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051208 CC WS AgPCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, MAY 12, 2008 AGENDA 1. CONVENE CITY COUNCIL WORK SESSION A. Roll Call 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. Mayor Lizee Woodruff Turgeon Bailey Wellens 2. 3. 4. 5. 6. 7. B. Review Agenda DEBT FINANCING OPTIONS FOR CITY HALL IMPROVEMENTS -PRESENTED BY PAUL DONNA, NORTHLAND SECURITIES (Att. -Finance Director's memorandum) DISCUSSION REGARDING WARD SYSTEM (Att. -Planning Director's memorandum) CHRISTMAS LAKE SURFACE USE (Att. -Planning Director's memorandum) DRY HYDRANTS (Att. -Director of Public Works' memorandum) OTHER ADJOURN e ~{~ 7 "~~ 5 i `a v~ i ~ ~ s a .. ,. P ~ , ~~ -~ ~~ _. ~~~~_ `~~ 5755 CCJNTRY CLUB R®AD ~ SHE3REVV©OD, MINNESOTA 55331-8927 ~ (952) 474-3236 FAX (952) 474-0128 ®www.ci.shorewood.mn.us ®cityhall@ci.shorewood.mn.us MEMORANDUM Date: May 8, 2008 To: Honorable Mayor and City Council Members Lawrence A. Brown, Acting City Administrator ,~1 From: Bonnie Burton, Finance Director/Treasurer Re: Work-session; Debt Financing Options for City Hall Improvements h1 conjunction with the on-going discussions regarding the City Hall remodeling and renovations, the Council requested awork-session to learn about the debt financing options available for City Hall improvements. Accordingly, the City's bond consultant Paul Donna, Senior Vice President for Northland Securities, Irrc., will be at the May 12 work-session at 6:OOPM to discuss the options available, the process and tirneline for issuing municipal bonds, and to answer questions the council may have. A memo providing an overview from Paul is attached for your review. Please contact me if you have questions or would like more information prior to the meeting ~~ ` ~ ~®~ PRINTED ON RECYCLED PAPER - ~ I~TUR'I'HLAI~D SE~~..TRITIES 'Apri11, 2008 Ms. Bombe Burton, Finance Director City of Shorewood, Minnesota Via EMAIL Re: Debt Financing Options for City Hall Improvements Dear Bonnie - As you know there are now three debt financing options available to City's for the acquisition, construction, equipping or improving City Halls: • General Obligation (Referendum) Bonds -the City has the authority to issue General Obligation Bonds backed by the full faith and credit of the City. It would be necessary for the City to hold a special election on this question. If the election question passes, the City has the ability to issue General Obligation Bonds. The bonds would be subject to the statutory debt limit T`he City's current statutory debt limit margin is approximately $16.OM. • Lease Purchase Revenue Bonds -the City has the authority pursuant to Minnesota Statutes, Section 465.71 to acquire such a facility pursuant to a lease with option to purchase agreement. The City must have the right to terminate the lease purchase agreement at the end of any fiscal year during its term. Unless terminated at the end of any fiscal year the lease is payable from any revenues available to the City. Under current law, if the City wants the ability to levy taxes outside of levy limits to make the lease payments, the bonds must be issued by the Economic Development Authority. The Economic Development Authority has the authority to issue revenue bonds payable solely from lease payments to be made by the City pursuant to the lease purchase agreement entered into between the Port Authority and the City. Under current law, a financing of this type does not require a referendum. In addition, because the project cost will exceed $1.0 million, the entire lease purchase bond-financinng amount counts against the City's statutory debt limit. • General Obligation Capital Improvement Plan Bonds - The 2003 Minnesota Legislature enacted into law a program that allows home rule and statutory cities to establish a capital improvement program and issue bonds for certain capital improvements -including public lands, buildings or other improvements for the purpose of a City Hall, public safety facility and public works facility without an Northland Securities, Inc. 45 South 7"' Street, Suite 2500, Minneapolis, MN 55402 Toll Free 800-851-2920 Main 612-851-5992 Member FINRA and SIPC City of Shorewood, Minnesota City Hall Financing Memo Page 2 election. These bonds would be subject to the City's debt limit. In addition, there are other limitations and procedural requirements involved: o Under current law, the maximum principal and interest on the bonds may not exceed 0.16% of the taxable market value in the City. The actual pay 2007 market vahie of the City was $1,481,421,600. This provision will allow for a bond issue of approximately $35.5M based upon an issue maturing over 20 years at 4.25%. o A capital improvement plan must be developed and approved by the City after a public hearing. The capital improvement plan must cover various cost, needs and revenue considerations as outlined in MSA 410.326 subdivision 3. o The bonds would only be subject to a referendum if the City received a petition calling for a vote on the issuance of the bonds. The petition must be signed by voters equal to 5% of the votes cast in the City's last general election within 30 days after t11e public hearing. Based on my understanding of the City's project descriptiarl, the amount of a bond financing would not be an issue as it relates to any statutory requirements. Preliminary Cost Comparison - A lease revenue bond for city hall improvements will currently yield approximately .20% - .25% higher interest rates than a general obligation bond for the same project because of the increased risk due to possible non -appropriation and a lower credit rating. The spread would be greater for an asset that is less essential. In addition, a lease revenue bond will carry higher costs of issuance /closing costs. Below is an estimated cost comparison fora 15 year issue and a 20 year issue. 20 Year Project Financing 15 Year Project Financing City Hall Improvements City Hall Improvements (1.OM+ financing costs) (1.OM+ financing costs) General Lease Difference General Lease Difference Obligation Revenue Obligation Revenue Average 3.89% 4.14% 0.25% 3.63% 3.83% 0.20% Rate Net Debt $1,542,863 $1,583,580 $40,717 $1,388,357 $1,411,747 $23,390 Service Average $77,143 $83,708 $6,565 $92,577 $101,604 $9,027 Ann1-lal (20 Fa~men~ts) (19 prz~~nents) (15 przy»2ents) (14 ~ayr~2e~its) Payment Northland Securities, Inc. 45 South 7°' Street, Suite 2500, Mi~meapolis, MN 55402 T°Il Free 800-851-2920 Main 612-851-5992 Member FINRA and SIPC City of Shorewood, Minnesota City Hall Futancing Memo Page 3 The Municipal Bond Market -Currently, municipal interest rates are artificially high relative to treasury rates (a typical barometer) in part because of a huge supply of municipal bonds in the market and a "flight" to high quality investments like treasury bonds. The increased supply is partially due to institutional portfolios being liquidated because of credit rating downgrades and the need to stabilize balance sheets due to the sub-prime mortgage market. All else being equal, we would expect to see municipal bond rates trend lower over the coming months as the financial markets stabilize and municipal bond supply reverts to traditional levels. From a historical perspective however, the current bank qualified rates are only .25% - .30% higher than the lowest rates we have seen in 30 years. I hope this information is helpful. If you have any questions, please do not hesitate to contact me. Sincerely, NORTHLAND SECURITIES INC. Paul Donna Senior Vice President Northland Securities, inc. 45 South T~ Street, Suite 2500, Minneapolis, MN 15402 Toll Free 800-851-2920 Main 612-851-5992 Member FINRA and SiPC Assumptions 'erm: 15 2 !stimated Annal Debt Service: $101,604 $83,70 'ay 2007 Taxable Net Tax Capacity: $16,319,066 $16,319,06E st. Net Rate Increase: 0.62 % 0.51° Residential Homestead 15 Year 20 Year Market Value Annual Impact Annual Impact $300,000 $19 $15 $400,000 $25 $21 $500,000 $31 $26 $600,000 $39 $32 $700,000 $47 $38 $800,000 $54 $45 $900,000 $62 $51 $1,000,000 $70 $58 Commercial /Industrial 15 Year 20 Year Market Value Annual Impact Annual Impact $500,000 $31 $26 $750,000 $51 $42 $1,000,000 $70 $58 $1,500,000 $109 $90 $2,000,000 $148 $122 $2,500,000 $187 $154 $3,000,000 $226 $186 $4,000,000 $304 $250 $5,000,000 $381 $314 Northland Securities Public Finance Page 2 Prepared 4/7/2008 Assumptions Cerm: 15 2( stimated Annal Debt Service: $92,577 $77,14: 'ay 2007 TNTC: $16,319,066 $16,319,066 3st. Net Rate Increase: 0.57% 0.47% Residential Homestead 15 Year 20 Year Market Value Annual Impact Annual Impact $300,000 $17 $14 $400,000 $23 $19 $500,000 $28 $24 $600,000 $35 $30 $700,000 $43 $35 $800,000 $50 $41 $900,000 $57 $47 $1,000,000 $64 $53 Commercial /Industrial 15 Year 20 Year Market Value Annual Impact Annual Impact $500,000 $28 $24 $750,000 $46 $38 $1,000,000 $64 $53 $1,500,000 $99 $83 $2,000,000 $135 $112 $2,500,000 $170 $142 $3,000,000 $206 $171 $4,000,000 $277 $230 $5,000,000 $347 $290 Northland Securities Public Finance Page 1 Prepared 4/7/2008 I`I'I' SHOR~WOOD 5755 COUNTRY CLUB ROAD • SNOREWOOD, MINNESOTA 55331-8927 • (952) 474-3236 FAX (952) 474-0128 • www.ci.shorewood.mn.us • cityhall@ci.shorewood.mn.us MEMORANDUM TO: Mayor and City Council FROM: Brad Nielsen DATE: 7 May 2008 RE: Work Session -Wards FILE NO. City Code (Chapter 106) The City's ward system was established in 2002. Recently, upon receiving a resident request to reconsider the ward system, the Council agreed to schedule the topic for an upcoming work session. As part of that discussion, Councilmember Wellens requested some background indicating how many candidates have filed for elections under the current system versus the previous at-large system. In response, Jean Panchyshyn has provided information from the last six elections (see Exhibit A). With respect to scheduling this item for discussion, there are two timing issues that require Council direction: Community Survey. It has been suggested that the ward system be a topic for the upcoming City survey, in order to gain feedback from residents. This seems like a perfect topic for the survey, however, the timing of the survey would not allow any change in the ward system (if that is the outcome) in time to affect this year's election (see following bullet). 2008 Election. If the Council is inclined to change the ward system in time to affect this year's election, there is a very small window (more like a port hole) of time in which this can occur. If the City changes a precinct boundary, it must be done by 30 May. We would not be changing any rep cinct boundaries, however, we would be renaming them. Staff has a call in to the Secretary of State's office, to determine if the renaming triggers the 30 May deadline. .} ~n ~®~' PRINTED ON RECYCLED PAPER S ? ^~ Memorandum Re: Ward System Discussion 7 May 2008 The next critical date is 11 June. Polling places must be identified by that time and submitted to the County. A resolution to that effect would have to be adopted at the 9 June meeting. Assuming the Council would want to follow the same process for abolishing the wards (i.e. at minimum, a public hearing) as it did for establishing them, a public hearing could be scheduled for 9 June. A resolution and an ordinance amending Chapter 106 would have to be adopted the night of the hearing. Note that this also provides very little time for public. notice of the issue. Based on the preceding, it may be possible, with very minimal public process, to change the ward system in time for this year's election. As a practical matter, and in the interest of good public policy, it makes sense to include the ward system in the community survey. The topic could be scheduled for the first work session following the receipt of the survey results. Cc: Larry Brown Tim Keane Jean Panchyshyn -2- City of Shorewood Election Filings 1996-2006 2006 Election Mayor 3 candidates Ward 1 2 candidates (4-year term, vote for 1) Ward 3 1 candidate (4-year term, vote for 1) 2004 Election (Ward Elections implemented Mayor l candidate Ward 1 1 candidate (2-year term, vote for 1) Ward 2 1 candidate (4-year term, vote for 1) Ward 3 1 candidate (2-year term, vote for 1) Ward 4 1 candidate (4-year term, vote for 1) 2002 Election (at lame) Mayor 1 candidate Council 3 candidates (2-year term; vote for up to 2) 2000 Election (at lame) Mayor 1 candidate Council 2 candidates (4-year term; vote for up to 2) 1998 Election (at lame) Mayor 2 candidates Council 4 candidates (4-year term; vote for up to 2) 1996 Election (at lame) Mayor 2 candidates Council 4 candidates (4-year term; vote for up to 2) Council 2 candidates (2-year term; vote for 1) NOTE: Mayor is always fora 2-year term, at-large Exhibit A `I" F` SHOREWOOD 5755 COUNTRY CLUB ROAD •SHOREWOOD, MINNESOTA 55331-8927 • (952) 474-3236 FAX (952) 474-0128 ° www.ci.shorewood.mn.us • cityhall@ci.shorewood.mn.us MEMORANDUM TO: Mayor and City Council FROM: Brad Nielsen DATE: 8 May 2008 RE: Christmas Lake -Surface Use Restrictions FILE NO. 405(Natural Resources) Residents on the north end of Christmas Lake, adjacent to the Merry Lane public access, have been in discussions with Shorewood, DNR and MCWD staff regarding the silting-in of their bay (see Site Location map -Exhibit A, attached). They had hoped to get one or more of the agencies to undertake a dredging project, alleging that the bay was filling with silt due to boating activity associated with the public boat launch. The property owners have now resigned themselves to applying for a dredging permit themselves. Before spending the money to do so, however, they request that measures be taken to prevent the silting problem from recurring in the future. One of the ideas discussed was the possibility of a "no wake zone" in the vicinity of the launch area, possibly including the entire bay. A significant part of the intent of such restrictions would be to keep boaters from powering their boats onto trailers, which. can result in substantial disturbance to the lake bottom. Staff has checked into what is required to make such a request from the DNR. The process is summarized on Exhibit B, attached. Ultimately, if restrictions are imposed, a public hearing would have to be held to provide for public comment on the proposal. Prior to the hearing, staff, with the assistance of the Watershed District and the DNR, would provide background information and analysis to the Council. Obviously, one issue which would have to be addressed is enforcement (the Planning Department might get that boat yet!). This item is scheduled for discussion at Monday night's work session. No decisions will be made. Staff is simply seeking direction. Cc: Larry Brown James Landini James Wisker cb j®*® PRINTED ON RECYCLED PAPER { SHOREWOOD 5755 COUNTRY CLUB ROAD •SHOREWOOD, MINNESOTA 55331-8927 ®(952) 474-3236 FAX (952) 474-0128 e www.ci.shorewood.mn.us > cityhall@ci.shorewood.mn.us MEMORANDUM TO: Mayor and City Council FROM: Larry Brown, Acting City Administrator & Director of Public Works DATE: May 8, 2008 RE: Discussion Regarding Dry Hydrants Enchanted and Shady Islands receive fire protection through contracted services by the Mound Fire Department. In 1994, the City of Shorewood completed a project for installation of three "dry hydrants" for'the islands to provide an adequate water source for fire suppression. The project was completed, and each property on the islands was assessed for the improvement project. Best described, picture a "dry hydrant" as "one hydrant on a really long soda straw" placed across the bottom of the lake. The very end of the "straw" or intake pipe is capped .with a tubular screen, with rip rap and a weed mat placed above the intake screen. Attachment 1 includes a map of the location of the hydrants, and a diagram showing the intake configuration. Annually, the Mound Fire Department performs test pumping on the. hydrants. Prior to these trial pump runs, the Shorewood Public Works Department performs back flushing of the hydrants to help clear debris from the end of the screen, and to prevent silt from remaining on the intake section of the system. Over the past few years, the fire department has reported that there has been an incredible amount of silt that is drawn in, during the trial runs. In addition, flow capacity has been dropping over the past years. Both the drop in flows and the amount of silt present reason for concern. While concern for the drop in flows is obvious, the silts and small rocks drawn in can during pumping operations can result in significant and costly damage to the pump apparatus. Back flushing of the systems on amore frequent basis has not resulted in clearing of the silt materials. Staff wanted to inform the City Council of the current situation, and to commence with a feasibility report, (to be performed in house) as to reasonable solutions on how to improve the quality and quantity of flow available for fire fighting operations. Staff will present this item in more detail for comment during the work session on Monday evening. as ~®~® PRINTED ON RECYCLED PAPER q~~~~ ~°"`° £~ BASE MAP ~EGENQ rLAtTED JTIIEET 011 RAR.ROAp CORRR)p11 ~~,~ M.AT7Ep fT11[ET, NOT SUR.T ~'•~'-""- lURJ STREET, NOf Fl.ATTED (CENTER ImEI i vAtAT[D STR[ET ~rT ut caETraN errs wDER sErAwm OM11F.R$1M1 ........... roT tr1E ~ecTr1EEN 1ms 1RCER cawaM owNEleylrl -••- ![C,IOR AND /2 SltT10N UNE; SCC710M NUiMeER CRr l0.MARv SNOREIK ~~ / i _ ~ ..... ` ~ N 1, t y .._ ` \, coos iscan~ ~ ~ - ` . ~. ~ sNADV auND -c z sN,wr CTLAND TR _~ PULPS BAY , ~ ,.~~ s sw,Dr rn.AND aR. 1~4. a .~ r?' -~G ~,...:~i ~. a.: ~~ ~_ .®, c~ r d i ~•~•1 ~~ ~, h . 11-93 CF-34 LAKE M/NNETONKA Dry Hydrant .Locations Enchanted Island and Shady Island / .~.~ -~ - _ ~- I strvAY i ~ i .,`` . ~ ~. ~ I .~ , ,; ) :% ~ I "~-- '~~•- ~.i~ I ~. ~ ~ ~'~ ~ ~ • L. a .~ ' .,,.,, .. • v~' ~~ ZS Lit .. ~ ~ ~. '~ ', " 4 . = O '.j N i4~~ ~ s ~ /' 1 ~ ~ 1. s !1 ~ "•• ~ ;.. N • ~ tM . N ~ . •' A •.. t p ^w ic.. t ~' • ~ -i t Q O ~ ~ ~,{y • • ~ t~! f • ~ t i~. tk 1i ~ 1,~~ r '~I as ~~ ~ `~' • ' r~ . ~. •. ~L , ,. • • r ~, `• ~• ~ .+ O ~ •. +•• VI . ~ 1 ;, 1,f'`.1 ~~ .;. ' v',_„ `;''y 54~; ~ ''` /~- w. :~e4i , , `rte S 1111 ~ ` V Ot•\ + r. • •.iN ti :. ~ l r ~~ ... • ~. ~ ~ ii` ~ ' J :. I /,~. ,. ~- r 1 1' 1 ~ . • ` ~ r ~ ~ ~ • ~ ~ ~ w ~~ n•til ~ ill 111 .~ a ~ :~ ~ ~ \ ' j •/ ~:. •a:4` ~ pan ~ ~ v /. The third pipe is located at 4550 EnchantAd Point (Crewe Res.). This pipe will ~ extend approximatelyi90' into the lagoon to elevation 924.7. A sump area will have r ; ~1 to be excavated at this locatcion to acheive the proper depth. ,.`e~ (~ _ - , . "~,' . ,11~,,, .' 'r,~. \ •. '4 .. ~;. 3:.'•. M ., . 4' ~• ./ .. • ~~ ~~ ~ ~h r' ~~• +`~ -~4cooN ~~-. +•~•~~•' ~; t ~ w ~:~ N ~,i1,4 s r. W r. _ ' .~ ~'" `~ 0 1' ~ - ~ a. !!~ , ~ ; . 1~ ~~ ~~ ~~s ;~ N C' .~~~ ~~RY HYv~i~iT Lvc~T',o~/ r, fu. ,~ ~. ~. ~. .. '', , ~ wr/' ' ,i :..~.: , - The second pipe is located at the Cul-de-8ac at Enchanted Drive. This pipe will extend approximately 150' lakeward, and the pipe will continue approximately ,100' landward to the street, The inlet will be set at approximately 921.0 .~ N ~~, ;~ ~ r~ tl,.~ V' u , .. ~ ~ H Y D 1'~~uT Lo cry--rr c~,~l `, ~--- ~, R i o~,= -- f ~~ ~ J 9 ~ ~. t ~ *~~,. '. ,K , ,~ .~' ~~ ,~ ~ ay Y W ~ w ' U+ f ~ ~ .= D v . i a, i~ ~ rti j ... ti ~,' ~ ~ .. sir'"' 3 g~i ~~U ~ `. tM ~ ~„ 9.w `~ ~ ~ ~ ''„ •. 9c* ~ ~~ ~ Lt 4iZ a ~~% .. 1 ,62 . ~ c ~ yt,.. --- t_ _.._ •• y`~.'!~ Salt v ~~• ~; ~~ N ~ ''• '. ~ ~ ~ 9,9. •`~~ SSt l (.1 ro r¢ .,\ e . ~ ~,, ~,. ~. `~ ,~ ~ ~ ~ . , / ,~. ,~' ~! 1• . ` ~!` / The first hydrant is located west of the Shac~ y Island bridge. This pipe will ~ ``~ ~° ' extend approximately 700' lakeward tv elevation 922. ~' ~ , r /~"\ r-~ ~~ .,, cc Q l~l. d H W U Lu w x H z >- a a a ~ a ~ w x w ~ r F-- 1.~ l.l.! ~ _~ O ~7 3 ,~ 4 ~~~ ~b7 ~9 9~ f^ V C~ w ~ ~ -~ "' ~" ~-- ~^~ ~ C~,i 50 3n~d ~?3 b'31iI~1 31~~f1Q E~r95-~~r-~Ty r7:rT r6E'[!--