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04-10-07 WSApril 10, 2007 Page 1 MINUTES CITY COUNCIL WORK SESSION -April 10, 2007 A work session of the Hopkins City Council was called to order by Mayor Gene Maxwell at 6:40 p.m. on April 10, 2007, at the Hopkins City Hall. Council members Kristi Halverson, Bruce Rowan and Jay Thompson were present. Council member Cheryl Youakim arrived at 9:30. City personnel present were City Manager Rick Getschow, Assistant City Manager Jim Genellie, Building Official Merwyn Larson, Housing Inspector Elizabeth Page and Police Services Liaison Kathy Magdal. Also present were Nate Stulc, Mike Smerdon and Dan Salzwedel of the County Assessor's Office, and Peter Leatherman of Decision Resources. Members of the audience who spoke to the Council were David Day, Doug Hammerseng, and Molly Grove of MHA. Rental Licensing Program Building Official Merwyn Larson said at present common areas of apartment complexes are inspected annually, and about 15-20 percent of units in each building are inspected on a 3-year cycle. The remaining 950 one- and two-family units are normally inspected on a complaint basis. The current rental-licensing ordinance requires owners to maintain their properties and to deal with tenant behavior. Regular inspections and tenant screening improve housing quality, increase property values, attract good tenants, and may decrease criminal behavior. The new proposal calls for an additional inspector so that one- and two-family rental dwellings can be regularly inspected on a two-year cycle, and for property owners to use acrime-free lease addendum on tenant leases and to do background checks. Staff suggests raising the fee from $20/building and $5/unit to $100/building and $6 per unit to cover the additional cost. A public meeting was held January 30, 2007. Additional meetings have been held with individual owners. The major themes raised by individuals have been: (1) most support the crime-free program but don't feel property maintenance inspections will affect the crime rate; (2) neighbors strongly support inspections, but owners have suggested the city accept HUD or other government agency inspections in lieu of city inspections and that the cycle vary by inspecting problem properties more frequently and trouble-free properties less often; {3) most owners feel the increase is too big and will make properties noncompetitive with surrounding areas. He noted Hopkins has very low fees compared to other cities. An average apartment would increase $0.64, ranging from $0.11 to $2.31 per unit per month. Condo rentals require more administration than apartment buildings; if condos are treated as apartments revenue reduction would be about $23,500. Possibly condo associations could take on part of the responsibility fora 20°lo reduction in fees. In response to owner comments, staff is discussing lower rates for owner-occupied properties or rental properties with a nearby owner with the city attorney. A reinspection fee is already in place. In answer to Council members' questions, he said that HUD inspections are often done by someone from out of state and often don't focus on Hopkins issues, such as environmental issues. We could not use their inspections in court cases. Mr. Getschow said he is not sure if government agencies would share their documentation and noted that they do only apartments, not single-family or duplex units. Mr. Larson noted that in April 10, 2007 Page 2 the rental licensing fee chart, the Total Revenue column was computed with Hopkins numbers times the other cities' charges so a real comparison could be made. Area fees range from $.00 to $150.00 for single-family units; $0.0 to $200.00 for two-family units; building fee of $55 to $140 and unit fee of $.0 to $19 for apartment buildings. The present proposal for Hopkins is $100 for single-family units; $100 for two-family units, and $4.00-$6.00 per apartment unit with a base $100 per apartment building. Ms. Page noted duplexes, townhomes and single-family dwellings have fewer maintenance issues than apartment buildings. She feels the most important issue is the crime-free addendum and resident pre-checks, which most apartment landlords already have in place. Single family landlords often do not. Answering Mayor Maxwell, she said she works with all properties, not just rental, but she does get referrals from agencies (including the police) and neighbors. Ms. Magdal noted that a sample crime-free addendum would be sent with license registration materials. Answering Mr. Thompson, Mr. Larson said 450 inspections can be done in a year, so the 900 one- and two-family units would be on a 2-year cycle with a fulltime inspector. Mr. Thompson observed that if the whole community benefits from more frequent inspections, he would support paying part of the cost from the general fund. Answering Mayor Maxwell, Ms. Page said property owners are always notified of an upcoming inspection, and the notice includes a checklist of common problems and fire prevention issues they can use to eliminate problems beforehand. She has to go back for a reinspection on over half the properties. Answering Mr. Rowan, she said the most common infractions with apartments are connected to smoke detectors and emergency back-up lights. Answering Mayor Maxwell, she said smoke detectors are usually battery-operated in older buildings and hard-wired (with battery back-up) in newer buildings. She does not know of any programs to help landowners buy smoke detectors. Mayor Maxwell asked for audience comments. Mr. Day said he has a double bungalow, which he occupies. He does his own screening. He feels if his property is inspected, every Hopkins property should be inspected, whether rental or not, because he sees many properties with problems. Targeting rentals isn't fair. Mayor Maxwell commented the Council is trying to find a way to take care of the problems, yet be fair to everyone. Mr. Hammerseng said he has had to reduce rents for his double units in the past couple years. He sometimes "carries" tenants so they can stay there. Even $5 a month would really affect them. He has never had a police issue and feels it is not fair to penalize good owners. Comparisons to other cities are not fair because it isn't known what other cities do in their inspections. He has no objections to the crime-free addendum. Mayor Maxwell said it is a quality of life issue, everyone should feel safe. Mr. Hammerseng responded then everyone should pay for it, not just the landlords. Ms. Grove says higher licensing fees really impacts landlords, who are already paying increased taxes and upkeep. Local landlords pay $1.4 million in taxes. The crime-fi~ee addendum and background checks are okay, but courts do not always help landlords get rid of problem tenants. She noted that expecting landlords to attend noontime meetings is unrealistic as many landlords have fulltime jobs. Mayor Maxwell suggested half the meetings could be evening meetings. There were no other audience comments. Mr. Getschow said staff and the Council will keep working on the program and keep accepting public comments. He would like to have Council consensus as staff moves into drafting the ordinance. The fee schedule will affect the 2008 budget. Mayor April 10, 2007 Page 3 Maxwell said he would like to consider Mr. Thompson's suggestion, so it would need to be settled before the budget work starts this summer. Mr. Getschow noted housing inspections may already being subsidized by the general fund. Mr. Thompson asked when the fee had gone to $20. Ms. Page said five years ago. Mr. Thompson said he would like a history of the fees so there could be a comparison to the inflationary rate. He also would like to know what the units cost us. Mr. Rowan said it is important to keep in mind this is a licensing fee, not an inspection fee. Licensing and inspections need to be looked at separately. Ms. Halverson agreed as other cities have different inspections. She asked what percentage is now paid out of the general fund. Mr. Larson said it is 40 percent fees, 60 percent general fund. Mr. Thompson said Ms. Youakim had given him some points to consider. She felt if the owner lived onsite, there should be a discount. Perhaps there could be a cap on the fees per number of units. Mr. Rowan said he felt Levels 1-3 should be different for different types of rentals. Ms. Halverson agreed. Mr. Rowan said the argument other cities are higher is not a good argument. Mr. Genellie said that the purpose of using other cities' figures was solely to make sure staff was not "outrageous" in their estimate for needed increases. Mr. Thompson commented the Council in the past has tried to get the entity causing the expense to pay more of the cost. The Council's job is to figure out who pays what percentage. He and Mr. Rowan both fee] the burden should be more on the problem landlords, not the ones with a good record. Mr. Larson said he had received an e-mail today about the St. Paul system, which uses a point system to determine how often inspections will be done, etc. Mr. Genellie said since the 2008 budget work will start in June, the proposed ordinance should be done before then. Annual Assessor Update Mr. Stulc said there were 100 residential sales for this assessment year (as compared to 137 the year before). Overall, Hopkins had a 2% median growth in residential properties values. There were 64 condo sales from private seller to buyer (non-developer sales), compared to 73 the previous year. Values stayed the same or declined slightly. Townhomes had 47 sales, compared to 52 previously, and also stayed the same or declined slightly. Double bungalow sales were down and depreciated 4.5%. Hennepin County assessors concentrated on north Hopkins this past season; values went both up and down -some increased $50-60,000; others were valued $20-30,000 less. Mayor Maxwell asked in a substantial increase like $50,000, why couldn't the increase be spread over two years. Mr. Stulc said it would not be fair to other residents who have to pay the full cost for their increases. Mr. Getschow noted limited market value and tax deferral for senior citizens both could come into play here. Mayor Maxwell asked what would happen if the owner brought in an appraisal with a lower value; for example, the previous valuation was $233,00, now will be $268,000, and he gets an appraisal for $250,000. Mr. Stulc said the owner should call him, give him a copy of the appraisal, and he would take another look at the property. He added sometimes large lots could be subdivided, and that makes land values seem high. Answering Mayor Maxwell, he said empty lots are selling for $90-125,000. He has received about 55 calls and reviewed 20 properties in Hopkins. Mr. Thompson noted the valuations are much better since the April 10, 2007 Page 4 County started doing the assessing. Mr.Salzwedel added the biggest problem is that values are always behind the current trends as they are based on the previous year's sales. Mr. Salzwedel said the commercial/industrial real estate is doing well. His estimates ran very close to actual sales, at 94%. There were 10 sales in Hopkins this past year. There was a median increase of 10%. He got only 4 calls this year. He noted apartment values stayed flat, adding that income figures are a basis for figuring value. Mr. Getschow noted that there is presently a bill in the legislature that would require apartment owners to have crime-free addendums to get a property tax break. The "open book" session will be May 7, from 4:00 to 7:00 in the Raspberry Room of City Hall. City-wide Survey Peter Leatherman of Decision Resources handed out a rough draft of the survey questionnaire. Rather than focusing on specific areas, this survey is a more general "quality of life" survey. He noted Decision Resources has been in the business 18 years. They have worked with every neighboring community and school district in the past 3 years. They have a huge data base so Hopkins can compare their results with other cities. The survey would involve 400 telephone calls, which would be placed by random digit dialing. A pool of 400 guarantees results +/- 5% and is large enough to allow "break-outs" such as senior citizens, families with children, etc. Answering Mr. Rowan, he said cell phones have not skewed the process as only 2% of the city population and 1% of the suburban population have only cell phones. Answering Mayor Maxwell, he said the typical call lasts 20-25 minutes. Some residents get so involved, the calls last longer. Refusals are rare. If the surveyor calls at an inconvenient time, a convenient time is agreed upon. They avoid gender bias by asking for the adult over 18 whose birthday is closest to the day of the call. While there are 125 questions, some of those are "branch" questions which follow up on specific answers, so most people do not answer that many. The questions are tested by a pre-test of 40 calls. Mayor Maxwell asked what had been budgeted for the study; Mr. Getschow said $20,000. Mr. Rowan pointed to a question on whether residents would want council meetings available on the city web site. Mr. Getschow suggested instant run-off voting. Mr. Leatherman said a short explanatory paragraph could be written to introduce that question, but there could be a lot of "I don't know's." Mayor Maxwell commented that in that case the Council would know there needs to be more public education. Mr. Getschow brought up economic redevelopment, with perhaps a specific question on Mainstreet redevelopment. General Consensus was to include the suggested topics in the questionnaire. Mr. Leatherman said Council members should go through the sample questionnaire and get back to him with suggestions by next week. The poll would occur over 2-2'/z weeks in May. It will take 2 weeks to tabulate results, so the Council should get the information based on the poll by early June. April 10, 2007 Page 5 Other Mr. Thompson asked about rail cars with ethanol residue being parked near Shady Oak. Mr. Rowan asked where the rail cars would be parked. Mr. Getschow said the cars would be assembled into a train near Dominick Drive. Ms. Halverson noted that on Channel 4 a clip on Lino Lakes Citizens' Academy showed the fire department putting out a car fire. Mr. Getschow said he will be giving a presentation at the Minnesota League of Cities on citizens' academies. Mr. Getschow reminded Council members Citizens' Academy graduation is at the next Council meeting. Ms. Youakim arrived at 9:30 and reminded Council members to look at the legislative survey sent to them by e-mail. Mr. Getschow said staff is working on a tax base sheet and a graffiti program. A weakness in the present graffiti ordinance is that there is not a set period of days for abatement. There may be a story in the S~~rt Sailor. On motion by Ms. Halverson and second by Mr. Thompson, the meeting adjourned at 9:40 p.m. on a vote of 5-0. Kasey Kester, Secretary ATTEST: Eugene 3. axwell, Mayor