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HomeMy WebLinkAbout07.20.15 Work Session Minutes Council Work Session Minutes July 20,2015 Mayor Larson called the work session to order at 5:02 p.m. Present: Larson,Bartholomay,Bonar,Donnelly, Pitcher Also Present: David McKnight, City Administrator; Robin Hanson,Finance Director;Adam Kienberger, Community Development Director;Randy Distad,Parks and Recreation Director; Kevin Schorzman, City Engineer; Cynthia Muller, Executive Assistant MOTION by Bonar, second by Pitcher to approve the agenda. APIF,MOTION CARRIED. 2016 Budget The tax levy in June had a 9.4% increase as a starting point. It has been reduced to a 3.99% increase over 2015. The net tax levy would be$9,529,861. Some of the larger reductions included adjustments for contract negotiations,benefits, etc., elimination of one and a half positions,the placeholder for the fire inspector position has been eliminated. There is a$20,000 reduction in the transfer to the EDA and a$75,000 to be determined position reduction. There is also a one-time utilization of future MSA maintenance dollars for$200,000. Mayor Larson was concerned with the elimination of people and the$20,000 reduction to the EDA. We want economic development and we are pulling money away from it which doesn't make sense. This budget sets Farmington back instead of ahead. All we can do is add another percent to the budget to keep that position and the EDA levy. We have to be done eliminating positions. Councilmember Bartholomay also disagreed with the$20,000 cut to the EDA. Cutting positions is tough because next year will be worse. He felt we have cut all the positions we can. It is hard to ask for more taxes when more rooftops are not being built,but we can also move backwards if we cut too much. His top tax increase would be 4.96%. Councilmember Pitcher agreed cutting positions is very tough. Regarding the$20,000 reduction in transfer to the EDA,the transfer should be$40,000 or more. Any balancing of the tax income and residential will take time. We have to do what we can to bring in more businesses and support our current ones. Bringing the tax increase to 4.81%would restore a position and have a positive impact. Councilmember Bonar agreed the reduction in transfer to the EDA is not in our best long term interest. In the survey he did not recall that residents spoke to the level of service. He decided to move forward with the reductions as presented. Councilmember Donnelly agreed we are going backwards if we keep cutting. The 195th Street project is a big part of this,but people are getting something for it. We are already not filling two positions,but also cutting another position and reducing the EDA transfer. He agreed going Council Work Session Minutes July 20,2015 Page2 to a 4.9%increase. We want to move forward. He agreed with not cutting the position and putting the$20,000 transfer back in the EDA. City Engineer Schorzman stated we have the opportunity to use some of the MSA funds received for 195th Street to help the 2016 budget. We receive a$550,000 reimbursement each year from 2016 through 2020 and$250,000 in 2021. We can use this to reduce the amount we bond for the 195th Street project and do an internal loan for part of it. We would use$304,000 of the $550,000 to make the loan payment. Then$200,000 we could put towards the debt levy to take care of other road project debt that has already occurred. Council agreed with using MSA dollars for the 2016 budget. 195th Street Financing The city's share of the 195th Street project is$5.8 million to be paid this fall. Staff recommended using$1 million in MSA funds,use$1,645,000 as an interfund loan and the bond amount would be$3,155,000. The public hearing for the bond sale would be in mid-August and would close mid-October. Staff will also be asking for a review of our bond rating in hopes of going from AA-to AA. 2016 Budget There are still some areas yet to be finalized for the budget. These include LGA, fiscal disparities,data processing charges,human resource costs and debt repayment obligations. Staff gave a history of tax levy changes which in the last six years have ranged from a 0% increase to 4.96%increase. The estimated market value for residential homes is expected to increase from $199,426 to $213,155, an increase of 6.88%. For 2016, based on 3.99%the average tax increase is$41.48 per year. With 4.81%the increase is$51.13 per year. This is based on an average$225,000 home. This average was used to match the school district's average home. Special Revenue Fund Budgets—These include the EDA,TIF-City Center, Park Improvement and Arena. Council expressed their desire to restore the EDA transfer to$40,000. There are two years left on the City Center TIF. Once the final payment is completed in 2016, we can close that district. Any residual funds will go back to the county for redistribution between the city, school district and the county. As much of the funds as possible will be used on the Downtown Redevelopment Study. The park improvement fund has money in 2016 for the Troy Hills Park. Liquor store transfers of $40,000 will be used for completion of the trail along Highway 3. The arena budget anticipates a rate increase July 1, 2016, and the continuation of summer ice. In 2017 staff is recommending the replacement of the current propane ice resurfacer with an electric resurfacer. With the FYHA donations,the city's annual transfer of$20,000 and a potential Council Work Session Minutes July 20,2015 Page3 Mighty Ducks grant we will have those funds on hand. We should also be able to sell the propane resurfacer. Council asked about the road and bridge fund and roads showing wear,when will they be added into the CIP and how long can we wait. Staff explained the road and bridge fund is dedicated to make sure the related bonds are paid and whatever money is left is projected to go into the CIP. The next project in the CIP is in 2019 which is 2nd Street and Hickory for a full reconstruction. After that,projects are scheduled every other year. Capital Project Funds—This includes sanitary sewer trunk,cable communications,road and bridge, fire, storm water trunk,rambling river center and arena capital projects,private capital, permanent improvement revolving, general capital equipment and the maintenance fund. Regarding the road and bridge fund,we have an operating transfer in where an internal loan was done to pay off some bonds early. The final payment is coming through the debt levy in 2016. The fire capital projects fund was discussed last week. A budget neutral proposal for the fire CIP was approved. The storm water trunk will be the source for internal loans and refunding some bonds due in February 2016. General capital equipment contains money set aside to take care of equipment. Specifically two new squad cars purchased each year in the replacement plan and a proposal for$70,000 to cover the gap in the CIP for vehicles. The maintenance fund contains$350,000 set aside each year for seal coating. There is$15,000 being proposed in 2016 for building and$30,000 for trail maintenance funds. Enterprise Fund—Includes liquor stores, sewer, solid waste, storm water and water. The liquor store budget reflects the one half-time position of a liquor store support person approved earlier this year. There are increased IT services costs for PCI compliance. The transfer out of$40,000 is reflected in the park improvement fund. Due to increased operation costs, income levels will be less than in the past. There is a proposed sewer rate increase for January 1,2016. There is also a placeholder of $750,000 in professional services in the event the sewer line extension on the north end anticipated for 2015 gets delayed. There is a remaining$100,000 for professional services to update the sanitary sewer plan. The MCES fees from the Met Council are yet to be determined. In solid waste we are anticipating replacing the 2004 rapid rail truck for$295,000 and will be paying cash for it. Storm water had a rate increase January 1,2015. There is$100,000 in professional services to update the waste management plan and the Akin Road drainage design. Council Work Session Minutes July 20,2015 Page4 The water fund includes a rate increase effective January 1, 2017. 2007A Bond Refunding These bonds are redeemable on February 1, 2017, and were used to finance city hall and the 1st Street garage. At that time there will be just under$6.5 million in bonds outstanding. We can issue refunding bonds now,they would sit in escrow until February 1,2017. At that time we would pay those bonds off and the new bonds would replace them. We would borrow at 3% interest. The negative investment earnings would be$172,000. Staff is estimating the city can save$340,000 by doing a refunding now. We would still be under the same rules for renting the upstairs expansion area. The city council will continue to discuss the two options available at their work session on August 10, 2015. MOTION by Bartholomay, second by Bonar to adjourn at 6:35 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant