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08/09/2004 - 00026407CITY OF FRIDLEY CITY COUNCIL MEETING AUGUST 9, 2004 The regular meeting of Fridley City Council was called to order by Mayor Lund at 7:30 p.m. PLEDGE OF ALLEGIANCE: Mayor Lund led the Council and audience in the Pledge of Allegiance to the Flag. ROLL CALL: MEMBERS PRESENT: Mayor Lund, Councilmember-at-Large Barnette, Councilmember Billings, Councilmember Wolfe and Councilmember Bolkcom. OTHERS PRESENT: William Burns, City Manager Fritz Knaak, City Attorney Scott Hickok, Community Development Director Richard Pribyl, Finance Director Jon Haukaas, Public Works Director Julie Jones, Environmental Planner Bob Musil, Minneapolis Metro North Convention and Visitors Bureau Don Anderson, Resident Lenny Brandt, Resident Bill Holm, Resident MINNEAPOLIS METRO NORTH CONVENTION AND VISITORS BUREAU: Mayor Lund introduced Bob Musil, the new Executive Director of the Minneapolis Metro North Convention and Visitors Bureau. APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: City Council Meeting of July 26, 2004. APPROVED 1. Receive the Minutes from the Planning Commission Meeting of July 21, 2004. APPROVED FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 2 of 17 2. Variance Request, VAR #04-11 by Park Construction to Allow a Portion of the Parking Lot to Remain Gravel for the Purpose of Storing Tracked Vehicles, Generally Located at 30-81St Avenue N.E. (Ward 3). Dr. Burns, City Manager, explained that Park Construction would like to store their tracked vehicles on gravel. The Appeals Commission approved this variance at their July 14 meeting subject to eight stipulations. Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 3. Resolution to Vacate Unimproved Portions of Ely Street and the Alley Way between Ely Street and Liberty Street, Generally Located at 30 - 81St Avenue N.E. (Vacation Request, SAV #04-01, by Park Construction) (Ward 3). Dr. Burns, City Manager, stated the Planning Commission approved this request at their July 21, 2004, meeting subject to ten stipulations. Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 4. Preliminary Plat Request, PS #04-04, by Park Construction to Replat Multiple Parcels to Create One Lot to Allow the Petitioner to Develop the Property Generally Located at 30 - 81St Avenue N.E. (Ward 3). Dr. Burns, City Manager, stated the Planning Commission approved this request at their July 21, 2004, meeting subject to ten stipulations. Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 5. Approve Professional Services Agreement and Proposal for Engineering Services between the City of Fridley and WSB & Associates, Inc. for the Springbrook Watershed Implementation Project. Dr. Burns, City Manager, stated this agreement authorizes the preparation of topography data and design alternatives associated with the stream bank stabilization portion of the project. The work will be completed in two phases. In Phase 1, WSB will prepare the contour mapping and the analysis of various alternatives for restoration of flow patterns and stream banks at the Springbrook Nature Center. In Phase 2, WSB will complete the wetland delineation, prepare permit applications and complete the final design. Phase 1 will cost $8,000 and Phase 2, if necessary, will cost $16,300. It may be determined that Phase 2 is not necessary, but staff is asking Council to give them the authority to complete both phases if necessary. This project is totally grant funded FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 3 of 17 and is a multi-city project under the direction of the Springbrook Watershed Project Advisory Committee. Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 6. Receive Bids and Award Project for the Marian Hills Reservoir Project No. 356. Dr. Burns, City Manager, stated the low bidder for this project was Natgun Corporation of Wakefield, Massachusetts, with a base bid amount of $1,018,000. The estimate for this project was $550,000 more than identified in the 2002 Water Systems Study. The Public Works Director said the disparity is attributable to sky-rocketing costs for steel and concrete. Also, the original estimate did not take into account the very tight timeframe for completion of the project. Staff recommends approval of the base bid together with Alternate No. 4(soil correction at $34.50 per cubic yard) and Alternate No. 5($9,060 for City logo sign). THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 7. Approve Change Order No. 1 to the Marion Hills Reservoir Project No. 356. Dr. Burns, City Manager, stated the change order is for $37,500 for overtime needed to accelerate the construction schedule. The alternative to this would be to pay $90,000 for heating of concrete mix should an early winter set in. Staff recommends Council's approval. THIS ITM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 8. Approve Request to Restrict Parking on the East Side of Stinson Boulevard from 68t" Avenue to 69t" Avenue; and Approve Request for Additional Parking Restrictions on Lynde Drive between Polk Street and Fillmore Street. Dr. Burns, City Manager, said the City Fire Marshall recommends establishing a no parking lane on the east side of Stinson Boulevard to prohibit parking 24 hours a day. Also, in response to a petition from residents on Lynde Drive, staff recommends parking restrictions on Lynde Drive between 12:00 a.m. and 9:00 a.m. for the portions of Lynde Drive between Polk Street and Fillmore Street. APPROVED. 9. Resolution Designating Polling Places and Appointing Election Judges for the 2004 Primary and General Elections. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 4 of 17 Dr. Burns, City Manager, presented a resolution appointing election judges for the 2004 election. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 10. Appointments — City Employees: Dr. Burns, City Manager, stated staff recommends the appointment of Brian Wierke to replace Captain Lynne Tellers Banks. Brian joined the Fridley Police Department in 1995. Since then, he has served as a patrol officer, a DARE instructor, a school resources officer, a detective, a member of the department's Problem Response Team, a Neighborhood Resource Officer, and a patrol sergeant. He holds a BS degree in criminal justice from Minnesota State University and a Master's of Management Administration from Metropolitan State University. Dr. Burns stated staff recommends the appointment of Greg Salo to the Sergeant's position being vacated by Brian Wierke. Greg has been a Fridley police officer since 1994. He has been a patrol officer, member of the Problem Response Team, a Neighborhood Resource Officer, a field training officer, and a Community Emergency Response Team instructor. Greg has also served as a temporary sergeant. He holds an Associate's Degree in Law Enforcement from North Hennepin Community College. APPROVED THE APPOINTMENTS OF BRIAN WIERKE TO CAPTAIN AND GREG SALE TO SERGEANT IN THE FRIDLEY POLICE DEPARTMENT. 11. Claims: APPROVED CLAIM NOS. 117566 THROUGH LL7809. 12. Licenses: APPROVED THE LICENSES AS SUBMITTED AND AS ON FILE. 13. Estimates: APPROVED THE FOLLOWING ESTIMATES: Northwest Asphalt, Inc. 1451 Stagecoach Road Shakopee, MN 55379 2004 Street Improvement Project No. ST. 2004 — 1 Estimate No. 3 ................................................................................. $ 54,499.05 FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 5 of 17 Midwest Asphalt Corporation 5929 Baker Road Suite 420 Minnetonka, MN 55345 Hickory Drive Watermain Replacement Project No. 350 Estimate No. 5 ................................................................................ $ 22,040.53 Ron Kassa Construction, Inc. 6005 — 250t" East Elko, MN 55020 2004 Miscellaneous Concrete Repair Project No. 355 Estimate No. 2 .............................................................................. $19,609.99 Councilmember Bolkcom requested that Items 2, 3, 4, 5, 6, 7 and 9 be removed from the Consent Agenda. MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adopt the consent agenda with the removal of Items 2, 3, 4, 5, 6, 7 and 9. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. ADOPTION OF AGENDA: MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adopt the agenda with the addition of Items 2, 3, 4, 5, 6, 7 and 9. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM: Mr. Lenny Brandt, 190 Craigbrook Way, asked if Springbrook signs are available at the Nature Center. Dr. Burns, City Manager, said there should not be any signs at the Springbrook Nature Center and offered to check into the matter and let Mr. Brandt know. Mr. Brandt asked if the vote fails in November, would the Springbrook Nature Center still be open and maintained. Mayor Lund stated it would be open and maintained. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 6 of 17 Mr. Brandt asked if this is a vote on Springbrook Nature Center or a vote on staff for the interpretive center. Mayor Lund stated it would be a vote on continuing the operation of the interpretive center building, the paid staff, and the educational programming. If the vote fails, the programming will not continue. Dr. Burns said the ballot issue is asking the voters if they want to fund the programming. Councilmember Wolfe stated it is not true that the park will be gone if the vote does not pass. It will still be open for everyone to use if the vote fails. Mr. Brandt asked if there are any regulations (city, state or federal) that govern misleading signs and literature for a ballot issue. Mr. Knaak said there were and if there was any material misstatement of fact, the person making that statement could be held criminally accountable. Mr. Brandt asked who was responsible for correcting misleading signs and literature. Mr. Knaak stated this is an area where prosecution is done very cautiously because of the right of free speech. Mr. Brandt referred to statements in the Sun Focus claiming the upcoming ballot vote will save the Springbrook Nature Center. Mr. Knaak stated if Mr. Brandt is asking whether such a statement is criminal, the answer is no. Because such a statement was open to interpretation, he did not think it could be successfully prosecuted. Mr. Brandt disagreed with Mr. Knaak and asked for a final answer on this matter. Councilmember Billings suggested that Mr. Brandt speak to the County Attorney. Mr. Knaak said if Council directs him to do so, he will look into the matter for Mr. Brandt. Councilmember Bolkcom asked if there needs to be a formal resolution to authorize Mr. Knaak to investigate this matter at the City's expense and, if so, how long will such research take. Mr. Knaak offered to do this pro bono. Councilmember Bolkcom expressed concern that the proponents of Springbrook may demand similar assistance from the City Attorney at the next Council meeting. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 7 of 17 Councilmember Billings said the more often Council discusses this, the more often there is communication to the citizens of Fridley that emphasizes the fact that the signs are misleading. Councilmember Wolfe asked if the $275,000 will increase each year as the value of homes goes up. Dr. Burns stated it will increase to the point that the limited market values established by the State of Minnesota are present. Councilmember Wolfe asked if City employees get a raise would that cause an increase. Dr. Burns said it would contribute to the increased costs at the Nature Center and toward an increase of the levy to the extent it is consistent with the limitations of the City Charter. Councilmember Bolkcom commented that Council must be careful how this is presented because there is a limit to the amount of the increase. Councilmember Barnette said he appreciates the offer Mr. Knaak made to research this matter pro bono and he would like to see the response. It was important for Council to correct misinformation. Mr. Don Anderson, 7304 West Circle N.E., asked if Sharks will be reopening their nightclub. Council was not aware the nightclub was closed and suggested that Mr. Anderson contact the owners. NEW BUSINESS: 2. Variance Request, VAR #04-11 by Park Construction to Allow a Portion of the Parking Lot to Remain Gravel for the Purpose of Storing Tracked Vehicles, Generally Located at 30-81St Avenue N.E. (Ward 3). 3. Resolution to Vacate Unimproved Portions of Ely Street and the Alley Way between Ely Street and Liberty Street, Generally Located at 30 - 81St Avenue N.E. (Vacation Request, SAV #04-01, by Park Construction) (Ward 3). 4. Preliminary Plat Request, PS #04-04, by Park Construction to Replat Multiple Parcels to Create One Lot to Allow the Petitioner to Develop the Property Generally Located at 30 - 81St Avenue N.E. (Ward 3). FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 8 of 17 Councilmember Bolkcom asked to discuss all three of the Park Construction items at the same time. She had some questions for the petitioner but he was not present. Mr. Hickok stated the petitioner was aware that this matter was on tonight's agenda. Councilmember Bolkcom stated she understands the need for the gravel area for tracked vehicles but was concerned about other storage on the gravel area. She was also concerned about the dust created by the gravel. Some of the neighbors are concerned about the dust and the vehicle backup noise associated with this business. Mr. Hickok explained that there are currently materials stored on the property that they can remove and the owners have been instructed not to bring any more materials in until the plat has been approved. Councilmember Bolkcom asked if there were plans to do rock crushing on this property. Mr. Hickok stated the owner has not discussed crushing on this site. Councilmember Barnette asked if they have done crushing on this site. Mr. Hickok explained there was a business in that area does have a special use permit for rock crushing, but that does not transfer in any way to the Park Construction. Councilmember Bolkcom was concerned about approving any variance when the petitioner was not present to answer questions. Councilmember Barnette asked if the petitioner can proceed with the building on the northern portion of the site. Mr. Hickok explained the petitioner needs a minimum of 1'/ acres in the M-3 district in order to construct the building. They do have in excess of that and without platting the property or without any official action from the Council, the petitioner can build their building. Councilmember Barnette asked if Mr. Hickok will contact the petitioners and advise them to be present at the next meeting. MOTION by Councilmember Bolkcom, seconded by Councilmember Barnette, to table consideration of Variance Request, VAR #04-11, to extend the review period for City Council action an additional 60 days and to notify the petitioner in writing of the 60-day extension as soon as possible. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 9 of 17 MOTION by Councilmember Bolkcom, seconded by Councilmember Wolfe, to table consideration of Vacation Request, SAV #04-01, to extend the review period for City Council action an additional 60 days and to notify the petitioner in writing of the 60-day extension as soon as possible. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Bolkcom, seconded by Councilmember Wolfe, to table consideration of Preliminary Plat Request, PS #04-04, to extend the review period for City Council action an additional 60 days and to notify the petitioner in writing of the 60- day extension as soon as possible. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. Approve Professional Services Agreement and Proposal for Engineering Services between the City of Fridley and WSB & Associates, Inc. for the Springbrook Watershed Implementation Project. Councilmember Bolkcom said this had nothing to do with the Springbrook Nature Center but addressed the management of the water that goes through Springbrook Nature Center. She asked why staff is requesting Council's approval of both phases when the second phase may not be necessary. Ms. Jones, Environmental Planner, explained the advisory committee related to this project is the same group of people who have been involved with this project since 1997 when it began. The advisory committee has already received the proposal from WSB and agreed to approve the entire proposal. However, this group is very cautious and saw that there was a possibility that a couple of the tasks may not need to be completely done. They asked the consultant to put language in the proposal that gave the advisory committee an out on those tasks if they were not necessary. The advisory committee may or may not decide to go ahead with some of the design projects. They are a month behind on this component of the project. They worked with Anoka Conservation District to do the contour mapping before the trees leafed out. Unfortunately, after the trees leafed out, they discovered their information was not complete enough for the consultant to proceed. This particular project has to be completed this winter when the ground is frozen so there is no damage to vegetation in Springbrook Nature Center. They would like to give the advisory committee the approval to complete this proposal knowing that they will not do those portions of the proposal that are not necessary. Councilmember Bolkcom asked why they could not appear before Council for the second phase if it is deemed necessary. She was reluctant to give a blanket approval. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 10 of 17 Ms. Jones stated she understands the concerns but it is very difficult to get the large number of people on the advisory committee together for a meeting in a timely manner prior to a future Council meeting. They wanted to be ready to start soliciting proposals as early as September 1. Councilmember Bolkcom asked who makes the decision to proceed with the second phase if the advisory committee does not reconvene. Ms. Jones stated the committee would not meet before mid-August and the consultant would have to prepare more design materials which would be difficult to complete by September 1. They will be coming back to Council with the bid proposals before construction begins. Mr. Haukaas stated the advisory committee is asking Council to trust them to evaluate what comes back and make that determination whether to proceed with Phase II. What is before Council at this time is WSB's portion of the contract and any construction would be addressed under separate contracts. Mr. Hickok stated the advisory committee has been extremely careful. Councilmember Bolkcom stated again that she wants it very clear that this has nothing to do with the Springbrook Nature Center but is a separate discussion regarding water management only. MOTION by Councilmember Bolkcom, seconded by Councilmember Barnette, to approve the Professional Services Agreement and Proposal for Engineering Services between the City of Fridley and WSB & Associates, Inc. for the Springbrook Watershed Implementation Project. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. Receive bids and award project for the Marion Hills Reservoir Project No. 356. Councilmember Bolkcom stated she was surprised by the million dollar price tag for this project. She would like an explanation on why the timeframe has to be so short and why overtime is necessary. Mr. Haukaas, Public Works Director, stated the tank provides pressure to everything east of Highway 65. The only way we are going to get through the construction process is to artificially inflate that pressure through pumping. The pumps are only designed for the City's high elevation area which is south of I-694 and Highway 65 which is a very small area. They will be running the pumps beyond their original design to get through the construction project. Also, they are trapped between the high usage during the summer months and the cold of winter and have instructed the contractor not to start FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 11 of 17 before Labor Day. The cold weather costs were bid out separately because they were concerned that could be an open-ended part of the project. They have a substantial completion date of December 20. The original budget for this project, $550,000, was based on an estimate from the consultant, but staff should have asked for more detailed information at that time. When they proceeded with requests for proposals, the estimate came back at $900,000 plus some demo costs and site work costs. The City could try limiting water usage, but that could create problems if the request is ignored or a fire emergency creates a high demand for water. Councilmember Bolkcom asked what the cost of this project does to the City's fund balances and whether other projects would be affected. Mr. Pribyl, Finance Director, said it would draw down the City's funds because they only anticipated and bonded for the $550,000 figure. The remainder would have to come from the capital expenses set aside for other infrastructure. The capital items coming up would have to be reevaluated. Mr. Haukaas explained that included in the bonding were improvements to the Commons Filter Plant which will still need to be done. Other projects that would require additional bonding or that would have to be delayed are water main improvement projects. The other two tanks that need to be cleaned and painted will require an additional bond issue a few years down the road. Mr. Pribyl explained the City can bond up to three years past the creation of projects. Based on this additional cost, they could put this together with the next bonding project as long as it is within the three-year window. Councilmember Bolkcom asked if staff is confident that the million dollar figure will get the job done. Mr. Haukaas stated both the consultant and the contractor are confident that this will get the job done. He also explained what the City is buying is a finished product and this is the price for the finished product. Councilmember Barnette questioned the penalty for going beyond the completion date. Mr. Haukaas stated the penalty is $1,250 per day. Councilmember Bolkcom questioned if we really need a logo on the tower at a cost of $9, 000. Mr. Haukaas stated it is purely to promote the City of Fridley. Councilmember Barnette asked if this is an essential project or is repairing the existing tower an option. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 12 of 17 Mr. Haukaas explained they did evaluate that option but the repair costs were in excess of $650,000 and those repairs would only last about 15 years. MOTION by Councilmember Bolkcom, seconded by Councilmember Wolfe, to receive the bids for the Marion Hills Reservoir Project No. 356 and award the project to Natgun Corporation for a total price of $1,018,000 plus Alternate #4 which is soil corrections at $34.50 per cubic yard and excluding Alternate #5, $9,060 for the City logo. Dr. Burns asked if the soil corrections are in addition to the $1,018.000 figure. Mr. Haukaas stated they were. Councilmember Billings said $9,060 for the City logo was not included. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. Approve Change Order No. 1 to the Marion Hills Reservoir Project No. 356. MOTION by Councilmember Bolkcom, seconded by Councilmember Billings, to approve Change Order No. 1 to the Marion Hills Reservoir Project No. 356 for a contract addition paying for overtime work in the amount of $37,500, to accelerate the construction schedule. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 9. Resolution No. 2004-38 Designating Polling Places and Appointing Election Judges for the 2004 Primary and General Elections. MOTION by Councilmember Bolkcom, seconded by Councilmember Billings, to adopt Resolution No. 2004-38 Designating Polling Places and Appointing Election Judges for the 2004 Primary and General Elections. MOTION by Councilmember Bolkcom, seconded by Councilmember Barnette, to amend the motion to read "Resolution No. 2004-38 Appointing Election Judges for the 2004 Primary and General Elections." Councilmember Bolkcom said the reason for the amendment is because the polling places were approved by Council at a previous meeting. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 13 of 17 14. Approve Extension of Curbside Recycling Contract between the City of Fridley and BFI. Ms. Jones, Environmental Planner, stated this contract is due to expire March 31, 2005. Staff feels strongly that the City should consider extending the current contract with BFI based on the quality of service that BFI has provided. BFI has been working hard to correct some issues with multi-family services, but there has been as much as a three- month period of time with no missed collections for the single family service. She stated they also reviewed market prices and determined the price on the existing contract is very good. BFI has also done some extra things they were not required to do, including a canned food drive, safety camp participation and `49er Days participation. Ms. Jones said they consulted with the City Attorney regarding this contract and were advised that because this is a service, the City does not have to bid out the contract. As long as Council feels that the terms of the contract extension are reasonable, the contract can be extended. She consulted with her recycling industry contacts to get a feel for what new things are happening in the marketplace and found out about the revenue sharing. She also consulted with the City's Environmental Quality and Energy Commission. They were interested in seeing the City pursue revenue sharing and extending the existing contract. Revenue sharing is the City sharing with the contractor the value of the revenues of the recyclable materials when they are marketed. Market prices have driven prices up to an all-time high, so it was attractive for the City to pursue revenue sharing at this time. Cities that currently have 100% revenue sharing have reduced their costs by 50%. Ms. Jones said traditionally the market values did not justify the risk and the City's contractors never offered revenue sharing. Another factor is up until a couple of years ago when the solid waste ordinance was changed, the City Council had to go through an ordinance amendment every time they wanted to adjust the rates that the customer pays. Now it can be done by resolution which makes it easier to adjust the fees. Since then, however, they have been inhibited by the Charter Amendment limitations. Another big factor is the way the County funding system works. With respect to the money that residents pay on their garbage bills that goes back to the state, the state keeps about half and the other half goes back to the county. The way Anoka County does their funding system for the recycling grant money is the City has to basically deficit spend in order to capture that money, which we have always had great difficulty in doing. That is why we came up with the service exchange fund to be involved in a revenue sharing contract. Instead of the contractor paying the City the value of those revenues on a monthly basis or taking a discount on the City's service bill, the City would request the revenue sharing go into a credit account where funds could accumulate up to one year and draw down that fund within six months. The City could use this service exchange fund to provide recycling-related services on possibly things the City has cut from the recycling budget such as recycling events or conducting informational mailings. This would allow the City to capture more of the County funding dollars. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 14 of 17 Ms. Jones said BFI submitted three proposals. All of the options would keep the service the same--a two-sort system picked up weekly. Option 1 would provide no revenue sharing and would keep the service and price the same at $2.18 per household per month for 2005 and then would go up 2% annually in the years after that. Option 2 involves 50% revenue sharing over a base $50 processing fee (so that the contractor is guaranteed their costs for processing that material) with a rate of $2.28 per household per month for single family. Option 3 is 100% revenue sharing with the same base with a proposed rate of $2.40 per household per month for single family. Ms. Jones stated staff checked to see how Fridley's rates compared to other communities. After checking all of Anoka, Hennepin and Ramsey counties, she was unable to find a contract that provided a good basis for comparison. She found Edina and Wayzata were the most comparable and their rates were much higher. She was unable to find any comparables to Option 2 but did find two comparables to Option 3 and their rates were similar. Ms. Jones said with the 100% revenue sharing option, there is a potential for the City to capture $110,000 in revenues in a year. The City could go with Option 1 to play it safe, but the contractor would keep the $110,000. Staff feels the City should try to capture the $110,000. BFI does not care if the City takes the revenue sharing as a cash payment, a discount off the monthly bill, or if it is done as a service exchange fund. If the City took cash payments, it would not qualify for any of the County's recycling funds for the next couple of years ($61,000 per year). However, the City would still come out ahead if they reached that level of revenue and add $30,000 at the end of the year to the special revenue fund. Staff recommends the City pursue Option 3. It is risky, because there is the possibility that if a world-wide catastrophe happened we would not obtain those revenues and would need to increase the costs to the residents by 5.5%. If we do get the revenues, we can reduce the rate in later years. Staff wants to make sure Council understands that if the revenues are not received, the fees would have to be increased in 2005 and again in 2006. If Council is uncomfortable with the risk in revenue sharing, staff feels comfortable that Option 1 is still a very good choice for the City because of the attractive pricing level. The recent change made to the City Charter would permit the City to not increase the fees that the residents pay in 2005 under that scenario. Whichever option the Council chooses, staff feels strongly that a five-year contract be pursued, because it helps in long-range planning. Councilmember Billings stated the question has been asked why a weekly pickup is necessary. Ms. Jones replied that the City has surveyed the residents a number of times on this particular question and have heard that the residents are extremely satisfied with the service the way it is. In 1997 when the City switched from twice a month to a weekly service, there was a substantial increase in the tonnage collected. Currently more than half the residents set out recycling every week. In addition there are large families and day cares in private homes that need the weekly service. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 15 of 17 Councilmember Bolkcom stated with a ballot question on this issue coming up in November and with this contract not expiring until March, she questioned the urgency to proceed with it now. Ms. Jones explained they are actually a little behind in the process because if the Council chooses to solicit bids, that should be done by September 1. A new company would need at least a six-month lead time. Councilmember Bolkcom asked if Ms. Jones has discussed this with the County. Ms. Jones stated she and Mr. Hickok contacted Anoka County staff to discuss this issue and to see if an exception could be made for Fridley due to the City Charter limitations. The County staff would not meet with them, but encouraged staff to pursue revenue sharing and actually came up with the service exchange idea. Ms. Jones stated she would still like to work with Anoka County on this issue. Councilmember Bolkcom asked what would prevent Anoka County from pulling the recycling funds if the City goes to the revenue sharing program. Mayor Lund asked about the service exchange fund. Ms. Jones stated it was the County's idea to do the service exchange fund. She also stated there is nothing in our County contract that would prohibit the City from participating in revenue sharing because it would not be cash revenue. She said they had a few discussions with BFI about how to utilize the service exchange funds and staff believes they would not have any problem using the $110,000 a year. In 1995, the City spent over $400,000 in a massive clean-up effort. They have also considered using the funds to do recycling educational mailings, drop-off coupons and replacing recycling containers at apartment buildings. Councilmember Bolkcom asked if it would not be best to go out for bid on the recycling contract. Ms. Jones stated that after looking at what was in the market and after having done this a number of times, she found that when you go out for proposals, those proposals will be in the mid-range of the marketplace. The current contract is at or below what she is seeing in the marketplace so she did not expect to get a better price. In light of the limitations on raising the rates to residents, the City needs to be careful about going out for proposals. She did not think it would be a wise move for the City. Mr. Hickok, Community Development Director, said that Ms. Jones is the president of the Association of Recycling Managers and has her finger on the pulse of what the market is doing, not only in the metro area, but out-state as well. He said the City could not do any better than it was as far as the contract with BFI. Also, going with a new company creates problems as there will be a learning curve with new trucks and new drivers. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 16 of 17 Ms. Jones added that BFI wants Fridley's business which is why they are offering Option 1. Councilmember Wolfe stated two weeks of recycling sitting around in the summer is not desirable and he would prefer the weekly pickup schedule. Mr. Tom Chovan, General Manager of BFI in Blaine, stated BFI will do whatever it takes to keep this contract and try to extend it. The City knows the level of service BFI provides and if they go out for bid, they will not have that knowledge with a new company. Mayor Lund stated he is intrigued by Option 3 but he would like to see a bid for every other week to see if there is any significant savings. Councilmember Billings asked Mr. Chovan what he thought of the every other week pickup. Mr. Chovan responded that BFI has some biweekly contracts and they are more expensive than Fridley's rate. He explained the concern is what BFI would do with the equipment on those weeks they are not servicing that customer. Councilmember Wolfe stated BFI has provided good service and he had received no complaints. Councilmember Bolkcom stated the revenue sharing seems like a good idea but she is concerned that the County would not allow the City to proceed with this option and still collect County recycling funds. Ms. Jones stated the contract protects the City from the County counting the $110,000 in services as revenue. Mayor Lund stated he would like some clarification from the County on their position regarding the revenue sharing option. Councilmember Bolkcom asked if Council can get out of the five-year contract earlier if the revenue sharing option is not successful. Mr. Chovan stated BFI would have no problem at any time if the recycling market collapses renegotiating with the City and going back to a flat fee. Mr. Knaak said he reviewed the contract and the contingency they are now discussing was not provided for and would have to be added. Councilmember Bolkcom stated she has no problem approving the extension if at the next Council meeting there could be some language worked out with BFI that would address some of the concerns. FRIDLEY CITY COUNCIL MEETING, AUGUST 9, 2004 Paqe 17 of 17 Councilmember Barnette stated he feels comfortable accepting Mr. Hickok's and Ms. Jones' professional opinion. He likes the idea of writing into the contract a"bail out" for the City. MOTION by Mayor Lund, seconded by Councilmember Wolfe, to table this item until such time that staff can bring it back with some negotiation with BFI for Option 3. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 15. Informal Status Reports: Dr. Burns, City Manager, asked Mr. Pribyl to respond to comments made by Mr. Eisenzimmer at the previous Council meeting. Mr. Pribyl, Finance Director, stated Mr. Eisenzimmer spoke during the Open Forum on July 26 regarding the Charter Amendment. Staff was concerned about some of the comments Mr. Eisenzimmer made. After reviewing the tape, staff was unable to determine what his concern was. He wanted it made clear that the City is in full compliance with the Charter Amendment as far as the actual rates or percentages of increase. Councilmember Barnette stated on August 19, a Fridley Community Housing Policy forum will held. This will be the first in a series of four meetings to be held at 7:00 p.m. at the Fridley Community Center. He urged all citizens who have an interest in the future of Fridley to attend these meetings. Councilmember Bolkcom thanked everyone for the success of National Night Out. ADJOURNMENT MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MEETING ADJOURNED. Respectfully submitted by, Rebecca Brazys Recording Secretary ������ Scott J. Lund Mayor