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12/04/1996 - 00002279� � � THE MINUTES OF THE SPECIAL MEETING OF THE FRIDLEY CITY COUNCIL OF DECEMBER 4, 1996 The Special Meeting of the Fridley City Council was called to order by Mayor Nee at 7:30 p.m. PLEDGE OF AI,LEGIANCE: Mayor Nee led the Council and audience in the Pledge of Allegiance to the Flag. ROLL CALL: MEMBERS PRESENT: MEMBERS ABSENT: ADOPTION OF AGENDA: Mayor Nee, Councilwoman Jorgenson, Councilman Billings and Councilwoman Bolkcom Councilman Schneider MOTION by Councilman Billings to adopt the agenda as submitted. Seconded by Councilwoman Bolkcom. Upon a voice vote, all voting aye, Mayor Nee declared the motion carried unanimously. OPEN FORUM, VISITORS: Mr Pete Eisenzimmer, 6525 Oakley Drive, voiced his concern that his mail box has been knocked down twice by the snowplow He stated that this is a Federal offense, and he felt the City was responsible and should repair it. Mr. Eisenzimmer stated that he talked to Councilman Billings. Someone from the City came out and told him the plow did not hit the mail box. The snowplow driver is responsible for materials that hrt the mail box even though it may not be the actual plow. This also happened last winter; however, these last two winters are the only times he has had a problem. Mayor Nee stated that if Councilman Billings is checking on this problem he believed the City would try to resolve the issue. PUBLIC HEARINGS: 1. PUBLIC HEARING ON THE ADOPTION OF THE 1997 CITY OF FRIDLEY AND PUBLIC HEARING TO LEVY A TAX WHICH APPEARS TO BE IN EXCESS OF 16 MILLS: MOTION by Councilwoman Jorgenson to waive the reading of the public hearing notices and open the public hearings. Seconded by Council- � SPECIAL CITY COUNCIL MEETING OF DECEMSER 4, 1996 PAGE 2 man Sillings. Upon a voice vote, all voting aye, Mayor Nee declared the motion carried unanimously and the public hearings opened at 7:39 p.m. Mr. Burns, City Manager, stated that it was a pleasure to present the 1997 budget. He stated that he would address the budgeting process and issues which arose from this process, compare this budget with last year's, as well as review its impact �nd the City's financial health. Mr. Burns stated that one of the most relevant issues is actions that will be taken by the State legislature, as this aPfects revenues. In 1996, a lot of time was spent on the State's tax structure. Tax reform will be a primary issue in 1997. The State is considering several approaches to tax reform Ann Rest, the House Tax Committee Chair, has drafted a tax reform proposal that would have the State legislating property taxes for education and local governments levying property taxes for local governmental services. This legislation would also eliminate HACA assistance to the City whlch amounts to about one million dollars a year. Mr. Burns stated that another proposal for tax reform is instead of applying the different levies to tax capacity, it would be applied � to market values which would shift the tax burden from commercial and industrial properties to residential properties. In addition to these proposals, other bills are also being considered for tax reform. Mr. Burns stated that representatives from AMM said that there is strong consideration for a property tax freeze. The best the City can hope for is that no revenues are lost, but we do not to expect any gains. There is a real danger of losing HACA, as well as a property tax freeze, and a more restrictive formula for distribution of Local Government Aid. Mr. Burns stated that Council met with department managers to establish their goals and ob�ectives for 1997. The ma�or priorities were fighting crime, redeveloping blighted areas, increasing citizen involvement, enhancing the City's image, and improving the quality of City services The department managers were very responsive. The Police Department proposes to improve the involvement of the neighborhood police officers by providing a minimum of sixteen hours of new training for twelve neighborhood resource officers. The Recreation Department will begin a volunteer supported parks beautification program. The Community Development Department will � continue to fulfill efforts to upgrade the attractiveness of neighborhoods through rehabilitation programs, acquisition programs, and establishment of a housing maintenance code. The � SPECIAL CITY COUNCIL MEETING OF DECEMBER 4, 1996 PAGE 3 Public Wcrks Department will improve the City water servlces through completion of the construction of a new filter plant on Highway 65. Mr. Burns stated that the financial burden of the City was eased with the budget cuts done in 1995. He then proceeded to identify issues that arose in this year's budgeting process. He stated that 27 positions were reclassified which has a$90,000 impact on the General Fund. There was focus on a number of other issues which were related to cuts made in 1995. Those included the restoration of warming houses, the purchase of Public Works equipment, the brush disposal program, and the capital improvements and utility fund pro�ects. A number of Municipal Center improvements were discussed including rewiring, the municipal garage improvements, water rate increases, and the �oint funding of an adult gymnasium and an addition to the Community Education Center. Mr. Burns stated that the total budget for all funds is $13.4 million. This is $1.4 million greater than the 1996 budget or a 12 percent increase. The ma�ority of the increase is for the �oint venture with School District No. 14 for the adult gymnasium and the addition to the Community Education Center. , Mr. Burns stated that the General Fund budget is $10 million which represents a 2.4 percent increase over last year or approximately $239,D00. This increase is attributable to increased employee costs and commitment to replace machinery and equipment. There are no increases associated with the employment of additional full-time staff but a small increase for part-time warming house attendants and an increase to help to cover additional evening hours at Springbrook Nature Center. The equipment being replaced is in the Public Works and Police Departments. Mr. Burns stated that the total budget for the Special Revenue Funds is $889,000 which represents a 9.2 percent increase from 1996. The increases are in the Cab1e Television and Solid Waste Abatement Funds. Mr. Burns stated that the total budget for the Capital Pro�ects Fund is $2,457,000 or a 83.9 percent increase from 1996. There are three components to this fund which include buildings and lands, streets, and parks. The buildings and lands category will increase from $63,000 in 1996 to $1,685,464 in 1997. Of this cost, $1,588,464 is to be spent in support of the City's portion of �oint pro�ects with School District No. 14 for an adult sized gymnasium at Hayes Elementary School and construction of an addition to the Community Education Center. Mr. Burns stated that $50,000 wi11 also be used to replace Municipal Center fuel tanks and $20,000 for ' computer-related rewiring of the Municipal Center. � SPECIAL CITY COUNCIL MEETING OF DECEMBER 4, 1996 PAGE 4 Mr. Burns stated that in the street category, there is a decrease from $941,680 in 1996 to $492,540 in 1997. This is the result of the absence of a ma�or street reconstruction proqram for 1997. In the park category there is a decrease from $332,100 in 1996 to $279,600 in 1997. Mr. Burns stated that the City has four Enterprise Funds. water, sewer, storm sewer, and liquor operations. The total budget for these funds is $8,793,216 which is a fifteen percent decrease from 1996. Most of the decrease is attributable to reduced liquor fund expenditures and a six percent water fund decrease associated with a reduction of debt service expenditures for 1997. Mr. Burns stated that for the sixth time in the last seven years, Council has determined not to increase the City's budget tax levy. The budget pro�ects the use of $491,089 from fund balances. He stated that this decision not to levy property taxes will result in decreased property taxes for some property owners. The City's portion of the property tax is only one part of the total tax bill. Taxes will vary depending on the taxing �urisdlctions where the property is located. The actual levy depends on any changes in market value and the extent to which additional levies are passed. � Mr. Burns stated that the City wi11 have nearly $35 million in pro�ected fund balances by the end of 1996. More importantly, it is projected that the City will have $21 million in discretionary fund balances. He also pointed out that these balances are declining as we use them to fund our operating budget. Mr. Burns stated that in comparing General Fund expenditures with external, as opposed to internal, sources of revenue; in 1992, the City had more external sources of revenue than expenditures. This disappeared in 1993 and grew worse until 1995. This issue was addressed in 1996, but the City is still using external sources of revenue for funding. He felt that the C1ty would need to continue to rely considerably on external sources of funding to balance the General Fund budget. The Debt Service Fund, the General Fund reserves, and the Liquor Fund continue to be important sources of transfers to the General Fund. Mr. Burns stated that expenditures have increased by only about 1.2 percent in the last five years in constant dollars. He felt that this was remarkable considering the new programs that have been added. Mr. Burns stated that all the external indicators are positive and reflect that Fridley is experiencing good economic times. Construction is the highest it has been in ten years. There are 1 eleven new pro�ects in Fridley this year that are in excess of $500,000 each. � SPECIAL CITY COUNCIL MEETING OF DECEMBER 4, 1996 PAGE 5 Mr. Burns stated that unemployment is about the same as last year; at 3.2 percent. The number of jobs in Fridley has increased about 1.3 percent, wrth a small loss in manufacturing �obs and a gain in retail and the service sector. Retail sales have increased from $153,735,965 in 1993 to $303,855,349 in 1995. This figure will, no doubt, increase as a result of the construction of Home Depot. Property values have increased by about 2.9 percent, with some increases ranging from 3.2 to 5.9 percent. Mr. Burns stated that crime decreased by 1.4 percent, and serious crimes decreased by 12.2 percent. The amount of students receiving free or assisted meals declined by 4.5 percent, and those receiving food stamps declined by 4 percent. Mr. Burns stated that even though the City has an attractive local economy, caution is needed in decision-making as it relates to expenditures. Every year the City is using the reserves to balance the budget. That number is getting higher. There is the prospect of tax reform in 1997. All revenue sources tend to be very static and do not necessarily grow with the economy. Mr. Burns stated that the City did a lot of budget cutting in 1995 and seized most of the opportunities to economize. He stated that � the City will spend about $40,00 a year to operate a community center. The Police Department is receiving requests for more community oriented policing. Funds are needed to upgrade the street infrastructure. There is also a long list of commercial and residential redevelopment pro�ects that will ultimately compete for tax dollars. Mr Burns stated that the City will continue to search for economies. He felt that one way this may be accomplished is through cooperative ventures with other cities. The City is now working with the cities of Andover and Columbia Heights in this regard for the establishment of a GIS Range Rider program. Mr. Burns stated that there will be increasingly tough decisions, but the challenges are made easier by a strong economic environment. Mayor Nee noted that his property taxes for the City and County decreased, with an overall decrease of 9.3 percent. Mr. Pete Eisenzimmer, 6535 Oakley Drive, stated that he was saddened that there were not more people at �his meeting on taxes. He questioned why taxpayers were being taxed when there is a lot of new businesses which should be bearing some of the tax burden. He felt there should be tax relief for the senior citizens. He said businesses are getting a tax break and residents are not. � Mr. Burns stated that one approach that has been suggested to the Legislature is to shift the burden of taxation from commercial and industrial to residential property. There is also the feeling that � SPECIAL CITY COLTNCIL MEETING OE DECEMBER 4, 1996 PAGE 6 tax reform should simplify the State taxation system. There is also an effort to address the need for an educational fund. Mr. Burns stated that there is nothing in this budget that raises taxes. In a lot of cases, there wi11 actually be a decrease. The City has been spending fund balance but still wants to keep a substantial amount of fund balance to avoid substantial tax increases. Mr. Eisenzimmer stated that he thought the Hayes auditorium was included in the school referendum. Mr. Burns stated that the school referendum covered a youth sized gymnasium. The Crty`s contribution will accommodate an adult program. The City's contribution to the pro�ect is very small. The residents wi11 receive a good product for the funds spent. The Community Education Center will receive an addition that will benefit the seniors. Mr. Eisenzimmer felt that the seniors do a lot of volunteer work and contribute to the community. They should be recognized and be given a tax break so they can remain in their homes. � Councilman Billings said that the State legislature determines the tax rates for commercial, industrial, and residential properties. The City only operates under the powers and authority given by the State. The City cannot reduce property taxes for senior citizens. If Mr. Eisenzimmer would like, he should contact his State representatives for changes in the tax structure. About sixty percent of the value of property in this City is single family residential housing, and those properties only pay about thirty percent of the real estate taxes. On the other hand, approximately thirty percent of the property in the City is commercial and industrial, and they pay sixty percent �f the property taxes, with multi-housing paying about ten percent. If there is tax reform in the State based on value, it would mean residential property owners may pay double the taxes, and commercial and industrial taxes would probably be cut in half. Mr. Pribyl, Finance Director, stated that there are legal reasons why the City has to maintain some of the fund balances. Councilman Billings stated that the City's portion of the property taxes probably decreased. Mr. Eisenzimmer stated that his taxes decreased by $14.00, but he did not think that was substantial. He felt it should have been about $100 � Councilman Billings stated that $14.00 is a large sum when all properties in the City are considered. � � � SPECIAL CITY COUNCIL MEETING OF DECEMBER 4, 1996 PAGE 7 Councilwoman Jorgenson stated that her taxes increased by l.B percent, and her portion of City taxes is $188.39. She pays more for garbage service than for the services she receives from the City for water, snow plowing, and police and fire protection. Mr. Eisenzimmer stated that recycling has also increased from $2.00 to $4.00, which he predicted would happen. He felt that the City should eliminate recycling. Councilwoman Jorgenson said that the State would not allow the City to quit the recycling program. The County would have to pick up these materials and charge the City. This would end up costing the City more. Everyone is facing this problem, as there is not a market for the recycled materials. The Council is trying to do the best �ob possible to keep taxes down. Mr. Eisenzimmer also questioned what was developing on the drive-in site. Mr. Burns stated that there is a designated developer who has an eighteen-month agreement with the HRA to develop the site. There has been a very intensive marketing program, and the developer is working very diligently. It is the intent to reserve that land for corporate office space. The City could have had retail development there a long time ago, but this would not have generated as much market value for tax purposes. A lot of corporations either locate their offices south or west, and it ls difficult to convince them to locate in the northern suburbs. Mr. Pribyl, Finance Director, stated that the 16 mill levy is a Charter requirement that when it is anticipated the Council would approve a levy in excess of 16 mills, a public hearing is required and a resolution passed by a four-fifths vote. There was a change in the tax law, but since the Charter has not been modified, the City needs to satisfy this requirement and hold the public hearing. Mayor Nee stated that the Charter requirement for the 16 mill process has been met with this public hearing Councilman Billings stated that the Charter has not been changed or updated from tax mills to tax capacity even though it has been about eight years since the law was changed. Mr. Pribyl stated that staff is working on this. It will be an agenda item for the Charter Commission. Mr. Pribyl stated that on December 16, 1996, the budget and levy will be before Council for formal adoption. Mr. Burns stated that Council will meet at 8:00 p.m., instead of 7:30 p.m. on December 16, 1996. � � � SPECIAL CITY COUNCIL MEETING OF DECEMBER 4, 1996 PAGE 8 MOTION by Councilwoman Bolkcom to close the public hearing. Seconded by Councilwoman Jorgenson. Upon a voice vote, al1 voting aye, Mayor Nee declared the motion carried unanimously and the public hearing closed at 8:34 p.m . MOTION by Councilwoman Bolkcom to ad�ourn the meeting, Seconded by Councilman Billings. Upon a voice vote, all voting aye, Mayor Nee declared the motion carried unanimously and the Special Meeting of the Fridley City Council of December 4, 1996 ad�ourned at 8:34 p.m. Respectfully sul�mitted, Carole Haddad 5ecretary to the City Council William J. Nee Mayor