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11-24-1986 CC MIN e e e REGULAR MEETING OF THE ELK RIVER CITY COUNCIL HELD AT THE ELK RIVER POLICE DEPARTMENT MEETING ROOM MONDAY. NOVEMBER 24. 1986 Members Present: Mayor Hinkle, Councilmembers Schuldt, Gunkel and Tralle Members Absent: Councilmember Engstrom Staff Present: Patrick Klaers, City Administrator; Lori Johnson, Finance Director; Philip Hals, Public Works Superintendent; Terry Maurer, City Engineer; Peter Beck, City Attorney Also Present: Bill Birrenkott, Utilities Superintendent, and Utilities Commissioners Don Kettner. Henry Duitsman and Doug Dill 1. The Meeting was called to order at 7:00 p.m. by Mayor Hinkle. 2. Consider 11/24/86 City Council Agenda COUNCILMEMBER GUNKEL MOVED 1986 CITY COUNCIL MEETING. THE MOTION PASSED 4-0. TO APPROVE THE AGENDA FOR THE NOVEMBER 24. COUNCILMEMBER TRALLE SECONDED THE MOTION. 3. Consider 11/17/86 Minutes The following corrections were noted: (1) Page 1, Item 2, should be "Councilmember Tralle, not "Commissioner" (2) Page 6. Item 8B, line 2. should be "objectives", not-"objections". (3) Page 7, "M-Vale Plat", line 6 of the motion, the following should be added after the word "M-Vale", "but that no further work be allowed at this time." COUNCILMEMBER TRALLE MOVED COUNCIL MINUTES AS AMENDED . THE MOTION PASSED 4-0. APPROVAL OF THE NOVEMBER 17. 1986 CITY COUNCILMEMBER GUNKEL SECONDED THE MOTION. 4. Joint Meeting with Utility Commission and City Council 4.1 Hydrant Rental Fees Commissioner Don Kettner stated that the hydrant rental fee was established some years ago as a result of damage to fire hydrants by snowplows. Commissioner Kettner noted that approximately $8,400 in hydrant rental fees to be collected from the City is budgeted for 1987. Commissioner Kettner stated that he would like to defer discussion of this item until after discussion of Item 4.2. 4.2 Water Tower Bond Repayment Mayor Hinkle introduced City Attorney, Peter Beck. Mr. Beck presented the following background information for discussion of this item. I Page 2 City Council Minutes November 24, 1986 e On April 1, 1985 at a regular City Council meeting, the City Council approved a tax increment plan to finance the new water tower. This was not an official joint meeting with the Municipal Utilities, but the Utilities were represented by Edson Stansfield, Utilities Superintendent, and Councilmember Duitsman, who served on the Utilities Commission. Terry Maurer and Phil Hals also were in attendance at the meeting and the City's fiscal consultant, Springsted, Inc. was represented by Ron Langness. The City Council reviewed the proposed increment district, parcel by parcel to try to determine what they could expect by way of increments to finance the water tower. It was determined that there could be substantial deficiencies in the cash flow generated by the increments. The City Council found that they would need some assurances that the water tower project could be paid for before they could give authorization to proceed. Mr. Langness provided handouts at the meeting showing cash flow projections, noting the expected shortfall and projections with both a $17,500 annual contribution and a $25,000 annual contribution by the Municipal Utilities. Mr. Beck stated that he had made a notation on his copy of the cash flow sheets showing the acknowledgement by the utilities to make a $20,000 annual committment. Based on this assumption, the City Council went ahead with the project. Mr. Beck further stated that this meeting took place before the bonds were issued. e Commissioner Duitsman stated that he does not feel he agreed to an annual payment, but rather a one-time payment of $20.000. Commissioner Duitsman noted that at that time the Water Department was operating with a deficit. Mr. Beck stated that despite that fact, he felt the Utilities also could see the need for the water tower. Commissioner water tower. estimates. Kettner Mr. asked how close the cost projections were for the Beck stated that the project had come in under Commissioner Kettner stated that the Utility Department is in a position to make the 1987 payment. but felt that he could not make a commitment for future years and that they would have to deal with the payment on a year- by-year basis. Commissioner Kettner stated that at this time, he doesn't know where they will get future funds, as they will be encountering some significant expenditures, such as the water main replacement in the Main Street project and possibly chlorination of the City's water system. He noted that the only means of increasing the Water Department revenues is through increased water usage, and that the rates cannot be raised, as they are high already. He also noted that the increased development in the City would help the water usage. e Mr. Bill what the Drinking River. Birrenkott stated that the Water Department must wait to see Federal government does in regards to modifications in the Clean Water Act, and to know what financial impact it will have on Elk e e e Page 3 City Council Minutes November 24. 1986 Commissioner Duitsman stated that he was in favor of setting up a water service district to generate funds for the Water Department; an idea which had been previously discussed by the City Council and Utilities Commission. Commissioner Kettner again stated that the payments to help payoff the Water Tower Bond Issue must be dealt with on a year-by-year basis. and that he is in favor of discontinuing the hydrant rental fee charge (Item 4.1). Commissioner Kettner stated that there has been very little damage to hydrants in the past several years. Mr. Hals noted that the hydrants are quite well marked now and that the last damage he could recall was in 1983 and was not done by a City employee. Commissioner Doug Dill stated that he can't see the support for an annual payment. and does not feel that was the intent. He further stated that there was no money in the Water Department at that time. Commissioner Duitsman agreed that he felt the intent was a one-time payment of $20.000. He questioned whether or not the tax increment would cover the bond repayment. Mr. Beck stated that with bids shopping center developing much looking better than one originally coming in lower than expected and the faster than he had anticipated. it is expected. Discussion was carried on regarding the financial position of the Water Department. It was the concensus of the Utilities representatives to discuss at one of their upcoming meetings the following plan to assist in paying for the water tower project: (1) payment amount of $20.000 in 1987 to the City by the Utilities. with the of future years' payments to be made as funds are available. (2) Negotiate increase in the $12.000 Payment in Lieu of Taxes made by the Utilities to the City (Agenda Item 4.4). 4.4 Payment in Lieu of Taxes It was noted that this payment was set up some years back by former Mayor Frank Madsen to help with the City's negative financial situation. Mr. Bill Birrenkott noted that in his experience this type of payment is common. and that it is merely a transfer of utility dollars back to the tax payer. Page 4 City Council Minutes November 24, 1986 e Discussion was carried on regarding donations made by the Utilities to the City, such as street lighting, lighting of ball parks, Christmas decorations, etc. Further discussion was carried on regarding the title used for the transfer of funds (Payment in Lieu of Taxes) and setting up a standard to be used in calculating the dollar amount to be paid. Bill Birrenkott discussed, how the payment was determined in the various States he has worked. He noted that in South Dakota they use 1-1/4% percent, of the depreciated capitalized tax property and that he has found .75% percent used in Minnesota. Mr. Birrenkott stated that the value of the Municapal Utilities is approximately 2.5 million before depreciation, and 1.5 million after depreciation. he stated that since it is nearly impossible for utilities of this nature to determine exactly how many feet of line they have, how many poles and how many guide wires they had, they use a federally dictated chart of accounts to determine values. He further stated that he has calculated that they would pay approximately $12,000 to $14,000 in taxes, if they were a private enterprise, noting that he did not used the assessed valuation. Mr. Birrenkott also noted that if the water towers are on the City's books, they will have to be capitalized, and that it must be recorded as an assit on capitalized property. e Mr. Bill Birrenkott stated that he felt it is very important that consideration be given 'to the Water Department service area, especially the old core City, when new development is proposed, so that problem areas can be taken care of whenever possible. It was the consensus that another meeting between the Utilities and City Council would be set up, possibly mid to late January, to discuss the bond payments and increase in payments in Lieu of Taxes plus other relevant issues. 4.5 1984 Bond Repayment Ms. Lori Johnson stated that this $58,000 project consisted of a 16 inch water main crossing under Highway 169 from the new shopping center site to Dodge Avenue. Mrs. Johnson further stated that there is a $26,000 deficit between the project cost and the amount assessed out. She noted that in researching the project she found reference to a $54,000 commitment by the Utilities. She also noted that there were two assessments levied against the developer totaling $32,000. Ms. Johnson stated that although the books show $54,000, $26,241 is the balance that was supposed to be picked up by the Utilities (sewer & water). Mayor Hinkle stated that he could not recall what was agreed to, but that he does remember that Barthel signed a waiver for a public hearing on the assessment. e Commissioner Duitsman felt that he did not recall that the Utilities were involved in any commitment to finance the project. Page 5 City Council Minutes November 24. 1986 e Commissioner Kettner stated they would research this item and get back to the Ctiy Council at the next joint meeting. Mr. Maurer stated that the project was done working for them. but if the City requested. at the project file for information that Mr. Klaers stated that he would send a possible. by CEO when he was no longer they would allow him to look may help clear up the issue. request to CEO as soon as At this time Commissioner Kettner stated that he would have to leave the meeting because of a previous commitment. Commissioner Kettner stated that he has regretfully decided to not continue on the Utilities Commission when his term expires December 31. 1986. He stated that he feels it is important to get a person with utility background to serve on the commission and that he would be willing to serve on a month-by-month basis until such a person is found. Mayor Hinkle expressed the Council's appreciation for Commissioner Kettner's six years of service on the Utilities Commission. e Discussion was carried on regarding the Utility Commission meeting minutes. Members of the Council expressed their desire for more detailed minutes. Mr. Bill Birrenkott stated that their Attorney has advised them that it would be better to record only the formal actions taken at the meetings. Mr. Beck stated that he felt it was important that pertinent comments are also recorded for future reference. The Utilities Commission agreed that the minutes of their meetings would be sent directly to the City Hall for distribution to members of the City Council. Discussion was carried on regarding Utility input in plat reviews in the future. It was the concensus that new plats needing City utility connections would continue to come to the Utility office. as well as any other developments the City Councilor staff feels they need to review. 4.3 Street Lighting Policy Mr. Klaers stated that he could find no record of a formal street lighting policy. He expressed his concern for the need for such a policy. as experienced in the Deerfield 3rd Addition which has an urban setting with no street lights. Commissioner Duitsman stated than if an individual requests a street light. they must pay all costs including cost of the pole. light. installation and labor and are charged a monthly energy usage fee. e Mr. Bill Birrenkott stated that if the City requests a street light. they must pay the capital cost for the pole and light and the Utilities donates the cost of labor and equipment for installation as well as the continued maintenance of the light. He also stated that at the present Page 6 City Council Minutes November 24, 1986 e the City pays $100.00 a month for street lights ($1,200 a year). Mr. Birrenkott noted that in calculating the actual energy used, the cost of street lights for the City for 1985 was $23,000. He stated that the $1,200 paid to the Utilities is subtracted from the actual cost and the result is the amount the Utilities donates to the City for street lighting. Commissioner Duitsman placed on the amount lights. stated that three years ago, a $25,000 cap was the Utilities will continue to donate for street Discussion was carried on regarding the benifits of projected new growth and development in the City, and the impact it will have on the City and Utilities. Mr. Bill policy, maintain Birrenkott stated he found a document street lights in the that in his search for a street lighting stating that the City will only install and old historic townsite. Mayor Hinkle stated that the City Council will be considering redefining the urban/rural bounds. He noted that the Deerfield 3rd Addition needs to be bought into the urban district and that the issue of street lighting there will need to be addressed. e Mr. Klaers stated that the plats. Councilmember Gunkel requirement. City may expressed require street lights in future her support for such a Mr. Bill Birrenkott questioned who would costs for street lights in new developments. felt the users should pay the costs. pay the ongoing maintenance Mayor Hinkle stated that he Discussion was carried on regarding costs for installation of street lights and energy costs. Mr. Birrenkott stated that it costs approximately $225 to $250 for one light and pole. He further stated that an individual requesting a street light may either pay for the cost of a light and pole and be billed a monthly energy cost, or the Utilities could put in a street light and bill the individual monthly for the pole light and the energy used. It was the consensus of the City council and Utilities Commission that a meeting be set up including Bill Birrenkott, Lori Johnson, Terry Maurer. Peter Beck and Pat Klaers to review past street lighting procedures and to develop a street lighting policy, which will include street lighting for new plats. e Discussion was carried on regarding the ineffective street lighting in Barthel Shopping Center, new lighting for the downtown on the Main Street project, and street lighting for the Industrial Park.. e e e Page 7 City Council Minutes November 24. 1986 Mr. K1aers stated that plans for projects such as those mentioned will be passed to the Utilities for their comments. 4.6 Dam Maintenance Discussion was carried on regarding maintenance of the Lake Orono Dam with the following comments being noted: 1. The City has assumed ownership of the dam. 2. Rusty Bradway. employee of the Elk River Municipal Utilities. is currently responsible for overseeing the dam on a daily basis and that the City has maintenance responsibility for the dam. 3. The dam provides the cooling water for the diesel generators. 4.7 Other Business A. Combining of Sewer and Water Departments Commissioner Dill introduced the subject of combining the Water and Sewer Departments. He stated that he was in favor of the idea. Mr. Dill stated that he also thought it was a good idea. and that he felt it made sense for the Ut1ities to take over the sewer. since they already do the billing and collecting now. Mayor Hinkle stated that he was not sure whether the Utilities should take over the sewer or whether the City should take over the water to bring them under one roof. He stated that a previous referendum came about because of the feeling of the Council that the two departments should be. together. At that time. the Water Department was not supporting itself as it now is. and also there is the fact that the City Council must do the bonding and assessing for any improvements. He stated that if the Sewer Department was combined with the Water. there would have to be a means for direct communication between the Utilities and the City. Counci1member Gunkel expressed her feeling that the referendum failed generally because people just weren't informed or didn't understand the issue. Commissioner Dill deal of the work that in addition to line cleaning and plant. stated that he feels the Utilities does a great of the sewer department now. Mayor Hinkle stated bonding and assessing the City is responsible for maintenance. as well as running the treatment Mr. K1aers stated that he feels the Water and Sewer is interrelated with the streets as the mains typically line under the street system. Page 8 City Council Minutes November 24. 1986 e Councilmember Tral1e questioned whether or not there was a way to combine the two departments (water and sewer) other than by referendum. Mr. Beck stated that the Council could add the sewer to the Utilities Control by resolution. but to place the Water Department under the City's control would take a referendum. Discussion was carried on regarding the possible duplication of equipment under the present set up. Counci1member Gunkel questioned what would happen if the Utilities took over the Sewer Department and they experienced a need for major equipment replacement. Commissioner Duitsman stated that they would have to come to the City to help them. which would be the same for the water and electric departments. Mr. Dill stated that they also could use short term borrowing. Mayor Hinkle concluded the discussion by saying that the ramifications need to be studied further but that he feels they (Council and Utilities Commission) are in agreement that the two departments should be together. B. Dead End Water Service Areas e Discussion was carried on regarding problems and complaints with bad smelling and bad tasting water in certain non-looped water service areas. Commissioner Duitsman expressed his concern that a line be extended when the Main Street project is completed to take care of at least one of these problems. 5. Resolution Approving 1987 Pay Plan for Non-Organized City Employees Mr. Klaers outlined the proposed 1987 Pay Plan for members of the City Council. It was the consensus that consideration of the resolution would take place at the 12-8-86 Council Committee Meeting. 6. Other Business COUNCILMEMBER SCHULDT MOVED APPROVAL OF RESOLUTION 86-85. A RESOLUTION EXPRESSING RECOGNITION AND APPRECIATION FOR THE DEDICATED PUBLIC SERVICE or MR. LEROY PIK.E. COUNCILMEMBER TRALLE SECONDED THE MOTION. THE MOTION PASSED 4-0. There being no further MEETING BE ADJOURNED. MOTION PASSED 4-0. business. COUNCILMEMBER TRALLE MOVED THAT THE COUNCILMEMBER SCHULDT SECONDED THE MOTION. THE The meeting adjourned at 10:15 p.m. e submitted. Deborah Kleckner Recording Secretary --