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03-10-14 CC WS MinutesCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, MARCH 10, 2014 MINUTES CONVENE CITY COUNCIL WORK SESSION 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:15 P.M. Mayor Zerby called the meeting to order at 6:22 P.M. A. Roll Call Present. Mayor Zerby; Councilmembers Hotvet and Sundberg; Administrator Joynes; City Clerk Panchyshyn; and Finance Director DeJong Absent: Councilmembers Siakel and Woodruff B. Review Agenda Sundberg moved, Hotvet seconded, approving the agenda as presented. Motion passed 310. 2. SOUTHSHORE CENTER ADVISORY COMMITTEE PROPOSAL Administrator Joynes stated that during the February 8, 2014, Council and staff retreat Council asked that a work session be dedicated to talk about issues discussed during the retreat regarding the Southshore Community Center (SSCC). Since the retreat Council and staff received a copy of a 3 -year pilot project proposal titled The Cove that was prepared by two members (Greenwood Mayor Kind and Tonka Bay Councilmember Ansari) of the Southshore Center Advisory Committee (SCAC). A copy of that proposal is included in the meeting packet. The following items are also included in the meeting packet: staffs analysis of the Cove proposal and their concerns about it; two concept plans for Badger Park; a couple of legal memorandums from Attorney Keane; a few historical documents and some findings he was asked to put together; and information on current usage. He noted that earlier in the day he and Mayor Zerby spoke with Minnetonka Community Education (MCE) Executive Director Tim Litfin about what the MCE's thoughts are about using the SSCC. He then noted he also spoke with Deephaven City Administrator Dana Young and was informed that Deephaven, a co -owner of the SSCC, is not interested in proceeding with a joint venture. That was not a surprise be- cause Deephaven Mayor Skredc had indicated something similar to that earlier on in this process. He stat- ed that takes a fairly major player out of the process going forward. He stated the Cove proposal is a well - intentioned effort and it was developed in a very short period of time. He explained that staff believes there are some major holes in the proposal because of Greenwood Mayor Kind's and Tonka Bay Councilmember Elli Ansari's lack of experience in managing the SSCC. City staff has gained that experience over the last year. This proposal, or something similar to it, would commit the City to expenditures of staff resources and money. Some of that commitment is not included in the proposal. City staff has been more involved with SSCC operations than is apparent to people who are not involved. He explained staff reviewed the staff hours and quality of employees that would serve the SSCC in the proposal. In the proposal Shorewood would be responsible managing those employees (including all su- pervisory needs) along with a number of other responsibilities. NICE would be a partner in control of the SSCC. It assumes that the Southshore Senior Partners (SSSP) would continue to use the SSCC but how that will continue needs to be established. The 3 -year proposal tries to reach a break -even point for SSCC operations. One of the conclusions identified in the business plan for the SSCC that was prepared by the Vantage Team was the SSCC could possibly break -even or close to it. The ]'earn found that there were CITY OF SHOREWOOD WORK SESSION MEETING MINUTES March 10, 2014 Page 2 of 4 six common elements (daycare center, meeting space, a fitness center, gyms, swimming pools and ice rinks) that most of the six local profitable centers had. Five of them were found in at least four of those centers. The SSCC has only one - meeting space. From his perspective it is very unlikely that SSCC oper- ations could break even. The proposal also assumes Shorewood can provide services at the SSCC with 20 hours of supervisory staffing per week at a cost of $15 per hour and some fill -in help at $8 per hour. Based on the City's cur- rent experience many more than 20 hours a week are spent on SSCC operations at a much higher cost be- cause of the higher quality personnel. That is consistent with the rate for other centers that comparisons were made with. The City has trouble getting fill -hr people to come and work at $10 per hour. It can't even compete with Caribou for people. He noted that some of the fundamentals in the proposal are unreal- istic. He stated there is a lot of tweaking that has to be done to the numbers. He cautioned Council about taking any of the numbers as valid. The numbers were estimates that were reached quickly. He reiterated there are a number of issues that were over looked in the proposal because of people's inexperience. He noted that even if employees were hired at the level indicated in the proposal they would be required to be under the Public Employee Retirement Association (PERA) and the City would have to contribute to that for them. That money is not factored into the proposal. He stated if enough of the five cities who co -own the SSCC remain involved then before anything is final- ized it is prudent that staff be given the opportunity to fine tune the numbers. He then stated from staff's perspective if a 3 -year project moves forward, the SSCC will continue to operate at a deficit which has recently been $60,000 — $70,000. Staff does not think that will go away in any major way. He noted that the proposal does not include any formula for the co- owners to share in that deficit. He stated if that is not resolved lie asked if it would be up to Shorewood to fund the deficit. If Council wants the City to enter into some agreement he recommended that a formula be devised and included in the agreement so that the co -owner cities share in any deficit. He then stated with Deephaven going out and the other cities starting to consider this, he is not sure it will come back to Shorewood in any format that Council and staff can support. It is likely Shorewood will have to take on a larger portion of the responsibility. He noted staff has gathered information about the actual hours that have been spent at the SSCC on operations. He stated the hours in the proposal are not realistic. And, the proposal assumes a more intense use. Councilmember Sandberg noted that she appreciates the level of detail Greenwood Mayor Kind and Ton - ka Bay Councilmember Ansari included in the proposal. She stated she was surprised that none of that planning included anyone from Shorewood. That was problematic for many of the reasons Administrator Joynes highlighted. The key players like Shorewood should have been involved. She then stated the Van- tage Team did an admirable job with the business plan it developed. Administrator Joynes noted that staff used some of the Vantage Team's survey data and some of the ele- ments it identified that successful centers have when evaluating the 3 -year proposal. He appreciated hav- ing that information available. He stated flee conclusions the Team reached were based on different expe- riences. Councilmember Sandberg stated the proposal does not factor in actual experiences. She then stated that she was pleased two other communities were proactive. She noted that at this point she would like to get feedback from the other cities. She asked if anyone plans on going to the other City Council meetings when Greenwood Mayor Kind presents the proposal. Mayor Zerby stated that has not been discussed. She thought there could be benefit in someone attending them. Councilmember Hotvet asked if the Vantage Team made a presentation to the other four City Councils. Administrator Joynes noted that the Deephaven Council declined to put the Team on an agenda. And, it had been discussed in front of the Greenwood Council. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES March 10, 2014 Page 3 of 4 Councilmember Hotvet stated she leans towards Shorewood taking responsibility. She then stated there needs to be a plan and it needs to be incorporated into the City's park system. The City needs to work with SSSP representatives. She then stated she liked the Vantage 'ream's recommendation about a Sum- mer Hangout program. She recommended pursuing that further. She clarified she understands that up- grades to the SSCC would have to be made, permits would have to be obtained, vehicles pur- ehased /leased, insurance would have to be purchased and so forth. But, for the western end of the school district to have a facility where a program could be offered on weekdays during the summer would be invaluable. Mayor Zerby explained there are two components to the SSCC. One is the operational component. It was made clear during SCAC meetings that the other cities are not willing to subsidize any of that. Then there is the capital maintenance improvement component for the building. The Cove proposal includes putting about $50,000 in improvements into the building, MCE operating the facility and the SSCC breaking even. MCE has indicated that the building is too small for its needs and the revenue sharing recommenda- tion proposed by Greenwood Mayor Kind in the proposal is too thin for MCE. The capital improvement projections from staff for the building for 2014 — 2018 total about $85,000. If the other co- owners ever hope to get some portion of their original investment in the building back, they have to help fund the capital maintenance of the building. He has heard there are issues with the roof, the kitchen is aging, and the Cove proposal indicates the interior is outdated. From his perspective if the other cities are not willing to, at a minimum, contribute to the maintenance of the building over the next several years, then they should surrender their stake in the building and let Shorewood take it from there. Councilmember Sundberg stated she likes that suggestion and approach. She then stated the SSCC build- ing does not have what it takes to become a break -even operation. That should not be the reason to keep the SSCC functioning. It's time to move on. Councilmember Hotvet stated the facility is part of the community and things need to move forward. Councilmember Sandberg asked if there is any idea about what Excelsior's interest is about this. Admin- istrator Joynes explained the Excelsior Council will talk about this during its second meeting in April which is unfortunate because it will be after the Shorewood Council's meeting when Greenwood Mayor Kind makes a presentation. He then stated the Excelsior City Manager had speculated that if the agree- ment ends up being between Shorewood and Excelsior it may be too steep for Excelsior's financial situa- tion. He clarified that is speculating about what the Excelsior Council may think. Administrator Joynes stated it makes the best sense for Council to wait until it knows what Excelsior is going to do before making any decisions. If Excelsior is not going to move forward with supporting the SSCC then it will clearly end up being Shorewood's. He then stated Attorney Keane has provided an op- tion of a "cash call" to the other four cities where if they do not want to help fund capital maintenance improvements they would lose their equity stake in the building. He noted that is what Deephaven wants to do. Councilmember Sundberg cautioned against burning bridges with the cities because there are a lot of oth- er opportunities for sharing services. Administrator Joynes stated if it were to end up just being Excelsior and Shorewood there may be a way to work out the operation of the building with a couple of additional services and programming. The two cities could probably do it if Excelsior is willing to do something. He then stated it's his understanding Excelsior likes having the building available as a backup for City Council meetings and as a community CITY OF SHOREWOOD WORK SESSION MEETING MINUTES March 10, 2014 Page 4 of 4 space. There have been some ideas discussed about possibly providing joint services out of the building that are attractive to a number of people. Councilmember Hotvet reiterated that she thinks the Vantage Team's Summer Hangout opportunity is big. Councilmember Sundberg asked if the City should let Excelsior know that if the interest is just between the two cities that Shorewood is still interested. Administrator Joynes noted he expressed that to the Ex- celsior City Manager today. He stated contact at the Council level might be more appropriate. Mayor Zerby asked if there is any reason the City can't reach out now to the Vantage Group about renting part of the SSCC. Administrator Joynes stated he will reach out to the Minnetonka High School, who runs the Vantage Program, about that. Zerby stated that on paper he thought the Vantage Team's summer programming idea (Sumner Hangout) looks like a good idea. Being summer is fast approaching he asked if there is anything that should be be- ing done in parallel to prepare for that opportunity this summer. Administrator Joynes stated in addition to needing to promote it there is the complication of not wanting to compete with MCE. MCE offers similar programs. Joynes stated there are the issues Councilmember Hotvet had mentioned earlier as well as li- censing and the safety issue. Councilmember Hotvet stated she could envision that being a perfect setup with MCE being the front per- son for summer child care and after school programs. The school district does not have the facilities to meet current needs. The things that could be done there, if done well, could be really great. The SSSP could also be involved. Mayor Zerby stated MCE is not very enthusiastic about additional programming as this time. MCE al- ready provides a lot of programming. Administrator Joynes stated he understands that Council agrees with waiting until they know what the other cities intend to do. After that is known, Council could then have another work session about this. 3. ADJOURN Sandberg moved, Hotvet seconded, Adjourning the City Council Work Session of March 10, 2014, at 6:46 P.M. Motion passed 310. RESPECTFULLY SUBMI'T'TED, Christine Freeman, Recorder Scot erby, Mayor j ATTEST: (;ul d°-- Pam, Jean Pauchyshyn, City Clerk