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HomeMy WebLinkAbout2022 11-21 FCM11/21/2022 Page 1 MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL/FINANCIAL COMMISSION OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND STATE OF MINNESOTA JOINT WORK SESSION NOVEMBER 21, 2022 CITY HALL - COUNCIL CHAMBERS 1. CALL TO ORDER The Brooklyn Center City Council/Financial Commission Joint Work Session was called to order by Mayor Elliott at 6:10 p.m. 2. ROLL CALL Mayor Mike Elliott and Councilmembers April Graves and Dan Ryan were present. Councilmember Marquita Butler was absent and excused. Also present was Financial Commission Chair Taneshia Kragness. Commissioner Dean Van Der Werf was absent and excused. Also present were City Manager Reggie Edwards, City Clerk/Interim Assistant City Manager Barb Suciu, Director of Finance and Fiscal Services Angela Holm, Director of Public Works Elizabeth Heyman, and Deputy Director of Public Works Mike Marsh. 3. APPROVAL OF AGENDA There was a motion by Mayor Elliott and seconded by Councilmember Ryan to approve the agenda. Motion passed unanimously. 4. DISCUSSION ITEMS 4a. CENTRAL GARAGE City Manager Reggie Edwards introduced the item and invited Director of Public Works Elizabeth Heyman and Director of Finance Angela Holm to continue the presentation. Mayor Elliott noted he has to leave at a certain time, and Councilmember Ryan will take over at that time. Finance Director Angela Holm explained the Central Garage allows for more efficient management of the City vehicles. The Public Works Department has the goal to responsibly provide for the maintenance and operations of the City’s infrastructure and facilities in a quality, cost-effective matter. 11/21/2022 Page 2 Director of Public Works Elizabeth Heyman summarized the Staffing level of the Public Works Department. The fleet is maintained based on a set of policies. Ms. Holm added Public Works operates by planning to save up and better afford large equipment repairs or replacement. An inflation factor was also added more recently to take future inflation into account. There should have been a seven percent inflation increase in the fund, but three percent was the compromised number. Ms. Holm showed a slide depicting the cash flow of the Central Garage including the capital outlay, actual cash balance, and targeted cash balance. At any given time, there is a reserve to handle three months of operations. She added she is not concerned that the actual cash balance is not at the level of the targeted cash balance as it is very rare for Public Works to face a financial emergency. Mayor Elliott noted it would be interesting to see the average distance between the targeted cash balance and the capital outlay. Ms. Holm explained that is part of the evaluation process. Councilmember Graves asked what items were purchased in 2023 and where the information is in the line-item budget. She pointed out there are no items listed for 2023. Ms. Holm stated the headings are not updated, but the numbers are correct. The equipment purchases are under the total capital outlay for vehicles. Ms. Heyman added they try to stretch equipment as long as possible, so not all of the 2023 items may not be purchased. For example, there is one mower that needs to be replaced, but they may be able to stretch another mower. Councilmember Graves asked how many items are expected to be purchased in 2025, as that has a high capital outlay in the graph. Deputy Director of Public Works Mike Marsh stated there are trucks to retire in 2024 and 2025, which are very expensive. The Central Garage has about 144 pieces of equipment with a standard replacement schedule based on industry standards. When looking to replace something, Staff considers the cost of the replacement, the amount the item would resell for, and the status of the current equipment. Financial Commission Chair Taneshia Kragness asked if the spending slated for 2025 can be spread out between 2024 and 2026. Mr. Marsh stated Staff plans to assess the equipment and strategize how to spread out the spending more evenly. They hope to move around some of the smaller purchases, but it is difficult when replacing larger items such as a fire truck. Plus, the replacement costs go up significantly each year, and it is hard to catch up. Mayor Elliott asked if the cash balance is bearing interest. Ms. Holm stated a fair amount of the reserve cash in investments such as CDs and municipal bonds. Bonds are yielding between three and 3.5 percent whiles CDs are yielding 1.5 to two percent. Mayor Elliott asked if the interest and the three percent inflation adjustment bring the expenses in line with inflation. Ms. Holm stated it gets them closer to inflated prices. 11/21/2022 Page 3 4b. UTILITIES Ms. Holm stated Brooklyn Center provides water, sanitary sewer, storm drainage, street light utility, and recycling utilities. The income from fees needs to cover expenses such as operational funds and maintenance. Brooklyn Center occasionally seeks out bonding to support the funds, and the fees still need to be set. Ms. Heyman noted the water utility includes 1.3 billion gallons each year supplied to customers from wells, water towers, and the water treatment plant. She showed a slide depicting Staffing levels for public utilities. There are approximately 13 total positions between part-time and full- time employees. Staff recommends adding more part-time positions to address new initiatives. Ms. Heyman explained the first goal is to meet or exceed safe drinking water standards of the State of Minnesota and manage stormwater runoff in an efficient and environmentally sensitive manner. Another goal is to initiate improved, streamlined management strategies and techniques through the use of refined methods and technologies. Ms. Heyman showed a slide with a table depicting utility performance measures. The goal was to do more than 990 miles of street sweeping, and Brooklyn Center completed almost 1500 miles of street sweeping. The goal is to televise, clean, root-saw, line, and replace piping one-fifth of the total piping each year, but they recently surpassed that number with 26 miles. Mr. Marsh noted the goal is one-fifth because of insurance purposes. There are 97.9 total miles of pipe in Brooklyn Center, and they have to be serviced every five years. Ms. Heyman pointed out there was one private sanitary sewer backup due to City system blockage. All drinking water requirements were met. Ms. Heyman stated key initiatives for the coming year include rain garden landscaping and maintenance, stocking light poles, lead and copper data collection, continuing lift station rehabilitations, 1-94 & Dupont 24" steel water main replacement, water treatment plant redundant water main connection, and Freeway and Highway utility crossing replacements. Ms. Heyman stated Brooklyn Center currently doesn’t have any backup light poles, and they take months to replace. Therefore, they are hoping to stock backups. The City has to send out notices if there is any lead in the water, so the City recommends two part-time positions to address any lead concerns. Councilmember Ryan asked if the lead and copper data collection is due to an unfunded federal mandate. Ms. Heyman confirmed the lead and copper data collection is due to an unfunded federal mandate. However, there is support at the State level. Councilmember Ryan noted most of Brooklyn Center was built in the 1960s. He asked how the rust would impact the data collection. Mr. Marsh stated the lining prevents issues with rust. 11/21/2022 Page 4 Councilmember Ryan asked when the 20-year loan on the water treatment plant would be paid off. Ms. Holm stated it is scheduled to be paid off in 2034. Councilmember Ryan pointed out that will relieve a lot of debt service. Ms. Holm stated there is around $1 million in principal paid by Brooklyn Center each year. Dr. Edwards noted the City has saved money through the loan process rather than contracting services from Minneapolis. Mayor Elliott stated the City has taken on the replacement of street lights with LED lights. Ms. Heyman stated the plan is for a policy review regarding street lights in 2023. Mayor Elliott asked if there is a policy about sources of energy for the fleet. Ms. Heyman stated as a vehicle comes up for replacement, they will continue to discuss alternative energy sources and determine the long-term impact of switching energy sources. Mr. Marsh stated there was a recent purchase of three hybrid cars with the plan to purchase four more. However, there were significant issues with the first three cars. They were constantly at the shop. Some of the vehicles were traded in. Mayor Elliott asked if fully electric cars are being considered. Mr. Marsh stated electric vehicles, especially for City Staff vehicles, are being discussed. There are grant and bonding opportunities available for electric vehicles. There is a hope that electric vehicles would be more reliable than hybrids. Councilmember Ryan asked which type of hybrid cars were used. Mr. Marsh stated it was a Ford hybrid. The gas usage decreased from about 10 gallons of gas needed per shift to three gallons. Councilmember Ryan noted the batteries for electric cars are much more expensive than gas cars. Mr. Marsh stated the cars they ordered included a 100,000-mile battery warranty. The squad cars are rarely used up to 100,000 miles, so there weren’t battery concerns. Ms. Holm stated the assumptions for cash flow and rate projections include capital outlay based on a 15-year CIP. Anticipated debt issues include water GO revenue bonds in 2024, 2025, and 2028, sanitary sewer GO revenue bonds in 2024, 2025, 2028, and 2030, and storm sewer GO revenue bonds in 2029 and 2030. Assumptions also include a three percent annual increase in personal services and a two percent annual increase in operating expenses. Ms. Holm noted Staff gets the most questions about water, in terms of utilities. She showed a slide with a table depicting the water utility rate and cash from 2021 and the projected amounts for 2022-2026. Ms. Holm then showed a chart with the water utility cash flow with the capital outlay, ending cash balance, and the minimum targeted balance. She pointed out the ending cash balance is lower than the targeted rate for several years. That may require a rate increase for residents. Staff would prefer to make minor increases than larger increases down the line. The ending cash balance will increase significantly in 2034 when they are done with the debt service. 11/21/2022 Page 5 Chair Kragness asked what the forecast is for the capital improvements. Ms. Heyman stated they do projections every year. Councilmember Graves asked what is coming up in 2024. Ms. Heyman stated the largest outlay is a large neighborhood improvement, and they are considering converting it into a two-year project. Councilmember Ryan noted some of the water lines in the City are very old. Mr. Marsh stated the water lines have been skipped in the past to focus on streets. The water mains will be addressed in the coming years. Ms. Holm showed a chart comparing the water utility rate for Brooklyn Center, White Bear Lake, Fridley, Shoreview, Richfield, Roseville, Maplewood, Golden Valley, Crystal, and New Hope. Brooklyn Center’s 2022 rate and 2023 rate are both on the lower end for the comparison cities. She noted the projections are for the cost of 18,000 gallons of water per quarter. The proposed increase would be $6. Dr. Edwards pointed out that the yellow bar is the increase for Brooklyn Center in 2023, but the rates for other cities are from 2022. Likely, the comparison cities will also increase in 2023, which would make Brooklyn Center even lower in comparison. Mr. Marsh noted the three most expensive cities are Golden Valley, Crystal, and New Hope, all of which contract with Minneapolis for water. Mayor Elliott added those cities claim to have better water quality. Mayor Elliott asked if there is anything the City can do to address the hardness of the water. Mr. Marsh stated there isn’t anything the City can do at the water treatment plant to decrease water hardness. Mayor Elliott asked what the cost would be for the City to address hardness in comparison to an individual resident to install something to improve the water. Mr. Marsh stated he doesn’t have the information in front of him. Mayor Elliott stated people pay $600-900 per month to soften their water. Dr. Edwards added it is important to consider only some households soften their water, which is something to consider when comparing costs. Mayor Elliott noted there is likely a portion of the residents who would like to soften their water but cannot afford to on their own. Councilmember Ryan pointed out the hardness of the water has decreased. Mr. Marsh stated the hardness hasn’t decreased very much because the calcium levels are the same. Councilmember Graves commented she doesn’t like how softened water feels. She asked if the complaints about the chlorine smell have decreased. Mr. Marsh stated he hasn’t heard complaints recently, but the water itself hasn’t changed. He hasn’t experienced the smell himself. There was an extensive water study completed when the treatment plant opened, and there weren’t any issues 11/21/2022 Page 6 with water quality. Dr. Edwards agreed there haven’t been complaints of chlorine lately, but the Staff is still aware of the concern. Ms. Holm showed a slide with a table for the sanitary sewer utility rate and cash flow from 2021 and the projected amounts for 2022-2026. She explained the fund is quite liquid and has healthy reserves. Ms. Holm then showed a chart with the sanitary sewer utility cash flow with the capital outlay, ending cash balance, and the minimum targeted balance. Ms. Holm showed a sanitary sewer utility rate comparison to several cities, and Brooklyn Center was on the mid-to low-end of the chart. The comparison cities included Roseville, Golden Valley, Maplewood, Shoreview, White Bear Lake, Richfield, Crystal, Fridley, and New Hope. She pointed out that the rates on the chart are from 2022 with the yellow bar depicting the 2023 Brooklyn Center rate. Ms. Holm showed a slide with a table for the stormwater utility rate and cash flow from 2021 and the projected amounts for 2022-2026. She explained the fund is also solid and stable, but some capital outlay projects need to be dealt with in the coming years. Ms. Holm then showed a chart with the stormwater utility cash flow with the capital outlay, ending cash balance, and the minimum targeted balance. Ms. Holm showed a storm sewer utility rate comparison to several cities, and Brooklyn Center was on the mid-to low-end of the chart. The comparison cities included Roseville, Golden Valley, Maplewood, Shoreview, White Bear Lake, Richfield, Crystal, Fridley, and New Hope. She pointed out that the rates on the chart are from 2022 with the yellow bar depicting the 2023 Brooklyn Center rate. Ms. Holm showed a table with the combined water, sewer, and storm utility bill would be in comparison to other cities. The comparison cities included Roseville, Golden Valley, Maplewood, Shoreview, White Bear Lake, Richfield, Crystal, Fridley, and New Hope. In 2022, Brooklyn Center was the second lowest rate. She then showed a visual graph of the same information and noted other cities will see an increase in 2023 that is not reflected in the current data. Ms. Holm showed a slide with a table for the street light utility rate and cash flow from 2021 and the projected amounts for 2022-2026. There is a low margin in 2026, and it needs to be handled appropriately in the coming years. Ms. Holm then showed a chart with the stormwater utility cash flow with the capital outlay, ending cash balance, and the minimum targeted balance. Staff hopes to increase the cash balance in the next couple of years to handle the planned capital outlay projects. There is a desire to introduce smooth, incremental increases. After 2029, there is a large increase in the cash balance. Mayor Elliott asked what they pay for the light bill. Ms. Holm stated Brooklyn Center pays around $225,000 per year for electricity. 11/21/2022 Page 7 Mayor Elliott asked how much the City pays for natural gas. Ms. Holm stated she doesn’t have the information in front of her because it doesn’t come out of this fund. Mayor Elliott asked how much the City pays for fuel at the Central Garage. Ms. Heyman stated there isn’t a simple total because it is split amongst Departments, but Staff would gather the data for Council. Ms. Holm showed a storm sewer utility rate comparison to several cities, and Brooklyn Center was on the mid-to-high-end of the chart. The comparison cities included Crystal, New Hope, Richfield, Golden Valley, and Shoreview. Not all cities charge for streetlights. She pointed out that the rates on the chart are from 2022 with the yellow bar depicting the 2023 Brooklyn Center rate. Ms. Holm showed a graph with the recycling utility rate and cash flow. Brooklyn Center has a relationship with two other cities that provide recycling services to its residents. The City charges a fee and pays it out to the contracted parties. There is a healthy cash balance that would slowly decrease until about 2030. There aren’t many administrative costs, and there is no capital outlay for the fund. Councilmember Graves stated she has had issues with her recycling being picked up. She asked if the City has received complaints about recycling. City Clerk/Interim Assistant City Manager Barb Suciu stated she has received complaints, and there have been issues staffing enough trucks. She noted residents have had success with residents calling the recycling entity directly to ask for them to pick it up. Ms. Holm showed a table with the recycling utility rate comparison, and Brooklyn Center is in the middle of the pack. The comparison cities include Roseville, Fridley, Crystal, New Hope, Maplewood, and Golden Valley. Councilmember Graves asked about the change in the fund balance. Ms. Holm stated the net change takes into account cash and appreciation. There are some weaknesses in how government accounting is presented as it needs to show appreciation and capital outlay among other things. It is ultimately an issue of presentation. 5. FUTURE MEETINGS 5a. BUDGET MEETING DECEMBER 5, 2022 Mayor Elliott noted the next budget meeting is December 5, 2022. Dr. Edwards noted Staff hasn’t had the opportunity to present on enterprise funds yet, so he will propose a date to address the golf course, Heritage Center, and liquor stores. Ms. Holm noted November 29, 2022 was proposed via email. Mayor Elliott noted he has a conflict that day, but the meeting can 11/21/2022 Page 8 6. ADJOURN There was a motion by Mayor Elliott and seconded by Councilmember Ryan to adjourn the meeting. Motion passed unanimously. The Brooklyn Center City Council/Financial Commission adjourned at 8:37 p.m. STATE OF MINNESOTA) COUNTY OF HENNEPIN) ss. Certification of Minutes CITY OF BROOKLYN CENTER) The undersigned, being the duly qualified and appointed City Clerk of the City of Brooklyn Center, Minnesota, certifies: 1. Attached hereto is a full, true, and complete transcript of the minutes of the City Council from the City of Brooklyn Center Joint Work Session with the Financial Commission held on November 21, 2022. 2. That said meeting was held pursuant to due call and notice thereof and was duly held at Brooklyn Center City Hall. 3. That the City Council adopted said minutes at its December 12, 2022, Regular Session. City Clerk Mayor