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08-14-17 CC WS MinutesCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, AUGUST 14, 2017 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 6:01 P.M. A. Roll Call Present. Mayor Zerby; Councilmembers Johnson (arrived at 6:07), Labadie, Siakel (arrived at 6:03), and Sundberg; Administrator Lerud; Interim Finance Director Rigdon; Planning Director Darling; Director of Public Works Brown; and, Engineer Hornby Absent: None B. Review Agenda Labadie moved, Sundberg seconded, approving the agenda as presented. Motion passed 310. 2. CAPITAL IMPROVEMENT PROGRAM Administrator Lerud explained staff updated the City's street maintenance schedule so it more accurately reflects current cost estimates to do the maintenance. The estimated costs in the schedule have traditionally been used to update the Street Reconstruction Capital Improvement Program (CIP). He noted the meeting packet contains a copy of a May 20, 2017, street maintenance schedule and a copy of the updated schedule. Director Brown explained that for every City -owned street staff has created Excel spreadsheets where costs for each type of maintenance are calculated. He distributed an example of such a spreadsheet for Arbor Creek Lane. Each spreadsheet includes some general information about the road. There is a reconstruction section identifying the various tasks included in that reconstruction project and associated costs, plus a 10 percent contingency, plus 25% to 30% for soft costs (e.g.; design, legal, inspection). There is a reclamation section showing the estimated cost to do the work plus contingency and soft costs. There is an overlay section identifying the tasks and associated costs plus contingency and soft costs. There is a sealcoat section showing the estimated cost to do the work plus contingency and soft costs. The estimated costs in the updated street maintenance schedule came from the spreadsheet data for each individual street and are based on feasibility estimates. The schedule also includes the estimated cost for storm sewer improvements for each street. The schedule reflects 2017 dollars. The plan is to increase the 2017 dollar costs by 2% each year going forward. None of the project costs include the cost for easement acquisition. Mayor Zerby stated earlier in the year Council was told the estimates were off by about 20% and now Council is being told the yearly inflationary adjustment should be about 2 %. Director Brown stated 2% is pretty tight. He then stated that is not always going to happen. If contractors are really busy and bid the job high the 2% would be exceeded. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES August 14, 2017 Page 2 of 6 Engineer Hornby stated there are two bidding seasons; one is early in the year and the other is later in the year. He noted that based on the feedback he has received bituminous contractors are not that busy now. Mayor Zerby asked that the street maintenance schedules (both the May and August schedules) be modified to include totals. He wanted that for comparison purposes. Administrator Lerud stated when the City receives the bids for this year's reclamation project staff will compare the bids to its forecast model to determine how accurate the forecast estimates are. Councilmember Labadie asked why in the August street maintenance schedules the reconstruction costs appear to have mainly gone up yet the reclamations costs have mainly gone down when compared to the May 20 schedule. In addition she questioned the overly costs where some went up and some went down. Director Brown explained in the past staff had been using an approximate $60 per square -yard unit cost for reclamation. After reviewing past bids staff adjusted that down to $30 per square -yard unit cost. Director Brown explained staff decided the City cannot afford to do a lot of roadway reconstruction. From a purely technical perspective staff is proposing the City reclaim roadways rather then reconstruct them whenever possible. Unfortunately, reclamation will not solve drainage issues all of the time. A reclamation project does not necessarily include adding curb; it could be added for an additional cost. It also does not allow for the extension of watermain. Engineers often use 20 years for the design life of a constructed road. In Shorewood the roads have lasted closer to 40 years; they were built in the 1970s when sanitary sewer was installed. Pavement reclamation should last 12 to 15 years. Mayor Zerby stated the August schedule reclamation costs went down by almost 60 %. He asked if staff used any cost estimate data from other cities. Engineer Hornby explained WSB and Associates tracks projects over a number of years. The data is tracked by city. WSB has a system that allows him to review average bid prices based on quantities constructed. That allows him to make a reasonable projection of what the units cost would be. The Minnesota Department of Transportation (MnDOT) data is not included in WSB's information because MnDOT's high volume results in a lower cost by about 25 %. Administrator Lerud explained knowing the City does not have the funding to fund the Street CIP staff prepared a spreadsheet showing how much funding the City could collect from franchise fees through Xcel Energy and CenterPoint Energy from 2018 to 2024. He assumed 20 new residential connections per year for each of those years. If the monthly franchise fee were $4 for each utility the City would collect a little over $2 million over those 7 years. If the fee was $5 the City would collect almost $2.6 million. A year or so ago the then Council decided the City would annually increase the transfer into the Street Reconstruction Fund by $15,000 each year. The Ehlers rate study assumed a 20% increase in the storm sewer fee in 2018 and 2019 and then a 3% increase per year after that. Some storm sewer money would be set aside for ongoing maintenance. There was a line item showing the balance in the Street Reconstruction CIP for each of those years assuming the 2017 reclamation project comes in on budget. There was a line item for Minnesota State Aid (MSA) monies. There line item for a $4 million bond issue for storm sewer with a 17 year payback period which comes out to an annual debt service payment of $273,000. A $5 million bond issue would require an annual debt service payment of $338,000. There were calculations showing the estimated funds available for street maintenance projects (including storm sewer work) for four scenarios: a $4 franchise fee and $4 million in bonds: a $4 fee and $5 million in bonds: a $5 fee and $4 million in bonds: and, a $5 fee and $5 million in bonds. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES August 14, 2017 Page 3 of 6 Lerud clarified that trail funding needs were not factored into any of his projections. The Trail Plan priorities identified in 2011 show there are about $7 million in remaining project needs. Park funding needs were also not factored in. Lerud asked Council how it would like to see revenues and expenditures lined up. Councilmember Sundberg asked if $4 and $5 monthly franchise fees are fairly typical. Administrator Lerud stated some cities have fees as high as $12 and there are some as low as $1. A $4 fee is in the middle. Administrator Lerud stated in Shorewood about 97 % are residential meters for both gas and electric. In response to a question from Councilmember Sundberg, Administrator Lerud stated the City's franchise fee agreement with Xcel Energy ended in 2007. Sundberg then asked about a reverse referendum on franchise fees. Lerud explained the reverse referendum, as proposed by the Legislature, would allow a certain percentage of voters in the last election to petition for a vote to eliminate the franchise fee. He said that is not current law. Administrator Lerud stated he would like staff to first focus on getting the numbers right for the early years of the CIP. Based on a comment from Councilmember Sundberg, Administrator Lerud stated he thought collecting franchise fees is a good tool to use because the City would capture funds from infrastructure users who do not otherwise pay through property taxes. Councilmember Sundberg noted she was interested in having a higher franchise fee in part because the City has not had one for a while. Administrator Lerud asked if Council would be comfortable with a bond issue to fund stormwater management needs. Mayor Zerby asked what the bottom line impact would be for residents. Administrator Lerud stated he does not think it would be very great if the other things including the franchise fee were done. He then stated without a bond issue it would take 6 to 7 years before the City would have accumulated the $3 to $4 million needed to make the needed stormwater improvements. Councilmember Siakel asked if the bond issue would be specific to stormwater management. Administrator Lerud confirmed that and explained it would be a General Obligation revenue bond to the stormwater utility and the City could pledge franchise fees to help pay for the bonded debt. Siakel asked how stormwater management improvement priorities will be merged with roadway improvement priorities. Director Brown explained from staff's perspective 90% of the significant stormwater issues are on the west side of the City. One is in the Strawberry Lane and Cathcart Drive area and another is the ditch along Grant Lorenz Road. Staff discussed installing a drainage pipe in the ditch and the calculations they did indicated a 60 -inch pipe would be needed. The impact to that roadway would be significant. Engineer Hornby noted that corridor is already crowded. Brown stated staff has discussed realigning that channel (the ditch) and hardening it (e.g.; installing rip rap). CITY OF SHOREWOOD WORK SESSION MEETING MINUTES August 14, 2017 Page 4 of 6 Brown then explained that over the last five years the focus has been on roadway improvements. Now the stormwater management issues need to be the focus. There are three things that will define what will happen in the public right -of -way (ROW) — stormwater management, road reconstruction and watermain extension. Council will have to decide which stormwater management issues will necessitate reconstruction rather than reclamation of a roadway. The same is true for watermain extension. Engineer Hornby stated he did not think there are any existing easements near the ditch along Grant Lorenz Road to enable doing any work. Mayor Zerby stated he agreed there is a need to bond for stormwater management improvements. He explained the west end of the City was developed many years ago during a time when stormwater management was not as big of a focus. There are many stormwater management issues on the west end that residents would like addressed. Councilmember Siakel stated she thought the City's storm water utility fee is very reasonable. Some cities have a much higher fee. She suggested consideration be given to increasing that fee. She commented she has friends who live on the east coast who have hefty fees for stormwater management. She stated the fee had been increased not too long ago because the previous fee was minuscule from her perspective. She expressed her support for increasing the fee. Councilmember Sundberg agreed that the City needs to prepare for the financial needs for stormwater management improvements. Engineer Hornby encouraged exercising caution when comparing the City's stormwater management fee to other cities' fees. Some cities use the fee for things other than stormwater management capital improvements (e.g.; to pay for their MS4 program, to do other environmental work). Councilmember Siakel stated stormwater management along Grant Lorenz Road has been an issue for years. She asked if it would be valuable to hire a contractor to prepare a stormwater management plan and work with the Minnehaha Creek Watershed District (MCWD) to secure its help with a project for Grant Lorenz Road. She stated the drainage from the Freeman Park area flows down that corridor and into Lake Minnetonka. She noted she would support setting money aside to hire someone to help the City to do that. Engineer Hornby noted the City's Comprehensive (Comp) Plan identifies what those capital plans are going to be. So does the City's Surface Water Management Plan. Director Brown stated he thought there would be value in having someone lobby on behalf of the City with the MCWD and prepare all of the supporting materials. From his vantage point engineers are not good marketers. Mayor Zerby noted he, Administrator Lerud and Engineer Hornby had met with MCWD representatives and reviewed the Comp Plan with them during the first quarter of the year. He explained they did stress the Grant Lorenz Road stormwater management issues to them. They also stressed stormwater management improvements there would have a regional benefit; something the MCWD considers a priority. Unfortunately, they did not have the backup materials needed to help secure the MCWD's support. He stated if it would help to hire someone to assist in preparing the materials needed to strengthen the City's case he would support doing that. Director Brown stated roadway improvements and watermain extension have driven the City's CIP over the last 30 years. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES August 14, 2017 Page 5 of 6 Mayor Zerby stated he, along with Council, appreciate the work staff has done to refine the cost estimates for street maintenance and stormwater improvements. He thought there was some interest in bonding for stormwater management improvements and in increasing the storm water utility rate. Administrator Lerud summarized his understanding of Council's direction. He reiterated stormwater management improvements will be the focus with other infrastructure improvements being done in conjunction with them. He noted Riviera Lane and Shorewood Lane street and utility improvements had been scheduled for 2017 and moved out to 2018. Staff will look at advancing some stormwater improvement projects and then determine which street maintenance projects could be done in conjunction. Mayor Zerby stated he still has a desire for a trail along the Country Club Road and Yellowstone Trail corridor route. Director Brown recommended renaming what is frequently called the Country Club Road, Yellowstone Trail and Lake Linden Drive cut thru corridor route. From his perspective cut thru corridor is a negative connotation. Councilmember Siakel and Councilmember Sundberg agreed. Councilmember Sundberg asked if some of the Traffic Committee's recommendations are being included in the plans. Engineer Hornby responded yes. He noted the blinker stop signs are included in the bids for the 2017 pavement reclamation project as are the concrete curbs at intersections to help calm traffic. There are pavement markings for a 20 foot radius and a 25 foot radius for the curbs. Director Brown stated it would be nice to have an aerial shot of those pavement markings for the curbs. Mayor Zerby stated that earlier in the day he stopped at the intersection of Country Club Road and Yellowstone Trail. He stayed there long enough to video record six vehicles at the intersection taking a right hand turn to go north on to Country Club Road. All of them went between the 20 foot and 25 foot pavement markings. All of the drivers rolled through the stop sign. Based on what he saw he does not think the 25 foot radius will not change a driver's behavior; it needs to be 20 feet. Director Brown agreed and explained engineers believe that to slow drivers down the turning area has to be constricted. He stated that when that curbing goes in it is likely the City will receive complaints from drivers about the tightness of the driving surface. Zerby stated he could deal with that. Zerby stated he thought there is a need to extend the new trail along Country Club Road that was built by the developer for the Minnetonka Country Club (MCC) development. It stops across from where Mary Lake Trail intersects with Country Club Road. From his perspective having the trail end where it does now is not safe. He would like it extended down to Yellowstone Trail. He noted he understood the topography is challenging in that area. If the trail is to be extended then from his perspective he does not think the curbing at the intersection should be installed now. Councilmember Sundberg noted that Yellowstone Trail is not pedestrian friendly. She stated she does not think the City should encourage pedestrians to walk along it. Mayor Zerby stated completing the trail is the top priority in the Trail Implementation Plan. Councilmember Siakel suggested Council have a work session to discuss the Trail Implementation Plan. She explained the Trail Committee was asked to develop a Plan for the entire City and to prioritize where trails could be built. It was never the intent that the City would build every one of the trails identified. Mayor Zerby stated he thought the trails in the Plan were prioritized to some extent based on where people needed to go. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES August 14, 2017 Page 6 of 6 Director Brown asked where the funding would come from to extend the trail along Country Club Road to Yellowstone Trail, Mayor Zerby stated part of Council's job is to decide what kind of city it wants Shorewood to be and then allocate funds to make it that way. In response to comments from Mayor Zerby, Engineer Hornby stated he did not recommend including the extension of trail along Country Club Road in the 2017 pavement reclamation project. Doing so would delay the project until 2018. Zerby stated he wants to either include the trail extension or exclude the curbing in the project. Director Brown stated the cost to make changes to the curbing would not be expensive in future years. Zerby reiterated he wanted the radius at the intersection reduced to 20 feet. Councilmember Siakel asked if the City had any easements along Yellowstone Trail. Director Brown stated along portions of it. 2. 2018 GENERAL FUND BUDGET Administrator Lerud stated the draft preliminary 2018 General Fund Budget reflects a 2.9% levy increase when compared to the adopted 2017 Budget. It also includes the use of $174,097 in General Fund reserves. The 2018 costs for police and fire are factored in as is the addition of another person for Public Works. Lerud suggested the August 28, 2017, budget work session start at 5:30 P.M. Mayor Zerby stated lie agreed that adding the position in Public Works is a good idea. His understanding is the cost would be partially offset by the elimination of the cost for a part-time summer position. In response to a question from Zerby, Brown stated it would be a light equipment operator position. kiIWR 111X l S Labadie moved, Johnson seconded, Adjourning the City Council Work Session of August 14, 2017, at 6:58 P.M. Motion passed 5/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder Scot .' erby, or ATTEST: Sandie Thone, City Clerk