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2016.04.14 Work Session Packet4141 Douglas Drive North • Crystal, Minnesota 55422-1696 CITY of Tel: (763) 531-1000 • Fax: (763) 531-1188 • www.crystalmn.gov CRYSTAL Posted: April 8, 2016 CRYSTAL CITY COUNCIL WORK SESSION AGENDA Thursday, April 14, 2016 6:30 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, April 14, 2016 in Conference Room A located at 4141 Douglas Drive, Crystal, Minnesota. I. Attendance Council members Staff Adams Norris Dahl Therres Deshler Revering Kolb Gilchrist Libby Serres Parsons Hansen Peak II. Agenda The purpose of the work session is to discuss the following agenda items: 1. City Manager performance evaluation process* 2. Calling for Early Payment of GO Improvement Bonds Series 2005A and Series 2006A 3. Debt free 4. 2017 budget format * Denotes no supporting information included in the packet. 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 rrn' or CRYST DATE: April 7, 2016 TO: Mayor and City Council Anne Norris, City Manager FROM: Charles Hansen, Finance Director SUBJECT: Discuss Option of Calling for Early Payment of the City's Outstanding General Obligation Improvement Bonds Series 2005A and Series 2006A. Background The General Obligation Improvement Bonds, Series 2005A and 2006A were sold to finance special assessments from the Phase 7 and Phase 8 Street Improvement Projects. These bonds have a call feature which allows the City to call the remaining outstanding bonds for early payment on or after February 1, 2016. Discussion The 2016 budget assumed that these bonds will be called for early payment on August 1, 2016. It appears that between the December 31, 2015 balances and the first half collection of 2016 special assessments, both debt service funds should have sufficient cash on hand to call the remaining bonds for early payment on August 1, 2016. If the first half collection of 2016 special assessments leaves us short of the amount needed for calling the bonds, it will only be by a small amount. This shortage will be covered by the second half collection 2016 special assessments. There will also be charges of several thousand dollars for professional services related to calling the bonds and performing the final arbitrage calculation for the IRS. Calling the bonds will allow the remaining special assessments scheduled for collection in future years to be transferred to the street reconstruction fund. The remaining special assessments total about $250,000 for the Series 2005A bonds and about $450,000 for the Series 2006A bonds. Conclusion There are a series of steps necessary to call bonds for early payment. These steps need to begin in the near future. If the City Council wants to call these bonds for early payment, then I will advise Springsted to begin the process to call the bonds for early payment on August 1, 2016. Memorandum carr of UR YS] DATE: April 7, 2016 TO: Mayor and City Council Anne Norris, City Manager FROM: Charles Hansen, Finance Director SUBJECT: Discuss the Possibility of Becoming a Debt Free City. Background The City Council has expressed an interest in becoming a debt free city. First it is important to define what a debt free city is. Being debt free would literally mean not having any outstanding bonds or other debt. Another less literal definition could be to stop issuing any new debt and allow the existing bonds to be paid as scheduled. With this approach, the city would eventually become debt free, but it would take time. Existing Debt Currently the City's debt is as follows: ■ Bonds necessary to finance the portion of street reconstruction projects that are paid by special assessments over time. ■ Bonds that paid for the rehabilitation of the pool in 2005 and which are supported by a property tax levy. The City currently has eight special assessment bond issues with a total of $12,810,000 in outstanding bonds. Another special assessment bond will be issued this summer to finance the Phase 15 street reconstruction project. We estimate that it will be in the range of $3,200,000 to $3,400,000 depending upon the amount of special assessment prepayments we receive. We also anticipate calling two of the existing bond issues for early payment on August 1, 2016. Calling these two bonds will retire $1,090,000 of bonds. These transactions will result in the City ending 2016 with about $15,000,000 of special assessment bonds. The pool bonds currently have $765,000 of remaining bonds. These bonds have also reached their date for early payment, but the pool debt service fund doesn't have sufficient cash to cover early payment of the bonds. Even if all of the debt service funds had sufficient cash to call their respective bonds, it wouldn't be possible until each bond reaches it call date. The call date is typically ten years after the issue date of the bond. Future Capital Needs Streets Phase 15 and Phase 16 street reconstruction projects will each need to finance in excess of $3,000,000 of special assessments. An aggressive mill and overlay program will extend the life of our reconstructed streets. Exactly how long the street life can be extended can't be determined with any certainty. We think new streets will last for at least 30 years after reconstruction and an optimistic projection is that they could last 50 years. The City Council has discussed the idea of levying a property tax to pay for the next round of street reconstruction instead of relying on special assessments and bonds. Past reconstruction projects have generally cost from $3,000,000 to $6,000,000 each. To avoid bonding, we would need to levy property taxes each year to build a cash balance in the reconstruction fund prior to reconstruction of Phase 1. At the short end of the estimated street lives, Phase 1 could come up again as soon as 2025. Subsequent phases would follow in quick succession. Building the cash balance to replace special assessments for Phase 1 in 2025 could be done with an annual property tax levy of around $500,000 per year starting in 2017. However to pay for Phases 2, 3, 4 etc. coming quickly after Phase 1, you would need to sharply increase the property tax levy in 2025. The tax increase in 2025 could be less steep if we start in 2017 with a tax levy of $1,000,000 or more. In the worst scenario, property tax levies from 2025 onward will need to be roughly $3,000,000 to $5,000,000 to pay for each Phase in the year it happens. Buildings After the street reconstruction phases are complete, the next project that might call for issuing bonds will most likely be for the remodeling of a major city building or construction of a new major city building. These buildings include the Police Station, City Hall and Community Center. Rebuilding the balance in the Major Building Replacement Fund could offset the need for issuance of bonds. If one of these projects is to happen in the next five years, it is possible to think in terms of the Major Building Replacement Fund paying for the remodeling of a major building, but not construction of a new major building. In the case of constructing a new major building, the balance in the Major Building Replacement Fund could still reduce the amount of bonds that would need to be issued. Parks The Park Commission has recently developed a list of possible park improvements. These total about $3,700,000 in the years 2017 through 2020. A plan to finance these improvements needs to be developed and will compete with all other capital needs for financing. Discontinuing special assessments for street maintenance The City Council also has a goal of ending special assessments for mill & overlay projects. A study of this prepared earlier this year indicated that an annual property tax levy of about $250,000 from 2017 through 2019 would be needed in place of special assessments. There then could be a break in the tax levies from 2020 through 2026 as fewer mill and overlay projects take place. The tax levy resumes in 2027 and increases in amount as larger mill & overlay projects are done in quicker succession. This could coincide with the time period when street reconstruction tax levies increase sharply. One way to cushion the tax levy increases when street reconstruction projects resume would be to continue the $250,000 mill & overlay tax levy from 2020 through 2026. Conclusion Even if we had the cash we can't call all of the existing bonds, so the only option for becoming debt free is to attempt to stop issuing any new bonds. Any approach to becoming a debt free city is going to take time and effort. To get a sense of the scale of the challenge, here is a "best guess" scenario of what would be required from the annual tax levy for the city to not issue additional debt in the future, if these amounts were to begin accumulating in 2017 and continued annually: $250,000 for future mill & overlay projects without assessments or debt • $1,000,000 for future street reconstruction projects without assessments or debt $563,000 to pay for future building replacement or substantial rehab/additions $900,000 for park improvements that go beyond "maintaining what we have" Of these, our tax levy already includes a capital levy of $563,000 which in prior years was dedicated to paying off CR81 debt. We assume that this levy will continue but be dedicated it to building replacement. But this scenario would still require $2,150,000 more from the annual tax levy to, essentially, pre -pay for both mill & overlay and street reconstruction and cover park improvements. To provide cash flow for projects without issuing debt requires developing new revenue sources. Choices for significant new revenues are limited. Probably the only revenues that would provide sufficient cash flow would be an increase in the property tax or starting a franchise fee. Neither would be popular with citizens and business owners. As discussed earlier in this memo, a variety of needs from street reconstruction, street mill & overlay, park construction and major city building remodeling & construction are all going to overlap in demanding financing in the same years. The Council should discuss: - What is the Council's definition of debt free? - What is the goal for when the city should become debt free (20 years, 30 years?) Is it realistic to include all capital needs? What additional information is needed to articulate and develop a policy and determine the level of funding needed? - Anything else? Memorandum Cof A] ,, DATE: April 5, 2016 TO: Mayor and City Council FROM: Anne Norris, City Manager SUBJECT: 2017 Budget Presentation/Materials At a February work session, the City Council discussed changes to the way the 2017 budget is presented, including the budget documents. The City Council discussed goals of the documents: - Keep the information big picture: o Focus on staffing changes c: Focus on operational changes and service levels o Assumptions or known factors affecting budget/operations Keep operations separate from capital Show expenses of each department and division and also show revenue generated by department Show capital by department (still thinking about how best to do that) The budget documents would continue to include details regarding: Department goals - Department detail operating budgets Based on the Council's comments, I've attached mock-ups of a sample of the general fund budget documents, using the administration department. The Council should review the mock-ups and comment and provide additional direction. Attach: CITY OF CRYSTAL 2017 BUDGET GENERAL OPERATIONS Revenues Property Taxes Licenses, permits, fees, charges for service Intergovernmental Fines Investments/interest Expenditures — General Operations General Government Administration Public Safety Community Development Public Works Recreation $ XXXXXXXXXX $ XXXXXXXXXX $ XXXXXXXXX $ XXXXXXXXX XXXXXX $ XXXXXX $XXXXXXXXXXX $ XXXXXXXXX $ XXXXXXXXX $ XXXXXXXXX $ XXXXXXXXX $ XXXXXXXXX CITY OF CRYSTAL 2017 BUDGET - REVENUES Revenues — General Operations Property Taxes Property Taxes Special Assessments Licenses, permits, fees, charges for service $ XXXXXXXXXXX Business Licenses Contractor Permits Housing Inspections/Licenses Ingovernmental funds Charges for Service — General Government Charges for Service — Recreation Charges for Service — Public Safety Intergovernmental Fines I nvestments/interest $ XXXXXXXXXX $ XXXXXXXXX XXXXXXXXX $ XXXXXX $ XXXXXX CITY OF CRYSTAL 2017 BUDGET — EXPENDITURES Expenditures — General Operations $ XXXXXXXXXXX General Government Administration $ XXXXXXXXX Mayor and Council $ XXXXXXXX Administration $ XXXXXXXX Human Resources $ XXXXXXXX Assessing $ XXXXXXXX Legal $ XXXXXXXX Elections $ XXXXXXXX Finance $ XXXXXXXX Public Safety $ XXXXXXXXX Police $ XXXXXXXX Fire $ XXXXXXXX Community Development $ XXXXXXXXX Planning and Code Enforcement $ XXXXXXX Building Inspection $ XXXXXXX Housing Inspection $ XXXXXXX Environmental Health $ XXXX Public Works $ XXXXXXXXX Engineering $ XXXXXXX Streets $ XXXXXXX Park Maintenance $ XXXXXXX Forestry $ XXX City Buildings $ XXXXXXX Recreation $ XXXXXXXXX Recreation $ XXXXXXX Community Center $ XXXXXXX Waterslide/Pool $ XXXXXXX CITY OF CRYSTAL 2017 BUDGET Departmental Detail Administration Department Expenses: Revenues generated by department activities: Staffing: XX FTE 2014 Budget 2015 Sud et 2016 Budget City Manager 1.00 1.00 1.00 Assistant City Manager 1.00 1.00 1.00 City Clerk 1.00 1.00 1.00 Human Resources Representative .60 .70 .70 IT Manager 1.00 1.00 1.00 Administrative Coordinator 1.00 1.00 1.00 Assessing Specialist 15 .15 .15 Permit and Licensing Technician 70 70 .70 Receptionist (formerly CSR) .50 .50 Communications Coordinator 1.00 1.00 Communications Assistant 60 .60 .60 2017 Goals: 1. 2, 3. 4. 0. Budget Highlights: Line Amount Discussion Item/Description _ 6205 — Professional $7,000 This covers the cost of website hosting, Services maintenance and upgrades through Revise, network connections, record destruction services, communication consulting and various city-wide _ professional services. 6320 — LOGIS $64,900 This is the administration department share of the Services Local Government Information Systems charges, which includes services for: Business License & Code Enforcement, internet, systems development, network wellness, fiber optic network maintenance and network engineering. LOGIS provides managed services for email, email archiving and backup. 6470 — Service $38,922 The City is a member of LOGIS (Local Government Contracts Information Systems). LOGIS negotiates contracts for various computer software licenses (Websence, pest patrol, Altiris, Cisco, Mircosoft, Etrust antivirus, Areserv, Identitsys, etc.). Includes the maintenance of 126+ computers. In addition, it includes managed print and re-write software maintenance for the copier and printers. It also includes license fee for di ital storage of official documents. 6505 — Misc. $20,000 This covers the cost of all office supplies for City Operating Supplies Hall and public works facilities which includes paper, toner, letterhead, envelopes, etc. 6605 — Postage $22,000 This is for postage using a mailing service. 6655 — Printing $33,500 This provides for the costs of designing, editing, Newsletters printing, WEB production and mail preparation, and postage of the combined city newsletter and recreation publication four times a year. Each edition contains a 12 page city newsletter and a 2 — 44 page recreation publication. The summer edition the publication contains the water quality information as mandated by state law. 6810 —Training and I $12,000 This provides for training and travel expenses for Travel the administration department (10 staff members) as well as for city wide training (98 regular staff) related to safety, diversity, data practices, writing skills, sexual harassment, and supervisory skills. 6850 — Awards $4,200 This provides for the costs of the Stop Accidents for Everyone Awards program by recognizing employees who have a good safety record. Administration Department Profile and Budget Summary The Administration Department oversees the daily operations and policies of the City Council under the direction of the City Manager. This department includes the functions of City Clerk, Human Resources, Communications and Information Technology. This department works together with and coordinates the activities of all City government departments for effective and efficient operation of the city. Staff: These personnel are supervised or work in this department, although part of their personnel expenses may be charged to another department in which they also work. City Manager: Directs the administration of the City government as provided for by the City Charter, City ordinances and resolutions, and within the guidelines and policies set by the City Council. The City Manager manages operations of all city departments including financial activities, personnel functions, planning and community development programs, public safety, maintenance, public works, recreation, communications. Assistant City Manager: Assists the City Manager in the overall administration and operational activities of City affairs. Oversees the functions of: Human Resources, Labor Relations, Information Technology/Computers, General Administration, Office Administration, Communications, Safety. Oversee the management of the clerical functions of City Hall to meet the demands of the Administration, Community Development and Engineering Departments. a City Clerk: Provides maintenance of City records, maintains custody of ordinances and other official documents, and oversees licensing functions and the CDL drug and alcohol testing program. This position supervises all elections and City voter records, is secretary to the City Council • Human Resources Representative: Performs professional level Human Resources work in the areas of recruitment, selection, training, compensation, and performance evaluations; responsible to adhere to applicable state and federal laws. • IT Manager: Coordinates and addresses citywide information technology needs. Provides both user support and network management to all systems. Works with LOGIS and other outside vendors to ensure system and user needs are met. Provides technical support for PC's and Local Area Network (LAN). Assists in budgeting, purchasing, training and planning for Information Technologies. Administrative Services Coordinator: Acts as Deputy City Clerk providing backup to the City Clerk in all aspects of council operations, election procedures and requirements. Supervision and coordination of clerical staff of City Hall. Assists with communications and handles advisory board and commission vacancies and operations. Communications Coordinator: Provides professional assistance to city departments by assuming primary responsibility for coordinating development and management of the city's communications efforts. Ensures consistent theme, high quality and timely distribution of accurate and relevant information to stakeholders. Promotes a positive public image of and for the community. • Assessing Specialist: Responsible for front counter and customer service as it relates to assessing (homesteads/market valuations) and special assessments for City offices. Handles a wide variety of support work for Community Development and Administration in conjunction with other City functions. i Permit and Licensing Technician (formerly Customer Service Representative): Processes permits and licenses following office procedures. Provides front counter coverage as needed in assisting Receptionist to provide customer service and receptionist work for City offices. Handles a wide variety of support work for City departments. * Receptionist (formerly Customer Service Representative): Works at the front counter to provide customer service and receptionist work for City offices. Handles a wide variety of support work for City departments. • Communications Assistant: Provides administrative support for desktop publishing, Administration, Communications and Community Development. Coordinates updates from all departments and performs data entry and management for the City's Website. Functions and Products • Carry out the policies of the City Council under the direction of the City Manager • Prepare for and administer 26 City Council meetings, over 42 Council work sessions, and 7 Citizen Input Time meetings, including agenda materials and follow up on actions taken or discussed at meetings. Respond to citizen issues raised at Citizen Input Time, Council meetings and in general. • Prepare and provide staff support for Council -directed task forces (City Code Review, etc.) • Interact with the public in a professional and responsive manner • Direct the daily administrative operations • Oversight of the annual budget • Manage City Communications including implementing communications plan, press releases, quarterly City Newsletters, web site, cable system, and social media. • Coordinate and manage information systems city wide, including computer, electronic document management and telephone systems. Also, assist in the management of the building security system. • Administer the City Safety program. ■ Manage data practices compliance under state law. • Supervise the election process for municipal, state and national elections. • Serve as a West Metro Fire board member. Funding Sources The Department exists to support all City Departments. It generates revenue from various administrative licenses, election fees, and is supported by general taxes. 2016 Goals and Objectives City Manager • Work on the advancement of the City Council and priorities. • Work with the Mayor and City Council to update goals and priorities. • Carry on the work with department heads to set departmental expectations and long- range plans. • Staff and coordinate Council -established task forces. • Monitor Legislative actions and any impact on city operations. • Continue to participate in and manage Citizen Input Time. • Continue to participate in Crystal Business Association. • Continue to serve as a West Metro Fire Board member. General Administration • Provide high-quality customer service to customers on a daily basis. • Expand archival information available on website (Council meeting agenda packets, etc.) • Provide administrative assistance and support for all functions within Administration, Building, Planning, Engineering and Public Works. • Process city licenses. • Process payments (utility bills, permits, etc.) made to the city. • Continue to translate key documents/forms and informational items into various languages as appropriate. • Continue the web streaming of council meetings and electronic posting of council packets. • Coordinate and execute implementation of digital storage of official records. • Provide support to City Clerk for various elections functions Information Technology • Purchase new hardware and software according to updated replacement schedule. • Assist with the electronic posting of council packets. • Manage telecommunication technology. • Coordinate the technology needs of councilmembers, departments and facilities. • Continue to serve as an information technology resource for the organization by troubleshooting and solving technical issues.