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1983 09 19 I I I REGULAR CHANHASSEN CITY COUNCIL MEETING SEPTEMBER 19, 1983 Mayor Hamilton called the meeting to order. The meeting was opened with the Pledge to the Flag. Members Present Councilwoman Watson, Councilman Geving, Councilman Horn, and Councilwoman Swenson. Staff Present Bill Monk, Don Ashworth, Bob Waibel, and Scott Martin. APPROVAL OF AGENDA: Councilman Horn moved to approve the agenda as pre- sented. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. CONSENT AGENDA: Consent Agenda item a. (201 program) was deleted from the agenda. Councilwoman Swenson moved to table item b. (Agreement between HRA and City Adopting Tax Increment Financing Plan) until Council members have a chance to review the material submitted. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Councilman Horn moved to approve the following consent agenda items pur- suant to the City Manager's recommendations: c. Certification of Delinquent Utility Accounts. RESOLUTION #83-41. d. 1983 Audit Contract, DelaHunt Voto and Company. e. Revised Near Mountain Final Plan for Phase I. RESOLUTION #83-42. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Delinquent utility accounts over $100.00 that are to be certified for collection in 1984 will be published in the Carver County Herald. CARVER COUNTY SHERIFF'S DEPARTMENT: Sgt. Jerry Amrhein has been appointed as liaison between the Sheriff's Department and the City of Chanhassen. He briefly discussed the Sheriff's organizational chart and will be attending future Council meetings. MINUTES: Councilwoman Watson moved to note the August 24, 1983, Planning Commission minutes. Motion seconded by Councilman Horn. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Councilwoman Watson moved to note the August 18, 1983, HRA minutes. Motion seconded by Councilman Horn. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Councilwoman Watson moved to note the July 12, 1983, Park and Recreation Commission minutes. Motion seconded by Mayor Hamilton. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Council Meeting September 19, 1983 -2- PROPOSED REPROGRAMMING OF COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS: RESOLUTION #83-43: Councilman Horn moved the adoption-or-a resolution accepting the recommendation of the HRA in reprogramming the Community I Development Block Grant Funds. Motion seconded by Councilwoman Watson. The following voted in favor: Mayor Hamilton, Councilwomen Swenson and Watson, Councilman Horn. Councilman Geving voted no. Motion carried. BILLS: Councilwoman Swenson moved to approve the bills as presented, checks #014816 through #014887 in the amount of $1,061,778.57 and checks #019261 through #019357 in the amount of $279,074.19. Motion seconded by Councilwoman Watson. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. SUBDIVISION REQUEST, NORTHEAST CORNER OF HIGHWAYS 5 AND 41, PAUL SAVARYN: Mr. Savaryn is requesting approval to split off and seTl-~Or-acres. The Planning Commission recommended approval. Councilwoman Swenson moved to approve the subdivision of the property as legally described in Carver County Book of Deeds 145, Page 415 in accor- dance with the Schoell and Madson survey dated received Chanhassen Community Development Department August 24, 1983, marked "official copy" and contained in file 83-11 Subdivision. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. PROPOSED GAMBLING QRDINANC~ FIRST READING: Councilman Horn moved to place I on first reading an Ordinance Licensing and Regulating the Conduct of Bingo and Gambling Adopting State Law and Providing for a License and License Fees. Motion seconded by Mayor Hamilton. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. MORTGAGE REVENUE BOND PROGRAM: Scott Martin - I first talked about the program with the HRA in July. We explor~r-during the last couple of weeks and are at a point now where I need some direction from the Council as to whether they might want to pur- sue this. I would see a program that would be for new construction only although you can sell bonds to provide mortgage money for reduced mortgage rates for existing homes. Detached or attached single family homes are eligible. $103,000 maximum new construction sale price. Maxmium household income limits, $35,000 gross annual income (some adjustments are made for family size). Ninety percent of all mortgage funds must be reserved for first-time home buyers. First time home buyers, the definition of that is that they cannot have their own home in the last three years. Mortgages are 30 year assumable fixed-rate conventional mortgages with a 5% down payment. Interest rates generally are between l!% to 3% lower than market rates. If we are to move forward on this we will have to prepare a Housing Plan and Program which will have to be adopted and submitted to the Metropolitan Council for approval. We have to make an application by January 2, 1984. In order to do that we will have to schedule a public hearing by the middle I of October to get public input on whether or not the City should go forward with this type of a program. It is a competitive type program in that sta- tewide there is $27.5 million allocated. No city can apply for more than $10 million in bonds. There is $1,000 application fee that is not refun- dable. There is a great deal of developer commitment. The City is basi- I I I Council Meeting September 19, 1983 -3- cally lending its name to the bond issue similar as to what we do with industrial revenue bonds. Bonds must be sold within one year of applica- tion approval by Minnesota Housing Finance Agency. The HRA discussed this last Thursday and were very excited about the idea and passed a motion showing their support and recommending that the Council also endorse the project. Councilwoman Watson - It sounds like a terrific deal. Councilman Horn - My feeling on this is that from the time I was on the Planning Commission and we heard about our housing opportunities, I was very disturbed by the fact that it seemed like the only people who could compete successfully with that type of housing were mass producers. To me the beauty of this kind of programming is that we can get some smaller builder/developers who use a little more imagination and creativity and don't have these large plots of the same kind of thing, building and being able to compete effectively with that kind of production line housing pro- ject. That's why I am excited about this project. This gives some of our local people a chance to compete. I think this might get something started and get us a long way toward getting some reasonable kind of housing to satisfy our housing opportunities. Councilman Geving - I am very much encouraged by this. I think it's a great idea. There is a need and obviously it does provide us with a means of developing some housing in Chanhassen. WATERSHED MANAGEMENT ORGANIZATION FOR BLUFF CREEK: Bill Monk - There are five watersh~districts in the City of Chanhassen, Minnehaha Creek Watershed District, Riley-Purgatory Creek Watershed District, Lower Minnesota Watershed District, Hazeltine-Bavaria Watershed District, and Bluff Creek Watershed District. The only one that is unat- tended at the present and we will have to do something with under the new legislation regading watershed districts is the Bluff Creek area. The options that the City can pursue at this point are, 1) set up a watershed management organization, a joint powers with the other cities that are a part of that or 2) a petition that would increase the Riley-Purgatory Watershed and take over that district, or 3) let it ride and let the county decide how they want to deal with it. Since the Riley-Purgatory Creek Watershed District is in existance at this point, I am recommending that the City petition for boundary enlargement to formulate the Riley-Purgatory-Bluff Creek Watershed District. Councilwoman Swenson moved that the Council adopt the City Engineer's recommendation to petition the Water Resources Board to have the boundaries of the Riley-Purgatory Creek Watershed District enlarged to encompass the Bluff Creek Watershed. Motion seconded by Councilman Horn. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. 1983 EQUIPMENT CERTIFICATES: Rick Rabenort, Dale Gregory, and Dick Wing were present. The Public Works Department is requesting approval to purchase a new or used grader and the fire department is requesting appro- val to purchase a rescue truck. Mayor Hamilton moved to authorize preparation of plans and specifications to seek bids for a grader and rescue truck. Motion seconded by Councilwoman Watson. The following voted in favor: Mayor Hamilton, Council Meeting September 19, 1983 -4- Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. 1984 BUDGET: ëOUñcilwoman Swenson - I would like to have some clarification about the auditor's report regarding the cash balance. They recommended a higher balance than we have. Don Ashworth - For several years the City had maintained a cash reserve equal to 15%. The current budget shows 20%. It will actually be over the 20% so if you use the 20% figure you will come out with an ending fund balance, we are talking about Statement 2, page 5, we will go in there with $248,000. It's basically the fund balance forward and revenue balances expenditures to that's what you should end the year with. DeLaHunt Voto have recommended in their audit report to the City increase the fund balance to equal 1/2 of the property tax levy for the City. That means they are recommending that that be increased to $360,000 as a fund balance or approximately $120,000 higher than it currently is. Their reason for making that recommendation is that we previously received our monies from the State, State Aids, quarterly, the first of April, the first of July, the first of September and year end. Our shortest cash flow time is up to the period when we get our first property tax collection. When the State changed and withheld all of our State Aids to the end of the year, what in fact they did, was they took $100,000/$120,000 out of your cash balance for the first months of each year. By the end of the year we come back to a final position but what they have done is taken the interest money on the dollars. Again, DeLaHunt's recommendation was that the city should not be relying on the State. That we should increase our fund cash balance to $360,000. I did not include it as a part of this Budget simply because of the tax impact. There is two considerations in the Budget right now, the impact of State Aids including the homestead credits has resulted in a net loss of about $100,000 directly related to cutbacks from the State. That approximates a two mill increase in property taxes. The North Service Area is included in this Budget. That represents a two mill increase in pro- perty taxes. Each two mill increase represents a $40.00 increase in the average taxpayer's taxes. Now remember 2%, I am talking about your total tax bill. So let's assume a guy has a $1,400 net tax. His real tax is $1,400 plus the $600 homestead credit so in other words his beginning tax was actually $2,000 minus the $600 so his net tax was $1,400. When you say 2%, 2 mill, you are saying it's 2% times that $2,000 which represents an increase of $40.00. So you have increased the taxes, the State has increased the taxes by $40 because of the reduction in aids. To provide an increase in fund balance to meet DeLaHunt Voto1s recommendation it would require another two mills, another $40.00. Councilwoman Swenson - For as many years as I have been involved in the City it has been handled so conservatively. As a matter of fact, 1983 shows with a drop of better than one mill from 1982. We have gotten to a point, it seems to me, where we are looking at a situation where we are continually getting things done on a shoestring. We ran into problems with our bonding because, not of our own making, but because the way the figures fell. The City catches the devil even when taxes are the result of, and if they always have been, the increased county and school taxes we still catch the dickens but we are not getting any benefit. It seems to me that it is time that we thought seriously about saying we have got to do something to get this on a fiscally sound basis which has been recommended to us by the auditor. We have an opportunity here, since there is an easing on the levy limitation that we are allowed to place, we can put ourselves into the I I I I I I Council Meeting September 19, 1983 -5- black with this. It1s a $40 situation, I realize, added to the other two, it may be a problem but at least there is a certain amount of gratification to know that at least it is to the benefit of the City and not for the benefit of somebody elses pet program. I think we need to have this. I think it is a responsible government reaction to a situation that is becoming more and more difficult as time goes on. We have got to catch up with it sooner or later. I see no way that the State is going to reverse the situation next June which means we are still going to have that North Service Area, I suspect we are going to have continued decrease in State Aids and property tax credits and this delay in giving it to us because obviously the State is no hurry to give up any revenue that it can get its hands on. I personally am concerned that we have tried maybe through to much responsibility as far as being conservative is concerned and bending over backwards to prevent raising taxes and we are working ourselves into a hole that we are not going to be able to get out of. I would feel no com- punction whatsoever in standing before a group of citizens and saying this is what it's going to cost to do this but if you are interested in having your city in a fiscally responsible condition won't you give $40 extra and my recommendation is that we seriously talk about this. I personally would like to make a motion that we include this and accept it as a policy the recommendation of the auditor for a recommended cash balance. Mayor Hamilton - You have made that motion to follow the auditor's recom- mendation. Do we have a second? Councilman Horn - I will second it for discussion purposes. I tend to agree. My feeling though is that we can't do it all at once. I think we need to make a gradual approach to get ourselves to that position and not take one giant step forward. I think the timing is very bad right now to exercise our muscle since the county is doing such a good job of doing that for us. I also feel from what I have heard from the State level that the cutbacks that we have been seeing should be receding, hopefully, in the next fiscal year. I think in the long run I would like to see that happen, too, but not at one time. Councilwoman Watson - I guess I agree that maybe we should do it but I guess I don It want to do two mills at one time. Councilman Geving - I think the auditor's tend to be far too conservative for me and they don't have to listen to taxpayers. They make recommen- dations to us and I think it's too big a jump to make in one year. Mayor Hamilton - I think we are responsible here and that we have made provision for some funds to be held to that we can cover ourselves and I think we did a good job of doing that. Councilwoman Swenson - First of all we are not really sure that next year the door is going to be open to increase. This may be a one time oppor- tunity to take advantage of the situation and we are not talking about that much money per household. We have another situation that has been in the back of my head but we have been so conservative in all of our budgets that if anybody has driven around this City and in some cases you are lucky you don't lose a wheel, Bill has been doing a tremendously good job of trying to keep these streets patched together. The City is deteriorated and we are going to have to start thinking about having some money to put into these funds to take care of the City. I have been here for over seven years and I have seen it deteriorate and I don't think that this is respon- Council Meeting September 19, 1983 -6- sible. We have to start on planning the fact that we are going to need that money. This year, this two mills would help to take care of this but we have got to start over a period of time. I think we have got to start now. I think we have to face the fact and that is that we have got to start accumulating some money so that our Public Works Department can keep this City and our City streets from completely deteriorating to a point where we can't afford to fix them. We haven1t been able to do it before because we have been hamstrung with levies. We have had to go to special assessments and I don't think there is anybody on this board that doesn't know bad words with special assessments. This, it seems to me, is a slightly open door that gives us an oportunity to look forward. I know this is not a popular subject and there isn't anybody that wants to raise taxes but sometimes you have to sit down and say, people I am sorry but we simply have got to do this now. Don Ashworth - Pat and Carol came in this afternoon and we went through the Budget and basically the two concern areas that Pat had brought up was how can we get to the point where we are taking care of some of these streets. The $20,000 in Revenue Sharing really isn't doing the job. I stated to her that one of the objectives for this next year is coming up with a three or five year capitol improvement program. We are not doing anything as far as preventative maintenance on these streets. The cracks and holes that water is getting down and deteriorating the surface and it is starting to show up. The Chanhassen Estates area, Frontier Trail are two examples of where we did not go in and did not do any type of yearly maintenance to those, we have lost them. You are not going to do anything to them. You are not going to be able to salvage them. Pat IS question was how do we handle this and this is one of the things that we want to do this year is to prepare this plan. Under previous State mandates we really didn't have any choice but to look at a potential special assessment procedure where it would be somewhere in the area of $150 per household every three to five year period of time to surface that street. We have a cash balance problem. I don't think it's really severe. I think we are going to pull our way out. Each year we continue to increase and come back but without question not only the State but the auditor's have given you a good reason to set this addi- tional two mills. You might say that's kind of like a bank account, once you make this two mill levy to build up your banking account, your bank account is built up you don't need to build it up the following year but that two mills in that following year could be then converted over into something like the street maintenance program and I guess that's what we were talking about. It would produce~ on the average, again $40 per home and you took this three to five year payment type of thing in other words that's what our annual program is, you can see that's coming in to a three year cost for an average home of $120. In other words the same cost as a seal coat program. It would appear as though that could be done but that is solely a decision of this group. Councilwoman Swenson - I just feel so strongly that we have got to start making preparations to do these things. I am so afraid that we are going to let an opportunity slip past us because we are so afraid that people are going to descend on us with the wrath of God and I just really have enough faith in the citizens of this City that if we tell them why they are going to understand and they are going to go along with it. Nobody is going to like it. I am not going to like it but I honestly believe it's a necessity. I I I I I I Council Meeting September 19, 1983 -7- Councilman Horn - I tend to agree that there is a certain amount necessary but I don't-rnDw of any citizen who would trust any government to manage any excess money. Government traditionally has shown that they justify that position. I think if you are going to do this you need to have it set aside in a fund that doesn't get touched for all of the other kinds of things and I still wouldn't recommend going to two mills, possibly one as Carol suggested but I agree we have to take care of this place. Councilwoman Swenson - My motion was to move a resolution to approve a policy position recommended by the auditor's regarding the cash balance of the City. In this particular case two mills will bring us up to the 50%. Mayor Hamilton - All those in favor of the motion signify by saying aye. Councilwoman Swenson - Aye. Mayor Hamilton - Opposed? Councilwoman Watson - Aye. Mayor Hamilton - Aye. Councilman Horn - Aye. Councilman Geving - Aye. Mayor Hamilton - The motion is defeated. Are there other items on the budget? Councilman Geving - I have some questions on page 1, statement 1, I asked for a clarification on the Capitol Outlay, whether the $184,200 is correct or whether the $118,200 is correct. A lot of my comments are going to detailed. Don Ashworth - I didn't relay your question back to Kay. Councilman Geving - Let me go through all my questions and then they can answer them all. Under statement 2, page 1, regarding Allowance for Delinquents, you are indicating a $12,000 increase in 1984, are you anticipating a substantial increase in delinquencies? Don Ashworth - That's a percentage of the total property tax collection TTgure. We are using 8%. You were averaging 3% to 5%. One of the biggest cut back areas in there is the loss of homestead credit monies from the state. Councilman Geving - Over on statement 2, page 2, I would like to look at City Hall Contractual Services, what are you planning in the City Hall next year that will add $10,000 to Contractual Services? Don Ashworth - Two items, one the maintenance man is no longer under CETA and so you are looking to a cost factor. The salary is $3.50 per hour. Kay Klingelhutz - Utilities alone are $11,000. Insurance, General Liability is $22,500. That insurance is for everybody other than Utility. This year we changed our policy year. We always had it June 1st and it was very confusing because we could never use our audit reports and it really Council Meeting September 19, 1983 -8- created a lot of problems. We have changed it so that our anniversary date will be January 1st so this year we are only paying five months of insurance. I Councilman Geving - Going back to statement 2, page 1, on the Administrative Trust Fund Reimbursement, this year we are not going to put anything back into that account, could you explain that to me? Don Ashworth - You are not putting monies back into the General Fund from that Administrative Trust. That had high balances at the same point in time that the State started their cutbacks and what you did was carried out a two year period where you transferred $45,000 each year out of that fund back into the General Fund. You simply can It afford to do that. Councilman Geving - I have an item over on statement 3, page 1, called Sale of Bonds and there we have a discrepancy between Replacement Fund and the Total and I assume that the $80,000 is correct. Don Ashworth - 1111 have to check that one as well. Councilman Geving - Could I take you to statement 5, page 1, what is the Personnel Services increase that you are showing under the Sewer Operations? Don Ashworth - The biggest cost increase there is in the area of Workman's Compensation. The cost increase there is $1,200 1983 and for 1984 is $3,000 so there is an $1,800 increase associated with the Workman's Compo portion. The rest of that is basically normal, in other words Salaries Regular are going from $31,300 to $33,900. Councilman Geving - On both of those accounts you have a fairly large Other, for example under Administrative you are going from $12,400 to $15,050 and under the Sewer you are going from $22,300 to $26,600, what is Other? I Don Ashworth - What we wanted to do was to identify first of all the MWCC Charge as a part of Contractual and then all Other costs, telephone, utili- ties, postage, printing and publishing, insurance, etc. Councilman Geving - The only other comment I have to make and that is a concern that I have for the Public Service Enterprise Fund and that is a concern that I have and where we are going to go with the four options next year. I am on statement 5, page 2, do we have to make a decision on what we are going to do with the Enterprise Fund? It looks like a healthy increase for our citizens. Don Ashworth - Last week I didn't have the percentages exact. If you would TTke I can give you those right now. For alternate #1, that's without any rate increase then naturally it's zero, zero all the way down the line. To fully meet the auditor's requirements in one fell swoop would require a 42% increase in sewer utility rates, zero percent increase for water, for an average net increase of 27%. Option #3 meets the auditor requirements, transfer for previous deficits so in other words take out of your sewer and I water expansion fund to pick up the deficit that currently exists but otherwise to meet the auditor recommendation for fund balance that produces a 34% increase for sewer, zero percent for water, average increase 22%. Number four is the one as shown on the previous page, that would take a I I I Council Meeting September 19, 1983 -9- staged increase in terms of the fund balance that the auditor's were recom- mending and that would cause a 20% increase in sewer rates, zero percent in water, average increase 13%. Councilman Geving - That still leaves us a fairly good balance in the water. The overall budget then would still have a balance of $12,200, is that what you are saying on statement 5, page 1? If we were to take option #4 we would end up with a $12,000 balance? Don Ashworth - In previous years, water has always produced more money for the City than sewer. We continue to lose, every time we thought we were gaining in terms of sewer MWCC would ram home another increase and we would find ourself in another losing position. Councilman Horn - Why sock it to people for water when it's the sewer bill that's costrng-all the money. What we are doing is, the people who have both sewer and water are subsidizing the people who only have sewer. Don Ashworth - The budget as you have here, the 20% increase for sewer customers and zero percent for water, what that does is it puts it back to equal so now water is paying its fair share, sewer is paying its fair share. For 1984, the $161,000 being generated does pay the water share of the expenses. Councilman Geving - If I could make a suggestion, Mr. Mayor, I personally lean toward option #4 as presented. It does the job. It gives us a balance and hopefully if everybody made their projections correctly we will have a positive figure at the end of the year. Don Ashworth - You can expect a comment from the auditor as part of the audit report but you know to go into options 2 or 3 they are just to trama- tic. Councilwoman Swenson - I remember a time when we had $200,000 in the Administrative Trust Fund and it kind of makes me sick to see we are down to zero which means we have utilized this money to help balance the budget in previous years and I would like to make another motion since the Council obviously is opposed to a two mill rate increase. I would ask for a compromise and make a motion that we adjust, what I want to get is to a one mill towards making the position of the City a little more firm in the areas in which we discussed before without going into detail. Councilwoman Watson - Can we have a little more time. We can still do that if we don It do it tonight, can't we? Don Ashworth - October 3rd is actually your hearing. You can't adopt this budget this evening. Councilman Horn moved to adjourn. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Councilwomen Watson and Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Don Ashworth City Manager Council Meeting September 19, 1983 -10- Footnote to Minutes: 1983 legislative action included an allowance for cities, sUCh as Chanhassen, to qualify for a levy limit base adjustment equivalent to fund balance reduction accuring in 1981. The City Council, I on August 22, 1983, duly requested the State to make such adjustment in an amount of $138,100. The City advertised that such adjustment was being requested and set this meeting, September 19, to hear public comments on the 1984 budget with base adjustment request. No action was required of the City Council. No persons were present and, as such, the City Council solely reviewed the 1984 budget as reflected in the above minutes. I I