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HomeMy WebLinkAbout10.14.13 Work Session Minutes Council Budget Workshop Minutes October 14,2013 Mayor Larson called the workshop to order at 6:30 p.m. Present: Larson, Bonar, Fogarty Absent: Bartholomay, Donnelly Also Present: David McKnight, City Administrator;Robin Hanson, Finance Director;Kevin Schorzman, City Engineer;Randy Distad, Parks and Recreation Director;Todd Reiten, Municipal Services Director;Blair Peterson, Liquor Operations Manager; Cynthia Muller, Executive Assistant Investment Review Finance Director Hanson reviewed the investment portfolio as of September 30, 2013, and the City's Investment Policy. As of September 30, 2013,the City has a combined balance of$21.7 million in cash and investments. $5.4 million is in a checking account at Anchor Bank and$16.3 million is invested with other financial institutions. The average checking account balance for the last three years has been approximately$6.9 million. Investment balances have increased over the last three years. The City can invest in a variety of investments. Finance Director Hanson would like to expand the type of investments we use and the authority to do so. The current policy says we cannot have 25%of investments extend longer than five years and none should extend beyond ten years. Interest rates have changed over the last nine months. We have a$210,000 swing at the end of September. Staff has recorded this as interest income as allocated in the budget. Finance Director Hanson reviewed proposed changes to the Investment Policy. The last time this was reviewed was in 2011. She is recommending that no more than 30%of total investments extend beyond five years and no investments should extend beyond 15 years. A section on ethics and conflicts of interest was added. A paragraph has been added allowing the Finance Director to sell an investment as long as it is at par or a gain. This would not be allowed if it will be a loss. The current practice will continue of reconciling the investment report monthly,providing a quarterly report to the City Administrator, and an annual report to Council. This policy will be brought to the October 21,2013, Council meeting for approval. 2014 Budget Review—Other Funds Enterprise Funds—Liquor Operations—City Administrator McKnight stated staff is being very conservative in building this budget year to year. Regarding the general fund, Councilmember Bonar asked about the percentage of revenues over expenditures. We had a$10 million general fund budget in 2012,with$500,000 to the good, which is 5%. A lot of delinquent taxes were collected in 2012. Councilmember Fogarty asked about building permits this year. City Administrator McKnight noted we are at 150%through 13 Council Workshop Minutes Page 2 October 14,2013 September,which is$100,000+. That number was increased$10,000 - $15,000 next year. Staff prefers to wait a few years before making any large changes to this amount. There are 300 lots available. Councilmember Bonar stated his level of comfort with revenues versus expenditures is 1 —3%which is tough to do. City Administrator McKnight noted we are still in a big hole. Each fund should stand on its own. We got to a surplus of$500,000 in the general fund last year because of conservative budgeting. Enterprise Funds—Street Lights—Mayor Larson asked if staff has done research on LED lights for savings and if there are any rebates from electric companies. City Engineer Schorzman stated this has not been done in the last year. Mayor Larson asked if the per light charge could be reduced by installing energy saving bulbs. Staff noted West St.Paul is in the middle of a big study with their street lights. Results will be available after next year. After those results a lot of cities will have the tools to evaluate the potential upfront cost of switching over and the payoff to make informed decisions. Mayor Larson agreed with waiting for those results. Xcel provided the lights for free to West St.Paul so they had no upfront costs that others will have. Xcel will take this back to the public utilities commission and use it to establish the rate for their LED fixtures. Until that is finalized, we don't know what the cost will be to switch over. Currently we collect $210,000/year for the street light utility. The goal would be to keep this utility rate at the same amount for the longest time possible. Councilmember Bonar stated we could have an opportunity with MN RETAP to explore our street lights. We have two utilities providing electricity for the community. He felt it is important that we consider some sort of pilot program and be at the leading edge. City Engineer Schorzman noted we would have to give both companies an opportunity to set up a study area and ask for their best offer and the rate. Municipal Services Director Reiten noted they are constantly coming up with new technology. Right now, companies are more interested in the outcome of the West St.Paul study. Mayor Larson was comfortable with waiting for the study. The fund balance at the end of December 2012 was just short of$31,500, but there was only$3,000 in cash and$28,000 in receivables. Councilmember Bonar noted there is risk in doing nothing. Storm Water Utility—Councilmember Fogarty asked about new rules encouraging higher water rates and conserving more. City Engineer Schorzman stated there are ground water studies in our area that are alarming. A discussion with the Water Board was a concept of water conservation rate structures. That is why they increased the gap in the rates to $.50. Councilmember Fogarty asked about simple references they can use to explain to residents that even though we don't have water shortage, we still need to conserve. Staff distributes a lot of information about water conservation. The watering restrictions were set up for system concerns. If everyone watered,the wells could not keep up and would be at risk if there was a fire. Solid Waste—Mayor Larson noted they are minus one person and asked if that position needs to be replaced. Municipal Services Director Reiten replied no, at certain times they borrow a person from streets. Water Utility—Revenue is expected to exceed expenditures by$41,000 after depreciation. 14 Council Workshop Minutes Page 3 October 14,2013 Special Revenue Funds—Arena—Staff will be buying skates in 2014 for renting. The dehumidification system is working great. The heating system has been upgraded in the team rooms and seating. Park Improvement Fund—A conscious effort was made to fund trail maintenance. If we don't have development coming in we won't have funding for park improvements. Parks and Recreation Director Distad provided funding options including liquor store profits, a tax levy and local government aid. Trail maintenance is a separate fund from park improvements. Councilmember Bonar asked about the status of the trail master plan. The initial plan is to get all the county trails done first,then identify trails within the City system. All county trails have been seal coated except for the intersection at Pilot Knob and 195th Street because of the upcoming street project. The TIF Eagles district will be expiring in 2014. Finance Director Hanson is working with financial advisers on the City Center TIF which has an accumulated fund balance of$300,000. Any excess TIF funds this year have been put into the EDA fund. Debt Fund—When looking at the budget from 2014 to 2015 we are stepping up paying the CIP bonds. The 2015 budget will increase the tax levy due to the debt. Each bond series costs us $2,000/year to do arbitrage compliance. Capital Projects—The seal coat funding is operating as anticipated. The 2012 road and bridge fund has been reconciled. Staff is working on consolidating the funds where possible. We have $1.7 million in assessments in Vermillion River Crossing related to the bridge. This plan assumes it is 100%collected. We have six lots that have been purchased. For two of those lots, the Credit Union and the medical clinic, the decision was made to push those assessments to the remaining part of the development and reallocate it. Four of the lots have active assessments and are paying on them. We have the$1.7 million remaining balance and have to make provisions on financial statements whether we think we will collect that or will continue to push assessments to other lots. Regardless of whether Council decides to forgive any assessments, Finance Director Hanson is obligated to write it down on the financial statements. She asked that Council think about how forgivable they want to be with assessments. Whatever amount is forgiven, affects the road and bridge fund at 100%of the amount. Council discussed taking the assessments that were pushed off and do a 2%reduction for the entire development, not lot specific. 2014 Fee Schedule Regarding the pool, in an effort to generate more revenue,the hours have been extended in the afternoon and the rate increased, and reduced the evening hours and the rate. Season passes have been eliminated. An option of 50 punches with a punch card has been added. Adding another hour in the afternoon will hopefully increase concession sales. In some cases concession prices have been raised 50%with no complaints. This year there was a$3,000 increase in revenue over last year by increasing concession prices. 15 Council Workshop Minutes Page 4 October 14,2013 The SAC rate has been increased proportionate to the Met Council increase. The antenna lease rate was increased in line with the market. The surface water management fee follows a plan which is a 30 year look at the rates and how to keep them where they need to be. The sanitary sewer trunk fee is a 2% increase to keep up with the increased cost of construction. General Fund—There is no change from the 2014 preliminary budget. The increase is due to debt on both the CIP and corrections. As of today,the 2015 budget is a 4.587%levy increase. Expenditures are up 3%and revenues are down 2.29%. Fiscal disparities will be left as is until new numbers are received. Debt is up 2.29%mostly due to the step up in repayment of the CIP. Any changes to wages and benefits in 2014 will affect 2015. The same LGA revenue amount is included in 2015. City Administrator Update The hotel feasibility study started today. The study will take three weeks. City Administrator McKnight met with DARTS and the City of Lakeville. DARTS has applied for a grant to provide service in Farmington, Lakeville, and Hastings. Our cost would be $5,000/year. There would be two days of service in Farmington/Lakeville and one day in Hastings. The service area would be determined. Council agreed with the investment. MOTION by Fogarty, second by Bonar to adjourn at 7:55 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 16