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HomeMy WebLinkAbout07.14.14 Work Session Minutes Council Budget Work Session Minutes July 14,2014 Mayor Larson called the work session to order at 6:32 p.m. Present: Larson,Bartholomay, Bonar, Fogarty Absent: Donnelly Also Present: David McKnight, City Administrator; Robin Hanson, Finance Director;Brian Lindquist,Police Chief;Adam Kienberger, Community Development Director; Randy Distad,Parks and Recreation Director; Kevin Schorzman, City Engineer; Todd Reiten,Municipal Services Director;Blair Peterson, Liquor Operations Manager; Cynthia Muller, Executive Assistant MOTION by Bartholomay, second by Bonar to approve the agenda. APIF,MOTION CARRIED. The purpose of this work session was to review the draft 2015-2016 budgets for the special revenue, capital projects and enterprise funds. Special Revenue Funds EDA—The EDA 2015 budget includes$40,000 in general tax levy dollars for operations and $50,000 in local government aid for the proposed Vermillion River Crossing hotel assessment subsidy. Funding is also included to implement the marketing plan and to provide for a facilitated review and work session on a new three-year strategic plan for economic development. TIF—City Center and Eagles—Decertification for City Center is December 31,2020. The bonds will be fully repaid in 2015. The Eagles district will be decertified at the end of 2014. Staff will work with Ehlers on options for next steps. Police Donations and Forfeitures—Revenue is obtained from forfeitures and donations to the K-9 program. Park Improvement Fund—The 2015 budget includes$40,000 in transfers from liquor operations. Expenditures for 2015 are budgeted at$200,000 for the construction of a new building at North Creek Park including restrooms and open area that could be used as a warming house. There will be an extension on the end for a picnic shelter and room for storage. Councilmember Bonar asked about the current cost of the warming house. Parks and Recreation Director Distad stated it is a small trailer onsite for December through February. The cost is $1,200 per year. Councilmember Bonar asked about the balance of the fund where this money would be taken from. Finance Director Hanson stated the projected balance of the Park Improvement Fund at the end of 2014 is$234,000. At the end of 2015 it is projected to be $107,000 and in 2016 the balance would be$111,000. Councilmember Bonar asked about Recreational Capital Projects. Staff explained that is only Rambling River Center projects. Councilmember Bonar asked about a long term plan for the park improvement fund. Parks and Council Work Session Minutes July 14,2014 Page 2 Recreation Director Distad stated the plan is to focus on neighborhood parks. Troy Hills Park needs new playground equipment,but there isn't room for a shelter. Prairieview Park needs new playground equipment and potentially a shelter. The park in Executive Estates will need to be developed. Councilmember Bonar stated with a potential planned expenditure of$200,000 in a park and based upon our proceedings for the next five years, are we going to reduce the fund balance to near zero in the future? Parks and Recreation Director Distad stated that depends on whether we have development. Park dedication fees have been the primary source of funding. Some park development fees are charged on building permits, but are earmarked for specific parks. There is the potential the fund may zero out. There could be some funding from liquor operations. Improvements could be phased over a longer period of time. Councilmember Bonar was concerned about such a large expenditure for a warming house. Any income is shown as rental income in the general fund. Mayor Larson agreed it is a lot of money for a shelter for a neighborhood park. Parks and Recreation Director Distad explained it provides an opportunity for larger rentals and it is an indoor space that can be used for weather related issues. Councilmember Bartholomay stated we are doing a survey in 2015 and would look at this in conjunction with the second sheet of ice and the pool. He would like to see the outcome of the survey before we do any large expenditures on parks. He would like to see the money spread out over several parks. He would like to see the$40,000 liquor operations transfer spread out for trail maintenance as well. Councilmember Fogarty noted North Creek Park is the only other place for hockey and pleasure rinks,however, she agreed with other Councilmembers. We are looking more at Jim Bell Park now and she would rather see the expenditure go there and wait until after the survey. Mayor Larson agreed. There is not enough money in the fund balance to spend this amount of money. Councilmember Bonar asked what the Parks and Recreation Commission is planning for 2016. Staff stated they are looking at$30,000 for a shelter at Fairhills Park, $15,000 for completing construction of the remaining boardwalk in Meadowview Park and$25,000 for a small looped paved trail in Hillview Park for a total of$70,000. Some of these could be moved to 2015. There was a consensus among Councilmembers to move the proposed 2016 capital projects to 2015 and the 2015 projects to 2016. Ice Arena—The 2015 and 2016 budgets anticipate a$20,000 transfer from the general fund to the ice arena. The 2015 budget with the transfer has a projected negative balance of$18,000. Specific items in the 2015 budget include a new POS system that allows staff to accept debit or credit cards, investment in additional skates, increased costs related to providing summer ice, purchasing and installing surveillance cameras at the arena, and expanding the Wi-Fi at the arena. Council Work Session Minutes July 14,2014 Page 3 Councilmember Bartholomay asked why employee benefits are doubling from 2014 to 2015. City Administrator McKnight stated it is for budget accuracy and to place an employee where they belong in the budget. Councilmember Bartholomay asked if any of the items could be spread out over a couple years. That can be done,but staff wanted to get the technology done in 2015 to move forward. If we are going to have summer ice,this budget reflects those costs. Mayor Larson asked about the cost for each of the items. The POS is$4,500 for hardware and training,the additional skates are$1,600 to expand sizes offered, surveillance cameras are approximately$6,000 for four cameras. Councilmember Fogarty asked about expenses versus revenues for summer ice. Summer ice just started today so that information will be available later. This is the best time of year for staff to have summer ice. Councilmembers agreed with this budget. City Administrator McKnight reminded Council this is not an$18,000 loss, it is a$38,000 loss. The$20,000 liquor operations transfer is not free. Capital Projects Fund Sanitary Sewer Trunk—No expenditures are planned for 2015 or 2016. Cable Communications Fund—Revenue comes from franchise fees and PEG fees. Projected franchise fees are$170,000 for each of the next two years. Expenditures include our share of the ongoing operations for cable communications and our share of capital expenditures over time. Road and Bridge/Street Reconstruction Fund—No new projects are being added to this fund and it is a closed fund. It is being used to support bond related issues and to support the CIP plan approved last year. It does include the collection of the Vermillion River Crossings assessments. Fire Capital Projects—Two sources of revenue include donations from the Fire Relief Association and money set aside for the Fire CIP. The 2015 expenditures include$2,500 for firefighter fitness incentive program and$60,000 for brush truck one. There were two additional chiefs vehicles in the 2015 budget for the Fire CIP. Rather than buying new,the second SRO vehicle will be repurposed for a fire chief's vehicle and in 2016 the commercial vehicle inspector's vehicle in the Police Department will be replaced and the current vehicle will become the second fire chief's vehicle. The brush truck will come from LGA dollars. The firefighter incentive program will come from money donated by the Fire Relief Association. If a firefighter went to a fitness gym at least eight times per month and provided satisfactory documentation, they would receive a$25 per month reimbursement toward gym fees. The City does not have a policy in place. The Fire Relief Association money to be donated comes from gambling proceeds. Councilmember Fogarty stated if we create this program and funds do not come in, have we created a program the City needs to fund. Mayor Larson stated the policy would have to state the program is subject to funding. Council Work Session Minutes July 14,2014 Page 4 Storm Water Trunk—The 2015 budget includes $300,000 for the potential purchase of right-of- way needed for the 195th Street project. In 2016 the cash in the fund will be used to retire the debt which is$1.3 million so we can finance it internally and repay it with debt levy dollars. This fund could also be a source if Council decides to pursue option four for the pool so we could finance it internally. Recreation Capital Projects—This is donations above the Rambling River Center's original commitment. Councilmember Fogarty asked that the fund be renamed to what it is used for. Private Capital Projects—This is where we capture engineering and administrative fees incurred on behalf of a private development that we in turn bill back to the private development. Permanent Improvement Revolving Fund—Staff will evaluate if this fund is needed. General Capital Equipment—This is a new fund starting in 2015 used for future capital equipment purchases with the exception of the Fire CIP through 2020. In 2015 and 2016 money would have been spent in the general fund for two new squad cars. There are LGA funds available for staff to assess if we should repair or replace a vehicle. When we sell non-forfeiture vehicles proceeds will be put into this fund. Maintenance Fund—It has funding for seal coating, building and trail maintenance, and the street reconstruction project. The bond proceeds for the Akin Park Estates East and West project were put into this fund. If there are any dollars left,they will be used for the Henderson project next year. The bond proceeds for 195th Street will be placed in this fund and disbursed from this fund. Enterprise Funds Liquor Operations—In 2015 and 2016 staff has broken down projected sales by type. The projected bottom line before transfers is 6.1%of gross sales which is close to the 6.5%target. It envisions a$50,000 transfer to the general fund for administrative costs and the remaining $40,000 is for the park improvement fund for now. The lease for the downtown store is due in three years and the Pilot Knob store is due in two years. Sewer—For 2015 there is a projected deficit as$750,000 will be used to rebuild the sewer line at the north end of Pilot Knob due to development in Lakeville. The current rate structure does not cover operating costs and depreciation. A rate analysis will be done for sewer and storm water in late 2014. Proposed rates for 2015 will be brought to Council. Solid Waste—In 2015 professional services are budgeted less than 2013 actual based on the new recycling contract. In 2016 staff is planning to replace a garbage truck and will pay cash for it. Storm Water—Rates are insufficient to cover operating costs and depreciation. These will be reviewed in the fall of 2014. Water—A new rate structure was implemented for 2014. There is still a deficit for 2015 and 2016. Over time the fund balance will become positive. Council Work Session Minutes July 14,2014 Page 5 Streetlights—Revenues and expenditures are similar to past years. It has a modest positive fund balance. Each department is charged for IT services. Finance Director Hanson provided a list of how the $371,000 is spread out among all the funds for 2015. Councilmember Fogarty stated our IT budget will continue to be large. Technology is allowing us to not grow our staff. It is important to help people understand we would have six or seven more staff if we did not have the kind of technology we have invested in. Finance Director Hanson noted in some cases technology is not a replacement for staff. The applications are things the residents want. Councilmember Bonar noted the building maintenance RETAP assessment was mainly for energy conservation. It did not address physical condition or age of the properties. City Administrator McKnight stated nothing has been spent from the building maintenance fund. City Administrator Update The Akin Park project started today. The Council meeting broadcasting system will be ready on Monday. A ribbon cutting will be held on Friday at the Hindu Milan Temple. MOTION by Fogarty, second by Bartholomay to adjourn at 7:45 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant