City Council

September 18, 2018 Special City Council Meeting MINOT CITY COUNCIL - SPECIAL MEETING – SEPTEMBER 18, 2018 at 6:30 PM ROLL CALL: Members Present: Jantzer, Olson, Pitner, Sipma, Straight, Wolsky Members Absent: None Mayor Sipma presiding and led the Council in the Pledge of Allegiance. ORDINANCE NO. 5315 - MINOT PARK DIST. - CANADA GOOSE MITIGATION REQUEST – SECOND READING – APPROVED Alderman Wolsky moved the City council place ordinance no. 5315 on second reading to amend and reenact 23- 61 of the City of Minot Code of Ordinances to add an exception for a Canada goose mitigation program for the Park District. Motion seconded by Alderman Jantzer and carried unanimously. Alderman Wolsky moved the City Council pass ordinance no. 5315 on second reading. Motion seconded by Alderman Jantzer and carried by the following roll call vote: ayes: Jantzer, Olson, Pitner, Podrygula, Sipma, Straight, Wolsky; nays: none. PRESIDENT’S MESSAGE President Jantzer said, he provided his message to the Council and made it available to the public on September 4th. He said, it is hard not to be able to find large cuts. There are two large infrastructure projects that make it necessary to approve a tax increase for 2019. Alderman Podrygula commented that he appreciated the process that took place this year opposed to previous years. The President’s message was disseminated early to give the Council time to mull it over rather than having to make a decision on the fly. He said, he was impressed there was no proposal of cuts for the sake of looking good to the public. Alderman Straight agreed and said, he has been stewing over the two large projects the City is undertaking. He empathized by saying, after the disastrous flood in 2011, some will be carrying a financial burden for the rest of their lives and he is mindful of people struggling. He said, he is not looking to kick the can and he was elected to lead for the citizens of Minot. Alderman Pitner thanked President Jantzer and the staff for developing the budget and the President’s message. He said, this increase is the result of years of kicking the can. We are dealing with a flood of course correction but he believes the City is over willing to invest in flood protection by diverting more than our obligation to the project. There are other affected communities that are not contributing and it is causing other City projects to be deferred. He said, we cannot cut at the expense of our employees and he has faith the Souris River Joint Board will be able to find the funds to carry out flood protection. He stated, this generation will end up paying for a project that the next several generations will benefit from. He would prefer to see funds diverted back to the Magic Fund and other investments that improve growth in the community rather than a wall. Page | 1  September 18, 2018 Special City Council Meeting PUBLIC HEARING ON PROPOSED 2019 BUDGET The City Council held a public hearing on the proposed 2019 Annual Budget. Mayor Sipma opened the public hearing with several announcements. He encouraged everyone to be respectful others and their time and to limit questions to five minutes. He said, the Department Heads are available at the dais to answer questions efficiently. He requested that issues on personal assessments be discussed privately by scheduling a meeting with the City Assessor. He referenced all of the outreach that took place revolving around the budget and said all presentations are available to the public. He described some of the cuts that were made prior to completing the proposed budget. Mayor Sipma then addressed some of the common misconceptions that have been expressed by the public. He explained, Federal Grant funds cannot be used to pay for flood control or general fund expenses. The relocation of Home Sweet Home was not paid for using property tax. The Council directed staff to protect the investment in the Parking Structures so it was accounted for in the budget. He then briefly explained NAWS and said it is vital to Minot and to the region. It is a long term project that is coming back online after years of litigation. Mr. Barry outlined two slight changes that staff recommends adopting along with the rest of the 2019 proposed budget. He said, there was a JAG Grant the Police Department received in the amount of $4,519, and the revenue needs to be added to General Fund Department 23. There was also Storm Sewer Development revenue that was inadvertently omitted from the 2019 Preliminary budget and has been added to reflect the estimated revenue. It will result in an increase in the cash reserves fund which are programmed to be used for projects in the 2020 budget. Mayor Sipma then invited the public to comment on the 2019 Preliminary Budget. Mike Enslin, of 1714 5th Ave SW, came forward to discuss his concerns. He said, the parking garages are a debacle that we now have to take care of and spend money on. He suggested we either sell them or tear them down because he does not believe we need them. Mayor Sipma explained that businesses downtown have been asking for a parking ramp since the 1990’s and in 2012, the idea to construct them was put in motion. He said, we cannot change what has happened in the past but we can change what happens with them in the future. The cost to tear them down would be substantially more than the benefit we will see from them. Due to the ongoing litigation, we can’t do anything with them yet but we do have a financial responsibility to maintain them until litigation is concluded. He said he foresees a tremendous asset in the parking structures especially considering the improvements being made downtown and the potential for repurposing the Trinity buildings. He stated, like many investments, it is likely we will not see a breakeven point for several years. Mr. Enslin then inquired about making cuts to the budget rather than increasing taxes. He compared the City’s budget to a personal budget and said there should be cuts made across the board. He also said there is a lot of waste and there should be a fraud hotline for citizens to report to. Mayor Sipma responded by saying, any additional cuts to this budget would result in cut services. He said, if maintenance projects are delayed it would be detrimental. Upon questioning by Mr. Enslin as to whether this will be the last tax increase for Minot, Mayor Sipma said, he cannot make promises but this increase will put us in a better position moving forward. According to the five year projection, we will be in better shape for a longer period of time. Page | 2  September 18, 2018 Special City Council Meeting Mr. Enslin stated, people are moving out of Minot because they cannot afford it and he suggested using the Magic Fund for tax relief. He also said, the City should stop funding MADC. Mr. Barry responded by saying, the City reduced its contribution to MADC by $36,000, budgeting a total of $356,000. Mayor Sipma added, a short term one-time reduction at the sacrifice of future development is not the solution. He said, Minot needs the intermodal facility to attract businesses and it is a significant economic driver. AGT Foods is one example of a business using the facility. Alderman Wolsky clarified, there is no contribution to the Magic Fund recommended for this budget. If approved, those funds will be redirected to flood control. He explained that we have been using reserves to cover the cost of government and that needs to stop. Mr. Ternes, the City Assessor, referenced statistics demonstrating home sales in Minot over the last few years. He showed, there is no reason to believe taxes are causing people to leave because the home listings and the rate of sales have remained steady. Jim Soltis, of 1307 15th St SW, said he has been in business in Minot for 42 years. He proposed increasing sales tax by .5% so that everyone can share in the cost to run the City. Mayor Sipma said, that idea has been discussed and will continue to be discussed as a potential option. Alderman Straight commented that other cities have higher sales tax. The Finance Director said, Grand Forks has 7.25% sales tax, Williston has 8%, several others have 7%, and Minot has 7.5%. Alderman Straight recognized the large projects will benefit those outside the city of Minot and supports the comments regarding increased sales tax. Jonah Lantto, of 433 5th Ave NW suggested being more creative to generate revenue. He mentioned the implementation of a sugar tax, tobacco tax or alcohol tax. He also commented on the decreased amount of State Aid for Minot and the fact that Minot was one of the lowest recipients of HUB City funding. He questioned whether the right people are being sent to secure state funds and wondered if perhaps Minot is overfunding their share of flood control. Mayor Sipma stated, we have been working collaboratively on HUB City funding and it should turn around next year with the revised funding calculation. There is also the possibility of online sales tax collections. He emphasized the need to invest in economic development to grow the base here in Minot. With support from the Magic Fund and MADC, he said, he expects big things in the next few years. Alderman Podrygula gave examples of ways the City has implemented increased fees to help offset the costs of services. He said, it involves a balance to stimulate investment without deterring growth. He also mentioned the restrictions the State imposes which prevent the City from collecting appropriate fees, for example limiting the dollar amount on speeding tickets. The fee associated with a speeding ticket is less than what it costs for an officer to write the ticket, which is ineffective. He assured, the City has gained efficiencies but now we need to build growth. Mayor Sipma then encouraged the public to buy local to generate sales tax. Page | 3  September 18, 2018 Special City Council Meeting Brad Magness, of 234 14th Ave SE came forward to suggest charging stations be installed in the parking garages to encourage people with electric cars to park there while shopping downtown. Alderman Pitner said this is a good example of innovative ideas we appreciate hearing. Robert Hodge, of 3012 8th St NW stated, the City needs to take a step back and stop doing all projects at once. He said, after the 15% increase last year and the possible 18.5% this year, it is not fair. He said, there are always increases but he has never seen a reduction. Mayor Sipma replied by saying, many projects are done with Federal dollars using a local match of funds. There are projects that have been delayed and we have subsidized projects by using sales tax dollars for a long time. If we delay flood control it will mean a 12-18% increase in flood insurance each year which would add up to a higher cost for homeowners than the tax increase will be. We need to get it done while we can because we have no control over future costs. Our water limitations bound us economically and we are looking long-term for solutions. The cost of NAWS needs to be collected in the short term but once it is complete, those sales tax dollars can be diverted back to other uses. The City Assessor addressed the comments about sales tax continuing to increase year after year. He said that in 2012 the mill levy was cut by 30 mills and taxes decreased about $400-$500. The State also added 12% tax relief. Mr. Hodge countered by saying, while those mill reductions were taking place the value of property increased over the same period and homeowners did not see a reduction in taxes. The City Manager added, the mill levy rate in 2005 was well above what the City is proposing this year. He said the City of Minot has a history of tax reductions which is not sustainable to continue. From the period of 2006 to 2016, home values more than doubled but the ten-year change resulted in an increase of about $13 per year for City of Minot taxes. The 10% increase over ten years did not even keep pace with the cost of inflation which is 2% per year which demonstrates that the City was been hiding the cost of government by using subsidies. Mayor Sipma also commented that the size of the city grew by 86% in that time period, which required more police officers, firefighters, roads and equipment to keep up with basic services. Those increased costs have been buried in sales tax revenues rather than property tax. He spoke about the need to reinvest in the community to offset property tax. He brought up the number of full time employees compared to other cities in North Dakota, which demonstrates how the City of Minot staffing ratios are well below the average for a city of this size. The only substantial cuts that could be made are to staff and that would have a significant effect on the ability to provide services. Alderman Podrygula recalled his past experience on City Council by saying, reducing the mill levy was always seen as an accomplishment but they never discussed their goals or the effect it would have on services. He emphasized the fact that the cost of living has gone up 20% over ten years but taxes didn’t even increase 10%. He stated, there is a cost to running a government and the staff, the Mayor and City Council have looked at cuts and believe they have done what they can. The Finance Director presented a graph showing the reduction in property taxes for the City of Minot since 2011. At a time of significant inflation when costs to operate were increasing, the City did not compensate for the increases by raising property tax but instead used sales tax revenue and cash reserves until they depleted the ability to continue that practice. He also commented on the issue of cutting projects and how they need to coordinate with other agencies and corresponding projects in order to have the lowest impact possible on the budget. Page | 4  September 18, 2018 Special City Council Meeting Ernie Medalen, of 912 18th Ave SW, came forward to comment. He said, the budget is complicated which is why the citizens of Minot depend on the Aldermen to take care of city needs while respecting the interest of citizens. He suggested the Council look for budget cuts rather than just looking at revenue. He questioned the budget presented for the Parking Ramps and said, there are legal fees combined with the roof repair and maintenance costs making it not transparent. He also said it is misleading to say the tax bill will only increase 6%. He questioned whether it really is a bare bones budget or if additional cuts could be made. He then discussed the salary and benefit package and said it cannot be verified that salary was a factor in employee retention. He also mentioned the landfill expansion and the land that was purchased in 2017. Mayor Sipma responded to some of his concerns by saying, he believes the staff has done a good job of demonstrating that the City portion of the tax bill would increase an average of 18% but clarified, the consolidated tax bill would increase about 6%. He showed data to demonstrate that the salary and benefits are significantly lower than other municipalities including Ward County and around the state. He mentioned that City employees don’t pay into social security which is a substantial loss to recruitment since they cannot depend on retirement. He said, we are struggling to find employees and are suggesting to buyup healthcare to compensate for the error made to employee salaries last year. The City Manager explained the increased turnover rate that was seen last year after the budget passed. He said the improved benefit plan will cost $567,837, whereas the turnover last year cost the City $856,000 meaning it will pay for itself if it prevents even two positions from resigning. The Finance Director clarified that the Parking Structure budget includes capital improvements to the ramps and the legal fees are included in the Attorney’s budget. They also budgeted additional costs for work done with the legislative session and included funds to contract an attorney to handle court since the workload in the department has increased. Dean Somerville, of 2803 11th St SE, asked about the total increase in the budget. He said, in 2010 the City budget was $67 million but in 2018 it increased to $179 million. The Finance Director explained, since that time, we have added CDBG and NDR grants as well as the Flood Control project, which accounts for a significant amount of that increase. He further stated, a bulk of that increase is capital projects that were not included in previous budgets. Mr. Somerville suggested the City borrow more money for Flood Control rather than using property tax. He also said we should use the Magic Fund to pay for maintenance of the Parking Ramps. Mayor Sipma responded by saying, the City is responsible for two of the largest projects in our history which account for most of the budget. He questioned how much we should bond and borrow to pay for basic services when that will affect our bond rating and we will end up paying more. When asked about the possibility of cutbacks, Mr. Lakefield said, there have already been $8.5 million in cuts made to the budget before presenting it. Megan Laudenschlager, of 108 19th St NW, spoke in support of the proposed budget. She submitted a letter to the City Council prior to the meeting, and read her statement aloud. Devin Walter, of 1219 18 ½ Ave SW, representing the Fire Fighters Local 1157, said the Executive Board and Union members want to recognize the effort taken to retain City employees. He said, they provide the best Page | 5  September 18, 2018 Special City Council Meeting available services and they need to keep trained firefighters from resigning in order to protect themselves and the citizens of Minot. Scott Joern, of 412 1st St NE, said that he believes the City should operate more like a business and should make cuts. He also suggested looking into the history of the Magic Fund and the bid process in order to find funding sources and cost savings. Mayor Sipma stated, the bid process is done consistently in compliance with City and State guidelines. There was a recent incidence where bids were rejected for not being low enough. In the case of the Flood Control project, the costs were largely reduced because of deflating costs. They strive to save money without sacrificing quality. Alderman Wolsky stated, this budget does not propose any investment in the Magic Fund. There will be a complete review of economic development addressing the concerns of the community in order to get as much out of it as we can. Nancy (Bommelman) Bruce, said she believes Firefighters and Police are grossly underpaid. She also said, she knows people are leaving Minot because of taxes. She believes the City is spending too much money and there should be an election on every issue, such as the MAYSA Arena and the Dome for MSU. She said, we need to stop building and she opposed the idea of constructing a gathering space downtown. Alderman Straight expressed his support for the Gathering Space and explained how beneficial it was for Rapid City when they reinvested in their economy. He emphasized that the proposed space will be built with Federal dollars and it will be used by the younger demographic in Minot which will have a positive effect on the economy. Alderman Pitner sympathized and said, he had concerns about the Dome as well but it adds a much needed facility to our community where children can play sports throughout the year. He said, the Council is trying to make the best decisions they can, based on the data they have. He mentioned, the IEDC report and said the task force is working with business owners to positively influence the economy. Mr. Enslin questioned the land purchase for the expansion of the landfill and asked why the City would pay $4 million when it was valued at only $1.3 million. Mayor Sipma explained that it was the only land available so when the time came for expansion, the seller had the upper hand. Mr. Enslin also brought up the use of studies and the costs associated with them. Alderman Wolsky responded by saying, the purpose behind studies is to ensure the staff and City Council have the data to make decisions and be the best stewards of the dollars we spend. Nathan Routhier, of 1805 West Central Ave, asked if there was any increase to the budget as a result of maintenance of buyout properties outside what is necessary for flood protection. Mayor Sipma said there have been increased costs associated with mowing grass and snow removal on those properties but everything acquired is needed for the long term flood protection project. The Mayor continued by saying, there are blighted properties that are being purchased for demolition and then the land is being sold through the Neighbor Next Door program. Mr. Routhier then asked what the City is doing to encourage people to use the parking ramps. Mayor Sipma said, they are trying to find volume use for a substantial amount of the year to offset operating costs until litigation is complete. Page | 6  September 18, 2018 Special City Council Meeting Mayor Sipma commented that the Council used to receive the budget in inflated form and widdle it down in August. The process has changed so they create priorities at the beginning and have all of the cuts done before the budget is presented. The City Manager added, the budget started with a 47 mill increase this year and they have cut it down to 22.8 mills so they have cut more than half. Upon questioning by Mr. Routhier whether everything is 100% needed, Mayor Sipma said, yes, the only debatable item would be the roof to protect the investment of the parking garage which he believes is necessary. Kristie Miller, of 203 7th Ave SE, said that families can’t afford the taxes in Minot. She said, entities keep building and improving parks but they are not a need, they are a want. She encouraged the Council to think about the elderly and disabled on a fixed income who cannot afford to live in Minot anymore. The Mayor responded by saying, the Gathering Space is a project that was included in the application for National Disaster Resilience funds and is a necessary piece of receiving those funds, otherwise, it all would go back to the Federal government. Alderman Pitner moved the City Council close the public hearing. Motion seconded by Alderman Olson and carried by the following roll call vote: ayes: Jantzer, Olson, Pitner, Podrygula, Sipma, Straight, Wolsky; nays: none. ORDINANCE NO. 5319 – ADOPT THE 2019 ANNUAL BUDGET – FIRST READING – APPROVED Alderman Pitner moved the City Council place ordinance no. 5319 on first reading, adopting the 2019 Annual Budget as proposed, including the changes mentioned by the City Manager regarding the JAG Grant the Police Department received in the amount of $4,519 and the Storm Sewer Development revenue. He also moved the City Council divert $250,000 of the 15% of sales tax allocated to the Magic Fund for development of a 501c3 and implementation of an economic development task force. Motion seconded by Alderman Wolsky. Alderman Pitner explained that he would like to have some funding set aside to bolster economic development in Minot and set up a base to lessen the burden on property taxes. The strategy is to improve the value property in the city. Mayor Sipma requested clarification on what the money would be used for, to which Alderman Pitner said, it would be at the discretion of the task force and approved by City Council. He said, he wants to be able to move forward with economic development as soon as possible. Upon questioning by the Council, John Zakian, NDR Program Manager, came forward. He said, the cost to create the 501c3 is minimal, around $100. He explained that moving forward he envisions there being a requirement to match grant funding but that could be done through the use of the Magic Fund, which already exists for that purpose. He also said, the NDR grant has $150,000 available but it would be limited to flood affected areas. The Council and staff discussed how to best accomplish the goal Alderman Pitner suggested. The City Attorney said, any revision to the first penny allocation of sales tax would require an ordinance amendment. Alderman Jantzer said, he supports economic development efforts, however, hesitates to support the amendment since it is premature. Page | 7  September 18, 2018 Special City Council Meeting The City Manager mentioned that the Magic Fund has its own board that would need to approve any funding allocated to this purpose. Alderman Wolsky withdrew his second to the motion. The Motion by Alderman Pitner failed due to lack of a second. Alderman Wolsky moved the City Council place ordinance no. 5319 on first reading, adopting the 2019 Annual Budget as proposed, including the changes mentioned by the City Manager regarding the JAG Grant the Police Department received in the amount of $4,519 and the Storm Sewer Development revenue. Motion seconded by Alderman Olson and carried unanimously. Alderman Wolsky moved the City Council pass ordinance no. 5319 on first reading. Motion seconded by Alderman Olson. Alderman Wolsky said, the Magic Fund Steering Committee exists for a reason and he does not want to sidestep the process. Alderman Olson acknowledged all of the comments provided and said she understands this tax increase is a tough pill to swallow but the budget meets the needs of the City and provides necessary services. Alderman Pitner said he does not want to focus entirely on one project and he sees a better benefit to investing in other infrastructure, therefore he will not support the motion. Alderman Wolsky expressed his thoughts by saying, this is the burden of the cost of government. They made a commitment to improve our government and they need to create efficiencies. He stressed the need to invest in the employees and support the needs of the community and the region. He said that we are paying for past mistakes by literally paying for them. He promotes transparency and will no longer hide the cost of government with tax subsidies. He continued by saying there are a lot of things to consider in the years ahead but there is also a lot to be proud of. Alderman Podrygula concluded by saying, the budget is a reflection of our priorities. He said, the staff has done a great job throughout the process. This budget ensures that we provide water to the region, public safety, flood protection, efficiency, and value our staff. He believes it is the best we can do and we are taking responsibility and moving in the right direction. Whereupon a vote was taken on the above motion by Alderman Wolsky, seconded by Alderman Olson and carried by the following roll call vote: ayes: Jantzer, Olson, Podrygula, Sipma, Wolsky; nays: Pitner, Straight. ADJOURNMENT There being no further business, Alderman Jantzer moved the City Council meeting be adjourned. Motion seconded by Alderman Pitner and carried unanimously. Meeting adjourned at 10:07 pm. ATTEST: ___________________________ APPROVED: ____________________________ Kelly Matalka, City Clerk Shaun Sipma, Mayor Page | 8