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HomeMy WebLinkAbout2004 10-04 CCM Joint Work Session with Financial Commission MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL OF THE CITY OF BROOKLYN CENTER IN THE COUNTY i OF HENNEPIN AND THE STATE OF MINNESOTA JOINT WORK SESSION WITH FINANCIAL COMMISSION OCTOBER 4, 2004 CITY HALL - COUNCIL CHAMBERS CALL TO ORDER The Brooklyn enter City y Council met in Work Session and was called to order b Mayor Y Y Myrna Kragness at 6:30 p.m. ROLL CALL Mayor Myrna Kragness, Councilmembers Kathleen Carmody, Kay Lasman, Diane Niesen, and Bob Peppe. Also present: City Manager Michael McCauley, Assistant City Manager /Director of Operations Curt Boganey, Director of Public Works /City Engineer Todd Blomstrom, Fiscal and Support Services Director Dan Jordet, and Deputy City Clerk Maria Rosenbaum. Others present were Financial Commissioners Jay Hruska, Mark Nemec, Lawrence Peterson, Susan Shogren Smith, and Earl Simons. Chair Donn Escher and Commissioner Timothy Elftmann were absent and excused. UTILITIES City Manager Michael McCauley discussed that the City's rates have been compared to neighboring cities and the water rates have historically been in the lower range; sanitary sewer rates have been in the middle range; storm sewer rates have been in the upper end due to the capital projects that have been undertaken and debt service, as some cities are in a different stage in their stormwater infrastructure undertakings. The recommended utility rates for 2005 are as follows: • 2.8 percent increase for water. This is the level of rate increase that was projected in last year's study. Review indicates that the projected rate increases for 2006 -2009 should be at least three percent, rather than 2.8 percent to support operations and street construction projects. Actual revenues in 2004 appear to be slightly below budget estimates. The 2002 study had projected a three percent annual increase and this was reduced last year to 2.8 percent. The 2002 study used a base year with every high water sales and this presented a more optimistic projection of future revenues than is warranted. After a formal rate study using a consultant, the plan may need to be revised to increase rates to sustain infrastructure needs. 10/04/04 -1- • 2.8 percent increase for sanitary sewer. Results are on track with the 2002 and 2003 studies. The period of 2005 -2009 is projected with the same 2.8 percent annual rate increase to sustain operations and capital. • Zero percent increase for stormwater. Stormwater rates were not increased in 2004 and that utility will be retiring bonds in 2005/2006 that will favorably impact its net revenues. The City needs to develop a plan for the servicing of regional stormwater detention ponds and the 2005 proposed budget would include funds to hire a consulting firm to conduct a study of those needs and costs to address them. Staff continues what was begun in 2004 to use stormwater utility funds for the cost of curb and gutter construction in street projects since the curb and gutter is an integral part of the collection system for stormwater. Sweeping costs are also placed in the stormwater utility to reflect the water quality issues that are improved by removing material from the streets and keeping them out of the stormwater flows. One full -time public works employee is placed in the stormwater budget for 2005 to reflect the time spent on stormwater system maintenance and street sweeping. 0 Three percent increase for street light. The street light utility is not generating enough revenue to sustain the costs of street lights involved in the street reconstruction projects. Last year it was indicated that the City might need to propose a higher rate increase in 2005 or 2006. That study proposed a plan to increase street light utility rates to address the funding imbalance. Last year one of the possible ways to ameliorate increases in the street light utility charges was a possible reduction in stormwater utility rates dependent on development of a plan for future needs with the retirement of bonds. With the proposed study the City would be in a better position to determine future needs in the stormwater utility that might favorably impact rates. Another issue in the street light utility is the potential for Excel to discontinue the provision of street light services. • 9.3 percent increase for recycling. Over the past few years the recycling fund has spent down its fund balance and rates had not been increased during that period. It is now necessary to increase recycling rates to match revenues and expenditures. The last recycling rate increase was in 1995. Mr. McCauley distributed sheets to outline the residential utility costs and water rates, and comparable quarterly storm utility, sanitary sewer utilities, and recycling, for surrounding cities. Mr. McCauley discussed that the work progresses on the draft 2005 -2009 Capital Improvement Plan for the November 15, 2004, meeting. Increased construction costs are having a significant impact on planning and staff is trying to maintain the 2008 project year that had been previously built into the plan. Construction costs are increasing at six percent per year. At this time Mr. McCauley asked if there were any questions to be addressed. 10/04/04 -2- Councilmember Lasman questioned if the City will move in the direction of Xcel discontinuing the provision of street light services and if so how many more the City would have to service. Mr. McCauley discussed that had not been delineated. Commissioner Peterson questioned if this could be done now. Director of Public Works /City Engineer Todd Blomstrom discussed the Group Five Lease Program and informed that this program would have to essentially be phased out since the leases were for 20 year terms. Councilmember Niesen questioned the increased LOGIS charges throughout the proposed budget. Mr. McCauley discussed that the increased LOGIS charges are for the conversion of the new utility software. The new software is estimated to cost $111,000 and each utility budget has a percent of charges to make up for the anticipated cost of $111,000. Councilmember Niesen inquired if that would be over one or five years. Fiscal and Support Services Director Dan Jordet discussed that would be over a one year period and informed that the breakdown would roughly be as follows: 35 percent to water; 35 percent to sanitary sewer; 20 percent to stormwater; five percent to street light; and five percent to recycling utility funds. Councilmember Niesen questioned the year to date totals. Mr. McCauley discussed that the year to date totals would have been the number calculated into the system as of approximately September 20, 2004. Councilmember Niesen questioned the utility system supplies (6235) final budget of $50,000 for 2004 and if the City improves in this category could the money saved help offset Local Government Aid Costs. Mr. Jordet explained that the other repair and maintenance supplies (6239) along with repair and maintenance supplies -other (6230) are over and under budget and these line items try to take movement between and balance the utility system supplies. Councilmember Niesen questioned where unspent budgeted monies are placed. Mr. McCauley advised that utilities are operated as enterprise funds and not used to offset General Fund costs. Unused funds are retained in the Utility Funds and for utility portions of street projects. Councilmember Niesen asked about the capital outlay (6500) amounts for 2005 when there was nothing budgeted in capital outlay (6500) in 2004. Mr. Blomstrom discussed that the expenses reimbursed (6499) numbers have been shifted to capital outlay (6500) representing the monies transferred for street projects. For 2005, no money is budgeted for expenses reimbursed (6499). Councilmember Niesen inquired about the storm sewer wages and salaries (6101). Mr. McCauley discussed that this would be the line item that would be moving a public works employee to this fund. Councilmember Peppe asked when the liquor budget would be reviewed, as he was concerned about current operating results. Mr. McCauley advised that the liquor budget would be on the November 15, 2004, agenda. Assistant City Manager /Director of Operations Curt Boganey discussed that the liquor budget has not seen any drop in revenues; however, the revenues are not as hoped and it is still unknown what the improvement will be with the new SuperAmerica opening. 10/04/04 -3- The sales are far below the marketing study that was done by the City's consultant and staff will be working on changing the marketing approaches. Mayor Kragness questioned if additional signage is planned for the liquor store at 69 and Brooklyn Boulevard. Mr. Boganey discussed that the owner of the building is not willing to add additional signage and that he does not believe additional signage would have a dramatic result. DRAFT ENTERPRISE FUND BUDGET (NON - UTILITY) Mr. McCauley discussed that the golf course continues to work on revenues and expenditures in light of both weather and increased numbers of golf courses. The golf course appears to be able to meet its loan repayment schedule in 2004 and cover operations through the efforts of Mr. Glasoe and his staff in restructuring costs. Councilmember Niesen questioned if the City has alternative plans for the enterprise funds. Mr. McCauley discussed that the liquor and Earle Brown Heritage Center are meeting expectations and there are no formal alternate plans at this time for golf or liquor. GENERAL FUND Council discussed the request from REACH regarding restoring funding in the City's Budget. Councilmember Niesen expressed that she would like to provide funding to REACH. Councilmember Lasman asked for clarification regarding the number of people and number of programs participated. Mr. McCauley discussed that the number of people was 73 who participated 153 times. Mayor Kragness informed that she had received a telephone call from a resident asking if they would be able to help fund some money to REACH since a particular program they had participated in had been cut. Mayor Kragness discussed that she had informed the resident that the costs for funding REACH had not been broken down by programs. Commissioner Hruska questioned if the three organizations that sell pull -tabs in Brooklyn Center could be approached to see if they would be able to provide any funding for REACH. Mr. McCauley discussed that the Council could include funding in the budget and consider approaching the three organizations that sell pull -tabs. Commissioner Hruska questioned if Councilmember Carmody would like to draft a letter to those organizations. It was the consensus of the Council to add funding back into the budget for REACH and to have Councilmember Carmody draft a letter to the three organizations that sell pull -tabs. 10/04/04 -4- NOVEMBER 15 MEETING Councilmember Niesen expressed that she would like to know the average increase to homeowners before the November 15, 2004, meeting. Mr. McCauley informed that by the November 15, 2004, meeting staff should have better numbers from Hennepin County to estimate the impacts. Councilmember Carmody requested clarification on the average tax increase since there will be a difference with a lot of properties. Mr. McCauley responded that the average house would be used to calculate the tax increases. MISCELLANEOUS Councilmember Lasman questioned if PRISM will be a topic of discussion for the budget. Mr. McCauley informed that PRISM had not made a request. Mayor Kragness questioned if letters had been mailed to those organizations. Mr. McCauley responded letters had not been mailed this year. Councilmember Niesen questioned if there are any plans to review the number of vehicles the City has and the Assessing Department services as the City is currently doing now dispatch services. Mr. McCauley informed that there are no plans to discuss either of those items at this time. Councilmember Carmody discussed the need to focus staff time on the adopted 2005 City Council Goals. Councilmember Niesen expressed that she believes the Council needs to look at other cost reductions. ADJOURNMENT A motion by Councilmember Lasman, seconded by Councilmember Peppe to adjourn the Work Session at 8:04 p.m. Motion passed unanimously. IW City Clerk Mayor 10/04/04 -5-