HomeMy WebLinkAbout02.25.13 Work Session Packet City of Farmington Mission Statement
430 Third Street Through teamwork and cooperation,
Farmington,MN 55024 the City of Farmington provides quality
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foster a promising future.
AGENDA
CITY COUNCIL WORKSHOP
February 25, 2013
5:00 p.m.
Training Room
1. CALL TO ORDER
2. APPROVE AGENDA
3. 2013 GOAL SETTING/STRATEGIC PLANNING
4. CITY ADMINISTRATOR UPDATE
5. ADJOURN
PUBLIC INFORMATION STATEMENT
Council workshops are conducted as an informal work session,all discussions shall be considered fact-finding,hypothetical and unofficial
critical thinking exercises,which do not reflect an official public position.
Council work session outcomes should not be construed by the attending public and/or reporting media as the articulation of a formal City policy
position. Only official Council action normally taken at a regularly scheduled Council meeting should be considered as a formal expression of
the City's position on any given matter.
�Y A i�, City of Farmington
/` 4 430 Third Street
�` \„s Farmington,Minnesota
o 651.280.6800•Fax 651.280.6899
A PRR
www.cilarmington.mn.us
TO: Mayor, Councilmembers, City Administrator
FROM: Kevin Schorzman, P.E., City Engineer
SUBJECT: Road and Equipment CIP Discussion
DATE: February 25,2013
INTRODUCTION/DISCUSSION
Staff has continued to work on Capital Improvement Plans (CIPs) for both infrastructure and
equipment that will meet the City's needs operationally and at the same time not create undue
burden on the taxpayers of the City. Attached to this memo, you will find a chart depicting
several items:
• Levy for existing Road and Bridge debt
• Levy for other existing debt
• Levy for new road CIP debt
• Levy for new equipment CIP debt
• Levy for road CIP expenditures
• Levy for equipment CIP expenditures
• Funds available for other needs
Attached you will also find a spreadsheet indicating the monetary value of each block. Also, as
background information, the 2013 levy dedicated to existing Road and Bridge debt and other
existing debt totals approximately$2.72 million.
Levy for existing Road and Bridge debt: The black bars indicate the amount of levy used to
service existing Road and Bridge debt. This information is taken directly from the "Road and
Bridge Fund” spreadsheet that Council has seen on numerous occasions, and that has been used
as the financial plan for the old Road and Bridge Fund for three years.
Levy for other existing debt: The gray bars indicate the amount of levy used to service other
existing debt currently owed by the City. This debt was incurred to fund items such as fire
stations, the police station, the central maintenance facility, city hall, the old waste water
treatment facility,the ice arena improvements, and the DCC.
Road and Equipment CIP Discussion
February 25,2013
Page 2 of 3
Levy for new road CIP debt: The light pink bars indicate the levy necessary to service new
debt that will be necessary to fund future road CIP projects. While it would be ideal to fund
these projects without incurring debt, the amount of time necessary to save the required funds
would not be realistic when it comes to the timing of the needs. It also takes advantage of
anticipated lower interest rates toward the beginning of the CIP and weans off of debt in the
future when interest rates can be reasonably anticipated to be higher. Debt associated with this
item will fund the 195th Street project in 2015, and portions of the 2'" Street project in 2019, the
Willow Street project in 2022, the Spruce Street project in 2023, the 1st Street project in 2024,
the Westview Acres project in 2027, the 6th Street project in 2028, and the Pine Street project in
2029. This debt is necessary to cash flow this plan.
Levy for new equipment CIP debt: The red bars indicate the levy necessary to service new
debt that will be necessary to fund future equipment CIP expenditures. The debt associated with
equipment expenditures is necessary to finance three large purchases of fire equipment in the
plan. The assumption is that these purchases would be financed over a period of 5 years similar
to the recent fire truck purchase. This keeps the time frame compact which reduces interest
costs, and provides the necessary funding to cash flow the plan.
Levy for road CIP expenditures: The blue bars indicate the levy that will go directly toward
expenditures in the road CIP. These funds will not be used to service debt; rather they will pay
for actual expenditures associated with the plan.
Levy for equipment CIP expenditures: The yellow bars indicate the levy that will go directly
toward expenditures in the equipment CIP. These funds will not be used to service debt; rather
they will pay for actual expenditures associated with the plan.
Funds available for other needs: The green bars indicate funds that have not been allocated
toward debt or actual expenditures associated with either the road CIP plan, the equipment CIP
plan, or current debt. These funds would be available for future needs of the City not included in
one of the plans.
A few items to note:
• As indicated on the spreadsheet, the graph depicts a levy increase of $125,000 in
2014, increases of $118,267 in 2015 through 2019, and an increase of $36,882 in
2020. As a percentage increase over the 2013 (and 2012 and 2011 for that matter)
levy, the increase in 2014 is 1.46%, 2015 through 2019 is 1.38%, and 2020 is 0.43%.
Staff is not anticipating the need to increase the levy beyond 2020 to support the road
CIP and the equipment CIP.
• There will likely be additional operational increases (not associated with these plans)
needed beyond those listed in any given year. The benefit of the light yellow bars on
the graph is that additional operational increases may be taken out of this without
creating the need for a levy increase. The first of these bars appears in 2021, which is
less than 10 years from the start of these plans.
Road and Equipment CIP Discussion
February 25,2013
Page 3 of 3
• As we have discussed many times, there is a cost to deferred maintenance. Both of
these plans will, by nature, create deferred maintenance costs. When putting together
these plans, staff tried to limit the impact of deferred maintenance costs by moving
the equipment plan out into the future and accepting that there will be deferred
maintenance cost associated with this action. However, inherently, the deferred
maintenance costs associated with moving the road plan out into the future and
starting the equipment plan now seemed to be more significant than the costs
associated with moving the equipment plan out and starting the road plan now.
• Specific to the road CIP, the levy associated with the plan is sufficient to support the
plan without assessments. There are several cities that are considering moving away
from assessing for these types of projects. Apple Valley discontinued assessing for
projects as part of their 2013 budget process.
Respectfully Submitted,
Kevin Schorzman,P.E.
City Engineer
cc: file
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