Loading...
10-25-10 CC WS MinCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, OCTOBER 25, 2010 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION Mayor Lizde called the meeting to order at 6:00 P.M. A. Roll Call 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. Present. Mayor Lizde; Councilmembers Bailey, Turgeon, Woodruff and Zerby; Administrator Heck; Finance Director DeJong; Planning Director Nielsen; Director of Public Works Brown; and Engineer Landini Absent: None B. Review Agenda Turgeon moved, Zerby seconded, approving the agenda as presented. Motion passed 510. 2. CAPITAL IMPROVEMENT PLAN Director DeJong stated he reviewed the 2011 — 2015 Capital Improvement Program (CIP) with the department heads. He explained the 2011 information reflects the capital outlay proposed for 2011. Years 2012 — 2015 in the CIP are used to evaluate the funding adequacy of each capital fund when compared to the spending plan. He noted that the first two years in the CIP are more solid than the last three years. He explained that equipment replacement projects were spread out more evenly over the five -year period in order to level out the proposed spending. He stated there are a few projects in the CIP for the Enterprise Funds that are more speculative. He then stated he was willing to entertain questions from Council about the CIP. Councilmember Bailey expressed his discomfort with the Equipment Replacement Fund balance projected to be in a deficit state in 2014 and 2015. He noted Council had required the Park Commission to revise the Parks CIP so it would not end a year in a deficit state. Director DeJong explained the $50,000 transfer into the Equipment Replacement Fund for years 2011 — 2015 is not adequate. The 2009 transfer in was $175,000 and the 2010 budgeted transfer in is $100,000. He stated he thought that to keep the Fund solvent out to 2025, a transfer in of $120,000 — $125,000 is needed each year. Councilmember Turgeon asked if the $75,000 budgeted for a backhoe in 2011 is adequate. Director Brown responded it is. Turgeon then asked if there will be enough clearance for a dump truck to go up on the planned vehicle lift. Brown responded there will be. Turgeon also asked if the $50,000 budget for the lift in 2011 is sufficient. Brown responded it is. Councilmember Zerby requested that going forward changes the CIP be displayed in strikeout and underline so Council can easily determine what changes have been made since the last time it discussed the CIP. Zerby asked if any line items had been added to the Equipment Replacement CIP. Director Brown responded no new line items were added, but the replacement schedule was spread out. For CITY OF SHOREWOOD WORK SESSION MEETING MINUTES October 25, 2010 Page 2 of 6 example, two dump trucks had been scheduled for replacement in 2012 and the replacement of one is now scheduled for 2013. Councilmember Zerby asked if any line items had been added to the Technology CIP. Administrator Heck responded that two items had been moved from the General Fund budget to the Technology CIP per Council's request. They are the Narrow Band Radio Replacements and the Cartograph Software ]. Councilmember Zerby asked if any capital expenditure line items had been added to the Water CIP. Director Brown responded the Boulder Bridge Well Control item at $75,000 was added. Zerby stated total cost of the proposed projects in the 2013 Water CIP is substantially more than in the other four years of the Water CIP. Brown explained that in 2013, the West Water Tower is scheduled to be rehabilitated at a cost of $450,000, and there are possible watermain extension projects scheduled as part of two roadway rehabilitation projects for a combined cost of $250,000. Zerby stated the difference between the cost of the 2011 proposed projects and the 2013 proposed projects is approximately $500,000. He asked where the increased funding comes from. Brown explained that the Water Fund is an Enterprise Fund and the revenues for that fund come primarily from water fees. Director DeJong explained the accounting for general funds is different from enterprise funds. For enterprise funds the cash outlay may vary from year to year, but the expenditures will not vary that much. The depreciation on the capital expenditure is an expense. The overall enterprise budget will not vary by much just because a high -cost capital project. The cash position may go down, but the expense will go up by one - fifteenth of the cost assuming a fifteen -year depreciation cycle. Councilmember Woodruff stated what is missing on the Projects by Funding Source reports are the opening and closing fund balances, noting he had spoken with Director DeJong about that earlier in the day. He related DeJong suggested Council focus on the making sure the list of projects for each CIP is correct and then DeJong can prepare a financial forecast for each of the capital funds. He commented there is plenty of money in the Water Fund. He stated in the not to far future the beginning and ending fund balances will have to be provided to Council so it can determine if rate changes need to be implemented for enterprise operations. Councilmember Zerby stated for the City's taxpayers he would prefer there be just enough money in the Enterprise Funds as opposed to more than enough money. Councilmember Woodruff stated from his vantage point the Water Fund is over funded. Councilmember Bailey commented the Water Fund is revenue neutral. Councilmember Turgeon stated that for 2010, Council reduced the water rate for the lowest consumption rate and Staff needs to determine what impact that had. Councilmember Woodruff agreed that impact has to be determined. Councilmember Zerby asked if there were any line items added to the Sanitary Sewer CIP. Director Brown responded no. Zerby stated it appears as if the City runs out of sanitary sewer projects in 2014 and 2015. He expressed skepticism about there not being any sanitary sewer repairs needed. Director Brown explained future Inflow & Infiltration (I &I) studies will likely identify remediation needs that are not currently known. He stated that earlier in the day Engineer Landini and he learned of several issues that need to be addressed on Enchanted Island. Brown then stated he thought new I &I remediation projects will be identified. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES October 25, 2010 Page 3 of 6 Councilmember Zerby asked if it would be prudent to include placeholders for potential projects in the CIPs. Brown explained that during his tenure with the City various councils have treated it both ways. He stated when placeholder projects are included there can be a tendency for the CIP to become a wish list. He noted the budgets for seal coating of roadways and the bituminous overlay of roadways could be considered a placeholder. He cautioned that there has to be a healthy balance when it comes to including placeholder projects. Councilmember Woodruff stated the $70,000 per year budgeted for I &I could be considered a placeholder, and he thought that would fund some remediation. Director Brown noted the costs for 1 &I related activities can be significantly more or less than the $70,000 budgeted amount. Councilmember Woodruff stated the Local Street Reconstruction CIP identifies roadways that will need some type of stormwater management improvements during the five -year CIP time period. He asked if the Sanitary Sewer CIP should include some level of funding for sanitary sewer improvements along those roadways. Director Brown stated that can be done, noting it would be similar to what is done for Water. Mayor Lizke asked if Staff is anticipating any type of sanitary sewer and /or stormwater management changes or improvements because of the interceptor work being done by the Metropolitan (Met) Council. She noted there is a lot of work being done on Rolling Acres Road and Smithtown Road. She explained that during 2009 Met Council had meetings about potential changes and upgrades through the Cities of Chanhassen and Excelsior. Director Brown stated that Administrator Heck and Director DeJong have had numerous conversations with Met Council representatives about potential increases in Met Council Environmental Services ('VICES) rates. Administrator Heck explained the increases Staff is aware of are to help pay down the Met Council's bonded debt for the build out of the system in anticipation of new development. The Met Council was counting on the service available charge (SAC) to pay the bonded debt. Unfortunately, development slowed and the Met Council is not collecting the level of SAC fees it anticipated. The Met Council has chosen to put the burden for some of the assessment for the build out on those cities that already have systems. The City's MCES rate is going up to help pay for that cost. Heck stated the rate will increase over 8% for 2011. Councilmember Woodruff stated he assumed the increase in the MCES increases will be reflected in the Sanitary Sewer Fund Enterprise Budget in the line item MCES Service Charges. Administrator Heck confirmed they would. Director Brown explained that Staff is working on developing a comprehensive plan for stormwater management projects. One of the unknowns with regard to these types of projects is contaminated particulates in stonuwater ponds or stormwater inlets. Staff believes it will be a financial challenge to cleanup the particulates if they are found in all of the City's ponds and inlets. Councilmember Zerby expressed concern that the Stormwater Management CIP plans for nine projects in 2011. He thought nine may be too many. Councilmember Turgeon commented the City hasn't done many of these types of projects for a number of years. Zerby stated he didn't want the City to over promise and under deliver. Turgeon stated the Star Circle and Star Lane project may come off the list if these two roads are not rehabilitated. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES October 25, 2010 Page 4 of 6 Administrator Heck, Engineer Landini and Director Brown reviewed the stormwater management projects added to this CIP since the last time Council reviewed the CIP. They are Vine Hill Road Stormwater, 26980 Edgewood Drive, Waterford Place and McKinley Place Curb, Silver Lake Outlet, and Covington Road Storm Sewer. Heck stated if all nine projects remain on the list for 2011, Landini needs to identify the resources needed to accomplish the projects. Councilmember Zerby stated the CIP contains a column for priority and indicated use of the column is inconsistent. He then stated either that feature should not be used or it should be used consistently and correctly. Director DeJong stated he did not think the prioritization has been consistently used in the past. Ile then stated he is reluctant to use that feature until Council has reached agreement on what projects should be done in 2011. Councilmember Woodruff also questioned if Staff can complete all nine projects in 2011. He asked if the Stormwater Management Budget includes funding for the additional resources that will be needed to help do the projects. Engineer Landini noted that there is not enough Staff time or resources to complete all nine projects, and the budget does not include funding for what it would take to purchase the needed resources. Councilmember Woodruff stated then it will not be possible to deliver what is promised in the CIP. Mayor Liz6e stated the projects in the CIP are contingent on Council approving the projects move forward. Mayor Lizee stated with regard to the Edgewood Drive project Council and Staff have been trying to work with the two affected property owners for years. To date there has been no success in reaching an agreement. She noted the City is now trying to acquire an easement from the new property owners and she thought that may take another year to work out. Councilmember Turgeon stated the Vine Hill Road and the Star Circle /Star Lane projects in the Stormwater Management CIP would be done in conjunction with their associated roadway improvement projects. The other stormwater management projects are drainage only projects. She then stated the Covington Road Storm Sewer problem has been known about but it hasn't been addressed. She went on to state the Lake South Auto Drainage issue has been around so long she doesn't remember what it is. She indicated she would like Staff to identify project priority. Councilmember Woodruff reviewed the reasons he thought Council was going through this exercise. The first is to reach agreement on what projects should be on the 2011 list; second to determine if staff and financial resources are available to complete the project list. He expressed his agreement with Councilmember Zerby's previous comment that once the projects are on the CIP he wants the residents to feel confident that the projects will get done. He stated if the budget in the CIP for the projects does not include the costs for additional needed resources to complete them in 2011 then the costs need to be revised. Councilmember Bailey asked about pushing projects out a year or more. Bailey then stated it's up to Council to ensure there are the needed recourses available to complete the projects Council believes should get done, and staff has to let Council know what the resource needs are. Director DeJong stated Staff needs Council to identify projects it believes should get done but aren't in the 2011 CIP, and review those identified by Staff to see if some of the projects should be removed from the 2011 CIP. IIe noted he cannot prepare a financial plan until the project list is agreed upon. He stated if the budgets do not include the funding needed to complete the projects Council will need to find additional funding or reduce the size of the project lists. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES October 25, 2010 Page 5 of G Councilmember Zerby stated if some of the stormwater management problems pose a health risk then those projects should have a higher priority. Councilmember Turgeon stated if stormwater drains from City roadways or properties on to residential properties, it's the City's responsibility to correct that. Director Brown stated Staffs focus has been on the Local Street Reconstruction CIP so the Stormwater Management CIP is not as refined as it could be. Councilmember Bailey suggested increasing the transfer to the Equipment Replacement Fund to keep the balance from going into deficit. 3. ENTERPRISE BUDGETS Director DeJong explained the expense in an enterprise fund is different from the cash outlay. He explained he is trying to make the budget documents match up with the annual financial report. Councilmember Bailey stated from his perspective an enterprise fund could be starved such that there is not enough money for a large capital project in the future. He thought it important to look at the cash balance in the Sanitary Sewer Fund and the Stormwater Management Fund. He stated to be provided with net asset information is not all that helpful to him. Director DeJong stated there is a need for different things for each enterprise operation such as a CIP, an annual budget and a long -range financial plan. Director DeJong explained the Stormwater Management operation is profitable on an annual basis yet the Stormwater Management Fund balance is going down. With regard to the Water Fund, Director DeJong explained there is a slight decrease in revenues from water sales when compared to the 2010 adopted budgeted. He noted there is not enough information to determine the impact of the new water rates implemented in 2010 because they have not been in place for a full year. He stated it will be somewhat challenging to make that assessment without doing a volume analysis. Revenues from special assessments are predicated on watermain extension projects, noting there are not many projects built into the CIP. He then stated rates for space on water towers for cell antenna need review by Staff. Administrator Heck explained the City has a rate it charges for renting space for wireless antennas on the water towers. A carrier's rental rate increases each year they rent space. That carrier's rate will be more than the rate for a carrier who has just started to rent space. There has been discussion about the possible need to increase the entry rental rate so that longer -term renters are not paying more than new renters. He stated the plan is to discuss this with Council before the end of 2010, while noting the 2011 fee schedule will have to be adopted no later than earlier January. Councilmember Woodruff stated the Staff memorandum indicates that Council should decide if the revenue received for rental of antenna space should be put in the Water Fund. He recommended putting it into the line item Miscellaneous Revenue in the General Fund. Councilmember Bailey asked who paid to take down the antenna equipment belonging to the carrier that went bankrupt a few years ago. Director Brown responded the next carrier to rent the space paid for it. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES October 25, 2010 Page 6 of 6 Director DeJong stated he contacted several colleagues to find out how they handle these revenues. He indicated approximately 40 percent of them put the revenues in their General Fund, approximately 40 percent put the revenues in their Water Fund, the majority of the rest put some of the revenues in their Parks and Recreation Fund, and the remainder uses the revenues for general city technical needs. He stated the city can use revenues wherever there is a need; for example, the Equipment Replacement Fund. Director DeJong noted the City added $760,000 to the balance in the Water Fund over the last three years. In addition, expenses for water enterprise operations remained relatively flat over the last five years. Councilmember Woodruff stated he had a conversation with Director DeJong about the Recycling Budget. He explained DeJong will correct an entry that is incorrectly classified for 2010. He stated the City collects funds for the amoral spring clean -up event and that should be reflected in the budget. In response to a question from Councilmember Zerby, Administrator Heck explained the City's contract for recycling services includes recycling in the City's parks. Heck stated there has been discussion about having different containers for recyclable material. Mayor Liz&e asked if Council wanted to continue this discussion after the regular meeting this evening. Councilmember Bailey stated he did not think there was much more to discuss at this time. Director DeJong stated he did not think there was a need to continue this discussion this evening. 4. ADJOURN Woodruff moved, Zerby seconded, Adjourning the City Council Work Session of October 25, 2010, at 6:58 P.M. Motion passed 510. RESPECTFULLY SUBMITTED Christine Freeman, Recorder O W . _ 4 Christine Liz6e, Mayor