CITY OF WANAMINGO
City Council Regular Meeting
Monday, July 24, 2023 6:00 P.M.
Wanamingo City Council Chambers – 401 Main Street
Wanamingo, MN
CALL TO ORDER: Mayor Holmes @6:00PM
PRESENT: Council: Ryan Holmes, Stuart Ohr, Jeremiah Flotterud, Rebecca Haugen, and Eric Dierks
City Administrator: Michael Boulton
ABSENT: Deputy Clerk Karen Masters
ALSO PRESENT: Brad Kennedy, Melissa Myers – Zumbrota News Record, and Patricia Heraty (SEMCHRA)
ADOPT AGENDA: Ohr motioned to adopt the agenda, seconded by Flotterud. Passed 5-0-0.
PRESENTERS:
A) Patricia Heraty – SEMMCHRA – Heritage Hills Report
1) Presented 2023 projected expenses and transfers from the Operating Reserve Fund – required yearly as part of transfer agreement.
2) Operating losses and capital for 2023 are projected at being up to $23,005.00
3) In the past 14 years since SEMMCHRA took over operations the City of Wanamingo has contributed $378,195 toward operations of the facility
4) SEMMCHRA is asking for a transfer of up to $23,005.00 from the operating reserve for projected losses and capital expenditures. The capital items include replacement of aging appliance (three washer/dryer units at $1,300/each) and repair/replacement of broken sidewalks. There were also higher than budgeted insurance, snow removal costs significantly higher than expected, and heating fuel costs increased more than projected.
5) 2024 Levy Request will be $25,000.
6) Patched, sealed and striped the parking lots with County Community Funding. Drainage issues were addressed by the garage.
Holmes asked if the increased utilities and other operating costs would be reflective with potential rent increases in 2024. Heraty stated that there is a request for a $20/month (2.8%) rent increase for 2024, which will require approval. Flotterud asked when refinancing of the Heritage Hills bonds could take place. Heraty stated that August 2023 was the planned refinancing date for the Heritage Hills bonds. However, higher interest rates no longer make refinancing feasible. Holmes stated that he was happy to see icing concerns and parking lot surface water issues addressed. Holmes stated that residents have shared those concerns with him the past year or two. Heraty stated that SEMMCHRA will be speaking with New Life Church regarding snow piling concerns for next winter. The current snow piling melts into the parking area causing addition surface water and freeze/thawing concerns. Heraty hopes that the New Life Church snow piling can be adjusted to avoid additional surface water and icing caused by freeze thaw cycle. Flotterud stated that SEMMCHRA somehow always manages to keep the levy at $25,000 in both good and bad financial operating fiscal years.
NEW BUSINESS:
1) 2024 Budget discussions
A) City Council looked at the staff proposal of the 2024 proposed budget, Memo on 2024 proposed budget, and proposed 2024 levy. The proposed to increase to the levy is 9.18% ($980,000 to $1,070,000). There are concerns with additional inflation along with addressing future capital needs. The general fund, Street Capital, EDA, and Debt Service Fund 328 are proposed to increase as part of the 2024 levy. Debt Service Fund 336 will be created for a future road project.
B) Administrator Boulton explained a number of line items that had either changed from the previous year or needed an explanation. Proposed wage increases were roughly 5% while proposed health insurance increases would 5%. Boulton stated that an aggregate 22% ($17,645) increase has been built in for fuel, electric, and natural gas. The proposed $80,000 street maintenance (seal coating) project and $10,000-$15,000 Prairie Ridge Estates Park Equipment (basketball hoop and other equipment in 2024 or 2025). The fire department budgeted expenses are proposed to increase by roughly $14,850.96 (13.64%) from 2023. This is due to fuel, electric, natural gas, and insurance increases. There was additional budgeting for Building R & M, Small Tools & Minor Equipment, Seminars & Training, Clothing (turnout gear) and $5,000 more for future truck purchases. There are scheduled elections in 2024 of $3,700. The general fund is projected to have a $9,587.17 surplus at the end of 2024. The Council does need to be conscience of keeping the reserves near the agreed minimum of $500,000. Boulton stated that the 2024 truck purchase to replace the dump truck will be $150,000. Truck is not expected to be delivered until late 2024 or early 2025. The fund will have a $82,000 balance at the end of 2024. If the truck arrives in 2024, the plan is to transfer funds from 336 Debt Service Fund to cover the remaining portion of the costs not available in the fund.
C) Administrator Boulton explained that the new Revland Alignment expansion increased is taxable value by an estimated $135,300 with 2022 expansion. This would bring in roughly $5,500 (slightly less than half City portion) in property taxes (0.041). New construction within the community over the last seven years (7 new taxable homes in 2022) should aid with the increase to the taxable market value increase. Maple Island/Mead Johnson TIF will be de-certified and placed back in the tax levy pool. In 2022, there was $80,000 TIF generated. The City portion is roughly half of the generated TIF; $40,000. The new construction and decertification of the TIF District should off-set roughly 60% of the proposed levy increase (5.6% of the proposed 9.18% increase). The Council will see how the finalized 2024 market value rates compared to the proposed levy increase will affect property values based on $100,000 levels in October. The Council will be setting the initial levy at the August meeting and could stay at the same levy amount or decrease at the December meeting. The Council could not increase the levy from August to December.
D) Boulton stated that Local Government Aid (LGA) certified amounts would increase from $276,253 in 2023 to $302,161 in 2024. The legislature recently approved funding for Small Cities Assistance to communities under 5,000 population for use on road construction and maintenance. This formula has been periodically funded in recent years. The City of Wanamingo will receive $32,416 in 2024. Additionally, the City will receive one-time public safety aid of $50,017. The plan is to transfer these funds into the 333 Fund for a future fire truck purchase.
Flotterud asked if a 2024 street maintenance project is planned. Boulton stated that there is $80,000 budgeted in 2024. The staff will review if a project will be completed in 2024 or if it would be better suited to do a larger project in 2025 with an additional $80,000. This is in order to obtain economies of scale with having a larger project. Flotterud asked how the proposed North Zumbro Sanitary Sewer District construction costs would be paid. Boulton stated that if the district receives additional State capital investments for construction there will also be a provision in the bill to create a sanitary sewer district. This district could issue debt for the local match portion. The district will bill each of the Cities their agreed upon portion. The City of Wanamingo could pay some or all of their share of the costs through user rates or levy dollars. Flotterud disagreed with the use of levy dollars. Boulton stated that the user rates could potentially make the monthly utility bills quite high (doubling sewer portion). Flotterud stated that the sewer fund is projected to have $630,000 by the end of 2023 and could help pay down costs while rate increases occurred over a multi-year period of adjustment. Flotterud asked when the construction bonds would be issued and when payments toward the bonds would occur. Boulton stated that the earliest bonds would be issued is Spring 2026 with principal payments needed to be made the following year. Ohr stated that the downtown clay sanitary sewer lines should be addressed before the North Zumbro Sanitary Sewer District construction begins. Ohr stated that I & I (inflow and infiltration) of ground water would increase Wanamingo’s cost to the operations of the district. Boulton agreed that the next street project should have a component of sanitary sewer clay line replacement. Boulton stated that there are roughly twenty-five blocks of clay sanitary sewer lines. It is estimated that replacement of the clay sewer lines and manholes would cost roughly $100,000/block or roughly $2.5 million. Boulton stated that there was no guarantee that the clay sanitary sewer line replacements would correct a significant portion of the I & I. Boulton stated that private roof drains, private sump pumps, leaking private sewer service lines, and possible cross connections with storm and sanitary sewer lines could be contributing to the I & I. Flotterud asked what the difference in water pumped out of the wells compared to wastewater treated was in a year. Boulton stated that the City pumps 45 million gallons. Boulton and Kennedy were not aware of the number of gallons treated at the wastewater treatment plant. Flotterud stated that there has to be a break-even point for cost of repairs compared to treatment cost of I & I. Kennedy stated that he would look into volume of treated wastewater per year. Boulton stated that the plan is to slowly increase the sewer rates to build a reserve to pay some of the initial costs. Boulton also stated that the other reason was so that rate increases are lessoned for residents at the time these projects are completed. Boulton also noted that the Council's intentions are to increase the utility rates incrementally for future waste water treatment plant and clay sanitary sewer line replacements. Boulton recommends the water base rate increasing from $25/month to $26/month. Boulton also recommends an increase on the sewer base rate from $22/month to $26/month. Boulton noted that new construction probably will not continue at the same rate in the next few years and will in turn slow the levy growth. The tax rate growth should be captured in the levy now because 2025 and 2026 the levies should stay under 5% each year. Boulton stated it would be ideal for the increase in the 2025 levy to be inflationary plus capturing the new table market value (tax base) in the levy. The Council directed Administrator Boulton to bring the recommended budget and levy information at 9.18%, or $90,000 levy increase in the 2024 proposed Levy Resolution and 2024 Proposed Budget.
RESOLUTION:
23-045 = Approving Updated 10-Year Capital Improvements Plan for the City of Wanamingo: Flotterud moved to approved, seconded by Ohr. Capital Improvements 10-Year Plan Discussion took place – security cameras at City Hall and tree/leaf dump site ($10,000), pager replacement ($13,000), skid loader attachments ($16,000), pickleball/basketball court ($50,000), rust filter system at pool ($5,000), sewer jetter upgrade/replacement ($300,000), and well house rehab ($15,000). Flotterud stated that the air filtration system for manholes should be purchased in 2023. Flotterud stated that the relatively small cost of $1,500 compared to safety is important to purchase as soon as possible. Kennedy stated that the City has an air monitor and process before ever entering a confined space. Kennedy stated that it is extremely rare for staff to ever enter confined space. Staff has tri-pod/harness/gas monitor and other safety equipment that is utilized if confined space ever needs to be entered. Boulton stated that the proposed 2024 levy would include $43,000 ($26,000 in 2023) for the street equipment fund (221). Passed 5-0-0.
Holmes recessed the Council meeting to the Wanamingo Street Shop (648 2nd Avenue) for a tour at 7:46PM. Kennedy pointed out the condition of the building including the roof, siding, service doors, overhead door, and portions of the exterior concrete. Kennedy presented a number of equipment items that will need to be replaced in the near future. Kennedy explained the condition of the skid loader plow and the need to replace the plow before the 2023-2024 winter. Staff is looking at a V-Snow Blade through Midwest Machinery. Kennedy explained the condition of the Ford Ranger and how it does not leave town and lacks power to drive faster than 40 mph. Boulton stated that the plan to replace the Ford Ranger with a ½ ton pick-up in 2025/2026. The 2000 Chevy pickup was reviewed. The 2000 Chevy pickup had over $5,500 of repairs made to it in early 2023. The 2000 Chevy pickup will last longer than the Ford Ranger, but will hopefully be replaced in 2026/2027. The newer payloader plow damage from hitting several manholes was reviewed. The replacement Frog, Blank, 12’ edge was just picked up from Little Falls Machine Inc. Scott Meyers plans to make the repairs later this summer. Scott Meyers repaired the older pay loader snow plow and blade last year. Ziegler has been scheduled to take a look at the older payloader engine. Over winter the older payloader has lost power and may need significant work later this summer. Finally, the Council looked at the dump truck. The dump truck will be replaced when the 2-ton truck is delivered in late 2024/early 2025. The tour from staff highlighted the building improvements and equipment that are on the 10-year capital improvement plan. The tour helps the Council visualize the needs for repairs or replacement.
OLD BUSINESS:
Administrator Boulton provided a memo and photos from the League of Minnesota Cities Annual Conference. The annual conference was held June 21st-23rd in Duluth. The annual League of Minnesota Cities is worth Boulton attending every couple of years. Boulton stated that Council members would also benefit from the networking and training opportunities encourages Council member to consider attending in future years.
Updates:
*Next City Council meeting on 8/14/2023
Adjourn: At 8:30PM a motion to adjourn the meeting made by Dierks and seconded by Ohr. Passed 5-0-0.
Signed: Attest:
____________________________ ____________________________________
Ryan Holmes, Mayor Michael Boulton, City Administrator
