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CCM 11/27/2017 CITY COUNCIL MEETING CITY OF FRIDLEY NOVEMBER 27, 2017 The City Council meeting for the City of Fridley was called to order by Mayor Pro Tem Barnette at 6:59 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Pro Tem Barnette Councilmember Varichak Councilmember Saefke Councilmember Bolkcom MEMBER ABSENT: Mayor Lund OTHERS PRESENT: Wally Wysopal, City Manager Darcy Erickson, City Attorney Shelly Peterson, City Finance Director/Treasurer Scott Hickok, Community Development Director Steve Eggert, 1090 Hathaway Lane Julie Doth, 6873 Seventh Street NE th Avonna Starck, 650 – 67 Avenue NE APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: City Council Meeting of November 13, 2017. APPROVED. OLD BUSINESS: 1. Second Reading of an Ordinance Pursuant to Section 12.06, of the City Charter Declaring Certain Real Estate to be Surplus and Authorizing the Conveyance Thereof (Ward 1). THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 2 2. Second Reading of an Ordinance Amending Fridley City Code, Chapter 101, Animal Control, by Redefining or Adding Definitions to Section 101.01 Definitions; Creating a New Section 101.04 Allowing for and Regulating Chickens; Creating a New Section 101.05 Allowing for and Regulating Honeybees; Amending Section 101.14 Changing Kennels to Multiple Pet Locations and Renumbering Sections of this Chapter as Required; and Adopt Official Title and Summary Ordinance. APPROVED. 3. Receive the Minutes from the Planning Commission Meeting of October 18, 2017. RECEIVED. NEW BUSINESS: 4. Receive Bids and Award 2017 Sanitary Sewer Pipe Lining Project No. 450. Wally Wysopal, City Manager, stated this is to award the contract to Lametti & Sons for $956,682 which is part of the City’s budget. RECEIVED BIDS AND AWARDED CONTRACT FOR THE 2017 SANITARY SEWER PIPE LINING PROJECT NO. 450 TO LAMETTI & SONS. 5. Approve Change Order No. 1 for the Main Street Drainage Improvements Project No. 17-486. Mr. Wysopal stated this is a $3,305.20 reduction in the total amount of the contract with Lametti & Sons because of some reduction in work. APPROVED. 5. Claims (178801-178918). APPROVED. ADOPTION OF PROPOSED CONSENT AGENDA: Mayor Pro Tem Barnette asked to remove Item No. 1. MOTION by Councilmember Varichak to adopt the proposed consent agenda with the removal of Item No. 1. Seconded by Councilmember Saefke. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 3 UPON A VOICE VOTE, ALL VOTING AYE, MAYOR PRO TEM BARNETTE DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM, VISITORS: Steve Eggert , 1090 Hathaway Lane, stated he represents Positively Fridley, a new civic organization in the City. Positively Fridley is a grassroots effort striving to help create an even more vibrant community in Fridley. Their members live, work, worship, attend school, and volunteer in Fridley. They want to learn about issues in Fridley. They are faced with a lot of change that comes to the community. They may have no choice about seeing more changes, but they do have a choice in how they respond. If they see the need, they would like to move forward in a positive direction and have some fun along the way. Mr. Eggert said they have been working on a public art project. Positively Fridley also recently hosted the Urban Land Institute Workshop--Navigating Your Competitive Future. Member from the Planning Commission, HRA and Parks and Recreation Commission were at the two-hour session. They took a look at national trends, Fridley demographics and housing, and had a panel discussion with some of the local experts. Positively Fridley is hoping the slide show they were provided with and the videotaped session can be made available to people on the City’s website. Mr. Eggert stated another area they are interested in is restaurants. Positively Fridley took an inventory of the market area and they were surprised to learn there are 96 restaurantes within the City’s market area. On January 8, they are going to have a “supper night” and visit restaurants in Fridley. Mr. Eggert stated they would like to be involved in some way with the move to the new Civic Center. If anyone is interested in the group they can call or e-mail him. They also have a Facebook page. Their next meeting is Tuesday, January 16, at 7:00 p.m., at City Hall. Councilmember Bolkcom asked how someone would join and what the time commitment was. Mr. Eggert said they were a volunteer organization. The group really is about people who care about their community. As to the time commitment, they do a time and talent survey of people because they would like to identify their talents and provide opportunities for people to work within their talents. Julie Doth , 6873 Seventh Street N.E., stated Positively Fridley is undertaking a public art initiative. She and Ms. Starck are part of a subcommittee that was formed to explore what public art can do for Fridley and how they can organize a planning process for a public art program. Ms. Doth stated in the last couple of months, she has spoken with a couple of local organizations about this initiative and they liked the idea. She is here tonight to submit a petition to the City Council asking for support for this initiative. Accompanying the petition is an action plan Ms. Starck has prepared that will guide them through the next year in organizing this endeavor. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 4 th Avonna Starck , 650 – 67 Avenue N.E., said this plan covers background, budget, timelines, and stakeholders. It is intentionally vague right now, and it will change with new information and opportunities. Councilmember Bolkcom stated to Ms. Starck one thing she would like Positively Fridley to do if possible is involve the executive director at Banfill-Locke Center for the Arts. Banfill is also looking at something similar right now. It has some money from the County and is looking at doing a sculpture. One of the concerns is trying to find additional money for which they are working closely with Anoka County. Anoka County is doing a lot more public art in their other parks. Banfill is going to be going out for a proposal soon. There are two great programs: one in Sioux Falls and one in Mankato. They have public art in all their parks, and people have an opportunity to vote for their favorite one. They have art commissions in both of those communities where they actually purchase one which becomes permanent in either a park or on their civic campus. People also have an opportunity to purchase some of those other ones. She tried to get a hold of someone at the program in Mankato but has not heard back from anyone. Ms. Doth stated she has had several conservations with Jeffrey at Banfill-Locke, and he is going to be working with them on grant writing and submitting proposals. She said she had also picked up some brochures from various places who have done public art. They are making sure they have diversity in their planning process. She has talked to the schools. They are going to involve school kids and different ethnic groups, so they do get a representation of who Fridley is. Councilmember Bolkcom asked whether Positively Fridley will become a 501C. It is really hard to get grants unless they have some matching funds, etc. Mr. Eggert replied it is one of their goals. Councilmember Bolkcom stated at Banfill they applied for a grant and the County was on board to do a big mural underneath the bridge. They did not get the grant but they would love to partner with someone else to do that. One of the artists in residency would love to work with Positively Fridley if that is something they would be interested in doing. Ms. Doth stated she has had two public artists contact her already and has their information. MOTION by Councilmember Bolkcom to receive into the record a public art initiative including a campaign plan from Positively Fridley. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR PRO TEM BARNETTE DECLARED THE MOTION CARRIED UNANIMOUSLY. Councilmember Bolkcom asked if there was anything else they could do. Mr. Eggert replied not only the overall support of the Council but also the City itself as key stakeholders in this is a major role in the oversight of this program. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 5 ADOPTION OF AGENDA: MOTION by Councilmember Bolkcom to approve the agenda the addition of Item No. 1. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR PRO TEM BARNETTE DECLARED THE MOTION CARRIED UNANIMOUSLY. PUBLIC MEETING: 7. Presentation of the 2018 City of Fridley Budget. Shelly Peterson, , Finance Director/Treasurerstated staff is presenting the revised 2017 budget, the 2018 proposed budget, and the 2018 proposed property tax levy. This public meeting is designed to provide citizens of Fridley, elected officials, and other interested parties with a description of the 2018 proposed municipal services, capital investments for the upcoming year, as well as the means to pay for them. Ms. Peterson stated the City continues to monitor operational expenditures to achieve cost savings without negatively impacting current service levels to taxpayers. The budget does not include any new major initiatives or enhancements to existing services. Ms. Peterson stated the 2018 proposed levy was developed following the revised Charter restriction which became effective November 2. Ms. Peterson stated on September 25, Council adopted the preliminary levy that included a 5 percent levy increase for the General Fund which is the primary operational levy. The Information Technology Fund levy and the Springbrook Nature Center both reflect a 5 percent levy increase; and the debt service levy is established with the City’s debt service schedule. With the Council approving a 5 percent operational levy and that debt service levy, the total tax levy for 2018 is proposed to be $14,807,913 which is a 4.86 percent increase over the prior year’s levy. Ms. Peterson stated when looking at a median-valued home in Fridley, staff calculated the estimated impact; and it amounts to about $4.42 a month. Staff looked at the nine neighborhoods in the community and found the median value. The median value in 2017 was $174,388; and in 2018 that value is estimated to be about $186,000. The City’s portion of those taxes in 2017 was $763, and staff estimated the City portion of the taxes in 2018 would go up to $816. That is about $53 a year or 6.95 percent increase. It is important to note that a median-valued home is dependent on its value increase. Those values increase depending on the neighborhood between 3 and 10 percent. Staff again averaged that to a 7 percent increase. Ms. Peterson stated if they look at the past ten years of levy comparisons, they will see in 2017 the historic civic campus capital improvement bond levy which the City started collecting on for debt service payments. Construction will be completed at the end of 2018. As to the General Fund operational levy, if you average it out over the past ten years, even with the 5 percent levy FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 6 proposed for 2018, it still averages about 2.63 over the course of those ten years. Ms. Peterson stated staff looked at the surrounding cities and those total levy increases ranged from 4.67 percent to 9.63 percent over the prior year. This includes all of the neighboring cities’ debt levy as well as Fridley’s. If you take the surrounding neighbors, the average increase is about 6.36 percent and Fridley’s is proposed to increase 4.86 percent. Ms. Peterson stated the General Fund is the primary fund which supports the day-to-day operations of the City. Of that total levy, 75 percent is designated to support General Fund operations. That revenue provides 66 percent of the resources needed to support the General Fund operations. Ms. Peterson stated another significant revenue source to the General Fund is Local Government Aid (LGA) which has not always been a reliable funding source. In 2012, because of that volatility, Council made an effort to dedicate all of the LGA to the Capital Project funds or other one-time expenses and not rely on it to support the City’s operations for those recurring costs. This practice was modified in 2016 as a result of expenses increasing at a higher rate than was allowed with the former Charter restriction. Ms. Peterson stated LGA is anticipated to increase by $160,000 for 2018. Staff is proposing that increase be directed to the General Fund to support the City’s operations. For 2018, staff is proposing that 60 percent of the LGA be directed to the General Fund. Ms. Peterson stated the City does not anticipate any new revenue sources for 2018 in its General Fund. Some highlights in other areas that have been modified are the administrative fees. These are the fees charged to the Enterprise Funds and to the HRA to support their operations. As to water, sewer, storm water, and the HRA, the City is increasing those fees by 4 percent. They are also reinitiating the recycling administrative fee that had been suspended two years ago. The City is also reinitiating the liquor administrative fee which was suspended several years ago so that funds could be redirected towards the reconstruction of the Fridley Market and the Moore Lake liquor stores. Ms. Peterson stated the City is seeing a slight reduction in building permit revenue for 2018 and staff is projecting that. Antenna revenue has been adjusted down. The City actually had more revenue budgeted than what has come in. It is in line now with actuals for the past several years. Also, as to recreational programming the City has seen slight reductions in a couple of areas. Ms. Peterson stated another significant change to the revenue is the transfer from the Closed Bond fund. Transfers from this fund have been designed to balance the General Fund budget. This has occurred since the early 1990s. In 1990, this fund had a cash reserve of just over $8 million. It has now turned into a source of funding that has been necessary in the General Fund. It was not just used to do a minor adjustment here and there. It has now become a regular transfer from this fund. At the end of 2017 it is projected that the balance in this fund will be $3.2 million. With savings identified in expenditures and that 5 percent levy increase, staff has been able to reduce that transfer down to $104,000 for 2018. The goal would be to have no transfer coming from this fund. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 7 Ms. Peterson stated as far as General Fund expenditures go, salaries make up 63 percent of the General Fund budget. With step increases anticipated for some of the newer employees and cost-of-living adjustments as approved in the union contracts, they are anticipating a $300,000 increase in expenditures. Ms. Peterson stated 2018 is an election year, so the City has $60,000 budgeted there which is primarily election judge staffing. They are allocating funds to address some staffing issues in the City’s technology and Human Resources areas. They have a 25 percent increase in workers’ compensation insurance anticipated for 2018. The City did see a reduction of 18 percent in its health insurance premiums. Ms. Peterson stated in other areas of the General Fund, the City increased the allocation to its self-insurance fund to cover its deductible portion. They have been seeing an increase in liability insurance claims and also in claims that are not covered by insurance. They have had to adjust that allocation to the General Fund to replenish reserves. Ms. Peterson stated staff did identify cost savings of $180,000 in the General Fund. Fuel and salt has been less than anticipated in the past few years. Staff has also identified savings in fuel and technology costs in the Police Department. Ms. Peterson stated the City’s legal service expenditures were less than anticipated. With some restructuring, the Assessing should see some savings on staffing. As to building inspection, they will see savings with less professional services needed. Ms. Peterson stated the document also includes the 2017 revised budget which represents the final budgeted figures for 2017. General Fund revenues have been adjusted. They will see a slight reduction in property tax revenue because of tax court petition settlements which reduces the revenue staff anticipated the City would be receiving. Antenna rental revenue has been reduced and it is more in line with prior years. Ms. Peterson stated as to recreational sports and athletic revenue, the City has seen a slight reduction and that budget has been reduced in 2017. Ms. Peterson stated General Fund expenditure adjustments include a reduction in part-time salaries. This is primarily because of vacancies in the City’s CSOs staffing in police. Fuel costs are also anticipated to be less than budgeted in police and public works. Professional services will be less than budgeted for 2017, and that would be legal services and building inspections. Ms. Peterson stated the General Fund policy is to maintain 35-50 percent of the next year’s budgeted expenditures. This guideline is to provide cash flow for expenditures for the first half of the year until that first half settlement arrives in July. With the 2017 budget revisions, staff anticipates the fund balance will be at 55 percent of the 2018 proposed budget. A very healthy fund balance. Ms. Peterson stated for the past three years the City’s fund balance is just above the 50 percent working capital policy. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 8 Ms. Peterson stated the proposed expenditures for the 2018 General Fund budget are $16,652,700. The revenue sources identified equal the expenditures and will result in no change to fund balance. Staff does not anticipate needing fund balance for 2017 or 2018. Ms. Peterson stated in addition to the General Fund, the City has its Special Revenue Funds. These are funds that have a primary funding source other than the general operation levy. The Cable TV Fund provides the primary communication for the City. This fund will be using fund balance or its cash reserves to fund the council chambers AV equipment at the new civic campus. Ms. Peterson stated the solid waste abatement fund is the recycling programming. The primary source of this fund is the recycling fees which also fall under the City’s charter restriction. The Council approved a fee increase of 4.3 percent on November 13. That increase should provide the funding necessary for the City’s hauler contract which increases each year. It will also allow for reinstatement of the admin fee which had been suspended a couple of years ago. Staff anticipates a slight increase in professional services with 2018 being the year the City goes out for RFPs for services starting in 2019. This fund will be balanced and not require use of reserves. Ms. Peterson stated another special revenue fund would be the Police Activity Fund. This is a fund that will be used when there is a dedicated revenue source for a special initiative in the City’s Police Department. This fund currently has the City’s public safety data system’s technology staff person who is an employee of the City, and is fully reimbursed through the County, so there is no significant budget highlights with that. It is basically salaries and then a reimbursement from the County. Ms. Peterson stated the last special revenue fund would be the Springbrook Nature Center. This fund has its own levy which is the market value referendum levy. This is also subject to the Charter restriction, and Council did approve a preliminary levy increase of 5 percent for this fund. The budget for this fund was developed in anticipation of another strong year of programming. They are seeing an increase in program revenues which also increases the City’s salaries, supplies, and other contracted services but will result in no change to the fund balance or the need to use reserves. Ms. Peterson stated the Capital Improvement Funds were part of the City’s capital investment plan which was approved by Council on September 11. The budget document merely summarizes that detailed document that was approved earlier in the year. In the Building Improvement Fund transfers are anticipated from the HRA and the Cable TV Fund to support their share of the civic campus project. The Building Improvement Fund’s primary focus in 2017 and 2018 is that civic campus project. Then there are funds designated for improvement costs that are anticipated with the Police and Public Works off-site storage site. Reserves are anticipated to be at $370,000 at the end of 2018. Ms. Peterson stated a couple of other Capital Investment Funds include the Street Improvement Fund which has $1.9 million in projects planned for 2018 and will be using reserves in 2018 to fund some of those projects. The Park Capital Fund has $629,000 in projects planned and will also be using reserves in 2018. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 9 Ms. Peterson stated the Information Technology Fund has $317,000 in projects and equipment planned for 2018 and again will be using reserves. The Equipment Fund has $534,000 in equipment planned. This does not include $300,000 in equipment that had been deferred during the budget process. This fund will also be using its reserves. Ms. Peterson stated as they can see, the City’s capital funds are in need of finding a reliable funding source. Since 2014, these funds are slowly depleting in their reserves. The City will hopefully be able to shift some LGA back into these funds, we still need to find other reliable sources, or possibly defer projects. Ms. Peterson stated in the Utility Funds, on November 13, the Council approved a restructuring of the water and sewer rates and tiers which is anticipated to increase revenues by 9.8 percent in the water fund and 4.3 percent in the sewer fund. The Storm Water Fund was not a part of this restructuring, and Council approved a 3.5 percent increase in the rates. In the water fund some highlights include $1.1 million in infrastructure improvements and continued work on the meter change-out project. Since 2016, City has had staff change out 3,600 meters. In 2018 the focus will be on multi-unit residential properties and commercial properties. Ms. Peterson stated in the Sewer Fund, the City has $265,000 scheduled in capital and infrastructure improvements. This is primarily one piece of equipment which is replacement of a jet truck. It is important to note this is an off year for the sewer lining project; therefore, this budget is typically higher for capital. The other important thing to note is that in the Sewer Fund, 70 percent of that budget is the fees charged from Met Council for processing of the City’s waste. MCES charges are anticipated to increase 3.7 percent. Ms. Peterson stated in storm water back in 2015 Council approved a 75 percent increase in the rate to better align with its expenditures. There was no increase in the rate for 2016. In 2017 Council approved a 4 percent increase and for 2018, Council has approved a 3.5 percent increase. These increases are in line with the significant projects that have happened over the past three years. In 2016 storm water spent over $500,000 on projects and in 2017 and 2018 it is more than double the cost for projects planned. Ms. Peterson stated as to liquor operations, sales are anticipated to increase 2 percent over what was budgeted for in 2017. They are seeing revenues continue to increase. In the expenditures it includes the addition of a full-time staff person. This is a result of Sunday liquor sales, and the struggle in finding consisted long-term part-time staffing. With that additional full-time staff person, the City will see a reduction in part-time staffing costs. It also includes that reinstatement of the admin fee to the general fund, and there are two capital items included in the 2018 budget which would be the replacement of a condenser over at the Fridley Market and the replacement of the HVAC over at Moore Lake. Ms. Peterson stated it also includes the transfer out of $338,000 which is the same as 2017. This would be $175,000 going to the capital equipment fund; $75,000 supports the Park Improvement Fund and then $88,500 to the General Fund. Reserves are projected to remain stable. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 10 Ms. Peterson stated she will present the final budget on December 11. It will include the final levy, the final 2018 budget, and the revised budget for 2017. OLD BUSINESS: 1. Second Reading of an Ordinance Pursuant to Section 12.06, of the City Charter Declaring Certain Real Estate to be Surplus and Authorizing the Conveyance Thereof (Ward 1). Mayor Pro Tem Barnette stated this has to do with land at Locke Park. Outlot E is where the current playground is located. The neighborhood did not want to lose the park. This makes this very clear. On page 14, item 5, says “The Redevelopment of the Outlots requires that there be sufficient space for the expansion of the water pumping facility and that there be recreational opportunities for the occupants of the redeveloped Outlots and the adjacent community.” In Item 3 under Actions, it states, “The Authority and the City will agree as to the amount of space, design and location for recreational opportunities including a tot lot to service the future residents and the adjacent community.” The diagram they received shows the proposed ideas of where everything will go with the patio homes, etc. which would now absorb Outlot E. There is full agreement that the park area and the equipment would remain on-site moving over to the east side of the area. Mayor Pro Tem Barnette stated in the 1950s and early 1960s, when he came to Fridley as a teacher, he worked summers with the Park Department and they built a lot of parks at that time. As he recalls when a developer came in with the property, he had to allocate a proportion or percentage of that for park or pay a value of that park. He is wondering when the HRA seeks proposals for housing if that could be included. Scott Hickok, Community Development Director, said it was staff’s intention to include a park dedication. That historically has been the way development has happened, and it certainly is still in play with this negotiation. Mayor Pro Tem Barnette stated he just wanted to make sure the public understands they are not losing a park. They are relocating it. There were some concerns with the soccer fields, etc. and the Parks and Recreation Commission have talked very intently about maintaining that on a different site where there would be adequate parking. MOTION by Mayor Pro Tem Barnette to waive the reading of the ordinance and adopt Ordinance No. 1348. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR PRO TEM BARNETTE DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 27, 2017 PAGE 11 8. Informal Status Reports: There were no informal status reports. ADJOURN: MOTION by Councilmember Bolkcom to adjourn. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR PRO TEM BARNETTE DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 7:49 P.M. Respectfully submitted by, Denise M. Johnson Robert Barnette Recording Secretary Mayor Pro Tem