HomeMy WebLinkAboutCity Council Packet 10-28-2014 SpecialCITY OF PLYMOUTH
AGENDA
SPECIAL COUNCILMEETING
OCTOBER 28, 2014, 5:30 p.m.
MEDICINE LAKE CONFERENCE ROOM
1. CALL TO ORDER
2. TOPICS
A. 2015 Budget
B. Report on major capital reserve funds
3. ADJOURN
Special Council Meeting 1 of 1 October 28, 2014
City of 2q
Plymouth Memo
Date: October 28, 2014
To: Dave Callister, City Manager
From: Givonna Kone, Human Resources Manager
Subject: 2015 Budget — Mayor and Council Wages
Section 205.01 of the city code provides for a wage increase for the mayor and city council
members each January 1 that follows a regular municipal election. The wage increase is
automatic unless it is waived by the city council. January 2009 was the last time the city council
received a wage increase. The city council was eligible for a 3% wage increase in January 2011
and a 5.22% wage increase in January 2013; however, the city council waived those increases.
The mayor and council members are eligible for a wage increase on January 1, 2015. If the city
council allows the increase to take effect, the increase will be based on an estimated 3.39%
increase in the CPI since the November 2012 municipal election. The mayor's annual wage will
increase from $14,004 to approximately $14,479 and the city council's wage will increase from
10,140 to approximately $10,484.
The 2015 budget is sufficient to cover an estimated 3.39% increase in wages for the mayor and
city council.
Staff is seeking direction regarding how the city council would like to proceed with regard to
the wage increase that is scheduled to take effect January 1, 2015.
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To: Dave Callister, City Manager
MEMORANDUM
Prepared by:
Jodi Bursheim, Finance Manager
Luke Fischer, Administrative Services Director
Date: October 28, 2014
Item: Report on Major Capital Reserve Funds
As part of a comprehensive financial review, staff has engaged in an in-depth study of the City's capital reserve funds.
This review is intended to identify funds that do not have a budget, measure available resources in those funds, and
recommend use of certain funds, where appropriate. The majority of the City's General Fund, Special Revenue Funds,
Enterprise Funds, and Internal Service Funds are all budgeted for and have a specific purpose — guiding the resources
available in each. The Debt Funds carry special restrictions that are described in each bond transcript, which limits use.
The Capital Funds are generally assigned to a certain type of project or task. The capital funds used for tracking
transactional activity are identified with a three digit code of "CON" in front of their fund number and the funds that
were intended to build reserves and fund projects are identified with a three digit code of "FND". Most of the Capital
Funds have a clearly designated purpose or use, while five have opportunity for further consideration.
Funds with Opportunity
Construction Improvement Fund — General (CON 400) — Cash Reserve Balance: $2.9 Million
Description: This fund is used to account for expenditures incurred for capital improvements related to General
facilities or Parks. Historically, cash was deposited into this fund prior to project commencement based on
budget. As projects were completed under budget, the excess cash was left in the fund. This strategy was
modified several years ago to only transfer funding for incurred expenditures, essentially eliminating the ability
of this balance to grow considerably in the future. Interest is the only continuing revenue source — averaging an
estimated' $35,000 in annual deposits.
Community Improvement Fund (FND 404) — Cash Reserve Balance: $5.5 Million
Description: This fund was established to accumulate resources to pay for expenditures, which may be made
only for items of a capital nature. Allowed expenditures are provided for by Charter and Ordinance. Historically,
cash was deposited into this fund from surplus money or special assessment collections that remained after an
improvement project had been fully funded and the bonds issued for the project paid. Interest and collections
from older assessments are the only continuing revenue sources. Interest earnings are estimated at $69,000
annually and older assessments are minimal.
Pre -construction Fund (FND 407) — Cash Reserve Balance: $525,000
Description: This fund was originally designed to provide funding for project contingencies or pre -project
expenditures. Initially, cash was deposited in this fund from historical surpluses on special assessments. Interest
and administrative fees from conduit debt are the only continuing revenue sources — though both are extremely
minimal averaging an estimated $13,900 annually.
All estimated interest earnings are derived from five years of earning history and do not reflect annual market valuation changes.
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Capital Improvement Fund (FND 409) — Cash Reserve Balance: $3.8 Million
Description: This fund was established to accumulate resources for capital improvements, such as building
construction, without the need to issue bonds. The revenue source is primarily the designated levy and interest
revenue; combined they contribute over $350,000 per year.
Construction Improvement Fund - Streets (CON 413) — Cash Reserve Balance: $6.5 Million
Description: This fund is used to account for expenditures incurred in the construction of certain public
improvements such as residential streets, traffic signals, and sidewalks. This fund grew to its current balance as
projects were completed under budget, leaving excess cash in the fund and interest earnings over the years.
Interest is the only continued revenue source — averaging an estimated $70,000 annually.
Staff then reviewed the Capital Improvement Program to determine if there are potential projects that could be funded
with the balances available in these Capital Funds. Based on available resources, staff recommends the City Council
consider the following funding strategies.
Fund Proposed Use Remaining Cash
Reserve Balance
CON 400 - Construction Improvement Fund — General Economic 1.9 Million
Reserves of $2.9 Million Development2
1 Million)
FND 404 - Community Improvement Fund Pending Hilde 4.0 Million
Reserves of $5.5 Million Improvements
1.5 Million)
FND 407 - Pre -construction Fund Reserve for Tax 520,000
Reserves of $520,000 Abatements3 No Change)
FND 409 - Capital Improvement Fund Park and Recreation 1.3 Million
Reserves of $3.8 Million Facility Improvements
NW Greenway/Ice
Center)
2.5 Million)
CON 413 - Construction Improvement Fund - Streets Public Works Facility 1.5 Million
Reserves of $6.5 Million Expansion Phase 1
2 Million)
Public Works Facility
Expansion Phase 2
2 Million)
Complete Stop Light
Enhancements
1 Million)
Future Fund Availability
Each of the funds identified grew a cash balance reserve over many years of conservative financial oversight. The funds
will continue to slowly accrue interest over time, though there is not an identified source to replenish most of the funds
to its current position if the recommended projects are approved. The City Council may elect to structure use of these
2 Conceptually, these funds could be used for infrastructure, redevelopment, traffic or environmental studies, revolving loans for
economic development purposes, and other non -operational uses.
3 Tax Abatements are a result of a petition for a reduced property valuation for tax purposes. Essentially, the abatement is used to
credit an owner if a property is determined to have been overvalued in a prior tax year. Consider the commercial property that is
valued at $2 million in year 1 and is valued at $4 million in year 2 with no improvements and no major market changes. The owner
may petition to have the value reduced for tax purposes and would be reimbursed for tax overpayment through an abatement. Staff
anticipates that this fund will be replenished with interest and surplus, as needed.
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funds as internal loans — creating a repayment plan to complete each improvement. Doing so would ensure a timely
replenishment of funds, while reducing borrowing costs typically associated with bonding or other financing tools that
could be used to complete the projects. Conversely, the City Council may authorize the use of these funds for one-time
use and draw the balances down. Though the recommended project list contemplates about $7.7 Million in spending,
there would still be an appropriate balance available for cash flow and emergency purposes — which staff views as
critical to the overall financial health of the organization. Finally, the City Council could elect to do nothing and maintain
all existing cash balances. While each alternative has its own merits, staff recommends the Council develop a strategic
plan with the available balances to ensure a continuation of the careful fiscal stewardship that has made this cash
available.
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