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CHM 10/02/2017 CITY OF FRIDLEY CHARTER COMMISSION MEETING OCTOBER 2, 2017 CALL TO ORDER: Chairperson Ostwald called the Charter Commission meeting to order at 7:00 p.m. ROLL CALL: Members Present: Commissioners Gary Braam, Don Findell, Manuel Granroos, Richard Johnston, Ted Kranz, Bruce Nelson, Dave Ostwald, Barb Reiland, Valerie Rolstad, and Avonna Starck Members Absent: Commissioners Zach Crandall, Rick Nelson, Rick Nelson, Pam Reynolds, Cindy Soule and Richard Walch Others Present: Roberta Collins, Staff Liaison Shelly Peterson, Finance Director APPROVAL OF AGENDA Commissioner Rolstad MOVED and Commissioner Reiland seconded a motion approving the meeting agenda. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. APPROVAL OF MINUTES Commissioner Braam MOVED and Commissioner Rolstad seconded a motion approving the Charter Commission meeting minutes of September 5, 2017 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. ADMINISTRATIVE MATTERS A.Order from the judge was received by the District Judge for the reappointments of Commissioners Richard Johnston and Richard Walch. The terms expire September 9, 2021. Commissioner Johnston took his Oath and Acceptance. APPROVED 11/6/2017 CHARTER COMMISSION MEETING OF OCTOBER 2, 2017 PAGE 2 OLD BUSINESS DISCUSSION OF CHAPTER 7 Chairperson Ostwald suggested the Commission review the draft of Chapter 7 made upon recommendation of the Finance Director. Section 7.02.3.A. – Recycling Fees Finance Director Peterson said recycling fees were not mandated by the state when originally created. The City chose to have a centralized service and bill for those services as part of the utility bill. The City felt recycling should be reclassified as a utility type fee because the City goes through the same process when determining what to collect for the rates as it does for water and sewer. When the City renegotiates the recycling contract, the charter restriction limits the ability of increasing the fee. For example, if fuel prices go up, the City cannot increase or pass on that cost. As the City does not have the funds to pay for the increases, the funds are taken from another fund to support the increase. She said the charter definition states a fee or tax as affecting all property owners, however, the recycling fee does not affect all properties. Recycling is only charged to residential properties with twelve (12) units or less. So it truly does not meet the definition of a tax that is charged to every property owner. Staff recommended recycling fee be redefined as a utility like water and sewer. She said the Commission should decide if it should be redefined and understood it was controversial. However, in light of the levy restrictions and the change in the law that recycling is now mandatory, it was appropriate to revisit the issue at this time. Commissioner Reiland asked if the fees could be increased at any time. Ms. Peterson said the City signs a multi-year contract that provides an inflationary calculation that can increase the recycling fee rate, and that rate is not the same rate as the charter restriction. She said the City is in the process of going out for bids for recycling as the contract is nearing its term. Recently organics collection was added to the city code. While it is not mandatory, legislation may change and it may become mandated at some date in the future. There was further discussion on what organics were and general questions on where the City was with that initiative. The Commissioners had a brief discussion about Section 7.02.3.C and it was determined the redlined sentence would not be redlined and the word described would be changed to “referenced” in Section 7.02.3.B above. Commissioner Kranz asked Ms. Peterson to explain why the charter language was out of date. Ms. Peterson said the charter is so specific that when a law changes, even something as simple as a date, the Charter becomes out dated. She reviewed many other city charters and looked for consistencies or patterns. In addition she reviewed the League of Minnesota Cities (LMC) web site and policies. Based on that information, she made changes that were easier to understand and APPROVED 11/6/2017 CHARTER COMMISSION MEETING OF OCTOBER 2, 2017 PAGE 3 removed some of the specifics and referenced state law or state auditor guidelines. Ms. Peterson said if everyone agreed with this section they could move to the next section. Commissioner Reiland MOVED and Commissioner Starck seconded a motion moving recycling fees from section A to section B, referencing state law and adding one sentence to section C as referenced while removing the strikeouts. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. Section 7.04 Preparation of the Budget Ms. Peterson said the LMC has specific guidelines on what should be included in a budget document and references specific statutes. Staff recommended this section be simplified by acknowledging the city manager should have discretion on what to provide to the City Council regarding the different funds. The City is different than the private sector as it has many funds that all have special uses requiring special reporting and accounting. This section outlines the general fund and special revenue funds where reporting requirements are similar. It still identifies the required columns like prior year activity and current year projections. It also specifies the broad categories of expenditure types and organizations units (rather than departments which are very specific). This would provide the city manager more flexibility on how the budget is presented to the city council. Ms. Peterson said there were other funds where that format would not work. An example would be a business type fund, (i.e., utility fund) where you do not record capital as an expense, but rather record an annual depreciation figure. Additional language was added to this section to differentiate between the different types of funds. Ms. Peterson said Section 2 was very specific and did not appear in other charters reviewed. What discovered in the current chapter was that when you have a small department and you are required to list specific employee information in the budget document, you can pretty much determine who that person is and what kind of health insurance or benefits they have or other private information which could be a violation of HIPPA and other regulations. Since we have that information and know what is public or private, it is better to list broad categories rather positions. The recommendation would be to omit this section. Commissioner Braam wondered if it was still prepared with specific information by the finance director and provided to the city manager and if there was a question during an audit if it would be available. Ms. Peterson said yes, the City had a large budget document that would have this information, however, the city council preferred to see more of a summary budget. Commissioner Rolstad MOVED and Commissioner Kranz seconded a motion approving the recommended changes to Section 7.04 as provided. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. APPROVED 11/6/2017 CHARTER COMMISSION MEETING OF OCTOBER 2, 2017 PAGE 4 Section 7.06 Enforcement of the Budget Ms. Peterson said after reviewing other charters and looking at what has worked well for the City for enforcing the budget, staff recommends simplifying this section to reference the provisions of the budget and financial policies. The current charter also states that anyone that purchases something outside of the budget could be liable for the purchase and is very specific. If needs change during the year, the proposed changes provide more flexibility but still require employees stay within their allotted budget. The Commissioners discussed the last sentence regarding excess amount wondering whether the word shall or will should be used in the last sentence. Ms. Peterson stated that the reason you may want to say “may” vs. “shall” is that there may be an emergency that may cause you to go over the budget. After further discussion it was agreed the word “may” should be used. There may be a reason it is not a part of the appropriate budget, but you cannot foresee an emergency. Commissioner Reiland suggested inserting the word “an” before “officer of City employee” Commissioner Rolstad MOVED and Commissioner Johnston seconded a motion approving Section 7.06 with the addition of “an” before the word “officer” as recommended by staff. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. Section 7.07 Alterations in the Budget. Ms. Peterson said she tried to make changes in this section to be consistent with the section above referring to budget resolution and removed language that did not change the content of the section. Chairperson Ostwald asked why reduced salaries was specifically being removed. Ms. Peterson said the council adopts a revised budget so she tried to keep this section more general because if the budget needs to be revised for any purpose, it has to go to the city council by resolution. After some discussion the Commissioners agreed, if reducing the budget, to the following language… “the sums appropriated for any purpose by the budget resolution or authorize the transfer of sums from the unexpended balances of the budget to other purposes.” Commissioner Kranz MOVED and Commissioner Reiland seconded a motion approving the proposed language just read (as shown in above paragraph). UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. Section 7.10 Tax Settlement with County APPROVED 11/6/2017 CHARTER COMMISSION MEETING OF OCTOBER 2, 2017 PAGE 5 Ms. Peterson said after reviewing other charters staff found our charter was very detailed, which other charters were not. She was recommending deleting the language, but the Commissioners could decide whether to keep it in, change the language or remove it. She said the County followed their own statutes and regulations and they know when they have to provide the cities with our tax levies. She felt the City could not make a demand on the County to turn funds over. Section 7.11 Disbursements How Made Ms. Peterson said it identifies a process that has now become more automated and staff felt this section could be deleted. She said in the past when disbursements were made, payments would be late due to certain regulations or approvals needing to be met before payments could be made. This section is no longer included in other charters reviewed and with technology things are changing with ACH’s and wire transfers. Commissioner Findell wondered if there was still a paper trail for these processes. Ms. Peterson said yes, laws are very specific as to how Cites can process payments and our auditor ensures we adhere to those requirements. She said there are internal controls that have been created to address the new payment processing technology. Commissioner Rolstad MOVED and Commissioner seconded a motion approving the deletion of Sections 7.10 and 7.11 and renumbering the following sections. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. Section 7.12 Funds to be kept Ms. Peterson said this section should be updated to match the state auditor chart of account guidelines and Generally Accepted Accounting Procedures (GAAP) by removing the fund names and descriptions to simplify and allow the City to follow one standard for consistency. Staff’s recommendation is to create a new first paragraph and delete the remaining language in this section. The changes remove any specifically defined account which allow the City to adjust as there may be new accounting standards or funds. The language was discussed and the Commissioners agreed the word “the” before resolution would be removed in the second line of the paragraph. Commissioner Rolstad MOVED and Commissioner Reiland seconded a motion approving the changes made to section 7.12 by re-numbering to Section 7.10, creating a new paragraph and deleting the remainder of the language. Section 7.13 Receipts to go to City Treasurer Ms. Peterson said this section is outdated and the recommendation is to delete this section as it is similar to accounts payable but is the receipting process. APPROVED 11/6/2017 CHARTER COMMISSION MEETING OF OCTOBER 2, 2017 PAGE 6 Commissioner Rolstad MOVED and Commissioner ____ seconded a motion approving the deletion of this section and renumbering the reminder of the chapter. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. Section 7.14 Accounts and Reports Ms. Peterson said the section should be simplified and updated. The upper sections talks about how the City needs to follow the rules and that the city manager shall submit the report rather than stating how often or what to report. It is left to the discretion of the city manager and requires the City follow the law at the end of the year when the audit is finalized. Commissioner Findell wondered if there needed to be a timeline of when reports are due. Commissioner Rolstad felt there should be no timeline and that it be open ended as it is written in state law when those reports are due. Commissioner Rolstad MOVED and Commissioner Braam seconded a motion approving the staff recommended changes, adding a comma after “Once a year,” and renumbering of the remainder of the section. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. Section 7.15. Bonded Debt and Debt Limit Ms. Peterson said bonding is clearly defined in Minnesota statute and each bond has unique requirements. Bonds are an expensive method of borrowing money and there are other options the City should be able to utilize such as certificates and other bank notes that are less expensive. The City should be able to take advantage of all types of indebtedness legally available rather than the limitations of this section. In reviewing other charters, they called it indebtedness and referred to state law. There is another tool on the LMC website explaining the types of debt available to cities and rules that apply. Not only is there a rule on how much we can borrow and how we calculate the limit, every bond has very specific requirements. She simplified the language to reference the state laws and took out the limit we set upon ourselves which was less restrictive than state law. Commissioner Findell said the words at the end of the first paragraph…”by the laws of the State of Minnesota state law” should be removed. Commissioner Reiland suggested removing the word “the” at the end of the first sentence and end the sentence after the word “law and begin a new sentence “The Council may at its discretion…” with a comma after members. APPROVED 11/6/2017 CHARTER COMMISSION MEETING OF OCTOBER 2, 2017 PAGE 7 Commissioner Rolstad MOVED and Commissioner Johnston seconded a motion approving the changes recommended by staff to Section 7.15 and as provided in the paragraph above. Commissioner Findell wondered if there was an area in the charter or state statute that describes how special assessments are paid back as that seems to be language being deleted. Ms. Peterson said Chapter 429 provides for special assessments and there is a special assessment policy that would provide specific information on how the assessment is calculated and paid back. The interest collected goes go back into the street construction fund. If it was a bonded special assessment, it would be defined during the bonding process as to who will be assessed, how the funds are managed and the county would then administer the annual collection from those assessed. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. Section 7.16. Form and Repayment of Bonds Ms. Peterson said this was not found in other rules or charters and that is because the County establishes the amount collected for the debt levy and state law identifies the other specifics listed in this section which are all dependent on the type of borrowing. Commissioner Rolstad MOVED and Commissioner Starck seconded a motion approving the recommendation to delete the language and continue to renumber the chapter. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. Section 7.17. Debt and Tax Anticipation Certificates/Section 7.18 Bonds outside the Debt Limit Ms. Peterson said she tried to make the charter more consistent with other charters by simplifying, amending and deleting unnecessary language. Tax Anticipation and Emergency Debt address two different types of borrowing, both used to address emergencies. The City receives two installments from the County each year for property taxes. Tax Anticipation Certificates are a short-term borrowing to bridge the gap between these two installments. Commissioner Rolstad MOVED and Commissioner Starck seconded a motion approving the recommended changes to section 7.17 and 7.18 and renumbering the remainder of the charter. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. APPROVED 11/6/2017 CHARTER COMMISSION MEETING OF OCTOBER 2, 2017 PAGE 8 Section 7.14 Emergency Debt Certificates (NEW SECTION) Ms. Peterson explained that this emergency type debt allows the City to borrow funds in the event of a natural disaster or unforeseen emergency. Commissioner Rolstad wondered if in the new section if the word “deb” should be “debt” and it was. Commissioner Rolstad MOVED and Commissioner Granroos seconded a motion approving the recommended new language as Section 7.14 and changing the word “deb” to “debt”. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. Chairperson Ostwald directed staff to prepare a draft ordinance of the changes for the next meeting. The Commissioners wondered if the language had been reviewed by an attorney. Ms. Peterson said the City’s bond counsel has reviewed our chapter and recommends the revisions. She said she would provide the latest revisions to the city attorney and bond counsel for review. NEW BUSINESS There was no new business. FUTURE MEETING TOPICS/COMMUNICATIONS Final review of draft ordinance to Chapter 7 of the Charter Discussion of Chapter 8 ADJOURNMENT: Commissioner Kranz MOVED and Commissioner Braam seconded a motion to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED AND THE MEETING WAS ADJOURNED AT 8:45 P.M. Respectfully submitted, Debra A. Skogen, MMC, City Clerk/Staff Liaison Commissioner Manuel Granroos, Secretary APPROVED 11/6/2017