Loading...
HomeMy WebLinkAboutMinutes i� ��tJV� �ri°t � y � ............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... ���� �ri e ar�d PC�� t MINUTES COTTAGE GROVE CITY COUNCIL June 20, 2018 COUNCIL CHAMBER 12800 RAVINE PARKWAY SOUTH SPECIAL MEETING - 6:00 P.M. - ST. CROIX CONFERENCE ROOM 1 . CALL TO ORDER Mayor Bailey called the workshop meeting to order at 6:00 p.m. 2. ROLL CALL Mayor Myron Bailey, Council Member Steve Dennis, Council Member Wayne Johnson, Council Member La Rae Mills, Council Member Dave Thiede, City Administrator Charlene Stevens, Finance Director Robin Roland, Public Safety Director Pete Koerner, Deputy Public Safety Director Greg Rinzel, Deputy Public Safety Director Randy McAlister; Cathy Mohr, Assistant Finance Director; Joe Fischbach, HR Manager/City Clerk; Christine Costello, Economic Development Director. 3. AGENDA ITEM A. Budget Workshop City Administrator Charlene Stevens stated they've actually started to prepare the 2019 and 2020 budgets; Department Heads have been given their budget, and they've been given a target of 3%. Finance Director Robin Roland stated they're looking at levies for 2019 and 2020. When we issue debt, we have required debt service levies that are included in our levy; for 2019, those include the recently-issued Ravine Parkway bonds. We anticipate issuing bonds in 2019, one of which will be the HERO Center bonds; we're assuming about a $4,000,000 bond, although it may be less. Equipment Certificates we plan to issue for the refrigerant at the Ice Arena are currently in flux, somewhere between $2,000,000 and $3,000,000. Director Roland stated the 3% change in gross levy includes about a 3% increase in the General Fund levy. Other debt service issues include the refunding bonds for the Ice Arena at $190,000, the Central Fire Station bonds of$600,000, and existing Pavement Management debt from previous years. 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 June 20, 2018 Page 2 Director Roland stated in 2020 there's a 3% increase over 2019 for the General Fund; they're working on this way ahead of schedule. An equation used is for every $1,000,000 of debt that you issue, that will be $70,000 worth of debt levy that you have to add to your levy. So, $4,000,000 of bonding for the HERO Center will be $280,000; if that amount is added in, the levy jumps from about 4% up to 5.94%. If we add in the Equipment Certificates for the Ice Arena, that's approximately $2,000,000, so a cost of $140,000. So, just with the HERO Center and the Ice Arena, the debt commitments already agreed to in 2020 will be a 7.47% levy increase. That doesn't take into consideration any of the other projects that have been discussed, so the impact will be significantly more assuming those other projects are considered. Director Roland reviewed the tax base and the levies for 2018 through 2020. Because the level of growth and the tax levy aren't increasing at the same level, you'll see a decrease in the tax rate. For 2020, it will be about the same tax rate, if we assume a 7% increase in the base, which would be consistent with both the commercial and residential growth in the tax base. Director Roland stated a 3% rate is pretty common, but she felt the Council needs to focus on what's going to happen in 2020; decisions made in 2019 regarding bonding have an impact into future years. Director Roland reviewed the Washington County tax rates from 2017 to 2018. Should we find ourselves in a recession, we will need to think about how much our tax base is either going to stay the same or decline and maybe not grow as much. Council Member Johnson asked what Cottage Grove's current growth rate is for homes; Director Roland stated it's expected there will be an increase of 9% in 2019. Director Roland stated 2020 will be impacted due to the HERO Center, the Ice Arena, and anything else that the Council deems is important in 2019. Further discussion took place regarding potential tax increases by both Washington County and ISD 833. Director Roland stated regarding the HERO Center, she anticipates issuing the bonds early, probably in January, 2019; because these will be Capital Improvement Plan Bonds, there will be a 30-day reverse referendum, so we'll need to make sure that's in our plan. The debt will need to be issued in order to support our side of the construction of that project; they're working with the State right now on the Capital Bonding Grant Agreement. Mayor Bailey asked if the land Cottage Grove is donating was included in the $4,000,000 cost; Director Roland stated that Cottage Grove will get credit for the land. Administrator Stevens stated that Woodbury would actually reimburse Cottage Grove for their portion of the land; we believe the land is also reimbursable from the State, so Cottage Grove would get a credit. Director Roland stated they're using numbers on the high end, but the bonding amount might be only $3,200,000. Administrator Stevens stated they're working with some other partners with possible contributions, so the bonding amount may be reduced further; they have not yet accounted for those in the capital costs. For budget purposes they think the bonding amount will be lower than initially expected. Regarding operations and maintenance costs, that will most likely be in late 2019 or early 2020. Director Roland stated she'd worked with Deputy Director Greg Rinzel on City Council Meeting Minutes June 20, 2018 Page 3 the operating budget; they're being conservative on the amount of revenue they're actually going to collect. Additional revenues include rental of the range from different agencies and potential rental fees from either schools or other agencies. They anticipate very minimal revenue initially; also, operating expenses, including maintenance, can be handled by Woodbury and Cottage Grove. In 2021 and 2022, the revenue should increase slightly due to agency rentals, and expenses will then have to perhaps include half a year of a full-time manager due to the increased use; that would increase expenditures over revenues. Much discussion ensued regarding future revenue; other sites currently in business aren't able to keep up with the demand, and how that revenue should cover operating expenses. They wanted to provide Council with just the initial conservative estimates. Administrator Stevens stated that now that this project is actually funded, it's easier to get other Cities to consider being partners on this project. Council Member Mills asked if they've been contacted by any other agencies who have expressed interest in our site. Deputy Director Rinzel stated he's spoken with Metro Transit, who currently shoots at all the different ranges, and he'll be meeting with their staff. Metro Transit is currently experiencing difficulties in trying to find available range space. Mayor Bailey confirmed with Director Roland if our Finance Department would be doing the financials; Cottage Grove will also be charging administrative fees to Woodbury for that service, reports, etc. Mayor Bailey asked if after operating expenses were deducted and there was money remaining if the idea was to put that money aside for repairs, replacement, etc. Director Roland stated that would be the case and Administrator Stevens indicated those future costs are part of the operating budget. Deputy Director Rinzel stated costs are split with Woodbury by the number of officers Woodbury employs and the number of officers Cottage Grove employs; the costs will be based on a percentage of the use. If another agency wanted to buy into the HERO Center, their percentage would have to be calculated, for both profit and loss. There are fees associated with snow removal, etc., which will be performed by Cottage Grove Public Works, so that will be paid to Cottage Grove. Mayor Bailey asked if there was a tentative groundbreaking date; Administrator Stevens stated they'd anticipate that would be this fall, but they're in process of getting a contract finalized with MMB Construction. The Memorandum of Understanding with the City of Woodbury also needs to become a Joint Powers Agreement. They're anticipating construction in 2019 with an opening in fall, 2019. Council Member Mills asked if the other similar facilities that are currently operating are breaking even; Deputy Director Rinzel stated they each use different mechanisms by which they collect revenue and divide costs. One of them just added a $1,000,000 addition, but didn't raise their rates to do so because it was money they had on hand. Mayor Bailey asked if we go to referendum next year for the Community Center and it eventually comes out of the tax roles, if that would be a separate item on the tax bills; City Council Meeting Minutes June 20, 2018 Page 4 Director Roland stated that it would be a tax capacity referendum, which is part of our regular levy. If it's a School District referendum, that's on a separate line and that's a market rate referendum. Mayor Bailey asked if one or the other was better than the other; Director Roland stated she'd have to check into that. Mayor Bailey stated he just wanted transparency for the citizens. Council Member Dennis asked what they were predicting for cost of living and benefits for the budget; Director Roland stated the 3% is already factored into the existing contracts, as well as for the non-represented staff. Health insurance is expected to increase 7% to 10%, so those are already incorporated into the salary and benefit numbers. Council Member Dennis asked Director Roland what percentage the valuation of homes might increase this year; Director Roland stated the 9% comes out of the tax valuation statements that everyone received at the beginning of this year. Of that 9%, Washington County estimates about 2.5% of that is due to new construction. The balance is about an evaluation increase of 25% to 50% of the properties within Washington County. Council Member Johnson asked Council Member Thiede if he was okay with the 3% as long as it didn't affect residents' taxes; Council Member Thiede stated he wanted us to maintain level taxes, as he felt that was really important. If 2020 is 7%, if we're actually experiencing enough growth that that percentage also would have little or no impact on an individual homeowner's taxes, he'd be okay with that. Director Roland stated they'd be given an estimate of what the impact would be on the average taxpayer in the community; they'd be given that information at the budget presentations in July and August. 4. ADJOURNMENT The Workshop Special Meeting was adjourned at 6:48 p.m. Minutes prepared by Judy Graf and reviewed by Joe Fischbach, HR Manager/City Clerk.