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City Council - 10/06/2015 - Workshop APPROVED MINUTES CITY COUNCIL WORKSHOP & OPEN PODIUM TUESDAY, OCTOBER 6, 2015 CITY CENTER 5:00— 6:25 PM, HERITAGE ROOMS 6:30— 6:55 PM, COUNCIL CHAMBER CITY COUNCIL: Mayor Nancy Tyra-Lukens, Council Members Brad Aho, Sherry Butcher Wickstrom, Kathy Nelson, and Ron Case CITY STAFF: City Manager Rick Getschow, Police Chief Rob Reynolds, Fire Chief George Esbensen, Public Works Director Robert Ellis, Community Development Director Janet Jeremiah, Parks and Recreation Director Jay Lotthammer, Communications Manager Joyce Lorenz, City Attorney Ric Rosow, and Recorder Lorene McWaters Workshop Council Member Nelson was absent. I. ENTERPRISE FUNDS Liquor Operations Liquor Operations Manager Jaime Urbina and Finance Manager Sue Kotchevar presented information on Liquor Operations. Urbina said the goals of liquor operations are to: • Control liquor sold in Eden Prairie • Maximize profit to support the City's Capital Improvement Program • Provide exceptional service, selection and convenience • Engage in the community Urbina characterized 2015 as the year of customer service for liquor operations. A formal customer service training program has been implemented for all staff, and staff is working with Baker to update store signage to provide better information for both customers and employees. Staff is also working to create loyalty among the customer base through coupons, additional savings for wine club members and weekly electronic communication with customers on new products, specials and events. Kotchevar said liquor sales have decreased approximately 10 percent compared to last year mainly due to intense competition in the marketplace from stores that can provide deep discounts based on the large volume sales. Getschow noted that some communities with municipal liquor operations transfer profits into the general fund, whereas Eden Prairie's profits go toward the CIP fund. He said he has heard of one city that is considering getting out of the liquor business due to the intense competition. Council Member Aho asked if Eden Prairie is considering getting out of the liquor business and simply selling liquor licenses as a source of revenue. Getschow said liquor licenses typically costs between $1,000 and $2,000 per year. The City would not be able to come close to generating the amount of profit it currently sees from its stores. City Council Workshop Minutes October 6, 2105 Page 2 Sales increases of 2.5% and 3%for 2016/2017 respectively are budgeted, from the adjusted 2015 budget. Expense increases of 2.2% and 3.1%from 2016/2017 respectively are budgeted, from the adjusted 2015 budget. Miscellaneous Liquor-Related Matters Getschow said everyone is familiar with the recent popularity of taprooms, and now there is a similar model where spirits are distilled on site, and patrons can order cocktails made with the distilled spirits and purchase small quantities to take home. Getschow said two Eden Prairie residents are interested in opening a microdistillery in Eden Prairie, but it would require an ordinance revision. He asked for Council input on the concept. Case asked about possible downsides. Getschow said microdi still eri es are allowed to sell off-sale alcohol. This could be viewed as competition with our municipal liquor stores; however, the amounts sold by the microdistillery are small and their products would also be available in our stores. Tyra-Lukens said she is fine with the microdistillery concept. She said the area seems to be getting saturated with tap rooms, and a microdistillery would be unique. Getschow said AMC Theaters is seeking permission to sell liquor in its Eden Prairie Center theaters, which would require and ordinance revision. He said AMC currently serves liquor at some of its Mall of America theaters, which are specifically designated as over-21 only. AMC is proposing to serve liquor that could be consumed in any of the theaters. Getschow said the Police view serving alcohol in the theaters as similar to serving liquor in restaurants. Butcher Wickstrom asked if liquor is allowed in theaters in other places around the country. Getschow said it is allowed in some areas. Aho said he would be more comfortable allowing alcohol in over-21 theatres rather than in all of the theaters. Case said he too believes that control and regulation of alcohol is important. He is not opposed to the idea, but thinks the City should let AMC know we are concerned about potential abuse. Utilities (Water, Sewer, Storm Drainage) Public Works Director Robert Ellis provided an update on the three areas that comprise utilities—water, sewer and storm drainage. Ellis said the overall goals of the Utilities Division are to provide a safe and reliable supply of water to its customers; protect the pubic's health by providing safe collection and removal of wastewater; and to provide a storm drainage and natural waterway system that protects property, people and the environment. The financial goals are to ensure adequate funds are available to provide for the operating and capital needs of the three systems and to prepare a ten-year revenue adequacy evaluation model for each of the three utilities. The City's reserve policy for the utility funds states that each fund will maintain: • An amount equal to 90 days of operating expenses • An amount equal to the following year's debt service principal and interest • A capital reserve of two years' capital expenses, except for the storm drainage fund, which will maintain one years' capital expenses City Council Workshop Minutes October 6, 2105 Page 3 Water Utility Fund Ellis said that water use over the past 10 years has been variable, due mainly to weather fluctuations; however up to 10 percent of recent reductions in water use can be attributed to conservation. As of December 31, 2014, the water utility fund met operating and capital needs. While there is a significant amount in reserve, it did not meet the policy goal. Ellis said 2014 and 2015 revenue was lower than expected due to the weather cycle, and the 10-year CIP has flexibility built into it to adjust for these types of revenue dips. Ellis said water utility assets are considered to be in a state of expansion, with only minor repairs. Ellis said that cash flow in this fund is in the black and it is attempting to keep up with depreciation. Operating revenues are budgeted to increase 4.1%in 2016 and 3.8%in 2017. Operating expenses are budgeted to increase .3%in 2016 and 2.7%in 2017. Case asked if the City should be doing more to promote conservation. Ellis said that progress has been made. Consumption is down from 110 gallons per day to about 75 gallons per day. Part of the decrease is due to weather cycles, but some is the result of conservation. Sewer Fund As of the end of 2014 the sewer fund met operating and capital needs as well as reserve policies. Rate increases of 3% are planned for 2016 and 2017. Sewer utility assets are considered to be in a state of preservation with minor repairs. Operating expenses are budgeted to increase 9.6%in 2016 and 2.9%in 2017. The Met Council Environmental Service charge is increasing 9.3% or $318,631 in 2016. Staff will monitor these Met Council charges closely to see if city rates need to be adjusted in the future to cover their increases. City I&I efforts appear to be working as overall wastewater flows are down over the past two wet seasons Storm Utility Fund The storm utility fund had a negative balance of$881,791 at the end of 2014. The negative balance was due in large part to the flooding experienced during the spring and summer of 2014. The fund received a $1,571,709 loan from the CIP fund, which is being repaid, and there is a plan in place to rebuild reserves. Revenues are budgeted to increase 12%in 2016 and 2017. Operating expenses are budgeted to decrease 18.8%in 2016 and increase 32.4%in 2017. Ellis said expenses vary significantly based on timing and cost of various projects. Storm drainage assets are considered to be in a state of capital replacement and repair. The 2016 budget includes one new FTE stormwater operator. This position will be responsible for performing repair projects that are currently outsourced. Staff has found that outsourcing these types of repairs is costly and slow. Ellis noted that Eden Prairie has a combined utility rate that is in the lower third of the list of communities included in the AE2S North Central Rate Study. Open Podium II. OPEN PODIUM City Council Workshop Minutes October 6, 2105 Page 4 A. Sara Freeland and Sarah Kallal—Backyard Chickens Freeland and Kallal addressed the Council as follow-up to the April 21 Open Podium, at which they asked the Council to amend City Code to allow backyard chickens in residential areas. They addressed concerns raised by the City Council at the Open Podium and at the September 1 Council Workshop. Freeland and Kallal suggested solutions to a number of concerns including building standards, odors, predators, containment, setbacks, slaughtering and inspections. They asked that the information they have provided be used to craft a draft ordinance. They said backyard chickens are just one component of the green movement, and they are a tangible way to connect kids back to the earth. Case said he feels it is time to have staff draft a sample ordinance for the City Council to consider. He said other cities do not appear to be having problems with backyard chickens. He suggested doing a trial ordinance. Tyra-Lukens said a trial ordinance would not be practical. Aho said he is still in favor of waiting and including a question about backyard chickens on the next community survey, which will be conducted in about a year. Case said the City could pass an ordinance and tweak it over time if necessary. Tyra-Lukens said she still does not feel she has enough information about the experiences of other cities. She asked staff to collect information to present to the Council. Getschow said staff will survey other cities and provide a report to the Council. He said it will also be important to get input from Council Member Nelson, who was not able to attend tonight's meeting. III. ADJOURNMENT