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HomeMy WebLinkAbout06.08.15 Work Session Minutes Council Budget Workshop Minutes June 8,2015 Mayor Larson called the workshop to order at 6:37 p.m. Present: Larson, Bartholomay, Bonar, Donnelly, Pitcher Also Present: David McKnight, City Administrator; Robin Hanson, Finance Director; Brian Lindquist, Police Chief; Jim Larsen, Fire Chief; Adam Kienberger, Community Development Director; Randy Distad, Parks and Recreation Director; Kevin Schorzman, City Engineer; Todd Reiten, Municipal Services Director; Brenda Wendlandt, Human Resources Director; Cynthia Muller, Executive Assistant MOTION by Bartholomay, second by Pitcher to approve the agenda. APIF,MOTION CARRIED. 2016 Budget The 2016 proposed budget is $10,028,551 which is an$864,343 increase or 9.4%. Regarding revenues,building permit revenues have been reduced$100,000 and fiscal disparities are projected to decrease $160,000. On expenditures,human resource costs are estimates. All four union contracts expire later this year. Health insurance and workers compensation amounts are unknown at this time. The state is continuing to phase in the minimum wage increase, and the federal level is continuing to look at the number of workers eligible for overtime pay. Human resources represents 65%of the budget. All department budgets are affected by information technology costs. The total for 2016 is $500,000 which is 4%of the budget. There are not a lot of new requests. The budget contains ongoing costs of IT services as well as equipment replacement that is on the replacement cycle. Staff has gone back to a four to five year equipment replacement schedule. An IT CIP will be developed to spread out costs through the years. In 2016 there are three servers that are due to be replaced including two data servers and the Laserfiche server and the video surveillance server. Servers are on a four-year cycle. New requests include cameras at the fire stations, card access at station one, and more computers. As we add more credit card payment options we have to follow PCI compliance. The cost for 2016 for PCI compliance is $18,451, most of which is set- up as we add areas to take credit cards. Costs will decrease slightly in future years because we won't have the initial setup. This is a significant increase for 2016 and we don't have an option if we want to take credit cards. IT funds have been spent in 2015 to get everyone on the same operating system to improve productivity. We have a significant amount of technology costs on an ongoing basis amounting to $500,000 a year. We move toward technology to hold off on people costs,but there is a cost to technology as well. When purchasing equipment, staff does look at state bid. In 2014 we spent$8,000 to purchase Novus Agenda and there is an annual maintenance cost of$5,000. There is no new software in the budget for 2016. Council Work Session Minutes June 8,2015 Page 2 Staff and Council discussed expenses for the fire department. The big ticket items needed include self-contained breathing apparatus which firefighters wear on their backs when entering a structure. These are on a 15-year life cycle by statute. The last testing was done recently so we have five years left on all self-contained breathing apparatus and spare bottles. This is a $200,000 expense that will have to be split over a five-year period. This was not budgeted for in the previous CIP's. There are federal grants available which staff will submit. Each spare bottle is $7,000 - $8,500 each. Another expense is not every member has access to a portable radio. The current model of radios will be phased out beginning in 2018. We currently do not have enough radios for each riding firefighter. We are short 20 portable radios at a cost of$3,000 each. Law enforcement is looking at encrypted radios which are approximately$6,800 each. Fire is electing not to get encrypted because of the additional cost. Another item is personal protective gear which is a mandated ten-year life cycle and we are over on some of those and have not been included in the budget. The fire department is in the process of purchasing gear as we do not have a choice. Staff will be phasing in 12 to 15 sets per year. We currently have 44 members and are working to get up to 50 members, so we will need six additional sets at$2,400 per set. The fire department has significant IT needs. At station one 11 fire officers share one computer station. At station two there is one computer station for the entire station. There are vehicle supply needs. A brush truck was upgraded last year, and a bigger water tank was installed, but we didn't upgrade the suspension on the truck so it is top heavy. We need to add springs, etc. to keep it from rolling over. There is a lot of equipment in the back of the command vehicles that is unsecured. We have oxygen tanks, defibrillators, medical bags, command materials that are unrestrained and are projectiles. We need cabinetry or something to secure these items. Transfers out includes LGA uses and general fund(non-LGA uses). LGA uses include the fire CIP for$205,000 and the streets and equipment CIP gap funding for$71,607 for a total LGA amount of$276,607. Non-LGA uses include EDA$40,000; fire CIP $90,000;recreation capital projects fund—Arena$20,000; capital equipment fund—two squads $85,000; sealcoating $350,000;trail maintenance $30,000; building maintenance $15,000 for a total of$630,000. The debt service fund includes funding for scheduled debt principal and interest repayment obligations, etc. This fund also continues to strengthen the cash flow for various debt issue as we continue to work toward full compliance with the 105%funding requirement,recognizes adjusted timing for special assessments and provides for the 195th Street reconstruction bonds that will be issued later this year. The average estimated market value for residential homes is projected to increase from$199,426 to $213,155 a 6.88%increase. The county estimated new construction market value for Farmington is $23.4 million. This is$256,935 in new tax capacity or$157,899 of tax levy related to new construction or 1.49%. The draft 2016 budget includes the pool closing at the end of 2015. In 2016,we will have the cost to fill it in. The salary related to the permanent employee will be redirected to building maintenance or the arena. The 2016 budget does not include a splash pad or an aquatic facility. The amount budgeted for 2016 is $60,000 - $65,000. The current year subsidy is $75,000 - Council Work Session Minutes June 8,2015 Page 3 $78,000 so there is a modest savings. More savings will be seen in 2017 after demolition is completed. We are following the plan to close the pool, but there is no money in future debt for a splash pad. When demolishing the building is discussed, staff would like to keep the restroom facilities for the park. Council agreed with this plan. Regarding bond refinancing,the draft budget does include 2005C bonds are redeemed on February 1, 2016. The debt levy would be used to repay the storm water trunk fund. The 2016 debt levy assumes we have a delay in the Vermillion River Crossing assessments and they will not be received in 2016. The 2007A bonds were issued to finance City Hall and the First Street Garage. In the past it was discussed to refinance the bonds to allow the city to rent the vacant space to private entities. The city will have to pay off not only the vacant space, but also common spaces. The timing of the refunding is very restrictive. We have to know upfront who the space will be leased to and they have to wait until the bond deal is done and then have the lease start. If we have to allocate additional debt at 25%it would be $15,400 a month to cover the debt service. If we allocate 20% it would be $12,300 per month. To get$12,000 a month in rent is high. We currently pay $12,000 in debt for space we don't use. If someone leases it for$8,000, we are spending$4,000 for space someone else is using. If rates stay steady, we should refund the bonds by the end of the summer. If we refund the bonds under a taxable basis,the space could be rented to public or private parties. Security upgrades would be minimal. Staff will inquire with a realtor on any interested parties. The 2016 budget is currently at a 9.4%tax increase. Previous Council discussions have resulted in an increase of 4%or less. Mayor Larson asked before any of the desired increases happen, with current obligations what is the percentage of increase. If we keep the budget steady with 2015 and add on decreased revenues from building permits,the decreased fiscal disparities and the increased debt levy related to 195th Street, it is 4.3%which amounts to $450,000. This does not include human resource costs or anything else. If Council wants to stay with their percent, we have another$500,000 to cut or increase revenue. Council asked if all employees are empowered to identify cost savings or efficiencies and report them. Department heads have that and some extend that to their staff, but department heads know their budget and what can be changed and the impact. To reach the amount to be reduced means services. City Administrator McKnight asked about the aquatic facility and forming community groups to make a recommendation to Council for a ballot question in 2016. Council agreed this work should not be done in 2015. Mayor Larson asked Council if 3.99%is still their goal or if they want to increase it due to commitments. Councilmember Bonar would like 3.99%, noting something will have to be displaced to reach it and to balance the scale we need to subtract. Councilmember Donnelly was at 5%at the most. Councilmember Bartholomay was at 4.96%. Councilmember Pitcher wanted to stay at 3.99%. Mayor Larson was between 4% and 5%. The July work session will include all funds. Council Work Session Minutes June 8,2015 Page 4 195th Street Reconstruction Project The original plan for phase two was to leave the north-south connection for Everest Path open. There are many trucks hauling dirt along 195th Street and traffic is not stopping at the stop signs at Everest Path. Therefore, Everest Path was closed at 195th Street as it was becoming too dangerous. Charleswood is accessible at Pilot Knob and 200th Street and this intersection will be monitored. Hotel—Vermillion River Crossing The EDA determined we have waited long enough for the hotel situation to occur with the current company and decided to also explore other options. An update three weeks ago stated the current company is still exploring options hinging on financing. Council agreed to look at additional parties. MOTION by Bartholomay, second by Pitcher to adjourn at 7:55 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant