HomeMy WebLinkAbout06.12.17 Work Session Packet City of Farmington Mission Statement
430 Third Street Though teamwork and
Farmington,MN 55024 cooperation, the City of
Farmington provides quality
services that preserve our proud
past and foster a promising
future.
AGENDA
CITY COUNCIL WORKSHOP
June 12, 2017
6:00 PM
Farmington City Hall
1. CALL TO ORDER
2. APPROVE AGENDA
3. DISCUSSION ITEMS
(a) 2040 Comprehensive Plan Process Update
(b) Financial Review-Quarter Ended March 31, 2017
(c) 2030 Financial Plan
4. CITY ADMINISTRATOR UPDATE
(a) City Council Roundtable
5. ADJOURN
o�FAr „ City of Farmington
430 Third Street
Farmington, Minnesota
651.280.6800 -Fax 651.280.6899
,14
'•e.d'4. www ci.farmington.mn.us
TO: Mayor, Councilmembers and City Administrator
FROM: Adam Kienberger, Community Development Director
SUBJECT: 2040 Comprehensive Plan Process Update
DATE: June 12, 2017
INTRODUCTION
Staff will provide an update on the 2040 Comprehensive Plan process and review proposed timelines to
produce the required content. The Comp Plan serves as the foundational document for the Planning
Commission to grant land use approvals and zoning decisions.
Staff will also review the supporting infrastructure plans being developed alongside the Comp Plan including
the surface water management plan, sanitary sewer plan, water plan, transportation plan, and parks, facilities
and trail plan.
DISCUSSION
Below is an excerpt from the city newsletter providing an overview of what is a Comp Plan:
So,what is a Comprehensive Plan? A Comprehensive Plan is a document that helps establish a long term
vision for a community and reflects regional policies and important local goals. The Comprehensive Plan
serves as a compass or resource guide for the development of the community. Major components of the
Comprehensive Plan include a land use element,housing element, transportation element, water resources
element,parks and recreation element, and an implementation element.
Why does the city have a Comprehensive Plan? Firstly,to ensure that Farmington's excellent quality of life
will continue. Through the Comprehensive Planning process city residents,business owners and
community organizations help to shape Farmington's land use and open space pattern. A well planned
community provides compatible land uses, as well as transportation networks, public facilities, and parks.
Comprehensive Planning helps to ensure that Farmington continues to be an attractive, safe, and prosperous
place in which to live and work. Secondly, the city is required by State Law to have a Comprehensive
Plan. The city is governed by Minnesota Statutes Chapters 462(Municipal Planning Act)and 473
(Metropolitan Land Use Planning Act). Chapter 462 states that cities can do planning and sets forth a
process for plan adoption and amendment. Chapter 473 requires cities in the 7-county metro area to have a
Comprehensive Plan and to update that plan every 10 years.
The 10 year Comprehensive Plan cycle officially started when the Metropolitan Council issued System
Statements for every community in the 7-county metro area in September 2015. The System Statement is
a customized document for each community that informs how the community is affected by the
Metropolitan Council's policy plans for regional systems and to assist in amending its Comprehensive Plan.
The System Statement includes forecasts for population, households, and employment as well as provides
affordable housing goals that must be incorporated into the plan. Once System Statements are issued,
communities have 3 years (December 2018) to complete the Comprehensive Plan update and have it
approved by the Metropolitan Council.
BUDGET IMPACT
The budget impact for implementation of the 2040 Comp Plan is included in the 2017 budget.
ACTION REQUESTED
Receive an update on the 2040 Comp Plan process.
io�E ► � City of Farmington
430 Third Street
Farmington, Minnesota
S► 651.280.6800 -Fax 651.280.6899
414 .4.«301. www.cifarmington.mn.us
TO: Mayor, Councilmembers and City Administrator
FROM: Robin Hanson
SUBJECT: Financial Review- Quarter Ended March 31, 2017
DATE: June 12, 2017
INTRODUCTION
Staff reviews the financial performance of the General Fund and several other funds with council quarterly.
The financial statements are included in your packet and incorporate more detailed analytical comments.
The following provides a more in depth review of the General Fund and highlights notable areas for the
other funds included in this review.
DISCUSSION
General Fund
The General Fund is the city's primary operating account. The financial summary for the first quarter is the
first attachment. The following will provide explanations for the various revenue items and highlight the
more significant expenditure variations. If you would like to follow along, the items reviewed are in the order
they appear on the attached General Fund financial statement.
Revenues
For 2017 budgeted General Fund revenues total$11,053,140. During the first quarter the city recorded
General Fund revenues totaling$351,647 or 3% of total budgeted revenues. This is consistent with the prior
years.
Property taxes represent 74.5% of total General Fund revenues (including transfers in from other funds). In
Minnesota,property taxes are generally payable in two installments, May and October, and collected by the
county. The city receives its share from the county in June and December. So, during the first and third
quarter of each year, the city receives zero property taxes. Which is why revenues recorded during the first
quarter only represent 3%of the annual budgeted amounts.
While there are many reasons the city needs a fund balance(which is similar to an individual's personal net
worth), needing to pay its bills between the receipt of tax payments from the county is the most significant
reason. As you will note on the attached General Fund fund balance chart, as recently as 2012 and 2013, the
city did not have sufficient funds in its General Fund to pay for operations (negative balance in May and
November). The city had to borrow from other funds to pay its bills. Over the past few years the city has
strengthened its fund balance and is now able to pay all of its General Fund bills between the receipt of tax
payments, essentially paychecks, from the county without borrowing from other funds, a significant
accomplishment. An important step in becoming a city of fiscal excellence.
The other types of revenues in the General Fund consist of licenses,peiinits, intergovernmental revenue,
charges for services, fines, investment income, franchise fees, rental income, etc.
Among others, license revenue, includes liquor and animal licenses. First quarter revenues for 2017 are in
line with budget and ahead of 2016 due to two customers paying their liquor licenses for the entire year
upfront. This was offset by a modest decline in other types of license revenue.
Permit revenue includes building,plumbing and heating, electric, etc. permits. The revenue for the first
quarter of 2017 is $34K more than the same time period last year. Building permit revenues account for
$20K of the increase. Residential building permits are more than last year(2017-17 new single-family
detached housing and one duplex versus 2016 with 10 permits). In addition plumbing and heating and fire
permits are ahead of last year's pace.
Intergovernmental revenue includes local government aid (LGA), municipal state aid (MSA)maintenance,
police and fire aid, etc. The city received the first half of its MSA maintenance funds in February. The
second half will be received during the third quarter. The city also received the first half of its Metropolitan
Grant to help pay for planning assistance related to the city's comprehensive plan update. LGA is paid in
two installments, June and December. Police and fire aid are paid in the fall. So,these revenues have not
yet been received. Another reason the city needs a strong fund balance as many of these items are paid later
in the year.
Charge for Services includes fire,recreation, pool, school resource officer(SRO), etc., charges. Castle
Rock and Eureka townships are billed quarterly for fire protection. Empire, the largest of the three
townships, is billed annually, after year-end,per contract. Non-contract(i.e. illegal and/or hazardous)fires
charges are billed as they occur. Recreation and pool programs are primarily offered in the summer. The
school is billed for their share of the school resource officers human resource costs on a quarterly basis.
First quarter revenues for these items are$11K less than last year. The recreation supervisor position was
vacant most of the first quarter. As a result recreation program offerings were less than a year ago and there
were fewer co-rec softball teams registered during this same time. The city also changed the way it invoices
for the SRO hours, evenly over 4 quarters in 2017, to reduce the revenue fluctuations for this line item.
Investment interest consists of investment earnings and the city's annual mark-to-market to recognize the
change in the market value of its investment portfolio. For the first quarter of 2017 the city recorded
negative net interest of approximately$1,000. Looking closer at the two components one can see this
amount consists of the annual reversal of the year-end mark-to-market,which for 2017 resulted in a `loss' of
approximately$9,000(reversal of a year-end gain)and investment earnings of approximately$8,000.
Investments will be marked-to-market again at the end of the year. And the investment earnings for the first
quarter represent 35% of the 2017 budgeted amounts.
Miscellaneous revenues include rental income related to the Rambling River Center(RRC-senior center),
pool and city hall as well as donations. The 2017 amounts are less than the amounts received during the first
quarter of 2016. Last year included a donation from the Rotary, redemption of the city's VISA credit card
rewards and an Aggregate Tax Credit. These items were not received in 2017.
Franchise fee revenue in the General Fund represents the transfer of a portion of the city's franchise fee
revenue to the General Fund to help pay for city operations. The remainder of the franchise fees is used to
pay for the city's cable operations. The first quarterly installment is received after the first quarter, which is
why there is zero franchise fee revenue recorded for the first three months of the year.
Expenditures
Finance tracks expenditures by department. The following notes explain significant or unusual variations
from last year or actual versus budgeted amounts which vary quite a bit from the expected 25% (ie. 3 of 12
months)through the end of March in the same order as they appear on the attached General Fund financial
report.
There are no amounts recorded for Historical Preservation. This was eliminated from the 2017 budget.
In the communications budget there was a mix-up with one of the vendors where the city's payment was
applied to the wrong invoice as a result a duplicate payment was made. The city is working with the vendor
to correct the situation. As a result expenditures for communication were 28%,more than the 25%that
would be expected for the first three months of the year.
Finance expenditures are higher in 2017 than 2016 due to the addition of a full-time front desk staff person
mid-year 2016 and the payment of compensated absences to an employee who left city service during the
quarter.
Fire expenditures will even out over the year. One of the larger items, the fire pension payment, will occur
during the second half of the year.
Engineering expenditures were less than expected due to the City Engineer position being vacant until mid-
February.
The decision to change the part-time building inspector, added mid-year 2016, to a full-time building
inspector occurred after the 2017 budget was adopted. As a result,building inspection expenditures for the
first quarter are more than 25% of budget. The city anticipates higher permit revenue will help offset the
increased expenditures in this area.
The city experienced more snowfall in the first quarter of 2017, than in 2016. As a result the 2017 Snow
Removal expenditures are higher this year, than last.
Finally, the expenditures for the recreation program and swimming pool are lower in the first quarters as
most of those expenditures occur during the summer.
Overall, General Fund expenditures, excluding transfers, are at 22% of budget for the first quarter of the
year.
In summary, the General Fund had a net decrease in assets of$2.1 million during the first quarter of the
year. The General Fund fund balance is healthy enough to absorb this net outflow prior to receipt of the
first half of the city's property taxes in June.
RRC, Pool, EDA, Park Improvement and Arena
The Rambling River Center(RRC-senior center), EDA(Economic Development Authority), Park
Improvement Fund and Ice Arena activities have historically been of interest to council. So, they are also
included for your review.
Rambling River Center(RRC)
Rambling River Center revenues are lower than a year ago for two reasons. First, members have utilized the
federal CDBG (Community Development Block Grant)funds at a higher rate than a year ago. These funds
are attributable to the RRC activity,but are recorded elsewhere so fmance can more easily track federal
dollars. Second, rental income is lower than a year ago, as two regular renters have not returned in 2017.
With the arrival of the new recreation supervisor in early March, the RRC staff will have more time to
concentrate on RRC program offerings during the remainder of the year.
Pool
The pool opens in June. There is minimal financial activity during the first quarter of the year.
EDA
The EDA revenues included the receipt of funds related to the anticipated sale of 209 Oak Street.
Disbursements included the pass-through of CDBG funds for work recently completed at the Cakery and
the payment of the city's annual Open to Business membership fee.
Park Improvement Fund
The Park Improvement fund will have increased activity in the summer when the new playground is installed.
Arena
Revenues and expenses for the ice arena were higher than a year ago,with the bottom-line(i.e. revenues over
expenditures)being nearly identical for the 1st quarter of 2017, as was realized in 2016.
Liquor Operations
The city has two financial benchmarks for its liquor operations. The first is a 25%gross profit margin. For
the first quarter both stores met the gross profit margin target. The second standard is a 6%profit as a
percent of sales. This is evaluated on a combined basis. For the first quarter the stores reached 5.0%.
This percentage is generally lowest during the first quarter of the year. The 2017 results are ahead of last
year's pace, which was 4.4%through the first quarter. For 2016, the stores exceeded the profit as a percent
of sales total. The liquor stores are on track to meet that benchmark once again this year.
After each calendar year, staff reviews the financial results for the two liquor stores combined, determines
the amount of funds needed to cover day-to-day operations and administrative transfers to the General
Fund. The remaining funds are divided evenly and transferred into the Community Investment and Capital
Improvements accounts. This is referred to as the four pots philosophy. Each year staff utilizes actual
financial results to fund these four pots. Staff periodically makes recommendations to council on how to
best invest available dollars in the Community Investment pot to benefit the community. Meanwhile,the
capital improvement dollars are available for future liquor store capital building needs (e.g. remodeling,
updating, relocation, possible building, etc.).
Enterprise Funds
The city operates five utility funds: sewer operations, solid waste, storm water, water and street light.
Sewer Operations
From a financial perspective,the sewer operations fund is currently the most challenging. For the first
quarter of 2017 revenues were not enough to cover operating expenses.
In addition, depreciation is only recorded at the end of the year, which means these expenses were zero
during the first quarter. This is done so that those amounts do not distort the review of day-to-day operating
numbers throughout the year.
From a big picture level the increase in MCES (Metropolitan Council Environmental Services)fees have
outpaced city fee increases. These are the fees charged to the city to treat its sewer water. The increased
fees reflect an increase in the cost to treat as well as increased volumes processed.
The following chart recaps the MCES expenses for the past 10 years.
City of Farmington
Sewer Operation Fund's MCES Fees Recap
$1,400,000
$1,200,000 $1,282,639
$1,030,000 $911,468
$800, $870,015
$603,000 $793,195
MCES Fees
$403,0 -
$200,000
$0 r
00 0 o a mi n
0 0 0 0 0 0 0 0 0 0
N N N N N N N N N IN
In addition, staff needs to discuss the need to be incrementally funding for future replacement costs (i.e. not
just depreciation—doesn't factor in inflation)for its various utility funds. Bottom-line, staff needs to spend
time developing a comprehensive asset management plan,which will define replacements needs, and in turn
update the long-term financial plans for this fund, as well as the other utility funds. Staff will then review
these plans with council to determine the extent to which rate adjustments are needed. This will happen over
the next year as the various infrastructure plans are updated in conjunction with the city's comprehensive
plan update.
Solid Waste
For the first quarter solid waste expenses exceeded revenues. This is unusual. There were increased
expenses during the first quarter of 2017,which were not incurred during the first quarter of 2016. The more
notable differences are the addition of a staff person mid-2016, the timing related to the purchase of
additional garbage carts and increased recycling charges.
For all of the city's utility funds, the billing cycle(revenue)lags the recording of expenses. For example, the
city bills every three months. The January billing includes November and December of the previous year, as
well as January of the current year. So, two-thirds of that billing cycle is attributable to the prior year and is
recorded as such in the financial statements. This means that at the end of this year, the financial statements
will remain open so that we can capture the revenues related to the current year,which will not be billed out
until January and February of the following year. With that said,based on what I know now, I believe the
Solid Waste fund will finish the year with revenues greater than expenses.
Additional comments,which may be of interest to you, including those for the storm water,water and street
light funds are contained in the comment section of the attached financial statements.
BUDGET IMPACT
The budget impacts have been noted above as appropriate.
ACTION REQUESTED
This is your opportunity to ask any questions you may have of the material presented.
ATTACHMENTS:
Type Description
D Backup Material General Fund Qtr Ended 3-31-17
o Backup Material General Fund Fund Balance Chart Qtr Ended 3-
31-17
o Backup Material Other Funds - Qtr Ended 3-31-17
o Backup Material Liquor Operations -Qtr Ended 3-31-17
D Backup Material Utilities - Qtr Ended 3-31-17
General Fund
March 2017 YTD Operating Report
Actual March
March YTD Quarter 1 March YTD get YTD YTD
Bud Company Actual Actual Actual Budget Act as% Comments
2016 2017 2017 2017 Variance of Bud
2017 2017
Revenues
Property Taxes 0 0 0 9,095.753. (9,095,753): 0%Taxes are received semiannually.let halt will be received in June.
Licenses 18,010 22,038 22,038 38,340 (1,122) 57%Includes liquor,beer&wine,club arcade,message,gambling,animal,etc.64K Increase in liquor licenses year-to-date(YTD)due to two
customers paying the fee for the entire year upfront This was offset by a modest decline in other types of licenses.
Permits 66,849 100,877 100,877. 359.275 (159,656) 2B%:Includes building,plumbing and heating,electric.etc.permits.Building permit revenues account for$200 of the 0340 increase in 2017
when compared to 2016.Residential building permits are more than last year(2017-17 new single-family detached housing and one duplex vs
2018-10 permits).In addition Plumbing and Heating and Fire permits are ahead of last year's pace.
Intergovernmental Revenue 125,553 128,078 126,076 847.432 (714,643) 15%Includes Local Government Aid(LGA),Municipal State Aid(MSA)Maintenance,Police and Fire Aid,etc.Reed 1st hag of MSA for road
maintenance(2nd half will he in July)and 1st half of Metropolitan Grant Planning Assistance Grant for the city's comp plan work.LGA Is paid
in two installments,June and December.Police and Fire Aid not received until the fall.
Charge for Service 92,429 81,663 81,683 481,950 (329,883) 17%Includes fire,recreation and pool,school resource officer,etc.charges.Castle Rock and Eureka are billed quarterly for fire charges/contract.
Empire,largest$amount.billed annually,after year-end/conhact.Nonconhect(I.e.Illegal,hazardous)fire charges are billed as they
occurred.Recreatlon and pool programs primarily held in the summer.School resource officer is billed quarterly.YTD revenues less than last
year.Rec sept position was vacant most of the first quarter.As a result rec program offerings were less than a year ago and there were fewer
softball teams registrations during the first quarter.The city also changed the way It bill for SRO hours,evenly over 4 quarters In 2017,
rather than based on hours worked per quarter,to reduce revenue fluctuatrons.
Fines 12,033 9,081 9,081 40,000 (27,899) 23%Fine revenue continues to decline.2017 budget was reduced.Further reductions proposed for'18 and'19.
Investment Interest 8,730 (999) (999) 23,005 (21,936) -4%.Intestment earnings attributable to General Fund's proportionate share of Investment balances.Nag amount in Jan reflects reversal of
year-end distribution of mark-to-market adjustment(99.1K);the 2017 net change will be booked In Dec 2017.1st qtr inveetmenl Income totab
98.1K which Is 35%of the 2017 budget amount
Miscellaneous 22,404 12,912 12,912'. 47,385 (26,931) 27%Includes Sr Center,Pool.City Hall rental income end donations,2018 included$9.20 related to a donation from the Rotary,redemption of
2015 VISA card rewards points end Aggregate Tax Credit.These Items did no occur during the let quarter 012017.
Franchise Fees 0 0 0 120.000 (59,715) 0%A portion of the city's franchise fee is used S pay for the city's General Fund operations.The remainder Is used to pay for the city's cable
operation.Generally,the first payment is not received until the 2nd quarter.
Subtotal Revenues 346,008 351,647 351,647 11,053,140 (10,437,319). 3%
Expenditures
Legislative 14,835: 15,435. 15,435 90.121 (65,670):. 17%
Historical Preservation 0 0 0. 0: 0 Eliminated for 2017.
Administration 78,066' 79,974 79,974 295,408. (175,293) 27%
Elections 25: 3,798 3,796 34,370 (30,552) 11%1st quarter Includes annual maintenance fee for election equipment
Communications : 24,610 30,943 30,943. 109,072. (84,803)', 28%Mix-up with one of the payments for the Pitney Bowes invoices being applied to the wrong account.Accounting Is working with the vendor to
correct
City Hall 42,311 48,775 48.775 198,028: (130,352)'. 25%2017 includes a repair for the generator at city hall.
Finance and Risk Mgrnt 158,556 173,357 173,357:. 740.102 (471,425) 23%2017 increase reflects the addition of a full-time front desk staff person midyear 2016 and payment of compensated absences to an employee
who lett city service.
Human Resource 65,657 64,405 64,405 294,176 (190.636). 22%.
Police Administration 185.563 202,434 202,434 823,992' (523,972) 25%:On a combined basis Police Admin.Patrol&Invest are 23.4%
Patrol Services 632271 849,914. 649,914 2,680,419 (1,623,303) 24%On combined bests Pollee Admin,Patrol&Invest are 23.4%
Investigations 196275: 185,578. 185,578 820,923. (544,700)' 23%One combined basis Police Admin,Patrol&Invest ere 23.4%
Emergency Management 54 54 54 4.900 (4,828)', 1%'.
Fire 211,575 221,268 221,268 1,145,404 (729,021) 19%.
Rescue 0 0 0 0 0
Engineering 113,742'. 103,290 103,290 543,757 (389,084)', 19%City Engineer position was vacant until mid-February.
Planning 87,740 63,972 63.972. 420.914 (306,099)'. 15%2016 included 917K for the downtown redevelopment study(non-recurring charge).
Building Inspection 62,547 84,018 84,016 304,107 (171,372)' 28%Decision to change PT Bldg Inspector to FT was made atter adoption of 2017 budget anticipated Increased expenditures would be offset by
higher permit revenue.
Natural Resources 28.041 27,854 27,854 142,151 (97,298) 20%
Streets 217,330 238,011 238.011 1,047.993 (678,395) 23%Streets added a position mid-year 2016.As a result 2017 expenditures are higher Nan 2018.
Snow Removal 36,732 83,000 83,000 230,539 (140,571)'. 36%:More snow In January 2017,than 2017.As a result,sand,salt,vechile parts and staff lime were higher than a year age
Park Maintenance 119,063 134,337 134,337 631213 (419,343)', 21%:,
Rambling River Center 33,121 39,004 39,004 171,358'. (113207): 23%':.
Park&Rec Admin 62,727: 43,911 43,911 271,040 (182,998) 16%Pakr and Rec Supr position was vacant for the first 2 months of the year.
Recreation Programs 9,749'. 8,294 6,294 113.822 (98,659), 6%Majority of programming Is In the summer
Swimming Pool 4,058 2,797 2,797 137.339 (123,797) 2%Seasonal
Interest Paid 482 0D 0 0 Fire buck loan was paid In full December 2016.
Bed Debt Expense 0 0 p, 0:.
Subtotal Expenditures 2,383,131, 2,502,420 2,502,420:11,251,148 (7,255,577): 22%
Revenues(Over)Under Expenditure (2,037,123).(2,150,773)', (2,150,773): (198,008), (3,181,742). 1,086%':
Other Financing
Transfers In 288740':. 287,588 287.588 1,150,350 (671,038) 25%
Transfers Out (229,152) (237280) (237,280) (952,342) 558,508 25%'.
Subtotal Other Financing 59,588 50,307 50,307 198,008 (112,529) 25%':
Net Change In Fund Balance (1,977,535) (2,900,466): (2,100,466)', 0, (3,294,271),
6/5/2017 3:37:21 PM Page 1 of 1
City of Farmington
General Fund Fund Balance
$6,500,000
■ ■ • ■ • • • • • • • • ■
$6,000,000 + + + + + + + + + + +
$5,500,000
0 $5,000,000 • • • • • • • • • • • ♦ e
• • • • • ,- • I • • • • •
_CU $4,500,000
co
m $4,000,000
-0 $3,500,000 .1
c 1 i
$3,000,000 ,�
LL $2,500,000
4— --fi
.— $2,000,000 -
C $1,500,000
� $1,000,000 °. I • ■ IP Mi 1 1 LL II - .
1
II
0 $500,000
s-
_i I
$(500,000) Jan Feb Mar - pr 0 py June July Aug Sept Oct , ov Dec
�- General Fund Cash Shortfall 2012 and 2013
$(1,000,000) -
roam 2012 esim 2013 2014 min 2015 num 2016 mom 2017 —0-40%of 2017 Exp 50%of 2017 Exp t40%of Est 2018 Exp —N-50%of Est 2018 Exp
RRC, Pool,EDA,Park Improvement,Arena
March 2017 YTD Operating Report
March YTD Quarter 1 March YTD March YTD March YTD March YTD
Company Actual Actual Actual Budget Actual Budget YTD Act as% Comment
2016 2017 2017 2017 Variance 2017 of Bud 2017
Rambling River Center FYI-CDBG(i.e.federal funds accounted for elsewhere)totaled$4,024
forlst qtr 2017 and$851 for 1st qtr 2016.
Rec Fees-Sr Ctr 6,789 4,690 4,690 19,G00 (14,310) 25% There has been an increase in the use of budgeted CDBG funds(federal
(Excludes CDBG) grant)to pay for memberships and programs when compared to the prior
year.They are accounted for separately.Amounts are listed above.
Membership Fees 7,983 5.311 5,311 9,000 (3,689) 59% There has been an increase in the use of budgeted CDBG funds(federal
(Excludes CDBG) grant)to pay for memberships and programs when compared to the prior
year.They are accounted for separately.Amounts are listed above.
Advertising 2,193 1,104 1,104 2,200. (1,096) 50% Collection of advertising revenue is slower in 2017,than in 2016.Invoices will
be sent to those who have not yet paid.
Rental Income-RRC 7,544 4,670 4,670 21,000 (16,330) 22% Decrease due to two past regular renters who are no longer renting at RRC.
Subtotal Rambling River 24,508 15,776 15,776 51.200 (35,424) 31%
Center Revenues
Rambling River Center 33,121 39,004 39,004 171,358 (132,354) 23%
Expenses
RRC Net (8,613) (23,229) (23,229) (120,158) 96,929 19%
RevenueslExpenditures
7P dY;w .-k"Y "".,` `.: ;? "a. .,, , r, `:' 'Wit
Pool Admissions 210 0 0 37,000 (37,000) 0% Pool Closed until June.
Swimming Lesson Fees 0 0 0 11,000 (11,000) 0%.Pool Closed until June.
Concessions 0 0 0 11.000 (11,000) 0% Pool Closed until June.
Rental Income-Pool 153 0 0 2,200 (2,200) 0% Pool Closed until June.
Subtotal Swimming Pool 363 0 0 61.200 (61,200) 0%
Revenues
Pool Expenditures 4,058 2,797 2,797 137,339 (134,542) 2% Ongoing costs--utilities,pool licensing,pool permit,pool operators class,etc.
Subtotal Pool Revenues (3,694) (2,797) (2,797) (76,139) 73,342 4%
Over(Under)Expenditures
i '. ..._,
EDA Revenues 700 5,125 5,125 2,374 2,751 216% Revenues include 209 Oak St purchase deposit.
EDA Expenses 10,196 21,186 21,186 45,255 (24,069) 47% Includes Cakery CDBG pass-through and Open to Business fee.
EDA Net (9,496) (16,061) (16,061). (42,881) 26,820 37%
RevenueslExpenditures
Transfers In 10,000 10,000 10,000 40,000 (30,000) 25%
Transfers Out 0 (827) (827) 0 (827) Transfer to Trident TIF distdd for Dakota County TIF maintenance fees
Subtotal Other Financing 10,000 9,173 9,173 40,000 (30,827) 23%
Net Change in EDA Fund 504 (6,888) (6,888), (2,881), (4,007), 239%
Balance
Park Improvement 4,791'. 7,935 7,935 9,000 (1,065)', 88%'.
Revenues
Park Improvement 0 4,545 4,545 150,000 (145,455) 3%
Expenditures
Park Improvement Net 4,790 3,390 3,390 (141,000) 144,390 -2%
Change in Fund Balance
Ice Arena
Ice Arena Revenues 125,207 128,662 128,662 333,786 (205,124) 39% Amounts comparable to the prior year.Fee Increase went into effect July 1,
2016.
Ice Arena Expenditures 96,916 100,274 100,274 313,952 (213,678) 32% Amounts comparable to the prior year.
Ice Arena-Rev Over 28,289 28,388 28,388 19,834 8,554 143%
(Under)Expenditures
Ice Arena-Transfers In 0 0 0 0 0
Ice Arena-Transfers Out 0 0 0 0
Ice Arena Net Transfers 0 0 0 0 0
Ice Arena Net Change in 28,289 28,388 28,388 19,834 8,554 143%
Fund Balance
6/6/2017 6:56:25 AM Page 1 of 1
Liquor Stores
Statement of Revenue & Expenses
March YTD 2017
Mar YTD Mar YTD Mar YTD Mar YTD Actual Mar YTD
Company 2013 Actual 2014 Actual 2015 Actual 2016 Actual Actual Actual Budget Budget Variance ACTBUDGET Comment
2016 2017 2017 2017
Revenues-Downtown
Total Revenue-Downtown 2,080,722 2,163,826 2,221,056 2,222,128 454,947 468,414 2,205,640 (1,737,226) 21% Downtown store's sales are$13K higher
than a year ago.Off to a good start.
Cost of Goods Sold-Downtown
Cost of Goods Sold 1,554,967 1,622,549 1,669,646 1,659,631 340,325 348,676 1,650,268 (1,301,592) 21%
Gross Profit-Downtown
Gross Profit 525,755 541,277 551,410 562,497 114,622 119,737 555,372 (435,635) 22%
Gross Profit%-Downtown 25.3% 25.0% 24.8% 25.3% 25.2% 25.6% 25.2% 0.4% 101.5% Meets 25%benchmark.
Expenses-Downtown
Total Expenses-Downtown 415,943 426,033 464,010 475,533 106,844 110,362 479,469 (369,107) 23%
Revenues(Losses)Before Transfer
Revenue(Loss)B4 Trans-Downtown 109,812 115,244 87,400 86,964 7,778 9,376 75,903 (66,527) 12% Net revenues before transfer higher than 1st qtr one
year ago.Majority of sales and profit occur the
second half of the year.
Revenues-Pilot Knob
Total Revenues-Pilot Knob 2,440,731 2,475,368 2,394,242 2,529,076 519,116 517,881 2,458,547 (1,940,666) 21% PK store's sales very similar to the 1st quarter
of last year.Store was closed three days during
the 1st quarter.
Cost of Goods Sold-Pilot Knob
Cost of Goods Sold-Pilot Knob 1,823,289 1,845,248 1,797,841 1,878,227 385,580 382,084 1,841,448 (1,459,364) 21%
Gross Profit-Pilot Knob
Gross Profit-PK 617,441 630,120 596,401 650,849 133,537 135,796 617,099 (481,303) 22%
Gross Profit%-PK 25.3% 25.5% 24.9% 25.7% 25.7% 26.2% 25.1% 1.1% 104.5% Meets benchmark. Mix of sales favors
higher gross profit margin items.
Expenses-Pilot Knob
Advertising 2,174 3,462 4,393 5,198 926 898 3,900 (3,002) 23%
Total Expenses-Pilot Knob 411,857 421,999 421,108 435,498 98,294 96,260 481,484 (385,224) 20%
Revenues(Losses)B4 Transfer
Revenues(Losses)B4 Trans-Pilot Knob 205,585 208,121 175,293 215,351 35,243 39,536 135,615 (96,079) 29% Net revenues before transfer higher than
1st qtr one year ago.Majority of sales and
profit occur the second half of the year.
Combined Inc(Loss)Before Transfers
Combined Inc(Loss)B4 Transfers 315,396 323,365 262,693 302,315 43,021 48,912 211,518 (162,606) 23%
Profit(Loss)As A%of Sales 7.0% 7.0% 5.7% 6.4% 4.4% 5.0% 4.5% 0.4% 109.4% Percentage is generally lowest the first
quarter of the year.
Operating Transfers
Operating Transfers-Out 70,000 70,016 91,504 204,113 23,760 23,657 94,630 (70,973) 25%
Net Increase(Decrease)in Assets 245,396 253,349 171,189 98,202 19,261 25,254 116,888 (91,634) 22%
6/6/2017 6:49:12 AM Page 1 of 1
Sewer,Solid Waste,Storm Water,Water&Street Lights
March 2017 YTD Operating Report
March March YTD
Quarter 1 March YTD
YTD Actual Budget YTD Act as
Company Actual Actual Actual Budget Variance 2017 %of Bud Comment
2016 2017 2017 2017 2017
Revenues(Sewer) 420,169 393,333 393,333 2,060,012 (1,549,291) 19.09% Commercial usage is similar.Net WAV(amt billed is based on the lower of winter or actual
consumption)increased for the residential cycles approximately 1%.Yet,2017 YTD revenues less
than 2016,because the February 2016 invoices,included an incorrect invoice for one
customers;sewer charge was$35K.Meter had been hit by lighting.Incorrect read.Fixed May 2016.
Expenses-(Sewer) 356,955 389,497 389,497 2,231,750 (1,481,409) 17.45% YTD expenses are higher than a year ago due to a budgeted increase in MCES(Metropolitan
Council Environmental Services)fees and needed sewer repairs.
Revenues Over Expenses(Sewer) 63,213 3,836 3,836 (171,738) (67,882) -2.23%
Transfers Out(Sewer) 79,187 79,532 79,532 318,126 (185,574) 25.00% See detailed transfers worksheet.
Net Change in Fund Balance(Sewer) (15,973) (75,696) (75,696) (489,864) 117,692 15.45% Net operating revenue(i.e.before depreciation--booked in December each year)are
insufficient to cover operations.In addition rates need to be high enough to cover
replacement costs for the city's sewer infrastructure.These rates will need to be carefully
reviewed and revised this fall before the 2018 rates are adopted.
Revenues(Solid Waste) 409,966 404,705 404,705 1,986,203 (1,458,812) 20.38%,2016 revenue higher than expected due to billing error earlier in the year(i.e.2016 includes$25K in
revenue attributable to 2015).
Expenses-(Solid Waste) 339,088 388,485 388,485 1,905,011 (1,198,741) 20.39% 2017 expenses more than 2016 primarily due to the addition of a FT staff person mid-2016,the
purchase of additional garbage carts and increased recycling charges.
Revenues Over Expenses(Solid Waste) 70,878 16,220 16,220 81.192 (260.071) 19.98%
Transfers In(Solid Waste) 15,962 15,962 63,849 (37,245) 25.00%'.Per detailed transfers worksheet.New in 2017.Other enterprise funds reimbursing Solid Waste for a
portion of the shared staff person's lime.
Transfers Out(Solid Waste) 32,149 45,335 45,335 181,338 (105,781) 25.00% See detailed transfers worksheet.
Net Change in Fund Balance(Solid Waste) 38,729 (13,152) (13,152) (36,297) (191,536) 36.24%
Revenues(Storm Water) 134,717 133,347 133,347 650,003 (491,303) 20.51% YTD comparable to last year.
Expenses-(Storm Water) 20,093 26,678 26,678 690,995 (648,576) 3.86%
Revenues Over Expenses(Storm Water) 114,623 106,669 106,669 (40,992) 157,273 -260.22%
Transfers Out 85,628 93,038 93,038 372,150 (217,088) 25.00%.See detailed transfers worksheet.
Net Change In Fund Balance(Storm Water 28,996 13,631 13,631 (413,142) 374,361 -3.30%
Revenues(Water)
Water Availability Charges 12,550 21,335 21,335 65,000 (29,860) 32.82%'.Correlates to building permit activity.Increased building permit activity in 2017 compared to 2016.
Net Interest Income 514 2,788 2,788 55,191 (44,757) 5.05% After adjusting for the reversing of premium/discount recorded in December 2016(will be reviewed
and recorded again in December 2017),the increase in investment income reflects a combination of
an increase in interest rates and the investment balances in the water fund.
Rental Income 77,246 84,438 84,438 203,700 (76,182) 41.45% Reflects wireless companies(ex.Sprint,ATT,Verizon)rental of space on the city's water towers.
Enterprise Sales 170,765 188,402 188,402 1,457,808 (1,217,471) 12.92%'.Increase in Enterprise Sales reflects a rate increase which went into effect 1-1-17,which was
mitigated by a reduction in the number of gallons consumed(i.e.billed).
All Other Revenues 4,862 10,409 10,409 31,400 (15,617) 33.15%
Total Revenues 265.936 307,372 307,372 1,813,099 (1,383,887) 16.95%
Expenses•(Water) 90,970 134,842 134,842 1,506,024 (1,317,874) 8.95%.Increase in expenses reflects the timing of when chemicals are purchased;chemicals are
purchased,as needed.
Revenues Over Expenses(Water) 174,966 172,530 172,530 307,075 (66,013) 56.18%
Transfers Out(Water) 109,035 104,654 104,654 418,617 (244,193) 25.00% See detailed transfers worksheet.
Net Change in Fund Balance(Water) 65,931 67,876 67,876 (111,542) 178,180 -60.85%,
Streetlight
Revenues(Streetlight) 40,059 40,060 40,060', 220,838', (166,273)', 18.14%
Expenses 48,180 41,860 41,860 286,200 (202,794) 15.72%
Revenues Over Expenses(Street Light) (8,121) (1,800). (1,800) (45,362) 36,521 3.97%
6/6/2017 11:50:53 AM Page 1 of 1
o�FAi , City of Farmington
430 Third Street
Farmington, Minnesota
'rs651.280.6800 -Fax 651.280.6899
•A 1,600a' ' www.ci.farmington.mn.us
TO: Mayor, Councilmembers and City Administrator
FROM: David McKnight, City Administrator
SUBJECT: 2030 Financial Plan
DATE: June 12, 2017
INTRODUCTION
City staff has been working on the 2030 Financial Plan for some time. This plan is a culmination of the
many capital improvement plans you have put in place over the past six years along with a number of other
relevant parts of the annual city budget.
DISCUSSION
The work session will be the start of the 2018/2019 budget process. Finance Director Robin Hanson and I
will review the current draft of the 2030 Financial Plan. This plan is a culmination of a lot of work you have
completed over the past six years.
The narrative portion of the plan is attached for your review. The many detailed spreadsheets have not been
attached since the first five years of the spreadsheets are included in the narrative portion of the plan. The
detailed spreadsheets will be available for you at the work session.
The financial plan is being used as a reminder on financial decisions you have already made(debt and union
contracts)and an educational tool for those members who were not involved in those decisions. The plan
itself is in constant flux as we try to address old and new issues, realise the fmancial limitations of the city
and wait to gather your priorities for the next two years.
While Robin and I will review the plan and give you a general idea where our finances are for 2018/2019, we
wanted to use this work session as an opportunity for the city councilmembers to have a chance to share
priorities, ask questions and provide direction to city staff.
Our plan is to take what we learn from the work session and bring you the first draft of the 2018/2019
budget at your July 10, 2017 work session. This approach has worked in the six years that I have been here
and the solid budgets you have set in place have been an important part of improving our financial health
over that same time period. The positive audits we received along with the bond rating upgrade in 2015 are
just a few examples of how your hard work and decision making is paying off.
BUDGET IMPACT
This work will result in the 2018/2019 annual budget document in December 2017.
ACTION REQUESTED
Listen to the presentation on the draft 2030 financial plan, ask any questions you have and provide direction
to city staff on the priorities you have for the 2018/2019 budget.
ATTACHMENTS:
Type Description
D Backup Material Draft 2030 Financial Plan
D Backup Material Ehlers Financial Planning Handout
City of Farmington
2030 Financial Plan
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6/5/2017 DRAFT
The Farmington 2030 Financial Plan is a document developed to help make Farmington a city of fiscal
excellence. The city council and city staff have been working on issues and plans related to this
document since 2010. This document takes the financial and capital improvement plans and puts them
in one place to help provide a roadmap to the financial future of the city.
History
Farmington has transitioned from a small, rural community to a third ring suburb over the past 40 years.
A significant portion of the growth occurred in the late 1990's and early 2000's when the population
grew from 5,000 to an estimated 23,000 residents today. The fast growth rate placed a lot of pressure
on the city to provide services, infrastructure and facilities.
In the past 15 years the city built a police station, municipal services building, a second fire station and
city hall among other facilities. In addition,the building and maintenance of infrastructure including
streets,trails and utilities has placed many demands on the city finances.
While the city enjoyed the growth that occurred, a coordinated financial review and plan were not put
in place. In 2010,a review of the financial health of the city was started,along with the development of
long term capital improvement plans in areas,such as street projects and vehicle replacement.
The financial health review showed the city was not in good shape. The General Fund,the fund
responsible for most basic government services, had to borrow money from other funds two to three
times a year to pay its obligations.
City of Farmington
General Fund Fund Balance
$6,500,000 •
• • ■ • • ■ ■ ■ • • ■ ■
$6,000,000 11---N---11---0-4D-IN---11)-1,--11--11S-19–ms-- - -._ . -_ u ■
$5,500,000
O $5,000,000 • • __ • • _ • _ • • • • —s—
CI $4,500,000
7-13
Ca $4,000,000
-p $3,500,000
C $3,000,000 -- --
u- $2,500,000 –." -
.E $2,000,000
• $1,500,000 -- ■
C $1,000,000 ' . ■ • MI
. , ■ .
.0 $500,000 ,
U $_
$(500,000) Jan_--Feb_ _Mar -•pr lay June__July----Aug_ ept__Oct nv Dec_
$(1,000,000) -- - -
L in=2012 to 200 tare 2014 201E ii20N Nim 2017 -. et2017 E.p -n-50%012017 Exp 4.-.4011 61e02018 En) -0-.S071 a Eat 20111E*p
The negative amounts in April, May and November in the chart above show how the city would have to
borrow from other funds in previous years and also shows how this issue has been resolved with sound
financial practices.
1
The financial review also made it clear that the city had encumbered a large amount of debt in recent
years. The city had at one time almost$40,000,000 in debt on the books.
Outstanding Debt as of December 31
(includes Interfund Loans and planned 2019 bond issue)
$40,000,000 -
$35,000,000 ___ _ Refunding bonds issued
2016. Related bonds
$30,000,000 - redeemed February 2017.
$25,000,000 -— - — — —
$20,000,000 - ■ ■ ■ --
$15 000,000 I ' I '
■ ■
$10,000,000 - — —
$5,000,000 111 — —
$ T - l
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
The financial review and direction and hard work by the city has reduced the amount of debt to
approximately$22,000,000 in early 2017. The issuance of debt is expensive and has limited the city's
ability to do other things, including reducing or maintaining taxes.
In 2016 the city paid$4,120,736 in debt repayments. Of that amount$3,026,534 was principal
payments and$1,094,202 was interest and fiscal charges.
A final note from the financial health review from the past few years. We discovered in 2012 that 14 of
our 42 major cash and investment funds had a negative balance. As of early 2017 we now only have two
of 41 funds in a negative balance. One of these funds will be resolved in 2017 and the final fund
resolved in 2018. City staff made the city council aware of this issue and together,following a plan,this
issue will be resolved next year.
These examples, and our community's infrastructure needs, led the Farmington City Council to set a
number of goals to address these issues as a part of the 2030 Financial Plan. These goals include:
1. Pay down existing debt.
2. Transition to paying for future large projects with a combination of cash and bonds;these have
historically been financed with just bonds,which is very expensive.
3. Control future tax levy increases as much as possible while meeting financial obligations.
4. Implement the many capital improvement plans the city has developed.
5. Ensure that the city council, city staff and the community are aware of this financial plan.
The work that has gone into developing this financial plan has been many years in the making. This
document will never be finished as it will be adjusted each year based on decisions that impact the plan.
The document should be used as a roadmap and help reduce the number of surprises that future city
council's encounter.
2
Capital Improvement Plans
The city has developed a number of capital improvement plans since 2010 that are incorporated into
this document. The plans are meant to move Farmington to a more proactive approach to both funding
and planning for projects.
Capital improvement plans(CIP)have been developed in the following areas:
1. Streets
2. Vehicles
3. Fire Vehicles(2013-2019)
4. Fire Equipment
5. Police Equipment
6. Trail Maintenance
7. Arena Capital Projects
8. Sealcoating
9. Building Maintenance
10. Park Improvements
These are the major plans that are addressed in the plan at this time. Smaller plans do exist within city
departments and may be incorporated into this plan in the future. Not all of the current plans have
specific projects or expenditures listed;funding is the more important part of the planning process.
Base Year
This version of the 2030 Financial Plan uses the year 2017 as the base year of the plan. All numbers
used as base numbers are taken from the 2017 general fund budget.
Important information from the 2017 budget to keep in mind when reviewing the 2030 Financial Plan is
included below:
Non-Property Tax Revenues $ 3,107,737
Expenditures $12,203,490
Revenue Under Expenditures ($9,095,753)
Fiscal Disparities $ 2,136,834
General Fund Levy $ 6,958,919
Debt Levy $ 3,037,903
Net Tax Levy $ 9,996,822
Financial Plan Document
This document is intended to be used as a narrative summary to the attached spreadsheets that show
the expenditure detail for each area. The plan will summarize the major components of the plan at this
time and show you how future plans are incorporated.
Annual Human Resources Costs-These are all the costs associated with labor,including wages,
taxes,overtime,retirement and all other benefits.
3
Base Non-Human Resources Costs-These are the operations items in all budgets including
contract costs,equipment, training,professional services and more.
Existing Debt-Debt that is in existence as of January 1,2017.
Street CIP Debt and Cash-This is anticipated debt incurred and cash collected for of future street
projects.
Vehicle CIP Debt and Cash-This is anticipated debt incurred and cash collected for of future
vehicle purchases.
Transfer Project Tax Levy and Local Government Aid-These are projects that are included in the
Transfers budget that are paid for by the tax levy or local government aid dollars.
Although this is a financial plan that looks out to the year 2030,the primary focus is on the next five
years,2018 through 2022.
4
Existing Debt CIP
The Existing Debt CIP includes the repayment schedule for all of the unpaid debt the city had as of
January 1,2017. The debt payments are divided into two areas: bond financed related Road and Bridge
Fund and Non-Road and Bridge Fund.
The current debt incurred by the city paid for projects like the Elm, Main and 195th Street projects as
well as the building of the Police Department, Fire Station#2, City Hall and the Central Maintenance
Facility among others.
All of our current debt will be fully paid off by the end of 2030. The 2017 debt levy totaled$3,037,903.
Our current debt levy needs will peak in 2018 with a debt levy of$3,363,373.
The current debt levy needs for the years 2018-2022 are included below:
Road and 2018 2019 2020 2021 2022
Bridge Fund
2011A $320,000 $320,000
2013A $449,000 $444,000 $669,000 $435,000 $300,000
2016A $271,000 $271,000 $352,000 $582,327 $324,750
TOTAL $1,035,000 $1,035,000 $1,021,000 $1,017,327 $624,750
Non-Road and 2018 2019 2020 2021 2022
Bridge Fund
2013B $521,000 $376,021
2016C $551,000 $530,262
2010D $139,000 $240,000 $30,000
2010A $533,873 $495,677 $400,000 $401,408 $42,000
2005C $166,000 $166,000 $166,000 $166,000 $166,000
2016B $124,000 $125,000 $665,000 $635,000 $640,000
2015A $293,500 $293,500 $293,500 $293,500 $293,500
TOTAL $2,328,373 $2,226,460 $1,554,500 $1,495,908 $1,141,500
GRAND TOTAL $3,363,373 $3,261,460 $2,575,500 $2,513,235 $1,766,250
The full existing debt CIP spreadsheet is attached as#1.
5
Street CIP
The Street CIP includes the anticipated major street projects to be completed. These projects are to be
funded primarily through bonded debt, but also include funding from three utility funds(water,storm
water and sanitary sewer), Municipal State Aid contributions and transfers from the Road and Bridge
Fund.
Starting in 2020 cash starts to be set aside for these projects. This is a significant change in major
project funding philosophy for the city and is one of the primary goals of the financial management plan.
Historically,the city has borrowed the funds necessary for its major projects. It will take time to achieve
the goal of funding projects with a combination of cash and debt. Over time this will serve the taxpayers
well by spending fewer tax dollars on interest. The first step of this goal is taken in 2020.
The projects that are currently included in the street CIP are as follows:
Project Year Project Year
Second Street/Honeysuckle Lane 2019 CR 50/Flagstaff Avenue Traffic Control 2026
Willow/Linden Street 2022 Multiple Areas 2026
Euclid Path 2022 Westview Acres 2027
Spruce Street 2023 Sixth Street 2028
Sunnyside Phase Two 2023 Multiple Areas 2028
First Street/Oak Street 2024 Pine Street 2029
Multiple Areas 2024 Multiple Areas 2030
This plan is subject to change based on needs, unforeseen factors and staff recommendation.
The debt levy and other funding sources for the years 2018-2022 are included below:
PROJECT 2018 2019 2020 2021 2022
SECOND STREET/HONEYSUCKLE LANE $3,000,000
WILLOW/LINDEN STREETS $2,750,000
EUCLID PATH $540,000
TOTAL STREET CIP EXPENDITURES $0 $3,000,000 $0 $0 $3,290,000
STREET CIP FUNDING/FUND BALANCE 2018 2019 2020 2021 2022
STARTING BALANCE $0 $0 $0 $90,000 $350,000
TOTAL ANNUAL EXPENDITURES $0 $3,000,000 $0 $0 $3,290,000
TOTAL ANNUAL TAX LEVY(CASH) $0 $0 $90,000 $260,000 $775,000
BONDED DEBT REVENUE $0 $2,400,000 $0 $0 $2,210,000
WATER FUND CONTRIBUTION $0 $200,000 $0 $0 $180,000
STORM WATER FUND CONTRIBUTION $0 $200,000 $0 $0 $180,000
SANITARY SEWER FUND CONTRIBUTION $0 $200,000 $0 $0 $180,000
TRANSFERS FROM R/B FUND $0 $0 $0 $0 $0
MSA CONTRIBUTIONS $0 $0 $0 $0 $0
YEAR ENDING BALANCE $0 $0 $90,000 $350,000 $585,000
6
FUTURE CIP DEBT REPAYMENTS 2018 2019 2020 2021 2022
SECOND STREET/HONEYSUCKLE $192,000 $192,000 $192,000 $192,000
WILLOW/LINDEN STREETS AND EUCLID PATH $180,000
TOTAL STREET CIP DEBT $0 $192,000 $191,000 $191,000 $372,000
The full street CIP spreadsheet is attached as#2.
7
Vehicle CIP
The Vehicle CIP includes the anticipated major vehicle purchases for all General Fund departments. The
funding for most of the vehicle purchases is cash,with the exception of the more expensive Fire
Department vehicles. Currently,there are four fire department vehicles included in the vehicle CIP that
are funded through debt.
To help achieve the goal of minimizing the tax levy impact on residents,the Vehicle CIP does not start
until 2020.
The vehicle CIP for the years 2018-2022 includes:
2018 2019 2020 2021 2022
COMMUNITY DEVELOPMENT $0 $0 $64,000 $0 $0
ENGINEERING $0 $0 $0 $32,000 $32,000
FIRE $0 $0 $115,000 $55,000 $55,000
STREETS $0 $0 $525,000 $240,000 $255,000
NATURAL RESOURCES $0 $0 $0 $0 $40,000
PARKS $0 $0 $60,000 $53,000 $60,000
TOTAL $0 $0 $764,000 $380,000 $442,000
VEHICLE CIP FUNDING/FUND
BALANCE 2018 2019 2020 2021 2022
STARING BALANCE $0 $0 $0 $0 $0
TOTAL ANNUAL EXPENDITURES $0 $0 $764,000 $380,000 $442,000
TAX LEVY REVENUE(CASH) $0 $0 $764,000 $380,000 $442,000
BONDED DEBT REVENUE $0 $0 $0 $0 $0
YEAR ENDING BALANCE $0 $o so $0 $0
The Fire Department has a separate vehicle CIP that will run through 2019. The funding for this plan is
included in the Transfers CIP. There is currently only one vehicle purchase remaining in the Fire
Department Vehicle CIP. An engine/tender is scheduled to be purchased in 2019.
The full Vehicle CIP spreadsheet is attached as#3 and#4. The Fire Department 2013-2019 CIP is
included as#5.
8
1
Transfers CIP
The Transfers CIP includes a variety of projects that are funded annually by the tax levy and tracked
separately to carry over unspent dollars from year to year as part of long term capital improvement
plans. In addition,there are also projects in the Transfer CIP that are funded by local government aid
dollars for the same reason.
TAX LEVY PROJECTS 2018 2019 2020 2021 2022
ARENA CAPITAL PROJECTS $0 $0 $20,000 $20,000 $20,000
BUILDING MAINTENANCE CIP $0 $0 $0 $0 $0
EDA TRANSFER $0 $0 $0 $0 $0
EMPLOYEE EXPENSE FUND(2024) $13,022 $13,022 $13,022 $13,022 $13,022
FIRE CAPITAL EQUIPMENT(2019) $0 $72,568 $0 $0 $0
FIRE EQUIPMENT CIP $70,545 $91,545 $91,545 $91,545 $91,545
GENERAL CAPITAL VEHICLES(PD) $85,000 $90,000 $90,000 $100,000 $100,000
PARK IMPROVEMENT FUND $20,000 $20,000 $20,000 $20,000 $20,000
POLICE EQUIPMENT CIP $51,000 $51,000 $51,000 $40,725 $30,725
PROPERTY/CASUALTY DEDUCTIBLE $10,000 $10,000 $10,000 $20,000 $20,000
SEALCOATING CIP $350,000 $400,000 $400,000 $400,000 $400,000
TOWNSHIP ROAD MAINTENANCE $3,000 $3,000 $3,000 $3,000 $3,000
TRAIL MAINTENANCE CIP $10,000 $0 $0 $60,000 $0
TOTAL TAX LEVY PROJECTS $612,567 $751,135 $698,567 $768,292 $698,292
LGA PROJECTS 2018 2019 2020 2021 2022
BUILDING MAINTENANCE $37,432 $10,000 $86,607 $151,607 $156,607
EDA TRANSFER $0 $0 $40,000 $40,000 $40,000
EMERALD ASH BORER $0 $0 $10,000 $10,825 $10,000
FIRE CAPITAL EQUIPMENT(2019) $150,000 $177,432 $0 $0 $0
GENERAL CAPITAL FUND(VEHICLES) $90,000 $90,000 $0 $0 $0
PARK IMPROVEMENT FUND $0 $0 $0 $0 $0
TBD $0 $0 $90,825 $55,000 $30,825
TRAIL MAINTENANCE $10,000 $10,000 $60,000 $30,000 $50,000
TOTAL LGA PROJECTS $287,432 $287,432 $287,432 $287,432 $287,432
TOTAL TRANSFERS PROJECTS $899,999 $1,038,567 $985,999 $1,055,724 $985,724
The full Transfers CIP spreadsheet is attached as#6.
The Transfers CIP document refers to three additional CIP's. These CIP's are the Fire Equipment CIP
attached as#7,the Police Equipment CIP attached as#8 and the Trails Maintenance CIP attached as
#9.
9
Park Improvement CIP
The city has long had a Park Improvement Fund that was funded primarily through development fees.
Over the years the dollars in this fund have been reducing without being replenished due to
development slowing down.
City staff has made the city council aware of the funding needs for all of our current parks. The
equipment in our parks is aging and the amenities that are most popular with the different age groups
change over time.
This CIP is included in the Financial Plan as a reminder that this issue is outstanding and funding
discussions need to occur. The funding and expenditures included in the CIP are placeholders at this
time. The CIP is attached as#10.
10
Building Maintenance CIP
The city council and staff have discussed over the past two years the need for a detailed building
maintenance plan and related funding. In 2017 the city hired Wold Architects to review the condition of
the main city buildings to prepare a draft plan for work that will likely need to occur at:
✓ City Hall
✓ Rambling River Center
✓ Fire Station#1
✓ Fire Station#2
✓ Police Station
✓ Maintenance Facility
✓ Swimming Pool
✓ Schmitz-Maki Arena
✓ Downtown Liquor Store
✓ Pilot Knob Liquor Store
This study is underway and should be completed mid-2017.
The piaceholder Building Maintenance CIP is attached as#11. This will be updated once the study is
completed.
11
Other Financial Plan Revenue
The Financial Plan includes four other sources of revenue besides the tax levy. These other revenues
include:
Other Revenues-These are all of the other revenue sources included in the General Fund budget
including permits,licenses,intergovernmental revenue,fines,investment income and more.
Fiscal Disparities-This revenue source is a metro wide program that is used to balance the
development of commercial and Industrial growth throughout the region.
Use of Fund Balance-The city works hard each year to maintain a balanced budget throughout
the years in order to maintain a minimum 40%fund balance at the start of each year. Recent
history has produced positive results that may make the use of fund balance available to help
alleviate potential tax levy increases.
12
2030 Financial Plan Summary
All of the information contained in the Financial Management Plan is summarized on this spreadsheet.
This one page summary shows the financial needs as they are known at this time. The plan takes into
account our operating costs, current and future debt,CIP's,other revenues and forecasts the possible
tax levy in future years. These numbers should be used by current and future city council's to determine
what level and which services they want the city to provide.
2018 2019 2020 2021 2022
ANNUAL HR COSTS $8,540,790 $8,885,011 $9,240,412 $9,610,028 $9,994,429
BASE NON-HR COSTS $3,213,206 $3,309,602 $3,408,890 $3,511,156 $3,616,491 _
EXISTING DEBT $3,363,373 $3,261,460 $2,575,500 $2,513,235 $1,766,250
STREET CIP DEBT $0 $192,000 $192,000 $192,000 $372,000
STREET CIP CASH $0 $0 $90,000 $260,000 $775,000
VEHICLE CIP DEBT 23 $0 _ $0 $0 $0 $0
VEHICLE CIP CASH $0 $0 $764,000 $380,000 $442,000
TRANSFERS-LEW $612,567 $751,135 $698,567 $768,292 $698,292
TRANSFERS-LGA $287,432 $287,432 $287,432 $287,432 $287,432
TOTAL $16,017,368 $16,686,640 $17,256,800 $17,522,144 $17,951,894
OTHER REVS(1%UP) $3,138,814 $3,170,203 $3,201,905 $3,233,924 $3,266,263
FISCAL DISP(1%DN) $2,115,466 $2,094,311 $2,073,368 $2,052,634 $2,032,108
TOTAL REVENUES $5,254,280 $5,264,514 $5,275,272 $5,286,558 $5,298,371
SUMMARY
BASE TAX LEW $11,753,996 $12,194,613 $12,649,301 $13,121,185 $13,610,920 _
CIP/TRANSFER/LGA $899,999 $1,038,567 $985,999 $1,155,724 $1,085,724
EXISTING DEBT $3,363,373 $3,261,460 $2,575,500 $2,513,235 $1,766,250
STREET/VEH.DEBT $0 $192,000 $192,000 $192,000 $372,000
STREET/VEH CASH $0 $0 $854,000 $640,000 $1,217,000
TOTAL EXPENSES $16,017,368 $16,685,640 $17,256,800 $17,522,144 $17,951,894
OTHER REVENUES $3,138,814 $3,170,203 $3,201,905 $3,233,924 $3,266,263
FISCAL DISP. $2,115,466 $2,094,311 $2,073,368 $2,052,634 $2,032,108
FUND BALANCE $150,000 $0 $0 $0 $0
TOTAL REVENUES $5,404,280 $5,264,514 $5,275,272 $5,286,558 $5,298,371
TOTAL TAX LEVY $10,613,088 $11,422,126 _ $11,981,528 $12,235,586 $12,653,524
%CHANGE 6.16% _ 7.62% 4.90% 2.12% 3.42%
$CHANGE $616,266 $808,039 $559,058 $254,058 $417,938
13
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Follow the Money: Using financial planning
to implement a community's vision
League of Minnesota Cities Webinar
Stacie Kvilvang & Nick Anhut - Ehlers
August 20, 2014
11(
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Ehlers Background
• Independent Public Finance Advisors
—Our Clients: Cities, Counties, HRA/EDAs, School Districts
• Registered Municipal Advisors
• Debt Planning , Issuance and Management
• Financial Management Consulting
— Feasibility Analysis / Funding Strategies for Major Projects
— Long-Term Financial Management Planning (including CIP)
— Water, Sewer and Stormwater Utility Rate Studies
• Economic Development Consulting
2Ito 0 FREERS
LEADERS IN PUBLIC FINANCE
What is a Financial Management Plan ?
• A multi -year fiscal plan for all tax-
supported funds
✓ Can include enterprise or special revenue funds if
desired
• Integrates :
✓ Existing Debt
✓ Capital Improvement Plans
✓ Future Debt
✓ Tax base growth
✓ Future staffing needs
✓ Future operating expenses
40114—
'j_>.; ' EHLERS
LEADERS IN PUBLIC FINANCE
Why do Financial Planning ?
• Allows council to focus on big picture and policy issues
— Get away from randomly picking a percent or number increase for the
budget
• Allows council to focus on long-term financial health of the
City rather than the immediate
— Good roads, facilities, services, reinvestment, etc.
— Not on single-year tax impacts
• Mechanism for translating community vision into reality
• Sets the parameters for success
— Help develop consensus around community goals
• Identifies funding sources for all priorities
• Evaluate financial impacts on tax payers and customers
4 4116 a EHLERS
LEADERS IN PUBLIC FINANCE
What Makes It Practical?
■ Helps to manage expectations
✓ New spending proposals/projects evaluated against other
identified priorities
✓ Weigh proposals vs. predefined affordability parameters
• Helps to maintain assets
✓ Regular replacements or _ ,
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✓ Large periodic repairs
• Reduces stress during budget process
✓ Previously agreed spending guidelines
✓ Better understanding of the effect decisions have
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EHLERS
LEADERS IN PUBLIC FINANCE
What Makes It Practical?
■ Projects, in the context of multi-year planning, tend to
be less controversial
— Provides background/perspective on issues for discussion
- Provides framework to make informed decisions
■ Reduces reactivity amidst an unpredictable fiscal
environment and unfunded mandates
■ If there is a plan, projects get done and the City has a
vehicle through which to inform the residents on the
goals of the City
■ GFOA recommended practice
■ Rating Agencies like multi-year planning
g‘p EHLERS
LEADERS IN PUBLIC FINANCE
GFOA Best Practice
The GFOA recommends that governments at all levels
forecast major revenues and expenditures [for] several
years into the future. The forecast, along with its
underlying assumptions and methodology, should be
clearly stated and made available to stakeholders in the
budget process.
Financial Forecasting in the Budget Preparation Process
(Approved by GFOA February 2014)
7 lir ,, I
EHLERS
LEADERS IN PUBLIC FINANCE
Rating Agencies & FMP
■ Standard and Poor's
— Affects 4 out of 7 areas evaluated as part of Financial
Management Assessment (FMA)
• 20% weight on S&P's Local Government G.O. rating criteria
S & P's Seven Rating Factors City Score Weighting Weighted Score
Institutional Framework 2.00 10% 0.20
Economy 2.00 30% 0.60
Management 2.00 20% 0.40
Financial - Budgetary Flexibility 1.00 10% 0.10
Financial- Budgetary Performance 4.00 10% 0.40
Financial- Liquidity 2.00 10% 0.20
Debt & Contingent Liabilities 5.00 10% 0.50
Total Weighted Score "AA-" 2.40
8 Ito ØEHLERS
LEADERS IN PUBLIC FINANCE
Rating Agencies & FMP
■ Moody's
• - "Below-the-line adjustment for its Factor 3 Management score (20%
weight)
• "We may notch a score up or down if we believe a local government's financial
planning and budget management are unusually strong or weak."
Moody's Rating Factors Indicated Score Weighting Weighted Score
Economy/Tax Base(30%)
Tax Base Size:Full Value Aa 2.39 10% 0.24
Full Value per Capita Aaa 0.74 10% 0.07
Wealth:Median Family Income Aaa 0.71 10% 0.07
Finances(30%)
Fund Balance as%of Operating Revenues Aaa 0.91 10% 0.09
Fund Balance Trend(5-yr change) A 3.61 5% 0.18
Cash Balance as%of Operating Revenues Aaa 0.50 10% 0.05
Cash Balance Trend(5-yr change) Aaa 1.37 5% 0.07
Management(20%)
Institutional Framework A 2.00 10% 0.20
Operating History:5-yr trend Baa 6.39 10% 0.64
Debt/Pensions(20%)
Net Direct Debt/Full Value Aaa 1.01 5% 0.05
Net Direct Debt/Operating Revenues A 2.77 5% 0.14
3-yr Ave.Adjusted Net Pension Liability/Full Value Aaa 0.96 5% 0.05
3-yr Ave.Adjusted Net Pension Liability/Operating Revenues A 2.71 5% 0.14
Total Weighted Score "Aa2" 1,99
r'' EHLERS
4
9 ` '
. , .
,. LEADERS IN PUBLIC FINANCE
How Do You Develop a FMP?
io
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EHLERs
LEADERS IN PUBLIC FINANCE
Step One : Review your situation
• Review the city's financial position
✓ Fund balances
V Annual operating surplus or deficit
✓ Projected debt payments
✓ Past Budget history and current budget
• Review financial policies to make sure the
appropriate financial controls and constraints are
understood by management and staff
(:A..Cs.,1.,„) EHLERS_
•: } LEADERS IN PUBLIC FINANCE
Step Two : Assemble the Required Information
■ Develop an inventory of all capital needs (CIP)
✓ Critical to have
• Make sure to have input from department heads
• Need to be realistic in their requests (put it in when they need it)
✓ Look for deferred or one-time maintenance expenditures (non-
recurring)
• Identify current and alternative revenue sources
• Estimate growth in the tax base
✓ New value for both commercial and residential construction
✓ Inflation in existing properties
✓ TIF District Decertification
• Look for new budget needs to meet growth demands
✓ Personnel and Equipment
12 I 0 EHLERS
LEADERS IN PUBLIC FINANCE
{
StepPrepareThree : the Model
• Analyze the financial impact of the total
requested spending
• Determine if it meets the affordability limits
defined by the governing body
• Affordability limits may include :
✓ Impact on overall tax levy
✓ Tax impact on average home
✓ Impact on City tax rate
EHLERS
LEADERS IN PUBLIC FINANCE
', ,,. ...,..., ......
StepPrepareThree : the Model
GENERAL FUND 2013 2014 2015 2016 2017 2018 2019
Budget Adopted Projected
REVENUE
Taxes 8,834,274 8,869,774 9,295,873 9,745,775 10,103,074 10,548,272 10,991,981
Other taxes 118,500 83,000
Licenses and Permits 528,095 564,395 570,039 575,739 581,497 587,312 593,185
Intergovernmental 498,510 523,510 528,745 534,033 539,373 544,767 550,214
LGA/HACA 289,900 r 260,900 ' 234,800 ' 211,300 ' 190,200 ' 171,200
Charges for Sences 182,850 201,250 203,263 205,295 207,348 209,422 211,516
Miscellaneous 113,100 109,300 110,393 111,497 112,612 113,738 114,875
Franchise fees 290,000 290,000 290,000 290,000 290,000 290,000 290,000
Interest on Investments 15,000 15,000 15,000 15,000 15,000 15,000 15,000
TOTAL REVENUE 10,580,329 10,946,129 11,274,213 11,712,139 12,060,203 12,498,710 12,937,971
EXPENSES
General Government 1,543,576 1,618,804 1,667,368 1,717,389 1,768,911 1,821,978 1,876,638
Public Safety 6,156,068 6,306,652 6,495,852 6,690,727 6,891,449 7,098,192 7,311,138
Public Works 2,266,002 2,384,144 2,455,668 2,529,338 2,605,219 2,683,375 2,763,876
Culture& Recreation 544,483 586,329 603,919 622,036 640,698 659,918 679,716
Other 60,200 40,200 41,406 42,648 43,928 45,245 46,603
Transfer out 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Equipment Fund 100,000 100,000 100,000 100,000
Contingency 80,000 150,000
New Employees-Positions Added - - - - - -
TOTAL EXPENSES 10,580,329 10,946,129 11,274,213 11,712,139 12,060,203 12,498,710 12,937,971
REVENUE OVER UNDER EXPENSES - - - - - - -
Ending Fund Balance 5,194,143 5,194,143 5,194,143 5,194,143 5,194,143 5,274,143 5,424,143
Fund Balance as a Percent of Annual Expenses 49% 47% 46% 44% 43% 42% 42%
liko.
EHLERS
LEADERS IN PUBLIC FINANCE
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StepPrepareThree : the Model
GENERAL FUND 2013 2014 2015 2016 2017 2018 2019
Budget Adopted Projected
GENERAL FUND OPERATING TAX LEVY 8,834,274 8,869,774 9,295,873 9,745,775 10,103,074 10,548,272 10,991,981
ANNUAL INCREASE 1.3% 0.4% 4.8% 4.8% 3.7% 4.4% 4.2%
EXISTING DEBT SERVICE LEVIES
Bond 1 186,520 188,093 183,971 184,877 185,336 0
Bond 2 763,800 766,110 765,808 764,391 767,107 763,236 763,498
Bond 3 77,000 79,175 82,194 79,437 81,472 82,942 83,821
Bond
Bond 4 59,080 55,090 70,000 141,970 140,000 140,000 140,000
Bond 5 97,965 97,965 96,285 94,605 92,925 96,495
Bond 6 220,000 220,000 220,000 220,000 220,000 220,000 220,000
Bond 7 15,028 75,000 0 93,388 90,868 88,348
Capital Fud 125,000 125,000 53,000 35,000 150,000 175,000 125,000
PIR Fund 0 0 126,597 486,535 610,034 734,972 879,980
Arts Center 85,000 50,000 115,000 260,000 215,000
Ice Arena 65,000 65,000 65,000 65,000 65,000
Equipment fund 0 0 0 0 137,563 326,713
PERA Rate Increase 35,500 35,500 35,500 35,500 35,500 35,500
EDA/HRA Levy(tax rate based on market value' 225,000 273,980 273,980 273,980 273,980 273,980 273,980
TOTAL SPECIAL LEVIES (Tx Cap Based) 1,466,900 1,546,461 1,860,035 2,158,995 2,557,442 2,798,006 3,039,355
TOTAL TAX LEVIES-Based on Tax Capacity 10,301,174 10,416,235 11,155,908 11,904,770 12,660,516 13,346,278 14,031,335
Adjustment for Fiscal Disparities (1,332,979) (1,422,717) (1,422,717) (1,422,717) (1,422,717) (1,422,717)
(1,422,717)
NET LEVY TO TAXPAYERS 8,968,195 8,993,518 9,733,191 10,482,054 11,237,799 11,923,561 12,608,618
\, 1ØEHLERS
rr LEADERS IN PUBLIC FINANCE
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PrepareStepThree : the Model
GENERAL FUND 2013 2014 2015 2016 2017 2018 2019
Budget Adopted Projected
EXISTING TAX CAPACITY(TAX BASE) 14,368,863 14,409,835 14,559,835 14,859,835 15,234,983 15,569,476 15,803,018
TAX INCREMENT CAPTURED TAX CAPACITY
TIF 2-6-Decertifies 2019
TIF 2-9-Early Decertification-2016 104,402
NEW REDEVELOMENT TAX CAPACITY 0 0 150,000 150,000 0 0 0
TOTAL TAX CAPACITY 14,368,863 14,409,835 14,709,835 15,009,835 15,339,385 15,569,476 15,803,018
TAX RATE ON TAX CAPACITY 62.414% 62.412% 66.168% 69.835% 73.261% 76.583% 79.786%
TAX RATE%CHANGE 6.37% 0.00% 6.02% 5.54% 4.91% 4.53% 4.18%
City Taxes (incl MV Exclusion) 1,298 1,298 1,393 1,487 1,578 1,669 1,759
%tax increase on average home(225k) 6.37% 0.00% 7.27% 6.78% 6.14% 5.76% 5.40%
Amount increase on •T•'ag $78 $0 $94 $94 $91 $91 $90
Tax Rate vs. Tax Increase
410 ØEHLERS
LEADERS IN PUBLIC FINANCE
Sample Charts
Total Levy by Type
Debt Levy as Percent of Total Tax Capacity Levy
14,000,000
30.00%
12,0063,000
HCA
25.00%
10,000,000
- gi EDA Levy
.,
New Debt 2o.00% -*'
8,000,000
61 Existing Debt .
_
6,000,000 15.00%
ri General Fund •
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__ 1__ _
4,000,000
10.00%
2,000,0IX) — I
5.00% i --'
-
$11,639,959
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Debt levy Percent MEM Hiciazna:15.16 15.15%16 62'Y MEI=0=EMEZ
Debt tsies28144013
.1(MAKI Historic and Projected Tax Rates
100.000%
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.MICOIrvvergrt:I Ile WIT{ a MA(4,la,Irvva 1.,, 09111C01.817pr..Ern.11%., 'City Tax Rate 55.73 54.67 62.41 62.41 6932 72.39 74.36 7646 80.14 81.42 83.34 86.74 83.63
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Step Four: Analyze and Compare to Standards
■ This is an optional step
✓ Depends upon your council
■ Compare to other similar entities — best
practices
✓ Level of expenditures
✓ Employees per capita
✓ Debt
• Per Capita
• As a Percentage of Budget
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ØEHLERS
LEADERS IN PUBLIC FINANCE
Step Five : Council Discussion and Input
■ Layout policy issues
/ Fund balance (general fund , other various funds)
/Annual tax increase
✓ Level of service
• Discuss priorities and options
/ Bring back options for review at future Council
work session(s)
• Model and analyze alternative "what if"
scenarios for Council review
....,„
>>' EHLERS
LEADERS IN PUBLIC FINANCE
Step Six: Develop Support and Communicate Plan to
the Public
■ Approve plan
■ Develop key messages for public
■ City is in good financial condition
• Adequate reserves to address issues
• Ability to finance needed projects
• Tax base growth captured through redevelopment
— Capture immediately since not utilizing TIF
• Recent rating increase
■ Need to refine a couple of structural issues in budgeting, but not
significant impact on taxes
■ Will need to increase taxes over next several years to finance
required projects
• Reinvestment in roads and public facilities is key to tax base growth and
preservation
■ Access
✓ City website, etc.
440 eEHLERS
LEADERS IN PUBLIC FINANCE
Case Study # 1 — Minneapolis Suburb
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Case Study # 1 — Issues
• Actively redeveloping
— Need to build EDA fund
• Was being used to support other general fund budget issues
• Funding needed for:
— Downtown redevelopment
— Ice Arena
• How to finance capital needs
• How to increase revenues
• Discussion if should be enterprise fund or special revenue fund
— Arts Center
• Running a deficit
• Needed capital improvements
• Council didn't understand how being funded
• Discussion if should be enterprise fund or special revenue fund
— Needed funding for annual Pavement Management Program
22 14 EHLERS
LEADERS IN PUBLIC FINANCE
Case Study # 1 — Solutions
• Developed FMP
— Showed impact of doing nothing vs. doing something
• What happens to fund balances
• How issues are just being pushed down the road for future councils to deal with
• Laid out policy issues simplistically for Council
- Bottom line and keep it simple
• They make the decisions which sets the framework
• No where else to make cuts — can't keep 0% increase — not realistic
• Provided options and impacts
— Allowed Council to see impact of their policy direction
— Helped to refine their policy direction
• Had open discussion/dialogue between council and staff
23 - '' EHLERS
9'7 '` LEADERS IN PUBLIC FINANCE
Projected City Impacts
$225,000 Single Family Residence-Inflated at 1% Annually
$2,500
$2,000
410.
$1,500
$1,000
I I
$500
$0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
City Taxes $1,298 $1,298 $1,393 $1,487 $1,578 $1,669 $1,759 $1,848 $1,935 $2,022 $1,974
V
Average City Tax increase of $75 City Tax Reduction of $48
2015 Levy Increase
Use Dollar Increase Tax Increase
General Fund $461 ,599 $44
Arts Fund $85,000 $13
Capital Fund $53,000 $8
PIR Fund $126,597 $19
Pavillion $65,000 $10
TOTAL $791 ,196 $94
Tax Impact on Average Value Home
Annual Monthly Daily
$94 $7.83 $0.26
'',“10* LEADERS IN PUBLIC FINANCE
2
2015 Tax Impact of Levy Increase On Property
Type of Taxable Estimated
Property Market Value Tax Increase
100,000 $26.96
125,000 $37.18
Residential 150,000 $47.43
Homestead 175,000 $57.65
•
240 $94.33
Average taxable 250,000 $88.37
value in City
300,000 $108.84
400,000 $149.77
500,000 $347.39
Commercial/ 750,000 $535.17
Industrial 1 ,000,000 $722.94
1 ,500,000 $1 ,098.50
2,000,000 $1 ,474.05
- 0EHLERS
LEADERS IN PUBLIC FINANCE
Final Results
1 . City is in a better financial position than it was prior to the
FMP process
✓ Have plan to finance needed road, capital equipment and City
owned facilities
✓ EDA fund is utilized for redevelopment staff and projects rather
than funding the Arts Center
✓ Arts Center is funded with additional tax levy and plan in place to
address negative fund balance by 2021
✓ Ice Arena is funded with additional tax levy to allow for needed
capital improvements and a plan to address negative fund balance
by 2019
✓ Provides adequate reserves/fund balance for various funds
✓ Funds depreciation (future capital reinvestment needs) of City
facilities, thus reducing need for future borrowing
2. City has road map for future budget processes
EHLERS
,,„.4, LEADERS IN PUBLIC FINANCE
Case Study #2 - Outstate MN & Reinvestment in a
Rural City
• Challenge of replacing infrastructure
✓ New fire hall shared with townships
✓ Sewer main reconstruction
✓ Pavement Management Program
✓ EDA owned housing had deficits
28
OEHLERS_
431
LEADERS IN PUBLIC FINANCE
Case Study #2 - Issues
• Couldn't do street projects because they had a 100% assessment
policy
— The values didn't support that, plus people couldn't afford it, so a street
reconstruction project was stalled out
• Didn't know if they could "afford" their share of the new fire hall in
partnership with the surrounding townships
• They had no capital improvement plans
• The EDA owns an apartment building that is not self-supporting
— They have been transferring funds from the general fund to the EDA each
year on an as-needed basis
• Lack of information was compromising City's ability to make
decisions
— Didn't know whether they could undertake any of the projects
29 410111F EHLERS
LEADERS IN PUBLIC FINANCE
Case Study #2 — Solutions
• Measured cost to constituents for each project so that Council can
prioritize
• Developed CIP for all City facilities
— Plan for future maintenance and capital needs
— Determined they could "afford" their share of the Fire Hall
— Determined would need to annually support EDA owned housing with General
Fund
• Provided basis for new assessment policy
— Council considered other policies: 20%, 25%, 35%
• Approving 25% policy
• Provided basis for utility rate increases to finance new water treatment
facility
— Tax and water rate increases planned for and communicated
— Utility funds are now self-sufficient
• Changed budgeting of transfers
— Liquor store revenue not sufficient to transfer budgeted amount
30 ØEHLERS
LEADERS IN PUBLIC FINANCE.
Results
• City confident that infrastructure needs will be addressed
• Project timing determined to stabilize tax levy
• Didn't find a "magic pot" of money
— They will have to rely on property taxes
— Found out they could afford to address their capital needs with
manageable tax increases
31 �- 0
EHFS
LEADERS IN PUBLIC FINANCE
Tactics for Successful Implementation
• Make a comprehensive fiscal plan
• Integrate budget, tax policy, and capital plans
V Often seen as completely separate processes, but this should be a
unifying document
• Identify key policy and process changes
• Update annually
• Get involvement from all departments
✓ You need their information to make the plan accurate
✓ This will increase their understanding of how they fit into the
big picture
• Communicate to constituents
laEHLERS
LEADERS IN PUBLIC FINANCE
Benefits
1 . Makes difficult decisions easier for elected officials
2. Less "paycheck to paycheck" thinking
3. Projects, in the context of multi-year planning , tend to
be less controversial
4. If there is a plan , projects get done
Iter
; ": EHLERS_
Yui`` LEADERS IN PUDLIC FINANCE
Questions/Contact
Nick An h ut
Financial Specialist
Office: 651 .697 .8507
NAnhut@ehlers-inc.com
Stacie Kvilvang
Senior Financial Advisor/Director
Office: 651 -697-8506
skvilvang@ehlers-inc.com
34 40 EHLERS
LEADERS IN PUBLIC FINANCE
41A1i►it City of Farmington
= 430 Third Street
Farmington, Minnesota
651.280.6800 -Fax 651.280.6899
�r.A +. www.ci.farmington.mn.us
TO: Mayor, Councilmembers and City Administrator
FROM: David McKnight, City Administrator
SUBJECT: City Council Roundtable
DATE: June 12, 2017
INTRODUCTION
This item is placed on the agenda for city council work sessions to allow city councilmembers to share
information, ask questions and provide a discussion opportunity for issues of relevance.
DISCUSSION
The city council is provided with an opportunity at work sessions to discuss issues of relevance. This
discussion period may results in work direction to city staff but no formal action can take place on issues
discussed at work sessions.
BUDGET IMPACT
NA
ACTION REQUESTED
Discuss any issues you may have with the other city council nembers.