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CC WS 2021 10 11CHANHASSEN CITY COUNCIL WORK SESSION MINUTES OCTOBER 11, 2021 Mayor Ryan called the work session to order at 5:30 p.m. COUNCIL MEMBERS PRESENT: Mayor Ryan, Councilwoman Rehm, Councilman McDonald, Councilman Campion, and Councilwoman Schubert. COUNCIL MEMBERS ABSENT: None. STAFF PRESENT: Laurie Hokkanen, City Manager; Matt Unmacht, Assistant City Manager; Charlie Howley, Public Works Director/City Engineer; Kelly Strey, Finance Director; Ari Lyksett, Communications Manager; Don Johnson, Fire Chief; Kate Aanenson, Community Development Director; Jerry Ruegemer, Park & Recreation Director; and Kim Meuwissen, City Clerk. PUBLIC PRESENT: Wong Nystrom, Enterprise Fleet Management. INTERVIEW ENVIRONMENTAL COMMISSION YOUTH APPLICANTS Applicants Alexandra Jerdee and Julia Adams were interviewed with the City Council for the newly created Environmental Commission Youth position. DISCUSS LEASE PROGRAM WITH ENTERPRISE FLEET MANAGEMENT Laurie Hokkanen introduced Wong Nystrom from Enterprise Fleet Management who will be giving the presentation tonight. She referenced the staff report and that this concept could address several current issues such as: • Strategic Priorities: Asset Management, Financial Sustainability, and Operational Excellence • Supply Chain Issues • Reduce Administrative Staff time • Identify an effective vehicle life cycle that maximizes potential equity at time of resale creating annual savings • Reduce need for maintenance to the fleet • Improve fuel economy • Improve fleet safety for the operators and the public • Provide a lower sustainable fleet cost that is predictable year over year Mr. Nystrom presented information on a vehicle lease program that would help the city address these current issues. Enterprise Fleet Management is one of the vetted fleet services providers and are part of the member for the Association of Minnesota Counties and they sponsor the Minnesota Sheriff’s Association, both for about 12 years. They provide services to over 50 cities and counties alone in Minnesota and 1,700 nationwide and have been providing fleet services since 1967. Enterprise is the largest fleet management company in North America. City Council Work Session Minutes – October 11, 2021 2 Mr. Nystrom shared a slide showing an example of the total cost to buy and hold a typical Public Works ¾-ton pickup truck. This $32K vehicle ends up costing over $64K over the life of the vehicle. Enterprise finds the right vehicle and the right life cycle for that vehicle. At some point maintenance expense goes up and you lose fuel economy degradation (.3 miles to the gallon after the fourth year). He referenced the old adage of buying a vehicle and running it into the ground for 10 years and that they found it not to be cost effective. An effective vehicle life cycle will provide savings and safety at the right time. Key observations include: • Depreciation/year declines over time • Running costs of fuel and maintenance increase gradually over time • Mandated MPG efficiencies reward staying on technology wave Mr. Nystrom explained the difference between an open end lease and a closed end lease (typically what you see on TV). A closed end lease has mileage restrictions, wear and tear charges, set terms, etc. Enterprise provides an open end lease that can be customized to fit the City’s needs. Mr. Nystrom presented a slide showing the City’s fleet profile of 61 vehicles with an average age of 10.6 years combined and an average mileage of 5,100 miles. Enterprise is recommending replacing 32 vehicles for 2022 because the City has 32 vehicles that are over 10 years old. Council discussion followed which included the following questions and comments: • Are employees were asking for safety features? Howley responded that staff does like the safety features and available add-ons. Mr. Nystrom stated that our vehicles are not unsafe. They are maintained well and the City’s mechanics are very thorough. Newer vehicles provide improved safety design with updated technology. • Council discussed vehicles low actual miles, renting vehicles that don’t get much use, and what happens with the vehicles after the City is done with them. Mr. Nystrom presented a slide on Fleet Planning Analysis. He recommends moving from a 12-year cycle to a 4-year cycle. Shortening the lifecycle of the vehicle would improve resale, and lower maintenance costs. The vehicles would only need routine maintenance. Vehicles would be replaced before they needed tires. The recommendation is to get rid of all 10- year-old vehicles. • Council questioned leased equity and if the proposed 4-year lease cycle is specific to Chanhassen. The answer is yes. • Will the City continue to perform the maintenance? Mr. Nystrom said yes because there is less maintenance required because the vehicles are less than four years old and we already have a maintenance shop and staff available to perform routine maintenance. • Wil insurance costs differ by leasing? Mr. Nystrom replied that he could answer that because he is not an insurance agent. • Has a cost analysis has been performed between gasoline and electric vehicles? Nystrom replied that currently it is not financially feasible nor is the infrastructure ready yet for electric vehicles. • What are the current issues with sourcing vehicles? Mr. Nystrom replied that it is a challenge, but Enterprise can source vehicles faster without waiting because they can City Council Work Session Minutes – October 11, 2021 3 order vehicles right when the order banks open. By waiting until December, January, or February, there will not be any vehicles left. • What are the next steps – Do we get started in 2022? Hokkanen replied there are unique circumstances with resale prices being so high right now during COVID and that it makes sense to move forward in 2022. Council could direct Mr. Nystrom to meet with Mr. Howley and our fleet staff to do a deeper dive and then come back at our next meeting with updated information. If the City wants to participate in the lease program with Enterprise in 2022, it would probably need to be approved by the City Council in November. We could also put it on a different schedule and consider implementing it next year. • How would this program impact the current budget and CIP? Hokkanen replied it would have a positive impact on the CIP and make it more stable and predictable. Strey added that the impact would be positive in meeting the financing gap in that fund. This would take pressure off of future tax levies. • How many vehicles could be replaced in 2022? Mr. Nystrom stated vehicles are available now, but is not sure what will happen in 30 days. It takes about six to nine months to get a vehicle right now. The supply chain issue is not going to go away for the foreseeable next two years. • Would the City or Enterprise would be selling our 32 used vehicles and who would facilitate the sales? Mr. Nystrom said they could be sold by either the City or Enterprise. Strey commented that we retain a lot flexibility by being able to choose the best option. We might want to have our staff take some of them to auction and Enterprise can take the other ones that make sense for them to sell. • Is the danger of waiting that the supply would be limited and the resale price will go down? My Nystrom confirmed this statement. Howley commented that the pickup truck on tonight’s Consent Agenda was the first pickup truck that could be ordered since the 2021 CIP was approved last December. Enterprise has the buying power to leverage, the City does not and the situation will only get worse. Staff believes this is a good option to pursue right now. • Strey commented that she ran this proposal past our consultant at Ehlers to make sure that it made financial sense to them, and it did. • Is Enterprise peerless or do they have any competition. Mr. Nystrom responded that Enterprise is the RFP winner through the government entity Sourcewell. They are the largest in the country at working not only with commercial but also with government entities. • Hokkanen was asked what the process was in Plymouth and she replied that they were in the process of implementing it when she was leaving the city. • If the City approves this program does it have to go through an RFP? Hokkanen stated that process has already been satisfied through the Sourcewell contract. • Has the City looked at the competition? Hokkanen responded that the city could conduct an RFP but doesn’t believe we could get a better deal than the large national RFPs. She replied that she could reach out to Sourcewell to see other responses to the RFP. Mr. Nystrom suggested contacting the State of Minnesota Leasing Program. No one else does what Enterprise does to the level that they do it at. • Concerns were voiced about the total impact to the bottom line effects of the budget and requested assurances from staff that this is the best deal. City Council Work Session Minutes – October 11, 2021 4 • Council requested that Mr. Nystrom prepare real numbers to bring back for the next step as well as asking staff to provide assurances that this is the best deal for the City. Mayor Ryan recessed the work session at 7:01 p.m. Mayor Ryan reconvened the work session at 7:25 p.m. DISCUSS A REQUEST TO CONSIDER LAND USE AMENDMENT AND REZONING FOR WESTWOOD CHURCH PROPERTY Kate Aanenson provided information about a Land Use Amendment and Rezoning that Westwood Church was considering to permit senior co-op (80-100 units) and senior rental (80- 100 units) housing on their property as well as expansion of the existing Hope House facility. Aanenson reviewed the history of the site as well as provided reasons for both Council consideration and denial. If the Council is interested in moving forward with this request, Aanenson provided the following options: • Explore one or both projects • Allow developer to schedule neighborhood meeting to explore community reaction • Return to City Council with concept plan and opportunity for City Council to hear from neighbors: o If still interested in moving forward, make formal application(s) o A unique PUD zoning would have to be created o Traffic analysis will need to be evaluated Mayor Ryan asked Council for their comments on willingness to make a change to the Comprehensive Plan Land Use Amendment, neighborhood meeting, and pursuing one or both projects. Council concurred that Westwood Church should conduct a neighborhood meeting to get input from the residents. DISCUSSION OF CONDITIONAL USES VERSUS INTERIM USES IN THE FRINGE BUSINESS (BF) DISTRICT Kate Aanenson shared a PowerPoint Presentation on the BF Zoning District which currently allows conditional uses which run in perpetuity with the property. With Highway 101 opening this area will be a gateway from the southern end of the city. The current uses in the BF District conflict with the City’s long-term vision for the area, and they may not develop at the highest and best uses. The City is proposing rezoning this district to eliminate conditional uses and replace them with interim uses. By allowing conditional uses that conflict with the City’s long- term vision for the area, these properties may not develop at the highest and best uses. Aanenson referenced the Highway 61 Corridor Study which focused on the properties in this district. The purpose of the rezoning would be to eliminate the Conditional Use Permits and only allow Interim Use Permits. Mayor Ryan asked for Council input regarding the rezoning of this property. The Council provided direction to staff to move forward with the rezoning. City Council Work Session Minutes – October 11, 2021 5 REVIEW OF THE CHANHASSEN COMPENSATION POLICY MANUAL AND 2021 AND 2022 PAY PLAN Mayor Ryan provided background on previous discussions on what is being proposed and indicated that this is the most significant part of the budget increase for 2022 and directly impacts the levy. Laurie Hokkanen provided a short introduction of what has been accomplished since the last time the City Council discussed this item, including where employees commute from and the cost of employee turnover. Hokkanen provided a comparison of how our former system compared to what some of our competitors would have and what we might be going to. Kelly Strey reviewed the proposed plan which would move the City to a performance-based step and grade system with 19 pay grades and 9 steps from minimum (hiring) salary to maximum. Council discussion followed which included the following questions and comments: • Provide clarification between the COLA and the step increases and if the Council has annual discretion to adjust the COLA. • Is the COLA amount tied to an index? • Discussed the need for public input and the effects this plan would have on the 2022 budget, and that they should wait until after the December 13 Truth-in-Taxation public hearing before making a decision. Adopting the plan before the December 13 public hearing would be premature. • Does approving the policy component of the plan provide reassurance to staff that Council is supportive without tying it to the numbers? COLA and step numbers could not be included in that option. • Could it be established as a guideline with Council’s discretion to adjust it or is what is being proposed locking it into stone? • Asked for clarification of getting the employees on the step program and the Council controlling the annual COLA adjustment. • Are there cases where the step is equal to the COLA? • Could the Council use discretion to determine a percentage of the step each year? • What are the advantages of waiting until December 13 to vote on this item? FUTURE WORK SESSION SCHEDULE The meeting adjourned at 9:16 p.m. Submitted and prepared by Kim Meuwissen City Clerk