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HomeMy WebLinkAbout09.14.20 Work Session Minutes CITY OF FARMINGTON CITY COUNCIL MINUTES WORK SESSION SEPTEMBER 14,2020 Call to Order Mayo Larson called the work session to order at 6:00 p.m. Roll Call Present-Larson, Bernhjelm, Craig, Donnelly, and Hoy Also Present-Administrator McKnight, Finance Director Malecha, Public Works Director Gehler, Community Development Director Kienberger, Police Chief Rutherford and Parks and Recreation Director Distad. Agenda Motion by Hoyt,second by Bernhjelm,to approve the agenda as presented.APIF, motion carried. 2021 Draft Budgets Finance Director Malecha presented the second draft of the 2021 General Fund budget and tax levy. Staff began working on the draft budgets in April. The first draft of the General Fund budget represented a 29.12 percent increase over 2020. An increase of that size is not feasible for the residents and businesses within Farmington. Department heads have reviewed and revised their respective department budgets multiple times. City Administrator McKnight and I have done the same with the department budgets and the operating transfers budget. The changes reduced the levy increase to 12.85 percent, then to 6 percent. Further reductions have been made to bring the levy increase down to the 4.9 percent. General Fund At the August 10, 2020 work session, staff presented city council with a 6 percent levy. It has since been decreased to 4.9 percent as shown below: 2020 Budget 2021 Proposed Increase(Decrease) Budget Revenues $3,411,161 $3,298,344 (3.31)% Expenditures 13,642,352 13,832,464 1.39% Fiscal Disparities 2,294,024 2,277,659 (0.71)% General Fund Levy 7,937,167 8,256,461 4.02% Debt Levy 2,805,387 3,012,093 7.37% Net Tax Levy $10,742,554 $11,268,554 4.90% Many changes have been made to reduce the levy increase for 2021. The city's Local Government Aid (LGA) and Fiscal Disparities funds have been reduced by$228,800 and $16,365, respectively, requiring further reductions. Below are numerous changes that have been made, but the list is not all-inclusive. Revenue increases: • A portion of the franchise fee revenue that is transferred to the General Fund has been increased $25,000 to $145,000 for 2021. • The building permit revenue has been increased $62,190. • Utility and Other permit revenue was increased $4,000. • Investment income for the General Fund was increased $5,000. • Fire revenue was increased $4,325. • A transfer of$25,000 from the liquor proceeds to the General Fund was added. Historically, the transfer was only from the liquor proceeds to the Park Improvement Fund. Expenditure Decreases: • EDA funding was decreased from $70,000 to $40,000. • Fleet replacement has been reduced from $380,000 to $143,989 for police vehicles only. No other vehicle replacements are accounted for. • Sealcoat was reduced $600,000 for the property tax levy. An additional $200,000 will come from liquor store proceeds resulting in a net reduction of$400,000. • The extension of 202nd Street into Farmington from Lakeville at the north end of Farmington High School was removed resulting in a $200,000 decrease to the property tax levy. • Downtown sidewalk replacement of$100,000 was removed. • The first year debt payment for the Highway 3 backage road has been moved to 2022. • Trail maintenance was decreased from $80,000 to $50,000. • The transfer to the Arena Capital Project fund has been removed for 2021. • The City Council budget was reduced $2,100 for legal expenses and mileage. • The Snow Removal budget has been reduced $10,000 in street materials, fuel, equipment supplies and parts, and sod damage repair. • The salary for Natural Resources has been reduced $10,000. • The Police budget has been reduced $10,000 in fuel, budgeted overtime, and training. • The Fire budget has been reduced $10,000 in fuel,training, utility costs for the fire stations, and uniforms. • The Engineering budget has been reduced by$1,500 for fuel, professional services, and legal expenses. • The Municipal Services budget has been reduced $5,500 for spray patch and fuel. • Administration has been reduced by$3,000 for training, citywide office supplies, and equipment parts and supplies. • Elections equipment maintenance has been reduced $1,000. • Building maintenance has been reduced $85,172. • The transfer to property insurance has been reduced $14,024. Expenses are supported by the transfers into the fund from the tax levy. The fund can likely support itself with this reduction for one year. The RFP completed by Human Resources for staff health insurance was successful resulting in over$100,000 savings that affects the General Fund. If the revenues and expenditures do not meet budget, the General Fund fund balance must be used to fund the difference. The General Fund balance at the end of 2019 was 42.2 percent. City policy requires a fund balance between 40 and 50 percent. Due to COVID-19, it is difficult to predict the fund balance for the end of 2020. The General Fund budget summary and operating transfers are included for your review. Debt Service Funds Levy The Debt Service Fund budget provides funding for scheduled debt principle and interest repayment obligations, as well as ongoing trustee, assessments, arbitrage, and post-issuance compliance fees related to the city's debt. The 2021 debt levy is $206,706 higher than 2020. Ladder One accounts for $268,013 of the debt levy.The Ladder One costs are new expenditures for the 2021 budget. The city's debt shows a decline starting in 2022 in the Financial Plan attached. The preliminary General Fund budget and tax levy will be adopted at your September 21, 2020 city council meeting. Once the preliminary levy is adopted it can be decreased, but it cannot be increased. Councilmember Craig asked how fuel could be cut. Malecha stated we look at historical averages. Councilmember Bernhjelm asked for clarification on the sealcoat funding coming from liquor revenues. Malecha stated it was liquor revenue already earned. Councilmember Donnelly asked for clarification on what the sealcoating account is used for. Public Works Director Gehler clarified that this account is used for a variety of street maintenance projects, particularly mill and overlay projects. Donnelly inquired about the Natural Resources salary reduction. Administrator McKnight stated that the starting salary in the budget was too high and could be reduced. McKnight also clarified that the additional revenue placed on building permits could potentially be taken from fund balance as a way to address the issue of the fund balance level raised by a few councilmembers. Councilmember Hoyt asked how we address the issue of the second year of the budget cycle being extremely high. McKnight stated that either the city needs to start doing some of the one-time projects that keep getting pushed back or we need to remove them from the budget. The preliminary budget will be presented to the city council for consideration on September 21, 2020. Assessment Hearing for the Reassessment of the County Road 50 Water and Sewer Utilities Public Works Director Gehler reminded the city council that they voted to table the County Road 50 reassessment at their last city council meeting so it could be discussed at a work session. Councilmember Craig asked if the way we are addressing this assessment is typical. Gehler stated originally this assessment was placed under the old approach and the reassessment would be done under the new approach. Councilmember Hoyt reviewed the history of the assessment stating that the taxpayers paid $192,000 over time for the project. He would like to keep the original $192,000 assessment on the property and credit it to the SAC and WAC fees once the property develops. This amount should not be prohibitive to the sale of the property. Councilmember Bernhjelm stated that development would occur when it is ready. Hoyt stated that the city should look at all commercial/industrial properties and have assessments to see if they should be eliminated. Councilmember Donnelly stated that is not the approach that is being discussed. Donnelly stated that removing the assessment would have a positive impact on the city. Bernhjelm asked why there was such a large gap of time between the original discussion on this topic and now. Gehler stated that that the pandemic was the primary reason. Donnelly brought up the concerns related to showing the actual benefit test if an assessment is left on the property. Councilmember Craig stated we need to stick with the original approach to reassess the property to zero. Councilmembers discussed various pros and cons to the approach on this issue and impacts on other properties in the city. The consensus of a majority of the city council was to move forward as originally discussed with the reassessment. Vermillion River Crossings Discussion Administrator McKnight shared the Councilmember Hoyt asked to place this item on the agenda so the city council could discuss options to spur development. Councilmember Hoyt stated that the city has options before September 2020 when the current deal with Hy-Vee is set to expire. He knows that they do not need to come to Farmington now. The city has leverage now with the assessment deal and we should contact Hy-Vee so they understand our situation of having no grocery store and minimal public transportation. Hoyt asked if we should contact Hy-Vee to discuss the issue. Councilmember Bernhjelm stated that she works with Hy-Vee in her professional capacity and has discussed the issue of their timeline with their representatives. She stated they will build when they want to build. They understand the market better than any of us do and the market has changed with the pandemic. Hoyt discussed the impact of doing nothing and potentially changing the way we approach city budgets and policies. Councilmember Craig shared that she believes we are growing at a rate where we may see Hy-Vee develop soon. After continued discussion,the direction of the city council was to have staff develop a letter to send to Hy-Vee making clear the city's desire to see them develop as soon as possible. City Owned Property Discussion Administrator McKnight shared that the city has been contacted about the availability of lot the city owns on Second Street. The city obtained the lot 12 years ago through the tax forfeiture process. The city does have the land designated in the downtown redevelopment plan as a future trail area. Councilmembers had thoughts on both options and this issue will continue to be reviewed. Ice Update Administrator McKnight shared that the city has been meeting with the school district and the Farmington Youth Hockey Association on ice needs in the community. Councilmembers Hoyt and Bernhjelm have been part of the meetings along with Parks and Recreation Director Distad and Administrator McKnight. At this point, it looks like if the issue moves forward it will need to be a city led initiative. The meetings will occur with the next scheduled meeting set for October. DCC Funding Task Force Recommendation Administrator McKnight updated the city council on the work of the DCC Funding Task Force. The issue of DCC ownership and funding have been discussed for the past five plus years. As a result of these discussions,the task force was put in place earlier this year and is recommending that the county take over between 50-100%of the fixed costs of the facility. The county is receptive to the idea of continuing these discussions. Councilmember Craig asked what determines the final percentage if we come to an agreement. McKnight stated it would a part of the negotiations if a deal can be worked out. Adjourn Motion by Hoyt, second by Craig,to adjourn the meeting at 7:29 p.m.APIF, motion carried.