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CCM 12/23/2019 CITY COUNCIL MEETING CITY OF FRIDLEY DECEMBER 23, 2019 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:01 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember Tillberry Councilmember Eggert Councilmember Bolkcom Councilmember Ostwald OTHERS PRESENT: Wally Wysopal, City Manager Daniel Tienter, Director of Finance/City Treasurer APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF CITY COUNCIL MINUTES: 1. City Council Meeting of December 9, 2019. APPROVED. NEW BUSINESS: 2. Resolution Requesting Conveyance of Tax Forfeit Property to the City of Fridley (Generally Located at 6101 University Avenue N.E.) ADOPTED RESOLUTION NO. 2019-77. 3. Resolution Approving Gifts, Donations and Sponsorships for the City of Fridley. ADOPTED RESOLUTION NO. 2019-78. 4. Approve First Amendment to the Agreement between the City of Fridley and Ralcorp Frozen Bakery Products, Inc., for the Construction of Specific Stormwater System Improvements in The Oak Glen Creek Subwatershed (City of Fridley Projects 17-446 and 17-516) (Ward 3). APPROVED. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 23, 2019 PAGE 2 5. Claims: (ACH PCard - 1912; and 187450 - 187585). APPROVED. ADOPTION OF PROPOSED CONSENT AGENDA: MOTION by Councilmember Eggert to adopt the proposed consent agenda. Seconded by Councilmember Tillberry. 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 adopt the agenda. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. PUBLIC HEARINGS: 6. Consideration of an Ordinance Repealing and Replacing in its Entirety Fridley City Code, Chapter 407A. Cable Television Franchise (Continued November 25, 2019). MOTION by Councilmember Bolkcom to remove the public hearing from the table. Seconded by Councilmember Ostwald. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Bolkcom to continue the public hearing to January 27, 2020, to allow the parties additional time to reach an agreement. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. NEW BUSINESS: 7. Resolution Certifying Final Tax Levy Requirements for 2020 to the County of Anoka. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 23, 2019 PAGE 3 Daniel Tienter, Director of Finance/City Treasurer, stated there is an official copy of the budget uploaded to the City of Fridley’s website for any parties who would like to review it. It looks a little different than previous years. The City used to have a consolidated budget document that was about 100 pages long. Staff has replaced that with a much longer, now a 340-page budget document and divided it into three volumes. They have a budget overview which is a summary providing information about demographics about the community, trends, projections, the City’s assumptions, information about how property taxes are set for the community, etc. Then there is Volume II which is the actual budget detail and financial report. These are printouts directly from the City’s financial reporting system and are actually the line-by-line detail or what will be the adopted budget for the organization. Volume III is the standalone document for the capital investment program. Mr. Tienter stated they have had the opportunity to increase the amount of information available to the public because they are using the City’s financial system, Tyler Technologies, to a greater extent in producing more reports rather than having to construct all this information through Xcel or other means. It has also allowed staff to provide greater analysis and insight for anyone who is interested in the budget document. They have also included more information about goals and objectives. Mr. Tienter stated as he has mentioned previously, the goal is ultimately to have the City apply for the distinguished budget presentation award from the Government Finance Officers Association. The document will actually be graded; and they will provide the City with information on how it can improve it, make its process more transparent and easier to understand. The goal is to make the document more usable for members of the public. Mr. Tienter stated he is not going to go through the budget in great detail as they have had the opportunity to review that during the City’s truth in taxation hearing. One thing he did want to talk about was the process City staff goes through in order to develop the budget. It actually begins annually in April with the annual town hall meeting where they do a little bit of a year of review for the members of public. After that they meet with Council for what they call a goals and objectives workshop where they provide the first unaudited information. Council provides its first insight and direction to staff about what they are thinking for the budget for the next year. Mr. Tienter stated they do all of that before the staff completes the audit for the previous year. It is pretty much always budget season in the Finance Department. If they are ever interested feel free to stop by. Staff does some preliminary work with the Council in June and then in July they have internal meetings with the City Manager because ultimately per the Charter the Council receives a recommendation from the City Manager. Mr. Wysopal provides targets to all of the department directors, and then they file adjustments and requests and then ultimately sort through them based on the Council’s preferences. Mr. Tienter stated in September staff does its proposed 2020 general fund budget and the preliminary property tax levy which is what is used to create the truth in taxation notices. In October and November, they have more budget workshops. They review utility rates and fees with the Council. Finally, in December they do the truth in taxation hearing and finally this evening they formally adopt the various components of the budget. In any given year, there are FRIDLEY CITY COUNCIL MEETING OF DECEMBER 23, 2019 PAGE 4 at least five workshops with Council related to the budget. That does not include any meetings like tonight or the truth in taxation hearing where the Council sits in a more formal environment to review the budget. Mr. Tienter stated for total revenues, they are anticipating just under $42 million in fiscal year 2020 weighed against expenditures of just over $48.5 million so that would be a use of cash or fund balances of $6.5 million. Of that, $2.3 million is the use of capital project funds so these are planned spend-downs of fund balances based on capital project planning efforts of the Council through the CIP. They are using about $2.8 million in enterprise fund cash again to support capital projects. Council has authorized a $1.1 million interfund loan to support improvements to the Locke Park Water Treatment Plant. Mr. Tienter stated about 31 percent of all revenue comes from the property tax levy, and about 42 percent comes from the various enterprise funds which are charges for services related to water, utility, sanitary, storm and of course any sales at the municipal liquor store. The remaining 10 percent comes from governmental aids and about $1.7 million is from Local Government Aid. Mr. Tienter stated personnel services make up about 35 percent of all budget expenditures and other services and charges comprise about 28 percent. You can think of these as charges for professional services like fees for the City Attorney or about $5.4 million annually to the Met Council for wastewater treatment. Mr. Tienter stated finally, about 21 percent accounts for capital outlay or those projects that are authorized by the capital investment program. Mr. Tienter stated the City has returned to what he characterizes as more typical activity. In 2017 and 2018, the increase in revenues and expenditures were mainly attributable to the 2017 general obligation improvement bond that was issued for the construction of the Fridley Civic Campus. They see that reflected in the City’s revenue figures in 2017 and then the corresponding spend-down in 2018. Mr. Tienter stated for 2020, the City’s total expenditures are just over $48.5 million. That is about $50,000 more than the previous year, about an increase of .3 percent. When it comes to revenues, again, there will be about $42 million for 2020. That is an increase of about $2.4 million or about 6.07 percent. The City’s revenue growth is pacing its expenditures growth. In 2020, they have really been very successful in trying to control costs overall for the organization. Mr. Tienter stated the changes in revenue are mostly attributable to about $1.4 million in increases for special assessments related to deferred street improvement projects. There is about a $700,000 increase in property taxes, and a $600,000 increase in intergovernmental aids which is related to the action from the Legislature providing an increase for that program this past year. Mr. Tienter stated included in Council’s packet is an Attachment A which outlines various changes to the budget since Council adopted its proposed action on September 23, 2019. The list included in the packet is much longer but a few projects, about $32,500 for improvements at the FRIDLEY CITY COUNCIL MEETING OF DECEMBER 23, 2019 PAGE 5 liquor store related to the cash wraps and shelving which has not been replaced in the better part of 30 years. They added a new engineering department vehicle replacement. The City received a very large grant from FEMA to replace the self-contained breathing apparatus for the firefighters. It was about $193,000. With some of that fund balance freed up, they were able to identify some additional capital project needs. Mr. Tienter stated the next three items are consistent with the Council’s discussion about the street capital projects fund and moving some of those monies around so they can see the change in capital signage, traffic signal maintenance, and street sealing. Most of these changes, compared to the proposed budget, are related to what they call, “carry-overs” which are essentially capital projects that are not completed in the year they are budgeted and there is carry-over which has to happen within the next fiscal year. In the last kind of few months, they get a better understanding of what those numbers look like and then staff adjusts the budget accordingly. Essentially the 2019 budget gets revised down, and the 2020 budget gets revised up to make sure all those projects remain on track. There are essentially no increases related to the carry-over; it is just a shift of budget authority from one year to the next. Mr. Tienter stated the property tax levy is the principal funding source for the organization. Based on current expenditures and revenue assumptions the City does have a balanced general fund budget. That is supported by a 5.72 percent increase in that property tax levy. However, there is a corresponding decrease of about 2.5 percent in debt service. Altogether, when factoring in the other components of the property tax levy, it adds up to about a 3.97 percent increase. It is worth noting this is the same amount that was included for the proposed levy so there has been no change between the proposed levy and final levy as presented this evening. In total it nets the organization about another $615,000 for fiscal year 2020. Mr. Tienter presented a slide which the Council has seen many times, but it is an excellent reference to see where the City has come with the property tax levy. They in 2017 a little bit of a jump which is the additional debt service for the Fridley Civic Campus. Over the past 12 years if you include that debt service, the City has averaged about a 4.5 percent increase annually. However, if you exclude it, the City is closer to about 3.4 percent annually. Over time, the City has been fairly successful in controlling costs. Mr. Tienter stated the levy gets spread over with the State, in Minnesota it is called “net tax capacity,” which is essentially the property tax base. They can see commercial and industrial is actually closer to 46 percent and that is significantly higher than what they would see in an average community. Usually that is typically around 30 percent. The City has a very strong commercial/industrial base. The one thing he would note is that lower bracket housing has been increasing by a little less than double the rate of upper bracket housing. They have seen a much higher demand for entry level housing and as a result those prices have appreciated over time. Mr. Tienter stated there is a regular homestead credit refund available for anyone who meets the means test established in law. If you have a median valued home and adjusted income of about $40,000, your estimated refund would be just over $1,400. He said if anyone was interested in this program, staff would be happy to help, but they can only provide assistance. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 23, 2019 PAGE 6 Mr. Tienter stated as to a year-over-year change in the property tax levy, it was 4.64 percent last year, and 3.97 percent this year. The taxes are anticipated to go up about $64 year over year, which is about a 7.4 percent increase. It is worth noting that they are estimating the property tax rate to go down about .97 percent, so most of the increase in the property taxes for fiscal year 2020 ends up being attributable to a change in valuation. Not as much towards the property tax levy. Essentially the levy is not increasing as much as the base is expanding. As a result, if the value of your property actually remains the same and the City levied the same amount of taxes, your property taxes will actually go down about 1 percent. That really does demonstrate how that valuation is what is driving the change in property taxes here. However, generally it costs an average residential home about $5.33 a month. Mr. Tienter stated assuming Council approves the recommended actions tonight, staff will transmit the appropriate information to the County. Staff has to file a series of forms and reports with the State of Minnesota, and then the City will publish a summary budget in the official newspaper. MOTION by Councilmember Eggert to adopt Resolution No.2019-79. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 8. Resolution Adopting a Budget for the Year 2020, a Revised Budget for the Fiscal Year 2019 and the 2020-2024 Capital Investment Program. MOTION by Councilmember Ostwald Adopting Resolution No. 2019-80. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 9. Informal Status Report: There were no informal status reports. ADJOURN: MOTION by Councilmember Ostwald to adjourn. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 7:20 P.M. Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor