WS 2007 06 25
CHANHASSEN CITY COUNCIL
WORK SESSION
JUNE 25, 2007
Mayor Furlong called the work session to order at 5:35 p.m.
COUNCIL MEMBERS PRESENT:
Mayor Furlong, Councilman Litsey, Councilwoman
Ernst, Councilwoman Tjornhom, and Councilman Peterson
STAFF PRESENT:
Todd Gerhardt, Laurie Hokkanen, Kate Aanenson, Greg Sticha, Paul
Oehme, and Todd Hoffman
REVIEW INITIAL DRAFT OF THE DEBT POLICY, EHLERS AND ASSOCIATES.
Greg Sticha reported on a presentation by Standard & Poor's in which they discussed a new
program they are using to rate their clients called "Financial Management Assessment". The
purpose of the program is to determine which of their clients have good, sound financial
management tools and practices in place. Based on Mr. Sticha's evaluation, the City of
Chanhassen is considered strong in almost all categories. One criteria that the City currently
does not have in place is a formal debt policy. Staff is asking council to review the initial draft
of the City's debt policy and provide feedback. In the graph labeled "Amount of City's Property
Tax Levy Dedicated to Debt Service", Mayor Furlong asked if the 25% shown for the maximum
allowed per policy could be changed to 30%. Mark Ruff with Ehlers and Associates discussed
staying at 25% versus going to 30% and noted that going to 30% would not adversely affect the
City's credit rating. After concurrence from other council members, Mayor Furlong requested
that that amount be changed to 30%. Todd Gerhardt suggested the 30% be revisited in 2009.
DISCUSSION OF CONNECTION CHARGES VS. ACREAGE CHARGES, EHLERS
AND ASSOCIATES.
Greg Sticha explained the city's current policy of charging a flat connection charge and requested
the council consider diversifying the way the charges are collected by implementing a platting
charge. Jessica Cook with Ehlers and Associates reviewed their recommendation that the City
use two separate fees, one called a "plat fee" that would be collected at the time the preliminary
plat is filed, and two, continue with the "connection fee" which is collected at the time the unit
hooks up to the city's system. She noted that the recommended change was not raising fees, but
changing how fees are collected, shifting the carrying cost from the city to developers.
Councilman Litsey asked for clarification on how the 30/70 ratio was established. Mayor
Furlong asked if fees would be applied, on a dollar amount or percentage. Councilman Peterson
asked what amount of money would be saved by changing the fee structure. Mayor Furlong
asked about the risk or down side. The council discussed approving what was being proposed or
tabling the item to research historical information on the types of use and separating commercial
from residential costs. Mayor Furlong suggested that the item be tabled.
City Council Work Session - June 25, 2007
INITIAL DISCUSSION OF 2008 BUDGET.
Greg Sticha reviewed the 2008 Budget Calendar and noted changes. Items that will affect the
2008 budget include the addition of police services in the approximate amount of $100,000. He
explained the spreadsheet showing the history of new construction growth in the city, which has
a direct impact on the tax levy. That number is predicted to be 1.8% which historically has been
closer to 3%. Another impact will be the Consumer Price Index (CPI) which was 3.7% in 2006
and projected to be 2.6% for 2007. After review of the financial audit, staff is recommending
capping the catastrophic reserve in the general fund at $1.3 million. Councilwoman Ernst asked
for clarification on how the catastrophic reserve is used. Greg Sticha reviewed projected
expenses and revenues. Todd Gerhardt addressed the issue of the projected deficit in 2009.
Greg Sticha explained how the projected levy amount for 2008 was determined.
Mayor Furlong adjourned the work session meeting at 7:00 p.m.
Submitted by Todd Gerhardt
City Manager
Prepared by Nann Opheim
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