Working Session

MAYOR COUNCIL WORK SESSION
Wednesday, June 25, 2008 - - 4:00 p.m.
A101

Present: Gershman, Bjerke, McNamara (joined in progress), Christensen (joined in progress), Kreun, Mayor Brown.
Absent: Bakken, Glassheim.

Gershman called the meeting to order at 4:00 p.m.

Matter of 2009 Budget.

Rick Duquette, City Administrator, stated that John Schmisek, Finance Director, will be presenting information on the 2009 budget over a series of three meetings which will provide the council with details of the budgetary needs of the City as well as revenue forecasts and economic data.

Schmisek stated that tonight’s discussion will include economic data, Six-Year Capital Improvement Plan, Special Revenue Funds, Debt Service Funds, Internal Service Funds, and Trust & Agency Funds. He added that many of these latter funds are somewhat fixed, but is providing information as to the needs in those areas for the Council’s reference.

The group agreed to hold all questions to the end of the presentation.

a) Growth Indicators for 2009

Schmisek stated that overall property valuation rose by 5.04% this year, with 1.86% from new construction and 3.18% from revaluation, which is opposite what we have seen in the last few years. Sales tax collections are estimated to grow by 4% from revised 2008 projection of collections in 2009 which would equate to $305,000 more for the General Fund, $185,000 more for Infrastructure, and $127,000 more for Economic Development. Schmisek continued that the CPI up 4.7% for Midwest cities between 50,000 to 1.5 million. He stated there are other statistical data included for the Council’s review and will not go into those in detail today.

(Christensen reported present.)

Schmisek continued that there are two Mill Sheet projections included and noted that these are for reference only and are not recommendations as no decisions have been made at this point. The first sheet shows the scenario of a reduction by 4 mills in the Flood Control bond and will talk about in more detail during the debt service portion of the agenda. The other scenario is a reallocation of mills, taking those from the Flood Control area and shifting to the General Fund, and again, are not saying those mills are definitely needed in the General Fund, just showing the scenario if we were to make the shift what result would be. On scenario where reduce the 4 mills and we would only increase by the actual tax dollars collected, $180,631 which equates to 1.25% over last year and on the other sheet would be the 5.44% as shown on the first sheet.

Schmisek stated that other sheets provided show the taxation history as have been given in the past and that Council can be very proud of its ability to keep the tax level stable, despite the increase that is seen in valuation, as shown on the graph; valuation average increase of 9.27% per year and actual on 4 mill cut will be 5.11% and without doing the 4 mills cut would be 5.67% per year increase. Schmisek continued that if we had taken all the valuation increase plus new growth each prior year would be at 8.27% now, so staying at that 5% range is something to be proud of.

b) Capital Improvement Plan (CIP)

Schmisek stated that Utility Infrastructure items will be discussed next week along with the budgets for the Enterprise Funds.

Schmisek noted the following:

Facilities and Buildings – Includes a 2011 GO Bond for a Southeast Fire Station and will discuss this more later today as well as in two weeks with General Fund Budgets.

Streets & Bikepaths – Will be discussed in greater detail later today.

Equipment – Christensen requested a detailed list of the equipment that is to be funded from the reserve.

Gershman inquired whether there was any ability to move up the downtown traffic signal upgrades project. Grasser responded that project is all timed with the State and there may not be any ability to move this project up and would have to discuss with the State.

Kreun inquired whether there was any ability to access some farm to market road funds for some City projects and commented that these are currently being spent by the County in rural areas, but are allowed to be used for projects within the City, and particularly seems good fit for DeMers and downtown signals due to farm truck usage in fall. Schmisek stated that have approached the County in the past, but not been receptive, but Council could send a letter to the County requesting this use be considered.

c) Special Revenue Funds

Fund 2101 – General Fund Loan & Stabilization – Schmisek noted that there is an expenditure in the 2009 budget for carpeting in the Engineering and Planning Departments and Main Hall of second floor of City Hall and that there are rips and fraying in numerous places.

(McNamara reported present.)

Fund 2121 – Public Building Fund – Schmisek noted that the major item in this budget is in 2011 with the Southeast Fire Station and that is area where the city is growing and have discussed in the past adding a station in this area to handle the new sections of the City.

Schmisek noted that we expect less growth in real estate tax than the last couple of years and are projecting in the model 3.6 mills in 2009, 3.75 in 2010, and 3.85 mills in 2012. Christensen asked why there is a 0.5 increase in mills. Schmisek replied that there is a corresponding decrease in another fund.

Fund 2169 – Infrastructure – Schmisek stated that this fund is now used as the source for federal match on infrastructure projects. He added that the document does see changes, for example, the South 48th Street project, that is on the plan, then gets shifted out to a future year, but wants Council to know that we are planning for it, even if doesn’t happen today.

He also noted the South Washington Street Underpass that may be shifted due to the potential for a shift at the direction of the State to fund work on the Kennedy and Sorlie Bridges. Grasser added that these two bridges have already been prioritized on the Minnesota side and there is pressure on North Dakota to prioritize them, if that happens then will push some other major project out into the future and it would probably be this one, as while it is deficient, it is not a safety hazard. Christensen commented that if the Kennedy is done, there is no requirement for a local match so shouldn’t effect us and the cost for the Sorlie Bridge is looking so high for local share that will probably result in Congressional help with federal funding, especially on the Minnesota side.

Schmisek commented that there are a grouping of related projects for the Southend of Columbia Road which is another large part of this budget and if completed as programmed at this time will result in a deficit in 2013 and 2014. He continued that we will need to be visiting with ND DOT on this and that so far we do not have matching funds available to complete all of these projects as they would like them done and may need to move some out to future years.

Fund 2104/2104 – PSAP/E-911 – Schmisek stated that there is cash buildup in this fund and that the department is still working on a plan for moving the department and also covering equipment upgrades, which will absorb cash. The group discussed several options that have been considered and that the current plan being researched by the Board with their consultant is an addition to the Police Department. Fiala commented that from an IT standpoint that would be the best option, rather than relocating to a different facility. Duquette commented that he has visited with the Authority Board Chair and will be coming forward with their plan at a future meeting. McNamara inquired if there is redundant capability at the Training Center to provide support during move, etc. Packett replied that there is.

Fund 2163 – Economic Development – Canad agreement is done 2011 so then all revenues will be staying in this fund. He noted that there are several areas within this budget that will be maintained in 2009 and upcoming years including: Industrial Park expansion planning, maintaining special services allocation, maintaining special events allocation, a budget for no shortfall for the Alerus for 2009, but then being conservative including an average loss amount for future years that can hopefully be taken out as each year occurs.

Gershman commented that it would be good to consider building a spec building to have available for companies wanting to come to Grand Forks, as know that we have lost a couple of deals because there was not a building available, that we are putting aside $500,000 for loans, but maybe use some of that for spec building, possibly put on Amazon land or on some of land we hope to acquire in expansion. Christensen stated that we have the $500,000 that we are setting aside for deals, plus the land amount until we actually make a land purchase and then $2.3 million in 5996 and should look at what route to take and make this a priority for 2009.

Fund 2115 – Highway User Fund – Schmisek noted that all street department equipment is now transitioned to be funded in the Street Department in the General Fund and no transfer from this fund any longer. Schmisek continued that there is included a large spend down for 15th Ave S by LM Glassfiber, which is anticipated to be about $1 million, but is in terrible shape due to the heavy usage. Schmisek stated that there is a 2% projected increase based on state projection from our share of gas tax revenue.

d) Debt Service Funds

Schmisek stated that this fund will be brought down 4 mills due to the anticipated bond sale in early July that will refund the earlier bond and save us interest and that there may be more savings, but won’t know more until after the figures come in July 7.

e) Internal Service Funds, Trust & Agency Funds

Schmisek stated that there is a summary sheet included for these funds, but there are no large items or items of influence, these are mainly pass through funds.

Questions:

Bjerke inquired what is located in the PD building presently. Schmisek replied the Police, PSAP, Emergency Management, and Sheriff’s Office. Bjerke inquired whether if moved out the Sheriff’s Department would have room for PSAP and could avoid the addition. Shields replied that the Sheriff’s Department is located there in exchange for the Health Department space in the County Building and if moved them out would then need to pay rent on Health space, so be trade off.

Bjerke inquired as to the 1 mill in the Emergency Fund. Schmisek stated that can levy up to $5 per capita in the fund and that after that level reached reduce the mills. He said we can transfer from this fund for emergency use as well as for snow removal, debris removal, etc.

Bjerke inquired if Ward 1 is considered an LMI area and if so, can N 51st be funded from CDBG. Hoover stated that it is LMI, but N 51 does not meet criteria for CDBG funding.

Bjerke inquired on S 48th St., if we are considering expanding the industrial park in a direction other than south, why still including this project. Schmisek stated that there would still be the same infrastructure needed and than substitute to new location. Grasser briefly commented on the substitution process with the state. Christensen stated that he would like to see a priority made for 2009 that a decision on Industrial Park expansion be made.

Bjerke inquired whether CDBG could be used for the fire truck. Schmisek stated that no only if only area served is LMI and can’t transfer truck from LMI area and then use CDBG to buy new truck for LMI.

Bjerke inquired on 15th Ave S in industrial park whether there would be any funds recouped from LM Glassfiber since their use of the road has been the cause of its deterioration. Group discussed and due to current policy to encourage job development and their bringing 1,000 jobs to the city and so City will cover the repair.

Bjerke inquired on the Bikeway whether the budgeted amount is for capital or maintenance and who does the maintenance. Schmisek responded that it is for capital. Maintenance is done by the Street Department, except for areas within the Park District Land that are maintained by the Park Department. Bjerke stated that he felt this is recreation and should all be park district responsibility. Duquette replied that the City owns the land and that is why we maintain that portion. Christensen added that there is some funding from the Greenway Maintenance fee which also covers cost of maintenance of those sections in the greenway. The group noted that people did appreciate the efforts to keep the paths clear even in the winter and that they did see quite a bit of use so nice service to provide. Feland stated that any work that is done to maintain any areas owned by the Park District is charged to them. Grasser stated that there also parts of the bike path system that are considered part of the City transportation plan and are not recreational intent.

Bjerke clarified that landscaping amount listed is the old beautification program. Schmisek confirmed that it is. Bjerke also asked what the Special Grant Programs are. Schmisek explained that is the Historic Preservation and CVIC grant funds that the City receives and then passes through to those agencies.

Other.

Schmisek stated that there will be a meeting next Wednesday, July 2 on Enterprise Funds and will cover operations, capital, current transfers to the General Fund, state statute regarding 20% cap on transfers, bond covenants and rate impacts.

Schmisek continued that the following week, July 9, will highlight the General Fund, planning model, and all revenue line items.

Christensen stated that he would like to see how profit is defined and maybe what happens if we include zero depreciation and the raw cash. Schmisek stated that we have standards established by GASB and bond covenants and can not go against those requirements. He added that the presentation will include all of this information.

Meeting adjourned at 5:30 p.m.

Respectfully submitted,

Sherie Lundmark
Administrative Specialist Senior