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City Council - 10/19/2010 (5) APPROVED MINUTES EDEN PRAIRIE CITY COUNCIL MEETING TUESDAY, OCTOBER 19, 2010 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 Gene Dietz, Community Development Director Janet Jeremiah, City Attorney Rick Rosow and Council Recorder Jan Curielli I. ROLL CALL/CALL THE MEETING TO ORDER Mayor Young called the meeting to order at 7:01 PM. All Council Members were present. II. COLOR GUARD/PLEDGE OF ALLEGIANCE III. OPEN PODIUM INVITATION IV. PROCLAMATIONS /PRESENTATIONS V. APPROVAL OF AGENDA AND OTHER ITEMS OF BUSINESS MOTION: Duckstad moved, seconded by Case, to approve the agenda. Motion carried 5-0. VI. MINUTES A. COUNCIL WORKSHOP HELD TUESDAY, OCTOBER 5, 2010 MOTION: Aho moved, seconded by Duckstad, to approve the minutes of the City Council workshop held Tuesday, October 5, 2010, as published. Motion carried 5-0. B. CITY COUNCIL MEETING HELD TUESDAY, OCTOBER 5, 201 MOTION: Case moved, seconded by Duckstad, to approve the minutes of the City Council meeting held Tuesday, October 5, 2010, as published. Motion carried 5-0. VII. REPORTS OF ADVISORY BOARDS & COMMISSIONS A. PARKS, RECREATION & NATURAL RESOURCES COMMISSION Geri Napuck, Chair of the Parks, Recreation & Natural Resources Commission, reviewed the work done by the commission this year, including the grand opening of the Observatory and the start of the Flying Cloud Fields expansion after the lease agreement with MAC was concluded. She said this year they held joint meetings with CITY COUNCIL MINUTES October 19, 2010 Page 2 the Arts Commission and the Conservation Commission. VIII. CONSENT CALENDAR A. CLERK'S LICENSE LIST B. APPROVE PROPOSED MODIFICATIONS TO THE POLICY GUIDELINES FOR COMMUNITY USE OF CITY CENTER RENTAL FACILITIES C. SET DATE FOR CANVASS OF RESULTS OF MUNICIPAL ELECTION FOR TUESDAY, NOVEMBER 9,AT 6:30 P.M. D. APPROVE REALLOCATION OF BUDGET AMONG EXISTING PROJECTS FOR PHASE 3 OF 20/40/15 E. APPROVE CONTRACT WITH VANCO FOR THE CITY TO RECEIVE UTILITY PAYMENTS FROM CUSTOMERS VIA ELECTRONIC DEPOSIT INSTEAD OF PAPER CHECK F. APPROVE CHANGE ORDER NO. 1 WITH G.F. JEDLICKI AND AMEND CONTRACT FOR HTPO FOR THE RIVERVIEW ROAD POND REPAIR PROJECT G. AWARD WESTWIND & WINDWARD CIRCLES' WATERMAIN REPLACEMENT CONTRACT TO MACHTEMES CONSTRUCTION INC. H. AWARD CONTRACT FOR IMPROVEMENTS TO ROUND LAKE SKATE PARK TO KAMIDA INC. MOTION: Duckstad moved, seconded by Aho, to approve Items A-H on the Consent Calendar. Motion carried 5-0. IX. PUBLIC HEARINGS/MEETINGS A. 2010 SPECIAL ASSESSMENTS (Resolution No. 2010-70) Neal said official notice of this public hearing was published in the September 30, 2010, Eden Prairie News and sent to 12 property owners. Each year, the City Council holds a public hearing to consider levying the Special Assessments that have been identified over the previous 12 months. This year, the Council will address one improvement project and is being requested to reduce the interest rate for the project—Singletree Lane Improvements —from 7.5% to 5.25%. Staff also recommends Council approve the list of supplemental assessments for such things as trunk utility assessments and contracted removal assessments. In regard to the Singletree Lane Improvement project, there is a signed and recorded Agreement Regarding Special Assessments dated September 4, 2007, in which the owner of the properties agrees to the levying of assessments at an interest rate of 7.5%. Due CITY COUNCIL MINUTES October 19, 2010 Page 3 to the recent drop in interest rates, City staff is recommending that the interest rate for the project be set at 5.25% in line with other assessments for this year. Neal said the City Council established the amount to be assessed for this fall's assessment hearing at its regular meeting on September 17, 2010. Since that time, the owners of Randy's Bobby and Steve's have requested the City portion of the sewer and water access charges in the amount of$55,800.00 be levied as an assessment rather than paying the cost in cash at time of building permit. We have accommodated these requests in the past for businesses that have high water use, which translates into high access charges. We have received a 100% petition from the partnership, which waives their right to public hearing for the cost to be assessed. Therefore, even though the adoption of the resolution setting the amount to be assessed did not include their amount, the waiver allows the process to be finalized at the scheduled assessment hearing. The total amount proposed to be assessed in 2010 is $1,284,177.31. There were no comments from the audience. MOTION: Aho moved, seconded by Nelson, to close the public hearing for the approval of the 2010 Special Assessments and to adopt Resolution No. 2010-70 approving all Special Assessments presented in the fall of 2010. Dietz said staff received a request from Tom Casey, Attorney for Barbara Kaerwar, to defer the trunk assessment for the Kaerwar Addition until the Development Agreement is signed. He said staff recommends that the assessment for trunk sewer and water for the Kaerwar Addition be pulled as requested and put on next year's assessments. AMENDMENT TO THE MOTION: Case moved, seconded by Nelson, to remove the trunk sewer and water assessment for the Kaerwar Addition from the 2010 Special Assessments. Motion carried 5-0. VOTE ON THE MOTION AS AMENDED: Motion carried 5-0. B. CHANGES TO UTILITY RATES AND THE UTILITY RATE STRUCTURE (Resolution No. 2010-74) Neal said official notice of this public hearing was published in the October 7, 2010, Eden Prairie News. The City is currently transitioning from a period of utility expansion and is shifting the focus toward facilitating sustainability of existing system infrastructure through continuous and proactive maintenance and rehabilitation. The City aims to develop a long-term and comprehensive plan for funding operation and maintenance (O&M) of its utilities through the establishment of strategic utility rate structures and reserve accounts. Comprehensive rate planning, revenue stability, and overall revenue adequacy of the water, sewer, and storm drainage utilities are high priorities for the City of Eden Prairie. Neal said the City retained Advanced Engineering and Environmental Services, CITY COUNCIL MINUTES October 19, 2010 Page 4 Inc. (AE2S) to develop a ten-year utility rate study for its water, sewer, and storm drainage utilities. Continuing to provide above average service at affordable rates, while providing for the long term sustainability of the utilities is a primary goal for the City of Eden Prairie. This study and the implementation of the recommendations is an important step in planning for the challenges associated with successfully and equitably meeting future utility revenue requirements. The proposed changes will transition the operations from a period of utility expansion to shift the focus toward facilitating sustainability of existing system infrastructure, increase the stability of revenues, and promote conservation efforts not only for environmental reasons but to minimize the need for future significant infrastructure expansion. Kotchevar gave an overview of the proposed changes to utility rates, noting that a survey of utility rates in the metropolitan area shows that the rates in Eden Prairie are currently very low when compared to other cities. She reviewed the current utility rate structure, the proposed new block rate structure, and the impact of the new rate structure on residential bills. Future rate increases would be used to build up our operating reserves to manage fluctuations in revenue and to cover unexpected facility repairs. She said if the changes are approved the rates will take effect on January 1, 2011. Commercial customers would see the change in February, and residential customers would see the change in April. She reviewed the plan that will be used to communicate the changes to utility customers. Case said he was concerned there may be a double message being given between our need to use less water for environmental reasons and our need to build up a revenue stream. Kotchevar said that was true, and we will have to monitor this very carefully. Dietz said the rate structure at the lower end that covers 85% of the customers isn't going to change much. He said we are anticipating having to increase rates in the future,but we hope we don't have to push it so high we will have unintended consequences. Nelson asked if there will be enough to cover repairs to the water lines and other equipment so there will be no big surprises for residents. Kotchevar said that is the plan. Neal said a key part of the study was to look at what the rate structure would do for conservation but also to take a look at the system itself and see what it would take to replace the system we have and then back that number into a rate structure. The rate structure needs to produce a certain amount of money to cover those kinds of costs. Nelson asked if the money will be put into an account specifically for replacing water mains and other equipment for utilities. Kotchevar said the City has had a policy that any money collected for utility rates will stay in the utility fund. Young said he was puzzled by the effect of the change on demand and asked how often we bill. Kotchevar said we bill monthly for commercial and quarterly for residential. Young said those who use quite a bit of water won't know what they use for a three-month period until they receive their quarterly bill. Kotchevar said we hope to accomplish that through communication about the rate structure. Young said he thought they won't know what that means to them when they get the information on the new rate structure. He said he doesn't remember what his usage CITY COUNCIL MINUTES October 19, 2010 Page 5 is from one billing period to another, only that it was higher than he thought it would be. Kotchevar said we might do personalized communications about the rate structure and also where the customer might fall in the rate structure based on their usage the previous year. Young asked if we provide that kind of information on our bills like the gas and utility bills do. Dietz said people who pay their bills on line can go to a website and see their history and compare it to their neighbors or the City-wide average. He noted only the incremental amount of each block is charged at that rate so it is not for the whole year and not for the entire bracket that you pay the extra amount. Aho thought the feedback to residents might come too late and asked how onerous it would be to give feedback to users who exceed the base quota. Kotchevar said currently the residential readings are only done quarterly so we would have to gather more information at an additional cost. She said they have discussed the possibility of billing monthly,but heard strong feedback that the cost benefit of that was probably not worth it. Aho said he would like to see what the cost would be for a check on the data and a communication to people who are near the boundary who could then make an adjustment before the end of the period. Dietz said the issue is that in order to make that kind of a judgment we would probably have to spend most of the $150,000 cost to go to monthly billing in order to get the data. Nelson thought$150,000 for administrative cost is way too much. Most residents who had high bills the previous summer will be more careful if it is important to them. They have the information on line and we might want something on the first page of the website to lead them back to that information. Basil Wissner, 8293 Mitchell Road, asked if the rate between 2010 and 2011for the 36,000 gallon was $1.80. Kotchevar said that is the difference per tier. Dietz said 2010 is $1.75 per thousand and 2011 is $1.80. Mr. Wisner said he has two water accounts, an irrigation account and a regular account and asked what the rate will be for the irrigation account. Kotchevar said 0-48,000 gallons will be at$2.80, anything between 48,000 and 60,000 gallons will be $3.30 and up, and so on. If the use is less than 48,000 gallons, it will stay where it is now. MOTION: Case moved, seconded by Aho, to close the public hearing and to adopt Resolution No. 2010-74 approving changes to utility rates and the utility rate structure. Motion carried 5-0. X. PAYMENT OF CLAIMS MOTION: Duckstad moved, seconded by Case, to approve the payment of claims as submitted. Motion was approved on a roll call vote, with Aho, Case, Duckstad, Nelson and Young voting "aye." XI. ORDINANCES AND RESOLUTIONS A. RESOLUTION NO. 2010-75 APPOINTING INTERIM CITY MANAGER CITY COUNCIL MINUTES October 19, 2010 Page 6 Neal said the appointment will begin at 12:01 AM on Friday, October 29, 2010, and will end upon direction from the Council. The resolution also authorizes the Council to set a salary for the Interim City Manager. He noted the Council has not had discussion on either item, and there is a blank in the resolution for the name of the Interim City Manager. He said he recommended to the Council earlier this week that Jay Lotthammer be appointed as Interim City Manager. MOTION: Duckstad moved, seconded by Aho, to adopt Resolution 2010-75 approving the appointment of Jay Lotthammer as the Interim City Manager for the City of Eden Prairie, Minnesota. Case asked if we should amend the motion to include information on the salary increase. Neal said it is included in the resolution. VOTE ON THE MOTION: Motion carried 5-0. Lotthammer thanked the Council for their confidence in him. He said he looked forward to working with City staff and the City Council as we move forward. XII. PETITIONS, REQUESTS AND COMMUNICATIONS XIII. APPOINTMENTS XIV. REPORTS A. REPORTS OF COUNCIL MEMBERS B. REPORT OF CITY MANAGER 1. BAC Appointment Process Neal said there are ten new candidates for appointment to the Budget Advisory Commission (BAC), and two current members (Annette Anger and Richard Proops) want to continue to serve. He said Gwen Schulz's term is also up,but she has chosen not to continue. He said the question is whether the Council would want to interview the two incumbent candidates. We have established November 9t" as the date for the Council to interview the candidates, and November 16t" as the date to appoint them to the commission. He thought the Council might want to split the group of ten into two groups of five for the interview process. Nelson said she would like to interview the incumbent candidates. Young said he thought we have a basis on which to make a decision for incumbent candidates. Aho said he didn't believe it is that helpful to re-interview the incumbents, and it might make the other candidates feel awkward to be in the same group with the incumbents. Duckstad said we have a good awareness of what an incumbent has contributed to the commission and what they have done. Case said he was fine with that, although he thought CITY COUNCIL MINUTES October 19, 2010 Page 7 having an incumbent come in for an interview might provide an opportunity to get some feedback on what is working well and what needs the commission has. Nelson said, in light of the other Council Members' comments, she was fine with not interviewing the incumbents. 2. Parting Thoughts . . . Neal noted this is his final City Council meeting as the Eden Prairie City Manager. He said being the City Manager of Eden Prairie is a particularly prestigious job, and getting the job back in 2002 was one of the most exciting events in his life. He thanked the past and present City Councils for their support and said Eden Prairie is a great place to work. He also thanked the City staff for their support and noted he has had a great group of coworkers. Aho said Mr. Neal has been an effective City Manager and has built a strong management team in Eden Prairie. He said Mr. Neal developed good communication and has a good working relationship with all levels of staff. He said Mr. Neal also represented the City of Eden Prairie well during his involvement with community groups. He thanked Mr. Neal for his contribution to making the City of Eden Prairie the No. 1 city in the U.S. Nelson thanked Mr. Neal for all the time, effort and heart he has put into the community. Case said he feels a sense of personal loss at losing Mr. Neal as City Manager. He said Mr. Neal has fulfilled every expectation he had for him when we hired him eight years ago. He thanked Mr. Neal for his service here and said he believes Edina is a very fortunate city to be getting him. Duckstad said he joined his colleagues in thanking Mr. Neal for the job he has done and wished him luck as he begins his job in Edina. C. REPORT OF THE COMMUNITY DEVELOPMENT DIRECTOR D. REPORT OF PARKS AND RECREATION DIRECTOR 1. Acknowledge Art Center Donation Lotthammer said Mrs. Elaine Sampson donated $3,000 to purchase a gas- fired kiln. This type of kiln will be used for porcelain and other unique types of clay art work. He noted on May 29, 2008, the City of Eden Prairie officially took ownership of the building donated by the Sampson Family. The building was offered to the City of Eden Prairie from the Sampson Family with the intent to be used as an Art Center. Mrs. Sampson has continued to support the Art Center since it opened. Lotthammer said the gas-fired kiln will be very beneficial to the Art Center. CITY COUNCIL MINUTES October 19, 2010 Page 8 Prior to Mrs. Sampson's donation the center was using one that was on loan from an artist. MOTION: Nelson moved, seconded by Case, to acknowledge the donation from Mrs. Elaine Sampson in the amount of$3,000 to be used for purchasing a gas-fired kiln at the Eden Prairie Art Center. 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 XVI. CLOSED SESSION TO DISCUSS COLLECTIVE BARGAINING STRATEGY At 7:53 PM the City Council moved to closed session to discuss collective bargaining strategy. XVII. ADJOURNMENT Following the closed session, Mayor Young adjourned the City Council meeting at 8:25 pm.