HomeMy WebLinkAboutCity Council Packet 08-11-2009 SpecialCITY OF PLYMOUTH
AGENDA
SPECIAL COUNCIL MEETING
AUGUST 11, 2009, 5:30 p.m.
MEDICINE LAKE CONFERENCE ROOM
1. CALL TO ORDER
2. DISCUSSION TOPICS
A. 2010/2011 Budget
3. ADJOURN
Special Council Meeting 1 of 1 August 11, 2009
rp)City of Agenda 2 . Q
Plymouth Number:
Adding QuoUty to Life
To: Laurie Ahrens, City Manager
SPECIAL
COUNCIL Prepared by: Calvin Portner, Administrative Services Director
MEETING Reviewed by:
August 11, 2009
Item: Budget Discussion
1. ACTION REQUESTED:
Provide staff direction on 2010-2011 biennial budget.
2. BACKGROUND:
At the July 28, 2009, Special Council Meeting the City Council scheduled August 11,
2009, for a special session to continue discussion on the budget and street reconstruction.
Staff was directed to provide a number of reports with regard to the budget discussion.
The following items are attached:
a.) Find the number of households that fall into the "average" home sale scenario.
b.) Find the concentration of $1 million commercial/industrial properties.
c.) Find the "average" business or value concentration.
d.) Find the ratio of residential properties versus commercial/industrial properties and
the impact of taxes.
e.) What is the budget impact of a 0.0 percent increase on the average home?
f.) Compute the median home value as an option for the existing tax scenarios.
Council Member Willis asked for follow-up on the following questions:
a.) Show the trend of allocations by year from 2005 through 2011. Show the change
as a percentage of growth with regard to the general fund budget growth.
b.) Show how the Street Reconstruction Program funds were used from 2005-11,
showing how much was spent on street reconstruction, temporary overlays, mill &
overlay, patching and administrative costs/specs.
c.) What was the property tax revenue amount over the last several years?
Lastly, at the July 14, 2008, study session with the city's auditor, council requested two other
pieces of information which are attached:
a.) Impact of OPEB on the city bond rating.
b.) What is the purpose of the Economic Development fund and the Community
Development Fund?
Distribution of Residential Property by Value
The following chart shows the distribution of Plymouth's non agriculture properties by
value. Non agriculture includes condominiums and townhomes.
The median value of all residential property is $279,400 meaning one half of all residential
properties are valued higher and one half of all properties are valued lower.
In comparison, for taxes payable 2010 (2009 assessment) the average Plymouth sale price
was $366,800.
Twenty percent of all residential properties (4,500) are between $225,000 and $275,000,
making up the largest concentration of like valued residential property. For property tax
comparisons, we have selected the next largest concentrations above ($400,000) and
below ($250,000) the median.
Home value clusters by percentages:
21.6% under $200,000
56.7% are under $300,000
80.2 % are under $400,000
90.8% are under $500,000
4.2% are over $500,000
0.4% are over $1 million
6,000
5,000
4,000
3,000
2,000
1,000
0
0 0 0 0 0 0 0 0 0 0 0 0
o° o° o° o° °° °° o° o° o° °° o° o°
o°' °' °" °" CO o°' °' ti°'
z ''
rad" 1 yah C° a° 1 1
Distribution of C/I Property by Value
The median value C/I property in Plymouth is $1,924,000 and the mean is $3,150,914.
30% of C/I properties are valued under $1milllion, and 52% of all CA property is valued
under $2 million.
Properties valued under $1.5 million tend to be owner -occupied, which is important
because many of them are our small business owners.
There are a total of 34 properties over $10 million.
120
100
80
60 — —
40 — ---
5eriesl
20
0. . . . .
o
Ln b Ln C7 Ln C7 Ln O Ln C7 Ln C7 Ln O Ln C7 Ln O Ln D
c x ,--i - r.i ry rri r i :; :;i Lr u i La L.6 n r, QQ_ oD c_ c_ o
Distribution of Property Taxes
Residential vs. Commercial/Industrial Comparison
1 million property
The following charts compare the amount of taxes paid by two City of Plymouth properties,
both valued at $1 million.
Chart 1 shows the commercial property pays over $30,000 in property taxes, however only
9.8% or $2,946 is levied to the city.
Chart 2 shows the similarly valued residential property pays a total of just over $12,000,
however, 22.4% or $2,741 is levied to the city.
As a result, while the commercial/industrial property owner pays 2.5 times more than the
residential property owner, the city collects only $200 more.
CHART 1 - Property taxes paid by a Commercial property valued at $1 million
Tax Authority Tax Pct.
County 4,886 16.2%
Regional Rail 46 0.2%
Plymouth 2,946 9.8%
State General Tax 8,765 29.1%
School District 4,155 13.8%
Met Taxing Dist 312 1.0%
Other Taxing Districts 631 2.1%
Non Voter Approved
587 4.8%
Levies 70 0.2%
Fiscal Disparities 8,301 27.6%
Total Tax 30,111
0.0%
CHART 2 - Property taxes paid by a residential property valued at $1 million
Tax Authority Tax Pct.
County 4,546 37.1%
Regional Rail 43 0.3%
Plymouth 2,741 22.4%
State General Tax 0 0.0%
School District 3,984 32.5%
Met Taxing Dist 290 2.4%
Other Taxing
Districts 587 4.8%
Non Voter Approved
Levies 70 0.6%
Fiscal Disparities 0 0.0%
Total Tax 12,262
70
2'
County
46 Regional Rail
Plymouth
State General Tax
School District
Met Taxing Dist
County
43
0 Regional Rail
Plymouth
2,741
State General Tax
School District
0
Met Taxing Dist
C/I Property Tax Dispersal
The following pie charts show the source of property taxes, by percentage, that the city
receives before and after the redistribution resulting from Fiscal Disparities.
The charts show that roughly 23% of city property taxes are levied from Commercial /
Industrial properties.
FARM 0.3%
COMMERCIAL 15.7%
INDUSTRIAL 17.1%
RESIDENTIAL 60.9%
APARTMENT 6.0%
OTHER 0.0%
FARM 0.3%
COMMERCIAL 11.2%
INDUSTRIAL 12.2%
RESIDENTIAL 69.3%
APARTMENT 6.9%
OTHER 0.0%
CHART 1 - Before Fiscal Disparities, C & I contributed 32.8%
15.7%
FARM
COMMERCIAL
INDUSTRIAL
RESIDENTIAL
APARTMENT
OTHERLip17.1%
CHART 2 - After Fiscal Disparities, C & I contributed 23.4%
11.2%
FARM
COMMERCIAL
i INDUSTRIAL
RESIDENTIAL
12.2%
APARTM ENT
OTHER
Levy:
End of
Levy
General Fund $12,856,138.00 12,895,429.16 $13,040,115.00 $13,040,115.00
PERA $101,012.00 108,727.61 $108,727.61 $108,727.61
Police $9,231,614.00 9,183,834.79 $9,183,834.79 $9,183,834.79
Market Value Homestead Credit (included in
levy limit) - have to levy and then we get
unalloted $510,000.00 589,795.00 $589,795.00 $589,795.00
WILL
NOT
RECEIVE
Market Value Homestead Credit Special
Levy (1/2 of 2008 & all of 2009)$801,650.00
Street Reconstruction $2,458,092.00 2,458,092.00 $2,531,834.76 $2,531,834.76
Recreation Fund $678,497.00 628,497.00 $628,497.00 $628,497.00
Capital Improvement Fund $358,216.00 358,216.00 $368,962.48 $368,962.48
GO 2003B Street Recon Bonds $178,355.63 179,038.13 $179,038.13 $179,038.13 2013
GO 2003C Street Recon Bonds $424,531.43 2009
GO 2004A Public Safety $596,354.06 596,957.81 $596,957.81 $596,957.81 2024
GO 2007A Open Space $255,486.00 255,223.50 $255,223.50 $255,223.50 2023
Total City Tax Capacity Levy $27,648,296.12 5.25%27,253,811.00 -1.43%$27,482,986.08 -0.60%$28,284,636.08 2.30%
City Market Value levies
Activity Center Bonds $432,016.00 428,007.00 $428,007.00 $428,007.00 2013
2003D Open Space Refunding $267,256.50 281,326.50 $281,326.50 $281,326.50 2010
Total City Market Value Levy $699,272.50 0.98%709,333.50 1.44%$709,333.50 1.44%$709,333.50 1.44%
Total City Levy $28,347,568.62 5.14%27,963,144.50 -1.36%$28,192,319.58 -0.55%$28,993,969.58 2.28%
HRA Levy $551,277.00 551,277.00 $551,277.00 $551,277.00
TOTAL LEVY $28,898,845.62 5.14%28,514,421.50 -1.33%$28,743,596.58 -0.54%$29,545,246.58 2.24%
2009 Amended
2010 LEVY
SCENARIO #1 SCENARIO #2
2010 Projected
levy limit w/max market
value special levy (no
add'l bond)
2010 Projected
reduction to 0 increase for
average sale home
SCENARIO #3
2010 Projected
levy limit - no special levy for
market value or add'l bond
Residential Property
Estimated Estimated Percentage
2009 2010 Increase Increase
Average Home Sale Value 384,400 366,800
Tax Capacity at 1%3,844 3,668
Combined City Tax & Market Value Tax Rate 24.351%25.625%
Total City & Market Value Property Tax $936.04 $939.92 $3.88
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $18.58 $18.86 $0.28
Total Property Tax $954.62 $958.78 $4.16
Market Value Credit ($6.94)($11.10)($4.16)
Total Net Property Tax $947.68 $947.69 $0.01 0.00%
Tax Impact - Reduction in Levy - Scenario #1
Residential Property
Estimated Estimated Percentage
2009 2010 Increase Increase
Lower Value Concentration to Median Value 264,400 250,000
Tax Capacity at 1%2,644 2,500
Combined City Tax & Market Value Tax Rate 24.351%25.625%
Total City & Market Value Property Tax $643.83 $640.62 -$3.21
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $12.78 $12.86 $0.07
Total Property Tax $656.61 $653.48 -$3.13
Market Value Credit ($35.29)($38.69)($3.40)
Total Net Property Tax $621.32 $614.79 -$6.54 -1.05%
Estimated Estimated Percentage
2009 2010 Increase Increase
Median Value 293,100 279,400
Tax Capacity at 1%2,931 2,794
Combined City Tax & Market Value Tax Rate 24.351%25.625%
Total City & Market Value Property Tax $713.72 $715.96 $2.24
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $14.17 $14.37 $0.20
Total Property Tax $727.89 $730.33 $2.44
Market Value Credit ($28.51)($31.75)($3.24)
Total Net Property Tax $699.38 $698.58 -$0.79 -0.11%
Estimated Estimated Percentage
2009 2010 Increase Increase
Higher Value Concentration to Median Value 419,000 400,000
Tax Capacity at 1%4,190 4,000
Combined City Tax & Market Value Tax Rate 24.351%25.625%
Total City & Market Value Property Tax $1,020.29 $1,025.00 $4.71
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $20.26 $20.57 $0.31
Total Property Tax $1,040.55 $1,045.57 $5.02
Market Value Credit $0.00 $0.00 $0.00
Total Net Property Tax $1,040.55 $1,045.57 $5.02 0.48%
Tax Impact - Reduction in Levy - Scenario # 1
Commercial Property
Estimated Estimated Percentage
2009 2010 Increase Increase
Combined City & Market Value Tax Rate 24.351%25.625%
On a $1,000,000 Property $1,051,000 $1,000,000
Tax Capacity 20,270 19,250
less: Fiscal Disparity contribution rate 0.371552 0.371552
Net Tax Capacity 12,739 12,098
Total Property Tax $3,102 $3,100 -$1.93 -0.06%
Residential Property
Estimated Estimated Percentage
2009 2010 Increase Increase
Average Home Sale Value 384,400 366,800
Tax Capacity at 1%3,844 3,668
Combined City Tax & Market Value Tax Rate 24.351%25.855%
Total City & Market Value Property Tax $936.04 $948.37 $12.33
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $18.58 $18.86 $0.28
Total Property Tax $954.62 $967.23 $12.61
Market Value Credit ($6.94)($11.10)($4.16)
Total Net Property Tax $947.68 $956.13 $8.45 0.89%
Tax Impact - max levy - no market value credit special levy or add'l bond levy -
Scenario #2
Residential Property
Estimated Estimated Percentage
2009 2010 Increase Increase
Lower Value Concentration to Median Value 264,400 250,000
Tax Capacity at 1%2,644 2,500
Combined City Tax & Market Value Tax Rate 24.351%25.855%
Total City & Market Value Property Tax $643.83 $646.38 $2.55
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $12.78 $12.86 $0.07
Total Property Tax $656.61 $659.23 $2.62
Market Value Credit ($35.29)($38.69)($3.40)
Total Net Property Tax $621.32 $620.54 -$0.78 -0.13%
Estimated Estimated Percentage
2009 2010 Increase Increase
Median Value 293,100 279,400
Tax Capacity at 1%2,931 2,794
Combined City Tax & Market Value Tax Rate 24.351%25.855%
Total City & Market Value Property Tax $713.72 $722.39 $8.68
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $14.17 $14.37 $0.20
Total Property Tax $727.89 $736.76 $8.88
Market Value Credit ($28.51)($31.75)($3.24)
Total Net Property Tax $699.38 $705.01 $5.64 0.81%
Estimated Estimated Percentage
2009 2010 Increase Increase
Higher Concentration to Median Value 419,000 400,000
Tax Capacity at 1%4,190 4,000
Combined City Tax & Market Value Tax Rate 24.351%25.855%
Total City & Market Value Property Tax $1,020.29 $1,034.21 $13.92
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $20.26 $20.57 $0.31
Total Property Tax $1,040.55 $1,054.78 $14.23
Market Value Credit $0.00 $0.00 $0.00
Total Net Property Tax $1,040.55 $1,054.78 $14.23 1.37%
Tax Impact - max levy - no market value credit special levy or add'l bond levy -
Scenario #2
Commercial Property
Estimated Estimated Percentage
2009 2010 Increase Increase
Combined City & Market Value Tax Rate 24.351%25.855%
On a $1,000,000 Property $1,051,000 $1,000,000
Tax Capacity 20,270 19,250
less: Fiscal Disparity contribution rate 0.371552 0.371552
Net Tax Capacity 12,739 12,098
Total Property Tax $3,102 $3,128 $25.92 0.84%
Residential Property
Estimated Estimated Percentage
2009 2010 Increase Increase
Average Home Sale Value 384,400 366,800
Tax Capacity at 1%3,844 3,668
Combined City Tax & Market Value Tax Rate 24.351%26.661%
Total City & Market Value Property Tax $936.04 $977.91 $41.87
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $18.58 $18.86 $0.28
Total Property Tax $954.62 $996.77 $42.15
Market Value Credit ($6.94)($11.10)($4.16)
Total Net Property Tax $947.68 $985.67 $37.99 4.01%
Tax Impact - market value credit maximum special levy - Scenario # 3
Residential Property
Estimated Estimated Percentage
2009 2010 Increase Increase
Lower Value Concentration to Median Value 264,400 250,000
Tax Capacity at 1%2,644 2,500
Combined City Tax & Market Value Tax Rate 24.351%26.661%
Total City & Market Value Property Tax $643.83 $666.51 $22.68
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $12.78 $12.86 $0.07
Total Property Tax $656.61 $679.37 $22.76
Market Value Credit ($35.29)($38.69)($3.40)
Total Net Property Tax $621.32 $640.68 $19.36 3.12%
Estimated Estimated Percentage
2009 2010 Increase Increase
Median Value 293,100 279,400
Tax Capacity at 1%2,931 2,794
Combined City Tax & Market Value Tax Rate 24.351%26.661%
Total City & Market Value Property Tax $713.72 $744.90 $31.18
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $14.17 $14.37 $0.20
Total Property Tax $727.89 $759.26 $31.38
Market Value Credit ($28.51)($31.75)($3.24)
Total Net Property Tax $699.38 $727.52 $28.14 4.02%
Estimated Estimated Percentage
2009 2010 Increase Increase
Higher Value Concentration to Median Value 419,000 400,000
Tax Capacity at 1%4,190 4,000
Combined City Tax & Market Value Tax Rate 24.351%26.661%
Total City & Market Value Property Tax $1,020.29 $1,066.42 $46.13
HRA Tax Capacity Rate 0.483%0.514%
HRA Property Tax $20.26 $20.57 $0.31
Total Property Tax $1,040.55 $1,086.99 $46.44
Market Value Credit $0.00 $0.00 $0.00
Total Net Property Tax $1,040.55 $1,086.99 $46.44 4.46%
Tax Impact - market value credit maximum special levy - Scenario # 3
Commercial Property
Estimated Estimated Percentage
2009 2010 Increase Increase
Combined City & Market Value Tax Rate 24.351%26.661%
On a $1,000,000 Property $1,051,000 $1,000,000
Tax Capacity 20,270 19,250
less: Fiscal Disparity contribution rate 0.371552 0.371552
Net Tax Capacity 12,739 12,098
Total Property Tax $3,102 $3,225 $123.35 3.98%
GENERAL FUND - TOTAL ALLOCATIONS AND EXPENDITURES
2003 2004 2005 2006 2007 2008 2009 Total
Annual Annual Annual Annual Annual Annual Annual
Budget Amt Budget Amount Budget Amount Budget Amount Budget Amount Budget Amount Budget Amount change from
2003-2009
Total Allocations: $2,849,824.00 $3,037,017.00 $3,355,858.00 $3,539,277.00 $3,732,088.00 $3,625,525.00 $3,880,469.00 $1,030,645.00
Yearly Allocation Increase
Decrease): 6.57% 10.50% 5.47% 5.45% -2.86% 7.03% 36.17%
Total Expenditure: $20,311,398.00 $21,458,236.00 $22,493,654.00 $23,849,211.00 $25,616,296.00 $27,328,347.00 $27,932,495.00 $7,621,097.00
Yearly Expenditure Increase: 5.65% 4.83% 6.03% 7.41% 6.68% 2.21% 37.52%
12.00%
10.00%
8.00%
6.00%
Yearly Allocation Increase (Decrease)
4.00%
Yearly Expenditure Increase
2.00% —
0.00%
2004 2005 2006 2007 08 2009
2.00%
4.00%
Street Improvement Funding History
Notes:
In 2005, Temporary Overlay bids were exceptional so the City Council authorized expenditures exceeding programmed amount.
In 2006, Seal Coat bids were excessive so the City Council rejected bids so funds were not expended although programmed.
In 2009, the Street Reconstruction bids were questionable so the City Council rejected bids so funds we not expended although programmed.
Street Reconstruction Fund $2,925,000 $4,176,000 $5,605,000 $5,960,000 $5,560,000
2005
Contract % of Total
2006
Contract % of Total
2007
Contract % of Total
2008
Contract % of Total
2009
Contract % of Total
Crack Seal 46,400 1% 45,000 1% 100,000 2% 125,000 2% 130,000 2%
Seal Coat 235,000 7% 0 0% 340,000 5% 360,000 5% 427,000 7%
In-house Paving 100,000 3% 162,000 4% 345,000 5% 235,000 4% 400,000 6%
Temporary Overlay 480,000 15% 370,000 8% 235,000 4% 320,000 5% 350,000 5%
Mill and Overlay 95,000 3% 350,000 8% 370,000 6% 640,000 10% 610,000 9%
Reconstruction 2,350,000 71% 3,456,000 79% 5,000,000 78% 5,000,000 75% 4,600,000 71%
Total 3,306,400 4,383,000 6,390,000 6,680,000 6,517,000
Increase over previous year N/A 33% 46% 5% 2%
Assessment Rate (%) 30 35 40 40 40
Notes:
In 2005, Temporary Overlay bids were exceptional so the City Council authorized expenditures exceeding programmed amount.
In 2006, Seal Coat bids were excessive so the City Council rejected bids so funds were not expended although programmed.
In 2009, the Street Reconstruction bids were questionable so the City Council rejected bids so funds we not expended although programmed.
Street Reconstruction Fund $2,925,000 $4,176,000 $5,605,000 $5,960,000 $5,560,000
Property Tax Revenue
FUND FUND Description 2000 2001 2002 2003 2004 2005 2006 2007 2008
100 General 11,549,168 12,083,855 13,639,495 14,178,145 16,184,302 16,973,390 18,242,620 20,273,516 21,177,722
200 Park & Recreation 432,751 469,731 499,062 623,594 623,673 623,665 623,572 658,733 658,735
250 CDBG 11,001 16,543 15,703 15,980 17,106 18,484 23,206 18,918 11,516
254 HRA Section 8 19,430 13,150 - - - - - - -
258 HRA General 408,052 424,791 494,271 509,521 551,758 568,069 503,231 473,737 501,994
406 Street Reconstruction 600,671 449,003 1,366,308 1,483,461 47,008 701,108 1,547,007 2,074,040 2,300,575
409 Capital Improvement - - 284,647 309,013 309,051 318,319 327,820 337,652 347,783
TOTALS:13,021,072 13,457,072 16,299,487 17,119,714 17,732,898 19,203,035 21,267,455 23,836,596 24,998,325
does not include debt service levies
City of Plymouth Property tax revenue by fund from 2000 to 2008
30,000,000
28,000,000
26,000,000
24,000,000
22,000,000
I l[ II[iI e
18,000,000
16,000,000
14,000,000
12, 000, 000
10,000,000
24,998,325
23,836,59
21,267
21,177,722
z17,119,X32,898
273,516
8,242,620
16,299,487
16,973,390
184,302
13,021,072 14,178,145
13,639,495
12,083,855
11, 549,168
2000 2001 2002 2003 2004 2005 2006 2007 2008
tGeneral Fund Property Tax Revenue
M—Total Property Tax Revenue
Memo
To: Jodi Bursheim, City of Plymouth
From: Jonathan North
Cc:
Date: August 5, 2009
Subject: OPEB and impact on bond ratings
It is our understanding that the City is evaluating the impact of OPEB 1) reporting requirements and
2) the options of funding OPEB liabilities, on its bond ratings.
Rating Status: Aaa
Plymouth has a Aaa rating from Moody's Investors Service. This is the highest rating possible.
Higher ratings translate into lower borrowing costs for the City, and in the current recession and
credit crunch, maintaining the Aaa is even more important to the City's ability to issue bonds as
cheaply as possible.
What are Other Post Employment Benefits (OPEB)?
Generally speaking, OPEB represents the cost of providing benefits other than pensions (e.g. life
insurance and healthcare) to existing and future retirees that have been provided to employees
generally or agreed to under labor contracts.
GASB 43 and 45
In 2004, GASB released Statements Nos. 43 and 45, which require significant additional disclosure
and accounting requirement as relates to OPEB. Governmental units have historically accounted for
OPEB by recording the annual expense related to disbursement of insurance premiums or other
payments in order to measure the necessary accounting impact. Very few local governments
forecasted" the cost of OPEB. The new standards are based on the principal that these benefits are
compensation" earned during employment and the expense should be measured and recognized as
the benefits are accrued. A similar standard had applied to pension benefits for quite some time, as
well as to private corporations.
Funding of OPEB and Actuarial Details
Most communities have traditionally funded OPEB on a pay-as-you-go basis — paying the annual
expenditure related to premiums and other costs associated with providing these benefits. Other
communities establish a trust fund in advance of the expenditures funded out of operating expenses,
while still others have used bonds to provide seed money for the trust fund to fund the liability.
EHLERS
LEADERS IN PUBLIC FINANCE.
3060 Centre Pointe Drive
Roseville, MN 55113-1105
Phone: 651-697-8545
Fax: 651-697-8555
jnorth@ehlers-inc.com
OPEB Implications on Bond Ratings
Rating agencies have taken a somewhat muted response to OPEB liabilities. While they assess the
actuarial analysis and UAAL, they have not made rating changes due solely to this soft liability.
That said, the agencies are interested in ensuring a community has studied the liability, reviewed
options, planned its funding strategy, and started implementation to manage OPEB. In this vein,
Plymouth should have periodic reviews of their liability, and review options for funding the liability
and adopt revisions to its long-term funding plan as needed.
One example of the rating agencies' approach is the City of Duluth's recent announcement of their
very large OPEB liability. Despite this liability, no ratings or rating outlooks were changed.
Following the announcement, Duluth created an "OPEB Taskforce" to review funding options —
which the rating agencies viewed favorably enough to offset the impact of the liability.
As for a preferred funding mechanism, to date, the rating agencies have not stated a credit preference
between cash or bond funding, nor have they opined on the use of revocable versus irrevocable trusts.
However, the rating agencies may take a position in the future that indicates what is perceived as a
credit strength.
r2p, City of
Plymouth
Adding Quality to Life
TO: Cal Portner, Administrative Services Director
FROM: Jodi Bursheim, Finance Manager
SUBJECT: Council Request Follow up
DATE: August 4, 2009
Council has requested the following:
Economic Development Fund Purpose:
This fund was created in 1997 as part of a loan application to the Department of Trade and
Economic Development (DTED) to assist Value Rx with its plan to relocate its business to
Plymouth.
The loan to Value Rx stipulated that the first $100,000 in repayments on the DTED loan would
go to the City in order to provide seed capital to create a revolving loan fund. The Plymouth
Economic Development Revolving Loan Fund (PEDF) was to encourage economic development
by supplementing conventional financing sources available to existing and new businesses.
Community Development Fund Purpose:
This fund was used to account for funds to assist with financing the costs of community
development functions, such as comprehensive plan updates, land use maps, and other
development activities.
A loan in the amount of $225,000.00 is outstanding with a maturity date of August 1, 2039.
This loan was established with funds from Met Council. When this loan matures, the money can
be used for a loan of the same purpose.
The fund balance of $51,828 is from interest earnings over the years and is not restricted.