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HomeMy WebLinkAbout06.09.04 Work Session Minutes COUNCIL CIPIBUDGET WORKSHOP MINUTES June 9, 2004 Present: Ristow, Cordes, Fitch (arrived 5:38), Fogarty, Soderberg Mayor Ristow called the workshop to order at 5:30 p.m. They recessed for a few minutes to review the agenda materials and reconvened at 5:38 p.m. MOTION by Soderberg, second by Fogarty to approve the agenda. APIF, MOTION CARRIED. Discuss CIP The CIP contained General Government, Public Works and Parks and Recreation projects for the next five years. General Government 2005: Fire Station #2 (cost of$2.176 million) City Hall 3rd and Spruce Streets (cost of $7.630 million) Public Works 2005: Sidewalk and Curb Replacement Project (2005-2009) Sealcoating (2005-2009) Prairie Creek Drainage Way Dredging Ash Street Reconstruction Spruce Street Extension and Bridge Construction 208th Street - Western portion to Pilot Knob Road Signal Lights Elk River Trail and CSAH 31 Sewer Meter Replacement 2006: 210th Street and English Avenue 208th Street Easterly portion to Akin Road Hill Dee Street Reconstruction Well #8 195th Street - Easterly portion to Hwy 3 Elm Street Reconstruction 2007: Signal Lights 190th and CSAH 31 and 195th and CSAH 31 Spruce Street Reconstruction - 1 st Street to 4th Street 2nd Street Overlay and Curb Reconstruction - Elm Street to Walnut Street This would be done with the Spruce Street Reconstruction Central Maintenance Facility Expansion 2008: 5th Street Trunk Sewer Extension 208th Street Extension from Middle School Campus to Hwy 3 East Walnut Street Area Reconstruction The 5th Street Trunk Sewer Extension would need to be done first Well #9 and Pumphouse Council Workshop June 9, 2004 Page 2 2009: Ground Reservoir - 4M Gallons 193rd Street Mill and Overlay Reconstruction Council requested the area known as the "big blue blob" also be included in the CIP. Parks and Recreation 2005: Silver Springs Park Vermillion Grove Hill Dee Park Rambling River Park Seed Genstar Park and Meadow Creek Park (2005-2007) Evergreen Knoll (2005-2006) Middle Creek Park (2005-2006) Depot Way Arts Park (2005-2006) 2006: River Bend Development Park (2006-2007) Spruce Street Town Square (2006-2007) Dakota County Estates Park (2006-2007) 2007: Troy Hill Park (2007-2008) Daisy Knoll Park (2007-2008) Westview Park (2007-2008) 2008: Prairie Waterway Park (2008-2009) Pine Knoll Park (2008-2009) Prairieview Park (2008-2009) Lake Julia Park (2008-2009) Council will need to provide staff with the ranking ofprojects and that is what will go into the 2005 budget. Councilmember Soderberg asked ifbulk fuel tanks should be added under General Government projects. Finance Director Roland replied at one time this was discussed that if there were available funds at the end ofthe construction ofthe Maintenance Facility the City would consider purchasing these tanks. They would be paid from Certificates of Indebtedness. A concrete slab has been constructed and it is included in the expansion plan for the Maintenance Facility. The meeting recessed at 7:02 p.m. and reconvened at 7:15 p.m. Discuss 2004 Revenue and Expenditure Projections Building permits are predicted at 303 instead of 440. This is for residential permits only, not commercial. There were 689 platted lots. The Riverbend development was anticipated to come in this year, however it will not. This development consisted of 140 lots. This amounts to $211,676. Councilmember Cordes recalled a month ago at a Council Meeting she asked about building permits being down and was told it was because ofthe snowy winter. That turned out not to be the case. Regarding investment income staff is anticipating it to be half of what was budgeted. This amounts to $175,000. Staff assumed interest rates would go up. Recreation fees revenue will exceed budget by $20,000. Councilmember Cordes stated in 2004 Farmington took Council Workshop June 9, 2004 Page 3 on the SORR soccer league. In 2005 and 2006 that revenue will be gone. She asked if that has been taken into account. Staff replied this is for 2004 only. In 2005 the revenues will be adjusted accordingly. Total anticipated revenues are $5.790 million. Total anticipated expenditures are $6.157 million. This leaves a shortfall of $366,000. Staff identified places to cut the budget immediately and potential cuts. Council Administration HR/IS Community Development $1,000 Training and conferences There would still be $1,000 left in the budget and there has been $460 spent. Under identified cuts there is a negative $6,000. Staff did not know what to anticipate for a new Administrator's contract which included a $5,000 moving allowance and a car allowance. There is also a $4,000 potential cut in equipment supplies, training, and outside printing and an identified cut of $1 ,500 for communications. Identified cuts include $3,100 for Human Resources and $3,000 for MIS. Within each department and division the emphasis has been that department's run their own budget. One ofthe policies is that tuition reimbursement is a benefit that is paid for by the City. If you get an A you get 100% of the class work paid for. The employee has to put forth a plan and have it approved. Whatever has been turned in for tuition reimbursement has been paid. If it has been more than the line item budget, it has been taken out of other line items in the Human Resources budget. This year, as of April tuition reimbursement has already exceeded the line item. There is funding available within the Human Resources budget, so that staff still anticipates we could come in under that budgeted item. If the City continues to offer tuition reimbursement as a benefit, then a commitment is needed to fund that on an annual basis. Staff cannot make that decision. It is a City policy and needs to be approved by Council. There are four employees in school. According to the Police agreement, the City must reimburse tuition. The AFSCME contract is silent. There is a clause that if they leave before the time frame, they have to reimburse the City for classes non-work related. Tuition only is reimbursed, not fees or books. Human Resources approves these requests. There could be a $23,000 reimbursement expense for tuition, $17,000 over budget. The money could be taken from the employee expense fund which amounts to $171,000. Council will need to direct staff if acceptable to go over the budgetary line item and/or utilize the employee expense fund. The policy was established in 1998. The degree has to be advantageous to the City. Councilmember Fitch felt an employee reimbursement program is not only a good program, but is smart for the City as an employer. He would like to see the policy and perhaps it needs to be adjusted to reflect the budgetary times. $6,300 has been identified to be cut. In addition, there is a potential cut of $20,500 for professional services used to pay Inspectron. Staff asked for guidance from Council on how to deal with this issue. Over the last three years, staff has reduced their reliance on Inspectron. In 2002 the City paid them $93,000, in 2003 it dropped to $40,000, in 2004 it has been zero. Council's decision last year to fund a building intern position has helped a Council Workshop June 9, 2004 Page 4 Police: lot. The City pays him $12-$14/hour as opposed to $50/hour for Inspectron. In 2002 the turnaround time was up to 5 weeks for reviewing building plans. Inspections were out one week. Staffhas focused attention on reducing those turnaround times. It is now one week for building plan review and 48 hour turnaround for inspections. From 1998 to the present staffhas doubled the number of inspections each inspector is doing. In 2004 we have a limited number of inspectors and an escalating amount of work and something has to give. The area being pushed back is in non-finalized permits. This relates to things such as decks, garages, siding, etc. There are so many outstanding non-finalized permits staff needs to decide what to do. There are 7700 inspections needed to clear this up. About 20% ofthese do not need an inspection to be finalized. It would take about 20 minutes/inspection including travel time which comes out to 64 full work weeks. They would not have time for plan reviews or regular inspections. The options are to declare these permits no longer valid, which staff does not recommend; hire another inspector, keep the intern, create a position for a part-time inspector; or chip away with the existing staff, however there will be ramifications. Currently the intern leaves a card at the residence that they have an un-finalized permit when he is in that particular area and as he has time. City Administrator Urbia suggested sorting out the type of permits and review the type of permits required. Staff suggested some of the money set aside for Inspectron could be used to clear up this backlog, pay staff overtime for evenings and weekends, or use the intern. There is an intern in Planning and one in Inspections. The funding will run out September I, 2004 and they will be gone as of that date. To keep them through the rest ofthe year, it would be approximately $10,000. The Planning intern's time could be devoted to economic development questions. Councilmember Fogarty felt there may not be another year with so few building permits and an opportunity to catch up. There are still concerns with overtime costs. Line items such as uniforms could be cut. Dew Days will amount to $10,000 in overtime. After the budget was prepared, staff learned there would be four officers and one clerical staff out on FMLA which is 25% of staff at 12 weeks each. During June and July there will be 790 hours of paid leave time used. 200 hours is FMLA and 600 hours is vacation time. This is covered with 110 hours overtime. Councilmember Fogarty asked if it would be cost effective to hire two more officers this year. Staff replied one officer starts the end of June which will eliminate 30 hours of Dew Days overtime. If another officer starts August 1 as a temp to regular the cost would be $25,000 with no benefits. A new officer has to ride with a full time officer for 12 weeks. The officer starting the end of June will be on his own October 1. If a second officer started in August that person would be on the street November 1. The extra $25,000 is not there to fund an extra position. The overtime saved would be only in the last three months of the year. Councilmember Fitch stated if we are dipping into the fund balance anyway, what is the difference? Council needs to make a determination regarding the position and the effect it will have. Farmington has the lowest ratio of officers to population in cities ofthe same size. Council Workshop June 9, 2004 Page 5 There are some one-year solutions. There are cable franchise fees where $35,000 would go into the general fund for communications and anything left went into a capital projects fund to fund fiber optics, future cable uses, etc. That fund is at $142,000. Staff is expecting $135,000 in cable franchise fees. If all of the cable franchise fees went into the general fund this year as a one-time option that would get the City $100,000 more than what we currently have. If all of the City's interest income were allotted to the general fund, this was also done in 1999, this would eliminate any shortfall. Interest and investment earnings in 2003 were $311,000. This should not affect any other projects. There are also funds available in the employee expense fund. The amount in the potential cut column is $267,882. The funds in the interest income fund and the cable franchise fees would equal this amount. Discuss 2005 Bude:et Goals Staffthen discussed the 2005 Budget calendar, which outlines the due date of various steps in preparing the budget. Some goals to be considered for 2005 include: 1. Elimination of the deficit fund "1991 Annexation" as prescribed by the City's audit firm. 2. Reclassification ofthe Arena fund to a Special Revenue fund to address the current deficit cash balance and future funding issues. 3. Examination of Sewer and Solid Waste utility rates to determine what levels of increases are necessary to fund operations. 4. Review the HRA capital projects fund to address TIP project deficits due to tax compression over the last few years. 5. Establish a strategy to address these deficit issues. Council will need to decide on a policy for curbside clean-up and whether to change the format or charge a fee. Staffwill be providing a summary of the 2004 clean-up at the June 21 Council Meeting. Staff provided Council with a Financial Performa for 2004-2012. For 2004 the City tax rate was 41.174%. The proposed tax rate would be 42.0%. The City has a requirement in 2005 to levy for 1.114382. This includes lease revenue bonds, certificates of indebtedness and all requirements the City has. This would leave the City with a General Fund levy of $3,608,000, which would be an increase over 2004 of$815,000 to spend in the General Fund on items the City needs. The City is increasing the levy by 21 % from last year. This is because the City lost $500,000 this year and could not get more than 60% of it back. This covers three years of growth the City has not been able to capture at 20%-23% of growth every year. This will not increase the tax rate to the average homeowner. The debt service levy includes the Main Street bonds. Councilmember Cordes asked how the Ash Street project will affect this. Staff replied it will affect it in 2006, it will be $200,000 - $300,000 more on the debt levy every year. This would be less than a 10% increase. Council could leave the tax rate at 41 %. Council needs to advise staff what they want to do. If Council wants to leave it at 41 %, what do they want to cut? Councilmember Cordes stated $20 to some people is a lot of money. Once things are added, the taxes will go up. It is unfortunate building permits were down, and we cannot predict what they will be next year. The 140 lots in Riverbend could still be in litigation. Councilmember Fogarty stated the City portion of her taxes has gone down every year. The City did not have a chance to keep them level and the City is missing those dollars. Once MUSA is determined, that will influence the number of building permits per year. That is where the tax capacity value will level off. There have been discussions at the MUSA meetings Council Workshop June 9, 2004 Page 6 about how long the process is taking. Council should think about whether the scope of the MUSA Committee is going beyond what was intended. Some people where thinking they would make recommendations to Council as to where development should occur. Discussions have gone to what type of development. Perhaps these decisions should be made by the Planning Commission or Council. The $211,000 reduction in revenue for building permits, could be cut in half if the MUSA process moved fast enough to allow developers to build 65 houses. If there are a couple of parcels where the group agrees development should occur, perhaps the MUSA Committee could make an interim recommendation. If the recommendation goes to Council in August, there would be enough time to build. Councilmember Fitch felt meeting once a month was a mistake. The point about going beyond, we are at a point where we can say what kind of development we want and not be dictated to by developers. He felt they should have more than one meeting a month. Staffhas given the members dates and often it is once a month where everyone could meet. Perhaps they have to meet without everyone being present. Ifpeople are willing to meet once a week, staff is prepared to do so. Council was in favor of expediting the process. Councilmember Soderberg stated the $800,000 increase in the levy brings us up to the performa. This could provide the resources for inspectors or police officers. Council needs to decide what level of service Council wants staff to provide. Staffwill provide Council with a draft document on August 16. On June 18 budget documents will be distributed to the department heads which will be due to Finance July 12. The Management Team will meet July 22-29. Staff needs a preliminary idea from Council as to what their goals are. Council should provide what they want for the tax rate - 40%, 41 %, 42%; an emphasis on staff - overall or in one department; there is equipment on certificates - should that be included in the general levy or in the debt levy for the future. Council should also provide answers to strategic questions, such as how fast do they want the turnaround for building inspections. With that staff can determine the number of building inspectors needed. Staff would like to have tentative recommendations from Council by July 6 on the CIP and budget strategy. Councilmember Fitch wanted staff to understand Council would not pit one department against the other, but Council does need to decide on priorities. Finance Director Roland noted the City will be losing a contracted employee in Engineering. The City contracts with Bonestroo for Engineering services. As a solution staffhas proposed the retainer for him goes away and the City hires an Engineering Tech to replace those functions and get services that are already in the budget. It will solve current problems and help out Building Inspections. Council agreed to hold a Council Workshop on June 21 immediately following the Council Meeting to provide staff with the information needed. MOTION by Cordes, second by Soderberg to adjourn at 9:27 p.m. APIF, MOTION CARRIED. Respectfully submitted ~~~ Cynthia Muller Executive Assistant