City Council - 11/14/2017 - Workshop APPROVED MINUTES
CITY COUNCIL WORKSHOP & OPEN PODIUM
TUESDAY, NOVEMBER 14, 2017 CITY CENTER
5:00—6:30 PM, HERITAGE ROOMS
6:30—7:00 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 James DeMann, Fire Chief George
Esbensen, Public Works Director Robert Ellis, Community Development Director Janet Jeremiah,
Parks and Recreation Director Jay Lotthammer, Communications Manager Joyce Lorenz, Liquor
Operations Manager Jaime Urbina, Finance Manager Sue Kotchevar, Finance Supervisor Tammy
Wilson, City Attorney Ric Rosow, and Recorder Cynthia Harder
GUEST: Grant Meyer, AE2S (Advanced Engineering and Environmental Services)
Workshop - Heritage Rooms I and H
I. 2018-19 BUDGET—ENTERPRISE FUNDS
Mayor Tyra-Lukens called the workshop to order at 5:32 p.m. and introduced the first
presentation on the liquor enterprise fund.
A. LIQUOR ENTERPRISE FUND
Jaime Urbina, Liquor Operations Manager, started off with a short history of the
municipal liquor stores. All three stores were renovated between 2007 and 2010
and all stores are approximately the same square footage so residents can find a
great selection and find the same products at each location. He said the lease for
the Prairie Village location was recently negotiated at a reduced rate that will save
the City around $63,000 per year. Urbina said the reduced rate was better than
reducing the size of the store.
Aho asked for clarification about the percentage of gross sales being paid to the
owner under the new lease conditions. Kotchevar replied 5% would only be paid
on gross sales over$3.5 million and noted long-term projections do not show
sales will exceed $3.5 million. Case confirmed 5% would only be paid on sales
over$3.5 million. Kotchevar said 5% would be paid on sales over $3.5 million
during years 1-5 and over$4 million during years 6-11.
Urbina reviewed the goals are to control liquor sold in the City; maximize profit
to support the City's CIP; provide exceptional service, and engage the community
at various events.
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November 14, 2017
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Urbina said the stores' current priorities are customer service, gaining customer
loyalty, adding value through pricing and promotions, employee development,
and engagement through events and social media. He announced new monthly
products and promotions are being offered to compete with other liquor stores in
neighboring communities.
Butcher-Wickstrom asked about employee retention the liquor stores. Urbina said
turnover has been extremely low with full-time positions,however it is more
difficult to retain part-time employees. Butcher-Wickstrom asked if there is
continuous training offered to both full- and part-time employees. Urbina said all
employees are thoroughly trained at the start of employment and ongoing training
is offered related to product training.
Aho asked if non-Eden Prairie residents attend the events. Urbina said he knows
of several non-Eden Prairie residents who attend the events and are impressed by
the Eden Prairie stores.
Urbina reviewed the finance history of the liquor stores. Tyra-Lukens clarified the
most profit that has been made in one year is $1,000,000. Urbina said that it
correct and they expect$650,000 in profit this year.
Urbina explained there would be a sales increase of 8.5% and 2.9% for 2018 and
2019 respectively. He said there will also be an expense increase of 5.7% and
3.1% for 2018 and 2019 due to increased IT costs, credit card fees, and other
factors.
Aho asked for insight on Sunday sales. Urbina said the challenge with Sunday
sales is there has not been a strong trend other than Sunday being the slowest day
of the week. He commented Sunday through Tuesday do not tend to generate
profit. Getschow added it is proving difficult to determine if six days' worth of
profit is being spread over seven days.
Tyra-Lukens asked if cost of sales will be reviewed to determine whether or not to
eliminate Sunday sales. Urbina said, at this point, it would be hard to remove the
option of Sunday sales because of the convenience it provides customers. He said
after one year of offering Sunday sales, they will look for patterns related to days
and hours of operation and make recommendations to adjust if needed.
Nelson was pleased liquor sales generate profit and said it is better than increasing
taxes by 3% to account for the amount of money being generated through the
municipal liquor stores. Getschow thought communication is key to informing
residents of the benefits of municipal liquor stores. He said residents will also see
posters at certain locations stating the project was funded by liquor store sales for
increased awareness of how the profit benefits residents.
Urbina touched on the results from the Eden Prairie Quality of Life Survey to end
his presentation. Urbina said overall, the survey results have been very useful as
to how to improve operations and measure changes.
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November 14, 2017
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B. UTILITY FRANCHISE FEES
Robert Ellis, Public Works Director, said his presentation is meant to serve as a
refresher before Council votes on franchise fees at December's Council meeting.
He said there are 228 miles of streets in the City and the average age of the streets
is 30 years. He reviewed the most expensive repair is reconstruction, while repair
maintenance is in the middle, and preventative maintenance is the most
affordable.
Ellis said if a City were to build a road and do nothing but fill potholes, within 25
years the road will fail and require complete reconstruction. Ellis said our goal is
to keep roads in the range of excellent to very good on the PCI scale.
Ellis said there are over 100 communities with franchise fees in the state and the
revenue they generate are used for purposes such as for the general fund,
trails/sidewalks, and pavement management. He said most communities charge a
flat rate ranging from$1 to $7 per month, while residents of other communities
pay a certain percentage of their utility bill ranging from 1.5% to 5%. He noted
Eden Prairie currently charges a flat rate of$2.50 per household. Ellis said the
recommendation back in July was to increase the flat rate fee to $4.00 for the next
five years, generating a revenue of$3.2 million.
Tyra-Lukens asked Ellis if the City would spend the extra revenue in the same
year it was generated. Ellis confirmed when it comes to franchise fees, the City
will use all of the dollars coming in during the calendar year in that same year.
Tyra-Lukens thought it is nice residents who pay the fee will see the updates.
Getschow added residents will not be charged roadway assessments. Nelson noted
when franchise fees began, businesses were in favor of them because it guarded
against expensive assessments for road repairs.
Ellis ended the presentation with a reminder that the flat rate fee increase will
have a public hearing at the December 14 City Council meeting.
C. UTILITY ENTERPRISE FUNDS
Grant Meyer from AE2S began the presentation on utility enterprise funds by
saying he has been working closely with staff on projections for wastewater and
storm drainage rates. He said every mile of road Ellis mentioned also has water,
sewage, and storm drainage to maintain, along with pipeline, pumping stations,
water storage, and treatment facilities.
Meyer reviewed the study objectives were to update the Water Cost of Service
Analysis (COSA)based on current use patterns, evaluate changing revenue
requirements, evaluate the base charge component for water and sewer, continue
promoting water conservation, and evaluate reinvestment in the long-term outlook
for utilities. Meyer then reviewed the rate study process.
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November 14, 2017
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Meyer said the average utility bill for Eden Prairie residents is currently around
$43 per month and noted this is impressive considering Eden Prairie provides
softened water. Meyer said while looking at longer term projections, they took
into consideration that even though population is increasing, water usage is
steadily decreasing due to residents' awareness toward saving water and use of
energy efficient appliances.
Aho said funds should be dedicated to the long-term system,but asked what
happens when unforeseen projects arise. Ellis said the lifespan of pipes are around
75 years and once the roads are 75-80 years old, we will need to see complete
replacement of the underground components but this is not something happening
soon. Ellis said there will come a point to consider when replacing the roads, if
the underground water and sewer pipes should also be replaced.
Meyer said there are nearly $20 million of capital improvements planned for
water utilities within the next five years. Meyer said each utility should ideally be
self-sustaining, fund three types of reserve funds, and maintain a strong
conservation focus.
Meyer showed the water cost of service is close to the revenue. Compared to
other communities in the region, Eden Prairie's fee for water is about average and
the fee for sewer is one of the least expensive charges.
Meyer announced the water recommendations are to increase the base charge
from$4.62 to $5.25 per month for residential and to increase the base charge from
$5.50 to $6.26 for commercial. He said sewer recommendations are to increase
the monthly base charge from$14.25 to $16.22. Meyer showed the recommended
utility rate adjustments will keep Eden Prairie's rates competitive with those of
other communities.
Meyer said additional recommendations are to review revue adequacy annually,
monitor water sales and near-term revenue stability, and review COSA every five
years.
Aho asked if these rates are needed to have a sustainable system and if they
factored in the water plant. Meyer answered yes to both questions. Aho asked if a
larger water filtration or water treatment plant will be needed. Ellis didn't believe
planning for another water treatment plant was needed at this time but thought
more wells and ground storage reservoirs are needed, which are in the CIP. He
noted WAC fees are dedicated to expanding the water system.
Meyer summarized the proposed rate adjustments for sewer and showed how they
fund the operating reserve and eventually work up to fully funding the capital
reserve as well.
Meyer explained storm drainage is newer so some larger adjustments are
recommended to build up to fully funding capital reserves. Tyra-Lukens asked if
storm drainage is used for cleaning out ponds and Meyer said yes.
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November 14, 2017
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Case noted the City has higher SAC and WAC fees and asked if Meyer foresees
any pressure about charging higher SAC and WAC fees while also increasing
utility rates. Meyer responded even with the recommended utility rate
adjustments, Eden Prairie's fees will still be considered low when compared to
neighboring communities. Case thought we need to be aware low utility rates
have been a selling point of the system and this seems to still be in line with that.
Getschow said fees will be discussed during a public hearing at the December 12
City Council meeting and Tyra-Lukens thanked Meyer and staff for the
presentation.
Open Podium - Council Chamber
II. OPEN PODIUM
A. WALLACE ANDERSON—BEARPATH GOLF BALLS
Tom Burt addressed the Council on behalf of Wallace Anderson, the property
owner of a cabin on Riley Lake. Mr. Burt estimated a dozen golf balls fall onto
his step-father's property every week from Hole 16 at Bearpath Golf& Country
Club. He stated it has been an issue since the golf course was built in 1993,but
the former owner of the club would compensate Mr. Anderson for repairs when
his property was damaged. However, he said the club has changed ownership and
the new owner does respond to Anderson's concerns.
Mr. Burt explained they are frustrated by damage caused from golf balls hitting
the property but are most concerned of liability should a person be injured. He
said after not hearing from the current owner, Anderson reached out to City
Manager Getschow who set up a meeting with Bearpath's General Manager.
Mr. Burt asked for the Council's help and gave three possible solutions for the
golf course to solve the problem: put up a large net, screen the tee, or redesign the
16th hole. He asked the Council to direct Getschow and City Attorney Rosow to
assist in finding a solution.
Next, Mr. Anderson addressed the Council and restated he had a verbal
understanding with the former owner of Bearpath who paid for damages but the
new owner is not responsive.
Case asked Rosow to gather information for the Council on what typically
happens in a case like this, as there have likely been similar issues at other golf
courses. Getschow noted he has tried to be a mediator between the two property
owners and will continue to mediate. Tyra-Lukens said Rosow will gather
information for the Council.
III. ADJOURNMENT