Loading...
032309 CC Reg MinCITY OF SHO WOOD CITY COUNCIL REGULAR MEETING MONDAY, MARCH 23, 2009 MINUTES 1. CONVENE CITY COUNCIL REGULAR MEETING 5735 COUNTRY CLUB ROAD SOUTHSHORE CENTER 7:00 P.M. Mayor Lizee called the meeting to order at 7:04 P.M. A. Roll Call Present. Mayor Lizee; Councilmeinbers Bailey, Turgeon, and Woodruff; Attorney Tietjen; City Administrator Heck, Finance Director Burton; Planning Director Nielsen; and Director of Public Works Brown Absent: Councilmember Zerby B. Review Agenda Turgeon moved, Woodruff seconded, approving the agenda presented. Motion passed 4/0. 2. APPROVAL OF MINUTES A. City Council Work Session Minutes, March 9, 2009 Turgeon moved, Bailey seconded, Approving the City Council Work Session Minutes of March 9, 2009, as presented. Motion passed 4/0. B. City Council Regular Meeting Minutes, March 9, 2009 Bailey moved, Woodruff seconded, Approving the City Council Regular Meeting Minutes of March 9, 2009, as amended in Item 10.E, Page 13, Paragraph 1, add the sentence "He noted that LMCD Board Chair Lisa Whalen was not able to be in attendance this evening due to a scheduling conflict."; in Paragraph 2, Sentence 9, change "The LMCD started" to "The Minnehaha Creek Watershed District started"; in Paragraph 3, Sentence 3, change "the LMCD's bylaws have not been updated." to "the fine in the LMCD's bylaws has not been updated."; and, in Paragraph 4, Sentence 3, change "Woodruff states this has not been revolved." to "Woodruff stated this has not been resolved." Motion passed 4/0. C. City Council Work Session Minutes, March 16, 2009 Woodruff moved, Turgeon seconded, Approving the City Council Work Session Minutes of March 16, 2009, as presented. Motion passed 4/0. CONSENT AGENDA Mayor Lizee reviewed the items on the Consent Agenda. She noted Council had been provided with an updated Verified Claims List. S__w - C CITE' COUNCIL REGULAR MEETING MINUTES Page 2 of 13 Turgeon moved, Woodruff seconded, Approving the Motions Contained on the Consent Agenda and Adopting the Resolutions Therein. A. Approval of the Verified Claims List (This was moved to Item 10.1) under General/New Business.) B. City Clerk's License List C. Adopting RESOLUTION NO. 09-016, "A Resolution Approving a Change Order 3 for the Radio Read Water Meter Project, City Project No. 07-04." Motion passed 4/0. 4. MATTERS FROM THE FLOOR There were no matters from the floor presented this evening. Mayor Lizee stated Colin Hulbmaier, a student at Holy Family School, was in attendance this evening for a school project for a government class he is taking. 5. REPORTS AND PRESENTATIONS A. Report on Lake Minnetonka Communications Commission Activities by Representative Patrick Hodapp Mayor Lizee introduced Patrick Hodapp, the Secretary of the Lake Minnetonka Communications Committee (LMCC) Executive Committee and the City's representative to the LMCC. Mr. Hodapp stated he was present this evening to give Council a quarterly report on LMCC activities. A summary of his report is as follows. The LMCC's 10-year lease on its current facility expired on January 31, 2009. The LMCC's intent was to purchase that facility at the end of March 2009; the final purchase agreement is nearly complete. Recently the LMCC was approached about the possible purchase of the Southshore Center by some elected city officials from cities currently owning the Center. The LMCC has issued a pro forma offer for the member cities to consider if the cities collectively want to sell the Center. The LMCC would be very interested in acquiring the Center rather than having it be underutilized or sold to a commercial party. He noted this topic will be discussed further on in the agenda. Mr. Hodapp stated a special LMCC committee has been established to review and monitor the call wait time issue with Mediacom. The LMCC has been in contact with Mediacom about the issue of Mediacom dropping the TV Guide channel. The LMCC's year-to-date performance against budget is meeting expectations. The LMCC's 2008 year-end audit has been started. The LMCC has established a committee to assess the feasibility of fiber to the home, noting Councilmember Woodruff is on the committee. That committee is looking for opportunities to receive grant money or funding for a feasibility study. The LMCC intends to update its bylaws during 2009; there is a considerable amount of disconnect between the bylaws and the LMCC's operating procedures. He distributed a report prepared by LMCC Executive Director Sally Koenecke which highlights some of the local community benefits the LMCC provides. 6. PUBLIC HEARING None. - ---_,C --T°Y COUNCIL REGULAR MEETING MINUTES Page 3 of 13 7. PARKS Commissioner Davis reported on matters considered and actions taken at the March 10, 2009, Park Commission meeting (as detailed in the minutes of that meeting). 8. PLANNING Commissioner Hutchins stated there had not been a Planning Commission meeting since the last City Council regular meeting. A. Zoning Code Text Amendment Applicant: South Tonka Little League Location: Freeman Park Ball Fields Director Nielsen stated South Tonka Little League (SILL) has requested amendments to the City's Zoning Code that would allow it to display commercial advertising signs on the ball-field fences of the two fields in Freeman Park used by STLL for little league games. He explained that earlier in the day Kyle Heitkamp, representing STLL, requested (in writing) that this matter be continued for up to 60 days. Under what is known as the 60-day rule in the State Statutes Council would have had to take action on this matter this evening had the City not received the request for a continuation. If the continuance were granted, Council would have to take action no later than May 11, 2009, on the text amendment request to stay within the 120-day timeframe. Nielsen reconullended the request be continued to the May 11, 2009, City Council regular meeting. Turgeon moved, Woodruff seconded, continuing a request from the South Tonka Little League for amendments to the Shorewood Zoning Code that would allow commercial advertising signs to be placed on ball-field fences in Freeman Park to the May 11, 2009, City Council regular meeting. Motion passed 4/0. 9. ENGINEERING/PUBLIC WORKS A. Accept Proposal for Professional Design Services for Harding Lane Director Brown stated the City received proposals from three firms to provide engineering services to do a survey of and provide a feasibility report for the reconstruction or reclamation of Harding Lane and Harding Avenue. The fines were WSB and Associates, SRF Consulting Inc. and Short Elliot Hendrickson Inc. (SEH). He explained SRF and SEH failed to meet some of the requirements of the proposal; for example, they did not provide an estimate for the drainage/storm sewer analysis or a cost estimate. Brown related Engineer Landim recommends Council accept the proposal from WSB based on its proposal pricing and the completeness of its proposal, and he stated Staff concurs with Landim's reeonunendation. Mayor Liz6e stated Council had requested Staff move forward with this part of the reconstruction process. Councilmember Bailey questioned if it is common for firms to submit an incomplete request for proposal (RFP). Director Brown responded it is not uncommon, and it is usually because of a heavy staff workload resulting in rushing to complete the RFP. Brown stated it is a good indicator of what a firms staffing level SHED __IC - C-fY COUNCIL REGULAR MEETING MINUTES March 2v, 2 9 Page 4 of 13 versus workload is, and this is taken into consideration when evaluating proposals. He then stated he has spoken with both SEH and S and informed them that the City was advertising for RFPs to select firms for the City's engineering pool of firms it will use in 2009. A firm will not be rejected for all future projects because it makes one mistake. Bailey stated the quality of the RFPs submitted should carry a fair amount of weight when considering fixture proposals from the two firms. Bailey questioned if the City received competitive bids when two of the three RFPs were incomplete. Brown stated SRF is a quality engineering firin, but apparently the person assigned to complete the RFP did not do a thorough job. Brown stated there is a tendency to think RFPs should be selected primarily based on the lowest quote, but he discouraged doing that. It's important to consider if the City is going to get a good value for the services it will receive, as well as a firm's ability to provide the services it says it can. Councilmember Bailey stated the City is about to engage on an extremely large Public Works project (from an expenditure perspective) for road reconstruction over the next few years, and he thought it important for the City to have a good pool of engineering and construction firms to contract with. Director Brown stated as of last week 6 - 8, firms had submitted RFPs to be considered for inclusion in the pool. Councilmember Woodruff stated Staff and Council had previously discussed reconstructing Harding Lane and Harding Avenue and reclaiming Smithtown Lane. Yet, the RFPs for the Harding roadways and Smithtown Lane are the same. He questioned if the services requested should be the same for Smithtown Lane if it's going to be reclaimed. Director Brown stated that although there appears to be consensus to reclaim Smithtown Lane, he thought it prudent to conduct a thorough feasibility study for this roadway. In response to a question from Councilmember Woodruff, Director Brown explained that WSB was willing to reduce its cost to conduct soil tests for the roadways by $400 for the Harding roadways and another $400 for Smithtown Lane if the soil tests were done at the same time. The total savings for the City would be $800. In response to a question from Councilmember Turgeon, Director Brown explained Engineer Landini was asking Council to approve WSB's proposal for the survey work, feasibility report and soil tests for Harding Lane and Harding Avenue for an amount of $16,964. Turgeon commented there were some inconsistencies in the numbers between the WSB proposal and the Staff report. Woodruff moved, Bailey seconded, approving the proposal from WSB and Associates dated March 18, 2009, for engineering services for a feasibility report and surveying for Harding Lane and Harding Avenue for an amount of $13,764.00 and authorizing Staff to order the soils report for an amount of $3,200.00 with the total amount not to exceed $16,964. Motion passed 4/0. B. Accept Proposal for Professional Design Services for Smithtown Lane Director Brown stated Engineer Landini was asking Council to approve the proposal for the feasibility report and surveying from WSB and Associates for an amount of $11,656.00 for Smithtown Lane and for a soils report for an amount of $2,300.00. Woodruff moved, Bailey seconded, approving the proposal from WSB and Associates dated March 18, 2009, for engineering services for a feasibility report and surveying for Smithtown Lane for an amount not to exceed $11,656.00 and authorizing Staff to order the soils report for an amount not to exceed $2,300.00. Motion passed 4/0. SHORE. _TY COUNCIL REGULAR MEETING MINUTES March 23, Page S of 13 10. GENERAL/NEW BUSINESS A. CenterPoint / Xcei Franchise Administrator Heck stated the City has a draft (not yet finalized) franchise agreement with Xcel Energy, and the City has received a request from CenterPoint Energy requesting the City have a franchise agreement with it as well. He explained the draft agreement with Xcel does not include a franchise fee; the agreement is such that the City has the option to choose to authorize a franchise fee in the future. He noted that option is a "sticking point" with Xcel. He asked Council if it would like to have an option for a franchise agreement with CenterPoint similar to the draft agreement with Xcel. Director Brown explained when a previous Council first considered a franchise agreement with Xcel it did not want to impose a franchise fee because it would just be another fee collected from the rate payers. He commented Xcel is not fond of franchise fees. He explained if a fee exists it is identified as a separate item on Xcel's utility bills and it indicates the fee is instituted by another organization. Councilmember Woodcliff stated he does not like to increase residents' taxes for no particular reason. He is not in favor of collecting a franchise fee at this time or in prohibiting the City from authorizing a fee in the future. There was Council consensus to have the same franchise fee option in a franchise agreement with CenterPoint that it has in the draft agreement with Xcel. B. Southshore Center Mayor Lizee stated per Council's direction during its March 9, 2009, meeting Administrator Heck has drafted a memorandum of understanding (MOU) between the Cities of Deephaven, Excelsior, Greenwood, Shorewood, and Tonka Bay (the Cities) regarding interim operations of the Southshore Center. Council also directed Heck to draft an agreement for the operation of the Southshore Center between the Cities and the SouthShore Senior Partners (SSSP) for the period of March 1 - April 30, 2009. Copies of these documents were included in the meeting packet for this meeting. The packet also included a revised purchase offer term sheet from the Lake Minnetonka Communications Commission (LMCC) for the purchase of the Center, and a projection of revenues and expenses for the Center for March and April. Lizee then stated at its March 9"' meeting Council discussed the Southshore Center and what the options were for the long-tern future of the Center. The Cities have been working through some issues in order to keep the Center operational. At that meeting Council requested she and Administrator Heck inform the other four Cities (at a meeting of the Southshore Center working group held on March 10`x') of the City's intent to work cooperatively with the Cities through April 30"' to evaluate options for the long-term future of the Center. A viable firm needed to be found to manage the operations of the Center, and a commercial appraisal of the Center needed to be conducted. During the March 9"' meeting the LMCC approached the City with an offer to purchase the Center; Council wanted to first determine if it was feasible to keep the Center operational before it decided to sell the facility. Lizee went on to state she was disappointed that LMCC had submitted a revised one-page tern sheet which the City received on Thursday, March 19"'. The LMCC wanted to enter into a 10-year lease/purchase contract with the City with payments of $3,600 per month (for a total of $432,000) including interest assuming four of the five member cities adopted resolutions authorizing Shorewood to exercise the Shorewood Option outlined in the Cooperative Agreement between the Cities. LMCC stated it would have to make modifications to the existing garage [which is located on City property]. The SHO WOOD CITE' C J. ,GIJLA ;TING MINUTES March 23, 2009 Page 6 of 13 LMCC offer is only good until March 25"' and the purchase agreement roust be executed by April 15th. She expressed disappointment that the LMCC was indicating the process Council agreed to two weeks ago could not be followed if it wanted to consider the LMCC's offer. Lizee recommended Council discuss the draft MOU and draft interim operating agreement with SSSP. Councilmember Woodruff stated any entity has the right to make an offer or proposal at any time, and the LMCC made its recent offer with full knowledge of what Council had discussed. It's up to Council to decide what it wants to do with the offer. Administrator Heck stated the draft MOU was crafted based on discussions of the Southshore Center working group during its March 10"' meeting. The MOU outlines the financial agreement between the Cities for operation of the Center through April 30"'. With regard to operating expenses, any amount of expenses in excess of revenues received would be paid for equally by the Cities. Should the revenues exceed expenses Shorewood would keep the excess revenues to cover Staff time and attorney fees. The revenue and expense projection he prepared for the months of March and April indicates there could be a slight surplus in revenues. Per stipulations in the Cooperative Agreement four of the five cities have to approve the MOU; the MOU will become an amendment to the Agreement. Councilmember Turgeon stated she wants the MOU to specifically identify what operational costs the Cities would be responsible for; specifically she wanted the Cities to only be responsible for heat, lighting, water, custodial services and garbage. The verified claims list for this evening included a claim for $66 for the website and she did not think the Cities' should have to pay for that and as far as she is aware the website has not been updated since November 2008. At the March 10t" meeting of the Southshore Center working group, the City of Deephaven was the only city that stated it would pay 20 percent of the operating costs for March and April. The other three cities balked at paying 20 percent, and the cities thought spending $900 to operate the center in the next 45 days may be a little too much. If the other three cities balk at the $900 cost, then she assumed it would be difficult to reach a long-tern agreement regarding operating and maintaining the Center because those costs would be higher. The topic of a rental agent has not been addressed for the long-term and that will be at an additional cost, and there will also be a cost for some organization to manage the facility. She wants it very clearly stated in the MOU what the Cities are responsible for. Under the Cooperative Agreement the Cities are not responsible to pay any of the operating and maintenance costs of the Center. Mayor Lizee said the MOU states the Cities agree to equally share the operational costs for the term of the MOU. At the March 10t" meeting of the Southshore Center working group the Cities' representatives were not authorized to speak for their respective Councils. She understood why Deephaven is willing to split the operating costs equally as 20 percent is less than the approximate 23 percent they would pay if the costs were split similar to the split of construction costs for the facility. She did not have issue with identifying the specific operating costs the Cities would be responsible for in the MOU. Councilmember Bailey stated he could agree to the MOU but only with the proviso that it would not prohibit either the sale of the facility or the City's right to exercise the Shorewood Option between now and April 30"'. Mayor Lizee stated that was not what Council agreed to during its March 9t" meeting; Council requested she and Administrator Heck inform the Southshore Center working group of the Council's commitment to keep the Center operational through April 30t" to give the Cities time to detennine what the long-term future of the Center should be and to find a viable partner to manage the Center. Bailey asked the proviso be added for clarification purposes. WT) CITY COUNCIL REGULAR MEETING ` ®I_ _T_ S 1 2C_9 __9 13 In response to a comment from Councilmember Turgeon, Councilmember Bailey stated the MOU states all bills will be paid for equally by the Cities. Administrator Heck explained the Cities will share equally in any operational costs incurred that are in excess of revenues already generated or to be generated during the interim. There have been no rentals taken for the Center since the first or second week of March because there is no certainty that there will be a Center at the end of April. He stated the MOU can be modified to specify which operating costs will be paid for. Heck commented the website hosting cost is for the months of March and April. Attorney Tietjen stated the revenue and expense projection for the months of March and April can be included as an attachment to the MOU. In response to a question from Councilmember Woodruff, Administrator Heck stated he believes all of the rents for March and April have been collected and if that is not correct, the individuals or organizations will be billed for rents not paid. In response to another question, Heck explained the City is responsible for collecting the rent in the interim. Woodruff recommended that be included in the MOU, along with a statement that there is no intent to do any further rentals until there is a long-tern solution. He also recommended the MOU address who is going to open and close the Center for renters. The MOU should address what happens to the facility if the Cities cannot reach an agreement about the long-term future of the Center by the end of April. Woodruff asked who pays the phone bill, to which Heck responded that has not been addressed; it is not included in the revenue and expense projections. Councilmember Woodruff stated he did not think Council could approve the MOU until the recommended changes have been incorporated into it and Council has been provided a revised MOU to review. Councilmember Tu rgeon stated to keep things simple the costs should be limited to the five items she previously identified. Councilmember Woodruff recommended Culligan water expenses should also be paid; he assumed it is for water softening and thought there could be ramifications to stopping the softening of the water. Administrator Heck stated there is general agreement among the Cities to keep the Center operational; the question is who is responsible for the operating expenses during the March - April interim period. It appears that there should be sufficient rental income to pay for the majority if not all of the operating expenses during that time. He suggested he and Attorney Tietjen revise the MOU and send it to the other Cities as their Council's meet before the next City Council meeting which is scheduled for April 13"'. He stated Council could hold a special meeting on April 6"' if so desired to discuss this further. There was discussion about having a special Council meeting on April 6"', but no consensus was reached. Mayor Lizee noted that Council had requested request for proposals (UPs) be solicited for managing the Center and conducting programs at the Center. The due date for receiving those requests is April 3'11. The Southshore Center working group will review those proposals during April. Mayor Lizee stated the current MOU is obviously not going to be approved this evening. She asked the Councihmembers if the revised proposal is going to meet the same fate, to which Councilmember Turgeon responded she hoped not. Administrator Heck explained the draft interim operating agreement between the SSSP and the Cities essentially allows SSSP to continue operating the Center through April 30"'. SSSP will open the Center in x s-.°. I," CITY COUNCIL REGULAR MEETING MINUTES rna 23, ®.,.,3 P; e8of13 the morning and close it at the end of day Monday - Friday. SSSP is required to allow renters to use and access the kitchen, table and chairs consistent with past practice. SSSP will pay rent totaling $1200 for the months of March and April combined. Councilmember Turgeon suggested the specific expenses SSSP is responsible for should be identified in the interim agreement. Councilmember Woodruff suggested the interim agreement specify which SSSP members will have access to the facility. He also suggested SSSP submit a rent check for the months of March and April before the agreement goes into effect. He agrees with the services as identified in Section 2.a under Scope of Services. He suggested the specific time SSSP will open the Center be identified in Section 2.b, and that "past practice" be changed to say "past practice of the Friends". The agreement should require that SSSP has someone on site during their hours of operation Monday-Friday. Councilmember Bailey stated he was comfortable with the Councilmembers comments. Administrator Heck stated he and Attorney Tietjen will revise the document and ensure the other Cities receive the revised documents. h1 response to a comment from Councilmember Turgeon, Administrator Heck stated the individual who has been scheduling Center rentals has been on vacation so the future renters have not been notified of the situation that the Center may not be available after April 30`x' Administrator Heck stated the LMCC provided the City with a revised one-page offer sheet on Thursday, March 19t". His understanding, based on the proposal, is the direction would be to have Shorewood exercise the Shorewood Option provision stated in Section 6(a) of the Cooperative Agreement; the provision allows Shorewood the first right to purchase the Center. Once the LMCC is able to gain acceptance by 2/3 of its member cities to purchase the Center, the LMCC would have Shorewood sell the facility at the stated cost of $432,000 (or $3,600 per month for ten years); the amount includes a modest amount of interest. The City would provide parking, access and snow removal. The LMCC would have use of the existing garage, and it wants to make some modifications to the garage. The LMCC requires that four of the five Cities pass resolutions approving Shorewood's execution of the Shorewood Option. The LMCC's offer is in effect until March 25`x' and a purchase agreement must be executed by April 15°i. He noted the Cooperative Agreement is in effect, and it stipulates a process that must followed to sell of the facility. Attorney Tietjen advised Council that it can choose to go into a closed door session to discuss this proposal if it wanted. Council chose to remain in an open session. Tietjen stated she had prepared a memorandum for Council regarding the Shorewood Option based on her interpretation of that provision in the Cooperative Agreement. She commented the Cooperative Agreement is not free from ambiguity. She stated the Agreement stipulates that two-thirds of the Cities (4 out of 5) must approve the sale of the Southshore Center. If that occurs Shorewood would have the first right to purchase the Center by paying each of the remaining Cities an amount equal to their original capital contribution. Councilmember Woodruff stated during the March 9t' Council meeting Attorney Tietjen stated the City had the right to exercise the Shorewood Option. He commented he made a motion to exercise the option and the motion failed. He stated her position memorandum is different than it was on March 9"'. He commented there is ambiguity in the Cooperative Agreement. He explained Section 6 in the Agreement states that Shorewood had the first right to purchase the facility; Section 7 deals with dissolution, amendment and termination of the Agreement. Section 6 deals with the termination of the Lease; the lease S-----WOOD C'ITE' COUNCIL REGULAR MEETING MINUTES 23, 2009 Page 9 of 13 was tenninated by the Friends of the Southshore Center. Section 7 deals with the Agreement itself and whether or not the Cities want to dissolve the agreement. Section 7 states two-thirds of the Cities have to approve the sale of the facility. Section 6 very clearly states there is a Shorewood Option and in no way is that characterized as a sale, noting a sale is referenced in Section 6(b). He stated he could very easily read the document to say Shorewood has an option to exercise the Shorewood Option to acquire the facility because of the termination of the lease with the Friends. He agrees that two-thirds of the Cities must approve the sale of the facility. He stated he respectfully disagrees with Attorney Tietjen's interpretation. Mayor Lizee stated she appreciated Councilmember Woodruff's right to his own opinion, but she preferred Council follow the recommendation of the City's legal counsel. Councilmember Bailey stated one could argue that paragraphs 6 and 7 in the Agreement stand alone. From his vantage point the agreement is at best a short sighted document, and at worst a very poorly crafted document. He asked Attorney Tietjen if she were preparing the document if she would have included a not-withstanding statement in paragraph 7 if she wanted paragraph 7 to control paragraph 6. Tietjen stated she would likely have done so. Tietjen explained that typically an agreement is read to interpret the provisions as they fit together. She does not interpret individual paragraphs in an agreement; she tries to get the effect of the document as a whole. She noted that is what her opinion is based on. She stated she thought an argument could possibly be made that paragraphs 6 and 7 could be read separately. The Agreement is subject to interpretation. However, she explained when she read Section 6 what caught her attention after reading it a few times is "the Center may be sold" subject to three options that were listed in that Section. She looks at the Shorewood Option under the option of "may be sold". In order for a "sale" to take place under Section 7 there must be written approval by two-thirds of the Cities. Councilmember Bailey stated he respectfully disagrees with Attorney Tietjen's interpretation. From his vantage point the logic of the Shorewood Option is to protect Shorewood because it was the biggest contributor to the construction of the facility; it is to protect Shorewood from the other Cities should they decide to do something substantially contrary to Shorewood's interest. For example, if the other Cities decided to amend the agreement to require that skylights be installed and require Shorewood pay 50 percent of the cost, then Shorewood could act through the Option to protect itself. Only if the Shorewood Option could be exercised by Shorewood alone would that make any sense. If Shorewood wanted to protect itself but had to go to the other Cities to respectfully request it protect itself against something the Cities would want to do to Shorewood, that would defy logic. He thought Tietjen was reading the Agreement very literally without injecting any common sense into why the Shorewood Option would exist. He thought Tietjen was neutering the Shorewood Option in any sort of protection for Shorewood. Attorney Tietjen stated that could be one interpretation. She then stated that typically when the courts and judges look at documents like this they look at the face of the document. It could have been the intent of the parties to have the document interpreted that way. She did look at the literal language of the document in her interpretation, but that does not preclude looking at the intent of the parties was when the document was prepared. Councilmember Bailey stated on the face of the document paragraph 6 precedes paragraph 7, but there is no language in paragraph 7 that states it now controls paragraph 6. He then stated he thought the Shorewood Option could be exercised by Shorewood alone. Councilmember Turgeon stated if Council were to decide this evening to exercise the Shorewood Option, the other Cities could challenge whether or not Shorewood had the right to exercise the option without written approval of at least three of the other Cities. The other Cites could take Shorewood to court, although she was not sure how many people would do that. Council can vote to exercise the Shorewood Fe-_ -7 - - - --_TY COCJNCIL REGULAR MEETING MINUTES 23,2t,, Page t of 13 Option tonight to buy the facility, and if any of the other Cities disagree that Shorewood has the right to do so they can sue the City. That action by the other Cities could generate some forward movement in resolving the long-term issue of the Center. Mayor Liz6e stated at its March 9"' meeting Council discussed triggering the Shorewood Option, and a motion to pursue the Option failed. She thought all of the Cities' Councils wanted to make progress regarding the Center. Hopefully with the direction provided by Council at its March 9"' meeting the issues can be resolved by April 30tr' Bailey moved, Turgeon seconded, authorizing Shorewood to exercise the Shorewood Option as delineated in paragraph 6 of the Cooperative Agreement; directing the Shorewood City Administrator to contact the other Cities who are party to the Cooperative Agreement no later than 10:00 A.M. on March 24, 2009; directing the Shorewood City Administrator to inform the Lake Minnetonka Communications Commission of Shorewood's intent to exercise the Shorewood Option under the Cooperative Agreement and Shorewood's intent to seek the immediate concurrence of the other Cities; and further following that exercise, Shorewood intends to enter into final discussions to sell the Southshore Center to the Lake Minnetonka Communications Commission as substantially outlined in the proffered term sheet. Mayor Liz6e stated she hoped that with the motion and second that it will be the impetus to move things further along with the Cities, but that was not what she was feeling based on Council's discussions. She thought it could bring out negative feelings from the other Cities. Councilmember Turgeon stated she thought this action would get the Cities to discuss this openly. She consistently hears the Center is a great community asset, yet at every meeting of the Southshore Center working group it all comes down to money. From her vantage point the asset is not the facility. The asset is the seniors; therefore, no one should be arguing about the money. She did not think any further progress could be made unless someone exercises the Option, and the City is the only one that can do that. The Center is not a $40,000 investment; it costs $100,000 a year to keep it functioning. It costs $40,000 a year just to keep the lights on. The Cities contributed $42,000 in 2008 for Center operations, and she did not know how the money was spent. Overall the Cities have given over $822,000 to the Center; $622,000 to build it and $200,000 over 14 years out of Conmlunity Development Block Grant program funds. The Cities have not done a disservice to the seniors; they have tried to support the seniors every year through the funds that they have contributed. The disservice has been through lack of leadership of the [Friends] Board. She conmlented the petition that talks about the cost of $2.00 per resident is inappropriate as the City does not tax by resident; it taxes by household. She stated over the last 14 years the Cities have contributed a lot of money to the Center; money they did not have to contribute. When the Center was built the Friends and the Cities agreed the Center would be self sustaining, but it has never been 100 percent self sustaining. She commented the Friends did not give the Cities a 30-day notice to terminate its lease with the Cities. Councilmember Bailey stated the ideal solution would be for the Center to remain operational. It would also be ideal if the Cities could amend the Cooperative Agreement to align administrative control with financial responsibility (i.e., for the amount of money a City contributes it would have that much administrative control). It would also be ideal if the Cities had a primary tenant who is financially stable and capable of paying for most of the operating costs of the facility, and who could also manage the facility. Bailey then stated the reality of the situation is as follows. The Cities are unable to agree on a Cooperative Agreement that doesn't force the largest City (i.e., Shorewood) to pay the bulk of the costs of maintaining Y ` -TY COUNCIL REGULAR MEETING MINUTES li `c.s 23,2 1, e11of13 the building's infrastructure yet give Shorewood only a minority voice in terms of lease arrangements and capital improvements. The building's primary tenant has behaved irresponsibly, violated its lease, and shirked its financial commitments to the Cities. Further, that tenant tried to transfer its lease privileges to a proxy organization, in violation of the terms of the lease, while simultaneously abrogating its own financial obligations to the Cities. The cost of operating and maintain the building is roughly $115,000 per year. That is $40,000 to keep the lights and heat on; $15,000 for capital repairs reserves; and $60,000 for building management and rental services. It would appear that the revenues generated by the building amount to only $35,000 per year. That leaves $80,000 a year to be picked up by the Cities. Over 20 years, the present value of $80,000 a year is $1 million. The building is not worth $1 million, and it's probably not worth half of that. On day one the building was probably worth less than its original construction costs because the Cites constrained the uses of the building. It contains no land but the footprint on which it is built, access is obtained by easement across public property, and the zoning restricts the building in terms of its use by only a public or semi-public entity. No commercial use can take place under the current zoning. Bailey went on to state there are only a few acceptable options. The Cities sell the Center directly to the LMCC and split the proceeds according to their original contribution percentages. The Cities could work to develop other alternatives for providing senior programming. Shorewood could exercise the Shorewood Option, and then come to agreement with the LMCC to sell the LMCC the Center. Despite his serious misgivings about the City's legal counsel's interpretation of the Cooperative Agreement, perhaps that exercise has to be in agreement with the other Cities. The option of the Center remaining operational is less desirable because of the reasons he has already discussed. If the Center were to remain operational then he thought the Cities need to share the operating costs and capital improvement costs equally. If the Center remains operational and the Cities pay for the operating and capital improvements in accordance with the current funding formula, then each city should effectively receive voting shares in the control of the facility (if Shorewood pays 50 percent of the cost then Shorewood receives 50 percent of the votes in terms of running the Center). The last option is the City withdraws from the Cooperative Agreement. His preference was expressed in his motion. Mayor Lizee stated there are operating costs and managing costs for the Center. In 2008 the Cities received a proposal from Minnetonka Community Education for managing the Center at a cost of $60,000. The Cities are awaiting receipt of RFPs for management services of the Center. If the costs for operating and managing the Center are $100,000 per year, she personally sees that as an investment in the Community. The Center was built from donations from the Cities as well as private donations totaling over $100,000. It has been operated successfully by the Friends for many years until there were some changes a few years ago. The Center is owned by the Cities, and it serves 14,000 - 16,000 people. If indeed the costs for the Center are $100,000 per year that is not a lot of money. The City has allocated $218,000 for its parks in 2009; $9,900 is budgeted for Biffs in City parks. She maintains the Shorewood portion of the Center is an investment in the community. The Center is a wonderful building; it has been built and paid for. Councihnember Turgeon stated the facility is not paid for; it will never be paid for. The initial payment has been made. The Cities are being asked to pay for the operating costs and capital improvement costs. Mayor Lizee stated there are always ongoing maintenance costs for any structure. Motion passed 3/1 with Lizee dissenting. Administrator Heck stated it is his understanding that he is to inform the other Cities by 10:00 A.M. on March 24, 2009, of Shorewood's decision and to notify the LMCC of that decision and pursue negotiations with the LMCC regarding the purchase of the facility. SHO WOOD CITY COUNCIL REGULAR MEETING MINUTES March 23, 2009 Page 12 of 13 C. Lake Minnetonka Conservation District Update by Representative Dick Woodruff Mayor Lizee stated during the March 9, 2009, Council meeting she asked Councilmember Woodruff to get answers to some questions she had about Lake Minnetonka Conservation District (LMCD) activities. She asked Woodruff to highlight his answers to the questions which are documented in a report from him. With regard to the LMCD's save-the-Lake fund, Woodruff explained the LMCD's Save-the-Lake Committee is comprised of three LMCD Board Members and three residents. The Committee established a policy to spend approximately 25 percent of the Save-the-Lake Fund each year. It tools a long time to accrue the balance in the fund, and there is no desire to deplete the fund. With regard to launch fees, Woodruff explained the LMCD's 1991 Lake Management Plan does advocate things such as launch fees, but it also recognizes they can not be imposed because State Statutes prohibits them. The LMCD intends to discuss fees as part of its strategic planning process. With regard to code enforcement cost and potential legal costs, Woodruff explained the LMCD has not reached a final conclusion on how it will handle code enforcement. This was discussed as part of a strategic planning meeting held on March 18, 2009, and the discussion was continued to the next strategic planning discussion. Code enforcement is one of the LMCD's goals. There is $14,000 budgeted for the monitoring component of code enforcement in 2009. With regard to a request from Bayside Grille Catering for authorization to sell on-sale alcoholic beverages on the iee, Woodruff explained the LMCD's legal counsel had stated a licensed caterer with a Minnesota liquor license can exercise the privileges of that liquor license anywhere in Minnesota. The LMCD has taken it under advisement to consider whether or not it wants to control this type of activity through its special event permitting process. That discussion will occur over the next few months. D. Approval of the Verified Claims List This item was removed from the consent agenda at Councilmember Turgeon's request. Director Burton stated Council had been provided with an updated verified claims list this evening which includes an additional $22,000 in bills. Councilmember Turgeon requested check # 48166 for an amount of $66 to William Tomlinson for web hosting for the Southshore Center be pulled from the verified claims list. Turgeon moved, Woodruff seconded, approving the verified claims list subject to check # 48166 being removed from the list. Claims approved were checks #48111 to #48183, excluding check # 48166. Motion passed 4/0. 11. STAFF AND COUNCIL REPORTS A. Administrator and Staff 1. City Hall Construction Update Administrator Heck stated the goal is to have electrical work completed in the next few days that will allow City Hall to be connected to regular power rather than temporary power. The new phone system SHOI3EWOOD CITY COUNCIL REGULAR MEETING MINUTES March 23, 2009 Page 13 of 13 should be installed and functional by the end of the week. Staff is slowly relocating back to the remodeled office area; the goal is to be done by Friday, March 27"'. Once that is complete, work can be completed in the Council Chambers. B. Mayor and City Council Councilmember Bailey stated there is an Excelsior Fire District (EFD) Board meeting scheduled for March 25, 2009, during which a very draft 2010 EFD budget will be discussed. He asked Council if they had any direction they would like him to bring forward at the meeting. He asked Council if it would like him to ask EFD Chief Gerber to come before Council to discuss the very draft budget which the EFD Board has not yet discussed. There was consensus to invite Gerber to come and discuss the draft budget in April. Councilmember Woodruff stated he would like to entertain a budget in parts. The first operating budget level should have a zero percent increase over the 2009 budget. Then the next level should include the costs by line items that are necessary to continue to provide the same level of service as is currently provided. He noted he is not advocating the EFD 2010 operating budget be a zero percent increase. In response to a question from Councihnember Turgeon, Administrator Heck stated the City's $6,000 contribution to the 2009 Eurasian watermilfoil treatment of Phelps Bay is contingent upon the Minnesota Department of Natural Resources making a contribution to the treatment effort and the City receiving a copy of the Lake Minnetonka Association's financial statement. Heck stated he thought he had forwarded to Council a copy of the document the LMA filed with the Secretary of State. 12. ADJOURN Turgeon moved, Woodruff seconded, Adjourning the City Council Regular Meeting of March 23, 2009, at 9:00 P.M. Motion passed 4/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder ATTEST: Bri ec , Administrator/Clerk hristine Lizee, Mayor