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10-08-2013 CCMINUTES OF THE CITY COUNCIL WORK SESSION Tuesday, October 8, 2013 City Hall Raspberry Room— 5:00 p.m. The meeting was started at 5:09 p.m. Present were Mayor Maxwell and Council members Molly Cummings, Jason Gadd, Kristi Halverson and Cheryl Youakim, City Manager Mike Morrison, Finance Director Christine Harkess, Director of Economic Development and Planning Kersten Elverum, Community Development Coordinator Meg Beekman, Public Works Director Steve Stadler, Public Housing Manager Stacy Unowsky, Ehlers representatives Stacie Kvilvang and Jason Aarsvold, Cathy Bennett, ULI MN/RCM, Kerri Pearce Ruch, Hennepin County and Community Involvement Program representatives John Everett and Kim Vohs. New business: Financial Management Plan Mr. Mornson introduced the Financial Management Plan, a comprehensive look at a proposed financial plan for the city. City Department heads and staff met earlier today to review the plan. Ms. Kvilvang of Ehlers presented an overview of the reasons for and the results of a long-range financial management plan for the City of Hopkins. The findings demonstrated that the overall financial health of the City is good and that annual levy increases for the next 8 years (2015- 2022) will be needed. Issues that need further discussion are funding of the Hopkins Center for the Arts, Ice Arena operation & capital needs and General Fund balance reserve percentages. Ms. Kvilvang gave an overview of taxable tax capacity, general fund balance, what the levy pays for, historic & projected tax rates, projected tax impacts on an average home, existing debt and new debt. The Ehlers recommendation is that the Hopkins Center for the Arts (HCA), which was previously funded by the EDA fund, becomes part of the tax levy in order to begin repaying the HCA negative fund balance. Ms. Kvilvang reviewed the General Fund budget increases, tax levy increases needed by adding HCA and the Ice Arena beginning in 2015 and the tax impact to the average home. Ms. Kvilvang noted that future developments are not accounted for and will impact the tax capacity. Ms. Kvilvang reviewed the recommendations for fund balances and General Fund balance reserve percentages. It is Ehlers recommendation that the Capital Equipment Fund maintains a balance of $750,000 and Capital Improvements Fund maintains a balance of $300,000. It is also recommended to increase the balance reserve from 42% per policy to a projected 50% in future years. There was much Council discussion regarding the current fund balances. Ms. Harkess addressed the Council regarding the fund balances and how it has performed over the last five years. City staff has done a good job of analyzing buildings to estimate when improvements will be needed. Currently the system is set up to pay as needed. The fund balance would need to be replenished as it is used. There was much Council discussion regarding the General fund balance reserve percentage, bond rating and rating agency criteria. Staff will continue monitor the changes to the bond rating criteria. Ms. Kvilvang presented an overview of the HCA beginning and ending fund balances and the continually growing negative fund balance without fund assistance. By gradually increasing the levy to replenish the fund balance there will be a positive fund balance by year 2020. It was discussed that the Art Center is an economic engine for downtown Hopkins and negative fund balances make it difficult to attract funders and grants. HCA staff will continue to keep expenses in line, look for additional funding & revenue sources. Page 2 There was much Council discussion regarding the tax impact on the average home, the impact of HCA on downtown businesses, public perception, justifying the tax increase to the residents, is the annual impact of $201,000 a manageable number and the tax impact would decrease after year 2020. Staff will continue to work on a plan to decrease the levy amount. Ms. Kvilvang discussed the Ice Arena operation and capital needs. The Ice Arena revenues are taking care of operation expenses but a levy is needed to fund capital outlay improvements and new refrigeration system in 2021. Ms. Kvilvang reviewed the levy increase and the total levy impact to the average home. There was much discussion regarding hockey ice time rate increase, need to upgrade the facility to justify rates, feasibility study to add another sheet of ice, sharing the financial burden with partners, public perception and the loss of the school lease of $38,000/year. Pavilion staff is seeking other rental opportunities. $120,000 will fund all necessary capital improvements at the Ice Arena until the replacement of the refrigeration system in 2021. There was discussion about holding off improvements but then costs may be higher and also looking at ways to flatten the increase between the years 2015 and 2017. Ms. Kvilvang stated that the Financial Management Plan would get updated every year and will be a tool to assist staff making decisions at budget time. Ms. Kvilvang reviewed the next steps of refining the plan based on Council direction, continuing to review the plan at future Work Sessions and presenting a final plan at a future City Council meeting. Council requested additional information on the tax impact on a wider range of homeowners and the impact to commercial property. Council consensus was that the Financial Management Plan makes a lot of sense but feels it will be important to educate the public about the plan. Having a vision and planning for the future is important in shaping the direction of the city. The Plan sets a course for future councils with the budget process and is a good plan to solve the problem of the negative fund balance. Council felt it was important to seek business owner testimonials on the impact of the Art Center on the downtown. It will be important to produce an extensive public relations piece to educate and inform the public about the Plan. The staff and Council will continue to review the Plan, look for ways to reduce the levy amount, engage additional partners and seek ways to encourage public buy -in of the Plan. The Financial Management Plan will be discussed again at a future Work Session in January 2014 with a final timeline deadline prior to the 2015 budget approval. The Council was encouraged to continue to share comments and questions with staff. Housing Discussion: Housing Inventory Ms. Elverum introduced the members of the SW Community Works Housing Task Force who will present an overview of the Hopkins housing inventory along the S WLRT corridor. Ms. Bennett presented an overview of the of SW LRT Community Works and Housing Work Group, the first step in preparing a County -wide housing strategy for the SW LRT corridor. Ms. Bennett reviewed the vision and guiding principles, benefits to the community, federal funding support and housing inventory research. Members of the Task Force reviewed the highlights of the '/2 mile housing inventory at the Hopkins stations along the SW LRT. They gave an overview of the demographics, employment opportunities, education opportunities, rental housing highlights, affordable rental housing, how to improve connections to existing housing, average walking time, how to preserve and maintain existing housing stock and how to get a mix of housing to Page 3 meet the needs of current and new residents along the SW LRT. The Blake station had the highest population & population density and only 5 stations along the SW LRT have rental housing within 1/4 mile, which include the Blake and Hopkins stations. The Task Force reviewed the gap analysis process and timeline. The Council requested a copy of the Housing Inventory Report and PowerPoint. Ms. Elverum discussed the importance of using the data in the report to attract a wide range of households, incomes and mix of housing at the stations areas. Community Involvement Program (CIP) Mr. John Everett and Mr. Kim Vohs presented an overview of the Community Involvement Program, a non-profit organization providing residential services, community support, mental health services for those with developmental disabilities and mental illness. The organization website is www.cipmn.org. The Community Involvement Program is planning to remodel a duplex they own at 1301-1303 Oxford Street. CIP are seeking Hennepin County funds for the rehabilitation work and need the City of Hopkins support with a resolution to access the dollars. The CIP representatives discussed the rehabilitation plans for the properties at Oxford Street and 1014 Westbrooke Way, #6. There was Council discussion regarding the rental units, tenant screening, support staff, renovation timeline, length of leases, property maintenance and that CIP has owned the property for 12+ years with no neighborhood complaints. Staff will check on the emergency call history to the property. Ms. Elverum discussed the redevelopment possibilities in the Oxford Street area. CIP are aware of the risk but want to maintain their properties even if redevelopment is a possibility in the future. Council consensus was that to include the resolution on the Consent Agenda at the next Council meeting. Update of Dow Towers Ms. Unowsky discussed the Ross program, a grant funded program that provides a full-time Vail Place staff person to work at Dow Towers to assist the residents to make connections to necessary services. The program is voluntary for residents but the majority has made contact with the caseworker. There was much discussion regarding the grant application reporting, amount of the grant, Dow Towers staffing, number of residents and wait list. The amount of the grant is $250,000 over three years to provide the caseworker. Dow Towers has 76 residents and the wait list is approximately two years. Ms. Unowsky discussed with Council that she would be reviewing the policies, getting resident feedback and bringing the changes before Council at an HRA public hearing in 2014. Ms. Unowsky reviewed the Dow Towers financial picture. Dow Towers is in good financial shape despite the federal shutdown, are collecting 100 percent of the rents and have only one vacancy to lease at this time. Ms. Unowsky discussed the budget challenge of expensive bed bug treatments but as of last inspection there were no findings. The kitchen renovation capital improvement project is in progress and pictures of the improvements were shared with the Council. Page 4 Dow Towers has been a smoke-free building for 2 years. The decreased smoke damage to the units has improved the turnaround time and lowered expenses in preparing units for new residents. Ms. Unowsky discussed with Council a neighbor complaint regarding the location of the outdoor smoking area. There was much discussion regarding a buffer near the smoking area. Staff will continue to explore options such as fencing or plantings to buffer the area from neighboring residents and bring a solution back to the Council. Staff will also address the need to paint the outdoor poles. Ms. Elverum recognized Ms. Unowsky for the good job she does managing Dow Towers. Housing Programs Discussion Ms. Beekman presented an overview of housing programs that are available to Hopkins residents. Ms. Beekman also discussed the housing trends within the community and initial forecasts for population provided by the Metropolitan Council. The preliminary population forecasts for the city were projected to increase by 10,000 residents by year 2040. Staff feels this number is high. Ms. Beekman discussed the trends and impacts affecting the housing forecast. Staff discussed that the preliminary population forecast would be an opportunity to look at areas that could possibly be redeveloped for housing in the next 30 years. Ms. Beekman discussed with Council the Housing Rehabilitation Program that receives CDGB funding and is administered by Hennepin County. The program allows low and moderate income homeowners to borrow up to $25,000 for home remodeling and fix -up. Currently the City's housing rehabilitation fund has a balance of approximately $430,000. According to Hennepin County, Hopkins is the only City in their housing rehabilitation program that carries a balance in their fund. The County would like Hopkins to use the funds more effectively. Some reasons for the low participation rate of Hopkins residents in this program is the minimal demand pool, monthly loan payments and the application process. Staff is investigating ways to broaden the program by possibly adding rehabilitation funding for low rise, low density rental properties. There was much Council discussion regarding the income guidelines, loan requirements, application process and ways to make the program more desirable. Staff will continue to research other ways to use the CDGB funds, make the program more attractive and explore opportunities to market the program more effectively to Hopkins residents. Ms. Beekman presented an overview of MHFA and GMHC Programs available to Hopkins residents that provide assistance to homebuyers and homeowners. The Center for Energy and the Environment (CEE) has approached the City of Hopkins to request a partnership in their Home Energy Squad Enhanced Program. Ms. Beekman gave an overview of the program and benefits to residents. Based on the size of Hopkins, CEE anticipates 40-60 participants a year, which would equate to $3,00044,000 per year in cost. Council consensus was that the CEE program would be beneficial to Hopkins residents and could begin in 2014. Staff will investigate funding for the program. Staff will promote and highlight all the housing opportunities on the city website and in other public relation materials. Page 5 Other • Discussion of SW LRT project scope and resolutions that are being voted on Wednesday, October 9, 2013. *Overview of the Beyond the Yellow Ribbon event on Saturday, October 12, 2013. • Discussion of 81" Ave closure over the weekend due to utility work. Staff will follow up on this. • Discussion of upcoming Hopkins Minnetonka joint meeting on Tuesday, October 29, 2013 With no further business to discuss there was a motion by Council member Cummings and a second by Council member Gadd to adjourn the meeting at 9:52 p.m. Respectfully Submitted, Debbie Vold ATTEST: Eugene J. xwell, Mayor CITY COUNCIL Kristine A. Luedke, City Clerk