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02-10-09 WSFebruary 10, 2009 Page 1 MINUTES OF THE CITY COUNCIL WORK SESSION Tuesday, February 10, 2009 Mayor Maxwell called the meeting to order at 6:34 pm. Present were Mayor Maxwell and Council members Halverson, Brausen, Rowan, Youakim and City Manager Rick Getschow, Director of Planning and Economic Development Kersten Elverum, City Engineer John Bradford, State Senator Ron Latz, State Representative Steve Simon, Bill Beard and Ron Mehl. 2009 Legislative Agenda: State Representative Ron Latz and State Representative Steve Simon discussed the current 2009 Legislative session. Representative Latz stated that there is no money and there is a 5.5 billion dollar gap to close and it is going to be on the backs of everyone except maybe K-12 education. He stated that LGA is another large pot of money that is going to take it lumps. We can't close the gap by raising revenue at least not alone so there will be cuts. The human services area is going to take another big hit. The Governor is saying he wants to take the health care access fund and use it for the general fund on a permanent basis. The Democrats have strong majorities in the Senate and, close but not quite, in the House. The Governor is probably not going to that interested in compromising. Representative Latz stated that there are things that they can do which would include policies such as, the false claims act to rule out fraud against the government, homeowner protection plan, and southwest corridor light rail to name a few. There will be things that we can accomplish. City Manager Rick Getschow thanked Representative Latz and Representative Simon for the work that they did on the TIF legislation in 2008. Representative Simon stated that there are no good options right now. All of the options that are on the table right now are bad and we need to find the least of the bad. He stated that we were talking about 3.5 billion dollar budget last time and the hole is going to be about 6 billion. The pie chart of the budget of what the budget cover is 75 % of K-12, housing human services and higher education. There are 43 other states that are facing the same issues and the only ones that aren't are the energy producing states. We do not have a lot of options so we need to reprioritize. Representative Simon stated that they would take a list of mandates to assist cities and see what they could do on the cities behalf. City Manager Getschow stated that the city does have a list that they can provide for them to work on. Representative Latz stated that we are hoping that the federal government will give a 1 - 2 billion dollar stimulus package. Representative Latz also stated that they are talking about increasing the tobacco and alcohol tax, sales tax on services, racino, slots in bars, income tax surcharge, airport casino where we could recoup funds from people that are passing through as revenue items. Council Member Rowan stated that the Governor wants to eliminate funding for the arts. Representative Latz stated that the Governor wants to change it from the state agency to anon-profit that would rely on donations. Mayor Maxwell asked how is the money going to be allocated from the stimulus package. Representative Latz stated that the talk is that a billion dollars might go to the state's general fund to close the budget gap. Another one to two billion might go to services that would not be able to help us with our shortfalls such as transportation projects. February 10, 2009 Page 2 Representative Simon stated that he heard 1 billion would go to Medicaid and medical assistance. If we got up to 2 billion dollars more it would likely go to shovel ready projects. The commissioner of finance is in charge of stating where the money is going unless we pass laws right now stated where it must go. Some of the money will go into existing formulas that are in place now in terms of who gets what and how much. Council Member Rick Brausen stated that he is not happy that there is going to be cuts to healthcare access for between 80,000-90,000 people. Representative Simon stated that this is not a final decision, it is an opening bid. Rick stated that he doesn't think this is something that should even be discussed. City Manager Getschow stated that the City of Hopkins has sent requests to the State of Minnesota for the dollars earmarked for transportation. The projects have to be "shovel ready" and done from 90 days to 120 days, however, they have to be projects that you don't have in your CIP. City Manager Getschow stated that the healthcare is the number one driver in our city budget.. Health care premiums increased 16 % increase last year and will again next year. We are in a health care crisis and something needs to be reformed. Council member Rowan asked how we get our voices heard. Representative Latz answered that the democratic majority hear the voices more than the Governor does. In the end we need to come to a deal that the Governor is willing to sign. Representative Latz stated that they will push on their end but note that there will be pushing all around. The fact is that money is limited and resource options are limited as well. Council member Rowan inquired about the closing of other state offices one day a week. Representative Latz stated that it is already happening in the courts in Minnesota. Representative Simon stated that part of it is getting people to understand what the numbers are. True welfare is 1 % of the budget, State employees is 2%. So people don't have a clear understanding of the number. On the other side someone might suggest raising the taxes on the rich by 1 % which would yield about $400,000. Both sides need to understand the numbers and know that doing one of these is not going to solve the problems. City Manager Getschow stated that the Market Value Homestead Credit program is not a city program but rather a state program. There is $240,000 dollars that we are going to have to cut out of our current budget and plan for not getting in 2010 because the state said they aren't going to pay the city. The homeowner is still going to get the credit but the state is not going to pay the city to give to them. City Manager Getschow states that there are some very good state tax relief programs for seniors and for people with low income and/or disabled so we need to keep promoting those programs and there might be ways from a technology standpoint to help those people get connected. Some people do not realize that they can defer their property taxes or their special assessments. City Manager Getschow stated that our City Clerk put together a platform on the elections and Representative Simon stated that the City Clerk, Terry Obermaier had some great ideas and he stated that he is on the committee and they will work together to make it better. Mayor Maxwell stated that it is about parties working together. It is about educating and informing people and everyone working together. Mayor Maxwell thanked both Representative Latz and Representative Simon for coming and talking with the council. February 10, 2009 Page 3 Marketplace and Main: Director of Planning and Economic Development Kersten Elverum introduced Bill Beard and Ron Mehl to the Council. Kersten stated that about 2 years ago we started the redevelopment of the Marketplace and Main. She stated that it provided a $900,000 loan to the Beard Group to acquire the property and it also pledged TIF that the property would generate totaling about 1.8 million dollars. The agreement was in two phases. The first phase was the condominium project, construction starting to be done by October of 2008 and ending December 2009. The second phase was Townhomes and retail which had a little later start date of May, 2009 and ending June. 2010. Kersten stated that the world was a very different place two years ago and they have been working hard to keep the project going as we envisioned it and now there are a number of obstacles. The City has the ability under the agreement to terminate. It would require the Beard Group to pay back that $900,000 loan. Ron Mehl stated that the property was purchased in April, 2007 and they have done marketing which would include parade of homes, newspaper, listings on MLS, mailing campaigns and advertisements. The economy today has hurt them in that we were getting about 20 unique visitors through per week and now it is averaging about one or two and sometimes none. The condo market is not good right now. He stated that they are not able to hit the presale requirements. Ron stated that they would like to talk to Council about possibly converting to luxury rental on all three floors plus the retail. Doran Companies has provided them with a market study. The report said the vacancy rate was at 8.8 and now it is 4.4 for this type of development. There is currently no luxury rental in Hopkins so the lenders say they would get behind the Beard Group. The demand is there for luxury units. Mayor Maxwell inquired about how many units there are. Ron stated that the plan is for 53 units. Mayor Maxwell asked if the number of units is firm and Bill stated it is. They will not go with less. Mayor also was concerned with noise from unit to unit. Mr. Beard stated that it will be quality work and there will not be an issue with the noise. People want to live in Hopkins with the small town feel. Council member Youakim asked if the possibility of rent would go up would deter people. Mr. Beard stated that issue is an individual issue. Most people will be very happy to have a place with less work. It will be built with separate utilities so in the future it could be changed to condos. Council member Brausen stated that he thinks the feel of Hopkins is very small town feel and that you can walk all over to go shopping, library, drug store, movie theatre and etc.. He stated he likes the feel of an old town that has a lot of charm. He stated that this is a good opportunity. Ms. Elverum asked about the time frame that it would take to be in the ground and the financing commitment. Mr. Beard stated that there are two options which are conventional and HUD loans. The Beard Group has requests for financing right now that is going into review. Mr. Beard stated that it should be about 2 weeks before they hear from either one of them. They have been working with TCF and would like to work with the Beard Group. Mr. Beard stated that they would get the bids and start in the summer. Council consensus was to move forward with the luxury rental development plan. A revised redevelopment agreement would need to placed on an upcoming Council agenda for approval. February 10, 2009 Page 4 St" Street South Improvement Project: City Engineer John Bradford stated they have received some preliminary project numbers and held a small meeting with affected owners today. The total project cost is up to 1.3 million and the assessments are a little higher than originally thought. Based on these facts, Bradford stated that they are recommending that the project be pushed off one or maybe two years. The feasibility report and survey work that have been completed are still viable and will be used when the project is ready. He stated that they looked at completing an overlay as opposed to a reconstruct, but realized that was not feasible due to pavement and soil conditions. Mayor Maxwell suggested that the City Engineer send out a letter to all affected parties stating that the project may be delayed for at least a year, but that it will need to occur in the near future. Council member Rowan stated that this is the second of two street improvement projects planned for 2009 and he asked if staff considered delaying the other project. Getschow stated that the other project is much further along and the planning for this project has just begun. Council members also discussed the importance of repairing the sewer and water lines in the residential area that are not part of this project. Consensus was to delay the 5th Street Improvement project for at least one year and revisit this again as soon as next year. Other: Council member Rowan asked for further information on the utility bill increases for 2009. City Manager Getschow stated that he will get something to the Council. It was noted that the month the new fees went into effect was the same month that annual $6.00 state water fee was charged. Council member Youakim inquired as to state law pertaining to a caterer receiving an off-sale liquor license. Getschow stated that only an on-sale establishment can receive such a license and he will provide information on this topic. City Manager Getschow handed out information on information on the staff meetings he will be having with all the city departments related to city finances and goals. Getschow provided information on the upcoming level three sex offender notification meeting. Getschow stated that there is now an internal city committee on going green and the first meeting is on Wednesday. February 10, 2009 Page 5 Getschow stated that he would like to discuss at the next meeting an agenda for an upcoming faith community meeting that the Council would host. With no further business, a motion was made by Brausen, seconded by Youakim to adjourn the meeting. The motion passed unanimously. The meeting was adjourned at 9:45 pm. Debbie Sperling, Secretary ATT T: ~ ~ ~ p~~ ,.-~ Eugen . Ma ~ well, Mayor CITY COUNCIL