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07-12-10 CC WS MinCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, JULY 12, 2010 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 5:30 P.M. Mayor Lizce called the meeting to order at 5:31 P.M. A. Roll Call Present. Mayor Lizee; Councilmembers Bailey (arrived at 5:40 P.M.), Turgeon, Woodruff and Zerby (arrived at 5:57 P.M.); Administrator Heck; 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 310. 2. 2011 BUDGET Administrator Heck stated revision 2 of the 2011 budget has a few minor adjustments in it. Some of the revenue budgets have been refined. He said the only expenditure item in revision 2 of the budget that needed to be changed was for police services and the change was based on the discussion held during the July 1, 2010, South Lake Minnetonka Police Department (SLMPD) Coordinating Committee budget work session. Administrator Heck highlighted changes in the 2011 budget revenue items. ➢ The base levy (which is the total levy minus the special levy) was increased 2% over the 2010 base levy. The new base levy is $4,241,845. The special levy decreased slightly to $616,000 (this amount needs to be verified). The total levy increase is 1.71% over Pay2010 for an amount of $4,857,845. ➢ Building Permit revenues are $70,000 compared to 2010 budgeted revenues of $90,000. 2010 year -to -date revenues for the first six months are approximately $55,000 and year- end projected revenues are $60,000 — $65,000. ➢ Plan Check Fees revenues will be increased to approximately $11,000 from $0.00 in 2010. The amount is the same as revenues projected for 2010. Where that income is currently being classified has to be determined. ➢ Charges for Services /City Hall Rent will be decreased to $0.00 because rent because there is no rent collected. In 2010 income from the rental of the City -owned house and the June 2010 payment for the water tower lease payment for the cellular antenna have been put into this line item. The lease payment revenue will be reclassified to Cellular Antenna Revenue and it will ultimately be transferred to Water Fund. The rental income for the house will be reclassified to Miscellaneous Revenue. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 12, 2010 Page 2 of 9 ➢ Refunds and Reimbursements revenue was decreased to $0.00 from $10,000 in the 2010 budget. This income has mainly been attributed to the dividend from the League of Minnesota Insurance Trust; therefore, Heck preferred not to budget for it because there is no guarantee the City will receive it. The divided is usually $5,000 - $10,000. ➢ Miscellaneous Revenue will be decreased for 2011 to reflect leasing the house through April 2011. Administrator Heck highlighted changes in the 2011 budget expense items. ➢ City Council /Support Services and Charges increased to $65,809 over the 2010 budget of $46,200. The increase is for the approximate $19,000 performance pay pool. ➢ Elections /Personnel was reduced to $4,781 from the 2010 budget of $30,689 because there aren't elections in 2011. The General Government/Personnel budget was increased by the amount of the decrease. ➢ Finance/Personnel was reduced to $151,734 from the 2010 budget of $178,584. The 2011 budget includes $80,000 for a finance director's salary. ➢ Professional Services /Support Services and Charges was increased to $208,000 from $199,000. A small increase was budgeted for attorney fees and the County Assessor's fees were increased to $96,000. ➢ Planning/Personnel was decreased to $178,386 from the 2010 budget of $193,605. ➢ Planning /Support services and Charges was increased to $10,630 from the 2010 budget of $4,700. The increase is for training for Planning Commissioners. ➢ Municipal Buildings /Transfers was reduced to $0.00 from the 2010 budget of $60,000. There is no transfer back to the Sewer Fund because that internal loan has been paid off. ➢ Municipal Building /Bond Payments was increased to $111,000 from the 2010 budget of $106,000. ➢ Police services costs are based on the South Lake Minnetonka Police Department (SLMPD) budget discussed during the July 1, 2010, SLMPD Coordinating Committee budget work session. The City pays 50% of the cost. The 2011 budget is 4.19% higher than the 2010 budget. ➢ Fire services costs are based on the City's portion of the 2011 Excelsior Fire District (FEE) budget and the Mound Fire Department (MFD) budget. The 2011 budget is 235% higher than the 2010 budget. Heck will verify it includes the cost for the MFD. Turgeon asked that the two costs be broken out. ➢ City Engineer/Personnel increased to $111,103 from the 2010 budget of $94,875. Part of the increase is due to allocating administrative support time to this line item. Heck explained the City Engineer's time is currently allocated to Engineering and Storm Water Management, but it should be changed to allocate some to Streets and Roadways. ➢ City Engineer /Capital increased to $5,700 from the 2010 budget of $1,000. The increase is for the cost of the signage inventory management software. ➢ Public Works Services /Personnel was reduced to $184,107 from the 2010 budget of $295,372. The adjustment was based on where Publics Works staff actually spent their time between June 2009 and June 2010. Some of their time was allocated to Enterprise operations. Vacation and holiday pay needs to be reallocated accordingly. Public Works /Transfers includes a $100,000 transfer to the Equipment Fund. This is the same as in 2010. ➢ Public Works /Capital budget increased to $11,000 from the 2010 budget of $3,800 with the budgeted amount being mainly for the shop machinery and equipment. It also includes $4,000 for repairing the roof on the Public Works building. That will be taken out because the roof is going to be repaired in 2010. Woodruff asked for detail on the machinery and equipment needs. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 12, 2010 Page 3 of 9 ➢ Street and Roads /Personnel has increased to $113,459 from $95,607 due to the reallocation of Labor. ➢ Street and Roads /Support Services and Charges increased to $34,000 from the 2010 budget of $23,500. The increase is for things such as paint striping and disposal of street sweepings ➢ Street and Roads /Transfers remains the same as the 2010 budget at $700,000. This needs to be discussed further. ➢ Snow and Ice Control /Personnel has increased to $56,567 from $40,857 due to the reallocation of labor. ➢ Traffic Control /Support Services and charges increased to $51,850 from the 2010 budget of $45,049. The increase is for the $6,800 for contract services to conduct a signage inventory. ➢ Traffic Control /Materials and Supplies needs to be adjusted to $5,000 from $0.00 to replace traffic lights and bulbs. The 2010 budget is $6,000. ➢ Sanitation /Weeds /Waste Removal/Personnel increased to $2,281 from the 2010 budget of $0.00. The majority of this is for the annual spring cleanup. Labor has not been budgeted for this in the past. ➢ Tree Maintenance /Personnel was decreased to $14,020 from the 2010 budget of $17,279. ➢ Tree Maintenance /Support Services and Charges remains the same as in 2010 at $13,500. This is for contractual services for tree removal and tree trimming. This does not include tree replacement or identification of diseased trees. This warrants further discussion. ➢ Tree Maintenance /Materials and Supplies was decreased to $2,000 from the 2010 budget of $2,700. ➢ Parks and Recreation /Personnel increased to $185,708 from the 2010 budget of $160,481. This is the result of the reallocation of labor. There are approximately 1.7 full - time equivalents working in Parks plus part -time people. ➢ Parks and Recreation /Materials and Supplies increased to $20,800 from the 2010 budget of $16,300. This line item is for maintenance of things in the parks. Heck explained it is more appropriate to fund these expenses out of the Parks operating budget rather than the Parks capital fund. Parks and Recreation/Transfers remains the same as the 2010 budget of $42,000. Turgeon suggested discussing this further as she is not sure this transfer can continue to remain at this level at this time. She acknowledged the parks need to be maintained to a level where they are safe. ➢ A budget for the Southshore Center has been added. Administrator Heck stated the 2011 General Fund revenue is expected to increase approximately 0.6 % including the 2% base levy increase. General Fund expenditures are projected to decrease 0.5% over the 2010 budget. This does not include any increase in transfer to Streets and Roads, to Equipment or to Parks. Revision 2 of the 2011 General Fund budget is approximately $127,000 short of a balanced budget. The 2011 Public Facilities Capital Improvement Program (CIP) programs $30,000 for signage for entry points into the City and the City Hall monument sign. That is currently reflected as a transfer in to the General Fund from the Public Facilities Fund. The General Fund budget anticipates a $40,000 transfer in from the Liquor Fund. This revision does not include any draw down of the General Fund balance. Heck then stated he thought the Park Commission has done an excellent job of looking at the big picture. The plan for Parks considers the safety and security of the parks, it adds additional amenities and it considers some of the things identified in the TKDA study for the future of the parks. He asked the Commission to spread out some of its proposed capital projects for parks. For example, it could consider constructing an ice rink in Freeman Park one year and installing rink lighting a year or two later. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 12, 2010 Page 4 of 9 Councilmember Bailey stated he would not be in favor of a Parks CIP that went into a deficit state or to $0.00. Even though Councilmember Woodruff asked the Commission to think big picture, it doesn't mean it should be in the CIP. And, there should be a second document that takes the broader view into consideration. The Park Commission has to agree to a CIP that does not exceed the currently planned $42,000 annual transfer in to the Park Capital Fund. There has to be enough in the Fund to deal with unplanned capital expenditures. Woodruff agreed there should be a second document and that the Parks CIP should, in effect, be balanced. Councilmember Woodruff stated the Parks CIP shows a transfer in of $12,021 in TIF proceeds. He explained the TIF proceeds cannot be spent on parks so it needs to be removed. Administrator Heck stated the City may not be able to use it for Silverwood Park because of state statutory changes. Councilmember Woodruff recommended including using$160,000 from the General Fund balance in to the General Fund operating budget. He thought there are sufficient funds in the General Fund balance and that the use would more than balance the budget. He indicated that although he was not thrilled about it he could, for now, agree to keep the base levy increase at 2 %. Mayor Lizce asked what the reserve balance would be if that were done. Administrator Heck stated reserves would be 55% — 60 %. Councilmember Woodruff stated he thought it would be 58 %— 59 %. Councilmember Woodruff stated the most recent budget report with year -to -date information and the revision 2 of the 2011 budget do not have consistent 2010 information. Administrator Heck stated that has been corrected. Administrator Heck stated if there is a $160,000 use of General Fund reserves and if the base levy remains at 2% then the 2011 General Fun budget would have a positive balance of $15,606. This does not include any increase in the transfer into the Road Fund or into other capital funds. Councilmember Woodruff stated Council could decide to spend more or reduce the base levy slightly. Councilmember Turgeon stated she had no issue with a 2% base levy increase. She did not think $15,000 was a sufficient cushion. Councilmember Woodruff stated the $160,000 transfer in could be considered being part of the $700,000 transfer into to the Road Fund. The 2010 budgeted transfer and 2009 actual transfer of $700,000 are more than double the 2007 actual transfer $345,000. He noted that for the last three years the General Fund budget was balanced using General Fund reserves. He thought reserves should be used until the level of reserves reaches the level defined in the General Fetid Balance Policy and then another way for funding road construction has to be identified. Councilmember Turgeon stated she thought the budgeted amounts for the Southshore Community Center (SSCC) are a little lofty as far as revenue versus expense. She suggested budgeting something for emergency repairs to the SSCC through the end of the City's contract for managing the SSCC in 2012. Administrator Heck stated there is approximately $200,000 in the Municipal Facilities Fund and $10,000 of that could be programmed for that purpose should the need arise. Councilmember Woodruff stated he agreed with Heck's suggestion, but cautioned against using the fund for anything other than a true capital need. Mayor Liz6e stated it's imperative to bring the other four SSCC member cities in on this. The City has received donations from some of the cities this year. She recommended establishing a fund for the maintenance of the facility similar to what is being done for the public safety facilities and what there is for the City's municipal buildings. She encouraged the SSCC Operating Committee to reach out to the CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 12, 2010 Page 5 of 9 other cities and get them to contribute toward establishing such a fund. Councilmember Turgeon stated any donation to the SSCC goes into the capital fund; it does not go towards operations. Councilmember Zerby stated the other member cities still have ownership in the SSCC facility; therefore, they should contribute towards the maintenance and repairs of the facility. Turgeon stated the City agreed to take over the entire operation for three years. Zerby clarified that the City is just a renter of the facility. Councilmember Turgeon stated that Administrator Heck's budget memorandum states one option is to use funds in the Public Facilities Fund for improvements to shelters in the parks. Heck clarified he was only presenting alternatives, not necessarily recommending that. Turgeon stated the maintenance of the shelters has to be planned for. Councilmember Woodruff recommended expenses for parks be budgeted separately; he did not consider the shelters municipal facilities. Woodruff stated he thought the City should be reimbursed for one half of the maintenance and repair costs for the SSCC; the City only owns one -half of the facility. He stated he was willing to make an exception and use funds in the Building Facilities Fund for SSCC repairs and maintenance. Councilmember Bailey stated he would like to have further discussion about the $30,000 transfer from the Public Facilities Fund for signage. He thought that was an extravagant amount of money to spend on signage to say someone is entering Shorewood when there are potential budget cuts in other areas. He then stated he would like to discuss sticking to a 0% base levy increase and use other sources, such as the Liquor Fund, to help balance the budget depending on what amount of General Fund reserves are used. Mayor Liz& expressed she has difficulty with having a 0% levy increase and with raiding the Liquor Fund. She stated Council has not solicited public input on what to use the Liquor Fund for. The interest earned by the Liquor Fund has gone down precipitously. After the sale of the City's liquor operations Council decided to transfer the interest earned into the General Fund to compensate for the loss in a transfer in from liquor operations. She has difficulty not investing that Fund in big picture items. The use of that Fund needs to be discussed by Council and with the residents. She agreed that spending on signage for the main entry points into the City is not pressing. She thought a monument sign for City Hall should be purchased and installed. Councilmember Zerby stated the 2010 Local Street Reconstruction CIP programs approximately $600,000 for the reconstruction of Star Circle and Star Lane. He questioned how the need to reconstruct the roads was determined. Engineer Landini explained that won't be done until the feasibility study has been completed. Councilmember Woodruff stated he would like to have a City Hall sign. He asked what the cost for that would be. Director Nielsen stated the quote from one vendor indicates it would be approximately $14,000 for a sign without a digital component. Nielsen explained Staff is going to have the masonry base for the sign bid separately to determine if the cost can be reduced. Woodruff stated he supports reducing the budget for signage to $15,000. Councilmember Zerby stated he thought there needs to be some new signage along Highway 7 for an east and a west marker. The signs would say Welcome to the City of Shorewood and the 2010 census population numbers. Zerby noted there are no City signs along Highway 7. Director Brown stated the City has to apply for permission to replace those types of signs. Director Nielsen noted the cost for the type of signs Zerby is talking about is not very much. Nielsen stated the need for identity is noted in the Comprehensive Plan. Mayor Lizee asked if the monument sign at City Hall would also direct people to the SSCC and Badger Park. Director Nielsen stated there would be a smaller directional sign in addition to the monument sign. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 12,2010 Page 6 of 9 Councilmember Bailey stated he proposed not spending money on any of these signs in 2011. Councilmember Turgeon stated she can support delaying a City Hall monument sign for another year. Councilmember Zerby stated he still wants the Welcome to the City of Shorewood signs. Director Brown stated that type of sign costs around $400 each. Zerby stated there is a need for 4 — 8 signs along Highway 7. Mayor Liz6e asked Director Brown to determine the cost for replacing and adding signs along highway 7. She indicated she supports purchasing a monument sign at City Hall and 4 — 8 green reflective identity signs. Councilmembers Bailey, Turgeon and Zerby supported only the green reflective identify signs. Mayor Liz6e stated it appears the three of them do not see the value in finishing the aesthetics of the City Hall campus with the SSCC. She stated if the monument sign is going to be delayed a year she would like the current wood sign at City Hall to be painted to match the colors of City Hall. Councilmember Woodruff suggested taking the $30,000 in Transfers From Other Funds in the General Fund budget out. He suggested the green identity signs be funded out of the Local Street Reconstruction Fund for a budgeted amount of $3,200. He explained taking out the transfer would bring the General Fund budget to within $40,000 of a 0% base levy increase. Councilmember Turgeon asked where the subsidy funding for the SSCC operations will come from. Administrator Heck stated it's currently planned to come out of General Fund reserves. There is $7,000 budgeted in the Parks budget that will be transferred to subsidize the operations. Turgeon expressed concern about the revenue projection for 2010 of $52,390 when 2010 year -to -date revenues are just under $25,000 and the 2011 revenue budget is $61,100. Heck clarified the $61,100 includes the $7,000 transfer in from the General Fund. Turgeon suggested the SSCC budget include a transfer line item in order to track where the money is coming from. She stated she thought it would be prudent to have a detailed history of the finances for the SSCC at the end of the three -year contract period in order to evaluate the operations. She indicated she thought the revenue projections were quite aggressive. Heck stated the best estimate for how much the SSCC operations will have to be subsidized in 2011 is $7,000 — $8,000. Councilmember Woodruff stated he agreed with a transfer in from the General Fund. Councihnember Bailey stated in a year when property values in the City are down approximately 7% residents will be expecting a decrease in the base levy and that's not possible. He did think a 0% increase is reasonable. Mayor Liz6e stated the City has held the line on the base levy fairly well. Mayor Liz6e stated the 2011 budget for Professional Services is $208,000 with $96,000 of that being for the county assessor's services. She asked how much of the rest is for services provided by Kennedy and Graven and how much has that increased over the 2010 budget. Administrator Heck explained the total amount programmed for civil and prosecuting legal services is $87,000; an increase of approximately $9,000 more than the 2010 year -end projection. The remaining $25,000 is programmed for audit services. Liz6e stated Attorney Potts is asking for a minimal increase. Liz6e asked that the fees for service for Kennedy and Graven be broken out separately and she wants to know the increase. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 12, 2010 Page 7 of 9 Administrator Heck explained if the 2011 base levy remains the same as the 2010 levy and if the revenue projections remain as discussed there will be a $50,567 deficit in the General Fund budget. Heck stated he will make additional refinements and send that information out by the end of the week. Administrator Heck asked Council what additional information it would like in the next revision of the General Fund budget. Councilmember Woodruff stated he would like more detailed justification about the signage inventory management software and the contractor costs for conducting a signage inventory. He questioned why the City couldn't hire someone to write a program in Microsoft Access to manage the signage inventory. Engineer Landini explained an Access program won't interconnect with the GIS software. Councilmember Zerby asked if another city had the same need so multiple cities could share the cost. Landini explained the cost is for a licensed number of seats and he is not sure how that works. Woodruff stated he wants to discuss this further because he thought the cost of this software is 20% of what it cost for new finance software. Administrator Heck summarized his understanding of the discussion for the 2011 General Fund budget. The budget will include the use of $160,000 in General Fund reserves. Funds will be set aside for capital needs at the SSCC. There will be a document that reflects no increase in the base levy over 2010. Tine City Hall monument sign and the major entry point signage will be removed ($30,000) and $3,200 will be programmed for 4 — 8 green reflective identity signs. The line items in the SSCC budget will be clarified. The budget for civil services and prosecuting services will be broken out. Fire services for the EFD and MFD will be broken out. Councilmember Woodruff stated he is not thrilled with the increase in the SLMPD budget. Administrator Heck explained the increase to the City is approximately $46,000. Woodruff suggested the SLMPD go back and look at cutting its budget. Woodruff stated he wanted an increase similar to the fire services budget increase of approximately 2.5 %. He noted he did not want to short the SLMPD. Mayor Liz6e explained there have been significant reductions in the SLMPD's revenue. Projected investment income is down]. Revenues from State Peace Officer Aid and State Training Reimbursement are also down significantly]. There has been discussion that all reimbursement from the State may go away. The SLMPD and the SLMPD Coordinating Committee have scrutinized the proposed budget. If Council is going to demand cuts below what is proposed then the cuts will have to be in personnel. She asked Councilmember Woodruff what SPLMPD individual he would like to cut. Woodruff stated he did not say lie wanted to cut personnel, but he did not buy that the SLMPD and Coordinating Committee can't find 1.5% in cuts. Liz6e stated SLMPD Chief Litsey has offered to answer any questions her fellow Councilmembers may have. She recommended they contact him to discuss their concerns before they judge the budget. They are also welcome to come to the July 21` SLMPD Coordinating Committee quarterly meeting. Councilmember Turgeon requested Chief Litsey include a column in the budget comparisons for the current year -to -date expenditures. She thought it would be helpful. Mayor Liz6e explained that information comes out on a quarterly basis. Turgeon stated she would prefer it be included in the detailed budget information. Councilmember Zerby stated he was not sure what Council will do with the year -to -date information. That doesn't have any value unless you understand the spending cycles for SLMPD operations. He expressed this has been the worst crime rate in the City in years. There have been break -ins in the Birch Bluff and in Boulder Bridge areas, there was a shooting at Lake Shore Market, and kids have tried to CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 12, 2010 Page 8 of 9 blow up the church. Councilmember Turgeon commented the year before the crime rate was down. Zerby stated he wants to ensure the SLMPD gets what it needs. Mayor Liz6e stated the proposed 2011 SLMPD Operating Budget is extremely lean. She again recommended Councilmembers contact Chief Litsey to discuss any questions they have before they judge the budget. She stated she will pass on Councilmember Turgeon's request. Discussion turned to the Capital Improvement Program. Administrator Heck stated Council has been provided with copies of the 2010 — 2019 CIP. The 10 -year CIP provides some indication if the transfers should be adjusted. He highlighted the various CIPs. Administrator Heck explained the Equipment Replacement CIP is projected to have a balance of more than $700,000 at the end of 2010. The two purchases scheduled for 2011 are for a Track Excavator and a Dump Truck. The balance would drop by $141,426 if there is a $100,000 transfer into this fund again in 2011. He related that he has told Director Brown that the CIP should be reviewed to ensure it reflects the needs of the City. fleck stated the fund stays healthy until 2015 when it drops to under $140,000. Councilmember Turgeon asked Administrator Heck and Director Brown to assess what the impact would be of not transferring $100,000 in 2011. Heck noted that the 2009 transfer was reduced to $100,000 from $175,000 in 2010. Heck explained the Local Street Reconstruction 2011 CIP programs almost $600,000 for the reconstruction of Star Circle and Star Lane and approximately $177,000 for the City's portion for the mill and overlay of Vine Hill Road. It also programs $225,100 for the bituminous sealcoating of roadways. A $700,000 transfer in to this fund from the General Fund is also contemplated. The balance in this fund is projected to be approximately $1.3 million by the end of 2011. In 2015 this fund will go into a deficit state based on the projected scheduled. Councilmember Turgeon stated it may be prudent to put reconstruction of roadways on hold during these tough economic times unless a roadway is down to gravel; roadway reclamations could be considered. Mayor Liz6e stated that is something that should be discussed. Liz6e then stated there are utilities that need to be considered at the same time. A decision will need to be made as to whether or not it's a sound financial decision just to reclaim a roadway rather than reconstruct it. Water main can be extended as part of a reconstruction. Councilmember Woodruff stated this CIP includes a revenue item for Minnesota State Aid. That is already accounted for in the General Fund budget so it should be removed from one of the places. He commented the MSA reimbursement could be considered as part of the $700,000 transfer. Councilmember Zerby stated he thought the 20 -year Pavement Improvement Plan is overly ambitious. He thought it would be beneficial to solicit input from the residents about what their perceptions are of the quality of the roadways in front of their properties. Mayor Liz6e stated Councilmembers need to be cautious about making them look good in the eyes of the residents at the expense of future council members when it comes to roadway improvements. Councilmember Turgeon stated the Star Circle and Star Lane are dead end streets. Therefore, she questioned reconstructing them. She suggested the Plan be revisited. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 12, 2010 Page 9 of 9 Councilmember Bailey stated the message he will give to the Park Commission during its meeting the following evening is the Park CIP needs to be within the revenues budgeted. Administrator Heck stated he will take the use of the TIF proceeds out of the Park CIP. He will see if it can be used for roadway maintenance. There was discussion about scheduling a budget work session for July 19` Councilmember Zerby stated he cannot attend. Councilmembers Bailey and Woodruff indicated they will check their calendars. 3. ADJOURN Woodruff moved, Zerby seconded, adjourning the City Council Work Session of July 12, 2010, at 7:00 P.M. Motion passed 5/0. RESPECTFULLY SUBMITTED Christine Freeman, Recorder Christine Lizee, Mayor