HomeMy WebLinkAbout2013-05-23 - Council Agenda Packet - Part 2Agenda
Corcoran City Council
TIF Workshop
May 23, 2013 - 7:00 PM
1. Call to Order
2. Agenda Approval
3. TIF Project Discussion*
4. Adjournment
*Includes Materials - Materials relating to these agenda items can be found in the House Agenda Packet by
Door.
MEMORANDUM
NORTHLAND STRATEGIES
Special Projects Group
To: Dan Donahue, City Administrator
From: Tammy Omdal
Date: May 1, 2013
Re: Financial Planning Project
The purpose of this memorandum is to provide a follow -up to our recent discussion on the Utility
Financial Planning Project. The City of Corcoran has hired Northland Strategies, the special projects
group within Northland Securities, to assist with financial planning for municipal utility services and
to complete an update to the City's adopted "Multi-Year Financial Management Plan Report",
originally adopted September 13, 2012. This memorandum provides a preliminary timeline and
details on the work to be completed.
Background
The following tasks have been identified and preliminary dates for completion are as follows:
By May 31 Present information at a City Council Workshop on the financial planning work that
will be completed and key decision points for the City Council.
By June 28 Complete a Utility Study (update to the preliminary financial plan previously
prepared by Northland Securities in year 2012.) Work will incorporate Wenck
Associates' Regional Development Study, which will provide Trunk costs for
infrastructure.
By June 28 Prepare draft Policy for Utility Fees and Charges for consideration and adoption by
the City Council (a preliminary draft of a policy was prepared by Northland
Securities and Wenck in year 2012, but has not been finalized and adopted by the
City Council).
By July 31 Complete an update to the Multi-Year Financial Management Plan (inclusive of all
City funds).
By July 31 Work with the City Attorney to create a draft of a Water and Sanitary Sewer
Ordinance and assist the new City Administrator on implementation.
By July 31 Provide advice to the City on possible modifications to Tax Increment Financing (TIF)
District No. 1 that may be necessary as a result of the update to the City's Financial
Plans. It is recommended that any final modification to the l'IF Plan for the District
should be completed no later than November 2013. Work shall include coordination
with other City consultants.
Northland Securities, Inc. 45 South 7th Street, Suite 2000, Minneapolis, MN 55402 Toll Free 1- 200 - 851 -2920 Main 612 - 851 -5900
www.northlandsecurities.com
Member FINRA and SIPC
Financial Planning Project
May 1, 2013
Page 2
City Council Workshop
We had discussed the idea of a scheduling a Council Workshop to discuss the utility financial
planning effort and key decision points for the City Council. The following items would be covered
at this meeting:
• Review the available methods for financing capital and funding operations of water and
sanitary sewer utility systems. These include for example:
- Water and sewer availability charges (WAC and SAC)
- Trunk -line charges
- Connection charges
- Lateral connection charges
- Service availability fee (i.e., fixed dollar amount per billing cycle)
- Usage (consumption) fee (i.e., $/1,000 gallons)
- Special assessments (developers may request a special assessment process for a
portion of development - public infrastructure costs)
- Financial terms to be included in development agreements
• Review in general terms the previously adopted multi-year financial plans, including the
financial plan for the proposed Water and Sewer Fund. This would include, but not be
limited to, a review of the prior assumptions for cash flow and fund balance goals for the
City and a review of the prior assumptions for future growth in new utility customers and
the need to modify the prior assumptions based on potential pending development.
• Review a draft Policy for Water and Sewer Fees and Charges and seek preliminary direction
from the City Council on methodology for fees and charges.
Utility Study
The purpose of the Utility Study is to update prior assumptions and estimates for fees and charges
for the proposed new Water and Sewer Utility Enterprise Fund. While the City has been planning
for the eventual establishment of a new utility fund(s), the City has not yet taken formal action to
create the new utility. The Study will provide the City with updated and current information in
order to proceed with necessary official actions; official actions will include adoption of Ordinances
to establish the water and sanitary sewer utility services, including necessary fees and charges.
Policy for Utility Fees and Charges
The purpose of establishing a policy for utility fees and charges is to provide direction and guidance
for the administrative implementation of the Ordinance that will be adopted to establish the water
and sewer utility services. The policy will address such items as whether the City will require
property owners to connect to municipal water and sanitary sewer when available to a property,
types of fees and charges for usage of the utility systems, trunk line availability charges and
connection charges, frequency of billing, etc.
Financial Planning Project
May 1, 2013
Page 3
Multi -Year Financial Plan
The Multi-Year Financial Plan Report needs to be updated to reflect actual financial performance for
fiscal year 2012 and for other changes to prior planning assumptions. The City adopted a fund
balance policy in year 2012 that establishes a goal of maintaining a minimum fund balance in the
General Fund at 35% of the operating budget. The fund balance policy also addresses level of
balance goal for other City funds. Updates to the financial plan will evaluate the previously
projected timeline for the City to achieve this goal.
Water and Sanitary Sewer Ordinance
The City will need to establish regulations and fees and charges for the water and sanitary sewer
utilities by ordinance. The ordinance will need to address the following types of regulatory items
(the list of items is intended to provide an example of the items to be covered in the ordinance and is
not intended to be a comprehensive outline):
• Installation of meters
• Billing regulations
• Public water system connection requirements
• Faulty meters
• Leak in service line
• Liability for repairs
• Prohibited discharge into sanitary sewer system
• Installation of connections
• Establishment and payment of charges
Modification to Tax Increment Financing District No. 1
Northland has assisted the City with extensive review of'1IF District No. 1 and is knowledgeable
about the allowable options and the City's desire to utilize available tax increment for funding 1'11x'
eligible projects within the City. As part of the continued financial planning work that Northland
will perform for the City, Northland will coordinate with other City consultants on what may be
required for modification to the 111- Plan for TIF District No. 1 prior to the decertification date of
December 31, 2013. The outcome of the financial planning work and pending Council decisions will
determine whether modification to the 'I1F Plan will be necessary. Depending on what may be
required for modification to the 1114 Plan, a public hearing may be required and if so advance
notification to the county, school district, and public will be necessary.
City of Corcoran TIF Utilization Preliminary Schedule of Activities
Prepared By Kirstin Barsness May 2, 2013
May
June
July
August
September
2014
Tasks
_
9
16
23
30
6
13
20
27
4
11
18
25
1
H
15
22
29
5
12
19
26
City Council Meeting
x
x
x
\
x
x
\
x
v
Verify Year End TIF Balance
Finalize Estimates for Downtown Infrastructure
Authorize Update on Utility Study
Authorize 5 Year Plan Update
Confirm Projects for TIF Fund Use
Utility Study Update Completion
Finalize Source & Use Statement For Downtown
5 Year plan Update Completed
Presentation on Downtown Finaning Options
Decision on Level of TIF Participation in Downtown
Meeting with Downtown Property Owners
Prepare Utility Policy
Prepare Utility Ordinance
Modify TIF District Budget
TIF Decertification
Prepare Bid Docuements
Award Bid
Construct Improvements
Jan -14
TBD
TBD
TBD
Prepared By Kirstin Barsness May 2, 2013
Sheetl
Page 1
Item
Description
Expense
Deposit
Balance
Comment
Use of TIF
— 70/30 Downtown Option
1
TIF available at end of 2013
$1,856,604
$1,856,604
Yr End = $1,856,604; Currently $1,629,710
2
HWY 55 planning reimbursement to
general fund
$73000
,
$1783604
, ,
This amount may rise to $100,000 but use the
more conservative amount here.
3
Transportation Planning (Refined)
$60,000
$1,723,604
4
East/West Transportation Corridor
$80,000
$1,643,604
5
Property Acquisition
$175,000
$1,468,604
6
Lift Station in Park
$500,000
$968,604
7
Stub sewer /water to downtown
$40,000
$928,604
8
Downtown sewer /water: City pays lift
station and stub (above) and 30% of
actual downtown cost.
$525,900
$402,704
After lift station and stub, remaining downtown
project cost is $1,753,000. City pays 30% of that.
(See NOTES 1 & 2)
9
Design Guidelines
$20,000
$382,704
10
POTENTIAL: Additional general
reimbursement from HWY 55 planning to
general fund
$27,000
$355,704
We may be able to do this but must stay within
the 10% administrative cost.
11
Hope Church Road Assistance
$125,000
$230,704
Total
$1,625,900
Notes:
1
It is reasonable for the city to pay the full cost of the lift station since it will also serve both the park and the Schendel property in addition to downtown. It also seems
reasonable to me for the city to pay the $40,000 to bring the sewer stub to the downtown area.
2
The original survey of the downtown businesses was based on a 50/50 split of the overall cost between city and businesses Having the city provide the lift station and
the stub to the downtown area and then using the 70% / 30% formula for the actual downtown part of the project as listed above is perhaps more in line with our
assessment policy as it currently exists. Using this method the city would pay 80,600 less then the originally discussed half of the total project cost (half would be
$1,146,500 instead of $1,065,900 as above). Thus the downtown businesses collectively would pay about $80,600 more then half the cost.
3
Downtown option cost summary: 1) Force = $1.062 M; 2) Gravity with 24' streets = $1.965 M; 3) Gravity with 32' streets = $2.293 M
Page 1
Sheetl
Page 2
Item
Description
Expense
Deposit
Balance
Comment
Use of
TIF — 50/50 Downtown Option As Proposed in Survey
1
TIF available at end of 2013
$1,856,604
$1,856,604
2
HWY 55 planning reimbursement to
general fund
$73,000
,
$1783604
, ,
This amount may rise to $100,000 but use the
more conservative amount here.
3
Transportation Planning (Refined)
$60,000
$1,723,604
4
East/West Transportation Corridor
$80,000
$1,643,604
5
Property Acquisition
$175,000
$1,468,604
6
Lift Station in Park
$0
$1,468,604
7
Stub sewer /water to downtown
$0
$1,468,604
8
Downtown sewer /water: City and
businesses each pay half of total project
cost
$1,146,500
$322,104
9
Design Guidelines
$20,000
$302,104
10
POTENTIAL: Additional general
reimbursement from HWY 55 planning to
general fund
$27,000
$275,104
We may be able to do this but must stay within
the 10% administrative cost.
11
Hope Church Road Assistance
$125,000
$150,104
Total
$1,706,500
Notes:
Page 2