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CCM 11/28/2016 CITY COUNCIL MEETING CITY OF FRIDLEY NOVEMBER 28, 2016 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:05 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember Barnette Councilmember Saefke Councilmember Varichak Councilmember Bolkcom OTHERS PRESENT: Wally Wysopal, City Manager Darcy Erickson, City Attorney Kay Qualley, Environmental Planner Scott Hickok, Community Development Director James Kosluchar, Public Works Director Shelly Peterson, Finance Director Brian Reilly, Ehlers and Associates, Inc. APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: City Council Meeting of October 24, 2016. (Tabled November 14, 2016) Councilmember Bolkcom referred to Page 7 and stated "Mr. Qualley" should be "Ms. Qualley". APPROVED AS CORRECTED. City Council Meeting of November 14, 2016. Councilmember Saefke referred to Page 31, paragraph 5, line 1, and stated the word "the" should be inserted before "fire station". APPROVED AS CORRECTED. OLD BUSINESS: 1. Second Reading of an Ordinance Opting Out of the Requirements of Minnesota Statutes, Section 462.3593, which Defines and Regulates Temporary Health Care Dwellings. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 2 WAIVED THE READING OF THE ORDINANCE AND ADOPTED ORDINANCE NO. 1338 ON SECOND READING AND ORDERED PUBLICATION. 2. Second Reading of an Ordinance Amending Fridley City Code, Chapter 113, Solid Waste Disposal and Recycling Collection; and Adopt Official Title and Summary Ordinance. WAIVED THE READING OF THE ORDINANCE AND ADOPTED ORDINANCE NO. 1339 AND THE OFFICIAL TITLE AND SUMMARY ORDINANCE AND ORDERED PUBLICATION. NEW BUSINESS: 3. Resolution Confirming Statutory Level of Tort Limits. ADOPTED RESOLUTION NO. 2016-69. 4. Approve an Easement and Indemnification Agreement with Fridley Assisted Living. APPROVED. 5. Authorize Issuance of an Estoppel Certificate Relating to the Fridley Assisted Living Property. APPROVED. 6. Receive Bids and Award the Main Street Bridge Project ST2015-21. Mr. Wysopal stated staff recommends awarding the contract for the Main Street Bridge Project to the low bidder, S.M. Hentges & Son, Inc. for $1,882,486.05, with a start date in the spring of 2017. RECEIVED THE BIDS AND AWARDED THE CONTRACT FOR THE MAIN STREET BRIDGE PROJECT NO. ST2015-21 TO S.M. HENTGES & SON, INC. 7. Claims (ACH PCard - 1611; 174764-174885). APPROVED. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 3 8. Estimates Northwest Asphalt, Inc. 1451 Stagecoach Road Shakopee, MN 55379 2016 Street Rehabilitation Project No. 2016-01 Estimate No. 6....................................................... $ 35,933.38 Keys Well Drilling 1156 Homer Street St. Paul, MN 55116-3232 2016 Well Rehabilitation Project No. 448 Estimate No. 5.........................................................$ 11,542.50 Keys Well Drilling 1156 Homer Street St. Paul, MN 55116-3232 2016 Well Rehabilitation Project No. 448 Estimate No. 6.........................................................$ 31,321.50 APPROVED. ADOPTION OF PROPOSED CONSENT AGENDA: MOTION by Councilmember Barnette to approve the proposed consent agenda. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM, VISITORS: No one from the audience spoke. ADOPTION OF AGENDA: MOTION by Councilmember Bolkcom to approve the Agenda. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 4 NEW BUSINESS: 9. First Reading of an Ordinance Amending Chapter 205.30 0-5, Telecommunications Towers and Facilities District, to Add Language to the Code that Defines and Regulates "Small Cell" Technology within the Right-of-Way, as Well as Other General Housekeeping Amendments. Scott Hickok, Community Development Director, said in December of last year, the City adopted a resolution to study small cell technology. Staff wanted to take a look at small cell technology, at what it would do in terms of the City existing telecommunications’ ordinance and what amendments would be necessary. Mr. Hickok stated after reviewing this chapter, staff determined there were some changes that should be made to the City's ordinance. Staff brought those to the Planning Commission at its meeting on October 19. The Planning Commission concurred with staff's recommendation and unanimously recommended approval of the text amendment which really clearly marked what the City would do with small cell technology in the public right-of-ways within the City. Mr. Hickok stated a public hearing was held at the City Council meeting on November 14. No one from the audience spoke MOTION by Councilmember Varichak to waive the reading of the ordinance and adopt the ordinance on first reading. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 10. Approve Adjustments to the 2017-2021 Capital Investment Program to Carry Forward Storm Water Projects. Shelly Peterson, Finance Director, stated earlier this year, Council approved the Capital Investment Plan. It is a plan document incorporated into the budget which will be presented to the City Council next month. During the budget process, staff identified two projects that had been approved in 2014 which had not been completed nor were they carried forward. Therefore, James Kosluchar is presenting to the Council two additional projects within the Storm Water Fund he would like to incorporate the Capital Investment Plan. Staff recommends approval of these additions to the Capital Investment Plan. Councilmember Bolkcom asked since one of them is related to the Stonybrook Flood Project, which is Beech Street, do they approve this knowing there may be other things to be done. There is future work that needs to be identified. Mr. Wysopal asked Councilmember Bolkcom to repeat her question. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 5 Councilmember Bolkcom stated one of the projects that is before them now is the Stonybrook Flood Control. With respect to several of the owner on Beech Street who had problems, where do they go if this is only a portion of what needs to be identified? She asked how that worked. Do they fix a portion and then identify more that would be added to future years? She asked when they thought they would be doing a portion of it. James Kosluchar, Public Works Director, said until the City gets a firm funding commitment from Anoka County they would not want to put together a schedule. They have contacted the County. If there is a possibility to advance the project into 2017, there is a portion of the funding that would be from the County Highway Department and possibly the Coon Creek Watershed District. The City is going to retain a portion of the project funding. This is the best way to move the project forward into 2017 for construction. Councilmember Bolkcom stated basically it is just putting this capital improvement out before them and, then as things progress and there are more costs and cost sharing and that type of thing, this would be brought back to Council. They are not really ordering the project. They are just putting this on as a capital improvement. Mr. Kosluchar replied correct. Mayor Lund stated he thought what Councilmember Bolkcom was asking was, if staff wishes this project move forward in 2017, how much of the project is related to the overall problem on Beech Street? Mr. Kosluchar replied, he would say that what they are attempting to do with the project is to specifically alleviate the flooding condition there. Their original plan was to incorporate that into the 2014 street project. Unfortunately, they could not find an opportunity there. They found some vacant parcels. Physically they do not work. The alternative versus increasing downstream capacity would be to build storage somewhere close to where these businesses stand, and there was no property suitable for that without condemning several properties. This would have meant millions of dollars for a project they are suspecting right now is probably going to be in the $200,000 to $300,000 range. Councilmember Bolkcom asked if they were putting a band aid on something. Mr. Kosluchar replied the most cost-effective way to alleviate their flooding is to increase the downstream capacity. Councilmember Bolkcom stated then they really need to have a buy-in from Anoka County and the Highway Department. Mr. Kosluchar replied correct. Councilmember Bolkcom stated and with respect to the Oak Glen Creek Watershed, they have some commitment though from the Watershed, correct. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 6 Mr. Kosluchar replied correct. MOTION by Councilmember Bolkcom to approve the adjustments to the 2017-2021 Capital Investment Program to Carry Forward Storm Water Projects. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 11. Resolution Providing for the Sale of $50,505,000 General Obligation Capital Improvement Plan Bonds, Series 2017A. Ms. Peterson stated on November 14, Council approved the Capital Improvement Plan and gave preliminary approval of the financing. That CIP document identified one project area known as the Civic Complex Redevelopment project area which includes Police, Fire, Public Works, and City Hall facilities. The proposed levy adopted in September included the debt service for the repayment of the CIP bonds intended to fund the project. Included in the documentation is the presale report. This document provides an executive summary related to the type of debt, the issuance schedule, and debt schedules including current rate assumption. Brian Reilly from Ehlers & Associates, Inc. will provide an update on the bond rate. Mayor Lund stated when he looked at the interest rate accumulating for 25 years, it started out at 1.01 and it went to the 25th year to about 3.5. Based on the latest chart the interest rate has gone up. The first year shows 1.45% and it increases to 4.1%. Brian Reilly, Ehlers & Associates, Inc., replied they do have some cushion in there over current market rates. However, in terms of gauging the impact, during the last four weeks, rates are up anywhere from a quarter of a point to nearly one-half of a point give or take the maturity. What they are seeing is accurate in terms of recent market movement looking back even all the way to June. September was the low point for interest rates during the last six months. After the election, they saw the impact of really quite a volatile interest rate environment in terms of upward movement. Looking at rates today in relationship to even where they had been previously, the 30-year treasury is still just under 3 percent. The 10-year treasury is about 2.3 percent. If you take a step back and look at it historically, they are still under a really excellent interest rate environment as far as that is concerned Mayor Lund stated so it can fluctuate every day. Mr. Reilly replied it does fluctuate every day. There was about 2 to 2 ½ weeks where they saw the dramatic moves and they have stabilized in the last two weeks. Given that it was a holiday late last week, there was not a lot of market activity. He said he did look back about a month. Those sales in terms of the interest rate scales that Mayor Lund referenced are up about a quarter point from where things were about a month ago in relationship to comparable ratings that they were looking at in the AA range here today. They are still seeing strong interest in purchasers. Each of those transactions had six bids from interested parties which is quite strong. If there was a tremendous amount of volatility uncertainty, you really would not see that kind of interest in FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 7 owning those bonds. You would see people backing off from submitting proposals for purchase. Mayor Lund asked whether Mr. Reilly had any input as to direction of this type of funding, financing or bonding for the near term--now and in the next six months. Mr. Reilly replied, in the case of the calendar they are looking at where they would anticipate coming back to the Council in early January potentially with a bond sale on the petition period which will expire in mid-December, they are already well along with the planning stage to get everything pulled together. They will have a discussion with the rating agency which will dictate to some extent what the funding costs will be; however, he would say in looking forward in time is the reactions that have occurred are generally likely to hold here for some time. It will not be until the new Congress comes in where some actual proposals are set. Everything right now is based upon estimation of what the next government that will be installed here might do, but no one can say for sure. Even if things are proposed, it will literally take months and months for them to unfold. They do not have a lot of concern that any major tax proposals would lessen the value of tax exempt interest. If tax rates are reduced, that reduces the value of tax exempt income generally; however, none of that is going to happen between now and early January. Mr. Reilly stated he suspects that they are in a bit of a range here. The markets do slow down quite a bit in terms of activity. They will see a bit of a flood of issuance happening maybe early December as they try to hit calendar year end and things will get very quiet into the end of the year. He cannot guarantee results going into January, but generally January has been a pretty good month to be an issuer the last number of years. They generally hear it called the January effect. It has been a good month to be an issuer because there is not a lot of activity. A lot of money is coming back to investors around the November-December timeframe so they are looking to reinvest, and a lot of people have not really squared up their tax situation so then you see kind of that March-April timeframe being a point in time where people start to gather more cash because they have to pay the federal government their tax bill from the previous calendar year. Mr. Reilly stated he wished he had a better answer, but things have not moved around a lot in the last couple of weeks after the initial thrust. On the plus side, they will see what happens in December with the federal reserve action. They have told him it is highly likely they are going to raise short-term rates and that will impact on the positive side because it is going to No. 1, bring hopefully high revenues to the City's cash balances but, No. 2, it will get a substantial amount of money at closing which, sure it will be spent, but it will also get invested at the same time as well. That is going to garner some additional return to fund the City's project over and above what is going to be borrowed. And it will not impact as greatly the City's financing because it is borrowing long-term and is really short-term interest. MOTION by Councilmember Barnette to adopt Resolution No. 2016-70. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 8 12. Resolution Providing for Water, Sewer and Storm Water Utility Rate Change. Shelly Peterson , Finance Director, stated staff worked with the 5-year pro forma to determine the breakeven point for all three of the utility enterprise funds for 2017. In addition, staff updated the 20-year long-range forecasts to aid in estimating both long-term operating and other capital needs, to help guide them with the rates. The goals of the long-range forecasts are to enable the utility funds to be self-sustaining without relying on debt to fund ordinary capital outlay and to maintain low to moderate rate increases in the future. Ms. Peterson stated for the City's water utility funds over the past several years they have seen consumption steadily declining. In 2015 there was a slight increase over the prior years so staff used a three-year average in determining the residential consumption. To put in perspective the decline in consumption, the average residential consumer uses 64.5 gallons of water per day; and Met Council recommends 75 gallons per day for a conservative resident. Not only are they struggling with the declining consumption, it looks like the trend is residential customers use consistently less than many of the City's neighboring communities. Ms. Peterson stated with significant capital and infrastructure projects continuing in 2016 and through 2018, they are anticipating spending $1.6 million in 2016. For 2017 the capital investment plan shows $1.7 million in projects, and in 2018 they are projecting nearly $2 million in projects. Staff is proposing a 9 percent increase in utility rates; and the average residential household would pay $15 annually. Ms. Peterson stated within the City's sewer funds, consumption is directly related to water consumption. This year, staff used a three-year average which was slightly higher than prior years. Met Council charges disposal fees to the City; and they make up nearly 80 percent of the sanitary sewer operating budget. Overall Met Council is collecting 5.4 percent more in disposal fees, but Fridley is expected to only pay 4.9 percent more in 2017. Ms. Peterson stated also in 2017 there is a significant capital investment plan project. It is $615,000 and part of the street initiative every other year where the City works on its sewer system. All of these things result in a proposed rate increase of 9 percent for next year, and the average residential household would see $29 more annually on their utility bills. Ms. Peterson stated as to the storm sewer fund, in 2015 to better align with expenditures, there was a significant increase in rates—75%. In 2016, staff proposed no rate increase. The City had two additional capital investment plan projects identified for 2017 which were presented earlier in the meeting. With those projects staff is proposing a 4 percent increase in rates for next year which amounts to $1.50 annually for a residential customer. Ms. Peterson stated the proposed rate increases are as follows: a 9 percent increase or $15 per year for water for the average household; a 9 percent increase in the sewer fund or $29 annually per household; and in the storm water fund a 4 percent increase or $1.50 per year more per household. An average household is based on 20,000 gallons per quarter. In total, this is estimated to impact the average residential customer quarterly by $11. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 9 Ms. Peterson stated staff is recommending approval of the resolution providing for water, sewer, and storm water utility rate changes. MOTION by Councilmember Saefke to adopt Resolution No. 2016-71. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 13. Resolution in Support of 2017 SWAP Fee. Kay Qualley, Environmental Planner, stated curbside recycling fees from the City's vendor, Republic, which has a contract for City curbside recycling services through 2019 increases each year. The City's contract will increase from $7.53 per household per quarter to $7.68 per household per quarter effective April 2017. However, Charter restrictions do not allow the City to increase billing rates even though it is billed along with the utilities. It is at a current rate at $7.86 per household per quarter, and the vendor rates go up each year for the next two years. This will be an ongoing problem. Ms. Qualley stated recycling program is also augmented through SCORE funds in Anoka County. SCORE stands for Select Committee on Recycling and the Environment. It is a State program that funnels down to the County which then designs programs to help cities achieve tonnage goals and remove recycles from the waste stream toward achieving 2030 goals of 75 percent diversion through a variety of recycling techniques. Ms. Qualley stated SCORE funds are variable each year and are heavily weighted now in favor of organics as the next coming waste stream for removal from garbage and mixed municipal solid waste. It cannot pay for all the expenses from the recycling drop-off, billing and collection for recycling, curbside resident services, parks recycling, apartment recycling, inspections, educational materials, and website updates and so on. Ms. Qualley stated the City’s curbside fees cannot be raised even though the City's costs are increasing. The other thing that is kind of a major part of the SCORE program is drop-off participation is increasing which is a good thing. In the last couple of years, the City has gone from 500 cars for a spring event to 618 cars. Unfortunately, even though the City went out on an RFP last year, the electronics collection fees for disposal have increased dramatically. The spring drop-off event went from about a $9,000 charge to a $24,000 charge to provide this service to the community. The City had to increase the fees for mattresses and electronics for the last two events. In the fall, fewer mattresses were collected because the price went up. Ms. Qualley stated this can have a community impact in terms of code enforcement and apartments. Staff received a call that people were taking their license plates off their cars, and dumping mattresses next to apartment buildings in the southern part of the City. Pulling 100 mattresses at an event out of the City is a big deal, and there is more to be done. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 10 Ms. Qualley stated staff will work as fast and hard as they can in the time that they can, but they also have to have a way to operate. If the City increases fees further, it may have a negative effect on what people bring because when the City has more free stuff, more tonnage appears. MOTION by Councilmember Bolkcom to adopt Resolution No. 2016-72. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 14. Approve a Memorandum of Understanding for the Oak Glen Creek Pond Expansion Project. James Kosluchar, Director of Public Works, stated staff has essentially been working with the owners at the current Treehouse Food site defining project performance and responsibilities for the Oak Glen Creek Pond expansion project. Treehouse Foods is formerly known as McGlynn’s Bakery, ConAgra, and then Pillsbury before that. Treehouse Foods has been there since earlier this year. Staff has been working with a bunch of different people as the property changed hands. The attached Memorandum of Understanding (MOU) summarizes the project and partner activities going forward, and the project has received Clean Water Project funding allocation for water quality elements. It also helps to alleviate flooding issues. The City working with Wenck Associates has developed a preliminary design. The project includes four basic elements which includes (1) a storm water pond with iron-enhanced sand filter. That is a water quality element and also flood storage element; (2) improved inlets at Commerce Lane and that is along the front of the property to increase capacity; (3) the separation of outfall piping across the BNSF Railroad; and (4) storm sewer trunk line diversion. Mr. Kosluchar stated the City will administer the design and construction including inspection and engineering. Treehouse Foods will donate property needed for the pond and other improvements by deed or permanent easement. Treehouse Foods would fund the cost of the storm sewer trunk line diversion estimated at just over $460,000. The City with its grants and matching funds available will fund the remaining improvements which are currently estimated at $961,000. This presumes a grant funding of $517,780 applied to the project. Mr. Kosluchar stated the City would abandon and reestablish its easements for the storm sewer diversion. The City would provide all future maintenance of the trunk storm sewer as it does now, and for the pond. There would be a little increase in maintenance because of the pond area. Maintenance of other elements would be the responsibility of Treehouse Foods. The MOU outlines the City's intent to cooperate on the project. Staff requests the City Council move to approve the MOU for construction of these specific storm water system improvements. If approved, staff will obtain concurrence from Treehouse Foods and continue to progress towards completion of the project in 2017. Mayor Lund stated typically this water must be from a much greater area than Treehouse's property. Treehouse is being very generous in donating property for the system of the overall FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 11 property. It does benefit Treehouse Foods by stopping the flooding from everyone else's water that is coming downstream and winding up on their property. Councilmember Bolkcom stated but they are also moving their storm water pond. Mr. Kosluchar replied, correct. The storm water diversion is moving the City's current storm water interceptor that bisects two of their properties. Basically it runs right down the middle of their properties. If they move it to the north boundary, it is out of the way then for expansion at some future point. That is why they are funding that. Councilmember Bolkcom asked Mr. Kosluchar to explain a little bit about the outfall piping by the railroad. Mr. Kosluchar replied there are two piping systems. One is the trunk main that runs through the property. The other actually carries water from the rear of the Treehouse Foods property by their loading dock. Those two come together after crossing the BNSF Railroad tracks. One of the problems is that if the City's interceptor capacity is taxed and fills up, the water backs up through its system. Separating those two is essential to the project. Mayor Lund stated they are being separated rather than coming together on the western side of the railroad. He asked if they were going to be diverted to go the opposite direction. Mr. Kosluchar replied they are hydraulically connected on the west side. There is a control structure on the west side of the tracks that they both come into. The concept is to push their outfall past that control structure directly so it can free flow, regardless of where the 60-inch pipe is. Councilmember Bolkcom asked what type of flooding is there now. Mr. Kosluchar replied, right now they have regular flooding on Commerce Lane. Earlier today there was hail and rain, and the water was above the curb. When you get a bit more than what they had today, and they have had this event probably three times this year, water flows off Commerce Lane onto their property. They are built very low. In the September rainfall they had water inside their building which is a bakery. They had several days where they were shut down and had to clean and sanitize everything within the property. They had people who had to stay home from work. Councilmember Bolkcom asked if it would benefit any other businesses. Is there any other flooding along there? Mr. Kosluchar replied across Commerce Lane there are not as severe problems but there are some problems and they are trying to address those. The City is working its way up the watershed. They started out with the Oak Glen Creek stabilization. There is also some property on the west side of the railroad tracks that is for sale right now, and maybe that will redevelop and provide some relief, too. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 28, 2016 PAGE 12 Councilmember Bolkcom asked if the City was comfortable with the cost. Mr. Kosluchar replied they are comfortable with the estimate. They have a contingency, so he is hoping the project will come in lower. MOTION by Councilmember Bolkcom to approve a Memorandum of Understanding for the Oak Glen Creek Pond Expansion Project.Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 15. Informal Status Reports: . There were no reports 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 7:57 P.M. Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor