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07-25-11 CC Reg Mtg MinCITY OF SHOREWOOD CITY COUNCIL REGULAR MEETING MONDAY, JULY 25, 2011 MINUTES 1. CONVENE CITY COUNCIL REGULAR MEETING 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 7:00 P.M. Mayor Lizde called the meeting to order at 7:06 P.M. A. Roll Call Present. Mayor Lizde; Councilmembers Hotvet, Siakel, Woodruff and Zerby; Attorney Keane; City Administrator Heck; Finance Director De7ong; Planning Director Nielsen; Director of Public Works Brown; and Engineer Landini Absent: None. B. Review Agenda Zerby moved, Woodruff seconded, approving the agenda as presented. Motion passed 510. 2. APPROVAL OF MINUTES A. City Council Work Session Minutes, July 11, 2011 Woodruff moved, Siakel seconded, Approving the City Council Work Session Minutes of July 11, 2011, as presented. Motion passed 510. B. City Council Regular Meeting Minutes, July 11, 2011 Zerby moved, Hotvet seconded, Approving the City Council Regular Meeting Minutes of July 11, 2011, as presented. 3. CONSENT AGENDA Mayor Lizde reviewed the items on the Consent Agenda. Zerby moved, Siakel seconded, Approving the Motions Contained on the Consent Agenda and Adopting the Resolution Therein. A. Approval of the Verified Claims List B. Culvert Replacements for Lake Virginia Drive and Division Street C. Adopting RESOLUTION NO. 11 -042 "A Resolution Approving a Minor Subdivision of Real Property Located at 5750 Covington Road.' Motion passed 510. 4. MATTERS FROM THE FLOOR CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES July 25, 2011 Page 2 of 7 There were no matters from the floor presented this evening. 5. PUBLIC HEARING None. 6. REPORTS AND PRESENTATIONS A. 2010 Audit Presentation by Adam Flaherty, Abdo, Eick and Meyers, LLP Mayor Liz& explained a draft copy of the City of Shorewood's 2010 Comprehensive Annual Financial Report (CAFR) had been prepared. Mr. Adam Flaherty, with the independent CPA firm of Abdo, Fick & Meyers, LLP, is pre sent to highlight the findings. Mr. Flaherty stated this evening he will provide Council with a short overview of the audit and the City's financial data. He noted the firm he works for will be issuing a "clean" (or qualified) opinion on the financial statements once the audit is complete. He explained that for 2010 there was a material audit adjustment during the audit. There were some journal entries that may or may not have been identified without the audit procedures. The entries revolved around bank statement issues with reconciliations in the investments as well as some year -end accounts payable entries. The effect of that is the monthly financial reports for cash and investments may not have been 100 percent correct throughout the year or at year end without the journal entries. Management has responded that audit finding will be corrected and the firm agreed with the plan management presented. Mr. Flaherty then stated there were not any compliance issues with Minnesota Statutes. The plan and scope of the audit were close to plan. City Staff requested an extension from the Office of the State Auditor because of the need for reconciliation, noting that is fairly common for cities to ask. He said Staff was very cooperative in providing the auditors the information they needed. Mr. Flaherty provided a financial overview of the City's General Fund expenditures and revenues. He explained the City's General Fund balance was approximately $3.4 million at the end of 2006. At the end of 2010 it was approximately $3.53 million, which is a decrease of $28,732 from the 2009 year -end balance of approximately $3.56 million. The 2010 year -end balance was at 67 percent of the 2011 budgeted expenditures. The City's General Fund Balance Policy requires a fund balance of 55 — 60 percent of the next year's expenditures. Over the last five years, the General Fund reserves have been between 66 percent and 71 percent. The firm compiled peer group average General Fund information from approximately 120 cities of similar population. In 2010 that average General Fund balance, as a percentage of expenditures, was 63 percent. His firm typically recommends reserves of 50 percent to satisfy cash flow needs. There is a new accounting standard that will be in effect for the 2011 audit which has to do with general fund balance and that will provide the City with an opportunity to revise its Policy. Mr. Flaherty explained revenues were under budget by $50,520 and expenditures were under budget by $181,535; expenditures exceeded revenues by $131,015 not including transfers. There was a positive variance of transfers out in the amount of $5,631 and a negative variance of transfers in of $10,378. There was a total net overall positive variance of $123,268. There was a large amount of transfers out during the year and they were primarily for future capital purchases. Approximately 91.5 percent of the City's revenues and transfers in (for 2010, approximately $4.72 million out of $5.16 million) came from property taxes. Revenues from licenses and permits have decreased significantly since the end of 2006 but CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES July 25, 2011 Page 3 of 7 there was over a $26,000 increase over 2009. Interest on investments has also decreased significantly in 2009 and 2010. Mr. Flaherty then explained the majority of the City's expenditures are in general government and public safety with them being 22.1 percent and 26.8 percent respectively of the total expenditures and transfers out. Expenditures and transfers out have been fairly consistent from year to year. With regard to Debt Service Funds, Mr. Flaherty stated there were approximately $9.6 million of EDA Public Safety Facility bonds outstanding at the end of 2010. There were $1.24 million on the 2008 Lease Revenue bonds for the renovation of City Hall outstanding at the end of 2010. He recommended the City continue to monitor to make sure the future cash flow will be sufficient to cover the bonded liabilities. With regard to Special Revenue Funds, Mr. Flaherty stated the City has only one special revenue fund and it's called the Southshore Community Center Fund. It currently has a deficit fund balance of approximately $18,000 and a deficit cash balance of approximately $3,000 which is currently funded with an inter -fund loan. He recommended the City continue to monitor the Fund and come up with plan to get the Fund out of the deficit state. With regard to Capital Projects Funds, Mr. Flaherty stated they all have a very healthy balance. He suggested the City monitor the Funds to ensure there will have sufficient cash flow to fund future associated capital needs. With regard to the Liquor Fund, Mr. Flaherty explained the City's liquor operations were sold in 2007. The Liquor Fund was closed with a transfer out of $873,431 as of December 31, 2010. Mr. Flaherty highlighted the Enterprise Funds (water, sewer, recycling, and storm water management). He recommended the City monitor these enterprise operations to ensure rates are sufficient to cover operating expenses, debt service, and future capital needs for the enterprise operations. Water Fund revenues have decreased 22 percent since 2008. Expenditures and transfers have all been very stable over the last three years. The 2010 year -end cash balance was over $3.7 million. The Sewer Fund has had operating losses the past three years and that is primarily due to depreciation on the assets (a non -cash expense). The Fund had cash over $3.7 million at the end of 2010. The Recycling Fund and the Stormwater Management Utility Fund are basically break -even funds. Their rates are sufficient to cover needs. The City is building a cash balance in the Stormwater Management Utility Fund for future needs. Mr. Flaherty reviewed the ratio analysis. The debt- service- coverage ratio decreased to 108 percent from 125 percent for the Water Fund bonds payable. A ratio of 100% or more indicates the City was generating enough cash to cover its debt service expenses. The bonded- debt - per - capita ratio and the taxes -per- capita ratio have remained relatively consistent over the past few years. The capital assets percent stayed the same between 2009 and 2010 for governmental activities and it decreased 2% for business -type activities. A higher percentage indicates newer assets and a lower percentage indicates older assets which may need more repair and maintenance thereby requiring more cash reserves and capital to do unexpected maintenance and make unexpected repairs. Mr. Flaherty reiterated the Governmental Accounting Standards Board (GASB) Statement 54 regarding fund balance has to be implemented by December 31, 2011. Zerby moved, Siakel seconded, Accepting the 2011 Comprehensive Annual Financial Report (CAFR). Motion passed 510. CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES July 25, 2011 Page 4 of 7 No report was given because there had not been a Park Commission meeting since the last Council meeting. 8. PLANNING Planning Commission Chair Geng reported on matters considered and actions taken at the July 19, 2011, Planning Commission meeting (as detailed in the minutes of that meeting). Geng highlighted the Commission's work plan for the remainder of the year. Councilmember Zerby asked Chair Geng if the Planning Commission has researched what the City of Excelsior's ordinance is regarding dynamic signs. Geng responded the Commission hasn't reviewed any of the ordinances for the other neighboring cities, noting the Commission has asked Staff to provide that information. Councilmember Siakel asked what the response to the deer feeding survey has been. Director Nielsen responded the responses haven't been counted yet but visually it appears to have been high. Nielsen noted that approximately 2700 surveys were sent out. The deadline for returning the surveys is July 31 '`. Mayor Liz6e stated Chair Geng explained that the Planning Commission would like to have another joint meeting with Council on either August 2 nd or August 16` to again discuss the Smithtown Crossing Redevelopment Study. She suggested the meeting be held on August 2 nd because there is a Lake Minnetonka Communications Commission full meeting on August 16` that some Councilmembers are going to attend. There was consensus to schedule the joint meeting for August 2 M . 9. ENGINEERING /PUBLIC WORKS None. 10. GENERAL/NEW BUSINESS None. 11. OLD BUSINESS None. 12. STAFF AND COUNCIL REPORTS A. Administrator and Staff Administrator Heck stated he has been meeting with representatives from the Cities of Minnetrista and Mound about the Eurasian Watermilfoil chemical treatment program for Phelps Bay in Lake Minnetonka. He also met with Lake Minnetonka Association Executive Director Dick Osgood and Lake Minnetonka Conservation District (LMCD) Executive Director Greg Nybeck about the same thing. During a September Council meeting Osgood will provide an update on that treatment program. At that time there may be additional information from the LMCD Aquatic Invasive Species (AIS) Task Force presented. CITY OF SIIOREWOOD REGULAR COUNCIL MEETING MINUTES July 25, 2011 Page 5 of 7 During that meeting there will be some discussion about how to mitigate the impacts of AIS currently found in the Lake and how to prevent new species from entering the Lake. Heck then stated he had been contacted by a reporter from WCCO with regard to the Christmas Lake boat launch controlled access pilot project. He was also contacted by a representative from Outdoor Weekly News. It's his understanding that Eric Evenson, Minnehaha Creek Watershed District (MCWD) Administrator, and Joe Shneider, President of the Christmas Lake Homeowners Association, have a meeting scheduled with a representative from the Minnesota Department of Natural Resources on July 26 "' after their meeting with the Carver County Board of Commissioners. Heck went on to state that staff, Mr. Evenson and James Wisker (also with the MCWD) went to Freeman Park to discuss the possibility of the MCWD assisting the City with a wetland restoration project in the Park. WSB and Associates had done a concept plan on in 2003/2004. After walking around the Park area there didn't seem to be much wetland area so the MCWD's representatives suggested doing a stream restoration project instead. There is a stream that runs through the Park. Councilmember Zerby stated it's his understanding that the MCWD has done a historical review of some maps and he asked if Council was going to have an opportunity to review the results of what the MCWD found. Administrator Heck stated he can arrange for someone from the MCWD to present what it found to the Council. Councihnember Siakel asked why Freeman Park was selected as a restoration site. She stated she thought there are other areas, such as along Grant Lorenz Drive, that are in greater need of restoration. Administrator Heck stated he selected that site because it was the only site there was a concept plan for. Heck then stated if Council prefers it can select another site for the MCWD to consider. Administrator Heck stated earlier in the year Council discussed licenses and permits. At that time Council directed the Planning Commission to review certain licenses and permits not related to the Planning Commission. He and Deputy Clerk Panchyshyn are in the process of preparing a document about those licenses and permits for Council to review. Heck then stated he recently attended a League of Minnesota (LMC) Improving Service Delivery Policy Committee meeting and a Human Resources and Data Practices Policy Committee meeting earlier in the day (he is a member of both Committees). He provided a brief summary of the discussion. Director Brown stated the Murray Hill Road storm sewer improvement project was kicked off today and that the intersection of Murray Hill Road and Chaska Road had been closed. The City is working with the City of Chanhassen on that project to make sure the uphill road concerns are addressed as well. 1. Monthly Financial Report Director DeJong stated the meeting packet contains a copy of the June 2011 Monthly Budget Report. He commented that he has not had the opportunity to create a report that compares balances of the other City funds. 2. Quarterly Investment Report Director DeJong stated the meeting packet contains a copy of the 2011 Quarterly Investment Report. He noted that in order for investments to earn over one percent recent they have to have an investment timeframe out to 2014. CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES July 25, 2011 Page 6 o'I7 B. Mayor and City Council Councilmember Siakel noted she serves as the City's representative on the Lake Minnetonka Conservation District (LMCD) Board until such time as a resident who is not an elected official comes forward and expresses a desire to serve in that capacity. She then noted her attendance record has been 100 percent since she assumed that position the beginning of the year. She explained that because of the State government shutdown harvesting of milfoil in the Lake was temporarily suspended. As part of its July 27, 2011, meeting the LMCD Boardmembers will have the opportunity to visually assess the impact of the chemical treatment of Eurasian Watermilfoil and Cully Leaf Pondweed in the bays that were selected for treatment. Siakel then stated the question before people in the Lake Minnetonka area is how to manage the aquatic invasive species (AIS) that are currently found in the Lake and how to prevent the infestation of other types of AIS. The roles of the various agencies and organizations in those efforts have to be defined. She commented there are a number of things the LMCD does correctly. She noted an editorial written by the Executive Director of the Lake Minnetonka Association was recently published that recommended the Minnehaha Creek Watershed District (MCWD) take on more responsibility for the mitigation of and prevention of the spread of various forms of AIS because the MCWD has technical expertise, they have scientists on their staff and so forth. She stated Lake Minnetonka is a resource for the entire state not just those in the area. She expressed she thought AIS should be approached from a state -wide perspective not a lake by lake perspective. She asked for Council and residents to provide her with their perspectives on management of the mitigation and prevention of AIS. Siakel noted the LMCD's 2012 budget is really flat when compared to the 2011 budget. Councilmember Woodruff stated he attended a recent Association of Metro Cities Municipal Revenue and Taxation Committee meeting. It appears as if one new policy will be considered this year. Levy limits were not carried forward to 2012. The raiding of funds that fund police and fire state aid was not as severe as anticipated. There is another meeting of the Committee scheduled for August. Mayor Liz& stated she attended a South Lake Minnetonka Police Department (SLMPD) Coordinating Committee meeting held on June 20 The Committee discussed the proposed 2012 SLMPD Operating Budget. That budget reflects a 2.6 percent increase over the adopted SLMPD 2011 Operating Budget. She explained that in accordance with the June 1, 2006, Finding of Fact and Order document the funding allocation formula for the SLMPD operating budget is to be adjusted every five years with the first year of the adjustment being effective for 2012. Based on the adjustment Shorewood's share was reduced to 48.49 percent from its current share of 50 percent. The means Shorewood will contribute approximately $4,600 less in 2012 than it would have under the 50 percent share. Lizee went on to state the SLMPD needs to replace its record management system (RMS). It doesn't meet the SLMPD's needs and it is no longer supported. The SLMPD is considering partnering with the Hennepin County Sheriffs Department with selecting a system called PremierOne developed by Motorola and marketed though the Local Government Information Systems Group. It's likely the SLMPD will go five with a new RMS in mid 2012. CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES July 25, 2011 Page 7 of 7 13. ADJOURN Zerby moved, Woodruff seconded, Adjourning the City Council Regular Meeting of July 25, 2011, at 7:47 P.M. Motion passed 510. RESPECTFULLY SUBMITTED Christine Freeman, Recorder ATTEST: Christine Liz6e, Mayor Administrator /Clerk