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COMMON COUNCIL Minutes 0111025 COMMON COUNCIL - CITY OF MUSKEGO Approved 11/22/11 MINUTES OF MEETING HELD OCTOBER 25, 2011 Mayor Chiaverotti called the meeting to order at 7:00 p.m. Present were Ald. Fiedler, Schaumberg, Soltysiak, Werner, Borgman, Harenda, Snead, and Assistant Deputy Clerk Chavie. Those present recited the Pledge of Allegiance. The Assistant Deputy stated that the meeting was noticed in accordance with the open meeting law. COMMUNICATIONS FROM THE MAYOR’S OFFICE Mayor Chiaverotti noted no meetings would be held on November 8 because of the Special School District Referendum Election. She thanked the Director of Finance and Administration, Sharon Mueller, as well as all the Department Heads for their work developing the 2012 budget. The Mayor thanked the Common Council members for their participation in the budget process, which began back in August. PUBLIC COMMENT The following registered to speak: John Walters, W142 S6839 Gaulke Drive  Concerned about the budget, especially the amount proposed to be spent on the Pioneer Drive project. Mike Brandt, S67 W13015 Larkspur Road  Opposed to the amount of money proposed to be spent on Pioneer Drive for six businesses.  Opposed to the amount of spending and debt, which will create more taxes in the future. Scott Dickmann, S69 W17945 Muskego Drive  Opposed to the City’s potential purchase of the lake property. Does not believe the City should purchase that particular property. Perhaps the owner would donate it and develop it. The City could then maintain it.  Opposed to outsourcing the Building Inspection services. There are cuts that could be made to other departments that would allow the two Building Inspector positions to be retained. Please reconsider before passing the budget. Suzi Link, W172 S7297 Lannon Drive  Concerned that proper meeting notification was not given.  Concerned about several budget items and believes a public hearing should be held regarding them.  Strongly urges that the budget resolutions be deferred so another meeting can be held for further discussion and public input. Heidi Lindhorst, S75 W18094 Boszhardt Lane  Opposed to outsourcing the Building Inspection services; it is more efficient for the City to use its own employees.  Concerned with the amount of money proposed to be spent for Pioneer Drive, Janesville Road, and the potential purchase of the lake property.  This is a time in history when spending has to be limited. Common Council Minutes 2 October 25, 2011 Jim Lindhorst, S75 W18094 Boszhardt Lane  Concerned about the potential purchase of the lake property. He thanked the Council for removing his property from the proposal. Most people he has spoken with are not in favor of the City purchasing the property. Doreen Foyer, S68 W18089 Island Drive  Opposes the City purchase of the lake property. The proposed property is not large enough or of the quality that could provide a decent park. Even considering it is absurd. Put it to a referendum to find out what people want. The Mayor thanked all those who provided public comment. NEW BUSINESS Reso. #149-2011 - Resolution Authorizing the Issuance and Sale of $14,500,000 General Obligation Promissory Notes. Ald. Fiedler moved for adoption. Ald. Werner seconded. Ald. Harenda stated he would like to reduce the total amount by removing the following: $1,000,000 for Janesville Road Contingencies, $2,495,080 for Pioneer Drive, $80,000 for Pioneer Drive Studies, $176,567 for Miscellaneous Contingencies and $1,835,000 for Janesville Road. In addition he would like to add $1,200,000 for the radios that will be required in 2013 and $295,000 for resurfacing Pioneer Drive. He also stated his opposition to transferring the $2,000,000 from the Landfill Special Revenue Fund. Ald. Harenda moved to reduce the amount of the borrowing to $8,231,786. Ald. Borgman seconded. Mayor Chiaverotti requested the City’s financial consultant, Paul Thompson, be allowed to present information regarding the potential borrowing before the Council proceeds. Mr. Thompson stated that the interest rate on the $14.5 million is 1.6%. The majority of the borrowing is for Durham, Janesville and Pioneer, which represents about $13 million. The City received a very high rating (Aa2) by Moody’s. The report from Moody’s noted that the City’s financial operations were well managed. Mr. Thompson stated that the notes are set up to cover projects in the Capital Improvement Program; however, dollars can be moved from one project to another as the Council sees fit, or as the projects develop. If the amount of the borrowing is amended, the process would have to start over, which could affect the interest rate of 1.6%. The notes are set up to be refinanced in two years because the total of some of the projects is unknown. This gives the City flexibility to move dollars around. Mr. Thompson stated that the City does not want to borrow too much money long term (15 to 20 years). He did confirm that some of the money could be used for the radios as requested by Ald. Harenda. Mr. Thompson gave a brief overview regarding the difference between using notes vs. bonds. A municipality can use notes for short-term borrowings (10 years or less), which does provide the flexibility for how the money can be utilized. It can be moved from one project to another. When a municipality borrows long term (10 to 20 years), then a bond is issued. An initial resolution must be adopted for each project. You can only spend the dollar amount stated in the resolution on that project, which is very restrictive. This is typically done for a single purpose where the cost is known (for example a new fire station). Mr. Thompson stated that the City’s short-term notes would become bonds once the project costs are known. He noted that if a municipality borrows long term, the debt cannot be prepaid for the first ten years. So if more money is borrowed long term than what is needed, the municipality would have to continue to pay back the debt and the money could not be used for another purpose. Common Council Minutes 3 October 25, 2011 Mr. Thompson stated the Council will have the discretion after the two-year period to determine how it will proceed. He did not encourage multiple borrowings because they are inefficient. There is a cost that the municipality incurs for each borrowing. It is more efficient to look at projects over a period of two years. Ald. Snead asked how the borrowed money will be paid back, which she knows is a concern of the taxpayers. Mayor Chiaverotti stated that this particular borrowing does not impact the levy. Mr. Thompson stated that the City’s current debt will drop from approximately $2.7 million to $2.4 million in 2015 or 2016 and drop to $1.8 in 2018 or 2019. So when the refinancing is done, a repayment schedule that has the least amount of impact will be established. Mr. Thompson stated the City’s current debt will be reviewed and the new debt will be wrapped around that to try to create a leveling out effect so there are no dramatic impacts. Ald. Soltysiak noted that things in the future can change. The City is looking at a two-year commitment, which could potentially affect the levy in the future. He expressed concern that the amount the City is proposing to borrow now could affect the amount of money the City can borrow in the future as well as the amount of money available for the operating budget and could raise taxes. He would like to nail down the project costs better so we have a more realistic long-term view of what the borrowed money will be used for. Ald. Borgman is opposed to borrowing a big pot of money and then just choosing projects; that is not the way public money is supposed to be handled. Mr. Thompson reiterated that the majority of the $14.5 million is for the three road projects. He also noted that the borrowing that is being proposed allows for flexibility; it does not mean you have to move money from one project to another. In response to Ald. Harenda’s request, Ms. Mueller stated that the potential lake property acquisition is not included in the proposed borrowing. She stated the project is in the initial stages. It has not been determined if it will move forward and what funding source will be used if it does. Motion to amend failed 3 in favor and 4 opposed with Ald. Soltysiak, Borgman and Harenda voting yes and Ald. Fiedler, Schaumberg, Werner and Snead voting no. Ald. Soltysiak moved to take the $2 million that could be transferred from the Landfill Special Revenue Fund and reduce the total amount of the borrowing to $12,500,000. Ald. Borgman seconded. Ald. Harenda stated we are borrowing a lot for projects and we don’t know what they are. He supports taking the $2 million and reducing the total amount to be borrowed. Ms. Mueller stated that the proposed borrowing schedule reflects a need of over $2 million for 2013. There will be other expenditures in 2013 that are not reflected in this borrowing. She does not believe it is financially prudent to postpone borrowing for 2013 until next year. The City will have to pay additional issuance fees and go through the rating process. Ms. Mueller noted the borrowing process is quite complex and offered to provide any information that the Council may request. She said it makes much more sense to leave the $2 million in the Landfill Special Revenue Fund (vs. transferring it out), and borrow what is needed. Then during the refunding process when final project numbers are known, the landfill funds could be used to reduce the amount that is refinanced. Ald. Soltysiak stated that the 2013 projects to be borrowed for have not been discussed. Ms. Mueller responded that the only 2013 project included in the borrowing is the balance of the Janesville Road project, which has been discussed for several years. She did note that the City’s return on its investments is greater than the 1.6% interest rate that will be paid in the next two years. Ald. Snead stated her objection to reducing the borrowing amount by the $2 million. Common Council Minutes 4 October 25, 2011 Ald. Harenda stated there is $800,000 in Residual TIF Funds that could be used for contingencies. Why borrow for those when we have a resource that could be used? Ms. Mueller stated that $600,000 of that money has been earmarked for grant or loan purposes per resolution. The Council would have to take action to change that. Ald. Soltysiak stated the bottom line is that some of the Council members do not want to borrow more than is needed whether short term or long term. He wants to borrow only what is needed for specific projects and is not comfortable with the flexibility. Mayor Chiaverotti stated the City is not borrowing more than it has to. Ms. Mueller stated it is not unusual for there to be issues when doing large projects so money in contingency is necessary. She reiterated that it is extremely inefficient to do multiple borrowings. It is not looked upon favorably because it appears the City is not planning properly. If the project numbers come in lower, the refunding can be reduced. The Mayor just reminded the Council that if the borrowed amount is reduced, the process will have to begin again and costs will be incurred. Ms. Mueller stated that a substantial amount of money has already been spent on projects, such as Durham Drive; the borrowing needs to move forward. In response to Ald. Fiedler’s question, Mr. Thompson stated the issuance costs on this borrowing were about $25,000. The Mayor noted staff time would be involved, and there is a cost to that as well. Motion to amend failed 3 in favor and 4 opposed with Ald. Soltysiak, Borgman and Harenda voting yes and Ald. Fiedler, Schaumberg, Werner and Snead voting no. Original motion to adopt Reso. #149-2011 carried 4 in favor and 3 opposed with Ald. Fiedler, Schaumberg, Werner and Snead voting yes and Ald. Soltysiak, Borgman and Harenda voting no. Reso. #150-2011 - A Resolution Authorizing the Issuance and Sale of $2,740,000 Water System Revenue Refunding Bonds of the City of Muskego, Waukesha County, Wisconsin, and Providing for the Payment of the Bonds and Other Details with Respect to the Bonds. Ald. Werner moved for adoption. Ald. Fiedler seconded. Mr. Thompson stated this is for the refunding of water revenue bonds. There were three outstanding issues from 1999, 2000 and 2001. All those bonds have interest rates well over 4.75%. The interest rate on the new bonds is 2.85% with a savings of $338,942 over a period out to 2020. The water utility rated one step below the City’s general obligation debt at Aa3, which is typical because it is supported by revenues as opposed to tax levy. Mr. Thompson noted that the rating is still very high. Motion carried 7 in favor. Mayor thanked Mr. Thompson for attending the meeting. Reso. #151-2011 - Approval of 2012 General Fund Operating Budget and Tax Levy. The Mayor noted that the proposed budget reflects a zero levy increase. Ald. Fiedler moved for adoption. Ald. Werner seconded. Ald. Harenda moved to amend to reflect a zero increase in wages and salaries. Ald. Borgman seconded. He stated the budget includes a 2% increase, which he opposes given the current economic climate. Ald. Soltysiak noted that the State just announced that there will be a zero percent increase for all employees for the next two years if approved by the legislature. He does not believe an increase is justified. The Mayor stated that just because the money is in the budget does not automatically mean the employees will receive it; it has to be negotiated. She believes some dollars need to be in the budget. Ald. Soltysiak stated there would be other sources to take the money from if it were needed. Motion to amend failed 3 in favor and 4 opposed with Ald. Soltysiak, Borgman and Harenda voting yes and Ald. Fiedler, Schaumberg, Werner and Snead voting no. Common Council Minutes 5 October 25, 2011 Ald. Harenda moved to amend to remove the $76,000 from Contingency so it could be appropriated to reinstate the Building Inspection positions and to not make any change to the City Engineer position. Ald. Soltysiak seconded. Ald. Harenda stated that the cost savings to eliminate the two inspection positions will be reduced by the amount of severance. He supports reinstating the Point of Sale Inspection to generate revenue. It is his understanding that there is work that the inspectors could do such as water inspections, which are 10 years behind. He expressed concern about promoting the City Engineer position to the Director of Public Works. The Mayor stated the employee is already acting as the Director given his administrative knowledge. He should be compensated accordingly. Ald. Soltysiak stated he does not believe the City will realize the savings stated in the budget by eliminating the two inspector positions. Builders and developers have expressed their preference to work with in house inspectors. He stated that the water inspections are mandated by the DNR and the City is behind in performing them. Why would the City not use existing employees to do these inspections? The cost for the additional outsourcing has not been figured into the potential savings to eliminate the positions. He does not support creating a Director of Public Works position. Putting the City Engineer in that position will cost more in the long run because the work he currently does will have to be outsourced or another employee hired. Ald. Soltysiak further stated that he does not believe the $76,000 should be put in Contingency; it should go back to the taxpayers, or be used to fund the building inspection positions. Mayor Chiaverotti noted that the majority of the additional money received from the State did go back to the taxpayers. That is how the zero levy increase was able to be proposed. Ald. Fiedler stated discussion took place at the Public Works Committee regarding the required water inspections. It cannot be assumed that the current inspectors are qualified and capable to perform the required inspections. The Public Utilities Superintendent stated that the inspections will be performed. Outsourcing the Building Inspection services has been discussed for several years. It was anticipated that economic growth would occur, which would cover the cost for those services. That has not happened and the Department Head has come forward with the proposal, which is expected to save significant dollars. He believes the transition will be transparent to the City’s residents. Ald. Soltysiak wanted to clarify that he supports retaining the Building Inspection Services Department. Staffing the department is a separate personnel issue. The Mayor added that the estimated annual savings is $100,000 to $125,000. Had this been implemented five years ago, the City would be ahead a half million dollars. Motion to amend failed 3 in favor and 4 opposed with Ald. Soltysiak, Borgman and Harenda voting yes and Ald. Fiedler, Schaumberg, Werner and Snead voting no. Ald. Harenda moved to amend to take the $76,000 recommended to increase the Contingency Fund and return it to the taxpayers. Ald. Soltysiak seconded. The Mayor stated doing so will not cover the anticipated contingencies. She further stated that taking the money to further reduce the levy would not be prudent. In the proposed budget, $356,000 of surplus funds was used to offset expenditures. That will not be available going forward. In addition, State Shared Revenue and Transportation Aids have been declining, which will continue. Ald. Snead reiterated that there was portion of the increased state aid that was being given back to the taxpayers. There was a proposed levy increase that was reduced to zero by using the additional money from the State. Ald. Harenda stated that not only is there money in Contingency, but there is Common Council Minutes 6 October 25, 2011 also Fund Balance. These are resources to be used for unallocated items or emergencies. Mayor Chiaverotti stated Fund Balance should not be used for contingencies. That is poor planning and will hurt the City’s bond ratings. She further noted that the State does allow municipalities to increase the levy by its net new growth. For 2012, the levy could have increased by 1.06%. Going forward, the City will probably have to increase the levy by the amount allowed. Ald. Harenda and Soltysiak disagree. Ald. Fiedler stated he does not support decreasing the levy any further. Motion to amend failed 3 in favor and 4 opposed with Ald. Soltysiak, Borgman and Harenda voting yes and Ald. Fiedler, Schaumberg, Werner and Snead voting no. Original motion to adopt Reso. #151-2011 carried 4 in favor and 3 opposed with Ald. Fiedler, Schaumberg, Werner and Snead voting yes and Ald. Soltysiak, Borgman and Harenda voting no. Reso. #152-2011 - Approval of 2012 Capital Budget. Ald. Fiedler moved for adoption. Ald. Schaumberg seconded. Ms. Mueller did note that language was added to the resolution regarding the Lake Property purchase and Boxhorn Launch to reflect that both projects are subject to further review by the Common Council. The 2012 Capital Budget does have money in for both if they are approved and move forward. Ald. Soltysiak moved to amend to remove $2,575,080 for the Pioneer Drive Project (2011-2013) and to allocate the same dollar amount for trail planning. Ald. Harenda seconded. Ald. Soltysiak does not believe the Pioneer Drive Project should go forward at this time. He does not believe it would provide a good return on the investment. He prefers that the money be spent to enhance the recreational trail system. Mayor Chiaverotti stated that the Pioneer Drive Project was in the 2014 plan. The reason it has been moved up was to respond to the business owners who requested that it coincide with the Janesville Road Reconstruction Project. The businesses did not believe that they could survive road construction in 2012, 2013 and 2014. Ald. Soltysiak stated he is not opposed to resurfacing the road, but that is not what is being proposed. The Mayor stated the estimated project cost of $2.5 million includes approximately $1 million for the water utility service. She believes it is a smart business decision to do the proposed project at this time given the favorable bidding climate and low interest rates. Ald. Borgman expressed concern about the timeframe given the County would not be redoing the section of Janesville Road that intersects with Pioneer until 2013. The Mayor stated all the consultants and governmental entities involved in both projects would coordinate the work. Ald. Werner reiterated his support for the project. In addition to the reconstruction project, many of the property owners want to receive water service. Motion to amend failed 3 in favor and 4 opposed with Ald. Soltysiak, Borgman and Harenda voting yes and Ald. Fiedler, Schaumberg, Werner and Snead voting no. Original motion to adopt Reso. #152-2011 carried 4 in favor and 3 opposed with Ald. Fiedler, Schaumberg, Werner and Snead voting yes and Ald. Soltysiak, Borgman and Harenda voting no. Reso. #153-2011 - Approval of 2012 Sewer Utility Budget and Rates. Ald. Fiedler moved for adoption. Ald. Snead seconded. The Mayor stated that there are no rate changes. Motion carried 7 in favor. Reso. #154-2011 - Approval of 2012 Water Utility Budget and Rates. Ald. Fiedler moved for adoption. Ald. Snead seconded. Ald. Soltysiak moved to remove Common Council Minutes 7 October 25, 2011 $961,580 for the Pioneer Water Extension from the Capital Outlay Costs. Ald. Harenda seconded. Motion to amend failed 3 in favor and 4 opposed with Ald. Soltysiak, Borgman and Harenda voting yes and Ald. Fiedler, Schaumberg, Werner and Snead voting no. Original motion to adopt Reso. #154-2011 carried 4 in favor and 3 opposed with Ald. Fiedler, Schaumberg, Werner and Snead voting yes and Ald. Soltysiak, Borgman and Harenda voting no. CLOSED SESSION Ald. Borgman moved to convene into closed session pursuant to Wis. Stats. §19.85(1)(f) Considering financial, medical, social or personal histories or disciplinary data of specific persons, preliminary consideration of specific personnel problems or the investigation of charges against specific persons except where par. (b) applies which, if discussed in public, would be likely to have a substantial adverse effect upon the reputation of any person referred to in such histories or data, or involved in such problems or investigations, more specifically discussion of pending duty disability claim and Wis. Stats. §19.85(1)(g) Conferring with legal counsel for governmental body who is rendering oral or written advice concerning strategy to be adopted by the body with respect to litigation in which it is or is likely to become involved, more specifically Kohls vs City of Muskego. Ald. Soltysiak seconded. Motion carried 7 in favor. Police Chief Geiszler, the Director of Finance and Administration and Assessor Laura Mecha were present for their respective closed sessions along with counsel for the City. OPEN SESSION Ald. Snead moved to reconvene into open session. Ald. Harenda seconded; motion carried. CONSENT AGENDA Ald. Harenda requested that Reso. #159-2011 be removed. Ald. Borgman stated he wanted to comment on Reso. #156-2011. Ald. Soltysiak moved to approve the remaining items. Ald. Snead seconded. Motion carried 7 in favor. The following items were approved: Approval of Operators’ Licenses Approval of Common Council Minutes - October 11, 2011 Reso. #155-2011 - Appointment to the Library Board Reso. #156-2011. - Resolution Authorizing a Grant from the Approved Janesville Road Building and Grant Program (Jill’s Cleaners - S74 W16834 Janesville Road). Ald. Borgman commented when the grant program was implemented, he thought the money would be used for items other than general maintenance, which is the responsibility of every property owner. Ald. Soltysiak suggested the CDA review the program; he will contact the chairman. Ald. Snead added that the CDA does scrutinize the requests in great detail. Reso. #157-2011 - Resolution Authorizing Special Quarterly Charges for Garbage and Refuse Disposal and Recycling Service Common Council Minutes 8 October 25, 2011 Reso. #158-2011 - Approval of Agreement between Graef and the City of Muskego for the Design of a Multiuse Recreational Path on Woods Road from Quietwood Drive to Racine Avenue Reso. #160-2011 - Request Exemption from the DNR for Any Low Flow Requirement from Dam Outlet Reso. #161-2011 - Approval of Settlement between Kohls vs. City of Muskego. (This resolution was not required. The Council gave the Assessor direction during closed session.) NEW BUSINESS CONTINUED Reso. #159-2011 - Approval of Agreement between RA Smith National and the City of Muskego for Design Services for the Reconstruction of Pioneer Drive from Janesville Road to Racine Avenue. Ald. Werner moved for adoption. Ald. Snead seconded. Ald. Harenda questioned why this was forwarded to Council without a recommendation from the Public Works Committee. Mayor Chiaverotti explained that an item does not need a favorable recommendation in order to be forwarded to the Common Council. The item generated from Committee of the Whole and the City Engineer needs direction. The Council ultimately makes the decision. It was noted that the Finance Committee did make a recommendation regarding the Agreement. Motion carried 4 in favor and 3 opposed with Ald. Fiedler, Schaumberg, Werner and Snead voting yes and Ald. Soltysiak, Borgman and Harenda voting no REVIEW OF COMMITTEE REPORTS The following minutes were reviewed: 9/27/2011 Finance Committee, 9/19/2011 Public Works Committee, 9/20/2011 Community Development Authority and 5/9/2011 Conservation Commission. LICENSE APPROVAL Ald. Fiedler moved to approve a Temporary “Class B” Retailers’ License for the Sale of Wine and Fermented Malt Beverages for the Muskego Chamber of Commerce for November 19, 2011. Ald. Soltysiak seconded. Motion carried 7 in favor. Ald. Fiedler moved to approve Mr. Zeke Radovanovic as the new agent for the “Class A” Retailers’ License held by Wal-Mart Stores East, LP. Ald. Soltysiak seconded. Motion carried 7 in favor. VOUCHER APPROVAL Ald. Schaumberg moved for approval of payment of Utility Vouchers in the amount of $350,685.73. Ald. Fiedler seconded. Motion carried 7 in favor. Ald. Schaumberg moved for approval of payment of General Vouchers in the amount of $330,918.21. Ald. Fiedler seconded. Ald. Harenda requested that the voucher for $8,839.50 for Priority Dispatch be removed to be discussed separately. Ald. Fiedler moved to amend the motion to approve the General Vouchers by reducing the total amount by $8,839.50. Ald. Harenda seconded. Motion carried 7 in favor. Ald. Harenda stated the voucher amount exceeded the amount that was budgeted. Ald. Werner stated that the City will receive some reimbursement for this from the State. Ald. Fiedler moved to approve the $8,839.50 voucher. Ald. Snead seconded. Motion carried 7 in favor. Common Council Minutes 9 October 25, 2011 CITY OFFICIALS’ REPORTS The November calendar was reviewed. COMMUNICATIONS AND MISCELLANEOUS BUSINESS Mayor Chiaverotti made the following comments regarding adoption of the 2012 budget:  The Common Council, by a vote of 4 to 3, adopted a budget with a zero levy increase. Going below would have risked services in the future.  The budget is fiscally responsible to the taxpayers and takes long-term planning into account.  The City is attempting to make sound “business” decisions.  Taking advantage of record low interest rates and a favorable bidding climate was also done.  Use of prior years’ surplus funds was also used to give money back to the taxpayers.  Personnel costs were reduced and reorganizations will be implemented to create more efficiency. Ald. Fiedler stated that the Durham Drive project was close to being finalized. He thanked the people in his district for enduring the inconvenience. He also thanked all those for their patience regarding the Big Muskego Lake level. ADJOURNMENT Ald. Snead moved to adjourn at 10:11 p.m. Ald. Fiedler seconded; motion carried. Minutes transcribed by Jill Blenski, Deputy Clerk