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CCM 09/23/2019 CITY COUNCIL MEETING CITY OF FRIDLEY SEPTEMBER 23, 2019 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 Tillberry Councilmember Eggert Councilmember Bolkcom OTHERS PRESENT: Wally Wysopal, City Manager Daniel Tienter, Director of Finance/City Treasurer Jay Karlovich, City Attorney Scott Hickok, Community Development Director James Kosluchar, Public Works Director Gretchen Nicholls, LISC Twin Cities Patrick Miller, Miller Construction David Hamernick, 1340 Hillcrest Drive NE Cindy King, Fridley resident PROCLAMATIONS: Deb Skogen Appreciation Day: Thursday, September 26, 2019 Domestic Violence Awareness Month: October 2091 Fire Prevention Week: October 6-12, 2019 PRESENTATION: Parks Master Plan Public Workshops Recap by Gretchen Nicholls, LISC APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF CITY COUNCIL MINUTES: 1. City Council Meeting of September 9, 2019. Councilmember Eggert pointed out he needs to be listed as Councilmember and not Commissioner. APPROVED AS CORRECTED. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 2 NEW BUSINESS: 2. Resolution Declaring Costs to be Assessed, Ordering Preparing of Proposed Assessment Roll and Directing Publication of Notice of Hearing for 2019 Nuisance Abatement. ADOPTED RESOLUTION NO. 2019-47. 3. Resolution Approving Gifts, Donations and Sponsorships for the City of Fridley. ADOPTED RESOLUTION NO. 2019-48. 4. Claims: (186463 - 186602). APPROVED. ADOPTION OF PROPOSED CONSENT AGENDA: MOTION by Councilmember Bolkcom adopting the proposed consent agenda. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM, VISITORS: No one in the audience spoke. ADOPTION OF AGENDA: MOTION by Councilmember Bolkcom to adopt the agenda. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. PUBLIC HEARING/NEW BUSINESS: 5. Consider Declaring 1340 Hillcrest Drive N.E. a Public Nuisance (Ward 2) (Continued July 22, 2019). MOTION by Councilmember Eggert to remove the public hearing from the table. Seconded by Councilmember Bolkcom. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 3 UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS REMOVED FROM THE TABLE AT 7:33 P.M. Scott Hickok, Community Development Director, on July 22 there was the first public hearing was held. It was opened, and consideration was given as to whether this property would be appropriately deemed a public nuisance. If deemed a nuisance, a statutory process very much like the City’s abatement process would be followed. The property owner would be given a posting and a letter, and options would be listed on the posting. They could simply have the project completed within 20 days, come to an agreed-upon schedule that would be 20 days or a few days beyond that, or just simply leave it and allow the City to abate the property and clean it up through its own demolition contractor. Mr. Hickok stated prior to the July 22 meeting, the neighborhood met and expressed sympathy and concern for the owners, as this was certainly a devastating experience having the fire and house left in such a condition. As time has gone on, there has been concern about the house being left there even with the chain link fence around the site, as it is attractive as a potential nuisance. There have been a number of Rolloff dumpsters removed with items to minimize maybe the attraction of the nuisance. Still the property remains largely in the same condition in terms of the structure standing, the potential for people to get in and walk around and to possibly loot. The City would like to bring this item to a close. The owner and his demolition contractor are at the meeting. Mr. Hickok stated the property owner has demonstrated they do have a contract with a demolition contractor. They have now indicated the insurance company has issued the check, and the contractor has that in their possession. The contractor has indicated they are ready to start although there might be some complication or delay with the disconnection of utilities. Mr. Hickok stated staff’s recommendation would be to post this as a public nuisance. The contractor can start on the project, but it would have to be done within 20 days. He understands it will only take a few days to get the building down and the site cleared. Mr. Hickok stated he wanted to remind the Council and the owner, and he did have a discussion with the demolition contractor, when this site is done and cleared, the expectation is that what is left is a seeded lot, dormant seeded for this season, but nothing else. No sheds, no fences, no containers--no other things that would be out on the site giving an indication other than this is a vacant lot ready to be redeveloped at some point in the future. Mayor Lund stated he is a little disappointed. He would like to hear from the contractor. Patrick Miller, Miller Construction, stated he is the owner of Miller Construction in Fridley. They have been contracted by Mr. Hamernick to remove the home. It has been a long process for them as well. At first it was more just battling with an insurance company and what they thought it would cost to remove. They got through that battle and the check was issued (there was a mortgage company so they had to get it through that). There was a bit of a slow process there. The biggest thing they experienced was just the green light to go from the owner. He was still FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 4 removing debris, contents out of the home. They do have a demolition permit ready to be picked up on Wednesday. They will pick that up and they should start this project within 5-7 working days, and it would take about 2 days to get it done, and then probably another 3 days to do the grading and put down the seeding. Mayor Lund asked Mr. Miller whether he has been given the green light from Mr. Hamernick to go ahead. Mr. Miller replied he has been given a green light. He is not holding him up. Councilmember Eggert asked Mr. Miller whether he would be able to complete the work in 20 days. Mr. Miller replied, absolutely. Mayor Lund stated he is not willing to give an extension. Mr. Miller replied, not necessary. Councilmember Tillberry stated he has a note that states currently the contractor is awaiting approval of a request to disconnect utilities. How difficult is that? Mr. Miller replied instead of tearing up the street to disconnect them, to put the street back together, to only tear it up again in six months to hook it back up, what he is asking is if they can just shut it off at the curb instead of tearing up the street to cap off the utilities. If they have to do it, they have to do it. He just thinks it is kind of a waste of time and energy with tearing up the street. He thinks he is going to get his answer tomorrow if he has not already received one. Councilmember Tillberry stated he can understand this has been a long time already and then to say, well, now we have to do something with the disconnecting and disagreeing with how that will go and whatever. Mr. Miller stated he is sorry. There is no delay. They are going to pick up a demolition permit on Wednesday and he should have a start date to Mr. Hamernick as early as tomorrow to start next week. Mayor Lund stated one works or the other. Utilities in the ground or digging it up in the street. As long as it gets done within the 20 days. Mr. Miller stated, done. Councilmember Eggert stated with the HRA, they have had to demo several homes throughout the year. He does not recall ever tearing up the street to shut off utilities. Mr. Miller stated that is the information he received. At this point it does not really matter. They are going to pick up the demolition permit on Wednesday and get started. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 5 Mr. Hickok stated when they purchased the homes for demolishing and redevelopment through the HRA at some point the road is disturbed. They do not rely on the old utilities and the connection in the roadway for the new construction. The one bit of uncertainty here, too, is that it sounds like a home may be built in the not too distant future. They hope it is left in the best position to then be future developed. Councilmember Eggert stated the issue never came to their attention and in fact these homes were done in a matter of days. Mr. Hickok stated it is the magic that happens behind the curtain. It gets taken care, but it is something that is done. Councilmember Bolkcom stated she is a little confused because she heard Mr. Miller say that he is going to pick up a permit and probably next week. If it is their decision to move forward tonight, and Mr. Miller has 20 days, the clock starts ticking tonight. Then to say it might be next week, he is not sure about disconnecting the utilities, and might not be able to start until mid next week, and then it might rain. They have given this a lot of time. She feels very sorry for Mr. Hamernick, but this has gone on way too long. Councilmember Eggert stated having walked the neighborhood, and seeing no change at all over these past months, and talking with some of the neighbors, they are very anxious for this to get cleaned up; and they are looking to the City to take care of this. Mr. Miller stated he just got a down payment on this two weeks ago. If he walks out of this building on Wednesday with a demolition permit, probably. He says probably because he does not have a crystal ball. He is going to safely assume if he gets the demolition permit on Wednesday. They will start the project next week. Mr. Hickok stated just to be clear it is 20 days from the time of posting. They will post the site tomorrow. David Hamernick, 1340 Hillcrest Drive NE, stated he wanted to take a minute to speak to Council. Somebody said they walked by and nothing had been done, but 160 cubic yards of material have been removed by him and his wife at a cost of $6,400 to this point which is not reimbursable by insurance. To be cast that way saying they have not done anything is wrong. As far as the July 22 meeting with this Council where they promised to get going, they signed the contract with Patrick Miller three days after that. What delayed it was the awful insurance process. Finally, a check arrived and was issued. It was cut on August 27. Mr. Hamernick stated as far as he was concerned, whether it was July 25 when they signed the contract or when the insurance money arrived, they were cooperating. He was not delaying at all. It was their family treasure they lost. It was an extra $6,400 they already spent and will not get back. All he asked is whatever process must begin, not be initiated until Patrick Miller has everything in his hand to proceed forward. They wanted to post tomorrow but he is asking to wait until Patrick Miller gets the green light from the City. He would prefer it not happen at all because he is made to look like he has done nothing which is untrue. This has been his family FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 6 treasure that is gone and, since the delay with the insurance, what they tried to do is sift through and find some treasure that might remain. Councilmember Eggert stated he stands corrected as far as nothing being done. From his observation from the street, he could not tell that anything had been done. The issues Mr. Hamernick is talking about are issues under his control in dealing with this issue. The City has been very patient in working with this, and the insurance thing is something within Mr. Hamernick’s control. Mr. Hamernick replied, he cannot force the insurance company to write a check. It took them until August 27, even though you have a contract, until the money is in place. Councilmember Tillberry asked what happened between August 27 and September 23? Mr. Hamernick stated as far as he is concerned it was in the hands of the contractor. There is nothing more he could do. They had the money and they had the contract. He asked them to come to the City and do whatever is necessary to launch the project, and that is what he presumed has been done except now he is hearing there is one more thing that has to be done. He is asking for just an understanding of what happened so they are not miscast as being uncooperative and then that the start date would not start until the City and the contractor have everything in hand and agree to go ahead. Mayor Lund stated he heard that but he for one is not going to go for that. Mr. Hamernick will get the 20 days, another three weeks almost, and that is all he is willing to give. This has gone on way too long. Carol King, Fridley resident, stated she lives at the back side of the property in question. It has been seven months today. She awoke to that fire. She felt horrible. She thought there was a chance they might be in there. Right now they are dealing with an influx of mice, and they still have the mess to look at. She said she has been patient. The neighbors have been patient. It is time. Winter is coming. They need a safe area there. She does not want people to make their way onto the property and have something happen. The fence is not as secure as it looks to be. MOTION by Councilmember Eggert to close the public hearing. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS CLOSED AT 7:55 P.M. MOTION by Councilmember Eggert to declare 1340 Hillcrest Drive N.E. a Public Nuisance. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 7 MOTION by Councilmember Tillberry to receive six photos provided by Cindy King. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. Consider Vacation Request, SAV #19-01(a), by the City of Fridley HRA, to Vacate a Storm Pond Easement at the Northstar Train Station Site, Generally Located at 6050 Main Street N.E.; and Resolution to Vacate a Drainage Easement for the Property Generally Located at 6050 Main Street, Petitioned by the City of Fridley’s Housing and Redevelopment Authority (Ward 3). MOTION by Councilmember Bolkcom to open the public hearing. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS OPENED AT 7:56 P.M. Scott Hickok, Community Development Director, stated this was a request to approve a vacation request of the City by the HRA for the property generally located at 6050 Main Street, known best known as the East Train Station Site. Sherman Associates’ development will soon be underway, and the East Train Station Site had a pond at the northeast corner that was part of the Metro Transit development there. It was a storm pond for the parking area. They are requesting to vacate the easement around that pond as the new pond, as part of the plat, is now going to be at the southwest portion of the train station site. The are no longer needing a pond or an easement in the northeast corner of the train station site. MOTION by Councilmember Bolkcom to close the public hearing. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS CLOSED AT 7:58 P.M. MOTION by Councilmember Bolkcom to approve Vacation Request, SAV #19-01(a), by the City of Fridley HRA, to Vacate a Storm Pond Easement at the Northstar Train Station Site, Generally Located at 6050 Main Street N.E.; and to adopt Resolution No. 2019-49. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 8 7. Preliminary Assessment Hearing on 2018 Street Rehabilitation Project No. 2018-01; and Resolution Ordering Final Plans, Specifications and Calling for Bids: 2018 Street Rehabilitation Project No. ST 2018-01. MOTION by Councilmember Tillberry to 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 7:59 P.M. James Kosluchar, Public Works Director, said the City of Fridley performs rehabilitation on its streets, according to its Pavement Management Plan. This project is called the 2018-01 project thth and includes 69 Avenue from Central to Stinson Boulevard and Anoka Street from 69 to the south terminus. On February 12, 2018, the City Council authorized initiation of this project. In May 2018 an identical resolution to that in Council’s packet was passed, but the project was not let within 12 months and so the hearing and authorization process must be repeated. Mr. Kosluchar presented a map of the area. He stated the property to the north is Medtronic and Cummins and they have Rice Creek Townhomes on the east end and Timber Ridge kind of in the center, and then some residential properties to the west and the intervening property is an Anoka County Park. The existing conditions of the roadway are wide unmarked drive lanes, 52- feet wide, curb face to curb face. They have very few streets that wide. They have traffic speeding issues on the corridor, excessive impervious surface obviously with that width, and high maintenance costs associated again with the width. Reducing the roadway width will help all these conditions. Mr. Kosluchar stated the proposed project elements include a shared multi-use trail that is relocated to the south side to provide better service to residents along the south side of the roadway, driveway extensions associated with that, removal of pavement, reclaim and base construction, water main work including gate valves and hydrants which has been completed, storm sewer and drainage work including addition of a storm swale for water quality treatment, curb replacement, and repaving of the streets. They will do spot curb replacement. Restoration of the turf and getting things back to normal. Mr. Kosluchar stated in February 2018, the City had an open house and presented some different design options and gave residents an opportunity to give feedback. They had additional meetings that took place with Timber Ridge Townhome Association, Rice Creek Townhomes, and Medtronic and additional outreach and feedback offered through a POLCO survey and ongoing e-mail. Mr. Kosluchar stated the summary of feedback the City received were concerns about traffic th speeds and truck traffic on 69Avenue, medians not being desired due to access limitations, general support for storm water improvements, and preferred moving of the roadway to the north FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 9 if the pavement width was reduced. Some concepts had it moving to the south so staff accommodated that. There was concern about parking loss for both the townhome locations, th vehicles parking on 69 Avenue and Anoka Street, trail and retaining wall needing reconstruction, and questions about access during construction. Mr. Kosluchar stated reducing lane widths can lower traffic speeds and trucks are allowed to use the street as it is a designated stated route. Medians were removed out of a couple of the design options because of feedback from the meetings. Storm water treatment is provided on the south side of the road right-of-way. This pushes the roadway north, again defined as preferable th at meetings. They have reduced roadway width proposed on 69Avenue. Parking has been eliminated. Apartment and townhome properties typically need to provide their own parking. Staff offered an option to Timber Ridge Townhomes to install 12 additional parking spaces on Anoka Street with costs assessed to the Association, but the Association declined. th Mr. Kosluchar stated trail relocation to the south side of 69 Avenue is proposed, again to better service the neighborhoods. It eliminates the need for retaining reconstruction and maintenance. It provides better trail access. Medtronic is supportive of the design and moving the trail. Mr. Kosluchar said to the west, there is a trail on the north side with the retaining wall. Here is a 52-foot road width with excess room for parking and traveling. Typically, that would take a 40-foot maximum width. He believed there was some concept by the City that it might possibly turn into a four-lane roadway at some time in the future, but that has not materialized nor is it necessary with Medtronic and other development in the area. There is also a trail and then a storm water swale for water quality treatment and two lanes of traffic. Mr. Kosluchar stated as is typical with the City’s reconstruction project, they will work with the contractor to limit the amount of disturbance and allow residents access in and out of their properties. There may be special circumstances or certain days there will be limited access, but they will notify the residents of. Schedules and notices will be provided. Mr. Kosluchar stated staff presented a feasibility report to the Council that evaluated streets in the area, considered the conditions of utility improvements, and other typical elements which may be incorporated into the project. The feasibility report concluded the project was necessary, feasible, and cost-effective. Mr. Kosluchar stated the street rehabilitation project was submitted also to the Rice Creek Watershed District’s Urban Storm Water Remediation Cost-Share Program. It was approved for a $47,500 grant from the Rice Creek Watershed District. These are matching funds. The proposal includes the road diet, pavement reduction, adding a storm water swale on the south side of the street, and scored amongst the top projects with the Rice Creek Watershed District in their cycle. Mr. Kosluchar stated the estimated project cost (and these have not been updated since the feasibility report) is $740,700 for the total project. Municipal State Aid will carry a majority of the roadway cost, there is also a significant that will be assessed to adjacent properties, utility funds and as he mentioned, the Rice Creek Watershed District grant. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 10 Mr. Kosluchar stated there are two different assessable parcel categories: low-density residential and non-low density residential defined by four units or less for low-density residential and project assessment of $2,350 per residential unit. Again, duplexes pay 1.5 times, triplexes would pay 2 times that rate, and so on. Non-LDR or commercial industrial assessments would be on the order of between $30-$35 a lineal foot as estimated. Again, the assessments are based on actual construction prices for both cases so these are estimates. Mr. Kosluchar stated as to the tentative schedule, revamping to open bids and award next month and construction in April to August 2020. There could be some early construction on Anoka Street and they would provide incentives if contractor could get some meaningful work done yet this fall. Notice of assessment in October 2020 would be typical and then assessments would begin under a payment plan in January 2021. Mr. Kosluchar stated there is no change to the concept of the project. They needed time to coordinate with five different agencies, including some difficult coordination on the traffic signal on Old Central. They came out of that coordination fairly good, kept costs to a minimum, and kept options open for future changes to that intersection if they are warranted by Anoka County. Councilmember Bolkcom stated because a couple of the councilmembers were not on the Council at that time, there was a lot of discussion about parking and both sides where the townhome residents were using the street, and then there were the other neighbors who were like, okay, you are parking on the street, you are not moving them, there is snowplowing. She just wanted to make sure they were aware of that. Councilmember Bolkcom stated as far as the storm water she asked if there is a deadline. Mr. Kosluchar replied it is funded through the end of 2020. Councilmember Bolkcom asked if staff was concerned about the costs of the project changing. Mr. Kosluchar said for this year’s construction season, the numbers would be a little higher. Bidding this project out at this time of year for next year, gives them an early start, and probably gets them the best possible pricing for the project. Councilmember Bolkcom asked if the City had heard back from anyone in the neighborhood. Mr. Kosluchar replied, they have not had any e-mails or calls that he knows of. Councilmember Bolkcom asked if they heard any more from the townhomes about the parking. Mr. Kosluchar replied, no. Councilmember Eggert stated regarding the parking, one resident of the Rice Creek Townhomes did send him an e-mail regarding his parking issues. Councilmember Eggert responded but has not heard back. They can see it is normal to rent a one or two-bedroom unit FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 11 and have one or two cars. In this resident’s case he has three. It is likely that a number of the tenants have more than two cars. That is creating some of the parking issues. They may not have explored the fact that a number of the residents have no cars. There is a way for them to work through that. Councilmember Bolkcom stated there also was the opportunity for them to build out those spots, but they would incur the cost. Councilmember Eggert stated that was for the other units of Timber Ridge. MOTION by Councilmember Tillberry to close the public hearing. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS CLOSED AT 8:13 P.M. MOTION by Councilmember Eggert to adopt Resolution No. 2019-50. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OLD BUSINESS: 8. Second Reading of an Ordinance Amending Chapters 6 and 128 of the Fridley City Code, and Section 205.05 of the Fridley Zoning Code pertaining to the Dissolution of the Appeals Commission and Transfer of Responsibilities to the Planning Commission (Text Amendment, TA #19-04) (Continued September 9, 2010); and Adopt Official Title and Summary Ordinance. Scott Hickok, Community Development Director, stated at the last Council meeting they held the second reading for Text Amendment #19-04. This text amendment has to do with the Appeals Commission and the future disposition of the Appeals Commission. Councilmember Bolkcom asked about the members and what happens to membership. Mr. Hickok stated under Section 5 in the ordinance as presented, the language after review clearly depicts what happens there. The membership numbers do not change. The chair of the Appeals Commission will become a member-at-large so there will be four members-at-large rather than three members-at-large. Other than that change, the body of the Commission really stays the same. Mr. Hickok stated in further reviewing this and after discussing this with the City Attorney, they came to the belief that one of the parts of that question might have also been about Aaron Jahnke. There is one member of the Appeals Commission who would no longer be on a FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 12 commission, and staff was aware of that. They in fact discussed this with Mr. Jahnke some time ago who indicated that he appreciated being on the Commission, and he knows and understands why they considered the dissolution the Appeals Commission. He said that at some point in the future if another opening comes on another commission, he would be very interested in having another opportunity to serve. MOTION by Councilmember Bolkcom to waive the reading of the ordinance and adopt Ordinance No. 1373 upon second reading, to adopt the official title and summary ordinance and to order publication. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. NEW BUSINESS: 9. Resolution Approving the Proposed Property Tax Levy for 2019 Collectible in 2020. Daniel Tienter, Director of Finance/City Treasurer, stated as part of the budget development process, staff and the City Council reviewed the economic expectations both for the near-term and long-term economic growth. They rely on the economic forecast and projections that are prepared by the State of Minnesota. Those projections provide for near-term, stable economic growth; but the State is predicting a slowing of economic growth beginning later this year and continuing annually until 2023. In fact, slowing to about less than 1 percent. Mr. Tienter stated at the conclusion of the 2019 legislative session, the State did adopt a structurally unbalanced budget and, as they have talked about with Council, available State budget reserves are expected to be reduced by about $242 million by the end of the state fiscal year 2021 and another $63 million by state fiscal year 2023, for a spend down of about $179 million. This will be important for the Council in the future, because as there is greater stress on the State budget, it may affect the City’s budgets. Mr. Tienter stated the Federal Reserve recently lowered the Federal Funds Rate target by 25 basis points. They have the stated goal of trying to continue the longest economic expansion essentially in the recorded history of the United States, but they do know that the treasury yield curve recently inverted. Mr. Tienter stated there are some continuing trade disputes with international trading partners and that is creating uncertainty in the long-term economic forecasts, and then of course Brexit or the United Kingdom leaving the euro zone may impact global economic growth. As he has shared with Council in the past, when they actually failed to move out a few months ago, the Dow actually fell about 3.4 percent so that can have serious ripple effects. Mr. Tienter stated as to general assumptions for the budget, they tend to have a conservative budget model when it comes to both the revenues and expenses. It essentially allows the City not to back into an unanticipated hole in the budget. They also are including a single-salary step increase for eligible employees and, as a part of the regular budget development process, they FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 13 always reallocate current resources based on the City’s need and actual history. They use a three-year rolling average at the City of Fridley where they compare the recent history of its expenditures and revenues to what has been budgeted and they make adjustments accordingly consistent with the guidance of the City Charter and the previous approved Council action so they make sure the budget is doing everything the Council said they are going to do and that they do not adopt anything that would be contrary to that. Mr. Tienter stated it supports the current compliment of Full-Time Equivalent (FTE) employees and right now it is structurally balanced and there is a proposed use of fund balance which he will talk about in a later slide. For everyone’s benefit there are just a handful of assumptions the City uses. There are of course more than these but for salaries and wages, they are assuming 3 percent; 3.5 percent increase in health and similar insurance; 2 percent workers’ compensation; and 2 percent materials and supplies. It is also important to note that the preliminary projections for next year’s budget do not include a variety of things such as salary and wage disparities between union and non-union staff, wage, or fringe benefits that are subject to some collective bargaining agreements. With respect to the three bargaining units, their agreements will expire at the end of the year, and the City will be opening negotiations with them in the near future. That will have an impact on the budget. Mr. Tienter stated there is quite a bit of work to be done regarding expenditures and revenues associated with the park system master plan as they heard earlier this evening. So there will also be impacts on the budget moving forward. They have not yet finalized the street capital investment program transfer and they recently approved some organizational changes with respect to the City Manager’s Office and the Department of Finance which take effect on September 26. For purposes of the proposed budget, they are not included but will be included in the final budget. Mr. Tienter said with respect to the general fund revenues, at present the property tax revenue based on Council’s guidance is proposed to increase 5.72 percent or $674,192. When it comes to intergovernmental revenues there is no change in the gas tax in 2019 or 2020 or related City revenues. The Council had a discussion at previous budget workshops about a possible increase in the gas tax as a part of the most recent legislative session. That did not happen. Mr. Tienter stated based on the recent Local Government Aid (LGA) certification, the City will receive an increase of approximately $270,000. All of those monies will be directed to the Capital Investment Program. Then additionally they will be drawing down the use of LGA in the operating budget by another $119,000. That is consistent with the Council’s past direction to limit the City’s reliance on what they have regarded as one-time money in LGA. Mr. Tienter stated also under current law, the State aid for the PERA assistance will expire. That was approximately $27,000 annually so this budget accommodates that. Also, recently approved agreements with the Council have increased the reimbursements for the school resource officers to about $25,000 annually. Mr. Tienter presented a chart which essentially captures the recent history of the City’s use of LGA. They can see back in 2010 and 2011 they were using all of it in the general fund and then FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 14 they moved it over to the capital fund and slowly over time they added it back in to offset cost pressures in the operating budget. In 2018 and 2019, Council provided guidance that the City should attempt to draw down its use of LGA and they can see in 2019 the City held it flat. In 2020, they are drawing it down to the point where the majority of the LGA is now in the capital budget. Mr. Tienter stated as far as revenues, continued charges for service, the proposed budget reexamines the administrative charges for various enterprise and special revenue funds. It only resulted in an increase of about $1,100; but there are some savings to the water fund and the sanitary sewer fund and an increase for the storm water fund. They will talk about those at a future budget meeting, but it is important that they did look through all of them and essentially they were budgeting appropriately as far as the general fund was concerned but had to make some changes across some of the enterprise funds to support those charges. Mr. Tienter stated other financing sources given the City’s recent claims experience and generally the performance of the insurance trust, the City’s insurance reimbursements are anticipated to go down about $2,300. Generally, if the League performs well in a given year, the City receives a dividend which is a function of the City’s own claims experience plus how the broader pool does. As they know, there have been some well-publicized reports of large settlements with the League of Minnesota Cities Insurance Trust so they are seeing a ripple effect here. Mr. Tienter stated they are also no longer using the closed bond fund to support City operations. For several years the City was using a few hundred thousand dollars to essentially offset operating costs. They have since eliminated the use of that one-time money. Mr. Tienter stated as to the general fund revenue budget by the various revenue categories, they can see the majority of the revenues come from the property tax levy, from intergovernmental or LGA, and then charges for service. The proposed 2020 budget reflects a 2.29 percent increase in revenues. It is mostly attributable to the increase in the property tax levy. Mr. Tienter stated moving over to the expenditure side, personnel services make up the balance of the general fund budget, just over 77 percent, and their anticipated increase is about 3.48 percent or just over $465,000 in 2020. That is a result of the various assumptions he outlined on a previous slide as it relates to health insurance and changes in the compensation plan. Supplies are anticipated to remain relatively stable in 2020, and they are assuming about a $22,900 decrease in operating supplies. That is a result of the City’s effort to use that rolling three-year average and make sure they are right-sizing its budget. Mr. Tienter stated as to other services and charges, utility services and miscellaneous charges are anticipated to decrease about $168,000 or about 15 percent to reflect a cost-savings for the new Fridley Civic Campus. As part of the 2019 budget, the Council assumed a 20 percent contingency plus a 5 percent rate change for utility services not knowing what the City’s utility services experience would be like in this building. Now that the City has had enough of a history between a summer and a winter period, they were able to more accurately model what the utility services experience will be in the future. They have decreased those utility services and miscellaneous charges to reflect those assumptions. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 15 Mr. Tienter stated as discussed previously, they anticipate an increase of about 2 percent or $82,000 across all non-personnel expenditures which is based on the March 2019 CIP for the Midwest and other factors. Mr. Tienter stated as to general fund expenditures, the balance is personnel expenditures followed by other services and charges and then supplies. Occasionally they have some other financing uses and capital outlay, but they tend to be very minimal. Overall, they anticipate an increase in expenditures of about 2.41 percent after they factor in all those various assumptions. Mr. Tienter stated when they look at the general fund balance history, the City has a goal of maintaining a 35-50 percent working capital fund balance for the next year’s budget. They basically look at what it is they are budgeting and make sure the City is somewhere between those amounts. Over time, that amount increased, and then between 2018 and 2019 it decreased. That decrease reflects the creation of the community investment fund. Monies were transferred from the general fund to the community investment fund and they can see now that 50 percent threshold. They are just about $170,000 below it which works out to just about 49 percent. Council is still maintaining a very healthy general fund balance and reserve and in fact at this level, would still be considered AAA rated. Mr. Tienter said generally they see other property tax levy scenarios by looking at all external revenues including intergovernmental aid, charges for services, etc. They look at the City’s total projection for expenditures and come up with a figure typically referred to as net City cost. Basically, it is the amount that has to be supported by the property tax levy or fund balance. As a thought exercise they can see in the table he presented what would happen if the Council had a -3 percent change in levy, 0, 3, 5, 5 plus $85,000, and 6.5 percent. Mr. Tienter stated right now if they were to essentially decrease it 3 percent, they would have to find cost offsets or revenues that total just over $1 million. Based on current expenditures and revenues, a balanced budget would result in about a 5.72 percent increase. The proposed budget does assume a use of fund balance to support some supplemental road repairs. At this point in time they are proposing a 5 percent plus $85,000 to arrive at the 5.72 percent. As to where the $85,000 comes from, the City has two debt issues that are expiring for the year payable 2020 and ultimately what is being proposed as a part of this property tax levy is to move that $85,000 from the debt service levy to the general fund levy. Essentially maintaining that as the constant between the two years and then adding the 5 percent in order to accommodate all the costs increases and revenue changes that were previously discussed. Mr. Tienter stated the $33,200 deficit is a planned use of fund balance for next year for the supplemental road repairs. Essentially after a harsh winter, there are some additional road patching and work that needs to be done. Public Works has requested some additional funds. Since it is a one-time appropriation and given the City’s strong fund balance position, rather than adding that number onto the ongoing property tax levy, they are proposing to use fund balance. Mr. Tienter stated if they look at the property tax levy alternatives they will see as reference in 2019 a 6.5 percent increase or 4.64 overall. For proposed 2020, some various alternatives, the FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 16 5 percent plus the $85,000 results in a 3.97 percent overall increase in the property tax levy. The reason that number is less than the 5.72 that was mentioned earlier is because of a change in the debt service levy. The debt service levy at this point in time is right around $3.1 million as a result of the bond payment on this facility and, when that changes, that has a significant impact on the overall levy change. Mr. Tienter said with respect to the cost increase in terms of property taxes payable as a result of those various alternatives, last year the Council went up to 6.5 percent which resulted in about a $38 change. At the 5 percent plus the $85,000 it would be about a $64 change year over year or about $5.33 per month. It is important to note that the average-valued homestead is actually increased 7 percent compared to 8.8 percent the previous year so they can see the shift in property values which does affect the overall amount of tax that an individual residential homestead would pay. Mr. Tienter stated they looked at the estimated market value. From 2019 to 2020 the change in the lower bracket housing is about 7 percent and then the upper bracket housing is between 4 and 5. The difference there is essentially because there is a higher demand for entry-level housing, and the values of those homes are appreciating faster. The City’s average residential homestead is $222,500 and a median is$217,200. They asked the City Assessor to take a look at the current MLS, and these are the current values are higher which is essentially a long way of saying they are anticipating these values to increase over time because of what will reflect for sales this year will be qualified for property tax valuation purposes next year. Mr. Tienter said as a reminder there is a regular homestead credit refund. If you had a home that was just under $203,000, if you had an annual income of just over $39,000, you would be eligible for a refund of about $1,367. Mr. Tienter stated assuming that the Council is supportive, they would also notice the City’s truth and taxation hearing which would be conducted on December 9. Council would be asked to adopt the proposed 2020 budget, the final CIP, the final property tax levy, and the revised 2019 budget at the end of the year. MOTION by Councilmember Eggert to adopt Resolution No. 2019-51. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 10. Resolution Approving the Proposed 2020 General Fund Budget. MOTION by Councilmember Bolkcom to adopt Resolution No. 2019-52. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 17 11. Resolution Consenting to the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, Adopting a 2019 Property Tax Levy, Collectible in 2020. Daniel Tienter, Director of Finance/City Treasurer, stated since about 1996, the Housing and Redvelopment Authority (HRA) has levied a property tax to support its various programs and activities. Typically, the levy has gone to support many of the housing redevelopment programs operated by the HRA. Pursuant to Minnesota state law, the levy for the HRA cannot exceed 0.0185 percent of the estimated market value of the jurisdiction. Mr. Tienter stated as opposed to the proposed 2020 property tax levy for the City, which has a complicated formula, the HRA levy is just a function of the market value against the levy that is set by Council. Typically, the HRA has always levied the statutory maximum which is 0.0185 percent. Mr. Tienter stated State law also says in order for this tax levy to take effect, the Council must consent to the recommendation of the HRA. The HRA adopted a resolution at their meeting in September and recommended to Council a property tax levy of $528,164 which would be payable in 2020. As such, a property owner with a residential homestead valued at the City’s median value at this point, of $217,200, would pay about $40.18 a year and a commercial/industrial property valued at $1 million would pay about $185. Mr. Tienter stated as to the history of the property tax levy, since it is based on an estimated market value and it tends to track the general economy, it increased in 2009 and then decreased and moved down in 2013. As the City has gone through the economic expansion from 2016 through 2020, it has slowly increased in time to reflect the estimated market values that exist in the City proper. For 2020, they are anticipating an increase of about $54,996 compared to the 2019 levy. Mr. Tienter stated assuming the City Council adopts the attached resolution, staff will transmit it to Anoka County on or before September 30, which is also required by State law. MOTION by Councilmember Tillberry to adopt Resolution No. 2019-53. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 12. Resolution Ordering Preparation of Preliminary Report, Plans and Specifications th for 7th Street and 57 Avenue Multi-Use Trial Project No. ST2021-21. James Kosluchar, Public Works Director, stated this is part of the City’s Capital Investment Program. The resolution directs staff to prepare a feasibility report and initiate preliminary design and analysis to determine whether the project is feasible. thrdst Mr. Kosluchar said this project includes a multi-use trail on 7 Street from 53 Avenue to 61 thth Avenue and on 57 Avenue from 7 Street to Highway 47. It includes review and possible FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 23, 2019 PAGE 18 thth improvement of intersections on 7 Street at 57 Avenue and Medtronic Parkway. It also ties to rd existing connections for trail and walkway in a future east/west route on 53 Avenue. Mr. Kosluchar stated the project is part of the City’s Active Transportation Plan on designated routes. These identify a need for safe alternative modes and prioritize trail connections. Staff hosted a block party event in June 2017. The proposed concept was based on residents’ th feedback for their preferred option. The 57 Avenue trail extension, that leg of the project, was added because of feedback at that meeting. Mr. Kosluchar stated staff submitted the project for federal funding and received $516,120 in eligible funding for shared multi-use trails. The City scored 6th out of 40 projects submitted in that category in the metro. The project is slated for the 2021-2022 state fiscal year. If approved tonight, staff will schedule an open house with the neighborhood for October 8, 2019, at 6 p.m. . Staff will also complete a feasibility report for Council that will indicate whether the project is feasible from a construction and financial standpoint. If so decided, the project could go to construction as soon as 2021. MOTION by Councilmember Tillberry to adopt Resolution No. 2019-54. Seconded by Councilmember Eggert. 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: MOTION by Mayor Lund to adjourn. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 8:47 P.M. Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor