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12-11-2001 CCM MINUTES REGULAR MEETING - HUTCHINSON CITY COUNCIL TUESDAY, DECEMBER 11, 2001 1. CALL TO ORDER- 5:30 P.M. 2. INVOCATION - Rev. Greg Nelson, Bethlehem United Methodist Church, delivered the invocation. 3. MINUTES (a) REGULAR MEETING OF NOVEMBER 27,2001 Minutes were approved as presented. 4. CONSENT AGENDA (a) REPORTS OF OFFICERS, BOARDS AND COMMISSIONS 1. HUTCHINSON AREA HEAL TH CARE FINANCIAL REPORT FOR OCTOBER 200 1 2. HUTCHINSON UTILITIES FINANCIAL REPORT FOR OCTOBER 2001 3. FIRE DEPARTMENT MONTHLY REPORT FOR NOVEMBER 2001 4. CHARTER COMMISSION MINUTES FROM OCTOBER 29, 2001 5. BUILDING DEPARTMENT MONTHLY REPORT FOR NOVEMBER 2001 6. PIONEERLAND LIBRARY SYSTEM BOARD MEETING MINUTES FROM OCTOBER 18,2001 7. PIONEERLAND LIBRARY SYSTEM FINANCIAL REPORT FOR OCTOBER 2001 8. PARKS, RECREATION & COMMUNITY EDUCATION BOARD MEETING MINUTES FROM NOVEMBER 1,2001 (b) RESOLUTIONS AND ORDINANCES 1. RESOLUTION NO. 11841 - RESOLUTION AUTHORIZING MUTUAL AID 2. RESOLUTION NO. 11843 - REVISED RESOLUTION ACTIVATING DEFERRED ASSESSMENTS (REVISING RESOLUTION NO. 11816) 3. RESOLUTION NO. 11844 - RESOLUTION ADOPTING ASSESSMENT ROLL NO. 5052 (LETTING NO. 3/PROJECT NO. 01-06) 4. ORDINANCE NO. 01-303 - AN INTERIM ORDINANCE WHICH PROHIBITS ALL APPLICATIONS FOR SUBDIVISIONS, REZONINGS AND PERMITTING WITHIN THE HIGHWAY 7 EAST AREA (SECOND READING AND ADOPTION) (c) CONSIDERATION OF APPROVAL OF TRANSIENT MERCHANT LICENSE FOR RICHARD SYLVESTER (dba OFF PRICE CLOTHING CO.) (d) CONSIDERATION FOR APPROVAL OF APPOINTMENTS TO HUTCHINSON FIRE DEPARTMENT ( e) 2002 LICENSE RENEWALS 1. BINGO LICENSES CITY COUNCIL MINUTES - DECEMBER 11, 2001 2. GAMBLING DEVICES LICENSES 3. COMMERCIALIRECYCLING HAULERS 4. PAWN SHOP LICENSE 5. TOBACCO LICENSES Motion by Haugen, second by Hoversten, to approve consent agenda. Motion carried unanimously. 5. PUBLIC HEARING- 6:00 P.M. (a) OVERVIEW OF 2002 TAX LEVY AND GENERAL FUND Ken Merrill, Finance Director, presented an overview ofthe 2002 tax levy and general fund. Mr. Merrill explained that there was not a requirement to hold a truth-in-taxation hearing, however the Council requested that a public hearing be held explaining the levy and general fund increases. Mr. Merrill also noted that residents had not received their tax statements yet, but should be receiving them within the next week. Mr. Merrill noted that state funding had been reduced by $212,000, which created quite an impact on this year's levy. Mr. Merrill explained that the preliminary tax levy proposed was $4.8 million. The final proposal is now $4.5 million for the 2002 tax levy. Mr. Merrill gave an overview of the numbers for the tax assessors market value, tax capacity, the City of Hutchinson tax levy and the tax rate. There is an increase of approximately 22% from last year's levy. This is mainly due to the state statue formula for tax capacity and the loss of state funding. Mr. Merrill showed comparison examples for homestead and commercial property using the proposed 2002 tax levy. He detailed a breakdown of where residents' tax dollars are specifically being allocated to (i.e. public safety, streets & highways, etc.). Mr. Merrill noted that commercial properties will be acquiring a new state tax as well. Mr. Merrill also detailed the cost increase for the 2002 general fund. Roger Krantz, resident of Hutchinson, commended the Council for holding this public hearing. Mr. Krantz commented that he was appalled at the lack of residents at the Council meeting. He felt that the low attendance displayed a lack of interest in residents' property taxes. Gail Plaisance, resident and business owner of Hutchinson, commented that "times are tough" with business owners, as well as the state and the city. He asked that the Council "watch" the amount of spending. Mayor Torgerson commented that it is frustrating for the Council and city staff to set a budget when the state keeps changing the level of funding. He noted that the tax capacity was reduced by the state, although the City of Hutchinson is constantly growing and expanding. He reminded the citizens that state funding was reduced by $212,000, while other communities were receiving increases. Duane Hoversten stated that had the city received the same amount of funding from the state as in previous years, the budgeted numbers would not be as high in the levy and general fund. He also noted that our tax levy rate would be the same as last year. Kay Peterson also noted that due to the new state formulas on tax capacity, the Hutchinson tax capacity went down $2 million even though our actual property values went up $30 million. Mayor Torgerson stated that the more progressive Hutchinson is, the less funding it receives 2 CITY COUNCIL MINUTES - DECEMBER 11, 2001 from the state. John Mlinar noted that there is a Board of Review that residents can attend after they have received their tax assessments. Typically, more residents are apt to attend that meeting then a public hearing such as this. Tentative numbers should be sent out to residents next week. Mayor Torgerson also noted that the school district portion of assessments will not be included on tax statements. J oAnn Yost, resident of Hutchinson, asked the Council if there is anything that citizens can do to work with state legislature in regard to the lack of funding that was give to the City. The Council urged citizens to write to the state legislature to voice their concerns. Motion by Mlinar, second by Peterson to close public hearing. Motion carried unanimously. 6. COMMUNICATIONS. REQUESTS AND PETITIONS 7. UNFINISHED BUSINESS 8. NEW BUSINESS (a) CONSIDERATION FOR ADOPTION OF 2002 TAX LEVY Motion by Haugen, second by Peterson, to approve Resolution No. 11845, adopting the 2002 tax levy. A roll call was taken: Haugen - I; Mlinar - nay; Peterson - I; Hoversten - I; Torgerson - I. Motion carried 4 to 1. (b) CONSIDERATION FOR ADOPTION OF 2002 GENERAL FUND BUDGET John Mlinar noted that at a previous budget workshop, it was mentioned that a few items be reduced (i.e. energy costs, equipment). He asked if any of those could yet be reduced. He also noted that in the preliminary plans, a 5% increase was projected to make up the difference of the loss of$212,000 in state aid. He also commented that there seemed to be a large increase in the personnel area with insurance costs and addition of staff. Ken Merrill stated that the amount budgeted for energy costs is lower than the amount budgeted in 2001. Mr. Merrill also noted that with the Event Center being added, the city needs to be sure there are sufficient funds for fuel, electricity, etc. John Mlinar also questioned whether or not hiring could be put off for another year, as well as possibly reducing the annual market adjustment. John Rodeberg commented that the city conducted a market survey with surrounding cities and Hutchinson was placed in the average area compared to the other cities surveyed. He also commented that the increase in pay is a market adjustment to keep city employees earning average wages as those in other cities. There was further discussion in regard to the annual market adjustment. Mayor Torgerson noted that two council members were part ofthe wage committee that had compiled the data for the recommendation of the annual market adjustment. He felt that they had done their "homework" and carefully considered the numbers being proposed. Kay Peterson added that other cities in the market survey are granting 3.2%, 3.4% and higher market adjustment rates for their employees. She feels that if Hutchinson does not incorporate a 3% market adjustment rate, it makes us fall that much farther behind in comparison to other city's wages. Duane Hoversten explained that he feels the process used to arrive at the personnel cost increase is very acceptable. He is not in favor of the end result of the amount of the overall increase, but supports the process. 3 CITY COUNCIL MINUTES - DECEMBER 11, 2001 Brenda Ewing presented a list ofthe cities used in the market analysis. On the bottom ofthe list, it i~ noted that this list will have longevity and be used again in the future for market compansons. John Mlinar requested that the percentages of increases and reductions be configured. The percentage of decrease was figured from the preliminary numbers to the final proposed numbers for the general fund budget. Percentages were also configured for the reduction from the prelimmary numbers for the tax levy proposal. Mr. Mlinar referred to the percentages that were forecasted in the Hutchinson Leader as far as increases from 2001 to 2002. He was concerned with the fact that the final numbers are in line with what was projected. Duane Hoversten noted for the listening audience that the city did reduce the preliminary budget approximately $300,000.00. He also commented that the state may have to cut more funding to cities due to the deficit. Ken Merrill noted that the City reduced the proposed tax levy amount from the preliminary amount by $383,000, which is 8%. Motion by Peterson, second by Haugen, to approve Resolution No. 11846, adopting the 2002 general fund budget. Roll call taken: Haugen - I, Mlinar - nay, Peterson - I, Hoversten - I, Torgerson - I. Motion carried 4 to 1. (c) CONSIDERATION FOR ADOPTION OF 2002 TAX LEVY FOR SPECIAL TAXING DISTRICT HUTCHINSON REDEVELOPMENT AUTHORITY Mr. Merrill commented that this has also been reduced from the preliminary figure. Motion by Mlinar, second by Hoversten, to approve Resolution No. 11847, adopting the 2002 tax levy for special taxing district Hutchinson Redevelopment Authority. Motion carried unanimously. (d) CONSIDERATION OF REDUCING ASSESSMENTS ON TAX FORFEIT PROPERTY Ken Merrill, Finance Director, explained that a parcel of property located at 1145 Cheyenne Street SW, Lot 4, Block 6, Plaza Heights, has been tax forfeit for several years. A party has come forward that is interested in purchasing this property. This party has requested that the assessments be reduced by approximately $3000.00. By having a party purchase this property, it would put it back on the tax roll. A condition of the purchase of this property would require a cash payment. Motion by Peterson, second by Hoversten, to approve the reduction of assessments on tax forfeit property. Motion carried unanimously. (e) CONSIDERATION OF AWARDING SALE OF $680,000 GENERAL OBLIGATION CAPITAL NOTES Steve Apfelbacher, Ehlers & Associates, presented before the Council. Mr. Apfelbacher explained that Stifel, Nicolaus & Company was the lowest bidder for the general obligation capital notes. The City received an A3 rating from Moody Investments. Motion by Mlinar, second by Peterson, to approve Resolution No. 11848, awarding the sale of $680,000 general obligation capital notes. Motion carried unanimously. (f) CONSIDERATION OF AWARDING SALE OF UTILITY BONDS Patrick Spethman, Hutch Utilities, explained that these bond rates were negotiated and the lowest rate bid was from Stifel, Nicolaus & Company. Steve Apfelbacher explained that Moody Investments rated the Utilities at an Al rating. H also explained that this is a revenue issue and revenues only will be pledged and not the tax base. 4 CITY COUNCIL MINUTES - DECEMBER 11, 2001 Motion by Hoversten, second by Mlinar, to approve Resolution No. 11849, awarding the sale of utility bonds to Stifel, Nicolaus & Company. Motion carried unanimously. (g) CONSIDERATION FOR APPROVAL OF 2002 PAY PLAN Brenda Ewing, Human Resources Coordinator, explained that the pay plan is a document that needs to be approved each year. This pay plan establishes the position grades and the "step plan" for the wage increases. John Mlinar recommended that this item be acted on after the public hearing discussing the budget. Motion by Mlinar, second by Peterson, to approve Resolution No. 11842, adopting the 2002 pay plan. Motion carried unanimously. (h) CONSIDERATION FOR APPROVAL OF PERSONAL VEHICLE POLICY Gary Plotz, City Administrator, explained that city staff had been looking at policies pertaining to various accountability issues of city employees. This policy details policy and procedure for employees with car allowances. Motion by Peterson, second by Mlinar, to approve Personal Vehicle Policy. Motion carried unanimously. 9. MISCELLANEOUS (a) COMMUNICATIONS John Mlinar - Mr. Mlinar requested an update on the status of the Charter Commission. Mr. Plotz explained that the Charter Commission had completed a draft of the new City Charter and will be holding a public hearing the end of January for residents to raise questions and provide input. After the public hearing, appropriate changes may be made to the Charter and it will come before the Council for final approval. Gary Plotz - Mr. Plotz updated the council on the codification proposals received for the Hutchinson Municipal Code. Two proposals have been received and will need further review before Council action is taken. A committee of city staff will report to the Council at the next meeting. Mr. Plotz also reported that three proposals have been received for the position of City Attorney. Mr. Plotz is requesting that a committee be appointed to review the proposals and make a recommendation at the next Council meeting. John Mlinar, Mayor Torgerson, and Gary Plotz will serve on the committee. Mr. Plotz will appoint other city staff members to the committee. John Rodeberg - Mr. Rodeberg reported that a resident contacted his department requesting a consideration for costs to be reduced for extensive work done under Main Street (T .H. 15) during water service replacement. Mr. Rodeberg is requesting the Council grant him the ability to negotiate the final cost with this resident and bring back that negotiated cost to the Council at the next meeting for approval. Mr. Rodeberg is estimating that this resident's bill may be double of what is a normal charge. Melissa Starke, Administrative Secretary/Election Official, noted for the Council that there are state funds available in a matching grant for new voting machine equipment. Cindy Schultz, McLeod County Auditor, is completing the application process for the City and needs to have a resolution adopted in support ofthe grant application. Ms. Starke requested the Council adopt Resolution No. 11850. Motion by Peterson, second by Haugen, to approve Resolution No. 11850, authorizing and pledging support for voting equipment grant application. Motion carried unanimously. 5 CITY COUNCIL MINUTES - DECEMBER 11, 2001 10. CLAIMS. APPROPRIATIONS AND CONTRACT PAYMENTS (a) VERIFIED CLAIMS A Motion by Mlinar, second by Peterson, with Hoversten abstaining, to approve and authorize payment of Verified Claims A from appropriate funds. Motion carried unanimously. (b) VERIFIED CLAIMS B Motion by Peterson, second by Haugen, to approve and authorize payment of V erified Claims B from appropriate funds. Motion carried unanimously. 11. ADJOURN With no further business to discuss, the meeting adjourned at 7: 15 p.m. 6