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HomeMy WebLinkAboutBudget Advisory Commission - 06/24/2008 APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING TUESDAY, MAY 27, 2008 7:00 PM, CITY CENTER 8080 Mitchell Road, Eden Prairie, MN Heritage Room COMMISSION MEMBERS: Don Uram(Chair), Katherine Kardell (Vice Chair), Mark Kantor, Richard (Rick) King, Jon Muilenburg, Richard (Dick) Proops, Gwen Schultz CITY STAFF: Sue Kotchevar(Finance Manager), Tammy Wilson (Finance Supervisor), Lisa Wu (IT Manager), Jay Lotthammer (Parks and Recreation Director), Stu Fox (Parks and Natural Resources Manager), Angie Perschnick(Recording Secretary) I. ROLL CALL/CALL THE MEETING TO ORDER Chair Uram called the meeting to order at 7:01 PM. All Commissioners were present with the exception of Vice-Chair Kardell. II. MINUTES A. BAC MEETING HELD TUESDAY,APRIL 22, 2008 The minutes from the April 22, 2008 meeting were approved as written. III. BAC COMMENTS A. REVIEW AND FINALIZE SUMMARY OF COMMENTS FROM APRIL 22, 2008 MEETING Kantor noted one of the suggestions from the BAC was included in the minutes but not in the comments for the City Council from the April 22, 2008 meeting. The suggestion was that the cost savings be quantified for the equipment scheduled to be replaced. The BAC learned that the information was in the spreadsheet, but it was not included in the part shown the BAC during the Public Works presentation. Kotchevar will add a note to the comments to reflect that the BAC would like to see this data in the future. King recommended a note be added to the comments to reflect the information the BAC received on vehicle life was received in response to a request the BAC made to see this data at a meeting last summer. Kotchevar noted Mike Barone will be at the next meeting for feedback on timing of BAC terms and the start date for new commissioners. Budget Advisory Commission Minutes May 27, 2008 Page 2 MOTION: Proops moved, seconded by Kantor, to approve the BAC recommendations from the April 22, 2008 meeting. Motion carried 6-0. IV. STAFF PRESENTATION AND BAC QUESTIONS A. INFORMATION TECHNOLOGY Lisa Wu discussed the changes happening in the IT department with CIP and budgetary impacts. The focus was on the LOGIS transition. A study was done last year on LOGIS applications, and the study was completed in October 2007. They looked at 8 vendors who could deliver several of the modules the City needs, and they are considering an integrated system for HR, Payroll, Finance, and some department-specific applications. Based on the study, the IT department is projecting they could save over $400,000 over a period of 5 years. LOGIS is the only provider available for the Assessing department, but other vendors could be chosen for other applications. A subscription fee is paid on a per-module-used basis, so it does not add costs for different vendor to be used for different applications. Proops asked if Krause, the consulting firm that completed the study, calculated the amount of money that could be saved with different vendors. Wu said the report shows averages for estimated savings. Proops also asked about the process for choosing Krause, and Wu said they were chosen through a bidding process. Proops asked about the $1 million fiber cable project that was discussed during the budget process last summer. Wu said they decided not to do that project this year. Instead, they are using connections from a remote site from Edina. If they pull more applications from LOGIS, bandwidth can be reduced. Uram asked if additional equipment will need to be purchased and if those numbers are included in the packet. Kotchevar responded the hardware is not included in the CIP numbers, but the estimated $400,000 net savings over 5 years does include hardwire costs. Uram asked who decided to evaluate other providers, and Wu said it was decided by the IT staff because another provider could make things more efficient and LOGIS isn't fully meeting their needs. LOGIS is a consortium of local companies that banded together in the 1970s to reduce costs. Uram noted Plymouth has moved away from relying on LOGIS. He also stated that because LOGIS serves a number of smaller communities along with larger ones like Eden Prairie, all the cities have to wait until the smaller ones can afford to join in before they make system upgrades or other improvements. Kantor asked if there are options they could install and if there are state contracts. Wu said they purchase and install MS office with a state contract, but this option is not available for business applications. Kantor asked if on-demand solutions were available as a subscription. Wu said the applications are live on LOGIS and cities join as a member instead of subscribing. Budget Advisory Commission Minutes May 27, 2008 Page 3 King asked if the BAC could receive a copy of the consulting report. Wu said they could, but it is very lengthy. Schultz said a three to four page summary would be helpful, but that is not currently available. Proops asked about the cost of the study, and Wu said it was $18-$20,000. Muilenburg asked how they could quantify the projected savings (of over $400,000 over 5 years) if they don't know which way they are going (if they are switching vendors or making any other changes). Wu said they currently have one vendor providing the solution, so this was a high level study that looked at savings for switching vendors for specific applications (this year police and fire applications are the focus). Wu noted that a six month notification is needed if the City decides to leave LOGIS. Uram asked where the money is allocated; it is in the IT operating budget. Uram asked how staff would be able to manage the additional workload with only adding 1/2 a person to the IT staff to handle the change. They would be working with a vendor, so at this point, 1/2 a person is all that is expected to be needed. King asked if it was more cost efficient to run HR and Payroll through the City than through a third party. It was noted that with frequent tax changes and other regulations, it is often more efficient to have payroll handled by a third party administrator. Wu said they are considering service providers like ADP for payroll. King asked about the number of FTE for the City. There are 350 regular employees and 300 seasonals. Muilenburg would like to see more information on each of the projects. He would like to see a summary of the report and a description of the activities and reasons for the projects. King noted that it is difficult to see which costs go with which possible projects. Wu said that they will be increasing licensing, and they may hire an intern to help implement that. King asked what justification is for what. The internal network is listed as one project, but he's not sure if there is a justification given for document imaging. Wu stated that the storage needs are increasing for imaging and scanners are needed to complete this project. In response to a question from Kantor, Wu said that the imaging costs include only the scanner and licensing. Wu noted that net application storage is needed regardless of which vendor is picked (LOGIS or another). Schultz asked if staff time would be saved eventually and if the document imaging information would be available to the public. The storage project will touch every department, and eventually time may be freed up. Uram said that after the IT study document is reviewed, the BAC can spend time discussing it at the next meeting before finalizing their recommendations for City Council. B. PARKS AND RECREATION Jay Lotthammer and Stu Fox discussed the new projects and renovations planned for Cedar Hills Park, Miller Park, and the Trails project. For Cedar Hills Park, Budget Advisory Commission Minutes May 27, 2008 Page 4 which is in the CIP currently, a fee will be paid to MAC for lifelong City accessibility (a permanent use agreement). Purchase of the land has been held up due to the lawsuit between MAC and NWA. The City plans to purchase the 30 acres from MAC in 2008 or 2009 for $900,000. New homeowners have seen the plans for this park near their homes, and there is also land to be developed in the future that is near the park. In 2011 and 2012, the park is scheduled to be developed, including ball fields for non-league use. This is currently the last neighborhood park planned for development. Proops asked why the City is spending $2 million on another park. Lotthammer said the neighborhoods near the park are not yet fully developed, and there will be a sizable population near the park to use it. Most neighborhood parks are 8-15 acres with a small parking lot and small ball field, so this one is somewhat larger but still more of a neighborhood park than a community park. The land provides an opportunity to get another soccer field too since it will be one of the larger neighborhood parks. Two soccer fields will be lit in Miller Park this year. It was noted people usually access neighborhood parks by walking, so most people are not likely to drive to it. The fields are not for league play but for practice only. Proops asked if this is a good use of $2 million, and Fox said this cost is fairly typical for a neighborhood park. Uram asked when there will be a larger population in this area to use the park. Fox noted that this project did get pushed back from 2005, and if the housing market stays bad, it could get pushed back again. They can keep moving the project out except that the $900,000 purchase does need to happen soon. It will be a one-time payment. Uram asked about the Flying Cloud field expansions. The estimated cost for these expansions is $1.4 million. Lotthammer said they intend to develop the fields at Flying Cloud further based on user demand and increased field needs. Uram asked if the new soccer field planned at Cedar Hills Park would fill some of this need. Lotthammer clarified that the soccer field at Cedar Hills is really considered more of a green space where non-league practice and games can take place. The Cedar Hills Park land is not developable and would not be able to go onto the tax rolls if not made into a park; fields are an acceptable use for the land. Kantor asked if MAC could take the land back. Currently a year to year "lease"is paid for the land under the user agreement. Fox said that, although MAC could take it back, they are not likely to for political reasons. Lotthammer noted that the City Parks & Rec department is close to sitting down with MAC again to finalize the lease of the land. The second project discussed is the 2008 Miller Park project. Since Miller Park is a larger community park, a large play structure is needed. There are a couple of phases of the Miller Park project, and they stand independently. One can be done sooner and the other later, depending on if more fundraising is needed. Phase I of the Miller Park project is for the replacement of the play structure, and that is needed because the materials on the current structure did not hold up well and cannot be replaced. There is also a man who wants to make the park more Budget Advisory Commission Minutes May 27, 2008 Page 5 accessible and is raising funds for that effort. It would cost $350,000 to complete Phase II. They are currently looking at all play structures and replacing them on an as- needed basis. This is a multi-phase project that will be re-evaluated based on usage and need. On Memorial Day, there were 50 people on the play structure. The play structures at Miller Park are typically heavily used. One part of the planned projects involves $350,000 to replace the soil and improve drainage at the athletic fields at Miller Park. Last year they took out the clay soil and brought in sand-based soil for green fields (so they drain faster). They typically take out one at a time and make improvements (they need all others available for use and cannot really do more than one at a time). There is $200,000 in contributions that will primarily go to benefit the baseball association for the Miller park baseball stadium. The project isn't ready to go now and may not be next year either. In addition, the Miller Park shelter lacks a picnic area, and they would like to add this in 2013. Muilenburg asked why a shelter costs $600,000. The costs are for the foundation, restrooms, running water, and other elements typically found in a shelter. Muilenburg asked where it would be located, and Lotthammer responded that the shelter would be east of the play area. Lotthammer noted that there are currently waiting lists for shelters, and they could book shelter rentals every weekend for events and family gatherings. Muilenburg asked about the ROI on the shelters. Based on the cost of $100-150 per event to rent it out, the ROI is probably about 90 years. He suggested the price could be raised to generate more revenue and decrease the payback period. Proops asked about the impact of the projects on the operating budget. He noted that, since 2005, the Parks Maintenance budget is up 40%. He wondered how many more thousands of dollars we are building into the operating budget with the improvements. Fox noted there are three segments of conservation trail areas from the master plan in 2005. The three trail areas include Lower Purgatory Creek, Riley Creek Woods, and Edenbrook. Some land was given by developers, and it was planned to be used for nature trails with money included for improvements. The plans were made in 2006, and there are several phases for trail improvements. Phase II is planned for 2008 (and approved for the 2008 CIP), and Phase III is planned for 2013. Most of the trails are planned for the purpose of connecting different neighborhoods together. For Lower Purgatory Creek, Phase I was completed in 2006, and Phase II is planned for 2009 with Phase III planned for 2012. Land acquisition is needed before these trails can be completed. Phase II for Riley Creek goes through some MAC property near the planned Cedar Hills Park. King asked if some of the projects would involve referendum money as a funding source. The answer was given that all of the trail project Budget Advisory Commission Minutes May 27, 2008 Page 6 money would come from the CIP and park maintenance fees. Some trails currently stop in downtown areas, and they plan to connect more of those trails. Muilenburg asked how heavily used the nature trails are, and Fox replied that they are very heavily used. There have been public hearings and a petition requesting the completion of Phase IL Neighborhood petitions and studies drive the trail building decisions and are used to prioritize the projects. Muilenburg asked if the trails will be unpaved, and they will be; that means no snow removal services will need to be hired for them. Uram asked what the criteria are for determining where funding comes from. Lotthammer said the trails are paid for by either referendums or the CIP. Overlays, maintenance, and repairs come out of the CIP. New trails may be paid for by referendums. Cash park fees are used for new park equipment, and replacing large play structures usually relies on the CIP too. In response to a question from Proops, we learned that trails in the right of way are in the public works budget. The park maintenance budget is used for other trails. Proops noted that he is impressed with the Parks & Rec department's planning, but he is concerned about all the money recently spent and planned for spending in the future on trails. Several million dollars has been either spent or approved in recent years for trail improvements. Lotthammer clarified that the master plan for the trails was approved by the City Council and the Council awards bids and authorizes spending. He noted the priority of when and where to spend money for various projects changes over time. Proops asked about the $1 million for Cedar Hills Park, and Lotthammer clarified that this money has not been approved yet for spending. Fox said that they try to balance needs when they plan for spending money. Muilenburg asked when we will stop acquiring property and developing it for new trails and parks. Fox said they are not planning to buy more land at this time. They are planning to renovate existing parks instead (some are 25-30 years old currently). They are also protecting natural resources in the process as they make improvements. Improvements and maintenance are needed for Miller Park since around 270 games are played on each field in that park annually. Lotthammer said that as redevelopment occurs, at times they may decide to decrease the density and put land into the public domain. They may look at acquiring little pieces of land to make the park system whole. An example of this type of project would be acquiring land in the future that makes Riley Lake more accessible (currently this land is privately owned). Also, the Pioneer Trail expansion may impact land availability for trails. Funding sources are different from park fees, and cash park fees won't always come in. They could charge user fees too. Uram asked if they evaluate whether or not a section of trail is needed. Lotthammer said there are currently 100 miles of trail and 80 of sidewalk, and they are not planning to pull out trails to decrease maintenance costs. Fox added that there is a hierarchy for prioritizing trail needs. First, transportation trails are considered most important to keep bikes off of the highways. Second, connective Budget Advisory Commission Minutes May 27, 2008 Page 7 trails are important to provide paths to shopping areas and schools. Third, nature trails are developed to connect other neighborhoods, etc. Based on the quality of life survey, trails and parks are near the top of citizens' priorities. The City wants to keep the trails in good condition and stretch pavement management over a longer time (so replacement isn't needed most of the time). Proops asked how much is in the park development fees, and Kotchevar said $2 million. Proops asked what is out there that is assured. Proops noted that $5 million is planned in the short term. Lotthammer said park fees brought in $998,000 last year. Lotthammer said they are not factoring in possible increases in fees (they are presenting conservative project estimates for the BAC's review). Proops asked if memberships were ahead of projections for the Community Center. There are close to 1,000 members, but Lotthammer noted that the money from the memberships is a very small piece of the financial pie. Proops said there is no money for capital costs for the Community Center included, and it was clarified that there is a small amount of money included for facilities. RJM Construction Management is managing the total Community Center project with a "not to exceed" figure. On June 17, Parks & Rec will give an update to the City Council at a workshop for the Community Center project and Birch Island Woods. Architectural fees were included at the time the contract was approved for the Community Center. Muilenburg would like to see the final Community Center report. There was a $14 million referendum that included the Community Center project, a third patch of ice, and ball fields. Proops noted that, for the Community Center project, some capital costs are included as start up costs that should probably be expense items. Kantor asked about the tennis courts at Round Lake Park, and it was clarified that the costs are shared 50150 with the school district. Fox said they are putting in sub-drainage, and the projections are pretty accurate. He noted that Parks & Rec shares playgrounds with schools and do 50150 renovations at times. The tennis courts are only one example of this. There is a new skate park planned for Homeward Hills, and the demand for this is driven by kids and their parents. There is currently only one skate park (at Round Lake), and it is highly used. The new skate park is projected for 2011. Muilenburg asked if there is a significant liability to the City for having a skate park. Fox said they are covered by a risk management group called League of Minnesota Cities. He also noted that, if equipment is under a certain height, it doesn't need to be monitored and helmets are not required. Also, Lotthammer noted that injuries are not as prevalent or severe as we might expect for skate parks. They are not like the motor cross areas that were popular in the 1980s that were later ripped out due to liability problems. Budget Advisory Commission Minutes May 27, 2008 Page 8 In response to the first critical question, Proops thanked the presenters for not using a PowerPoint presentation, and he complimented them on their knowledge. Schultz agreed that the presentations were great, and the presenters were well- prepared. Uram noted that the playground equipment is ranked, and that may be of interest to others to see. In response to the second critical question, Muilenburg said the Parks & Rec department could be more complete in their justification for the projects. Most of the wording in that part really just describes the projects. Uram thought it would be helpful for them to quantify the projects more. For the third question, the fundraising outlook looks bleak to Uram based on the current housing market. Uram wanted to know the total cost of maintaining the current trail system. He also wondered how maintenance will be funded for new trails going forward. Fox asked what costs they are wanting more information on (overlaying, plowing, other costs). Proops asked what the ongoing impact is of the projects in terms of costs. Fox said the park and street maintenance staff help plow, but changing ordinance means that street maintenance people will not have as much to maintain going forward. Fox said the operating costs include lots of things, and he wasn't sure what data the BAC would want to see. Proops said they would want to know all the costs that would be involved if a private citizen owned the trail. King agreed that some estimates of annual maintenance are needed. Fox said the facilities group takes care of all park maintenance buildings. Trails and playgrounds and parking lots are components in a lump sum in the budget. These were included in the packet given to the BAC previously. Proops noted that if Cedar Hills is operational right away, the costs could increase sooner than the CIP information indicates. It was clarified that mowing expenses hit the operational budget, and Cedar Hills would add to the seasonal employee cost minimally (Fox clarified that it would not be a substantial increase in cost to maintain that park). Kantor said they can't always project all costs in the future, and it may not be too useful to try to plan for costs that are 15-20 years down the road (like replacing a new roof on a shelter that is not yet built). Muilenburg said that annual maintenance costs that will add to the operations budget are useful, and Kantor agrees with that statement. Proops thinks capital expenditures should be slowed down in this market, and he would like to see them take about $2 million out of the planned expenses. Muilenburg asked about fund-raising efforts given the amount of pressure on the ball fields. It may make sense to consider increasing user fees so the City can recover more of its costs. Kantor said they may need to reduce the CIP number, but more importantly, they could prioritize the projects in case some need to be delayed due to the costs. Lotthammer noted that the information provided in the packet is categorical currently, and the priority information is not generally shown. They have prioritized projects, however, and about 25% of them have been moved to a later year (none have been moved to a sooner year than originally planned). Budget Advisory Commission Minutes May 27, 2008 Page 9 Lotthammer stated that spending has been slowed already because so many projects have been planned into later years. If they took last year's amounts, almost $6 million are in 3 big projects. Delays are saving money in the short-term. Fox added that the reason the operating budget increased for Parks & Rec is because the risk management costs were put onto each park (they switched budgets from a central one to the Parks & Rec budget). Kantor clarified that this means the comparison of the 2005 budget to the current budget is not an apples to apples comparison. V. BAC ANSWERS CRITICAL QUESTIONS AND FORMULATES COMMENTS A. CRITICAL QUESTIONS 1. Were the projects adequately described? Was the need for the projects justified? 2. Where appropriate, is there a systematic method for identifying projects and costs? Was the condition of current assets including the projected need for repair or replacement and the likely demand for the improvement considered? 3. What is the funding outlook for these projects? 4. Does the BAC have recommendations in this area including budgetary and operational changes? What are the recommendations and why? B. COMMENTS 1. Include in Summary of Comments that is presented to the City Council VI. ADJOURNMENT King congratulated Uram on his new role as City Administrator for Victoria. He starts the job on June 9. The meeting ended at 9:08 PM. King moved to adjourn the meeting. The next meeting will be held on Tuesday, June 24 at 7:00 PM. APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING TUESDAY,JUNE 24, 2008 7:00 PM, CITY CENTER 8080 Mitchell Road, Eden Prairie, MN Heritage Room COMMISSION MEMBERS: Don Uram(Chair), Katherine Kardell (Vice Chair), Mark Kantor, Richard (Rick) King, Jon Muilenburg, Richard (Dick) Proops, Gwen Schultz CITY STAFF: Sue Kotchevar(Finance Manager), Tammy Wilson (Finance Supervisor), Lisa Wu (IT Manager), Paul Sticha(Facilities Manager), Angie Perschnick (Recording Secretary) I. ROLL CALL/CALL THE MEETING TO ORDER Chair Uram called the meeting to order at 7:00 PM. All Commissioners were present. II. MINUTES A. BAC MEETING HELD TUESDAY, MAY 27, 2008 Proops noted that the reference to potential Cedar Hills land "purchase" on page 4 should read "lease" instead. Instead of the current year-to-year lease, the City would plan to make a "permanent" lease lasting 99 years. Muilenburg noted that, on page 3, it should say "handled" instead of "handles" in reference to the possibility of outsourcing payroll to a third party administrator. MOTION: Schultz moved and Kantor seconded approval of the minutes from the May 27, 2008 meeting. Motion carried 6-0-1 (for-against-abstain), with Kardell abstaining since she was not in attendance at the meeting. III. BAC FEEDBACK ON BAC TERMS AND START DATE OF SERVICE Mike Barone walked through the creation of the BAC in 2007. He noted the appointments were made for 2 years each, which means they are all set to expire at the same time. The City Council could set up the BAC so group members stagger terms. This has been recognized as beneficial by the City Council in past Commission appointments, and it is very likely the Council would reappoint some members for continuity purposes. Barone noted he is very willing to follow a different time schedule for appointment of BAC members than for other commissions. Proops asked if another option could be for the existing commission to agree to stagger the terms and to determine who would stay on past the 2 year point the current commissioners are appointed for. Barone clarified that the City Council decides when Eden Prairie Budget Advisory Commission June 24, 2008 Page 2 rollovers occur, and both the number of years of appointment and the specific individuals appointed are decided by the Council. Uram said the Council could choose to extend terms for some BAC members and not others so the BAC terms would be staggered going forward and some continuity would be provided. Barone noted each current BAC commissioner can choose to reapply or not to reapply as part of the typical appointment process. Muilenburg suggested the City Council could decide to reappoint a few people early to ensure continuity. Uram did not support making a recommendation regarding who the City Council reappoints or encouraging early reappointments. Kantor noted the BAC might want to recommend that several positions be extended so there isn't a possibility of all commissioners leaving at the same time. He also wondered if November and December are good times to do the interviewing process since potential commissioners may be more likely to be busy with other obligations at that time of the year. He thought interviewing early in the year would probably work better and may encourage more applicants to apply. King noted the City is one-third to one-half of the way through the budget cycle by spring, so it would be beneficial for the BAC to begin meeting in early January instead of in the spring. One of the first jobs of the new City Council could be to decide BAC appointments shortly after initiation in January. Then there would be time for the BAC to make progress early in the year. King pointed out it may be better to stagger the commission so approximately half roll off at a time and they aren't starting with a new commission in the middle of a budget cycle. Barone wondered if there was a numerical reason they couldn't do that. He noted there is a learning curve for all commissions. Schultz pointed out the BAC's learning curve is probably more complex than other commissions. Kardell agrees with King's approach to avoid starting the BAC at the end of April. It was noted the City Council already inherits other existing commissions, so timing the start of the BAC with the start of a new City Council may not be critical. Uram asked what Barone would like for feedback from the BAC in terms of recommendations. Barone said it would be helpful to hear some options that make sense to the current BAC members for the future. Kotchevar will be at the next City Council workshop on July 15 to discuss some financial information. Uram noted he will also be in attendance and could answer any questions relating to the BAC's recommendations. Uram clarified the current BAC's official recommendation for future BAC groups includes (1) a January — December year (this is preferable to the previous plan that included starting in April) and (2) 3 commission members serve for 4 years and 4 serve for 2 years apiece. This provides continuity and ensures members' terms do not end in the middle of a budget cycle. IV. CHAIR AND STAFF ADMINISTRATIVE ITEMS Kotchevar will provide information to the City Council from BAC at the July 15"' workshop and receive feedback from them at that time. She will find out if the City Council would like to see reports or presentations from the BAC in the future. Eden Prairie Budget Advisory Commission June 24, 2008 Page 3 Muilenburg asked if the July 29 meeting can be changed to another date. He will be unable to attend. Uram and Kotchevar will coordinate among commissioners' and necessary staff members' schedules to see if another date can be found to accommodate all BAC members' and relevant staff members' schedules. V. BAC COMMENTS A. REVIEW/FINALIZE SUMMARY COMMENTS FROM THE MAY 27, 2008 MEETING The BAC had no comments on the CIP spending plans presented by IT at the previous meeting. Regarding the Parks & Recreation CIP spending proposals, there was a concern from Proops that he sees no mechanism for ending their expenses. He said he had asked for this information in September of 2007 and hasn't seen it yet. One mechanism he sees is to stop spending CIP money over time. Proops presented information suggesting the funding source for Parks & Recreation spending be changed so the CIP is not used. He recommended transitioning over time to rely more on the park improvement fund and less on the CIP going forward until the CIP is no longer part of the funding. Uram clarified that Proops' main recommendation is to change the funding source, and the purpose of this is to decrease spending over time in the Parks & Recreation area. King is not sure what the impact is of changing the funding source. Proops agrees the change could not be done overnight, but maybe a smooth transition could occur. Muilenburg asked about use of the park development fund. Kotchevar noted the park development fund is decreasing and the source will go away at some point most likely, although some redevelopment will occur and the fund could be used for that too. King said the BAC could approve the IT spending recommendations for the CIP and hold the Parks & Recreation approval until the next meeting. Then the BAC could look at those spending proposals in more detail since more information is needed. Some funding is available in the park improvement fund. It was noted that park dedication fees need to be used for new things (not maintenance) legally (by statute). Uram noted there is not enough money in the park maintenance fund to finish the park system, so money needs to be pulled from the CIP if it is to be completed. Kantor said it seems that the point is to throttle spending, and the BAC doesn't need to recommend changing the funding mechanism to make that spending recommendation. He would have a tough time recommending that the funding source be changed. King confirmed that Kantor's point sounds right, and the funding source should not need to be changed if the purpose is to cut spending. Muilenburg suggested they would need more information from staff to see if it makes sense to change the funding mechanism. King would like to know how much it will cost to complete the master plan for the parks and trails system. Eden Prairie Budget Advisory Commission June 24, 2008 Page 4 What happens if we don't complete the master plan? Proops said some of the projects could be deferred to delay the spending and save money in the short run. The group decided more information may be needed at the next meeting before funding decision recommendations can be made for Parks & Recreation CIP fund requests. King said there are $4.5 Million of projects in the CIP, including $900 Million for the Cedar Hills park land and $1.4 Million for Flying Cloud fields. He wondered if it would be helpful to see ranking among the projects to help determine their priority. Kotchevar noted there are 4 big projects, and Lotthammer has already ranked them and pushed them out in the past. At this point, all of them are a high priority. Uram wondered if there is a window of opportunity with MAC to finalize the long-term lease agreement for the Cedar Hills land. Acquiring the land is more of an opportunity to the City of Eden Prairie than to MAC. Proops noted a lot of work has gone into this agreement, so it might not make sense to stop pursuing it to save money. Muilenburg asked what the long-term impact would be of delaying projects. Uram recommended deferring further discussion on the Parks & Recreation CIP funding requests. Then Jay Lotthammer could come back with more information and be available to answer some of the questions being raised by the BAC. Kotchevar said she needs direction from the BAC on what further information is requested from Lotthammer. MOTION: Schultz moved and Uram seconded approval of the CIP fund requests from the Information Technology department. The motion carried 7-0. VI. STAFF PRESENTATION AND BAC QUESTIONS A. INFORMATION TECHNOLOGY FOLLOW UP Lisa Wu asked if there were any questions about the IT proposal, and there were none. Kantor noted the study the BAC reviewed was interesting. B. FACILITIES Paul Sticha presented information on the CIP funding requests made by the Facilities department. Approximately half of the buildings in Facilities are administrative, and approximately half are Parks & Recreation buildings (including the Senior Center and Community Center). They added five buildings this year. The City is now responsible for the maintenance of Smith/Douglas/Moore House after the lease changed. Also, the Art Center was recently donated to the City. In addition, there are three new park shelters. Sticha stated all building equipment has a life cycle. In a commercial building, the timeframe for roofs, boilers, parking lots, etc. is about 20 years (maybe up to 25 with great maintenance). They are currently in the middle of a 20 year bubble Eden Prairie Budget Advisory Commission June 24, 2008 Page 5 where many repair costs are hitting all at once. They are planning to replace up to five roofs in the near future. In 2005, EPI was hired to do building assessments on four different areas (four separate evaluations were done on the buildings). As part of this comprehensive review process, internal staff evaluated floor coverings, walls, ceilings, and furniture. The staff asked customers in the buildings what they saw that needed to be replaced. The results of this study include the ability for facilities staff to predict the useful life of building parts and equipment(roofs, etc.). There are two significant challenges in commercial (vs. residential) buildings: (1) the size is much larger generally and (2) the complexity is much greater. Sometimes cranes are needed to replace roofs, and the cost of repairs is generally 10-30 times what we would expect to pay for repairs in our homes. King asked Sticha about the new chillers that are in the current plan. The chillers are stand-alone projects for the lower level of a building that was used for manufacturing previously. No cooling was used there, so they are now very short on chiller capacity in the building. The City is required by law to bring in a certain amount of fresh air. The chiller increases capacity to take care of the current needs, and roof top units could also be added. The chiller doesn't replace any of the other needs,but it adds additional necessary capacity. The dates for all projects are theoretical based on expected life from manufacturers, Sticha's experience, etc. Sticha takes the approach of repairing things to the brink of failure, and then he replaces them near the end of their expected lifespan. King noted there is $50,000 planned for interior signage. Sticha said they have received requests to standardize signage, including putting the new logo on signs and repainting signs in City Hall. Muilenburg asked about the priority system used. Sticha said things needed for life safety are a priority 1, and enhancements or improvements are a 3 or 4. Roof replacement is important and typically ranks high. King clarified that some things that reduce operating costs could make sense to do in 2009 even if they are a 3 or 4. The Council did not approve the expenditure request for changing the wiring on a standby generator. Now a new analysis is being done to determine the correct payback period for that project. Proops asked about the roof projects that are projected. He wondered if they can save money by combining the projects together. Sticha said roofs are typically replaced at the 20 year point so they don't take significant chances with safety. He pushes the life out of the roof as far as he can by maintaining it, and then when it's necessary, the roof is replaced. Proops suggested maybe the City could get a better deal on the replacements by packaging the roofs together. Paul said there are 2 roof replacements that are imminent, and he could package those. The other 3 can keep getting pushed out for awhile. Proops asked if there has been a recent evaluation of the maintenance services that were outsourced. Sticha noted they do have a technician-level person who does basic stuff and a building engineer who has licenses is needed for more Eden Prairie Budget Advisory Commission June 24, 2008 Page 6 complicated repairs, so simple repairs are not done by overqualified people at a higher pay rate than what is necessary with the contracted service. They do as much as they can in-house with a handyman. Schultz asked about the issues the EPI has recognized from their assessments. Sticha said they found issues in the Is' two years when they did the assessments. EPI does plans and specs, and the $50,000 is for these as well as the evaluations; also, EPI does some work for the City for closing out projects that is included in this cost figure. Schultz asked about mold growth or other environmental issues that have been found through inspections. Sticha stated the City has spent $25,000 to remove mold growth found through inspections, and they have replaced carpet as needed in this process. An asbestos evaluation has also been done, and they take out affected areas as they fail within City buildings. If the fibers are not disturbed, it's safer to leave the asbestos alone, so they wait until the appropriate time to make the replacements. A question was asked about a roof that is planned to be replaced over a two-year period. Sticha noted that there is an expansion joint in the middle of the roof, and he is trying to spread out the costs for replacement. Muilenburg asked if there may be savings from doing it all at once and from asking for it to be bid on that way. Muilenburg and Kardell thanked Sticha for being very thorough and providing detailed descriptions and justifications in his report. Sticha replied to a question about the heating pump costs by saying that the $75,000 in the CIP will be in there indefinitely. The money is needed to replace heat pumps, and it is in the CIP because there is not enough money in the maintenance budget for it. Kardell asked if the Council will require that the roofs be green. Sticha does not think so, and King noted this has already been voted down once by the City Council. Uram asked about efficiencies among the different equipment chosen by the City. Sticha said there are usually at least 2 or 3 levels of efficiency, and they can pay more up front but sometimes save money in the long-run by choosing a more efficient product or piece of equipment. Uram asked what efficiency level Sticha typically buys. Sticha noted that he must take the low bid,but he usually aims for a mid-range efficiency level. In response to a question about whether or not he can level out the expenses, Sticha said that there will probably be another replacement bubble for several roofs in 5-7 years. Uram asked about the condition of the Art Center, and Sticha said the building is in very good shape with just $10-$20,000 worth of paint and caulking needed. There are no other shelters or buildings planned for construction or acquisition in the future. Proops asked if Sticha was consulted for the repairs needed at the Art Center, and he confirmed that he was. Muilenburg asked if they are assessing the benefit of purchasing the highest efficiency level of products. He said that the top level product could be worth it Eden Prairie Budget Advisory Commission June 24, 2008 Page 7 in some cases even if it costs more up front. Sticha responded that they do a cursory evaluation to decide if it makes sense to buy the higher efficiency level. For a geothermal heat pump system, there was a 40 year payback, and the system only has a 20 year lifespan. In that case, Sticha was easily able to decide that it was not worth it to buy that level of product. Uram asked about the BAC's recommendations for the Facilities CIP funding requests. The critical questions listed in part VII were answered as follows by the group: (1) The projects were elegantly and thoroughly described; (2) Yes, the needs were justified. A systematic method of evaluation was used; (4) Uram's only comment was to keep looking for ways to spread out the costs where it makes sense to do so. Muilenburg recommended looking at the ROI for top level products and looking for bids where they can combine several projects together for cost savings. Proops said these are critical repairs as opposed to optional activities such as buying park land. VII. BAC ANSWERS CRITICAL QUESTIONS AND FORMULATES COMMENTS A. CRITICAL QUESTIONS 1. Were the projects adequately described? Was the need for the projects justified? 2. Where appropriate, is there a systematic method for identifying projects and costs? Was the condition of current assets including the projected need for repair or replacement and the likely demand for the improvement considered? 3. What is the funding outlook for these projects? 4. Does the BAC have recommendations in this area including budgetary and operational changes? What are the recommendations and why? VIII. COMMENTS The Parks & Recreation issues were revisited. Muilenburg suggested they could put all acquisitions into the fund for park development. That is funded by the developers to get new parks developed (for acquisition and expansion). Muilenburg asked what the impact would be of moving new trails into this fund. Kotchevar said that the funds would be very challenged by such a move (there would not be enough money to fund them most likely). The BAC's recommendation to Lotthammer was to consider how he would prioritize these projects if he had limited funding. Kotchevar noted the City's planning process decides the Parks & Recreation initiatives. Eden Prairie Budget Advisory Commission June 24, 2008 Page 8 Schultz asked if a subcommittee should be put together to look at the Parks & Recreation issue. This suggestion was agreed to by the group, and Muilenburg, Proops, and Schultz will be on that subcommittee. IX. ADJOURNMENT The meeting ended at 8:56 PM. Kardell moved and Schultz seconded the motion. The next meeting was originally scheduled for July 29 at 7:00 PM, but the meeting may be moved if another date can be found where all commissioners and necessary staff can be in attendance.