Loading...
CHM 05/24/2010 - 29993CITY OF FRIDLEY CHARTER COMMISSION MEETING May 24, 2010 CALL TO ORDER: Chairperson Soule called the Charter Commission meeting to order at 7:00 p.m. ROLL CALL: Members Present: Commissioners Peter Borman, Gary Braam, Don Findell, Marion Flickinger, Carol Hoiby, Bill Holm, Nancy Jorgenson, Ted Kranz, Rick Nelson, Pam Reynolds, Noel Ryan, Lois Scholzen, Keith Shaw, and Cindy Soule Members Absent: Commissioner Leslie Plummer Others Present: Deb Skogen, City Clerk/Staff Liaison Cindy Ruschy, Staff Liaison Richard Pribyl, Finance Director APPROVAL OF AGENDA Commissioner Holm MOVED and Commissioner Braam seconded a motion approving the meeting agenda. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON SOULE DECLARED THE MOTION CARRIED. APPROVAL OF MINUTES Commissioner Reynolds asked if her comments on Page 2, could be changed to reflect more what she said "allow them to make the decision about using the CPI plus 2% or up to 5 %." Commissioner Holm MOVED and Commissioner Findell seconded a motion approving the Charter Commission meeting minutes of April 26, 2010, as amended. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON SOULE DECLARED THE MOTION CARRIED. ADMINISTRATIVE MATTERS Commissioner Soule said the Commission had recommended changes from Chapters 7 through 12 and Ms. Skogen has prepared them into an ordinance. Commissioner Reynolds said there were a couple of errors. First, in Section 4, page 2 the title of the Chapter 12 was wrong and should be changed. Second, her notes reflected that the Charter Commission would set the criteria if the City Council opted for a Commission in Section 3, Section 11.08 but didn't know if it had been agreed upon by everyone. Commissioner Jorgenson said when they were discussing the issue, State Statute pretty much defined what could be done and that is what the Charter Commissioners agreed to. Commissioner Soule said the whole chapter was about public works and it was clear the sentence was being added for clarification that this was about a Public Utilities Commission. By the consensus of the Commission, no changes were made to this section. Approved September 27, 2010 CHARTER COMMISSION MEETING OF MAY 24, 2010 PAGE 2 Commissioner Soule asked if there were any other comments and whether or not they wanted to recommend the amendment by ordinance to the City Council. Commissioner Holm said a change should be made to Section 7.02 to change the word "that" to "than" in the sentence, "a tax levy that is greater that than the prior year..." Commissioner Reynolds was wondering whether or not this section should be included in the ordinance as the Commission was still discussing Chapter 7. Commissioner Nelson felt it should be moved forward pending the outcome of the discussion. Commissioner Jorgenson agreed that it should move forward as they did not know the status on Chapter 7 at this time. There was further discussion on whether or not to remove this section from the ordinance. Commissioner Borman MOVED and Commissioner Reynolds seconded the motion that they send forth Sections 2, 3 and 4 of the ordinance and renumber them Sections 1 through 3 and remove Chapter 7 from the title. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON SOULE DECLARED THE MOTION ADOPTED BY A VOTE OF 13 TO 1, COMMISSIONER NELSON VOTING NAY. DISCUSSION OF CHAPTER 7 Finance Director Rick Pribyl provided two handouts. He said the discussion would be a mute issue as the City was currently under state levy limits as well as the charter restrictions. He said there was an unintended consequence of the levy limitation, but felt it worthy of discussion. He said original creation of the HRA tax increment financing was a tool used for redevelopment to eliminate blight or to create incentives for redevelopment. It was the, "but for" tax incentives, the project would not be completed to build future taxable value. He said the outcome is growth in taxable value, another tool for future city councils to provide for necessary financing of future services. He said the TIF Districts are created, the city ends up redevelopment and additional tax growth. He said when the Districts decertify, 20 -35 years later, there is now additional value. He said the limits do not allow the city or any future city council to levy against that new growth. The intent is to keep taxes at its current level. With the TIF rolling off of these decertified districts, the foundation of the charter limit was to put a cap on the levies and a cap on what the growth on property taxes is. With the value coming off in these decertified districts, instead of the HRA capturing this value in property taxes, it now comes back to and goes and mixes with the taxable value of the overall city. He said the new growth now goes back to all of the taxing jurisdictions. He said the new growth upon decertification, Moore Lake in 2008 with a total taxable value of $595,000; the North area came off in 2009 with $1,400,000; and the Center City came off for about half at $351,000. He said if there was no state levy limit in 2009, nor a charter limit, this city could have levied an additional $673,000 and not increased the tax capacity rate. Commissioner Jorgenson said the monies in the TIF districts went back to the HRA to pay off their bonds. Now that they are decertified, that money would come back to all of the taxing jurisdictions, and the city's portion comes back to the general fund. Commissioner Nelson said if there was $100 in taxes and 100 people, each person paid $1. Now that this is coming in, they give us $.40, so each person would then pay $.60 rather than $1. Mr. Pribyl said that was correct and that having it come in doesn't do the City any good as long as the state has levy limits. It hurts to have the districts decertify with levy limits in place. One of the thoughts was to build additional capacity for future levy ability for future councils which does not happen any longer because of the state levy limits and the charter restrictions. He said when all this taxable value comes back to the City, it reduces the tax capacity rate, which then writes down what everyone is paying in property taxes. While that is good, it still has that cap, which was not the expectation of the City Council when it was put into place. Commissioner Jorgenson wondered if there were levy limits for the county and the school districts as well towards those funds. Approved September 27, 2010 CHARTER COMMISSION MEETING OF MAY 24, 2010 PAGE 3 Mr. Pribyl said he was not sure as they had different formulas. He said there were probably limits, but he did not know what they were. He said the limits are on until 2011 and since we are under the levy limits, our taxes have been dropped by this value coming on. To make an amendment to the charter to try to make use of this funding would most likely drive taxes back up, because it is already going to be used to subsidize those taxes in 2011 and write them down. He said the other sheet provided shows for 2008, 2009 and 2010, what the City could have had in additional levy capacity should there have been no charter or state levy limit. Commissioner Jorgenson asked which was more restrictive, the charter or the state. Mr. Pribyl said the state was more restrictive right now, but it might waffle back and forth depending on the state's formula. Commissioner Nelson said in 2009 $180,000 went towards property owners, who received the benefit, it was not new income into the city. Mr. Pribyl said if you took Medtronics for example, had it not been in a TIF District, all that new value would have helped the average property owner, because it is new value coming in. He said ordinarily you would have levied up that value to keep the tax capacity rate the same, to add more capacity in the levy. It would have then decreased the tax capacity rate and decreased the taxes on the average home. Commissioner Jorgenson asked if part of the TIF district with Medtronics was ready to be decertified next year. Mr. Pribyl said per the agreement, there is about $210,000 taxable value coming out, just as the decertification would be going to all taxing jurisdictions. Had the City been able to tax that, it would have been about $67,000, had the City been able to tax it at the city's tax capacity rate. He said it seemed to be contradictory from the initial onset of TIF and HRA as far as building that value to be able to levy on when you need more levy. Commissioner Findell said they understood the HRA TIF Districts. He said the HRA virtually benefitted from the offset of taxes, but wondered who benefitted from Medtronic in the same way HRA benefit when TIF was in place. Commissioner Nelson said everyone benefitted right now. Mr. Pribyl said the increment that is being generated by Medtronic right now, when they pay their taxes, the HRA gets 10% for administrative costs, then 90% goes back to Medtronic who then pays 10% to the HRA for the land sale. He said there was really no benefit until that district actually expires, or there is a year when value comes back onto the tax rolls. Mr. Pribyl said when the HRA receives their 80% net, that is the incentive for the parking ramp. They, like everyone else, are petitioning their valuation, thereby attempting to reduce their valuation meaning they pay less in taxes and do not get as much back. Commissioner Holm said these districts were significant and represented a large part of the taxable value. Mr. Pribyl said yes it was about 7 to 10% of the total taxable value of the City. Commissioner Holm said the people who live in the Fridley School District benefited more than those people who live in another school district and Mr. Pribyl said that was correct for the Moore Lake TIF District. Mr. Holm wondered if there was any language that could be crafted to help get the city a portion for future reference. Mr. Pribyl said it depended on how they wanted it to work and how it was worded. Any future districts that decertify that value would be excluded from the calculation of limitation, but now sure it would be worth it in the future as there is only about $250,000 (Medtronic). Commissioner Findell said the taxpayers were receiving a benefit but the City was not receiving any additional spendable revenue. Mr. Pribyl said that was correct. He said due to the economy and loss in property valuation, it is hard to see it right now. The proposed new valuation can't effectively be used as originally thought due to the state levy limits and charter restrictions. Commissioner Borman, asked, as the actual dollars go, the way the Charter is written, the rate of inflation or 5 %, whichever is least, the Commission has been kicking around adding 2% to the CPI and wanted to know how that Approved September 27, 2010 CHARTER COMMISSION MEETING OF MAY 24, 2010 PAGE 4 2% might benefit the City. Mr. Pribyl said 1% was approximately $80,000, so 2% would be approximately $160,000. Mr. Pribyl said the City appreciates the Commission is trying to provide for the future of Fridley, but subsequently, we will be entering a period of inflation and it is going to be really difficult. He felt it would still not give the Council the tools they need in the future. Commissioner Holm asked if it got affected by the state levy limits. Mr. Pribyl said that even though the city had the ability to have the additional 2 %, if there were state levy limits, they couldn't use it. He said the state can put on ceilings. Commissioner Borman asked if the City was gaining anything by having a Charter. Mr. Pribyl said the City would have more local control. Commissioner Borman said when the state could put limits on it. Commissioner Jorgenson said the state has really decreased a lot of the ability the cities have had with their home rule charter. She believed the Charter Commission should make a recommendation that the city abolish the charter as the state is super - ceding everything that we are doing and we are only adding additional costs to the city by having to publish these notices and hold these public hearings, vs becoming a statutory city, when the state changes it and you don't have to. Commissioner Borman said it was frustrating. He said the state budget just pushed everything out one more year. He said even if you went 2% plus CPI, the city would still be hurting. It doesn't solve the problem right now, it only takes care of the state's problem. He said the charter was fine as certain limitations could be placed on the city, but you are not gaining anything because everything is being controlled by the state. Commissioner Jorgenson said the City has to get their levy and budget to the County in August or September, but the legislature does not start meeting until January or February. She felt it was a never ending thing, and didn't see a way out with the climate at the legislature, and they have bigger issues to worry about. Commission Borman said the things the legislature does affects the city and the city has to wait to see how it is going to affect them. He said it was like being part of a family where everyone gets punished, even if they didn't do anything wrong. Commissioner Jorgenson said the state started putting TIF restrictions in about the mid 1990's because several cities used TIF districts in an inappropriate way. She said the expansion of the Rosedale Shopping Center got the legislature riled because the money was paid back incorrectly. If the city did try to pass another TIF district, the state would decrease the taxes paid back to the city, and the city would have to take a hit to create a new district. She said when the Medtronic district was being reconsidered; the state nailed the city for $350,000 in taxes. She said if there was a good tool and it was working well, but somebody messed it up, you don't hammer everyone else. Commissioner Reynolds said the legislature had created several different kinds of TIF districts including one that no longer requires blight in the district. Commissioner Jorgenson said the 2001 Gateway West required blight. Commissioner Nelson MOVED and Commissioner Jorgenson seconded a motion to table discussion of Chapter 7. Commissioner Nelson felt they could continue to discuss it and possibly make changes, but that it wouldn't matter as long as the state keeps levy limits. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON SOULE DECLARED THE MOTION WAS ADOPTED BY A VOTE OF 13 TO 1, COMMISSIONER REYNOLDS VOTING NAY. Approved September 27, 2010 CHARTER COMMISSION MEETING OF MAY 24, 2010 PAGE 5 Commissioner Jorgenson said the Commission discussed how long it would take for the city to recapture the lost local government aid in the last 10 years, and we were looking at $160,000 (2% over the CPI), the City could never recapture that amount. Commissioner Nelson said they would have to have a 10% increase over the neat 5 years to even come close to recapturing that amount. Commissioner Jorgenson said with levy limits they couldn't increase it and so what was really the point of changing it. Commissioner Nelson said the City Council, similar to Columbia Heights, should say they will no longer rely on LGA and we are going to increase things accordingly until we get back to the amount we had before, which would mean a commitment for everyone, as their taxes would be increased to keep the same level of service. Commissioner Findell asked how Columbia Heights could increase the taxes. Ms. Skogen said they had no restrictions, that only three cities in the state had those restrictions - Mounds View, West St. Paul and Fridley. Commissioner Kranz asked what would happen when property taxes go up - a house that is worth $150,000 and goes up to $200,000, there's going to be more taxes on this house. Mr. Pribyl said it was all based on the levy. If all of a sudden we had a huge spike in value, which would mean the economy has rebounded, then the tax rates and the taxes go down on the individual homes and commercial and industrial. We have to work with both the state and local levy limits, it's not so much the taxable value. Commissioner Holm asked what would happen if all property values go up 25 %. Mr. Pribyl said everything stays the same, and the City wouldn't get any additional revenue. With all of the different tax rates, there could be tax shifts. He said the scale appears to be pushing down commercial and industrial property values while it is increaseingresidential value. He said there was a huge block of the commercial and industrial property owners who are petitioning the court for lower valuations, which the City has never seen before. There were 58 new tax petitions that came in for 2010, and there are about 62 from the three prior years. Commissioner Jorgenson asked how many foreclosed homes there were. Mr. Pribyl said that Bill Burns knew and that assessing may have information, but the number was somewhat misleading as the banks are holding some of the inventory back as well, rather than taking it out to the public. He said there was a list, some of which are in good condition that get bought up before they go to market. The Commissioners thanked Mr. Pribyl for providing information to them. He told them in all of the years he had been with the city, this group of Commissioners does a great job and thanked them. Commissioner Nelson said they may want to reconsider the ordinance voted on previously this meeting. Commissioner Jorgenson MOVED and Commissioner Borman seconded a motion to reconsider the motion to remove Section 1 from the ordinance under Item 5 of the agenda. Commissioner Holm asked, as a matter of clarification, if this was in conflict with the motion to table Chapter 7. Commissioner Soule said no, because it was a motion to reconsider actions taken earlier in the meeting. UPON A VOICE VOTE, CHAIRPERSON SOULE DECLARED THE MOTION WAS APPROVED WITH A 12- 2 VOTE, WITH COMMISSIONERS HOLM AND REYNOLDS VOTING NAY. Commissioner Nelson MOVED and Commissioner Jorgenson seconded a motion to put Section 1 pertaining to Chapter 7 as discussed earlier with the changes under item 5 back into the ordinance for recommendation to the City Council. UPON A VOICE VOTE, CHAIRPERSON SOULE DECLARED THE MOTION WAS APPROVED WITH AN 11 -3 VOTE, WITH COMMISSIONERS BRAAM, HOLM, AND REYNOLDS VOTING NAY. Approved September 27, 2010 CHARTER COMMISSION MEETING OF MAY 24, 2010 PAGE 6 DISCUSSION OF CHAPTER 2 Ms. Skogen said Chapter 2 deals with vacancies in the Council. With all of the legislative changes made, there are now a lot more days when an election cannot be held. She provided a calendar of an election showing the Commissioners the dates an election could not be held. She said if someone gave notice after filings, you could not hold an election for that position until after December 12th. No special election may be held between the primary and general election; special elections are prohibited within 40 days of the general election; special election not held with federal or state, continues to be 30 days; if a special is held with the primary, you have to provide a notice 67 days before August 10th, which is June 4th; if a special is held with the general, you have to provide a notice 74 days before August 20th. Otherwise minimum notice to Anoka County would be 39 days to prepare ballot for absentee ballot, plus you need time for filing, or minimum amount of time you can hold an election if you have a vacancy is 64 days. She said she looked at what was new, and what our Charter said. She said the charter was silent about what to do if a vacancy occurs between the first and third year and it might be something the Charter Commission and/or Council may want to address. She wanted to bring the information forward for thought and discussion, especially to address what could happen during someone's second year due to all of the dates you cannot hold an election. Commissioner Soule asked if the Commissioners were interested in task force meeting over the summer to discuss this issue. Commissioner Jorgenson said the Council would ultimately have to decide the issue, as they have not wanted to appoint anyone in the past and it would be hard for five people to come to consensus on this issue. Ms Skogen said in Chapter 5, she provided a timeline as well describing special election pertaining to a question, it would be about a seven week process and outlined the process. She highlighted the dates, rather than suggesting new. She said 64 days is the minimum amount of time needed for declaring an election. Commissioner Jorgenson asked what happens in statutory cities if there is a special election. Ms. Skogen said they are regulated by state election law. Commissioner Jorgenson said that would be another good reason for dropping the charter and moving back to becoming a statutory city. She said they were constantly having to go back and change the charter to comply with state law and they super cede the city on other issues. Ms. Skogen said there were directions in the state law regarding the dissolution of the charter and has to go to a vote. Commissioner Kranz MOVED and Commissioner Jorgenson seconded a motion to table Chapter 2 and 5 until September meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON SOULE DECARED THE MOTION CARRIED UNANIMOUSLY. FUTURE AGENDA ITEMS Commissioner Jorgenson said she seriously thought the Commission should discuss dissolving the Charter Commission. Commissioner Holm said they should have the pros and cons of dissolution and the process as to how it should be done. Nancy Jorgenson and Carol Hoiby volunteered to research the issue over the summer and bring it back to the Commissioners in the fall. Future Items, Chapter 2, Chapter 5, and dissolution of the city charter ADJOURNMENT: Commissioner Jorgenson MOVED and Commissioner Findell seconded a motion to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON SOULE DECLARED THE MOTION CARRIED AND THE MEETING WAS ADJOURNED AT 8:40 P.M. Respectfully submitted, Approved September 27, 2010 CHARTER COMMISSION MEETING OF MAY 24, 2010 Debra A. Skogen, City Clerk/Staff Liaison Carol Hoiby, Secretary Approved September 27, 2010 PAGE 7