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City Council Minutes 01-14-2013 SpecialMINUTES SPECIAL MEETING — MONTICELLO CITY COUNCIL Monday, January 14, 2013 - 5:30 p.m. Mississippi Room - 505 Walnut Street, Monticello, MN Mayor: Clint Herbst Council Members: Lloyd Hilgart, Tom Perrault, Glen Posusta, Brian Stumpf Others: Jeff O'Neill, Wayne Oberg, Bob Paschke, Bret Weiss, Ann Eckman, Tom Moores, Steve Joerg, Ron Hackenmueller, Angela Schumann, Tracy Ergen, Matt Theisen, Kitty Baltos 1. Call to Order Mayor Herbst called the special meeting to order at 5:30 p.m. 2. Purpose of Workshop a) Financial planning and management setting for 2013 -2016 b) Establishment of Time Sensitive Acquisitions Committee c) Workshop Schedule and Goal- setting process for 2013 Jeff O'Neill explained the purpose of the special meeting and summarized above items. He said the financial planning topic is a preliminary look at 2014 budget preparations. 3. Review and discuss financial planning and management setting for 2013 -2016 Wayne Oberg provided a printout from the League of MN Cities called "Property Tax 101" for council members. He went through a presentation highlighting various items related to property taxes. He noted the relationship between the property tax capacity value and rates. He showed a graph of the property tax levy over the last 10 or so years. Wayne Oberg showed the relationship between tax rates in 2012 and 2013 and pointed out that, if the tax rate had been kept the same, the city would have generated quite a bit more revenue from property taxes. Wayne Oberg touched again on some of the challenges that the city will be facing in coming years: MCC debt service, unpaid special assessments, water access fund, sanitary sewer access fund, and financing of new projects. Wayne Oberg talked about the debt service levy from 2011 -2022 and noted that the city will need additional funds through 2016 for debt payments and then the debt levels off. Those lower levels, however, may be offset by new debt depending on what projects the city undertakes in the next few years. Wayne Oberg went through some of the future major projects that are on the list for future years such as Fallon Avenue Overpass, street reconstruction improvements, Trunk Hwy 25 improvements, Bertram Chain of Lakes acquisitions, and fire truck. Wayne Oberg pointed out that the city is at least $30M under their debt limit at this time. City Council Special Meeting Minutes - January 14, 2013 Page 1 Wayne Oberg summarized by stating that staff will be looking to Council for direction for the levy for next year and going forward. Jeff O'Neill added comments to Council in this regard to see what Council would consider in future levy increases. Brian Stumpf asked staff to comment about the water and sewer funds that are depleted. Bret Weiss and Wayne Oberg pointed out that the Water Access Charge and Sewer Access Charge funds are running out of fiords because of the lack of development. When development comes back, those funds would be refreshed for future infrastructure. Wayne Oberg pointed out that as long as development turns around, the city should be fine. If not, there may be some funds needed for debt service. Brian Stumpf asked about the additional tax capacity from commercial development. Jeff O'Neill pointed out that the levy was decreased and, therefore, the city won't realize as much additional revenue from the increased values. Lloyd Hilgart asked about the current amount that is collected for Water Access Charge and Sewer Access Charge fees. Ron Hackenmueller noted the Sewer Access Charge collection on a new residential permit is $4000 and the Water Access Charge fee is $850. Lloyd Hilgart asked about the situation that will be faced in 2016. Wayne Oberg explained that there is a large increase in debt service payments due at that time. Prior to 2016, the city should be able to cover debt service from current funds. Brian Stumpf brought up the CIP and projects that are scheduled to be done in the next few years such as Area 5 reconstruction and Fallon Avenue Bridge. Brian Stumpf wondered why not wait until 2014 to raise the levy instead of this next year. Jeff O'Neill pointed out a number of other items that will be coming up in 2 to 5 years including transportation improvements, fire truck, and Bertram Chain of Lakes. Clint Herbst asked why the State would not be providing assistance on Hwy 25; Bruce Westby and Bret Weiss stated that the State is not allocating funds for addressing congestion. They are focusing on preservation; that's why they did an overlay on Hwy 25 last year. There was some discussion about state aid dollars and how the city can utilize those funds. Glen Posusta commented that the interest rates are so low right now that it would probably be in the best interest of the city to bond for these projects. Wayne Oberg pointed out that the cost for bond debt would only cost about $500,000 annually on a $6 million bond. Brian Stumpf asked Jeff O'Neill to explain what staff is looking for in terms of budgeting for next year. Jeff O'Neill explained that the taxpayers saw quite a savings in their property taxes this year. He would like Council to come up with a figure or percentage that they would be comfortable with for some kind of an increase. Clint Herbst stated that he feels government should come up with the number that they feel is needed. Wayne Oberg pointed out an example where a 4% increase would generate about $300,000 in taxes. Clint Herbst would like to see staff come up with a scenario to generate funds over the next few years to meet debt obligations and other needs. Lloyd Hilgart asked how much is actually needed in 2016 to fill the gap; Wayne Oberg said the gap would be around $600,000 and he would propose raising the levy slightly over the next few years to cover that. City Council Special Meeting Minutes - January 14, 2013 Page 2 Glen Posusta commented that he would like to tie any increase to the time when Mills Fleet Farm builds in Monticello. That would generate a lot of traffic and increased value. 4. Consideration of establishing a Time Sensitive Acquisitions Committee and appointing representatives to the committee Jeff O'Neill introduced this item and asked Council to consider approving such a committee and appointing several council members to the committee. Jeff O'Neill talked about the recommended guidelines that would guide the committee. Glen Posusta asked how the committee would function if someone had a request. Would the group meet in person or could they discuss via phone or email? Jeff O'Neill thought it could work either way. Clint Herbst suggested that the committee could first go through a list of items that they would possibly consider. The committee could also consider other items that come up unexpectedly. Tom Perrault asked about the note regarding the audit requirements; this referred to the provision to report all authorized purchases to the full Council in order to fulfill audit requirements. Brian Stumpf and Glen Posusta volunteered to serve on the committee. LLOYD HILGART MOVED FOR ALTERNATIVE #1 TO ESTABLISH A TIME SENSITIVE ACQUISITIONS COMMITTEE (TSAC), ASSIGN THE CITY ADMINISTRATOR AND FINANCE DIRECTOR TO THE COMMITTEE, AND APPOINT BRIAN STUMPF AND GLEN POSUSTA TO SERVE AS COUNCIL REPRESENTATIVES; SUBJECT TO THE FOLLOWING CONDITIONS. TOM PERRAULT SECONDED THE MOTION. MOTION CARRIED 5 -0. 1. Review by the TSAC shall not be used to sidestep standard purchasing policies. TSAC shall be convened only when an opportunity occurs for malting an offer or purchase on short notice, which cannot be accommodated under the normal approval process. Opportunities would apply to equipment, products or services that have been included in the budget, would serve a necessary purpose, or are needed due to an emergency situation. 2. For items in the budget, TSAC can authorize up to $30, 000 toward bidding or purchase. 3. For items not in the budget, TSAC can authorize up to $15, 000 far bidding or purchase. 4. Any items authorized for purchase through the TSAC system, shall be reported to and confirmed by the full Council at its next regular meeting. 5. Review upcoming Workshop Schedule and proposed goal- setting process for 2013 Jeff O'Neill explained that he has been working with Angela Schumann and Bruce Westby on a Council and EDA workshop schedule for special meetings that are coming up in the near future. Jeff O'Neill noted this includes WWTF Improvements, EDA work City Council Special Meeting Minutes - January 14, 2013 Page 3 plan discussions, discussion of economic development direction, and management of TIF 1 -22 (downtown). Jeff O'Neill went through some of the proposed dates for the various special meetings /workshops. Jeff O'Neill noted they should also schedule a meeting to talk about capital equipment/projects that could be funded through an equipment note. It was suggested to hold this meeting at Public Works on Wednesday, Jan 23rd at 4:30 pm. Tom Perrault asked when they would be updated on FiberNet; Jeff O'Neill noted they are meeting with bondholders later this month so Council would be updated following that. 6. Adiourn GLEN POSUSTA MOVED TO ADJOURN AT 6:27 P.M. BRIAN STUMPF SECONDED THE MOTION. MOTION CARRIED 5 -0. Recorder: Catherine M. ShumanCW Approved: February 11, 2013 Attest: Q inistrator City Council Special Meeting Minutes - January 14, 2013 Page 4