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CC 2011 12 12 CHANHASSEN CITY COUNCIL REGULAR MEETING DECEMBER 12, 2011 Mayor Furlong called the City Council meeting to order at 7:05 p.m. The meeting was opened with the Pledge to the Flag. COUNCIL MEMBERS PRESENT: Mayor Furlong, Councilman McDonald, Councilwoman Tjornhom, Councilwoman Ernst, and Councilman Laufenburger STAFF PRESENT: Todd Gerhardt, Laurie Hokkanen, Paul Oehme, Kate Aanenson, Todd Hoffman, Greg Sticha, Jill Sinclair, and Roger Knutson PUBLIC PRESENT: Tom Devine 7640 South Shore Drive Steve & Carol Donen 7341 Frontier Trail Greg Fletcher 7616 South Shore Drive Katie Mahannah 92 Shasta Circle East Dennis Hansen 6450 Pleasant View Circle Mayor Furlong: Thank you everyone. Thank you for joining us here in the council chambers this evening. For those watching at home as well, we’re glad that you all joined us. At this time I would ask members of the council if there are any changes or modifications to the agenda. If not we’ll proceed with the agenda as published. Like to start this evening with a presentation of Environmental Excellence Awards so I’m going to come down in front and ask a few people to come join me. PUBLIC ANNOUNCEMENTS: PRESENTATION OF ENVIRONMENTAL EXCELLENCE AWARDS. Mayor Furlong: At this time I’d like to invite a couple members of our Environmental Commission, David Christianson and Matthew Myers to come up and join me. Good evening gentlemen. Welcome. This evening we’re going to be presenting a couple Environmental Excellence Awards. These are awards presented by the City to recognize environmental improvements and stewardship throughout our community. The awards are designed not only to recognize achievement but also to communicate new ideas and encourage others to consider ways that they can become better stewards of our natural resources as well. At this point I’d like to invite some representatives from Lakewinds Natural Foods to come join me. Jeff Grimm, Guthrie Horgan, Brit Kowalski, Katherine Roseth, Dwight Gladys, Dale Woodbeck and Doug Eagan if they’re here. You’re welcome to come up. Lakewinds Natural Foods has approached sustainability with a comprehensive perspective and plan that aims to provide an example as well as to educate it’s customers about sustainable practices. This year, in order to reduce energy use, the store implemented a number of measures, including lower wattage light bulbs, censor switches, and solar film. To reduce solid waste Lakewinds has increased it’s on site composting and recycling as well as offering customers convenient on site recycling opportunities as well. The store strives to reduce it’s product’s packaging by working with vendors and uses 100% compostable and biodegradable shopping bags. We appreciate the Lakewinds’ efforts for education and conservation practices and so at this point I’d like to present 2011 Environmental Excellence Awards to Lakewinds Natural Foods. Did you get a picture Dave or Laurie? At this point we have some members from the Lotus Lake Clean Water Association here. I’d like to invite up Steve Donen, Tom Devine, Greg Fletcher and Mary Borns. This past year the Lotus Lake Clean Water Association has really worked hard and provided many educational opportunities for residents and others in our city regarding water quality. The group organized five DNR aquatic invasive Chanhassen City Council Meeting – December 12, 2011 species training sessions and volunteers worked nearly 700 hours at a local boat ramp educating boaters and inspecting vehicles regarding AIS or aquatic invasive species. The organization offered public meetings at the Chanhassen library with information concerning AIS and maintained a website with current information, wrote numerous articles to the local paper and are making ongoing efforts to keep lake water quality at the forefront of people’s minds. The City appreciates these efforts to increase residents awareness and knowledge of aquatic invasive species and maintaining water quality so on behalf of the Chanhassen City Council and Environmental Commission present you with this 2011 Environmental Excellence Awards. Okay at this time we’ll move on with other items on our agenda. CONSENT AGENDA: Mayor Furlong: Councilwoman Ernst, item (k), you’ve recused yourself from that item. Councilwoman Ernst: Yes. Mayor Furlong: Would you like to abstain on that? Councilwoman Ernst: Yes I would. Mayor Furlong: Okay. So Councilwoman Ernst’s vote on item (k) would be an abstention, and then Mr. Gerhardt you had mentioned item (h) as well? nd Todd Gerhardt: Correct. Pioneer Pass 2 Addition, Ryland Homes has asked that this item be tabled until our January meeting. Mayor Furlong: So the action tonight on item (h) would be replaced with the staff report, with the action to table that until future meeting. Todd Gerhardt: Yeah. Mayor, item (j) is the one that Councilmember Ernst is abstaining. Mayor Furlong: Oh I’m sorry. Councilwoman Ernst: Oh yeah you’re right. Thank you. Todd Gerhardt: Sorry. Mayor Furlong: Thank you. So for clarification Councilwoman Ernst’s vote on the item (j), 1(j) will be an abstention. Is that correct? Todd Gerhardt: That’s correct. Mayor Furlong: Okay, thank you. Any other items 1(a) through (l) that someone would like to discuss separately? Councilwoman Ernst: Mayor, I’d like to pull (l). Mayor Furlong: L? Okay. Why don’t we bring that up under, let’s bring that up under new business. I don’t know if it matters where, we can bring it up under 4 if that’s okay. Councilwoman Ernst: Sure. 2 Chanhassen City Council Meeting – December 12, 2011 Mayor Furlong: Or 3. Councilwoman Ernst: Either one. Mayor Furlong: 3.1. Councilwoman Ernst: Sure. Mayor Furlong: Okay. Any other items? With that is there a motion to adopt items 1(a) through (k)? Councilman McDonald: So moved. Mayor Furlong: Thank you. Is there a second? Councilwoman Tjornhom: Second. Mayor Furlong: Motion’s been made and seconded. Councilman McDonald moved, Councilwoman Tjornhom seconded to approve the following consent agenda items pursuant to the City Manager’s recommendations: a. Approval of Minutes: -City Council Work Session Minutes dated November 28, 2011 -City Council Verbatim and Summary Minutes dated November 28, 2011 Receive Commission Minutes: -Park and Recreation Commission Verbatim and Summary Minutes dated November 22, 2011 Resolution #2011-65: c. TH 101 Improvements, Lyman Boulevard to Pioneer Trail: Approve Resolution Accepting EA/EAW and Making a Negative Declaration on the Need for an EIS. Resolution #2011-66: d. 2012 Street Improvement Project: Accept Feasibility Study and Call for Public Hearing. e. Approval of 2012 Police Contract with the Carver County Sheriff’s Office. f. Approval of Lease Extension for Old Village Hall, Seattle Sutton. Resolution #2011-67: g. Approval of Resolution Accepting Voluntary Donation for City Services in Lieu of Paying Taxes, Mount Olivet Rolling Acres. nd h. Pioneer Pass 2 Addition: Table Final Plat, Plans and Specifications and Resolution Reapportioning Assessments. i. Approval of Requests for Temporary On-Sale Intoxicating Liquor License, Chanhassen Rotary Club: 1) February Festival, February 4, Lake Ann 2) Fourth of July Celebration, July 3 & 4, City Center Park j. Approval of Findings of Fact for Denial of the Concept Planned Unit Development, Walmart. *Councilwoman Ernst abstained on this item. 3 Chanhassen City Council Meeting – December 12, 2011 k. Repeal Chapter 10, Article VIII of Chanhassen City Code Concerning Rental Dwelling Licensing. All voted in favor and the motion carried unanimously with a vote of 5 to 0 except on item 1(j).* VISITOR PRESENTATIONS: Todd Gerhardt: Mayor, we do have one resident and commissioner that would like to talk about an upcoming event here in Chanhassen. Mayor Furlong: Well I guess we can slow it down. They must move slower at the county meetings than they do here. Commissioner Workman, good evening. Tom Workman: Good evening Mayor and City Council. Thank you. I was talking about surgeries out in the hall with a neighbor. Not mine. I am here on behalf of the Chanhassen Lions Club here in Chanhassen. A couple years ago I asked them if we couldn’t sponsor an event in town that we don’t presently have, and they said good if I did all the work and so I’ve been sort of at this in the details along with the City’s parks department. Mostly Jerry Ruegemer. He says Ruegemer on his voicemail, I say Ruegemer. But it is a Polar Plunge and to be, Knutson has already signed up so. In fact I was in the lake today. I went out, there’s about 5 to 6 inches on the beach where we’ll be having it. I drilled a couple of holes. Got into my bare feet on the ice. Crawford was my photographer and so look for that so but it’s now it’s about getting jumpers and that’s why I’m here tonight to tell the city and I don’t know if that will pick it up. Can I put this on? Laurie Hokkanen: Sure. Todd Gerhardt: Right on the picture. Tom Workman: Wow, that looks perfect. There is a website that people can go to sign up and so let me tell what that is. That’s very clear. Chanlionsplunge.com. Chanlionsplunge.com for the attorneys in the room. But as I said the details are all coming together. Thanks to the City of Chanhassen and Jerry to let us get set up down there. Don’t know how it’s all going to turn out. Sometimes it’s a little bit weather related. If it’s 14 below and a howling wind, even Laufenburger won’t show up but I think you’re signed up. Councilman Laufenburger: You can take that to the bank. Tom Workman: So but anyway it’s going to be a lot of fun. I’ve been going for yeas up to Lake Minnetonka where they have a really good one and really successful one and I thought this is good. We can maybe do even do a little bit better but keep the money maybe even a little closer to home for the Lions and all of our charities. The Lions or the Lions. The fire department is going to be helping us. We’ll probably have about 6 firemen down there. Fire people to help anybody who may have an issue. There will be an ambulance on site so now the Mayor’s coming and so we’re, I am counting on every one of you to be down there so, nothing else going on really on New Year’s Day. I’m not a big New Year’s Eve guy and so I always started doing this, started as kind of a tradition. Chanhassen Legion’s going to be helping out with discounts on their buffet and some Bloody Mary’s or whatever else you want over there, so it’s going to be a great community event. I’ll stop taking your time. If you have a question for Commissioner Workman, county business, our budget is due to be finalized tomorrow. We’ll probably have less than you in our room. We’ve kept it like you, pretty tight and no real, no real issues on our budget. We are going to be talking a little bit about zebra mussels tomorrow. We had some Lotus Lake 4 Chanhassen City Council Meeting – December 12, 2011 friends here. Not sure how that’s going to come out but I’m not sure that we need to make a decision tomorrow. We’re kind of just trying to get out in front of the legislature so, and they don’t know what they’re doing yet so. Anyway if there’s any questions. Mayor Furlong: Mr. McDonald. Councilman McDonald: You never said what time. st Tom Workman: 9:00 a.m. 9:00 a.m. January 1, 2012. Laufenburger will be elsewhere apparently. Councilman Laufenburger: Well you said the fire department’s going to be there. I’m assuming they’re going to be building fires, is that right? Tom Workman: We’ll probably have some of that. McDonald’s will be out there with some hot coffee so it’s going to be a great thing. You know I always show up at the Feb Fest. Councilman Laufenburger: Yeah you do. Tom Workman: You know it’s always the highlight of my year when Denny interviews people so. Mayor Furlong: You usually stay above the ice though. Usually. Usually. Tom Workman: Jerry did make sure that the hole wasn’t going to be where there would be future Feb Fest traffic and so I would imagine that 5 weeks later our hole will be probably not even visible but it’s going to be a lot of fun. Thanks for the time. Mayor Furlong: Thank you. Okay, at this point let’s go on with our items of new business. SET FINAL 2012 TAX LEVY; APPROVE RESOLUTION ADOPTING THE 2012 BUDGET AND 2012-2016 CAPITAL IMPROVEMENT PROGRAM. Mayor Furlong: Let’s start with a staff report please. Good evening Mr. Sticha. Greg Sticha: Good evening Mayor, City Council members. I’ve prepared a power point for this evening that will kind of take us through the history of the budget process this year and I’ll go through some of the dates and what we’ve accomplished so far this year in terms of the budget and the CIP. As we’re going through it, if there’s any questions the City Council please feel free to stop me and ask me any questions at that point in time. Our budget process for those of you who have not been part of the budget process so far this year and maybe listening at home actually starts in June of the year. We had a meeting with City Council in late June that discussed some of the budget concerns for the upcoming year. In July budgets are submitted by the department directors to finance for approval. The budget is then reviewed by myself and the city manager and we make any adjustments that we see might need to be made at that point in time. A detailed budget is then reviewed with the City Council in August. We actually had a couple meetings in August where we talked about the budget but the second meeting in August we had a detailed discussion and presentation by the departments that presented each of the department’s budgets in detail. In September we had a preliminary tax levy adoption. That preliminary levy was then used to produce the Truth in Taxation statements that were sent out here a couple weeks ago. Three weeks ago. We continued to have a couple budget meetings in October and November but the most recent meeting on the th budget was held last Monday, December 5 where we had a public budget meeting giving the residents the opportunity to come in and comment on the proposed budget and levy that was set in September. And then this evening we’ll be adopting the final budget which will be levied for taxes payable in 2012. So 5 Chanhassen City Council Meeting – December 12, 2011 what has changed since we set the preliminary levy back in September? I’m going to go over those few bullet points here quickly with the council. Health care costs came in at an increase of 2.62%. Staff had been budgeting for an increase of approximately 15%. That’s what we had been hearing would be possible from our broker. We’re fortunate to get good bids this fall. It will require us to change providers to a different provider but the increase in premiums will be 2.62% for 2012. That change allowed staff to make some adjustments in the preliminary levy that we’re able to keep the $20,000 funding that we had to remove from funding back in September in order to adopt the preliminary levy at the level that the council had set at that point in time and the wage increases had dropped from 1 1/2 to 1 percent. The savings from the health care costs being only 2.62% versus 15% helped to get both of those items back into the general fund budget for 2012. Staff also in the last few months had been reviewing a number of funds and a number of services that we have and contracts that we have to look for ways to further reduce the budget from the preliminary levy. One item that was noted was we have a fire station number 3 levy slated for the books for 2012. At this point in time staff’s recommendation is to temporarily eliminate that levy. We still do have the construction of the fire station and the equipment for that fire station in our CIP. However because construction won’t begin obviously in 2012 for this station there is really probably no need to levy for that at this point in time. We also made some adjustments to account for a piece of equipment that we know we desperately need. The capital replacement equipment fund was increased by $50,000. In essence what we have done here is taken $90,000 of the savings from the elimination of the fire station and for a one time purpose increased the capital replacement equipment fund levy to help fund the purchase of a payloader that is 40 years old and is fairly close to it’s last leg. From a combination of getting a good trade in value, plus if you look at item number 4. The bullet point on here, we were also, what we did to fund, attempt to fund the payloader was we moved $125,000 in funding for the tennis court improvements from the revolving assessment construction fund. From, excuse me, the capital replacement equipment fund to the revolving assessment construction fund. Staff felt probably a little more natural fit for this funding source rather than the equipment fund to be done in conjunction if possible with streets and that cost would save $125,000 to the capital replacement equipment fund. The net of those three items with the trade in would get us approximately the $170,000 or $175,000 we would need to purchase the payloader that I was just discussing. Bullet point number 4, the adjustment for the $42,700 was what I had discussed previously. The 2.62% decrease from the 15% which was originally budgeted for health care amounts to $42,700 approximately and the two items that we, oh excuse me. Bullet point number 4 is a different item and we looked at the general fund expenditures in quite detail the last month of the year in 2011 to look for any last changes that we could reduce spending and get spending closer to the 2011 level. We were able to find two items, and I guess one kind of fell onto us but one item, Beth Hoiseth who is our Crime Prevention Specialist has requested going from a 40 hour work week to a 32 hour work week on a permanent basis. This cost savings amounts to roughly about $17,000 or $18,000 to the general fund by allowing her to go to the reduced work hours. Staff felt that reducing the work hours did not interrupt services or have an impact on services. In addition the city manager took a look at the contract for policing services with the Carver County Sheriff and they found $28,000 in costs related to an administrative position that the County and the City has agreed would not need to be funded anymore, and maybe Mr. Gerhardt can comment on that position a little bit on exactly what that’s all about. Todd Gerhardt: Mayor, council members. Carver County sheriff’s office in their contracting model and formula included basically a crime specialist that provided statistical analysis of crimes that occurred throughout the county and provided that information back to the contracting cities. That service will be provided in-house versus hiring somebody new. Vicky McRoberts had the position and she left oh about a year and a half ago so the position hasn’t been filled and the county sheriff’s office was looking at filling the position for 2012 but based on conversations with the contracting communities and the City of Chanhassen, it was determined that that service would be provided in-house or through the assistance of Beth Hoiseth, our Crime Prevention Specialist. So that savings equated back to about $28,000. 6 Chanhassen City Council Meeting – December 12, 2011 Greg Sticha: The total of those two amounts to the $42,700 you see on the power point. That amount brought spending below the 2011 level of spending for the general fund just under $9,616,000 I believe is the number. The net results of all these changes is the total levy lower than the preliminary levy by $82,700. A total of $113,000 lower than the previous year. Councilman Laufenburger: Mr. Sticha, just a question. Can you go back to the comments you made about fire station number 3. I understand the levy has been eliminated or shifted but you also spoke of constructing costs are in the CIP. Do you recall what’s the timing of those construction costs in the CIP? Do you recall that? Greg Sticha: It’s in the CIP currently for 2013 construction and some equipment then bought in 2014. Councilman Laufenburger: Okay. So my follow up question then is, if for example we choose to either postpone or move this timing of this fire station back, then those dollars in the CIP would be shifted by 1 or 2 years or whatever many years, is that correct? Greg Sticha: Yep. As we have each of the last 4 or 5 years we will look at the need for the fire station with the city council and adjust when we fund that in the CIP accordingly to what the city council’s needs are, or City’s needs are at the time we have that discussion. So it will be a part of the CIP process again next year and that’s a good point. The CIP items that you’re voting on this evening, again in particular years 2013 and beyond, those items are place holders. Any of them in the next year’s CIP process can be adjusted, moved, changed, as the City Council sees fit. Councilman Laufenburger: Okay, thank you Mr. Sticha. Greg Sticha: So let’s take a look at the general fund expenditures as compared to the previous year. Total spending below in total from the previous year. We’ve talked about the changes in spending. There were no other substantial significant changes in any of the departments aside from the ones that we previously just mentioned. Wage increases were included of 1.5% for the employees in this but total spending for the general fund budgeted is the same or less than previous year. Revenues. No adjustments to the revenues from the preliminary levy. The one adjustment was to the property tax line. That number came down as a result of the change in the $42,700 savings in the general fund so that number was able to come down so total revenue matches total expenditures and again identical or slightly below the previous year’s numbers from 2011. Taking a look at the general fund expenditure history. This bar graph shows the history of spending in the general fund since 2003, and this reflects the change from the preliminary levy as the bar indicates. Mayor Furlong: Mr. Sticha just to verify, these are the budgeted. Greg Sticha: These are budgeted numbers, correct. Not actual. Mayor Furlong: So the actual numbers could have in effect in many cases were lower, or different. Greg Sticha: In almost all the cases the numbers were lower than the number actually budgeted. There might have been a couple of minor exceptions but. Mayor Furlong: Okay, thank you. Greg Sticha: This is a comparison of our key financial strategy cities and what they made us aware that they were planning for wage increases for the upcoming year. The 1 1/2% is comparable to a number of other communities that we polled here that are key financial strategy cities. So taking a look at the total 7 Chanhassen City Council Meeting – December 12, 2011 levy dollars and how they compared to the previous year 2011, the general fund levy down 1%. You’ll notice the capital replacement equipment levy is now $800,000 rather than $750,000. We talked about that earlier in one of the previous slides and you’ll also notice the fire station number 3 levy is now zero and in this line previously there would have been $90,000. So tax capacity levies, a .3% increase from the previous year just roughly over I believe $40,000. No, $30,000 excuse me. And then the market value levies, if council recalls, we have one remaining market value levy left for the library and last year we had refunded the library bonds. Resulted in a savings of $351,648. A reduction from the 495 saving approximately $140,000. I took a look at the debt payment schedule. For whatever reason we structured the refunding of this bond. Next year there will be a slight increase and then it comes back down again in future years and we had done that to accommodate our debt levy schedule if you recall our debt levy schedule which plans all of our debt levies. There was a little more room for the market value levy in next year to be slightly higher than 2012 so that’s why you’ll notice a change back up in 2013 and then it comes back down in 2014 for that particular repayment of debt. Total levy decrease of the $113,000 that we had talked about before, or a lower levy in total by 1.1%. This graph takes a look at comparing our levy increase or decrease from the previous year as compared to new growth increase from the previous year. From 2006 to the current. For 2012 we had new construction or new growth of 1.16% and the levy is down 1.1%. Taking a look at some of the previous years, in general previous city councils have attempted to try to keep the levy increase from the previous year to approximately the amount of new growth from the previous year and for the most part that has stayed true. A couple years of difference. In 2008 we should note we did add an additional position on the police contract so those just kind of compare the levy dollars versus the new growth of the city from year to year. Councilman Laufenburger: Mr. Sticha, can you put a dollar value on that new growth for last year? Greg Sticha: That’s roughly, I believe it’s $106,000. 1.16% is just over $100,000 in new tax. Councilman Laufenburger: Okay, $100,000. Greg Sticha: Yep. Councilman Laufenburger: So those are new tax dollars that we’ll be receiving from properties in 2012, correct? Greg Sticha: Correct. Councilman Laufenburger: Okay. Greg Sticha: So the net effects of this tax levy, again the general fund levy’s down by 1% from the previous year and the total tax levy decrease of $113,000 or 1.1%, which we’ve discussed. We included this slide in our t-n-t presentation last week to the residents to kind of show some of the impacts of property tax statements in terms of city property taxes. We also showed a video that attempted to explain the change in the market value homestead credit program to a market value exclusion, homestead exclusion program. We’re not going to show that video again this evening or go over the change in that program again but we did want to note that the tax bills you see presented on this slide are based on the preliminary levy and with staff’s recommended levy this evening of decreasing another $82,700, all of these tax bills would come down by some amount. The exact amount, little uncertain and depends on the value of your home a little bit but each and every one of these amounts would come down based on staff’s recommendation of lowering the levy by the $82,700. This is an example of what a property tax statement looks like for a home in School District 112. Approximately 20% of the property tax bill is the City’s portion of the bill and then the break out’s of the other jurisdictions are listed in the pie graph there. 8 Chanhassen City Council Meeting – December 12, 2011 So staff’s recommendation this evening is to adopt a general fund budget of $9,616,600. A total levy of $10,153, 690 and a total 2012, that’s a typo. Not 2106. That’s a big CIP. 2016 CIP of $73,479,100. Mayor Furlong: Okay, thank you. Questions for staff. No? Councilwoman Ernst: Mayor, I don’t have any questions. I just had some comments. Mayor Furlong: Yeah, we’ll get to comments. Councilwoman Ernst: Or do you want to wait and do that? Mayor Furlong: Well we might get there is there are no questions. We’ll get there pretty quickly. Councilwoman Ernst: Okay. I’ll wait to see if there’s questions. Mayor Furlong: Any other questions at this point? Okay. Let’s bring it to council for discussion and a motion. Councilwoman Ernst. Councilwoman Ernst: Well first off I want to say to staff I appreciate the work, and I’m going to say in particular Greg, that you’ve done with the budget this year, particularly on the general fund. We saw the video at the Truth in Taxation meeting last week regarding taxable market value. It was implied in that video that cities really do need to cut their expenses and compensate for the increase that some of the, some of the homeowners may see in their taxes. Or may experience. And I had hopes this year that we’d see a reduction in each portion of the budget. In terms of the tax capacity levy, which includes the library referendum, in 2011 we spent $9,771,990 and this year you’re proposing that we spend $9,804,402 for 2012 which is primarily $32,412 more than last year. Therefore I don’t support this proposed budget but we could do any of the following to reduce the tax capacity levy lower than last year. Number one, we could eliminate the wage increase of 1.5% which is in the amount of between $50,000 and $60,000. And by the way I just want to make mention here that you know I would support the 1.5% increase if we could come in lower on the budget than we did last year. We’re spending also additional money on the payloader that came in after the preliminary tax levy was approved, and that is now in our capital replacement fund. Improving tennis courts at a cost of $125,000 are moved into the pavement management fund. I don’t support this project. I’m not saying we shouldn’t go forward with it at a future date but I don’t think now is the time. It’s not a necessity. And the ideas I just mentioned amounts to roughly about $180,000. Of course excluding the Audubon assessments and the payloader so I don’t believe it should be that difficult to get a number less than what we spent last year. But in addition I’d also like for us as a council to look at the Audubon revolving assessment fund to see if there’s a way that we can get a consistent, maybe lower payment there. More on that for a following discussion but I think it would be good just to see what that looks like because after talking to you Greg, even though it was significantly lower than this year, and higher this year, it will probably go down again next year and then up the following year just due to the way that we had the payment schedule generated so. And the EDA debt is not zero from $126,000 and the library’s now reduced from $495,000 to $351,000. This amounts to roughly between $260,000 and $270,000. These are additional monies that we could be saving rather than reallocating. So with that, those are the reasons that I choose not to support this budget. Mayor Furlong: Other comments, discussion. Councilman Laufenburger: Mr. Mayor. Mayor Furlong: Councilman Laufenburger. 9 Chanhassen City Council Meeting – December 12, 2011 Councilman Laufenburger: I’m a rookie in this process. This is my first budget process so it’s been very enlightening. I tend to look at kind of a big picture of this budget and one of the things that’s very striking for me is that if we compare 2012 to 2011, and I’m going to look at the total levy for 2011 which was $10,267,000. And then I think about the new construction and I think that new construction number I looked at referenced I think it was $119,000 for new construction. So realistically if we did everything the same way we did last year and brought in the taxes from the new construction, that means we could take, we could take that levy to $119,000 higher and really have, potentially have no impact on the taxpayers, aside from the fact that property values goes down. There has to be a distribution. But in fact rather than taking the levy up $119,000 we’re taking it down $113,000. That represents to me a striking $230,000 lower levy than potentially we could based on the economic growth that we’ve seen in the city of Chanhassen. So I, from a big picture standpoint I think the staff has done a very good job and I can support this budget at the level that Mr. Sticha identifies. Mayor Furlong: Thank you. Other thoughts and comments. Mr. McDonald. Councilman McDonald: I guess I’ll chime in also. Councilwoman Ernst mentioned the video and yeah the implications of that I think what the legislature tried to do is again force down to the cities to make up for all of this money that suddenly the State was not going to be providing. They didn’t give us a lot of notice to do that. The problem we run into by trying to again reduce all the taxes down is services and we have spent a lot of time since, I believe as you said since August is when we first saw all of this and we came back with a lot of challenges and questions about services and really kind of looked at a number of services for reduction in costs and also to determine what impact those would have on the budget. What we’ve come back with is a budget that’s kind of reflective of what we feel provides at least the same level of service if not a little bit greater to the residents, and we have identified certain key areas as being priorities for service. Again snow plow removal, park maintenance, trails and all of those things and time and time again on study after study and question after question with all the residents those rank as very high priorities. It’s don’t touch those so unfortunately in order to maintain a service at the same level you did the previous year, the price is going to go up. It’s just a function of the economy that prices will rise, either through wages or cost of goods or cost of materials but services will rise even if you maintain the same. So I looked at all of that. The next area that I really kind of looked at and I was very, I won’t say troubled but I was very concerned about again raises. What I looked at, and I listened to the residents. We’ve had a number of people come through and I’ve talked to a number of people concerning their own particular situations as to where they’re at and while I realize that there are people out in the community that are not doing all that well, there are also people out in the community I think are doing well and as a city we’re doing quite well. Chanhassen is a little bit of a oasis in a very bleak landscape throughout the state. So then what I tried to look at is how do you justify giving staff and everybody a raise. Well, in my own business one of the things I look at is how did you perform. What did you do for me? I have certain expectations that you will do your job. You know you get paid for doing that. One of the things that this city has managed to do is to go from a AA+ to a AAA bond rating. That is not an easy task and there are very cities within this state and even around the country. In fact even the U.S. government no longer holds a AAA bond rating. We’ve managed to get one 2 years ago and we managed to hold onto it through last year. That took a lot of work and a lot of effort in my way of looking at things, you went above and beyond what was required of you by your job descriptions. So I also asked you know what’s that worth to the city. I mean it’s great to say we got a AAA bond rating you know. AA+ but exactly what’s it worth? Well over the past couple of years we have now reissued bonds, four bonds to be exact and over the life of those bonds what that means to us is a savings of about $130,000. That’s just the bonds that we were able to reissue in the past 2 years because of this new bond rating. Going forward there will be savings in any bonds that we do issue because again it’ll be at a AAA level instead of the AA+ and that means we pay lower interest rates on those bonds. Also we are considered lower risk. Again that’s something that is unique for the City of Chanhassen and I think it’s one of the things that makes the city work is that we’re able to do things because we have access to credit that a lot of cities and 10 Chanhassen City Council Meeting – December 12, 2011 communities do not have. So based upon all of that, when I look at the performance of the city staff, including the city manager and everyone, I see people that are not just sitting around just getting by because yeah, they’ve got you know guaranteed income and the job’s pretty simple. All you have to do is just kind of maintain stuff. That’s not what we do here and I think because of that the city shows it. You know I’ve talked to a few people about the city and they’ve talked to me about it too, there’s something different about Chanhassen. I mean you go out and you look at it and it’s different. It came up as a part of the Walmart discussion that a lot of residents came up here and they talked about the nature of this city and this town. Again the special aspects of it and the special feeling and the look and you go out there and you look at it, we’re decorated for Christmas. We’re decorated for the holidays. It’s a clean city. The staff and the city does an excellent job of taking care of this property that belongs to all the residents of this community. Again you can go to a lot of other cities and you’re not going to find this. So based upon all that and then looking at the comparisons between other cities and where we rank and what all we’re doing and also I did go online, I wanted to look at what’s the private industry doing. Where are their trends? There is a slight trend up. You know people are beginning to see some increases. Again it depends on who you work for and it depends on how they’ve been doing but businesses that are doing well are starting to reward their employees. The City’s no different. It’s like a business. We don’t really produce a product but the thing we do is we take care of property and the City has been doing an excellent job of doing that. So based upon all that the conclusions that I came to, after looking at the budget, and again I do thank staff for again going above and beyond what we set as a preliminary levy and hearing us that you know you’ve got to find some other reductions. They did and they come back with those. So based upon all of that I could support this budget all the way through including the salary increases up to a 1 1/2 percent increase because I think it is well deserved. I do think that you know the residents, the property that they own as part of this city is being well taken care of and I think that’s reflective of the comments we get by the public meetings. By everybody that comes up and they always have good things to say about the City of Chanhassen so that’s not due to anything I do sitting up here. I don’t work at the City during the day. That’s the staff so with that those are the reasons why I would support this budget. Mayor Furlong: Thank you. Councilwoman Tjornhom, any thoughts? Councilwoman Tjornhom: Yes. Lots of thoughts. Mayor Furlong: Any you’d like to share? Councilwoman Tjornhom: Any important I’m not sure but going back to Councilmember Laufenburger, I remember being a rookie also my first budget and we were in work session and those were the good old days where there was lots of development and things were coming up roses all over and you know one of the, at that time it was Councilmember Craig Peterson and Councilmember Labatt and Councilmember Brian Lundquist and you know they taught me that the main thing was to control growth and spending and to balance those two. Make sure that you spent only as much as you were taking in and I think we were like $50,000 short or something in our work session and Brian Lundquist, because I’m wondering how are you going to find $50,000. To me that seemed like a huge amount of money and I heard him laughing going well I guess staff will find it somewhere and walked out the door and next thing I knew I came back to the next meeting and staff had found it you know and I think to staff’s credibility, that’s kind of the direction they’ve been given for a very long time. To be responsible and to have a respectable budget and they’ve kept on doing that year after year. Sometimes I’ll still walk out and go I don’t know how they’re going to do it and I come back and they’ve done it and so thank you to Laurie and Todd and Greg and Todd and everyone who was a part of that. You know it’s amazing this year we’ve had some real highs and some real lows. You know the beginning of the year I didn’t really want to be a council member. Watching us in the news and what was going on. Felt so helpless with the sewer back up or the watermain break. You felt so like I said helpless. What can we do for these people? What should we do? th And then you know we have wonderful days like the 4 of July celebration and you’re glad to be a 11 Chanhassen City Council Meeting – December 12, 2011 council member again and then you have developments that come into town and they are testing, they’re a challenge and you wonder once again what’s the right thing to do as a council member and for me what I always fall back on is the residents. You know right now we probably have 1, 2, 3 residents here for our budget. We probably had 400 residents here for the past development that was wanting to coming to town and you know that shows a lot to me about our residents and that if there’s an issue, they’re going to let us know or if something’s not going on right in town they’re going to let us know or if something’s not going on right in town they’re going to let us know. They certainly let us know that night and the Planning Commission that night what their desire was for this town and I take that very seriously and I’m so thankful they do it because then I can represent them in the way I should. And we won many awards this year and you know that was due to our quality of life in this town and that is due to our families I guess and the way they raise their children and what our values are but then it also goes back to the city and that goes back to our staff because believe it or not I’m just a council member. You know and then I have to admit I don’t do any of the accounting for the city. I don’t think about our investments or worry about them. You know I’m informed by them and I’m encouraged to do what’s right and what’s you know about timing and proper times to buy and sell and all those things but I don’t do that. That’s our accountant, our finance director that does that. When it comes time for street reconstructions, I don’t worry about how we’re going to do that. How they’re going to be engineered. What needs to be done. That’s our engineer Paul Oehme that does that. When it comes to our planning, I don’t, I have opinions but we always refer back to our ace planner Kate who’s probably the best city planner we have in the state of Minnesota I would think so I want to thank her for that. Let’s see, have I forgotten anyone else? The parks and rec director. You know we won awards because of our parks and our park programs. Once again I don’t plan those park programs. I encourage them. I participate in them but it’s Todd Hoffman and his crew that you know deserves a round of applause for making that happen and making them successful and so all those people I just mentioned are our city staff and they’re what makes this city, make our residents have a quality of life and so I’m proud of the staff and I’m proud of what they’ve done and I agree with Jerry that if you’re doing a good job then you should be compensated for that because you’re doing good things and you are, you’re, our investment in you is coming back 10 fold to our residents and so I also am in favor of this budget and I’m very proud of it. Mayor Furlong: Great, thank you everyone. It’s interesting to see the different perspectives. I’ve always laughed that we have 5 members on the council and sometimes 6 personalities that show up in a council meeting. I usually bring 2 or 3 of them. Councilwoman Tjornhom: What does that mean? Mayor Furlong: But you can see that each of us have approached this in different ways but we’re all coming to, at least most of us are coming to the same position. I think overall when we look at the budget is really a function and represents values that we as a council try to represent and staff values our residents and businesses in our city that we as a council try to represent and our staff understands those fully. People in city hall, especially our department heads and others are very connected to this city. Many live in town and those that don’t there’s no shortage of understanding really what are those aspects that make Chanhassen just a great place for everybody to live, work and raise a family. Over the years we’ve been recognized, in recent years especially, recognized for those qualities of life that we’ve all known and appreciated and grown to love. I think as we look at the overall budget, one of the primary goals and objectives, and there are some competing interests obviously. One is service levels. What are those services that the City will provide to our residents and businesses? Making sure that we maintain and improve upon those areas, those public goods. Those public services that people are looking for. That obviously costs money so how are we going to allocate the limited funds that we have to those services and to make sure that those service levels are, and one of the primary goals of this council has been to at least maintain those services and where appropriate to expand upon the services. We’ve done that over the years as Mr. Sticha mentioned. There have been increases in public safety staff over the 12 Chanhassen City Council Meeting – December 12, 2011 years. For example when there was a need there and a demonstrated need to do that, we did that in terms of adding an investigator and a school resource officer. Another category so it isn’t just always keeping what you have. We’re doing less but sometimes it’s doing more. In this particular budget that is being proposed it was, it’s a budget from a spending standpoint that is actually less than the preliminary levy was projected to be. It’s equal to last year’s budgeted spending level. Keeping spending flat. People talk about living within their means and from a city government standpoint that really talks about spending and from our standpoint, as I said, we’ve got a proposal here that shows spending down. Service, or spending flat. Service levels being maintained and as a result of that, because we are still growing as a city, our tax base is still growing, even where other cities have not grown, we are going to see, as Councilman Laufenburger mentioned a reduction not only in the actual reduction of the levy but an effective reduction even greater than that because of the new growth that occurred in the tax base. So for all those reasons from a financial standpoint this budget clearly works. I think what it does too is it’s part of the factors that bonding rating agencies look at in terms of long term planning. We have a CIP plan here through 2106 is it Greg or? Greg Sticha: 100 years. Mayor Furlong: So you know they can plan really well here. That’s long term planning at it’s finest. Councilwoman Tjornhom: Number one in the state. Mayor Furlong: But the key is it’s a 5 year plan that’s also funded. While there are some place holders, as Greg mentioned there, we’ve got revenue sources generally earmarked for each and every one of the items. Now we don’t know exactly where they’re coming or if they’ll come within the timeframe that we’ve looked at but it is a realistic 5 year plan and it’s a plan that focuses on investing and reinvesting in our city, as we’ve talked about before. You know I think it’s important to recognize, and I want to certainly thank city staff and the council members this year, especially Denny. You jumped in at an opportune time. I think we had one of the more extensive reviews and discussions and information with regard to service levels and budget discussions starting back in July-August timeframe and that’s good. It was healthy. It was good. We received a lot of requests or suggestions from residents a year ago on ways to change service levels and we looked at each and every one of those. Some of them we agreed with. Some of them we didn’t. Generally it was, it was worthwhile to take a look at everything and from time to time to look at things. Just because we’ve been doing it that way in the past, that doesn’t mean that we should continue to do it as well, so overall I think this is a good budget. I want to thank staff for their resourcefulness and continuing to look for ways to meet the council’s goals and objectives and stretch but when we can pass a budget here that keeps spending flat by maintaining current service levels and reducing the tax levy at the same time, I think that’s a successful outcome to what has been a long but I believe very productive budgeting process. So at that point unless there’s additional discussion, would somebody like to make a motion? Councilman McDonald: Sure. Mayor Furlong: Mr. McDonald is recognized. Councilman McDonald: I make the motion that we adopt the staff’s recommendation to adopt a general fund budget of $9,616,600 and a total levy of $10,153,690 and a total of, from 2012 to 2016 CIP of $73,479. That number’s not right. Greg Sticha: $73,479,000. Councilman McDonald: $73,479,100. 13 Chanhassen City Council Meeting – December 12, 2011 Mayor Furlong: Okay, thank you. Motion’s been made. Is there a second? Councilwoman Tjornhom: Second. Mayor Furlong: Motion’s been made and seconded. Any discussion on the motion? Hearing none we’ll proceed with the vote. Resolution #2011-68:Councilman McDonald moved, Councilwoman Tjornhom seconded that the City Council adopts a resolution establishing the 2012 final levy at $10,153,690, approves total general fund expenditures of $9,616,600, and approves the 2012-2016 Capital Improvement Program in the total amount of $73,479,100. All voted in favor, except Councilwoman Ernst who opposed, and the motion carried with a vote of 4 to 1. CONSIDER AMENDMENT TO CHAPTER 4 OF CITY CODE CONCERNING FEES. Greg Sticha: Thank you again Mayor and City Council members. On an annual basis staff reviews all of the fees the City charges for it’s various services we provide either to residents or businesses in town. We’ve had a few discussions with City Council earlier this year, in particular in terms of the utility rates that we plan on adjusting for the upcoming 2012 year. We had a utility rate discussion, work session discussion with the City Council and our financial advisors back at the end of October. Part of that discussion we talked about operating increases and connection increases for fees for our various utility infrastructures. From an operating side or usage side the study bore out that increases for the water usage rates of 2% in all the tiers except the fifth tier where 3% was warranted, and for the sewer rates 3% and for the stormwater usage rates or the quarterly fee of 3% increase. On the connection side, or hook-up side for fees related to each of these utilities, 6% on the water, 4% for sewer and 5% for stormwater quality and quantity. The study did it’s best to take into account all levels of spending and all the funds and cash balances that should be maintained for reserve purposes. We felt the study was again done very well this year with the help of our financial advisors and staff’s recommendation is to proceed with those increases as discussed as part of that work session on the rates. The only other fees that are changing within our ordinance is the SAC fee, and that is set by Met Council. They have increased their fee for 2012 by $135 or 6% increase in the SAC fee. That item is out of the control of the City but we are amending the ordinance to reflect that change. All of the other fees the City charges are remaining the same as the previous year. So if there’s any questions about any of the fees or any of the items we discussed earlier this year in terms of the utility rates I’d be happy to answer those at this point. Mayor Furlong: Thank you. Questions for staff. Mr. Sticha, just a question that came up. Allocation of, when Ehlers and Associates conducts the analysis, they look at projected spending and investment within their respective system, whether it’s stormwater management or utilities. Sewer. Sanitary sewer, water, correct? I mean they’re looking at what we expect will be the investment going forward, capital expenditures? Greg Sticha: Correct. Mayor Furlong: And they’re also looking at for some of them the operating costs and operating costs as well. Greg Sticha: Depending on the fee, yep. Mayor Furlong: Depending on the fee or the nature of the enterprise fund. 14 Chanhassen City Council Meeting – December 12, 2011 Greg Sticha: Yep. Mayor Furlong: The allocation, the question comes up about allocation between usage or usage rate fees versus capital or development related fees. What’s the process that’s involved there in terms of looking at that allocation? Greg Sticha: Well, typically the new infrastructure, what you see happen in any rate structure is the new construction of some of the main lines that are within the city, you’ll typically see more of a tendency to charge the connection fees related to that new infrastructure and the operating costs are funded with operating or usage rates from the actual usage of the service. Within that however there is sometimes an allocation of a portion of the usage funds to be used towards some of the infrastructure, and vice versa if it’s warranted. We do, depending on the asset that we’re talking about and the fund that we’re talking about, we would fund certain assets within certain funds maybe a little bit differently than you would in the water fund and the sewer fund for example. So we take a look at new connections that are coming in in the future. New burdens to the system to help try to pay for that new infrastructure, and we take a look at new volume that we’re going to have to produce for everybody and so it’s a combination of the two a little bit. It’s not to say we 100% use all connections for all infrastructure only and 100% for operating revenues just to provide the water, or just to pump the water only. A percentage gets allocated for each purpose within each fund depending on the need for that individual fund. Mayor Furlong: So some of the usage rates will go towards investment in the system, for example replacement of existing services when we reconstruct a road, we’re replacing the utilities, generally the water and sanitary sewer lines underneath that and those are being funded in part out of the usage fees as well. Greg Sticha: Correct. Mayor Furlong: …replacement, that depreciation aspect so say with that. Okay. Greg Sticha: That would be correct. Mayor Furlong: Okay. Alright. So it sounds like the process is not necessarily an arbitrary one. Greg Sticha: No, by no means at all. Each fund is looked at individually and each asset within each fund is looked at as to how it should be funded so it’s a very extensive process. The engineering department is heavily involved in the rate study and the infrastructure needs for the city. They spend a lot of time in very detailed looking at the infrastructure needs when they put together these plans and we’re not putting together just a 3 or 4 year infrastructure need plan. We’re putting together a 15 year infrastructure need plan so it’s an extensive process start to finish. Mayor Furlong: Okay. Obviously as plans change we’ve seen developments slow in recent years so what we maybe thought 5 years ago we might be doing this year, we’re not doing and now we’re going to do it in a few years. That delay and that investment also then, or provides an opportunity for a delay in rate increases as well. Greg Sticha: That would be correct. Mayor Furlong: To the extent that the costs aren’t there necessarily to do. Greg Sticha: Yep. 15 Chanhassen City Council Meeting – December 12, 2011 Mayor Furlong: Okay. Alright, thank you. Any other questions for staff at this point? Councilwoman Ernst: I have a question. So Greg when I originally was voted into office one of the things that we talked about was when we had the big drought when we dried up and we were talking about increasing fees to really control water consumption at that point. And then we started talking about okay, well we need the revenue to pay for a water treatment. Second water treatment plant so the monies that we’re collecting from these fees are going towards, I’m going to say that fund more or less, is that correct? Greg Sticha: A portion. Not the entire amount by any means but a portion are helping to go pay for the water treatment plant. A portion are going to help pay for chemicals for treating the water. You know so. Councilwoman Ernst: What would be that ratio? Mayor Furlong: Excuse me, just clarify your response if you could. Were you referring to funds being collected today for funding the current water treatment plant or funding the second water treatment plant? Councilwoman Ernst: No, the second. Mayor Furlong: Were you responding. Greg Sticha: I was responding to the current water treatment plant. Mayor Furlong: Okay. Greg Sticha: Funding for the second water treatment plant, the rates as you see them are not including, in other words a reserve to set aside for the future purchase of a second water treatment plant. We’re not collecting revenue now to essentially reserve or pay for that treatment plant. We do have the treatment plant in the study. We are planning on bonding for that treatment plant so we are planning for a repayment of that bond as part of the rate study into future years. Councilwoman Ernst: Which would come out of this fund or not? Greg Sticha: No. Not in this particular year, no. Rates will. Councilwoman Ernst: No, but I’m saying could potentially come out of this fund where we’re collecting these fees. Is that an accurate statement? Greg Sticha: The substantial amount of the increase in the fees for this year are not funding future, a future water treatment plant. Todd Gerhardt: Mayor, council, probably another way to say it is that, how you prioritize your expenditures really play a role in this. We did the analysis to show if you eliminated the second water treatment plant from this analysis it would not have an impact on the current rates but you know as other debt comes off that debt will replace if and when the future water treatment plant would be built so, or you would look at a water tower that might be needed in the southerly growth area of Chanhassen so you know depending on when your needs are, they would step in and take on whatever debt would be replaced or any increase that you would see in fees or rates. Councilwoman Ernst: So when we pay, when we collect these fees what are we paying for besides chemicals in the existing water treatment plant? 16 Chanhassen City Council Meeting – December 12, 2011 Greg Sticha: Water lines. Improvements to the entire water infrastructure system. The sewer increases are funding all of the improvements to the sewer system on an every other year basis with every street reconstruction project. We invest hundreds of thousands of dollars in improving the water and sewer lines in those areas. So it’s a whole list of items that these funds are used for. Councilwoman Ernst: And I don’t want to drag this out but can you speak to the percentage that goes towards the water treatment plant and the chemical? Just to kind of get an idea. Greg Sticha: Not off the top of my head probably. Todd Gerhardt: Mayor, council. Probably the best way to answer it is that your utility fees that you pay on a quarterly basis are used for the operation of the system. That’s paying for salaries. Paying for chemicals. Paying for electricity to run the pumps and then the hook-up fees are paying for the capital expenditures of the system that are regional so your over sizing your sewer lines. You’re over sizing water mains to accommodate future growth and that’s what the hook-up charges are used for. Some of the hook-up charges are used for the water treatment plant. Percentage wise I can’t get you an exact amount but, and that’s for future growth that that treatment plant would provide service to but the current users are probably using a larger percentage of this plant and the second water treatment plant would probably be built for future growth and the area served in the high zone because that’s where the water would be treated from. So long story, short story, most of your utility rates are used to operate the system. Hook-up charges are used to finish out the system and oversize it for future growth and you can’t ask a developer to pay for over sizing of a system that could be the benefit of his neighbor’s property for when it develops. Councilwoman Ernst: But when we’re looking at future growth, how far are we looking, how far in the future are we looking because right now of course we don’t have that much growth so how do we, how do we actually I guess generate an amount that makes sense that really will apply to future growth? Todd Gerhardt: Our utility rate study that we do takes into account a certain percentage of commercial growth. It takes into account residential growth in the tune of anywhere from 150 units to 200 units per year so kind of taking into account what we’ve been seeing for new growth so that’s included in the equation in determining what our rates will be. Councilman Laufenburger: Mr. Gerhardt, isn’t there a, isn’t there a State statute that prohibits us from charging more for utilities than what it costs to operate? In other words we can’t arbitrarily charge an additional 15% and turn our utility rate into a profit so that it supports the general fund, isn’t that true? Greg Sticha: Well I’m not sure if there’s a statute on that. Roger Knutson: There is. Greg Sticha: There is? Councilman Laufenburger: Thank you Mr. Knutson. Roger Knutson: Your utility funds are dedicated funds. You can’t take your money out of your water fund and use it to pay for your fire department, other than the fire department using water I guess. No, it’s a dedicated fund. Councilman Laufenburger: Okay, thank you. 17 Chanhassen City Council Meeting – December 12, 2011 Greg Sticha: In terms of accounting, government accounting standards require that you don’t operate it at a profit per se so. Mayor Furlong: But normal profit except to the extent there’s a reserve balance that, and targeted reserve balances. Greg Sticha: For targeted future spending. Mayor Furlong: So in a year where revenues may exceed expenses it could be for a variety of reasons. A lot of development that year. More than we expect. It’ll be just the normal planning process to replenish the reserve fund and building up reserves for major investments at some time is certainly a part of the overall planning process. Greg Sticha: As Roger said, within that fund, yep. Mayor Furlong: Yes. Councilman McDonald: And let me ask just a clarification. I mean you brought it up but part of what this is used for, anytime we do a road improvement that also requires sewer and water connections, we only charge the residents for the road. The sewer, for their portion of just the road construction and the cost of that. The sewer and the water is picked up 100% out of this fund. Greg Sticha: Correct. Councilman McDonald: Okay, and that’s the purpose. Greg Sticha: The sewer and water portions are paid 100% out of the utility funds. Councilman McDonald: Right, and that’s the purpose of this fund also is to help us go back and fix the infrastructure. Todd Gerhardt: Mayor, council. When you established your assessment policy it was with the basis that the City would pick up 100% of the sewer and the water and as a part of that we have to include that cost in our utility rate study. There’s a dollar amount associated each year for sewer and water replacement as a part of that so that’s part of our ongoing operation of the system. There is a life expectancy and a depreciation of that asset and so we need to account for that. Right now we are not funding utility funds at 100% of depreciation and I think our auditor’s told us, our financial advisors have told us some cities do that. We have not. Councilwoman Ernst: Mayor. Mayor Furlong: Yes, Councilwoman Ernst. Councilwoman Ernst: So just going back to Councilor McDonald’s statement when he was talking about you know when we’re doing road improvements and we have to pay for water and sewer that’s coming out of this fund. So in reality though are our taxpayers not paying the assessment fee and then on top of that they’re paying, now they’re going to be paying more for their water and sewer because of the increase, right? So they’re getting assessed plus they’re paying the additional increase. It’s really not, it’s really the taxpayers that are paying for it. Right. 18 Chanhassen City Council Meeting – December 12, 2011 Todd Gerhardt: The utility users. Councilwoman Ernst: Correct. Todd Gerhardt: And they’re not getting assessed for the sewer and water. Councilwoman Ernst: Right. Todd Gerhardt: They’re getting assessed for the road portion only. Councilwoman Ernst: Right, I understand. Todd Gerhardt: And that everybody that is a sewer and water user is paying for the replacement of the older infrastructure and that’s why we do the utility rate study to make sure that we can still fund to that policy level for future projects and so those people that are looking for a street reconstruction into the future can get the same benefit that prior projects received. Councilwoman Ernst: So if we didn’t pay, if we didn’t increase, if we didn’t have any increases last year and everything was fine, why do we have to have an increase this year? Because we didn’t last year? Greg Sticha: No. The rate study takes into account all of the future infrastructure requirements as well as the operating needs. If you recall at our work session meeting we talked about a time period in the mid to late 90’s and early 2000’s where we had 4 or 5 or more years of no rate increases. We then did a utility rate study and found our utility funds were drastically underfunded and a lot of our infrastructure needs were going unmet and at that point in time we had to implement back to back years of double digit percent increases in the utility rates and what the rate study does is it tries to avoid that and we try to keep everything on an even keel basis in terms of a rate increase from year to year and rather than having 4 or 5 years of no increases, it’s been staff’s approach and other city council’s previous approach to take a more moderate increase rather than having a onetime 10% increase followed by another 10% increase in back to back years. More incremental increases of 2 to 3 percent from year to year. It seems to be better for, in terms of accounting. In terms of funding infrastructure and in terms of for your residents. You hit with a 10% increase in one year, you know that can be pretty substantial and the flat approach seems to have worked much better for all parties involved. Todd Gerhardt: Mayor, council. Councilmember Ernst is correct. Last year there was not a rate increase and that is something we all worked towards seeing how we could adjust the rates without an increase last year due to the economy and you know not to pile on. However when we put our rate study together it did show a projection for a rate increase for last year but bottom line is we pushed that back out and the reason we’re looking at some of these rate increases also is the current water treatment plant was scheduled to look at double digit rate increases when we first built it and that’s something the council wasn’t interested in seeing and they wanted to slowly have those rates increase and also let growth come in and pay for that water treatment plant, and we’ve been seeing growth of around 1% even in the poor economy so those, this year 160 homes are contributing towards that water treatment plant and last year it was 75 homes that contributed to that water treatment plant. So having growth also helps keep our rates down but we did take that into account when we do our rate study. Councilman McDonald: Excuse me, you said we didn’t do an increase last year. While technically I think that’s correct, we did create a fifth tier so we did do a tier increase. Todd Gerhardt: That’s correct. 19 Chanhassen City Council Meeting – December 12, 2011 Councilman McDonald: We added it that way instead of adding the percentage so while technically we didn’t do an increase, the effect was I think we got an increase. Todd Gerhardt: You’re right. That is correct. Mayor Furlong: Any other questions for staff? Seeing none, any discussion or comments? Okay. Would somebody like to make a motion please. Councilman Laufenburger: Mr. Mayor? Mayor Furlong: Yes Councilman Laufenburger. Councilman Laufenburger: I make a motion that the Chanhassen City Council adopts the attached ordinance amending Chapter 4 of the Chanhassen City Code. Mayor Furlong: Thank you. Is there a second? Councilman McDonald: I’ll second. Mayor Furlong: Motion’s been made and seconded. Any discussion on the motion? Councilman Laufenburger moved, Councilman McDonald seconded that the Chanhassen City Council adopts the attached ordinance amending Chapter 4 of the Chanhassen City Code revising the fees for 2012. All voted in favor, except Councilwoman Ernst who opposed, and the motion carried with a vote of 4 to 1. 1L. APPROVE CHANGES TO EMPLOYEE PERSONNEL POLICY. Mayor Furlong: Councilwoman Ernst, did you have some questions or, you asked that this be removed from the consent agenda. Councilwoman Ernst: Right. So I know that we’re talking about changing the personality, or personality, sorry. The personnel city code to 2 times what the accrual is today and I have proposed that we eliminate the liability and let those that have earned up to the time that they have, that they can actually obtain the time that they have earned. For example if they’ve been with the City, was it 16 years they get 5 weeks? So they would get that 5 weeks but would not be able to accrue that time and I know that we’ve already talked about the sick pay but they do have the sick pay which is an additional 600 hours that they can add to the, which they can accrue today up to their vacation time, which I think is more than fair and so due to that I would not support this policy so I would make a motion that we eliminate the liability. Mayor Furlong: Do you want to clarify how, in your motion how you’re going to eliminate the liability? Councilwoman Ernst: By when they get the 5 weeks, the 5 weeks is the time that they’ve earned. That would be carried in the budget but there is no accrual. So basically you’re, we’re already paying them for the time that they’ve earned. And there would be no accrual or carry over. Mayor Furlong: And maybe we’re discussing for, if you, can we get a quick background from staff on this issue so people watching at home have some idea a little bit more of what we’re talking about. Councilwoman Ernst: Sure. Sure, absolutely. 20 Chanhassen City Council Meeting – December 12, 2011 Mayor Furlong: And then I’ll come back to you and then for your motion. Ms. Hokkanen, could you give us a quick update. I don’t know if you have your power point presentation or not from the work session. Laurie Hokkanen: I can just go over it from the staff report. Mayor Furlong: If you’d like to, whatever’s most convenient. Laurie Hokkanen: Okay. Over the course of several work sessions this year we have reviewed our policy on the benefit of vacation that staff received and in the staff report, which people can look up online if they’re interested in seeing in detail, we documented a history so we went back to the early 90’s. We had a policy in place where vacation was accrued. You started off accruing 10 days and eventually after 20 years of service earned an additional 1 day per year of service with no limit and in the early 90’s, 1994 we introduced a system, after 20 years of service instead of that 1 day per year of service you received 25 days of vacation and that was the max in which you could earn. We currently have in place and have had in place a 3 times accrual rate so if you get 2 weeks of vacation this year, and for whatever reason don’t take advantage of those, you can carry those over to next year up to a maximum of 3 times whatever your accrual rate is. So if it’s 2 weeks, you can have 6 weeks on the books. If it’s 4 weeks, etc. So over the course of this fall we kind of looked at that and came to a consensus that we’d like to see that reduced and that it would be appropriate to have that reduced to 2 times the maximum accrual. So the changes that are before you tonight would set a maximum accrual rate of 2 times going forward but it would give staff that currently have a balance between 2 and 3 times, which I believe was 16 employees, 5 years to reduce that balance. If they left sometime in the next 5 years they’d not be able to be compensated for that balance but they do have the 5 years to reduce it after which point if it’s not used it would be lost. Mayor Furlong: When you say compensated, not compensated for anything over the new 2 times. Laurie Hokkanen: Correct. Correct. We also took a look at what, at the various rates at which you could accrue the annual leave amount according to years of service and we are recommending a new policy for st hires after January 1 that would have a maximum leave category, leave earning category at 20 plus years of service you would earn 22 days of vacation versus the current policy under which 20 years plus service receives 27 days of vacation. Mayor Furlong: Okay, thank you. I appreciate your accommodation so Councilwoman Ernst your motion then would be exactly what? Councilwoman Ernst: Well due to the fact that today we have a $948,000 liability on our, well actually it’s more than that now. I don’t know what it is for 2011. I haven’t seen the audit report but 2010 it was $948,000 liability and I’m making my motion to eliminate that liability and have the employees obtain the time that they’ve earned with no accruals. Mayor Furlong: You say obtain the time that they’ve earned. Councilwoman Ernst: Like up to 5 weeks I think, 16 years is 5 weeks. Laurie Hokkanen: 20 years. Councilwoman Ernst: 20 years? Okay. Mayor Furlong: Alright. Councilwoman Ernst has made a motion. Is there a second? 21 Chanhassen City Council Meeting – December 12, 2011 Councilman McDonald: Can we ask questions? Mayor Furlong: I think we should have a second if we’re going to discuss unless. Lacking a second then the motion fails and we’ll continue with council discussion or questions. Any other discussion? I think it’s, the item as far as the proposal, as Ms. Hokkanen mentioned this is a discussion that we’ve had over the course of several meetings and work sessions. As I mentioned this evening we were talking about, I think if everybody individually sat down and wrote down an employee benefit policy on vacation or sick time or just about anything else you’d have about as many versions as you have people writing it. I think it’s been my experience the benefits, employee benefits vary from organization to organization. From company to company. From industry to industry. There are some industries I’m familiar with that have a use it or lose it vacation policy. There are others that have, they allow employees to accrue vacation time. Some businesses or industries will provide short term disability insurance. Others will provide the ability to accrue sick time. As a City we fall into the latter category for that component. With regard to the number of cities, guideline cities, key financial strategy cities that we looked at, the vast majority of those, and I think just about all of them, their annual accrual fell fairly similar to where we were in terms of the range. There was a range there. Most all were near the 2 times accrual. As a city we were above that, or have been above that so I think there was agreement to lower that to a level that’s more consistent with what we see with other city governments, comparable city governments so again as I mentioned I think with this policy, if I was writing it or somebody else was writing it it might be different but I think that this is a fair compromise. It accomplishes the goals that as a council we started out considering and it’s something that staff has been involved with. Anytime we’re adjusting employee benefit packages, employee compensation, we don’t, we can’t do that in a vacuum and so I think we need to consider all factors in all the effects of the potential change in policy so I certainly support this policy. I think it’s a step in the direction that we needed to go and while it may not be perfect in some people’s minds, I think it is a fair policy and a very competitive policy with regards to our organization so if there is any other discussion, be happy to hear it. Otherwise this is item 1(l). I’d certainly entertain a motion. Councilwoman Tjornhom: I’ll make a motion. Mayor Furlong: Councilwoman Tjornhom, thank you. Councilwoman Tjornhom: I make a motion that the City Council adopts the amended personnel policy dated 12, December 12, 2011. Mayor Furlong: Thank you. Is there a second? Councilman McDonald: I’ll second it. Mayor Furlong: Mr. McDonald seconds it. Any discussion on the motion? Councilman Laufenburger: Mr. Mayor? Mayor Furlong: Yes. Councilman Laufenburger: I would, I intend to support this motion but just for clarification, Mr. Sticha could you just take as an action item for some time in early 2012 to do a recalculation of what the liability is based on the 2X accrual and what that, I’m not sure how you do that but I’m sure you’ll, as Bethany pointed out so well earlier, you’ll figure out how to do that. Okay? Okay. Thank you very kindly Mr. Mayor. Mayor Furlong: Thank you. Any other discussion? Hearing no we’ll proceed with the vote. 22 Chanhassen City Council Meeting – December 12, 2011 Councilwoman Tjornhom moved, Councilman McDonald seconded that the City Council adopts the amended personnel policy dated December 12, 2012. All voted in favor, except Councilwoman Ernst who opposed, and the motion carried with a vote of 4 to 1. COUNCIL PRESENTATIONS. Councilwoman Tjornhom: Mr. Mayor. Mayor Furlong: Yes, Councilwoman Tjornhom. Councilwoman Tjornhom: As mentioned earlier in work session I’ve had a really good day today and I want to say, I have. I just, I’m just so proud of our town again and our city manager and all our staff and Len Simich with the Southwest bus station… I was one of the 7:10 riders today and the bus was there early. It was wonderful. They had a little choir singing Christmas carols and it was festive and it just, it’s going to be such an asset to this town. You know I talked earlier we’ve had our highs and lows this year and this is certainly a high point. You know as I drove in it was empty but it was only, it was dark still but it’s going to be exciting one day when I drive up and that ramp is full and that means that there are those people coming into town and as a rookie and for Todd Gerhardt taught me that you want people to come to town and spend their money and go home and I think, isn’t that right? Todd Gerhardt: That is correct. Councilwoman Tjornhom: …taught me that also. If you’re going to have a successful downtown, and I think hopefully that’s what the plan’s going to be you know so I’m very excited about that. It was a wonderful ride and it was a wonderful experience and I know that it’s going to be put to a lot of good use, not only with the bus riders but with the Dinner Theater people also. A lot of opportunity with future expansion and good things to come so it was a good day in Chanhassen. Mayor Furlong: Great, thank you. Other council presentations? Let me share some summary comments regarding our city manager’s annual performance review. The City Council met in executive session on thth December 5 and again this evening, December 12 to discuss Mr. Gerhardt’s performance and compensation as our city manager. The following is a summary of those discussions. Mr. Gerhardt’s performance this year was ranked as exceptional by the City Council. This rating recognizes that Mr. Gerhardt’s performance during 2011 was one that consistently achieved the highest levels of performance in his duties and often went above and beyond expectations. He accomplished many of his personal goals and those of the City Council and together with the City Council and staff coordinated and executed on a number of strategic initiatives for the city. Some of the major accomplishments and highlights this year included completion of the 2011 street reconstruction and rehabilitation projects in multiple neighborhoods and in our downtown, on time and on budget. Working effectively with other governmental organizations such as school districts 112 and 276, Carver County, MnDOT, our neighboring cities to coordinate improvements and reinvestments into our highways, parks and trail system, municipal utilities and other public infrastructure. Completion, as Councilwoman Tjornhom just mentioned of our Chanhassen Transit Station located next to the Chanhassen Dinner Theater which will provide transit services for our residents and others for years to come, bringing more people to our downtown and local businesses on a regular daily basis. Working effectively with Chanhassen based civic organizations including the Lions Club, American Legion, Rotary Club, Southwest Metro Chamber of Commerce and Buy Chanhassen and other organizations to support and promote city wide events and to serve to enhance our high quality of life. An improvement in the City’s financial position. Advanced refunding of various bonds, as was mentioned earlier this evening resulted in approximately $450,000 in savings for our city taxpayers in the coming years. Managing the City’s general fund operating budget at 23 Chanhassen City Council Meeting – December 12, 2011 a level below budgeted expenditures and achieving a reaffirmation of the City’s AAA credit rating by Standard and Poors. At that time the City also received a stable outlook from S&P and a strong rating on it’s management practices. Additionally this rating was reaffirmed at the same time when the credit ratings for both our federal and state governments were being downgraded. All told the City’s accomplishments in 2011 under Mr. Gerhardt’s direction were numerous. Each is built upon the many successes that we have seen in our city over the past several years. Money Magazine’s unsolicited ranking of Chanhassen as the tenth best place to live in the country reinforces our own knowledge that Chanhassen’s quality of life is truly exceptional. Mr. Gerhardt’s service to the City of Chanhassen for these last 25 years and as city manager for the last 10 plus years is one of the many reasons that Chanhassen has become nationally known as a great place to live, work and raise a family. In consideration of his overall performance and other factors the City Council discussed changes in Mr. Gerhardt’s compensation. Based upon those discussions and considerations at this time I would move that the City Council approve a 1.5% increase to Mr. Gerhardt’s base salary for 2012. This is the same percentage change on average in compensation that was approved in the 2012 budget earlier this evening so at this time I’ll make that motion and ask for a second. Councilman McDonald: I’ll second. Mayor Furlong: Motion’s been made and seconded. Any discussion on that motion? Councilwoman Ernst: I have some comments. Mayor Furlong: Councilwoman Ernst. Councilwoman Ernst: Todd first off I’d like to say good job this year, and your performance review proved what you’ve done. As you well know I declined the 1.5% increase in wages this evening and that would be the same for your’s because as I understand it, whatever we gave staff would be your’s. But I do want to commend you and staff on what you’ve done and really some of the things that we talked about this evening and I want to congratulate you on that. Todd Gerhardt: Thank you. Councilwoman Ernst: So I will be voting no on this but good job. Todd Gerhardt: Thank you. Mayor Furlong: Any other discussion on the motion? Mayor Furlong moved, Councilman McDonald seconded to approve a 1.5% increase in the City Manager’s base salary for 2012. All voted in favor, except Councilwoman Ernst who opposed, and the motion carried with a vote of 4 to 1. Mayor Furlong: At this time I’d like to invite other members of the council to provide any other comments regarding Mr. Gerhardt’s performance as city manager that they may wish to provide. Any comments? Mr. McDonald. Councilman McDonald: Well I pretty much said what I had to say about the raises and everything before but I do want to reiterate that again the City’s leadership is Mr. Gerhardt and the staff really looks up to him. I mean that came through in a lot of instances throughout the year and I do think that again under his leadership the City has progressed. We’re doing quite well as far as managing the City as an asset for 24 Chanhassen City Council Meeting – December 12, 2011 the residents and I just want to thank him and also his staff but it’s your leadership Todd that I think inspires the people working under you to do the good things they’re doing so for that thank you. Todd Gerhardt: Thank you. Mayor Furlong: Other comments? Councilwoman Tjornhom. Councilwoman Tjornhom: Yeah. The interesting thing Todd is our relationship as a city manager and city council member when the sewer backs up and I don’t want to be a council member anymore, you’re city manager and you want to be city manager. You’re there and you’re a strong leader and you’re someone I depend on for advice and how to handle situations and some of them I would always go to if there is a city question problem whatever, you know you’re the city manager and you do it very well. You should be very proud of yourself so thank you for all your hard work and let’s just hope that we don’t have, it’s smooth sailing this next year. Alright. No vacations… Todd Gerhardt: Not going anywhere. Mayor Furlong: Mr. Laufenburger. Councilman Laufenburger: Thank you Mr. Mayor. I’ll be very brief. This is the last meeting of the year. My rookie year so I’ll try not to call myself the rookie anymore but Mr. Gerhardt, Todd you’ve taught me a lot this year and I appreciate the way you’ve responded to all of my questions. You answered all of them including the dumbest ones and you never passed judgment on me about that. I think that we are very fortunate to have not only your skill, your acumen but your tenure in this, with this city. It serves us all very, very well and it served me exceptionally well this last year so thank you Todd. Todd Gerhardt: Thank you. Councilwoman Ernst: I have one last comment. Mayor Furlong: Councilwoman Ernst. Councilwoman Ernst: Good job. Thank you to every one of them you said. Todd Gerhardt: Yep, getting my… Councilwoman Ernst: As Councilman Laufenburger stated earlier in the work session so good job. Mayor Furlong: Todd, any thoughts, comments? Todd Gerhardt: Well you know, I take credit for everything that’s ever happened in this city. I don’t have any help or anything like that. I’m trying to do the exact opposite of what I typically do but you know I think it was mentioned earlier that I have a skill in selecting my staff and I’ve got a great staff. They’re passionate about the work they do. We’re fortunate in this city to have a park and rec director that’s passionate about park and rec and we have an engineer that’s passionate about, not just building roads but building things and he did a fantastic job with that public works facility. We have a planning director that loves planning. Loves bringing people together and giving everybody an opportunity to speak and to be heard and enforcing the city’s ordinances. And we have a finance director that loves numbers and you know really loves cash. He doesn’t like it when all of us spend money and that’s what’s really made this city successful. And we also have an assistant city manager, as much as I had to dig really deep in that pile to find her, we’ve got a gem there too. Laurie does a fantastic job with the city’s 25 Chanhassen City Council Meeting – December 12, 2011 benefits and you know in my absence she makes sweeping changes every time, but you should see the line outside her office. She is very well respected. People come to her for advice when I’m not around or even when I am around and she is a great asset to this community. Rick Rice has a passion for MIS and he makes sure that we have a state of the art system here and that we’re not spending any more than we have to to have that. He can fix anything and knows exactly what happens when a system goes down and that just bugs the heck out of me. That somebody knows that and can find it right away so this city is very, very fortunate to have the staff that they do have and I’m very appreciative of all of them because they make me look very good. I would like to also thank the mayor and council for your leadership. You’ve done a great job of taking this city into the future but providing for today too so, and I didn’t want to forget Roger Knutson, our city attorney also. Roger’s not here every day but we talk to him on the phone and he comes to all our meetings and Roger’s been here for 30 plus years. Roger Knutson: Who’s counting? Todd Gerhardt: I am. And he is a wealth of knowledge. We lean on Roger for advice all the time and you know what’s really nice about that is he’s got expertise in the numerous other cities that he represents in the Twin Cities so, and so another great asset to this overall team and that’s what it is. It’s a team effort by everybody so on behalf of the team, thank you and look forward to establishing 2012 goals and strategies and keep looking to the future. Mayor Furlong: Excellent. Thank you and again I’ll say thank you for your leadership. For assembling a great team and to the team, those that are here and I know that each of the department managers that you mentioned has a team that helps them out on a daily basis too and to your point, it is everybody working together to get the good things done and there have been a lot of good things getting done so on behalf of the council, residents, businesses, thank you and we’re proud that you’re our city manager and we’re proud of all the employees that work for the city and really make this city a great place for all concerned so thank you. Todd Gerhardt: You’re welcome. Mayor Furlong: Any other council presentations? ADMINISTRATIVE PRESENTATIONS. None. CORRESPONDENCE DISCUSSION. None. Mayor Furlong: Since this is our last meeting for the year, we’ll extend holiday wishes, Merry Christmas, happy holidays to everybody. Happy New Year. The council will be meeting for the first time in 2012 on the second Monday of the month but our top notch city staff will be working tomorrow at 8:00 so, so with that enjoy the time off and if there’s nothing else to come before the council this evening, is there a motion to adjourn? Councilman Laufenburger moved, Councilwoman Ernst 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 8:50 p.m. Submitted by Todd Gerhardt City Manager Prepared by Nann Opheim 26