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City Council - 05/28/1996 - Workshop APPROVED MINUTES EDEN PRAIRIE CITY COUNCIL TUESDAY, MAY 289 1996 7:00 p.m. CITY CENTER COUNCIUSTAFF WORKSHOP Heritage Room IV, 8080 Mitchell Road COUNCI AMBERS: Mayor Jean Harris, Councilmembers Ron Case, Nancy Tyra-Lukens, Patricia Pidcock, and Ross Thorfinnson, Jr. CITY COUNCIL STAFF: City Manager Carl Jullie, Assistant City Manager Chris Enger, Personnel Coordinator Michael Barone, Director of Parks, Recreation and Facilities Bob Lambert, Police Chief Jim Clark, Director of Public Works Gene Dietz, Director of Assessing and MIS Steve Sinell, Director of Finance John Frane, Director of Inspections Kevin Schmeig, Assistant Finance Director Don Uram, Accountant Sue Kotchevar, and Barbara Anderson, City Recorder I. CALL TO ORDER The meeting began at 7:05 p.m. Ross Thorfinnson, Jr. was absent. II. BUDGET DISCUSSION A. OVERVIEW Mayor Harris reviewed the goals for the workshop which included development of a framework for the budget and establishing parameters for the next years expenditures. Jullie noted that two items needed to be added for discussion which were an update on performance measurement process and establishment of a City Council subcommittee to review staff benefit programs, including sick leave policies. Enger reviewed the goals and assumptions which were established for the development of the 1996 budget. The Council needed to make revisions to these assumptions and reach a consensus on strategy to be used in development of the 1997 budget. Most of these will be general discussion items for the Council. B. ASSUMPTIONS Enger stated that staff had assumed a certain percentage of market and new construction growth in Eden Prairie for the coming year, and this included market value and tax capacity projections. It also included a fiscal disparity calculation. He noted that they were low on residential development and with the changes the CITY COUNCIL WORK SESSION MINUTES May 28, 1996 Page 2 City Council made in the City's spending policy, it will put the City in a good position to develop the 1997 budget. He stated that a downturn in development has been foreseen due to the supply of land. At this point, staff anticipates the MUSA line will be open for construction in 1997. The revenues from fees will be lower in 1997 but they should be back up in 1998-1999. He noted there was no change predicted in the fiscal disparities law. He noted that the tax impact on median residential homestead properties increases 4% per year. They would prefer to target increases in City taxes between 3% to 6% per year, and would prefer to be on the lower end because of the limitations the Council made in spending last year. He noted that tax levies were based in projected tax capacities and tax rates. The 5% tax increase based on 4% market value increase will be different. He noted that there would also be a new TIF district established for the Eden Prairie Center mall. C. STRATEGIES The changes to the strategies will be to target the 4% increase, and he noted that the fee structure has been revised. The City will have to reexamine operating expense projections, which should increase less than 6%. The general fund taxes should be about the same as last year. If a new liquor store is built near the Cub store it will increase these revenues. Enger noted that the inflation rate has been less than 3% so far this year. Enger reviewed the assumptions set forth by staff for the 1997 budget development. These include: 1. Growth factors for existing property taxes to remain at the 1996 level. 2. MUSA line expansion will be allowed in 1997. 3. Decrease in developable acreage in the southwest area due to airport expansion. 4. Decrease in the amount of residential development in 1977 because of the MUSA line expansion delay. 5. Eden Prairie meets the requirements of Liveable Communities Act. 6. A new TIF district will be created for Eden Prairie Center in 1996. 7. Development projections will be evaluated and revised. Enger reviewed the 1996 budget strategies, and noted that the City needs to develop a new contingency plan to offset unforseen expenses that may arise, because with the decrease in development they will need to have some type of savings to provide for some type of maintenance and long term capital improvements which they cannot rely on growth to provide. The City has not accounted for a recession in any of these projections, and this should also be taken CITY COUNCIL WORK SESSION MINUTES May 28, 1996 Page 3 under consideration. Enger noted that they may be able to change the tax rates for median valued homes based on the figures for this year. Sinell commented that there will be a shift in the tax base toward commercial/industrial rates increasing more than the rates for single family residential. Enger reviewed the proposed budget strategies for the 1997 budget development process. These include: Level 1. Operating Expenses (on-going). This includes new programs, such as MIS and additional employees being added. Level 2. Capital Equipment to Maintain Operations (3-5 years). This includes computers and technology additions, and possibly office furniture, etc. Level 3. Equipment Revolving Fund (3-5 years). Level 4. Capital Maintenance Replacement (10-20 years). This includes building maintenance programs and such items as pavement maintenance, etc. Level 5. Capital Improvements (10-20 years). This includes items such as replacement of park shelters and major construction projects. These strategies will need to be discussed in detail as some of them have not been previously included in the budget. Staff believes that they are things that need to be planned for. The park shelters are projected to have a ten year life and some of them have been used for fifteen or more years already. Mayor Harris commented that they could hold a bond issue to build them but a proposal would need to be assembled. Lambert commented they could replace the shelters on a piecemeal basis as some of them can be nursed along but there are also trails that need repair and playground equipment that needs to be updated and replaced because of the new safety standards which have to be met. He believed perhaps a combination of funding sources would be a way to achieve these goals. Enger discussed the revenues which the City anticipated for 1997, and noted that the City could initiate a property tax increase of less than the 6% projected last year. He noted they must prepare for a lag in property tax collection due to the delay in the expansion of the MUSA line. He stated there were three budget scenarios staff had considered. One is the base budget, which maintains the same operating expenses as the 1996 budget, but contains no contingency plan. The recommended budget scenario includes an increase in operating expenses to fund a new MIS system and additional staff members, information included in other critical areas, and begin funding for emergencies. A third scenario would be a savings budget, which would include a savings plan plus funding for capital maintenance and improvements that will be part of the future Capital Improvement CITY COUNCIL WORK SESSION MINUTES May 28, 1996 Page 4 Plan. These will be the items for discussion at the next budget workshop meeting. III. PERFORMANCE MEASURES Schmieg reviewed the performance measurement criteria which will be required by the State in the future. These will include such items as: 1. Workload or demand measures. This would include such items as numbers of building permits issued, zoning complaints handled, acres of parkland mowed, miles of City streets plowed, numbers of fire inspections performed, etc. Initially this has to be demonstrated to the City Council but it will eventually be sent to the Auditor or higher. Staff will report this information to the City Council, and it is already being done to some degree to justify expenditures. 2. Efficiency measures. These would include items such as the cost of reviewing a building permit, the cost of resolving a zoning, complaint, the cost of mowing an acre of parkland, the cost of plowing a mile of City streets or the cost of performing a fire inspection. This would provide data to make decisions on how to use resources. 3. Effectiveness measures. This would include the percentage of contractors satisfied with the length of time it takes staff to issue a permit, the number of households satisfied with the resolution of zoning violations, and the percentage that feels that the parks are adequately maintained, etc. Performance measurement must never become an end unto itself, but is used to show the public that the City is being a good steward of its resources. These effectiveness measures will provide a means of gauging how effective City services are perceived by the public. Staff will initiate the process of measuring efficiency effectiveness of several cross-functional processes. They will perform a gap analysis to determine if improvement is needed and if it is, then a process for improvement will be implemented. Concern was expressed that they not make measuring services something that was done just to measure things, and staff was not supportive of having the state determine the reporting processes of municipalities in even more areas. Enger noted that this was a general overview of the process and how it will be implemented in the 1997 budget. Dietz commented that some years the City performed better than others and he preferred to see any additional dollars rolled over into other expenses that are not funded and are long-term issues. Pidcock commented that her sources indicate that the economy will be taking a downturn sometime in the near future, but did not predict exactly when that would occur. Enger noted that staff would take this into account in the projections of growth for 1997. Uram noted that the City's mutual fund managers expected a recession within the next two years. Harris commented that as long as staff maintained it's conservative CITY COUNCIL,WORK SESSION MINUTES May 28, 1996 Page 5 approach, the budget should be acceptable to the Council. Discussion ensued regarding the next budget meeting, and Jullie noted it would be on July 23rd. The preliminary budget will be reviewed in August and the recommended budget will be adopted by the end of September. Enger noted that opt-outs could go under their own levy but would show up on the tax statements under City taxes, but he was concerned that people would not understand that these were not levied City taxes. Harris commented that the media should be used to make this clear to Eden Prairie residents that this was not part of the City tax structure. Mayor Harris noted that she and Thorfinnson would serve on the Council Subcommittee to review City Personnel policies. IV. ADJOURNMENT The meeting adjourned at 9:00 p.m.