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HomeMy WebLinkAbout11 26 12 City Council Minutes 4646 Dakota Street SE Prior Lake, MN 55372 REGULAR CITY COUNCIL MEETING MINUTES November 26 , 2012 CALL TO ORDER The meeting was called to order at 7:00 p.m. Present were Mayor M yser, Council members Erickson, Hedberg, Keeney and Soukup , City Manager Boyles, City Attorney Rosow, Finance Director Er ickson, City Engineer / Inspections Director Poppler, Police Chief O’Rourke, Fire Chief Hartman, Public Works/Na tural Resources Director Gehler , Communication and Economic Development Director Rogness, Assistant City Manager Kansier , Assistant City Manager Meyer and Administrative Assi s tant Green. PUBLIC FORUM The Public Forum is intended to afford the public an opportunity to address concerns to the City Council. The Public Forum will be no longer than 30 minutes in length and each presenter will have no more than ten (10) minutes to speak. Topics of discussion are restricted to City governmental topics rather than private or polit i cal agendas. Topics may be addressed at the Public Forum that are on the agenda except those topics that have been or ar e the subject of a scheduled public hearing or public information hearing before the City Cou n cil, the Economic Development Authority (EDA), Planning Commission, or any other City Advisory Committee. The City Council may discuss but will not take formal a ction on Public Forum presentations. Matters that are the subject of pending litigation are not appropriate for the Forum. Comments: No person stepped forward to speak. APPROVAL OF AGENDA MOTION BY SOUKUP, SECOND BY KEENEY TO APPROVE THE AGENDA AS PRES ENTED . VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried. APPROVAL OF MEETING MINUTES MOTION BY ERICKSON , SECOND BY HEDBERG TO APPROVE THE MINUTES OF THE NOVEMBER 13 , 2012 CITY C OU NCIL MEETING. VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried. CONSENT AGENDA City Manager Boyles reviewed the items on the consent agenda. A. Consider Approval of Claims Listing B. Conside r Approval of Treasurers Report C. Consider Approval of Building Permit S ummary Report D. Consider Approval of Animal Control Services Report E. Consider App roval of Fire Department Report F. Consider Approval of Police Department Report G. Consider Approval of Resolution 12 - 192 Designating Northern Capital Insurance Group as the Insurance Group of Record for 2013 - 2017 and Authorizing the Mayor and City Manager to Execute the City’s Standardized Professional Services Agreement Phone 952.447. 9800 / Fax 952.44 7 . 4245 / www.cityofpriorlake.com H. Consider Approval of Resolution 12 - 193 Approving the Capital Asset Policy Amendment I. Cons ider Approval of Resolution 12 - 194 Requesting Advancement of State Aid Funds J. Consider Approval of Resolution 12 - 195 Approving the Decertification of Tax Increment Financing District No. 1 - 1 of the City of Prior Lake K. Consider Approval of Resolution 12 - 196 Approving the Appointment of Technology Village Board of Directors Councilmember Erickson requested that item 5G, Consider Approval of Resolution 12 - 192 Designating Northern Capital Insurance Group as the Insurance Group of Record for 2013 - 2017 an d Authorizing the Mayor and City Manager to Execute the City’s Standardized Pr ofessional Services Agreement, be removed from the Consent Agenda for discussion. Councilmember Soukup requested that item 5C, Consider Approval of Building Permit Summary Repor t , be removed from the Consent Agenda for questions . Mayor Myser requested that item 5E, Consider App roval of Fire Department Report, be removed from the Consent Agenda for questions. MOTION BY HEDBERG , SECOND BY SOUKUP TO APPROVE THE CONSENT AGENDA AS MODIFIED. VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried. Comments: Soukup : Commented that the building report reflects 142 building permits to date and asked how many were budgeted. J. Erickson : Replied the budget w as for 85 . Hedberg : Noted that the report is through the end of October and asked the current status. Poppler : Replied that four more permits were issued and there are 23 in review or ready for pick up. Hedberg : Asked if they will be picked up before ye ar end . Poppler : Responded that probably 20 of them would. Hedberg : Queried if the year - end total is project ed to be around 165 permits. Poppler: Affirmed . Myser: Asked if staff had learned why there is a significant increase in vehicle accidents. Ha rtman : Responded that there is increase in activity on the roadways and there are issues with inattentive driving. Myser: Suggested the Traffic Safety Advisory Committee research possible causes for the increase. Erickson: Commented that the proposed agreement with Northern Capital Insurance Group appears it will save the City significant money over the next few years. Questioned why staff is recommending Northern Capital when they did not submit the lowest bid. J . Erickson: Responded that the prop o sal recommended is fee based, not commission based. Quotes were received from seven companies. There is much benefit in having individuals in the insurance business provide their expertise for property and casualty as well as worker’s compensation. The recommendation is b ased on proposals and interviews, the level of technology, municipal experience and expertise . Erickson : Clarified that the savings will be around $30,000 for the contract period . November 26 , 2012 City Council Minutes 2 J. Erickson: Replied that is the projected savings on t he fee side , but w ith experts looking at our assets and coverage, it is hope d they will make recommendations that will help us realize greater savings. MOTION BY SOUKUP , SECOND BY ERICKSON TO APPROVE 5C CONSIDER APPROVAL OF BUILDING PERMIT SUMM ARY REPORT ; 5E CONSIDER APPROVAL OF FIRE DEPARTMENT REPORT ; AND 5G CONSIDER APPROVAL OF RESOLUTION 12 - 192 DESIGNATING NORTHERN CAPITAL INSURANCE GR OUP AS THE INSURANCE GROUP OF RECORD FOR 2013 - 2017 AND AUTHORIZING THE MAYO R AND CITY MANAGER T O EXECUTE THE CITY’S STAN DARDIZED PROFESSIONAL SERVICE S AGREEMENT. VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried. PRESENTATION No presentation was scheduled. PUBLIC HEARING Public Hearing to Consider Approval of a Resolution Providing for the Vacation of Drainage and Utility Easements located within Lots 7 & 8, Shady Beach Addition Community and Economic Development Director Rogness stated an application was received from property owners at 14291 Shady Beach Trail for vacation of an easement. Explained that a public sanitary sewer system was installed across their property in 1965 , but the easement for it is not centered over the actual sewer line. The easement is proposed to be relocated. MOTION BY HEDBERG , SECOND BY KEENEY TO OPEN THE PUB LIC HEARING. VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried and the public hearing opened at 7:18 p.m. Comments: Harry Alcorn , 14283 Shady Beach Trail, Lot 6, adjoin ing Lot 7. Questioned how this easement might affect adja cent properties. MOTION BY SOUKUP , SECOND BY HEDBERG TO CLOSE THE PUBLIC HEARING. VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried and the public hearing closed at 7:20 p.m. Comments: Rogness : Responded to Alcorn’s query by stating that a s easements come to the adjoining properties , they will have a slight shift in alignment, but it will not impact them . Each will still have adequate easements over their property. Stated the City Engineer has reviewed those easements and does not perceive any problems with adjacent properties. Hedberg : Asked if the sewer line be centered in the easement as it traverses the Alcorn property ; and i f not, how far off it will be. Poppler : Replied that the sewer line is still within the easem ent, it just will not be perfectly centered. Hedberg : Since the Rixmann’s had an issue with the easement in order to perform some construction , he believes it should be raised with the neighbor’s if they have similar issues. Soukup : Commented that perha ps the whole easement area should be adjusted. Keeney : Asked if the easement will still meet the 75’ setback from shoreline . Rogness : Affirmed. November 26 , 2012 City Council Minutes 3 Keeney : Understands it is quite common for the easements not to be centered and we generally don’t go back a nd adjust it unless so meone has a particular issue. Stated the easement d oes not appear to be off center enough on the other properties to use resources to correct it. Myser : Suggested staff might review to see if there are any potential problems with ot her properties. MOTION BY HEDBERG , SECOND BY SOUKUP TO APPROVE RESOLUTION 12 - 197 PROVIDING FOR THE VACATION OF DRAI NAGE AND UTILITY EAS EMENTS LOCATED WITHI N LOTS 7 & 8, SHADY BEACH ADDITION PLAT INCLUDING THE ADDITI ON OF A STATEMENT THAT THE APPLICANT/PET ITIONER SHALL RECORD THIS RESOLUTION AT T HE SCOTT COUNTY RECORDER’S OFFICE WI THIN SIXTY (60) DAYS OF CITY COUNCIL APPR OVAL . VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried. Public Hearing for Proposed 2013 City Budgets a nd Property Tax Levies (Truth in Taxation) City Manager Boyles provided a PowerPoint presentation regarding the proposed 2013 City budget and property tax levy. Reviewed the City’s accomplishments during 2012 as well as the focus of future efforts. Spoke about the Truth in Taxation process and associated timelines . Reviewed the budgeting process and the financial planning components that are involved. Discussed budget amounts and corresponding tax levies. General Fund balances from a historical perspecti ve and planned future levels were discussed. Comments: Hedberg: Commented that the presentation shows that over last six years, taxes per household have gone from $ 1 , 060 to $ 1 ,16 0 , 4% . Pointed out that a number of people have experienced property tax increases over that period of time and stated that it is because there is a class of homes with l akeshore and deeded lake access where a ssessments were not keeping up with market value changes prior to 2006 . The County was mandated by the State to get th at valuation back into alignment , which r esulted in significant assessed changes during the period of 2006 - 2008 . T he limited market value t ax break was phased out which added another impact to lakeshore property. In 2010 the homestead credit was phased o ut , which had allowed people with lower and moderate value homes to get a tax break . Now those homes can receive the same amount of credit, but it is accomplished in a different way and funded by tax increases on higher valued homes in the community. R ep ort s from the assessor point ed out that homes on the lake were holding their value more than the community at large; specifically , homes valued at less than $ 600,000 were affected negatively more than the rest of the community while homes valued at more th an $ 600,000 and up were holding their value. All of these factors have the accumulated effect that even while taxes per household went up only 4% over six years, individuals may have experienced more significant tax increases and it has nothing to do with City administration. Soukup : Asked how many building permits are planned in the 2013 budget. J. Erickson: One - hundred - twenty - five . Myser : Clarified whether the general fund reserve additions from surplus through 2012 have not been shown. J. Erickson: Replied th e presentation depicted a reduction of $218,000. That amount wa s shown prior to the close of the Pike Lake Park which used $350,000 of reserves. Myser : Asked why a change in the total city market value would add to an increase . J. Erickson : Replied it is due to redistribution. If the City must collect a particular amount and the levy is kept constant and the tax rate goes up ; that application against a particular property will cause the dollar amount to be increased. November 26 , 2012 City Council Minutes 4 MOTION BY ERICKSON , SECOND BY KEENEY TO OPEN THE PUBLIC HEARING. VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried and the public hearing opened at 8:05 p.m. Comments: Craig Gutosk e , 6382 Conroy Street, thanked the Council for its work through out the year. Stated that his home valuation increased 16.5% and the City portion of taxes went up 67.6% since he has moved there ; and in the past year, it has increased 20%, which he believes is u nreasonable and unacceptable. Stated that during the same time period, the n on - city portion went up 40.5%. Stated he has not looked at the City budget in detail, but believes that Federal and State level governments are failing and questions whether there is a spending issue with the City. Wes Mader , 3470 Syca more Trail, said structure and make up of budget is changed so often it is hard to for him to track. Stated the Prior Lake American said the City is experiencing $857,000 of surplus and he believes the tax bill received was 10% higher than it needed to be . Believes that irresponsible spending by government, institutions and individual consumers contribute to difficult times in America. Provide d examples of areas where he believes the City has not been frugal and that the expenditures do not benefit him o r his neighborhood. Asked Council to recognize that spending decisions are what drive taxes up. Increasing taxes does not improve quality of life. Stated he is p leased that the current tax levy proposed is reduced from the preliminary levy. Joe l Culpe pper , 15263 Wilds Parkway (also 16520 Inguadona Beach) stated he purchased his Inguadona Beach property this summer a t a price reduced from the County’s valuation. Property he is trying to sell on Wild’s Parkway is competing with foreclosures and short sa les and is virtually impossible to sell. Rob Gardner , 14163 Shady Beach Trail, stated he moved to this house three years ago, remodeled it, and since then taxes have increased 20.5%. Stated he c annot afford this. Commented on City buildings recently buil t and stated they could provide the necessary services if they were designed simply and inexpensively. Stated he has taken a substantial pay cut over past few years while others are getting raise. Asked if any City staff will experience pay cuts and if m ore spending and higher taxes can be expected in the future. Kevin L il land , 4560 Embassy Circle NE, stated he does not live on the lake and his home’s valua tion went down , but the City portion of his taxes increased 14%. Stated the County and School i ncreases were less and it seems inappropriate to have such a large City increase. Seems government is not feeling the pain as the homeowners do. Rick Schumacher , 3735 Island View Circle, experienced a 20% increase in taxes , which is three times the inflat ion rate. Believes the City should abide by inflationary principles and a sked councilmembers if a property with no improvements and a valuation increase of 3% should have a 20% increase in taxes. Ty Sten z el , 37 65 Island View Circle, asked if 5% of the t ax payers are paying for the bulk of the increase or more than the increase. Asked if the City has considered fee for service for services rather than property taxes. Patricia Larson , 4717 Oakwood Circle SE, stated she moved here in 2009, purchased a forec los ed home, renovated it spending $60,000 and each year the property value has gone down. Stated her home is now $100,000 less than in 2009 , but the taxes ar e up. Made a comparison to car taxes that go down as a car devalues. Jerry Me ysenbourg , 15330 Ed gewater Circle, stated his market value has increased 3%, but the City taxes increased 20%. Listed increases he has received over the years. Asked how the C ity justifies the increase. Stated he lives on the lake, but does not believe he should have to s ubsidize properties that are of lower value. Stated he does not receive proposed tax statements prior to budget planning meetings or he would have been at the meetings. Believes a clear message was given to Council by voters at the last election. Believ es the City is spending too much. November 26 , 2012 City Council Minutes 5 Hor st Graser, 3715 Island View Circle, stated his house was built in 1988 and his property tax has increased three - fold since then with the City portion increasing 20% this year . Understand s the formula and the moving pa rts of the equation that result in tax to property; but found pre sentation somewhat overwhelming and asked why the levy needs to be raised if a $800,000+ surplus is projected this year. Bob Kelly , 14277 Shady Beach Trail, s tated he is a retiree on a fixe d income for the past ten years and City taxes have doubled in that time. A sked if there could be consideration for freezing property taxes for retirees. Julie David , 14958 Pixie Point Circle, stated her property taxes went up 12.7% with the City’s porti on up 26%. Stated her home is valued under $500,000. Queried that when a house cannot be sold at the valuation level it is being taxed at, how can that be changed. Believes lake properties are losing value. Asked how market value is defined. M. C. Gr esser, 14145 Shady Beach Trail, read from an article entitled, How Long Do We Have , regarding how long a democratic form of government can last. Stated it is not a matter of not enough money coming in, but rather too much spending. Dana Wheeler, 14126 Or chard Circle, works for an organization of S tate employees and stated he has had no raise for six of the past eight years. Believes it is possible to keep increases down and figure out how to do more with the same resources. Stated it is emotionally and intellectually trying to understand the level of tax increases given circumstances of retirement or stagnant incomes. Need to tell citizens the specifics of what the City needs the money for. Believes the City needs to cut back on the amount of money it spends. Janine Alcorn, 14283 Shady Beach Trail, stated she has similar sentiments to those already expressed. Commented that t axes, insurance, groceries have all gone up. The City taxes on her property are up 19.75% and the assessed value is up 2.7%. S tated their neighborhood does not have fancy streets or even many street lights. Feels a bit penalized with the recent tax statement. Jack Haugen, 4824 Adrian Circle, b elieves the tax system is broken . Stated it is not a City problem ; the State defin es the tax system and County implements it . Underassessment in our community amplifies the problem. Tax inequity needs to be resolved at State level. B elieves the City has had lowest tax rate in County in recent years . The r ate of City employees per c apita is one of the lowest in the County; police officer ratio is lowest in the County. Still have a tax problem. Commented that the Moody’s rating has increased twice in the past few years which saves City tens of thousands of dollars in interest monies . Cautioned against allowing reserves to go to o low as the Moody’s rating could be jeopardized if the reserves fall below 45%. Stated that s trong management look s at the present and bases decisions based on the big picture. Commented that having an $85 7,000 surplus in the private sector would be complimented on the combination of increased revenues and decreased expenditures. MOTION BY HEDBERG, SECOND BY ERICKSON TO CLOSE THE PUBLIC HEARING. VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried and the public hearing closed at 9:00 p.m. Comments: Myser : R eiterated the questions posed by the audience to assure clarity . Commented on his own valuation and increase of taxes which have doubled in seven years. Stated it w as part of his motivation to run for office. Stated it is not just the taxes that the City has set ; but mostly it is due to changes at the State level , the market value homestead credit, etc. Erickson: Stated that a question was asked about whether there will be this much of an increase in the future. One of the things voted for last year was a rebate which was done by taking some of the reserves to decrease the taxes. Since budget the was “bought down” last year, it is a false number to compare increases to. Commented that the preliminary budget is a maximum budget and is planned to be lower when finalized . November 26 , 2012 City Council Minutes 6 Myser: Stated it was d iscussed whether to give a reduction in one year, or do it over several years. He r ecommended giving the money back in one year and w ould do so again. Commented on surplus revenues and estimations that are made when developing the budget. Supported spending reserves for Pike Lake Park as a long - term benefit for the community. Stated a 45% of general fund budget in reserve is the targeted amount and he s upports using the rest of the reserves to reduce the tax levy. Hedberg : Commented on the query about expected increases in the future by stating that Prior Lake has been a growing community and still is , though at a slower rate. Stated the Council agreed that tracking taxes and spending should be done per household. Per household, spending is about $10 per household greater than it was in 2008. Believes that i ncreases per household need to be below the rate of inflation, but increases due to growth can be expected. Cannot forecast what will happen to an individual’s taxes because it is dep endent on market value for the C ity and for the individual property. Council cannot manage the distribution of taxes as that is governed by State and Federal government; but the tax levy is projected to be lower in 2013 than it was in 2009. Keeney : Responded that the General Fund expenditure does not reflect some other expenditures such as fees, borrowing, paying off debt, etc. Does n ot believe the General Fund is representative of spending. Commented on spending and collecting taxes from people who have money to pay and stated his belief that u nless changes are made , there will be dramatic increases in taxes of the people who have to pay the bills. Boyles : Responded to the query about whether there were be salary cuts by stating that salaries were increased by one percent in 2011 and two percent in 2012. In 2009 and 2010 some employees were furloughed and others received no raise s. Hedberg : Commented that the City Manager’s salary was frozen during some of that time period and there were contracts with zero percent increase . Stated he w ould consider pay cuts under the right circumstances. Stated that about 85% of the employees are organized and multi - year contracts are in place. Increases have been below the rate of inflation. Believes the City has been responsible in freezing pay increases. Keeney : Commented that p ayroll is a big expense; it is how services are provided. It is managed by the total number of full time employees and t hat has not increased. Explained that increases have not been in the number of staff. When there is not a lot of turnover, staff receives longevity benefits. Long - term staff is more capable and is worth more money. Stated he does not have problems with staff and their compensation. It is expensive to hire people. Erickson : Added that if the City does not negotiate with organized labor groups, it ends up going to arbitration and that is not ne cessarily good. Stated the Council has looked at benefit costs and negotiations have resulted in giving concessions and gaining concessions. Commented that the Council receives a minor compensation and also receives per diems. Stated he p ersonally did n ot claim any per diems through 2012. Myser : Stated that one of his goals when taking office was to keep levels flat in order to not increase taxes ; and to grow commercial tax base. Noted that the Council voted to add three new staff members in 2012, whic h was his primary reason for voting against the 2012 budget. Queried each Council member about the question posed at the public hearing – would they approve a 20 percent tax increase when property valuation was only up three percent. Soukup replied she w ould not. Hedberg responded that in this situation where valuations are going down across City, the individual valuation situation affects a tax outcome and is not something Council calculates. Keeney stated it is easy to say no as the Council is not pla nning to approve the preliminary budget level. Erickson stated the Council will not be approving a final budget tax levy increase in the amount of the preliminary budget. Concurred that the Council does not control the system and how the levy is distribu ted. Myser said he would not approve a 20 percent increase and added that wit h respect to tax and how it is allocated , that decision is done at State. Added that the November 26 , 2012 City Council Minutes 7 Council makes a decision about tax levy but not valuation, which weighs heavily on how m uch of the tax dollars end up at a particular property. Boyles : Responded in regards to the query of having a fee for service system commenting that some services are based on fees such as fees for park services ; and the City also exchange s services wit h other communities. Erickson : Added that fee for service is done for water/sewer bills and assessment s for road reconstruction. Not ed that not all services can be billed out that way so it is kind of a hybrid. Stated the City has been trying to do mo re fee for service such as franchise fees to cable companies, etc. In his tenure o ver the past seven years , the City has significantly shifted from being totally dependent on property taxes to fee for service. Hedberg : Stated that n ew development is one of the largest areas for fee for service where developer f ees are set aside for sewer/water system extensions. Building permits is another example of fee for service. The largest single expenditure is public safety – police and fire protection – and he believes it does not make sense to have fees for that. Myser : Commented that franchise fee ends up being a pass through so he feels it is a tax. Several years ago property taxes made up a lesser share revenue that came into City, but as revenue sources d ried up from building, more pressure was put on property tax and it is now a greater percentage of the revenue. Erickson : Responded to the question about why there is a need to raise taxes when there is a surplus by stating the Council does not want to raise taxes. Noted that the City d id not know what the surplus was going to be until the end of the year and such things like whether there will be refunds are unknown. The final budget is taking shape, but all of the 2012 operating numbers are not avail able even by December 31, and decisions must be based on the best information available. C ompliment ed staff on budget management. Keeney : Stated that o ne of the reasons a tax increase is being considered rather than refunding a surplus is because of t he choice to spend $ 350,000 on Pike Lake Park land acquisition . The entire Counc il voted for it and it shows the danger of the reserve because it is easy to spend. The Council did not make the tough choice of what we were not going to spend in order to b uy Pike Lake Park. Spending decisions based on a balance of cash are not as well thought out as if we had to come to the taxpayers and ask for the money. Believes the process works better without the reserve. We did not refund the reserve last year, onl y about a third of it. Believes if reserves are over the targeted amount, they should be refunded. Soukup : Complimented staff for not spending the budget that was allocated. Provided examples of how staff saves money. Spoke of future needs such as fin ancial system software and the need to e stablish a line item in the budget for them; as well as the need to anticipate possible expenditures such as police enforcement at SMSC without knowing what amount that may become. Myser : Commented that there are a number of areas where staff is doing a very good job , but he believes we should be able to come closer to the number that is budgeted. Stated a s mall surplus is fine , but large surpluses show budgeting is not well planned . Stated the Council has policy of a target of 45% reserve of the next year’s spending to manage cash flow. Thirty - five percent is needed for cash flow and ten percent for downturns, emergencies or opportunities. Today we are at 60% and p rojections for 2013 would still have us at over 50 %. Boyles : Responded to the query about the possibility of tax levy freezes for retirees by noting that special assessment taxation may qualify for the deferral option. Hedberg : Stated there is a program where seniors who meet income guidelines can def er taxes up to the time they sell or somehow settle their estate. Also noted there are financial tools to leverage equity in home value to finance staying in one’s home. Keeney : Added that if taxes are frozen for everyone, it would freeze the retiree taxes as well. Erickson : Commented on the query about how market value is defined and how a property can be taxed for a valuation amount even though it is not saleable for that amount by stating it is complex how market November 26 , 2012 City Council Minutes 8 value is determined. Valuation i s done by the County, but there is an appeals process. T he City stands as the Board of Appeal and Equalization at an annual meeting where people can appeal the valuation of their home. Boyles : Added that, t ypically , the Board of Appeal and Equalization meets the first meeting of May. Hedberg : Stated th at he wants to maintain core services of sewer and water, public safety, streets and parks as he believes that is what a city should provide for residents. Added that he would be cautious about expendi ng beyond those core services. Soukup : Stated she does not support the currently proposed budget. Myser : Stated he has supported inc reases for economic development because he b elieves the C ity has been paying residential property taxes because of an unde rdeveloped commercial tax base. Believes resources need to be spent on economic development to improve and recruit businesses to the community. Keeney : Asked if the economic development budget reflects zero because the E conomic D evelopment A uthority (E DA) has its own budget . J. Erickson: Responded that the EDA budget is $ 150,000. Keeney : Stated he support s economic development because it will bring jobs to the community and that is an important quality of life issue for residents. Myser : S uggested lo oking at the tax base in a few years and see if it changes. Added that three ordinances (sign, C - 2 zoning and fire code 1306) have been modified along with an initial analysis of building codes that will make us comparable to neighboring communities to e ncourage businesses to come to Prior Lake. Myser : Responded to the query about changing distribution of property taxes and whether there is another way by stating that the City was not intentional about redistribution of market valuation. Hedberg : S tated that p roperty tax reform by the State is needed . The wild swinging that occurs when property values are changing radically and 30 - 40% of transactions are not qualified for comparables but directly affect what you can get for your property means the system needs reform. Myser : Noted that increasing or decreasing the levy can be affected by the Council. Commented on metrics used for tracking services and expenditures to make them more transparent. Believes t axes per household is the best metric we have for now; and that p utting metrics in place will tell us if we are doing a good job or not. Claiming the City has the lowest tax rate is true, but it does not include fiscal disparities which allow us to avoid levying for a pproximately $800,000 . Add ed that 12% of properties are on the lake and the average property value for those homes is two to three times more than other locations in the City. Believes that using the tax rate to say we are doing a good job is not being completely open. Boyles : Clarified that fiscal disparity is a metropolitan - wide pool so areas with greater number commercial properties pay into it. Myser : Stated it is one of the rules the State put into place that is helping us. As we improve our economic base that will become less, but he would rather be self - sufficient as that law could be changed also. Erickson : Reiterated that fiscal disparity results in communities receiving large amounts of tax dollars from commercial properties pay ing into a pool that is paid out to co mmunities that do not have much commercial area. Believes Prior Lake should get economic development to balance its tax base. Boyles : Requested Council direction to assist staff in developing changes to the proposed budget. Soukup : Proposed increasing building permits to 135. Would like to use more than $450,000 of reserves to provide levy relief. J. Erickson: Use of reserves is currently proposing $450,000 for the General Fund; increase in tax levy based on 5.44% is $198,000. The remaining portio n associated with the 5.44% increase is for economic development tax levy of $150,000; funding debt service of $165,000 for bonds issued in previous years where the repayment schedule is already laid out. November 26 , 2012 City Council Minutes 9 Soukup : Requested the Council to discuss tonight in order to come to mutually agreed terms and direction to staff so a solid plan can be presented. Wants to start spending down reserves by an additional $ 200,000. Myser : Agree d with 135 building permits for increased revenue used to spend down levy. He dberg : Suppor ted a 5.44% levy increase in the past , but there is n ew information that building permits will be up and projected reserves higher than forecast. Those things indicate reducing reserves. Some monies have been programmed for funding the facil ities management plan and other items the Council has considered. W ants to clarify how much of $ 450,000 is specific to levy relief . J. Erickson: Replied $ 200,000 is planned for transfer to the facilities management fun d for seed money for that fund. Or iginally funding for that was to come from tax levy and General Fund transfer. The tax money portion of that was eliminated and it was going to be totally funded by transferring reserves. The market value exclusion program will decrease over the next tw o years so monies were being in phased in to make that transition. Hedberg : B ased on the current experience of building permits and new plats, he would support an increase in the permits budget and corresponding reduction of the levy. If reserves are forecast higher between now and December 10, it should open up further discussion. Suggests at this time the change should only be around $75,000 to $100,000. Recognize s that we won’t have all information on 2012 results until February. Keeney : Asked if the General Fund reserve chart displayed during the presentation is based on the most recent projection of surplus. J. Erickson: Affirmed. Originally it was planned to us e $736,000 of fund balance reserves. Council authorized use of a budget amend ment bringing that up to $1.1 million and the difference between that and the expected year - end amount of $857,000 is $318,000. Keeney : Stated that it would be another $600,000 in levy relief to get to the 45% target for the General Reserve. J. Erick son: Clarified that the 45% target would be 5.6 million . Keeney : Stated he would support levy relief to get to the 45% target number. J. Erickson: Asked when we would striv e to hit that target. Keeney : By the end of 2013. J. Erickson: Stated that fu nd balance projects anticipate use of reserves over the next three years. If the target is to be brought down to 45% by end of 2013, the reserve will be below the targeted threshold by 2015. Keeney : Stated he is seeking ways to get to the target in one y ear. Perhaps there would be additional things on the spending side that he would want to reflect in the levy. Hedberg : Stated that if approved plans for projects that go beyond 2013 would be implicated, those projects would have to be pulled into 2013 f or completion; otherwise the Council is not responsibility dealing with things that are already approved. Keeney : Stated that it is responsible to refund the reserve back to the targeted level sooner, rather than later is responsible. If it turns out tha t the projections are spot on and we do not have a surplus again, we will have to look at raising the levy to cover those ongoing capital plans. Erickson : Commented that with the newly annexed area and road construction on Sunset Avenue, growth will occu r and the levy will be spread over more homes. Supports building permits at 135 and suggested they might be 140 or 145. Believes the reserves should be paid back, but the Council should not be hasty on how quickly it is done. Believes people do not want a roller coaster of highs and lows for their taxes, but rather want something they can plan on. Reserves should be reduced logically at a mid - range amount. Keeney : Will go with the consensus on the building permits. Noted that if building permits inc rease, staff will have to be increased to process them. November 26 , 2012 City Council Minutes 10 Myser : Supported using 150 building permits in the budget . Expects to add the associated expense back into the budget. Supports giving reserves back and eliminating the levy. Soukup : Support s 150 building permits with use of additional staff. Asked where the reserve fund would be at if $512,000 were applied against it. Myser : Clarified balances proposed. J. Erickson: Noted that spending is based on a 3% increase . Erickson : Noted that a 2% increase in population is projected. Myser : Believes the consensus is to use some additional reserves . Hedberg : Stated the plan projects reaching the target reserve by the end of 2015. If we accelerate this, there are approved use s for capital needs that must be funded immediately , which is approximately $400,000 . Myser : Stated he understands and supports that. There are still additional reserves we could use to help residents during this tough time. Hedberg : Reiterated that Prior Lake has taxes per household tha t are lower than 2009 and they will be lower in 2013. Myser : Affirmed that is good because median household incomes are down. Believes the Council has a responsibility of doing best we can and should use reserves. Does not support return of reserves in an amount that would put the bond rating at risk. Soukup : Stated the reserves exist because the Council has been running City conservatively and the staff is diligent about spending money . With that in mind, r esidents need a brea k. Believes the City is in a position to give that. Wants to see 150 building permits and a zero to one percent increase of levy . J . Erickson: Stated there are two levies. The debt service mandates a $165,000 increase. The EDA is funding operating exp enses for EDA of $ 150,000 . So, the general operating levy would have to be reduced by $500,000 of reserve reduction, plus the $150,000 plus the $165,000. Soukup : Understands the need for those monies. Rather than her previous comments, asked for more de tail on the breakdown of what everything is going to be used for so it can be discussed at the next meeting. Erickson: Proposed scenarios be presented where $0, $250,000 or $500,00 were applied to the reserve reduction and what that would look like. OL D BUSINESS Consider Approval of a Report with Respect to Filling Vacancies on the City Council City Manager Boyles reviewed Council’s history for filling vacancies. Comments: Keeney : Stated that after consulting with the City Attorney, he understands t hat this Council can adopt ordinance to provide that future vacancies be filled by special election. Provided copies of proposed language for such ordinance. Believes that for a vacancy of this length, it is fair to hold a special election and the expens es are justified. Erickson : Stated he is not aware of any c ity that uses special elections for this and Prior Lake would be setting a precedent. Commented on historical perspective of appointments of up to 23 months. This process has been in place. No reason to set a new preceden t . Soukup : With the history provided, it does not appear that a special election has been used in the past. The cost to have a special election is significantly more than appointment and she does not see the cost benefit. Not sure the turnout for a special election would be very great. Favors appointment. Hedberg : Believes the most important reason special elections are not used is that they have low voter turno ut. Noted that the City changed to even - year elections because of low voter turnout on years where only a municipal election was being held. The City has a long precedence of appointment and even an November 26 , 2012 City Council Minutes 11 exact circumstance of a c ouncil member being elected to M ayor and that vacancy being filled by appointment. Believes a special election would just have a turnout of a narrow slice of people and would not reflect the will of the people. Myser : There will be a C ouncil of four people. Asked if a Mayor is required to appoint from the people who applied i n the event of a ti e . Rosow : Replied that in the event of a tie vote, an appointment is made by the Mayor . It does not need to be from anyone who has applied or any person who has been discussed that led up to the tie vote. Myser : Asked if a special election must be h eld if there is 24 months remaining in the term. Rosow : Replied that if a vacancy occurs before the time for filing affidavits or if more than two years remains in a term, then a special election must be held at or prior to the next general election. Myse r : Noted that this vacancy w ould be approximately two years . Rosow : Replied it is very close. Statute says that an elected person takes office on the first Monday of January. Hedberg will take office on January 7, 2013 . In terms of computing the am ount of time his Council seat will be open, you look at when he vacates the seat. The Attorney General addressed whether he must resign or whether the resignation occurs by operation of law. If Hedberg resigns effective January 6, there would be less tha n two years remaining of term. Myser : Asked if the length of term is determined by calculating to the first Monday of 2015. Rosow : Affirmed and stated that he had made that calculation and it is still less than two years. Myser : A sked Hedberg his int entions . Hedberg : Replied that he had i ntended to submit a written resignation, but based on the Attorney General’s guidance and considering continuity of Council , there is no reason for him to resign . The m ost streamlined process is to let it occur by o peration of law. Myser : Stated he does not like a process where a M ayor can select anyone. A democratic process would not allow that and it s eems more appropriate to let the people vote on this. Hedberg : Not if it is 15% of the people. Myser : Stated he w ould like to modify the process to have one that is well known and planned for. B elieves the cost is minimal. Hedberg : Presumably in 1997 , when a councilmember was voted to the Mayor position, there had just been an off - year election. The City chose t o switch to even - year elections to have the best representation of the people. The City just held an election w ith a 96% voter turnout. When that just occurring, and then to hold another election in just four months to make a choice with a potential low turnout is not representative of the people. Questioned why the City should do something different than any other place in the State has ever done . Myser : Stated it has been known for several weeks that there would be a Council vacancy. Does not suppor t having a Mayor have th e ability to appoint a council member. Hedberg : It is a process specified by State law. Myser : State law also allows things to be done d ifferently. Support s Keeney’s proposal. Erickson : Commented that an appointment would have to be made anyway to fill the vacancy before a special election. Keeney : Stated the Council will be split on some important issues. This proposed ordinance change is an option the City has to avoid the situation where the Mayor and one other council m ember can appoint themselves the majority until the next year. It was done one time in the past and was successful. It is hubris to thi nk that the appointment of the M ayor and one councilmember will reflect the wishes of the people and believes the appoi ntment approach is political maneuvering . Hedberg : Stated than an accusation of political maneuvering is deeply offensive and completely false. Soukup : Commented that the Council has no idea who is going to apply. Whoever applies and goes through all of the steps, will be the best candidate. Myser : Clarified that Soukup does not support a special election. November 26 , 2012 City Council Minutes 12 Soukup : Affirmed she does not. Keeney : Stated he cannot believe the Council thinks that two people can pick an elected official. Soukup : State d that f our people will be part of the appointment process reviewing the information and meeting the candidates. Believes all of them will be looking out for the best interests of the people. Keeney : Replied there is disagreement on what the best interes ts of the people are and a fifth candidate elected by the majority of the citizens may have yet another opinion. Soukup : Commented on the cost of a special election. Keeney: Stated he would donate the cost of a special election out of his Council salary because he believes that is not a valid argument. MOTION BY KEENEY, SECOND BY MYSER FOR AN ORDINANCE REQUIRING A SPECIAL ELECTION TO FILL VACANCIES LONGER THAN NINE MONTHS. VOTE: Ayes by Myser, Keeney. Nays Erickson, Hedberg and Soukup. The motion f ailed . NEW BUSINESS No new business was scheduled. OTHER BUSINESS Community Events Soukup : Reminded all that the Holiday Dazzle will be on Friday. Erickson : There is a dance at Club Prior on Thursday. MOTION BY HEDBERG , SECOND BY ERICKSON TO SUS PEND THE RULES REGARDING ADJOURNING THE MEETING BY 11 P.M. IN ORDER TO RECESS INTO EXECUTIVE SESSION. VOTE: Ayes by Myser, Erickson, Hedberg, Keeney and Soukup. The motion carried. EXECUTIVE SESSION The Council recessed to an Executive Session. Mayor M yser reconvened the meeting at 11:44 p.m. and stated the Council met in Executive Session to advise staff regarding a purchase agreement for park property and the intersection of Sunset Avenue and CR 12. A DJOURNMENT With no further business brought before the Council, a motion to adjourn was made by Soukup and seconded by Keeney. The motion carried and the meeting adjourned at 11:45 p.m. __________________________________________ ________________________________________ Frank Boyles, City Manager Charlotte Green, Administrative Assistant November 26 , 2012 City Council Minutes 13