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09-06-05 Special CITY COUNCIL MEETING MINUTES Richfield, Minnesota Special City Council Meeting September 6, 2005 The meeting was called to order by Mayor Kirsch at 5:33 p.m. Members Present: Martin Kirsch, Mayor; Susan Rosenberg; Fred Wroge; Bill Kilian; and Sue Sandahl. Staff Present: Steve Devich, City Manager; Mike Eastling, Public Works Director; Dan Scott, Public Safety Director; Jim Topitzhofer, Recreation Services Director; Bruce Palmborg, Community Development Director; Brad Sveum, Acting Fire Services Director; Wayne Kilgren, Acting Liquor Operations Director; Chris Regis, Finance Manager; and Cheryl Krumholz, Recording Secretary . Item #1 Finance Manager Regis reviewed the formulas related to the determining of the City's certified tax levy, local levy, local tax base and tax capacity rate and payable taxes based on home value. City Manager Devich explained the State has lifted levy limits for 2005 and 2006 but a limit could be re-established to extend above the base levy in the future. Council Member Wroge asked about the State putting limits on again if cities continue a 9 - 12% increase in levies. City Manager Devich said that was possible. Council Member Kilian stated taxpayers should realize they pay 67% of City services and other fees pay the remainder. Special Council Meeting Minutes -2- September 6, 2005 Council Member Wroge said taxes cannot be about housing value and tax increment financing (TIF) districts. He added that the City has removed many single-family homes. Council Member Kilian stated that would be true if the community was losing value but it is constantly increasing. City Manager Devich explained fiscal disparities, including differences in a city being a contributor or recipient. Council Member Rosenberg stated that if the City did not have the use of TIF and the removal of certain properties, there would be no growth. She said she does not believe any improvements done in the past have been wrong. The big picture and the benefits need to be considered. Public Works Director Eastling added the base tax in TIF Districts continues to be paid. Mayor Kirsch stated it all started with the HUB area, which was good for the community. Council Member Wroge said the past has been good and this is a great community that needs to be kept affordable. If LGA reductions continue to be blamed for tax increases, the City is in trouble. He added that the City needs to be cautious. City Manager Devich stated it is not a matter of blaming, but making up the base of the budget which for years included LGA. There has now been a paradigm shift and if residents want the same level of services they will need to shoulder the cost. Funds need to be invested in the community. Council Member Sandahl said hindsight is 20/20 and the City needs to live with past levies. Council Member Kilian added that the future needs to be considered. Larry Wozniczka, 6744 Wentworth Avenue, asked about incurring interest and bond issuance costs for Capital Notes. Finance Manager Regis explained the rationale for Capital Notes. With the Capital Notes the property tax levy is 9.01 %; without it, it would be approximately in the upper 8%. Council Member Wroge questioned the need to spend $20,000 in interest and bond issuance costs when equipment could be purchased and be included in the base levy. This would save the community money. Then if the levy limit returns, the Capital Notes could be re-instated. Council Member Kilian said funds should not be borrowed if it's not necessary; it depends on the levy impact. City Manager Devich explained the advantages and disadvantages of using Capital Notes. The City Council consensus was to not use Capital Notes for 2005 and 2006. Council Member Sandahl stated the City needs to begin allocating funds for the 2008 Centennial Celebration. She suggested $5,000 in 2006, $5,000 in 2007 and $10,000 in 2008. Marketing and staff support needs to be provided to the Celebrations Commission for this project. City Manager Devich explained the City receives a small share of the Richfield Tourism Promotion Board (RTPB) funds for administration so those funds could be used for the celebration. Special Council Meeting Minutes -3- September 6, 2005 The City Council consensus was to allocate the amounts suggested by Council Member Sandahl from the RTPB funds for the City's 2008 Centennial Celebration. Council Member Wroge asked about the use of cable television franchise fees. City Manager Devich explained the fees collected have been used to assist with capital expenses in the past year and then paid back to the fund. Council Member Wroge suggested using some of those funds for the Centennial Celebration. City Manager Devich stated the cable franchise fees could be borrowed and paid back to provide funding for the relocation of the Cedar Liquor Store. Council Member Sandahl suggested Recreation Services Director Topitzhofer assist the Celebrations Commission with preparing for the Centennial Celebration. Some of the allocated funds could be for the Richfield History Center to commission the preparation of a book on Richfield's history to be presented as part of the Centennial Celebration. This could be a cooperative effort. Council Member Sandahl suggested the Celebrations Commission prepare a budget to explain use of the funds and present it to the City Council and RTPB. Council Member Sandahl said the History Center has requested a $10,000 appropriation from the City in 2006 but she would support no more than $5,000. City Manager Devich explained that there was a one-time donation of $5,000 for 2005/2006. Council Member Wroge expressed concern that the History Center is returning for funding assistance again which could result in other organizations coming to the City Council with funding requests and not using fundraising efforts. City Manager Devich said that no other funding is provided to other organizations other than Human Service agencies and that amount has remained unchanged for several years. The City Council needs to decide upon the most effective use of $10,000. Council Member Sandahl said the joint effort between the Celebrations Commission and the History Center will be beneficial. The City Council consensus was to not provide additional funding assistance to the Richfield History Center. Council Member Kilian explained an alternative funding approach for the City Council to consider. A 1/2% fee on selling a home, not to exceed $1,000 per unit to be paid by the new owner. This is used by the City of Woodbury. The funds would not be used for the General Fund but be earmarked for major capital infrastructure improvements only. The previous owner, through taxes, has already paid for the infrastructure so only the new homeowner pays for a new infrastructure. The City Council consensus was to have the City Manager review the legal basis for the alternative funding option discussed by Council Member Kilian. - Special Council Meeting Minutes -4- September 6,2005 Council Member Wroge said the City would undertake one major capital improvement with the funds - not divide funds between projects. City Manager Oevich explained the key financial strategic planning process will set capital improvement priorities as approved by the City Council and if there is a change, the City Council will need to approve it. Council Member Rosenberg said a fee for rental property is being researched. City Manager Oevich stated the approach to property maintenance issues is being reviewed and various options will be discussed with the City Council on October 11. Educating the homeowner should be tried first but the City should also try to recover costs. State law limits the amount to be charged to only what is expended. Council Member Kilian discussed a rewards system for owners who do a good job of meeting established community property maintenance standards, which could result in money off of their property taxes. City Marlager Oevich said this would be a form of tax abatement. City Manager Oevich said the City Council will certify the 2006 preliminary tax levy at the September 13 meeting. A cable television show about the budget is also planned. The City Council could also conduct a public meeting in October. Mayor Kirsch stated the proposed levy on September 13 can be as high as legally permitted and thereafter, it can be reduced as determined by the City Council but not increased. City Manager Oevich explained the proposed levy now spends $300,000 of the $600,000 previously set aside for the LGA reductions. Council Member Sandahl said the City should assume no more LGA will be provided. Council Member Wrage said LGA should be stopped from being included in the budget. Mayor Kirsch said staff is trying to wean the City off LGA, which was directed by the City Council. Council Member Kilian said that if no LGA is included this year, the levy would be approximately 16%. Some residents will pay more or less depending on the market value of their home. Council Member Kilian asked if the taxes on residential properties was raising faster than commercial. City Manager Oevich explained the commercial tax compression. Council Member Wroge asked about the budget including funds for a national disaster similar to the recent hurricane in New Orleans. City Manager Oevich said there are no funds but the City does have a disaster preparedness plan. Special Council Meeting Minutes -5- September 6, 2005 The meeting was adjourned by unanimous consent at 7:14 p.m. ch:!f~~if~ Recording Secretary Date Approved: September 27, 2005