10.3. SR 11-07-2011ITEM 10_3_
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
Mayor and City Council
Tim Simon, Finance Director
November 7, 201 I
2012-2016 Capital Improvement Plan (CIP) Update
The purpose of this discussion is to provide preliminary information regarding projects
proposed to be funded. The review and final document is prepared to anticipate major
expenditures in advance of the year they may become budget requests. Projects listed in the
first year (2012) are included in the budget and upon each annual update of the CIP some
projects will be deleted, added, or even delayed. Much of our discussion will focus on the
2012 portion of the CIP and the timing of these items. After we review the cash flows and
projects, I will be putting together the document for approval in December.
Park Dedication Fund (Exhibit A)
The park dedication fund has seen a decrease in revenues in recent years as the recording of
new plats has slowed. This fund recently completed the payoff of the Barsody and
Malmstrom property contract for deeds. This fund currently has one contract for deed
obligation outstanding for land acquisition. Pinewood Golf Course will be paid in full in
2013 with a balloon payment. The revenues in the attached exhibit have been completed
with the assistance of the City planning department. With the existing obligations and the
estimated revenues, no projects have been programmed in the current five-year CIP until
revenues increase to fund obligations or repayment of the internal loans.
GRE Reserve Fund (Exhibit B)
• BDF payment
The GRE reserve fund receives an annual payment for hosting the RDF plant. This revenue
was identified as a funding source to make a portion of the Pinewood contract for deed
payment. The cash forecast assumes the RDF plant continues operation and the payment
remains at the same level. If park dedication revenues do not increase, this fund has made
internal loans to the park dedication fund for the other half of the Pinewood payment.
Once park dedication revenues increase this fund will be repaid.
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• Peaking Plant payment
Starting in 2010, the City received payment from GRE for hosting the peaking plant. This
amount will be received over five years in the amount of $375,000 for a total of $1,875,000.
This amount is coded to the GRE reserve fund but tracked separately. In 2011, the Council
authorized the use of these funds for the Downtown parking lot acquisitions ($234,803
including closing costs). That leaves a remaining balance of $515,197 at the end of 2011.
The Council asked for information as it relates to calling in the bonds on the Ice Arena
before final maturity on 12/01 /2013. Besides the amount of principal and interest in the
2011 budget, the additional amount of principal is $370,000 plus accrued interest from
December 1, 2011 until the next regularly scheduled payment on June 1, 2012. Paying off
these bonds would eliminate the $111,650 transfer from the general fund to the Ice Arena in
2012. In addition, $31,920 in future interest expense would be saved.
Trunk Utilities Fund (Exhibit C)
The Ciry maintains a trunk utility fund made up of special assessment revenue from water
and sewer improvement projects. The funds are to be spent on certain trunk water and
sewer expansion/improvement projects. The funds may be used only for trunk connections
and improvements in the area for which the assessments were collected, unless there is no
further need in the existing area, then they can be used in another area. These funds would
be used in lieu of having to issue bonds on future expansions and wait for the future revenue
stream to repay the bonds. City Engineer Justin Femrite has incorporated the 171st Focused
Area Study (Phase I) for your input and discussion. More detailed information on the 1715`
Focused Area Study (Phase 1) will be discussed on November 14, 2011.
Technology Replacements (Exhibit D)
Technology replacements/software replacements for the most part are funded out of the IT
operating budget and the Capital Outlay Reserve Fund. Over the next couple of years the
major items to be discussed are a phone system replacement and virtual desktops. IT
Manager Bob Pearson will be at the meeting to discuss these projects in detail. A few items
are listed in 2012 that are carried over from 2011; which are laptops/computers for Council
and time keeping software. Both of these items were to be considered if we got local
government aid in 2011.
Capital Outlay Reserve Fund
This fund has no revenue stream other than interest income and donations. This fund has
been used to purchase the LETG police software, IT virtualization equipment, and fund
various capital equipment/software needs. The undesignated cash balance as of 09/30/2011
is $1,149,310. The 2012 budget includes a transfer of $122,100 to cover the capital outlay in
the general fund for 2012. This is acceptable to our financial management plan since it is a
one-time revenue source with one-time expenditures. After the $122,100 we have a number
of technology/capital improvements that are anticipated over the next five years. This
includes phone system replacement, virtualization refresh, and virtual desktop. This leaves a
balance of approximately $406,710 to fund future equipment and fixture needs.
N:\Public Bodies\City Council\Council RCA\Agenda Packet\11-07-2011\2012-2016CIPupdate110711[1].doc
Development Fund (City)
The City's development fund has a cash balance of $375,820 as of 09/30/2011. This fund
has been used for development purposes (Northstar Business Park) in prior years and it was
identified to fund the 171St Focused Area Study environmental review and preliminary
engineering for Phase I. The primary revenues are any conduit bonding administrative fees
and the tax abatement repayments for economic development projects.
Other items to consider
• The expansion fee is currently allocated 85% government building and 15% street
improvement reserve. The Council may want to consider reallocating the percentage
to 100% government building as we reviewed last month. The Council can change
the percentage at any time, but we will review the fund on annual updates of the
CIP.
• The complete copy of the CIP will be put together for Council review prior to action
in December.
N:\Public Bodies\City Council\Council RCA\Agenda Packet\11-07-2011\2012-201GCIPupdate110711[1].doc
EXHIBIT A
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EXHIBIT C
Interest
2010 Balance 4,132,403.08 0.00
2011 Activity Assessments 43,650.11
Interest alloc -43,650.11
Dec. estimates{assessments
Well 9 Raw watermain improvements (ERMU)
20116alance 4,112,294.55 -
2012 Estimated Activity
Assessment Revenue
171st Area (Phase I)
Mining Study
2012 Estimated Balance
NW Area Western Area Eastern Area NE Area
Sewer Water Sewer Water Sewer Water Sewer Water
539,273.98 539,273.97 385 834.41 463,710.19 1,613 947.09 313,759.19 138,252.13 138,252.13
3,612.06 3,612.05 3,210.04 3,210.04 56,271.22 66,271.21
5,551.49 5,551.49 3,979.35 4,774.67 17,079.46 3,886.15 1,413.75 1,413.75
3,fi12.0fi 3,612.05 1.888.38 1,888.39 36,810.95 36,810.95
$(284,5&8.06)
552,049.59 552,049.56 395 012.19 473,583.29 1,724,108.72 136,159.44 138,665.88 139,665.88
5,596.48 5,596.48 8,081.62 8,081.62 76,452.65 76,452.65 - -
- - - - (78,000.00) (175,000.00) - -
(25,000) (25,000) - - - - - '
$ 532,646.07 $ 532,646.04 $ 403,093.81 $ 481,664.91 $1,722,561.37 $ 37612.09 $139,665.88 $138,665.88
Updated as of: 10130/2011
EXHIBIT D
City o k River
TachnQlo~y/Software impravemants
2011 2012E 2013E 2014E
Expenditures
In squad Video upgrade 20,000 - - -
Laserfiche upgrade 13,000 - - -
Virtualization repayment 10,900 10,900 10,900 10,900
SQL server upgrades 26,000 - - -
HardwarelEnterprise switch/ UPS - 30,000 - 52,000
Fiber Project - - 20,000 -
2004- Phone system replacement - - 150,000 -
Virtualization refresh - - - -
Security Camera Replacement - 20,000 20,000 -
Timekeeping Software - 75,000 - -
Recreation software upgrade - 25,000 - -
Laptops/Computers Council - 7,500 - -
Virtual Desktop - - - 100,000
Total Expenditures 69,900 168,400 200,900 162,900
Funding Sources
General Fund Operating 30,900 10,900 30,900 10,900
Capital Outlay Reserve Fund 39,000 157,500 170,000 152,000
2015E 2016E
- 52,000
70,000 -
70,000 52,000
70,000 -
- 52,000
carried over from 2011
carried over from 2011