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11-12-2014 CCMMINUTES REGULAR MEETING — HUTCHINSON CITY COUNCIL WEDNESDAY, NOVEMBER 12, 2014 1. CALL TO ORDER — 5:30 P.M. Mayor Steve Cook called the meeting to order. Members present were Gary Forcier, Mary Christensen, Bill Arndt and Chad Czmowski. Others present were Marc Sebora, Interim City Administrator, Kent Exner, City Engineer and Jody Winters, Attorney 2. INVOCATION — Pastor Todd Harris, Oak Heights Covenant Church, delivered the invocation. 3. PLEDGE OF ALLEGIANCE 4. RECOGNITION OF GIFTS, DONATIONS AND COMMUNITY SERVICE TO THE CITY Gary Forcier commented that several volunteers painted the hallways at Park Elementary and everything looks great. 5. PUBLIC COMMENTS Paul Ackland, 167 Elk Drive, presented before the Council. Mr. Ackland stated that he was at the last Council meeting at which the HUC General Manager gave a presentation on a reduction of the HUC industrial rates. Mr. Ackland urged the Council to take a vote on the proposed reductions even though they are not required to. He feels it is a very important item that needs to be considered by the Council. Mr. Ackland asked the City Attorney to review Section 10.03 of the City Charter pertaining to the necessity of a public hearing. Both Jody Winters and Marc Sebora explained that Section 10.03 pertains to public hearings required for public utilities operating under franchises, such as telecommunications and other public utilities. The Hutchinson Utilities Commission rates are regulated under Chapter 11 of the City Charter and no public hearing is required. Although Mr. Ackland disagreed with these opinions, he again urged the Council to take action on the proposed industrial rate reductions being proposed. Craig Bishop, 221 Freemont Avenue, presented before the Council. Mr. Bishop also asked that the Council vote on the industrial rate reduction. He also asked Mr. Sebora if it made sense to have a public hearing held on the matter. Mr. Sebora reiterated that the City Charter does not require that a public hearing be held. 6. MINUTES a) REGULAR MEETING OF OCTOBER 28, 2014 b) SPECIAL MEETING OF OCTOBER 31, 2014 Motion by Christensen, second by Arndt, to approve the minutes of the regular meeting of October 28, 2014, and special meeting of October 31, 2014. Motion carried unanimously. 7. CONSENT AGENDA (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. 14353 —RESOLUTION AMENDING RESOLUTION NO. 14321 — ADOPTING CORRECTION OF LEGAL DESCRIPTION (b) CONSIDERATION FOR APPROVAL OF IMPROVEMENT PROJECT CHANGE ORDERS - CHANGE ORDER NO. 4 — LETTING NO. 3, PROJECT NO. 14-03 (2014 PAVEMENT MANAGEMENT PROGRAM) - CHANGE ORDER NO. 3 — LETTING NO. 1, PROJECT NO. 14-01 (JEFFERSON STREET) CITY COUNCIL MINUTES NOVEMBER 12, 2014 (c) CONSIDERATION FOR APPROVAL OF IMPROVEMENT PROJECT CHANGE ORDER NO. 2 FOR BURICH ARENA REFRIGERATION REPLACEMENT PROJECT (d) CONSIDERATION FOR APPROVAL OF REVISIONS TO ASSESSMENT ROLL FOR 2014 PAVEMENT MANAGEMENT PROGRAM PROJECT (e) CONSIDERATION FOR APPROVAL OF ITEMS FOR 2"D AVENUE SE RECONSTRUCTION PROJECT — LETTING NO. 1, PROJECT NO. 15-01 (ORDERING PREPARATION OF REPORT ON IMPROVEMENT, RECEIVING REPORT AND CALLING HEARING ON IMPROVEMENT) (f) CONSIDERATION FOR APPROVAL OF ITEMS FOR AUTOMATIC WATER METER READING IMPLEMENTATION PROJECT — LETTING NO. 7, PROJECT NO. 15-07 (ORDERING PREPARATION OF REPORT ON IMPROVEMENT, RECEIVING REPORT AND CALLING HEARING ON IMPROVEMENT) (g) CLAIMS, APPROPRIATIONS AND CONTRACT PAYMENTS — REGISTER A Item 7(b) was pulled for separate discussion. Motion by Arndt, second by Czmowski, to approve those items contained under the consent agenda with the exception of Item 7(b). Motion carried unanimously. Item 7(b) had further discussion. Marc Sebora noted that the board action form had been revised to accurately match the change order. Motion by Forcier, second by Christensen, to approve Item 7(b). Motion carried unanimously. 7A. CONSENT AGENDA (a) CLAIMS, APPROPRIATIONS AND CONTRACT PAYMENTS — REGISTER B Motion by Czmowski, second by Arndt, with Forcier abstaining, to approve Council Check Register B. Motion carried unanimously. 8. PUBLIC HEARINGS — 6:00 P.M. - NONE 9. COMMUNICATIONS, REQUESTS AND PETITIONS (Purpose: to provide Council with information necessary to craft wise policy. Always looking toward the future, not monitoring past) 10. UNFINISHED BUSINESS 11. NEW BUSINESS (a) CONSIDERATION FOR APPROVAL OF ENTERING INTO CONTRACT WITH B S & A FOR SOFTWARE SERVICES Tom Kloss, Information Technology Director, presented before the Council. Mr. Kloss provided an overview of actions staff has taken to date on researching alternative software services for the City's financial and other software systems. The City is researching other software service providers due to the lack of service and support being provided by the current provider, Civic Systems. In 2013, the City converted to a system from LOGIS to Civic Systems in order to save costs. BS & A was another company that had also made a proposal to the City in 2013. Mr. Kloss and the utility billing specialist recently had a site visit to the offices of BS & A, a software company specializing in government management software, along with live demonstrations at a community that currently 2 CITY COUNCIL MINUTES NOVEMBER 12, 2014 utilizes their software package. Based on the site visit and demonstrations, staff is requesting approval to enter into a contract with BS & A for software services to manage Human Resources, Payroll, Finance, Business Licensing, Special Assessments, Building Permits, Rental Inspections and Utility Billing. Mr. Kloss provided a cost breakdown for the BS & A product. The payback of converting to this new system will see a payback in an additional two years. Total with both products will see a payback of four years. This is a $130,000 annual cost savings from the LOGIS system that had been used for decades by the City. Marc Sebora provided comments on the feedback he has received from staff members on the disappointment of the current system that went into place in 2013. Motion by Forcier, second by Christensen, to approve entering into contract with B S&A for software services. Motion carried unanimously. (b) CONSIDERATION FOR APPROVAL OF FULL ACQUISITION OF MN/DOT WATER STREET TRUCK GARAGE PROPERTY John Olson, Public Works Manager, presented before the Council. Mr. Olson explained that the City has been utilizing a Water Street truck garage property since early 2013. MnDOT offered a conveyance of the property, with a reversion clause, for the City to take possession of the property. The Council passed a Resolution in May 2013 requesting conveyance of the property from MnDOT to the City. Just recently, staff was notified by MnDOT that the State would prefer a full transfer and would be willing to convey the property with no reversion clause for $3,000, which represents MnDOT's cost to convey the property. Staff is recommending approving this conveyance. The facility will provide off-season storage for the Fire Department, Public Works and other city departments. Motion by Forcier, second by Czmowski, to approve full acquisition of Mn/DOT Water Street truck garage property. Motion carried unanimously. (c) CONSIDERATION FOR APPROVAL OF LETTER OF SUPPORT FOR DAKOTA RAIL, TRAIL, STUDY AND PRELIMINARY DESIGN GRANT APPLICATION Kent Exner, City Engineer, presented before the Council. Mr. Exner explained that the Minnesota Department of Natural Resources along with the assistance of McLeod County is submitting a grant application for the Dakota Rail Trail study and preliminary design efforts. Staff is requesting that the Council approve a Letter of Support to be submitted with the grant application. A slight revision was made to the letter of support that was originally included in the packet and was distributed to the Council. Motion by Arndt, second by Christensen, to approve letter of support for Dakota Rail trail study and preliminary design grant application. Motion carried unanimously. (d) DISCUSSION OF HUTCHINSON UTILITIES COMMISSION INDUSTRIAL RATE REDUCTION AND CONSIDERATION OF POSSIBLE ACTION Mayor Steve Cook focused on some key points provided during the presentation at the last Council meeting. Some of these points included the increase of on-site generation sites and increased use by factories. There are over 55 on-site generation sites currently in operation throughout the state. The government supports these on-site generation sites for various reasons. Mayor Cook covered user benefits and other cost-saving benefits. The proposed industrial rate reduction will keep 3M as a full customer of HUC and the phased -in approach HUC is considering will give them time to study all concepts for researching various cost reductions. The HUC has already reduced $500,000 in expenses to control costs. Mayor Cook mentioned that at the last Council meeting, a member of the public mentioned that perhaps council members might have a conflict of interest because some of them have 3M stock. Jody Winters, attorney, explained the difference between contractual and non -contractual conflicts of interest. Ms. Winters explained that the Council Members do not have a personal interest in this decision that is so distinct from the public that they cannot fairly represent the public interest. The CITY COUNCIL MINUTES NOVEMBER 12, 2014 recommendation from the HUC is to reduce the rates for its industrial users and 3M just happens to be one of the users. Ms. Winters stated that it would be impossible for the Council to make this decision, or others, if all connections to an industrial user could disqualify them from voting. There is no evidence or information to suggest that a decision on this matter is an arbitrary reflection of the Council Member's selfish interests, or in other words, that the Council Member cannot fairly represent the public. The decision the council may be making will have the same impact on them as any other citizen. Gary Forcier commented that he hopes there will not be a rate increase to the residents and hoped that more information could come forth on how the $Imillion shortfall will be made up. It is the unknown that scares people on how their rates will be affected. Jeremy Carter, HUC General Manager, presented before the Council. Mr. Carter explained that RUC is continually reviewing their business model and changes may be made, which will in effect either create cost reductions or revenue generators. This will be an ongoing process and all options will be considered before rates are increased for users. Mr. Carter spoke about capacity sales, which offset costs. This is due to HUC having their own generation within the city. (e) CONSIDERATION FOR APPROVAL OF SETTING 2015 HUTCHINSON UTILITIES COMMISSION FINANCIAL TRANSFER Marc Sebora, Interim City Administrator, presented before the Council. Mr. Sebora explained that the HUC will be facing financial challenges over the next few years. These challenges are mainly due to, among other things, increasing costs particularly in the electric division. Andy Reid, City Controller, presented before the Council. Mr. Reid explained that in 2014 a base transfer amount of $1,430,000 was transferred from HUC to the City. In addition to the base transfer amount, HUC transferred an additional $500,000. Because of the financial challenges HUC is facing, a subcommittee consisting of City and HUC officials met to discuss the transfer for 2015. Based on these discussions, it is proposed that there is a City transfer reduction of the additional $500,000 that will be transferred in 2014 outside of the base transfer amount, in addition to a base amount reduction of $500,000 (transfer percent) to a total 2015 transfer figure of $939,000. This reduction to the 2015 base amount can be offset by the additional $500,000 received in 2014 that have been put in reserves. Because these additional 2014 dollars are set aside, they can be used to backfill a temporary reduction in the base amount transfer, resulting in no net tax levy impact to the City in 2015. The City's final budget will be revised to incorporate this change. The revised budget will be presented at the truth in taxation hearing and in December when final approved. Motion by Christensen, second by Cook, to approve reduction of Hutchinson Utilities Commission financial transfer. Motion carried unanimously. (f) CANVASS ELECTION RESULTS FROM MUNICIPAL ELECTION HELD NOVEMBER 4, 2014 Motion by Arndt, second by Christensen, to approve Resolution No. 143 54, canvassing the election returns of the general municipal election held on November 4, 2014. Motion carried unanimously. 12. GOVERNANCE (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) RESOURCE ALLOCATION COMMITTEE MEETING MINUTES FROM OCTOBER 7, 2014 13. MISCELLANEOUS Marlin Torgerson, 1245 Rolling Oaks Lane, presented before the Council. Mr. Torgerson asked if questions could be clarified related to the industrial rate proposals. Mr. Torgerson requested a meeting between the City Council, the HUC Commissioners and former HUC Commissioners. Mayor Cook suggested that interested persons meet with the HUC General Manager or HUC Commissioners first. 11 CITY COUNCIL MINUTES NOVEMBER 12, 2014 Mary Christensen and Bill Arndt both recognized the various Veterans programs that were held yesterday on Veterans' Day. Gary Forcier requested that residents adopt a fire hydrant and keep them clear from piles of snow. Marc Sebora spoke briefly about the process that will be followed when Gary Forcier takes the mayor's seat and his City Council Seat #3 becomes vacant in early January. Mr. Sebora explained that most likely the Council will appoint an individual to Council Seat #3 and then a special election will be held to fill the remainder of the term of that seat. Mr. Sebora also mentioned that the City Council approved offering an employment contract to Matt Jaunich for the city administrator position. He, Brenda Ewing, Gary Forcier and Chad Czmowski were appointed to a negotiating committee to work on the contents of the employment agreement. The intention is to have rendition of the contract put together shortly to present to Mr. Jaunich. Kent Exner — Mr. Exner spoke about a grant application that is due this Friday for available funds that can be used to to improve Century Avenue from Hwy 15 South to Jefferson Street. The City will be requesting $500,000 and the City's matching requirement will be 20% or $125,000. These funds are scheduled to be delivered in 2019, but there is sometimes potential to receive the funds sooner if other projects do not occur as scheduled. Motion by Arndt, second by Forcier, to approve grant application for improvements to Century Avenue. Motion carried unanimously. Mr. Exner informed the Council that a neighborhood meeting will be held tomorrow night for the 2nd Avenue SE project. Mr. Exner also stated that Hwy 22 paving was completed today. Mayor Cook stated that earlier this year the Council had discussed changing the mayoral term from two years to four years. One of the reasons received for opposition to that concept from the public was that it would make it difficult if a "bad" mayor was in office. Because of these comments, Mayor Cook suggested perhaps the Council should consider adopting Council bylaws. Mayor Cook stated that he had some examples from the City of Minnetonka and the Mayor's Association Handbook. Mayor Cook stated he would forward information on to other council members for them to review. Mayor Cook also mentioned that awhile back the Council and staff had discussed implementing an ethics policy. He suggested placing a draft policy on a future meeting agenda. 14. ADJOURN Motion by Arndt, second by Christensen, to adjourn at 7:20 p.m. Motion carried unanimously