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HomeMy WebLinkAbout12.16.13 Council Minutes COUNCIL MINUTES REGULAR DECEMBER 16, 2013 1. CALL TO ORDER The meeting was called to order by Mayor Larson at 7:00 p.m. 2. PLEDGE OFALLEGIANCE Mayor Larson and Cub Scout Pack 117,Den 7,led the audience and Council in the Pledge of Allegiance. 3. ROLL CALL Members Present: Larson,Bonar, Donnelly, Fogarty Members Absent: Bartholomay Also Present: Andrea Poehler, City Attorney; David McKnight, City Administrator; Robin Hanson, Finance Director; Kevin • Schorzman, City Engineer; Jen Dullum,Natural Resources Specialist; Cynthia Muller, Executive Assistant Audience: 4. APPROVE AGENDA City Administrator McKnight noted some duplicate pages in the packet. Councilmember Fogarty asked to discuss 7b) Set Date Board and Commission Interviews. MOTION by Fogarty, second by Bonar to approve the Agenda. APIF,MOTION CARRIED. 5. ANNOUNCEMENTS 6. CITIZEN COMMENTS 7. CONSENT AGENDA MOTION by Fogarty, second by Bonar to approve the Consent Agenda as follows: a) Approved Council Minutes (12/2/13 Regular)(12/9/13 Workshop) b) Set January 6,2014 for Board and Commission Interviews. Councilmember Fogarty is not available on January 6, 2013. Executive Assistant Muller noted all incumbents have re-applied. There is one vacant seat on the HPC and an application has been received for that seat. In the past Council has not interviewed incumbents, so there would be one applicant to interview. If there continues to be one applicant,the interview will be held on January 6,2014, at 6:30 p.m. c) Approved Fire Contract with Castle Rock Township-Administration d) Approved Temporary On-Sale Liquor Licenses VFW -Administration e) Adopted RESOLUTION R56-13 Accepting Donation City Hall - Administration f) Adopted RESOLUTION R57-13 Approving HPC Consultant Contract- Planning g) Approved Senior Citizen Assessment Deferral - Finance h) Approved Bills APIF, MOTION CARRIED. 3 Council Minutes(Regular) December 16,2013 Page 2 8. PUBLIC HEARINGS 9. AWARD OF CONTRACT 10. PETITIONS,REQUESTS AND COMMUNICATIONS a) MS4 SWPPP Application for Reauthorization -Engineering This is an application to apply for coverage for an NPDES permit to discharge the City's storm water. Farmington has a municipal storm sewer and we are required to develop a storm water pollution prevention plan. Coverage under the current permit has been extended until the new permit is approved by the MPCA. The application is due December 30, 2013, and there will be a 30-day review period. Upon approval, the City will have 12 months to implement the new permit and all the changes in it. Natural Resources Specialist Dullum highlighted the various changes contained in the permit. There will be ordinance revisions,written procedures, and we will have to update our organization's practices from what is currently in our storm water plan. City Engineer Schorzman noted other cities hired a consultant to work on this application. Farmington's was prepared in- house by Natural Resources Specialist Dullum. b) Approve Long-Term Fund Balance Strategies -Finance In 2012, Council took several steps 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 were eliminated,the 2013A and 2013B bond issues were structured to provide for the collection of the levy prior to the bond payments being made, some bonds were redeemed early resulting in future interest savings, and financial policies were adopted for the liquor stores and positive fmancial results are occurring. The next step is to address the general fund and debt service fund. These do not have sufficient resources to pay their bills all 12 months of the year. The combined cash flows for these two funds show a combined cumulative deficit of$2.3 million in June 2013. The general . 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. The City's minimum funding guidelines for the general fund is to have on hand 25% of the subsequent year's expenditures. The State Auditor's office recommends the minimum fund balance be calculated either at 35% of general fund operating expenses for the year or five months of operating expenses. The minimum funding guidelines range from$2.6 million to $4.4 million. As of December 31, 2013,the City had an estimated general fund fund balance of$2,050,000. This means the general fund is underfunded between $600,000 - $2.4 million, depending on which benchmark is used. Other cities closest in population have a fund balance ranging from 22% - 92%. The three neighboring cities have fund balances of 54% - 76%. In 2011,the City's fund balance was at 16%. At the end of 2012,the City's fund balance was 22%. State law requires 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. 4 Council Minutes(Regular) December 16,2013 Page 3 The City is projected to be underfunded by$1.2 million as of December 31, 2013. The City will pay all of its scheduled debt service in 2014,but will need to borrow internally to do so. Internal borrowing will be repaid as the 2014 tax levy dollars are received. The majority of the City's bond issues are eligible for early redemption in the next five years. If low interest rates continue,the City may be able to refund several bond issues to address the 105%requirement, cash flow timing and achieve interest rate savings. Finance Director Hanson presented a worksheet showing how over the next six years,the City should be able to meet the 105%funding requirement in the majority of its bond issues. Staff is recommending Council adopt the following strategies to eliminate these deficits over the next few years. 1. Continue to adopt solid, comprehensive budgets, including conservative revenue projections. 2. If the general funds' actual revenues exceed actual expenditures,retain these funds in the general fund to strengthen its fund balance. 3. Debt refundings and all new borrowings 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 until the 105% funding level deficiencies are eliminated. The 2014 budget includes $80,000 to address this. 5. Staff will continue to review related existing 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. There is an initial set of transfers that can be done. 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 these deficits by the end of 2023. Councilmember Donnelly clarified with the debt service requirement of 105%, the City is not overspending. We have to have 105% of the debt payment in the debt service fund. Finance Director Hanson explained the 105%requirement is because not everyone pays their taxes on time, so according to state law,we have to ensure we have enough funds on hands to make the payments. Currently we have been borrowing internally from other funds and then repaying it when the tax levy comes through. This is a result of not levying enough in the past. Councilmember Bonar noted this provides positive,forward thinking solutions and where we are going, not where we were. MOTION by Bonar, second by Fogarty to approve the above steps and the proposed debt service fund transfers presented. APIF,MOTION CARRIED. c) Adopt Resolution—Approve Debt Policy Revisions -Finance The Debt Policy was last reviewed in April 2005. Finance Director Hanson has reviewed several other debt policies and has revised our current Debt Policy. The purpose of the policy is to establish parameters and provide guidance governing the issuance, management, continuing evaluation and reporting of all our debt 5 Council Minutes(Regular) December 16,2013 Page 4 obligations. It covers debt limits, debt structuring practices, debt issuance practiced and debt management practices. Finance Director Hanson explained each of these sections and the proposed changes. Councilmember Bonar noted this is one more example of revising our policies. This policy is more than appropriate and guides our hand and future Councils. Councilmembers thanked Finance Director Hanson for her work on this. MOTION by Fogarty, second by Donnelly to adopt RESOLUTION R58-13 approving the revised Debt Policy. APIF,MOTION CARRIED. 11. UNFINISHED BUSINESS 12. NEW BUSINESS 13. COUNCIL ROUNDTABLE Councilmember Donnelly: Wished everyone Happy Holidays and enjoy time with your families. Councilmember Fogarty: Wished everyone Happy Holidays. There are two days left to donate to Toys for Town. Wrapping will take place Saturday morning at the high school. Councilmember Bonar: He and other Councilmembers attended the five-year anniversary of the Yellow Ribbon Network. A beautiful piece of artwork was given to the City. Farmington was the first in the nation for this effort. Mayor Larson: Thanked Governor Dayton and all those who attended the five- year anniversary Yellow Ribbon Network celebration. The artwork was donated by a local artist and signed by military soldiers as they came through the Yellow Ribbon Network He encouraged residents to shop local. 14. ADJOURN MOTION by Fogarty, second by Donnelly to adjourn at 7:39 p.m. APIF, MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 6