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City Council - 04/20/1999 - Workshop APPROVED MINUTES EDEN PRAIRIE CITY COUNCIL WORKSHOP Status of Enterprise Funds TUESDAY,APRIL 20, 1999 5:00-6:55 PM, CITY CENTER HERITAGE ROOM H CITY COUNCIL: Mayor Jean Harris, Councilmembers Sherry Butcher-Younghans,Ronald Case, Ross Thorfinnson,Jr., and Nancy Tyra- Lukens CITY STAFF: City Manager Chris Enger,Public Safety Services Director Jim Clark,Parks & Recreation Services Director Bob Lambert,Public Works Services Director Eugene Dietz, Community Development &Financial Services Director Don Uram Management Services Director Natalie Swaggert, City Attorney Ric Rosow and Council Recorder Peggy Rasmussen OTHER I. CALL MEETING TO ORDER—MAYOR JEAN HARRIS Mayor Harris called the meeting to order at 5:20 p.m. H. APPROVAL OF AGENDA MOTION: Case moved, seconded by Butcher-Younghans,to approve the agenda. Motion carried. III. ENTERPRISE FUNDS, STATUS A. LIQUOR OPERATIONS Uram reviewed the 1998 audited statements of revenues, expenses and retained earnings for the various liquor store operations. He pointed out that sales increased 18 percent from 1997 to 1998 for a total of$6.2 million. Operating expenses were 4.5 percent of this amount, or $486,078. Eden Prairie's sales are the fifth highest in the state. The philosophy for liquor operations is to maximize profits, through quality customer service, competitive prices and complete product selection. Recommendations by the MMBA for improvements include implementing a perpetual inventory system. The Total Register System was selected, at a cost of $20,000; scheduled installation of the system is May 24-26. Another CITY COUNCIL WORKSHOP April 20, 1999 Page 2 recommendation is to review merchandising and store presentation. Two ideas came out of this: to reorganize the wine selection at the Den Road location and to implement an open floor plan,which includes wider aisles and more open spaces. Staff recommendations include adjusting staffing levels. The city plans to hire a liquor operations manager to manage the daily operation, prepare the annual liquor budget, and supervise liquor store managers. The city also will hire an inventory control clerk and some part-time employees. Another staff recommendation is to focus on customer service. This includes annual training seminars and establishing a formal customer service policy. Employee training will include personal safety, bad checks, and sales to minors/"carding." Signs are posted in the store stating sales clerks will card anyone under 30. If a clerk sells to a minor,the clerk is the one penalized,not the City. Another staff recommendation is to increase use of technology, through expanding the City's Internet marketing and holding product kiosks. Performance measures included an internal audit at each store, which revealed no material weaknesses, conducting security analyses at the stores, and establishing financial benchmarks such as profitability/efficiency ratios. Future projects include remodeling the Prairie Village store, finding additional store locations, education of managers and their assistants, development of the Wine Club, and a strategy for enterprise marketing. Expanding on these plans for the future,Uram said the City would like to find new store locations in the area of T.H. 169 and County Road 1 and in the northwest corner of the city. Managers and assistants will attend the Academy for Product Management. It is important for managers to know the market and be knowledgeable about the products in the store. Wine Club development is going well. Smaller classes and more wine tasting opportunities are recommended. Uram said the city needs to develop an overall marketing strategy that will be consistent, through advertising and informing people that the liquor stores are operated by the City of Eden Prairie. When one of the good wines was used as a loss leader to bring customers into the store, overall sales increased by five times the normal amount. Once the customers shop around the city's stores they find the prices are not high. B. UTILITY OPERATIONS Dietz explained the need to hire a new plant operator at the water treatment plant. One plant operator had a stroke earlier this year and will be off work for some time. It takes about six months to train a person for this job. Dietz has received permission to hire another plant operator. If the plant operator who had the stroke returns to work,the new operator will become the second shift operator. There will be a reception on May 14 from 4:00-6:00 p.m. at the new water treatment plant,by invitation only,with ceremonial ribbon cutting at 5:00 p.m., CITY COUNCIL WORKSHOP April 20, 1999 Page 3 which will include several different groups. On May 15 there will be an open house from 1:00-4:00 p.m.to which the public will be invited, and another ribbon-cutting ceremony at 1:00 p.m. Tours of the plant will be offered and refreshments served. There will be an advertisement in the newspaper and flyers sent to schools to promote the open house. Dietz reported on several emerging issues. He said Hennepin County is expected to adopt a new ordinance in June establishing higher standards for septic systems. There are about 500 existing septic systems in Eden Prairie. Homes built in the last five years are the only ones that will meet the new standards. Inspections by the city would be mandatory if a home is sold, if a homeowner builds an addition to the home or if a septic system is found to be leaking. If the septic systems don't pass inspection, new ones will have to be built. It is expected to cost the City$150 per inspection and an inspector will probably be hired to do this. One alternative to this situation would be for the City to bring sewer and water to every home in Eden Prairie and require homeowners to connect to it, at a cost to them of between$13,000 and$18,000. Case inquired what authority the City has if people choose not to connect to the City's system. Dietz responded that there is a law in place requiring connection within two years but Eden Prairie has not enforced it. At the present time, homeowners are required to pump out their septic system once a year. Dietz said a four- or five-year program should be developed. It will be necessary to initiate special assessment projects to make the system available to homeowners. The Council has authority to adopt resolutions to levy assessments. The City should establish a philosophy on how it wants to proceed. For example, we don't want to make people replace their old septic systems if the City is going to make sewer and water available to their homes in another year. Enger said it will soon be necessary to decide whether the City should pick up the cost of connecting sewer and water and putting in curb and gutter for each new development, and then spread the cost over the whole community. Many communities do this. Another emerging issue is Infiltration and Inflow (I and I) in the sewer system. Some clear water,mostly from sump pumps, is running off into the sanitary sewer system. The City meters how much runoff comes into Eden Prairie from Minnetonka and Chanhassen and also meters what goes out from Eden Prairie; the difference is the amount Eden Prairie pays the MWCC. They have been saying for some time that there is a considerable amount of clear water coming into the sewer system from sump pumps. The City doesn't know exactly what the impact is, but we do know the cost to the City goes up by 30%-40%whenever there is a hard rain. A lot of this is a result of leaking pipes from sump pump systems, but in some areas of the community where there is high ground water, many of the sump pumps are connected to the sanitary sewer system instead of being piped to the outside. It is difficult for the City to gain access to these homes to inspect the sump pumps. Waconia began a program nine or ten years ago of adding a fee to CITY COUNCIL WORKSHOP April 20, 1999 Page 4 utility bills, and the only way homeowners can have this fee removed is by letting the city inspect the sump pumps in their homes. The priority for handling the above issues is: • Assessable costs for rebuilding streets and establishing the cap on assessments. This will be coming up in the next 30 days. • Inspection of septic systems to meet the new Hennepin County standards. The county is expected to adopt the ordinance early in June, and the City Council will see it in July. • I and I in sewer system will probably be handled next year. IV. OTHER BUSINESS Swaggert reported that staff will be asking to add an additional item to the Consent Calendar, which is approval of the contract for equipment and services that will provide communications cabling necessary to connect the new Fire Station 1 telephone equipment and computer network to the City Center telephone and computer systems. The cost of$34,100 will be part of the overall funding for the fire station. Enger said a tenant in this building has exercised their option to continue renting for five years after January 1, 2000. However, there is another tenant City Staff would prefer to have, which may result in a future sale of the property, so the City will try to negotiate with the current tenant to see if they will leave at the end of this year. V. COUNCIL FORUM—6:30-6:55 PM Enger reported no one had asked to speak to the council. VI. ADJOURNMENT MOTION: Tyra-Lukens moved, seconded by Butcher-Younghans to adjourn the meeting. Mayor Harris adjourned the meeting at 6:45 p.m.