102703 CC Ws AgP
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CITY OF
SHOREWOOD
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5755 COUNTRY CLUB ROAD. SHOREWOOD, MINNESOTA 55331-8927 · (952) 474-3236
FAX (952) 474-0128' www.ci.shorewood.mn.us' cityhall@cLshorewood.mn.us
MEMORANDUM
DATE:
October 22, 2003
FROM:
Honorable Mayor and City Councilmembers
Bonnie Burton, Finance Director ~
TO:
CC:
Enterprise Fund Budget Workshop:
Work-session, Monday October 27, 2003 ".
Craig W. Dawson, City Administrator cA;>
RE:
Attached for your review are Year 2004 budget drafts for the City's Enterprise Funds. "These
documents will be discussed at the work session on Monday night. The documents consist of
budgets for the Water Operations and Water Debt Service, Sanitary Sewer Fund, Stormwater
Management, and Recycling Funds, and Liquor Operations
Water Budget
The Water Fund budget is comprised of two parts: the Water Operating budget and the Water
Debt Service budget. The 2004 Water Debt Service payments for the two existing bond issues
are scheduled at approximately $265,000 and will be paid for by a transfer from the Water
Operating budget.
The 2004 Water Operating budget revenues are projected at $1,222,000 and the expenses
(including depreciation) are forecast at $1,438,804. This results in a shortfall, or deficit, of about
$216,800. The items contributing to the projected shortfall are the debt service transfer
($235,000) and depreciation ($182,000). Proposed capital expenditures include the Woodhaven
Well Interconnection ($140,000), the Badger Well House Reconstruction ($480,000), the Water
Meter Radio Read project (Year 1 of 3 - $70,000), SE Area Water Tower Painting ($50,000) and
installation of the SE Area Well VFD ($18,000) and Amesbury Polyphosphate System
($12,000). Water Revenue Bonds are the proposed funding source for these improvements,
which are estimated at $800,000 - $1,000,000.
In order for the Water Funds to be self-supporting, to assure the system can provide for
improvements and enhancements, and to preserve fund balance at current levels, a water rate
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~~ PRINTED ON RECYCLEO PAPER
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Enterprise Budget Memo
Page 2
increase was necessary in 2003. At the budget workshop last year, Council may recall that staff
suggested a three-year step approach to water rate increases, and Council concurred at that time.
Based on that approach, the 2004 scheduled increase would change the base rate from $25 to $30
for up to 10,000 gallons; from $1.95/1000 gallons to $2.95/1000 gallons for 10,000-50,000
gallons; and from $2.75/1000 gallons to $3.75/1000 gallons for 50,000 + gallons usage. There
are currently approximately 1,200 water connections that use an average of 30,000 gallons per
quarter. The proposed 2004 increase would generate and additional $95,000-100,000 in annual
revenue and the average quarterly bill (30,000 gallons) would increase from about $65 per
quarter to $89 per quarter.
Sanitary Sewer Budget
The City currently has about 2,800 connections to its Sanitary Sewer System. The Sanitary
Sewer Fund has a substantial fund balance that has enabled it to be used to help fund projects
such as the Gideon Glen land acquisition. This loan is being repaid on schedule from the
Stormwater Management Fund. Council will recall that a sanitary sewer rate increase was
implemented during 2003. Staff is not recommending any additional rate increases at this time.
Proposed operating revenues and expenditures for year 2004 are contemplated at approximately
$870,000. In addition, capital improvements of approximately $121,500 are planned. Capital
improvements for year 2004 include refurbishment of Lift Stations 8 and 15. In addition, funds
have also been designated for Inflow & Infiltration Control and Reduction projects ($25,000).
Storm water Management Budget
The 2004 Stormwater Management Budget draft contemplates revenues and expenditures of
about $361,000. This includes operations and debt service payments for the Gideon Glen land
acquisition. Capital improvement projects anticipated include the Gideon Glen Drainage Project
($183,300) to be funded with grant proceeds and by the MCWD; Boulder Bridge Storm Lift
station improvements ($82,800) to be funded with special assessments; and the Glen Road
Drainage Improvement project. The Council will recall that a small increase in rates was
implemented for 2003. Staff is not recommending any additional rate increases at this time.
Recycling Budget
The Recycling Budget draft contemplates revenues and expenditures of about $117,480. The
City will receive $21,640 from Hennepin County Grant Funds, which is a slight reduction due to
funding cuts in this program. Council will recall that the rate the City charged was increased
slightly for 2003 to keep pace with the contract increase with EZ Recycling (now $2.25 per
household.) We note that the number of households participating in the recycling program
remains stable at about 1,100 households per month. Staff is not recommending any additional
rate increases at this time.
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Enterprise Budget Memo
Page 3
Liquor Operations
For the first time in a several years, the Liquor Operations has a surer sense of the future of its
liquor stores. The City optimistically anticipates reasonable profit levels at its two current
operating stores.
Waterford (Store No.1)
During 2003, the City was successful in substantially reducing the lease rental rates and this store
is forecasted to show a small operating profit for 2004.
Shorewood Plaza (Store No.2)
Lastly, during the coming year, the Shorewood Plaza location should be positively impacted by
its recent relocation within the mall and the completion of the Cub store. Business at this store
declined by 28-33% during construction this year; however staff anticipates a strong fourth
quarter 2003. The 2004 budget for this store reflects an expected return to profitability. Capital
improvements for this store include inventory software and hardware upgrades ($20,000).
Tonka Bay / Smithtown Store (Store No.3)
As CounGil will recall, the Tonka Bay store closed on November 30, 2002. City staff, with the
approval of the Liquor Committee, initiated discussions with the owners of the Oasis gas station
(located across the street from the current Tonka Bay store) to discuss building a liquor store
there. Early discussions are encouraging, however staff has concluded that a marketing
feasibility study should be undertaken in early 2004 to ascertain if an adequate market exists to
justify a third store. Accordingly, $20,000 has been budgeted for this study.
The Liquor Committee at its October 13 meeting reviewed the Liquor Operations budgets and
the committee recommends approval of the budgets by the City Council.
Conclusion
We invite your response and comments on the Enterprise Budgets. Please advise if you would
like additional information or if we can be of further assistance prior to the work-session.
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CITY OF SHOREWOOD,
MINNESOTA
2004 WATER BUDGET
October 27, 2003
4FZ.A
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SUB FUND:
Water Operations
MISSION:
To provide a safe. clean, uninterrupted
supply of drinking water to all City
residents connected to the City water system.
FUND:
Water
FUND NO: 601
DESCRIPTION OF ACTIVITY:
Responsible for operation and maintenance of seven (7) well systems, including all
pumps and wellhouses. maintenence of water tower and treatment plant, and
extension of new watermain and construction of new water facilities. as necessary.
OBJECTIVES:
- Supply a safe, clean uninterrupted source of water to all connections
- Explore possibility of interconnecting with other communities
HIGHLIGHTS/COMMENTS:
Revenues:
Estimated water sales based on quarterly billing at a tiered rate of $1.95 - $2.75/1.000 gallons (2003 adopted rate change)
Connection and permit revenues
Miscellaneous Income includes interest income and Cellular Antenna Space Rentals
Anticipate issuing Water Revenue Bonds for approximately $ 800,000 - 2004
Expenses:
Staffing:
1.00 Utility Operator
.10 Senior Accounting Clerk
.20 Accounting Clerk
Supplies/Materials:
Office Supplies, including billing forms and postage
Maintenance contracts for computer hardware and software
Maintenance of gate valves
Small tools and chemicals for water treatment
.125 City Engineer
.25 Engineering Technician
.05 SecJRecep.
Support Services & Charges:
Engineering
Water Operations Ucenses & Training
Insurance on water system
Water testing & Water Quality Reporting
Water system analysis
Capital Outlay:
Woodhaven Well Inter-Connection ($140,000 - 2004)
Badger Well House Reconstruction ($480,000 - 2004)
Radio Read Meter project-Year 1 of 3 ($70,000 - 2004)
SE Area Water Tower Paining ($50,000 - 2004)
SE Well-Install VFD ($18,000 .2004)
Amesbury Polyphosphate System ($12,000 - 2004)
Other:
Water Purchased from other communities
Meter purchases
Well utility charges
Transfers to Water Debt Service Fund and General Fund
Depreciation (Non-cash expense accounts for future system replacement)
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FUND: #601 FUND: Water Operations DEPT #: 49400
BUDGET Actual Actual Actual Budget YTD Sept Proposed Adopted
ITEM 2000 2001 2002 2003 2003 2004 2004
REVENUE
Charges for Service 300.652 334,830 272,465 327,000 169,368 351,000 0
Bond Proceeds 0 0 0 0 0 800,000
Misc. Revenue 116.648 72,778 104,106 76,000 42,624 71.000 0
TOTAL REVENUE 417,300 407,608 376,571 403,000 211,993 1,222,000 0
EXPENSES
Staffing 12.595 17 ,829 48,431 100,312 52,160 99,654 0
Supplies/Materials 48,861 52,542 47,565 49,750 33,016 49,250 0
Support Services & Charges 120,131 137,711 140,580 72,350 55,865 77,900 0
Capital Outlay 5.111 935 0 270,200 0 800,000 0
Transfers 45,000 85,000 110,000 150,000 0 230,000 0
Depreciation 172,032 178,328 180,805 180,000 135,277 182,000 0
TOTAL EXPENSES 403,730 472,345 527,381 822.612 276,318 1 ,438,804 0
SERVICE INDICATORS:
Miles of Water Line 16 16 16 16 16 16 16
No. of Connections 1.120 1,120 1,120 1,120 1,172 1,200 1,200
No. of Hydrants 222 222 222 222 222 222 222
Avg Daily Consump- gals 430.000 430,000 430,000 430,000 430.000 430,000 430,000
Water rate/1000 gals 1.50/1.76 1.50/1 .76 1.50/1.76 1.50/1.76 1.50/1.76 1.95/2.75 1.95/2.75
CASH FLOW IMPACT:
Beginning Cash Balance 617,861 730,741 923,070 1.057,481 1,057,481 817,869 817,869
Revenues 417,300 407,608 376,571 403,000 211,993 1,222,000 0
Expenditures (403,730) (472,345) (527,381) (822,612) (276,318) (1,438,804) 0
Depreciation 172,032 178,328 180,805 180,000 135,277 182,000 0
Construction of Infrastructure
Other Cash Flow Impacts (72,722) 78,738 104,417 0 0 0 0
Ending Cash Balance 730,741 923,070 1,057,481 817,869 1,128,434 783,065
STAFFING:
Lt. Equip. Oper. .30 .30 .30 .30 .30 1.10 1.10
Engineer. Tech. .25 .25 .25 .25 .25
Engineer .15 .15 .15 .125 .125
Sr. Acctg. Clerk .10 .10 .10 .10 .10 .10 .10
Acctg. Clerk .20 .20
SecJRecep. .10 .10 .10 .10 .10 .05 .05
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SUBFUND: Water Debt Service
MISSION:
To provide for the retirement of
debt incurred to construct water
system improvements.
FUND: Water
FUND NO: 601
DESCRIPTION OF ACTIVITY:
Responsible for the accumulation of resources for the retirement of Water Fund debt, and
for the periodic payment of principal and interest.
OBJECTIVES:
To assure adequate resources to retire debt as scheduled, or more quickly if prudent.
HIGHLIGHTS/COMMENTS:
Revenues:
Property Tax Levy for Debt Service
Special Assessments on Water Improvements
Connection Charges
Interest Income
Transfers from Water Operating Fund
Expenses:
Staffing:
Supplies/Materials:
Support Services:
Charges & Fees:
Capital Outlay:
Other:
Debt service payments - Principal and interest
Fiscal Agent Fees
8
FUND: #601 FUND: Water - Debt Service DEPT # 49400
BUDGET Actual Actual Actual Budget YTD Sept Proposed Adopted
ITEM 2000 2001 2002 2003 2003 2004 2004
REVENUE
Sp Assess/Connect Chgs 216,409 115,198 16,904 120,000 16,763 35,000 0
Misc. Revenue 10 18 0 0 0 0 0
Transfers 40,000 85,000 110,000 150,000 0 230,000 0
TOTAL REVENUE 256,420 200,216 126,904 270,000 16,763 265,000 0
EXPENSES
Staffing 0 0 0 0 0 0 0
SupplieslMaterials 0 0 0 0 0 0 0
Support Services 0 0 0 0 0 0 0
Charges & Fees 0 0 0 0 0 0 0
Other - Debt Service 299,424 325,985 275,258 267,904 267,904 264,890 0
Capital Outlay 0 0 0 0 0 0 0
Transfers 0 0 0 0 0 0 0
TOTAL EXPENSES 299,424 325,985 275,258 267,904 267,904 264.890 0
SERVICE INDICATORS:
Outstanding Debt, Year End 2,100,000 1,915,000 1.730,000 1,545.000 1,545,000 1,355,000
CASH FLOW IMPACT:
Beginning Cash Balance
740,511 697,507 571,738 423,384 423,384 425,480 425,590
Revenues
256,420 200,216 126,904 270.000 16,763 265,000 0
Expenditures
(299,424) (325,985) (275,258) (267,904) (267,904) (264,890) 0
Ending Cash Balance
697,507 571,738 423,384 425,480 172,243 425.590 425,590
STAFFING:
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Capital Plan
~
City of Shorewood, Minnesota
PROJECTS BY DEPARTMENT
2004
thru
2008
Department Project# Priority 2004 2005 2006 2007 2008 Total
Municipal Water System
Badger Well House Reconstruction W-03.Q3 3 480,000 480,000
Woodhaven Welllnlerconnect W.Q3-05 0 140,000 140,000
Water Meter Radio Read Project W.03-06 0 70,000 70,000 70,000 210,000
Amesbury Submersible Well- Pull &. Inspect W..Q4.Q1 3 21,000 21 :000
SE Area Waler Tower - painting W.Q4.06 0 50,000 50,000
SE Well-Install VFD W..Q4.Q7 0 18,000 18,000
Amesbury Polyphosphate System W-04.0B 0 12,000 12,000
Boulder Bridge Submersible Well- Pull &. Inspect W..QS..Q1 3 21,000 21 ,000
S.E. Area UneshaftWell- Pull &. Inspect W.Q6..()1 3 22,000 22,000
Amesbury Uneshalt Wen. Pull &. Inspect W.QHJ2 0 22,000 22,000
Municipal Water System Total 770,000 91,000 91,000 22.000 22,000 996.000
GRAND TOT PJ.. 770,000 91.000 91,000 22,000 22.000 996,000
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Preliminary
$835,000.00
City of Shorewood, Minnesota
General Obligation Water Revenue Bonds of 2004
(Current Al Rated Rates plus .50%)
DEBT SERV:rCE SCHEDULE
Date principal Coupon Interest Total P+I FISCAL TOTAL
6/01/2004 - - - - -
6/01/2005 - - 32,735.00 32,735.00 -
12/01/2005 30,000.00 1. BOO'll 16,367.50 46,367.50 79,102.50
6/01/2006 - - 16,097.50 16,097.50 -
12/01/2006 45,000.00 2.150% 16,097.50 61,097.50 77,195.00
6/01/2007 - - 15,613.75 15,613.75 -
12/01/2007 45,000.00 2.550% 15,613.75 60,613.75 76,227.50
6/01/200B - - 15,040.00 15,040.00 -
12/01/200B 50,000.00 2.900\ 15,040.00 65,040.00 80,080.00
6/01/2009 - - 14,315.00 14,315.00 -
12/01/2009 50,000.00 3.250% 14,315.00 64,315.00 78,630.00
6/01/2010 - - 13,502.50 13,502.50 -
12/01/2010 50,000.00 3.550% 13,502.50 63,502.50 77,005.00
6/01/2011 - - 12,615.00 12,615.00 -
12/01/2011 55,000.00 3.850% 12,615.00 67,615.00 80,230.00
6/01/2012 - - 11,556.25 11,556.25 -
12/01/2012 55,000.00 4.100% 11,556.25 66,556.25 78,112.50
6/01/2013 - - 10,428.75 10,428.75 -
12/01/2013 55,000.00 4.150% 10,428.75 65,428.75 75,857.50
6/01/2014 - - 9,2B7.50 9,287.50 -
12/01/2014 60,000.00 4.300% 9,287.50 69,287.50 78,575.00
6/01/2015 - - 7,997.50 7,997.50 -
12/01/2015 60,000.00 4.450% 7,997.50 67,997.50 75,995.00
6/01/2016 - - 6,662.50 6,662.50 -
12/01/2016 65,000.00 4.550% 6,662.50 71,662.50 78,325.00
6/01/2017 - - 5,183.75 5,lB3.75 -
12/01/2017 70,000.00 4.650\ 5,lB3.75 75,183.75 80,367.50
6/01/2018 - - 3,556.25 3,556.25 -
12/01/2018 70,000.00 4.750% 3,556.25 73,556.25 77,112.50
6/01/2019 - - 1,893.75 1,893.75 -
12/01/2019 75,000.00 5.050% 1,893.75 76,893.75 78,787.50
Total 835,000.00 - 336,602.50 1,171,602.50 -
Y~ELD STAT~STICS
Bond Year Dollars..................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Li fe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Coupon. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$7,797.50
9.338 Years
4.3168003%
Net Interest Cost INIC)...............................................
True Interest Cost (TIC)..............................................
Bond Yield for Arbitrage Purposes.... . . . . . . . . . . . . . . . . ., . . .. . . -. . . . .. . .
All Inclusive Cost (AIC)..............................................
4.4774287%
4.4684680%
4.2654586\
4.8356728\
IRS FORM 8038
Net Interest Cost................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted Average Maturity.... .... .. .................... . . ........ .. .,.
4.3168003%
9.338 Years
Northland Securities Inc.
Public Finance
File = SHOREWOOD.SF
11
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Preliminary
$840,000.00
Ci ty of Shorewood, Minnesota
General Obligation Water Revenue Bonds of 2004
(Current Al Rated Rates plus .50%)
DEBT SERVICE SCHEDULE
Date
6/01/2004
6/01/2005
12/01/2005
6/01/2006
12/01/2006
6/01/2007
12/01/2007
6/01/2008
12/ 01 / 2008
6/01/2009
12/01/2009
6/01/2010
12/01/2010
6/01/2011
12/01/2011
6/01/2012
12/01/2012
6/01/2013
12/01/2013
6/01/2014
12/01/2014
6/01/2015
12/01/2015
6/01/2016
12/01/2016
6/01/2017
12/01/2017
6/01/2018
12/01/2018
6/01/2019
12/01/2019
6/01/2020
12/01/2020
6/01/2021
12/01/2021
6/01/2022
12/01/2022
6/01/2023
12/01/2023
6/01/2024
12/01/2024
Total
Northland Securities Inc.
Public Finance
Principal
10,000.00
30,000.00
30,000.00
30,000.00
35,000.00
35,000.00
35,000.00
35,000.00
40,000.00
40,000.00
40,000.00
45,000.00
45,000.00
50,000.00
50,000.00
50,000.00
55,000.00
60,000.00
60,000.00
65,000.00
840,000.00
Coupon
1. 800ll;
2.150%
2.550%
2.900%
3.250%
3.550%
3.850%
4.100%
4.150%
4.300\
4.450%
4.550%
4.650%
4.750%
5.050\
5.100%
5.200%
5.250%
5.300%
5.400%
Interest
37,072.50
18,536.25
18,446.25
18,446.25
18,123.75
18,123.75
17,741. 25
17,741.25
17,306.25
17,306.25
16,737.50
16,737.50
16,116.25
16,116.25
15,442.50
15,442.50
14,725.00
14,725.00
13,895.00
13 , 895 .00
13,035.00
13,035.00
12,145.00
12,145.00
11,121. 25
11,121. 25
10,075.00
10,075.00
8,887.50
8,887.50
7,625.00
7,625.00
6,350.00
6,350.00
4,920.00
4,920.00
3,345.00
3,345.00
1,755.00
1,755.00
511,193.75
12
Total P+I FISCAL TOTAL
37,072.50 -
28,536.25 65,608.75
18,446.25 -
48,446.25 66,892.50
18,123.75 -
48,123.75 66,247.50
17,741.25 -
47,741.25 65,482.50
17,306.25 -
52,306.25 69,612.50
16,737.50 -
51,737.50 68,475.00
16,116.25 -
51,116.25 67,232.50
15,442.50 -
50,442.50 65,885.00
14,725.00 -
54,725.00 69,450.00
13,895.00 -
53,895.00 67,790.00
13,035.00 -
53,035.00 66,070.00
12,145.00 -
57,145.00 69,290.00
11,121.25 -
56,121.25 67,242.50
10,075.00 -
60,075.00 70,150.00
8,887.50 -
58,887.50 67,775.00
7,625.00 -
57,625.00 65,250.00
6,350.00 -
61,350.00 67,700.00
4,920.00 -
64,920.00 69,840.00
3,345.00 -
63,345.00 66,690.00
1,755.00 -
66,755.00 68,510.00
1,351,193.75 -
File = SHOREWOOD.SF
Preliminary .
$840,000.00
Ci ty of Shorewood, Minnesota
General Obligation Water Revenue Bonds of 2004
(Current Al Rated Rates plus .50%)
DEBT SERVICE SCHEDULE
Y~ELD STAT~STICS
Bond Year Dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,640.00
Average Life....................................................... 12.667 Years
Average Coupon. . .... .. . .,. ...... .... ...... .. .... .., .,. .. ., . ..... .. . 4.8044525%
Net Interest Cost (NIC).............................................
True Interest Cost (TIC)...........................................
Bond Yield for Arbitrage Purposes..... .... .. ., ........ .............
All Inclusive Cost (AIC)............................................
4.9465578%
4.9340824%
4.7351654%
5.2329837%
J:RS FOllM 8038
Net Interest Cost... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8044525%
Weighted Average Maturi ty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12.667 Years
Northland Securities Inc.
publi c Finance
File = SHOREWOOD.SF
13
CITY OF SHOREWOOD,
MINNESOT A
2004 SANITARY SEWER BUDGET
October 27, 2003
#28
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SUB FUND:
DEPT NO:
Sanitary Sewer
611
MISSION:
To provide a safe, sanitary sewer
service to all City residents
FUND:
Sanitary Sewer
DESCRIPTION OF ACTIVITY:
Major activities include maintenance of fourteen (14) lift stations, and cleaning,
televising and repairing sewer mains to control inflow and infiltration. Sewage
treatment is performed by Metropolitan Council Environmental Services (MCES) and is
provided for in this area.
OBJECTIVES:
_ Work with MCES to correct inflow and infiltration into the sanitary sewer system
- Work with MCES to reduce sewage treatment costs to the City
- Refurbish two lift stations per year
HIGHLIGHTS/COMMENTS:
Revenues:
Quarterly Sewer service charges at $70.00 per quarter
Interest revenue from investment of Sewer Fund cash balances
Other permit and connection fee revenues estimated based on 15 new homes
Repayment of Interfund Loan from Stormwater Management Fund for purchase of Gideon Glen land
Expenses:
Staffing:
.10 Senior Accounting Clerk
1.10 Light Equipment Operator
.05 Receptionist/Secretary
SupplieS/Materials:
Office Supplies, including billing forms and postage
Maintenance contracts for computer hardware and software
Support Services:
Sewer Main Cleaning
Inflow & Infiltration Control
Insurance on sewer system
Legal & engineering services
Utilities
Travel & seminars
Charges & Fees:
Charges for sewage flow into City of Excelsior trunk mains
Metropolitan Council Environmental Services sewage treatment charges
Capital Outlay:
Refurbish Lift Stations 15 (2004)
Inflow & Infiltration Reduction
Transfers:
Intertund Loan - Gideon Glen 2000
Depreciation (Non-cash expense accounts for future system replacement)
16
FUND: # 611 FUND: Sanitary Sewer DEPT # 49450
BUDGET Actual Actual Actual Budget YTD Sept Proposed Adopted
ITEM 2000 2001 2002 2003 2003 2004 2004
REVENUE
Charges for Service 860,283 788,944 809,913 840,500 467,932 840,500 0
Transfers 0 0 0 38,877 0 37,397 0
TOTAL REVENUES 860,283 788,944 809,913 879,377 467,932 877,897 0
EXPENSES
Staffing 18,973 18,795 32,068 104,812 40,960 104,154 0
supplies/Materials 16,742 10,013 21,334 18,500 10,430 22,750 0
Support Services & Charges 368,506 445,493 413,547 520,800 383,068 510,758 0
Capital Outlay 0 0 0 197,700 11,767 121,500 0
Transfers 651,875 10,000 15,000 0 0 0 0
Depreciation 198,974 200,821 202,291 202,000 151,693 205,000 0
TOTAL EXPENSES 1,255,070 685,122 684,239 1,043,812 597,918 964,162 0
SERVICE INDICATORS:
Miles of Sewer Line 57 57 57 57 65 65 65
No. of Connections 2,705 2,705 2,705 2,773 2,773 2,773 2,773
No. of Lift Stations 16 16 16 16 16 16 16
Sewer Charge 60.00 60.00 60.00 70.00 70.00 70.00 70.00
CASH FLOW IMPACT:
Beginning Cash Balance 2,050,624 1 ,758,652 2,026,007 2,823,305 2,823,305 2,821,993 2,821,993
Revenues 860,283 788,944 809,913 840,500 467,932 840,500 0
Expenditures (1,255,070) (685,122) (684,239) (1,043,812) (597,918) (964,162) 0
Depreciation 198,974 200,821 202,291 202,000 151,693 205,000 0
Other Cash Flow Impacts (96,159) (37,288) 469,334
Ending Cash Balance 1,758,652 2,026,007 2,823,305 2,821,993 2,845,013 2,903.331 2,821,993
STAFFING: 0
Sr. Acctg. Clerk .10 .10 .10 .10 .10 .10 .10
Acctg. Clerk .20 .20 .20 .20
Lt. Equip. Oper JForeman .20 .20 .20 1.10 1.10 1.10 1.10
Receptionist/Secretary .10 .10 .10 .05 .05 .05 .05
City Engineer .125 .125 .125 .125
Engineer. Technician .25 .25 .25 .25
17
Capital Plan
I
I
City of Shorewood, Minnesota
PROJECTS BY DEPARTMENT
2004 thru 2008
Department
Project# Priority 2004
2005
2006
I
I
I
I
..
~
I
Sanitary Sewer
Infiltration and Inflow Reduction SS.Q3-05 3 25,000 25,000 25,000
Lift Station 15 Rehabilitation SS.Q3-Q6 3 18,000 81 ,000
Lilt Station 17 Rehabilitation SS.04.Q1 3 22,000 81,000
Uft Station 16 RehabUitation SS.Q5.01 3 25,000
Lift Station 12 RehabOitation SS.Q7.Q1 0
Sanitary Sewer Total 43,000 128,000 131,000
GRAND TOT AI.. 43,000 125,000 131,000
1 ~3
2007
25,000
79,000
19,000
123,000
123,000
2008
25,000
91,000
116,000
116,000
Total
125,000
99.000
103,000
104,000
110,000
541,000
541,000
2003.2007 CAPITAL IMPROVEMENT PROGRAM
Section 110. SANITARY SEWER - PROJECT SUMMARY
I
I
I
I
I
I
I
I
I
I
I
-
,
-
proj Description 2003 2004 2005 2006 2007
1 Lift Station 18 Rehabilitation $ 102,658
2 Lift Station 8 Rehabilitation $ 70,950
3 Generator for Lift Stations $ 36,100
4 Purchase Autodialer Systems $ 8,000 $ 5,000 $ 4,000
5 Lift Station 15 Rehabilitation $ 6,750 $ 92,608
6 Lift Station 17 Rehabilitation $ 6,750 $ 92,608
7 Lift Station 16 Rehabilitation ,$ 6,750 $ 95,908
8 Infiltration and Inflow Projects $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
TOTAL $ 249.458 $ 129,358 $ 128,358 $ 120,908 $ 25,000
18
CITY OF SHOREWOOD,
MINNESOTA
2004 RECYCLING BUDGET
October 27,2003
4f:zG,
21
SUB FUND:
Recycling
MISSION:
To provide weekly pickup of recyclables
to all City residents; provide for the annual
pickup of household and yard wastes
FUND:
Recycling
FUND NO: 621
DESCRIPTION OF ACTIVITY:
Weekly pick-up of newspaper, corrugated cardboard, recyclable plastics, glass and
metal, and other recyclable materials. Includes annual City curbside pickup of large household
items and brush, and operation of an annual brush/leaf composting drop-off site.
OBJECTIVES:
_ Continue weekly pickup of recyclable materials
_ Hold curbside pickup of household and yard wastes in the Spring of the year
_ Provide a leaf and yard waste disposal site in Fall of the year
HIGHLIGHTS/COMMENTS:
Revenues:
County Aid is a Hennepin County grant
Charges for Service includes City Clean-up fees and a
City Recycling Fee of $1.75 per month per household
Tranfers/other includes transfers, interest income and revenue sharing from the Recycling Contractor
Expenses:
Staffing:
Miscellaneous staffing for City Clean-up and Yardwaste Disposal
SupplieslMaterials:
Office Supplies
Support Services:
Recycling contract with E-Z Recycling. $2.35/householdlmonth for 2,720 households
City Clean-up costs
22
FUND: #621 FUND: Recycling DEPT # 49550
BUDGET Actual Actual Actual Budget YTD Sept Proposed Adopted
ITEM 2000 2001 2002 2003 2003 2004 2004
REVENUE
County Aid 21,858 23,728 23,690 23,700 0 21 ,460 0
Charges for Service 76,864 77,600 81,860 86,120 63,843 94,020 0
Transfers/other 2,346 2,017 2,831 1,250 949 2,000 0
TOTAL REVENUE & 101,067 103,345 108,382 111,070 64,793 117,480 0
OTHER SOURCES
EXPENSES
Staffing 0 653 498 3,914 590 2,920 0
Supplies/Materials 1,840 983 1,694 750 990 1,300 0
Support Services & Charges 85,577 102,516 102,516 106,406 89,944 113,260 0
Capital Outlay 0 0 0 0 0 0 0
Transfers 0 0 0 0 0 0 0
TOTAL EXPENSES 87,417 104,151 104,709 111,070 91,524 117,480 0
SERVICE INDICATORS:
Avg. mo. Participant Hshlds. 1,100 1,100 1,100 1,100 1,100 1,100 0
Avg. mo. Tonnage 70 70 70 70 70 70 0
CASH FLOW IMPACT:
Beginning Cash Balance 26,317 35,975 37,785 41 ,457 41,457 41 ,457 41 ,457
Revenues 101,067 103,345 108,382 111,070 64,793 117,480 0
Expenditures (87,417) (104,151) (104,709) (111,070) (91,524) (117,480) 0
Other Cash Flow Impacts (3,992) 2,616
Ending Cash Balance 35,975 37,785 41 ,457 41 ,457 14,726 41 ,457 41 ,457
STAFFING:
.05 Receptionist/Secretary
23
CITY OF SHOREWOOD,
MINNESOTA
2004 STORMW ATER MANAGEMENT
BUDGET
October 27, 2003
+/:ZD
25
SUB FUND:
Stormwater Management
MISSION:
To provide proper surface water and
ground water management throughout
the City.
FUND:
Stormwater Management
FUND NO: 631
DESCRIPTION OF ACTIVITY:
Activities include maintenance of storm sewer system, including cleaning of catch basins,
dredging of drainage ditches and retention ponds, and minor repairs to system problem areas.
Provides partial funding for larger subwatershed drainage projects.
OBJECTIVES:
To build and maintain a stable fund balance in order to facilitate council priorities and projects.
HIGHLIGHTS/COMMENTS:
Revenues:
Stormwater Management Utility Charges
Misc. Revenue includes interest income and other misc. revenue (antenna)
Transfers from the General Fund
Expenses:
Staffing:
.05 Senior Accounting Clerk
.10 Light Equipment Operator
Supplies/Materials:
Drainage Correction/Maintenance Materials
Support Services:
Engineering
Contractual Services for drainage correction
Debt Service:
Repayment of Internal Loan to Sewer Fund for land purchase (Balance outstanding at end of 2004: $120,000)
Capital Outlay:
Glen Road Drainage Improvement ($25,000 - 2004)
Gideon Glen Drainage Project ($183,300 - To be funded by MCWD in 2004)
Boulder Bridge Storm Lift Station ($82,800 - To be funded with special assessments in 2004)
26
FUND: #631 FUND: Stormwater Management Utility DEPT If 49600
BUDGET Actual Actual Actual Budget YTD Sept Proposed Adopted
ITEM 2000 2001 2002 2003 2003 2004 2004
REVENUE
Special Assessments 0 0 0 0 0 82,800
Charges for Service 52,134 48,425 43,985 59,500 27,946 59,500 0
Misc. Revenue 17,711 205,092 62,580 2,500 23,605 269,100 0
Transfers 10,000 10,000 35,000 18,000 0 25,000 0
TOTAL REVENUE & 79,845 263,516 141,565 80,000 51,551 353,600 0
OTHER SOURCES
EXPENSES
Staffing 2,340 2,473 2,299 11 ,528 1,598 11,979 0
supplies/Materials 642 600 3,376 2,000 0 2,300 0
Support Services 7,699 44,399 12,486 18,095 19,669 18,200 0
Charges & Fees 0 0 0 0 0 0 0
Other - Debt Service 0 206,767 29,863 38,877 0 37,397 0
Capital Outlay 0 0 0 0 0 291,000 0
Transfers 0 0 0 0 0 0 0
TOTAL EXPENSES 10,682 254,240 48,023 70,500 21,267 360,876 0
SERVICE INDICATORS:
CASH FLOW IMPACT:
Beginning Cash Balance 228,296 118,043 135,105 173,094 173,094 182,594 182,594
Revenues 79,845 263,516 141,565 80,000 51,551 353,600 0
Expenditures (10,682) (254,240) (48,023) (70,500) (21,267) (360,876) 0
Other Cash Flow Impacts (179,416) 7,785 (55,553) 0 0 0 0
Ending Cash Balance 118,043 135,105 173,094 182,594 203,377 175,318 182,594
STAFFING:
City Administrator .10 .10 .10 .10 .10
Engineer .05 .05 .05 .05 .05
Lt. Equip. Oper./Foreman .10 .10 .10 .10 .10 .10 .10
Sr. Acctg. Clerk .10 .10 .05 .05 .05 .05 .05
Acctg. Clerk .10 .10 .10 .10 .10
27
2004 - 2008 CAPITAL IMPROVEMENT PROGRAM
Section 110. STORM WATER MANAGEMENT - PROJECT SUMMARY
proj Description 2004 2005 2006 2007
1 Gideon Glen $ 183,300
2 Glen Road Drainage Improvement $ 25,000
3 Boulder B ridge Storm lift Station $ 82,800
4 Harding Lane Drainage Project $ 30,000
5 Stormwater Projects $ 30,000 $ 30,000 $
TOTAL $ 291 ,100 $ 30,000 $ 30,000 $ 30,000 $
28
CITY OF SHOREWOOD,
MINNESOT A
2004 LIQUOR
OPERATIONS BUDGET
October 27, 2003
-:/J: ZE
29
FUND NO:
640
MISSION:
To control the sale and distribution of
packaged alcholic beverages within the
City and to provide property tax relief
the use of operation profits.
FUND:
Liquor
SUBFUND:
DESCRIPTION OF ACTIVITY:
Provides for the sale of packaged alcoholic beverages to the general public.
OBJECTIVES:
- Effectively control the sale of packaged alcoholic beverages in the City
- Produce a reasonable net profit
- Find a new location for Tonka Bay Store
HIGHLIGHTS/COMMENTS:
Revenues:
Estimated liquor sales for two stores at approximately 71?% increase.
Expenses:
Staffing:
1.00 Operations Manager
2.00 Assistant Managers
1.00 Full Time Clerks
.15 Senior Accounting Clerk
10.00 Part time Sales Clerks
Supplies/Materials:
Office Supplies, Bags, Postage
Services & Charges:
Finance and Auditing Services
Consulting Services include a marketing study for the former Tonka Bay Store
General and Liquor Liability Insurance
Electric & Gas Utilities, and Refuse Hauling
Building Rental
Advertising
Credit Card Service Charges
Capital Outlay: To Be Determined
Transfers Out:
Transfer to General Fund
Misc. Revenue/Expenditures:
Interest Income & Service Charges
30
FUND: # 640 SUBFUND: Liquor Operations (Shorewood Village & Waterford) DEPT #
BUDGET Actual Actual Budget YTD June Proposed Adopted
ITEM 2001 2002 2003 2003 2004 2004
REVENUE
Sales 2,622,145 2,507,063 1,986,000 746,176 2,224,045 0
Cost of Goods 1,962,099 1,829,854 1,487,000 517,531 1,645,909 0
GROSS PROFIT 660,046 677,209 499,000 228,645 578,136 0
EXPENSES
Staffing 290,934 302,702 233,473 101,762 272,477 0
Supplies/Materials 12,912 11,325 8,000 4,556 8,000 0
Services & Charges 258,685 232,728 194,790 90,681 196,830 0
Depreciation 9,662 10,085 7,300 4,837 14,800 0
Capital Outlay 0 40,000 30,000 2,774 20,000 0
TOTAL EXPENSES 572,193 596,840 473,563 204,610 512,107 0
TOTAL OPERATING INCOME (LOSS) 87,853 80,369 25,437 24,034 66.029 0
Transfers In/(Out) (10,000) (30,000) (20,000) 0 (30,000) 0
Misc. Revenue/(Expense) 4,502 10,680 9,000 3,348 11,000 0
NET INCOME (LOSS) 82,355 61,048 14,437 27,383 47,029 0
SERVICE INDICATORS:
Gross Profit as a % of Sales 25.17% 27.01 % 25.13% 30.64% 25.99% #DIV/O!
Oper. Income as a % of Sales 3.35% 3.21% 1.28% 3.22% 2.97% #DIV/O!
CASH FLOW IMPACT:
Beginning Cash Balance
Net Operating Income/Loss
Depreciation
Other Cash Flow Impacts
Ending Cash Balance
STAFFING:
Full time:
Operations Manager 1.00 1.00 1.00 1.00 1.00 1.00
Assistant Manager 3.00 3.00 2.00 2.00 2.00 2.00
Full Time Clerk 1.00 1.00 1.00 1.00
Sr. Acctg. Clerk .15 .15 .15 .15 .15 .15
Part time:
Sales Clerks 15.00 15.00 15.00 15.00 10.00 10.00
31
FUND NO:
Liquor MISSION:
To control the sale and distribution of
Shorewood Plaza packaged alcholic beverages within the
City and to provide property tax relief
641 the use of operation profits.
FUND:
SUBFUND:
DESCRIPTION OF ACTIVITY:
Provides for the sale of packaged alcoholic beverages to the general public.
OBJECTIVES:
_ Effectively control the sale of packaged alcoholic beverages in the City
_ Provide a profit equal to at least 2% of sales for transfer to the General Fund
HIGHLIGHTS/COMMENTS:
Revenues:
Estimated liquor sales
Expenses:
Staffing:
.50 Operations Manager
1.00 Assistant Manager
1.00 Full Time Clerk
5.00 Part time Sales Clerks
.05 Senior Accounting Clerk
SupplieS/Materials:
Office Supplies, Postage, Equipment Repair, Bags
Services & Charges:
Finance and Auditing Services
Contractual Rug Service
General and Liquor Liability Insurance
Electric & Gas Utilities, and Refuse Hauling
Building Rental
Advertising
Credit Card Service Charges
Capital Outlay:
Completely remodeled store in 2003
Computer inventory & accounting software systems (2004)
Misc. Revenue/Expenditures:
Interest Income & Service Charges
32
---
FUND: #f: 641 SUBFUND: Liquor - Shorewood Plaza DEPT#f:
BUDGET Actual Actual Budget YTD June Proposed Adopted
ITEM 2001 2002 2003 2003 2004 2004
.=-~-
REVENUE
Sales 1,086,613 986,844 1,140,000 366,143 1,367,445 0
Cost of Goods 813,073 714,346 853,000 255,619 1,011,909 0
GROSS PROFIT 273,540 272,499 287,000 110,524 355,536 0
EXPENSES
Staffing 117,261 104,673 127,565 47,899 159,510 0
SupplieslMaterials 4,733 4,967 4,000 2,418 4,000 0
Services & Charges 88,860 86,660 106,715 47,327 103,565 0
Depreciation 1,848 3,188 1,500 2,445 10,000 0
Capital Outlay 0 0 30,000 851 20,000 0
TOTAL EXPENSES 212,702 199,487 269,780 100,940 297,075 0
NET OPERATING INCOME (LOSS) 60,838 73,011 17,220 9,585 58,461 0
Transfers In/(Out) (5,000) (15,000) (15,000) 0 (25,000) 0
Misc. Revenuel(Expense) 7,697 11,740 10,000 3,363 12,000 0
NET INCOME (LOSS) 63,535 69,752 12,220 12,947 45,461 0
BUSINESS INDICATORS:
Gross Profit as a % of Sales 25.17% 27.61% 25.18% 30.19% 26.00% #DIV/O!
Oper. Income as a % of Sales 5.60% 7.40% 1.51% 2.62% 4.28% #DIV/O!
CASH FLOW IMPACT:
Beginning Cash Balance 287,570 280,742 361,442 280,742 361,442 361,442
Net Operating Income/(Loss) 60,838 73,011 17,220 9,585 58,461 0
Depreciation 1,848 3,188 1,500 2,445 10,000 0
Other Cash Flow Impacts (69,514) 4,500 4,500 4,500 (5,000) (5,000)
Ending Cash Balance 280,742 361,442 384,662 297,271 424,903 356,442
STAFFING:
Full time:
Operations Manager .33 .33 .33 .33 .50
Assistant Manager 1.00 1.00 1.00 1.00 1.00
Full Time Clerk \I 1.00
Sr. Acctg. Clerk .05 .05 .05 .05 .05
Part time:
Sales Clerks 5.00 5.00 5.00 5.00 5.00
33
FUND NO:
642
MISSION:
To control the sale and distribution of
packaged alcholic beverages within the
City and to provide property tax relief
the use of operation profits.
FUND:
Liquor
SUBFUND:
Waterford
DESCRIPTION OF ACTIVITY:
Provides for the sale of packaged alcoholic beverages to the general public.
OBJECTIVES:
_ Effectively control the sale of packaged alcoholic beverages in the City
HIGHLIGHTS/COMMENTS:
Revenues:
Estimated liquor sales
Expenses:
Staffing:
.50 Operations Manager
1.00 Assistant Manager
5.00 Part time Sales Clerks
.05 Senior Accounting Clerk
Supplies/Materials:
Office Supplies, Postage, Equipment Repair, Bags
Services & Charges:
Finance and Auditing Services
Contractual Rug Service
General and Liquor Liability Insurance
Electric & Gas Utilities, and Refuse Hauling
Building Rental - reduced through reduction in floor space
Advertising
Credit Card Service Charges
Capital Outlay:
Misc. Revenue/Expenditures:
Interest Income & Service Charges
34
FUND: # 642 SUB FUND: Liquor - Waterford DEPT #
BUDGET Actual Actual Budget YTD June Proposed Adopted
ITEM 2001 2002 2003 2003 2004 2004
REVENUE
Sales 774,745 792,260 846,000 380,033 856,600 0
Cost of Goods 562,372 575,759 634,000 261,913 634,000 0
GROSS PROFIT 212,372 216,501 212,000 118,120 222,600 0
EXPENSES
Staffing 73,187 97,522 105,908 53,863 112,967 0
SupplieslMaterials 3,878 4,746 4,000 2,138 4,000 0
Support Services 115,188 97,251 88,075 43,354 93,265 0
Depreciation 5,771 4,854 5,800 2,393 4,800 0
Capital Outlay
TOTAL EXPENSES 198,023 204,373 203,783 101,748 215,032 0
TOTAL OPERATING INCOME (LOSS) 14,349 12,128 8,217 16,372 7,568 0
Transfers In/(Out) 0 0 (5,000) 0 (5,000) 0
Misc. Revenue/(Expense} (13,736) (6,453) (1,000) (14) (1,OOO) 0
NET INCOME (LOSS) 613 5,675 2,217 16,358 1,568 0
BUSINESS INDICATORS:
Gross Profit as a % of Sales 27.41% 27.33% 25.06% 31.08% 25.99% #D1V/0!
Oper. Income as a % of Sales 1.85% 1.53% 0.97% 4.31% 0.88% #DIV/O!
CASH FLOW IMPACT:
Beginning Cash Balance (159,160) (181,233) (161,251) (181,233) (161,251 ) (161,251 )
Net Operating Income/(Loss) 14,349 12,128 8,217 16,372 7,568 0
Depreciation 5,771 4,854 5,800 2,393 4,800 0
Other Cash Flow Impacts (42,193) 3,000 3,000 3,000
Ending Cash Balance (181,233) (161,251 ) (144,234) (159,468) (148,883) (161,251 )
STAFFING:
Full time:
Operations Manager .33 .33 .33 .33 .50 .50
Assistant Manager 1.00 1.00 1.00 1.00 1.0 1.0
Full Time Clerk
Sr. Acctg. Clerk .05 .05 .05 .05 .05 .05
Part time:
Sales Clerks 5.00 5.00 5.00 5.00 5.00 5.00
35
~
~..
.
CITY OF
SHOREWOOD
5755 COUNTRY CLUB ROAD. SHOREWOOD,'MINNESOTA 55331-8927. (952) 474-3236
FAX (952) 474-0128. www.cLshorewood.mn.us · cityhall@cLshorewood.mn.us
MEMORANDUM
DATE:
October 23,2003
FROM:
e
Honorable Mayor and Councilmembers R . II ,1../
Bonnie Burton, Finance Director/Treasurer ~
TO:
CC:
Capitalization Policy Draft
Craig W. Dawson, City Administrator ~
RE:
City staff is preparing for the required GASB 34 transition, and recently met with City
Auditor Steve McDonald to review the requirements for this new financial reporting
model. One of the requirements is to provide for infrastructure reporting and to that end,
a sample draft Capitalization Policy is attached for council review and discussion.
Some of the highlights of this policy include defining capital assets and how to report
them; definitions, depreciation, and useful life values. The City already reports its
general fixed assets, and reports and depreciates its enterprise fund capital assets.
However, the City of Shorewood (like most cities) does not report infrastructure (streets,
road, and bridges). This policy will provide the basis for such reporting.
Following Council and staff review at the work-session, the policy will be brought to the
Council for formal adoption in November.
ft
~.1 PRINTED ON RECYCLED PAPER
-=#-3
~~r
The City of Shorewood is required to implement Governmental Accounting Standards Board
(GASB) Statement No. 34, Basic Financial Statements and Management's Discussion and
Analysis for State and Local Governments, for fiscal-year ending December 31,2004. Statement
No. 34 establishes new financial reporting requirements for state and local governments
throughout the United States. When implemented, it will create new information and will
restructure much of the information that the City of Shorewood has presented in its annual reports
in the past. The intent of these new requirements is to make annual reports more comprehensive
and easier to understand and use.
""'t
INTRODUCTION
Two key components of Statement No. 34 require governments to report capital assets and that
the capital assets depreciate over their estimated useful lives. The City of Shorewood currently
reports and depreciates capital assets for the Enterprise Funds. The exception is infrastructure
reporting. The City of Shorewood, (like most cities) does not provide infrastructure reporting
(streets, roads, bridges). Therefore, it is necessary for the City to develop and implement a
Capital Asset Policy that provides for infrastructure reporting needs and meets the new financial
statement reporting requirements.
The proposed Capital Asset Policy will provide guidance to implementing the new reporting
requirements, i.e., meeting the primary objective of financial reporting as it pertains to valuation,
allocation, presentation and disclosure.
1
,"
TABLE OF CONTENTS
SECTION I Define Capital Assets and Capitalization Thresholds
3
SECTION II Reporting Capital Assets
3
SECTION III Depreciation Capital Assets
4
SECTION IV Capital Asset Definitions and Categories
SECTION V Capital Assets Estimated Useful Life
2
()L)
'~
~r
4
8
CITY OF SHOREWOOD
CAPITAL ASSET POLICY
...,
PURPOSE
It is the policy of the City of Shorewood to maintain appropriate procedures regarding the
procurement, management, and disposal of all capital assets, in accordance with Governmental
Accounting Stands Board Statement No. 34 (GASB 34). The Capital Assets Policy addresses
classes of assets, determination of useful lives, and calculation of depreciation.
SECTION I
DEFINE CAPITAL ASSETS AND CAPIT ALIZA TION THRESHOLDS
A capital asset is real or personal property used in operations and having a value equal to or
greater than the capitalization threshold set forth by the City, for that specific asset classification,
and has an estimated useful life greater than one year. For financial reporting purposes only, the
City will classify and establish capitalization thresholds for each asset class as follows:
Other assets
CAPITALIZATION THRESHOLD
$10,000
$25,000
$25,000
$ 5,000
$ 5,000
$100,000
Accumulate all costs and capitalize if
over $100,000 when com lete.
$ 5,000
Another criterion for recording capital assets is capital-related debt. Capitalize capital assets
purchased with debt proceeds and depreciate over their estimated useful life. Capitalizing these
assets will minimize the potential of reporting negative net assets in the statement of net assets.
In most cases, these assets will meet the thresholds and guidelines for recording as a capital asset.
SECTION II
REPORTING CAPITAL ASSETS
Report capital assets at historical costs, which include most costs necessary to placing a capital
asset into its intended use or state of operation. Historical cost includes the vendor's invoice, the
value of any trade-in or allowance, sales tax, initial installation cost (excluding in-house labor),
modifications, attachments, accessories or apparatus; and ancillary charges such as freight and
transportation charges, site preparation costs, and professional fees.
In the event the historical cost of a capital asset is not practicable determinable, it will be
necessary to record an estimated historical cost of the asset using alternative methods.
Alternative methods include standard costing and normal costing. Standard costing estimates the
historical cost of a capital asset by establishing the average cost of obtaining the same or a similar
3
asset at the time of acquisition. Normal costing estimates historical cost based on the current cost
to either reproduce or replace the capital asset, indexed by a reciprocal factor from the estimated
acquisition date, i.e., taking the value of acquiring the asset new today and then discounting that
amount by an appropriate inflation factor back to the date of acquisition.
.",
Capital assets donated to the City shall be reported at fair value. Fair value is the amount at
which an asset could be exchanged in a current transfer at ann's length between willing parties,
other than in a forced or liquidation sale. Donations are defined as voluntary contributions of
resources to the City by a non-governmental entity. A voluntary contribution of resources
between governmental entities is not a donation.
SECTION III
DEPRECIATION CAPITAL ASSETS
Depreciation is the process of allocating the cost of a tangible asset to the periods of benefit.
Capital assets shall be depreciated over their estimated useful live with exception of the
following:
· Inexhaustible assets, i.e., land, and land improvements that do not require maintenance or
replacement, e.g., certain works of art and historical treasures;
· Infrastructure assets reported using the modified approach; and
· Construction work-in-progress.
For financial purposes the City will use the straight-line method of depreciation, which allocates
the cost evenly over the life of the asset. Generally, at the end of an asset's life, the sum of the
amounts charged for depreciation in each accounting period, or accumulated depreciation, will
equal the original cost less salvage value.
A significant issue when recording capital assets is the question of when is expenditure
capitalized as an improvement versus recorded as repairs or maintenance expense. The key
consideration for determining whether to capitalize expenditures depends on whether the cost
incurred, significantly extends the asset's useful life, increases its capacity, or improves its
efficiency. Therefore, capitalize capital asset improvement costs if:
· The costs exceeds the capitalization thresholds; and
· One of the following criteria is met:
o The value of the asset or estimated life is increased by 25% of the original cost or
life period;
o The cost results in an increase in capacity of the asset; or
o The efficiency of the asset is increased by more than 10%.
SECTION IV
CAPITAL ASSET DEFINITIONS AND CATEGORIES
Land is the surface or crust of the earth, which can be used to support structures, and may be
used to grow crops, grass, shrubs, and trees; and is characterized as having an unlimited life, i.e.,
indefinite. Land is an inexhaustible asset and no depreciable.
4
Land improvements consist of betterments, site preparation, and site improvements (other than
buildings) that ready land for its intended use. The costs associated with improvements to land
are added to the cost of the land. Land improvements can be further categorized as inexhaustible,
not requiring maintenance or replacement; or exhaustible, e.g., parking lots, landscaping and
fencing.
Examples of items to be capitalized as land and land improvements include:
. Purchase price or fair value at time of gift;
. Commissions;
. Professional fees, includes title searches, architect, legal, engineering, appraisal,
surveying, environmental assessments;
. Land excavation, fill, grading, and drainage;
. Demolition of existing buildings and improvements, less salvage;
. Removal, relocation, or reconstruction of property owned by others, i.e., power,
telephone and railroad lines;
. Interest on mortgages accrued at date of purchase;
. Accrued and unpaid taxes at date of purchase;
. Other costs incurred in acquiring the land;
. Water wells, including initial cost for drilling, the pump and its casing; and
. Permanent right-of-way.
Other Improvements include land improvements that are exhaustible in nature and enhance the
quality or facilitate the use of land for a specific purpose.
Examples of items to capitalize as other improvements include:
. Fencing and gates;
. Landscaping;
. Parking lost, driveways, and parking barriers;
. Outdoor sprinkler and irrigation systems;
. Recreation areas and athletic fields, including bleachers;
. Golf courses;
. Paths and trails;
. Septic systems;
. Stadia;
. Swimming pools, tennis courts, basketball courts, skate parks;
. Fountains,
. Plazas and pavilions; and
· Retaining walls.
Buildings refer to a structure that is permanently attached to the land, has a roof, is partially or
completely enclosed by walls, and is not intended to be transportable or moveable. Certain
buildings or structures that are ancillary parts of infrastructure networks, such as well houses and
pumping stations will report as infrastructure rather than as buildings.
Examples of items to be capitalized as building:
Purchased Buildings
. Original purchase price;
. Expenses for remodeling, reconditioning, or altering a purchased building to make it
ready for its intended purpose;
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· Environmental complies, i.e., asbestos abatement;
· Professional fees, includes architect, engineer, management fees for design and
supervision, legal;
· Cancellation or buyout of existing leases; and
· Other costs required to place or render the asset into operation.
Constructed Buildings
· Completed project costs;
· Cost of excavation or grading or filling of land for a specific building;
· Expenses incurred for the preparation of plans, specifications, blueprints;
· Building permits;
· Costs of temporary buildings used during construction;
· Additions to buildings, i.e., expansions, extensions, or enlargements.
Building improvements include capitalized costs that materially extend the useful life of a
building or increase the value of a building, or both, beyond one year. Building improvements
should not include maintenance and repairs done in the normal course of business.
Examples of items to be capitalized as building improvements include:
· Installation or upgrade of heating and cooling systems, including ceiling fans and attic
fans;
· Original installation or upgrade of wall or ceiling covering such as carpeting, tiles,
paneling, or parquet;
· Structural changes such as reinforcement of floors or walls, installation or replacement of
beams, rafters, joists, steel grids, or other interior framing;
· Installation or upgrade of window or door-frames, upgrading windows or doors, built-in
closet and cabinets;
· Interior renovation of casings, baseboards" light fixtures, ceiling trim;
· Installation or upgrade of plumbing and electrical wiring; and
· Installation or upgrade of telecommunication systems.
Examples of items considered repairs or maintenance in nature and should not be capitalized as
buildings or building improvements include:
· Adding, removing and/or moving of walls relating to renovation projects that are not
considered major rehabilitation projects and do not increase the value of the building;
· Improvement projects of minimal or no added life expectancy and/or value to the
building;
· Plumbing or electrical repairs;
· Cleaning, pest extermination, or other periodic maintenance;
· Interior decoration, i.e., draperies, blinds, curtain roads, wallpaper;
· Exterior decoration, i.e., detachable awnings, uncovered porches, decorative fences;
· Maintenance-type interior renovation including repainting, touch-up plastering,
replacement of carpet, tile, or pane sections, and refinishing of sinks and fixtures;
· Replacement of a part or component of a building with a new part of the same type and
performance capabilities, e.g., replacement of an old boiler with a new one of the same
type and performance capabilities;
· Any other maintenance-related expenditure, which does not increase the value of the
building.
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Equipment, Machinery and Vehicles refer to fixed or movable tangible assets used for
operations, the benefits of which extend beyond one year from date of receipt.
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Examples of expenditures to be capitalized as equipment, machinery, and vehicles include:
. Original contract or invoice price;
. Freight charges;
. Handling and storage charges;
. In-transit insurance charges;
. Sales, use and other taxes imposed on the acquisition;
. Installation charges;
. Charges for testing and preparation for use;
. Cost of reconditioning used items when purchased; and
. Parts and labor associated with the construction of equipment, machinery, or vehicle.
Note that the cost of extended warranties and/or maintenance agreements, which can be
separately identified from the cost of the equipment, machinery, or vehicle, shall not be
capitalized.
Infrastructure Assets are long-lived capital assets that are linear and stationary in nature and can
be preserved for a significantly greater number of years than most capital assets.
Examples of infrastructure assets include:
. Roads, streets, curbs, gutters, sidewalks;
. Bridges;
. Water and sanitary sewer systems;
. Drainage and storm water systems;
. Street light systems; and
. Signage.
Infrastructure assets shall be capitalized and depreciated unless the modified approach is used.
The modified approach is an alternative to reporting depreciation for infrastructure assets that
meet the following criteria:
. The assets are managed using a qualifying asset management system; and
. It is documented that the assets are being preserved at or above a condition level
established by the City.
Under the modified approach the infrastructure, assets are not depreciated, and only the costs that
increase the capacity or efficiency of the asset are capitalized, while all other expenditures that
preserve the useful life of the assets are expensed. Only infrastructure assets that comprise a
network or subsystem of a network can be reported using the modified approach.
Other Capital Assets includes computer software that is either purchased or developed for
internal use, which should be capitalized, if the cost of the software exceeds the capitalization
threshold and depreciated over the software's estimated useful life. Capitalization of computer
software includes software license fees if the total dollar amount of the fee divided by the number
of units or terminals exceeds the threshold.
Examples of expenditures to be capitalized as computer software include:
. External direct costs of materials and services, i.e., third-party fees for services;
. Costs to obtain software from third parties;
7
.
Travel costs incurred by employees in their duties directly associated with development;
Payroll and payroll-related costs of employees directly associated with or devoting time
to encoding, installing or testing; and
Costs to develop or obtain software that allows for access or conversion of old data by
new information systems.
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Note that upgrades and enhancements should only be capitalized to the extent that they increase
the functionality of the product.
Capital Leased Property includes leased real or personal property, for which ownership of the
asset substantially transfers to the lessee; therefore meeting the criteria for capitalizing as an
asset. Capitalize the cost of the asset if the lease agreement meets anyone of four conditions:
· It transfers ownership of the property to the lessee at the end of the lease term;
· The lease contains a "bargain purchase" option-an option that gives the lessee the right
to purchase the asset for a future price less than the fair market value;
· The lease term is equal to at least 75% ofthe asset's estimated economic life; or
· The present value of the minimum lease payments at the inception of the lease, excluding
executory costs, equals at least 90% of the fair market value of the leased asset at the time
the lessee signs the lease.
I
Leases that do not meet any of the above conditions shall be recorded as an operating lease and
reported in the notes of the financial statements.
SECTION V
CAPITAL ASSETS ESTIMATED USEFUL LIFE VALVES
20 ears
20 ears
15 ears
20 ears
15 years
tennis courts, basketball
20 ears
15 ears
15 ears
20 years
20 ears
20 ears
20 ears
Buildin sand buildin im rovements
Buildin s
Tern ora and ortable buildin s
Roof
HV AC (heatin , ventilation, air conditionin )
Electrical
Plumbin
40 ears
25 ears
20 ears
20 ears
20 ears
20 ears
8
stem
J
et
20
10
10
15 ears
7 ears
15 ears
10 ears
20 ears
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and vehicles
structural
10 ears
6 ears
7 ears
10 ears
5 ears
10 ears
10 years
10
10
10
10 ears
5 ears
15 ears
10 ears
5 ears
5 years
6 years
15 ears
Infrastructure
Roads, streets, curb and utter
Parkin lots
Sidewalks
Water, sanit sewer, storm sewer s stems
Brid es
20 ears
15 ears
20 ears
50 ears
20 ears
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