11-06-03 Worksession
CITY COUNCIL MINUTES
Richfield, Minnesota
Special Worksession
November 6, 2003
The meeting was called to order by Mayor Kirsch at 5:37 p.m.
Members Present:
Martin Kirsch, Mayor; Susan Rosenberg; Gertrude Ulrich; John Enger; and
Sue Sandahl.
Staff Present:
Samantha Orduno, City Manager; Steve Devich, Administrative Services
Director; Bruce Palmborg, Community Development Director; Jim
Topitzhofer, Recreation Services Director; Kevin McGinty, Fire Services
Director; Bill Fillmore, Municipal Liquor Operations Director; Mike Eastling,
Public Works Director; Barry Fritz, Acting Public Safety Director; Chris Regis,
Finance Manager; Randy Hughes, Operations Superintendent; Brad Sveum,
Assistant Fire Chief/Fire Marshal; Ray Wroblewski, Forestry
Inspector/Operations Assistant; and Cheryl Krumholz, Recording Secretary.
Item #1
Jim Strommen, Kennedy & Graven, reviewed the franchise fee implementation process for
gas and electric utilities. He explained the fee designs: per meter, gross revenues based or usage
based. The per meter fixed fee per month is stable. The gross revenue - based fee is the least used
design because of fluctuations.
Mr. Strommen said an ordinance is required with no separate State Statute for public hearings
other than the City's process. Implementation of the fees could occur in January or February to allow
time for the utility companies to set up their billing process.
Council Member Ulrich stated that informal discussions with residents found them to be
supportive of a fixed rate and she agreed.
Council Member Sandahl stated there is already a fee on cable television and that she
supports the franchise fees since there are costs to the gas and electric companies to do business in
Richfield related to the life and damage of the streets. She added the fees are a way to recover costs
since there are restrictions to putting the fees on property taxes.
Council Member Enger stated he did not favor fees and preferred taxes. He didn't know how
much the street life was damaged because he believed they were put back the same. There were
ways to save money without additional fees and the maximum levy was a big enough burden for the
taxpayers.
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November 6, 2003
Council Member Enger said not everyone has cable television but everyone needs gas and
electricity.
Council Member Sandahl asked Mr. Strommen how many metro cities have instituted
franchise fees.
Mr. Strommen explained the cities with franchise fees and how it is structured. He said
Richfield has a right to go up to 5% but that amount is not proposed.
Mayor Kirsch asked about most cities having the fees usage/percentage-based not a fixed-
rate.
Mr. Strommen explained the percentage-based was on an earlier monopoly model. Now,
typically, the fees are meter or account-b~~eq because both companies are the same.
City Manager Orduno said there is a nexus of franchise fees to dedicated revenue sources.
Cable television franchise fees are a dedicated revenue source for communication purposes and not
part of the General Fund.
City Manager Orduno stated the City Council needs to consider long-term strategies for
financial stability, non-stable revenue sources, Market Value Credit Aid (MVCA), fiscal disparities,
levy limits and the critical issues facing the City.
Council Member Enger asked for an explanation of MVCA.
City Manager Orduno provided an explanation.
City Manager Orduno reviewed the three scenarios related to Revenue/Budget consideration
and impacts/outcomes. Scenario 3 includes franchise fees and levying below the limit. Low-income
persons can get help with utility bills, but few qualify for property t~x rebate according to the
Minnesota Department of Revenue.
Council Member Ulrich stated she believes people don't know about the options of the
property tax rebate for renters and homeowners or reverse mortgage for homeowners.
Steve Lindgren, Chamber of Commerce President, addressed the City Council regarding the
Chambers' anticipated board position on November 19, 2003:
. If the notifications to businesses by the City would be similar to the street light fee process?
. City Council consider establishing a mechanism (Fiscal Planning Advisory Committee),
similar to the school districts, to bridge communication gap with residents.
. The Chamber would have supported the street light fee because it was equitable, justified
and easily explained.
. City Council establish a sunset provision on the franchise fees.
. City Council establish a dedicated fund for the franchise fees.
. City Council establish the franchise fee on a per meter basis.
Council Member Sandahl stated that among the public, the street light fee was unpopular, but
it may return if State aids are cut and the Chamber's support would be appreciated.
Council Member Rosenberg said the advisory committee was a good idea because there is a
constant battle with communication. People need to feel part of the process and solution.
Council Member Rosenberg said she liked the dedicated franchise fee because it explains
how people are affected and the funds are spent on something they can grasp.
Council Member Sandahl asked about the Local Government Aid (LGA) budgeted amount
being reduced from $600,000 to $400,000.
City Manager Orduno explained the impacts of the different amounts on the tax levy and the
dedication of the franchise fees. More positives than negatives are being heard regarding the
economy, but the future of LGA cuts is unknown. Communication is an on-going issue - people don't
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November 6, 2003
like increases and some make inaccurate assumptions, but if the funds are dedicated to maintenance
services, the increase is more acceptabl~>"
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City Manager Orduno stated there are concerns regarding a sunset provision because there
needs to be a strategic long-term stable revenue source.
Council Member Ulrich said sunset means a time to review the fees.
City Manager Orduno said the fees will be reviewed annually during the budget process.
Public Works Director Eastling described examples of dedicated funds, including the sewer
system, water system, storm sewer system. He explained the history of City streets and the concern
of extending street life if there is no dedicated funding source.
Mayor Kirsch stated support for the franchise fees because the funding roller coaster needs to
end and taken out of the State's hands so plans can be made for the future.
Council Member Ulrich said information among the City's organizations needs to keep flowing
so the trust level remains high and residents are satisfied.
City Manager Orduno said, if the City Council wishes to move forward on the franchise fees,
timing needs to be decided. The first reading of the ordinance and scheduling the public hearing for
December or January can be held at the November 12, 2003 City Council meeting. Notice to the
public can be through the Richfield Sun Current and City organizations.
Council Member Ulrich stated support for the franchise fees and proceeding with no delays.
Council Member Sandahl expressed concern if $400,000 was enough to budget for less LGA
and if the levy should not be reduced as much to keep the street maintenance amount the same.
Council Member Enger said the franchise fee should be lowered and levy the maximum on
property taxes.
City Manager Orduno said the franchise fees have been reviewed and found to be acceptable
by the gas and electric companies.
Council Member Sandahl said she did not disagree with levying to the maximum. City Hall is
in desperate need of maintenance and suggested applying the difference to the City Hall fund.
Council Member Enger said reductions could be made elsewhere by cutting staff in the upper
ranks, not lower ranks. People don't see a cut in service if staff is reduced in the offices, but they do
see it in streets and parks work. Paperwork can wait, but plowing streets cannot wait.
Council Member Enger suggested management staff take a pay freeze for the next year. He
questioned the percentage increase for salaries in 2003 and 2004.
City Manager Orduno explained that Richfield's pay scale is at or below the median, especially
for management staff. Management staff has received no merit increase in two years, but the lower
ranks have moved through the step increase process. She said City services are tied to staff levels.
Administrative Services Director Devich explained that the percentage increase for 2003 and
2004 is for all personnel and it is 3%. He reviewed the salaries for the different employee groups and
the progression through the step system.
City Manager Orduno referenced a September 23 USA Today article, "Outlook for pay raises
bleak".
Mayor Kirsch said the City is training staff for other cities because of wages and the current
staff is being squeezed with no extra pay.
City Manager Orduno said the philosophy is to pay less employees, more rather than pay
more employees, less and to keep the pay plan stable with consolidating job duties.
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November 6, 2003
Council Member Enger said he would love to get a 3% pay increase every year, and hasn't
seen a 3% pay increase in his City job for probably seven years and next year he'll get $.08.
Mayor Kirsch said contracts drive wages.
Administrative Services Director Devich explained pay equity issues and that Richfield
compares to other Stanton Group 5 cities of which St. Paul is not a part.
Council Member Enger stated he wished Richfield was as good as Minneapolis and St. Paul.
He asked to see the salary survey of other cities.
Council Member Sandahl stated Council Member Enger could bring up the pay freeze of
Management staff next year, but it will probably not get support from the other City Council Members.
She said she believes the current st~ff is doing an excellent job for the City with a well-run
organization.
Council Member Rosenberg stated she works closely with staff on housing issues and to
describe them as not-exemplary staff is a disservice. She said she wished more could be done for
the staff because they are outstanding.
Mayor Kirsch stated developers say that Richfield is a good City to work with on projects.
City Manager Orduno said credit should be given for maintaining service expectations with a
reduced staffing level so residents don't notice. Cuts have affected staff internally not externally in
the organization so the Richfield quality of life doesn't diminish.
City Manager Orduno said the City tries to stay competitive, remain in compliance with pay
equity and not waste taxpayers' money.
City Manager Orduno invited Council Member Enger to spend the day with her to observe City
staff during the workday.
Council Member Sandahl suggested levying to the maximum and setting a franchise fee of
$1.45 per meter on gas and electric utilities.
Council Member Rosenberg stated she opposed levying to the maximum because the City
needs to diversify revenue and help low-income residents. If $400,000 less LGA budgeted is not
enough, staff should recommend alternative funding.
Council Member Rosenberg suggested reducing the levy and designate funding for the
franchise fees to protect the City from LGA reduction.
Council Member Ulrich said there needs to be a dedicated fund for City Hall maintenance.
City Manager Orduno said $104,000 is proposed to begin the fund. The fund balance should
not be reduced because it affects the City's bond rating.
Council Member Sandahl said she preferred keeping the maximum levy, but suggested raising
the levy by $100,000 for City Hall maintenance or street maintenance.
Council Member Rosenberg said she supported an increase for City Hall maintenance.
City Manager Orduno stated there is a concern regarding becoming a target with levy limits
and it was right to be below the limit, but it could come back to bite the City.
Council Member Enger suggested levying to the maximum and reducing the franchise fees
because the end result is the same.
Council Member Sandahl suggested levying to the maximum, not reducing franchise fees and
put the money where it is needed. If funds are left-over, apply it to the reserve or City Hall fund.
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November 6, 2003
Council Member Rosenberg said she would go for the levy maximum and franchise fees
because the increase to homeowners is minimal.
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The majority of City Council supported the maximum levy, gas and electric franchise fees at
$1.45 per meter with dedicated services, put the funds where needed and move quickly with
implementation. Also, communication regarding the franchise fees is very important.
City Manager Orduno said most of the public doesn't care about the City Hall maintenance -
work environment is important, but equal to that are ADA requirements.
Council Member Sandahl asked about the utility billing cycle to notify residents of the
franchise fees.
Public Works Director Eastling said the cycle takes three months.
City Manager Orduno asked if notification should be prior to the public hearing. The
implementation takes two months following approval.
Council Member Sandahl said the public should be educated after the franchise fees are
instituted.
A Special City Council meeting is scheduled for January 6, 2004 to conduct the public hearing
on the franchise fee ordinances.
Operations Superintendent Hughes reviewed the City's storm damage and debris removal
policy.
Council Member Sandahl suggested the removal of the reference "The City Council will make
a determination of further assistance depending on the severity of the disaster".
Council Member Sandahl said if the City does work on private property, there could be a fee
imposed for those services.
Council Member Rosenberg said, during clean-up from this summer's storm, she heard older
residents comment that they would set private tree debris to the curb and the residents would pay if
the City would take it away. This would also reduce the fee scalping if the City were involved.
Mr. Hughes reviewed the tree planting and maintenance plan, including the removal of trees
that cause damage to sidewalks and curbs in narrow boulevards would be reviewed on a case-by-
case basis by the Community Service Commission.
Council Member Enger said there needs to be a restriction of two times for curb/gutter
replacement unless the resident pays for the replanting of a new tree.
Mr. Hughes said there is cooperation with Public Works and the Community Service
Commission when they find a curb/gutter damaged from a tree.
Forestry Inspector/Operations Assistant Wroblewski reviewed the cost of replanting trees lost
from Dutch elm disease and this summer's storm. He said there is not enough funding to replace
trees from both losses.
Council Member Rosenberg explained a Garden Club plan for replacement of trees lost in the
storm for Madison Park.
Council Member Enger suggested the City contact Friends of the Park as another
organization for 1" to 1 1/2" trees for planting in the parks.
Operations Superintendent Hughes said vandalism is a problem with little trees.
Council Member Enger said most trees will survive and the residents will feel like they've
given back to the City.
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November 6, 2003
Council Member Enger asked about the cost of tree stump removal.
Forestry Inspector/Operations Assistant Wroblewski explained the grinding is done under
contract with staff doing the clean-up.
Council Member Enger suggested implementing a program that when boulevard diseased
trees are removed, the stump is left unless the homeowner agrees to pay half the cost.
Forestry Inspector/Operations Assistant Wroblewski said that if the homeowner does not
agree to pay for the stump removal it may be aesthetically unattractive.
Council Member Enger withdrew his suggestion for tree stump removal.
Council Member Sandahl said there appears to be not enough money for tree replacement.
Forestry Inspector/Operations Assistant Wroblewski explained the priority is tree replacement
for homeowners; the City is unable to replant parks.
Council Member Sandahl asked about trees along County roads.
Operations Superintendent Hughes explained some places have a wide right-of-way, some
may need easements. He said the City could put in the tree if the resident did the maintenance.
City Manager Orduno distributed the proposed 2004 license, permit and miscellaneous fees,
stating the fees were generally increased 3%. She said the fees were not increased to the
Springsted recommended amount even though that amount may represent the true cost, because the
City needs to keep in line with other cities.
Council Member Sandahl asked about the costs related to the abatement process.
Council Member Enger said the abatement charge needs to include all costs at the fully-
burdened rate because taxpayers should not pay for these services.
Council Member Enger provided to Operations Superintendent Hughes the City of St. Paul's
summary abatement rates and surcharges schedule.
City Manager Orduno asked the City Council to review the license, permit and miscellaneous
fees and contact her if there are questions.
Mayor Kirsch thanked staff for their efforts in providing tonight's budget information for City
Council review.
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Chery ru holz
Recording Secretary
Date Approved: November 25, 2003