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HomeMy WebLinkAboutBudget Advisory Commission - 03/01/2012 APPROVED MINUTES BUDGET ADVISORY COMMISSION MEETING THURSDAY, MARCH 1, 2012 6:00 P.M., CITY CENTER 8080 Mitchell Road EDEN PRAIRIE, MN COMMISSION MEMBERS: Chair Rick King; Vice-Chair Jon Muilenburg Commissioners: Annette Agner, Eapen Chacko, Dan Funk, Michael Morris, Chris Nylander STUDENT REPRESENTATIVE: Charles Adams CITY STAFF: Sue Kotchevar, Finance Manager; Tammy Wilson, Finance Supervisor; Jan Curielli, Recorder I. ROLL CALL/CALL THE MEETING TO ORDER Vice-Chair Muilenburg called the meeting to order to 6:20 p.m. when a quorum was reached. Chair King and Commission Members Chacko and Funk were absent. Muilenburg suggested the Commission consider changing the meeting time to 6:30 p.m. because 6:00 seems to be too early for some members. Kotchevar said the City Council approves all commission meeting dates and times at the beginning of the year. If the BAC wants to deviate from that during 2012, the change would have to be posted before each meeting for the rest of the year. After a brief discussion of the time change, Muilenburg suggested the subject be added to next months' agenda when there should be more people to discuss it. Muilenburg said he had some comments to make regarding the meeting minutes and what our task is regarding those minutes. He said Commission members are to look through them for accuracy,but it is not intended to be an opportunity to embellish nor to do a lot of word smithing. II. MINUTES A. BAC MEETING HELD THURSDAY,JANUARY 5, 2012 Kotchevar said she had some changes to the minutes suggested by Mr. Chacko. Page 2, paragraph 2, sentence 2 should be changed to: "Nicole said they received about$10,000 in donations for 2011...." Change Page 5, Paragraph 1, next to last Budget Advisory Commission Minutes March 1, 2012 Page 2 sentence to: "Nylander said the seller may not receive full value of the improvement." MOTION: Nylander moved, seconded by Morris, to approve the minutes of the January 5, 2012 meeting as amended. Motion carried 4-0. III. MAYORAL AND COUNCIL PAY Kotchevar said the City Council has asked the BAC to look at the current pay for the Mayor and City Council Members. The Council would like to have the BAC develop positive and negative points of why the pay should or should not be increased. If the BAC determines the pay should be increased, the Council would like a recommendation as to what the amounts of increase should be. The Council would like to have some kind of report to consider when making their decision about a pay increase. Kotchevar gave a PowerPoint presentation reviewing the current pay for the Mayor and City Council. She said the Mayor's pay is higher than that of the other Council Members because she has more responsibilities. In addition to the monthly pay, the Council Members receive a technology stipend of$60 per month. She said their special meeting pay of$35.00 per meeting was discontinued on October 14, 2010. The council last received pay raises in 2004 and in 1992. Morris asked about the purpose of the technology stipend. Kotchevar said the purpose is to reimburse them for internet service at their homes because it is required for City business. Kotchevar said State statutes stipulate that no increase in salary will take effect until the next succeeding regular City election. The salary may be an annual or monthly sum or a per-meeting rate. Kotchevar reviewed a spreadsheet comparing the pay given to city council members in several cities in the metropolitan area. She noted some cities provide a health care benefit. Eden Prairie Council Members can opt in to the health care benefit, but they are required to pay the full premium for their coverage. Agner suggested filtering the spreadsheet for like- size cities. After the filtering was completed, Nylander noted it appears that Eden Prairie is on the lower end of the pay scale. Nylander asked if the levels of responsibility are the same for the other four Council Members, since the Mayor is paid more for the additional responsibilities. Kotchevar said she believes the levels would be similar. Agner asked how the original pay levels were set--for example, was it per citizen or by the number of times they met. Kotchevar thought it may have been pretty random. Agner asked if there were any criteria such as number of meetings. Kotchevar said the special meeting pay was put in place because some put in more time than others. Agner asked if they can be penalized for missing a meeting. Kotchevar said they cannot be penalized. Budget Advisory Commission Minutes March 1, 2012 Page 3 Nylander asked if we have any information on the number of hours they put in annually. Kotchevar said they attend every City Council meeting, and there is a workshop before each meeting. The Mayor and Council Members also sit on various boards. At the beginning of each calendar year the Council passes a resolution assigning different City Council members to boards. For example, Council Member Case was appointed as a Director to the Suburban Rate Authority, and Mayor Tyra-Lukens was appointed to the National League of Cities. Kotchevar said they don't track their meeting time, and they spend a lot of ad hoc time responding to citizens' emails or phone calls. Morris noted whether we look at salary alone or at salary plus technical stipend Eden Prairie comes out second from the bottom. He asked if the technical stipend is dependent on anything. Kotchevar said it is not, and it is recognition that they incur costs for their work as Council Members. She said they are not reimbursed for cell phones. Morris thought it is more likely at this time that everyone is connected to the internet at home. Nylander said he could see where we could make an argument that the salary should be increased. He would probably choose to roll the technical stipend into the salary. Agner asked to see a comparison for salary divided by population because the one thing all of the cities in the comparison have in common is people. After Kotchevar calculated the comparison, Nylander noted that comparison also places Eden Prairie at the second lowest. Nylander asked if the Council is looking for a report about what the BAC thinks the appropriate pay would be. Kotchevar said that is part of it, along with why it should be changed or why it should not. Nylander suggested the following items for the report: • Pay adjusted for inflation over the time period • A historical look at pay per citizen • Consider rolling the technology stipend into the pay • Balancing the pay to that of other city councils. Muilenburg suggested running the inflation figures from the last two pay raises. Nylander said we have no data on the time commitment for Council Members, so we can't really do an effective comparison of pay per hour worked; however, he was pretty sure the amount per hour would be quite low. Agner asked if he was suggesting we calculate that as part of the report. Nylander said we could include a point that there is no data kept on the amount of time commitment so we cannot calculate the per hour rate. Morris asked if the Council's pay is at all correlated to economic development, and if the high-end cities have had more development in the past several years. He also asked if the Council has deemed anything to be a measure of success. Muilenburg thought the citizen survey results would be a measure of success. The consensus was that performance Budget Advisory Commission Minutes March 1, 2012 Page 4 measures should include the City's bond rating, a balanced budget and the citizen survey results. Agner thought balanced planning of commercial and residential development was also a good performance measurement, and Eden Prairie has balanced the two very nicely. Kotchevar said the special meeting pay went away in late 2010, so that had the effect of decreasing their pay. She noted not every Council Member chose to receive the special meeting pay. A total of$5,530 was paid out for 158 special meetings in 2009, and a total of$2,100 for 60 meetings in 2010. Nylander said we have a lot of data points for the report. Some of the positive data points include the balance to other cities, the balance to the past, and that the pay is not enough to be an incentive to run for the Council position. Negative points include a difficult economy and citizen perception/public opinion. Nylander thought the pay is a stipend to effectively cover their costs and expenses. Muilenburg asked if the technological stipend is treated as an expense. Kotchevar said it is income to the Council Members. A discussion followed about including a length of service comparison. Nylander didn't think we should consider length of service in terms of how we would determine pay. Agner volunteered to write the report. Nylander said he would provide the information for inflation adjusted pay rates. Kotchevar said she would forward the information to Nylander and Agner. She thought we could get a draft sent out a week before the next meeting for everyone to review and to use as a basis for further discussion at the meeting. Muilenburg asked to receive the draft report before it is sent on to Ms Kotchevar. IV. ECONOMICS OF CITY CENTER Kotchevar said City Assessor Steve Sinell and Economic Development Manager Dave Lindahl will attend the next meeting to share some financial models for the City Center that Steve has put together. She said the City Center building was purchased in 1993. The debt for the building will be paid off in 2012, and the C.H. Robinson lease is up in March of 2014. The commission's task would be to do an analysis of the pros and cons of the City staying in the building, leasing out the extra space, or selling the building. We would look at the financial considerations and other pros and cons of the various options. Nylander asked if there is anything besides financial considerations that is driving this discussion. Kotchevar said there are many things we could discuss. There is a financial risk to leasing space to other companies. She said in 1993 the property was in bankruptcy and the building was vacant except for the portion leased by C.H. Robinson. The City had been leasing space for City Hall and wanted to own a building. This property was purchased for $15,700,000,renovations were done to the building in 1994 at a cost of$5,800,000, and there have been $3,900,000 in improvements made to date. She said the current book value of the building is $11,500,000. The sources used to pay the building debt included the Budget Advisory Commission Minutes March 1, 2012 Page 5 City's General Fund, rent from C.H. Robinson, and rent from the Eden Prairie School District. She noted the School District was not allowed to purchase their portion of the building but they could lease it. The total square footage of the building is 229,280 square feet, with 74,338 used by the City, 46,453 by the School District and 67,333 by C.H. Robinson. Agner asked about the amortization period. Wilson said it is 50 years. Kotchevar said the School District lease extends from August 23, 1993 to August 31, 2023. Nylander asked if they have rights after 2023. Kotchevar said she believed they do but she will double check that. She said the C.H. Robinson lease started February 15, 1990 and they can option out in March of 2014. They have indicated they will opt out at that time. Nylander asked why C.H. Robinson is opting out. Kotchevar said they built a new world- wide headquarters on Charlson Road and will move their people to that facility. Nylander asked if the City has other facilities it is leasing for office space. Kotchevar said the only other space is a small area we lease in the Eden Prairie Mall. Kotchevar said the BAC has been asked to develop a financial framework for how the City should look at future opportunities and a list of the positives and negatives to continued use of the City Center. Kotchevar noted next month's meeting will include a lot of time discussing this topic. Agner asked if there is something of a non-financial nature prompting this discussion. Kotchevar said C.H. Robinson's moving out will leave a lot of space. The question is whether we try to lease that space when they leave or do something else, such as possibly build a new City Hall or some other option. V. UPDATE ON FRANCHISE FEES Kotchevar said at the March 6th City Council meeting Director of Public Works Robert Ellis will do a presentation on franchise fees for gas and electric. There will be an open house for citizens on March 15. First and second reading of the ordinance will take place at the two subsequent Council meetings. The collection period would start in August if the ordinance is passed. VI. ADJOURNMENT Kotchevar said the next meeting will be scheduled for April 12, 2012, the second Thursday of the month, because the first week of April is spring break. MOTION: Nylander moved, seconded by Morris, to adjourn the meeting. Motion carried 4-0. Vice-Chair Muilenburg adjourned the meeting at 7:15 PM.