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CHM 04/03/2017 CITY OF FRIDLEY CHARTER COMMISSION MEETING April 3, 2017 CALL TO ORDER: Chairperson Ostwald called the Charter Commission meeting to order at 7:00 p.m. ROLL CALL: Members Present: Commissioners Gary Braam, Zach Crandall, Don Findell, Manuel Granroos, Richard Johnston, Ted Kranz, Rick Nelson, David Ostwald, and Pam Reynolds Members Absent: Commissioners Bruce Nelson, Barb Reiland, Cindy Soule, Avonna Starck, and Richard Walch Others Present: Bob Barnett, Councilmember at Large Ann Bolkcom, Councilmember Ward 3 Wally Wysopal, City Manager Deb Skogen, City Clerk Jake Foster, Management Analyst APPROVAL OF AGENDA Commissioner Nelson MOVED and Commissioner Reynolds seconded a motion to approve the agenda. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. APPROVAL OF MINUTES Commissioner Granroos MOVED and Commissioner Kranz seconded a motion approving the Charter Commission meeting minutes of March 6, 2016. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. ADMINISTRATIVE MATTERS A.Oath of Office for Appointments Ms. Skogen said Chairperson Ostwald and Commissioner Johnston had read and signed their oaths of office. She said Commissioner Findell and Soule’s terms were expiring in May, and Adopted May 1, 2017 CHARTER COMMISSION MEETING OF APRIL 3, 2017 PAGE 2 Commissioners Johnston and Walch in September. They will all need to be re-appointed along with the new appointees Bruce Nelson and Valerie Rolstad. Commissioner Nelson MOVED and Commissioner Kranz seconded a motion recommending the re-appointments of Valerie Rolstad, Don Findell and Cindy Soule in May, and Commissioners Johnston and Walch in September. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED. B.Update on Chapter 2 Amendment Ms. Skogen stated the Chapter 2 Amendment had its second reading and was published. It now has a 90 day period before becoming effective in June. OLD BUSINESS A.Discussion of Chapter 7 Chairperson Ostwald asked if the Commissioners had reviewed the materials staff sent and how they would like to proceed with the discussion. Ms. Skogen asked if Mr. Foster had any other information and he responded there were no additional materials. Commissioner Crandall asked if there were any specific state statutes that might have an impact on Chapter 7. Mr. Foster said the state statutes were referenced in the summary of recommendations document and the comparison of statutory cities with charter cities document, but he did not have copies of the statutes themselves. Commissioner Findell asked if city staff had prepared a redlined copy of Chapter 7. Mr. Foster said no as there were some Commissioners concerned with a first draft coming from staff. Commissioner Findell asked if references made to specific documentation in the minutes from last month’s meeting should be provided. Ms. Skogen said they were included in previous agenda packets and were available on the web through Laserfiche. Commissioner Reynolds said the charter commission often looked to other cities for examples, but took issue with the use of the word “modern” when city staff recommended changes to Chapter 7. She equated the City’s charter to the U.S. Constitution, and that it is the duty of the Commission to amend the charter. She added the charter should not be amended based on what staff perceived as “modern.” She added that other cities often use the League of Minnesota Cities’ templates when updating their charters. Additionally, she appreciates the fact the City’s charter was drafted by the City’s forefathers. Ms. Skogen replied the City’s charter came from a model charter from the National League of Cities in the ‘50s and it was not created by the City. Adopted May 1, 2017 CHARTER COMMISSION MEETING OF APRIL 3, 2017 PAGE 3 Commissioner Reynolds said she was concerned that amending the charter would remove the power from the citizens and give all of the control to the City. She also felt this chapter was being reviewed because the City felt it wasn’t getting enough money. Mr. Foster felt her assertion was speculation. That the use of the word “modern” was to amend the chapter to reflect today’s accounting practices such as the Generally Accepted Accounting Principles (GAAP), the State Auditor’s Guidelines, and State Statute while removing redundant or unnecessary language. Mr. Wysopal added an apology for using the word “modern” and not defining it well enough. He did not want to paint the charter as being antiquated, but wanted to avoid making a direct recommendation regarding the language in Chapter 7. He said the recommendations using the word “modern” was meant to reflect more contemporary dates in the City’s budgetary process. Chairperson Ostwald asked the Commissioners move forward on their discussion before getting too caught up in specific words or details. Commissioner Kranz said he would be hesitant to completely decimate all of the existing language, but times were changing and it’s important to keep up with these changing times. Commissioner Findell thought much of the language in the other charter examples remained quite vague, but many do reference state statute and do defer to the State in setting specific levy standards. Commissioner Crandall referenced the notes provided by staff in Section 7.09 stating the County no longer has their own auditor, but that State still refers to the “county auditor” directly in their statute language. Mr. Foster said that recommendation came from the Finance Department, but he would double check with them regarding whether or not there still is an auditor on the county level. Commissioner Findell said he would be in favor for leaving the 5% cap intact, but that the index used could be adjusted. He asked for the thoughts of the other Commissioners. General discussion took place regarding the CPI and other indexes. Chairperson Ostwald asked what was at the root of the distrust removing these limitations. Commissioner Reynolds described the example about water rates have risen since they were removed from the levy limitation. Mr. Wysopal summarized the discussion of the past several meetings citing how the reserves have diminished, how the City’s water fund was diminished, how debt service has been extended, and maintenance, such as paint for fire hydrants, has been forgone due to the levy limitation. He said the water and sewer rates in the City remain near the median of rates in other cities within the metro. Adopted May 1, 2017 CHARTER COMMISSION MEETING OF APRIL 3, 2017 PAGE 4 Councilmember Bolkcom added that water maintenance costs have also been deferred to reduce the burden of potential cost being passed on to residents. Commissioner Nelson asked if it would be possible, recommended, or even legal for the City to carve out exceptions from their general fund levy to lessen the burden of the restrictions in Chapter 7. He wondered if things like infrastructure or capital equipment could be placed in separate levies that would not be subject to the restrictions. Mr. Wysopal said it is something staff could look into, but the levies that are certified to the county are for operations or debt services. He said many of these types of services aren’t funded through levies, but rather fees paid. Further discussion took place as to how the City might be able to approach this notion, and evaluate its feasibility. Commissioner Crandall asked what the difference would be regarding the special levies that are permitted in the state statute. Mr. Wysopal said to keep in mind that personnel costs make up the majority of the costs in the City’s budget. Councilmember Bolkcom asked what the difference between the proposal and the current process as budgetary line items are listed in the budget and can be debated and shifted. Commissioner Nelson said this proposal would give the City the ability to levy additional dollars as certain items aren’t counted against the levy limit. Commissioner Reynolds said Mounds View levied a specific dollar amount per household to create a dedicated fund for the purpose of their streets. She added the charter provides a procedure in which there are means of creating an additional levy during an election year. Mr. Wysopal said this provision is ineffective as the funds would go into effect in the following year, and this scenario would need to be a situation where immediate funds are required. General discussion took place regarding this provision in the charter. Commissioner Kranz expressed his concern especially regarding the fees, and it’s important to continue to provide avenues to foster trust. Commissioner Crandall asked if it would be feasible or acceptable to remove the index language, but leave a percentage cap in the restriction. Chairperson Ostwald asked if there were any other cities that use a restriction using only a percentage. Mr. Wysopal said only Fridley and Mounds View had any limits in their charters. Commissioner Crandall reiterated his question regarding potential concerns with leaving a hard percentage limit in the charter, but removing the index limitation. Commissioner Crandall expressed concern with West St. Paul’s levy increasing by larger amounts in some years after their restriction was removed. Councilmember Bolkcom said she was hesitant to speculate as to the reason why there were such increases without having additional information. The Commissioners discussed percentage caps and contributing expenses to annual levies. Chairperson Ostwald stated all options should be presented and discussed. Adopted May 1, 2017 CHARTER COMMISSION MEETING OF APRIL 3, 2017 PAGE 5 Commissioner Reynolds said she was concerned that if the levy restrictions were removed the City would increase their levy to pay for expanded services, such as recycling, and that she wouldn’t want to pay for such an expansion. Mr. Wysopal said recycling services should be left to the Council. He felt this type of debate and authority is the responsibility of the City’s elected officials and it is unfair for the Charter Commission to seek to inhibit the ability for council members to debate and makes such decisions. Commissioner Granroos asked what the balances of operational reserves funds. Mr. Wysopal said the City needed a fund balance to cash flow for at least six months as the City is paid twice a year from the State and/or County. Councilmember Bolkcom asked why there was so much distrust within this body. Commissioner Findell felt a lot of the distrust stemmed from the original petition members who put the restrictions in place. He felt that depreciation and additional funds should be set aside to pay for future costs without fund balance being grown to exorbitant amounts. Mr. Wysopal agreed and said this is great insight. Fund balances should be kept in check, so long as cities have the ability to keep them at acceptable levels. Further general discussion took place regarding fund balance. Councilmember Barnett asked the commissioners, as citizens of Fridley, how they viewed their taxes in regards to how they compare to other cities. Commissioner Findell said the City’s portion of the taxes is low compared to the portions taken by the school districts and the County. Councilmember Barnett said Fridley’s taxes are often quite lower than the taxes of the surrounding cities. Commissioner Crandall said he was curious to see what the City’s personnel would say in regards to removing the index in the restriction, but keeping a percentage limit. Mr. Wysopal responded saying it would make things easier, but he had some concerns that it may not be the proper rationale for dealing with the chapter considering all of the work and time that has been put into the discussion. Commissioner Granroos said he agreed they shouldn’t seek to provide direction on policy concerns, but it is their job to protect the City’s citizens with what is in the Charter. He said he thought removing the index but keeping the percentage makes sense. Councilmember Bolkcom asked how the Commissioners would arrive at a number for the potential percentage cap, and how would that number be explained to other citizens. Mr. Crandall said that he was just offering the idea for discussion, but a 5% cap is already in the charter. He also thought removing the index, but keeping the cap, would make things more workable for City staff. Commissioner Crandall was concerned the current restriction was put in place by very few people. He said he also had concern that even fewer people would have input if the restriction was process-driven. Adopted May 1, 2017 CHARTER COMMISSION MEETING OF APRIL 3, 2017 PAGE 6 Commissioner Kranz said the commercial industrial makeup of the City helps to ease some of the tax burden. Councilmember Barnett agreed. Commissioner Reynolds asked if the Commissioners knew that the group in 2000 was not the one that added the language using the CPI. She said that it was changed from the mill rate to the CPI before then. She said the language around fees was changed with the petition language. Commissioner Nelson asked Mr. Wysopal what it generally means when cities are referencing “applicable by state law” in these sections of their charters. Mr. Wysopal said there is nothing currently restricting city tax levies in State Statute. Mr. Foster added the State does impose restrictions from time-to-time, but they are passed by the legislature. Mr. Wysopal said staff would be willing to explore any areas or solutions they might be interested in. He acknowledged they are aware of the deep seeded roots of the restriction within the community and would certainly take that into consideration. Commissioner Nelson suggested there could be an additional parameter than might be able to extend the levy amount of CPI, or any other index chosen to be used, increased beyond a certain percentage from the prior year without limiting the levy increase to an index itself. He would still like to see a separate levy for infrastructure or other essential expenditures so the City could generate additional revenue for these projects so citizens could better understand where there taxes were being spent. Mr. Wysopal said this is a concept they could certainly explore with the Finance Department. Commissioner Nelson asked if City staff could provide amounts of what additional levy amounts might be needed to support essential projects and whether they could remain exempt from State- imposed levy restrictions. Commissioner Crandall asked if Local Government Aid was earmarked for any specific uses. Mr. Wysopal said it was not, but Council would like to use it for capital expenditures as it can be a volatile funding source. Commissioner Nelson asked what a percent change would equate to in levy dollars or what the 2018 increase would equate to in dollars. Mr. Wysopal offered to take further direction from the Commission as to what type of information they would like or solutions to be explored for feasibility. He thanked the Commission for their continued time and support. Chairperson Ostwald asked if there were any specific items the commissioners would like to have analyzed by City staff. Commissioner Granroos said he would like staff to look into Commissioner Crandall’s idea of removing the index but keeping a percentage limit. He thought it might be a good starting point Adopted May 1, 2017 CHARTER COMMISSION MEETING OF APRIL 3, 2017 PAGE 7 for discussion. He also liked Commissioner Nelson’s idea of developing separate levies or funds for essential projects and asked more analysis of that idea. Commissioner Crandall asked for clarification on special assessments. Mr. Wysopal said these were assessments tied to specific properties that could be levied in the following year. Commissioner Nelson asked if the City could identify what the enterprise fund covers. Commissioner Crandall said he would like to know if a 5% cap would be workable and asked staff to speak to its feasibility. Commissioner Nelson MOVED and Commissioner Kranz seconded a motion for staff to provide the Commission with the information and analyses that were discussed as being desired by commissioners. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED NEW BUSINESS A.There was no new business. FUTURE TOPCIS Administrative Matters  Swearing in of remaining new members Old Business  Continued Discussion of Chapter 7 ADJOURNMENT: Commissioner Kranz MOVED and Commissioner Granroos seconded a motion to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OSTWALD DECLARED THE MOTION CARRIED AND THE MEETING WAS ADJOURNED AT 8:42 P.M. Respectfully submitted, Jake Foster Management Analyst/Staff Liaison Commissioner Manuel Granroos, Secretary Adopted May 1, 2017