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City Council - 05/19/1998 - Workshop APPROVED MINUTES CITY COUNCIL/STAFF WORKSHOP TUESDAY, MAY 199 1998 5:00 PM, HERITAGE ROOM IV 8080 Mitchell Road COUNCILMEMBERS: Mayor Jean Harris, Sherry Butcher- Younghans, Ronald Case, Ross Thorfinnson, Jr. and Nancy Tyra-Lukens CITY COUNCIL STAFF: City Manager Carl J.Jullie, Assistant City Manager Chris Enger, Finance Director Don Uran, Director of Assessing Steve Sinell, Director of Public Works Gene Dietz, Director of Human Resources & Community Services Natalie Swaggert, Director of Inspections Kevin Schmieg, Director of Parks, Recreation & Natural Resources Bob Lambert, Chief of Police Jim Clark, Lead Accountant Sue Kotchevar, Facilities Manager Barbara Cross, Fire Chief Spencer Conrad, and Council Recorder Jan Nelson I. CALL MEETING TO ORDER Acting Mayor Tyra-Lukens called the meeting to order at 5:05 p.m. Mayor Harris was absent. H. OVERVIEW OF 1999 PROPOSED BUDGET A. INTRODUCTION Jullie thanked the department heads for their work on preparing the proposed budget. Enger said we have had a more formal process for the last three years with a Budget Team and the department heads involved in the process. This means the Council has been able to set strategic direction rather than just reviewing line items. Enger reviewed the budget achievements that included eliminating the use of one- time revenues to fund operations, a balanced budget model and preparing for the transition from high growth to a stable community, increasing the awareness of long term financial impacts of decisions, and minimising tax impacts. CITY COUNCIL/STAFF WORKSHOP May 19, 1998 Page 2 B. 1997 BUDGET TO ACTUAL RESULTS Uram presented the 1997 budget to actual results. He noted their goal is to complete the audit earlier every year so that the departments have the information to use in preparing their budgets. He said 1997 was an excellent year with $700,000 more in building permit revenue than anticipated and $500,000 more in taxes. The operating budget was held to the previous year's level. He said they have discussed amortizing the additional revenue over a period of years to offset years when revenue is not as high as anticipated. Tyra-Lukens asked if they intend to amortize the $700,000. Uram said it will be the entire $1.3 million. Case asked if we would amortize for future use in general or for specific use. Uram said they have expenses to fund in the future, and it could be used for that. Enger said, if the CIP were done, we would not have this amount of variance. We will probably have a need in the future to fill negative amounts some years. This would provide flexibility. He noted that multi-year budgeting would be good from this perspective. C. 1999 BUDGET STRATEGIES Enger then reviewed how the City Council and community values tie into the budget strategies. He explained the budget strategies we use: freeze operational expenses and employee head count; reduce the rate of increase in operating expenses; use "one time" revenues for "one time" expenses; no new programs to expand services without offsetting revenues or reductions in existing services; maintain a balanced budget model; consolidate departments' Capital Improvements Plans; and develop performance measures. D. MAJOR INITIATIVES Barb Cross reviewed the efforts to find a replacement site for Fire Station #1. After identifying and evaluating potential sites, they determined the best balance of all sites was the Methodist Church location; however, soil tests showed that it was not feasible to build in that location because of the bad soils. They have since determined that the upper west parking lot of the City Center building to be the best alternative to the Methodist Church location. C. H. Robinson is okay with taking that location if we replace their parking. She said the costs of building a parking ramp for the replacement parking will be offset by the amount that we will not have to invest in a land purchase. She also reviewed an alternative to build a parking ramp on the City Center parking lot to increase the parking available for the City Center. CITY COUNCIL/STAFF WORKSHOP May 19, 1998 Page 3 Enger noted this needs to be divided into two pieces--the fire station site with an 80-car ramp to replace the parking lost by the fire station building, and the separate issue of additional parking for City Center. He believes the additional parking for City Center would improve the public use of the building, but it may not fit into the immediate needs category and may be a project for the future. Case asked about the $1.6 million item on tonight's Consent Calendar. Cross said that is the amount for the architectural fee to begin the process. She said we have an aggressive time schedule because we have to have the apparatus housing space usable by November 15. We need to get the design done in a month, which may not be feasible, but we are on a month-by-month lease at the current station. Case asked if the Consent Calendar item is to design Phase 1 and Phase 2 and if we will have discussion of any expense beyond the architectural fee. Enger said Staff is recommending that we hire the architect to design the Fire Station and an 80- space parking deck. Tyra-Lukens asked if the cost of the balance of the parking deck is $1.6 million. Enger said the $1.6 million is for the full deck. Case asked if timing is the biggest issue in not going with the Methodist Church site. Enger said there isn't a major dollar difference. Thorfinnson asked what the savings was for not purchasing the land. Cross said it was $500,000 for the land and the surcharge would have cost$500,000. Case asked what the total is and what we will get from the State. Enger said the State payment is $1.4 million, and the total budget for this item is $2.7 million. However, it will cost$3.2 million to build this because the new building is larger in order to accommodate the program requirements. Jullie noted we have outgrown the current Station#1. Case then asked if we are okay with the other stations. Clark said, in terms of apparatus space we are, but not in terms of other programs. He said the proposed station would meet our needs for a very long time. Case asked where we will get the difference between the State payment and the cost. Enger said the difference would have to be debt issued, as we did for the City Center. Case asked if there is a statutory limitation on spending without a referendum. Enger said it depends on what it is used for. Essential function revenue bonds were used for the City Center, so we could also use those bonds for a fire station. Butcher-Younghans asked what the other benefits are to this site. Cross said the exit to Scenic Heights Road was a benefit, and a deck would improve the City Center property. CITY COUNCIL/STAFF WORKSHOP May 19, 1998 Page 4 Case asked if would be possible to use the Methodist Church property for parking. Cross said C. H. Robinson would not accept that because it is too remote. Case asked if we could move City people there. Enger said we have a constant battle to keep people from parking near the front door. Thorfinnson asked what the soil problems are on the church site. Cross said the church took the good soils for their building site and moved the bad soils to the empty lot. Swaggert asked if C. H. Robinson has any issues on the design. Cross said they would like to see that their corporate image is preserved, and they are excited about the new entrance to their facility. Clark reviewed the proposed Public Safety Training Facility. He said a group of cities came together to talk about future training needs. Our Police Department currently uses a shooting range in Carver County since the Braemar shooting range was torn down. He is concerned that there is a huge liability issue with the current range. The only indoor range is in Maple Grove and that is over booked. Two years ago the discussions about a combined facility got accelerated, and the group ended up including the M.A.C. Police Department, Bloomington Police and Fire, Edina Police and Fire and Richfield Police and Fire. Clark said they have prepared a business plan. While they don't expect to make a lot of money on the facility, they will be able to fill the time at the site between the group members and rental to other groups. He said Edina will give the site at Braemar. The group applied for a Governor's bond but were turned down by the legislature. Clark said we need to make a decision fairly soon. While it is not in our backyard, it is very close. The cost for the building is $6.7 million. The range components are very expensive, but we must have a facility to train the police and firefighters in order to keep up with the standards. If the group does not build a facility together they will all have to build individual ones. Clark said the operational costs for us would be $50,000- $60,000, and they plan to hire someone to work on filling the space available. He said their formula for the up front costs was determined by use and employment status, and our costs were$800,000-$1 million for the initial investment. They have set up a Joint Powers Agreement. Butcher-Younghans asked if Minnetonka was interested in joining. Clark said they were in and out of the group, but they will use the facility if it is available. Case asked if a city like Minnetonka would pay more. Clark said they would pay for operational costs. He said they took time to study the market, and they believe we can put people in there at all times. He noted that as part of the group we will be able to pick the best times and have more opportunities to schedule the training. CITY COUNCIL/STAFF WORKSHOP May 19, 1998 Page 5 Tyra-Lukens asked when we will be asked to make a decision. Jullie said they are meeting again in the next couple of weeks, and they wanted us to get a sense if this is a serious project for us. He thought it is an area-wide collaborative effort that will save tax payers a lot of money. We are not doing training we should because the facilities aren't there now. Butcher-Younghans asked if the councils in the other cities have approved this. Jullie said they have received positive responses, and Edina and Bloomington are very much behind it. Case asked what the plans are to fund the $1 million investment. Jullie said this would qualify for the essential function revenue bonds, so we could do that for our share. The debt service will be about $80,000 per year plus operating costs of $40,000-$50,000, which would be a total of$130,000 per year as a General Fund expenditure. Butcher-Younghans asked how that compares to our annual training costs. Clark said they have tried to come up with a comparison but it is hard to do. He said the lands aren't available for shooting practice like they have been in the past. Jullie said they tried to quantify the costs, but there are items such as travel time that are hard to evaluate. Jullie said they would like to report there is a strong interest in this. The architects are hired and are ready to go. We would be committed to the architectural design piece. Tyra-Lukens noted we have been talking about this for many years. The need doesn't go away and we need some better way of training than sending people outside of the area. Clark noted the legislature gives mandates regarding training, and those change from year to year. The consensus was to support the new training facility. Enger said the City Center Parking Ramp is probably something we should have a CIP plan for. Uram said we have two very important projects in the Fire Station and the Public Safety Training Facility. He noted that capital improvements planning has been going on in the past in the Parks and Recreation and Public Works Departments. Our goal with the process is to coordinate and consolidate everyone's information so we can present it to the Council. When it is completed, we can identify projects, determine the timing of those projects, determine funding options and prioritize projects. He said they have worksheets from the departments; however, this is a long process and takes a lot of work from the departments and from the Council. They hope to have a capital improvement budget as part of the process. CITY COUNCIL/STAFF WORKSHOP May 19, 1998 Page 6 Case asked if we will receive this as a line item even though we don't have the plan. Uram said they will set up a permanent revolving fund for capital improvements and capital maintenance that will provide seed money for all capital improvements in the next few years. They are sitting down to determine what funds will be available in the next few years to fund these. Enger noted we don't have the fine points yet. E. PERFORMANCE AND EFFECTIVENESS MEASURES Enger said Kevin Schmieg is working on performance measurement. They would like to take the enterprise funds such as the liquor store revenues and use these measurements to increase profits. F. BUDGET PROCESS Il"ROVEMENTS Enger said they created an Information Technologies division and coordinated the 1999 fee schedule and resolution with the budget process. Uram said they intend to hand off the fee resolution as part of the budget process. They have the 1997 financial information earlier this year, so the actual amounts from last year are available as the budgets are prepared. G. BUDGET OUTLINE FOR SURCHARGE MONIES (ENVIRONMENTAL & WASTE MANAGEMENT COMMISSION Dietz said the Environmental & Waste Management Commission has prepared recommendations for the $50,000 budgeted for environmental programs from the $250,000 revenue from surcharge monies. He noted that City Attorney Pauly has some concerns about the scholarships proposed, and we will need to bring back more information before those would be finalized. He said the budget could be approved with the proviso that grants and scholarships would come back before the Council prior to being awarded. Case said, while he would be inclined to approve this, he would have preferred some incentive goals for those who take the initiative to reduce water usage. The water-saving rebate is a very small part of the program. He asked if we could have the Commission review and come back with more incentives. Dietz said it is difficult to spend $50,000 in this way. He thought the 1999 budget process will have something similar to this. He thought the way to get at the issues might be to carry back the concerns about needing more incentives for next year. Case asked if the rest of the $250,000 goes into the general enterprise fund to lessen future increases as they occur. Dietz said that is not a done deal, and we could have some changes in that. CITY COUNCIL/STAFF WORKSHOP May 19, 1998 Page 7 Tyra-Lukens thought the whole thing is interesting in that we are giving out money in the hopes that we won't have as much money next year. Butcher-Younghans thought we will have a need for maintenance of the equipment at the facility because we have groups going through the water plant. H. CONCLUSION Tyra-Lukens thought we will need to meet again on the budget prior to the August 18th meeting in order to give direction on the issues. Enger said in previous years we have had one or two Council people work with Staff, but it may be best to use the Council as a committee of the whole this year. The consensus was to set a workshop for the beginning of July. Uram noted we need to get the levy limits from the state as part of the process. Thorfinnson was concerned that we need to know the impact of premature revenues on future years. He was concerned that we don't know if we underestimated the budget or if we are using up future revenues. Enger said they can have the answers available at the next meetings. IV. OTHER BUSINESS IV. ADJOURNMENT Acting Mayor Tyra-Lukens adjourned the meeting at 6:45 p.m.