111306 CC WS AgP
CITY OF SHOREWOOD
CITY COUNCIL WORK SESSION
MONDAY, NOVEMBER 13,2006
5755 COUNTRY CLUB ROAD
COUNCIL CHAMBERS
5:30 P.M
AGENDA
1. CONVENE CITY COUNCIL WORK SESSION
A. Roll Call
Mayor Love _
Lizee
Turgeon _
Callies
Wellens
B. Review Agenda
2. ENTERPRISE BUDGETS (Att. - Staff memorandum)
3. ACTIVITY INDICATORS (Att. - Administrator's memorandum)
4. OTHER
5. ADJOURN
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
Celebrating 50 Years · 1956 - 2006
MEMORANDUM
DATE:
November 6, 2006
FROM:
Honorable Mayor and City Councilmembers!J.. .
Bonnie Burton, Finance Director/Treasurer ~
TO:
CC:
Enterprise Fund Budget Workshop:
Work-session - Monday, November 13,2006
Craig W. Dawson, City Administrator ~
RE:
Attached for your review are Year 2007 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 Debt Service budget and the Water
Operating budget. The 2007 Water Debt Service budget includes payments for the existing bond
issues, including the 2006 issue for financing major water and well improvements in 2006 and
2007. These debt service payments are programmed at approximately $310,000 and will be paid
by a transfer from the Water Operating budget.
The 2007 Water Operating budget revenues are projected at $693,000 while expenses (including
depreciation) are forecast at about $1.372 million. This amount includes capital expenditures to
be funded from 2006 bond proceeds including: Amesbury Well enhancements; Woodhaven Well
Abandonment and Chanhassen Interconnection: Radio Read Meter project; and southeast water
tower wash and rehab.
(l"J
fJ \) ?Sli'lTEO ON P.ECYCi..EIJ PAPER
,,07
2007 Enterprise Budget Memo
Paae 2 of 3
'"
In order for the Water Funds to be self-suppOlting, to assure the system can provide for
improvements, and to preserve fund balance at stable levels, a three-year step approach to water
rate increases was discussed and approved by the Council several years ago.
Based on that plan, the CUlTent water rates are: $35 for up to 10,000 gallons; $2.95/1000 gallons
for 10,000-50,000 gallons usage; and $3.75/1000 gallons for 50,000 + gallons usage. There are
cun-ently approximately 1,225 water connections that use an average of 30,000 gallons per
qumter. The 2007 budget includes $8,000 for possible feasibility studies.
Sanitary Sewer Budget
The City cun-ently has about 2,800 connections to its Sanitary Sewer System. Proposed
operating revenues and expenditures for year 2007 are programmed at approximately $1.185
million. This amount includes capital improvements of approximately $236,000. Capital
improvements for year 2007 include refurbishment of two lift stations (Christmas Lake #12 and
Enchanted Lane #16). The budget includes a transfer from reserves for the capital projects.
The largest single increase in expenses is the MCES wastewater charge, which is the amount the
City must pay to the Metro Council for wastewater processing. The City's 2006 charges were
$462,000 annually and 2007 charges are $573,740, or an increase of about $112,000. Each
City's share of the cost is determined by the MCES using a formula based on the last actual
known flows from the period July 1,2005 - June 30, 2006.
The City received good news that it is not subject to the Inflow & Infiltration surcharge program
that the MCES will implement in 2007. However, to continue to be exempted from this
program, the City will have to be proactive regarding I & I mitigation and funds have been
designated for this purpose. Given the foregoing, sewer rates will have to be monitored closely;
however staff does not recommend any additional rate increases at this time.
Stonnwater Management Budget
The 2007 Stormwater Management Budget draft contemplates revenues and expenditures of
about $325,000. This includes operations and the final debt service payment due to the Sewer
Fund for the Gideon Glen land acquisition. Expenditures also include capital improvement
projects planned for 2007: the Gideon Glen Drainage Project ($70,000 for the City's portion, to
be funded by a grant from the Met Council); Mary Lake Project survey and design ($74,000);
Manitou Drive-Wedgewood Pond Project survey ($10,000); Boulder Blidge Pond Project survey
($10,000) and the Stratford Place Project (PA #20 - $27,000).
In order to finance these projects, the 2007 Budget contemplates a rate increase from $1.68 per
residential propelty/month to $5.00 per property/month or from $5.04 per quarter to $15 per
quarter. The Stormwater rates were last changed in 2003. The City Council at that time
approved a small inflationary increase because there had not been a rate change since the
inception of the Stormwater fund in 1993. A compmison of other cities current rates show they
range from $4 to $13 per q umter.
2
2007 Enterplise Budget Memo
Page 3 of 3
Recycling Budget
The Recycling Budget draft contemplates revenues and expenditmes of about $120,000. The
City anticipates again receiving approximately $21,000 from Hennepin County Grant Funds.
A new company bought the recycling contractor midway through 2005, and although the
repOlted number of tons of recycled material decreased in 2005 (762 tons) from 2004 (1,093
tons), the number of households pmticipating in the recycling program remained stable at about
1,100 households per month. A new recycling contract is to be in place by Apli11, 2007, and
while the contract rate may increase slightly, staff does not recommend any additional rate
increases at this time.
The Recycling budget contains the Spring Clean-Up Program. Although all costs are recovered
through collection site fees or an additional charge on the recycling bill, Council should discuss
whether to continue the curbside collection component of this service. (See attached
memorandum. )
Liquor Operations
The City optimistically anticipates reasonable profit levels at its two CUlTent operating municipal
stores. However, the 2007 budget has been prepared very conservatively. Liquor Operations
Manager Don Swandby has said that his emphasis will continue to be on additional promotion
and advertising to increase sales.
The Waterford (East) store is forecasted to show a small operating profit for 2007.
Improvements that are programmed for 2007 include new countertops at the check-out area,
painting, and new floor-covering. The City has received notice from the owner that it plans to
downsize our space as permitted in the cun-ent lease. This will be a discussion point in the lease
negotiations and it is expected the smaller space will be acceptable. The Shorewood Plaza
(West) store continues to show profitability and the 2007 budgets reflect this. This store is
scheduled to add additional wood shelving.
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.
3
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
Celebrating SO Years. 19S6 - 2006
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
City Council
Craig W. Dawson, City Administratorl\~
September 21,2006 VL-J
Activity Indicators in Budget
The City Council discussed activity indicators as it acted to accept the 2007 proposed budget and tax
levy on September 11, 2006. Council requested that this matter be placed on the agenda for a work
session on September 25.
Staff Recommendation: Over the brief time since the last Council meeting, department directors,
who are responsible for providing the activity indicator data for the budget, have not been able to
assemble fully the information that Council found lacking. Staff believes that a full discussion about
activity indicators would be beneficial to everyone, and would suggest that the matter be placed on
the budget work session scheduled for October 23.
History: In 1997, the Legislature enacted a Local Performance Aid program. It was funded by
withholding $1/capita from a local government's homestead credit aid. The local government was
refunded this amount by showing that it had instituted some way of indicating performance in its
budget. The state program was very general in what could be done to qualify in terms of
performance indicators. By 2000, the Legislature abandoned the program. Cities having received
local performance aid were grandfathered at $l/capita to the Local Government Aid (LGA) program.
This grandfather went away for Shorewood when LGA was reformed in 2003.
Shorewood began including activity indicators in 1992 and these subsequently complied with the
Local Performance Aid program. Shorewood was also going through a period of growth in the late
1980s and early 1990s where there were dramatic changes annually in the volume of business the
City was transacting on all levels. The indicators selected at the time were to give an idea of the level
of activity performed, or the amount of things that needed to be addressed, within a program
(dept/division) budget. Shorewood is now virtually fully developed, so there is little change in the
indicators from year to year.
The Ri2ht Indicators of Activity?: The key questions with performance indicators are whether they
are reporting the right things, and how useful are they. It is inefficient to collect data that have little
bearing or are of little use in making decisions about allocating resources. There are many areas of
the City's operations where activity levels are not cost drivers; rather, the City has a responsibility to
provide the service (e.g., animal control). The program is provided at whatever is the unit cost; if
fewer staff resources are used in a particular year, they are applied in another area, and the overall
cost of doing the City's many businesses remains the same.
~"
t ~ PRINTED ON RECYCLED PAPER
....
Budget Activity Indicators
September 25,2006, City Council Work Session
Page 2
It is good to have information about what is being accomplished. It is a common practice, ifthis is
addressed in the annual budget, to do so in narrative form (such as a budget transmittal
memorandum), or in a separate statistical section. In providing this information, it is also better to
have accurate data or estimates; in their absence, it is better to report nothing instead of something
that may be misleading.
Performance Measurement: This topic is one that has been coming into vogue in the city
management and finance professions. It is designed to identify how well things are done (and to
provide a basis for benchmarking with other organizations). As it relies on data-gathering without an
infinite amount of staff resources to do it, selecting meaningful things to measure is important.
An even higher level of performance measurement is effectiveness measurement. Whether an
increase or decrease in funding has any effect on say, reported crimes or the percentage of streets
remaining in poor condition, would be evaluated. By contrast, activity indicators would generally
show the amounts of things (e.g., miles of roadway; number of financial transactions) that the City is
responsible to address.
Staff Suggestion: It would be a good project for Council and staff to re-examine the activity
indicators as they relate to the budget document and to other purposes. This is likely longer-term
than for the 2007 budget. In terms of the 2007 budget, it would be productive for the City Council to
forward specific ideas, suggestions, or concerns to me in writing or by email, so that they may be
assembled for and addressed at the October 23 work session.