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4.1. DRAFT MINUTES 02-20-2018 VA City of Elk Meeting of the Elk River City Council River Held at the Elk River City Hall Monday, February 5, 2018 Members Present: Mayor Dietz, Councilmembers Olsen, Ovall,Westgaard, and Wagner Members Absent: None Staff Present: City Administrator Calvin Portner, City Attorney Peter Beck, Parks and Recreation Director Michael Hecker, Recreation Manager Steve Benoit,Recreation Coordinator Tim Dalton, Recreation Administrative Coordinator Tonya Love,Arena Manager Rich Czech, Farmer's Market/Event Coordinator Karen Wingard, Economic Development Director Amanda Othoudt, Police Chief Ron Nierenhausen, and City Clerk Tina Allard I. Call Meeting to Order Pursuant to due call and notice thereof, the meeting of the Elk River City Council was called to order at 6:40 p.m. by Mayor Dietz. 2. Pledge of Allegiance The Pledge of Allegiance was recited. 3. Consider February 5, 2018, Agen` Moved by Councilmember Wagner and seconded by Councilmember Olsen to approve the February 5, 2018, agenda. Motion carried 5-0. 4. Consider Consent Agenda Councilmember Wagner noted three corrections to the January 16, 2018,regular meeting minutes. Moved by Councilmember Wagner and seconded by Councilmember Olsen to approve the following consent agenda: 4.1 January 12, 2018, Special Minutes January 16, 2018, Regular Minutes (with corrections) January 16, 2018, Closed Minutes 4.2 Check register, check numbers 9925-9928 and 104720-104923 as outlined in the staff report. 4.3 Temporary On Sale Liquor License to Elk River Rotary Club for Taste of Elk River, May 17, 2018 with the condition alcohol must be limited to an area enclosed by fence with a secure, controlled access. Wrist band control is also required. City Council Minutes Page 2 February 5,2018 ----------------------------- 4.4 Hire Katie Porath for Records Specialist position effective February 14, 2018. 4.5.A Hire Matthew Bonebrake as Street Maintenance Operator II effective February 12, 2018. 4.5.B Hire Kevin Anderson as Street Maintenance Operator II effective February 6, 2018. 4.6 Adopt Resolution 18-08 authorizing a transfer from the General Fund to the Pinewood Golf Course Fund. 4.7 Purchase of a 2018 Elgin Pelican Dual Gutter Broom Sweeper. Motion carried 5-0. S. Open Forum Jack Lorge, 19490 Lowell Street, stated he is here to speak on behalf of area seniors. He expressed his thanks to the city for taking care of its senior population. He further stated the seniors felt very fortunate for the amenities available to them. He distributed thank you cards from the seniors. Jim Peppin, 18266 Concord Street, stated Elk River is a wonderful community to raise a family. He stated seniors make good use of the Activity Center. He stated he would hate to lose the activity center and hopes the Council will keep in mind seniors are here and the center is a wonderful place to go. Mayor Dietz stated he's had previous conversations with the seniors and has stated they will have, at a minimum,the amenities they are currently being offered,and may even have more in the future depending on how the Council proceeds with the Activity Center building. 6.1 Annual County Prosecutor/Attorney Presentation Sherburne County Attorney Kathleen Heaney and City Prosecutor Scott Baumgartner presented their reports. Ms. Heaney discussed recent case activity involving the Elk River Police Department: forged prescriptions and a methamphetamine/traffic stop. She discussed the extraordinary work of the police department,which helped in getting convictions. She further noted the police department is always very professional and caring and follows through on case work. She thanked the police chief for his work and thanked the Council for approving an officer to the drug task force. Mr. Baumgartner stated he works with many police departments and the Elk River Police are the best as they are always professional and courteous. He stated drinking and driving campaigns seem to have helped bring awareness to the issue and reduced driving while intoxicated cases in the city. He discussed the adult diversion program. POWERED 9r UREI City Council Minutes Page 3 February 5,2018 ----------------------------- 7. Public Hearings There were no public hearings. 8.1 Reconsider Recreation Facility Referendum Ms. Wagner stated she would like to pause on the current arena project. She stated she would be making a motion against the bond sale, the next item on the agenda. She stated one of her goals as Councilmember was to change public perception of citizens that their voice is not heard and the Council does what it wants to do. She stated this is why she volunteered to be on the original facilities task force,which ultimately recommended a multipurpose facility to create efficiencies and expand city services for already owned city buildings. She stated after hundreds of hours of work she felt the multipurpose facility was the best use of tax dollars to fix ailing buildings that wouldn't consider our future service level needs or bring any additional economic prosperity to the city. She noted this led to a failed referendum which has brought us to where we are today with Plan B,the arena project. Councilmember Wagner stated she takes responsibility for voting for Plan B even though she always felt the original multipurpose facility, along with the other improvements,was the right thing to do for the community. She stated after discussions with many people who supported the differing plans she feels there is need for Council to step back and have a thorough discussion to make sure Plan B is truly the right answer. Councilmember Wagner stated she would like staff to prepare a preliminary draft 2019-2020 budget to show how bond service payment would affect the overall budget and subsequent levy. She stated she was very uncomfortable with capital expenses and future needs during the last budget cycle and she feels Council hasn't done an adequate job looking at the big picture and how it affects taxpayers. Councilmember Wagner feels past process has created a loss of public trust: the very thing she hoped to restore. She stated the city needs to do a better job at disseminating information to the community. She further stated the public needs to do their part. She stated typing and spreading false information and making harmful, slanderous accusations is quite reckless. She stated Council meetings and city hall are open to the public and the Council is here to serve the community,not keep secrets. Councilmember Wagner reiterated she would like to take a few days to think about the project options. Councilmember Olsen noted a lot of money has been committed to Plan B and questioned how to retreat from that expense. Councilmember Wagner agreed further stating she takes responsibility for her own decisions on this project. She stated it is a lot of money but not a reason to stop a $20 plus million dollar project. She stated she is not asking for the plan to go away P 0 W I R I D 9 Y otm§A UREJ City Council Minutes Page 4 February 5,2018 ----------------------------- but wants a few more days to think and discuss the project further and to review funding options. Mayor Dietz noted there are two contracts, engineering and construction manager, for the current project and questioned how they would be affected if Council paused the project. Mr. Portner stated staff would need to review contract language. He further stated without a formal Council decision he isn't sure anything can be changed yet. He stated he would need a Council motion to halt the current project; otherwise the work would continue. He stated the city has incurred costs related to the contracts. Councilmember Olsen expressed concerns with the timelines and whether the work can be delayed. Mr. Portner stated the next item on the agenda does not initiate anything except staff beginning the preparation work for the bond discussion. He stated the city doesn't have a way to pay for this type of project without utilizing bond debt. He stated if Council wants to stop the current arena project this is the last opportunity to do so. Council concurred to discuss this item at their Thursday meeting and have the meeting play live on the cable channel. 8.2 Resolution Directing Staff to Prepare for Bond Sale Mr. Portner presented the staff report and reviewed design schematics for the current arena project outlining some of its multiple uses. Mayor Dietz questioned the acoustics of the building because sometimes the outdoor concerts are rained out and need to be moved indoors. Mr. Portner stated concerts could be held in the building along with some other events like the Rotary Taste of Elk River event. 8.3 Discuss Work Session Items Mr. Portner presented the staff report. 9. Council Liaison Updates Council provided updates on activities of the various boards and commissions. Energy City ■ EV charger at Coborn's getting use. Fast charger most popular option. ■ Bicycle-friendly grant denied. ■ Meters in city buildings to track consumption. Council may want to consider for arena. Partners offer to share their monitoring software with the city itmaA UREJ City Council Minutes Page 5 February 5,2018 ----------------------------- Heritage Preservation Commission ■ Lack of Quorum at last meeting and this is second or third time cancelled. Mr. Portner stated staff is evaluating the long-term needs of the commission and noted commissioners lose interest when there is no project work. Library ■ Held annual meeting in January. ■ Ordered new ADA accessible tables with benches for outside. New waste/recycling bins ordered. Want to encourage outside seating. ■ GRRL fundraiser locally grown.All funds stay local. ■ GRRL upgrade digital system to Access360. ■ New hours have been very positive and averaging 25-30 patrons. Planning Commission ■ Worksession meeting to discuss various ordinance amendments to simplify city process. Utilities ■ Water department award for water fluoride quality. ■ Territory acquisition. Highway 10 streetlights maintenance transfer to utilities. ■ Multi-billing cycle. Parks & Recreation ■ Outdoor skating rinks. ■ Deer herd management update. ■ Update on facilities plan. ■ Revised trail plan. Much more detailed. ■ Andy Solva recognition,MRPA Jack Niles professional award. Arena ■ Facilities update Councilmember Wagner stated she attended the Elk River Ambassadors crowning. She noted the volunteer group does a lot of work to pull the program together. ------------------------------ Council recessed at 7:46 p.m. in order to go into work session. Council reconvened at 7:52 p.m. 10.1 Jackson Hills Residential Suites, LLC, and Elk River Lodge Suites, LLC Housing TIF Application Ms. Othoudt presented the staff report. She stated staff reviewed city policy and the maximums as set by state statute. She stated staff reviewed the applications based on the city's policy. P 0 W I R I D 9 Y otmaA UREI City Council Minutes Page 6 February 5,2018 ----------------------------- Ms. Othoudt stated the applicant is requesting to pool the two projects,which is not specifically addressed in city policy. She stated her recommendation is to consider Jackson Hills and Elk River Lodge Suites as separate projects. She stated the Hills project, as a stand-alone project, can be justified through the affordable housing needs study and it fits within the guidelines of city policy. She stated the Lodge project, as a stand-alone project, does not meet policy guidelines as it doesn't generate increment based on the analysis provided by Springsted Consultants. Ms. Othoudt stated the garages in the Lodge project site would add about $87,500 worth of new value. She noted the applicant has pulled a permit for the Lodge project and already commenced construction. She stated construction has already commenced on the Lodge project and it would be a difficult argument to meet the but for analysis. She further stated the applicant is legally obligated to build a 25-unit garage and have onsite parking spaces to convert his property from an extended stay hotel. She stated the applicant is required to construct the garages/parking with or without Tax Increment Financing (TIF) in order to make it a legal use. Ms. Othoudt stated the Finance Committee looked at this project pooled together and based on city policy,identified more than one public purpose that met the requirements to extend the terms of the TIF. She stated the Committee recommended approval for the project for 26 years. Ms. Othoudt stated the Housing and Redevelopment Authority reviewed the project and noted two of the five commissioners abstained from voting, one was absent, which left two to vote. One member agreed with the Finance Committee's recommendation of a 26-year term for a housing district and the other was more interested in looking at the policy and the two applications as a separate project. Ms. Othoudt discussed the options for Council. She stated Council could move forward with the Jackson Hills project and call for a public hearing on February 20, 2018. She stated if the Council doesn't feel the project meets city policy objectives, the project would be dead and come back to Council for formal denial. Ms. Othoudt noted city policy sets the maximum term at 15 years but state law sets it at 26 years. Councilmember Ovall questioned the standards for other communities and if the city is putting itself at a disadvantage by setting a policy maximum of 15 years. Mikaela Huot, Springsted, explained the different districts and stated most communities have a goal to reduce the terms of the district to the amount of TIF needed;hopefully for less than 25 years,noting housing districts are more unique than other districts and have more flexibility on what the dollars from the TIF district can be used for. She stated typically they are for acquisition, site development,anything prior to vertical development, and housing costs. She stated it really comes down to city policy,which is tied to community goals, and some may go the longer term because they really need affordable housing. She stated by providing a housing district, an applicant is agreeing to the affordability for the maximum term P 0 W I R I D 9 Y otmaA UREJ City Council Minutes Page 7 February 5,2018 ----------------------------- of 26 years. She further noted the term can be longer for rural communities due to construction costs and needing to close the gap. Councilmember Ovall asked what the average term is for other communities considering establishing a housing district. He also asked Ms. Hout about pooling increment as there is confusion if it both projects need to be TIF eligible for pooling. Ms. Huot stated she has seen Housing District terms anywhere from 15 to 25 years depending on the individual housing needs of each community. Ms. Huot stated pooling is defined as the spending of tax increment dollars from a specific tax increment district within a defined project area. She stated it is the taking of tax increment dollars from a particular TIF district and spending them on qualifying uses outside the boundaries of that district. She discussed how the districts can be different along with the percentage of dollars pooled. She stated housing districts have the most flexibility meaning a city can spend the dollars anywhere in the city as long as they are on a qualifying project. Councilmember Ovall stated this is an important distinction and that a project receiving pooled increment does not have to be a qualifying TIF district as long as the project has an affordable housing component to it. He questioned if this is a TIF-eligible project because it does create an increment,but based on Ms. Huot's comments,it seems to be geared more towards affordable housing and percentage. Ms. Huot stated,based on the two current project criteria,it would not make any sense to create a district for the Lodge project because it doesn't generate any increment. She stated the only way for this project to receive any increment would be from some other funding source. Councilmember Ovall affirmed the Lodge could qualify for pooling under the statutory uses. Ms. Huot stated as long as there are capital expenditures and it meets the affordability criteria. Councilmember Ovall stated the base issue to consider is whether the Council wants to veer from the 15 years outlined in city policy. He noted the intent from the applicant is to pool the projects in order to use the increment for capital improvements at the Lodge,which there is capital improvements and it would meet the affordable housing guidelines. Mayor Dietz questioned if the city is requiring the applicant to make the Lodge into an apartment building. Ms. Othoudt stated he is doing it by choice because he is required to do the repairs per city ordinance,noting it is currently an illegal non-conforming use. UREJ City Council Minutes Page 8 February 5,2018 ----------------------------- Mayor Dietz questioned what the advantage would be to the city when the applicant is required to do the work anyway. He stated he didn't feel this project was a good use of TIF funding. Councilmember Wagner agreed with Mayor Dietz and further questioned what kind of capital improvements would happen at the Lodge because her understanding is the garages are already required code improvements. Ms. Othoudt noted the building permit has already been issued for the garages. She stated the applicant wants to refinance existing debt in order to construct the garages. Councilmember Ovall stated this isn't germane to the conversation and the issue is that in order to qualify for pooling,the increment is being used for capital improvements, not whether or not the project started and then second,do we want to change policy regarding the maximum term allowed and then does the city want to allow pooling. He stated current city policy doesn't have language regarding pooling. HRA Chairman Larry Toth stated he doesn't feel the two projects should be pooled together. Ms. Huot discussed state law and noted each year there is more proposed legislation to make pooling more restrictive. She stated the intent is for more single stand-alone projects for a lesser amount of time. She stated the majority of cities utilizing pooling have already established programs/policies where they peel off increment from each established district to finance into an affordable housing pool. Councilmember Ovall noted it is a more forward used tool than fixing old. Pat Briggs, applicant, stated this is a solution to help the Lodge,based on their submitted application six months ago, a vacant building that needed to be converted. He stated the Lodge will not happen if the Jackson Hills project does not move forward. He stated in order for us to help make the Lodge the best project we can make it, this was a way we could all work together on it. He stated if he doesn't build this project,the increment isn't there. He stated the reason this application was submitted was to help solve the challenges at the Lodge. He stated the dollars he submitted to recapture are 15 years for these two properties, so from his interpretation of how the policy is written,it actually is for 15 years. He further noted it really is one project because it is the same people. Mayor Dietz stated he has difficulty with Mr. Briggs comments because the city has already told him what has to be done for the Lodge. Mr. Briggs stated direction was only for a portion of the project because they will be improving it in many areas,including completely new driveway, ripped out all the rock bed,regraded around the perimeter,put all new irrigation in,brought in 75 P 0 W I R I U 9 Y otmaA UREI City Council Minutes Page 9 February 5,2018 ----------------------------- plants/shrubs,repainted the exterior,and replaced the entire fire alarm panel system that wasn't required by code but now exceeds its new air handler system. He stated by applying for the Lodge six months ago,he didn't get approved. He stated he was working together with Ms. Huot and they thought this would be a good solution to help the Lodge by reapplying six months later to use it for pooling. Councilmember Westgaard stated he struggles with the improvements as changes in occupancy for the Lodge wasn't driven by the need, on the city's behalf, for the city to provide affordable housing and was driven strictly by Mr. Brigg's private business need. He questioned the benefit of pooling for the city. Mr. Briggs stated he could move everyone out of the Lodge and let it go vacant and deteriorate or create and affordable housing project in good faith. Councilmember Westgaard noted the Lodge property wasn't dilapidated until a few years ago and all the city requested was improvements necessary to make it an apartment building to meet the use Mr. Briggs requested. He further noted the Lodge wasn't vacant six months ago and was an income property not being used as permitted by city code. Mayor Dietz stated the applicant is asking for TIF funding for work that is already required and he will not vote for the project. He further stated he didn't appreciate the applicant threatening the Council. He further questioned why the city would get involved in paying for a benefit to a private business. Mayor Dietz stated he would like to leave the term at 15 years in city policy and recommends no TIF funding for the Lodge project. Councilmembers Wagner,Westgaard, and Olsen concurred. Ms. Huot commented she never represented the developer as indicated earlier. She further stated as part of her review she did have discussions with the applicant on behalf of the city in order to understand his needs,noting it is common to have to work with applicants on city's behalf. 10.3 Summer Festival Events Mr. Benoit presented the staff report. Mayor Dietz stated he likes the ideas presented but is not sure he is in favor of all the dates outlined with the open streets concept. He suggested trying the concept once to see how the program works. He stated if the fireworks will continue to be shot from the School Street area then the program will need to end early so people have time to stage for the fireworks and there are no traffic issues. He questioned where the additional$3,000 for the road closure would come from and how a beer garden would be staffed. P O w E R E U 9 1 UREJ City Council Minutes Page 10 February 5,2018 ----------------------------- Mr. Benoit indicated costs haven't been worked out yet. Councilmember Ovall stated it seems like a lot of events are being proposed for a small section of street area that would be utilized. Councilmember Wagner stated she doesn't think Highway 10 needs to be affected and the city could consider a smaller street closure. She stated if the term"river"is included in the event's name;why not incorporate use of the lower parking lot. She suggested leave the parking plaza for parking. She stated she was adamantly against starting the event in summer 2018 because she struggles with having to plan it in a short timeframe and not having as good event to draw people in future years. She expressed concerns with the Independence Day timeframe as it is one of busiest weekend of the year and most people leave town. She stated she likes the idea of smaller events. She stated she is not sure how she feels about the city hosting a beer garden versus a business. She questioned if this would be a volunteer or Chamber- prepared function. She suggested the Rivers Edge Downtown Association handle the event. She stated she struggles with the resources to handle the event. Representatives from Aegir Brewing stated they would love to participate and sponsor a beer garden and are more than willing to help out. Debbie Rydberg, Elk River Area Chamber of Commerce, stated she agrees with Councilmember Wagner's comments about planning an event for this year based on her event planning experience. She stated it is better to take the time and plan a good quality event. She stated there is a lot of marketing and moving pieces and expressed concerns about staff time due to their current workloads. She suggested waiting a year. She stated with the Plan B layout in the presentation she has concerns about blocking the back parking lot area behind the businesses; noting they won't be happy and their regular patrons won't have access. She suggested not closing Main Street but utilizing King Avenue, the lower parking lot,and the park. She stated five months is not enough time to work with the business community. Councilmember Wagner noted the downtown businesses will not be happy if their businesses are not filled during the event. She further stated this is also not the city's problem. She stated she doesn't support this event for 2018. She stated she supports a reach out to businesses to see if they will partner together and do something similar to this proposed event. She stated it has been a desire of the Rivers Edge Association to close the street and do an event. Councilmember Olsen stated he likes the idea of closing King Avenue, the lower lot and the park noting events could be consolidated to fit the space. He suggested starting simple the first year to see how it goes and keep costs to a minimum. He further stated the August dates might work better to get more attendance. Mayor Dietz expressed concerns with moving the fireworks because they are a big draw. He suggested possibly taking a quick survey of downtown businesses. He believes a city event is more likely to happen if it is city driven citing the difficulty in P 0 W I R I U 9 Y itm§A UREJ City Council Minutes Page 11 February 5,2018 ----------------------------- getting volunteers. He stated he is against moving the fireworks downtown due to traffic concerns expressed by the police department. He suggested talking with the liquor establishments to see what will work for a beer garden. Mr. Hecker suggested evaluating, a few years from now, shooting fireworks from Baily Point Ms. Wingard stated businesses can be more eager to assist with a community event, when the event is scheduled near them. She stated the more downtown businesses we can incorporate into the event,the more there is a community feel to it along with less issues arising. Ms. Love noted decisions need to be made quickly and expressed concerns with having time for marketing;particularly noting if an event is held, a name needs to be decided upon. 10.4 Food Trucks Ms. Allard presented the staff report. Mayor Dietz stated he doesn't feel Main Street is a good option in the core downtown area and suggested moving it further west. Councilmember Wagner expressed concerns with designating specific food truck spots on street parking areas on Main Street. She suggested allowing them to park in the city lot on the north side of Highway 10, noting it also doesn't help the taproom with their needs. Councilmember Ovall expressed concerns with the lower city owned parking location, especially in the winter time with the distance for carrying food to and from the taproom. Councilmember Wagner questioned Aegir if they would be okay with applying for a special permit to be able to have food trucks on certain dates. Aegir representatives stated yes. Ms. Allard noted there is still the issue of where a truck would be allowed to park. She questioned if Council would be interested in considering the Main Street parking plaza. Council indicated no. Aegir representatives stated they never wanted to advocate for utilizing public streets in front of businesses and would prefer a truck in the parking lot behind their building, noting the two spots located on the east side of the lot would work for them. Aegir noted there are delivery trucks in that lot throughout the day and they P 0 W I R I U 9 Y otm§A UREJ City Council Minutes Page 12 February 5,2018 ----------------------------- sometimes block access to his business for up to an hour. He stated if Council is concerned about a food truck,then they should also consider not allowing delivery trucks in the lot,but he also understands all the businesses need the deliveries too. Ms. Allard expressed concerns with the stacking of customers if the two east parking spots are utilized. Aegir representatives stated they have a patio customers would be sitting at and there would not be stacking of customers at the truck. The stated if the truck was in the back parking lot it would help reduce their visibility. Council felt this was the best compromise for everyone and removes the truck site lines from the public. They further suggested allowing the food trucks via a special event permit. Mayor Dietz expressed concerns with other entities wanting a special event permit for downtown for food trucks. He stated he liked the idea of using the city lot on the north side of Highway 10. Councilmember Wagner agreed stating there are street lights for customers to cross the highway,it gives the food trucks good visibility,and may encourage others to use those lots. Mr. Portner stated we are trying to solve a problem that doesn't exist and suggested we designate the two easterly parking spots as food truck parking via special event permit only to see how to works. He noted the ordinance can always be amended. He stated traffic circulation in the lot is slow because the lot is tight and planning Ekes calming measures in parking lots,noting a food truck will help with calming. Councilmember Wagner stated the restaurants might not like this but it's an opportunity to see what happens. Ms. Rydberg suggested not locking into a designated parking spot but to leave it open in case other businesses want a truck somewhere else in the downtown. Mr. Portner expressed concerns with city staff making a judgement on the location because the downtown is a controversial location. Ms. Rydberg expressed concerns with signing a designated food spot in the middle of the parking lot. Council further noted the two designated spots wouldn't be blocked all the time for food trucks; only when a permit is requested. Mayor Dietz stated the police department could block off the spots when needed. 10.2 Parks and Recreation Proposed Fees UREJ City Council Minutes Page 13 February 5,2018 ----------------------------- Mr. Hecker presented the staff report. Mr. Hecker asked Council to start thinking about the percentage of operating cost they would like to recover for the various activities. He indicated other cities charge fees to offset operations and maintenance of playfields and facilities. He said some athletic associations currently pay field rental and others do not. He stated the athletic groups are aware the city is reviewing the fees but staff hasn't formally met with them yet. Mr. Portner stated the city spends about$200,000 a year in operational costs on three complexes: Oak Knoll,Youth Athletic Complex, and Dave Anderson Athletic Complex. He stated, as a comparison for the Ice Arena, 100% of the operational costs are paid for by the user groups. He stated traditionally people didn't pay for parks or playfields. He noted there are two things to consider: how much should the city subsidize the youth associations with city tax dollars and how equitable are user fees among groups. He noted there is $9 million worth of improvements coming in the future without any funding resources. He stated,depending on Council philosophy,the city could shift the operational costs to the users and taxpayers could pay for the capital improvements. He stated this would create a long-term sustainable plan for funding facilities. He noted there are a lot of factors to discuss. He stated if the Council wants to capture 60%, they don't need to implement it all in the first few years but could work towards it over a period of time. Mr. Hecker reviewed the Activity Center operations compared to other centers in Minnesota. He noted Elk River's operating budget, at$250,000, for senior activities is one of the largest in the state,noting the activity center budget numbers presented tonight doesn't include building and grounds maintenance services. He also questioned Council about the percentage of operating costs they would like to collect from senior users. Mr. Portner stated Council may not find a number to offset the costs noting the outgoing costs are high due to the expense of the current facility and the lack of multipurpose use space available. He stated the current facility can't be rented out for new revenue without disrupting the current users. Councilmember Wagner questioned why the $250,000 activity center budget is so different from other peer cities. Mr. Hecker stated part of the reason is because Elk River has a dedicated building and two full-time staff. He stated other centers may be connected to other facilities and can be open more hours for rental purposes. Mr. Hecker reviewed the Ice Arena budget and fees. Councilmember Wagner stated she would be interested in what each association is paying for facilities based on numbers we are already using whether they are up front rental or for field improvements. POWERED 9r UREJ City Council Minutes Page 14 February 5,2018 ----------------------------- Councilmember Ovall stated the city needs to recapture as much direct expense as possible and feels the capital investment is the link the city has been missing. He stated he doesn't want to detract from what associations have given in the past and would like to give them pay back so they all pay the same. II. Adjournment There being no further business,Mayor Dietz adjourned the meeting of the Elk River City Council at 10:45 p.m. John J. Dietz,Mayor Tina Allard, City Clerk UREJ City of Elk Special Meeting of the Elk River City Council River Held at the Elk River City Hall Thursday, February 8, 2018 Members Present: Mayor Dietz, Councilmembers Olsen, Ovall,Westgaard, and Wagner Members Absent: None Staff Present: City Administrator Calvin Portner, Parks and Recreation Director Michael Hecker, City Engineer Justin Femrite, Finance Director Lori Ziemer, and City Clerk Tina Allard I. Call Meeting to Order Pursuant to due call and notice thereof, the meeting of the Elk River City Council was called to order at 5:04 p.m. by Mayor Dietz. 2. Pledge of Allegiance The Pledge of Allegiance was recited. 3.1 Discuss Improvements to Ice Arena and Lion John Weicht Park ., Lions Member Scott Trenholm stated the Lions Club voted not to take over Lions Park Cent Mayor Die ked if the'`ions discussed whether they had any interest with locating into the arena. ,. MrVr.o Trenholm stated there was no discussion about it or the use of the rest of Lion Weichtark. P Portner resentedNhestaff reP University ort. He discussed the Universi of Minnesota Extension Service study for sales tax in Elk River. He stated the university representative believes the city should complete a separate study from the county but noted they would give both the city and the county a discount because some of the data would be the same. Mayor Dietz stated he discussed the study with Sherburne County Commissioner Tim Dolan. He stated the study is very extensive and outlines how much the tax would affect taxpayers versus visitors from outside the city. He stated he feels it is worth the money to complete the study. Ms. Ziemer presented the tax impacts for the ice arena portion of the levy. She stated debt service projections are based on a $25 million bond payable over 25 years with a stipulation the first four years of repayment of the debt service be interest only until the public safety bonds are paid off in 2023. She stated the tax impact on a City Council Minutes Page 2 February 8,2018 ----------------------------- $200,000 home would see an increase of$77 with our current Net Tax Capacity (NTC). She stated the NTC has an average growth of 4.5% over the past four years and this percentage was calculated into each year. She explained how the tax impact would decrease in 2019 on a $200,000 home to $74. And how the tax impacts would decrease each year as growth happens. Ms. Ziemer further discussed the tax impacts for 2023 when the principal is included, noting the net effect would be a $100 increase on a$200,000 home and would further decrease with growth each year. Councilmember Westgaard confirmed the examples provided in the packet only takes in the current net tax capacity and does not grow it inflationary with any additional homes or business expected to be added to the tax base. Staff confirmed yes. Ms. Ziemer explained the city's total levy impact with factoring in the arena's debt levy. She stated with the county-estimated 2018 tax rate based on current NTC the tax rate should be 46.01%. She stated if inflationary increases were factored in for 2019, the tax rate would be about 48.965%,which equates to a tax impact on a $200,000 home of$53,with the $1 million levy added. Councilmember Wagner questioned how taxes would change when future needed building projects such as the fire station, Highway169, and the $9 million parks and recreation funding. She expressed concerns with Council not considering the big picture by including future projects. She stated it makes sense to consider a sales tax to help spread out the costs especially since some of the association members are not from Elk River. Mr. Portner explained how future anticipated growth will determine when the city needs a new fire station. He stated this growth will drive the fire station build out and the new growth will be beyond the 4.5 % outlined in the tax impact projection Ms. Ziemer presented earlier. He stated the Park Improvement Fund is part of the fee discussion Council had earlier in the week to determine another revenue source for offsetting operational costs. Mr. Portner stated the tax abatement line item for new construction will go away in time,tax increment financing will decertify, and it would be recommended to continue collection of that revenue to fund the Capital Reserve Fund for additional park improvement costs. He stated the city may be eligible to use Municipal State Aid (MSA) funds for portions of transportation projects. Mr. Femrite discussed the Corridors of Commerce and the various payment split options. He stated there may be funding options through MSA,the pavement fund, the county, and other local options through Region 7W for federal funding. Mayor Dietz stated a 0.5% sales tax based on 2015 sales would generate a minimum of$2 million. The city's bond payment would be about$1.7 million. He stated he asked staff to review whether the remainder of the revenue generated from the sales tax be used for park improvements and possibly for Lake Orono dredging. UREJ City Council Minutes Page 3 February 8,2018 ----------------------------- Mr. Portner stated language could be added to allow these additional improvements but Council will need to identify a timeline,project details, and costs. Councilmember Wagner stated her goal is to change public perception that they aren't heard. She stated she heard many options from the public about what they want and a majority wishes the previous referendum had passed. She stated she wants to make sure the entire Council is on the same page before moving forward and all options have been exhausted. She feels this isn't the right plan and the single multipurpose facility is needed in this community. She stated the original referendum benefitted a much larger percentage of people when comparing the costs between the two options. She stated the first plan looked at economic impacts and the ability for growth on the west side of the city noting the vacant land in the area business and homeowners would want to be apart of. Councilmember Wagner stated the location of the arena plan makes sense for the school district and is easy for kids to access. She stated the done (fieldhouse) is the additional right thing to do but has concerns for the amount of funding expected to be spent on this project when the only clear way to pay for it is a property tax levy. She stated she feels like Council is of the consensus to go for a sales tax referendum and the bond payment would be covered but only if the sales tax passes. She questioned if the Council is willing to use these numbers knowing all the other projects on the horizon and if the sales tax referendum doesn't pass it will go on a property tax levy. She asked if this location and funding are the right way to go. She questioned if an economic impact study might help determine what an investment of this type means to a city. Mr. Portner stated there may be a study through DEED. He cited the new Prairie View Elementary in Otsego where, according to the superintendent,the new school resulted in the return of 500 students who had open enrolled outside the district, likely because people moved because they see the value. He noted how his examples showed there is an economic boost with having new facilities. He further mentioned past history in Elk River when the district was changing the boundaries for Twin Lakes Elementary and the concerns with moving to an older school. Councilmember Wagner agreed there is value when a city invests in itself. She stated when people look at communities they look at what is new and shiny. She stated she is against moving softball to Oak Knoll Park and the field house becoming a third sheet of ice in the future. She stated these two pieces hold her up. Mayor Dietz stated there are only two choices for financing;property tax and sales tax. He stated this will go to property tax if the referendum fails. Councilmember Wagner asked the mayor if he is okay with this. Mayor Dietz stated he has never been okay with it going on property taxes so it is why he is proposing the sales tax. POWERED 9r UREJ City Council Minutes Page 4 February 8,2018 ----------------------------- Councilmember Ovall questioned Mayor Dietz if he is linking the repayment with the sales tax. He questioned if he is saying he doesn't want to move forward with the project until Council definitively knows it is moving forward with sales tax funding. Mayor Dietz stated no. He stated he wanted a special election for the sales tax but found it is required to be on the November ballot. He stated the majority of Council voted to move forward with this project but he still needs to participate in the discussions and vote on project details as they happen. He stated it could be explained to the public how a sales tax option would work versus a property tax option. Councilmember Ovall stated he wanted to clarify whether one drove the other or if the mayor were recommending moving forward with bonding and if it fails Council is stuck with the property tax option. It sounded to him like Mayor Dietz didn't want to wait for a conclusion on the sales tax referendum to move forward with the arena. Mayor Dietz noted this was a good point and he needs to think about it. Councilmember Westgaard stated Council had this discussion when talking about the community center. He noted the city has three failing facilities and questioned if Council is willing to replace them. He questioned what the plan would be if voters say no to the referendum. He stated this was laid out very clearly in the literature to the community. He stated the sales tax seems like a good funding option to help spread the tax burden beyond the local tax base but asks what happens if it fails. He noted the city has gotten benefit in its building fund from the landfill and been able to construct a lot of buildings and deferred and paid for a lot of bond payments and as a result hasn't been a burden on taxpayers. He stated Council wouldn't be having this discussion if talking about a police/fire station,but are now because the arena is more controversial. He stated it is a quality of life issue. He questioned if Council should replace the arena to maintain current service levels. He agrees combining all three facilities was a better dollar value,but it was voted down and he questioned how many times the city should go back to voters. He stated this community has looked at community centers for 16 years. He stated as policy makers Council has the ability to build and bond for a community center if they feel it is a better project. Councilmember Ovall stated a lot of issues need to be broken down for him. He questioned how many times a sales tax has been turned down by the state or governor. Mr. Portner stated he is not sure it has been turned down but wants Council to know;per a consultant, Elk River is closest to the metro and these are different political times. He stated most of the sales tax allowances have been for regional centers or out state communities. Councilmember Ovall stated there are a number of other cities and counties around us utilizing sales tax. POWERED 9r UREJ City Council Minutes Page 5 February 8,2018 ----------------------------- Mayor Dietz noted most of the sales tax collections around us are county collected for transportation and noted Sherburne County is considering a similar option. Mayor Dietz stated he spoke with Representative Zerwas who told him whenever a local sales tax has been approved by its citizens;it has never been turned down by the legislaure. Councilmember Ovall questioned how many arenas have been funded without a referendum. Mr. Portner stated he doesn't have the answer for this meeting but noted the City of Shakopee had three failed referendums and they ended up building an arena. Councilmember Ovall stated this is the biggest expense ever put forth on the community and it is for an amenity versus a need which is tough for him. He stated he wants to revisit the numbers because they have been tossed around differently. He noted how past literature outlined the city would still spend money if the vote is no but it stated it would be for about$10-12 million and Council is now discussing $23 million noting this doesn't include other facilities needing work. He stated he has an issue with moving forward on the current arena project based on what was stated in the literature. He further stated he wants to communicate with citizens and do another referendum if Council is deviating from the$10-12 million. Mr. Portner stated the referendum literature stated, at a minimum,the city would still spend $10-12 million to replace the ice plants, fix the roofs and corrosion in the Barn and didn't add other needed spaces such as locker rooms. He stated on January 17, 2018, Council rejected that process and gave consensus to move forward with the other option based on the task force report. Councilmember Ovall stated he wouldn't have voted for the other$23 million option if he understood what he had been voting for. He understood it to mean Council had to act on something versus kicking the can down the road He assumed there would be more citizen engagement with the project. Councilmember Westgaard stated he does not follow Councilmember Ovall's comments. Councilmember Ovall stated he voted against the arena project and doesn't recall voting for a $23 million building option. Councilmember Westgaard stated in January the discussion was what the Council should do now. Mr. Portner stated the January meeting gave direction to staff to engage 292 Design Group in order to review previous architectural plans and to engage JLG Architects for an option with combining uses/facilities and to engage the YMCA to look at P 0 W I R I U U Y otm§A UREI City Council Minutes Page 6 February 8,2018 ----------------------------- senior programming options. He stated in April 292 Design and JLG Architects presented Council cost estimates for design. He stated after that meeting Council directed staff to work with the school district because the design would infringe on softball fields. He stated in May they met with the school district about their plans but it got pushed back due to a superintendent not being on board at the district yet. He stated this is when the $25 million option was presented. He stated Council was asked if they wanted to move forward with a Request for Proposal for architectural services,which were approved,He stated Council was asked whether they wanted to commit to this project. He stated that presentation more accurately reflected the dollar amount. He stated Council did see the funding and voted on it. Councilmember Ovall stated he voted against the $25 million option but at subsequent meetings he thought it looked like it had already been approved and he figured he wanted the work done properly so hiring a construction manager seemed Eke the right thing to do. Councilmember Wagner stated she wanted to move this forward due to time spent by the task force and it made the most sense to put the facilities together. She stated she felt frustrated because Council said what they were planning to do and she thought it was clear if the referendum failed Council was still going to move forward with improvements. She stated she never expected this to be a $10-12 million project but feels a lot of people did. She stated the right thing to do is to go back and regain public trust. She stated the public also has a lot to do on their end and it is unfair to write false accusations about people they don't even know. She stated she would like to reconsider a referendum. She understands if it fails they need a backup plan. She stated she receive a lot of comments from people who said if they had known better what the referendum stood for,they would have voted for it. She stated she has always been on board about needing to do something but doesn't feel the current plan is the right one. She stated Council needs to reconsider a referendum but doesn't feel it necessarily needs to be the same as the last one. She suggested some things could be done differently or better, such as a different location. Councilmember Ovall stated by citing the $10-12 million and what we would do if the referendum failed to maintain current (minimum) service levels. He stated the upgrades were bonuses and frankly maybe isn't needed for the arena. He stated he doesn't disagree the facility is dated not the most functional but it goes beyond scope of what was communicated to the public. Councilmember Westgaard stated the literature did lay out the three options Council was considering acting upon if the referendum had failed. Councilmember Wagner concurred but feels not everyone understood it. She noted the city did hold extensive stakeholders meetings with 30+ groups. Councilmember Westgaard noted the city held numerous community engagement meetings at several different forums at several different levels. UREJ City Council Minutes Page 7 February 8,2018 ----------------------------- Councilmember Wagner stated it wasn't enough and not soon enough. Councilmember Olsen stated the ballfields are an option to locate at Lions Park based on the Lions vote at their meeting. He stated Council can do what it needs to with Lions Park Center and take it off the tax rolls. He stated a student athlete's time is of the essence so it makes sense to keep the arena at its current location. He stated the drive from the high school to Lake Orono Park doesn't make sense. He stated his focus is the student athlete. He stated he likes Eden Prairie's model of having the activity center nestled with the school campus. He stated he is in favor of the current arena project. Mayor Dietz stated if the arena project is for the student athlete then why the city should pay for it versus the schools. He stated he needs more reasons to spend $25 million for an arena. Councilmember Wagner stated she is supportive of kids and it's the number one reason why she supports doing something here. She stated driving across town was discussed by the task force but it was noted road improvements will make it easier. She stated this wouldn't derail her from looking at another location noting other kids have to drive for their activities all the time. Councilmember Olsen requested to enter Dave Williams email to the record. He noted the city bought a used arena facility and maintained it on cheap. Mayor Dietz stated he takes offense to the comment about the arena being built on the cheap noting although they installed a used ice plant it lasted for 20 years and the city got its money's worth. He stated when the arena was built Council was told it would generate revenue because surrounding hockey groups would use the facility but this turned out not to be true because everyone started building arenas and received grants funding for them. Councilmember Wagner stated before making a motion to go back to referendum she would like to see Council lead the charge to revisit this matter. She stated if she is spending$24 million she would rather see a larger project to make a bigger difference. Mayor Dietz clarified if Councilmember Wagner wanted to revisit the project first before deciding if a referendum is needed. Councilmember Wagner stated the city should do a referendum. Moved by Councilmember Wagner to revisit putting the community center option back to referendum. Mayor Dietz questioned if Council wanted to call this a community center because it's not really its intent. UREJ City Council Minutes Page 8 February 8,2018 ----------------------------- Councilmember Wagner suggested calling it a civic center. Councilmember Wagner amended her motion for Council to bring back a multipurpose facility for a referendum vote. Mayor Dietz questioned if the referendum would be for November of this year. Councilmember Wagner stated yes. Mayor Dietz seconded the motion. Councilmember Ovall questioned what he is voting on. He questioned if he is voting for a civic center at Lake Orono Park. He expressed concerns with the many geographical issues in the city such as the highways and railroads. He questioned where the percentage of population lies between the east and north sides of town. He noted the traffic issues around Lake Orono with the fireworks. He questioned what the right place is based on the user of the facility. He discussed spin off economic development and asked if the gravel mines should be evaluated as an option. The maker and seconder of the motion both agreed the motion does not identify a site specific location. Councilmember Wagner stated the motion includes the Council leading the effort. Mayor Dietz, the seconder of the motion, agreed. Mayor Dietz stated he is opposed to the Dave Anderson Complex at Lake Orono Park and prefers the current high school site. Councilmember Ovall stated he understands it's Council's authority to make decisions on what they believe is best for the community but when it comes to discretionary spending he will always put it to the citizens. Councilmember Olsen stated the city needs a first class structure that will last a long time and he is in favor of continuing with current process and sales tax options. Councilmember Westgaard stated he is not in favor of doing a referendum because the city has been down this road many times over 20 years and has three facilities rapidly approaching or have already exceeded their lifespan. He noted every referendum has failed and Council continues to not make a decision. He asked the three Councilmembers for the referendum what their contingency plan is if there is a failed vote. He further stated there was discussion in January that if there isn't the appetite to own an arena,then sell it and get out of the business. He stated it isn't responsible to own and operate dilapidated facilities without any plan to repair them. He state Council had this discussion and said they would move forward. He stated P 0 W I R I U 9 Y otm§A UREI City Council Minutes Page 9 February 8,2018 ----------------------------- he is in favor of the sales tax option. He stated the project needs to continue to move forward,noting it also fits within the strategic plan of the school district. He stated if the tolerance isn't there for an arena,then vote to shut it down. There was discussion about past referendum votes. Motion passed 3-2. Councilmember Olsen and Westgaard opposed. Mr. Portner stated Council may want to take action on the resolution regarding the two contracts with 292 Design Group and RJM Construction. Mayor Dietz asked if they can be put on hiatus. He stated Council needs to figure out what to put on the ballot and whether these contractors would do this work. Councilmember Westgaard stated the current contracts are for architectural services for the arena and construction services and it makes no sense to incur more costs. Staff was directed to talk with the city attorney or the contractors and report back at the next meeting. Mr. Portner stated the timeline is very tight and Council needs to determine where they want to start, such as with the task force information. He stated a specific location needs to be decided upon before ballot language can be drafted. He questioned if Council wanted to hire a facilitator. He stated more direction is needed from Council. Councilmember Wagner volunteered to work directly with Mr. Portner to create a timeline and some next steps before moving forward stating it needs to be a Council led project while still obtaining public input. Mayor Dietz sated the goal should be to have everything ready by July in order to have enough time to communicate the project to the public. Councilmember Wagner further asked the public to take responsibility in participating. Councilmember Olsen stated it is the nature of the times regarding social media and asked for people be directed to the website which highlights the arena project. Councilmember Olsen stated he would like to participate in discussions with the YMCA regarding the activity center. Councilmember Wagner noted part of this projecat may bring back the activity center. Mayor Dietz stated the city should still explore the YMCA option and Councilmember Olsen should coordinate with Mr. Portner. UREJ City Council Minutes Page 10 February 8,2018 ----------------------------- Council consensus was to keep proceeding with the YMCA option. 4. Adjournment There being no further business,Mayor Dietz adjourned the meeting of the Elk River City Council at 6:41 p.m. John J. Dietz,Mayor Tina Allard, City Clerk UREJ