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City Council - 11/30/1989 !r EDEN PRAIRIE CITY COUNCIL APPROVED MINUTES THURSDAY , NOVEMBER 30 , 1989 7 : 30 P. M. CITY COUNCIL CHAMBERS 7600 Executive Drive COUNCIL MEMBERS: Mayor Gary Peterson, Richard Anderson, Jean Harris , Patricia Pidcock, and Doug Tenpas CITY COUNCIL STAFF: City Manager Carl J. Jullie, Assistant to the City Manager Craig Dawson, Finance Director John D. Frane, Director of Planning Chris Enger, g Director of Parks , Recreation dr. Natural Resources Robert Lambert , Director of Public Works Gene Dietz , Police Chief Keith Wall , Director of Human Resources & Services Natalie Swaggert , City Assessor Steve Sinell , Director of Inspections Kevin Schmieg , and Recording Secretary Barb Malinski PLEDGE OF ALLEGIANCE ROLL CALL : All members present . I . APPROVAL OF AGENDA MOTION • Pidcock moved , Anderson seconded, to approve the Agenda. Motion carried unanimously. 2I . PUBLIC HEARINGS A. proposed 1990 Budget and Ta4 Levy Jullie summarized the 1990 General Fund and Operating Budget Proposal of $13 , 289 , 700, an increase of 9 . 6% over the 1989 spending level . This amount is based upon a 9. 7% increase in the number of households and a 4 . 0% increase for the local rate of inflation over the past year. Revenue needed for long-term bonded debt is $1 , 967,000, an increase of $606 , 000 over 1989 . The total 1990 operating budget and long-term . debt proposed is $15 , 192 , 700 , an increase of 13 . 2% over the 1989 figure of &13 , 398 ,000. The total property tax levy for a J City Council Minutes November 30 , 1989 1990 is $11 , 858 ,000 , an amount 28. 4% greater than in 1989 . Revenue sources other than property taxes is $3 . 4 million . Sinell explained that because information is not yet available on what the new tax capacity totals will be , it is not possible to have an accurate figure to determine the growth of the tax base. He presented examples of projected taxes on residential homestead properties assuming the estimated market values were increased 3 .4% from the 1988 ( payable in 1989 ) assessment to the 1989 ( payable in 1990 ) assessment using new (pay 90 ) property tax laws for properties located in School District 272 and Watershed District No . 4. A house with an estimated market value ( EMV ) of $100 , 000 has net city tax of $249 for 1988 (payable in 1989 ) . Homes in the $75 ,000-200 ,000 ENV would result in an average increase of 20%. Homes valued at $300 ,000 and up would increase 31% in net City tax . The net school tax on a home of $100 , 000 ENV in 1988 (payable in 1989 ) would be $794 and would decrease to $725 in 1989 (payable in 1990 ) . This represents a decrease in 1 taxes of 8 . 7%. The combined city and school tax for this particular home would result in a decrease of $23 ( 2 . 2% ) in 1990 over the 1989 tax levy. Sinell reported the projected taxes on commercial and industrial properties assuming the estimated market values were increased 3 . 0% from the 1988 ( payable in 1989 ) assessment to the 1989 payable in 1990 assessment using the new ( pay 90 ) property tax laws. The properties were located in School District 272 and Watershed District No . 1 . A commercial/industrial property of $1 ,000 , 000 EMV in 1988 (payable in 1989 ) had a net City and school tax of $23 , 371 resulting in an increase of 6. 4% payable in 1990 . The City tax payable in 1990 would be $1 , 485 . He also reported on the projected taxes on apartment properties assuming the EMV had no increase from the 1988 assessment ( payable in 1989 ) to the 1989 assessment (payable in 1990 ) using the new ( pay 90 ) property tax laws. The properties were located in School District 272 and Watershed District No. 4 . An apartment property of $1 , 000,000 EMV in 1988 ( payable in 1989 ) had a net combined tax of $27 , 438 and $25 , 813 for 1989 ( payable in 1990,)--a decrease of $1 , 625 ( 5 . 9%) . 2 i City Council Minutes November 30 , 1989 Sinell also referred a table on the values of single family property that indicated the majority of properties were in the $75 , 000 - $149 , 000 range of EMV. Jullie, explained the major changes in the debt service levies. The City suspended payments on certificates of indebtedness ( to finance purchases of police , fire , and public works equipment ) for one year to balance the 1989 budget in anticipation of a large increase in the tax base for 1990 . To resume the repayment schedule for this and other operating fund debt , a net levy of $600,000 is proposed for 1990 . Also, local governmental aid shifted to the school district--a loss of $331 ,000 taken from the City and transferred to school districts . He further reported an increase of $125, 000 for a new communications center in the police department . The City has outgrown the facility shared with Richfield. An additional increase of $120 ,000 is neeeed for bike trail and park access improvements. Jullie reported that 10 .4 new staff positions are proposed. y Tenpas asked Sinell if the recently passed referendum was a reflected in the school district budget figures. Pidcock questioned the tax capacity rate for the City. Sinell commented the rate was 20 . 736%. Pidcock requested the net percentage of difference from 1989 over 1990 in tax . Sinell answered 30 percent . Marty Siegel , 18453 Tristram Way, expressed concern to keep taxes from rising and requested the City to come up with a way of spending less dollars . Dierdre Griswold, 10537 Bluff Road , asked how interest income goes down and the level of borrowing goes up. Frane explained that interest rates have fallen and the net outstanding debt has decreased . Tenpas questioned if the total bonded debt has increased every year. Frane said the total debt was at a low point now. Tenpas requested that the Council receive a clearer report when negative fund balances occur. Griswold asked for an explanation on whether tax revenues from property taxes received semi-annually go into an interest bearing account . Jullie clarified that property tax receipts are used to offset negative account balances which have accumulated.. Griswold stated the City has a high debt 3 City Council Minutes November 30, 1989 load per capita according to the State Auditor ' s reports . Frane explained the City has to pay for the development of fire stations , parks , new construction and other buildings involved in City growth. Peterson commented that debt repayment for new private development does not come from the City tax . Tenpas inquired on the possibility to reduce the debt financed. 3 Dave Kelley , 1026.0 Summer Place , asked why the City had to increase its portion of 'the budget . He addressed the issue that as more people come into the City, more tax dollars would be available for the City. He said the voters were clear in defeating the park referendum and higher taxes were the answer. Rick Atherton, 6980 Sand Ridge Road, expressed concern that homes were decreasing in market value , yet taxes continued y to rise . Linda McDevitt , 9498 Olympia Drive , commented the increased taxes were not in line with the services . She said taxes had to be held. Tenpas stated that in 1989 taxes were distributed as follows : 16% to the city, 50% to the school districts, and 27% to the county. He said the process used to assess value on new development and existing homes was difficult . McDevitt said the taxes should be in line with other cities . Pidcock questioned how many people voted at school board elections or monitored the school districts ' activities , since the district has 50% of the total tax. Karel Newman, 6959 Tartan Curve , requested the Council to find ways to decrease property taxes . Sandy Carlson, 14091 Sundial Court , commented that the taxes were too high in Eden Prairie and budget cuts must be found . She made reference to corporations that lay off staff to meet budget demands . Kris Carson , 10332 Franlo Road , had a concern on the distribution of funds and the total percentage allocated to each department . Jullie responded that departmental growth fluctuates , but this basically has not changed . Carson commented as the city grows, additional money comes in and the services should change. Peterson commented that as the City grows , the services performed increase also. 4 City Council Minutes November 30 , i989 Craig DeBrau, 11089 Mount Curve Road, spoke in favor of a decrease of the City budget . He questioned why the property tax of a $310 , 000 home is approximately six times more than a home of $77 , 600 estimated value, but the services received are not six times greater. Tenpas commented that the State has a system set for determining property taxes. DeBrau clarified that the City has no play on the mill rates and would like the City to be a leader in lowering property taxes . Pidcock and Jullie commented that some Council members are on committees addressing the tax problem. DeBrau commented that the City budget may have room for cutting . He also asked for clarification on the percentage of increase over the years in the operating budget. Jullie replied that the budget reflects a 9 .6% increase over the 1989 operating fund. DeBrau also asked for clarification of Human Services. Swaggert commented the budget dollars help the elderly, disabled, and persons in trouble or disturbed. The county purchases the services of staff to assist. DeBrau further inquired if the City should expend more money on sewer, water, fire protection, etc . if the City decreases in the future. Anderson indicated that people are moving into the City and new growth involves additional people and funds. Peterson reported that the new schools built can be converted into residential or commercial property. Frane noted the staff has been adamant and come in with a budget proposal of what is needed to get the job done rather than what is hoped for. Carol Fyock, 13188 Cardinal Creek Road , asked why the Delinquency Allowance line of the property tax collections showed a large increase over the previous year. Frane explained that the budget proposal reflects the City ' s actual expenditure and the 1989 figure is lower than the actual . Fyock also questioned the increase in Facilities . Schmieg explained that the department is a new program and Jullie stated the City began paying rent in 1988 . Fyock said the 9. 6% increase was unacceptable. Sam Guaqliardo , 11831 Curve Road , commented the City is pricing itself out of the market . He asked the Council to consider restructuring management and cutting salaries. Mark Rode , 9276 Amsden Way, expressed concern that the City should live within the budget , just as he did in building his home . Linda Wilson, 9140 Larkspur Lane , spoke in favor of not increasing the budget 10% and living within. She did not 6 i City Council Minutes November 30 , 1989 think the market values were going up as much as the taxes do in the City. Dave Kelley suggested the Council return the proposal to staff with the request to reduce the budget by 10% and help relieve the taxes. Regan Massee , 15571 Michelle Lane , questioned what happened with dollars remaining at year end and the effect on the following year' s budget . Frane expressed that the philosophy of the City was for departmental managers was to ask for what was needed to get their job done . "Unspent" dollars were placed in the General Fund balance for the following year. Roger Swigart , 13184 Cardinal Creek Road, had concerns that the City was not spending funds appropriately. He said some homes in Eden Prairie had not been assessed for four years. He commented that the 30% increase in the budget required serious consideration by the Council . Robert Mikelson , 11742 Mount Curve Road, inquired if salary increases were taken from the Reserve program and how much was proposed. Jullie explained the salary adjustments would be based on a 4 . 3% cost-of-living increase for the Minneapolis/St. Paul area and changes in the comparable worth program ( a State of Minnesota mandate ) . Mikelson questioned the $350 , 000 amount in the 1987-88 reserve . Frane stated that the budget was overspent because of the contested case landfill hearing. Michels also asked if the Park Capital outlay included items that were not passed in the referendum; if so, he said the voters turned it down and the City seemed to make room in the budget for the particular item. Peterson commented that the Council ' s priority is with safety issues . Kent Barker , 15801 Cedar Ridge Road , spoke in favor of the City Is park system, but said the misunderstanding was between the budget (which can be reduced ) and the level of taxation. He said it might be helpful for residents to know how much money has been given to fiscal disparities . He also said Eden Prairie did not pose a threat to the Legislature because it did not receive state aid as other cities do . He said the concern was taxation, not budget . He urged all people in the community to study and understand the taxation system. J. Tom Schwartz , 7333 Ann Court , inquired why the dollars budgeted for cable television broadcasting of the City 6 'A tNo 4 k City Council Minutes November 30, 1989 Council meetings have not been used . He stated that this was a good way to educate people. Peterson mentioned the cablecasting is still under debate but the money is not available for 1990 . Tenpas noted that the equipment was available, but volunteers would have to run it . Schwartz desired the Council to trim the budget. He said the f Assessing Department has a large increase for furniture and Facilities also has a large increase for office supplies. Sinell responded that the furniture is for a new part-time staff member' s work station and replacement of a broken chair. Schwartz favored trimming the budget to a normal ' increase over the previous year. Tom Cooney, Mt . Curve Road , said he could not understand where his tax money was going and what benefit he should be receiving. He was concerned about how many properties have decreased in value in the past year and that effect when he wished to sell his house. Marty Siegel stated he expressed concern to make reductions in the budget at an earlier Council meeting and said he did not think cuts had been made . He asked if the Council was prepared to ask the city manager to come back with a budget decrease . Tenpas stated the Council had to discuss this . MOTION.- Tenpas moved, Pidcock seconded , to continue the Council meeting another half hour. Tenpas amended the motion. MOTION: Tenpas moved, Pidcock seconded , to continue the Council meeting until 11 : 30 p.m. Motion carried unanimously. MOTION : Anderson moved , Pidcock seconded , to continue the public hearing until December 19 , 1989. Motion unanimously carried. III . UNFINISHED BUSINESS s A. Tenpas suggested. that the staff come in with a 5% increase e x City Council Minutes November 30 , 1989 over the approved budget amount for 1989 and show the impact of no budget increase. He advised that next year the Council should receive fund balance account information and have a Saturday work session during budget proposal time . Peterson recommended that staff review each department and come back with a 5% increase to the Council . Anderson asked that specific cuts be identified. Harris agreed with the comments. Tenpas desired to see salary increases allocated within each department rather than the reserve and requested a budget figure in for legal expenses. Jullie commented the adjustments were based on a performance review process and thus not allocated to any individual department . Pidcock confirmed that the Reserve program did not allow a 4 . 3% increase across-the-board for staff. t MOTION•Tenpas moved, Harris seconded, that Jullie provide the Council with information about the impacts on the General Fund Operations budget with increases of 0% and 5% above the amount approved for 1989. Motion passed unanimously. Tenpas commented that he would like direction from staff on the in-house computer project , engineering fees/revenues, and pre-payment of bonded debt . IV. QTHER BUSINESS V. ADJQURNMENT MOTION: Pidcock moved, Tenpas seconded , to adjourn the meeting at 11 : 20 P.M . Motion carried unanimously. 8