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CC 2018 08 20CHANHASSEN CITY COUNCIL SPECIAL MEETING AUGUST 20, 2018 The City Council met at 5:30 to tour the West Water Treatment Plant. Mayor Laufenburger called the special City Council meeting to order at 7:00 p.m. The meeting was opened with the Pledge to the Flag. COUNCIL MEMBERS PRESENT: Mayor Laufenburger, Councilwoman Tjornhom, Councilman McDonald, Councilwoman Ryan, and Councilman Campion STAFF PRESENT: Todd Gerhard, Paul Oehme, and Greg Sticha PUBLIC PRESENT: Marlene Schaller 806 Buckingwood Court A. Jay Schreur 8376 Suffolk Drive Terry Kroells 1071 Chap Court Karla Ramsey 400 Deerfoot Trail Judy & Joel Nybeck 7404 Frontier Trail Mack Titus 2747 Century Trail Slammer 491 Bighorn Ray Murray 6618 Brenden Court Randy Raddatz 6340 Elm Tree Larry Koch 471 Bighorn Drive George & Leah Lucas 410 Cimarron Charlie Littfin 7609 Laredo Drive Dave Peck 1521 Lake Susan Hills Drive Tom & Rose Rolland 6211 Greenbriar Scott Mason 1280 Lake Susan Hills Drive Sue Morgan & Linda Scott 4031 Kings Road Reuben Kelzenberg 7604 Iroquois Avenue Pat Pavelko 7203 Frontier Trail Jay Johnson 7496 Saratoga Chris Dahl 1774 Valley Ridge Trail PAVEMENT MANAGEMENT PROGRAM FUNDING DISCUSSION TO ADD FRANCHISE FEE. Mayor Laufenburger: Thank you and good evening to everyone. Those of you in the chambers as well as those of you that may be watching on Mediacom cable channel at home or via the City website livestream. First item is just regarding the agenda. Without objection council we will proceed with the agenda which has one item on it for this evening. Is there any objection to that? City Council Special Meeting – August 20, 2018 2 Alright we’ll proceed. Ladies and gentlemen and just for those of you that are watching at home or via Mediacom or the website, I think we have probably 50 people here in the council chambers and this is the first time that I can recall where the meeting of the council is for the sole purpose of public comment. We have public comment. We have visitor presentations. Public hearings at our regular council meetings and that is part of a meeting at which action is taken on any of a number of items but tonight the council has no action on the agenda. Tonight is only about listening and learning. As a result of tonight’s session council, these 5 members here may direct city staff to do further investigation. We may also make this a topic, a subject of a work session. Council may also decide that no action is to be taken on this but tonight is about hearing from you, the citizens. This is how we’ll proceed tonight. First of all we’ll receive a presentation from staff on the subject, including a brief summary of comments gained at other public meetings held prior to this evening. Secondly I’ll ask the council if they have any questions of staff or any clarification of any sort and then thirdly I’ll ask for public comment at which time you will come to the podium individually stating your name and your address for the record and then you make your comments and I would ask that you make your comments, direct your comments to the council. Now council members also I would invite you that if you have any questions during that time, during the public comment if you have any questions you’re certainly welcome to ask those of the person who’s presenting so wanted this to be a little less formal than we might normally follow during the council meeting. Agreed? Everybody okay? Alright. I expect that we will hear from many of you this evening so I ask that your comments be limited to 3 to 5 minutes if possible. Be respectful of the council and also respectful of those present that may have views that are a little different than your own. Also I know that some of the things you hear tonight you may really like or really not like but I just, I ask that you just keep your response to those items to yourself. We want to hear from all who would like to speak tonight and I don’t want anyone to feel like they need to be intimidated or hindered in speaking their views and convictions. Also if you’d like to include in your comments stating whether or not you think the council should act to maintain a certain level of street condition known as the PCI or the pavement condition index you may include that in your comments so. Also remember that the City Council has had an opportunity to read and hear many comments already. There have been 4 public sessions at the library and many of those comments and the results of those sessions have been shared with the council as well so unless there’s any questions or comments from council at this time let’s begin. Staff report please. Mr. Oehme are you beginning this? Paul Oehme: Mayor, City Council members, thank you. So I’d like to just go through the agenda like, that staff would like to present tonight. This presentation, this power point that staff has put together is really similar to the other meetings that we’ve had at the library with the community and we’ve been tweaking the I would say the power point over the last couple meetings here just to make things a little more clear and clarify a couple things and add some more information too so we’ve added a couple things to this power point that we did not present at our last open house. So what I’d like to do tonight is explain kind of the purpose and need for the additional funding request for our pavement system. Our pavement management system. Then Greg Sticha will talk about one option is talk about the franchise fee option that we’ve been discussing with you and then we’d like to take public comment and input from the audience and City Council Special Meeting – August 20, 2018 3 the community on the proposed franchise fee and then the current assessment practice that we currently have so with that, what is a pavement management program and what exactly does it involve. So I mean the City’s goal is to implement changes to our current funding for pavement management by maintaining a sustainable and consistent funding source for our pavement management of our streets and our trails so that’s kind of the goal that we’re working under. Just a little background and our system as it currently sits. We currently own, maintain, operate about 112 lineal miles of streets within our community. If you look at what the cost, the capital cost for that network is, if it would have to be replaced today, it’s about $183 million dollars so that is by far our largest capital asset the City currently owns and maintains. Likewise with pedestrian trails. We have approximately 60 miles of paved trails within our community. 37 of those miles are within our current right-of-way or in the back of the curb of streets like on 78th Street and then there’s another 23 miles with our community and parks and open spaces in city land so if you add up those costs, what it would take to replace those trails today it’s a little over $9 million dollars in value so it’s a substantial amount of capital outlay that it took to build and build up the trail network over the years. So our goal again is try to do the right thing with these pavements at the right time to try to prolong the pavement life as long as we can. Keep again the city’s infrastructure in good repair as best as we can. Maintain or increase property values that curbside appeal. And then also try to implement and have a system that’s cost effective as well. So the pavement management program was started right around 1991. Kind of kicked off with our first surveys and then 1994 it really kicked in where we started surveying all of our streets once every 3 years and those surveys would pick up what distresses we find in each of the segments of the roads and the network that we have out here. For example we identify the severity of the potholes. How big they are. How distressed they are. How many cracks per block we have. Rutting. That’s the tire marks that potentially are in the road and a bunch of other little distresses. We gather that information. We have that information inserted into a pavement program basically it’s called and that program identifies and rates our streets and it’s called a pavement condition index so that computer program would tell us what condition our streets are in. So for example a new street in our community would be rated 100 by this program because there are no distresses that would be out there and the road’s, no potholes and those type of things. But however if a road is gravel or severely distressed it would be down closer to the zero mark where it’d be almost looking like a gravel street if you had a zero. So over the years again we’ve obtained this data or collected this data and we have a pretty good record of what our streets are, have been over the last 10 years. So for example in the last 10 years overall our street networks on average would be rated, have been rated right around a 70 which is considered fairly good street conditions. So there’s a few potholes, a few cracks but no major distresses on average through our networks. So our street network has been built as development has come into the community so this graph shows when all of our streets were constructed so this graph here shows that approximately 20 percent of our streets were built in the 1970’s and then as we go along, 1980’s. That 10 year span there was 27 miles of streets that were constructed and then in the 1990’s 38 miles of streets were constructed so the city did have a very big growth period in the 80’s and 90’s. In fact about 60 percent of our streets were constructed in those two decades. However now these streets are starting to deteriorate a little bit and they’re coming due for maintenance. We’ve tried to prolong these streets as much as we can by patching, City Council Special Meeting – August 20, 2018 4 sealcoating, regular maintenance but it’s coming to the point where those type of treatments are not going to be cost effective anymore. If we look in this pavement management program can also project out in the future what the pavement condition will be so if we estimate, we can estimate out into the future what our pavement condition will be if we currently funding levels as they are today so looking out about 20 years our pavement condition index would right now is about a 70, would drop to a 44 in 20 years with the current funding levels that we have. And this is specifically due to the fact that we have so many streets again that were built in the 80’s and 90’s that are coming due for some sort of maintenance. This slide just shows graphically what the pavement condition index looks like so again upper left hand corner, this is a very good street. Recently paved maybe one or two years ago. It’s rated at a 95. You know very smooth. Very consistent. No cracks. No potholes. Those type of things. A good street is shown here visually. There’s some cracks. Maybe there’s some settlements in the road but no significant distresses in terms of alligatoring or potholes. Those type of things but as we go down you can see that roads at each of these PCI levels are significantly deteriorated so again if we were, we’re currently up in the 70 range but if we’re looking at not increasing the, or doing more streets in our community over the next 20 years we project that our street condition is going to be on average again looking more towards this visual representation of PCI that’s at 45. So what can we do to address that need? This is a typical life cycle cost of a pavement. This graph represents what a pavement life cycle can be. These graphs, life cycle costs are nationally and state accepted. The treatments that we’re looking at are no different than other communities currently offer and do. So I just wanted to explain this graph a little bit. So if we start on the left hand side at zero for pavement age on the lower level of the graph and as we go up the pavement condition rises so again 100 on the PCI scale is basically a brand new street and if you’re at zero you would expect that street to be brand new or at 100 so but over the time as we go to the right of the graph, the pavement’s going to age. It’s going to deteriorate over time and how best to maintain that, that roadway. So the red line represents a pavement, a street, a road that has no maintenance involved with it so it’s going to deteriorate kind of on a gradual basis and as we get out to 20-25 years, maybe 30 years it’s going to run down to the PCI level of you know 30 and lower where you know you’re going to eventually need a reconstruction if no maintenance is completed. What the city and other communities have took on is try to extend those life, those pavement lives as long as we can so the blue line represents a well maintained or a life cycle cost of a street where say after 8 years we’re looking at a sealcoat and that’s the chip seals that we put down on our roads with an asphalt binder to it. That bumps up our roadways to a little bit. We also crack seal our roads to try to keep the water out of the subsurface but over time that sealcoat’s going to deteriorate too so another maybe 8 years or 10 years after that first sealcoat then we’re going to do maybe another sealcoat and that will bump us back up to another 10 points or something like that but over time where our streets are going to deteriorate and those sealcoats aren’t going to be cost effective anymore where we’re going to have to do some sort of major, more major rehabilitation. That’s where we’re talking about maybe looking at a mill and overlay or a full depth reclamation project where for a mill and overlay that’s where we’re maybe grinding off or removing the first inch, inch and a half of asphalt and then repaving that. That roadway. That would bump us back up to 100 PCI and then we would go through that life cycle again so maybe do another two sealcoats and then at this point in time maybe after 40 years City Council Special Meeting – August 20, 2018 5 or longer we’re looking at a reclamation where we’re digging up all the asphalt and replacing that and that would bump us back up again. But over time it’s going to, that road’s going to deteriorate and the sub-base is going to weaken and maybe some utilities would have to get replaced so you know after 50-60 years or longer potentially we’d be looking at a reconstruction. And the reason why we try to do, go through this life cycle cost, do some overlays, mill and overlays. Sealcoating, those type of things and try to extend the road as much as we can is just because of the cost effectiveness of these type of programs where we’re not reconstructing roads every 25 or 30 years. If you look at what the costs for some of these treatments are, sealcoating about a buck 40 a square yard versus a mill and overlay which is at $13 dollars a square yard versus a reclamation where you’re digging up the asphalt again and replacing all the asphalt. That’s about $21 and when you come down to a reconstruction where it’s over $100 a square yard comparatively. So if you look at the life cycle cost again or if you’re reconstructing roads and not doing any maintenance we’re project, you know it’s about 2 ½ times more expensive to let the road deteriorate and reconstruct versus going through the life cycle cost and doing some of these treatments down the road. This is a proposed 10 year local street plan that staff has generated if additional funds are available for, through the franchise fee or some other funding source. This is the improvement plan that we’d like to put forward over the next 10 years to try to have our street system maintained at that 70 PCI level and these again are for a local streets. These are more the neighborhood streets that we are proposing and it includes the overlays. The mill and overlays and the full depth reclamation projects and the total reconstructions as well. And then likewise for our collector roadways, this is just a 5 year projection. We do have a 10 year projection. I just wanted to show you a 5 year and these are the roads that we have planned over the next several years as well so if we look at all of that, all the improvements that we’re looking, we’re proposing again to maintain our PCI level at right around that 70 level, the streets that we’re proposing to improve here in the next 10 years is right around 45 miles worth of streets and it represents about 40-41 percent of our total street network as well. So with that I think Greg will talk about the funding as well so unless there’s questions. Sure. Councilman Campion: Mr. Oehme, do those collector roads repairs, were those overlays or are those reconstructions? Paul Oehme: Yep so most of these improvements would be overlays. I know Market Boulevard that would be a reconstruction. That would be, we’re looking at widening Market Boulevard from 78th Street down to Highway 5 in the near future. Most of the other projects that we’re proposing here are mainly mill and overlays. I know the Bluff Creek Drive we’re going to have to replace the storm sewer out there so that’s a little bit more intense project so there’s some reconstruction associated with that project. Pleasant View Road, that one’s more of a reclamation project as well too. I think that’s more, and there’s going to be some reconstruction areas out there as well too so that maybe is more of a hybrid out there. With that project. Councilman Campion: Okay. Mayor Laufenburger: Go ahead Mr. McDonald. City Council Special Meeting – August 20, 2018 6 Councilman McDonald: Mr. Oehme, one of the questions I’ve had on all this and one of the ideas that I looked at one time was the PCI number. If we were to allow that to slip down. Right now we’re, we do things around a 70 is that correct? Paul Oehme: That’s correct. Councilman McDonald: Is when we start looking to redo and you say we go out another 20 years and it could be down in the 40’s if we did nothing. The drawing you have in your packet shows a street at about a 45. It’s got a number of cracks and those types of things. What risk do we run, what harm do we cause if we don’t repair this road say 20, or well about 20 years sooner and we just allow it to get down to this condition where what you’re doing is constantly patching and the road’s cracked and probably disheveled in a couple of areas. What harm do we actually do? Paul Oehme: Sure, so there’s a lot of factors and a lot of things that go into that. I would say you know complaints I think from the public. The general driving public. We would receive a lot more complaints about you know the ride ability of our roads. The quality of our roads. The again if you’re not addressing and maintaining the streets when we should be, you know we’re postponing the improvement, it’s just going to cost us more down the road to do those type of treatments so for example if we can do a mill and overlay when it needs it versus a reclamation project you know maybe in 10 years down the road after that, you know there’s some significant monies that would be saved by doing those smaller projects. Less intrusive projects versus doing the reclamation projects and the reconstruction projects. So I think it’s two fold. One is it’s a monetary savings. You know we try to keep our roadway system at a higher PCI. I think financially we’ll be spending less money and then also from a public perception as well. We’re not going to get as many complaints I think from the public if we try to maintain our network to our current levels as well. I think those are the two factors. Another factor that you know can play into that as well, you know we’re, we potentially have to farm out patching if we, to contractors. I have to contract out for patching in the future if we drop our PCI’s lower than they currently are today. Our street crews are out basically from you know when road restrictions are out all the way til September-October sometimes patching our streets currently at our current PCI level. If we drop them, if we drop the PCI lower than it is today you know we’re just not going to have enough staff in-house to maintain those roads in the future. Councilman McDonald: Okay let me ask another question. If you go to your next slide after the pictures, that’s the maintenance strategies for life cycle extension. If I allow the roads to get down to about a 45 am I roughly the first downturn on the blue or am I at the second? Paul Oehme: Yep it all depends on you know how old the street is. When you’re down to about a 45 that’s kind of right at our threshold that we’re really looking at you know is it a reclamation project or do we have to go to the next level of, you know do we have to reconstruct the whole street just because of the amount of distresses in those roads. City Council Special Meeting – August 20, 2018 7 Councilman McDonald: Okay so by trying to save some money and really not do too much at all I’m really going to be shooting myself in the foot because now I’ve put this road in a condition where I may no longer be able to rehab it. I may have to rebuild it. Is that? Paul Oehme: That’s the gist exactly. You said it correctly. Councilman McDonald: Okay and roughly the difference in cost between a rehab and reconstruction that would be your graph down here at roughly $108 a square yard versus if I do, well I can do sealcoating, mill and overlay and some reclamation and I haven’t even come close to $108 a square yard. Paul Oehme: That’s correct. Councilman McDonald: So in the long run even though I’m probably working on roads maybe a lot more frequently I’m doing less intrusive work on the roads so that way I’m really not shutting things down for too long of a period and I’m not having to rebuild a road. Paul Oehme: Right. We can do a mill and overlay and a reclamation project in les than half the time that a reconstruction project takes place. Councilman McDonald: Okay thank you. Mayor Laufenburger: Mr. Oehme a couple questions. Can you go to your MSA slide please. Yeah the 5 year. What’s the source of revenue to pay for those projects? Paul Oehme: So most of the revenue generated to pay for these projects would come from our state gas taxes that we receive annually from the State so. Mayor Laufenburger: Is there a limit to how many dollars we can get on an annual basis? Paul Oehme: We do yep, exactly. So the money is distributed through a complicated formula between all the state aid cities within the community and a lot of the money goes to the counties as well too but they’re split but there’s a formula. Mayor Laufenburger: What’s the formula result in how many dollars is made available to Chanhassen say on an annual basis? I’m not looking for a precise number but kind of a general number. Paul Oehme: Yeah roughly it’s right around $800,000. Mayor Laufenburger: Okay so $800,000 but those, that $800,000 is stuff that we get from the State. City Council Special Meeting – August 20, 2018 8 Paul Oehme: Correct. Mayor Laufenburger: We bring it in and it’s used for MSA qualified roads. Paul Oehme: Yep exactly. Mayor Laufenburger: So not all roads qualify for MSA funding is that correct? Paul Oehme: Correct. That’s correct. Mayor Laufenburger: So we can only use those dollars from the State to repair those roads. Paul Oehme: Right, exactly. Mayor Laufenburger: Okay. Can we go, can we go in kind of in advance on MSA? Can we ask for more money than we should have in a particular year? Paul Oehme: We can. Yeah so the State allows us to advance a certain amount of funds if we have a larger project that we want to complete and then maybe take 1, 2, 3 years of our annual allotment to pay back so we can request that and we have in the past. Mayor Laufenburger: But if we do that, that means that somehow we’re going to have to not get funds for a couple years in order for that fund to build up for us. Paul Oehme: Exactly. Mayor Laufenburger: Okay, alright. Okay one more thing. You said we’ve been maintaining at 70 and Mr. McDonald said if we do nothing it will go down to 44. I don’t think that’s what you said is it? If we continue at the current pace. Paul Oehme: Right. Mayor Laufenburger: Over time the PCI index will go down to 44. Paul Oehme: Yep. Yep. Mayor Laufenburger: So in order to keep the PCI index at 70 we’ve got to spend more than we have been over the last few years. Paul Oehme: That’s correct. Mayor Laufenburger: Okay, alright. City Council Special Meeting – August 20, 2018 9 Paul Oehme: Thank you for that clarification. Mayor Laufenburger: Alright, thank you Mr. Oehme. Are we with you Mr. Sticha now? Greg Sticha: Yes. Mayor Laufenburger: Okay you’re up. Greg Sticha: So Mr. Oehme kind of went over the condition of our roads. Where they’ve been and kind of the life cycle of the roads. I’m going to go over how we have spent, or how we have paid for our local roads to date. I’m also going to go over what the funding options would be for the council to pay for any additional funding that would be set aside for roads. And I’m also going to discuss to some extent how a franchise fee works. What it is and exactly what some potential impacts could be on either a residential home or commercial property if a franchise fee was used to help fund some of these roads. This first slide talks about some of the numbers that essentially are generated out of our pavement management program so to date we’ve been spending about $2 million dollars a year on local roads doing an average of about 2.6 miles per year and that’s been able to keep us at or near that 70 mark that Paul talked about but what our program is telling us is that based on all these additional roads that were built in the 80’s and 90’s, that’s not enough and in order to maintain that same PCI throughout the city on average $3.3 million per year is needed and not the $2 million that we’ve been spending or 4.1 miles instead of the 2.6 miles. So how have we paid for our local roads to date and I guess the simplest answer at least since the early 2000’s is the revolving assessment construction fund. So in 2006 this fund was started with about $6.7 million in transfers into the fund and within that fund we also have our special assessment practice so it’s the City’s current practice to assess local benefitting property owners 40 percent of the street reconstruction portion of a project. Not water and sewer or stormwater improvements but only the street portion of a project when it’s put in. The total expenses per year that we’ve talked about, we’ve been spending on average about $2 million a year so of that $2 million a year if you assume 40 percent of that $2 million is assessed for, the residents have been paying about $800,000 a year in assessments to go towards that. That leaves $1.2 million in city costs to pick up the other 60 percent and one of the funding challenges we’re having is, we’re running out of funds for the city portion. The 60 percent that the City is responsible for we don’t have enough funds left currently in this revolving assessment construction fund to fund it into the future yet alone increase the funding to $3.3 million a year. Mayor Laufenburger: Mr. Sticha I’m going to stop you just for a second. You use a term 40 percent to the benefitting property owners and 60 percent to the City and essentially the City is the rest of the citizens correct? Greg Sticha: That’s correct. Mayor Laufenburger: Okay so 40 percent specifically is paid for by the benefitting property owner and the other 60 percent is paid by everybody in the city. City Council Special Meeting – August 20, 2018 10 Greg Sticha: Everybody who is a property tax paying property owner. Mayor Laufenburger: So if they pay a property tax then they’re contributing to the 60 percent. Greg Sticha: In portion. Mayor Laufenburger: Right, yep. Okay. Well what if somebody gets a street fixed in front of them and they’re not a property taxpayer, how much do they pay? Greg Sticha: Unless they would be assessed, and I think it’s been pretty rare that we’ve assessed for certain projects in certain areas that are non-property tax paying portions of the city, they would pay essentially nothing. Mayor Laufenburger: Well if a benefitting property owner happens to be a non-property tax paying business, citizen, entity, don’t they get assessed 40 percent? Greg Sticha: They would and certain projects we have but there just hasn’t been a ton of those projects in front of non-profit organizations to this point in our history. Mayor Laufenburger: Okay. Greg Sticha: We’ve had one that I can think of and, but that was one in the last I think 10 or more years. Mayor Laufenburger: What you’re saying is most of the streets for which we are responsible are in front of property tax paying entities. Greg Sticha: That’s correct. Mayor Laufenburger: Okay, alright. Sorry for that interruption. Thank you. Greg Sticha: So how has the City paid for it’s share of the $1.2 million that I just talked about? So the fund was created with those transfers. The other thing the city councils have done historically in the past is when they’ve had the opportunity to have general fund surpluses they’ve dedicated those funds for this purpose. Over the last several years several city councils have done that. In addition the repaid assessments that the property owners pay go right back into this fund along with any interest that is earned from those repaid assessments. Also the fund has earned some interest on it’s fund balance or reserves over the years so that money stays in there and then in 2015 the City Council had an opportunity to use a debt levy that was coming off the books of at the time was roughly $400,000. Right now it’s $384,000 and dedicated that specific property tax levy to be used in this fund for the City’s share of local road improvements. And that formula has worked for the time being. But the real need is the $3.3 and the funds that City Council Special Meeting – August 20, 2018 11 are available to us just can’t keep the fund balance positive for more than a year or two at this point in time. So by increasing the spending to $3.3 without increasing any funding the fund essentially will be out of all funds by 2019 or 2020 at the latest. So just to kind of give some perspective as to how much we talk about roads at the City Council level and in general. This is just a list of dates in 2017 alone that we’ve talked at a work session about funding our roads to one extent or another. Some of the options we’ve discussed over the last year have included changing the percentages on assessments. Raising the levy. Reducing the levy. And we’ve also had some very brief discussions on establishing a franchise fee and when we had those discussions with council the council directed staff to begin to take public comment on our special assessment practice and the franchise fee itself. We did that in early 2018 with 3 different meetings and the results of some of those comments are included in your packet this evening and a number of people who are here this evening did attend those meetings so we in total had about 100 people at those 3 meetings over the spring and summer. So what is a franchise fee? I guess the simplest way to describe it is a line item on your electric or gas bill at the bottom that by state statute has to be called a franchise fee but it has the same impact as a tax and we’ll get into that a little bit later but each city in the state of Minnesota has statutory authority to have franchise agreements with all of the utility companies and those agreements are put into place to help maintain the city’s right-of-way. Within many communities within those agreements they charge a franchise fee as part of those agreements to pay for various things in cities and we’ll get into what some cities use a franchise fee to pay for certain things other than roads but, so how it works is, currently the City does not impose a franchise fee and we’re getting into what communities do and do not but the City of Chanhassen to this point in time has not instituted a franchise fee on gas and electric bills. The City does have a franchise fee on it’s cable TV operator and those funds are used to help pay for these council chambers broadcasting these meetings and then pretty much anything that comes out of the public television broadcasting that you see on your cable channels. So who has franchise fees in Minnesota and this is already a year old and I know of at least one community that has been added to this list since then but if you take a look at the communities that do have franchise fees in place, one of the things you begin to notice real quickly is that as you center towards the urban areas it’s more likely that a community will have a franchise fee and then as communities begin to grow and their roads become aged you’ll notice that more franchise fees have been instituted over the last couple of decades so that’s one characteristic that you’ll notice of this map. The other thing you’ll notice is that all of our neighbors, and I’ll try to point this out right here, currently do have a franchise fee. Shorewood just recently instituted their’s. Shakopee, Eden Prairie, Chaska, Victoria, Minnetonka all have franchise fees in place. To the right you’ll see what a list of some communities use their franchise fee to fund. You’ll notice some cities use it to directly offset some of their costs in their general fund but by far the most common practice is to use a franchise fee to help pay for road improvements and the majority of cities do exactly that. So then the question becomes why would you use a franchise fee over a property tax levy to help pay for roads? And I think there’s one simple answer and that is a franchise fee is much more flexible than a property tax levy and I’ll try to explain this as simply as possible but essentially the City of Chanhassen is made up of just over 80 percent of it’s total taxable market value is made up of residential properties. The other 20 percent is commercial industrial properties. So City Council Special Meeting – August 20, 2018 12 every time the City issues a property tax levy in essence 80 center of every dollar is being paid for by a home. A resident in Chanhassen. Mayor Laufenburger: By the collective residents. Greg Sticha: By the collective residents. 20 cents is being paid for by commercial industrial property owners. A franchise fee is different in that you can set up a franchise fee to collect from whatever property type owners that you want to collect from. For example utility companies have roughly 4 different utility meter types that they have on their bills so if a local jurisdiction wanted to they could collect more or less from a residential property than they could from a commercial property and likewise the same on commercial properties. They could collect more or less if they wanted to structure it in a way that collected more of the total franchise fee from commercial properties versus residential properties and in some of our initial discussions we had discussed the possibility of implementing a franchise fee that would get the total cost of all streets to approximately a 50/50 cost split basis and that is by far the largest advantage of a franchise fee. A property tax levy we can’t do that. Mayor Laufenburger: Who determines the, you said the 80/20. Is that outside of our, outside of this council’s control? Greg Sticha: In theory yes. It’s based on the total taxable market value of all properties within Chanhassen so. Mayor Laufenburger: But that’s a formula you said. Greg Sticha: Yes. Mayor Laufenburger: Who determines that formula? Greg Sticha: The State of Minnesota in large part determines, largest part determines that formula. Mayor Laufenburger: So legislation, et cetera. So what you’re saying is the City Council cannot alter that 80/20 balance in property tax. If it’s related to property tax, property tax levy, whatever it is we can’t, we in Chanhassen can’t alter that. Greg Sticha: No we could not. Mayor Laufenburger: By what authority can we shift the balance in franchise fee? Who gives us that authority? Greg Sticha: The State Statutes give you that authority. City Council Special Meeting – August 20, 2018 13 Mayor Laufenburger: Okay so the State Statute says you can’t touch the property tax formula. You can do your own franchise formula. Greg Sticha: Yep. Mayor Laufenburger: Okay. That make sense. Greg Sticha: So why would a franchise fee make more sense in some instances than a property tax levy increase and some of these numbers are based on a very, one very simple I guess you could say sample run that we did. This by no means means that the City Council is looking at this dollar amount in particular for setting a franchise fee or property tax levy increase. This was one very, very simple process that we went through to get to some approximate amounts. Now this has a number of variables that impact each of whether you would institute a franchise fee or property tax levy and we’re going to get into those variables here in a little bit but the assumptions behind this particular scenario is keeping the assessment, the revolving assessment construction fund funded for about 12 years and there are two different scenarios up there. One which keeps the assessment practice in place and one which does not. So if, the other assumption that is used in this particular scenario is if you were going to use a franchise fee attempting to collect 50 percent of the total cost of all road improvements from residential properties and 50 percent from commercial industrial properties. So those are some of the assumptions that were used when we put this one particular scenario together. Under this particular scenario you would need about a franchise fee, and we’re going to get into it in just a minute here but of about $4 to $6 dollars per month and that depends on in part if you would keep the assessment practice in place or roughly $100 to $120 per year. Under the exact same funding scenario with the exact same assumptions, if you were to use a property tax levy instead of a franchise fee the impact on the average home would be closer to $200 to $220 and even higher if you eliminated the assessment practice. Mayor Laufenburger: Okay so once again this reflects the levy is roughly 80 percent property tax comes from residents and the light blue is franchise fee and the scenario you’re painting is 50 percent coming from residential properties. 50 percent coming from commercial properties. Greg Sticha: Right. The scenario also has one other assumption I forgot to mention. It keeps the current $384,000 levy that is in place in place. Mayor Laufenburger: Okay. Greg Sticha: So a lot of variables and assumptions used in this one particular scenario. So how does that impact the commercial property? A commercial property which would have what’s considered a medium size meter would see about a $360 a year franchise fee based on a bill of about $3,000 a month in electric or gas consumption. So each meter will vary for commercial properties and it’s based on the meter type that is in at each commercial property. For an example if you are a hair salon and have a very small, light to small commercial meter you could City Council Special Meeting – August 20, 2018 14 structure the franchise fee that would keep that bill at a same or similar percentage as to the same percentage on a let’s say a large manufacturing company in the city of Chanhassen would pay a much higher dollar amount. Again if you went with the principle that you wanted to attempt to keep between commercial properties paying the same percentage of the total bill as a franchise fee. So the meetings we’ve had to date. February, April and July and then this evening we’re here to take input from council. Frequently asked questions we’ve gotten so far and these are just a list of some of the questions we’ve gotten to date. These are not by any means all the questions we’ve received but is a franchise fee a tax and we’ve been very clear that yes. It has the same attributes as a tax. Same impact as a tax. But the State Statute surrounding what it is called on a utility bill is it has to be called a franchise fee and I don’t think anybody at least on city staff has said anything other than that we understand that it has the same impact as a tax. Mayor Laufenburger: Mr. Sticha. I’m not a tax attorney or an accountant but there are different implications on how people can report or claim a tax versus a franchise fee. Can we just acknowledge that? Greg Sticha: Sure. Mayor Laufenburger: Yeah so I, we understand that but from our standpoint it’s a source of revenue from the citizens and businesses in the community of Chanhassen. Okay. Greg Sticha: Yep. Why should a resident pay the same per month as a commercial business who might have more frontage to streets and heavier or more damaging vehicles and I answered that in two slides previous. Under most scenarios, depending on how the council set up the franchise fee, if they were to choose a franchise fee, they would not. More than likely the fixed dollar amount of a franchise fee would be much smaller than what a fixed dollar franchise fee would be for a light commercial user, a medium commercial user or a heavy industrial commercial user. Again you could structure it to be based on a percentage of the bill but it still could be a fixed dollar but so that you had some equity between commercial businesses but had a different fixed dollar amount for residential properties. Under these scenarios, we talked about it a $4 to $6 per month franchise fee would be about in the ballpark and a $10 to $280 per month for commercial utility accounts with the $10 being closer to a light commercial user with a light utility meter. And the $280 dollar amount per month per utility being for a heavy industrial electric or gas meter within the city. Will the franchise fee increase over time? If the City Council were to set a franchise fee, a fixed franchise fee we don’t believe we would need to for approximately 12 to 15 years based on the assumptions we used previously 4 slides ago. So under those scenarios we would not need to increase the franchise fee over that period of time. Obviously some of the outputs coming out of the revolving assessment construction fund will impact which includes construction costs over time and we’ll get into some of those variables here just in a couple slides but based on some of our very simple scenarios that we’ve run you would not need to increase it at least within that timeframe. Can the franchise fee be used for other purposes? Well the statutes allow for the use of franchise fee revenues for pretty much any funding purpose. I believe to this point in time it’s been City Council’s intention to use it solely City Council Special Meeting – August 20, 2018 15 for pavement management. Now whether or not you chose a franchise fee or a property tax levy to be instituted at the beginning for roads, any future city council can change that decision. And it does not matter if it’s a franchise fee or property tax levy and there is no, and we’ve checked with our attorneys. There is no way for a current city council to bind a future city council as to how a funding source can be used. Mayor Laufenburger: So in reality this is determined every year at budget time, is that correct? Greg Sticha: Unless staff got direction from the City Council the, a franchise fee would stay in place unless we received. Mayor Laufenburger: But to the question can it be used for other purposes? Greg Sticha: Oh yes. Yes. So again unless staff got direction from the City Council. Mayor Laufenburger: It will be used for pavement management only. Greg Sticha: Right. Mayor Laufenburger: Okay. Greg Sticha: Are there other options to pay for roads such as a sales tax, wheelage tax or a utility fee similar to how the City’s water and sewer funds operate? A wheelage tax is not allowed per state law for cities. Those are only allowed for counties and Carver County does have one of those. A street reconstruction utility fee. There were a couple communities that have those and they just recently were challenged to the Supreme Court and the cities lost so that is also not an option that would be available to help pay for roads. A sales tax would be allowed per state law but you need special legislation approval on any sales tax and currently the only special sales taxes that have been made available by the legislature have been for stadiums, park and rec amenities, convention centers, community centers. So I think a sales tax for a local road improvement fund, the likelihood of getting legislative approval for that is probably pretty bleak. So I’ve been talking all night about, so what are all the variables that go into this and how did you come up with $4? I mean how does that make sense? And there are a lot of them and so I’ve listed the most significant ones here on this slide and I’ll do my best to explain them in as simple a way as possible and we still, they’re probably going to have some questions about them but one of the first questions that needs to be answered is, is it the goal of this council to maintain a PCI of at or near 70? If a targeted goal of something less than 70 was wanted that would have an impact on the funding and we could run those numbers in Paul’s pavement management program and it might, in those scenarios it wouldn’t be $3.3 million that we talked about previously. Will the assessment practice continue? And if the answer is yes will it remain at a 60/40 cost share? This probably has the biggest impact on what any franchise fee or property tax levy would be. Obviously when 40 percent of your funding is the assessment, if you eliminate that funding source it’s going to have a significant impact on what you would need City Council Special Meeting – August 20, 2018 16 to collect in another revenue stream, whether that be a franchise fee or a property tax levy. If the assessment practice is discontinued will there be some consideration of rebate for those recently assessed? A question that we got commonly asked at a number of our neighborhood meetings and we’ve included the comments in your packet this evening. Again this would have an impact on if dollars were to be used to pay for some type of rebate this would have again a significant impact on what you may need to charge in a property tax levy or a franchise fee. What is, how long does the City Council want to keep the revolving assessment construction fund with an estimated positive fund balance before re-evaluating the revenue streams? The very simple scenario we ran earlier on the previous slide again was based on about keeping the fund positive for 12 years. We ran other scenarios where we keep the fund positive for 20 years. Is it 15 years? Is it 10 years? Is it 25 years? Whatever the goal of the council is to keep that fund positive without any changes to the revenue streams we would need to know that target goal, whatever that might be. Will the current levy of $384,000 remain in place for street improvements or does a reduced or larger levy want to be considered? I missed number 5. What is the goal of the City Council to fund the total cost of all street improvements between commercial and residential properties? As we said earlier with a franchise fee you have the option to set that where you would like to attempt to do. With a property tax levy you would not have that option. So all of those variables would have an impact on whatever the final answer may or may not be on a franchise fee or a property tax levy. Some of the other estimates that are included in all of our calculations include the current assessment interest rate of 5.75 percent. 2 percent interest earned on the revolving assessment construction fund and 3 percent increase in construction costs. Change any of these variables and the output of what you might need in terms of a revenue stream changes. So I just wanted to reiterate how complicated this discussion actually is and all the things that impact what might the needs be going forward. So one of the things we’ve talked about and we’ve heard at the meetings we’ve had to this point is the assessment practice and probably the most commonly asked question and commented thing is you know the City’s current assessment practice and what we wanted to put on here were some advantages for keeping it and advantages for the potential of eliminating the current assessment practice and we’ve put together a small list of what we believe are some of those advantages. The advantage for keeping the current assessment practice, it allows for diversified revenue streams within the road construction fund. It’s consistent and equitable between previous projects. And if a rebate program were to be considered it could result in some equity and administrative challenges and we can get into those later but if you kept the, if you eliminate the assessment practice and instituted a rebate, that would be a complicated discussion. Advantages for eliminating the current assessment practice. Creates a better relationship, working relationship between the City and it’s residents on new projects. There isn’t as much animosity when it comes to well I don’t want my street assessed because I don’t want to pay a $7,000 assessment and it becomes more of a, it’s just your turn rather than having that discourse over the public with why this year or why my street. Administratively it’s much less time consuming and more efficient process. To this point we’ve assessed fewer properties and as, if you continue the assessment practice and more streets get redone each year, that’s more assessment rolls that will be going to the County. That’s more public hearings. Public meetings and it’s much more time consuming of a process having that assessment practice in place than versus not having that. City Council Special Meeting – August 20, 2018 17 And then in some cases the elimination of a perceived double taxation. Some believe that if you’re assessing my property as well as you have a franchise fee, some people are, believe that that is you’re hitting me twice for the same thing which is true but the funding sources that are going towards those roads are using to pay the city share and not the residential share of each improvement project. Mayor Laufenburger: Mr. Sticha I’m going to ask you to skip that last slide. I think the council’s anxious to hear from the public and we’re prepared to hear whatever it is that they have to say tonight so council do you have any questions or clarifications from, go ahead Dan. Councilman Campion: On slide 12 you showed, I’ll let you get there first. Sorry, forward. It was where you had the franchise fee versus the levy. There. So the assumption here is that the current assessment practice is still in place? Greg Sticha: That would be correct. Councilman Campion: Okay I just wanted to validate that. Mayor Laufenburger: Go ahead, please. Councilwoman Tjornhom: One thing that’s kind of perplexing to me so maybe you can explain it to all of us. In 2017 the County passed a transit sales tax and in your presentation you noted that as a city we are not allowed to have a wheelage tax or a gas tax but the County is allowed to pass that onto us when we go fill up our tank and get our tabs and as Chanhassen is one of the largest cities in Carver County that probably spends a lot of money on our gas and our tabs and our wheels and everything else, how much of that money do we really see coming back into Chanhassen and you know what kind of options do we have as a council to go to the county and say listen, you know we need more of that money. We want more of that pie. Greg Sticha: I’ll let Mr. Gerhardt answer the second part to this question. In terms of the make- up of that tax we’ve done some initial calculations on that and approximately 55 to 60 percent of the funds is coming from within Chanhassen, whether that’s from sales tax collected within Chanhassen businesses or whatever the case may be, that’s approximately the amount of funds that would be coming from the City of Chanhassen. In terms of what the County’s intention is for those funds I’ll let Mr. Gerhardt or Mr. Oehme talk about that a little more. Todd Gerhardt: Mayor, City Council members, similar to the City of Chanhassen we have a capital replacement program for our streets and Carver County has one also for their county roads and right now they only account for a mill and overlay on Galpin Boulevard north of Highway 5. There is some money in for Lyman but that is part of a joint agreement we have with Carver County and different sources of money than the wheelage or sales tax that was mentioned earlier so right now the only money out there is about $800,000 that would come to Chanhassen for mill and overlay on Galpin. And staff and City Council directed staff to request City Council Special Meeting – August 20, 2018 18 that additional money be spent in upgrading Galpin to a fuller urban section road with trails on both sides. What we would call a super two. Right turn lanes. Left turn lanes. Along with one through street on each side going north and south so, and that would change that percentage closer to I think $5 to $7 million dollars. Mayor Laufenburger: The final answers to your question Councilmember Tjornhom is that the people who determine how that sales tax is used throughout the county are the county board so they’re the ones that are determining that and anybody can see what projects are priorities for the county at the county website so, but you know I made a calculation myself. I think from a sales tax standpoint Chanhassen contributes about $2 million dollars a year to that sales tax and wheelage tax fund so. Any other questions? With that I’m anxious to hear from the public. Again I ask that if you have a comment you would like to make to the City Council speaking to what you’ve heard about this before, if you have questions I’m going to accumulate some of those questions and then answer them as we get a group of them so this is your time to present to the council your views on what you’ve heard not only this evening but also what you read in the paper. What you’ve been at, heard from various public sessions. Maybe over coffee or responses you got from council members and remember we as a council we’ve heard from many of you already but we’re anxious to hear from you in person so who would like to break the seal on the public comment? Mr. Titus, please. State your name and address please. Mack Titus: Mack Titus, 2747 Century Trail, Chanhassen. There is already a transit improvement tax on my utility bill here. The Xcel bill so I called and spoke with Xcel and spoke with Tyler who told me that 2005 legislations enacted at the State level which allowed counties to enact legislation which would permit municipalities within those counties to utilize or to place a tax on their, on the utility bills and it started with Anoka, Dakota, Hennepin, Ramsey and Washington. Carver apparently passed legislation last September which allowed the use of a franchise fee is my understanding. The guy I talked to Tyler thought this only allowed municipalities within a county to impose a utility or a transit tax but I’ve already got that line item so based on the comments I’ve heard here maybe that the county can do this as well and that’s what I’m seeing here. Do you know if that’s, my assumption is correct? Mayor Laufenburger: I’m not familiar with that term Mr. Titus but I would say that to date, today the City of Chanhassen is seeing nothing of that transit improvement tax. It’s not, none of that is rolling into Chanhassen for our street improvement so I can’t speak to what that is. Mr. Gerhardt could you look into that please or are you familiar with that at all? Todd Gerhardt: The only thing I can think of is a part of the sales tax on your gas and electric that would go back to the County. Mack Titus: No this says transit improvement tax. Mayor Laufenburger: There are, now is this on your Xcel bill? City Council Special Meeting – August 20, 2018 19 Mack Titus: Yes. Mayor Laufenburger: Okay. We’ll look into that but none of that money is coming to Chanhassen let me assure you. Transit suggests perhaps it’s, it has to do with bus transit. Could be rail transit. Could be any of a number of things but transit does not do anything to repair or improve our streets and roads in Chanhassen. Mack Titus: Okay. Mayor Laufenburger: But we’ll look into that. Did you have other comments? Mack Titus: One other question. Mayor Laufenburger: Go ahead. Mack Titus: Am I, if the franchise fee is enacted here then the pavement management program will be totally funded by the franchise fee and that chunk of dollars will stop coming out of my property tax money? Mayor Laufenburger: That’s one consideration Mr. Titus. Franchise fee is considered one of the potential sources of revenue to fund street repair over the coming years. Mack Titus: Okay. Mayor Laufenburger: It doesn’t mean anything will be eliminated. That will be up for the council to decide but is one of the funding sources. Mack Titus: Thank you. Mayor Laufenburger: Okay, thank you Mr. Titus. Anybody else? Tom Rolland: One thing that. Mayor Laufenburger: State your name and address please. Tom Rolland: Tom and Roseanne Rolland, 6211 Greenbriar. Are levies, are tax levies and assessments are they two different things? And they’re both used for road improvements. Todd Gerhardt: Can be. Tom Rolland: And what this gentleman here just mentioned that when people took the 10 year plan. City Council Special Meeting – August 20, 2018 20 Mayor Laufenburger: With 10 year repayment plan? Roseanne Rolland: Yeah. Tom Rolland: Paying for the assessment yep. Which were kind of discouraged because they said it’s going to be a 5 percent interest so I paid it all upfront. Now if they do away with the people who took the 10 year plan, they’re coming out pretty good and I’m getting shafted. Roseanne Rolland: Do we get a reimbursement for that money? Mayor Laufenburger: So what you’re saying is, when was your street repaired Tom, and Roseanne is that right? Roseanne Rolland: Yes. Mayor Laufenburger: When was your street repaired? Tom Rolland: It was 2000, we were assessed in 2012 so it’s been about 6 years that we’ve, you know that people who have paid on time have been paying but I paid it all in lump so I wouldn’t. Mayor Laufenburger: So you would avoid that 5.75 percent interest. Roseanne Rolland: Right. Tom Rolland: Interest so I take money out of my retirement fund to pay us off and now I’m going to have to pay it twice. The other thing is that in your thing here you’re really concerned about administrative challenges but it doesn’t seem like you’re real concerned over. Roseanne Rolland: Reimbursement. Tom Rolland: Paying the residents. Roseanne Rolland: There couldn’t be that many people that paid up front so I can’t see what a big challenge that would be. You added it onto these people’s property taxes and they must have been a lot more than what people that paid up front so I don’t see what kind of a challenge that would be. Tom Rolland: What is the percentage do you know of people that paid? Mayor Laufenburger: Mr. Sticha do you know what percent pay up front their assessment versus have it on their property tax bill? City Council Special Meeting – August 20, 2018 21 Greg Sticha: It varies from year to year and depends in large part on the size of the project but typically about 20 percent. Mayor Laufenburger: Pay up front? Greg Sticha: Pay up front. Mayor Laufenburger: So 80 percent choose to finance on their County. And in fact the County collects that money and they pay us is that correct? Greg Sticha: Correct. Mayor Laufenburger: So the County acts as an agent through the property tax statement to make that assessment. So are you in favor of a franchise fee? Tom Rolland: No. Well I’m saying our taxes go up every year anyway. I mean my property I don’t has been, a very few years that it never stays the same so I’m paying more taxes there and now if you come up with another franchise fee, which I feel I’ve already paid for, then I’m going to be, just going to be, I’m going to be taxed right out of the county because it’s, they don’t take into consideration people who, you know are retired here and living on fixed income. I don’t know how many, what the percentage of those are in the county or in the city either but these are things that concern me. The other thing that he had mentioned at one of the other meetings which I would probably, I mean if you need more money obviously you need more money would be that if you didn’t have the complete franchise fee and people were still assessed, at least a portion of it I would feel that I would be less taken advantage of than just erasing their debt while I’ve already paid it. Mayor Laufenburger: I understand that Tom. Tom Rolland: And I know there’s other people that feel the same and I guess if I would, if I would have known this before I would have taken the payment plan. Roseanne Rolland: Yeah. Tom Rolland: This is a deal… Roseanne Rolland: Yeah we could pay, we could pay the money that we would have coming back to us, if you pass this. Mayor Laufenburger: Yeah I would just like to clarify one thing. I’m not saying that the City’s going to do this but when we assess for street repair it’s a bill. Roseanne Rolland: Yeah and we paid it up front. City Council Special Meeting – August 20, 2018 22 Mayor Laufenburger: I understand. It’s a bill. Some people choose to pay it up front, just like some people pay their credit card off every month so they have no debt. Those people that chose to pay over a period of time still have to pay their bill. It’s not like we’re, oh we’re going to change the program and those of you that have only paid 5 years on a 10 year assessment, you’re clear on the other 5. That’s not been determined yet. Tom Rolland: Yeah but that’s a possibility. Roseanne Rolland: Yeah, yeah. Yeah and are we going to find out if that’s a possibility? Mayor Laufenburger: Everything is a possibility. Tom Rolland: That’s what I see as, that’s basically my understanding is that they’re just going to erase that debt because these people are paying the monthly thing too so they would feel why should I pay twice. Roseanne Rolland: Yeah. Mayor Laufenburger: Well let’s clarify one thing. The they that you’re talking about is the 5 of us right here. It’s us. You know it’s not anybody else. We’re tasked with the responsibility of funding the street repair in this community and we have to figure out how to get that revenue. How to find the dollars to pay for that street repair so I appreciate and I understand your comments about the assessment. I understand that. Councilmembers any thoughts? Mr. Gerhardt? Todd Gerhardt: Mayor, council. I think Mr. Sticha talked about kind of the rebate that you’re talking about. Giving some of that money back. The $3.3 million needed to fund the current proposed expansion to our roads, we would need more than the $3.3 if you’re going to give a rebate is what Greg was saying. So the $3.3, you’re going to have to ask for, you’re going to have to get more money if you’re going to start to give rebates back so I don’t think that is a direction that staff would recommend to the council to go. We’re trying to keep the cost down. Tom Rolland: Well that’s why, which was suggested at one of the meetings is that if you do the franchise fee but less franchise fee and keep the assessment, maybe a less assessment. Todd Gerhardt: Right. Tom Rolland: I think it would be more fair all the way around. Todd Gerhardt: Right. Tom Rolland: And right in here you’re talking about. City Council Special Meeting – August 20, 2018 23 Mayor Laufenburger: That’s a good suggestion Tom. Tom Rolland: You’re talking about a better relationship with the city and it’s residents, well here’s one resident that wouldn’t be too happy if. Todd Gerhardt: We got that feedback and we shared it with the Mayor and council. Tom Rolland: But I could live with, like I say I wouldn’t necessarily love it but I could live with that. Todd Gerhardt: Yeah. Tom Rolland: Put it that way. Todd Gerhardt: We shared that with the Mayor and the council and, but it was an option that was on the table. We shared that with the council. They wanted to hear every option that was out there and somebody suggested the rebate so we shared it with them. Tom Rolland: Yeah like I say I can see where that would be a real, a real problem. Todd Gerhardt: Yes it is. Tom Rolland: But not my problem. Mayor Laufenburger: Okay before you go, Mr. McDonald. Councilman McDonald: Yeah I think this is kind of confusing. You bring up a good point. The baseline proposal that Mr. Sticha has proposed does not give back a rebate. It continues with the current plan. We’re only looking at we’ve got to fill in this gap. Where’s that money going to come from and that’s what his presentation is based on. That’s the baseline. You know he mentioned these other options. We could do those. You know we asked to look at you know should we just redo the whole plan, the way that we currently do it and what’s that going to cost and how difficult is it going to be implement? It’s an option but the baseline is to continue as it is and to just find a gap, a filler for the current funding gap that we’re going to be facing so that’s the baseline. That’s what we’re really looking at. Anything else would be a totally different discussion because at that point all these numbers change. Roseanne Rolland: So in other words we’re not going to get our money back? Is that what you’re saying? Councilman McDonald: Well under the current baseline. City Council Special Meeting – August 20, 2018 24 Roseanne Rolland: Yeah, well okay. Mayor Laufenburger: Here’s the simple truth. We need more money to repair the streets. The question is what does the council decide on where that money comes from and there’s options. Assessment practice. Property levy. Franchise fee and all of them have pros and cons. That’s one of the reasons why we asked for this meeting tonight so we could hear from you all to get your feedback. That’s the purpose of tonight. Tom Rolland: And that’s the other thing is that from the letters and the meetings, I’ve attended at least two of the other meetings and the last one got franchise fee has been everywhere from $3.50 up to $12, somewhere in this window so that seems a little gray shall we say. Mayor Laufenburger: Well there are different variables that are a part of those different calculations. Thank you Tom very much. Dan. Councilman Campion: Mr. Mayor one point I just wanted to make. This is just off of what Mister, or Councilman McDonald was saying. So the baseline plan, but it’s not even a plan or proposal. It’s just a baseline example that Mr. Sticha is giving here so this is simply how to deal with the 40 percent. The City’s portion of the extra pavement management expense. Sorry the 60 percent over the next 10 years right. Now if we look at the miles of road that would need to be repaired over the next 10 years, what was the estimate there Mr. Oehme? That’s 40 to 60 percent of the residents would likely be assessed on top of, you know extra portion that’s going to, would have to be paid by, you know to make up the City portion. Mayor Laufenburger: The dollars are $2.2 million or, $2 million or $3.3. How do we come up with $1.3 million dollars to repair the streets in order to keep the index at 70? That’s the real problem. Councilman Campion: My point was just that the assessed properties would be paying their assessment on top of this additional property tax or franchise fee. Greg Sticha: Under this one very simple scenario. Councilman Campion: Yes, yes. Yes under this one example. Mayor Laufenburger: Exactly. Can we hear from somebody else? Please. State your name and address please. Jay Schreur: My name is Jay Schreur. I live at 8376 Suffolk Drive and our neighborhood is all townhomes and the street that goes north and south and east and west is a private road. We maintain that through our association. Mayor Laufenburger: So you’re talking about Suffolk Drive is a private road? City Council Special Meeting – August 20, 2018 25 Jay Schreur: Yes. Mayor Laufenburger: Is there another one there too? Jay Schreur: Yeah Essex. Mayor Laufenburger: Essex okay. Jay Schreur: Yep, yep. And my question is we’re paying to maintain this road plus if we get this assessment it’s like double taxation. Mayor Laufenburger: Well let’s just clarify some words Jay. Jay Schreur: Yes. Because we said earlier that this was the same as a tax. Mayor Laufenburger: Well when you repair your streets, Suffolk and Essex, does the City repair those streets Mr. Oehme? Todd Gerhardt: No. Mayor Laufenburger: Those are private, okay. So you are not assessed for those roads because, because the City does not repair those. Jay Schreur: No but we are assessed through our association. Mayor Laufenburger: Correct but the City general fund pavement management program does not see any of those dollars. Jay Schreur: No, no, no, no. I know that. So I guess what could be done is we could, I don’t like to pay a double tax but if we could get a lesser tax because we maintain our own road or else have the City maintain the road that we live on. Either one of those. And I hope they would take this under consideration too so we’re not paying double. That’s the main thing. Make sense? Mayor Laufenburger: I understand what you’re saying. Jay Schreur: Alright, thank you. Mayor Laufenburger: Thank you Mr. Schreur. Charles Littfin: Good evening. My name is Charles Littfin. I live at 7609 Laredo Drive. Right across from the elementary school. We had our road done oh I don’t know, 10 years or so ago and we paid well over 6 grand. The problem we had with that project was all the businesses, the City Council Special Meeting – August 20, 2018 26 school, fire department, post office, and a few other places on that road were assessed at a much lesser level than the residents. They were assessed by the foot because they felt, the meaning was well some of the businesses have corner lots and we don’t think it’s right that they should be assessed less. Or more I should say. The school was hardly assessed anything. Fire department. Post office which is owned by somebody out of state. Private party. Being I paid up front, if you go through with this franchise fee I will be paying an assessment on the road that gets used by everybody in this city. Not just residents. But I will also be paying for this road again and other roads that I don’t use frankly. Now what I say you should do is people that have been assessed already shouldn’t have to pay the franchise fee until their assessment has been paid back. So go back how many years until I’ve been reimbursed this 6 grand. That’s the way I look at it. We went round and round with this street project with the previous administration. They did nothing for us. We pleaded our case about this whole thing when it was all going down. Mayor Laufenburger: You said, when was the street repaired Mr. Littfin? Charles Littfin: I don’t know. 10 years ago roughly. Mayor Laufenburger: Alright. Charles Littfin: Roughly. And this street’s already been in bad shape already. It’s already been, had a gravel overlay on it. Right in front of my house I have two industrial garbage trucks every morning and when school’s in I have an 18 wheeler every morning going up to the school. And the fire department. So something needs to be done. The franchise fee is, if I get reimbursed or exempt for my 6 grand I’m all for it because you should be fair. I tried to tell that to the City Council years ago. Why is it the residents on this street that are paying for this street that everybody uses? Granted everybody can use every road but that road especially. I tried to get it converted over to a commercial road because of the use that’s on it. Paul Oehme told me all the roads are commercial. Un-un, because I talked to the project manager. He said nope, this stretch right here is done heavier than everything else. I even went to the Carver County on commercial streets and they nope, nothing you can do. You’ve still got to pay the same. So anyways I think the franchise fee is okay. It evens the playing field as long as I don’t have to pay it until the 6 grand is reimbursed to me. That would be the only fair thing to do for people that have been assessed already. That have paid their dues. Mayor Laufenburger: Okay thank you Mr. Littfin. Charles Littfin: You’re welcome. Thank you for listening to me. David Peck: Good evening Mr. Mayor, my name is David Peck, 1521 Lake Susan Hills Drive and I’m mainly concerned about equitability. I’m one of the 20 percent who paid my assessment up front. We had Lake Susan Hills Drive done last year. And as I understand it what we’re talking about is filling the gap between the current system and if that’s the case I think the franchise, these are just my opinions obviously. I think the franchise fee makes sense because it City Council Special Meeting – August 20, 2018 27 spreads a little more fairly between residents and commercial business and the one thing I would ask you not to do is to roll back the process of the rolling assessment. While nobody likes it I think it’s the fairest way. I believe streets should be fixed. Everybody’s got to pay for them. I’m good with that. I just don’t want to be the sucker who paid my bill and then have the rolling assessment discontinued for other people in the future or for people like these gentlemen who have already paid it years past. If it’s just a matter of, if all these are based on the status quo of the rolling assessment and the franchise fee and the property levy, if I’ve got that correct, then I agree with the franchise fee because it splits it a little more evenly to the homeowners because the rates are going up regardless and it’s a smaller increase by and large for most of us. But I do not want to see the rolling assessment rolled back because that just seems to make it unequitable for everybody who’s like he said, played by the rules over the past number of years so I think if the system is kept in place and we use a franchise fee I’m good with that but I do not want to see my good intentions of paying my bills on time or people who are paying on a regular basis get thrown out the window. I don’t even know if this is even a viable possibility that you’re going to remove the rolling assessment but if that’s a consideration I would ask you not to consider that because I think that’s patently unfair to the rest of us who have been doing what we’ve been doing. Mayor Laufenburger: Alright. Well thank you. David Peck: That’s pretty much it, thank you. Mayor Laufenburger: Thank you very much David. Okay. Randy Raddatz: Good evening, I’m Randy Raddatz. We live at 6340 Elm Tree Avenue. I guess my first comment would be that there, I believe there’s a schedule that isn’t in here that was at the previous meetings and it talked about the savings that would occur with franchise fees versus special assessments over 60 years to which I would say well why didn’t the people back in 1958 think about this because that was 60 years ago. My point is you can’t project forward 60 years and determine what the needs are going to be at that point. You, you’re lucky if you can project 10 years out and the reason for that is two fold. One, we don’t know what costs are going to be. Maybe we assume 3 percent increases. Maybe we’ll find that product that’s going to last us 40- 50 years. Flip side, maybe in 50-60 years we’re not going to need streets. We don’t know. We don’t know what the transportation mode will be. Where I’m going with this is I’m concerned about pre-paying for something that may or may not be needed in the future and that is in effect what a franchise fee does. It saves money, if you can call it saves money versus special assessments in two ways. Well there are two ways that are given as examples. One is the interest carrying cost. You collect the money up front. You have the money rather than getting it on the back end. Well that’s great except if you’re a taxpayer. Now that’s money out of your pocket that the City is hold that you don’t get to invest. You don’t get to pay down your debts. You don’t get to put into your savings account. So the City’s got the money. Residents don’t. The second issue, and I’ve heard this one over and over and I brought up the question at the last meeting is what about these commercial properties that don’t pay taxes currently and the answer City Council Special Meeting – August 20, 2018 28 was well like schools for example. We would collect from them. Well that’s great except then my school taxes increase so it doesn’t really matter how it comes out of my pocket, it still comes out of my pocket. This is not a situation of saving money by charging another taxable, or another taxing entity. Let’s see what else did I have? Oh the comment was made in here that it’s the City Council’s intention to use it solely for the pavement management program. Again collecting it up front the intention is to use it for this. There’s no guarantee. The argument is well you can do the same thing with the property tax assessment program. Well it’s a little tougher to do that because you’re collecting that after the work is completed so at least the residents would have an argument for hey you use this for something else and I’ll give you an example. We can argue whether it’s right or wrong but the surplus, what was the original intent of the surplus? We don’t know but it was used to reduce special assessments. City diverted funds, maybe a good thing but the point is future city councils make decisions that current city councils may or may not agree with and that is a big concern of mine. I just get very concerned about the original intent because a future city council can change it. They can use it for whatever they want. They can increase the fee. We anticipate no fee increase for the next 10 to 15 years unless it changes. Then there’s an increase. I’m not a big believer in intent and especially I’m sorry when it comes to government I’m a huge disbeliever in intent because money has a way of getting spent. I guess to sum it up I would rather keep my money. If it comes down to me paying more via a special assessment at the end and I use that word if, that’s the route I’d rather go because I’d rather have the money in my pocket knowing what it was spent for than give it to the City and hear you say trust me. We’ll use it for this purpose in the future. Mayor Laufenburger: So can I ask a question Mr. Raddatz? Randy Raddatz: Thank you, sure. Mayor Laufenburger: So I’m trying to understand what you’re saying and I think what you’re saying is that if we were to change the assessment practice from 40 percent to the benefitting property owner and 60 percent to the remaining City you would be in favor of increasing the amount that the property owner pays. Randy Raddatz: Yes I would. Mayor Laufenburger: To like maybe 60 or 70 percent of the work and 30 percent to the rest of the City. Randy Raddatz: Because the cost is the same either way. We can argue whether or not we want to maintain a 70 or a 60 or a 45 or whatever, but it has to be paid for one way or the other. Mayor Laufenburger: Right and if the, I think Mr. Oehme has made it clear that we don’t perceive that the anticipated cost is the same. We perceive that the anticipated cost is going to be like $1.3 million dollars a year more than what we’ve been practicing in the past. City Council Special Meeting – August 20, 2018 29 Randy Raddatz: The cost will but the mechanism for funding, it still has to cover the cost. Mayor Laufenburger: Absolutely. Randy Raddatz: Okay. Mayor Laufenburger: And that’s the question that council has to address. Randy Raddatz: Yeah and for that reason I’m very much, based on what I’ve heard in the meetings that I’ve attended and this evening I’m very much opposed to the franchise fee. Mayor Laufenburger: Okay, okay. Thank you Mr. Raddatz. Randy Raddatz: Thank you. Mayor Laufenburger: Mr. Sticha I have a question. Mr. Raddatz raises a question regarding how monies can be used. He mentioned the surplus which is the revenue exceeding expenses that we see on a yearly basis. Are there any restrictions on how either the franchise fee can be used or the surplus can be used? For example if we found that our water enterprise fund was short of funds can we transfer, does the State Statue allow us to transfer general fund dollars, property tax levy dollars, can we transfer those to a water bill or to our, to pay for our water plant or water treatment or sewer? Greg Sticha: Yes. Statue would allow you to do that. That would not be following a government best practice where a utility fund is paid for by those using that fund. Mayor Laufenburger: Okay. Greg Sticha: There are some properties in the city of Chanhassen that do not have water and sewer hook up for example so taking property tax dollars and using it for a user based service. Mayor Laufenburger: Not a good practice. Greg Sticha: Not a good practice. Mayor Laufenburger: Okay, alright. How about surplus at the end of the year? Is there, you know we have anywhere from maybe $100,000 or $400,000 or $500,000 because permit revenue you know exceeded anticipation. Is there any restriction on how we use that surplus money? Greg Sticha: No. City Council can direct wherever they would like those funds to go. Mayor Laufenburger: What has been our practice? Recent practice. City Council Special Meeting – August 20, 2018 30 Greg Sticha: In large part the surpluses we’ve had have been directed towards the pavement management program. They did make an exception about 5 years ago to put some of the surplus towards the park picnic shelter program which we are just about complete. All of our neighborhood parks now have a picnic shelter program or picnic shelter within the park. Mayor Laufenburger: Yep the gazebo. Greg Sticha: So but those have been the two that have been used to this point in time. Mayor Laufenburger: Okay, alright. Todd Gerhardt: Mayor? Mayor Laufenburger: Mr. Gerhardt go ahead. Todd Gerhardt: One thing if you go solely with special assessment you have to show benefit and as Mr. Oehme will tell you we do an appraisal every year when we specially assess and the appraiser has to come back in and say this property will benefit by $5,000 worth of road improvements. That that property owner would sell his house and would get that benefit back. Now if you get an assessment of $20,000 and the appraisal shows that the benefit isn’t there that property owner could turn around and sue the City saying I don’t benefit to $20,000 so there is a limit of how much you can specially assess against a property. Mayor Laufenburger: So there’s a test that we have to pass. Todd Gerhardt: Correct. Mayor Laufenburger: Okay, alright. Anybody else? Please. Come on up. Ray Murray: My name’s Ray Murray. I live at 6618 Brenden Court. I just have a couple of things to, I’m a little new in the neighborhood so I don’t understand all of it but. Mayor Laufenburger: Welcome to Chanhassen. Ray Murray: Thank you. But we live on a street that’s a cul-de-sac and the cul-de-sac is, as the other gentleman there said will not use as much as his is really a public street because of the drop off of kids at the junior high school. West junior high school because as a walkway between the street and the school. Mayor Laufenburger: Yep. Ray Murray: So we have 50 to 75, maybe even 100 cars driving through there every day of the school year okay. So that’s wear and tear on our street and so I just want to comment on that. I City Council Special Meeting – August 20, 2018 31 recognize also that allocations are difficult. They’re not always fair to anybody. Whether it’s based on, and I don’t know if the say there was an improvement to that street if it’s based on property value or if it’s on street frontage. Mayor Laufenburger: Actually with the residential properties our practice has been the total of the street repair divided by the number of benefiting property owners so if there’s 20 benefitting properties. Ray Murray: So it’d be equal per owner. Mayor Laufenburger: That’s correct. Ray Murray: Okay, alright. Mayor Laufenburger: Per parcel ID. Ray Murray: Okay, alright. And then I just have a couple questions on the franchise fee. The process and so forth. Obviously that would be paid to the utility companies. Mayor Laufenburger: Right. Ray Murray: Would that be a, or are they just acting as a conduit so we would get dollar for dollar from them? Mayor Laufenburger: My understanding is we get dollar for dollar. Is that correct Mr. Gerhardt? Todd Gerhardt: That’s how it’s supposed to operate but our process is that we would do an audit every 3 years to make sure that the proper amount is paid back to the City. We’ve learned in the past that utility companies have difficulty with math and so we do have an audit that is done. Ray Murray: And would those funds be passed back to us quarterly then and if they’re delayed in any way do we also get interest on those funds which would help the funding of this project? Mayor Laufenburger: We had evidence where our audit has shown that we are owed more than we’ve been paid and we’ve been paid interest as well. Ray Murray: Okay thank you. That’s all I had. Mayor Laufenburger: That’s a good question. Thank you Mr. Murray. Anyone else? Good evening. City Council Special Meeting – August 20, 2018 32 Sue Morgan: Good evening. My name is Sue Morgan. I live at 4031 Kings Road and I have a few questions. This is the first meeting I’ve been to regarding the fees so hopefully it’s not redundant. I just wanted to clarify that the fee is a flat fee. It’s not based on my energy usage at all, is that correct? Greg Sticha: To this point in time we’ve discussed a fixed or flat fee, yes. You could structure it based on a percentage of bill but we have not discussed that to this point in time. Sue Morgan: Okay I think that would be unfair if it was based on usage because you said. Mayor Laufenburger: You said it would be unfair? Sue Morgan: Unfair. Mayor Laufenburger: Unfair okay. Sue Morgan: Because the usage of trails and roads has nothing to do with how much electricity, how much gas I use. There are some of us retired and we are at home. There’s some of us that work from home so our usage would be different than those people that just commute back and forth from Chanhassen to wherever they work. Mayor Laufenburger: How many cars do you have Sue? Sue Morgan: Two. Mayor Laufenburger: Okay. Sue Morgan: Two. Also I was wondering if the fee is going to be influenced by a commercial property being for profit or not for profit. By commercial we just assume it’s profit? For example churches. When there are a lot of parishioners and a lot of road usage will they be charged a fee as well? Greg Sticha: Yes they would. Sue Morgan: Okay. Greg Sticha: Anybody who has a gas or electric meter in their either business or home would be charged the fee. Sue Morgan: Okay. Mayor Laufenburger: And Sue just to clarify. Mr. Sticha I think you said that the utility companies have ranges of meters is that correct? So did you say 4 ranges or 4 groups of meters? City Council Special Meeting – August 20, 2018 33 Greg Sticha: Depending on the utility company yes. Mayor Laufenburger: Okay. Greg Sticha: About 4 different types of meters. Mayor Laufenburger: Okay so in that case the more usage, if somebody is a maximum user of electricity in Chanhassen they would be at the top level meter so they would be assessed a certain level of franchise fee is that correct? Greg Sticha: Our initial discussions have structured it that way but you would not necessarily have to do that. Mayo r Laufenburger: Okay. Sue Morgan: Because that would be based on usage then. If it’s based on the size meter you have then that’s based on usage. Therefore the fee is based on usage. Greg Sticha: In theory yes. Sue Morgan: Okay. Where would I find it on my CenterPoint Energy bill? My Xcel Energy bill? Which bill would it be on? Greg Sticha: It would be on both. It would be, there would be, it would be on your. Sue Morgan: Charge a fee on both? Greg Sticha: Gas and electric correct. That’s one option. Sue Morgan: The same amount? The same amount? Greg Sticha: More than likely yes. The utility companies don’t like when a franchise fee is instituted and you’re actually going to have a very difficult time getting the franchise agreement approved where you would charge one utility company and not another. So they like equality across the entire jurisdiction so. Sue Morgan: So if I’m being charged $4 on CenterPoint Energy I’m also being charged $4 on Xcel Energy? Greg Sticha: And that. City Council Special Meeting – August 20, 2018 34 Mayor Laufenburger: Sue those numbers, in principle what you’re describing is true but those numbers have not been determined yet. Sue Morgan: Right, right. It’s just theoretical. Mayor Laufenburger: Yeah theoretically so if it’s $4 on your CenterPoint, it’s $4 on your Xcel. If you live south of Highway 5 $4 on your CenterPoint, $4 on your Minnesota Valley so it’s, they collect it from you and they pass it along to us. Sue Morgan: Okay. And then my next question would be if, okay so there’s a discrepancy in my utility bill. And maybe these are just detail questions you guys will iron out at some point in time. Do I call the City or do I call Xcel or CenterPoint Energy? Mayor Laufenburger: If you have a discrepancy. Sue Morgan: Based on my fee. My franchise fee. Mayor Laufenburger: Well as Mr. Gerhardt said we would audit this and obviously we would work through with the utility company exactly what it’s supposed to be but if there was a problem on your bill your first call would be to the utility provider. Sue Morgan: Okay. So there’s not going to be, it’s not me. It’s the City. It’s the City. It’s not me. Mayor Laufenburger: I can’t guarantee that Sue. Sue Morgan: Okay. Okay. Mayor Laufenburger: I can’t guarantee that they wouldn’t say hey, call Chanhassen. Sue Morgan: All I’m saying is if you guys decide to do this I hope you have it coordinated and you have it administratively covered so we’re not all dealing with this because that’s usually what happens when you put a middle man in the situation. This happens. Mayor Laufenburger: I agree. Sue Morgan: So that’s my concern. The other is we live on 8 acres. We’ve owned the property for 33 years. Kings Road is a little feeder road. It used to be a dirt road that runs onto Minnewashta Parkway. In ’92 the road was paved and, our road was paved but that’s not the issue I have. Minnewashta Parkway was redone and we don’t have to use Minnewashta Parkway but we use it to get in and out to 7 and 5. We were assessed by the City for 3 fictional properties we could possibly build on our 8 acres. There’s only one house on it. We have two cars. But we were assessed for I don’t know, $750 for each lot. Something like that. We got no big City Council Special Meeting – August 20, 2018 35 retaining walls. We got no fancy fences. It’s just because those 3 lots could factiously be built on. For 33 years they haven’t but we’ve been assessed for those. If this franchise fee goes through are we going to be fee’d for those additional 3 fictitious properties again or are we going to be fee’d based on one house with two cars? Mayor Laufenburger: Well a franchise fee is based on utility usage so unless you have 3 utility meters on those 3 properties I think you’re going to get, you would get one. Sue Morgan: Okay because we only have two cars, one household but we were assessed for 3 that don’t exist so I just want to make sure if we get assessed in 2019 for Minnewashta being done again and then we get levied, we get a franchise fee on top of that, I don’t think that’s quite fair. But if it’s just one household, one set of utilities that’s, I understand that. Mayor Laufenburger: Sue I don’t know the circumstances of 1992 but I believe that our practice is to, if we assess we assess by parcel ID so if there was 3 parcel ID’s in 1992. Sue Morgan: There were not. Mayor Laufenburger: So. Sue Morgan: There were not. There was only one. Todd Gerhardt: Mayor there was, back then if you had the potential of subdividing your property it was based on how many units you would have. Mayor Laufenburger: Okay. Todd Gerhardt: That’s another assessment practice you can use. Sue Morgan: And then I was wondering if we do go ahead with this franchise fee if there’s some way that we can build a little more efficiency in the trail building, road building. Just for example Roundhouse Park, I swear they put in a trail and they ripped it out 2-3 times in order to get it right so you know I’d like to pay the fees but it’d be nice if the efficiency was kind of monitored a little better in how they built things. And then for the future you know it’s kind of like my own budget. If I can’t afford it then I don’t buy it. If we can’t afford to maintain them why continue to build so many trails? I understand roads but you know that was a big push when we first moved out here was we needed more parks. We needed more trails but if we can’t afford to maintain them why do we keep doing it? So that’s just my hope. We think about the future instead of increasing everybody’s taxes to keep up with more and more and more and more why not just cut back and then we wouldn’t have to. So thank you very much for listening. I appreciate it. City Council Special Meeting – August 20, 2018 36 Mayor Laufenburger: Thank you and you said this was the first time you’ve come before the City Council, is that right? Sue Morgan: Oh no, no, no. It’s the first time regarding a franchise fee. Mayor Laufenburger: Oh okay. Sue Morgan: I’ve been here many times. Mayor Laufenburger: I was going to say you speak with a little bit of experience here. Thank you very much Sue. Sue Morgan: Thank you. Mayor Laufenburger: Thank you. Anyone else wishing to address the council? Steve Stamy Slammer: Hi I’m Steve Stamy Slammer from 491 Bighorn Drive. First I’d like to thank the council. I’ve sent several emails and some of you have replied back so I appreciate your time on doing that. A couple quick, I have a lot of questions but a lot of them have already been answered or asked. My question is, when do you think that the council will have a vote on this franchise fee issue? And I also read that if 5 percent of the citizens petition, have a petition that it would go before a general vote on the November election, or on a general election. Is that true? Mayor Laufenburger: I’m not familiar with that statue. Mr. Gerhardt? Steve Stamy Slammer: That’s from, I got that from the State of Minnesota. Greg Sticha: So I can answer that question. Mayor Laufenburger: Please do. Greg Sticha: The State Legislature had a bill in place this past session that would require franchise fees, any new franchise fee agreement to have a reverse referendum as part of all of those new agreements. That bill did not pass. It was not part of the current, or of that session. Mayor Laufenburger: It was proposed, the reverse referendum meaning if a certain number of citizens as Mr. Stamy, is that right? Steve Stamy Slammer: You can call me Slammer Denny. Mayor Laufenburger: Yeah okay. Slammer as he said but that’s not, that’s not legislation. City Council Special Meeting – August 20, 2018 37 Greg Sticha: Not currently in legislation. Mayor Laufenburger: So what you heard was correct. It’s just, it didn’t get all the way through the legislation. Steve Stamy Slammer: I was going back to a 1992 thing from the Minnesota House. That far back, anyways. And then was new construction and new housing taken into the budget in terms of, there’s a lot of new construction going on in the city. Mayor Laufenburger: Correct. You’re talking about right now? Steve Stamy Slammer: Yes. Mayor Laufenburger: Okay. Steve Stamy Slammer: And also proposed construction that will come up probably in the next 2 or 3 years like, such as Prince’s property. Has any of those been taken into consideration how much money that will contribute to the pavement fund? I mean there’s got to be a way that you’re looking at taxes that are coming out of those construction projects I would think. Mayor Laufenburger: Well we know that last year, what was the property tax percentage increase based on last year’s development? Greg Sticha: New construction. So total new construction property dollars increased .97 percent. Mayor Laufenburger: Okay so just under 1 percent. So we’re aware that there are new streets that are coming in. We’re aware that there will be new property taxes coming in. But frankly that’s not a consideration that I give to whether or not a development is approved or not so. Steve Stamy Slammer: And then I’d like to comment. Mayor Laufenburger: Just a second. Steve Stamy Slammer: Oh go ahead. Mayor Laufenburger: Mr. Gerhardt. Todd Gerhardt: That equates to about a little bit over $100,000 in revenue to the City each year is what the average has been the last 5 years so and that’s helped offset increases in cost. Steve Stamy Slammer: Is that including like any of the TIF money and everything like that too? City Council Special Meeting – August 20, 2018 38 Todd Gerhardt: Yes. Steve Stamy Slammer: Okay. And then the comment the gentleman with the yellow shirt on I like about the intentions you know are all can change over the years very easily and if those intentions do change and money can be diverted anyway the City Council deems important and according to what I heard from Mr. Mayor Laufenburger: Sticha. Steve Stamy Slammer: Stocha. Mayor Laufenburger: Sticha. Steve Stamy Slammer: How do you pronounce it? Greg Sticha: Sticha. Steve Stamy Slammer: Sticha. Sticha, I’ll get it right. Anyway so is there a mechanism in place that the council or the City will notify the public that the money is being diverted and into what kind of fund? Mayor Laufenburger: The mechanism is, we give public notice of budget meetings. We give public notice of agendas so if there’s any discussion about how monies are used, transferred, various there’s always public notice given to that Slammer. Steve Stamy Slammer: And then one last comment. If I heard it right the current assessment program will still stay in place along with the proposed franchise fee. Mayor Laufenburger: Well that’s yet to be determined but that’s one of the considerations. Steve Stamy Slammer: Alright, thank you. Mayor Laufenburger: Thanks Slammer. Audience: You didn’t answer your question on when you’re going to vote on this. Mayor Laufenburger: Oh good point. Mr. Sticha can you talk a little bit about anticipated timeline on this? Steve Stamy Slammer: Thank you. Greg Sticha: Well there’s, the first thing that would need to happen is the variables that we had on the one slide, we’d have to make a determination about. City Council Special Meeting – August 20, 2018 39 Mayor Laufenburger: Are those the right variables? Greg Sticha: Yeah what exactly does the City Council want to do so that probably is going to take a few work sessions. You will have to hold a public hearing on a final approval of a franchise agreement and franchise fee related to that agreement. Mayor Laufenburger: Yep. Greg Sticha: My guess at this point in time the soonest we would see any revenue rolling in from a franchise fee, if the council decided to implement a franchise fee, would probably at the very soonest second quarter next year. More likely third quarter so there’s still a number of decisions that need to be made as well as additional public meetings that have to be had. Mayor Laufenburger: But in fact if we do nothing the current practice will continue which is we’ll figure out which streets need to be repaired. The funding needed for that and we’ll use the existing funds. You said that the current pavement management program under current process would run out when? 2020 maybe? 2019? Greg Sticha: If you kept the assessment practice in place you probably have one to one and a half more years of streets available that you could do yet. Mayor Laufenburger: Okay so Slammer and Tom, there is no specific time table that has been determined but the council has a lot of talking to do after we hear from the public comments so, and that will as Mr. Sticha says that will likely take place at work sessions and if we propose anything to be presented to the citizens then it will be, it will be presented in the form of a public hearing and that, could that happen before the end of the year? Possibly. That could be a stretch. Mr. Gerhardt. Todd Gerhardt: I would think you need at least 2 to 3 work sessions to talk through this issue and come to agreement on what direction you’d like to go. Mayor Laufenburger: Okay. Todd Gerhardt: And then call for a public hearing. Calling for the public hearing doesn’t mean you need to make the decision that evening. You’re just taking input again like you’re doing tonight and then you could make the decision at the following meeting or that meeting. Mayor Laufenburger: Alright. Todd Gerhardt: So I would say you’re looking at the earliest October. City Council Special Meeting – August 20, 2018 40 Mayor Laufenburger: Okay and just a reminder, though we’re taking public comment tonight our emails and our phones don’t turn off so if you have additional feedback that you want to provide to us you know how to get a hold of us. Many of you have already done that so we welcome that. Yes sir. Jay Johnson: I’m Jay Johnson, 7496 Saratoga and I’m a former council member from back in the 80’s-90’s timeframe. Mayor Laufenburger: Welcome back. Jay Johnson: And a public works director for another city for 6 years and I really want to say I’m glad you’re tackling this because this is something I brought up with the city that I was working for and how this is going to build up on your and it’s like not changing the oil in your car. Yeah I’m saving a little money now but when I have to replace that engine it’s a whole lot more than what we did. I like to continue the 40/60 split. Excuse me. Hay fever. The 40/60 split on the assessment and the franchise fee as I understand it will kind of reduce our 60 percent that goes out on the whole city budget so we’re, that $1.3 million that we’re, have to increase to keep our streets in the great condition they are, and I’m proud of our streets here. Hate to say it my city had a street that was at zero. I could see where there used to be asphalt. I thought it was a gravel road but I found out there used to be asphalt. That’s a different political situation there. The people on the street didn’t want to pay anything. They didn’t. So anyway keep the, I like the franchise fee. I think it will, our businesses provide a lot of wear and tear to our streets. They get a lot of customers. They get a lot of big trucks and they need to pay a little bigger portion of it and this franchise fee achieves that. I like to see that if you can make that as close to the 50/50. And if it’s a set amount each month for each resident $4. $6. Per meter. Water, or not water meter. Electric and gas meter. That’s affordable. One thing there may be, we do have some residents here that really are, have marginal income and when you say well you know what’s $12 a month. Well $12 a month is you know do I buy this or pay my insurance fee you know and whatever. So maybe some consideration for the extremely low income people that we may have in town. Somehow to help them out a little bit but beyond that I think most of us are in, I’m fixed income. I’m retired but I can afford another $12 a month. It’s two less Starbucks. They’re going to build another one up in Minnetonka or Shorewood so lord knows we need more of those so, anyway I’m for your plan. I like the scenario that Greg has done here and Paul have put together as an example. I think it seems to be the most logical of many of the examples so hopefully it works out. Mayor Laufenburger: Alright, thank you Jay. Pat Pavelko: Pat Pavelko, 7203 Frontier Trail. Greg one question, we’re spending an average of $2 million dollars. What’s that average taken over? How many years? 4 years? 5 years? 10? 20? Greg Sticha: I think I went back either 10 or 15 years. City Council Special Meeting – August 20, 2018 41 Pat Pavelko: 10 or 15 years. Okay what did we spend last year? What did we spend the year before? Greg Sticha: Mr. Oehme might be a little better able to answer that question than I can but the average over the 10 or 15 years was the 2 but I don’t remember what we spent last year and the year before. Paul Oehme: So Mayor, City Council members, I don’t have those numbers in front of me right now but the Minnewashta Heights neighborhood I think that was right in the range of $2.8 million for streets I think in that ballpark. Park Road that we just completed this year, that we spent well in excess of $1.3 million dollars on that project alone for that mill and overlay so the last, we didn’t have a street project in 2018. I’m talking about the 2017 projects. Pat Pavelko: Okay help me out with my midget mind here. We’re looking at $3.3 million in the future but you’re telling that last year or the year before we spent $2.8 million already so we’re only making up a difference of $500,000? I mean when we take an average of 20 years, I mean isn’t that going back quite, isn’t it going back too far? Greg Sticha: We didn’t go back 20 years. The $2 million, there were years I know we did a million dollar or less project so while there were some years that were $2.8 or $3 million there were other years where it was either a million or less so. Mayor Laufenburger: So Mr. Pavelko could you just share with us your thoughts on franchise fee, assessment, property tax levy, what’s your thoughts on that? Pat Pavelko: Well I mean I think that question should be answered first is if we’re looking at $3.3 million but we’re spending $2.8 million now, or we have in this past year then we’re really only looking at a, I don’t know is that $500,000 increase? Mayor Laufenburger: Well what we’re seeing is on average $2 million over the last 10 years. Let me finish. And what we’re seeing is that the pavement management fund, which is used to pay for those projects has been decreasing. You’ve heard Mr. Sticha say that if we don’t change our practice, if we continue to repair the roads at our current rate or at a dissipated rate and we don’t change the funding mechanism we’re going to run out of money. Pat Pavelko: Right. Mayor Laufenburger: So what we’re trying to do is to increase the source of revenue into that fund so we repair the streets at what we believe is an anticipated rate. Pat Pavelko: Right. And I mean when you guys all sit down it might be a $1 franchise fee. Possibly? City Council Special Meeting – August 20, 2018 42 Mayor Laufenburger: That certainly is possible. If we found another source of revenue for the remainder. Pat Pavelko: Okay, right. Now the money. Mayor Laufenburger: Just a second, did you want to make a comment Mr. Gerhardt? Todd Gerhardt: Yeah I mean Mr. Oehme commented on Park Road being you know $3 million or something like that. That’s a municipal state aid. We talk about municipal state aid monies that we get. Not every road is a municipal state aid. Lake Lucy. Park Road. They have to meet certain standards to become a municipal state aid so that’s additional revenue source so that will up that average but not every residential street is a municipal state aid road. Park Drive, or Park Road is a municipal state aid so that number will be higher but when you go up into the Minnewashta area, the residential area those are not municipal state aid roads. So the average is about $2 million. Pat Pavelko: Over 10 years. I mean you’ve got, it’s like excuse me I don’t want to say this but it’s like a shell game then. I mean now you’re saying it’s $2 million but we spent $2.8 million. So I think if you take the average you should take the average maybe over the last 3 years or 2 years and I think you’d have more, a realistic number. Mayor Laufenburger: Okay that’s a good suggestion Mr. Pavelko. Pat Pavelko: Okay now the franchise fee is for PMP. Does that money go into the general fund? Or does that go to PMP and cannot be taken out? Mayor Laufenburger: Well Mr. Sticha do we have a line item that says pavement management program? Is it part of the general fund? Greg Sticha: We do not. Mayor Laufenburger: Okay. So it’s dollars that come in that are budgeted specifically for street repair, is that correct? But it’s still part of the general fund. Greg Sticha: Okay you lost me on that one. Mayor Laufenburger: Well when the dollars are collected is pavement, we have a water enterprise fund. Greg Sticha: Are you referring to the levy that we have? Mayor Laufenburger: Yeah, $384,000. When those dollars come in where does it go? City Council Special Meeting – August 20, 2018 43 Greg Sticha: That goes directly into the pavement management fund. Mayor Laufenburger: So it’s a separate. Greg Sticha: Separate line item on our total levy. Mayor Laufenburger: On our total general fund. Greg Sticha: Our total property tax levy. Mayor Laufenburger: Okay. Greg Sticha: Yep. Pat Pavelko: So the money goes to the general fund. Mayor Laufenburger: Yeah it all goes to the bank but it’s in the, it’s a line item that says this is to be used for pavement management. Pat Pavelko: So in essence you’re saying it, the money is going to go to PMP? Greg Sticha: Yes. Pat Pavelko: But in essence it’s going in the general fund and it can be spent on anything. And will be spent on anything. Everything. Mayor Laufenburger: Well I don’t know about the will but you’re right, the statute allows money that comes in from franchise fees can be used for a number of different things. The City Council right now is talking about using those franchise fees, if we enact that specifically for street repair. Pat Pavelko: Can the franchise fee specifically go, stay out of the general fund and go to the PMP fund? Greg Sticha: There’s some misunderstanding in some of the verbiage here. The franchise fee would be directed by the City Council to staff and whatever City Council told staff to put those funds in, they would go directly into those funds. If that’s the pavement management program fund and that is what the City Council directed staff to do, every dollar would go directly into the pavement management fund. What the Mayor was referring to is we currently levy $384,000 that is used and put directly into the pavement management fund right now. It’s a part of our total general levy but it goes directly into the pavement management fund right now so unless City Council Special Meeting – August 20, 2018 44 directed differently by City Council those funds would go directly in to that fund and would never be in the City’s general fund. Never. Pat Pavelko: They would never be? Greg Sticha: Not unless directed by a city council. Future city council. Mayor Laufenburger: Just a second. Continue Mr. Pavelko. Pat Pavelko: Yeah so okay let me get this correct then. So it will not go to the general fund? Greg Sticha: No it would not go into the City’s general fund budget. It’s part of the current levy. The total general property tax levy but the money currently goes directly into the pavement management fund. Mayor Laufenburger: So Mr. Pavelko, are you. Pat Pavelko: Okay say the franchise fee collects. Mayor Laufenburger: A million dollars. Pat Pavelko: Well $4 million since we’re looking at $3.3 million so that $4 million is going to go to the PMP and cannot be spent on anything else other than the PMP. Correct? Mayor Laufenburger: I’ll accept your hypothetical of $4 million dollars but I don’t see this council passing action that brings in $4 million dollars in franchise fee every year because that’s not what we need. Pat Pavelko: No, well correct bit of, I guess what I’m saying is, is if we go over what the budget is and the money’s there, the money is going to stay? Mayor Laufenburger: That’s correct. There is carry over every year in the pavement management program fund. Every year there’s money going in and there’s money going out and over time the balance of that fund is going down and what we’re trying to figure out is how do we change the trajectory of that fund. How do we get it moving this way to pay for future street improvements. Pat Pavelko: Okay yeah, I understand. Yeah I understand that. Mayor Laufenburger: So do we specifically dedicate those funds to a pavement management program? That’s what this council, at least that’s the direction that we’ve given to Mr. Sticha and Mr. Gerhardt. How do we make up that difference in the pavement management program? City Council Special Meeting – August 20, 2018 45 Pat Pavelko: Okay. Mayor Laufenburger: It’s not how do we do, how do we bring in money for the pavement management program and then also have a little bit extra in order to build a ballfield over at Lake Ann. That’s not part of this discussion. Pat Pavelko: No and I guess I wasn’t insinuating that. Mayor Laufenburger: Okay. Pat Pavelko: But my concern is that the franchise fee money goes to the general fund and it just kind of disappears so, so okay let’s move on. Mayor Laufenburger: Please. Pat Pavelko: It’s a 60/40 split that we presently have. So it hasn’t been determined, I mean I have to imagine that we’re trying to make this, keep, fill this gap that the 60/40 plan will continue. Mayor Laufenburger: Is that your preference? Pat Pavelko: Well I guess I would want one or the other. 60/40 plan or the franchise fee. Mayor Laufenburger: Okay. Is there any situation under which you would accept both? Pat Pavelko: I don’t know. I’d have to look at it. Mayor Laufenburger: Okay. Pat Pavelko: So but it has not been determined whether it will be a 60/40 or a, no. Where the residents could go down to 30. A 70/30 or nothing like that has been determined? You guys all have to work on that yet. Mayor Laufenburger: That’s correct, it has not been determined yet. Pat Pavelko: Okay, thank you very much. Mayor Laufenburger: Thank you Mr. Pavelko. Pat Pavelko: Everybody have a nice night. Mayor Laufenburger: Thank you. Anybody else? City Council Special Meeting – August 20, 2018 46 Karla Ramsey: My name is Karla Ramsey. I’m at 400 Deerfoot Trail and I live in a similar situation with the previous gentleman that spoke. We have a 12 home association and we pay 100 percent of our street costs. We recently did a chip sealcoat that cost $8,000 and we all had to endure that burden and even though we have 12 homes only 10 of them are paying right now so that increases our burden for street repairs so just a general comment. If we do go ahead with the franchise fee I would just like consideration given to those of us that do pay 100 percent for our street repairs and if we could get some help from a franchise fee that would be… Mayor Laufenburger: So Deerfoot is a private road. Karla Ramsey: Correct. Mayor Laufenburger: Gotch ya. Anything else Ms. Ramsey? Karla Ramsey: That’s it. Just a comment. Mayor Laufenburger: Thank you very much. Anyone else like to offer at this time? Larry Koch: My name’s Larry Koch. I live at 471 Bighorn Drive. Thank you for the opportunity to speak before you. I especially want to talk about your process because I want to commend you for having a special meeting to allow the public to address these issues. I think that is great government practice and I have rare occasions to be before city councils and county commissioners and other government agencies. I personally do not like the idea of a meeting, a public hearing and then immediately a decision. I personally don’t like that. I think this is great so first of all I want to thank you for this process. I think it’s very valuable. Mayor Laufenburger: Thank you. Larry Koch: But to the specifics here, lived in Chanhassen since 1990 on that basis. We are a recognized city in this country I think in large part because we care about this city. I know you do. We have to take care of our roads. It’s the old supply and demand. You know we take care of it. People like to come here. Our property values are more stable than a lot of places so we have to do that. I realize the real question is how do we pay for this. What I would, I recommend, my opinion is because of the issues raised about getting rid of the 40/60 split. Continue the 40/60 split. But I also recommend consideration for the people here who mentioned like for example the school issue. I don’t know the specifics. There are some people that I think maybe pay a little bit more than what they think they should because of their nearness to either industry or a school and a lot of traffic and maybe their road wears out earlier or not. I don’t know for sure but I know those are concerns and that does happen and I would just suggest as part of your whole process here that you do look into that. We really do need some improvements here. You know I’ve been here as I said since 1990. Frontier Trail continues to be a mess. I realize that’s a very involved project because I believe there’s curb, gutter, lots of things. It’s a very involved and expensive process but I have to believe that we could have paid City Council Special Meeting – August 20, 2018 47 for a lot of that road if we could have taken all the repairs over all these years and put it into whether it’s a reconstruction or whatever term you use for that. And it is deteriorating and it keeps to do it so however you can fix that road I think is very, very important. I also live, in the area I live in there’s Conestoga Trail and Conestoga Court I believe it’s called. Their area, especially where that one turns into the other. That is really in bad condition and I know there are other places and either patches don’t get made or they’re very, let’s put it this way. A patch is only so good. You know you just cannot blend old tar to new tar. It just doesn’t work and so there are areas that were, I think that as part of your program raising enough money so we can go out there and fix those we would actually save considerable amount of money because I think patching is a very inefficient process because you’re spending time driving to this pothole. That pothole, et cetera so I’m really in favor of raising enough money to do it and do it right okay on that basis. So I’d like to see you retain the percentages. Have the projects. Get them completed. Get them done because we will save money in the long run. My only concern about the franchise fee is I’m a little concerned that it’s a regressive type of a fee for, as I mentioned for some people that are on fixed incomes, et cetera or people who don’t have the same amount of money. Now you know it’s pretty hard to deal with maybe in a flat fee. I think a percentage fee you could consider that but I am concerned about there are people that 12 bucks does make a difference. It really does make a difference so I’d like your consideration of that. And finally is I really would like you know the commitment by the council members that absent some dramatic change if you pass this we are really going to put this into a road improvement fund. Carry it over. Fix our roads. Make us the recognized city that we have been because I think it’s very, very important we do that and we don’t get in the habit, unless we have an emergency of jerking money from one fund and put in another. And I’m not saying you’ve done that. I’m just saying please when you go into this with a conscious mind you can’t control the future council members. I understand that but I think that would be you know a good pledge to say in your part of your resolutions this is our intent. You have to reserve your rights to make changes but I think it’d be important to the people of this city to know that that’s how you’ve approached these topics. So thank you very much. Mayor Laufenburger: Thank you Larry. Appreciate your comments. We have some more time. Anybody else like to speak at this time? Chris Dahl: My name is Chris Dahl. I live on 1774 Valley Ridge Trail in Chanhassen. Mayor Laufenburger: Welcome Chris. Chris Dahl: I’ve been a resident here for about 18 years. I want to thank you and the council for having this meeting. It’s kind of the first time up here talking. The big thing is transparency. The franchise fee is one thing but I’m looking at from the tax standpoint is that the franchise fee is not deductible as a tax deductible item. If you put it on the real estate tax statement not as a special assessment or some other means there that there’d be residents here that could take that as a tax deduction and reduce their federal and state income tax if they itemize so that’s one thing. Having a. City Council Special Meeting – August 20, 2018 48 Mayor Laufenburger: Just a second. So I’m not a tax attorney but what you’re saying, what I’m hearing you say Chris is that a special assessment appearing on your property tax bill can be deducted from your federal tax. Chris Dahl: No not a special assessment but it’s through the general fund. It’s through your general real estate tax. Mayor Laufenburger: Oh okay, so what you’re saying is if you, rather than do a franchise fee which is a balance of potentially 50 from residents, 50 from citizens. If you do a property tax, 80 percent from residents, 20 percent from businesses, that is deductible. Chris Dahl: Yeah the individual, the individual tax return will be able to deduct that as an itemized deduction. Mayor Laufenburger: Okay. Okay. Chris Dahl: The problem is, is that we have a $10,000 limitation on that now with the new tax law that came through. Todd Gerhardt: Good idea. Chris Dahl: So we’re not as high as Minnetonka’s taxes but we don’t have some of the… Mayor Laufenburger: Hey we’re proud of the fact that we’re not as high as Minnetonka taxes too by the way. Go ahead Chris. I’m sorry for interrupting you. Chris Dahl: No that’s fine. That’s fine. I love living in Chanhassen. Coached many sports in Chanhassen over the years and it’s a great place to bring up a family. I think a lot of people realize that. The franchise fee is I guess the thing that draws back, I look at Comcast is a utility. Southwest Bell. Xcel. Minnegasco. Century Link. Are each one of those public utilities going to be charging the fee or? Mayor Laufenburger: Mr. Sticha what does the State say, but you’re right. We already charge a Mediacom franchise fee and that is paid on, if anybody who uses Mediacom for cable TV we eventually that money comes back to the City. What’s the State statute? Chris Dahl: But that might be just for the usage of the land. It’s like cell phone coverage. Mayor Laufenburger: For the right-of-way. It’s the right-of-way. What’s the statute on either cell phone towers or utilities other than electric and gas? City Council Special Meeting – August 20, 2018 49 Greg Sticha: The only legislation that I am aware of that you would allow, be allowed to issue a franchise fee on are a gas utility company and an electric utility company. And a cable TV provider. Mayor Laufenburger: And we’re already doing that. Greg Sticha: And we’re already doing that yep. Chris Dahl: I’m fine with gas. Electricity if it was based on usage. People have solar panels would be charged a lot less fee. This is something I was just sitting here thinking some people in the neighborhood. It’s a little bit more complex the system when you throw in this franchise fee on top of the normal real estate tax statement so we can’t come back to you and say well look, why did our taxes increase. Once that franchise fee is established it will never go away. It’s kind of like the Minneapolis Convention Center. That sales tax to build that stadium and the principle payments once that was done paid for they rolled it into something else and that’s something that the board’s got to make sure that they tell the constituents of the community. That franchise fee once it’s established I don’t think it’s ever going to be abolished. It could be but chances are that once it’s established it will never go away. That’s something about taxes that I’ve seen over time. I think either way you go it’s got to be fair. I’ve heard some instances here that I just never even thought about. If they pre-paid for their road already. The other people need to pay for their portion over the term of the loan. It’s just, that’s the way it is. Mayor Laufenburger: I would agree with you. Chris Dahl: And I never thought about Todd’s mentioning if they put a street assessment and they put in a road and they’re assessed $20,000 for it. Well if the appraiser says $5,000 is what the property went up in value, who eats the other $15,000? Well it’s the rest of the taxpayers essentially. I just wanted to bring up those points to the council about the tax deductibility. How to work that into the equation. My thought about it is, is well if they set a budget for what we’re going to spend in city dollars you’re going to have up’s and down’s in years if you’re going to pay, set the budget this year and next year have a different amount. It’s going to go up and down and you’re either going to be fighting the community about having a 20 percent increase or not fighting the public when there’s a 10 percent decrease in the ebbs and flows of what road maintenance is going to cost. My thought is that I would prefer that way because that would promote transparency in spending would be justified by somebody saying well we need a 20 percent increase this year because we have a $3.8 or a $4 million dollar road improvement next year. It’s expected to go down to $2.2 and that you can’t judge 5 years from now because the variable costs of constructing a road are the materials. Gas prices have gone down. Well who knows, they could double next year and the cost of labor is consistently going up so if your budget, and put that into the real estate tax assessment for the year, maybe the next year say it won’t be a big of bite. I’d like, I don’t mind having a reserve but I don’t like having too big of reserves or okay we’ve got this money. Let’s spend it type of attitude so thank you for having this meeting. Appreciate it. City Council Special Meeting – August 20, 2018 50 Mayor Laufenburger: Alright, Chris thank you very much. Appreciate your comments. Chris Dahl: Thank you. Mayor Laufenburger: Is there anyone else who would like to address the council on this subject? Okay with that I hope those of you that have been watching at home on Mediacom or on the website have found this informative. At this time the council will now take this under consideration and we will schedule with Mr. Sticha and Mr. Gerhardt appropriate next steps which will include likely discussion at a work session. The council will likely weigh in on what the things that they’ve heard and their views and as Mr. Gerhardt says this may be something that we address even before November so, so with that in mind council any comments or questions from council at this time? Not required. Okay. With that may I have a motion to adjourn. Councilman McDonald moved, Councilman Campion seconded to adjourn the meeting. All voted in favor and the motion carried unanimously with a vote of 5 to 0. The City Council meeting was adjourned at 9:20 p.m. Submitted by Todd Gerhardt City Manager Prepared by Nann Opheim