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03-24-1986 CC MIN REGULAR MEETING OF THE ELK RIVER CITY COUNCIL HELD AT THE ELK RIVER CITY HALL MONDAY, MARCH 24, 1986 . MEMBERS PRESENT: Mayor Hinkle, Councilmembers Schuldt, Williams, Engstrom, and Gunkel MEMBERS ABSENT: None STAFF PRESENT: Lori Johnson; Finance Director, Philip Hals; Public Works Superintendent, Thomas Zerwas; Police Chief, Fritz Dolejs; Liquor Store Manager ALSO PRESENT: Mr. Bob Wuornos of R.L. Wuornos & Associates, Mr. Duane Kropuenskeof First National Bank, Charlotte Novak - Municipal Liquor Store employee The meeting was called to order at 7:30 p.m. by Mayor Hinkle. 2 . Agenda COUNCILMEMBER GUNKEL MOVED TO APPROVE THE MARCH 24, 1986 CITY COUNCIL AGENDA. COUNCILMEMBER SCHULDT SECONDED THE MOTION. THE MOTION PASSED 4-0. 3. Minutes of March 17, 1986 City Council Meeting The following corrections to the March 17th City Council minutes were noted: . Item 9 - Ordinance Amendment to C-2 Zoning District - add to motion, "COUNCIL- MEMBER SCHULDT OPPOSED" Item 12 - Conditional Use Permit Request by Florence Lene/Public Hearing - add to motion, "COUNCILMEMBER WILLIAMS SECONDED THE MOTION. THE MOTION PASSED 4-0." Item 13 - Conditional Use Permit Requested by Darrell Goskey/Public Hearing - motion to be revised to read, "COUNCILMEMBER ENGSTROM SECONDED THE MOTION. THE MOTION PASSED 3-1. COUNCILMEMBER GUNKEL OPPOSED." COUNCILMEMBER GUNKEL MOVED TO APPROVE THE MARCH 24, 1986 CITY COUNCIL MINUTES AS AMENDED. COUNCILMEMBER WILLIAMS SECONDED THE MOTION. THE MOTION PASSED 4-0. 4. Review of Feasibility Study for King and Main Streets Tax Increment Financing Proposal Mayor Hinkle opened the discussion of the feasibility study by noting three items of concern to him: 1) .it may not be correct to assume that no ,relocation costs would be incurred regarding the municipal utilities, 2) if the utilities building were not part of the project and it were to remain in its present location, there may not be adequate parking, and 3) the desired 10 year bond retirement would probably have to be extended to 15 years. Discussion of the following parking issues followed: . 1) Whether or not the number of parking spaces shown would be adequate. 2) Whether or not the parking north of the Elk River Clinic would actually be available for City use, as shown on Figure 1. City Council Minutes March 24, 1986 Page Two . 3) The possibility of a parking ramp being included in the project. 4) The dimensions of legal parking space requirements (10 ft. x 20 ft. for a regular space, 12 ft. x 20 ft. for handicapped). 5) If MSA funds were to be used for improvements on Jackson Avenue in the future, MSA standards would require parallel parking and not angle parking as shown, creating fewer spaces available. Discussion was carried on regarding the municipal utilities operation, the value of the existing land and structure, and whether or not the proposed project would be financially feasible if additional costs were incurred to acquire the utilites property. Mr. Wuornos indicated that the developer would be reviewing these costs when they were available to make a determination. Discussion was carried on regarding the process involved in creating a tax increment district and the possible impact of legislative changes. Council- member Gunkel indicated that it was her understanding that the tax increment financing tool was originally set up for projects of this nature and perhaps the criteria for a project such as this one would remain intact. Council- member Gunkel further indicated that Mr. Dave Sellergren; City Attorney, had recently stated that the legislature had not acted on the tax increment issue this session and since the legislature has now adjourned, nothing would probably happen until they meet again. . Mayor Hinkle suggested that the developer meet with the utilities and discuss acquisition of the municipal utilities property. Councilmember Gunkel also suggested that once the developer and utilities have met, the Council could meet jointly with the two groups. Mayor Hinkle, Councilmembers Schuldt, Engstrom, Gunkel, and Williams all expressed their support for the project and their willingness to pe~p out any way they can if the project proves feasible. Mayor Hinkle asked Mr. Wuornos to review the concerns addressed by the Council. Mr. Wuornos agreed to take a look at the whole parking issue and to address the municipal utilities acquisition question, and that he would get back to the Council as soon as possible. 5. Discussion of Possible Sale of Municipal Liquor Store Mr. Fritz Dolejs reviewed for the City Council some of the concerns he had regarding the possible sale of the liquor business, liquor liability was a major issue which the Council should consider; the possibility of a lawsuit and the cost and availability of insurance. He also reviewed the impact of the following items on the liquor store's future: 1) The 21 year legal drinking age law which would cause a cut in sales. 2) The strong probability for legalization of wine sales in grocery stores.. . 3) The elimination of two grades of beer to only one, allowing strong beer to be sold in grocery stores. 4) Future expenditures that are likely to be necessary such as building improvements and new cash registers. City Council Minutes March 24, 1986 Page Three . Mr. Dolejs further expressed his concerns if the Council decided to sell the liquor store. He stated that he felt it was important that the Council con- sider setting restrictions for private off sale liquor establishments, such as limiting the number of stores, and setting specifications for size and design of the stores. Discussion was carried on regarding the possibilt~y of passing an ordinance setting limits for off sale liquor establishments. Further discussion was carried on regarding the limitations presently set for on sale liquor opera- tions. Discussion was carried on regarding the potential that exists for lawsuits in the liquor business and the impact a lawsuit could have on the City's economic situtation. Lori Johnson, Finance Director, reviewed items of concern as stated in her memo to the City Council dated March 18th. Councilmember Williams questioned the value of the municipal liquor store assets. Lori Johnson stated that the land and building was vaulued at approximately $240,000, the inventory at approxi- mately $150,000 and a cash balance of $100,000, for a total of approximately $490,000. Discussion was carried on regarding comments the Council and Citizens Advisory Committee had received regarding the possible sale of the liquor store. . Mr. Duane Kropuenskeindicated that some of the calls the Advisory Committee had received were regarding the possible loss of jobs for present liquor store employees. Mr. Kropenske indicated that it should not be assumed that if the store were sold to a private owner, that all the employees would be let go, but even private enterprise, employees are at the same risk, if the owner of the company were to sell his business. Mr. Kropuenske expressed, his concerns if the City were to keep the liquor store; 1) the financial impact a lawsuit would have on the City, 2) the location of the store, 3) the inevitible deterioration of the building and added costs, and 4) the need for the City to have better facilities. Mr. Kropuenskeindicated that he felt the City has no choice but to sell the liquor store, as it is the only asset they have that could be liquidated in a relatively short period of time, as a source of funds to finance a new City facility. Ms. Charlotte Novak expressed her concern that if the liquor store were sold, where would the funds come from to continue City services provided at the present. CouncilmemberSchuldt indicated that that is the important question that must be considered. Lori Johnson explained that if the Council decided to sell the liquor store, two questions must be placed on the referendum ballot; 1) to use funds generated from the sale of the liquor store business to build a new city facility and 2) to build a new city facility. . Discussion was carried on regarding another referendum. It was the general feeling of those present that a third referendum would not be successful unless most of the funds to finance a new city facility were acquired some way, other than by raising taxes. MAYOR HINKLE MOVED TO DIRECT THE STAFF TO OBTAIN AN MAl PROFESSIONAL APPRAISAL FOR THE LIQUOR STORE PROPERTY. COUNCILMEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 5-0. City Council Minutes March 24, 1986 Page Four ~ 6. Police Department Remodeling Chief Thomas Zerwas presented a remodeling plan for the police which consisted of changing the present front entrance on the east side of the building to the south, creating a front entry area by using space in the old bar. Chief Zerwas indicated that there would be a counter separatingthecentry from the reception area with bulletproof glass. Chief Zerwas further indicated that the First National Bank was willing to donate some bulletproof glass they had left over. Chief Zerwas recommended that a local contractor be hired to complete the revised front entry at a cost of approximately $1,200 to $1,300. Chief Zerwas further explained a plan to expand the office space into the back of the old bar area. Philip Hals, Public Works Superintendent, explained that the expansion could be done at a cost of approximately $3,800 for materials using City personnel to do the actual work. Mr. Hals indicated that for the next two to three weeks, his crew would not be as busy, since there probably would not be any snow to plow and it would be too early to start grading and making road repairs. It was recommended that some type of ventilation for the restroom be installed as part of the project. Chief Zerwas indicated that with the reduction in the price of gasoline, the Police Department could possibly save as much as $8,000 in their budget this year, which is more than over the cost of the proposed improvements. ~ COUCILMEMBER WILLIAMS MOVED TO APPROVE THE POLICE DEPARTMENT IMPROVEMENT PLANS AS PRESENTED By CHIEF ZERWAS AND PHILIP HALS, WITH THEFRbNTEN'I'RANCE IMPROVEMENTS TO BE COMPLETED BY A LOCAL CONTRACTOR AND THE REMAINING WORK TO BE DONE BY THE CITY'S STREET DEPARTMENT PERSONNEL, AT A COST OF APPROXIMATELY $4,000. COUNCILMEMBER ENGSTROM SECONDED THE MOTION. THE MOTION PASSED 5-0. 7. Recommendation for Appointment of Building Inspector COUNCILMEMBER WILLIAMS MOVED TO ACCEPT THE RECOMMENDATION OF THE BUILDING AND ZONING ADMINISTRATOR, STEPHEN ROHLF, TO APPOINT .MR. KENNETH NORQUIST AS ASSISTANT BUILDING INSPECTOR, AT AN HOURLY WAGE OF $10.50 PER HOUR. COUNCIL- MEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 4-0. 8a. Status of State Budget Cuts Discussion was carried on regarding the Action Alert sent out by the League of Minnesota Cities on local government aid and homestead credit cuts. Lori Johnson indicated that if the legislature does not call a special session, the cities could face severe budget cuts in 1987. Ms. Johnson reviewed the follow- ing possible losses in funds: 1) A 37% cut in the last payment of federal revenue sharing funds for 1986 which would amount to approximately $4,400. . 2) Local government aid for 1986 to be cut as much as $38,000 plus approximately $4,500 in homestead credits. 3) Possibly no local government aid in 1987 - the City presently receives approximately $290,000 a year. . . . City Council Minutes March 24, 1986 Page Five 4) If the City decides to sell the liquor store, approximately $50,000 a year in revenues would be lost. Discussion was carried on regarding the present levy limit and the possibility of going to the state for special permission to raise the levy limit to balance the City's budget, if the proposed cuts by the state are made. 8b. Recreation Board Appointments COUNCILMEMBER WILLIAMS MOVED TO APPOINT MR. BYRON HOUGHTELIN, MS. MARILYN VANPATTEN AND MR. TODD MIXER TO RECREATION BOARD. WITH MR. HOUGHTELIN AND MS. VANPATTEN SERVING A TWO YEAR TERM, AND MR. MIXER SERVING A THREE YEAR TERM. COUNCILMEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 4-0. 8c. 2001 Conference Mayor Hinkle directed staff to register himself and CouncilmembersWilliams, Schuldt, and Engstrom for the 2001 Conference. Councilmember Gunkel indicated that she had already sent in her registration. 8d. 1986 League of Minnesota Cities Annual Conference Councilmember Gunkel expressed her desire to attend the 1986 League of Minnesota Cities conference in Duluth. The Mayor and remaining Councilmembers stated that they were unsure at this time whether or not they would be able to attend. 9. Check Register COUNCILMEMBER WILLIAMS MOVED TO APPROVE THE CHECK REGISTER. COUNCILMEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 4-0. There being no further business, COUNCILMEMBER SCHUDT MOVED TO ADJOURN THE MEETING. COUNCILMEMBER ENGSTROM SECONDED THE MOTION. THE MOTION PASSED 4-0. The meeting adjourned at 10:00 p.m. Respectfully submitted, Deborah Kleckner Recording Secretary DK/be