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12-12-16 CC Reg Mtg MinCITY OF SHOREWOOD CITY COUNCIL REGULAR MEETING MONDAY, DECEMBER 12, 2016 MINUTES 1. CONVENE CITY COUNCIL REGULAR MEETING 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 7:00 P.M. Mayor Zerby called the meeting to order at 7:00 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; Planning Director Nielsen; Director of Public Works Brown; and, City Engineer Homby Absent: None. B. Review Agenda Sundberg moved, Labadie seconded, approving the agenda as presented. Motion passed 510. 2. APPROVAL OF MINUTES A. City Council Work Session Minutes of November 28, 2016 Siakel moved, Sundberg seconded, Approving the City Council Work Session Minutes of November 28, 2016, as presented. Motion passed 510. B. City Council Regular Meeting Minutes of November 28, 2016 Woodruff moved, Zerby seconded, Approving the City Council Regular Meeting Minutes of November 28, 2016, as amended in Item 8.11, Page 5, Paragraph 4, Sentence 2 change "He questioned why Council would want to taking action ..." to "He questioned why Council would want to delay taking action ...". Motion passed 510. C. City Council Special Meeting Minutes of December 5, 2016 Sundberg moved, Labadie seconded, Approving the City Council Special Meeting Minutes of December 5, 2016, as presented. Motion passed 5/0. 3. CONSENT AGENDA Mayor Zerby reviewed the items on the Consent Agenda. Woodruff moved, Sundberg seconded, Approving the Motions Contained on the Consent Agenda and Adopting the Resolutions Therein. A. Approval of the Verified Claims List CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES December 12, 2016 Page 2 of 8 B. Public Works AFSCME Contract Tentative Settlement C. Approve Public Works Job Description and Authorize Internal Posting D. Authorize Expenditure of Funds for Public Works Equipment — Cab and Chassis for Utility Service Truck E. Authorize Expenditure of Funds for Public Works Equipment Utility Service Truck Body, Crane, Compressor, Lighting and Accessories F. Adopting RESOLTUION NO. 16 -0919 "A Resolution Approving Change Order No. 3 for Star Lane and Star Circle Utility and Street Improvements, City Project 14 -11." G. Adopting RESOLTUION NO. 16 -0929 "A Resolution Accepting Improvements and Authorizing Final Payment for Star Lane and Star Circle Utility and Street Improvements, City Project 14 -11." H. Adopting RESOLTUION NO. 16 -0939 "A Resolution Accepting Improvements and Authorizing Final Payment for 2016 Pavement Marking Project, City Project 16 -02." I. Adopting RESOLTUION NO. 16 -094, "A Resolution Accepting Improvements and Authorizing Final Payment for 2016 Guard Rail Project." J. Financial Security Reduction Request No. 1— Minnetonka Country Club Councilmember Sundberg stated for Item 3.0 the Public Works job description she asked if it an existing position with expanded responsibilities which does not create another open position. Director Brown confirmed that. Motion passed 510. 4. MATTERS FROM THE FLOOR John Coverdale, 26930 Beverly Drive, noted he has lived at his home on Beverly Drive for nearly 51 years and for about 45 there has been a problem on Beverly Drive. He explained there are four traffic signs that he does not think need to be there anymore. There is a stop sign on each end of Beverly Drive and one on Cajed Lane; drivers are not bothering to stop for them. There is also a 25 miles per hour (mph) posted speed limit sign. When they metered the roadway it showed drivers were traveling 50 mph. He had been told nothing could be done about that. Two new families with young children have moved into his neighborhood. Three families with small children moved out of the area because of the traffic. He does not want more families to move out of the neighborhood. Director Brown stated if Council wants staff can assess if the signs meet warrants to be there. He then stated speed limit violators have to be addressed through enforcement. He went on to state consideration could be given to doing a speed study in the spring when traffic count tubes can be put down. He suggested asking the South Lake Minnetonka Police Department (SLMPD) to conduct a mini speed study with radar guns. CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES December 12, 2016 Page 3 of 8 Councilmember Woodruff stated he has a friend that lives along that street and he hears about the problem frequently. His friend told him he thought the streets are used as a cut thru from Smithtown Road on to Cathcart Drive and then on to Highway 7 during the morning and evening rush hours. Director Brown stated there is a fair share of cut thru traffic that travels on Cathcart Drive to Smithtown Road and on to Highway 7. He explained the City had done a traffic study. Some of the residents who petitioned the study were disappointed with the results because the traveled speed typically ranged from 30 — 38 mph. Councilmember Woodruff stated the fact that drivers do not stop at the stop signs does not mean they should not be there. Hopefully they manage the control of the cut thru traffic to some extent. He thought drivers go south off of Smithtown Road and on to Cajed Lane, then Beverly Drive and then on to Cathcart Drive. He cautioned against removing the stop signs. Director Brown stated at Council's request the SLMPD has been very active in doing special enforcement along Country Club Road and Yellowstone Trail. The SLMPD could be asked to do the same thing along the roadways Mr. Coverdale spoke about. Councilmember Siakel stated it was her recollection that residents told Council that one resident was doing laps around the neighborhood. She encouraged staff to contract the SLMPD and request increased enforcement along the route Mr. Coverdale spoke about. Mayor Zerby asked staff to report back to Council about this issue. He thanked Mr. Coverdale to bringing this to Council's attention. 5. PUBLIC HEARING 6. REPORTS AND PRESENTATIONS A. Report by Sue Davis on the January 12 —15, 2017, Arctic Fever Event Mayor Zerby introduced Sue Davis who was present to report on the January 12 — 15, 2017, Arctic Fever Event. Ms. Davis is a founder of the event. Ms. Davis noted that this is the 11 -year anniversary of the Arctic Fever event. For 2017 a fourth day has been added. She explained that on Thursday evening there will be an Art Via Vino event and it will be held at Lord Fletcher's noting that Lord Fletcher's has been wonderful to work with over the years. She also noted that there is a snow yoga activity scheduled for Saturday afternoon. She encouraged members of staff and Council to come to the event. She stated it was extremely cold during last year's event yet those who regularly come to the event came to go on the dog sled rides. Ms. Davis stated some people are stealing the banners for the event. If people see a large Arctic Fever banner she asked them to let someone know. She noted the event's brand new banner that was out near the highway was taken two years in a row. Small banners are also missing. Ms. Davis explained the funding cycle for the event is very unusual. Funds come in during the fall when event organizers ask for donations. A large amount of money comes in after the event each year and that allows the organizers to maintain a carryover fund balance to secure activities for the next year's event. The musher that participates in the event is considered to be the best in the state and his fee is not small (he had kept his rate the same for a number of years). The sleigh ride person has been involved in the CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES December 12, 2016 Page 4 of 8 event since the first event and he has only raised his rate once over the 11 years. Many sponsors will donate gift cards for prizes for the Princess Brunch or the pizza party on Friday evening for the sculpture garden. The attendance at the Princess Bruch is so high that consideration is being given to funding a second doll. That activity is done in shifts. Councilmember Woodruff asked if there is a need for volunteers. Ms. Davis stated there is always a need for volunteers and noted there is a link on the City's website to the Arctic Fever website. She noted there is a need for volunteers to work on Saturday at Freeman Park, particularly volunteers who like to work with dogs. Ms. Davis routed a copy of a financial statement for the event In response to a comment from Mayor Zerby, Ms. Davis stated that a few weeks ago the Star Tribune published an article about a company called Relan that takes banners and billboards and recycles them into hand bags. She has brought expired banners to that company. Councilmember Labadie encouraged middle and high school students in the Minnetonka School District who are working on their presidential service award to contact their guidance counselor to find out if hours spent volunteering at the event would count toward their award. Ms. Davis noted that many presidential scholars volunteer at the Princess Brunch. 7. PARKS 8. PLANNING 9. ENGINEERING/PUBLIC WORKS 10. GENERAL/NEW BUSINESS A. Accepting the 2017 — 2021 Capital Improvement Program and 2017 Enterprise Budgets Director DeJong noted the meeting packet contains a copy of the 2017 — 2021 Capital Improvement Program (CIP) and the 2017 Enterprise Budgets. He explained Council and staff started discussing the CIP during July 2016 and the Enterprise Budgets during November 2016. No changes have been made to either since they were last discussed. He noted staff recommends approval of both. Sundberg moved, Woodruff seconded, Adopting RESOLUTION NO. 15 -0959 "A Resolution Adopting the 2017 — 2021 Capital Improvement Program and 2017 Enterprise Budgets" as presented. Motion passed 510. B. 2017 Non -Union Wage Recommendations Administrator Lerud explained that the 2017 General Fund Budget which Council adopted during the December 5, 2016, Truth -in- Taxation hearing included a 2.5 percent increase for non -union personnel and a $30 increase in the City's contribution toward employee health insurance. The budget for union and non -union personnel increases was $60,000. The actual increases amount to $40,955 for the General Fund and $49,670 across all City funds. He recommended Council approve the 2.5 increase in salaries and the $30 increase in the contribution toward employee health insurance. CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES December 12, 2016 Page 5 of 8 Siakel moved, Labadie seconded, approving 2017 salary increases of 2.5 percent and a $30 increase in the City's contribution toward employee health insurance. Motion passed 510. C. Annexation - Detachment Agreement for The Waters Senior Living Project Location: 22920 Highway 7 and 723 Water Street Administrator Lerud explained that during its November 28, 2016, meeting Council considered an amendment to the Shorewood Comprehensive (Comp) Plan to reflect a change in the Shorewood boundary for the 22920 State Highway 7 and 723 Water Street properties. The properties would be part of the site for The Waters Senior Living's (The Waters) project called The Waters of Excelsior. Council directed staff to forward the amendment to the Metropolitan (Met) Council for its review. Council also considered an Annexation - Detachment Agreement (the Agreement) between Shorewood and the City of Excelsior that would detach parcels of land from Shorewood and annex them into Excelsior. Council chose not to approve the Agreement until Excelsior agreed to split future property tax proceeds such that 70 percent would go to Shorewood and 30 percent to Excelsior once the term of the Tax Increment Financing (TIF) District expires. During its December 5, 2016, meeting the Excelsior Council approved that split and the Agreement. On December 9, 2016, staff received a document showing the structure of the TIF Loan. Earlier in the day he had had a conversation with a representative from Springsted (the firm structuring the TIF loan for Excelsior). Earlier in the day he received a copy of a draft TIF Plan which Excelsior would administrator. He thought it would be in Shorewood's best interest to have a fair evaluation of the Plan. There had not been an opportunity to do that yet. Lerud noted that earlier in the day Director Nielsen informed him that Met Council thought the Comp Plan amendment adjusting boundaries could be done as part of the other updates that have to be done in 2017. Councilmember Siakel stated she thought it would be prudent to give staff an opportunity to evaluate the TIF Plan. She noted the City had been requesting a copy of the Plan for some time. She also noted the TIF Loan structure document reflects the lending institution will charge an interest rate of 6 percent. She thought that rate was high. Administrator Lerud concurred and noted the rate for the Oppidan TIF Loan was 5.5 percent and he thought that was a little high. Jay Jensen, representing The Waters Senior Living (the applicant), explained when he prepared the TIF Loan structure document two months ago he thought there was sufficient cushion with the interest rate. Interest rates traditionally spike about 0.5 percent in December. The 10 -year Treasury Bill has gone up 1.0 percent since August. The Loan would be placed with Bridgewater Bank about March. In the past The Waters Senior Living has had Springsted represent a city and review The Waters' financial terms with the bank before anything is signed. Springsted would have to protect a city's interest until the documents are signed. He noted that currently the interest rate is 6 percent. He also noted that it is in The Waters best interest to pay the lowest interest rate possible because The Waters has to guarantee the Loan. Mr. Jensen then explained that the Bank requires a certain amount of debt service coverage on TIF; it is approximately 15 percent. That extra 15 percent is paid the first year. The Bank then takes that and applies it to principal. That is done every year. The assumption in the structure is the taxes would go up about 3 percent annually; a combination of valuation and taxes. If that were to happen the TIF Loan would be fully amortized in about 16 years and the term of the TIF District would expire. It is planned as a 25 -year TIF District. CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES December 12, 2016 Page 6 of 8 Councilmember Woodruff asked staff how long it would take for them to review the numbers in the TIF Plan. Administrator Lerud stated that would be done before Council's next regular meeting (January 9, 2017). Attorney Keane explained staff suggests an independent fiscal advisor assess the TIF Plan. That consultant would have the modeling to analyze what the impact would be of various interest rates. The City has only been provided with the conclusions. It was not provided with the data needed for comparison analysis. He noted it appears the Bank will charge 4 percent origination costs. He asked if The Waters will pay those costs. Mr. Jensen explained that would be paid out of the $2.5 million TIF Loan and clarified that includes all of the costs to do the transaction including legal fees. Keane stated from his perspective that is "very rich" in today's market. He noted that he would like to see the details that explain how the 4 percent or $100,000 in origination costs was arrived at for a $2.5 million TIF Loan. He 1 — 2 percent was more customary in the commercial loan world. Keane noted that staff, with a financial advisor's assistance, should be able to analyze the TIF Plan over the next few weeks and have a recommendation for Council during its January 9 meeting. Mr. Jensen stated he has been told that the TIF Agreement would not occur until after the annexation and detachment is done. He asked if it would be possible to separate the TIF discussion from everything else. That would keep the annexation piece moving forward with the State of Minnesota. He would be willing to go through any detail related to TIF during Council's January 9 meeting. He noted that he had sent the complete Excel spreadsheet for the TIF Plan to staff and staff could input various interest rates in to analyze the impact of them. Mayor Zerby stated it is difficult for Council to move forward without having a clear recommendation from staff. He noted that Shorewood is a partner in the project on a 70/30 split of property tax proceeds. He explained TIF would affect that. He noted that he wished Council could make a decision tonight so the project could keep moving forward but that would not be the responsible thing to do for Shorewood. He stated he has tried to come up with approval based on some contingencies but has been unsuccessful. He recommended continuing this to Council's next meeting. Councilmember Sundberg stated she also supports continuing this to Council's next meeting. Sundberg moved, Labadie seconded, continuing the consideration of the Attachment- Detachment Agreement between the City of Shorewood and the City of Excelsior to Council's January 9, 2017, meeting. Mayor Zerby noted that the Shorewood Council was not trying to impede The Waters Senior Living's project. He was in favor of the project and thought others on Council were as well. He clarified that Shorewood Council was not putting a new requirement in anyone's way. Shorewood staff has been discussing the need to assess the TIF Plan for a number of months. Motion passed 510. 11. STAFF AND COUNCIL REPORTS A. Administrator and Staff 1. Update on City of Minnetrista Road Project CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES December 12, 2016 Page 7 of 8 Engineer Hornby stated the City of Minnetrista City Council did accept the feasibility report for improvements to Enchanted Lane (the portion located in Minnetrista) and Tuxedo Road. That Council set the public hearing date for January 17, 2017. The discussion that Council had was relatively positive. Other Director Brown stated a rectangular rapid flashing beacon (RRFB) at the at -grade crossing of the Lake Minnetonka Regional LRT Trail at County Road 19 is malfunctioning. It is on constant flash. Hennepin County has again been notified of a malfunction. Mayor Zerby suggested covering the RRFB until it gets fixed. Engineer Hornby noted the weather conditions have brought an almost screeching halt to construction activity. Mayor Zerby asked Engineer Hornby to update Council on Xcel Energy's work related to the Minnetonka Country Club (MCC) development project. Hornby explained the developer wanted to bury the overhead power lines in front of the development. The developer has been working with Xcel for over one year to try and get that done. Work had been in progress on the south side of Smithtown Road but other utilities were encountered. The City approved a revised permit to allow them to go on the north side. Zerby asked if that means power poles will be removed because of the undergrounding. Hornby confirmed that would be the case up to the first residential property west of the MCC site. Zerby asked when a model house would be open in the MCC development. Director Nielsen stated staff will check on that. Councilmember Woodruff suggested that the City periodically put an update on the MCC project on the City's website. Mayor Zerby stated he had spoken with staff about doing that. Some storm sewer work can still be done on the southern part of the MCC development because it is wet there. Director DeJong stated he is working on implementing insurance updates for the League of Minnesota Cities (LMC) insurance policies. He has also started to work on year -end activities. Director Nielsen stated the free skating rink in Freeman Park will not be in place for this upcoming season. The contractor could not do the necessary grading. The electrical work has been done. Mayor Zerby asked staff to research using synthetic materials for that rink. Nielsen stated staff will research that some more. B. Mayor and City Council Mayor Zerby noted that unless a special meeting is called this is Councilmember Woodruff s last meeting as a member of Council. He thanked Woodruff for his ten years of service as a member of Council and his two years of service as a Planning Commissioner. He stated he thought Woodruff has been a valuable member of Council. His comments were mindful and detailed. He wished him well. Councilmember Woodruff wished Councilmember -elect Johnson well and noted that he was in the audience. He stated that he learned a lot being on Council and that he met a lot of good people. He noted that being on Council is different than being in the business world. He stated a number of tenured staff will be retiring over the next year and that should be an exciting time. He thanked people and noted it has been a good ten years. He expressed appreciation for everyone's cooperation. CITY OF SHOREWOOD REGULAR COUNCIL MEETING MINUTES December 12, 2016 Page 8 of 8 12. ADJOURN REGULAR MEETING TO EXECUTIVE SESSION Woodruff moved, Labadie seconded, Adjourning the City Council Regular Meeting of December 12, 2016, to executive session at 7:45 P.M. It was noted that the purpose of the executive session was to discuss a personnel matter. The session was closed pursuant to Minn. Stat. 13D.05. Subd. 3. Mayor Zerby, Councilmember Labadie, Councilmember Siakel, Councilmember Sundberg, Councilmember Woodruff, Administrator Lerud, Attorney Keane, and Councilmember -elect Johnson were in attendance. Motion passed 510. Mayor Zerby called the executive session to order at 7:50 P.M. 13. ADJOURN EXECUTIVE SESSION TO REGULAR SESSION Woodruff moved, Labadie seconded, Adjourning the City Council Executive Session of December 12, 2016, at 8:46 P.M. Motion passed 5/0. Mayor Zerby called the regular meeting back to order at 8:47 P.M. Woodruff moved, Siakel seconded, Adjourning the City Council Regular Meeting of December 12, 2016, at 8:47 P.M. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder ATTEST: Jean Panchyshyn, City Jerk