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HomeMy WebLinkAbout03.12.12 Work Session Minutes Council Workshop Minutes March 12,2012 Mayor Larson called the workshop to order at 6:30 p.m. Present: Larson,Bartholomay,Donnelly, Fogarty(arrived 6:40 p.m.) Absent: May Also Present: David McKnight, City Administrator;Tim Pietsch,Fire Chief;John Powers, Fire Marshal;Adam Fischer,Fire Department;Cynthia Muller,Executive Assistant MOTION by Bartholomay, second by Donnelly to approve the agenda. APIF,MOTION CARRIED. Fire Truck There are three options for purchasing a fire truck,demo,new,or HGAC(a pre-bid consortium). A demo would be used by the manufacturer for up to six months. This would be a$7,800 savings. To obtain a new truck,we would go out for bid. The Fire Department would determine who matches the specs and review pricing. A new truck would be built to the needs of the department and the City. Other cities have more equipment and don't need as much on the truck. We would need equipment mounted on the truck. (Councilmember Fogarty arrived). HGAC is a pre-bid consortium. There are nine fire truck manufacturers that have already pre-bid and are qualified. It costs$1,000/year to join, but the bid process is already done. They review the specs and match up our needs with the best manufacturer. Approximately 25%of the truck would not be custom so we then have the option to change the component manufacturer to one that complies with HGAC or buy it separately. The more we comply with HGAC the bigger the savings. Purchasing turnout gear from HGAC would save$125. Using HGAC would shorten the process by three months. The Fire Department expects a fire truck to cost between$555,000 - $600,000. Council reached a consensus on using HGAC to purchase a new fire truck. Fire Truck Funding City Administrator McKnight noted any costs are estimates. There are two funding options. The first option is to bond for the truck. A$555,000 bond would cost$623,000 to pay back. Another option is to borrow from the Water Board. It would be a five year loan, and staff suggested paying the Water Board 3%interest on the loan. With the Water Board loan,the City would pay$20,000- $25,000 less than bonding. Staff is recommending obtaining a loan from the Water Board. The City would save money and the Water Board would earn interest. The Water Board has agreed to this, as they will not be using the money during the five year period. Mayor Larson, Councilmembers Fogarty and Donnelly suggested 2%interest. Councilmember Bartholomay suggested 1.65%interest. The Fire Department was directed to move forward with purchasing a new fire truck. Staff will bring an agreement to the Water Board for 2%interest on the loan and the agreement will be brought to Council for approval. Loan payments would start in 2013. It takes 9-12 months to build a fire truck. 10 Council Workshop March 12,2012 Page 2 2013 Budget Goals City Administrator McKnight explained the gap that needed to be filled in the 2013 budget. Council used one-time money to maintain the levy for 2012. That created a gap for 2013 of $367,258. We need to fill that gap so we start 2013 at zero. Council paid off two debts in 2012 with that one-time money;the EDA debt of$175,000 and the Park and Rec fund debt of $120,000. Those numbers do not need to be carried over to 2013. In order to fill the gap,we also had a change in Community Development saving$50,000. Council created a$140,000 reserve in 2012 and City Administrator McKnight proposes to take$30,000 of that to fill the gap. These four cuts,the EDA debt$175,000,the Park and Rec fund debt$120,000,Community Development change$50,000 and$30,000 reserve reduction total$375,000 to fill the$367,000 gap. This gets us to zero for 2013. Some of the issues we need to be aware of for 2013 and the future include the following: Street projects $400,000-$800,000 Vehicles/Equipment $330,000-$630,000 Ice Arena Deficit $275,000 Fire Truck Payment $140,000 Economic Development Funding $50,000 Delinquent Tax Levy $75,000 Fuel Costs • $15,000 Revenue Shortages Liquor Store Funding Future HR/Contract Costs Department Requests Levy Limits Likely Returning Economy and Taxpayer Attitude Council's Budget Goals Councilmember Bartholomay was concerned with Directors' salaries and wants their salaries under$100,000. Councilmember Fogarty likes the idea of working on a two-year budget for 2013 and 2014. She would like to incorporate the CIP for roads and equipment into the budget. She realized we cannot do it all in one year. She did not buy into the fact that vehicles need to be replaced within a certain number of years. She would rather see it go by mileage. Mayor Larson stated we have a CIP schedule in place for roads. Staff is planning on keeping that schedule,but it needs funding. The needs have not changed. Councilmember Donnelly stated if we fund these things they cannot be totally funded with tax increases,there also has to be a savings. The legislature is talking about levy limits and staff is expecting a levy limit at 1.9%to 2.0%. Mayor Larson agreed with Councilmembers Fogarty and Bartholomay. Also in the long term, after hearing about the fuel savings with Dakota County,he feels it is important for the City to have our own fueling station and salt storage. Eventually it will pay for itself over time. We cannot afford it now,but he would like it included in the plan. We need to work on funding for 11 Council Workshop March 12,2012 Page 3 the CIP for roads and equipment. Mayor Larson asked if there was a plan for the ice arena. City Administrator McKnight stated we are close to breaking even,but we still have the negative $250,000 fund balance issue. We will likely have to levy for it and suggested$25,000/year for 10 years. We moved the pool to the general fund so why are we still funding the pool with liquor store revenue. Those funds could be used for the arena. Mayor Larson would like staff to bring a plan for the arena to Council. Councilmember Fogarty asked about the length of the bond for the arena. Mayor Larson stated we have cut a lot of people at City Hall and asked when we get to the point of diminishing return. He noticed the Police Department has a lot of administrative staff and asked the City Administrator to look at staffing. Budget Format City Administrator McKnight presented a new format in budget worksheets for Council to use for working on the 2013 and 2014 budgets. There are four levels of detail and he presented the first three levels to Council. In reviewing the budgets,he has noticed in 2011 there was a total of $107,000 spent in three personnel areas that was not budgeted for. This is part of what is affecting our fund balance. The admissions revenue for the arena was not met in 2011 and should have been corrected for 2012. Council is very pleased with the new budget worksheets. At the end of the year,the large format we currently have for the budget will still be prepared. City Administrator Update City Administrator McKnight viewed the old senior center building with a different realtor and was told if we want to sell it,we need to fix it up. Councilmember Fogarty will not accept the low offer the City has been given when it will not go on the tax roles. City Administrator McKnight agreed if we fix it up we will increase the sale price but the net profit will likely be the same as the offer that was made recently. He will bring a new realtor agreement to Council and get a quote on abatement. MOTION by Fogarty, second by Bartholomay to adjourn at 7:40 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 12