Loading...
CCM 11/26/2018 CITY COUNCIL MEETING CITY OF FRIDLEY NOVEMBER 26, 2018 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:03 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember Barnette Councilmember Saefke Councilmember Varichak Councilmember Bolkcom OTHERS PRESENT: Wally Wysopal, City Manager Scott Hickok, Community Development Director Cassandra Wolfgram, City Attorney Dan Tienter, Finance Director/City Treasurer James Kosluchar, Public Works Director Pat Wolfe, Rental Manager Brian Weierke, Director of Public Safety Rachel Workin, Environmental Planner Marisa Bayer, Center for Energy and Environment Yvonne Pfeifer, Xcel Energy st Audrey Nelson, 250 - 61 Avenue NE APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: 1. City Council Meeting of November 13, 2018. APPROVED. NEW BUSINESS: 2. Second Reading of an Ordinance Amending the City Code of the City of Fridley, Minnesota, by Repealing Chapter 3 Entitled “Personnel” in its Entirety and Adopting a New Chapter 3 Entitled “Personnel”; and Adopt Official Title and Summary Ordinance; FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 2 and Resolution Providing the Authority to the City Manager to Formulate and Execute Administrative Policies, Rules and Regulations for Employment and Approving Non- Union Employee Paid Holiday and Annual Leave Cap. WAIVED THE READING OF THE ORDINANCE AND ADOPTED ORDINANCE NO. 1363 UPON SECOND READING AND ORDERED PUBLICATION. ADOPTED RESOLUTION NO. 2018-60. NEW BUSINESS: 3. Approve the City of Fridley Energy Action Plan. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND ADDED TO THE REGULAR AGENDA. 4. Approve First Amendment to Tower Site Lease Agreement between the City of Fridley and NCWPCS MPL 31 – Year Sites Tower Holdings LLC. APPROVED. 5. Claims (ACH PCard 1811; 183029 - 183128) APPROVED. ADOPTION OF PROPOSED CONSENT AGENDA: Councilmember Bolkcom asked that Item No. 3 be removed and added to the regular agenda. MOTION by Councilmember Barnette to adopt the proposed consent agenda with the removal of Item No. 3. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM, VISITORS: No one in the audience spoke. ADOPTION OF AGENDA: MOTION by Councilmember Bolkcom to adopt the agenda with the addition of Item No. 3. Seconded by Councilmember Saefke. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 3 UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. PUBLIC HEARING/NEW BUSINESS: 6. Consider Revising and Adding Language to the Fridley City Code, Chapter 220, Residential Rental Property Maintenance and Licensing Code; and First Reading of an Ordinance Amending Chapter 220 of the Fridley City Code Related to the Residential Rental Property Maintenance and Licensing Code. MOTION by Councilmember Bolkcom to waive the reading of the public hearing notice and open the public hearing. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY, AND THE HEARING WAS OPENED AT 7:07 P.M. Scott Hickok , Community Development Director, stated they discussed this item at a recent workshop. Pat Wolfe, Lieutenant Jeff Guest, and police staff have done a very nice job of pulling this together revision together. Mr. Hickok stated there was an internal staff review and discussion of Chapter 220 of the Fridley City Code which is the City’s rental housing code. Bridget Nason, an attorney with the City Attorney’s office was also involved. Attorney Nason did a nice job of reviewing and helping staff with the ordinance, so they are very comfortable with the ordinance before the City Council tonight. Mr. Hickok stated preparation of the draft revised ordinance was introduced to Council for feedback. Chief Weierke did a very nice job of presenting this in a workshop meeting. In that discussion, Chief Weierke and the City’s Community Development Department really worked together to prepare this. Mr. Hickok stated summarizing the updated references and language were a very important part of the ordinance. Updated licensing and application requirements were a part of this, and the revised process for addressing licensing and management issues was also cleaned up as part of this amendment process. Mr. Hickok stated rental licenses are required for rental dwelling units and the language was touched up. As to “let” the definition is possession or occupancy of a dwelling unit, whether or not compensation is paid to a person who is not the legal owner of record pursuant to a written or unwritten lease. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 4 Mr. Hickok stated staff made sure that it was clear what the license exemptions were. The exemptions are: hotels, motels, hospitals, residential care facilities, assisted care facilities, nursing homes, and single-family homes or duplexes where the owner resides in a portion of it. Mr. Hickok stated the rental license requirements and process was clearly defined through this set of amendments. The license rental application is valid for 12 months from the date of issuance, and requires an inspection and annual fee. It includes the appointment of a designated agent if the owner does not reside within the 11-county metropolitan area, inclusion of a crime- free/drug-free lease addendum, and completion by the licensee or manager of the crime-free rental housing program. It also includes requirements for licensees to address incidents of illegal, disorderly conduct on the licensed premises. Mr. Hickok stated as to adverse licensing action, a violation of the terms and conditions of a rental license may lead to suspension, revocation or conversation to a provisional license process whereby there would be a mitigation plan to make sure that issue is not something they are seeing repeated. Councilmember Bolkcom asked how much time was spent on this ordinance. They know there are some other cities that have had some questions and comments related to changing their ordinance. She asked for more background on the ordinance. Mr. Hickok stated the Community Development Department has been in charge of the rental inspection program for the last four years. Prior to that, back to 1993, the Fire Department was in charge of inspections. Pat Wolfe has managed the program for Community Development with the rental inspections, and they are very pleased with the work that has been done on this program and the collaboration that has happened by having the Building Department, the Code Enforcement and Rental Inspections staff together in one department. Pat Wolfe , Rental Manager, stated in 2017 Chief Brian Weierke brought to their attention that there were some concerns from citizens about their safety around rental properties. They got together at the request of Chief Weierke and Scott Hickok to start to review the ordinance and determine how they could make it better. There was a conduct section in Chapter 220 that probably had not been used as frequently as it could have been. Chief Weierke wanted to use that conduct section in Chapter 220. Being a rental inspector since 1986, she saw the need for it as well. She has never felt unsafe during a rental inspection, but times are changing. It has been brought to their attention through Lieutenant Guest and other police officers there seems to be a little bit more crime in the City’s rental properties than there has been in the past. Just in the short time they have worked together with this new group, they are seeing changes really fast. They are seeing both landlords and tenants responding, and they are starting to look at how they can make all of them safer--the tenants, landlords, and the community. This process started in 2017. They met as a group which also included staff from the Fire Department, and they discussed how they could change Chapter 220. It was outdated in many ways. For example, carbon monoxide detectors were not even addressed in Chapter 220. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 5 Ms. Wolfe stated they had to come up with language that applied to different hazards they have not seen in the past. She could speak to the licensing part and the inspection part, and the Police Department, whether it be Chief Weierke or Lieutenant Guest, could speak directly to what they saw was outdated in the conduct section which was more or less the area they covered. Brian Weierke , Director of Public Safety, stated Ms. Wolfe was absolutely right. They saw a concern a few years ago and wanted to address it. Really from the Police Department’s standpoint, this was all about a partnership for them. They put more resources into the rental housing in Fridley. It was really about partnerships where Lieutenant Guest can call most apartment owners and landlords by their first name and let them know what is happening on their properties. They can call the Police Department if they need anything. They really want to open those lines of communication. Chief Weierke stated they are seeing a decline in rental property issues. They do not have anything quantitative they can point out. It would take weeks if not months to go through their reports and figure out which ones are rental, but the conduct is getting better. They are trying to help the landlords, so if they have somebody who is acting out and causing a lot of problems, they are communicating and partnering with them. So far they are seeing a great success with that and give a lot of credit to Pat Wolfe, Lieutenant Guest, and Courtney Miller with making these changes that really bring them up to 2018. They took a lot of information from other cities and included it, and they are very proud of this product. MOTION by Councilmember Bolkcom to close the public hearing. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS CLOSED AT 7:21 P.M. MOTION by Councilmember Bolkcom to waive the reading of the ordinance and adopt the ordinance on first reading. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. Consider Transferring Property to the Fridley Housing and Redevelopment Authority to Facilitate the Redevelopment of the Fridley Municipal Center Campus, Generally Located at 6431 University Avenue N.E. (Ward 1) and First Reading of an Ordinance Under Section 12.06 of the City Charter and Minnesota Statutes Section 465.035 Regarding Certain Real Estate and Authorizing the Conveyance Thereof. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 6 MOTION by Councilmember Barnette to waive the reading of the public hearing notice and open the public hearing. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE HEARING WAS OPENED AT 7:22 P.M. Scott Hickok , Community Development Director, said this item is to transfer property of the City of Fridley to the Fridley Housing and Redevelopment Authority. The City’s HRA is currently in exclusive negotiation with Ivy Properties and Amcon to redevelop the City’s old municipal center site. Ivy and Amcon are interested in constructing a 134-unit senior building for Ebenezer Homes. Ebenezer is the residential arm of Fairview Health Systems. The municipal center site contains land owned by both the City and the Fridley HRA. Mr. Hickok stated the HRA is requesting that all of the property be put into the HRA’s name to simplify facilitating the redevelopment. Ivy and Amcon are paying fair market value of $2.2 million for the property. Demolition and other extraordinary costs incurred by Dunbar (which is part of Ivy Development) will be credited towards the sale price. The HRA’s actual cost will be deducted, and the remaining funds passed onto the City. The Authority will adopt the resolution on December 6. Mr. Hickok stated the deal is structured in a very typical way. There is no indebtedness on the property. In other words, the City owns it outright through the City and HRA. Mr. Hickok stated the City owns Lots 6, 8, 9, 10, 11, 12, 13 and Block 1. The HRA owns Lot 7, 15, and 16 of Block 1, Lot 2. Mr. Hickok stated staff recommends holding the public hearing and adopting the first reading of the proposed ordinance for the sale and transfer of City property to the Fridley HRA for redevelopment. If this is approved this evening, the second reading would take place on December 10. Councilmember Bolkcom asked how much the demolition costs would be. Mr. Hickok replied the demolition bids have not come in yet. They have done the soil borings on the site and taken a look at the building just from an early demolition perspective, but the bids will tell them what those actual costs are going to be. Councilmember Bolkcom asked do they think there is any type of hazardous material that will have to be disposed of. It is $2.2 but the City and the HRA are incurring the cost of demolition, correct? Mr. Hickok replied, yes. There is always a little bit of something they find, but they think it is a relatively clean site. Probably one of the most complicated things they will find on that site is a post-tension parking deck, and the deconstruction of a post-tension parking deck takes experts. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 7 It is not an easy task for them to do. They will have to systematically take it apart in order to release the tension first in the deck and then demolish after that. Councilmember Bolkcom asked if this goes through tonight and the second reading is adopted, when will it be demolished. Mr. Hickok replied the developer would like to demolish it during the winter months so that when spring comes they would be ready for development. Councilmember Barnette asked if construction would begin in the spring or summer. Mr. Hickok replied they are very anxious to get it started. The earlier the better for them. MOTION by Councilmember Saefke to close the public hearing. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS CLOSED AT 7:29 P.M. MOTION by Councilmember Saefke to waive the reading of the ordinance and adopt the ordinance on first reading. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. Approve the City of Fridley Energy Action Plan. Rachel Workin , Environmental Planner, said the impetus for this plan came through the City’s involvement in the Green Steps Cities Best Practices Program as well as through the 2040 Comprehensive Plan planning process. During the 2040 Comprehensive Plan planning process, the Metropolitan Council asked the City to identify ways to increase the City’s resiliency. They also heard numerous comments from the public asking the City what it was doing to reduce its greenhouse gas emissions and reduce its energy consumption. Ms. Workin stated apart from the global larger scale question of energy use, reducing energy consumption is important on a local level because there are significant costs associated with energy use. Furthermore, reducing energy promotes cleaner air. More energy-efficient buildings tend to be more comfortable to live and work in, and can be safer because of improved lighting. Also, energy-efficient buildings have higher resale values. For these reasons, the City thought this was a really important endeavor to undertake. However, developing an energy action plan is a very big process. There is a lot of data to look through. There are a lot of different approaches that could be taken, so they looked for a partnership to help them through this process and found that through Xcel Energy’s Partners in Energy Program. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 8 Ms. Workin stated this process is designed to help communities to develop localized community-specific energy action plans. To start out this program, they developed an Energy Action team comprised of Fridley staff, residents, businesses, and institutions. While this is not a public hearing they do have members of the Energy Action team in the audience. Ms. Workin stated through the Partners in Energy Program, they were guided through a five workshop planning series to help them develop what the community’s energy vision, mission, and goals would be. The Energy Action team represented really a wide group of opinions and diverse perspectives from the community, and there was a lot of good discussion that came through these meetings. The first workshops focused on the City’s baseline energy use so they could best understand what strategies would work best. They found that while the majority of customers came from the residential sector, the majority of electrical and natural gas consumption came from the industrial and commercial sectors. Over 80 percent of the energy consumed in the City of Fridley is consumed within the commercial and industrial properties. Ms. Workin stated Xcel also broke down for them what the average customer was spending on natural gas and electricity. They found that while this could vary greatly between different users, the average Fridley resident pays $771 per year on electricity and $677 per year on gas. This is a pretty sizable amount people are spending year after year. It is an equity issue. Everyone pays an energy bill, so the proportion of what lower income residents are spending on energy is much higher. Ms. Workin stated commercial and industrial properties on average are spending over $20,000 on electricity per year. This is a real cost that can affect bottom lines and the ability to expand and hire new workers. If they can help bring those costs down for the City’s businesses, they can help them succeed. Ms. Workin stated they also looked at what programs Fridley residents and businesses and institutions were currently participating in. In the residential sector, they found that 9 in 100 premises are currently participating in an Xcel Energy conservation program already. This could be in having participated in a home energy squad visit or a new construction rebate. The results of this participation is a .9 percent savings on total energy use as compared to residents who had not participated in programs. While they do have a fair number of people participating, there is a lot of room for improvement and getting the word out to get even more people tapped into these savings. Ms. Workin stated from the commercial sector, 7 in 50 premises are participating in the program. They are also seeing here there is a range of programs with untapped opportunities that they can increase education and awareness related to these programs so their commercial partners can participate. Ms. Workin stated they also looked at the way Fridley residents and businesses were interacting with the renewable energy programs, such as Windsource, which allows residents and businesses to subscribe to wind-based energy as well as on-site solar energy among other examples. Based on building permits in 2017, only two Fridley residents and one commercial property installed solar panels. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 9 Ms. Workin stated based on the baseline data they were guided through a series of activities to help them determine what their energy vision and mission would be. They knew they wanted the City to be a leader, and they wanted to involve all sectors of the community, and they really wanted to focus on saving money so Fridley remained an affordable community to live and work in as well as maintain a high quality of life. Ms. Workin stated the energy vision that was developed for Fridley was they would continue leading by example and engaging residents, businesses, and institutions to save money and reduce greenhouse gas emissions for the benefit of everyone in the community. For the mission, in order to achieve their community-wide goals, they focused on increasing sustainable reliable energy in the grid, strengthening energy-efficient practices and participation, and supporting innovative strategies and technology to achieve their energy vision. Ms. Workin stated for a community-wide goal they set the benchmark of 5 percent energy reduction by 2020 compared to business as usual and 20 percent energy reduction by 2030. They will achieve these goals by focusing on four key areas: residential energy which is inclusive of homeowners and renters but with a specific focus on under-resourced residents, businesses and multi-family which includes multi-family apartments of over 5 units, institutions which include City-owned property as well as worship facilities, medical facilities, and such; and transportation and electric vehicles. Within each of those categories they weave elements of renewable energy as well. Ms. Workin stated their 2020 goals include Fridley residents taking 1,200 additional actions towards energy conservation and renewable energy. These would take place in forms of the rebates allowing them to track how they are achieving that goal. That business and multi-family will achieve 5 percent energy savings by 2020, and institutions 5 percent energy savings. Also, an outreach campaign to increase awareness of electric vehicles and installing one electric vehicle charging station at a City-owned building. Ms. Workin stated by 2030 they set the goal that City residents will reduce energy use by 10 percent as well as a 20 percent reduction for businesses and multi-family and a 15 percent reduction for institutions. Ms. Workin stated the key strategies they will use to get there which go into further detail within the Energy Action Plan are providing informational materials through the City’s communication channels, leveraging existing City relationships and programs, providing targeted support, and coordinating with the City’s building department and development review committee to integrate information about energy efficiency and renewable energy into the development process. Ms. Workin stated they expect this plan will result in a combined energy savings for the City of over $3 million by 2020. Participating households are expected to save $52 per year on their energy bill. That combined with the decarbonization of the electric grid, will reduce the greenhouse gas emission by 30 percent by 2030. As a side benefit, they expect this outreach will result in new partnerships and active engagement from community members. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 10 Ms. Workin stated following approval of the Energy Action Plan, the Partners in Energy Program transitions into an 18-month implementation period. During this time, they will receive support through the Partners in Energy Program with regards to marketing and communications, data tracking and measurement, program expertise, and project management. They will have that really technical support that these leaders in energy conservations can provide them, as well as the ability to actually track what the changes are in the City’s electricity consumption and natural gas consumption. Ms. Workin stated at this time she would like to welcome any questions they might have about the City’s Energy Action Plan as well as to invite two guests to the podium, Yvonne Pfeifer, the Community Energy Efficiency Manager with Xcel and Marissa Bayer, the Community Energy Planner, working with the City from the Center for Energy and Environment. Mayor Lund asked how did they arrive at a 20 percent reduction at their goals for 2030? Was it something that was statistically calibrated or just a goal they thought was achievable? Marisa Bayer , Center for Energy and Environment, stated part of the Partners in Energy offering is to have a very data-driven and community-driven process, so as part of the planning workshop they looked at historical baseline energy consumption data. Working with the Energy Action Plan team members, they modeled out what would be achievable for the City of Fridley based on historical participation as well as achieving those shorter-term 2020 goals. In one of their workshops, they did a pretty thorough exercise of are they hitting the mark or should they go a little more ambitious, and that is where that 20 percent came from. They though 14 percent, and the group thought they should be a little bit more ambitious and that the City of Fridley and its community, the residents, and the businesses would be able to shoot for 20 percent. Mayor Lund stated between now and 2030, another decade, if everybody had every light bulb in their house changed to an LED bulb which is quite a bit less energy, what would the savings be there alone? Yvonne Pfeifer , Xcel Energy, replied that is a difficult one because it is based on usage and changes in the home. Mayor Lund stated the reason he brings that point up is because changing bulbs is a pretty easy thing. He does not know if that even puts a small dent in the equation as far as energy savings. Ms. Pfeifer replied it does. That is a really good place to start. Councilmember Saefke stated he knows that LED bulbs cost a little bit more but you save the money because they last a long time. Councilmember Bolkcom asked Ms. Workin, after the Plan is approved, what might they start seeing in the next three to six months? FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 11 Ms. Workin replied the next step as part of this process they have developed is an implementation plan that breaks out scheduled activities amongst the 18 months of the implementation plan by quarter. The residents should expect to see a lot of increased communication related to energy efficiency which they will be developing in conjunction with Xcel and the Center for Energy and Environment and the City’s own communication department. They will be looking at a lot of different communication channels to get the word out. They will also be focusing on outreach at events, such as the environmental fun fair hosted at Springbrook Nature Center and other events there including a dinner as part of their discovery dinner series with one of the experts on electric vehicles which will be occurring in February. They will also be working on integrating information into their development review committee process and with the building permits and other outreach channels from the City. Councilmember Saefke asked Ms. Workin if she knew if anyone is going to be installing charging stations for electric cars. Ms. Workin replied the City has applied for a grant through the MPCA for an electric vehicle charging station at the Civic Campus which they are waiting to hear about and, depending on the outcome, they will continue to apply for other potential funding sources. Xcel Energy is also piloting some new rate structures and experimenting with that to support electric vehicle users. She did not know if Ms. Pfeifer could speak to that in any more detail. Ms. Pfeifer replied, not in any more detail. They have actually filed for the rate. They have not heard back yet but once they do will be putting more information out there for residents and businesses. MOTION by Councilmember Bolkcom to approve the City of Fridley’s Energy Action Plan. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. NEW BUSINESS: 8. Resolution Providing for Water, Sewer, Storm Water and Recycling Rate Changes for 2019. Dan Tienter , Finance Director/City Treasurer, stated unlike the general fund, the water and sanitary sewer and storm sewer funds are enterprise funds, meaning they are expenditures and obligations and are established through user fees and other charges for services. Much like the general fund, they maintain a minimum six-month operating balance for expenditures including depreciation of the system. As has been discussed with the utility rates study, ideally these enterprise funds should support the entire cost of their capital improvement. Mr. Tienter stated one thing they always like to stress when having this discussion is these rates are often the subject of external costs and pressures, most notably in the sanitary sewer fund. The Metropolitan Council of Environmental Services does charge a wastewater transmission and FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 12 treatment charges. Those charges make up approximately 70 percent of the expenditures of that particular fund. Mr. Tienter stated to support these costs and maintain stable fund balances, they review and consider changes to the rate structure annually. In addition, they regularly commission third- party reviews of the system. The City did review the water and sanitary sewer funds with the City’s financial advisor, Ehlers; and they did provide several modifications to the City’s rate and fee structures. Generally those modifications were designed to accomplish two principal goals. First, to provide stable and predictable modifications in the rates and fee structure over time and second, to maintain appropriate balances and limit the need for additional debt or borrowing to support capital expenditures. Mr. Tienter stated with that history in mind he will walk through each fund generally. Earlier this year, Council had a conference meeting and reviewed the water and sewer funds in greater details. Through that analysis, they determined the water utility fund was not meeting revenue projections. They were coming up short based on the Ehlers’ study by about $100,000. They do know the fund continues to rely on the use of bond proceeds to fund certain projects and they are planning on issuing water utility revenue bonds next year to support certain water-related projects. Mr. Tienter stated they have found the current usage and revenue patterns are equitable, and that has been consistent with the philosophy that was established by Council. They will recall that one of the main tenants of the Ehlers study was to assure that water usage and water revenue were aligned by class. Mr. Tienter stated the resolution before the Council does recommend an increase in the water volume rates between 3 and 6 percent, depending on the user class; and there is an attachment included with the Council’s memorandum outlining the various changes. That is designed to offset that loss of revenue. They are also recommending an increase in the quarterly base fee of $2 and $5, depending on user class; and that is outlined in the chart attached to the memorandum. Mr. Tienter stated they are planning on significant expenditures for 2019. They do have a water treatment plant and then also some distribution system projects, and they are planning to issue bond proceeds. They need to look at the cash balances for the fund. It is always important to call out those uses of bond proceeds. The City is supporting its long-term expenditures right now. Mr. Tienter stated moving into the sanitary sewer utility fund, based on the analysis the City has done to date, they are anticipating that fund to exceed its revenue projections although at this point in time they are still anticipating the use of bond proceeds to support ordinary capital expenditures. It is always important to understand what the Metropolitan Council environmental service charges are for the upcoming year. They do make up about 70 percent of the expenditures for this fund, and they have been advised by the Metropolitan Council that those charges will be increasing by 9.2 percent for next year. They are also planning 4 percent FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 13 increases in the out year. Any changes in those rates does cause them to review very carefully the sanitary sewer charges. Mr. Tienter stated to maintain the viability of the fund and limit the future need for borrowing, they are recommending the City Council increase the sanitary sewer volume rate by 4.4 percent. However, in recognition of the fact the fund is currently exceeding its revenue projections, they are recommending the Council not increase the base fees for either the residential or multi-family units, meaning 3 units or less. For the larger multi-family units and commercial/industrial, they are recommending an increase in the base fees. Similar to the water utility they can see with the sanitary sewer fund they have had more success over time increasing the cash balances to support ongoing operations and capital expenditures, but in 2019 they still are assuming the use of bond proceeds. Much of that uptick for 2019 is the result of the City borrowing. Mr. Tienter stated what they have here is a gallon use, 12,000, which they kind of categorize as the City’s medium user. Right now the change would be about 3.2 percent across both of the water and sewer utility funds. It is important to mention they run this scenario for a variety of types of users and the changes from a low volume user would be about 2.96 percent compared to the City’s highest commercial/industrial user which would be about 5 percent. Again, the range is a 3 to 5 percent increase but since they are holding those base fees flat for this year. The lower users do experience a lower increase than the rest of the user classes. Mr. Tienter stated in addition to water and sewer they also operate a storm water utility. Based on the analysis they have done, the storm water is meeting storm water projections; and the City actually contributes fund balance for future needs. So this fund is self-sustaining. It is something of a model for the other two funds. They do not foresee any need for additional borrowing for any activities planned through 2023. Mr. Tienter stated based on those anticipated expenditures and to maintain the self- sustainability of this fund, they are still recommending an increase in the storm water utility fee of 3.5 percent which does work out to be about 32 cents per residential lot. Mr. Tienter stated much similar to the previous enterprise funds, the cash balances are increasing and will give the City the opportunity to fund major capital improvements with cash as opposed to issuing debt. Mr. Tienter stated annually the City participates in a review of storm water and water funds, and they provide the City with the survey results. He presented a chart showing a comparison of th metropolitan municipalities. The City ranks 17 out of the 30 participating municipalities. Fridley’s water, sewer, and storm water rates aggregated are competitive with the surrounding metropolitan area. Mr. Tienter stated as to the solid waste abatement fund (also known as the recycling fund), based on their review and the commodity values of certain recycling materials, they are anticipating a need for additional revenue to support the current service levels. It is important to stress in this particular area the costs that are being incurred are beyond the control of the City. This really has much more to do with the commodity markets as it relates to recyclable materials. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 14 They are recommending an increase in the solid waste abatement fee by 10 percent or about 82 cents per quarter. One thing to stress here is the recycling contract makes up about 83-84 percent of the expenditures for this fund so any shifts in those costs causes them to take a long hard look at the rates that are being charged. Mr. Tienter stated again the recycling fund has been relatively stable over time, and the City is maintaining its cash balances and they are anticipating that increase to support the additional costs of the recycling services contract. Mr. Tienter stated assuming the City Council supports these recommended modifications, staff does recommend they adopt the resolution and also, assuming approval, these rates would be effective for the first billing cycle of 2019. Mayor Lund stated during the conference meeting they did express some concern over the ever increasing water and sewer rates, but they also understand there is really not much in the way of alternatives. Also, they do need to keep up the fund balances to include payment of a $3.8 million project they have for the upcoming season. They do not have $3.8 million sitting there in reserves and are, therefore, borrowing the money. He has even made comments about his own water bill as of late but inevitably his choices are not any better. They all need it and it is a very necessary service. He asked if anyone in the room was interested in making a comment. st Audrey Nelson, 250 61 Avenue NE, said she was at the town hall meeting and at that time she and others brought up the fact that those who are in a one-person household and only using 4,000 gallons in a whole billing period, they get socked with the $50 sewer charge, when they are using so much less than everybody else and are being penalized. At that time during the town hall meeting, the City said they would take that under advisement. She asked if they had. Mayor Lund replied, they have to recall just the user fee. He understands where Ms. Nelson is coming from. She is a small user and why does she not get a little better break. However, that model has proved to be so unstable. They need to have a basis of income to support the water and sewer because the infrastructure is expensive and here in Fridley it is aging considerably. They cannot make it on usage and it fluctuates so much. The City of Fridley residents and businesses collectively are using 22 percent less water over the last six years. Great that they are all conserving but, on the other hand, they are not getting enough income because of the reduction in water sold. They find it very unstable and have gone to a higher base rate. Yes, there are small users but the basis is there for everybody. They still get a benefit because they are not using as much water so their bill is ultimately lower. However, the base rate has gone up considerably. Mayor Lund stated as Ms. Nelson can see from the charts, the City does not have a lot of control especially over the sewer rates. They do not have control over three-quarters of that; over 70 percent of that goes elsewhere. He is not criticizing the Met Council because the alternative would be a lot more expensive. The rates are going up considerably with the Met Council. He asked how much. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 15 Mr. Tienter replied, Met Council has advised the City they are going to increase their fees by 9.2 percent for fiscal year beginning 2019. Mayor Lund stated and the City has no control over that. Ms. Nelson stated and she understands that. She is coming from her own personal perspective that she thinks the $50 base charge for sewer gives her, what, 12,000 gallons. Mayor Lund stated he did not remember, was it 8,000 or 12,000? Mr. Tienter stated, it is 8,000. Ms. Nelson stated it is 8,000 and she is not. She is using the same amount of water. That is what she does not understand. If you have to do that, then how come the City cannot offer those who are low income some type of discount or proof or something like that? Mayor Lund stated he does not know that they would lower the base for those who are low water users. They would have to look at just dropping the thousands of gallons used or create another level for the 4,000 gallon. There is not a lot of them. He wished he was in that bracket. His water bill last quarter was over $500 and there are two people in his house. Ms. Nelson stated there are people who conserve and they are being punished by not using the maximum. Councilmember Bolkcom stated she looks at her gas and electric bill and there is a base rate, too. They still have to maintain all the City’s wells and any well project they have is expensive. They are an older city. They have fewer stations, and they all have to be maintained whether you are running water down them all the time or not. No matter what the City’s rates would be, if the base rate was changed to $45, if you did 2,000 vs. 4,000, there still has to be some base rate because the City still has to maintain that infrastructure and it is huge. It is how many miles of sewer and lift stations they have. It is incredible. They hear it from the people who go away in the wintertime, too. Well, while they are gone the sewer still has to be there and they have to have the lift stations and water running through. It is a difficult cycle and they are trying to be as conservative as they can. Ms. Nelson replied, it comes to affordability for a lot of them. She is not just talking about herself. There are other people in the community to. It is affordability and $10 can make a big difference when you starting adding that up. Councilmember Bolkcom stated but do they give Ms. Nelson such a reduced rate that people who are on the next level pay more? She is trying to get her head around it, too. Ms. Nelson replied, she does not have any suggestions. She is just letting them know what her concerns are and how this affects her. FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 16 James Kosluchar, Public Works Director, stated the Mayor points out a lot of this is due to conservation reduction usage over the past years and that creates a shift in the cost apportionment whether the Council addresses it with changing the rate structure or kind of modernizing the rate structure or not. They will have folks who save in one instance and others who bear the expense in another instance just because of reduction in use in different rate classes. The Council has taken the step to try and make the rates more sustainable by increasing the base fee on sewer specifically, where sewer does not rely on metered quantities. The theory is it is available to every resident and business in the community whether you use it or not. The pipe is there and is ready to carry what you send its way. Councilmember Bolkcom asked, and those rates are based on winter water usage also, correct. Mr. Kosluchar replied, that is correct. Whether you occupy your home or not the sewer is available to you. That is part of the philosophy of shifting toward a little more of the base fee with the sanitary sewer vs. the water still being pushed in the direction of consumption. Also, Mr. Tienter’s presentation outlines the fact that the base rate is basically being held at zero increase for next year. They are still new in this rate structure, too. The City does not have a full year under its belt yet at this point. They are being cautious about adjusting that upwards at this point but still kind of in evaluation mode for what this structure does. Wally Wysopal , City Manager, stated they did consider the concerns that were expressed at the meeting back in the spring and staff did review the analysis that was done by the consultant. They took those things into consideration and the result may not be the way people wanted it to be, but they did look at it to make sure, as they promised, that it was doing what it was supposed to do--that is protect the overall financial health of the system. Ms. Nelson stated next time they have a big meeting about this remember her. Councilmember Bolkcom asked Ms. Nelson when she says, big meeting, does she mean the next time they talk about rate structure? Ms. Nelson replied, yes. Councilmember Bolkcom stated she hopes they will have another town meeting here in the future. Mayor Lund stated and Ms. Nelson is welcome to join them whenever she wants at Council meetings. They have discussed this at quite length and did earlier to night also. . MOTION by Councilmember Saefke to adopt Resolution No. 2018-61. Seconded by Councilmember Bolkcom. Councilmember Bolkcom asked staff if they would be looking at this again in six months. Mr. Tienter replied, they can certainly do the review and analysis at any time. If the Council would like to see that information again in six months, that is certainly possible. They can FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 17 discuss it again with Ehlers and get their input. Of course if they involve them, there may be some additional costs along with that. In any event, the rates are always reviewed on an annual basis. So there is always an opportunity at least annually to discuss the rates, their changes, the factors that influence them, etc. Councilmember Bolkcom asked if it would be beneficial to look at it in six months. Mr. Tienter replied, yes, it would be beneficial. At this point in time, their analysis has only been through the first ten months of the rate structure, so they do not have a full year’s worth of billing. Reviewing it after the end of the year or after those billings have gone out would provide the City with a fuller picture. As discussed during the conference meeting when they reviewed the information, what they have prepared to date is an extrapolation of that last quarter. Once they have that actual information it would be beneficial to review it. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 9. Resolution Authorizing the Donation of Real Property to the City of Fridley by Ralcorp Frozen Bakery Products, Inc., Pursuant to Minnesota Statues § 465.03 (Ward 3). Jim Kosluchar, Public Works Director,stated by and large the City Attorney, Jay Karlovich, has carried the ball on this and provided the information they see in the packet. The subject property was required for the City to construct a storm water pond as part of the Oak Glen Creek pond expansion project that began in 2017. At that time, staff had advised the staff at Ralcorp (also known as Treehouse Foods) that the City of Fridley would accept a donation of the subject property if they preferred it over an easement. Part of that was because they were working well with the City to donate the property so the City could accomplish the project. Mr. Kosluchar stated Treehouse Foods has since requested the parcel be donated to the City after staff established the easement last fall. That was a matter of timing really. It would have been a much longer process to have the property donated. They needed to get the project under way so the easement was established first. Mr. Kosluchar stated Treehouse Foods provided the requisite title work for the City Attorney at their cost, and the City Attorney developed the attached agreement and accompanying resolution that conveys the property. The resolution also approves execution of an access agreement in favor of the City of Fridley so it can basically get to the location of the pond. Mr. Kosluchar stated staff is recommending the City Council pass the resolution authorizing the donation of real property to the City by Ralcorp Frozen Bakery Products, Inc.; and it is pursuant to Minn. Stat. § 465.03. If approved, staff will notify Treehouse Foods of the approval and will have documents fully executed and recorded. Mayor Lund asked was it to petitioner’s advantage to donate it because it takes it off the tax roll then? Was there some advantage for Ralcorp? FRIDLEY CITY COUNCIL MEETING OF NOVEMBER 26, 2018 PAGE 18 Mr. Kosluchar replied that may be part of their thought process. They are not absolutely sure about that and what the tax advantage might be for the donation. The one other factor was that the pond exists, and the City will be maintaining it. From an insurance perspective they do not have to insure the parcel against a hazard, etc. The City obviously would be doing that regardless. He thinks from a business standpoint there are a couple of reasons that makes sense. As far as an appraisal, they had talked about that and the acreage was not appraised to have substantive value to them. Mayor Lund asked would they be willing to donate a little more property so the City can expand the pond? He is not certain it is big enough yet. It could never be big enough for all rain events. Mr. Kosluchar replied, the City’s rule is to combine it with some additional improvements the City has in budget for 2019, some lesser improvements that will be able to allow them to bear the 100-year storm without having water inside their building. They are the low property along this portion of Oak Glen Creek subwatershed and so they do get flooded out first if anybody does. That is the goal. They will be able to achieve that goal with the pond they have in place, and then kind of the conveyance improvement they are anticipating next year. Mayor Lund asked he supposed it is not practical for them to put in a green roof or maybe a pervious type asphalt system in the parking lot to absorb more water? Mr. Kosluchar replied, upon retrofit he is sure they would entertain that. MOTION by Councilmember Bolkcom to adopt Resolution No. 2018-62. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 10. Informal Status Reports: There were no informal status reports. ADJOURN: MOTION by Councilmember Barnette, seconded by Councilmember Varichak, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 8:21 P.M. Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor