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City Council - 12/16/2008 APPROVED MINUTES EDEN PRAIRIE CITY COUNCIL MEETING MONDAY, DECEMBER 16, 2008 7:00 PM, CITY CENTER Council Chamber 8080 Mitchell Road CITY COUNCIL: Mayor Phil Young, Council Members Brad Aho, Sherry Butcher, Jon Duckstad and Kathy Nelson CITY STAFF: City Manager Scott Neal, Parks & Recreation Director Jay Lotthammer, Public Works Director Eugene Dietz, Community Development Director Janet Jeremiah, City Attorney Ric Rosow and Council Recorder Jan Curielli I. ROLL CALL/CALL THE MEETING TO ORDER Mayor Young called the meeting to order at 7:05 PM. All Council Members were present. II. COLOR GUARD/PLEDGE OF ALLEGIANCE Mayor Young thanked the Senior Webelos from Cub Scout Den 348, Eden Lake Elementary School, for presenting the colors tonight. III. OPEN PODIUM INVITATION IV. APPROVAL OF AGENDA AND OTHER ITEMS OF BUSINESS Neal said there is a memo on goldenrod paper that Council Member Duckstad submitted. Duckstad asked that it be considered with Council discussion under Item XIV.B.3. Butcher said she would like to add some comments under Item XV. MOTION: Butcher moved, seconded by Aho, to approve the agenda as amended. Motion carried 5-0. V. PROCLAMATIONS/PRESENTATIONS A. PROCLAMATION RECOGNIZING 40TH ANNIVERSARY OF THE EDEN PRAIRIE CHAMBER OF COMMERCE Young read a proclamation recognizing the 40"'Anniversary of the Eden Prairie Chamber of Commerce. He congratulated the Chamber and wished them continued success. Pat Mulqueeny, President of the Eden Prairie Chamber of Commerce, said the Chamber looks forward to many more years of working with the Eden Prairie City Council. B. EDEN PRAIRIE HISTORICAL SOCIETY—JAN MOSMAN Jan Mosman, Acting President of the Eden Prairie Historical Society, said the City Council voted in early June of this year to allow the Historical Society Board time to develop a plan for the Cummins Grill House under one of the options of the J. R. Cummins Adaptive Reuse study. She said they met with City staff and with the CITY COUNCIL MINUTES December 16, 2008 Page 2 Heritage Preservation Commission about the plan. While they originally suggested a lease arrangement that would give the Historical Society responsibility and freedom to occupy the house, the plan has grown into a cooperative agreement with the City. The Historical Society is offering to eliminate some of the work and expenses necessary to operate a City-owned building by helping with maintenance, cleaning, seasonal displays, ADA compliancy, and fire safety. They would work on marketing with the Parks & Recreation Department and School District programs and would help get media attention for the building. Mosman said this facility currently hosts warm season events on the property and handles 10-50 person groups in the winter in a venue that is unmatched in the City. The City's master plan for the section of Staring Lake Park that includes this property is being finalized by staff in the next couple of months. The house and property work well geographically and functionally as part of the long range plan. Because of the number of recreational activities that converge in this area of the park, they would like to further develop the Cummins Grill House as an amenity for scheduled public use. They would work under and for the City Parks Department at this building and would bring no-cost labor, educated tour guides and dedicated volunteers as well as bringing fund raising money to the City. They would like to have approval to continue with a memo of understanding with the Parks Department and would bring back a more complete proposal in the next few months. Young noted the Council tabled the reuse study and asked Mr. Neal when that issue is set to come back to the Council. Neal said that discussion was tabled indefinitely and issues regarding the baseball field, the parking lots and access to the site will need to be more fully resolved. Staff is working with the state and county to figure out those answers. Young then asked if it is possible to know when staff will bring the issue back for a decision. Neal said staff believes the road project might be a two-year project, so sometime during the next year that issue will have to be worked out. Once we have a better idea of the design of the parking lot and ball field we will probably have some preferred options. Nelson thought their suggestion that they continue working with City staff is a good one, and she thought they asked for our concurrence on that. Young said they are free to continue discussions with City staff on options. VI. MINUTES A. TRUTH IN TAXATION PUBLIC HEARING HELD MONDAY, DECEMBER 1, 2008 MOTION: Duckstad moved, seconded by Aho, to approve the minutes of the Truth in Taxation Public Hearing held Monday, December 1, 2008, as published. Motion carried 5-0. B. CITY COUNCIL MEETING HELD MONDAY, DECEMBER 1, 2008 CITY COUNCIL MINUTES December 16, 2008 Page 3 MOTION: Butcher moved, seconded by Duckstad, to approve the minutes of the City Council Meeting held Monday, December 1, 2008, as published. Motion carried 5-0. VII. REPORTS OF ADVISORY BOARDS & COMMISSIONS VIII. CONSENT CALENDAR A. CLERK'S LICENSE LIST B. APPROVE SECOND READING OF ORDINANCE 27-2008 UPDATING FEE SCHEDULE FOR ADMINISTRATION OF OFFICIAL CONTROLS AND ADOPT RESOLUTION 2008-112 APPROVING SUMMARY PUBLICATION C. SUPERVALU Second Reading of Ordinance 26-2008-PUD-13-2008 for Planned Unit Development District Review and Zoning District Amendment in the Office Zoning District on 37 acres, Resolution 2008-113 for Site Plan Review on 37 acres. Location: 11840 Valley View Road. (Ordinance 26-2008-PUD-13-2008 for PUD District Review and Zoning District Amendment; Resolution 2008-113 for Site Plan Review) D. AWARD CONTRACTS FOR WATER TREATMENT CHEMICALS FOR 2009, I.C. 09-5740 E. APPROVE CHANGE ORDERS 1 AND 2 FOR RECONSTRUCTION OF FLYING CLOUD DRIVE, I.C. 07-5708 F. APPROVE REALLOCATION OF $25,000 IN CDBG FUNDS TO PROP FOR EMERGENCY HOUSING ASSISTANCE PROGRAM G. ADOPT RESOLUTION 2008-114 DECLARING CITY'S OFFICIAL INTENT TO REIMBURSE ITSELF FOR PRIOR EXPENDITURES OUT OF THE PROCEEDS OF A SUBSEQUENTLY ISSUED SERIES OF BONDS MOTION: Butcher moved, seconded by Duckstad, to approve Items A-G on the Consent Calendar. Motion carried 5-0. IX. PUBLIC HEARINGS /MEETINGS A. ALLOCATION OF 2008 CDBG FUNDS FOR PROP SITE ACQUISITION Neal said official notice of this public hearing was published in the November 13, 2008, Eden Prairie News. This item is a proposal to reallocate Community Development Block Grant (CDBG) funds to PROP to relocate the PROP services from the City Center building to a new building. Molly Koivumaki said we have an opportunity to use CDBG funds acquired over several years to help PROP acquire a site. PROP has outgrown the space in the City building and they have a need for greater food storage and other client services. She CITY COUNCIL MINUTES December 16, 2008 Page 4 said this is a good opportunity for them because there are sites available and they have some very good funding available to use. Aho asked if they have looked at leasing a facility or are they looking to purchase property. Koivumaki said they are looking at purchasing a building. She said CDBG funds can be expended for a lease if that is all that is available, but the priority for HUD funding is acquisition. Young asked if this would be a one-time distribution of funds to PROP. Koivumaki said that was correct. Young then asked if the City provides any fees or services to PROP. Neal said our support for them includes the rent-free space and some limited support of their telephone and computer needs. Young asked if this is a one-time motion and if it does not come with any expectation that the City would make any additional monetary contribution. Koivumaki said that was true. Neal said CDBG funds come in two categories 80% is for bricks and mortar and about 15% is for services. Federal law does not let us use all the funds on services, and this proposal fits into the bricks and mortar section. Nelson asked if this takes into consideration any growth over the next few years and if the new facility will be located not too far from the City Center. Koivumaki said they are still investigating the possible locations, but it will provide them with the space they need and an access that is not quite as public as it is here at the City Center. Butcher asked how they will let people know about the new location. Koivumaki said they are developing a plan right now, and they are receiving a lot of community input so it will be part of a collaborative effort. Aho asked if there is any opportunity to merge the PROP shop and the PROP distribution center on the same site. Koivumaki said it has been looked at but she was not sure it is a probability immediately when they move in. Aho asked Mr. Neal to give a brief synopsis of what CDBG funds are and how this proposal does not affect the City budget. Neal replied that CDBG is a federal system of grants provided to cities. The funds come directly to us from the Federal government, and local decision makers can make the decision on how to spend them. There is often money that we appropriate, but for some reason it is not spent. In that case we don't lose the money, it just accumulates. We can then reallocate the funds for another purpose, although there are very limited purposes for which the money can be spent. We can't bring the money into our own City budget. Anne Harnack, Executive Director of PROP, said they are seeing increased need at PROP. In 2006 they processed 3,000 food orders and through November of 2008 have processed 4,000 orders. Housing support has also increased close to 50% over two years ago. More people come in to the building and they have more food CITY COUNCIL MINUTES December 16, 2008 Page 5 coming in and going so they are running out of space. They have some primary concerns about the current space and are concerned about the safety of the volunteers. Self-sufficiency is a very strong goal for PROP. They want to help people sustain or regain self-sufficiency but they don't have the space to do that. She said PROP is also getting more people coming in who have never been to a food shelf in their lives. At the current location they come in and see their friends and neighbors in the same building, so a more private facility would be helpful. Dan Schmidt, Eden Prairie resident and PROP volunteer, said he serves on the Board of Directors as Treasurer and is President of the Facilities Committee. He said by the end of 2008 they will have received about $400,000 in cash contributions from corporations and individuals and about $600,000 of in-kind contributions. He said they are in the very preliminary stages of looking at a 7500 square-foot facility at the intersection of Flying Cloud Drive and Pioneer Trail. They have about 2000 square feet of usable space now, so that facility would give them room for expansion. He thought it is a good idea to combine the PROP shop with the distribution center. The PROP Shop is under a lease now, but it is something to look at in the future. He said a $300,000 HUD grant would help get the project off the ground. They would expect to finance the facility through grants, a building fund campaign and other means. Cathy Haukedahl, Branch Manager at Flagship Bank in Eden Prairie, said the bank is committed to this effort and will help PROP obtain a mortgage on the property. MOTION: Butcher moved, seconded by Nelson, to close the public hearing and to approve allocation of$300,000 in Community Development Block Grant funds to PROP for acquisition of a facility for use as its base of operations. Motion carried 5-0. B. 2009 TO 2013 CAPITAL IMPROVEMENT PLAN (RESOLUTION 2008-115) Neal said official notice of this public hearing was published in the November 20, 2008, Eden Prairie News. In 2003, the Minnesota legislature passed Minnesota Statute 475.521, which allows cities to issue bonds under a qualified capital improvement plan. Bonds may be issued for the acquisition or betterment of public lands,buildings or other improvements for the purpose of a city hall,public safety facility, and public works facility. The law requires a public hearing and council adoption of the plan. Sue Kotchevar, Finance Director, gave a slide presentation of the 2009 to 2013 Capital Improvement Plan (CIP) which included the objectives and outcomes of the program, a department summary, a funding summary, and an overview of significant projects included in the CIP. There were no comments from the audience. MOTION: Aho moved, seconded by Butcher to close the public hearing and to adopt Resolution 2008-115 approving the 2009 to 2013 Capital Improvement Plan. CITY COUNCIL MINUTES December 16, 2008 Page 6 Motion carried 5-0. Young noted the CIP is a very important planning tool for the City Council,but it is only a guide, and most of the projects have not yet gone through the Council for approval. He noted sometimes the projects come up as expected,but sometimes things change and they do not come before the Council as planned. X. PAYMENT OF CLAIMS MOTION: Aho moved, seconded by Butcher, to approve the Payment of Claims as submitted. The motion was approved on a roll call vote, with Aho, Butcher, Duckstad, Nelson and Young voting "aye." XI. ORDINANCES AND RESOLUTIONS XII. PETITIONS, REQUESTS AND COMMUNICATIONS XIII. APPOINTMENTS XIV. REPORTS A. REPORTS OF COUNCILMEMBERS B. REPORT OF CITY MANAGER 1. INVITATION TO JOIN HWY 169 COALITION FOR 2009 Neal said the City has been invited to join a group of other cities coming together to advocate for Highway 169 improvement projects. He attended the organizational meeting of the group in Jordan early this summer. Most of the cities represented were located south of the river. The group wants to begin an advocacy campaign, somewhat modeled after the Hwy 212 group, to expand Hwy 169 to become a limited access freeway from here to Mankato. He said after discussing this with staff and his peers in other cities he could not bring a recommendation to join the group. He said we do advocacy for the Hwy 169 and 494 intersection improvements through the I-494 Corridor Commission and other groups, and we have experienced a fair amount of attention from MNDoT on that project. He was not sure we have an interest in the extension of Hwy 169 to Mankato as a freeway. He noted if the Council chooses to join, there will need to be some kind of action taken tonight as they charge $5,000 for annual dues. Duckstad said he was wondering how much it would cost and asked if we could join at a later time if we changed our mind. Neal said he thought they would always be happy to take our money. Aho said he is a member of the I-494 Corridor Commission, and he thought we are advocating very effectively for the Hwy 494/169 interchange improvements. That is an on-going discussion and concern that we are CITY COUNCIL MINUTES December 16, 2008 Page 7 working very hard on, and staff has put a lot of effort into that. Unfortunately the economic times make it challenging to get the project completed. He didn't see a benefit to getting that interchange approved by our joining this coalition. Neal noted the number one project for the Hwy 169 group is the 494/169 interchange, so they will be advocating for that as well. After that project is completed, everything else on their agenda is south of the river. 2. PROPOSED 2009 COUNCIL MEETING SCHEDULE Neal said he distributed a proposed 2009 Council meeting schedule by email to get feedback from the Council. He said the 2009 schedule was developed with the past year as a model to provide breaks to Council Members and City staff. Nelson asked why there was only one meeting scheduled in April and why it was set the second Tuesday. She thought it would be more logical to have the meeting on April 21 which is the third Tuesday in order not to deviate from the first and third Tuesday schedule. Neal said he thought the proposed April meeting was set around the school spring break but he was okay with changing it to the third Tuesday. He said staff will draft the language to put it in play and bring it to the Council in January. 3. RESOLUTION 2008-116 CERTIFYING 2009 PROPERTY TAX LEVY,ADOPTING THE 2009 BUDGET,AND CONSENTING AND APPROVING THE 2009 HRA TAX LEVY Neal said the proposed budget was thoroughly vetted by the Budget Advisory Commission (BAC) and approved by the City Council in a general form in December of 2007. Although it is a two-year budget we don't have legal authority to grant formal approval in the second year, but we do new projections and freshen the numbers. Neal said on September 2, 2008, the Eden Prairie City Council adopted a resolution certifying the proposed 2009 City budget and property tax levy. Calculations for the City showed the budget to be $42,611,155 and the certified levy to be $33,113,185 before fiscal disparities distribution. The net tax levy after fiscal disparities distribution of ($1,616,764) is $31,496,421. The 2009 budget maintains City services with a budget increase of 4.2% in the general fund and a total budget increase of 4.8% which includes the capital levy and debt service payments. The tax levy is budgeted to increase 3.4% or $1,030,539. This is an increase of $27.00 or 2.5% on the median value home of $369,400. According to state statute, the final levy amount must be certified to the county auditor by December CITY COUNCIL MINUTES December 16, 2008 Page 8 29, 2008. City Council adoption of the final levy and budget will complete this process. Young noted the Council had some preliminary discussion at the last meeting, and Council Member Aho had a proposal at that time. We also have the memo from Council Member Duckstad with his proposal. Duckstad said he listened to the proposal of Council Member Aho at the last meeting, and agreed in principle with what he said. However, even though we adopted this budget in 2007, a lot of changes have taken place in the economy since that time. He wasn't sure anyone has an idea how long the problems will continue and, in light of the economic situation and the plight of our citizens, he thought we should adopt the same levy we used in 2008. He would suggest we freeze the 2008 levy and use that as a starting point so as to not increase anybody's taxes during this time of economic downturn. He noted the motion proposed in the agenda has three parts, and he had no problem with the third portion regarding the HRA levy. Duckstad said he thought freezing the tax levy at the 2008 level is doable and it gives the City and the City Manager an opportunity to take advantage of certain savings available and, if necessary, use money from the rainy day fund or the Economic Development Fund. He suggested the Council also consider shrinking the proposed 2009 budget because that called for an increase of $2,000,000. In light of the economic situation he thought that amount should be shrunk in the sense we would not want to use funds to pay that amount. He suggested the City Manager may be able to find some savings to help offset the proposed $2,000,000 increase. There may be energy savings because of lower energy costs, some savings because of personnel attrition, and we could use any overage we find at the end of the year. Young noted the budget and the tax levy are related but a zero percent tax levy is not the same as a zero percent budget increase. Duckstad said he proposed that we first freeze the tax levy, and secondly consider the issue of whether there should be an increase in the proposed budget. Young then said if we freeze the levy that will have an impact on the budget, and if we change the budget that will have an impact on the levy. Duckstad said if we can agree on freezing the levy he would be in favor of doing that. The budget as proposed from 2008 is increased about $2,000,000. If the levy is put at the 2008 levels, he assumed it would not generate an increase in taxes from the City's point of view. Because there are some savings that can be found, those items can also be addressed and we also have the possibility that we could resort to using the Budget Stabilization Fund. Returning to the alternatives Mr. Neal proposed at the last meeting, Young said we all recognize that times have changed in ways that no one foresaw. In September we started looking at something different from what the City Council discussed last year. He thought a couple of things warrant CITY COUNCIL MINUTES December 16, 2008 Page 9 emphasis. The budget put together last year for 2009 contemplated a reduction in City head count. Irrespective of what we do today, we will continue to monitor the service needs of the City and determine whether further reductions in head count are necessary. Construction activity is down and that has an impact on certain things. Mr. Neal and he had discussions over the past two years about compensation philosophy. He thought that was something we are doing very well at. We pay above the median to our employees. We are making other changes as well and are starting to move away from the traditional vacation and sick time to a paid time off system. Over the long term that will bring a large cost saving. It is an important way we are making improvements in fiscal responsibility while remaining consistent with the principle of paying employees above the median. Young asked Mr. Neal what impact the alternatives he presented at the Truth-in-Taxation hearing would have. Neal said he proposed three options at the Truth in Taxation Hearing: the proposed 2009 budget as approved by the City Council in 2008, alternative one with a zero levy increase, and alternative two with a zero budget increase. As Mayor Young explained, there is a difference between the two alternatives. There is a connection between what we levy and what we spend, but those are not related on a one-to-one basis. Neal said alternative one was developed to provide the Council an opportunity to tell taxpayers our levy is where we impact you the greatest. We determine how much money we are going to take from the taxpayers and use for public purposes. If we can freeze that levy from one year to the next, we effectively freeze the impact on the taxpayers. Under alternative one about 97% of residential taxpayers would have no increase or pay less in taxes for 2009 as compared to 2008. He said most of the commercial/industrial property appraisals did not decrease this year so those properties would pay more. He noted how that burden is spread is not up to the City Council and only the assessors and the market will determine which properties go up and which ones go down. Neal said the zero levy increase takes the approach to zero the tax impact on residential taxpayers because that is in the Council's power to do. That alternative has $1,100,000 of reductions and we would put about $550,000 back using the Budget Stabilization Fund and would have $550,000 in expense reductions. We have seen a significant reduction in fuel costs and that will create energy savings of about $100,000. He said Council Member Nelson asked if that was a sustainable reduction. In the long run we do expect fuel costs to go back up as the economy recovers. He received an estimate from the Facilities Manager that we could reduce capital and operating budgets in those areas. We looked at additional personnel savings through attrition and by lengthening the time before we replace a vacancy. CITY COUNCIL MINUTES December 16, 2008 Page 10 Butcher thought we have had a good suggestion from the City Manager. She thought we need to have a very deliberative and calm process. There is a lot of concern about the economy everywhere. She thought we need to follow the policies we set out in the past. We have had hard times in the City in the past, and we have learned how to deal with it. We have guidelines but she was frustrated that we have not gone back to our policies to look at those. Last year we established the two-year budget and the proposed change in taxes on a median-valued home from 2008 to 2009 would be a $27 increase. While that is more money than last year, she did not find it to be excessive. It is good to have this conversation, but we need to go back to the policies. If we are going to change those policies, we need to deliberately do so. The suggestion to cut $2,000,000 out of the 2009 budget just came up a month ago and she didn't like to do anything too quickly. Butcher thought Mr. Neal's idea about expense reduction is a very useful one. Over the next few months we should deliberately assess the spending in every department, look for waste and practice a lean budget. She did not like to use a Band-Aid approach so that next year we would need to reduce services to residents. During the 1990's we had a situation where we used one-time revenue to backfill the budget. That was a mistake and because we did that we decided to put a policy in place that we would not use one-time revenues to backfill the budget. She thought our responsibility as good governance is to do due diligence, review policies, and make a thoughtful decision before making a mistake like we did in the past. She appreciated the expense reductions made by the staff toward this alternative called the zero levy increase,but she could not support use of the Budget Stabilization Fund for the other piece of it. Nelson said when she and Mr. Neal talked about the proposed energy savings and if they were sustainable she was concerned that we don't take off things in 2009 that are going to multiply in 2010 and 2011. Mr. Neal assured her that some of the items were sustainable. Nelson asked what the expected overage is for this year and if that was planned into the 2009 budget. Neal said we are on track to be in the $400- 800,000 range. Kotchevar said it is very challenging to predict year-end results. We seem to be on a similar track as the last couple of years, but the books are open until February. Neal said the City Council has a policy that puts that money into the CIP, absent some Council action to direct it otherwise. Nelson said in 2008 we used that as a piece to put together the budget. Kotchevar said approximately $250,000 was planned to be used in 2009 from the Budget Stabilization Fund. Nelson asked if we could use the overage instead of the Budget Stabilization Fund in alternative one. Neal said the default position for that money is the CIP. The concern we would have in using that as a revenue CITY COUNCIL MINUTES December 16, 2008 Page 11 source is that we do have a relatively long period in 2009 where we pay 2008 bills. Nelson asked what the overall effect would be to the Budget Stabilization Fund if we take another $550,000, making a total of $700,000. Kotchevar said it is hard to say right now. We take a look at the General Fund financial results at year end, calculate what is needed in the Budget Stabilization Fund and the Cash Flow Fund and what is left over is the overage. Neal said the balance in the Budget Stabilization Fund is about $5,000,000. Young said his recollection of the policy is that when the fund reaches a certain threshold, the Council gives direction as to whether it goes to the CIP. When the fund was begun, it was an operating fund and not a capital fund. We anticipated accumulation in the fund over time, and he thought it would be consistent with the policy to use it for operating purposes. Nelson asked about the status of the Economic Development Fund. Kotchevar said it is approximately $5,000,000 which includes the land sale to Presbyterian Homes. Nelson was concerned we probably won't get the last half of the market value homestead credit because of the state budget deficit. Everything she has heard indicates we won't get that until the economy rights itself, so we may have a missing chunk in our CIP fund that we ultimately will have to make up. She didn't know that we have to do anything about that tonight, but we need to consider it when looking at the overall budget picture over the next three years. Nelson asked what amount would result if we dug a little deeper into the travel budget and cut back on convention travel. Neal said staff looked at that at all levels, and it didn't amount to much more than $20,000. We don't do a lot of out-of-state traveling. Nelson then said she would like to take that $20,000 off because with a lean budget we should be limiting that kind of excess and we could do that travel every other year. She thought we need to look wherever we can to find that kind of money. Whatever we do she wanted to make sure it doesn't mean citizens have to pay a lot of extra money in 2010. She also assumed we can't continue to take money out of the Budget Stabilization Fund year after year. Neal said that was true, and if we do a zero levy increase we will need to take a close look at the proposed 2010 and 2011 work plan, services and other items during the budget process. Nelson said at the same time we need to recognize that people in the City want good services. The City may have higher valued home prices partially because of what the City is. She didn't want to see something that will make home values fall more than they would otherwise. Aho thought the economic times are tough and you can't just look at tax increase on the median value home because some would be impacted more than $27.00. We have to look at the budget and know we have the option to CITY COUNCIL MINUTES December 16, 2008 Page 12 make a difference for people. He hoped things will turn around and improve, but right now we have the opportunity to look at a zero percent levy increase. We can do that with $500,000 from an estimated budget surplus for 2008, $100,000 from fuel savings, $100,000 from facilities, $100,000 from IT savings, and $250,000 from staff adjustments. Those amounts total $1,050,000 which is almost identical to our proposed levy increase and doesn't take anything from the Budget Stabilization Fund. Aho said the Budget Stabilization Fund was designed so that we could have the ability of using some of those funds for our General Fund. It was not designed to just accumulate and sit there forever. We made a policy a year ago that fund would not grow over 15% of our current operating budget. He thought in this case we don't want to use too much funding to reduce our budget artificially, but this gives us some opportunity to buffer what is happening in the economy and gives us time to plan for the future. We would maintain our services at levels people expect. He said he proposed adding some from the Budget Stabilization Fund as a buffer because we don't know what the 2008 budget surplus will be. If we took $500,000 from the Budget Stabilization Fund in addition to the other savings he outlined, we would have a savings of $1,550,000 which would give us a budget savings and a reduction to the levy. He said he would make a motion to that effect. Duckstad asked if that proposal still maintains a zero tax levy. Aho said it is actually less than that. The proposed tax levy is $1,539,000 with the current proposed budget, and this proposal would have a savings of $1,550,000 so there would be a decrease between 2008 and 2009. Duckstad asked if it could be more if we realized more in the budget surplus. Aho said the only approximate figure involved is the estimate of the 2008 budget surplus. Duckstad said he would like to support Council Member Aho's suggestion as outlined. He thought we have an obligation to do something in light of the economy. We put together a Budget Advisory Commission a couple of years ago and they came up with the recommendation of a zero tax levy. He thought that was a reasonable recommendation in tough times. He noted the last time the City had a deficit in 2003 the Council did not increase the budget over 2002. He understood the City was the recipient of three national awards for good financing and budgeting that year and received an AAA bond rating. The idea of cutting when we have to is not a bad idea, and it works in the best interests of people who pay taxes. Young noted at the last meeting Council Member Aho supported the zero percent levy and asked him to explain the difference between that and his new proposal. Aho said it is essentially the same with a little more structure and careful analysis. He met with Mr. Neal who provided the numbers on the amount of savings. We are using $500,000 of the Budget Stabilization Fund instead of$550,000. CITY COUNCIL MINUTES December 16, 2008 Page 13 Duckstad thought the Budget Stabilization Fund had $5,900,000 in it. Kotchevar said that was the balance at the end of 2007. Duckstad said he understood the Economic Development Fund had close to $8,000,000. Kotchevar said it has about $5,100,000. Aho asked if that includes the $3,000,000 coming from the sale to Presbyterian Homes. Kotchevar said it does. Young asked if the total number for cash buy down is $1,000,000. Aho said there is $500,000 coming from the Budget Stabilization Fund and cash buy- down from the budget surplus of 2008 which is estimated at $500,000. Young asked how that is different from the zero percent levy proposed by Mr. Neal. Neal said his proposal used only the $550,000 cash from the Budget Stabilization Fund and did not use any 2008 budget surplus. Aho said rather than just taking surplus money and rolling it into the CIP Fund, we will use it to augment the General Fund. Duckstad said when we had a workshop presentation on the CIP Fund at the end of 2007 we showed $4,200,000 going into that fund. Kotchevar said the current balance in the fund is $6,100,000, but $1,600,000 is in the Pavement Management Fund. Over the next five years the projects currently in the CIP will total about $13,900,000. Nelson said she could support a zero levy increase but she can't support what Council Member Aho proposed, especially when we are down $700,000 from not receiving the market value homestead credit from the state. We could take $530,000 out of the Budget Stabilization Fund along with expense reductions and the $20,000 from budget luxuries. She couldn't see taking another$500,000 out of the CIP. Aho said we haven't lost the market value homestead credit at this point. We received $226,000 this year, or about half, so we could lose $226,000. Nelson said the state budget is such that aid to cities and local governments is expected to go under the axe. She didn't think we can assume we will get the market value credit, so we have to budget accordingly. She didn't think we can afford to do the extra $500,000. In four or five years we will start having to budget everything for the CIP every year, and taxes will definitely jump. Neal said the Governor has not yet acted on the allotment, but from everything we are hearing there is a 99% certainty that we won't receive the second half of the market value homestead credit. Aho asked what the market value homestead credit was for 2009. Neal said that is a number that fluctuates, and as values go down, that number goes up. We would project it to be between $450-500,000 for next year. Young asked Mr. Neal why he drew from the Budget Stabilization Fund when he put together the zero percent levy proposal. Neal said that is a sure CITY COUNCIL MINUTES December 16, 2008 Page 14 source of cash rather than having the uncertainty of what our unreserved fund balance will be for the upcoming year. If we are going to use that money to plug a cash hole in our budget, that fund or the Economic Development Fund would be the best source. He noted staff has been working to put together an Economic Development Fund budget and will soon have a proposal for the City Council to consider. Young said he came prepared to support the zero percent levy alternative, and he liked Mr. Neal's balanced approach of drawing from cash funds and also reducing or postponing some expenses. We can't sustain cash infusions and his preference would be to draw upon the unreserved fund balance. Before we tap into the Budget Stabilization Fund he thought the Council needs to discuss what we expect from that fund. We need to recognize that the 20102011 budget is going to be a challenge, particularly because of our use of cash. We cannot, by statute, rebate money to the taxpayers so the only way we can use those funds is to mitigate taxes. He was not yet at the point of agreeing to use an additional $500,000 from the Budget Stabilization Fund to further reduce the tax levy. Aho said the hard part of looking at the budget surplus for 2008 is that it is an unknown quantity. If we use none of the Budget Stabilization Fund and use an estimate of $500,000 from the budget surplus fund, we would be at $1,050,000, which is almost identical to the proposed levy increase and would be a zero increase. The only question is the variability in that funding source. Neal said we could deal with that because the Council would set the levy tonight and that is a hard cap. The Council could set the budget tonight and give direction that, if the budget surplus for 2008 turns out to be overestimated, staff would have to come back for different direction. Aho suggested we plan to take the estimated savings for expenses and $500,000 out of the budget surplus. If the budget surplus comes in lower than that, we would make up the different from the Budget Stabilization Fund. Young asked to see what that did to the numbers for the tax levy and budget. Neal suggested he and Ms Kotchevar confer to put the numbers together while the Council goes ahead with the next item. C. REPORT OF THE COMMUNITY DEVELOPMENT DIRECTOR 1. MAJOR CENTER AREA STREETSCAPE PLAN Jeremiah said a year ago the Council had a joint meeting with the Planning Commission at which time staff was meeting with property owners around the Major Center Area. At that time we were considering the project on Prairie Center Drive which was pushed back. The Singletree Lane project continues and the Council asked staff to do a separate study to see if we could move the utility poles out of the area. That study found it would be CITY COUNCIL MINUTES December 16, 2008 Page 15 very expensive to move the poles so we will have to work around them. The streetscape plan shows some ideas for doing that. The streetscape plan went to the Planning Commission in May and June of this year and staff discussed where this goes from here. Staff has submitted updates to the plan as changes evolve and products such as LED lights become available. Jeremiah said at this point staff feels that the consultant's work on the plan is done and it has covered all the elements we asked for. We have received great feedback from the meetings we held and people seem quite pleased with the aesthetics. There are some concerns about whether it is cutting edge from an environmental perspective. We asked SRF Consulting to look into the potential for LED lighting, but they believe the technology is not ready. Staff is still open to consider the most efficient options as we move forward. At this time staff is asking the Council to accept the plan so it can be used as an advisory tool going forward. Nelson said she was very unhappy with the language in the plan stating LED lighting was not energy efficient. She was willing to accept the plan, but she wanted staff to continue working on it. She would rather change some of the design to use current or near future LED lighting and was concerned that the statement they made is totally different from what McKinstry told us about lighting savings. She didn't think the lighting as presented here is at all the same as what the City is doing elsewhere. She thought we may need a consultant in the future that is doing a little more with lighting. This is one of the few areas where we will put up light poles of our own, and she thought it was ridiculous to do something here that is different from what we are asking Xcel to do for the whole City. Dietz said he serves as the City's delegate to the Suburban Rate Authority and they did a street light study. It is a mistake to say LED lighting is not energy efficient. However, the fixture in the parking lot at City Center is the only LED fixture currently available. Also, the City of Brooklyn Park installed a number of those in a neighborhood on a test basis and it turned out that people didn't like them. He said induction lighting is coming and may be a better solution for street lighting. Staff is exploring this but in terms of the Singletree Lane project LED lights will not fit into the kinds of fixtures called for in the document. Nelson said she was concerned the report says the only kind of lighting we can have is the old-fashioned lighting we have had before. This basically says we are going with the old stuff and are wedded to the old light design. She was concerned about investing so much money and having to forego all the energy efficient savings we would get from LED lights. Dietz said the Singletree Lane project anticipates about eight or nine poles because it is just the section between Eden Road and Flying Cloud Drive. The poles are priced at$5-6,000 apiece, so we wouldn't want to turn around and change those out. The architecture is what is driving this issue, and the CITY COUNCIL MINUTES December 16, 2008 Page 16 shoebox fixtures in the City Center parking lots are the only ones available for LED lights. Anything that resembles the architecture of the streetscape plan is not currently available in LED. Nelson said she has a problem with having an architectural detail go beyond what makes sense for the City. If the only way we can get the look and the finances, maybe we have to sacrifice a few light poles. She would like staff to look for a third option. Neal asked if there is a timeline that is important for the City Council to recognize with this tonight. Jeremiah said we need to move forward with the Singletree Lane project and will need to commit over the next few months. We can continue exploring options up until letting the bids. The document will evolve, but she thought the consultant wants to close the contract. They provided documentation regarding LED not being efficient for street lighting. She said the question is do you feel that this contract is complete with the caveat that we continue to explore LED lighting. Nelson said that would be acceptable. Young said he didn't think we want that boxy looking fixture on Singletree Lane, and he thought the aesthetics is driving this plan. Neal said we could continue the discussion to the January 20 meeting to give staff more time to see if there are additional possibilities out there and bring it back at that time. Rosow said the discussion is clear that staff will research the lighting issue and bring back more detail on January 20, so there is no need for a motion to table the item. B. 3. RESOLUTION 2008-116 CERTIFYING 2009 PROPERTY TAX LEVY,ADOPTING THE 2009 BUDGET,AND CONSENTING AND APPROVING THE 2009 HRA TAX LEVY (Continued from above) Young asked about the status of Council Member Aho's first motion. Rosow said it died for want of a second. MOTION: Aho moved, seconded by Butcher, to adopt Resolution 2008- 116 certifying the 2009 Property Tax levy to be $32,063,185, to approve the 2009 Budget of$42,061,155 as reviewed by the Council, and to consent and approve the HRA tax levy and budget of$200,000. Motion carried 4-1-0, with Duckstad opposed. D. REPORT OF PARKS AND RECREATION DIRECTOR 1. PROJECT SUMMARY FOR BIRCH ISLAND PARK, ROUND LAKE BASEBALL STADIUM, THIRD SHEET OF ICE AND COMMUNITY CENTER CITY COUNCIL MINUTES December 16, 2008 Page 17 Neal said we are able to close out the Community Center project now and we wanted to review the story of this improvement with the community. He reviewed the history of the project which started in 2003 when a Task Force was put together to study the issue. The Task Force proposed that we have a family aquatic center, and that proposal was put out to a City referendum in 2004. It was voted down in a close vote. The Council then decided we would do a follow up survey. There were several important findings from the survey: the residents wanted to do the referendum again but wanted to do it at a General Election and at a time when the School District was not having a referendum: they asked for an a la carte ballot; and they did not want to vote on an aquatic center again. Neal said we redesigned the referendum as an a la carte style ballot. After the referendum was voted on in November 2005, we put together the projects that were approved, had a ground-breaking ceremony in 2007 and held the grand opening in May of 2008. He said when we began thinking about expansion of the Community Center we knew $6,500,000 of General Obligation Bonds would not be sufficient to do what we wanted. We used the CIP, the Park Improvement Fund and fund raising dollars to come up with four or five large sources of dollars for the project. Lotthammer said this was not completed without a lot of community support and funding. There were sponsors that put up a lot of cash or in- kind contributions and that made the project better than it would have been. He said RJM Construction and the architects are here tonight and he thanked them for their efforts on the project. He noted every City department has touched this project in some way. Lotthammer said the improvements to Birch Island Park was the smallest of the projects and involved swapping soil with the Community Center project. Because of the requirements for the parking lot at the Community Center they needed to shift the baseball field and that led to the Baseball Stadium project. The Baseball Association contributed $290,000 to upgrade it to a stadium and raised another $40,000 for a scoreboard. For the third sheet of ice they had to develop some unique financing options so that a third came from revenue bonds, a third came from the Hockey Association and naming rights, and a third came from City funding. He reviewed the revenue and expenses for the project. He said they came back with a change order for some unexpected things several months ago. Staff is now requesting another change that would deduct $15,900 due to some cost savings that have occurred. He said the final payment on the contract is contingent on surety and that is in process, so we are a few weeks away from the final payment. Lotthammer said the community reception of the facility has been overwhelming, and they have received many positive responses from everyone. He reviewed events already held in the facility and noted the rooms are being well used by classes and organizations. He said at this CITY COUNCIL MINUTES December 16, 2008 Page 18 point he could say the decisions that were made in the planning process were good ones. Duckstad thanked Mr. Lotthammer and Mr. Neal for putting together the update. He thought it goes a long way to providing some of the things the citizens should know about the project. Aho thanked the construction firm, the architects, and all those who worked on the project for their great work. 2. CHANGE ORDER 2 FOR RJM CONSTRUCTION FOR BIRCH ISLAND PARK, ROUND LAKE BASEBALL STADIUM, THIRD SHEET OF ICE AND COMMUNITY CENTER MOTION: Butcher moved, seconded by Duckstad, to approve change order #2 to the RJM Construction contract as a credit of$15,900.00 to the City of Eden Prairie for cost savings related to the improvements outlined in change order#1 at Birch Island Park, Round Lake Baseball Stadium, the Third Sheet of Ice and Community Center improvements. Motion carried 5-0. E. REPORT OF PUBLIC WORKS DIRECTOR F. REPORT OF POLICE CHIEF G. REPORT OF FIRE CHIEF H. REPORT OF CITY ATTORNEY XV. OTHER BUSINESS Young said he wanted to express how much he has enjoyed working with Council Member Butcher over the past six years. He said she has represented the City very well,both on the City Council and in public. Butcher said tonight is her last night as an Eden Prairie City Council member after having served for 12 years. She said it has given her great pride and has been an honor to have been given the responsibility to serve as a leader in the community. She noted the City is different now than when she was first elected. Eden Prairie has developed into an extraordinary city and one that is a model for others. She said she has been honored to work with the talented and dedicated staff over the years. Each leader she worked with has been committed to do their very best. She thanked the people of Eden Prairie for the opportunity to serve the city she loves, to work with people she respects, and to collaborate with residents whom she cherishes. XVI. ADJOURNMENT MOTION: Duckstad moved, seconded by Aho, to adjourn the meeting. Motion carried 5-0. Mayor Young adjourned the meeting at 9:45 PM.