City Council Minutes

Members Present: Mayor Mary Hershberger Thun; Councilmembers: Tom O'Connor, Jim Crowley and Kim Roden.

Absent: Councilmember Tom Strigel.

Staff Present: Don Uram, City Administrator; Holly Kreft, Community Development Director; Ann Mahnke, Public Works/Park and Recreation Director; Jylan Johnson, Finance Director; Cara Geheren, City Engineer; and Mike Norton, City Attorney.

Others Present: Sue Orsen, Victoria Gazette; Unsie Zuege, The Chanhassen Villager and others.
 

None.

Mr. Uram introduced Clint Matvick, President of the Victoria Fire Relief Association and Jeff Nordeen, Treasurer of the Victoria Fire Relief Association.

-A- Victoria Fire Relief Association

Mr. Nordeen explained the pension account, via a slide show presentation:

Mr. Nordeen noted that it is a lump sum pension which is what about 85% of the state's fire departments currently provide.

Mr. Nordeen reviewed the strategy to achieve the goal:

Mr. Nordeen talked about the audit findings and management letter. He said the firm performs both the audit and the draft financial statements. There is limited segregation of duties which are broken down into four categories. He noted they now have a laptop designated specifically for this purpose.

Mr. Nordeen showed the funded level status chart. He said in 2010 they were at 88.4% funded. In 2011 there has been one payment and the asset level is at about $760,000. He reviewed the schedule of funding progress and schedule of employer contribution. He noted the city and state contributions have been very consistent.

Mr. Nordeen said in summary there was approximately a 10.8% return on investments. The funded level increased from 78.8% to 88.4%.

Mr. Nordeen reviewed the retiree exposure. He noted there are 3 members with a combined 100 years of service and 1 deferred member. H stated there would be no immediate effect on the funded ratio.

Mr. Nordeen said he thinks they are moving in the right direction. The goal is to attain and maintain 100% funded level which will eliminate mandatory municipal contributions.

Councilmember Roden asked if they are required to do an audit every year. Mr. Nordeen said yes, any pension fund with over $200,000 in assets.

Councilmember O'Connor commented on the change in the funding level from 68% to 84% and asked if the risk profile of the investments was changed. Mr. Nordeen said they took a hit but didn't change the portfolio to be less aggressive. Councilmember O'Connor asked if they are comfortable with the level of risk. Mr. Nordeen said yes.

Senator Ortman talked about the work at the State Capitol. Senator Ortman and her colleagues proposed a $34 billion dollar budget and the Governor proposed a $37 billion dollar budget. Senator Ortman said the outcome was an agreement to adopt a $35.2 billion dollar budget.

Senator Ortman said the news from the economists is not good. She talked about the growth in the economy and said there will be an immediate budget impact next year. She said the State will be going back to find further reductions.

Senator Ortman stated she hopes to be an active partner with the City of Victoria. She asked the City Council to go to the associations and talk to them about what they are working on and the vision.

Senator Ortman said the goal was always to maintain the levels adopted in 2010 and 2011. She said as Tax Chair that goal will continue to make sure the city's that need help will get help.

Senator Ortman commented on the market value credit. She said the credit was started in 2001 and in the 10 years it has been funded fully one time. She explained a city that doesn't receive LGA will have a 100% reduction in market value credit. Senator Ortman stated they looked at the tax budget which is about 10% of the state's budget and everyone they talked to all testified in favor of that being the eliminated credit because it was so complicated. She noted the maximum credit is $304 for a home valued at $76,000.

The City Council took a two minute break to change the tape at 8:25 p.m.

Senator Ortman talked about the property tax and said there are 22 classifications that are being studied. She urged the City of Victoria to participate.

Senator Ortman said one of her efforts at the State Capitol was to craft a potential constitutional amendment and she has 33 Senate Authors. The goal is to define further what it means to have a balanced budget. She thinks it should mean they only spend 98% of the revenues and reserve 2%.

Councilmember Roden commented on the original tobacco settlement and asked if that was going to be dedicated to health spending. Senator Ortman said the State receives money as part of the settlement and the State always gets an amount every year based on a percentage they make in the industry. She noted the amount will diminish more as the tobacco sales go down. Senator Ortman said they were not allowed to put the money into general fund. She said there are certain one-time costs they are dedicating that revenue for.

Councilmember Roden shared her concerns with the government shutdown and borrowing against the tobacco funds. She commented on balancing the State budget and said she is nervous about what she sees at the State and Federal level. She said she is also nervous about all the constitutional amendments and does not want to become the State of California. Councilmember Roden said so much of the payments are already predetermined. She stated she thinks the only thing that will work is non-partisan government. Senator Ortman commented on the state shutdown and said they really tried to avoid a government shutdown. She said she doesn't think it was good for the State. Senator Ortman said she needed to know where that money was going to go. She said they need to have dialogue about the next steps with long term visioning and planning which will take more than one year.

Councilmember O'Connor asked about the likelihood of getting the amendment passed on the budget definition. He said it would be a welcomed start. Senator Ortman said she believes she has the 34 votes she needs to pass it.

Senator Ortman stated the reserves have been eliminated.

Senator Ortman said the hardest thing to do in government is to say no.

Councilmember Roden removed the minutes of the August 31, 2011 City Council workshop.

Councilmember O'Connor removed B.

Mayor Hershberger Thun removed the minutes of the August 22, 2011 City Council meeting.

Mayor Hershberger Thun referred to page 6 and corrected the date at the top of the page to August 22, 2011.

Mayor Hershberger Thun said when they were talking about the land trust lots in Rhapsody and Krey Lakes there was a motion where everyone voted no, but she thought the person who made the motion had to vote for the motion. She clarified you can vote against the motion you make but can't speak against it. She noted the vote would have been 5-0.

Councilmember Roden corrected the 6^th paragraph from the bottom of page 3 to say Councilmember Crowley not Councilmember Roden.

Councilmember Roden corrected the last sentence in the 4^th paragraph from the bottom of page 7 to read: She said she is also comfortable that they will be paying down a significant amount of debt in 2012.

Councilmember O'Connor said when this was approved a couple weeks ago the suggested interest rate was going to be between 3% and 3.25% and now they are at 2.69%. He stated they will save $4,100 per year and $28,000 over the term.

Mayor Hershberger Thun asked about the rate adjustment. Mr. Uram said in the agreement there was a rate adjustment and that has been changed to a fixed rate at 2.69%. Councilmember O'Connor stated this is a financing of an asset they will own.

The motion was seconded. With all members voting in favor, the motion carried. Vote: 4 Ayes, 0 Nays.
 

Mr. Uram stated that the City Council needs to establish the preliminary levy tonight. He noted there is opportunity prior to the December 12^th meeting to reduce the preliminary levy. He said this would be the highest levy that can be certified for 2012.

Ms. Johnson reviewed the levy comparison and said the proposed levy is the lowest since 2008. She explained the three components the levy is comprised of: general fund levy, debt service, and Victoria Recreation Center levy.

Ms. Johnson reviewed the general fund revenues. She noted in the prior work sessions decreasing the current fund balance from 50% to 30% was discussed starting in 2012. The excess would be used for long term street maintenance. Ms. Johnson explained the tax revenues represent approximately 81% of the operating revenue. She noted that permitted fees are based on 55 new homes, which was reduced since the workshop.

Ms. Johnson reviewed the budgeted transfers that total approximately $558,000.

Ms. Johnson talked about the unfunded capital improvements. She noted the street reclaim is less expensive than the street reconstruction.

Ms. Johnson reviewed the Victoria Recreation Center revenues and expenditures. The operating revenues consist of the lease payments from the School District, fees from memberships, facility rentals, daily passes and concessions. She noted the tax levy will be the same as 2011. Ms. Johnson said the operating expenditures account for approximately 36% of the overall expenditures and debt service accounts for approximately 54%.

Ms. Johnson talked about the tax impact. She said the median assessed taxable value in 2011 was $341,800 and in 2012 it is $317,900. She explained the city's tax shows a reduction of $42 for the median assessed home. Ms. Johnson said the tax rate changes from 37.4% to 38.9%. She noted only those property owners with a value decline of 1.6% will see an actual decrease in the city tax.

Ms. Johnson reviewed the monthly cost of services. She said approximately 80% of the taxes paid will go to general operation and the recreation center and the remaining 20% goes to the debt service.

Ms. Johnson reviewed the city services independent of property value:

• Police and fire – same response to a 1,000 square foot rambler or a two-story 5,000 square foot walkout.

• Public works – same level of snow removal depending on size of footage.

• Parks and Recreation services – function of the number of people that use the services.

Ms. Johnson showed the comparisons with surrounding cities. She noted the preliminary levies from Carver County will be released later in the fall.

Ms. Johnson reviewed the recommendations:

• Council adopt maximum levy; retaining the opportunity to reduce the final levy in December.

• Budget transfers totaling $558,794 for (1) capital equipment, (2) partially repay inter-fund loan from the Water enterprise Fund, (3) long-term street maintenance plan; and (4) capital facilities fund.

• Reduce the general fund balance to 30% of expenditures less transfers, use excess for LT street maintenance.

• Increase Victoria Recreation Center fund balance as budgeted.

Councilmember Crowley clarified the budget proposed is the D7 scenario.

Councilmember Crowley commented on the recommended increase of 1.5% in the budget and asked if the $110,000 undesignated fund still exists. Ms. Johnson said it does, the undesignated will go to the capital facilities fund.

Councilmember Crowley commented on the median household receiving a reduction in taxes and stated that 65% to 70% of the taxes are paid by people to the right of that so not everybody's taxes are going down. Ms. Johnson said unless the valuation went down more than the 1.6% there wouldn't be a decrease in the city tax portion.

Councilmember Roden commented on the potential of not putting money aside for the fire department capital equipment replacement fund in 2012 which has been totaling $75,000. Mr. Uram said at the workshop they discussed a number possible transfers and budget cuts. The proposed budget includes the transfer but can be taken out at the final.

Councilmember Roden questioned the building permits going from 65 to 55 new homes. Ms. Johnson said in looking at the inventory they realized it wasn't going to be possible to do the 65 in 2012. Mr. Uram noted the impact is minimal to the overall budget.

Mayor Hershberger Thun reminded the City Council if they want to see changes before the December 12^th meeting they need to get recommendations to Mr. Uram and Ms. Johnson prior to that night.

Ms. Johnson said the Finance Committee will be revisiting the levy and budgets in October. Mayor Hershberger Thun asked that a memo be sent telling the City Council when that meeting will be.

Mayor Hershberger Thun asked if there is a statement to be released to the press on what was done. Mr. Uram said yes he has a draft press release for members of the media.

Councilmember Roden said they discussed at the workshop the importance of a public works facility tour. She said she thinks it is important to explain to the public what they are trying to achieve. She noted the question was asked if the public works facility can be addressed by leaving the levy flat and the answer was no. Councilmember Roden said several cities asked the state to delay the date in which they set the preliminary levy and the state said no delays.

Councilmember Crowley said he was disappointed there was $110,000 discovered which was not designated for any use and now they are going to spend that money and add $150,000 more. Mr. Uram explained they are establishing a street maintenance fund. The $113,000 was designated for capital facilities. Councilmember Crowley said they could have passed a budget for 2012 without having to raise the levy. Mayor Hershberger Thun asked staff not to come with miscellaneous or undesignated funds. Councilmember O'Connor said that could have been labeled revenue stabilization

Ms. Johnson said the Truth-in-Taxation hearing will be scheduled for Monday, December 12, 2011 at 6:30.
 

None.
 

Ms. Geheren explained Aster Trail and Aster Circle are on the northeast corner of the City of Victoria and you have to drive through other communities to get there. She noted they have a gravel road and no city water or sewer. She stated the neighborhood is scheduled in the 2012 street capital improvement plan for street reconstruction. Ms. Geheren noted the neighborhood has been studied numerous times over the last 20 years. She said this area is expensive to provide water and sewer when the potential assessments are looked at. She explained that extended sanitary sewer and city water to an area is 100% assessed to the benefiting property owners. Streets are 50% assessed.

Ms. Geheren said she has been getting calls asking when the streets are going to be completed. She noted some properties have turned over or done some significant improvements. She stated there are three property owners who are under an order to replace their septic systems. Carver County did give them an extension knowing the streets were programmed for 2012. Ms. Geheren said they held a neighborhood meeting in the spring and the discussion was very engaged and the meeting was well attended. She said there seems to be interest in having more information. She noted she is not in the position to answer some of the questions from the residents.

Ms. Geheren said also in the calculations for the assessments are some of the properties that are potentially developable.

Ms. Geheren stated given the history instead of doing an entire feasibility study she is suggesting an interim review to come up with current cost estimates and current potential assessments before they come back with authorization for the full study. She noted the feasibility studies cost $15,000 to $25,000. Ms. Geheren said they are seeking authorization to spend about $6,000 to figure out a sewer and water layout and cost estimates with potential assessments.

Ms. Geheren said Lake Virginia is currently an impaired water body. She noted it is likely that non-compliant septic systems are contributing to the impairment. She said there may be the potential to access some funding for this project with the Minnehaha Creek Watershed District.

Councilmember O'Connor asked how many residents there are. Ms. Geheren said there are about 20 properties. Councilmember O'Connor asked what the cost estimates are that were shared. Ms. Geheren said if the cost of the sewer from 1989 was indexed forward it would be $26,000 per property if shared evenly but some were deemed to have the potential to develop up to 5 lots. Councilmember O'Connor asked what the reaction was. Ms. Geheren said she thinks there is interest in preserving the ability to develop in the future.

Councilmember O'Connor questioned if it is worth going through the exercise again for another $6,000. Ms. Geheren said TKDA prepared the feasibility study in 2002 and her sense of the reaction of the residents is very different now from what it was then. She noted there might be some interest in just doing the streets. Ms. Geheren stated she felt convinced there was interest. She noted this information could be carried forward into a feasibility study.

Councilmember Roden commented on the history and said based on the knowledge from the neighborhood she is comfortable moving forward.

Councilmember Crowley asked what the road amount was. Ms. Geheren said the road number was about $9,000 per unit.

Councilmember Roden stated the assessments are based on units. She noted there are also potential deferments for people that meet certain criteria.

Mayor Hershberger Thun clarified there are 20 houses.

Mayor Hershberger Thun referred to page two of the staff report and asked if the three properties that have non-compliant septic systems are the ones that really want the improvements. Ms. Geheren said there were other people who were currently not known to be non-compliant that were interested in sewer.

Mayor Hershberger Thun asked how many calls were received. Ms. Geheren said a small number of calls were received.

Councilmember Roden asked about the petition process. Ms. Geheren said they did not receive a petition. She noted the petition process is still available by statute. She explained this was already programmed for 2012.

Mayor Hershberger Thun clarified they need a 4/5ths vote to approve this project if they reach that point.

Councilmember Crowley asked if the $6,000 is being paid out of this year's budget. Ms. Johnson said currently in the CIP there is $1.5 million budgeted for 2012 of street projects which was in the D7 scenario. She explained this will set up a project fund. Ms. Johnson said if the project doesn't go forward then this would be paid for out of the general fund.

Mayor Hershberger Thun said the only reason she is voting yes is because of the pollution in Lake Virginia. She said she is leery of the 20 houses supporting this. Councilmember Crowley said he shares the concern. Ms. Geheren said she is being asked questions and can't respond too residents without doing the analysis.

Ms. Kreft said this is an update from the July meeting. She noted there are two parts; the first is the use of the brand and logo and the second is the actual location of the sign. Ms. Kreft said the City Council recommended both logos be used and asked that information be provided on when to use them. She noted the city's consultant graphic designer recommended not using both on the same material. She feels the current city logo is more of an illustration and could potentially be incorporated with the "V". Ms. Kreft said the draft policy lays out when the city logo would be used and when the brand would be used. The city logo would be used on any official material and the brand would be used more in marketing.

Councilmember Crowley said the Victoria logo has value and he likes what has been done.

Councilmember O'Connor commented on the park signs. Ms. Kreft said the parks use the city logo and the suggestion is to use the city brand as they need to be replaced. Councilmember O'Connor questioned the change and said he likes the park signs with the logo.

Councilmember Roden said she thought the original "V" was developed primarily to brand the downtown. She stated she is comfortable with what the consultant has recommended. Councilmember Roden questioned what they are trying to accomplish.

Councilmember O'Connor said he is comfortable with the recommendation except for the parks. He thinks the existing signage should reflect the current logo.

Mayor Hershberger Thun said she will be voting no. She stated she thinks they need to choose. She said she doesn't think the current logo will stand up in court in the future. Councilmember Crowley stated the constitution says regarding the establishment of religion the government shall make no laws. Mr. Norton said he will do some research and bring that back to the council. Mayor Hershberger Thun stated she is not saying that she doesn't like the current logo or the "V" logo she is just expressing her concern. Councilmember Roden stated she asked if the logo is illegal at the previous meeting and was told no by the City Attorney because of the historical use. She said they need all the information at once. Councilmember Roden said she also asked if there were any complaints about the logo and the answer from staff was no. Mr. Norton said he is not changing his legal opinion but didn't receive direction to research that specific issue. He said if something is established as a religious symbol that may be a problem. Councilmember Roden said she wants to look at everything then; the Christmas tree in the hall and the tree lighting. Councilmember Crowley said he agrees and out of the 10,000 things they need to do this is beyond that. Mayor Hershberger Thun said she agrees. She said it is just a personal concern. She noted there have been questions about the logo and she has responded that she has bigger battles to fight.

Councilmember Roden asked that this not be talked about for the rest of the year.

Ms. Kreft noted at the last meeting there was a recommendation to have staff research converting the existing sign to an electronic message board. She noted the Business Development Committee also discussed this at the July 27^th meeting and recommended the city consider an alternative number of locations.

Ms. Kreft said given the ongoing budget discussions she would like feedback from the City Council on whether or not a community sign in the range of $45,000 to $50,000 is going to be supported regardless of the location.

Councilmember Crowley referred to a letter from the Victoria Business Owners Association. He said the last sentence states the Victoria Business Owners Association would be interested in working with the city to fund the project.

Councilmember O'Connor stated this was looked at a month ago and they voted. He said in his mind that should have been the end of it. He said he doesn't know why they are talking about this again. Councilmember O'Connor said he doesn't think it makes any sense given the budget situation.

Mayor Hershberger Thun referred to the minutes of the July 25^th meeting and read the motions.

The City Council went back to the visitor presentation and had Senator Ortman speak.

Councilmember Roden stated she is confused as to why they are here. She said she thought they would just get the costs not a number of different locations.

Ms. Kreft said this is in response to the direction that City Council gave which was to look at converting the existing sign. She noted the sign was also discussed at the Business Development Committee.

Councilmember Roden said she has a lot of comments if they are opening this up again.

Councilmember Roden said if they are going to talk about signs again she would like a workshop. She commented on all the information she has on safety. She urged everyone to go to the Minnesota Safety Council website. She stated driver distraction is the most serious threat. Councilmember Roden said if they want to subsidize businesses she is willing to look at that.

Councilmember Crowley recommended this be tabled for discussion at another time or have a workshop.

Mayor Hershberger Thun noted there is a motion on the floor.

Mayor Hershberger Thun asked if there is interest in having a workshop.

Councilmember Roden said they can have a global discussion on business subsidies.

Councilmember Crowley said he is interested in investigating this further but doesn't think it is a business subsidy issue.

Councilmember Roden stated she doesn't want to talk about signs because they already voted on this.

Mayor Hershberger Thun said she would like to simplify the data on just Victoria.

Mayor Hershberger Thun explained that they talked about having a community event sign. She said the Business Development Committee and the Victoria Business Owner's Association have had discussions on how they can promote the City of Victoria. She questioned if they never have a chance to come back. Councilmember O'Connor said never is a long time and in his opinion this is done for this council. Councilmember Crowley said he disagrees and if there is new information he wants to know about it. Mayor Hershberger Thun said if this is going to be discussed they need a workshop.

Mr. Uram said for staff's benefit at whose direction do they bring a sign discussion at any point back. Councilmember Roden said from the council. Mayor Hershberger Thun said she agrees. She noted anybody has the right to make a request during the open forum. Councilmember O'Connor said they have had a lot of discussion and asked people to respect the decision of the City Council and not bring this up in the next couple of months.

(10) NEW BUSINESS:

None.

Mr. Uram said he would like to talk about the development and the partnerships. He said they have to emphasize the need to develop lots in Victoria. Mr. Uram stated the need to fund a revenue stabilization fund is also critical.

Mr. Uram said they continue to work on land acquisitions. He said Craig Peterson sent out an email blast to 600 brokers within the community and no inquiries were received on the 13.5 acres.

Mr. Uram talked about the partnerships and said they are actively involved in Highway 5. He noted there will be an open house on Thursday night. Ms. Geheren said that open house is from 4:00 p.m. to 6:00 p.m. She stated new information will be coming forward.

Ms. Geheren said the construction is occurring from TH 41 all the way to the intersection by the Dairy Queen. She stated Mn/DOT is starting to produce what the staging might look like. She said the preliminary discussion for how long it would take to construct the pedestrian underpass is it will take 30 days and that would be a full closure at Highway 5. Ms. Geheren stated the project continues to be on schedule. She reminded everyone there is construction just outside of the bridge and the pedestrian underpass.

Councilmember O'Connor commented on citizens not being aware of how inconvenienced they are going to be.

Mr. Uram said they have highlighted what they have accomplished with the strategic plan. He stated they will continue to work on the goals for 2011.

Mayor Hershberger Thun noted that Councilmember Crowley had to leave the meeting but a quorum was still present.

Mr. Uram said they received a letter from the City of Shorewood requesting the City of Victoria's support for the Minnehaha Creek Watershed District to take a lead role in developing a comprehensive AIS program. Mr. Uram said the watershed district is looking for feedback from the communities on if they should pursue this.

Councilmember Roden said she attended the Watershed District meeting. She said there were three lake associations that were looking for someone to set up a process. She stated zebra mussels are in Lake Minnetonka and they are spreading. She said there isn't a strategy that has been endorsed. Councilmember Roden noted one of the controversies is if it would limit public access. She said all the fisherman groups were saying don't do this and all the lake associations are asking for help.

Councilmember Roden said she trusts Bill Olson's opinion. She stated right now nobody is taking this on.

Mr. Uram said Mr. Olson emphasized this would be a pilot program for ultimate implementation by the DNR. He noted the watershed district would move forward without unanimous approval from all communities.

Mayor Hershberger Thun said she is concerned about the City of Shorewood's resolution. She said there has been a lot of work done on this. She stated she is only interested if it is a pilot program and other parties are included.

Mr. Uram said it was Mr. Olson's suggestion that a motion be drafted as opposed to a resolution.

The revised recommendation is:

The City Council recognizes that over the years, there have been many local, regional and state groups involved in the management and prevention of substantial treats to water quality and ecosystems. The Council supports the development and implementation of a model regional Comprehensive Aquatic Invasive Species (AIS) program by the Minnehaha Creek Watershed District (MCWD). Furthermore, the MCWD is strongly encouraged to involve, up front, other informed and experienced partners and entities such as the Lake Minnetonka Conservation District (LMCD); Department of Natural Resources (DNR); and other lake association stewardship programs.

Mayor Hershberger Thun commented on an article about the LMCC calling for viewer comments. She said if anyone wants to give opinions about the Mediacom service the email is franchise@lmcc/tv.org or 952-279.2404. All comments need to be in by October 31^st.
 

None.
 

A motion was made by Councilmember O'Connor, to adjourn the meeting at 9:28 p.m. The motion was seconded. With all members voting in favor, the motion carried. Vote: 3 Ayes, 0 Nays.
 

Respectfully submitted,

Tanya Schmieg
TimeSaver Off Site Secretarial, Inc.