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08082013CouncilMinutes CITY OF AMMON CITY COUNCIL MINUTES – WORK SESSION THURSDAY, AUGUST 8, 2013 AGENDA: CITY OF AMMON 2135 SOUTH AMMON ROAD CITY COUNCIL AGENDA – WORK SESSION THURSDAY, AUGUST 8, 2012 – 4:30 P.M. DISCUSSION ITEMS: 1.Budget Discussion 2.Misc. EXECUTIVE SESSION: 1.Personnel Evaluations - Idaho Code 67-2345 (1-b) 2.Real Property Acquisitions - Idaho Code 67-2345 (1-c) 3.Pending Litigation - Idaho Code 67-2345 (1-f) City Officials Present: Mayor Steve Fuhriman Councilmember Dana Kirkham Councilmember Rex Thompson Councilmember Russell Slack Councilmember Brad Christensen City Clerk/Administrator/Planning Director Ron Folsom Deputy Clerk Rachael Brown City Treasurer Jennifer Belfield City Engineer Lance Bates Public Works Director Ray Ellis I.T. Director Bruce Patterson Parks Director Ken Knoch City Officials Absent: Councilmember Sean Coletti Councilmember Brian Powell DISCUSSION ITEMS: Mayor Fuhriman opened the meeting at 4:30 p.m. at the City building located at 2135 South Ammon Road. 1. Budget Discussion: Jennifer stated the highlighted items are the changes. The changes in the general funds were reduced by $20,673 and the Parks fund was reduced by $30,673. The East Idaho Community Action Project (EICAP) for $45,000 will cover three employees for three months and two employees for four months. Ken Knoch explained the EICAP, which was just funded, is a grant from the Federal Government to the City. The City will pay the expenses and the Federal Government will reimburse the City. Gary Bates, 2445 John Adams explained he does urban forestry for the State of Idaho. The purpose is to inventory the trees in the urban areas of Eastern Idaho. There are two parts to the project, and the City of Ammon will be a part of one of those. The employees will go out and measure areas at 1/10 of an acre each, they will identify everything in that area such as asphalt, canals, grass or trees. With the information received from this data, the State will be able to inform the City of their canopy coverage and species throughout the area. The second part is a GPS survey that is done driveway by driveway including every sidewalk, lighting, existing canopy, etc., which the City will receive. Canopies help with energy savings in the environment, extending the life of roadways due to shade, storm water control, etc. which is a major beneficial value of trees. Jennifer explained that the Department Heads started with the expenses and then the revenues were reviewed. Councilmember Kirkham said the Council had been asked if they were going to take a three percent property tax increase, upon which the proposed budgets were then created, however, it was later determined to increase by 1.8 percent, which is why these changes were necessary. Jennifer said the SCADA project was removed from the wastewater fund. Water was a zero percent increase and the wastewater was a four percent increase for the treatment facility. Councilmember Kirkham stated the funds are still $13,000 in the 15 Council Minutes 08.08.2013Page of negative. She asked Ray about the elimination of the SCADA upgrade. Ray said it just puts the City in the hole for the next year and eliminating the generator is also a concern. Councilmember Kirkham stated that taking a four percent increase still doesn’t solve the shortfall. If there’s ever a lesson to be learned it is from the City of Blackfoot; you want 100 percent reliability from the system. If there is no power to the lift station on Ross, it only takes thirty minutes to fill, and then it will end up in someone’s home. Ray said Ross has the highest flow. In the rest of the areas, the City would have approximately one to one and a half hours to respond. Once a generator is placed, it runs full time until the power comes back on, and there could be an issue if another lift goes out. Councilmember Christensen asked if the SCADA system is eliminated for both wastewater and water. Ray said just wastewater, but we kept the four percent increase in the Wastewater fund. Councilmember Christensen inquired if the previous budget was good and now that the SCADA system upgrade has been eliminated, why is the budget still in trouble with the four percent increase. Ray stated the first budget was significantly underfunded. Councilmember Kirkham said the four percent had been allocated to EIRWWA (Eastern Idaho Regional Waste Water Authority), but she is not sure the City will go forth with this. Councilmember Kirkham stated the City has several issues; first trying to not take the full three percent increase in property tax, and trying to stay within a 1.8 to 1.9 percent increase, second not taking a four percent increase in the water fund and a four percent increase in the sewer fund. She feels they are all separate issues; however, the property tax increase is affected by all the other issues. Councilmember Kirkham said she can live with not taking the four percent in the water and feels the rest of the Council concurs. Councilmember Thompson said he feels a small increase would be appropriate. Councilmember Kirkham said she thinks that we probably can leave the water flat, but we are putting ourselves in a deficit moving forward. Councilmember Slack makes a legitimate point that the City doesn’t know how much they are going to cost, but at least the City is trying to save for them, even though there still might be a shortfall. Councilmember Slack said he would like to pull the strategic plan out and figure out a way to get there with the percentage of increases the City needs to take. Councilmember Kirkham said the City needs a master plan that ties in water, sewer, and roads. It makes no sense to replace the road, and then find out the water line needs repaired; you have to tear up the road again. Ray has budgeted for a master plan, which needs to be completed. Councilmember Kirkham explained that Ray has budgeted $90,000, however she suggests backing off that amount a little bit, and if needed, go into reserves to fund it. This will identify what projects need to be done, in what priority, and costs in current day dollars. This will help make us eligible for grants from ITD (Idaho Transportation Department), BMPO (Bonneville Metropolitan Planning Organization), and the DEQ (Department of Environmental Quality). Councilmember Slack said the Council knows that we are going to need to replace the lines in the Original Town Site. Councilmember Kirkham said we really don’t know the remaining life of the water lines; however the sewer lines have at least twenty years left. Discussion ensued regarding possible costs for water line, asphalt, and sewer repairs. The master plan will scope lines, etc. and put items into priority. Councilmember Slack stated the City is installing meters over the next eight years, and water lines in the Original Town Site over the next eight to ten years. He figures a half mile will cost approximately $250,000 - $300,000. Councilmember Kirkham explained that the City would also like to keep a year’s O&M. Councilmember Thompson said the costs will increase over the next ten years. Ray said the Original Town Site will need to be done in five years, and Hillview and Hillsdale will be needed shortly after that. Councilmember Kirkham said the projection on wastewater that Keller & Associates provided the City stated that a half million dollars of wastewater repairs will be needed every year to address the most pressing issues, with new issues arriving yearly. Councilmember Slack said the City will be putting off an entire half mile section for another three years by not taking the increase. The City is now six years behind on just a half mile section of road. There are places in these lines where it is just dirt. Councilmember Kirkham said you can take the money and put it into a master plan which enables you to get a $500,000 grant to do that half mile of road; so now you are not behind. Councilmember Slack said you are looking at ten years and he is concerned with getting the grants. Councilmember Kirkham said she thinks the grants are the reality. Councilmember Slack said if the City takes the increase this year and works towards that end goal, at least the City has one component completed. Councilmember Slack said we have ten years worth of savings to acquire in five years. He feels the City keeps kicking the can down the road. Councilmember Christensen said the real way to work our way out of this problem is to grow our way out of the problem. New money helps facilitate new infrastructure. Councilmember Thompson said growth hasn’t paid for itself for the last ten years. If the City continues growth without increasing the fees, it’s going to continue not paying for itself. For the last forty years the City hasn’t been saving to pay for new infrastructure when it’s needed and those two items should come together. Mayor Fuhriman said the growth hasn’t kept up with the pace and we shot ourselves in the foot fifteen years ago when we didn’t take any increases. Now we have convinced ourselves that taking increases are the way to go, but by themselves they really can’t get us out of the hole, but it’s better than not taking the increase. Councilmember Christensen feels a four percent increase in the wastewater system, and a zero percent increase in the water system averages the impact to the citizens to 1.9 percent, which is roughly equivalent to the trailing twelve month CPI which he can support. Mayor Fuhriman said he feels Councilmember Christensen has a good point; if we can get the confidence of the public back, and not taking that rate increase every chance we get, it will help us in the long run. Councilmember Kirkham said she thinks a four percent increase isn’t making or breaking anybody’s budget. 25 Council Minutes 08.08.2013Page of Councilmember Kirkham said we need to get out of the habit of thinking the only way we gain revenue is through fees, so maybe making it uncomfortable for ourselves will force us to be more proactive, because there has got to be another solution to this problem because raising the fees is hard on the public and it doesn’t solve the problem; we turn to raising the fees first, because they are our first source of revenue. Councilmember Kirkham feels this is a compromise she can live with, with a personal commitment to trying to find another way to increase revenues. This is why she feels a master plan is one step towards that because there is grant money out there and we need to get it. Councilmember Kirkham said water is in a lot better shape than wastewater. Councilmember Kirkham explained that she has been going over a spreadsheet that was brought in by Jim Mullen. The spreadsheet breaks down what projects need to be done and the projected cost. The Council gave Jim instruction to show the Council a rate increase that would fund the new train. Councilmember Kirkham said the first scenario in the spreadsheet is what Jim brought back to them. This shows increasing the rate seventeen percent every year until 2021. Obviously that is not realistic because it would put the sewer rate at $158.00. Scenario number two is Councilmember Kirkham’s scenario and it would mean a four percent increase. Discussion ensued. Councilmember Kirkham said this brings us to the levy rate. She invited the Council to share their thoughts on levy percentages. Councilmember Slack said we have to fund the building department, technology department and street department, and most of the street department funds are reserved. If we are going to be building or repairing streets; if we are going to have movement forward the general fund will have to fund a lot of what we don’t have in the proprietary funds. We are looking at a $50,000 increase in a year. We don’t have a big tax base, and there is a lot of demand placed upon the general fund to support other funds that fall short. Councilmember Slack wants to take the three percent increase. Councilmember Thompson said he doesn’t want to take the three percent, but feels we need to take the three percent if we are going to stay afloat. Councilmember Christensen said he likes the reverse approach and ask what the citizens can tolerate under current conditions. He supports the 1.8 percent; it makes a difference of $22,000. He know it is, so little on both the citizen and city side. The reason is he does not want Ammon to demonstrate, although we are an extremely efficient city, that we raise the levy rate at every opportunity, because we then begin to communicate we are not efficient with the resources we have, even though we have caught up to the levy rate of a big city. He thinks we can do phenomenal things inside of this budget; everyone has pitched in and made it work. Stacy added two full time positions inside of his budget and made it work. He wants to take the 1.8 percent increase and save the $22,000. He thinks we can eliminate meals on wheels because it is not something we have ever supported before. Councilmember Kirkham said Councilmember Coletti in his e-mail suggested that also. Councilmember Christensen said line items like this grow themselves into the budget. Then they become the default and become entitlement mentalities. He is really cautious about any money we grant to other entities. Councilmember Slack said the reality is we have $5 million sitting in the general fund. It looks like a lot of money; $4.2 million is reserved that will leave us with $1.2 million dollars available; we have negative balances in the building, technology, and park’s budgets to balance at the end of the year. We are negative $191,000 in getting where we want to be on our base savings piece. We kept forgetting the demands placed upon the general fund to cover the shortfalls. We have taken money out of the general fund the last four years to support other departments. The difference between the 1.8 percent and three percent is $22,000. We have $650,000 before inflation for a project on Hitt Road that will be hitting us with the City of Idaho Falls. We have streets in the Original Town Site and other roads that need to be repaired. The street department does not have a lot of funds to do anything with. We are not able to cover any shortfalls based upon our reserve amount in the general fund. Councilmember Christensen said taking the streets piece and $1.7 million if we expend that, which he hopes we do, we have talked about that being replaced. The first pitch we gave to Costco was that they would pay for all improvements and we would reimburse them as future users tied into the system. Councilmember Slack said Costco is not in the budget. Councilmember Christensen said the bottom line is any money that is spent also represents a growth in the City that can help pay for ongoing services. Councilmember Slack said he has not seen any fees out of any part of this growth that is able to replace the aging infrastructure pieces. He has not seen a plan showing how the growth will cover the upcoming expenses. Councilmember Christensen said the key is the appreciation and value of our assets base. This year is lower than last year because of the elimination of the personal property tax to some degree. He estimates next year we will see an appreciation in our asset base that will allow us, even at the same levy rate, to collect significantly more money. Councilmember Slack said the appreciation in the home prices will not get you more money year to year. It is based on the budget set forth. House prices vary up and down, and that number is divided by the asset base to get you to what the levy rate piece is. Inflation of housing prices does not increase the amount you will get for your budget. Councilmember Christensen said taking the 1.8 levy increase will actually represent a much higher percentage increase to the levy rate itself. In a year where the assets appreciate the same levy rate will get you more money. Councilmember Slack said he understands now. Jennifer said as we look at the dollar value of some items, an example is the enforcement contract where they tried to minimize the increase this year. But this means next year it will be more of an increase because they will be trying to catch up for some of the things they didn’t do this year. We do know next year a larger amount will be coming out the general fund and the $22,000 really does make a difference to help us continue to make the City work. Councilmember Kirkham said the levy rate increase has always been, for responsible cities, sort of a savings plan, and you take it when you need it only. We never took the up to three percent increase until 2008. For ten years we did not take the increase because we lived within our means and had growth that helped pay for itself. When the economy collapsed we decided we had to take the rate increase. She feels they have been responsible. She does not feel the three percent has ever been assumed. They have only used it when they needed to. Ray said the elephant is in the 35 Council Minutes 08.08.2013Page of room, almost the single biggest line item he has is the transfer to support the general fund. Half a million dollars this year out of three million dollars of income is a pretty significant percentage. In the private world it would not be allowed. If we are going to worry about bringing the rates down we need the tax base to support the general government; currently it is way out of whack. Councilmember Thompson asked if Ray feels we need to take the three percent increase so we are not taking so much out of his fund to get that caught up. Councilmember Kirkham said the Council votes next week. Everyone has their own opinion with the three percent versus the 1.8 percent and maybe we don’t have to have it hashed out until the Council goes to a vote. Councilmember Thompson said three percent is $1.00 per month per citizen. Councilmember Christensen said he is interested in hearing what will be said at the public hearing. Councilmember Kirkham said we do have to be cognizant of the overall impact with the cemetery and school district raising their rates. All of the entities tax the same people. Councilmember Kirkham said Ray’s budget needs to have the generator put back into his budget, even though it would require $48,000 from reserves. When the City switched to the wastewater system, it became the City’s responsibility to prevent accidents. Ray said it’s really hard to buy used equipment, since you have to take the lowest price and it could be a piece of junk. There’s usually a reason the other entities are turning them in. Councilmember Kirkham said Ray always goes to find the best deal. Councilmember Slack asked Bruce about where the City is with capital improvements for the fiber projects to get to the end game. Bruce said in the last financials there was $190,000 left in broadband and there is a bill going to the school district for $158,000 and a $6,000 up front contract for another cell contract. There is another bill for the University of Idaho grant, which has not been billed due to complications and a budget adjustment that had to be approved which will come in at approximately $20,000. By the time all the bills are submitted the figure should be over $300,000. It’s really hard to say. If you are only looking at M&O, it would be $70,000 next year. Councilmember Slack asked if the Council could reduce the Broadband reserves from $600,000 to $100,000. Bruce said he would prefer to keep it around $250,000, because not everything is paid up front. Most providers will want the City to have something into the pot. Councilmember Slack asked if all of the City’s assets have fiber run to them. Bruce stated not to the sewer lift stations. The fiber is there, but the City doesn’t have the equipment. It would have to be determined which department would be responsible for the expense. For every station, the expense to cover it is different. Some will require additions to the building and the fiber connection point at each location will be used to serve the neighborhood. Councilmember Slack changed the reserves to $100,000. He advised the Council this will save $308,000 in the general fund. Bruce said his instruction when he started the Broadband Department was to build a fiber network that would stand on its own. He feels the City is on this path. The Council concurred. Jennifer said she will publish three percent on the property taxes and the water is published flat. Jennifer said we can always publish the water at the four percent increase, since the Council can always reduce it at the meeting. Councilmember Kirkham said to be safe go ahead and publish the water and wastewater at four percent with the rest staying the same, except adding the generator in Rays’ budget for $35,000 and reserve the water right at $188,000. Councilmember Slack said the City’s liability would be huge if it doesn’t purchase the generator. Councilmember Kirkham said the City of Blackfoot had four houses with this situation and it has cost approximately one million dollars. Ron said one of the things discussed last year is that the City would notify our residents if increases are going to occur. Councilmember Kirkham said to publish and the Council would love the public to come to the meeting, so they can hear what they have to say. Jennifer said the Mayor had brought up three items he would like to add to the budget. Mayor Fuhriman said the goal of the line items would be to increase the City’s tax base. The first item would be a $2,000 increase for travel for development to bring companies to the City. He would like to send a delegation or he would like to go to Costco to promote the City. This is a recommendation from the state economic development division. The second would be $5,000 for research and development for projects in the future. It would not be used this year, since it is not enough to conduct a feasibility study, but it would be built upon for research and development. The third item would be $450 for the chamber leadership program. Councilmember Kirkham said she doesn’t support any of them, because the $2,000 for travel in a year where we are struggling with a three percent increase seems like an excess the City can’t afford. The City has a lot of economic development opportunities with Grow Idaho Falls and the Chamber of Commerce, as well as the Council’s personal contacts. Councilmember Kirkham doesn’t see the benefit of anyone going to Seattle to talk to Costco, since she and Scott Bishop have talked with them and the location has been decided, however, they are uncertain if they are going to build the store. She asked what the Mayor saw the City researching. Mayor Fuhriman said a larger swimming pool and the studies would help with that type of knowledge. Councilmember Kirkham said this would come out of the individual departments budgeting for them. Councilmember Christensen said he’s not interested in increasing the overall expenses with the travel line item. He would rather have private money go towards a feasibility study and possibly ask for citizen input to what they would desire. He doesn’t have any problem for the leadership program. Councilmember Kirkham said however it doesn’t need a separate line item, since it can be covered through others. Councilmember Kirkham said as far as having resources available for the Council or Mayor to court people, she feels this job is a public service. She goes to lunch often with other city leaders, and she pays for it out of her own pocket. The salary she receives 45 Council Minutes 08.08.2013Page of for this job is to do it for the community and she feels fine putting it back for those resources and asked the Council how they felt. Councilmember Thompson said no, but he isn’t the Mayor and he does have more obligations than the Council. Councilmember Kirkham said between the boards she sits on, at least two times a week, she travels for the City and she has never charged the City a cent for that. Mayor Fuhriman said he feels it boils down to how bad the City wants new businesses to come in. There will be a certain amount of businesses that come here, because of our growth. He was at the Cives open house in Ucon and the Governor and Economic Development Chairman attended. He met with the President of the Cives sister company who is looking at another location to place west of the Mississippi. He’s from Canada, and if we are not in that mix of people the City won’t get those businesses. The Mayor asked if the Council wanted to actively go after these businesses. Councilmember Slack said it is Grow Idaho Falls’ responsibility and that is how Cives came to Idaho Falls. They put out requests to locate property available for development. The City is a member of Grow Idaho Falls for this reason and if the City had opportunities or land, then definitely the City would do whatever was possible to help stir the pot to help that process grow. Councilmember Kirkham said this is how Edwards Theatre, Target and Sportsman’s Warehouse came about. The City doesn’t own the land, and it is up to individual property owners. The Council knows most of the land owners to help assist in this growth. Councilmember Kirkham said we struggled to get a $35,000 generator and then to take another $7,000 for this, she struggles. Councilmember Christensen said if the question is should the City add money then he would say no. The opportunities can still be done by any of the Council or Mayor. Ron said the public hearing for the fees would have to be published two times starting to two weeks prior to the hearing and there isn’t time. The budget hearing has already been scheduled. Councilmember Kirkham said in the write up for the public hearing state in two weeks the Council will be discussing the budget. She would like to hear what people say concerning the fees. 2. Misc.: Councilmember Christensen said he would like to commend the staff for doing such a tremendous job on Ammon Days. Everything was perfectly executed with the public works cooking for nine straight hours. It was a rousing success and he received a letter today with a feeling of support and gratitude from the citizens. In the budget it costs the City $10,000 and in the end the reward we give to the citizens is so much more. In terms of heart and effort and work this is a major gift that is given back to the City and he is excited for next year’s event. Councilmember Kirkham said the budget process can be tense, but she wants the staff to know that the Council acknowledges and understands that they are responsible. She thinks the staff is amazing and asks that they don’t take these discussions personally, but the Council has to be responsible to the public. The meeting adjourned at 6:13 p.m. __________________________________________________ Steve Fuhriman, Mayor __________________________________________________ Ron Folsom, City Clerk 55 Council Minutes 08.08.2013Page of