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City Council Minutes 08-31-2009 SpecialMINUTES SPECIAL MEETING — MONTICELLO CITY COUNCIL August 31, 2009 — 5:00 p.m. Members Present: Clint Herbst, Tom Perrault, Glen Posusta, Brian Stumpf, Susie Wojehouski Members Absent: None 1. Call to Order Mayor Herbst called the meeting to order at 5 p.m. and declared a quorum present. 2. 2010 Budget Workshop Tom Kelly summarized the changes that were received from Wright County since the prior budget meeting on August 24th. The estimated revised tax capacity is now reported at $16,733,909. In addition several TIF districts have been decertified for 2010, resulting in an estimated tax capacity of $16.8 Million after those districts are added back in. After making adjustments to budget expenditures, the recommended tax levy is now down to $7,758,267, which is essentially the same as last year. If a resident's property value stays the same, their city tax should remain about the same. Glen Posusta asked about determination of Xcel Plant market value; he thought there were improvements that should have increased the taxable value. Tom Kelly noted that it may not have caught up with the assessment year yet. Clint Herbst also noted that the formula has changed slightly and increase of valuation may be offset by change in depreciation. Jeff O'Neill asked if the transition aid from the State is malting any difference. Tom Kelly noted that the aid formula is not really helping the City at this time. Tom Kelly explained that the County has indicated that overall residential tax capacity has decreased by about 10 %. Auditor did not disclose if actual residential property values have decreased by a similar percent. If residential property value has decreased, the impact could be a corresponding decrease in those property taxes. Brian Stumpf asked about the amount from reserves (approximately $800,000) that is being used toward balancing the budget. He wanted to know if that is above the $600,000 going toward purchase of Prairie Center. Tom Kelly noted the $800,000 budgeted out of reserves is in addition to the property purchase. Brian Stumpf then asked how much the City has in reserves. Tom Kelly noted there is about $60 million in reserves, which includes dedicated funds and reserves in enterprise funds. Council asked about amount of interest earnings on those reserves. Tom Kelly noted that interest earnings add up to about $1 million per year. Glen Posusta wanted to know how the total in reserves compares to last year, 5 years ago, and I Oyears ago. Tom Kelly stated that he does not have those numbers with him, but they are available on his computer. Clint Special Council Minutes — August 31, 2009 Page 1 Herbst suggested that perhaps City should consider using interest earnings from reserves and try not to utilize reserves for balancing the budget. Tom Kelly reminded Council that the figure that Council approves for a preliminary levy cannot be increased when they set the final levy. They should keep in mind that they can make further adjustments to decrease the levy later in the year. Tom noted that, if $7.758 million is approved for a levy, the State will be cutting $257,000 when they take away Market Value aid next year. City will have to cut back next year to accommodate the loss of the Market Value aid. Glen Posusta asked which funds are designated for Fallon Avenue improvements. Tom Kelly noted that those funds were left in the budget. Glen asked about the funds that are usually budgeted for the reconstruction fund. Tom noted that he had removed all expenditures from the Street Reconstruction fund for next year. The core street project on River Street will use funding sources of assessments, state aid maintenance funds, and access funds. Clint Herbst talked briefly about the value of the Liquor Store and how the City utilizes the profits from the store. He noted that city staff should check into the request made at the last City Council meeting to find out whether a competitive store could be considered when there is already a municipal liquor store. Jeff O'Neill asked about assessed value on residential properties and whether that would impact the levy that Council would adopt. Tom Kelly explained that information is not known from the County yet. He would estimate that it would not have a huge impact. Glen Posusta noted that Council should keep in mind that what they purchase now will not be able to be bought for the same price two years from now. His concern is that the City has a huge amount of reserves and it doesn't seem that we need to keep that much on hand. Tom Kelly noted that it would depend on how much they want to keep in the utility funds for depreciation and replacement. Currently, the City is not covering the cost of depreciation in those funds, which affects the amount set aside for improvements when they are needed. Jeff O'Neill asked if the City will be in better shape to use reserves for purchases now that they are building depreciation replacement into the budget. Tom Kelly noted that in general that would be true. He does have some concern over the Bertram Chain of Lakes as the cost is not determined yet. Brian Stumpf asked about the cost that has to be set aside for furnishing and operating FiberNet Monticello at the Prairie Center building. Tom Kelly noted that the amount for operations has not been determined yet; those would be enterprise fund expenditures and would not affect the levy. Clint Herbst noted that there will be funds generated from current leases that can be used to offset immediate purchases to equip the building. All expenses incurred by FiberNet will be tracked in that fund. Susie Wojehouski asked about sign - making equipment budgeted in Streets Department. She was wondering if the City is currently making signs and what this item would cover. Special Council Minutes — August 31, 2009 Page 2 Bob Paschke explained the wide variety of uses that would be possible with the equipment for malting signs. Tom Perrault commented that he would like to know what is going to happen with the assessed values of residential property before a decision is made on a preliminary levy figure. Tom Kelly pointed out that the County will not disclose final information yet. Clint Herbst asked if the budget had increased for any departments. Tom Kelly noted that Elections has a budget for 2010 since that is an election year. Tom Kelly explained there would be no change expected in the city tax on residential property at the proposed levy. If the levy was increased by $257,000 to make up for the Market Value aid that will be lost, it would increase taxes by about $30 on a $250,000 house. Consensus of Council is to vote on a preliminary levy at the Sept 14 Council meeting. They asked Tom Kelly to present an estimated levy of $8 million. 3. Consideration of authorizing Edmonson Avenue Pathway Improvements, City Project No. 09CO07 and Sunset Ponds Pathway Improvements, 08CO21 (2008 -21C) Bruce Westby reviewed the background on this project as was presented to Council on August 24. Staff researched options for improving the Edmonson Avenue pathway and solicited quotes for completing the pathway. They also checked into ADA accessibility requirements for the Sunset Ponds pathway to the playground. It was found that it is required to pave the section of path leading to the playground, of which there are two different segments. The lowest quote for the Edmonson Avenue pathway would be $9,930 for paving only or $22,370 for Rill build. The lowest quote for the Sunset Ponds pathway would be $1,900 for paving only or $2,968 for preparation and paving. Bruce Westby noted that there are several curves on the Sunset Ponds path, which would make it a better candidate for contracting the work. Since the City does not have experience with paving pathways, this one could be a challenge. BRIAN STUMPF MOVED TO DIRECT CITY STAFF TO COMPLETE BASE PREPARATION, RESTORATION AND TURF ESTABLISHMENT FOR THE EDMONSON AVENUE AND SUNSET PONDS PATHWAY; TO APPROVE CONTRACTING WITH KNIFE RIVER FOR PAVING EDMONSON PATHWAY FOR $9,930; AND TO APPROVE CONTRACTING WITH RUM RIVER FOR PAVING SUNSET PONDS PATHWAY FOR $1,900. GLEN POSUSTA SECONDED THE MOTION. MOTION CARRIED 5 -0. Tom Perrault asked for confirmation of the funding source. Tom Kelly noted that funds are to come from the Park and Pathway Dedication fund. Special Council Minutes — August 31, 2009 Page 3 4. Consideration of alternative heat system for FiberNet Monticello Garage City Proiect No. 090006 Bob Paschke explained that city staff is bringing this to Council as an alternative for heating the FiberNet garage facility. He noted that two quotes were received for in -floor electric heating and both were essentially the same system. Since there is no gas line to the building, only quotes for electric based heating were requested. Olson Electric has been contacted about the changes required to switch from infrared to in -floor heating. In addition to the flooring, there would be some cost to prepare the base prior to pouring the garage floor and to insulate prior to installation of in -floor heating equipment. Glen Posusta noted that there is a distinct advantage for in -floor heating rather than infrared heating. With in -floor heating, the floor stays much drier for working. Glen Posusta also noted that in -floor heating also maintains more even heat in the building. If doors are opened, the heat instantly recovers when doors are closed again. Susie Wojchouski suggested that consideration be given to dual heating sources to take advantage of lower electrical costs through off -peak rates. GLEN POSUSTA MOVED TO APPROVE ALTERNATIVE #2 TO AWARD THE CONTRACT TO PURCELL PLUMBING IN THE AMOUNT OF $5,211 PLUS APPROVE THE COSTS OF FLOOR PREPARATION AND INSULATION. SUSIE WOJCHOUSKI SECONDED THE MOTION. MOTION CARRIED 5 -0. Tom Perrault asked if it would matter that Council did not select the lowest quote. Tom Kelly noted that the amounts are under the threshold so it is acceptable to select an alternate quote. Council noted that justification for the contract is that Purcell Plumbing is already performing heating work as part of the project and this would enable better management of the project by city staff. 5. Approval of pavment of bills for August 31st SUSIE WOJCIOUSKI MOVED TO APPROVE PAYMENT OF THE BILLS FOR AUGUST 31sT. TOM PERRAULT SECONDED THE MOTION. MOTION CARRIED 5 -0 TO PAY THE CHECK REGISTER TOTALING $46,080.00. 6. Adjournment TOM PERRAULT MOVED TO ADJOURN THE MEETING AT 6:10 P.M. GLEN POSUSTA SECONDED THE MOTION. MOTION CARRIED 5 -0. Recorder: Catherine M Shuman Approved: September 14, 2009/��� Attest: CA nistrator Special Council Minutes — August 31, 2009 Page 4