLMPD 2009 BUDGET This was discussed after Item 3 on the agenda. Mayor Lizee stated SLMPD Chief Litsey had provided Council with two alternatives for a revised 2009 SLMPD Operating Budget and a cover memorandum. She explained at its July 29"' meeting, each Coordinating Committee member highlighted the discussions that occurred and actions taken at their respective city council meetings when the SLMPD budget was discussed. Because the Shorewood Council took no specific action and provided no formal direction and because it seemed the focus of its concern was on the additional officer (there was little discussion about the baseline budget increase or the additional funding for technology), the Committee directed Chief Litsey to prepare two alternative budget revisions. Alternative 1 includes a baseline budget plus an additional $10,000 in technology funding. The technology is needed for the new record management system. Alternative 2 (the baseline budget) removes the additional technology funding. The Committee continues to solidly support the original proposed budget as directed. Because the majority of the Council was in opposition to the costs associated with hiring an additional officer, the Committee advocates Alternative 1. Lizee then explained that in Alternative 1 the budget increase is lowered to 6.7 percent and the City's contribution to annual operations would be reduced by $25,500 from the original proposed budget; this decrease is the result of removing all costs associated with hiring an additional patrol officer. In Alternative 2 the budget increase is lowered to 6.1 percent and the City's contribution to annual operations would be reduced by $30,500 from the original proposed budget; this decrease is the result of CITY OF SH®12EV0'O®D W®12K SESSION MEETING MINUTES August 4, 2008 Page 2 of 9 removing all costs associated with hiring an additional patrol officer and the additional $10,000 in funding for technology. Lizee stated if the Council cannot support either Alternative I or Alternative 2, it is likely the budget would revert to the default provisions specified in the SLMPD Joint Powers Agreement. There was ensuing discussion about the default provisions in the JPA. Councilmember Woodruff stated he would not support an increase over 6 percent. Councilmember Wellens stated he would support the default which was 3.9 percent or the CPI. Mayor Lizee clarified Council was not taking a vote this evening, but it did need to provide direction to Chief Litsey. She stated the budget is lean. She did not think it was realistic to expect a 3.9 percent increase when there are there are increases to items outside of anyone's control (e.g., contract wages, insurance, pension, motor fuel, and ammunition). The alternative budgets presented have increases of either 6.7 or 6.1 percent. If neither is acceptable then it would likely revert to the default provisions in the JPA. Councilmember Turgeon stated Cliief Litsey has the option to reduce the budget to 6 percent. She then stated she had said a 6 percent increase when the budget was last considered and she hasn't changed. She then stated from her vantage point she has received different amounts for what the additional patrol officer would cost; and that the reason the budget has increased so much was because the SLMPD lost $50,000 in State aid [a grant from the Minnesota Financial Crimes Task Force for its participation in the MFCTF]. Mayor Lizee clarified the state aid was reimbursement for the salary of investigator participating who has retired. Turgeon stated she understood the cost of an additional officer to be $80,000. Councilmember Turgeon stated she would not support an increase in excess of 6 percent. Acting Administrator Brown stated in order to clarify the provisions in the JPA he will read an email response he sent to Councilmember Wellens on July 27, 2008, regarding budget provisions in the JPA, which Wellens forwarded to Councilmember Bailey. The email was as follows. Marty. Attached is a PDF of the JPA and all the amendments that have been filed. The "Original Agreement" Page 5 first paragraph states: "The maximum annual budget shall be set by each city determining the number of dollars it proposes to pay for police protection. This figure shall be converted to percentage of budget contribution and the lowest total budget so computed shall thereupon be the established budget for the calendar year. If no determination is reached on budget matters by September IS" of each year then the total budget amount shall continue at the previous year's level. HOWEVER, this has been revised by the agreement that set the fixed percentages, passed in 1996. While somewhat complicated the amendment states (page 29 of the document). "Effective January 1, 2007, the annual dollar contribution of each of the Parties toward the Approved Annual Operating Budget shall be determined by applying the allocation resulting from the 2006 Cost Allocation Arbitration Proceeding. CITY OF SHOREWOOI} ~VORIC SESSION MEETING MINiJTES August 4, 2008 Page 3 of 9 The Approved Annual Operating Budget for each year shall be determined in advance by unanimous agreement of the Parties. If the Parties do not unanimously agree on the Approved Annual Operating Budget by September IS` of each year, the amount of the previous year Approved Annual Operating Budget will be increased by the lesser of the following to arrive at the Approved Annual Operating Budget a. The increase in the July Minneapolis/ St. Paul Consumer Price Index for All Urban Consumers CUPI over the previous 12 month pe~°iod or b. The percentage increase in the most restrictive statutory levy limit applicable to the budget year placed on any of the Parties over the levy limit for that Party for the prior year c. In the event that a or b decreases the operating budget shall remain the same The above formula applies only to operating expenses not governed by wage or benefit increases required by any union contracts. All Parties must pay wage or benefit increases as required by union contracts other expenses can have ceilings applied per the above formula. For purposes of determining the 2007 Approved Annual Operating Budget the previous year Approved Annual Operating Budget referenced above shall be $1,510,506. Adoption of an Approved Annual Operating Budget pursuant to this subdivision shall entitle each Party to full and complete SLMPD services funded by the SLMPD annual operating budget and preclude delivery of multiple tiers or levels of services to Parties. Parties may contract with the SLMPD for the delivery of supplemental services delivered by separately dedicated personnel outside of the approved budget as mutually agreed by all Parties. Agreement to provide such supplemental services shall not be unreasonably withheld Not withstanding the foregoing all expenses related to the planning financing and construction of a new police station facility for the SLMPD shall be paid annually on an ad valorem basis. Facility expenses shall include but not be limited to architectural expenses land acquisition expenses site preparation expenses construction expenses and expenses related to procurement and installation of furniture equipment and fixtures for the new facility Councilmember Woodruff stated it is his understanding he and Councilmember Turgeon would support a maximum of a 6 percent increase, and Councilmember Wellens would support an increase of the default plus the union contract increase. Councilmember Bailey stated his position was the same as at the July 28, 2008, Council meeting; a 6 percent increase was his upper limit. Councilmember Woodruff stated from his vantage point in the alternative SLMPD budgets there were lots and lots of places where there is discretionary spending. Mayor Lizee stated there were numerous meetings where the budget was discussed and Councilmember Turgeon participated in them. The baseline budget is the recommendation of the SLMPD Coordinating Committee and Operating Committee. The original proposed budget was passed by three member cities' councils, and the Shorewood Council did not provide any formal direction. It appears that a 6.1 or 6.7 percent increase was not acceptable to the other four Councilmembers. She will convey their sentiments to Chief Litsey. She noted there was no Coordinating Committee scheduled before the September I S` budget approval deadline. CITE' OF SHOREWO®D W®RIZ SESSION 1l~IEE'rING IVIINU'rES August 4, 2008 Page 4 of 9 Councilmember Woodruff stated it would be a shame to revert to the budget default provisions in the JPA without having the member cities' councils have an opportunity to vote on budget with a lower percent increase. Reverting to the default leaves the cities in an unknown situation. He requested Mayor Lizee inform Chief Litsey and the Coordinating Committee that three of the flue Shorewood Councilmembers are against reverting to the default provisions. Mayor Lizee stated all of the other Councilmembers are against any increase over 6 percent (the baseline increase is 6.1 percent). Discussion moved to Item 4 on the agenda. 3. GENERAL FUND DRAFT 2009 BUDGET This was discussed after Item 1 on the agenda. Director Burton stated at its June 23, 2008, work session Council directed Staff to prepare the first draft of the 2009 General Fund Operating Budget with a zero percent tax levy increase over the adopted 2008 budget. The first draft of the budget, which is in very rough form, and a budget overview document had been distributed to Council. Staff believes the budget is on target to achieve the objectives specified by the Council. She explained Council needed to adopt anot-to-exceed property tax levy by September 15, 2008; the last Council meeting prior to that deadline was September 8, 2008. She commented the enterprise budgets will be prepared and discussed in the fall. Burton noted the Legislature imposed local levy limits on cities with populations over 2,500 for 2009 - 2011.The Pay2009 levy limit allows for up to a 3.9% inflationary increase in the base levy over the 2008 base levy. The levy limit law allows for "special levies" (such as debt service on bonds) which are added to the base levy. She stated preliminary information from Hennepin County on the City's estimated market values indicates an increase in the range of 4% for Pay2009; the City has not received information regarding the change in tax capacity or taxable value. Director Burton reviewed the 2009 budget revenue highlights. - The budget contemplates a base tax levy of $4,056,917. It reflects a 0% increase from the 2008 base tax levy. The special tax levy (for debt service for the public safety buildings and the bonds for the City Hall renovation) is $635,670, compared to $555,078 in 2008. The total proposed 2009 tax levy is $4,692,587; a 1.75% increase over the Pay2008. - Transfers out to Capital Improvement Funds are programmed at $860,000. This amount is reduced from 2008 budgeted transfers of $945,000, but greater than transfers of $670,000 for 2007. - The budget includes using about $151,000 (4%) of General Fund reserves, in keeping with the General Fund Reserve Policy. This use of reserves should result in an anticipated General Fund balance of $3.5 million. - Other City revenue sources are expected to remain generally unchanged, including building permit revenue, license and permit revenue, and miscellaneous revenue (which includes interest income). Fine revenue was reduced by $10,000. No transfers into the General Fund from the Liquor Fund are budgeted. Director Burton reviewed 2009 budget expense highlights. - No staffing changes are anticipated. Budgeted salaries reflect a 3% economic adjustment. There is no budget allocation in this budget draft for merit increases; the 2008 adopted budget included $20,000. The AFSCME contract (which expires December 31, 2009) calls for 2% increases each in January and July. Total insurance CITY OF SHOREWOOD WORK SESSION MEETING MINUTES August 4, 2008 Page 5 of 9 premiums are estimated to increase 10%; the City's payment of up to $756 per month of a regular full-time employee's insurance costs is proposed to be increased to $800 per month. This may change when renewals are completed in the fall. - Fuel prices are expected to continue to be high. - There are reductions in elections because 2009 is not an election year. - The budget draft uses an estimated total police expenditure amount of $1,211,908, which is a 9% increase over the 2008 budgeted amount. This amount will be adjusted once the SLMPD 2009 Operating Budget has been approved. The expenditure for Mound fire service will be reduced by approximately $3,000 based on recent information. - Assessing services from Hennepin County were increased $3,000. - The budget does not include funding for replacement computers for four employees scheduled for replacement next year. The estimated cost for those replacements is $10,000. The following clarifications and comments were made with regard to revenues. - The City is going to remind landlords and tenants of the need to have a rental permit for rental property. - Tobacco licenses are issued in October of each year. There are four licensed establishments in the City and the license fee for each is $250. - The revenue from alcoholic beverage licenses is fairly accurate. The Minnetonka Country Club's license alone is $7,500. There are three other licenses issued as well. The City had to pay for a license for the two liquor operations it owned. - The amount budgeted for Charges for Service/Recreation revenue is conservative. There has been a reduction in tournament activity. The little income there is from concessions is included in the amount. - Staff will review Miscellaneous Revenue in more detail. - The greatest revenue risk in the revenue forecast is with building permits. The City is 95% built. New development is very slow, although there is some redevelopment occurring and planned. The following clarifications, comments and requests were made with regard to expenditures. - This headcount allocations used in this first budget are the same as those used in the final 2008 budget. The allocations will be reviewed and refined as needed going forward in the budget process. - Fire protection reflects a reduction in the City's total contribution to the EFD and the Mound Fire Department. - After discussion, there was consensus to leave the $5,000 budgeted for the appreciation event in the budget. - If funds were to be appropriated for treatment and control of aquatic invasive species they would be included in the Mayor and Council budget. - Staff will determine what the total non-union salaries are for 2008. Staff will also determine what portion of the $20,000 budgeted for merit increases in 2008 was used. - The staffing cost, including his year-end increase, is budgeted for the new city administrator as is a 3% economic adjustment. - After ensuing discussion, technology related items (such as digital cameras, computers, etc.) will remain in the individual department budgets. - Items such as digital cameras will not be included in capital outlay; they will be included in supplies and materials. There was Council consensus to have the City Administrator be responsible for approving the purchase of those types of items. CITY OF SIIOREWO®D WORK SESSION MEETING MINUTES August 4, 2008 Page 6 of 9 - Capital Outlay will only include capital items. - General Government/Supplies & Materials -the increase is mainly due to the video recording of Council work sessions. That was not budgeted in 2008. - Staff will provide additional detail about the amount budgeted for Finance/Support Services. - Finance/Capital Outlay is for a laser printer dedicated to Finance, and a comment about that will be added. - Professional Services/Support Services 2008 year-to-date includes $51,000 for miscellaneous services which includes architectural services for the City Hall renovation project. Those fees will be transferred to the capital expenses for the project at year end. Legal and audit service costs are the same as the 2008 budgeted amount. Staff will research what expenses have been incurred in this line item through July 2008, and verify the 2009 budgeted amount is sufficient. - Staff will determine where the costs for the executive search firm for the city administrator have been charged. - Planning & Zoning needs a digital camera to improve work efficiencies. It's very inefficient to try and coordinate the use of one camera between two individuals who use a camera frequently. The costs to purchase another camera will remain in the budget. The staffing increase is mainly due to salary increases and insurance cost increases. - Staff will prepare a pro forma for a couple of the departments. - Municipal Building/Support Services includes property liability insurance costs which are estimated at $110,000. Insurances are renewed in November. Capital Outlay includes $30,000 for principal and $79,900 for interest for the debt service for City Hali. Some of the transfers are to the pay for the internal loan for the City-owned house. The residential maintenance comment is for the City-owned house. No rental income is budgeted for 2009. - The Police budget includes funding for the SLMPD Designated Reserve Officer. Fund. The proceeds are used to fund the annual appreciation banquet for reserve officers, and to help fund equipment and training for them. Support services includes $4,000 for prisoner expense, court officer expense and booking fees. - Staff has not approached Mound about providing police services to Shady and Enchanted Islands. Staff will review the SLMPD JPA to determine what, if any, restrictions there are. Councilmember Woodruff suggested the Council consider incremental funding for police services from Mound for the Islands allowing SLMPD officers more time to serve the rest of the City. - Protective Inspection/Staffing includes costs for the building inspector and some support staff time. Staff will review the 2009 budget amount to determine if it is sufficient based on the run rate through June 2008 or if it is too high being there is less building construction occurring. - Staff will research what the engineering technician is spending leis time on. - City Engineer/Support Services includes $5,000 for consulting engineering services (outside of projects which are funded); $6,000 for travel, conference, school, communication, etc.; $2,000 for printing and publishing; plus funding for subscriptions, licenses, etc. Travel, conferences and schools increased approximately $2,000 over 2008. The engineering conference has not yet occurred in 2008. The 2009 budget includes the same line items as in 2008. - Staff will provide supporting detail for the Public Works budgeted amounts for Supplies/Materials and Support Services. Based on the run rate through June 2008, the 2009 budgeted amounts may not be adequate. - There was ensuing discussion about street and roadway maintenance. The City has a goal to sealcoat its roadways once every five years; it has not achieved that goal for a number CITY OF SHOREWOOI) WORK SESSION MEETING MINUTES August 4, 2008 Page 7 of 9 of years. Mill and overlay and sealcoating are funded out of the local roadway fund. Staff will prepare estimates for what it would cost to sealcoat one-fifth of the roadways. Staff will also present estimates for the roadways that should be milled and overlaid by August 11, 2008. - Staff will provide additional detail and historical metrics to support the budget for Snow & Ice/Supplies & Materials. The budget was based on purchasing 375 tons per year of salt at the current price of $53.75 per ton and 1,125 tons of sand per year at the current price of $11.56 per ton. In 2007 the City used 440.78 tons of sand and 153 tons of salt. Supplies and Materials also include costs for cutting edges for plows, deicing chemicals, etc. - Traffic Control and Street Lighting includes costs for re-tamping for traffic signals and electricity for street lighting. A comment will be added explaining that. - Sanitation/Waste Removal/Weeds includes costs for patrolling every City street and spraying most of the boulevards and roadways. - The budget for Southshore Center funding is the same as 2008, $12,500. - In Parks & Recreation the entire budget with the exception of the $15,000 transfer (which goes to Park CIP) is for the City to maintain the parks and facility. The Park capital Fund has approximately $280,000 in it. The City recently authorized spending for approximately $50,000 for Badger Field lighting. - There was ensuing discussion about the cost to resurface (basically fill cracks) and replace tennis courts. Acting Administrator Brown stated he had been challenged in the past about his cost estimates of $80,000 - $100,000 to replace the courts, which is a realistic number based on this discussion. The City has four tennis courts. - Until the Council has the opportunity to review the Park Commission's master plan Parks & Recreation funding will remain as is. There was consensus to make the following changes to the budget. - The descriptions, staffing tables, comments and metrics in the department budgets will be reviewed for accuracy and updated as needed. - Tobacco license revenue will be reduced to $1,000. - Building permit revenues will be reduced by $20,000. - A $40,000 transfer to the General Fund from the Liquor Fund will be budgeted for 2009. It is not a commitment to do that in future years as there was commitment to get public input on how the principal balance in the liquor fund should be used. - Mayor and Council -Support Services will be increased to reflect the approved budget amount for the LMCD, and an Aquatic Invasive Species Treatment $1 place holder line item will be added. - Administration - a $30,000 placeholder will be added for merit increases. The amount will be adjusted depending on what the actual total is for salaries for employees outside of the bargaining unit for 2008. - General Government/City Clerk/Elections -Staffing costs will be reallocated to more accurately reflect the Deputy Clerk's time. - Elections -Staffing will be adjusted down to reflect S% of the Deputy Clerk's time. - Municipal Building -the capital outlay will be adjusted to reflect the actual debt service payment schedule for the City Hall renovation. - Fire protection -will be reduced by $3,000 to reflect the reduction in fees for Mound fire service for 2009. - Animal Control -expenses will be reduced to zero due to this cost already being in the police budget - Public Works/Supplies & Materials -this will be increased by $10,000. CITY OF SHOREWOOI) WORK SESSI®N MEETING NtI]otUTES August 4, 2008 Page 8 of 9 - Streets and Roadways -the transfers in amount will be set at $645,000. - Snow and Ice Removal -Supplies & Materials will be decreased by $5,000. - Parks & Recreation -funding for the Southshore Center and the Friends will be reduced to zero with the understanding it could be added back. - Staff requested $10,000 be added to replace the four computers scheduled for replacement. Councilmember Bailey stated there was a need for a calendarized budget to make budget tracking and comparisons easier. Councilmember Bailey summarized the budget changes that he thought were recommended. - Add a $40,000 transfer to the General Fund from the Liquor Fund. - Reduce building permit revenues by $20,000. - Reduce animal control by $25,000. - Add $30,000 for merit increases. - Reduce City Hall renovation debt service by $10,000. - Clarify Public Works supplies needs. - Increase street and roadways by $85,000. - Decrease snow and ice by $5,000. - Decrease Southshore Center and Friends funding by $21,000. Bailey stated the net change, not including the additional $10,000 requested to replace four computers, is about $44,000. The levy limit, based on a 3.9% levy limit, is $158,000. He did not want staff to personally purchase a computer for City use. He thought it was imperative to know what the funding needs were for street and roadway maintenance and reconstruction, which he thought was a top priority. Mayor Lizee stated there was a plan for the streets and roadways and for technology replacement. If the plans are not adhered to future councils will be at a disadvantage. Director Burton stated the City's General Fund policy should be reduced by three points per year in accordance with the General Fund Reserve policy if it is in excess of 60%. That amount would be about $160,000 and the budget includes a $1.51.,000 transfer. That would bring the reserves down to 57%. She noted the City's bond rating was just upgraded based on the General Fund Reserve policy. There was Council consensus to review the revised budget draft with changes noted at the August 11 work session. Discussion. returned to Item 2 on the agenda. 4. SOUTHSHORE CENTER FUNDING This was discussed after Item 2 on the agenda. Mayor Lizee stated the Southshore Center Funding Committee will consider a funding proposal prepared by the Friends sometime during the week of August 18`x'. CITY ®F SHOREW®OD WORK SESSION MEETING MINUTES August 4, 2008 Page 9 of 9 5. BAYSWATER ROAD Councilmember Wellens stated he was contacted by a resident on Bayswater Road stating the road was in terrible condition. He asked Acting Administrator Brown to tell Council when the road was scheduled to be repaired. Acting Administrator Brown explained the resident on Bayswater Road has called him a number of times about the condition of Bayswater Road. Each time he reassures the resident that the road will be patched, and the resident doesn't like the answer he gets for when it will be done. The first patching done by the Public Works staff does in the spring/summer is for problems that could potentially cause damage to vehicles.. Staff then identifies roadways that will be sealcoated during the year and those that are scheduled for striping. He stated there was so much patching that had to be done this year that Public Works barely completed the patching before the sealcoating began. He noted he had received approximately 20 requests from. residents wanting asphalt curbing to control stormwater runoff. He commented the City does not allow concrete curbing. There was ensuing discussion about the process that should be followed to handle this type of complaint. There was agreement that those types of complaints should be referred to the Director of Public Works for him to follow up on, and to provide an update to a Councilmember if they had forwarded the complaint. 6. ADJOURN Turgeon moved, Wellens seconded, Adjourning the City Council Work Session Meeting of August 4, 2008, at 8:45 P.M. Motion passed 5/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder •. 1 ~~ Christine Lizee, Mayor ATTEST: rence A. Brown, Acting City Administrator/Clerk