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07-19-10 CC WS MinCITY OF SHOREWOOD 5755 COUNTRY CLUB ROAD CITY COUNCIL WORK SESSION COUNCIL CHAMBERS MONDAY, JULY 19, 2010 5:30 P.M. MINUTES 1. CONVENE CITY COUNCIL WORK SESSION Mayor Liz6e called the meeting to order at 5:45 P.M. The meeting was delayed pending a quorum. A. Roll Call Present, Mayor Liz6e; Councilmembers Bailey (arrived at 5:57 P.M.), Turgeon, and Woodruff; Administrator Heck; and Planning Director Nielsen Absent: Councilmember Zerby B. Review Agenda Mayor Liz6e recommended that because Director of Public Works Brown and Engineer Landim were not in attendance this evening the discussion about the Equipment Capital Improvement Program (CIP) and the Local Street Reconstruction CIP be postponed until they can be present. Councilmember Turgeon voiced her objection to doing that. Turgeon stated Councilmembers can ask their questions tonight and they can be answered at a later date if need be. Councilmember Woodruff supported asking the questions this evening. Woodruff moved, Turgeon seconded, approving the agenda as presented. Motion passed 2/1 with Liz6e dissenting. 2. 2010 BUDGET Mayor Liz6e asked Administrator Heck to highlight the questions he received and answered by email from both Councilmember Turgeon and Councilmember Woodruff. Councilmember Turgeon objected to doing it that way. She stated each question and response should be discussed when the related budget is discussed. Administrator Heck stated Council discussed the second draft of the 2011 General Fund Operating Budget during its July 12, 2010, work session. During that work session Council identified some budget adjustments which have been incorporated into draft 3 of the budget which will be discussed this evening. Heck explained the meeting packet for this evening contained a document which reflects the impact on the 2011 operating budget of a 0.0% levy increase, a 1% levy increase, a 1.5% levy increase, a 2% levy increase and the use of $160,000 in General Fund reserves as well as the use of $40,000 from the Liquor Fund. The document also reflects the impact of a 0.0% increase along with no transfers in from other funds and no use of General Fund reserves. Heck then explained in draft 3 of the operating budget he removed the $30,000 expense item for a monument sign at City Hall and signs at the major entry points into the City. He added $3,200 to the CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 19, 2010 Page 2 of 9 Streets and Roads budget for the purchase of 4 — 8 green reflective standard signs along Highway 7. Under Professional Services he separated out civil attorney fees and prosecuting attorney costs. He separated the costs for Excelsior Fire District (ETD) services and Mound Fire Department (MFD) services. He updated the information in the Southshore Community Center operating budget, noting he thought the projected 2011 revenue seems reasonable. He reduced the transfer amount into the Equipment Replacement Fund to $50,000 in 2011 and $75,000 in 2012 — 2014; it had been $100,000. He increased the transfer amount into the Street Reconstruction Fund to $750,000 in 2011 from the budgeted amount of $700,000 in 2010. Heck stated a there are a couple of questions that Council needs to answer. The first is whether or not to use reserves to help balance the budget. Based on the draft 3 budget revenue and expense projections a levy of $4,180,973 is needed. Heck explained the current levy amount of $4,774,672 would cover all 2011 operations and $599,824 in transfers to improvement funds. Draft 3 contemplates $842,000 in transfers. There are two main fund balances from which reserves can be taken; the General Fund undesignated reserves and the Liquor Fund. The General Fund Balance Policy requires the General Fund reserves to be 55% - 60% of the upcoming year's budgeted operating expenditures. Based on the draft 3 2011 operating budget the reserve amount should be $2,961,336 — $3,230,549. The 2009 year -end audited General Fund Balance was $$3,555,724 (or 66% of the adopted 2010 General Fund budget and the draft 3 2011 General Fund budget). Heck then explained the 2009 audited balance in the Liquor Fund was $865,111 which is from liquor operations and the proceeds from the sale of the liquor operations. There are varying views among the Councilmembers as to how those funds should be used. He indicated Staff s willingness to prepare a brief article for the City's newsletter and a survey on the City's website asking for residents' input on how the funds in the Liquor Fund should be used. He noted the 2010 budget programmed a transfer of $18,842 from the Liquor Fund. Heck went on to explain the transfer into the Park Capital Improvement Fund remains at $42,000. He recommends increasing that transfer amount $45,000 in 2012 — 2014 and then to $50,000 in 2015 — 2020. His rationale for doing so is there are tennis courts in Badger, Cathcart and Manor parks and the approximate cost to reconstruct a two -court facility is a minimum of $200,000. Heck stated the proposed draft 3 operating budget reflects a 1.4% decrease in revenues when compared to the 2010 budgeted revenues and a decrease of 1.2% in operating expenditures when compared to the 2010 budgeted expenditures. Councilmember Turgeon asked where the costs for the utility rate study conducted in 2009 were allocated to. Administrator Heck explained they should have been distributed equitably to the Water Fund, Sewer Fund and Stormwater Management Utility Fund. Councilmember Woodruff stated according to Administrator Heck's documents $38,376 is needed to balance draft 3 of the 2010 General Fund operating budget which contemplates a 0.0% levy increase over the 2010 levy, the use of $160,000 in General Fund undesignated reserves and the use of $40,000 from the Liquor Fund. He explained that leaving the transfer to the Street Reconstruction Fund at the $700,000 2010 budgeted amount (the draft 3 budget reflects an amount of $750,000) would more than balance the budget. He stated he advocates a 0.0% levy increase for 2011. He stated he thought there are a few line items that need further investigation; his email identified some of them. The draft budget doesn't appear to include license /maintenance fees for the financial system software. There are expense items in the budget that could be paid for with a transfer from other designated funds (e.g., the signage management software could be paid for out of the Technology Fund). CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 19, 2010 Page 3 of 9 Councilmember Woodruff then stated the fine tuning of the 2011 operating budget can be done over the next six weeks. For purposes of this evening's discussion he was comfortable with the draft 3 2011 budget once the $50,000 reduction in the transfer to the Street Reconstruction Fund is made. Administrator Heck stated the cost for the maintenance of the financial system software is included in the Financial Budget in the line item Maintenance of Equipment. There is $6,700 budgeted for the licensing. Mayor Liz6e asked what the size of operating budget cushion would be based on Councilmember Woodruff s recommendation. Administrator Heck stated it would be $14,000 — $15,000. Mayor Liz6e stated it's her recollection that during the July 12 work session budget discussion there had been some interest expressed in having a 2% 2011 levy increase. Councilmember Bailey stated he is willing to go forward with Councilmember Woodruffs recommendation for the 2011 operating budget. But, before the end of the year he wanted Council to discuss if some of the funds in the Liquor Fund should be transferred into the Street Reconstruction Fund. He indicated he is unwilling to give up on increasing the Street Reconstruction Fund at this time. Councilmember Woodruff stated he thought there should be a separate meeting to specifically discuss the Liquor Fund, the Street Reconstruction Fund and the Park Capital Improvement Fund. Mayor Liz6e asked the Councilmembers if they had interest in going through the budget detail this evening. Councilmember Turgeon stated she had some questions that she thought should be discussed. Councilmember Turgeon questioned what the $2,300 monthly retainer for prosecuting attorney services covered. She wondered how many and what type of cases the City has. She requested a break down of prosecution costs for 2009. She questioned if it may be better financially to pay for the services on a case by case basis. She stated if most of the cases are traffic related then she suggested the line item titled Professional Services /Prosecution Contract be moved under Police. She questioned the $4,000 budgeted in Police/Miscellaneous Services which according to the budget documentation is for tow charges for forfeiture vehicles. She asked if the costs for court overtime are also included in that line item. She wanted to have a clear understanding of what the total cost for police services is. Administrator Heck explained that most of the cases the prosecuting attorney deals with are generated through the South Lake Minnetonka Police Department ( SLMPD). Violations of the City's Ordinance or State Law are investigated and dealt with by the SLMPD. The SLMPD refers them to the prosecuting attorney. The prosecuting attorney may also handle civil cases for the City. Director Nielsen stated the prosecuting attorney has not handled any land use issues in quite some time, and the relatively new Administrative Code Enforcement process may address many land use issues. He clarified the monthly retainer fee is $2,291.66 (or $27,499 annually) and the fee will remain the same for 2011. He explained the City is billed individually for the forfeitures. The 2011 budget of $35,000 is based on his estimate of what the City may be doing for forfeitures. He stated he would be comfortable reducing the 2011 budgeted amount to the 2010 budgeted amount is $33,000. Heck went on to explain the costs for towing and other services have been accounted for in the Public Works budget. They are not in the Police /Miscellaneous Services line item. Those will begin to show up under the budget for Police in the City's operating budget going forward. He will investigate what gets classified to that line item. The City is billed for court overtime, and the more prosecutions there are the more overtime there is. Prosecution costs are for law enforcement activities but they are not related specifically to Police. He thought the line item Prosecution Contract needs to remain under Professional Services. He stated independent of whether or not the City contracts for police services or has its own CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 19, 2010 Page 4 of 9 police department the City still needs a prosecuting attorney. He indicated he will gather detail on what the prosecution charges for 2009 were for. He noted the City is reimbursed for some of its forfeiture related charges. Councilmember Turgeon reiterated her point of view. From her vantage point the prosecution costs, towing costs, court overtime costs, and costs for staying in the Hennepin County jail are all part of police related costs. The cost for police services is more than the SLMPD Operating Budget. Councilmember Woodruff stated he would like detail on 2009 prosecution costs also, noting he did not necessarily need to know that for this budget discussion. Mayor Liz6e asked Administrator Heck to provide Council with a chart depicting how personnel time is allocated across the operating departments and the enterprise operations. The highlights of the discussion about the draft 3 2011 General Fund operating budget are as follows. ➢ City Council • It includes $19,112 for a performance salary increase pool. ➢ Administration • Any small amount of unemployment compensation that would need to be paid to the former city administrator would be paid out of unallocated expenses. • It's anticipated there will not be any need for contractual services in 2011. • The budget for the City's share of employee insurance went down because it's based on the actual costs for 2011. The cost for a full -time employee is $10,600 per year. ➢ Local Government • Personnel costs are up when compared to the 2010 budget. Part of the deputy clerk's time was allocated to elections in 2010 and it's reallocated to this budget in 2011. • The City uses a mailing house to mail utility bills and its newsletter. It has a postage meter for other regular mailings. The mailing house budgeted amount of $6,000 will be verified. ➢ Elections • Personnel costs are down compared to the 2010 budget because 2011 is not an election year. ➢ Finance • The starting wage for the new finance director is budgeted for approximately $80,000. The wage is significantly lower than the past director's position. ➢ Professional Services • The Prosecution Contract budget will be reduced to $33,000; the same as the 2010 budget. ➢ Planning • Travel /Conferences /Schools increased to $6,820 from the 2010 budgeted amount of $1900. Some of the increase is for planning commissioner training ($2000 for miscellaneous training, $700 for GTS training, and $520 for Sensible Land Use Coalition seminars). • Liz6e expressed concern with the budgeted amount. The City provided the Commissioners with an opportunity for some in -house training in 2010. Also, there have been fewer revenues from planning related items. She recommended reducing the Travel/Conferences /Schools budget by $2000. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 19, 2010 Page 5 of 9 • Turgeon questioned the reduction for SLUC seminars from $1,000 to $520. • There was consensus to increase the budget for SLUC seminars to $1000, to reduce the budget for miscellaneous training for planning commissioners to $1000, and to eliminate the budget for their GTS training. ➢ Municipal Buildings ➢ Police ➢ Fire Liz& questioned why they Insurance budget was reduced to $105,000 from the 2010 budgeted amount of $115,000. Heck stated the budget for this line item had been more than what was needed in the past. Woodruff stated he did not think there is a need to budget $5,000 for Maintenance of Buildings. There is a significant balance in the Building Facilities Fund and some of those funds could be used for that purpose. There was consensus to reduced Maintenance of Buildings line item to $0.00. Liz& noted there is a SLMPD Coordinating Committee quarterly meeting scheduled for July 21" and the Committee will discuss the SLMPD 2011 proposed budget during this meeting. Heck stated he will get answers to Turgeon's questions. The costs for EFD services and MFD services have been broken out. The MFD formula is based on population, property values, land values and number of calls. The 2011 budgeted amount is $25,000. • Turgeon asked if it would be better for the City to contract for MFD services on a per incident basis. Heck will ask about this. ➢ Protective Inspections • A cellular phone charge line item may have to be added to this budget. • The number of inspections is down; therefore, the budget for mileage was reduced by $400. ➢ City Engineer • Personnel costs were increased due to 20% of an administrative support staff person's time being allocated to this activity. • There is $5,700 budgeted for the purchase of signage inventory management software that would interconnect with the Geographic Information System (GIS) software. Woodruff asked for more justification on this, and if this were to be purchased he recommended using funds in the Technology Fund for that purpose. Turgeon expressed concern about this item and the Traffic Control/ Contractual Services budgeted amount of $6,800 for conducting an inventory of the City's road signs. ➢ Public Works The 2011 Motor Fuels and Lubrication budget was reduced to $40,000 from the 2010 budgeted amount of $43,123 based on 2009 actual and 2010 year -to -date expenditures. Turgeon asked that this be reconsidered; she supported leaving the 2011 budget the same as the 2010 budget. Bailey stated the budget for this line was increased in past years; therefore, he wasn't sure it should be increased. Heck will consider increasing the budget to $43,000. Operating Transfer — Equipment was reduced to $50,000 from the 2010 budgeted amount of $100,000. Heck will research if the $7,000 budgeted for Machinery and Equipment should be a capital or expense item. Woodruff asked for more detail on this item. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 19, 2010 Page 6 of 9 ➢ Streets and Roadways • Travel /Conferences /Schools is budgeted at $4,000 for things such as Safe Assure training (which has to be done annually). • Heck noted there are number of training programs all City employees must attend annually. • Turgeon asked who has paid for the random drug testing of Public Works personnel. Heck explained there is a federal mandate that requires anyone with a commercial driver's license be randomly tested for drugs in companies with more than 10 employees. The employer must create the policy and ensure the employees are randomly tested. A while back the City was part of a testing pool but is not any longer. He's not sure when the last time was anyone was tested. • The transfer to the Street Reconstruction Fund will be reduced to $700,000; the salve as the 2010 budgeted amount. ➢ Snow and Ice Control • Personnel costs are higher than the 2010 budgeted amount because of the reallocation of labor based on actual time sheet information. Labor allocation will be reviewed. ➢ Traffic Control /Street Lighting • Turgeon stated she did not think the City should have to pay to replace LED bulbs in semaphore traffic lights on Highway 7 and County Road 19 and other non -City roads. Heck will research this. • Contractual Services costs in the amount of $6,800 for conducting an inventory of road signs will be discussed again. ➢ Sanitation/Weeds/Waste Removal • The labor costs are associated with the annual cleanup day. ➢ Tree Maintenance • Lizee stated Council had discussed the possibility of doing a tree inventory to look for diseased trees in the City's parks and right -of -ways. Heck stated nothing has been budgeted for that effort because Council has not yet decided if that should be done. Nielsen stated Staff and the Planning Commission have been working on developing a diseased tree management plan and that should be completed sometime in August. Staff has received some inventory cost "hip shot" numbers in the range of $30,000 — $40,000; Staff is trying to identify ways to reduce the cost. The goal is to have more finite number in a month or so. Turgeon asked if any residents have contacted the City to complain about diseased trees. Nielsen stated the plan may include helping residents with the initial evaluation of their trees and then encourage them to contact an arborist. Heck stated he will add an expense item for the inventory to the budget. Bailey asked that the budget for that be realistic. He then asked if an inventory would have to be conducted again in 4 years if one was conducted in 2011; he didn't want to have to repeat the inventory in just a few years. This item will be discussed again once the diseased tree management plan is complete. There was consensus that the City should not take on the liability for determining if trees on private property were diseased. ➢ Parks and Recreation Personnel costs have increased due to the reallocation of labor. • Maintenance of Equipment was increased to $5000 from the 2010 budgeted amount of $1500 to cover general maintenance in the parks. Replacement equipment had been paid for out of the Parks Capital Improvement Fund even if it was a small item. CITY OF SIIOREWOOD WORK SESSION MEETING MINUTES July 19, 2010 Page 7 of 9 • Heck recommended the transfer to the Park Capital Improvement Fund be increased to $45,000 at some point. Bailey stated the reason it was reduced to $42,000 from $45,000 for 2010 because $3,000 was left in the Parks operating budget for programs. Turgeon stated she did not want to increase the transfer. Bailey suggested some of each year's transfer to the Fund should be saved to help pay for future large capital projects. • Lizee questioned if the $4000 budgeted for the Three Bay Treatment program for aquatic invasive species in 2011 is sufficient. She asked if there is flexibility in how the $70,000 total budget for Contractual Services could be utilized, to which Heck responded there is. LizBe noted there is nothing budgeted for removal of Buckthorn and as long as there is flexibility she is okay with that. Turgeon indicated she preferred to concentrate on removing Buckthorn from the parks before the right -of -ways if staff has time. ➢ Southshore Community Center • Heck stated he thought the 2011 revenue projections were achievable. • Heck recommended not including any Staff time in this budget. What time is spent is part of their normal duties. • Maintenance of Building costs are for the routine maintenance and cleaning of the SSCC. • Capital Outlay /Building & Structure needs, if any, will be funded out of the Public Facilities Fund. Administrator Heck summarized his understanding of what Council has asked for regarding draft 3 of the 2011 operating budget. ➢ The transfer to the Street Reconstruction Fund will be reduced to $700,000 from $750,000. ➢ He will provide detail on what the 2009 Prosecution Contract charges were for. ➢ The budget for Prosecution Contract will be reduced to $33,000 from $35,000. ➢ The budget for Planning Travel, Conferences & Schools will be reduced as discussed this evening. ➢ Municipal Buildings/Maintenance of Buildings will be reduced to $0.00 from $5000. ➢ He will research if a per - incident type contract with the Mound Fire Department for fire services is possible and if so would it be beneficial to the City. ➢ He will get statutory information on replacing LED bulbs in semaphore traffic lights on Highway 7 and County Road 19. ➢ He will get more detail on the signage management software and consulting services for conducting a signage inventory. ➢ Once the diseased tree management plan is done Staff will discuss the possibility of conducting a tree inventory of the City's parks and right -of -ways. ➢ He will provide a staffing allocation chart. Councilmember Bailey stated he appreciated receiving a lot of budget detail as it helps bring items to the forefront for discussion. He expressed the quality of detail will get even better after a finance director has been hired. Councilmember Woodruff stated based on the discussion this evening the 2011 operating budget will have an approximate $20,000 positive balance and no levy increase. He thought the surplus could be "put CITY OF SHOREWOOD WORK SESSION MEETING MINUTES July 1.9, 2010 Page 8 of 9 in a sock" or Council could look for contingencies as the budget process moves forward. He expressed he was pleased with the budget. Administrator Heck stated the 2011 special levy is $604,000. Mayor Liz6e asked Councilmembers what time they will be able to get to a budget work session on July 26, 2010. The focus of the work session will be the CIP. There was consensus to start work session at 6:00 P.M Councilmember Bailey stated the Park Commission was a little stunned by Council's request that it not provide a CIP with a large deficit. There apparently was some miscommunication in the past few months. It appeared that it was a complete surprise to the Commissioners that they couldn't run the Park Capital Improvement Fund into a deficit state of $200,000 or so. He explained to the Commission that it can have a project wish list but its recommended CIP has to be fiscally responsible and work within the $42,000 contribution to the Fund. He thought Councilmember Woodruff's statement to the Commission a while ago telling the Commission it should "think big" about additional ideas morphed into a very large CIP that included items for which there is no projected funding. The original CIP had been scaled down. He noted the Commission will not have had the opportunity to adjust the CIP prior to the July 26` work session. Administrator Heck explained the Commission is frustrated because it worked with TKDA to update the Parks Master Plan and Council thought the Plan was too grandiose. The Commission developed a scaled down CIP and was told to think big, only to be told the CIP needs to be scaled back. The CIP software allows for entering and tracking things for future consideration which are not part of the CIP. Mayor Liz& departed the meeting at 7:25 P.M. Councilmember Woodruff stated he did tell the Commission to think big. The Commission went from a very tiny CIP budget that it wasn't spending to a budget that can't be funded. He suggested the Commission prepare a project list of must have projects and a list of should do projects. Administrator Heck stated Staff will review the Equipment Replacement CIP to ensure the items on the list are actually needed to provide services. For example, he was not sure a track excavator is needed in 2011 because it can only be used in the spring and fall and that's only five months of the year. It may be that piece of equipment could be rented. He didn't think Staff had discussed that type of thing in detail in the past. Administrator Heck stated Council needs to have another serious discussion about roadway projects. It needs to review the 20 -Year Pavement Improvement Plan (PMP) and determine if it makes sense. Are the roadways identified as top priorities for improvements the correct ones? The Street Reconstruction Fund will run out of funds in 2016 based on the CIP. Council has to decide how to deal with that. Councilmember Bailey asked that Director Brown review the PMP to evaluate if some of the roadways rated as needing to be reconstructed are traveled so lightly that it may not make sense to even think about reconstructing them for a long time. Councilmember Turgeon stated the 2011 CIP programs Star Lane and Star Circle for reconstruction. She noted there are only about 18 houses in the area and they are dead end streets. She suggested dead end streets be overlaid or just sealcoated. CITY OF SIIOREWOOD WORK SESSION MEETING MINUTES July 19, 2010 Page 9 of 9 Councilmember Woodruff agreed Council needs to make smart choices about how to use the limited funds. But, other things such as resolving stormwater drainage concerns have to be taken into consideration. For example, stormwater management issues were taken into consideration when improvements to Harding Lane were discussed. Administrator Heck stated some of that won't be known until feasibility studies have been completed. He noted the City's stormwater plan has related information. Councilmember Woodruff stated he went on a boat cruise on Lake Minnetonka hosted by the Minnehahe Creek Watershed District and the University of Minnesota. The organizations held two sessions to teach attendees about best management practices and phosphorus loading. Attendees were able to see good and not so good practices around the Lake. One of the messages was as municipalities do roadway projects they need to find a way to minimize runoff. 3. ADJOURN Bailey moved, Woodruff seconded, Adjourning the City Council Work Session of July 26, 2010, at 7:40 P.M. Motion passed 4/0 RESPECTFULLY SUBMITTED Christine Freeman, Recorder LIV4 L., &� Christine Liz6e, Mayor ATTEST: