August 24, 2015, Work Session Minutes

AUGUST 24, 2015 – 7:00 PM
Attendance: Shirley Bren, Gary Hughes, Pam Horton, Bruce Williamson, Megan Pavot, Dan Tolsma, Wendy Lewin, Nancy Beck.

a. Included for review is a staff memo and the draft 2016 budget. –
Williamson said the budget has to be finalized in December so the months leading up to December can be used to tweak things. He said they start with a preliminary budget as a starting point to work from. He said in September the budget will be adopted as preliminary. It can be changed between September and December but can only be reduced, not increased. Horton asked about the public works department and the fact that the budget was surpassed. She wonders if this has been factored in the new budget. Williamson said Tolsma will talk about this. Tolsma said to turn to the first page with all the numbers. Tolsma said the first five pages are the focus of the city council as this is what needs to be levied for – general services. He said the first five pages are also broken out to departments. Tolsma said the numbers he track, he looks at the bottom column and the percentage spent so far during the year. Tolsma advised the council to not focus on numbers that are beyond allowable percentages for the time of year. Williamson also adds that it depends upon the actual dollars spent.

Tolsma goes through his memo regarding the levy and budget for 2016. Tolsma said the increase to the police budget is a big hit. Hughes asks why. Tolsma said police is having a budget increase but according to Orono’s Ron Morse, the formula didn’t work in Spring Park’s favor this year taking into market value, number of calls and population. Williamson asked if there was an increase cap in the contract. Tolsma said he will check on this. Hughes asked about the rolling increase like the fire department has. Williamson said there is a concern about base value to properties being increased and he wonders if that is spelled out in the contract. He recommends reviewing this to check for a cap. Williamson is concerned about the increase in health care costs and notes it’s a 28% increase. Tolsma and Pavot said a few years ago BCBS lowered rates in order to get a buy in from cities and then they started raising the rates. Williamson thinks maybe the bond payment should just be made from the reserve funds, funds that have built up because revenues have been higher than expenditures. Tolsma said it’s hard to defend an increase to the levy by 6% so it makes sense to make the bond payment from reserves. Hughes said he is concerned about Lewin leaving during an election year and thinks attention should be paid to timing this.

Water and Sewer funds Tolsma said revenue is what is sold but the unknown is the unforeseen emergencies such as water main breaks. He said the revenue is based on fees forecasted. Hughes asked about the sewer side and the infiltration on Lafayette and Black Lake Road. He said there is about $13K being paid to the Met Council due to the I&I and wonders about sleeving the sewer lines. Tolsma said it’s on the CIP. Tolsma said when there is a reserve transfer that is less than what is depreciated, he’s not worried. However, the sewer reserve transfer does not meet the depreciation. He said this is due to the new lift station. Williamson said new lift stations are funded out of reserves so the lack of interest earning is gone. He said old lift stations have been depreciated out. He said the money has been spent, the depreciation is gone, the interest earning is no longer and the Met Council increases the rates.

Tolsma said this first round of the draft levy does have a 2% increase.

Hughes asked about staff increases and wonders if this has been factored. Tolsma said it’s been factored but it’s not hard and fast figured yet. Williamson said it’s difficult when an actual percentage is discussed and then it’s not agreed to. Tolsma said the consumer price index has decreased so it’s hard to make the cost of living increase argument. He said it doesn’t mean there can’t be a merit or performance increase.

Pavot wonders about raising the sewer rates. Tolsma said it’s hard to pick a number but typically there is a study performed to study scenarios. Williamson said there are two components, one being the base charge and the second being the use rates. He said the arguments have been which component should they raise and that’s why the research is helpful. Pavot wonders about the 1% increase that doesn’t ding the user but helps on the revenue side because she feels they’re close now. Hughes would look at not changing the use rate but the base charge. He thinks this would cover the money spent for the new radio reads. Tolsma thinks meters should be associated with the water fund. He said the argument could be made because of the new lift station and sewer backups. Williamson said a good time to take up the fee ordinance would be September 21st when the preliminary budget is adopted. As far as the sewer study goes, a financial analysis should be performed to determine what makes the reserve stable. He said the sewer reserve fund has close to 700K in it. Tolsma thinks it might be 800K, cash in sewer reserves. Williamson said the money can be taken from anywhere but it should be taken from the sewer. He said it could be taken from the capital improvement funds too. Williamson thinks council should concentrate between now and then what they want to research or discuss. Beck suggests Tolsma look at a modest increase to the base rate and to the user rate to see what that does. It’s decided that the fee schedule should be the priority along with the preliminary levy and then work on potential sewer increase.

Williamson said there is a water treatment plant upgrade and there will be operating expense increase that will impact the water fund. He said until the slip lining is done and what else is found during the televising, this will draw down the sewer reserves and this might affect the sewer rates. He said referencing the audit it shows they are pretty close. He agrees that a small increase might be the best way to systematically restore the fund. Hughes said regarding the water treatment plant and the staff time involved and continuing involvement for Goman, he wonders about looking at hiring a more regular part-time person due to running the city. He wonders at some point if this might be necessary to go beyond seasonal for a part-time person. He thinks this is going to be a near future item more than a far out projection. Hughes wonders about a public works building for future or, like Williamson suggests perhaps contracting out some of the services. Hughes wonders about thinking about extra staff costs. Williamson thinks maybe the public works department should be analyzed as one person mowing the lawns is not equivalent to a licensed, certified worker. Hughes wonders about hiring a project manager for the water plant upgrade and Williamson disagrees. Tolsma said Lewin (Paul) would probably be around almost year round if he is needed in the meantime. Pavot could probably do a job analysis regarding this because that is what her degree program is in. Hughes thinks this should be considered for this budget cycle and Tolsma should be directed to look at this. Hughes said the engineer referenced an additional 20 hours a month to get the routine established. Tolsma said an estimate for one year is that it will take more time to operate the new features in the water plant. Long-term, there is no data for that. Williamson said training time versus actual operating should be examined. Bren said there will be extra time and work involved in keeping the water plant clean. She said she thinks there is a learning curve involved with this and it will take time to learn it. Williamson thinks there is extra money in the grant to accommodate the extra time involved. Tolsma confirmed it has been factored in for one year.

Williamson said in regards to a public works facility, when adding the extra costs for renting and utilities, maybe this should be re-evaluated. Williamson also asked about the on-call with Orono and Tolsma said he thinks the city is only billed when they respond to a call. Williamson thinks an analysis of the job might be beneficial.

Tolsma asked as far as the budget goes, he would like direction in terms of second draft changes. He asked for first impressions on the two percent levy increase. Pavot said she was confused on the line item for $15,000 on “catch up” for sewer inspections. Tolsma said this is on the CIP and this is going to happen. He said televising and filling cracks, cleaning is making sure we are compliant with the policy. Williamson asked about the upgrade to the city’s phone system and wonders if it is in this year’s budget. Tolsma said this is small enough to qualify as a contingency. Williamson said document storage needs to be reexamined and Hughes mentions security as well.

a. Staff will outline maintenance proposals and an updated televising/cleaning schedule that will ensure every line in the City is televised at least once every 5 years.
Tolsma said this is in response to maintenance on sewer lines and he asked Goman to put this together. He suggested the city be split into five sections so the entire city is complete in five years by doing one section a year. He said they aren’t all equal based on linear feet but based on lift stations locations. He said this schedule could be handed to a vendor and they’ll follow the schedule. Pavot wondered if this takes into account the areas that haven’t been done for a while . Tolsma said they’ve taken that into consideration and staged it so recently done lines will be placed later on the rotation. He said there might be some areas that need to be incorporated to get on track for the five year plan. Williamson asked if authorization is needed for slip lining and Tolsma said they’re not there yet. It’s going to be based on the televising and cleaning. Williamson wondered if there are areas that might need to be done before winter sets in as he thinks it can’t take place during the severe cold weather. Tolsma said this needs to be coordinated with a street project as it doesn’t make sense to slip line something that’s going to need to be replaced.

Williamson thinks if something needs to be done, the sooner the better as the costs will go up. Williamson said it’s necessary to distinguish between what needs to be done. He feels there will be an impact from on the stock market crash that occurred today.


a. September Channels 8 & 20 Schedules

Adjourn at 9:15 p.m