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12-7-09 CC Spec MinCITY OF SHORE WOOD CITY COUNCIL SPECIAL MEETING MONDAY, DECEMBER 7, 2009 14%1 1. CONVENE CITE' COUNCIL SPECIAL MEETING 5755 COUNTRY CLUB ROAD COUNCIL, CHAMBERS 7:00 P.M. Mayor Lizee called the meeting to order at 7:03 P.M. A. Roll Call Present. Mayor Lizee; Councilmernbers Bailey, Turgeon, Woodruff and Zerby; City Administrator Heck; Finance Director Burton; Planning Director Nielsen; Director of Public Works Brown; and Engineer Landim Absent: None B. Review Agenda Turgeon moved, Zerby seconded, approving the agenda as presented. Motion passed 5/0. 2. APPROVAL OF MINUTES A. City Council Work Session Minutes, November 23, 2009 Turgeon moved, Zerby seconded, Approving the City Council Work Session Minutes of November 23, 2009, as presented. Motion passed 5/0. 3. CONSENT AGENDA Mayor Lizee reviewed the item on the Consent Agenda. Woodruff moved, Zerby seconded, Approving the Motion Contained on the Consent Agenda. A. Approval of the Verified Claims List Motion passed 5/0. 4. TRUTH -IN- TAXATION PUBLIC HEARING A. Staff Presentation Director Burton stated the purpose of this Truth -in- Taxation Public Hearing is to present the City's 2010 Proposed Budget and 2010 Tax Levy and to take public continent. She noted this is not the not the forum to discuss the assessor's valuation of properties for tax purposes. That takes place at the Board of Review, generally in mid /late April. If the public has questions about their valuations the City can put them in contact with the Hennepin County Assessor. Burton first highlighted the City's 2010 proposed budget and tax levy. The highlights are: there are levy limits in place for 2010; Shorewood plans a zero percent tax levy increase from 2009; the budget includes the use of some of the General Fund Reserves; transfers to the Capital Funds are planned; expenditures will increase a fraction of one percent from 2009; and the City's tax base decreased approximately two percent. SHOREWOOD CITE' COUNCIL SPECIAL MEETING MINUTES December 7, 2009 Page 2 of 6 Burton presented information on the City's property tax distribution for 2010. Out of every property tax dollar levied approximately 23 percent goes to the City. She reviewed the budget preparation calendar. Burton stated the proposed General Fund Budget for 2010 is programmed at approximately $5.375 million. The 2010 tax levy is programmed at approximately $4.8 million which is the same as the 2009 levy. She summarized the 2010 Proposed Budget revenues and expenditures. Revenues for 2010 are projected to be approximately $5.375 million compared to almost $5.5 million in 2009. She noted 89 percent of the revenues come from property taxes, and 3 percent will come from General Fund Reserves. Expenditures and transfers are proposed to be $5.375 million compared to almost $5.5 million in 2009; an approximate 2 percent decrease. Most of the departments show a decrease in expenditures with the exception of Parks and Recreation which shows a slight increase. Approximately one -third of the expenditures are for public safety (police, fire and protective inspections). Burton stated the total property taxes on a median value home of $419,000 in Shorewood would be approximately $4,902. The proposed City portion of the tax is $1,120. Estimates show City taxes could increase $24 over 2009. For that amount of money, residents received a value in City services in the areas of police protection, fire protection, snow plowing, street maintenance, parks and recreation, building inspections, and other City services Burton summarized the Enterprise Funds, and proposed budgets for those funds, which include Water Operations, Water Debt Service, Sanitary Sewer, Stormwater Management, Recycling, and Southshore Community Center Operations. She noted these funds are designed to be self - supporting (i.e., they would be run similar to a separate business). The Water Operations Budget increased primarily due to anticipated capital expenditures of approximately $400,000. A new minimum charge is proposed at $17.50 per quarter for users consuming 5,000 gallons or less. The current minimum water charge is $35 per quarter for users consuming 10,000 gallons or less. The Sanitary Sewer Budget reflects the use of $1 million in Sanitary Sewer Fund Reserves to establish a new Community Infrastructure Fund to help finance infrastructure improvements. This budget allows for capital improvements of approximately $400,000. The Recycling Budget reflects a rate increase which is in part due to a change in service provider. The increase can be offset by RecycleBank credits. The Stormwater Management Budget anticipates approximately $400,000 in capital expenditures. The Southshore Community Center Budget is new for 2010; Shorewood assumed management responsibilities for the Center mid -2009. This budget anticipates a $12,000 deficit at year -end 2010. Burton stated Council had been provided with copies of revised resolutions for consideration this evening. B. Public Hearing Mayor Lizee opened the Public Hearing and Public Testimony portion of the Public Hearing at 7:20 P.M. A member of the audience stated she thought she could discuss her market valuation this evening. Mayor Lizee clarified that is discussed during the Board of Review in April with Hennepin County assessors. Ray Brockhouse a resident, asked what the value of the recycling program is. Mayor Lizee stated the City has looked at many recycling programs and the City's contract with its current recycling service provider expires at the end of 2009. The best bid the City received was from Allied Waste. Allied Waste will provide single -sort recycling services and collect recyclable materials every other week. Allied Waste is known to be very successful with its single sort system. Every other S Ot2E OOD CITY COUNCIL SPECIAL ME Tt G MINUTES December , 2009 Page 3 at 6 week pickup will result in less wear and tear on the City's roadways. When a resident increases their amount of recyclable material they have a reduction in solid waste which can result in a savings for that service. She commented that the Cities of Excelsior and Tonka Bay use this type of system. Mr. Brockhouse questioned why residents have to pay a service provided to take their recyclable materials when the provider is paid by someone else for those materials. He stated all he has to do is throw his recyclable materials in with his solid waste. Administrator Heck explained in the late 1980s the Solid Waste Management Act was passed. It required counties and cities to reduce the amount of solid waste going to the landfills and other facilities. Cities and counties were mandated to provide for reuse and recycling of materials. If residents within a county weren't doing something to reduce their waste cities would have to find ways to manage the solid waste. It's difficult to expand a landfill because of Pollution Control Agency regulations. Implementing recycling programs was one way the State Legislature chose to reduce the need for additional landfills. Allen Kramer, a resident on Enchanted Island questioned if residents will go along with this program. Or, will they just throw their recyclable materials in with their solid waste. He stated the residents are paying for the service and the haulers are being paid for the materials collected. He questioned why the residents have to pay for the service. Councilmember Zerby explained there is not enough demand for recyclable products for to make it self sufficient. The materials thrown away are not worth what it costs to haul it away, process it and make a new product. He stated by recycling more a resident can reduce the amount of solid waste they have. Most solid waste providers have different size containers for solid waste and collect fees based on the size of the container. In the long term recycling improves the environment and the economy. He did not think recycling haulers made a substantial profit. Mayor Lizee commented there is a substantial cost to set up a recycling center as well as the cost to collect the materials. Director Burton commented that residents can earn credits for materials recycled. Mr. Brockhouse asked how the service provider will know how much each resident recycles. Burton explained they weigh it. Councilmember Woodruff stated Allied Waste will make some money on providing the services from the fees, but the money they make off the materials collected doesn't pay for the cost of the operation. The residents have to subsidize the cost of the service in order to keep the materials out of the landfill. He then stated he received a letter the past week from Allied Waste about the new program. There is some evidence that a resident can earn up to $20 in credits based on the amount of material they recycle. Each recycle bin has an RFID tag on it. He clarified the amount of credits is based on the amount of recyclable material collected in the neighborhood. Mr. Brockhouse stated maybe all waste, recyclable or not, should go to the garbage dump and there should be a plant at the dump to handle it. Councilmember Woodruff stated the cost for solid waste services would be increased if that happened. Mayor Lizee stated recycling is a personal choice. The City's job is to increase the amount of recycling. Councilmember Turgeon clarified that the types of materials that can be recycled is not changing with the new program. Ms. Kramer asked if Allied Waste will tell residents what types of things can be recycled. Mayor Lizee explained Allied Waste will provide a complete list. Ms. Kramer asked what happens when some residents don't want to participate or recycle very much. SHOREWOOD ci COUNCIL SPECIAL MEETING MINUTES December 7, 2009 Page 4 of Mayor Lizee closed the Public Hearing and Public Testimony portion of the Public Hearing at 7:37 P.M. C. Council Deliberation/Decision to Reconvene Mayor Lizee stated there are three resolutions for Council to consider this evening. They are: a resolution adopting the 2010 budgets and approving the 2010 property tax levy collectible in 2010; a resolution adopting a capital improvement program for the years 2010 — 2014; and, a resolution authorizing the transfer of funds. She explained Council can act on them this evening or continue them to its December 14, 2009, meeting. There was consensus there was no need to reconvene this item on December 14, 2009. Councilmember Woodruff recapped the budget discussion of Item 4.A. He explained Council had numerous discussions about expenditures. The 2010 budget reflects a zero percent tax levy increase over 2009. There will not be any decrease in services provided. Some funds were reallocated to areas some Councilmembers deemed a higher priority such as parks. To help achieve a zero percent increase Council decided to use some of the General Fund Reserves. There are no salary increases planned for City staff and police and fire personnel. Councilmember Turgeon stated Council and Staff have done their due diligence with regard to the 2010 budgets. Turgeon moved, Zerby seconded, Adopting RESOLUTION NO. 09 -064 "A Resolution Adopting the 2010 Budgets and Approving the 2010 Property Tax Levy Collectible in 2010 ", Adopting RESOLUTION NO. 09 -065 "A Resolution Adopting a Capital Improvement Program for the Years 2010 — 2014 ", and Adopting RESOLUTION NO. 09 -066 "A Resolution Authorizing the Transfer of Funds ". Councilmember Zerby thanked Director Burton for the good job she did on her presentation and he asked that it be placed on the City's website. Mayor Lizee asked Administrator Heck to conduct a role call vote which he did. Zerby — yes, Bailey — yes, Turgeon — yes, Woodruff — yes, and Lizee — yes with a caveat. Lizee stated Council has been discussing the budget for six to eight months. It was determined Council wanted to achieve a zero percent increase over 2009. She expressed she continues to think that is an arbitrary number. She also expressed she thought some of the priorities have been skewed. She stated that from her vantage point the most important service the City provides its residents is fire and police protection. She stated the fire department had to make difficult and significant cuts to achieve the required zero percent increase. The police department also had to make difficult cuts. Yet this evening Council heard from residents they had a desire for more police visibility. She Mayor Lizee stated Rusty Fifield, with Northland Securities, was present to provide his final report on the Municipal Utility Systems Financial Planning and Rate Analysis Final Report. Mr. Fifield stated he was present this evening to conclude a five month long process of planning for the future of the City's utility systems. Northland Securities has worked closely with Staff during this process. Three work sessions were also held with Council to discuss the analysis. The meeting packet for this meeting contains a copy of the final report which summarizes the results of the process and the recommendations for moving forward. Mr. Fifield highlighted a couple of items that apply to all three utilities. In the final report the 2008 numbers have been revised to be the actual 2008 numbers. It also includes 2009 projections. The 2010 numbers are based on the 2010 — 2014 Capital Improvement Program (CIP) Council adopted this evening. Mr. Fifield explained there is no increase in user fees for 2010 for the stormwater utility. The projections in the report indicate capital improvements will be funded with cash. It is likely that will be accomplished through internal borrowing to spread the cost of the improvements over time and mitigate the impact on the Stormwater Management Fund balance. The projections show that by 2012 — 2013 current spending on the operation of the stormwater management system and capital improvements will deplete this Fund's balance without there being any borrowing or rate increase. Some increase in user fees is likely going into the future. Mr. Fifield then explained the City's Sanitary Sewer Fund has a significant balance. The balance allows the City to not increase user fees in 2010 and for some years after that. That will be accomplished by drawing down on this Fund's balance. The 2010 Sanitary Sewer Budget reflects using $1 million of this Fund's balance to establish a Community Infi Fund. The Community Infrastructure Fund will facilitate internal borrowing; it will give the City greater management in funding capital improvements and help hold down the cost of them. He noted Metropolitan Council Environmental Services (MCES) is considering rate changes. The projections are based on the best information available from MCES and they should be revised as new MCES rates are set. Mr. Fifield went on to explain the Water Utility projections are based on a zero percent increase in operating revenues. Council is being asked to adopt a change in the City's water user charge structure this evening. One of the primary focuses of this study was to determine if the City could reduce the minimum charge structure for water consumption fees. The proposed new minimum charge is $17.50 per quarter for users consuming 5,000 gallons or less. The current minimum water charge is $35 per quarter for users consuming 10,000 gallons or less. The proposed use based rates are $2.95 per additional 1,000 gallons consumed between 5,001 and 50,000 and to $4.25 for each 1,000 gallons consumed over 50,000. He strongly suggested that as the City looks forward to 2011 Staff assess whether or not there were any unintended consequences because of this change, noting the rates are consumption based. Mr. Fifield stated he was willing to entertain any questions Council may have, and that he will provide Council with bound copies of the final report. Mayor Lizee thanked Mr. Fifield for his efforts and keeping up with the schedule this summer. H R WOOD CITY COUNCIL SPECIAL MEETING MINUTES December 7, 2009 Page 6 of 6 Mr. Fifleld stated it was nice to deal with a group that is engaged in a process. He hoped the report reflects what Council would like to see happen in the community. He stated as part of this process the City has created a blueprint for its utility systems going forward. Changes have been made to set the City up well to do capital improvement financing, to manage the utilities and for Council to be a good financial steward. Motion passed 510. Mayor Lizee asked for a motion to set the water and recycling fees and rates. Councilmember Turgeon asked what the proposed recycling rate is indicating she has heard various rates discussed. Director Burton stated the proposed resident recycling rate is $4.50 and she thought the rate has been consistent during discussions. She explained the per- resident cost to the City is $4.90, noting the City will subsidize a small portion of the cost through a Hennepin County Recycling Grant. Turgeon stated she will vote in support of the motion because the water rate is included in it and she wants it approved, but she was not in support of the recycling rate. Lizee moved, Bailey seconded, Adopting RESOLUTION NO. 09 -067 "A Resolution Setting Water and Recycling Fees and Rates." Motion passed 510. 6. ADJOURN Zerby moved, Woodruff seconded, Adjourning the City Council Special Meeting of December 7, 2009, at 7:56 P.M. Motion passed 5/0. Administrator Heck stated he will add revising the City's water policy to the list of goals and objectives. RESPECTFULLY SUBMITTED Christine Freeman, Recorder Christine Lizee, Mayor