HomeMy WebLinkAbout12.09.13 Work Session Packet City of Farmington Mission Statement
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AGENDA
CITY COUNCIL WORKSHOP
December 9, 2013
6:30 p.m.
City Council Chambers
1. CALL TO ORDER
2. APPROVE AGENDA
3. FINANCIAL MATTERS
a. Long-term Fund Balance Strategies
b. Review of Proposed Debt Policy Revisions
4. AKIN PARK ESTATES PROJECT UPDATE
5. NO LET LOSS OF PARKLAND AND OPEN SPACE POLICY
6. CITY ADMINISTRATOR UPDATE
7. 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 aformal expression of
the City's position on any given matter.
1
,o / . City o of Farmington
= 1a Stret
g Farmington,Minnesota
p�/J 651.280.6800•Fax 651.280.6899
www.cifarmington_mn.us
TO: Mayor, Council Members, and City Administrator
FROM: Robin Hanson,Finance Director
SUBJECT: Long-term Fund Balance Strategies, General Fund and Debt Service Fund
DATE: December 9,2013
•
INTRODUCTION
Municipalities organize their financial activities into separate "funds" in order to properly
manage and account for the services provided. Each fund can be thought of as a separate
business organized for a specific purpose. Each of the funds has a different purpose, different
constraints on its resources, a different method of accounting for its activities, and is designed to
stand on its own financially.
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DISCUSSION
In 2012 several steps were taken to strengthen the City's overall financial position. Negative
fund balances were eliminated in the EDA, Recreation Operations and Ice Arena Funds. With
the exception of the new Fire Truck, all remaining interfund loans and receivables/payables were
eliminated. The 2005B and 2006A refunding bonds (i.e. 2013A) structure was revised to provide
for the collection of tax levy and special assessments to be received prior to the bond payments
becoming due. Some bonds were redeemed early, resulting in future interest savings. Financial
policies were adopted for the City's liquor stores and positive financial results are occurring.
The next logical step is to address the two funds that still do not stand on their own financially.
The General Fund and Debt Service Fund do not have sufficient resources to pay their bills all
twelve months of the year. The combined cash flow for these two funds was reviewed during the
September 9, 2013 City Council workshop. The maximum combined cumulative deficit reached
approximately $2.3 million in June 2013. In addition, the General Fund fund balance does not
comply with the City's financial policy or meet the minimum guidelines recommended by the
State Auditor's office. The Debt Service Fund does not comply with the funding requirements
set forth in the bond resolutions.
On November 7,2011,the City adopted a financial policy which established a minimum General
Fund Balance target of 25%of the subsequent year's expenditures. As of December 31, 2012 the
General Fund fund balance was 19.6% ($2,067,246 fund balance/$10,568,653 expenditures) of
the following year's budgeted expenditures, below the City's 25% target. Meanwhile, the State
Auditor's Office recommends a minimum fund balance of either 1) 35% of operating revenues
($3.7 million) or 2) five month's operating expenditures ($4.4 million). The chart on the
following page details each of these funding levels.
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The following table provides additional information about the funding levels needed for the
General Fund to comply with the City's financial policy and the State Auditor's guidelines.
State Auditor State Auditor
City Policy Option 1 Option 2
Five Months
35%of of Operating
General Fund Expenses
Operating Funding
25% of Revenues Level
Subsequent (State (State
Year's Auditor Auditor
Expenditures Minimum) Minimum)
General Fund:
Unassigned Fund Balance Target $ 2,642,163 $ 3,699,029 $ 4,403,605
Actual 12/31/12 Unassigned Fund Balance $ 2,050,000 $ 2,050,000 $ 2,050,000
12/31/12 Unassigned Fund Balance,Underfunding $ 592,163 $ 1,649,029 $ 2;353,605
Projected General Fund underfunding if nothing
is done over the next 10 years,2%inflation $ 720,000 $ 2,010,000 $ 2,870,000
Average Annual Increase Needed For Next 10
Years To Achieve Minimum Funding Level $ 72,000 $ 201,000 $ 287,000
Earlier this year the Office of the State Auditor published a Financial Review of Minnesota
Cities. This report provided detailed information for each Minnesota City regarding fund balance
levels. A comparison of the City's General Fund fund balance with cities of similar size and
neighboring cities is included as Exhibit A. If you would like a copy of the State Auditor's
report,let me know and it will be provided to you.
As for the Debt Service Fund, in accordance with State law, the bond resolutions require the debt
service funds be funded at 105% of the principal and interest due. As of December 31, 2012, the
City did not meet this requirement. See attached Exhibit B. Assuming we remain in a low
interest rate environment, staff believes by following the steps recommended at the end of this
memo the Debt Service Fund deficiencies will be addressed.
During one of the City Council workshops earlier this fall, we reviewed how to-date these
deficiencies have been covered with internal borrowings. While internal borrowing is less
expensive than external borrowing arrangements, the City realizes this is not a healthy long-term
fmancial situation. The other internal funds have their own operational needs and are not
intended to be the `bank or line of credit' for the General Fund and Debt Service Fund.
As you know this situation did not occur overnight. It will require a commitment to a
combination of efforts and many years to achieve these financial targets. At this time the City
needs to acknowledge the deficit situations and commit to taking specific steps to eliminate these
deficits.
3
Council is being asked to support the following specific steps to increase the City's General
Fund and Debt Service Fund fund balances to the desired minimum funding levels:
1) Continue to adopt solid,comprehensive budgets,including conservative revenue
projections.
2) If the General Fund's actual revenues exceed actual expenditures,retain(i.e. do not
spend)these funds in the General Fund to strengthen its fund balance. This is similar
to the situation that occurred in 2012.
3) Debt refunding's and all new borrowings(bonds or otherwise)will be structured to
ensure the source of repayment is collected prior to the related debt service being paid
and the 105%minimum funding levels are satisfied.The 2013A and 2013B bond
issues were structured this way.
4) Future budgets will continue to include a debt levy increase(ex. $80,000 in 2014)
until the 105%funding level deficiencies are eliminated.
5) Staff will review related existing funds, such as the Road and Bridge Fund and TIF
Funds,to determine if monies can be transferred into any of the corresponding Debt
Service Funds to come into compliance with the 105%funding requirement. The
initial set of transfers is included as Exhibit C. In addition updated cashflow
projections for the Road and Bridge Fund and Non-Road and Bridge Fund bonds will
be available at the meeting.
6) If the General Fund and Debt Service Fund deficits are expected to continue past
February 1, 2018, then Council is committed to increasing future General Fund and
Debt tax levies as necessary in 2018-2023 to eliminate the deficit by the end of 2023.
The February 1,2018 date was selected because the bond issues currently not meeting
the 105% funding requirement are eligible for refunding on or before February 1,
2018. By the end of 2017, the City will know which bond issues still need additional
funding to satisfy the 105%funding requirement.
There will continue to be fmancial challenges in the future. A vigilant commitment to these
strategies will serve to further strengthen the City's financial health and make future financial
decisions less difficult than they otherwise could be.
ACTION REQUESTED:
Adopt the following long-term strategies to achieve the City's minimum funding levels for the
General Fund and Debt Service Funds:
1) Continue to adopt solid, comprehensive budgets, including conservative revenue
projections.
2) If the General Fund's actual revenues exceed actual expenditures,retain(i.e. do not
spend)these funds in the General Fund to strengthen its fund balance.
3) Debt refunding's and all new borrowings(bonds or otherwise)will be structured to
ensure the source of repayment is collected prior to the related debt service being paid
and the 105%minimum funding levels are satisfied.
4) Future budgets will continue to include a debt levy increase(ex. $80,000 in 2014)
until the 105% funding level deficiencies are eliminated.
5) Staff will continue to review related existing funds,such as the Road and Bridge
Fund and TIF Funds,to determine if monies can be transferred into any of the
corresponding Debt Service Funds to come into compliance with the 105%funding
requirement.
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6) Approved the proposed Debt Service Fund Transfers outlined in Exhibit C.
7) If the General Fund and Debt Service Fund deficits are expected to continue past
February 1,2018,then Council is committed to increasing future General Fund and
Debt tax levies as necessary in 2018-2023 to eliminate the deficit by the end of 2023.
Respectfully submitted,
Robin Hanson, Finance Director
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Exhibit A
2011 Fund Balance Comparisons
Information from the State Auditors Financial Review of Minnesota Cities Report
Unrestricted
Fund Balance as
2011 Total 2011 Total a Percent of
Cities of Unrestricted Current Total Current
Similar Size: Fund Balance Expenditures Expenditures
Champlin $ 4,731,957 $ 18,742,964 25.2%
Chanhassen $ 7,813,280 $ 12,545,811 62.3%
Chaska $ 2,753,025 $ 12,183,248 22.6%
Elk River $ 9,849,331 $ 16,040,973 61.4%
Faribault $ 7,173,602 $ 14,850,687 48.3%
Farmington-2011 $ 1,516,892 $ 9,428,187 16.1%
Hastings $ 5,423,105 $ 13,392,627 40.5%
New Hope $ 9,587,293 $ 10,423,732 92.0%
Northfield $ 7,864,454 $ 10,696,893 73.5%
Ramsey $ 7,198,542 $ 14,536,306 49.5%
White Bear Lake $ 4,418,651 $ 8,632,150 51.2%
Neighboring Cities:
Apple Valley $ 12,587,092 $ 23,131,141 54.4%
Lakeville $ 11,088,641 $ 20,427,598 54.3%
Rosemount $ 7,753,467 $ 10,136,804 76.5%
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12/31/12 Debt Service Funds Overage(Shortfall)
Exhibit B,page 1
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' Does the City have enough cash on hand to satisfy When are bonds eligible for refunding and .
_ 105°/requirement? _ what are outstanding interest rates?
12/31/13 12/31/13 Debt
Estimated 105% Service Fund Remaining
Cash 2014 Debt Requirement Overage Final Callable Interest Rates
Balance Service** (Fiscal Year) (Shortfall Resolution Maturity Call Date Amount At Call Date
1995 Wastewater Treatment $ 47,934 $ 29,334 30,801 , 17,133 8/20/2016 2/1/2016 28,507 4.63%
2004B(TIF-City Center) $ 11,796 $ 73,640. 77,322 (65,526) 2013 Trf TIF$'s 2/1/2015 Minimal benefit to City to refund.
2004D(Pd off 1/4/13) $ 67,765 $ - - N/A To 2007A in 2013 N/A N/A N/A N/A
2005A(Pd off 1/4/13;owe R&B Fund$'s) $ 8,364 $ - - N/A N/A N/A N/A N/A
2005B(To be refunded 2/1/14 by 2013A) $ 165,011 $ 201,153 211,210 (46,199) 2014 N/A N/A N/A N/A
2005C $ 32,507 $ 134,786 141,525 (109,018) 2014 and 2015 2/1/2026 2/1/2016 1,385,000 3.875%-4.4%
2006A(Refunded 3/1/13) $ - $ - - - - N/A N/A N/A N/A
2007A $ 300,724 $ 573,019 601,670 (233,181) 2015,2016,2017 2/1/2028 2/1/2017 6,480,000 4-4.2%
2008AB $2,830,287 $ 719,066 755,020 2,075,267 2/1/2024 2/1/2017 4,725,000 3.55-4.1%
2010A(Refi) • $ 13,931 $ 343,619 360,800 (346,869) 17,18,'19($33K) 2/1/2022 2/1/2018 1,435,000 3.25-4%
2010B(Pd By Utility Fds) $ 10,991 $ 107,960 113,358 (102,367) Utility Fds Trans 2/1/2022 2/1/2018 445,000 3.125-3.25%
2010C $ 189,245 $ 165,522 173,798 15,447 2/1/2027 2/1/2017 1,665,000 3-3.75%
2010D(need to move$to proj acct) $ 16,201 $ 131,070 137,624 (121,4231$121K Unresolved I 2/1/2020 2/1/2017 405,000 2.7-3.1%
2011A $ 96,100 $ 304,794 320,033 (223,933) Rd&Br Trans 2/1/2019 2/1/2018 335,000 2.50%
2013A $ 151,324 $ 53,650 56,333 94,992 2/1/2022 2/1/2020 1,240,000 2% .
2013B $ 1,703 $ - 1,703 2/1/2020 N/A N/A N/A
2007-DCC(will be pd off 2/1/14) $ 82,277 $ 56,375 N/A N/A N/A N/A N/A N/A
Fire Truck $ - $ - N/A _ N/A N/A N/A N/A N/A
$4,026,160 I$ 2,893,987 $ 2,979,492 [$ 18,143,507
Road and Bridge Fund Related Bonds -" (270,132)
6/17/13 Per Shelly
(912,857) Aggregate Early Redemption Options
Non-Road and Bridge Fund Related Bonds computed on fiscal
Amount Needed To Satisfy 105%Requirement year. Above now only ! $ (1,182,989) 2/1/2016 1,413,507 3.875%4.63%
includes 2/1 debt 13,275,000 2.7-4.2%
• j service payments.,not L/
8/1/interest payments. 1
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The theory being the If low interest rates continue,could 2/1/2018 2,215,000 2.5-4%
June/July installment possibly resolve this in next 5 years.
arrives in time for
Would require new issues to wait $ 16,903,507
August 1 payment. one year,before principal payments
iare made,similar to 2013A.
.
*Agrees to 2012 CAFR. _ _ _
**Agrees to 2013 Debt Payment Detail schedule. •
***Goes away 2/1/14
Transfers being recommended to address 105%deficiency.
v
' 12/31/12 Debt Service Funds Overage(Shortfall)
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Exhibit B,page 2
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2015 Scheduled -_
Pd In Full
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Principal(except 2015 Scheduled 2015 Trustee, Transfer Projected .
for 2013A and Interest(except Spec Assess, Transfer $'s From 2014 Debt
2013 B which is for 2013A and B Cont Disc, $'s from Transfer Road and 2013A Levy Need
8/2015 and which is 8/2015 Arbitrage Comp, TIF From Bridge Special Funds On Without 2014 Debt : 2015 Debt 2017 Debt
2/2016) and 2/2016) Etc. Account Utilities Fund Assess Hand 105% Levy Levy 2016 Debt Levy Levy 2018 Debt Levy 2019 Debt Levy
1995 Wastewater Treatment 54,162 4,505 185 58,852 70,500 1 58,050 Pd In Full Pd In Full Pd In Full Pd In Full
20048(TIF-City Center) 70,000 1,820 588 72,408 TIF Funds TIF Funds 2 TIF Funds Pd In Full Pd In Full Pd In Full Pd In Full
2004D(Pd off 1/4/13) - - - Pd In Full Pd In Full : Pd In Full Pd In Full Pd In Full Pd In Full Pd In Full
2005A(Pd off 1/4/13;owe R&B Fund$'s) 177,000 - - 10,484 Internal Adv 177,000 3 177,000 3" 110,000 3' - - -
20058(To be refunded 2/1/14 by 2013A) - - - - 49,000 2013A Refund I 2013A Refund 2013A Refund !2013A Refund '2013A Refund
2005C 100,000 63,759 588 172,564 276,000 1 167,000 1 165,000 1 166,000 167,000 167,000
2006A(Refunded 3/1/13) - , - - 20136 Refund 2013A Refund 2013A Refund 12013A Refund 2013A Refund 2013A Refund '2013A Refund
2007A 420,000 311,438 616 768,656 734,000 889,413 4 780,239 4 757,529 1 850,000 798,000
2008AB 605,000 237,110 6,720 390,588 - 352,791 110,723 50,000 75,000 I 85,000 90,000 ', 90,000 ; 90,000,
2010A(Refi) 305,000 87,906 2,610 415,292 398,000 396,000 393,000 531,373 453,865 507,385
20108(Pd By Utility Fds) 95,000 23,023 2,610 124,552 Utility Fds Pay Utility Fds Pay Utility Fds Pay Utility Fds Pay Utility Fds Pay Utility Fds Pay
2010C 135,000 66,106 2,790 30,000 28,273 152,905 - 150,000 i 181,000 . 181,000 181,000 ' 181,000
2010D(need to move$to proj acct) 125,000 19,184 2,610 154,133 166,550 4 147,000 1 145,000 146,000 143,000 143,000
2011A 295,000 30,938 2,750 30,931 312,644 312,000 310,000 310,000 315,000 320,000 320,000
2013A 670,000 94,000 3,489 281,000 101,999 14,250 388,753 453,950 321,950 458,334 448,333 443,333 443,333
2013B 160,000 20,815 2,610 192,596 135,000 180,815 129,775 253,730 495,675 417,995
2007-DCC(will be pd off 2/1/14) - - - - 1,000 Pd In Full - - -Fire Truck 113,657 6,343 N/A 120,000 120,000 ' 120,000 120,000 120,000 - -
3,324,819 966,946 28,166 72,408 515,140 311,000 524,478 14,250 2,843,003 I 2,943,000 2,992,228 2,877,348 3,008,965 3,143,873 3,067,713
Road and Bridge Fund Related Bonds Road and Bridge Fund , 1,033,950 1,144,334 1,034,333 1,034,333 1,034,333
Non-Road and Bridge Fund Related Bonds Non Road Bridge Fund 1,958,278 1,733,014 1,974,632 2,109,540 2,033,380
Amount Needed To Satisfy 105%Requirer ,228 i L. 2 8 !!77,348 i F--- 3,143,873 1 ; _ 31.
Amt Kevin Has Built Into CIP(excludes 20138 and 2014$80K Debt Levy) I 2,719,950 2,659,334 I I 2,655,895 I I 2,537,333 I I 2,538,334
2014 General Debt Levy Increase 80,000 80,000 80,000 80,000 80,000
2013B Actual 180,815 129,775 253,730 495,675 417,995
20138 Estimate vs Actual 11,463 8,239 ��19,340 30,865 31,384.iiii Target " WA!!E?'' .,.. .. -..
Future 195th and 2019 issue 67,500 293,500 293,500 293,500 485,700
Agrees to Kevin's CIP worksheet 3,059,728 3,170,848 3,302,465 3,437,373 3,553,413
*Agrees to 2012 CAFR.
**Agrees to 2013 Debt Payment Detail schec
***Goes away 2/1/14 1-Increased to address 105%deficiency.
2-Recommending 2013 transfer be increased to address 105%deficiency
3-$512,000 of internal funds were advanced in 2013 to redeem bonds early and is
to be repaid by future levy dollars.
4-Balance used to partially address 105%deficiency.
11/20/20133:26 PM H:\Budget 2014\2014 Debt Levy Calculation
OD
Proposed 2013 Additional Debt Service Fund Transfers Exhibit C
IN
Gen'I Fund 2011A 2010D 2007A 2004B Cap Acq
Fund 1000 3099 3098 3135 3235 4000 Totals
0 TIF Proj Acct 2050 $ 70,000 $ 70,000
U 2004D DSF* 3125 I $ 67,765 $ 67,765
T Sewer 6202 $ 26,250 $ 26,250
Solid Waste 6302 $ 39,375 $ 39,375
Storm 6402 $ 13,125 $ 13,125
Water 6502 5 26,250 1 $ 26,250
Rd & Bridge Fd 4100 $ 225,000 $ 225,000
DCC Bonds 2007*' 3140 $ 33,000 $ 45,569 $ 78,569
- $ 33,000 $ 225,000 $ 105,000 $ 67,765 $ 70,000 $ 45,569
Transfer from TIF Project Account to TIF Debt Service Fund to eliminate 105% deficiency,
-s`Transfer 2004D Debt Service Fund residual to 2007A to partially address 105% deficiency.
c -' iTransfer funds from the utility accounts into the 2010D bond to eliminate 105% deficiency.
Transfer funds from Road & Bridge Fund to 2011A to eliminate 105% deficiency.
Final payment for DCC bonds will be made before 12/31/13. Initial $33,000 from General Fund being returned. Residual transferred to
Capital Acquisition/Cable Fund for future capital project.
*In addition the remaining special assessments of approximately$$13K are being recommended
for transfer to 2007A
**Amount being transferred to Capital Acquisition Fund is an estimate as of 11/30/13. Final amount will be determined at year-end.
CD
H:\Council Memos\2013 Year-End DSR Transfers2013 Year-End DSR Transfers2012 Transfers per Budget
� ��, City of Farmington
' 430 Third Street
Farmington,Minnesota
10 651.280.6800-Fax 651.280.6899
�Y. pa°y�`� www.ci.farmington.mn.us
TO: Mayor, Council and City Administrator
FROM: Robin Hanson, Finance Director
SUBJECT: Review of Proposed Debt Policy Revisions
DATE: December 9,2013
INTRODUCTION:
Staff will provide a review of proposed revisions to the City's existing debt policy.
DISCUSSION:
The City's debt policy was last reviewed and updated April 18, 2005. The current policy is attached
as Exhibit B.
After working with the City's various debt issues,reviewing the GFOA's (Government Finance
Officers Association—national organization) sample debt policy,the Minnesota League of Cities
information, and the debt policies for the cities of Lakeville and Chanhassen, staff has provided a
revised debt policy for your review and consideration. For your convenience notes have been added to
the existing policy to indicate whether a section was being carried over, changed, expanded or deleted
in the new policy. The proposed revised investment policy is attached as Exhibit A.
ACTION REQUESTED:
Review and provide feedback on proposed debt policy changes.
Respectfully submitted,
Robin Hanson,Finance Director
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,
Exhibit A
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City of Farmington, Minnesota
Debt Policy
Purpose
The purpose of this policy is to establish parameters and provide guidance governing the issuance, management,
continuing evaluation of and reporting on all debt obligations of the City pf Farmington and to provide for the
preparation and implementation necessary to assure compliance and confo I.with this policy.
Debt Limits <;;�1c?.' ",.
Legal Restrictions g 4` s : '-:;'
State of Minnesota Statutes limits the amount of le :
,°�i'ebl; obligation for debtins{truments that are wholly tax
supported to 3%of the City's estimated market value. s]imitation does not apply toother types of debt the City
may issue. . .
Public Policy --z....:-\,\•••••••
The policy requires a commitment to lonk-tangg,' financial planning hich incorporates, at a minimum, five-year
capital improvement and capital equipment p'la i 'at ci ntain debt assuip. tiio s that match this policy.
Long-term borrowing will be li eted to financing ec ital equ ��n �it,public' aeilities or infrastructure needs, which
cannot,and appropriately sh,gdiikbe financed sotely from c entYevenues:•
The City has a goal of p for all capital equipment kith a?useful liife of five years or less from cash reserves or,
within the bounds of le ti� `"°*
vy it t from ar ual operating tdgets. Capital equipment with a useful life greater than
five years may be financed wi d• t,but,tli ,final maturity;'should not exceed ten years.
Refundin 41 ;4;i'ssues"''designed tb;;restructure d'iiir ntl' oiiis ding debt at a lower net interest rate are an
accepta use ofbond roc�e�eds. ,
Debt will' of be used to finan 0,i urent okr Mons, except in the case of extreme financial emergency which is
beyond its co'''ol,r reasonable alii#t :,to fore
Financial Restr� o s .,,`';.!
The City will strive to`i e by 2020.0d then maintain direct debt outstanding of less than$1,000 per capita.
Debt.Structuring Practi s .
Proposals
Debt proposals will be accompanied by an analysis of the sources and uses of funds for the project to be financed
and the sources of funding for repayment of the debt.
Structure
Term—The City will endeavor to keep the total maturity length of general obligation bonds equal to or less than 20
years and at least 50%of the principal shall be retired within 10 years. In all cases,the final maturity shall be
shorter than the useful life of the related assets.
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Tithing--Debt repayment will be structured to reflect the collection of the source of repayment prior to the
scheduled payment of the principal and interest of the related debt.
Structure—Debt will be structured to achieve the lowest possible net cost to the City given market conditions,the
nature of the capital project and the revenue source pledged to the debt repayment. Typically,the debt will be
structured with level principal and interest payments.
Coverage—For debt subject to Minnesota State Statute Chapter 475,the City will levy taxes equal to 105 percent of
the principal and interest due that year to cover possible deficiencies in tax collection.
Variable and Derivative-Based Debt—The City will generally not issue variable rate debt and will not use
derivative-based debt.
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Interfund Borrowing—Interfund borrowing for periods of more than one 440 shall only be undertaken for capital
expenditures.A reasonable payment schedule for repayment of the bor�rt1ed`amounts,including interest at an
interest rate comparable to the investment of City funds in a similar ,and enforceable covenants,established
to ensure recourse if the schedule is not adhered to,shall be appr 0 k e;•amity Council.
Debt Issuance Practices ,:::
Advisors ,� ;� '�;.: ,
The City may use the services of qualified internal staff,,outside advisors,to assist in tli.q. alysis,evaluation and
decision.process,including bond`counsel and financial adv�o• s •S':'« Y.;;;,,
Sale Type ' �; ,;�.1,,,,, �,
Bonds will be sold on a competitive basis unliss if'isin the,best interes '''‘...1'N,f the City to conduct a negotiated sale.
Competitive sales are preferred. :;$;, a,;kr.;
Negotiated sales may occur e•�`r special circnms ces to be p .oy.ed in adv ce�by Council.In the event of a
negotiated sale process tl�eefty, -ill seek to establish<a com t�; .fNe selectiipn,of ancial institutions,unless the
transaction's size is ve ?amall. +•a ''
\i 4 :p 1
Advanced and Current Ref ndings.P• ,.-:••
Unless there e' programmahc�re�son -kfo e'sample t remove tax-exempt restrictions),advanced and current
refundin . ;,nds•'sh6 d'n t be utilized unless e: i e t vat~e savings of at least 3%of refunded principal is
achievS done in coice ;yyith other bonds issues tio'save'costs of issuance.And for advanced refunding's the
call date eds to be within 2'ygars, • ? :.,
;,:,
Debt Manage ent Practices
Investment of Bori :Proceeds t:•.'•.?
The City shall follow tii'4,,kipe invest***guidelines when investing debt proceeds as stated in the City's
investment policy. ';;,�: 1 :`:a,° :,;
Early Redemption and Refuriiliitgs
The City will periodically review all outstanding debt to determine if there is an net economic benefit to early
redemption or refunding opportunities.Potential benefits include reductions in future interest costs,restructuring
debt to better fit evolving revenue sources and restructuring legal covenants or eliminating federal tax restrictions.
Refundings with a negative interest cost savings will not be considered unless there is a compelling public policy
objective.
Policy Compliance Responsibility
While the Mayor and City Council have ultimate responsibility for policy compliance,professional assistance will
be provided by the City's Finance Director.
12
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Disclosure
The City shall comply with SEC rule 15(c)2(12)on initial and continuing disclosure deemed appropriate for each
issue of debt. -
Arbitrage Rebate Monitoring and Filing
The City will follow its Post Issuance Deb Compliance Policy.
Effective Date
This policy reflects the current Debt Policy of the City of Farmington and shall be effective immediately upon
adoption of the City Council. The policy shall be reviewed periodically to assure continued appropriateness and
relevance.
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Effective 12/16/2013;Last Revised 4/18/2005 • '
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13
RESOLUTION NO.R-13
RESOLUTION ADOPTING A DEBT POLICY FOR THE CITY OF FARMINGTON,
MINNESOTA
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of
Farmington, Minnesota was held in the Council Chambers of said City on the 16th day of
December 2013 at 7:00 p.m. .
•
Members present:
Members absent: •
Member introduced and Member s .;. ded the following resolution:
WHEREAS, the City of Farmington seeks to psi. fish parameters and provide guidance
governing the issuance, management, continu pg�,;evaluation off;;and reporting on all debt
obligations; �'.=,�., ' ,•
WHEREAS,the City desires to maintain, and i:f'pbspible to improve its cui 'ent AA-bond rating
so borrowing costs are minimized and access to credit:itt.pr, zved and ti''.,
WHEREAS,decisions about debt sho ul't;lbt;the result of deliberate consideration of all factors
involved. :`':..
'��` ;t
NOW THEREFORE J J RESOLVFI?'by the oity;Council o£the City of Farmington,
Minnesota that the j l�fFarxh bibton hereby�hdop s�tl a attfic�ied Debt Policy for the City.
.,:,,,:::\ ,;;:.:-.:;.-,
This resolution adopte y., ecord4,;vote of the:Farmington City Council in open session on the
16th day of D9c;pr ber 20 '' ::
Mayor
Izn
Attested to the '?day of December,2013.
City Administrator
SEAL
•
14
/ 5 717,_ 9--Th
RESOLUTION NO.R43-05
ESTABLISHING A DEBT MANAGEMENT POLICY
Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of Farmington,
Minnesota,was held in the Council Chambers of said City on the 18 day of April 2005 at 7:00 p.m.
Members Present: Soderberg,Fogarty,McKnight,Pritzlaff,Wilson
Members Absent: None
Member Wilson introduced and Member Pritzlaff seconded the following:
WHEREAS, the City of Farmington seeks to maintain, and if possible to improve its current A2 bond
rating so borrowing costs are minimized and access to credit is preserved; and,
WHEREAS, it is imperative that the City demonstrate to rating agencies, investment bankers, creditors
and taxpayers that City officials are following a prescribed financial plan; and,
WHEREAS,decisions about debt should be the result of deliberate consideration of all factors involved.
NOW, THEREFORE, BE IT RESOLVED by the Mayor and City Council of the City of Farmington,
that the City will adhere to the following Debt Management Policy:
71. General Obligation bond borrowing shall be planned and the details of the plan will be
incorporated in the City's Five Year Capital Improvement Plan.
2. Bond proceeds should be limited to financing the costs of planning, design, land
acquisition, buildings, permanent structures, infrastructure, attached fixtures or equipment
�� �,,�y - and movable pieces of equipment with a life expectancy of greater than 10 years as
permitted by State Statute.
(3. Refunding bond issues designed to restructure currently outstanding debt at a lower net
�iolid ( interest rate are an acceptable use of bond proceeds.
/4. The City will not use short-term borrowing to finance operating needs except in the case of
extreme financial emergency which is beyond its control or reasonable ability to forecast.
5. Bond proposals will be accompanied by an analysis of the sources and uses of funds for
9 the project to be financed with the bond proceeds and sources of funding for the repayment
of the bonds. The analysis will reflect how the new bond will fit with the City's existing
?). -debt structure.
6. The City may use the services of qualified internal staff and outside advisors to assist in
the analysis, evaluation and decision process, including bond counsel and financial
advisors.
,/7. All potential debt issued by the City will comply with all laws and regulations, as well as
sound financial principles.
8. Bonds will be sold on a competitive basis unless it is in the best interest of the City to
conduct a negotiated sale. Competitive sales are preferred. Negotiated sales may occur
under special circumstances to be approved in advance by Council.
15
✓ 9. Bonds cannot be issued for a longer maturity schedule than a conservative estimate of the
useful life of the asset to be financed. The City will attempt to keep the average maturity
004 [of General Obligation Bonds at or below 20 years.
1 Whenever possible, the City will finance capital projects using self supporting revenue
" bonds,d those who pay for the project are matched).
equity (those who benefit from the project
11.Financial reporting and disclosure requirements will be fulfilled annually according to the
v/ disclosure guidelines of the Government Finance Officers Association of the U.S and
Canada.
This resolution adopted by recorded vote of the Farmingto, City Council in open session on the 18th of
April,2005.
I►!a or
Attested to the tor/4 day of April 2005. —� I
City -tin iIstrator
SEAL
16
`o�m ir/y : City of Farmington
0 430 Third Street
' '`x;>:?a Farmington,Minnesota
°.0 651.280.6800•Fax 651.280.6899
'sr'A PROS\g\0 www.ci.farmington.nm.us
TO: Mayor, Councilmembers, City Administrator
FROM: Kevin Schorzman, City Engineer
SUBJECT: Akin Park Estates Project Update
DATE: December 9,2013
INTRODUCTION/DISCUSSION
At the October 7th meeting Council provided direction on several items related to this project.
As an update,we have completed the first review of the project specifications and plan sheets are
in development. While preparing the specifications, one item surfaced that requires Council
input. The MnDOT specifications currently have a table that adjusts the amount that is paid per
ton for bituminous materials based on the density of the in-place material after construction. The
table includes both incentives for achieving a higher density than considered "normal" or
"acceptable", and disincentives for achieving lower density. It has been City practice over the
past several years to modify the MnDOT specification to remove the incentive, but keep the
disincentives.
Because having higher density should lead to a higher quality, longer lasting pavement, I believe
it would be in the long-term best interest of the City to begin allowing the incentives for
achieving higher density. In the MnDOT specification, incentives of 2% to 3% are included
based on the achieved density. Staff is proposing 1% or 2%. If the contractor chooses to try to
achieve this incentive, and is successful, estimates indicate that the maximum incentive payment
would be less than$15,000.
Related to the construction schedule, the current specifications allow work on the project to
begin on June 16th, and the project needs to be substantially complete prior to August 30m. It is
anticipated that staff will ask Council to approve the plans and specifications and authorize
advertisement for bids at the January 6, 2014, Council meeting. The project would then be
advertised and bids would be opened on February 10, 2014, and pending favorable bids, the
Council would be asked to approve the bids and award the contract to the lowest responsible
bidder at the February 18,2014 City Council meeting.
BUDGET IMPACT
As discussed in the past, if this project comes in under budget, any remaining funds would be
used to fund a project on 9th, Hickory, and Euclid Streets. The inclusion of incentive payments
for density has the potential to increase the project cost by as much as $15,000.
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•
Akin Park Estates Project Update
December 9,2013
Page 2 of 2
ACTION REQUESTED
Review the information and provide feedback on the recommended incentive.
Respectfully Submitted,
Kevin Schorzman
City Engineer
cc: file
18
�o�F i�, City of Farmington
��0 430 Third Street
Farmington,Minnesota
l'44(
°44'-1 651.280.6800•Fax 651.280.6899
.83.•A PROM°d
www.cilarmington.mn.us
TO: Mayor, City Council Members and City Administrator
FROM: Randy Distad,Parks and Recreation Director
RE: No Net Loss of Parkland and Open Space Policy
DATE: December 9, 2013
INTRODUCTION
The Park and Recreation Commission(PRC)identified in its 2013 Annual Work Plan to develop policies for
issues related to Parks and Recreation and then forward the recommended policies to the City Council for
approval. The most current policy to be drafted for the City Council's consideration is a No Net Loss of
Parkland and Open Space Policy(Policy).
DISCUSSION
From time to time a request is made to purchase parkland or open space from the City. There currently is not
an approved City policy on how to address this request. Department staff created the Policy that is attached
as Exhibit A,which includes criteria to be met in order for consideration of parkland and/or open space to be
sold or disposed of to another party.
Staff reviewed the draft Policy with the PRC at its September 11,2013 meeting. The PRC approved
unanimously a recommendation to the City Council to adopt the Policy.
Having the Policy in place will provide a much needed tool for staff to use when addressing requests that are
made from someone to purchase City parkland and open space.
ACTION REQUESTED
By motion adopt the attached No Net Loss of Parkland and Open Space Policy.
Respectfully Submitted
Randy Distad
Parks and Recreation Director
cc: Park and Recreation Commission Members
19
4, City of Farmington
•
,oci
'y 430 Third Street
g , Farmington,Minnesota
�10 651.280.6800•Fax 651.280.6899
.A�O
www.ci.farmington.mn.us
NO NET LOSS OF CITY PARKLAND AND OPEN SPACE POLICY
I.PURPOSE
The purpose of this policy is to reinforce the importance of the City's existing parkland and open space
(collectively known as PLOS) areas by establishing a policy whereby the City shall preserve and protect
PLOS and shall not sell,transfer, lease, relinquish,release, alienate, or change the control or use of any right
or interest of the PLOS with another party unless an equal amount is acquired by the City or the public
benefit is greater than the benefit of the PLOS. The City's policy shall be to have no net loss during any type
of land transaction involving PLOS. Creating this policy shall provide guidance to City staff,the Park and
Recreation Advisory Commission and the City Council during discussions about the preservation and
protection of PLOS.
II. DEFINITONS
For the purposes of clarifying key words,the following definitions apply to the key words being used to
describe the policy:
Park: Public green space owned by the City that is used more for organized recreational purposes such as
exercise, socialization, athletics, leisure programs, etc.
Open Space:Public space or area owned by the City and used for recreational purposes but is developed
less in an organized and intensive manner and preserved more in a natural state, which can include such
natural features as: wildlife,habitat, undeveloped scenic area, forested/wooded land, and water.
No Net Loss:Meaning to either remain the same or increase but not decrease.
Criteria: Certain requirements needing to be met.
III.POLICY
Statement of Policy
It is the policy of the City of Farmington to protect,preserve and enhance all City-owned PLOS. Further the
policy requires that the City shall not sell,transfer, lease,relinquish,release, or change the control or use of
any right or interest of City owned PLOS land. The goal of this policy is to ensure no net loss of PLOS
under the ownership and control of the City of Farmington. Exceptions,if any, shall be governed by the
conditions included in this policy.
Page 1 of 2
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Policy Exceptions
The City of Farmington shall not support the sale,transfer, lease, relinquish,release or change the control or
use of any right or interest of City owned PLOS unless there are exceptional circumstances that exist.A
determination of"exceptional circumstances" is subject to all of the following criteria being met:
• Safety of the community is at stake.
• Public benefit is greater than the loss of PLOS.
• Its proposed use does not destroy or threaten a unique or significant resource i.e. significant habitat,
rare or unusual terrain, or areas of significant public recreation.
• The sale, lease or transfer of a PLOS parcel is not contrary to the express wishes of the person(s)
who donated, dedicated or sold the parcel or interests therein to the City of Farmington.
Review Process for Disposal of PLOS When Exception Criteria are Met
To ensure that disposal of PLOS is in the best interest of the City of Farmington an internal review process
for any potential disposal to ensure that, at a minimum,the conditions in the Criteria section above are met.
The internal review process shall include the following steps:
1. Initial review by City staff to determine if criteria has been met
2. Review by Park and Recreation Advisory Commission who will forward a recommendation to the
Planning Commission
3. A public hearing held at a Planning Commission meeting with a recommendation being forwarded
to the City Council by the Planning Commission
4. City Council reviews and either approves or does not approve the disposal of PLOS
PLOS Land Exchan'e
The substitution or replacement parkland is always required when a proposal is being made to dispose of
PLOS. Substitute lands must be provided. The substitute or"swapped"property must be at least equal to the
lands being converted. "Equality"is based upon the specific standards below:
• The fair market value of the lands proposed for substitution must be of equal or greater value than the
lands being converted.
• The recreational usefulness of the lands proposed for substitution must be reasonably equivalent to
the lands being converted.
• The location of the lands proposed for substitution must be comparable to the lands being converted.
Thus,the fair market value of both the proposed substitute lands and the land to be converted must be
determined and submitted. In determining fair market value,the City of Farmington requires that strict
appraisal rules be followed, specifically,the Uniform Standards of Professional Appraisal Practice.
Leasing Undeveloped PLOS for Other Uses
The City may wish to lease undeveloped PLOS property for other uses until it is determined that
improvements shall be made to the PLOS property. In this case a formal written lease agreement shall be
drawn up with the party that is interested in leasing the PLOS. Any funds received from the lease of PLOS
shall be deposited into the Park Improvement Fund for future improvements in all City PLOS.
Page 2 of 2
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