Loading...
CCM 12/02/2013 CITY COUNCIL MEETING CITY OF FRIDLEY DECEMBER 2, 2013 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:02 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember Barnette Councilmember Saefke Councilmember Varichak Councilmember Bolkcom OTHERS PRESENT: Scott Hickok, Community Development Director James Kosluchar, Public Works Director Darin Nelson, Finance Director/Treasurer Wally Wysopal, City Manager Darcy Erickson, City Attorney Julie Jones, Planning Manager Kay Qualley, Environmental Planner Jack Velin, Environmental Quality & Energy Commission Eric Boyles, Environmental Quality & Energy Commission th Edward Hondl, 685 – 57 Avenue NE Jim Golden, 6701 Overton Drive Richard Walsh, 6859 Seventh Street NE APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: 1. Council Meeting of November 18, 2013. APPROVED. OLD BUSINES 2. Second Reading of an Ordinance Amending the Fridley Home Rule Charter, Chapter 7. Taxation and Finances; Chapter 8. Public Improvements and Special Assessments; Chapter 11. Public Ownership and Operation of Utilities; and Chapter 12. Miscellaneous Provisions (Continued November 4, 2013). WAIVED THE READING OF THE ORDINANCE AND ADOPTED ORDINANCE NO. 1310 ON SECOND READING AND ORDERED PUBLICATION. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 2 NEW BUSINESS: 3. Receive the Minutes from the Planning Commission Meeting of November 20, 2013. RECEIVED. 4. Special Use Permit Request, SP #13-13, by Aramark Uniform Services, Inc., to Allow Limited Outdoor Storage, Generally Located at 5330 Industrial Boulevard N.E. (Ward 3); and Resolution Approving Special Use Permit, SP #13-13, Aramark Uniform Services, Inc., the Property Owner for the Property Located at 5330 Industrial Boulevard N.E. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 5. Resolution Deferring Special Assessment Payments for the Property Located at 7569 Jackson Street in Regards to Street Improvement Project No. ST. 2013-01 (Ward 1). ADOPTED RESOLUTION NO. 2013-70. 6. Resolution Ordering Preparation of a Preliminary Report and Preliminary Plans and Specifications for 2014 Street Rehabilitation Project No. ST. 2014-01. ADOPTED RESOLUTION NO. 2013-71. 7. Claims (161858 - 161954) and 1311 – ACH Pcard. APPROVED. 8. Licenses. APPROVED THE LICENSES AS SUBMITTED AND AS ON FILE. APPROVAL OF CONSENT AGENDA: Councilmember Bolkcom asked that Item No. 4 be removed. MOTION by Councilmember Barnette to approve the proposed consent agenda with the removal of Item No. 4. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 3 ADOPTION OF THE AGENDA: MOTION by Councilmember Bolkcom to approve the agenda with the addition of Item No. 4. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM: No one from the audience spoke. NEW BUSINESS: 4. Special Use Permit Request, SP #13-13, by Aramark Uniform Services, Inc., to Allow Limited Outdoor Storage, Generally Located at 5330 Industrial Boulevard N.E. (Ward 3); and Resolution Approving Special Use Permit, SP #13-13, Aramark Uniform Services, Inc., the Property Owner for the Property Located at 5330 Industrial Boulevard N.E. Councilmember Bolkcom stated because the City allows the different temporary storages and they are basically there for a purpose, but also, there is going to be this shielding from the right- of-way. She asked what happens if one of those goes away? Does that change the special use permit? Scott Hickok , Community Development Director, replied, there are two outdoor storage areas, one of them is the two trailers. It is their understanding that typically, there are two trailers there to hold garments at any and all times. It would not change. It allows them up to two trailers in this special use permit. Councilmember Bolkcom asked if for some reason they no longer need one or two of the trailers, would that change the special use permit. Mr. Hickok replied it goes with the land. The next user of this building could use that area that has two trailers if they chose to. Time away from the dock does not mean the SUP goes away. Councilmember Bolkcom asked, but if they were to sell, and the next property owner did not need that but maybe wanted to use just one of them, does that change? Mr. Hickok replied, no, it does not. That is one of the nice things about special use permits. It is actually added real estate value because they get a benefit to the property that goes along with the property to the next user. Provided the next user does not exceed what is permitted by this special use permit, they can do that as well. One trailer would not change this special use permit. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 4 Councilmember Bolkcom asked if one trailer would still have the screening effect. Mr. Hickok replied, yes. MOTION by Councilmember Bolkcom to approve Special Use Permit Request, SP #13-13, by Aramark Uniform Services, Inc. and adopt Resolution No. 2013-69. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY . 2014 BUDGET AND PROPERTY TAX PUBLIC MEETING: 9. Presentation of the 2014 Budget. Wally Wysopal , City Manager, stated the State Statute and Fridley Charter require the City Manager to present the budget to the City Council. By the time he started his tenure with the City in June, much of the work had already started by Darin Nelson and staff. A lot of good work on the budget had been done in years past by the previous City Manager, Bill Burns. They built on that tradition. They continue to provide a budget that is independent from LGA for operational activities. The City does use LGA for capital improvements and such to try and reduce its reliance on borrowing. They do try and remain as independent from LGA as possible because of the fluctuations that seem to come through the State’s commitment to that program. Mr. Wysopal stated another major change this year was the inclusion of some outcome indicators. The purpose of the outcome indicators is to allow the public to see more transparently what they are trying to achieve with the tax dollars that are being utilized by the City. Tonight Council is being asked to move this process one step forward with final approval scheduled for next week. Darin Nelson , Finance Director/Treasurer, stated the City does have levy limits in place. In addition to the Council’s levy-setting authority, the City does have two other additional authorities that govern the levy limit. The first is the Legislature. The 2013 Legislature implemented levy limits right at the end of the session this past year. Those levy limits are set at about 3 percent. The City did find out at the August budget work session, right before the meeting actually started, that those levy limits probably would not be applicable to the City of Fridley, first, because of it being a 3 percent levy limit, and second, the debt levy is a special levy that is considered outside the levy limit, so it actually increased the levy cap significantly higher than 3 percent. Mr. Nelson stated the second authority is the Charter. Based on the Charter, the City’s levy is restricted to either a 5 percent levy increase or the CPI, whichever is least. Over the last number of years, the CPI has been significantly less than that. For 2013, the CPI stipulates the City is limited to 2.3 percent. Mr. Nelson stated for the first time in several years, the City is allocating a portion of the levy towards capital outlay—specifically, capital equipment. The goal of dedicating levy towards FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 5 capital equipment is to reduce and eventually eliminate the need for future capital equipment certificates. Over the last four years, the City has issued two separate issuances of capital equipment certificates. Unfortunately, it was a tool the City used to buy some time in order to make the necessary purchases for capital equipment but with that comes the additional cost of the interest expense on those equipment certificates. It is a goal of the Council and City staff to eventually eliminate those capital equipment certificates and be able to get into the financial position of buying more police cars, fire trucks, snow plows, with cash. Mr. Nelson stated as to the breakdown of the 2014 levy, a little over $10 million is dedicated to the general fund which is increased by about $81,000. Springbrook, which has its own special levy, increased to about $339,000, which is a $7,600 increase, or 2.3 percent increase. Mr. Nelson stated the Capital Equipment Fund has $175,000 of the levy. This is the new allocation for 2014 that was previously mentioned. The debt service fluctuates a little bit each year given the principle interest payments that are due. That gives it an increase of $258,807 or 2.3 percent levy increase for 2014. Mr. Nelson stated as to the tax impact of the levy increase on the City’s homeowners, in the past, the City would use one average home. This year, the City broke it down a little differently. Staff did three different scenarios with the homes valued at $100,000; $150,000; and $225,000. As of January 2013 for taxes payable in 2014, the City did experience significant decreases in property values. On average, across the City, residential properties declined about 10 percent. Those valuations are dated back to October 1, 2011, through September 30, 2012. That is when those valuations were established, which was a time where the market was just starting to turn. Next year when residents get their property tax notices or valuations in the spring, they should see their valuations start to go up. Mr. Nelson stated the change in property taxes for a 2.3 percent increase in the proposed tax levy will actually bring about a decrease in City property taxes by the same rate as what the home values decreased. For example, home values that are experiencing a 10-14 percent decrease in valuation should also see a 10-14 percent decrease in their City taxes. This does not include the school district, county, or any other special taxing districts. Mr. Nelson stated there were two very important changes the Legislature brought forward this past session. First, was the change to LGA funding. The City is scheduled to get an increase of about $450,000 for 2014. That is a nice extra amount of money the City can dedicate right towards capital outlay, such as buildings, parks, and capital equipment. The total LGA for right now is scheduled to be about $1.2 million. The City received about $760,000 over the last several years but, prior to that time, the City was up right around the $2 million range. Mr. Nelson stated the other major change was sales tax. For the last 20 years or so, cities have had to pay sales tax on any purchase they make. Starting January 1, 2014, the City will no longer have to pay sales tax for the most part. The City will experience about a $70,000 savings to the general fund because of this. That savings is allowing the City to move a portion of the levy over towards the capital equipment fund. If it was not for the sales tax savings, there would be a bigger levy increase in the general fund and not as big of one in the capital equipment fund. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 6 It is helping the City move away from having to issue capital equipment notes in the future. Citywide, the savings are just under $150,000 across all the utility funds. The purchase of vehicles is not exempt from this--that is a motor vehicle sales tax, and this is specifically a general use sales tax. Mr. Nelson stated the City’s major financial initiatives for the budget includes continuing to strive for financial independence by not relying upon LGA. It is all being dedicated to capital project funds and not the operational budgets. Staff is plowing LGA proceeds into buildings, streets, parks and capital equipment. There again, with the goal of eliminating future equipment note issuances. We do not want debt service to be the driver of a tax rise in the future. Mr. Nelson stated technology and service innovations have created organizational changes and have actually resulted in a net reduction of FTE’s for the City as well. Mr. Nelson referenced a ten-year levy comparison chart. In 2005 through 2009, a small portion of the levy was dedicated to capital improvements, specifically parks. The other part that started in 2006 was debt service, which grew at a higher rate than other portions of the levy. In 2011 and 2013, the City issued capital equipment certificates. In 2011, the City was limited by levy limits by both the State and the Charter. In 2013, the capital equipment levy shot up again sue to a jump in debt service payments. The City’s goal is to moderate debt service, and then start to reduce and get away from that need. In 2014, there is $175,000 of the levy dedicated towards capital equipment. Mr. Nelson stated as to the general fund, this budget includes not only the 2014 budget but also the 2013 revised budget. For the most part, this will be the final 2013 budget. There are still some reappropriations that will come before Council in March for donations and grants received from now through the end of the year. Donations and reappropriations received prior to December have been accounted for already. Council will not see a lot of changes coming forward for the final budget. Mr. Nelson stated revenues are coming in higher than anticipated. Building permits are on track to outpace what the City budgeted. On the expenditure side, personnel costs are down and that is because of several vacancies the City has had throughout the year. Adding those two together, the City anticipates about a $380,000 surplus in the City’s general fund. Ideally, each year we do need to add to the City’s fund balance to accommodate increased expenditures in the next year. Mr. Nelson stated as for the 2014 budget, the City has budgeted a levy increase of $82,000, or about .82 percent of the levy increase going towards the general fund. Revenues are increasing at about $324,000 total. Of that amount, $82,000 is from the tax levy. The remaining part of it is permit revenue which is expected to be high next year, with a lot of building activity expected. Mr. Nelson stated they are anticipating expenditures to increase about $340,000 or 2.3 percent. In addition, 2014 is an election year. The City has elections every other year, so with that comes increased costs of about $45,000 to $46,000. The City also has budgeted for emergency siren replacement, which is anticipated to be about $60,000. This is a one-time capital cost. The FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 7 City’s cost-of-living adjustment for personnel costs is budgeted at 1.5 percent. That is about a $125,000 cost across the general fund. Mr. Nelson provided a breakdown of the general fund revenues. The general fund is heavily reliant upon property taxes. The City’s revenues diversification is limited. General fund revenues consist of property taxes, charges for services, licenses and permits, and other inter- governmental revenues, grants, etc. Two-thirds of the City’s general fund revenue comes from property taxes. Mr. Nelson stated as to expenditures, Police, Fire, and Public Works account for about 70 percent of the City’s pro rata expenditures in the general fund. These core services account for a majority of the City’s costs. The City is in the service industry, so personnel is going to be the driver of the City’s costs. About 75-80 percent is personnel costs within the general fund. Mr. Nelson stated as to the capital project fund, this year, staff implemented a stand-alone, five- year capital improvement plan (CIP). The CIP was discussed in June at a budget work session and in late August, Council approved the stand-alone document. In past years, the CIP has been included as part of the budget. This year, staff broke it out and did a more in-depth analysis, which helped with strategic visioning. Mr. Nelson stated it should be noted that all the 2014 projects approved in the CIP are included in this budget within the specific fund. Again, LGA and a portion of the levy are being dedicated towards the capital project funds with hopes of eventually eliminating those capital equipment notes. Mr. Nelson stated moving onto the utility funds, the water, sewer, and storm water funds, Council may recall staff recommended 20-year projections on all the utility funds a couple of years ago. That was at the request of Councilmember Bolkcom to determine what the City needed to do to stabilize rate increases. The City wanted to stabilize the rates and get them back to more moderate rate increases. Once they saw the 20-year projections and what the future held, they realized that if the City kept up issuing debt every other year, down the road, 10, 15, 20 years, the debt service would really became the driver of the rates and not the operation. They wanted to get ahead of that and have the opportunity to increase rates at a higher rate for a few years which would allow the City to build sufficient reserves in order to pay for these capital outlays that should be paid for on a routine basis. Mr. Nelson stated with those forecasts, the City does have short-term and long-term goals. The short-term goal is the City wants to maintain sufficient cash balances to maintain operations and pay the City’s debt services obligations. Also, they want to build upon those balances to cover yearly capital outlay related to routine repair and reconstruction. Mr. Nelson stated as to long-term goals, they are to maintain financial sustainability and eliminate debt. The City has not issued debt for the water fund since 2010. The City does have one debt issuance anticipated in 2014 and, depending upon what projects go or do not go and what their cash flow needs are, we may not have to issue debt in 2014. Even with this debt issuance, we are moving to a four-year debt issuance plan rather than a two-year debt issuance FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 8 plan. That really helps down the road with reducing debt service payments. This is only the water fund we are talking about. The sewer fund has been issuing debt as well. We do not foresee any debt being issued for the sewer fund or the stormwater fund unless there are some extraordinary expenses that occur. Mr. Nelson stated those assumptions and recommended rates they talked about have not changed. Some of those assumptions we are anticipating, include MCES charges at the 2012 rate plus a 2 percent increase every year. Mr. Nelson stated staff still recommends that water increase 8 percent, sewer increase 5 percent, and storm water increase 4 percent. The cost of these increases to an average resident will be about $13 per year for water, $17.48 for sewer and about $.76 for storm water. Mr. Nelson stated each year AE2S does a statewide survey comparing what utilities rates are across all the different cities. Mr. Nelson presented a survey just on the metro-area cities. Mr. Nelson stated each year the City also does a cost-of-services comparison. This takes the utility bill, water/sewer/stormwater bill, along with the property tax rate and compares it to the nine contiguous cities around Fridley. The City of Fridley is ranked as one of the lower cities, basically tied for third with Spring Lake Park, Coon Rapids, and Mounds View. Given that assumptions stay the same and reality comes in as predicted, the City should be in the 3 percent range for the next year. Mr. Nelson presented a chart giving a total breakdown of revenues citywide. Between the 2013 revised budget and the 2014 budget, revenues for 2014 are expected to increase. Some of the bigger increases are in the water, sewer, user fees, and charges for water consumption. The rates are obviously increasing there, too; but they have seen a couple of drier summers the last couple years so the City has had some higher consumption numbers that are driving that as well. Also, in the user fees and charges are the special assessments which for 2014 the City has a bigger project with some bigger assessments for that year. Also, the other source is the bond proceeds in the amount of $1.76 million that are expected from debt issuance for the water utility fund. Mr. Nelson stated on the expenditures side, Public Works and Public Safety account for a large majority of the expenditures. As to capital outlay with the debt issuance, with the revenue coming in, the City will have the revenue going out on the capital project side of it. Mr. Nelson stated user fees and charges include liquor store sales, and take into account all the operations of the City. When you look at the City as a whole and when you look at the general fund, property taxes are about 67 percent of the revenue. Here, when you look at the entire City, property taxes are at about 30 percent. Mr. Nelson stated breaking down the general fund, personnel is at 77 percent, looking at it with the City as a whole, it is 41 percent. Capital outlays are at 20 percent, other services and charges, 33 percent, which includes Met Council’s sewer charge from MCES which is around $3 million a year. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 9 Mr. Nelson stated the City has complied with the appropriate section of the City Charter that requires certain formats, and the information is contained within the budget document. The budget needs to be approved by Council and submitted to the County by the end of December. It is on the agenda for the next Council meeting on December 9 to approve the levy and the budget. No action is required tonight. The budget is available on the City’s website. Councilmember Bolkcom stated they all balked a little bit at the process to begin with. This is actually a much smoother process and gets everyone involved in helping make the decisions and shows why they are making the decisions. Mayor Lund stated the best thing he can see as part of the outcome of this, is the reduction of not having to put more debt service out there for capital equipment, capital outlay. That is a real positive. It gets worrisome if you keep adding to that debt service. This is a real plus. Mr. Wysopal stated this is an opportunity with the LGA and, if the LGA were to go away, the City will be back in the situation again where they will have to decide how they want to finance certain capital types of items. Right now it makes sense to try and eliminate that debt financing as much as they can. Councilmember Varichak stated with the reduction or a slight increase in our utility fund, the critical part will be the reduction next year with the smaller percentage increase. The City is now getting to a point where it can finally reduce that end and have a lower percentage rate as well. th Edward Hondl , 685 – 57 Avenue NE, stated he has no questions on the budget other than the information that was in the budget that drove to it. Really the levies and the percentages of increases that resulted in property values and taxes. He was rationalizing his proposed tax statement he received for 2014, and it is completely off the wall from what is being said. His property values went up by 19 percent. That was the estimated market value. The taxable market value went up by 25 percent. That translates into a City increase in his taxes of 25.7 percent. He is not sure what is driving that other than the increase in his value. He questions whether everybody else’s property in Fridley on average is increasing 10 percent. He has actually done nothing to his property in 30 years since the last permit was drawn for an addition he put on the house. He said there was someone around the spring or the summer to assess the values of the property in the neighborhood he is in. Mayor Lund stated, an appraiser. Mr. Hondl stated, yes, an appraiser. He thinks there is a certain area of the City that is done every year. This has been a number of times since he has lived there. Councilmember Barnette stated, every four years. Mr. Hondl stated he has been in his property for 38 years. This is the worst increase in taxes he has seen. He is looking to find answers to rationalize what is on his property tax statement against what the budget is saying. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 10 Mayor Lund stated he understands. He said first of all Mr. Hondl should talk to the City Assessor’s office. Some neighborhoods will see significant reduction, some little, some slight increases, and unfortunately, much larger increases. Mr. Hondl asked if that was a general trend in the area which was reassessed this summer. A comment was made by the assessor to him that the City lost a bunch of documents relating to properties and they were going back and redoing things. Mr. Nelson stated if it was assessed last summer that is measured as the valuation that is not going into effect for these taxes right now. It was a valuation from one and one-half years ago that drove this tax levy. He recommended Mr. Hondl talk with the City Assessor or the residential appraiser and find out why the value increase because they did see the values drop 10 percent across the City on residential property. He said he would mention it to the appraiser and have him take a look. Mr. Hondl asked Councilmember Saefke if this happened to anybody else in his ward, because the houses in their ward are very, very comparable. They are three-bedroom ramblers. Councilmember Saefke stated no one has mentioned anything to him. His increased a little bit because they put an addition on it a couple of years ago. Councilmember Barnette asked Mr. Hondl if he has talked to some of his neighbors. Mr. Hondl stated his neighbors have changed so much. The one thing that concerns him is he has one of the nicer pieces of property in the neighborhood largely because of the rental units within his area. People who cannot sell their homes are renting them. They are kind of deteriorating. PUBLIC HEARING: 10. Consideration of a Rezoning Request ZOA #13-02, by the City of Fridley, to Consider Rezoning Property from C2, General Business, to M-2, Heavy Industrial, Generally Located at 3720 East River Road N.E. (Ward 3). MOTION by Councilmember Bolkcom to open the public hearing. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE HEARING WAS OPENED AT 7:48 P.M. Scott Hickok , Community Development Director, stated its last use was the Baggan’s Pub. The property was foreclosed upon. Prime Security Bank is the current owner of this property. It is th comprised of two separate lots and is at the corner of East River Road and 37 Avenue. Right on the Minneapolis border. The state statutes for rezoning gives the City the authority to rezone a property. It is in both the City’s interest and the owner’s interest to see the property sold and FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 11 reoccupied. The rezoning would be consistent with the City’s comprehensive plan that designates the future use of this site redevelopment. Mr. Hickok stated staff feels strongly that the rezoning will result in the redevelopment of this site in a manner that will produce the highest and best use. Currently, the property is zoned C-2, General Business. Combined, the lots are 2.3 acres of land. An existing 10,708 square foot building exists on the site, and there is a deteriorating parking lot as well. The surrounding uses are all heavy industrial. It is surrounded by the Minneapolis Water Works which is zoned “Public”. A similar use of that type would be heavy industrial. Across the way is heavy industrial property and along the rail is industrial property as well. Mr. Hickok stated to the south are a couple of properties. One is King Koil which has a large trucking operation and is industrial in nature. Rock-Tenn is a corrugated company that is south on the same side on East River Road as the subject property. On the west and the north sides is the Minneapolis Water Works property (or Minneapolis EEOC) and across is a very large salvage operation for automobiles that is heavy industrial also. Mr. Hickok stated the site was originally zoned M-2, matching its surrounding property. It was first used in 1949 as the City’s liquor store, and the site became Public. When the City of Fridley owns a property or the City of Minneapolis or Anoka County, “P” automatically becomes the zoning because it is owned by a public entity. Once it is not used as a public entity anymore, it rolls back to what its previous zoning had been. It started in 1949 as a liquor store. In 1970 a restaurant was added. The liquor store was closed, but rezoning the commercial use to C-2 did not occur until 1975. Different restaurants serving liquor came and failed during the course of those three years, the last being Baggan’s Pub. Mr. Hickok stated a possible cause of its deterioration is inadequate business. The site has also been empty and has not been maintained very well. Both the building and the parking lot, as well as its landscaping, have really sadly deteriorated; and this site is rather bleak. Zoning as an M-2 is a better fit, as the C-2 zoning was spot zoning back in its time. When it was rezoned in 1975, the chair of the Planning commission at the time asked the question about it, and the legal opinion of our legal counsel was the property had been sold to a private entity for a commercial use and the zoning should match what the City had sold the property for. Today the City would not have made that same decision, and 38 years of history show it was not a good decision. Mr. Hickok stated the site, with lots combined, meets the minimum lot size standard for an M-2 zoning district, and the zoning would also allow most of the uses the owner had inquiries about. Mr. Hickok stated the Planning Commission held a hearing on November 20, 2013, and unanimously recommended approval of the rezoning. The owner, however, has submitted a letter of objection. Councilmember Bolkcom asked when the letter was received. Mr. Hickok said it was received November 20, 2013. He proceeded to read the letter of objection. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 12 Mr. Hickok stated staff does believe the best use of the property is industrial that allows commercial, and the owner disagrees with that. The City of Minneapolis staff appeared concerned also about what an industrial zoning could bring for an end use with the EEOC being right next door. Mr. Hickok stated all the above considered, and having received no phoned or written comments from the surrounding properties since the Planning Commission hearing, staff believes the current C-2 zoning is not appropriate for this site based on 38 years of experience, and the Comprehensive Plan, and the goals for this area. An M-2 zoning is a better fit for this site and will lead it to be sold to a long-term successful user. Councilmember Bolkcom asked why Council did not receive the letter in their packet. Mr. Hickok replied it was purely an oversight. It was mentioned in the staff report and should have been an attachment in the Council’s packet. MOTION by Councilmember Bolkcom to receive the letter from Jay Larsen, Prime Security Bank, dated/received November 20, 2013. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, THE MAYOR DECLARED THE MOTION CARRIED UNANIMOUSLY. Councilmember Bolkcom asked what it would hurt if they did wait six months and let them continue to pursue this. Is the City out anything? She read in the staff report that there has been a fair amount of interest. Also, Council has heard there has been some interest from a funeral home. She drives by it a lot and it is in pretty rough shape. What would be the downfall of waiting six months? Mr. Hickok replied it is within Council’s discretion to do that if they so desire. Staff feels steadfast in its recommendation that M-2 is correct and 38 years of bad retail use on this site would be a pretty good indication that, if you are looking for a retail user, you are not surrounded by like uses. You have no synergy for retail there, it has not been successful. In spite of their realtor’s insistence, he would say it is not a C-2 site. It is far better zoned as an M-2 industrial site. It will awaken interest in this site. It is an independent site that might thrive on being close to a larger development. When the City was doing the Comprehensive Plan, they were saying that redevelopment was the direction this site should go and certainly something should happen with the zoning. Also, the 1975 history is a supporter of going back to M-2 as opposed to trying to keep it C-2. Councilmember Bolkcom asked how long this has been a discussion on the staff level related to changing the zoning. Mr. Hickok replied that would take them back to 2008. Councilmember Bolkcom asked when approximately the first conversation was related to the rezoning with Prime Security Bank. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 13 Julie Jones , Planning Manager, replied a couple months ago. Councilmember Bolkcom asked what their response was when they were talking about rezoning. It sounds like some of this has been in the works, the funeral home, and as was privy to the letter, considerable amount of time and effort was put on it by a couple of other entities that were thinking about this property. Ms. Jones replied they were kind of mixed in their opinion. Staff had a conference call with multiple people on the other line. They were not adamantly opposed or in support. It was mostly a conversation about what would be the benefits either way with the zoning and some of the options they had at the time. The school they brought up was something that just happened and just came to staff’s attention about an hour before the Planning Commission meeting. At the staff level, it is interesting that all the other uses they mention in their letter staff has received phone calls from people on, but she has not had any phone calls from anybody about the school. Usually when businesses are looking at moving somewhere, they contact City staff and ask questions about whether the zoning is permitted or not. Councilmember Bolkcom asked at the Planning Commission meeting, what was the response from Prime Security Bank. Ms. Jones replied, they were not present at the meeting, and that is why they submitted this letter. They were unable to attend the Planning Commission meeting. Mr. Hickok stated staff also had a very good discussion with the Bank about what M-2 Industrial allows them. It allows them to consider retail uses also. ThatM-2 zoning as the City sees it broadens the spectrum. They see this as narrowing their opportunity. Retail is still a possibility in the M-2 district along with M-2 users. They mention several times in their letter they have not had any interest from an M-2 industry. They have not heard anything because it is zoned commercial. Another point relating to the value of the property as mentioned in the Bank’s letter, when you talk to the City’s assessor, she will tell you the rate at which they would be charged taxes is the same regardless of whether it is zoned industrial or commercial. Councilmember Bolkcom stated it does not limit them from getting commercial, but does that fit in there? Mr. Hickok stated the M-2 district also allows what is permitted in the M-1. There again, it is broadly permissive. It allows a heavy and light industry. If you look a little further up East River Road, you will see the River Road Office complex. It is a very nice office complex which has a mix of users in it. If you look at the zoning, they will see that retail associated with that industry or retail on its own is permitted under certain conditions. This would not necessarily scare away a retail user, including potentially the school. Staff thinks it broadens the opportunity instead of narrowing it. Councilmember Bolkcom asked if Prime Security Bank is aware of that. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 14 Mr. Hickok replied they should be. They had the conference call with all of the big decision makers and staff told them then. He thinks they are relying a lot on their real estate person who may not understand the zoning piece as well. Councilmember Bolkcom asked if any staff had spoken with him. Mr. Hickok replied he was involved in the telephone conference. Councilmember Bolkcom stated at one point, there was some discussion about doing some type of recycling drop-off. She asked Mr. Hickok to expand on that. There was some interest at some point with both Hennepin and Anoka counties. Mr. Hickok replied, one thing to be clear. This rezoning did not come about as a result of that interest. Frankly, both Hennepin County and Anoka County have talked about a joint facility somewhere. It was intriguing to them that this site might be available to them after they learned the rezoning was going to happen. Really, that is the sequence in which it happened. Just to the north is the current Minneapolis EOC who also had expressed some interest in that site as a possibility for expanding their campus. They have not ruled it out and mentioned at the Planning Commission level they were curious and expressed concern about what would develop next to them. It is a picture of heavy industry that might be in their way. Of course they would not like it. M-2 Heavy Industrial is a broad spectrum. Plus it is a district that is very permissive. Mayor Lund stated given the fact that he does think it is spot zoning and was probably a bad judgment call 38 years ago, now that they have been made aware of it, are they under some type of requirement to make it right and not allow it for a continued spot zoning? Mr. Hickok replied, he will try and respond and then refer this to the City Attorney. The sense that he gets and history would show that these kind of decisions were not only made in Fridley but elsewhere. They have become more sophisticated in ways of zoning and understanding exactly what it means to have spot zoning like this happen. There were some circumstances related to this that caused it to be something the City was very interested in doing, and it did not weigh as heavily on comprehensive planning as it did a user in-hand. Those circumstances did not make it right, but they were not unique to Fridley. Those types of decisions were made all over. In terms of an obligation for the City to do something, he asked the City Attorney to help him. Darcy Erickson , City Attorney, stated she does not think the City is compelled to change it at this time; but it seems now might be an ideal time. It is a vacant property. It is inconsistent with all of the surrounding land uses, and it is a piece of history but missing that required correction. Mayor Lund said the owner states in the letter they are hoping for a quick sale, but they have owned it for three and one-third years. It seems to him the City has dealt with rezoning before. If he recalls correctly, those who typically have wanted to go from commercial to industrial, it kind of opens or widens the spectrum. Does that make the property more valuable, too? FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 15 Mr. Hickok replied it could be argued that it does broaden the spectrum. It would be hard to argue it diminishes the value, because you would look around and say Fridley is an enormously successful industrial community. A piece of property so beautifully situated, 2.3 acres, in that location he does not think diminishes its value at all. Staff would not be advising the rezoning if they thought it did. Mayor Lund stated he was trying to recall if it was near the Northstar train station and the gentleman from out of state who approached the City to rezone it going from commercial to industrial and, therefore, making it more valuable. Mr. Hickok replied he would have to go back and brush up on that history. There are times when industrial only makes sense. The assessment piece of it, having a rate per square foot, you can take that factor almost out of it. Then it comes down to what users would be interested in using that site. From the City’s experience, they have a window of retail that could happen there, and they have a much broader spectrum of industry that could happen and maybe the two could happen together. Maybe it is retail-related to a larger industry on this site. Staff knows there have been plenty of users who have asked if the City has that kind of combination. Also, 2.3 acres is not too small for that kind of thing. Mayor Lund asked if they go to this different rezoning, an M-2, are there restrictions as to how much of that can be retail. Mr. Hickok replied correct. There are certain percentage cutoffs. Thirty percent of the building can be retail, the remainder needs to be industrial. However, it does offer some opportunity even for a restaurant relative to the industry around it. There are opportunities for a Class A or B restaurant in that location as well as related to industry that might develop. It would be hard to argue that it closes out opportunity. If their place wanted to do it in this industrial spectrum of M-1 and M-2, they talk about things like service industries. Based on their interpretation, you might say that if it is a service, the teaching of this trade, then that, too, could be there. Even the retail associated with that. Certainly there would be products sold at the school. Councilmember Bolkcom asked if a funeral home could be there. Mr. Hickok replied the M-1 and M-2 are silent on that. He would say the answer is, no, not without a text amendment. Councilmember Barnette asked if the City of Minneapolis were to purchase it, would the City lose the taxes from that property. Mr. Hickok replied, yes, it would be tax exempt, public zoned property. Councilmember Barnette asked and the taxes are $32,000 a year? Mr. Hickok replied, yes, currently. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 16 Mr. Wysopal, City Manager,asked if there was currently a purchase agreement on the property the City was aware of. Mr. Hickok replied, no, the purchase agreement expired on May 31. There has been a lot of talk and they have gone as far as some architectural stuff. There is no talk of a purchase agreement. Just a valuation of the building. Councilmember Bolkcom stated before they put together a purchase agreement, you would want to go in and ask to look at the inside to see what the costs would be. Mayor Lund stated it is a little troubling not to have someone representing the property owner here tonight as well as for the Planning Commission meeting. Mr. Hickok replied there will be a first and second reading and they can pass their comments on to them. Typically, the public hearing is where you would hear it; however, if they would like to hear from them, staff can insist they be present at the first reading of the ordinance. Councilmember Varichak asked, even with the new Paul Hyde redevelopment, it would be better zoned as an M-2 than leave it there for what could be developed there. Could there be possibly something developed better with the development across the street? Mr. Hickok replied it is something staff has spent a lot of time on. They have evaluated what could happen. Maybe a restaurant, a lunch menu restaurant, with that demand across the street. Could they do that in the M-1 or M-2, yes. There could also be a smaller type supplier cozying up to a larger industrial complex. That could happen also relative to the Paul Hyde development. Councilmember Bolkcom stated she remembers doing some rezoning related to the Comprehensive Plan, but most of the time it has not been when there is a property owner against the property. She said she was struggling a little bit with this. If there is no huge urgency, could they let them have six months and go back to them and say, we really want to hear from you within the next month or two about what is going on. What would preclude the City from, in six months from now, going back and giving them that six months to pursue what they have there. The bottom line is industrial maybe makes sense there, but it is their property. Personally, she wants something that looks nice in her ward. It does not look nice now. She knows there have been problems when it was commercial, and most of the recent problems have been all related to a restaurant that had an intoxicating beverage license. Mr. Hickok replied it is something the City is empowered to do through statutory authority to rezone a property, and it is not unusual at all to not have all the property owners necessarily agreeing with it. It really comes down to what the City sees as the best end use for the property and what is guided in the Comprehensive Plan. If their vision is within the next six months to have retail there, he does not think even a retail that does not involve a liquor license is going to be successful there. The City had problems with its liquor store there. It is far away from any other synergetic interest and, when you get away from other businesses which are kind of looking out for you because they are similar to yours, then you have large industries that are just there and you have a little site that is functioning kind of as an island. He would hope in six FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 17 months they could bring the City a retail user, but they have not been successful during the three years or more they have owned the site. They spent a lot of time with the funeral home and hoped for that, but he thinks that long range purchase agreement came and went and with the substantial amount of money that went with that purchase agreement, he honestly does not know they will see a funeral home down there either. Councilmember Bolkcom stated the unfortunate thing is this letter was not received by the Council and she thought they would be here tonight as it is a big deal to them. Some of those questions she is asking Mr. Hickok are questions she would have been asking owner of the property. Mr. Hickok stated their reason for not being here tonight is they really do not have anybody close to this area and thought they would just appear by letter. They did not appear at the Planning Commission meeting either. The letter did not get in the packet, but it was made part of the record of their objection at the Planning Commission, and was made available tonight to the Council. Jim Golden , 6701 Overton Drive, asked if the taxes were paid in the last three and one-third years. Mr. Hickok replied, he did believe staff did a check on that; and before Prime took over there was a delay in getting taxes paid. Prime took care of the taxes after they took over. Mr. Golden stated it seems to him if they are getting their taxes paid to the City, why would you want to change that without letting the people have a say in it. Why not leave it open. There is not anyone who is working for a commercial business that is going to be looking in an M-2 surrounding for a walk-in business. Mayor Lund stated it looks like it is more apt to be more industrial and be successful than leaving it. Mr. Golden asked if the school was a possibility? He does not see a major problem if there is not liquor there. Mayor Lund replied that issues came up the same day as the Planning Commission meeting so that was a new wrinkle. Mr. Golden said give them six months and see if they can sell it. Councilmember Varichak asked where is Prime Security Bank? Councilmember Saefke stated it is noted at the bottom of the letter, Shakopee. Mayor Lund replied it does seem to lose some credibility when they are not here. They might be careful what they ask for as well, because if they do find an industrial business, they might be FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 18 coming to the Council asking for a change in the zoning. At that time, would they be required to pay for the fees to go through that process? Mr. Hickok stated if Council chose to bring it back at a certain date, the fee and everything they brought forward would still apply. If Council chose to leave it C-2, and they found an industrial user, they would bring back the application. Councilmember Bolkcom stated she would like to continue the public hearing until next week, give them an opportunity to come and have a discussion. They are running against a time period. Mr. Hickok stated they are running the clock as though this was a private application, but the City does have the ability to waive the 60 days. Councilmember Bolkcom directed staff to send a letter to Prime Security Bank and also have a conversation with them that it is very important they have a representative here. Council wants to hear their whole six-month plan and they would have a better opportunity to ask questions. MOTION by Councilmember Bolkcom to continue the public hearing to December 9, 2013. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE HEARING WAS CONTINUED TO DECEMBER 9, 2013. NEW BUSINESS: 11. Pursuant to Minnesota Statute 115A.94, Motion to Receive a Report from the Fridley Environmental Quality and Energy Commission, Acknowledge its Recommendations, and Direct Staff to Notify and Meet with the Appropriate Licensed Haulers for the Purpose of Exploring Organized Collection and to Report Back to the City Council No Sooner than February 10, 2014. Mayor Lund stated on page 123 of tonight’s agenda, there is a very good synopsis of what the City needs to do in this case. There has been some confusion about a public hearing tonight and Council taking comments. That is not what this agenda item is. It is solely about whether Council wishes to deny any further action and to also acknowledge the recommendations from the City’s volunteer commission members. It does not mean Council agrees or disagrees with them. It is just acknowledging the Commission has done some study over the last three years relating to the garbage collection issue. If Council elects to move forward to the next step, it is his understanding there is a 60-day period within which Council would request staff and the garbage haulers to have conversation. Then, if they decide to move forward to the next step or drop it, the City would advertise a public hearing. He asks people to not think this is being ramrodded. It has been going on for three plus years. Do not think there are any foregone conclusions because there are not. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 19 Mayor Lund stated there is comment he read about the City Manager that he may be spearheading this because he comes from a community that has organized collection. That is not true. He has been with Fridley about six months, and the Environmental Quality and Energy Commission has been looking at this since late 2009 or early 2010 off and on. He asks they keep an open mind as he would expect of himself and Council as well. There is a step-by-step process alluded to in the State law. With that in mind, he asked that people be civil and considerate. Richard Walsh , 6859 Seventh Street NE, stated a lot of people came to the meeting and he knows Council is going to be considering this move. He asked if someone could make a motion to allow public hearing at this meeting. Mayor Lund replied he will not do it because he is going to follow the letter of the law, for which the law is very clear to them when a public hearing will be held. He does not want to take unusual steps in one way or the other and sway some type of outcome. He understands people were inconvenienced because there was an expectation. It was not advertised as a public hearing. He cannot take any comments as they would officially in a public hearing. Mr. Walsh asked if Council wanted to hear what they have to say. Mayor Lund replied they do. However, this is not the process before them right now. He thinks it is the correct process under State law. He does want to hear from people. They can certainly do that by e-mail, letter, phone call and, if they get to that point, there will be a public hearing scheduled. This is a little premature to ask for public comment now until the public, as well as himself and Council, have had an opportunity to hear the whole story. He asked they be patient and wait until they get the whole story. The City goes a step farther than most cities do when they have public hearings by the Planning Commission and the City Council. The law does not require that it happens at both. Mr. Walsh asked if the Planning Commission meeting last week was a public hearing. Ms. Jones replied, no. Mr. Walsh stated one further clarification, maybe the City Attorney can clarify whether it is illegal to have this as a public hearing. The Mayor seems to be relying a lot on the statute. He read the statute, it is only a page long. It gives some broad guidance, but there is nothing in there that would seem to indicate to him that you could not motion for this to be a public hearing. Mayor Lund said he asked for the City Attorney’s opinion on this. A public hearing has to be posted and published, and the City has not done that. Attorney Erickson stated the whole purpose of a public meeting is to put people on notice they can come and provide comment. People may have read what was posted and may not come and provided their commentary. On the flip side, while Mr. Walsh is here and wants to provide comment, there also may be people who may not have attended based on their understanding a meeting was on the agenda but not a public hearing. There is nothing in the statute at this point that requires a public hearing, and it spells that out as a requirement. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 20 Jack Velin , Environmental Quality and Energy Commission (EQEC) member, stated Eric Boyles will be providing a rundown of what they have done over the last four years that they have been studying this. Eric Boyles , EQEC, stated this is something the Commission has looked at for four years, and they are very happy to present this especially with the addition of the revised statute. First of all, as to the definition of an open versus organized hauling system, the City has an open waste hauling system. What that means is customers in Fridley are able to hire their own hauler for garbage and yard waste services. The fee structures, pricing, and fuel surcharges are varied based on company. The hauler pays annual license fees to operate in the City and states the number of customers they service. Mr. Boyles stated Fridley’s license haulers have customers scattered throughout the City. Days of the week of pickup vary by hauler but generally speaking match up with the recycling. The customer service complaints generally go to haulers; however, the City fields complaints about road damage, marketing practices, and pricing. Mr. Boyles stated there are currently five licensed haulers in the City of Fridley: Ace, a division of Waste Connection, located in Woodland, Texas; Allied, which is a division of Republic Services based in Phoenix, Arizona; LePage and Sons based in Bethel; Walters Recycling and Refuse in Blaine; and Waste Management out of Houston, Texas. Mr. Boyles stated under the statute, generally one or a consortium of licensed haulers would be under contract with the City to collect refuse by zone, picking up containers at every house, in an area not scattered throughout a city within which it currently takes place. Every household has the same fee structure based on services like yard waste and container size. The structure of an organized garbage hauling system has been modified in 2013 with the Minn. Stat. §115A.94. Staff will present a flow chart on the procedures prescribed in the statute following his presentation. Mr. Boyles stated the typical city can verify the end location of the waste in the just-approved statute; and there are too many plastics in the waste stream which could be mitigated by marketing, and that would be made easier by organized collection. Mr. Boyles stated the EQEC has been reviewing this for the past four years. In 2009, after citizens complained about garbage trucks damaging newly paved roads, the EQEC and the City Manager at the time launched meetings. The EQEC studied topics in 2010 through 2011 with input from the public, haulers, and experts. Mr. Boyles stated in 2010 and 2011, the EQEC reviewed what the issues were, what other cities were doing, and got input from experts, residents and haulers. Mr. Boyles stated in April, 2010, the panel discussion started with the EQEC on the benefits and challenges of organized versus open collection, and surveys and news articles went out to residents. In May, 2010, the City Attorney attended the EQEC meeting where statute and local FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 21 solid waste laws were discussed. It was stated that any new collection system must not impact recycling. Mr. Boyles stated in July, 2010, the City staff panelists from Blaine, Robbinsdale, and Columbia Heights provided input on how to handle yard waste and bulky items. In September, air quality, like carbon dioxide, and neighborhood health impacts were discussed. In October, 2010, Peter Sandhei from the MPCA presented findings from the analysis of waste collection service arrangements. The findings stated that substantial license fees do not produce enough revenue to compensate cities as an offset for road damage. Mr. Boyles stated in November of that year, Fridley haulers shared their points of view in an organized versus open collection systems. They feared the small haulers could not compete. They stated that natural gas burning trucks are less impactful for noise and air pollution; and that is the direction of the overall industry, however, it is not yet there. Mr. Boyles stated as to findings regarding benefits and challenges of implementing organized waste collection, recycling recapture rate is higher with organized garbage programs; and it more easily follows Anoka County’s directives to reduce solid waste through using consistent messages with all haulers. Mr. Boyles stated the MPCA’s study shows that 73 percent of U.S. cities outside of Minnesota have one hauler per neighborhood, which is a higher rate than in the State of Minnesota. Garbage trucks are among the heaviest on the road based on axle weight. Minnesota studies between 1993 and 2004 show lower cost for organized collection, but any individual contract could be less if organization takes place, but it would depend on the contract negotiated and special term limits offered in the marketplace. Mr. Boyles stated if organized collection is ever implemented with the City, the City would incur administrative costs. Currently the City has more than 100 annual code enforcement cases involved in lack of garbage services. Therefore, City staff is dealing with those telephone calls and spending time doing that. There would be a reduction in truck noise and air pollution. It would reduce the number of property owners’ complaints and also match the Comprehensive Plan goals. There would be an increase in safety in the residential neighborhoods and encourage walking and biking. Mr. Boyles stated food waste collection could be implemented consistently as available. Up to 30 percent of the waste stream is food waste. With organized collection, haulers lose pricing flexibility and are concerned about smaller haulers’ livelihoods. Further EQEC discussions were tabled until 2013 to await a study or model from Dr. Wiley of the Minnesota State University- Mankato. His preliminary paper was presented, and he and others are continuing to work on the model for assessing road impacts as of Fall 2013. However, there are other ways to measure road impact, such as MnPAVE from the Minnesota Department of Transportation. Mr. Boyles stated the EQEC heard a summary of revisions to organized collection which is the statute he discussed earlier, Minn. Stat. § 115A.94, which passed in 2013 unanimously in the Senate and passed both chambers of the State Legislature. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 22 Mr. Boyles stated in 2013, Public Works Director, James Kosluchar, presented a memo with a staff report on impact on Fridley roads from refuse trucks in residential areas using the model called, MnPAVE, from the Department of Transportation. On a typical street reducing the heavy garbage trucks from the five to ten which is what the City currently sees to one to two days per week could add seven years of life to those residential streets depending on other factors, like underlying soil and water. Mr. Kosluchar estimated $100,000 was the conservative annual cost of roadway repairs resulting from heavy garbage trucks at current volumes in residential neighborhoods. Mr. Boyles stated the EQEC has four recommendations for the Council and made those in November of this year: (1) That the City of Fridley Council explore the option of organized City garbage collection per the statute, 115.94; (2) that the City Council encourage a process that allows the existing five licensed residential haulers to divide their existing Fridley market share into zones per the statute; (3) that if an organized garbage system is developed in Fridley, it should include single-family homes and residences through 12-unit apartment buildings which is very similar to what it has with the recycling; and (4) the EQEC would be willing to conduct further study if Council felt it met the statutory requirements for considering organized garbage collection. Mr. Boyles stated if Council votes to accept the EQEC’s recommendations, Council would start the process outlined by the new legislation and not make a decision for or against organized solid waste collection. That would come later. The Council’s decision tonight would be to explore this further and get more data following the procedures outlined by Minn. Stat. § 115A.94. Ms. Jones, Planning Manager, stated it is important for Council to understand the process. Staff appreciates the work of the Environmental Quality & Energy Commission. They took on the task as asked and really dedicated a lot of time to it and did a great job of patiently listening to a lot of presentations from a lot of different people. Ms. Jones stated, unfortunately, after all of their work and the summation they just heard, their committee work does not meet the requirements now of the committee study’s work that is described in State Statutes which were just recently changed. In addition, a new 60-day hauler negotiation period has been added to those statutes, and that must happen before new committee work can begin under the new guidelines. Ms. Jones stated there is a flow chart in Council’s packet which sets forth, looking at the State Statutes, the process that is involved. As they can see, even if Council goes ahead with the 60- day negotiation period with the haulers at this point, Council then has several options as Mayor Lund alluded to, if they get to that process, as to how to proceed. Those processes are what triggers the public hearing steps and the whole statute requirement. The new statute requirements are in place to protect the haulers’ businesses. She believes they have had representatives who have worked on this legislation to put this new process in place. Ms. Jones stated the City Council needs to be cautious in following the State Statute requirements in the correct order. She knows there are many people here tonight wanting to be heard on this matter and, as Mayor Lund has stated, they will have that opportunity if Council FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 23 moves ahead with this. The public hearing requirements are in place in the statutes requiring the City to give proper notice to the public and to the haulers so they can be given an opportunity to be heard. However, right now, at this stage in the process, if Council moves forward, it is all designed to give the haulers an opportunity to negotiate with the City. Ms. Jones stated while staff and legal counsel find the order of the State Statute requirements a bit odd, staff does advise the City Council follow these steps as stated in Statute § 115A. The 60-day negotiation period’s intended outcome is development of a consortium of the existing haulers that the City could contract with. This would mean that all five haulers would retain their current customer base. However, it would be condensed into one area of the City. Everyone in the City would be paying the same price and have the same options for service levels. Ms. Jones stated the statutes are even particular about what needs to be addressed by the haulers and staff during the 60-day negotiation process. The City needs to identify its priorities. The issues related to the zone creation need to be worked out. Obviously the haulers are going to be the experts on that as to how they can work their routes and work their business. They need to look at issues of traffic, safety, environmental performance, and look at the services that are provided and what options makes sense to preserve. Also, they need to talk about price and create zones based on the hauler’s average customer counts during the six months prior to the commencement of the 60-day negotiation period. Ms. Jones stated, from the City’s budget standpoint, staff recommends and encourages the City to proceed further in analyzing organized refuse collection as an option to reduce the City’s costs of road repair and replacement. Staff also sees this as an opportunity to reduce costs, particularly staff time costs, in code enforcement issues. That is something that staff, brought to the City Council several years ago as an issue. At that time, Council decided to give the haulers some opportunity to at least change their routes to match the recycling routes because they felt people would do a better job of recycling if they had it on the same day. For the most part the haulers have done that voluntarily without the City taking action. Ms. Jones stated this process is going to be challenging for the City Council if they choose to move ahead, but staff feels it is one of the most important decisions Council could make to reduce City expenses and, particularly, individual household expenses for the taxpayers. Staff just learned today, in talking to the staff from the City of Maplewood that recently went through this process, that they have now concluded they are saving the residents over $1 million a year in total garbage hauling costs. Staff feels that is impressive for the City Council to consider and think about as they make their decision tonight. Mayor Lund stated there are a lot of pros and cons. Basically for him, it would be somewhat a kind of a slap in the face if they did up to four years of study and then have Council say they did not want to discuss it. That would be suppressing the democratic process, quite frankly. The discussion should be had and, at any time, if Council elects, they can stop the process. They do want to hear from people. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 24 Councilmember Saefke said he would like to point out that this whole process was not started by Council. Citizens came to them, and that is how this discussion was initiated. Also, they were not able to put up that flow chart. There are copies in the back of the room. Each of the interested parties can have a copy so they can understand the process and what and when it is going to happen. Councilmember Bolkcom asked for the flow chart be put on the screen. Obviously they need to put this on the City’s website. It is small but it shows that it is not just one or two steps. There are a lot of different steps and ways it can proceed. Councilmember Bolkcom asked regarding the 100 code enforcement cases a year, are those related to not having garbage service or that people are leaving their garbage cans sit out. Ms. Jones replied, in looking at 2012 numbers, there were 442 cases of outside storage and solid waste issues that could potentially be related to that. Not placing garbage cans in the right place is in a different category. Staff has estimated that about a quarter of those are probably related to not having garbage service. They cannot extract exact data for them on that. The City does have a lot of cases every year related to people not having garbage service. Particularly, a lot within the last five years with all the foreclosures, because that is the first thing that people quit paying for is their garbage service. Councilmember Bolkcom asked if someone had questions about the process, could they ask those questions tonight. Mayor Lund replied, he thinks she is opening up something that is going to digress from the meeting. He does not mean to suppress people from talking and asked people to send a letter, call or e-mail if they have questions. Mr. Wysopal asked the City Attorney whether these meetings within the 60-day period are governed by the open meeting law. Attorney Erickson replied the provisions of the new statute as it was amended by the 2013 legislature basically calls for an exclusive negotiation period between the haulers and, in this situation, there are five licensed haulers, and the City. The statute does not say those are open meetings, just that they are negotiations. She said she thought they are intended to be staff-level conversations with the haulers. There is a distinction then in the statute when it comes to the work of the committee, if it would ever get to the point where a committee is appointed and then engages in a study process. Those are subject to 13(d) of the Minnesota Open Meeting Law. However, with respect to the 60-day conversations between haulers and City staff or the City, she thinks if the elected body were to get together with the haulers that would have to be open to the public because you have a quorum capable of making a decision. She believes the intent of that statute is to allow discussions among City staff and the haulers themselves, but to distinguish that from any committee work, if the committee is appointed, that is subject to 13(d). FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 25 Mr. Wysopal asked, to further clarify, the subject matters for that negotiation and discussion is specifically enumerated in the statute. Attorney Erickson replied, the statute addresses, in Subd. 4(d), the subject matter that would have to be identified and addressed in any kind of hauler proposal. Basically it says, “The city or town must provide a 60-day period in which meetings and negotiations shall occur exclusively between licensed collectors and the city or town to develop a proposal in which interested licensed collectors as members of an organization of collectors collect solid waste from designated sections of the city or town. The proposal shall include identified city or town priorities including issues related to zone creation, traffic, safety, environmental performance, service provided, and price and shall reflect existing haulers maintaining their respective market share as of the six-month period before the commencement of the 60-day negotiation period.” It sort of whittles down or at least provides the baseline of what has to be into any type of proposal that is developed as a result of the 60-day negotiation period, but as she knows that it is an exclusive negotiation period, there is no provision that is subject to 13(d) like the committee would be. Mr. Wysopal stated regarding Subd. 7 of that statute which speaks to the anti-competitive conduct, it is his understanding the statute raises that issue and then provides the opening for it to take place provided the City follows the statute closely. Attorney Erickson replied, Subd. 7 deals with anti-competitive conduct. It basically authorizes the City to engage in anti-competitive conduct to the extent necessary when it chooses to organize collection under the statute. There is a recognition by the legislature that there is a set number, a finite number, of haulers that the City is negotiating with and the City is authorized to do so. Councilmember Bolkcom stated it says at a staff level, but it also says in subsection 4(d) that it is related to the city or town’s priorities. She asked who establishes what the city or town’s priorities are related to this? Is it totally on the staff level or during this time does the City Council have some input into what they feel is a priority? Attorney Erickson replied, this is a brand new section of the state statute and, she does not mean to suggest that the statute itself says it is at the staff level. Councilmember Bolkcom said as a City Council, they have been waiting for this to come from the EQEC. There has not been any detailed discussion about what they would hope to come out of the 60-day negotiation. She asked how does staff know what the Council feels is a priority. Mr. Wysopal replied staff’s interpretation would be to take what the EQEC has forwarded as the general priorities of the City. They would be subject to the City Council’s final review later on if it decides to be accepted by the City Council. Councilmember Bolkcom asked so it would go through a 60-day process before the City Council would actually make comment. That is not quite how she interpreted how that first 60 days would happen. She thought there would at least be some input on Council’s part on what FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 26 they thought might be some of the priorities. She thinks the EQEC was given a goal as to whether this makes sense and to go over the reasons to do it or not. They had a four-year discussion. Council has been told they can come to those meetings but could not say anything. There really has not been a lot of discussion back and forth between the Council and the EQEC. Mayor Lund said he feels they should allow the haulers and staff to do their 60-day thing. They are going to report back to Council and they have an option to not pursue from there or to have a public hearing where everyone will weigh in and Council will also weigh in. Councilmember Bolkcom stated maybe she is misunderstanding it, because it says that they receive it and then direct the staff to negotiate with the haulers, and then the haulers would reach a collective agreement to organize their routes and develop a consortium which the City can negotiate a collection contract which then goes down and they either decide to do it or hold a public hearing and pass a resolution to establish it. At what point do they have their discussion about priorities and that type of thing? It says, “We will hold a public hearing and pass a resolution to establish organized collection options.” She said if she is confused, she has to believe there are a fair amount of people out in the audience who are confused by it, too. So it becomes part of the committee’s study. The collections options study committee? Attorney Erickson replied, she does not think the statute again is terribly clear, but by resolution, the City Council appoints the commission members. The statute does not specify who has to be on that committee, but it has to be established by a city council resolution. You have to be appointed to the commission. She would assume there would be a representative group comprised from various interests. Mayor Lund replied, in all fairness, he thinks it should be someone who might be more pro and someone more against. Councilmember Bolkcom asked how long does the whole process take? It is 60 days and then what happens after that. Obviously at some point after 60 days, there is an opportunity to have a public hearing. It does not say they have to have a public hearing does it? Mayor Lund replied, no, or you go onto a further study with an appointed group. Attorney Erickson stated but before there is any implementation whether it is under a hauler proposal after the 60 days, you would have to have a public hearing at that point to consider the proposal. The way she reads the statute is you would have a public hearing at that point because you would be implementing. She is looking at the statute itself. Councilmember Bolkcom stated she is only going where it says, “when the haulers have a collective agreement for their routes, council may decide not to pursue it” or it goes right down to they may skip further study and hold a public hearing to consider passing a resolution. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 27 Attorney Erickson stated, from what she understands of the statute, there needs to be a public hearing if 60 days go by with negotiations with the hauler. At the end of the 60 days if there is a proposal being submitted by the haulers, before the City implements that because that would be a type of organized hauling, they need to have a public hearing. If there is no successful negotiation after 60 days or the time period specified, then the City can appoint a commission. You have to do so by resolution, and they generate a report, they engage in study analysis and so forth. And the statute, while it does not specify who is on the committee, it specifies the topics that they need to collect input on and then they provide a report to the City Council and the City Council, the statute says, shall review it. Councilmember Bolkcom stated if she is looking at this process right, you could bypass a committee. Attorney Erickson replied, you may not need a committee if they can come to a successful negotiation with the hauler within the 60 days. Councilmember Bolkcom stated that is her whole point. It could actually come back to the City Council in 60 days, have the public hearing, and there would never be any discussion on it as far as the City Council’s priorities. Attorney Erickson stated she thinks that if there is a proposal from the haulers, what would be discussed at the public hearing is Council’s reaction to the proposal, receive public input on the proposal, perhaps an opportunity to refine it. When the statute was drafted, there was equal representation of municipal interest and hauler interest in the legislature. It is designed to give first shot at it to the haulers. Mayor Lund stated he thinks there are actually two portions to this, that they acknowledge the recommendations that were presented to them this evening from the EQEC and, second, do they want to pursue further into the investigation with allowing the 60 days. Ms. Jones stated what would be helpful to staff because there are four recommendations from the EQEC, if Council wants staff to negotiate with the haulers, if they could let them know of their agreement or disagreement with the recommendations. Councilmember Bolkcom stated the EQEC said they would be willing to conduct further studies if Council felt it met the requirements, but she heard in the presentation tonight that what has been presented so far and what they have studied is not enough to qualify as a committee and there is much involved in the committee structure. Ms. Jones replied, the statutes do say there are some specifics of who has to be on that committee. In part that would meet that requirement but not in whole because they do not have representatives from the hauling community and from the City Council. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 28 Attorney Erickson stated she thinks Ms. Jones might be picking up on No. 4, seek input from. She did not see the section where it is outlined who shall be on the committee. Ms. Jones replied, under Subd. 4(b) and then paragraph (4). Attorney Erickson stated it says they shall seek input from, but she did not interpret it to necessarily identify. It would be smart to have members of the committee be comprised of those types of groups, but it does not really have an absolute requirement. It would be well-advised to include residents, perhaps some member of the governing body, local officials in the City responsible for the program. It suggests membership, but it does not mandate it. Also, “seeking input” to her suggests what issues and concerns need to be evaluated. It goes more to the content and work of the committee perhaps, but she thinks any city would be well-advised to select a group of people who would represent and be able to comment on these issues. Councilmember Bolkcom stated it seems there should be more than one motion. One is to receive the EQEC recommendations to further study it. Another one would be to direct staff to negotiate with the haulers for 60 days. It could be different. Mayor Lund replied, he agrees. He thinks there are two parts. MOTION by Councilmember Bolkcom to receive the EQEC’s recommendation to further study the organized garbage collection. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Bolkcom to receive and acknowledge the EQEC’s report and recommendations from the EQEC. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Bolkcom to direct staff to negotiate with haulers for 60 days and make an agreement for collective organization. Seconded by Councilmember Saefke. Councilmember Bolkcom stated even if it is after 60 days, it is okay. Attorney Erickson replied you have to provide a minimum of 60 days to develop a proposal and engage in negotiations. The 60 days applies to zoning. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 2, 2013 PAGE 29 ADJOURN: MOTION by Councilmember Barnette, seconded by Councilmember Varichak, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING WAS ADJOURNED AT 9:34 P.M. Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor