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062402 CC Ws AgP 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 TO: FROM: DATE: SUBJECT: City Council" ~ . Craig W. Dawson, City Administrator W June 20, 2002 Work Session -- 2003 Budget Priorities The City's budget process for 2003 is beginning in earnest. It is very helpful to the process for Council and staff to have a discussion about important matters to include in the development of the budget. This discussion provides Council with an understanding about technical matters identified by staff that the City must or should address. Council can also identify programmatic or project priorities for the community. Council has received a budget schedule. In the first phase, budgets for the general and tax-supported funds need to be accepted by September 16, as that is the date the City must established its "proposed tax levy" (i.e., not-to-exceed levy) for pay2003. Council may, in the following months, spend additional time on utility and other nontax-supported budgets. After the elections in November, Hennepin County will send the parcel-specific truth-in-taxation hearing notices to property owners. After Thanksgiving, and before year-end, the City Council will need to adopt the final tax levy and approve the City's 2003 budget. (After a one-year hiatus, due to the significant and relatively late-in- the-year changes in the property tax system, the truth-in-taxation process returns as a requirement.) Levy Limits: The 2001 Legislature enacted limits on levy increases for the pay2002 and pay2003 property taxes. In 2002, the Legislature amended the law so that municipalities may levy at least a 2.0% increase for pay2003. It appears that this is the maximum amount that Shorewood would be able to levy - approximately $60,000 higher than the pay2002 levy. The City will also "gain" approximately $40,000 in levy ability, due to changes in the way the Excelsior Fire District will be accumulating funds for capital facilities. Additionally, and fortunately, the City's share of payments for new public safety facilities will be exempt from the levy limitation. State Revenue Shortfalls: The Legislature undid the Governor's plan to address immediate and long- term revenue shortfalls. The Governor would have had cities "share in the pain", as if cities were somehow partly to blame for the reduction in revenue. That plan would have zeroed-out Local Government Aid (LGA), which for Shorewood would have removed around $8,700. It also would have removed the City's "market value levy aid", akin to the now-gone Homestead and Agriculture Credit Aid (HACA), to a maximum of approximately $80,000. ft ~.1 PRINTED ON RECYCLED PAPER -=It (~ 2003 Budget Work Session June 24, 2002 Page 2 What may happen to address future or further shortfalls is anybody's guess, as the make-up of the Legislature will change significantly and we apparently will have someone else sitting as Governor. It is expected that LGA will be a target; fortunately, Shorewood's exposure is small. It may be prudent to increase the contingency in the City budget as a precaution. Coping with Levv Limits and State Revenue Shortfalls: Shorewood provides a relatively limited range of services with a minimal level of staff. Decreases in expenditures or staffmg would result in significant reductions in the level and array of services to Shorewood residents and businesses. The City has been fortunate in that it has been able to make sizeable transfers from the General Fund (and its tax levy) to a variety of capital improvement funds (e.g., the Local Roadways Fund, the Equipment Replacement Fund). If levy limits remain in effect only through 2003 or a few years thereafter, or if there are short-term revenue reductions from the State, the City may cope with them by reducing the amount of money transferred to the capital improvement funds. The level of transfer may be restored when levy limits/revenue reductions expire. If these limitations become a long-term phenomenon, the Council may wish to consider issuing debt (e.g., bonds for road and parks; five-year certificates for equipment) in lieu of transfers from the General Fund, or begin to identify areas for service reduction. Direct debt obligations have traditionally been exempt from levy limits in Minnesota. New Law on Road Funding: Hidden in the laws adopted by the 2002 Legislature is a significant change in public finance - and one that has great relevance to Shorewood. Cities would now be allowed to issue long-term bonds without special assessments or a referendum requirement if: 1) The streets are in the reconstruction plan (i.e., the capital improvement plan fCIP]) for the next five years. Construction of new streets is not eligible for this financing. 2) The City Council approves the plan and the issuance of bonds on a unanimous vote following a public hearing. 3) Residents may petition requesting a vote on the issuance within 30 days of the public hearing. (The number of petitioners must equate to five percent of the votes cast in the last city election.) This is called a "reverse referendum", and can potentially undo the Council's action. In general, referenda are required for obligations that are tax-supported and are longer than five years. Special assessments must comprise at least 20 percent of the revenue for special assessment bonds (aka Chapter 429) in order for them to be exempt from the referendum requirement. Utility system bonds are generally exempt from the referendum requirement, as user charges are the anticipated revenue source. (Lease-revenue financing, which is planned for the public safety facilities, is technically an annual appropriation rather than a long-term obligation; therefore, it is not considered a 5+-year commitment requiring a referendum.) 2003 Budget Work Session June 24, 2002 Page 3 This new law is especially opportune for Shorewood. It can be difficult to establish the' increase in the value - the test for a special assessment - that a property is benefited by a public improvement. Consequently, roadway project costs are borne by the City as a whole through general revenues - which may be subject to levy limits. By shifting to newly-authorized road bonds, the Council may address roadway needs more quickly as it will not need to accumulate general revenue over several years. The Council could also decide whether the balance in the Local Roadway Fund could be redirected (e.g., a trail fund). This discussion is to point out a new policy option for the Council. It is still wise to make some transfer from the General Fund to the Local Roadway Fund in 2003. It is also prudent to revisit the way the Council may wish to fund roadway projects in the future. Auditor Recommendations: The City's auditor noted that the City had a very healthy undesignated General Fund balance. He also noted that there were a number of improvement funds that had operating deficits, several of which were due to interfund loans. Staff will present options for these funds for the Council to consider during the July budget work session(s). Specific. but Big-Picture Matters Identified by Staff: Most of the changes in the 2003 budget will be incremental for the continuing cost of doing business. There are a few areas that staff has identified that may be significantly different: * Staffing: Space constraints exist, especially in City Hall, whenever additional staff resources should be considered. With that being said, there is sufficient workload to consider at least regular part-time staff to handle the volume of transactions in the Finance Department. In Public Works, with the plan to end the relationship with Munitech, it will likely be necessary to add at least one full-time light equipment operator position. * Elections: Cities are mandated to run and pay for state and local elections. To stabilize revenue requirements (especially in light of levy limits), one-half of the cost of elections should be levied in non-election years. This revenue would be designated in the fund balance so that it would be available in election years. *Communications: It seems like there can never be enough communication. It is likely that the length of the newsletter will increase, and that upgrades to the Priport duplicator will be necessary. * Technology: A regular replacement schedule for computers and other such equipment should be initiated. This approach will make costs ,more predictable and help the City keep up-to-date with technology. . 2003 Budget Work Session June 24, 2002 Page 4 "'Homeland Security: This is a topic that everyone is concerned about, but there have not been definitive decisions about the proper responsibilities (and costs) for which levels of government. Probably most critical for Shorewood is the security of the water system, and we have taken steps in this regard. Additional costs in the name of homeland security cannot be identified at this time. "'Recreation Management: It is expected that the Park Commission will present recommendations to the Council in July, and include options that will require new spending. The Commission has established this timeline in order that the Council could consider the recommendations during the budget development process. "'Gideon Glen: The Gideon Glen project will be implemented in 2003. At this point, it is not entirely clear about what the cost-sharing arrangements will be. The City will need to plan for proper management and maintenance of the site into the future. "'NPDES Phase II Compliance: The City will be subject to the Phase II requirements of the federal Non-Point Discharge Emissions Standards for stormwater by March 2003. Stormwater outfall and basin evaluation and reporting scheme needs to be underway by that time. These costs can be assigned to the stormwater utility. "'Utility Operations: Staff is proceeding with Council's direction to end the relationship with Munitech and take these operations in-house. "'Utility Improvements: Projects for 2003 would include replacement of the Badger well house (due to health code); connection of the W oodhaven well to the City of Excelsior water system; converting a portion of the water system to radio-read meters; and purchase of a smaller (30 KW) used generator for the sewer system. "'Utility Rates: Rates for the water, sewer, and especially stormwater utilities need to be reviewed and likely increased. "'Building Improvements: City Hall projects for 2003 would include hookup for backup power generation; rehabilitation of the restrooms, reconstruction of the sump pump system; and installation of a camera system for the front counter and lobby. The public works maintenance building should have minor changes for interior walls and plumbing. "'Gateway Improvements: Coming out of the visioning process is a recommendation to provide enhancements to the gateways to Shorewood. These areas could include County Road 19, Highways 7 and 41, the southeast area, and the southwest entries to the City. There are gateway/aesthetic improvements planned for the County Road 19/5mithtown Road/Country Club Road intersection project. It is not known whether there will be any City (Le., non-State Aid) costs, or whether they would be due in 2002 or 2003. 2003 Budget Work Session June 24, 2002 Page 5 *Imt>lementing the Visioning Strategy: The consultant's final report is expected in July 2002. Most of the strategies were no- or low-cost. Implementation of the strategies may result in a redirection of staff resources in 2003. *Easements/Land Donations: The Land Conservation and Environment Committee (LCEC) is expected to issue a final report in August. It has been trying to identify some type of funding incentive for property owners to give conservation easements or make donations of land. Whether the City should undertake such a program and the level to which it should be funded will need to be discussed by the Council. Progress on 2002 Goals and Priorities: A progress report on the Council's 2002 Goals and Priorities is attached as a general update and to assist the Council in identifying priorities for the 2003 budget. Council Direction: It will be valuable as staff prepares the budget for the Council to comment on the issues identified above by staff, and for Council to indicate what other issues or parameters it wishes to see addressed. 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 TO: City Council Department Directors FROM: Craig W. Dawson, City Administrator DATE: June 20, 2002 SUBJECT: Progress on Goals and Priorities for 2002 Attached is an update of each of the 2002 Goals and Priorities that the City Council adopted March 11,2002. ft ~.1 PRINTED ON RECYCLED PAPER CITY OF SHOREWOOD 2002 Goals and Priorities June 20, 2002, Progress Report City Council 1) Determine whether, or how to continue function of, LCEC (set to sunset 06.30.02) Progress: Council discussion scheduled for June 24 Council meeting 2) Review fund-raising performance of Shorewood Parks Foundation toward year-end 2002, and evaluate whether to provide on-going staff support to the Foundation. Progress: Will be addressed in last half of 2002 City Council! Administration 3) Establish wards (adopt ordinance by April 30) [Priority item] Progress: Accomplished 4) Construction/Financing of Public Safety Facilities (EDA) Progress: *Commitment to project approved by five city councils, two joint powers governing boards, and EDA *Public financial advisor named by EDA *Financing issue tentatively scheduled for end of August *Consideration of CUP for EFD West/SLMPD station planned for August *EFD East station identified; cooperation agreement between EDA and City of Deephaven in process *EDA selection for general contractor/construction manager services scheduled for June 24 5) Non-phosphorus lawn fertilizer legislation Progress: Legislation enacted in 2002 session 6) Complete community visioning process; develop action planes) Progress: Community meetings finished; consultant preparing final report for presentation to individual cities 2 Administration 7) Have new organization-wide performance assessment process ready for implementation by April 1 , 2002 [Priority Item] Progress: Accomplished by April 1 8) Update position descriptions and evaluation criteria, particularly of department directors Progress: In process; delayed by CUB and public safety facilities projects 9) Update/replace personnel policy Progress: Notbegun yet 10) Research & determine direction re: opt-out transit service Progress: Little effort; awaiting information/progress by Minnetonka as a model; new opt-out Possibilities unclear with shift to MnDOT funding of transit 11) Update communications plan & component parts (e.g., newsletter, website) Progress: Changes suggested by Council and residents (through survey) have been incorporated in Newsletter; report on analysis of residents' survey responses is in progress; scope of information on website has been expanded, and efforts are on-going to keep information current 12) Accomplish one-half of recodification Progress: Council has authorized agreement with firm to perform recodification; Staffhas begun work with firm on project; project expected to be completed by June 2003 13) Do space needs study for City administrative offices Progress: Not begun yet 14) Continue to explore opportunities for multi-city collaboratives using municipal employees in service delivery Progress: No tangible changes; always an on-going effort Staff discussions with Tonka Bay and Excelsior about sharing building inspection staffhas led to a discussion about those two cities sharing such a position 3 AdministrationIFinance 15) Relocate Tonka Bay liquor store; and extend Shorewood Plaza store lease beyond 2002 Progress: Future of Tonka Bay liquor store is in flux; contingency plans identified Shorewood Plaza lease in effect through 2002, with re-opener identified for 2003 16) Develop contingencies to respond to City revenue reductions due to State budget shortfall Progress: City revenue not reduced by Legislature, although Governor may still "un-allot" revenue; revenue reduction in 2002 may be handled with City's reserve funds Finance 17) GASB 34 (continue progress toward required implementation date of Jan. 1,2004) Progress: On-going 18) Determine whether to change employee-benefit insurance providers Progress: Change in health insurance provider scheduled for June 24 Council meeting 19) Review, purchase, and convert accounting system software Progress: In progress FinancelPublic Works 20) Analyze and update utility fees (sewer, water, and stormwater) for 2003 budget ifnot earlier Progress: Will be part of the 2003 budget process 21) Evaluate data processing and computer system, including replacement of network server Progress: Server crashed and replaced with new system in February/March; maintenance/ technical assistance arrangement made with The Geek Squad Public Works 22) Adopt plan to solve drainage issues, Gideon Glen/Glen Road! Amlee Road!CR 19 area Progress: In progress 4 23) County Road 19 project - implement in 2002&3 Progress: Appears to be ready for some type of construction in 2002, with the project to be Finished in 2003 24) Smithtown Road project - implement in 2002 Progress: On target for 2002 completion of rehabilitation project, with provision made for safe facilities for non-motorized traffic 25) Recreation/park management - base schedules on capacity of parks; evaluate & decide on how services are to be provided (Park Commission report expected by July 1,2002) Progress: *Staggered scheduling established with organized sports groups *Park Commission report appears to be on schedule for July completion, in order to be ready for 2003 budget process 26) Transition from Munitech contract to in-house service of City utilities for 2003 budget year Progress: Begun 27) Improve safety at intersection of Highways 7 & 41, and along Highway 7 in general between County Road 19 and Church StreetlMinnewashta Parkway Progress: Shorewood and Chanhassen have requested that this area be designated as an "Accident Reduction Zone" 28) Re-evaluate concession operations at Eddy Station Progress: City-run "The Depot" in operation by June 22, 2002 Public W orkslPlanning 29) Finish update of water ordinance Progress: Not begun 30) Gideon Glen project - implement in 2002 Progress: Lead on project taken by MCWD; plans will be approved in 2002, implementation will occur in 2003 . 5 Planning 31) Gateway area plan Progress: Brauer & Associates retained as part of CR19 intersection project; work session held by Planning Commission to provide direction 32) Organized refuse collection Progress: Public hearing scheduled for July 2002 33) Develop formal program (including criteria) to encourage conservation easements, gifts of land (LCEC task) Progress: Development of formal program is underway and anticipated to be completed by the end of August; easements and gifts are encouraged as opportunities to suggest them arise 34) Finalize update of Comprehensive Plan and submit to Met Council Progress: Anticipated to be completed by the end of the year, so as to include the area plans 35) Hold Planning Workshop in April for Lake-area planning commissioners, Councils, and staff Progress: Accomplished on April 27 Planning Commission I) Adopt new Subdivision Ordinance Progress: Accomplished 2) Complete review of Planning District Area Plans Progress: Nearly complete 3) Organized refuse collection Progress: Public hearing scheduled for July 2002 4) Historic preservation Progress: Not yet addressed 5) Complete right-of-way ordinance Progress: Not yet addressed 6 .. 6) Affordable housing Progress: Not yet addressed; identified as a need in South Lake Minnetonka Area community visioning process 7) Senior housing Progress: Not yet addressed; identified as a need in South Lake Minnetonka Area community visioning process Park Commission 1) Complete Park Master Plan process and incorporate Plan as part of the Comprehensive Plan Progress: Much progress made thus far this year 2) Develop a process for park management and scheduling Progress: Schedule addressed in meeting with organized sports groups; thorough plan currently being developed by Commission 3) Complete Lake Linden Drive trail evaluation Progress: Feasibility report authorized; may be implemented as part of CUB Foods project 4) Re-evaluate concession operations at Eddy Station Progress: City-run "The Depot" to open by June 22 5) Complete installation of Parking Lot 4 at Freeman Park Progress: Award of contract for work scheduled for July