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11/29/1997 - 00001846� � THE MINUTES OF THE SPECIAL MEETING OF THE FRIDLEY CITY COUNCIL OF NOVEMBER 29, 1997 The Special Meeting of the Fridley City Council of November 29, 1997 was called to order by Mayor Jorgenson at 10•00 a.m. PLEDGE OF ALLEGIANCE: Mayor Jorgenson led the Council and audience in the Pledge oF Allegiance to the F1ag. ROLL CALL: MEMBERS PRESENT MEMBERS ABSENT ADOPTION OF AGENDA: Mayor Jorgenson, Councilman Billings, Councilwoman Bolkcom None Councilman Barnette, Councilman Schneider and MOTION by Councilman Schneider to adopt the agenda as submitted. Seconded by Councilwoman Bolkcom. Upon a voice vote, all voting aye, Mayor Jorgenson declared the motion carried unanimously. OPEN FORUM, VISITORS: There was no business. PUBLIC HEARING: response from the audience under this item of 1. PUBLIC HEARING ON THE 1998 CITY OF FRIDLEY BUDGET: WHICH APPEARS TO BE IN EXCESS OF 16 MILLS LEVY REOUIREMENTS FOR 1996 TO THE GOUNT MOTION by Councilman Barnette to waive the reading of the public hearing notice and open the public hearing. Seconded by Councilman Schneider. Upon a vozce vote, all voting aye, Mayor Jorgenson declared the motion carried unanimously and the public hearing opened at 10:01 a.m. The purpose of this public hearing is to fulfill the Truth-in- Taxation requirement and levy what appears to be a tax levy in excess of 16 mi11s. Mr. Burns, City Manager, presented the 1998 budget message. The State legislative decisions that were made during this year's � legislative session were more incremental. These reforms were not as dramatic as expected. The City's Local Government Aid was increased about $33,000, and the HACA was retained In 1998, he � SPECIAL CITY COUNCIL MEETING OF NOVEMBER 29, 1997 PAGE 2 understands it will be much the same, unless there is a ma�or surprise in the area of budget surpluses. Mr. Burns stated that Council budget work sessions took place in June and July and covered a variety of issues. Staff helped in preparing a Council survel identifyinq ma�or policy issues. Those results were used in preparing the budget. Some of the issues were the potential expansion of our neighborhood resource officer program and various youth programs that are administered by the Police Department, Fire Department personnel needs, the Comprehensive Plan amendment process, and the recycling proqram. Mr. Burns stated that Council reviewed a proposal for a ma�or street and utility improvement pro�ect for the Riverview Heights area. The pro�ect is proposed for ]999 and 2000 construction seasons. In anticipation of this ma�or effort, the appropriation for neighborhood street reconstruction in 1998 is much smaller than usual It does, however, provide for the reconstruction of HaclQnann Avenue. Mr. Burns stated that capital improvement discussions focused on a proposal for a double gymnasium at the Fridley Community Center, playground equipment upgrades for several City parks, removal and � replacement of fuel and oil tanks at the municipal garage, a new garage ventilation system, a new municipal center telephone system, upgrading of 57th Avenue, and extension of the Central Avenue bike path. Mr. Burns stated that the most important issue raised during the 1997 budget work sessions was the issue of a property tax increase. Staff recommended a three percent property taY levy increase to generate an estimated $137,OOD to cover a budget gap between General Fund revenues and expenditures Nearly $288,000 in expenditures trimmed, and $65,000 from the Liquor I'und was transferred, leaving a gap of less than $280,000. Staff also recommended a small increase in the sold waste abatement fee. Mr. Burns stated that the total ex_penditures for all funds, excluding Enterprise Funds, is $12.4 million or a decrease oE 7.4 percent. General Fund expenditures will increase by 2.6 percent or $258,831. Most of thls increase is accounted for by increased employee costs, and our recent commitment to the operation of the Fridley Community Center Mr Burns stated that a three percent cost of livinq increase for employees amounts to $178, 952. There are no additional full-time employees, and some changes have been made in the work force ln the areas of FinancelMIS, Police, Public Works, Recreation and � Naturalist, and Coznmunity Development. Employee health insurance costs have decreased but will probably increase in 1999 � SPECIAL CITY COUNCIL MEETING OF NOVEMBER 29, 1997 PAGE 3 Mr. Burns stated that other notable changes in the General Fund appropriations include diminished expenditures for machinery and equipment and increased expenditures for contractual services. Contractual service costs have increased by $119,815. Of this amount, $47,326 is attributable to new costs pro�ected for operation of the Community Center and recreation programs. An additional $15,000 is pro�ected for completion of the City's Comprehensive Plan, and another $26,000 is allocated for a contract plumbing inspector. Mr, Surns stated that the total for a11 four Special Revenue Funds is $1,056,046 or a$166,849 increase. These funds include the Cable Television E�nd, Grant Management Fund, Solid Waste Abatement Fund, and Housing Revitalization Fund Most of this increase is in the 5olid Waste Abatement Fund for increased costs in the City's operation of the redemption center and weekly curbside recycling. The Grant Management Fund has an increase of $98,318 attributable to the youth program qrants Mr. Burns stated that the total of the Capital Pro�ect Funds is 51,032,472 or a decrease of 58 percent The total for Buildings and Lands is $280,000, which includes telephone system upgrades, removal and replacement of municipal garage fuel tanks, replacement ' of voting booths, and purchase of a standby generator for the garage. For Streets, the total is $483,737 and includes the improvement of Hackmann Avenue, 57th Avenue, and the Old Central bikeway extension. For Parks, the total is $268,735 for playground equipment upgrades, tennis court repairs, and park improvements in order to comply with the Americans with Disabilities Act Mr. Burns stated that the Enterprise Funds include Water, Sewer, Storm Water, Liquor Operations and Debt Service The Water P'und will increase $23,444; the Sewer Fund will decrease $62,468; the Storm Water Fund will increase $36, 008; and the Liquor Operations Fund will increase by $171,078. Mr. Burns stated that this budget provides for a three percent increase in the property tax levy. The levy increase will cost local tax payers, as a whole, about $137,000. Its impact on individual property owners, of course, will vary with the value of the home. For a property owner with a$90,000 home, it will mean a $7.00 increase ln taxes payable in 1998. A homeowner with a $120,000 home will pay $8.00 more in taxes The total tax bill for homes in the four school districts in Fridley will actually decrease. This decrease ranges from $6 00 to $207.00, depending on the district where the home is located. Mr. Burns stated that barring any ma�or disappointment in what � remains of 1997, the fund balances should remain very strong relative to annual operation costs and should continue to be strong through 1995. It is pro�ected the 1997 fund balance will be about $700,000. The sources of General Fund revenue have changed very � � � CITY COUNCIL MEETING OF NOVEMBER 29, 1997 PAGE 9 little. The transfers are changing from year to year with a decreasing reliance on the General Fund and a greatly increased reliance on the closed debt fund and the liquor fund. Mr. Burns stated that there are a number of external factors which a£fect the City's operation. Unemployment is at an all time low, and new construction is up by almost $30 million. A hiqher portion of the 1997 value of construction is in the public sector as opposed to the private sector The pri•aate sector construction consists more of alterations and additions as opposed to new buildings. There is a small decrease in the number of Fridley �obs with a slight increase in retail and a small decrease in manufacturing 7obs. Mr. Burns stated that property values for all classes of property in Fridley have increased by 5.1 percent or to $1,209,684,500. This total includes a 4.4 percent increase in the value of homesteaded residential property; a 7 2 percent increase in the value of non-homesteaded, multi-family property; a 6.3 percent increase in the value of industrial property; and a 3.3 percent increase in the value of commercial property. Fridley's tax capacity, however, has dropped from $28,351,144 to $26,662,800 or 7.3 percent less than the available tax capacity in September of 1996. Mr. Burns stated that the overall crime rates are down. However, the most serious crimes increased by 3.� percent, with most of this increase involving larcenies. The number of people using public assistance is also less than in 1997. There is an 18 percent decrease in Fridley residents receiving cash assistance and food stamps. The number of students receiving free or assisted means in District 14 has declined by 9.1 percent Mr. Burns stated that the State legislature's actions on tax reform were a key issue. In the City's budgeting process, services were maintained at existing levels with two exceptions; the Community Center operations and recycling. There was a tendency to move from reliance on full-time employees to consultants and contractual services. Both internal and external measures of the City's financial health are very good, and property values are up significantly. Mr. Burns stated that the City should continue efforts to preserve our aqing housing stock and public infrastructure. We need to continue to deal with the problems of youth and the elderly and strengthen our recreational opportunities For people of all ages. We need also to address Fridley's image, particularly the imag2 that is created by our three ma�or transportation corridors. Mr. Burns stated that in order to address the challenges, we need to continue to demonstrate flexibility in our approach to governmental services and search for opportunities to achieve � SPECIAL CITY COUNCIL MEETING OF NOVEMBER 29, 1 5 economies of scale through cooperative ventures with other �urisdictions. We also need to be prepared to drop existing lower priority services and programs. Mr. Burns stated that in addition to operational improvements the City needs to continue the search for new reeenues. This means continuing the quest for State fundinq of our housing programs, capitalizing on Federal and State grant programs, ad�ustinq charges for services to reflect changes in our costs, continuation of our efforts to maximize liquor operation pro�ects, and exploration of the means to diversity our tax sources. Mayor Jorgenson asked about the increase in larcenies at businesses. Mr. Burns stated that these larcenies include shoplifting, drive offs, and bad checks. Councilman Schneider asked how the budget affects the City's bond rating. Y4r. �ribyl, Flnance Director, stated that the budget has a positi�e impact on the City's bond rating. Fridley's Aal bond rating is � probably the highest one for a rlty of our size. The high level of fund balances accounts for this rating. The debt service costs for Fridley are probably lower than other cities in the metropolitan area. � Councilman Schneider asked how the fund balances are invested. Mr. Pribyl stated that these fund balances can only be invested in fixed income securities, as regulated by the State, and are scrutinized l�y the City Manager and the City Council. Mayor Jorgenson asked about the solvency of Crty government and the process for balancing the City's funds. Mr. Pribyl reviewed by there is indicators. stated that there are a number of issues which are the auditors. As a result of the auditing process, management letter identifying the key financial Councilman Sarnette asked how the City of Cambridge could have gotten into the problems they experienced Mr. Pribyl stated that this situation had to be over a long period of time and a continued downward progression. In Fridley, there are a number of controls. The City Council has been very responsible. This community has a s�rong financial background, and Council has played a very active part. ' SPECIAL CITY COUNCIL MEETING OF NOVEMBER 29, 1997 PAGE 6 Councilman Barnette stated that his home is located in School District No. 14, and he experienced a tax decrease. However, with the recent levy approved by the taxpayers, the tax statement he received may not truly reflect hls total taxes. Councilwoman Solkcom stated that the tax statement noted that this amount of tax was dependent on the outcome of the levy proposed by School District No. 14. Councilman Billings stated that he lives in School District No. 13. He understands that the tax statement he received from the County is correct. Only those homeowners residinq in School District No. 14 may be affected because of the school district's levy. Councilman Billings stated that this publlc hearing is being held on this day because the Legislature has stated that there is a certain time frame when the Truth-in-Taxation hearzngs musT be held. These hearings are also held with other taxing �urisdictions such as the County, Metropolitan Council and School District. This glves the City very few choices when to conduct the hearing, as it cannot be on the same date as another �urisdiction. For the last five years, there has been only one person atrendinq this Truth-in- Taxation hearing. Sy having it on Saturday morning, it may make a � difference and more people would attend. However, this is not the case, and only Senator Betzold is in attendance. Councilman Billings questioned if all the costs associated with this hearing are worth it to continue conducting the hearing. Councilman Billings pointed out that there have been discussions on tax relief for senior citizens on fixed incomes. The Legislature has made a change in property taxes for senior citizens. There is a manner in which property taxes can be deferred if certain guidelines are met as far as age, income, and the length of time you have resided in your home. He suggested that seniors interested in this program contact the Minnesota Department of Revenue. Mayor Jorgenson stated that there is also another contingency in order to qualify for this program the mortgage would have to be over fifty percent paid. Councilman Billinqs stated that there is also a property tax credit that can be filed with your 1997 income taxes, payable in 1998. This credit applies to both homeowners and those who rent Councilman Billings stated that although the value of property in the Crty increased, the actual tax capacity or the amount that can generate property taxes decreased. If the Legislature keeps � changing the ability of the City to tax commercial and industrial property he questioned the impact on residential property. � � � SPECIAL CITY COUNCIL MEETING OF NOVEMBER 29, 1997 PAGE 7 Mr. Burns stated that as long as the State has a surplus it would not greatly affect the property taxes. If there are no surpluses, the shift in tax capacity rate for commercial and industrial properties could result in a substantial increase for residential property owners. Councilman Billings stated that in trie final analysis, if the State is looking at changes in the property tax structure, it cannot be done piecemeal. He felt the tax system needed to be overhauled and that it should be done once and for all. By doing it piecemeal, the whole system will eventually collapse, and the residential property owners will all of a sudden have to face a larger tax bill. Mr_ Burns stated that the human service demands are increasing, as is the need to invest in the City's infrastructure. At the same time, the base revenue is flat, and there needs to be a greater increase in the City's revenue sources. Councilman Billings asked what percentage of the City's budget was for personnel costs. Mr. Burns stated that it was about 65 percent. Councilman Billings asked what is being done to try to reduce those personnel costs or to keep them stable. Mr. Burns stated that the biggest thrust is to avoid responding to new program needs by adding full-time employees. The City should remain flexible in dealing with these needs. The City is using contractual services for the short-term, and it will be less costly in the long-term. He also said that every position is reviewed and �ustlfied before a vacancy is filled. The number of employees in the City Manager's office, Flnance Department, and Public Works Department have been reduced. However, there have also been some increases in other areas. Councilman Sillings stated that in previcus years, it was necessary to pass a resolutzon �ustifying a levy in excess of ]6 mills. There was a change in the Charter. He asked if such a resolution was necessary this year. Mr. Pribyl stated that a resolution will be on the City Council's agenda for December 8. There was a change in the Charter; howecer, this new ordinance will not be in effective before Council must take action. This hearing is held to make sure that the City is in compliance wrth the Charter. No persons spoke regarding this proposed 1998 budget. � � � 5PECIAL CITY COUNCIL MEETING OF NOVEMBER 29, 1997 PAGE 8 MOTION by Councilman Schneider to close the public hearing. Seconded by Councilman Billings. Upon a voice vote, all voting aye, Mayor Jorgenson declared the motion carried unanimously and the public hearing closed at 11:02 a.m. ADJOURN[�NT : MOTION by Councilman Schneider to ad�ourn the meeting. Seconded by Councilman Sarnette. Upon a voice vote, all voting aye, Mayor Jorgenson declared the motion carried unanimously and the Special Meeting of the Fridley City Council of November 29, 1997 ad�ourned at 11•02 a.m. Respectfully submitted, Carole Haddad Secretary to the City Council Nancy J. Jorgenson Mayor