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12-13-2011 CCMMINUTES REGULAR MEETING – HUTCHINSON CITY COUNCIL TUESDAY, DECEMBER 13, 2011 CALL TO ORDER – 5:30 P.M. 1. Mayor Steve Cook called the meeting to order. Members present were Mary Christensen, Bill Arndt, and Chad Czmowski. Member absent was Eric Yost. Others present were Jeremy Carter, City Administrator and Marc Sebora, City Attorney. INVOCATION 2. – Rev. Kaye Brandt, Vineyard United Methodist Church, delivered the invocation. PLEDGE OF ALLEGIANCE 3. RECOGNITION OF GIFTS, DONATIONS AND COMMUNITY SERVICE TO THE CITY 4. PUBLIC COMMENTS 5. MINUTES 6. (a)REGULAR MEETING OF NOVEMBER 22, 2011 Motion by Czmowski, second by Christensen, to approve the minutes as presented. Motion carried unanimously. CONSENT AGENDA 7. (Purpose: only for items requiring Council approval by external entities that would otherwise have been delegated to the City Administrator. Traditionally, items are not discussed.) (a)RESOLUTIONS AND ORDINANCES 1.RESOLUTION NO. 13934 - RESOLUTION ESTABLISHING LOCATION FOR TRAFFIC TH AVENUE SE) CONTROL DEVICES (5 (b)CONSIDERATION FOR APPROVAL OF ISSUING 2012 LICENSES (MASSAGE, GARBAGE/HAULING, PAWN SHOP, TAXI, TOBACCO) (c)CONSIDERATION FOR APPROVAL OF ISSUING SHORT-TERM GAMBLING LICENSE TO CROW RIVER BUILDER ASSOCIATION FOR FEBRUARY 5, 2012 (d)BOARDS APPOINTMENTS/REAPPOINTMENTS -APPOINTMENT OF RAYMOND NORTON TO PLANNING COMMISSION TO MARCH 2012 (FILL TERM OF CHRIS KOVACIK) -APPOINTMENT OF LEON JOHNSON TO HUTCHINSON UTILITIES COMMISSION TO DECEMBER 2016 -REAPPOINTMENT OF MIKE MCGRAW TO HUTCHINSON EDA BOARD TO DECEMBER 2017 (e)CONSIDERATION FOR APPROVAL OF ISSUING TEMPORARY LIQUOR LICENSE TO HUTCHINSON JAYCEES ON APRIL 21, 2012, AT HUTCHINSON CIVIC ARENA (f)CONSIDERATION FOR APPROVAL OF IMPROVEMENT PROJECT CHANGE ORDERS CITY COUNCIL MINUTES –DECEMBER 13, 2011 -CHANGE ORDER NO. 3 – LETTING NO.5, PROJECT NO. 11-06 (PLAZA 15 PARKING LOT IMPROVEMENTS) -CHANGE ORDER NO. 3 – LETTING NO. 1, PROJECT NO. 11-01 (SCHOL ROAD NW) (g)CONSIDERATION FOR APPROVAL OF MN/DOT AGREEMENT NO. 99897 – STATE OF MINNESOTA AGENCY AGREEMENT BETWEEN DEPARTMENT OF TRANSPORTATION AND THE CITY OF HUTCHINSON FOR FEDERAL PARTICIPATION IN CONSTRUCTION (h)CLAIMS, APPROPRIATIONS AND CONTRACT PAYMENTS Item 7(c) was pulled for separate discussion. Motion by Czmowski, second by Christensen, to approve consent agenda with the exception of the item noted above. Motion carried unanimously. Item 7(c) had further discussion. Mayor Cook clarified that the final drawing will be held on February 5, 2012, however tickets will begin to be sold earlier. Motion by Arndt, second by Czmowski, to approve Item 7(c). Motion carried unanimously. Council Member Eric Yost arrived at 5:40 p.m. PUBLIC HEARINGS – 6:00 P.M. 8. (a)TRUTH IN TAXATION HEARING Jeremy Carter, City Administrator, presented before the Council. Mr. Carter reviewed how 2011 market values are configured. These factors include sales data information from October 1, 2009 – September 30, 2010, and new residential/commercial construction from 2010. The County then sets the 2011 market value on January 2, 2011, from that data. Following that, estimated market value notices are sent out to property owners and local boards of equalization hearings are held to make any adjustments to property values if necessary. Then, in November, the final market valuation notices are sent out and preliminary levies are applied to that value. Mr. Carter then reviewed the market value exclusion program. This new program addresses the State’s budget deficit, the previous program, the Market Value Homestead Credit, has lost general support by failing to reimburse cities, and when the State cut reimbursements, the effect is the reduction of the city’s certified levy. This new program will cause tax rates and taxes for most properties to rise. So, now property tax relief is delivered by excluding a portion of a home’s market value from taxation. Mr. Carter reviewed the City of Hutchinson’s mission statement and reviewed the six core areas of focus of the City, which include public safety, health & recreation, transportation, economic development, environment and good government. Mr. Carter also reviewed the timeline that the City has used in establishing the 2012 budget. City departments started putting budgets together in the Spring/Summer of 2011. A levy target was set on August 4, 2011; a town hall meeting was held August 24, 2011; the preliminary general fund and debt tax levy was certified on September 13, 2011; additional workshops were held on October 25 & November 17, 2011; Truth in Taxation hearing on December 13, 2011; and the final levy will be set on December 27, 2011. Mr. Carter also reviewed the proactive measures the City has taken over the last several years to address budget issues. These items include reducing reliance on local government aid to fund the general operating budget; reducing full-time & part-time employees; reducing staff hours; offering an early retirement program; having no market adjustments; reducing operating expenses, overtime budgets & seasonal budgets; increasing certain user fees & some fees that were once waived; and moving from a fully-insured to Health Reimbursement Account to Health Savings Account health insurance program. Mr. Carter also noted that the City has less employees today than it did in 2000. Mr. Carter reviewed preliminary tax levy information. The preliminary levy included a 3% increase over 2011 and included a voter-approved special mosquito levy of $35,000. The debt service fund tax levy had a preliminary tax levy increase of 5%. Since the preliminary levy was set, the proposed final levy now has a 0% general fund levy increase and the debt service fund remains at a 5% increase, with an overall levy 2 CITY COUNCIL MINUTES –DECEMBER 13, 2011 increase of 1.48%. Mr. Carter explained the debt management plan which manages improvement projects. Mr. Carter provided a breakdown of a resident’s tax bill for 2012. This includes 39% to the City of Hutchinson, 34% to McLeod County, 25% to ISD 423, 1% to the EDA, .8% to the HRA and .2% to Region 6E. The proposed budget for 2012 is $10,339,050. Last year’s budget was set at $10,637,539. Therefore, there is a 2.8% decrease from 2010. Julie Elder, 18 Main Street South, raised concerns about her increasing property taxes at the business she owns. Mr. Carter reviewed the makeup of the general fund budget expenditures and the revenues. Mr. Carter then presented a five-year budget, which has many items remaining flat, with other areas seeing a 2-5% increase. With the forecasted five-year budget, the City’s gap between revenues and expenditures gets continually larger. A serious discussion the Council will have to have with staff, along with input from citizens, is what services/programs is the City able to do without. Mr. Carter reviewed current ongoing cost-containment initiatives which include a volunteer program, wellness program, facilities improvement program, equipment/vehicle replacement program, service prioritization/service level discussions, additional revenue streams and additional expense reduction opportunities. James Redekopp, 326 Circle Drive, commented on reduction of labor with providing the same services. Mr. Carter noted that this issue will be a main focus in 2013. Mr. Carter commented that currently employees are working across departments and the City is finding current employees that have different skill sets that can provide a similar service amongst departments. Dean Bloemke, owner of 1135 Hwy 7 West, presented before the Council. Mr. Bloemke noted that taxes on his commercial property went up 22.9%. Mr. Bloemke offered ideas for the Council to consider to address budget issues. These included: with the debt level continuing to rise over next 2-3 years, then leveling out, can the debt be maintained at current level. The levy comparison saw quite an increase of 15% over four years. Mr. Bloemke asked if that can that be looked at. Mr. Bloemke also expressed that transfers from enterprise funds could be increased. He also noted that some nonprofits not taxed. Those properties should be looked at, because there is a possibility that they do not meet the requirements of the North Star Plan and they should be paying property taxes. st Dave Skoog, 22 1 Avenue NE, presented before the Council. Mr. Skoog asked if anyone could explain the disparities between taxes in commercial properties. Mr. Skoog noted that his property taxes went up 46% from last year and the property that his abuts hardly went up at all. Mr. Carter noted that the best answer he can give is that it is related to the Market Value Exclusion Program. There doesn’t appear to be any consistencies any longer. th Dave Conrad, 1000 5 Avenue SE, presented before the Council. Mr. Conrad represents New Discoveries Montessori Academy and New Century Charter School. These schools are public charter schools and employ approximately 80 employees. There was a recent change in tax laws and the school district is now responsible for property taxes. Although the schools are public schools, they are 501(c)3 corporations. The schools are not allowed to build property but they can lease property as public charter schools. The schools are responsible for $106,000 in property tax for 2012. Mr. Conrad noted it is ironic that as a public school they will need to pay these property taxes with public tax dollars. School representatives have spoken with local legislators about this issue. Sarah Baumetz, AmericInn, presented before the Council. The AmericInn’s property taxes have increased 22% from last year. The AmericInn is struggling with this property tax increase due to the economy. Mr. Carter noted that as residential market values decrease, it causes a shift to commercial values which then increase. Mayor Cook commented on initiatives the City has undertaken to attract new businesses to Hutchinson to grow the economy. Julie Elder noted that we need to keep people shopping in Hutchinson. Motion by Arndt, second by Yost, to close public hearing. Motion carried unanimously. 3 CITY COUNCIL MINUTES –DECEMBER 13, 2011 COMMUNICATIONS, REQUESTS AND PETITIONS 9. (Purpose: to provide Council with information necessary to craft wise policy. Always looking toward the future, not monitoring past) (a)DISCUSSION OF CITY SNOW EMERGENCY PROCESS AND PROCEDURES John Olson, Public Works Manager, presented before the Council. Mr. Olson reviewed snow emergency information which has been provided to citizens in their recent utility bill. Mr. Olson reminded the public that a snow emergency ordinance was put in place in 2010. Mr. Olson reviewed the various ways that citizens are notified that the city is under a snow emergency, which means that all vehicles must be removed from city streets for snow removal operations. Snow emergencies will be announced at 4:00 p.m. and will go into effect at 12:00 a.m. the following morning Notifications will be made to local media outlets and will also be available as a telephone message. General discussion was held regarding snow removal operations in downtown city parking lots. Comments were made on putting up signs as drivers enter the city. Mr. Olson noted that he has not received any feedback from Mn/DOT on his permit request. The City Administrator will follow up with Mn/DOT on the request. Dan Hatten, Police Chief, noted that historically with the first snow emergency event, the police department has issued a citation and then warned violators that the next event will cause for a tow of the vehicle. That will more than likely be the case for the first snow emergency event for this season. UNFINISHED BUSINESS 10. NEW BUSINESS 11. (a)CONSIDERATION FOR APPROVAL OF 2012 FEE SCHEDULE Jeremy Carter, City Administrator, presented before the Council. Mr. Carter requested that this item be tabled to the next meeting to allow for some modifications that need to be made. Motion by Czmowski, second by Yost, to table Item 11(a) to the next Council meeting. Motion carried unanimously. GOVERNANCE 12. (Purpose: to assess past organizational performance, develop policy that guides the organization and Council and manage the logistics of the Council. May include monitoring reports, policy development and governance process items.) (a)FIRE DEPARTMENT MONTHLY REPORT FOR NOVEMBER 2011 (b)HUTCHINSON PUBLIC LIBRARY BOARD MINUTES FROM OCTOBER 24, 2011 (c)PIONEERLAND LIBRARY SYSTEM BOARD MEETING MINUTES FROM OCTOBER 20, 2011 (d)PLANNING, ZONING AND BUILDING DEPARTMENT MONTHLY REPORT FOR NOVEMBER 2011 (e)HUTCHINSON UTILITIES COMMISSION MINUTES FROM OCTOBER 26, 2011, AND NOVEMBER 10, 2011 MISCELLANEOUS 13. Jeremy Carter, City Administrator, provided an update on the well moratorium. The Water Department and Engineering Department are working on a draft of a proposed well ordinance. Mr. Carter also provided the Council an update on the local option sales tax that will be going into effect January 1. Staff is working on an article to go to the Hutchinson Leader and there will be information on the City’s web site. 4 CITY COUNCIL MINUTES –DECEMBER 13, 2011 Mayor Cook – Mayor Cook noted that Gary Plotz, former City Administrator, has been working at Creekside since his retirement. Mayor Cook asked for an update on what he worked on in 2011 and what his projects are for 2012. Mr. Carter explained that Gary Plotz worked mainly on a website for customers to allow for purchasing. Mr. Plotz also sent out marketing materials within a 500 mile radius to potential customer. Mr. Plotz has also been working on certification for an organic line for Creekside. Mr. Carter noted that mid-2012 will be a good time to determine if these efforts are seeing a payoff. In 2012 Mr. Plotz will continue to work on the organic line and continue to bring in new customers and new product lines. ADJOURN 14. Motion by Arndt, second by Christensen, to adjourn at 7:50 p.m. Motion carried unanimously. ATTEST: Steven W. Cook Jeremy J. Carter Mayor City Administrator 5