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HomeMy WebLinkAboutMinutes 4/05 i� ��tJV� �ri°t � y � ............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... ���� �ri e ar�d PC�� t MINUTES COTTAGE GROVE CITY COUNCIL April 5, 2017 COUNCIL CHAMBER 12800 RAVINE PARKWAY SOUTH REGULAR MEETING - 7:00 P.M. 1. CALL TO ORDER The City Council of the City of Cottage Grove, Washington County, Minnesota, held a regular meeting on April 5, 2017, at Cottage Grove City Hall, 12800 Ravine Parkway. Mayor Bailey called the meeting to order at 7:00 p.m. 2. PLEDGE OF ALLEGIANCE The audience, staff, Mayor, and City Council Members recited the Pledge of Allegiance. 3. ROLL CALL The following were present: Mayor Myron Bailey, Council Member Steve Dennis, Council Member Wayne Johnson, Council Member La Rae Mills, and Council Member Dave Thiede. Also present were: Charlene Stevens, City Administrator; Korine Land, City Attorney- LeVander, Gillen & Miller, PA; Nate Estrem, Project Engineer; Ryan Burfeind, Assistant City Engineer; Les Burshten, Public Works Director; Zac Dockter, Parks and Recreation Director; Joe Fischbach/HR Manager/City Clerk; Jennifer Levitt, Community Development Director/City Engineer; Molly Pietruszewski, Recreation Supervisor; Rick Redenius, Fire Chief; Robin Roland, Finance Director; Craig Woolery, Director of Public Safety. 4. OPEN FORUM Mayor Bailey asked if anyone in the audience wished to address the Council on any item that was not on the agenda. As no one wished to address the Council, Mayor Bailey closed the open forum. 5. ADOPTION OF AGENDA Motion by Council Member Thiede, second by Council Member Dennis, to adopt the agenda. Motion carried: 5-0. CITY OF COTTAGE GROVE • 12800 Ravine Parkway • Cottage Grove, Minnesota 55016 www.cottage-grove.org • 651-458-2800 • Fax 651-458-2897 • Equal Opportunity Employer City Council Meeting Minutes April 5, 2017 Page 2 6. PRESENTATIONS A. Inclusive Playground Donation —West St. Paul/Mendota Heights Rotary Club Staff Recommendation:Accept donation of$21,000 from the West St. Paul/Mendota Heights Rotary Club to be used towards the construction of the Inclusive Playground at Woodridge Park. Johanna Mohwinkel, the President of the West St. Paul/Mendota Heights Rotary Club, introduced herself and stated she and her colleagues were able to go to District Rotary to ask for monies to put toward the Inclusive Playground; a colleague, Kori Land, put a lot of effort into raising funds from other Rotary Clubs to include in this donation. Ms. Mohwinkel stated they were looking forward to being able to come and play there and also would with any clean-up projects; she wished the City good luck going forward and presented the check in the amount of$21,000 to Mayor Bailey. Mayor Bailey acknowledged that this project has been years in the making, and the goal is to get the playground built this summer. Mayor Bailey thanked the Rotary Club for the donation and for everything they do in the community; he invited them to attend the grand opening of the Inclusive Playground. 7. CONSENT AGENDA A. Receive and place on file the approved minutes for the Arts Commission meeting on February 7, 2017. B. Receive and place on file the approved minutes for the Parks, Recreation and Natural Resources Commission meeting on December 12, 2016. C. Receive and place on file the approved minutes from the February 27, 2017 Planning Commission meeting. D. Pass Ordinance 980 amending City Code Chapter 3-12-5-B-3 relating to Liquor Control, Sunday Sales. E. Authorize entering into the Shared Used Agreement for Recreational Facilities Between School District 833 and the City of Cottage Grove. F. Authorize the purchase of workers' compensation insurance from the League of Minnesota Cities Insurance Trust in the amount of$454,060.00, which includes the experience modifier, a premium discount, and a $25,000.00 per occurrence medical deductible. G. Adopt Resolution 2017-036 authorizing issuance of a premises permit to the Cottage Grove Athletic Association to conduct lawful purpose gambling at Junction 70 Grill, 6933 Pine Arbor Drive South. H. Appoint Marie Sumstine to a term on the Advisory Committee on Historic Preservation, ending on February 28, 2018. I. Adopt Resolution 2017-039 approving amendments to the Minnesota High Speed Rail Commission Joint Powers Agreement. City Council Meeting Minutes April 5, 2017 Page 3 J. 1. Approve the Cooperative Agreement between the City of Cottage Grove and Washington County for Construction Cost of County State Aid Highway (CSAH) 19, CSAH 13, and County Road (CR) 74 Multi-Use Trails. 2. Approve the Cooperative Agreement between the City of Cottage Grove and Washington County for Maintenance of County State Aid Highway (CSAH) 19, CSAH 13, and County Road (CR) 74 Multi-Use Trails. K. Approve the Harkness Avenue small area planning study as identified in the March 16, 2017 proposal from Stantec, at a cost not to exceed $20,908. L. Adopt Resolution 2017-040 to: 1. Award the 2017 Woodridge Park Inclusive Playground Contract to Landscape Structures, Inc. for the total base quote of$597,321.50; and 2. Award Alternate #1 for$42,241.55 and Alternate #2 for $49,251.07, contingent upon the availability of funds, by June 1, 2017. M. Approve Contract No. 1027696 with the Minnesota Department of Transportation regarding the release of East Point Douglas Road and West Point Douglas Road right-of-way to the City of Cottage Grove. N. Adopt Resolution 2017-041 authorizing the final payment in the amount of $1,406.28 to E.H. Renner & Sons, Inc. for the Cottage Grove Well No. 4 Maintenance Project. O. Receive information on the year end General Fund Balance for 12/31/2016. P. Adopt Resolution 2017-042 approving mandatory write off of 2016 Ambulance charges totaling $2,331,300. Q. Authorize staff to replace unit 70-8204-05, a 2005 New Holland Backhoe, for the Water Department. R. Approve the Maintenance Agreement between Washington County and the City of Cottage Grove for maintenance of the improvements at County Road 74 and Goodview Avenue. S. 1. Approve and execute the assessment waiver agreement between the City of Cottage Grove and The George L. Posavad, Jr. Trust, The Verene E. Posavad Trust, and the Posavad Family Limited Partnership. 2. Approve and execute the permanent and temporary construction easement agreement between the City of Cottage Grove and The George L. Posavad, Jr. Trust, The Verene E. Posavad Trust, and the Posavad Family Limited Partnership. T. Award the professional service contract to RJM for the Construction Management Pre-Design Services for the HERO Center in the value of $34,780. U. 1. Approve the Cooperative Agreement between Washington County and the City of Cottage Grove for construction of CSAH 22 Management & Safety Project. 2. Approve the Cooperative Agreement between Washington County and the City of Cottage Grove for maintenance of the CSAH 22 Management & Safety Project. City Council Meeting Minutes April 5, 2017 Page 4 V. Adopt Resolution 2017-046 awarding the quote for the Trunk Sanitary Sewer Rehabilitation Project (Hy-Vee Site) to Lametti & Sons, Inc. in the amount of$48,600.00. W. Approve Change Order No. 1 for the 70th Street South (CSAH 22) and Jamaica Avenue Improvements Project. X. Appoint Jody Lewis as the Chair of the Public Services Commission. Council Member Johnson wished to pull Item X and Council Member Thiede wished to pull Items H, J, S, and T for further comment and/or discussion. Council Member Johnson acknowledged and thanked Jody Lewis, who has stepped up to be the new Chair for the Public Services Commission, and Lisa Rediske has stepped in as Vice Chair when Jody is unavailable. He thanked them for agreeing to fill those positions. Council Member Thiede asked the Council to approve Marie Sumstine to a term on the Advisory Committee on Historic Preservation; she's actually on the South Washington County Historical Society and also a member of the Minnesota Genealogy Library, so he felt she'll be a fantastic addition to the Historic Preservation Committee. Council Member Thiede stated regarding the Safe Routes to Schools and Cooperative Agreements between Washington County and the City, it involved making some new trails and sidewalks. He asked Community Development Director/City Engineer Jennifer Levitt to summarize what was going on with that project. Engineer Levitt stated they've been working for ten years with the School District and Washington County to fill in the gaps in the City's trail networks. The Safe Routes to Schools funding is a federal funding allocation they've been awarded. There are two trail segments, one on Hinton Avenue where the trail terminates right by the Holiday gas station, and it will go up to 65th Street. From Hinton and 65th Street, it will go to the Cottage Grove Elementary School, so that will provide a necessary link for additional walkability to the school. There will be a second trail site on County Road 19, between 80th Street and Indian Boulevard, which will get children to Grey Cloud Elementary School and Cottage Grove Middle School; this will be the missing link to the roundabout project at 70th and County Road 19, as it wi I I tie i nto 80th Street. Council Member Thiede asked if there were any plans to put a crosswalk on the north side of 65th Street, across from the school, so children could actually get cross the street at the school. Engineer Levitt stated Washington County is not supportive of mid- block crossings due to safety issues; the safest place to navigate an intersection would be at Hinton and 65th Street, at the controlled stop. The final connection on the north side of 65th Street will carry forward when adjacent parcels are developed. Council Member Thiede asked if the school had some involvement in these projects and set some goals or priorities; Engineer Levitt stated Safe Routes is a federally-funded project so they really needed the School District to work with the City. They want to City Council Meeting Minutes April 5, 2017 Page 5 increase walkability, exercise, connectivity, healthy choices within the school, so they did a lot of educational efforts and surveys, which have been done to position the City to receive the federal funds. The School District has been a great partner to move that project forward to enable the City to receive the necessary funds. Council Member Thiede stated he was looking at the maintenance agreements and he thought the City should set up a procedure to make sure we account for the ongoing costs of a new project. Engineer Levitt stated they wanted roundabouts to be an attractive element, as sometimes they're gateways to our community. They've been working with Public Works and the Parks Department in the last year regarding safety issues with the road widths, the designs, and the medians: They're using a low-grass grass for the roundabouts so it won't have to be mowed as often, they're also switching from mulch to rock, which won't have long-term maintenance costs, and the irrigation systems added will try to ensure success of the plants. Council Member Thiede asked if the cost for the pre-design services are part of the costs that have already been approved; Engineer Levitt stated that was correct, as the funding awarded for the HERO Center from the State bonding was for $1.46 million. As part of that, they secured the architect, the pre-design services (surveying, soil borings, etc.), and the final design for the project so they could pursue construction dollars to build. Woodbury and Cottage Grove opted to use the construction manager model for the project; they selected firms, interviewed them, and asked them to propose on the project. They felt very strongly that RJM was the best fit for the project delivery; the $34,780 costs were covered in the bonding that's already been received to date. Council Member Thiede stated when he looked at the bids, RJM was actually $244,000, or 43% higher, than ICS. When he looked at ICS Consulting's proposal, there were a lot of buildings in the metro area that they'd completely successfully; he asked what triggered them to want to spend $244,000 more for the same building? Engineer Levitt replied that there were a lot of determining factors; they were looking at a comparison of an approximately 13-month construction schedule. RJM felt they could bring their construction schedule down to approximately 11 months, so they'd save overhead and expense of two months of fees. Their actual fee is identical, 1.25%, which matched ICS' fee. The team felt very strongly that RJM had strong Public Safety background experience and had a more robust pre-design team related to estimating and pre-design services, more of a specialty element. They know they'll need their expertise to bring the building to a more economical place, and they felt RJM would be able to do so. Council Member Thiede asked what the possibility was of the $814,000 cost being less and how much less; Engineer Levitt stated they hoped to receive bonding dollars to move to construction. At that time, they'd renegotiate a contract, as they haven't even defined a delivery model of the construction manager, agency versus at at-risk model. Those two carry different values, so the professional service contract is only for pre- design. They know there will be other challenges and hurdles to overcome in the future, but tonight they're requesting Council to approve pre-design services only. Construction schedules, fees, etc. will be discussed in the future. City Council Meeting Minutes April 5, 2017 Page 6 Mayor Bailey stated regarding Item M, the East Point Douglas Road and West Point Douglas Road Right-of-Way Release, there is Resolution 2017-048 because they're working with the State of Minnesota, who would like a Resolution completed. Administrator Stevens stated the Council would just need to approve the Resolution as part of the Consent Agenda, as that will authorize the Mayor and the City Clerk to execute the agreement with the State. Motion by Council Member Dennis to approve the Consent Agenda, including Resolution 2017-048, Agreement 1027696, second by Council Member Mills. Motion carried: 5-0. 8. APPROVE DISBURSEMENTS A. Approve payment of check numbers 200241 to 200477 in the amount of $998,798.46 and EFT Payment of$649,538.41. Motion to approve disbursements by Council Member Dennis, second by Council Member Johnson. Motion carried: 5-0. 9. PUBLIC HEARINGS — None. 10. BID AWARDS A. 2017 Pavement Management Project Staff Recommendation: Adopt Resolution 2017-037 awarding the bid for the 2017 Pavement Management Utility and Street Improvements to Northwest Asphalt, Inc. in the amount of$1,457,188.99, which includes Alternate #1. Ryan Burfeind, Assistant City Engineer, stated bids for the 2017 Pavement Management Project were taken on March 23; there were four bids received. The project in the base bid included two residential neighborhoods for street reconstruction; the first was the Rolling Hills neighborhood. There was an alternate for this project, an aggregate trail proposed to be constructed along the east side of Pinetree Pond, just south of 80th Street; the Parks Commission recommended in March to move forward with that trail project. The low bid was from Northwest Asphalt, Inc. with a base bid of $1,406,756.01; their Alternate 1 bid was $50,430.98. Engineer estimates for the base bid was $1,495,000 and Alternate 1 bid of$73,000. They're recommending award of the base bid and Alternate 1 bid to Northwest Asphalt, Inc. Motion by Council Member Mills to Adopt Resolution 2017-037 to Northwest Asphalt, Inc., second by Council Member Thiede. Motion carried: 5-0. City Council Meeting Minutes April 5, 2017 Page 7 B. 65th Street, Geneva Avenue, and New Oltman Middle School Improvements Staff Recommendation: Adopt Resolution 2017-043 awarding the bid for the 65th Street, Geneva Avenue, and New Oltman Middle School Improvements project to Eureka Construction, Inc. in the amount of $2,373,767.72. City Engineer Levitt stated there were ten bids for this project, received on March 30; the engineer's estimate was $3.2 million, the base bid on the low bidder was $2.3 million, so they're excited to bring the project forward well under the engineer's estimate. They're recommending bid award to Eureka Construction, Inc., as they're the contractor who built the parkway in front of City Hall and the bridge that spans the ravine; they have a great working relationship with them. Council Member Johnson asked if there were contingencies or any increased costs expected from the bid received. Engineer Levitt stated for some of the items related to the contract, such as asphalt, they carry extra tonnage in the estimate to ensure that the work comes in at the bid amount. They don't carry specific contingencies on a project such as this since there are unit prices for everything. Contingencies are involved in architectural building projects, but at this point there are contingencies built into the unit prices associated with the project. Council Member Johnson asked if the cost would go up at all; Engineer Levitt stated she never guarantees that because they never know what kind of site conditions they'll find. Council Member Johnson asked if that happened, if it would come back before the Council or how that was handled. Engineer Levitt stated anytime there's a cost overrun of$5,000 or more, at that point they start to initiate a change order process with the contractor, which needs to be approved by Council. Motion by Council Member Dennis to Adopt Resolution 2017-043, awarding the bid for 65th Street, Geneva Avenue, and the New Oltman Middle School Improvements Project to Eureka Construction in the amount of$2,373,767.72; second by Council Member Johnson. Motion carried: 5-0. C. Central Fire Station — Bid Award (Guaranteed Maximum Price Contract) and Carpentry Bid Award Staff Recommendation: 1. Adopt Resolution 2017-044 approving the Guaranteed Maximum Price Contract with Kraus-Anderson in the value of $7,668,057. 2. Adopt Resolution 2017-045 awarding the Central Fire Station Carpentry Contract to Ebert, Inc., DBA Ebert Construction, in the amount of$398,800.00. City Engineer Levitt stated the bids for the Central Fire Station project were received in early March. This was an architecturally bid project, so all of the various divisions were in the Kraus-Anderson Guaranteed Maximum Price Contract; as such, they're requesting that the Council assign all of those division bids received to Kraus-Anderson City Council Meeting Minutes April 5, 2017 Page 8 and enter into a Guaranteed Maximum Price Contract with them, valued at $7,668,057.21. When the low bids received were compared, they were just over $8,000,000; the engineer's estimate was approximately $7.965 million for the project. They felt very strongly with value engineering and also with the contingency still in place for this project that we will be able to bring this project in at the $9,000,000 that is budgeted. At this point, they're requesting Council to Approve the Resolution for the Guaranteed Maximum Price Contract with Kraus-Anderson and to award the carpentry bid to Ebert Construction in the amount of$398,800. Motion by Council Member Thiede to Adopt Resolution 2017-044 approving the Guaranteed Maximum Price Contract with Kraus-Anderson in the value of $7,668,057.20, second by Council Member Mills. Motion carried: 5-0. Motion by Council Member Johnson to Adopt Resolution 2017-045 awarding the Central Fire Station Carpentry Contract to Ebert, Inc., DBA Ebert Construction, in the amount of $398,800, second by Council Member Dennis. Motion carried: 5-0. D. East Point Douglas Road — 80th Street Intersection Improvements Project Staff Recommendation: Adopt Resolution 2017-047 awarding the bid for the East Point Douglas Road-80th Street Intersection Improvements Project to Hardrives, Inc. in the amount of$428,287.56. Assistant City Engineer Burfeind stated there was a traffic study completed with the Hy- Vee project and the Grove Plaza redevelopment project; with that, they need to make changes to two intersections to better accommodate the expected increased traffic. The first is at the actual entrance to Grove Plaza and Hy-Vee; it will be restriped and the entrance will be widened, as there will be a multi-lane entrance to the site. With that work, it requires relocating or modifying the existing signal system to accommodate the restriping and lane changes. The second intersection is at 80th Street and East Point Douglas Road; the purpose of the work is to provide dual access onto 80th Street, going towards Highway 61. The road will actually be widened with a new right-turn lane, so there will be four lanes approaching the signal instead of the three that currently exist. With that project, there will be some pole relocations and additional work with the signal system; because of that, the system will actually go down for a period of time. During that time, it will basically operate as a four-way stop. Due to the high traffic at that intersection, there are some restrictions in the contract; the work will need to be completed in a four-day period, from Thursday to Sunday, to minimize the impact. The public will be well informed about the project, which will occur in early May, with advance notices posted at the intersection. Engineer Burfeind stated five bids were received on March 30; the low bid was Hardrives, Inc. with a base bid of$428,287.56. The City cost is anticipated at $215,000. As part of the redevelopment and the Hy-Vee construction, Hy-Vee is responsible for work at the intersection at their entrance, which is anticipated to be $213,000. Hy-Vee's estimate was $175,000, so it's slightly higher for them as, during final design, there was City Council Meeting Minutes April 5, 2017 Page 9 an additional signal pole that needed to be relocated, and that wasn't incorporated into the original estimate by the engineer. At this time, they're recommending the Council award the project to Hardrives, Inc. Motion by Council Member Johnson to Adopt Resolution 2017-047 awarding the bid for the East Point Douglas Road-80th Street Intersection Improvements Project to Hardrives, Inc. in the amount of$428,287.56, second by Council Member Mills. Motion carried: 5-0. 11. REGULAR AGENDA A. Innovation Road Renaming Staff Recommendation: Adopt Resolution 2017-038 renaming the Innovation Road (CSAH 19) segment located north of the Highway 61 Interchange and south of 90th Street to Keats Avenue South. Engineer Levitt stated as Washington County got into the details of their project, one of the finer details is the City now has to change the address of Ravine Park because the main entrance is now going to come off County Road 19, instead of East Point Douglas Road. As they looked at those details, Innovation Road actually goes to the curve in the road to the north, actually just shy of 90th Street. The existing road ends at the bend, so the road segment to the north is actually called Innovation and it doesn't actually stop at a specific point in time and place. There was probably going to be confusion if the park address was off of Innovation because most people thought of that road as just going towards 3M and not to the north. What the City is proposing, which is supported by Washington County, is renaming that road to Keats Avenue so there won't be any confusion. Coming off of the Highway 61 ramp, you would have Keats Avenue to the north and Innovation Road to the south. Staff recommends the renaming of the Innovation segment, north of the Highway 61 intersection and south of 90th Street, as Keats Avenue South. Motion by Council Member Mills to Approve Resolution 2017-038 renaming the Innovation Road segment located north of the Highway 61 Interchange and south of 90th Street to Keats Avenue South; second by Council Member Thiede. Motion carried: 5-0. 12. COUNCIL COMMENTS AND REQUESTS Council Member Mills stated the next Fare For All will be on April 6 at All Saints Church; there will also be a special brunch package available. It's open to the public, and produce and meats are available at reasonable prices. Council Member Mills stated April 22 is the "Soup-er Bowl," a fundraiser for Stone Soup Thrift Shop, and they're looking for teams; you can register your team by stopping by Stone Soup and information is on their website. It's a great way to support that City Council Meeting Minutes April 5, 2017 Page 10 organization. Council Member Mills stated the Arts Commission's Artist of the Month is Joe Filipovich; he makes guitars out of oil cans and is a local musician, and the video of him was just posted online today. Council Member Mills congratulated him. Council Member Thiede recommended when the City looks at projects, when documenting costs of the project, we give an estimate of what effect the ongoing costs are going to be year after year; e.g., maintenance costs and any additional burden it would put on resources to maintain the project, which will give an idea of not just what it's going to cost today but what it's going to cost in the future. Administrator Stevens stated additional maintenance costs are already taken into account. Council Member Thiede felt the additional strain on the City's services or resources should be considered. Discussion ensued amongst the Mayor, Council Members, and Administrator Stevens regarding: how that could be done over time, as costs change; what timeframe should be looked at; the benefit of knowing costs ahead of time, how that would be done; if additional items to a project would be denied outright or scaled back; and whether or not those issues were already being addressed in the budget and with Department Heads involved. It was noted that those items are factored in when working on the budget, as every project is always going to add to maintenance costs, as does the aging of buildings and/or equipment. Council Member Thiede would like to have a workshop that will look at the equipment approval process and also to review the fixed asset policy, as that's not been done since 2004. Maybe the numbers won't change that much, but he'd like to have that reviewed at a workshop sometime in the near future. Administrator Stevens stated that could be done; Mayor Bailey stated they'd add that to a future workshop session. Council Member Johnson asked when the flushing would be starting for the fire hydrants; Administrator Stevens stated they believed that would begin the week of April 10. Director Burshten stated they'd begun street sweeping and sometimes there are some hydrants opened on and off, which might be causing brown water. Mayor Bailey stated there were two more Fish Fry Fridays at The Eagles Bar and Grill at the River Oaks Golf Course. Mayor Bailey stated the Cottage Grove Parks and Recreation Easter Egg Hunt will be on April 8 at the Cottage Grove Ice Arena; preregistration on the website or via contacting Parks and Recreation is recommended, as it generally sells out. Mayor Bailey stated National Tire & Battery (NTSB) will have a ribbon-cutting ceremony on April 8 at noon; they remodeled and took over the former Midas Muffler location in front of Target. Mayor Bailey stated on April 22 at the Cottage Grove Ice Arena the Chamber Business Showcase will take place from 10:00 a.m. to 2:00 p.m.; all local businesses will be City Council Meeting Minutes April 5, 2017 Page 11 there, there will be lots of food to try, and this event is free and open to the public. He encouraged everyone to attend to support the local businesses within our community. Mayor Bailey stated on April 29 there will be an Arbor Day event at Highlands Park; they'll be planting trees and shrubs, so he encouraged everyone to join them. Mayor Bailey stated at the next Council Meeting they'll be talking about the Spring Clean Up that's coming in May. Mayor Bailey stated an employee at Public Works, Brad Riggins, had passed away unexpectedly last weekend. He'd been with the City of Cottage Grove for 15 years, working in various departments in Public Works. On behalf of the Council, he stated that their thoughts and prayers were with Mr. Riggins' family. They're also supporting the Public Works staff throughout this difficult time. 13. WORKSHOPS — OPEN TO PUBLIC A. Water and Sewer Rate Study Staff Recommendation: 1. Consider evaluation of the current utility rate and area charge fee structures by conducting a comprehensive water and sewer utility rate study. 2. Utilize results from the water and sewer rate study to develop a fee structure that will adequately fund the water and sewer utility funds. 3. Review the existing tiered fee structure for services and implement measures to promote water efficiency with residential, commercial, industrial, and institutional customers. 4. Continue to participate in the Coalition to further develop regional water use goals, objectives, and water supply approaches. 5. Continue to promote the importance of water efficiency and conservation. Engineer Levitt stated water is an extremely important resource to all. She reviewed that there are 11 wells in Cottage Grove and we also draw from the Prairie Du Chien- Jordan aquifer; the water system uses the well houses, the water towers, and water is treated with fluoride and also chlorine for any bacteria. The City doesn't do any water softening or treatment for taste or odor. All City sewage goes to the Eagles Point Wastewater Treatment Plant before it's discharged into the Mississippi River. Regarding water usage, in 2015 the City residents used approximately 2.35 million gallons per day. Water gallons per capita is 91.6 gallons per day; the DNR requirement is 75 gallons per capita, per day, so as a community we need to target a lower per capita and look at water efficiency, a 17% reduction. If we can't hit some of the per capita goals that could affect any future well-drilling activities in the community. Water contamination issues also need to be dealt with. The community is growing and water amenities need to be maintained to support the growth; they're looking forward to a population of nearly 50,000 so being able to supply water in a very cost-effective manner is important. The DNR also wants industrial, institutional, and commercial water usage reduced by another 1.5%. Water conversation is obviously important; the City Council Meeting Minutes April 5, 2017 Page 12 Met Council spoke of alternative water sources. However, the cost of those were frighteningly expensive so they'd rather not proceed with those alternative measures and instead manage it within the City's well field and our own water supply with our customer base. There are 151.18 miles of water main in the City, nearly 2,700 valves, 1,300 fire hydrants to flush, 6 operational ground tanks, 11 water supply wells, 132.81 miles of sanitary sewer pipe, and only one lift station. There are many operational costs to maintain all of those: 1) The Utility Fund for both water and sanitary sewer; 2) Bonds, which can help supplement the maintenance costs, and a potential treatment center in the future; 3) Utility Fees and Connection Fees; 4) Utility Area Charges, where developers pay to facilitate the growth of the larger system. The City did a Comprehensive Sewer Policy Plan in 1992 and a Water Supply and Distribution Plan in 1994 and 1995. At that time, an in-depth look at the rate structures and area charges took place. In 1997, they analyzed the West Draw, but any rate analysis has not been done since essentially 1994; however, the City has grown substantially since that time. There are now new regulations being thrust upon the City with new goals and objectives. Staff felt we need to take a more in-depth look at the City's rate structure to evaluate the new trends in the marketplace. The City's Connection Fees also have not been evaluated since the 1990s, so it's probably important that the City start to evaluate those. We want to capture the correct amount of money for the system but also don't want to be put out of the competitive market. Engineer Levitt stated the City's water rates are low compared to other cities; Mayor Bailey added we were lower on many of the rates compared to others. Engineer Levitt stated that Cottage Grove does not have a commercial or institutional rate for water; instead, we have a one-rate policy. She felt it might important to evaluate the commercial rate structure and develop one of those. She stated when you look at the Water Fund and the Sanitary Sewer Fund balances, the balances in those continue to decrease. Finance Director Robin Roland stated regarding the Fund balances, we used only the unrestricted portion; the portion of the fund balance that is available for the City to use for projects. There is a $35,000,000 balance in the Water Fund; however, $30,000,000 of that is all in the City's assets, not in cash or liquid assets. The City's rates have been fairly stagnant; even though the tier system was changed over the last couple years to conform to the DNR's requirements for a tiered-rate system, which charges a higher amount of fees when more water is used, there have been a couple of wet years so the water usage has not gone up. However, that's not good for revenue. Rates are used to encourage water conservation; you get people to actually conserve water and the City's revenues go down, although the expenses of the infrastructure do not. Therefore, the City will need to make a biggerjump in the rates in the long run; instead of 5% every three-to-four years, it might have to be 3% every year in order to impact the revenue City Council Meeting Minutes April 5, 2017 Page 13 stream as well as the conservation of that particular resource. In 2016, the expenditures exceeded revenue by approximately $680,000. Administrator Stevens stated when rates are raised, larger users (businesses) will then work to improve their consumption, which reduces their usage to reduce their costs, but the City's costs are fixed. The challenge is how to raise rates in a way that's systemic and stable, as no business wants to see their rates vary from year to year because that's not good for the business climate if they can't predict their expenses. The rates need to be raised high enough to generate some of that conservation but also high enough that, when that conservation occurs, the City continues to have adequate revenue. Director Roland stated for many years the Council was very conscious of tax rates and utility rates for residents so they weren't raised for a long time. We need to look at what kind of revenue we can generate to cover the expenses, as things are not going to be cheaper but more expensive; there are water mains, there's more development, there are more things that need to be taken care of by Public Works. It's a combination of how do we pay for current operations, as well as the future expenses of replacement of the current infrastructure. We need to do a rate study that takes all of this into consideration because of the issues with the DNR, the challenges with the impacts of current operations, reduction of conservation rates, and paying for future infrastructure. Council Member Johnson stated infrastructure costs can be set, and a line item could be added to generate revenue for what the City needs. Director Roland stated that's typically not the model that's used with water, sewer, storm water, and streetlights; even though it sounds like that's the way to go, it's all wrapped up into the utility rate in Minnesota. We could break with tradition, but might have some difficulty explaining why we have two different rates. Administrator Stevens said you'd have a capital charge and a usage charge, and that's why there's a value to having a rate study done so options can be discovered. Engineer Levitt stated it would be necessary to determine those getting the benefit of the water are those paying for it. We need to analyze potential water treatment and what those costs will be and also analyze the depreciation schedule, etc. A utility rate study typically will take three-to-six months; they analyze data for the last five years, coupled with capital expenditures, which of those are pending, and the new regulations in place and what that will do to future water usage. The Public Services Commission could analyze some of the different theories and ideas. We also need to educate the public regarding rate changes. None of the rates would be effective in the next budget cycle; they'll first be developing policies regarding Fund balances. Mayor Bailey asked if they'd give us legitimate Fund balance targets; if there was going to be a rate increase, he'd like to be able to quantify exactly the reason(s) for that. Administrator Stevens stated that yes, that'd be what we'd get with this rate study; options for rates, what should be maintained in reserves for operational costs, how to factor that into our rates, and a plan on how to phase in rate changes. There may be various rates for City Council Meeting Minutes April 5, 2017 Page 14 large commercial versus residential and guidelines for how to balance those rate structures would be provided. Council Member Johnson stated if the City achieves the goal set by the DNR, the City would be hurt by that as that would mean decreased revenues; therefore, we need to figure out what to do if we're successful in achieving that goal. If the residents want water, the City has to pay to get them water; from that point on, the residents get to make the decision. Administrator Stevens stated that's the point of the rate study. Director Roland stated with the rate study we'd have justification for any rate increase. The study could be fallen back on as justification when residents ask why their rates are being raised; it's an outside organization who would give the City information in a professional and logical way. Administrator Stevens stated they'd run those scenarios in various ways and give Council the options to how to effectively structure the rate to achieve the City's goals and how they'd compare across the region. Engineer Levitt stated, per the DNR, we must have a tiered-rate structure. Council Member Thiede asked if they could have a fixed rate for a certain property type and a tiered rate for another property type; Engineer Levitt stated she'd have to check the State Statute to see if it could be broken down by zoning types to that degree. Mayor Bailey said with a flat rate you might not get the conservation you'd want. Mayor Bailey understood they'd like to move forward with the study, and he asked if there was a cost estimate on that; Engineer Levitt stated it could cost anywhere from $40,000 to $70,000, depending on the consulting firm. Administrator Stevens stated they were trying to determine tonight if there was enough interest to go forward with getting proposals and bring those proposals back to the Council for review. If there's not interest in moving forward with a rate study done by an outside firm, they'll continue with the existing rate structure. If they'd like to get a more comprehensive look at this issue, they'll seek proposals and bring them to the Council with a recommendation. She stated City staff did not have the ability to do such a complex study in house. Council Member Thiede asked about the justification for the benefit and to try to monetize that benefit; Mayor Bailey stated the benefit would be they'd be able to have a sufficient Fund balance to cover the infrastructure costs without having huge peaks and valleys. Mayor Bailey felt they should go forward and bring back some proposals. Mayor Bailey asked what water strategies could be put in place regarding automatic sprinkler shutoffs, certain types of toilets or faucets used, etc., which would help us get to the level where the DNR wants us to be. He wondered if new policies had to be created or if there were other options available to citizens or businesses, which could offer them a rebate. Engineer Levitt replied that other cities are taking the higher fees and putting them toward grants to offer back to the citizens; there are different ways those things could be structured to reward people for conserving water, as some cities are offering water audits to help citizens conserve water. Council Member Mills asked with the study if they'd also look forward regarding where City Council Meeting Minutes April 5, 2017 Page 15 the City's future water will be coming from, especially if we don't conserve enough; Engineer Levitt stated that would be included, as they're looking at the future and want to be successful. Council Member Mills asked regarding the conservation if the City should possibly reinstate the Environmental Commission to be a part of helping get the citizens educated regarding how they could conserve. Engineer Levitt stated they could develop a work group from the community, engaging people who have a passion for conservation to be a part of that group. Administrator Stevens felt we didn't have the product yet to answer that question. Council Member Johnson felt trying to educate the community to use less water will be difficult when builders are promoting products that use maximum water, Associations are encouraging sprinkler systems, etc. He felt it's almost like you'd have to make them hurt to make them decide. Administrator Stevens stated that's why there's generally two tiers, to get a water rate that makes it appealing for individuals to conserve. Engineer Levitt stated the question tonight is whether they should move forward with the rate study; all of the Council Members agreed that the rate study should be done. B. River Oaks Update — Quarter 1 Staff Recommendation: Review and update only, no action required. Administrator Stevens stated this was an opportunity to give an update on River Oaks for the first quarter of 2017. This year will be the first full golf season where The Eagles Bar and Grill will be operating. She stated Director Zac Dockter and Recreation Supervisor Molly Pietruszewski were present to answer any questions. Many questions were asked and comments made by the Mayor and Council Members regarding the overall feeling from customers regarding the changes made; if the business plan that was put forward was being met; the possibility of a Sunday brunch; menu changes; staffing and service issues; the opening of the golf season; equipment issues; and how to potentially fill staff vacancies. Administrator Stevens, Director pockter, and Ms. Pietruszewski stated they'd worked hard to rebuild and restore confidence with people who are booking banquets that they'll have not only high-quality food but also great service. Administrator Stevens felt the grab and go options for golfers will be helpful this year as it didn't exist last year; it's adapting to the customers during the daytime. They're recommending people call ahead; the menu with the grab and go options will be on the golf carts. Director pockter stated the first quarter of any year has never been very successful, and Administrator Stevens stated the volume's just not there yet. Mayor Bailey stated he was encouraged when looking at the totals for March, which are above the target. Reasons target goals weren't met included customers using coupons, happy hour pricing, customers ordering an appetizer as a meal, customers splitting meals, etc.; thus, the $9 goal per meal decreased. Alternatively, Fish Fry was a $15 meal, which City Council Meeting Minutes April 5, 2017 Page 16 pushed up the goal. Mayor Bailey noted that Friday and Saturday were the best business days and Sundays were the worst. Director pockter stated they took the data and looked at what was working and what wasn't working; they kept doing what was working and fixed what wasn't. It was felt a Sunday brunch would substantially boost the numbers. Director pockter stated that right now they just didn't have the equipment to make that happen. However, he felt they should be open on Sunday morning as opposed to Sunday evening, although they need a steam table to keep the food warm for a brunch. Mayor Bailey asked about the cost of a steam table; he was told they could be picked up relatively inexpensively. Administrator Stevens felt they had to get to a more consistent level of staffing and service delivery. Administrator Stevens stated they were trying to build up staff; they need to get more staff for banquets, etc. At that point, more service options could be added. Perhaps appetizer prices could be increased and the entree portions could be decreased; that way customers might order dessert and/or another beverage. Adjustments could be made to turn things around. The budget depends on $4,000 a month in desserts and we're not even coming close, so that should be reevaluated. Director pockter agreed. Administrator Stevens stated that's what's being done; if everything else goes the way it should, then that could be reevaluated, but the $4,000 will need to be picked up somewhere else. Director pockter stated he felt it's too early to fix it right now; they wanted to take a whole year to figure out what changes should be made. Changing the food portion sizes might help boost dessert sales. If you're already bringing part of the meal home, you wouldn't even be thinking about dessert. They were also finding with happy hour specials, people would order some drinks, have a few appetizers, and then would not order anything else, or a couple might split a meal. Perhaps appetizer prices could be increased and the entree portions could be decreased; that way customers might order dessert and/or another beverage. Adjustments could be made to turn things around. Mayor Bailey stated he's heard a lot of positive comments about the atmosphere and the new bar. Someone thought the banquet area carpeting was new, but it had just been cleaned. The physical work that was done made it much more presentable. Once staffing is adequate, Mayor Bailey hoped they could do a Sunday brunch. Mayor Bailey stated that people who have been coming in for Friday Fish Fry will probably not continue to come in once that ends, so he wondered what else they could do to bring them in again. He'd hate to lose the feel of what's happening on Fridays. Director Roland stated she and Director pockter and Administrator Stevens have talked about the bottom line; it was a very good result given the situation we were in. She felt City Council Meeting Minutes April 5, 2017 Page 17 it said a lot about the strides that were made last year and felt those could be built upon this year. Mayor Bailey stated he was very impressed that they were over $11,000 on the opening day of golf, which was amazing, and hoped with the continued nice weather, they'd be busy. Administrator Stevens there were three legs to the stool and the whole facility is not successful if all three aren't successful; they need to rebuild the banquet business and keep the golf side and The Eagles Bar and Grill doing well. She felt they could reevaluate sometime in September and have a better overall sense of how things are going. City employees potentially covering some staff vacancies at the golf course was discussed; however, Administrator Stevens stated that could not happen because they're bound by the Fair Labor Standards Act (FLSA). Any hours worked over 40 hours would be paid as overtime; even with part-time employees, if they exceed a certain number of hours, benefits would need to be paid. Mayor Bailey asked Ms. Pietruszewski how many banquets had already scheduled for this year; Director pockter stated he believed it was 70 or 71. Ms. Pietruszewski stated she's booking one or two every day. Also, May will be a big month for athletic banquets. Mayor Bailey asked if they'd received any comments on the menu of the banquet side; Ms. Pietruszewski stated people were really excited about new items on the menu and they've received all good comments. Mayor Bailey asked if things were good from a technology standpoint; Ms. Pietruszewski said as they work on budgets, they'll determine what they'll want to update next. Right now they're okay; she said there are not enough plug-ins to host 50 people from 3M due to their laptops, phones, etc. Administrator Stevens stated if we want to do buffets, we'll need to invest in equipment (steam tables), which will be an upgrade, and the barbecue grill also needs a handwashing station. 14. WORKSHOPS — CLOSED TO PUBLIC — NONE. 15. ADJOURNMENT Motion by Council Member Dennis, second by Council Member Thiede, to adjourn the meeting at 9:41 p.m. Motion carried: 5-0. Minutes prepared by Judy Graf and reviewed by Joe Fischbach, HR Manager/City Clerk.