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HomeMy WebLinkAbout07.11.16 Work Session Minutes CITY OF FARMINGTON CITY COUNCIL MINUTES WORK SESSION JULY 11,2016 Mayor Larson called the work session to order at 6:30 p.m. Roll Call Present-Larson, Bartholomay, Donnelly, Bonar and Pitcher Staff Present-Administrator McKnight, Finance Director Hanson, City Engineer Schorzman, Natural Resources Specialist Dullum and Police Chief Lindquist Agenda Motion by Donnelly,second by Bonar to approve the agenda as presented. APIF, motion carried. Emerald Ash Borer Management Scenarios Engineer Schorzman and Natural Resources Specialist Dullum presented information on potential emerald ash borer management scenarios. Dullum reviewed tree inventories she has performed of the Dakota Estates and Nelson Hills neighborhoods. The inventories showed the condition of the ash trees in these two neighborhoods. Staff corrected the information in the memo in regards to the cost of treatment options available. The correct cost should have read $130,000 as an estimate for treatment costs. Dullum reviewed the option of removing trees one third at a time and potentially replacing them one third at a time as well. Staff estimated costs with this area to potentially include: • Poor Quality Trees Removal $196,000 • Treatment $130,000 • Removal and Replacement of All Trees $2,200,000 The city council asked a number of questions and as of now directed staff to work with other cities on a potential joint powers agreement on this issue,continue the three year approach to tree removal,take the necessary steps to adjust any city policies/ordinance to ensure that trees are not replaced in the boulevard, anticipate that the city council will support treatment of trees, complete the ash tree inventory and schedule some public input meetings at the appropriate time based on this potential approach. July 11,2016 Work Session Minutes -1- Draft 2017 Budget Finance Director Hanson presented the draft 2017 budgets for all city funds. The draft 2017 General Fund budget is proposed as follows: 2016 Budget 2017 Budget Increase(Decrease) Revenues $3,051,055 $3,117,189 $66,134 Expenditures $11,798,225 $12,244,895 $446,670 Fiscal Disparities $2,104,764 $2,077,080 ($27,684) General Fund Levy $6,642,406 $7,050,626 $408,220 Debt Levy $2,970,848 $3,037,903 $67,055 Net Tax Levy $9,613,254 $10,088,529 $475,275 4.94% Hanson reviewed the major changes in both the revenues and expenditures proposed for 2017. The proposed increase for next year is a result of increased debt payments and increased human resources costs. The human resources cost increase for 2017 are a result of three additional positions added in 2016, increased costs for the four union contracts settled for 2017 and the proposed addition of a new position in the Information Technology Department in 2017. Expenditures outside of debt and human resources areas in all budgets are at or below 2016 levels. The use of local government aid dollars and the transfers out expenditures were reviewed with the city council. The city council asked questions in a number of areas including the IT budget and new proposed position, police budget adjustments for 2017, a possible fire inspector position, projected fiscal disparities amounts, compensated absences funding, and future funding of other areas the city council has noted as needing to be addressed in the future. City staff will bring back updated General Fund information and more detail on the IT Fund at the August 2016 work session. Debt Service Funds Levy The Debt Service Fund budget provides funding for scheduled debt principal and interest repayment obligations,as well as ongoing trustee, assessments, arbitrage and post-issuance compliance fees related to the City's debt.The levy is also used to continue to strengthen the cash flow for various debt issues as the City continues to work toward full compliance with the 105%funding requirement. July 11, 2016 Work Session Minutes -2- The 2017 debt levy increase has been mitigated by the use of$100,000 in MSA funds. Special Revenue Funds EDA—The EDA budget includes a $40,000 transfer in from the General Fund. TIF—City Center—The City Center budget is blank, because the city intends to decertify this district in 2016. Park Improvement Fund—The Park Improvement Fund has planned expenditures in 2017 of $150,000 for Prairieview Park and is also the placeholder for$40,000 in planned liquor stores community investment transfers. Ice Arena—The ice arena budgets reflects the rate increase which went into effect July 1, 2016. Capital Projects Funds Road and Bridge Fund—The only planned disbursements are the operating transfers included on the operating transfers worksheet. Fire Capital Projects Fund—No planned vehicle purchases until 2019. In accordance with the Fire CIP money is being accumulated to pay cash for a new fire engine in 2019. General Capital Equipment Fund—Monies are transferred into this fund in accordance with the police vehicle, police equipment, and fire equipment CIP's. In addition $90,000 of LGA funds will be transferred into this fund for the Municipals Services Director to use to address vehicle needs until the city's comprehensive vehicle CIP begins in 2020. Maintenance Fund—The 2017 budget includes planned transfers for seal coating,trail maintenance, and building maintenance per their respective capital improvement plans. In addition the budget includes the receipt of MSA construction funds for the 195th Street project. A portion of these funds are being used to reduce the 2017 debt levy by$100,000.The remaining funds are being transferred back to the Storm Water Trunk Fund to repay the funds to be borrowed later this year to pay the county for the remainder of the 195th Street reconstruction project. There is also one new item.The city has cost sharing arrangements with the three townships for road maintenance.These costs do not occur on a regular basis.When they do occur they are large enough that the city needs to separately budget for them to ensure we have sufficient funds on hand that will not take away from other ongoing city street maintenance projects.The 2017 budget includes a $3,000 transfer from the General Fund into the new Township Road July 11,2016 Work Session Minutes -3- Maintenance line item. In addition staff is recommending$10,000 of the MSA construction reimbursement funds be transferred into this fund for initial funding.This will help cover the cost of one request already received this year from one of the local townships for approximately$5,000 for road maintenance. Enterprise Funds Solid Waste—The human resource costs for the Municipal Services Coordinator and new shared position are charged to the Solid Waste fund.The Sewer,Storm Water and Water Funds benefit from these two positions. Accordingly,these funds will be transferring in$64,000 to help pay for these two positions. Water--The 2017 budget reflects a planned rate increase per the long-term Water Plan. Streetlight--The 2017 budget includes$35,000 for the continued transition to LED lights with Dakota Electric. Fund Balance Projections A worksheet has been included in your packet which details the actual fund balance for the past four years as well as projected 12/31/16 and 12/31/17 amounts. If all of the 2016 and 2017 revenue and expenditures were to occur as budgeted,the General Fund's 12/31/17 fund balance of$4,734,534 would drop below the city's 40%funding level target of$4,897,958 by$163,424. Tax Notes A brief history of the tax levy changes for the past five years are listed below: 2012 0.00% 2013 0.00% 2014 1.92% 2015 4.96% 2016 4.90% The residential homeowner's estimated market value (EMV)for next year increased from $214,737 to$223,029,an increase of 3.86%. The County estimates the market value for new construction in Farmington is$14.1 million. This translates to$157,386 in new tax capacity.Applying the city's 2016 tax rate to this amount would result in $93,188 of tax levy related to new construction. Based on the information available today, staff estimates the impact of a 4.94%increase on the July 11,2016 Work Session Minutes -4- average residential home with an estimated market value of$223,029 would be$52.71/year or$4.39/month. Additional Notes The proposed levy is 4.94%.This is less than the amount needed to fund ongoing equipment, vehicle and building maintenance needs.This is the amount council indicated was the maximum increase you could support and fits within the city's long-term financial plan. As you consider the budgets please keep the following in mind. 1.The attached budgets do not include the impact of the city's 2017 bond referendum. If question one passed,the estimated annual tax increase on a 2016 median value home of $212,787 for question one is$75.00 for 20 years. If both questions one and two are passed the estimated annual tax increase is$102 for 20 years. In addition annual operating costs, net of the currently budgeted pool subsidy of$72,000, are estimated to require an additional $115,000 in annual operating levy. 2.The attached budgets do not reflect any anticipated debt refundings.These refundings are not guaranteed and will not occur until after the preliminary levy is adopted. If the city is able to refund some of its debt later this year,the 2017 debt budget will be revised, accordingly. The city council thanked staff for their work and looks forward to continued review of the 2017 draft budgets. Councilmember Bartholomay left the meeting at 8:45 p.m. Police Department Organizational Study Police Chief Lindquist discussed his desire to perform an organizational study of the police department. Chief Lindquist would like to study the following items: 1. Efficiency of Manpower Use 2. Effectiveness of Manpower Use 3. Policy Review 4. Technology Review 5. Morale 6. Structure Councilmembers asked questions on the status of a number of department related items including strategic plans, call volumes, Blue in the Schools,and more. Administrator McKnight brought up the fact that no new officers have been hired in five years and if the study would help determine what this means. July 11,2016 Work Session Minutes -5- City councilmembers were in support of continuing to look into this item. Lindquist and McKnight will flesh out the issues to be studied and obtain some quotes to get this work done. The issue will be brought back to the city council for action when appropriate. Adjourn Motion by Pitcher,second by Donnelly to adjourn the meeting at 8:54 p.m. APIF, motion carried. Respectfully Submitted David McKnight, City Administrator July 11,2016 Work Session Minutes -6-