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City Council - 11/09/1999 - Workshop APPROVED MINUTES EDEN PRAIRIE COUNCIL WORKSHOP TUESDAY,NOVEMBER 9, 1999 5:00-7:30 PM, CITY CENTER TRAINING ROOM/LOWER LEVEL CITY COUNCIL: Mayor Jean Harris, Councilmembers Sherry Butcher,Ronald Case,Ross Thorfinnson, Jr., and Nancy Tyra-Lukens CITY COUNCIL STAFF: City Manager Chris Enger, Parks & Recreation Services Director Bob Lambert, Public Safety Director Jim Clark,Public Works Services Director Eugene Dietz, Community Development and Financial Services Director Don Uram, Management Services Director Natalie Swaggert, City Attorney Ric Rosow and Council Recorder Peggy Rasmussen I. CALL THE MEETING TO ORDER—MAYOR JEAN HARRIS Mayor Harris called the meeting to order at 5:30 p.m. H. CAPITAL IMPROVEMENT PLAN Enger said the information to be presented on the 2000-2005 CIP is updated from the previous presentation in March 1999. The City has a lot of needs, which don't all fit into the six-year CIP. He said this would be a strategy session, where the present status of the CIP would be presented by Staff and direction received from the Council. Uram gave the background on the 2000-2005 CIP and how it fits with the City Council's values. The 2000/01 Budget Objectives were reviewed. Uram explained that the Capital Improvements Program has three parts, which are maintenance, support and expansion. The process followed is to determine the Capital needs, organize and prioritize the needs, determine funding sources, and then implement and monitor the program. The funding sources are transferring from the General Fund, Cash Park Fees, Capital Improvement Fund, and other possible sources. The Service Areas included in the plan are Public Works, Public Safety, Parks and Recreation, Management, and Community Development/Financial. The Service Area directors went through a process to determine priorities for projects in the CIP. The Capital requests for 2000-2005 total $23,240,400. These are for "A" projects only. Because there are so many of them, some may be allowed to slip beyond 2005. Requests beyond 2005 may be considered`B"projects. They total $10,396,000. To fund the "A" projects, $1,177,200 would come from the General Fund and $6,063,200 from the Cash Park Fees. The General Fund would cover the areas of Facilities, Information Technology, Public Safety and Public Works. Cash Park Fees would cover park acquisition, development, and trail construction. COUNCIL WORKSHOP MINUTES November 9, 1999 Page 2 Funding strategies include one-time revenue/one-time expense, a General Fund tax levy, transfers from Liquor Enterprise or Utility Enterprise funds, adding charges to utility bills for street lighting, using the CIP Revolving Fund, bonding, Special Assessments fees, tax abatement, or other jurisdictions. Funding sources were discussed. Staff proposes to transfer $6 million from the Liquor Enterprise Fund to the General Fund, and transfer $60,000 per year from the Utility Enterprise Fund to the General Fund. Regarding the CIP Revolving Fund, Uram said if this fund is not used,there would be$12 million in the fund over 10 years, and$4 million of that can be leveraged. Street lighting costs each year of$630,000 are paid from the General Fund to NSP. One proposal was that property owners pay for this expense through their utility bills. Uram said NSP charges about $15 per month for the newer light fixtures in the City, and $10 per month for the older ones, in addition to the cost of maintaining the light poles. Dietz was asked if other cities put this cost on their utility bills. He said most cities pay for this out of the General Fund. Enger said it looks like there is only enough money to meet basic maintenance and support services. It is difficult to find money for expanding services. He asked for a policy discussion on strategies to identify revenue sources. Butcher asked about finding new locations for liquor stores. Uram replied the opportunity for new locations doesn't exist right now. The Utility Enterprise Fund has accumulated $2 million. Thorfinnson asked if there is the potential to transfer more than $60,000 from the fund next year. Dietz replied there probably isn't much potential without raising utility rates. Water rates were raised a little in 1998, and it would be in the City's interest to increase rates a little. Dietz said Eden Prairie is probably average compared to other cities in its water rates. Butcher inquired if the City could sell water to other cities. Dietz said the City didn't build much excess capacity into the water plant. Also our water is not compatible to other cities like Chanhassen or Minnetonka, because they don't soften their water, so they would not want to buy our water,which is softened. Dietz said if the Council decides to use the Utility Enterprise Fund for other things, how to retire the debt on infrastructure, such as the new water plant, needs to be decided before siphoning any money from the Utility Enterprise Fund. A fee on utility bills for street lighting would be perceived as a new tax. About $10 per quarter per household could be raised. Dietz said storm water utility funds could be used to offset pavement reconstruction costs, especially on streets where storm sewers and curb and gutter do not exist. Enger said he gathered from what had been said that Council does not want to raise taxes, but instead wants to take more money from the Utility Enterprise Fund, and is considering a street-lighting fee. Thorfinnson said those two sources of revenue would COUNCIL WORKSHOP MINUTES November 9, 1999 Page 3 total about$1 million a year and would not be enough to pay for any of the projects in the CIP. It could be put toward street maintenance, however. He would not be opposed to raising taxes for certain purposes. Case said he is not entirely against raising taxes, but would like to consider"pay-as-you- go" options. Dietz suggested looking at charging a fee to property owners for street lighting, and adding an increase of five cents to the water assessment. Mayor Harris said there is no good answer beyond a General Fund levy. It is better to sell the public on the need for infrastructure improvements than on operating costs. A decision on a tax increase can be made later. Uram said he would suggest a referendum on paying for capital improvements rather than a general levy. Tyra-Lukens said a funding source for the"A"projects needs to be assured. Uram said five-percent tax abatement is plugged into the tax receipts, which is about $500,000 a year. They expect that amount to continue for the next couple of years. They could leverage that amount. Thorfinnson said there are two ways to bring revenues and the costs of the projects in the CIP closer together. The first is by dedicating additional revenue and the other is to cut back on expenditures. He asked Staff to look at all the projects to see if cuts could be made in any of them,have a schedule of debt retirement, determine what kind of bonding levels would be feasible over the next four or five years, and look at other alternatives. Enger agreed to do this and said Staff would put together additional information on possible sources of revenue, and then plan to discuss it again with the Council in March 2000. III. SPECIAL ASSESSMENT POLICY Dietz referenced the September 7 workshop when he was asked to find out how Minnetonka handles the costs of street reconstruction. He explained that Minnetonka pays 100% of street reconstruction costs. They receive an annual dedication from their General Fund,which has been increased annually for inflation and is now at$2.2 million. They did not build their residential streets with curb and gutter, but with reconstruction, curb and gutter is being added, with no special assessment. In Eden Prairie, one difference is that the majority of residential streets have been constructed with curb and gutter and adequate storm sewer. For the Hillcrest/Alpine neighborhood, which has never paid for curb and gutter or adequate storm sewers, Staff believes it makes sense to assess these costs to them. The second question asked at the September 7 workshop was about the ramifications of setting a precedent of the City maintaining the street system after it is fully upgraded to City standards. The answer is about $2 million per year. The proposed CEP requests an increased General Fund contribution for street maintenance from an additional $500,000 per year in 2000 to an additional $1,500,000 by 2005. Approximately 25 percent of that COUNCIL WORKSHOP MINUTES November 9, 1999 Page 4 $2.0 million budget would be used for reconstruction. Over the next 8-10 years he would expect to mill and overlay those roads two or three times. With proper maintenance, most pavements will last 20 years and some sections 40 years. Dietz explained the pavement condition index,which shows that the average condition of Eden Prairie roads is 81 out of 100. As a comparison, the best parts of the roads in the Hillcrest neighborhood are rated 50 and the worst part about 20. The City generally has one reconstruction project like that every year. Those roads are only a small percentage of the total number of roads in the City. If$2 million a year is spent on the roads they can be kept at about 80. If only $500,000 a year is spent on the roads over 20 years, the pavement would go down to about 60, and after that they would deteriorate very quickly. The $2 million a year is only about one percent of the original cost of the City's road system. He agreed to look at some of the scenarios at a lower level of spending. In summary, Dietz said he believes the City should assess the costs for road improvements neighborhoods have never paid for. This would include curb and gutter, upgraded storm sewer and restoration behind the curb line,with the City paying for work done to the road in front of the curb. He advocates using $19,600 as the new assessment cap. Staff is considering having appraisals done on some of the Hillcrest/Alpine homes as part of the feasibility study, to see if the property can support assessments of$19,600. The City can only assess the amount by which property gains in value by a project. IV. OTHER BUSINESS V. ADJOURNMENT Mayor Harris adjourned the meeting at 7:20 p.m.