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11-10-14 CC WS minCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, NOVEMBER 10, 2014 MINUTES CONVENE CITY COUNCIL WORK SESSION 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 5:35 P.M., OR IMMEDIATELY FOLLOWING CANVASSING BOARD MEETING Mayor Zerby called the meeting to order at 5:35 P.M. A. Roll Call Present. Mayor Zerby; Councilmembers Hotvet, Siakel, and Woodruff, Administrator Joynes; City Clerk Panchyshyn; Finance Director DeJong; and, Director of Public Works Brown; Absent: Councilmember Sundberg B. Review Agenda Woodruff moved, Hotvet seconded, approving the agenda as presented. Motion passed 4/0. EXTERPRISE BUDGET / CIP FUNDS FINAL REVIEW Administrator Joynes noted that the meeting packet contains a number of documents related to the Enterprise Budgets, the Capital Improvement Program (CIP) and the Financial Management Plan (FMP). He stated this evening staff needs Council to decide what projects it wants to include in the 2015 — 2019 CIP and what it wants to do with the enterprise operations. In response to a question from Councilmember Hotvet, Administrator Joynes clarified that the estimated $300,000 cost for the Excelsior Boulevard trail segment is the worst case scenario. Metropolitan Council Environmental Services (MCES) has not provided a revised cost estimate. Jaynes noted that there is $180,000 budgeted for that trail in the 2014 CIP. Director DeJong stated if the cost for that trail segment is more than what is budgeted for in the CIP then that gap is unfunded. Administrator Joynes noted that the available money for the trail projects also includes Minnesota State Aid (MSA) funds that can be allotted to the trail projects and possible loans from other funds. Councilmember Hotvet asked if the cost estimates for the four trail projects are all worst case. With the exception of the Excelsior Boulevard trail segment cost the costs are based on the fall bidding environment. The costs for the three other projects are intended to be staff's best guesses. Mayor Zerby asked if the cost estimate for the Galpin Lake Road trail segment is the amount of the bid for the project that Council rejected because it was too high. Director DeJong responded yes because Engineer Hornby does not anticipate that the 2015 bidding environment will be much different than it was this past fall. There were many municipal projects in the metropolitan area that were bid out and rejected because they were so high. That likely means those projects will be rebid in 2015. Zerby stated that when Council rejected that bid it was told that if the Galpin Lake Road Trail Project were to be bid with the Smithtown Road East Sidewalk Extension Project there should be some cost savings. Had he CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 10, 2014 Page 2 of 11 known back then that the 2015 bid would likely not have been any lower he may have made a different decision. Council was told that the bidding climate should be a little more normal in 2015. Councilmember Siakel stated the cost estimate in the Smithtown Road East Sidewalk Extension Project Feasibility Report dated October 27, 2014, for the sidewalk and storm sewer improvements is $1,000,043. That is approximately $300,000 less than what is shown in the 2015 Trails CIP. Director Brown stated he has to defer to Engineer Homby on the cost estimates and he is not present. Councilmember Woodruff stated the feasibility study was done early this year and the bids came in higher. Mayor Zerby clarified that Project has not been bid out. Director Brown explained staff is trying to avoid Council running short on funds earmarked for capital projects. Combining the two trail projects might save 5 percent in equipment mobilization costs. Mobilization costs typically run 3 — 5 percent. He thought staff provided good, faithful estimates. He noted that staff has no control over the bidding environment. Mayor Zerby noted that 5 percent of the combined estimated cost for the Galpin Lake Road Trail Project and the Smithtown Road East Sidewalk Extension Project is $145,000. Director Brown stated if those savings are realized staff will reallocate the amounts. Councilmember Siakel stated it is clear that based on the cost estimates for the four trail projects there is not funding for all of them based on the City's current funds. She noted Council was not provided with possible options for funding them. She then stated if she had to give staff direction right now the one project she could support is the Smithtown Road East Sidewalk Extension Project while noting that all four projects are viable. She went on to state if Council decided to construct only the Smithtown Road East sidewalk extension she asked staff how it would be paid for. Administrator Joynes stated there are a number of ways to finance the projects; but, they are policy issues not staff issues. He then stated Council needs to decide what it wants to do. Siakel stated she made a decision and now wants to know what the options are to pay for it. Joynes stated the City can bond for them, it can borrow from other City funds, it can increase the tax levy, and it can delay or cancel some of the projects and transfer the budgeted funds to the remaining projects. Administrator Joynes explained if Council decides it wants to bond for the trail projects there are a number of ways to do that. There is the option for a City -wide General Fund levy which would have to be approved by the voters. There is a capital improvements bonding option but there is the possibility of a reverse referendum per of State Stature. There is the Shorewood Economic Development Authority (EDA) bonding option which does not require a voter referendum or a reverse referendum. The City could borrow against excess funds in the Sewer Fund and the Water Fund and pay it back with interest or the loans could be forgiven. He noted that for every $50,000 of bonds or loans that would have to be paid back the tax levy would have to be raised 1 percent. He stated if the Council chose to forgive the internal loans there could be resident push back because of how those funds were collected. Mayor Zerby noted that he is not willing to bond for the trail projects at this time; there is approximately $2.4 million dollars in funds available at this time. He also noted that the total gap for the Excelsior Boulevard, Galpin Lake Road and Smithtown Road East Projects is much less than the total trail projects funding gap of approximately $2 million. He recommended continuing going forward with the Excelsior Boulevard and Smithtown Road East Projects and delaying the Galpin Lake Road Project until a way can be found to lower the cost of that project. The wetland impact raised the cost of that Project significantly from what it was when it was first discussed. He stated he would like to have more discussion about whether or not it is appropriate to spend about $1,560,000 on that Project for so few residents. He encouraged staff to approach the Minnehaha Creek Watershed District (MCWD) about possibly helping fund that Project because of the wetland issue. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 10, 2014 Page 3 of 11 Councilmember Hotvet asked what the amount is of General Fund reserves above the 60 percent General Fund Balance Policy guidelines. Director DeJong responded about $300,000. Councilmember Siakel asked where the $283,000 available for the Strawberry Lane Trail Project is coming from. Director DeJong responded the Stormwater Management Fund. The remainder amount of $852,000 for the trail is unfunded. DeJong noted that the $1,135,000 is only a small part of the reconstruction cost for Strawberry Lane and the construction of a trail. The additional street costs are about $1.4 million. The total project cost is more than $2.2 million. Mayor Zerby stated because of the Galpin Lake Road Trail Project wetland issue he suggested considering a partial trail that works with the access to Highway 7 and creates a safer route. He then stated he thought there is a way to work within the City's means. Councilmember Siakel stated that during the open house for the Galpin Lake Road trail segment and the Smithtown Road East sidewalk extension the bulk of the residents that were there were mainly concerned about the corner around Highway 7. She suggested Council consider a portion of that trail but maybe not in 2015. She stated if staff is looking for direction she suggested Council identify one or two trail projects to proceed with and delay the others. She then stated solutions have to be identified for Strawberry Lane; it has been a mess for 20 years and it needs to be fixed with a permanent solution. Mayor Zerby stated that Council has not heard anything back from staff about the safe routes to schools (SIRS) program that the City could possibly get some funding from for the Strawberry Lane trail segment. He then stated the Boulder Cove development in the City of Chanhassen will have a big traffic impact on Strawberry Lane and West 62d Street so he suggested approaching Chanhassen about partnering on roadway improvements and the trail segment. Councilmember Siakel asked when staff anticipates the City will receive revised construction numbers from MCES for the Excelsior Boulevard trail segment. Director Brown stated in the next couple of weeks. Councilmember Hotvet stated she would make the Excelsior Boulevard trail segment a priority. Councilmember Woodruff stated from his perspective constructing the Excelsior Boulevard trail segment would be a waste of money. And, based on the $300,000 worst case estimate it would be a ridiculous waste of money. There would be about 300 yards of trail which amounts to a cost of about $10,000 per yard. He does not think anyone will use that trail. Councilmember Hotvet disagreed. Woodruff stated the trail does not go anywhere on the east. Hotvet stated it would bring in people from Shorewood. Woodruff asked which people, Woody ?. Hotvet stated she does not know who. Councilmember Siakel asked Woodruff why he was obsessed with one resident. Woodruff explained the trail would start at Manor Road in the City of Greenwood and go east to Barrington Way. There is another three - fourths of a mile east of that where there will not be a trail yet there is a senior housing complex and park in that area. Mayor Zerby noted that the reason to do that trail now is because that road is under construction as part of the MCES forcemain project and therefore MCES is helping to fund it. Zerby also noted that this trail project also includes the construction of an expensive retaining wall. Councilmember Siakel stated from her perspective she would include the Excelsior Boulevard trail segment in the Trails CIP as a placeholder until the actual costs are known. And, she would support proceeding with the Smithtown Road East Sidewalk Extension Project in 2015. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 10, 2414 Page 4 of 11 Councilmember Woodruff stated he agrees with doing the Smithtown Road East Sidewalk Extension Project. That makes sense to him because the City already constructed the Smithtown Road West sidewalk. He thought there is enough money to do that with minimum impact on the budget, even at the current cost estimate, if Council decides to cancel or delay some of the other trail projects. There is a gap of $351,500 between the updated estimate and what is available. Per Director DeJong there is about $300,000 in reserves available and clarified that he is not necessarily advocating that. Or, the City could fiend the gap with a loan from the Water Fund and pay it back at a very small cost over ten years with or without interest. He then stated the construction of the Strawberry Lane trail segment is programed for 2019. Talking about that project now is useful but he does not think it is necessary to talk about funding for that now. Councilmember Siakel concurred. Woodruff stated it would be appropriate to discuss that during the February Council and Staff retreat. He went on to state that during the open house for the Galpin Lake Road trail segment and the Smithtown Road East sidewalk extension more than half of the residents he spoke with indicated they would like the Galpin Lake Road trail segment provided it would not raise their taxes. Woodruff suggested rebidding the Galpin Lake Road Trail Project and bidding the Smithtown Road East Sidewalk Extension Project next spring. Council can then make a decision about where to get the money then. He stated the City can always borrow money from some of the Enterprise Funds and structure the loan so the loan repayment would be minimal in 2015. Director DeJong clarified that if the City borrows the money in 2015 it will not have to make its first payment until 2016. Woodruff reiterated he opposes spending $300,000 or even $250,000 on the Excelsior Boulevard trail segment. He asked staff if the City has any sunk costs in that project other than engineering costs. Director Brown stated the City owes MCES some money for it but nothing significant. Councilmember Siakel stated she understands Council to be in agreement about proceeding with the Smithtown Road East Sidewalk Extension Project in 2015 and putting a plan in place for Strawberry Lane roadway improvements and the trail construction. She noted she would be open to building at least a portion of the Galpin Lake Road trail segment. She stated the residents have indicated if the City cannot afford to construct that entire segment then they would at least like the portion along Highway 7 constructed. Mayor Zerby stated that sounds like the direction Council wants to go. Councilmember Hotvet asked if the projects will be bid out together. Administrator Joynes responded they will. Administrator Joynes stated with the possibility of the Minnetonka Country Club (MCC) property being redeveloped the Smithtown Road East sidewalk extension might be part of that discussions. That could be another area for cost savings for the City. Unfortunately, no one knows the timing of that. Councilmember Woodruff stated from his perspective the City has about six months into 2015 before it needs to award a bid for the Smithtown Road East Sidewalk Extension Project to ensure it can be mostly completed in 2015. During that time there will be discussion about what the redevelopment alternatives are for the MCC property. Administrator Joynes summarized what he understood Council's direction to be. The Smithtown Road East Sidewalk Extension Project will be bid out in 2015. The Galpin Lake Road Trail Project will be CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 10, 2014 Page 5 of 11 rebid in its entirety and the portion of that trail along Highway 7 will be bid out as an alternative. He asked if the Excelsior Boulevard trail segment is going to remain on the table. Mayor Zerby stated that depends upon what MCES comes back with for the cost of the retaining wall and trail segment. Councilmember Woodruff suggested leaving that on the table until the City hears back from MCES. Zerby noted that Council has already approved funding in the amount of $180,000 for Excelsior Boulevard segment. Woodruff concurred. Joynes stated the Strawberry Lane roadway and trail projects will be placed on the agenda for the council and staff retreat. Administrator Joynes explained there is no funding for the reconstruction of Strawberry Lane and Glen Road. The combined estimated funding gap for those two projects is $2,285,000. The estimated cost for Glen Road is $1,145,000 and for Strawberry Lane it is $1,114,000. One funding option for streets is assessments; a procedure a lot of cities use. Mayor Zerby stated that would be a good policy discussion. He then stated when there are residents who want to delay the schedule in the City's Street Reconstruction CIP and that results increased costs to the City to do that work at a later date then the City should have a discussion with the residents about the possibility of assessing them for the increase. The City's plan is to reconstruct a roadway when it is most economically viable to do so. In response to a question from Councilmember Hotvet, Administrator Joynes explained funding sources have been identified for a lot of the roadways that are scheduled for reconstruction. Glen Road and Strawberry Lane have been moved up in the priorities. In response to a question from Councilmember Siakel, Director Brown explained that a number of years ago the then council had discussed reconstructing Glen Road along with Amlee Road and Manitou Lane. Glen Road is rated 4 now which means it is in very poor shape. When Glen Road was last discussed extensive engineering studies were done. The project for the three roadways politically failed with the residents back then. They were against the Glen Road right of way (ROW) issues and easements that were needed to reconstruct the roadways. That council opted not to move forward with the Glen Road project and pushed it way out. Recently staff has heard Council ask why Glen Road reconstruction is not scheduled for 2016 in conjunction with the Amlee Road and Manitou Lane projects. A similar thing occurred with Star Lane and Star Circle when the reconstruction of them was discussed in 2010. Mayor Zerby stated he does not recollect bringing Glen Road up. Councilmember Woodruff stated he brought the reconstruction of Glen Road up because Amlee Road and Manitou Lane are in the 2016 Street Improvement CIP for reconstruction but Glen Road is not. Yet, Glen Road is the feeder street to the other two roadways. He asked that Glen Road be added to the CIP. He noted that he questioned the need to reconstruct Amlee Road and Manitou Lane and suggested Council discuss that. Councilmember Siakel stated when residents are adamant about not having the roadways in their neighborhood improved and they refuse the extension of watermain and then Council decides to reschedule the reconstruction for ten years out then that is where it should stay. If Glen Road is moved up then the City has to come up with funds to move it up in the queue. She noted she is not sure she supports doing that. Councilmember Woodruff concurred. He stated that a because Amlee Road and Manitou Lane were to be done in conjunction with Glen Road a number of years ago yet those two roadways are programed for reconstruction in 2016 but Glen Road is not. He asked what the rationale is for leaving Glen Road off. He questioned if there is a less costly option for those two roadways. He explained that the last time these CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 14, 2014 Page 6 of 11 roadways were discussed there were more than a few property owners that were going to need to give the City easements for ROW concessions and the property owners adamantly refused to do that. Council did not want to go through the process of eminent domain at that time so the reconstruction process was pushed out. He noted that Glen Road East is in the CIP but not the piece past Manitou Lane which ends in a dead end. That piece is where there was the most controversy about ROW and easements. Councilmember Siakel asked if the residents have been complaining about the condition of Glen Road. If not she suggested leaving it on the schedule as is. Director Brown stated the City has not received specific complaints about Glen Road but it has received a few complaints about Amlee Road and Manitou Lane. They are in far worse shape than Glen Road. Councilmember Woodruff asked if any of the stormwater issues along those three roadways can be mitigated without a total reconstruction. He stated there are people complaining about stormwater issues in that area. Director Brown stated there are significant stormwater issues that cannot be addressed without reconstructing Amlee Road and Manitou Lane. Woodruff suggested leaving the reconstruction of Glen Road in the CIP with the understanding that before the 2015 budget and CIPs are agreed to Council has to find a way to pay for it. Councilmember Hotvet asked if anyone can find out what the timeframe for reconsideration was when the project was tabled last time. Councilmember Woodruff stated it was indefinite. Mayor Zerby noted those three roadways were last discussed in 2007 and Councilmember Woodruff was the only member of this Council that was on council back then. Councilmember Woodruff stated the discussions dragged on for quite some time and the discussions were fairly contentious. At that time there were comments about Amlee Road and Manitou Lane being done at a later date. Councilmember Siakel stated she does not view this as a crisis. Administrator Joynes stated staff will leave Glen Road out of the CIP at this time and then place this item on the February retreat agenda for discussion. He asked if that is acceptable. Mayor Zerby responded it is. Director DeJong asked for clarification — should it be left in the CIP. Director Brown suggested leaving it out of the CIP at this time and then discussing it at the retreat. Joynes stated it will be left out of the CIP and discussed at the retreat. Joynes stated if it were to be left in the CIP for publication there needs to be a note that Glen Road is not funded. DeJong asked if this is about just Glen Road East or does it include Amlee Road and Manitou Lane. Joynes stated he hears Council say that all three of them will be discussed. Councilmember Siakel stated she supports leaving Glen Road East out of the 2016 CIP and discussing it during the retreat. Councilmember Woodruff stated from his perspective historically if Council thought it wanted to do a project in the next few years it was included in the CIP. Council has to find a way to fund it. Mayor Zerby noted at this time this is being driven by just one member of Council. He stated he is not prepared to include a more than $1 million dollar project in the budget without having adequate discussion about it and without hearing from the residents. He also supports discussing this during the February retreat. Councilmember Siakel asked if everyone is clear that it will be left out of the CIP and discussed during the February retreat. Administrator Joynes responded yes. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 10, 2014 Page 7 of 11 Councilmember Woodruff stated if that is the case the same thing should be done with Star Circle and Star Lane. He then stated the last time Glen Road was discussed a lot of the serious drainage issues were on the west end and reconstructing that is not in the 2015 — 2019 CIP. With regard to parks and recreation, Administrator Joynes stated the Southshore Community Center (SSCC) situation is still in flux. The unfunded capital improvement costs for the SSCC in the amount of $344,400 are spread out over 20 years and they are not included in the Park Improvement CIP. The cost for the improvements to Badger Park is estimated to be $1,323,797 and there is a total of $575,000 available. That leaves an unfunded gap of $748,797. One of the things that could potentially mitigate that gap is the possible redevelopment of the MCC property which could generate up to approximately $500,000 in park dedications fees at the base level of development and other things could be negotiated over time. Mayor Zerby stated that Badger Park improvements need to be put on hold for one year. He does not think it makes any sense to spend any money on improvements until the City knows what is going to happen with the MCC property. Councilmember Siakel agreed with putting all improvements on hold. Mayor Zerby stated he does not think the capital improvement costs provided by staff for the SSCC are realistic and suggested discussing that during the February retreat. Administrator Joynes stated he is confident that the $344,400 will be spent for capital improvements over 20 years but he does not know when. It could possibly be tomorrow. Director DeJong noted there is still money budgeted to fund the SSCC operating shortfall in 2015. Administrator Joynes stated staff will put Badger Park improvements on hold for 2015 and the SSCC will be discussed during the February retreat. Director DeJong asked if Strawberry Lane is supposed to be left in the 2019 CIP. Administrator Joynes stated it should be left in there and the trail and reconstruction will be talked about during the February retreat. Administrator Joynes stated there are two miscellaneous items. One is the green energy study and the proposals from the three firms indicate the cost for that will be between $25,000 and $50,000. The other is for hiring a consultant to help determine options for the MCC property and no funding source has been identified for that maximum cost of $75,000. Staff will talk to three consultants about the scope of services and ask them to submit a proposal for Council's consideration. Mayor Zerby stated it was his recollection that staff was going to check with the City of Orono staff about what costs Orono incurred when going through their golf course redevelopment projects. Joynes stated the houses for the Orono projects may be similar but MCC redevelopment will have significant impact on traffic. Councilmember Woodruff stated he spoke with the Orono City Administrator and she indicated she would be willing to talk to Council about what Orono had to go through. He was told that Orono held about seven fairly contentious meetings about the proposed redevelopment of one golf course property. He noted Orono structured the cost for its consultant as being paid for by the developer. It received an escrow from the developer and it charged its costs back against the escrow. He stated he does not think the City will be out $75,000. Administrator Joynes concurred. Administrator Jaynes stated depending on the size of the area the City would like to plan for there may be other funding sources than just the General Fund. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 10, 2014 Page 8 of 11 Councilmember Woodruff asked if the $75,000 is included in the budget. He stated General Fund reserves could potentially fund it. Mayor Zerby and Councilmember Siakel both indicated that would be appropriate. Administrator Joynes stated staff will revise the budget numbers and FMPs and make a recommendation for funding sources with the goal to minimize the impact on the tax levy. A short-term loan from one of the Enterprise Funds may be most appropriate. Mayor Zerby recessed the meeting at 6:23 P.M. Mayor Zerby reconvened the meeting at 6:25 P.M. Councilmember Siakel stated the City has some MSA designated roadways and it earns a certain amount of money from the State for reconstruction of those roadways or the construction of trails along MSA roadways. She asked staff to elaborate on how that process works. Administrator Joynes noted the City receives MSA maintenance reimbursement money and MSA street reconstruction reimbursement money. Director DeJong noted there really isn't much cash flow. He explained the City receives an allocation of MSA funds. Funds for maintenance flow into the General Fund and it can amount to up to 25 percent of the maintenance costs for MSA roadways. The remaining MSA funds are only available for reconstructing MSA roadways to MSA standards or trails along MSA roadways to MSA standards. The City does not anticipate reconstructing any MSA roadways in 2015 — 2019. It is anticipated that some of the funding for the Smithtown Road East sidewalk extension will be funded out of the MSA Street Reconstruction Fund. Because there are limited uses for the funds in that Fund the balance will build up somewhat overtime. If the City continues not to use the funds the State will start to scale the City's allocation back. Director Brown explained the funds collected at the gas pump are held by the State. Once the City does a roadway reconstruction project or constructs a trail the City asks the State for reimbursement. The State will advance up to he thought 60 percent of the project cost. He then explained that for the Smithtown Road West Sidewalk Project there was an MSA representative present at times during construction to verify that the sidewalk being built met MSA standards. Councilmember Woodruff stated there is not any capital outlay for the Smithtown Road East Sidewalk Extension Project in the MSA Street Reconstruction Fund IMP. Councilmember Siakel stated if the City's allocation for MSA reconstruction funds goes down if the City doesn't use them on a regular basis she asked why the City would not use them. Director DeJong stated there is a possibility they may be used for the Smithtown. Road East Sidewalk Extension Project. Unfortunately they cannot be used for the Galpin Lake Road Trail Project because Galpin Lake Road is currently not designated MSA. Strawberry Lane is not an MSA roadway either and cannot be designated as one at this time. Director Brown explained the MSA system is to interconnect and build a network of roadways. For a roadway to be designated as an MSA roadway it must connect to another MSA roadway or a trunk highway or a county state aid highway. Although Galpin Lake Road connects to Trunk Highway 7 it does not connect to another MSA roadway, trunk highway or county state aid highway. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 10, 2014 Page 9 of 11 Councilmember Siakel asked how much of the balance in the MSA Street Reconstruction Fund could be used for the Smithtown Road East Sidewalk Extension Project. Director Brown noted the year -end balance in the Fund is not projected to be very high. Brown explained the City can borrow against its allocation up to three, or maybe five, years in advance. He thought the City is allocated about $265,000 annually. Director DeJong clarified the allocation is over $300,000. Councilmember Woodruff stated that depending on how the MCC property is redeveloped there may be an opportunity to spend MSA funds on the Smithtown Road intersection. Director DeJong clarified that the City has to pay for the project up front and then it can get reimbursed MSA funds after the fact. Councilmember Woodruff stated that could be addressed by borrowing from an Enterprise Fund and then pay it back once it receives the MSA funds. Mayor Zerby stated the Equipment Replacement CIP includes a Public Works Building line item in 2017 for an amount of $81,000. He asked what that is for. Director Brown stated it is for replacing the roof. Councilmember Woodruff explained the 2015 Equipment Replacement CH' shows $427,500 in expenditures. That will bring the balance in the Equipment Replacement Fund down to $88,363 at the end of 2015 and the FMP for that Fund shows it will go into a deficit state in 2016 and will remain there through 2019. He asked if some of the 2015 expenditures could be funded out of the Water Fund to level the spending in the Equipment Replacement Fund and to keep the Fund from going into a deficit state. Director Brown stated previously staff has allocated some of the cost of Equipment Replacement purchases to other funds when the equipment is used for a variety of purposes. Administrator Joynes stated for the first City budget he was involved with staff recommended to Council that be done. Staff was fairly conservative at that time. Staff will reconsider that and make sure that any recommendations would pass an audit. Councilmember Siakel asked why there are so many costly equipment replacement purchases scheduled for 2015. Can they be spread out? She clarified she was not criticizing anyone. Director Brown stated staff has and continues to extend the life of equipment whenever it can. For example, the life of a dump truck has been pushed out to 12 — 15 years while many cities replace them after ten years. Mayor Zerby stated the 2016 Equipment Replacement CIP includes a boom truck for a cost of $84,000. He asked if that will be new equipment or a replacement purchase. Director Brown noted the City does not have a boom truck. Zerby asked if the City of Excelsior has one. Brown responded no. Zerby asked if staff has explored financing the purchase together with Excelsior. Brown stated that has been discussed a little. Brown explained that the tree inventory program will be coming to fruition and it is presumed that Public Works personnel will play a key role of managing the trees in the City's ROW. He noted that technically if there is anything above shoulder height Public Works personnel cannot cut it without a boom truck. Zerby stated he understands the need for one, but he would like staff to explore a joint purchase with Excelsior. Brown stated the equipment staff has explored is a used piece of equipment and that there is a handshake that the equipment would be shared with Excelsior. Councilmember Siakel noted that she supports funding some equipment replacement purchases out of multiple funds if the equipment is used for multiple purposes. Councilmember Woodruff stated the Stormwater Management CIP still does not include anything for a stormwater management assessment for the Freeman Park and Shorewood Oaks areas. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 10, 2014 Page 10 of 11 Mayor Zerby noted that the Glen Road East item needs to be taken out of the Stormwater Management CIP based on the discussion this evening. Councilmember Woodruff stated the 2015 Street Maintenance Fund FMP reflects there is a $725,000 transfer in. That is not correct and it needs to be corrected. Director DeJong stated a decision was never made on the allocation of the $830,000 coming out of the General Fund. It was increased to $830,000 from $800,000 and the $30,000 was split equally between the Equipment Replacement Fund and the Street Reconstruction Fund. It can be split differently if Council wants. DeJong then stated that the purchase of front -end loader replacement and street sweeper had been pushed out. He explained that prior to 2008 more than $100,000 was transferred into the Equipment Replacement Fund annually. A decision was made to reduce that transfer in to $50,000. That was too much of a reduction. The transfer in is slowly being increased to what it needs to be. Councilmember Woodruff stated he can support splitting the $30,000 equally. He suggested talking about equipment replacement needs during the February retreat. Woodruff suggested closing out the Community Infrastructure Fund. He explained that Fund was created with proceeds from the sale of the City's liquor operations and by transferring in $1 million from the Sewer Fund. He noted that the 2015 green energy study will be funded out of this Fund. He suggested transferring whatever remains after that (which is projected to be $172,107) into the Park Improvement Fund or to some other fund such as the Trail Construction Fund. He stated the revenue stream for the Park Fund is from park dedications fees and the $42,000 transfer in from the General Fund. Director Brown stated staff has discussed if there should eventually be a separate enterprise for alternative energy. Eventually the City will have to determine if that enterprise would be self - sustaining. The Community Infrastructure Fund balance could go into that fund. Councilmember Woodruff suggested that during the February retreat there be discussion about what to do with the surplus in the Recycling Utility Fund that is being generated by the revision in the recycling contract. Woodruff stated the meeting packet contains copies of the budgets for the City's four enterprise operations. He stated the budget numbers for 2015 in the Water Budget and the numbers in the graphs do not match. When it is time for Council to approve the budgets he does not know which one Council will be approving. Director DeJong explained the FMP is a five -year projection based on the adopted 2014 budget. Council adopts a one year budget. The FMP reflects a 2 percent annual increase in expenditures. The only increases that are not in the Enterprise Budgets are salary increases. Those are accounted for in the General Fund and when Council decides what the increases should be for 2015 they will be allocated to the correct enterprise operations. Director DeJong noted that the Sewer Budget does not include anything for the Metropolitan Council Environmental Services penalty the City will have to pay which is almost $400,000 and it will have to be paid over the course of the next five years should that penalty hold. Councilmember Woodruff stated the Sewer Fund cash balance should be able to handle that. Mayor Zerby noted that some of that penalty can be paid by making needed repairs to the system. Mayor Zerby noted that he thought this work session was much better than the October 27 work session. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 10, 2014 Page 11 of 11 Woodruff moved, Siakel seconded, Adjourning the City Council Work Session of November 10, 2014, at 6:57 P.M. Motion passed 4/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder ATTEST: Jean Panchyshyn, CiVy Cldrk Se 146&-ffiy' mftr