HomeMy WebLinkAbout09/08/2009 Council Packet (2)WORK SESSION AGENDA
CITY OF LINO LAKES
Tuesday, September 8, 2009
CITY COUNCIL WORK SESSION
Community Room (not televised)
5:30 P.M.
1. Harvey Karth regarding intersection of Lake Drive and Main Street
2. Charter Commission Audit
3. Charter Commission Budget
4. Kraus Anderson development proposal (Matt Alexander)
5. Proposal to convert Country Inn & Suites to Assisted Living/Memory Care
6. 2010 Budget Discussion
7. 35E /CSAH 14 Interchange JPA/Funding Update
8. Review of Regular Council Meeting Agenda
Adjourn
PAGE 1
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September 8, 2009.
To: City Council
From: Lino Lakes Employees Who Are Members of AFSCME
Subject: Working Together To Serve Lino Lakes Residents
• We appreciate the statements by directors and city council members
recognizing the importance of trying to avoid eliminating services to the
residents of the Lino Lakes.
• We feel favorable about negotiating agreements regarding things such as:
A commitment to some minimum voluntary unpaid time off for all employees.
Additional voluntary unpaid time off, which is in the contract already.
Potential for increasing the maximum of voluntary unpaid time per year.
• We worry about spending money on new, unanticipated things, when the City is
decreasing services because of budget issues. If the City can't meet current
needs for serving the public due to budget constraints, committing to new
financial demands does not seem financially advantageous.
WS — Item 2
WORK SESSION STAFF REPORT
Work Session Item 2
Date: 8 September 2009
To: City Council
From: Dan Tesch, Director of Administration
Re: Charter Commission
Background
The City Council has directed staff to place the Charter Commission Audit on this work
session for discussion. Upon receiving the audit, 4 points were identified by council as
issues that needed additional discussion. Those points are listed in bold below with staff
comments immediately following.
Requested Council Direction
1. Charter Commission Operating Guidelines — what they can and cannot do.
The city council and charter commission have already agreed to a series of joint
meetings designed to clarify roles and work together on upcoming issues.
2. Charter Commission Bill Paying Guidelines.
The attorney who conducted the Charter Commission Audit, and the attorney for
the Charter Commission have a difference of opinion on how much and for what
purpose the Charter Commission may expend public dollars. The city attorney has
been requested to be prepared to discuss this at the work session on September 8.
3. Data Practices — who is the Responsible Authority for the Charter
Commission and where are documents maintained.
1
When the audit was presented to the council, Attorney Dougherty remarked,
regarding the area of data practice, that the charter commission has the same
obligation as the city to appoint a responsible authority and follow data practice
law. It is a policy issue who will take on the responsibility and it should be
undertaken only with established guidelines and procedures for data practices.
4. How do we communicate to residents about the Charter Commission and
how the city charter works.
From time to time the city has invited representatives of the League of Minnesota
Cities come out and lead discussions designed to assist in this area. Staff could
contact the League for additional assistance in this area.
Attachment(s)
1. Copy of Charter Commission Audit
2. Charter Commission Attorney Marty Response
3. Attorney Michael Dougherty letter dated August 5, 2009
2
Severson, Sheldon, Dougherty � Molenda, P.A.
EVERSON SI-IELDON
D Ili Attorneys 1 Advisors.
MEMORANDUM
TO: Dan Tesch, Director of Administration
FROM: Michael G. Dougherty
DATE: April 6, 2009
RE: Investigation of Charter Commission Materials
Our office has been asked to issue an opinion regarding certain activities undertaken by the City
of Lino Lakes Charter Commission. These activities were taken in association with a question
placed on the municipal ballot at the general election on November 4, 2008. In the performance
of these activities, the Charter Commission incurred expenses which were then directed to the
City of Lino Lakes for payment.
ACTIVITY
it In October 2008, the Charter Commission contracted with Summit Printing, Inc.
for the production of 6,500 flyers. A banner on the flyer appears as follows:
Vote "No" to KEEP Your RIGHTS
Vote "yes" t • : ive them up
The flyer directed the reader to www.linocharter.org for more information and
further stated that the flyer was prepared and paid for by the Lino Lakes Charter
Commission.
® In October 2008, the Charter Commission contracted with Mailing Solutions for
the purposes of moiling 6,481 flyers to addresses in Lino Lakes.
® In October 2008, the Charter Commission contracted with PoliGraphics for the
production of fifty two -sided printed lawn signs. Each lawn sign contained the
following message per side:
LinoCharter.org
Know Your Rights
The lawn signs contained the following. "Prepared and paid for by the Lino Lakes
Charter Commission, 600 Town Center Parkway, Lino Lakes, Minnesota 55014 ".
www.linocharter.org is a Web Site/URL that carries a banner that reads "Lino
Lakes Charter Commission ".1 In October of 2008, the Home Page of the Web
Site contained the following language:
On November 4, citizens of Lino Lakes will be presented a ballot question
to determine how road widening, reconstruction, city utility expansion and
other public improvement projects will be managed. Under the provisions
of Chapter 8 of the current city charter, citizens enjoy certain rights for
assessable projects that will be lost should the ballot issue pass.
The material on the Web site contains the following notation: Copyright 2008.
Lino Lakes Charter Commission. All rights reserved.
While the Web site contains many "pages," the majority of the content centered
around the theme that in Lino Lakes, the only measure currently in place that
allows voters to restrict tax increases imposed by the City Council is in Chapter 8
of the Lino Lakes City Charter. An example of such content is the following.
"If the charter amendment passes, all citizen input will be surrendered to
the City Council... the checks and balances offered by the current city
charter would be null and void."
AUTHORITY OF THE CHARTER COMMISSION
The existence of a charter commission is conferred by the state legislature. The commission's
only powers are those expressly conferred by statute or implied as necessary to aid in those
expressly conferred powers. The charter commission has no authority to undertake any action
without the existence of enabling legislation to support such activity. In other words, the charter
commission has no inherent power.
The charter commission's expressed powers are only found in Chapter 410 of the Minnesota
Statutes. The powers of the commission enumerated in Chapter 410 are as follows:
r The cost of operating and maintaining the Web Site were not directed to the City of Lino Lakes for payment, and
are not further addressed in this opinion.
2
• Make rules with reference to its operations and procedures - Section 410.05,
subd. 2
• Submit to the chief judge of the district court each year an annual report and
forward a copy of the report to the clerk of the city — Section 410.05, subd. 2
• May submit to the court the names of eligible nominees to be considered in
making appointments to the charter commission — Section 410.05, subd. 3
• To meet at least once each calendar year and upon presentation of a petition —
Section 410.05, subd. 4
• May discharge itself by a vote of 3/4 of its members — Section 410.05, subd. 5
• May employ an attorney and other personnel to assist in framing such charter, and
any amendment or revision thereof, and direct the reasonable compensation and
the cost of printing such charter, or any amendment or revision thereof, to be paid
by such city— Section 410.06
• Deliver to the clerk of the city either (1) its report determining that a home rule
charter for -the city -is -not necessary or desirable, or (2) the draft of the proposed
charter — Section 410.07
• Any time before the council has fixed the date of the election upon the proposed
charter, the charter commission may recall it for further action — Section 410.10,
subd. 1
• If any charter so submitted be rejected, it may propose others until one is adopted
— Section 410.10, subd. 4
• May propose amendments to a charter and shall do so upon petitions of voters —
Section 410.12, subd. 1
• Modify or approve any summary of a proposed ordinance — Subd_ 410.12, subd. 1
• Transmit petitions for charter amendments to the city council — Section 410.12,
subd. 3
• Review for approval or rejection . any city council proposed amendment or to
suggest a substitute amendment and notify the council of any action taken
Section 410.12, subd. 5
A review of the activities undertaken in October of 2008 begins with the purpose of the action
and the authority to support it. The October activities particularly consisted of the Commission
contracting for the production of communication material (e.g. flyers and lawn signs). The
expressly conferred powers of a charter commission, as set forth above, do not include the
authority to contract for flyers and/or lawn signs. Moreover, the contracts for the material are
unnecessary to aid in the carrying out of an express power.
In analyzing the authority of a school district to pay for literature concerning a levy referendum,
the Minnesota Attorney General opined that from the school board's express authority over the
"care, management and control" of school district business, the board had an implied authority to
provide factual information to the public regarding the effect the vote would have on the "care,
management and control" of the district. Unlike a school board or city council, a charter
commission is not charged with the management and control of public property or public .
employees or city business. The legislature has not enabled the charter commission with a
general set of public powers,
3
In 2005, the Minnesota State Auditor's Office was asked to opine on the design and distribution
of a flyer by a charter commission. The Auditor, citing to the Attorney General's opinion, stated
that the charter commission lacked authority to produce and distribute an educational flyer. The
Auditor stated that a charter commission has a narrowly limited statutory purpose. That purpose
is to draft and present the charter or any amendments to the city.
INFORMATIONAL MATERIAL VS. ADVOCACY
As previously noted, unlike public entities charged with management and control of public
assets, the charter commission has no express or implied authority to create communication,
flyers or lawn signs. Notwithstanding the issue of authority, no public entity, including a charter
commission, may advocate for the passage or defeat of a local ballot question. While every
action of the charter commission must be legislatively supported, such actions must also have a
proper public purpose. The Minnesota State Attorney General's office and the Minnesota State
Auditor's office have each authored opinions that there is no public purpose for a public entity to
take a position on a ballot question. Additionally, each office has clearly asserted that public
funds may be not be used to advocate for the adoption or rejection of any ballot question and by
extension local government units may not give money to an organization to advocate or
campaign for or against a ballot question.
The conduct of a campaign by governmental entities before an election for the purpose of
influencing the voters is not the exercise of any legitimately proper legislative power. Public
funds may not be used in support of only one side of any election issue. Any such activity is
beyond the role of government.
"Vote No to KEEP Your RIGHTS. Vote yes to give them up." There can be no clearer example
of advocacy literature that fits the prohibition articulated by the Minnesota State Attorney
General's office and the Minnesota State Auditor's office. Similarly, while less discerning than
the direct language found in the flyer, the lawn signs coupled with the Web Site2 clearly contain
prohibited advocacy.
FAIR CAMPAIGN PRACTICES
Under Chapter 211B of the Minnesota Statutes — Fair Campaign Practice, political purposes is
defined as "an act intended or done to influence, directly or indirectly, voting in a primary or
other election." Minn. Stat §211B.09 states that an employee or official of the state or of a
political subdivision may not use official authority or influence to compel a person to apply for
membership and/or become a member of a political organization, to pay or promise to pay a
political contribution, or to take part in a political activity. In her Statement of Position made in
2008, the Minnesota State Auditor referred to these statutes while noting that Minnesota's
Campaign Practices law appears to prohibit public officers and employees from approving the
2 We note that the Web site contains a statement that the Web site is 100% paid for through volunteer contributions
by members of the Lino Lakes Charter Commission_ However, there can be no doubt that the Web Site belongs to
the Commission as evidenced by the style, title, use of the Commission's name, and more importantly through the
copyright in the name of the C IJIL
w Ssiuu.
4
expenditure of funds for ballot issue advocacy. The Auditor's concern statement would appear to .
apply to the entering into contracts for the production and -disc ibution of-materials for ballot
issue advocacy. As clearly noted on the materials, the flyer and lawn signs indicate that they
were prepared and paid for by the Lino Lakes Charter Commission.
PAYMENT OF CHARTER COMIVIISSION'S EXPENSES
The City Council also asked for direction regarding the charter commission expenses for which it
is obligated to pay. The sole applicable provision of Minnesota law is:
Minn. Stat. § 410.06 Compensation; expenses
The members of such commission shall receive no compensation, but the commission
may employ an attorney and other personnel to assist in framing such charter, and any
amendment or revision thereof, and the reasonable compensation and the cost of printing
such charter, or any amendment or revision thereof, when so directed by the commission,
shall be paid -by such city. —The amounrofreasonable and- necessary- charter - commission
expenses that shall be so paid by the city shalt not exceed in any one year the sum of
$10,000 for first class city and $1,500 for any other city; but the council may authorize
such additional charter commission expenses as it deems necessary. Other statutory and
charter provisions requiring budgeting of, or limiting, expenditures do not apply to
charter commission expenses. The . council may levy a tax in excess of charter tax
limitations to pay such expenses.
The first sentence of this statute provides authorization for the charter commission to employ an
attorney and other personnel to assist in framing the charter and any amendment. This sentence
also provides that the reasonable compensation and cost of printing the charter shall be paid by
the city when so directed by the charter commission. The second sentence of the statute caps the
City of Lino Lakes' liability for the charter commission's reasonable and necessary expenses at
$1,500.00 per calendar year; but it allows the City of Lino Lakes to authorize the payment of
additional legitimate charter commission expenses as the City Council deems necessary.
Minn. Stat. § 410.06 has not been the subject of any reported lawsuits .3 However, the section has
been the subject of interpretation by state agencies and most recently by the Dakota County
District Court. The interpretations can be distilled as follows:
• The City (Lino Lakes) has no obligation to pay any charter commission expenses in
excess of $1,500.00 per year.
• Should the Council decide to pay charter commission expenses in excess of $1,500.00
per year, the Council must deem such expenditures as necessary.
• The reasonable amount of any compensation paid to an attorney or other personnel is a
determination to be made by the charter commission.
3 Published cases by the Minncsota Court of Appeals or the Federal Court System.
5
• The charter commission expenses to be paid by the City must solely relate to: (i) the
employment of an attorney and other personnel to assist in framing the charter or any
amendment or revision and/or, (ii) the cost to print the charter and any amendment or
revision. It is not enough that the expenses be reasonable and necessary.
These interpretations are consistent with the language used in Section 410.06, taken together
with Chapter 645 of the Minnesota Statutes governing the canons of interpretation. "[G]eneral
words are construed to be restricted in their meaning by preceding particular words...i4 In the
cases discussing this canon, it has been held that: where, in a statute, words particularly designate
specific things (reasonable compensation and cost of printing) and are followed by words- of
general import regarding comprehensively designating things (reasonable and necessary charter
commission expenses), the latter are generally to be regarded as comprehending only as to the
matters particularly stated. In other words, the latter used phrase (reasonable and necessary
commission expenses, found in sentence two of §410.06) solely relates to the prior phrase
(reasonable compensation and cost of printing, found in sentence one of §410.06).
The first part of Section 410.06 particularly designates that the commission may contract for the
reasonable compensation of an attorney or other personnel for the sole purpose of framing a
charter and amendments. Following the limited contractual language are the words that
prescribe the payment of $1,500.00 by the City using the general term of "reasonable and
necessary charter commission expenses ". Under the rules of construction the phrase
"commission expenses" relates solely to the payment of compensation to an attorney or others
employed to assist in framing amendments or revisions to the charter (the cost of printing the
amendment or revision is also included.)
Recently, the Dakota County District Court, in denying a charter commission's request for
reimbursement from the City for the cost of producing a Web Site, found that for expenses to be
paid by the city, the expenses must relate to the statutory itemized expenses of: (1) the
employment of an attorney and other personnel to assist in framing the charter and any
amendment or revision and (2) the cost to print the charter and any amendments or revision. A
city is not authorized by statute to pay for other charter commission expenses.
The Court's interpretation also conforms to the position of the Office of the State Auditor. The
Office of the Auditor has stated that to "simply annually appropriate $1,500 to a charter
commission .... is inconsistent with the statute." The expenses must be reasonable and
necessary and related to the charter commission's purpose and powers laid out in the statute."
4 Minn. Stat. § 615.08, subp. 3 (2008).
6
SOURCES FOR OPINION
• Flyer entitled Keep Your Rights prepared and paid for by Lino Lakes Charter
Commission
• Invoice from Summit Printing, Inc. for Charter Commission flyer
• Invoice from Mailing Solutions to Lino Lakes Charter Commission for mailing piece
• Invoice from PoliGraphics to Lino Lakes Charter Commission for 50 lawn signs
• Printed material from Web site: www.linocharter.org (Copyright 2008. Lino Lakes
Charter Commission. All rights reserved.)
• Opinion of the Attorney General 159a -3 (May 24, 1966)
• Opinion of the Attorney General 159b -11 (September 17, 1957)
• Findings of Fact, Conclusions of Law, Order and Order for Judgment and Judgment in
Bette Fedde, on behalf of the Eagan Charter Commission v. City of Eagan, Dakota
County District Court (May 5, 2008)
• Statement of Position by Rebecca Otto, Office of the State Auditor, Expenditure of
Public Funds on Ballet Issue Advocacy (2008)
• Minn. Stat. Chapter 410
• Minn. Stat. §211.B.01 and 211B.09
• Minn. Stat. §210.06
• Minn. Stat. Chapter 645
SSeverson, Sheldon, Dougherty Et moienda, RA.
EVERSON SHELDON
Attorneys 1 Advisors,
DERMORANDUM
TO: Dan Teach, Director of Atimblistation
FROM Michael G. Dougherty
DATX Apra 10,2009
RED, Amu:wary a-Attorney, Qpinien
111 adaltifenee Willy:Mr request; the following summarigeg pp:mpoWtta. -610, *a:tit todoii
dated-AAA zopi tegodingtheitttreatigation ChUrterCOmitiligion Materials.
**AT Qopito-kit ua§ iitn4 pnwett- *hi& ate . enumerated in Chapter 410 of the
100146fif Statatei,
le a ;3W Corittait'on:maY contra* fon (T) .1o3t44# amtWottit
verstom_ to gglist ni frOing, -01-1Ier ;did ay • :ailiWidtiVit or ins4tion and (2) the coat ue
P#110.00.140 dantiittind:00 tntientiment or revision.
46, AWfahArbo " n316eSliot have any express orimplied porem:th proorg or'oadract tit
01131fial
thelInVarition angera, Jawn'skpo'andlor Well sites.
1). TheCiliater;P:PA9Won 114. OVP2s;s14.thil404 powtt 4611cl:swat;
efflplOye0.4 Ottitir: tishi:4*.t
ir Woe** 5tetialOs *nit die citk -cif Lino Lakes' paymentof 001creqfpn:dskign p;pengeg (bog
ofittormY and-TothelFPerEPPWIg&isting ni the andenathent ar itaikon ofthe &giter anilzost or
9.0110/1e.101,,500.:00 per yettr.
The City "leo. LlikeLittEty ekteed the$1,50100 per year limit ittlyt4144-4 seems tho **A
patent (cost of attorne.r* oth riersolind ag*aitg the Altkiadin'eibt revision. of the Chatter
44'90 Pfliuti4g) to be niees-atio.
�.
• "Nten Anueted by the Charter dtimtaissieu fur payment, the paynsed made by the City of Lino,
Labs. shall be paid directly ta the vendor (attorney or printer).
cc : M Rola, Finanre Direckn.
MARTY LAW FIRM, LLC
3601 Minnesota Drive
Suite 800
Bloomington, MN 55435
June 1, 2009
Caroline Dahl
Chair, Lino Lakes Charter Commission
600 Town Center Parkway
Lino Lakes, MN 55014
Dear Ms. Dahl:
Telephone: 952 -921 -5859
e -mail: kmarty @ix.netcom.com
Fax: 651- 294 -1026
Thank you for the opportunity to review the opinion rendered by Mr. Michael G.
Dougherty, regarding an audit he performed of the Charter Commission expenditures. He
concludes that the Lino Lakes Charter Commission has only those powers granted by statute, no
"inherent" powers, and that the Charter Commission apparently overstepped its limitations when
it expended funds encouraging citizens to retain the current charter rather than repeal one portion
of it. In support of his conclusions, he cites no case law other than a district court decision
(which is neither published nor binding on any other judge or court), and opinions by two state
departments, which likewise are not binding on any court.
Regarding the suggestion that the Charter Commission is limited to the powers granted by
statute, Mr. Dougherty is only partially correct. A charter commission has both the powers
granted by statute, and also those which " are implied as necessary in aid of those powers"
expressly granted by statute. Welsh v. City of Orono, 355 N.W.2d 117, 120 (Minn. 1984). In
Welsh, the court was discussing the power of a statutory city, but the point remains the same: an
entity created under statute has the powers necessary to accomplish its work as specified in the
statutes.
Mr. Dougherty relied upon decisions relating to the City of Eagan's failed attempts to
adopt a charter. Eagan was and is a statutory city, without the powers of a home rule charter city.
Its charter commission had only one goal: the adoption of a charter. That failed, and the charter
commission had no other purpose for existence. Lino Lakes successfully adopted a charter in
1982. Once a city adopts a charter, it has much broader authority than a statutory city. Nothing
says the city may not empower its charter commission to do matters beyond those specified in
state law. See Lino Lakes Charter Section 1.02.
Statutory cities have only the power granted to them by the legislature. Charter cities
have all the power of the state legislature, except where the legislature has withheld that power.
Put another way, the legislature has told statutory cities "you can do only those things I say you
can do." The legislature has told charter cities "you can do anything you want, except for those
things I say you cannot do."
This power extends to recommending and considering amendments to the charter. Under
the Minnesota Constitution, Article 12, § Sec. 5, "charter amendments may be proposed by a
charter commission ". In one of the few charter commission cases, the Minnesota Supreme Court
reviewed an amendment to the charter of the city of Columbia Heights. It noted that "the city's
charter commission in February 1972 recommended adoption of the challenged charter
amendment." Charter commissions are expected to recommend adoption of beneficial
amendments, and nothing suggests that a charter commission may not recommend against
adoption of an amendment deemed to gut the charter or harm the city.
In 2008 the Minnesota Supreme Court was asked to interpret a statute which gave
authority to "approve" but was silent regarding authority to "deny ". The Court ruled that the
power to approve includes the power to disapprove.
The authority to approve "some or all categories" necessarily includes the authority to not
approve "some or all categories," that is, to deny. Thus, we conclude that the term
"approve" in this context includes the authority to deny. See, e.g., Oahe Conservancy
Subdistrict v. Janklow, 308 N.W.2d 559, 561 -62 (S.D. 1981) ( "It is generally held that
statutes which vest 'approval' authority imply a discretion and judgment to be exercised to
sanction or reject the act submitted. ").
Calm Waters, LLC v. Kanabec County , 756 N.W.2d 716, 721 -722 (Minn. 2008). Taking this
rule and applying it to Lino Lakes, it logically follows that the Charter Commission's power to
recommend amendments would necessarily include the power to recommend against
amendments.
Cities and charter commissions have often spent public moneys to fight arbitrary, illegal,
or questionable amendments to their charter. Nearly every case involving a charter commission
also involved the expenditure of public money to oppose a charter amendment. See, e.g.,
Minneapolis Term Limits Coalition v. Keefe, 535 N.W.2d 306 (Minn. 1995) (opposing attempt to
amend charter to add term limits, in conflict with the state constitution); HRA of Minneapolis v.
City of Minneapolis, 293 Minn. 227, 198 N.W.2d 531 (1972) (opposing attempt to amend charter
when the amendment would require the city to violate the law); Bard v. City of Minneapolis, 256
Minn. 581, 99 N.W.2d 468 (1959) (fight over whether a sufficient majority approved a charter
amendment); Leighton v. Abell, 225 Minn. 565, 31 N.W.2d 646 (1948) (opposing claim that a
revised charter was only an amendment, and subject to different approval procedures); and
Haumant v. Griffin, 699 N.W.2d 774 (Minn. App. 2005) (opposing attempt to amend charter
when the amendment would violate state law). It is difficult to contemplate how else a charter
commission might fulfill its statutory and constitutional duties, than to discuss, consider, and
respond to proposals to amend the charter.
In summary, while Mr. Dougherty is correct in much of what he says, he appears to
inappropriately rely on nonbinding opinions, relating to actions in a city where no charter was
adopted. Lino Lakes, which is a home rule charter city, is not bound in the same way as a
statutory city, and its charter commission has the powers utilized by other charter commissions in
Minnesota: to recommend and to recommend against charter amendments.
Sincerely,
MARTY AW FIRM, LLC
Karen E. M
Attorney at Law
LARRY S. SEVERSON
JAMES F. SHELDON$
MICHAEL G. DOUGHERTY*
MICHAEL E. MOLENDA
LOREN M. SOLFEST *$
SHARON K. HILLS
ROBERT B. BAUER*
TERRENCE A. MERRITT$
ANNETTE M. MARGARIT
STEPHEN A. LING*
August 5, 2009
Dan Tesch
City Administrator
City of Lino Lakes
600 Town Center Parkway
Lino Lakes, MN 55014
SEVERSON, SHELDON,
DOUGHERTY & MOLENDA, P.A.
RE: Charter Commission
Our File No. 10556 -28517
Dear Mr. Tesch:
A PROFESSIONAL ASSOCIATION
ATTORNEYS AT LAW
SUITE 600
7300 WEST 147TH STREET
APPLE VALLEY, MINNESOTA 55124 -4517
(952) 432 -3136
TELEFAX NUMBER (952) 432 -3780
www.seversonsheldon.com
GARY L. HUUSKO#
CHRISTINE J. CASSELLIUS$
BRIAN J. WISDORF*
MICHAEL D. KLEMM$*
EMILY FOX WILLIAMS
MATTHEW J. SCHAAP
THOMAS R. DONELY
JESSICA L. SANBORN
RYAN J. BIES
WILLIAM M. TOPKA
ERIN. E. BOERSCHEL
Having read the opinion of Karen Marty, as posted on the Lino Lakes Charter Commission Web site, I am
compelled to respond. Thus, enclosed is a memo, provided at no cost, that refutes what has been
presented to the Commission as an opinion based on legal precedent. The summation of my response is:
• The Marty opinion is full of references to broad city powers, but purposefully fails to distinguish
the city from the charter commission, which has limited powers.
• Whether a charter commission can recommend for or against an amendment has no relation to
whether it can spend money to advocate its position. It cannot.
• In none of the "legal precedents (cases)" cited in the opinion is there even a mention of a charter
commission entering into a contract or expending money.
• The office of the State Auditor has emphatically stated that a charter commission has no implied
power to incur expenses for flyers or other material.
If you have any questions, please call.
ichael G.
GD /j It
Enclosure
E -mail: dougherty ' @seversonsheldon.coln
Direct: (952) 953 -8820
INDIVIDUAL ATTORNEYS ALSO LICENSED IN IOWA, WISCONSIN AND MISSOURI
$QUALIFIED NEUTRAL UNDER RULE 114 OF THE MINNESOTA GENERAL RULES OF PRACTICE
#REGISTERED PATENT ATTORNEY
*MSBA BOARD CERTIFIED REAL PROPERTY SPECIALIST
Severson, Sheldon, Dougherty £t Molenda, P.A.
EVERSON SHELDON
D
Attorneys 1 Advisors
MEMORANDUM
TO: Dan Tesch, City Administrator
FROM: Michael G. Dougherty, Esq.
DATE: August 5, 2009
RE: Charter Commission
Our File No. 10556 -28517
The following is a response to the letter opinion prepared by Karen Marty of the Marty Law
Firm, LLC, dated June 1, 2009 addressed to Carolyn Dahl, Chair of Lino Lakes Charter
Commission (the "Opinion "). As you are aware, the Opinion comments on my memorandum of
April 6, 2009 regarding the investigation of Charter Commission materials. The Marty Opinion
attempts to create a proposition that is neither supported by the facts nor the law. To follow the
position espoused in the Opinion would place the City in a risky position.
First and foremost, the language used in the Opinion is cavalier. The Opinion makes no effort to
distinguish the city as an entity from the commission; in Paragraphs 2 through 4 the powers of a
city (which are found in numerous chapters and sections of state statutes) are entangled with
those of the commission (which are found only in Chapter 410 of the statutes). As a result of this
ambiguous use of nouns and pronouns, it is implied that a commission's power may expand,
which is false. Furthermore, in an attempt to discredit my opinion, it is suggested that I relied
upon laws affecting statutory cities without a charter (I did not); nevertheless, the Opinion cites
as support a court case involving the City of Orono (a statutory city without a charter and a case
having absolutely nothing to do with the powers of a commission). A careful reading of the
Opinion reveals that there is no legal support for any argument that a "charter commission" has
powers other than those identified in my memorandum.
Secondly, the Opinion spends a considerable amount of time attempting to justify a charter
commission's ability to recommend for or against charter amendments. The argument implies
that the term "recommendation" is synonymous with the ability to expend funds. However, there
is nothing in the Opinion nor in the cases cited that support such a theory. In fact, in none of the
cases cited in the Opinion is there evidence that a charter commission spent a dime. Moreover,
none of the cases cited involved a charter commission as a party, nor is there evidence that a
commission spent public money to fight arbitrary, illegal or questionable amendments. The
Opinion did not cite to any court case that even mentioned the public funding of a charter
commission's position on a proposed amendment, let alone a case that upheld such expenditure.
Finally, the Opinion seeks to dust off with the waive of a hand the opinions of the Attorney
General and State Auditor that cited in my memorandum. To simply state that such opinions are
nonbinding in court disregards the powers of the co -equal legislative and executive branches of
Minnesota government. The City of Lino Lakes does not operate in a vacuum without oversight
for the expenditure of public funds. It is not my practice, nor would I counsel the City of Lino
Lakes, to disregard or leave unexamined the opinion of state agencies based on the criteria that
such opinions are not binding on any court. What the Charter Commission believes it may or
may not do based on the Opinion should be carefully scrutinized before such similar activities
are undertaken by city government. Here is the exact language from a letter authored by the
office of the State Auditor regarding the design and distribution of flyers by a charter
commission:
Further, in our opinion charter commissions have no implied power to direct a
city to pay any expenses for educational flyers. As noted above, an implied
power can only exist if it is necessary in the aid of expressly conferred powers. A
charter commission has express authority to ...frame proposed amendments .. .
The publication of flyers explaining a proposed charter is not a necessary aid to
any of these express powers.
It is logical and prudent to apply the same analysis to the design and distribution of flyers with
respect to amendments to existing charters.
While it is well recognized that two lawyers may have two different opinions, the Marty Opinion
is an obfuscation of the differing powers possessed by a city versus a charter commission. My
prior opinion is in concert with the opinions of the State Auditor, the State Attorney General and
a Minnesota District Court, each of which has addressed the extent of the powers of a charter
commission. I might point out that the extent of such power prohibits the City from paying for
the Opinion rendered to the Charter Commission.
MGD /j It
WS — Item #t,
WORK SESSION STAFF REPORT
Work Session Item #1
Date: September 8, 2009
To: City Council
From: Julie Bartell
Re: Charter Commission Budget
Background
The Lino Lakes Charter Commission originally submitted the attached letter requesting
additional funding in 2009. Charter Commission representatives have since met with the
council at meetings (including a joint charter commission and city council meeting) to
discuss the subject of their 2009 budget request and proposed 2010 budget. The attached
"Budget Points" outlining the commission's current budget request were given by
Commissioner Sutherland at the council's budget work session on August 25.
Requested Council Direction
Staff requests direction on the matter of the 2009 and 2010 budget for the Charter
Commission.
Attachment(s)
Letter of July 24, 2009 from the Lino Lakes Charter Commission
August 25, 2009 Budget Points of Commissioner Sutherland
1
Lino Lakes Charter Commission
600 Town Center Parkway
Lino Lakes, -MN 55014
Mayor John Bergeson
600 Town Center Parkway
Lino Lakes, MN 55014
HAND DELIVERED
July 24, 2009
Dear Honorable Mayor Bergeson,
On July 23, 2009, the Lino Lakes Charter Commission voted to develop Charter Amendments for the
November 2009 election. On behalf of the Commission, I formally request additional funding in the
amount of $4,000.00 for 2009, exclusively for legal services pertaining to amending the City Charter.
The primary proposal to be developed would be a Charter amendment that would include a limit on
property tax increases.
Currently, the Commission has less than $21.00 remaining in its budget. This situation occurs
despite letting our regular (professional) minute -taker go, and taking the minutes ourselves.
As you know, the Charter Commission Members do not receive any compensation. The 2009 budget
for the Charter Commission has been sharply reduced by the City Council, from over $7,000 in
recent years to $1,500 for 2009. Our current operating budget is now roughly one -third of the
amount that the City budgeted to the Commission in the 1990's (without factoring for inflation).
During the 2009 budgeting process last fall, upon learning of the proposed budget cut, the
Commission requested that the Council allow sufficient funding for legal services pertaining to an
amendment in its budget. The Council denied that request at that time, whale making assurances that
if the Commission needed additional money beyond what was budgeted for 2009, then the money
would be available and could easily be taken from the contingency fund (if the Council so
stipulated).
I respectfully request that this matter be added to the July 27, 2009 Council Work Session and
approved that same day.
Thank you for your consideration and attention to this urgent matter. I apologize for the short notice;
however, the City Council is allowed to make last - minute changes to the existing agenda.
Please let me know if there's anything I can do to assist in this process.
Co ,
Caroline Dahl ' \
Chair, Lino Lakes Charter Commission
cc: Council member Kathi Gallup
Council member Jeff O'Donnell
Council member Jeff Reinert
Council member Dan Stoltz
City Clerk Julie Bartell
Acting City Administrator Dan Tesch
(excerpt of email communication from Connie Sutherland, August 27, 2009)
Budget Points:
1. The City's actions to "audit" the Commission with a single letter and no due process caused
extraordinary expense to the Charter Commission, hence all remaining legal fees and
subsequent expense should be covered for the remainder of 2009. To date these expenses total
$2,633.20, with a remaining unpaid balance of $1,570.35 and we estimate an additional $1,000 to
cover any further responses required.
2. Charter Operating expenses year over year have been minimal and fiscally conservative, it is with
great respect to the tax payers of the city of Lino Lakes that we request a moderate budget of
$3,000 to cover those estimated expenses, to be decided upon at the discretion of the charter.
Any remaining 2009 balance would return to the general fund as in previous years.
3. In addition to the $1,500 afforded by the state of MN as amended in 1947 (M.S. 410.06
Compensation; expenses, later revision to cap expenses at $10,000 M.S. 410.06 passed 1961) to
frame and amend, we request an additional $1,500 to facilitate continued efforts to frame and
amend through the rest of 2009.
4. Per discussion at the joint meeting, we ask that the 2010 budget for the Charter commission
include a total budget of $8,500. This amount includes operating expenses, legal consulting fees,
frame and amend attorney fees with an attorney independent of the city attorneys and strategic
planning dollars. As discussed, if the council so chooses they can delineate the expenses by line
item as expenses are submitted.
WS — Item 4
WORK SESSION STAFF REPORT
Work Session Item 4
Date: September 8, 2009
To: City Council
From: Mary Divine
Re: Grocer proposal at Hodgson Road /County Road J
Background
Kraus Anderson has a grocer client that is interested in locating on the west side of
Hodgson Road at County Road J. The developer has been working with landowners and
has held two neighborhood meetings with residents in the area. The developer, staff and
the county engineer met to consider the traffic issues that would need to be addressed.
The county requires that the developer complete a traffic analysis and improvement plan
as the next step in the process. The developer requested a meeting with the city council
before moving forward with that study.
EDAC has met with the developer and several EDAC members have attended the
neighborhood meetings. At its August 6, 2009 meeting EDAC made the following
recommendation:
EDAC recommends that the city council provide support to the developer to move
forward with the concept plan for the grocery store that this developer proposes. This
recommendation recognizes that a range of issues need to be addressed to a reasonable
satisfaction. EDAC requests council direction on whether the committee should continue
to work with the developer to move this development proposal forward.
Requested Council Direction
The developer is looking for input from the city council regarding its interest in a grocer
at this intersection. EDAC is seeking direction from council regarding its continued
support of this proposal.
Attachment(s) None
1
WS — Item 5
WORK SESSION STAFF REPORT
Work Session Item 5
Date: September 8, 2009
To: City Council
From: Mary Divine
Re: Conversion of Country Inn & Suites to Assisted Living
Background
Staff has been approached by developers regarding the conversion of the Country Inn &
Suites into a combined assisted living and memory care facility. Attached is a letter from
Mr. Michael Schoenecker of Winkelman Building outlining the proposal.
The Legacy at Woods Edge development was a Planned Unit Development designed as
an integrated mixed -use development area. The mix of uses and the design of the site
were carefully planned to meet goals of the city for certain types of housing, commercial
and civic uses. In addition, the city is heavily invested in the area in many ways. The city
and the developer entered into a development agreement that spelled out the quantity and
types of housing allowed, with limited flexibility built in.
Below is an outline of items that will need to be addressed if the council woul d want to
consider this change in use.
Land Use
1. On the Land Use Plan for Legacy at Woods Edge in the Lino Lakes Town Center
Design and Development Guide, the hotel site is within the Commercial District.
Assisted living is not listed as an allowable use within the Commercial District.
2. The potential impact on adjacent commercial parcels will have to be considered if the
hotel is changed to assisted living.
1
Development Agreement
1. The original development agreement requires at least 60 units of senior housing,
either owner occupied or rental. Would this assisted living project qualify as
senior housing? If so, this project meets the minimum requirement. Consideration
should be given as to whether this meets the intent of "senior housing" in the
development agreement.
2. Consideration should be given to the current market trends in senior housing,
which often offer "continuum of care" facilities. At one time the Legacy
developer was planning a senior housing project. A separate assisted living
facility could deter the development of that type of facility within the
development area. Does this short term resolution to the hotel use deter future
senior markets from locating here, setting up an additional obstacle to full
development?
3. The development agreement allows for a maximum of 450 housing units in the
development area. Again, will assisted living be considered housing? If so, that
removes a potential 60 units of housing from the existing residential districts.
4. The development agreement requires that 60 percent of the housing units in the
development area be owner occupied. Will assisted living be considered rental?
If so, this represents an additional hurdle to future housing development,
especially in light of the current housing market. An additional 60 units of rental
on parcels not designated for housing would further skew the rental /owner
occupied mix.
Tax Increment Financing
The hotel is within the TIF District. The city has obligations that are dependent on Tax
Increment taxes generated within the TIF District. The impacts on the amount of taxes
generated if the use were changed to a different property classification would have to be
determined.
This is not a complete inventory of all possible issues. However, at a minimum, this
change of use would require an amendment to the PUD for Legacy at Woods Edge to
allow assisted living in the commercial district.
Requested Council Direction
The developer is looking for input from the city council regarding this change of use in
the Legacy project before pursuing this matter further.
Attachment(s)
1. Letter from Winkelman Building Corp.
2
AL.
131J1 L U 114 0014 Y.
w
August 21, 2009
Mary Alice Divine
Economic Development Coordinator
600 Town Center Parkway
Lino Lakes, MN 55014-1182
Dear Mary:
Thank you for taking time to meet with us on Wednesday. We appreciated your input
toward the process to amend the current PUD and would like to move forward
through the process.
As you know we are very interested in converting the current Country Inn and Suites
into an assisted living and memory care facility. Therefore, we would like to request
inclusion in the upcoming Council Work Session scheduled for September 86 to
introduce them to our concept and gather valuable feedback for moving forward
1 represent an investment group that will be partnering with the current Country Inn
owners to convert the project from 83 hotel rooms to 41 assisted living units, 28
memory care units and 1 guest room. Very preliminary plans have been sketched to
see what could fit into the existing building. As a result of those sketches which are
attached for your review, the facility will incorporate a production kitchen, two dining
rooms, a combination meeting /activity room, beauty shop, four lounges, library, activity
room, three offices, linen and laundry rooms and a variety of tub and shower rooms.
These sketches are very preliminary and we are open to suggestions. In fact I
appreciated your comments about moving the beauty shop to the exterior of the
building and opening it up for public use. We intend to lease the beauty shop space to
a local beautician to have them move their business into our building and incorporate
our tenants as new clients.
The building will be professionally managed by a healthcare provider with years of
senior housing experience. At this time we have two extremely qualified organizations
that have been providers of health care services for more than 100 years.
The intent is to keep the ownership as a for -profit entity which will continue to
provide tax revenue for the city. Preliminary discussions with the assessor's office at
Anoka County have indicated that estimated annual taxes for our 69 unit assisted living
and memory care facility, if appraised at between $8.2 million and $10 million, will be
in the range of $75,000 - $92,000. We are open and willing to work with the city on
this issue.
340 Hwy to South St. Cloud, MN 56304 Office: 320.253.241 Fax 320.253.2324
E -mail: info @winkbuild.com % Web Site: www.winkbuild.com
Many things have changed over the past five years since the original owners set their
sights on a successful lodging operation. None having more affect than the current
economic climate. With less expendable discretionary income, lodging demand has
dropped dramatically all across the country, not just in Lino Lakes. However, demise
of the planned Lino Lakes Town Center, has also had a dramatic impact on the
attraction of potential guests.
Therefore after years of struggling to support an unprofitable operation, the current
owners would like to partner with Winkelman Building Corporation and our investors
in providing another highly sought after lodging option into your community.
Our proposed senior housing option brings many benefits to your community;
There currently are no senior - housing -with- services facilities located in Lino
Lakes.
• Local seniors must move elsewhere.
• Their expendable income goes with them.
• Approximately 50% of residents will come from outside Lino
Lakes, bringing their income with them.
A recent study by Maxfield Research has identified an unmet demand in the
Lino Lakes Area. (See attached draft copy. The final version is still in the
works.)
All Anoka County nursing homes are located at the south end of the county.
We will accept elderly waivers and group residential housing certificates
through the county; thereby assisting low income as well as private paying
elderly residen
A senior housing complex will create many more jobs than a motel.
(Approximately 40 ftes)
A senior housing complex will create better paying jobs than a motel
(approximately $1 million in payroll).
We are sure that if you check with the local medical clinic located one block to
the south of the site, they will be very pleased to see the addition of senior
housing in the neighborhood. We are actually currently working with another
clinic at another site that approached us to incorporate a 12,000 sf clinic and
pharmacy into our building.
The proposed building will have less traffic than a hotel.
This project will help improve the bottom line for the Hampton Inn which
currently is in default on its taxes.
If not allowed to convert to senior housing, the Country Inn will most likely
suffer some form of debilitating financial situation.
Conversion may help both the Hampton Inn and former Country Inn remain
solid tax- paying businesses.
For all of the above stated reasons, we would like to move forward to convert the
existing Country Inn and Suites into a viable senior housing community. To start the
process of amending the PUD to allow such a project, we request being placed on the
agenda for the September 8, 2009 City Council Work Session.
Included with this submittal are the preliminary sketch plans, draft market study and
background information on Winkelman Building Corp.
Sincerely,
WINKELMAN BUILDING CORP.
Michael Schoenecker
Vice President
;1 t s 1-z- r,.Q. VA" or- k SP s
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
� I G f Zool
Mary Alice Devine, Economic Development Coordinator
Terri Heaton, Senior Vice President, Client Representative
Jennifer Wolfe, Senior Project Manager
September 8, 2009
Proposed Country Inn and Suites Conversion — TIF #1 -11
Springsted Incorporated
380 Jackson Street, Suite 300
Saint Paul, MN 55101 -2887
Tel: 651 - 223 -3000
Fax: 651 - 223 -3002
www.springsted.com
The City has been approached by Winkelman Building Corporation with a proposal to convert the Country Inn and
Suites hotel located within the Legacy TIF District #1 -11 into a senior living facility. The current hotel owners indicate
they are currently operating at only twenty percent occupancy and have partnered with Winkelman Building
Corporation to seek alternative uses for the property.
The City has requested that we calculate the estimated impact to the TIF District #1 -11 if the conversion proceeds as
proposed. The current value of the property (2008 assessment) for taxes payable in 2009 is $3,750,000. The
assessor's value for 2009 remains the same for taxes payable in 2010. As a hotel, the tax classification for the
property is commercial /industrial. Commercial /industrial properties include a portion of the tax capacity to be
distributed to the fiscal disparity pool, thereby reducing the tax increment portion (an election the City made when the
TIF District was es tablished).
The proposed re -use for the hotel is for 70 units of senior living housing, including 41 units of assisted living, 28 units
of memory care and 1 guest room. According to the Anoka County property assessment department, the estimated
market value resulting from the proposed conversion is $3,500,000 to $4,200,000. Additionally, the proposed senior
living facility includes 20% of the units' set -aside as "qualified low- income rental housing" (4d classification), which
reduces the tax capacity for the qualified units. The Minnesota Housing Financing Agency will determine the
applicability of a reduced tax classification for the affordable units. However, we have assumed the applicant is
successful and calculated the estimated tax increment with 20% of the taxable market value classed as "qualified
low- income rental housing" (0.75% class rate) and the remaining 80% classed as apartments (1.25% class rate).
Public Sector Advisors
City of Lino Lakes, MN
Proposed Country Inn and Suites Conversion - TIF #1 -11
September 8, 2009
Page 2
We have calculated the estimated change to the property tax increment for TIF District #1 -11 based on the proposed
conversion. Our assumptions are as follows:
✓ Pay 2010 proposed market values for all TIF properties (excluding hotel)
✓ Pay 2010 proposed market value for hotel ($3,750,000)
✓ Assessor's estimated market value for proposed assisted living facility detailed above
✓ Frozen tax rate of 87.567%
✓ State auditor deduction of 0.36%
✓ Fiscal Disparity Ratio of 34.1664% (pay 2009)
✓ Estimated property tax increment received with continued delinquencies assumes only the hotel (or assisted
living facility), apartments and apartment retail pay their tax bill, and all others continue to be delinquent
A summary table follows comparing the existing hotel to the proposed assisted living facility:
Parcel Information ( #17- 31 -22 -12 -0061)
1) Current
Hotel Use
Proposed Assisted Living Facility
2A) Low Value
2B) High Value
A.
Base Market Value
$122,900
$122,900
$122,900
B.
Base Tax Capacity
$1,844
$1,413
$1,413
C.
Est. Taxable Market Value
$3,750,000
$3,500,000
$4,200,000
D.
Est. Tax Capacity
$74,250
$40,250
$48,300
E.
Est. Fiscal Disparity Reduction
$25,369
$0
$0
F
Est. Net Captured Tax Capacity
(D - B - E)
$47,037
$38,837
$46,887
TIF District #1 -11 Information
1) Current
Hotel Use
Proposed Assisted Living Facility
2A) Low Value
2B) High Value
G.
Base Tax Capacity
$20,613
$20,182
$20,182
H.
Est. Fiscal Disparity Reduction
$63,295
$37,927
$37,927
I.
Est. Tax Capacity
$252,854
$218,854
$226,904
J
Est. Net Captured Tax Capacity
(I - G - H)
$168,946
$160,745
$168,795
K.
TIF District Sharing Factor (J / I)
66.8155%
73.4485%
74.3904%
L.
Est. Property Tax Increment (100 %)
$147,408
$140,253
$147,276
Ni.
Property Tax Increment Loss
L1 - L2A & L1 - L2B
NA
$7,155
$132
N
Est. Property Tax Increment Received
(with continued delinquencies)
$96,778
$84,596
$90,906
0.
Real Property Tax Increment Loss
(delinquencies continue)
N1 - N2A & N1 - N2B
NA
$12,182
$5,872
City of Lino Lakes, MN
Proposed Country Inn and Suites Conversion — TIF #1 -11
September 8, 2009
Page 3
The above table indicates that with the proposed property conversion, the loss of calculated property tax increment
(100 %) could be insignificant if the value is at the high end of the appraiser's estimate of $4,200,000 or could be
more than $7,000 if the value is at the low end of the appraiser's estimate ($3,500,000). However, if the
delinquencies for all other properties continue, the loss could range from $5,872 with the higher market value to
$12,182 with the lower market value. These losses assume the hotel maintains its' current value and continues to
pay its' taxes. This situation is not without risk.
If the hotel property continues to operate at occupancy as low as twenty percent, the owners may challenge their
value which could reduce the available tax increment. On the other hand, the hotel property could stop paying taxes
due to continued low occupancy levels resulting in reduced income, which also would reduce the available tax
increment.
Summary
There are two options the city could take:
✓ Accept the proposed conversion and recognize that there will be a potential loss of annual increment in the
range of $6,000 to $12,000.
✓ Do not accept the conversion and risk the property challenging their value and reduced tax payments, or
non - payment of taxes resulting in a foreclosure situation.
If the City is acceptable to the proposed conversion, staff may desire to encourage the developer to make
adjustments to the plans to increase the projected tax capacity for the re -use. The staff should understand the
necessity for the low- income set - aside, which reduces the tax capacity for the property. Furthermore, the City should
be confident that the conversion will result in a more viable property that is able to maintain its value and tax status
long -term. Springsted is available to review any additional documents as requested by the City.
is -?u-J e() w
61 I 1zool
C 1 T OF
IN i ► KE
Memorandum
To: Mayor and Council Members
From: Al Rolek, Dan Tesch, Dave Pecchia, Michael Grochala, Rick
DeGardner
Date: September 8, 2009
Re: 2010 Proposed Budget/levy adjustments
Per the direction of the City Council given at the work session on August 31, a levy for
2010 was calculated at a rate of 38.616% and budget adjustments are proposed to bring
the proposed budget in line with the levy.
Factors to Consider:
• A tax rate of 38.616% is lower than the 2009 rate of 38.732%
• Results in a total proposed levy of $8,695,414, $548,924 less than the 2009
adopted levy
• Proposed levy is $634,071 below the State levy limit
• Requires an interfund loan of $569,084 to fund the debt service on the 2005A
bonds and adjustment for the unallotment of Market Value Homestead Credit of
$241,000
• Requires reduction to 2010 Proposed Budget of $554,623
• Brings the 2010 Proposed Budget to $9,393,809, a reduction of $670,913 from the
2009 adopted budget of $10,064,722
• Demand for basic services such as police and fire protection, road maintenance
and plowing, park maintenance, recreation programming, protective inspections,
code enforcement, storm water management, etc., have not decreased along with
the economy.
Proposed Budget Adjustments
The directors met and collaboratively arrived at the proposed adjustments needed to
balance the proposed budget. The proposed adjustments are as follows:
Staff Reductions:
Building Inspections 1.5 FTE $106,220
Administration 1.0 FTE 53,940
Community Devel. 0.5 FTE 26,970
Finance/Utilities 0.5 FTE 27,260
Police 0.5 FTE 26,909
Streets/Parks 1.0 FTE Included in Budget
Discontinue JPA w/ Centennial Schools 50,000
Renegotiate w/ Police unions 60,000
Reduce Engineering 35,000
Furloughs — 2 weeks Staff, 3 weeks Directors 211,500
Total Adjustments
Total Adjustments needed to Balance
Adjustments over needed to Balance
Non -Public Safety Staffing Levels Reduced to Pre -2000
$597,799
554,623
$ 43,176
Cutting 5 FTE staff positions will cause adjustments to be made in most service delivery
areas, requiring the cross training of personnel to allow for staff backup at minimal
levels. Should the retirement incentive plan approved by the City Council prove to be
effective, it may have an effect on the number of positions proposed to be reduced and on
the cost of the reductions, i.e. unemployment payments.
While the level of adjustments is about $43,000 more than required, it must be noted that
some use of fund balance is required to balance the budget. If the use of fund balance to
balance the budget is not acceptable, additional staff reductions would be necessary. In
addition, we note that the budget includes no contingency. Should there be any need for
additional unforeseen spending in 2010 it is assumed that the Council would use fund
balance as a last resort to fund these needs.
Possible Effects on Centennial Fire District
It was also suggested that the possibility of reducing or eliminating Centennial Fire
District capital contribution would save the city up to $69,600 in 2010. While this
amount is not included in the city's budget, it would reduce the necessary debt issuance
needed to purchase capital equipment, and reduce the burden on future levies. A
renegotiation of the contribution formula in the JPA may be to the city's advantage in
future years.
Future Impacts
It should be noted that while the City Council may feel the need to hold level or reduce
the city's tax rate in troubled economic times, the cost of doing so will certainly have an
affect on how the city delivers services and on it's ability into the future to continue to
deliver the high quality of services that our citizens have come to expect.
Some affects included in the 2010 proposed budget:
• Staff reductions of 5 FTE
• Further reduced staffmg levels due to furloughs
• No increase in pavement management maintenance budget for each of last 3 years
— Pavement Management Plan calls for 5% increase each year
• No increase in surface water maintenance budget for each of last 3 years
• Suspension of the capital equipment funding plan
• No contingency for unforeseen expenditure needs
• Service level impacts, including customer service and ability to respond to
maintenance needs
In addition, future impacts and considerations include:
• Reduction of the tax rate this year may compound budget funding problems for
2011 and ensuing years
• Budgeting by tax rate may result in large swings both downward and upward in
the City's future tax levies. This is especially true in a volatile property value
market
• Costs for outside services and supplies will continue to rise. The city's ability to
maintain its services at these additional costs will be impacted if there is no ability
to pay for them.
• The ability for the City to recover in the future may be impacted by factors
beyond its control — statutory levy limitations, legislative actions, charter levy
limitations, economic factors such as property values, interest rates, etc.
• Sustainability, continuity and ability to respond are key
We must be cognizant of the factors that allow for the continuation and sustainability of
city services, and that the cuts in the city's levy and budget today may translate into
higher tax increases in future years if the adjustments made today are found to have
adverse affects. We must keep in mind that Lino Lakes citizens truly do receive a value
in public services at a reasonable cost. Sustainability must be our goal in considering any
adjustments to city service levels.
WS — Item 7
WORK SESSION STAFF REPORT
Work Session Item 7
Date: Council Work Session, September 8, 2009
To: City Council
From: Michael Grochala
Re: 35E /CSAH 14 Interchange Funding
Background
As directed at the August 3, 2009 council work session staff has continued to work with
Anoka County on the interchange improvement funding. Since that meeting Anoka
County has been informed of an additional $2 million dollars being provided by Mn/DOT
from the American Recovery and Reinvestment Act (ARRA). Attached to this report is a
draft Joint Powers Agreement (JPA) which provides the structure for the city's cost share
participation. As currently proposed the city's share of the project is estimated at
$4,221,000. This is approximately a $1.3 million reduction from what was discussed in
August. Anoka County's share of the estimated $22 million project is $3,017,334.
As noted in the agreement the city share of construction and land acquisition, after
application of federal and state funds, will be 60% and the county 40 %. Any cost
overruns or underruns will be based on this same percentage. Additionally, any
additional funding received would be applied consistent with this formula.
While reduction in the city's share of costs is extremely helpful, financing the
improvement continues to be the largest impediment. Nearly 80% of the proposed
assessment amount is expected to by deferred because the land falls into one of the
following categories: 1) green acres; 2) senior citizen; or 3) unplatted /undeveloped land.
This severely limits the revenue stream necessary to fund any debt issued for the project.
As a result staff has requested that Anoka County carry the debt on the project with no
limitation on the timeline for city payment of our obligation. Based on our recent
discussions it does not appear the county is in a position to accommodate this request. As
noted in the JPA under section III.F.5 the county is proposing the carry the debt for 5
years with the city responsible for interest and service charges accrued to that date.
To accommodate this funding scenario the city would need to identify a interim revenue
stream to meet the debt obligations until assessment revenue is received. Springsted Inc.,
the city's financial consultant, is evaluating the availability of our state aid street
revenues as an interim financing source. In absence of an interim financing source and
1
given the issuance of general obligation bonds it may be necessary to levy to cover
outstanding debt service.
The agreement does include additional opportunities for the city to earn credits based
toward our share. City and county staff have explored options including county road
turnbacks and land in lieu of cash for a future salt storage /truck garage. These are just
examples but show how the county is willing to be flexible in addressing the cost share.
The credit option also provides the city with a "contingency" to address potential
overruns, assessment adjustments if necessary or as an interim financing source.
Given the deadlines for use of the ARRA funds (November 15, 2009) both the city and
county are anxious to finalize the agreement. In order to position the project to meet this
timeline we are anticipating the need to approve the JPA at the September 28, 2009
council meeting. This date corresponds to the expiration of the 60 day petitioning
process as outlined in the city charter.
Following completion of the Springsted analysis staff is recommending a meeting with
the city council to discuss options. While unfortunate it is possible that no satisfactory
option exists or is determined acceptable to both parties and the project is terminated.
Council Direction
Staff is requesting council consideration of the proposed agreement parameters. Staff is
also requesting consideration of a special meeting to discuss financing options based on
Springsted Inc., analysis prior to the September 28, 2009 council meeting.
Attachments
1. Draft Joint Powers Agreement
DRAFT
Anoka County Contract No.
JOINT POWERS AGREEMENT
FOR THE RECONSTRUCTION OF
COUNTY STATE AID HIGHWAY 14 (MAIN STREET) AND I -35E INTERCHANGE
COUNTY PROJECT NO. S.P. 02- 614 -28
THIS AGREEMENT is made and entered into this day of
2009, by and between the County of Anoka, a political subdivision of the State of Minnesota,
2100 Third Avenue, Anoka, Minnesota 55303, hereinafter referred to as "County ", and the
City of Lino Lakes, 600 Town Center Parkway, Lino Lakes, Minnesota 55014, hereinafter
referred to as the "City ".
WITNES SETH
WHEREAS, the parties to this agreement agree it is in the best interest of the traveling
public to reconstruct the Interchange of I -35E and County State Aid Highway 14 (Main Street)
including the bridge over I -35E, hereinafter referred to as the "Project "; and,
WHEREAS, the parties to this agreement consider it mutually desirable to proceed with
the preliminary engineering & environmental documentation, final design, land acquisition,
construction, and construction engineering & administration for the reconstruction of the Project;
and,
WHEREAS, Anoka County has jurisdiction over County State Aid Highway 14 (Main
Street); and,
WHEREAS, the Minnesota Department of Transportation (MnDOT) has
jurisdiction over I -35E; and,
WHEREAS, the parties and MnDOT have entered into a separate agreement for the
preliminary engineering and environmental documentation (MnDOT Agreement No. 89335);
and,
WHEREAS, the County has obtained Federal Funds for the preliminary engineering and
environmental documentation (MnDOT Agreement No. 88479); and,
WHEREAS, the County has obtained Federal Funds for the final design (MnDOT
Agreement No. 92714); and,
WHEREAS, the County has obtained State resources for the construction engineering &
administration ( MnDOT Agreement No. 94579); and,
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DRAFT
WHEREAS, the parties and MnDOT have entered into a separate agreement for the
maintenance of traffic control signal system for the Project (MnDOT Agreement No. 94607M);
and,
WHEREAS, the parties agree that it is in their best interest that the cost of said land
acquisition required for the Project be shared; and,
WHEREAS, the parties agree that it is in their best interest that the cost of the non - state,
non - federal share of the construction of the Project be shared; and,
WHEREAS, the County and the City both agree to pursue additional funding sources to
minimize the burden to both the County and the City; and,
WHEREAS, Minn. Stat. § 471.59 authorizes political subdivisions of the state to enter
into joint powers agreements for the joint exercise of powers common to each.
NOW, THEREFORE, IT IS MUTUALLY STIPULATED AND AGREED:
I. PURPOSE
The parties have joined together for the purpose of the reconstruction of the interchange
of I -35E and County State Aid Highway 14 (Main Street) including the bridge over I -35E. The
County project number for the reconstruction is S.P. 02- 614 -28. Said engineering plans will be
filed in the office of the Anoka County Highway Department and incorporated herein by
reference.
II. METHOD
The parties and MnDOT have provided for the preliminary engineering & environmental
documentation for the Project via MnDOT Agreement No. 89335; and,
The County shall provide all professional services for the final design required for the
Project in conformance with federal and state aid standards; and,
The County shall provide all professional services for the land acquisition required for
the Project in conformance with the Uniform Relocation Assistance and Real Property Policies
Act; and,
The County shall cause the construction of the Project in conformance with said plans
and specifications. The County shall do the calling for all bids and the acceptance of all bid
proposals; and,
The County shall provide all construction engineering & administration services required
for the Project.
2
III. COSTS
A. The contract cost of the work, or if the work is not contracted, the cost of all labor,
materials, reimbursable utility relocations, normal engineering costs and equipment rental
required to complete the work shall constitute the actual "construction costs" and shall be
so referred to herein. "Estimated costs" are good faith projections of costs which will be
incurred for the Project. Actual costs may vary from the estimated costs and actual costs
are what the parties are responsible for.
B. Participation in the cost of the final design for the Project is as follows:
1. The estimated final design costs for the Project are $912,500 as shown in the
attached Exhibit A.
2. The Project has been awarded an appropriation of federal funds for final design.
i. Federal HPP funds capped at $730,000.
3. The County shall pay One Hundred percent (100 %) of the remaining final design
cost after federal funds have been applied. The cost to the County is $182,500.
C. Participation in the cost of land acquisition for the Project is as follows:
1. The estimated land acquisition costs for the Project are $5,600,000 as shown in
the attached Exhibit A.
2. The County shall pay for forty percent (40 %) of the cost of the land acquisition.
The cost to the County is $2,240,000.
3. The City shall pay for sixty percent (60 %) of the cost of the land acquisition. The
cost to the City is $3,360,000.
D. Participation in the cost of construction for the Project is as follows:
1. The estimated construction costs for the Project are $14,000,000 as shown in the
attached Exhibit A.
2. The Project has been awarded two amounts of federal funds for construction.
i. Federal STP funds capped at $5,775,000 (20% local match required).
ii. Federal ARRA funds capped at $6,825,000.
3. The County agrees to contribute forty percent (40 %) to the remaining
construction cost after federal and state funds have been applied. The estimated
local cost (total cost less federal and state funds) of the construction is $1,435,000
as shown in Exhibit A. The cost to the County is $574,000.
3
DRAFT
4. The City agrees to contribute sixty percent (60 %) to the remaining construction
cost after federal and state funds have been applied. The estimated local cost
(total cost less federal and state funds) of the construction is $1,435,000 as shown
in Exhibit A. The cost to the City is $861,000.
E. Participation in the cost of the construction administration & administration required for
the Project is as follows:
1. The estimated construction administration & administration costs for the Project
are $1,200,000 as shown in the attached Exhibit A.
2. The County has entered into an agreement with MnDOT for in -kind construction
engineering & administration services to be provided by MnDOT.
3. The County shall pay One Hundred percent (100 %) of the remaining construction
engineering & administration costs if they occur. The cost to the County is $0.
F. The Payment from the City to the County shall be as follows:
1. The total estimated cost of the City's share of the Project is $4,241,833.
2. The City has previously paid for the preliminary engineering & environmental
documentation for the Project via MnDOT Agreement No. 89335 in the amount
of $20,833.
3. The remaining costs for the City's share of the Project are estimated at
$4,221,000.
4. The County will initially bear the City's remaining share of the costs associated
with the Project.
5. The City's remaining share of its costs, plus interest and service charges accrued
by the County to carry the City's debt, will be due and payable by October 15,
2014. Estimated debt repayment costs and schedule are shown in Exhibit B.
6. As a credit to the City's share of the cost of the Project, and as executed under
separate agreements, the following items may be used to reduce the City's share
or to apply for the City's repayment schedule:
a) A $300,000 credit for the turnback of County Road 153 (Lilac Drive)
from the County to the City;
b) The appraised value of land provided by the City to the County as
accepted by the County for its purposes.
4
DRAFT
IV. TERM
This Agreement shall continue until terminated as provided hereinafter.
V. DISBURSEMENT OF FUNDS
All funds disbursed by the County or City pursuant to this Agreement shall be disbursed
by each entity pursuant to the method provided by law.
VI. CONTRACTS AND PURCHASES
All contracts let and purchases made pursuant to this Agreement shall be made by the
City and County in conformance to the State laws.
VII. STRICT ACCOUNTABILITY
A strict accounting shall be made of all funds and report of all receipts and shall be made
upon request by either party.
VIII. TERMINATION
This Agreement may be terminated by either party at any time, with or without cause,
upon not less than thirty (30) days written notice delivered by mail or in person to the other
party. If notice is delivered by mail, it shall be deemed to be received two days after mailing.
Such termination shall not be effective with respect to any solicitation of bids or any purchases
of services or goods, which occurred prior to such notice of termination. The City shall pay its
pro rata share of costs which the County incurred prior to such notice of termination.
IX. MAINTENANCE
A. Maintenance of the completed watermain, sanitary sewer, storm sewer, and detention
basins (including ponds and their outlet structures and grit chambers /collectors) shall be
the sole obligation of the City.
B. Maintenance of all trails and sidewalks, including snow plowing, shall be the sole
responsibility of the City.
C. Maintenance of streetlights and cost of electrical power to the streetlights shall be the sole
obligation of the City.
D. Maintenance of the completed signals and signal equipment shall be determined by
separate agreement (MnDOT Agreement 94607M or its successor).
5
GRAFT
X. NOTICE
For purposes of delivery of any notices herein, the notice shall be effective if delivered to
the County Administrator of Anoka County, 2100 Third Avenue, Anoka, Minnesota 55303, on
behalf of the County, and to the City Administrator of Lino Lakes, 600 Town Center Parkway,
Lino Lakes, MN 55014, on behalf of the City.
XI. INDEMNIFICATION
The City and County mutually agree to indemnify and hold harmless each other from any
claims, losses, costs, expenses or damages resulting from the acts or omissions of the respective
officers, agents, or employees relating to activities conducted by either party under this
Agreement.
XII. ENTIRE AGREEMENT REQUIREMENT OF A WRITING
It is understood and agreed that the entire agreement of the parties is contained herein and
that this Agreement supersedes all oral agreements and all negotiations between the parties
relating to the subject matter thereof, as well as any previous agreement presently in effect
between the parties to the subject matter thereof. Any alterations, variations, or modifications of
the provisions of this Agreement shall be valid only when they have been reduced to writing and
duly signed by the parties.
6
RAFT
IN WITNESS WHEREOF, the parties to this Agreement have hereunto set their hands on
the dates written below.
COUNTY OF ANOKA CITY OF LINO LAKES
By: By:
Dennis D. Berg, Chair John J. Bergeson
County Board of Commissioners Mayor
Dated: Dated:
ATTEST
By: By:
Terry L. Johnson
County Administrator City Administrator
Dated: Dated:
RECOMMENDED FOR APPROVAL
By: By:
Douglas W. Fischer, P.E. Michael Grochala
County Engineer Community Development Director
Dated: Dated:
APPROVED AS TO FORM
By: By:
Dan Klint
Assistant County Attorney Its: City Attorney
Dated: Dated:
7
JOINT POWERS AGREEMENT
FOR THE RECONSTRUCTION OF
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Prelim. Engr. & Env. Doc.
Final Design
ROW Acquisition
Construction
Const. Engr. & Admin.
Total
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Local Share