12/12/2005 - City Council Special~-,
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SPECIAL CITY COUNCIL MEETING
AGENDA
DECEMBER 12, 2005
5:30 PM
EAGAN ROOM-EAGAN MUNICIPAL CENTER
I. ROLL CALL AND AGENDA ADOPTION
II. VISITORS TO BE HEARD
P, ~ III. 2006 BUDGETS /RESPONSE TO COUNCIL INQUIRIES
~~ IV. REVIEW 2006 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)
APPLICATION
e,~ V. GAS STATION CANOPY SIGNAGE
(~ VI. COMMERCIAL/INDUSTRIAL ARCHITECTURAL STANDARDS
ORDINANCE ,
~~ VII. BUILDING SIZE/SCALE STANDARDS WITHIN ZONING CATEGORIES
VIII. REVIEW CEDAR GROVE REDEVELOPMENT PLANS /SCRAPER
'P ~ ~ RICHARDSON
IX. OTHER BUSINESS
X. ADJOURNMENT
Agenda Information Memo
December 12, 2005, Special City Council Meeting
III. 2006 BUDGETS / RESPONSE TO COUNCIL INQUIRIES
A. Technology Working Group Consulting Services/Fees
ACTION TO BE CONSIDERED:
To provide direction to staff regarding budget request for additional information.
FACTS:
On June 21, 2005 the City Council approved participation in the ISD 196 fiber
project including installation of 11.5 miles of City owned conduit through Eagan.
As a result of that action, included in the City Administrator's recommended 2006
budget was an allocation of $49,500 for consulting services to conduct a
business feasibility plan and engineering study. (This cost has since been
reduced to $21,500 as noted in the background information to follow.) The study
is contemplated to support the work of and to be monitored closely by the
Technology Working Group.
The allocation was proposed to be funded through retained franchise fees and
paid directly from that fund.
In the background information regarding the allocation it was noted that in the
same way a consultant assisted the previous Technology Task Force in creating
a first-ever map to identify technology gaps in the City to be used for economic
development/business location purposes, it is proposed that the newly formed
Technology Working Group be assisted through a similar level of consulting
expertise, to be funded through retained franchise fees. While the Working
Group is made up of top technology advisors, they have been asked to serve as
volunteer advisors, which does not pay for the marketing/sales and engineering
analyses necessary to bring conduit opportunities to the market place, determine
the highest value customers, and maximize City revenues. The analyses
provided by consultants would suggest leasing options, projected revenues from
leasing or whether it is best to sell the conduit space, and project take-rates to
position the City to recover the costs associated with a City investment in fiber. It
is not proposed that such consulting costs would be ongoing; however, it is
suggested that such costs are necessary to prepare a viable market-ready plan
to provide revenues that might offset the loss of cable franchise fees in the
future.
In addition to the services noted above, and for no extra charge the consultant
will also study whether a fiber to-the-premise approach to bring world-class
Internet speeds to Eagan is feasible. A similar analysis is being done for the City
of Burnsville.
As part of the budget review process, the City Council directed that additional
information be provided regarding this request. The additional information is to
include responses to the following questions: 1.) How could the City recoup its
costs to hire the consulting services? 2.) What services would the City receive
through an allocation of $50,000? 3.) How could this service be captured
through an Enterprise Budget?
At the November 15, 2005 City Council meeting an opportunity was presented
and approved to enter into an agreement with DynamicCity to provide this
consulting service at a cost of $21,500. The Director of Communications and the
City Attorney's Office are engaged in the preparation of the appropriate contract
document so the work can be undertaken. A kickoff meeting with the City will be
scheduled soon.
1.) How could the City recoup its costs to hire the consulting services?
In general terms, the answer to this question is that the City will recover its
consulting services investment through successful use of the City-owned fiber
loop. Experts have consistently stated that there will be numerous business
opportunities available to use the loop in an entrepreneurial manner, to recover
these consulting costs as well as the infrastructure costs, and to generate a
return on the investment. There are a number of unknowns related to the
business opportunities that need to be answered through the investigation
process.
2.) What services would the City receive through an allocation of $50,000?
(Now $21,500)
In response to question number 2, as outlined in the Conduit Ring Utilization
Analysis and Open Communications Fiber-to the-Home Infrastructure Analysis
Proposal approved by the Eagan City Council on November 15, 2005,
DynamicCity will:
• Analyze potential use and best practice for existing 11.5 mile conduit ring
and make recommendations based on findings
• Develop model scenarios for an open infrastructure network in the City of
Eagan and identify the best leverage for the conduit ring
• Explore feasibility of open infrastructure fiber-to-the-home and fiber to the
business network city-wide throughout Eagan consistent with the cost and
revenue analyses outlined in DynamicCity's proposal to Eagan.
• Study and educations sessions with city staff and officials, a final report
and presentation and an electronic copy of the final report will be provided
to the City of Eagan as outlined in DyanmicCity's proposal to Eagan.
The conduit ring analysis specifically will address the following questions:
• Should the City of Eagan of Eagan sell or rent the conduit space to
recoup its investment?
• Should the City of Eagan place fiber itself in the conduit ring and/or make
the conduit part of an open infrastructure enabling fiber to the premise in
Eagan?
• What is the highest and best use of the existing conduit?
• What is the best long-term use of the existing conduit?
• How and how soon could Eagan expect to recoup its investment in the
11.5 mile conduit route and the cost of the Dynamic City consulting
project?
The infrastructure analysis should also specifically address the following
questions:
• Where is Eagan positioned today relative to true high speed world class
Internet services and speeds?
• What action steps-including all likely costs-would be necessary to
achieve world class Internet access for Eagan residents and businesses?
• What are the pros and cons of the City of Eagan partnering with the
private sector to attract true high speed/world class Internet speeds to
Eagan?
• What is the current state and federal legal environment for projects of this
kind?
• Any other considerations from either an engineering, marketing, financial,
or public-purpose standpoint of which Eagan officials should be aware.
3.) How could this service be captured through an Enterprise Budget?
Question number 3 appears to be a request for an accounting of all costs related
to this fiber project. The City can certainly set it up as an enterprise fund on its
books. Depending on the auditor's interpretation of government accounting
standards, it may need to be presented differently in the official annual financial
report, but that can be determined at a later time.
In a subsequent email City Councilmember Carlson asked that a timeline be
developed, policies put in place, known costs be reported for a budget
breakdown, and the role of the Technology Working Group be defined.
Timeline:
• The ISD 196 fiber installation project is on schedule and projected to be
active on or before June 30, 2006. The conduit is installed and
connections to the various facilities are being made at this time.
• The work of DynamicCity was to be completed from November 21, 2005
to February 28, 2006. As the contract was negotiated, the starting date
slipped; consequently, the completion date may also be slightly delayed.
• Beyond those two definitive projects the future timeline will be determined
by the City Council and probably based on the outcome of the work of
DynamicCity and the response of the Technical Working Group to that
information.
• The Technical Working Group is tentatively scheduled to meet with the
City Council in March.
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Policies:
• In general, detailed policies will be best developed after the work of the
consultant is completed and reviewed. At that time the question of
whether to retain ownership and lease the use of the conduit or to sell it
will be first addressed. The definitive business plan can then be
developed and implemented.
The following policies/parameters will help inform the response to the results of
the consultant study:
• The City is not interested in operating any kind of fiber network, but in
partnering with others, including the private sector in meeting the goal of
enhancing economic and business development and in providing a level
of competition for high speed Internet access to the business and
residents of the community.
• The project must be financially feasible long-term, standing on its own.
• The City desires to maximize the return on its investment through the
business opportunities for the 11.5 miles of conduit.
• Although there is some overlap in the installation cost, the business
opportunities and costs for the 11.5 miles of conduit are considered
separate from the business of the City. However, meeting the specific
needs of the'City as a user is provided for as the base component of the
City's participation in the ISD 196 fiber project.
Costs/Budget:
• The 11.5 miles of conduit is budgeted to cost $240,000 and relates to the
business opportunity (Column 2). The City is committed to approximately
$170,000 (Column 1) related to the business of the City which costs
would exist with or without the addition of the City owned 11.5 miles of
conduit. The total costs related to the ISD 196 fiber project are $410,000
(Column 3). This breakdown is demonstrated with additional detail in the
following table:
Eagan Budget Estimates for ISD 196 Fiber Project
(1) (2)
ISD 196 Fiber Eagan Owned
Loop City 11.5 Mile
Location/Activity Cost Share Conduit Loo Total
Installation Costs $ 95,000 $ 170,000 $ 265,000
Fire Station 3 29,600 29,600
Fire Station 4 18,800 18,800
City Hall 3,700 3,700
Fiber Loo Eagan Share in ISD Conduit 14,000 14,000
Western Service Center Connection-Construction 5,500 5,500
Western Service Center Connection-Fiber 3,400 3,400
Conduit - 70,000 70,000
Total $ 170,000 $ 240,000 $ 410,000
(1) Paid directly from Retained Cable TV Franchise Fees Fund (9196)
(2) Paid from the new "Fiber Conduit Ring" Fund (9225)
• In addition, the recently approved consulting contract discussed earlier
obligates the City to a cost of $21,500.
• Therefore in total $261,500 is the current budget obligation known to date
for the business opportunity related to the 11.5 miles of conduit.
Role of the Technology Working Group: (Specific to the 11.5 miles of conduit.)
At the April 26, 2005 Special City Council meeting staff was directed to proceed
with advertising and gathering of interested applicants for the Technology
Working Group. There role is as follows:
• To lend their expertise as technology experts to the City staff and City
Council, providing a valuable resource at little cost to the City.
• To provide direction to and to monitor the work of the consulting group,
DynamicCity.
• To assist staff and the City Council in formulating and implementing
appropriate policies and an acceptable business plan.
• To review the results of the DynamicCity study and to provide
recommendations and assistance to the City Council in formulating the
appropriate action plan(s) to meet the City's policy objectives.
• To provide a link to both sophisticated and novice fiber users and potential
users in the community.
ATTACHMENTS: (None)
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Agenda Information Memo
December 12, 2005, Special City Council Meeting
III. 2006 BUDGETS / RESPONSE TO COUNCIL INQUIRIES
B. 2006 Health Insurance Costs
ACTION TO BE CONSIDERED:
This is an informational item, no action is required.
FACTS:
• At the August 23, 2005 Special City Council Meeting during the discussion
of the General Fund Budget the increased cost of employee health
insurance was noted.
• The Council requested a copy of the joint health insurance report that was
prepared through the HiPP Project.
ATTACHMENTS:
• Enclosed on pages r7 through 44D is a copy of the joint health
insurance report that as prepared through the HiPP Project.
Dakota County High
Performance Partnership
Project
Employee Health Care
Committee
Committee Members
Molly Park, Sunfish Lake, Co-Chair
Tom Lawell, Apple Valley, Co-Chair
Dawn Strauss, Apple Valley
Jill Hansen, Burnsville
Will Volk, Dakota County
Lori Peterson, Eagan
Joe Fischbach, Farmington
Melanie Mesko Lee, Hastings
Jenelle Teppen, Inver Grove Heights
Cindy Joosten, Lakeville
Dawn Weitzel, Rosemount
Glenn Burke, South St. Paul
June 17, 2005
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Table of Contents
Executive Summary
Research Topics
Section 1
Health Insurance Programs
Section 2
Dental Insurance Programs
Section 3
Short Term Disability Insurance
Section 4
Long Term Disability Insurance
Section 5
Health Management Programs
Identification of Future Research Topics
Appendices
A. Opportunities for Managing Benefits Under a Joint
Powers Agreement - Stanton Group
B. Health Insurance Purchasing Pool - Discussion
Guide March 22, 2005, Deloitte Consulting
C. Dental Insurance Plan Offerings - June 2005
D. Short Term Disability Insurance Plan Offerings - June 2005
E. Long Term Disability Insurance Plan Offerings - June 2005
F. Current Health Management Program Offerings - June 2005
b
Executive Summary
Local governments in Dakota County have a long history of collaborative
engagement to enhance the efficient delivery of services to County residents. In
early 2004 the Dakota County Board of Commissioners along with a steering
committee of representatives from local governments initiated an examination of
opportunities for additional city/county collaboration. This project, in aggregate
named the High Performance Partnerships (HiPP) study, released a report in
mid-2004 identifying 20 areas for further examination and subsequently
recommended six projects for specific evaluation.
The joint purchasing of employee health care is one of the six recommended
projects and was seen as a potential opportunity for cost savings through the
development of coordinated program design, consolidation of certain
administrative functions and increased purchasing power through the
establishment of a larger or more coordinated purchasing pool.
The HiPP Health Care Committee was formed to evaluate employee health care
purchasing opportunities. In conducting that review, the committee broadened its
scope of review by also addressing other employee health care related issues
including dental insurance, short-term disability insurance, long-term disability
insurance, and employee health maintenance effort.
The key findings of this review include:
Health Insurance
• There is wide variation in the health insurance plans offered by the study
participants.
o Amongst the entities offering health insurance, there is
approximately a 20% difference in benefit values from richest to
least rich benefits
o Normalizing the data for a common plan design shows that for 2005
the premiums by group vary by as much as 40%
• Based on an analysis of participating jurisdictions' 2004 claims
experience, it appears that in aggregate the entities are negotiating well
with insurers. Expected claims plus administrative fees exceed 2005
premiums.
• The work done to date identifies a number of challenges but also details
significant potential opportunities in pursuing a joint medical purchasing
arrangement.
• However, the size of the opportunity is directly proportional to the degree
of dislocation jurisdictions are prepared to accept. The maximum cost
savings estimated in total ranges from $900,000 to $1,500,000.
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• Based on these preliminary study results, the HiPP Employee Health Care
study team sees substantial merit in the further examination of joint
purchasing of employee health care. However, a more detailed
assessment of governance considerations as well as acceptable medical
plan design and funding alternatives would need to be undertaken. This
level of analysis would require professional benefits consulting assistance.
• It is the recommendation of the HiPP Employee Health Care study team
that Deloitte Consulting be engaged to develop the next level of detail.
• It is recommended that this engagement be structured as an amendment
to the existing contract between Dakota County and Deloitte Consulting,
with fees being paid directly by Dakota County but allocated to
participating jurisdictions based on employee population. It is estimated
that this engagement would cost approximately $20,000, plus out-of-
pocket administrative expenses not to exceed 10% of the professional fee.
It should be noted that this cost estimate does not completely implement a
joint health care purchasing concept. Total costs related to designing and
implementing a true joint health care purchasing concept could range from
$200,000--$400,000.
Dental Insurance
• Similar to health insurance costs, dental insurance costs are also on the
rise, although at a lower annual percentage increase.
• Eight of the 11 participating entities provided information on their dental
insurance plans.
• The eight entities report using one of two dental plan providers;
HealthPartners or Delta
• There are strong similarities between the plan designs, carriers and
premium costs amongst the eight entities reporting.
• As such, , the HiPP Health Care Committee recommends that we further
explore the idea of joint bidding or establishing an insurance cooperative
to address the rising prices of dental insurance.
• A follow-up meeting to further discuss this possibility has already been
scheduled for June 20, 2005.
Short Term Disability Insurance
• Three out of 11 participating entities offer some type of short-term
disability insurance coverage to their employees
• The program offerings from the three entities vary significantly.
• Employer contribution varies in that Apple Valley and Dakota County are
self-funded and Farmington provides as part of the cafeteria plan.
• Due to limited numbers of entities currently offering a short-term disability
benefit and the significant variations in plan designs, the HiPP Health Care
Committee does not recommend a consolidation of short-term disability
insurance coverage at this time.
• The Committee does recommend developing a "model" plan design for
cities and the county to consider working towards in their respective
organizations. The Committee recommends a follow-up discussion on this
subject in one year to determine level of interest.
Long Term Disability Insurance
• Ten out of 11 of the participating cities offer some type of long-term
disability insurance to their employees.
• Seven of the ten organizations which offer long-term disability benefits pay
for the program on behalf of the employee while three organizations offer
the benefit as an employee-paid option.
• While there are some coverage differences in the various long-term
disability insurances programs offered by the cities, it appears that many
of the essential components of long-term disability programs are closely
aligned regardless of who the provider is or which organization is offering
this benefit.
• As such, , the HiPP Health Care Committee recommends that we further
explore the idea of joint bidding to address the need for long-term
disability insurance.
• A follow-up meeting to further discuss this possibility has already been
scheduled for June 20, 2005.
Health Management Programs
• A survey of the 11 participating jurisdictions indicates that a wide variety of
health management programs are being offered at this time.
• There is little or no coordination of these programs offerings at this time.
• City/County representatives report a wide disparity in the percentage of their
employees who participate in the health management programs offered in
their jurisdictions.
• Organizing health initiatives are labor intensive. Current staffing limitations
do not allow for the expansion of these programs to keep pace with growing
needs.
• Employee participation is difficult to achieve without incentives.
• Importance of health management programs is not universally understood
by employees, management, the State Auditor, and the general public
• It is recommenced that a county-wide health promotion committee be
created.
• It is recommended by the HiPP Health Care Committee that Dakota County
and Dakota County cities contract with a consultant to develop a one-year
health initiative plan to follow. Cities can "invest" according to their needs.
Activities are to be organized by the consultant.
P
• It is recommended that cooperative purchasing be pursued in this area.
One example would be to collaboratively approach vending companies to
provide healthier vending machine selections for employees.
Future Research Topics
• The HiPP Health Care Committee recommends that two additional
employee health related topics be researched in the near future.
• The selected topics include: Employee Safety Programs and Employee
Training Programs
• Both topics are deemed very important in developing and protecting our
most important organizational resource-our employees.
• Should the HiPP Steering Committee wish to see these topics explored in
greater detail, the HiPP Health Care Committee Members would be willing
to continue to provide this review.
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Section 1
Employee Health Insurance
The joint purchasing of employee health care is one of six projects recommended
for further study by the HiPP Steering Committee. It was seen as a potential
opportunity for cost savings through the development of coordinated program
design, consolidation of certain administrative functions and increased
purchasing power through the establishment of a larger or more coordinated
purchasing pool. A HiPP Health Care Committee was formed and has evaluated
collaboration opportunities.
A preliminary assessment identified opportunities for cost savings in a medical
purchasing pool arrangement. Given the complexity of this issue, it is the
recommendation of the study team that an additional, more detailed assessment
of potential plan structures and corresponding challenges be undertaken. This
work would be completed by Deloitte Consulting and produce a report for the
HiPP Steering Committee and participating jurisdictions.
Overview
Providing cost effective employee health care coverage has, for all employers,
become an increasingly complex matter. Based on a high level assessment of
participants' current state, study team members recognized that additional
professional assistance would be needed to go beyond very basic discussions of
plan design and administration opportunities. Initially the study team received a
presentation by the Stanton Group (current administrator of the LOGIS Health
Insurance Group) to brief the team on the opportunities and challenges of
healthcare pooling. The presentation is included as Appendix A.
Additionally, Dakota County, on behalf of the Health Care Committee, asked
Deloitte Consulting LLP (Deloitte Consulting) to review claims data and related
plan information for participating cities and the County. The objective of this
review was to test at a very high level, the potential impact of joint purchasing.
Deloitte Consulting reviewed the claims data, reported on group differences,
quantified potential savings and discussed design/transition issues. Following is
a summary of the analysis and findings. The complete report is included as
Appendix B.
Data Gathering
Deloitte Consulting requested the following information from the eleven (11)
participants:
2003 claims and enrollment by plan
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2004 claims and enrollment plan
2003 medical plan description
* 2004 medical plan descriptions
2005 medical rates by plan
2005 medical plan description by plan
* Renewal date
* Description of restrictions to competitive bidding
Nine (9) of the eleven (11) participating entities provided data for the analysis
(Sunfish Lake is listed as a participating entity but does not maintain a health
insurance plan as it has no full time employees).
Findings and Group Differences
Although all groups are currently fully insured with the carriers taking risk,
significant differences exist between each group's rate structures, plan designs
and premiums. These differences are most likely a reflection of jurisdiction
benefits plan design philosophies, employee population demographics, plan
experience and contract negotiations/benefits committee history.
To develop the basis for a valid comparison of the plan(s) of one jurisdiction to
those of another, Deloitte Consulting conducted a "normalization" analysis to
develop a common benefit factor framework. The methodology employed is
illustrated in Attachment II and results in both comparable plan value and related
common premiums needed to appropriately fund the average plan.
Summary of Data
• Ten (10) of the jurisdictions offer health plans
• Five (5) separate carriers/vendors currently provide benefits
o Blue Cross Blue Shield of Minnesota
o Health Partners
o LOGIS Health Insurance Group - a consortium of Minnesota local
government groups purchasing insurance through Medica
o Medica
o SW/WC Service Cooperative - a cooperative that purchases insurance for
school districts, non-profit organizations, cities, counties, and other
governmental agencies using Blue Cross Blue Shield of Minnesota
• Twenty (20) unique benefit plans offered
o Each jurisdiction offers from 1 to 4 plans
2005 aggregate premium = $26,404,561
Normalized monthly premium
o $388.10 -Single
o $1,067.29 -Family
Rate Structures - Three (3) different rate structures currently exist
Differences in plan rate structures most often directly reflect employee
demographics and the jurisdictions' philosophy as to how much one group should
subsidize the expenses of another.
Single/Family
Single/Single + 1/Family
• Single/Single + 1/Single + Child(ren)/Family
Benefits Levels - Approximately 20% difference in benefit values from richest to
least rich benefits
Deloitte Consulting developed a benefit factor that reflects the relative "value" of
each plan's design elements and coverage levels. This analysis produced
values that ranged from a low of 76% to a high of 95%. Key reasons for these
differences in plan values can be found in jurisdiction benefits strategy and
collective bargaining results. Each jurisdiction has implemented a plan design
and contribution strategy around what is seen as its unique needs.
Richest Plan Design - 100% with $15 office visit copay
Least Rich Plan Design - $2,000 deductible plan
Premiums - For a common plan design, 2005 premiums b group va b as
much as 40%
To fully determine the reasons that premiums vary as they do, a more detailed
assessment would be needed. However, the most likely drivers can probably be
found in group demographics, corresponding plan utilization, and premium cost
sharing between the employee and employer.
Since premiums currently vary by up to 40%, aggregating all covered employees
into one insurance pool might result in some jurisdictions experiencing lower
premiums and some who might experience higher premiums. It may, however,
be possible to moderate these effects through plan and rate structure design.
Current Rate Adequacy - current aggregate premiums are reasonable
Based on an analysis of participating jurisdictions' 2004 claims experience, it
appears that in aggregate the entities are negotiating well with insurers.
Expected claims plus administrative fees exceed 2005 premiums.
Opportunity for Savings
Current medical insurance plan arrangements among the participating
jurisdictions do present some potential savings opportunities. However, the size
of the opportunity is likely directly proportional to the degree of possible
/5-
dislocation jurisdictions are prepared to accept. That is, a modest change such
as retaining individual jurisdictions' plan designs but synchronizing RFP cycles
and developing joint solicitation processes would have little or no impact on the
premiums a medical plan provider might be expected to propose. In contrast, the
potential for more significant savings might occur if jurisdictions enter into a
common insurance pool with sharply limited plan offerings. Such a pool could be
administered by any of the traditional carriers/vendors or via the State of
Minnesota Advantage Plan.
Further savings might be generated if the insurance pool were to be self-funded.
In this instance participants would realize maximum administrative savings while
also avoiding certain taxes/assessments. However, this direction would require
bargaining unit concurrence and limit any downward movement in the aggregate
value of a jurisdiction's medical plan benefits. Additionally, self-funding could also
result in significant year-over-year fluctuation in funding requirements as well as
the need for the setting aside and building of necessary premium reserves. As
well, the success of any pool arrangement would at least be enhanced and
perhaps be predicated on making the arrangement mandatory to avoid adverse
selection over time. Adverse selection occurs when participating jurisdictions
choose not to join or to exit the pool when that jurisdictions' experience is good,
resulting in increased costs for the remaining employers. The consultants
advised us that mandatory participation would be necessary to avoid such a
predictable adverse selection spiral while providing the largest possible
participant pool.
Based on aggregate annual premiums of approximately $26.4 million, the
consultants estimated that in an ideal circumstance the following cost savings
might be realized:
Administrative Savings $500,000 to $800,000
Reduced Agent/Broker $250,000 to $500,000
Fees
Reduce Claims Expense $125.000 to $250.000
Total Potential Savings $900,000 to $1,500,000
It is important to note, however, that these figures represent potential first year
savings that would be realized only after a joint purchasing pool becomes fully
operational. Overall cost of administration or impact to individual entities
has not been factored into these figures since necessary administrative
and governance structures are not considered to be within the scope of
this document and are, therefore, not defined.
Ili
Design/Transition Issues
Challenges exist to realize potential savincis
The following list reflects the most substantial considerations that would need to
be addressed to realize identified savings.
Design and development of an organizational/governance structure.
Determination of the degree of risk jurisdictions are prepared to assume
(insured versus self-funded arrangement).
Willingness to contribute to upfront funding for expenses associated with
organizing, designing and managing implementation of a purchasing pool.
Determining the degree of operational and medical plan design independence
jurisdictions would intend to retain.
Determining the range of choice jurisdictions would need to maintain. Limited
plan offerings, one vendor, or reduced provider network may be difficult for
groups to accept but would be a necessary design element.
Agreement to a phased implementation consistent with some jurisdictions
current multiple-year rate guarantees or limitations on bidding
Acceptance of some loss of flexibility in collective bargaining with employee
resistance being likely. If flexibility were needed, potential cost savings might
be correspondingly reduced.
Conclusions
Participating jurisdictions currently have a broad range of medical plans in place.
Some currently participate in restrictive purchasing pools and benefits levels and
premiums vary. substantially. A number of cost saving measures might be
considered, ranging from the simple with only modest cost savings, to the most
complex arrangement involving a self-funded mandatory insurance pool. While
there are plan structure and design options that would lessen the challenges,
they would likely also reduce the cost effectiveness of the initiative. A highly
preliminary estimate of costs to design and implement a purchasing pool are in
the range of $200,000-4400,000.
Tasks preparatory to developing a purchasing pool
If a purchasing pool were to become a viable option, jurisdictions would need to
agree on at least the following:
Design of a trust or organization structure to administer and manage the risk
pool
Development of a joint powers arrangement to form a multi-employer
governmental plan
Engage a benefits/actuarial consultant to facilitate the establishment of the
pool including:
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o Project management
o Develop plan designs and structures
o Design financial arrangements
o Define rate and reserve requirements
o Educate and communicate with participating jurisdictions
o Competitively bid proposed plan(s)
Recommendations
As noted earlier in this document, the provision of employee medical plans has
become an increasingly complex undertaking. The preliminary assessment that
has been completed to date identifies a number of challenges but also details
significant potential opportunities in pursuing a joint medical purchasing
arrangement. Based on these preliminary study results, the HiPP Employee
Health Care study team sees substantial merit in the further examination of joint
purchasing of employee health care. However, a more detailed assessment of
governance considerations as well as acceptable medical plan design and
funding alternatives would need to be undertaken. This level of analysis would
require professional benefits consulting assistance.
It is the recommendation of the HiPP Employee Health Care study team that
Deloitte Consulting be engaged to develop the next level of detail.
Proposed Approach and Workplan
Through preliminary discussions with Deloitte, a tentative workplan has been
developed that could begin immediately with one-on-one meetings with the
participating jurisdictions offering health plans. The goal of these meetings would
be to better understand the current healthcare environment and catalog the
needs of each jurisdiction in moving forward with any joint purchasing concept.
Each meeting would be scheduled for approximately two hours and include
jurisdictions' key technical and management representatives. At least two more
meetings with the HiPP Employee Health Care study team would be anticipated.
Study deliverables would include a final report outlining the pool structures and a
summary of jurisdictions' needs for moving forward. As part of that report,
Deloitte would develop at least three high-level alternative scenarios for
preliminary consideration by the jurisdictions.
Contractual Arrangements and Professional Fees
It is recommended that this engagement be structured as an amendment to the
existing contract between Dakota County and Deloitte Consulting, with fees
being paid directly by Dakota County but allocated to participating jurisdictions
based on employee population. It is estimated that this engagement would cost
approximately $20,000, plus out-of-pocket administrative expenses not to exceed
10% of the professional fee.
Ia
Section 2
Dental Insurance Programs
Introduction
Not unlike medical insurance costs, dental insurance costs are on the rise.
Informal reports state that dental insurance is climbing at a rate of 7% - 9% each
year. Although it could be argued that medical costs are increasing at double
this rate, the increase in dental insurance premiums is still significant. Typically,
consumers are intolerant of food or gasoline prices rising 7% - 9% each year, so
it is proper that we take a serious look at addressing rising dental insurance
prices before their premium increases rise any further.
One interesting theory for rising prices is due to a lack of dentists providing
general dentistry in the United States, with many moving into cosmetic dentistry
which is less affected by the insurance industry.
A Summary of Dental Insurance Plans
After reviewing Dental Insurance for the High Performance Partnership
Committee, it is interesting to note that of the seven cities and one county
reporting, each jurisdiction has some sort of dental plan in place. Of the eight
jurisdictions reporting, there are only two carriers represented; HealthPartners
and Delta Dental. HealthPartners covers three entities (two with full coverage
and one with preventative care only), while Dental Dental covers the remaining
five entities.
The treatment parameters can be categorized into diagnostic and preventive,
basic restorative, major restorative and orthodontic. All plans report that 100% of
all diagnostic and preventative care is covered by the plan. Basic restorative
coverage ranges from 80% to 100%. Major restorative coverage ranges from
50% - 70%, and of the eight entities reporting, four of them offer orthodontic
coverage at 50%, with a $1500.00 maximum per year. The annual total
maximum benefit per year, (not including orthodontics) ranges from $1200.00 per
year to $1750.00 per year. Enrollment period typically begins the first of the
month following the date of hire. The majority of plans operate within a network of
providers. Eligible dependents include spouses and children up to age 19, and
up to age 25, if they are a full time student. Upon termination of employment,
coverage ends on the last day of them month. Of those reporting, seven of eight
jurisdictions provide some sort of employer contribution to the premium; five
report funding the dental plan at 100%, two report allowing the employee to
utilize dollars from the cafeteria plan to fully fund or partially find dental
insurance. Total monthly premium costs range from $31.00 to $35.00 for single
coverage and $90.00 to $100.00 for family coverage. Typically, there is a $25.00
deductible for single coverage and a $75.00 deductible for family coverage.
In conclusion, there are many similarities in plan design, enrollment and eligibility
requirements, premium costs, employer contributions and carriers. Where there
are differences, the range does not appear significant. Detailed data on the
current dental plans being offered by the participating entities can be found in
Appendix C.
Additional Analysis
Some additional information to be obtained could include the volume of utilization
or experience ratio over the past 2 - 3 years, along with determining the costs of
claims administration and any brokerage fees incurred. There may be variations
in cost between those entities which are self funded verses fully funded.
Recommendations
Joint Bidding
One idea would be to consider working within the informal or formal networks
that have already been established to competitively bid for dental insurance. At
this time the following cities have an established relationship to go to market
together and shop for life and long term disability insurance:
• Plymouth
• Ramsey
• St Louis Park
• Burnsville
• Minneapolis
• Maple Grove
• Shoreview
• Apple Valley
• Chanhassen
• Stillwater
• Hopkins
Using the same carrier, they are able to maintain their own plan design and they
are responsible for the financial implications of any change in experience ratings
from year to year. Individual administrative fees are driven by the carrier's
response to the volume of claims in each city. Premiums costs will vary
depending on claims experience. The cost savings in this scenario is realized
through the pooling of claims administration fees. The next cycle of joint bidding
is scheduled for this summer, and a meeting to gauge community interest is
~o
scheduled for June 20, 2005. Members of the HiPP Health Care Committee
have been invited and are encouraged to attend.
Establish a Dental Insurance Cooperative
Another thought would be to establish a Dental Insurance Cooperative and issue
a Request for Proposal that calls for three plan designs that could be easily
modeled after the current plan designs reported, whether self insured for fully
insured, and pool and share the risk between all participants. This cooperative
may reflect those participating in the HIPP study, or perhaps the stakeholders
would be a modified grouping of the cities listed above that are already working
together.
Additional Variables
It appears from the data that the jurisdictions compel employees to take at least
single coverage for each employee. In this reporting group, at least one city
would be interested in offering a dental plan on a voluntary basis only. Therefore,
rates may vary in that case.
Conclusion
There appears to be a potential opportunity to further explore the notion of joint
bidding or establishing an insurance cooperative to address the rising prices of
dental insurance. Due to the similarities between the plan designs, carriers used,
and premium costs, entering into some sort of partnership would appear to have
a minimal direct impact on how an employee experiences this benefit, but could
have a favorable impact for the Employer, as it relates to cost.
Section 3
Short Term Disability Plans
Background
Short-term disability plans generally exist to provide financial protection to an
employee and his/her family in the event of a non-work related injury or illness.
An employee is eligible to collect short-term disability until returning to work or
becoming eligible for long-term disability whichever occurs first, but no longer
than a specified period of time (i.e., six months).
Short-term disability plans are generally designed to provide income replacement
after a waiting period such as seven, 14, or 30 days. The short-term disability
plan will provide income replacement at a percentage of salary, typically at about
60% of basic earnings.
Employers may provide short-term disability as an employee paid benefit on a
group basis, an employer paid benefit (self-insured or fully insured) or an
employee paid benefit by using cafeteria plan dollars. The taxability of the
income received depends on whether the plan is contributory (employer paid
premiums) or non-contributory (employee paid premiums). The benefit is
generally off-set by other income benefits such as retirement/pension plans,
automobile insurance, worker's compensation, etc. just to name a few.
Short-term disability plans are often designed to work in coordination with other
time off plans such as sick leave accruals, vacation banks, and/or paid time off
accrual plans.
Current Situation
Three government entities within Dakota County currently offer a short-term
disability plan: Apple Valley, Farmington and Dakota County. The details and
benefit levels of the three plans vary greatly and are summarized in Appendix D.
Key Findings
1) Three out of 11 organizations currently offer short-term disability
insurance coverage.
2) Benefit plan designs vary. For example, City of Apple Valley provides
a 21 day elimination period where Dakota County provides three levels
(8, 30, 75 day) and Farmington provides three levels (7, 14, and 30).
a~
3) Employer contribution varies in that Apple Valley and Dakota County
are self-funded and Farmington provides as part of the cafeteria plan.
Recommendations
Due to limited numbers of entities currently offering a short-term disability benefit
and the significant variations in plan designs, the Employee Health Care
Committee does not recommend a consolidation of short-term disability
insurance coverage at this time. The Committee does recommend developing a
"model" plan design for cities and the county to consider working towards in their
respective organizations. The Committee recommends a follow-up discussion on
this subject in one year to determine level of interest.
a~
Section 4
Long Term Disability Programs
Current Offerings
Long term disability insurance provides holders financial protection in the case of
a long-term disability. Of the eleven communities contacted regarding whether
they provide long term disability insurance to their employees, all responded
affirmatively. While the specificities of a long term disability program may vary
slightly among those organizations offering this benefit to their employees, an
analysis of the coverage offered shows that many of the essential components of
a long-term disability program are closely aligned regardless of who the provider
is or which organization is offering this benefit.
Qualification
To qualify for long-term disability, providers require the completion of a
qualification period, during which a covered employee must be disabled before
benefits are payable. The most common qualification period offered by the
Dakota County municipalities which offer a long-term disability program to its
employees is 3 months or 90 days. The other common qualification period
offered was 180 days (six months). A lesser qualification period may be met if an
employee can still work, but an injury, sickness or pregnancy prevents that
employee from earning more than a certain percentage of their monthly pay in
any occupation for which their education, training and experience qualifies them.
Benefits Available
Once qualified, an employee on long-term disability is then eligible for a benefit of
a percentage of their regular monthly pay. In the plans offered, this percentage
ranges from 40% to 70% of an employees basic monthly earnings, with a
maximum monthly benefit which ranges from $4,500 to $7,500. The most
common plan offered by Dakota County municipalities is 60% of basic monthly
earnings with a $5,000 monthly maximum.
How Benefit is Paid
Seven of the ten organizations which offer long-term disability benefits pay for
the program on behalf of the employee; three organizations offer the benefit as
an employee-paid option. There is a taxable impact on the receipt of this benefit
depending on who pays for the coverage. Generally, if a City pays 100% of the
cost, the long term disability benefit is then taxable to the employee when it is
received. If the premiums are paid by the employee, generally the benefit is not
taxable.
The information provided by the organizations which participated in this project is
attached as Appendix E.
Current Collaborations
Within Dakota County there are not currently any arrangements where the
purchase of long-term disability insurance is jointly bid to a common plan design.
However, two Dakota County cities currently participate in a joint bidding
arrangement where 11 cities collectively negotiate with vendors to save
administrative costs and yet still offer unique terms of coverage to meet their
organization's specific needs.
Recommendations
It is recommended by the HiPP Health Care Committee that we further explore
joining or establishing a network to competitively bid for long-term disability
insurance. At this time the following cities have an established relationship to go
to market together and shop for life and long term disability insurance:
• Plymouth
• Ramsey
• St Louis Park
• Burnsville
• Minneapolis
• Maple Grove
• Shoreview
• Apple Valley
• Chanhassen
• Stillwater
• Hopkins
Using the same carrier, they are able to maintain their own plan design and they
are responsible for the financial implications of any change in experience ratings
from year to year. Individual administrative fees are driven by the carrier's
response to the volume of claims in each city. Premiums costs will vary
depending on claims experience. The cost savings in this scenario is realized
through the pooling of claims administration fees. The next cycle of joint bidding
is scheduled for this summer, and a meeting to gauge community interest is
scheduled for June 20, 2005. Members of the HiPP Health Care Committee
have been invited and are encouraged to attend.
Conclusion
There appears to be a potential opportunity to further explore the idea of joint
bidding or establishing an insurance cooperative to address the provision of long-
term disability insurance. Due to the similarities between the plan designs,
R's-
carriers used, and premium costs, entering into some sort of partnership would
appear to have a minimal direct impact on how an employee experiences this
benefit, but could have a favorable impact for the Employer, as it relates to cost.
Section 5
Health Management Programs
The study of workplace wellness has been in existence for more than 30 years.
During that time it has advanced from a field typically characterized by trial and
error, to one more akin to a science. The past three decades have also yielded
evidence that health promotion programs can produce tangible outcomes. There
are presently more than 500 studies documenting the health impacts of health
promotion programs. In addition there are more than 40 studies capturing
positive financial impacts (Chenoweth, From 0 to 500 in 30 Years Flat 2002).
Why the extensive studies? Employers are placing more emphasis on viewing
their employees as assets requiring investments that are critical to long-term
performance and growth. Companies have found that a fundamental component
of this philosophy is the benefit of workplace health promotion programs.
Workplace health promotion is now being considered as an essential feature of
employment and no longer just a trend.
More focus is being placed on productivity, employee development and wellness
as a long-term strategy. "Employee development packages" now include Intranet
curriculum, on-demand training, traditional meetings, individual counseling,
personal training, events, exhibits, friendly competitions, annual health screening,
and positive support and attention. Stress in the program is placed on
employees understanding their medical and behavioral choices and the support
and education available through the wellness initiatives. Health management
and employee development are considered part of a business strategy.
Can Health Promotion Programs really produce Financial
Outcomes?
Yes, according to literature reviews by Steve Aldana from Brigham Young
University. In the 2001 American Journal of Health Promotion literature review,
Dr. Aldana reviewed 72 studies that evaluated the relationship between
healthcare costs and health risks; absenteeism and health risks; and program
impact on healthcare costs and absenteeism. The literature review showed very
positive results. More specifically, a sample of targeted programs includes:
• Back Care Programs: Coca Cola Bottling reduced back injuries by 32% and
DuPont reported that it saved $10 million from its back care program (1990).
• Body Mass Index: Five recent studies with large sample sizes document a
positive correlation between obesity and absenteeism (Aldana, 2001). Research
has shown that worksite competitions are effective in helping employees to
achieve weight loss.
• Cardiovascular Health: Specific heart disease programs have been shown to
be cost-effective. The Travelers Insurance Company, over the course of four
years, saved $3.40 for every dollar spent on its employee wellness program,
which focused on heart disease prevention (Pelletier, 1993). Specific
intervention strategies, such as dietary intervention and smoking cessation, have
been shown to be less costly than drug therapy when dealing with cardiovascular
health. A 17-article review by Pelletier also reveals that providing opportunities
for individualized counseling for high risk employees may be the critical
component of an effective intervention.
• Exercise/Physical Activity: Even early years of research in worksite wellness
demonstrates positive outcomes from physical activity programming. A cross-
sectional analysis of employees at the Mesa Petroleum Company showed that
those who participated in the physical activity program had a significantly lower
average medical cost of $173 compared with $390 for non-participants. Recent
studies have shown that in addition to claims reduction, fitness programs
generate improvements in absenteeism, productivity, stress, recruitment,
retention, corporate image, satisfaction, and employee morale. DuPont
experienced a reduction in absenteeism of 47.5% over six years attributed to its
programming (Ellington, 1992). Additionally, it was found that hourly employees
who participated in the fitness program used 145 fewer disability days than non-
participants. This resulted in a net total of 11,726 fewer disability days for the
company (Pelletier, 1993).
• Injury and Illness Prevention: Aspen Imaging International lowered its
compensation claims by 50% in a two-year period by concentrating on injury and
illness prevention. Prior to the implementation of program, Aspen Imaging
recorded 120 claims totaling $600,000. During the first two years of the program,
claims dropped to $221,000 (Moorehouse, 1992).
• Smoking: Smoking cessation programs provide immediate cost savings
through reduced absenteeism. Savings are also achieved from smoking
cessation programs because costs related to long-term disease and disability are
reduced. UNUM Life Insurance Company reported an estimated annual savings
of $132,000 to $237,000 from its smoking cessation programming, with a return
of $181 for every dollar spent on the program (Olson, 1995). Johnson &
Johnson, General Motors, The Steelcase Corporation, DuPont, and Citibank
have all shown successful results from health management programming.
Among the findings: hospitalization claims were lowered; there was a reduction in
the high-risk pool; sick days decreased; and health savings were realized.
a~
What is a Healthy Employee Worth?
Medical costs are not the primary outcome of poor health - they are secondary.
Poor health leads to symptoms and clinical outcomes that lower functionality and
increase the need for expensive care. The same symptoms, clinical outcomes,
and lowered functionality also interfere with a person's ability to perform at a high
level in the workplace. Healthy employees not only cost less in medical care,
they also are more productive at work, absent less often, experience fewer
injuries, and arrive back on the job more quickly after they do get injured.
Focus on Human Capital Investment
Companies with successful health management programs believe that the value
of a person to an organization extends beyond any single outcome or cost.
Mazarr, in his book entitled Global Trends 2005, makes the argument for health
promotion in the message that while human capital has always been important, it
will become exponentially more vital to organizational survival in the near and
distant future. The changes seen in the last century will pale in comparison with
the changes to be seen in the first quarter of this century. Therefore, it stands to
reason that if human capital is going to become more important, those individuals
making up the human capital equation will need to be healthy and ready to meet
the challenge. Human capital, which Mazarr refers to, relates to the many
abilities and resources an employee brings to the organization. This includes
skills, experience, attitude, vitality, and physical and mental effort. The concept
of human capital proposes that a company should invest in its "humans" to
increase their abilities, and thus get a return on human capital investment. This
is best typified as training, new technology, or organizational support. The
companies found to have a competitive advantage also include improving the
health of their employees in this mix.
Poor health not only adds medical costs - it interferes with one's ability to do
work and be at work. Poor health diminishes work capacity. Poor health erodes
human capital. Conversely, as individuals move along the path from illness to
wellness, capacity and ability to work improves. As such, investments in good
health are investments in human capital. (Lynch, What is a Healthy Employee
Worth? 2002).
Consider the relevance the following questions have on worksite operations.
What if all workers had two fewer days absent?
What if an employer could get just four percent more effort from its workers?
What if workers' compensation claims were reduced by half?
What if organizations could reduce the number of workers needed, because
everyone was focused, on-task, and on the job?
These outcomes do not have to be hypothetical. Productivity research indicates
that individuals with multiple risk factors are absent more, injured more, and
CQ 9
return to work more slowly than individuals with fewer risk factors. A StayWell
study indicated that individuals who participated in health management programs
reduced their use of disability benefits by several days per case. The value of
the combined loss of effort from sick absences, disability, and workers'
compensation far exceeds the difference in medical costs between low- and
high-risk employees.
Health Promotion and Disease Prevention Programs are a Wise
Investment
Few people would argue that modifiable risk factors - obesity, lack of exercise,
poor diet, excess drinking, unsafe sex, and high stress - result in disease and
premature death. (Ron Gozel Speaks his Mind, 2002) Most people, however,
say that they're still not convinced that money spent on prevention will save
money on the treatment side. Today the body of literature is growing and
providing documentation that prevention does save money. This research will
make people more aware of health promotion's ability to improve health and
reduce unnecessary expenditures. When you start to add up the medical dollars,
absenteeism, disability, workers' compensation, and safety issues, organizations
are spending a lot of money on health and productivity losses. Many of the
disease conditions responsible for skyrocketing expenditures can be traced back
to modifiable risk factors. For example, heart disease is the number one killer in
this country, but it's also the most expensive disease in corporate America. If
you consider the precursors of heart disease - the behaviors that put you at risk
- they're all modifiable: obesity, lack of exercise, diet, smoking, high blood
glucose, high cholesterol, high blood pressure, and stress.
Employees with risk factors cost money. A majority of the modifiable risk factors
result in significant cost expenditures to the employer; their consequences
represent roughly one-quarter of total healthcare expenditures. By changing the
risk profile of the population, the cost structure is changed. As people move from
high-risk to low-risk, or are prevented from moving from low-risk to high-risk,
organizations can save money.
Taking a Serious Look at Health Management
Employers are now turning to health management programs as a proactive and
long-term prevention strategy that will result in more positive employee attitudes
and morale and increased productivity - and in the long run, lowered medical
costs. Rationale for health management programs:
• Today we spend almost all of our health care dollars on treatment of disease
instead of prevention;
• There is indisputable evidence that lifestyle and behavioral risk factors cause a
large proportion of preventable disease in our society;
• Many such preventable diseases such as coronary artery disease, various
forms of cancer; diabetes, and HIV/AIDS impose a large cost burden on our
society;
• Many of the risk factors that cause these expensive diseases are modifiable
through the use of scientifically-based a well-implemented health
promotion/disease prevention programs;
• When the risk profile of a population is improved, medical, absenteeism and
productivity costs are also reduced; and finally
• There is mounting evidence that well-designed and well-resourced health
promotion and disease prevention programs provide a payback for that
investment, multi-fold. There is a growing literature base that supports the
assertion that individual and multi-component health promotion/disease
prevention programs achieve remarkable cost benefit ratios and that there is
the potential for a significant return on investment. (Goetzl, ROI PDQ 2002)
Current Situation
A survey of the 11 participating jurisdictions indicates that a wide variety of health
management programs are being offered at this time. There is little or no
coordination of these programs offerings at this time. City/County
representatives report a wide disparity in the percentage of their employees who
participate in the health management programs offered in their jurisdictions. A
survey of the various current program offerings can be found in Appendix F.
What Challenges Have We Found?
• Organizing health initiatives are labor intensive - not enough staff time available
• Employee participation is difficult to achieve without incentives
• Importance of health management programs is not universally understood by
employees, management, the State Auditor, and the general public
Recommendations
The HiPP Health Care Committee offers the following recommendations in
relation to Health Management Programs:
• Dakota County and Dakota County cities contract with a consultant to develop a
one-year health initiative plan to follow. Cities can "invest" according to their
needs. Activities are to be organized by the consultant.
• "Volume price" with other cities (save by combining purchases, i.e. vending
companies which offer healthy alternatives)
• Create a county-wide health promotion committee
31
Section 6
Identification of Future Research Topics
As described in this report, the area of employee health encompasses a broad
assortment of topics. While the HiPP Health Care Committee was originally
tasked to study only the employee health insurance topic, the group quickly
decided that it was also important to review other employee health related topics
as well, such as dental, long-term disability, short-term disability, and health
management programs. While we were able to study and evaluate these five
employee health related topics as part of this study, many other areas of inquiry
had to be left for future review and discussion.
Two research topics that the HiPP Health Care Committee recommends for
future investigation include:
1) Employee Safety Programs
2) Employee Training Programs
It is the opinion of the Committee that both of these topics are very important in
developing and protecting our most important organizational resource-our
employees. Each jurisdiction already provides certain programs in an attempt to
accommodate employee safety and training needs, and we believe there is a
great opportunity for collaboration in these areas. Should the HiPP Steering
Committee wish to see these topics explored in greater detail, the HiPP Health
Care Committee Members would be willing to continue to provide this review.
Appendices
A. Opportunities for Managing Benefits Under a Joint Powers Agreement -
Stanton Group
B. Health Insurance Purchasing Pool - Discussion Guide March 22, 2005,
Deloitte Consulting
C. Dental Insurance Plan Offerings - June 2005
D. Short Term Disability Insurance Plan Offerings - June 2005
E. Long Term Disability Insurance Plan Offerings - June 2005
F. Current Health Management Program Offerings - June 2005
32
Appendix D
Short-Term Disability Insurance
Plan Offerings - June 2005
Benefit Apple Valley: Dakota County: Farmington
Summary self-insured self insured, AFLAC
Eligibility Regular full-time - no Class 1* Regular full-time
seasonal Class 2* 40 hours/per week
Employer Self-funded by the 0% (no taxes Part of cafeteria
Contribution employer deducted when plan can use
benefits are dollars to pay the
collected) premium on an
after tax basis
Employee Cost $0 8-day plan 7-day plan*
$1.47/$10 weekly 14-day plan*
benefit 30-day plan*
30-day plan *premium costs are
$0.38/$10 weekly based on age and
benefit income
75-day plan
$0.16/$10 weekly
benefit
Effective Date 1't day of the month Date of hire 15 day of the
following one month of month following
full-time employment one month of full-
time employment
Pre-existing Excludes benefits for None
limitations injury, sickness, or
pregnancy for which a
Participant received
medical care within the
one-month period prior
to becoming covered
under the Plan.
Elimination 21 day 8-day elimination 7-day plan
period period 14-day plan
30-day elimination 30-day plan
period
75-day elimination
3q
period
Benefit percent 100% 60% of basic 60% of basic
earnings earnings
Maximum 161 days (no including 180 calendar days - 180 calendar days
benefit period the elimination period) which includes the -which includes
elimination period the elimination
period
Definition of Plan does not cover: Because of an Totally disabled
disability a) injury, sickness, illness or injury an defined as
or pregnancy not employee cannot continuing inability
being treated by perform each of the to perform the
a Physician. essential functions material and
b) By war or act of of their occupation. substantial duties
war, Must be under the of full-time job.
c) Commission of a regular care and Must be under the
felony, treatment of a care and
d) Participation in a licensed physician. attendance of a
riot, physician. See
e) Illegal AFLAC brochure
occupation, for list of "What is
f) Intentionally self- not covered".
inflicted injury,
g) Worker's comp,
h) Working for
another
employer.
Coordination of Other income benefits Off-set by worker's Off-set by worker's
benefits as defined in the plan. comp payments. comp, sick leave,
etc.
Return to work If a Participant returns to If an employee is Separate periods
work as an active full- disabled, returns to of disability due to
time employee for 30 work, and becomes unrelated causes
consecutive days or disabled again due will be considered
more, any recurrence of to the same or a a continuation of
a Disability shall be related cause, the the prior disability
treated as a new second disability will unless they are
Disability. If recurrent be considered a separated by
period of Disability are continuation of the returning to full-
due to the same or a first period as long time work for at
related cause and as they had least one full day.
separated by less than returned to work for Pays only for one
30 consecutive days of less than two disability at a time.
work as an active full- weeks. Separate periods
time employee, they If the second of disability, if due
shall be treated as the disability is to the same or
same period. If a period unrelated to the related condition
of disability or partial first, or if the and not separate
disability is extended b em to ee had b 180 days or
a new cause while returned to work for more, will be
benefits are payable, more than two considered a
benefits shall continue weeks, the second continuation of the
while the participant is period of disability prior disability.
disabled or partially will be considered a
disable. However, separate claim and
benefits shall not a new elimination
continue beyond the end period must be
of the original maximum satisfied.
benefit period.
*Dakota County Class 1 employees; All full-time, non limited active employees of
the County working at least 40 hours per week, who are covered by a collective
bargaining agreement that does not include the FlexComp program in active
employment.
Class 2 employees: All non-limited active employees of the County, and all
elected officials and other person the County determines to be eligible for
benefits under a joint powers agreement pursuant to Minnesota Statutes 471.59
or 471.61 who participate in the FlexComp program in active employment.
Appendix F
Current Health Management
Program Offerings - June 2005
Burnsville
Wellness Committee in Place
Shape-Up Challenge (Medics)
Annual Health/Wellness Fair
10,000 Step Program
3,000 Hour Activity Marathon
Various Wellness Related Seminars
Year-round Wellness Program (including varying campaigns)
Health Risk Assessment
Red Cross Blood Drives
Flu Shots
Fitness Room Facilities
Discounted Fitness Program through BCBS
Rosemount
Member of T.E.A.M. EAP Services
Reduced Seminar Prices
Discounted Fitness Program through BCBS
Monthly In-House Blood Pressure Checks
Flu Shots
Quarterly Employee Newsletter
Worksite Wellness Program offered through consortium
Consultation/education to assist employees in meeting wellness goals
Online wellness education
Telephone and e-mail access to a wellness coach for support
Apple Valley
Spring Health Fair: Blood pressure clinic, cholesterol and glucose screening
Cardiovascular Disease Management
SHAPE Weight Management 12 week program
Healthy vending machine choices
Brown bag lunch health related seminar
Walking program
On-site exercise options
Workout area
"Taking care of your back" safety/educational materials
Stress management-educational materials
Mental Health
Medica offers a frequent fitness discount
S7
Farmington
Member of T.E.A.M. EAP Services
Use of Police Department's Exercise Facility
Free to employees, spouses or significant others over the age of 18.
Payroll stuffers from Medica to promote wellness and/or better health care
utilization and consumerism.
Participated in the health risk assessment that was done by the LOGIS group in
2003.
Future: hold seminars for employees on healthy living, nutrition, etc.
Dakota County
Yoga Classes
Mental Health Monthly/On-Going
Weight Watchers Classes Monthly/On-Going
Fitness Rate discounts by Health Partners
10,000 Steps by Health Partners 8 week program
Increase employees' physical activity
Pedometers and educational materials sent to employees
Phone Line Class by HealthPartners
Partners for Quitting Smoking
Flu Vaccination Clinics
Offered flu shot to employees and their dependents.
Blood Pressure Clinics
Offered blood pressure checks and educational materials.
Red Cross Blood Drives
Held six Blood Drives in 2004.
Shape Up Challenge Event
An annual event that provides an opportunity for person achievement and
friendly challenges between teams made up of co-workers.
Wellness Credit
$5.00 monthly County contribution towards the cost of
employee benefits that reward healthy lifestyles.
Monthly Health Topics
Stairway Challenge Event
Increase the use of stairs rather than the elevator.
Includes stairwell painting and poster purchases.
Fitness Center at certain facilities
West St. Paul
None at this time
South St. Paul
South St. Paul is planning a fall health fair through their Parks
and Recreation Department directed more to the community.
JO
Lakeville
Recently formed a volunteer wellness committee to establish actions.
Nutrition Exercise Wellness Beginnings Newsletter
Kickoff week in January Medica Optum provides trainers at no cost
Brown Bag Lunch Seminars
Informational Booths
Provides payroll handouts, newsletter articles, information for weight loss group, etc.
"Walk Across America" Competition employees form groups and log walking
time. First group to walk across America, in theory, wins.
Inver Grove Heights
Flu Shots
Health Partners offer a frequent fitness discount ($20 off membership)
Community Center Fitness Center
Hastings
Flu Shots
Discounted Fitness Program through BCBS
EAP Services
BCBS offers frequent fitness discount ($20 off membership)
Employee newsletter with articles on health issues
Midwest EAP services-online and phone wellness education
Spring Safety Training Day-topics include stress management, work/life
balance, etc.
35
Agenda Information Memo
December 12, 2005, Special City Council Meeting
III. 2006 BUDGETS / RESPONSE TO COUNCIL INQUIRIES
C. General Fund Fund Balance
ACTION TO BE CONSIDERED:
As an informational item, no action is required.
or
The City Council may direct preparation of a revised City of Eagan Fund Balance
policy.
FACTS:
Fund Balance Percents
• At the August 9, 2005 Special City Council Meeting during the discussion
of the General Fund Fund Balance the Council requested a detailed
report on how the fund balance has increased and what funds are
included in State Auditor's calculation of the fund balance.
• The fluctuation in the percentages reflect the City practice of allowing the
balance to exceed the general target and then appropriating funds for a
project or equipment purchase of community wide benefit. They also
reflect the City's relatively conservative budgeting practices in that each
year's operations typically results in an increase to fund balance meaning
that revenues exceed expenditures.
• The City's current General Fund Balance calls for an undesignated fund
balance of 30 to 35% of the next year's general fund expenditure budget.
-2141
• The following table shows the calculation for the available fund balance
percentages as calculated by the City for the year ends 1995 through
2005.
General Fund Fund Balance Percent Comparison 12-31-1995 Through 12-31-2005
A B C D
Year End General Fund
Undesignated Next Year's General Fund Balance As a Percent
Year End Fund Balance Budget W/O Contingency of Next Year's Budget
1 12/31/1995 5,914,248 15,159,300 39.0%
2 12/31/1996 7,735,510 15,952,100 48.5%
3 12/31/1997 5,769,242 16,461,800 35.0%
4 12/31/1998 8,163,296 17,241,600 47.3%
5 12/31/1999 10,724,402 18,200,000 58.9%
6 12/31/2000 8,972,051 19,280,700 46.5%
7 12131/2001 9,680,794 20,795,700 46.6%
8 12/31/2002 9,328,995 21,369,950 43.7%
9 12/31/2003 9,532,907 21,740,400 43.8%
10 12/31/2004 10,750,543 22,910,400 46.9%
11 12/31/2005 10,583,043 23,977,500 44.1%
The dollar amounts for 12/31/2005 are preliminary budget numbers.
State Auditor Fund Balance Calculation
• The following table demonstrates how the City calculates the percentages
in comparison to the State Auditor. The information used is for year end
2003 since that is the latest information available from the Office of the
State Auditor.
Fund Balance 12-31-2003
City:
General Fund - Undesignated (12-31-2003) $ 9,532,907
Total 2004 Budgeted General Fund Expenditures
(without contingency) $ 21,740,400
City's Calculated Fund Balance Per Cent 43.8°/x`
Office of the State Auditor:
Fund Balance:
General Fund - Undesignated $ 9,532,907
Special Revenue Funds Designated:
Enhanced 9-1-1 Fund $ 144,761
Housing Fund 865,623
Cable TV Franchise Fund 1,878,410
Police Forfeiture Fund 24,602
Recycling Fund 23,985
Economic Recovery Grant Fund 193,706
Cearvale Special Services Fund 11,076
Subtotal Special Revenue $ 3,142,163
Total Fund Balance $ 12,675,070
2003 Current Expenditures:
General Fund $ 20,721,068
Special Revenue Funds:
Enhanced 9-1-1 Fund $ 28,735
Housing Fund 4,050
Cable TV Franchise Fund 201,392
Recycling Fund 4,657
Cearvale Special Services Fund 4,056
Subtotal Special Revenue $ 242,890
Debt Service Funds:
Various $ 44,221
Capital Projects Funds:
Equipment Revolving $ 5,201
Park Site Acquisition & Development 36,894
Radio Replacement 17,448
General Facilities Renewal & Replacement 19,560
Hwy 551149 TIF 41,400
Cedar Grove TIF 377,727
Hwy 55 / Blue Gentian TIF 17,332
Storm Sewer Trunk 41,766
Water Trunk 2,036
Sanitary Sewer Trunk 1,667
Subtotal Capital Projects $ 561,031
Total OSA 2003 Expenditures $ 21,569,210
OSA's Calculated Fund Balance Per Cent 58.8%
J43
• The methodology used in calculating the fund balance percentage
obviously has a large impact on the results that are reported. While each
of the methods presented has advantages, City staff prefers the Eagan
method to more accurately reflect current operations and to eliminate the
effect of cyclical events or saving activity in the Special Revenue Funds.
ATTACHMENTS:
• Enclosed on page is a graphic representation of the City's fund
balance percentages for the year ends 1995 through 2005.
VT
•
t
•
00
Agenda Information Memo
December 12, 2005, Special City Council Meeting
III. 2006 BUDGETS / RESPONSE TO COUNCIL INQUIRIES
D. Eagan Community Center Budget to Actual Numbers
ACTION TO BE CONSIDERED:
This is an informational item, no action is required.
FACTS:
• At the August 9, 2005 Special City Council Meeting during the discussion
of the 2006 Eagan Community Center Budget the Council inquired as to
the difference between 2004 actual numbers and 2004 budgeted
numbers. The 2004 budget numbers were not presented in the budget
material provided to the City Council for review.
• In summary, the 2004 actual revenues from operations were $24,075
below the projections and expenditures were $123,809 below the
budgeted appropriations. This net favorable result from operations
allowed the antenna lease transfer to be reduced from the budgeted
number of $290,590 to $190,856 for a reduction of $99,734.
• The use of the various line items from an accounting and management
standpoint is still being refined with experience; consequently, the match
in 2004 is not exact on a line item by line item basis. In the aggregate the
numbers are correct and audited.
ATTACHMENTS:
• Enclosed on page is a summary of revenues, other funding
sources, and expenses for the 2006 Eagan Community Center Budget
material. The information now provides a comparison of the 2004
budget to actual along with the 2005 and 2006 budgets.
30-Nov-05
COMMUNITY CENTER ENTERPRISE FUND
2006 BUDGET
Revenues, Other Funding Sources, and Expenses
2004
Variance
Favorable 2005 2006
Budget Actual (Unfavorable) Budget Budget
REVENUES
Membership $ 371,400 $ 352,657 $ (18,743) $ 574,200 $ 706,600
Room Rentals 155,040 131,269 (23,771) 172,300 249,900
Group Sales 65,570 69,413 3,843 100,500 98,800
Daily Admission 71,400 67,450 (3,950) 96,500 78,100
Contract Revenue 46,000 47,139 1,139 55,700 57,000
Personal Training Services - 4,282 4,282 22,200 37,500
Concession Sales 40,000 28,637 (11,363) 31,900 33,900
Park Program Revenues 93,900 74,483 (19,417) 13,900 15,400
ECVB Rent 6,600 7,333 733 8,600 9,000
Vending - 6,148 6,148 5,000 6,000
Merchandise Sales - 2,910 2,910 2,600 3,700
Equipment Rental - 5,602 5,602 2,000 3,000
Facility Rental - 6,221 6,221 1,500 1,500
Interest - 22,292 22,292 - 20,000
Subtotal 849,910 825,835 (24,075) 1,086,900 1,320,400
Other Funding Sources
Antenna Leases 290,590 190,856 (99,734) 292,300 141,000
Total Rev & Other Fd Sources $ 1,140,500 $ 1,016,691 $ (123,809) $ 1,379,200 $ 1,461,400
EXPENSES
Personal Services $ 779,500 $ 721,483 58,017 $ 826,200 $ 905,000
Supplies, Repairs and Maint 55,000 48,616 6,384 73,000 82,100
Other Services and Charges 288,000 194,902 93,098 339,200 287,200
Merchandise For Resale 18,000 20,248 (2,248) 20,000 31,000
Capital Outlay - 31,442 (31,442) - 34,500
Reserve For R & R - - - 120,800 121,600
Total Operating Expenses $ 1,140,500 $ 1,016,691 $ 123,809 $ 1,379,200 $ 1,461,400
y7
Agenda Information Memo
December 12, 2005 Eagan City Council Workshop
IV. PRELIMINARY REVIEW OF 2006 CDBG APPLICATION
DIRECTION TO BE CONSIDERED:
To discuss the program and improvement alternatives for inclusion in the City's FY 2006
Community Development Block Grant (CDBG) Application and provide staff direction
regarding the specific items to be included in the application when presented to the
Council at its next regular meeting.
FACTS:
• The US Department of Housing and Urban Development (HUD) provides block grant
funding for programs that conform to national objectives and eligible activities that
meet Community Development Block Grant (CDBG) Program regulations.
• The City of Eagan's CDBG allocation is administered through a subrecipient
agreement with the Dakota County CDA. The coordination of the program by the
CDA permits various cities within the County to focus on a range of specific eligible
activities unique to their situations and the CDA is able to balance the activities
countywide to ensure that the overall County allocation meets all HUD eligibility
requirements.
• The CDBG fiscal year begins July 1. The application deadline for local governments
has been set at December 16, 2005. However, the CDA is allowing the City of Eagan
to submit after this date to provide proper review and eventual consideration of a draft
application by the City Council on December 20, 2005. Therefore, preliminary
budget information is being provided at this time to prepare the application.
• Eagan's FY 2006 available funding amount will be approximately $215,500, an
estimated 10% reduction from 2005.
• Staff is presenting a combination of alternatives for Council consideration including
programming, public improvements and acquisition of properties for redevelopment.
Eligible activities under the HUD rules must either remove slums and blight or
provide benefits to low and moderate income (LMI) persons and families. The
CDBG program requires that at least 70% of all funds to be used for LMI benefits.
For HUD purposes, this means that 51% of the benefiting families be at or below
80% of the median income for the region. In 2005, a family of four making $58,000
met this criteria.
• The CDA requires that at least 50% of each City's application be somehow
designated for LMI uses, which can be either programs or acquisitions. In addition,
when CDBG funds are used for slum and blight removal, a portion will be repaid to
the City's CDBG account at the time the property is resold for development.
Ultimately, the account will need to be used to provide for LMI benefit.
Agenda Information Memo
December 12, 2005 Eagan City Council Workshop
Page 2 of 2
• In addition, as staff has discussed the program with CDA staff, it has been noted that,
while CDBG applications may be amended, the process is a minor amendment if the
dollar amounts are reallocated among previously approved line items, but it is a major
amendment requiring higher levels of review if dollars are to be shifted to new
activities.
• As a consequence of the percentage requirement and in consideration of the level of
amendment necessary to reallocate dollars among activities, staff is offering a range
of programs and activities that have at least some allocation for 2006, including a
larger number of activities that meet the LMI standard.
• The proposed Parks and Police programs are discussed in the attachments.
Descriptions of the other line items are provided below:
o Cedar Grove Redevelopment - Allocations are noted in this category for
acquisition, relocation and demolition of properties both for general removal of
substandard buildings and for acquisitions that would eventually provide for LMI
housing. Since low and moderate income housing development is required in the
first or second phase of the Cedar Grove Development Agreement, if the
agreement is favorably considered at the public hearing on December 20, it is
probable that an LMI property development partially funded by CDBG funds will
occur within the near term. As such, funds used in the short term for blight
removal and repaid by the developer can be used for an LMI purpose at that time.
o Rental Housing Inspection Program - In addressing the Wescott Hills
maintenance issues, the City's Police, Building Inspections and Code
Enforcement personnel worked in cooperation with the CDA staff to help insure
that code violations and public safety issues in the area were being enforced and
promptly responded to. To the extent that other areas of low and moderate
income housing may face other property maintenance issues, it may be possible to
identify and separately code those activities for CDBG purposes. The details of
this alternative continue to be addressed with the CDA staff. It will be pursued
further if the Council believes this to be a priority.
• The budget alternative spreadsheet shows requested allocations in a number of
categories as place holders to begin the discussion. Specific allocations are noted in
the Youth and Family Development, Directed Patrol Programs and Rental Housing
Inspection Pilot Program.
ATTACHMENTS:
• Draft Budget alternatives on page SO
• Parks Programming narrative on pages 5I-S7A
• Directed Public Safety Patrol narrative on pages C1~T
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City of Eagan - Parks and Recreation
Youth Development - 2005-2006 Community Development Block Grant Summary
Historically Youth Development activities have been coordinated in two specific
neighborhoods which fell within the guidelines for the CDBG grant requirements. These
neighborhoods and sites no longer meet these guidelines.
Over the last couple of years Youth Development has shifted the focus too partner with
other community agencies to continue to provide recreation activities at critical times of
the day to reduce risky youth behaviors while promoting health and wellness.
The purpose for CDBG funds is to provide a flexible source of annual grant funds for
local governments that can be devoted to the activities that best serve their own particular
development priorities provided that 1) the benefit low and moderate income persons as
outlined by federal standards; 2) prevent or eliminate slums or blight and meet
community development needs.
With this in mind I would like to propose the following outline for consideration in
recreation that have been identified a community need and meet the criteria for eligible
activities.
1. Building public facilities and improvements: $25,000
To be allocated to the park improvement projects for Carnelian Park (play ground
equipment $35,000). This park is located in tract 607224 (low income tract).
And the activities / improvements benefit the entire community.
2. Providing public service: $20,000
a. Establish a $10,000 community development scholarship program for
individuals, youth, families, seniors, people with disabilities of low to
moderate income to reduce barriers and increase access to recreation
programs city wide and thereby strengthening our community.
b. Set aside $10,000 to address transportation barriers for seniors coordinated
on a local and regional level.
Justification:
1. All requests meet the guidelines outlined by CDGB.
2. One of the major relevant benefits of recreation is the impact on the
family/community. The National Recreation and Parks Association, the
Search Institute, University of Minnesota and reports out of Harvard and
Stanford have proven through research across the country that "Leisure
(recreation, play) is the single most important force developing cohesive,
healthy relationships between husbands and wives and between parents and
their children." "Families that play together stay together". Healthy families
improve the overall health of the community.
3. Blending long range capital improvement projects with dedicated funding
resource in a comprehensive plan is fiscally responsible and efficiently
revitalizes community facilities.
'51
4. Utilizing CDBG funds exclusively for youth programming targeted at specific
locations minimizes the overall community impact and access. Strong
collaborative partnerships have been established to continue work with both
the Glacier and Pilot Knob after school programs, and will be included any
change. By establishing a community development program for scholarships
we broaden our services and are more inclusive. This community wide
approach has the potential for meeting a larger percentage of the population in
need and greater community impact.
5. Seniors are an assumed benefit population. Access to programs and activities
via transportation is a barrier both locally and regionally for the senior
population. Allocating funds specifically to address this barrier would be the
beginning of the building blocks necessary to address this issue.
Tracking mechanisms for all Public Service Activities:
1) Utilize the CDBG approved self certification form to identify benefit eligibility.
2) Establish criteria and guidelines for individuals and families accessing benefits.
3) Senior transportation will not require a fill application however will still need to
acquire critical data from the users (ie: Hispanic, race, female head of household).
Public Safety Patrol
2006 Community Development Block Grant Proposal
The City of Eagan has close to 6,000 multi-family- rental-units, constituting 25% of the
total housing stock within the city. In the year 2004, officers responded to over 4,600
calls for police service at rental communities, a citywide call ratio of .78 per unit. In
1995, the city implemented the Crime Free Multi-Housing Program, which works in
partnership with rental communities to reduce crime and calls for police service.
Low interest rates over the past several years have allowed many renters to buy homes,
reducing the best-qualified tenant base. Since 1999, vacancy rates in Eagan have risen as
homeownership has been increasing. (See attached graph of historical vacancy rates).
Higher vacancy rates have resulted in looser screening criteria used by rental managers to
evaluate new tenants. In order to maintain their business investments, rental communities
are accepting individuals they would have not considered a desirable tenant three years
ago.
Based on United States Census data, there are areas in Eagan that are definable as low or
moderate-income areas. Some of these areas have large concentrations of multi-family
rental units and account for some of the highest calls for service ratios in the city. The
rental communities within these identified areas represent 24 % of the total rental units
within the city. In 2004, these communities accounted for 36% of the total calls for
services to all rental communities within Eagan.
As a means of addressing the disproportionately high calls for police service in these
areas, the police department is proposing to increase police presence and neighborhood
problem solving efforts. The dedicated patrol activity would be in addition to regular
patrol staffing. Rather than add permanent staffing we would accomplish the additional
presence with officers on overtime.
A detailed analysis of police activity in the defined low to moderate-income areas is
underway to identify the specific types of activity and times of day to be targeted with the
additional staffing. Officers assigned to provide additional presence in the selected areas
would be expected to document problems and contacts with people in the area and to
establish contacts with property managers in order to establish the police department as a
problem solving resource.
We propose that the staffing in the targeted areas consist of 20 hours per week, which
would total 1,040 hours over the course of a one-year period. Cost for the additional
staffing is estimated at $44,133.
015
Dakota County Vacancy Rate Trends
19,95 - ,005
T
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Source: Dakota County CDA 2005 Market Survey
Agenda Information Memo
December 12, 2005 Special City Council Meeting
V. CONVENIENCE GAS CANOPY SIGNAGE
ACTION TO BE CONSIDERED:
To provide further direction to staff regarding the regulation of canopy signage.
Or
To confirm the current interpretation of the sign code by staff to permit only business name/logo
and corporate color raceway markings on canopies and to direct staff to process an ordinance
amendment to that effect to Chapter 11 to the APC for Public Hearing
Or
To determine that it would be acceptable to permit gasoline price signage on canopies and direct
staff to process an ordinance amendment to that effect to Chapter 11, to the APC for a Public
Hearing.
REQUIRED VOTES FOR APPROVAL: Majority of Councilmembers present
FACTS:
This item was before the City Council at their regular meetings of September 20 and
Novemberl, 2005. The City Council requested the City Attorney research whether LED
canopy signage could be restricted to gasoline price only. The attorney has stated that
canopy signage can be restricted.
➢ The City Code does not contain standards for canopy signage; however, signage requests
have been approved exclusively for business name/logo and corporate color raceway striping.
The City Attorney's office has advised that this policy/ practice should be codified regardless
of whether gas price signage would be permitted or not.
ISSUES:
➢ The current request to permit gas prices to be posted on station canopies arises from the
suggestion by a sign company that they cannot provide this information effectively within the
City's current interpretation of its sign code and the typical practices in the industry by which
price information is posted on pylon signs, monument signs or building signs.
The policy consideration for gas price information on canopies is whether this would amount
to increased commercial signage and whether such an increase is acceptable. It is anticipated
that allowing this type of signage will certainly result in most, if not all, convenience gas
~S
operations opting to put gas prices on the canopy in order to free up pylon sign space for
other advertising purposes.
➢ To date, no information has been provided to suggest that the gas station operators or sign
company have exhausted efforts to provide gas price signage within the current code and
code interpretation. As such, it is not clear that an amendment of the code to permit such
signage is warranted.
➢ If there are situations where canopy gas pricing is the only reasonable alternative it would be
appropriate for the sign company/business owner to demonstrate that alternatives to meet
information needs through City Code signage that is allowed on the existing building or
pylon/monument sign have been exhausted.
➢ As a consequence, if it is determined that such signage may be considered, staff suggests that
the City Council consider these instances as Variances based on the circumstances of each
individual situation.
ATTACHMENTS (4):
Photos o4anProposed al gas price signage from existing stations in the community on page
through
Existing canopy signage for 1286 Lone Oak Road on page LFD-- and.
Photos of typical canopy signage on page and.
Letter from Identigraphics on page.
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C;CRAPHICS
"A Total Sign Source" www.igdecal.com
8660 HWY 7, P.O. BOX 160 • ST. BONIFACIUS, MN 55375-0160 PHONE 952-446-1172 • FAX 952-446-1717
August 29, 2005
City of Eagan
City Council SEP ?Q~~
3830 Pilot Knob Road L111
Eagan, MN 55122
By-
Dear City Council Members :
As the sign installation company representing Twin Cities Stores, we are writing to request that the
council override the denial of permission to put LED price signs on the east and north sides of the
canopy at the Oasis Market located at 1286 Lone Oak Road in Eagan. It is our understanding that the
city does not have a clear code provision for LED signs on canopies. but that city planning staff has not
granted permission for these types of signs. Please note that these are not flashing signs.
We are requesting that the signage for this location be updated to provide adequate signage to
advertise our products and draw customers into our store.The present signage (building wall sign) and
a small ID sign (3'x 8') on a pylon is inadequate to let our customers know that we sell fuel and what
the price of that fuel is.
We have looked at alternatives such as:
• A. New primary ID sign 10' wide & 17' tall, with a price change sign and a reader board
• B. LED price change signs on the canopy (30" x 120") - 2 of these, one on the east side and
the other on the north side of the existing canopy
Either system will let our customers know what products we sell and what the current price is.
Currently there are two Amoco illuminated signs on the canopy which total 30 sq ft each - both of these
will be removed. The two 30" x 120" LED price signs would replace the existing Amoco signage.
Our first choice, of course, would be the new 10 ft ID & price change sign. which I understand would
require a variance to place a second freestanding sign. Therefore; I respectfully ask you to consider
our appeal for permission to put up the LED price signs on the canopy. I have enclosed a computer
rendering of what the LED signs on the canopy would look like.
In addition, we are also requesting city council approval for LED price signs on the south & east sides
of the canopy of the Oasis located at 3390 Coachman Road and for the west & north sides of the
canopy of the Oasis located at 4250 Lexington Ave in Eagan., Here; again, not having visible price
signs leaves us at a competitive disadvantage because our pricing cannot be seen until one is actually
at the station.
If you need additional information, please contact me at 952A46-1172.
Sincerely,
C;67m Nelson
President
111
3M CERTIFIED GRAPHIC INSTALLERS
ovum
Agenda Information Memo
December 12, 2005 Special City Council Meeting
VI. ARCHITECTURAL EXTERIOR DESIGN STANDARDS FOR
COMMERCIALANDUSTRIAL DEVELOPMENT
ACTIONS TO BE CONSIDERED:
To discuss draft ordinance regarding exterior design standards for commercial/industrial
development.
To direct staff to modify draft document and/or proceed with the Ordinance Amendment process
based on discussion at the Special Council meeting.
FACTS:
➢ This item is before the Council for the purpose of a checkpoint review/comment before
formal APC consideration and a Public Hearing on an amendment is scheduled.
➢ The topic of exterior finish materials for commercial development was brought before the
City Council in the fall of 2004. During that workshop, the Council reviewed a number
of photos that displayed like-businesses in different cities.
➢ Upon review of the photos, the Council was struck by the disparity of window signage
and directed staff to work with the Advisory Planning Commission to determine
reasonable yet suitable window signage standards for the City. That exercise expanded to
also incorporate temporary signage and these modifications to the Sign Ordinance were
adopted by Council action on June 21, 2005.
➢ Subsequent to the successful conclusion of the temporary/window signage ordinance
review and approval, attention again has been turned to the issue of commercial/industrial
exterior materials. The genesis of the finish material discussion came about primarily for
three reasons:
1. The City has operated for years with an undefined (and not codified) commercial
exterior material standard of "brick or better".
2. It has not been unusual for council members, commission members and staff to hear
the citizenry ask why another city got a higher quality architectural finish
restaurant/store than Eagan.
3. The City Council, Advisory Planning Commission and staff are often told by an
applicant/developer that one "benefit" of a proposed Planned Development is "higher
quality" building finishes. Mandatory quality finish materials/architecture will result
in a development demonstrating other public benefits to justify a PD zoning.
➢ The initial point of discussion with the APC was whether or not the City of Eagan should
expect a high quality finish on commercial and industrial development simply as a matter
of course. The commission believes Eagan's maturity and standing in the metropolitan
area warrants high quality finish materials as a given.
➢ Planning staff has worked with the Planning Commission at several workshops to review
and discuss the merits and advantages of existing standards imposed by Eagan in Cedar
Grove and other metro cities (including Bloomington, Maple Grove and Woodbury).
➢ Staff has had informal discussions with several developers/builders regarding quality
finish materials and the response has been that the development community is generally
supportive of higher standards provided the City's expectation is clearly defined and
consistently applied. Developers have also indicated that the consistent application of
high quality standards will protect their investment.
ATTACHMENTS (2):
Draft ordinance language on pages te-7 and
Chapter 11, Section 11.70, Subd. 21, 3 on pages and~~
Exterior surface materials of buildings shall be subject to the following:
(1) Classes of materials. For the purpose of this subsection, materials shall be
divided into class I, class II, class III and class IV categories as follows:
Class I
a. Brick
b. Natural stone
c. Glass
d. Copper panels
e. Other comparable or superior materials (as approved by City
Council)
Class II
a. Specialty concrete.block such as textured, burnished block or rock
faced block
b. Masonry stucco,
c. Other comparable, or superior materials (as approved by City
Council)
Class III
a. Exterior finish installation system (EFIS)
b. Architecturally precast textured concrete panels
c., Opaque panels
d. Ornamental metal
Class IV
a. "Smooth concrete block
b. Smooth scored concrete block
c. Smooth concrete tip up panels
d. Ceramic
e. Glass block
f. Wood
g. Other comparable or superior materials (as approved by City
Council)
(2) Buildings shall incorporate classes of materials in the following manner:
a. Office and commercial buildings shall use at least three (3) class I
materials and must be composed of at least sixty-five (65) percent
class I materials; not more than thirty-five (35) percent class II or
i~77
class III material and not more than ten (10) percent class IV
materials.
b. Any building fagade exceeding forty (40) feet in width shall be
designed with multiple planes, multiple sections of coordinating
materials, or both, to add visual interest.
C. Industrial and Business Park buildings located within eight
hundred (800) feet of the right-of-way of any freeway, highway or
county road shall use at least two (2) d fferent class I or II
materials and be composed of at least'sixty-five (65) percent class I
or class II; not more than thirty-five (35) percent of class III or
class IV materials. Not more than ten (10) percent of the building
shall be class IV materials.
d. Industrial and Business Park buildings located further than eight
hundred (800) feet of the right-of.-way of any freeway, highway or
county road shall meet the performance standards outlined in
Chapter 11, Section 11.70,.Subd 21,1
~a
LAND USE REGULATIONS (ZONING) § 11.70
3. Industrial and General Business District architectural standards.
a. Policy statement. All buildings in light industrial (I-1), general industrial
(I-2) and general business (GB) districts shall be designed to accomplish the
goals and objectives of the city land use Comprehensive Guide Plan.
Exterior building materials shall be attractive in appearance, durable and
compatible with adjacent structures and consistent with the city's standards
for the district in which it is located.
b. New construction.
i. No less than 75 percent of the exterior, exposed walls of any newly
constructed building in light industrial (I-1), general industrial (1-2) or
general business (GB) districts shall be constructed of a vertical finish
made of noncombustible, non-degradable, and low maintenance con-
struction material, including, but not limited to, face brick; natural
stone; specially designed precast concrete or synthetic stucco or com-
parable material (e.g., dryvit) units, provided the surfaces have been
integrally treated with an applied decorative material or texture;
smooth, painted or decorative concrete block, provided the block is
scored at least twice.
ii. Twenty-five percent or less of the exterior, exposed walls of any newly
constructed building in light industrial (I-1), general industrial (I-2) or
general business (GB) district may be constructed of any of the
following materials: metal, including but not limited to steel, sheet or
corrugated aluminum, or iron; vinyl; plain concrete block; or any other
material not within the standards set forth in paragraph b.i. Any metal
surface or siding as permitted herein shall be coated or anodized with
a non-reflective, glare-free finish.
iii. Notwithstanding any provision herein to the contrary, exterior, ex-
posed walls of any accessory structure to a building in light industrial
(1-1), general industrial (1-2) or general business (GB) district may be
constructed of the following material: metal, including steel, sheet or
corrugated aluminum or iron; vinyl; plain concrete block; or any other
material not within the standards set forth herein, provided a condi-
tional use permit is first obtained from the city.
C. Expansion or enlargement of metal-sided buildings.
i. In the event any building, which is an existing, nonconforming
metal-sided building under this subdivision on the effective date of this
ordinance, is enlarged or expanded and the expansion is less than
10,000 square feet and 50 percent in size by total square feet of the
existing, nonconforming metal building, the expansion structure need
not comply with the provisions of this subdivision, but any exterior,
exposed side or surface of the expansion structure shall be constructed
of identical material and color to the existing, nonconforming building.
Supp. No. 10 CD11:139
~q
§ 11.70 EAGAN CODE
In the event the expansion or enlargement is at least 10,000 square
feet or 50 percent in size by total square feet of the existing, noncon-
forming metal building, whichever is greater, the provisions governing
nonconforming structures or uses in this chapter shall govern.
ii. For purpose of this subdivision, the total square feet of the existing
nonconforming building shall be determined as the total size of the
existing building as existed on June 1, 1995. The total square feet or
percentage of any and all expansions to an existing nonconforming
building as of June 1, 1995, shall be aggregated for purposes of
calculating the size or percentage of the total expansion to the original
building existing on June 1, 1995.
C. Expansion or enlargement of other nonconforming buildings. In the event any existing,
nonconforming building, which is constructed of material other than metal, is enlarged
or expanded, the expansion structure to the existing, nonconforming structure shall be
constructed of compatible material and color to the existing, nonconforming structure.
D. Site design and development requirements. All multi-family, commercial and indus-
trial uses shall be designed and developed in accordance with the following:
1. Landscaping. All yards shall be landscaped or be left in a natural state. If any
yards are to be landscaped, they shall be landscaped attractively with lawn, trees,
shrubs, etc. Any areas left in a natural state shall be properly maintained in a
sightly and well-kept condition. Yards adjoining any residential district shall be
landscaped with buffer planting, if this is not provided in the natural state. Plans
of such screens shall be submitted for approval as a part of a site plan and
installed prior to issuance of a certificate of occupancy for any land in the district.
In the event this requirement cannot be met because of climate, a bond shall be
required to insure compliance within a reasonable time. The design shall make
use of all land contained in the site. All of the site plan shall be related to the
multiple use, i.e., either parking, circulation, recreation, landscaping, screening,
building, storage, etc.
2. Drainage. The drainage of stormwaters shall be provided for either on the site or
in a public storm sewer.
3. Curbs. Interior curbs shall be constructed within the property to separate driving
and parking surfaces from landscaped areas. Interior curbs required by this
section shall be concrete construction.
4. Walkways. Surfaced walkways shall be provided from parking areas, loading
zones and recreation areas to the entrances of buildings.
5. Surfacing. All interior driveways, parking areas, loading areas, etc., shall be of
blacktop or concrete construction.
Stipp. No. 10 CD11:140
7D
Agenda Information Memo
December 12, 2005 Special City Council Meeting
VII. BUILDING SIZE/SCALE STANDARDS
ACTION TO BE CONSIDERED:
To provide further direction.
Or
To direct staff to process an ordinance amendment to Chapter 11, regarding bulk standards,
beginning with the APC holding a Public Hearing.
REQUIRED VOTES FOR APPROVAL: Majority of Councilmembers present
FACTS:
➢ Council members have asked that information be gathered pertaining to building size and
scale. The attached memo explains that building size/buildable area is governed by standards
contained in the City Code. These Bulk Standards include minimum building and parking
setbacks, green space, off-street parking and maximum building coverage and height.
➢ The cities of Bloomington, Maple Grove and Woodbury were surveyed to determine if they
regulate building scale in a means different than Eagan. In each case, building setbacks,
height limitations and green space requirements primarily dictate the size of buildings. The
survey findings are summarized in the attached staff memo.
➢ Additional visual information will be provided to the City Council on Monday evening.
ISSUES:
➢ Identifying the specific issue/concern relative to building scale will help the City Council and
staff identify next steps.
ATTACHMENTS (1):
Staff memo on pages 2a_ through.
An animated 3-D fly-through of the Diffley Marketplace proposal will be shown to the council.
`11
41100 City of Ema
To: Tom Hedges, City Administrator
From: Jon Hohenstein, Community Development Director*
Mike Ridley, City Planne
Date: December 9, 2005
Subject: Building Scale & Size
History
Subsequent to a recent development review for commercial development adjacent or near
residential property, the City Council asked that information be gathered together and
preliminarily analyzed that relates to the scale of development. The specific properties
that were identified when the questions were raised were those in which retail
commercial zoning abuts established residential areas.
As you know, in addition to minimum setbacks, green space requirements and height
maximums, off-street parking requirements also all set parameters as to the development
capacity of any given site. In staff reports for developments, these are generally referred
to as bulk standards. Zoning and subdivision codes set such standards in consideration of
the type and intensity of different types of development, recognizing that development
will often abut land uses that differ by type and intensity.
When the City updated the Zoning Chapter (Chapter 11) a few years ago, the code
requirements that affect the scale or bulk of development were contained in a tabular
form titled "Bulk Standards" for each zoning district. For example, the Neighborhood
Business Zoning District table is shown below:
Bulk Standards (minimum unless noted).
Setback From Public Right-of-way' 30 feet
Side Yard Setback 10 feet
Rear Yard Setback 20 feet
Adjacent to property guided for 30 feet
residential use*
Structure Height (max.) 30 feet
Green Space 30 percent
Building Cover (max. 20 percent
t 50' from county/state r-o-w
Land use guide designation per City's Comprehensive Guide Plan.
-7 a
To some extent, the purpose of this discussion item is to invite more clarification by the
City Council as to the specific issues that may be addressed by this review, but it is
presumed that the starting point is whether the current bulk standards are sufficient to
regulate building scale and size as the City builds out and, particularly, in in-fill
situations.
Survey
The City Council requested survey data from other cities regarding retail/commercial,
office/service and special areas. Planner Cartney surveyed the cities of Bloomington,
Maple Grove and Woodbury because we have used these communities as comparisons in
the past because they are comparable in scale and because they offer a cross section of
development stages from the more mature nature of Bloomington to the higher growth
nature of Maple Grove and Woodbury. We specifically studied the zoning and
subdivision codes of those communities to determine if they regulate building scale in a
means different than Eagan.
In each case, building setbacks, height limitations and green space requirements primarily
dictate the size of buildings. These regulations may vary in the various types of business
zoning, with lesser limitations in more intense business zones, the tools are essentially the
same. What we also found is that there is no zoning district in those communities that
correlates to Eagan's special area comprehensive guide designation and that
office/service regulations typically permit greater intensity than retail zones, particularly
the neighborhood retail zoning standards. As a consequence, the survey and analysis to
date is concentrated on retail/commercial standards.
Eagan Bloomington Maple Grove Woodbury
Setback from 30'/50' 50' 30' 50'
Public R-O-W
Side Yard Setback 10' 20' 10' 30'
Rear Yard Setback 20' 35' 10' n/a
Building Setback 30' n/a 100' 110'
Adjacent to
residential
Building Height 30' 35' 35' 50'
Green Space/ 30% n/a 30% n/a
Landscape Area
Building Coverage 20% 25% > 2,999 SF Bldg n/a
Impervious n/a n/a n/a 65%
Surface
One interesting finding is that some communities are also concerned about buildings
being of a minimum size, so as to avoid an inefficient mixture of undersized structures.
For example, Maple Grove's Business District requires a minimum building size of 3,000
SF. Also, any development consisting of one or more lots owned or improved by the
same person simultaneously and designed or required to contain at least 50,000 SF shall
be developed as a Planned Development.
_73
In addition to surveying other cities regarding their standards, staff also developed some
background illustrations that may be helpful in visualizing the relationship of commercial
building scale to adjacent residential areas. Using the City's Pictometry software, staff
will present a virtual drive by of the proposed Diffley Market Square development and
will show elevations of two of the larger commercial structures in retail areas adjacent to
residential areas - the Lifetime Fitness facility at Thomas Lake Center and the Nicols
Professional Building on Nicols and Cliff Drive. These will be presented at the
workshop on Monday.
Discussion of Alternative Tools or Mechanisms to Define Scale
The essential question suggested by these findings is whether the City of Eagan's bulk
standards are reasonable means of regulating size and scale of buildings by comparison to
the other cities. Since these are the primary means that the cities surveyed use in this
regard, the first question is whether there is a need to consider modifications of Eagan's
current standards.
A second question is whether other tools exist that might be considered to further manage
scale and size and whether they would be useful in Eagan's case. The two additional
tools identified in our review are requirements for expanded setbacks for commercial
development when it is adjacent to residential development and floor area ratio (FAR)
calculations.
While Eagan requires a slightly greater setback in situations in which commercial
development abuts residential uses, the Business District zoning in Maple Grove requires
a substantial additional setback between commercial and residential zones. This district
has standard setbacks except that the building setback from residentially zoned property
is 100 feet, unless separated by a street. Setbacks are also increased one foot for every
foot by which building height exceeds 35 feet. The Maple Grove Code also requires a
minimum 25 percent landscaped area generally and 30 percent when adjacent to
residentially zoned property.
While Eagan and those surveyed do not employ the bulk standard known as Floor Area
Ratio (FAR), it is not an unusual standard in planning circles. FAR is defined as the
Gross Square Footage of all structures on a site divided by the Gross Square Footage of
the lot. A single-story building that covers 20 percent of a lot results in a .02:1 FAR. I
have attached a description and graphic (1:1 FAR) of FAR utilized by Palo Alto, CA.
Provided the bulk standards continue to set a maximum on lot coverage, FAR would only
be useful to consider for square footage above a certain height.
Analysis
In order to refine the analysis of this information for the Council's use in considering
whether to retain or modify the current building size and scale standards, it is important
to fully understand the issues or concerns that the City Council would like to address.
-7+
Specifically, how would City Council's questions related to building size and scale be
affected by:
• Lower building height maximums
• Smaller footprint maximums
• Greater set back minimums
• Greater set backs minimums when adjacent to residential uses
• Adjusted building setbacks based on building height
• Differences in land uses - are concerns greater or less if the adjacent use is retail,
office or some other use?
Because the City's current standards for lot coverage of 20% in the neighborhood
business district is relatively low in comparison to other zoning districts, discussion of the
questions above will permit the City to define and focus on the aspects of building size
and scale that are the basis for the concerns.
Summary
Our survey determined that the cities to which we typically compare ourselves regulate
building scale and size with tools and standards similar to the ones Eagan uses. It did not
lead us to information on comparable cities restricting maximum building size.
The research did identify a small number of additional tools that may be considered -
expanded setbacks and FAR standards - but the fundamental question is whether
modifications of the current standards or the implementation of additional standards
would respond to the issues identified as the City approaches build out.
Please contact me or Mike if you have questions or need additional information.
Agenda Memo
Eagan City Council Workshop
December 12, 2005
VIII. CEDAR GROVE REDEVELOPMENT DISTRICT - REVIEW CEDAR
GROVE REDEVELOPMENT PLANS / SCHAFER RICHARDSON
DIRECTION TO BE CONSIDERED:
To receive a presentation regarding the proposed redevelopment plan for the Cedar Grove
Redevelopment District Core Area, to review the Proposed Tax Increment Financing
Development Agreement and to identify any additional information that may be
necessary in order to consider the plan and agreement at the Public Hearing at the EDA
meeting on December 20, 2005.
FACTS:
• The City has taken steps to bring about the redevelopment of the Cedar Grove
Redevelopment Area, including public improvements, environmental reviews,
comprehensive plan and zoning modifications and the initiation of redevelopment
activity in a portion of the district consistent with the City's plans for the area.
• In 2004, the City issued an RFP for a master developer for the core area of the
Cedar Grove Redevelopment Area. As an outcome of that process, on February
1, 2005, the Council and EDA acted to:
1. Designate Schafer Richardson as Master Developer of the Cedar Grove
Redevelopment District and lead in the partnership with Ryland Homes.
2. Approve the refined conceptual redevelopment plan and development
program, including general land uses, layout and building types.
3. Confirm the role of the Council Finance Committee as liaison to staff for
negotiation of development agreement.
4. Authorize staff to proceed with negotiation of the development agreement.
• Since that time, the City's Redevelopment Group - consisting of staff, the City
Attorney and representatives of Ehlers and Associates - worked with Schafer
Richardson to review the developer's proforma for the project and negotiate a
development agreement that would implement the City's priorities for the area as
outlined in the original RFP and consider the economics associated with a
redevelopment of this type.
• At its meeting of October 18, 2005, the EDA and City Council approved an
agreement in concept and directed staff and the developer to finalize a draft
development agreement to be presented to begin the public review and public
hearing process. It should be clarified that since the Council direction was given,
the developer and staff have confirmed that the height of the building on the
Phase 5-Hotel site will be a minimum of 85' from ground level.
• The draft agreement was completed and was presented to the Economic
Development Authority and the City Council at it meeting of November 15, 2005.
At that time, the Council scheduled a discussion of the agreement and plan for the
workshop meeting Monday evening.
• Staff and the developer also held a neighborhood informational open house on
December 8. Property and business owners in the redevelopment area itself as
well as neighbors from the area bounded by Hwy 13, Blackhawk Road, Diffley
Road and Nicols Road were mailed notices of the open house. Approximately 35
people attended the meeting, with roughly equal representation from the
neighborhood and area business community. Questions were raised about traffic,
housing types, potential business locations and relocations and the availability of
recreation space within the development. The tone of the meeting was generally
positive and participants were made aware of opportunities to comment at the
public hearing on the 20`h.
• The purpose of this business item will be to provide a preview of the project and
agreement elements for the Council and to identify whether further information
needs to be provided at the public hearing on the 20''.
ATTACHMENTS:
• Redevelopment District map on page -
• Proposed Revised Concept Plan on age
• Proposed Phasing Plan on page
• Outline of October 18, 2005 Concept Agreement on page
• Development Agreement enclosed without page number.
--77
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CITY OF EAGAN
CEDAR GROVE REDEVELOPMENT
CORE AREA DEVELOPMENT CONTRACT
COUNCIL DIRECTION/APPROVAL IN CONCEPT
Tuesday, October 18, 2005
The deal points outlined below were presented to the City Council and EDA at its meeting of
October 18, 2005. Based on the outcome of the parties' negotiations on the afternoon of the 18`x',
the City Council approved the agreement in concept with the following clarifications resolving
the deal points remaining after that meeting:
• Agreement to a $500,000 developer fee to be paid %z at the end of Phase 3 and the
balance at the end of Phase 5
• No commissions to be paid for sales of property by Schafer Richardson employees.
• Requirement that the development not only conform to the CGD architectural and finish
standards, but also to the requirement that residential units must be attached and in
buildings of four or more residential units.
1. Developer Return.
• The City's development consultant indicates that developer return on redevelopment
projects typically ranges between 10% and 15%. Under the terms outlined in the RFP,
the City was willing to consider a 15% return, based on the expectation that developer
would acquire properties and project would internalize certain redevelopment costs. At
the direction of the City Council, the City has taken on the responsibility for acquiring
properties and holding them until redevelopment occurs.
• Through negotiations, the developer has asked that the City take on costs for
environmental review and remediation, underwriting the costs of affordable housing,
offsite transportation improvements and certain assessments. In consideration of the
changes in the structure of the deal from the original RFP, the City has required and the
developer has agreed to a 12% return.
• The 12% return applies only to actual costs assumed by the developer and does not apply
to project costs paid directly by the City. Since the mall itself is owned by a partnership
consisting of the developer and other parties, the base price of the mall will be included
in the costs to which the return applies.
• In addition to the 12% return, the developer has proposed a $500,000 developer fee to
offset certain costs. At the last Finance Committee meeting it was concluded that the fee
would be considered, if it is paid at the end of the project. The City Council agreed to the
payment of the developer fee to be paid '/2 at the end of Phase 3 and the balance at the
end of Phase 5.
• An open issue remains regarding applying the return rate to commissions paid to Schafer
Richardson for sales to third parties that do not make use of a broker. The Finance
Committee recommended against this. The City Council determined that no
Commissions are to be paid to Schafer Richardson for sales to third parties that do not
make use of a broker.
2. Mall Price
• The developer's calculation of the mall price, based on the income approach to valuation,
puts the current proposed value at $5.75 million as compared to the $2,975,000.00
amount the developer paid for the mall in 2002. The current value will need to be
supported by a professional appraisal.
• In keeping with the approach that the substantial benefits accrue to the developer for
completing the entire project, the agreement proposes to pay the difference between the
current basis cost of the mall ($3.4 million based on purchase price plus improvements)
and the current value in two parts - half after completion of Phase 3 and the balance after
the completion of Phase 5.
3. Cost of City Property
• In order to make the TIF cash flow balance, the agreement calls for the City to sell the
properties it had acquired as of March, 2005 to the developer for a dollar. The developer
will pay the City the actual cost of acquisition for properties acquired after that date.
4. Assessments.
• Assessments for Project 80OR will be paid upon closing with each of the properties to be
acquired, including the mall. The developer will assume the costs of public
improvements associated with new development within the redevelopment area. The
City will absorb the costs of offsite improvements identified in the traffic studies
associated with project, if and when such improvements are needed.
• The City will also pursue third party funding for the construction of a transit
station/parking ramp in the eastern, gateway area of the development. The ramp will
serve transit users during the day and food and beverage and entertainment business users
in the evening. The eastern transit station is intended to provide transit service to the area
until such time as specific plans and implementation funding are available to construct
the BRT station on the west end of the project.
5. Affordable Housing.
• The developer has agreed to incorporate a mixture of affordable housing types totaling
20% of the units in the overall project. These will consist of scattered site owner
occupied units priced at or below the value for affordability identified by the
Metropolitan Council, scattered site units sold to persons who qualify for the CDA's First
Time Home Buyer Program and/or Down Payment Assistance Programs, a mixed income
rental apartment project and a CDA constructed work-force rental rowhome project.
• The costs of the first two types of products are expected to be market rate and require no
specific financing assistance. The City will work with the CDA and other funding
agencies to provide the necessary write-downs to assist with the mixed income apartment
and work-force rowhome project.
8~
6. Environmental issues.
• Environmental remediation is one of the costs that typically prevent the private sector
from undertaking redevelopment activities. The City has agreed (but is not obligated) to
cover the costs of investigation and remediation.
7. Phase 5 - Hotel.
• From the outcome of the Cedar-13 Task Force through the RFP process until now, the
City has had an expressed expectation that a hotel would be built at the west end of the
project to create another node of retail activity and a vertical building (6 or more stories)
that could be seen from Cedar Avenue to provide a visual connection between the
development and the traveling public.
• The developer has yet to identify a development partner that would insure the
construction of the hotel by the time the project would be completed. He has requested
consideration of alternative uses. The Finance Committee indicated that the hotel
remains the first choice and that it should remain an expectation in the development
agreement. The Committee indicated that the City should be open to alternative uses if
the hotel is not feasible at that time, provided that the alternative use(s) is identified as
part of the agreement, that such use(s) would be 6 or more stories to provide the visual
connection to Cedar Avenue and that it not be entirely residential. The developer has
proposed a structure in which a hotel would be the first option, an office building second
(preliminary traffic analysis indicates that an office use would exceed the capacity of the
traffic improvements in the area) and a mixed use retail-condominium building.
8. Allocation of Inflation
• The City will retain any inflation in TIF return from the project to cover unanticipated
costs and to provide assurance of certain improvements if grant funding cannot be
secured.
9. Park Dedication and Public Open Space
• The developer will provide parkland and improvements or pay cash dedication as part of
the APrC review of the development applications for each phase.
• The developer has also agreed to the suggestion that public places be defined within the
primary mixed use area and along the linear pedestrian ways from east to west through
the development. The concept plan will be updated to reflect those additions. The costs
of long term maintenance of such improvements are to be borne by the benefiting
properties.
10. Conformance with CGD Zoning Re ations - Attached Housing
• The development will conform to the CGD requirements that only permit housing if it is
attached and in buildings of four residential units or more. The single family detached
product should be removed from the concept plan.
Q~
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