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11-26-12 CC WS Mtg MinCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, NOVEMBER 26, 2012 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION Mayor Liz& called the meeting to order at 6:04 P.M 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. A. Roll Call Present. Mayor Liz6e; Councilmembers Hotvet, Siakel, Woodruff and Zerby; Interim Administrator Joynes; Finance Director DeJong; Planning Director Nielsen; and, Director of Public Works Brown Absent: None B. Review Agenda Woodruff moved, Hotvet seconded, approving the agenda as presented. Motion passed 510. 2. 2013 CAPITAL IMPROVEMENT PROGRAM AND ENTERPRISE BUDGETS Director DeJong explained the only change between the 2013 Capital Improvement Program (CIP) provided to Council in the November 12, 2012, work session packet and the one provided in this evening's work session packet is in the Equipment Replacement CIP. Staff recently learned that Toro changed its lawnmower line significantly. There is no longer a direct replacement for the City's Groundsmaster Toro 328D. Because Director Brown will need more time to research replacement options that purchase has been moved from 2012 to 2013. Director Brown explained that in addition to changing its line Toro raised prices significantly and none of the City's current attachments would be compatible with Toro's new line of mowers. Therefore, Staff will be looking at other manufacturers as well. Mayor Liz& noted that the Groundsmaster is a necessary piece of equipment. Director DeJong noted three projects have been added to the 2013 CIP since it was discussed during Council's October 8, 2012, work session. They are: a network connection between City Hall, the Southshore Community Center (SSCC) and the Public Works facility; aLaserfiche upgrade; and, a replacement color copier. DeJong explained there were some significant challenges when the City's file server was recently upgraded. Public Works was not connected for several weeks because of how people tried to connect to the server. The speed that can be achieved using the current TI line is so slow that applications time out. There is no connectivity between City Hall and the SSCC and therefore there is no ability to provide phone coverage. Connectivity would allow for the City to provide better service. He stated he would like to explore connectivity with Council. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 26, 2012 Page 2 of 7 Mayor Liz6e stated she thought that would be a good idea, noting she would like Staff input on that. She asked if connectivity to the Public Safety facility near the Public Works facility would be in order also. Director Brown explained a number of years ago the City installed a CIP software application. It can't be used at the Public Works facility because it times out because of the slow transmission speed. He sends his information to Director DeJong and then DeJong has to retype into the application. He then explained the South Lake Minnetonka Police Department (SLMPD) has a certain connection protocol that it needs to follow. He questioned if that would be a critical link. Councilmember Woodruff stated if the money for the network connection is left in the CIP he assumes staff will do a workflow / needs analysis at a later date. He noted that this is the first time he heard of the inadequacy of the TI line coining into City Hall, and that he supports an analysis of the TI line as well. He stated it's his understanding that the TI line is also being used by the phone system. Typically one - half is assigned to the phone system and the other to data. Director DeJong explained he thinks it is more dynamic; if a person picks up an outside line it takes 1 of the 23 data channels. Director DeJong noted that the SSCC has access to Mediacom internet service and therefore there is much faster transmission speeds from there than for the staff at City Hall. Councilmember Woodruff stated CenturyLink has higher speed DSL offerings. He commented that he knows of a person who uses that and can achieve 20 megabits. Councilmember Zerby noted he gets 50 megabits with Mediacom internet service. Director DeJong stated the approximate cost to upgrade the City's Laserfiche system is $8,000. He explained it is his understanding that system needs to be upgraded because the support for that version is going to be terminated. The upgrade provides the ability to save documents into Laserfiche as part of the regular process, and it improves access for users who log into the system from the internet. Mayor Liz6e noted Staff has spent a great deal of time and energy scanning old documents into the Laserfiche system. Therefore, she thought it makes sense to make the investment and to do so in December 2012 because it will save a little money by using pro -rated credits the City has that will expire at the end of the year. Councilmember Zerby agreed and noted there is a Laserfiche app that would be available with the new release. There was Council consensus to purchase the Laserfiche upgrade in 2012. Director DeJong stated the approximate cost to replace the color copier is $9,000. The copier is about seven years old. As copiers age the cost to maintain them goes up. Based on a review of the per -copy cost it appears the City could save close to $1,800 per year in copy costs. That results in about a five -year payback. Mayor Liz& expressed her support replacing it sooner versus later. Councilmember Woodruff stated he thought the City might be able to recoup a little of the cost in trade in. Councilmember Hotvet asked if the price would be about the same to lease a copier. Director DeJong explained when something is leased there is an implied interest rate because the vendor has to finance it. The interest the City is earning on its money is low. The City's cost of capital is less than the vendor's. Therefore, it is cheaper to purchase than to lease. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 26, 2012 Page 3 of 7 Director DeJong moved on to the Enterprise Budgets. Director DeJong explained it continues to be a challenge to try and predict the Southshore Community Center (SSCC) budget. This year the SSCC fund started out with an approximate $13,000 cash balance. With the increased deficit in 2012 that cash balance will be used entirely. The meeting packet contains a copy of a balanced budget for SSCC operations for 2013. He took the projected revenues and based on them calculated the commission the SSCC's contract manager could earn. The base salary for that position plus the projected commissions equate to a projected cost of $71,000 in 2013 for those services. That amount is $5,000 less than what was projected ($76,000) the last time this was analyzed. The General Fund Budget anticipated a $40,000 subsidy. That has been increased to $47,700 thereby increasing the amount of General Fund reserves anticipated to be used in 2013. DeJong noted the meeting packet contains a copy of all updated available General Fund balance calculation. He explained that it indicates there would still be excess fund balance according to the City's General Fund Balance Policy at the end of 2013 after the subsidy increase for the SSCC is factored in. DeJong explained that there is adequate funding for the various operations for 2013. But, funding beyond that will become more problematic. Ongoing revenue sources need to be found. He stated it makes city administrators and finance people nervous when one -time revenue (which is what the fund balance is) is used to cover the cost of ongoing operations. He recommended that the upcoming Council talk about funding sources and establishing the City's service priorities in depth during the anticipated lengthy work session that will be held after the first of the year. He stated similar to the federal government if the City's revenues are not sufficient to support the City's operations it has to either raise revenues or reduce spending or a combination of both to achieve financial stability. Councilmember Zerby noted that 2012 year -to -date SSCC rental revenue is approximately one -half of the actual 2011 rental revenue and approximately 40 percent of the 2012 budgeted revenue. He asked if it's anticipated there will be a lot of end -of -the -year rentals. He then asked if the rental rates for the SSCC are competitive with other centers. Director DeJong explained SSCC Manager Anderson has indicated to him that there will be quite a few end -of -the -year rentals. DeJong then explained the rental of the kitchen for cooking classes is down significantly, and big users for meetings are no longer renting. He noted revenue will not make budget in 2012. Zerby asked if kitchen rentals are down because the kitchen is substandard or are there are other things that are substandard that make it difficult to rent the SSCC. Interim Administrator Joynes explained a person who used to rent the SSCC to host cooking classes had been so successful that she moved to her own space. Upgrading the SSCC to attract different types of clients is a possibility. He recommended Council have a fairly significant conversation after the first of the year about what it wants the SSCC to be. Should be a standalone enterprise fund or be included as part of parks and recreation? Should a City employee manage the SSCC or should the City contract out for those services? Council also needs to discuss if it wants to approach the other four cities who are part owners of the SSCC about contributing to the operation of it. That may require upgrading the SSCC so they feel it is worthwhile to put money into it. He noted he reviewed documents from the last 3 — 4 years related to the SSCC and he is not sure there is a great handle on how the SSCC should be funded and maintained. He stated the situation with the SSCC is not going to approve unless Council takes affirmative action. He then stated he thought it is difficult to compete with other facilities at this time. He indicated firmer oversight of that facility is warranted. Councilmember Woodruff stated that when Council has that discussion he would like to have Staff prepare a pro -forma business plan based on current conditions and to identify possible actions that could affect the results. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 26, 2012 Page 4 of 7 With regard to the Water Fund, Director DeJong stated there are no significant changes. Director DeJong recommended continuing to analyze rates for the Sewer Fund and the Stormwater Management Utility Fund to ensure they can fund all of the planned expenditures. He explained the Stormwater Management Utility Fund is profitable from the perspective that the operating costs are covered with the current rate structure. But, the City continues to spend the cash in that Fund down on new projects. As the cash is spent down new cash needs to be coming in to cover that. He thought there is general agreement by the Council that it can be covered in the short term through the use of cash balance in the Sewer Fund. The Sewer Fund has an approximate cash balance of $3.5 million which is much more than is needed on an annual operating basis. The Sewer Fund is losing about $300,000 annually and that has been masked by the large cash balance. Director DeJong stated that as part of the long -term financial analysis there has to be an assessment of what is needed on an annual operating basis for all of the Enterprise Funds and a discussion about how the cash balance in the Funds will be used (e.g., funding the capital projects). He explained the City contracted with WSB & Associates this year to update the City's 20 -Year Municipal Water Extension Plan. The costs projected to extend water throughout the City were daunting on both a per -use and total cost basis. Councilmember Siakel stated earlier in the year there was a recommendation to conducting a rate analysis for the sewer utility. She asked what is needed to make that happen. Director DeJong stated the first step is for Council to select a financial advisor and use their expertise to conduct a rate analysis. He noted that selection is on the meeting agenda for the regular meeting immediately following this work session. Councilmember Woodruff commented in 2009 the City contracted with Northland Securities to conduct a comprehensive utility rate study because the then finance director did not think it could be done with in -house staff. He stated if the City is going to use outside resources to conduct another rate study he wants to get it done. He would like to have something from Staff explaining how that is going to happen. He then stated if it could be done by in -house staff that would be great. Director DeJong noted there are not any rate changes proposed for any of the Enterprise Funds for 2013 at this time. Rates can be raised mid -year. He stated it is prudent to ensure the Funds are self- supporting and cover the necessary expenditures for the long term without unduly burdening the residents. Councilmember Woodruff stated he wanted to go back to the CIP. He noted he sent an email to Staff about the Trail Fund. He then stated on December 3, 2012, Council will hold a Truth -In- Taxation public hearing with the intent of presenting to the public what the budgets for 2013 are going to be. He noted he did not think the Trail CIP correctly reflects the current thinking of this Council. He suggested changing it to reflect what the Feasibility Report prepared by WSB for the Smithtown West Trail segment [from the ShorewoodNictoria border to the Minnewashta Elementary School and then on to the Lake Minnetonka Light Rail Trail at Eureka Road] indicates it is going to cost. He stated the CIP should reflect what the City thinks it is going to do, noting Council can always change plans. He explained the amount in the 2013 CIP is less than one - fourth of what the Feasibility Report indicates it will cost. Mayor Lizde expressed reluctance to adjusting it that much without having any concrete plans. Councilmember Woodruff stated the City accepted the Feasibility Report during its November 12, 2012, meeting and that it estimates it will cost $1.4 million. He noted that estimate trumps the staff estimate from in the spring. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 26, 2012 Page 5 of 7 Interim Administrator Joynes stated an adjustment can be made based on Council's direction. Council can make decisions later when the contracting process begins. He then stated Staff has not heard from Council as a body about which design it wants. The Feasibility Report indicates a bituminous surface rather than a concrete surface is about $200,000 less costly. Councilmember Woodruff stated he would not object to the amount in the CIP being changed to $1.2 million. That would be closer to reality. Councilmember Siakel stated she agrees the amount in the CIP is low. She noted she thinks constructing that trail is the right thing to do. But, if there is no other funding than that from the City she is not sure Council will support it. She expressed reluctance to saying the City is going to spend $1.2 million when it may not. Councilmember Woodruff stated he does not think it appropriate to tell residents during the Truth -In- Taxation public hearing that it is only going to cost $400,000 when the Feasibility Report indicates it will cost $1.4 million. Councilmember Siakel clarified the amount in the CIP is less than $400,000. She stated the CIP should reflect a more realistic number. Councilmember Hotvet stated the amount in the CIP should reflect a project the City is serious about. She noted that is not totally known at this time; it may not be the case. Councilmember Siakel expressed concern about the possibility of residents panicking about something that costs that much when it may not be come to fruition. Councilmember Hotvet noted residents are already aware of the estimated cost included in the Feasibility Report which was made available during the open house on the Trail. She thought the number should be consistent. Councilmember Zerby stated lie thought the cost should be as accurate as what anyone knows today. He explained the Executive Summary of the Feasibility Study estimates the cost for the trail segment from the Shorewood /Victoria border to the Minnewashta Elementary School will cost $873,400 and the cost from School to the LRT Trail at Eureka Road will cost $353,600. Councilmember Hotvet noted they are two projects. Councilmember Woodruff suggested an amount should be added for the segment of trail proposed for along Country Road 19 from the LRT Trail to the shopping center in Tonka Bay. Director Nielsen noted that is in there. Woodruff stated the total amount cannot be replaced with $1.4 million; the amount for the short segment needs to be added. Interim Administrator Joynes asked Council to give Staff direction to incorporate the cost for the high - end design of the Smithtown West Trail segment. That could be adjusted at a later date. He noted that on this evening's regular meeting agenda Council will be asked to approve the acquisition of the easements and right -of -way and that has to be done to meet the schedule. Councilmember Woodruff stated the 2017 Trail CIP needs to be adjusted downward because cost to construct the trail segment from the School to the LRT is in the 2013 CIP. Director DeJong stated the challenge from his end is in determining if the per -foot cost in the CIP is valid for all trail segments. He noted he hates to make a change in isolation. If the per -foot cost used in the CIP CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 26, 2012 Page 6 of 7 for all trail segments is low then nothing needs to be removed from 2017. That would likely go up based on the per -foot cost for the Smithtown West Trail segment. Councilmember Hotvet stated the change for the Smithtown West Trail segment needs to be made in isolation because this has never been done before. The City has no idea what it is going to cost until it starts to receive construction bids. Councilmember Woodruff agreed with not changing the 2017 CIP amount at this time. fie stated the amount in 2013 ought to be the best known at this time. Mayor Lizee noted that she is not comfortable with putting $1.4 million into the 2013 CIP. She stated she thought that is putting the cart before the horse saying this is what we are going to do, this is what it is going to cost and this is the design Council has agreed upon. She explained $1.4 million implies to her a decision has been made that this is the design standard Council is looking at (a concrete surface with curb) and that these are the acquisitions the City has to make. She stated if the CIP is adjusted to show $1.4 million there needs to be a caveat that says it is for the high -end standard for the segment from the Victoria border to the School. She reiterated she is not in agreement with putting $1.4 million in the CIP, but with the appropriate caveat she could possibly be convinced. Councilmember Woodruff thanked Director DeJong for preparing the list of projects that would not need additional Council approval for 2013 purchase. He stated the list includes an item for computer workstation upgrades and replacement for an amount of $10,000 yet the Equipment Replacement CIP includes $20,000 for that. Director DeJong explained the other $10,000 would be for operating system and software upgrades to Windows 8 and Microsoft Office. Most of the Staff PCs are not running on the Windows 7 operating system and most are using Microsoft Office 2003. That will be brought back before Council. Woodruff noted he is fine with the list. Councilmember Zerby stated he has installed Windows 8 and does not recommend upgrading to that release level quickly. Ile agrees with upgrading Microsoft Office to a newer version. Mayor Lizee expressed she continues to have great concern about the plan for Badger Park because she does not think it is a good plan. From her vantage point it is pie in the sky. There has been no input from the community on how the Park will be used in the future. There is no consideration given to how it relates to City Hall or the SSCC. She suggested that plan be redone. Director Nielsen stated the Park Commission suggested having a joint meeting with Council to discuss Badger Park with Mayor Lizee's thoughts in mind. Lizee expressed she is pleased to hear that. Councilmember Siakel stated the plan for Badger Park needs to be grossly rethought. She explained if the costs for all of the items in the Park Capital Improvement CIP for Badger Park are added together it comes to close to $600,000. That makes no sense. She questioned why the items are in there without there being a realistic plan. Director Nielsen explained that is why the funding was moved from 2013 when those projects were originally scheduled to 2014. Siakel noted that she would not even put it in 2014. Councilmember Woodruff stated there are a lot of placeholder items in CIPs beyond 2013 that need a lot of discussion. He asked that 2013 be as realistic as possible. Councilmember Woodruff stated the 2013 Street Reconstruction CIP includes the reconstruction of Valleywood Circle and Valleywood Lane and the Water CIP includes a substantial amount of money for CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 26, 2012 Page 7 of 7 extending watermain down those streets. That decision has not been made. But, he thought it is appropriate to have those as placeholders. Director DeJong stated he and Interim Administrator Joynes will get together and decide on an amount to propose for the Smithtown West Trail segment for 2013. Director DeJong stated the plan is for Council to adopt the 2013 General Fund Budget and the 2013 — 2022 Capital Improvement Program and the Enterprise Budgets during its December 10, 2012, regular meeting. In the past Council has adopted the General Fund Budget on the night of the Truth-In-Taxation public hearing. There was Council consensus to adopt the General Fund Budget on the night of the Truth -In- Taxation public hearing, and to adopt the 2013 — 2022 Capital Improvement Program and the 2013 Enterprise Budgets during its December 10, 2012, regular meeting. 3. 2013 GENERAL FUND BUDGET Director DeJong noted nothing has changed in the General Fund Budget when compared to the preliminary Budget Council adopted in late August with the exception of the increase of $7,700 in the transfer to the SSCC. That increases the use of General Fund balance up to $103,000 for 2013. There is sufficient cash on hand to cover that. He expressed that he is comfortable recommending that at this time. 4. ADJOURN Woodruff moved, Zerby seconded, Adjourning the City Council Work Session of November 26, 2012, at 6:55 P.M. Motion passed 510. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder Christine Lizee, Mayor