05/15/1997 - City Council Special
OC164
MINUTES OF A SPECIAL MEETING
OF THE EAGAN CITY COUNCIL
Eagan, Minnesota
May 15, 1997
A special meeting of the Eagan City Council was held on Thursday, May 15, 1997 at 5:15 p.rn. at
the Eagan Municipal Center Building. Present were Mayor Egan and City Councilmembers Awada,
Blomquist, Masin and Wachter. Also present were Director of Parks and Recreation Vraa, Director of
Finance VanOverbeke and City Administrator Hedges.
FIRE RELIEF ASSOCIATION
DEFINED BENEFIT TO DEFINED CONTRIBUTION
City Administrator Hedges stated that the Fire Relief Association Pension Committee is exploring
the possibility of switching their pension plan from a defined benefit to a defined contribution. He stated
that the defined benefit plan is one in which a retiree's benefits are fixed and predetermined based on an
established formula and a defined contribution plan is one in which an individual retirement account is
established for each participating employee. The City Administrator outlined the advantages and
disadvantages of the defined benefit and defined contribution plans from material that was provided by
Symmetric Investments, Inc., an independent broker/dealer and registered investment advisor firm that
has been working with the Relief Association as they consider a conversion from defined benefit to
defined contribution.
The City Administrator further stated that along with the Director of Finance there have been
several meetings with the Relief Association since early February to consider the change and due to the
complexity of the issues, if the City Council is agreeable to considering the concept of making a switch
from defined benefit to defined contribution, it will be necessary to engage the services of the appropriate
consultants. He further stated that the Relief Association representatives would like to present the
concept of a switch to the defined contribution benefit plan at their special meeting to the general
membership on May 19.
Mayor Egan stated that on the surface the defined contribution appears to be a good approach to
providing benefits, eliminating the need to pursue special legislation on an ongoing basis and each
firefighter is able to manage their own retirement account to maximize their investment income. City
Councilmember Blomquist stated that she has concerns about the cost of the transition. City
Councilmember Wachter stated that he is in support of the concept but would need more financial data
and a specific proposal from the Relief Association. City Councilmember Awada stated that changing to
a defined contribution is a good scenario and would support the proposal in concept allowing the City to
gain additional information on the cost to the City of a proposed conversion.
Dave Thompson, representing Symmetric Investments, Inc., stated that a change in the defined
benefit to defined contribution would be less responsibility to the City. Director of Finance VanOverbeke
stated that careful consideration in the cost of the transition is important in that depending on the
proposal, the amount of money required up front to make the conversion could be high in order to
eliminate any future liability. According to Mr. Thompson the up front liability could be financed over a
period of time. Pat Diloia, representing the Fire Relief Association explained that retroactivity of benefit
increases in a defined benefit plan creates a higher unfunded liability.
City Councilmember Masin asked that an analysis show how much the City would contribute if
the defined benefit were approved at $5,200 lump sum versus conversion to a defined contribution
program of a similar amount. Director of Finance VanOverbeke stated that the City needs to determine
two issues. 1) What will the City put in for each firefighter annually and 2) what is the total transition
amount? Mayor Egan asked if the defined contribution will change options that are currently offered
under defined benefit which is both monthly and lump sum. Mr. Thompson stated that each firefighter
Special City Council Minutes/May 15, 1997
Page 2
00165
can determine whether they wish to withdraw as a lump sum or create a monthly annuity under a defined
contribution plan.
Mark Sportelli, President of the Fire Relief Association, stated that in response to discussion
regarding the 2% insurance contribution from the State of Minnesota, it is possible that the City's
contribution could be lowered as a result of the State's allocation of an increase in insurance. City
Councilmember Masin stated that she is supportive of the change from defined benefit to defined
contribution in concept and that the City should proceed with hiring the technical support necessary to
consider all aspects of the transition. City Councilmember Wachter concurred that the City should
proceed ahead and gain the necessary information for the Council to make a policy decision. Mayor
Egan stated that it is the consensus of the City Council that the City proceed ahead with the concept and
engage the appropriate technical support necessary to evaluate all aspects of a conversion from defined
benefit to defined contribution including the cost of a transition to the City.
TOUR AMPHITHEATER SITES
City Administrator Hedges stated that at the April 29 Special City Council meeting, members of
the Eagan Rotary Club presented a plan to develop an amphitheater for the community. He further stated
that there was considerable discussion about where the amphitheater would be located. It was agreed
that the City Council, along with members of the Rotary Club and Advisory Parks Commission would tour
several sites including the Municipal Center site, Patrick Eagan Park, Unisys site and Skyhill Park. He
further stated that the Dart property had also been mentioned as a possible site at the May 6 meeting.
Mayor Egan welcomed members of the Rotary Club and Advisory Parks Commission for the tour.
Director of Parks and Recreation Vraa, along with the entire City Council, members of the Rotary Club
and Advisory Parks Commission and City Administrator physically toured the community stopping and
observing both locations at Skyhill Park and the Unisys site, a drive by of the Dart property, and physically
walked the Patrick Eagan Park and Municipal Center Sites.
The tour lasted approximately an hour and fifteen minutes. Mayor Egan thanked me mbers of the
Advisory Parks Commission and Rotarians for their participation. He further stated that this fact finding
would be scheduled for further consideration at a future City Council work session.
NORTHWEST AIRLINES PRESENTATION
City Councilmembers attended a portion of the Airport Relations Commission meeting to hear
Jennifer Sayre, representing Northwest Airlines, present information on fleet plans the company has for
their fleet growth, the Stage III fleet conversion and compliance plan objectives, information on noise
levels of their retrofitted aircraft versus factory Stage III and their proportional utilization of Stage II at
MSP as compared to the utilization of Stage II system wide. She also presented a history of the NWA's
noise agreements at MSP and their regional employment, stating that 2,400 employees reside in Eagan.
Ms. Sayre ended her presentation by reviewing NWA's position on Runway 11 R/29L reconstruction delay
and NWA's operations at MSP, specifically as it relates to growth projections.
Following the presentation, the City Councilmembers excused themselves from the regular
meeting of the Airport Relations Commission.
OTHER BUSINESS
There being no Other Business, the meeting was adjourned at 7:45 p.m. .
May 15, 1997 ~
Date City Clerk