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1981 10 13 I I I SPECIAL CHANHASSEN CITY COUNCIL MEETING OCTOBER 13, 1981 Mayor Hamilton called the meeting to order at 7:30 p.m. with the following members present: Councilwoman Swenson, Councilmen Horn and Geving. Councilman Neveaux was absent. OKTOBERFEST: The Jaycees have made application for a one day on-sale non-intoxicating liquor license for an Oktoberfest to be held October 17 in St. Hubert's School Auditorium. Councilman Horn moved to grant the one day license for a fee of $1.00 conditioned that the City Attorney review and verify the Jaycee liquor liability insurance and that the City is shown as an additional insured. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Councilwoman Swenson, Councilmen Geving and Horn. No negative votes. Motion c@rried. NORTH SERVICE AREA REASSESSMENTS: The City Engineer presented a revised resolution as per the Council's instruction of October 5, 1981. RESOLUTIONS' #81-38 AND 8l-38A: Councilman Geving moved the adoption of resolutions Establishing and Imposing Availability Charges for the North Area Sewer and Water Project 71-1. Motion seconded by Councilwoman Swenson. The following voted in favor: Mayor Hamilton" Councilwoman Swenson, Councilmen Geving and Horn. Motion carried. 1982 POLICE CONTRACT: Mayor Hamilton gave a report on a meeting he had with Sheriff Schalow and Captain Wallin to discuss the police contract. He will be meeting with Commissioner's Neaton and Aretz to sign the contract. PUBLIC HEARING 1982 BUDGET INCLUDING PROPOSED USES OF REVENUE SHARING Mayor Hamilton called the hearing to order. Fritz Coulter, Jack Kreger, Art Kerber, Don Stafford, and Frank Kurvers from the fire department were present for a portion of the hearing. Mayor Hamilton My three major categories are: proposed changes to the 1982 budget, proposed changes to the 1982 operations, and proposed changes for future budgets. I would like to go through the whole thing so that you have a feel for what I am saying and if I cover a point that you may have we can go back to them. I have tried to just summarize these areas. Don and I discussed these, I think each and everyone, this morning so he, is well aware· of where I am coming from and the comments that I have to make. Under the proposed changes to the 1982 budget, there are four that would have to do with the direct levy of taxes. Number 1 is to assess only that amount needed by the Firemen's Relief Association to keep the fund solvent under the present agreement. Renegotiate the agreement but under no condition agree to a flat mill levy. The savings if we were to do that this year would be $15.000 approximately. Number 2 to discontinue the Diseased Tree Program. Move the Forester to the Park Department or terminate. There is a currenLcbalance din the Diseased Tree Program of $35,340. There is a proposed budget to handle the Diseased Tree Program for an extra $33,380 that would give us a total dollar savings of $68,720. Now, out of that we do need to pay our last installment on the tree spade. You could guess there are some other alternatives to number 2. I am just suggesting one. Number 3, Vehicle Purchases. Although we continually need new vehicles and equipment, I feel we must evaluate the need for some proposed 1982 Council Meeting October 13, 1981 -2- purchases and ask ourselves if we can live without or are other alternatives available? As the Mayor I am not willing to do miscellaneous paving of various streets and roads and sealcoat and I assess the benefitting property owners at this time. This is only one example of equipment and programs that must be reviewed prior to budget approval. If you look at the total vehicle savings that are in the budget for this year, total proposed vehicle expenditures, it's about $43,000. I am not saying that we should discontinue all of that. Certainly we have got to use our heads and look at that and say we do need to prepare for the future. We can't let all our vehicles fall apart but at the same time I think we could be creative and not necessarily buy all new vehicles. There are such things as used cars or other used equipment that I should think we could deal on and get a very good piece of equipment for our dollars and not have to always buy new and pay top buck for it. Number 4, review the assessment of general property tax for the retirement of the North Service Area debt. This should not be a general levy. The savings there would be $28,000. This $28,000 needs to come from some place, simply because we are in trouble in the North Service Area as far as paying the bond issue up there. I think there are other areas where we can come up with $28,000 rather than having it be a general levy. Number 5, the"Transfers Out"of the following accounts, in my opinion, must stop. The Administrative Trust Fund, currently we are transferring out $42,500. The Utility Fund $15,800. The HRA account $10,000. All of these transfers are out of those accounts and to the General Fund. Transfers out of these funds into the General Fund, which is where these funds are going, is I in most cases as far as I know, illegal by State Statute and must have a Council Resolution to allow this. They are not discretionary funds to be handled by a Manager at his will. In particular, I would like to discuss the Utility Fund. The actual 1979 beginning cash balance in this account was $147,981. Today this account is nearly $20,000 in the red. 1980 saw a 50% increase in utility charges. Where is the money? The 1981 budget has a category of Required Cash Reserve with a total of $32,800. The 1982 proposed budget is missing the $32,800 and the category. Where is the money and why has the Required Cash Reserve category disappeared? I think when we look at the budget, we try to compare two years and we are missing a category, I would like very much for it to be consistent and follow through each year and as I read through it that, all of a sudden we are missing a category and you look at the dollars and you say we are missing dollars. They have gone some place. I am sure that Kay or Don can answer the question but we sitting here, can't answer that. By State Law, I am told, there are only three things that excess utility funds can be used for. First of all you are to pay your current expenses. Secondly, your debt service retirement or utility systems can be paid and lastly, if there are other public purposes, but only by resolution of the City Council, we may expend funds for that. If the Utility Fund were charged for only those expenses that are incurred by the utilities I suggest there would be an I excess of over $30,000 annually in this account. This account should have a permanent positive balance of a predetermined amount established by the Council and with the City Manager by resolution. Should any amount be transferred out of the General Fund these would require a Council Resolution. What I am saying is, some cities have by resolution established a dollar amount of $100,000 to be left in the Utility Fund at all times. Any excess of $100,000 I I I Council Meeting October 13, 1981 -3- would first be used to payoff any debt service for any utility projects also you can set a dollar figure once you have your $100,000 you may also by resolution say we are going to transfer out "XII number of dollars to pay for administrative costs but only when you reach that point where you have an èxcess. This account must be brought under control immediately but not by increasing utility rates as proposed by the City Manager. Proper accounting techniques would turn this account around within a year to where it would have a positive balance and in three or four years there could be an excess amount to be used for debt service retirement or other public purposes. That concludes my remarks on the dollars for 1982. The second category is proposed changes to the 1982 operations. The first item is, at the present time the staff of Chanhassen is not positioned correctly. Several changes should be made or should be considered to bring the staff in line with the City's needs. An example of this could be the need for an engineering tech to help Bill during the coming years when in fact we are going to need additional help in that area. I think we also need to take a very hard look at the Park and Rec. Director and what are we getting for our dollar in that area. The City Manager manages the City on a day to day operation and I feel that unless more creative, innovative, imaginative solutions to community problems and more guidance of staff is evident soon,a change should be considered there. I suggest such things as realignment of staff must be considered, investigate the purchase of our own data processing equipment, evaluation of equipment needed but not necessarily new equipment, excessive use of IBM copier, more efficient use of vehicles, alternatives to radios in all cars and trucks, evaluation of park and rec. program with suggestions to improve and save money, more prompt action on suggestions by the Council such as;the Council has mentioned that there ought to be guidelines for snow plowing, 3" snow fall for instance, we haven't seen anything back on tha t, the use of salton City streets may be a wayto~save some money and certainly to preserve our lakes, a review of salaries was slow in coming, organizational structure is still not finalized, six month review of new staff members hasn't been done yet, salary performance reviews, cost of living increase for staff for 1981 has not been executed. We have that on the agenda tonight. I would like to see us review all park charges and make adjustments as traffic would dictate. There are car counts of traffic using Lake Ann Park and the increase in the traffic is astronomical and the increase in our fees for the use of those parks isn't changing very much. Our costs are going up all the time to maintain these parks and we are not bringing in any more money. The third area I would like to address are the proposed changes for future budgets. Number one, I would like to have a review done on budgets of other municipalities and glean all the ideas possible from their formats and if our budget format can be improved, make necessary changes. Second, consideration must be given now for a different audit firm to audit our records. The firm must be familiar with municipal auditing practices and procedures. Consideration should be given to the purchase of and implementation of own mini processor. We currently pay about $10,000 plus to the data processing firm and I feel for less dollars we could purchase our own system, for instance an Apple type mini computer will give us better and more reliable service plus in the long run save the City money and provide us with more flexibility. Four, all budget areas must show only those dollars expended for the operation of that area. More accurate estimates of Council Meeting October 13, 1981 -4- dollars needed to operate an area must be submitted. Also a more clear line definition of expenses must be started. An example would be "Equipment Rental" does not mean the same as I accrual for vehicle expenses to me. I think the fire department has another good example where they purchase some supplies and whatever the line read meant first aid equipment. Well, say first aid equipment. It is not a State Law that we keep everybody in the dark on what we are buying. My final comments are, it's time the budget became understandable and used as a working tool for Council and staff. If the Council continues to be stonewalled at every suggestion and proposed change by the staff the best solution is to make changes in the staff to alleviate such problems. I think we have, in my opinion, a lot of room for improvement. I am sure there are many, many other suggestions that could be brought up· I know Dale you spent a lot of time looking at the budget, have you any specific areas that you want to address? Councilman Geving - I have some specifics and I don't know if we want to get into the nitty-gritty at this time. I do agree with many of the statements you made in the three areas and I know we are going to have to address tonight for sure the 1982 budget and the proposed levies and some of your recommendations. I would like to pursue that first because the proposed future budget area is something we are all going to have to wrestle with at a later date. The proposed changes tonight being two, it's administrative, it's organizational and there is a lot of I things that can be covered outside of tonights meeting. For tonights purposes I think we ought to zero into the 1982 budget and address those items that you hit first and that's proposed changes to the budget items for 1982. I would like to start with the Administrative Trust Fund. Councilman Horn - I have some questions about some of the things that you were discussing, for clarification. Councilman Geving - Let's take those first. Councilman Horn - I guess one of the questions I had was with regard to the North Service Area, it seems that if I heard the number correctly, we are $28,000 short this year for meeting those bond issues. The proposed budget is to have them come out of the general obligation levy? Mayor Hamilton - That's right. Councilman Horn - I guess one of the things that does disturb me is the fact that we have, I believe, had the opportunity to recoup at least that amount on assessments that we have chosen to defer. It appears to me that would have a mechanism to have reduced that unless I am misunderstanding something. Don Ashworth - The $28,000 last year was $25,000. It came out of literally the original bond sale for this project. We have gone through a number of debt service studies. You have one in front of you tonight. If you look under the section for 72-73 you will see that that $28,000 I is in there. Page 6a of 8, the 1981 amount $25,500, the 1982 amount of $27,540. That's different than the $28,500 in that it represents an estimated collection after delinquencies. I should take you back one page, 6 of 8 to better reflect the actual cash position of that fund. It shows at maturity for 1990 it will be $475,000 in the hole. That's down from $2.3 million in 1976. The I I j Council Meeting October 13, 1981 -5- City Council's actions in putting on additional assessments and refunding bond issues. The refunding where you consolidated your debt and literally went back out to refinance that debt at a net lower interest rate brought in a net savings of about $300,000 to $400,000. The amount of grants was about $150,000. The reassessment that you went through a year ago, which was recommended because we knew that this debt would be a significant problem was about $1 million, not including interest. So you have now brought that down to a net position of about $475,000 in the hole. At the time of the 1982 budget was prepared the only thing I had to go on was the figures that were used in the study two years ago which at that point in time showed this fund as $600,000 to $700,000 in the hole. I think that that $28,000 can be deleted in future years because we do have surpluses in other areas but it was only after the completion of this study, that the City Council is seeing for the first time tonight and the first time I had was this past week, reflects that we do have some opportunities today, literally for the first time in the five years that I have been here, the City is now out of the hole and potentially can consider that $28,000 reduction. Up until this year it could not. What you did each year for the past five years was to make that transfer to cover that, by resolution of the City Council. Councilman Geving - What would happen, in this particular case, in 1986, what would an alternative possibly be to turn that situation around? Could we refinance at that time? Don Ashworth - No. The refinance we carried out three years ago was literally the last one to occur in the State of Minnesota. The other options that you do have is in consideration of consolidating all of your debt. Page 8a of 8 reflects what would happen if we combine all of the debt of the City and what really shows is the bond issues of 1978, 1979, and 1980 and 1981 will have surplus balances where the current cash positions, investment programs established are bringing in enough excess interest earnings that by consolidating this one deficit with the overall debt service will produce a net positive position in all of your debt service accounts of $534,000 at maturity which is in 1996. Councilman Horn - Are you suggesting possibly that the staff be aligned so that salaries come under a specific account and you don't have people with 30% of their time here and 20% somewhere else and 10% here and 5% here. Mayor Hamilton - Yes. One is to align the staff and what I meant by that is that perhaps we have the wrong people working for the City currently compared with what our needs are. We need to review that. I don't think we need more people. We need the same number of people. We just need different people or a key person in a different slot. Also one of my recommendations was to adjust those expenses. All budget areas must show only those dollars expended for the operation of that area. I think 100% of a persons salary that works in an area ought to be shown in that area at least for our purposes. The budget that I want to see would have that. Councilman Horn - I agree that I think you should be able to assign a person to a department and have his total salary reflected in that department but I think that runs somewhat contrary to what I heard several weeks ago and that is that. people should work across department lines. Mayor Hamilton - What I am saying is merely a suggestion, it's a philosophical question. Don disagrees with my position and I disagree with his and that's fine I don't have any problem with that. Certainly what he says is very valid and he has been dealing with city budgets a lot longer than I have. I am not trying to horn in and tell him how to run the show here. It was merely something that I saw that I felt would make it easier for me to understand the budget. We also disagree on the Manager's, Scott and Bill's time. I feel that managers are overhead and I don't care where Bill spends his time. If he has got a problem with the Council Meeting October 13, 1981 -6- garage this year and spends 80% of his time down there, that doesn't bother me in the least. That's your responsibility. You spend your time where it needs to be spent. Next year you may not have a problem. That's fine. That's my philosophy and Don differs with that. Councilman Horn - I guess before we had Scott and Bill I would tend to have a problem with that philosophy also. I think that since we do have them we can look at them as budget centers and as a budget center their time can be looked at as overhead against that budget center. They can have sub-accounts under them. One other question that I had is under your discussion of vehicle cutbacks you talked about sea1coating and I was wondering if that was two different things. Is there a vehicle involved in the sealcoating process? Mayor Hamilton - There is a piece of equipment involved which is the thing that is attached to the back of a dump truck to run your blacktop through. I understand the reason why you want to buy that thing for $12,000 is so we can do some patching of roads and that's only what it's going to be used for. Not patching of potholes but patching a stretch of road 20 feet long and then you may seal coat that stretch of road and assess that. I think road maintenance is a part of living in your house and paying your taxes and I see sea1coating as a part of that. If your road is so bad it has to be repaired and we have to go in and remat it, then you have to assess it back. Councilman Geving - I kind of agree with what you are saying because I think there is one area of this whole budget where we have completely deleted dollars for maintenance of our roads. We have got $5,000 in there for road maintenance. Now that's crazy. $18,000 for materials. We have got 50 miles of roads in Chanhassen. That account should be $40,000 or $50,000. It's ridiculous and that's one area where we really missed the boat. Don Ashworth - To do the job would be, you are absolutely correct, $50,000 per year. The question comes about, how are you going to pay that $40,000 to $50,000 per year. Looking at overall limitations of this budget we had suggested that the work be done by sectioning the community, ten, twenty block areas, with the work to be assessed back to the benefitting owners. The City Council has every right to determine if it should be a general maintenance cost. Many cities do and I think it's a good program if you can but at this point when you are under a limitation from the State and a very severe one, and in terms when you are looking at significant police costs I question where we are going to come up with the money. Councilman Geving - I would not suggest that we do it this year. We didn't plan for it. Councilman Horn - I guess the other question about the equipment is, have we gone through an evaluation to see if that's more cost effective than hiring someone to do it? Bill Monk - I have not done a cost analysis that would be necessary to justify that. That's pretty much why we have not bought the paver yet. The money was allocated in 1981. The paver has not been purchased. We looked at buying a used paver and a new paver. I couldn't come to grips with that amount of money being justified until I got a feeling from the Council on how they want to proceed on the street matter. Back a few months when we did the original budget proposal there was $40,000 in the budget for that item and a very brief discussion about that item and when the cuts had to be made I deleted the $40,000 and thought that the only route that we could afford to go was the assessment route. I agree totally that the best way to go is to put in $40,000, $50,000 a year and to do it as a roadway maintenance operation. I I I I I I Council Meeting October 13, 1981 -7- Don Ashworth - I am sure if you carried out that analysis that it would not prove cost effective unless you were going through again being able to carry out a seal coat program where you were able to do five to ten blocks per year. Otherwise it's really ineffective to go out and carry out minor patching if you are not giving a base shot to the road. Most of the equipment purchases are looked at not only in terms of the replacement of equipment but also a guideline we believe was established in terms of attempting to carry out more work with city forces. A good example is this type of a piece of equipment, a backhoe. Each time there is a sewer or water break we hire Swedlund or Sorenson, etc. Bill will present back to you an actual justification for the piece of equipment. We can't go out and literally purchase it. We can go through the process of receiving bids. Mayor Hamilton - The point that I made to Don this afternoon was this is a $l2,000 purchase of a piece of equipment that I feel is questionable, especially this year. I would rather see us, if we have to, take that $12,000 and put that toward maintenance to start a sealcoating project and if an areas road is so bad that it needs to be repaired immediately I would then like us to go to the citizens in that area and ask them if they want the road repaired and give them a rough estimate of what the cost is going to be assessed to them. Maybe by sealcoating some of these areas we can save the roads for two or three years. Councilman Horn - If we are not preserving the road by sealcoating it, why waste the money. It shouldn't be our judgment as to whether we are going to preserve the road or not. I am not going to try to second guess our engineering department on whether that preserves a road. We should see facts on that and justify the equipment based on that. We should have a sealcoating program presented and justified before we launch into it. One of the comments I have heard repeatedly, whether it at election time or whatever, is that the taxes in Chanhassen have stayed low for the last ten years. We have had no increases and this type of thing and that's fine on the front end but I would guess that if you looked at a per capita of assessments in Chanhassen you would find that what you are cutting out in the front door you are spending in the back door and I really think that we would be better off facing them up front in taxes than try assessing everybody on normal types of maintenance. I don't really think that's an acceptable philosophy and I haven't seen that in any other city that I have lived in to the degree that I see it here. I think a general obligation tax is going to much less detrimental for people to pick up on a small basis than it is for this large one-time lump sum thing that we get sued for and have trouble collecting at the back end. Councilwoman Swenson - I would like to see us work towards having general maintenance and this type of thing eventually become a city general obligation. Mayor Hamilton - I agree with what Clark said. I think the general fund this year if we spend more time and dug into it more and brought it in line with where it should be, I think we would find that it's in pretty sad shape. I think at some time we are going to have to do that. Just if you consider the three areas of transfers out of various funds that in my opinion shouldn't be transferred out I think there is a law that says we can't do it and it's partially a philosophical question but that's $68,000 that would be coming out of the general fund. Where do you make that up? Councilman Geving - I think it probably is very frustrating for the City Engineer and his crew to see these chuck holes and see the complaints and not be able to do something about it. We just don't have the financial resources. Council Meeting October 13, 1981 -8- Councilwoman Swenson - You were talking about the salaries being broken down into various departments, I would find it much easier if I had dollars to work with instead of percentages because at this particular time I don't have figures of what is, for instance Scott's actual salary. Don Ashworth - When can I respond to some of these points? We are going through them and I don't know when I can ever come back and at least give you what some of the options are that you can consider. Councilwoman Swenson - I notice that in Park Development for 1982 there is no money allocated. I assume that we adopted a five year plan. Don Ashworth - The Park Commission has not completed their allocation for park acquisition and development fund so therefore it was not shown. Councilwoman Swenson - I noticed in the Housing and Redevelopment expenditures we have got $67,000 budgeted. I thought the HRA was self- supporting. Don Ashworth - It is but the resource for that is shown on another page. Councilwoman Swenson - On this Utility thing, Mayor, you mentioned that there was a $20,000 deficit. How come we arrive at a deficit? Mayor Hamilton - Currently the books show a $20,000 deficit. Councilman Horn - How long ago was it $147,OOO? Mayor Hamilton - 1979. Councilman Geving - I think that's what is so confusing about to us. I have so damn many notes on this is exactly where the Mayor indicated that reserve is missing which was in there for does not show up in 1982 and I guess that with me as to where that went. Don Ashworth - At the end of 1982 there would be $11,400. The Mayor is correct I that the line between beginning balance and total resources, previously showed a account for necessary reserves. In 1979 when we carried out the audit portion at that time it showed that the City was continuing to lose money within the sewer and water utility fund. We had not carried out a rate increase since 1972. The Council authorized a study to be conducted in terms of utility rates. That lead us into a long discussion with Metropolitan Waste Control Commission about the level of charges. There charges have and have continued to be over 35% per year. The rate study carried out by Schoell and Madson showed an 80% increase would be required in utility rates simply for that fund to be where it should be so that it could carry an adequate required reserve. The Council sent the study back saying there was no way that they could adopt an 80% utility rate increase in one year and that we must find ways to cut budgets. The rate increase did become effective but because of the delays in having that enacted the first time that took effect was in April 1980. We do not have a required reserve section in there like I would like to see. I think that should be at an 8% to l5% level. There are two philosophies for a reserve account. One is to assure that at no time during the current operating year that you ever run into the hole. Some communities use that as a slush account, holding account or something like that. I can't recommend that. Mayor Hamilton - As near as I can find out, utility resources are to be used for utility purposes and if there are excess resources in your operation I during the period of a years time, there should be a reserve built up. I think it's just a reserve fund and I am not so sure it's for financing as much as it's for a reserve to pay for any utility problems that may happen that just don't ordinarily happen. So if there is $100,000 in there then if something happens you do have something to draw on. Then if there is excess funds during the operating year over that $100,000, which there should be if I the budget as presented particular page. This the required cash 1981 at $32,800 and is a point of contention I I I Council Meeting October 13, 1981 -9- only those things that are charged to that account that belong there, there should be an excess every year. Don Ashworth - I am not in disagreement with you in terms of what you may want to do as far as how you want to see, whatever. Most of the areas I have attempted to relate what past policies have been on why it has been included in here and to try to present at least options or philosophies for why that occurs. In terms of administrative expenses where there is a percent shown it is only for the purpose to try to record as reasonably as possible the costs that occur in a particular fund. The object is to attempt to record back and show the costs that are related to utility sewer and water customers and charge those expenses accordingly. That is a percent type of thing. We can either get it into a fixed dollar basis if you actually know that. Some costs become harder to define, heat, lights for a building. You might go into a square footage of a building and try to determine what portion of the sewer and water building charges or the customers should pay that type of an expense. The second way that that can be accomplished is by the usage of transfers in and out where the general fund shows the entire cost. I heard, I believe it was the Mayor, that he wanted to see all the salary portion shown under one fund, that's fine if that's what you would like to do it can be done and then itemize those costs included in each of the operational areas that are attributable to some other operating center and literally make a transfer at the end of the year for those types of costs. This does parallel the state law. I would recommend that the budgets continue to reflect those types of transfers to be able to fund the costs that are appropriately incurred by a particular fund. The City Council has every year, by resolution, approved the transfers. Mayor Hamilton - One thing I really differ with you on and we mentioned this morning was if in fact you are going to charge utility administration for instance, you are taking money out of that fund for rent, heat, lights, water, and you also charge them for space, if you are going to do that type Df thing, then you had better charge Scott's area, charge Bill's area, charge Waibel's area, and all those areas are to be charged the same. Because you have got some dollars there that you can grab I don't think you ought to start charging rent for a space and if you did that it should be consistent. How do you arrive at a dollar figure anyway for rent? How do you charge a percentage of your gas and electric to just that area? Basically as I see it for administration you have got one person working parttime in the administration of your utilities. You start looking at the figures that you charge that area, it doesn't come out somehow in my mind. You are charging way to much and when you also add on the IBM Copier, heavily charging utility for the usage of that when I don't think their usage is that heavy in that area, why are we charging utility for the usage of the copier? That's what I am saying, if you charge that area only for those things that they use, I don't happen to have Jean's budget but you have got books and periodicals, memberships, travel and training, and as far as I know Jean doesn't go anyplace. Charge the dang thing for what we use in it. I worked it out and looking at it from what I know of the thing, just observing and trying to find out from asking questions of Jean and Kay just how the area operates, it looks to me like we are going to come up between a $30,000 and $40,000 plus figure at the end of every year but only charging for those things that we use. Don Ashworth - The budgetary process is a long and difficult one as I mentioned to Kay about five years ago, that was put in there and it was just a flat 70% of all costs associated with my office were charged to the general fund. 30% were charged to utilities and that includes the copier, etc. Council Meeting October 13, 1981 -lO- In other words that was literally the only administration charge portion, yes there was a transfer. For this year that 70/30 split is only on selected accounts and one of the things that it does not include is it does not relate to any of Bill Monk's time. Definitely there should be a reduction in terms of charges of expenses incurred in my office and how they relate to the Utility Fund but I think you are going to find that if you were really charging by time spent that a portion of Bill's time should rightly be paid under that enterprise fund. Mayor Hamilton - I know that there is all kinds of those rules and regulations and you have to follow them and it's exactly the same thing that we have been talking about with Zinter. He is going to follow the book and I see no reason why you have to follow the book. You can be creative. That's all I am asking. We sit here and we talk about these things and we just don't seem to make any headway. I feel like I have been beating my head against a wall. I am getting a little tired of doing it. It's up to you (Don) to come to us with these kinds of suggestions, let's change it, here's what we can do, here's what we can't do. We are trying to point out some areas of concern that we have within the budget and how they get resolved, we say there is a problem here with the Utility Fund I think it is a problem and I think the other council members feel it's a problem, how do we resolve it? I don't have all the answers. You say you have got all these rules from the state, well maybe that tells us exactly and specifically these is only one way to do it and we have to do it that way. If in fact that's the case, just say that, that we are doing it correctly and it's over with and there is nothing else we can do. Don Ashworth - I have tried to give you three options as to the way to try to accomplish what I am hearing you say. I am not sure if the other council members recognize at least what is in the budget as I have proposed. You can take out all administration and those costs that you have noted. If you do that you are going to have to either cut expenses in the general fund because again that is a credit that is being paid back by sewer and water utility customers. The same way with Administrative Trust. Councilman Horn - Can't you divide up your overhead accounts by the percentage of the overall budget of each of the sub-accounts? You know how much is allocated for each of the sub-accounts for the year in the budget. Each one has a certain percentage of that total budget. Now if you took your three salaries and put them in as overhead you could then allocate the total overhead based on the same proportion as each of the total operating budgets for those areas but they would be reflected in overhead not as we are seeing in here. Mayor Hamilton - We are picking up and paying for various salaries out of the utility fund. We are currently $20,000 in the hole in the utility fund. There is a proposed $15,000 transfer out for next year and I haven't proposed any changes in the line items, consequently we are still going to hit that utility fund for the same amount that we hit it for last year, how far are we going to run that account in the hole before we finally say that we have got to do something to get out of that position? At some point we have got to bite the bullet. I think our general fund is in tough shape. It's worse than we really want to think it is I think and if we don't do it this year we are going to have to do it next year or the year after. We are going to have to raise property taxes to get ourselves out of a pickle. Councilwoman Swenson - It is my understanding that ~yß are already taxing to the limit of the law. How can we do it? I I I I I I Council Meeting October 13, 1981 -11- Councilwoman Swenson - How many accounts do we have? Kay Klingelhutz - About 47 in all. Councilwoman Swenson - I guess what I would really like to see is a breakdown of all line items? How much, for instance, do we actually pay for heat? Kay Klingelhutz - For heat and electricity, for 1982 proposed budget, we have in there $71,900. All funds combined. Councilwoman Swenson - I would like to know what do we pay to Northern States Power or whom ever it happens to be. What is the total amount we put out for supplies? Are we talking about office supples or first aid supplies? This is the one problem that I have always had. Maybe what we have to do instead of trying to drop thousands of dollars or hundreds of thousands of dollars is to start thinking about the five hundreds and the thousands and try to resolve that and you can't do that when you are looking at things that are split up in 47 different accounts. Mayor Hamilton - I agree totally. That could be a summary page in the front. It should be a summary of all line items, the revenue and expense, so you know where all your revenue comes from and know where all your expense goes. Councilman Horn - Maybe as a starter we could use a definition of the accounts to get us going. As far as I am concerned we need to start by getting a summary of the accounts and I think that if Don can't come up with a way to summarize these things and make some sense to us we are going to have consider a different format because I feel very uncomfortable being in this position and not really understanding this whole thing. Councilman Geving - I don't think it would be out of the question on our part to ask the Treasurer or Don to present a quarterly updatè to us and administratively just hit the high spots and tell us where there is a problem. Just identify a problem. I would like to see one copy of this approved 1982 budget sit right here in the Mayor's cubicle and we drag it out from time to time when we pass judgment on a truck that we said we were going to buy. We ought to do that every time on these major things. Councilman Horn - It also has to be pointed out clearly to us when we are doing something in a meeting that's going to jeopardize any of these situations, such as deferments, that be pointed out to us. It makes us aware of what the situation is and it put us in a much better bargaining position with people we are dealing with to justify our position. Mayor Hamilton - That's one of the things that I would like to see the staff work on is to make firm recommendations. You are the guys that are doing the job. You are the ones who have all the information and the knowledge, give us your recommendation and a strong recommendation. Don Ashworth - If I am hearing the Council correctly, we can attempt to come back with some different formats. I don't know how you are going to carry out a reshaping of this document for 1982. I can come back with some different options. We have to resolve the 1982 budget this evening. If I may suggest that we go right down the order as presented by the Mayor. I would like to take and present a short position on each one in regards to the budget and potentially you could vote or save all of them to the end to decide. Some way or another you are going to need to make a decision on fire relief, diseased tree, etc. Councilman Geving - I would like to interject here and hold Don's comments until I am finished with my comments. I would like to hit seven areas and the first one was Administrative Trust Fund. I would like to refer to page 116 of the latest version of the 1982 budget. Please remember that my only concern in the budget portion of this years budget is to reduce the levy to the most practical numbers we can. In previous years our numbers have been very favorable and we haven't spent a lot of time on the budget process. This year it's an entirely Council Meeting October 13, 1981 -l2- different picture and we have dug deeper between the Mayor and myself, than any other Council in the last five years. In this particular Administrative Trust Fund I think you have to remember that this was started by a Council back in 1968 before the City became a City. It was acknowledged that a certain amount of money was needed to pay for the administrative costs of construction activities and so they levied a small percent on each construction project. Well, low and behold, over the last 12-13 years people have kind of forgotten about this fund. They have let it go and no one really looked at the policy decisions behind it. Today we are looking at a fund that is in excess of $235,000. It was never intended to be more than just an administrative fund. It's drawing over 25 and 30,000 dollars in interest alone. My only comment here on this page is that we will end this year with a $238,000 balance and my comment to the rest of the Council is what do we want to do with $238,000 and my recommendation is that we need a long range policy from the Manager on how this fund should be administered. That there should be a cap placed on this fund of say $100,000 and that this fund should be used wherever possible to reduce the overall levy of the City. Now I know that the Treasurer, the Account Clerk, the Manager, and others could charge considerable amount of their time to this fund if these monies were transferred out of the Administrative Trust Fund and into the general fund. I would like to have the Manager review this particular fund and give us alternatives of a long range view of what he is going to do with $238,000. It just got away from us. Nobody gave us any policies. They just continue to collect the money and this year we have only got $8,OlO as expenses against this $235,000. LetTs take a look at this. Give us some policy. Give us some direction on what are alternatives are. I I The next area I would like to review is diseased tree. I know the Mayor has spend a considerable amount of time on this but it's an area that bothers me and I think I want to spend some time on that. What I looked at in this particular fund is here is an activity that was started when I was a Councilman and I saw it happen. We hired a CETA employee at no charge to the City. He came in as the City Forester and started marking trees and fine, it didn't cost the City anything so we let it go. Now we are looking at a levy, $28,000 with an expenditure of $33,000 to fund the diseased tree program. My comment is, we already have a balance of $35,000 carryover in that account, forget about the levy. Kill the levy. Drop this particular program and let the elm trees die. Move Doug to the Park Department and payoff the remainder of our tree spade $5,000 and forget it. My next comment is in regard to the Utility Fund. It bothers me a whole lot that in looking at the Utility Fund increase proposed for this year that we are talking about a 19% increase in sewer income and l5% increase from water customers. It bothers me I that this was not mentioned in the Manager's preview to his budget figures. This should have been placed in front of us from the beginning that he is proposing a significant increase in the cost to our citizens. There probably is more volatile comment that I hear from our citizens than the damn City is doing it to me again. The cost of sewer and water is going up and has increased dramatically in the last year and I am hearing about that. I remember when this was two different funds. We had a I I I Council Meeting October 13, 1981 -13- sewer fund and we had a water fund and my opinion still is to this day that the water fund is solvent and when I see that water bill come to my home and I know it is solvent it is used to payoff the damn sewer fund. People don't understand that. I think we would get a lot more reaction from our legislators if they knew that the Metropolitan Waste Control is the one that's doing it to them, not the water that used in sprinkling the water. I have always favored keeping the water and sewer separate showing the two costs rather than combining it into a utility fund. I would prefer to see that required cash reserve back in where it belongs. I would like to know from the Treasurer, item 3801 interest earnings on this account proposed for 1982, I can't believe that an account that handles literally thousands and thousands of dollars will generate only $500 in interest income. Kay Klingelhutz - Because we have been running this account in the hole and the way our investment program is set up, it will charge it interest. Councilman Geving - How fast do you turn over your money once you receive it? Kay Klingelhutz - The expenses are usually covering the revenue. Councilman Geving - Would you care to comment Don, about my statement in keeping the two funds separate and what affect if has on the citizens? Don Ashworth - You are correct, water has traditionally subsidized sewer. If you look at the budget as proposed you notice that sewer customers $262,000 for resources, expense of $263,000. That's only sewer operation. There is no administration in there. Councilman Geving - Would you care to comment Don on the proposed increase in the sewer and water rates for this year? Don Ashworth - The City found itself in a position of looking at 8% increases simply because they did not increase rates for over a seven year period of time. It's my recommendation that a minor increase 5% be shown so that you do not get yourself in that type of position again. It also assures that the fund balances. As of today the current position of the Utility Fund is $20,000 in the hole. If a fund does go in the hole like that, the computer automatically starts charging interest. In 1982 I am anticipating that that should marginally start building itself back up so that you can look to putting that reserve account back in. When it got down to the point of $10,000 it seemed a little ludicrous to even put the statement in. What Kay invests is she will look and see that projecting her total resources and total expense that will have $364,000. She doesn't know who has got the $364,000. That's up to the computer to figure out when the actual balances come in. Those that have a deficit balance are charged interest and those that have a plus balance will gain interest on the total amount invested. Interest is calculated based on the actual cash position of that fund. Councilman Geving - I would like to look at page 54, on the recreation programs and this is just a comment or a policy type recommendation. It bothered some of us who have been around recreation programs in Chanhassen for some time, at our involvement in the community schools. We think that we can pullout of the community schools program, run our own recreation program under Fran Callahan, and we can use the same amount of money. Turn it over to Fran. Let him hire his own people and let's get our Chanhassen kids manning the gate and our lifeguards at the beaches and I think we can do a good job for $16,000 on our own. I don't know what we get out of the $5,000 fee that we turn over to the community schools people. I have questioned that for a long time but we continue to pay it. I for one am displeased with how that thing is going and I would like Chanhassen to run its own program. Council Meeting October 1.3, 1981 -14- >' The next area that I want to spend a minute on and I agree wholeheartedly with the Mayor's comments is on the vehicle purchases for 1982 as planned. I think this is a very austere year and as such I think that there are monies in the program $134,000 planned, some of which are very essential I agree. Maybe we need another utility vehicle for the department. I am not so sure we need the plow that goes with it. It seems like vle always buy plows for those vehicles. We must have a stack of them somewhere. Old yellow is going to have to last another year as far as I am concerned. I know it's in bad shape but I think if there is one area that we can cut out, that's it. I think if Scott or Fran or anybody else has to go on a trip do\mtown or anyplace and needs a vehicle and there isn't one out there, they should be given mileage to drive their own car. That's one I disagree on. The one that I have questions on is the rescue truck for the north fire station. I know we don't have any men up in that north station yet. I know that it will run the federal revenue sharing budget in the red and there is simply not enough money in the account to cover that vehicle. I think we are going to have to think long and hard on that one but at this stage of the game I would say I am not in favor of buying that vehicle. We are going to have to buy the first aid supplies anyway for whatever vehicle. I know that John has mentioned it several times and I have to agree with him after looking at the depreciation account that that is a shakey item and I don't see the money to cover that $23,000 this year. In my opinion that should be deleted along with the new sedan for the City Staff. The gang mower I have no problem with. The utility truck is no problem with me as long as we drop the plow. My recommendation would be to drop $30,000 from motor vehicle. I I Don Ashworth - I have a list of l2 comments. Number one, assess only the need for fire relief. That's solely a policy decision of the City Council. Three years ago you had attempted to work this up, it's page ll2. If I understand the firemen's actuarial report the amount they currently need is $14,000 to pay for the benefit level that they currently asked for. The State Aid amount $lO,lOO is fixed so really they only need $4,000. Again three years ago there was a decision to attempt to bring it up to a $20,000 total funding level which would provide a higher benef it . Councilman Geving - I would like to comment on that. For the benefit of those people who weren't on the Council last year we anticipated an additional ten people to be added to the force and we amended our budget for $5,lOO to cover that proposed expansion which didn't take place. So they in fact have $5,100 in the bank in their fund for which they have no expenditures or at least the relief fund had nothing to be charged off to. We gave them $5,lOO last year. We did have the $1400 for Mr. Windschitl and is that included? Don Ashworth - Yes. Their current level of funding only requires $14,000 and that is the Mayor's recommendation and I am not making any comment. Councilman Geving - And I will second the Mayor's recommendation. Mayor Hamilton - Last year, I believe, they came to the Council and asked for an I increase from $6.00 to $8.00 for their pension. They also asked for a widow's benefit. They were both turned down. If you add in with the $14,000 the widow's benefit and the increase from $6.00 to $8.00 low and behold you come up to $28,300 consequently what they are really doing is pulling an end run which is fine, I have no problem with that. I talked to Fritz (Coulter) about that and I said, what are you trying to pull there and he said well, it's an I I I Council Meeting October 13, 1981 -15- run and I said I know. What we do, if in fact we were to approve a half a mill levy for them, they would take the $28,300 and they would come to us and say, well, we now have this level of funding and this is what we are going to do with the money. They have got the money and they are going to tell us what they are going to do with it rather than coming in and saying, I would like this level of funding to do these things. We would be approving the dollars and they would do as they pleased. The agreement still is $14,000. I would like to renegotiate some of the funds within their contract and I have told Fritz this. I think their funding should be increased annually but I don't think it ought to be increased from $6.00 to $8.00. I see no problem with going from $6.00 to $6.50 or $6.75 or something in between there, but why do you have to jump to $8.00 all of a sudden. I think there should be something at least proposed and considered for a widow's benefit. Currently if a fellow dies in the line of duty all his widow can get is $75.00. If I were a widow and I received that, I would send it back with a few comments attached and I don't think that's fair. I think there should be something considered and I told Fritz this and said I think you ought to come to the Council with some proposals for that. Not everything that you want at one time but let's do it in pieces. Let's keep it going up. Let's keep it going up in small increments so that we can handle it. They were here tonight and I was surprised they didn't stay. Councilman Geving. I agree with you Mayor. That going from $6.00 to $8.00 alone was $8,000. If they would come in with something reasonable $6.50 or $7.00 so we can look at it. I think they have to go back and do this kind of analysis of local fire departments and what those relief associations are providing in the area. Don't get way out in Plymouth. Get the local ones. Here they did a very good study, Chaska, Excelsior, Prior Lake, Shakopee, Wayzata, Eden Prairie, Savage, Mound, Minnetonka. This is dated September 29, 1980. I think what they have got to do is go back and do an analysis like they did and get back to us and let us study it. Don't just throw it at us a month before this budget is given to us and maybe we can have some meetings periodically. Mayor Hamilton - I think they deserve the benefits and I think their spouses do also. Councilman Horn - I think what typically happens through the year is that we get into the budgeting cycle and say, well we don't get in all the details here and when those have to corne up for approval again later and then when later comes, they say, well it was a budgeted item that you approved. Don Ashworth - It is a chicken and egg situation. Councilman Horn - If you don't do it at that point it makes it look like you changed your mind on the thing in the middle of the year, whereas you really didn't get a proper evaluation. Councilman Geving - I think one thing we ought to always consider, the firemen should come back every year and talk about this because once you go to a mill you are locked in. You have to look at your city finances each year. Mayor Hamilton - I have already asked them to come back and give us something but not to break the bank. Come back and ask us for what you think is reasonable. Councilman Horn - I would have trouble turning down the widow's benefit but I guess I do have a little problem with their methods. I guess my position would be that I would like to have that included in the budget. Councilman Geving - They have $5,100 to play with from last year. Mayor Hamilton - It was intended for ten people. They are actually down one person right now from last year. Councilman Horn - I would like to see that covered, that they include that benefit. Mayor Hamilton - The only problem is that that is not what they asked for. They asked for half a mill. Council Meeting October 13, 1981 -16- Councilman Horn Councilman Geving But if it's not in the budget? - Let them come back to us. We can make an adjustment. budget adjustments periodically. We make Mayor Hamilton moved to levy $4,000 in line item 3010 under the Firemen's Relief Association. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Council1voman Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. I Councilman Geving moved to delete the Diseased Tree Levy of $29,810 and retain the City Forester, half time in Park Maintenance, half time in Sewer and Water Operations and transfer appropriate salary. Motion seconded by Mayor Hamilton. The following voted in favor: Mayor Hamilton, Councilwoman Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Councilman Geving moved to reduce the Motor Vehicle Depreciation Fund to $100,000. Motion seconded by Councilman Horn. The following voted in favor: Mayor Hamilton Council~voman Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Councilman Horn moved to remove the North Service Area General Obligation Levy of $28,000. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Councilwoman Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. The City Manager agreed to go through an itemization of what the transfers to the General Fund involve for the Council. He will report to the Council with an itemization for why the costs are being put to utility, HRA, and administrative trust. Mayor Hamilton requested a legal opinion from the City Attorney on the utility, HRA, and administrative trust funds, what can be transferred in or transferred out so that the Council knows ~vhere they stand. I Councilman Horn moved to transfer $57,500 out of administrative trust fund and nothing out of the utility fund. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Councilwoman Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Councilman Horn moved to approve the transfer of $10,000 from the BRA to the General Fund. Motion seconded by Councilman Geving. The following voted in favor: Mayor Hamilton, Councilwoman Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. Mayor Hamilton requested that the City Manager reduce the following line items in the Utility Administration Fund to reflect actual utility expenses: line items, 40l0, 41l0, 4301, 4330, 4340, 4360, 4370, and 44l0. Councilwoman Swenson moved to include $20,000 in the Street Maintenance Budget for sealcoating of city streets. Motion seconded by Councilman Horn. The following voted in favor: Mayor Hamilton, Councilwoman Swenson, Councilmen Geving and Horn. No negative votes. Motion carried. RESOLUTION #8l-39: Councilman Horn 1981 tax levy, collectible in 1982. The following voted in favor: Mayor Geving and Horn. No negative votes. moved the adoption of a Resolution seconded by Hamilton, Councilwoman Motion carried. resolution approving the Councilwoman Swenson. Swenson, Councilmen I SPECIAL MEETING: A joint meeting with the Planning Commission will be held Wednesday, October 2l, 1981, at 7:30 p.m. to discuss the comprehensive plan. Councilman Horn moved to adjourn. Motion seconded by Councilman Geving. voted in favor: Mayor Hamilton, Councilwoman Swenson, Councilmen Geving No negative votes. Meeting adjourned at 12:lS a.m. The following and Horn.