CC 2008 12 01
CHANHASSEN CITY COUNCIL
SPECIAL MEETING
DECEMBER 1, 2008
Mayor Furlong called the meeting to order at 7:15 p.m. The meeting was opened with the
Pledge to the Flag.
COUNCIL MEMBERS PRESENT:
Mayor Furlong, Councilman Litsey, Councilwoman
Ernst, Councilwoman Tjornhom, and Councilman McDonald
STAFF PRESENT:
Todd Gerhardt and Greg Sticha
PUBLIC PRESENT:
Ryan Rydberg 1036 Pontiac Lane
Ben Gowen 6440 Hazeltine
Greg Bohrer 3706 Hickory Lane
Terry Kroells 1071 Chaparral Court
Cindy Pugh 260 Mountain View Court
Pat & Kathy Pavelko 7203 Frontier Trail
Kent Braun 900 Hiawatha Drive
Mayor Furlong: Thank you and welcome everybody. Tonight’s agenda, first of all I appreciate
everybody for, we’re starting a little bit late here so thank you for your patience letting the
council join us. The one thing that I would, from an agenda standpoint. The Truth in Taxation
hearing is the reason we’re here this evening. We have on our work session agenda a discussion
following the public hearing, a continuing discussion of our budget and unless there’s objection,
my thought is that we just keep this meeting open and pick up that work session item on the
agenda here with our regular meeting. Our meeting here today. Our special meeting. We’ll just
kind of continue right into it as well so, unless there’s any objection we’ll amend our agenda to
do that. With that, again tonight’s purpose here is our 2008 Truth in Taxation hearing. We’ll
start with a report from our city staff on the budget process. We will open it up for public
comments. There will be no decisions tonight on the budget or the levy. That will take place at
our meeting scheduled for next Monday evening. The purpose here is to gain input and thoughts
and comments from the public and as I just mentioned, the ongoing discussions that we have
with our budget which you’ll see in a minute with the process that we’ve been through so far.
It’s been a process that’s been going on for a number of months. We will continue here this
evening as well as we try to wrap things up and hopefully give staff some direction in advance of
next Monday’s meeting. So with that, Mr. Sticha are you ready to go with the presentation?
Greg Sticha: Yep.
Mayor Furlong: Let’s get a presentation first then we’ll go to public comment.
City Council Special Meeting - December 1, 2008
TRUTH-IN-TAXATION PUBLIC HEARING.
Greg Sticha: Thank you Mayor and council. Before I begin my power point presentation I just
want to stress a couple items. First of all the figures that you will see in the power point
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presentation are based on the preliminary levy that you set on September 15. That is also the
numbers that were based on the Truth in Taxation statements that our residents got a couple
weeks ago. So all the numbers that you see tonight are based on the preliminary levy of
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September 15 and that’s also what was put on the Truth in Taxation statements that our
residents did receive. One other item of note. Because our preliminary levy only increased 3%
from our final levy from the previous year, by law we are not even required to have this meeting,
but from a policy standpoint from year to year, it’s always been our practice to go ahead and
have the meeting regardless of the percent of increase or decrease in our levy. First I just want to
kind of touch on some of the required elements to hold a Truth in Taxation hearing and kind of
the budget process that we go through. We need to present the proposed 2009 budget, which is
what we did in September, and a tax levy related to that which is what we did in September and
had budget discussions surrounding those when we certified the preliminary levy in September
to Carver County. We will discuss major changes to the budget and levy. Tonight we will hold
the public hearing for citizen input and comments about the preliminary levy and the preliminary
budget, and then as the mayor said, no decisions will be made this evening about the budget.
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That will be done next Monday at our December 8 council meeting. Kind of the budget process
that city staff and council has gone through over the last 6 months I guess now. Back in July,
preliminary budgets were submitted by our department directors to our city manager for review.
Myself and the city manager reviewed those budgets and prepared a preliminary budget for
presentation to City Council in August. Then in September set a preliminary levy which was
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certified to Carver County before September 15, which is what I said earlier the Truth in
Taxation statements are based on. In the months of October and November we held detailed
budget meetings on each individual budget to go over each department’s budget on a more
detailed basis. This evening we’re holding the Truth in Taxation hearing and then again next
Monday we will be adopting a final budget and levy. Just kind of want to go over some of the
expenditures and revenues that the general fund budget and preliminary budget is based on.
Total expenditures, based on the preliminary budget and levy increased 6.4%. Each division saw
some form of increase, and I’ll kind of get into those in a couple slides after this one, but the
entire expenditure budget increased by 6.4%. Revenues, we present a balanced budget from a
year to year basis. Therefore if expenditures went up 6.4%. Revenues needed to go up 6.4% to
present a balanced budget. For the most part, most of the revenue line items stayed pretty flat.
From percentage wise, some of those percentages are a little higher but from a total dollar
standpoint, most of the revenue items stayed relatively flat. The one exception being property
taxes, which makes up the bulk of the revenues for the general fund. It did go up slightly more.
Taking a look at our general fund expenditure history. This just shows the expenditures in the
general fund over the last 6 years. The increase in general fund expenditures for 2009 compared
to 2008 is 6.4%, which is what the preliminary budget and levy was, is based on. So that gets
down to why did the expenditures, general fund expenditures increase 6.4%. The largest over
riding reason was health care costs and wage increases which accounted for $306,000 or 52% of
the increase in the general fund. Another item that made up a larger percentage of the total
increase was $119,000 increase in the police contract, which was 20% of the increase. And the
preliminary budget and levy had increased fuel and utility costs that accounted for about
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City Council Special Meeting - December 1, 2008
$126,000 or 21%. Those 3 items make up over 90% of the increase in the expenditures in the
general fund. Taking a look at it, based on a levy by levy change from the previous year. Tax
capacity levies are levies that everyone who owns property in the city of Chanhassen base their
property taxes on. Market value levies are levies that are only paid for by residential property
owners, so these levy dollar amounts would affect everyone who owns property in the city of
Chanhassen. The general fund levy had an increase of 5.8% to present a balanced budget. A
number of the other levies in the tax capacity levy arena remained relatively flat. The general
obligation debt levy did decrease due to the elimination of one of our debts on the debt levy
schedule. Total increase in tax capacity levies was 1.2%. Market value levies, there are two that
the City of Chanhassen have. A park referendum and a library referendum. The library
referendum remained relatively flat. The park referendum did see an increase. I believe it was
about 3 years ago we refinanced that debt for a lower interest rate was one of the reasons. The
other reason was, in 2009 we knew more of our debt levy money became available due to the
reduction of other debt levies, so it was the intent of management to one, refinance for a lower
interest rate producing interest cost savings. And two, to push some of that principle back to
2009 when more debt levy money became available, so that’s why that debt levy is a little bit
larger increase over the 2008 amount. This is the last year of the park referendum debt levy, and
I’ll get to that in my next slide. The debt levy for 2009 remained the same as the prior year. It
has been City Council’s intent to maintain a level debt levy from year to year, and in order to do
that in 2009 we did have to use reserves to maintain that debt levy level again for 2009. In 2010
that large park referendum debt levy comes off the books and more debt levy would then become
available for possibly other uses, and it’s been our practice or intent at this point to use, to
possibly use that levy for streets or a revolving assessment fund in future years. So what the net
tax levy affects, the general fund levy increased 5.8%. Total levy dollars, the total levy dollars
that the City is asking for in levy dollars from our taxpayers was actually an increase of 3%
which is what we set at our preliminary levy in September. That’s $295,000. I asked Carver
County to give me a handful of Truth in Taxation notice statements that were sent out a couple
weeks ago. The majority of properties in Chanhassen saw relatively no increase in the value of
their homes for the most part on average. Certainly there were some homes that went up in value
and some that went down in value, but for the most part our total residential value of homes
remained relatively flat from the previous year. This graph shows 5 different valued homes.
What their 2008 value was. What their 2009 value was and what their property, city property tax
bill is based on. Each of the values in each of the years and the percent increases or decreases
from year to year. At this point staff’s recommendation would be to hold the public hearing.
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Hold a continuation hearing if needed on Monday, December 8 and then adopt the final levy
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that evening, Monday, December 8.
Mayor Furlong: Thank you. Any questions for Mr. Sticha at this time? One question, if you
could bring that back up. The one, if you move to your second to last slide that showed the 5
different homes. Number 4 there obviously is different. It’s showing a 4% increase in property
value, and a corresponding increase in the potential property tax. Was there something particular
about that property that, did you look into that at all or?
Greg Sticha: I did not. I don’t know the specifics behind that particular property. I certainly
could do that. I’m not sure why they saw a 4% increase and a correlating 4% increase in their
property tax bill.
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City Council Special Meeting - December 1, 2008
Mayor Furlong: And then number 3 there was basically no change in the property value but an
increase in the.
Greg Sticha: Well as me and Mr. Gerhardt were discussing, in particular with that one, when
your home gets over $500,000 in value, it enters into a new class rate so that might have had
something to do with the fact that although it saw relatively no increase in value, it still saw a
slight increase in the property taxes. Typically your homes over $500,000 will end up carrying
more of the tax debt burden than homes under $500,000 in value.
Mayor Furlong: And that’s based upon state statute?
Greg Sticha: State statute.
Mayor Furlong: Okay. And the other question that we received a few questions on from some
residents is the, I think it was limited market value. Is that the correct?
Todd Gerhardt: That’s correct.
Mayor Furlong: Category. And maybe give a little brief explanation if possible.
Greg Sticha: Well maybe Todd wants to talk about it a little more than I do. I’m not an expert
on the limited market value. I do know it pertains to homesteaded residents only.
Todd Gerhardt: Yeah. Again state law created limited market value to provide relief to
homesteaded residential property owners from seeing dramatic increases in their market value
and thus seeing a major increase in their property taxes. So what the State did was create a law
that limits the increase in your market value to 15%. There’s a formula of course. It may be
under 15% but it is capped at the 15% of a market value increase from the prior year. And that
law is going to go away after the 2010 budget year, and those people with large true market
value of your property versus taxable market value, in 2010 you may see a dramatic increase in
your property taxes because you’re going to now be taxed at that true market value. Unless our
legislator this coming session extend that out further and they may do that. So it’s up to our
legislators in St. Paul to decide that. The current law has that going away after 2010.
Mayor Furlong: And Mr. Gerhardt, is it phasing out or is it just a, it goes away and there’s a.
Todd Gerhardt: It goes away.
Mayor Furlong: It’s just a one time jump.
Todd Gerhardt: Yeah.
Mayor Furlong: So the question is then, I think Mr. Sticha you said on average there’s been little
or no increase, inflationary increase in residential property value but certainly some property
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City Council Special Meeting - December 1, 2008
values have seen some changes. Perhaps even double digit changes in their assessed values from
earlier this year, is that correct?
Greg Sticha: Yep. There were some properties that saw double digit increases in their property
values, that’s correct.
Todd Gerhardt: I would say those individuals on the lakes are the ones that are probably falling
into that category of the limited market value. That’s the one where we’ve seen double digit
increases over the years and so, I would say almost most of the lake homeowners have some type
of limited market value versus their taxable market value.
Mayor Furlong: Thank you. Any other questions for staff at this time? If not, then I will go
ahead and open up the public hearing for Truth in Taxation this evening and invite all interested
parties to come forward to the podium. And please state your name and address for the record
and we’ll be happy to listen to your thoughts. Anybody want to go first?
Pat Pavelko: Hi. My name’s Pat Pavelko. I guess could you put the, that shows the increases of
the different areas.
Mayor Furlong: Mr. Pavelko, could you state your address too for the record?
Pat Pavelko: Sure. 7203 Frontier Trail.
Mayor Furlong: Thank you.
Pat Pavelko: Ah no. The one with the health care, wage increase. 52%. That slide. Yeah. I
guess you know in these tough economic times, and most of the residents either staying flat in
their wage increases or taking anywhere from 5, 10, 15, 20, 30, 40 percent cut in wages in this
economy and paying more of their health care costs, so their companies can try to become more
profitable. Do you really feel it is wise to increase wage and health care in the city by 52%?
$306,000 when the average homeowner is losing their health care. Is taking decreases or staying
flat in their wage increases.
Mayor Furlong: Mr. Sticha, maybe you could respond to that because I think there’s some…
Pat Pavelko: Has the City Council looked at that at all?
Greg Sticha: Again these numbers were based on the preliminary levy. That’s the first point that
I would like to make. We did have from that number we, our original preliminary levy included
a 25% increase in health care cost because that’s what our provider was telling us was going to
happen at that point in time. Since then we have found out that that’s going to be 9%, so what
we set for a final levy will be somewhat lower by approximately $36,000 just for the health care
cost. In addition, since the preliminary levy we have based on a recommendation of staff, come
up with a decrease in the actual wages itself for another $17,000 reduction from the preliminary
levy.
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City Council Special Meeting - December 1, 2008
Pat Pavelko: So is that 52% going to be less? Is that $306,000 going to be less?
Greg Sticha: Well, I can’t really comment on.
Mayor Furlong: From a recommendation standpoint, these numbers as I understand it, they were
put together with some best guesses back in August and September. Since that time we’ve
gotten some better information in terms of what insurance premium for health care will go up.
They had estimated 25%. I think looking at over time, there was a change and Mr. Gerhardt last
year there was a significant reduction in health care expenses. We went to a different provider.
In fact we moved most, if not all of the city staff to a health savings account plan versus a
traditional co-pay type plan. The purpose of that was to reduce overall cost in terms of health
care, both currently in that year and going forward and to reduce the premiums, and I don’t recall
the specific numbers but there was an actual significant reduction, a double digit reduction if I’m
not mistaken in terms of our health care premium a year ago when we went to that and so that’s
why there was the opportunity for some re-capturing. In the end it’s not occurring.
Todd Gerhardt: Yeah. I think to answer your question, that 52% is going to go down and it’s
going to go down from our preliminary estimate in August was a 25% increase. That wasn’t
acceptable. We went out and competitively bid our health insurance and we got a 2 year contract
with Preferred One that is going to cap our expenditures going into 2009 and 10 at 9% each year.
Wages, we brought that down by a half a percent from what the preliminary budget was back in.
Pat Pavelko: May I ask what the increase is for wages?
Todd Gerhardt: 3.5%.
Pat Pavelko: Do you feel that’s prudent for the economic times that are upon us right now for
any type of increase?
Todd Gerhardt: Our policy here has been to try to keep wages at what the cost of living is, and
cost of living when we started the budget was 4.5%.
Greg Sticha: It was actually over 5%.
Todd Gerhardt: And we brought it down for that so.
Pat Pavelko: Yeah. I mean I think yeah. Times have changed and to automatically look at a
cola increase on a yearly basis I think really should be reviewed. When you have your budget
meetings, it should be reviewed by the City Council. Because that’s not what’s out in the private
sector right now and I think the government should reflect that.
Todd Gerhardt: And I think the council did that. We’re below the cola and so you know it’s,
we’ve got to try to retain our employees. Recognize those individuals that do a great job for the
city and we have a performance based system so not everybody is going to get 3.5%. Some may
get more. Some may get less based on their performance, and.
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City Council Special Meeting - December 1, 2008
Pat Pavelko: But in these economic times I, I mean I really feel that it should be reviewed and I
think the City Council should look at that budget. Another question too is on increase in fuel.
Now with the fuel cost being down substantially since the highs of in July and August, that 21%
increase now, is that decreased?
Greg Sticha: That again is going to be part of our discussion later tonight and that item is going
to be decreased as well.
Pat Pavelko: Okay. Now I guess away from the budget for 2008. Looking on to 2009. Has the
City of Chanhassen or the City Council, with the decrease in revenues, or the decrease in market
value, taxable market value of the houses in Chanhassen, probably plummeting anywhere from
10%, 15%, to 25% and, which was not reflected in this budget. Or I should say in the valuations
of last spring because it was kind of ahead of the curve when the market values have plummeted
since. Has the City Council or the budget looked in the 2009 where to be quite honest with you
the percentage, it should be houses or the revenues should be decreased. The taxable market
value should be decreased in 2009 compared to 2008, which then you’re going to have less
revenue to draw from. Do you, I mean is that a correct statement?
Todd Gerhardt: Well, for the budget year 2009, Mayor if you don’t mind.
Mayor Furlong: Please.
Pat Pavelko: Well I meant for 2010. Or for 2010.
Todd Gerhardt: Yeah, and what you see is you also have new growth that’s occurring in the
community. You have new office industrial. We did about 300,000 square feet of office
industrial. You still see increases in some of our homes market values, and preliminary
discussions with the county assessor for budget year 2009, we saw an increase in real growth of
2.44% so, and the overall valuation of the existing base, before the new construction, stayed
even. So we did not see a decrease. We’re not going to know until probably April what 2010 is
going to do for us but with the new construction that has occurred, and you’ve kind of got to look
at what happened in 2007 to really see what values you’re going to have for budget year 2010.
You can always have that one year delay.
Pat Pavelko: Correct, yeah. You know I mean for all indications if you look at the valuations of
houses here in Chanhassen, they have decreased and if you sit down with the realty world they
will tell you that. And if the house valuations decrease, the revenues decrease and there might
have to be some very, very tough decisions made by the City Council over the city budget for the
year 2010. Just one more question too, maybe you can clarify it for me. When the new
assessments do come out in the spring, what is the process for disagreeing or agreeing with the
valuation of your home?
Todd Gerhardt: Mayor. When you get your valuation notice, our process is an open book
process is what it’s called. You can call down to Carver County Assessor’s office and the city
has contracted with Carver County for our assessment services, and you can sit down with them
or come to City Hall here. We usually schedule a day where they meet here also, but they prefer
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City Council Special Meeting - December 1, 2008
to have people come down to the County where their computers and books are so you can really
look at all the valuation information down there. And they’ll go through the process and how
they determine your valuation and give you the comp’s that they used in determining that. They
will then.
Pat Pavelko: So it’s done on a one on one basis?
Todd Gerhardt: Yes.
Pat Pavelko: Okay.
Todd Gerhardt: Yep.
Councilman Litsey: We’ve had really positive feedback on that process because it is one on one
and you can sit down and look at your property.
Pat Pavelko: Yeah.
Councilman Litsey: So I think hopefully if you do that you’ll find that a good experience.
Pat Pavelko: That’s it. Thank you.
Mayor Furlong: Okay. Thank you for your comments. Others that would like to comment this
evening.
Kathy Pavelko: His wife wants to comment.
Mayor Furlong: Please do.
Kathy Pavelko: We bought our house 20 years ago.
Mayor Furlong: I’m sorry, if you could state your name.
Kathy Pavelko: Kathy Pavelko, 7203 Frontier Trail. We’ve lived in the house for 20 years. We
bought it for $285,000 and about 8 years ago we did some remodeling. My taxes are over
$13,000. I can’t afford it anymore. We’re selling. I’m being driven out of a home I love. A
community I would like to stay in, but I can’t. I can’t afford it anymore. We can’t keep going
and we’re going to have to sell. $13,000. 560 is what I put into this. It’s ridiculous. It can’t,
it’s just going up and up and up. My wages haven’t gone up. My wages have gone down and
I’m going to sell my house.
Ben Gowen: Ben Gowen from 6440 Hazeltine. It was announced on the news tonight that
we’ve been in a depression since December ’07. These figures that you’re showing us were
probably I’m guessing figured out and justified somewhere in July or August of this year. Oil
was still at $150 a barrel. It’s now $49 today. I think it behooves the city to re-evalue these
things on a 6 month basis at this time. Maybe not normally but we’ve had a whale of a decrease.
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City Council Special Meeting - December 1, 2008
The market went from 13,000 to 8,000. It went down $600 today. 600 points today which was
the highest, second highest in history. These circumstances behoove the city to re-evaluate at a
current date rather than use the July-August-June dates. I’m sitting on $150,000 increase in my
valuation. My property. It’s gotten older. Not newer. This is a tremendous increase. $150,000
on 6 acres. 7 acres. Thank you.
Todd Gerhardt: Mayor, council members. I had a short conversation with Mr. Gowen prior to
the meeting and I’m going to make a call down to Carver County Assessor’s Office to see why
Ben’s property went up more than 15%.
Ben Gowen: You talking about me? I can’t hear you.
Todd Gerhardt: I talked about our conversation we had earlier where we’re going to.
Ben Gowen: 101 to R2 you mean?
Todd Gerhardt: Where we’re going to call the County Assessor about your valuation.
Ben Gowen: Oh, you mean tonight.
Todd Gerhardt: Yeah. So we’ll contact the County Assessor and talk about why it went up.
Kent Braun: Kent Braun, 900 Hiawatha. I’ve been doing an addition on my house. It’s not even
done. There’s no siding on it. I don’t have doors on the house. You know in the new part and
mine went up, I should have been here last year because it went up last year. I mean it wasn’t
even finished and you know the properties have gone down and mine went up 18.4% this year.
And last year it went up a large amount, and I mean I don’t know with the housing market, it’s
not even finished. If I went to get a loan for it, I couldn’t even get a loan for it. To go to sell it, I
mean would be hard so I mean I don’t know how they can justify you know it going up 18.4%
this year then plus with the large increase last year, and it was not even you know, I mean it’s
getting closer but I mean last year that’s you know, and this year it’s kind of ridiculous, but.
Todd Gerhardt: Mayor if I could just let Ben and Kent know, if we could get a copy of your
Truth in Taxation notice with daytime phone number, we’ll contact you tomorrow and
coordinate a conference call with Angie. She’s the Carver County Assessor and as I stated
earlier, the city contracts with Carver County for our assessment services and we’ll have a
conference call and determine how they came up with your values.
Kent Braun: Alright, thank you.
Mayor Furlong: Mr. Gerhardt, if there are other residents watching at home this evening, can
they contact you tomorrow at City Hall?
Todd Gerhardt: Oh sure.
Mayor Furlong: If they are in a similar situation.
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City Council Special Meeting - December 1, 2008
Todd Gerhardt: Yep.
Mayor Furlong: Because it sounds like having the specific properties would probably make
those conversations easier as well.
Todd Gerhardt: Sure.
Mayor Furlong: Thank you. Others that would like to comment this evening? Good evening
sir.
Greg Bohrer: Yeah, Greg Bohrer at 3706 Hickory Lane. I guess I’m one of those lakeshore
people. It went up 18%. Now we’re talking about the process. When the process, the taxes you
know that are payable in 2008 and 2009, so is this process over with then? I mean as far as what
you’re going to be taxed.
Todd Gerhardt: Mayor, council members. The valuation for taxes payable in 2009 was
determined last April-May, and there’s nothing we can do for your taxes payable in 2009. You
always have the option to go to District Court next year and I would advise you to ask for legal
advice to see whatever options you may have that way.
Councilman Litsey: Is that what you were asking, or were you asking if, I guess I took it as are
you asking if the budget process is over yet?
Greg Bohrer: I guess the budget process.
Todd Gerhardt: Oh. The budget will continue until, if the council is satisfied and supports the
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budget, the last meeting we have scheduled is December 8. And that is, we’re going to have a
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discussion tonight. We’ll also have it on their work session on the 8, and then we’ll have
another presentation similar to this to kind of announce the results and the final budget figures at
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our December 8 meeting. If the council feels comfortable approving it then. We can always set
another meeting date if they need additional time. But right now the schedule is to hopefully
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have it approved by December 8.
Councilman Litsey: The reason we hold off until near the end of the year is because, as been
talked about here, we have better budget numbers as we get closer to that time period, so what
we’re looking at tonight is this preliminary tax levy, but now we have other additional
information that’s come in and so that’s what we’ll be talking about after this meeting.
Greg Bohrer: Okay, great. Is there a way that I could get in that conference call?
Todd Gerhardt: For valuation? For your valuation?
Greg Bohrer: Yeah.
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City Council Special Meeting - December 1, 2008
Todd Gerhardt: Sure. Not a problem. Just, if I could get a daytime phone number and we’ll
make copies of your Truth in Taxation notice so I have a PID number to give to Angie.
Greg Bohrer: That will work. Thank you.
Councilman Litsey: Thank you.
Terry Kroells: Terry Kroells, 1071 Chaparral Court. It’s always been a bit confusing to me how
the market valuations on my house could go up 10% year after year, and when I call the
assessors office they tell me they just raise them 10% across the board to everybody. And now
when I pull statistics from Standard and Poors off of the internet, it tells me that the home prices
peaked in September of 2006 across the country and as of September, 2008 they should be down
to May, 2003 valuations which doesn’t show up on my property tax statement at all. From
September in 2006 should show up so could somebody explain to me why the valuations can be
arbitrarily raised 10% year after year and why they don’t arbitrarily go down since September,
2006 too.
Todd Gerhardt: Mayor, council. I would say a good percentage of people in Chanhassen did see
a valuation decrease throughout the community. Not everybody but you know the county
assessor looks at neighborhoods to see how those homes are selling compared to your neighbors.
So you may have a couple of homes in your neighborhood that have sold for more than what the
market value is. They will do a basis based on the neighborhood sales. Not the community as a
large. So they may look at you know all split level entry homes that were built in 1995 that are
you know 1,800 square feet and they’ll check around the neighborhood to see how that
compares. And then if there aren’t, then they will look out throughout the community.
Terry Kroells: What you’re seeing is our little corner of Carver County here has bucked the
national trends since September of ’06? By 17% one year and 16% the next year. My valuation
went down 1%. That’s a long ways from 16 and 17 for the last 2 years. For no improvements on
my house other than painting the walls inside.
Todd Gerhardt: Yeah, all I can do is, not having the comps here to justify the valuation that the
County used, you know that’s all I can tell you.
Councilman Litsey: I know there was some, there’s been some media coverage in the past about
evaluations and certain communities and I know Chanhassen’s been listed as maintaining their
property values above the norm. Whether that’s accurate or not, I don’t know.
Terry Kroells: And I agree with this gentleman. My company has had two lay-off’s this year
and frankly every day I’m thankful I have a job and I keep wondering where do you expect the
money to come from. I can’t go to my boss and ask for a 6 or 10% raise to pay the increase in
my valuations and taxes. I’m frankly glad I have a job because our company doesn’t have work.
And it’s hard to cut but I’m going to have to cut. Everybody has to cut. The government’s
learning they’re going to have to cut. But these valuations are all smoke and mirrors as far as
I’m concerned. There’s no basis for this when you can arbitrarily raise valuations 10% year after
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City Council Special Meeting - December 1, 2008
year. There’s houses on the market that have for sale signs for 6 months in my neighborhood so
don’t tell me that the houses are selling and the valuations have gone up. It’s not there in fact.
Councilman Litsey: Have you taken advantage of the open book process or do you?
Terry Kroells: I call the assessors. I haven’t gone and sat down but when my house goes up
10% year after year for no reason and I call the assessor and their answer is they arbitrarily raise
everybody’s taxes. What am I supposed to argue against? Oh, look at what you can sell your
house for. Well what can we sell our house for now? My argument is stuff always seems to go
up really quick but it doesn’t come down really quick, and I’m not hearing anybody saying that
our valuations are going to go down 16% next year and 17% the year other. The year after that.
In fact they should have gone down already since houses peaked in 2006. That should have
showed up on this year’s valuation. And it doesn’t.
Todd Gerhardt: Mayor and council. All I can suggest is that if you sit down with the county
assessor, they will show you comps of recent sales in your neighborhood and show you what
they’ve sold for and that’s the basis that they use for those comparisons. If not, you know if you
can show them comparisons of where other values have gone down, then they’re going to have
to seriously look at reducing your value based on what those sales have occurred.
Terry Kroells: The last time the assessor came to my house I happened to be home. I let him in.
I started asking him questions was and all his responses, did you paint this room? And he
marked it down on his computer and I says, you’re telling me that painting this room is going to
raise my taxes and his response was, I only enter the information. The computer determines
what your valuation is. That was his response. Is that suppose to, it’s like blame the computer
because the valuation on my house goes up. Somebody had to program that, so how is that stuff
determined?
Todd Gerhardt: Well they take into account the condition of the home. You know those people
that take pride in maintaining their home will help in the re-sale of it. If you don’t keep up your
home, then you will have a devaluation because whoever comes back in to buy that home is
going to have to make those improvements to bring it up to a standard that they may want to live
at. But if you don’t maintain your home you should reflect a lower value.
Councilwoman Tjornhom: May I just make a comment on this, and I don’t mean to be anti-
government but to me that just seems so hypocritical or crazy.
Audience: You’re penalized.
Councilwoman Tjornhom: Yeah, for keeping a nice home and you know we had the assessor
come through our home this year too and I have to let you know that I wasn’t comfortable either.
You know I had to open every closet and I even had to open my garage to see if we had sheet
rocked it or finished it or, and so I understand the process is uncomfortable and sometimes
bewildering.
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City Council Special Meeting - December 1, 2008
Terry Kroells: It seems like any little thing they can mark down as an improvement, they’re just
looking for.
Councilwoman Tjornhom: Yeah, and that’s why I think you know I would advise you to go
down to the county and sit down and have an eye to eye with a human being. Not a computer,
and have a real discussion about what you feel is happening is your neighborhood and your home
value. I think that’s I think the best advice that Mr. Gerhardt has given is that you know I’m
almost tempted to because when I saw that my home increased, yet when you turn into my
neighborhood, there’s probably 8 for sale signs and I’m going, you know I don’t want to have to
sell my house now because it’d be really hard and so you know like I said, I think, I sympathize
with you. I think we all do. I sympathize with everyone in this room. This is a real problem and
I think the best thing to do is go down to the county and like I said look someone in the eye and
have a real conversation with them about this dilemma we’re all facing.
Ben Gowen: Can I go up again?
Mayor Furlong: Absolutely Mr. Gowen. Happy to hear from you.
Ben Gowen: Ben Gowen. Same address.
Councilwoman Tjornhom: Haven’t moved yet. Can’t sell your house.
Ben Gowen: Who has to okay this budget that he’s presented tonight? The council?
Greg Sticha: Yes.
Mayor Furlong: The council will be considering a budget for adoption at our, it’s scheduled
right now for.
Ben Gowen: You do the adopting though, right?
Mayor Furlong: We’ll be adopting a budget, that’s correct.
Ben Gowen: Can the budget be re-vamped because of the critical circumstances of this month?
This era? Can it be done?
Mayor Furlong: Well I think the answer to your question is yes and it will be. The numbers that
you saw tonight, and with some of those increases were estimates completed during the summer
months.
Ben Gowen: I’m sure that that fuel bill of 21%.
Mayor Furlong: Will be coming down.
Ben Gowen: We’re sitting on $150 a barrel. We’re down to $49 today.
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City Council Special Meeting - December 1, 2008
Mayor Furlong: Right.
Ben Gowen: And there’s an awful lot of market that’s gone down. Went from, I think it was
13,000. They hit 8,001 today and I’ll bet you it goes to 3,000. That’s my prediction.
Mayor Furlong: And we’re taking some steps and you brought up the fuel issue. Staff has taken
a look at the estimates for what the cost of the city buys fuel. We buy both unleaded for vehicles
and diesel as well, and made some estimates as to what they think the cost, based upon the best
information we have right now.
Ben Gowen: Can you change these numbers though? That’s what I want to know.
Mayor Furlong: Yes, and we will be. I expect, and we haven’t done it yet but we will be doing
that.
Ben Gowen: It would have to be done I think because my income has changed now. Not next
year. It’s changed now. This gentleman says the same thing.
Mayor Furlong: Right.
Ben Gowen: And if you can’t re-vamp those numbers within the next, before you vote on it, it
will be a sacrilege not to be able to redo those numbers.
Mayor Furlong: And we will be. We will be.
Ben Gowen: I hope so.
Mayor Furlong: As part of the process, no. And we’re going to continue that discussion. As
Mr. Sticha said, we’ve been talking about these numbers since the summer months and gathering
information. We know and can see, we’re all seeing the same thing and reading the newspapers
and all of us have other jobs that we’re working in as well so we’re aware of it. We appreciate
the comments because you’re reinforcing what we already know. But to the extent that some of
the, and fuel costs, you raise that issue. One of the things that we’re doing new this year is
working with the State of Minnesota, Department of Transportation to try to lock in a portion of
our fuel costs at a lower level and to try to reduce fuel cost.
Ben Gowen: You mean futures?
Mayor Furlong: Not necessarily through futures but by participating in a contract with the State
that they’re bidding out.
Ben Gowen: I’ve got a friend that futured on corn at $8.00. It’s down to 3 now and he’s bought
it at 8.
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City Council Special Meeting - December 1, 2008
Mayor Furlong: And what I was going to suggest. It’s not necessarily futures but I was talking
with Mr. Sticha this afternoon, and if we all knew what the fuel prices were going to do next
year, we’d probably be in different positions.
Ben Gowen: Well we don’t know but we do know what’s happened now.
Mayor Furlong: Yes we do and we try to use the best information we have now and that’s why,
as it was said earlier, we wait to approve a budget and a levy until the last possible moment,
which is the month of December.
Ben Gowen: But they’re predicated last June, July.
Mayor Furlong: But.
Ben Gowen: They’ve got to be re-vamped now.
Mayor Furlong: And that’s what we’re doing. And you’re participating in that process and we
are in the process of re-vamping.
Ben Gowen: I hope so.
Mayor Furlong: The numbers that were presented this evening were what was consistent with
the Truth in Taxation notices that were sent out. Those are the pieces of mail that you all
received.
Ben Gowen: Well you as mayor have done a good job in the past on the finance of this unit and
I hope you can continue.
Mayor Furlong: Well thank you for the compliment and at least there’s no pressure now.
Councilman Litsey: I think, to help people understand. This has been a long process and we’re
continuing to challenge staff as a council to try to come up with ways, cost savings or innovative
ways to do things.
Ben Gowen: Why don’t you just hit 5% and chop it off, all the way through?
Councilman Litsey: Well, we try to listen to what the needs are and then balance it against all
the other things we hear and try to come up with a, you know workable budget but. So it’s
important to hear what you have to say.
Mayor Furlong: Good evening sir.
Ryan Rydberg: Hi. Ryan Rydberg at 1036 Pontiac Lane and I guess I’m, maybe just more of a
question. Actually I’m kind of happy with my market value so congratulations on that one so. I
guess the question I have is, when I got the tax statement there’s an administration cost and then
a city offices cost. They’re the first two line items on the proposed taxes for next year. I guess
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City Council Special Meeting - December 1, 2008
my question is, you know I saw a decrease in my market value. But then on the other hand you
see big increases for administration line items and city of Chanhassen. I guess I’m just curious,
is this both of those combined? It just kind of was like they’re taking, robbing Peter for Paul.
Mayor Furlong: Mr. Sticha, do you see that on there?
Greg Sticha: Yeah. The first line of your Truth in Taxation notice is Carver County
administration. That’s the Carver, the county portion of your property taxes. So the first line
would be the county portion. The second line is the City of Chanhassen amount for property
taxes. And that would be based on the valuation of your property what your property taxes went
up or down.
Ryan Rydberg: Okay. Okay, so this number up here is that…
Greg Sticha: City of Chanhassen only.
Ryan Rydberg: Okay. That’s all I had. Thank you.
Todd Gerhardt: I believe the county’s public hearing is Thursday.
th
Greg Sticha: Yep. Thursday the 4. That’s correct.
Todd Gerhardt: At what time Greg?
Greg Sticha: 7:00 p.m., Carver County Government Center in Chaska.
Mayor Furlong: That would be a similar opportunity to speak to the county commissioners
about their budget, the county’s budget. Similar to our discussion here tonight is focusing on the
city portion of the property taxes.
Todd Gerhardt: Yeah, we’re roughly 20% of your tax bill. And you’ve got the school district
and the county and then there’s also the other jurisdictions. Mosquito Control. Vo-tech and
watershed district that fall into that other category. So for every dollar that you pay in taxes,
20% of that cost is the City of Chanhassen. Or 20 cents.
th
Greg Sticha: School District 276, their hearing will be December 9 at 7:00 p.m. at the Service
Center Community Room in Minnetonka. I’m not sure what the other school district, what night.
th
I would imagine it’s the same night, December 9 as well. Probably at 7:00 p.m.
Mayor Furlong: If people live in District 112, check their web site or contact the district office
and they’d be able to share that information.
Todd Gerhardt: Yeah. It’s also on your Truth in Taxation notice.
Mayor Furlong: The statement itself, right.
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City Council Special Meeting - December 1, 2008
Ryan Rydberg: Well it says on the, for District 112 that there’s no meeting required.
Greg Sticha: They must not be having a meeting then. And technically our meeting was not
required either but we went ahead with the meeting so they must have had a levy increase that
was below the state statute requirement for having a Truth in Taxation meeting so it would be
my guess that maybe they then decided not to have a Truth in Taxation hearing.
Todd Gerhardt: I don’t think that precludes you from going down and meeting with
Superintendent Jennings or Finance Director Steve Pumper.
Mayor Furlong: Okay.
Pat Pavelko: I just, I hate to drag the meeting out but you know in the police contracts. The
20% increase. What is that?
Greg Sticha: Well, Todd you can answer that question. I know the answer too but.
Todd Gerhardt: We are adding a law enforcement position this coming year so about $100,000
of that is for the school liaison officer and also adding a patrolman.
Mayor Furlong: And I think that’s a net effect. We had in this current calendar year we had two
mid year hires under our police contract with Carver County. There was a detective that was
hired in March I believe. Earlier in the year. And then a second deputy that was brought on late
in the year, so part of that increase is, which we planned for and budgeted for this year but we
didn’t have the full year salary in this year’s budget. So part of that increase is capturing the full
year salary next year over the partial year salary this year. In addition to Mr. Gerhardt’s point,
the effect of that is also with the new high school opening up. There is a student liaison police
officer that will be participating there with Carver County. The school district and the city are
jointly participating in funding that position. That is the plan at this time. To do that. So part of
that increase is some mid year hires this year, and obviously we’ll have them full time next year.
So, and then there’s…
Pat Pavelko: So $100,000 of the $119,000 is new personnel?
Todd Gerhardt: Yes.
Mayor Furlong: Effectively, yep.
Pat Pavelko: Oh, okay. I guess one more item here on the wage and health care increases. Boy,
I guess to me the City Council and the Mayor in these times should really go back to the budget
process and say hey. Can we really afford a wage increase? And to see if that can be trimmed
down. I mean economic times do not really dictate a 3.5 or you know somebody’s getting a
merit increase of 7% or 5% or whatever it may be. That’s not the real world and I really think
the you know City Council should send them back to the drawing board and see what else they
can come up with.
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City Council Special Meeting - December 1, 2008
Councilman Litsey: When you look at wages you look at economic adjustments. You look at
market rate adjustments. Obviously we want to have good employees here. We want to attract
and retain good employees and so we look at what the prevailing rates are and we want to be
competitive in that because there’s a value outside of just the dollars you pay. A value in the
employee and what they bring to the city and if you have good employees, you compensate them
fairly. Hopefully you can retain them in that, but they will also be of service to the City.
Pat Pavelko: Yeah, I mean that’s true with the private sector with the 3M’s. The Northwest
Airlines or Delta Airlines now. I mean it’s the same thing. They want to retain their personnel.
They want to retain good personnel, but the fact of the matter is, is the economy’s not dictating
wage increases right now.
Councilman Litsey: Part of it is is that you want to get, I don’t want to get into a long dialogue
about private sector and public but the earning potential for public employees in good times is
limited. It isn’t for the private sector. So they don’t have the opportunity to get those large
increase that perhaps when times are good. So then when times are bad, yes they perhaps get a
fair adjustment but they’ve given up that opportunity to get you know what the market gets in the
private sector sometimes too so. The public and private sector, the way I look at it anyway, are a
little bit different because their earning potential is far greater in the private sector when times
are good.
Pat Pavelko: Oh yeah, absolutely.
Councilman Litsey: So those wages may have gone up during those times. Now they’re maybe
stabilizing or going down but the public sector hasn’t necessarily kept. It’s just the way of
looking at it.
Pat Pavelko: Right, yeah. No, I mean I agree with you 100% but I guess I look at too, when you
say that, you have to remain competitive with the competition, I guess you’d have to show me a
city right now that’s having great economic times here in the metropolitan area or in the state of
Minnesota or throughout the United States. They’re not. You’re all in the same boat and to
retain competent people, cities are not going to be throwing money away. So I mean again, I just
think you should review that. Thank you very much.
Councilman Litsey: Thank you.
Mayor Furlong: Thank you. Anyone else this evening like to comment?
Kent Braun: Yeah I guess that last point… I think that from what I’ve heard, you know you
have the city employees are well compensated for their time. If you go to public, you know to
the private sector, I think the government employees are paid very well and plus with their
benefits are excellent. Their pensions and all that so I mean as far as keeping the help, I think
you know if you go from private and public, you know it’s apples and oranges. Government
workers make a fair amount of money from what all you would as a say a factory worker you
know. Or you know if you’re on the line shuffling papers but from what I’ve heard that when
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City Council Special Meeting - December 1, 2008
you jump up to the government, with taking compensation for the health and all that stuff, that
they’re well paid. Thank you.
Mayor Furlong: Thank you. Anyone else? Please.
Cindy Pugh: My name is Cindy Pugh and I live at 260 Mountain View Court, and I didn’t come
here tonight to make a comment. I just have never been to a meeting and I wanted to observe.
But I feel compelled to just make an observation and even a suggestion that I think it’s the
council’s responsibility and the city’s responsibility to look for ways, look for as many ways to
retain the valued residents of Chanhassen, like the Pavelko’s here. If I said your name correctly.
I think there should be as much focus on doing whatever is possible to retain the valued residents
who have been here for 20 years and built here 20 years ago just like we did, and as retaining
valued city employees. I mean I’m sure they’re wonderful. Just as wonderful as all the residents
who have liked lived and breathed and want to stay here forever, but I’m just not sure that there’s
as much focus on doing what ever is possible to cut back on expenses right now. You know if in
fact the, you know having run just as an aside, I mean having run a Dayton’s store as the general
manager for a number of years, I just know in really challenging economic times, you know like
Christmas season. I mean if it’s not a, if the business isn’t good, we had contingency plans in
place to cut back and business isn’t good, and it hasn’t been good for a long time and there’s
nothing on the radar to tell me that things are going to turn around any time soon so I just think
that I’m not really sure how that 3% was agreed upon and maybe that made the most sense at
that point in time, but I think the times, I mean all the, everyone who spoke here tonight just
spoke so articulately. These are different times and they were significantly different than the
summer and I think it’s time to come up with some significant contingency planning in order to
even look for a reduction. So thank you.
Mayor Furlong: And that is something, Mrs. Pugh thank you for your comments. It is
something we’ve already started to do and we’ll continue to do that and I think the update that
we get later on this evening is going to be part of that. What are our contingencies? The
revenues for the city are not solely property taxes. They make up a large percentage of it. I
don’t know if you have a slide on that Mr. Sticha or not but there’s also a, there it is right there.
You can see that there are other sources of revenues and probably the most significant from an at
risk standpoint or uncertainly are the license and permits. Those are permits and license fees, but
especially permit fees based upon building permits. Now we have been able to generally stay
near budget on our permit fees this year because of commercial development. We have had
some new residential homes and permits there and some remodeling but what has kept those
permits on budget this last year has been our commercial and our industrial development. Some
of the growth that occurred the prior year and continued this year. From a contingency
standpoint, and we’ll get into this in a minute. That was probably from an uncertainty
standpoint, the largest revenue source of uncertainty is in the permits. What will construction do
next year? As you can see the current preliminary budget held those essentially flat. Now we
are aware of some projects that are in the queue if you will. The question is whether or not
they’ll go and when they go. And so we have already months ago started talking with staff about
putting together some contingency plans as we look at some uncertainty with regard to some of
the other sources of revenue that we have. In a growing city, permits make up a significant
portion of your revenue. It funds the inspectors. The planning department and those are
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City Council Special Meeting - December 1, 2008
expenses that the city incurs and that we need to incur to make sure that we maintain a high
quality city from a growth standpoint, but they are funded not necessarily with property tax
dollars but with permit dollars. And so we have, and just because new development will cease, it
doesn’t mean that some of those expenses go away. There are other needs that we have for that.
Sometimes remodeling increases but the economics of a remodel versus new construction is
different, both in terms of fees generated and costs incurred, and so those are some of the balls
that up in the air that we’re looking at, so that is one thing. I appreciate your comments but it
also is something that we have recognized and have started doing, and we’ll likely continue to do
through the coming year. Is to continue to watch closely where the revenues and expenses are
going and be able to react and make changes as necessary. My sense here is once we get done
with this public hearing, we’re going to start talking about some of the up to date information
that’s been brought getting into the month of November and December of 2008 with our best
estimates so that we can start taking a look at some of those, or continue to look at those and start
seeing where we might need to refine those numbers more closely. And based upon some of the
comments tonight here, we may be doing that. And taking a look at some of the numbers that
have, some additional information that was already, that we haven’t perhaps looked at as closely
as some people are suggesting that we do so, just some quick comments there but I appreciate
that but it’s something we are already doing.
The following letter was received from John Nicolay, 608 Pleasant View Road. He was unable
to attend the meeting and asked that his comments be entered into the record:
“Dear Mr. Mayor and Honorable Members of the Chanhassen City Council,
I am writing, for the first time in my 30 years as a City resident, to object -in the most strident
and strenuous manner the written word will allow - to the proposed increase in taxes on my
property. I'm writing because I'll not be able to make the meeting at City Hall tonight.
The increase proposed, on my residence, for the City of Chanhassen's portion of my 2009
property tax is currently $181.70 or 15.3% over the 2008 actual. This is not acceptable!!!
Although I do not understand the actual mechanics, I understand that there have been changes to
how the State redistributes taxes to the cities. If we, as a city, are not getting as much as we did
from the State or if, in the details, the State has lowered it's collection and left it to the cities to
go get then it makes it easier to understand.
BUT, I'm not getting a 15% increase in my pay this year and I am not willing to support - at this
time - giving the City of Chanhassen that much either!!! If we need that kind of increase then
you all owe it to the community to educate us as to why. AND, you need to come to us with the
explanation. Whether that is by letter or other communication vehicle.
I also understand that the bursting of the housing bubble has probably sent a shock wave through
the system in terms of valuations and thus net revenues on applied levy rates. Well, again,
educate us!
Once again, I do not support the currently proposed increase!!!
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City Council Special Meeting - December 1, 2008
Sincerely,
John Nicolay
608 Pleasant View Road
R25.7300090
952-474-0157”
City Manager Gerhardt contacted Mr. Nicolay and explained that his Taxable Market Value went
up 15% from 2008 to 2009, which caused his taxes to go up by 15%. He further explained that
homes valued above $500,000 in Market Value are calculated at a higher Class Rate (The first
$500,000 is calculated at 1% and anything over $500,000 is calculated at 1.25%).
Mayor Furlong: Anybody else before we close the public hearing? Okay. If not, is there a
motion to close the Truth in Taxation public hearing this evening?
Councilman Litsey: So moved.
Mayor Furlong: Thank you. Is there a second?
Councilwoman Ernst: Second.
Mayor Furlong: Made and seconded. All those. Any discussion on that?
Councilman Litsey moved, Councilwoman Ernst seconded to close the public hearing for
the Truth in Taxation hearing. All voted in favor and the motion carried unanimously
with a vote of 5 to 0.
DISCUSSION OF 2009 BUDGET.
Mayor Furlong: With that let’s take the opportunity to take a look at some of the changes that
was staff’s updated information. Again the information presented before was consistent with
the Truth in Taxation statements that were sent out. Since that time there has been some updated
information, some of which was shared already but let’s go through the list. Mr. Sticha, maybe
we can slide into the next item and have some more questions answered perhaps and discussion
as well.
Greg Sticha: Absolutely. Before we get started I’m just going to try to get this a little more
viewable for the screen here. Is that a little better?
Todd Gerhardt: Yeah.
Mayor Furlong: We can work with you.
Greg Sticha: Alright.
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City Council Special Meeting - December 1, 2008
Mayor Furlong: This isn’t as polished I’m sure because this is a work in process.
Greg Sticha: Okay, as you’ve pointed out Mayor, we did receive a large amount of information
since our preliminary levy that allowed us to come up with some areas for resources or cuts to
the preliminary budget. We’ll just kind of go through each of those. The top two lines of this
spread sheet, which were included in your memo, just kind of give you an idea of the reduction
in expenses needed to get to the levy for each of those levels and what that resulting levy
increase would be. You set a preliminary levy of 3%. To get to that amount you would have to
cut $44,551 from the budget that was presented to you back in August. To get to a levy of 2.4%
you would need to cut $100,000 from the budget. With that in mind and with the information
that we received since September in mind, we put together this spread sheet which kind of breaks
out some of the resources or cutting opportunities that we have. Wages. Staff and the city
manager went ahead and felt the same concerns that some of the residents pointed out tonight.
We actually lowered wages, that should actually say 4% to 3 1/2 % for a savings $17,000 on the
general fund budget. We also, as discussed earlier this evening, saw our health care costs come
in at 9% rather than 25%. That saved the general fund budget $36,000. We adjusted fuel costs
from $255,000 down to $210,000. That saved $45,000 in the general fund budget. We also
adjusted the utility cost at the library and city hall. We originally thought utility costs might
increase by as much as 25%. We don’t think that that will probably be the case for either
facilities. When we were able to cut that number $10,083 for a total identifiable resources/cuts
within the general fund of about $116,000. In addition to that we’ve looked at areas that we
could cut that would result in some type of service level reduction. One of those options that we
came up with would be to eliminate the Maple Leaf. That would say about $10,000 out of the
budget. Another one would be next year, we conduct our citizen survey every 2 years currently.
Next year is one of those years when we would be conducting that survey. Conducting that
survey every 4 years rather than every 2, that would save about $16,000 out of next year’s
budget. I’m not going to talk about sealcoating just yet. Delay the hiring of a quarter patrol
position that is currently scheduled for 2009 and not hiring that position until 2010. That would
save about $20,000. If you add up all of those numbers. The 10, the 116, plus the 10 plus the 16
plus the 20 is what staff’s recommendation was based on in the memo that was sent to you.
Staff’s recommendation, we actually had 3 recommendations within the memo. The first of
which was to reduce the levy to the 2.4% which means you’d have to cut $100,000 from the
general fund budget. So of the $116,000, $100,000 would have to be used to reduce the levy to
that level to the 2.4%. The remaining amounts, the $16,300 plus the 10 plus the 16 plus the 20
equals $62,000. Staff’s recommendation for that $62,000 was to either use for eventual
increases in the public works, new public works facility building utility costs, or set aside for
roads for our revolving assessment construction plan. Those were two of the recommendations.
The third recommendation had to do with contingencies. As you talked about earlier and one of
the residents brought up, revenues for next year are certainly in flux. In particular building
permit revenues. It’s very possible we may have a shortfall next year. Our hope is that, based on
some of the projects we’re hearing about that maybe that won’t be the case but to have a
contingency plan in place, as council directed, is probably a very prudent idea. In order to plan
for a contingency reduction in those revenues, staff is recommending not sealcoating in 2009,
which would save about $217,000 and to use that as a contingency just in case revenues do fall
short in 2009. One of your other areas that you certainly could use is within the general fund
there is the catastrophic reserve fund of $1.3 million. That is not a part of staff’s
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City Council Special Meeting - December 1, 2008
recommendation. The three recommendations, as I stated, were the ones that I mentioned before
but you certainly could also access a portion of that catastrophic reserve fund to either lower the
levy or set aside for some alternative purpose for the 2009 budget. Some of the needs we have,
obviously a number of residents and some of you have you know discussed the need of lowering
the levy. That would be one. A revolving assessment construction fund is always a need.
Keeping our streets high quality and in good shape has always been one of the things that we’ve
kind of prided ourself here in Chanhassen. Another need is park maintenance fund for our future
maintenance and improvements to our existing parks. We currently do not have any such fund in
place to maintain our growing park facility system. As I mentioned earlier a utility cost increase
for our public works building, which is part of staff’s recommendation. The second
recommendation, and then another need is a contingency plan for a revenue shortfall in 2009
which is the third portion of the recommendation, which is the $217,000 for not completing seal
coating in 2009. That’s kind of a breakdown of the numbers that we were able to find which
would be in the very top few rows here. Some other numbers that we’ve provided as
suggestions, which would result in service level reductions, and then we listed the needs that we
obviously have here so. With that in mind we put together the memo with those 3
recommendations for you. Certainly it’s your discussion and ability to do with that
recommendation what you guys feel is the best fit for the city for the upcoming budget year. So
with that, I have no further comments on the memo.
Mayor Furlong: Thank you. Mr. Gerhardt, perhaps City Manager, looking at some of the
potential reductions in service levels. Looking at the list here starting with the Maple Leaf and
citizen survey. Perhaps you can just give us a basic background on the, if we were to go and
eliminate those services, what the affect would be and the importance of having those in place.
Todd Gerhardt: Mayor, City Council members. What the Maple Leaf provides back to the
community is communication on two fronts. The back side of the Maple Leaf is an insert in the
Chanhassen Villager and we will send that information out 4 to 6 times a year. The front page is
usually reserved for what may be going on in the coming months. The last one was elections so
we had a nice map for the public to see where the precincts were. Where they might vote. And
then the back side is always reserved for promoting our park and rec activities at the rec center or
activities that may be going on in the coming month. And so it’s a marketing brochure to the
public to let them know on specific events that are going to be coming up in the following
month. Eliminating that we can pick up some of that through the Connection which is also
another marketing, but you know some of my staff have concerns on the park and rec element
and getting the word out about activities occurring at the Rec Center. So you know there may be
some other ways that we can get that information out but to do that it’s typically mailings and
you have postage, printing and layout that goes along with that. For $10,000 I think it’s a nice
tool to communicate back to the public of what’s going on. Conducting the citizen survey every
4 years, what that is is a comprehensive survey that is professionally done. You get a
professional result. It’s done through the mail. It helps measure the services that we provide
back to the residents. Do you need to do it every 2 years? You know it’s up to debate. I know
some cities that do it annually. Some that do it 2 times and some that don’t do it at all and you
know I think this city could live with a 4 year analysis on that. So that one, it’s up to the council.
I think one of the things we did talk about the survey is you’re always looking for feedback from
the residents and we always have open ended questions that we can ask during that survey
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period, and so that’s something you should be thinking about this coming year if there’s any type
of feedback you want to see from residents to get a good cross section of what the public may be
thinking about. I think last time was should we have an outdoor mall type thing and that, you
know should we save the Dinner Theater were two of the main questions in the last time we had.
Councilwoman Tjornhom: And this is a work session so this is very informal. Our work
sessions usually we just talk a lot about our thoughts and questions so excuse me but would it be
possible, talking about the Connection, to have maybe just our own little survey in the
Connection and if people get it and want to fill it out, they can send it back to us themselves?
Would that be an option to at least look at and explore instead of having to do an full blown
survey? Although staff time and counting the survey too but it just, I mean there has to be some
way that we could still get opinions and thoughts without you know doing this every 2 years.
Todd Gerhardt: Well, you know personally I think that having the professional survey that
we’ve done has measured us from year to year, and having that tool and using the same
company, you know in private sector you’re constantly measuring yourself and this is something
government has been grabbing onto is using these surveys to measure how we’ve been
evaluating our service from the residents. And you know there is going to be a cost to put
something together but again, unless you really have, I mean we can get opinions back from
people that way but it’s not professionally done. I mean if you’re looking for feedback, we kind
of do that with our CSO’s and law enforcement and the fire department. You know how did you
like our service? We got that type of feedback.
Councilwoman Tjornhom: So we shouldn’t have the address go to Brian’s house?
Councilwoman Ernst: So Todd if I could back up for just a second. When we were talking
about the Connection and now we’re talking about the survey, and I know that we talked about
putting the survey on line before and we also talked about putting the Connection on line and is
there any reason why we couldn’t advertise those events on line rather than in the Connection?
Todd Gerhardt: The Connection is available on line and so you know anybody that went through
there, those activities are advertised there also. But I don’t know if we’ve done, I don’t know if
the Maple Leaf is on line or not. If we scan that in and make that available.
Councilwoman Ernst: You know I guess I’m thinking, if we have resources out there which we
already do. We have a nice web site. Why we couldn’t, rather than spending the money to
publish these pieces, why we couldn’t put them on line. It makes sense and it’s the way we
operate today more or less. You know in our world that we exist in today.
Todd Gerhardt: Marketing is done through a variety of different sources and trying to get a
physical document in somebody’s hand is why we try to do the Maple Leaf. Not everybody’s
going to go to the City of Chanhassen’s web site. By truly marketing you are putting that
document in the home, and so that’s why we would you know, I’m suggesting that.
Councilwoman Ernst: Yep. Right, and that has worked for us in the past but as we’ve heard
here tonight, we’ve heard some major concerns so where we can look at cutting costs and it
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makes sense to do it, then I think we should really be looking at those ways to reduce those costs.
And that’s the reason for my questions because if, really if we can save even $26,000 in those
first two line items, and it’s a win. We may not be reaching the hands of everyone but again, we
may be reaching more hands than we think.
Councilman Litsey: I kind of like, I mean I hear what’s being said here and I agree with some of
that. I think maybe doing perhaps like a blend of we increase the survey time to 3 or 4 years and
then in the interim, like Bethany suggested, perhaps have a just an opportunity for people to
comment in the interim permit. Offer feedback. Things like that. Granted you never know who
might take advantage of that so I think there is a value every so often of having kind of a
professional service go out there and reach those people that perhaps maybe wouldn’t comment
normally. But in the interim period, if we would lengthen this out, I think that would be an
opportunity so they still have that forum, but it wouldn’t be quite as scientific or you know
maybe quite as valid from a sampling standpoint. The other thing on the Maple Leaf, a lot of
times for me like when I think about registering you know your child for sports or an event, even
if we didn’t have the Maple Leaf, perhaps if we just periodically put things in the paper alerting
people to go to the web site and watch for the Connection. You know spring registration is
coming and just kind of to jog your memory sometimes I think is to do that in time. Maybe
there’s other ways, less costly ways to do that than having an insert.
Councilwoman Tjornhom: Brian I think also though when we do get our sign, our official sign
up, that will also share a lot of information.
Mayor Furlong: Another touch.
Councilwoman Tjornhom: Yeah, to people also.
Mayor Furlong: Okay, let’s keep going on these because we may have some other discussion on
the individual items. Again Mr. Gerhardt, just your thoughts on, if we can keep going.
Deferring sealcoating.
Todd Gerhardt: Yeah, if anybody else wants to leave.
Mayor Furlong: Either to Mr. Gerhardt or Mr. Sticha here.
Todd Gerhardt: Mr. Sticha can make a copy of your Truth in Taxation statement and so we have
that for the record.
Mayor Furlong: One of the items here is to consider deferring sealcoating or making that to a
later year but.
Todd Gerhardt: Yeah, I mean the sealcoating, it’s a delayed maintenance type thing and for a
one year period as we hope that this economy would turn around, that we would kind of monitor.
You’ve got a deadline when you sealcoat and it’s usually typically the end of July, middle of
August is really the drop dead date to sealcoat roads. You need the warm weather for the oil to
seep down and give you a good seal so as we kind of get up through the July period, we’ll be
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City Council Special Meeting - December 1, 2008
monitoring our building permit activity which is our largest revenue source and that’s most
drastically affected by the economy. We would come back and inform the council that we may
need to implement delaying this maintenance for a one year period. The quarter of a patrol
position in 2009, I believe it was September in 2009 that that position would start, and pick up
the remaining portion of that patrolman in 2010. Again this is one that we would like to just hold
on the back burner and see how the economy goes up until that point and then bring it back for
council consideration. And if we need to implement that cut, then take a look at the 2010 budget
and see if we can’t absorb it into that. That’s one of the recommendations out there. And then
the last one is the catastrophic fund. It’s a fund for situations like this. There’s really no outside
source that feeds to this fund so that reserve is there for the council to use any time that you feel
is necessary.
Councilwoman Ernst: So when we were talking about the different options, obviously there are
3 options for recommendations here and the fourth one being utilizing the catastrophic fund.
Can we, so if we’re looking at the $62,300, I’m assuming that brings us down to the 2.4%. Is
that correct?
Todd Gerhardt: Can you repeat that?
Mayor Furlong: There’s about 3 questions in there.
Councilwoman Ernst: So we’re looking at the 3 recommendations plus the catastrophic fund
option? That’s not a recommendation but an option.
Todd Gerhardt: Yeah, the catastrophic fund is part of the contingency fund that if for some
reason we don’t hit our revenue expectations during the 2009 budget cycle. So we would come
back and ask the council to transfer money out of that fund to balance the budget at the end of
the year. That was the contingency plan that we talked about. That’s one option that would be
out there. And then the other one was the sealcoating and the quarter of patrol position. Those
are three options that we put out there for the contingency aspect of it.
Councilwoman Ernst: Right.
Greg Sticha: The quarter patrol actually is in the $62,000.
Todd Gerhardt: Oh it is in the 62?
Greg Sticha: Contingency for public works/roads. The recommendation for contingency is the
217 and the hope would be that we wouldn’t go beyond a $217,000 shortfall. If we did then I
guess it would be staff’s recommendation to then use the catastrophic reserve fund, if it went
beyond a $217,000 shortfall.
Councilwoman Ernst: The reason I’m asking the question is because I see you know we ended
at 2.4 to say here’s, you know here’s what, bottom line here’s what you need to do to get to the
2.4. But it says, to the left of it it says reduction to get to zero increase on average property tax
bill. So we’re saying at 2.4%.
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City Council Special Meeting - December 1, 2008
Greg Sticha: The average property tax bill would see either a zero increase or probably most
likely a slight reduction. Assuming no fluctuations in their market value or large increases in the
market value of their home. If they saw what the average resident saw in the City of Chanhassen
where their value of their home stayed either close to the same or saw a slight decrease, they
would also see no increase in their property tax bill and like I said, mostly likely would see a
decrease on the, based on the 2.4% levy increase. They would most likely see a decrease in their
property tax bill.
Councilwoman Ernst: So if we’re listing the other options down here. I don’t know what that
gives us having it in front of me like for example if we don’t do the sealcoating, that’s not
included in that 2.4%, right?
Greg Sticha: Correct.
Councilwoman Ernst: So I don’t know what those numbers, what the levels of the numbers are.
Todd Gerhardt: Okay, I’m with you now. I’m sorry. The $100,000 reduction to get to the 2.4 is
the adjusted wage decrease, the health care cost adjustment, the adjusted in fuel cost and the
adjusted utility cost for the library and the adjusted utility cost at city hall minus $16,000 from
anyone of those because to get to the 2.4 you need $100,000. Okay?
Councilwoman Ernst: Okay.
Todd Gerhardt: And then the $16,300 gets moved down to eliminating the Maple Leaf. Pushing
back to the citizen survey from 2 years to 4 years and the quarter patrolman. So if you add the
$10,000, the $16,000, the $20,000 and the $16,000 up above, that totals $62,000.
Councilwoman Ernst: Okay. But the number for the resource cut. I’m sorry, for the resources
cut with service reductions is what I’m not seeing in terms of what that brings that tax levy to.
Councilman Litsey: You want to know the net effect.
Councilwoman Ernst: Yeah, exactly.
Todd Gerhardt: Net effect, okay.
Councilwoman Ernst: That’s, yeah.
Todd Gerhardt: Greg do, if we reduce the levy by an additional $62,000, so roughly bringing it
down to $10,012,565.
Mayor Furlong: Yep, is the effect about one percentage point for every $100,000 reduction?
Greg Sticha: Not quite.
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City Council Special Meeting - December 1, 2008
Mayor Furlong: Not quite?
Greg Sticha: Under staff’s recommendation, to get to the 2.4% you would have to use 100 of the
$116,000 to get to that point. The other $62,000 in the staff recommendation was to be used for
contingency purposes of public works building/roads. If you use that to lower the levy to get to a
number $62,000 lower than a $10,074,565 listed on the spread sheet, that would give you a levy
of $10,012,000 which would actually be a 1.8% increase in the levy. So it’d go from.
Councilman Litsey: If you applied all that towards the levy.
Greg Sticha: If you applied all that towards the levy it would go, the levy increase would go
from 2.4% to 1.8.
Councilwoman Ernst: And then Greg we talked, I’ll ask this one last question and then I’ll be
quiet. To get to the point where we talked about today to the .79%. If we took $100,000 out of
that million 300, that would bring us down to the .79%.
Greg Sticha: If you wanted to get to a levy of .79 or .8 percent levy increase from the previous
year’s levy, you would have to cut in addition to the $162,000, another $100,000.
Councilwoman Ernst: Another 100, right.
Councilman McDonald: Could I ask a question then?
Mayor Furlong: Just a second. Mr. McDonald.
Councilman McDonald: Okay, if I understand this then, the $16,000, you’re moving that down
to, it’s not in the sealcoat but you said it’s part of the public works. It would remain there as a
contingency fund.
Greg Sticha: If you look at the second page of the budget wrap up memo I included in your
packet.
Mayor Furlong: This is page 2 of the narrative memo?
Greg Sticha: This is page 2 of the narrative.
Mayor Furlong: Okay.
Greg Sticha: In the first paragraph we mentioned the 100,000 resulting in the 2.4% increase. So
taking $100,000 of the $116,000 for that purpose to lower the levy to 2.4% increase. The
remaining amounts as listed, bulleted. They’re in bullets on the memo, elimination of the Maple
Leaf of $10,000. Delaying the citizen survey of $16,000. Delay hiring the police patrol position
of $20,000 and the remaining portion of the $16,300 from above listed on this spread sheet, so
noting that the $100,000 would be used to lower the levy. That remaining $16,300 plus those
other 3 items mentioned is $62,300. In staff’s recommendation the $62,300 would be for the
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City Council Special Meeting - December 1, 2008
contingency of the public works building utility cost increases for next year and/or our streets or
roads revolving assessment construction fund for that purpose.
Councilwoman Ernst: Which is the $217,000?
Greg Sticha: Nope.
Councilwoman Ernst: No. That’s still out.
Greg Sticha: That’s different. Different topic.
Councilwoman Ernst: Okay. Okay.
Greg Sticha: Don’t talk about that one right now.
Councilwoman Ernst: Okay, gotch ya.
Mayor Furlong: Mayor, if I can just make a point. I think Councilmember Ernst talked about
taking $100,000 out of the catastrophic reserve fund. That’s only a one time reduction. That
then puts the burden back onto the 2010 budget to make up that $100,000. You know you’re
going to have to levy that money back. You’re using kind of a one time dollar amount to reduce
the levy, so we’ll be in the hole into the 2010 budget by $100,000 if you use one time money.
Why we suggested these cuts and not the catastrophic in using that for a one time revenue
shortfall is that that wouldn’t put you into a deficit position as you start your 2010 budget.
Councilwoman Ernst: Yep, that does make sense. I guess two things on that though. For the
$217,000 sealcoating, and I am going to bring this up now Greg.
Greg Sticha: Sure.
Councilwoman Ernst: For the $217,000 sealcoating, could we use possibly $100,000 of that in
place of the contingency fund?
Greg Sticha: Well if you used $100,000 of that amount to lower the levy I think is what you’re
suggesting.
Councilwoman Ernst: Right.
Greg Sticha: Then you would have $100,000 less for revenue shortfall next year. In case
revenues, then that would leave $117,000 for revenue shortfalls next year, so if revenue
shortfalls next year exceeded the $117,000, which is possible, then you would have to find some
resource to make up that difference and the most likely candidate would be the catastrophic
reserve fund.
Councilwoman Ernst: Right, and that was going to be my question. That’s probably where we’d
have to take it from, right?
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City Council Special Meeting - December 1, 2008
Todd Gerhardt: My concern again by reducing the sealcoating, you’re kind of doing the same
thing again. You’re reducing the amount of sealcoating you would be doing into the community
now and into the future because you’re doing $217,000 today. If you take or reduce this budget
by $100,000, you are now saying that you’re only going to do $117,000 worth of sealcoating
now and into the future. So once you take that levy amount away, you’re $100,000 short in
providing that service. So again kind of in that $100,000 hole as you go into the 2010 budget
again.
Councilman Litsey: Conversely though, if you’re putting that in contingency and you do need to
use that, you’re doing the same, you could actually be worst off than the 100. You know what
I’m saying? If you end up needing to use, if you’re using this money okay as a kind of a back-up
plan if things get really bad.
Todd Gerhardt: Yep.
Councilman Litsey: Then you’re not going to be doing the sealcoating and therefore you are
penalizing future.
Mayor Furlong: For that one year.
Councilman Litsey: For that year. The problem that I have with that is we base our sealcoating,
we base our pavement plan and so forth on data and what is best practices and it’s kind of like
okay, save a little now. Pay me a lot more, or you know it’s going to cost me a lot more later.
You’re kind of, you’re going to have to make that up at some point in time because if you’re not
keeping your roads up to date and so forth, then you’re going to get into these major road
reconstructions that are even going to cost more so. Now you may not have to do that because
this is kind of a contingency plan, but I’m just saying worst case scenario, then you are
jeopardizing the street projects down the road perhaps that we may have to go the even more
costly reconstruction and stuff because we haven’t been prudent on keeping those up so to me
that’s not a good way to look. I think we stay the course with our pavement plan. I think it’s a
good plan and we do what it takes to fund that. To me that is not the place to look to draw that
from.
Councilwoman Ernst: And I agree with you Brian. We may or may not have to pay later in
terms of what kind of shape our roads are in. But if we’re delaying it for a year, and I don’t
really even want to really focus on taking away from the, that construction fund for sealcoating.
I want to go back to the contingency fund for a second because I thought, or the I’m sorry. The
catastrophic fund. So if we take $100,000 off of that, that was for like emergency purposes,
correct? So if we take $100,000 out of that, there really isn’t an urgency to pay back to that as
there would be for the sealcoating, right? I mean we can pay it back but we don’t have to have
that paid back in a certain period of time because it’s going to be used for emergency purposes,
and that, as I understood it, that was the purpose of that money.
Todd Gerhardt: You’re absolutely right and we gave you options and you know we don’t want
to delay maintenance on anything because you know I think I’ve told you this time and time
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City Council Special Meeting - December 1, 2008
again. It backs up the river and we gave you some options that are out there. We tried to find
options that would probably not dramatically put the city behind the 8 ball. And so they’re out
there. When and if we get into these positions, we would bring these back to you and have a
healthy discussion and debate on which one of these options we may want to select.
Councilman Litsey: Part of the problem too with the patrol officer delay is that, there comes a
point in time they can’t gear up to put that person on either so you can say we’ll wait and see and
then you say okay. We can do it. Well now we don’t have the personnel. We haven’t had
enough notice to do that. I just look at sealcoating and law enforcement as core services that we
need to provide. We’re already on the lean side when it comes to law enforcement and we’ve
come up with a plan that at least is addressing that. I just think you know, the other things I
could see you know perhaps looking at and then, I’d rather use, if we’re going to go this route,
I’d rather use the catastrophic fund than to kind of be our back-up.
Mayor Furlong: But Mr. Gerhardt and Mr. Sticha, I guess the issue of if you use a cash fund
balance in a cash, catastrophic fund. Just if we use that to reduce an annual expense or to offset
an annual revenue source, the issue is not replacing that money in the fund. The issue is next
year when, how are you going to offset that reduced revenue or the expense next year. I think
that’s what Mr. Gerhardt was getting to. It’s not that you have to put the money back into the
fund. It’s next year you’re starting from a balanced budget standpoint, $100,000 in the hole.
And so either you spend again out of your cash, or you have to increase revenues some…come
back with a levy increase or tax increase.
Councilman Litsey: Yeah, I agree with that but what I’m, and I understand that and I don’t think
that is. I don’t want to take, lower the levy by using the reserve funds. What I’m saying is, we
anticipate we’re going to be able to do these things if worst case scenario the worst happens, then
we’ve got that catastrophic fund to you know back us up. But I don’t want to take that
catastrophic fund now and lower the levy with it. I don’t think that’s prudent at all.
Mayor Furlong: I thought that was one of the options I heard presented.
Councilman Litsey: Oh, okay.
Councilwoman Ernst: Right. And that was the question I was asking. But if we don’t, I guess
Mayor to your point, if we’re not looking at that. If we’re looking at it as an expense, it’s not, in
reality it’s not an expense. Because it’s just being held there, right? It’s not like, it’s not
something that we need to use for any specific purpose. And it makes the budget look like we’re
short $100,000 and that we need to get it back in there, but in reality it’s kind of just a holding
place for that money in case we need it is my question.
Councilman Litsey: But it has to, but if you count on it to lower the levy it has a compounding
effect over the years because then you also have the normal increases you’ve got to cover plus
you’ve got to make up that increase so generally as a budgeting principle I personally don’t feel
that’s a good way to go. I agree with staff on that. What I’m saying is that it, worst case
scenario and some of these things, you know we need to make up a revenue shortfall that we
really didn’t anticipate. That’s what that would be for.
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Todd Gerhardt: I think Councilmember Ernst is thinking about us replenishing the catastrophic
fund. Don’t think about the catastrophic fund. Think about sealcoating if we reduce that by
$100,000 and we take $100,000 out of the catastrophic fund and move it into the sealcoating.
Then in 2010 you have to take either $100,000 out of your catastrophic fund to fund sealcoating
to a $217,000 level, or the 2010 budget is going to have to increase the levy by $100,000.
Councilwoman Ernst: Well unless I mean things change now though between now and 2010.
Those revenues could come in to make up for that rather than taking it out to put it back in.
Taking it out of catastrophic fund to put it back into the sealcoating plan. The revenues come
from, I mean things could change but looking at, if we’re looking at 2010, but the budget is for
2009 and thinking long term I understand your point but I guess I’m saying that revenues could
definitely increase by that time so would we really need to take it out of there to put it back in?
Greg Sticha: Well to make up $100,000, the biggest revenue source within the general fund is
building permits, which is about a million bucks. So that’s 10%. So we would have to see a
10% increase in revenues that we already think the revenues for 2009 might be a little high, so
you’re asking for a 10% increase in our revenue line item that we think for 2009 might be a little
low to begin with. So it would be 10 plus percent that you would have to have your revenues
rebound in 2009. Whether or not that happens, I don’t know. Like we said earlier, you can’t
predict the future on that but over a 10% increase in that line item may be difficult.
Todd Gerhardt: If I hear you correctly you’re saying potentially to make up that $100,000 you
would look at other revenue sources other than the general fund.
Councilwoman Ernst: Yep.
Todd Gerhardt: And I have to kind of agree with Greg. If we’re potentially thinking building
permit revenues might be short in 2009, it might be our guess that we you know not increase our
revenues in 2010.
Councilwoman Ernst: So then does it make, and I don’t even know if this is feasible but you
know how we have the franchise fund?
Todd Gerhardt: Yep.
Councilwoman Ernst: Can we take out of the franchise funds and move those over?
Todd Gerhardt: No.
Greg Sticha: The cable TV franchise fees?
Councilwoman Ernst: Well no, not.
Greg Sticha: Or establish a new franchise fee.
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Mayor Furlong: Water and, what are you thinking of?
Councilwoman Ernst: Well either water or I know we had the forestry.
Greg Sticha: Our utility funds?
Councilwoman Ernst: Yeah, wherever that…
Todd Gerhardt: Storm water management?
Councilwoman Ernst: Yeah. We have several different franchise funds, right?
Todd Gerhardt: Well what we have are utility funds. Sewer, water and storm water. The only
franchise fee that we receive is the cable TV fund, and that money can solely be used for public
education on the public access channel, and buying equipment to broadcast that information back
to the public. The same thing holds true to our utility funds. The sewer and water. We have to
allocate costs based on the services that we provide in those funds. So a portion of my salary, a
portion of Greg’s salary that relates back to providing sewer and water to the public is already
allocated to that. We can do another evaluation to see if there’s any additional money that we
can transfer over there, but a good portion of some of the employee’s salaries are already being
done.
Greg Sticha: Well said. Just like what the finance director would say so.
Councilman Litsey: So if we were to adopt the 2.4% levy, the majority of homeowners in
Chanhassen would either see no increase or a slight reduction?
Greg Sticha: Correct.
Councilman Litsey: Now we have that, we have no you know, nothing we can do about market
values and things like that. I mean that’s.
Greg Sticha: Right. Correct.
Councilman Litsey: That’s a different issue. We’re talking about a budget here. And then if,
and then the things you’ve suggested in the resource cuts of $116,300, so that would, we’d have
$16,300 left over from that to apply to something else.
Greg Sticha: Correct.
Councilman Litsey: And if we were to do everything but the sealcoating and the patrol position,
that would give us another what, $42,300?
Greg Sticha: Correct.
Mayor Furlong: Correct.
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City Council Special Meeting - December 1, 2008
Councilwoman Ernst: Which is.
Councilman Litsey: Plus the 16. Or I added the 16.3 into that so it’d be $42,300. So I guess,
I’m not committing to anything tonight but I guess to me that would seem a reasonable approach.
And then anything beyond that we’d have to look at reserve funds if things got bad.
Todd Gerhardt: Yeah, and our other recommendation was sealcoating you know to try to give
you options.
Councilman Litsey: No, I’m not criticizing that. I appreciate staff throwing those out. I’m sorry
Bethany.
Todd Gerhardt: Nope. You’ve got a good point.
Councilwoman Tjornhom: No, I don’t mean to interrupt either. I just wanted to ask questions
before anything, before we went any further. If I heard you correctly when it came to
sealcoating we would keep that fund for now and then if we stayed pretty true to our revenue, or
what our budget forecast was, we could still do the sealcoating in the fall, is that correct?
Greg Sticha: Our hope would be to look at the revenues as they come in and as development and
permits start to come in in the spring and early summer and kind of gauge at that point in time to
see if we think we are going to have a revenue shortfall in the building permit area. At that point
in time we would probably be coming back to council or discuss with the city manager, yeah. It
looks like we’re going to be short and we would probably have to reduce or eliminate sealcoating
to a certain extent. Or if we feel at that point in time you know, we had a big project that came
in or a number of developments that came in that we hadn’t maybe thought were, we would then
still go ahead with the sealcoating if that would be the case. But we’ll have to make that
determination probably late spring. You know April, Mayish, Juneish because in order to let the
contract and get the sealcoating actually done by fall, we would have to probably make a
decision about that time.
Councilwoman Tjornhom: And that was my next question. That we do let out for bids.
Todd Gerhardt: Yes.
Councilwoman Tjornhom: And we know that bids have been coming in pretty competitively so
it probably would be less than what we’re budgeting for. Or do we have a certain amount that
we set aside? So does it matter how much what the estimates come in.
Greg Sticha: Usually Paul, if Paul has $217,000 worth of sealcoating, he’ll try to sealcoat
$217,000 worth of streets.
Councilwoman Tjornhom: So we don’t have certain areas then?
Greg Sticha: We do identify certain areas.
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City Council Special Meeting - December 1, 2008
Councilwoman Tjornhom: Oh. That’s what I thought but since there was the 217, I wasn’t sure
how that collated with the streets.
Mayor Furlong: It’s a budget item and I think you know what, if there’s 217 available in the
budget, and staff has the authority to spend that amount. If prices come in lower we will get
more streets done.
Councilwoman Tjornhom: Get more done, sure. More bang for the buck which…
Mayor Furlong: Right, we’re getting more value. The other option is, is that the council can
work with staff and say, let’s do those projects that are due only and if there’s, if it comes in less
than that’s money saved from a spending standpoint so I think those are, that’s where we work
with them and give them direction and listen to their thoughts and recommendations. But I think
the biggest clarification Councilwoman Tjornhom that you brought up is that by keeping it in
there, it is a rather significant expenditure but it’s a mid year expenditure so while it might be in
there now, we can take a look at it mid year and determine, and have better information as was
brought up tonight, using current information at the time rather than guessing now what things
are going to be like in April, May, or June. And I know you can’t defer forever.
Councilwoman Tjornhom: And I’m not saying that we should at all.
Mayor Furlong: What we haven’t heard tonight.
Councilwoman Tjornhom: This is work session. We interrupt each other.
Mayor Furlong: No, when we, we don’t have enough information to know what the effect of
deferring one year would be. What we have identified, just from a simple budget process is that
this is a significant amount of funds that are generally spent mid year, so the time to review that,
and whether or not it’s appropriate to spend and get information rather than just assuming that it
puts us behind a year. Maybe it does. Maybe it doesn’t. We can get that better information mid
year sometime and then evaluate with information on revenues as well as the overall budget and
listening to the engineering what makes sense at that point. We don’t have to make that call
now. But you know we can’t defer forever all the time because then you dig yourself a hole. For
many years the city had quit sealcoating. We re-instituted the sealcoating program how many
years ago? 3-4 years ago?
Todd Gerhardt: Yep.
Mayor Furlong: Okay. So prior to that it had been discontinued for a number of years, so there
was some catch up and maybe we’re still in that catch up mode, but those are things that we have
to look at, so the fact that we’re doing it as a part of our pavement management program, which
we’ve been following, I’m just looking at this, and what I’m hearing them say is, here is an
expenditure that has more flexibility from a timing standpoint than perhaps some of your other
expenditures such as salaries. You know we issue paychecks every 2 weeks at the city, like most
businesses do so you can’t defer half your salaries to the last half a year. That doesn’t work.
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City Council Special Meeting - December 1, 2008
Councilman Litsey: I just think that’s a core service or you know, we want to keep up with that.
I think the better approach personally is to do what she said, you already alluded to and that is,
we’ve got a plan in place that’s based on you know data and what we think is a reasonable
schedule for sealcoating. Let’s maintain that but if bids come under, then it’s clear that, to staff
that we don’t, we just don’t have $217 to spend, that whatever savings there is will be kept in
reserve. I’d rather do it that way because I want to make sure that the project gets done rather
than waiting. Maybe they accomplish the same thing but.
Mayor Furlong: And at the time you know I think we have the luxury of time with regard to
making that decision too. We may find that the prices are, prices are still good. Sealcoating is
heavily based on petroleum prices and we may evaluate it based upon better information at the
time. And I’ll use this phrase I use all the time. All things considered, but we’ll be considering
all things at that time and reviewing it at that time.
Greg Sticha: One item of note on this particular item. The actual levy for it is $267,000.
However the city manager and the city engineer felt $50,000 of that is for pot holes. The city
manager and city engineer felt it was prudent to not get rid of that $50,000.
Mayor Furlong: So you’re going to keep filling in pot holes?
Greg Sticha: We’re going to keep filling pot holes.
Mayor Furlong: Especially in front of Councilman Litsey’s house.
Councilman Litsey: We just paid for a new street so hopefully, that was my gift remember when
I got on the council. A street assessment.
Mayor Furlong: Mr. Gerhardt.
Todd Gerhardt: It’s pot holes and crack sealing. To maintain the system you’ve got to fill in
those cracks from the freeze thaw cycle too so try to keep that moisture out.
Councilman Litsey: But irregardless, it’s all predicated on the 2.4% levy right? So we’re just
building in, and to that point I agree. We’re building in some cushion or things, if worst case
scenario happens, this is where we’re thinking of going.
Mayor Furlong: There’s some flexibility. There’s some flexibility.
Councilman Litsey: Yeah.
Councilman McDonald: Well you know speaking of that, the question I’ve got, you’re talking
about the revenue coming from license and permits. On property taxes, what happens if a house
goes into foreclosure and they don’t pay the property taxes? We suffer the hit, is that correct
until, where’s the money come from?
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City Council Special Meeting - December 1, 2008
Todd Gerhardt: Yeah, we calculate each year delinquencies into this budget, so we have
delinquencies every year so that’s calculated in. You know the nice thing is, is you’ve got other
year delinquencies coming back and kind of the question is, are we going to see more
delinquencies than what we’ve budgeted and we really haven’t seen that.
Greg Sticha: To this point, for whatever reason, we’ve been pretty resilient in delinquencies and
foreclosures. We’ve had some. An increase in some. However our taxpayers for the most part
are doing a little better than some communities and maintaining their mortgages and making
those payments so. We’ve been much more fortunate than some other communities or suburbs
who’ve been more hit than we have on this.
Councilman McDonald: Well it’s just what I’m thinking there is okay, license and permits is
only a million dollars and the other two, the 217 is probably reasonable to look at shortfalls to
take care of that. But in the property tax area if it got, and it could get to be more than that. Is
that when the catastrophic reserve fund comes into play?
Todd Gerhardt: Could.
Mayor Furlong: And then, correct me if I’m wrong. That would be eventually, and who knows
how long, a timing issue because unpaid property taxes, are they not attached to the property?
Councilman McDonald: Right. They will eventually get paid whenever the property eventually
sells or turns over so we would get the money and that would be future dollars coming in, but in
the meantime, now we’ve got some security to pay back the fund.
Mayor Furlong: When the taxes would be paid…
Councilman McDonald: When the taxes are paid back, that would be a source of repayment so.
Mayor Furlong: And it’s not a budget item.
Councilman McDonald: Right, it’s not a budget item or anything such as that but at that point, if
that’s the criteria that we’re looking at, then that begins to make sense, especially if we say
permits could go down. Now by mid year we can make a decision based upon where the permits
are. Where the levels are. You know what’s coming in and we can make a decision at that point
where those funds go. Either towards sealcoating to make up the shortfall in this other area.
Todd Gerhardt: Yeah. I mean state law says you know, you’ve got 3 years that you can go
delinquent and then you, the property you know comes up for sale to pay for that. Rarely does a
piece of property in Chanhassen ever get to that point. The land and/or building on there is
worth much more than whatever the taxes would be over a 3 year period.
Councilman McDonald: Right.
Todd Gerhardt: And so, plus the penalties and interest that go along with that is also another
incentive to keep it current.
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City Council Special Meeting - December 1, 2008
Councilman McDonald: Okay, well I guess the point that I’m trying to drive at is that, you know
if we’re going to be having shortfalls to make up and using the catastrophic fund, that’s probably
the category that we want to start looking at to take money from to make it up. Where we’re
sure about there is going to be a repayment. Maybe at the most it is 3 years and that’s a little
easier to put into the budget. Then taking money out of an item and then having to double up the
next year to replace it. So using that as criteria going forward, that makes I think a lot more
sense to hold this money in reserve for again permits and those things because if they’re down,
probably streets and things such as that are going to be down anyway and it makes more sense
for us to be able to evaluate it at that point. So I’m all in favor of waiting. That way the
money’s there. It’s the first place we go for, depending upon the circumstances and I guess my
concern is that over the coming year, I think we’re going to get hit with circumstances that we’ve
never been hit with before. It’s going to be unusual. I mean I agree with the gentleman out
there. The market isn’t done yet and so we need to be flexible. I think we’ve got the flexibility
to handle our situations so yeah, I’m comfortable at this point.
Mayor Furlong: Let me ask, rather than continuing to talk about these items, are there any other
expense categories, service levels that we want city staff to take a look at? They’ve come back
with some recommendations. I just want to see if anybody has some ideas or questions or things
that they’d like to review before we consider this next meeting.
Councilman McDonald: I guess I was under the impression that we were going to adopt some of
these cuts. I mean the way everybody’s talking.
Mayor Furlong: Well I think the decisions. There are no decisions made tonight.
Councilman McDonald: Right.
Mayor Furlong: This is all you know, and they’ve already come with these numbers. I just want
to make sure that if there’s other things or other expense line items, categories that we want the
staff to look at, want to evaluate the potential effect of a change in service level and to give them
an opportunity to evaluate what that effect would be in terms of how they would offset it or
whatever. I just want to make sure that we use this next week as an opportunity to do that as
well. So I guess any, Councilwoman Ernst anything? Have you got other things you want them
to look at?
Councilwoman Ernst: Well I, and I talked to Greg a little bit about this today. I would really
like us to look at the wages. I mean I realize that we were 4.5 last year and we’re 3.5 this year,
but really, right? As an average.
Greg Sticha: Actual yeah. But from budget, from preliminary budget to now is 4 to 3 ½ but
actual last year was 4 ½, correct.
Councilwoman Ernst: Right. So I would like us to take a look at that to see if there’s anything
else that we can do with that. To decrease it, and I know it’s not an additional Mayor, but.
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City Council Special Meeting - December 1, 2008
Mayor Furlong: No, I was just going to say. What I’ve got written down here is some items I
want to make sure we bring up tonight and that is just from some direction because I think
Councilman Litsey brought up some reasons for making sure that we properly pay our
employees and I think everybody would agree with that, but at the same time I guess I’d ask staff
to contact other cities. Other government agencies during this coming week and let us find out
what they’re thinking of doing in terms of salary levels and so that we have some better
information because I think the concerns brought up are valid concerns but let’s get some better
information on what’s happening, rather than just saying 3 or 2 ½ or nothing or let’s find out
what they’re doing. Doesn’t mean we have to follow them. You know. We have blazed our
own path in this city time and time again and it’s always proved successful so, but it would give
us some better information forecast.
Councilwoman Ernst: Would the League of Minnesota Cities have information?
Councilman Litsey: They have a salary survey that you can, I assume that that’s probably used
by, you can take a look at market and economic adjustments but yeah, you can filter that by
category.
Mayor Furlong: But would that give us what cities are currently thinking about in terms of this
year’s budget?
Greg Sticha: No. We would have to survey other cities and other finance directors.
Mayor Furlong: Which we’ve done before on other issues.
Councilman Litsey: Well it’s current as of last summer. What they do is they have a way of
calculation of how they, a prediction basically on what it will likely be at any given time that you
put in. You can put a year ahead. Whatever, it’s called an aged average and you can do that. It
will help you predict. To be honest with you we did that last year, in my other job, and it came
pretty darn close. That aged average.
Mayor Furlong: And if we want to, I mean let’s consider that. But let’s make some calls too,
because they may be having some similar discussions that we’re having, which is fine.
Greg Sticha: We can certainly gather some hard data on that from comparable communities.
Mayor Furlong: Because I think generally, I guess the first premise is, are we generally
competitive in this current year that we’re looking at, 2008, generally. We may have a position
high or low somewhere but are we generally competitive already with our salaries? I think we
made some minor adjustments over the last few years to make sure that we’re competitive so
generally we are competitive at this point, is that correct?
Todd Gerhardt: Well, in most position’s I’d say. We use the League of Minnesota Cities salary
information and compare our employees and make a market adjustments if need be.
Mayor Furlong: Yep, so we do that on a case by case basis?
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City Council Special Meeting - December 1, 2008
Todd Gerhardt: Ah yes.
Mayor Furlong: As much as anything else so.
Greg Sticha: Just one item I would like, or we can certainly gather that hard data and I can just
kind of tell you what I’ve been hearing through the grapevine, because we talk as finance
directors and most colas I’m hearing are 2 1/2 to 3 percent range. However their colas, we are
the only city that I know of that have a performance based pay system. Their cola would be just
a cost of living. In addition to that, almost all the other cities also have step increases which we
do not, and usually that’s another ½ a percent or more, for step increases. We do not have that at
the City of Chanhassen, so.
Mayor Furlong: So in fairness.
Greg Sticha: Fairness to just say cola versus what our number is, it’s hard to compare those two
numbers because the numbers aren’t comparable because in addition to their cola they also have
step increases.
Councilman Litsey: Or longevity or something like that.
Todd Gerhardt: We can ask that question.
Mayor Furlong: …getting comparable information and make sure that we’re looking at it on a
comparative basis.
Todd Gerhardt: Yeah, we’ll use our key financial cities as comparisons so. Getting like
communities. Same population.
Mayor Furlong: I mean I had on my list, you brought up, which is good. At least we’ll get some
better information so that we can consider.
Councilman Litsey: Is there already, how far down the road are we on people’s expectations and
pay expectations on what their salary’s going to be next year?
Todd Gerhardt: Just department heads know at this point.
Mayor Furlong: And anybody watching this evening.
Greg Sticha: Anybody involved in the budget process.
Councilman Litsey: Yeah, okay.
Mayor Furlong: Okay. Any other points or service areas or service levels that we want to.
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City Council Special Meeting - December 1, 2008
Councilman Litsey: Well I mean obviously if things fall on tougher economic times, I mean this
is some but there’s always still other things we’ll be obviously looking at that don’t necessarily
have to be, I mean it’s probably good if you can identify most of those now but there are some
things we’re going to have to balance between core and more discretionary services down the
road. We’ve still got opportunity but if they’re not on this list.
Mayor Furlong: Agreed. Agreed. I just wanted to make sure that we had, if somebody had
another item that they wanted staff to take a look at, bring it up now rather than waiting til next
week when there’s no time for them to investigate it and give us good information back. That’s
one of the advantages for having some additional time.
Councilman Litsey: So if between now and next week obviously if we have some other things
that we haven’t brought up tonight, we obviously should get to Todd…
Mayor Furlong: Sooner rather than later.
Todd Gerhardt: Yeah, because packet goes out Wednesday.
th
Councilwoman Ernst: So are we making a decision at the next council meeting on the 8 or?
Mayor Furlong: That’s when we’re currently scheduled.
Greg Sticha: We have to make a decision.
Councilwoman Ernst: We have to make it?
Mayor Furlong: Is there a deadline?
Greg Sticha: Well we, or.
Mayor Furlong: That’s our last meeting for the year.
Greg Sticha: Or we’d have to have a special meeting. That would be.
st
Councilman Litsey: December 31.
th
Greg Sticha: Well it can’t be that late. …to the county by December 20 I believe so. The
decision really needs to be made by next Monday, or a special meeting would have to be.
Mayor Furlong: But I think if, I know they jump through hoops. If we ask them tonight to look
into something, or tomorrow, they’ll be able to look into it and give us a decent response.
Decent information next week. That’s what I’m saying. I mean this is something we’ve all been
working on for a number of months and since August, June, July, August, September so if there
are other things that we haven’t talked about, I want to make sure we get them out so they have a
chance to look at it and give us some good information next week.
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City Council Special Meeting - December 1, 2008
Councilwoman Ernst: Yep. The only thing Greg, if you could lay out that net so that we could
see what those options are with the nets, that would be good. Like for the levy and the budget.
So with this option here’s what it looks like. With this option, here’s what it looks like. Kind of
like you did with the 2.4.
Greg Sticha: Up here on the screen.
Todd Gerhardt: Add the 62 in.
Councilman Litsey: You want to know what it’s going to look like…the levy or this scenario
adopts the 2.4% and has this.
Councilman McDonald: I guess the problem I have with that, or just throwing up a number to
get down to things is I don’t know what goes into that. With this at 2.4, I know where the
$100,000 is and I know the impact upon the city. If we’re just going to throw numbers in there,
that doesn’t accomplish anything because we still have to end up going through and saying,
where are the cuts going to come from, and that’s a whole thing all by itself. I would expect
anyone on the council that wants to do that, you’ll come in with specific line items so that there’s
time for staff to come back and answer that particular question of okay, if we put in another
$200,000. This is where the additional $100,000’s going to come from per your request and this
is the impact, because otherwise we’re going to sit at the meeting trying to figure out, okay.
Where’s that additional $100,000 going to come from? So it’s just, I would not want to see staff
just doing numbers. I don’t think that accomplishes anything.
Councilwoman Ernst: And that’s not what I’m asking.
Councilman McDonald: Okay.
Councilwoman Ernst: I’m asking for different levels and what makes up that level. So.
Councilman McDonald: Well I guess I’m not following you there.
Todd Gerhardt: Well the only two numbers, well maybe three, I heard $42,000 up and above the
100. And that took into account everything but the patrolman, and then the 62 would include the
patrolman, and then if you wanted $200,000 number, I’m not exactly sure where that extra would
come from. That I have concerns because.
Councilman McDonald: Right, and that’s what I don’t want you doing is guessing upon that so.
Todd Gerhardt: That’s what we’re kind of talking about that.
Councilman Litsey: …I’m not looking at that number to reduce the levy from 2.4.
Todd Gerhardt: I know you aren’t.
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City Council Special Meeting - December 1, 2008
Councilman Litsey: I’m looking at that as that’s what we’re going to have in contingency.
Wiggle room.
Todd Gerhardt: Right, and staff is still recommending the 42 and the 62 go into a contingency.
Councilman Litsey: Right.
Councilman McDonald: Yeah, and I guess that’s one option but what I’m saying is.
Todd Gerhardt: But you guys get to make the big decision.
Councilman McDonald: Anything else that’s trying to lower down the 2.4 needs to be specific
or else we don’t know what’s going into that number. So if we’re going to evaluate it, I need to
know specifically where it’s going to come from.
Todd Gerhardt: Yeah, and the 42 we’ll give you the item. The 62, we’ll give you the item.
Councilman McDonald: We’ve got those numbers.
Greg Sticha: You’ve got those numbers in front of you but what.
Councilman Litsey: Well I can do the math.
Councilwoman Ernst: Well I can do the math too as far as that goes but.
Councilman Litsey: Well I think it’s a difference in philosophy because I think if I hear you
right Vicki what you’re saying is you want to take those reductions and apply them against the
levy.
Councilwoman Ernst: Exactly.
Councilman Litsey: And I’m saying I’m not, or what my approach would be like staff’s
recommended. Is we adopt that levy and this is our money in contingency if we need it.
Councilwoman Ernst: I mean you know they’ve given us what makes up the 2.4 and I’m just
saying okay, with these other things in here, what does that look like but I can do my own math.
Todd Gerhardt: We can put it in there. You shouldn’t have to do the math.
Councilman McDonald: And what’s Bryan’s talking about is Option 1.
Councilman Litsey: Right.
Councilman McDonald: What Vicki could be talking about is Option 2.
Councilman Litsey: But there’s two there.
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City Council Special Meeting - December 1, 2008
Councilman McDonald: Right, there’s two, and I agree with you 100% and so yeah, it would be
nice to see those but those are specific line items and that’s all I’m saying is don’t just throw a
number out there and say reduce it by this amount because that doesn’t do us any good.
Mayor Furlong: And what I’m going to get back to is, we can see certain line items here. I want
to make sure that there are no additional line items that somebody wants to bring up next week.
Let’s bring it up tonight.
Councilman McDonald: Right.
Mayor Furlong: So that staff has the opportunity to identify what the effect of that line item will
be, both from a dollar amount. A potential dollar amount reduction as well as a service impact
so that we can evaluate that from a policy standpoint.
Councilman Litsey: But how far, how micro do we want to go? I mean.
Mayor Furlong: I want to know if we have anything else as a council that we want them to look
at. Just because somebody looks at something doesn’t mean that we’re doing to adopt it.
Councilwoman Ernst: That’s a fair.
Councilman Litsey: Well one of the things that I brought up last time was I think, although I
understand the reason why we do it, I think at work sessions we shouldn’t provide meals.
Mayor Furlong: Okay.
Councilman Litsey: I think that should be on there, but that’s a small.
Councilwoman Ernst: We shouldn’t provide what?
Councilman Litsey: Shouldn’t pay for the meals. I mean I think we should forego that.
Mayor Furlong: Alright. And that’s what I want to.
Councilman Litsey: Unless there’s some compelling reason, I think we should keep ourselves,
you know from a council level, I’m not saying necessarily at a staff level, that we are, any
training we go to we try to keep within the state and not out, you know outstate travel unless
there’s some compelling reason to do it and then perhaps that just be the mayor as representative.
Greg Sticha: That’s an easy one for us to find out and tell you what it is.
Councilman Litsey: We already talked about this before so.
Greg Sticha: We’ll find the number out and.
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City Council Special Meeting - December 1, 2008
Councilman Litsey: See I can throw those out now. Those are things that I would look at
perhaps maybe into the year if we really got into that position but if you want them all on the
table now.
Mayor Furlong: Well I think, let’s get the numbers and find out what, if those are things. Now
not everybody, just because we’re looking at it.
Councilman Litsey: Doesn’t have to agree, no.
Mayor Furlong: You don’t have to agree and we don’t have to take it.
Councilwoman Ernst: So I have one last question on the fuel cost Greg. Where, you haven’t
gone out to bid with the other cities on those fuel costs yet have you?
Greg Sticha: No. The contract with, I talked to Paul, Paul Oehme this afternoon. The City
Engineer about the fuel contract. It hasn’t been let but he’s given me every indication that it is
very, very likely that it will be let. He can give you a little better idea on how much that’s going
to save us in the long run but it looks like it’s a very likely thing that will happen for next year.
The actual dollar amount or impact on us, I don’t know and I don’t know if he will know until
going into next year sometime what that will be. But we do plan on purchasing, if the contract
goes through with the state, half of our fuel through that contract.
Councilman Litsey: But it takes a lot of the volatility out of that category, which is nice because
presumably it could very likely go up again and that at least half our fuel budget is locked in. I
mean it could go down more but it’s.
Mayor Furlong: We don’t know at what price.
Councilwoman Ernst: Right.
Mayor Furlong: That’s the good thing so. I guess as we’re wrapping up here. So if there’s
nothing else that we want to identify costs and items, then we can move on. Any other thoughts
or discussions? One thing I guess I wanted to lay as a background, especially for those still here,
as well as those watching at home. We’ve been talking about the 2.4% levy increase, which is
the equivalent to the real growth in our tax base this last year. As much as we had, and we heard
tonight from some residents that their home values increased significantly. To the extent that on
average there was no inflation in the overall residential property tax values. There was some real
growth, so if somebody went up. Somebody else went down. Doesn’t help the person going up,
but if we’ve got some things that are inconsistent, we’ll be looking at those. Bottom line is over
the last many years we have as a tax policy limited the levy growth to the rate of real growth in
our tax base. So over the years that there’s been an inflationary increase of 5, 10, 15 percent, we
have not as a council over the last 6 years been taxing that inflationary increase on the whole.
We’ve been limiting our levy increase to the rate of real growth in the tax base. That’s why this
2.4% is the number that we’ve been looking at because that’s the 2.4. What does that mean?
The effect of that is, from a tax rate standpoint, the amount of property taxes paid relative to the
property values has dropped, and it’s dropped materially. In 2003 it was over 39% and it’s been
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City Council Special Meeting - December 1, 2008
down, we’ve gotten it down now to where it’s below 23%. 24%. And by looking at the 2.4 we
would like to keep it there. I think the biggest issue that we have to look at and as I know the
staff and the council are going to look at, is as much how do we provide for today’s needs within
our current economic environment, and at the same time look ahead and make sure that we’re
planning for providing tomorrow’s needs as well, and I think that’s going to be our challenge as
we look at this over the coming week and a week from tonight is making sure that we find a way,
like so many of our residents are doing, is living within their means. Cutting where we can
prudently but without, to the extent possible, cutting out meat or bone or jeopardizing, making
any prudent decisions now that are going to come back and cost us later. And that’s our
challenge and if it was easy, anybody could do it but I’m confident that we’ll be able to get it
done and again just to close I want to thank everybody for coming here tonight and those that
have provided comments. I know there will be another comment here but we’re kind of going
over some same things. Also I would encourage people to contact members of the City Council.
If you have specific questions about the budget, feel free to contact Greg Sticha or Mr. Gerhardt
at City Hall. If you have comments or opinions about the direction that we should go after
listening to tonight, or if there’s something that we haven’t talked about tonight that you’d like
us to consider, make sure you get in touch either by phone or by email. Very effective way and I
can tell you that we get back to people and as timely as we can and we try to get answers for
them and make sure that they know that they’re heard. So we hit a lot of issues tonight and I
know that there’s some follow-up here.
Greg Sticha: One other item not related to the budget. Actually related to our utility rate
discussion that we will be having next Monday that I wanted to bring up, and on the overhead I
have put up the executive summary from our utility rate discussion with our financial advisors
Ehlers and Associates a couple of weeks ago. At the last meeting we provided you with some
detailed information on what projects would be delayed and to when in regards to keeping our
utility rates flat from year to year. Up top we’ve listed the executive summary and what we from
a staff level plan on putting forth to you next Monday for rate increases on those. Again this is
the same rate increases that you saw in last year’s rate study and I guess it’s staff’s
recommendation to go forward with the recommendations from our financial advisors to go with
these rate increases for the utility rates in 2009. If there’s any direction council would like to
give to staff this evening it would be very helpful because what we plan on presenting in the rate
ordinance next week would be the rate increases listed in the executive summary.
Mayor Furlong: Okay, thank you. Any comments on this item? And we talked about these a
few weeks ago.
Greg Sticha: Yep, we talked about them last week and we gave.
Mayor Furlong: We’ll see some additional information based upon questions raised.
Greg Sticha: Correct.
Mayor Furlong: Any questions or comments at this time on these? Okay, so we’ll see this again
next week.
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City Council Special Meeting - December 1, 2008
Greg Sticha: Yep. The numbers you see presented in the executive summary will be what the
rate ordinance will.
Mayor Furlong: And same with the capital improvement plan, the CIP?
Greg Sticha: The CIP will be the same CIP that you saw last week. That’s what will be
presented at the meeting next week.
Councilwoman Ernst: And I’m sorry Greg, you said those are the same as last year, right?
Those rates.
Greg Sticha: These rate increases are the same rate increases from the previous year’s rate study,
correct.
Mayor Furlong: Well it’s what, let me see if you can help me understand. Previous year.
Greg Sticha: Last year’s rate study.
Todd Gerhardt: Recommendations.
Mayor Furlong: We have a long term plan.
Greg Sticha: Correct.
Mayor Furlong: And these are continuing to follow that plan.
Greg Sticha: Correct. And it’s the exact same. Same rate increases from year to year based on
last year’s rate study. This year’s rate study has the same increases from year to year. Make
sense?
Mayor Furlong: Somewhat. The rate increases last year for someone were.
Greg Sticha: Were the exact same rate increases that you’re seeing on this executive summary.
Councilman Litsey: But to meet that target we’re tweaking some stuff on the time table.
Mayor Furlong: Well and last year we introduced a third tier on the water rates.
Greg Sticha: Correct.
Mayor Furlong: And it showed a more significant increase.
Greg Sticha: Correct.
Mayor Furlong: But now that tier is following the other tiers and if we go forward with this
would have the same…
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City Council Special Meeting - December 1, 2008
Greg Sticha: Increase in all the years. Yep.
Mayor Furlong: All the rates are increasing.
Greg Sticha: Yep.
Councilwoman Ernst: So nothing changes.
Greg Sticha: Nothing. From the rate study perspective, nothing will change. Correct.
Todd Gerhardt: But to Bryan’s point, you know we didn’t see the connection charges this past
year that we had budgeted so you know what we’ve done is delayed some maintenance that were
due to growth or construction or new growth. So since we haven’t seen that new growth, we’ve
delayed some of those maintenance items or capital costs.
Mayor Furlong: I was going to say, they’re not necessarily maintenance perhaps but expansion
of the system that we’re, was planned assuming growth…
Todd Gerhardt: Correct.
Councilman Litsey: Like the water treatment plan. The next one. Because the growth isn’t
there necessarily to support it. We can delay that makes some sense.
Mayor Furlong: Yep. And I know we asked for that and we got that.
Councilman Litsey: Yeah, thank you for that.
Mayor Furlong: Okay. Anything else this evening? From the budget standpoint. Okay. Thank
you. Greg. Todd. Appreciate all your efforts. To the folks here, thank you for your comments.
We value them and we’ll consider them strongly and seeing how we can get this work out. If
there’s nothing else to come before us this evening, is there a motion to adjourn?
Councilwoman Ernst moved, Councilman McDonald seconded to adjourn the meeting. All
voted in favor and the motion carried unanimously with a vote of 5 to 0. The City Council
meeting was adjourned at 9:40 p.m.
Submitted by Todd Gerhardt
City Manager Prepared by Nann Opheim
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