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10-13-14 CC WS AgendaCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, OCTOBER 13, 2014 AGENDA 1. CONVENE CITY COUNCIL WORK SESSION A. Roll Call B. Review Agenda 2. ENTERPRISE BUDGET DISCUSSION 3. ADJOURN 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:00 P.M. Mayor Zerby Hotvet Siakel Sundberg Woodruff ATTACHMENTS Finance Director's Memo #z MEETING TYPE City of Shorewood Council Meeting Item Work Session Title / Subject: 2015 Enterprise Budgets Meeting Date: October 13, 2014 Prepared by: Bruce DeJong, Finance Director Reviewed by: Bill Joynes, City Administrator Attachments: Enterprise Budget Spreadsheets Policy Consideration: How should the City of Shorewood prepare its enterprise fund budgets for 2014? Background: These budgets adequately fund all enterprise activities in 2014. Staff worked with Ehlers to model rates for two enterprise funds. We need to raise rates to keep up with cost increases, particularly the Metropolitan Council Environmental Services (MCES) costs for collecting and treating sewage, along with new projected costs related to storm water management. Both the Sewer and Storm Water funds have reasonable fund balances and no debt. The cash balance of each fund has been dropping over the past several years. The anticipated uses of the new money raised through rate increases will go to new projects planned in the next five years, support transfers to the Trail fund, and meet increased costs of existing expenditures for staffing, utilities, and professional services. Water The Water fund had a poor year in 2013 due to wetter weather and we expect a similar pattern for 2014. With the additional rain users water less in the summer. This affects our revenue most dramatically because the tiered water rates are structured with higher rates for high usage. We have foregone that revenue when no sprinkling is required. The fund does have a large fund balance which can sustain low revenue years for some time without needing any change in usage rates. Staff intends to maintain the existing rates until it becomes clear that the fund is not able to meet its future obligations without adjustment. Sewer Ehlers discussed the significant options available for sewer users. In order to maintain the targeted cash reserves, they recommend a 3% annual increase. The City Council determined that we should maintain a flat sewer rate for all residential users. Sewer Fund - Customer Rate Options Quarterly Sanitary Sewer Rates These rates are sufficient to allow transfers to the Storm Water fund until its rates are sufficient to cover all of the operating and capital costs necessary for SWMPP & MS4 purposes. Staff intends to bring the proposed rates back for approval prior to the end of the year. The open discussion item at this time is the Metropolitan Council Environmental Services (MCES) assessment of Inflow & Infiltration (I &I) surcharges for the major storm event this summer. Nearly every community in the metropolitan area exceeded their maximum flow in the sanitary sewer system this summer. MCES has proposed a preliminary assessment of $664,000 1 &1 against Shorewood because of the excess flow. Mr. Brown is disputing that it is our fault because of the low -lying MCES main along Silver Lake. However, the proposed amount expenditure required from Shorewood would be $166,000 per year. We currently have $70,000 budgeted each year for I &I issues, but this would be an additional $96,000 per year for at least the next four years if the amount is not reduced. Recycling The Recycling fund operates on basically a break -even basis. The costs of services are covered by the user fees and County grant funds. With the modified contract rates on tonight's agenda, staff will have to analyze the impact to determine if user rates can go down. Storm Water Ehlers proposed the following rates for Storm Water: Quarterly Storm Water Rates Existing 2013 Proposed Quarterly Rates 2014 2014 2016 2016 1 2017 2018 3.00% 3.00% 3,00% 3.00°1 3.00°1 Fixed Charge Res. < 10,000 sq. ft. Residential 12.71 15.25 18.30 21.96 26.35 Res. > 10,000 & < 50,000 sq. ft. Residential 7000 8.25 850 8.75 9.01 9.29 Low Intone - Sewer Only 46.66 48.57 50.03 51.53 53.07 54.67 Sewer Only 70.00 72.85 75.04 77.29 79.61 81.99 commercial 48.29 57.95 69.53 83.44 100.13 Commercial 70.00 8.25 8.50 8.75 9.01 9.29 Usage Rates Residential - Option #'1 0.00 1.90 196 2 02 2 08 2 14 Residential - Option #2 0.00 3.40 3.50 3.F.11 3.72 3.83 Commercial 0.00 1.' ij 1 :Ni 2.02 2.08 2.'14 These rates are sufficient to allow transfers to the Storm Water fund until its rates are sufficient to cover all of the operating and capital costs necessary for SWMPP & MS4 purposes. Staff intends to bring the proposed rates back for approval prior to the end of the year. The open discussion item at this time is the Metropolitan Council Environmental Services (MCES) assessment of Inflow & Infiltration (I &I) surcharges for the major storm event this summer. Nearly every community in the metropolitan area exceeded their maximum flow in the sanitary sewer system this summer. MCES has proposed a preliminary assessment of $664,000 1 &1 against Shorewood because of the excess flow. Mr. Brown is disputing that it is our fault because of the low -lying MCES main along Silver Lake. However, the proposed amount expenditure required from Shorewood would be $166,000 per year. We currently have $70,000 budgeted each year for I &I issues, but this would be an additional $96,000 per year for at least the next four years if the amount is not reduced. Recycling The Recycling fund operates on basically a break -even basis. The costs of services are covered by the user fees and County grant funds. With the modified contract rates on tonight's agenda, staff will have to analyze the impact to determine if user rates can go down. Storm Water Ehlers proposed the following rates for Storm Water: Quarterly Storm Water Rates Note: 1, 944 out of 2,961 ( or 67 %) of Storm Water accounts are charged the middle Residential rate. Existing 2013 Proposed Quarterly Rates 2014 2015 2016 2017 2018 Flat Rates Residential Res. < 10,000 sq. ft. 10.59 12.71 15.25 18.30 21.96 26.35 Res. > 10,000 & < 50,000 sq. ft. 15.12 18.14 21.77 26.13 31.35 37.62 Res. > 50,000 sq. ft. 19.68 23.62 28.34 34.01 40.81 48.97 Commercial Commercial / Industrial (Average Charge) 40.24 48.29 57.95 69.53 83.44 100.13 Note: 1, 944 out of 2,961 ( or 67 %) of Storm Water accounts are charged the middle Residential rate. These rates increase at 20% for five years. This will allow us to meet our target cash balance for working capital at the end of 2018 as shown below. We continue to monitor new regulations for their impact on the budget and capital plan. Staff intends to bring the proposed rates back for approval prior to the end of the year. Financial or Budget Considerations: These program expenses are feasible based on the proposed rates and financial management plan. Options: The City Council is encouraged to discuss any enterprise budget questions with staff. Recommendation / Action Requested: Staff recommends that the City Council finalize these budgets prior to adoption in December. Next Steps and Timelines: The City Administrator and Finance Director intend to discuss capital and budget items through the Truth -in- Taxation hearing in December. Connection to Vision / Mission: Adopting a prudent budget contributes to sound financial management. WATER FUND Revenue Coding: 601-00 - Expenditure Coding: 601 -00- Approved Dept Actual Actual YTD Budget Request Percent Dollar REVENUES 2012 2013 2014 2014 2015 Change Chang( 3710 Water Sales 612,892 494,201 148,650 630,000 600,000 -5% (30,000) 3610 Special Assessments 19,486 37,492 20,307 15,000 35,000 133% 20,000 3711 Permits & Connection Fees 21,230 46,020 36,510 15,000 25,000 67% 10,000 3620 Interest Earnings 32,351 17,887 0 35,000 25,000 -29% (10,000) 3713 Water Meter Sales 1,845 6,920 2,500 2,500 0% 0 3627 Antenna Space Rental 101,942 0 0 0 0 Total Revenues 789,746 595,600 212,387 697,500 687,500 -1% (10,000) EXPENSES Personal Services 4101 Regular Salaries 105,532 73,949 82,521 79,796 79,796 0% 0 4102 O.T. Salaries 1,348 8,424 3,408 3,000 3,000 0% 0 4121 PERA City Share 7,945 5,941 5,633 6,003 6,003 0% 0 4122 FICA City Share 7,720 5,899 5,694 6,334 6,334 0% 0 4131 Ins. City Share 14,750 12,784 1,545 12,726 12,726 0% 0 4151 Workers Compensation 2,194 0 Total Personal Services 137,295 106,997 100,995 107,858 107,858 0% 0 Supplies 4200 Office Supplies 109 146 - - - 4208 Postage 1,292 1,308 760 1,400 1,400 0% 0 4221 Maint- Equipment 5,494 4,332 2,018 6,500 6,500 0% 0 4223 Maint - Buildings 2,335 760 - 1,000 1,000 0% 0 4240 Small Tools 686 583 550 600 9% 50 4245 General Supplies 11,891 13,887 5,637 10,000 12,000 20% 2,000 4260 Wtr Purch -Tonka Bay 3,331 2,121 989 3,500 3,500 0% 0 4261 Wtr Purch - Excelsior 21,221 18,267 7,354 22,000 22,000 0% 0 4262 Wtr Purch - Mtka 1,245 881 254 1,500 1,500 0% 0 4263 Wtr Purch - Chan 15,645 9,498 5,846 16,000 16,000 0% 0 4265 Water Meters 10,659 6,926 6,720 15,000 15,000 0% 0 Total Supplies 73,908 58,126 30,161 77,450 79,500 3% 2,050 Other Services & Charges 4301 Financial & Audit - 2,250 2,500 2,500 2,500 0% 0 4303 Engineering 11,926 1,327 8,824 5,000 5,000 0% 0 4304 Legal Fees - 56 - - - 0 4321 Communication 766 663 680 2,800 2,800 0% 0 4331 Travel, Conf,Sch 525 - 1,096 800 800 0% 0 4351 Print /Publish 558 552 543 1,000 1,100 10% 100 4360 Insurance -Total - 8,000 2,500 8,000 8,000 0% 0 4394 Utilities - Amesbury 11,835 12,368 5,115 12,000 12,000 0% 0 4395 Utilities - Badger 8,557 9,270 3,811 12,500 12,500 0% 0 4396 Utilities - Boulder Bridge 21,565 21,097 7,342 20,000 20,000 0% 0 4398 Utilities - SE Area /Tower 33,180 34,917 19,731 33,000 34,000 3% 1,000 4400 Contractual 10,190 26,018 25,303 30,000 30,000 0% 0 4420 Depreciation 274,917 271,166 - 290,000 290,000 0% 0 4437 Licenses -Sales Taxes 3,072 635 - 3,000 3,000 0% 0 4440 Misc. Services 196 17,949 392 200 200 0% 0 4450 Bank Svc Chgs 44 8 16 1,000 1,000 0% 0 Total Other Services & Charges 377,331 406,276 77,853 421,800 422,900 0% 1,100 Bond Expense 4711 Bond Interest 99,910 74,887 51,425 91,303 77,796 -15% (13,507) 4720 Fiscal Agent Fees 758 46,908 495 800 800 0% 0 Total Bond Expense 100,668 121,795 51,920 92,103 78,596 -15% (13,507) Transfers 4820 Transfers Out - 12,500 12,500 0% 0 Total Transfers 12,500 12,500 0% 0 TOTAL EXPENSES 689,202 693,194 260,929 711,711 701,354 -1% (10,357) REVENUES OVER /(UNDER) EXPENSES 100,544 (97,594) (48,542) (14,211) (13,854) SEWER FUND Revenue Coding: 611-00 - Expenditure Coding: 611 -00- Approved Requested Actual Actual YTD Budget Budget Percent Dollar REVENUES 2012 2013 2014 2014 2015 Change Change 3620 Interest Earnings 29,842 14,191 - 36,000 25,000 -31% (11,000) 3710 Sewer Sery Charges 801,996 831,259 430,830 835,000 860,050 3% 25,050 3610 Sewer Chg -Cnty Coll 26,493 15,634 0 3400 Local SAC Charges 2,400 13,200 6,170 - 6,000 6,000 3712 Sewer Permits 3,150 3,060 2,100 700 700 0% 0 Total Revenues 863,881 861,710 454,734 871,700 891,750 1% 10,000 EXPENSES Personal Services 4101 Regular Salaries 68,000 68,010 68,248 69,186 69,186 0% 0 4102 O.T. Salaries 2,636 3,139 1,651 2,500 2,500 0% 0 4121 PERA City Share 5,343 5,092 4,541 5,197 5,197 0% 0 4122 FICA City Share 5,182 5,093 4,764 5,484 5,484 0% 0 4131 Ins. City Share 13,456 10,293 1,545 10,787 10,787 0% 0 4151 Workers Compensation 1,645 - 2,500 2,500 Total Personal Services 94,617 91,627 82,394 93,155 95,655 3% 2,500 Supplies 4200 Office Supplies 109 146 - 150 150 0% 0 4208 Postage 1,265 1,324 694 1,500 1,500 0% 0 4221 Maint- Equipment 1,182 3,382 6 5,000 5,000 0% 0 4240 Small Tools 45 732 21 550 550 0% 0 4245 General Supplies 550 1,293 354 2,100 2,100 0% 0 Total Supplies 3,151 6,877 1,075 9,300 9,300 0% 0 Other Services & Charges 4301 Financial & Audit - 2,250 2,500 2,500 2,500 0% 0 4303 Engineering 13,927 10,753 617 5,000 5,000 0% 0 4313 Engineering - Design Stage 583 1,701 - 5,000 5,000 0% 0 4321 Communication 3,374 4,103 3,762 4,500 5,500 22% 1,000 4331 Travel, Conf,Sch 1,300 975 600 1,500 1,500 0% 0 4360 Insurance -Total 773 6,500 - 7,000 7,000 0% 0 4380 Utilities- Gas /Elec 5,326 5,588 3,725 7,500 7,500 0% 0 4385 MCES Service Charges 675,409 529,386 406,191 575,000 609,180 6% 34,180 4386 Excelsior Sewer Chg 26,797 31,676 18,120 31,000 31,000 0% 0 4400 Contractual 10,230 17,940 3,042 20,000 20,000 0% 0 4200 Depreciation 221,214 81,329 - 225,000 225,000 0% 0 4437 Licenses -Taxes - 23 73 - - 0 4440 Misc. Services 195 33,960 - 150 150 0% 0 4450 Service Charges 12 - 8 1,500 1,500 0% 0 Total Other Services & Charges 959,140 727,684 440,026 887,150 922,330 4% 35,180 Transfers 4820 Transfers to General Fund 12,500 12,500 0% 0 4820 Transfers to Storm Water 226,700 226,700 0% 0 Total Transfers - - - 239,200 239,200 0% 0 TOTAL EXPENSES 1,056,908 826,188 523,495 1,228,805 1,266,485 3% 37,680 REVENUES OVER /(UNDER) EXPENSES (193,027) 35,522 (68,761) (357,105) (374,735) RECYCLING FUND Revenue Coding: 621-00 - Expenditure Coding: 621 -00- EXPENSES Personal Services Approved Requested 4101 Regular Salaries Actual Actual YTD Budget Budget Percent REVENUES 2012 2013 2014 2014 2015 Change 3362 County Recycling Aid 23,007 22,989 - 23,000 23,000 0% 3362 County Park Recycling Grant 339 2,841 8,250 475 475 0% 3610 Special Assessment 5,588 6,363 3,437 500 500 0% 3620 Interest Earnings 528 253 - 350 350 0% 3710 Recycling Service Charges 154,288 154,265 80,719 155,000 155,000 0% 3732 City Clean -up Fees (2,291) 5,086 7,815 6,000 8,000 33% Total Revenues 181,120 191,797 100,221 184,350 186,350 1% EXPENSES Personal Services 4101 Regular Salaries - 69 5,749 - 5,410 4102 O.T. Salaries 774 - - 1,000 1,000 0% 4103 Part Time Salaries 4,126 2,296 306 5,410 - -100% 4121 PERA City Share 339 166 360 475 475 0% 4122 FICA City Share 377 176 352 500 500 0% 4131 Ins. City Share 876 831 126 717 717 0% 4151 Workers Camp - 1 - - Total Personal Services 6,492 3,538 6,894 8,102 8,102 0% Supplies 4200 Office Supplies 109 - - 100 100 0% 4208 Postage 1,904 1,298 694 900 1,400 56% 4245 General Supplies 664 193 193 200 200 0% Total Supplies 2,677 1,491 887 1,200 1,700 42% Other Services & Charges 4400 Contractual 165,730 167,345 110,385 166,992 117,000 -30% 4440 Misc. Services 12,810 9,163 8,025 8,000 8,500 6% 4450 Service Charges - - - - - Total Other Services & Charges 178,540 176,508 118,410 174,992 125,500 -28% TOTAL EXPENSES 187,709 181,537 126,191 184,294 135,302 -27% REVENUES OVER /(UNDER) EXPENSES (6,589) 10,260 (25,970) 56 51,048 STORMWATER MANAGEMENT FUND Revenue Coding: 631-00 - Expenditure Coding: 631 -00- EXPENSES Personal Services Approved Requested Actual Actual YTD Budget Budget Percent Dollar REVENUES 2012 2013 2014 2014 2015 Change Change 0 4121 PERA City Share 3,336 3362 Grant Proceeds - - - - - 4122 0 3610 Special Assessments 7,605 9,321 4,231 7,400 7,400 0% 0 3620 Interest Earnings 1,411 582 - 1,200 1,200 0% 0 3670 Miscellaneous Revenue - 6 6 - - 0 3710 Storm Utility Charges 186,326 185,622 106,039 224,352 224,352 0% 0 3920 Transfers from Sewer 0 Supplies 226,700 226,700 0% 0 Total Revenues 195,342 195,531 110,276 459,652 459,652 0% 0 EXPENSES TOTAL EXPENSES 162,944 107,935 66,244 176,552 176,752 0% 200 REVENUES OVER /(UNDER) EXPENSES 32,398 87,596 44,032 283,100 282,900 Personal Services 4101 Regular Salaries 45,744 35,089 37,355 20,523 20,523 0% 0 4102 O.T. Salaries 163 1,348 2,153 0 4121 PERA City Share 3,336 2,632 2,766 1,500 1,500 0% 0 4122 FICA City Share 3,269 2,644 2,616 1,570 1,570 0% 0 4131 Ins. City Share 5,099 2,490 158 2,059 2,059 0% 0 4151 Workers Comp - 994 0 Total Personal Services 57,611 44,203 46,042 25,652 25,652 0% 0 Supplies 4200 Office Supplies 109 146 - 100 100 0% 0 4208 Postage 1,265 1,298 457 1,200 1,400 17% 200 4421 Maint- Equipment - 1,031 - 5,500 5,500 0% 0 4240 Small Tools - - 300 300 0% 0 4245 General Supplies 310 706 295 3,000 3,000 0% 0 Total Supplies 1,684 3,181 752 10,100 10,300 2% 200 Other Services & Charges 4303 Engineering 10,914 13,540 5,647 20,000 20,000 0% 0 4304 Legal 2,534 518 - 1,000 1,000 0% 0 4313 Engineering - Design Stage 5,955 5,160 169 5,000 5,000 0% 0 4321 Communication 315 331 355 500 500 0% 0 4351 Print /Publish 64 129 643 100 100 0% 0 4400 Contractual 36,430 4,551 2,135 71,500 71,500 0% 0 4420 Depreciation 32,314 33,802 - 34,000 34,000 0% 0 4433 Subscrip- Member - - 6,600 6,600 0% 0 4440 Misc. Services 935 2,520 10,497 1,100 1,100 0% 0 4450 Service Charges - 4 1,000 1,000 0% 0 Total Other Services & Charges 89,461 60,551 19,450 140,800 140,800 0% 0 TOTAL EXPENSES 162,944 107,935 66,244 176,552 176,752 0% 200 REVENUES OVER /(UNDER) EXPENSES 32,398 87,596 44,032 283,100 282,900 SOUTHSHORE COMMUNITY CENTER Revenue Coding: 201-00 - Expenditure Coding: 201 -00- 4200 Office Supplies 190 Approved Requested (190) 4208 Postage Actual Actual Actual Actual Budget YTD Budget Budget Percent Dollar REVENUES 2010 2011 2012 2013 2013 2014 2014 2015 Change Change 3471 Rentals 48,000 61,801 40,765 75,000 55,000 55,000 -27% 14,235 3480 Class fees 2,500 9,958 19,248 2,500 15,500 15,500 520% (3,748) 3620 Interest Income 100 - - 100 100 100 0% 100 3623 Contributions /Donations 1,500 7,942 1,219 1,000 1,000 1,000 0% (219) 3670 Miscellaneous Revenue 4,000 411 867 1,500 1,500 1,500 0% 633 3920 Transfers In 48,591 13,600 13,600 47,700 47,700 251% 34,100 TOTAL REVENUES 56,100 128,703 75,699 93,700 120,800 120,800 60% 45,101 4321 Communication 20 610 1,497 100 1,500 1,500 0% 3 EXPENDITURES 1,000 1,492 527 1,000 1,500 1,500 185% 973 MATERIALS & SUPPLIES 2,500 325 - 3,000 1,000 1,000 #DIV /0! 1,000 4200 Office Supplies 190 (190) 4208 Postage 290 (290) 4223 Maintenance of Building 7,200 317 2,020 7,500 5,000 5,000 148% 2,980 4245 General Supplies 800 4,917 1,237 800 800 800 -35% (437) 4246 Program Expense 10,491 13,000 13,000 2,509 4247 Community Event Expense 4,000 4,000 4,000 TOTAL MATERIALS & SUPPLIES 8,000 5,234 14,228 8,300 22,800 22,800 60% 8,572 OTHER SERVICES 4302 Consulting Fees 72,714 71,000 71,000 (1,714) 4304 Legal - - - - - - 0 4321 Communication 20 610 1,497 100 1,500 1,500 0% 3 4351 Print /Publish 1,000 1,492 527 1,000 1,500 1,500 185% 973 4360 Insurance -Total 2,500 325 - 3,000 1,000 1,000 #DIV /0! 1,000 4380 Utilities 11,000 14,567 12,976 11,000 11,000 11,000 -15% (1,976) 4400 Contractual 30,000 50,540 10,816 60,000 10,000 10,000 -8% (816) 4410 Rentals 3,475 (3,475) 4433 Dues & Subscriptions 204 (204) 4437 Taxes /Licenses 728 (728) 4440 Misc. Services 10,000 13,357 5,561 10,000 2,000 2,000 -64% (3,561) 4450 Bank Service Charges 599 400 - - - (400) TOTAL OTHER SERVICES 54,520 81,490 108,898 85,100 98,000 98,000 -10% (10,898) CAPITAL OUTLAY 4640 Building & Structures - 24,261 - - - - 0 TOTAL CAPITAL OUTLAY - 24,261 - - - - 0 TOTAL EXPENDITURES 62,520 110,985 123,126 93,400 120,800 120,800 11% (2,326) Revenues over /(under) (6,420) 17,718 (47,427) 300 - -