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CCM 12/28/2015 CITY COUNCIL MEETING CITY OF FRIDLEY DECEMBER 28, 2015 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:00 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember Barnette Councilmember Saefke Councilmember Varichak Councilmember Bolkcom OTHERS PRESENT: Wally Wysopal, City Manager Darcy Erickson, City Attorney Scott Hickok, Community Development Director Darin Nelson, Finance Director/Treasurer James Kosluchar, Public Works Director Brian Grogan, Moss & Barnett Patrick Haggerty, CenturyLink APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: City Council Meeting of December 14, 2015. Councilmember Saefke stated the third line on Page 15 should read: "He said he 'agrees' with . . .." APPROVED AS CORRECTED. OLD BUSINESS: 1.Second Reading of an Interim Ordinance for the Prohibition of Approving and Siting New Telecommunications Towers and Wiring Telecommunications Facilities to Allow for the Study, Adoption or Amendment of Official Controls Related to the City's Zoning Code. WAIVED THE READING OF THE ORDINANCE AND ADOPTED ORDINANCE NO. 1326 ON SECOND READING AND ORDERED PUBLICATION. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 2 NEW BUSINESS: 2. Receive the Minutes of the Planning Commission Meeting of December 16, 2015. RECEIVED. 3. Resolution Approving the 2015 Gifts, Donations and Sponsorships to the City of Fridley. ADOPTED RESOLUTION NO. 2015-65. 4. Approve Change Order No. 2 for the 2015 Street Rehabilitation Project No. ST2015-01. Wally Wysopal, City Manager, stated this amounts to 1.4 percent of the contract amount. APPROVED. 5. Claims (1512-ACH PCard; 170891 - 171010). Councilmember Bolkcom referred to page 36 and asked what a Bell Sonic license was. The vendor is C.D.W. Darin Nelson, Finance Director, said the City purchased a lot of its IT equipment from C.D.W. He is assuming it is related to the City's firewall. APPROVED. 6. Licenses. Mr. Wysopal stated the licenses are for businesses and rental. APPROVED THE LICENSES AS SUBMITTED AND AS ON FILE. 7. Estimate. Ron Kassa Construction 6005 East 250th Street Elko, MN 55020-947 2015 Miscellaneous Concrete Repair Project No. 473 Estimate No. 2.............................................$11,193.95 FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 3 ADOPTION OF PROPOSED CONSENT AGENDA: MOTION by Councilmember Barnette to approve the proposed consent agenda. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM, VISITORS: No one from the audience spoke. ADOPTION OF THE AGENDA: MOTION by Councilmember Bolkcom to adopt the agenda. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. PUBLIC HEARINGS: 8. Consider an Application from Qwest Broadband Services, Inc., d/b/a CenturyLink, for an Additional Cable Franchise in the City of Fridley. MOTION by Councilmember Saefke to waive the reading of the notice and open 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 OPENED AT 7:04 P.M. Brian Grogan, Moss & Barnett, stated he is serving as outside legal counsel for the City on this matter. The purpose of the public hearing is to receive comment on CenturyLink's application which the City received. It went out for bid to receive competitive cable television franchise applications. One applicant responded. That was CenturyLink, which was as expected. CenturyLink is now seeking a competitive franchise to compete directly against Comcast. Attorney Grogan stated they are here tonight in large part to consider the qualifications of CenturyLink under this application. They have not yet prepared the draft franchise or negotiated a franchise with CenturyLink. Attorney Grogan stated Council should think of this as a two-step process. The first step is to determine whether they believe the applicant, CenturyLink, is legally, technically, and financially qualified to own and operate a cable system in the City. The second step will occur FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 4 sometime in 2016 when they will present the City with a draft franchise for its consideration to actually award CenturyLink the right to do business in the City. Attorney Grogan stated tonight they are talking about just the first step. There is no specific decision required this evening. They are still in the process of completing a financial review. His firm had previously done a financial review in the spring of 2015 on behalf of some other municipal clients. He wants to update them and provide third-quarter data so they can get a more accurate picture of CenturyLink's financial position. They expect to have it to the City in January. Attorney Grogan stated the City published notice of intent to franchise as required by State law on November 6 and November 13. It had a closing date for applications of December 2, 2015. His firm is ultimately going to prepare a report which will provide written documentation of the applicant's qualifications. Council will be reviewing that and determining whether it agrees with those recommendations and then ultimately making its decision. They expect that to occur sometime in the month of January, and they expect probably a proposed franchise some time thereafter. They are awaiting a response from CenturyLink. Attorney Grogan stated one of the purposes of the Cable Act is to promote competition in the delivery of cable television services and to avoid unnecessary regulation. Attorney Grogan said as to CenturyLink's standard of review, Council may not unreasonably refuse to award a second competitive cable franchise. The standard here is one of reasonableness when cities take action on licensing or franchising matters. Attorney Grogan stated they have a provision in the existing Comcast franchise that references competitive equity. When Comcast entered into its most recent franchise renewal, they wanted some assurance that the City would not go about adopting a new franchise to a competitor on terms that were substantially more favorable to the competitor than to Comcast. They included a provision that in essence says the City agrees it will not provide more favorable or less burdensome franchise terms to a competitor. There is some question as to whether this exact phrasing in competitor equity remains enforceable under some more recent FCC regulations. He thinks the concept is one that Council has already advised they are in favor. Their goal is to provide nearly identical franchise documents, so the City is not taking a position to favor any one competitor. The competitors can go out to the marketplace and fight for their customers. The City's job will be to have a uniform set of regulations that apply to both consistently. Mr. Grogan will provide update when they bring them a draft franchise. Attorney Grogan reviewed the history of CenturyLink. The company is based in Monroe, Louisiana. They acquired US West, ultimately Qwest Communications. They are a Fortune 500 company. They are the third largest telecommunications company in the United States. The actual grantee or applicant for the City of Fridley is a company known as Qwest Broadband Services, Inc. It is a legacy company, and they are putting their video and cable television operations under that umbrella. Qwest Broadband Services, Inc. is actually a wholly-owned subsidiary of CenturyLink, Inc. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 5 Attorney Grogan stated the last time they checked, CenturyLink was in good standing in both Minnesota and Delaware (the state of their incorporation). They will be updating those as part of the report they will be providing the City in January. When they most recently checked, they were not aware of any UCC or tax filings adverse to the company. They come up fairly clean as it relates to their legal qualifications standard. Attorney Grogan stated as to technical qualifications, the company offers its service a little bit different than Comcast. They offer what is called IP Television Service which is an internet protocol service. It essentially means they bring in one cable channel at a time into your home instead of hundreds of channels and a converter box which determines which channels you are able to select from. Attorney Grogan stated they are going to use existing infrastructure that is already in Fridley's rights-of-way. They have wires and they have had for years--Qwest wires, US West wires-- which are now owned by CenturyLink. They will be used to provide this new video product. It does not require installation of a brand new distribution system. Rather, they are going to be using existing wires they already have in place to provide this new product. That does not mean they are not going to have to do some construction. Not every wire in town is capable of providing video service. They are going to need to do some things to bring fiber deeper into the neighborhood to provide more service. Attorney Grogan stated their system requires a minimum of 25 megabits speed into someone’s home in order to provide voice, video, and telephone service they are looking to provide. Many of the homes have it, but not all. That is something CenturyLink will have to explain to the City's negotiating team as they proceed. Attorney Grogan stated the report his firm will prepare for the City will include their reviews of several cities around the country that have already franchised with CenturyLink so they can get a feel for any problems or issues the company has had in other communities. Attorney Grogan as to their financial qualifications, they are in the process of updating their report from about six months ago that they prepared for other Twin Cities jurisdictions. They are unaware of any state or federal standards that help them assess exactly how one determines what it needs to be financially qualified. Typically, when you look at an accounting standard, there are a series of criteria that a company looks toward. No one can tell them what it exactly means to be a financially-qualified applicant for a cable television service. Therefore, they are using the best information they have available to try and present the City with a report. They specifically asked for detailed financials on Qwest Broadband Services, Inc., which is the operating subsidiary. What the company has provided his firm with is the parent company financials for CenturyLink, Inc., which is publicly-available information. It is a little more difficult to determine the qualifications of the applicant when looking at the parent company's financials. They will address that issue in their report. They have done this for many cities, as they have reviewed these applications around the Twin Cities. They requested this information through a separate letter, and the company indicated they had adequately responded to the financial questions the firm has asked. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 6 Councilmember Bolkcom referred to page 62 at the bottom, January/February 2016, it states "At least 7 days (MS 238.081,subd. 6) Not within 20 days . . ..” She asked what that meant. Attorney Grogan replied, when they submit a draft franchise to the City, there is a requirement that the City hold a public hearing on that franchise. You have to wait a minimum of seven days before you can actually grant it. The purpose is to make sure that all the members of the public have had a chance to discuss it. They have used their best guess as they tried to create a timeline to outline what the Council may look forward to. Their hope is to bring this to Council in February 2016, but it could be later. When they do that they will have to have an initial reading, and there will have to be a gap of at least 7 days because that is what the Statute requires before they can actually award the franchise if that is what is determined to be in the best interests of the City. Councilmember Bolkcom asked what “not within 20 days" meant. Attorney Grogan replied he believed that is referring to a specific provision of the City Charter that relates to timing. The City cannot consider the award of a franchise within 20 days of conducting the public hearing. He said he was not worried about this, as Qwest will not be ready to bring the Council a document within 20 days of this public hearing since they have not yet begun negotiations. He will work with the City Attorney to verify the timeframes so that they comply with the Charter. This internal timeline is largely for City staff's purposes to make sure they do not miss any of the deadlines that are required at either the local or State level. Councilmember Bolkcom asked about the second reading of the ordinance and asked what the timeframe was and whether it had to be within 60 days of the first reading. Attorney Grogan said he believed it was a Charter provision. He guessed the intent was that they did not want a more lengthy delay to occur between first and second readings. They have to complete it within that period of time. That is not typically something he has seen in other cities. Every city has unique provisions for franchise documents. Councilmember Bolkcom said it does go on to say it could be delayed but both parties would have to be in agreement. Attorney Grogan replied, generally those provisions are permitted where, if you have an unforeseen event, an 11th-hour issue that comes up, instead of having to start from scratch and redo all the hearings, the parties are generally capable of mutually agreeing to extend the time period. Their goal would be not to bring a document before Council until staff and CenturyLink have reached a consensus on the exact terms down to a letter ready document, so that there should not be any 11th-hour issues. If they are not ready to present it to Council, they will just push it to the following meeting. Councilmember Bolkcom asked if the agreement had to be in writing. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 7 Attorney Grogan replied they are talking about compliance with the City's Charter. They would certainly have a document in writing, and he would work with the City Attorney to make sure it is correctly documented. Mayor Lund stated from time to time they have received a request for an extension, and the other party agrees to the extension that falls within the 60-day rule. He asked if that was what they are talking about. Darcy Erickson, City Attorney, replied, typically under a 60-day rule you can have the applicant waive the requirement. It is something they have to take a look at under the Charter provision, but it is doable. Patrick Haggerty, CenturyLink, stated Mr. Grogan did an effective job in describing their company's product. As to the progress they are making in the Twin Cities for the franchises, they are working with about 65 communities across the Twin Cities. Hopefully as of tonight, they will have 21 approved franchises in the Twin Cities. They are excited to be in Fridley. Mayor Lund asked how much of the area would be immediately covered if CenturyLink was awarded the franchise. He asked how many people have the right speed. Mr. Haggerty replied it is a very fair distribution. There are areas that currently do not meet those needs, but a significant amount of houses within the City do. Mayor Lund asked whether he could give a percent. Mr. Haggerty replied he would be cautious to give a percent at this point. Mayor Lund replied the interest is for the City’s residents. It is fine to have competition and to have another organization involved in cable television. He is concerned that it is not 20 percent of the community. If CenturyLink got the franchise, would there be an expectation that they are going to grow the capabilities to accommodate more and more people who will not have the access or benefit from CenturyLink being in Fridley.? Mr. Haggerty replied, what they have determined, as well as what the FCC through their studies and request for information have presented, is any level of competition brings influence into a marketplace. Whether that number is 25 or 75 percent he thinks residents of Fridley are going to see a benefit to competition just based on how their companies have to operate within marketplaces. Bringing this franchise to Fridley, if it were approved, definitely is a catalyst to further investment. Once they have the franchise, they are committed to bringing the product to whatever initially that percentage is, and they are going to be compelled to continue to invest in the networks so more and more homes can receive it. That is the ultimate goal is to just initially get it started as is economically possible for a company to come in after this many years in a monopoly environment. MOTION by Councilmember Barnette to close the public hearing. Seconded by Councilmember Saefke. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 8 UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS CLOSED AT 7:23 P.M. Councilmember Bolkcom asked when they would see something further on the agenda. Attorney Grogan replied, having completed this step, the next thing they are looking for is for CenturyLink to provide them with a markup of the franchise. He understood from talking with CenturyLink's representatives, that they are in the process completing it and expect to have it shortly. At that point, they will meet with staff to determine where the differences lie between CenturyLink's draft franchise and what the City is using as its base document. The City gave CenturyLink its copy of the existing Comcast franchise. They are hoping to have as near identical a contract as possible. Whatever they propose as different is what they will be negotiating. It usually takes six weeks for negotiations to be complete. At that point, they will then start the process of getting it on Council's agenda. In some cases it has taken several months. The goal here would be sometime in February or March. 9. Consider an Ordinance Amendment to Chapter 206 of the Fridley City Code, to Adopt all Current Amendments to the State Building Code and Allow for Perpetual Future Adoption of Amendments as They Occur. MOTION by Councilmember Bolkcom to waive the reading of the notice and 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 7:26. Councilmember Saefke pointed out on pages 66 and 69, the word "ordinances" is misspelled in the title of the resolution. Scott Hickok, Community Development Director, stated this would allow perpetual adoption of amendments to the Minnesota State Building Code as well as an amendment to the text before them. The State Building Code division spends an enormous amount of time annually on revisions of the Building Code. If they dug deeply into 2015 Code they would note that it is a compilation of components from the 2012 International Building Code, the 2012 State Building Code and other codes, such as the Fuel and Gas Code. In other years when the Building Code was finally ready for adoption at the State level, it has included the Electrical Code, Fire Code, Plumbing Code, and International Fuel and Gas Code. This time, however, those codes are not ready to be adopted at the State level; however, the State Building Code principal document is. Mr. Hickok stated the downside to not adopting this piece of legislation before them is that each amendment would require its own public hearing and a new ordinance process. The State requires adoption by the City in a timely fashion. In fact, they require that it be done immediately after its adoption. The City cannot choose not to adopt the State Building Code. It really has no options when they are talking about adopting it. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 9 Mr. Hickok stated a public hearing serves a purpose in that it allows discussion and debate of an ordinance when it is being changed. Amendments by the State are to be adopted in their entirety. A public hearing can create an expectation of the City's audience that if they speak up locally we can effect change of that section of the Code. Unfortunately, that is not true. Like any piece of the State legislation, that discussion would need to happen with the legislators at the State Capitol and would impact all the others governed by this Building Code. Change does not happen at the City's level. Mr. Hickok stated consequently, staff's recommendation would be for the City Council to hold this public hearing and later in the evening, when they get to the legislative portion of the agenda, adopt the first reading of this ordinance, and staff will clean up any spelling or other housekeeping that needs to happen between now and then. Mayor Lund stated what Mr. Hickok is proposing here is to just automatically do it rather than them having public hearings. Is that a requirement to have a public hearing before they adopt this? Mr. Hickok replied, Fridley's ordinances require them to do so. However, this ordinance before them would say when the State changes something in the Code, the City changes it. We cannot change it anyway. Mayor Lund said he was not sure if the State requires them to hold a public hearing to adopt the changes in the State Building Code or of this is in the City's own ordinance. Mr. Hickok stated, yes, this would just be a change to the City's Chapter 206 which between first and second reading they will reply on a couple of other things besides spelling errors in the ordinance. Mayor Lund stated the reason why this is more unusual is the State usually has it all encompassing when they request a change. In this case they are not. He assumes it alludes to the fact they have been fighting over this for the last few years. Councilmember Bolkcom asked, if someone wanted to know what the changes were, would the best place to look be to go to the State Building Code. Mr. Hickok replied the State Building Code Division is a publishing house. They do not post or electronically publish their Code. You could go to a library and ask for the State Building Code. Ron Julkowski, Dave Jensen, and Tony De Forge have their own, but those three books and subsequent books they will need for this update are about $6,000 a set. They do not make it easy for people to go on-line because they might just print it off rather than buying it. Councilmember Bolkcom asked the best thing for them to do if they have questions is to call City Hall and ask. Mr. Hickok replied, certainly they could do that and Mr. Julkowski would be good at answering those types of questions. However, if someone had a concern about a certain segment of the FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 10 State Building Code, talking to the State's Building Code Division is a better resource for them. Interestingly enough, the State's Building Code Division oftentimes calls Ron Julkowski for his interpretation. MOTION by Councilmember Saefke to close 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 CLOSED AT 7:40 P.M. NEW BUSINESS: 10. First Reading of an Ordinance Amending Chapter 206 of the Fridley City Code, Adopting all Current Amendments to the State Building Code, and Allowing for Perpetual Future Adoption of Amendments as They Occur. MOTION by Councilmember Saefke to waive the reading of the ordinance and adopt the ordinance on first reading. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 11. Resolution Certifying Final Tax Levy Requirements for 2016 to the County of Anoka. Darin Nelson, Finance Director, stated looking at the 2016 levy, the proposed levy is $12,200,835, or 3.97 percent more than the 2015 levy. In his memorandum to Council, there is one typo indicating 2014, but it should be 2015 on the breakdown for last year. This proposed part of the levy complies with City Charter requirements regarding inflationary increases and public disclosure and is the same amount that was presented at the public budget meeting held on December 14. Mr. Nelson stated just to quickly recap, the tax levy and its tax impact on homes, the levy for 2016 on an average median priced home, about $176,000, will have an impact of about $14 or so on the City's portion. For the 2016 levy, we are incorporating an increase in debt service with the intent of prepaying a 2007 and 2008 debt service bonds originally set to expire in 2018 and 2019. The City will pay these off in 2017 when we collect tax proceeds in 2016 for debt service payments in February 2017. Mr. Nelson stated the general fund levy is about $10,500,000. That is an increase of about 1.4 percent which is the City's tax levy that it is limited by the Charter. There is $50,000 that goes to the Capital Projects Fund which is the same as last year; and $350,000 to the Springbrook Nature Center which is limited by the Charter restriction of 1.4 percent. That is followed by the debt service which is $1.26 million, an increase of 33% or $315,000. The debt service levy includes the additional prepayments to retire the 2007 and 20098 improvement bonds. FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 11 Mr. Nelson stated that leads up to $12,200,285 which is a 3.97% percent or about a $466,000 increase over the prior year. The majority of that increase is going toward debt service and operational fees. Mr. Nelson stated staff recommends Council approve the attached resolution levying taxes in the amount of $12,200,835 for the 2016 budget. It will be levied in 2015 for collection in 2016. MOTION by Councilmember Barnette to adopt Resolution No. 2015-66. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 12. Resolution Adopting a Budget for the Year 2016 and a Revised Budget for the Year 2015. Darin Nelson , Finance Director, stated a public meeting was held at the December 14 City Council meeting. During that meeting, staff presented the proposed budget for 2016 along with the revised budget for 2015. At the conclusion of the budget presentation, the Mayor opened the meeting up to public comment. There were no suggested modifications to the budget at that time. Certification of the final budget must be turned into the County auditor by December 29. Mr. Nelson stated the City has complied with the appropriate sections of the City Charter which requires a certain format and information contained within the budget. That includes previous columns of 2013 actual, 2014 actual, the revised 2015 column, and the 2016 column. This resolution adopting the 2016 and the revised 2015 budget will finalize the City's budget process. Mr. Nelson stated as always, the City's financial documents can be found on the City's website and also at City Hall, and those include the 2016 budget, prior year’s budgets, CIP for 2016 through 2020 and the financial statements. Staff recommends Council’s approval. MOTION by Councilmember Saefke to adopt Resolution No. 2015-67. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 13. Informal Status Reports: There were no Informal Status Reports. ADJOURN: FRIDLEY CITY COUNCIL MEETING OF DECEMBER 28, 2015 PAGE 12 MOTION by Councilmember Barnette to adjourn. Seconded by Councilmember Varichak, UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 7:53 P.M . Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor