CITY COUNCIL MEETING CITY OF FRIDLEY SEPTEMBER 26, Councilmember Barnette Councilmember Saefke Councilmember Varichak Councilmember Bolkcom

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1 CITY COUNCIL MEETING CITY OF FRIDLEY SEPTEMBER 26, 2016 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:02 p.m. ROLL CALL: MEMBERS PRESENT: OTHERS PRESENT: Mayor Lund Councilmember Barnette Councilmember Saefke Councilmember Varichak Councilmember Bolkcom Wally Wysopal, City Manager Darcy Erickson, City Attorney Shelly Peterson, Finance Director Tina Bronson, Alexandra House Shelly Eldridge, Ehlers Investment Partners PROCLAMATION: Domestic Violence Awareness - October 2016 Presented to Tina Bronson from Alexandra House. APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: City Council Meeting of September 12, 2016 APPROVED. NEW BUSINESS: 1. Resolution Designating Time and Number of Council Meetings for Wally Wysopal, City Manager, stated the City's regular council meetings will remain on the second and fourth Mondays at 7:00 p.m. Conference meetings held prior to the regular City Council meetings will begin at 6:00 p.m. ADOPTED RESOLUTION NO

2 FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 26, 2016 PAGE 2 Claims ( ) APPROVED. 2. Business License. Wally Wysopal, City Manager, stated this is for a temporary on-sale intoxicating liquor license for October 8 at Totino-Grace High School. APPROVED. ADOPTION OF PROPOSED CONSENT AGENDA: MOTION by Councilmember Barnette to approve the proposed consent agenda. Seconded by Councilmember Varichak. OPEN FORUM, VISITORS: No one from the audience spoke. ADOPTION OF AGENDA: MOTION by Councilmember Bolkcom to adopt the Agenda. Seconded by Councilmember Saefke. 4. Resolution of Certifying Proposed Tax Levy Requirements for 2017 to the County of Anoka. Shelly Peterson, Finance Director, stated Chapter 275 of Minnesota Statute requires the City to certify a proposed property tax levy to Anoka County by September 30. On December 12, the final levy and budget will be presented to Council at which time the public must be allowed to speak. On December 27, Council adopts a final levy and budget which is due to Anoka County by December 28. The City s final levy cannot be higher than the proposed levy. The County sends parcel-specific tax estimates the week of November 14. The operational levy for the City of Fridley makes up over 75% of the total City levy. Ms. Peterson stated Chapter 7 of the City Charter limits the 2017 operational levy to an increase not to exceed the change in the 2015 CPI. The final 2014 CPI was , and the final 2015 CPI was This calculates to a reduction in CPI and, therefore, results in no change in the 2017 operational levy over the prior year's levy.

3 FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 26, 2016 PAGE 3 Ms. Peterson stated in anticipation of the proposed Civic Complex which includes Public Safety, City Hall and Public Works, the preliminary levy also includes debt service for the repayment of $50 million in Capital Improvement Bonds (CIP) intended to fund this project. In anticipation of the CIP bonds, in 2016 the City prepaid existing debt to reduce the impact of this new levy. Setting the proposed debt service levy does not authorize the proposed Civic Complex project. Authorization of that project is scheduled prior to the December 31 final levy deadline and, therefore, must be included in the proposed levy. Ms. Peterson stated although the operational levy is flat for 2017, the proposed bonding would increase the total levy by $1,921,416 or 15.75%. The 2017 levy information is not available yet for metro area communities. Ms. Peterson showed a breakdown of the tax levy. The general fund, capital equipment, information technology project fund, and the Springbrook Nature Fund all show zero change in the percent levy change. The debt service levy does, however, reflect the $50 million civic campus project bonding, resulting in a total tax levy of $14,122,251, or a 15.75% increase in the tax levy. Ms. Peterson stated a median-valued home in 2016 was $156,600. The City s portion of those taxes was approximately $600. In 2017, that home will be valued at approximately $170,000, which results in approximately $715 in City taxes. This is an increase of $115 or a 19% change over last year's taxes. These are all preliminary figures from the County. Ms. Peterson stated the 2017 levy information was not available yet for metro area communities. However, staff was able to capture information on 2016 and, of the 28 cities in the metro area with similar populations, the City of Fridley ranked in the middle at 15 when comparing the 2016 average tax rate. Of those communities surrounding Fridley, the City ranked 4 th lowest out of all 9. Fridley is the only City among the 4 that does not collect a gas and electric franchise fee. Minneapolis is the only neighboring City that is a Fiscal Disparities contributor like Fridley. Ms. Peterson stated the final levy and budget are scheduled to be on the December 12 th agenda, at which time the public must be allowed to speak. Staff is recommending that Council adopt the attached resolution to certify the proposed tax levy requirements for Councilmember Barnette said when they looked at this idea of where they are 4th lowest out of 9, if they had a gas and electric franchise fee, that would make Fridley look even better. Ms. Peterson replied that could be an assumption that could be made. It all depends where those cities designate the franchise fee to go. Typically it helps out taxes. Councilmember Barnette stated people are always asking about the City allocating $350,000 for Springbrook. If they go back to when the referendum was originally passed, the limit then was $275,000 including any inflationary costs. He asked if that was reflected in the $350. Ms. Peterson replied she believed they follow the same levy as the City s levy restriction now.

4 FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 26, 2016 PAGE 4 Mayor Lund stated the fee has gone because there is an inflationary factor from the original amount years ago. MOTION by Councilmember Varichak to adopt Resolution No Councilmember Saefke. Seconded by 5. Resolution Adopting the 2017 Proposed Budget. Shelly Peterson, Finance Director, stated in addition to adopting the proposed levy, the City also needs to adopt the proposed general fund budget to the County. Chapter 275 of Minnesota State Statute requires the City certify a proposed budget to Anoka County on or before September 30. On December 12, the final levy and budget will be presented to Council, at which time the public must be allowed to speak. On December 27, the Council will adopt a final levy and budget which is due to Anoka County by December 28. Ms. Peterson stated the proposed budget may change as more information becomes available on anticipated revenues and expenditures. Right now staff is anticipating total revenues of $16,205,230. This amounts to a 3 percent increase over the prior year's revenue budget. Ms. Peterson stated the General Fund budget provides funding for the day-to-day operations of the City. Personnel costs make up over 80% of the General Fund expenditures. She presented a slide showing the proposed expenditure budget right now based on each department. She said the total expenditures are $16,205,230, which is a 2% increase over the prior year and results in a balanced budget with no change to fund balance. These figures could change prior to the budget coming back at the work session in November. Ms. Peterson stated the proposed levy and budget should be adopted tonight. The next Budget Work Session will be November 21. That is when a complete budget is presented by fund, department, and division. The utility rates for 2017 are presented to Council for approval at its November 28. Council holds a public meeting on December 12. Council would then adopt the final 2017 levy, 2017 budget, and revised 2016 budget on December 27. Ms. Peterson stated staff recommends that Council adopt the attached resolution. MOTION by Councilmember Saefke to adopt Resolution No Councilmember Bolkcom. Seconded by

5 FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 26, 2016 PAGE 5 6. Resolution Calling Public Hearing on the Intention to Issue General Obligation Capital Improvement Plan Bonds and the Proposal to Adopt a Capital Improvement Plan for 2017 through Under Minnesota Statutes, Section Shelly Peterson, Finance Director, stated after nearly three years of analysis, citizen involvement and education, the City is now moving into the funding phase related to the construction of a new civic complex. Results of an independent facilities study were presented to Council in March, That study found serious deficiencies in safety and accessibility, deteriorating structures, and additional space needs of City buildings. Ms. Peterson stated after reviewing cost estimates and the lifespan of those repairs versus new structures, Council decided to move forward with exploring options for new structures. They examined 9 possible locations within the City to house a civic complex which would co-locate and coordinate City services for police, fire, city hall and public works. Ms. Peterson stated in October 2014, the Fridley HRA acquired the Columbia Arena site which had sat vacant and neglected for well over a decade. With heavy industrial to the north and residential to the south, it has not been seen as a desirable site for private development. In March 2015, 100 residents participated in 4 workshops to explore future possibilities for the Columbia Arena site. This group developed recommendations that included 3 elements: park space, a civic presence to help guide private development, and private development of housing options for the residents. Ms. Peterson stated in late 2015 these two projects merged. Council reviewed the 9 possible locations which included the Columbia Arena Site. Some locations were eliminated because of size and location. Others were eliminated because of cost, such as land acquisition. After reviewing citizen recommendations on the Columbia Arena site, Council took a closer look at housing the civic complex on the old Columbia Arena site and all its site advantages. Ms. Peterson stated in early 2016, Council hired an architect to explore the possibility of creating a site which would merge the two projects. The result would be a civic complex that would provide a buffer from the industry to the north and spur retail and residential development on the remainder of the 33-acre site. Otherwise, it would have remained vacant. Ms. Peterson stated the next step in the process is to secure financing of a new civic campus. The City has made the decision to finance the civic complex project using General Obligation Capital Improvement Plan bonds. Minnesota statute allows cities to issue bonds under a capital improvement plan without the requirement of an election. This CIP Act applies to capital improvements consisting of city halls, public works, and public safety facilities. Ms. Peterson stated there are several requirements that need to be met within the plan in order to comply with the CIP Act. The first step for this type of bonding is to call for a public hearing letting citizens know the City s intent. That public hearing has been scheduled for November 14, After closing the public hearing, the Council must then approve the sale of the CIP bonds by a four-fifths vote. Please note this is a change from the initial memorandum that went out.

6 FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 26, 2016 PAGE 6 Subsequent to the approval of the bond sale by Council, a 30-day reverse referendum period begins, during which voters can petition for the decision to be put on a ballot. If the petition is filed with the City Clerk within 30 days of the public hearing, which has been signed by voters equal to 5 percent of the votes cast in the most recent general election, the bonds may not be issued unless approved by the voters. Based on the schedule for the public hearing date of November 14, the reverse referendum period would end December 13. If Council approves the sale of the bonds, and no successful reverse referendum petition is presented, Council would award the sale on January 9, Ms. Peterson stated although the plan is a five-year document, the City of Fridley anticipates the project to be funded through the CIP Act will be the public works, police, fire, and city hall facilities located in the city civic complex redevelopment project area. Ms. Peterson stated this project area includes but is not limited to site preparation work, buildings, fixtures, furniture, road improvement, utilities, parking, storm water management and landscaping. The maximum principal amount of CIP bonds may not be financed for than the preliminary project cost which is $50,505,000. A draft Plan provided to Council defines the requirements of the CIP Act, the City s project and the timeline for bonding. It is important to note the debt will be issued following both Statutory Authority and Charter rules. Any other revisions to the Plan will be presented to Council prior to the October Public Hearing Notice publication in the paper. Ms. Peterson stated staff recommends Council call for a public hearing on the intention to issue general obligation Capital Improvement Plan bonds and the proposal to adopt the Capital Improvement Plan. Shelly Eldridge, our bond advisor from Ehlers Investment Partners is available to answer your questions related to the Capital Improvement Plan and bonding. Councilmember Bolkcom referred to page 55 of the document, which indicated the City had discussions with Spring Lake Park, Anoka County, and Fridley School District, and the County library. It was determined that the County may be sharing Public Works space but other organizations do not see immediate need for shared facilities. She does not quite understand that. Does that mean they would what to share some facilities? Ms. Peterson replied, it is saying staff has looked at working with another entity to build a facility that could then incorporate more than just Fridley's city services. Mr. Wysopal stated this provision is attempting to make certain and disclose to the public that staff has looked at various options for these facilities and that they did not omit the discussions of jointly building a facility and, therefore, saving some money. Staff has talked with those agencies. They have either developed something on their own earlier. With respect to Anoka County, there may be some options to share some very small space inside so they can locate a truck for servicing Locke Park. Councilmember Bolkcom asked is it best to just receive the new revised draft into the record.

7 FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 26, 2016 PAGE 7 Darcy Erickson, City Attorney, replied, yes, they should receive the current draft as amended into the record. MOTION by Councilmember Bolkcom to receive into the record a new draft of 2017 through 2021 Five-year Capital Improvement Plan for the City of Fridley September 25, Seconded by Councilmember Saefke. Mayor Lund asked as to the change mentioned from three-fourths vote to a four-fifths vote, is that because they were operating under Roberts Rules and now they are under another set? Attorney Erickson replied, no, this has to do with the fact there is a Charter provision in Section that speaks to a four-fifths vote for petitioning bonds and there is an additional provision in the Charter, she believed it is that requires issuance of a bond to conform to the vote requirement set forth in the Charter. Councilmember Bolkcom asked about the changes on page 10. Ms. Peterson replied staff is switching the $14 million to the $51 million. It was a typo in the document. That was the net amount and they need to list the full amount of the debt for the way that sentence is worded. They were trying to explain one thing but yet the sentence did not make sense so they corrected it to show the $51 million is what debt the City has that would be subject to the limit. Councilmember Bolkcom asked about the addition of the last sentence. Ms. Peterson replied, the last sentence reflects the City's Charter restriction. State Statute has a legal debt limit which is 3 percent of debt which is subject to property taxes. The City's charter restricts the City's total debt with a 10 percent limit, and it is based on a different factor which is the taxable market value, not the estimated market value. Staff is disclosing that in the document. MOTION by Councilmember Saefke to adopt Resolution No Councilmember Bolkcom. Seconded by Councilmember Bolkcom asked if a petition on the reverse referendum came forward, does it say anywhere in the Statute how soon you have to have the actual ballot question. Shelly Eldridge, Ehlers Investment Partners, replied there is nothing in the capital improvement plan bond that requires a certain time period when an election must be held. If a petition is received, then the election would be held according to the election process. Councilmember Bolkcom stated she thought there might be something in the City's charter.

8 FRIDLEY CITY COUNCIL MEETING OF SEPTEMBER 26, 2016 PAGE 8 Ms. Eldridge replied, as far as the capital improvement plan law, no. Attorney Erickson stated there are provisions in the Charter that relate to the levy that if the City is going to go above the levy limit, it gets placed on the ballot of the next regular municipal election. She did not believe there is anything in the Charter provision that speaks to the reverse referendum on capital bonds. Councilmember Bolkcom stated but there is nothing in the actual State timing laws as far as that. Attorney Erickson stated she can provide an update to Council on that, but she does not know that the Charter speaks to this precise issue of capital improvement bonding. ADJOURN: MOTION by Councilmember Barnette, seconded by Councilmember Varichak, to adjourn. MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 7:38 P.M. Respectfully submitted by, Denise M. Johnson Recording Secretary Scott J. Lund Mayor