May 21, 2018 Work Session Minutes

MAY 21, 2018 – 6:00 PM

CALL TO ORDER - The work session was called to order by Mayor Rockvam at 6:02 p.m.

Council Members Present: Jerry Rockvam, Mayor; Gary Hughes; Catherine Kane Palen; and Pamela Horton (arrived 6:07 p.m.)

Council Members Absent: Megan Pavot.

Staff Present: Dan Tolsma, City Administrator; Mike Kuno, City Engineer; and Theresa Schyma, City Clerk.


City Administrator Tolsma gave a brief summary about history of issues and concerns regarding rental licensing and property maintenance in the City of Spring Park. He added that the Planning Commission is interested in tackling both of these issues in the near future.

Council Member Hughes brought up short-term rentals in the City.

City Administrator Tolsma responded that the language in the City Code regarding short-term rentals needs to be clearer. He also stated that it is a good time to discuss short-term rentals since the general attitude regarding short-term rentals has changed since the issue was last discussed by a previous Council.

Mayor Rockvam asked why the City doesn’t allow short-term rentals and if it was mainly due to noise concerns.

City Administrator Tolsma responded that previous Councils decided it was not an allowable use in the City. He added that the rental ordinance issue was listed as a priority at the City Council goal setting session in 2017 so it should definitely be revisited. He continued that his main goal with tonight’s discussion was to ask the Council for direction on whether or not they would like the Planning Commission to tackle this issue and provide a recommendation that would eventually come back to the City Council.

Mayor Rockvam stated that referring the Planning Commission to look into the issues surrounding outdoor storage was a clearer task since the end goal was more defined but this discussion is more broad and open-ended. However, they can take a good look at the issue and the many hypothetical situations and give the City Council a proposal to be considered.

Council Member Kane Palen stated that the issues of outdoor storage/nuisance, property maintenance, and rental licensing are all interconnected.

City Administrator Tolsma responded that those issues were the three main priorities that came out of the 2017 City Council goal-setting session. The outdoor storage issue has been addressed so now the Planning Commission can start the process of looking into the other two issues.

The City Council consensus was to direct the Planning Commission to look into rental and property maintenance ordinances and provide a recommendation that would eventually come back to the City Council.


Mayor Rockvam stated he was shocked to find out that previous Councils had not raised rates in 10 years since the issue should be looked at on an annual basis with the budget. He added that the City is now subsidizing water and sewer rates out of the reserve account and these are enterprise funds so they should be supporting/funding themselves.

City Administrator Tolsma stated that utility rates can be as complicated as you want them to be but the bottom line is that the City is losing money, especially in the sewer fund. He further discussed revenue and depreciation since 2009.

City Administrator Tolsma added that the rates issue is not a new one since it has been brought up consistently every year but previous Councils were in a pattern of not being concerned about factoring in depreciation. Also, there was a time when the Council decided the water fund basically offset the negative sewer fund so it was not a concern. However, they have two separate infrastructure needs and should be considered separately.

Council Member Hughes asked how much money the City pays the Metropolitan Council.

City Administrator Tolsma responded approximately $200,000. And he stated that one of the main reasons the rates need to increase is due to the increased rates from the Met Council. He added that since 2009 the City’s fees to the Metropolitan Council have basically doubled and the City has not done anything to adjust with those increases.

Council Member Horton asked if less drainage will go through the system as the City works on fixing pipes and if that will make it better.

City Administrator Tolsma responded that there are two components that factor into drainage; public infrastructure and the private connection system. We can work on fixing the entire public infrastructure system but we have no control over the private connection system.

Mayor Rockvam asked about depreciation.

City Administrator Tolsma stated that the City is currently breaking even on water rates including depreciation but once you factor in the costs of maintaining the system and depreciation, that fund will eventually go down as well. The system is an asset and all assets need to factor in depreciation.

Mayor Rockvam stated that the Council needs to factor in depreciation into budgeting and rates or else you get to the end of the line and the City has no money.

Council Member Hughes also stated that previous Councils discussed one rather consistent argument that was made about why current residents should have to put money aside for issues that would only impact future residents.

Mayor Rockvam and Council Member Kane Palen stated that is not a responsible way for any City Council to approach budgeting.

City Administrator Tolsma stated that the City needs to bring the rates current and get on a schedule so that rates are looked at every year. He added that the warning he has been heeding every year is that you don’t want to do one major increase when the fund is so low that there are no other options. However, nothing has been done in 10 years so the City’s options are more limited since the sewer fund is now underfunded by approximately 25%.

City Administrator Tolsma discussed how it would impact residential bills on a quarterly basis so the Council could see the true impact of changing sewer rates to get the City current. He suggested one option of splitting up the increases over three years to get the City current and putting the City on a schedule for much smaller increases in the future.

Council Member Kane Palen stated that the history of why nothing was done is not the issue; this is something that needs to be taken care of now.

Mayor Rockvam agreed and thinks that both water and sewer rates need to be taken care of immediately.

The City Council consensus was to have staff prepare two proposals (one year option vs. three year option) for the Council to discuss and consider at a future meeting.


City Administrator Tolsma provided an update on the Fire Department contract and stated that Minnetonka Beach has decided to leave the contract. He added that the City’s fees for fire services are likely to increase but it is unclear as to how much of an increase it will be.

4. LMCD BUDGET UPDATE - Council Member Hughes presented the new LMCD budget to the City Council. He asked the Council to review the budget and provide feedback.


6. ADJOURN - The work session was adjourned by unanimous consent at 6:58 p.m.

Date Approved: June 4, 2018

Dan Tolsma, City Administrator

Theresa Schyma, City Clerk