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12/11/2000 - 00008543THE MINUTES OF THE REGULAR MEETING OF THE FRIDLEY CITY COUNCIL OF DECEMBER 11, 2000 The Regular Meeting of the Fridley City Council was called to order by Mayor Jorgenson at 7:30 p.m. PLEDGE OF ALLEGIANCE: Mayor Jorgenson led the Council and audience in the Pledge of Allegiance to the Flag. ROLL CALL: MEMBERS PRESENT: Mayor Jorgenson, Councilmember Barnette, Councilmember Billings, Councilmember Wolfe, and Councilmember Bolkcom MENIBERS ABSENT: None STATEMENT OF MEETING CONDUCT: Please be reminded that those present at today's meeting may hold a variety of views and opinions regarding the business to be conducted. The exercise of democracy through representative local government requires that ALL points of view be accommodated at these proceedings. It is further expected that a standard of mutual courtesy and respectfulness be exercised by all in attendance, through our individual expression, manner of speaking, and conduct. Therefore, please receive the views of others with the same degree of courtesy and respect which you desire to be given your views and opinions. Any departures from this standard will be addressed by the Presiding Officer through whatever means are deemed appropriate. Thank you for your attendance at today's meeting, and your agreement to abide by these standards of personal conduct. PRESENTATION: Safety Camp Ms. Chevalier, Crime Prevention Specialist, stated that this was the si�th year of sponsoring the Safety Camp. She said 160 ten-and eleven-year-old children participated. The whole camp is dependent upon the area businesses and different agencies. Staff is very appreciative of all of the business sponsoring this event. January 23 will be the first Senior Safety Camp. Councilmember Bolkcom asked Ms. Chevalier who interested persons could contact for information on the Senior Safety Camp. Ms. Chevalier stated that they can call Connie Thompson or her. It is a county-wide program. Mayor Jorgenson asked if it was open to all the other communities as well. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 2 Ms. Chevalier stated that it is open to other communities in the County and transportation will be provided. Mayor Jorgenson asked if 160 spots were open to seniors. Ms. Chevalier stated that was correct. Councilmember Barnette stated that Ms. Chevalier should be personally recognized for all her efforts in running these programs very smoothly. National Ni�ht Out Award Mr. Sallman, Public Safety Director, stated that Fridley has received first place in the nation for participating in National Night Out for cities under 30,000 people. This is a joint effort of staff from the Public Works, Recreation, Fire, and Police Departments, and the City Council. He recognized the former coordinator, Rosie Griep, for the number of years of work she has put into this. The Block Captains and members of the Block Captain's Advisory Board work very hard to help make this happen every year. APPROVAL OF PROPOSED CONSENT AGENDA: MOTION by Councilmember Bolkcom to approve the proposed consent agenda. Seconded by Councilmember Billings. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE MOTION CARRIED UNANIMOUSLY. APPROVAL OF MINUTES: City Council Meetin� of November 20, 2000 APPROVED. OLD BUSINESS: 1. ORDINANCE NO. 1146 TO AMEND THE CITY CODE OF THE CITY OF FRIDLEY MINNESOTA, BY MAKING A CHANGE IN ZONING DISTRICTS (ZOA #00-02, BY EAST RANCH ESTATES, GENERALLY LOCATED AT 7610 UNIVERSITY AVENUE N.E. ) (WARD 1): Mr. Burns, City Manager, stated that the petitioner, East Ranch Estates, is asking that the property formerly occupied by the University Station restaurant be rezoned from C-3, General Shopping, to C-2, General Business. Council approved the first reading of this ordinance subject to six stipulations at their November 20 meeting. Staff recommended Council. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 3 WAIVED THE READING AND ADOPTED ORDINANCE NO. 1146 ON THE SECOND READING AND ORDERED PUBLICATION. NEW BUSINESS: 2. APPROVE CONSULTING SERVICES AGREEMENT BETWEEN THE CITY OF FRIDLEY AND PLANSIGHT, LLC: Mr. Burns, City Manager, stated that this was the annual contract for GIS services. Fridley has joined Columbia Heights and Andover for several years in jointly contracting for these services. These services consist of building and maintaining geographic information system databases for each of the three communities. P1anSight also does special mapping projects and assists the three cities with the development of new GIS applications. This is a one-year contract in the amount of $67,499.34. Fridley's share of that amount is $25,406.67. Staffrecommended Council's approval. APPROVED CONSULTING SERVICES AGREEMENT BETWEEN THE CITY OF FRIDLEY AND PLANSIGHT, LLC. 3. RESOLUTION NO. 108-2000 AMENDING THE CITY REPRESENTATIVE TO THE SIX CITIES WATERSHED MANAGEMENT ORGANIZATION: Mr. Burns, City Manager, stated that staff recommended that Council appoint Jon Haukaas as the City's alternate representative to the Six cities Watershed Management Organization's Board of Managers. ADOPTED RESOLUTION NO. 108-2000. 4. RESOLUTION NO. 109-2000 OPPOSING THE CONCEPT OF ALLOWING FURTHER PROLIFERATION OF LIQUOR SALES FROM DISPENSARIES OTHER THAN DULY AUTHORIZED OFF-SALE LIQUOR STORES: Mr. Burns, City Manager, stated that staff has learned that the Retail Grocers Association will be pushing very hard during the ne�t legislative session to have the legislature pass legislation that will allow the sale of beer and wine in grocery and convenience stores. This resolution opposes this legislation. Staff believes that the legislation would weaken control over the sale of alcohol and threaten the economic viability of municipal, off-sale liquor operations. The City has regularly transferred significant amounts from its liquor operations to support Police, Fire, Public Works and other General Fund operations. ADOPTED RESOLUTION NO. 109-2000. 5. CLAIMS: APPROVED CLAIM NOS. 96741 THROUGH 97037. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 4 6. LICENSES: APPROVED ALL LICENSES AS SUBMITTED AND AS ON FILE WITH THE LICENSE CLERK. 7 ESTIMATES: APPROVED ESTIMATES AS FOLLOWS: Frederic W. Knaak, Esq. Holstad and Knaak, P.L.C. 4255 White Bear Parkway Suite 1300-A Vadnais Heights, MN 55127 Services Rendered as City Attorney for the Month of November, 2000 $ 5,000.00 Carl J. Newquist, Esq. Newquist & Ekstrum, Chartered 301 Fridley Plaza Office Building 6401 University Avenue N.E. Fridley, MN 55432-4381 Services Rendered as City Prosecuting Attorney for the Month of August, 2000 $19,364.00 ADOPTION OF AGENDA: MOTION by Councilmember Bolkcom to adopt the agenda. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM, VISITORS: Ms. Joan Olson, 6320 Van Buren, stated that the referendum that was just passed was going to be sent to the Charter Commission for clean-up. She wanted to know what that meant and what the status was. Mayor Jorgenson stated that the language is going to be cleaned up, not the intent. She said there will be another meeting in December regarding this issue. Ms. Olson stated that this is not what she voted on. She voted on what was presented to her. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 5 Mayor Jorgenson stated that they need a definition of "discretionary monetary spending." The Charter Commission is also going to be looking at this so everyone understands what this term means. It will then come before City Council with a public hearing, which will be posted and published in the newspaper. Ms. Olson asked when the public hearing would be held. Mayor Jorgenson stated that it depends on when the Charter Commission is finished looking at it. It would probably be March before the City Council can look at it. Ms. Jerri Lynn, 7303 Taylor Street, stated that on November 20, a reading was scheduled before the Council on the proposed Park Closing Ordinance to make sure that displaced mobile home owners are compensated fairly for relocation expenses. The ordinance was not read that night. She was not aware that it would not be read that night until she got to the meeting. The City Council received a copy on November 20 of the letter dated November 16 from William Burns, the City Manager. Attached was a copy of a draft of the City Park Closing Ordinance and written in the corner by hand was a note saying: "Park Plaza Estates version." Councilmember Barnette stated that he was confused by some items in her letter. He thought some of the items had been handled already in negotiations. Ms. Lynn stated that Ms. Dacy explained that the draft of the ordinance received by Council- members on November 20 was a draft of the ordinance of the things that they would like to see in a park closing ordinance. If the hand written note was not on there, the park owners did not indicate that this was coming from them. Ms. Tracey Tomas, Manager of Park Plaza Estates, sent a copy of the draft that Park Plaza Estates sent to the City of Fridley. The copy included a letter with suggested changes. On November 20, that letter was not included with the packet for City Council. Confusion may have been eliminated had the document been included with the packet Council received. Mayor 7orgenson stated that the draft ordinance Council received was not the one from Park Plaza Estates for consideration. That was the attachment they had given to Council. Council did not adopt their language. Ms. Lynn stated that the original that came from Park Plaza Estates is different from the attachment that Ms. Dacy sent her in the mail. One has italicized language, and one has red- lined language. Mayor Jorgenson stated that they received a photocopy of the document from Park Plaza Estates, not the original. Ms. Dacy, Community Development Director, stated that both the red-lined copy and the italicized version came from Tracey Tomas. The red-lined copy and the original was done by Ms. Tomas to speed the reader's review. The italicized words are the same as the red version. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 6 Council's electronic mail version is the draft from staff. In the packet was a copy of the italicized version received from Tracey Tomas. Ms. Lynn asked when the italicized version was received. Ms. Dacy stated that it was received the same day she received the red-lined copy. The original was sent on purpose to Ms. Lynn with the red lined so she could see the difference between the two. The italicized copy was being used for Council. The words are exactly the same, it is just in a different version. The draft under consideration by the Council is the second draft dated October 27, 2000. Ms. Lynn stated that she wished she received the italicized version because the red lined one does not copy well for the residents to review. She appreciates the fact that she received the italicized version given to the Council, although this is not what Ms. Dacy told her before. Mayor Jorgenson stated that this item was laid over until January to give opportunity to work through some of these items. If Ms. Lynn wants to work through some items, it should done with staff and brought back to Council. Ms. Lynn stated that in Paragraph C, it states "Nothing in this section is intended to prevent the park owner from obtaining economic assistance from any governmental entity to assist in the payment amounts due to displace residents." She said they should get everything entitled to them under the Uniform Relocation Act if the government in involved. None of the park closing ordinances met with the standards set by the State and the Federal government. Councilmember Bolkcom stated that staff has to work together with the owners of the property. He said Council would not get anywhere if everyone become adversarial. Ms. Lynn stated that she agreed. She was concerned that this may be a discretionary fee pertaining to the new amendment and that it might drag out for some time holding up the ordinance. She voted no for the amendment because she thought the language was vague. PUBLIC HEARINGS: 8. CONSIDERATION OF THE 2001 CITY OF FRIDLEY BUDGET: MOTION by Councilmember Bolkcom to waive the first reading and open the public hearing. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING WAS OPENED AT 8:15 P.M. Mr. Burns, City Manager, stated that this is a maintenance budget that preserves strong City services that are provided by very dedicated City employees. The legislative conte�t in 2000 did not have any change in State aid and the levy limits were lifted for the year 2001. There were no marked changes in limited market value and no major changes in tax increment financing laws to CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 7 put the City at a disadvantage. The 2001 legislative session will focus heavily on tax reform. We believe that there will be a restoration of levy limits. Senator Kelly has been concerned about telecommunications legislation. That may have some impact on the cable franchise. Mandatory pooling of employee health insurance may affect homeowners in Fridley. If any tax reform proposal is approved, it will probably go away in favor of some other source of buying down the education program. If not, then the Homestead Education Tax Credit will continue to benefit. Mr. Burns stated that the Council/Commission survey process asks the department managers and staff throughout the City about their issues of concern. Those issues are translated into a survey that goes out to the Council and Commission members. About fifty people address this wide array of issues. They meet and discuss the issues, and the results of the survey lead the staff on objectives and goals. They also have an impact on the capital improvements plan revisions and budget preparation. It then comes to Council in budget review sessions. We focused on a variety of issues including self-funded employee health insurance, additional part-time IS technician, an additional Water Section employee, increased funding for the elementary after school program, funding for an additional senior program supervisor, automated meter reading, capital improvement projects, use of our Police Activity Fund money, water and sewer rates, and property taxes. Mr. Burns stated that for all funds, the City has $14,404,459 which is an increase of $1,151,241, or an increase of 8.7 percent. A lot of that is increased capital spending. At the end of last year the City took out a lot of capital spending out of the budget. If you replace that, you will have a sizable increase. What is shown is an increased spending from special revenue funds. That actually shows a double expenditure of $271,126 from the Police Activity Fund which came from the State Pension Plan. After the City transferred two other funds, it showed as an expenditure again. The increases for these budgeted funds is $334,918 after staff factored out the capital improvements increase and the double spending. Mr. Burns stated that the General Fund is $11,664,022 which is $139,368 more than what was budgeted for this year. That is a little misleading because some money has been moved out of the grant funded personnel Police Department budget over to the grant management budget. About 31 percent of the money goes to the Police Department, 27 percent goes to Public Works, Finance gets about 10 percent, and the Fire Department gets about 8 percent. The object of expenditures shows that the City spent 69 percent on employees salaries and fringe benefits, other services and charges as pertains to vendors, and contractual services with 20 percent impacted by the same inflationary pressures that our own budget is impacted by. Ninety percent of the General Fund is people in one form or another. Ten percent is spent for supplies and equipment. Mr. Burns stated that the personal services cost of the General Fund reflects a 3 percent cost of living increase for employees. Contractual service costs have increased by 7.2 percent and equipment costs are down 17.7 percent. Special Revenue Funds are $1,382,837 with an increase of $466,673 that reflects the move of the grant-funded Police Department employees to the grant management fund and reflects the creation of the new police activity fund. The Cable Television Fund is at $114,481 down by $39,234. It reflects the absence of any major capital outlay CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 8 expenditures. This year the replacement of the projectors in the Council Chambers cost some money that the City will not face in 2001. The Grant Management Fund has a budget of $432,530, which is up considerably. A large portion is for the grant-funded police personnel. Staff had $137,636 in CDBG funding with a vast majority going for the Housing Rehabilitation Loan Program for low and moderate income people. The City has $47,371 for the HRA Housing Coordinator and the Handyworks Coordinator. The fourth special revenue fund is the Solid Waste Abatement Fund with $314,700 for recycling programs, $14,156 more than what was being budgeting for 2000. It includes a$10,000 increase for collecting recyclables in the two mobile home parks. Mr. Burns stated that the Housing Revitalization Fund was established by Council in 1994 for housing acquisition. $250,000 per year has been budgeted since that time. The Police Activity Fund was established for 2001 to account for expenditure of police retirement turn back money that was provided to the City by the State earlier this year. Expenditures for 2001 are $271,126. Items include youth workers to support Project Safety Net, the local share of grant funded personnel, line charges for the countywide record keeping system and other police costs that are related to current or former grant funded services and to technology upgrades. Mr. Burns stated that Capital Improvement Funds has $1,348,400, $545,200 more than last year. Typically, this range is within $1,000,000 to $1,500,000 per year. The expenditures are budgeted for buildings at $204,000, including $140,000 to carpet the Fridley Municipal Center and $25,000 for painting the interior and e�terior of the Municipal Garage. The streets portion is $830,000, including $500,000 for 2001 neighborhood street reconstruction program for the Woody Lane, Hillcrest, Tennison Drive project, $180,000 for sealcoating and $150,000 for regional bikeway additions in the Locke Lake area connecting with the bikeway on East River Road. Mr. Burns stated that Parks expenditures are $314,000, including $50,000 for replacement of wiring at the Commons Park athletic fields, $57,000 for replacement of park signs, and $42,500 for correction of drainage problems at Community Park The above items are major capital improvements. Mr. Burns stated that the fourth category of funding outside the $14,000,000 just talked about are the Enterprise Funds. The City has the water fund, sewer fund, storm water fund, and liquor operations fund. We are spending about $12,000,000 for this budget adding up to a total City expenditure in excess of $26,000,000 for 2001. The Enterprise Funds are down by about $1,500,000. The Water Fund is about $2,000,000 with more than half of the increase for debt service. The Sewer Fund is about $3,000,000, down about $81,000, attributable to MCES costs for treatment. The Storm Water Fund is about $375,000, the Liquor Operations Fund is $6,700,000 (appro�mately down by about $1,500,000). Staffmade an adjustment in the cost of goods sold at the liquor store and now has a better handle with the new store with what is needed there. Eighty-seven percent of that budget is for cost of goods sold the amount of. $300,000 is budgeted to be transferred from that operation to the General Fund services in the year 2000. Mr. Burns stated that the levy is set at $4,205,000. It is $169,329 more than we certified for 200.0 It is a 4.2 percent increase in line with changes in the Consumer Price Index for the most CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 9 recent twelve months. Factors that affect property tax levels are valuation, changes in State tax laws, and levy changes for all taxing jurisdictions. The average Fridley home value has jumped from $111,900 for pay 2000 to $122,200 for pay 2001, or 8.5 percent. There have been no changes in State law. The impact of Fridley's levy increase in combination with the rise in valuation may take the local share of property taxes on the average home from $230.85 in 2000 to $248.62 in 2001. This is an increase of $17.78 per year. The total property tax burden for the average value Fridley home will rise by amounts that range between $4 in the Spring Lake Park School District to $140 in the Fridley School District. Much of this change is related to changes in market rate levies that were recently approved in each of the four school districts for capital improvements. Mr. Burns stated that fund balances are not necessarily cash balances. The discretionary funds portion from the General Fund, Capital Improvements Fund, Closed Bond Fund, and the Utility Funds is earmarked for coverage of liabilities, replacement of fixed assets, future capital improvement projects, working capital needs, self-insurance obligations, and encumbrances. While there is an improvement for 2000 due to a one-time injection of police pension turn back money, the long-term trend is downward. The unreserved discretionary fund balances were reduced from $23,600,000 in 1996 to a projected $19,400,000 in 2001. Staffpredicted that will continue to go down as more and more of the fund balance is used to balance the General Fund budget. Other considerations are the balances apply to all funds for which there are expenditures in excess of $26,000,000. They are a source of more than $1,300,000 in interest earnings. They enable the City to keep property taxes and utility rates low. They enable the City to pay for capital improvement projects as we build them. They enable the City to avoid expensive debt service and maintain a very high bond rating. Another internal economic indicator is e�ternal revenues versus expenditures. The e�ernal revenue sources are property taxes, state, intergovernmental systems, grants, fines, charges and all other sources of interest earnings and General Fund revenue. The expenditures since 1999 have been using huge chunks of money from the sources of revenue. This year there is almost a certainty that we will use over $1,000,000 in fund balances. Staff budgeted $1,400,000 for ne�t year. All indications are that Fridley economy is healthy. Staff had over $100,000,000 in new construction in 2000, with fifteen permits for work in excess of $500,000. The amount of $81,400,000 belongs to Medtronic. New building is expected to taper off in 2001. Mr. Burns stated that the average unemployment for the first nine months was 2.26 percent, comparing with 2.06 percent for the same period in 1999. Low unemployment accompanied by a 2.8 percent increase in the number of Fridley jobs between 1998 and 1999. There is an increase in 2000 of .5 percent. Job composition is changing with a loss of 3.6 percent in manufacturing jobs, a gain of 7.3 percent in service sector jobs, and a loss of 1.6 percent of retail jobs. Retail sales had a 40 percent growth between 1996 and 1998. Expect these numbers to level off for 1999 and 2000. Estimated market value for property values are $1,489,787,000 in pay 2000, or an 11.6 percent increase in value. Homesteaded residential property values have increased by 8.5 percent. Non-homesteaded residential property has increased in value by 18.7 percent. The value of industrial property has increased by 12.9 percent. Commercial property values have jumped by 10.9 percent. Crime rate statistics are not accurate for this year. The rates are down for the third year in a row but we are shifting from our local system of police reporting to a county-wide system with new software. It will be the early part of ne�t year CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 10 before staff has crime statistics. The county reports that public assistance for Fridley families is up by 2.2 percent and 649 students are receiving free or reduced cost lunches in School District No. 14. Mr. Burns stated that year 2000 was a very good year for Fridley. Medtronic headquarters is nearing completion. The City completed many projects and continued to provide a wide array of strong City services. Many projects and continued strong services are planned for 2001. This is all at a cost of government that is the lowest in this area. Some challenges on the horizon are dealing with declining fund balances within the restrictions of the newly approved Charter amendment, property tax reform at the State level, other securing funding for cities. The City needs to secure funding for the widening of Highway 65, and many competing demands for additional resources that will be reflected in ne�t year's planning process. Continued high cost of redevelopment is a challenge; however, staff is energetic and resourceful. Fridley has a good team of Councilmembers, Commission members and staff who are proud of our accomplishments and dedicated to moving forward to rise to these challenges and to making Fridley a better place to work and live. Councilmember Barnette stated that the budget presentation was well done. The major cost of any business, the major cost is for personnel. His tax statement for the year 2001 for Anoka County has the City portion for ne�t year going up $8 for the whole year or .70 per month. To live in Fridley, he pays $26.25 per month for all City services. It is a very reasonable cost, and he is proud to be a part of the City Council and live in a City like Fridley. Mr. Peter Eisenzimmer, 6535 Oakley Drive, stated that he could not see where the mortgage value could be raised $8,000 every year. That is quite a jump. Council says taxes are not going up. Every time Council raises the value of the home the taxes go up. When he first moved in 1980 he paid $308 a year in taxes. His social security has not gone up that much. Councilmember Barnette asked Mr. Eisenzimmer how much his social security has gone up in the last ten years. Mr. Eisenzimmer stated that it has only gone up about $200. Councilmember Barnette stated that social security in the last ten years has gone up 30 percent. Mr. Eisenzimmer stated that his house is about $1500 higher in value than the home ne�t to his, and he has less social security. His home is only 750 square feet, his neighbor's is 900 square feet, and his neighbor's taxes are cheaper. Mr. Eisenzimmer said it was not fair. Blaine has garbage and recycling included. He said he has to pay for recycling and garbage. Mr. Burns stated that was considered in the figures he gave him. Mayor Jorgenson stated that Blaine does the garbage and recycling at the same time. Fridley has people contracting with their own garbage contractors. Mr. Eisenzimmer stated that should be added to the tax assessment. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 11 Mayor Jorgenson stated that his house may be smaller than his neighbors, but the assessment is based on any improvements done. He could come in to the Board of Review process. Mr. Eisenzimmer stated that he has been here many times, and the City does not listen to the people. Mayor Jorgenson stated that he would have to take the argument of the market value assessment of his home to the State legislature because Fridley is mandated by them to assess property at 92 percent of market value. Mr. Eisenzimmer stated that the bikeway/walkway paths are to be e�tended, and he would like more information on that. Mr. Burns stated that they have $150,000 in the Street Capital Improvement budget for e�tending a bikeway. Mr. Eisenzimmer stated that people from other communities use the paths, and they say that we have the nicest paths there are. They are not paying the taxes on them. Mr. Burns stated that Fridley residents can bicycle almost all the way over to the St. Croix river on bike paths that are built by communities all over the metropolitan area. Mr. Eisenzimmer stated that he felt this was an unnecessary expense. He also said there were problems with the light bulbs on the underpass near Highway 65. He understood that they have been taken care of now. Mr. Burns stated that is Anoka County's portion to maintain. Mr. Eisenzimmer stated that he felt this item should have been placed earlier on the agenda. He would appreciate that Council would think about that ne�t time. Mayor Jorgenson asked if the bikeway over the Locke Lake bridge was discussed in the budget previously. Mr. Burns stated that they did talk about it in previous discussions. Mr. Pribyl, Finance Director, stated that on Monday evening, December 18 the City Council will have two resolutions. One for the property tax and levy, and the other is the actual resolution that approves the 2000 budget. MOTION by Councilmember Bolkcom to close the public hearing. Seconded by Councilmember Wolfe. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING WAS CLOSED AT 9:12 P.M. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 12 9. CONSIDERATION OF THE LOCAL LAW ENFORCEMENT BLOCK GRANT: MOTION by Councilmember Wolfe to waive the reading and open the public hearing. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING WAS OPENED AT 9:12 P.M. Mr. Burns, City Manager, stated that the Local Law Enforcement Block Grant is a source of about $23,000. The proposed expenditures include ground fighting equipment including squad rifles, laser sights, a Taser electronic incapacitation device, a plastic squad back seat, and the crime view mapping program traffic squad. MOTION by Councilmember Barnette to close the public hearing. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING WAS CLOSED AT 9:15 P.M. 10. CONSIDERATION OF SPRINGBROOK CREEK CHANNELIZATION PROJECT NO. 335 (CONTINUED FROM NOVEMBER 20, 2000): MOTION by Councilmember Bolkcom to remove this item from the table. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING WAS OPENED AT 9:15 P.M. Mayor Jorgenson stated that this is a continuation of the public hearing. Mr. Haukaas, Public Works Director, stated that this past Saturday there was a neighborhood meeting on the site of the proposed project. After discussion of what the City could do in the area, the neighbors asked that the public hearing be continued for an indefinite date later in the spring after they have a chance to talk among themselves and study more data. They have not come to a consensus of what to do yet. Councilmember Bolkcom stated that there was a meeting before that after the last Council. At that time, everyone seemed willing to work together. This should be a good project. MOTION by Councilmember Bolkcom to continue the public hearing. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE MOTION CARRIED UNANIMOUSLY. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 13 NEW BUSINESS: 11. RESOLUTION NO. 110-2000 INCREATING TAX INCREMENT FINANCING DISTRICT NO. 17 AND ADOPTING THE TAX INCREMENT FINANCING PLAN FOR THE GATEWAY EAST PROJECT: Mr. Fernelius, HRA Housing Coordinator, stated that this is consideration of the tax increment district for the Gateway East project. This would be the 17th tax increment financing district created by the City. The City completed negotiations with the developer, Real Estate Equities of St. Paul. A number of issues were resolved last week, and the HRA approved a development contract at the December 7 meeting. The project will have 28 townhome units on the site. Construction is scheduled to begin in the spring of ne�t year to be completed by the end of 2002. The developer will complete all the site improvements which would include the site work, public streets, utilities and landscaping. They have also agreed to pay prevailing wage to workers employed on the project. Mr. Fernelius said the need for the tax increment district is to recover some of the HRA's costs related to the project. The HRA has expended almost $700,000 on demolition, acquisition and relocation. The HRA will be contributing appro�mately $650,000 for additional site improvements and environmental remediation. The factors that affect this project are location of the site, unique shape of the parcel, and the small layout. There are a number of infrastructure improvements that the HRA will have to pay for. These include street modification, utilities, and converting a former commercial use into a residential use, an additional factor would be prevailing wage, which is 15 percent of the developer's cost. The City is trying to improve its image along a very important corridor and push the market in terms of creating a very nice development along an important gateway into the City. Mr. Fernelius stated that the HRA collects the difference in the taxes between what the properties are generating right now and also what the new development will generate. Our estimate at this point is that the townhome development will generate about $4,480,000 of total market value translating to appro�mately $70,820 in new taxes. The total tax increment of the life of the district adds up to about $2,100,000. In using the present value factor that allows us to determine what that stream of income over a period of time is worth in today's dollars, it equates to about $715,000. A number of assumptions were used in preparing the analysis including a 2 percent inflation rate, and the average sales price of $160,000, which is higher than what is expected. Both the revenues and the expenses have been projected at their maximum level. The City is looking at a 2001 buildup, valuation in 2002, and collection of the first increment in 2003. The TIF plan has to be submitted to Anoka County and the affected school districts. The City did not receive any comments from either. The City Council conducted a public hearing on October 23. The HRA acted on the development contract and approved the creation of the district on December 11. Council action this evening is the last step in the process for creating a tax increment district before it goes to the County. Staff recommended Council approval of the attached resolution which creates the tax increment financing district. Mayor Jorgenson asked where this project fits in the affordable housing goal. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 14 Mr. Fernelius stated that using the Metropolitan Council standard, which is around $135,000, some units would be built in that price range, and some would be higher. The City is hitting a certain segment of the affordable housing market. The goal of the project has been to have a higher target price range. Mayor Jorgenson stated that she thought this project was going to be affordable. Mr. Fernelius stated that a certain segment will be affordable. Mayor Jorgenson asked what percentage would be. Mr. Fernelius stated that he did not have that information with him. Mr. Chris Winter, Real Estate Equities, stated that the preliminary constructions costs are estimated to be in the mid $130's to the mid $140's. Mayor Jorgenson asked Ms. Dacy what the metropolitan rate was for affordable housing. Ms. Dacy, Community Development director stated that she believes that they increased it to $134,000 for owner-occupied townhomes. Mayor Jorgenson asked if this is based on the amenities that the owner would request for their property. Mr. Winters stated that they offer an all-inclusive price with e�tra cost for additional options. Mayor Jorgenson asked how many units would be priced in the mid $130's. Mr. Winters stated that it has not been determined. Councilmember Bolkcom stated that she thought Fridley's numbers for home costs are higher than other communities. She said she is not sure that our goal was for affordable housing here. Ms. Dacy stated that the City took a look at a number of options for this project. The demographic was to create owner-occupied housing and we also realized that there is a certain element of move-up option prevalent in Fridley. The direction was to create a project that could be successful and respond to the niche that does occur in Fridley. The other proposed for the RFP did include a number of additional units with 40 units representing density staff felt did not achieve what the Council wanted. Mayor Jorgenson asked if this was similar to the Rottlund project. Ms. Dacy stated that this is different because it is an e�tremely small site with 2.5 acres as opposed to 14 acres across the street. This is an oddly shaped site with a frontage road through it and commercial properties to the north and south. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 15 Councilmember Bolkcom stated that the Christianson Crossing project was also different because a lot of rental property had to be moved which is different than moving commercial. There is opportunity in other areas to do more affordable housing and more options to explore for that. Mayor Jorgenson asked what the average income to qualify for a mortgage for this townhome would be. Mr. Fernelius stated that lenders set caps of 28 to 30 percent of the income to determine the mortgage. He did not know what the exact dollar amount is. He said that staff would be happy to find that number out later. Mayor Jorgenson asked Mr. Winter if he had anything more to add about his project. Mr. Winter stated that they have not changed the design standpoint since the last meeting. It would be a three-story tuck under unit with a front elevation for the front porch and brick banding along the bottom with bay windows on the side and double car garages. MOTION by Councilmember Billings to table this item. Seconded by Councilmember Barnette. UPON A VOICE VOTE, MAYOR JORGENSON, COUNCILMEMBERS BILLINGS, AND COUNCILMEMBER WOLFE VOTING AYE, COUNCILMEMBER BARNETTE AND COUNCILMEMBER BOLKCOM VOTING NAY, MAYOR JORGENSON DECLARED THE MOTION CARRIED BY A THREE TO TWO VOTE. Councilmember Billings stated that in this point in time the HRA cannot sell any property due to the Charter Amendment pending and he does not see the rush to get into it. Councilmember Barnette stated that was a valid point. Mr. Casserly, City Consultant, stated that this issue is here because Council has the only authority of creating a tax increment district. The HRA can only request that the Council create such a district. The HRA authorized the City to redevelop contracts. At the last meeting it authorized the execution of a redevelopment contract. The HRA passed a resolution requesting Council to approve the tax increment district. The HRA technically and legally can enter into the redevelopment contract. It does not really need the tax increment district because the property is in the HRA's project area where it has authority to act. The tax increment district is allowing the HRA to recover part of its public investment. There is no tax increment going directly to the redeveloper as a result of this project. All of it will go to the HRA for reimbursement for public cost already incurred. If Council does not want the HRA to recover the cost already incurred in the amount of $700,000, it does not have to be approved. The Charter amendment has room for discussion about whether it has application to the HRA. The land is being sold for $1, and the HRA is escrowing funds to complete various kinds of site and public improvements. It would require a very imaginative mind to bring this within the Charter amendment. This project has a very aggressive application. Council has complete discretion. It does not impact the HRA's ability to enter into an agreement. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 16 Mayor 7orgenson stated that she thought Council did not feel comfortable in bringing the agreement. Council needs to look at the Charter issue to make sure they are not going to be out of compliance with them in creating a district. Councilmember Billings stated that the HRA would be selling the property. Mr. Casserly stated that was correct if one could construe the $1 as a sale. That was not actually put into the agreement, the City just said the HRA will convey. The City would be transferring it with the understanding that if the improvements are not made without our right of recovery, the City can take it back. Councilmember Billings stated that it does not fall under the category of discretionary charges. Mr. Casserly stated that is clearly an argument he would like to make. Councilmember Billings stated that the Charter amendment applies to all departments of the City, and subdivisions. The HRA's financial statement is co-mingled with the financial statement of the City's. The HRA's levy is a levy by the City of Fridley, not by the HRA as such. The Charter amendment does not prohibit the creation of a tax increment district. It affects the ability of the HRA to charge anyone for anything that is not a charge that was currently in place at the time of the approval of the Charter amendment or adjustment of such charges that are in excess of the cost of living. Mr. Casserly stated that he is not sure this issue could be resolved this evening. The issue previously before the Council was whether or not the City should create a tax increment district. The effect would be to allow tax increment to be collected to reimburse for public improvement costs. Not creating a tax increment district means there will not be an opportunity to recover the costs already incurred. The HRA has deemed it necessary to give the land away to make this project work The City is not selling land. Mr. Knaak, City Attorney, stated that some of these questions are being explored as is the obligation of Council and staff to determine how the new Charter language is to be implemented. He did not have an opinion. He believed that Mr. Casserly was correct in that the creation of the tax increment district would not violate any of the new language with the Charter to his knowledge. Some possible consequences of that would raise questions. It is important to make the statement, as Council in tabling this item, that you are not making an opinion as a City as to the application of that language to this instance or other instances. Mr. Knaak encouraged Council to adopt the view that they were exploring answers to the questions being raised which is a justification for tabling it. He said that Council may be taking a position that may be construed as a legal position. These are court issues and are being actively explored. Mr. Knaak said that Councilmember Billings is stating this very well, but it is important that the City not reach a conclusion. It is not clear whether or not the Charter will impact these issues. Mayor Jorgenson asked if the City Attorney wanted clarification. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 17 Mr. Knaak stated that there is no comment to accompany a motion to table. He was hopeful that the underlying reason that was stated for the motion to table would be reflected in the record that it was concern about these issues, but not a position being taken. He did not think they needed to pass a separate motion or resolution. Councilmember Bolkcom asked Mr. Knaak if he would have advised any Councilmember or Mr. Burns not to pass this resolution on the TIF district. Councilmember Billings stated that he believed the City Attorney's concern was that Council's reason for tabling was not tied with the Charter amendment. He made the motion to table because no councilmember was making a motion for the resolution. The subsequent discussion with Mr. Casserly was not the reason for tabling. Mr. Burns stated that a lot of work has gone into the negotiations with the developer and is a substantial investment of the City. He asked what the motion to table tonight would do to Real Estate Equities. Ms. Dacy stated that it changes the dynamics from the HRA's side and their ability to provide and to fund the project. If the issue is that the HRA is not conveying the land for a price or fee then that removes the issue for the Council. She would recommend that the item be placed on the December 18 agenda so the developer would have some direction on the project. MOTION by Councilmember Barnette to remove this item from the table. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Barnette to approve the resolution creating tax increment Tax Increment Financing District No. 17 and adopt the tax increment financing plan for the Gateway East Project. Seconded by Councilmember Bolkcom. Councilmember Bolkcom asked Mr. Knaak if there were any issues related to creating a TIF district that would violate the Charter amendment language. Creating a district would not violate the new language. Some of the things going with this will raise questions. Council will not necessarily infringe on the new language. This area needs to be studied carefully. The creation of the district is one step. The sale or charge of the land raises some issues and those issues are being explored right now. She said she can understand the desire of Council to table certain aspects of this but not necessarily the creation of the TIF district. Councilmember Bolkcom asked Mr. Knaak when he thinks there will be an answer about the legal issues related to the property itself. Mr. Knaak stated that he did not know. He said in his opinion it would come within the ne�t two to three months. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 18 Councilmember Bolkcom asked when it would legally become a Council issue as far as the property, or if it was now an HRA issue. Mr. Knaak stated that the interpretation is one of the things they are involved with. Mr. Burns asked Mr. Casserly if the HRA went ahead with the development with Real Estate Equities without the TIF district, at what point the TIF district could be applied to the area. Mr. Casserly stated that once the building permit is issued, the opportunity to create a TIF district is lost. Mayor Jorgenson asked when they plan to apply for a building permit. Ms. Dacy stated that she thought it would be this spring. Mr. Casserly stated that they would need grading permits before the building permit. Mr. Burns asked if there were any remedial testing or grading or building-related activities that still needed to be done. Ms. Dacy stated that the developer would conduct additional soil borings and contamination exploration. The time frame for this development is very tight. Mr. Burns stated that he was trying to see if there was any way to buy some time to get the Charter issue resolved and not cause them to lose time on this project. Mr. Casserly stated that there are a number of things that could be done. The developers would not want to proceed without a 100 percent reimbursement because they would not know if the City was ever going to do the project. The HRA will not proceed if they do not have the opportunity to recover some of the investment. Councilmember Billings asked if the HRA has site control. Ms. Dacy stated that they have site control and a title for all the properties. There are two parcels. Councilmember Barnette asked Councilmember Billings if he was concerned about the other governmental agencies. Councilmember Billings stated that his concern is the Charter amendment. He said he has a philosophical problem with selling property for $1 or giving property away. He would rather see the developer charged a fair market value for the property. If additional subsidies are required to compensate the developer for fences, bollards, site design, elements and things like that, he would like to see the HRA cut the checks to the developer for that. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 19 Councilmember Bolkcom asked Councilmember Billings if he was saying that this would be easier understood by someone looking at it the way he described. Councilmember Billings stated that it is easier to understand than the fact that we are giving things away. Councilmember Bolkcom stated that she does not think we are giving it away, but it could be explained in easier terms for people. The Affordable Housing session she went to in Boston said to sell the land cheap. Councilmember Bolkcom did not think the City was doing anything that other communities not doing all over the United Sates. It costs money to develop land. Councilmember Billings stated that he thought it should be clear about what it is costing. Mr. Casserly stated that in trying to analyze whether or not a tax increment district should be created is to look at the alternative uses for the property without tax increment systems. No alternative uses would be made unless the City did remediation. He said he tries to look at what could go on the site reasonably without any additional land assistance. It was concluded that the City could create four duplex units and one small commercial building of about 7,500 square feet. The potential market value would be about $1,200,000. The City could then really review and spend a lot of time for the performance of the competing projects. As you increase the density and build a lower cost unit, you can have smaller total vestments in the site. The City looked at the expensive way, and staff concluded that this was not the direction the City was looking at going. The City could have structured this whole thing differently to have the HRA sell the land for a set price, provided the assistance through other mechanisms so the HRA could swap dollars, and we approached it very up front. This product needs this kind of assistance and the City will provide this assistance and mechanism. The City has a net revenue sharing concept worked into this project. If the remediation exceeds $50,000 the HRA can decide not to proceed with the project. Cities are trying to take over commercial areas that are no longer efficient and convert them into residential area. They are grappling with the redevelopment and transportation costs. Then they would have to grapple with the affordable issues. These costs are nowhere out of line compared to other projects. The City has spent more time than this should merit, but it is complicated because of all the issues. The City can structure this differently but it took an awful lot of effort to make the numbers work. He thought it was what the City would want. Mayor 7orgenson stated that they are very appreciative of his efforts and the HRA and the developer in putting together this project. She knows everyone is doing a good job. Approving this tax increment district may cause considerable expense too. If the City was talking about 28 to 30 percent of a person's annual income they are looking at a house that would cost $135,000. There are many families coming into Fridley looking for their first home. Mr. Casserly stated that he takes this seriously and this is what he does. If someone is looking at an affordable housing component you have created a whole new dimension for us. He has not heard this issue on this site. He would need to do a whole new approach. He could put more money into this and bring down the cost. You can subsidize first mortgages or many other schemes that can make things affordable, or you just give him the money. We will recycle and get some back, but it is money. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 20 Mayor Jorgenson asked if first-time home buyer money could be applicable to this project. Mr. Casserly stated that may be. If you want to downscale the product we can do that, but then we are getting into a whole other arena. Ms. Dacy stated that the average value of a home in Fridley is $123,000. The value of this construction is not much more than the average value. The City would be offering maintenance free, townhome living for folks who do not need to mow their lawn. This offers a little bit of move-up opportunity. The project is what the Council and HRA requested. Councilmember Bolkcom stated that she does not ever remember Council talking about the affordable housing project. These numbers are nothing new and have been on the table for some time. If that is the intent Council should have been pursuing this with the HRA and giving them more direction. Councilmember Wolfe stated that he agreed with Councilmember Bolkcom in that he does not remember the affordable housing issue. Councilmember Barnette stated that this comes out the same if the HRA gives the land away for nothing or sells it for money and recoups the money. The bottom line is still the same. The City will recoup those dollars in taxes. He said he would hate to see this project go away. Mayor Jorgenson stated that the question has been called. UPON A VOICE VOTE, COUNCILMEMBERS BOLKCOM, BILLINGS, BARNETTE, WOLFE VOTED IN FAVOR OF THE MOTION, MAYOR JORGENSON VOTED AGAINST THE MOTION. MAYOR JORGENSON DECLARED THE MOTION CARRIED. 12. INFORMAL STATUS REPORTS: Mr. Burns, City Manager, stated that there will be a reception in Mayor Jorgenson's honor ne�t week at 6:00 p.m. at the Municipal Center. The public is cordially invited. Councilmember Bolkcom stated that the NCDA is holding a meeting here on December 14 from 5:00 p.m. to 7:00 p.m. Everyone is invited. Either Ms. Dacy or Mr. Hickok will give more information if so desired. ADJOURN: MOTION by Councilmember Barnette to adjourn the meeting. Seconded by Councilmember Bolkcom. CITY COUNCIL MEETING MINUTES OF DECEMBER 11, 2000 PAGE 21 UPON A VOICE VOTE, ALL VOTING AYE, MAYOR JORGENSON DECLARED THE DECEMBER 11, 2000, CITY COUNCIL MEETING ADJOURNED AT 10:35 P.M. Respectfully submitted, Signe L. Johnson Nancy J. Jorgenson Recording Secretary Mayor