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11-28-16 CC WC MinCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, NOVEMBER 28, 2016 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. Mayor Zerby called the meeting to order at 6:00 P.M. A. Roll Call Present. Mayor Zerby; Councilmembers Labadie, Siakel, Sundberg, and Woodruff; Attorney Keane; City Administrator Lerud; City Clerk Panchyshyn; Finance Director DeJong; Director of Public Works Brown; and, City Engineer Hornby Absent: None B. Review Agenda Woodruff moved, Labadie seconded, approving the agenda as presented. Motion passed 510. 2. 2017 GENERAL FUND BUDGET, ENTERPRISE BUDGET AND CAPITAL IMPROVEMENT PROGRAM REVIEW Director DeJong noted the meeting packet includes a summary of the discussions Council and staff have had regarding the 2017 General Fund Budget, the 2017 — 2021 Capital Improvement Program (CIP) and the 2017 Enterprise Budgets. He then noted that the 2017 Truth -in- Taxation hearing is scheduled for December 5, 2016. He went on to note that the proposed 2017 Budget included in the meeting packet is the same as the preliminary budget that Council adopted during its August 22, 2016, meeting. He reviewed the amount of the mayor changes in the proposed 2017 General Fund Budget when compared to the adopted 2016 General Fund Budget. Revenues • Property tax levy $101,588 • Increased permit revenue $ 60,000 • Increased plan check fees 10,000 Total change in revenue $171,588 Expenditures • Council — Contractual ($ 50,000) • Council — Contingency $ 33,000 • Administration — Election Judges ($ 12,000) • Professional Services — Prosecution $ 4,000 • Professional Services — Assessing $ 5,000 • Munn. Buildings — Communications $ 4,000 CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 28, 2016 Page 2 of 7 • Police — Contractual Services $ 73,885 • Police — Buildings ($ 16,000) • Fire — Contractual Services $ 3,262 • Fire — Buildings ($ 13,972) • Inspections — Contractual Services $ 2,500 • Public Works — Motor Fuel ($ 3,000) • Miscellaneous Expenditure Changes $ 33,550 Total change in expenditures $ 64,225 Change in use of reserves in 2017 ($107,363) He explained the Council Miscellaneous Services (Council — Contingency) was $27,000 in 2015. It was increased to $60,000 for 2017 to cover pay increases for both non -union and union personnel and an increase in the contribution to employee health insurance. It equates to roughly a 2.5 percent increase in salaries and a $25 per month per employee increase in the contribution. The Police Contractual Services line item increase was due to an adjustment in the funding formula; that adjustment is done every five years. Shorewood's share of the funding went up so that budget line item increased by $73,885. He then explained the cost for forestry services is likely to exceed the budgeted amount of $40,000 in the Public Works budget. Staff anticipates the actual costs could be as high as $75,000. That additional $35,000 would have to be covered out of reserves. DeJong went on to explain that an update to the Comprehensive (Comp) Plan has to be done in 2017. Staff does not have the expertise to make all of those updates. Therefore, the City will have to use outside resources to do that. If all of the updates were to be done with outside resources staff estimates the cost to be $85,000. Councilmember Sundberg stated it is her understanding the Police Contractual Services line item did not go up significantly; the City share of the funding did. Director DeJong clarified Shorewood's share of the funding increased from about 46 percent to 48 percent. Sundberg asked Mayor Zerby if he was comfortable with the City's increase. Zerby noted there is not much to do about it. Zerby explained the South Lake Minnetonka Police Department ( SLMPD) Coordinating Committee discussed making changes to the Joint Powers Agreement (JPA) but that would require all four member cities voting in favor of that and the changes that were discussed were not well accepted by all four cities. Sundberg clarified that the reason she asked is the City is not receiving more services. Councilmember Siakel stated she thought part of the increase in the SLMPD budget was because there was agreement by the member cities to have the SLMPD hire an additional officer. Mayor Zerby confirmed that. Councilmember Sundberg asked what is driving the increase for forestry services. Director Brown explained there are four major components to the Urban Forestry Management Plan (the Plan). They are: 1) the removal of diseased trees (staff has been working on that with S &S Tree and Horticultural Specialists because of the urgency to remove them); 2) the proactive removal of ash trees; 3) dealing with ash trees that could become diseased; and, 4) the reforestation plan. The first two CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 28, 2016 Page 3 of 7 components have to be done. Staff was able to get the cost for S &S to do the most urgent work down to $76,000. Mayor Zerby asked what services S &S is providing. Director Brown explained that to date S &S has brought one or two arborists on site and one of them essentially ends up being a laborer. S &S brings a boom truck along. S &S does the cutting that requires the boom truck. Public Works personnel do the cutting that does not require the boom truck and they haul the debris away. He stated that he hoped that Shorewood would invest in a used bucket truck. Then Public Works could take a lot of the load off of S &S. He noted that OSHA has mandated that a worker cannot bring a chainsaw above shoulder level. Councilmember Siakel stated it was her recollection that when S &S made a presentation to Council during its October 10, 2016, work session they indicated it would cost $200,000 a year for five years. Council asked S &S and staff to downsize the scope of activities to what has to be done. Director Brown stated the first phase of the Plan is reactionary; that is trying to take care of diseased trees. The second phase is anything above that. He then stated the cost for reforestation under the S &S proposal seemed to be quite expensive so some of that was taken out of the proposal. The City can pursue grants and other types of opportunities for reforestation. Administrator Lerud stated that staff thought it would be important to plant some new trees and not just cut trees down. Staff also discussed being proactive and buy the City some time by treating some ash trees to prevent them from becoming diseased with emerald ash borer (EAB). That would allow the reforestation to be spread out over 10 years. With regard to a question from Councilmember Sundberg, Administrator Lerud clarified there will definitely be a need for outside help to make the updates to the Comp Plan. Lerud stated no decision has been made about which updates can be done by staff and which must be done by outside resources. He noted that he and Director Nielsen plan on discussing the process the next day. Director Brown noted that some of the updates (e.g.; aerial topography, stormwater calculations that have to be . done by a hydrologist and transportation planning) will require specialized expertise. Councilmember Woodruff stated Council and staff have discussed providing an Urban Forestry Management Plan service where a resident can ask for the City to come to their property and assess the health of a tree. There may be a fee for such a service. He asked if that is in or out of the budget for forestry services in 2017. Director DeJong stated there is some time for that in the budget and explained staff discussed staff scheduling those inspections so there would be a number of them done by S &S on one day. S &S has indicated that one onsite inspection would take 30 — 45 minutes. Director Brown explained the last time staff met with S &S representatives a lot of time what spent trying to frame policy for inspections. Councilmember Siakel asked Director DeJong to explain the $33,550 increase in Miscellaneous Expenditure Changes. DeJong explained that is a total amount all expenditure line item increases that are less than $2,500. Siakel suggested the budget for forestry services should be $75,000. She also recommended the budget include $85,000 for consulting services for the Comp Plan updates. Mayor Zerby and Councilmember Sundberg concurred. Mayor Zerby stated on page 2 in the staff memorandum under Financial or Budget Consideration it states "The budget increases the tax levy by 2% for 2016." He assumed that should be 2017. He then stated in that same section it states "Staff has prepared a resolution adopting the preliminary tax levy for the CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 28, 2016 Page 4 of 7 regular meeting this evening." Director DeJong clarified there is no resolution for consideration this evening. Council will consider a resolution for the 2017 General Fund Budget during the Truth -in- Taxation hearing on December 5. Councilmember Woodruff commented that increasing two amounts to the 2017 General Fund Budget as suggested by Councilmember Siakel would necessitate increasing the planned use of reserves. It would not be the $107,363 reflected in the staff memo. It would increase the use of reserves to $227,363. Director DeJong clarified the $107,363 is the amount the use of reserves would decrease when compared to 2016 in the 2017 Budget included in the meeting packet. That Budget reflects the use of $72,785 in reserves. Adding $120,000 ($35,000 + $85,000) would bring the planned use of reserves in 2017 to $192,785. Director DeJong noted the available reserve balance is approximately $949,000. DeJong stated there has been discussion about moving up to $500,000 in available reserves into the Street Reconstruction Fund if the City of Minnetrista repairs in 2017 its share of Enchanted Lane that was impacted by flooding a few years ago. There would be some amount of cost savings if Shorewood repaired its portion of Enchanted Lane at the same time as Minnetrista did. Engineer Homby stated the Minnetrista City Council will be presented with a feasibility study for improvements to Enchanted Lane and Tuxedo Road on March 5. Mayor Zerby asked if Minnetrista has included the preliminary estimates for those improvements in its preliminary budget. Hornby noted it is in the Minnetrista road plan. He explained Minnetrista bonds for some projects and for others funding comes out of its roadway maintenance fund (out of their CIP). Minnetrista assesses for roadway improvements. Councilmember Siakel noted she does not support transferring $500,000 from the General Fund to the Street Reconstruction Fund noting she has made her position clear in a number of other meetings. She stated she wants to stick to the Pavement Management Plan (PMP). She went on to state if there is a portion of Enchanted Lane that needs to be repaired because of previous flood damage out on Enchanted Island she would support doing that. She does not support advancing the repair of the other roadways on the Islands to 2017. Those other roadways should be repaired according to the original schedule in the PMP. She explained that during the October 24 Council meeting there was discussion about FEMA (Federal Emergency Management Agency) having removed the Islands from the flood zone. She stated she would prefer to use some of the available reserves for things that would benefit the greater community. She reiterated her position that she does not support transferring $500,000 from the General Fund to the Street Reconstruction Fund. Councilmember Woodruff noted he understands Councilmember Siakel's position noting he has heard her state that before. He stated he thought that some statements made are not pertinent and that he does not think some are accurate. He stated from his perspective the reason for considering redoing the roads on the Shorewood part of the Island is not because of flooding. He clarified there may be some mitigation of potential flooding as a result. He thought it has to do with current road conditions. He thought most of the roadways on the Islands are eligible by the City's rating system for some type of remediation. Director Brown explained most of the roadways on the Islands have a rating of 4 or 5. Under the City's current policy there is a goal of having City roadways have a rating of 4 or better. They are eligible for some restoration. He noted the flooding has been an issue for Enchanted Lane. Engineer Hornby noted that during the high lake level period Enchanted Lane had to be built up in order for vehicles to get through there. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 28, 2016 Page 5 of 7 Mayor Zerby noted that he has previously expressed his support and continues to do so for making improvements to that portion of Enchanted Lane that was impacted by flooding provided Minnetrista improves its portion of that roadway. Councilmember Woodruff stated the latest updated FEMA floodplain maps do not indicate that the Islands have been removed from the floodplain. Engineer Hornby explained that the initial updated FEMA floodplain maps showed the Islands were removed from the floodplain. FEMA made a revision to the maps to possibly correct what could have been a mistake on their part. He noted that he has not looked at the revised maps that were approved in November 2016 but he thought they are again shown as in a floodplain area. He explained that something is considered to be in a floodplain if it is below 931 feet whether or not it is on the Islands. Some roadways and properties on the Islands are below that elevation and clarified that he was speaking holistically about Enchanted Island. Councilmember Siakel noted that she had not been told that FEMA had revised its maps again. Councilmember Labadie stated the General Fund Budget Summary line item Parks Maintenance/Personnel increased significantly from year to year: 2013 actual was approximately $82,200; 2014 actual was approximately $121,600; 2015 actual was approximately $150,900; and the 2016 budgeted amount was approximately $115,000. She asked Director DeJong to explain that. DeJong explained there are generally two people who work on parks maintenance during the course of the year; they are not full time. When the budget is prepared an estimate from previous years is used. Some Public Works employees code their time on a time sheet bi- weekly. Although the variances from budget to actual may be significant it does not affect the City very much. Most of their time is going to be split between parks maintenance, the general public works function, and snow and ice control. How they spend their time is to some extent a function of the time of the year and the weather. He noted that the budget is set such that 100 percent of the salaries are covered. There are specific overtime line items as well. If more of an employee's time is coded to one department then less will be coded to another. It balances itself out over the course of the year. Councilmember Siakel stated she does not understand the big swings in the amount of available reserves. Early in the year it was around $300,000. During the last Council meeting it was about $500,000. The sheet in the meeting packet shows $769,323. During this discussion Director DeJong stated the available reserve balance is $949,000. She asked where that number came from. She questioned how the City could almost have a $1 million in available reserves. She thought this year the City may have spent more on projects than anticipated. Director DeJong explained at the end of 2015 there was an approximate $400,000 increase in the General Fund Balance and that was reflected after the 2015 financial audit. That was the surplus in 2015 from the City being over in revenues and under expenses. He noted that until the audit is finalized he does not use any updated number. He explained the available fund balance was based off of the previous year's budget. The fund balance is calculated against the following year's expenditures and transfers. As new figures are known the calculation is updated. He then explained that at the end of 2015 the General Fund Balance was $4,502,167. Sixty percent of 2017 expenditures and transfers ($5,921,312) is $3,552,787. That leaves about $950,000 in available reserves. Based on the changes recommended earlier the planned use of reserves in 2017 would be $192,785; up $120,000 from the $72,785 planned in the budget included in the meeting packet. That leaves about $750,000 in available reserves above the 60 percent General Fund Balance Policy amount. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 28, 2016 Page 6 of 7 Mayor Zerby stated the available reserve amounts do fluctuate quite a bit. Zerby then stated that Hennepin County sends the City tax payments twice a year. He asked how certain Director DeJong is of the next check amount. DeJong explained staff does not know specifically but generally the City collects about 99 percent of what it levies for the year. That can change between the first payment and the second payment. Zerby asked where the unexpected revenue in 2015 came from being the tax revenue does not very much. DeJong explained it came from significant new construction projects that had not been anticipated at the beginning of 2015. For example, there is a very large project along Lake Minnetonka that had significant fees associated with it. Part of the expense savings was the coding of Public Works personnel time. They spent significantly more time working in enterprise operations in 2015 so those related personnel expenses did not show up in the General Fund. The allocation to General Fund operations and enterprise operations is based on a three -year rolling average. Councilmember Sundberg noted that all of the roadways on the Islands were moved into the 2017 Street Reconstruction CIP. Director DeJong explained that staff originally suggested that if Minnetrista is going to redo its portion of Enchanted Lane in 2017 it would make sense for Shorewood to do its portion of that roadway that was damage by high water at the same time. It would reduce engineering, mobilization and floodplain mitigation costs. Also, it would also reduce the inconvenience to the residents. Councilmember Siakel asked if Minnetrista had its neighborhood meeting about the proposed improvements and if so were the residents receptive to being assessed for improvements. Engineer Hornby stated there was a presentation of information to the Minnetrista Council and the following evening there was a public informational meeting. During the public informational meeting the reaction from those residents in attended was generally favorable. He noted the Minnetrista Council will consider the feasibility report during its December 5 meeting. Councilmember Woodruff stated that Director DeJong has been given direction to modify the 2017 General Fund Budget. That revised budget will be presented during the December 5 Truth -in- Taxation hearing. Council will consider adopting that budget and approving the 2017 tax levy. If Council does not do that on December 5 it can do it during its December 12 regular meeting. He then stated the CIP does not affect the General Fund Budget unless Council decides to transfer money out of the General Fund. From his perspective that had not been talked about. He noted that if Council does not approve the 2017 CIP during its March 12 meeting noting that will not cause any problem as long as it does not impact the General Fund Budget. I think this should be December. Councilmember Siakel noted the staff memo states "There are sufficient funds available in the General Fund that are over the fund balance policy to be transferred into the Street Reconstruction Fund ...." There has been discussion about transferring funds; discussion specifically about transferring about $500,000 into the Street Reconstruction Fund from the General Fund. She then noted that she does not support doing that. She prefers the funds to remain in the General Fund and if Minnetrista moves forward with its Enchanted Lane project and Shorewood decides to move forward with an Enchanted Lane project as well then funds can be transferred at that time. Once the funds were transferred it is likely they would not be transferred back into the General Fund. Councilmember Woodruff stated from his perspective the transfer does not have to be made until Council decides that it wants to do the Enchanted Lane improvement project. He commented there is a difference between planning and cash management. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 28, 2016 Page 7 of 7 Mayor Zerby noted he agrees that the roadways other than Enchanted Lane out on the Islands are not ready to be improved yet. He also noted that the City does need to do the small piece of Enchanted Lane that was damaged by high water if Minnetrista moves forward with its project in 2017. Director DeJong noted that the CIP does reflect that the Strawberry Lane and West 52 °d Street project had been moved to 2018 per Council's direction. EVITNT 1:► Woodruff moved, Labadie seconded, Adjourning the City Council Work Session of November 28, 2016, at 6:52 P.M. Motion passed 5/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder ATTEST: Jean Panchyshyn, City Clerk <::::z -TA Sc6g&erbAn