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01-02-86 agenda CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No.~ 9 Agenda January 2, 1986 The Honorable Mayor and Members of the City Council City of Richfield Subject: Renewal Premium for City's Property and Casualty Insurance Package for 1986 Council Members: In September of 1985, the City staff began securing quotations from the Home Insurance Company and the League of Minnesota Cities Insurance Trust for the City's entire property and casualty insurance program. The property and casualty insurance coverages include: General Liability; Property; Automobile; Liquor Liability; Public Officials Liability; Police Professional Liability; Excess Liability; and, miscellaneous coverages. The City has been insured through the Home Insurance Company for the past several years. Each year the policy is renewable upon the option of both parties. During the Fall of 1985, the City learned that the Home Insurance Company was going to cancel the City's coverage for Liquor Liability (Dram Shop coverage). In addition, the coverage offered by the Home Insurance Company for the General Liability and Property package was also going to be subject to significant price increases after December 31, 1985. Council Members may recall that the insurance package for 1985 cost the City $385,000 as compared to $104,000 for 1984. Thus, a further increase in premiums for 1986 was very alarming to the City. The City worked with its agent, Marsh and McLennan, to solicit premium quotations from the League of Minnesota Cities Insurance Trust, the Home Insurance Company, as well as any other viable markets. Several insurance markets were approached for quotations for the placement of the City's Property, General Liability, Dram Shop and Auto coverages and Umbrella coverages. However, of the viable markets, only the Home Insurance Company and the League of .Minnesota Cities submitted quotes on the bulk of the insurance package. Dram Shop insurance coverage was not offered by either the League or the Home Insurance Company and was secured through a quotation from the new Minnesota Assigned Risk Pool. As can be seen from the following comparisons, the quotations submitted by the League and the Home Insurance Company represent another increase in insurance premiums from 1985. (Note City General Fund budget for 1986 includes an additional $50,000 for possible premium increases.) In addition, the dollar coverage itself is also reduced with the City having to assume larger deductibles. 1 i 1 86 9 1985 League Home Ins. Other Property & Gen. Liability $179,000 $223,766 $258,100 Liquor Liability 71,000 N/A N/A $56,000 Assigned Risk Pool Auto 26,443 32,705 84,031 Public Officials 6,648 14,853 N/A Police Profes- sional 17,834 22,257 N/A 39,153 Nation Casualty Miscellaneous (Crime) 2,211 League Assessment 26,710 Umbrella 50,985 78,200 N/A ($5 million) ($1 million) Excess Liability 27,250 N/A N/A $5-$25 Million Total Home Insurance Package $342,131 Total League Package $322,502 (Includes one-time $28,733 assessment) Total Liquor Package $ 56,000 Total Umbrella Package $ 78,200 Several factors contribute to the .City's current unfavorable insurance situation, including the following: 1) The current insurance marketplace is in .total turmoil on the national level. Insurance companies have either no longer writing municipal business and the one or two that are left are not very competitive, due to the overall poor risk of the business. 2) The Dram Shop insurance available to the City has dwindled to a point where the best possible solution for securing coverages would be to proceed through the new Assigned Risk Plan developed by the State of Minnesota, a program specifically designed to deal with the difficult Dram Shop insurance market in Minnesota. 3) While the City's loss ratios are better than in previous years, the municipal business as a whole is unattractive to underwriters. Thus, the City continues to suffer from being a municipality, and carrying over one large loss from the .early 1980's. In that particular loss, a traffic accident resulted in an individual being severely injured and a claim in that matter has been reserved by the insurance companies against the City for an amount in excess of $500,000. Umbrella Coverage A major consideration in securing insurance, however, for 1986 centers around the issue of umbrella coverage. The umbrella coverage is simply a liability insurance that takes over where the primary layer leaves off, up to a specified amount. The primary coverage as offered by the League of Minnesota Cities is $600,000. The primary limits offered by the Home Insurance Company are $500,000. The bids proposed to the City of Richfield include an umbrella policy which is fashioned to fit over the top of the League of Minnesota Cities primary layer. Thus, it would provide coverage for certain kinds of insurance, up to $1,60.0,000. It is important to understand that Dram Shop insurance (Liquor Liability) is not included under the umbrella. The umbrella coverage would cost the City $78,000 for the $1,000,000 layer.. The City has carried $25,000,000 umbrella insurance in 1984 and $5,000,000 in 1985. The $5,000,000 package in 1985 cost approximately $51,000, whereas the $1,000,000 now under consideration is $78,000. Thus, it can be seen that for some $27,000 more in premium, we're being offered $4,000,000 less in coverage. In addition, in 1985 and in previous years, the umbrella insurance always covered the Dram Shop insurance as well. It is not possible in this market to bring an umbrella coverage over our Dram Shop insurance. Alternatives The alternatives available to the City at this point involve the following: 1) The City could select the primary coverages offered by the League of Minnesota Cities Insurance Trust, which is the most cost effective proposal, at a cost of $322,502 and Dram Shop insurance at a cost of $56,000. In addition, the City could purchase the $1,000,000 umbrella for an additional $78,200, this for a total cost of $456,702. -The advantage to this option is that the City would purchase as much insurance protection as is available in the marketplace. 2) The City could. selected the League of Minnesota Cities Insurance Trust primary package, Dram Shop insurance and not purchase an umbrella insurance policy above that amount. The rationale for this option would be that the City could set aside the $78,000 that would have been spent in premium and initiate a self-insurance fund, which would be used as an umbrella over the primary layer the City would have. The self- insured umbrella fund could then be used to cover any loss which exceeded the primary layer, including Dram Shop insurance. ' 3) Another option to consider would be to select the League of Minnesota Cities primary insurance program, Dram Shop insurance, and not purchase the umbrella insurance available, but instead, take the $78,000 of premium which would have been i paid for an umbrella policy, plus a designated amount, say $100,000 of any excess General Fund balance available at year- end 1985 to begin funding a self-insured umbrella fund. Under this option, the City could begin the program with approximately $175,000 in the fund, which would provide greater comfort for the City. 4) A final option would be to select the League of Minnesota Cities primary insurance program, Dram Shop insurance, and the umbrella policy and invest approximately $100,000 of fund balance at 1985 year end to begin a self-insured umbrella program. In analyzing any of the above options, the element of risk must certainly be considered. If the City would be successful in using proposed premium dollars and excess fund balances for a matter of one or several years to establish a self-insured umbrella fund and if the fund was not utilized by claims, then the City would certainly have been seen as developing a very advantageous program. The self-insured umbrella fund would remain a part of the City's investment portfolio as a separate fund and accrue interest as the fund grew each year. At a level of $175,000 per year at roughly 8% interest, the City could build up approximately $1,109,000 in five years, providing the fund is not utilized. However, the obvious risk of such an option is that if • the City incurred a claim which exceeded the primary level in the early years of building up the fund, the claim could exceed the City's set-aside fund. Thus, the City would be forced to pay the claim out of other City funds. Depending upon the size of the claim, this might be done through setting aside future years' allotments of General Fund dollars to fund the loss or by selling general obligation bonds to pay for the loss. In any event, the real risk of loss is limited to $1,000,000 because there is no way that the City can purchase any insurance in excess of $1,000,000. We would be exposed to losses in excess of $1,000,000, whether or not the City purchased umbrella insurance or self-funded. Another factor to be considered in such a determination is that the State Statute does provide some limit of liability for municipalities at. $600,000. However, it is questionable as to whether or not such a limit of liability would hold up in court and there are certain kinds of liability exposures which are not covered by the $600,000 limit. Dram Shop insurance is one such liability exposure. The City Attorney may wish to comment further on other types of exclusions to the $600,000 limit. Budgetary Considerations In the 1986 budget, there is a total of approximately $435,000 set aside for insurance payments for 1986. If the City were to purchase the umbrella insurance for 1986, the total insurance package would exceed the $435,000 set in the budget. The total package for the Property/Casualty package, the Liquor Liability and the Umbrella would come to roughly $456,702. Recommendation Insofar as the City has to have coverage as of January 1, 1986, and the 1985 insurance package expired on December 31, 19.85, it was necessary for the City Manager to secure certain coverages as of December 31. The Property/Casualty package from the League of Minnesota Cities Insurance Trust was secured as of January 1 and the Liquor Liability program through the Assigned Risk Pool was also secured, as of December 31. Both such coverages were bound with the understanding that the City Council would have to review the action as of January 2, 1986. However, it was not possible to allow the City to remain uninsured for the two-day period. Finally, the City did not bind the umbrella coverage as of December 31. Instead, the City has until the end of the business day on January 3 to go to the umbrella carrier to secure the umbrella coverage for 1986. In such a ease, the insurance would be bought back to January 1, 1986. If the City does not wish to secure the umbrella package, the City Manager could notify the Agent of that decision. Based on the attached losses for the past five years (Attachment A), the City, during that period of time, had only one claim which was reserved for more than the primary layer of insurance, that is, over $500,000. Most claims incurred by the City were in the range of under $5,000. A few claims also fall between the $5,000 and $75,000 range. With the insurance available to the City through either the League or the Home Insurance program, it was necessary to buy insurance which left the City liable for the first $5,000 of loss. In the ease of property insurance, the City Manager recommends that the City also purchase insurance which would leave the City liable for the first $10,000 of loss. Based on past experiences, it appears to be a prudent move on the part of the City. Thus, in the package presented to the Council, the City is insuring as many of the lower cost exposures as possible to save as many premium dollars as possible. That results in a League primary package, excluding liquor liability, which amounts to $322,502. (It should be pointed out that the $322,502 includes a one-time 10~ assessment to each member City.) The liquor liability would then add an additional $56,00 of insurance cost. The reserve assessment would be put aside to be called upon in case future losses from the premium year 1986 for the League program exceeded premiums collected by the League for the insured cities. Theoretically, such a reserve assessment should not be levied against the City again, unless some catastrophic losses occur in the League program. Finally, the issue of umbrella insurance must be addressed. Based on the losses incurred by the City in the past, it is the recommendation of the City staff that the City Council explore the option of creating the self-insurance fund for umbrella liability. However, it should be pointed out that this is a fairly bold move in insurance placement. The City, has been successful in self-insuring its Workers' Compensation program, commencing in 1979 and also successful in self-insuring a Dental program, commencing in 1983. It is hoped that based on the data collected and the City's previous experience in self-insurance, the City would also be successful in a program of self-insuring umbrella liability. If, in the future, the price of umbrella insurance were to be significantly reduced, it would then be recommended that the City once again begin purchasing umbrella liability insurance (for example, in 1984, $25,000,000 of .umbrella insurance was purchased for $13,300). It is recommended that the City Council authorize the insurance package of primary and Dram Shop coverage proposed by the City staff and authorize the City to establish a self-insured umbrella fund in lieu of umbrella insurance, commencing with 1986. Red. ectfu ubmitted, . 'f~vsV A John G. Cartwr ht City Manager JGC:sb cc: Administrative Services Director Finance Manager Personnel Manager • F~ LOSS STRATIFfCATfON Line of Insurance(Self-Insurance: Time Period: January 1 , 1981 -June 30 , 1985 Stratification Number of Amount Amount Total In Level Claims Paid 'Reserved Layer Less than $999 72 $ 23,274 $ 950 $ 24,224 1,000- 2,499 a1 $ 2.5,353 $ 7,050 $ 56,627. 2,500- 4,999 5 $ 12 , 86 0 $ $ 12 , 86 0 5,000- 9,999 3 $ 15 , 0 0 0 $ 5, Ea 0 0 $ 2 0, 0 0 0 10,000- 24,999 3 $ 18,059 $.35,000 $ 53,059 25,000- 49,999 $ , $ $ 50,000- 74,999 $ $ $ • 75,000- 99,999 1 $ 3 0, 0 0 0 $ 6 0, 0 0 0 $ 9 0, 0 0 0 • 100,000-149,999 $ $ , $ • 150,000-199,999 $ $ $ 200,000-249,999 $ $ $ 250,000-299,999 $ $ $ 300,000-349,999 $ $ $ 350,000-399,999 $ $ $ 400,000--449,999 $ $ $ 450,000--499,999 $ $ $ 500,000-549,999 1 $ $ 500 , 000 $500 , 000 550,000-599,999 $ $ $ 600,000-649,999 $ $ $ 650,000-699,999 $ $ $ 700,000-749,999 $ $ $ r .Over 750,000 $ $ $ - 1986 PROPERTY/CASUALTY PACKAGE COVERAGE LEAGUE HOME INS. Property $104,539 $ 75,497 $TO,000 Ded. Inland Marine 6,230 (Inc. Above) General Liability 112,997 182,603 $S,OOG Ded. Auto 32,705 84,031 Crime 2,211 (Inc. Above) Public Officials 14,853 N/A. Police Professional 20,234 N/A SUB-TOTAL $293,769 $342,131 One-time. Assessment 28,733 N/A TOTAL P&C $322,502 $342,131 DRAM SHOP (From Assigned Risk Paol) 56,000 56,000- UMBRELLA ( $1,000,000 Limit) 78,200. N/A TOT ALL COVERAGES $456,702 $398,131 ~a~ ~ CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 8 Agenda January 2, 1986 The Honorable Mayor and Members of the City Council City of Richfield Subject: Association of Metropolitan Municipalities 1986 Legislative Policies to be Considered at the January 9, 1986, General Membership Meeting Council Members: On December 18, 1985, council members were provided with copies of the legislative policies proposed by~the Association of Metropolitan Municipalities for 1986. These policies were also reviewed by the city's department heads, and it is their recommendation that. the city council endorse these proposed legislative policies. The legislative policies will be considered for adoption by the general member- . ship at the annual meeting of the AMM on January 9, 1986. If the city council endorses these proposals, it would be appropriate for the city. council appointed liaison to the AMM to vote for their adoption at the January 9, 1986, AMM general membership meeting. The writer attaches for city council information two items: (1) AMM 12/17/85 Bulletin which has attached to it additional policies for addendum policy consideration; and, (2) a December 20, 1985, memorandum from Public Safety Director Tom Morgan giving his support to a number of policies which have public safety significance. The additional policies for addendum policy consideration are revenue items. The writer served on the AMM Revenue Committee and the Fiscal Disparaties Subcommittee to the Revenue Committee. Each of the proposed polices are recommended for support. In addition, the writer with support from Minneapolis also obtained the Revenue Committee endorsement to support legislation that would make it possible for Hennepin County to fund the 911 system with a charge on each telephone bill. Currently, the county provides "free" 911 services to those communities for whom it performs dispatching services but charges independent cities like Richfield who perform their own dispatching services. The Public Safety memorandum is self explanatory. Since council members were previously sent copies of the policies, copies are not attached to this council letter. However, a master copy will be available at the January 2, 1986, council meeting should any member of the council wish to review them at that time. Re eetfu y witted, c ohn G. Cart righ City Manager JGC/eja ~C-3 ~ s z 1. C,~.s r. - . a~sociG#~on of ~ . ~e~ro,~©~s#an r~un~c~pali#~e~ . December i7, i985 BULLETIN T0: AMM Member Cities FROM: J eheibel, President RE: METROPOLITAN AND AMM ACTIVITIES OF IMPORTANCE ' 1.. REMINDER: AMM MEMBERSHIP MEETING TO CONSIDER. ADOPTION OF LEGISLA~i:vr. POLICIES FOR 1986 - THURSDAY. JANUARY 9, 1936. dust a brief reminder of. this very important meeting which will be held in the Socfal Hall of -the Brooklyn Center Community Center, 6301 Shingle Creek Parkway,,~ust •off I-94 in Brooklyn Center. In addition to consideration and adoption of legislative policies, a number of amendments to the AMM By-Laws will also be considered. The meetin will be called to order at 7:30 P.M. g with registration .and refreshments starting at 7:O0 P.M. 2. VACANCY ON AMM BOARD OF DIRECTORS: There is a vacancy on the Hoard of Directors effective January, 1986. Pat Hoyt Neils, Plymouth Gouncilmember, did not seek re-election in the November election and must be replaced on the Board. The person selected to fill this vacancy will serve the remainder of the term which expires May 31, 1986 but will be~ eligible for re-election at that point in time. The Board meets the first Thursday night of each month in the AMM Offices.. Nominationslrecommendations should be sent-to the attention of vern Peterson in the AMM Office by not later than Janaurv 6, ~9ca. 3. TRANSPORTATION ADVISORY BOARD (TAB) VACANCY: there is .also one municipal vacancy on the TAB. Howard Bunce, Richfield Gouncilmember, was not returned to office in the November election. The person selected to replace Mr. Bunce will serve the balance of his two-year term which expires October 31, 1986 and will be eligible for renomination at that point in time. The individual selected must be an elective city official. The TAB provides general advice and counsel to the Metropolitan Council, Regional Transit Board and MNDOT and one of its most -i. ~ 83 university avenue east, st. pau1, minnesota 55101 (612) 227-5600 ac-~ . important functions is to determine the priorities for FAU project funding for the seven county metropolitan area. Ten (10) elective city officials serve on this very important 30 member regional body. Nominations/recommendations should be sent to the attention of Vern Peterson in the AMM Office by not later than January b , 19~tb . 4. LGA POLICY The LGA Policy accompanying this Bulletin has been recommended by the Revenue Committee 'to be considered. by the Board and Membership at the January ',9th. meeting. It is in addition to the previously mailed policy) and is the same as the LMC policy recommended by the LMC Rev',enue Committee. 5. FISCAL DISPARITIES POLICY:I The r'iscal Dispari-ties Pollicy accompanying this Bulletin has been recommended by the Revenue Committee and will be considered by the membership at the January 9 meeting. along with the previously mailed Addendum policy. The Board of Directors will review the Fiscal Disparities additions prior to the meeting and will make its recommendation at the general meeting. The Fiscal Disparities policies being recommended are a result of many hours of intensive study, by the Revenue Committee and its subcommittee. Existing background .data', and a multitude of computer runs altering various components were used for analysis anal discussion. The proposedpolfcies are neither an overwhelming endorsement nor condemnation of the program. They recognize the economic value of some sharing among the various, metropolitan communities and primarily ,request greater equity within the . existing program toward that end. Copies of the other proposed legislative policies .and by-law amendments were mailed to'I the Chief Administrative Official in each city earlier this month and please contact that person if you have not received yourlindividual copies as yet. DISTRIBUTION NOTE:. This', bulletin and attached proposed policy has been mailed to 'each Mayor, Councilmember and Manager/Administrator individually. -2 - s ADDITIO~tAL ?OLIC~IES FOR ADDENDUM POLICY CONSIDERATION I.C.3 r^RMULA AND INCREASE FOR 1987 (New Policy) Local government aid is an important component of the state's property tax relief system. It complements cities other mayor revenue source, the property tax. A - complementary revenue source for cities is necessary because a city's ability to raise revenue from the property tax does not necessarily coincide with the cost of the services which that city must provide to its residents. Due to the payment schedule .shifts enacted in response to a past state budget crisis, aid for calendar year 1987 is paid out of state. fiscal year 1988. Because cities must set their levies in the fall of 198b, the 19$6 legislature must establish the .funding level and formula for 1987 during this legislative session. Property tax relief has always been a high priority for the state. Cities will continue to try to keep. levies down as far as possible but will find that a tough challenge in .1987. Federal revenue sharing has been used by many cities to fund essential services and will be completely eliminated for 7987. Further budget pressure will likely result from continuing increases in insurance, implementation of comparable worth studies, increased debt service costs, and cutbacks in other intergovernmental revenues. A six percent increase in LGA will assist cities in avoiding sudden large increases in property taxes. THE AMM STRONGLY SUPPORTS CONTINUATION OF THE LOCAL GOVERNMENT AID PROGRAM AS AN ESSENTIAL COMPONENT OF THE STATE'S PROPERTY TAX RELIEF SYSTEM. IT IS RECOMMENDED THAT A SIX PERCENT INCREASE IN THE TOTAL APPROPRIATION BE AUTHORIZED FOR 1987 (STATE FISCAL YEAR 1988). THE FORMULA USED TO DISTRIBUTE 1986 LOCAL GOVERNMENT AID (LGA) SHOULD BE CONTINUED FOR 1987. THERE SHOULD BE A COMPREHENSIVE-STUDY AND REVIEW OF THIS DISTRIBUTION FORMULA AND ALTSRNATIVES PRIOR TO THE 1987 LEGISLATIVE SESSION. THE AMM IS PREPARED TO ASSIST IN THAT STUDY. MAJOR CHANGES IN THE DISTRIBUTION FORMULA SHOULD WAIT UNTIL THE 1987 LEGISLATIVE SESSION. i ~ z~ I.G FISCAL DISPARITIES (New Policy) G-1 TAX BASE SHARING PROGRAM The basic premise for the need for a tax base sharing or tax base redistribution system in this Metropolitan Area, is that much commercial and industrial (C/I) development occurs based on location and/or availability of land or particular services. If the seven county Metropolitan Area were one political and economic unit, such as the Houston or Omaha areas, the growth of C/I development in any part would benefit the whole equally and tax base sharing would be unnecessary. However, in this area with 139 cities plus many townships and school districts that is not the case. Thus, there are many cities that because they are fully developed with no room for expansion, or they are located _ away from the center of activity without appropriate services, or have space.but are inconvenient from major . transportation ..faci.litiss cannot attract C/I development. Whereas, others,. more favorably located or serviced cannot keep C/I development away. This creates a situation, in general, where the tax base value per area, per household, or-per capita is higher, and the taxing ability of the governmental unit greater, allowing a lower tax rate or collection of more dollars to provide service. This, also, creates a situation where two identical C/I facilities could have a large disparity in their property tax rates. THE AMM SUPPORTS A PROGRAM OR PROGRAMS WHICH CONSTRAIN TAX RATE DISPARITIES IN THE METROPOLITAN REGION WITHIN A REASONABLE RANGE WITHOUT STIFLING LOCAL INITIATIVES OR UNIQUE COMMUNITY NEEDS. G-2 OPPOSE DRASTIC CHANGE To compensate for these disparities, the 1971 legislature passed the Fiscal Disparities Act, with a rather complicated. formula,whereby 40~ of all C/I development and inflation growth from 1971 on is contributed to a Metropolitan Pot and redistributed based on population and fiscal capacity. After 15 years of operation, the magnitude of distribution values both in terms of net value decrease and net value increase is significant for many cities. If fiscal disparities were repealed in total with no replacement or adjustments, property taxes in many cities would increase very significantly just as they would decrease in others. BECAUSE THE MAGNITUDE OF FISCAL DISPARITY DISTRIBUTION IN TERMS OF NET VALUE INCREASE AND DECREASE TO MANY CITIES IS SIGNIFICANT, THE AMM SUGGESTS THAT NO CHANGES BE MADE THAT ' 2b i L WOULD GAUSE DRASTIC SINGLE YEAR SHIFTS IN PROPERTY TAXES. G-3 ELIMINATE EXEMPTIONS. The Fiscal Disparities act contains various exemptions which operate contrary to the philosophy of fiscal disparities because they allow growth to be sheltered from contributions to the metropolitan pool. Tax increment districts can be made subject to fiscal disparities by allowing the valuation to be frozen dependent upon the outstanding indebtedness of individual districts. This approach will .narrow the differences in the way pre-1979 and post-1979 tax increment districts have been treated under the fiscal disparities program. The state deferred property taxation and redevelopment pro,~eet property tax exemption programs are thought to have an inconsequential effect on fiscal disparities. However, from an •equity standpoint, development projects constructed under these programs should not be exempted .from fiscal disparities. The special exemption far South St. Paul resulting from its EDA status should be removed and South St. Paul should begin to make contributions to the fiscal disparities pool using the -year in which the special exemption was terminated as the base year. The special exemption for the. Minneapolis-St. Paul International Airport also should be remayed. Although the airport has no population, it should be.entitled to a ~ i distribution from the fiscal disparities pool. based on the metropolitan distribution average. _ THE AMM SUGGESTS ENDING THE EXEMPTIONS CURRENTLY PERMITTED FOR, STATE DEFERRED PROPERTY TAXATION AND REDEVELOPMENT PROJECT PROPERTY TAX EXEMPTION PROGRAMS, THE CITY OF SOUTH ST. PAUL AND THE MINNEAPOLIS-ST. PAUL INTERNATIONAL AIRPORT, BUT ONLY IN SUCH A MANNER THAT-THE FINANCIAL VIABILITY OF THE PROJECTS, DISTRICTS, AND COMMUNITIES AT LARGE ARE MAINTAINED WITHOUT SIGNIFICANT PROPERTY TAX SHIFTS. OR INCREASES WITHIN ANY CITY. EXEMPTIONS FOR PRE X979 HRA-TAX INCREMENT DISTRICTS SHOULD CONTINUE EXCEPT THAT NEW PROJECTS CREATING NEW VALUE BEYOND THAT NECESSARY TO RETIRE EXISTING DEBT SHOULD BE SUBJECT TO FISCAL DISPARITIES CONTRIBUTION. G-~ HASE YEAR. ' ~ Fiscal disparities contribution is ~Op of all commercial and industrial growth including inflation since 1971. As time i progresses with growth and inflation the contribution amount moves closer and closer to 40$ of all commercial and industrial property, although mathematically 40~ cannot be I 2c • J~ l attained using the base year concept. If the tax base sharing concept is to share growth for a period of time such as 15 years anal then return that growth to the host city, then the base year should slide forward. However, this would tend to reverse the effect of tax base sharing and increase disparities. 'f thA concept is to move towards sharing all commercial anu .:jaustrial tax base than the base year should be dropped. However, this could. cause a sudden and significant property tax shift. Sliding backwards would mitigate the suddeness of a property tax shift, but could cause some additional tax rate disparities for some cities especially older fully developed cities that are losing population and experiencing infrastructure decay. THE AMM SUGGESTS THAT THE LEGISLATURE STUDY CAREFULLY THE EFFECTS OF MODIFYL~iG THE FISCAL DISPARITIES BASE YEAR PRIOR TO MAKING ANY CHANGE. ADMINISTRATIVELY, BASE YEAR CHANGING WOULD BE COMPLICATED AND POSSIBLY EXPENSIVE. A MAJOR CHANGE COULD RESULT IN SIGNIFICANT PROPERTY TAX SHIFTS AND THUS ...SHOULD BE .AVOIDED. G-5 VACANT LAND Vacant land is not treated uniformely. Some cities have vacant land zoned as commercial or industrial which includes it in the fiscal disparities formula. Others, have land zoned as rural, agricultural or some other designation but have it designated in planning. as future commercial and industrial which keeps it out of fiscal disparities computation. THE AMM SUGGESTS THAT ALL VACANT LAND BE EXEMPT FROM FISCAL DISPARITIES RATHER THAN THE CURRENT SYSTEM OR ATTEMPTING TO DETERMINE BY SOME OTHER MEANS WHICH LAND MAY SOME DAY BE DEVELOPED FOR COMMERCIALlINDUSTRIAL PURPOSES. G-6 MANUFACTURED HOUSING/UTILITIES In calculating the fiscal disparities distribution a,ll people are counted, however, manufactured housing and utilities classified as personal property are excluded from determination of fiscal capacity even though tax revenues are derived from these. TO ACHIEVE MORE EQUITY WITHIN THE DISTRIBUTION FORMULA, MANUFACTURED HOUSING AND UTILITIES CLASSIFIED AS PERSONAL PROPERTY SHOULD BE INCLUDED IN FISCAL CAPACITY DETERMINATION. G-7 MINIMUM DISTRIBUTION 2d s aC- 9 Although the overall effect is slight, some communities such as North Oaks and Sunfish Lake gain distribution by use of population as a minimum final index when the preliminary index is .less than the population which indicates that the fiscal capacity exceeds twice the average. THE AMM SUGGESTS THE REMOVAL OF POPULATION AS A MINIMUM IN THE DISTRIBUTION CALCULATION TO ELIMINATE THIS INEQUITY. G-8 ADMINISTRATION A central agency should be identified to provide administration for the fiscal disparities program. Currently, program responsibilities. are assigned, to county.. auditors and assessors and the Minnesota Department of Revenue. While the administrative auditor commonly is regarded as the office responsible for the program's administration, the division of responsibility and the lack of definition surrounding the administrative auditor's functions and authorities do not constitute centralized administration for the fiscal disparities program. Without a central program agency, it is difficult to ensure that consistency is maintained in administration of the program. THE AMM SUGGESTS THAT THE LEGISLATURE IDENTIFY A CENTRAL AGENCY RESPONSIBLE FOR OVERSEEING THE ADMINISTRATION OF THE FISCAL DISPARITIES PROGRAM. _ G-9 FISCAL DISPARITIES FUTURE EVALUATION The AMM Fiscal Disparities~Subcommittee met six (6) times, reviewed in excess of twenty computer runs, as well as other background data, and thoroughly discussed policy in addition to technical issues. Besides the policies being recommended, various issues were discussed but not recommended for adoption at this time. Some of these include mitigating low value city losses and high-value city gains, use of median. sales-ratio, and sliding contribution rate for the first few years of a porjeet. However, the major discussion issue involved contribution/distribution limits. The subcommittee spent much of its time reviewing computer runs using variables limiting basically contribution and discussing the policy issue of limitations. There is a genuine concern to develop equity and yet limit on some reasonable basis the amount of contribution as compared to total valuation. Some concern was expressed on limiting distribution as a percentage of total value but substantially less than the contribution side. A number of computer runs were made varying the limit from 10~ to 15~ of Ze - a~~~~ total assessed value after application of sales ratio equalization at 100x and ?1.45'. Using 100 equalization increases the pot by about ~.5 billion dollars or SOS. Using 71.45 equalization maintains the current 1.2 billion .dollar pot. The results ranged widely from city to city and county to county. However, one generalization was that those that contribute most continue at a high Level or increase, especially in Dakota County. Although this exercise did not provide enlightenment as to contribution limits, it did show that equalization done without care could cause some extreme changes. It was also noted that some of the lower C/I ratio areas were being raised by the Commissioner of Revenue far 1986. The questions. of "Hoer much" and "How to limit" remains unresolved at this time-. It was the committee consensus. that more analysis was needed to resolve these • questions and that the AMM should continuethis discussion. THE AMM HAS NOT FOUND AN EQUITABLE BASIS FOR CHANGING THE - MAJOR FACTORS OF CONTRIBUTION OR DISTRIBUTION AT THIS-TIME. THE AMM DOES RECOGNIZE-THAT THERE MAY E%IST CHANGES THAT WOULD ACHIEVE FURTHER EQUITY, BUT WOULD FIND IT NECESSARY TO OPPOSE ANY CHANGES NOT APPROVED HY THE BOARD OF DTRECTORS. • . 2f M E M O R A N D U M DATE: December 20, 1985 T0: John Cartwright City Manager FROM.: Thomas A. Morgan, Jr. /Director of Public Safety SUBJECT: 1986 LEGISLATIVE POLICIES ASSOCIATION OF METROPOLITAN MUNICIPALITIES I have reviewed the proposed legislative policies established by the Association of Metropolitan Municipalities. 2 believe there are five issues which have public safety significance, and which we should follow closely. The .first .issue relates to the increase of the 11 tele hone tax- 9 p to pay the local share for equipment and continuing line costs (page 2), for the system. I think we Should strongly support this position. If passed, the city could save $16,200 in current general fund costs for the 911 telephorse system. I think we should support both of the positions related to data privacy and open meeting laws (page 3) as ro osed. The current p P law in both of these areas is extremely complex and difficult to follow from a practicle operational perspective.. Any clarification of these two matters would seem to he advantageous. The proposal with regard to plumbing inspections (page 5), would seem to make sense. However, I am not sure that this is practicle. To have the technical knowledge required for intelligent plumbing inspection activities would seem to require a licensed plumber. If the quality of inspections could be maintained, I guess that the proposal-would be acceptable. The position issues related to charitable gambling (page 6), would be ,helpful. Under the new state law we have lost all fees from licensed gambling activities. However, from a practicle standpoint, we still have significant enforcement responsibilities. A shared fee policy related to charitable gambling would provide the city with revenue to support the continued enforcement which appears to be required. The final suggestion relates to the policy for MSA funds (page 20), which would allow such funds to pay for OPTICOM traffic control systems. I think we should strongly support this proposal. I believe that these are the only significant policies related to public safety operations which we might wish to endorse. ~aB-I ' CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 7 Agenda January 2, 1986 The Honorable Mayor and Members of the City Council City of Richfield Subject; Designation of Official Depositories for 1986 and Approving Collateral Council Members: There is an item on the January 2, 1986, city council agenda providing for council designation of official depositories to be used by the City of Richfield in 1986 and approval of the collateral pledged by these depositories. Six institutions have pledged collateral over and above the amount of the Federal Insurance for public depositories. They are: Richfield Bank & Trust Company, who is pledging collateral of $1,000,000; First Western Bank, $1,632,420; First Minnesota Savings Bank, $100,000 FSLIC Insurance plus U.S. Government and Government Agency Securities to be determined at the time of the investment; Midwest Federal Savings and Loan Association, $1,245,790; and, Twin City Federal, $229,136. Resolutions are attached designating the above institutions as official depos- itories. Another resolution, providing for designation of certaan other savings and loan associations as official depositories, is also attached. The city will be able to invest funds in these institutions not exceeding the Federal Insurance coverage of $100,000.. Lastly, a resolution is attached which designates certain financial institutions as depositories for the investment of city funds in 1986. These institutions offer government securities in a manner required by law. a~-~ It is recommended that the City Council adopt the attached resolutions designating official depositories, with the . understanding that the city could not invest in any of these depositories beyond the level of insurance coverage of the. pledged collateral. spect ul ubmitted, John G C twrig t . City Manager JGC/eja RESOLUTION N0. ~ RESOLUTION DESIGNATING THE RICHFIELD BANK & TRUST COMPANY A DEPOSITORY OF FUNDS OF THE CITY OF RICHFIELD FOR THE .YEAR 1986 AND APPROVING COLLATERAL BE IT RESOLVID by the City Council of the City of Richfield as follows: That, in accordance with law, the Richfield Bank & Trust Company be and hereby is designated a depository of the funds of the City of Richfield, subject to modification and revocation at any time by said City, and subject to the following terms and conditions: .The said depository shall not be required~to give. bonds or other securities for such deposits provided that the total sum thereof shall not at any time ex- ceed in any depository the sums for which its deposits are insured under the Acts of Congress of the United States relating to insurance of bank deposits; but that in ease such deposits in any such depository shall at any time exceed such insured sum, said depository shall immediately furnish bonds or other security for such excess according to law, approved by the City Council of said City. That said depository shall pay on demand all deposits therein; and shall pay all time deposits, at or after the end of the period for which the same shall be deposited, on demand. BE IT FURTHER RESOLVID, that there shall be maintained a•general account in which shall be deposited alI monies from golf course operations and not otherwise specifically provided for. Cheeks on this account shall be signed by the following officers or their. facsimile signatures: JOHN G. CARTWRIGHT, CITY MANAGER STEVEN L. DEVICH, TREASURER BE IT FURTHER RESOLVID, that there shall be a daily interest savings ~I account. All withdrawals from said account will be for transfers to the general checking account. I, BE IT FURTHER RESOLVID, that collateral in the amount of $1,000,000.00 I deposited for safekeeping at the Federal Reserve Bank of Minneapolis, is hereby approved. ' Passed by the City Council of the City of Richfield this 2nd day of January, 1986. John Hamilton Mayor ATTEST: Thomas P. Ferber City Clerk • • RESOLUTION N0. > B RESOLUTION DESIGNATING THE FIRST WESTERN BANK-RICHFIELD o~ A DEPOSITARY OF FUNDS OF THE CITY OF RICHFIELD FOR THE YEAR 1986 AND APPROVING COLLATERAL BE IT RESOLVED by the City Council of the City of Richfield as follows: That, in accordance with law, the First Western Bank-Richfield be, and hereby is designated a depository of the funds of the City of Richfield, subject to modification and revocation at any time by said City and subject to the following terms and conditions: The. said depository shall not be required to give bonds or other securities reof shall not at an time ex- for such deposits provided that the total sum the y teed in any depository the sum for which its deposits are insured under the Acts of Con ress of the United States relatin to insurance of bank deposits; g g but not in case such deposits in any such depository shall at any time exceed such interest. sum, said depository shall immediately furnish bonds or other security for .such excess according to law, approved by the City Council of said City. That said depository shall pay on demand all deposits therein; and shall pay all time deposits, at or after the end of the priod for which the same shall be deposited, on demand. BE IT FURTHER RESOLVED, that there shall be maintained a general account in which shall be deposited all monies from liquor, swimming pool/ice arena operations and city permits. Checks on this account shall be signed by the fol- lowing officers or their facsimile signatures: JOHN G. CARTWRIGHT, CITY MANAGER ~•r~VE[~ L. DEVICH, TREASURER BE IT FURTf~R RESOLVED, that there shall be maintained a city payroll account. There shall be issued_a single check biweekly for an amount equal to the biweekl ci a roll a able to the Treasurer for deposits in such pay- Y t3'PY ~ PY roll account. Thereafter, the Treasurer is authorized to issue payroll checks on said accounts bearing only his signature as City Treasurer for all wages or salaries included in said biweekly payroll. BE IT FURTHER RESOLVED, that there shall be a daily interest bearing checking account. All interest earned shall be transferred to the Investment Trust Fund. BE IT FURTHER RESOLVE, that collateral in the amount of $1,632,420.00, deposited for safekeeping at the Marquette National Bank of Minnapolis and the Federal Reserve Bank is hereby approved. Passed by the City Council of the City of Richfield this 2nd day of January, 1986. John Hamilton Mayor ATTEST: Thomas P. Ferber City Clerk RESOLUTION N0. 1~,~ A RESOLUTION DESIGNATING FIRST MINNESOTA SAVINGS BANK AS DEPOSITORY FOR THE INVESTMENT OF CITY FUNDS IN 1986 AND APPROVING COLLATERAL WHEREAS, pursuant to Minnesota Statutes, Section .475.66 and 118.17, municipal funds may be deposited in any savings and loan association which has its deposits insured by the Federal Savings and Loan Insurance Corporation, and WHEREAS, the amount of said deposits may not exceed FSLIC insurance covering such deposits, which insurance presently amounts to $1.00,000, unless 'amounts in excess of such insurance coverage is covered by additional collateral pledged to the City, and WHEREAS, the deposit of City funds in savings and oan associations and II banks would provide greater flexibility in the City's investment program and maximize interest income thereon. .WHEREAS, there shall be maintained a daily interest general checking account in which shall be deposited all monies from the city licenses. Cheeks on this account shall be signed by the following officers on their facsimile signatures: JOHN G. CARTWRIGHT, CITY MANAGER STEVEN L. DEVICH, TREASURER NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of - Richfield, Minnesota, as follows: 1. That First Minnesota Savings Bank, 6445 Nicollet, Richfield, Minnesota be designated as official depository for City funds in 1985. 2.. That collateral in the amount of unlimited funds, deposited for safekeeping with Federal Home Loan Bank of Des Moines, Iowa. Passed by the City Council of the City of Richfield, this 2nd day of January, 1986. John Hamilton Mayor ATTEST: Thomas P. Ferber City Clerk ` RESOLUTION N0. A RESOUTION DESIGNATING MIDWEST rr~ur~tcAL SAVINGS & IRAN AS DEPOSIZORY FOR THE INVESTMENT OF CITY FUNDS IN 1986 AND APPROVING COLLATERAL WHEREAS, pursuant to Minnesota Statutes, Section 475.66 and 118.17, municipal funds may be deposited in any savings and loan association which has its deposits insured by the Federal Savings and Loan Insurance Corporation, and Wl~tc~AS, the amount of said deposits may not exceed FSLIC insurance covering such deposits, which insurance presently amounts to $100,000, unless amount in excess of such insurance coverage is covered by additional collateral pledged to the City, and ' Whr~tt~AS, the deposit of City funds in savings and loan associations and banks would provide greater flexibility in the City's investment program and maximise interest income thereon. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield, Minnesota, as follows: 1. That the Midwest Federal Savings and Loan Association, 3100 West 66th Street, Richfield, Minesota, be designated as an official depository for City funds for 1986. 2. That collateral in the amount of $1,245,790.00, deposited for safekeeping with the Richfield Bank and Trust Company of Richfield, Minnesota, is hereby approved. Passed by the City Council .of .the City of Richfield, this 2nd day of January, 1986. John Hamilton Mayor A1'1'~71' Thomas P. Ferber City Clerk ~ - - RESOLUTION N0. ~ A RESOLUTION DESIGNATING TWIN CITY FEDERAL SAVINGS AND LOAN ~E/ AS DEPOSITORY FOR THE INVESTMENT OF CITY FUNDS IN 1986 AND APPROVING COLLATERAL WHEREAS, pursuant to Minnesota Statutes, Section 475.66 and 118.17, municipal funds may be deposiaed in any .savings and. loan association which has its deposits insured by the Federal Savings and Loan Insurance Corporation, and WHEREAS, the amount of said deposits may not exceed FSLIC insurance ` covering such deposits, which insurance presently amounts to $100,000, unless amount in excess of such insurance coverage is covered by additional collateral pledged to the City, and WHEREAS, the deposit of City funds in savings and loan associations and banks would provide greater flexibility in the City's investment program and maximize interest income thereon.. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of .Richfield', Minnesota, as follows: 1. That Twin City Federal Savings and Loan,. Marquette at 8th Street, Minneapolis, Minnesota, be•designated as an official depository for City funds for 1986. 2. That collateral in the amount of $229,136.00, deposited for safekeeping with Midland National Bank of Minneapolis, is hereby approved. Passed by the City Council of the City of Richfield this 2nd day of January, 1986. John Hamilton Mayor ATTEST: Thomas P. Ferber City Clerk RESOLUTION NO. A RESOLUTION DESIGNATING CERTAIN SAVINGS AND LOAN ASSOCIATIONS AND BANKS AS DEPOSITORIES FOR THE INVESTMENT OF CITY FUNDS IN 1986 BE IT RESOLVED by the City Council of the City of Richfield, Minnesota. WHEREAS, pursuant to Minnesota Statutes, Section 475.66 and 118.17, municipal funds .may be deposited in any Savings and Loan Association which has its deposits insured by the Federal Savings and Loan Insurance Corporation and WHEREAS, the amount of said deposits may not exceed the Federal Savings and Loan Insurance Corporation insurance covering such deposits which insurance amount is presently $100,000, and WHEREAS, the deposit of City funds in Savings and Loan Associations and Banks would provide greater flexibility in the City's investment program and maximize interest income thereon. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield, Minnesota, as follows: 1. It is hereby found and det~l,,,:~ned that it is in the best interests of the proper management of City funds that certain Savings and Loan Associations and Banks be designated as additional depositories for City funds for 1986. 2. The following Savings and Loan Associations and Banks in the metropolitan area are designated as additional depos- itories for municipal funds: . First National Bank of St. Paul 332 Minnesota Street St. Paul, MN 55101 F & M Marquette National Bank Marquette at 6th Street Minneapolis, MN 55480 Norwest Bank Southwest 7900 Xerxes Avenue South Bloomington, MN 55431 3. It is further found and determined that the purpose of such depository designation is to facilitate the proper and ad- vantageous investment of City funds and that such designation is not exclusive nor does it preclude the deposit of any City funds in other officially designated depositories of the City. Resolution No . -2- ~ ~4. The Treasurer is hereby authorized to deposit. City funds in any or all of the depositories herein designated. up to the amount of $100,000, or such other amount as may be subsequently permitted by law, such deposits to be in the form of demand accounts for Public Unit Savings Certificates purchased by the City, payable to the City of Richfield on .the signatures of the City Treasurer. Such deposits may be made and withdrawn from time to time by the Treasurer as his/her best judgment and the interests. of the City dictates. ' S. The investment of funds and the reporting thereof pursuant to this resolution shall be conducted in accordance with estab- lished policies of the City regarding the investment of City funds. 6. Investment bankers services, First American Investment Group, Inc., 3601 West 29th, Suite 120, Topeka, Kansas, 6660, Long Beach Savings & Loan, 101 Lang Beach Boulevard, Long Beach, CA, 90802 and Professional Asset Management, Inc., 221 - 15th Street, Del Mar CA, 92014, Goldstone Investment Corp., 9832 Oline St., Wakarusa, KS, 6656 are being used to service the depositories outside the metropolitan area. Passed by the City Council. of the City of Richfield, this 2nd day of January, 1986. John Hamilton Mayor ATTEST: Thomas P. Ferber City Clerk RESOLUTION NO. A RESOLUTION DESIGNATING trtu.•AIIV FINANCIAL INSTITUTIONS. AS DEPOSITORIES FbR THE . INVr~rr1ENT ~ ~.-~Q OF CITY. FUNDS TN 1986 . Whrat~AS, the City of Richfield has money which is available for investment, and Whr~tt~.AS, different financial institutions offer different rates of return on investments, and Whr~tt~AS, the City of Richfield shall purchase U. S. Treasury Bills, U. S. Treasury Notes and other such government securities in the manner required by law from the institution offering the highest rete to the City providing greater flexibility in the City's investment program and maximize interest income thereon. NOW, THEREFnRE, BE IT RESOLVID by the City Council of the City of Richfield, Minnesota, as follows: 1. It is hereby found and determined that it is in the best interests of the proper management of City ftulds that certain finncial institutions be designated as additional depositories for City funds for 1986. 2. The following financial institutions designated as depositories for municipal funds: F & M Marquette National Bank • Merrill Lynch, Pierce, Fenner & Smith, Inc. Dain Bosworth, Inc. Prudential -Bache Kidder, Peabody & Company Miller Schroeder Norwest Investment Services Offerman & Company, Inc. Piper, Jaffray & Hopwood State Street Bank & Trust, Trust for Short-Term U. S. Government Securities 3. The Treasurer is hereby authorized to deposit City funds in any or all of the depositories herein designated. Such deposits may be made and withdrawn from time to time by the Treasurer as his/her best judgment and the interests of the City dictates. 4. The investment of funds and the reporting thereof pursuant to this resolution shall be conducted in accordance with estab- lished policies of the City regarding the investment of City funds. Passed by the City Council of the City of Richfield, this 2nd day of January, 1986. John Hamilton Mayor ATTEST: Thomas P. Ferber City Clerk CITY OF RICHFIELD, MINNESOTA. Office of .City Manager Council Letter No. 6 Agenda January 2, 1986 The Honorable Mayor' and Members of the City Council City of Richfield Subject:. Martin Luther Ring Holiday - Personnel Ordinance Amendment. First Reading. Council Members: The State Legislature recently amended M.S. 645.~+~, Subdivision 5 - Holidays, to include "Martin Luther King's Birthday, the third Monday in January". .The section provides .that "No public business shall be transacted on any holiday, except in cases of necessity Thus, the .addition of Martin Luther King's Birthday mandates that city hall be closed for public business on the third Monday in January, commencing with January 20, 1986. Paid holiday leave is established by recommendation of the City Manager and approval of the City Council for city employee groups not represented by collective bargaining agreements. The specific benefits for such employees are stated in the City's Personnel Ordinance. Holiday pay for union-represented employees., such as police, fire and labor/trades personnel, is established through the collective 'bargaining process,. and approved by the City Council. Currently the City Personnel Ordinance grants eligible employees eight hours of paid. holiday leave for each of the following 11 holidays: New Year's Day on January 1st;. Washington's and Lincoln's Birthdays on the third Monday in February; Memorial Day on the last Monday in May; Independence Day on July nth; Labor Day on the first Monday in September; Veteran's Day on November 11th; Thanksgiving Day on the fourth Thursday of November; the Friday after Thanksgiving; Christmas Day; a holiday the date of which shall be designated each year•by the City Manager;~s.nd one floating holiday. There are several options available to the city to meet the :situation created by the new holiday, including: 1) Eliminate the employee's floating holiday and replace it with Martin Luther King's Birthday, or 2) Eliminate the City Manager designated holiday and replace it with Martin Luther King's Birthday, or 3) Add another holiday to the City Personnel Ordinance for Martin Luther King's Birthday and increase the annual paid holidays for eligible employees to 12. The city staff surveyed other metropolitan jurisdictions to inquire how the holiday would be handled. The results of the survey indicated that some jurisdictions, such as,Bloomington, Coon Rapids and Eagan, are adding an additional holiday to increase the total number of paid holidays to 12. The majority of communities are replacing an existing holiday with Martin Luther King's Birthday to remain at 11 total paid holidays. The writer is recommending to the City. Council that the Personnel Ordinance be amended to include an additional paid holiday for Martin Luther King's Birthday. There are several reasons for this recommendation: First, the non-organized city employees (General Services and Management) have enjoyed the use of a floating holiday since the mid-1970's and it has been very popular with the employees. To replace the floating holiday with Martin Luther Ring's Birthday would be a very unpopular action. Similarly, the designated 11th holiday, adopted February 25, 1980., which is often used as the day preceding or following Christmas Day, has allowed all General Services and Management employees to plan on a two-day city hall closing for travel, etc. The day before and after Christmas are extremely slow days with respect to city business. Few telephone calls are received on those days and walk-in business is nearly non- existent. Thus, it is a logical day to remain closed and is a very desirable holiday from the city employee's perspective. It should also be considered that it is not of ten. that the city. is in the position of granting a benefit to non-union city employees that union employees don't already have or have exceeded. The State of Minnesota has designated Martin Luther King's Birthday as an official holiday where no city business may be transacted. City employees did not solicit or initiate the new holiday and many are unenthusiastic about giving up a popular holiday they have already been granted for a day in January when they may not come to work due to a state-mandated closure of city hall. While the city remains consistent with the average pay and fringe benefits of most comparable area communities, granting an additional paid holiday for non-union employees at this point would allow the city to be on the leading edge of one type of fringe benefit without incurring significant additional cost or impairing or reducing service to the public. The writer I . ~ -.3 believes strongly that if management appreciates the dedication of its employees it should, from time to time, demonstrate this belief by taking an action to show -this appreciation.. The granting of an additional holiday to non-unionized employees offers this opportunity. Finally, it should also be noted that as contracts of the major labor groups open for 1986 and 1987, it is quite .possible that some labor groups will win an additional holiday through collective bargaining. As this occurs, it will gradually spread through the metropolitan area for all comparable work groups. It is, therefore, recommended that the City Council approve First Reading of the attached ordinance providing for an additional. paid holiday for Martin Luther King's Birthday for eligible General Services and Management employees. Peet 1 ubmitted, A o n G. artwri ht City Mana er JGC/eja Uj - L~ BILL N0. AMENDMENT TO CHAPTER II, PART III OF THE ORDINANCE CODE OF THE CITY OF RICHFIELD, MINNESOTA CITY OF RICHFIELD DOES ORDAIN: Chapter II, Part III, Section 2.33, Subdivision 2 of the Ordinance Code of the City of Richfield, Minnesota relating to Attendance and Leaves, Holidays, is hereby amended in the following respects: 2.33 ATTENDANCE AND LEAVES Subd. 2. Holidays. Eligible full-time employees will be granted eight hours of paid holiday leave for each of the following holidays observed by the city: New Year's Day on January 1st; Martin Luther Kim 's Birthday on the third. Monday of January; Washington's and Lincoln's Birthdays on-the third Monday in February; Memorial Day on the last Monday in May; Independence Day on July 4th; Labor Day on the first Monday in September; Veteran's Day on November 11th; Thanksgiving Day on the fourth Thursday of November; the Friday after Thanksgiving; Christmas Day; a holiday the date of which shall be designated each year by the city manager; and one floating holiday. Passed by the City Council of the City of Richfield, Minnesota this day of ~ , 1986. John Hamilton, Mayor ATTEST: Thomas P. Ferber, City Clerk I .CITY OF RICHFIELD,' MINNESOTA Office of -City Manager Council Letter No. 5 Agenda January 2, 198.6..... The .Honorable Mayor and Members of the City Council City of Richfield Subject-s Approval'of 1.986 Labor.. Contract with International Association of Firefighters Locale 121.5 Council Members: City staff have completed negotiations on a Labor Contract Agreement, subject to City Couneilapproval, with the International Association of Firefighters Local 1215, to cower the period from January 1, 19$6, through December 31, 19$6. T,he International Association of Firefighters Local 1215 is the officially recognized bargaining unit for Fire Division personnel,-including the positions of Fire Captain, Fire. Lieutenant and Firefighter. There are presently 2~+ employees . represented within this unit. The 1986 contract is the second ear of a two- ear contract Y Y , and contract articles open for negotiations were limited to those regarding insurance (hospitalization-and dental) and wages. The changes. in those articles which have been negotiated for 198b include the following: 1) An adjustment of ~+.5~ over 1985-wage. rates for all classifications. In addition, the wage rate for Fire Lieutenant has been. adjusted to represent 110 of the tap Firefighter rate (previously 107% of top Firefighter), and Fire Captain to 115 of top Firefighter rate (previously 11~~). The Director of Public Safety has implemented a Fire Division reorganization plan. The Fire Division in the past has been top heavy in command positions. The reconstructed organization reduces the number of Captain positions from six to three. The number of Lieutenant positions will be six rather than three. The Fire Division operates with three platoons. with one Captain responsible for each platoon. 'Since a Fire- fighter works 2~ hours on duty and then is off for ~8 consecutive hours, it is necessary to have two Lieutenants for each platoon to provide enough supervisors to cover two stations and days off for each officer. This plan places more responsibility upon the position of Captain since there will be only one Captain per platoon. The pay differential that has been negotitated reflects .these changes. This was a very important bargaining point in the recent negotiations. . ' With fewer Captain positions, there is a cost savings to the City when comparing the old organizational plan to the new plan. 2) An $8.00 increase in the maximum monthly health insurance premium increases the payment from $15+.00 per employee per month in 1985 to $162.00. per employee per month in 1986. 3) A 50 cent per month increase in employee dental insurance from $13.00 per employee. per month in ..1985 to $13.50 per employee per month in 1986. The change in the. City's health and dental insurance contribution is consistent with the council-approved 1986 insurance program for the City's General Services and Management employees. Please refer to attachments for details on the cost comparisons for insurance premiums. In negotiating the 1986 Firefighter rates, the following factors were .considered: 1) Firefighter settlements in other area communities range from 3.9~ to 4.5~. , 2) Duties of Firefighters in Richfield as compared to other communities. The Richfield Public Safety Department is unique. It is one of the few innovative and progressive organizations that expands the duties beyond firefighting. Richfield Firefighters also perform building and nusiance code inspections. Richfield has historically maintained a salary position in the top .three communities with respect for top Firefighter base wage rate. The proposed wage and insurance increase maintains that position. Please refer to the attachments to this council letter for comparisons with other cities. ~3 3) Wage adjustments of other Richfield City employee groups. It is recommended that the City Council adopt the attached resolution authorizing implementation of this Labor Agreement. Re ectful witted, h J hn G. a twright ity Manage JGC/eja 1 RESOLUTION N0. RESOLUTLON APPROVING LABOR AGREEMENT BETWEEN THE CITY OF RICHFIELD AND THE INTERNATIONAL ASSOCIATION OF FIREFIGHTERS LOCAL. 1215 BARGAINING UNIT FOR THE YEAR 1986 WHEREAS, the City Manager-and the International Association of Firefighters Local 1215 Bargaining Unit have reached a complete understanding concerning rates of pay, hours and other conditions of employment for the year 198.6, and WHEREAS, the Personnel Ordinance requires that .contracts between the City and the .exclusive representative of employees in an appropriate bargaining unit .shall be implemented by council resolution. NOW. THEREFORE BE IT RESOLVED that the, City Council does hereby approve the Labor Agreement between the City of Richfield _ and the International Association of Firefighters Local 1215 Bargaining Unit for the year 1986, and orders the provisions of the Labor Agreement to be implemented effective January 1, 1986. Passed by the City Council of the City of Richfield this 2nd day of January, 1986. John Hamilton Mayor Attest: Thomas P. Ferber City Clerk . / i ST N GROUP V 1985 TOTAL COMPENSATION (Base Wage, LongevityJEducation Incentive Insurances FOR TOP FIREFIGHTER IN RANK ORDER BY TOTAL COMPENSATION Annual 1985 1985 Annual 1985 Max. Long/E.I. Ins. 1985 Annual 1985 Total Community Base Salary Long/E.I. Pay Per/Mo. Insurance Compensation Burnsville $ 29,544.00 6 ~ $ 1,772.64 $187.50 $ 2,250.00 $ 33,566.64 Richfield 30,132.44 4 ~ 1,205.30 155.10 1,861.20 33,336.44 Coon Rapids 29,808.00 $40/bi-wkly 1,040.00 155.00 1,860.00 32,708.00 St. Louis Park 29,496.00 $117/month 1,404.00 150.00 1,800.00 .32,700.00 West St. Paul 29,061.76 $135/month 1,620.00 .155.00 1.,860.00 32,541.76 Cottage Grove 27,522,00 $214/month 2,568.00 195.74 2,348.88 32,438.88 Edina 28,?28.00 6 % 1,723.68 140.00 1,680.00 32,131.68 Stillwater 28,08?.20 ?-1/2 ~ 2,106.54 150.00 1,800.00 31,993.74 Fridley 28,850.641 $?2/month 864.00 145.00 1,740.00 31,484.64 Anoka 28,450.80 NONE 169.53 2,034.36 30,485.16 Hastings 27,738.00 None None 204.60 2,455.20 30,193.20 St. Anthony 26,784.00 $50/month 600.00 170.00 2,040.00 29,424.00 South St. Paul Columbia Heights 344,232.84 14,904.16 1,977.47 23,729.64 383,004.14 .1985 AVERAGES $ 28,686.0? $ 1,90.42 $164.79 $ 1,977.47 $ 31,917.01 1Fridley: Effective 1/1/85 $2,377.01; effective 7/1/85 $2,436.43 per month. TAN GR~Up V duaati°n IncentlVe S evity ~ E tgase Wage ~ Long COMPENSATION TOp ~IREFI~gTER 1g88 TOTAL urance) FOR ENSATION otal Ins OgpER BY TOTAL COMP 1956 1986 Annual Oo 8 en a RANK an°:. --"E.-+ IN Annual Ins . I nsu....----~'""" Long~E'I` per M°` ~ ~ Max• a ,11 986 Annual Lo 6 E.I. p .gr} ~TBD ~ bd •g0 34 X552, Salax ~ .1,772 1?9 Base 6 ~ 1G3_~~----_ ~ 544.00 ~ 1253.51 _._.eo ener 34,212.00 Oommunit 29, 4 R P 1 ~ 00 ~ ~ 820.00 s~ille 37...!.3-3~ 235 Buxn ~47,50biwky 160,00 Ai ~,eld 30 ~gg6.00 m 1 464 •~O ohi~ $122 anth Ooon Rapids 30 828.00 ` St. Louis park West St ~ peal OottaBe Gr°ve Edina Re°pener Stillwater NONE ~xidley .Reopener Anoka Hastings St. AntronY C peal ~ South St. $ CQlu~bia Heights $ ~n~ AV~RAQ"ES 1985 INSURANCE COMPARISON ~ , POLICE POLICE GENERAL i LOCAL OFCR. SUPV. SERVICES MGMT. ; 49 FIRE FED. ASSOC. 1985 INS. MO. $ ~ Health $ 132..00 132.00 ; 153.90 141.00 142.00 160.00 Life 2.20 2.20 ; 1.10 1.10 2.20 5..50 Dental 13.00 13.00 ; 13.00 13.00 Sub-Total 147.20 147.20 i 155.00 155.10 157.20 165.50 LTD 9.031 15.802. ~ TOTAL 156.23 163.00 ; 155.00 155.10 157.20 165.50 1986 INSURANCE COMPARISON • ; POLICE* POLICE* GENERAL i LOCAL* OFCR. SUPV. SERVICES MGMT. i 49 FIRE FED. ASSOC. 1986 INS. M0. $ ~ Health $ 140.00 140.00 i 149.00- . ~ Life 1.80 1.80 ~ •90 Dental 13.50. 13.50 i 13.,50 Sub-Total 155.30 155.30 ~ 163.40 * LTD 9.613 16.834 ~ TOTAL 164.91 172.13 i 163.40 1Based on average monthly salary of $1,641 (5~+2~ x 1984 Salary) 2Based on average monthly salary of $2,873 (5~+2~ x 1984 Salary) 3Based on average monthly salary of $1,748 (4.5~+2~) x 1985 Saia,••y) Based on average monthly salary of $3,060 (4.5~+2~) x 1985 Salary) *Contracts for 1986 have not been settled *LTD= Long Term Disability CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. ~4 Agenda January 2, 1986 The Honorable Mayor and Members of the City Council City of Richfield Subject: Council Liaison Appointments, -1986 Council Members: There is an item on the January 2, 1986, city council agenda providing for the appointment of council members and city staff members in a liaison capacity to various city and metropolitan boards and commissions. Most of the boards and commissions require one representa- tive and one alternate, with the exception of the Metropolitan Aircraft Sound Abatement Council (MASAC), South Hennepin Human Services Council (SHHSC), and the Southwest Suburban Cable Commission (SWSCC), all of which require two representative appointments. Relating to the two appointments to be made to the South Hennepin Human Services Council, the .Advisory Board of Health has recommended that Lia Ozols be appointed to fill the position formerl held b Norris Olson• and Ser cant John Nelson of the Y ~ g Y public safety department has indicated he is willing to accept rea ointment if there are no other candidates for this PP position. The terms of Ivan Ludeman and Howard Bunce do not expire until January, 1987. Mr. Bunce has indicated that he will continue to serve on the~SHHSC until his term expires. Don Hassenstab has indicated that he wishes to be considered for reappointment as the alternate director for the Suburban Rate Authority. It is also recommended that the city council appoint Steve Devich, Director Administrative Services, as Acting City Manager for. the ear 1 86. Y 9 Respectfu submitted, ohn G. Car wr' t City Manager .a JGC/e~ _ ~ ~~YpN_I,IAT.SO~ POINTNIENTS 19$' 6i SON ~ 1985 LIAISON r Hard Bunce~ P~L AGE ~ John Halton, Alt . Mt3NICIPALITIES p,SSOCIATION ~ROPOLIT~ resentative, one alternate One rep Ling Eaeh January _ Meets: Annual Mee lion, Director John Hams t Director ~ „rr ~a..nJ John Cartwrigh ' Ivan Ludeman, Alternate CATV CpM~SSION ~ Alternate two alter7a3 ~ Steven Devich: r Two directors, p p.M. I Meets: First Wednes0etober Jc~n Hamilton, Representative ,~N.`~--_ January-AAril-June' Alternate Don Priebe, OF MINNESOTA CITIES (~C) LEAGUE one alternate One representative~ing Each June Meets: Annual Mee resentative ~ _ MASAC) Don Priebe, Rap resentative Don Fondriek, Rep SO(1ND ABA'I'E~NT COUNCIL ( Alternate METROPOLIT~ AIRCRAFT Dennis Kraft Alternate resentatives, two alternates John Cartwright, Meeots p Firth Tuesday, 7:3~ P.M• lton, Delegate John Rte- Alternate .Howard Bunce, ~ ~CHFIELD SCHWL DISTRICT One delegate, one alternate 00 P.M, Liaison ' ' Meets: First and Third Monday, 7~ John Hilton, Don Priebe, Alternate - . ACTION, INC. ~ p~ .STOREFRONT/YOUTH one altern~t3O A.M. Director One liaison, slay, Sgt. John Nelso , Meets: Fourth Tue Di ector(Resigned) COUNCIL (S~iSC) Norris Olson, Di eetor - 11 7 I IyEpI~ HUMAN SERVICES ear terms Howard Bunee, etor Ivan Ludeman SOUTH ~ staggered two-y Q,~n Di Four directors, x:30 F.M. Ivan Lud ~ Meets: Third Wednesday, e' ~ a~ ~ ~ "1 AGENCY 1985. LIAISON 1986 LIAISON SUBURBAN RATE AUTHORITY Michael Sandahl, Director One director, one alternate Don Hassenstab, Alternate ~.,,02~ Meets: As needed basis " ADVISORY BOARD OF HEALTH COMMISSION Ivan Ludeman, Liaison 7~~~ One liaison, one alternate Thomas Morgan, Alternate `~/Z,~,~ Meets: Third t' mday, 7:00 P.M. ..COMMUNITY SERVICES DVISORY COMMISSION Michael Sandahl, Liaison ~lc~,,~ One liaison, c;~.~t. alternate John Nami lton, Alternate Meets: Second Tuesday, 7:00 P.M. - ENERGY AWARENESS ADVISORY COMMISSION Ivan Ludeman, Liaison ~I One liaison, one alternate Howard Bunce, Alternate R~l~ Meets: Third Tuesday, 7:00 P.M. HUMAN RIGHTS COMMISSION Howard Bunee, Liaison _ One liaison, one alternate John Hamilton, Liaison /~~m Meets: First Tuesday, 7:00 P.M. HUMAN SERVICES COMMISSION SERVING THE SENIORS AND DISABLED Don Priebe, Liaison ~~clf~ _ One liaison, one alternate Ivan Ludeman, Alternate Meets: Second Thursday, 4:30 P.M. PLANNING COMMISSION Michael Sandahl, Liaison i, One liaison, one alternate Ivan Ludeman, Alternate Meets: Fourth Tuesday, 7:30 P.M. SISTER CITIES INTERNATIONAL COMMITTEE John Hamilton, Liaison One liaison, one staff member John Cartwright, Staff (~~t/j~'~ Meets: Second Thursday, 7:00 P.M. ACTING CITY MANAGER Steven Devich q/~ii~-cam COUNCIL PRESIDENT -PRO TEMPORE Michael Sandahl 1 .....r.(o ~ ,n.,~J 1984 Ivan Ludeman 1983 Ivan Ludeman C~1 `l~~~ _ n ~ , 1982 Ivan Ludeman f / ~ c /G~'`2~ 1981 Howard Bunce ~p ~ ,.V ~s~-,~,9 * October 23, 1985 M N John Cartwright City Manager ® ~ 6700 Portland Avenue South L~'? Richfield, Minnesota 55423 •iF•+ ¦ ~ N Dear John: ~ As per your request, .the Richfield Advisory Board of ~ Health has acted to nominate myself for the council's ~ consideration in the appointment of the city representa- tive to the South Hennepin Human Services Council Board. At the su estion of Tom Moran the Advisor Board took gg g . Y ¦ this action b unanimous vote of the :embers resent at Y P their regular meeting on October 21, 1985. L ~ If approved by the Richfield City Council to this position, _ I will also act as the Liaison between the Richfield Advisory Board of Health and the South Hennepin Human ~ Services Council. My term as a Richfield Advisory Board of ~ Health member expires as of January 1986. Thank you for your consideration, and the council's consid- I ~ eration, of my nomination for this position.. ~ ' i` Sincerely, 0 CCr ¦ _ O `~L' is Ozols O Chairperson ~ Richfield Advisory Board of Health telephone: 869-7521 (612) an equal opportunity employe ~'v RESOLUTION DESIGNATING DIRECTOR AND ALTERNATE DIRECTOR TO SUBURBAN RATE AUTHORITY BE IT RESOLVED by the City Council of the City of Minnesota, as follows; is hereby designated to serve as a director of the Suburban Rate Authority, and is hereby designated to serve as alternate director of the Suburban Rate Authority. for the year 1986 and until their successors are appointed. T' STATE OF MINNESOTA COUNTY OF HENNEPIN j CITY OF ) I, the undersigned, being the duly qualified and acting Clerk of the City of -hereby certify that the attached and foregoing is a true and correct copy of a resolution duly adopted by the City Council of at its meeting on 198 as the same is recorded in the minutes of~the meeting of such council for said date, on file and of record in my office. Dated this day of , 198 . City Clerk (SEAL1 City of . / CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 3 Agenda January 2, 1986 The .Honorable Mayor and 'I Members of the City Council City of Richfield Subject: Purchases in Excess of $5,000 Council Members: I 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 will be submitted to. the city council for consideration. There are, two such items on the January 2, 1986, agenda. Change Order - Legion Lake Muek Excavation This deduct change order is brought to the attention of the city council as the amount exceeds $5,000. The change order calls for modification related to the Geotextile Fabric, the material used as a base for the pathway system and the pond separation through the marsh areas, a design similiar to that used at Richfield Lake. The specified permeativity minimum of 0.3 shall be changed to a minimum permeativity of 0.1. This change only refers to the amount of water that flows through the fabric. The change does not affect the strength. Since the fabric is placed under water, the greater flow through characteristic is not a problem yet the city saves nearly $10,000 on the material. The unit price of $.80 per square yard shall be changed to $.54 per square yard. The $8,580 deduction will amend the contract amount with Veit & Company, Inc. from $470,719.13 to $462,139.13. It is recommended the city council authorize this change order. Lease of Public Safety Radio Units The Public Safety Department has leased a substantial number of radio units from the Hennepin County Sheriff's office since 1977. The units involved are: 25 UHF mobile radios, 8 UHF teleprinters, and, 32 VHF portable radios. These units are used in alI five divisions of the public safety department. This lease arrangement has proven to be satisfactory and advantageous to the city. a~-~- Presently, the only radio equipment owned by the city are the VHF mobile radios personal pagers and. all of the radio equipment associated with the Public Safety Communications Center. In 1977, the annual payment to lease this equipment was. $9,566. It is recommended that the city council authorize. the current release payment of $11,29.65 to the Hennepin County Sheriff's Department for the lease of this equipment. Respeetf y submitted, John G. Cartwr ht e City Manager JGC/eja .~,j / CITY OF RICHFIELD, MINNESOTA Office of City Manager Council Letter No. 2 Agenda January 2, 1986 The Honorable Mayo r• and Members of the City Council City of Richfield Subject: Request For Continuance Of Hearing For On-sale Wine License Mamalu's Barbeque Restaurant Council Members: On December 9, 1985, the city council set a hcaring on the above requested on-sale wine license for the council meeting of - January 2, 1986. The applicant has contacted the Public Safety Department and requested a continuance of the scheduled hearing to February 24, 1986., to enable the applicant to conclude some issues which apparently are still pending with regard to the purchase of this business. It is recommended that the council continue the requested • license hearing to the regularly scheduled meeting of February 24, 19.86. R pectf bmitted, ohn G. Ca twrigh City Manage JGC/e.ja . (Oltlciat Psbdcatloa) NOTICE OF PUBLIC HEABtNG ON ' • RENEWALDB"ON-SALE"INtNE ' LICENSE NOTICE IS HEREBY GtYEN tbst • a public heating wait be beld Tbura- daY. January 2, 1988 before the City , • Council of the Cky of Rich[ieldat1a00 p.m.: or as sown therea[ter as b practicable in the Councq Chambers ' - o[ the Richfield City Hatt, 9780 PoNiand Avenue to consider appUca- ` tion [or °On-Sale" wine licet»e for 'the [oliowfn~: Mamalu a Barbeque Restaurant E 89{4 Pena Avenue South Richfield, Minnesota SS423 All persons interested are invited to ' attend and they wiH De heard. BY"ORDER OF THE COUNCIL ' ' . THOMAS F. FERBER . ` City ~1,erh i CITY OF RICHFIELD, MINNESOTA Office of Cit Mana er y g Council Letter No. 1 Agenda January 2, 1986 The Honorable Mayor and Members of the City Council City of Richfield Subject: Oath of Office For Council Members Edwina Garcia and Martin Kirsch Council Members: At the January 2, 1986, city council meeting, the first order of business will be the Oath of Office for Council Members Edwina Garcia and Martin Kirsch. The Oath of Office will be administered by City Clerk Thomas Ferber. - At this time, it would also be appropriate for the Mayor to designate the seating arrangement of the city council members. ectf 1 omitted, " y! ohn G. Cartwrigh City Manage ; JGC/eja •