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05-09-2007 CCMMINUTES REGULAR MEETING – HUTCHINSON CITY COUNCIL WEDNESDAY, MAY 9, 2007 CALL TO ORDER – 5:30 P.M. 1. Mayor Steve Cook called the meeting to order. Members present were Bill Arndt, Jim Haugen, Casey Stotts and Kay Peterson. Others present were Gary Plotz, City Administrator, Kent Exner, City Engineer, and Marc Sebora, City Attorney. INVOCATION 2. – Due to the absence of Rev. Gerhard Bode, Peace Lutheran Church, the invocation was dispensed. PLEDGE OF ALLEGIANCE 3. PUBLIC COMMENTS 4. Kurtis Hughes, 982 Jefferson Street, presented before the Council. Mr. Hughes commented on the topic of the possibility of cutting City dispatch services.He voiced his opposition to cutting dispatch and moving the procedure to the County system. MINUTES 5. (a)REGULARMEETING OF APRIL 24, 2007 Bill Arndt noted that he was absent from the April 24, 2007, meeting and the minutes should reflect that. Motion by Haugen, second by Cook, to approve the minutes with the change indicated above. Motion carried unanimously. CONSENT AGENDA 6. (a) REPORTS OF OFFICERS, BOARDS AND COMMISSIONS 1.PUBLIC ARTS COMMISSION BOARD MINUTES FROM MARCH 15, 2007 2.HUTCHINSON HOUSING & REDEVELOPMENT AUTHORITY BOARD MINUTES FROM MARCH 20, 2007 3.FIRE DEPARTMENT MONTHLY REPORT FOR APRIL 2007 (b)RESOLUTIONS AND ORDINANCES 1.RESOLUTION NO. 13190 – RESOLUTION CONCURRING IN APPROVAL AND AUTHORIZATION OF EXECUTION OF MINNESOTA MUNICIPAL GAS AGENCY AGREEMENT 2. RESOLUTION NO. 13191- RESOLUTION FOR PURCHASE (BIODIESEL) (c)CONSIDERATION FOR APPROVAL OF SOLICITOR’S LICENSE FOR TONY JENSEN ON BEHALF OF THE HUTCHINSON HOCKEY ASSOCIATION (d) CONSIDERATION FOR APPROVAL OF DESIGN SERVICES AGREEMENT WITH TKDA & ASSOCIATES FOR COMPREHENSIVE AIRPORT PLAN UPDATE (e)CONSIDERATION FOR APPROVAL OF PARADE PERMIT FOR THE FOUNDATION FOR CHALLENGED CHILDREN ON MAY 19, 2007 (f) CONSIDERATION FOR APPROVAL OF AUTHORIZING THE HUTCHINSON EDA TO HIRE ZRT ENGINEERS/ARCHITECTS FOR DESIGN OF INDUSTRIAL SPEC BUILDING Item 6(b)1 was pulled for separate discussion. CITY COUNCIL MINUTES – MAY 9, 2007 Motion by Stotts, second by Peterson, to approve the consent agenda with the exception of Item 6(b)1. Motion carried unanimously. Item 6(b)1 had further discussion. Mayor Cook noted that the Hutchinson Utilities Commission acted on this item yesterday morning. The hope of taking this action would aid HUC in purchasing natural gas at a reduced cost. The MMUA would oversee this project. Motion by Peterson, second by Stotts, to approve Resolution No. 13190. Motion carried unanimously. Mayor Cook also mentioned that the Hutchinson Jaycees had submitted a letter requesting their annual request for various permits required for the Water Carnival that will be held June 11 – 17, 2007. Motion by Arndt, second by Peterson, to approve the permit requests of the Hutchinson Jaycees for the Water Carnival activities. Motion carried unanimously. PUBLIC HEARINGS – 6:00 P.M. 7. (a) CONSIDERATION FOR APPROVAL OF PROPOSED GRANT APPLICATION ON BEHALF OF CUSTOMER ELATION Miles Seppelt, EDA Director, presented before the Council. Mr. Seppelt explained that a current project of the EDA is the recruitment of a business called Customer Elation, which is a call center operation. For this project, the EDA is applying to a state program called the Minnesota Investment Fund for a grant in the amount of $500,000. The state would make the grant to the City, the City would loan the money to the company and once the loan is repaid, the City can add those loan dollars permanently to the Industrial Park revolving loan fund. The company is looking for a 20,000 square foot facility that would employ approximately 200 people. Mr. Seppelt reviewed the following topics: project background, project scope, type of activity, project schedule, overall cost & proposed financing, funds benefiting Low/Moderate Income persons, displacement/relocation (not applicable) and housing & community development. No public comments were received. Motion by Arndt, second by Stotts, to close public hearing. Motion carried unanimously. Motion by Arndt, second by Stotts, to approve proposed grant application on behalf of Customer Elation, adopting Resolution No. 13192. Motion carried unanimously. COMMUNICATIONS, REQUESTS AND PETITIONS 8. (a) SUMMARY REVIEW OF HOSPITAL PRIVATIZATION PROCESS Paul Torgerson, City of Hutchinson special counsel, presented before the Council. Mr. Torgerson reviewed with the Council that in November 2004 a hospital privatization task force was created. The charge of the task force was to determine whether or not the City should consider moving forward with converting Hutchinson Area Health Care to a private, non-profit entity. The task force identified that HAHC is a regional care provider and that integrated care is strong in the marketplace. The task force came to the conclusion that a nimble organization that could move quickly and competitively in the marketplace should be the direction of the organization. This conclusion included recommending to the City Council that they consider moving forward with privatizing HAHC. Work that has taken place since the task force’s recommendation include creating a lease-model of privatization, whereas HAHC will lease the facilities, land, etc. from the City of Hutchinson. The model that Mr. Torgerson presented included creating a new, non-profit entity that would be governed by a board of directors, however the City would appoint a minority of the board of directors. This would allow significant input of the City Council. Two of the board members of the entity could be Council Members. The lease, again, would include real estate and personal property and HAHC would turn over other operating assets. The annual rent amount would be a hypothetical amount of $160,000, plus debt service. 2 CITY COUNCIL MINUTES – MAY 9, 2007 The initial annual rent amount would inflate 5% over the 30 year lease term. The lease term would be for 30 years, with the option renew for an additional 30 years. The springing membership rights would include the City obtaining the proceeds after the sale, obtaining the assets upon dissolution of the entity, having step-in rights in certain events, having amendment approval rights, and having “end game” transaction approvals. City representatives have commented that they wish to maintain health care in Hutchinson and be locally controlled. This model gives the new entity the freedom to operate on a day-to-day basis, however allows City control related to a windfall or dissolution. For all intents and purposes, the public will see no change as to what it sees today. Management, employees, location, will all remain as it is today, however will be under the devise of the new nonprofit entity. Mayor Cook noted that, in a lot of respects, nothing major has changed as far as asset protection and organizational structure. Mary Ellen Wells, HAHC President, presented before the Council. Ms. Wells commented that during this process the following items were always at the forefront: maintaining safe, superior care, the interests of employees and enabling the entity to be successful. Mayor Cook noted that he would like to set a town hall public meeting to continue the discussion and review the model of privatization for May 17, 2007, at 7:00 p.m. at the City Center. Motion by Cook, second by Stotts, to set town hall public meeting for May 17, 2007, at 7:00 p.m. to provide public feedback related to this topic. Motion carried unanimously. Motion by Stotts, second by Cook, to set May 22, 2007, at 6:00 p.m. as a public hearing to receive public feedback related to this topic. Motion carried unanimously. UNFINISHED BUSINESS 9. (a) DISCUSSION OF 2008 BUDGET PROCESS Mayor Cook noted that there may be confusion as to the budgeting for outcomes project. He reviewed the initial budgeting for outcomes steps that have been completed which include determining the local price of government, held public focus groups and set a maximum budget. Mayor Cook then reviewed other steps that are part of the formal budgeting for outcomes process which include: establishing results teams that would identify best strategies to achieve desired outcomes, request for results, allocating budget dollars between outcome areas, offers coming back from staff, the result teams would prioritize offers based on cost and ability to achieve desired outcomes, a proposed budget would be brought to the City Council, the City Council would set the budget based on priorities, cost and ability to achieve desired outcomes, indicators and performance measurements would be included with the offers and a budget document would be created that would explain what is kept and what is not based on priorities, cost & desired outcomes. These steps would not be included in the way the City currently adopts an annual budget. Since the “bidding process” or offers being submitted from staff has been noted as a concern, Mayor Cook suggested having a leadership team look at the offers or budget submittals via department. He suggested calling the process “budgeting for priorities”. The mayor feels that this type of model may be a hybrid model that was suggested at a previous meeting. Stotts proposed all current work be stopped on this process until a Council workshop is held to decide the direction the Council wishes to proceed. He also asked that no City staff work on this project until the entire Council decides as a body which direction they would like to go with the budgeting process. He would prefer that a process be established for the 2009 budget process. He would like to hold a workshop in July or August to discuss this item. Peterson suggested using the citizens group to review departmental budgets. Mayor Cook suggested that the departmental budgets include services and not just line item numbers. Motion by Peterson, second by Stotts, to declare that the 2008 budget be established as budgets have been prepared in the past. Motion carried unanimously. 3 CITY COUNCIL MINUTES – MAY 9, 2007 NEW BUSINESS 10. (a)CONSIDERATION FOR APPROVAL OF CREATION OF FINANCIAL MANAGEMENT DEBT PLAN Ken Merrill, Finance Director, presented before the Council. Mr. Merrill explained that previously when the Council was reviewing the tax levy and bond issuance, it was suggested that a debt study be completed. This study would review revenue collections, existing debt issues, future balances, future annual levies and projected overall future debt. The City’s financial advisor, Ehlers & Associates, have proposed to complete this study for a not to exceed amount of $6500 which will be paid for out of the Finance Department General operation, water and sewer general operations and excess bond fund. Mr. Merrill noted that the study does not need to be completed now, but he felt he would share Ehlers proposal since a study was suggested previously. Motion by Cook, second by Haugen, to approve creation of financial management debt plan. Motion carried unanimously. (b)CONSIDERATION FOR APPROVAL OF AWARDING PROPOSAL FOR INSURANCE SERVICES Gary Plotz, City Administrator, presented before the Council. Mr. Plotz explained that the City has an agent of record that monitors insurance claims brought against the City. These include workers’ compensation and miscellaneous claims. Mr. Plotz further explained that the City went out for a Request for Proposals to obtain proposals from various providers. Three proposals were received and reviewed. These proposals were from Insurance Planners, T.C. Field & Company and Arthur J. Gallagher Risk Management Services, Inc. The lowest proposal came in from AJ Gallagher at $12,500 per year for the next three years. This amount is significantly lower than what the City pays currently. The committee that reviewed the proposals are recommending the City hire AJ Gallagher as the agent of record. Items considered when reviewing the proposals were account manager expertise, team experience and expertise, depth of experience in the municipal sector, client services, cost and references. Motion by Cook, second by Stotts, to approve awarding proposal for insurance services to AJ Gallagher Risk Management Services for 2007, 2008 and 2009. Motion carried unanimously. (c)CONSIDERATION FOR APPROVAL OF AWARDING CONTRACT FOR WASTEWATER TREATMENT FACILITY IMPROVEMENTS – LETTING NO. 4, PROJECT NO. 07-04 Kent Exner, City Engineer, asked that the Council consider awarding the contract to John T. Jones Construction Company of Fargo, ND, in the amount of $11,100,000.00. The award of this contract is conditional on the City’s NPDES Wastewater Discharge Permit being approved by the MPCA and the Public Facility Authority Loan being allocated to the City. Jim Hagley, Donohue & Associates, presented before the Council and reviewed the bidding process. Motion by Arndt, second by Peterson, to approve awarding contract for Wastewater Treatment Facility to John T. Jones Construction. Mayor Cook suggested tabling this item to the next meeting for further discussions to take place before the City is locked into a contract. This discussion would include speaking to a large manufacturer to try to forecast their future needs and capacity. Council Member Arndt motioned to pulled his motion from the floor, second by Peterson. Motion by Arndt, second by Peterson, to table this item to May 22, 2007. Motion carried unanimously. 4 CITY COUNCIL MINUTES – MAY 9, 2007 (d)CONSIDERATION FOR APPROVAL AWARDING CONTRACT FOR MONTANA STREET NW EXTENSION – LETTING NO. 1A, PROJECT NO. 06-01A Kent Exner, City Engineer, presented before the Council. Mr. Exner stated that the low bidder was received from R&R Excavating Inc. in the amount of $186,194.16. The award would be conditional on the City’s acquisition of all necessary property easements required to complete the proposed improvements. Motion by Stotts, second by Peterson, to approve awarding contract to R&R Excavating Inc. for the Montana Street NW Extension with the condition noted above. Motion carried unanimously. MISCELLANEOUS 11. (a)COMMUNICATIONS 1. Resolution No. 13193 – Resolution Approving Mn/DOT Use Permit No. 4308002 for TH 7/22 & School Road Pedestrian Underpass and Authorization for Execution of Documents Kent Exner explained that this Resolution is basically a requirement of Mn/DOT to complete the paperwork for this project. Motion by Peterson, second by Arndt, to approve Resolution No. 13193. Motion carried unanimously. 2. Resolution Calling For a Public Hearing on the Proposed Adoption of a Modification to the Development Program for Development District No. 4 and the Proposed Establishment of TIF District No. 4-15 and the Adoption of a Tax Increment Financing Plan Therefore. Miles Seppelt, EDA Director, explained that the request of the EDA is to create a TIF District for the spec building that was previously approved. The idea of the spec building is to help recruit new businesses to Hutchinson in the Industrial Park. The spec building will be built on one of the lots the EDA owns in the Industrial Park. Motion by Arndt, second by Peterson, to set public hearing for June 12, 2007, at 6:00 p.m. to hear proposed adoption of modification to the development program for Development District No. 4 and the proposed establishment of Tax Increment Financing District No. 4-15. Motion carried unanimously. Marc Sebora – Attorney Sebora noted that he will be holding an informational meeting on May 21, 2007, at 2:00 p.m. at the Event Center to review the smoke-free workplace ordinance with business owners and other interested parties. Mayor Cook also noted that there is some grant money available to persons interested in quitting smoking but that do not have insurance coverage. Kay Peterson – Council Member Peterson congratulated Dan Hatten, emergency services, ambulance services and LifeLink on the mock crash presented last week. The crash will be shown on HCVN, Channel 10 at 2:00 p.m. Ms. Peterson also noted that she will be missing the next meeting to have surgery. Gary Plotz – Mr. Plotz noted that the City had a successful hard good pick up a few weeks ago. Mr. Plotz also noted that on June 2, 2007, a community cleanup will be held. More information will be forthcoming. Kent Exner – Mr. Exner noted that the work is proceeding on the final design of the Crow River Dam. A public informational meeting will be held on May 24, 2007, from 5:00 – 7:00 p.m. at the City Center. Mr. Exner also commented on the Hwy 7 project. He urged travelers to refrain from entering the construction zone. Mr. Exner also noted that the new water plant is up and running. General discussion was held regarding the use of the bass pond for runoff. Mayor Cook – Mayor Cook thanked Miles Seppelt, EDA Director, for the letter he wrote to the Star Tribune regarding the gas tax. Mayor Cook also noted that, related to hospital privatization, the hospital board is hoping to approve the lease document at their board meeting next week, with the City public hearings on May 17 and May 22, and then bringing the document forth to the Council following that. 5 CITY COUNCIL MINUTES – MAY 9, 2007 CLAIMS, APPROPRIATIONS AND CONTRACT PAYMENTS 12. Motion by Arndt, second by Haugen, to pay claims, appropriations and contract payments. Motion carried unanimously. ADJOURN 13. Motion by Arndt, second by Stotts, to adjourn at 7:30 p.m. Motion carried unanimously. ATTEST: _______________________________________ _____________________________________ Steven W. Cook Gary D. Plotz Mayor City Administrator 6