CITY COUNCIL SPECIAL MEETING MINUTES December 16, 2013 7 ...
CITY COUNCIL SPECIAL MEETING MINUTES December 16, 2013 7:00pm 1) Call to Order Fischer called the meeting to order at 7:00pm. In attendance: Mayor Cheryl Fischer, Council members Mark Vanderlinde, Anne Hunt, Arlene Donahue and Bob Christians, City Administrator Mike Funk, Finance Officer Brian Grimm, Assistant City Administrator Mike Barone, Director of Public Safety Paul Falls, City Engineer Mark Erichson (WSB) and City Clerk Terri Haarstad By unanimous consent, the City Council approved the agenda as amended. Switch items 2 and 3; hearing the Franchise Agreement with Mediacom first and the 2014 Budget Approvals second. 2) Franchise Agreement with Mediacom Funk presented the staff report as found in the packet dated December 16, 2013. Bryan Grogan, attorney with Moss and Barnet, reviewed details of the agreement as found in the packet dated December 16, 2013. Discussion included:
Paying back the capital provided by Mediacom to purchase equipment Fiberoptics Accessibility and 15 homes per square mile density requirement for access Term length of contract
a) Approve Ordinance No. 415 Adopting Cable Franchise Agreement Motion by Hunt second by Vanderlinde to approve Ordinance No. 415 Adopting the Cable Franchise Agreement with Mediacom. Motion carried 5-0. b) Approve Res No 158-13 Approving Publication of Ordinance 415 by Title and Summary Motion by Hunt second by Vanderlinde to approve Resolution No. 158-13 Approving Publication of Ordinance 415 by Title and Summary. Motion carried 5-0. 3) 2014 Budget Approvals Grimm introduced Todd Hagen and Nick Anhut (Ehler’s and Associates). Hagen informed the City Council that recently new bond rating standards have been implemented industry-wide. He informed the City Council that Minnetrista’s bond rating will be re-evaluated within the coming year and introduced Nick Anhut (Ehler’s and Associates) to provide details about how this is likely to impact Minnetrista.
Anhut provided the City Council with an explanation of the bond industry. He provided an overview of the bond ratings possible and explained that the higher the bond rating, the lower the interest rates will be. He explained the new industry wide quantitative bond rating factors including institutional framework, the economy, management, financial/budgetary flexibility, financial-budgetary performance, financial liquidity and debt and contingent liabilities. He provided an estimate of where Minnetrista’s bond rating would fit within these criteria using the City’s 2012 Audit report. Funk pointed out that the City is only 0.4% away from having its bond rating downgraded from AA+ to AA. Because the City is growing and the tax base has been reduced and is not being raised to meet demands of growth, red flags are starting to be raised in the bond industry. He informed the Council that he is not trying to force the Council to take a specific action but that he feels obligated to for make certain that the Council is fully informed about potential consequences of decisions. Grimm confirmed that during the several bond bid rating processes, staff was asked questions about the reasons for reduced and flat levies. Hagen reminded the Council that projects need bond money and that bond ratings are about attracting financiers and bond bids. He pointed out that when the City has a higher bond rating, it will have more bond bids and more choices. It also serves to attract developers and is a key factor in economic development. Anhut confirmed that Ehler’s and Associates cannot definitively say that the City’s bond rating will be reduced if the Council votes for a flat levy; however, there is a significant risk of reduction in bond rating if the overall tax levy is flat or reduced. Grimm provided an overview of what other communities have done in terms of tax levies. Funk provided a detailed explanation of why an increase was needed. Discussion included: Why budgeted permit revenue figures were conservative Cable franchise fee income a) Adopt Res No 159-13 Approving 2014 Tax Levy Motion by Donahue second by Christians to approve a flat gross levy of $3,878,323 for 2014. Motion carried 3 – 2 (Fischer and Vanderlinde). Vanderlinde stated that he cannot support a tax levy regardless of its popularity due to upcoming hard costs such as insurance increases, labor unions, fire contracts as well as upcoming needs like water treatment and roads. He pointed out that the 2011 Community showed that residents almost unanimously showed support for a tax increase if it went back to roads. He is also extremely concerned about the City going backwards in terms of its bond rating. Fischer described how far the City has come in the last twenty years and expressed concern that a flat levy would take the City backwards.
Christians stated that he cannot believe that the City cannot find $80,000 to make the budget work. He understands that you have to spend money to make money but he feels the permit revenue numbers are too conservative. b) Adopt Res No 160-13 Approving 2014 Budgets (General Fund, Special Revenue, Debt Service, and CIP Funds) Grimm presented the budget and requested the Council direct staff how they would like staff to balance it. Motion by Hunt second by Donahue to approve the 2014 budgets as presented using the reserves to make up the shortfall. Motion carried 4 – 1 (Fischer). c) Approve Res No 161-13 Updating Financial Management Plan Motion by Christians second by Hunt to approve the update to the Financial Management Plan . Motion carried 5 – 0. d) Approve Res No 162-13 Updating Utility Financial Management Plan Motion by Donahue second by Vanderlinde to approve the update to the Utility Financial Management Plan. Motion carried 5 – 0. Motion by Hunt to hold a special meeting December 23, 2013 to hear from Tony Hesberg who volunteered to conduct work on City branding on purpose. Motion died for lack of a second. By unanimous consent, the Council asked staff to add Tony Hesberg to the January 21 City Council agenda. Respectfully Submitted,
Terri Haarstad City Clerk
Paying back the capital provided by Mediacom to purchase equipment Fiberoptics Accessibility and 15 homes per square mile density requirement for access Term length of contract
a) Approve Ordinance No. 415 Adopting Cable Franchise Agreement Motion by Hunt second by Vanderlinde to approve Ordinance No. 415 Adopting the Cable Franchise Agreement with Mediacom. Motion carried 5-0. b) Approve Res No 158-13 Approving Publication of Ordinance 415 by Title and Summary Motion by Hunt second by Vanderlinde to approve Resolution No. 158-13 Approving Publication of Ordinance 415 by Title and Summary. Motion carried 5-0. 3) 2014 Budget Approvals Grimm introduced Todd Hagen and Nick Anhut (Ehler’s and Associates). Hagen informed the City Council that recently new bond rating standards have been implemented industry-wide. He informed the City Council that Minnetrista’s bond rating will be re-evaluated within the coming year and introduced Nick Anhut (Ehler’s and Associates) to provide details about how this is likely to impact Minnetrista.
Anhut provided the City Council with an explanation of the bond industry. He provided an overview of the bond ratings possible and explained that the higher the bond rating, the lower the interest rates will be. He explained the new industry wide quantitative bond rating factors including institutional framework, the economy, management, financial/budgetary flexibility, financial-budgetary performance, financial liquidity and debt and contingent liabilities. He provided an estimate of where Minnetrista’s bond rating would fit within these criteria using the City’s 2012 Audit report. Funk pointed out that the City is only 0.4% away from having its bond rating downgraded from AA+ to AA. Because the City is growing and the tax base has been reduced and is not being raised to meet demands of growth, red flags are starting to be raised in the bond industry. He informed the Council that he is not trying to force the Council to take a specific action but that he feels obligated to for make certain that the Council is fully informed about potential consequences of decisions. Grimm confirmed that during the several bond bid rating processes, staff was asked questions about the reasons for reduced and flat levies. Hagen reminded the Council that projects need bond money and that bond ratings are about attracting financiers and bond bids. He pointed out that when the City has a higher bond rating, it will have more bond bids and more choices. It also serves to attract developers and is a key factor in economic development. Anhut confirmed that Ehler’s and Associates cannot definitively say that the City’s bond rating will be reduced if the Council votes for a flat levy; however, there is a significant risk of reduction in bond rating if the overall tax levy is flat or reduced. Grimm provided an overview of what other communities have done in terms of tax levies. Funk provided a detailed explanation of why an increase was needed. Discussion included: Why budgeted permit revenue figures were conservative Cable franchise fee income a) Adopt Res No 159-13 Approving 2014 Tax Levy Motion by Donahue second by Christians to approve a flat gross levy of $3,878,323 for 2014. Motion carried 3 – 2 (Fischer and Vanderlinde). Vanderlinde stated that he cannot support a tax levy regardless of its popularity due to upcoming hard costs such as insurance increases, labor unions, fire contracts as well as upcoming needs like water treatment and roads. He pointed out that the 2011 Community showed that residents almost unanimously showed support for a tax increase if it went back to roads. He is also extremely concerned about the City going backwards in terms of its bond rating. Fischer described how far the City has come in the last twenty years and expressed concern that a flat levy would take the City backwards.
Christians stated that he cannot believe that the City cannot find $80,000 to make the budget work. He understands that you have to spend money to make money but he feels the permit revenue numbers are too conservative. b) Adopt Res No 160-13 Approving 2014 Budgets (General Fund, Special Revenue, Debt Service, and CIP Funds) Grimm presented the budget and requested the Council direct staff how they would like staff to balance it. Motion by Hunt second by Donahue to approve the 2014 budgets as presented using the reserves to make up the shortfall. Motion carried 4 – 1 (Fischer). c) Approve Res No 161-13 Updating Financial Management Plan Motion by Christians second by Hunt to approve the update to the Financial Management Plan . Motion carried 5 – 0. d) Approve Res No 162-13 Updating Utility Financial Management Plan Motion by Donahue second by Vanderlinde to approve the update to the Utility Financial Management Plan. Motion carried 5 – 0. Motion by Hunt to hold a special meeting December 23, 2013 to hear from Tony Hesberg who volunteered to conduct work on City branding on purpose. Motion died for lack of a second. By unanimous consent, the Council asked staff to add Tony Hesberg to the January 21 City Council agenda. Respectfully Submitted,
Terri Haarstad City Clerk
