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Home My WebLink About2013-05-15 PACKET 12.A.REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM # S DATE 05/15/13 � � �. PREPARED BY Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT HEAD ************************************************ COUNCIL ACTION REQUEST Workshop - 2014 & 2015 Budget � � :_ •►�►�_►�= •►_ BUDGET IMPLICATION: ADVISORY COMMISSION ACTIO N/A BUDGETED AMOUNT �� ❑ PLANNING ❑ PUBLIC SAFETY ❑ PUBLIC WORKS ❑ PARKS AND RECREATION ❑ HUMAN SERVICES/RIGHTS ❑ ECONOMIC DEV. AUTHORITY ❑ SUPPORTING DOCUMENT � MEMO/LETTER: Roland ❑ RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: � OTHER: 2014-2018 Goals docun - -1 ADMINISTRATORS COMMENTS REVIEWED ❑ ❑ ❑ ❑ ❑ ❑ ❑ Administrator DENIED ❑ ❑ ❑ ❑ ❑ ❑ ❑ � / Date ***************************�*****************�*� COUNCIL ACTION TAKEN: ❑ APPROVED ❑ DENIED ❑ OTHER N/A ACTUAL AMOUNT APPROVED ❑ ❑ ❑ ❑ ❑ ❑ ❑ H:\Council items\CC Action Form.doc Cottage J Grove � Pride and P�p5Perity Meet To: Mayor and City Council Members Ryan Schroeder, City Administrator From: Robin Roland, Finance Director Date: May 9, 2013 Subject: Workshop — 2014 & 2015 Budget Goals Staff is seeking direction from the City Council regarding the 2014 (and 2015) Property Tax Levy. Specifically, we will discuss the following: • General Fund Levy ■ Previously proposed increase for 2014 was 6%; be 3% over 2014. • Special Levies: ■ Continue Inclusion of future Municipal shelter/Landscaping initiative? ■ EDA — increase by 2% every 2 years? Debt Levies ■ Required levies on existing debt ■ Golf Course interFund loan ■ 2013 Pavement Management Debt proposed for 2015 would building & Park After three years of using other revenue sources to supplement the levy so it could remain flat, staff believes it is time to discuss increasing the levy to fund Council's vision and continue the initiatives begun as part of the Good to Great Organizational Development project. The 2014-2018 Strategic Direction document is included with this item. As part of the discussion, staff will address growth in the tax base for 2014 and expected impacts for 2015 and beyond of commercial and retail development projects currently underway. Further, since the 2013 Budget calls for extensive use of the cash reserves of the Equipment Replacement Fund, staff would like to discuss the appropriate level of fund balance in that fund and a process for a return to "pay as you go" financing of capital equipment. Staff would also like to discuss the potential for Utility Rate increases for 2014 in light of increasing costs and no increase to Water or Sewer rates in four years. A survey of the rates of comparable cities will be presented at the workshop for consideration. Levy The following chart reflects amounts identified in the 2013 Budget process for 2014 along with potential additions. Adopted Adopted Adopted Proposed Proposed -- _ -- -- -___ _- _ - __ _ .. __ - -- - 2011 2012 2013 2014 2015 __ ---- - - - - ---- ---- --- General Lev�es � � � -_ General Fund �$ 10, 345,100 �$ 10, 929,100 �$ 10, 867, 000 j$ 11, 561, 863 � $ 11, 908, 7 19 _-- _ __ � I � i_ � ._ E --- -- -- _ . � unal - . _. . - (. . _ 584,00 � . � . .- -. . . � ---- _ . ._. ( - - --- - --- --- Park shelter replacement/Landscape initiati� � � 30,_000 �__ 30,000 � 30,000 - �Future Municipal buildings � � � 30,000 � 30,000 E 30,000 � __ - - __ - _ �Economic development 106,000 � 106,000 � 108,100 � 108,100 � 110,000 � Total levy subject to limit 11,035,100 9 11,035,100 11,035,100 11,729,963 E 12,078,719 __ --- ----- -- - --- -- -- ___ __�- - -�---- ! . -- -- --- Debt Levies � � � � � ;_ ---- - - ---- - - � _ ____ -___ Ice Arena expansion bonds � 240,000 � 240,00 � _ 240,00 � 240,000 �__ 240, 000 � Debt service mitigation � 346,400 � _ ( � � � __ --- - - -- Public Safety/City Hall interfund loan � � 648,205 � 550,000 � 500,000 � 500,000 � P avement Mg 200 � 175,050 � 175,700 # 175,000 � 1 75,000 � 175,00 - ----- ---- - - - -- _ _ Pa�ment M gmt 2000 � 41,000 � 142,245 �_ 159,550 � __ 80 ( 8 0,00 0 - - . Pa�m Mgmt 2002c � _ 403,700 � � . . . . �- - - . - � --- -- -_ _ _ . - = - - - - - _--- Pa�m Mg 201 � � � 81,600 � 81,000 E 80,500 � Total debt levy � 1, 206,150 ; 1, 206,150 � 1, 206,150 � 1, 076, 000 � 1, 075, 500 _ _ _ _€ ' � � I Golf Course _ _ _ � _ __ I . _ I _ _ � __ 220,000 � 140,000 � - -- -- -- - -- - -- - - - -- ---- - �Pa�ement Mgmt 2013 � � � � 320,000 � 320,000 � __ _ ----- _____ _ _ additions proposed� -� - � - j 540,000 � 46 0, 00 0 _ . _ ..-- _ _ ___ - -- __ - -- I - -- I_ _ 1- _ ! I ___ _ __ 1 Total Gross levy �_ 12,241,250 � 12,241,250 � 12,241,250 � 13,345,963 � 13,614,219 � _ --_ _ __ @ C _ __ __ I _ � _ __ � __ I __ _ _� _ - ---- -- - -- -- - -- -- - -----__ Change irl G levy __ � 0.7 0 .00% � 0.00%I _ 9_02 2.0 _ -_ - _ ___ _ _ -- � -_ --_ _ �- __ -- � � ,- - - �- _= - � Debt_levy_as % of total levy_ _ __�_ __ _9.85% � _ 9.85% � 9.85% � _10.46% � _ _ 10.25% � The Pavement Management project for 2013 was budgeted at $7.6 million. Staff anticipates bonding $6.2 million for 15 years at an interest rate of 2.5%. The amount shown above for required debt service is $490,000 less annual special assessment collections expected of $170,000. With this addition of Pavement Management debt, the debt levy as a percentage of the total levy is slightly greater than 10%. This is important as the City's debt management policy identifies one of the goals of the policy as a"Debt levy 10% or less of the annual property tax levy". Congruence with established financial policies is a key factor when rating agencies consider the appropriate rating for the City's overall debt. At the end of 2012, the City's debt per capita was $484. The addition of the 2013 Pavement Management debt will increase the debt per capita by $174. Fortunately, in comparison to our peer communities, even $658 of debt per capita is still only half of the average ($1240). Taxable Value The chart below reflects Washington County's "first glance" estimate for Pay 2014 tax capacity value. _ ___ ______— _ _ -_=-_ -_ --- -. - - � Estimated Property Value for Property Value for Property Value for� Property Value for � Taxes Collectable Taxes Collectable Taxes Collectable Taxes Collectable § 2011 2012 2013 2014 _ : _ - _ - __ -_ _ __ =_ - =-- _ - - �- - - �- - - � _ _ � _ __ _ _- _ � Ma rket va l ue fi$ 2, 756, 698,100 �$ 2, 724, 906,400 �$ 2,277, 900, 700 �$ 2, 605,127, 500 I_ _ _ _ - - ° (_ -_ � __.. __ €- -- _ _ -� +Tax property va � ._ �_ . � _ � _ � -- _ _ _ __-- - - - -- - - =__ -- � Real estate _ � 29, 219,126 26, 854, 070 � 24, 938, 753 � 25, 811, 609 �- -- -- - - - - _ - _ ._ __- Persona) Property g 550,999 � 572,740 � 612,076 � 612,076 Total property value�_ 29,770,125 � 27,426,810 � 25,550,829 ( 26,423,685 __ __ ___ __ --- __ . _ � less: Tax Increment project � I valuations � (913,350)� (960,577)� (789,029)� (789,029) Subtotal - City 28,856,775 ! 26,466,233 � 24,761,800 � 25,634,656 _ less. Fiscal Disparity� . _ _ _ __ __ co nt r ibution value� (2,191,320)� (2,053,300)� (2,076,999)� (2,076,999) __ -- 'Net Tax Capacity value___ �_ 26,665,455 � __ 24,412,933 �__ _ 22,684,801 � 23,557,657 add: Fiscal Dis arit � distri buti n� 5, 879, 985 � 5, 879, 985 � 5, 000, 859 � 5, 000, 859 � � . � - __ __ �_ . _ - -__ I _. - ---- � - - -_ -_ - Total Tax Capacity� 32,545,440 � 30,292,918 � 27,685,660 � 28,558,516� f . ,: . __ I _ - --- --- - _ �__ . . _- - - � -_ _ ----__ � _- _- -- -- -- I Cha in Tax Capacity V alue -7.2%� -8 -7.1 3.8% _ _ - -- -- - - __ __ _ _ _ -- �- - (.- , _-._ -� -_ -_ � - - : � Historically at this point in the budget direction memo we have discussed tax rates in comparison to other communities and our "best guess" as to whether we will come in over or under the median rate of our peer communities. Although we are not making that prediction in this memo, we will discuss the potential tax rate at the workshop with an eye towards the taxable value per capita and its relation to the amount of tax revenue we are able to collect in comparison to other communities. Golf Course At the end of 2012, Golf Course operations required a$250,000 cash flow interfund loan. This is the third such loan in as many years. Currently, they have a total outstanding debt to the EDA and EDA Trust fund of $2.1 million. Despite the best efforts of the Golf Manager and his staff, net income is not enough to support repayment of this loan in the current configuration of the operations. Our auditors support the idea of making the fund a Special Revenue fund, similar to the Ice Arena. Although this will help with the net income side of things, we don't expect income to recover enough to fund necessary capital expenditures and also repay the debt. Staff has proposed a separate levy for Golf Course operations/debt as shown above. This levy would go to support the operational net income of the Golf Course and Clubhouse and the repayment of the interFund loan. Staff will bring a ten year projection of net income and debt payback for discussion at the workshop. Operational results at 12/31/2012 Golf Course Ice Parks Fund Arena Maintenance Forestry Recreation Revenues $ 1,561,025 $ 1,119,149 $ 6,698 $ -$ 143,499 Expenses $ 1,665,744 $ 1,256,012 $ 1,056,509 $ 254,074 $ 304,281 Net income (loss) $ (104,719) $ (136,863) $ (1,049,811) $ (254,074) $ (160,782) Note: The Golf Course Expenses include $172,540 in depreciation. The Ice Arena Revenues include $240,651 in Property tax. 2014 Budget Calendar Target Date Responsible party Action May 15, 2013 Council Discussion of budget goals at workshop May 20, 2013 Finance Budget Kick-Off Meeting/ Distribute forms June Finance Tax Revenue forecasts June 20, 2013 Departments Return forms to finance June 27, 2013 Budget team Preliminary review Week of July 15 Budget team and Review meetings Departments July 26, 2013 Finance Proposed Budget Document to Council July 31, August 7 Council Budget workshops - Council review & comment August 21, 2013 All Commissions All Commissions — Town Hall meeting on Budget August 28, 2013 Council Final budget workshop September 4, 2013 Council Adopt preliminary levy and budget By September 15, 2013 Finance Certify preliminary levy and comment hearing date November 2013 County Mails notice of proposed property taxes for next year taxes payable December 4, 2013 Council Conduct budget comment meeting December 4 or 18, 2013 Council Adopt final budget and levy By December 30, 2013 Finance Certify final levy 2014-2018 Strategic Direction Citv Council Mission: • Provide excellence in the delivery of public services to community residents, businesses and owners of property Citv Council Vision: The City Council continues its vision for the future as: • An accessible community with an appreciation for our environment, trees, hills, ravines, landscapes and river including quality park, green and open space areas • A good place to raise a family through its life cycle and grow a business with well maintained neighborhoods and private properties • A fiscally responsible, engaged government with well maintained infrastructure, access to quality inter- and intra-community transportation and transit and safe residential and commercial neighborhoods and public spaces Operational Guidinq Principles 2014-2018 • Be an employer of choice through a culture of continuous improvement, a spirit of collaboration between departments and divisions, a proactive approach to internal and external communications, job enrichment, employee growth and training, injury reduction and work place efficiencies • Achieve customer satisfaction in top 20% of peer communities across all metrics • Meet or exceed financial targets toward improvement of rating agency outlooks • Create an environmentally focused and sustainable organization • Ensure proactive evaluation of technology opportunities for business lines and service delivery as "return on investment" justifies implementation Departmental five year qoals Administration: 1. Operate River Oaks at Positive Cash Flow O 2. Create leading edge communications / media / social media approach C/O/E 2 n�..:...�.,:... i...,.�:...,.. �,.i.,.,. uAil4..'-,.,�c'�+ r�.-..,,.,-.....,H..:.,.,.. �►n �.... . . . ..�. �: �. . ��. ��. �. '� � �_ �.: ��. ��. � ,_ �:: � �. . :: '.." _. .� " ' ... " ` ' �"., J ' ._,.: �. ��:: . . " ' J ��: '� 4. Administer Elections with 0% Errors C/O 5. Maintain Licensing/Data Management at 100% customer satisfaction levels C/O 6. Create and /or initiate fund capacity building toward S&P AAA O Economic Development: 1. Assist existing job creators in the business park when expansion opportunities exist and assist in the development of at least 300,000 SF of additional quality business park end users (typical target of 20K to 100K) C 2. Lease out to quality tenants and maintain a vibrant growth environment in the BEC C 3. Strive to achieve and then maintain a retail/office vacancy of 5 to 7% of total retail square footage within the community C 4. Realize substantial development of the Shoppes at Cottage View C 5. Gain approval of a development plan for West Point Douglas between gptn Street and Jamaica (property owner dependent) C 6. Maintain aggressive public communication to Cottage Grove residents, property owners, external developers, brokers, investors, and end users of job, business creation and development and shopping opportunities with the community C Finance: 1. Provide accurate and timely financial reporting on demand to Council and staff users O/E 2. Provide online employee time entry and payroll/benefit information on demand/on demand E/O 3. Pay more than 85% of vendor invoices by EFT O 4. Offer a variety of payment options to customers utilizing City services and facilities — including online inquiry and payment options C/O IT: Manage hardware options (PC's, Servers, Laptops, tablets, phones) for the most cost effective and functional presentation of services across departments O/E/C 2. Integrate as many software applications as possible to provide seamless/transparent presentation of data O/E Community Development: 1. Create an environmentally friendly and sustainable community O/C 2. Provide planning services consistent with adopted plans and policies in a professional manner with a high level of customer service O/E 3. Improve the public health, safety, and general welfare of the community by planning for future development; so that public facilities and services are provided; the needs of agriculture, business, and industry are supported; residential subdivisions are developed in an orderly manner to coordinate roads, storm drainage, water and sewer systems, private utilities, emergency services, and parkland; and to promote the efficient and economical use of public funds O/C 4. Ensure all structures are constructed per code in the community to support public health and safety O/C 5. Code enforcement activities that improve health and safety and promote positive community appeal O/C 6. City pavement maintained at a 70 PCI, sanitary sewer, storm sewer, and water systems compliant with regulations, transportation mobility improved throughout the community, and transit services enhanced O/C 7. Coordinate with county, Regional, State and Federal agencies on studies, plans, and infrastructure improvement projects with said agencies providing the necessary financial partnerships to bring projects to fruition O 8. Accurate and professionally presented maps and infrastructure data management O/C 9. Active support role for emergency management O Parks & Recreation: 1. Create and promote policies that improve park user experiences O/C 2. Create and promote programs to improve health, well-being and vitality to the community C 3. Create and promote places that enable active living for a more healthy and social community C 4. Improve land management practices O/C Public Safety: 1. Successful implementation of the 5-year EMS plan to primary fire-based EMS services O/C/E 2. Provide a fully functional Emergency Operations Center in the physical space, in training and All Hazard Planning O/C 3. Establish a process for the consolidation of fire stations, planning and construction of a central fire station O/C/E 4. Evaluate and improve accountability for emergency and non-emergency calls �. �� 5. Improve reporting and tracking of clearance rates for Police O 6. Ensure that all public safety personnel have appropriate personal protective equipment E/O 7. Resolve the need for a shared public safety training facility through public and private partnerships and potential state funding O/E 8. Improve frequency and efficiency of life safety inspections and pre-incident planning C/O Public Works: 1. Realign Public Works organizational structure to meet future growing needs of the City by 2014- Plan in Place O/E 2. Achieve standard PCI of 70. Maintain acceptable level of infrastructure (above and below ground) maintenance for residents. Provide level of maintenance commitment per PMP as necessary to achieve maximum pavement and curb and gutter life cycle by implementing specific maintenance cycles and engineering standards as required by the Pavement Management Task Force report. O/C 3. Create an automated Shop Management System that integrates and streamlines billing, inventory and work orders. O/E 4. Reduce maintenance cost on all vehicles and equipment by 10°/o O 5. Achieve 100% compliance with OSHA-required safety training and implementation of in-house training plan. E/O