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CCM 09/28/2020 CITY COUNCIL MEETING CITY OF FRIDLEY SEPTEMBER 28, 2020 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:04 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember Ostwald Councilmember Tillberry Councilmember Eggert Councilmember Bolkcom OTHERS PRESENT: Wally Wysopal, City Manager Andrew Biggerstaff, City Attorney Daniel Tienter, Director of Finance/City Treasurer Brian Weierke, Director of Public Safety Melissa Moore, Adm. Services Coordinator PROCLAMATIONS: Fire Prevention Week: October 4-10, 2020 Night to Unite: October 6, 2020 APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF CITY COUNCIL MINUTES: 1. City Council Meeting of September 14, 2020. APPROVED. OLD BUSINESS: 2. Second Reading of Ordinance No. 1383 to Amend the City Code of the City of Fridley, Minnesota, by Making a Change in Zoning Districts (Rezoning Request, ZOA #20-01, by Roers Corporation, for the Property Generally Located at 6530 University Avenue) (Ward 3). WAIVED THE READING OF THE ORDINANCE AND ADOPTED ORDINANCE NO. 1383 AND ORDERED PUBLICATION. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 2 NEW BUSINESS: 3. Approve Preliminary Plat Request, PS #20-03, by Roers Companies to Replat the Property Located at 6530 University Avenue N.E. (Ward 3). APPROVED. 4. Adopt Resolution No. 2020 – 56 Directing the Public Safety Department to Enter into an Agreement and Authorizing Execution of Minnesota Department of Public Safety, Office of Traffic Safety, Federal Grant Program Amendment for DWI Officer. ADOPTED RESOLUTION NO. 2020-56. 5. Adopt Resolution No. 2020 – 57 Approving Gifts, Donations and Sponsorships for the City of Fridley. ADOPTED RESOLUTION NO. 2020-57. 6. Adopt City of Fridley Employee Recognition Policy. ADOPTED. 7. Claims: 190202 - 190328 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 members from the audience spoke. ADOPTION OF AGENDA: MOTION by Councilmember Bolkcom to adopt the agenda. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 3 NEW BUSINESS: 8. Adopt Resolution No. 2020 – 54 Approving the Proposed Property Tax Levy for 2020, Collectible in 2021, for the City of Fridley. 9. Adopt Resolution No. 2020 – 55 Approving the Proposed 2021 General Fund Budget for the City of Fridley. Daniel Tienter, Director of Finance/City Treasurer, stated on April 27, the City Council provided advice and guidance to staff through the City’s annual outlooks and objectives review. On June 15 Council and staff discussed the proposed CIP, and then on September 14 the City Council did have a discussion with staff on the proposed 2021 budget, all of the budgeted funds, and the property tax levy. This will be the fourth time essentially the City Council has talked about the budget this year. Mr. Tienter stated this evening the City Council will be asked to adopt the proposed 2021 budget and the property tax levy which needs to be certified to Anoka County by September 30. There is also a resolution to approve the HRA’s property tax levy. Mr. Tienter stated the proposed 2021 budget has several goals and objectives that were discussed. Because of the COVID-19 pandemic, staff did the best they could to stabilize ongoing revenues and expenditures, which has been a challenge. Mr. Tienter stated they strive to maintain structural balance which is a requirement of the City Charter. The City can only adopt a balanced general fund budget. They strive to achieve accountability and transparency which is done through the meetings they have with City Council but also the presentation this evening. They have gone through the process of reformatting and rewriting all of their budget documents, and those are now available on the City’s website if anyone is interested in reviewing them in greater detail. Mr. Tienter stated they also strive to ensure a financially competitive organization, meaning they are mindful of the costs to operate the City of Fridley with respect to property taxpayers and rate payers. Mr. Tienter stated economic contraction is still anticipated for the State and the entire region through 2020. In fact, if they look at the Wells Fargo economic forecast, they are predicting basically no growth in the economy between 2020 and 2021. Because of that, this budget actually assumes they will be in a mild recession through next year. Mr. Tienter stated the Federal Reserve is trying to support the economy as best they can. The State has a projected $2.4 billion budget deficit. They did take the extraordinary measure of having an interim budget projection as a result of COVID-19. They do have essentially a corresponding amount in budget reserves, or a rainy-day fund, but the Governor has signaled there will be likely limited draws on those funds, as they are emergency funds needed for other things. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 4 Mr. Tienter stated there has been some good news out of the State. MMB did release that net general fund statement for the entire State and anticipated revenues for the first two months of the year, actually about $308,000,000 or 15.1 percent higher than they were anticipated in the projection that outlined the $2.4 billion budget deficit. Mr. Tienter stated there are several factors that will cause uncertainty in both the City’s short- term, as in next year, and also its long-term economic forecasts. Of course, the spread of COVID-19 and resulting business survival. Obviously businesses are taxpayers, and they need those folks in the community to do so; and there are some open questions about some of the businesses and how it is they will weather COVID-19 and some of the restrictions that surround it. The City has taken a grant program to support businesses impacted by closures or restrictions as a result of COVID-19. They did recently conclude that grant round and had 14 applicants for 10 spots, so they are going through the process with that. The City is doing its best to help with that question. Mr. Tienter stated as to ongoing federal support for COVID-19, response does remain an open question; however, they do know the House and Senate have been quite a ways apart in trying to craft another relief bill; and it does not look like there is one in the immediate future. They will monitor that of course and provide any advice and insights to the Council as they learn it. Mr. Tienter stated the one thing that gets swallowed up in all of this is there are still ongoing trade disputes that have significant impacts on our economy. Especially here at the City because it does host several international and national corporations as well as several large regional corporations which is something to keep in mind. Therefore, the concern of recession looms large. The City has essentially assumed that because of COVID-19 there will precipitate a mild economic recession as the economy generally in the United States has been at the tail end of the longest economic expansion since they have essentially been keeping those records. Mr. Tienter stated as to what that all means for the City budget? As to the general assumptions, they reallocate current resources, and they use that conservative budget model to better reflect the City’s actuals. For the City Council’s benefit, they use a three-year rolling average. When they look back, they also use three-year trend data when they construct the ultimate projection for the proposed budget for the following year. Mr. Tienter stated they always make sure the budget is consistent with the City Charter with regard to structural balance. There is also a great number of City Council actions, be they the Pavement Management Plan, Active Transportation Plan, and other guiding documents if they have entered into agreements. For example, collective bargaining agreements with the labor groups at the City of Fridley. As a corollary they always make sure this budget supports the complement of full-time equivalence, meaning that it can pay for all of the FTE’s that are authorized as a part of this budget. Mr. Tienter stated the proposed 2021 general fund budget is structurally balanced. They can see a sampling of major budget assumptions by expenditure categories. Two that he would call out to the Council is Health/Dental and Similar Insurance Products. There is a 2.5 percent increase in that area. The City had a 5 percent renewal on its health insurance products, and the FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 5 City Manager has recommended essentially splitting the cost between employer and the employee, so the General Fund budget reflects a 2.5 percent increase based on that recommendation. Mr. Tienter stated additionally he would mention Utility Services. Often the City’s utility service providers do not inform the City of their rate changes until right around or just after the City sets its proposed budget. Staff makes a more generous assumption in that area which is something that can change as part of the final budget. Mr. Tienter said with respect to revenues, there are some negative numbers. Licenses and permits, intergovernmental, charges for services, etc. is indicative of the mild recession the City assumes as part of this budget will occur, so they have adjusted the City’s demand-based services accordingly. There is about a 4.85 percent increase in the overall levy. It is slightly less here, because they do make some assumptions based on the collection rate. Mr. Tienter stated the proposed 2021 budget does not include any adjustments for salary and wage discrepancies between union and non-union staff. However, they do plan as a part of the final budget to address this through the reallocation of internal resources, attempting to maximize the existing value the City is getting from the monies it already has available to support possible wage changes. Mr. Tienter said the City is currently in the process of developing a park system master plan which will reshape the park system for Fridley. They anticipate there will be revenue and expenditure changes with that plan. Since it is pending, the changes are not contemplated as part of this budget. Mr. Tienter stated for 2021, they are assuming a 4.85 percent increase in the overall levy or about $763,000. Because of COVID-19 in the current fiscal year, the City has experienced a decrease in its property tax collection rate. Over the last ten years or so, the average collection rate has been about 99.2 percent. For 2020, the property tax collection rate is actually down to just under 96 percent. Right now, coupled with the estimated delinquent property taxes, the City is assuming a lack of collections in property taxes of just over $576,000. Because of that change and anticipating there will be a similar issue in the next fiscal year, they have made an approximation based on that collection rate. There is an estimated collection rate of just under 98 percent which factors into lost revenue of right around $288,000. Mr. Tienter stated they do know from experience in the great recession they do collect delinquent property taxes in the following year. They tend to trail approximately one, two, or three years, so they have adjusted the delinquent estimate to $100,100. In total, they are anticipating that in terms of property tax revenue loss for next year, the City will experience a loss of about $188,500. Mr. Tienter stated as far as intergovernmental aids are concerned, based on the recent local governmental recertification which happened on August 1, the City will receive approximately $51,000 more in 2021. That is based on a tax bill that was adopted in the previous legislative year. Consistent with Council guidance, all of those monies will be allocated to the various FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 6 capital projects funds. This is also consistent with City policy and is part of the City’s financial management manual. These type of governmental aids and resources, because of their volatile and somewhat unstable nature, should not make up more than 10 percent of the operating budget. Right now, the proposed 2021 budget is consistent with that policy guidance. Mr. Tienter stated it also assumes about a 15 percent reduction in Municipal State Aid for maintenance. They know from the Minnesota Department of Transportation that gas taxes, because of a lack of consumption, are down about 15 percent. They have modeled model that projection as part of the proposed 2021 budget. Mr. Tienter stated as to charges for services, they are anticipating a reduction of about $26,500 or 1.23 percent. This is primarily due to reductions in parks and recreation revenues. It is part of the proposed 2021 budget. They are assuming that those revenues will be off about 40 percent compared to the previous adopted budget for 2020. Some of these assumptions also carry through to other sections of the budget such as the Springbrook Nature Center which offers similar services. Mr. Tienter stated with respect to Local Government Aid, Council has provided its policy direction to insulate the operating budget from what they have essentially considered one-time money or aids from the State. Beginning in 2016, there was a shift from the capital project funds into the general fund. In 2018, Council identified that as being an issue and subsequently moved in the other direction to provide the opportunity to delay projects as opposed to laying off staff or modifying services because the State does not have enough money to provide the same amount of Local Government Aid. Mr. Tienter stated some people may recall or even have lived the experience of the State going through the allotment process and actually reducing certified payments of Local Government Aids to cities. In some cases, some cities lost all of their Local Government Aid allocation and were forced to make some very quick and large changes in their operations. The City is making accommodations for that as part of the proposed 2021 budget. Over the last few years in fact, Council has reallocated about $315,000 in Local Government Aid from the operating budgets into the capital project funds. Mr. Tienter stated as for the last two major categories of revenue, they are essentially holding license and permitting activities at a same or similar level compared to 2020. It appears at this point, the outbreak of COVID-19 has not had a significant impact on redevelopment activities in the City. The Community Development Department is also aware of several large projects currently in some form of development that will be pulling these types of licenses and permits at the end of 2020 or the beginning of 2021. For that reason, they have essentially held these flat. Even being held flat, they are still below their three-year rolling average for revenue, so the City’s trend date would actually suggest they should be higher. However, because redevelopment activities can be difficult to anticipate, they tend to be a little more conservative in this area. Because they know of what is happening in the community with respect to redevelopment and the fact the City is under that rolling average, they have kept it at the 2020 level. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 7 Mr. Tienter stated as to other financing sources, they are anticipating about a 5.1 percent reduction in those revenues. The main reason for the reduction is because of the decreases in donations and gambling taxes. This follows trends they are seeing at this point in time in the 2020 revised budget. The proposed 2021 budget makes no use of the closed bond fund. In fact, that was converted to the community investment fund, and the general fund budget no longer relies on that as a revenue source. They also considered that as one-time money. If that was included in the $105,000 that was last budgeted in 2018, Council has actually reduced closer to $420,000 in one-time money from the operating budget. Mr. Tienter stated as to a breakdown of the general revenue sources, the property tax levy makes up the super majority of the revenues for 2021. Compared to the 2022 budget, they are anticipating about a 3.35 percent increase in revenues or about $601,000, most of which can be attributed to the change in the property tax levy. Mr. Tienter stated all of the revenues are increasing only about .16 percent between the two most recent fiscal years, or about $8,800. Normally they would have much larger growth in the external revenue categories but, because of the anticipated mild recession, they are relying a little bit more on property taxes for the next year. Mr. Tienter stated as to the expenditure budget for personnel services, it makes up about 76 percent of the proposed budget. Those changes he highlighted with regard to health insurance and then also a change in the compensation plan of about 3 percent for an overall increase of about 1.9 percent compared to the previous fiscal year or about $264,000 in change. As to supplies, the City is having a modest decrease of about $5,200 or about 6 percent compared to the previous year. This is consistent with the City Manager’s direction to either reduce or hold those costs flat. Mr. Tienter stated other services and charges make up the bulk of the increase in the expenditure budget, of about $342,000 or 10.5 percent. This is primarily due to a shift in maintenance activities from the street capital project fund. Council may recall that in their discussion about the CIP earlier this year and in the previous fiscal year, there was a concerted effort to reallocate traditional maintenance activities from the capital project funds into the general fund. For the next fiscal year, that would be just over $250,000, and there is a corresponding increase in the property tax levy to accommodate those increased expenditures. Mr. Tienter stated they have been also managing a similar shift from the IT capital project fund where that fund was paying for annual maintenance and licensing agreements for City software. They have been gradually moving those into the general fund so there is another $25,000 to $30,000 shift in those costs. Ultimately, making some of these activities which are traditionally operating expenditures part of the operating budget and being supported by more reliable funding sources. Mr. Tienter stated as to the general fund budget, 48 percent of the monies go to Public Safety. Police alone comprising of about 40 percent of the entire general fund budget followed by Public Works at about 22 percent and then the Finance Department comes in third at 9 percent. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 8 Mr. Tienter stated as to a history of the general fund balance, they will note between 2006 and about 2012 the City was generally flirting with its lower working capital threshold and then a series of financial decisions were made to essentially bolster the general fund balance. Since 2012 onto the current fiscal year and into 2021, they are about $980,000 above the City’s upper limit threshold. Mr. Tienter stated in 2019 the Council made the decision to create a community investment fund as part of the City policy. Anything above this 50 percent threshold would be swept into that fund to be used to support park capital improvement projects and also to finance utility improvements. They did not make a transfer in June of this year as required by policy because of COVID-19. They are anticipating about $370,000 in the use of fund balance to offset some of the property tax revenue losses he just discussed as well as losses in revenue for Parks and Recreation along other areas. Mr. Tienter stated the policy allows the City Manager to essentially hold off on the transfer if there is an emergency, and they are in a declared emergency both at the State level and also the local level. The Council adopted an ordinance to that effect. Therefore, right now they are holding more money in the general fund basically waiting to see how it is they wrap up the fiscal year, how things shape up for next fiscal year, and they may move money accordingly to reflect those changes. Currently, the City has a little more cash in this fund and that is quite important given the financial times right now. The City is in a strong position to weather that. Mr. Tienter stated it is important to mention that at this point in time the table presented does not reflect any of the $2.2 million the City has received from the Coronavirus Relief Fund which was appropriated as part of the CARES Act through the State of Minnesota. Mr. Tienter stated as to property taxes proposed for the upcoming fiscal year, at this point time the City Manager is recommending a 4.85 percent increase in the levy. Mr. Tienter stated the property tax levy supports four different categories or types of funds at this point: the general fund, IT capital projects fund, Springbrook Nature Center fund (which is actually a market-based levy), and then various service funds based on borrowing which Council has authorized in previous fiscal years. Mr. Tienter stated in the general fund, they can see the change between 2020 and 2021 is currently recommended at 6.12 percent or just over $762,000. In total across all the funds, the change is the 4.85 percent that was referenced earlier, for a total change of $780,528. He said the debt service levy funds are a very large portion of the overall levy and they do not change. In fact, they go down slightly compared to the other levy. Because they make up such a large percentage, they tend to pull down the overall change in levy. That is why they see a 6.12 percent on the general fund, but then an overall 4.85 percent. That will be a dynamic that will exist in the property tax levy in the foreseeable future because the greatest portion of this levy is the payback for the bonds for this facility. They are not going to pay those off for a couple decades. Mr. Tienter stated generally when setting the levy, they look at all external revenues. They add up all the expenditures based on the assumptions that have been outlined previously, and they FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 9 come to a number that needs to be supported by some other revenue source. In previous presentations to the Council, they have gone through the exercise of essentially outlining what would happen if they made a negative 3 percent change, no change, 4 percent, 5 percent, and the 6.2 percent he referenced. For example, if Council were to not change the levy at all between the two fiscal years, the City would be required to reduce the general fund budget by just under $600,000. That number is reflective of the cost pressure that they generally see year-over-year in the City’s enterprises. Mr. Tienter stated as they talked about, this year is a little unusual. Normally they budget whatever the Council certifies the levy at, but because of an anticipated reduction in the property tax collection rate, they can see at this point in time their estimated tax revenue is actually about $12.931 million, and the delinquent property taxes are at $100,100. They are essentially levying about $188,501 more than is needed because of the reduction in the collection rate that is being anticipated because of COVID-19, and also because of the lost property tax revenue that they anticipate to be collected in the next fiscal year as a part of delinquent property taxes. They are essentially coming up $188,500 short. Ultimately there is no use of fund balance and, therefore, the budget at this point in time is structurally based on what they anticipate happening with property taxes and consistent with the City Charter requirements stipulating the same. Mr. Tienter stated the net expenditure pressure that exists in the general fund is about $278,000, so overall, if the City were just to respond to that expenditure pressure, the total property tax levy change would have to be about 1.84 percent. As was just outlined in his previous slide, they are anticipating a net revenue loss in property taxes of about $188,500. If Council were to include that as part of the levy, that would require a levy change of about 3.01 percent. Based on previous policy decisions and Council direction about the streets capital project fund transition, that is another $295,000 to support those costs. That is how they arrived at the 6.12 percent on the general fund and then ultimately the 4.85 overall. Mr. Tienter stated this essentially provides a general approximation of where the increased property tax money needs to go based on how the budget has been constructed to date. Mr. Tienter stated that levy gets spread over the City’s net tax capacity which is essentially an approximation of all the value of all of the tax-paying properties in the City of Fridley. As noted before, 46 percent of that property is commercial/industrial which is above the average community. Most communities have 30-35 percent of commercial/industrial property. Fridley is much higher than the typical city. About 36 percent makes up residential homesteads for people who are living in a dwelling that is their primary home. Right now, the average residential homestead value is about $234,000; and the median is just over $222,000. The current MLS actually has Fridley’s average homestead value at about $242,000. He said he spoke with the City Assessor, and it is starting to push closer to $250,000. Mr. Tienter said as between the last two years a residential homestead in the City of Fridley has increased about 15 percent. In fact three years ago, it went up about 8 percent, so 23 percent over the last three years or so. There has been a significant appreciation in the value of residential properties. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 10 Mr. Tienter stated there are a couple homestead credits provided by the Minnesota Department of Revenue for people who are having any challenges, difficulties, or issues with their property taxes. The first is a regular homestead credit refund. In 2019, you had to make below $115,000 as a household. Mr. Tienter stated there is also a special residential homestead credit, and you can essentially make any amount of money. It is for property owners who have had a change in their net property taxes of more than 12 percent or at least $100, compared to the previous year. The one important caveat here, that change cannot be attributed to any improvements the property owner has made. Mr. Tienter said overall, the City has averaged about a 4.57 percent increase over the past 13 years. The single largest increase in 2015 was related to a change in the debt service levy for the Fridley Civic Campus. If you changed that number to the 13-year average, the average increase would be about 3.71 percent annually which is a manageable and stable figure. Mr. Tienter stated they like to take a look at what other communities they traditionally compare themselves with are doing. The average increase is about 4.43 percent. If you were to eliminate Maplewood which is at 0.0, ,the average would actually go to about 4.74 percent. There is a larger survey that was conducted as well of about 27 communities. Based on that average, thrd Fridley ranked about 17 or in about the 63 percentile. Mr. Tienter stated in November, they will discuss the proposed 2021 utility budgets and also the rates with Council. On November 23, Council will be asked to adopt the 2021 public utility rates. In December, they will hold the Truth in Taxation hearing. Part of the process for setting the proposed levy tonight is so Anoka County can produce those truth in taxation reports which st will get mailed to all property owners. On the 21 they will adopt the 2021 budget, the 2021- 2025 CIP, and revised 2021 budget. By the end of the month, they have to certify the adopted 2021 property tax levy to Anoka County. Mr. Tienter stated staff has two recommendations: Adopt Resolution No. 2020-54, approving the property tax levy for 2020 which would be collectible in 2021, and adopt Resolution No. 2020-55 which approves the proposed 2021 general fund budget. Assuming Council adopts these resolutions, staff will transmit the same to Anoka County certifying the levy. These proposed budget documents, along with a longer version of this same presentation, are available under the City financial section on the City’s website. MOTION by Councilmember Bolkcom to adopt Resolution No. 2020 – 54. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Eggert to adopt Resolution No. 2020 – 55. Seconded by Councilmember Ostwald. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 11 UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 10. Adopt Resolution No. 2020 – 53 Consenting to the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, Adopting a 2020 Property Tax Levy, Collectible in 2021. Daniel Tienter, Director of Finance/City Treasurer, said since about 1996 the Housing and Redevelopment Authority (HRA) has levied a property tax to support many of its various activities and programs. Over time, this levy has essentially evolved to provide a stable funding source for the general fund which houses all of the staff costs and some of the professional services that are used to take an initial look at redevelopment opportunities. The levy also supports many of the redevelopment loan programs the City offers, such as the Senior Deferred Loan Program for example and some of the other loan programs that are offered by the HRA. Mr. Tienter stated per Minn. Stat. § 469.033, the property tax levy for the HRA cannot exceed .0185 percent of the estimated market value under its jurisdiction--in this case the City of Fridley. The estimated market value for 2020 is $3,049,186,337. This last year they actually crossed $3 billion in market values. Since the HRA does levy the statutory maximum, that would work out to about $564,099 compared to 2020 or an increase of about $35,936. For the property tax levy to take effect, the HRA has to submit it to the Council who then has to approve that recommendation. At the statutory maximum, a property owner of a residential homestead valued at $200,000 would pay about $37 a year; and a commercial/industrial property valued at $1 million would pay about $185. Mr. Tienter said staff recommends Council adopt Resolution No. 2020-53. MOTION by Councilmember Ostwald to adopt Resolution No. 2020 – 53. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 11. First Reading of Ordinance No. 1384 Adding Chapter 33 to the Fridley City Code Entitled, “Administrative Enforcement of Ordinance Violations”. Melissa Moore, Administrative Services Coordinator, said municipal administrative citations are generally better suited than the judicial system to address City Code and parking violations. They provide flexibility to municipalities and their residents in several ways. They are more efficient by avoiding protracted court proceedings, they are most cost-effective by avoiding court fees and legal counsel fees, and they avoid the formal judicial process for minor violations. Ms. Moore stated typically the formal judicial process is not warranted for unique City Code violations, such as outdoor storage, a City-issued license or permit violation, or a parking citation. The authority to enforce administrative citations falls to licensed peace officers and any person employed by the City who is designated to enforce the City Code. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 12 Ms. Moore said staff engaged in comparative research for like-sized municipalities with similar administrative processes. A penalty of $100 per City Code violation and $35 per parking citation was found to be sufficient to cover staff time for administration. Ms. Moore stated Section 33.05 of this ordinance calls for late fees to be added if a penalty is not paid within 14 business days of a citation being issued. The late fee is $25 per City Code violation per day, and $10 per violation per day for parking citations. The City Council will consider adding these fees to the Fridley City Code, Chapter 11, Fees, as a separate ordinance amendment this evening and may further amend this chapter to include additional penalties at a later date. Ms. Moore stated if a member of staff issues an administrative citation, it will be done in writing. The recipient of a citation has 14 business days to pay the penalty. The written notice will inform the recipient of the process for an administrative hearing if they wish to appeal the citation. The recipient may request an administrative hearing before the hearing examiner within 14 business days of receiving the citation. Ms. Moore stated the fee for an administrative hearing is set at $200 which covers the cost of hiring a hearing examiner as well as staff time to administer the hearing process. The fee is 100 percent refunded if the requesting party prevails and the hearing examiner overturns the City’s citation. If the hearing examiner upholds the City’s citation, the requesting party will not be refunded the $200 and is required to pay the original citation fee. All administrative hearings will take place at City Hall, Monday through Friday, between 8 a.m. and 8 p.m. Ms. Moore stated the hearing examiner will provide written findings of fact within 15 business days of an administrative hearing. Either party may obtain judicial review of the hearing examiner’s decision in district court. Failure to appear at a requested administrative hearing is an admission of the original violation. The requesting party will forfeit the $200 administrative hearing fee and is required to pay the original citation penalty. Failure to pay the original citation penalty or the $200 administrative hearing fee are separate violations. Ms. Moore stated the City Manager, or their designee will contract with a third party to serve as a hearing examiner. The hearing examiner will set dates for all hearings; take testimony from all parties; review all facts and testimonies; keep a record of all proceedings and conclusions; and ultimately affirm, dismiss, or modify the original administrative citation. Ms. Moore said based on the process to date, staff recommends Council approve this first reading. If approved, the City Council would consider a second reading and final adoption at its meeting of October 12, 2020. Councilmember Eggert said with respect to the late fees, Ms. Moore said this was per day; however, as he looked at the ordinance it does not say that. He is looking at page 76, Chapter 11, Fees. Ms. Moore replied, that is something staff can definitely review and add for the second reading. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 13 Councilmember Eggert stated Chapter 11 exists and they are adding the administrative fees. Ms. Moore replied, they will be in the next ordinance. Councilmember Ostwald referred to language stating any person employed by the City as designated by the City Manager. He asked for an example as to who would be doing the enforcement and who is authorized to provide the citations. Ms. Moore replied, she envisions it as Public Safety. There is a parking citation. Any police officer would be designated to do that. Also, with code enforcement violations or rental inspections, those staff as their normal job duties apply would be designated to issue those citations. Councilmember Ostwald referred to the language, funds are disbursed in accordance with Minnesota Statute. He asked where the money would be sent. Mr. Tienter stated the ordinance is written quite broadly and includes what he would call general administrative citations and administrative citations that have statutory authority in Minn. Stat. § 169.999. That distinction is important because any administrative citation fees that are accepted by the City under that statute are capped at $60 for the fee and a certain portion of them have to be remitted to the State. It is his understanding, from his discussions with the Public Safety Director, the City is not planning on issuing any of those citations; but the ordinance does anticipate that as a possibility and makes accommodations as a part of the directions included in the ordinance as to the disposition of those fees. Anything else that is outside of those specific statutory citations would be deposited in the City’s general fund. Councilmember Ostwald referred to page 71, under (E)(5), “All administrative hearings will be recoded”. It should read “recorded”. Also, when they are talking about when they say a violation exists, he asked whether there is any kind of a cap on this because he can see it running away at some point. This may be something that could adversely affect somebody. Andrew Biggerstaff, City Attorney, replied as it is written, there is not a firm cap in the ordinance. Speaking from experience in other communities, what would normally happen is you get to a point where they realize this tool is not going to be effective. They would then start looking at what other options would be out there. One thing to keep in mind when thinking about administrative citations, is they are really on par with criminal citations and civil court options that would be available to the City. In a situation where the City had issued an administrative citation, and the party had not paid and refused to pay, and the City was sort of racking up these late fees, it would get to a point where staff would look at it and say, okay, this is not working. We need to look at a more aggressive option for this particular situation. Attorney Biggerstaff stated there are some examples they could look at from some other communities where, for instance, $2,000 is cited in one city. There are some firm caps and if that is something the Council wanted to do, they could look at definitely adding that; but there is nothing in there currently. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 14 MOTION by Councilmember Tillberry to waive the reading of the ordinance and adopt Ordinance No. 1384 on first reading with the corrections and clarifications made before the second reading. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 12. First Reading of Ordinance No. 1382 Amending the Fridley City Code, Chapter 11, Fees, Adding Administrative Citation Fees, Seizure Fees for Motor Vehicles and Tobacco Product Shop License Fees. Melissa Moore, Administrative Services Coordinator, stated Chapter 7, Section 2, of the Fridley City Charter empowers the City Council to set fees and other charges to recoup the costs associated with certain City activities. The proposed fees set forth in this ordinance cover the costs of varying programs’ administration consistent with Chapter 7 of the City Charter. Ms. Moore said Council has considered or adopted City Code amendments requiring an update to Chapter 11 of the Fridley City Code. Before them this evening is a proposal to consider setting general City Code violations at $100 per violation with a $25 late fee. A proposed fee of $35 per parking violation with a $10 late fee is also included. Ms. Moore stated all administrative citations must be paid or challenged within 14 business days to avoid the late fee. To challenge an administrative citation the recipient must apply for an administrative hearing and pay a $200 administrative hearing fee. Comparative municipal research indicates the fee of $200 adequately covers the cost to hire a hearing examiner along with required staff hours to administer the hearing process. Ms. Moore stated tobacco products shop licenses were approved through Ordinance No. 1381 on September 14, 2020. The proposed fee in this ordinance includes a $100 annual fee for licensed tobacco shops with an additional yearly fee of $100 for investigations related to license applications and renewals. Comparative municipal research and internal cost estimates indicate these fees accurately reflect the time required to administer this license. The City will begin charging these fees upon application for this license type in April 2021. Ms. Moore stated staff asks Council to consider adding vehicle seizure fees to the Fridley City Code. Minnesota Statute Section 169A.63 allows cities to charge fees related to vehicle seizures. The proposed fee in this ordinance includes a $200 per vehicle seizure fee and a $400 per vehicle seizure fee for vehicle owners or lienholders who do not repossess their own vehicles. Generally, these fees cover the cost for the City to seize, maintain, secure, and dispose of a given vehicle. Ms. Moore stated based on the process to date, staff recommends Council approve this ordinance. Assuming the City Council approves this first reading, Council would consider a second reading and adoption at its meeting on October 12, 2020. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 15 Mayor Lund stated they have one action item on their agenda yet on page 80 there is a five-page Chapter 11 with all of the fees and then there is a summary. Is one going to handle both? Mr. Tienter replied one motion would be in order just to adopt the ordinance as is. The City Chapter requires the Council consider ordinance amendments by section or subsection and section 11.11 is its own section, and the entire table is included in the section. They have included the table, added the appropriate fees and, because they have the requirement of publishing the ordinance, they are asking the Council to include in the ordinance a summary of the ordinance to be published to meet the publication requirement. Ultimately one motion adopting the ordinance itself for its first reading would be sufficient to accomplish that. Councilmember Bolkcom stated going back to the administrative citation or penalty on page 76, those are $135; but then the citation or penalty late fee is only a one-time fee of $25 and $10? Ms. Moore replied, no, those would be per day fees. Councilmember Bolkcom asked if she was someone just looking at how this is laid out, it is not in the ordinance right now. Mr. Tienter replied on the question regarding the late fees, they are not necessarily designed to be a late fee per day. Ultimately, it is a late fee for each administrative citation that is not paid within 14 days; and each administrative citation can be issued every day that the outstanding issue remains an issue. Councilmember Bolkcom asked if a car is parked illegally, they could get a ticket every day. Mr. Tienter replied, yes, each individual day would be treated as its own separate violation of the ordinance and then for every violation of the ordinance, the party involved would have to pay that fee within 14 business days. If they do not pay the fee, they receive a late charge which is a one-time charge. It is not a daily charge. Councilmember Bolkcom asked if she left her car parked, she gets an administrative citation, she does not move her car the next day and it is another $100, then finally she moves it after five days so now she is at $500. Then if she does not pay it after she moves it, she gets a one-time late fee or a late fee for every day she did not pay it? Mr. Tienter replied, she would get a late fee after 14 days if she did not pay the first one, the second one 14 days later, the third one 14 days later. Each one would have its own late charge. Councilmember Bolkcom asked but if she did move her car and she had that $500 because it is five days, but she pays the $500, she would get only one late fee if she did not pay it within 14 days. Mr. Tienter replied the third one, 14 days later, each one would have its own late charge. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 16 Councilmember Bolkcom asked but if she did move her car, and she had that $500 because it is five days, and then she pays the $500 she only gets one late fee because she did not pay it within 14 days Mr. Tienter replied that is a visionary scenario where you have all five days. Penalty No. 1 was due 14 days. You show up on Day 15 to pay all of them at the same time, you get a late fee on the one outstanding one that was late. Mr. Tienter stated also as to Councilmember Ostwald’s question and to add to the City Attorney’s response, if they did get into that situation he would also imagine the City would explore towing the vehicle as opposed to issuing citations day after day after day. Brian Weierke, Director of Public Safety, stated they do have the abandoned vehicle law where they would tow after 48 hours. Councilmember Bolkcom referred to page 81, under Seizure Fee for Motor Vehicles, and asked if they seize her car, she gets the $200 assessment, and then she gets a fee of $200. What causes the $400 fee? Councilmember Eggert replied, if she does not repossess it. Director Weierke stated the reason they did that is because it is a lot more staff time and work on the City’s part if you do not come in and get your vehicle back. The City does have some companies who are doing that at this point. Wally Wysopal, City Manager, stated perhaps members of the staff could discern between the fee under Code Section 33, $100 for a violation in general. What would general be and what would parking be? Ms. Moore replied, a general violation would be any City Code violation other than parking. Councilmember Bolkcom stated as to outdoor storage, say she does not pay the $100 fee. Is it every day she does not take care of it does she get another ticket? Ms. Moore replied, yes. Mr. Tienter stated that would be correct. Once a determination was made that a property was in violation either of a City Code or say a special use permit, they have exceeded the areas allowed for outdoor storage, that would be a situation where administrative citations could attach. However, at this point in time, the administrative citation ordinance at this point is being contemplated for parking violations. The ordinance has been written broadly to anticipate the City moving into other areas related to other violations of the City Code. Parking is the main consideration at this point based on direction and guidance Council has provided in the past related to some of the challenges related to on-street parking, particularly, during the winter months when the City’s winter parking ordinance is in effect. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 17 Councilmember Bolkcom stated going back to the outdoor storage fee, the City does not have the capability of doing that? Is that correct? If she has outdoor storage that does not belong out there, she is not going to get a $100 ticket right now? Mr. Tienter replied, that is correct. There is no administrative citation fee or other such relief other than that which already exists in the specific sections of Code that contain outdoor storage which as they know, based on the Council’s previous actions, are a little more involved and require a longer process. The ultimate idea behind these administrative citations is you can provide a little bit more of a nudge to property owners before having to go through a more protracted process that is outlined in the Code. The administrative citation ordinance itself explicitly states that administrative citation can be used in concert with, or in lieu of, other reliefs contemplated by the Code. Mr. Tienter stated and again, reaching back to the City Attorney’s example, where they may get into multiple days of something happening, it does not prevent the City from then perhaps ending the administrative citation process and moving into the more protracted reviews by the Council. Declaring something a hazardous building is a good example of where the City could say we are done with the administrative citation process. We are going to move into some of the other civil remedies the City has available in law and in the ordinance. Councilmember Eggert stated the neighborhood preservation efforts or the public nuisances are a little bit more complicated, but he understood this the first step in providing an umbrella format and as was said, working into other areas to pull it in as they decipher it. He strongly urges that the area of public nuisance properties, the issues that they have seen, be worked on soon. Mr. Wysopal stated when Council initially asked staff to get into administrative citations, it was for addressing the parking issue and to try and make it administrative relief. As they move forward on that, it becomes a little bit more complicated in terms of what the State law requires and a little bit more delicate surgery in putting that together. The City Council was giving staff direction saying, yes, they want to expand into areas like the Fire Code and Code Enforcement, yards, and that type of thing. Rather than going and building the ordinance to just address parking, they put it together so they can address all those other things. Mr. Wysopal stated they are not going to be going forward and administering via administrative citation for Code and for Fire until they are prepared to do that at a staff level and then notify the Council of that change. As they use the reference, “an umbrella,” yes, it the base program. It allows the City to do everything it wants to do once they get those other procedures into place. The parking is certainly the easiest. It just did not make sense to do just parking and then have to keep coming back and building it. They built the whole thing, and now they need to get those other processes into place. Attorney Biggerstaff replied that is a good summary. As to one other point that came up about the idea of multi-day penalties or fines, in a number of areas in the Code they already have those provisions. The Zoning Code is a good example for each day a violation exists is a new criminal offense. If the City wanted to, it could certainly prosecute a multi-month Zoning Code violation with 90 different criminal citations; however, for obvious reasons that does not often work very FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 18 well. As he said earlier, it is sort of this continuum of enforcement options that would be available to the City when they look at expanding into new areas and dealing with issues that may come up in the short and long term future. Councilmember Eggert stated he is looking at the Schedule of Fees and he understands this is something that has been out there for quite a while. They do need to look at these fees. For example, there is a false alarm fee of $50. That has been out there for more than 30 years. Is that appropriate? Out of curiosity, for Christmas tree lots, it is a $200 fee plus a $100 deposit. He asked what the $100 deposit was for. Councilmember Bolkcom replied, for trees and any other garbage they leave. Ms. Moore replied, she did not know the answer to that question. She will look into that with their Community Development Department and report back. She said a review of all fees is on their radar and will be part of the recodification process and initiative they want to start tackling. Councilmember Bolkcom stated so basically tonight they are amending it to add the administrative fees, citation fees for motor vehicles, and tobacco product shop fees. She is a little concerned when she hears she is approving an ordinance when they are going to add other things into it. How is someone going to find out now this is different in her backyard because she left her wheelbarrow out there for days or she has an old rusty lawnmower that her neighbors are tired of looking at? She is a little concerned they are saying, well, we are going to change this, and but we are going to add this, because we have this new ordinance going on. She is all for doing some of this. Director Weierke said right now, they are only focusing on parking. When they start working on the Fire Code, for example, they will come back to Council and discuss the Fire Code. Right now, they are just focused on parking because Winter Parking will go into effect on November 1. They are prepared to start the administrative tickets for parking on November 1. Mr. Tienter stated also in his discussions with Public Safety Director Weierke, as they traditionally do with winter parking, individual vehicle owners, for example, will receive warnings outlining the ordinance, the prohibition on parking during the winter months, and also including information about what the penalties could be if they continue to park their vehicle in violation of the ordinance which would include an administrative citation. There will be an opportunity, at least in this first thrust of the enforcement of administrative citations, to notify those parties who would be affected by it before they end up having to face any of those citations. He would imagine a similar process would unfold if they were to expand this effort to other sections of the Code. Councilmember Bolkcom stated she hopes they go really slow on this, and that people are well aware of what is going on. Mr. Tienter stated as the City expands administrative citations into other areas, it is possible that individual fees could be added to Chapter 11, specific to those types of violations. When they move into something like the Fire Code, they may decide there is an appropriate fee or fine that FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 28, 2020 PAGE 19 is specific to Fire Code, etc. Those are all required to be adopted by ordinance. If they were to change those fees and add specific fees, those would have to be presented through the two- reading process at the City Council. Councilmember Ostwald asked under Seizure Fees, what are the circumstances they seize vehicles. Director Weierke replied, a lot of the situations where they are allowed to seize vehicles are things that are related to impaired driving, drinking and driving, narcotics involved, fleeing of a police officer, other serious felonies. They do seize a number of vehicles throughout the year. Councilmember Bolkcom stated but then, too, the City has to make sure the vehicles are secure, etc. so there is a big cost of having them sit there, too. Director Weierke stated, yes, and there is a lot of staff time, emptying the cars, inventorying them, getting them into the storage facility, getting them ready for auction, the mechanics are involved, the administrative sergeant is involved, and getting titles transferred. It is an important piece to take the tool away from the criminal to help keep us safe. MOTION by Councilmember Ostwald to waive the reading and adopt Ordinance No. 1382 on first reading. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 13. Informal Status Reports. There were no informal status reports. ADJOURN: MOTION by Councilmember Ostwald, seconded by Councilmember Bolkcom, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 8:35 P.M. Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor