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HomeMy WebLinkAbout08-19-1999 Council Work Session PacketSUMMARY OF 2000 BUDGET WORK SESSIONS The following is a summary of Year 2000 budget information reflecting the Council discussion and direction at the August 5 and August 18 budget work sessions: General Fund Expenditures The proposed General Fund expenditures are $4,053,480. This is an increase of $203,480 or 5.28% over the 1999 budget. The main items causing the expenditure increase are as follows: A. Annual compensation adjustments (pay and benefits) B Market-based pay adjustments to bring the City’s pay levels in line with those of comparable cities $76,470 $30,000 C.The costs of hiring a police chief by October 1, 2000 to provide a three-month overlap period prior to Chief Cheswick's retirement $20,000 D. New expenditures related to the hiring of an additional police officer $52,000 E. Increased funding for Are equipment replacement F. Increased operating costs related to upgrading to the LOGIS police records system $10,000 $14,500 General Fund Revenues The General i -nd revenues by major category are as follows: Revenue Category Tax levy Licenses & permits Intergovernmental revenue Charges for services Fines & forfeitures Miscellaneous revenue Fund balance* Revenue Amount $1,858,410.00 $264,000.00 $563,780.00 $1,108,390.00 $84,000.00 $129,900.00 $45,000.00 % of Total General Fund Revenues 45.8% 6.5% 13.9% 27.4% 2.1% 3.2% 1.1% 1 Summary of2000 Budget Work Sessions Page 2 ___________ The 2000 budget uses $45,000 of General Fund reserves that are specific to two expenditure items: A. $20,000 of reserves will be used to fiand the one-time costs of hiring a new police chief to be on board three months prior to Chief Cheswick's retirement. B $25,000 of reserves is unused COPS grant funds that will be used to offset a portion of the first year costs of hiring an additional police officer. Tax Levy, Tax Capacity Rate, and Impact on Property Owners The total tax levy required to fund the proposed 2000 budget is $2,363,560. This is an increase of $71,680 or 3.13% over the 1999 levy. The proposed levy amount is at the City's levy limit. The estimated tax capacity for taxes payable in the year 2000 is $15,750,937. This is an increase of $1,035,895(7) or 7.04% over the 1999 tax capacity. Based on the City's tax capacity and the proposed tax levy, the tax capacity rate would be 14.637%. This is a 3.55% reduction from the 1999 tax capacity rate. Based on the reduction in the City's t?.\ capacity rate, and assuming no change in property value, the City's share of the property tax bill on a home valued at $100,000 would decrease by $9.19 or 5.1%. For a home valued at $400,000, the City's share of the property tax bill would decrease by $59.09 or 6.1%. Medium and Long-Term Needs Because of the levy limit and the need to address higher priority needs, the 2000 budget does not include increased Ending for street overlays, stormwater projects, or parks development. The Council discussed possible funding options for these needs. The Council directed that the funding for street overlays be used for collector roads versus neighborhood streets, and that staff develop a policy regarding assessments for overlays on neighborhood streets. Council also directed staff to provide information regarding the City's overlay bids to the presidents of the homeowners' associations of subdivisions with private roads. It was discussed that an option for funding smaller stormwater improvement projects is a stormwater utility. With a stormwater utility, all properties pay a user fee, similar to a water or sewer fee, based on the amount of stormwater runoff produced by their property. The Council also agreed that the City needs to be proactive in bringing ponding projects to the Minnehaha Creek Watershed District for funding rather than waiting for the Watershed District to bring projects to the City. A specific suggested site for a future pond is upstream of Stubbs Bay. The Council discussed that the 1999 General Fund surplus should be used to fund a priority special project. The Council directed staff to contact Ehlers Associates, the City's bond consultant, to determine if Orono could sell bonds for the new Long Lake Fire Station. J Summary of2000 Budget Work Sessions Page 3 _______ Enterprise Fund Budgets 1. Rate increases. The 2000 water and sewer fund budgets reflect rate increases of 2.7% and 3.2%, respectively. This provides sufficient revenue to fund operating expenses and depreciation. 2. Enterprise fund questions. The Council had a number of questions regarding the Enterprise funds. The questions, and staffs answers, are as follows: A. Whtt caused the sewer fimd operating expenditures to be reduced substantially from 1996 to 1998? Three factors caused the expenditure reduction. The first was a reduction in MWCC sewer treatment charges due to lower flows related to reduced infiltration and inflow of surface water into the system. The second related factor was that the lower sewer flows resulted in a credit from the MWCC due to the MWCC's over estimate of the City ’s sewer flows. The third factor was a reduction in depreciation expense based on increasing the expected life of the City's sewer lines from 50 years to 75 years. The magnitude of each of these factors is as follows: 1)Reduced MWCC charges $34,938 2)MWCC credit for prior year $52,283 final cost allocation 3)Reduced depreciation expense $51,348 B. What is the total loan amount to the water fund to fund the upgrade of the Navarre water treatment plant, and what is the term of the loan? The total loan amount is $475,000. The term of the loan is 15 years at an interest rate of 5.5%. The annual debt service amount on the water plant loan is $51,650. C. What is the outstanding special assessment amount related to the water plant project? The outstanding special assessment amount is $215,600. The special assessments will be paid over a 5-year period at an interest rate of 6.5%. The City received prepayments of $73,150 during 1998. The Council indicated the City should be showing liabilities in the water and sewer funds to reflect the tax levy being used to fund the debt service on the 1989 sewer and water bond. r 3 Summary of2000 Budget Work Sessions Page 4 Preliminary Adoption of Proposed Budget and Tax Le«/y The proposed budget and tax levy will be brought to the Council for preliminary adoption at the September 13 Council meeting. The tax levy must be certified to the County by September 15. The final budget and tax levy will be adopted after the Truth in Taxation hearing in early December. New Requirement: Public Hearing Regarding Tax Rate A new law passed in the 1999 State legislative session requires that all cities over 500 population and all counties must hold a public hearing and pass a resolution if the levy for the upcoming year increases such that, in the absence of an increase in tax capacity, the tax capaci*y rate would need to be increased. Very simply, what this means is that if a city is increasing its tax levy, it needs to hold this public hearing. The requirement is based on a Missouri law and was passed due to a concern that cities and counties were claiming they were freezing taxes; when in fact the levy* v/as increasing but the tax rate was frozen due to tax base growth. Under the law, the local government calculates what its tax rate would be in the coming year if the levy was held constant. Essentially, a baseline tax rate is calculated based on the prior year's levy and the curreiit year tax base. If the levy will result in an increase in the tax rate over, the baseline tax rate, the City Council must adopt a resolution at a public hearing. '' This resolution must be filed with the County Auditor by October 20 of each year. The information necessary to calculate the baseline tax rate will not be provided by the County Auditor until October 1. Based on this timeline, staff would suggest holding the public hearing and adopting a resolution at the October 11 Council meeting. iJ't k- ■ CITY OF ORONO NOTICE OF PUBLIC MEETING NOTICE is hereby given that the Orono City Council will meet at 7:30 a m. on Thursday, August 19. 1999 in the Orono City Council Chambers, 2780 Kelley Parkway, Orono, Minnesota. The purpose of the work session is to review the year 2000 budget and to ^scuss other items of current interest. /s/ Carole A. Haseman Deputy Clerk Posted at; City Hall Navarre Post Office Long Lake Post Office Crystal Bay Post Office i ■ >. TO:Mayor Jabbour and Orono City Council Members FROM:Ron Moorse, City Administrator DATE:August 18, 1999 SUBJECT: August 19, 1999 Budget Work Session The August 19 budget work session will focus on the enterprise funds (water, sewer and golf) and on capital expenditure needs both in the year 2000 and in future years. Water and Sewer Rates The long-term cash flow analysis performed in 1997 indicated that in order to meet projected long ­ term system repair and replacement needs, the City's water rates would need to be increased 2.7% per year and the sewer rates would need to be increased 3.2% per year. These rate increases are reflected in the proposed 2000 water and sewer fund budgets. Improvement and Equipment Outlay Fund Budget The improvement and equipment outlay fund is used to purchase all capital items needed by the general fund departments except the Police Department. The purchases are funded by a transfer of $105,000.00 fi-om the general fbnd. The transfer amount was increased from $95,000.00 in the 2000 budget to provide for an increase in funding for Long Lake fire equipment replacement from $?0,000.u0 per year to $30,000.00. The specific items requested are shown in Attachment G. Attachments The following materials are attached; A. Water operating fund cash flow budget Water fund capital requests Sewer operating fund cash flow budget Sewer fUnd capital requests Golf operating fund cash flow budget Golf fund capita! requests Improvement and equipment outlay fund budget detail Public Works capital requests Crystal Bay Post OflBce capiud requests. B. C. D. E. F. G. H. I City of Orono Water Operating Fund Cash Flow Budget Cash Flows From Ooeratine Activity: Operating Revenue Operating Expenses, including Depreciation Operating Income (Loss) Adjustments to reconcile operating income (loss) to net cash from operating activity - Depreciation 1998 Actual 261,436 222,742 38,694 43,193 1999 Budget 250,435 244,680 5,755 42,310 2000 Budget 268,460 265,760 2,700 68,720 % IiKrease 6.7% 7.9% year2(XK), Istyrdepr for plant rehab 29,600 Net Cash From Operating Activity Cash Flows From Canital. Financine & Investine Activity: 81,887 48,065 71,420 •• • Interest Received on Investments 23,358 20,200 35,000 Property Taxes for Revenue Bonds 104,734 100,000 75,000 Special Assessments for Revenue Bonds 44,050 41,390 38,940 Special Assessments for Water Plant Rehab 73,150 61,810 54,330 Antenna Leases Revenue 49,499 65,470 68,750 Connection Fees 6,664 16,350 18,020 Principal Paid on Revenue Bonds (118,886)(129,000) (136,590) Interest & Other Charges on Revenue Bonds (24,663)(21,980)(15,860) Interfund Loan from Building Outlay Fund 475,000 (a)270,000 (at 0 (a) l5yrs@S.S% Principal A Interest on Interfund Loan 0 (82,570) (c)(86,620)(c) payment «1 in 1999 Capital Outlay (147,453) (h)(607,550) (b)(7,000)(b) rehab proj 25 yr life Net Cash From Cap, Fin & Invest Activity 485,453 (265,880)43,970 Net Increase (Decrease) in Cash From Operating, Capital, Financing & Invnting Activity 567,340 (217,815)115390 Cash January 1 • 296,082 863,422 645,607 Cash, December 31 863,422 645,607 760,997 • 2.7% rate increase, 4.0% usage increase e WATER FUND CAPITAL OUTLAY 1.Electric valve turning machine to open and close gate valves on hydrants for water main breaks and for exercising the gate valves. Gate valves are currently opened using a tool that requires 2 maintenance staff. In some instances, gate valves that have not been opened for a substantial period of time cannot be opened manually. This causes a problem during water main breaks. If a valve can't be opened, the maintenance staff need to go to the next valve which results in shutting off water to a larger area. The cost of the valve turning machine is estimated at $4,800.00. 2.Electric generator to operate the water valve turning machine and other applications where portable electric power is needed. The estimated cost of the generator is $2,000.00. Future Water Fund Capital Expenditures With the completion of the upgrade of the Navarre Plant, there is one substantial capital project remaining in the water fund. This is the repainting of the Navarre water tower. The tower was last repainted in 1980. Depending on the condition of the tower, the costs of repainting the tower could be in the range of $160,000.00 to $250,000.00. A letter from the City's consulting engineer regarding the project is attached. At this time, the repainting is being planned for the year 2003. i i i. j ROSENE ANDERLIK ^ 6516361311 06/09/99 09:37 0 :02/03 NO:14! u I Bonestroo Rosene mriB Anderiik & Associates Engineers & Architects Bontttroa. »ote.tc Anoem ^Atiot,tttt. Inc Otto a. •enviiree rt • JoteohC a Ofi0«nif»itr tcnpioyec Cnn It coot M.. A?,*'’*!;: ^ SotvAl,, RL . «00.rf W. ROMO*. PI, »Kh.,a t c'jL i r Mietwel r. Rautmjnn. PC . TeO tJi„a PC . Keiv.«n P a ^ Hjoion, PC. . p wm-anuot,. pc, ts.. Roo.t. p >cet $L Pam. Rochettat. j, C,ou0. MN . w.lwaulee. Wl K'eO/ife; www.hpnesiroo com June 8,1999 Mr. Greg Gappa. P.E. Public Services Director City of Orono PO Box 66 / 2750 Kelly Parkway Crystal Bay, MN 55323^066 Rc: Navarre Water Tower bra File No. 139gcn Dear Greg: r„ «■' N.va« W„„ Tower. TV water e«.jSrv ev^te'St;^v'^o« >««>»>nicnd«l. A. Ute tame d«e. the •■ork is usually comS V sU^^X '>«>'>’ ™» tucondiiioning project. ^ “mpamet at a cost of under $5,000 and is the fint step in tV overall For budget puiposes. we are making t V following assumptions: r "ill r^uV complete sandblasting and relining. • The riser pipe does not need replacement. e''stSt-t:ro*o:trnlXX“1 The initial Inspection and a review of Ae nainHno ** * could lower costs considerably. . is feasible. ^ ® records will allow a determination of whether overcoating ^s'uv'S^’siSrin^:!;"'^ ^refined based on die . Please feel Pee to call me at (651) 604-1797 with any question, you may We. Sincerely, ^NESTROO. ROSENE, ANDERLIK A ASSOCWTES. INC. John Hemming cc: lack Brinkhaus - Public Wo )g Superintendrot .SSP west Mights„y JO . 5j ,„3 .6SI-636-4600 Fax: 65I*636>]3II • I »•< [> O ROSENE ANDERLIK © 6516361311 06/09/99 09:37 0:03/03 NO:145 reconditioning budget estimate NAVARRE WATER TOWER CityofOrono Date: June 8,1999 lism Tank Interior, 6,000 SF Mobilization Steel Repairs / Modifications $ 36.000 $ 5,000 $ 20,000 Exterior Surface Preparation and Repainting, 11,000 SF Exterior Containment Shroud Engineering & Inspection $ 50,000 $0 $ 30,000 Lead / Chromium Based Paint Considerations • III Contingency Total $5,( $ 14,000 S160,000 $ 36.000 S 10,000 S 20.000 $ 70,000 $ 40,000 $ 35,000 $20,000 S 19,000 $250,000 Extenor Overcoat Complete Exterior Paint Removal • | r r Operating Activity Operating Revenue Operating Expenses, including Depreciation Operating Income (Loss) Adjustments to reconcile operating income (loss) to net cash from operating activity - Depreciation Net Cash From Operating Activity Cash Flows From Capital, Financing & Investing Activity: Grants & Aids from Other Governments Interest Received on Investments Special Assessments for Revenue Bonds Interest Received on Ceftified Accounts Metro Council Environmental Serv • CVC Connection Fees Metro Council Environmental Serv - Def Gain Principal Paid on Revenue Bonds Interest ft Other Charges on Revenue Bonds Capital Outlay Net Cash From Cap, Fin ft Invest Activity Net Increase (Decrease) in Cash From Operating, Capital, Financing ft Investing Activity Cash January I Cadi, December 3 1 City of Orono Sewer Operating Fund Cash Flow Budget 1998 Actual 1999 Budget 2000 Budget 686,119 689,150 721,000 637,884 683,190 717,650 48,235 5,960 3,350 133,382 119,420 132,400 181,617 125380 135,750 7,102 0 0 90,307 100,000 82,500 19,020 17,960 16,900 5,551 5,250 5,000 21,996 22,000 22,000 3,886 10,000 9,540 (9,530)(9,530)(9,530) (116,144)(125,995)(133,410) (24,989)(21,485)(15,490) (61,477)(108,000)(95,000) (64,278)(109,800)(117,490) 117,339 15380 18360 1,573,145 1,690,484 1,706,064 1.690.484 1.706.064 1.724.324 % Increase 4.6% 5.0% 3.2% rate increase, est 30 new connections D. SEWER FUND CAPITAL OUTLAY REQUESTS 1. Replacement of 2 metal canister grinder pump stations on West Femdale Road. These were installed in 1984 and because they are below the water table they have rusted out and are e.xperiencing operational problems. Two similar lift stations in the area were budgeted for replacement in 1999. The estimated cost of the replacements is $90,000.00. 2. Radio path analysis for a potential electronic monitoring system for the City's lift stations and water plants. The City now has 44 lift stations and 2 water plants. These need to be monitored to ensure they are working properly. Currently, the City's lift stations have alarms that sound when the pumps are not working properly. When the neighbors hear the alarms, they call to notify the City of the problem. In recent years, as the City has replaced a number of its larger lift stations, the replacement has included the installation of an automatic dialing alarm system that calls the on-call maintenance person. These automatic dialing alarms are expensive over the long-term because of the telephone charges. An automatic monitoring and communication system which transmits information regarding the operation of the lift stations and water plants to a central location has a number of benefits. It would not rely on the neighbors to notify the City regarding a lift station malfunction. It would also provide information to a central location that would enable the on-call maintenance person to identify the type of problem prior to going to the lift station. If the City is to expand the number of lift stations that have the capability of sending an alarm to a central location, the telephone charges can be avoided by using a radio based system. The first step in reviewing the feasibility of a radio based system is to conduct a radio path analysis to determine whether a radio signal can reach all of the City's lift stations. The cost of a radio path analysis is estimated at $5,000.00. Future Capital Expenditure Needs The City currently has a jet rodding machine that is used for unplugging and cleaning sewers. This machine is 25 years old. It is becoming more difficult to find repU cement parts as repturs are needed. The jet rodding truck does not have the capability of vacuuming the debris cleaned from the sewer lines. It pushes the debris to a manhole where a two-person crew is needed to enter the manhole to remove the dd)ris. It is recommended that the City plan to replace the jet rodding truck with a jet rodding and vacuum truck. The cost of the replaceiv-cnt is estimated at $250,000.00. The new tnick would enable sewers to be cleaned by one maintenance person versus two. The vacuum capability also enables the truck to be used to clean catch basins, storm sewers and culverts. The new machine would enable an improved program of cleaning catch basins and storm sewers to catch the silt and other debris before it flows into the City's streams and lakes. City of Orono Golf Operating Fund Cash Flow Budget Operating Activity Operating Revenue Operating Expenses, including Depreciation Operating Income (Loss) Adjustments to reconcile operating income (loss) to net cash from operating activity - Net (Increase) Decrease in Inventory & Rcvbis Net Increase (Decrease) in Liabilities Depreciation Net Cash From Operating Activity Cash Flows From Capital. Financing & Investing Activity; Interest Received on Investments Capital Outlay Net Cash From Cap, Fin St Invest Activity Net Increase (Decrease) in Cash From Operating, Capital, Financing St Investing Activity Cash January 1 Cash. December 31 « 1998 Actual 211,166 168,311 42,855 (235) (6.547) 15,408 51,481 14,976 (25,349) (10373) 41,108 224,816 265.924 1999 Budget 191,180 167,780 23,400 12,580 35,980 12,000 (39,000) (27,000) 8,980 265,924 274,904 2000 Budget 196,910 185,020 11,890 19,260 31,150 15,500 (44,900) (29,400) 1,750 274,904 276,654 % Increase 3.0% 10.3% 9' . f *■4 ' i ■ 1^* •■ ■^1 m - -Cl 1. 2. 3. R GOLF FUND CAPITAL OUTLAY REQUESTS Replacement and elimination of exterior fuel storage tanks. The Golf Course currently has an exterior fuel storage tank to store fuel for the course maintenance equipment, a fuel storage tank to store fuel for the maintenance shed furnace and a tank to store fuel for the club house furnace. The year 2000 capital requests include the replacement of the exterior fuel storage tank with a concrete enclosed exterior tank to service the course maintenance equipment, the replacement of the maintenance shed furnace with a natural gas furnace to eliminate an exterior storage tank and the replacement of the fuel oil-fired boiler in the club house with a natural gas boiler to eliminate the exterior fuel storage tank. The cost to accomplish these three items are as follows: Concrete enclosed exterior storage tank - $20,000.00. B. Replacement of maintenance shed furnace - $3,300.00. C. Replacement of club house boiler - $4,900.00. Replacement of greens mower - $8,700.00. Purchase of a leaf blower as an attachment to a mower - $8,000.00. i Improvement & Equipment Outlay Fund Line Item Budget 227>Equip. Outlay Fund, 45SOO*Departmcnt 1998 ACTUAL 1999 BUDGET Y-T-D 5-22-99 2000 DEPT REOUEST 2000 MGR RECOMMD 2000 ADOPTED DOLLAR INCREASE fDECRFASEl % INCREASE (DECREASE) 550 Automotive Equipment 0 81,000 0 80,000 (81,000)-100.00% •570 Office Furniture, Fixtures, & Equipment 25,985 40,500 2,498 21,700 (40.500) -100.00% 580 Other Equipment 83,944 0 0 1,350 (1.350)NA TOTAL CAPITAL OUTI.AY 109,929 121,500 2,498 103,050 0 0 (122,850)-101.11% TOTAL AMOUNTS THIS FUND 109,929 121,500 2,498 103,050 0 0 (122.850)-101.11% 2000 2000 Canital Outlay fexcl.Police. Water. Sewer. Golf) • TRANSFER FROM GENERAL FUND ** 12/31/96 Accumulated Depreciation on General Government Equipment, Less Police and Parks, which are funded through other sources. REMARKS 1. Replacement of Existing Capital 85,000 Traflic Signs & Cones (Replacement)1,000 2. Purchases of New Capital 18,050 Plow Truck -1 ton (Replacement)43,000 3. Long Lake Fire Truck Replacement 30,000 Plow Truck - 3/4 ton (Replacement)29,000 • 4. Admin Info Sys Payback (Year 5 of 5)10,000 Sander & Plow (Replacement)8,000 5. Police Info Sys Payback (Year 4 of 5)8,400 Handheld Radio (2)350 Welding Room Improvements 1,000 151,450 Windows - Crystal Bay PO 5,500 • Replace Furnace & AC - PO 5,600 2 Computers (Replacement)4,000 • Computer - Lap Top - new 2,500 Fund Balance Desienated for Replacement of Existing Capital ** Miscellaneous Software 4 Drawer Lateral File-B&Z 4 Shelf Book Shelf-B&Z 2,000 500 200 . 1 'V Fund Balance Desienated for 4 Drawer Vertical File-Zoning 400 Vs ' Purchases of New Capital Total 103,050 Total Fund Balance 12/31/99 391,550 ’1. 4 » c> PUBLIC WORKS YEAR 2000 CAPITAL OUTLAY REQUESTS The following is a listing and short explanation of Public Works Capital Outlay items included in the year 2000 budget; 1. 2. 3. 4. 5. 6. Replacement of traffic signs and cones. This request includes 25 traffic cones, 2 "road work" signs, and 2 sign stands. These replace present cones and signs that do not meet current regulations. The estimated cost is $1,000.00. Replacement of one ton plow truck. The truck to be replaced is 13 years old with 95,000 miles and is in poor condition. Replacement cost is $43,000.00, which includes the truck, box, plow, and sander. Replacement of a 3/4 ton plow truck. The truck to be replaced is 15 years old with 124,000 miles and is in very poor condition. The replacement cost is $29,000.00 which includes the truck, box, plow, and sander. Replacement of sander and plow. These replace a sander and plow that are 13 years old. The estimated cost is $8,000.00. Two hand held 2-way portable radios. These radios are to be used during traffic control for water breaks, paving, etc. These radios would enable the City's radio channel to remain available for other uses. The estimated cost is $350.00. Welding room improvements. The improvements included the replacement of the exhaust fan blower and lighting improvements. The estimated cost is $1,000.00. • )» \ t X PROPOSED REPAIRS/IMPROVEMENTS TO THE CRYSTAL BAY POST OFFICE The year 2000 budget includes two improvements to the Crystal Bay Post Office: 1 2. The first is the replacement of the windows. The current windows are in poor condition. The glass is loose in the window frames and provides very poor insulation. The cost of window replacements is estimated at $5,500.00. Replacement of furnace and air conditioner. The post office currently has a furnace that bums fuel oil which means there is an outside fuel storage tank that serves the furnace. Replacement of the furnace with a natural gas furnace would enable the outside fuel storage tank to be eliminated. The estimated cost to replace the furnace and remove the fuel storage tank is $3,100.00. The post office currently has a window air conditioner. If the City wants to replace the window air conditioner with a central air conditioning unit, it would make sense to make the switch prior to installing the new windows. The cost of the central air conditioning unit is estimated at $2,500.00. •1 •f 4