07-22-85 agenda CITY OF RICHFIELD, MINNESOTA ~1~~/ -
Office of City Manager
Council Letter No. 277
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Regional Transit Board Appointment
Council Members:
City Council members have requested that the question of
endorsing a person for appointment to the Regional Transit Board
be placed on the agenda for consideration.
Several weeks ago, Allison Fuhr called the City Manager and
explained that 1985 legislation had eliminated the old 15 member
Regional Transit Board and replaced it with a 9 member board.
She said she has represented Bloomington and Richfield
interests in the past and asked if Richfield would support her
appointment to the Regicnal Transit Board.
• The City Manager then made a mistake by not knowing that a
Richfield resident, Juanita Collins, also served on the Regional
Transit Board.
Without this knowledge, the City Manager discussed the
request from Allison Fuhr with Mayor Hamilton. Mayor Hamilton
approved sending a letter of endorsement under both of our
signatures. Mayor Hamilton was also unaware that Juanita
Collins was a Regional Transit Board representative.
This matter should have been placed on the Council agenda
before any endorsement was given in order to obtain City Council
direction. The mistake was unintentional.
The City Manager. has called the Metro Council office and has
had the letter endorsing Allison Fuhr removed from the file.
This item is placed on the Council agenda for consideration.
Respectfull u tted,
w
' ~ .
ohn G. Cartw fight
• City Manager
JGC/eja
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
• Council Letter No. 276
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: $5,900,000 Variable Rate Demand Purchase
Commercial Development Revenue Bonds, Series
1984 (Market Plaza Commercial Jcint Venture
Project)
Council Members:
Backgraund
At the June 6, 1985, City Council meeting, a resolution was
considered and passed which had the purpose of amending the loan
and indenture agreements by changing the deadline for the
disbursement of commerical development revenue~(IDB's) bonds and
to obtain a replacement letter of credit for the shopping mall
• component of the Market Plaza project.
In December of 1984, Market Plaza developers, utilizing the
marketing services of Piper, Jaffray and Hopwood, sold the bonds
to Cargill for a temporary six month period to allow additional
time to complete the financial arrangements in order to market
the bond issue. The financial industry refers to this procedure
as "parking-the-bond-issue".
The June 24 resolution granted an extension of time to
finalize arrangements for the permanent financing of the
$5,900,000 bond issue from July 1, 1985, to August 5, 1985.
What The Council Is Being Asked To Do
The resolution before the City Council at the July 22, 1985,
Council meeting radifie_s the previous actions of June 24, 1985,
for extending the time of the "parked" bond issue. Also,
the resolution approves further amendments made to the Indenture
and Loan Agreement since June 24.
Attorney David Kennedy of the City Attorney's office has
approved the resolution and reviewed the documents referred to.
He recommends Council approval of the resolution.
R pectf bmitted,
• ~
John G. Car rig~~
City Manager
JGC/eja
RESOLUTION RATIFYING JUNE 24, 1985
ACTION OF THE CITY COUNCIL IN CONNECTION
WITH EXTENSION OF DISBURSEMENT DATE AND
AMENDMENTS TO VARIOUS DOCUMENTS PERTAINING
TO THE CITY'S $5,900,000 VARIABLE RATE DEMAND
PURCHASE COMMERCIAL. DEVELOPMENT REVENUE BONDS,
SERIES 1984 (MARKET PLAZA COMMERCIAL JOINT VENTURE
PROJECT) (the "BONDS") AND APPROVING FURTHER
AMENDMENTS TO DOCUMENTS AND OTHER MATTERS IN
CONNECTION WITH THE BONDS
BE IT RESOLVED by the Council of the City of
Richfield, Minnesota, as follows:
WHEREAS, on December 27, 1984, the Council approved,
pursuant to Resolution No. 6981, the issuance by the City of
its $5,900,000 Variable Rate Demand Purchase Commercial Develop-
ment Revenue Bonds, Series 1984 (the "Bonds"), the proceeds of
which are to be used to finance an approximately 70.,000 square
foot building and related improvements including parking facili-
ties and equipment suitable for a retail shopping facility (the
"Project"). .The Bonds were issued in accordance .with a Bond
Purchase Agreement dated as of December 28, 1984 (the "Purchase.
Agreement") between the City, Market Plaza Commercial Joint
Venture, a Minnesota joint venture partnership (the "Company")
and Cargill Export, fnc. (the "Bond Purchaser").
WHEREAS, pursuant to a Loan Agreement dated as of
December 1, 1984 between the City as Lender and the Company
as Borrower (the "Loan Agreement"), the City loaned the proceeds
of the Bonds to the Company to partially finance the cost of .
the Project. The Basic Payments made by the Company under the
Loan Agreement are fixed so as to produce revenue sufficient to
pay the principal of, premium,. if any, and interest on the Bonds
when due. The City assigned its rights to the Basic Payments
.and certain other rights under the Loan Agreement to First Trust
Company of Saint Paul, in St. Paul, Minnesota (the "Trustee") as
security for payment of the Bonds under an Indenture of Trust
dated as of December 1, 1984 (the "Indenture"). To further secure
the payment of the Bonds and the interest thereon and of the pur-
chase price of any Bonds required to be purchased under Section
2-18 of the Indenture, the City entered into a Remarketing Agree-
ment dated as of December 1, 1984 with Piper, Jaffray & Hopwood,
Inc., the Trustee and the Company (the "Remarketing Agreement")
and entered into a Letter of Credit Reimbursement Agreement dated
as of December 1, 1984 (the "Reimbursement Agreement") with The
First National Bank of Saint Paul (the "Bank"), the Company and
the Trustee pursuant to which an Initial Credit (as defined in the
I
Indenture) was issued.. The Council approved the Loan Agreement,
Indenture, Remarketing Agreement, Reimbursement Agreement, and
all other documents necessary to the transaction and directed
execution of the same.
WHEREAS, pursuant. to the terms of the Indenture, the
Company .has determined to replace the Initial Credit with a
.Replacement Credit (as defined in the Indenture) now. to be pro-
vided by Midwest Federal Savings and Loan Association of
Minneapolis and to remarket the Bonds at a fixed rate on August
5, 1985. Upon remarketing, the Replacement Credit will secure
payment on the Bonds as provided in the Indenture.
WHEREAS, pursuant to Resolution No. adopted by
the City Council on June 24, 1984 (the "Prior Amending Resolution"),
the City approved various amendments to the Indenture-and Loan..
Agreement to incorporate the terms of the Replacement Credit
and the remarketing of the Bonds and extended the Disbursement
Date, as defined in the Prior Amending Resolution, to August 5,
1985. .
WHEREAS, further amendments have been made to the
- Indenture and .Loan Agreement since the date of adoption of the
Prior Amending. Re solution to facilitate the issuance of the
Replacement Credit and remarketing of the Bonds.
NOW, THEREFORE, BE IT RESOLVEA,by the City Council of
the City of Richfield, Minnesota, as follows:
1. The approval. of amendments to the Indenture as
referenced in the Prior Amending Resolution are hereby ratified
and, subject to the approval of the City Attorney, the additional
amendments to the Indenture made since the date of the adoption
of the Prior Amending Resolution are approved substantially in
the form submitted and on file in the Office. of the City Clerk.
2. The approval of amendments to the Loan ,Agreement as
referenced in the~Prior Amending Resolution are hereby ratified
and, subject to the approval of the City Attorney, the additional
amendments to the Loan Agreement made since the date of the
adoption of the Prior Amending Resolution are approved substan-
tially in the form submitted and. on file in the Office of the
City Clerk.
3. The extension of the Disbursement Date from July 1,
1985 to August 5, 1985 and the execution of the Certificate.
as to Extension of Disbursement Date as approved in the Prior
Amending Resolution are hereby ratified.
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4. The Mayor and City Manager are hereby authorized and
directed to execute the Indenture and Loan Agreement, as amended
and herein approved. Such approval includes approval of such
additional details therein as may be necessary and appropriate
and such modifications thereof, deletions therefrom and addi-
tions thereto as may be necessary and appropriate and approved
by the City Attorney prior to the execution of the documents.
The execution of any instrument by the appropriate officer or
officers of the City herein authorized shall be conclusive
evidence of the approval of such documents in accordance with
the terms hereof. In the absence (or inability) of the offi-
cials authorized herein to execute any of the documents herein
referred to, the documents may be executed by any officer or
member of the City acting in theix behalf.
Passed: July 22, 1985
Mayor
Attest
City Manager
(SEAL)
•
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Extract of Minutes of Meeting of the
. City Council of the
City of Richfield, Minnesota
Pursuant to due call and notice thereof, a regular
meeting of the City Council of the City of Richfield, Minnesota
was duly held at the City Hall in said City on Monday, the 22nd
day of July, 1985, at o'clock p.m.
The following members were present:
and~the following were absent:
Member introduced the following
resolution and moved its adoption:
Res.
RESOLUTION RATIFYING JUNE 24, 1985
ACTION OF THE CITY COUNCIL IN CONNECTION
WITH EXTENSION OF DISBURSEPdENT DATE AND
AMENDMENTS TO VARIOUS DOCUMENTS PERTAINING
TO THE CITY'S $5,900,000 VARIABLE RATE DEMAND
PURCHASE COMMERCIAL DEVELOPMENT REVENUE BONDS,
SERIES 1984 (MARKET PLAZA COMMERCIAL JOINT VENTURE
PROJECT) (the "BONDS") AND APPROVING FURTHER
AMENDMENTS TO DOCUMENTS AND OTHER MATTERS IN
CONNECTION WITH THE BONDS
The motion for the adoption of the foregoing resolution
was duly seconded by member and upon vote being
taken thereon the following voted in favor thereof:
and the following voted against the same:
whereupon said resolution was declared duly passed and adopted.
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STATE OF MINNESOTA
COUNTY OF HENNEPIN
CITY OF RICHFIELD
I, the undersigned, being the duly qualified Clerk
of the City Council of the City of Richfield, Minnesota, DO
HEREBY CERTIFY that I have compared the attached and foregoing
extract of minutes with the original thereof on file in my
office, and that the same is a full, true and complete trans-
cript of the minutes of a meeting of the City Council of said
City duly called and held on the date therein indicated, inso-
far as such matters relate to ratifying extension of the Dis-
bursement Date and amendments to the Indenture and Loan Agree-
ment, and approving additional amendments and other matters,
in connection with the $5,900,000 Variable Rate Demand Purchase
Commercial Development Revenue Bonds, Series 1984 (Market
Plata Commercial Joint Venture Project).
WITNESS, my hand and the seal of said City this
day of July, 1985.
(SEAL)
City Clerk
CITY OF RICHFIELD, MINNESOTA
• Office of City Manager
Council Letter No. 275
Agenda July 22, 1985
.The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: New Minnesota State Law Passed that Allows for the
Funding of the Unfunded Pension Liability
Council Members:
The writer. has received a June 2b, 1985, communication
(attached) from Miller and Schroeder Municipals, Ine., that
offers a new method to deal with the problem facing
municipalities of funding the unfunded liability of pension
plans.
Richfield city government funds two plans at this time. They
are:
1. Richfield Police Relief Assn. Unfunded Liability
$3,024,385.
2. Richfield Fire Relief Assn. Unfunded Liability
$4,156,251.
The Minnesota Legislature has passed a 1985 law that allows for
the funding of the unfunded pension liability through the
selling of bonds and the purchase of annuities. Richfield may
be able to reduce its unfunded liability payments each year
through investment programs, thus reducing the taxable revenue
needed to handle the liability each year.
The writer will pursue this innovative financing tool to
determine if it can be a useful program to lower property taxes
in Richfield. To that end, Administrative Services Director
Steve Devich is currently working with Miller & Schroeder
Municipals, Inc, to develop an alternate plan for funding
pension liabilities. Once the calculations have been finalized
the writer will report the results to the City Council at a
future meeting.
spectfu s fitted,
~ //I/
K/
John G. Cartes ht
City Manager
JGC/eja •
cc: Steve Devich, Administrative Services Director
Tom Morgan, Public Safety Director
Don Fondrick, Community Services Director
Dennis Kraft, Community Development Director
Bill Fillmore, Liquor Operations Director
Jean Mitchell, Finance Manager
Clayton LeFevere, City Attorney
Toll Free Minnesota (800)862-6002 l~
Toll Free Other States (800) 328.6122 `
Miller & Schroeder Municipals, Inc.
IYorthwestem Financial Center, 7900 Xerxes Avenue South, Minneapolis, Minnesota 55431 • (612) 831-1500
June 26, 1985.
Mr. John G. Cartwright, City Manager,
City of Richfield
6700 Portland Avenue
Richfield, Minnesota 55423
Dear Mr. Cartwright:
One of the growing problems of municipalities today is unfunded lia-
bilty from various pension programs. It is important for a city to
be able to deal with this liability effectively, from a financial
point of view..
The Minnesota Legislature has just passed a law that allows for the
funding. of the unfunded pension liability through the selling of
bonds and the purchase of annuities. Municipalities would be able
to reduce their unfunded liability payments each year through
investment programs thus reducing the taxable revenue needed to
handle the liability each year.
Miller & Schroeder Municipals, Inc. and Dain Bosworth, Inc., having
worked with the League of Minnesota Cities and staffs from the dif-
ferent pension programs throughout the state, have helped in the
development of this legislation. The legislation is statewide. It
is not mandatory. Its passage allows cities to use this important
tool, but does not force them to bond for unfunded liab ilities.
Keeping this in mind, Miller & Schroeder and Dain Bosworth have
prepared a bonding program to deal with unfunded pension
liabilities. The state law has several aspects. It allows cities
to issue variable rate demand notes which will provide even greater
savings and, in turn, a more accelerated rate of reducing the yearlq
payments to the unfunded liab ility. Miller & Schroeder Municipals,
Inc. and Dain Bosworth, Inc. would be willing to negotiate such
variable rate demand notes. The interest rate could be as low-as
five or six percent using variable rate demand notes versus eight to
nine percent for fixed rate bonds. A city would enjoy sufficient
savings each year because it would be able to purchase annuities at
effective annual rates as high as ten or eleven percent.
Headquarters: Minneapolis, Minnesota
Branch Offices: Downtown Minneapolis•SolanaBeach, California •SantaMonica, California • northbrook, lllinois•St.Paul,Minnesota•1yaples,Florida•Tallahassee, Florida•GarsonCiry, Nevada
Member of the Securities Irnestor Protection Corporation
i~-~
June 26 1985
Page 2
Attached to this letter is an example showing how this program works
and, in turn, benefits the citq. As city officials, it is important
to constantly be aware of new and innovative ideas that have devel-
oped in municipal finance which can be used to reduce the tax burden
to residents. This is a partial alternative to appropriating
dollars from the general funds for unfunded pension 7.iab ilities.
You have an opportunity to save tax revenues. Two articles dealing
with bonding for unfunded pension liabilities are provided for gour
review. They help egpiain the way the bonding program can work for
the good of cities.
This letter serves only as an introduction to the concept of
using bonds for pension purposes. We will be contacting qou to set
up a meeting to go over the program in more detail. If you agree
that this is a useful program for pour city, Miller & Schroeder and
Dain Bosworth would like to be hired to help your city implement
this program.
If you have questions before you hear from us, please contact
Lou DeMars of Miller & Schroeder at (612) 893-8935, or Dick Miller
of Dain Bosworth at (612) 371-7820.
Sincerely,.
o-~~~-~
Louis G. DeMars
Vice President
LGD/ smo
Enclosures
~ .
MILLER do SCHROEDER MUNICIPALS, INC.
Alternate Methods of Funding Pension .Liabilities
The basic premise is than a City needs to pay $100,000 per ye:u for
20 years to achieve full funding. A diferent annual contribution actually
requires only a proportionate change in the figure to determine the results.
1. At present levy taxes of $100,00Q per year for 20 years.
2. If a 20 year variable rate bond .were issu 'd now to purchase
an X9'4- annuity paying out the. .$100,000 annual requirement,
a bond issue of $805,000 -would be required (present value of
$100,000 per yer plus 196 -one
time issuance costs).
Annual debt service payable from taxes would be $73,436 based
on a present interest .rate o~~s57~lo.
The annual. savings in taxes is $26.564.
. 3. The cross-over provision allows a fixed rate bond to be issued,
with the proceeds invested in U.S. Government obligations so
as to be self-supporting, but available as "insurance" that the
variable rate will not exceed the cross-over bond rate. ([f it
does, the variable rate bonds are paid off and the debt service
on the cross;-over bond is then the tax levy.
A fixed rate bond issue of $815,000 is required (present value
of $100,000 per year plus 2% one time issuance costs.
An $815,000 20 year 9% bond required $89,280 per yer.
The annual savings in taxes is $10,720.
Conclusion:
The use of the new powers available to fund pension liabilities
would red~ice taxes required to between 89% and 74% of present
requirements.
-
The Hoed Huger _
wedneaday. April 17. 1985 -
1~~~
..Bridgeport, Conn.,
May Sell Bonds
To Fund Pensions
By Gcor~e Yacik
Bridgeport, Conn.. is considering However. Richard Sisi. the may
soiling 3T5 million of general obit- or's administrative assistant. said
Batton bonds to fund the city's po- Hawkins Delafteid "has assured
lice and' fire pension funds. us" in a letter that the bond issue
The bond issue was r. „r „sod by could be structured insuch a way to
Mayor Leonard S. Paoletta and :has retain its tax-exempt status.
been approved by the. city's ftnan• ;
ctal advisory committee. which Ac..,., ,ling to bond lawyers. bond
_ oversees Bridgeport's long-term ~ issues to fund pension funds would
spending. it is now before the ti- not necessarity violate federal arbt-
nance committee of the city's Com• trage regulations - !n which case
mon Council. their tax exemption might be ques-
Details of the bond Issue are tinned -but laws in some states
sketchy because it is still in the pre- might .prevent municipalities from
liminary stages. said city officials. .selling such bond Issues.
bond counsel, and the city's finan- Last year. Multnomah County
ctal adviser, Connecticut Bank & School District No. 1 in O on sold
Trust Co. 3110 million in bonds to ~lreance
But a.._... ~ing to total newspaper the unfunded [tabtHty of a teachers
a. the proceeds from the issut pensfon fund to what was txltrved
would be invested to fund 3267 mil- to be the first deal of its kind. '
Icon to pensions for ponce workers
and- ftrefight... y., per the next ZO Robert Stanley. vice president in
years. the municipal finance division of
Those pensions are currently un- Connecticut Bank Bc Trust. said
funded, with the city meeting its there is a possibility that the bonds
obitgatlons on a pay-as•you-go forihepensionfundwtllbepartofa.
basis. larger city bond issue. But he would
13rtdgepoet officials have said the not comment further on an Issue
bond lsgue would be the Elrst of its , because everything is in its "initial
kind In Connecticut. Mayor Pao- staRes."
' tetra has beeaquoted as saying that Mayor Paoletta and Robert M.
the issue would be legal. which Lange, Bridgeport's comptroller.
come opponents to the bond-issue ' have said that the city would have
have questioned. to raise taxes to fund the prnsion
The city has hit'M the New York funds if the bond Issue is not sold. '
City law. firm of Hawkins, Delafidd Bridgeport's GO bonds are rated
& Wood to study that question. But A by Moody's investors Serrtce and
Jay A. Holt. an attorney at the Rrm, A-minus by Standard 8c Poor's
would not comment. only to say. Corp.
"There is no bond Issue yet."
•
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•
•
. Tax-Exem t Bonds:
p
A New Method of Finance
g
Unf
landed Pension Liab' 'ties
An Oregon school district's $114 million bond issue successfully. surmounted an
• obstacle course of regulatoryy legislative and credit market deterrents, resulting in
substantial savings to .the district's. taxpayers and future retirement benefits that
can now be guaranteed to future pensioners..
By Reaee Wentela
rT'he tax-exempe boTtd market has ex: Backgrouxd During the 1970s, state system,. or joining the PERS system.
1 perienced considenble changes in the and local government pension systems re- Typically, only xhe larger political sub-
past decade. Not only have we seen mote ceived considerable aaencion from both divisions in the state have chosen io estab-
creative financing being marketed by the Congress and the General Acoounring fish their own pension system. The Porc
sophisticated and highly come ..:,.:ve Office, who were looking into the ado- land School District had been providing
in _......rnc banking industry, but bond quary of funding for government pension retirement benefits through the Teacher
financing for an expanding .,i......un of .,,....s. A polity was established in 1966 Retirement Fund Associarion (TRFA},
public purposes has also become common. under generally a...~ ..1 accounting prin- which was organized in 1912 to provide
The type of financing and purpose for ciples (GAAP) that required iota! govern- defined benefits to teacher of the Portland
wing tax-.......pt bonds have both niencs to begin accruing their actuarially School District. (A "defined benefit"
..::eel aaencion this parr year as d.........:ned contributions to the pension pension rystem is a plan which ~ ,.ises co
Congress and the Treasury Department system in their financial statements. [n pay certain benefits co employees when
searched for ways roreduce-the federal 1983, the National Council on Govern- various events occur. such as reciremene or
defidt by broadening the nation's mental Accounting's (NCGA) Scatemrnc 6 disability.)
tax base. reaffirmed the financial disclosure and [n 1980, the Portland School Board ho-
Ltunicipal bonds have typically been concriburion regiiiremenn of governmrnca! lieced is was desirable for the district•to
used by governmental units to finance units and public pension s~n..s. Natonal pursue advance funding of the TREE pen-
capiral projects chat serve a general public bond racing agrndes also consider- sloe liability br integrating is into PERS.
purpose, such as a s.. ~ oc water system. ing the source and level of public pension (An ad~artce-funded pension system is one
However, the term public purpose has system funding when analyzing the overall where funds are sec aside in the current
come ro include housing for the elderly or credit quality of munidpal issuers. Ic was year and incesced so -ehacsufficienc funds
disabled; industrial development for use by believed chat unless the cv...... rnsts of wilt be available co pay the future pension
private industry; and energy development future petuion payments were recognized, benefits as members retire.) The school
projects. the governmental unit was facing an un- ~ board's action was in accordance with
In 1984 a new type of public purpose certain finanaal liability, given the rising laws passed by the Oregon legislature.
for municipal bonds was used successfully costs of labor due ro inflation and the which declared such integration co be in
by titultnomah County School District ~1 increasing age of the workforce. the public interest because is would
in Portland, O..b...i, to fund its public The Oregon Public Employees Retire- eliminate the duplicati~•e efforts of TRF.~,
prnsion s} s unfunded accrued liabil- meat System (PER$) was established in .ind ~?•ould require the school district co
icy. The district wanted to begin funding 1945, providing retirement benefits co ail begin funding the future liability of mem-
its pension rystem on an annual basis, state and legislative employees and co hers as they earned their benefits. The
and L.E;n accumulating assets equal co the employees from a majority of political legislarure required the school district not
accrued r _,...,:,on liability, which resulted in subdivisions in the state. PERS operated co accept any new TRFA member afrer
an unfunded liability of ap~.....:macely on a fully funded basis, with empbyer July 1, 1973, and also provided some
S 159 million. This article describes the contribution races-based on actuarial options for funding the liability that would
series of aaangements. inducting legislative valuations. result from integrarion with PERS;
action and Internal Revenue Service Local governments in O, a have the TRFA had operated its retirement
rulings. chat made this bond issue possible. option of setting up their own pension system on spay-as-you-go basis, wick the
r~PRIL I98s • C,oVERNMENr F~YAKGE REVIEW 19
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school district making payments ro TRFA 1. Continuing the pay-as-you-ga system, Treasury believed that the successful
,tc payments became due to Such which actuaries e~imaced could end up im .~,...ents of the pension fund, inclu~
payments amounted to approxirnarely costing the district a total of 5692 bond proceeds. would likely result to a
59.1 million in fiscal 1984, On Juiy 1, million. The 1984 annual costs of 59.1 lower contribution race for all school dis-
1984, 1,269 members of TRFA were million were _..r ....1 co increase co triers. The district could also be expected
receiving retirement benefits, and 1,200 521 minion by the mid- co laco-1990s, to pay lower contribution races as a result
active members were entitled co future as more TRFA member reached of these investments, resulting in tower
`pension benefits. A member of TRFA was meet age. property tax races. As a result, the
rntided to receive a retirement allowance 2. Borrowing S1S9 million from PERS for Treasury concluded that proceeds of the
consisting of an employee•paid annuity 30 years, at an interest race of 7c/: per- Series Bonds would be used to acquire
and an employer~paid pension. The annu• cent. This would cost the district S 13.2 securities chat would produce yields
icy porrion was based on the amount of .million/year. and 5396 million over the . materially higher than. the yield on the
the member's own contributions, plus life of the loan. Series A bonds. «ithin the meaning of Sec-
earnings. The pension amount was based 3. Issuing G.O. bonds and buying an in- lion !03(c)(2} of the Internal Revenue
on the age, years of service and salary of surance company annuity contract co Code. These bonds would be considered
the member ac retirement, and was paid as pay PERS as pensions co TRFA mem- arbitrage boncG, and the Interest would
members retired and were entitled to bets became payable. The district could not be taz-exe»fpt jot the. bo,rdho/tiers.
monthly benefits. expect CO issue a~ ~ ximately 5117.5 On the Series B Bond issue, proceeds
million in bonds co meet the S 159 would go to a third parry and could also
million liability since the insurance be invested ac a race of return materially
company issuing the annuity contract higher than the interest rate paid by the
]public Employees Retirement Sysce~n discounts the liability at more Chan the disccicc. These bonds were not considered
j (PERS). PERS administers defined 71/z p_.....c interest rate assumed by arbitrage bonds under 103(c)(3) of the
retiremene benefits to more than 109,000 PERS actuaries. The districts finandal Internal Revenue Code. because the dis-
active members and 41.000 retired mem- advisors expected the 5117.5 million trice would not derive any substantial
bets of the state and local governments. bond issue would mature Deer 20 years, benefit from the investment of the Series B
The active members include more than and sell ac an interest race of 9.42 prr• Bond pra:eeds.
37,000 state employees, 46,000 school cent, assuming the bonds could be sold [n 1983, a second ruling was requested.
district employees and 36,000 ...~....bers of as A.~A-raced bonds with bond insist- but. in this instance, it was understood chat
other political subdivisions. The employer ante. Annual costs co the district were all of the bond proceeds would. go directly
contribution rate is set for each group expected co be 512.8 million, with local co an insurance company in rerum for its
periodically, by-PERS based on actuarial costs of S2S6 million until the debt a•as assumption of the district s accrued pen
srudies. These studies result in certain retired. slot liability. The insurance compam•
actuarial conclusions about the costs of to assume the liability of paying the pen
providing future benefits, after making lion binifits arising from the TREE mem-
assumptions about the membership's life Eerships service, before the integration
rxpeaanry, expected agt of retirement, reasury Ruling Requested. to 1980, dace. In this case, the insurance rnmpam's
how long members would live after retire- Tthe discrici s legs! counsel began seek- _ liability could increase or decrease based
ment, the number of sun ivors and so ing a private litter. ruling from *he U.S. ort the actual time of the member sretire-
forch. Oregon school districts covered br• Treasury Department that interest could ment, the salan• ac retirement and the inci-
PERS are grouped together foe purposes of be excludable from gross inwmr urtdrr dance of morcalin• among the retiree popu-
actuarial valuation. The last actuarial !03!a, of the Internal Revenue Code for lotion. It was also understood that shire
~~aluation at December 31, 1982, deter- bonds issued co pay off an accrued pension .~tre to be no refunds or rebates co thi
mined chat contribution rates of 12.17 system liability. [n char reqursc, the scha>I district of amounts earned be thi in-
percent in 1983 and 10.30 percent there- district intended to issue avo series of surance company in excess of the actuarial
after were sufficient to meet the ongoing G.O. bonds. Proceeds from the Series ~ erpeaations. Under these assumptions,
actuarial costs of the sescem and to amor- issue would be used to pay the integration the insurance company could also be rx-
size. the system's unfunded actuarial liabil- liability direak to PERS for accrued pin- petted co invest the bond proceeds ac a
icy user 30 years. beginning January 1, lion benefits of active and former un- rice of return materially higher than the
1976. retired members of TRF.~1. The proceeds of interest rate paid by the district on the
the Series B &mds would be paid to a Series Bonds. The Treasury ruling con-
- third party, prrwmed to be an irttiurartce eluded chat it aemed reasonable certain
tumpanc, cu pay the pension amounts fur :hat "the district ~yould nut deriyr .i wb-
unding Options. TRF.~ was funded on retired TRF.a members whose prmions >rcntial benefit from the im•rstmrnc by the
Fa pay-as-you-go basis. Actuarial studies would be paid through PERS after third parry of the pr<xeeds of the Serirs
determined the present value of the school integration. Bonds" at a race of return maceriapy
district's integration liability to be approx- (c vas understood that bond pra:eeds higher than the rate on the bonds, and
imately S1S8.9 million, after being dis- that ware not used to pay benefits or such an im•escment would not cause the
counted at the 7t/z percene interest race administrative expenses would likely be bonds to be arbitrage bonds within the
used by PERS acruaries. Funding options invested at a race of return materially meaning of Section 103(c)(2) of the cone.
legally available to the district under higher than the intemt race paid by the The situation presented by the Poniard
Oregon laws included: district on the Series A Bonds. The School Distrtct contrasted facorabl}• with a
20 Arau. IvxS (~(»/:R~NtKf FINA~l:k RkYlt'I
' r
,I ,uuation the Treasury addressed in 10.89 percenc..~nnual debt service is ex- Legislature, not by the voters of the dis-
ling 80-257, 1980-2 C.B. 52. In petted to be approximately 313.9 million. trict.
th uatiun, a cite proposed to issue The bonds were sold with only an The legislature believed the bond issue
G.O. bonds .tnd deposit proceeds in ;t fire- rating from Standard & Poor's, .tnd did nor need to be approved by the voter
fighters' pension fund. Since the funds in without bond insurance. in the district because the liabiliry already
txcess of what was paid out in expenses or The district had originally sought bond existed, and the bond issue was nor
pension btnrfirs could be expected to be ratings From both ~loodv s and Standard creating new debt. The law passed by the
imtsted I+v the pension fund at a material- $C Poor s. Given the strong economic base 1981 Oregon Legislature allowed the
Iv higher r,)rt of return than the yield on of the Portland metropolitan area and the district to issue limited tax bonds without
the bonds, thereby reducing the amount of Ciry of Ponland's credit rating, the a vote only if the district obligated itself to
the qty's future contribution races, the city district hoped to receive at least an .~A pay the debt from within its existing voter-
could re,tson.)bly anticipate a substantial rating from both of the rating agencies. approved tax base and ocher funds
direct bcnrfic from such higher yielding The distritt also proposed the issue to the available to support the General Fund. [n
investments. Consequently, the revenue Municipal Bond insurance association Oregon, local governments can annually
ruling cuncludtd that bonds issued under (~•1B[A) and the .~merican Municipal Bond levy property taxes within their tax base,
a)ch clrcumcr.)nces would be arbitrage .-assurance Corporation ;.~~iB:~C) to see if with up to 6 percent annual increases,
hunds. bond insurance would be available. once the tax base has been approved by a
Both the bond rating agencies and the majority of the voters at an election held in
insurance companies raised set•eral credit stay or November of even-numbered
Integration .~lgrermcnt. On June _'I, considerations which they believed re- years. In 1982, the district successfully in-
j 1'~3-t, the .lisrrict entered inro an ,Igree- ~~ted negatively against the district. First, creased its tax base, which provided funds
mint ro inrtgrare TRF.a into PERS rffec- there was the impending threat of ytc to pay rlae cost of integration.
tics Jul}• 1y34..after chat dace, TRF,4 another 1':i percent property tax limita- It is not surprising chat the Ponland
mtmbrrs bccamr p.trticip;tnts in the PERS non measure-Baliuc Measurer2-chat School District s bond issue vas not w•arm-
was to be voted on November 6, 1984. Iv received by underwriters and credit ana-
rrtirtment stem. This was the fourth rime in tight years lysts, given the unusual nature of this type
C•ndtr arms of that aKreement, the that a tax limitation measure would be of debt and the circumstances under which
d:,crict ~wai to fund to PERS the amount woted on by the Ore on voters: in 1942,
cif the acruari.tllc computed unfunded lia- g a the bonds were sold.
hrlirv, ce)mputcd using PERS actuarial tax limiwtion measure was only n.crn)~wly
.is,umpnons relating to TRF.a members, as defeated by less than Sao of 1 percent of
ref tht integration bate. The unfunded lia- the voters. Second, there was great rrluc-
^i~ts to be paid through a lump sum lance on the p,)rt of the bond insurance onclusion. The school districts bond
c m PERS, the issuance of ,t companies to look Favorably at a \urth- Cissue of 31 14 million successfully sue-
r'- r ncue rc) PERS .u .in assumed rate (vest credit that teas issuing S 1 14 million mounted an obstacle course of regulatory,
rf . prrant c)r be porch;icing .in ,tnnuin• for a new twpe of debt, after their recent legislative and credit market deterrents.
.rr~tr.ict .crir:en hw .in insurance company, experiences t„ch the ~C'a,hingcon Public The bond issue resulted In subStlRCI1I SaY-
:^d a,crgmr.t; the conrr.tct to PERS. Potwer Suppl} S}stem \t PPSS debt. ings to tht district s ta.~pa}ers anti future
- Third, the district had no Icing-term deter renremtnt benefits which can now be
repayment histor•, since it had hi,tcincally guaranteed to fururt penaoners. The
funded its caprcal improvements un .i p.ly• districts ability to cictrcome these
encion Liabilin• Bond Issue. On OICO- a5-t All-QO b,l,l,. .~5 1 fe5l1IC, C11C dI;CrICC l)b,f1~ItS dCmUn;Cr.ltes .1 ,trong u)mmit-
^er 1~, ly4-~, the ~lultnum,ih Cnunry had nor established a credit hi,tt)rv to merit to Inng-term financial ,taMlicv.
~~^;...I Di.tnct • 1 i„ued S 1 I ~ million in ;how that revenues were eenerared ,u
r;'rttd t.ix G.O. bonds to fund the un- rimes and in amounts nrce,sar a) p,n the Rr.rr \t rn r ri ~ ••L; .r.: nr
1f ~rrn:a.f! 3, ..;.1 Orr :>;~,.r :•r f~•,~ •r.ur , ~r fi., ~•,a
.L.ded ptn,u>n sc;tem liability. The bonds debc..~nd fourth, the bonds tvtre limited i-•,,;rr,, ,;,r,;,,. -;.,,,rr,, -:.r,..,r.,•1 err ri•.•,•.r;r,.r,,r
.t err a) mature serially from l2/ I.i / 45 ro tax bonds, and wire authorized to he ,.,,,c,;,,,,,~ \i.,na~r ••r,•ar
f_ I i y-1 and ;old ac a net interest rate of I;,Ued by ,pCClal IC~,I,I,1[IOn of the Oregon ~.>rr•r.r5. V.::rr;r-,.,,
\rNU Iv4; . (~rnrK,+rr.r Ei.~~t r Rrticw 21
~/~-1
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter Na. 274
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City'Council
City of Richfield
Subject: Purchase of IV-95 Computer System
Council Members:
At the July 8, 1985, City Council meeting, City staff
presented the City Council with information regarding
the unfavorable lease/purchase agreement for the current IV-95
computer system which the City now has with Motorola Corp.,
Faur Phase Division, and options to end the lease or purchase
the system.
The City Council tabled this matter to allow more time for
• the City staff to analyze the options available and continue
negotiations with Motorola. Representatives from Motorola
present at the meeting agreed to extend the offer of an
installment sales agreement and accompanying time and materials
maintainence agreement for up to 30 days.
The City Manager and City Attorney recommended to the City
Council at the July 8, 1985, Council meeting that serious
consideration be given to terminating the lease at the end of
fiscal year 198b (Option B). The City would not purchase the
system. This is the least expensive solution cost-wise. There
is potential litigation in this option (see back-up for a
greater in-depth explanation of the four options). The City
Manager recommends Option B only if funding is allocated from
fund balances and not from operating budgets (General Fund,
Water Fund, Liquor Fund, etc.).
Since the July 8 meeting, the writer and Administrative
Services Director have talked with local Motorola (Four Phase
Division) representatives regarding the lease/purchase options.
The writer has been informed that the Minneapolis Motorola
representatives have contacted their hcme offices in Coopertino,
California, urging that a compromise solution be offered to the
City. The compromise being proposed to the home office is a
$180,000 purchase price fvr the buy-out of the system under
lease. The $180,000 price is halfway between the company's
current asking price of $223,795 for a buy-out of the system and
the City's cost of $140,000 for continuing the lease until
-2- ~i
December 31, 1986, then ending its lease under provision of
• Minnesota statutes.
As of this writing, the City has continued to be in
frequent contact with Motorola representatives, but has
not received a verbal or written proposal from Motorola
regarding the purchase of the system. If information is
received prior to the July 22 Council meeting, City staff will
inform the Council at the meeting of any new proposals and
subsequent staff recommendations. If a new proposal is not
received prior to the July 22 Council meeting, it is
recommended that consideration of this item be postponed
to a future Council meeting (a possible date would be Monday,
July 29th). Attached for your information is a copy of Council
better No. 261 from the July $ City Council meeting.
R ectf bmitted,
~~~~4~
Z(i~~~
hn G. ar wright/
City Manager
JGC/eja
•
• ~
.
CITY OF RICHFIELD, MINNESOTA
• Office of City Manager
Council Letter No. 261
Agenda July 8, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Sub 'ect: Com ut~ `
,7 p ..r S~udy/Compu~,er Purchase Status
~ .
PROJECT STATUS
Since November of 198, the City Staff, with the assistance
of DSM Information Services Inc., our computer consultant, has
been in the process of assessing the City's current and future
computer needs and resources. In April, 1985, the City Manager
reported to the City Council that several recommendations had
been formulated as a result of the completion of the first phase
of the study. Those recommendations included that the City take
the following actions:
• 1. Purchase the existing system to reduce overall costs.
According to the Consultant, an analysis of the
Cit 's current ~ ' ` F
lease a re.,m n
Y g e t wish .our-Phase for
the IV/95 system revealed that ~160,~00 could be
made if the system were purchased outright~as soon as
possible and kept until the end of .1989.
2. Begin to acquire and install new equipment and software
during FY 1986, transferring all applications to the
new system.
3. Prase out the existing ccmputer (IV/95) and software
by late 1986.
The study alsc indicated that the current Four-?hale IV/95
system and accompanying lease arrangement represented several
significant shortcomings. For example, tre lease arrangement
for the IV/95 requires the City to keep an extremely expensive
maintenance agreement with the Four-Prase Company (approximately
40p of current monthly lease payments cf $7,500). The
maintenance agreement cannot be discontinued unless tre rase
agreement is terminated. Further, each time the City purchased
an additional piece of hardware to add to the system, the lease
was automatically renewed for the full five year term. Tre
• original lease antered into in 1978 now extends into 1989 due to
subsequent hardware purchases.
-2- -
• In addition to the unfavorable lease agreement, the IV/95
system has a very limited capacity. Current staff utilization
of the system and software packages now require the system to
operate at approximately 90~ of memory capacity. This leaves
little, if any, room for expansion of the system without
additional hardware purchases which would further extend the
lease. The IV/95 system, however, is no longer in production
and is outdated both in terms of present generation computers
and City needs. Thus the study concluded that the City should
take steps to buy out the expensive, restrictive lease
agreement and begin the process of converting to a newer system.
OV ERVIEW OF OPTIONS
Upon receiving the recommendations of the Computer Study
Task Force, City staff began to examine viable options. It was
• 'determined that the City had four options to explore:
' A) Continue the current lease arrangement at a five year
cost projected by the consultant to be $481,400 if
continued through 1989.
B) Continue the current lease arrangement through December
31, 1986, at a cost of $140,000, at which time the City
-could assert that, according to Minnesota Statutes, a
political subdivision may unilaterally walk away from
any lease purchase agreement at the end of any fiscal
year.. This option may also include additional costs for
legal Pees and a possible settlement. There is an
element of risk associated with this option, in that the
outcome of 'potential litigation cannot be predicted.
C) Purchase the computer system immediately for a lump sum
purchase price of $223,795, plus time and materials
maintenance.
D) Purchase the computer system immediately with an
Installment Sales Agreement for a 5-year total cost for
principle and interest of X275,536, plus time and
materials maintenance.
Option A - Continuation of Current Lease
The current lease/purchase agreement was entered into in
1978 with the IV-Phase Company. Since that time, the City has
modified the system by adding additional hardware on three
occasions. The most recent addition took place in February,
1984, and, due to the automatic renewal provision in the
agreement, extended the lease to 1989.
Under the current lease, the City makes monthly payments of
• approximately X7,540, of which roughly 40~ ($3,000) represents
maintenance charges. The computer consultant, DSM Incorporated,
• _3_
• estimates the following costs for the City under the current
lease through 1889 assuming a 10~ increase per year far
maintenance:
1985 $ 90,600
1986 $ 93,200
1987 $ 96,000
1988 $ 97,100
1989 $102,500
$481,400
The current lease also allows the IV-Phase Company to extend
the lease for hardware additions to the system. This is an
unacceptable position for the City to be in.
Option B - Continue Lease with Unilateral Cancellation in
December, 1986 .
~A second option related to continuation of the current lease
involves a~possible early termination of the lease. The City
Attorney reviewed the current lease and reported to City staff
that, according to Minnesota Statute 465.71 (amended in 1982), a.
municipality may walk away from a lease/purchase agreement at .
the end of any of it's fiscal years. However, the City Attorney
• added that such an approach was not without risk. Current
federal and state law provide that a legislature cannot impair
a parties rights under contract. Thus, since the contract was
in place before the statute, the vendor, IV-Phase, may use such
an argument. In any event there would be no guarantee that the
City would be' sucessful in such an attempt to cancel the
existing lease agreement early.
If the City were successful, this option would be the least
expensive in that lease payments from now until December 1,
1986, would total approximately $140,000.
However, to its' disadvantage, this option, even if
successful in terminating the lease early, would require a new
computer system to be in place no later than January 1, 1986,
so that necesary conversions to the new system could be made
before the December 31, 1986, deadline. Previously, the computer
task force indicated that an 18 month conversion period would
be desirable. Shortening the conversion period to one year
(1986) would require every aspect of the purchase and
installation of a new system to proceed in a timely manner and
without delay. That process would also have to begin within the
next few weeks.
Finally, if the City were unsuccessful in terminating the
lease early, the City would face certain legal fees in addition
to either: a) a compromise settlement; b) scheduled buy out of
the lease/purchase agreement; or, c) continuation of the lease.
-4-
Option G - Lumo-Sum Purchase of the IV-95 System •
Pursuant to City Council authorization, City staff
approached IV-Phase for a quote on the outright purchase of the
current IV-95 system. IV-Phase responded with a quote of
$223,795 for the purchase of the system. It was earlier
estimated by the consultant and computer task force that the buy-
out price would be approximately $244,000.
The outright purchase of the system would allow the City to
save approximately $160,000 over the life of the lease. In
addition, it would allow the City to choose any maintenance
option available, as well as to add any equipment necessary
without extending a contractual relationship with IV-Phase.
. The $223,795 necessary to purchase the system would be
gained throw gh utilizing approximately $100,000 (45x) of general
•fund "fund balance". The remaining funds necessary to purchase
the system would be proportioned as follows: Liquor - $65,000
(29x), Water - $24,600 (11x), Sewer - 23,500 (10.5x), while th.e
Central Garage, Data Processing, Self-Insurance and Golf Course
funds would be assessed - $11,750 (5.25x). In addition to the
initial outlay, the City would have to enter into a time and
materials maintenance contract with a service provider.
For rough estimation purposes, the time and materials
maintenance costs could be calculated at $400-$500 per month.
• Unfortunately, the City has also experienced an unexpected
expense of some $270,000 for insurance premiums. The
combination of $223,795 for a lump-sum computer purchase in
addition to the $270,000 additional 1985 insurance premiums
represents a significant drain on all City funds for 1985.
Option D - Installment Purchase of the IV-95 System
Another option available until July 31, 1985, for the
purchase of the IV-95 system is an installment sales agreement
financed by IV-Phase at 8 1/2x interest for a period of up to
60 months.
Under this arrangement, the City would purchase the IV-Phase
system with an installment sales agreement of 60 equal monthly
payments of $4,591.00. In conjunction, the City could carry a
time and materials maintenance agreement with IV-Phase and pay
only for actual servicing incurred.
The total cost of this package would be $223,795 for the
purchase price of the equipment and an additional $51,741 in
interest costs for a total cost of $275,536. As in the lump-
sum purchase option, the City would also incur an estimated $400-
$500 der month for time and materials maintenance under the
installment purchase plan.
_
-5-
• To it's disadvantage the installment sales plan requires the
City to incur $51,741 of interest charges and requires the City
to pay a 3p penalty (based on unpaid principle) at the time of
any prepayment of the agreement. Further, it does require the
City to keep a maintenance contract with IV-Phase while the
agreement is in effect.
Offsetting advantages of the Installment Sales Agreement
include releasing the City from an unfavorable lease agreement
without incurring a lump-sum cost in 1985. The 8.5~ interest
rate is a fairly good rate which is exceeded by the City's
current investment portfolio rate (approximately 9 3/4a - 10p).
IV-Phase informed the City that as of July. 1, 1985, the firm
would no longer offer a time and materials maintenance
contract. Only time and materials contracts in effect on or
before that date would be honored. Without a time and materials
maintenance agreement the City would be forced to accept a
standard IV-Phase maintenance agreement which would cost $2,100
per month. Such steep monthly maintenance payments would negate
much of the advantages of an Installment Sales Agreement over
the current lease. '
Thus, to~protect this option, the City Manager has
tentatively entered into a time and materials contract as well
• as an Installment Sales Agreement subject to Council approval.
By entering into this stipulated agreement, the option of
entering into an Installment Sales Agreement with•a relatively
inexpensive T & M Agreement is preserved until immediately after
the Council meeting of July 8, 1985.
At the time the City became aware of IV-Phase's intention to
eliminate T & M maintenance agreements, a recommendation to
Council had not been formulated and as such, it was felt that
all options should remain open for Council consideration.
RECOMMENDATION
While it may appear from a cost perspective that Option B -
Ear1Y Termination of Lease is the least expensive alternative,
the writer recommends that the city council adopt Option D -
Installment Sales Agreement. Even though an early ~armination
of the lease/purchase agreement may be possible rendering a
total of $x40,000 in lease payments until December 1986 when the
system would be returned to IV Phase, too many risks are •
associated with this option. The City may incur sizable legal
costs, a compromise settlement or at worst, be faced with
purchasing the system in December, 1986, or continuing with the
lease. Uncertainty also exists if the City were to be
successful in having the IV-95 system lease terminated on
December 31, 1986. With the system removed as of that date, all
City system conversions would have to be completed during 1986,
-6-
leaving little if any margin for delay in any phase of acquiring
.and converting to a new system.
With the information staff has received from IV-Phase to
date, it is the City Managers recommendation that the City
exercise its' option to enter into the Installment Sales
Agreement for a term of 60 months. The I.S.A. would generate
payments of $4,592.00 per month (see Attachment A), some $2,900
per month less than the current $7,500 lease payments. Of the
$2,900 monthly savings,. $400 would be allocated for time and
materials maintenance while the remaining $2,500 could be put
aside for a future buy-out of the I.S.A. or a new system ir. the
future. -
Additionally, instead of requiring funds to set aside lump
.sums for a 1985 buy-out, the funds could remain in the City's
investment portfolio which is currently averaging near 10°~
' return overall. While the rate of return for City investments
will decrease in the future, it may be sederal months or perhaps
longer before the overall rate of return settles to 8.5~. Thus,
the City can gain some interest earnings by retaining the funds
it might have used for a lump sum purchase.
Finally, the Installment Sales Agreement allows the City to
control when it may be most advantageous to sell or salvage the _
IV -95 system. This would allow for a better planned conversion
from the current system to a new system at any point in the
future.
As of this writing, IV-Phase has been made aware of our
contention that the current lease may be terminated by the City
at the end of any fiscal year. In response, staff attorneys for
the IV-Phase division of Motorola have been in contact with the
City Attorneys office. Further developments in this regard may
take place up until the City Council meeting of July 8, 1985.
However, at this time it is impossible to say exactly what may
develop.
It is the recommendation of the City Manager, that the City
Council authorize the City to enter into an Installment Sales
Agreement with the IV-Phase Division of Motorola for the
purchase of the IV-95 computer system for a total cost of
$275,000, including purchase price and interest.
Future Direction
The writer wishes to emphasize that the action recommended
here authorizes the City to buy-out of an unfavorable lease for
its' current IV-95 computer system. That purchase would not add
to or enhance the capability of the IV-95. The IV-95 system
• remains a basically inadequate system to accomodate tre City's
data processing needs for now and the future.
-7- .
The long range solution to meeting the City's data
processing needs is the acquisition of a new computer system to
replace the IV-95. It is the recommendation of the computer
consultant (DSM Information Services, Inc.), the in-house
computer task force and City staff that such a replacement
system be ready for installation in early 1986. Staff
recommendations regarding the acquisition of a new computer
system will be presented to the City Council at a future
meeting.
Respe lly submitted,
Steven L. Devich
Acting City Manager
SLD/e,ja
cc: Data Processing Manager
ATTACHMENT A
•
INSTALLMENT SALES AGREEMENT
Schedule of Selected Amortized Monthly Payments
Beginning Balance $223,795
Interest Rate 8 1/2p
Payment Total Balance Buy-Out
# ~ Payment Principle Interest owed Cost
1 $4592.27 $3007.06 $1585.21 $224,787.94
2 4592.27 3028.36 1563.91 217,759.58 224,292.37
3 4592.27 3049.81 1542.46 214,709.78 221,151.07
4 4592.27 •3071.41 1520.86 211,038.37 217,987.52
5 4592.27 3093.16 1499.x1 208,545.20 214,801.56
6 4592.27' 3115.07 1477.20 205,430.13 211,593.03
7 4592.27 3137.14 1455.13 202,293.99 208,362.81
8 4592.27 3159.36 1432.:91 199,133.63 205,107.64
9 4592.27 3181.74 1410.53 195,951.89 201,830.45
1a 4592.27 3204.28 1387.99 1.92,747.61 198,530.04
11 4592.27 3226.97 1365.30 189,520.64 195,206.26
12 4592.27 3249.83 1342.44 186,270.81 191,858.93
18 4592.27 3390.42 1201.85 166,282.65 171,271.13
24 4592.27 3537.09 1055.18 145,429.82 149,792.71
30 4592.27 3690.10 902.17 123,674.90 127,385.15
36 4592.27 3849.73 742.54 100,978.86 104,008.23
42 4592.27 4016.27 576.00 77,301.00 79,620.03
48 4592.27 4190.02 402.25 52,598.84 54,176.81 '
54 4592.27 4371.27 221.00 26,828.08 27,632.92
60 4592.27 4560.37 31.90 -O- N/A
The above schedule projects the monthly costs associated
with the Installment Sales Agrement and the early buy-out
prices at various stages of the Installment Sales Agreement.
For example, if the City decided to buy-out of the
Installment Sales Agreement after 18 months, the costs would be
as follows:
Buy-out price including 3p penalty $171,271.13
Total monthly payments to date 82,660.86
Total cost incurred X253,931.99
~9,
• CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 273
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Council Approval of a Agreement for Joint
Assessment with Hennepin County.
Council Members:
In December, 1980, the City entered into a contract with
Hennepin County for assessing services for the years 1982, 1983,
198~t, and, 1985. Under this contract the County Assessor was
responsible for establishing valuation of all property within
the city of Richfield. Prior to 1980, the assessor and
appraisers were City employees.
• Hennepin County has performed their duties and
responsibilities under contract with the city of Richfield
in a very satisfactory manner. Typically a principal property
appraiser and one to three additional appraisers have been
assigned to the city of Richfield. In addition, the City
provides one clerical person to support the Hennepin County
personnel. The Hennepin contract resulted in a significant
cost savings by reducing the clerical support staff from two
persons to one person.
In terms of service tc the public, it is the conlusian of
the Administrative Services Director and the writer, that the
level of service available to residents under the Hennepin
County contract is responsive and professionally provided.
The day to day requests for information on processing
homestead applications are transactions typically handled
by the assessment clerk. In addition, much of the day to
day public contact is still handled by Richfield clerical
support.
Each April, the notice of valuations which have been
established by the County Assessors are processed just as they
have been in the past when the City assessor's staff handled the
function.
• Questions regarding property valuations which relate
directly to the appraisal process must of course be answered by
personnel who have actually done the appraisal and are handled
-2-
• by Hennepin County property appraisal staff. Since these
individuals are physically located within Richfield City
Hall,it's very convenient for residents to come into City Hall
and meet with the appraiser or principle property appraiser to
review their questions and talk about the valuation process.
Another concern which might be addressed is that of the
issue of local control. It may be common reaction to assume
that the degree of control aver an operation may be greater if
the employees performing that function report directly to
somebody within the organization rather than if such employees
report to some other supervisory jurisdiction. However, the
contract for joint assessment services with Hennepin County
stipulates quite clearly what the City's rights are and
what the duties of the County Assessor shall be with regard
to the establishment of property valuations with the City.
Furthermore, the state law is quite specific in defining
the responsibilities of the county assessor. Statutes
provide that the county assessor supervise
all wank done by the local assessors. The impact
of Minnesota statute 273.061 is that the county assessor
presently has the authority to override the valuations
established by any local assessor and finalize valuations.
Thus, the City has no less local control under the joint
Hennepin County contract than it would have had we continued
• with City assesing personnel.
A final concern might be that of the role of the Local Board
of Review in establishing and overseeing valuations in the
community. The responsibilities of the Local Board of Review
are specified within the law and continue to remain unchanged
regardless of who completes the assessment. The Local Board of
Review continues to have the power to reduce assessments upon
request of the property owner.
Cost
When considering a contract such as this, the issue of cost
becomes a major concern. In 1983, the city of Richfield paid
$100,000 for assessment services provided by Hennepin County.
In 1984, the City paid approximately $104,000. The cost for
1985 is estimated in 4104,000 - $106,000 range. In comparison,
in 1980, the last year that the City had a local assessor, local
property appraisers, and, two clerical staff support positions,
personal services costs alone amounted to $107,000. If one were
to take the $107,000 figure and inflate it by an average of
5.5% per year for 5 years, the costs of maintaining the same
personnel for the City would by roughly $141,000. Thus, it is
estimated that the City saves $35,000 in each of the years 1985
and 1986 by utilizing the contract wit Hennepin County for
assessing services. Further, those savings should continue
• far the next four years under the renewal contract with Hennepin
County.
I I ~3
-3-
• The renewal contract with Hennepin County states that:
"in consideration of assessment services, the City agrees
to pay the County the sum of $104,600 for each assessment
provided that any payment due in July of any year may be
increased or decreased by that amount which exceeds or is
less than the County's estimated cost of appraising new
construction and new parcels for relevant assessment and or
increased by an amount equal to postage cost of mailing
valuation notices and homestead applications."
The contract goes on to state that the $104,b00 may also be
increased if the County determines that the cost of carrying out
the agreement has increased or the County reasonably determines
that other costs should be included in the assessment work.
With repect to any of these increases, the County would give
written notice of any price change by June 15 of any year and
such increases would apply to the next fiscal year. Records
supporting any cost increases would be open to inspection by
the City at such times as are mutally agreed upon by the City
and the County. During the past four years, increases by
Hennepin County over the term of the contract have been very
minimal. In conversations with Hennepin County representatives
during the past week and a half, it is anticipated that
increases in the contract during the insuing four years would
remain much the same as the City has experienced in the past.
In view of the excellent contractual relationship the City
has enjoyed with Hennepin County in contracting far
assessing services, the level of services provided during the
past four years, and, the cost advantages of continuing to
contract with Hennepin County for assessing services, it is
recommended that the City Council adopt the attached
resolution authorizing the city of Richfield to enter into
a contract with Hennepin County for assessing services for the
years 1986, 1987, 1988, and, 1989.
pectfuJll ~ t~mitted,
7
~i~iU~T;t/7-~ ,
Lam,
ohn G. Cart right ;
City Manager
JGC/eja
cc: Steven Devich, Administrative Services Director
•
RESOLUTION N0.
RESOLUTION AUTHORIZING THE CITY OF RICHFIELD
TO ENTER INTO A CONTRACT WITH HENNEPIN COUNTY
FOR ASSESSING SERVICES
WHEREAS, Minnesota State Law provides that cities may
contract with the county to provide for property assessment, and
WHEREAS, state law further describes the responsiblity of
the county assessor with regard to insuring that property
assessments are made on an equitable and sound basis far all
jurisdictions of property within the county, and
WHEREAS, the city has realized substantial financial savings
by performing the property assessments functions through a
contract with the county rather than continuing to retain in
house staff to provide such services far the past four years.
NOW, THERFORE, BE IT RESOLVED by the City Coucil of the City
of Richfield, that we do hereby authorize the Mayor and City
Manager to execute a contract with Hennepin County which would
provide that the county provide assessing services to the City
of Richfield beginning July 31, 1985, and ending July 31, 1989.
Done at the City of Richfield this 22nd day of July, 1985•
Contract No. 50358
•
AGREEMENT
THIS AGREEMENT, Made and entered into by and between
the COUNTY OF HENNEPIN,,a political subdivision of the State of
Minnesota, hereinafter referred-tows the "COUNTY", and the CITY
OF RICHFIELD, a political subdivision of the State of Minnesota,
hereinafter referred to as "CITY"; .
WHEREAS, said CITY lies wholly within the County of
Hennepin and constitutes a separate assessment district; and
WHEREAS, under such circumstances, the provisions of
Minnesota Statutes, Section 273.072 and Minnesota Statutes,
Section 471.59 permit the County Assessor to provide for the
assessment of property; and
WHEREAS, said CITY desires the COUNTY to perform
certain assessments on behalf of said CITY; and
WHEREAS, the COUNTY is willing to cooperate with said
CITY by completing the assessment in a proper and equitable
manner;
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, it is agreed. as follows:
1. The COUNTY shall perform the 1986, 1987, 1988 and 1989
property assessments for the City of RICHFIELD in accordance
with property assessment procedures and practices
established and observed by the COUNTY, the validity and
reasonableness of which are hereby acknowledged and approved
by the CITY. Any such practices and procedures may be
_ changed, from time to time, by the COUNTY in its sole .
judgment, when good and efficient assessment procedures so
require. The property assessment by the COUNTY shall be
composed of those assessment services which are set forth in
Exhibit A, attached hereto and made a part hereof by this
reference.
2. All information, records, data, reports, etc. necessary
to allow the COUNTY to carry out its herein responsibilities
shall be furnished to the COUNTY without charge by the CITY,
and the CITY agrees to cooperate. with the COUNTY in carrying
out the work under this Agreement.
3. The CITY agrees to furnish office space needed by the
COUNTY, without charge, at appropriate places in the CITY'S .
offices. The keys thereto shall be provided to the COUNTY.
The CITY assures that such areas shall not be unattended,
during or after work of any kind by or on behalf of the
CITY, in any area occupied by the COUNTY as provided herein,
or if unattended, the CITY shall make certain that such
areas are locked and secured. Such office space shall be
sufficient in size to accommodate reasonably three
- appraisers and any furniture placed therein.
4. The CITY also agrees to provide appropriate desk and
office furniture as necessary, clerical and secretarial
support necessary and reasonable for the carrying out of the
(2)
/
work herein, necessary office supplies and equipment,
copying machines and supplies, and telephone service to the
COUNTY, without charge.
5. It shall be the responsibility of the CITY to have
available at the CITY'S offices each City working day a
person who. has such knowledge and skill to be able to answer
routine questions pertaining to homesteads and property
assessment matters and to receive, evaluate and organize
homestead applications. It shall also be the responsibility
of .the CITY to refer any homestead application which needs
investigation. to the COUNTY.
6. In accordance with Hennepin County Affirmative .Action
Policy and the County Commissioners' policies against
discrimination, no person shall be excluded from full
employment rights or participation in or the benefits of any
program, service or activity on the grounds of race, color,
.creed, religion, age, sex, handicap, marital status,
affectional preference, public assistance status, ex-
offender status or national origin;. and no person why is
protected by applicable Federal and State laws against
discrimination shall be otherwise subjected to
discrimination. CITY will furnish all information and
reports required by Hennepin County or by Executive Order
No. 11246 and Revised Order No. 4 and by the rules and
regulations and orders of the Secretary of Labor for
' 3 -
purposes of investigation to ascertain compliance with such
rules, regulations and orders.
7. It is agreed that nothing herein contained is intended
or should be construed in any manner as creating or
establishing the relationship of co-partners between the
' parties hereto or as constituting the CITY as the agent,
representative or employee of the COUNTY for any purpose or
in any manner whatsoever. CITY is to be and shall remain an
independent contractor with respect to all services
performed under this Agreement. CITY represents that it
has, or will secure at its own expense, all personnel
required in performing services under this Agreement. Any
and all personnel of CITY or other persons, while engaged in
the performance of any work or services required by CITY
under this Agreement, shall have no contractual relationship
with the COUNTY and shall not be considered employees of the
COUNTY and any and all claims that may or might. arise under
the Workers' Compensation Act of the State of Minnesota on
behalf of said personnel or other persons while so engaged,
and any and all claims whatsoever on behalf of any such
person or personnel arising out of employment or alleged
employment including, without limitation, claims of
discrimination against the CITY, its officers, agents,
contractors or employees shall in no way be the.
responsibility of the COUNTY and CITY shall defend,
(4)
I--/U .
indemnify and hold the COUNTY, its officers, agents. and
em Io ees harmless from an and all such claims re ardless
P Y Y 9
of any determination of any pertinent tribunal, agency,
board, commission or court. Such personnel or other persons.
shall not require nor be entitled to any compensation,
rights or benefits of any kind whatsoever from the COUNTY,
including, without limitation, tenure rights, medical and
hospital care, sick and vacation leave, workers'
compensation, unemployment compensation, disability,
severance pay and P.E.R.A.
8. CITY agrees that it will defend and hold the COUNTY, its
officers and employees harmless from any and all liability
(statutory or otherwise) claims, suits, damages, judgments,
interest, costs or expenses (including reasonable attorney's
fees, witness fees and disbursements incurred in the defense
thereof) resulting .from or .caused by any act or omission of
the CITY, its officers, agents, contractors or employees in
the performance of the responsibilities provided by this
Agreement.
9. The COUNTY shall endeavor to perform all services called
for herein in an efficient manner. The sole and exclusive
remedies for any breach of this Agreement by the COUNTY and
for COUNTY'S liability of any kind whatsoever, including but
not limited to liability for negligence with respect to the
services hereunder, shall be limited to correcting
(5)
- - - - ~
diligently any deficiency in said services as is reasonably
passible under the pertinent circumstances. In no event
shall the COUNTY be liable for actual, direct, special,
incidental, consequential or any other damages.
10. Any reduction in local government aid payments as a
result of an assessment dispersion penalty, as set forth in
Minnesota Laws 1977, Chapter 423, Art. VI, Sec. 13, shall be
borne solely by the CITY.
11. This Agreement shall commence on August 1, 1985, and
.shall terminate on July 31, 1989. It is agreed and .
understood that, as the COUNTY shall solely determine, the
COUNTY may commence and carry out its herein obligations
irrespective of the existence of similar assessment .
obligations of other persons within the City of Richfield.
• This Agreement may be extended for a term of four (4) years
by either party giving the other written notice of its
intent to so extend. no less than 150 days prior to the
termination of this Agreement. If the party who receives
said notice of intent to extend gives written notice to the
other party of its desire not to renew within 110 days prior
to termination of this Agreement, this Agreement shall
terminate on July 31, 1989.
Nothing herein shall preclude the parties, prior to the
end'of this Agreement, from agreeing to extend this contract
for a term of four (4) years. Any extended term hereof
(6)
-
shall be on the same terms-and conditions set forth herein.
Either party may terminate this Agreement for "just cause"
as determined by the Commissioner of Revenue after a hearing
far such a determination is held by the Commissioner of
Revenue.-and which has been attended by representatives of
COUNTY and CITY or which said representatives had a
reasonable .opportunity to attend; provided that after such
determination, any party desiring to cancel this Agreement
may do so by giving the other party no less than 120 days'
written notice. If the CITY should cancel this Agreement,
as above provided, before the completion of the then current
property assessment by the COUNTY, the CITY agrees to hold
the COUNTY, its officers, agents and employees harmless from
any liability that right ensue as a result of the
noncompletion of the then current property tax assessment.
For the purpose of this Agreement, the term "just
cause" shall mean the failure of any party hereto reasonably
to perform a material responsibility arising hereunder.
12. In consideration of said assessment services, the CITY
- agrees to pay the COUNTY the sum of $104,600.00 for each
assessment, provided that any payment due in July of any
year (as below provided) may be increased or decreased by
that amount which exceeds or is less than the COUNTY'S
estimated cost of appraising new construction and new
parcels for relevant assessment and/or increased by an
O
- . 9-~3
amount equal to the postage cost of mailing valuation
notices and homestead a lications far the relevant
PP
assessment. Regarding each assessment, in addition to being
subject to adjustment in the above manner, said assessment
cost of $104,600.00 may also be increased by the COUNTY if:
.(a) the COUNTY determines that any cost to
the COUNTY in carrying out any aspect of this
Agreement has increased, and/or
(b) the COUNTY reasonably determines that
other costs should be .included in the costs
of assessment work.
With respect to the latter types of increases, the COUNTY
shall give written notification of any price change by
June 15 of any year and such increases shall apply to the
next immediate assessment. Supportive records of the cost
increase will be open to inspection by the CITY at such
times as are mutually agreed upon by the COUNTY and CITY.
Payment for each assessment shall be made in the
following manner: Approximately one-half (1/2) of the cost of an
assessment (the amount payable being set forth in a bill sent by
the COUNTY to the city) shall be paid by the CITY no later than
the fifteenth (15) day of the December which precedes the
pertinent assessment year; and the remaining portion of said cost
(the amount payable being set forth in a bill sent by the COUNTY
to the CITY)~shall be paid by the CITY no later than July 15 of
the pertinent assessment year.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by its duly authorized officers and
•
;J
/ n
1 /
delivered on its behalf, this day of ,
1985.
COUNTY OF HENNEPIN, STATE OF MINNESOTA
Upon proper execution, this
agreement will be legally By:
valid and {(,~binds/ng ~ Chairman of the County Board
P~ssista~f~t' Cou~~y attorney ~ And:
Date:'"~ '7 ~ 5 - Deputy/Associate County
Administrator
APPROVED AS TO EXECUTION: ATTEST:
Clerk of the County Board
CITY OF RICHFIELD
Assistant County Attorney
Date:
By: Its Mayor
And: Its City Manager
The above Agreement No. 50358 is hereby approved by the
Commissioner of Revenue this day of
1985.
COMMISSIONER OF REVENUE
[CONY VIII]
(9)
Contract No. 50358
EXHIBIT A
CITY OF RICHFIELD
1. Physically inspect and revalue 25~ of the REAL property, as
required by law.
2. Physically inspect and value all new construction, additions
and renovations.
3. Conduct valuation reviews prior to Board of Review.
approximate dates: March and April.
4. Attend Board of Review. Per Board request, make all
necessary review appraisals.
5. Keep updated field card file - current values, homestead and
classification data.
6. Print, mail and post valuation notices and full year
homestead cards, postage at expense of the CITY. Process
midyear homestead applications.
7. Respond to taxpayers regarding assessment or appraisal
problems or inquiries periodically during contract term.
8. Make divisions and combinations periodically during contract
term.
9. Initiate, for the taxpayer, abatement applications
periodically during contract term, as requested.
10. Make appraisals for, tesify or negotiate all district court
or tax court filings, periodically during contract term.
11. Post values from appraisal cards to assessment rolls.
[CONY VIII]
CITY OF RICHFIELD, MINNESOTA
• Office of City Manager
Council Letter No. 272
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: ORDINANCE AMENDMENT RELATING TO STATE ELECTRICAL
LICENSES FOR INSTALLERS OF POWER LIMITED ALARM
CIRCUITS
( To be continued to August 26, 1985 )
Council Members:
During the special session of the state legislature in June,
1985, significant language amendments were passed which relate
to the licensure of power limited alarm circuit installations.
Initially, the council gave first reading to an ordinance
amendment which would bring our local licensing requirements
into conformance with the state statute. This amendment
• received first reading at the regular council meeting of April
22, 1985.
Because of the extensive language changes made in the
statute during the special legislative session, it will be
necessary for the city attorney to review this legislative
action and modify the ordinance amendment to conform with the
new provisions. Therefore, it is recommended that the second
reading of this ordinance amendment be continued to the regular
council meeting of August 26, 1985•
spectf 1 ~bmitted,
' /1
~Ll/
John G. Car Trig t
City Manager
JGC/eja
~
• CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 2-71
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Ordinance Amendment Relating to Bay Windows.
Second Reading.
Council Members:
At the July 8, 1985 council meeting the city council gave
first reading approval to the attached ordinance amendment.
This ordinance amendment allows windows and window units
(including bay windows) to protrude into a required front or
rear and u to 2 1/2 feet if the floor area of the dwellin is
Y P g
not increased.
•
It is recommended that the city council conduct a public
hearing on this matter and give second reading approval to the
attached ordinance.
e pectf 1 witted,
! , ~ ~
John G. ar ri ht~
g
' City Manager
JGC/eja
ORDINANCE NO.
AN ORDINANCE AMENDING SECTIONS
3.30 AND 3.30A OF THE ORDINANCE
CODE OF THE CITY OF RICHFIELD
RELATING TO REQUIRED SETBACKS
FOR BUILDINGS
CITY OF RICHFIELD DOES ORDAIN:
(1) Section 3.30, Subdivision 5 of the Ordinance
Code of the City of Richfield relating to building setbacks
is amended by adding at the end thereof the following additional
paragraph:
"(j) Window or window units may project a maximum of 2 1/2
feet into a required front or rear yard provided the floor
area of the dwelling is not increased."
(2) Section 3.30A, Subdivision 5 of such Ordinance Code,
also relating to building setbacks, is amended by adding at the
end thereof the following additional paragraph:
"(f) Window or window units may project a maximum of 2 1/2
feet into a required front or rear yard provided the floor
area of the dwelling is not expanded."
Passed by the City Council of the City of Richfield,
Minnesota this day of 1985.
John Hamilton, Mayor
ATTEST:
Thomas Ferber, City Clerk
•
a•
%r..5
ORDINANCE NO.
AN ORDINANCE AMENDING SECTIONS
3.30 AND 3.30A OF THE ORDINANCE
-CODE OF THE CITY OF RICHFIELD
RELATING TO REQUIRED SETBACKS
FOR BUILDINGS
CITY OF RICHFIELD DOES ORDAIN:
(1) Section 3.30, Subdivision 5 of the Ordinance
Code of the City of Richfield relating to building setbacks
is amended by adding at the end thereof the following additional
paragraph:
"(j) Window or window units may project a maximum of 2 1/2
feet into a required front or rear yard provided the floor,
area of the dwelling is not increased."
(2) Section 3.30A, Subdivision 5 of such Ordinance Code,
also relating to building setbacks, is amended by adding at the
end thereof the following additional paragraph:
"(f) Window or window units may project a maximum of 2 1/2
feet into a required front or rear yard provided the floor
area of the dwelling is not expanded."
Passed by the City Council of the City of Richfield,
Minnesota this day of 1985.
John Hamilton, Mayor
ATTEST:
Thomas Ferber, City Clerk
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 270
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Ordinance Amendment Relating to Hearing
Officer Process. Second Reading.
Council Members:
At the July 8, 1985, council meeting; the city council gave
first reading consideration to an ordinance to implement
a hearing officer process to review variance requests. The.
council directed staff to revise the ordinance to make
appeal to the city council easier. (See paragraph F of
this letter).
Attached far council review is a series of draft ordinance
amendments to implement the hearing officer process to hear
zoning variance requests. Following is a summary of the major
provisions of these ordinance amendments which have been
recommended by the Planning Commission.
1. A new section is added outlining the hearing officer
process. This includes the following:
A. A committee of hearing examiners is created. The
committee of hearing examiners shall have the power to
review all variance requests. Appeals of administrative
decisions will be made to the city council.
B. The committee of hearing examiners shall be a special
committee of the planning commission. Hearing examiners
shall be nominated by the planning commission, appointed
by the city manager, and confirmed by the city council.
C. Hearing examiners shall approve a variance request only
when it is demonstrated that such actions are consistent
with the standards contained in Minnesota State Statutes
applicable to the granting of variances.
D. Before granting a variance the hearing examiner shall
conduct a public hearing at least 15 1/2 working days,
but not longer than 30 working days after a complete
application has been filed. Hearings will be held in
the evenings unless an evening hearing would cause a
-2-
seriaus hardship to the applicant. Mailed notice of the
• hearing shall be made to property owners within 350 feet'
of the subject property at least 10 days prior to the
hearing. This notice shall also state that individuals
wishing to appear at the hearing should contact the
Community Development Department prior to the hearing
date.
Failure to give mailed notice or defects in the notice
shall not invalidate proceedings providing a bonafide
attempt to complete such mailing has been made. The
Planning & Zoning Division shall provide a written
report to the hearing examiner outlining the proposal,
enumerating the various reasons for recommendation to
either approve or deny the variance.
E. The hearing examiner shall, within 30 days of the close
of the hearing, render a written decision supported by
findings related to applicable zoning ordinance
standards and state statutes. The hearing officer's
decision shall be transmitted to all parties of record
and the hearing examiner decision shall be final unless
appealed.
F. Members of the council expressed feelings that the
provisions relating to appeals to the City Council
• would be too burdensome and too restrictive. The
last two sentences of 3.40A, Subdivision 6, have been
deleted. This amendment addresses the council concern
in my opinion.
G. An applicant may, within 7 days of the date of the
mailing of the examiner's decision, apply for a
rehearing of a variance request denied by the hearing
examiner if significant new factual evidence relevant
for the case can be presented.
H. All variances granted by the hearing examiner terminate
if the structure requiring the variance is not completed
within one year of the date it is granted.
I. The committee of hearing examiners shall at least
annually prepare a report for the city council and the
planning commission outlining the activities of the
hearing examiners and making recommendations relative to
possible zoning ordinance amendments which may be
necessary.
J. The hearing examiner process shall expire one year frcm
its effective date unless the council by resolution
extends it for an additional period of time.
-3-
• 2. The section of the city~s ordinances outlining the powers of
the board of Adjustments and Appeals is amended to make
provisions for the committee of hearing examiners. This
section is also amended to indicate that if the authority of
the committee of hearing examiners expires, the variance
review process returns to the Board of Adjustments and
Appeals as it is currently. The three conditions listed in
this section for granting variances are removed. The
subdivision indicating that variances shall be reviewed by
the planning agency is also eliminated.
Attached for consideration is the revised ordinances which
includes the changes requested by the city council on the appeal
process to the city council. It is recommended that the
council conduct the public hearing on this matter and give
second reading approval to the attached ordinance amendments.
R pectf ly) bmitted,
' ohn G . `Ca wrigh
City Manager
JGC/eja
•
•
r I - / / ~ ~
(~////~j. ~y
AMENDMENT TO .CHAPTER III, PART IV
~ - OF ia~ ORDIIIANCE CODE OF -rtu~
~ CITY OF RICHFIELD
CITY OF Rlt~.rsr IELD DOES ORDAIN
Chapter III, Part IV of the~Ordinance Code of the City of
Richfield entitled "Zoning Regulation" is hereby amended in the
following respects:
I. ey adding the following new Section 3.40A:
3.40 A. COMMITTEE OF HEARING EXAMINERS
Subdivision I. Purpose. It is the purpose of ,
this section to establish the Committee of Hearing`
Examiners and an administrative hearing process to
expedite the review of certain matters involving
requests for. variances to the literal provisions
of the city's Zoning regulations.
- Subdivision Committee of Hearing Examiners.'
There is hereby created the Committee of Hearing
_ Examiners which shall constitute a special
r' c....~.i.ttee of the Planning Commission to be
administered by the Department of Community
Deaelopment. The C~.W...ittee of Hearing Examiners
. shall constitute the Hoard of Adjustments and
_ Appeals in all matters within its iurisdiction.
• Hearing examiners shall .be nominated by the
Planning Commission and appointed by the City
Manager sub-iect to confirmation by the .City
Council and shall serve at the pleasure of the
City Manager. Hearing examiners may ~be city
employees and shall. have exaerience in municipal
administration and procedures of law.
Subdivision 3. Powers and Duties of Hearinc
Examiners. Hearing examiners shall have the power
- to hear and decide requests for variances from. the
literal provisions of the zoning regulations found
in Chapter III, Part ZV of- the Ordinance Code
where strict compliance would cause undue hardship
because of circumstances unique to the property
under consideration. The hearing examiners shall
' approve variance requests only when it is
demonstrated that such actions are. consistent with
_ the standards contained in Minnesota Statutes,
Section ...46.2 ..357.,_. Subdivision 6 aA~licable to the
- ~rantinq of variances, and the zoning reQttlations
of the city. The hearing examiners may not
permit, as a variance, any use which is not
r ,
permitted by the zoning regulations apclcable to
the property under .consideration.. The hearing ~ )
examiner may impose conditions on variances to
'ensure compliance and to protect adiacent
properties.
Subdivision 4. Application and Fees. Application
for a variance shall be made to the Department of
. Community Development upon forms prepared by the .
department for that. purpose. All applications for
variances shall be accompanied by payment. of a fee
as provided in Appendix D of this Cods. 'No
' application shall be deemed to be filed until it
is .complete in all respects. IIpOn filing,. the
department shall refer the application to a
hearing examiner designated by it to hear the
matter.. '
- ,Subdivision 5. Hearing Procedures. The. following
vales .apply to hearings conducted by hearing
examiners : ' , '
(1) The hearing shall be conducted at least 15~
working days but not longer than 30 working
-days after filing. Except in cases involving
serious hardship to the applicant, hearings
~shall.be conducted only in the evenings.
(2) Netce of the hearing shall be mailed by
_ first class -mail to the property owners
- within 350 feet of the subject property at
Least 10 days prior to the hearinc. Evidence
of the giving of ouch... notice shall be
. provided to the .hearing examiner at the
beginning of the hearing. The notice shall
also state. that individuals wishing to appear
at the hearing should contact the department
prior to the hearing date. The failure to
give mailed notice to individual property
owners, or defects in the notice. shall not
invalidate the proceedings, provided a bona
fide attempt to comply with this paragraph
has been made.
(3) The. Planning and Zoninc Division shall
provide a written report to the hearing
examiner outlininc the. proposal and
enumerating the various reasons -for a
rec....~endation to either approve or deny the
. variance request. The. written report shall
be filed with the hearing examiner at least, .
72 hours prior to the date of the hearing.
Copies of the report shall be made. available
~3
to the applicant and .shall be furnished to
- others upon .rec;ttest.
' .
t4) Parties of record shall be: -
ta) The applicant and representative of the
" applicant. ~
- tba . P,!!y interested person who has notified
• the department of an intent to appear. ~z~~
" . Cc) ~ City staff. - ~ ~
• ~ td~ Planning Commission. '
t ,a
t5') The hearing examiner may call witnesses, and
accept evidence and testimony, including
hearsay, relevant to the. issues being heard.
Parties of record shall have the sight to
cross-examine witnesses and present testimony
- and evidence. •
t6) For the purpose of avoiding redundencv or
• irrelevancy, the hearing examiner may impose
limitations on the number of witnesses and on
- _ the nature and length of testimony. '
' C7) A tape recordinc shall be made of the
~hearin The .tape will be transcribed on
request of the City Council. The tape will
also be transcribed at the request of any
party of record.upon the payment of all costs
of transcription. The tare recordinc shall
- be preserved until the time for appeal, as
provided 'in Subdivision 6., has expired.
C8) The hearing examiner shall, within 30 .days
following the close of the hearinc render a
written decision supported• by findings
specifically related to the applicable
standards contained in this Code and state
• statute. The hearinc examiner's decision
shall be transmitted to all parties of
record.. The hearinc examiner's decision -
sha•11 be final unless an appeal is taken
pursuant to Subdivision 6. It the hearing,
examiner shall fail to render its written
decision within such period the applicant may
present its application to the city council •
for consideration. at its next res~ularly
scheduled meetinc ..not less than 10 days
following the exr~iration of the time limit'
contained .above.
7
Subdivision 6. Appeals. Any party aggrieved by,
the decision of the hearing examiner may appeal
.the decision by delive=inq to the department a
notice of aoueal wtit~tin
10 days of the date the
decision is mailed out. The a eal shall be to
the City Council pursuant to Section 3.40 of this
Code . ~ '~lte issue on a eal shall be limited t~.t~Ke~
question "off whether the hearin~~ex~amin~~fas made
an error irI~ the interpreta~.i,ex~of the laws
. appicable to t~P_ ~ranti~f variances . If the
City Council rever~s~"the decision of the hearing _
examiner, ~i.tiS~iall , _~om any such determination
witlt.~s~dincrs as t~ how the a olicable laws were
+y~a isconstrued by the.• heari examiner.
Subdivision 7, Rehearin A
g ny a alicant may
• within 7 days of the date of mailing of the
examiner's decision, apply for a rehearing of a
variance request denied by the hearing examiner if
significant new fa~t~i,~l evidence .relevant to the
case not available~~to the applicant in the
original hearing can be presented. The recruest
for a rehearing 5ha11 state with articularity the
nature of the new evidence an why it was not
_ previously available. If an application for
rehearing is timely made., the time to appeal will'
be tolled until, the decisi~ on ranting or
denying a rehearing
is
mace. I~ehearinq is
allowed, the a~raminer s decision shall. be
withdrawn..
Subdivision 8. Time Limit. All variances granted
pursuant to this section shall, acid the decision
of the hearing examiner will, so state, lapse and
terminate if the structure requiring the variance
is not completed within one year of the date it is
granted.
Subdivision 9. Reports to City Council and
.Planning Commission.. The Committee of Hearing
Examiners shall at least annually Drepare a report
for the Citv Council and the Planning Commission
outlining-the •activities of the hearing examiners
and making recommendations relative to possible
zoning ordinance amendments to expedite the
processing of land use reQUests currently treated
as variances.
Subdivision 10. Expiration. This section shall
expire one year from its effective date unless the
City Council shall, by resolution, extend it for
an .additional period or ceriods.
_ , • - ~ I~_
II. By amending Section 3.40 entitled "Board of Adjustment and
Appeals" to read as follows:
3.40 HOARD OF ADJtTSTME~iTS AND APPEALS
.Subdivision 1. Creation. The board created is
this section is established in conformity with
. Minnesota Statutes, Section. 462.354, Subdivision
~2, and the .provisions to.which it refers.
Subdivision 2. Council Shall Act as Board;
Powers. The council shall serve as the board
created in this section:--~?ze~--t~-~_._..:-~-~9--sue
aetseq? ~ -hee--ire--~e~~eN~ag--peer to hear and
decide apgeals where- it is alleged that there is
an error in any older, requirement, decision or
determination made by an administrative officer in
the enforcement of this part of this chapter.
~=aa-$E1:..:.~--ESP- :.C ~$5~4~i~-A~iB- ~ £~r-E~F~--'r~s'-r36aN~
6'$AA~s--&~~&- :~-~t?k~~ Hearing examiners
from-the Committee of Hearing. Examiners created
pursuant to .Section 3.4OA of this ..Code shall heart
subject to the rictht of appeal to the council as
• Erovided in Section 3.40A, requests for variances
from the literal provisions of this part in
instances where their strict enforcement would
cause undue hardship because of circumstances
unique- to the individual property under
consideration, and to grant such variances only
a when it is demonstrated that. such actions are
consistent with Minnesota State- Statutes, Section
462.354, Subdivision 6 sand any amendments thereto
. and will be keeping with the spirit and intent of
this part. ~z- ,.....~.,.::}--cis--ids--agent--a~a~--nbt
pesast-ae-s-bar~eaee-aa~-eae-t3zQt-ia-net-pex~aitted
etades-tills-part-far-preperty-ia-ti~e-cane-Khere-tote
affected-peravaje-iaad-ta-~eeated---4~ke-eetsaei=-er
$ts-agent-atey-ia+pose-eeadtb=ena-$rt-tiro-graatsng-er
sariaaees- h.. . _ -~.....r,~--~:.:. W -t.. preteet
ed~ceert--r:..r _~?±ics- In the event that the
authority of the Coamtittee of Fiearina Examiners
.shall exr~ire ..pursuant to Section 3.40A,
Subdivision Z0, such expiration shall
automatically vest authority in the council to act
as the 'Board of Adjustment and ADOeals with.
resvect to the matters previousiv within the
jurisdiction of the Committee of Keariaa
Examiners..
Subdivision 3. Application for Ae~~e~et.-~e:~t
~ Appeal-F,ee. Application for .any ar~~~sezser~t appeal
i.~ permissible under provisions of this section shall
S be made ' to the ektaf--~.:,~, city manager by'
'written application. An application for
~-:9
ad; tietasent appeal shall be accompanied by paymemt
of a fee as provided in Appendix D of this Code in '
addition to the regular building fee, ~if any.
(Bill 1977-I6) 8/8/77
Subdivision 4. Public Hearing on r~d'teet,~ter~t
Appeal. IIpon receipt of any application, the
council may set a time and place for a public
hearing on such application. At least 10 days
before the date of any such hearing, a. notice of
the hearing shall be published once in the
' official newspaper. -
.Subdivision 5. Requirements for Compliance. In '
all cases in which adjustments or variance appeals
are granted under the provisions of this section
or Section 3.4OA, the council shall require such
evidence and guaraatees as it may deem necessary
to insure compliance with the conditions
' designated in .connection therewith.
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Ad~e~st3ner~t---ar-- 6~ar~artec----~.:~..:. _ --gr~r~:..y~--sa
epp~seaters- - -ed~~~t~ee~t--Qr-ws~=cei,~.:,--tke .
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eeadttseaa-a£~Ceetsr:g-tile-parttees~er-~ar~d -but~eitag
er-+s~e-~~c.. _ l -t~-~sr--t~te~-app~i~.~. E.iorr,--... ~ b-ee~ea
` te-etizer-prepert=es-trs-this-er-e:msssr-dsetr~etar
~~}--~Phett-~.~ie-~:. ~..ts~x3--e~--t~te~-ap~g~ieat~err-sa
neee~sary--fir--thr-~reae_ ~ .:.ti-cwt--and--e~sr~..._~.~. -e~
sesbstaatse~-p~eperty-rtg3~t9-
. ~{3}--4~3~at--tlse--gi~srg~--fry-tire--spp~seat~ea
~r~~~--r:et---mater~a~~y--ar:d--ad~rer~e~~--e~~eet--tote
hers~ti~-er-ee~ety-ef-peraera=res~diaq-er-Ker~trtq-~t~
tine-r_aig~ heeei ~v€ -t~:e- r.:. r, _s b~ f~-tke-appz~eart
nnd--~v~*~~~--suet--i, ~ater~a}~~-~~:..._.. t., -tine
pe~~~e---~e~3-fsx~e---o-r--ta~~tt~eas---~v---r:.,.r_~ E.~ --ems
sa~pre~re~aertts-3~-tire--~re~i .--~rt~-tie-hesr~3g
the--~pp~~ens~t---s~rai3---art--~r--sta t _rrt--a~ei
ear=denez--3~-.--s~uc,~r--;., y...~-as--~si~e~--es.~,r--Qre~- .....~..~:~-c-te
akeM-tzt9e-wets-
Subdivision ~ 6. Orders. The council shall
within a'reasvnable time made its order deciding
the matter and shall cause a copy of its order to
be served by mail upon the petitioner.
.Subdivision 8 7. Record of Proceedings. The
council shall maintain a written record of its
proceedings which shall include minutes or
meetings, its findings in cases before it, and a
record of action taken on each matter before it
including the final order.
" ~
6e~d#~r~s3oa--~;._-Seri-~r--'o~--~I.:......~r.~- t.. ~ . --2~e
deeiaiea-ai~ns~-~-~ra~ e-wry-~:e-~-err-cr_~-zae tte-
befere---i-~--+t~r~--tbe--p3.-~.....i-rrg-- ~.~~..~~--aet3~g
passetaat-te-zts-aether~ty-as-aet-£eyt?~-tn-dart-~T=~
e~-this-c?:..r -s~:e3.~--f~=*~--~rL-~re--?-a~ci-a-reeao~eb~e
eppertesstpT-~L ~ t~-~~:~~ -6~F3--~~s-,- -re~t~tx-and
repent-te-t~c-rt. ~ ,:u „i-i-~~ ~u -~~-!~-±-~±_-r-~-e~rrae-te
~t-by-t.~e-eeeae=~-
Passed by the City Couacil of the City of Richfield,
Minnesota this day of ~ 1985.
John N. Hamilton, Mayor
ATTEST:
Thomas Ferber, City Clerk
a
~~_l
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 269
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Planned Unit Development Plan Amendment to
Contract For The Sale of Land For Private
Development with Market Plaza Corp.
Council Members:
On December 10, 198, the city council approved a final
development plan for the Market Plaza development at 66th Street
and Lyndale Avenue with the following stipulations:
1. That the condominium owners be given priority for use of
the apartment garage spaces not needed for apartment
tenants;
2. That condominium and apartment visitors not be
prohibitied from using the commercial parking spaces on a
short term basis. This would not prohibit the applicant
from enforcing reasonable restrictions to prevent long term
parking which might adversely affect the commercial uses on
the site;
3. That the grading details of the interface between the
Wendy's property and the Market Plaza property and the area
within the vacated Graham Avenue adjacent to 65th Street be
submitted to the city engineer;
4. A final plat should be submitted;
5. That the final utility plan be submitted for approval by
staff;
6. That a fire protection system be submitted for approval
by the public safety department;
7. That no berm be constructed along 65th Street and
adjacent to the building, so as to provide space for snow
storage; and,
8. That trucks using the receiving area within the 65th
Street right-of-way not be permitted to obstruct traffic in
the traveled roadway of 65th Street.
.
-2-
• On May 14, 1984, the HRA, and City, entered a Contract with
Market Plaza Corporation, Arkell Development Corporation and E.
J. Plesko and Associates as co-developers for the development of
the "Godfather Block". Several amendments to the Agreement were
approved by the the city and HRA in November and December of
1984. The purpose of this letter is to identify the
construction project changes that have been made or need to be
made since the HRA approved exhibit H in November of 1984.
These changes are in anticipation of construction beginning
in August, 1985. Provided in your backup are the approved
project plans concerning Exhibit H dated November, 1984, and the
revised July, 1985 plans.
The approved planned unit development plan approved by the
city required a land exchange between the developer and the
owner (Strom) of the site occupied by Wendy's restaurant. The
developer has been unable to successfully negotiate this 400 to
500 sq. ft. land exchange. Several of the construction changes
are the result of the absence of the land exchange.
The plan changes proposed include the following:
(a) The configuration of the buildings have been changed.
The east end of the commercial level has been angled to the
south to keep the building from encroaching on the Wendy's
property. The commercial and apartment buildings have been
squared off where possible to reduce costs. The reconfiguration
of the apartment structure has resulted in an additional 4
dwelling units [changing the total number of units from 162 to
166]. The 4 additional units are one bedroom units.
(b) The grass floor area of the structure has increased
from 316,440 square feet to 322,659 square feet. This is an
increase of 6,219 square feet. The commercial floor area
increased 6,804 square feet and the garage area increased 7
square feet. The commercial floor area was increased by
reducing. the public area of the mall. The apartment floor
area decreased by 592 square feet.
(c) The building has been pivoted southward slightly to
provide additional space in the delivery area on the northeast
side of structure. With the additional space, trucks in the
delivery area will not obstruct the travelled roadway of 65th
Street. The garage entrance in that area has also been
eliminated so that the loading area will function better.
(d) A small maintenance building has been added on the west
side of the structure.
(e) Interior commercial spaces have been reconfigured and
the mall width has been reduced.
(f) The parking layout has been reconfigured in the
apartment guest parking area on the west end of the structure
and in the commercial parking area adjacent to the Wendy's
property. Additional guest parking has been provided in the
-3-
• landscaped area under the canopy on the west end. Guest parking
increases from 11 stalls to 13 stalls. The number of commercial
parking stalls decreased from 295 to 291 because the previous
proposal allowed for too few handicap parking stalls. The
driveway connection between the Market Plaza parking lot and the
Wendy's parking lot will not be construced.
(g) The project sign (tribute) location has been shifted
from the triangular shaped island in the parking lot to an area
adjacent to the 66th Street and Lyndale Avenue intersection.
This sign (tribute) may include a clock and other pedestrian
amenities. The final design is still being perfected. To date,
City staff has favored using public right-of-way far the tribute
but has rejected City financial participation.
The city's planned unit development (PUD) ordinance requires
that the devleopment of the planned unit development district
shall be in substantial compliance with the approved PUD plan,
final development plan and conditions imposed by the council.
Compliance shall not be considered substantial if there is:
(a) more than ten percent change in floor area in any one
structure;
(b) more tYian a ten percent change in the original approved
separation of buildings;
(c) any change in the original approved setbacks from
property lines;
(d) more than 5 percent change in ground area covered by
the buildings; or
(e) any change in the ratio of off-street parking and
loading space to gross floor area in the building.
The revised plan would not be in substantial compliance with
either the approved PUD plan or final development plan because
the ratio of off-street parking to gross floor area has been
decreased. Therefore the city must approve a plan revision
before building permits can be issued for the project.
Staff has reviewed the proposed changes. They are
acceptable. When applying city guidelines for parking there is
a potential shortage in the number of parking stalls provided
for the commercial uses in the development. The shortage has
increased from 60 spaces to 93 because of the increased
commercial square footage and the reduction of the number of
parking stalls provided. However, the mixed use nature of the
project reduces the amount of parking required on the site and
the parking provided should adequately meet parking demand.
• Regarding the exterior facade material, there will be three
different colors used on the walls: light gray brick, dpark gray
brick, and, white stucco or white brick. The dark gray brick
will be placed on the commercial component and will match the
dark gray brick on the first two levels of Woodlake Point
(garage area).
The planning commission reviewed the revised PUD plan and
recommended that the city council approve the revised plans
subject to the original 8 stipulations outlined above and the
following two additional stipulations:
1. That a 3 foot high brick wall suitable to protect
pedestrians from the difference in grade on the east
side of Market Plaza between its parking lot and the Wendy's
property be erected of brick the same color as that used in
the retail structure.
2. That a suitable area of off-street parking, for loading
and unloading moving vans and ether vehicles, be provided
for the 65th Street entrance to the apartments.
The HRA reviewed the revisions and the additional planning
commission stipulations. They concurred in the eight
stipulations and the one Planning Commission stipulation
regarding the brick retaining wall, but arrived at a different
conclusion regarding an off-street parking area for vans. They
requested that a statement be added to Exhibit H which would
require the developer/owner to install a loading and unloading
zone if requested by the City. The City would request the
installation if problems of congestion developed because of the
lack of such a facility.
The City Manager recommends the modifications to Exhibit H
of the developers agreement as indicated on the attachments and
the revised PUD and Final Development Plan, off-street parking
agreement subject to the 10 HRA approved stipulations.
spectfu 1 ubmittted ,
John G. Car right
City Manager
JGC/eja
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CITY OF RICHFIELD, MINNESOTA
• Office of City Manager
Council Letter No. 268
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Approval of Minutes, Tabulation of Bids and Award
of Contract for 1985 Sidewalk, Curb & Gutter and Crosswalk
Repair
Council Members:
On Friday, July 12, 1985, bids were opened for the 1985
Sidewalk, Curb & Gutter and Crosswalk Repair project. This
improvement project consists of removal and replacement of
concrete sidewalk sections and curb & gutter in various portions
of the city. A majority of this work is necessitated due to
heaving of the concrete by boulevard tree roots. A section of
deteriorated bomonite crosswalk in the L/H/N Redevelopment Area,
at 66th Street and Nicollet Avenue and at approximately 65 1/2
Street and Nicollet Avenue, will also be removed and replaced as
part of this contract.
Two bids were received for this work. The bid minutes and
tabulations are attached for council review. The engineer's
estimate was $43,100. The low bid was submitted by Edward
Watson Construction Company, Inc. of Minneapolis. It is
recommended that the city council take the following action:
1. Accept the bid minutes;
2. Pass the attached resolution to award the contract to
Edward Watson Construction Company Inc. in the amount of
$40,611.
R pectful~s mitted,
~dohn G. artw 'ght /
City Manager
• JGC/eja .
RESOLUTION N0.
RESOLUTION ACCEPTING BID AND AWARDING CONTRACT
FOR CONCRETE SIDEWALK, CURB & GUTTER AND CROSSWALK REPAIR
WHEREAS, pursuant to an advertis°ement for bids for the
removal and replacement of concrete sidewalk, curb & gutter
and crosswalk repair in various portions of the City of
Richfield, bids were received, opened and tabulated according to
law;
AND WHEREAS, it appears that Edward Watson Construction
Company, Inc. of Minneapolis is the lowest responsible bidder;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Richfield, Minnesota:
1. That the bid of Edward Watson Construction Company,
Inc, for construction of the above-mentioned project with
estimated construction cost of $40,611 is hereby accepted;
2. That the mayor and city manager are hereby authorized to
enter into a contract with Edward Watson Construction Company,
Inc. in the name of the City of Richfield for such improvement
according to the plans and specifications;
. 3. That the city clerk is hereby authorized and directed
to return forthwith to all bidders the deposits made with their
bids, except that the deposits of the successful bidder and the
next lowest bidder shall be retained until a contract has been
signed.
Passed by the City Council of the City of Richfield,
Minnesota this 22nd day of July, 1985.
John Hamilton, Mayor
ATTEST:
Thomas Ferber, City Clerk
~
CITY OF RICHFIELD
Bid Opening
July 12, 1985
Sidewalk and Curb and Gutter Repair
Bid i,o. 85-11
Pursuant to requirements of Resolution No. 1015, a meeting of the Administrative
Staff was called by Thomas P. Ferber, City Clerk, who announced that the purpose
of the meeting was to receive, open, and read aloud, sealed bids for Sidewalk
and Curb and Gutter Repair, as advertised in the official newspaper on June 26,
1985.
Present: Thomas P. Ferber, City Clerk
Steven L. Devich, Administrative Services Director
Art Bailey, City Manager Representative,
Engineering Tech.
The following bids were submitted and read aloud:
BIDDER BID SECURITY TOTAL BID
Edward Watson Construction .Inc, Mpls. 5% 40,611.00
Victor Carlson & Sons, Mpls. 5% 66,452.48
The City Clerk announced that the bids would be tabuiated and considered at the
July 22, 1985 City Council meeting.
Thomas P. Ferber, City Clerk
f~
KENNEL LICENSE APPLICATION INSPECTION
Name !''h`~?l,' 1~' ~ j ~ ~
Address ~7 -a
_ J
Number of Animals: ~ dogs eats
~ '
Breed: J~~,l~~~~~~, L;(.~:.~~-• ~~._f„1'_ Imo' ~ (a
~ iJ ~
Are animals currently licensed? yes no
Number of residents occupying dwelling
Is yard enclosed with a fence in good repair? Yes No
Will fence keep animals on owneris property? Yes~~• No
Is yard kept clean and free of animal droppings, etc.?
Yes ~ No
Is garbage stored in covered metal container? Yes No
Are pets kept for breeding purposes? Yes No /c
~ ,
How are pets exercised? (Where - areawise) _ f %ri.'
h~~K~~~~~~'%
Are there unpleasant odors present? Yes- No
Have all abutting property owners signed a petitioh_of
approval for a kennel license far this number of animals?
F
Yes No
If not, why not?
Additional Comments:
Inspected By ~Vr; S;'{, ~ > j ~ ~
;;,J''Z ~ Date E~l~~k"~
~
KENNEL LICENSE APPLICATION INSPECTION `
Name ~r Ifs%` 11 !1. ~v t r
I
Address ~y ~ l ~ l-~'. ~ r ~ l-~(-~
Number of Animals : dogs '.eats
Breed. ~ ~ ~~.L , ~
Are animals currently licensed? yes no
Number of residents occupying dwelling
.,1
Is yard enclosed with a fence in good repair? Yes No
Will fence keep animals on owner's property? Yes l1 No
Is yard kept clean and free of animal droppings, etc.?
Yes ~ No
Zs garbage stored in covered metal container? Yes F~ No
Are pets kept for breeding purposes? Yes No
How are pets exercised? (Where - areawise ) ~1~ f)~-(%~'~
x;17
Are there unpleasant odors present? Yes No
Hare all abutting property owners signed a petition of
approval for a kennel license for this number of animals?
. Yes Nc
T_F not, why not?
Additional Comments:
Inspected By ~ ; - = ~ - , Date ~ =Y
i
~ ~ G .i i ~ ~ l
• KENNEL LICENSE APPLICATION INSPECTION
Name ~~1~ ~r_ l` ` ~i
A~ ~k'~' i-' ~'i
_ Address 7~ .7 ~~c' rT r,'=
Number of Animals: dogs ~ 'eats
1~
-
Breed : ~~4_~ y ~ ~ ; ~'1=',~,i~~ i
~ j~ ~l i~~-
i f
Are animals currently licensed? ~ yes no
Number of residents occupying dwelling
Is yard enclosed with a fence in good repair? Yes j, No
Will fence keep animals on owner's property? Yes/~^ No
Is yard kept clean and free of animal droppings, etc ?
Yes ~ No
Is garbage stoned in covered metal container? Yes ~ No
Are pets kept for breeding purposes? Yes No
How are pets exercised? (Where - areawisej
Are there unpleasant odors present? ,Yes No k
have all abutting property owners signed a petition of
approval for a kennel license for this number of animals?
. Yes ~ No
If not, why not?
Additional Comments:
Inspected By . ~ ~ ; .Date ~ ~ ~
~yG~
Church of the Assumption
305 East 77th Street
Minneapolis, Minnesota 55423 • 866-5019
July 5, 1985
City Council
City of Richfield
6700 Portland Avenue South
Richfield, MN 55423
Dear Council Members:
Attached are applications for Assumption Church's annual Fun Fest. These
include an application for an itinerant food license, application for
itinerant places of amusement, and an application for a non-intoxicating
malt liquor license.
In as much as it is felt that the Assumption Fun Fest is, in a sense, a civic
celebration, it is requested that the City Council pass a resolution ap,:~ovino
the Fun Fest as a civic celebration on a daily basis for August 17 and 18, 1985,
and that all fees and bonds for the above mentioned licenses be waived.
Also enclosed with this letter are: a diagram of the booths and activities;
a schedule of activities; a listing of the games being played in addition to
Bingo and the raffle; a copy of the raffle letter to be sent to parishioners;
and a listing of foods to be sold at the various booths.
Thank you for your consideration.
Very truly yours,
Michael V. Dols
Parish Administrator
Enc:
DATE: July 18, 1985
TO: Lieutenant Barry Fritz
FROM: Agent William Rollick
SUBJECT: Assumption Church
Applications for Itinerant Places of Amusement and
Non-Intoxicating Malt Liquor License
On July 5, 1985 Mr. Michael Dols submitted applications for the two
above named licenses on behalf of the Church of the Assumption in
connection with the church's annual Fun Fest which will be held on
August 17 and 18, 1985.
Information supplied by the applicant appears to be complete and in
conformance with city ordinance code requirements. In addition, Mr.
Dols, the parish administrator, has no known criminal record.
Richfield Ordinance Code 11.02 Subd. 2 allows the city council to
permit a church to serve non-intoxicating malt liquor without a license,
free of charge, for a period not exceeding 12 hours and not more than
three times per calendar year. As of this date Assumption Church has
not requested such a permit and therefore is elligible for such a
permit. Finally, based upon the action of the city council in previous
years to grant the waiving of fee for an Intinerant Amusement License
I am recommending that the council approve both license requests on a
fee waived basis.
WJH:lkw
~
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 267
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Appointment of Acting City Manager During
Absence of City Manager
Council Members:
During the period of August 3, 1985, through August 24,
1985, John G. Cartwright, City Manager, will be in Europe on
vacation with his family.
During an absence of the City Manager, it is appropriate for
the City Council to appoint an Acting City Manager. It is
recommended that Steven Devich, Director of Administrative
Services, be appointed as Acting City Manager for the period
August 3, 1985, through August 24, 1985•
eetf u mitted ,
~~c , ~1~~i2c ~V
h
o n G. Ca twright
City Manage
JGC/eja
•
CITY OF RICHFIELD, MINNESOTA ~
Office of City Manager
Council Letter No. 266
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Purchase in excess of $5,000
Council Members;
The city council policy resolution on~purchasing provides
that when the purchase of merchandise, materials, equipment or
construction exceeds the amount of $5,000, the authority to
purchase shall be submitted to the city council for considera-
tion. There is one such item on the July 22 agenda.
Community Center Improvements
As part of the Community Development Block Grant funded
project providing improvements at the Community Center,
quotations were received for the following work:
1. Installation of new soffit fixtures and replacement of
old soffit fixtures on exterior of building to provide
improved lighting of sidewalks, entry and building
exterior.
2. Installation of outside receptacle on east side of the
j building.
3. Installation of lighting on patio using four pole lights
similar to those in the LHN and at city hall.
4. Installation of outlet in new room of building.
5. Sod replacement in the area excavated for underground
conduit from the .building to the patio.
Two quotations were received. Don Von Electric quoteda$5,~u9•
It is recommended the city co~lneil authorize a contract for the
electrical work with the low bidder, Linden Electric, in the
amount of $5,359•
s ectfu bmitted,
hn G. r aright
City Manager.
JGC/eja
/
CITY OF RICHFIELD, MINNESOTA
• Office of City Manager
Council Letter No. 265
Agenda July 22, 1985
The Honorable Mayor
and
Members of the City Council
City~of Richfield
Subject: Focus Group for Needs Assessment Study
Council Members:
Background
About a year ago the City Council asked city administration
to prepare a plan a long range and cost estimate far the future
of the Community Center at Nicollet and 70th Street. This
request was prompted at the time CDBG funds were being
allocated to make about $100,000 in improvements at the
Community Center. The improvements included a bus turn out
• lane, a new outdoor patio, new storage areas, and, other
improvements. Richfield has received a $20,000 CDBG grant for
an assessment of elderly and handicapped needs in the City.
This comprehensive study will aid the City staff in preparing a
report on what resources - both physical and financial - will be
required by the City to meet our long term elderly and
handicapped services. This study will also address the long
range plan for the Community Center.
The Process
An identification of existing programs and resources, a
computation of city demographics, a survey of a variety of ages
in the community, analysis of the survey returns and a
recommendation for providing services are all a part of
the project. The city has obtained the services of the Social
Research Center of St. Olaf College to do the survey and the
Department of Management Services of Hennepin County to analyze
and reflect the survey results.
As part of the project, the city is forming a "focus" group
of community leaders to provide input and comment to help
develop the survey instrument and provide direction far the
project. Time commitment for focus group members would involve
a one hour interview with Kris Bulcroft from St. Olaf College in
late July and one or two other meetings with the entire group in
• August or September. The focus group will be an important part
of the total project and it is important to obtain group members
as soon as possible to g~,.t the project moving.
-2-
It is recommended that two members of the city council °
serve as part of the focus group. It would be appropriate
for the City Coucil to disignate the two members at this time.
Respectf l~ s bmitted,
/
t~ G ~ti~1
John G. VCa twright;
City Manager c//i
JGC/eja
i
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 264
Agenda July 22, 1985
The Honorable Maycr
and
Members of the City Council
City of Richfield
Subject: June 20, 1985, Management Letter in Ccnnection
with Financial Statements far Fiscal Year 1984.
Council Members:
The June 20, 1985, Management Letter submitted to the writer
by our independent municipal auditors offers for review their
observations and recommendations cn six internal control
weaknesses. This letter also makes suggestions fer changes in
procedures which would strengthen internal ecntrcl or contribute
to the improvement of operating efficiency.
This city council letter provides city administraticn
• response to each internal control item.
1. Observation: noticed large variances between physical
counts and the perpetual records on interim inventory counts
for the municipal liquor stores.
Response: Yes, city administration concurs that the
liquor inventory discrepancies are a serious issue. Before
discussing pcssible actions to take, the writer wishes to
set forth the procedures followed in maintaining liquor
inventory. The procedure involves these steps:
1. A physical count of liquor inventory is taken every
quarter.
2. The weekly sales at each store are turned over to Data
Processing, which must key in total bottle sales by each
liquor store to update the perpetual inventcry.
3. Quarterly, the perpetual inventory is compared with the
physical inventory.
The problem is that when discrepancies are observed between
the physical and perpetual inventories, so much time has
passed that it is difficult tc learn where the mistakes are
made .
~d
-2-
The action to be implemented during the second half of FY
1985 is to assign Finance Division employees to conduct
. monthly surprise inventory counts. Each month, except the
third, sixth, ninth and twelfth months set aside for
quarterly inventories, will find one of the three stores
being inventoried on selected items.
It is anticipated that the results will include: a more
frequent opportunity to try to find out why we are making
mistakes; a check on inventory items showing the greatest
variances between physical and perpetual counts; and, an
awareness by employees involved that there is a greater
effort to maintain an inventory with as few variances as
possible.
Finally, city administration and the auditors both concur
that liquor inventory is one of the best justifications for
recommending a new computer system.
Efficiently operated retail stores now use a paint-of-sales
computer program to maintain perpetual inventories on a
daily basis. What is needed is a system that will record
daily purchases and daily sales from each of the three
stores which would provide management with a daily perpetual
inventory count.
Hcw serious is the current situation? During fiscal year
• 1984, the physical and perpetual inventory cn quarterly
basis were ever 5,000 bottles apart for the entire year
(see Attachment A).
Observation: Bank reconciliation should be automated by
instituting a computer program tc reconcile the thousands of
checks processed monthly.
Response: Finance Division concurs and reports that a
request to Data Processing for such a program has been
submitted.
Data Processing Division has experienced a backlog of
requests for similar programs and has been, to date, unable
to address this item.
During 1984 and 1985, Data Processing has been involved in
the following assignments:
1. Personnel records programming.
2. Revisions to the payroll program.
3. Lead role on the computer task force committee.
4. Storm sewer utility fee program.
5. Revise water and sanitary sewer bill programs to (a)
implement rate increases, (b) a new sanitary sewer
• minimum bill and, (c) 3 new late penalty provision.
6. Introduced financial spreadsheets and graphics
-3- Ss~~
programming and conducted training for all departments
on the use cf these tools.
The Director cf Administrative Services will be assigned the
responsibility to recommend a priority listing of all pending
requests for revisions to existing computer programs to the
management team for review and implementation.
3. Observation: Auditors have observed a substantial delay
in reporting financial information to management.
Response: The identified area responsible for the delay
is the cost accounting functions performed for operating
divisions at the city garage. '
The Director of Administrative Services will be assigned the
responsiblity to form a task force to analyze the problems
and propose solutions.
One factor in the problem may be the change over cf
personnel in the cost accounting position. Another
possibility may be the work load is too great for one
individual.
Observation: Many schedules and reports, especially
those related to the budgeting process, are being done
manually when they could be automated.
• Response: City staff agrees. This issue is similar to
item ~~2 (bank reconciliation) in that our data processing
work lead is so great that available time for new
programming is extremely limited.
Also, especially with the introduction of financial
spreadsheets we have learned that our Four Phase IV-95
system is too slow when there is more than one user an the
system at the same time.
5. Observation: Existing automated financial records require
revisions to eliminate extra efforts to produce financial
reports.
Response: Staff concurs that this is a continuing
problem. The Data Processing division workload has more
program requests by the users than it can meet.
Auditors concur that some changes at this time should not be
undertaken until the issue of a new computer system is
resolved.
6. Observation: The City may lack sufficient depth in
certain key financial and non-financial positions.
• Response: City administration has recognized this issue
as an important matter to deal with.
ss
To date, the following actions have been taken:
1. The Administrative Assistant to the City Manager is
preparing a manual on her job responsibilities.
2. The Personnel function is completely set out in manual
form.
3. The City Clerk job responsiblities were compliled in a
manual in January, 1985• '
All Finance Division employees are in the process cf
compiling a manual on their job assignments.
5. The Data Processing Division will undertake this
responsibility for a job manual as soon as a decision is
made on whether the City will acquire a new computer
system.
Opportunities for employees to gain greater departmental
understanding of the department functions will be emphasized
utilizing available training resources.
On behalf of the City staff, the writer wishes to
acknowledge the outstanding help provided to our employees and
staff by the very professional firm of Cummings, Keegan and
Ccmpany.
• e pectf 11 s mitted,
~
p ~j~i%-`~v R
John G. Car wrigh
City Manager
JGC/eja
cc: Steve Devich, Administrative Services Director
Don Fondrick, Community Services Director
Dennis Kraft, Community Development Director
Bill Fillmore, Liquor Operations Director
Tom Morgan, Public Safety Director
Jean Mitchell, Finance Manager
•
s
Attachment A
i
~ LIQUOR STORE
1984 BOTTLE DIFFERENCES
(Under) Over
Inventory Date Lyndale Cedar Penn Total
3/31/84 (1,910) (1,273) 484 (2,699)
6/30/84 (5,094) 39 323 (4,732)
9/29/84 860 (1,220) (968) (1,328)
11/24/84 385 (371) 1,800 1,814
12/31/84 441 1,709 (348) 1,802
1984 (5,318) (1,116) 1,291 (5,143)
The actual inventory shcws 5,143 under what the perpetual
• inventory indicates it should be.
JAMES J. KEEGAN, C.P.A. K MEMBERS OF
JOHN M. FREES, C.P.A. Ci a~~ • PRIVATE COMPANIES
JEFFREY D. EMERICK, C.P.A. PRACTICE SECTION OF
ROGER S. WHERRY, C.P.A. m m AMERICAN INSTITUTE OF
W.DONALDCUMMINGS.C.PA. ~ CUmm1n~S, Kee~a.n 8c Co. CERTIFIED PUBLICACCOUNOTANTS
• ( RETIRED)
C~~ ufied Public Accountants
6800 France Ave. So. • Suite 465 • Minneapolis, MN 55435
' Phone (612) 922-3622
ANOKA OFFICE: 6957 West Highway 10 • Anoka, MN 55303 •~Phone: (612) 427-3553 -
June 20, 1985
Mr. John Cartwright
City Manager
and the Honorable Mayor and
Members of the City Council
City of Richfield ~
6700 Portland Avenue South
Richfield, MN 55423
In connection with our examination of the financial statements of
City of Richfield as of December 31, 1984, we have made a limited review of
accounting procedures and internal control.. While the primary objective of
. such a review is to afford us a basis for determining the scope of our audit
procedures, it nevertheless presents us with an opportunity to submit, for
management's consideration, suggestions for changes in procedures. which, in
our opinion, would strengthen internal control or contribute to the improve-
ment of operating efficiency.
The comments in this letter are based upon observations made in the
course of such review. The review was not designed for the purpose of
expressing an opinion on internal accounting control, and it would not neces-
sarily disclose all weaknesses in the system. The matters discussed herein
were considered during our examination of the above mentioned financial state-
ments, and they did not modify the opinion expressed in our report on those
financial statements. However, we offer for your review the internal control
weaknesses, as noted on the following pages and our proposed solution thereto.
ACTION TAKEN
Liquor Inventory
During our observation of the liquor inventory,
we noticed large variances between physical
counts and the perpetual inventory records on
interim inventory counts. It appeared that
these variations were cutoff problems (i.e.
items on the shelves but not in the perpetual
inventory accounting records, or vice versa) as i
they reversed in future periods. ~ ~
¦
Accounflng
Flans
Associated
inc.
ss~
City of Richfield
Page 2
ACTION TAKEN
No satisfactory reason for the variances was
discovered until three months after the
variances arose when they reversed at the time
of the next. physical count. We recommend that
the perpetual and physical inventory variance
reports be prepared immediately after a physical
count. At this time, the City would still be
able to determine causes for variations between
perpetual and physical on a time effective
basis. Waiting more than a few days after a
physical count of a high turnover inventory like
liquor makes it next to impossible to track down
potential causes of any variance. Substantial
losses could be incurred by the City and not
discovered if these variances continue and are
not reconciled and resolved timely.
Automated Bank Reconciling
As we~recommended last year, the bank
reconciling function could easily be automated.
Automation would eliminate some of the tedious •
aspects of this chore and greatly reduce the
time spent each month in recociling the bank
accounts.
Financial Reporting
During our engagement, we become aware of a
substantial delay in reporting financial
information to management. It appeared to be
caused for the most part by slow processing
time, lack of timely information and under
utilization of possible data processing
applications. We recommend that the City study
the financial information system to discover
potential time saving areas and to determine how
to implement them so as to eliminate some of the
de Lays in preparing financial reports for
management.
City of Richfield -U
Page 3
ACTION TAKEN
Computer Applications in the Finance Department
Currently many schedules, reports (especially
the budget document and related budget
workpapers used by department heads) and other
procedures that are being done manually could be .
automated. Too much time is spent manually
creating some of these documents when a lot of
the information is already available on the
computer. We are aware of the computer problems
of the City and. hope that care is taken to plan i
for implemenation of manual procedures that '
would best be automated.
Computerized Reports
We would like to repeat our comments from 1983 i
regarding computerized reports:
After using various financial reports during the
course of the audit, we noted certain reporting
functions that could be improved.
Specifically, the annual general ledger con-
. twined a subtotaling function that was unusable
and the report. spacing/layout made it difficult
to read and use. Other reports should be
reviewed for both clarity and ease of use with
any desired changes being referred to the data
processing department. The ability to make user
requested changes is a benefit of having an
in-house data processing center.
In addition, certain "automatic" journal entries
created by the computer are subsequently hand
typed, and re-keyed into the computer in order
for them to post to the-general ledger. A short
program, if feasible, should be written to
• eliminate the interim manual procedures.
Key Personnel
We feel the City may lack sufficient depth in
certain key financial and non-financial
positions. We recommend that the City evaluate
key positions and determine the consequences of
personnel leaving or being absent from these
positions. Perhaps some duties which are solely
the responsibility of one individual could be
divided among. several responsible persons.
Along these same lines, as we have recommended
in the past, an accounting manual and even a
data processing manual would be invaluable for
training new personnel when a key person leaves.
City of Richfield ~s~ -
Page 4
The objective of internal accounting control is to provide reasonable, .
but not. absolute, assurance~as to the safeguarding of assets against loss from
unauthorized use or disposition and the reliability of financial records for
preparing financial statements and maintaining accountability for assets. The
concept of reasonable assurance recognizes that the cost of a system of inter-
nal accounting control should not exceed the benefits derived and also
recognizes that the evaluation of these factors necessarily requires estimates
and judgments by management..
There are inherent limitations that should be recognized in considering
the potential effectiveness of any system of internal accounting control. In
the performance of most control procedures, errors can result from misunder-
standing of instructions, mistakes of judgment, carelessness, or other
personal factors. Control. procedures whose effectiveness depends upon segre-
gation of duties can be circumvented by collusion. Similarly, control proce-
dures can be circumvented intentionally by management either with respect to
the execution and recording of transactions or with respect to the estimates
and judgments required in the preparation of financial statements. Further,
projection of any evaluation of internal accounting control to future periods
is subject to the risk that the procedures may become inadequate because of
changes in conditions and that the .degree of compliance with the procedures
may. deteriorate.
These comments are intended solely for the use of management and should
not be used for any other purpose. We are available to answer any questions
concerning our comments and to assist you with implementation of any recom-
mended changes.
We wish to thank your staff for their cooperation and assistance during
our examination.
Sincerely,
• t A ,fit/`
Certlified Public Accountants
bl
/
CITY OF RICHFIELD, MINNESOTA
_ Office of City Manager
Council Letter No. 263
Agenda _-July 22, 1985
The Honorable Mayor
and
- Members of the City Council
City of Richfield
.Subject: City of Richfield Comprehensive Annual Financial
Report Highlights for Fiscal Year ,Ended December
31, 1984
Council Members:
The annual in-house financial report for the period ending
December 31, 1984, was completed by the Administrative Services
Department in late March, 1985. The audited financial report
was not completed at that time due to the provisions of our
audit agreement with Cummings,~Keegan, and Company which
provides that the audit. will be undertaken after April 15. The
City, in turn, received a reduced audit fee for this delay. A
report on the highlights of the 1984 financial statements was
prepared by City staff and submitted to the City Council prior
to April 10 in conformance with the Richfield City Charter.
The City staff subsequently received the City's
comprehensive annual financial report for the fiscal year
ended December 31, 1984. The document will be distributed to
councilmembers at the July 22 meeting. The Administrative
Services Director, staff of the auditing firm, and the writer
will review the financial report and the accompanying
management letter at the July 22 Study Session (starts at
5:30 p.m.).
The highlights of the 1984 financial report are:
General__Fund*
(000 omitted)-
. 1983 Actual 1984 Budget 1984 Actual
Fund Balance 1/1 $ 2.394 ~ $ 2.787 $ 2.787
Add Revenues 7.836 8.354 8.460
Add Transfers .209 .206 .217
_ Total Resources 10.439 11.347 11.464
Less Expenditures 7.652 8.560 8.349
Fund Balance 12/31 2.787 2.787 3.115
• Inc. To Fund Balance .39~ .328
*raunded off to nearest $1000
~S
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As shown in the chart above, the General Fund of the City at
1984 year-end. had a fund balance of $3,116,000, ,(all figures
rounded off to nearest $1000 for discussion purposes) compared
to $2,787,000 at the end of 1983• The fund balance increase of
$328,000 over budget resulted from reduced expenditures in the
cityTs operating departments and increased revenues.. Total
expenditures came in $211,000 over budget. The fund balance is
utilized to cover the temporary cash shortages in the General
Fund which are experienced in May and June of each year. The
two year increase to the Fund Balance is $722,.000!
Revenues in the General Fund were $105,000 over budget in
1984, due to increases in fines and forfeitures ($51,000)
and miscellaneous revenues ($61,000).
Cable television franchise fees budgeted at $75,000 were not
received in 1984. The interim Cable T.V. ordinance provides
. that 60~ of the $75,000 will be collected in 1985. Interest
income, which was budgeted in the amount of $.100,000, exceeded
estimates by $49,000.
Expenditures in the General Fund came in under budget by
$211,000. The Legislative/Executive Department was under budget
by $28,000, mainly due to reductions in expenditures in the
Mayor-Council, City Manager and Legal Division. The
• Administrative Services Department came in $81,000 under its
budget of $774,000. The Public Safety Department was under its
$3,956,000 budget by $6,000, while the Community Development
Department exceeded its budget of $350,000 was overspent by
$19,000.
The Community Services Department came in .$116,000 under
budget with reduced expenditures in virtually=every division,
with the majority of reductions occurring in the Street and
Recreation Department. All of the City departments showed a
continued commitment to containing the cost of operations. As a
result, the City has been able to significantly enhance its fund
balance position as of 1984 year end.
ENTERPRISE FUNDS (Water, Sewer, Golf, Liquor)
The writer, in presenting a financial report on Enterprise
Funds, shall emphasize the liquidity (cash investments, etc.)
position of the funds. The auditors fund equity and retained
earning figures include assets (land, buildings, equipment)
which are not easily converted to a cash situation and,
therefore, are not a clear picture of just what funds are
available for determing whether rate increases are necessary,
ar if funds are adequate to meet cash flow requirements or what.
capital improvements can be made.
The auditors also treat depreciation as an operating expense
which reduces operating income. The City, however, does not set
~.S /-,3
-3-
• aside the depreciation amount in a reserve fund to replace the
assets when they wear out. Thus, the depreciation expense is
only an account transaction. Depreciation expenses do not
reduce the City's actual cash fund balance.
Water Fund
1984 1983
Current Assets $ 952,000 $ 695,646
Less Current
Liabilities 94,000 75,633
Fund Balance $ 858,000 $ 620,013
The fund needs approximately $500,000 far cash flow purposes
(accounts recivable). $523,000 cf the $952,000 cf current
assets are customer deposits received by the City for the
installation of water meters.
Sewer Fund
1984 1983
Current Assets $ 287,000 $ 53,789
Less Current
Liabilities 22,000 18,097
Fund Balance $ 265,000 $ 35,692
This dramatic improvement in the cash fund balance should
• enable the City to absorb the metropolitan sanitary sewer
district 6% budget increase without a rate increase being passed
on to our Richfield sanitary sewer customers.
Golf Fund
1984 1983
Current Assets $ 33,049 $ 24,834
Less Current
Liabilities 56,495 24,231
Fund Balance $-23,446 $ 603
The Golf Fund cash fund balance is a negative $23,446. This
deficit could have been avoided by not making the $30,000
partial loan repayment to the sanitary sewer fund. The sanitary
sewer fund advanced funds to assist in the ecnstructicn of the
golf course.
Another factor contributing to the negative cash balance was
the need to add an additional full time position to improve the
course maintenance. Equipment continues to be replaced and
funds expended for improvements to the facility.
The Gulf Fund is not establishing a fund to make major
capital expenditures (such as the future replacement of the club
house, parking lots, driving range, etc.). The golf course was
funded primarily by issuing bonds. Debt service will be repaid
over the years from user fees. When it becomes necessary to
replace a major facility (i.e, club house), a new bond issue cr
SS
• loan will be required. This is a typical process for
municipalities to utilize in the operations of Enterprise Funds.
One final note, there is a provision in the golf course
lease with MAC that once the golf course becomes profitable, it
must then begin to share its profits, if any, with MAC.
Liquor Fund
1984 1983
Unreserved Fund
Balance $1,508,000 $1,486,000
Less Assets 774,000 806,000
734,000 680,000
Less Inventory
(casr. flow) 500,000 500,000
Cash Fund Balance $ 234,000 $ 180,000
The financial position of the Liquor Fund grew even after a
$390,000 transfer to The Special Revenue Fund, which is used to
finance major capital improvements and projects.
The important issues facing the Liqucr Fund are: the need
for a replacement store for Cedar Avenue; to finance sky-
rocketing insurance costs; and, the continued successful
profitability of cur operations so we can continue to finance
our needed capital projects.
Ccnclusion
Time and space do not permit a further discussion on 1984
highlights. The 5:30 p.m. study session will hopefully provide
adequate time to consider these and other financial highlights.
~pectf~ ubmitted,
ohn G. Ca twrig
City Manage
JGC/eja