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12-05-2005 CC MIN . . . MEETING OF THE ELK RIVER CITY COUNCIL HELD AT THE ELK RIVER CITY HALL MONDAY, DECEMBER 5, 2005 Members Present: Mayor Klinzing, Councilmembers Dietz, Farber, Gumphrey, and Motin Members Absent: None Staff Present: Finance and Administrative Services Director/Interim City Administrator Lori Johnson, Parks and Recreation Director Bill Maertz, WWTP Chief Operator Gary Leirmoe, Liquor Store Manager Dave Potvin, and Recording Secretary Jessica Miller 1. Call Meeting To Order Pursuant to due call and notice thereof, the meeting of the Elk River City Council was. called to order at 6:30 p.m. by Mayor Klinzing. 2. Consider 12/05/2005 Agenda MOVED BY COUNCILMEMBER FARBER AND SECONDED BY COUNCILMEMBER MOTIN TOAPPROVE THE AGENDA. MOTION CARRIED 5-0. 3. Consider Consent Agenda MOVED BY COUNCILMEMBER GUMPHREY AND SECONDED BY COUNCILMEMBER FARBER TO APPROVE THE FOLLOWING CONSENT AGENDA: 3.1.. CITY COUNCIL MINUTES · NOVEMBER 14, 2005 · NOVEMBER 21, 2005 3.2. CHECK REGISTER 3.3. PERSONNEL COMMITTEE RECOMMENDATIONS AS OUTLINED IN THE STAFF REPORT 3.4. RESOLUTION 05-128 CALLING FOR REDEMPTION OF G.O. IMPROVEMENT BONDS, SERIES 1997A; G.O. IMPROVEMENT BONDS, SERIES 1999A; G.O. PERMANENT IMPROVEMENT REVOLVING FUND BONDS, SERIES 2000B; AND G.O. IMPROVEMENT REFUNDING BONDS, SERIES 2000C 3.5. RESOLUTION 05-129 APPROVING APPLICATION TO CONDUCT ANNUAL OFFSITE GAMBLING BY ELK RIVER YOUTH HOCKEY MOTION CARRIED 5-0. City Council Minutes December 5, 2005 Page 2 4. Open Mike . Amy Bodnar, 419 Norfolk Ave - indicated that she believes the City of Elk River should consider adopting a prevailing wage resolution to ensure that contractors that are awarded bids for city projects are paying their workers prevailing wages. Ms. Bodnar distributed a prevailing wage resolution that she received from Coon Rapids. Jim Lundquist, 21244 Vernon Street - stated that he believes that prevailing wage requirements ensure that the job is completed on a timely basis and is quality work. Mr. Lundquist noted that he believes that the City Council is obligated to spend the taxpayers money wisely and he believes "you get what you pay for". Greg Hanson, Elk River - indicated that he believes that requiring prevailing wages is a moral obligation of the city and that studies do not show how paying lower wages saves money on a project. He stated that he would be happy to share information he has on prevailing wages with the Council at a later date if they so desire. Mayor Klinzing stated that Ms. Bodnar is not asking for Council action this evening, she only wishes the Council to consider the item for discussion at a later time. Finance and Administrative Services Director/Interim City Administrator Lori Johnson indicated that she would like the City Attorney to review the resolution but that it could be discussed at the next Council meeting. Councilmember Motin stated that he does not have a problem with a prevailing wage requirement; however, he is not sure that there is an issue. He would like staff to research past projects to see if the prevailing wage requirements would have been met. Ms. Johnson indicated that staff will review past projects and report back to ,the Council in January. . 5. Truth in Taxation. Public Hearing Finance and Administrative Services Director/Interim City Admini~trator Lori Johnson stated that the Council approved the maximum tax levy of $8,823,793 in September. Ms. Johnson reviewed a breakdown of the funds. Ms. Johnson compared the tax levy amounts from 2004 through 2006 and indicated that the property tax rate will remain constant if the levy is approved as presented. Ms. Johnson reviewed general fund revenues and expenditures. She noted that some of the increase in the general fund expenditures has to do with increased fuel and utility costs as well as the Council's desire to include capital outlay items in the general budget rather than paying interest on equipment certificates. Ms. Johnson indicated that the budget as presented includes adding two engineering technicians, a park maintenance worker, a CSO, a part-time legal administrative assistant, and a IT summer intern this year. She noted that the hiring of the engineering technicians will reduce the city's engineering costs by not having to hire consulting services. Ms. Johnson reviewed the special revenue funds and enterprise funds. She stated that the enterprise funds are self-supportive and not supported by tax dollars. However, liquor store revenue transfers in to the general budget help offset the tax levy. . Mayor Klinzing explained that the purpose of the Truth in Taxation hearing is to discuss the general city budget and general tax information and that it is not a time to discuss individual . . . City Council Minutes December 5, 2005 Page 3 property values and taxes. She stated that if individuals have questions or concerns regarding their property values, they should attend the Board of Review meeting in the spring or contact the Sherburne County Assessor's Office. Mayor Klinzing opened the public hearing. There being no one to speak to this issue, Mayor Klinzing closed the public hearing. Ms. Johnson noted that discussion will be held later in the meeting regarding canceling the December 12, 2005 Council worksession for lack of business so the Council may wish to consider adoption of the 2006 budget and tax levy at the December 19, 2005 meeting. MOVED BY COUNCILMEMBER DIETZ AND SECONDED BY COUNCILMEMBER FARBER TO ADOPT THE 2006 BUDGET AND TAX LEVY AT THE DECEMBER 19, 2005 COUNCIL MEETING. MOTION CARRIED 5-0. 6.1. Ordinance 05-26 Adopting the 2006 Free Schedule. Public Hearing Finance and Administrative Services Director/In terim City Administrator Lori Johnson explained that fees for services are reviewed by staff and Council on an annual basis to ensure that fees charged cover the services that are provided by the city. Ms. Johnson presented the proposed changes as outlined in the staff report. Mayor Klinzing opened the public hearing. There being no one to speak to this issue, Mayor Klinzing closed the public hearing. Councilmember Gumphrey questioned why there is no minimum charge for copying as the .25C per page fee will not cover staff time. Ms. Johnson indicated that state law now only allows cities to charge .25C per page for copies. Councilmember Motin stated that he noticed that hockey rink rentals are now included in the fee schedule and questioned if hockey rinks can now be reserved. Parks and Recreation Director Bill Maert2; stated that one of the two rinks at Handke is allowed to be reserved. Mr. Maertz stated that last year there was a $5 charge for rink reservation but that it didn't cover the actual costs incurred and that the $20 fee will allow for true costs to be recaptured. MOVED BY COUNCILMEMBER DIETZ AND SECONDED BY COUNCILMEMBER GUMPHREY TO ADOPT ORDINANCE 05-26 ADOPTING THE 2006 FEE SCHEDULE. MOTION CARRIED 5-0. MOVED BY COUNCILMEMBER DIETZ AND SECONDED BY COUNCILMEMBER MOTIN TO PUBLISH A SUMMARY OF ORDINANCE 05-26. MOTION CARRIED 5-0. 6.2. Boys and Girls Club Request for Funds Finance and Administrative Services Director/Interim City Administrator Lori Johnson indicated that the city received a written request from the Boys and Girls Club for funding. Ms. Johnson explained that Club's request is for $36,000; $12,000 from landfill abatement funds for recycling programs and $24,000 from the general fund for ''Youth in Community" programs. City Council Minutes December 5, 2005 Page 4 Ms. Johnson indicated that Police Chief Jeffrey Beahen is on the Boys and. Girls Club Board of Directors and would like to speak to the Council on this request but he was unable to attend tonight's meeting. Ms. Johnson noted that Boys and Girls Club Executive Director Duane Howard was also planning on attending the meeting but is not present. She indicated that the Council may either consider the request or chose to postpone discussions until Mr. Howard and Mr. Beahen are present. . MOVED BY COUNCILMEMBER GUMPHREY AND SECONDED BY COUNCILMEMBER FARBER TO CONTINUE THE BOYS AND GIRLS CLUB REQUEST FOR FUNDING TO THE DECEMBER 19, 2005 CITY COUNCIL MEETING. MOTION CARRIED 5-0. 6.3. Elected Official Out of State Travel Policy Finance and Administrative Services Director Lori Johnson indicated that pursuant to Minnesota State Statute ~471.661, each statutory city must develop a travel policy for elected officials and review this policy annually. Ms. Johnson stated that the proposed policy is similar to the city's current employee travel policy. MOVED BY COUNCILMEMBER MOTIN AND SECONDED BY COUNCILMEMBER DIETZ TO ADOPT RESOLUTION 05-130 APPROVING THE ELECTED OFFICIAL OUT-OF-STATE TRAVEL POLICY. MOTION CARRIED 5-0. 6.4. Pinewood Appraisal Presentation . Finance and Administrative Services Director/Interim City Administrator Lori Johnson indicated that Mr. McMurchie was in attendance to present an analysis of market and financial factors for Pinewood Golf Course as prepared by McMurchie Golf Management, Inc. AI McMurchie, McMurchie Golf Management, Inc. - indicated d1at he has been retained by the city to provide an analysis of the existing golf course operation and the dynamics of a potential acquisition of Pinewood Golf Course. Mr. McMurchie explained that based upon his analysis, the condition of the golf course is rated good He stated that the size of the course, condition of the buildings, out-dated maintenance equipment, and close proximity of residential houses contribute to the limitations of the course. Mr. McMurchie stated that from a market standpoint, supply and demand factors have caused a parallel downturn in the golf market in recent years. Mr. McMurchie indicated that Pinewood is a community golf course and not one that people will drive a distance to play. He noted that the course could be expected to make a marginal profit annually. Mr. McMurchie noted that there was no past financial history or records available for comparison purposes. Mr. McMurchie explained that based on his findings, a supportable purchase price for Pinewood Golf Course would be $375,000. He stated that in addition to the supportable purchase price of $375,000, there would be an additional $175,000 of equipment replacement and property improvements that would be necessary in the next three-year period. Mr. McMurchie also explained that a viable replacement cost for a golf course of similar size and scope would be approximately $3.2 million which would include a driving range. . City Council Minutes December 5, 2005 Page 5 . Councilmember Dietz verified that the $375,000 is what Mr. McMurchie would recommend that the city pay for Pinewood. Mr. McMurchie explained that as a golf course business, the maximum purchase price that he would suggest paying is $375,000 minus the $175,000 of improvement costs. Parks and Recreation Director Bill Maertz stated that he believes the golf course would be a great recreational amenity for the citizens but that $2.4 million is too much for the city to pay. Mayor Klinzing indicated that the City Council asked for Pinewood to be appraised as a golf course and that she knew the appraisal would come in at less than $2.4 million but she is surprised it came in so low. She stated that the revised Letter of Intent has not been sent and that the Council can chose to either continue with the current Letter of Intent or modify it. Councilmember Motin stated that the Letter of Intent requires the appraisal to come in at $2.4 million as a golf course and since the appraisal came in no where near that amount, the letter would fail on its own terms. Councilmember Farber indicated that he is baffled by the low appraisal. He stated that the 26 acres of land is worth more than the $375,000 appraised value. . Councilmember Dietz stated that based on the appraisal, the Council can not continue with the current Letter of Intent. He stated that the Council could resume discussions with Mr. Krause and see if he will take less money for the course. Councilmember Farber questioned if the $375,000 included the land, buildings, and equipment. Mr. McMurchie indicated that the $375,000 is the total value of the golf course as a business. He explained that is the maximum amount that one could obtain financing for on the Pinewood Golf Course. Mr. McMurchie noted that the inventory that exists on the course is minimal and dated. Councilmember Farber explained that he does not believe the $375,000 is a reasonable appraisal for Pinewood and he would like to see the land value appraised. Mayor Klinzing stated that the owner of Pinewood indicated to the Council that he would like $2.4 million for the golf course and that the Council needs to decide to what extent they are willing to go to save the golf course. She indicated that she has concerns that the city would need to spend $175,000 in improvements just to open the golf course and that additional money may need to be spent to bring it up to city standards. Mr. McMurchie noted that he has never seen a city purchase a golf course and then turn around ~d sell it for residential development and that it would be politically difficult to do. Councilmember Dietz suggested that the Mayor speak to Mr. Krause regarding these [mdings and report back to the Council. City Attorney Peter Beck indicated that he spoke to Mr. Krause and his attorney last week and they would like to resolve this issue quickly. . Mayor Klinzing indicated that she will speak to Mr. K.rause and see what he believes is a reasonable purchase price for Pinewood and will report back to the Council at the December 19, 2005 Council meeting. MOVED BYCOUNCILMEMBERFARBERAND SECONDED BY COUNCILMEMBER MOTIN FOR THE CITY COUNCIL TO WITHDRAW City Council Minutes December 5, 2005 Page 6 THE CURRENT LETTER OF INTENT BASED ON THE APPRAISAL OF PINEWOOD GOLF COURSE AND FOR MAYOR KLINZING TO RESUME DISCUSSIONS WITH MR. PAUL KRAUSE REGARDING A FAIR AND REASONABLE PURCHASE PRICE FOR THE COURSE. MOTION CARRIED 5-0. . 6.5. 2006 Park Project Budget Parks and Recreation Director Bill Maertz stated that the proposed 2006 budget for park projects and land acquisitions is $1,248,750. Mr. Maertz presented the proposed 2006 park projects as outlined in his staff report. MOVED BY COUNCILMEMBER GUMPHREY AND SECONDED BY COUNCILMEMBER DIETZ TO APPROVE THE 2006 PARKS CAPITAL BUDGET AS PRESENTED. MOTION CARRIED 5-0. Councilmember Dietz commended Mr. Maertz for being aggressive in his park planning. 6.6. 6.6.A. 2006 Flexible Benefit Plan City Contribution to Plan Finance and Administrative Services Director/Interim City Administrator Lori J ohoson indicated that the city contribution to our Flexible Benefits Plan will be included in the Pay Resolution which will come before the Council in mid-December; however, the enrollment materials need to be distributed this week so staff is requesting the Council consider the city contribution at this time. . Ms. Johnson stated that medical and dental insurance benefits will continue unchanged for 2006 with premium increases of 10.75% for dental and 16% for medical. She noted that without a previously negotiated maximum increase for the medical insurance, the increase would have been significantly higher. Ms. Johnson stated that consistent with past years, the city budgeted a $15.00 per month increase in the amount it contributes to each employee's Flexible Benefits Plan. Councilmember Dietz questioned what percent the $15.00 per month city contribution is compared to the 16% increase in medical. Ms. J ohoson stated that the percentage would vary depending on which coverage an employee chooses but that it would be about a 2 to 3%. Councilmember Dietz questioned how doubling the city contribution would impact the budget. Ms. J ohoson stated that if the city contribution were doubled it would be approximately an additional $12,600 per year. Councilmember Dietz questioned if it would be better to base the city contribution on the coverage the employee chooses. Councilmember Motin questioned what the patrol union's increase was. Ms. J ohoson indicated that the patrol union's negotiated increase for 2006 is also $15.00 per month. She noted that the patrol union has a different health plan and they have not experienced the same increases as the city healtll plan. Councilmember Motin stated that his preference would be to approve the budgeted city contribution amount this year and consider an increase during budget discussions next year. Councilmember Dietz stated that he believes the amount of the increase should be based on how much insurance premiums are rising each year and also on the coverage the employee . . . . City Council Minutes December 5, 2005 Page 7 selects. Ms. Johnson indicated that she will have staff research benefit contribution options for the Council to consider next year. MOVED BY COUNCILMEMBER DIETZ AND SECONDED BY COUNCILMEMBER FARBER TO APPROVE THE $15.00 PER MONTH INCREASE TO EACH EMPLOYEE'S FLEXIBLE BENEFITS PLAN FOR 2006 AND TO DISCUSS AN INCREASE IN THE CITY'S CONTRIBUTION DURING 2007 BUDGET DISCUSSIONS. MOTION CARRIED 5-0. 6.6.B. Plan Amendments Finance and Administrative Services Director/Interim City Administrator Lori Johnson indicated that staff is requesting amendments to the city's flexible benefits plan document to include a grace period for incurring expenses and an increase in the maximum allowed contribution for the Health Flexible Spending Arrangement. Ms. Johnson explained that this year, the Internal Revenue Service issued Notice 2005-42 allowing a two and one-half month grace period extending beyond the end of the plan year to incur expenses. Ms. Johnson also explained that a number of employees have inquired about increasing the maximum dollar amount in the Health Flexible Spending Arrangement plan. She stated that staff is recommending the maximum amount be increased from $2,000 to $3,000 per year. Ms. Johnson noted that in addition to the two changes noted above, the amended plan will also include all regulatory changes that have been made since it was last updated January 1, 2004. MOVED BY COUNCILMEMBER GUMPHREY AND SECONDED BY COUNCILMEMBER MOTIN TO ADOPT RESOLUTION 05-131 AMENDING THE CITY'S FLEXIBLE BENEFITS PLAN. MOTION CARRIED 5-0. 6.7. 2006 Enterprise Budgets Finance and Administrative Services Director/Interim City Administrator Lori Johnson indicated that a summary of the enterprise fund budgets was included in the Truth in Taxation hearing. Ms. Johnson stated that the enterprise fund budgets include wastewater treatment, liquor operations, and garbage collection. She stated that each of these budgets is funded through revenue collections for service or sales. Ms. Johnson explained that Wastewater Treatment expenditures have increased mainly because of additional capital outlay costs. She stated that several lift stations are scheduled for major improvements and security lights are proposed to be added at all lift stations. Ms. Johnson noted that since this is the first full budget for Westbound and no reliable sales or expense data is available yet, the Westbound budget is based on sales projections and estimated operating expenses. Councilmember Dietz questioned how business at Westbound has been. Liquor St<?re Manager David Potvin stated that business has been good considering that no big grand opening has been held yet. Councilmember Gumphrey questioned how many security lights will be purchased. Wastewater Chief Operator Gary Leirmoe indicated that 17 security lights need to be purchased. Councilmember Gumphrey questioned how security and safety is at the lift stations now without the lights. :Mr. Leirmoe stated that currently the Wastewater Treatment employees use flashlights and that it is not a very safe environment. City Council Minutes December 5, 2005 Page 8 MOVED BY COUNCILMEMBER GUMPHREY AND SECONDED BY COUNCILMEMBER DIETZ TO ADOPT THE 2006 ENTERPRISE BUDGETS AS PRESENTED. MOTION CARRIED 5-0. . 6.8. Council Updates Councilmember Motin provided an HRA update and Councilmember Dietz provided a Library Board update. Mayor Klinzing indicated that if the Council concurs, on future agendas Council updates will be listed following other business and before staff updates. She stated that currently only select items are on the agenda for an update and this will allow an opportunity for all Councilmembers to bring up any item of importance to the Council. The Council concurred. 6.9. Council Worksession Agendas Mayor Klinzing indicated that witll the Truth in Taxation hearing closed, there are only two brief items scheduled for the December 12, 2005 worksession agenda neitller of which is urgent and could take place at a regular meeting or at a January worksession; therefore, the December 12 worksession could be cancelled if the Council desires. MOVED BY COUNCILMEMBER DIETZ AND SECONDED BY COUNCILMEMBER MOTIN TO CANCEL THE DECEMBER 12, 2005 COUNCIL WORKSESSION DUE TO LACK OF WORKSESSION BUSINESS. MOTION CARRIED 5-0. . 7. Other Business There was no other business. 8. Staff Updates Finance and Adrniills trative Services Director Lori Johnson provided an update on the Builder's Association Lawsuit. Ms. Johnson indicated that an Executive Session may need to be held December 19,2005 to discuss the lawsuit. 9. Adjournment There being no further business, Mayor Klinzing adjourned the meeting of the Elk River City Council at 8:43 p.m. Minutes prepared by Jessica 11ill.er. .