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City Council - 09/01/2009 APPROVED MINUTES EDEN PRAIRIE CITY COUNCIL MEETING TUESDAY, SEPTEMBER 1, 2009 7:00 PM, CITY CENTER Council Chamber 8080 Mitchell Road CITY COUNCIL: Mayor Phil Young, Council Members Brad Aho, Ron Case, 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 7:11 PM after the HRA meeting was adjourned. All Council Members were present. II. APPROVAL OF AGENDA AND OTHER ITEMS OF BUSINESS MOTION: Case moved, seconded by Duckstad, to approve the agenda as published. Motion carried 5-0. III. PROCLAMATIONS/PRESENTATIONS IV. MINUTES A. COUNCIL WORKSHOP HELD TUESDAY,AUGUST 18, 2009 MOTION: Duckstad moved, seconded by Aho, to approve the minutes of the City Council Workshop held Tuesday, August 18, 2009, as published. Motion carried 5- 0. B. CITY COUNCIL MEETING HELD TUESDAY,AUGUST 18, 2009 MOTION: Case moved, seconded by Nelson, to approve the minutes of the City Council Meeting held Tuesday, August 18, 2009, as published. Motion carried 5- 0. V. REPORTS OF ADVISORY BOARDS & COMMISSIONS VI. CONSENT CALENDAR A. CLERK'S LICENSE LIST B. DECLARE OBSOLETE COMPUTER EQUIPMENT AS SURPLUS C. AUTHORIZE STAFF TO SUBMIT A WINTER TRAIL ACTIVITIES PERMIT APPLICATION TO THREE RIVERS PARK DISTRICT FOR 2009-2010 CITY COUNCIL MINUTES September 1, 2009 Page 2 D. ADOPT RESOLUTION 2009-54 AMENDING OFFICIAL MEETING DATES FOR THE CITY COUNCIL IN 2009 E. APPROVE PURCHASE AGREEMENT WITH INTEGRA TELECOM F. AWARD CONSTRUCTION CONTRACT FOR IT REMODEL PROJECT TO DORAN CONSTRUCTION G. AWARD CONTRACT FOR TRAIL RECONSTRUCTION ON DUCK LAKE TRAIL, VALLEY VIEW ROAD AND EDENVALE BLVD. TO BITUMINOUS ROADWAY INC. H. APPROVE CDBG AFFORDABLE HOUSING GRANT AGREEMENT BETWEEN CITY AND CITY HILL FELLOWSHIP CHURCH Duckstad asked if there is a basis to delay the two projects for Items F and G given the state of the economy. Neal said he believes it is important to proceed with those two projects. He noted we have discussed the possibility of not going forward with some projects, and there are over $1,000,000 of capital projects we have postponed until 2011 and 1012. He said Item F is the remodeling of the old PROP space to consolidate the IT staff and operations into one area. Item G is a $68,000 contract to reconstruct some of the worst quality trail sections in the City which fits well under our duty to maintain the public assets. MOTION: Duckstad moved, seconded by Aho, to approve Items A-H on the Consent Calendar. Motion carried 5-0. VII. PUBLIC HEARINGS/MEETINGS VIII. PAYMENT OF CLAIMS MOTION: Nelson moved, seconded by Duckstad, to approve the Payment of Claims as submitted. Neal noted there were no Payment of Claims included in the agenda for the August 18 meeting so there is a double version on tonight's agenda. VOTE ON THE MOTION: Motion was approved on a roll call vote, with Aho, Case, Duckstad, Nelson and Young voting "aye." IX. ORDINANCES AND RESOLUTIONS A. RESOLUTION NO. 2009-55 IDENTIFYING NEED FOR LIVABLE COMMUNITIES DEMONSTRATION ACCOUNT FUNDING Neal said staff requests authorization to submit an application to the Livable Communities Demonstration Account (LCDA) on behalf of Presbyterian Homes for $838,300.00. The money would be used to help pay for street improvements to CITY COUNCIL MINUTES September 1, 2009 Page 3 Castlemoor Drive, a storm water pond, and a rainwater garden. The LCDA is funded by the Metropolitan Council. The purpose of this account is to provide funds to support development and redevelopment projects that connect development with transit, intensify land uses, connect housing and employment, provide a mix of housing affordability, and/or provide infrastructure to connect communities and attract investment. There is approximately $4,000,000.00 in the account. Duckstad asked if this award grant comes with any strings attached. Jeremiah said there are certain requirements of the Met Council with regard to meeting certain affordable housing requirements. She said we have already accepted those terms in general which makes us eligible to apply for these grants. There would be no additional requirements except that the project needs to be started within two years of the grant. MOTION: Case moved, seconded by Nelson, to adopt Resolution No. 2009-55 identifying a need for Livable Communities Demonstration Account funding and authorizing an application for grant funds. Motion carried 5-0. X. PETITIONS, REQUESTS AND COMMUNICATIONS XI. APPOINTMENTS XII. REPORTS A. REPORTS OF COUNCIL MEMBERS B. REPORTS OF CITY MANAGER 1. Prairie View Liquor Store Lease Neal said when the Council met to discuss this on August 18, staff presented two options: to stay in the current location with about 4200 square feet; or to move to a new location with about 9500 square feet in the same mall. The Council expressed some concern about the magnitude of going from 4200 square feet to 9500 square feet. There was also some concern about the competitiveness of the proposed rents, the certainty of our revenue forecasts and how much the City would pay for the improvements to the new space. Neal said the Council asked staff to consider a smaller footprint in the proposed Snyder's location, to get a renegotiated proposal for the lease extension to stay in the current location, to get some information on rental rates and to see a set of clear forecasted financials for each option. He noted he advised the Council that staff would be working on the information requested until the last minute. He said the information is in front of the Council tonight, with some of it in the form of an analysis by Jim McComb of the McComb Group that details seven options. We have five new CITY COUNCIL MINUTES September 1, 2009 Page 4 proposals to consider in addition to the two from the last meeting. He said the information also has a summary of Mr. McComb's services and qualifications. He also distributed a set of real estate comparables that the Colliers firm put together and the three store layout plans with the square footage for each one. Neal said he wanted to acknowledge Council Member Aho's wise counsel on this matter. Council Member Aho worked with staff and produced a spreadsheet showing some number comparisons of the current lease and four of the other options. He asked Council Member Aho to give a description of what he put together. Aho said in the spreadsheet he tried to analyze the vast amount of good data we had and to boil it down somewhat. He said the first column is the current lease followed by all of the ten year lease options in order of size. He put the projected operating income numbers for each of the scenarios below it. Duckstad noted the spreadsheet Council Member Aho provided shows the numbers for the options for ten year leases. He said in the material the City Manager provided there was another option for a five-year lease at the existing location. He asked if the rate for that would change from the $21.50 rate. Aho said he thought it was at a higher rate, and in his spreadsheet he was trying to look at the lowest rates in order to simplify the material and make it easier to compare the rates. Duckstad asked if a five year lease was possible for the existing store at the same rate. Neal said Table 8 in the larger set of information has a summary of the seven proposals. There are two proposals that envision staying in the current space, one for five years and the other for ten years, and both are at $21.50 per square foot. Case thanked Council Member Aho for preparing the spreadsheet. He said he believes we should move to the Snyder's store and that we should go with the 9500 square feet; however, he would be willing to move down to the 8000 square foot store if necessary. He noted Council Member Aho at some point made the comment that the rent amount is an actual number but the income is projected. He said if you look at comparing the 8000 spare feet to the 9500 square feet, the rent over ten years is about $77,000 higher but the projected income is quite a bit more, so even if only 27% of the projected earnings come through we would break even. He thought it is a good guess that we would be better off with the 9500 square feet. Aho said he realized staff spent a lot of time looking at this prior to the time it came to the Council. He has done a lot of talking to people in the industry, and what he has heard is that wine sales are the way to go in this current market. He thought increasing the size of the store and also changing the nature of the layout to improve the overall look and feel will result in an increase in sales. He said Mr. McComb has done a lot of work to come up with these projections, but it is hard to say if they will bear out CITY COUNCIL MINUTES September 1, 2009 Page 5 in the current economy. We need to look at the situation as a whole to see what makes sense. He said he concluded the 8000 square foot space is pretty much the same size as one of our other existing stores. It has the right feel in terms of sizing, and if you look at the total amount of rent, the rent is the lowest of all the scenarios. He said if this were his business he would look at it and say for a small additional amount of rent per year, we will make more in increased sales. He did not think we are here to discuss whether the City should be involved in the liquor stores. He thought the current store does need some improvements, and he thought it really makes good fiscal sense to go to the 8000 square foot store. Duckstad thought we have to look at this in terms of all the facts that apply to this issue. It was his understanding that if we made the change from the existing store to a larger space, we would be spending about $300,000 or more to retrofit the building. We have already increased the size of our other two stores. He agreed it probably would generate more wine sales if we enlarge this store; however, he was not sure if wouldn't just take sales away from the other two stores. He was not persuaded the change is in the best interest of taxpayers in the long run. Nelson said she concurred with Council Member Aho that it is only a small amount of increase in rent and it is a definite increase in sales. She has said all along that we need to do something about the current store. She thought this has turned out to be a good proposal, and she could support the 8000 square foot store. Neal said he saw the same thing as Council Member Case did, that the comparison of staying in the existing store for ten years or moving to a larger store shows by moving our rent expense actually goes down and our revenue goes up. Regarding Council Members Duckstad's question about whether we take sales away from the other stores, he said we asked Mr. McComb to look at that. Mr. McComb believes this is a business that has a great capacity to grow, and the trajectory in the liquor business is going up. It does have risk associated with it and if there is concern about that risk, the 8000 square foot store can perform at a high level. Duckstad asked how many additional employees would be hired to maintain the store in the event the City increases the size of the existing store to 9500 square feet. Kotchevar said the budget for staff at the liquor stores is projected at 8-10% of sales, and we would not immediately increase staffing. Duckstad asked if we added any additional employees at the first two stores when they were enlarged. Neal said our staffing models for liquor stores is such that we have a relatively few number of fulltime employees and a large number of part time employees. Young said he thought the City Council ultimately will make an imperfect decision because there are imperfect choices before us. The projections for revenue are just projections. The history of our three stores is that sales tend CITY COUNCIL MINUTES September 1, 2009 Page 6 to increase, but the sales at the Den Road store did not increase by a materially greater amount than in the past. He still has not received an explanation of why the wine sales would be different at this store. He said he originally pulled this material from the Consent Calendar because he was struck by the proposed lease terms in the current space and he got the sense that we were getting pushed out of the existing store. We negotiated a lease for $16.50 a year ago, and now in a worse economy we renew at $21.50, and he couldn't ignore that. The only definite we have if we move is an improvement fee of $390,000, and he didn't think that figure was capped. He said he has not heard anything materially different tonight so he did not think the case has been made. He said part of the function of this is timing, and he thought we should have had this discussion four months ago. He didn't think we necessarily have to be located close to a grocery store and he was not sure we couldn't just close the store. MOTION: Case moved, seconded by Nelson, to authorize the Mayor and City Manager to execute final lease documents for Option 6 for 8000 square feet of space for a ten year lease. Motion carried 3-2-0 with Duckstad and Young opposed. 2. Baker Associates Agreement Neal said the contract with Baker Associates is somewhat impacted by the actual square footage of the store, so staff would ask that this item be delayed. Staff will bring back the agreement to the September 15 City Council meeting. 3. Resolution No. 2009-56 Certifying Proposed 2010 Property Tax Levy, Accepting Proposed 2010 Budget, Setting Public Hearing Date & Consenting and Approving the HRA Tax Levy Neal said Minnesota law and administration rules prescribe a detailed process for public notification and participation in setting taxes and budgets of local governments. Cities must adopt a proposed net property tax levy by September 15 and certify it to the county auditor. In addition, the City Council must accept a proposed budget for the coming year. In the past the City set a date for the "Truth-in-Taxation" hearing and a date to reconvene it (if necessary). The 2009 statute was changed which eliminates the mandated truth-in-taxation hearing requirement. The City must announce at this Council meeting the future time and date of the regularly scheduled meetings at which the budget and levy will be discussed and public testimony taken. Earlier tonight in the Consent Calendar we changed our meeting from November 30 to December 1. The Council must adopt the final tax levy and budget by December 15. He said Minnesota law authorizes the HRA to levy a tax with the consent of the City Council and this resolution also gives the consent for the HRA levy. CITY COUNCIL MINUTES September 1, 2009 Page 7 Duckstad said in order to clarify, this is not a final levy but it caps the maximum the levy could be, with a later final determination of what the levy will be. Neal said that is true and this is the maximum levy for 2010. We can make the number lower but we can't make it any higher. Neal noted the only items in the staff proposal for the 2010 budget over and above the 2009 budget are a duty crew initiative for the Fire Department and a mandatory funding for the Fire Pension Relief system. He said most items are actually below what was spent this year. MOTION: Aho moved, seconded by Nelson to adopt Resolution No. 2009-56 that certifies the proposed 2010 property tax levy to be $32,751,059; and sets December 1, 2009 as the meeting which will include discussion of the budget and provide for public comment; and accepts the proposed 2010 budget of$41,052,045; and consents and approves the HRA tax levy of$200,000. Case said he planned to vote against this because he thought this levy limit produces a budget that results in a projected $2,000,000 gap between revenue and expenditures by 2012 and that would require a 6% tax increase for 2013 just to stay even. He thought our residents deserve a more honest budget that says we can't just use savings to work our way through this crisis. Young thought that is a fair comment, and he thought the Council is going to be engaged in work that has implications for the upcoming year's budget and beyond that time. He thought our long term objective needs to be to not put the City in the position where future City Councils need to put in a tax increase. Duckstad said he did not think the levy is going to be this amount at all. We will have an opportunity to discuss the full implication of our levy and our line item budget, so he thought the taxpayers will have an opportunity to see what we are going to do and fully discuss this budget. Nelson said she thought a zero increase or close to that is where we have to go for this coming year, given the economy and the fact this is simply the 2010 budget. Aho said this is only a maximum cap so he thought we have the opportunity to look at ways to decrease this. He thought there is no reason to not support it unless you want to go above this amount. VOTE ON THE MOTION: Motion carried 4-1-0, with Case opposed. C. REPORT OF THE COMMUNITY DEVELOPMENT DIRECTOR D. REPORT OF PARKS AND RECREATION DIRECTOR CITY COUNCIL MINUTES September 1, 2009 Page 8 1. outlot Management Lotthammer said the Council asked staff to review our approach and treatment of outlots in the City. He showed examples of some outlots and noted most of the time the land is in a natural state when we receive it. From a maintenance standpoint, most times we have left it alone in the natural state. Land not accepted as park land is generally treated as an outlot. He showed a map of the outlot that prompted this discussion. He noted it was evident from the map why it is not developable, and that is generally how we come to be owners of this type of land. Per direction from previous City Councils, as part of our park philosophy we have taken the approach that the line is the line. We have given notification if there is something on the City property that will have to be moved off. Almost all of these outlots are in a natural area and we haven't gone in and mowed them. We will remove diseased trees or treat noxious weeds, but in most cases it isn't a billable situation. Case said he has never advocated in the slightest for getting rid of any City park or City-owned lands. He asked if there are possibly some outlots that we have inherited by default from an association that fell apart in which we have no interest and that may, under the original deed arrangements, be available for us to divest ourselves of. He thought if we could develop some kind of a process whereby a neighborhood could come to the City and petition to buy an outlot, that would put the property back on the tax rolls. He thought there are probably many such outlots out there, and he was wondering if there isn't the need for some mechanism to help residents with the process. Lotthammer said he would probably defer part of this question to City Attorney Rosow, but there are a couple of cases where we have received some remnant property due to tax forfeiture. Those are usually quite small or not buildable. There was an association that did go defunct that had six or seven homes surrounding the outlot. If those six or seven neighbors were to band together, the difficulty would be the type of agreement we would need to ensure that going forward all six or seven of them would continue the maintenance. Case said he was suggesting the possibility we actually sell the land to them. He was looking for a win/win situation to get some cost savings for us, get some liability away from the City, and also get additional tax revenue. Young commented he thought the only certainty in that regard would be a lot more work for Mr. Rosow. Case said he was suggesting it would only be under the situation where a particular group of residents and neighbors come to us and we might have a process where they could do the legal due diligence. CITY COUNCIL MINUTES September 1, 2009 Page 9 Lotthammer didn't think such a scenario is that far off because about three years ago a group of residents came to the Council and asked to purchase land between their homes and a trail. We had asked them to stop mowing up to the trail. Young said he also recalled a group that came before us and wanted to make a lakeshore property. He thought we probably could never put together a policy that would capture what we want to capture, and he didn't know where to stop such a discussion once we start it. Case said he would like to have Park and Recreation go over what has been done historically on outlots. We may find there may be clear delineation on certain types of outlots and it may be an easier task to develop a type of process whereby neighbors can bring forth their concerns. He thought it is important that the good of all gets protected, and it might benefit the good of all of us if we were to divest ourselves of some property we don't get benefit from. He thought it was worth pursuing the discussion. Neal said we have entertained proposals in the past, so he thought there is the opportunity for folks to approach us and talk about a particular situation. The details of the individual outlot will control what options are available to the Council. He didn't think an overt public information campaign is necessary, but we do get these requests occasionally and if there is some discretion at the Council level, staff would refer it to the City Council. Young said he would never discourage a group of residents that have a concern or interest in a particular property from coming before the Council. E. REPORT OF PUBLIC WORKS DIRECTOR F. REPORT OF POLICE CHIEF 1. Homeland Security Grant Police Chief Reynolds said the City of Eden Prairie has been awarded a 2008 Homeland Security Grant for the amount of$86,700, and he was here to ask the Council to accept the grant. The grant will be used to fund a part- time contracted employee with MN Joint Analysis Center (MNJAC). He said this is the fourth time we have brought this before the City Council and with this grant we should be able to fund the position through the first quarter of 2011. At that time we would hope to have another grant available to continue funding. Duckstad asked how long the grant would provide payment for the position. Chief Reynolds said it will take us through March of 2011. Duckstad asked if, in the event there isn't a further grant available, there is a possibility the part time employee would continue to be funded with the City. Chief Reynolds said the position is dependent on grant funding so the position would go away if there was no grant money. CITY COUNCIL MINUTES September 1, 2009 Page 10 Aho asked for a brief synopsis of the duties for this position. Reynolds said the job is to gather and analyze data that comes to the MNJAC regional fusion center. The team takes a look at the information and determines where the information has to go. The function of the MNJAC is to collect, de-conflict and feed back out the information they get. It is part of the Homeland Security plan to set up Joint Analysis Centers in the different regions. Neal said it is important to know that Chief Reynolds has been a leader in assisting the MNJAC with this intelligence gathering initiative. We are more able to act quickly if we have this employee under our employment umbrella. We are in the front lines in terms of knowing intelligence that is valuable in the public safety of the community. Nelson thanked Chief Reynolds for continuing to go after these grants because it keeps the City safer. MOTION: Nelson moved, seconded by Aho, to accept the 2008 Homeland Security Grant for the amount of$86,700. Motion carried 5-0. G. REPORT OF FIRE CHIEF H. REPORT OF CITY ATTORNEY XIII. OTHER BUSINESS XIV. ADJOURNMENT MOTION: Duckstad moved, seconded by Nelson, to adjourn the meeting. Motion carried 5-0. Mayor Young adjourned the meeting at 8:15 PM.