08-16-07 Special
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CITY COUNCIL MEETING MINUTES
Richfield, Minnesota
Special City Council Meeting
August 16, 2007
I CALL TO ORDER
The meeting was called to order by Mayor Goettel at 5:37 p.m.
I ROLL CALL
Members Present:
Debbie Goettel, Mayor; Susan Rosenberg; Sue Sandahl; Fred Wroge; and
Bill Kilian.
Staff Present:
Steve Devich, City Manager; Mike Eastling, Public Works Director; Bruce
Palmborg, Community Development Director; Jim Topitzhofer, Recreation
Services Director; Brad Sveum, Fire Services Director; Dan Scott, Public
Safety Director; Bill Fillmore, Municipal Liquor Operations Director; Chris
Regis, Finance Manager; Pam Dmytrenko, Assistant to City Manager;
John Stark, Housing & Redevelopment Manager/Assistant Community
Development Director; and Cheryl Krumholz, Recording Secretary.
Item #1
DISCUSSION OF 2007 REVISED/2008 PROPOSED BUDGET AND 2008
PRELIMINARY TAX LEVY
City Manager Devich stated the data from Hennepin County has not yet been provided to
the City to make accurate property tax impact projections so the best estimates will be discussed
tonight. This budget discussion is being held earlier than in previous years as requested by the
City Council.
City Manager Devich reviewed the assessed property value process, which is based on
data from the previous year. An increase value of 2.8% is an average.
City Manager Devich and Finance Manager Regis presented the 2007 Revised/2008
Proposed Budget overview.
Finance Manager Regis said the proposed property tax levy increase is 8.4%.
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City Manager Devich discussed the bond sales for the new maintenance facility and
intersection improvements. Most of the tax levy increase is due to the issuance of the two bonds
and is needed to pay the debt service.
City Manager Devich reviewed the differences between a tax abatement district and tax
increment financing. The Cedar Point tax abatement is only the City's portion because the School
District and Hennepin County did not agree to abate their portions. However, Hennepin County did
provide a $2 million grant to the City.
City Manager Devich explained all of the 2008 allotment of local government aid (LGA) was
used to retain the $700,000 reserve from last year. It is a City Council policy decision to set aside
a portion of this year's allocation, requiring deeper budget cuts, which could result in a higher
property tax levy.
Council Member Wroge said fluctuations impact taxpayers and he is trying to figure out how
to eliminate that.
City Manager Devich 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.
Council Member Kilian asked about in-house services versus contracting with a legal firm.
City Manager Devich stated most cities contract legal services which is the most cost-
effective approach. The cost has not been researched recently, however.
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 using Hennepin County assessing staff at City Hall.
City Manager Devich explained each county handles assessing differently and in Hennepin
County the cities provide the services. Contracting their services includes providing office space
for Hennepin County assessing staff. Each year the contract is to be renewed, he does a cost
comparison.
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.
Council Member Wroge asked about the Bloomington contracts.
Public Safety Director Scott explained the City only pays for the time Bloomington services
are used and costs are monitored.
Council Member Kilian asked about reimbursement for services when Richfield is
called/requested to assist other cities.
Public Safety Director Scott explained the reimbursement process.
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.
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Council Member Kilian asked about workers'compensation costs.
City Manager Devich explained the self-insurance workers' compensation process including
following the basic manual rate changes and experience modification based upon prior year usage
of the benefit.
Community Development Director Palmborg reviewed and answered questions regarding
the revised and proposed Community Development budget, including the increase in personal
services.
Mayor Goettel asked about the Multi Jurisdictional Program funds.
Community Development Director Palmborg explained this funding from Hennepin County
was in lieu of participating in the tax abatement.
Council Member Wroge asked about the vacant pad on 76th Street/Lyndale Avenue by
Candlewood Suites.
Community Development Director Palmborg discussed the expansion being considered by
Richfield-Bloomington Honda. A preliminary agreement assessing design and cost feasibility,
including the vacant parcel, is being prepared to address a host of issues.
Council Member Wroge said a restaurant could not be built on this pad because multi-use,
multi-level use was required but now a single use is being permitted.
Community Development Director Palmborg said this is an already existing business and
building in the area.
Council Member Wroge asked about the HRA's involvement with determining who can
financially afford a home as part of the HRA's loan programs.
City Manager Devich explained the HRA's foreclosure subordination policy, including a
value to loan ration.
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.
There was discussion related to the franchise fees.
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.
Council Member Wroge asked why the swimming pool closes before Labor Day.
Recreation Services Director Topitzhofer explained most pool employees leave for college
so the last week of being open is a small staffing level.
Council Member Wroge discussed the mini-golf site not making a profit and the possible
major rehabilitation expenses in the near future. He suggested discontinuing and closing down
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mini-golf or building a new one next to the pool to generate a profit or if it doesn't move, have it
operated by a private company. The current site could be considered as a dog exercise area.
Recreation Services Director Topitzhofer added the mini-golf concession area in the shelter
could be vacated to expand the new Arts Center.
Council Member Wroge said he supports the Ice Arena and pool, whether they make
money or not.
Mayor Goettel agreed they were a huge amenity.
Recreation Services Director Topitzhofer stated the decision to renovate the mini-golf site
will be in 2010, which is in the master park planning process.
City Manager Devich discussed the financial reports and cash flow perspective of the
shelter and mini-golf.
Council Member Sandahl asked about the possibility of the current site becoming a golf
driving range.
Recreation Services Director Topitzhofer responded that there was not enough length and
there's less chance of success when it's not connected to a golf course.
Council Member Kilian discussed the depreciation of non-cash flow expenses and
continued operations.
Council Member Wroge said a profit should be made before depreciation is taken.
Council Member Sandahl said residents have expressed an interest in a disc golf facility.
Recreation Services Director T opitzhofer responded this is being considered as part of the
Master Park Plan.
Council Member Kilian suggested bag dispensers be provided in the parks for picking up
dog feces.
Municipal Liquor Operations Director Fillmore reviewed and answered questions regarding
the proposed and revised Liquor Operations budget.
Council Member Sandahl asked about customer comments on the 66th Street/Portland
Avenue roundabout.
Municipal Liquor Operations Director Fillmore said comments have included increased
safety and a learning curve to drive it.
Council Member Wroge asked about the profits at the Shops store.
Municipal Liquor Operations Director Fillmore discussed the profitability of the Shops at
Lyndale liquor store; including better purchasing power, shared expenses with the other stores,
commensurate amount of sales operating income.
Council Member Wroge discussed the potential of closing the Shops store. Customers
would probably go to the Penn and Lyndale Avenue stores. He said there should be more of a
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profit after opening 10 years ago, even with the Best Buy and Kensington developments. There
appears to be a disconnect between the four stores. The Shops store could be a restaurant,
Council Member Wroge expressed concern that the Special Revenue Fund liquor transfer
to parks has been reduced from $500,000 to $450,000.
Finance Manager Regis explained the $50,000 was re-invested back in the store.
Council Member Kilian said the Shops store is not cannibalizing the other three stores.
Council Member Rosenberg asked about the profit margin on cigarette sales and
considering eliminating their sales at the stores.
Municipal Liquor Operations Director Fillmore explained the cigarette sales are not real
profitable but are part of the store package. The cigarette selection has been reduced and is not
marketed.
Mayor Goettel discussed her concerns regarding the LGA formula and its volatility to impact
the City budget. She said she did not want to lose the rainy day fund because reserves are
needed.
Council Member Wroge asked how much the levy could be reduced if all the LGA was
used. He said he'd like to see the levy at a 4-5% increase and he'd like to make a way to have that
happen.
Council Member Wroge suggested the rainy day fund be zero to pay down taxes. There
are too many residents on a fixed income. He said he's concerned for this year, not next year, and
would not support the proposed 8.4% levy increase.
Finance Manager Regis explained the primary reason for the increase is the debt service
levy related to the two bonds.
City Manager Devich stated concern if the $700,000 reserve and all the 2008 proposed
LGA is spent to reduce taxes, there is a minimal reserve remaining.
Council Member Sandahl said the reserve needs to be maintained because of the
uncertainty of LGA.
Council Member Rosenberg asked about franchise fees to pay for street maintenance.
City Manager Devich explained they are built into the budget. If they're removed, an
additional $720,000 would need to be found in the budget.
Council Member Rosenberg said she would want to preserve staff if the levy is reduced to a
4-5% increase.
City Manager Devich explained most of the budget is for Public Safety, Public Works and
Fire Services funding.
Council Member Sandahl stated that if there was no debt service levy, the increase would
be 3.08%.
Council Member Rosenberg said she supported reducing the tax levy because there are
many poor people in the community.
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Budget presentation materials are Clerk's File No. C-430.
I ADJOURNMENT
The meeting was adjourned by unanimous consent at 9:27 p.m.
Date Approved: September 11, 2007