City of Grand Forks, North Dakota

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	Mayor and City Council Work Session February 23, 2005 – 5:00 p.m. A101 Council Members Present: Bob Brooks, Doug Christensen, Gerald Hamerlik, Dorette Kerian. Council Members Absent: Hal Gershman, Eliot Glassheim, Curt Kreun. Others Present: Todd Feland, Mark Walker, Don Shields, Rick Duquette, Daryl Hovland, Al Morken, Dennis Potter, John Packett, Pete O’Neill, Maureen Storstad, Greg Hoover, John Schmisek. Hamerlik called the meeting to order at 5:18 p.m. 1) Capital Improvements Plan Information. John Schmisek, Director of Finance and Administrative Services, stated that he would be providing a basic overview of the capital requests that have been turned in at this point. He continued that in preparing this overview he had relied on the following assumptions: 1) that the need for the item requested was justified and as such should receive funding; 2) that the $400,000 of expenses currently funded in the highway users fund, which includes street department equipment and a project engineer, should be moved to the General Fund; and 3) that a process should be set up to enable funding of projects for paving trunk streets in the Highway Users Fund and a policy shift to using the Sales Tax Infrastructure funds for local match on state and federal projects. He added that he will also touch on the public building fund and two major proposed projects – 1) the Police/Fire training facility and 2) relocation of the West Side Fire Station and potential addition of a fire station in the SE section of town. Schmisek stated that the overview spreadsheets are laid out in chronological order by year and funding source with all projects being included at this time. Schmisek directed the group to Schedule A, which details the Highway Users Fund. He explained that in recent years this fund has often been used as a “balancing fund” to cover expenditures that don’t have funding from another source. He stated that the spreadsheet presented shows the one time transfer in from 2163 that is in the 2005 budget and also includes the 2005 budgeted discretionary projects. He added that the group should note that from 2006 forward there are not any discretionary projects included in this spreadsheet. Schmisek stated that all of the items to be funded after 2005 are detailed under the ongoing obligations section. Christensen commented that he wanted to note that there is $1.2 million that should have been used for economic development that is now being spent on items that general taxes should be covering, and that perhaps it is time to get these expenses back to being funded where they should be. Kerian expressed agreement with this and added that there appear to be some significant needs that should be considered and that she would like to see us get all of these needs in perspective so that if any increases are needed then the Council has the information to be able to justify them to citizens. Brooks stated that he is also in favor of realigning these expenses to get them where they belong. Duquette asked if that meant the focus of the council was shifting focusing on funding actual necessary expenses rather than the focus being on assisting property owners with the increasing cost of taxes. Brooks stated that he believes that the first step is to look at realigning the costs to get them where they should be, making a plan for the future, and then looking at if there may be an opportunity to decrease expenses in any areas. Schmisek added that in reviewing the street department expenses that they are about the same as they were preflood, with only minor projected increases to account for inflation. He pointed out that in the projection he has gradually moved a portion of the cost back into the General Fund each year to ease the effect of picking up these expenses in the General Fund and that by the year 2009 all of these expenses will be fully out of the Highway Users Fund. He stated that of the street department cost that is in this fund, about 25% of it is for routine maintenance items. Brooks added that perhaps as a matter of policy a certain percent should be set by Council as the amount that will come from this fund and then the remaining cost if any could look to find funding elsewhere, thereby allowing for some dollars to build in this fund so that a reserve could be built to handle other upcoming projects. Schmisek responded that there is not enough revenue flowing into this fund to provide for an excess to accumulate that would be enough to cover the full amount needed for the required repairs for all the infrastructure projects in this fund, that is the basis for his proposal to shift those to the Sales Tax Infrastructure Fund. Moving to Schedule C, which details the Infrastructure Fund, Schmisek stated that in projecting the revenues he used an assumption of a 4.3% increase in 2005 and then a 3% increase thereafter, which is a fairly conservative projection based on past returns. He continued that a large part of the infrastructure obligations are for bond payments and he has provided the ending date for each issue in brackets behind its description. He added that the discretionary projects listed are all those that Council has recently approved to fund out of this area, mainly since they did not have a local match that was in place at the time of the approval. He continued that the timing of some of these may change, as most are still in the design phase. He stated that one project to note is the 42nd Street Underpass project. Schmisek continued that starting in 2011 there is a new cycle for state aid dollars and they are anticipating $1.4 million for local share. He continued that this projection also includes a spend down of cash. Schmisek commented that should the Council decide to follow the plan as proposed this would be a major policy shift from what has been done in the past. Kerian inquired whether there will be any more flood related bond issues that need to be included in this fund. Schmisek responded that there will be one more phase, probably done in 2007 to be payable in 2008. He continued that the City will probably do a temporary borrowing if funds are needed prior to that to complete the project. Christensen stated that he sees the need to provide funding for the street projects and this projection seems to take care of that need. He agreed that in the community there is feedback coming from citizens that there is a need for this and that they do not want special assessments to pay for the repairs and this projection seems to take care of meeting both of those needs. Kerian added that she feels the projection as set forth through 2010 looks to be in good shape. Schmisek stated that he would like Council to take a hard look at what is being proposed, and make the policy decision to make the policy change as to funding for these items, and then can say this is it until at least 2010. Schmisek stated that in Schedule B, which details the Public Building Fund, the major projects are for Public Safety facilities. He continued that there is a storage building for fire equipment that is not included here that already has $200,000 in funding set aside, and that the remaining is projected to come in 2006. He added that the major expenses will be in 2008 and 2009 and are projected to include the relocation of the west side fire station, and addition to the Police Building, a police and fire training facility, and a proposed new southeast side fire station, which will also require an additional approximately $1 million in operating costs to be funded in the general fund. He stated that this exhibit is only meant to give highlights of these items and that more detailed information will be provided by those departments in the near future as the budget planning process moves forward. Schmisek also stated that he wanted to remind the group should be aware of a proposed state statute that will change the way that schools are funded and could therefore impact the amount of levy that the school needs each year. He continued that they will provide more information on this as the bill moves forward. The group asked if the southeast fire station is entirely new or if it would be a reshuffling or relocation of personnel. O’Neill responded that it would be a new facility and as projected would require additional staffing from the current department, however the west side station proposed would be a relocation from its current location and would not require more personnel. Hamerlik stated that for the next meeting the Fire and Police Departments should present information on the proposed projects that have been briefly touched on today. Schmisek agreed that a decision on whether to proceed with some or all of these will help him in finalizing budgetary needs through 2010, so that the necessary funds will be available when needed. Christensen stated that he wanted to again suggest that perhaps the time is right to look at using any available dollars in the enterprise funds to provide funding for some of these projects. The group discussed whether there was also the opportunity to change the sales tax allocation so that funding could be redirected to the area most in need. Schmisek stated that the Council is empowered to make such an allocation change if they so desire. Hamerlik adjourned the meeting at 6:00 p.m. Respectfully submitted, Sherie Lundmark Admin Spec Sr.