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08/22/2006 - City Council Special MINUTES SPECIAL CITY COUNCIL MEETING AUGUST 22, 2006 5:30 P.M. EAGAN ROOM ? EAGAN MUNICIPAL CENTER City council members present: Mayor Geagan, Council members: Carlson, Fields, Tilley, Maguire. City staff present: City Administrator Hedges, Assistant to the City Administrator Miller, Administrative Services Director VanOverbeke, Chief Financial Officer Pepper, Community Development Director Hohenstein, Public Works Director Colbert, City Engineer Matthys, Communications Director Garrison, Parks & Recreation Director Johnson, Police Chief McDonald, Fire Chief Scott, Campus Facilities Manager Vaughn, Superintendent of Streets & Equipment Struve, Superintendent of Operations Mesko, Police Lt. Johnson, Police Lt. Pike, Administration Intern Ziemer, and Finance Intern Nicklay. I.ROLL CALL AND AGENDA ADOPTION Mayor Geagan called the meeting to order at 5:32 p.m. Council member Fields moved; Councilmember Tilley seconded a motion to adopt the agenda as presented. Aye: 5, Nay 0. II.VISITORS TO BE HEARD There were no visitors to be heard. III.CONSENT A. ECONOMIC DEVELOPMENT AUTHORITY ? Cedarvale Mall property management service contract with Griffin Companies. President Geagan convened a meeting of the EDA. EDA adopted a resolution, approving the property management service contract with Griffin Companies for the operation of the Cedarvale Mall property. Commissioner Tilley moved; commissioner Field seconded the motion. Aye: 5, Nay: 0. Meeting of EDA adjourned. IV.2007 PROPOSED CIVIC ARENA BUDGET City Administrator Hedges introduced the 2006-2007 proposed civic arena budget, including a slight ($5/hour) increase in ice rental rates, and the 2006-2007 capital outlay improvement budget. Administrator Hedges stated council approval of the arena budget was necessary as the 2006-2007 skating season was already underway. Hedges also said that the new rates remain competitive with hourly ice rental rates for surrounding communities. Councilmember Fields moved; councilmember McGuire seconded motion to approve 2006-2007 hourly ice rate increase, the 2006-2007 civic arena budget, and the 2006-2007 capital outlay improvement budget. Aye: 5, Nay: 0. Administrator Hedges stated that in 2007 the Eagan Hockey Association will pay off its $500,000 commitment pledged for construction of the east arena. Councilmember Carlson asked that city staff ensure that net profits are put back into the budget. Administrative Services Director VanOverbeke stated that excess profits remain in the fund. Councilmember McGuire requested city staff present a side-by-side comparison of Cascade Bay and Civic Arena shared FTE personnel. V.2007 PROPOSED TAX LEVY AND GENERAL FUND OPERATING BUDGET City Administrator Hedges thanked staff for their hard work on the budget, especially finance intern Nicklay for his work in the process. Administrator Hedges stated that staff used a new format for the 2007 city budget, using performance indicators and highlighting reasons for changes to department budget items. Councilmembers Carlson and Acquire noted the changes made the budget easier to read and follow. Administrator Hedges stated that overall city taxes payable on an average valued home of $278,021 in 2007 will decrease from $709 to $684. Councilmember Carlson asked city staff to create a chart showing city compared with surrounding communities. Administrative Services Director VanOverbeke stated once rates for other cities became available a chart would be created. Councilmember Carlson and McGuire also asked for additional information on average appreciation rates on Eagan homes, not attached to average market values in order to project trends community wide. Administrator presented reviewed reasons for 2007 budget increases, citing the largest increase is the result of COLA and step increases on existing staff. Hedges also stated that health insurance costs continue to be an ongoing concern. Administrator Hedges also presented for discussion market value homestead credit (MVHC), requesting direction from council members as to how they wish city staff to proceed. Hedges stated that statutory requirements call for cities to receive MVHC again. Hedges said current state budget forecasts look good, which would indicate MVHC would be paid out, which for the city would total $840,000 in the general fund. Hedges stated city staff included the $840,000 in the proposed 2007 general fund operating budget, and without it, the city may have to levy that amount back. Mayor Geagan and the council questioned what if the legislature decided not to pay the MVHC. Councilmember Carlson requested city staff to contact other cities to find out whether or not they intend to levy the MVHC amount or budget it. Administrator Hedges stated city staff would inquire as to the intentions of other cities, and prepare budget alternatives. Hedges stated the worst case scenario is if the city certifies the tax levy at the current proposed level and then does not receive MVHC, the city would be unable to levy for it. Another potential scenario presented would be if the state legislature imposed levy limits in 2008. Councilmember McGuire stated that the city needs to approve by Sept. 5 the tax levy it intends certify. McGuire said the city can only decrease that amount after that date. Administrative Services Director VanOverbeke stated that once a tax levy is certified, that is the amount collected. Administrator Hedges said that if the council decided to raise the levy and MVHC was received, the city would set aside the MVHC money. Administrator Hedges asked the council to reaffirm or modify its determination on the use of the Fund Balance as a contingency for operations and as a savings account. Mayor Geagan and council members concurred the Fund Balance should continue to be used in that manner. Administrator Hedges presented for discussion department budgets. Mayor Geagan convened a 15 minute break at 6:45 p.m. Mayor Geagan re-convened the special city council meeting at 7 p.m. Mayor Geagan asked that city staff look into salary compensation of council members, stating Eagan is the eighth largest city in Minnesota but salaries of council members is not commensurate with the size of the city. Councilmember Carlson stated that staff should look into an increase in reimbursement and expense accounts, rather than salary increases. Carlson expressed concern over salary increases so that people would still see mayor and council as voluntary positions. Under the proposed administration department budget, Mayor Geagan questioned the IT budget regarding phones. Administrative Services Director VanOverbeke stated that the telephone system is nearing the end of its useful life and that the costs associated with the phones is for 24/7 maintenance on the system, which includes voicemail updates. Mayor Geagan stated that the increasing maintenance costs may indicate need for a new system. Administrator Hedges stated that the increasing costs for legal services is due to additional legal activity regarding legal consultation with the city?s lawsuit against the MAC, and ongoing complexities regarding redevelopment projects in the city. Councilmember McGuire asked whether or not the League of Minnesota Cities (LMC) helps cover legal fees for cities. Administrative Services Director VanOverbeke stated that LMC does reimburse cities for some legal costs covered by insurance. Administrator Hedges stated that developers are billed back for legal services as part of project escrow accounts. Administrator Hedges presented addition of $6,700 to Community Development department budget for membership in new Economic Development Commission/Addition of Dakota Future. Community Development Director Hohenstein stated that membership would benefit the city more than an additional staff person, citing the make up of the new organization would be made up of a mix of community development professionals, chambers of commerce, and other business organizations. Councilmember McGuire asked that city staff provide additional information allowing the city council to make a final membership decision at a later date. Mayor Geagan questioned the 40 percent increase in asphalt prices, resulting in reduction of quantities of bituminous purchased for street repairs in 2007. Public Works Director Colbert stated the main factor is the increase in energy costs. Colbert stated the city is trying to get away with less patching by using a new spray injection that catches and prevents potholes before they form. Mayor Geagan asked if the spray injection equipment could be rented or leased out to other communities. Superintendent of Streets & Equipment Struve stated the city currently uses equipment nearly every day. Administrator Hedges presented the Parks & Recreation Department budget as two separate budgets ? park maintenance and recreation administration. Mayor Geagan wondered why expenditures increased only 15 percent while revenues were up 41 percent. Parks & Recreation Director Johnson cited a combination of factors, including programs reaching capacity. Those programs were seeing an increase in revenue without increasing expenses. Administrator Hedges said additional information requested by the council, including what other cities are doing regarding market value credit and levying taxes, would provided at the Sept. 5 regular council meeting. Administrator Hedges thanked staff for their work on the budget process to date. VI.OTHER BUSINESS Mayor Geagan reviewed council meeting procedures, asking that council members raise their hands if they wish to ask a question or address an issue, and when done speaking say ?thank you mayor? so the mayor knows they are finished. Councilmember Carlson concurred, adding no one else should speak while another council member is making a motion. VII.ADJOURN Councilmember Fields moved; Councilmember Tilley seconded a motion to adjourn at 8:05 p.m. Aye: 5, Nay: 0.