CITY OF BLUE EARTH
MINUTES
CITY COUNCIL MEETING
Monday, August 19, 2013 5:00 P.M.
CALL TO ORDER
Mayor Scholtes called the meeting to order at 5:00 P.M.
ROLL CALL
All Councilmembers were present. Staff members present: City Administrator, City Attorney and City Engineer. Fitness Center Director Michelle Hall arrived at 5:13 P.M.
DETERMINATION OF A QUORUM
Quorum present.
PLEDGE OF ALLEGIANCE
Mayor Scholtes led the pledge of allegiance.
MEETING OPEN TO THE PUBLIC
Public Present: County Commissioner John Roper, Yankten and Rachel Anderson, Shawn Gudahl, David Lein and Chris Anderson.
At this time Mayor Scholtes addressed the issue of Highland Addition, Outlot A. Yankten and Rachel Anderson and Shawn Gudahl were present for discussion. David Frundt addressed the information provided in the council packets with regard to a drawing that Shawn Gudahl is proposing for drainage options onto Outlot A. Frundt explained that Gudahl has 2 options available running into Outlot A. Option 1, the tile line would cross property line 26 feet from the road. Option 2, the tile would cross the property 60 feet from the road. Frundt recommended to the Council that we go ahead sell a rectangle shape to Mr. Gudahl to accommodate his request that would allow Gudahl to do whatever he needs to achieve the proper drainage of his property. Frundt explained that we would be looking at selling 26 feet from the road of that would include the Right of Way. Mayor Scholtes asked why the City would not consider an easement. Frundt reported that selling part of the Outlot would give Gudahl more flexibility.
City Engineer Wes Brown reported that there is a storm sewer line just underneath the curb that ultimately comes down to a catch basin and comes across the road and outlets to the existing culverts. Every property as a part of the reconstruction project will be getting a sump pump outlet to the storm sewer. Brown explained that Gudahl could hook up to his property rather than to the Outlot. Brown relayed that he had concerns over the gravity line being able to function in high water or during the freeze/thawing conditions. Gudahl did not have any issue to hooking up to the provided sump pump line. Brown noted that as long as the connection does not take on any surface water because then the line is subject to sand and debris that could potentially plug the line. Brown reported that the hook up location can be adjusted to best meet Gudahl’s needs. Gudahl was satisfied with the sump pump hook up option. Yankten and Rachel Anderson were satisfied with the option as presented. Gudahl asked if anyone would object if he mowed Outlot A. Council had no concerns over Gudahl’s willingness to mow the Outlot.
APPROVAL OF MINUTES
Motion by Huisman, second by Gaylord approving the minutes from the following Meetings:
Minutes from Special Joint Meeting July 29, 2013.
Minutes Special Council Meeting August 1, 2013.
Minutes from the Work Session and Council Meeting of Monday, August 5, 2013.
Minutes from the Special Council Meeting of Wednesday, August 7, 2013.
The motion was approved unanimously.
LICENSES AND PERMITS
There were no licenses or permits at this time.
CORRESPONDENCE
Airport Fly-in/Drive-in and the re-grand opening of the new runway reconstruction to be held on Sunday, September 15th from 11:00 A.M. to 2:00 P.M. at the Municipal Airport.
PUBLIC HEARINGS
None
REPORTS FROM STAFF
Mayor Scholtes moved the closed session for legal issue to the end of the meeting.
City Engineer Wes Brown gave an update on the Highland Drive, Eleventh and Twelve Street projects. Water services should be completed on Highland this week, then storm sewer installation next week so most of the underground work should be completed by the end of next week. Crews will begin grading preparation for the street work. Eleventh and Twelve Street is on the same schedule where they are working on the water and sewer services this week and next week. There are some connections to be made on Main Street so residents will notice flaggers and lane shifts on South Main Street this week. Street grading will follow.
Highway 169 has the curb installed at the Seventh Street round about. The contractors are planning Seventh Street to be open to traffic by Labor Day Weekend.
School will be opening soon so there have been discussions for pedestrian access across Highway 169. There will be a dedicated pedestrian crossing at Fifth Street with safety fencing along both sides of the road. The crossing will move to Sixth Street when work needs to happen on the Fifth Street intersection. Huisman questioned using a school safety patrol officer. Brod agreed that a crossing guard was a good idea. However, Brod did note that there will not be traffic traveling north and south. Brown explained that they are planning a 24 foot wide vehicular access and a 10 foot wide pedestrian area. Huisman suggested maybe having the Police there at the beginning just to get kids into a routine. Brod said that they could send out letters informing students of the designated crossing area. Brod explained that there is sidewalk on the north side of Fifth Street but not on the south side. Huisman commented that we need to do whatever we can do to make it safe.
Brown reported that crews are working on the storm sewers north of the river this week and will continue for some time due to the amount of pipe work to be completed. There is a very deep sanitary sewer crossing on First Street that is under construction at this time. The lining sewer crews have been working on the north end of TH 169 lining the sewers in the roadway ditch.
There is no pricing available from the contractor for the contaminated soil work at this time that would include the disposal fees.
Brod asked about waste system garbage pickup on Eleventh and Twelfth Street. Bailey reported that the contractors are responsible for moving the recycling and the trash to locations that the garbage and recycling haulers can pick up the items.
Mayor Scholtes asked that Brown look into the property on East 10th Street where the sidewalk sank. Brown explained that the project warranty does not expire until next year so the issue will be rolled into the final warranty list unless there is a safety issue.
Brod asked about a tree concern on Gorman Street belonging to Ben Gjere where the contractor pushed the tree chips into the hole and now the sod is dying in addition there are cracks in the curb.
Councilmember Erichsrud asked about the slit seeding to be done this fall. Erichsrud said that a property owner would like a 3 week notice in order to kill some of the weeds first. Brown reported that the quote package will be sent out this week the weed control will be included in the project. The seeding will happen late this fall.
Councilmember Brod asked if there is an estimated date for the roundabout on the corner of TH 169 and Co 44. Brown did not have any projected date for that area.
At this time Mayor Scholtes addressed the MNDOT detour agreement.
Brown explained prior to adding the new detour on Domes Drive we didn’t qualify for an agreement for the use of Sailor and 8th Streets as detours because the road aid calculation amount was under $1,000. Now the calculation changes for the City to enter into an agreement on the detours.
Brown reported that we are noting extensive damage to Eighth and Sailor Street due to the detour. The State’s maintenance crews have been out doing patching. However this agreement does reference Minnesota Statutes 161.25 which is the temporary trunk highway detour haul road language that says; prior to revoking the designation of MNDOT shall restore such streets or highways to as good of condition prior to the designation of the same as TH 169. Bailey reported that the heavy traffic is impacting the base of the detour routes and will result in more extensive repair of the infrastructure. Brod noted that maybe we can negotiate a reimbursement of a 3 or 4 inch overlay and then we can use those funds to offset reconstruction costs.
Bailey‘s recommendation on this agreement is that we table the item and request a representative from MNDOT attend the next meeting and explain the compensation for the use of City Streets as detour routes to the Council. Scholtes placed the MNDOT Agreement on the next council meeting of Tuesday, September 3rd. Bailey will notify MNDOT to send a representative to the meeting for question and answer discussion.
Liquor Sales Report
July 2013 June 2013
$142,418 $125,359
July 2012 June 2012
$135,495 $138,883
Up $6,923 in July 2013 Down $13,524 in June 2013
Erichsrud reported that he had asked Liquor Store Manager Don Adams what the difference in sales was contributed. Adams had explained that there was a difference of 1 day and that can mean as much as $8,000.00 difference.
REPORTS FROM BOARDS AND COMMISSION
Minutes were provided from the Economic Development Authority meeting of 7-11-13. The Minutes from the Special Meetings of 7 29-13 and 8-1-13.
Minutes were provided from the Housing and Redevelopment Authority Meeting of 6-10-13.
Minutes were provided from the Board of Public Works Meeting of 6-24-13.
REPORTS FROM STANDING COMMITTEES OF THE COUNCIL
Motion by Gaylord, second by Huisman to approve the reports of the Boards and Commissions as presented. The motion was approved unanimously.
CONSENT AGENDA
None.
OLD BUSINESS
Mayor Scholtes moved the Fitness Center Expansion up on the agenda due to the number of people present for that discussion.
City Administrator Kathy Bailey addressed the Fitness Center information as follows:
Budget Estimate - $625,000 including contingency, bonding and finance costs
RFPs: Received
Ankeny Builders, Inc. $497,169
United Builders of Blue Earth, Inc. $580,597
Financials – Updated from Business Plan
Current cash available is $190,000.
Profit and Loss History:
2008 Revenue $91,348
Expense $83,241
Profit $ 8,107* Facility paid off the internal
improvement loan
2009 Revenue $98,984
Expense $94,699
Profit $ 4,285* Facility bought out fair board
ownership.
2010 Revenue $107,507
Expense $83,603
Profit $ 23,904
2011 Revenue $126,802
Expense $84,280
Profit $ 42,522
2012 Revenue $145,815
Expense $88,962
Profit $ 56,853 audited
Bailey explained that there are three alternatives for financing this project; internal loan, abatement bond and revenue bond. An Internal loan would be the most cost effective because there would be no finance charges and the Council could set the interest rate. If the City charged the Fitness Center 1% interest over 20 years a yearly payment would be $34,492.00. Given that the above projects are stable the facility has $38,417 available to make loan payments.
The positives of this method are that it does save financing costs such as bond sale and bond attorney, the interest rate is lower for the loan, but still earns the City more than current bank rates. No matter what the finance method, the City would be liable for payments if the facility was unable to make the payment.
The negative is that the City is cash flowing numerous street projects this year and must balance the cash flow to the expenditures. It is anticipated that this project would move forward in late summer at the same time we will hear on the EDA industrial park grant.
A second option would be an Abatement bond. An abatement bond pledges a section of tax base that equals the payment amount. The bond payment is taken directly from the levy. If at the end of the year the facility has profits enough, the facility makes a transfer back to the City to replace the levy. In working with Springsted the estimate given for interest rates would be 2.8%. Again using a 20 year amortization schedule, the payment would be $39,378.00 per year. The positive about this method is that the funds do not draw down the City reserves. This would require the facility to increase membership by 4-8 new members.
The third method for financing the project is to use an enterprise bond. This type of bond is available to enterprise funds, is based on ability to pay, and does not require a referendum. The negative is that the project will also have additional costs for bonding added to the financing and is larger than 2012 profits predict. Springsted feels that a 3.25% interest would be tied to this type of bonding. Using the same 20 year bond repayment time period, the yearly bond payment would be $40,848.00. In theory this would require the facility to add 10 -14 new members. The difference between this bond method and the abatement bond is that the bond payment comes directly from the facility. If the profits are not available for the payment the City General Fund Reserve makes the payment. The negatives are that it could draw down the reserve and it is the highest interest rate.
Bailey recommended to approve Ankeny Builders proposal in the amount of $497,169.00 and to fund the project through an enterprise revenue bond option. Even though this is the most expensive option, Bailey thought it is the most transparent to the citizen and recommended that we combine the bond following construction with the Public Works CIP bond to save issuance costs.
Councilmember Brod asked if there were plans available. Bailey explained that the price submitted includes the plans, building material and the excavation work, site preparation, demolition of the old areas. The plans will be drawn by the architect and be submitted for building permit approval.