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CHM 11/24/2003 - 00027149CITY OF FRIDLEY CHARTER COMMISSION MEETING November 24, 2003 CALL TO ORDER: Chairperson Findell called the Charter Commission meeting to order at 7:05 p.m. ROLL CALL: Members Present: Don Findell, Char Fitzpatrick, Anita Gerrity, Craig Gordon, Harry Heck, Bill Holm, Nancy Jorgenson, Cindy Soule, Francis Van Dan, Members Absent: Janet Johnson, Deborah Monden Others Present: Deb Skogen, City Clerk/Staff Liaison Rick Pribyl, Finance Director 1. APPROVAL OF AGENDA Commissioner Holm requested that his draft motion amending the charter be placed under item 3 for discussion MOTION by Commissioner Gordon seconded by Commissioner Jorgenson to approve the agenda as amended. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON FINDELL DECLARED THE MOTION CARRIED UNANIMOUSLY. APPROVAL OF THE APRIL 29, 2003 AND JULY 24, 2003, CHARTER COMMISSION MINUTES: Chairperson Findell requested that the July 24th minutes be amended to reflect the change from "pest" to "to be pass through" on page 2 of the minutes. MOTION by Commissioner Gordon and seconded by Commissioner Jorgenson to approve the April 29 and July 24, 2003, Charter Commission Minutes as amended. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON FINDELL DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. ADMINISTRATIVE MATTERS A. Commissioner Gordon moved and Commissioner Jorgenson seconded a motion receiving applications for the Charter Commission from Daniel Garcia and Peter Borman and recommending their appointment to the Chief Judge of the District Court. Commissioner Gordon recommended sending a letter to Garcia and Borman notifying them that their applications have been forwarded to the Chief Judge and invited them to attend the few neat Charter Commission meetings until their appointment is ordered by the court. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON FINDELL DECLARED THE MOTION CARRIED UNANIMOUSLY. Adopted 1 -26 -2004 CHARTER COMMISSION MEETING OF NOVEMBER 24, 2003 PAGE 2 B. Commissioner Gordon moved and Commissioner Jorgenson seconded a motion receiving and accepting the resignations of Commissioners Suzanne and Dale Warren. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON FINDELL DECLARED THE MOTION CARRIED UNANIMOUSLY. A letter and certificates will be mailed to the Warrens thanking and recognizing them for their service on the Charter Commission. C. Commissioner Holm signed the Acceptance of Appointment to the Charter Commission to forward to the Chief Judge. D. The meeting dates for the year 2004 were selected: Jan 26, Feb 23, Mar 22, Apr 26, May 24, Sep 27, Oct 25, and Nov 22. 3. DISCUSSION OF HOLM DRAFT AMENDMENT Commissioner Van Dan MOVED and Commissioner Soule seconded a motion receiving Commissioner Holm's draft charter amended dated September 22, 2003. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON FINDELL DECLARED THE MOTION CARRIED UNANIMOUSLY. Commissioner Holm said after reading the minutes of the July 24, 2003, special meeting, he had an interest in how the charter could be amended to allow enough revenue to support the utility fees. According to the minutes of the July 24 meeting, Mr. Werner said the petition committee had not intended to include pass - through type services, that they only wanted to put a little restraint on the city council. Given this fact, Commissioner Holm felt it was important that the Charter provide the City Council with some flexibility to cover water and sewer increases to help get the reserve funds back to a reasonable level, if the reserve funds were being spent down. Commissioner Holm also noted that after the electorate supported the petition, there were some nuisance factors that needed to be addressed. Most of these nuisances and undesirable consequences that were not intended by the petitioners were resolved by a work group that was put together by then -Mayor Nancy Jorgenson. Commissioner Holm recalled that there was a discussion about utility fees in the work group discussions, with most work group members wanting to exclude water and sewer fees because they were truly pass - through fees. However, because a minority of one of the petition group members wanted to include utilities, a change to exclude water and sewer fees was not made. Commissioner Holm said that, based on the city's current financial condition, the charter should be amended. However, before the Charter Commission takes action, he believed it would be helpful for the Commission to hold an open forum for Fridley residents so as to present the proposed changes and ask citizens for their input. He suggested a good time to hold the forum would be early February with a result by the March meeting. Commissioner Jorgenson said this proposed Charter amendment was looking at undoing what the voters did. She said this should be up to the City Council to take it to the voters and she felt uncomfortable trying to circumvent what the voters did in approving the Charter Amendment in the November, 2000 election. Commissioner Gordon wondered if up to 9% increase was giving too much leeway back to the council if, for example, all that was needed was a 1% increase. Commissioner Holm replied he believed the Council can only raise rates as much as they needed in order to fully recover its costs. Mr. Pribyl, Finance Director, said that the city needed to remove Radium as a result of a federal mandate and replace the Marion Hill stand pipe which will cost the city $1,100,000. In addition, he said the city had consistently higher water treatment requirements in comparison to other cities. Adopted 1 -26 -2004 CHARTER COMMISSION MEETING OF NOVEMBER 24, 2003 PAGE 3 Commissioner Gordon wondered who would set the dollar amount in the amendment and if it would remain a fixed number. Commissioner Holm said the draft amendment could be changed to a percentage if that seemed to be more appropriate wording for the Charter. Commissioner Jorgenson felt there would be significant reserve funds to do bonding if needed, even if the city did the two projects. She thought there was $2,493,586 in cash and cash equivalents in the fund and that $700,000 was needed for improvements and felt there were sufficient revenues. Commissioner Jorgenson said the sewer fund did not refund money when the MCES made a mistake 3 or 4 years ago and her reading of the budget appeared to show the reserves would begin to build up again next year. Commissioner Gordon wondered if a percentage was not necessarily a reasonable value. Commissioner Heck said he remembered the city manager saying revenue was dependent upon whether it was a drought year or a wet year. Commissioner Holm said that utility fees are a significant dollar amount in the city. Mr. Pribyl stated water sales were $1.5 million, Storm water was $342,000, sanitary sewer was $3 million and that MCES fees were $2 million. Commissioner Holm said that if the water and sewer costs continued to rise at a rate greater than inflation and the city was not able to increase fees, the largest utility users would receive the greatest benefit. While all users of these services would be indirectly subsidized by the City, the largest users — typically the biggest commercial and industrial users, would receive the largest benefit. The City currently has some reserves in the water and sewer accounts and such a subsidy may not be a problem in the short term. However, if the subsidy continues for any length of time, he believed it could eventually affect the ability of the City to provide quality essential services such as those provided by the police and fire departments. Commissioner Jorgenson said that water and sewer funds were separate and that the general fund did not subsidize these funds. Commissioner Jorgenson said the city council should have to go to the voters to request utility fees be increased. If the voters didn't like what the city council did, then the voters could elect new members. The city should communicate to its citizens that it cannot pay for the services. This year the city council had an opportunity to ask the voters for an increase in water rates through an election in November and they chose not to. Commissioner Fitzpatrick asked what would happen if they did go to the voters and the voters turned it down. Commissioner Jorgenson said then the city council and the city charter would have to work together to change it. Commissioner Holm suggested the Charter Commission should put a proposed amendment concerning these fees before the city council. Some of the council members are facing re- election this coming November. If the council approves a charter change and the voters don't think they should have, the voters would have the opportunity to vote these members out of office. Commissioner Holm believed the issue of water and sewer fees was too detailed to be placed on the ballot as an issue for the general electorate. Chairperson Findell felt the general public did not want to be micro - managing the city. After reading all of the minutes of the work group, he felt leaving the utility fees in was an unintended consequence of the amendment and that it tied the hands of the city council too much. Commissioner Jorgenson said that although the group worked together to amend the language, there was a great deal of mistrust by the petition committee who felt the city council would move forward with franchise fees again. Adopted 1 -26 -2004 CHARTER COMMISSION MEETING OF NOVEMBER 24, 2003 PAGE 4 Chairperson Findell said that the utility fees were charges for these specific services, not to raise money for some other service and he wondered if they understood that. Commissioner Holm said that Mr. Eisenzimmer from the petition group was the only person who objected to removing utility fees at the meetings held in 2001 to resolve nuisance issues and unintended consequences. Had he not been at the meeting, the issue of water and sewer fees would have been resolved. Chairperson Findell felt that the Commission needed to give the city more latitude to manage its funds. He did not think the wording should refer to a specific dollar amount or percentage, but that there should be wording about managing costs. Commissioner Holm said that had some merit, but wondered, if by doing so, whether the city would let the reserve funds grow beyond what is necessary. Mr. Pribyl said one of the problems of talking about reserve funds was people tended to lump all the sums together and assume we have that much cash on hand. He said the city has a number of different funds, i.e., general fund, enterprise funds, debt service funds, all having different functions. The enterprise funds account for a lot of the infrastructure of the city. He said trying to associate cash and cash equivalents equal to an amount of accumulated depreciation the city would need to have to replace everything would be $40 to $50 million. Mr. Pribyl said those historical costs are nowhere near the replacement costs or the amount of cash on December 31, 2002. He further said, for instance, the water fund shows $2,278,000 with accumulated depreciation of $8,400,000. He said the bond issue they were working on had enough to fund the two projects discussed, but nowhere near what is needed. $2,200,000 funds are phenomenal, but we have a huge infrastructure. Repairs for emergency repairs are not included in the budget. Commissioner Holm agreed the infrastructure needed to be replaced, but did not think it needed to be replaced all at once. Mr. Pribyl agreed, but said the infrastructure did need to be replaced over time. He said it was good business sense to put some amount of cash in accumulated depreciation. Commissioner Holm felt this was the type of input and discussion the Charter Commission should have before making a decision. Chairperson Findell was concerned about adopting a specific dollar amount and Commissioner Gordon wondered about a percentage. Commissioner Gordon wondered what would be appropriate and asked Mr. Pribyl if he could provide some type of graph for each scenario (dollar amount or percentage) with the anticipated figures of the future. Commissioner Jorgenson reviewed information on the outstanding bonds of 91, 92, 94, 96 and 98 for water saying the amount for 2001 was $1,918,478 and that there was $9,000,000 in administrative costs. She said her personal preference would be to see the wording "utility charges" remain in Section 7.02.3.A. and amend Section 702.3.13. by naming the three city utility fees: water, sanitary sewer and storm water. Commissioner Holm said that would allow city management to manage the reserve funds or enterprise funds as they deemed appropriate. Commissioner Jorgenson said her experience was that the city never aggressively priced its utility fees, that they can only charge to recover for its costs and projects. She said the restrictions against gas and electric franchise fees should remain. In order for the city to have franchise fees, the city council would still have to adopt a new ordinance setting the fees. Adopted 1 -26 -2004 CHARTER COMMISSION MEETING OF NOVEMBER 24, 2003 PAGE 5 Commissioner Jorgenson said it would be difficult for the Charter Commission to determine the amount of money they would need to set in reserve fund. She knew there were major changes that would be coming to the Commons wells and also agreed the City's charter should not micro- manage. Chairperson Findell reviewed the second to last sentence in Section 702.3.B. stating that this section only allowed the city to charge based on the actual cost of the service being provided and felt that this protected the citizens. Commissioner Soule said this section would also allow the city to charge for the replacement of the infrastructure as part of the service. Commissioner Holm said he had no objection to simplifying the draft amendment and that it was good to have input from the former mayor with her experience. He would still prefer to proceed with some type of public forum to get input from the public. Commissioner Fitzpatrick recommended contacting the Chair of the League of Women Voters to help in the process as they would be an impartial body and to also notify the Chamber of Commerce. Commissioner Jorgenson said there was information and documentation that could be made available regarding current and past rates. Commissioner Holm said the Charter Commission had more information than the general public and that they could submit it to the public to see what the response would be and whether or not to move forward. Commissioner Holm MOVED and Commissioner Jorgenson seconded a motion removing the words "utility charges and recycling fees" in Section 702.3.A. and adding the words "water, sanitary sewer, storm water and recycling" to Section 702.3.B. Commissioner Heck wondered why recycling fees would be included. Commissioner Jorgenson said that recycling was based on the market and that an RFP is provided every other year to negotiate a recycling contract. She said the city did not control the cost and that they too are pass - through charges. Commissioner Fitzpatrick felt the electorate was not opposed to paying for the costs of the utility services, they were opposed to the franchise fees which they felt were hidden taxes. Commissioner Gordon wondered what the cost incurred and expended was for recycling fees. Mr. Pribyl said the city subsidized the recycling program from the general fund by about $70,000 to $80,000. He said recycling did not have the same magnitude of costs as water and sewer had. Commissioner Heck said he felt uncomfortable saying other people were not suitable to make a decision because he was just a citizen. Commissioner Jorgenson said that the majority of the electorate was not as educated about the city as commissioners were. Chairperson Findell said that until he became part of the Charter Commission he had no knowledge of how the city worked nor was he even interested. He did not believe that the general public wanted to make those decisions other than the people who chose to educate themselves. Commissioner Gordon felt if they were given the information, they could make the decision. Commissioner Jorgenson said the city could hopefully help educate people about the forum through the use of the city newsletter, utility billing, web and cable. She said the city could not take a stance, but could educate the voters. Adopted 1 -26 -2004 CHARTER COMMISSION MEETING OF NOVEMBER 24, 2003 PAGE 6 Commissioner Gordon wondered if he could have a raise of hands to get some kind of consensus about recycling. Commissioner Holm withdrew his motion. Commissioner Holm MOVED and Commissioner Gordon seconded a motion to proceed on this issue to hold a public forum on the merits of a proposal to remove utility charges and recycling fees from Section 7.02.3.a., and replace them with water, sanitary sewer, storm water and recycling for future consideration of a possible charter amendment by this Charter Commission. Commissioner Van Dan said that if recycling was based on a volume dependent charge, it would be a fee and not a charge. A fee is a flat, set amount. Commissioner Jorgenson recommended leaving in the words utility charges to reflect the franchise fees. UPON A VOICE VOTE BEING TAKEN, CHAIRPERSON FINDELL DECLARED THE VOTE UNANIMOUS AND THE MOTION CARRIED. Commissioner Gordon moved to adjourn the meeting. The motion failed due to the lack of a second. Commissioner Van Dan MOVED and Commissioner Jorgenson seconded a motion assigning the authority to Chairperson Findell to work with commission members at his disposal to set up a forum for February. Commissioner Fitzpatrick again suggested working with the League of Women Voters. UPON A VOICE VOTE BEING TAKEN, CHAIRPERSON FINDELL DECLARED THE VOTE UNANIMOUS AND THE MOTION CARRIED. It was suggested that an article be placed in the city newsletter if there was time. Commissioner Jorgenson MOVED and Commissioner Heck seconded a motion to receive the summary prepared by Commissioner Jorgenson pertaining to utility rates. UPON A VOICE VOTE BEING TAKEN, CHAIRPERSON FINDELL DECLARED THE VOTE UNANIMOUS AND THE MOTION CARRIED. ADJOURNMENT: MOTION by Commissioner Gordon seconded by Commissioner Holm to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON FINDELL DECLARED THE MOTION CARRIED AND THE MEETING WAS ADJOURNED AT 8:35 P.M. Respectfully submitted, "aA Debra A. Skogen, City Clerk/Staff Liaison Deborah Monden, Secretary Adopted 1 -26 -2004