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Home My WebLink About2016-06-09 Council Work Session Agenda Packet CITY OF CORCORAN Council Work Session Agenda June 9, 2016 - 5:30pm 1. Call to Order / Roll Call 2. 2017 Budget Objectives* 3. Five Year Financial Management Plan Assumptions* 4. City Project Update* 5. July Work Session Agenda 6. Unscheduled Items 7. Adjournment *Includes Materials - Materials relating to these agenda items can be found in the House Agenda Packet by Door. 2. CITY OF CORCORAN 8200 County Road 116, Corcoran, MN 55340 763.420.2288 – Office 763.420.6056 – Fax E-mail - general@ci.corcoran.mn.us / Web Site - www.ci.corcoran.mn.us MEMO Meeting Date: June 9, 2016 To: City Council From: Brad Martens, City Administrator Re: 2017 Budget Objectives ______________________________________________________________________ Staff is beginning to prepare the first draft of the 2017 budget. It is requested that the Council provide direction to staff on the following assumptions in order for staff to complete the first draft: Employee Structure and Compensation Assumptions  Staffing o Additional Public Works Maintenance Worker to begin January 1, 2017; this position will be paid out of the water and sewer utility. o New Public Works Director/Engineer position to begin July 1, 2017; this position would be funded through reduced engineering fees, revenue from reduced fee plan reviews, and the general fund o Continue with seasonal recreation coordinator position to support athletic associations  Wages o Two percent cost of living adjustment to wage schedule  Benefits o Use same costs for health insurance as 2016; the city will see a reduction in costs however staff recommends waiting until the Council sub- committee completes its work Planning Assumptions  Incremental increase to planning budget to allow for planning updates as needed Engineering Assumptions  Depends on employee structure to be discussed above; if no Public Works Director/Engineer position it is recommended to include a small increase due to 2. additional engineering activities for stormwater and preparation of other projects (paving roads, etc.) Fire Assumptions  Plan for increases based upon contract language (tax capacity, etc.)  Discussion on future planning needed for City (fire service planning?) Public Works Assumptions  Staffing as mentioned above  Increase in overlay budget from $150,000 to $165,000  Increase in dust control budget from $57,500 to $67,500 Police Assumptions  Continue with same services provided  Consider allocating some time towards investigations Council/Administration Assumptions  Minor increase for comprehensive codification of City Code  Website Upgrade/Agenda Parsing  iPad/tablets or Bring Your Own Device Policy  Laserfiche on Web and Administration Resident Service Terminal Fee Assumptions  Incremental increase to water and sanitary sewer fees to cover costs  Reduced hourly rate established for in-house engineering review  Incremental increase to fees to cover costs for credit card processing Building Permit Revenue Assumptions  It is anticipated that Ravinia will have 35 new building permits in 2017; continue to allocate 23 new home permits annually toward general fund with remaining revenue to be allocated elsewhere  “Remaining revenue” mentioned above is estimated at $60,000; should this go into reserves or towards project fund o Planning budget (comprehensive plan, etc.) o Street improvement fund o CIP o Park dedication o Fire service study o City Hall remodel planning o Public Works lean-to floor Other Initiatives/Thoughts  Continue annual $25,000 levy increase for CIP  EDA, brush site, etc. 2. The draft budget will be updated based upon the direction received at the meeting and be presented to the Council at the July 14, 2016 meeting. Important budget dates:  September 8th: Adopt Preliminary Levy  December 8th: Truth-in-Taxation Hearing  December 19th: Approve 2016 Budget and Levy Attachments: 1. 2016 Budget 3. CITY OF CORCORAN 8200 County Road 116, Corcoran, MN 55340 763.420.2288 – Office 763.420.6056 – Fax E-mail - general@ci.corcoran.mn.us / Web Site - www.ci.corcoran.mn.us MEMO Meeting Date: June 9, 2016 To: City Council From: Brad Martens, City Administrator Re: Five Year Financial Plan Assumptions ______________________________________________________________________ Annually the City updates the Five Year Financial Management Plan. In order to do so, staff would like the Council to provide direction on what assumptions to include in the update. Here is a list of items for discussion: Capital Improvement Plan  Equipment, Vehicles, and Facilities o Continue to increase levy by $25,000 annually to eliminate most borrowing for equipment  Water Improvements o Plan for the western water loop project to be constructed in 2019  Design in 2018; bid in January 2019  Sanitary improvements o No further projects anticipated  Street Improvements o Some Hackamore Road improvements planned for 2017 o Major improvements slated for 2018 however requires an agreement between Corcoran and Medina  Facilities and Parks o Purchase and some development of the “Regional Recreation Amenity” slated for 2017 Financial Plans  Key Factors o 2% annual increase in operating expense o 1.5% annual increase in non-property tax revenue (except utility revenue) o Achieve/maintain 35% reserve balance 3. Water Fund  Decrease to 35 new REU’s per year Sewer Fund  Decrease to 35 new REU’s per year Attachments: 1. 2015 Financial Management Plan CityofCorcoran FinancialManagementPlan DraftforJuly9,2015CityCouncilMeeting NORTHLANDSTRATEGIES SpecialProjectsGroup i LetterofTransmittal ExecutiveSummary1 OrganizationofPlan.................................................................................................................................1 StudyApproach..........................................................................................................................................2 UsingthePlan.............................................................................................................................................2 ConclusionsfromStudy...........................................................................................................................2 Recommendations....................................................................................................................................3 Background4 Summary.......................................................................................................................................................4 CapitalImprovementPlan5 OverviewofPlan........................................................................................................................................5 SourceofFunding.....................................................................................................................................5 DebtService.................................................................................................................................................6 TABLEA-CapitalImprovementPlan...................................................................................................7 TABLEB-DebtService.............................................................................................................................9 FinancialPlans11 Background................................................................................................................................................11 KeyFactors(Assumptions)....................................................................................................................11 TotalGovernmentalFundsCombined.............................................................................................12 TABLEC..................................................................................................................................................13 GeneralFundFinancialPlan.................................................................................................................14 TABLED.................................................................................................................................................16 TaxIncrementFundFinancialPlan....................................................................................................17 TABLEE..................................................................................................................................................18 DebtServiceFundsFinancialPlan.....................................................................................................19 TABLEF..................................................................................................................................................20 SpecialRevenueFundsFinancialPlan..............................................................................................21 TABLEG.................................................................................................................................................22 CapitalProjectsFundsFinancialPlan...............................................................................................23 TABLEH.................................................................................................................................................24 WaterFundFinancialPlan.....................................................................................................................25 TABLEI...................................................................................................................................................26 SewerFundFinancialPlan....................................................................................................................27 TABLEJ...................................................................................................................................................28 PropertyTaxLevyProjections.............................................................................................................31 TABLEK..................................................................................................................................................32 TABELL..................................................................................................................................................33 Contents ii Appendix34 CHART1-CombinedGovernmentalFunds,TotalSourceandUseofFunds.....................34 CHART2-GeneralFund,TotalSourceandUseofFunds.........................................................35 CHART3-ProjectedAnnual%ChangeinPropertyTaxLevyandTaxRate.......................36 CHART4-CashBalances......................................................................................................................37 TABLEM-UtilityFeeandChargesSchedule(NotAdopted)...................................................38 TABLEN-EstimatesforDowntownImprovementProject......................................................39 TABLE0-EstimatedDebtSchedule-2016Bonds......................................................................40 TABLEP-EstimatedDebtSchedule-2017Bonds......................................................................41 TABLEQ-EstimatedDebtSchedule-2018Bonds.....................................................................42 TABLER-EstimatedDebtSchedule2019Bonds........................................................................43 TABLES-EstimatedDebtSchedule2020Bonds.........................................................................44 iii 1 ExecutiveSummary EXECUTIVESUMMARY ThisFinancialManagementPlan(the“Plan”)isin- tended to serve as a guide for the on-going fi nancial managementoftheCityofCorcoran(the“City”).The Plan contains management strategies and identifi ca- tion of key factors that will impact the City’s fi nancial performance.ThePlanincludesinformationonthe levelofestimatedpropertytaxlevythatwillbeneed- edtoprovideadequaterevenuetofundcityservices, capitalimprovementplans,anddebtservice.Future citycouncilactionswillimpactthekeyassumptions thatwereusedtodevelopthePlan. The City fi rst adopted the Financial Management Plan onSeptember13,2012,andhasactedtoupdatethe Planeachyearfollowing. OrganizationofPlan The Plan is organized into fi ve sections: 1.ExecutiveSummaryprovidesinformationonthe organizationofthePlan,studyapproach,using thePlan,andconclusionsandrecommendations. 2.Backgrounddiscussesthehistoricalcontextand fi nancial decisions facing the City. Information is providedonkeydevelopmentandredevelopment factorsthatwillhaveanimpactontheassump- tions used to model and project future fi nancial performance. 3.CapitalImprovementPlanandDebtServiceStudy provides information on the City’s identifi ed plans forvehicle,equipment,andfacilitiesacquisition, streetmaintenanceandimprovement,andwater andsewerimprovements.Thisincludesestimates onprojectcostsandsourcesoffundstopayforthe improvements.Informationondebtserviceisalso included. 4.FinancialPlansareprovidedfortheeachofthe City’sgovernmentalfunds(consolidatedbyfund type)andfortheWaterFundandSewerFund.The fi nancial plans provide both historical, current, andfutureprojectedsourcesandusesoffunds. Financialplanstakeintoaccountcurrentlevelsof serviceandrevenuesandfuturecapitalimprove- mentplans. 5.Appendixprovideschartsofdatatakenfromthe fi nancial plans and information on fund balance levels.Inadditionascheduleoftheutilityfeesand chargesusedtodevelopthechargesforservices revenueshownintheWaterFundandSewerFund isincludedasanAppendixtothisPlan(seeTable MonPage38).Thescheduleoffutureyearutility feesandchargeshasnotbeenadoptedbytheCity Council. StudyApproach ThePlanwaspreparedbyNorthlandSecurities.The followingstepsweretakenaspartofthestudypro- cess: •Cityprovidedinformationonhistoricalspending andrevenues,capitalimprovementplans,andpri- oryearsbudgetinformation. •InformationprovidedbytheCitywasorganized, analyzed,andusedtosupportthedevelopmentof fi nancial plans. •Once the initial fi nancial plans were developed thenmultiplescenariosoroptionswereconsid- 2 ExecutiveSummaryeredandanalyzed.Thisincludedanalysisandre- viewofestimatedpotentialfuturedebtstructuring for fi nancial planning purposes. •City staff off ered preliminary input and feedback ontheassumptionsanddesiredoutcomes. It is also important to note aspects of fi nancial perfor- mancenotreviewedaspartofthisstudy: •Analysisoftheimpactoftheprojectedproperty taxlevyamountsonvariouspropertytypes. •Analysisofthesewerandwaterfeesandcharges incomparisontoothercities. UsingthePlan The Plan is intended to be a practical guide for city staff and the city council on the on-going fi nancial manage- mentoftheCity.MuchoftheinformationinthePlan hasenduringvalueandwillservetocontinuetoguide managementdecisionsoveranumberofyears.How- ever,managementofcityfundsisadynamicsystem. Propertytaxlaw,propertyvalues,utilitycustomer base,statutesandruleschanges,actualcostoflabor andmaterialsandsupplieswillallvaryfromyearto yearimpactingtheassumptionsinthePlan.ThePlan shouldcontinuetobethefoundationofanannualre- viewandupdate. ConclusionsfromStudy The following conclusions were identifi ed as a result ofthisstudy: 1.Afteryear2016(basedontheplannedimprove- mentstothedowntownareabeingcompleted) theCitywillnolongerbeabletorelyonavail- able tax increment funds for cash fl ow.TheCity’s tax increment fi nancing district was decertifi ed at theendof2013,asrequired.TheCityhasstarted toplanforothersourcesofrevenue,includingrev- enue from increasing property tax levy (off set by growthintaxbase)andfuturecollectionofutility fees and charges to support cash fl ow needs. Over- allcashbalancefortheCityisestimatedtodecline byabout10percent overthenexttwoyearsasthe cashbalanceintheTaxIncrementFundisspent down(seeChart4onPage37).TheCitywillbe able to maintain suffi cient cash fl ow in both the short and long term to meet all cash fl ow require- ments. 2.Futuretaxlevyandutilityrateincreaseswillbe necessaryfortheCitytomaintainadequatecash balances acrossallCityfunds.TheCityhasplans forcapitalinfrastructuremaintenanceandim- provementsthatwillrequireincreasedsourceof revenuetofund.TheCitywillneedtoincreaseits combinedannualpropertytaxlevy(generalfund anddebtservice)byapproximately3.3%onaver- ageoverthenextfouryears(fromyears2016to 2019),rangingfrom2.3%to5.6%annualincrease in the certifi ed tax levy before adjusting for fi scal disparities(seeTableKonPage32). 3.FuturedevelopmentwithintheCityisanticipat- edtoresultinincreasedrevenue totheCity’sWa- terFundandSewerFund.Therevenuecollected willbefromfuturedevelopmentfees(availability andconnectioncharges)andusagefees.Future developmentwillalsoprovideadditionalprop- ertyvaluetotheCityandpotentialforadditional propertytaxrevenuetopayforservices.Therate offuturedevelopmentandadditionofcustomers is a signifi cant variable. 3 ExecutiveSummary Recommendations Thefollowingoverallmanagementstrategiesarerec- ommended: 1.The Cityshouldmaintainaminimumcashbal- anceintheGeneralFundandotherCityfunds that provides suffi cient cash fl ow to avoid the need forshorttermborrowing.TheindividualFundlev- el (i.e., General Fund) fi nancial plans included in thePlanarebasedonamaintainingtheCity’sad- optedpolicyforaminimumfundbalanceequiva- lentto35percentofoperatingexpenditure(useof funds)fortheGeneralFund.Thisminimumison thelowendofminimumfundbalancefortheGen- eral Fund, as suggested by the Minnesota Offi ce of theStateAuditor.Atthisminimumlevel,theCity will meet cash fl ow requirements. However, fund balance, as projected, will not be at a suffi cient lev- eltocoverunanticipatedeventsthatmayarise.A minimumfundbalanceofthreemonthsoperating cashisrecommendedfortheWaterFundandthe SewerFund. 2.Inadditiontotherecommendedminimumcash balances,the Cityshouldstrivetomaintainad- equatecashtopayforannualon-goingcapital acquisitionandmaintenancetoavoidtheneedto borrowandincurinterestexpense forthesean- nualcosts.TheCapitalImprovementPlan(CIP)in- cludedinthePlanassumestheCitywillcontinue toincrementallyincreasethepropertytaxlevyfor capitaloutlay(i.e.,equipmentandvehicleacquisi- tion)toallowfortheCitytotransitionawayfrom issuingdebtforthesetypesofpurchasestoinstead using cash. The fi nancial management plan antici- patestheCitywillincreasethepropertytaxlevy by$25,000peryearuntilreachingatotaltaxlevy of$115,000peryearforequipmentandvehicleac- quisitions.Theadopted2015budgettaxlevyin- cluded$25,000forthispurpose. 3.Fundingforthedowntownareastreetandutil- ityimprovementsmaybeaccomplishedthrough acombinationoftaxincrementfunds,special assessments,andutilityrevenues.ThePlanpro- vides a scenario that would provide for suffi cient fundstopayforthecurrentprojectedcostsforthe downtownareaimprovements.TheCitywillneed toissuebondstocapitalizethespecialassessment revenueandfuturecollectionofutilityfeesand chargesfromfuturedevelopment/connectionsfor service.TheCitywillneedtocarefullymonitorthe cashbalancesintheWaterFundandSewerFund to ensure rates are set at a level to provide suffi - cientrevenuetomeettheplanneddebtobligation andthatspecialassessmentcollectionsareatan- ticipatedlevels. 4 Background BACKGROUND TheCityofCorcoranislocatedonthewesternedge oftheTwinCitiesMetropolitanarea.The2010census reportedapopulationof5,379and1,867households; the2013populationwas5,471.Populationisestimated toincreaseto7,200by2020andhouseholdsto2,700 basedonMetropolitanCouncilforecasts.Thepopu- lationestimatesincludetheurbanserviceareasonly, recognizingoverallgrowthacrosstheCitycouldbe greater.ThelandareafortheCityencompassesjust under36squaremiles. CommercialandindustrialdevelopmentintheCityis limited,primarilyduetothelackofmunicipalwater andsewerservicesandtheabsenceofmajortrans- portcorridors.TheCityrecentlycompletedamajor improvementprojecttobringmunicipalwaterand sanitarysewerservicestotheCity.Theimprovement projectprovidesforconnectiontothemetropolitan disposalsystem(MDS). TheCity’sdevelopmentplanforitsdowntownarea providesanopportunityforadditionaleconomicde- velopment. An on-going fi nancial planning consider- ationfortheCityistoprovidepublicfundingtoassist with paying a portion of the cost to off er municipal waterandsanitarysewerservicestothedowntown area.ThePlananticipatestheCitywilluseavailable taxincrementtoreducethecostoftheprojecttoprop- ertyowners.Considerationwillalsobemadetothe use of special assessment authority to fi nance a por- tionoftheprojectcosts. ThePlananticipatestheCityproceedswiththepro- poseddowntownprojectanddeterminestoassess benefi ting property owners a portion of the street improvementcostsandtochargepropertyowners oneresidentialequivalentunit(REU)forTrunkLine AvailableChargesandConnectionCharges,payable attimeofprojectcommencement(note,theREUbasis forpaymenttoMapleGroveisbasedon4REUperone carecommercialproperty).TheCitymayenterinto agreementwithindividualpropertyownerstospread the payment of the charges over a defi ned period of time. The City has not made a fi nal determination on whethertoproceedwiththeprojecttobringmunicipal sewerandwaterservicestothedowntownarea. 5 CapitalImprovement PlanandDebtService StudyCAPITALIMPROVEMENTPLANANDDEBT SERVICESTUDY TheCityannuallyreviewsitscapitalvehicle,equip- ment,facilities,andimprovementprojectneedsand preparesamulti-yearplan.TheCapitalImprovement Plan(CIP)providesdetailsoncostsbyyearandpro- posedfundingsources.Thedebtservicestudy,includ- edinthisPlan,providesinformationoncurrentdebt serviceandfutureestimateddebtservicebasedonthe CIP. Theinformationavailableonplansforfuturecapital acquisitionandimprovementsprovidedanimportant input into preparing the fi nancial plans included in this Plan. The fi nancial plans are inclusive of all sources andusesoffunds,bothoperatingandnon-operating. TableAonPage6providesasummaryoftheCity’s capitalacquisitionandimprovementplans. OverviewofPlan Themajorityoftheon-goingcostsincludedintheCIP areforon-goingannualvehicle,equipment,andfacili- tiesneeds.Thefourkeycategoriesofspendingshown intheCIPareasfollows: 1.Equipment,vehicles,andfacilities Over the next fi ve years (2015 to 2019) the City an- ticipatesspendinganaverageofabout$225,000per yearonequipment,vehicles,facilitiescapitalneeds. CurrentplansanticipatetheCityissuingequipment certifi cates every two years to fund the planned ex- penditures.Financialplansanticipateapproximately $250,000 on average over the next fi ve years in annual debt service levy for equipment certifi cates. 2.WaterImprovements WaterimprovementsareincludedintheCIPforthe downtownareaandfortheCountyRoad116(Western Loop)trunklineproject. Thedowntownareaimprovementswillbefunded fromacombinationofavailabletaxincrementfunds andbondproceedssupportedbywaterrevenuesand special assessments to benefi ting properties. 3.SanitaryImprovements SanitaryimprovementsareincludedintheCIPfor thedowntownarea.Therearenootherfutureprojects currentlyanticipated. Asforthewaterimprovementsforthedowntown area,thesanitaryimprovementsforthedowntown areawillbefundedfromacombinationofavailable taxincrementfundsandbondproceedssupportedby sewer revenues and special assessments to benefi ting properties. 4.Streetimprovementprojects TheCIPincludesstreetimprovementsforthedown- townareaandforHackamoreRoad(CR116/CSAH101). Thedowntownareastreetimprovemenswillbefund- edfromacombinationoftaxincrementfundsand bondproceedssupportedbyspecialassessmentsto benefi ting properties. The City’s share of the Hacka- moreRoadimprovements(projectisacooperative projectwithotherjurisdictions)willbefundedfrom a payment from the benefi ting residential developer and special assessments to other benefi ting properties. TheCIPdoesnotanticipateanypropertytaxlevysup- portforstreetimprovements. 6 CapitalImprovement PlanandDebtService Study SourceofFunding ThesourceoffundingfortheCIPincludeseithercash balance(fromexistingfundbalanceorcurrenttax levy)orbondproceedsoracombinationthereof. DebtService The City anticipates the issuance of bonds to fi nance certaincapitalimprovements.TableBonPage9 providesasummaryoffutureestimateddebtservice payments(principalandinterest)byyearandrelated fundingsources. Theannualdebtserviceonthefutureproposed bonds is also included in the fi nancial plans for the debtservicefundandutilityfund.Thepreliminary estimatesfordebtservicearebasedonbondstobe paidasfollows: •Equipment certifi cates paid over 10 years •G.O.bondsforstreetandutilityimprovements paidover10years The fi nal sizing, structuring, and interest rates will depend on project specifi cs and market conditions at timeofissuance.TheamountsshowninthisPlanare preliminaryandforplanningpurposesonly. 7 CapitalImprovement PlanandDebtService Study 8 CapitalImprovement PlanandDebtService Study 9 CapitalImprovement PlanandDebtService Study 10 CapitalImprovement PlanandDebtService Study 11 FinancialPlans FINANCIALPLANS Background Based on historical fi nancial performance, current chargesandfees,estimatesforfutureutilityrates,and future capital projects, the following fi nancial plans havebeenpreparedforeachCityfund.Aseparate report,TableKonPage32,isprovidedattheendof theindividualfundreportsthatsummarizesprojected propertytaxlevyamountsandtaxrates. •TotalGovernmentalFundsCombined •GeneralFundFinancialPlan •TaxIncrementFundFinancialPlan •DebtServiceFundsFinancialPlan •SpecialRevenueFundsFinancialPlan •CapitalProjectsFundFinancialPlan •Water(Proprietary)FundFinancialPlan •Sewer(Proprietary)FundFinancialPlan KeyFactors(Assumptions) Thekeyfactorsorassumptionsthatwereusedtode- velop the fi nancial plans are as follows: •2.0percentannualincreaseinoperatingexpense. •1.5percentannualincreaseinnon-propertytax revenue,withtheexceptionoffutureutilityfees estimatedtoincreaseby3.0percentannually. •Annualprojectedincreaseinpropertytaxleviesto be set at a level suffi cient to fund cash fl ow require- mentsandtomaintainminimumfundbalancelev- elsperCityPolicy. •Fiscaldisparitiesdistributionofpropertytaxesand contributionofpropertytaxcapacityisassumedto beatthesamelevelsasforPay2015forthePlan. Theactualamountswillvarybyyearandwillim- pacttheprojectionsshowninthisPlan. •Debtservicewillbestructuredinordertolimitthe annualincreaseindebtservicelevytoanamount thatwhencombinedwiththeincreasefortheGen- eralFundisconsistentwiththeCity’sgoalfortotal annualpropertytaxlevyincrease. •MaintainaminimumbalanceintheGeneralFund equivalentto35percentofannualexpenditures. •MaintainaminimumbalanceinthefutureUtility Fundequivalenttothreemonthsofoperatingex- penditures. •MaintainpositivebalancesinallotherCityfunds and amounts suffi cient to meet specifi c cash fl ow requirementsofthefunds. •CIPplanwillbeimplementasshowninTableA. Thisincludestheuseofavailabletaxincrementfor thedowntownareaimprovements. 12 FinancialPlansTheCityanticipatesimplementingseveralmajorproj- ectsoverthenexttwoyearsthatwillresultinaplanned spenddownofcashbalanceandmayrequiretheneed for bond issuance to fi nance certain improvement costs.Theprojectsincludeinstallinginfrastructurefor municipalsewerandwaterservicesinthedowntown businessarea. TransferstoOtherFunds Theonlyfuturetransfersbetweenfundsforfuture yearsisanticipatedtobetransfersfromtheWater FundandSanitarySewerFundtotheGeneralFundto payforoperationalsupport. TOTALGOVERNMENTALFUNDSCOMBINED The fi nancial plan on the next page provides a sum totalofallsourcesandusesoffundsfortotalGovern- mentalFundscombined.Thisincludesthefollowing funds: •GeneralFund •TaxIncrementFund •DebtServiceFunds •SpecialRevenueFunds •CapitalProjectsFund SourceofFunds Annualsourceoffundsfromnon-propertytaxlevy sourceshasbeenstablefortheCityoverthelastsev- eralyearsandisprojectedtocontinuetobesointhe future.TheCityreceiveslimitedlocalgovernmentaid fromtheState($10,908for2015). Propertytaxlevyincreaseswillbeneededtopayfor increasedoperatingcostsanddebtservicerelatedto plannedcapitalimprovements. UseofFunds Personnelandotheroperatingcostsoverallhavebeen and are projected to remain stable. The fi nancial plans anticipateanincreaseinoperatingexpenditures,sup- portedbytheWaterFundandSewerFund,relatedto additional public works staff and operational expen- diturestosupportthesesystems.Thiswillbephased inovertime. 13 FinancialPlans 14 FinancialPlansfutureestimatesforpropertytaxlevyincreasesby yearfortheGeneralFundandestimatedendingfund balanceasapercentofestimatedbudgetedcurrentex- penditures. UseofFunds TheGeneralFundisusedtoaccountfortheexpense ofprovidinggeneralgovernmentservicesfortheCity. Thelargestuseoffundsisforthecostofpersonnel,in- cluding salary and wages and benefi ts. Other costs in- cludingoperatingmaterialsandsupplies,equipment, andotherprofessionalservices. The fi nancial plan includes the following key assump- tionsforfutureuseoffunds: •Currentexpendituresareestimatedtoincreaseby 2.0%annually.Inaddition,currentexpenditures are increased to refl ect additional resources avail- ablefromtheWaterandtheSewerFund(transfers intotheGeneralFund)topayforoperationalsup- port, including additional staff for public works. GENERALFUND SourceofFunds Annualsourceofnon-taxrevenuefortheGeneralFund hasbeenstableoverthelastfewyearsandisprojected tocontinuetobesointhefuture.Intergovernmental revenueprovidesthesinglelargestsourceofnon-tax revenuetotheGeneralFund.TheCityreceiveslim- itedlocalgovernmentaidfromtheStateofMinnesota (approximately$10,000in2015).TheCitydoesreceive anallocationofmunicipalstateaidforstreetmainte- nance,recordedasintergovernmentalrevenue.The secondlargestsourceofnon-taxrevenueischargesfor services and the next largest is fi nes and forfeitures. Revenuefrompropertytaxlevyisestimatedtoin- creaseeachyearbetween2016and2020.Inaddition tofundinggeneralcityoperations,propertytaxlevy isneededtoproviderevenuetomeeton-goingcon- tingencyandfundbalancegoals.Figure1showsthe 15 FinancialPlans TransferstoOtherFunds Inyear2014,theGeneralFundtransferredcashtothe capitalprojectsfundstoeliminateaninterfundpay- ablethatwasduetotheGeneralFundfromthecap- italprojectsfundsforprioryearsprojects.TheGen- eralFundhadpreviouslyadvancedcashthroughan interfundloantothecapitalprojectsfunds.Transfers outtotaling$244,278wererecordedfromtheGeneral Fund to the capital projects funds in 2014 to write-off theinterfundloans. The$25,000transferin2015istoprovidetaxlevysup- porttotheEquipmentFund(CapitalProjectsFund). Beginning with taxes collected in 2016, the fi nancial managementplanassumestheCitywillrecordthetax levyforequipmentacquisitiondirectlyintotheEquip- mentFundandeliminatethistransferbetweenfunds. 16 FinancialPlans 17 FinancialPlans TransferstoOtherFunds Therearenoanticipatedtransferstoorfromother funds.TAXINCREMENTFUND The fi nancial plan on the next page provides sources andusesoffundsfortheCity’sTaxIncrementFund. The City has one tax increment fi nancing district, TIF DistrictNo.1,aredevelopmentdistrict.Itwasap- proved on February 12, 1987, certifi ed on May 6, 1987, and the fi rst tax increment was received in 1988. The TIF District was decertifi ed eff ective December 31, 2013,withnofuturecollectionoftaxincrementafter thisdate. SourceofFunds TaxincrementcollectedonparcelswithinTIFDistrict No.1,generallythedowntownarea,isrecordedinthis fund. AsofDecember31,2014,theCityreportedafundbal- anceintheapproximateamountof$1.8million.The Cityplanstospendthebalanceontaxincrementeli- gibleexpenditureforpublicimprovements. UseofFunds TheCityisreviewingtheuseoffundsforthefollow- ingexpenditures: 18 FinancialPlans 19 FinancialPlans UseofFunds Theuseoffundsisforthepaymentofdebt. TransferstoOtherFunds Therearenotransferoffunds. DEBTSERVICEFUNDS The fi nancial plan on the next page provides sources andusesoffundsonacombinedbasisfortheCity’s debtservicefunds.Thefundsincludedareasfollows: Fund 309 (G. O. Equipment Certifi cates), Fund 311 (2012PublicWorksBond),andFund407(FacilityEx- pansion). Attheendof2014,theCityreportedtotalbonds payable(reportedasgovernmentalactivities)of $5,395,000.Ofthisamount,$1,375,000isgeneralobli- gation equipment certifi cates, $4,000,000 is for general obligationcapitalimprovementbonds,and$20,000for leaserevenuebonds.(TheWaterFundandtheSewer Fundalsoreportdebtoutstanding,whichisaccounted forseparatelyinthesetwoproprietaryfunds.) SourceofFunds Therearetwosourceoffunds,propertytaxlevyand investmentincome,thathavebeenusedtoservice debt. The general obligation equipment certifi cates will be repaidwithpropertytaxlevy.Prioryearandfuture projected tax levy amounts are included in the fi nan- cialplan. ThedebtservicelevyincludesanamountfortheCity’s paymentontheleaserevenuebondsissuedbythe EDAformunicipalfacilitiesaswellasforapayment onthenoteissuedforaroadconstructionproject. Projectedfutureyearsincludetheanticipatedissuance ofdebtsupportedbytaxlevyandspecialassessments. 20 FinancialPlans 21 FinancialPlans SPECIALREVENUEFUNDS The fi nancial plan on the next page provides sources andusesoffundsonacombinedbasisforallofthe City’sspecialrevenuefunds.Thefundsincludedare asfollows:Fund201ReserveDonation;Fund202 PoliceDonation;Fund204FirearmsSafety;Fund205 DWIForfeiture;Fund206DrugForfeiture;andFund 207TruckSafety. SourceofFunds Thesourceoffundsforthespecialrevenuefunds comefromdonations,chargesforservices,andother miscellaneousrevenuesourceswhicharegenerally restrictedforthepurposetheywerecollected.There isnopropertytaxlevythatisrecordedtothespecial revenuefunds. UseofFunds Theuseoffundsisrestrictedforthepurposeofthe fundscollected. TransferstoOtherFunds Therearenotransfers. 22 FinancialPlans 23 FinancialPlansother benefi ting properties. UseofFunds Theprojecteduseoffundswillbeforcapitalprojects asincludedintheCity’sCapitalImprovementPlan. Thisincludesequipmentacquisitionandconstruction ofstreetandfacilityimprovements. TransferstoOtherFunds In2014,theGeneralFundtransferredin$233,278to theCapitalProjectsFundstoeliminateaninterfund loanpayabletotheGeneralFund. Inaddition,theWaterandSewerenterprisefunds transferredinacombined$251,774ofbondproceeds totheCapitalProjectsFundstoreimburseforprior constructioncostsforthepublicworksfacility. Nofutureinterfundtransfersareanticipated. CAPITALPROJECTSFUNDS The fi nancial plan on the next page provides sources andusesoffundsonacombinedbasisforallofthe City’scapitalprojectsfunds.Thefundsincludedare asfollows: •Fund415ParkCapital •Fund 416 Capital Equipment Certifi cates •Fund417ShannonLane •Fund419HackamoreUpgrade •Fund420WetlandRestoration •Fund305AsphaltMaintenance •Fund308PoliceCapital •Fund310CountyRoad19Improvement •Fund411PublicWorksFacility •Fund421HopeCenter •Fund402InfrastructurePlanning SourceofFunds Themajorityofthesourceoffundsisfromchargesfor service,specialassessments,investmentincome,inter- governmental,andbondproceeds. Year2018includesrevenuefromananticipated $1,140,000developerpaymentforcostsrelatedto HackamoreRoadimprovements.HackamoreRoad improvementswillbefundedfromacombinationof thedeveloperpaymentandspecialassessmentsto 24 FinancialPlans 25 FinancialPlanssuffi cient to cover projected use of funds is approxi- mately50unitsannually. TheCityanticipatestheissuanceofbondstopayfor improvementsinthedowntownareaandotherde- velopmentrelatedimprovements.Thebondproceeds amountof$1,433,450inyear2016isforthedowntown improvementproject($986,750)andforthepayment toMapleGrove($536,700)forthedowntownconnec- tions(REU).Thebondproceedsamountof$1,400,000 inyear2019isforatrunklineimprovementforresi- dentialdevelopment,asincludedintheCIP. The fi nancial plan for the Water Fund anticipates spe- cialassessmentrevenuefrompotentialagreement withpropertyowners(inthedowntownarea)to spreadthecollectionofconnectionchargesandtrunk line area charges. The fi nancial plan includes annual specialassessmentrevenuebasedontheassumption 38parcelsinthedowntownarea(60acres)willpay awaterconnectionandtrunklineavailabilitycharge, assessedovera10yearperiodwithinterestat5%. UseofFunds Theuseoffundswillbetopayfortheoperationand capitalimprovements,andrelateddebtservice,for providingmunicipalwaterservices.TheCityhasan agreementwiththeCityofMapleGrovewhichpro- videsforpaymenttoMapleGroveforwaterservices. Anticipatedannualdebtservicepaymentswillbesup- portedbyrevenuefromtheutilityandthecollectionof specialassessmentsrecordedtotheWaterFund. TransferstoOtherFunds The fi nancial plan anticipates the Water Fund will transferfundsannuallytotheGeneralFundtopayfor operationalsupport. WATERFUND TheWaterFundwasestablishedfortheaccounting forcostsofprovidingmunicipalwaterservicestoresi- dentsandbusinesses. SourceofFunds ThesourceoffundsfortheWaterFundischarges forservices,specialassessments,andbondproceeds. TheestimatedfeesandchargesusedforthePlanare providedinTableMonPage38.Futuregrowthfrom developmentisassumedatthefollowingratesforthe nexttenyears(fromyears2015to2024): ȬȱŘŗ ȱȱĴȱȱȱ¢ȱȱ -44residentialequivalentunits(REU)addedper yearonaverage(notincludingdowntownarea commercialproperty) -152REUaddedin2017fordowntownarea(38 parcelsat4REUperparcel)-collectionofconnec- tionandtrunklinechargeswillbespreadoverten years ȱȱȱĴȱȱȱ¢ȱȱȬ tialequivalentunitsaddedisaconservativeestimate basedonapproveddevelopmentprojects.Additional developmentwillneedtooccurinorderfortheWa- terFundtoremainself-supportingandnotrequire tax levy support or signifi cant increase in charges for serviceanddevelopmentfees.Theestimatedannual shortfall(withoutadditionaldevelopment)isestimat- edtobeapproximately$300,000annually.Theaddi- tionaldevelopmentthatisneededtoproviderevenue 26 FinancialPlans 27 FinancialPlans 28 FinancialPlansdevelopment that is needed to provide revenue suffi - cienttocoverprojecteduseoffundsisapproximately 50unitsannually. TheCityanticipatestheissuanceofbondstopayfor improvementsinthedowntownarea.Thebondpro- ceedsamountof$896,750showninyear2016isforthe downtownproject(includingthespecialassessment portionandportiontobepaidfromsewerrevenues). Otherspecialassessmentstobeleviedagainstprop- ertiesinthedowntownareawillbedonesounder agreementwithpropertyownerstospreadthecollec- tionofconnectionchargesandtrunklineareacharges. The fi nancial plan includes annual special assessment revenuebasedontheassumption38parcelsinthe downtownareawillpayasewerconnectionandtrunk lineavailabilitycharge,assessedovera10yearperi- odwithinterestat5%.Thesesameparcelswillalso payachargetotheCityfortheMetropolitanCouncil EnvironmentalServices(MCES)charge,whichisnot factored into the special assessment revenue in the fi - nancialplan.TheMCESisapass-throughfee. UseofFunds Theuseoffundswillbetopayfortheoperationand provisionofsewerservicesandforannualcapitalout- lay. Anticipatedannualdebtservicepaymentswillbesup- portedbyacombinationofoperatingrevenueandthe collectionofspecialassessments. TransferstoOtherFunds The fi nancial plan anticipates the Sewer Fund will transferfundsannuallytotheGeneralFundtopayfor operationalsupport. SEWERFUND TheSewerFundwasestablishedfortheaccounting forcostsofprovidingsewerservicestoresidentsand businesses. SourceofFunds ThesourceoffundsfortheSewerFundischargesfor services,specialassessments,andbondproceeds.The estimatedfeesandchargesusedtoestimatesourceof fundsfortheSewerFundareprovidedinTableMon Page38.Futuregrowthfromdevelopmentisassumed atthefollowingratesforthenexttenyears(fromyears 2015to2024): ȬȱŘŗ ȱȱĴȱȱȱ¢ȱȱ -44residentialequivalentunits(REU)addedper yearonaverage(notincludingdowntownarea commercialproperty) -152REUaddedin2017fordowntownarea(38 parcelsat4REUperparcel)-collectionofconnec- tionandtrunklinechargeswillbespreadoverten years ȱȱȱĴȱȱȱ¢ȱȱȬ tialequivalentunitsaddedisaconservativeestimate basedonapproveddevelopmentprojects.Additional developmentwillneedtooccurinorderfortheSew- erFundtoremainself-supporting-andnotrequire tax levy support or signifi cant increase in charges for serviceanddevelopmentfees.Theestimatedannual shortfall(withoutadditionaldevelopment)isestimat- edtobelessthan$100,000annually.Theadditional 29 FinancialPlans 30 FinancialPlans 31 FinancialPlans PROPERTYTAXLEVYPROJECTIONS TableK,onthenextpage,providesasummaryoffu- tureprojectedpropertytaxlevies,bothbeforeandaf- ter fi scal disparities adjustments, and future projected propertytaxrates,basedonaprojectedgrowthin grosstaxcapacityof0.75percentperyearfrommarket valuechangesandassumptionsfornewconstruction (asnotedunderassumptionsforTableK). It is important to note that on Table K the fi scal dispar- ity distribution of tax levy and fi scal disparity contri- butionoftaxcapacityareheldconstantatthePay2015 taxyearamounts.Theactualdistributionandcontri- bution from the fi scal disparities program will vary fromyeartoyear.Changestotheamountsshownfor fi scal disparities will impact the City’s spread levy and nettaxcapacityandtheresultingtaxcapacityrate. Explanationofchangesinlevyareprovided.Abreak- downisprovidedforthechangeinGeneralFundlevy for operations and cash fl ow requirements. Project- edgrowthinnon-taxrevenueintheGeneralFundis shown as an off set to the tax levy that would other- wisebeneeded.Abreakdownofthedebtservicelevy isprovidedforcurrentandfuturedebtservicelevy needsonTableLonpage33. 32 FinancialPlans 33 FinancialPlans 34 Appendix 35 Appendix 36 Appendix 37 Appendix 38 Appendix 39 Appendix 40 Appendix 41 Appendix 42 Appendix 43 Appendix 44 Appendix NorthlandSecurities,Inc. 45South7thStreet,Suite2000 Minneapolis,MN55402 TollFree1-800-851-2920Main612-851-5900 www.northlandsecurities.com MemberFINRAandSIPC 4. 1 CITY OF CORCORAN City Project Update Staffing I. Administration a. Reorganization complete in 2015 b. Seasonal Recreation Coordinator working part-time; beginning 40 hours per week in June II. Police a. Police Officer hiring process i. First round interviews were held on May 26th ii. Second round interviews held June 2nd iii. Initiating background review for preferred candidate III. Public Works a. Organizational structure amended to include a Crew Leader position Administration: I. Compensation Study a. Results presented at May 12th City Council meeting b. Council sub-committee created to discuss next steps; first meeting scheduled for June 9th II. Corcoran Southeast District Market Analysis a. Council approved proceeding with study at May 26th meeting b. County coordinating proposal process III. Credit Card Processing a. Finalizing agreements and implementation plan IV. Newsletter a. Second newsletter (2 of 4) completed; third newsletter will go out approximately July 1 V. Utility Billing Structure a. Residential billing structure amended b. Need to develop billing structure for commercial/industrial properties 4. 2 VI. Employee Handbook a. Drafting updates to the employee hand book to incorporate organizational changes and law changes VII. Solicitors Peddlers and Transient Merchant Ordinance & Background Check Policy a. Staff completing draft ordinance and policy for Council consideration VIII. League of Minnesota Cities – Data Security Survey a. Reviewing recommended action, considering options IX. Recognition Program a. Coordinating purchases Public Works/Parks: I. Install water meters; read monthly II. Floor settling issue a. Independent report received; reviewing internally b. Next step is to set up meeting with sub-contractors III. Evaluating equipment replacement schedule a. Purchasing of 2016 equipment IV. Hackamore Road issues a. Medina and Corcoran to complete comprehensive counts in 2016 for future discussion V. Dust control scheduled for week of June 6th; other work includes seal coating, ditching, mowing, graveling, grading, packing, and coordinating overlay work VI. Coordinating with Athletic Association for scoreboard installation at Snyder Field Police: I. Plan 2016 Night to Unite II. Incorporating paperless processing of public requests (burn permits, data requests, firearms permits, etc.) III. Streamlining officers’ data collection procedures on calls for service IV. Analyzing and evaluating space needs for essential services V. Refreshing reserve officer program VI. Evaluating equipment replacement protocols and coordinating necessary squad replacements VII. Increasing evidence room security VIII. Planning for 2016 special events (approximately 20 annually) IX. Working with City Hall to identify safety and security risks X. Managing and refreshing the department policy manual (Lexipol) XI. Coordinating POST, OSHA, and discretionary department trainings 4. 3 Planning: I. Ravinia a. 145 lots platted b. Phase five and six application received; continue to coordinate building permit/utility process for new homes c. Street signage was not installed according to plan; coordinating changes d. Cul-de-sac islands not installed according to plan; coordinating changes e. Planning for future improvements i. Neighborhood park ii. Hackamore improvements likely 2018 or 2019 iii. 66th Avenue improvements (extend Gleason Parkway to CR 116) II. Park Place Storage a. Anticipate preliminary plat application in summer/fall 2016 III. Code/Zoning Updates a. Updating park dedication ordinance b. Drafting solar ordinance c. Drafting minor subdivision ordinance Finance: I. 2017 Budget a. Staff creating first draft to be presented to Council in July II. Five Year Plan a. Updating for 2016 approval III. Equipment Certificates a. 2016 & 2017 plan approved b. Goal to eliminate equipment certificates by 2019 (fund with CIP) IV. Reserves a. Goal is 35% of unrestricted fund balance b. End of year 2015 at 36.2% i. $182,337 dedicated towards long range planning meaning that actual unrestricted balance is 31.9% Council Priorities I. Downtown Utility and Street Improvement Project a. Project under construction b. Need to complete individual finance agreements II. Regional Recreation Amenity a. Discussed at March 10th meeting; no action being taken at this time 4. 4 III. Paving Gravel Collector Roads a. Willow Drive/Larkin Road selected as preferred project b. Neighborhood meeting held on March 29th c. Staff working on drafting assessment policy; goal to have ready in late July/early August IV. Hazardous Property a. Council approved order to remove property at January 14, 2016 meeting b. Coordinating removal with property owner V. Downtown and Southeast District Design Guideline Update a. Guidelines approved at May 26th meeting b. Coordinating with Hennepin County to place transportation plans on provisional list Other Projects I. Update City Logo a. Buffalo School District i. Have discussed with Scott Thielman, Superintendent ii. No action on Buffalo side b. Rockford School District i. Have been in contact with High School Principal ii. No action taken Future Projects I. Restart the EDA II. Record Council meetings a. Equipment being installed; goal to have up and running no later than August III. Communications Update a. Consider revamping the City’s website b. Researching and implementing new communications tools such as social media and email or texting services.