12-01-03 Special
CITY COUNCIL MEETING MINUTES
Richfield, Minnesota
Special City Council Meeting
December 1, 2003
The meeting was called to order by Mayor Kirsch at 6:30 p.m.
Members Present:
Martin Kirsch, Mayor; Susan Rosenberg; Gertrude Ulrich (arrived 6:35);
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; Brad Sveum, Assistant Fire Chief/Fire Marshal;
and Cheryl Krumholz, Recording Secretary.
Item #1
City Manager Orduno announced that Congressman Sabo has placed $3 million for the
Lyndale Avenue bridge reconstruction in the Federal Transportation Appropriations Bill. This
brings the total to $13 million for that bridge.
City Manager Orduno made a presentation entitled, 2004 Proposed Tax Levy - "Focus on
Services and Stability - Now and Into the Future": (Clerk's File No. C-395)
. Timetable and Key Events
. 2004 Budget Influences
. Major Issues For 2004 and Beyond
. Levy Limits for Minnesota Cities
. History of State Aid Losses
. LGA Comparisons
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December 1 , 2003
. City Council Budget Preparation Philosophy
. Gross Tax Levy History
. 2004 Proposed Budget
. Full Time Regular Personnel
. General Fund History
. 2004 Department/Division Budget Reductions
· 2004 (2003) Proposed Budget General Fund Revenues
. 1994/2004 Expenditure Profile
. Property Tax and Police/Fire Costs
. 2004 Monthly Costs for Services
. Critical Issues
. Where are we going?
Administrative Services Director Devich continued the presentation: (included in Clerk's File
No. C-395)
. 2004 Proposed Levy Estimated Impact
. 2004 Tax Capacity Rates
. Business Property Impacts
City Manager Orduno referenced the headline in a Letter to the Editor in the November 27,
2003 Richfield Sun Current that stated the City's custodian had been fired - she said a correction
would be printed because the employee had been laid-off from his position.
Council Member Sandahl asked if the 12% estimated market value increase referenced in
Mr. Devich's.presentation was across the board.
Administrative Services Director Devich said 12% is the maximum increase this year and
will increase to 15% next year as establi~hed by the State.
City Manager Orduno stated it is important to note that Richfield's budget reductions started
in January 2002; most cities did not start reducing their budget until 2003. She said there has
been a best effort to fulfill the City Council's budget directives provided in January, with maintaining
the quality of City services.
Public Works Director Eastling made a presentation related to water, sewer and stormwater
rates: (Clerk's File No. C-395)
. Water Rate History
. Water Fund Operating Results
. 2002 Water Maintenance Operating Budget
. City Sewer Rates
. 2002 Sewer Maintenance Operating Budget
. MCES Charges
. Sewer Fund Operating Results
. Storm Sewer Rate History
. Utility Rate comparison for 20,000 gallon usage per quarter
Public Works Director Eastling said the increase is approximately 3% for water, sewer and
storm sewer rates. He added that the City Council's direction is to have rates increase steadily
instead of up/down rate adjustments.
Public Works Director Eastling explained the MCES charges and how they're determined.
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December 1, 2003
Council Member Enger asked Vl/hy a deficit is in the water fund operating budget.
Public Works Director Eastling explained rainfall amounts impact the fund because of how
much water is sold.
Mike Smith, 7044 Oliver Avenue, complimented the City in their efforts to reduce
expenditures. He referenced his property tax increase of 19 1/2% and feels he is being treated
unfairly because his increase appears out of balance when he hears the maximum increase is
12%.
City Manager Orduno requested he meet individually with Finance Manager Chris Regis to
discuss his property taxes.
Council Member Enger requested the City Council be provided the explanation for Mr.
Smith's percentage of increase.
Woody Duvlea, 7345 Lyndale Avenue, stated his taxes increased 19.4% and feels it is
related to fewer properties left in the City to pay taxes. He said the comparison of monthly costs
for services in Mr. Devich's presentation needs to be kept in perspective because services like
CATV are used daily and Public Safety/Fire services are used on an as-needed basis.
Kip Boie, 6514 Third Avenue, stated he had conducted anecdotal certificate of real estate
value research today. He questioned his taxable market value and 18% tax increase since he has
made no significant improvements to his property. He said he'd like to schedule an appointment to
discuss the justification of this value.
City Manager Orduno explained that Hennepin County assesses the property, not the City
of Richfield, so the assessor will attend the discussion along with City staff.
City Manager Orduno stated the maximum market value alone is 12% on most homes in
2004, which sunsets in 2006. She said very few homes pay taxes on the full value and that
represents the largest portion of the tax increase.
Council Member Ulrich asked Mr. Boie, since he is an east-side resident, how he felt about
the low frequency noise study expenditure of $60,000 prior to the north-south runway being up and
running. She said if a study is not conducted the east-side of Richfield may suffer, but all of
Richfield is impacted. She said the study could be cut from the budget as a cost-saving measure.
Mr. Boie said he supported the study because $60,000 out of a $16 million budget did not
seem like a lot of money. He said the airport noise is evident by being in your backyard and
stopping conversations because of the noise.
Rochelle Reynolds, 6856 Park Avenue, stated she believed her taxes were high and
requested an appointment to discuss this with staff.
Art Felgate, 7329 Girard Avenue, stated he would be surprised if there were no federal
grant funds available to conduct the low frequency noise study.
Council Member Ulrich responded that trying to obtain grants has been on-going but
unsuccessful.
Mr. Felgate said it appears the street light fee has been resurrected as a utility franchise fee
with the amount doubled from $300,000 to $600,000. He expressed concern of a creeping
expansion of the fee and the justification of the increase.
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December 1, 2003
Mr. Felgate spoke about municipal liquor store revenues and $700,000 in unallocated funds
in 2004, which is more than the proposed frctnchise fee. He added that most people have not
experienced a pay increase in several years and a tax increase might be necessary at some point,
but not until people have received personal increases, otherwise families will need to adjust their
budgets.
Council Member Ulrich explained that liquor funds are used for capital improvements,
primarily for Park and Recreation. She said there appears to be no thought amongst the citizenry
to change that designation.
Council Member Sandahl stated the funds are not unallocated; they're used to payoff the
pool renovation expenses.
City Manager Orduno added the second ice sheet is also paid by liquor funds.
Finance Manager Regis explained the purposes of the 2004 liquor funds.
Council Member Sandahl stated the street light fee is not resurrected, it was reviewed along
with the franchise fees. Discussion at the last City Council Worksession resulted in the franchise
fees making sense in light of reducing the dependence on State aid. If additional local government
aid is lost, the street light fee may b~ reconsidered.
Larry Wozniczka, 6744 Wentworth Avenue, stated it is unclear if the HRA budget is part of
the City or other taxing jurisdictions portion of the property tax.
City Manager Orduno said the HRA is a separate entity of the City with a separate budget
as established years ago. She added the HRA is within the City portion of the property tax.
Mr. Wozniczka stated his property tax increased 19%, but will be more because the Truth-
in-Taxation notice does not reflect the franchise fees. It is important to understand why the
increases are at that level and questioned if it could be related to apartment complex values. He
requested the Best Buy valuation be reviewed because it may impact single family homeowner
property taxes and there should be positive returns from Best Buy with significant administrative
costs coming to the HRA. He questioned debt service, fiscal disparities and the Penn Avenue
bridge project. He said the 19% property tax increase could be due to some additional costs the
residents have not been made aware of.
Finance Manager Regis explained the only debt service is for the General Obligation
Capital Notes which is the only thing that affects taxe~.
Mr. Wozniczka expressed concern regarding cuts in services. He questioned the Wood
Lake Nature Center Naturalist position discussion at a City Council Worksession, the importance of
the Half Marathon, the staff time spent on the event and $20,000 of storm water utility funds to
cover the Naturalist position. He suggested the position be revisited and formalized at a Regular
City Council meeting.
Mr. Wozniczka questioned the need for a part-time Communications Assistant since there
has been a cutback in providing Staff Reports to the library prior to a City Councilor HRA meeting.
City Manager Orduno said the Communications Assistant is not funded through the General
Fund, but by cable franchise revenues. She added that technology is changing and the web site is
growing as a source of information which this position will be monitoring, along with other
communication activities.
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December 1, 2003
Council Member Rosenberg cOrnmented onthe importance of this position and that the Arts
and Celebrations Commissions are anxlol.l'sly awaiting working with this person.
Public Works Director Eastling explained the expenses going to the Wood Lake Nature
Center position, including the federal and state mandates regarding education on how water is kept
clean and how Wood Lake Nature Center has an understanding of this element of education.
Recreation Services Director Topitzhofer explained the Naturalist position is responsible for
considerable amount of teaching, in addition to working on the marathon with the proceeds used to
continue environmental education to the schools. He added that filling this position was
considered by comparing the savings and revenues lost.
Mr. Wozniczka suggested a salary freeze for employees and a moratorium on new hires
without City Council deliberation to control costs.
Council Member Ulrich said there is no moratorium on hiring, staff is being laid-off.
Mr. Wozniczka clarified the moratorium should be on replacement positions through
attrition.
Council Member Ulrich stated that is a different category and gets into the levels of service.
City Manager Orduno reviewed the 21 positions eliminated from the budget, including those
left vacant through attrition.
Mr. Wozniczka asked about the reduction in the personnel count in 2002 and 2003.
City Manager Orduno said 10 1/2 in each year.
Mr. Wozniczl<a clarified he did not mean a moratorium to stop operations. He commented
on the recent Capital Notes bond sale related to the cost to taxpayers on the interest paid on the
principal until the notes are used.
City Manager Orduno stated the $30,000 savings was deducted from the levy.
Finance Manager Regis explained interest is not paid until the equipment is purchased in
2004 and that it was more financially prudent to take advantage of the low rates now.
Mr. Wozniczka commented on the $40 million fund balance in the various accounts.
Finance Manager Regis asked what accounts Mr. Wozniczka was referencing.
Council Member Enger asked Mr. Wozniczka if he was referring to investment accounts.
Mr. Wozniczka said yes.
Finance Manager Regis explained it is a common practice to pool funds to meet cash flow
commitments throughout the year.
City Manager Orduno explained the State tax revenue payments received by the City
during the year.
Mr. Wozniczka suggested not using equipment bonds but borrowing from other funds.
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December 1, 2003
City Manager Orduno explained many funds are dedicated and cannot be co-mingled
because of strict State and Federal guidelines.
Council Member Ulrich stated every governmental agency has budget guidelines.
Mr. Wozniczka questioned the need to hire project employees because in some instances,
the position is not dropped when the project is finished. He hoped the recent Engineering vacancy
would not be filled because he understood this position was hired for the Best Buy project which is
now finished. A similar history applies to the 76th Street project but that position remains in place.
He encouraged a review of HRA staffing levels, also.
Public Works Director Eastling reviewed the three Engineering position vacancies and said
one will be filled because the Lyndale Avenue bridge project federal funds are now available. No
other project positions are filled.
Council Member Sandahl added the Crosstown interchange project is also underway.
City Manager Orduno added projects such as these are of great magnitude and lengthy.
Mr. Wozniczka suggested that project positions have sunsets.
Mr. Wozniczka commented on the City Hall security system and that security in some areas
is marginally needed. The City Council should review the security system expenditures and
economize. He added that he didn't see a need for security in the administrative offices at City
Hall because it has worked satisfactorily in the past and he wondered who is trying to protect/hide.
City Manager Orduno explained there is no security system other than now requiring people
to sign in for ID badges and be escorted to the department being visited. The City Hall building is
very accessible. In today's society, it is important to know who is in the building.
Mr. Wozniczka questioned the recently approved HRA and City Council Public Expenditure
Policy because it made spending more libel and encouraged the City Council to review budgets to
see how much these types of expenditures have increased. He asked the City Council to consider
the people paying the bill as there are many fixed and low-income residents and those needs need
to be considered.
City Manager Orduno explained that City activities are reimbursed and were the first budget
cuts made and continue to be consistently reduced.
M/Rosenberg, S/Sandahl to close the public hearinq.
Motion carried 5-0.
M/Ulrich, S/Sandahl to schedule final action on the levv and budqet items and utility rates
for the reoular City Council meetino of December 9. 2003.
Motion carried 5-0.
Council Member Rosenberg stated the franchise fees are proposed at $1.45 per month on
each utility (gas and electric) per residence. She added this fee should be considered an
investment in the community and it would be foolish to pass this up based upon what needs to be
done to maintain Richfield. This budget looks at the future and staff has been responsive to the
City Council direction. She took issue with the implication that the City is not doing things correctly.
She added that home values should increase.
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December 1, 2003
Mayor Kirsch reminded residents that this budget is the City Council's responsibility and, by
formulating goals, City staff prepares the budget. The loss of State aid has impacted Richfield, but
the budget is balanced and quality services continue to be provided. Richfield needs to become
self-sufficient and not rely upon State aids. He commended staff for their efforts in preparing the
budget.
The meeting was adjourned by unanimous consent at 8:19 p.m.
Date Approved: January 13. 2004
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Recording Secretary