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HomeMy WebLinkAbout1997 06-23 CCM Regular Session MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA REGULAR SESSION JUNE 23, 1997 CITY HALL CALL TO ORDER The Brooklyn Center City Council met in regular session and was called to order by Mayor Myrna Kragness at 7:00 p.m. ROLL CALL Mayor Myrna Kragness, Councilmembers Kathleen Carmody, Debra Hilstrom, Kay Lasman, and Robert Peppe. Also present: City Manager Michael J. McCauley, Public Services Director Diane Spector, Finance Director Charlie Hansen, City Attorney Charlie LeFevere, and Council Secretary LeAnn Larson. INVOCATION Invocation was given by Pastor Steve Loopstra, Northbrook Alliance Church. COUNCIL REPORTS Councilmember Carmody noted an erroneous sale reported in the newspaper listing the sale of 6301 Shingle Creek Parkway. Councilmember Lasman gave a brief recap of events at the Earle Brown Heritage Center Open House held on Sunday, June 22, 1997. Everyone felt the event was a success. Councilmember Lasman thanked the EBHC Open House Committee for their many hours in preparation for the event. Councilmember Carmody remarked that she, Mayor Kragness, and Councilmember Lasman had recently attended the League of Minnesota Cities Conference in St. Cloud. APPROVAL OF AGENDA AND CONSENT AGENDA Councilmember Hilstrom requested the removal of May 22, 1997 -Joint Session with Financial Commission minutes from the consent agenda. 6/23/97 -1- A motion by Councilmember Carmody and seconded by Councilmember Hilstrom to approve the agenda and consent agenda with the removal of the May 22, 1997, minutes passed unanimously. APPROVAL OF MINUTES A motion by Councilmember Carmody and seconded by Councilmember Hilstrom to approve minutes of the May 27, 1997 -- Regular Session and June 9, 1997 -- Regular Session as printed passed unanimously. BROOKLYN CENTER FIRE DEPARTMENT RELIEF ASSOCIATION FINANCIAL STATEMENTS FOR THE CALENDAR YEAR ENDED DECEMBER 31 1996 A motion was made by Councilmember Carmody to accept the Brooklyn Center Fire Department Relief Association financial statements for the calendar year ended December 31, 1996. The motion was seconded by Councilmember Hilstrom and passed unanimously. RESOLUTION NO. 97 -101 Member Carmody introduced the following resolution and moved its adoption: RESOLUTION AMENDING THE 1997 GENERAL FUND STREET MAINTENANCE BUDGET TO ACCEPT SNOW REMOVAL REIMBURSEMENT AID, ACCEPTING QUOTE AND AUTHORIZING PURCHASE OF A WING SNOW PLOW The motion for the adoption of the foregoing resolution was duly seconded by member Hilstrom and passed unanimously. RESOLUTION NO. 97-102 Member Carmody introduced the following resolution and moved its adoption: RESOLUTION ACCEPTING BID AND AWARDING A CONTRACT, IMPROVEMENT PROJECT NO. 1997 -09, CONTRACT 1997 -C, 1997 SEALCOTING The motion for the adoption of the foregoing resolution was duly seconded by member Hilstrom and passed unanimously. RESOLUTION NO. 97 -103 Member Carmody introduced the following resolution and moved its adoption: RESOLUTION ACCEPTING BID AND AWARDING A CONTRACT, IMPROVEMENT 6/23/97 -2- PROJECT NO. 1997 -11, CONTRACT 1997 -J, ELEVATED STORAGE TANK REPAIR, TOWER NO.2 The motion for the adoption of the foregoing resolution was duly seconded by member Hilstrom and passed unanimously. RESOLUTION NO. 97-104 Member Carmody introduced the following resolution and moved its adoption: RESOLUTION ACCEPTING WORK PERFORMED AND AUTHORIZING FINAL PAYMENT, IMPROVEMENT PROJECT NO. 1997 -1, REPLACEMENT OF UNDERGROUND STORAGE TANKS AND FUEL SYSTEM, CENTRAL GARAGE The motion for the adoption of the foregoing resolution was duly seconded by member Hilstrom and passed unanimously. RESOLUTION NO. 97 -105 Member Carmody introduced the following resolution and moved its adoption: RESOLUTION DECLARING A PUBLIC NUISANCE AND ORDERING THE REMOVAL OF DISEASED TREES The motion for the adoption of the foregoing resolution was duly seconded by member Hilstrom and passed unanimously. LICENSES Garbage and Refuse Collection Vehicles Randy's Sanitation, Inc. PO Box 169, Delano UWS /Gallagher's 95 West Ivy Avenue, St. Paul Walter's Recycling and Refuse PO Box 67, Circle Pines Walz Bros. Sanitation, Inc. PO Box 627, Maple Grove Mechanical Systems Cool Air Mechanical, Inc. 1441 Rice Street, St. Paul D. A. Distribution 8282 Arthur Street NE, Spring Lake Park Diversified Mechanical Services 1525 East 88th Street, Bloomington Doody Mechanical, Inc. dba United Sheet Metal 520 Front Avenue, St. Paul Master Mechanical. Inc. 901 East 79th Street, Bloomington Minnesota Heating & Air Cond. 10701 93rd Avenue North #B, Maple Grove 6/23/97 _;_ Rental Dwellings Morning Sun Investments 1519 Humboldt Place North Morning Sun Investments 1525 Humboldt Place North Morning Sun Investments 1531 Humboldt Place North OPEN FORUM There were no requests for open forum. PUBLIC HEARING REGARDING AMENDMENT OF YEAR 1995 STATEMENT OF PROJECTED USE OF FUNDS FOR THE URBAN HENNEPIN COUNTY COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM City Manager McCauley explained that this was an amendment to the City's 1995 Community Development Block Grant (CDBG) Project Use of Funds. The proposed amendment would reallocate approximately $58,920.06 from the Scattered Site Redevelopment Project account to the 53rd Avenue Development and Linkage Project. In the 1995 CDBG program, the City Council allocated $181,657.75 to the Scattered Site Redevelopment Program. Of this 1995 amount, $122,755.65 was expended, leaving a balance of $58,920.06. This $58,920.06 represents the approximate cost of the acquisition and clearance of one scattered site property. With the establishment of the 53rd Avenue Development and Linkage Project, the City focused its redevelopment efforts on the 53rd Avenue Development and Linkage Project and away from scattered site redevelopment. A motion. by Councilmember Hilstrom and seconded by Councilmember Peppe to open the public hearing passed unanimously. No public input was offered. A motion by Councilmember Hilstrom and seconded by Councilmember Lasman to close the public hearing passed unanimously. RESOLUTION NO. 97 -106 Member Lasman introduced the following resolution and moved its adoption: RESOLUTION AMENDING THE URBAN HENNEPIN COUNTY STATEMENT OF PROJECTED USE OF FUNDS FOR THE YEAR 1995 BY REALLOCATING $58,920.06 FROM THE SCATTERED SITE REDEVELOPMENT PROJECT TO THE 53RD AVENUE 6/23/97 -4- DEVELOPMENT AND LINKAGE PROJECT The motion for the adoption of the foregoing resolution was duly seconded by member Carmody and passed unanimously. COUNCIL CONSIDERATION ITEM RESOLUTION AUTHORIZING THE CITY OF ENTER INTO A GRANT AGREEMENT WITH THE STATE OF MINNESOTA FUNDING THE SHINGLE CREEK REGIONAL POND. IMPROVEMENT PROJECT NO 1997 -17 City Manager McCauley explained that the Minnesota Department of Trade and Economic Development has requested a resolution authorizing the City to enter into a grant agreement with the State of Minnesota for funding for the Shingle Creek Regional Pond and the designation of a person authorized to execute the agreement on behalf of the City. DTED is moving forward with the authorization received in the recent legislative session through the efforts of Speaker Carruthers, Senator Scheid, and Representative Carlson to provide $2 million to assist in the development of the regional pond for the redevelopment of Brookdale. This resolution would be the first step in that process with DTED. RESOLUTION NO. 97 -107 Member Carmody introduced the following resolution and moved its adoption: RESOLUTION AUTHORIZING THE CITY OF ENTER INTO A GRANT AGREEMENT WITH THE STATE OF MINNESOTA FOR FUNDING THE SHINGLE CREEK REGIONAL POND, IMPROVEMENT PROJECT NO. 1997 -17 The motion for the adoption of the foregoing resolution was duly seconded by member Lasman and passed unanimously. DISCUSSION OF AMENDING THE SPECIAL ASSESSMENT POLICY REVISING THE SENIOR DEFERRAL POLICY City Manager McCauley recapped several prior discussions by the Council on amending the City's Special Assessment Policy and revising the senior deferral policy. Due to limited amount of funding available to continue the assessment stabilization program and refinement needed to the senior deferral program, staff has recommended amending the City's Assessment Stabilization Program and revising he senior deferral program. g P gram. The City's Special Assessment Policy would be amended to discontinue the Assessment Stabilization Program. Also, the Deferment of Special Assessments Policy would be amended to define "financial hardship as having an annual income for the household's size at or below 6/23/97 -5- the "very low income" limit established annually by HUD for the Minneapolis and St. Paul metropolitan area. Council consensus was in favor of the recommended changes. The Council directed staff to prepare the necessary resolution to enact the changes. COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31. 1996 Finance Director Charlie Hansen explained the City is required by state law and City Charter to have its financial statements audited each year by independent auditors. The City Council appointed the firm of Deloitte & Touche to perform this audit. Clifford Hoffman, Partner in Deloitte & Touche, explained the City is in better condition than a year ago. In 1996, the general fund expenditures were $700,000 under the budgeted amount. The City is conservative in its accounting practices charging today's taxpayers for today's services. By having a volunteer rather than a full -time fire department, the City saves a million dollars per year. In spite of this, the City is on the high end of the range for total public safety spending. Deloitte & Touche clients who have volunteer fire departments spend from 35% to 46% of their general fund budgets on public safety. Brooklyn Center spends 43% on public safety which puts it near the top of the range. The enterprise funds had their best year ever in 1996. The Earle Brown Heritage Center showed an operating profit after adding back depreciation although it still isn't funding depreciation. The golf course also had a better year, but isn't funding depreciation. Most of the utility funds have cash and investments that are greater than accumulated depreciation. However, for long lived assets, even fully funded depreciation only pays for an average of 35% of the cost of a replacement asset. The City's A -1 bond rating is above average. This is important because of plans to issue bonds this year, and it is based upon a belief that property values will improve in the future. The City is going in the right direction. An important factor will be what happens at Brookdale. Bond rating agencies like to see 50% of bonds paid off in 10 years. This City does that and pays back debt faster than the facilities wear out. Brooklyn Center has a competitive advantage in that it accounts for all debts. Levy limits have been reimposed which prevent the City from making up for zero percent levy increase in a previous year. The City is doing a very good job from an operating standpoint. It knows how to budget and follow good conservative accounting. The challenge is to know what the capital needs will be for the next ten years. Identifying projects which need to get done will create the highest rate of return on investment and rising property values. Colleen Crawford, Manager in Deloitte & Touche, reported in the Management Letter there had 6/23/97 -6- been no significant changes in accounting policies, no disagreements with management, and no lack of internal controls uncovered during the audit. The Audit of Federally Funded Expenditures reported no questioned costs or other problems. The Letter of Recommendations listed changes in reporting that will be required in the future and reported that 1995 recommendations were all resolved or in the process of resolution. Deloitte & Touche's opinion in the financial report is that the financial statements are fairly stated, and this is a clean opinion. Councilmember Hilstrom asked about a letter from the State Auditor regarding tax increment financing. Cliff Hof fan explained the state appropriated special money for the State Auditor to challenge all cities on how they handle tax increment financing and that this represents a change in the rules after the fact. Councilmember Hilstrom requested the City Manager discuss interfund loans. City Manager McCauley reported that page 39 shows monies owed between funds. The Earle Brown Heritage Center loan of $585,000 represents operating capital. Mayor Kragness asked if there also is a loan to the golf course. Finance Director Hansen reported there was in the amount of $1,150,000. It was used for the construction of the golf course, but the golf course isn't likely to be able to pay down the existing loan and at the same time make the capital outlays which will be required over the next 15 years. City Manager McCauley explained during the coming budget process the City will look at the capital needs and potential funding sources for the golf course and Earle Brown Heritage Center. The Earle Brown Heritage Center has now demonstrated that it is able to cash flow operations, but neither it or the golf course are generating the cash needed for capital investments. Councilmember Carmody noted the liquor stores showed a net income of $69,840 after transferring $100,000 to the general fund, and the net income had been about $30,000 each for the two previous years but there was no cash at year end. City Manager McCauley reported that the earnings were used for inventory equipment and prepaid expenses. The liquor fund is far short of funding depreciation. The target in the budget is to contribute $100,000 to the general fund and reinvest the rest in the liquor fund. Councilmember Hilstrom asked what is the depreciation in the liquor fund which should be funded? Cliff Hoffman responded it is reported on page 80 that the liquor stores have cash of $150 and accumulated depreciation of $268,000, so the difference is what is short. Councilmember Peppe asked what happened to the $69,840 of liquor net income? Finance Director Hansen explained we had $69,840 profit, so the expectation is there should be $69,000 in cash. However, the liquor stores increased the inventory levels by a few tens of thousands of dollars. The 1997 liability insurance premium was paid on December 31, 1996, whereas the 1996 liability insurance premium was paid on January 2, 1996, using up about $10,000 of cash. Current liabilities were paid a little faster than the year before. Each of these things used some of the cash, so the $69,000 profit remained in the liquor fund and was used for liquor purposes, 6/23/97 -7- it simply doesn't show up in the cash line because it was used for other things on the balance sheet. Councilmember Hilstrom asked if there is any money set aside for capital improvements? Finance Director Hansen answered no, it is necessary to maintain the health of the fund, to have inventories and pay liabilities. Those things need to be done to keep the stores operating on a day -to -day basis. A few years ago, there was too much money transferred from the liquor fund. For the last few years, we have been trying to transfer less than the profits to build up the balance sheet, so we will have cash when capital outlays are needed, but we aren't there yet. Councilmember Hilstrom asked if the cash isn't being set aside for capital needs, where will the cash come from if we need to move a liquor store? City Manager McCauley answered that we may need to incur debt to move a liquor store. Cliff Hoffinan drew the City Council's attention to the statement of cash flows on page 84. The first line under the liquor stores column is operating income of $167,957. Comparing this to the $486,000 of retained earnings, which is the City's investment in the liquor stores, you get a rate of return of over 30 %. Then you have to say, where is the cash going? To analyze this you add back expenses which don't consume cash, that is depreciation of $22,745. Then an increase in inventory used $27,000 of cash. A payment of insurance in December rather than the first week of January used $10,000, and payments to vendors for expenses used $41,000. The net cash provided by operations was about $131,000. Other adjustments included payments of $24,902 on the advance from other funds and interest on the advance of $9,598. Next was $100,000 transferred to the general fund, so the sum of the adjustments was $134,500. That's more money than the cash from activities for a net decrease in cash. The City had over 30% rate of return on the liquor stores in 1996, the challenge is to keep that up. Councilmember Carmody asked why it appears in the report as though the Earle Brown Heritage Center did not make money in 1997 when previous discussions have indicated a positive year for the Center. Finance Director Hansen explained that it has been reported that the Earle Brown Heritage Center made $150,000 in 1997 after adding back depreciation. In the Comprehensive Annual Financial Report, depreciation is subtracted as an expense, which results in a reported loss of $159,000 versus the positive cash flow of $150,000 when depreciation is added back, since it does not represent actual expenditure of money. If you look back at the construction cost of the Earle Brown Heritage Center, the premium paid for the historical preservation meant that it would never pay for itself. That is why the TIF district was formed and is paying for the bonds. The depreciation on the contributed assets is added back because it was never expected that the Earle Brown Heritage Center would be able to replace those assets. City Manager McCauley stated this is consistent with what has been put forward, which is that the operations of the Earle Brown Heritage Center last year cash flowed. It does not however begin to cash flow the replacement of the capital. Councilmember Hilstrom asked if there was a plan for the replacement costs at the Earle Brown Heritage Center. Finance Director Hansen stated that it was originally thought that after the 6/23/97 -8- bonds were paid off, but before the TIF district was dissolved, a couple of million dollar endowment fund would be set up with the proceeds from the last year of the TIF district to pay for roofs and furnaces, etc. Cliff Hoffman added that the important thing is that you know where the cash for capital is going to come from and balance that against the other needs of the City. Councilmember Carmody moved the Resolution Accepting the Comprehensive Annual Financial Report of the City of Brooklyn Center for the Year Ended December 31, 1996, and Ratifying Interfund Loans. Councilmember Peppe seconded the motion and all members voted in its favor. The Council took a break at 8:55 p.m. The Council table reconvened at 9:00 p.m. RESOLUTION NO. 97-108 Member Carmody introduced the following resolution and moved its adoption: RESOLUTION ACCEPTING THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY OF BROOKLYN CENTER FOR THE CALENDAR YEAR ENDED DECEMBER 31, 1996, AND RATIFYING INTERFUND LOANS The motion for the adoption of the foregoing resolution was duly seconded by member Peppe and passed unanimously. RESOLUTION AUTHORIZING THE CITY OF BROOKLYN CENTER TO ACT AS FISCAL AGENT FOR THE 1997 -98 MINNESOTA DEPARTMENT OF CHILDREN FAMILIES AND LEARNING AFTER SCHOOL ENRICHMENT GRANT City Manager McCauley explained that the City has been actively involved in a pilot after school enrichment grant program with the intent to provide afternoon activities for youth ages 9 -13. This is a noncompetitive grant program that requires agency collaboration and cooperation. The Brooklyn Center collaborative committee includes representatives from our four school districts, the YMCA, Northwest Hennepin Human Services Council, Hennepin County, and the City. This collaborative approach provides an outlet to utilize the skills and resources of the respective agencies. The City will be the fiscal agent for 1997 -98. Responsibilities of the fiscal agent include attendance at all grant meetings, appropriate record keeping, issuance of checks, facilitation of grant meeting agendas, and coordination of program evaluations. As compensation for our efforts, the grant authorizes reimbursements of up to $5,000 for fiscal agent expenses and $3,000 for the program evaluation process. RESOLUTION NO. 97 -109 6/23/97 -9- Member Carmody introduced the following resolution and moved its adoption: RESOLUTION AUTHORIZING THE CITY OF BROOKLYN CENTER TO ACT AS FISCAL AGENT FOR THE 1997 -98 MINNESOTA DEPARTMENT OF CHILDREN, FAMILIES AND LEARNING, AFTER SCHOOL ENRICHMENT GRANT The motion for the adoption of the foregoing resolution was duly seconded by member Lasman and passed unanimously. ADJOURNMENT A motion by Councilmember Hilstrom and seconded by Councilmember Lasman to adjourn the meeting at 9:43 p.m. passed unanimously. -�km"Z-A- V City Clerk Mayor Recorded and transcribed by: LeAnn Larson 6/23/97 -10-