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CHM 04/23/2007 - 29968CITY OF FRIDLEY CHARTER COMMISSION MEETING APRIL 23, 2007 CALL TO ORDER: Vice Chairperson Borman called the Charter Commission meeting to order at 7:02 p.m. ROLL CALL: Members Present: Peter Borman, Gary Braam, Bill Holm, Mary Kirkwood, Ted Kranz, Kathleen Linder, Leslie Plummer, Pam Reynolds, Noel Ryan, Lois Scholzen, and Cindy Soule Members Absent: Don Findell, Craig Gordon, Carol Hoiby and Nancy Jorgenson Others Present: Deb Skogen, City Clerk/Staff Liaison Richard D. Pribyl, Finance Director APPROVAL OF AGENDA: Ms. Skogen requested that an ordinance amending the Fridley Charter be placed on the agenda. Commissioner Braam MOVED and Commissioner Kranz seconded a motion to approve the agenda. UPON A VOICE VOTE, ALL VOTING AYE, VICE CHAIRPERSON BORMAN DECLARED THE MOTION CARRIED UNANIMOUSLY. APPROVAL OF MARCH 26, 2007, CHARTER COMMISSION MINUTES: Commissioner Holm MOVED and Commissioner Braam seconded a motion to approve the March 26, 2007, Charter Commission Minutes. UPON A VOICE VOTE, ALL VOTING AYE, VICE CHAIRPERSON BORMAN DECLARED THE MOTION CARRIED UNANIMOUSLY. 1. ADMINISTRATIVE MATTERS A. Election of 2007 -08 Officers Vice Chairperson Borman reviewed the Nominating Committee Report and opened the floor for further nominations. Seeing no nominations, Commissioner Holm MOVED and Commission Kirkwood seconded a motion to close the nominations. UPON A VOICE VOTE, ALL VOTING AYE, VICE CHAIRPERSON BORMAN DECLARED THE MOTION CARRIED UNANIMOUSLY. Adopted May 21, 2007 CHARTER COMMISSION MEETING OF APRIL 23, 2007 PAGE 2 Commissioner Kranz MOVED and Commissioner Reynolds seconded a motion to elect the uncontested ballot of Peter Borman, Chair; Cindy Soule, Vice Chair; and Carol Hoiby, Secretary as recommended by the Nominating Committee. UPON A VOICE VOTE, ALL VOTING AYE, VICE CHAIRPERSON BORMAN DECLARED THE MOTION CARRIED UNANIMOUSLY. B. Discussion of Ordinance Proposing Charter Amendment to Chapter 7 Rick Pribyl, Finance Director, updated the Charter Commission on the city's search of the legality of utility fees. The City Council forwarded a letter, resolution and memorandum from the City's Bond Counsel to the Minnesota Attorney General (AG) in February asking for an opinion as to the question of legality of the charter's restriction on utility fees. The City received a letter from the AG stating they would not give an opinion, nor would it be binding. The memo from Briggs & Morgan which states state law supersedes the Charter language and that the charter cannot restrict the city from charging residents for the services they provide at the actual cost to provide the services. The city cannot bond or issue debt when it is losing money; instance the 2008 project to repair the water tower on Highway 65. If the water tower project was done in 2008, the water fund would have a net loss of ($153,533) and be in debt by ($7,249) and was very critical at this time. The sewer fund shows a net loss of ($487,961) for 2008 with a cash balance of $2,432,374 at the end of 2008. The storm water fund usually transfers $100,000 to street projects, but it has been decided to end this annual transfer. The storm water fund shows a net income of $94,992 for 2008 with cash reserves of $816,558 at the end of 2008. The City Engineer will recommend not doing the water tower project so the water fund does not have that loss. Commissioner Soule felt a definition of utility charges should be in the charter stating it is the cost to provide the services. Mr. Pribyl said a small group of residents wanted to include the water, sewer and storm water as utilities in the changes in the 2001 amendment, which was approved by the Charter commission and the City Council. Mr. Pribyl said the Water Enterprise Fund was critical at this time. Staff met with the City Council to discuss the AG opinion and to get direction from the City Council. The Council would like to try to amend the charter by receiving a recommendation of an amendment by ordinance from the Charter Commission. Commissioner Reynolds asked what the cost of the water tower project was. Mr. Pribyl said it was about $1,200,000; there was internal repair, as well as the external cosmetic repairs needed. A picture was circulated showing the external state of the water tower. Mr. Pribyl said the City Council felt the citizens were more informed at this time and it was time to make the hard decisions to do what was in the best interest of the city. He said the water rates needed to be raised from $1.26 to $1.30 which would equate to about $2.88 per year for the average user. This would allow the city to bond for the water tower project and the average user would see an approximate additional $1 a year for debt service. He said he had worked as the Finance Director for over 30 years and felt there was no history for citizens to distrust the City and the City had always only billed for the services it provided, sometimes not raising the rates when they should. Adopted May 21, 2007 CHARTER COMMISSION MEETING OF APRIL 23, 2007 PAGE 3 Commissioner Kranz asked if the next renovation would be in about 10 or 15 years and Mr. Pribyl said yes. Commissioner Kranz wondered if the small increase was a break -even, would the city be in a similar place in 15 years needing more money if they didn't set any aside. Mr. Pribyl agreed that was a possibility. Ms. Skogen reviewed the timeline of the required steps in amending the charter if the Commission wanted to recommend the amendment by ordinance the City Attorney had drafted. Vice Chairperson Borman said he did not recall much opposition to the rate increase and didn't think there would be much opposition to this amendment. Commissioner Braam asked for the results of the previous three elections. Mr. Pribyl said the 2006 rate increase received 48 %; the 2005 City Council initiated question received 39 %; and the 2004 Charter Commission initiated question, which followed by a referendum, received 38 %. 51% of those voting in the election was required to pass the questions. Commissioner Holm said if people thought the City had too much power they could vote no. He wondered if there was any way to move the timeline up. Ms. Skogen said rather than waiting for May 21St, they could take action on it this evening. Commissioner Soule felt they would not be making any substantial changes other than turning over the financial control back to the City Council. She said it appeared state law superseded the charter for utility charges and that the City could not charge an exorbitant fee for the service. She wondered if they should put the state language into the Charter. Commissioner Holm felt if it was defined by state law and didn't need to be included in the Charter. Commissioner Braam wondered how much money should be set aside in reserve. Mr. Pribyl felt the City needed to set aside at least an amount equal to the depreciation. He said the Water Fund had approximately 20 million in assets. Commissioner Holm felt there would have to be a lot of education if the process went to a referendum. Mr. Pribyl said there had been a lot of education done on the previous years just through the election process and did not know if the same opposition was out there as in 2000. Commissioner Holm said this was one of the most critical issues the City would face and felt the Commission should recommend the ordinance to the council this evening so it could meet the requirements of the November general election. Commissioner Ryan felt people had been well educated on this issue. Commissioner Reynolds felt the amendment would cause a problem because the language would be changed rather than requesting people to vote on an increase. Commissioner Holm said if the process didn't work the City Council could change the process and possibly raise the rates without going to the voters and wait for a lawsuit from a citizen. He agreed Adopted May 21, 2007 CHARTER COMMISSION MEETING OF APRIL 23, 2007 PAGE 4 there might be opposition but felt they should find out, as there could be no election to raise the rates until November of 2008. Commissioner Soule felt the Charter Commissioner needed to assist the City Council by giving them the tools they need to exercise their fiduciary duties of the city. She felt the opposite of Commissioner Reynolds and felt there may be citizens that might counter sue because the Charter does not allow the City to exercise their fiduciary duties. She wondered what could be done to change the charter to do what is in the best interest of the City. Commissioner Reynolds said that trying to change the charter language failed twice and felt the same thing would happen again. Mr. Pribyl said that was possible but felt a lot of people understand the question now. Commissioner Soule suggested having a definition of what utility charges meant and what could be charged for, similar to that in state statute. Commissioner Reynolds said state statute says it had to be reasonable but it doesn't stop the City from raising rates beyond a break -even point. She cited the City of Breckenridge increased the rates to transfer money to their general fund. Commissioner Kranz said whether they approve the amendment that evening or the next meeting, they still needed to send something back to the City Council. Commissioner Borman said the Commission should look at the history of the City and the fact they have not provided any extra money to the general fund; they are only asking for enough money to provide the services to break -even. He said when he saw brackets around hundreds or millions of dollars, it caused him concern. Commissioner Holm MOVED and Commissioner Braam seconded a motion to approve the draft ordinance prepared by the City Attorney and recommended forwarding it to the City Council for their approval and adoption. (Attachment A) SEEING NO FURTHER DISCUSSION, VICE CHAIRPERSON BORMAN CALLED THE QUESTION. THERE WERE 10 VOTES IN FAVOR OF THE MOTION AND ONE VOTE (REYNOLDS) AGAINST THE MOTION. VICE - CHAIRPERSON BORMAN DELCARED THE MOTION WAS PASSED 10 -1. 2. DISCUSSION OF CHAPTER 3 Ms. Skogen reviewed Section 3.01.3, the change Commissioner Jorgenson recommended at the last meeting; that the City Council try to include the conference committee meeting schedule at the same time as the Council adopted their yearly calendar. 3. DISCUSSION OF CHAPTER 4 Ms. Skogen reviewed the changes she drafted in Chapter 4, based on review of state statute as requested at the last meeting. Section 4.08 shows the changes referencing a primary election which must canvas within Adopted May 21, 2007 CHARTER COMMISSION MEETING OF APRIL 23, 2007 PAGE 5 two days of the election and changing the regular election to the general election, so it is similar to state law as well. 4. DISCUSSION OF CHAPTER 5 Chapter 5 was not discussed. 5. DISCUSSION OF FUTURE ITEMS Chapter 3, 4 and 5 ADJOURNMENT: Commissioner Holm MOVED and Commissioner Ryan seconded a motion to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, VICE CHAIRPERSON BORMAN DECLARED THE MOTION CARRIED AND THE MEETING WAS ADJOURNED AT 8:15 P.M. Respectfully submitted, Debra A. Skogen, City Clerk/Staff Liaison Cindy Soule, Secretary Adopted May 21, 2007 Attachment A ORDINANCE AN ORDINANCE OF THE CITY OF FRIDLEY AMENDING CHAPTER 7 OF THE FRIDLEY CITY CHARTER WHEREAS, The City of Fridley, Minnesota, under the powers vested in it under Minnesota Statutes Section 410 and its own City Charter, has the power to amend its Charter; and WHEREAS, one method of amending its Charter is by Ordinance through the unanimous consent of its City Council; and WHEREAS, the City, through its Council, with the review and consent of its Charter Commission, has determined that current language of the charter related to restrictions on fee increases for utility services is causing deep and significant harm to the finances of the City and that a change in the Charter language is necessary to mitigate even further harm from being caused by the Charter to the City's finances. IT IS, THEREFORE, HEREBY ORDAINED THAT: The Charter of the City of Fridley, specifically Section 7.02, subsection 3, is hereby amended to read as follows: Any other fees created, or increased beyond the limits set forth in subsection 1, shall require voter approval as stipulated in subsection 2. A. For the purposes of this subsection, "fees" includes sales and use taxes, , recycling fees, gas and electric franchise fees and any other fee that produces a tax burden or direct financial obligation for all property owners and/or residents of Fridley. (Ref Ord 1152) B. For the purposes of this subsection, the term "fees" does not include: Utility charges, Parks and Recreation Department participation fees, charges for photo - copying, sales of municipal liquor store products, or civil and criminal fines and other charges collected in cases of restitution or violation of law or contract. The term "fees" also does not include rental housing fees, building permit fees, liquor license fees, the extension or transfer of cable television service authority to additional service providers for which fees are already being charged, fees for the operation of junk yards, annual license fees for the operation of pawn shops and other regulated business, and any other charge for services, including health and safety related Code enforcement, and other goods, services or materials routinely provided by the City to its citizens or other members of the public which, by law, must be limited to the actual cost of the service being provided. The term "fees" shall not include any special assessments made under Minnesota Statutes Section 429. (Ref Ord 1152) There being five council members present and voting in favor of this Ordinance, it has been duly adopted this day of , 2007. ATTEST: Debra A. Skogen, City Clerk Public Hearing: First Reading: Second Reading: Publication: Adopted May 21, 2007 Scott J. Lund, Mayor