2014.04.10 Work Session Packet4141 Douglas Drive North • Crystal, Minnesota 55422-1696
Tel: (763) 531-1000 • Fax: (763) 531-1188 • www.crystalmn.gov
AL
CRYSTAL CITY COUNCIL
WORK SESSION AGENDA
Thursday, April 10, 2014
7:00 p.m.
Conference Room A
Posted: April 4, 2014
Pursuant to due call and notice given in the manner prescribed by Section 3.01 of the City
Charter, the work session of the Crystal City Council was held at p.m. on Thursday, April
10, 2014 in Conference Room A located at 4141 Douglas Drive, Crystal, Minnesota.
I. Attendance
Council members Staff
Deshler Norris
Hoffmann Therres
Libby Peters
Peak Sutter
Selton Hansen
Adams Revering
Budziszewski Serres
II. Agenda
The purpose of the work session is to discuss the following agenda items:
• "Open to Business" Program for small business support
• Tax base expansion opportunities
• Resources and purposes of various funds
• Financing options for JWC (Joint Water Commission) emergency water supply
III. Adjournment
The work session adjourned at p.m.
Auxiliary aids are available upon request to individuals with disabilities by calling the City Clerk at (763)
531-1145 at least 96 hours in advance. TTY users may call Minnesota Relay at 711 or 1-800-627-3529.
DATE: April 2, 2014
Memorandum
TO: Mayor and City Council
FROM: Patrick Peters, Community Development Directorn,--p
SUBJECT: April 10 Council Work Session on Economic Development Matters
There are two economic development matters that merit Council discussion and consideration
at the April 10 work session: 1) The "Open to Business" small business assistance program, and
2) identifying opportunities for significant expansion of the city's tax base.
1) "Open to Business" (OTB) is a program of the Metropolitan Consortium of Community
Developers (MCCD) that offers a variety of services for new or expanding local businesses.
Please see Attachment A for an overview of the agency's offerings, which include small
business consulting, direct lending and loan packaging. Several Hennepin County
communities have enrolled in the program as a means of offering support to local
businesses and entrepreneurs. Crystal currently has no such programs to offer local
business. The annual OTB fee for services is $7,500, half of which is paid for by the
Hennepin County HRA. If the Council is open to a trial 1 -year partnership, the city's half
could be paid out of the EDA's redevelopment account.
2) Considering the fact that Crystal is a fully developed community, opportunities to expand
the city's tax base in a significant way are quite limited. The appeal and, perhaps, necessity
of identifying such opportunities stems from the fact that the preponderance of the
property tax burden falls to the owners of our modestly valued single-family properties.
This is because the tax revenues generated by single-family residential are and always have
been out of balance with the property tax revenue generated by Crystal's small commercial
and industrial base (see Attachment B). Our discussion at the work session will focus on the
potential for redevelopment that creates a significant number of new living wage jobs and
in the end brings a better balance to the city's tax base.
Page 1 of 1
MCCD is TO BUSINESS in your community
Promoting entrepreneurism. Entrepreneurs are starting and growing small businesses
in your community. By helping them gain access to financing and other business
assistance, you can encourage small business development that grows your tax base,
creates local jobs and increases community vitality.
How we can help. MCCD's Open to Business program brings on-site business services
specialists to your city that can expand your community development staff's expertise in
such areas as start-up financing and business plan development. We can respond to
requests for business assistance when those requests are beyond the range of the
services normally provided by your municipal agencies.
How we work. Our staff can provide one-on-one assistance customized to meet the
needs of your small business owners and operators. Many of our clients receive help in
planning and organizing their business ventures. We can also assist with financial
management, marketing and regulatory compliance.
Accessing capital for your businesses. MCCD operates a small business loan fund
that can help your entrepreneurs access the capital they need to grow their businesses.
We can also draw on our long-standing partnerships with area banks to help your
businesses obtain bank loans and revolving lines of credit. As a participant in MCCD's
"Open to Business" program, your community development agency can help promote
more effective access to capital for your local businesses.
How we partner with you. MCCD will work with city staff to develop materials that
brand this as a program of your city and assist with outreach ideas to the business
community. Or staff can meet clients at our office or their place of business. In addition,
we can schedule on-site hours at your city hall or other public venue for walk-in
consultations. This fee-for-service arrangement can provide you with a cost-effective
alternative to an "in-house" business development program staffed and funded by your
agency.
Who we are. The Metropolitan Consortium of Community Developers is an association
of 43 non-profit community development agencies that work to improve housing and
economic opportunity throughout the Twin Cities metropolitan area. During this past
year, our team of business development specialists has provided access to more than
$2 million in business capital for our clients and technical assistance services for more
than 300 area businesses. You can find our Web site at www.opentobusinessmn.org.
For more information, contact:
Rob Smolund
Metropolitan Consortium of Community Developers
rsmolund(o)-mccdmn.org
612-789-7337, ext 260
IMMUD
Metropolitan Consortium
of Community Da—lope-
Attachment A
Open to Business (OTB)
Loan Product Summary- Jan 2014
Open to Business- a program of the Metropolitan Consortium of Community Developers- offers
direct lending and loan servicing as an enhancement to the entrepreneurial support services it
provides. Financing packages are available to both Start-up and Existing businesses, and
available for a variety of uses; including; acquisition, property, equipment, inventory and
working capital. Loan terms and limits vary by use, but can be very flexible in structure to meet
the needs of the individual business. Examples of the financing OTP can provide includes:
• Loan Packaging/Facilitation
OTB staff can assist potential borrowers with the preparation of business plans, cash
flow and other financial projections and loan application materials. Our staff can assist
entrepreneurs in identifying borrowing needs and accessing community lending
programs that provide favorable terms and conditions for small business borrowers.
We work with our clients to help them find the financing that best meets their own
unique needs
• Micro Loans
Direct loans from OTB for a variety of business purposes, including inventory, working
capital, asset and equipment purchases, and start-up costs. Typical loan terms of 3-5
years, loan sizes up to $25,000 for retail/service businesses, or $50,000 for
manufacturing businesses. This program is targeted to start-up and early stage
businesses that cannot secure financing from traditional commercial lenders.
• Participation Financing
OTB loans in partnership with private lenders for physical improvements and hard
asset/equipment purchases. OTB can provide financing of up to 50% of a given project,
with interest rates and term generally set to match the Bank or other partner financing
entity. In most cases, OTB will subordinate collateral and repayment to the private
lender. Loan size and term vary from project to project, but can be from as little as
$5,000 to as much as $100,000 or more depending on use.
• Real Estate Gap Financing
OTB loans in partnership with private lenders to provide gap financing for real estate
acquisition projects — including projects financed through the SBA 504 program. OTB's
interest rate will be at or near the bank's rate, and will match the bank's term provided
that the term does not exceed 10 years- though we may amortize over a longer period.
• Real Estate Acquisition Financing
OTB- in partnership with private lenders- provides permanent term financing for
commercial real estate acquisition- up to 90% of the property's appraised value. OTB
will provide the difference between the bank's LN cap and 90%- up to 40% of the
appraised value. OTB will generally match the bank's rate with terms up to 10 years
(though amortizations may be longer).
• Transactional Financing
Short term loans, for businesses with a clear short term borrowing need, but whose
cash flow cycle inhibits them from making regular monthly loan payments.
Transactional loans are targeted to contractors, vendors and manufacturers who have
received a contract or order but need working capital to fulfill the order, and payment is
structured to concede with completion of the contract. Typically Transaction financing
is available for needs of less than 6 months, and for $25,000 or less, though larger loans
are also available for businesses with performance bonds and escrow payment
arrangements.
To learn more about financing options and other services available to entrepreneurs from Open
to Business, visit www.Opentobusinessmn.org, or contact an OTB Business Advisor at:
E-mail: info@opentobusinessmn.org
Phone: 612-789-7337
OPEN
io BUSINESS
Updates
Results by city:
City/County: Hennepin
Time Frame: 1/1/13-12/31/13
Jobs
created from
direct Jobs retained
Program
Approved direct
MCCD from
direct
# of Related Hours
and facilitated
Capital closed loan MCCD closed
Program
Clients TA/Admin
capital
Leveraged clients loan
clients
Bloomington
30 125
$ 72,484
$ 60,000 2
2
Brooklyn Center
24 70
$ 86,640
$2,552,000 5
7
Brooklyn Park /
Osseo
65 190
$ 510,240
$ 137,000 4
22
Eden Prairie
14 70
$ 21,000
-
3
Edina
12 212
$ 338,480
$ 960,000 12
7
Golden Valley/
New Hope
19 71
$ 105,240
$ 15,000 -
Hopkins
11 59
$ 480
$ 200,000 -
Maple Plain/
Medina
5 12
Minnetonka
32 218
$ 79,480
$ 445,000 18
12
Richfield
27 176
$ 196,204
$ 296,000 16
3
Robbinsdale
10 76
$ 4,335
$ 16,640 -
1
St. Anthony
Village
3 25
$ 10,000
1
St. Louis Park
29 120
$ 102,000
$160,000 -
21
Hennepin County
Totals
286 1424
$ 1,517,583
$4,851,640 57
79
The above stats
are from just Open to Business cities in suburban Hennepin County not
including Minneapolis.
In 2013, the Open
to Business program
overall closed on
145 loans — a one-year high —
totaling $2,007,745, including 75 credit building loans and 30 participations with
community partners. We leveraged over $14.6 million in additional financing including
owners' equity.
In addition, our business borrowers retained
or created 261 jobs.
IMMCCD
Metropolitan Consortium
of Community Developers
2013 at a Glance
2012
MCCD Direct Loans - Total
How many direct loans did we make in
the last two years? 32
How much of our own funds did we
lend out? $1,581,685
How much other money did our loan
fund leverage? $7,758,436
On average, how much financing from
banks, community partners, and equity
did every $1 of MCCD funds leverage? $4.91
How many jobs will our business
borrowers create or retain? 248
Direct Loans of $25,000 or less (to new and emerging
How many micro -loans did we make in
the last two years?
20
How much of our own funds did we
lend out as micro -loans?
$244,892
How much other money did our micro -
loan program leverage?
$935,836
On average, how much financing from
banks, community partners, and equity
did every $1 of MCCD microloan funds
leverage?
$3.82
How many jobs will our micro -loan
borrowers create or retain?
117
What share of our micro -loans went to
minority-owned businesses?
50%
Where are most of our micro -loan 75% were
borrowers located? located in
Minneapolis
Direct Loans greater than $25,000 to second stage and
How many second stage business
loans did we make in the last two
upa rc? 12
How much of our own funds did we
lend out as second stage loans? $1,336,794
How much other money did our
second stage loan program leverage? $6,822,600
c
In 2011, MCCD made direct loans
totaling $728,840 to 33 small
businesses.
The largest share (39%) was to African
American owned businesses followed by
Latino owned businesses (19%).
In 2013, micro -loan borrowers were also
located in Brooklyn Center, Brooklyn
Park, Chaska, Egan Robbinsdale, St.
Louis Park, and four other cities.
On average, how much financing from
banks, community partners, and equity
did every $1 of MCCD second stage
loan funds leverage?
How many jobs will our second stage
borrowers create or retain?
In how many cities were our second
stage borrowers located?
Credit Builder Loans
How many credit builder loans did
MCCD make in the last two years?
How much did credit builder loan
volume increase over the prior year?
What share of our credit builder loans
went to minorities?
2012
10
131
Businesses were located in Minneapolis,
Blaine, Bloomington, Burnsville,
Hastings, Hopkins, Plymouth, Saint
9 10 Paul, St. Louis Park, and Wayzata.
57
88%
Total Loan Volume (Direct Loans, Credit Builder Loans
In all, how many loans did we close in
the last two years? (a)
118
In all, how much money did we lend
out?
$2,108,558
The largest share (57%) was to African
Americans followed by Latinos (27%).
and Administered Loans,
This number also includes 23 Central
Corridor Loans which we administered
for the city of Minneapolis.
This amount includes MCCD's own
funds along with funds we administered
on behalf of our community partners.
(a) Excludes 6 loans MCCD closed and/or serviced for Seward Redesign, Inc. and 4 loans assigned to
MCCD from Sparc.
I Growth in MCCD's Loan Portfolio I
At what rate did MCCD's Direct Loan
Portfolio grow in the last two years?
At what rate did loans serviced by
MCCD grow in the last two years?
City of Crystal
Taxable Market Value Trends
Final 2012 Values for Pay 2013 Taxes
Residential Total
837,337,204
Run Date
Run Date
Percent
Value
Property
Types
12/4/2012
12/3/2013
Change
Change
A
Apartment
97,215,640
98,900,500
1.7%
1,684,860
B
Blind
1,199,380
874,010
-27.1%
-325,370
C
Commercial
119,045,000
118,721,000
-0.3%
-324,000
CR
Railroad
1,945,200
1,909,200
-1.9%
-36,000
D
Disabled
3,763,390
3,987,640
6.0%
224,250
DB
Double Bungalow
8,811,410
8,426,560
-4.4%
-384,850
HL
Housing low income >3 units
2,854,800
2,906,500
1.8%
51,700
1
Industrial
34,060,000
32,102,000
-5.7%
-1,958,000
LA
Vacant land - apartment
6,000
6,000
0.0%
0
LC
Vacant land - commercial
3,072,000
2,982,100
-2.9%
-89,900
LI
Vacant land - industrial
1,135,000
1,135,000
0.0%
0
LL
Vacant land - lake shore
119,000
106,000
-10.9%
-13,000
LR
Vacant land - residential
775,300
778,300
0.4%
3,000
ND
Non-profit community assoc. donation
726,000
726,000
0.0%
0
NP
Non-profit community associations
240,000
240,000
0.0%
0
R
Residential
810,034,957
812,293,357
0.3%
2,258,400
RL
Residential - lake shore
17,796,657
16,052,025
-9.8%
-1,744,632
RM
Residential - miscellaneous
165,000
165,000
0.0%
0
RZ
Residential - zero lot line
3,199,640
2,537,750
-20.7%
-661,890
TP
Triplex
283,880
257,800
-9.2%
-26,080
X
Condominium
5,180,685
4,434,925
-14.4%
-745,760
Y
Townhouse
12,546,195
13,408,485
6.9%
862,290
1,124,175,134
1,122,950,152
-0.1%
-1,224,982
Residential Total
837,337,204
837,051,882
0.0%
-285,322
Apartment Total
100,076,440
101,813,000
1.7%
1,736,560
Condominiums
5,180,685
4,434,925
-14.4%
-745,760
Townhomes
12,546,195
13,408,485
6.9%
862,290
Double Bungalows
8,811,410
8,426,560
-4.4%
-384,850
Commercial Total
122,117,000
121,703,100
-0.3%
-413,900
Industrial Total
37,140,200
35,146,200
-5.4%
-1,994,000
Other Total
966,000
966,000
0.0%
0
1,124,175,134
1,122,950,152
-0.1%
-1,224,982
Attachment B
Discussion of the Resources and Purposes of Various Funds
Governmental accounting is based on fund accounting. Each fund is a group of accounts which
record the assets, liabilities, revenues and expenses related to specific activities or functions.
This allows for analysis of an activity or function separate from unrelated activities or functions.
It enables the city to demonstrate compliance with laws, regulations or contractual provisions.
The City of Crystal uses six different types of funds. There usually are more than one fund of
each type.
General Fund — The General Fund accounts for the services that people most frequently
associate with city government. Primary revenues are the property tax and intergovernmental
revenue.. Other revenues include licenses & permits, charges for services, fines & forfeits and
investment earnings.
Special Revenue Funds — Special revenue funds account for revenues from specific sources and
demonstrate legal compliance with regulations or contractual provisions specified by the
revenue source.
Debt Service Funds — Debt service funds account for the principal & interest payments on the
debt and revenue sources that were dedicated to the debt at the time bonds were sold.
Capital Improvement Funds — Capital funds account for improvement or construction projects.
These projects may span multiple years, may be for large dollar amounts and the total amount
of capital projects can fluctuate widely from one year to the next. These projects may be
financed by property taxes, special assessments, grants, debt issuance or transfers from other
funds.
Enterprise Funds — City utilities are enterprises which are accounted for in a manner similar to
private business enterprises. The purpose of the utility is to provide a service rather than to
produce a profit. The enterprise generally needs to show a profit in order to generate cash to
pay for capital improvements. Revenues primarily come from customer charges.
Internal Service Funds — Internal service funds account for a service that is provided to other
city funds and departments. Crystal's primary example is the Self Insurance Fund. This fund
purchases insurance coverage from the League of Minnesota Cities Insurance Trust and pays for
deductibles not covered by insurance. Revenues are investment earnings and charges to other
funds and departments.
How funds may be used — The basic principal of valid public expenditures is that public money
must be spent for a public purpose. Additional restrictions may come from state law, grant
provisions, contract provisions or City Council policies.
City of Crystal
Combining Statement of 2014 Adopted Budgets
EXPENDITURES
General Government
1,981,873
Special
Debt
Capital
Total
Utility
Utility Internal
20,671
2,317,267
General
Revenue
Service
Projects
Govermental
Funds
Funds Service
55,657
Fund
Funds
Funds
Funds
Funds
Operating
Capital Funds
TOTAL
REVENUES
Property Taxes
8,237,000
566,000
772,153
1,287,249
9,575,153
109,500
9,575,153
Delinquent Tax & Penalty
15,000
12,669
1,420,232
Community Development
15,000
683,559
15,000
Special Assessments
125,000
1,857,257
499,736
2,481,993
60,000
2,541,993
Licenses & Permits
772,080
6,342,334
1,435,000
772,080
Debt Service
772,080
Intergovernmental
1,962,509
21,000
553,899
2,537,408
3,018,028
Total Expenditures
2,537,408
Charges for Services
647,730
44,860
27,082,870
135,000
827,590
6,269,002
173,512
7,270,104
Fines & Forfiets
326,500
1,315,800
1,323,800
326,500
326,500
Administrative Fines
40,000
658,000
40,000
63,200
40,000
Interest
60,000
49,200
33,510
213,929
356,639
67,800
11,249
435,688
Miscellaneous
96,664
35,800
7,703,113
352,886
485,350
113,000
30,000
628,350
Interfund Services
283,109
72,656,679
Cash & Investments 12/31/2013
8,113,377
283,109
5,529,162
27,247,496
283,109
Sale of Property
0
1,317,000
54,343,851
35,000
1,352,000
1,352,000
Total Revenues
12,565,592
2,033,860
2,662,920
1,790,450
19,052,822
6,509,802
214,761
25,777,385
EXPENDITURES
General Government
1,981,873
6,123
308,600
2,296,596
20,671
2,317,267
Public Safety
5,806,191
53,063
324,335
6,183,589
55,657
6,239,246
Public Works
2,201,350
10,586,856
12,788,206
115,103
12,903,309
Recreation
1,287,249
10,814
109,500
1,407, 563
12,669
1,420,232
Community Development
686,329
683,559
19,000
1,388,888
12,501
1,401,389
Public Utilities
6,342,334
1,435,000
7,777,334
Debt Service
190,597
2,827,431
3,018,028
3,018,028
Total Expenditures
11,962,992
944,156
2,827,431
11,348,291
27,082,870
6,342,334
1,435,000
216,601
35,076,805
TRANSFERS
In
8,000
1,315,800
1,323,800
1,323,800
Out
602,600
658,000
1,260,600
63,200
1,323,800
SURPLUS -DEFICIT
0
439,704
-164,511
-8,242,041
-7,966,848
104,268
-1,435,000
-1,840
-9,299,420
Dec 31, 2013 Fund Balance
7,703,113
5,661,948
5,440,680
26,902,230
45,707,971
25,770,648
0
1,178,060
72,656,679
Cash & Investments 12/31/2013
8,113,377
4,307,685
5,529,162
27,247,496
45,197,720
7,897,146
0
1,248,985
54,343,851
N
General Fund
The General Fund primarily consists of operating expenses. These usually don't fluctuate up or
down a great deal from year to year, but instead increase gradually with inflation. An example
of this is to say that if the city needed 30 police officers last year and this year, then it will
probably need 30 police officers next year. They will just cost a little more due to inflation.
The portion of the General Fund budget that can be considered capital is the transfer to the
city's capital funds. Capital outlays fluctuate much more than operations, but that fluctuation
happens in the capital funds. The amounts transferred from the General Fund have been more
constant, except for supplemental transfers approved during the year or at year end.
The largest revenues of the General Fund are the property tax and state aid. Property taxes are
received in three payments in June, July and December. The largest part of state aid is known
as Local Government Aid (LGA). LGA is received in two payments, one at the end of July and
one at the end of December.
Since General Fund expenditures happen at a fairly constant rate throughout the year, but
major revenues are received at the middle and end of the year, it is necessary for the General
Fund to start the year with cash in the bank.
An Adequate General Fund Balance Formula was developed as a guide for how much cash
should be in the bank at the start of the year. This formula calls for the fund balance to be at
least 45% of the following year's budget plus the amount committed for compensated
absences.
The General Fund's fund balance has generally been above the amount called for by the
formula. In several recent years, the City Council has approved an additional transfer at year
end in order to draw the fund balance down closer to the amount called for by the formula.
Supplemental year end transfers may result in the General Fund showing a deficit for the year.
This is fairly easy to explain to the State Auditor and bond rating agencies since the goal is to
approach, but remain above, the balance called for by the Adequate General Fund Balance
Formula.
It would be an entirely different matter to have the originally adopted budget show a deficit for
the General Fund. This would be viewed as being extremely negative and could result in an
immediate down grade in the City's bond rating.
The main restriction on the use of money from the General Fund is that it be used for a public
purpose. This gives the City Council substantial discretion in choosing projects and services to
be supported by the General Fund.
CITY OF CRYSTAL
General Fund Budget Summary
EXPENDITURES
2012
2013
2013
2014
Dollar
Percent
Mayor & Council
Actual
Actual
Amended
Adopted
Change
Change
Administration
Amount
Amount
Budget
Budget
2014/2013
2014/2013
REVENUES
75,922
85,572
85,620
52,239
-33,381
-38.99%
Property Taxes
8,137,698
8,083,616
8,150,000
8,237,000
87,000
1.07%
Delinquent Tax & Penalty
147,083
128,076
10,000
15,000
5,000
50.00%
Special Assess.
279,813
232,076
187,200
125,000
-62,200
-33.23%
Licenses
129,698
123,708
117,380
127,180
9,800
8.35%
Permits
291,360
402,353
318,500
369,900
51,400
16.14%
Inspections
249,104
317,680
276,000
275,000
-1,000
-0.36%
Federal Intergovernmental
9,697
38,127
16,000
16,000
0
0.00%
State Intergovernmental
1,741,280
1,981,241
1,943,509
1,943,509
0
0.00%
County Intergovernmental
4,000
0
3,000
3,000
0
0.00%
Gen Govt Charges
109,455
128,925
138,810
149,575
10,765
7.76%
Recreation Charges
200,573
200,207
202,250
211,825
9,575
4.73%
Comm. Ctr. Charges
87,516
102,099
87,350
90,350
3,000
3.43%
Pool Charges
175,170
163,527
176,600
180,100
3,500
1.98%
Public Safety Charges
82,204
91,343
74,080
90,880
16,800
22.68%
Fines & Forfiets
275,111
341,898
297,000
326,500
29,500
9.93%
Administrative Fines
16,852
32,786
50,000
40,000
-10,000
-20.00%
Investment Income
77,371
12,683
60,000
60,000
0
0.00%
Miscellaneous
90,127
20,504
72,000
21,664
-50,336
-69.91%
Interfund Services
278,835
291,368
291,148
283,109
-8,039
-2.76%
TOTAL REVENUES
12,382,947
12,692,217
12,470,827
12,565,592
94,765
0.76%
EXPENDITURES
Mayor & Council
131,255
133,228
133,263
113,771
-19,492
-14.63%
Administration
867,451
889,526
889,857
965,852
75,995
8.54%
Human Resources
75,922
85,572
85,620
52,239
-33,381
-38.99%
Assessing
202,410
211,965
214,639
220,554
5,915
2.76%
Legal
92,554
201,291
201,300
93,000
-108,300
-53.80%
Elections
43,217
1,087
5,039
63,200
58,161
1154.22%
Finance
443,633
448,471
457,176
473,257
16,081
3.52%
Police
4,399,763
4,456,154
4,459,035
4,631,523
172,488
3.87%
Fire
964,835
1,161, 826
1,161, 826
1,174,668
12,842
1.11%
Code Enforcement
198,212
204,172
208,452
211,279
2,827
1.36%
Building Inspection
244,714
253,202
253,254
239,864
-13,390
-5.29%
Housing Inspection
151,036
148,387
148,418
207,368
58,950
39.72%
Environmental Health
26,890
25,064
28,107
27,818
-289
-1.03%
Engineering
328,309
325,686
329,980
331,220
1,240
0.38%
Street Maintenance
754,417
825,973
826,033
836,487
10,454
1.27%
Park Maintenance
654,080
665,880
667,952
721,837
53,885
8.07%
Forestry
149,491
128,935
158,396
154,090
-4,306
-2.72%
City Buildings
166,872
149,526
173,004
157,716
-15,288
-8.84%
Recreation
602,702
633,904
643,657
673,966
30,309
4.71%
Community Center
346,319
362,824
362,864
367,089
4,225
1.16%
Waterslide / Pool
213,668
231,277
234,491
246,194
11,703
4.99%
Operating Transfers
1,442,700
842,620
842,620
602,600
-240,020
-28.48%
TOTAL EXPENDITURES
12,500,450
12,386,570
12,484,983
12,565,592
80,609
0.65%
DIFFERENCE -117,503 305,647 -14,156 0
Ending Fund Balance 7,397,466 7,703,113 7,383,310 7,703,113
Cash & Investments 7,766,704 8,113,377
4
Special Revenue Funds
Tax Increment Financing (TIF) Districts:
There are three TIF districts that are active. The Phase 2 Housing District has expired but is
using its remaining assets to support the Home Improvement Rebate Program. Two other TIF
districts have expired and been closed.
TIF districts support new commercial/industrial development in one of two ways. First is to
provide a direct cash subsidy at the time of construction. Second is to enter into an agreement
with the developer under which the developer pays for certain costs and is repaid by the TIF
district over a period of years. This is known as a developer pay-as-you-go note. Payments on
the note are made as tax increment revenues are available. There is no obligation to pay the
developer anything more than the available tax increments and the note may not be fully
repaid at the end of the agreed upon term of the note.
The Anthony Shopping Center and Lamp Lighter Districts are making payments on developer
pay-as-you-go notes. The Lamp Lighter District will also begin to support the Home
Improvement Rebate Program and the Cavanagh development.
The Suburban Motel District borrowed money from the Anthony Shopping Center and Lamp
Lighter Districts to provide a direct cash subsidy to a developer at the time of construction. It
should complete repaying these loans in 2016.
The Anthony Shopping Center and Lamp Lighter Districts have more resources than are needed
to make the payments on their developer pay-as-you-go notes. TIF resources may only be
spent on TIF eligible projects as defined by state law.
Economic Development Authority (EDA)
The EDA promotes single & multi -family residential developments and commercial/industrial
redevelopment. Its principal revenues include a property tax levy, occasional federal or state
grants, sale of land purchased in previous years and interest income.
The EDA's activities include purchase and clearing of blighted properties, resale of cleared
property for new development, the home improvement incentive rebate program, and direct
support to redevelopment projects. Transfers to other funds in 2014 include $500,000 for the
Public Works Facility and $150,000 for streetscape improvements along Bass Lake Road.
EDA resources may be spent for public purposes and are primarily used to prevent blight or
promote commercial or housing development.
City Initiatives Fund and Special Projects Fund
These funds account for small grants and donations that must be spent on specified projects.
City of Crystal
Special Revenue Funds
Combining Statement of 2014 Adopted Budgets
TIF 2151 TIF 2153 TIF 2154
Anthony Phase 2 Suburban
Shop Ctr Housinq Motel
TIF 2155 Economic
Lamp Develop City
Lighter Authori Initiatives
Special
Projects
/Grants TOTAL
REVENUES
Property Taxes 110,000
104,000 144,000
208,000
566,000
Intergovernmental
21,000 21,000
Charges for Services
44,860
44,860
Interest 5,460
100 50 13,200
30,390
49,200
Miscellaneous
13,200
1,000
21,600 35,800
Sale of Property
1,296,000
21,000 1,317,000
Total Revenues 115,460
100 104,050 170,400
1,580,250
21,600 42,000 2,033,860
EXPENDITURES
General Government 6,123 6,123
Public Safety 11,063 42,000 53,063
Recreation 10,814 10,814
Community Development 2,068 96,533 1,068 118,668 465,222 683,559
Debt Service 111,551 8,560 70,486 190,597
Total Expenditures 113,619 96,533 9,628 189,154 465,222 28,000 42,000 944,156
TRANSFERS
In
Out
SURPLUS -DEFICIT
Dec 31, 2013 Fund Balance
Cash & Investments 12/31/2013
8,000
2,000 2,000 2,000 .2,000 650,000
8,000
658,000
-159 -98,433 92,422 -20,754 473,028 -6,400 0 439,704
300,222 140,546 -222,293 _11374,767 3,950,300 59,049 59,357 5,661,948
193,609 180,284 1,354 1,256,487 2,562,251 61,661 52,039 4,307,685
Debt Service Funds
Crystal currently has eleven outstanding bond issues. Eight of them finance special
assessments on properties in the street reconstruction phases. One is the 2005 bond used to
finance reconstruction of the pool. Two bonds relate to financing the local share of the county
highway 81 reconstruction. Property taxes are the revenue for the pool and county highway 81
bonds.
Most of the city's bonds were issued with 15 year terms. Exceptions are the 2009 special
assessment bonds which have 20 year term and the county highway 81 bonds which combined
have a 5 year term.
Taxes collected in 2014 for the County Highway 81 bonds are supposed to be the last year for
that tax levy. For a while it looked like costs for highway construction would come in under
budget. We haven't been able to get a current cost estimate for the second segment from the
county, but it appears that the total project cost could end up over budget. It may be necessary
to continue a smaller tax levy into 2015 and/or charge some project costs to the EDA.
All of the bonds with 15 or 20 year terms have a call feature which allows the city to call
remaining bonds for early redemption in the tenth year or later. The 2004 special assessment
bonds reach the call date in 2014 and the 2014 budget presumes that they will be called. There
is enough cash in the debt service fund to exercise the call feature on August 1, 2014.
It is desirable to call bonds when possible since that avoids arbitrage payments to the IRS and
reduces the city's total amount of outstanding debt. If the 2004 bonds are to be called, a
decision will need to be made this spring in order to provide the needed lead time before the
call date.
There always are special assessments receivable remaining to be collected when a special
assessment bond matures or is called. These receivables and any remaining cash have been
transferred to the Street Reconstruction Fund.
Revenues and assets of debt service funds are restricted to paying the principal and interest on
the bonds until the last maturities of the bond issue have matured or been called for early
redemption.
City of Crystal
Debt Service Funds
Combining Statement of 2014 Adopted Budgets
2004A
2005A
2005B 2006A
2008A
2009A
2010B
2011A
2012A
2013A
2013B
Improvmt
Improvmt
Improvmt
Improvmt
Improvmt
Street
Improvmt
Improvmt
Improvmt
Street
Bonds
Bonds
Pool Bonds
Bonds
Bonds
Reconst
Bonds
Bonds
Bonds
Reconst
Phase 6
Phase 7
Bonds Phase 8
Phase 9
Phase 10
Bonds
Phase 11
Phase 12
Phase 13
Bonds TOTAL
REVENUES
Property Taxes 209,000
Special Assessments 88,128 93,477 159,804 184,611
Interest 360 4,991 1,872 6,370 6,106
Total Revenues 88,488 98,468 210,872 166,174 190,717
148,404
312,421 232,525 375,991
10,126 2,647 1,038
322,547 148,404 235,172 377,029
414,749 772,153
410,300 1,857,257
33.510
410,300 414,749 2,662,
EXPENDITURES
733,379
594,271
294,217
754,783
773,683
1,222,865
-8,677
455,509
505,580
Contractual Services
4,500
900
500
1,200
1,100
4,500
1,400
1,520
1,250 16,870
Debt Service Principal
700,000
95,000
160,000
125,000
155,000
195,000
141,337 140,000
225,000
395,000 2,331,337
Debt Service Interest
27,410
26,900
47,200
38,716
57,923
94,866
34,278
48,194
84,237 459,724
Arbitrage Rebate Pymts
7,500
12,000
Total Expenditures
739,410
122,800
207,700
164,916
214,023
306,366
141,337 175,678
274,714
85,487 395,000 2,827,431
SURPLUS -DEFICIT -650,922 -24,332 3,172 1,258 -23,306 16,181 7,067 59,494 102,315 324,813 19,749 -164,511
Dec 31, 2013 Fund Balance
733,379
594,271
294,217
754,783
773,683
1,222,865
-8,677
455,509
505,580
115,070
0
5,440,680
Cash & Investments 12/31/2013
730,829
592,839
292,113
752,711
766,026
1,214,312
107,654
453,138
504,474
115,066
0
5,529,162
CO
Capital Improvement Funds
Capital improvement funds account for the acquisition or construction of capital assets. Five
year capital plans are attached for the following funds:
• Permanent Improvement Revolving Fund (PIR)
• Major Building Replacement Fund (MBRF)
• Police Equipment Revolving Fund (PERF)
• Street Maintenance Fund
• Street Reconstruction Fund
Fire Equipment Revolving Fund (FERF)
FERF was created using annual transfers from the General Fund and pays for Crystal's share of
major apparatus for the West Metro Fire and Rescue District.
The FERF doesn't have a five year plan because it is expected that the next purchase of major
apparatus will not occur until after the year 2020. No further transfers from the General Fund
are planned until the need for the next purchase is better defined.
The main restriction on the use of money from the FERF is that it be used for a public purpose.
REVENUES
Special Assessments
Intergovernmental
Charges for Services
Interest
Miscellaneous
Sale of Property
Total Revenues
City of Crystal
Capital Improvement Funds
Combining Statement of 2014 Adopted Budgets
Permanent Major Police Fire
Improvement Building Equipment Equipment Street Street
Revolving Replacement Revolving Revolving Maintenance Reconstruct TOTAL
124,800
203,764
75,600
30,750
20,000
454,914
30,135
135,000
60,000 28,170 6,300
15,000
60,000 208,305 6,300
30,364 344,572
499,736
320,000
553,899
135,000
18,461 25,398
213,929
322,136
352,886
35,000
48,825 1,012,106
1,790,450
EXPENDITURES
General Government 308,600 308,600
Public Safety 324,335 324,335
Public Works 652,500 8,000,000 1,130,044 804,312 10,586,856
Community Center & Pool 109,500 109,500
Community Development 19,000 19,000
Total Expenditures 1,089,600 8,000,000 324,335 0 1,130,044 804,312 11,348,291
TRANSFERS
In 614,800 500,000 128,200 72,800 1,315,800
SURPLUS -DEFICIT -19,886 -7,440,000 12,170 6,300 -1,008,419 207,794 -8,242,041
Dec 31, 2013 Fund Balance 8,713,979 10,286,268 3,151,150 634,970 1,854,710 2,261,153 26,902,230
Cash & Investments 12/31/2013 8,506,731 10,263,839 3,130,400 636,265 1,848,833 2,861,428 27,247,496
Fund: Permanent Improvement Revolving (PIR) Fund
Fund Number: 405
DESCRIPTION OF ACTIVITY
The Permanent Improvement Revolving Fund accounts for most capital expenditures of
general benefit to the City. This includes most vehicle purchases, construction of park
improvements, repairs to city buildings, and some street maintenance. The challenge
for the PIR fund is that the backlog of projects exceeds available revenues.
Major sources of revenue for the PIR historically have been investment earnings and a
transfer from the General Fund. Beginning in 2014, a portion of the Local Government
Aid received from the State of Minnesota will be deposited in the PIR.
The main restriction on the use of money from the PIR Fund is that it be used for a
public purpose. Other restrictions may be set in grant agreements.
Five Year Capital Improvement Plan
Capital Outlays
2014
2015
2016
2017
2018
Funding Sources
308,600
172,000
133,000
72,000
84,000
Special assessments
124,800
128,000
114,000
22,000
20,000
Local Government Aid
188,764
190,652
192,558
194,484
196,429
Recycling Grant
15,000
5,000
0
0
1,700
Interest Income
75,600
110,967
138,675
167,872
199,604
Cable Franchise Fee
30,750
200,000
201,000
60,000
293,500
Sale of Property
20,000
362,000
226,000
353,000
359,000
Storm Water Transfer
63,200
68,000
60,000
33,000
30,000
General Fund Transfer
401,600
413,648
426,057
438,839
452,004
EDA Transfer
150,000
25,500
42,000
20,500
20,000
Total Funding Sources
1,069,714
911,267
931,291
823,195
868,037
Capital Outlays
Administration
308,600
172,000
133,000
72,000
84,000
City Buildings
39,000
247,000
307,000
265,000
24,000
Community Development
19,000
39,000
0
21,000
0
Engineering
5,000
5,000
0
0
1,700
Street Improvements
363,500
244,000
212,000
54,000
12,000
Streets
126,900
200,000
201,000
60,000
293,500
Parks
90,100
362,000
226,000
353,000
359,000
Forestry
28,000
33,000
33,000
33,000
30,000
Recreation
0
0
0
10,000
10,000
Swimming Pool
79,000
25,500
42,000
20,500
20,000
Community Center
30,500
105,500
29,500
15,000
31,500
Total Capital Outlays
1,089,600
1,433,000
1,183,500
903,500
865,700
Surplus/ -Deficit
-19,886
-521,733
-252,209
-80,305
2,337
Fund: Major Building Replacement Fund
Fund Number: 408
DESCRIPTION OF ACTIVITY
The Major Building Replacement Fund is accumulating a replacement reserve for the
eventual building replacements and major remodeling of the City Hall/Police Station,
Fire Stations 1 & 2, the Streets/Parks Garage, and the Community Center.
It was created on January 1, 2007 by a transfer or $8,000,000 from the Permanent
Improvement Revolving Fund. The only ongoing source of revenue is investment
earnings, although surplus funds from other sources is sometimes transferred into the
fund.
The Public Works Facility replacement project has been initiated and will probably use
the entire balance in the fund over the 2014 to 2015 period. It is possible that an
internal loan or additional revenue will be needed in 2015 to finish the Public Works
Facility.
Discussions for rebuilding the balance have centered on continuing the tax levy that
ends with taxes payable in 2014 for the county highway 81 bonds and redirecting it to
the Major Building Replacement Fund.
The main restriction on the use of money from the MBRF is that it be used for a public
purpose.
Five Year Capital Improvement Plan
Funding Sources
Property Tax Levy
Interest Income
Transfers from EDA Fund
Utility Funds reimbursements
Total Funding Sources
2014 2015 2016 2017 2018
563,153 563,153 563,153 563,153
60,000 28,090 -11,996 -1,216 15,399
500,000
1,000,000
560,000 1,591,243 551,157 561,937 578,552
Capital Outlays
Public Works Facility 8,000,000 5,000,000 0 0 0
Total Capital Outlays 8,000,000 5,000,000 0 0 0
Surplus/(Deficit) -7,440,000 -3,408,757 551,157 561,937 578,552
12
Fund: Police Equipment Revolving Fund (PERF)
Fund Number: 235
DESCRIPTION OF ACTIVITY
Primary revenues have been a transfer from the General Fund, grants and investment
income. PERF accounts for the purchase of police vehicles and other capital
equipment. The increasing cost of equipment and technology are making it difficult for
the existing revenue sources to keep up with the need.
The City of Crystal is a member of LOGIS. LOGIS will be purchasing a computer aided
dispatch/records system. Crystal will be assessed $135,000 for its share of the cost.
This one-time expense will be offset by depositing $135,000 collected from a developer
for an issuer fee on bonded debt.
The main restriction on the use of money from the PERF is that it be used for a public
purpose. Other restrictions may be set in grant agreements.
Five Year Capital Improvement Plan
Funding Sources
Fed. & State Grants
Issuer Fee on Cond. Debt
Interest Income
Sale of Property
General Fund Transfer
Total Funding Sources
Capital Outlays
Marked Squad Cars
Unmarked Cars
Computer Aided Dispatch
Mobile Radios
Mobile Data Computers
Mobile Radars
In Squad Video
Defibrillator Units
Officer equipment
Auto theft prevention sys.
Evidence manager sys.
Total Capital Outlays
Surplus/ -Deficit
2014
2015
2016
2017
2018
30,135
200
8,000
0
0
135,000
0
0
0
0
28,170
43,144
57,327
70,641
85,479
15,000
15,000
15,000
15,000
15,000
128,200
132,046
136,007
140,088
144,290
336,505
190,390
216,335
225,729
244,769
80,000
43,000
120,000
80,000
82,000
27,000
65,000
25,000
39,000
68,000
135,000
0
0
0
0
10,000
15,000
20,000
20,000
0
12,000
12,000
18,000
18,000
18,000
0
8,600
10,400
0
8,600
0
6,000
24,000
6,000
6,000
0
8,000
8,000
8,000
0
30,200
38,800
29,800
18,200
12,000
30,135
200
0
0
0
0
0
0
2,400
0
324,335
196,600
255,200
191,600
194,600
12,170
-6,210
-38,865
34,129
50,169
13
Fund: Street Maintenance Fund
Fund Number: 410
DESCRIPTION OF ACTIVITY
The Street Maintenance Fund accounts for the cost of seal coating streets that have
been reconstructed under the Crystal Local Street Reconstruction program.
A commitment was made to the citizens at the start of the street reconstruction program
that they wouldn't be assessed for maintenance of the streets while they were still
paying the assessment for street reconstruction. Seal coat projects will be assessed to
property owners if they take place after the reconstruction assessments have been paid.
Pavement mill & overlay projects are an essential part of a long term street
maintenance program. Overlays will be assessed to the property owners (street
reconstruction assessments will be paid off by then).
In addition to seal coat projects, this fund also accounts for intensified maintenance that
is needed Phases 1, 2 and 3 because this pavement is deteriorating faster than
expected. Costs will continue until the phases undergo mill and overlay. The streets
will also need more frequent seal coating until they undergo the mill and overlay.
Five Year Capital Improvement Plan
Funding Sources
Special assessments
Interest Income
Other city reimbursement
State Aid Streets
General Fund transfer
Total Funding Sources
Capital Outlays
Street Phase 1-3 patching
Phases 4 & 8 sealcoat
Phases 5 & 9 sealcoat
Phases 10 sealcoat
Phase 1 mill & overlay
Phase 2 mill & overlay
Phase 3 mill & overlay
Phase 4 mill & overlay
Total Capital Outlays
Surplus/ -Deficit
2014
2015
2016
2017
2018
30,364
499,084
451,581
392,361
536,936
18,461
15,759
12,532
0
7,306
1,001,845
41,553
103,432
1,061,333
776,973
528,000
72,800
74,984
77,234
79,551
81,937
121,625
589,827
582,900
575,344
1,154,179
50,000
12,000
277,106
250,990
226,399
802,938
1,001,845
1,061,333
776,973
1,130,044
1,013,845
1,312,323 226,399 776,973
-1,008,419
-424,018
-729,423 348,945 377,206
14
Fund: Street Reconstruction Fund
Fund Number: 415
DESCRIPTION OF ACTIVITY
The Street Reconstruction Fund accounts for the cost of reconstructing streets in the
Crystal Local Street Reconstruction program.
City streets were divided into sixteen phases for reconstruction. A phase is
reconstructed in most years, with an occasional pause for planning. Phases 1 through
13 were reconstructed between 1994 and 2013.
Generally speaking, each phase has balanced budget. However, special assessments
and state aid revenues often are not received until several years after the project is
completed. This will cause the Street Reconstruction Fund to show deficits until after all
phases are completed and the lagging revenues are collected. .
Funding Sources
Special assessments
State aid for streets
Interest Income
Other city reimbursement
Utility reimbursement
Sale of bonds
Total Funding Sources
Capital Outlays
Admin & pavement study
Phase 13, Becker Park
Phase 14, Lions Park
Phase 15, Twin Oaks
Phase 16, Skyway
Total Capital Outlays
Surplus/ -Deficit
Five Year Capital Improvement Plan
2014 2015 2016 2017 2018
344,572
1,207,190
1,678,730
1,898,359
623,818
320,000
600,000
600,000
600,000
100,000
25,398
38,020
40,442
56,440
34,658
322,136
0
183,254
0
340,110
0
474,591
657,025
987,514
0
0
2,535,498
4,022,355
4,019,689
0
1,012,106 4,855,299 7,181,806 7,562,002 1,098,586
16,900
1,950
2,000
19,050
2,100
566,077
221,335
4,884,481
1,187,919
227,168
5,497,878
1,478,894
25,000
230,370
6,790,096
2,051,762
804,312
5,138,599
6,918,167
8,288,040
2,053,862
207,794
-283,300
263,639
-726,038
-955,276
15
Enterprise Funds
The main restriction on the use of money from the utility funds is that it be used for a public
purpose. However there is an expectation from customers that fees paid to each utility will be
spent on providing the service of that utility.
Water Utility Fund
The main challenge facing the Water Fund is maintaining the positive cash flow needed to
finance capital projects. These projects include a $1,200,000 contribution for construction of
emergency wells by the Joint Water Commission. There also are an increasing number of
capital projects to maintain or replace Crystal's aging infrastructure.
Meeting this challenge will involve a combination of increases in the per unit water charge, a
new fixed charge for the emergency wells and possibly loans from other city funds.
Sewer Utility Fund
The Sewer Fund also faces the challenge of financing capital projects, although not as severe a
challenge as the Water Fund. The largest capital expenditures relate to relining old sewer
mains and replacing vehicles & equipment. The Sewer Fund may be the source of some of the
loan to the Water Fund.
Storm Drainage Fund
The Storm Drainage Fund faces the most severe financial challenge of all the utilities. The last
three street reconstruction phases have little or no existing storm drainage infrastructure and
so substantial capital expenditures are needed to create the infrastructure. The fund's cash
balance could be negative at the end of 2015 and may not recover in the 5 year period of the
current rate study.
Street Light Fund
The Street Light Fund is the only one of the utilities that shows increases in its cash during the 5
year period of the current rate study. However, the utility is making substantial expenditures
for street lights along Highway 81 and these expenditures were not included in the rate study
because accurate costs were not available from Hennepin County.
Recycling Fund
Crystal participates in the Hennepin Recycling Group (HRG). HRG is a joint powers agreement
with 3 other cities to provide state -mandated recycling services. Crystal collects recycling fees
from residents and pays them to HRG who hires a contractor to provide the service.
16
City of Crystal
Utility Funds
Combining Statement of 2014 Adopted Budgets
REVENUES
Special Assessments
Charges for Services
Interest
Miscellaneous
Total Revenues
EXPENDITURES
Wages & benefits
Professional & Contractual Sery
JWC & MCES
Utilities
Repair & Maintenance
Supplies
Communications
Dues, Insurance & Training
Depreciation
Administrative Services Charge
Total Operating Expenditures
TRANSFERS
Out
SURPLUS -DEFICIT
Dec 31, 2013 Fund Balance
CAPITAL IMPROVEMENT PLAN
Cash & Investments 12/31/2013
Storm
Water Sewer Drainage
Fund Fund Fund
Street
Light Recycling
Fund Fund TOTAL
60,000
7,487,049
9,555,852
1,152,693
153,403
60,000
2,982,000
1,997,300
770,900
180,050
338,752
6,269,002
23,300
38,000
100
5,800
600
67,800
107,000
6,000
113,000
3,172,300
2,041,300
771,000
185,850
339,352
6,509,802
324,578
324,578
180,484
829,640
109,755
32,905
34,177
327,474
504,311
2,322,454
1,319,193
3,641, 647
4,140
21,200
6,400
132,000
163,740
37,800
20,900
3,000
6,000
67,700
50,500
55,550
17,450
13,000
136,500
3,500
2,850
1,250
7,600
12,703
23,086
61,414
10,920
394
108,517
183,470
108,691
276,539
30,870
599,570
118,451
118,451
31,874
9,005
5,328
283,109
3,167,351
2,027,404
612,588
201,795
333,196
6,342,334
63,200 63,200
4,949 13,896 95,212 -15,945 6,156 104,268
7,421,651
7,487,049
9,555,852
1,152,693
153,403
25,770,648
145,000
1,128, 000
150,000
12,000
0
1,435, 000
2,150,437 4,611,170 392,861 651,745 90,933 7,897,146
Internal Service Funds
Self Insurance Fund
Self insurance is a slightly misleading name since the city does buy insurance from the League
of Minnesota Cities Insurance Trust. The self insurance fund pays the insurance premiums and
deductibles that aren't covered by insurance. It has a balance that serves as reserve for any
major loss that would not be covered by insurance. Revenues include interest on the invested
cash and charges to each city fund and department based upon their risks and coverage
requirements.
The main restriction on the use of money from the Self Insurance Fund is that it be used for a
public purpose. However, as a matter of practice, they have only been spent on insurance
premiums, insurance deductibles and claims.
Post Employment Health Benefits Fund
This fund accounts for post employment health insurance costs of certain retired employees.
The benefit consists of payment by the city of the single person health insurance premium of
retired employees until the retiree is eligible for Medicare.
This benefit is no longer available to current active employees. The last employee receiving
benefits will be eligible for Medicare in May 2014. There was a fund balance of $173,691 on
December 31, 2013. Only a few thousand dollars will be spent on insurance benefits in 2014.
Once the last employee loses eligibility, the fund should be closed since it will no longer have a
purpose. The City Council will need to decide to transfer the remaining assets to another fund.
18
City of Crystal
Internal Service Funds
Combining Statement of 2014 Adopted Budgets
Self Post
Insurance Employment
Fund Fund TOTAL
REVENUES
Charges for Services 173,512 173,512
Interest 91481 1,768 11,249
Miscellaneous 30,000 30,000
Total Revenues 212,993 1,768 214,761
EXPENDITURES
Wages & benefits 3,608 3,608
Insurance & Miscellaneous 212,993 212,993
Total Expenditures 212,993 3,608 216,601
SURPLUS -DEFICIT
0
-1,840
-1,840
Dec 31, 2013 Fund Balance
1,004,369
173,691
1,178,060
Cash & Investments 12/31/2013
1,072,176
176,809
1,248,985
Memorandum
CITY of
CRYSTAL
DATE: April 3, 2014
TO: Mayor and City Council
Anne Norris, City Manager
FROM: Charles Hansen, Finance Director
SUBJECT: Discuss Financing Options for JWC Emergency Water Supply
Background:
The City Council discussed financing options for Crystal's share of the Joint Water
Commission (JWC) emergency water supply backup project at the February 18, 2014
work session.
A majority of the Council preferred a financing option labeled Attachment F. This was a
combination of Water Fund cash on hand and an internal loan of $600,000 from one or
more other city funds to pay the JWC for Crystal's share of the wells. Attachment F
relied on a combination of a $1.00 per month fixed fee added to all customer bills and
more rapid increases in the water per unit charge to repay the loan.
Despite the increased revenues, the Water Fund's cash on hand declines over the next
10 years because of other capital projects needed to maintain or replace the water
utility's aging infrastructure.
Internal Loan
The main question at the end of the February 18, 2014 work session which other funds
would supply the internal loan and what the terms of the loan would be. The
Permanent Improvement Revolving (PIR) Fund and Street Light Fund both have
adequate cash balances throughout the ten year study period to supply the cash for the
loan. I recommend that each of them supply $300,000 for the loan.
The PIR Fund projects annual deficits during several of the coming years. However, an
internal loan would not negatively affect the deficit (it might positively affect the deficit) if
the Water Fund pays interest on the loan.
Attachment 1 shows the structure of a $600,000 loan with payments from 2015 through
2023 and an interest rate of 2%. If the loan was made interest free, it would only save
about $61,600 over the ten years.
Attachment F
In addition to the fixed fee, all years after 2015 have a rate increase of 15 cents per
unit. This slows the decline in cash and investments, but a cash deficit is projected in
the tenth year. A deficit that far in the future isn't a great concern because actual
results will differ from the assumptions made in Attachment F.
Conclusion:
I recommend that the PIR Fund and the Street Light Fund each provide $300,000 as a
loan to the Water Fund with a 10 year repayment schedule at an interest rate of 2%.
Repaying the internal loan and funding other capital projects will require adding an
emergency well fixed charge of $1.00 per month, per customer to the utility bill. In
addition, per unit water rates are projected to increase 20 cents per unit in 2015 and 15
cents per unit each year after 2015.
Attachment 1
Emergency Wells Debt Structure
$600,000 Internal Loan
Term: 10 years
2% interest rate Total
Debt
Year
Principal
Interest
Service
Balance
2014
0
0
0
600,000
2015
62,000
12,000
74,000
538,000
2016
63,000
10,760
73,760
475,000
2017
64,000
9,500
73,500
411,000
2018
65,000
8,220
73,220
346,000
2019
66,000
6,920
72,920
280,000
2020
67,000
5,600
72,600
213,000
2021
68,000
4,260
72,260
145,000
2022
70,000
2,900
72,900
75,000
2023
75,000
1,500
76,500
0
Total 600,000 61,660 661,660
WATER UTILITY RATE STUDY
2014 Adopted Budget with paying for emergency wells using half cash and half internal loan
Emergency well fixed
charges and per
unit rate increase
in addition
to rate increases in
the Adopted Bud
et
PROFIT & LOSS
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
REVENUES
600,000
600,000
$2.75
$3.36
$3.45
$3.55
$3.65
$3.75
$3.85
$3.96
$4.07
Water usage charges
2,600,000
2,760,000
2,880,000
2,970,000
3,060,000
3,150,000
3,240,000
3,330,000
3,420,000
3,510,000
3,600,000
Fixed service charges
Ermergency well fixed charge
150,000
150,000
46,800
155,882
93,600
160,294
93,600
164,706
93,600
169,118
93,600
173,529
93,600
177,941
93,600
182,353
93,600
186,765
93,600
191,176
93,600
Penalties
57,000
60,000
61,500
63,038
64,613
66,229
68,216
70,262
72,370
74,541
76,777
Special Assessments
60,000
60,000
61,500
63,038
64,613
66,229
68,216
70,262
72,370
74,541
76,777
JWC reimbursement
12,000
12,000
12,000
12,000
12,000
12,000
12,000
12,000
12,000
12,000
12,000
Investment Income
27,000
23,300
25,331
27,723
24,812
23,118
18,535
13,921
9,624
5,585
1,714
Miscellaneous
57,000
57,000
58,425
59,886
61,383
62,917
64,805
66,749
68,751
70,814
72,938
State testing fee billed
50,000
50,000
51,250
52,531
53,845
55,191
56,846
58,552
60,308
62,118
63,981
Internal loan proceeds
600,000
3,013,000
3,819,100
3,399,489
3,502,109
3,599,572
3,698,401
3,795,746
3,893,287
3,991,376
4,089,964
4,188,965
TOTAL REVENUES
EXPENSES
Salaries & Wages
230,449
235,494
241,381
247,416
253,601
259,941
267,740
275,772
284,045
292,566
301,343
Fringe Benefits
81,183
89,084
93,538
98,215
103,126
108,282
111,531
114,877
118,323
121,873
125,529
JWC - Operations
1,908,730
2,013,304
2,069,677
2,127,627
2,187,201
2,248,443
2,311,399
2,376,118
2,442,650
2,511,044
2,581,353
JWC - Capital
229,500
358,225
364,500
725,760
90,450
128,250
350,000
350,000
350,000
350,000
350,000
JWC - emergency wells
JWC 2 cents/1,000 gal. fee
12,000
1,215,000
12,000
12,000
12,000
12,000
12,000
12,000
12,000
12,000
12,000
12,000
Professional/Contractual
94,568
97,755
100,688
103,708
106,820
110,024
113,325
116,725
120,226
123,833
127,548
Utilities
4,200
4,140
4,264
4,392
4,524
4,660
4,799
4,943
5,092
5,244
5,402
Repair & Maintenance
38,100
37,800
38,934
40,102
41,305
42,544
43,821
45,135
46,489
47,884
49,320
Supplies
50,500
50,500
52,015
53,575
55,183
56,838
58,543
60,300
62,109
63,972
65,891
Communications & Printing
7,600
3,500
3,605
3,713
3,825
3,939
4,057
4,179
4,305
4,434
4,567
Insurance & Training
16,265
12,703
13,084
13,477
13,881
14,297
14,726
15,168
15,623
16,092
16,575
Depreciation
183,676
183,470
190,000
195,000
200,000
210,000
210,000
210,000
210,000
210,000
210,000
Admin. Service Charge
117,472
118,451
121,412
124,448
127,559
130,748
134,670
138,710
142,872
147,158
151,572
Debt service on internal loan
74,000
73,760
73,500
73,220
72,920
72,600
72,260
72,900
76,500
2,974,243
4,431,426
3,379,098
3,823,194
3,272,974
3,403,187
3,709,531
3,796,527
3,885,992
3,978,999
4,077,600
TOTAL EXPENSES
NET INCOME or -LOSS
38,757
-612,326
20,390
-321,085
326,598
295,215
86,215
96,760
105,384
110,965
111,365
ENDING FUND BALANCE
7,494,8881
6,882,562
6,902,953
6,581,868
6,908,467
7,203,681
7,289,896
7,386,6571
7,492,041
7,603,0051
7,714,370
2,163,732
2,262,611
1,688,755
1,386,146
992,482
770,603
617,817
464,032
320,793
186,177
57,141
CASH FLOW
Cash & Investments, Beg. of Year
Net income
38,757
-612,326
20,390
-321,085
326,598
295,215
86,215
96,760
105,384
110,965
111,365
Add back Depreciation
183,676
183,470
190,000
195,000
200,000
210,000
210,000
210,000
210,000
210,000
210,000
Deduct Capital Outlay
123,554
145,000
513,000
267,579
748,478
658,000
450,000
450,000
450,000
450,000
450,000
2,262,6111
1,688,7551
1,386,1461
992,4821
770,6031
617,8171
464,0321
320,793
186,1771
57,141
-71,494
Cash & Investments, End of Year
Retail Rate per 1,000 gallons, Tier 1
4.05
$4.30
$4.50
$4.65
$4.80
$4.95
$5.10
$5.25
$5.40
$5.55
$5.70
Retail Rate per 1,000 gallons, Tier 2
4.45
$4.70
$4.90
$5.05
$5.20
$5.35
$5.50
$5.65
$5.80
$5.95
$6.10
Retail Rate per 1,000 gallons, Tier 3
4.85
$5.10
$5.30
$5.45
$5.60
$5.75
$5.90
$6.05
$6.20
$6.35
$6.50
Rate increase from prior year
2.11%
5.15%
3.92%
2.83%
2.75%
2.68%
2.61%
2.54%
2.48%
2.42%
2.36%
Interest rate actual/projected
Crystal average rate
Unit sales (1,000 gallons)
JWC operating rate, /1,000 gallons
JWC capital rate, per 1,000 gallons
Units purchased from JWC
1.00% 1.00% 1.50% 2.UU"/o 2.5U% U.UU% J.UU% 6.UU1/0 J.UU% 1.UU1/0 s.UU%
$4.33
$4.60
$4.80
$4.95
$5.10
$5.25
$5.40
$5.55
$5.70
$5.85
$6.00
600,000
600,000
600,000
600,000
600,000
600,000
600,000
600,000
600,000
600,000
600,000
$2.75
$3.36
$3.45
$3.55
$3.65
$3.75
$3.85
$3.96
$4.07
$4.19
$4.30
$0.33
$0.60
$0.61
$1.21
$0.15
$0.21
$0.58
$0.58
$0.58
$0.58
$0.58
693,000
600,000
600,000
600,000
600,000
600,000
600,000
600,000
600,000
600,000
600,000
Attachment F