HomeMy WebLinkAbout11.09.09 Work Session Packet
City of Farmington
325 Oak Street
Farmington, MN 55024
Mission Statement
Through teamwork and cooperation,
the City of Farmington provides quality
services that preserve our proud past and
foster a promising future.
AGENDA
CITY COUNCIL WORKSHOP
NOVEMBER 9, 2009
6:30 P.M.
CITY COUNCIL CHAMBERS
1. CALL TO ORDER
2. APPROVE AGENDA
3. DISCUSS 2010 BUDGET
a) Fire Relief Pension
b) Solid Waste, Sewer and Street Light Utility Fees
4. EXECUTIVE SESSION - Labor Relations
5. ADJOURN
PUBLIC INFORMATION STATEMENT
Council workshops are conducted as an informal work session, all discussions shall be consideredfact-finding, hypothetical and unofficial critical thinking exercises,
which do not reflect an official public position.
Council work session outcomes should not be construed by the at/ending public and/or reporting media as the articulation of aformal City policy position. Only
official Council action normally taken at a regularly scheduled Council meeting should be considered as aformal expression of the City's position on any given matter.
City of Farmington
430 Third Street
Farmington, Minnesota
651.280.6800 . Fax 651.280.6899
www.ciJarmington.mn.us
TO: Mayor and Councilmembers
FROM: Peter J. Herlofsky, Jr.
City Administrator
SUBJECT: 2010 Budget
DATE: November 9, 2009
For consideration of the 2010 budget, I have provided to Council the following documents:
Page 1
This is the same summary sheet provided at the last Council meeting with some
corrections to the options at the bottom of the page. Please note that the $83,000 for
fire state aid could not be used to decrease the mandated contribution amount, so that
is no longer a reduction. Also, the Council requested that the $20,000 in parks be
removed from this item. The options provided based on the original spreadsheet are
$100,000.
Page 2
This is new. At the top of the page we have departments with 2% reductions as
requested by Council in columns noting without and with Public Safety. We also
have noted the amount of reduction in expenditures that would result in employee
furloughs and this would include all employees except for the liquor store. We are
looking at approximately 6 days per employee and this would include public safety.
At the bottom of this page, note the City Administrator's recommendation which
includes expenditure reductions and revenue adjustments. The expenditure
reductions are the $50,000 in bond refinancing noted on page 1 and staff restructuring
which I am estimating to be approximately $100,000 over the next two years. I am
asking the Council for some flexibility in accomplishing this task in 2010 and 2011
with the net effect being $100,000 and at this point estimating it to be $50,000 per
year. We will do this without layoffs of existing employees. Under revenue
adjustments, we are using the ALF revenues (a one time event) per Council request.
We estimate building permits to increase by $50,000. Total of the expenditure
reductions and revenue adjustments is $180,000.
Page 3
This 8 Yz x II sheet is the detail of department expenditure reductions.
Cmuller/Herlofsky/Council memos/2010 Budget 11-9-09
Page 4
This item is provided just to give the Council an idea of what is occurring in our
capital equipment. I am providing page 22 of the budget document which includes
the capital acquisition plan. Please note that 2011 looks like a very busy year, but we
have pushed everything from the last few budget years into the next budget year
because we have been dealing with tighter budget concerns. This is provided as a
concern from staff saying we are going to need to do some of these things in the
future and we would like to handle them in an organized way.
Please note: The levy that is being provided to the Council, the one that was originally provided,
resulted in City taxes on an average home at no increase from 2008. 2009 was a decrease from
2008. Ifwe look at the last two years plus 2010, you will note that taxes for the average home,
even accounting for the reduction in value in 2010, are still at the same amount of taxes as 2008.
If you have questions, please call and we will try to make the information available at the
meeting.
The recommendation of staff is to approve the levy at the original amount described on
September 8, 2009. If Council wishes to include the ice arena in that levy, the reductions
identified at the bottom of page 2 would be sufficient to cover that addition to the 2010 budget.
-..Res.pect.'f~llY......SU. b.m lit t... '
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City Adnc~istrator / /
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City of Farmington 11/5/2009
2010 Budget Summary P~~l
For all Funds Enterprise
Special Debt Capital & Internal
General Revenue Service Project Service Total
Items Fund Funds Funds Funds Funds
Fund Balance 1/1/2010 $ 2,040,127 $ 19,685 $ 1,278,549 $ 5,004,267 $ 10,785,114 $ 19,127,742
Increase %
Adopted Property Tax 2009 from Adopted 5.09%
Revised Property Tax 2009 · from revised 8.63%
2010
Increase from adopted 2009 $ 222,445 3.12% $ 239,372 $ 12,300 2.43%
Increase from revised 2009 $ 572,445 8.45% 14.21% $ (34,559) -6.26%
REVENUES
General Property Tax $ 7,345,244 $ 1,924,388 $ 517,900 $ 9,787,532
Special Assessments $ 393,000 $ 250,000 $ 70,000 $ 713,000
Licensee & Permits $ 316,005 $ 316,005
Fines & Forfeitures $ 100,000 $ 100,000
Interest $ 285,000 $ 6,500 $ 15,000 $ 25,000 $ 172,000 $ 503,500
Intergovernmental $ 417,140 $ 1,100,000 $ 10,789 $ 1,527,929
Charges for Service $ 600,500 $ 307,300 $ 13,049,006 $ 13,956,806
Dedicated fees $ 114,000 $ 250,000 $ 364,000
Miscellaneous $ 35,000 $ 30,200 $ 5,500 $ 70,700
Total Operating Revenue $ 9,098,889 $ 458,000 $ 2,332,388 $ 2,142,900 $ 13,307,295 $ 27,339,472
Bond proceeds $ 1,500,000 $ 1,500,000
Transfer in $ 331,500 $ 250,000 $ 1,576,440 $ 10,000 $ 2,167,940
Total Revenue $ 9.430.389 $ 708.000 $ 3.908.828 $ 3.652.900 $ 13.307 .295 $ 31.007.412
Total Available $ 11,470,516 $ 727,685 $ 5,187,377 $ 8,657,167 $ 24,092,409 $ 50,135,154
EXPENDITURES
General Government $ 1,915,283 $ 50,000 $ 7,031,773 $ 8,997,056
Public Safety $ 4,572,336 $ 8,000 $ 4,580,336
Public Works $ 1,763,936 $ 70,500 $ 5,045,454 $ 6,879,890
Parks & Recreation $ 1,003,834 $ 704,054 $ 1,707,888
Economic Development $ 542,540 $ 542,540
Debt Service $ 4,173,268 $ 157,525 $ 4,330,793
Improvement Projects $ 1,538,000 $ 1,538,000
Total Expenditures $ 9.255.389 $ 1,254,594 $ 4,173,268 $ 1,816,025 $ 12,077,227 $ 28,576,503
Transfers out $ 155,000 $ 538,132 $ 693,132
Recreation operating $ 175,000 $ 175,000
Arena
Debt Service
Total Transfers Out $ 175,000 $ 155,000 $ 538,132 $ 868,132
Total EXDenditures $ 9.430.389 $ 1.254.594 $ 4.173.268 $ 1.971.025 $ 12.615.359 $ 29.444.635
Excess (Deficiency)
Fund Balance end of year $ 2,040,127 $ (526,909) $ 1,014,109 $ 6,686,142 $ 11,477,050 $ 20,690,519
Options
Total
#1
No change from levy adopted September 8 (see above)
Expenditure Reductions Total
Fire - StateAid $ 83,000.00
$ 50,000.00
Parks $ 20.000.00
Bond Refinancing $ 50,000.00 $ 50,000.00
$ 153.000.00 $ 100.000.00
#2
Additional Revenue
Building Permits $ 50,000.00
Total $ 50.000.00
#3 Further Discussion
Street Liaht is established
Fee Increases for Solid Waste and Sewer
Additional Issues:
Ice Arena
Police SRO
EDA Budget
Sealcoat Policy
AssumDtions:
Administration $ 1,138,245
HRlIT $ 264,040
Finance $ 512,998
Police $ 3,762,227
Fire $ 810,109
Engineering $ 945,222
Municipal Services $ 818,714
Parks & Recreation $ 1,003,834
Total $ 9,255,389
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H:\Budget\2010\Summary All Funds 10-30-09
City of Farmington
11/5/2009
2010 Levv Adiustments
Pa.:; e. 2
City Council reauested options (Expenditure Reductions)
w/o Public Safety
Public Safety
Total
Departments 2%
Finance $
Engineering $
Municipal Services $
Parks & Recreation $
Administration $
Police
Total $
71.209 $
$ 3,885
$ 18,953
$ 18,500
$ 20,171
$ 8,200
20,000 $ 20,000
$ 1,500
16,000 $ 16,000
36,000.00 $ 107 ,209
HR
$
3,885
18,953
18.500
20,171
8,200
$
1,500
Fire
Employee FurlouQh (Includinq all City Employees. except Liquor Store)
$
150,000
City Administrator's recommendation:
Expenditure Reductions
Refinancing Bonds
Staff Restructure Note: $100,000 over 2 years
Reyenue adiustments
ALF Revenues
Building Permits
$ 50,000
$ 50,000
SubTotal $ 100,000
$ 30,000
$ 50,000
SubTotal $ 80,000
TOTAL $ 180 000
Ice Arena Improvements Estimate
I Bonds ( 10 year)
$
$
1,300,000
170,000 I
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H:\Budget\2010\Summary All Funds 10-30-09
General Fund
Revenue adjustments
Building permit revenues
ALF rebate - onetime
City Council 2% Expenditure reductions:
Administration Council Training
HPC
office supplies
Election judges
City calendar (paid by sponsorships)
Cleaning supplies - City hall
HR city wide training
HR director cell phone
Finance Insurance
Engineering part time summer help
tree trimming
Municipal Svcs dust control
gravel
fuel
contract svcs cul-de-sacs
Parks & Rec part time summer help
banners for light poles downtown
Tennis Court repairs
professional svcs-programs
reduce programming
subtotal
(1,000)
(200)
(3,000)
(500)
(1,000)
(2,500)
(1,000)
(500)
(3,885)
(6,003)
(12,950)
(5,000)
(9,000)
(1,500)
(3,000)
(1,522)
(2,500)
(9,149)
(3,000)
(4,000)
subtotal
net effect
50,000
30,000
80,000
(8,200)
(1,500)
(3,885)
(18,953)
(18,500)
(20,171)
(71,209)
151,209
Pct.j e- 3
PO-ere Lj
CITY OF FARMINGTON, MN
ANNUAL BUDGET
CITY OF FARMINGTON
CAPITAL ACQUISITION PLAN
2010-2014
Division Descriotion 2010 2011 2012 2013 2014
Police Administration Air conditioning for EOC 10,650
Police Patrol Squad repacements 54,000
Investigations Unmarked Chev Impala police package 24,000
Fire station #1 washer & dryer 10,000
Fire utility trailer - fire investigations 11,000
Fire Permanent signage Station #1 23,430
Fire Refurbish quick response unit 25,000
Fire chieflasst chief vehicle 38,000 38,000
Fire Pick up truck(s) - 4x4 four door 38,000 38,000
Fire Replace brush trucks 90,000
Rescue assistant rescue chief vehicle 38,000
Natural Resources Truck, Chev landscaping wlstainless dump body 41 ,530
Park Maintenance Truck, 1.25 Ton wi dump box 46,995
Park Maintenance Snowblower attachment Toolcat 6,300
Park Maintenance laser leveler for ballfields 18,105
Park Maintenance millcreek turf tiger topdresser 23,400
Park Maintenance Snowplow for pickup truck 4,686
Park Maintenance JD Tractor model 5425 18,000
Park Maintenance front mount v plow for JD Tractor 15,445
Park Maintenance sprayer for toro workman 11,715
Park Maintenance Trailer to haul mowers 13,182
Park Maintenance 5600 turbo tool Bobcat 52,200
Park Maintenance Brush & understory mower 9,052
Park Maintenance Tree spade 32,000
Recreation Puppet Wagon 3,500
Recreation 15 passenger bus 80,000
Recreation Truck, Pick up (4x4) 23,800
Recreation Outdoor LED sign 35,000
General Fund Total 54,000 508,275 209,715 11,000 90,000
Pool renovation outdoor wading pool 26,180
Pool replace existing bathhouse siding 25,000
Pool resurface outdoor pool floor 54,250
Recreation operations fund - 105,430 - - -
Arena building dehumidification system 301,320
Arena concrete floor & piping 400,000
Arena infrared heating system 33,887
Arena 50 stall parking lot 125,000
Arena Dasher board system 93,930
Arena Fund - 954,137 - - -
Fire Fire Ladder/Engine truck 800,000
Fire 3000 gallon water tender 375,000
Fire Fire Enoine 500,000 500,000
Caoital Acquisition Fund - 500,000 800,000 500,000 375,000
Fire fire station #3 (TBD-oooulation) 2,500,000
Fire Capital Projects - - - - 2,500,000
Solid Waste Vehicle, Automated Solid Waste 281,160 281,160
Solid Waste rolloff container (1 each year) 3,195 3,195 3,315 3,315 3,315
Solid Waste mesh cardboard container 3,621 3,728 3,834 3,834 3,834
Solid Waste Enterprise Fund 6,816 288,083 7,149 288,309 7,149
Information Technology Server(s) 6,950 12,780 12,780
Information Technology Switch 3,040
Information Technology replace police toughbooks 16,000
Information Technology Fiber connection - RRC 12,500
Information Technology Wi-fi Airnet receiver 3,593
Information Technology Wi-fi cameras & controllers 13,300
Information Technology (18) computers 23,004
Information Technology (2) black & white printers 3,107
Information Technology fire station printers 416
Information Technoloav comouters on cycle 26,838 16,614 16,614 16,614
IT Internal Service Fund 62,387 43,141 32,614 29,394 16,614
.3~
City of Farmington
430 Third Street
Farmington, Minnesota
651.280.6800. Fax 651.280.6899
www.ci.farmington.mn.us
TO: Mayor and Councilmembers
FROM: Peter J. Herlofsky, Jr.
City Administrator
SUBJECT: Farmington Firefighters Relief Association 2010 Pension Request
DATE: August 3,2009
INTRODUCTION / DISCUSSION
Attached for your review are two documents:
1. Letter dated July 23,2009, from Tom Hemish, President of the Farmington Firefighters
Relief Association.
2. Memo from Finance Director, Robin Roland, updating you on the financial implications
of the request.
With the financial limitations that the City is facing in the current fiscal year, it would be my
recommendation for the Council not to change the benefit level for our Firefighters Relief
Association.
ACTION REQUESTED
I. Approve the Farmington Firefighters Relief Association request for the City contribution
for 2010 at the calculated amount of $195,584.00.
2. Recommend maintaining the current pension benefit level.
Cmuller/Herlofsky/Council Memos/Fire Pension Request 8-3-09
City of Farmington
430 Third Street
Farmington, Minnesota
651.280.6800. Fax 651.280.6899
www.ciJarmington.mn.us
TO:
Mayor, Councilmembers and City Administrator
FROM:
Robin Roland, Finance Director
SUBJECT:
Farmington Firefighters Relief Association 2010 Pension Request
DATE:
August 3, 2009
INTRODUCTION
The Farmington Firefighters Relief Association has submitted their request for 2010.
DISCUSSION
The Relief Association is requesting an increase in benefit level of $125 per year of service. The 2009 level
is $4,575 per year of service. Under their request the 2010 level would be $4,700 per year of service.
Further, the Association has computed a required contribution level for 2010 of$195,584. This is due to the
significant decline in the value of the association's investments in 2008/2009 and the computed pension
liability at the current benefit level. Attached with this memo is a historical schedule of benefit levels and
required contributions.
BUDGET IMPACT
Each time the benefit level is increased, the result is an increase in pension liability which must be funded
from the Relief Association's resources (State Fire Aid, investments and statutory contributions).
Historically, the Relief Association's return on investments coupled with a consistent (but not required)
contribution from the City has been enough to cover the pension benefit. The economic downturn - more
specifically, the stock market decline in 2008 - reduced the Relief Association's funds by more than
$750,000, thereby significantly impacting their ability to pay the established benefit levels.
An increase to the benefit level will further increase the outstanding pension liability before the
Association's investments (and the stock market) recover. I would not recommend an increase to the benefit
level at this time. I would recommend the Association's investment situation improves before any
commitment to larger future payouts is made.
The City's statutorily required contribution for 2010 is included in the budget proposal currently under
preparation by staff.
ACTION REOUIRED
The City Council should adopt a benefit level for the Farmington Fire Relief Association for 2010.
7l;;:r~~
Robin Roland
Finance Director
City of Farmington
Fire Pension Levy I Benefit
City City Annual
Year Contribution Contribution Firefighter
made rea u ired Benefit
1992 $ 14,326 $ 1,200
1993 $ 28,483 $ 1,400
1994 $ 30,567 $ 1,450
1995 $ 34,375 $ 1,550
1996 $ 45,000 $ $ 1,600
1997 $ 45,000 $ $ 1,650
1998 $ 45,000 $ $ 1,750
1999 $ 60,000 $ $ 2,000
2000 $ 50,000 $ $ 2,300
2001 $ 50,000 $ 20,285 $ 3,000
2002 $ 55,000 $ 37,029 $ 3,000
2003 $ 55,000 $ 48,805 $ 3,000
2004 $ 55,000 $ 65,790 $ 3,050
2005 $ 60,000 $ 26,953 $ 3,200
2006 $ 62,600 $ 436 $ 3,350
2007 $ 67,500 $ $ 3,750
2008 $ 70,200 $ $ 4,200
2009 $ $ $ 4,575
2010 $ 195,584 $ 195,584 $ 4,575
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Date:
July 23, 2009
To:
Mayor & City Council
From:
Farmington Firefighters
Relief Association
Subject:
Association Pension Request for 2010
The Board of the Farmington Firefighters Relief Association met on July 21 st, 2009 to
discuss the pension request & city contribution for 2010. The SC-09 calculated a city
contribution for 2010 of $195,584.00, which will be the request for 2010.
The yearly pension for 2010 was also discussed. The Board's goal was to be at the
average for comparable fire departments in 2010. Based on the list of cities provided by
Brenda Wendlandt, Human Resources Director, that average would be $5,685.00 in 2010.
The Board felt that an increase to that amount would not be feasible at this time but did feel
we needed to continue to move forward to reach that goal.
The Farmington Firefighters Relief Association is requesting a yearly increase of$125.00,
which would put it at $4,700.00 per year for 2010.
If you have any questions, please feel free to contact Vice President Jay Clinkscales,
Treasurer Bob Ellingsworth, or myself.
Thank you.
Respectfully submitted,
~A
Tom Hemish
President
,c.c. Peter Herlosky, City Administrator
Robin Roland, Finance Director
Farmington Firefighters Relief Association Board
..
STATE OF MINNESOTA
OFFICE OF THE STATE AUDITOR
SUITE 500
525 PARK STREET
SAINT PAUL, MN 55103-2139
(651) 296-2551(Voice)
", ,(651) 296-4755 (Fax)
state.R\1ditor@state.1l1II.U$'(E-mail)
1-800-627-3529 (Relay Service)
Statement of Position
Required Municipal Contributions to Volunteer Firefighters' Pension Plans
State law requires a municipality to pay a minimum annual contribution to the special
fund of its affiliated volunteer fire relief association, 1 unless the special fund is fully
funded or fire state aid is sufficient to cover the municipal obligation.2 The special fund
is a fund established and maintained within a relief association to pay service pensions to
retiring members. A fund is "fully funded" when there are sufficient assets to cover
future liabilities.
The funded status of a special fund is affected primarily by changes to benefit levels (i.e.,
liabilities increase) and by investment gains or losses (i.e., assets increase or decrease).
Benefit increases and investment losses decrease a fund's assets, thereby increasing the
likelihood that a municipal contribution will be required. A decrease in the funded status
will also likely increase the size of the required contribution.
Whether a municipal contribution is required and the amount of the required contribution
is determined by using a statutory formula. The formula varies depending on whether the
plan is a lump sum plan or a monthly service pension plan.3
Lump Sum Plans
For lump sum plans, the minimum required municipal contribution equals the [mancial
requirements of the special fund minus 1) the amount of fire state aid to be received
during the following calendar year; and 2) the amount of any contributions to the special
fund from the active members of the relief association to be received during the following
calendar year. In addition, five percent annual interest on the assets is also subtracted. 4
I State law has been summarized and simplified. Minnesota Statutes should be consulted before making
decisions based on this Statement. The Statement does not contain legal advice and it should not be relied
upon in lieu of legal advice, It is subject to revision at any time.
2 Minn. Stat. ~ 69.772, subd. 3 & 4; Minn. Stat. ~ 69.773, subd. 5. In some instances, a municipal
contribution may be triggered even though the pension plan is fully funded.
3 See Minn, Stat. ~ 69.772, subd. 3 (for lump sum service pensions) and Minn. Stat. ~ 69.773, subd. 5 (for
monthly service pensions). There is no required municipal contribution for a dermed contribution plan.
4 Minn. Stat. ~ 69.772, subd. 3(d).
Reviewed: January 2009
Revised: NA
2009-2001
An Eql.llll Opportllllity Employer
The minimum required contribution is calculated by the officers of the relief association
during the month of July for the following year.5 To calculate the minimum required
municipal contribution, the officers need to know the special fund's financial
requirements for the following year. In July, the officers calculate the financial
requirements for the following year and the overall funding balance for the current
calendar year.
If the special fund is not fully funded, the financial requirements for the following
calendar year are detennined by taking into account 1) the total accrued liability for all
active and deferred members of the relief association, calculated for the following
calendar year; 2) the increase in the total accrued liability for the following calendar year
over the present calendar year; 3) the amount of anticipated future administrative
expenses; and 4) one-tenth of the deficit resulting from either an increase in the service
pension or an investment loss occurring over the last ten years. The deficit can be
amortized over ten years.
If the special fund is fully funded, the financial requirements for the following calendar
year are the total of 1) the increase in the total accrued liability for all members for the
following calendar year over the present calendar year; and 2) the amount of anticipated
future administrative expenses.
Monthly Service Pension Plans
For monthly service pension plans, the financial requirements of the special fund are
based on the most recent actuarial valuation. For most plans, the Governmental
Accounting Standards Board (GASB) requires an actuarial valuation every two years.6
In addition, a new actuarial valuation is required whenever there is a benefit change. If
the plan is in deficit, the deficit is amortized over twenty years and will be included in the
annual municipal contribution.7
Defined Contribution Plans
For defined contribution plans, the individual volunteer firefighter experiences the gains
and the losses. The municipality has no obligation to make contributions to offset losses
if they occur, although it can make a voluntary contribution to the special fund ifit
chooses.
Benefit Levels
The level of benefits paid by a volunteer firefighter pension plan is usually set by
agreement between the relief association and the municipality. Benefit level changes
S The Schedule Form, provided by the Office of the State Auditor, calculates the amount of any required
municipal contribution for the following year. For example, the 2008 Schedule Form will calculate the
required municipal contribution amount for the year 2009.
6 See Minn. Stat. ~ 69.051, subd. 1 (fmancial statements in conformance with generally accepted
accounting principles); GASB Statement 25, para. 35 (biennial actuarial valuations required for financial
reporting purposes).
7 Minn. Stat. ~ 69.773, subd 4 (d).
Reviewed: January 2009
Revised: NA
2
2009-2001
.
must first be discussed and adopted by the relief association through a change in its
bylaws. The changes must be made in keeping with the relief association's bylaw
amendment procedures and Open Meeting Law requirements. A relief association should
then seek municipal approval of the benefit level change. The city council or town board
can choose to approve the benefit level change or choose not to approve the change.
Once the bylaws are ratified by the municipality, however, the benefit levels are
guaranteed by the municipality. The municipality assumes responsibility for ensuring the
special fund has sufficient assets to cover approved benefit levels. " "
For those relief associations that are affiliated with an independent corporation rather
than a fire department, benefit level changes must be approved by the board of the
independent nonprofit firefighting corporation. In addition, the independent nonprofit
firefighting corporation is responsible for making any required contributions to the relief
association.
In limited circumstances, a volunteer fire relief association has the authority to increase
its benefit level without municipal ratification. However, if a municipal contribution is
later required, the contribution level will be calculated using the last benefit level ratified
by the municipality.8 If there was never a resolution to ratify a benefit increase, the relief
association must return to level where full funding is achieved.
Municipalities do not have authority to unilaterally change a relief association's benefit
level. Municipalities cannot initiate a change in benefit levels, rescind benefit increases,
or give contingent approval to benefit changes. To influence benefit levels,
municipalities must rely on positive and strong relationships with their volunteer
firefighters.
Payment of Required Municipal Contributions
To fulfill its obligation to provide at least the minimum required municipal contribution,
a municipality may use any source of public revenue, and it may levy taxes. For monthly
service plans, for example, a municipality may levy taxes "without any limitation as to
rate or amount and irrespective of any limitations imposed" by any other law or
regulation.9
If the benefit level the relief association is operating at was properly established and
approved by the affiliated municipality, the municipality is required under state law to
make any contributions that become due at that benefit level. If the municipality does not
include the full amount of the minimum municipal contribution in its levy for any year,
the officers of the relief association must certify that amount to the county auditor, who
shall spread a levy in the amount of the certified minimum municipal contribution on the
taxable property of the municipality. 10
8 Minn. Stat. ~ 424A,02, subd. 10.
9 Minn. Stat. ~ 69.773, subd. 5(d); ~ 69.772, subd. 4(c).
10 Minn. Stat. ~~ 69.772, subd. 4(d); 69.773, subd. 5(e),
Reviewed: January 2009
Revised: NA
3
2009-2001
Council Minutes (Regular)
August 3, 2009
Page 2
Council member Wilson asked about the wheelage tax that began two years ago
and how that affects Farmington. Commissioner Harris stated the $5 wheelage
tax was instituted by the County and shows up on license tab fees. The funds go
directly to Dakota County's transportation fund and amounts to $1.5 million/year.
This allows the County to do transportation projects.
6. CITIZEN COMMENTS
7. CONSENT AGENDA
MOTION by Fogarty, second by Wilson to approve the Consent Agenda as follows:
a) Approved Council Minutes (7/20/09 Regular)
c) Adopted ORDINANCE 009-607 Amending Definitions, Detached Garages and
Storage Sheds, and Accessory Structures - Planning
e) Approved School and Conference - Fire Department
APIF, MOTION CARRIED.
b) Fire Relief Association Pension Request - Administration
Councilmember Wilson preferred to look at the pension benefit during the 2010
budget process.
Councilmember May asked if the $195,584 was due to the lack of contribution in
2009. City Administrator Herlofsky replied no, it may make a small difference,
but this is an investment issue. The City has an obligation to pay the $195,584.
The second part of the Relief Association's request is for an increase in the
pension benefit level. Staff is recommending to not approve an increase. Finance
Director Roland noted the City was not required to make a contribution in 2009,
therefore, the $70,000 was absorbed into the general fund levy. Councilmember
May asked if staff knew the status of the Relief Association's investments when
the $70,000 was pulled from their budget for 2009. Finance Director Roland
explained that at the end of July the investments were great. They fell in
September. In July, staff did not have the numbers to show a decrease in value in
the investments. Council member May also felt the Relief Association should not
be investing in such volatile funds because now the City needs to contribute
$195,000, She approved staffs recommendation.
Councilmember Fogarty needed more time to review the information and had this
concern two years ago when the schedule was approved.
Councilmember Wilson asked if the City can suggest investments. Staff noted the
Mayor and City Administrator sit on the Relief Board. The financial advisor for
the Relief Association makes good investments. In a couple years, we will not
have this problem. MOTION by Wilson, second by Larson to approve the
$195,584 City contribution and to table the pension benefit level for discussion at
a budget workshop as to whether to leave it the same or increase it. Voting for:
Larson, Donnelly, May, Wilson. Voting against: Fogarty. MOTION
CARRIED.
City of Farmington
430 Third Street
Farmington, Minnesota
651.280.6800 . Fax 651.280.6899
www.ci.farmington.mn.us
TO:
Mayor, Councilmembers and City Administrator
FROM:
Robin Roland, Finance Director
SUBJECT:
Utility rate increases for 2010: Sewer and Solid Wasty.
DATE:
November 9, 2009
For 2010, rate increases are recommended in the Sewer and Solid Waste Utility funds to assure coverage of
the cost of enterprise operations. This memo and attachments will outline the reasoning for the requested
increases. The actual rate changes will be included with the Charges and Fees ordinance proposal in
December.
SEWER
Historically, sewer charges for service cover the costs of the personnel, supplies and other charges for
services including payment for MCES (Metropolitan Council Environmental Services) disposal charges.
The costs of trunk infrastructure have been covered by development fees and City SAC charges collected to
offset the debt service on bonds issued in 1999 (which funded trunk sewer lines).
MCES charges are based on sewerage flows from the City. Logically, if there is less sewer flow through
MCES pipes and treatment facilities, the City's charges should decline. However, despite a decline in
flowage over the last five years, charges have increased from $776,134 in 2006 to a projected $892,659 in
2010. These increases are due to MCES fixed costs which have escalated over time and which must be
covered by charges to users (Cities).
Year Flow (in Million gallons) MCES charge
2010 450.67 $ 892,659
2009 469.27 823,238
2008 484.87 822,731
2007 519.56 793,195
2006 502.90 776,134
'I.' ,
:, -
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An analysis of the sewer fund expense coverage is included with this memo. It reflects another reality of the
decline in development. The City has had enough revenues from City SAC fees to transfer each year from
the trunk fund to the operations fund to cover the debt service costs. In 2009 (and beyond)" the balance
remaining in the trunk fund is not enough to cover the debt service transfer,and this amount must be covered
by operating revenues or. sewer fund retained earnings. Increasing sewer, rates would result in additional
revenues to cover increasing operating costs and required debt service payments.
City residential sewer charges are currently $27.00 for the first 10,000 of metered water usage (based on
winter quarter consumption) and $2,30 per 1,000 above 10,000 per quarter. Staff proposes the rate for the
first 10,000 gallons remain the same ($27.00) but that the rate per 1,000 gallons after is raised to $2:70. The
average customer is billed for 15,000 gallons quarterly. Under the proposed rate increase, they would see
their quarterly sewer charge go from $38.50 in 2009 to $40.50 in 2010; or an increase of $8 per year ($2 per
qtr X 4).
SOLID WASTE
Similar to sewer charges, solid waste charges for service cover the costs of personnel, s'UPpliesand other
charges for service including payments for landfill and recycling charges as well as 'clean-up day'.
Additionally, fee revenue should cover an annual set aside for the purchase of new refuse trucks on a seven
year cycle,
The City has employed several different strategies for reduction of the waste stream and has encouraged
more recycling activities over the last several years. Notably, this year's change to single streamrecyc1ing
has increased recycling significantly over previous methods. However, despite thereducti()ninamount of
waste disposed, costs for disposal have escalated. The City has participated in a grant program which has
paid towards disposal of refuse at transfer stations which feed the Newport garbage burning facility.
Unfortunately, this grant funding is not slated to be available after 2009.
The City contracts with Dicks Sanitation for recycling services. The costs of this service have also increased
due to the increased cost offuel and the declining market for recyclables. .; Surcharges for these items have
increased expenses over the last two years by almost $50,000 per year. 'Solid waste fees have held steady
since 2008.
Current rates for 30, 60 and 90 gallon service are $44, $53 and $62 per quarter respectively. Staff proposes
an increase at each level of service of $2 per quarter. This would generate enough revenue in 2010 to help
offset surcharges from the previous two years and offset the lost grant funding which supplemented previous
years' operations. Again, this would result in an annual increase for each r~~Hdent of $8. ,~,..
CONCLUSION
Utilities are the business enterprises of the City and must have adequate funding. Although no one ever
wants increased fees charged for services provided by the City, revenues must be increased (as with any
business) to cover increased expenses. The rate increases addressed by this memo will be included in the
fees and charges ordinance to be adopted for 2010 operations.
Respectfully submitted,
.eROland
Finance Director
CITY OF FARMINGTON, MN
....... ..
. . . . . . . . . . . . . . . . . . . .
. . . . . . , . . .
. . . . . . . , . .
.,....... ,
......... .
......... .
......... .
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COb12>
5025
5030
REVENUES
Charges for service
Other
Other Revenues
4100 Special Assessments
4955 Investment income
5350 Miscellaneous
Total other revenue
Total Revenues
EXPENDITURES
6100 Personal services
6200 Supplies
6400 Other services & charges
6900 Capital outlay
Contributions to projects
Total Expenses
Net Revenues less expenses
7100 Debt service
5205 Sanitary Sewer trunk fund
7310 transfer to General fund
7310 transfer to Debt service funds
Net surplus (deficit) after
other sources & uses
SEWER OPERATIONS FUND
ANALYSIS OF EXPENSE COVERAGE
::>2l)04:/::Z(jQ~::::::: > \~OQE\>):::>::2l)Ot<: ::::;::Z(iQS:;::::: ::::::::::2009
:?APTi#W/:\:iAPfWW':':: \H AmVAL/ /U~qT0AiJ::::::AqfQA~:::::. :::::~~rh~t~d .
$ $ $ $ $ $
1,108,411
1,177,436
1,319,382
1,654,512 1,524,201 1,500,000
120,065 1,732 1,000
1,774,577 1,525,933 1,501,000
30,164 25,826 10,000
83,999 35,103 25,000
8,754 1,944 2,829
122,917 62,873 37,829
1 ,897,494 1,588,806 1,538,829
1,108,411 1,177,436 1,319,382
6,159 126,052 102,146
22,426 43,630
1,411 2,150
7,570 148,478 147,926
1,115,981 1,325,914 1,467,308
96,266 116,718 150,691 154,246 158,028 177,471
10,205 13,768 24,464 25,090 24,228 21,956
805,320 891,003 957,010 1,099,216 968,446 966,502
2,503 80,699 100,254 591,413 43,393 106,753
914,294 1,102,188 1,232,419 1,869,965 1,194,095 1,272,682
201,687 223,726 234,889 27,529 394,711 266,147
(233,175) (228,464) (230,381) (233,667) (233,873) (235,791 )
258,000 227,416 230,381 232,911 234,791
(50,000) (54,250) (57,000) (58,000) (61,000) (64,000)
(62,894) (62,385) (62,385) (32,444) (33,253) (32,908)
Net assets, beginning of year $ 3,027,046 $ 3,140,664 $ 3,246,707 $ 3,362,211 $ 3,298,540 $ 3,599,916
113,618
106,043
115,504
(63,671 )
301,376
(66,552)
Net assets, end of year
$ 3,140,664 $ 3,246,707 $ 3,362,211 $ 3,298,540 $ 3,599,916 $ 3,533,364
CITY OF FARMINGTON, MN
SOLID WASTE SERVICES FUND
ANALYSIS OF EXPENSE COVERAGE
..... . .
CObEY
:://~o,%1/:~)200$) '.::'::':':::.~:.:'~::,::.:.:::.~:::::.:::::::'~.::,:::C:?:,e:.:::.OU;:,$A:,:.~,l::.::~:::::.::.::::::::...,'. ..., ,2007. . . . . . , . , . 2008 ' . ,. ....2009
:::AGrUAl/: H)\OrUAW..... ~., , . ~ ,. :i:!::~~j\}~Gi:i:i ,:!,!'*b+0~J!H! :.:~~~i~~i~d: .
$ $ $ $ $ $
REVENUES
5025 Charges for service
1,446,275
1,647,406
1,658,076
1,660,150
1,446,275
1,647,406
1,658,076
1,660,150
4460
4955
5350
Other Revenues
Intergovernmental
Investment income
Miscellaneous
85,902
2,438
5602
14,762
7,048
1450
18,042
19,407
13,154
3,150
Total other revenue
18,042
93,942
23 260
35,711
Total Revenues
1 464,317
1 754 092
1,670666
1 693 787
EXPENDITURES
1,772,405 1,649,396
1,772,4051,649,396
103,010
2,438
5,602
78,838
111,050 78,838
1,883,455 1 728,234
6100 Personal services
6200 Supplies
6400 Other services & charges
Disposal costs
Clean-up day
Total Expenditures I
318,355 376,877 406,204 451,687 468,802 394,045
144,617 155,206 136,855 155,741 122,379 80,713
130,986 178,738 164,961 172,735 185,681 117,144
589,696 612,709 647,908 707,291 755,351 709,880
118,649 135,191 159,922 141,915 122,088 152,065
1,302,303 1,458721 1 515,850 1,629369 1 654 301 1 453847
Increase (decrease) before other
sources (uses)
211,945
177,937
124,723
162,014
Other sources (uses)
6900 Capital outlay
7310 General fund
7310 Debt service funds
(31,427)
(53,500)
(48,495)
(190,997)
(56,200)
(48,495)
(222,117)
(58,000)
(48,666)
(163,162)
(50,000)
(49,259)
229,154
274,387
(267,197)
(61,000)
(49,879)
(64,000)
(48,559)
Net Surplus (deficit) after other
sources & uses