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HomeMy WebLinkAbout04-22-2019 Council Minutes MINUTES OF THE ORONO CITY COUNCIL MEETEING Monday,April 22,2019 7:00 o'clock p.m. ROLL CALL The Orono City Council met on the above-mentioned date with the following members present: Mayor Dennis Walsh, City Council Members Richard Crosby,III,Matt Johnson,and Victoria Seals. Representing Staff were City Administrator Dustin Rief,Finance Director Ron Olson, Community Development Director Jeremy Barnhart,City Planner Melanie Curtis,Public Works Director/City Engineer Adam Edwards, and Recorder Jackie Young. Mayor Walsh called the meeting to order at 7:00 p.m., followed by the Pledge of Allegiance. APPROVAL OF AGENDA CONSENT AGENDA 1. CITY COUNCIL MEETING MINUTES OF APRIL 8,2019 2. CLAIMS/BILLS 3. RESIDENTIAL RECYCLING SERVICES 4. APPOINTMENT OF 2019 SEASONAL EMPLOYEES 5. SEASONAL EMPLOYEE PAY CORRECTION 6. BACKUP GENERATORS FOR LIFT STATIONS#1 (1302 SHORELINE DRIVE)AND GS#9 (1222 BRACKETTS POINT ROAD) 7. GOLF COURSE DRAINAGE PROJECT 8. SURFACE WATER MANAGEMENT PLAN ADOPTION RESOLUTION NO. 6967 9. 2019 SANITARY SEWER 10. FIRST QUARTER FINANCIAL REPORT 11. LA19-000007 TOM RAUSCHER ON BEHALF OF DONALD AND HEIDI HABERMAN, 2799 PHEASANT ROAD,VARIANCES—REVISED RESOLUTION NO. 6966 The City Council requested the following corrections be made to Resolution No. 6966 Page 1, Item 7, 303 square feet of hardcover should read 313 square feet, and under proposed hardcover, Items K and L,the total square footage should not exceed 313 square feet. 12. LA19-000010 REHKAMP LARSON ARCHITECTS,2587 KELLY AVENUE, VARIANCE, CONDITIONAL USE PERMIT—REVISED RESOLUTION NO.6968 13. LA19-000011 JULIE LENSING,3349 CRYSTAL BAY ROAD,VARIANCE—DENIAL RESOLUTION NO. 6969 Page 1 of 5 MINUTES OF THE ORONO CITY COUNCIL MEETEING Monday,April 22,2019 7:00 o'clock p.m. Crosby moved,Seals seconded,to approve the Consent Agenda as submitted,with the above-noted revisions to the Resolution for Item No. 11. VOTE: Ayes 4,Nays 0. PUBLIC COMMENTS None PRESENTATION 14. 2017 AUDIT Michele Hoffman, Clifton,Larson and Allen,provided a summary of the City's 2017 audit results. Minnesota Statutes require that the City have an annual audit performed by a certified public accountant or the State Auditor. The audit was issued a couple of months ago. It should be noted that the audit provides reasonable but not absolute assurance since the audit does not test every single transaction. There were no major accounting policies adopted in 2017. The audit provides significant accounting estimates, such as the useful life of capital assets,valuation of investments,post-employment benefits,net pension liability, and related deferred outflows and deferred inflows. Full cooperation was received from management. Following review of the City's financials, Clifton,Larson is able to issue an unmodified or clean opinion on the City's financial statements. There were some exceptions to internal controls noted, such as preparation of financial statements. Audit requirements require that be noted in the internal control letter. Internal controls are regulated by a lot of complicated accounting rules and it is not unusual for cities to rely on their auditors for segregation of some duties. The audit looked at the City's controls over financial transactions that flow through the City. Good accounting practices state that no one employee should control a transaction from start to finish. Orono did have some areas where only one employee was responsible for that task, but the audit did not find anything concerning. Overall segregation of duties can be difficult when there is a smaller staff,which is fairly common in smaller cities. The audit also looked at journal entries. There was one material adjustment that was required which related to a debt service payment that was reported in the incorrect fund. The check signer review has also come up in the past. In certain situations,the actual invoices are not always being reviewed by the check signer and that area could be strengthened as well. There were no exceptions noted in regard to Minnesota legal compliance. The audit tested approximately ten different items, such as bids and quotes, and if there were any items that were not in compliance,those would be noted. As it relates to the General Fund,the unassigned fund balance,for the last couple of years it has been steadily increasing to just under$4.5 million in 2017. That number represents approximately 58 percent of the City's General Fund expenditures. Hoffinan noted that number typically should be kept at around 40 to 50 percent of expenditures,which amounts to approximately six months of expenses. City policy says around 45 percent and Orono did have some excess unassigned fund balances in 2017. With regard to the General Fund—Revenue,that has also remained fairly steady showing a slight increase each year. Public services, consisting of various police contracts,accounts for the second largest portion of that revenue,with property taxes being the largest. Other sources of revenues include licenses and Page 2 of 5 MINUTES OF THE ORONO CITY COUNCIL MEETEING Monday,April 22,2019 7:00 o'clock p.m. permits, intergovernmental,and user fees. Overall revenues have remained fairly steady over the past five years,with a slight increase being noted in 2016 and 2017. Expenditures out of the General Fund are comprised of general government expenses, streets,public safety, public works,recreation and parks, and other expenditures. The green bar on the chart represents municipal state aid,which has decreased the past few years. The amount collected in property taxes has increased slightly in the past few years. By far the two largest expenditures of the City are capital outlay, such as the new police garage, and debt service. Seals asked why there is nothing listed under licenses and permits in 2017. Hoffman stated she will have to check on that but that there was revenue received from licenses and permits. Johnson asked what revenue from governmental funds is. Hoffman indicated most of it would be debt service funds or tax levy dollars. The exact source would depend on the fund, but other examples would include municipal state aid or park dedication fees. Hoffman noted the main expenditure of the City is debt service,which has been decreasing over the past few years,followed by capital outlay for various projects. The enterprise funds are broken out into unrestricted(spendable) and operating income. In 2017 the sewer fund had approximately$3 million,the storm water fund had$1.5 million,and the water fund decreased to just under$800,000. Hoffman recommended the City keep an eye on the enterprise funds to make sure they can fund potential capital outlays in the future. Walsh noted back in 2015,the City had no road improvements budgeted and that this Council is now more focused on budgeting for infrastructure improvements. Starting in 2015,his mandate was not to bond any more but to budget for various infrastructure improvements. Over the past couple of years approximately$4.5 million in debt has been paid off. Decreasing the City's debt service will help the overall budget and has helped the City's cash position on the balance sheet consistently get better with the reduction in the debt. Hoffman stated the City should always keep a certain amount in reserves when considering whether to bond or not. Hoffman noted a couple of the enterprise funds were operating at a loss in 2017, such as the water fund, and the recycling fund had approximately a$14,000 operating loss. The sewer fund was approximately$1,000 in the hole. Hoffman stated it is fairly common to see operating losses in enterprise funds since that number also includes depreciation and that if the number only reflected operating expenses,those funds would likely be positive. As it relates to debt service, in 2017 there was a bond that was paid off,which is why the amount was larger in 2017. It is projected the City's debt service will decrease in the years going forward from 2018 through 2022. Hoffman stated last year she had a graph that compared the tax rates of neighboring cities,but the League of Minnesota Cities did not have that data available for 2017 on their website. That graph helped provide a nice idea of where Orono compared with neighboring cities. Page 3 of 5 MINUTES OF THE ORONO CITY COUNCIL MEETEING Monday,April 22,2019 7:00 o'clock p.m. Seals noted the City of Medina sent out a notice recently and they listed Orono as the lowest. Hoffman noted GASB Statement No. 75 will be applicable in 2018. The City currently has liability on its books for post-employment benefits, such as health insurance. The regulations have changed in how that liability is being measured. Those liabilities originally were allowed to be phased in over 30 years but that is being eliminated,and due to that change, it is likely that liability amount will increase slightly. GASB Statement No. 87 will be applicable for fiscal year 2020 and relates to how the City accounts for any leases it might have. As a result of this change, leases might end up having to be on the financials as a liability if the term is over a year. Hoffman recommended the City take an inventory of those leases. The City Council took no formal action on this item. PLANNING DEPARTMENT REPORT 15, CONSIDERATION OF SUPPORT FOR GRANT APPLICATION FOR LAKEWEST, LLC—RESOLUTION NO. 6970 Barnhart stated Lakewest,LLC,has submitted a request for City Council authorization of an application for a Tax Base Revitalization grant from the Metropolitan Council to assist in mitigation costs on the site. The applicant is proposing development of a former landfill site known as the Eisinger property. By state statue,the applicant must be a local government. The developer will make the application on the City's behalf. The deadline for the application is twice a year, May 1 and November 1. The attached resolution, if adopted, states the Council authorizes the application by Lakewest and that the City will administer the grant if awarded for a high-density housing project of 20-25 units per acre. The resolution does not state the Council will approve the project reviewed by the Planning Commission in April. Staff supports the application from an environmental impact standpoint since development of the property will require proper mitigation of the landfilled materials. Seals noted this resolution does not approve the proposed project. Johnson asked how much Staff time will go into this. Barnhart indicated he is not sure at this time but that typically cities will administer grants from time to time. It is not anticipated this grant will require a huge amount of staff time. Curt Fretham,Lakewest Development, stated he is here for questions and that he is hoping to get the City's support on the cleanup of the site. Walsh stated the application seems pretty straight forward. Johnson moved,Crosby seconded,to adopt RESOLUTION NO. 6970,a Resolution Authorizing Application for the Tax Base Revitalization Account. VOTE: Ayes 4,Nays 0. Page 4 of 5 MINUTES OF THE ORONO CITY COUNCIL MEETEING Monday,April 22,2019 7:00 o'clock p.m. MAYOR/COUNCIL REPORT Walsh reported over the past couple of weeks he has met with some of the residents regarding the roads and that it is the Council's intention to continue moving in the same direction with funding of more road improvements. It is the goal to increase the road management fund from$500,000 to$700,000 over the next year or two. CITY ADMINISTRATOR REPORT Rief commended the Orono Police Department for receiving the Minnesota Police Chiefs' top award for innovation for their community dog program. CITY ATTORNEY REPORT None ADJOURNMENT Seals moved,Crosby seconded,to adjourn the meeting at 7:42 p.m. VOTE: Ayes 4,Nays 0. AT EST: Anna Carlson, City Clerk Dennis Walsh,Mayor Page 5 of 5