2014.05.08 Work Session Packet4141 Douglas Drive North • Crystal, Minnesota 55422-1696
CITY of Tel: (763) 531-1000 • Fax: (763) 531-1188 • www.crystalinn.gov
CRYSTAL
Posted: May 2, 2014
CRYSTAL CITY COUNCIL
WORK SESSION AGENDA
Thursday, May 8, 2014
7:00 p.m.
Conference Room A
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, May
8, 2014 in Conference Room A located at 4141 Douglas Drive, Crystal, Minnesota.
I. Attendance
Council members Staff
Libby Norris
Peak Therres
Selton Revering
Adams Larson
Budziszewski Hansen
Deshler Mathisen
Hoffmann Norton
Serres
II. Agenda
The purpose of the work session is to discuss the following agenda items:
West Metro Fire -Rescue District fund balance policy
Review financing plan for Crystal's share of emergency water supply
Discuss refinancing options for Major Building Replacement Fund
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.
Memorandum
CITY of
CRYSTAL
DATE: April 28, 2014
TO: Mayor and City Council
1
FROM: Anne Norris, City Manager
SUBJECT: Discuss WMFD Fund Balance Policy
The West Metro Fire -Rescue District (District) has separate funds for general
operations, pension, capital equipment, and major apparatus. The general operations
fund is the District's annual operations budget. The Capital Equipment fund was
established to fund equipment and 10 staff vehicles purchases. The Major Apparatus
fund was established to fund the purchase/replacement of 4 engines, 1 aerial truck and
4 rescue vehicles.
The District has a fund balance policy (attached) which has been revised over the
years. The current fund balance policy provides that the District will strive to maintain a
general fund balance equal to 10% of the annual general fund budget. The calculation
of reserve is defined:
1. The general fund balance is calculated based on the most recent audited fund
balance of the general fund.
2. The goals for the general fund reserve shall be calculated as 10% of the
subsequent general fund budget.
3. Annually the District Board will review the general fund balance reserve. Any
amount by which the calculation in paragraph 1 (above) exceeds the
calculation in paragraph 2 (above) will be distributed as follows: 70% to
majore fire apparatus and 30% to capital equipment. These amounts will be
considered a committed portion of the Capital Fund balance under the
provisions of GASB 54.
4. If the fund balance calculated in paragraph 1 (above) falls below the threshold
established in paragraph 2 (above), the Board will determine the appropriate
action to replenish the fund at the next board meeting or specifically called
meeting.
The fund balance policy has been revised to reduce the amount needed for the general
fund balance as both cities are invoiced and pay their contributions on a monthly basis,
so there is sufficient cash flow for most District expenses.
The Major Apparatus fund was established to fund future replacement of major vehicles
(engines, aerial and rescues). However, during a work session of the District Board and
both city councils some years ago, it was agreed both cities would fund their respective
portions of the costs of replacement of major equipment rather than having the District
save for these purchases.
Over the last 18 months, Chief Larson has worked on a stable capital equipment plan
over the next 11 years so that the cities' contributions are predictable with modest,
planned increases and equipment is replaced or purchased on a scheduled basis.
In the last 12 months, 1 of the 4 rescue vehicles has been replaced with a smaller, less
expensive vehicle, utilizing funds in the Major Apparatus Fund. The cost of this vehicle
was approximately $90,000. An additional 2 rescues will be purchased late in 2014 at
an estimated cost of $190,000. After these purchases, there will be a balance of
approximately $100,000 in the District's major apparatus fund and no funding plan. No
major apparatus/equipment replacement is anticipated in the next 8-10 years.
With no immediate use of the Major Apparatus Fund, the Board discussed whether to
continue the use of the Major Apparatus Fund or to close that fund. If the fund were
closed, the fund balance would be contributed to the Capital Equipment Fund to offset
the annual increases to the cities to fully fund the Capital Equipment Fund. The
District's auditor suggests the current restriction on the Major Apparatus fund is too
restrictive and the funds would be better used in the general Capital Equipment Fund.
The Board requested both city councils review this proposed change in District policy
and also to discuss how the cities will fund future replacement purchases of District
major equipment (whether each city will continue to plan for its share of the costs or
whether the District should be saving for long-term major apparatus purchases.) Both
city councils will be discussing this in May -June and then together with the District
Board at the August work session/joint meeting.
Attach: Current WMFD Fund Balance Policy
Memo from Matt Mayer with Proposed Policy Revisions
WMFD Capital Plan 2014-2025
WEST METRO FIRE -RESCUE DISTRICT
GENERAL FUND
FUND BALANCE POLICY
Purpose
The District shall maintain a general fund balance in order to bridge any cash flow needs and to
meet obligations for unanticipated expenses such as insurance deductibles, uninsured losses,
unexpected increases in supply/utility costs and other budget variables. The general fund
budget provides for payroll and benefits for full and part-time employees, supplies, and
adequate maintenance of buildings and equipment.
Policy
The District will strive to maintain a general fund balance equal to 10% of the annual general
fund budget of the subsequent year.
Calculation of Reserve
1. The general fund balance is calculated based on the most recent audited fund balance
of the general fund.
2. The goal for the general fund reserve shall be calculated as 10% of the subsequent
general fund budget.
3. Annually the District Board will review the general fund balance reserve. Any amount
by which the calculation in paragraph 1 exceeds the calculation in paragraph 2 will be
distributed as follows: 70% to major fire apparatus and 30% to capital equipment.
These amounts will be considered a committed portion of the Capital Fund balance
under the provisions of GASB 54.
4. If the fund balance calculated in paragraph 1 falls below the threshold established in
paragraph 2, the board will determine the appropriate action to replenish the fund at
the next board meeting or specially called meeting.
Provisions of GASB 54
GASB 54 provides for classification of Fund Balance in the following categories:
Nonspendable - This category includes the following:
Amounts that are not expected to be converted to cash, such as prepaid items or inventory,
Restricted — This category includes amounts that have an externally imposed constraint for a
specific purpose, by external parties or legislation
Constraints are legally enforceable
Examples include unspent grant proceeds and donor restricted contributions
Committed —This category includes amounts that have a self-imposed constraint for a specific
Purpose
Commitments require a Board resolution to make the constraint and a Board resolution to
change or remove the constraint
Fund balance commitment resolutions must be adopted before the end of the year, but the
exact amounts can be determined after year-end
Assigned —This category also includes amounts that have a self-imposed constraint for a
specific purpose
The constraint demonstrates the Board's intent
The Board authorizes the Chief to assign fund balance that reflects the Board's intended use of
those funds
Remaining positive amounts in governmental funds other than the general fund are considered
Assigned
Unassigned — This category includes amounts that are available for any purpose
Unassigned fund balance is reported only in the general fund and in other funds with negative
fund balances
Order of Spending
When a fund has both restricted and unrestricted fund balance, it is the District's policy to use
restricted resources first, then unrestricted resources as they are needed.
When a fund has any combination of committed, assigned, and unassigned fund balance, it is
the District's policy to use committed resources first, then assigned, and then unassigned
resources as they are needed.
Approved by the Board of Directors November 2, 2000
Modified by the Board of Directors December 15, 2004 (reserve balance adjusted from 25% to 17% of annual budget)
Modified by the Board of Directors June 8, 2005 (reserve balance adjusted from 17% to 14% of annual budget)
Modified by the Board of Directors November 14, 2006 (distribution of excess to vehicle and capital funds)
Modified by the Board of Directors November 9, 2011 (GASB 54 terminology/clarification of use of excess)
Modified by the Board of Directors April 11, 2012 (reserve balance adjusted from 14% to 10% with distribution 70% to major fire
apparatus and 30% to capital equipment. These amounts will be considered a committed portion of the Capital Fund balance
under the provisions of GASB 54)
New Business H-1
To: West Metro Administration
From: Matt Mayer, KDV
Re: Capital Fund Balance Policy
Current policy provides for the following components of Capital fund balance at the end of each fiscal
year:
• Committed for Major Apparatus — Amount represents 70% of general fund excess fund
balance transfers. This balance is to be utilized only to offset the City's costs of periodic
major apparatus purchases.
• Committed for Capital Equipment —Amount represents 30% of general fund excess fund
balance transfers. This balance is to be utilized for all other capital needs of the District.
• Committed for Carryovers — Amount represents board -approved carryovers of unspent
capital fund budget authorizations, including Turn Out Gear and SCBA roll -forwards.
• Assigned Fund Balance (Uncommitted) — Amount represents the residual fund balance
which has accrued over the years from unspent or underspent budget authorizations.
Two Issues to Consider
1. As the District looks ahead to its capital needs over the course of the next 10 to 15 years, it may
find the Committed for Major Apparatus set aside too restrictive. Currently the next
opportunity to utilize this balance (which will have grown to nearly $240,000 by the end of
2012) is 2015 with the planned purchase of rescue vehicles. I understand that an alternative to
this purchase may be in the works; if so, the next scheduled major apparatus purchase is in
2025.
Without a re -definition of "major apparatus" or a revision to the fund balance policy, there is
the potential that the District will be locking up nearly a quarter of a million dollars in available
resources for more than a decade.
2. The member cities have demonstrated a desire that their combined general and capital annual
contribution to the District is smoothed or level on a year-to-year basis. Because of the nature
of capital needs, this can sometimes be a challenge. Allowing a portion of fund balance to be
available as a way to smooth these annual contributions would be a valuable tool for
administration to help in achieving the member cities' objectives.
Recommendations
Revisit the 70% major apparatus allocation with the Board. If the board agrees that current
major apparatus needs have made this set-aside to restrictive, an alternative would be that
both this 70% and the current 30% set-aside be pooled into a "Committed for Future
Capital" account that could be used at the board's discretion for any specific future capital
needs of the District.
WEST METRO FIRE -RESCUE DISTRICT
GENERAL FUND
FUND BALANCE POLICY
Purpose
The District shall maintain a general fund balance in order to bridge any cash flow needs and to
meet obligations for unanticipated expenses such as insurance deductibles, uninsured losses,
unexpected increases in supply/utility costs and other budget variables. The general fund
budget provides for payroll and benefits for full and part-time employees, supplies, and
adequate maintenance of buildings and equipment.
Policy
The District will strive to maintain a general fund balance equal to 10% of the annual general
fund budget of the subsequent year.
Calculation of Reserve
1. The general fund balance is calculated based on the most recent audited fund balance
of the general fund.
2. The goal for the general fund reserve shall be calculated as 10% of the subsequent
general fund budget.
3. Annually the District Board will review the general fund balance reserve. Any amount by
which the calculation in paragraph 1 exceeds the calculation in paragraph 2 will be
distributed to capital equipment.
These amounts will be considered a committed portion of the Capital Fund balance
under the provisions of GASB 54.
4. If the fund balance calculated in paragraph 1 falls below the threshold established in
paragraph 2, the board will determine the appropriate action to replenish the fund at
the next board meeting or specially called meeting.
Provisions of GASB 54
GASB 54 provides for classification of Fund Balance in the following categories:
Nonspendable - This category includes the following:
Amounts that are not expected to be converted to cash, such as prepaid items or inventory,
Restricted ® This category includes amounts that have an externally imposed constraint for a
specific purpose, by external parties or legislation
Constraints are legally enforceable
Examples include unspent grant proceeds and donor restricted contributions
Committed — This category includes amounts that have a self-imposed constraint for a specific
purpose
Commitments require a Board resolution to make the constraint and a Board resolution to
change or remove the constraint
Fund balance commitment resolutions must be adopted before the end of the year, but the
exact amounts can be determined after year-end
Assigned — This category also includes amounts that have a self-imposed constraint for a
specific purpose
The constraint demonstrates the Board's intent
The Board authorizes the Chief to assign fund balance that reflects the Board's intended use of
those funds
Remaining positive amounts in governmental funds other than the general fund are considered
assigned
Unassigned —This category includes amounts that are available for any purpose
Unassigned fund balance is reported only in the general fund and in other funds with negative
fund balances
Order of Spending
When a fund has both restricted and unrestricted fund balance, it is the District's policy to use
restricted resources first, then unrestricted resources as they are needed.
When a fund has any combination of committed, assigned, and unassigned fund balance, it is
the District's policy to use committed resources first, then assigned, and then unassigned
resources as they are needed.
Approved by the Board of Directors November 2, 2000
Modified by the Board of Directors December 15, 2004 (reserve balance adjusted from 25% to 17% of annual budget)
Modified by the Board of Directors June 8, 2005 (reserve balance adjusted from 17% to 14% of annual budget)
Modified by the Board of Directors November 14, 2006 (distribution of excess to vehicle and capital funds)
Modified by the Board of Directors November 9, 2011 (GASB 54 terminology/clarification of use of excess)
Modified by the Board of Directors April 11, 2012 (reserve balance adjusted from 14% to 10% with distribution 70% to major fire
apparatus and 30% to capital equipment. These amounts will be considered a committed portion of the Capital Fund balance
under the provisions of GASB 54)
2014 -2025 Capital Plan
Board Approved May 15, 2013
Year Purchased Project Description 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Station 12012
Station 2 2012 Interior Lighting $11,300
Station 3 2012
Station 12006
Station 2 2006 Vehicle Exhaust Systems $14,000
Station 3 2006
Station 1 Sleeping Quarter Furniture $5,000
Station 2
ADMINISTRATION/TECHNOLOGY
Station 12008
Station 2 2007
Station Floor Recoating
$45,000 $45,000
Station 3 2012
Station 12005
On-going
Computer workstations
$5,000 $4,800
$2,000
$4,800
$4,800 $4,800
$4,800
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
On-going
Laptop workstations
$2,000 $2,400
$2,500
$2,500
Training Room Furniture
$2,500
Station 3 2005
$2,500
$2,500
$2,500
On-going
Printers
$2,000 $6,000 $10,000
$3,000
$2,000
Station 1 (7)
$3,000
$2,000
Station 2 (5)
Overhead Doors
$147,000
$3,000
On-going
Tablets
$4,000
$4,000
$4,000
2009
Security System Upgrade
$30,000
2009
LCD Projectors (portable)
$1,500
2009
LCD Projector (fixed)
$2,000
2006
Audio Recorder
$5,000
2009
Telephone
$20,000
LOGIS
Cisco Access Points
$2,500
LOGIS
Fire Wall
$5,500
LOGIS
Cabling multi to single mode
$5,200
LOGIS
Station 1 Switch Upgrade
$3,840
LOGIS
Station 2 Switch Upgrade
$6,044
LOGIS
Wifi Controller
$2,847
LOGIS
Wifi replacement for obsolete unit
$2,426
LOGIS
Estimated Logis Cost
$10,000
$10,000 $10,000
$10,000
$10,000
10000
10000
10000
10000
10000
10000
Total
$7,000 $15,200
$25,357
$23,300
$14,800 $17,300
$16,300
$24,500
$47,000
$24,500
$35,000
$21,500
$18,000
$17,500
Station 12012
Station 2 2012 Interior Lighting $11,300
Station 3 2012
Station 12006
Station 2 2006 Vehicle Exhaust Systems $14,000
Station 3 2006
Station 1 Sleeping Quarter Furniture $5,000
Station 2
BUILDING
Station 12008
Station 2 2007
Station Floor Recoating
$45,000 $45,000
Station 3 2012
Station 12005
Station 2 2004
Apparatus Bay Painting
$30,000 $30,000
Station 3 2011
30,000
Station 12008
Station 2 2006
Interior Painting
$20,000 $20,000
Station 3 2005
$30,000
Station 12000
Station 2 2001
Training Room Furniture
$10,000 $20,000
Station 3 2005
Station 12005
Station 2 2005
Office Furniture
$2,000 $6,000 $10,000
Station 3 2012
Station 1 (7)
Station 2 (5)
Overhead Doors
$147,000
Station 3 (9)
Station 12012
Station 2 2012 Interior Lighting $11,300
Station 3 2012
Station 12006
Station 2 2006 Vehicle Exhaust Systems $14,000
Station 3 2006
Station 1 Sleeping Quarter Furniture $5,000
Station 2
2014 -2025 Capital Plan
Bard Approved May 15, 2013
Year Purchased Project Description 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Station 12008
RESPIRATORY PROTECTION EQUIPMENT
Station 2
Kitchens
$3,000
Station 3
Station 1
Station 2
Bathroom Upgrades
$5,000 $5,000 $5,000
Station 3
Station 12007
Station 12008
Station 2 2006
Carpeting/Alternative Flooring
$25,000 $ 10,000
Station 3 2005
Station 12011
Station 2 2005
Washing Machines
$2,000 $2,000
Station 31991
$50,000
$3,000
Station 1198511,000
Pressure Washers
$
Station 21972
$50,000
$50,000
Station 3 1991
Station 3 Pressure Washer System
$10,000
$50,000
Total
$27,300 $11,000 $205,000 $25,000 $80,000 $70,000 $45,000 $0 $20,000 $73,000
RESPIRATORY PROTECTION EQUIPMENT
Station 12007
Station 2 2007
54-SCBA
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
Station 3 2007
Station 12006
Station 2 2007
3 -Fill Stations
Station 3 2011
Station 11995
Station 2 1995
3 -Breathing Air Compressors
$60,000
Station 31999
Total
$50,000
$50,000
$110,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
$50,000
PERSONAL PROTECTIVE EQUIPMENT
2007
10 -Turnout Gear Sets
$40,000
$25,000
$25,750
$26,500
$27,250
$28,000
$28,750
$29,500
$30,250
$31,000
$31,750
$32,500
Total
$40,000
$0
$25,000
$25,000
$25,750
$26,500
$27,250
$28,000
$28,750
$29,500
$30,250
$31,000
$31,750
$32,500
POWERED EQUIPMENTITOOLS
2012
Thermal Imagers
2011
Gas Powered Fans
$25,000
2011
Electric Fans
$25,000
2011
Chain Saws
$18,000
2011
Rescue Saw
$15,000
2012
Hydraulic Rescue Tool
$25,000
Total
$25,000
$0
$0
$0
$0
$0
$0
$0
$0
$83,000
$0
$0
$0
$0
COMMUNICATION EQUIPMENT
2006
MDCs
$25,000
$27,500
$35,000
$35,000
$40,000
$40,000
2004
Portable Radios $150,000
$50,000
$50,000
$50,000
2004
Mobile Radios/Apparatus and Operations
$55,000
Year Purchased
On -Going
2011
Project Description 2012 2013
COMMUNICATION EQUIPMENT
Minitor Pagers $3,700
2014 W2025 Capital Plan
Board Approved May 15, 2013
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
$5,500 $5,500 $5,500 $5,500 $5,500
Portable Radio Batteries $6,000 $6,800 $10,000 $10,000
Total $89,700 $27,500 $5,500 $12,300 $55,500 $90,500 $90,500 $0 $10,000 $0 $40,000 $50,000 $0 $0
TECHNICAL RESCUE EQUIPMENT
2005 PPE $6,500
2005 Rope $2,000 $5,000
2000 Hardware
2010 RIT Bags/Equipment
1994 Trailer
2006 Boat
Boat Motor $6,000
2005 Ice Rescue Suits (9) $18,000
Total $2,000 $11,500 $0 $6,000 $0 $0 $0 $18,000 $0 $0 $0 $0 $0 $0
HAZARDOUS MATERIALS EQUIPMENT
2010 Generator
2004 Trailer
2010 Mister
2009 Gas Monitors $3,000 $5,000 $5,000
Total $3,000 $5,000 $0 $0 $0 $5,000 $0 $0 $0 $0 $0 $0 $0 $0
PREVENTION
2010 Fire Extinguisher Training Prop $10,000
2009 Hazard House
2013 Sparky (Special Fund)
1999 Display Board $3,000
Total $0 $0 $0 $3,000 $0 $0 $0 $0 $10,000 $0 $0 $0 $0 $0
TRAINING
Rescue Manikins (Special Fund) $2,000
Total $2,000
MEDICAL EQUIPMENT
2009
On -Going 1990
LUCAS
AED
$4,000
$4,200 $4,200 $4,200 $4,200 $4,200
$4,200
$8,000
2010
Pulse Ox
2010
0/2 Cylinders
Total
$4,000
$4,200 $4,200 $4,200 $4,200 $12,200
$4,200 $0 $0 $0 $0 $0 $0 $0
FIRE SUPRESSION EQUIPMENT
2011
Hose
$5,000
$10,000
$10,000
2007
Nozzles
2011
Adapters/Couplings/Reducers
Total
$5,000
$0 $0 $0 $0 $0
$10,000 $10,000 $0 $0 $0 $0 $® $®
HAZARDOUS MATERIALS EQUIPMENT
2010 Generator
2004 Trailer
2010 Mister
2009 Gas Monitors $3,000 $5,000 $5,000
Total $3,000 $5,000 $0 $0 $0 $5,000 $0 $0 $0 $0 $0 $0 $0 $0
PREVENTION
2010 Fire Extinguisher Training Prop $10,000
2009 Hazard House
2013 Sparky (Special Fund)
1999 Display Board $3,000
Total $0 $0 $0 $3,000 $0 $0 $0 $0 $10,000 $0 $0 $0 $0 $0
TRAINING
Rescue Manikins (Special Fund) $2,000
Total $2,000
2014 -2025 ,Capotai Plan
Board ApprDved May 15, 2013
Year Purchased
Project Description
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
STAFFJUTILT`( VEHICLES
2013
U-31
$51,500
$50,000
2004
C-11
$42,000
$52,000
2004
C-24
$43,000
2007
C-31
$45,000
2003
U-31
$40,000
$51,000
2008
C-2
$46,000
2008
C-23
$47,000
2006
U-11
$44,000
2011
U-21
$49,000
2010
U-32
$48,000
Total
$51,500
$0
$40,000
$42,000
$43,000
$44,000
$45,000
$46,000
$47,000
$48,000
$49,000
$50,000
$51,000
$52,000
Grand Total
$304,500
$126,400
$415,057
$190,800
$273,250
$350,500
$288,250
$176,500
$212,750
$308,000
$204,250
$202,500
$150,750
$152,000
MAJOR APPARATUS
2012
Heavy Rescue / evaluate
2004
Aerial / Next Purchase 2029
2011
Engines / Evaluate / Form Committee 2021
2013
Light Rescues
$90,000
$190,000
$110,000
(2) $220,000
2013
Grass Utility
$48,070
$50,000
Total
$138,070
$1901000
Memorandum
:.CITY€9f
+CRYSTAL
DATE: May 1, 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 and again at the April 10, 2014 work session.
A majority of the Council preferred a financing option combining 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. This 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. However the City Council wanted the increased the water per
unit charge to show as a separate Emergency Well Surcharge line on the utility bill.
It also needs to be understood that the emergency wells are not the only new capital
cost facing the Water Fund. In the 2013 budget, capital outlays for Water Fund totaled
$705,475 for the five year period of 2013 - 2017. Crystal's share of the JWC capital
outlays totaled $1,368,900 for the five year period of 2013 — 2017.
In the 2014 budget, capital outlays for Water Fund totaled $2,332,057 for the five year
period of 2014 — 2018. The JWC capital improvement plan was updated in December
2013. In this updated plan, Crystal's share of the JWC capital outlays totaled
$1,667,185 for the five year period of 2014 — 2018. This is in addition to Crystal's
estimated $1,215,000 share of the emergency wells.
Comparing the estimate of Crystal's own five year capital outlays and its share of
JWC's five year capital outlays in the 2013 budget to our current estimates shows an
increase of $1,924,867 plus $1,215,000 for the emergency wells. Our estimate of total
capital outlays for the five year period has increased by $3,139,867 in the last budget
cycle. Plans must be adjusted to finance this entire amount, not just the emergency
wells. The change in Crystal's five year capital outlays is shown on Attachment B.
Financing Plan
Rate Increases. The City Council requested two additional charges on the utility bill,
each identified as an Emergency Well Surcharges. The first is to be a $3.00 per
quarter, per customer fixed fee. The second is to be a per unit charge (amount to be
determined) that will be shown on the bill separate from the regular per unit charge.
Based on staff's understanding of the utility billing software, I told you that the software
couldn't do this. Since the last meeting, I found out that New Hope asked LOGIS to do
this and the LOGIS staff worked out a way to manipulate the billing software so it works.
Attachment A shows the revised Rate Study. It includes an emergency well fixed
charge, an emergency well unit charge and faster increases in the regular unit charges
than was shown in the Water Rate Study in the 2014 Adopted Budget.
The emergency well fixed surcharge is $3.00 per customer, per quarter. The
emergency well unit surcharge in Attachment A is $0.07 per unit. Together these
surcharges raise $1,288,200 over ten years. This is enough to replenish the $615,000
drawn from Water Fund cash on hand, repay the $600,000 internal loan, and pay
$61,600 of interest on the internal loan.
Increases in the regular per unit water charge are $0.20 in 2015 and $0.15 per year
after that. These are higher than the unit charge increases shown in the 2014 Adopted
Budget.
Internal Loan
The Sewer 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.
Attachment C 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.
Utility Bills
Two commercial utility bills are attached. Commercial bills have more lines of charges
on them than do residential bills. We are limited to one bill format for all bills. Two
additional lines for emergency well surcharges appear to just barely fit on the first bill for
Holiday. The second bill for Twin City Vacuum has extra lines related to adjustment to
their bill. Two additional lines on this bill would may cause the Total Amount Due line to
print over the A 10% penalty line, making hard to read. Or it may cause the bill to print
on a second page. A second page would result in additional printing charges. We
have never had this on a bill before, so we don't know how the printer would handle it.
Conclusion:
The measures described above appear to finance the emergency wells and other
capital outlays for the next ten years. Projections ten years into the future are not
reliable and adjustments to the plan will be needed as time passes.
WATER UTILITY RATE STUDY
2014 Adopted Budget with paying for emergency wells using half cash and half internal loan
tmergency
well Tlxea cnar es
ana emer
enc well per
unit rale
Increase
PROFIT & LOSS
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
REVENUES
600,000
600,000
600,000
$2.75
$3.36
$3.45
$3.55
$3.65
$3.75
$3.85
$3.96
Water unit 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
150,000
150,000
155,882
160,294
164,706
169,118
173,529
177,941
182,353
186,765
191,176
Ermergency well unit charges
21,000
42,000
42,000
42,000
42,000
42,000
42,000
42,000
42,000
42,000
Ermergency well fixed charge
46,800
93,600
93,600
93,600
93,600
93,600
93,600
93,600
93,600
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
25,646
28,989
27,477
27,655
24,468
21,292
18,476
15,964
13,664
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
3,840,100
3,441,804
3,545,375
3,644,237
3,744,939
3,843,680
3,942,659
4,042,229
4,142,342
4,242,914
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
1,215,000
JWC 2 cents/1,000 gal. fee
12,000
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
73,7601
73,500
73,220
72,9201
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
-591,326
62,705
-277,818
371,263
341,752
134,149
146,132
156,237
163,343
165,314
ENDING FUND BALANCE
7,494,888
6,903,562
i 6,966,268
i 6,688,449
7,059,712
7,401,464
7,535,613
7,681,74517,837,98218,001,3251
8,166,639
2,163,732
2,262,611
1,709,755
1,449,461
1,099,063
921,848
815,600
709,749
615,881
532,118
455,461
CASH FLOW
Cash & Investments, Beg. of Year
Net income
38,757
-591,326
62,705
-277,818
371,263
341,752
134,149
146,132
156,237
163,343
165,314
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
123,5541
145,0001
513,0001
267,5791
748,4781
658,0001
450,0001
450,0001
450,0001
450,000
450,000
2,262,6111
1,709,75511,449,46111,099,0631
921,8481
815,6001
709,7491
615,8811
532,1181
455,461
380,775
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%
1 $0.071
$0.071
so.071
$0.071
$0.071
$0.071
$0.071
$0.071
$0.071
$0.07
Ermergency well unit charges
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% 2.5U% 3.UU"/o 3.UU1/0 3.UU1/0 :3.UU1/o :3.UU"/o 3.UU1/o
$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 A
Attachment B
Water Fund Five Year Capital Improvement Plan
2013 Adopted Budget
BU
Project Description
2013
2014
2015
2016
2017
6234
Water mains in street reconstruction projects
36,328
35,590
49,079
73,478
6200
Crystal reservoir perimeter fence
17,000
6232
Utility building - replace furnace unit
-
2,000
6228
Utility building - roof replacement
36,000
-
-
6235
Gate valve replacement
75,000
75,000
75,000
6237
Replace #434--- 1996 air compressor
13,000
6236
Replace #436 - 1996 portable streamer
8,000---
6215
Replace #447 - 2002 tandem dump truck
210,000
Total
Water Total
55,328
111,000
110,590
280,079
148,478
705,475
Joint Water Commission Total
1 229,500
309,150
432,000
205,200
193,050
11368,900
2,074,375
2014 Adopted Budget
BU
Project Description
2014
2015
2016
2017
2018
6207
- -
Replace Sensus meter servers
-70,0-00-
6231
New public works facility - water 40% share
400,000
6230
Water Main replacement/relining
600,000
600,000
6234
Water mains in street reconstruction projects
38,000
49,079
73,478
6235
Gate valve replacement
75,000-
75,000
75,000
6236
Replace #436 - 1996 portable streamer
8,500
6215 Replace #447 - 2002 tandem dump truck 210,000
6227 Replace #427 - 2004 Chevy 3/4 ton truck 40,000
6237 Replace #434 - 1996 air compressor 18,000 Total
Water Total 145,000 513,000 267,579 748,478 658,000 2,332,057
Joint Water Commission Total, amended Jan_ 14 358,225 364,500 725,760 90,450 1281250 1,667,185
Emergency Wells 1,215,000 1,215,000
5,214,242
Emergency Wells Debt Structure
$600,000 Internal Loan
Term: 10 years
Attachment C
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
cmc'
OtlWAL 4141 DOUGLAS DRIVE
t CRYSTAL, MN 55422-1696
Please Return This Portion With Your Payment
ADDRESS SERVICE REQUESTED
HOLIDAY
4567 AMERICAN BLVD W
BLOOMINGTON MN 55437-1123
0011913803 00046532 04/21/2014
AMOUNT DUE
111111111111'11111111II111111111111111111111111111IIII11111111III III
001191380300046532000711587
REMIT AND MAKE CHECKS PAYABLE •
CITY OF CRYSTAL
ATTN: UTILITY BILLING
4141 DOUGLAS DRIVE NORTH
CRYSTAL, MN 55422-1696
SERVICE ADDRESS: 5410 LAKELAND AVE N
SERVICE ADDRESS: 5410 LAKELAND AVE N
Meter #
Current
(Thousands
Read Date
Water Use
of Gallons)
Prev. Read
Pres. Read
Usage
63855943
03/25/2014
134408
755327
621
63855970
03/25/2014
1256344
1310893
55
67283949
01/23/2014
6989000
7274000
285
63523269
03/25/2014
2434181
2434181
0
SALES TAX
Water
Total Water Consumption:
Use History
961
SALES TAX
0.06
TOTAL CURRENT CHARGES: 7,115.87
i000
Z
Z
0 Boo
0 600
i;
Z
y 400
00
x
r
200
0
■ Water tj Irrigation
Message Center
*If you pay your utility bill electronically through your bank, please use both
your customer and account numbers on your payments.
*An automatic payment plan is available, providing for payment of your utility
bill directly from your bank account on the due date of the bill. Authorization
forms are available on the city web site and at City Hall.
*Crystal offers a discounted sewer rate for seniors age 65 and over. To apply,
bring a valid ID to City Hall showing your date of birth & complete a form.
BILLING
974.24
PAYMENT - THANK YOU
974.24CR
BALANCE FORWARD: 0.00
STATE TESTING FEE
1.59
WATER CONSUMPTION - TIER 1
!MEN.
!ME
WATER CONSUMPTION - TIER 2
180 units x 4.70 846.00
WATER CONSUMPTION - TIER 3
0
WATER SERVICE CHARGE
37.88
■ Water tj Irrigation
Message Center
*If you pay your utility bill electronically through your bank, please use both
your customer and account numbers on your payments.
*An automatic payment plan is available, providing for payment of your utility
bill directly from your bank account on the due date of the bill. Authorization
forms are available on the city web site and at City Hall.
*Crystal offers a discounted sewer rate for seniors age 65 and over. To apply,
bring a valid ID to City Hall showing your date of birth & complete a form.
BILLING
974.24
PAYMENT - THANK YOU
974.24CR
BALANCE FORWARD: 0.00
STATE TESTING FEE
1.59
WATER CONSUMPTION - TIER 1
235 units x 4.30 1,010.50
WATER CONSUMPTION - TIER 2
180 units x 4.70 846.00
WATER CONSUMPTION - TIER 3
546 units x 5.10 2,784.60
WATER SERVICE CHARGE
37.88
IRRIGATION - SERVICE CHARGE
4.75
SEWER
961 units x 2.15 2,066.15
STORM DRAINAGE - COM
301.86
STREET LIGHTS
4.65
HENN CO STADIUM TAX
1.17
SALES TAX
54.65
TRANSIT AREA IMP TAX
2.01
SALES TAX
0.06
TOTAL CURRENT CHARGES: 7,115.87
TOTAL AMOUNT DUE: 7,115.87
A 10% penalty will be applied if payment is not received by the due
date on the bill.
The City of Crystal bills quarterly.
Moving?? Please call in advance for a final reading.
When you pay by check the City will present your check for payment
electronically. Your original check will be destroyed and you will not
receive your cancelled check back.
City of Crystal 1 4141 Douglas Drive North I Crystal, MN 55422-1696 1 www.crystalmn.gov 1763-531-1114
CCc�1
rn� 4141 DOUGLAS DRIVE
CRYSTAL, MN 55422-1696
Please Return This Portion With Your Payment
DD
ADDRESS SERVICE REQUESTED
TWIN CITY VACUUM
5415 WEST BROADWAY
CRYSTAL MN 55428-3505
00
0012100202 047266 04/20/2014
-AMOUNT DUE
X74.9.82
IIIIIIIIIII IIIIIIIIIIII III III IIIIIIII IIII IIIIIIIIII I III
001210020200047266000074982
REMIT AND MAKE CHECKS PAYABLE •
CITY OF CRYSTAL
ATTN: UTILITY BILLING
4141 DOUGLAS DRIVE NORTH
CRYSTAL, MN 55422-1696
SERVICE ADDRESS: 5415 WEST BROADWAY
SERVICE ADDRESS: 5415 WEST BROADWAY
ADUSTMENT - HENN CO STADIUM TAX 0.73CR
ADUSTMENT - SALES TAX WATER 33.26CR
ADUSTMENT - TRANSIT TAX 1.21 CR
BILL CANCELLATION 812.64CR
BILLING 1,432.67
ADJUSTMENT - SEWER 168.55CR
ADJUSTMENT - WATER 479.10CR
BALANCE FORWARD: 62.82CR
STATE TESTING FEE
Meter #
(ThousandsCurrent Water Use
Gallons)
Read Date Prev. Read
Pres. Read Usage
WATER CONSUMPTION - TIER 2 30 units x 4.70
65835246
03/25/2014
125936
226736 101
4.75
SEWER 101 units x 2.15
Water
Total Water Consumption: 101
Use History
N
Z
0
J
120
100
4.65
HENN CO STADIUM TAX
0.73
0
N
O
Q
e0
60
TRANSITAREA IMP TAX
1.21
TOTAL CURRENT CHARGES:
x
40
20
0
749.82
■ Water
Message Center
ADUSTMENT - HENN CO STADIUM TAX 0.73CR
ADUSTMENT - SALES TAX WATER 33.26CR
ADUSTMENT - TRANSIT TAX 1.21 CR
BILL CANCELLATION 812.64CR
BILLING 1,432.67
ADJUSTMENT - SEWER 168.55CR
ADJUSTMENT - WATER 479.10CR
BALANCE FORWARD: 62.82CR
STATE TESTING FEE
1.59
WATER CONSUMPTION - TIER 1 30 units x 4.30
129.00
WATER CONSUMPTION - TIER 2 30 units x 4.70
141.00
WATER CONSUMPTION -TIER 3 41 units x 5.10
209.10
WATER SERVICE CHARGE
4.75
SEWER 101 units x 2.15
217.15
STORM DRAINAGE - COM
70.20
STREET LIGHTS
4.65
HENN CO STADIUM TAX
0.73
SALES TAX
33.26
TRANSITAREA IMP TAX
1.21
TOTAL CURRENT CHARGES:
812.64
TOTAL AMOUNT DUE:
749.82
A 10% penalty will be applied if payment is not received by the due
date on the bill.
The City of Crystal bills quarterly.
Moving?? Please call in advance for a final reading.
When you pay by check the City will present your check for payment
electronically. Your original check will be destroyed and you will not
receive your cancelled check back.
City of Crystal 1 4141 Douglas Drive North I Crystal, MN 55422-1696 1 www,crystalmn.gov 1763-531-1114
CITY of
CRYSTAL
DATE: May 1, 2014
Memorandum
TO: Mayor and City Council
Anne Norris, City Manager
FROM: Charles Hansen
SUBJECT: Replenishing the Major Building Replacement Fund
Public Works Facility
The Public Works Facility (PWF) is currently estimated to cost about $3,000,000 for land
acquisition and $10,000,000 for construction. The Major Building Replacement Fund (MBRF)
had $10,300,000 as of December 31, 2013 that will be entirely used up for the PWF. In addition,
approximately $1,000,000 will be contributed by the utility funds and $500,000 by the EDA.
This leaves a funding gap of approximately $1,200,000. This gap may be filled by either finding
$1,200,000 that can be transferred to the MBRF from other city funds or by continuing for
another two years (2015 & 2016) the tax levy that has been paying for the County Highway 81
bonds.
Replenishing the Maior Building Replacement Fund
There are no easy sources of revenue. Most money coming from outside the city is Local
Government Aid that the State grudgingly sends us and a few Federal grants that are
committed to specific purposes.
All other possible revenue sources involve collecting taxes or fees from homes and businesses
located within Crystal's borders. The city has little or no authority to collect revenue from
anyone outside of the city.
Any decision to replenish the MBRF is going to be difficult. The only ways to come up with the
money are to make a major service reduction to free up existing revenue for the MBRF or to
create new revenue from continuing the $563,153 County Highway 81 tax levy or a new fee
such as a franchise fee. Any new or continued tax or fee will be unpopular.
Other Future Building Protects
A project to replace or expand & remodel the Police Station is the next significant project that
has been identified. The timing, scope and cost of this project are yet to be determined.
Page 1 of 2
Continuing the $563,153 annual property tax levy beyond 2016 and depositing the revenue in
the MBRF would start to rebuild the fund. There would probably be only one to three million
dollars in it at the time the Police Station construction would commence. This wouldn't pay for
the Police Station construction but would allow the City to avoid bonding for the entire cost.
Conclusion
Replenishing the Major Building Replacement Fund is a worthy goal. Having cash on hand to
pay for at least part of future construction projects will make those projects easier.
The City Council will need to decide if it is willing to commit to replenishing the Major Building
Replacement Fund and how it is willing to fund such a decision.
Page 2 of 2
Major Building Replacement Fund (Fund 408)
Multi -Year Capital Improvement Plan
2014 Adopted Budget
Actual
2013 2014 2015 2016 2017 2017
Capital Outlays
Public Works Facility - Design 43,864
Public Works Facility - Land 3,000,000'
Public Works Facility - Construction 5,000,000 5,000,000
Total Capital Outlay
Funding Sources
43,864 8,000,000 5,000,0001 0 0 0
Property Tax levy
563,153
563,153'
563,153
563,153..
Interest Income
21,169II
60,000',
28,463
-11,242'
-255
16,581
Operating Transfer from Econ. Dev. Auth.
500,000',
Reimbursement from Utility Funds
1,000,0001
Total Funding Sources
_
21,1691i
560,0001
1,591,616'
551,911
562,8981
579,734'.
Budgeted Expenditures
(Over)/Under Funding Sources,
-22,6951,1-7,440,0001,-3,408,384'
551,9111
562,8981
579,7341
Year End Fund Balance
Assumed Return on Investments
10,286,268
1.5%
2,846,268
1.0%
-562,116
1.0%
-10,206
2.0%
552,692
2.5%
1,132,426
3.0%