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12/12/2011 - 31299CITY COUNCIL MEETING CITY OF FRIDLEY DECEMBER 12, 2011 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:32 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember-at-Large Barnette Councilmember Saefke Councilmember Varichak Councilmember Bolkcom OTHERS PRESENT: William Burns, City Manager Darcy Erickson, City Attorney Jim Kosluchar, Public Works Director Scott Hickok, Community Development Director APPROVAL OF PROPOSED CONSENT AGENDA: NEW BUSINESS: 1. Resolution Approving a Plat, P.S. #11-01, Sarah Addition, by Lindquist and Vennum, PLLP, on Behalf of the Owners, Bank of America home Loans Servicing, LP, for the Purpose of Reconfiguring the Log Lines to a North/South Position to Allow the Twin Home Units to be Sold Separately, Generally Located at 100-110 Mississippi Place N.E. (Ward 3) William Burns, City Manager, said the re-plat allows the lot line to be converted from an east- west direction to a north-south direction. The change will allow the owner to sell the duplex units on the property separately. Staff recommends Council's approval. ADOPTED RESOLUTION NO. 2011-62. 2. Approve Animal Control Contract between the City of Fridley and Brighton Veterinary Hospital William Burns, City Manager, said Fridley has contracted with Brighton Veterinary Hospital to provide animal impound services since 1997. They have agreed to continue the $1,500 per month fee in 2012. The contract also remains the same in other respects. Staff recommends Council's approval. APPROVED FRIDLEY CITY COUNCIL MEETING OF DECEMBER 12, 2011 PAGE 2 3. Claims (153275 — 153400). APPROVED. 4. Licenses. APPROVED THE LICENSES AS SUBMITTED AND AS ON FILE. 5. Estimates. Shank Constructors, Inc. 3501 — 85th Avenue North Brooklyn Park, MN 55443 WTP 3 Filter and Chemical Feed Project No. 405 Estimate No. 2 ............................................................................ $41,635.65 APPROVED. APPROVAL OF CONSENT AGENDA: MOTION by Councilmember Barnette to approve the Consent Agenda as presented. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. ADOPTION OF THE AGENDA: MOTION by Councilmember Bolkcom to adopt the agenda as presented. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY OPEN FORUM VISITORS: No one from the audience spoke. NEW BUSINESS: 6. Resolution Certifying Final Tax Levy Requirements for 2012 to the County of Anoka Darin Nelson, Finance Director, reviewed the proposed final levy in the amount of $10,703,739 or 1.85% more than the 2011 levy. This proposed final levy complies with the City Charter FRIDLEY CITY COUNCIL MEETING OF DECEMBER 12, 2011 PAGE 3 requirements regarding inflationary increases and public disclosure, and is the same amount that was presented by the City Manager at last week's Truth-in-Taxation meeting. Mr. Nelson said for taxes payable 2012, the state legislature enacted two changes: 1. Local levy limits were eliminated; and 2. The MVHC was replaced with the MVHE. The elimination of the MVHC was part of the budget balancing package enacted during the legislature's special session back in July, saving the State over $280 million per year. The MVHC provided homestead property owners with a credit on their property taxes that provided relief to lower valued residential properties. Theoretically the credit was then paid to the cities, counties, and schools in the form of State Aid. Mr. Nelson said as an example, if the City levied $10 million, we would effectively receive $9.6 million from taxpayers and $400,000 from the State. The problem was the State Aid payments to the local jurisdictions were sporadic at best. For 2011, the actual loss for the City of Fridley amounts to $495,000. Councilmember Barnette said if he was buying a house in Fridley and wanted a typical Fridley home which last year was around $160,000 assed value, under this new valuation if the price goes down to $147,000 what does that have to do with the actual sale price of the home? Mr. Nelson said the tax value is the value that is taxed. The sale price is different than the taxable market value. You will be taxed on the assessed value, not the sale price of your home. William Burns, City Manager, said the tax values are about 18 months behind the fair market value in today's market. MOTION by Councilmember Saefke to adopt Resolution No. 2011-63. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. Resolution Adopting the 2012 Final Budget. Darin Nelson, Finance Director, stated the City held its required truth-in-taxation meeting at the December 5 City Council meeting. During this meeting, the City Manager delivered the 2012 budget message. At the conclusion of the budget message, the Mayor did open the meeting for public comment, and there was none. Mr. Nelson said the certification of the final budget must be to the County Auditor by December 28. The City has complied with appropriate sections of the City Charter. This resolution adopting the 2012 Budget will finalize the budget process. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 12, 2011 PAGE 4 Mr. Nelson said that the once final budget documents are prepared, the final 2012 budget document can be obtained at the Anoka County Library, City Hall (Finance Department) and the City's website. The City Manager's Budget Message is also on the City's website. He said if anyone has any additional questions related to the 2012 budget, to please contact him at (763) 572-3520. Being there are no further open issues to resolve as a result of the public meeting, staff is presenting the 2012 budget resolution for Council's approval. MOTION by Councilmember Saefke to adopt Resolution No. 2011-64. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 8. Resolution Committing Specific Revenue Sources in Special Revenue Funds; and, Motion to Approve the City of Fridley's Fund/Cash Balance Policies. Darin Nelson, Finance Director, presented the new components of fund balance. No longer will there be Reserved, Designated, and Undesignated. The changes are to governmental fund type definitions, specifically Special Revenue Funds. The implementation date is effective for the 2011 calendar year. The new Fund Balance definitions are as follows: Nonspendable - Items not expected to be converted to cash (i.e. inventory, prepaid items, land held for resale). Restricted - E�ternally imposed constraint (i.e. external parties such as creditor, grantor, government, etc.). Committed - Requires Council action (i.e. committing cable franchise fees for cable TV programming). Assigned - Council authorizes the City Manager and/or Finance Director to assign fund balance (i.e. interest earnings with the Cable TV Special Revenue Fund). Unassigned - Available for any purpose, reported only in General Fund. Mr. Nelson reviewed the Statement 54 Definition as one or more restricted or committed revenues needs to be the foundation for a special revenue fund and comprise a substantial portion of the fund's revenues. The City of Fridley Special Revenue Funds includes Cable TV, Drug & Gambling Forfeitures, Police Activity, Solid Waste Abatement and Springbrook. Mr. Nelson stated in addition to changing Fund Balance definitions and tightening Special Revenue Fund uses, GASB 54 also requires a revision to the City's fund balance policy. The revised fund balance policy needs to authorize the City Manager and/or Finance Director to assign fund balance to reflect the City's intended use of funds. This does not change the FRIDLEY CITY COUNCIL MEETING OF DECEMBER 12, 2011 PAGE 5 authority to actually spend resources, but only to assign resources from a presentation standpoint only. The revised policy also needs to include how the City intends to use its resources when multiple categories of fund balance are available. When both Restricted and Unrestricted resources are available, it will be the City's policy to first use Restricted resources. When Unrestricted resources are available, it will be the City's policy to use resources in the following manner: Committed, Assigned and Unassigned. Mr. Nelson said in addition to updating the Fund Balance Policy in regards to the implementation of GASB 54, the policy has been updated to more accurately reflect the Office of the State Auditor's (OSA) statement of position. Under the City's current policy, most, if not all, remaining fund balance is annually designated for working capital, leaving no undesignated fund balance. The OSA now recognizes that cities require substantial year-end fund balances to meet the ensuing year's obligations before the first half tax settlement is received in late June. Therefore, designating fund balance for working capital is no longer needed, nor allowable under GASB 54, and should be classified as unrestricted fund balance. Mr. Nelson summarized the revised fund balance policy: General Fund — The City will strive to maintain an unassigned fund balance in the in the General Fund in the range of 35-50% of the subsequent year's budgeted expenditures. Solid Waste Abatement — The City will strive to maintain a fund balance of 10-15% of the subsequent year's expenditures. A majority of the funding comes from user fees which are received monthly as part of the utility billing process. Springbrook Nature Center — The Nature Center is self-sustaining and needs to have a fund balance sufficient to support both operations and ongoing capital expenditures. Water, Sewer, & Storm Water Utility Funds — The City will strive to maintain a cash balance in the range of 50-100% of the subsequent year's budgeted operating expenses less depreciation, plus the subsequent year's debt service and capital improvement obligations. Liquor — The City will strive to maintain a cash balance in the Liquor Fund in the range of 5-15% of the subsequent year's budgeted expenses. Due to the correlation of sales to purchases of inventory, a lesser cash balance percentage is justifiable. Mr. Nelson stated establishing specific fund balance amounts or percentages for both of these funds is not nearly as important as continuing to monitor current and future cash flow trends to ensure sufficient reserve levels are available to meet demands. Council and staff are continuously doing this as part of the on-going budget process. None of these changes affect how the City conducts business. All of these changes will be from a presentation standpoint within the City's Comprehensive Annual Financial Report (CAFR) only. Staff recommends Council pass a resolution committing specific revenue sources in the Special Revenue Funds and pass a motion approving the City of Fridley's Fund/Cash Balance Policies. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 12, 2011 PAGE 6 MOTION by Councilmember Saefke to adopt Resolution No. 2011-65. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY MOTION by Councilmember Saefke to approve the City of Fridley's Fund/Cash Balance Policies. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY Darin Nelson, Finance Director, presented the following Utility Rate Analysis for Item Nos. 9 through 12. Mr. Nelson stated at the last budget meeting in October, Council and Staff reviewed both five and twenty-year projections for each of the utilities (water, sewer & storm water). The goal of the discussion was to determine what type of increases would be needed to break even and sustain the City's utilities. These projections were based on both assumptions and goals. Mr. Nelson said the short-term goal is to maintain sufficient cash balances to meet operating and debt service obligations, and build cash balances to cover yearly capital outlay related to routine repair and reconstruction. The long-term goal is to obtain financial sustainability, debt elimination, other than large nonrecurring items, and to have low to moderate rate increases. Mr. Nelson stated the assumptions for projected cash balances equal 6 months of operating expenses. Ne�t year's debt service will ensure a year's capital outlay (normal repair and maintenance) only, 2% annual expenditure increases with water consumption at the 2010 levels. MCES charge at the 2012 budget level will be adjusted annually for 2% inflation. Mr. Nelson reviewed the history of rates. In the 2008 Utility Rate Study, Water had an 11% increase per year through 2013 and Sewer was at 8% increase each year through 2013. These increases were geared toward generating a cash balance for one year of operating and maintenance costs by the end of 2013. Due to a couple factors, rates have only risen by 5% per year and not by the recommended higher rates. As a result, we have begun to issue debt for capital improvements within both the Storm Water and Sewer Funds. In addition, the Water Fund will need to continue issuing debt on a bi-annual basis in order to maintain our current infrastructure. Mr. Nelson stated the good news is that borrowing costs are at historically low levels. We have an Aa2 bond rating from Moody's, which allows the City to borrow at lower interest rates. The bad news is that borrowing costs start to become more and more of a burden on the operations. We are continuing to issue debt to pay for relatively minor capital projects, and it could potentially lower our bond rating as our debt levels increase. Also by shifting current infrastructure repairs and maintenance onto future users, we are in essence shifting today's burden onto future taxpayers/users. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 12, 2011 PAGE 7 Mr. Nelson said as difficult as it is to raise rates in these economic times, the long-term effect of not raising rates enough to meet current and future obligations will be more detrimental. The 2012 staff-recommended rates are as follows: Sewer — 5% or $15.49 per year for the average resident Water — 8% or $10.95 per year for the average resident Storm — 25% or $3.63 per year for a residential property. This is a total of $30.07 per year or $7.52 per quarter for the average residential property. Staff is recommending Council's approval of the following resolutions: Resolution Providing for a Water Rate Change; Resolution Providing for a Sewer Rate Change; Resolution Providing for a Storm Water Drainage Rate Increase. Also note that the above resolutions need to be amended to read Section 402.20 of the City Code, not Section 402.13. 9. Resolution Providing for Water Rater Change. MOTION by Councilmember Saefke to adopt Resolution No. 2011-66. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY MOTION by Councilmember Saefke to amend the resolution to read: WHEREAS, Section 402.20 of the City Code provides that the City Council. ... Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY 10. Resolution Providing for Sewer Rate Change. MOTION by Councilmember Saefke to adopt Resolution No. 2011-67. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY FRIDLEY CITY COUNCIL MEETING OF DECEMBER 12, 2011 PAGE 8 MOTION by Councilmember Saefke to amend the resolution to read: "WHEREAS, Section 402.20 of the City Code provides that the City Council ...." Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 11. Resolution Providing for a Storm Water Drainage Rate Increase MOTION by Councilmember Saefke to adopt Resolution No. 2011-68. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY MOTION by Councilmember Saefke to amend the resolution to read: "WHEREAS, Section 402.20 of the City Code provides that the City Council ...." Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY 12. Resolution Approving Recycling Service Fees. Scott Hickok, Community Development Director, said this resolution is to approve a Recycling Service Fee Increase for the Solid Waste Abatement Program (SWAP). This resolution would raise quarterly rates per household from $7.04 to $7.17 and would be effective with the first utility billing of 2012. The last yearly increase occurred in 2010 and was $.64. Mr. Hickok said the proposed increase does not cover the cost of the City's residential recycling service contract. A subsidy of $36,000 from the State's SCORE funds and the City's general fund is required. The proposed increase is based on CPI. It affects all 1 to 12 unit residential buildings in the City's residential recycling service contract. Staff recommends the City Council adopt the attached resolution, directing staff to increase the SWAP recycling service fee by 1.85 percent to $7.17 per quarter effective with the first utility billing of 2012. MOTION by Councilmember Varichak to adopt Resolution No. 2011-69. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 12, 2011 PAGE 9 13. Resolution Receiving Report and Calling for a Public Hearing on Improvement for Street Rehabilitation Project No. ST. 2012-01. Jim Kosluchar, Public Works Director, said on October 24, 2011, the City Council passed a resolution directing staff to prepare a Preliminary Report and Preliminary Plans and Specifications for Street Rehabilitation Project No. ST. 2012-01. This allowed staff to officially begin work on preliminary design and analysis to determine whether this project is feasible. The concept segments will include Rice Creek neighborhoods including 7th Street, Fourmies, and West TH 65 Frontage Road for a total of 4.1 miles. Mr. Kosluchar said staff has reviewed the feasibility of the project. The feasibility report includes analysis of street improvements, City utility and storm water improvements, private utility and other coordination considerations and estimated costs and schedules. Mr. Kosluchar said during the development of the feasibility report, staff held an open house to alert those who might be impacted by the project, solicit input regarding the project and its need, discuss specific project concerns, and provide staff information regarding existing issues. Mailings of the open house went to 276 properties and 72 attended the open house. A presentation was made by staff and questions were answered regarding assessment, construction and utility services. Two residents expressed their objection to the project. Mr. Kosluchar said staff eliminated two segments from consideration; Rice Creek Terrace from 68th Avenue to Brookview Drive and Monroe Street north from 67th Avenue to Rice Creek Terrace. After the elimination of these segments, the project is 3.6 miles long. Staff is recommending reclaimation for rehabilitation of street that are 35 years of age or older. The utility work has been identified, including 1,850 feet of water main rehabilitation. Mr. Kosluchar said the project estimate is $998,000 and is within the budget. The project can be constructed between June and August of 2012. Staff has completed the feasibility report and has determined the project is necessary, cost effective and feasible. The costs are estimated within the 2012 budget. Mr. Kosluchar said staff recommends the City Council move to adopt the attached resolution, which receives the feasibility report and sets a preliminary hearing date and time. This resolution also outlines the streets that will be considered at the preliminary hearing, and for possible inclusion in this project. Mr. Kosluchar said if approved tonight, a public hearing will be set for January 23, 2012, at 7:30 p.m. Properties identified as benefiting and subject to special assessment will be noticed by mail 10 days prior to the hearing. At the hearing, those persons with property subject to assessment will be heard regarding the proposed project. Councilmember Saefke noted the first map of the presentation was incorrect and the construction should only go up to 68tn FRIDLEY CITY COUNCIL MEETING OF DECEMBER 12, 2011 PAGE 10 Mr. Kosluchar said the first map was before streets were eliminated and the last map was correct. MOTION by Councilmember Saefke to adopt Resolution No. 2011-70. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 14. Informal Status Reports: Jim Kosluchar, Public Works Director, said he received a mailing from FEMA regarding the flood plain mapping updates. There will be a flood risk open house this Thursday from 4:30 to 6:30 at 275 Garrison Street in Anoka. The purpose of this open house is to review the preliminary flood plain maps. Individuals with concerns on how flood insurance works and questions related to FEMA should consider attending the open house. If you have questions please contact him at 763-572-3552. Councilmember Saefke said there will be meeting regarding the Jackson Street Storm Sewer Construction on Wednesday evening, December 14 at City Hall at 5:30 p.m. with a presentation at 6:00 p.m. Staff will be present to answer questions and take input from residents. Please attend if you received a notification. If you cannot attend and have questions please contact Jim Kosluchar at 763-572-3552. Councilmember Varichak said there are no suspects in the Locke Park restroom arson fires. Staff is diligently trying to figure out how to stop this from happening and the bathrooms will be replaced by Memorial Day ne�t year. The bathrooms at the dog park will remain open for the winter. Mayor Lund wished Council, City Staff and residents a merry Christmas and a happy New Year. ADJOURN: MOTION by Councilmember Barnette to adjourn. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 8:20 P.M. Respectfully Submitted, Krista Monsrud Scott J. Lund Recording Secretary Mayor