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08-30-06 Special CITY COUNCIL MEETING MINUTES Richfield, Minnesota Special City Council Meeting August 30, 2006 The meeting was called to order by Mayor Kirsch at 5:04 p.m. Members Present: Martin Kirsch, Mayor; Bill Kilian; Fred Wroge; Susan Rosenberg; and Sue Sandahl. Staff Present: Steven Devich, City Manager; Mike Eastling, Public Works Director; Bruce Palmborg, Community Development Director; Jim Topitzhofer, Recreation Services Director; Brad Sveum, Fire Services Director; Bill Fillmore, Municipal Liquor Operations Director; Dan Scott, Public Safety Director; Pam Dmytrenko, Assistant to City Manager; Chris Regis, Finance Manager; and Cheryl Krumholz, Recording Secretary. Item # I City Manager Devich and Finance Manager Regis presented the 2006 Revised/2007 Proposed Budget overview. City Manager Devich stated the recommendation is a proposed small tax levy increase; with no change in the franchise fees rates and including the utility bond sale and debt service. Finance Manager Regis reviewed and answered questions regarding the revised and proposed Legislative/Executive Department budget, including Council/Mayor, Other Agencies, Human Services, City Manager, Legal and Boards/Commissions. Finance Manager Regis reviewed and answered questions regarding the revised and proposed Administrative Services Department budget, including Administrative, Finance, Assessing, Human Resources, Risk Management and City Clerk. Council Member Wroge asked about the switching of banking services from M & I and using the Richfield Bloomington Credit Union. Finance Manager Regis explained M & I was given an opportunity to respond but they could not match the fee savings. Richfield Bloomington Credit Union was not contacted because he wasn't certain they could handle all the credit card transactions. Public Safety Director Scott reviewed and answered questions regarding the revised and proposed Public Safety budget, including Support Services, Police, Inspections and Emergency Services. He also reviewed Part I Crime Trend and Construction Valuation. Special Council Meeting Minutes -2- August 30, 2006 Public Safety Director Scott discussed the Community Service Officer (CSO) activities and the request to increase CSO hours from 24 to 32 hours per week, per each of the three CSO positions. This increase is needed to support the property maintenance goals of. the City Council. City Manager Devich explained an additional CSO position is not requested but rather an increase in hours to permit flexibility of time during the different seasons. There is $30,000 in the 2007 budget to cover this cost but is a City Council policy decision to implement. The City Council discussed the adequacy of the number of hours proposed to accomplish what's needed to inspect the entire City and the need to do a reassessment if property maintenance issues do not decrease. Public Safety Director Scott reported on the graffiti problems in the City, including the police actions and cost for removing the tagging. The City Council discussed the resulting impacts of residents feeling unsafe in using the parks and that it looks like a lack of maintenance. The budget should recognize this problem as well as communicating to the public that their help is needed. Public Safety Director Scott clarified the CSO staff does not handle the graffiti problems, that is done by police officers. Public Safety Director Scott explained the City Council has the option to direct for more CSO hours to begin in 2006, which will exceed the Public Safety budget but could be covered out of year- end fund balance. The City Council agreed to a 2006 Public Safety budget increase of $20,000 to provide additional CSO hours directed to the inspection property maintenance program. The City Council agreed to a 2007 Public Safety budget increase of an additional $30,000 for a total of $60,000 to provide additional CSO hours for the inspection property maintenance program. Public Safety Director Scott discussed the 2007 budget request for a part-time business licensing clerk, including position responsibilities. The City Council agreed to include the part-time licensing clerk position in the 2007 budget at an additional cost of $22,000. Public Safety Director Scott discussed the police officerlschoolliaison position. Fire Services Director Sveum reviewed and answered questions regarding the revised and proposed Fire Service budget, including the impacts of staffing shortages resulting in significant overtime. Community Development Director Palmborg reviewed and answered questions regarding the revised and proposed Community Development budget, including the increase in personal services. City Manager Devich explained the staffing changes resulting in the step progression through the pay plan. Council Member Wroge stated he hoped with the income from grants, TIF Districts, project and administrative funds, the HRA would become self-sufficient and not rely on the general fund. Community Development Director Palmborg stated an analysis and five-year forecast have begun regarding the HRA becoming more dependent on revenues. Council Member Rosenberg requested the Kids @ Home Program be listed as a department focus. Public Works Director Eastling reviewed and answered questions regarding the revised and proposed Public Works budget, including the General Fund Divisions of Administration, Engineering, Streets, Park Maintenance and Forestry, and the Utility Divisions of Water, Wastewater and Storm Sewer. He also reviewed the Capital Projects in the key financial strategies. Special Council Meeting Minutes -3- August 30, 2006 Public Works Director Eastling stated the Streets and Forestry budgets more accurately reflect the amount of staff time spent and work performed. Council Member Wroge stated his belief that franchise fees should be eliminated until it is crucial to have that funding. He said the City received an LGA allotment for 2007. Funding provided by franchise fees should be transferred back to the property taxes. Council Member Wroge added he learned recently that, as established by ordinance, in 2008 the City Council is to revisit the continuance of franchise fees. Mayor Kirsch stated the franchise fees are discussed every year as part of the budget process. Public Works Director Eastling reviewed the proposed water division business plan budget impact, including the water capital investment, operating cost cuts and staff adjustments in utilities. City Manager Devich reviewed the future debt considerations for 2006, 2007 and 2008. Recreation Services Director Topitzhofer reviewed and answered questions regarding the revised and proposed Recreation Services budget, including the General Fund Divisions of Wood Lake Nature Center, Recreation Programs, Community Center and the Ice Arena, Pool and Special Facilities Divisions. Recreation Services Director Topitzhofer stated alternative uses of the second ice sheet may be considered if the profitability of keeping both rinks open in the summer decreases. Finance Manager Regis discussed the debt service payments and transfers impacts. Council Member Sandahl stated the taxpayers expect to pay the operating expenses needed to maintain the Ice Arena second ice sheet and swimming pool because the community likes these facilities. Municipal Liquor Operations Director Fillmore reviewed and answered questions regarding the proposed and revised Liquor Operations budget. City Manager Devich stated the City Council will adopt the 2007 preliminary tax levy at their meeting on September 14,2006. Included in the proposed and revised budgets will be funding for additional CSO hours and a part-time business licensing clerk. After September 14, the City Council can reduce the tax levy but not increase it. The City Council and City Manager discussed the tax impact scenarios and budget impacts of preserving some LGA as a set aside. Council Member Wroge suggested using the remaining 2004 LGA set aside and the 2007 LGA allocation in the budget. He continued that he would like the HRA to become self-sufficient in funding, to have franchise fees back to \property taxes and health insurance expenses addressed. He said his biggest concern was the roller coaster tax levy and would like to see a leveling of taxes with the use of the LGA annually. He suggested tying the tax levy to inflation rate so it becomes a predictable rate for residents. Council Member Rosenberg asked Council Member Wroge if he wanted to add to the tax roll. Council Member Wroge said an increase at the rate of inflation. City Manager Devich. reviewed and explained the City's tax levy history and levy limits. There is the possibility the Legislature may change the LGA formula or eliminate the LGA allocation if Richfield does not recognize the LGA as revenue to reduce taxes but decides to raise taxes anyway. Council Member Wroge said his number one priority was to deal with franchise fees and putting it back into property taxes. The City should be able to cover the costs and still have no tax increase. City Manager Devich explained that part of the LGA is being used for the tax levy. Special Council Meeting Minutes -4- August 30, 2006 Council Member Rosenberg said if all the LGA was used, there would be no reserve funding and that is a concern. Council Member Kilian discussed the change in the burden of the tax if franchise fees were eliminated. If the tax levy was bought down in 2007, it would need to be raised the next year to make up the difference. Council MemberWroge said he believes street maintenance is part of property taxes. Council Member Kilian stated he didn't like the concept of franchise fees but he also didn't like it on property taxes because the formula is based on value not infrastructure use. Mayor Kirsch said all but $700,000 of the LGA could be used to buy down property taxes. City Manager Devich stated that the tax levy is a City Council policy decision. If there are no franchise fees next year and less LGA allotted, there is a funding hole in the budget. Council Member Sandahl stated franchise fees are a tool to use as funding to count on regardless of the Legislatures action on LGA on levy limits. They are prudent financial decisions, earmarked for certain uses. A steady increase in the tax levy makes sense, but the Legislature may examine the use of LGA. Finance Manager Regis stated the LGA set aside is used to buy down property taxes as part of the General Fund revenue. Council Member Kilian said if there is not as much paid in taxes in 2007, it's a responsible use of LGA but if the taxes start to increase, the need for LGA may be questioned. Finance Manager Regis discussed the expected tax increase before the LGA allocation was received. Council Member Rosenberg stated residents do not complain about the franchise fees so it's not high on the radar but that doesn't mean it should not be reviewed. Mayor Kirsch stated some reserve funding is needed due to the uncertainty of the LGA and Legislature. This shows good faith on the City's part. Council Member Sandahl stated agreement with the buy down and set aside. The City Council agreed that $52,000 ($30,000 for CSO hours and $22,000 for part time business licensing clerk) should be included in the 2007 tax levy. City Manager Devich stated Hennepin County uses the tax levy set by the City Council on September 14. Mayor Kirsch stated the budget discussion was concluded this evening so the August 31 Special City Council meeting is canceled. All budget presentation materials are City Clerk's File No. C-422. a~H Cheryl ~ umi1ol. . Recording Secretary Date Approved: September 26, 2006 The meeting was adjourned by unanimous consent at 9:33 p. m--' .