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08/14/2006 - 00027595CITY COUNCIL MEETING CITY OF FRIDLEY AUGUST 14, 2006 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:32 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember-at-Large Barnette Councilmember Billings Councilmember Wolfe Councilmember Bolkcom OTHERS PRESENT: William Burns, City Manager Fritz Knaak, City Attorney Scott Hickok, Community Development Director Julie Jones, Planning Coordinator Jon Haukaas, Public Works Director Richard D. Pribyl, Finance Director/Treasurer APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: City Council Meeting of July 24, 2006. APPROVED. OLD BUSINESS: 1. Second Reading of an Ordinance Recodifying the Fridley City Code by Amending Appendix F to Provide for the Adjustment of Salaries for the Mayor and Councilmembers in Accordance with Section 2.07 of the Charter of the City of Fridley. William Burns, City Manager, stated staff is recommending a 3 percent increase in salaries for the Mayor and Council for 2007. This is consistent with the increase for employees contained in the proposed 2007 budget. The increase will provide the following yearly salaries: Mayor, $10,223.85; councilmember-at-large, $8,397.75; and each of the three ward councilmembers, $7,424.42. Staff recommends Council's approval. APPROVED. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 2 NEW BUSINESS: 2. Receive the Minutes from the Planning Commission Meeting of July 19, 2006. RECEIVED. 3. Resolution to Vacate Two 5-Foot Drainage and Utility Easements that Run Along the West and East Property Lines of Lots 2 and 3 of the Friendly Chevrolet Addition, Generally Located at 7490 Central Avenue and 7500 Central Avenue N.E. (Ward 2). William Burns, City Manager, stated the petitioner, Pat Pastoors of Brenk Properties, would like to vacate the easements to allow for the expansion of the building. Staff recommends Council's approval. This was approved by the Planning Commission. ADOPTED RESOLUTION NO. 2006-45. 4. Approve Change Orders for the Fire Department Aerial Ladder Truck. William Burns, City Manager, stated staff recommends Council's approval of the six change orders to the contract with Crimson Fire, the supplier of the new aerial fire truck The changes include additions as well as deletions. They also include an $18,900 penalty for late delivery of the finished vehicle. Altogether, the amount being paid is $21,586.66 less than the original contract price. The final cost of the aerial ladder truck is $745,188.34. Of this amount $450,000 was covered by a federal grant. Staff recommends Council's approval. APPROVED. 5. Approve Change Order No. 1 for the 2006 Street Improvement Project No. ST. 2006 — 1. William Burns, City Manager, stated staff recommends Council's approval of the change orders which are generally due to underground conflicts which were not identified in the design process. The net cost for Change Order No. 1 is $18,464.88. The revised contract amount is now $3,139,358.73. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 6. Resolution Approving MnDOT Agreement No. 89989 for the Maintenance of the University Avenue Decorative Fence (Ward 3). William Burns, City Manager, stated the agreement establishes the City's responsibility for maintenance of the new decorative fencing. There is no assignment of additional City liability for this fence. Staff recommends Council's approval of the agreement. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 3 THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 7. Resolution Authorizing the Execution of the Trust Agreement for the City of Fridley Deferred Compensation Plan with Wells Fargo Bank, N.A., as Trustee. William Burns, City Manager, stated the City has been evaluating the transfer of its deferred compensation plan from ICMA to a new plan provider since August 2005. Having carefully studied the alternatives to the existing ICMA deferred compensation plan, staff is prepared to recommend to Council that the current plan be changed to one that is administered by Wells Fargo and directed by an employee investment committee. Staff is also proposing to employ a financial advisor, Financial Concepts, Inc., to assist the employee investment committee and the individual plan participants with the identification and selection of investment options. Staff is requesting Council approve the trust agreement with Wells Fargo for administration of the new deferred compensation plan. The trustee is responsible for the receipt and distribution of the funds as they are paid to individual participants and allocated among the investment options. The agreement also provides that they will pay our financial consultant according to terms contained in our agreement with him. Additionally, they will pay themselves for fees agreed to for managing the City's deferred compensation account. They are not responsible for selecting investments or for advising individual participants in their choice of investment options. Dr. Burns stated if the trust agreement is approved tonight, staff will provide notification to ICMA that the City is terminating their services. We will also be hosting group informational meetings with plan participants in September. By the end of September, staff expects to be transferring funds from ICMA to Wells Fargo. The transferred funds will be mapped into the new plan and invested immediately. On or about October 17, staff will hold an additional meeting for all plan participants. At the October meeting, participants will be given enrollment instructions as well as answers to key questions they may have. They expect to offer opportunities for individual meetings with our financial consultant by late October. Staff recommends Council's approval of the trust agreement with Wells Fargo. Retirees will not be forced to move out of the ICMA plan. ADOPTED RESOLUTION NO. 2006-47. 8. Claims (127622 - 127933) APPROVED. 9. Licenses. APPROVED THE LICENSES AS SUBMITTED AND AS ON FILE. 10. Estimates. William Burns, City Manager, submitted a revised estimate sheet for Council's approval. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 4 APPROVED THE FOLLOWING ESTIMATES: Maertens-Brenny Construction Company 8251 Main Street N.E. Fridley, MN 55432 Locke Park Water Treatment Plant Improvements FINAL ESTIMATE $ 4,260.00 Allied Blacktop 10503 — 89th Avenue North Maple Grove, MN 55369 2006 Street Sealcoat Program 2006-2 Estimate No. 1 $178,858.00 Concrete Idea 13961 — 44th Lane N.E. St. Michael MN 55376 Miscellaneous Concrete Project No. 365 Estimate No. 4 $ 3, 53 5.99 Park Construction, Inc. 500 — 73rd Avenue N.E. Suite 123 Fridley, MN 55432 2006 Street Improvement Project No. ST. 2006 - 1 Estimate No. 3 $466,856.23 MOTION by Councilmember Barnette to approve the consent agenda as presented with the removal of Items 5 and 6. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. ADOPTION OF THE AGENDA: MOTION by Councilmember Bolkcom to approve the agenda with the addition of Items 5 and 6. Seconded by Councilmember Billings. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 5 NEW BUSINESS: 5. Approve Change Order No. 1 for the 2006 Street Improvement Project No. ST. 2006 — 1. Councilmember Bolkcom asked for an explanation of the requests contained in the change order. Jon Haukaas, Public Works Director, stated the first one is for the repair of a water main break that happened on June 11. Park Construction Company had the equipment in the area, and it was faster and easier for them to mobilize it since they were right there. That break also caused some material to go down a storm sewer, and staff had them clean it out. The second item was e�tra work to repair a storm sewer outlet that went from the 67th Avenue cul-de-sac to Meadowlands Pond that was not shown on the drawings. When the new pond area was being graded, it was damaged and they had it fixed. That was e�tra work and the cost was $708.01. Item No. 3 was to relocate an unmarked sanitary sewer service. A lot of our as-builts from the late 50's, early 60's were not high in detail. This one and four additional items are all related to the Rice Creek Boulevard cul-de-sac. The project required them to put in additional storm sewer treatment structures and, due to the quality of those as-builts from around 1961 to 1962, they did not know exactly where a lot of the utilities where and they ended up having a lot of conflicts. No. 3 was to e�tend the sanitary sewer service for the amount of $3,168.79. No. 4 was for a water break that happened in that cul-de-sac due to not knowing the exact location of the pipes. That was done at a cost of $1,957.74. Request No. 5 was to repair a water main that was inadvertently hit while excavating. The cost for that was $2,628.97. Item No. 6 was to e�tend water service around some of these structures due to the relocated water main. The cost for that was $6,785.75. Item No. 7 was another water service for a cost of $2,057.14. Item No. 8 was a credit for installing a slightly smaller drainage structure than the bid item. Councilmember Bolkcom asked, so as this happens, someone is actually recording this and if we ever go back in there, it will all be shown on some plans so we will not have those same problems again, correct? Mr. Haukaas replied, absolutely. They have pictures, additional drawings of where the new locations are and they are documenting everything that was changed. MOTION by Councilmember Bolkcom approving Change Order No. 1 for the 2006 Street Improvement Project No. ST. 2006 — 1. Seconded by Councilmember Billings. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. Resolution Approving MnDOT Agreement No. 89989 for the Maintenance of the University Avenue Decorative Fence (Ward 3). Councilmember Bolkcom asked if they were continuing to try to get some money from MnDOT. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 6 Mr. Haukaas said they were continuing to work with MnDOT. Councilmember Bolkcom said this item is related to the maintenance agreement and has nothing to do with the actual costs. Mr. Haukaas said the fence is an HRA-funded project; however, MnDOT does require the City to sign a maintenance agreement which says because this is different from the standard, they will take care of. The City will be required to do all future maintenance on the new decorative style fence. Councilmember Barnette said they have been asked why the fence is not taken down. The City has made an effort to work with the State for removal of some of the fence, and the State has been emphatic in saying that we cannot remove the fence. It is on the State's property. The City can improve it. He said he thinks it is going to be a very nice improvement. University Avenue is a gateway to our City, and the chain link is a detriment to its appearance. Pete Eisenzimmer, 6535 Oakley Drive NE, approached and asked how long the fence was and if another fence would be put in later on. Mayor Lund asked if he was referring to the City or the State. The State does not want to do anything. The City, through its HRA, is replacing the fence along the new section of redeveloped housing. Mr. Eisenzimmer commented because of the high expense he suggested the developer do the work. Mayor Lund stated to keep in mind that is not coming out of the general fund, it comes from the Housing and Redevelopment Authority which has its own budget. MOTION by Councilmember Bolkcom to adopt Resolution No. 2006-46. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM (VISITORS): Roger Avery, 600 Glencoe Street NE, approached and thanked Scott Hickok and Councilmember Bolkcom for cleaning up the area near his home. PUBLIC HEARINGS: 11. Consider Revocation of Special Use Permit, SP #03-14, for Central Auto Parts, Generally Located at 1201— 73 �/z Avenue N.E. (Ward 2) (Continued July 10, 2006). FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 7 MOTION by Councilmember Wolfe to remove this item from the table. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE PUBLIC HEARING OPENED AT 7:52 P.M. Julie Jones, Planning Coordinator, stated there were a couple of main issues remaining at the conclusion of the July 10 session of the public hearing which she believed caused the City Council to table the public hearing at that time. One was that the business owner was contending that there were drainage impacts from neighboring sites that had not been resolved and he was looking to the City to help him with that. Staff has met with the owners of the Gustafson Grinding property and believe they have resolved that issue. Ms. Jones stated the other point of concern was that the "property" owner claimed during the public hearing that he had not agreed to the 2003 stipulations. Staff has since looked at the public record of those meetings of 2003 and find at no time did Mr. Buzick voice opposition to those stipulations, and, in fact, there were several occasions where staff, including Dr. Burns and Scott Hickok, and also the attorney representing Mr. Haluptzok, stated that John Buzick had agreed to the stipulations in meetings that happened between staff and the property and business owners. Ms. Jones stated the conditions at the property have improved. The business owner has removed inoperable cars from the main yard entrance creating some space for customer parking. There is still need for more customer parking, because staff is continuing to see a lot of parking on the street in this area. The business owner has also reduced the height of the items stored on the property significantly, at least from the view of the front of the property; however, there are still storage height concerns on the backside of the property. You can see a significant amount of the material above the fence line in the rear of the property. Ms. Jones stated the business owner did submit a grading and drainage plan to staff last Friday. Unfortunately, staff has had very little time to take a close look at the plan. It is a preliminary grading and drainage plan. It is not a complete site plan. They do not have a landscape plan either, and those were part of the requirements that were supposed to be met by 2004. They have indicated that they are submitting that plan to the Rice Creek Watershed District for board review this month. The City and the Rice Creek Watershed District were required to approve the plan and they were to install the new fence and landscaping and irrigation by March 2005. Also, as part of their five-year plan for bringing the property into compliance, they needed to complete their grading and storm sewer piping by March, 2006. The installation of the first phase of the curb and gutter was due by March, 2004, with completion of the installation of curb and paving by March, 2008. She believed that was set aside in a two-year timeline because they are literally going to have to move material from one side of the site, pave the site that is clear, then move the material back and pave the other side. Ms. Jones stated as far as staff's recommendation, they feel the business owner has demonstrated progress by completing the preliminary grading and drainage plan. However, they are concerned because they are dealing not just with a business owner but also the property FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 8 owner as well; and staff has not received any assurances from the property owner since the July 10 meeting that he supports this preliminary plan or is committed to completion of the other 2003 stipulations. Staff is really not confident at this point that the property owner will ensure the plan gets completed. Therefore, staff continues to recommend the City Council takes action to revoke Special Use Permit, SP #03-14, and they have prepared a resolution for a separate agenda item. John Buzick, Central Auto Parts, approached and stated he is one of the principals of the corporation that owns the land. He is quite disturbed by what staff is saying because he will not agree to something he never agreed to in the first place. He said he thinks Mr. Haluptzok has done a fine job of working with the City. He has been trying to help him because he did agree to that. The Rice Creek Watershed District requires stuff that Mr. Haluptzok was not able to get. He talked to people about that so he will be doing that. As he said at the prior meeting, if he is going to do these things that is fine, but he never agreed to them in the first place. Mayor Lund replied they went over that at the last meeting. Staff's memorandum indicated that staff reviewed the videotapes from the 2003 public hearing. Mr. Buzick participated in those. He participated in the meetings afterwards. The record shows that Mr. Buzick was sent notice of the hearings. At that time, staff reported during the adoption of the resolution that the business owner and the property owner had agreed to the stipulations. He asked Mr. Buzick if he is saying three years later that he did not agree to any of that and he was not involved in the process. Mr. Buzick stated, that is correct. Mayor Lund said their goal is compliance. Staff has reiterated their concern that Mr. Buzick is not going to comply with these stipulations. Mr. Buzick and Mr. Haluptzok need to determine whether they are going to do these things. Mr. Buzick said it would be up to Mr. Haluptzok to address what he said he would do. The last agreement he had with the City pertains to the old special use permit. He did not enter into the new one. Mayor Lund said either the City is going to get compliance or they are going to seriously consider revocation of the special use permit. It is his understanding Mr. Buzick does not want that to happen, because the property will not be usable if the special use permit is removed. Whether it is Mr. Halputzok's responsibility or Mr. Buzick's, the goal should be to get compliance. Mr. Buzick said he did not agree to it in the first place. He hopes Council will take that into consideration. Mayor Lund stated, three years ago he agreed to it. The timeframe has not been met. Mr. Buzick stated he did not agree to it three years ago. Blacktopping the salvage yard does not make sense because you are setting cars on it that do not have tires. The cars will sink. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 9 Councilmember Billings stated as a point of clarification, he asked Mr. Buzick if he is telling them that he has not looked at the plans, he will not look at the plans, and it is his feeling that this is between the City and Mr. Haluptzok. He asked Mr. Buzick if he has seen the current plans that are being offered. Mr. Buzick replied he does not have a full copy. Councilmember Billings asked him if a full copy was made available to him would he look at them and would he tell the City whether he agreed to the work that is proposed there. Mr. Buzick replied if Mr. Haluptzok wants to do it. Councilmember Billings stated he is asking if Mr. Buzick would agree to the work that is being proposed. In the alternative, would Mr. Buzick propose another site plan and another grading plan and whatever as a property owner. Mr. Buzick replied if this does not work out with Mr. Haluptzok, he would be willing to sit down with the City and try and work out an amicable agreement. The one that Mr. Haluptzok got is not amicable. They want to blacktop the salvage yard. Councilmember Billings stated the point he is missing is that in 2003, the special use permit was up for review by the City. The special use permit is between the City and the property. Mr. Buzick was here for those hearings and the meetings with staff. The attorney for Mr. Haluptzok at that time stood at that podium and said he could not speak for Mr. Buzick, but he had been at the meeting. He was not at the podium there to object to it as the property owner. The only conclusion they could come to was that he was in agreement because he was not there objecting to it. They set new stipulations on the special use permit. What they called him in for was a review of the special use permits that were in place because he was not abiding by them. They called him in, along with the business owner, and they offered new stipulations on the special use permit. Now he is standing there telling them he did not agree to them. He did not have to agree to them because they are the City's stipulations that they attach to the special use permit. Unless he agrees to the drainage plan and everything else, they are not going to go through this again in another six years or another three years with him standing there saying he does not agree to it. This is the special use permit hearing. He is going to have to either agree to what is there, or he is going to offer a motion to vacate this special use permit and Mr. Buzick and Mr. Haluptzok can do whatever they want to do with the piece of property and the lease Mr. Buzick has with Mr. Haluptzok Mr. Buzick and his corporation own that piece of property. The City has a special use permit on that piece of property, and the special use permit is not being adhered to. He does not care who Mr. Buzick leases it to. It is between the City and the piece of property. If they revoke the special use permit, nobody is going to do business there as a junk yard. Councilmember Billings stated the other thing is unless he agrees to a drainage plan through this one or a new one, not only is he going to move to revoke this special use permit but he is going to move to revoke the other two special use permits because they are not going to go through this again with him. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 10 Councilmember Billings stated to Mr. Buzick he has from now until when the hearing closes to decide if he agrees to the drainage plan and everything that has been presented or to provide an alternative or he will make a motion to vacate the special use permit and he will also make a motion to have a hearing on the other special use permits just like they did in 2003. He is just as much in violation of those now as he was in 2003, and he guarantees him if this one goes away, the other two will also. The special use permit that he does have, does not even cover the whole piece of property. It only covers a portion of it. Mr. Buzick stated when Mr. Haluptzok first applied for the grant, there was a license and then there was a special use permit. To the best of his knowledge, that was Mr. Haluptzok's license he was negotiating. He said he did agree to a drainage plan. In fact he had discussions with a man arguing how unpractical that plan was. Mr. Haluptzok seems to be a on plan to get that all done so, if that is what it requires for him to stay in business and his employees are no longer there, he would be willing to help Mr. Haluptzok do that. Having to admit that he agreed to this is not going to happen since it is not true. Councilmember Bolkcom asked regarding an application made to the Rice Creek Watershed, does the City actually have a plan. She asked if a plan had been submitted since the July 10 Council meeting. Ms. Jones replied Mr. Haluptzok submitted a plan to staff last Friday. It is a preliminary grading and drainage plan. It is not everything that they were supposed to submit in the first year of the plan, but it is a start. It is something they need to come before the Rice Creek Watershed District and submit for approval. Councilmember Bolkcom asked what was missing. Ms. Jones said they have not had time to go through it. It was just submitted. Karen Kurth, counsel for Jerry Haluptzok and Central Auto Parts, approached and stated she wanted to clarify that she does not represent Mr. Buzick or his corporate interests or as the landlord or property owner. She just wanted to elaborate on staff's comments regarding what Mr. Haluptzok has been doing since July 10. Mr. Haluptzok retained a company to do the engineering and survey report for the site drainage plan. The preliminary plan was completed on August 2. There were some changes made to it. Attorney Kurth stated a comprehensive plan has been submitted. The engineering company has also been instrumental in dealing with the Rice Creek Watershed District. The plan and application were submitted on August 3. It is her understanding they meet once a month to consider permits. In order for this to be considered for the August 23 meeting, the materials had to be in by August 3. On Friday they received the initial engineering draft as to what changes they wanted them to make to the plan and what else needed to be done. She said there are a few minor things that need to be done. They need to do some soil boring and get some soil samples to determine the depth of the water table. The engineering company said that could be done in a day. They also need to contact the Rice Creek Watershed District because they want to revise the storm water pollution protection plan to deal with spill prevention and spill response. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 11 Apparently, there needs to be some changes made to the survey and engineering report that was submitted. There are some administrative things that need to be recorded with the County Recorder and an easement needs to be drafted. The ne�t meeting of the watershed district is September 27 and the material has to be submitted by September 7 in order to have the permit approved on September 27. Attorney Kurth said Mr. Haluptzok has continued to make an effort to improve parking, some of the other issues that were a problem. He has started to contact contractors. There really was not much of a need to contact them until they got some idea from the Watershed District on how close they are. Mr. Haluptzok doe not have a proposal yet from a contractor but has started to contact general contractors. If it is approved on September 27 and pending City approval, they would have about four to six weeks, depending on the weather, to start on the contracting part of it. Some of that depends on the contractor and what can get done. Mr. Haluptzok's is committed to being a contributing business member to the City of Fridley. The permit and serving costs to date are running about $17,000. The initial survey was $2,700. They think this survey is going to come in the neighborhood around $12,000 depending on any revisions that have to be made. The permit application to Rice Creek was $2,000; and there is a$2,500 surety bond that has to be posted. He would have no intention of expending that kind of money if he did not have the intention to follow through. He respectfully requests that the license and permit not be revoked and that he be allowed to continue to run his business. Mayor Lund asked if her client was willing to fulfill all the stipulations. Attorney Kurth replied, yes. Mayor Lund asked what kind of timeline they were looking at. Attorney Kurth replied if Mr. Haluptzok retains a contractor, they may be able to complete part of it depending on the weather. Mr. Haluptzok is really committed to this project. Mayor Lund asked if Mr. Haluptzok needed to be overseen by staff. Attorney Kurth said he needed help with the drainage issues. Mr. Haluptzok need to make sure some of the smaller things, such as the cars stacked above the fence, happen. Councilmember Barnette asked if blacktopping the surface was a new condition and if it was a true statement that other yards do not or are not required to have a hard surface. Mr. Hickok said in outlying areas outside the metro area, salvage yards may not have a hard surface. The City Code required it when Mr. Buzick was operating Central Auto Parts, and it should have been there. That was one of the many things that was not in compliance under his ownership and operation of the business. If asphalt is an issue than concrete might be the answer. It is one of those things that is code-required. Councilmember Bolkcom asked if it is realistic, considering the history with the Rice Creek Watershed District, they might still be able to do this project. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 12 Mr. Haukaas replied he cannot speak on behalf of all the contracts done. Mr. Haluptzok and the engineering company have done a nice job of trying to do it right for the Rice Creek Watershed District. If they are able to get approval by the end of the year, that might allow them enough time to get a lot of the work done, if they have a contractor who is willing to start right away. Mayor Lund said he would like to hear from the property owner and Mr. Haluptzok that they are going to do this, they have the means to do it, and they agree to do it. Attorney Kurth replied they have not gotten any indication that it was not permissible to make the changes that Mr. Haluptzok is ready to make. Mr. Buzick replied if they need his approval for things that Mr. Haluptzok said he would get done and he is committed to them, he does not have any problem with that. He does not need to see his employees on the street or him out of a business. The only other thing he wanted to say is that he never sat at any of the meetings where they were stipulating to any of those things and for him to say anything different is not true. If Mr. Haluptzok wants to do these things and is committed to doing the things he has said he would, he is willing to go along with the plan. MOTION by Councilmember Barnette to close the public hearing. Seconded by Councilmember Wolfe. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS CLOSED AT 8:40 P.M. 12. Consider Revocation of Special Use Permit, SP #89-08, for Sam's Auto World, Generally Located at 7570 Highway 65 N.E. (Ward 2) MOTION by Councilmember Wolfe to waive the reading of the public hearing notice and open the public hearing. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS OPENED AT 8:40 P.M. Councilmember Billings stated he would like to enter some correspondence into the record and let Council have some discussion about the correspondence before they continue. He is looking at a letter dated August 10, 2006, from attorney Jeffrey Carson and a fax dated August 14, 2006, making reference to the letter. Mr. Carson indicated he has recently been hired by Samir Awaijane and Sam's Auto World to represent them. In the August 141etter he states he is unable to attend tonight's meeting and that he is directing his client not to attend. He said that he has reviewed the calendar and determined that Monday, September 25, at 7:30 is a meeting that would give him the appropriate time to prepare, and he understands that the City will hear his request to postpone this evening. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 13 MOTION by Councilmember Billings to enter into the record correspondence dated August 10, 2006, and a fax dated August 14, 2006, from attorney Jeffrey Carlson. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. Councilmember Billings stated he would move to continue the public hearing until some time in September. He would hope that he gets a second, but he would hope that no one votes in favor of it. He asked Mr. Hickok if the property owners have been properly advised of the public hearing this evening. Mr. Hickok replied, yes, they have been. Councilmember Billings stated to Ms. Jones, he believed the attorney has been in contact with her, and asked if at any time during those conversations, he indicated there was any kind of lack of notice to his client regarding this public hearing. Ms. Jones replied, no, he did not. His reason for asking for the delay is that he was just retained by his client. He did not indicate that his client was not properly notified. Councilmember Billings asked how much notice has the property owner had about the hearing. Ms. Jones replied Mr. Awaijane was notified about three weeks ago that staff was planning the public hearing. Councilmember Billings asked are they here because there are a number of issues that staff intends that the property owner has not completed in a timely manner? Ms. Jones replied they are here primarily because of the concern of car sales at the site. Councilmember Billings stated personally he sees no reason to delay the public hearing. The property owner has been advised that the public hearing is tonight, it has been published in the newspaper. He thinks it pretty brazen for an attorney to direct his client not to come to a public hearing merely because he cannot make the public hearing. If the property owner or his attorney chooses not to be here, that is their choice. This is the scheduled public hearing and, unless there is some problem with the notification, he sees no reason to continue it. He asked the City Attorney if there is any reason they are legally bound to not continue with this process. Attorney Knaak replied there is no legal requirement that they do so if asked to. Councilmember Billings stated he is planning to vote against the motion he made and he is encouraging all them to do so. Councilmember Bolkcom said not only were they notified three weeks ago, but this has been an ongoing issue. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 14 Mr. Hickok replied, yes, that is true. There have been problems and there has been dialogue back and forth. Mayor Lund said if they should vote down this motion to continue the public hearing and then, after taking public testimony, make a motion to continue it to a later date after that, would there be any restriction as to who can make the motion? Attorney Knaak replied, no, there is not. MOTION by Councilmember Billings to continue the public hearing. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING NAY, MAYOR LUND DECLARED THE MOTION DENIED. Ms. Jones stated the property is zoned M-1, Light Industrial, which cannot have automobile sales even with a special use permit. The site contains an auto repair business which they do have a special use permit for. The existing special use permit was reassigned to the owners of Sam's Auto World on November 18, 1991. In 1992, the City Council considered revocation of the special use permit for paving and screening of outside storage violations; but then the business owner did comply with those stipulations and the City ceased the revocation process. Other past problems on the site have included high grass, outside storage, and unauthorized signs. Last year they did have an incident with an employee living in a semi-trailer on the site. This year's problems involved vehicle parking in the public right-of-way on the frontage road, as well as the issue of selling cars without a dealer's license from the State of Minnesota. Ms. Jones stated there is actually some history to this site as far as the sale of cars. The business owner, Samir Awaijane, tried to sell cars on this site in the 1990s. When he was informed he was not permitted to do that in an M-1 zoning, he decided to pursue a rezoning of the property in 1999 but then later withdrew the application. She assumed most likely because staff has suggested that a better solution for him would be to find another site with the proper zoning that had a special use permit existing for automobile sales. Mr. Awaijane purchased property on Osborne Road close to his auto body repair business which was zoned G2 and he could sell cars and did so for a number of years. However, about one or two years ago he sold that business, called A& E Auto Sales. The problem was that he had leftover inventory, and it was soon thereafter that staff started receiving complaints that Mr. Awaijane was selling automobiles at his auto body business location on Highway 65. To help him solve his dilemma and help him get rid of his inventory, staff did agree to sign off on a State dealers leasor's license which allows him to lease vehicles on the site, but only for nine vehicles (four of them being family vehicles and five being loaner vehicles for his customers). In January, staff did ask the Department of Public Safety to investigate; however, they have continued to receive complaints that he was selling vehicles. Ms Jones stated there are also some issues on the site as far as outside storage above the fence line. Section 205.17 in City Code does require screening for outside storage, and the storage behind that screening must be two feet below the fence line. As far as staff's recommendation, FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 15 despite clearly being aware of his inability to sell cars in an M-1 District, Samir Awaijane has violated City Code and his State dealer's license regulations by selling automobiles on site retail. Staff recommends that the City Council take action to revoke Special Use Permit, SP #89-08 for lack of compliance of stipulations for said permit. Primarily, the one that states he must operate his garage in a law-abiding manner. Councilmember Bolkcom stated she wanted to give the benefit of the doubt to the owner saying that he was advised by his attorney not to come tonight, good or bad advice. She suggested continuing the public hearing to August 28. Mayor Lund asked if the operator is in compliance now. Mr. Hickok replied it is their suspicion that auto sales would continue. Mayor Lund stated the State has been advised and they have done an investigation. Mr. Hickok replied the State has concluded there are retail auto sales. Mayor Lund asked if the owner had been cited by the State. Mr. Hickok replied, yes. The state inspector, Marc Peltier, indicated that there was a retail sale (and this is not the first call he has received), and the owner of the site would be cited for it. Councilmember Bolkcom asked if a letter will be sent to the owner stating he has to come to the meeting on August 28. Ms. Jones replied said there would and she has also agreed to telephone the attorney. MOTION by Councilmember Billings to continue the public hearing until August 28, 2006. Seconded by Councilmember Wolfe. UPON A VOICE VOTE, ALL VOTING MOTION CARRIED UNANIMOUSLY CONTINUED AT 8:53 P.M. AYE, MAYOR LUND DECLARED THE AND THE PUBLIC HEARING WAS 13. Consider the Need to Increase the Water, Storm Water and Sanitary Sewer Rates in Excess of the Inflationary Index or 5%, Whichever is Less, as Required by Section 7.02 of the Fridley City Charter. MOTION by Councilmember Bolkcom to waive the reading of the public hearing notice open the public hearing. Seconded by Councilmember Billings. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS OPENED AT 8:53 P.M. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 16 Richard Pribyl, Director of Finance, stated tonight's action is to comply with Section 7.02, Subd. 4, of that section of the City Charter which provides directions on how the City can increase taxes or utility rates beyond the limit imposed by the City Charter. This limitation has been in place since 2000. This public hearing is required by the City Charter to set forth the contents of the resolution that was passed by the City Council on July 10, declaring the necessity for the additional rate increase for the water, sanitary sewer, and storm water utilities. The public hearing notice has been published four times in compliance with the City Charter. The resolution published on July 10 outlines some key issues regarding the need for a rate increase beyond the limit as provided in the City Charter. It provided broad information regarding the losses being incurred by the operation. From the year 2000 through the year 2007, they do increase fairly substantially. The water rates have been increased each of the following years by the inflationary rate provided by the Charter. There were small increases to both water and sanitary and storm water. Mr. Pribyl stated over the years, they have tracked the City's standing regarding the cost of municipal utilities with other communities in the metro area. They have always found we have been among the lowest in regards to our quarterly utility cost for the homeowner. The City's budgeting efforts over the past five years have cut non-essential expenses from these operations in an attempt to reduce these losses and close the gap between revenues and expenses. In comparing the nine contiguous cities around Fridley, at $69.27 we are the lowest among our neighbors. Even with the proposed increase we would take to the voters on the ballot, we would still be at $79.90. Mr. Pribyl stated the utility rate would need to be brought before the voters this fall in order to actually do the projected monthly $10 increase, which is the rate needed to match the revenues with the expenses in 2007. What was allowed via the City Charter for the inflationary increase is 3 cents per thousand for water, and 7 cents per thousand for sewer. The storm water is based on a residential piece of property and is 9 cents per quarter. The voter-requested increase would be 16 cents per thousand gallons, 32 cents per thousand for the sewer, and 13 cents per quarter for a residential piece of property. The total for 2007 would be 19 cents per thousand for water, 39 cents per thousand on sanitary sewer, and the storm sewer would be 22 cents per quarter per residential piece of property. Councilmember Barnette asked who sets sanitary sewer rates and what control, if any, do we have over them. Mr. Pribyl replied the Met Council Environmental Services actually sets the rate by which they charge us for disposing of waste water into the municipal system. We have very little control over that except for the flows that actually flow from this community. We are actually charged per thousand gallons that we put into that. The amount is based on their cost of correcting the water that is put into the system to their specifications. Dr. Burns added their treatment cost is about 72 or 73 percent of our total operating cost for the sewer fund. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 17 Councilmember Barnette asked if the Met Council sewer bill was raised for Fridley, by 8 or 9 percent for example, and we are only allowed to raise the rates per the cost of inflation, for example 3 percent, how is the difference made up. Mr. Pribyl replied we have to find that within our reserves until we can actually take that one more time back to the voters again and request an increase from the voters. Councilmember Wolfe said we do not want to raise the rates to make money; we are only raising it to pay what we are being charged. Mr. Pribyl replied, correct. Councilmember Bolkcom asked Mr. Pribyl if he could go over how many customers we have and some percentages. She knows there has been some discussion whether we should be charging some of our high-end users different rates. Mr. Pribyl replied about 97 percent of our customers actually consume under 100,000 and that generates 51 percent of our revenue. Approximately 3 percent of our customers consume over 100,000 gallons and generate 49 percent of our revenue. Councilmember Bolkcom said the $42 per year is a combination of the rates. Spread over 12 months, the amount is less than $4 per month. Mr. Pribyl replied, that is correct. Mayor Lund said if they restructured the rates and increased the rate for the heavy water users, that is not going to significantly offset the losses that we are repeatedly incurring from year to year. The 3 percent are already generating the largest amount of revenue to the City. It seems a little disproportionate to raise the rates at a higher end for heavy water users. Councilmember Bolkcom asked if they had an calculations on increasing the rates for the high- end users. Mr. Pribyl stated they actually took a look at a sample change in the rate structure and incremented at a 100,000 gallons increase. Even at a 0 to 100,000; 100,000 to 200,000; and 200,000 to 300,000 they are still incurring actually a$124,000 shortfall using the Charter limitation. Pam Reynolds, 1241 Norton Avenue NE, asked if the commercial rates were going up. She stated with the current two-tier rate structure in Fridley, it is 0-5,000,000 and then it jumps to 5,000,000 plus. The commercial, industrial, and institutional users are being subsidized by the residential users. The commercial, industrial, and institutional users are using more water and placing a higher demand on all of the system connected to filtering, treating, and delivering water, as well as the sewer. From what she sees there are 11,000 plus households in Fridley; and they are paying the same rate as a handful of large companies. The big users are using the system more and straining the system. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 18 Ms. Reynolds stated she would recommend a sliding rate scale which many cities use. Other cities around us use an increase in block In fact our own comprehensive plan from 1999, Chapter 9, page 31, calls for a minor physical change to the City's water system. That change reads as follows: development of an increasing block method of water charges and/or summer rate that will promote water conservation. She feels it may help deficits in the future. Andover, Arden Hills, Blaine, Burnsville, Chanhassen, Cottage Grove, Inver Grove Heights, Lakeville, Lino Lakes, Plymouth and others in the 107 city reach of the Met Council have an increase in rate structure and a commercial/industrial/institutional rate higher than residential. Without a rate structure change to go with the rate increase, residential will be subsidizing the payback as well. The 2003 head of household age table, also from the 1999 comprehensive plan, shows 4,242 heads of household between the ages of 55 and 75. So that is a third of Fridley households that are in more of a senior category. Yet those people, the seniors, pay an average of $13.80 a year for unused water. Most of them do not qualify for senior discount because they have a stable income. Not charging a commercial/industrial/institutional rate is not conservation. The high-end users benefit and they are using our reserves because they use millions of gallons of water. There needs to be a two-fold fix to a problem that has plagued the City for almost seven years. We need to come up with a different rate structure so when the 3 percent cost of living increase happens, it takes us to the ne�t level. She understands we need an increase but then it needs to be fixed. Councilmember Billings asked is she suggesting they should eliminate the minimum fee. Ms. Reynolds replied she is suggesting that perhaps the minimum fee needs to be adjusted to go with the residential usage. A lot of cities have a much smaller minimum fee. We have a minimum fee that comes up at 12,000 gallons. From checking with a lot of people, some only use 36,000 gallons per year. So they are actually paying for a whole quarter of water at a minimum fee of $13.80 when they have not used a drop of water. She is saying lower the minimum fee on an increasing block scale. It needs to be a minimum fee and it needs to recognize that most of the households in Friday, 4,242 of them, are not using 12,000 gallons a month. Councilmember Billings asked if there were 4,000 people who are only paying the minimum? Mr. Pribyl replied that seems fairly excessive to him. Councilmember Billings asked Ms. Reynolds where she got the 4,000 number. Ms. Reynolds replied she based it on the number of households in Friday who are between the ages of 55 and 75. Councilmember Bolkcom stated just because they are senior citizens, does not mean they are not using the minimum rate. They are probably still watering their lawns just like others. She is confused how Ms. Reynolds arrived at 4,000 where there are actually 8,200. Ms. Reynolds asked how they came up with 8,200. Mr. Pribyl stated that is right off the system. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 19 Councilmember Wolfe said a lot of those could be apartments. Mr. Pribyl stated the first tier that they looked at, the 0 to 100,000, is a little shy of 8,000. He does not know how many would actually be at a minimum but it is certainly not that number. They would be sustaining a huge loss at that number. Councilmember Billings asked Ms. Reynolds is she suggesting that the minimum number of gallons per quarter be reduced? Ms. Reynolds stated, yes. Councilmember Billings asked Ms. Reynolds what is her concept of what the minimum fee is for. Ms. Reynolds replied according to her bill 12,000 gallons of consumption. Councilmember Billings asked her why she thought they had a minimum fee. Ms. Reynolds replied she is guessing it has to do with filtering and treating. Councilmember Billings replied the bottom line is that it costs the City just as much to do a meter reading and to generate an invoice whether a person is using 5,000 gallons or 100,000. The minimum fee is also intended to help capture the cost of having the water line run in front of the house. They could take a look at changing the number of gallons that apply to the minimum fee, but he thinks that would be part of a greater fee structure study. Councilmember Billings stated regarding the comprehensive plan and talking about conservations, the way the City would most benefit in terms of conservation would be if that 3 percent of our users who are using such high numbers were to use a smaller number of gallons of water. For example, we have one company in town that is a very large laundry company that goes around to businesses that does towels, uniforms, etc. If they establish a rate that is excessively high, that is going to cause that company to take a look at their water rates and determine whether it is more beneficial for them to conserve, for example, to do things like capturing the rinse water in a holding tank and then reusing that rinse water as the wash water in the ne�t cycle. That would certainly conserve water but it would also tremendously cut down the number of gallons that company is using. If they take a look at the fact that our system is losing money every year, and if that company were to use less water, it is not going to change our infrastructure costs all that much. It is going to change a little bit of the cost of electricity and a few other things that we are using to pump it. It is not going to change it all that much. We are actually going to have a greater deficit if they conserve even more than what they are conserving. Councilmember Billings stated a person has to be cautious on how much fees are raised because that 3 percent is generating approximately half of the revenue. If they start conserving water, then we are going to lose even more money and the rest of us are going to pay more in order to pick up the debt, because it costs us a certain amount of money just to have the system in place. We still have to have wells examined and rebuilt. We still have to do work on filter FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 20 plants. He thinks we are a fairly astute society. That is not to say that we cannot conserve more in our rooms and cannot be more environmentally correct in our homes, but he thinks the amount that we could conserve in homes and in most of our small businesses is minute in comparison to the total amount that we are using for water. Ms. Reynolds stated as she looks at the rates that are charged in cities around us, and she understands that Fridley is the only one who chooses to shy away from increasing commercial rates. Blaine is at $2.10 a thousand for commercial. Why? Because they put a greater strain on the system, simply by the amount that they use. If they conserve, she thinks that the comprehensive plan talks about a state law which says that every city had to come up with conservation measures. She said they are not looking at any kind of a method to increase saving and conserving water. The Minneapolis Star talks about a one-time increase. She asked if that was true. She said this year the City is asking voters to allow a one-time increase, not a change to the City Charter. Is that a one-time this year and then a one-time ne�t year? Or do we try to find a way? The 1999 comprehensive plan pointed out that it was necessary to do some sort of a study. Mayor Lund stated the reason for the 1999 comprehensive plan suggesting that cities look at that was for conservation purposes. Fridley does not have a watering ban like other cities because we have the capacity to service everybody and their demands. We have a good and adequate system. What we do not have is an inherent fixed cost in providing and delivering those services. He is not trying to argue the point because he does appreciate her interest and time and concerns. Ms. Reynolds asked if the rate increases will also affect every gallon of water used by commercial users as well. Councilmember Bolkcom replied, right. It will be increased for everyone right across the board. Everybody is subsidizing everybody right now. She said they do look at the water rates and try to figure out what they can possibly do. To be honest, she thinks they should have been increasing rate a long time ago. We are using the money to fix our wells and deliver a good product, and some of it is also related to federal mandate. We are being very prudent with the things we have to do. The capital improvements that we have done on our wells have been things that had to be done because we are an older city. Ms. Reynolds stated she thinks we cannot keep coming back and asking for more money because the voters already have an issue with 3 percent. Mr. Haukaas stated looking at the list of 29 cities Ms. Reynolds presented them with, only 5 of them he believed had more than 3 tiers, 4 of them had 3 tiers, and the remainder had 1 or 2 tiers similar to us. We are similar to 21 out of 29 with 2 tiers or less. He does not see how what we are doing is contrary to what everyone is doing. In addition to that, the quality of water is something that needs to be looked at. Blaine is cheaper than Fridley. The primary reason is that, at this time, we are able to filter basically 100 percent or our water. Blaine is filtering less than 20 or 30 percent of their water. They have large filtration plant projects in place. When those FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 21 are completed, they will still be filtering less than 50 percent of their water. It comes down to the product we are getting and the cost associated with it. Ms. Reynolds asked early on there was some discussion about street projects and how does that affect monies coming out of the water and sewer enterprise funds. Mayor Lund stated as they do the street reconstruction projects, it seems prudent to do repairs where needed under those streets. We are taking monies out of the water and sewer funds as appropriate to fix the infrastructure and that is what the reserves are set aside for. Ms. Reynolds replied the commercial user is paying the same $12 minimum. Councilmember Billings stated if a commercial/industrial user uses 1,000 gallons in a quarter, they are still getting billed the minimum. Ms. Reynolds stated she understands that but if she is a huge user, and using 5,000,000 gallons, she is putting more strain on the infrastructure and she is still only paying the $12 minimum. She is paying for all the water but she is paying a$12 minimum. Councilmember Billings replied if you are paying for 5,000,000 gallons, you are paying for the first 12,000, the second 12,000, the third 12,000, etc. and the ne�t 100,000. He said he is not sure what point she is trying to make. Ms. Reynolds stated they are saying the $13.80 that each residential user pays is for infrastructure and building. Councilmember Billings replied it is based on a minimum usage, not a minimum fee. Dr. Burns stated their problem is not a conservation problem. It is the budget-balancing problem. They really do not solve the revenue problem through conservation measures. If our rate structure were out of line and the residents/customers were paying a disproportionate share of the cost, then it stands to reason they would be paying more, but they are not. Robert King, 5398 Altura Road, asked if they are raising the rates every year to the maximum that is allowed. Mayor Lund replied they have been. Low inflation from year to year has caused them to raise only to the rate of inflation or 5 percent whichever is less as designated by the Charter. For the last five years, it has been 3 cents per 1,000 gallons. Mr. King asked where are they having the problems. Mr. Pribyl replied all three are in a deficit. Mr. King stated if they want something to pass, could they look at raising the sewer rates to match the rates that Metropolitan Waste Commission is charging. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 22 Mayor Lund replied they would like to but they cannot because of the Charter restriction. Mr. King stated, yes, but if they put it on a ballot. What they are looking for is a ballot that is going to pass, correct? Mayor Lund replied, right, in the previous two years, they have asked at the ballot for removing that part of the restriction that was placed upon the City in 2000 as it relates to the water, sewer, and storm water. That ballot question has failed two years in a row. It tells him the citizens do not want to be asked about a rate increase. We are asking for an increase and we would not be able to do another increase until we ask the voters again. We can do the small increase up until the rate of inflation or 5 percent, whichever is less. Even this increase will not get us to break even. Mr. King stated so the increase that they proposed every year that is on the Charter will not cover the water cost? Mayor Lund replied, no. Even going at the maximum that we are allowed to raise the rates now, it is going the wrong way. We are having a larger and larger deficit each year. Mr. King stated he understands that and from what he hears the main reason is the Metro Waste Commission is charging the City more money every year. Mayor Lund replied, that is one of the reasons. Mr. King asked can they live with that on a water increase and just increase the sewer rates to match the Metropolitan Waste Commission's increases? Mayor Lund replied those funds are not co-mingled, they are called enterprise funds. What they gather in revenues, the income for sewer stays in the sewer fund. He asked which one was losing more money. Mr. Pribyl replied actually the sewer fund has the higher loss. Mayor Lund stated Mr. King's point is well taken. Three-quarters of all the money the City derives from the sewer bills is going to Met Council to treat the sewage. The reason why our water fund keeps losing money is because we pretty much take care of our own system. The ever-increasing cost of the chemicals alone is going at a much higher rate than the rate of inflation. Our system is aging so we find more and more need for taking money out of that water reserve to pay for equipment. Mr. King commented he thinks the City does a terrific job. He thinks where we run into trouble with this is that the voters are voting now just because of spite. And the reason for that is because they tried to push through, five or six years ago, the utility fee and somebody went out and got a petition and now we have to vote on it. He thinks if they present something that is true and honest and they have their facts and figures straight, he thinks everybody will vote for it. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 23 Councilmember Wolfe stated they are just trying to recover what they are being charged. William Holm, 7424 Melody Drive, approached and asked if they are dedicated funds. They cannot be used for any other purpose. So theoretically if the City generates too much revenue, they have to use that money to lower rates. Mayor Lund replied in the reality of the real world, nobody gets a refund or lower rates. What it would do is keep them from raising the rates. Mr. Holm asked how they establish sewer rates. Mayor Lund replied sewer rates are figured for the whole year for everyone in the winter quarter which is probably the most fair because you are not watering your lawn then or using your pool. He guessed the premise is the water you are using in the winter quarter is water that is going down the sewer line. Mr. Holm stated he did not think a lot of residents understand that. Mayor Lund replied that is why that stays fixed and it is changed each year based on your consumption in the winter quarter. It would be unfair to charge a higher rate for sewer when you are paying for more water in the summertime because that is when obviously everybody is using the most water, watering their lawns. Mr. Holm stated right now we are running deficits of $500,000 or more combined and they are projected to increase by even more in the coming year. Has this affected the borrowing capability of the City in any way at this time? Mayor Lund replied as our reserves are diminishing and depleted, since we are in a negative in raising revenues, we cannot bond for future projects. Councilmember Bolkcom stated the City actually had its bond rating downgraded. Mr. Holm pointed out regarding one of the results of the spiteful vote years ago is that there has been a lot of talk regarding changing the rate structure. The City does not have the authority to do that because the Charter restricts them in terms of how much they can increase rates. So they cannot increase rates by more than the rate of inflation for industrial users. Changes need to be made to give them the authority to do that. A1 Stahlberg, 8055 Riverview Terrace, approached and stated people should pay for what they use. He stated he uses 3,000-4,000 gallons a quarter. He is not complaining about the $13.80 but the thing is he can go around and triple the amount and it would not cost him anymore. He stated he cannot believe they are not more concerned about conserving water; that it has to cost them a lot more to filter out 10,000,000 gallons of water than it does 5,000,000. Maybe the 3 percent paying for half the revenue is not paying enough. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 24 Councilmember Wolfe replied as far as raising the rates, the City is just trying to pay its bills. All the City wants to do is raise the rate to what it is being charged. Right now the City is paying 6.3 percent of everyone's water bill out of our balance and we just keep going backwards. Mr. Stahlberg asked what would it take to get us out of the hole? Mr. Pribyl replied that is exactly what they are looking at in 2007. We are going to be voting on a break-even rate for water, sewer, storm water for what is in place January 1, 2007, for that particular budget year. We do not know what will happen in future years. Councilmember Billings replied this number, based on all the information we have, is going to cause the water fund to get to a break-even point for 2007. We will be here again in 2007 if something we do not know about happens. Three times we have asked to raise it and the voters have turned it down. Once we break even, in theory, the cost of living should take care of it. Unless there are some major things that happen that we do not know about at this time. MOTION by Councilmember Barnette to close the public hearing. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS CLOSED AT 10:14 P.M. 14. Consider the Building Located at 5685 Jackson Street N.E. Hazardous and Order its Removal or Repair Pursuant to Minnesota Statutes, Section 463 (Ward 1). MOTION by Councilmember Billings to waive the reading of the public hearing notice and open the public hearing. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS OPENED AT 10:16 P.M. Mr. Hickok stated on April 21, 2006, this home was involved in a fire and sustained heavy damage. The City's Chief Building Official inspected it after the fire and determined the home sustained heavy enough damage to be determined a hazard and notified the owner. On Apri124, 2006, the property owner was contacted and informed that the Minnesota State Building Code said in part: "Any structure that constitutes a hazard to safety health or other public welfare by reason of disaster or damage, shall be considered unsafe." The State investigator from the Fire Marshall's Office concluded his on May 15, 2006. The building owner was contacted again by the building official and a detailed message was left. On June 8, the owner called and indicated the demolition would be concluded by June 30, 2006. His insurance company then called on June 13 and indicated that their fire investigation was complete. The home remains standing after assurances by the owner that the home would be taken down by June 30. State Statute 463 defines a process for demolition proceedings. That is the point of the hearing tonight. The property will have 20 days from service of notice to respond. The attorney for the property FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 25 owner has now indicated that the home will be removed within the ne�t 7 to 10 days, and a contractor for that property indicates that he will be deconstructing rather than demolishing the home. Staff is recommending that the City proceed with the statutory process so that we can take down the house if it does not come down. Mr. Hickok stated if the owner fails to contact or act in accordance with the notification, the City can repair or remove the structure and bill the expense, plus the administrative expenses, to the owner. Because of the severe damage to the structure, the City has determined the building will be demolished, rather than repaired. Staff is concerned about deconstruction. The company that is doing the demolition in this case has defined it as a deconstruction. That is to save the foundation. They would like to reuse the foundation which is a good principle and seems to make sense. However, it does take time, it leaves the hazard longer and it may make the hazard more attractive as a nuisance as the home becomes picked apart but yet some of it remains. The deconstruction site must be surrounded by a non-climbable chain link fence. The deconstruction site must be secured 24 hours a week, 7 days a week Staff prefers that the deconstruction occur this week and be concluded by Friday, August 18, 2006. The fence should remain around the foundation until it is capped and the hazard can be secured. Staff recommended that the Council hold the public hearing and approve the resolution that will authorize staff to move ahead with the statutory process, notify the property owner, and ultimately take down the structure if necessary. Councilmember Bolkcom asked if it was realistic to have it done in a week. Mr. Hickok replied the property owner's attorney indicated last Friday that it would be done in a 7 to 10 days, and they would like to hold them to that. Councilmember Bolkcom asked if he is recommending that the whole thing, including the whole foundation go or if he is saying they can deconstruct it as long as they follow the stipulations of having a fence around it and cap it. Mr. Hickok replied, the latter. If the City does it, they do not save the foundation. Roger Avery, 600 Glencoe Street NE, approached and stated this guy has 20 days. They have issues that have been going on in his neighborhood that have been going on for a long time. Pat Carline, 5705 Jackson Street, approached and stated he lives two houses away. He wondered if they tear it down and take the foundation down, why would they not fence the new building in. He has never seen a house under construction in the City of Fridley where they fence the foundation. Mayor Lund replied it is a temporary fence used on any construction site. Councilmember Wolfe stated it is for safety and typical for construction in an established neighborhood. Mr. Hickok stated there was a construction project just down the street recently and it was surrounded by chin link fence to keep people out. New construction does not require chin link FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 26 by law, but certain people use it if their project warrants it for the safety of others. In this particular case the fact it has stood for so long has really aroused the curiosity of a lot of people. Mr. Carline stated if they were concerned about safety it should have been fenced in a long time ago. He said he was at the scene and he would think that with the heat of the fire, the foundation would have been weakened. Attorney Knaak, City Attorney, stated the procedure that they are following now is actually kind of exceptional yet it takes special action on the part of the City Council to even be able to access the property in this way and to protect the public in this way. So the City has to follow a process. The resolution that is on the agenda for this matter actually serves as a summons. It is served on the property owner, and they have 20 days to answer. It gets immediately filed with the court and, if there is no answer after the 20 days, the City can actually go in and do what it needs to. The law is designed to protect the private property owner, and the City has to go through some really pretty e�traordinary steps to do this kind of thing. This is perhaps the third one which he has seen the City do in ten years. MOTION by Councilmember Billings to close the public hearing. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS CLOSED AT 10:32 P.M. NEW BUSINESS: 15. Resolution Revoking Special Use Permit, SP #03-14, for Central Auto Parts, to Operate a Junk Yard in an M-1 Zoning District, Generally Located at 1201 — 73 �/z Avenue N.E. (Ward 2). Councilmember Bolkcom asked the City Attorney if they needed to pass the resolution. She felt they have been working with City staff. She asked what would be the best way to give them a few more months. Attorney Knaak, City Attorney, replied there are a couple of possible procedures they could follow. One is just to continue this action item for another time. A special use permit already exists on the site. Council does not have to act on it this evening. Councilmember Wolfe asked so they could continue it, for example, six months. Attorney Knaak replied they could, although he would caution them on how they handle their review process of special use permits. It is important they do it regularly so that there does not appear to be any wavering. The danger that they run in a situation like this is, if they do it long enough, they will have appeared to have waived their options. Especially if they approach one year. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 27 Councilmember Bolkcom asked about the license. There is also a license with this whole process is there not? Mr. Hickok replied they are separating those two issues. The license will go ahead, they will continue to operate. Any corrections or modifications will come through the special use. Dr. Burns asked him what would be a reasonable date for continuation of this matter. Mr. Hickok replied, considering the progress that has been made and the comments they have heard back from and conveyed to the Rice Creek Watershed, he would say it would be fair to set it up for 60 days. They will have their answer from the Rice Creek Watershed District at that point, and they will have a better sense probably of other modifications. Councilmember Bolkcom asked, knowing that they are before the Rice Creek Watershed near the end September, would that be 60 days from then or is it from this evening. Mr. Hickok replied he thinks it is realistic they will have their answers and corrections made within 60 days despite the September date. They could start the 60 days from the September date. Councilmember Bolkcom asked Attorney Knaak if they continue it for 60 days it will set a time limit. Attorney Knaak replied that is a reasonable period of time. They have that discretion. Councilmember Billings said they are talking about the October 9, 2006, City Council meeting. Mr. Hickok replied, yes. Councilmember Billings asked if they are also expecting on October 9 that they would not only have approval from Rice Creek Watershed District but a tentative timetable of the rest of the items in the special use permit that need to be completed. Mr. Hickok replied, yes. Councilmember Bolkcom stated so basically they would have a contractor lined up and they would have their landscape plan and everything. Councilmember Wolfe stated but if on October 9 the Rice Creek Watershed District has not gotten back to them, they would just continue it again until they get it. Councilmember Billings stated he thinks at that point in time Council would have to make some kind of decision. MOTION by Councilmember Wolfe to table the Resolution Revoking Special Use Permit, SP #03-14, for Central Auto Parts, to Operate a Junk Yard in an M-1 Zoning District, Generally Located at 1201 — 73 '/z Avenue N.E. to October 9, 2006. Seconded by Councilmember Barnette. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 28 UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. Councilmember Billings asked attorney Kurth if she understands what they are looking for on October 9, 2006, is hopefully approval from the Rice Creek Watershed District, a tentative agenda as to when the items are uncompleted will be completed — an aggressive schedule, and asked that she nod in agreement if so. (Attorney Kurth nodded in the affirmative) Councilmember Bolkcom asked Attorney Knaak if tabling this resolution then allows the special use permit to continue until October 9? Attorney Knaak stated, yes. Councilmember Billings stated, just so there is no misunderstandings, he wants to make sure the property owner/fee owner is understanding that these are stipulations and the special use permit is tied to the property and, if they are not completed by the tenant or the property owner, one or the other, at some point in time they will be reviewing this again for a possible view towards revocation. 16. Resolution Ordering the Removal or Repair of a Hazardous Building, Pursuant to Minnesota Statutes, Section 463, Located Within the City of Fridley, Minnesota (5685 Jackson Street N.E.) (Ward 1) MOTION by Councilmember Billings adopting Resolution No. 2006-48. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 17. Informal Status Reports. Councilmember Bolkcom stated on the soggy National Night Out there were 2,000 pounds of food collected for the food shelves. There were 100 block parties. People from the City did a great job as well as everyone who organized the parties. Councilmember Billings asked if they want to add another item to their agenda. Based on the conversations he has heard tonight and those heard about four weeks ago, in review of the City Council minutes from 2003, there were two special use permits on Central Auto Parts prior to 2003. In 2003 this City Council took action to modify those two special use permits and to issue Special Use Permit, SP #03-14. They never actually vacated the two existing special use permits, and the property owner has argued that as far as he is concerned, this is the tenant's special use permit and, if it goes away, he never agreed to it, so he wants to go by the old special use permits. He asked if it would make sense to add an item to tonight's agenda to set a public hearing for October 9 to hear the revocation of those two old permits and then vacate them. FRIDLEY CITY COUNCIL MEETING OF AUGUST 14, 2006 PAGE 29 Attorney Knaak replied if there is any ambiguity about whether or not those earlier provisions are still in effect or not, he does not think it is at all a bad idea to clarify that and clarifying it does not mean you have to e�tinguish. The fact of the matter is you really run one special use permit at any given time. The last special use permit is deemed to be the special use permit and it does run against the property owner, notwithstanding what the owner said tonight for the parcel they are looking at. He would think at the very least what they would want to do is make very clear, when they have the newly modified special use permit, that they state in the resolution adopting that special use permit that any and all prior special use permits that may apply to the property have been e�tinguished. He would suggest that if they do that, they also very carefully review what those may be. It certainly would be appropriate to put that on the agenda for review. What they do normally, as an affirmative action in adopting a new special use permit, is to e�tinguish the terms and conditions of prior special use permits, and incorporate them into the current special use permit. He would anticipate that would be what they would want to do in this instance. Councilmember Billings said what he is hearing is on October 9 if it is the desire of the Council to not revoke the special use permit, the resolution should clearly state that they are not revoking the special use permit, they are adopting the new timelines as new stipulations and then adding an additional stipulation that any and all prior special use permits on this property would become e�tinguished. Attorney Knaak replied, that is correct, they would be e�tinguished. Councilmember Billings asked the staff to take a very close look at those special use permits prior to 2003 and make sure there is nothing in any of those that carries forward and take a more precise look at the language of the actual action from 2003. ADJOURN: MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MEETING ADJOURNED AT 10:53 P.M. Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor