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09-30-03 Worksession CITY COUNCIL MINUTES Richfield, Minnesota Special Worksession September 30, 2003 The meeting was called to order by Mayor Kirsch at 5:39 p.m. Members Present: Martin Kirsch, Mayor; Susan Rosenberg; Gertrude Ulrich; John Enger; and Sue Sandahl (arrived 5:46). Samantha Orduno, City Manager; Steven Devich, Administrative Services Director; Bruce Palmborg, Community Development Director; Dan Scott, Public Safety Director; Mike Eastling, Public Works Director; Bill Fillmore, Municipal Liquor Operations Director; Brad Sveum, Acting Fire Services Director; Chris Regis, Finance Manager; and Cheryl Krumholz, Recording Secretary. Staff Present: Item #1 City Manager Orduno stated the Worksession tonight is to discuss revenue taxation sources such as the street light fee and the gas and electric franchise fees. She clarified that a fee is an alternative form of taxation. Ms. Orduno reviewed the gas and electric franchise fee estimates for residential and commercial properties on the basis of a per meter fee or percentage of the utility companies gross revenues. Ms. Orduno reviewed Scenarios 1-7 including revenue/budget considerations and impacts/outcomes on a $160,000 and $180,000 valued home. Ms. Orduno stated if the February forecast is consistent with State revenue projections, there is less chance the Legislature will make mid-year LGA or MVHC reductions or reduce aid programs for 2005. If the forecast indicates a budget shortfall, chances increase that aid programs will be in jeopardy. The November forecast is not that telling, because the 2003 holiday season is critical. Ms. Orduno said the City Council needs to decide if the City should continue to depend on property taxes and LGA as revenue sources or look at alternatives. She explained there is a nexus between the franchise fees and street improvements. The street light fee revenue is included in the 2004 budget, but can be removed. Special Worksession Minutes -2- September 30, 2003 Ms. Orduno explained that property taxes can be claimed as a deduction if taxpayers itemize. The property tax refund is also an option for low-income taxpayers and renters. Fees are not a tax deduction. City Manager Orduno asked the City Council if the budget is on target as they directed. She added that additional cuts might mean a reduction in Police and Fire personnel and City services. Council Member Enger asked about the LGA set-aside. Ms. Orduno said the 2004 budget includes $600,000 less LGA. Council Member Rosenberg asked if there was a way to include the fees on property taxes because the City's poverty rate is increasing and the ability to pay more property taxes is decreasing. She stated support for a $600,000 LGA set-aside, but that she had strong concerns regarding the street light and franchise fees. Ms. Orduno said a $600,000 LGA set-aside without fees would mean additional budget reductions. Council Member Rosenberg stated support for a $300,000 LGA set-aside with no additional budget cuts. Council Member Sandahl stated the LGA set-aside needs to be increased due to the potential additional LGA that could be taken away. She said the maximum levy and one fee are needed to get $600,000. Council Member Sandahl asked for the advantages and disadvantages between the street light fee and franchise fees. Ms. Orduno stated there is little anyone can control on property taxes and the street light fee, but franchise fees can be controlled by the level of usage. The franchise fee is payment for the utility company to use the right-of-way and is a direct pass through to the resident. Council Member Sandahl said the franchise fee is connected to the repair and maintenance of streets. Council Member Enger explained an easy way for the public to save money on the franchise fees for gas and some electricity is to simply install a set back thermostat; there would be an 8% savings on energy usage. He added that if the fee is imposed, the public should be notified of this easy way to save money. Ms. Orduno said the per meter charge is favored by the utility companies. She asked the City Council to consider who bears the burden for the increase in the cost of City services - property taxes, diversified revenue sources, or reduce services. Ms. Orduno reviewed the annual pavement management costs paid from the General Fund. The City Council consensus was to have a minimum $600,000 LGA set-aside. Ms. Orduno said that Richfield will receive additional LGA cuts by the State because the City continues to receive aid. Administrative Services Director Devich explained that the market value credit could be cut as another way to reduce the aid received from the State. Ms. Orduno stated there is $200 million in residential market value that is not being taxed because of the current limited market value law which permits taxing the limited market value not the market value. This State law sunsets in 2006 when everyone is taxed for full market value. Ms. Orduno asked if the City Council had any issues with the current budget related to staffing or services. Special Worksession Minutes -3- September 30,2003 Council Member Sandahl asked about the summer recreation programs - status of the pay- as-you-go program and what continues t~;('~;;iP,r?vided tochildren in need. Ms. Orduno stated a report will be provided to the City Council. Council Member Sandahl asked about the budgeted amount for forestry/trees. Council Member Rosenberg said the Garden Club is planning a fundraiser for tree planting in Madison Park. Council Member Enger asked about the diseased tree replacement program when the sidewalk/curb is damaged. Public Works Director Eastling said this issue went to the Community Services Commission and explained that at the homeowner's request, a replacement tree is planted behind the sidewalk in the yard and then the homeowner maintains the tree. The City Council requested a written response on this tree replacement program. Ms. Orduno clarified there is $3800 in the Forestry budget for trees. Council Member Sandahl asked about the two-inch to three-inch snow plowing policy change implemented last winter. Public Works Director Eastling stated the snow season ended before the policy was drafted. He explained the largest cost is in staff overtime and the consideration of not plowing at night, but rather during regular work hours. He said the number of inches isn't the best way to manage costs. Ms. Orduno said there is a huge service expectation in the State to have the streets plowed by morning when there is an overnight snowfall. Council Member Enger suggested the elimination of the snowplowing of residential sidewalks, with the exception of the areas with no boulevards. Council Member Sandahl stated the sidewalk plowing is a service expectation dating back to the installation of the sidewalks. Public Works Director Eastling said the bulk of the City's sidewalks do not have boulevard space for snow storage. Council Member Ulrich said the cost savings would be minimal if sidewalks without boulevards continue to be plowed. Mayor Kirsch asked about snowplowing by the schools. Public Works Director Eastling said the plowing is shared. The City Council agreed to no change in current sidewalk snowplowing policy. Ms. Orduno asked if the $600,000 LGA set-aside was to include additional budget cuts or street light fees and/or franchise fees. She explained that if franchise fees are to be implemented, there needs to be time to notify the public. The street light fee will come before the City Council for action on October 14. Council Member Ulrich stated support and preference for franchise fees because the utility companies are providing a service, but does not rule out the street light fee. Mayor Kirsch stated a preference for the franchise fees. Ms. Orduno asked if the street light fee should proceed for City Council action. Council Member Ulrich said yes. Special Worksession Minutes -4- September 30,2003 Council Member Sandahl stated street light and franchise fees need to be considered as alternative ways to not be dependent upon property taxes for revenue. Ms. Orduno stated the user fee study presented to City Council tonight is prepared by Springsted. The staff recommended fees will be returned to the City Council for their approval. Council Member Sandahl asked about the levying costs for nuisance abatement. Administrative Services Director Devich explained not all staff administrative costs are recovered currently. He added that staff is researching why interest is not charged on the abatements. Council Member Ulrich requested that a method for re-evaluating or increasing fees periodically be considered. Ms. Orduno said fees need to be consistent with what is charged across the metro area. She added that fees are reviewed every year as part of the budget process. She cautioned that fees need to be reasonable so businesses continue to come to Richfield and not all costs can be recovered. Council Member Enger said that residential and commercial taxes make up the costs not recovered. Council Member Ulrich wished for a way to inform residential and commercial properties of how much service they receive for the money they pay. Council Member Enger requested the actual dollar amount of all staff wages paid from the General Fund, not including benefits. Administrative Services Director Devich said salaries with benefits are 70% of the total General Fund budget. He said the City Council will be provided the total salary only information. Item #2 Public Safety Director Scott asked the City Council for direction regarding the liquor establishment total market value of $600,000 as referenced in the current alcohol ordinance. He said the current ordinance includes land, building and equipment in the value. He reported that two establishments currently in Richfield do not meet the $600,000 value, all others exceed that value. Mayor Kirsch requested the equipment value be deleted and only the land and building be considered. Council Member Enger explained the value was established to prohibit small bars popping up in the City. He said the two current establishments cannot be made to comply, but future establishments must comply or increase the value. Council Member Sandahl said the value should not be lowered. Public Safety Director Scott said the value could remain at $600,000 because it is working well. The City Council consensus was to remove the equipment value from the current ordinance because an annual appraisal would be needed, continue to include the land and building value and maintain the $600,000 total market value. Council Member Sandahl requested the Richfield School District make a presentation to the City Council on October 14 regarding the proposed school referendum. She also requested a City Council resolution supporting the referendum be prepared for October 14. Special Worksession Minutes -5- September 30, 2003 The City Council scheduled a Special City Council Worksession on October 14 at 5:30 p.m. to discuss the 2004 Proposed budget. The meeting was adjourned by unanimous consent at 7:03 p.m. Date Approved: October 14, 2003 II { /J fi74:1hi e ~X Martin J. Kirsc Ma c~~~ Recording Secretary !4~