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10.0. SR 04-15-1996]ty of 'ver MEMORANDUM ITEM 10. FROM: DATE: SUBJECT: Mayor and City Council Pat Klaers, City Ad~trator April 15, 1996 Capital Improvement Worksession A Capital Improvement Program worksession is scheduled for Monday, April 15, 1996, following the regular City Council meeting. At the end of this regular City Council meeting, the Council should recess into the Training Room to review the Capital Improvement Program (CIP) funds that are available for projects. The projects that are desired, necessary, or appropriate were reviewed in the January and February CIP meetings (these minutes are attached for your review). Following this 4/15/96 CIP meeting, a draft CIP Plan will be put together which outlines potential projects and funding sources for the next few years. This draft plan will need to be reviewed by the City Council so that it can be used when the city goes out for bonds in May for the Wastewater Treatment Plant project plus anything else that the City Council may approve in the next few weeks (i.e., ice arena project, surface water management projects). The City Council has lots of flexibility in spending city funds for necessary projects. Funds that are currently designated for an activity can generally be redesignated by the Council for another activity or project. While the Council has a lot of flexibility, it should be noted that there are a limited amount of funds that are available. In this regard, the priorities of the Council must be clearly understood so that the most important projects get financed while the less important projects are put on hold until adequate funding is available. As noted in the attached material from the Assistant City Administrator Lori Johnson, one of the biggest concerns of the city is the funding of needed Surface Water Management (SWM) projects. I believe that it will be necessary to go out for a SWM bond in 1996 to finance some previously authorized 1995 projects and some anticipated 1996 projects. This bond issue, combined with the 1994 bond issue and some other internal loans that were made to the SWM fund, will leave the city with very few annual funds being available for new projects in the next few years. This will create a dilemma in terms of not doing projects versus increasing revenues to finance necessary projects. 13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425 Another significant CIP concern is the potential east Elk River public improvement project (County Road 12 residential area and east Highway 10 commercial/industrial area). It appears that in order for any type of project to move forward, the city will have to front end some of the project costs until the project is completed in ten or fifteen years. In this manner, the city may have to use its taxing power to pay off some bonds if all of the development and funding issues do not fall into place in a timely manner. If the city has to spend $500,000 to $1.5 million or more to make the project work financially, then the city needs to identify funds for these expenditures. This should take place in the very near future if a project is to move forward. Another CIP concern is the priorities for street projects. In this regard, I need the Council to advise the staff as to whether or not Dodge Avenue/5th Street is a higher priority than 171st Avenue or the School Street/County Road 1 intersection signal or Highway 10/County Road I intersection or the 3rd Street/Gates Avenue intersection or the... (you get the idea). We have some MSA monies available and some capital projects funds available, but I need to know where the money should be spent first so that we can program these projects in an orderly and financially responsible fashion. Additionally, there are special projects that need to be reviewed such as funding: the EDA downtown park improvements and Phase I of the river pathway projectl the development of Cass land recreation fields; identifying the source of the $50,000 contribution to the ice arena; and the need for the city to purchase industrial property for development. Finally, there is a concern about 1997 legislative action that may restrict the use of decertified TIF districts. In this regard, it may be imperative for the city to allocate its TIF No. I and 3 and No. 2 funds. Staff is recommending the TIF No. 2 fund be used for the 1995 Main/Evans SWM project. Another item that has been discussed by the EDA and the City Council is determining what funding source should be used to provide the local contribution for TIF projects. It is recommended that the city use the revenue generated from the industrial lot transaction with the School District. The Industrial Park land purchase can be paid off from the other transactions that have already been completed and most of this $45,000 from the school purchase can be available toward TIF penalties. s:XcouncilXcipmm.doc 'ity of 'ver FROM: DATE: SUBJECT: MEMORANDUM Mayor and City Council Lori Johnson, Asst. City Administrator April 15, 1996 CIP Discussion Surface Water Management Fund Attached is additional information regarding the Surface Water Management (SWM) fund. As you can see this fund has total current obligations of over $2 million. Of that, over $1.8 is related to debt service obligations. In addition to the existing debt, it is anticipated that bonds will be issued to fund the already completed Main Street and Evans Avenue improvement project and possibly to fund some upcoming 1996 projects which may include Highway 10 frontage road at Joplin Street and Ditch 28. In addition to bond obligations, the SWM fund owes $188,000 to the Capital Projects fund for costs incurred in 1992. As of this date no repayments have been made to the Capital Projects fund and no definite payment schedule is set. Unless this obligation is forgiven, a payment plan should be initiated so that these funds are eventually repaid to the Capital Projects fund. The current debt outstanding is retired in the year 2009 with the exception of the western area obligation which will be paid in total in the year 2006. Additional Main and Evans debt would probably continue through the year 2011. The average annual debt service for these three issues would be approximately $205,000. This leaves approximately $35,000 available for either repaying the Capital Projects fund, funding engineering studies, minor repair and maintenance to existing storm drainage systems, or for future debt. If growth continues in the city's tax base, the levy which has been set at 2.5 percent of the net tax capacity will obviously increase. However, without additional increases in the tax levy, the ability to pay additional debt service and fund future projects becomes very limited. Staff is recommending that bonds be issued to finance the Main and Evans improvements and any other major SWM projects the Council wants to be initiated in 1996. This bond issue is planned to be issued along with the WWTP expansion bond. Any TIF No. 2 bond would be used to reduce the size of the bond issue. 13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425 Surface Water Management Fund December 31, 1995, Cash Balance December 31, 1995, Fund Balance ($359,500) ($883,ooo) Outstanding Obligations Due to Capital Projects Fund - Fresno Street - Westwood Due to 1994 Western Area Phase II Debt Service Fund Principal & Interest on 1994 Storm Sewer Revenue Bond Total Obligations 72,935* 115,034' 272,955 $2,004,389 *There are internal loans which have no set repayment requirement. The remaining $1,816,420 obligation must be repaid annually in accordance with the debt service requirements on each of the corresponding bonds. Unfunded Proiects Main Street and Evans Avenue $461,500 In order to fund this project, additional sewer revenue bonds could be issued. This would add over $500,000 to the debt obligations of the SWM fund. If TIF No. 2 funds are used to help finance this project, the bonds could be reduced by approximately $115,000. Upcoming Projects - 1996 Highway 10 Frontage Road at Joplin Street $ 85,000 - 1996(?) Ditch 28 $ ? Cash Flow - 1996 Revenue Tax Levy $240,000 - 1996 Debt* 1994 Revenue Bond Western Area II Main/Evans Debt Balance $113,000 (average annuaD 30,000 60.000 $ 37,OOO Due to Capital Projects Fund v $ 10,000 Engineering Studies v 3,000 Minor Repair & Maintenance v 2,000 1996 Projects v *Including anticipated bond issue for Main/Evans and TIF Fund reduction. 1997 Revenue Tax Levy $255,000-270,000 1997 Debt* 1994 Revenue Bond Western Area II Main/Evans Debt 113,000 30,000 60.000 Balance $ 42,000-67,000 Due to Capital Projects Engineering Studies Minor Repair & Maintenance 1996 Project Debt/Internal Loan 1997 Projects $ 10,000 3,000 2,000 Tax Levy needs to increase if future major projects are to be funded. Consideration needs to be given to repaying the Capital Projects fund. Completed SWM Fund Projects Deerfield III Highway 10/101 Main/Evans County Roads 12/13 Western Area II Westwood Fresno Street Ditch Repairs Engineering & Legal $168,421 538,393 461,500 364,500 272,955 115,034 72,935 5,446 67,641 /VLEETING OF THE ELK RIVER CITY COUNCIL CAPITAL II¥IPROVEMENT WORKSESSION HELD AT THE ELK RIVER CITY HALL MONDAY, JANUARY 15, 1996 Members Present: Mayor Duitsman, Councilmembers Dietz, Farber, Holmgren, and Scheel Members Absent: None Staff Present: Pat Klaers, City Administrator; Lori Johnson, Assistant City Admi~istratol-;, Steve Ach, City Planner; Terry Maurer, City Engineer 1. gall Meetinq To Order Pursuant to due call and notice thereof, the meeting of the Capital Improvement Program ICIP] worksession of the City Council was called to order at 5:10 p.m. by Mayor Duitsman. 2. Discussion on Capital Improvement Proqram City Administrator Pat Klaers provided an overview of the CIP review and decision making process and how the process has evolved over the last few years. In 1996, the CIP process will involve month to month updates and decisions on projects and this worksession is being held as an overview summary of planned activities. ~Wastewater Treatment Plant Expansion - The City Engineer reviewed his 1/8/96 memo regarding the bids for the Wastewater Treatment Plant (WWTP) upgrade. The bids were very competitive and below the original estimate and the Iow bidder is qualified to do the project. The City Engineer reviewed his 1/11/96 memo regarding the capacity of the Treatment Plant and how this capacity relates to the urban service area approved in the Comprehensive Plan update. There is sufficient capacity to service this area with the proposed Treatment Plant expansion. -' Assistant City Administrator Lori Johnson reviewed with the City Council the 1/12/96 financial analysis of the Treatment Plant expansion project and the revenue projections for this enterprise fund to pay off the proposed bonds. It was noted that the projections outlined are for a 20 year bond repayment plan whereas previous estimates were for a 30 year repayment plan. The Iow bids for the project allowed the bond repayment schedule to be reduced. Lori reviewed the revenue assumptions and noted that in the current estimated debt service schedule does not allow for the depreciation expense to be reserved for future use because the projected income does not generate sufficient cash to meet annual debt payments. CIP Work. session Meeting January 15, 1996 Page 2 After discussion, it was the unanimous consensus of the City Council to put this issue on the January 22, 1006, City Council agenda for consideration of awarding the WWTP expansion bids. b. Egst Elk River Public Improvement Project The City Administrator provided an overview of this project from its conception in ] 080 fo the present. It was noted that the urban service district for east Bk River has been established with the update of the Comprehensive Plan and that starting in ] 096, the city would look at new alternatives for a construction project and disregard the past options and alternatives. '-, City Engineer Terry Maurer presented and reviewed alternatives A, B, C, and D. Discussion related to the direction of the trunk sanitary sewer either being along Highway 10 or across Highway 169; the need to establish one assessment rate Jplus COLA) for the entire east Elk River project; and the difference between the city "pushing" the project to the east versus a major developer "pulling" the project to the east. Discussion at the Council level included a concern over how much of the cost of the projecffhe city could hold on a temporary basis until it could be assessed out to benefited properly owners...The Mayor indicated his suppod for the approach of having the trunk sewer go across Highway ] 60 and also indicated his support fo hold a public hearing on the project in order to receive property owner feedback on the proposaL.The question was raised whether or not it would be appropriate to allow the County Rood 12 area to develop in a residential nature prior to the east Highway 10 area developing and if this is feasible...The maximum assessment rate per acre was reviewed...A number of Councilmembers indicated that the project should wait until it was developer driven. It was the consensus of the City Council to direct staff to obtain a quote for a complete appraisal for this project area from Patchin and Associates. It was the consensus of the City Council to get a quote from the City Engineer for the cost of doing topographical maps based on air photography. The Council asked for a clarification on the status of the assessment manual and the need for an update in order to ensure that one assessment rate can be established for the whole east Elk River area. .c. ~_eview of Current or Onqoinq Projects - The City Engineer reviewed his i / ] 1/06 memo on the status of current projects. d. Streets 185th Avenue or Hi,qhway 10 North Frontoqe Road Beqinninq at Joplin St__.'ee___~t The City Engineer reviewed the timetable for this proposed project. Sherri Emerson, representing the guardian Angels Foundation, asked a number of questions regarding development of the Guardian Angels property in CIP Worksession Meeting January 15, 1996 Page 3 this area. The City Administrator reviewed the city's financial commitment to this project. It was noted that this item will be on a City Council agenda for formal action in the next few weeks. School Street and School Street/Proctc)r Avenue Siqnal - This project is scheduled for 1997 and only preliminary work has been completed. The county is involved with this project as Proctor Avenue is a county road. Dodae Avenue and Fifth Street Re¢onstrgction. It was noted that this project will move forward when a petition from benefited property owners is submitted. The City Administrator outlined the city's financial obligation to this project. .Overlays - Th~ major overlay project in 1996 is in the Riverview Heights area unless a complete street reconstruction with city utilities project is undertaken. The City Council reviewed options for the Riverview area and directed staff to set up a neighborhood meeting. .County Road 1 - The City Engineer stated that this project is scheduled for 1 ?96. Discussion took place regarding a three lane versus four lane project and striping alignment. Discussion of the Highway 10 intersection and left turn movements at Proctor Avenue also took place. It was noted that the County Engineer will come to a future City Council meeting to review this project. Staff was directed to continue to work on options for the Highway 10/Proctor Avenue intersection. ~ - It was noted that this is a proposed 1997 project. Discussion took place regarding the possible realignment of the County Road 12 and/or County Road 13 intersection. .Main Street/Hiqhway 10/Otsec/o Bridclo - The Council acknowledged that this project is not feasible in the next few years, but indicated its ongoing concern for this area and noted that this is still a high priority project. West Business Center Drive - It was stated that this project will take place when it is petitioned for by benefited property owners. This road would connect Joplin Street to the County Government Center on the south side of Highway 10. The City Administrator identified the non-programmed street projects which are a high'priority, but which no petitions have been received for the project and which no financing has been arranged. A brief review of the city's long range transportation plan, the county's long range transportation plan, and the city/MnDOT corridor study took place. Th~ City Engineer highlighted the proposed new transportation corridors, including the east/west route, that are in the city transportation plan. The City Administrator requested permission to have the City Engineer and Street Superintendent work with the county engineering staff on a possible trail along County Road 44 or Meadowvale Road from Highway 10 to the CIP Worksession Meeting January 15, 1996 Page 4 railroad crossing. The Council agreed to do some preliminary work on this project. go· The City Engineer stated that he had received a request to have the city consider a sidewalk for pedestrians on the south side of the new Main Street bridge IDam Bridgel. The citizen was also concerned that a railing should be installed as people are using this area for walking and for fishing. The City Council received this request but took no action. ~ - The City Administrator reviewed the plans in 1996 for purchase and development of the Cass property. .Liquor Stor~ - The. City Administrator reviewed the recommendations from himself and the liquor store manager on the timing and planning for a new Northbound liquor store and the need for obtaining a Westbound liquor store site. The City Council requested that the Liquor Store Manager attend a future meeting to discuss these issues. Ice Arena - The City Administrator, Councilmember Farber, and Councilmember Dietz reviewed the proposed ice arena project and the intent to be under construction in early 1996. The ongoing time requirements placed upon the Finance Department for this new enterprise fund were acknowledged. R_iverwalk Proiecf_ - The City Administrator stated that it is not likely that construction will take place on this project in 1996, but that the Economic Development Coordinator would like fo have the finances reviewed and in place as soon as possible. The City Administrator noted that the Economic Development Coordinolor would like to have a special worbession with the City Council on this project. Councilmember Holmgren questioned whether repair or rePlacement of the central business district sidewalk was part of a riverwalk project. The City Administrator indicated that it is not part of the project at this time, but that this issue could be discussed with the Economic Development Authority and/or the Housing and Redevelopment Authority. Surface Water Manoqement - The City Administrator reviewed the 1995 Surface Water Management- Projects and the known 1996 expenditures. It was noted that the western area Surface Water Management document has been completed fdated November, ]995} and that this plan will be briefly reviewed by the City Engineer at a February Council meeting. The City Administrator noted that a similar study and report would be needed for the east side of Elk River when a trunk improvement project is scheduled. ~ - The City Administrator reviewed the annual equipment needs and highlighted some unusually large expenditures that are anticipated in the near future in the Street/Park department, Fire department, and WWTP department. Special City Council Meeting February 19, 1996 that it would review this area and the request from Mr. Duggan at its next meeting. Page 3 3. Discussion on Capital Improvement Pro,qram The CIP meeting began at approximately 6:30 p.m. The City Administrator provided an overview of the agenda and noted that the last ClP meeting is reviewed in the 1/15/96 minutes that have already been approved by the City Council. Municipal Liquor Store - Liquor Store Manager Fdtz Dolejs reviewed his 1995 Annual Report to the City Council. Fdtz highlighted the finances for 1995 as outlined on Page 5 of his reporf...Fritz indicated that his priorities for the future of the liquor store are to purchase a Westbound Liquor store site and begin plans for the construction of a new Northbound store...Councilmember Diefz discussed the possibility of a liquor store in the downtown area...Iocations along the north side of Highway 10 were reviewed and the Council indicated its support for the Joplin Street and Highway 10 intersection. COUNCILMEMBER HOLMGREN MOVED TO HAVE STAFF PROCEED WITH THE NEGOTIATIONS FOR A WESTBOUND LIQUOR STORE SITE AT THE NORTHWEST CORNER OF JOPLIN STREET AND HIGHWAY 10. COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 5-0. COUNCILMEMBER HOLMGREN MOVED TO OBTAIN A QUOTE FOR ARCHITECTURAL SERVICES FROM THE TUSHIE MONTGOMERY ASSOCIATES, INC. ARCHITEC:TURAL FIRM FOR SERVICES FOR A NEW NORTHBOUND LIQUOR STORE PROJECT. COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 5-0. Ice Arena Project Update - Ice Arena Task Force members Pat Klaers, Lori Johnson, John Dietz, and Larry Farber updated the City Council on the status of the ice arena project and recent Task Force meetings. COUNCILMEMBER DIETZ MOVED TO HAVE THE ARCHITECTS PROCEED WITH THE ICE ARENA CONSTRUCTION DOCUMENTS. COUNCIl. MEMBER FARBER SECONDED THE MOTION. THE MOTION CARRIED 4-1. Councilmember Scheel opposed. COUNCILMEMBER HOLMGREN MOVED TO HAVE THE CITY CONTRIBUTE TO THE PROJECT BUILDING PERMIT FEES, THE SEWER AVAILABILITY CHARGE, THE COST TO INSTALL THE SEWER LINE, AND ANY STREET DEPARTMENT HELP WITH THE STRIPING. AND MARKING AND SIGNAGE OF THE PARKING LOT. COUNCILMEMBER FARBER SECONDED THE MOTION. THE MOTION CARRIED 4-1. Councilmember Scheel opposed. Western Area Surface Water Manaqement Plan - The City Administrator briefly reviewed the western area surface water management plan and in the discussion of this document the City Engineer noted that a similar plan would be needed out east if urban development is going to take place. The western area plan dated November, 1995, was received by the Council Eastern Elk River Public Improvement Project - The City Administrator briefly reviewed the memo on east Trunk Highway 10 aerial topography and ground Special City Council Meeting Page 4 February 19, 1996 control. Discussion took place with the City Engineer on his quote for services and the need for this work. The Administrator also reviewed the 2/9/96 Patahin and Associates quote for an assessment benefit analysis of water and sewer trunk improvements in this area for commercial and industrial uses. COUNCIl. MEMBER HOLMGREN MOVED TO AUTHORIZE THE WORK ON THE EAST TRUNK HIGHWAY 10 AERIAL TOPOGRAPHY AND GROUND CONTROL FROM THE CITY ENGINEERING FIRM AS OUTLINED IN THE 1/25/96 MEMO FROM THE CITY ENGINEER. COUNCILMEMBER SCHEEL SECONDED THE MOTION. THE MOTION CARRIED 5-0. COUNCILMEMBER HOLMGREN MOVED TO AUTHORIZE THE BENEFIT ANALYSIS WORK AS OUTLINED IN THE PATCHIN AND ASSOCIATES LETTER DATED FEBRUARY 9, 1996. COUNCILMEMBER FARBER SECONDED THE MOTION. THE MOTION CARRIED 5-0. County Road 1 Update - It was noted that the County Engineer will be at the 2/26/96 City Council meeting to discuss this topic. The City Engineer briefly discussed the Planning Commission review of the Long Range Transportation Plan on 2/19/96 and its recommendation for approval. Summary of Riverview Hei,qhts Nei,clhborhood Meetin,q - The City Engineer reviewed his 2/14/96 memo that summarizes the recent Riverview Heights informational meeting regarding municipal improvements. The memo indicates the opposition for the public improvement project from the residents that were present. Councilmember Dietz indicated his concem over doing an overlay project at this time and then foregoing the opportunity for installing municipal utilities into this area for another ten years or so. The City Engineer was requested to provide more detailed information on potential assessments for sewer and water into this area. Surface Water Mana,qement Fund - The City Council agreed to discuss this issue at a future CIP meeting. Everyone present indicated their support for the projects that have been done, but also a concern over the status of this fund. Community Center Task Force Letter-The 1/10/96 letter from Cliff Lundberg regarding re-establishment of the Community Center Task Force was discussed. The Council indicated its desire to not initiate any Task Force on this issue until after the school has successfully passed a bond referendum for new facilities. 4. Other Business Economic Development Coordinator Task Force - The City Administrator, Mayor, and Councitmember Farber updated the City Council on the Economic Development Coordinator Task Force meeting held earlier in the day. COUNCILMEMBER HOLMGREN MOVED TO APPOINT MAYOR DUITSMAN AND COUNCILMEMBER FARBER, REPRESENTING THE CITY COUNCIL, JEFF GONGOLL AND PAT DWYER (WITH TOM BENDER AS AN ALTERNATE) REPRESENTING THE EDA, DUANE KROPUENSKE, REPRESENTING THE HRA, CHARLIE HOULE, REPRESENTING THE 4/96 CIP FINANCES MUNICIPAL STATE AID (MSA) MSA Funds can only be used for street, drainage, and sidewalk projects on MSA routes. These funds are usually used in combination with assessments to benefited properties and/or the use of City Reserve funds. The annual allocation for the City of Elk River is approximately $590,000 per year. These funds increase as the MSA mileage in the City increases. Funding is also subject to changes depending on State Legislative action. Some improvement projects that have been partially funded with MSA monies and which have taken place in the last ten years include: Tyler Street, Proctor Avenue, Fillmore Street, Main Street/Highway 169, Main Street/Orono Road and the bridge replacement, 193rd Avenue/Highway 169 signal, Orono Parkway, and School Street/Jackson Avenue along with the signal at this intersection. This fund also indirectly paid for the City's share of Joplin Street, the extension of Orono Parkway and Elk Hills Drive/Dodge Avenue. In 1992, the City bonded for some large scale improvement projects (Main Street/Highway 169, Orono Parkway, 193rd Avenue signal) and committed future MSA funds from 1994 through 1999 for the repayment of these bonds. This annual bond payment takes $185,000 from the MSA annual allocation. Accordingly, the annual revenues that are actually available to the City for improvement projects for the next four years are approximately $405,000. In 1994, the City advanced encumbered MSA funds for the School Street and Freeport Avenue project. This project met MSA funding eligibility requirements. By advance encumbering these funds, the State reserved the funds and will allow the City to draw out these monies through 1996 for this project. In reality, limited City MSA funds were needed for this project as other funding sources (State turnback monies and project assessments) paid for the majority of this project. However, by using this advance encumbering technique, the City has more flexibility and can then use these funds for other street projects that may not meet all of the MSA funding or design requirements. This is how the fund indirectly helped finance Joplin Street, the extension of Orono Parkway, and Elk Hills Drive/Dodge Avenue. All but $100,000 of the 1996 MSA monies are dedicated to the Joplin Street and Orono Parkway project that was completed last year. The remaining $100,000 is scheduled to be applied to the Joplin Street and Highway 10 intersection and signal project that is planned for 1996. Page 1 of 13 4/96 The balance of the 1997-99 MSA funds that are not committed to the 1992 bond are available for City use. If more funds are needed for street projects than what are available, then the City can advance encumber monies or use other City public improvement reserves to make the project work financially. Additionally, a 1996 law change now allows cities to obtain an interest free loan from the state aid pool of funds that have not been used by other municipalities. The City may want to use this new financing tool if additional funds are needed for City projects. Beyond the potential projects listed below, it is anticipated that in 1996, 1997, and 1998, the city will need MSA funds to complete the 171st Avenue upgrade project; the 197th signal project; and the School Street/Proctor Avenue intersection signal and School Street project. 1996 Revenues (Excluding Bond Payment and previous commitments) 1997 Revenues (Excluding Bond Payment) 1998 Revenues (Excluding Bond Payment) 1999 Revenues (Excluding Bond Payment) 2000 Revenues $100,000 $405,000 $405,000 $405,000 $590,000 Eligible MSA Projects: 173rd/175th Avenues Railroad Drive and 3rd Street Dodge Avenue and 5th Street Main Street and Highway 10 Liquor Store Road Waco or Zebulon Street Bridge School Street County Roads I and 12 Page 2 of 13 4~96 CIP FINANCES CAPITAL PROJECTS FUND This reserve fund was created in order to allow the City to recapture MSA funds that are spent on a project which was also partially assessed out to the benefited property owners. About $480,000 (in principal only) is anticipated to be added to this fund over the next ten years through assessments. Additionally, this fund can also receive some revenue, as designated by the City Council, when improvement project bonds are defeased. No other annual revenues are received so the City must be careful in spending these limited funds. The Capital Projects funds are spent on street improvement projects, special projects as designated by the City Council, or to supplement under financed projects. Approx. 1/96 Balance ( Undesignated Cash) 1996 Revenues: assessments and interest Sub-total $245,000 100,000 $345,000 1996 Expenditures: Part of Joplin Frontage Road Dodge Avenue and 5th Street Approx. 1/97 Balance (Cash) 1997 Revenues: assessments and interest Sub-total $ 70,000 $ 1997 Expenditures: Part of 197th Signal School Street and School Street/Co. Rd 1 Intersection Balance at end of 1997 Possible Projects: Outdoor Recreation Park Grant Old Township Roads 173rd/175th Avenues Tax Forfeited Land Purchases Dodge Avenue/5th Street Riverbank Improvement Project Improvement of the Railroad Trail Main Street/Highway 10 3rd Street/Gates Avenue Parks and Trails Improvement Waco or Zebulon Bridge Naples Street Dredging of Lake Orono Railroad Drive/3rd Street Concord Street County Roads I and 12 Liquor Store Road Page 3 of 13 4~96 CIP FINANCES LANDFILL FUND State law allows for a $1.00 per cubic yard surcharge on mixed municipal solid waste disposed of in the landfill. Some restrictions are placed on the use of these funds, but the City can, and has, designated $.70 of this surcharge for the three revenues noted below. How much money is generated by the surcharge fluctuates as the activity level at the landfill fluctuates. The annual revenues designated for the Government Buildings and Library funds are built into City Hall and Library bond repayment schedules. The balance of the Government Buildings fund is being reserved for a City Hall expansion that is anticipated in approximately seven years. The Street funds are not committed to specific projects and can be reapportioned at City Council discretion. However, for the past few years, the City Council has annually used between $25,000 and $40,000 of the Street Reserves to balance the General Fund budget for the overlays and the seal coating program. LIBRARY ($.05) Revenue (Annual Amount) $19,000 The Library bonds are scheduled to be paid off in 2006. GOVERNMENT BUILDINGS ($.45) Current Fund Reserve Revenue: (Annual Amount) Bond Payment Anticipated 1996 Year End Fund Reserve $110,000 70.000 40,000 The City Hall bonds are scheduled to be paid off in the year 2010. STREETS ($.20) 1/96 Balance (Cash) - Approx. $130,000 1996 Revenues (Annual Amount) 1996 Expenditures: Miscellaneous General Fund Transfer 50,000 10,000 40.000 BALANCE Available for other 1996 and beyond projects $130,000 Possible Streets Projects: (see the Capital Projects List) Page 4 of 13 4~96 CIP FINANCES EQUIPMENT AND INFRASTRUCTURE RESERVES This fund was originally established by the City Council through the designation of available General Fund monies and the defeasing of a special assessment bond. Additional revenues are very limited. Typical use of these funds is for smaller equipment items. Streets Department Utilities Contribution Fire Department Van Fire Pumper Public Improvements Parks Department Trails Ice Arena Major Equipment Repair & Maintenance General Approx. 1/96 Balance (Undesignated Cash) 78,000 23,000 (40,000) 24,000 55,000 45,000 19,000 10,000 70,000 59.000 $343,000 The Council may note that the Audit shows a higher amount of money available in the equipment and infrastructure reserves. This is because the above figures have been reduced based on funds being previously committed to projects by the Council. Also note that $25,000 will be spent from the Streets fund for trucks and $12,000 from the Utilities contribution will be spent on a siren in 1996. Regarding the above designations of equipment and infrastructure reserves, it should be noted that most of these designations can be changed per request of the City Council. The major equipment repair and maintenance category is somewhat new and eases the pressures from the General Fund budget when unexpected major expenditures and emergencies take place. This category was started with some of the monies generated by the City land sale to UPA in 1994. Additionally, regarding the parks amount listed above, this $45,000 amount has been accumulated over time and has been generated mostly through end of the year transfers from the General fund into this reserve. The Street Department reserves have been accumulated typically through the selling of equipment. The public improvement funds are expected to grow by over $400,000 in the next six years through contributions from the Utilities and most likely will be spent to help finance a trunk utility or surface water management project, or to purchase industrial land. Page 5 of 13 4/96 CIP FINANCES PARK DEDICATION Funds are generated in this category through the platting and development process. By State law, monies can be used only for park capital improvements and not for annual maintenance items. The Park and Recreation Commission annually reviews how funds in this category are proposed to be spent. The City Council has final approval over use of these monies. This fund has been traditionally used on an annual basis for smaller land purchases and for smaller capital improvements in neighborhood parks (approximately $25,000 per year). No large scale projects have been financed through this fund. The City has used some of this park dedication money as our local match for the State grant that was received for the Woodland Trails Park improvements. Additionally, other park grants are submitted annually that require local matches. If the City is successful in these grants, some of the park dedication monies may be needed to match the State funds. For example, in 1996 the City plans to use $45,000 from this fund for the local match requirement of the Shiely land project. In addition to the Shiely land expenditure in 1996, there is one other possible major expenditure that may come from this fund. This expenditure is for the balance of the cost for the Cass recreation field land and, to a larger degree, development of the fields. Approx. 1/96 Balance (Cash Balance) less Shiely Land less 1996 Park Improvements plus Menards Commercial Project $102,000 (45,000) (30,000) 26,500 The current park fee is $550 per residential lot. The commercial fee is $1,750 per acre. There is no fee on plats for industrial property. Page 6 of 13 4~96 CIP FINANCES LIQUOR STORE FUND At the end of each year, the Municipal Liquor Store typically has a net profit of approximately $100,000. This amount is after the transfers-out to the City General Fund. SINCE 1987, OVER $1.5 MILLION HAS BEEN TRANSFERRED AND SPENT ON GENERAL FUND RELATED ACTIVITIES. Of the $100,000 annual remaining balance, most has gone into the Land/Building Reserve fund for a future second liquor store site (Westbound) that is anticipated to be needed within the next five years. Also, it should be noted that in January, 1995, approximately $387,000 was spent on a site to relocate Northbound. A new Northbound store is planned in the very near future (either 1996 or 1997). Some of this new building expenditure will be recaptured when the existing Northbound site is sold. The Liquor Store fund also retains a constant $250,000 in reserves for its operating expenses and inventory (or for emergencies). The annually designated transfers from the liquor store to the General Fund and for part of the City Hall bond are typically in the $175,000 range and include part of the payment for the fire station expansion bond. In 1996, the Liquor Store is anticipated to make a profit of approximately $250,000. The General Fund budget is programmed to receive $133,000 of this total. Accordingly, in 1996 about $113,000 is available to flow into the Land/Building Reserve fund for the Westbound liquor store and for the new Northbound building project. Currently, we are slightly short of the necessary funds to completely finance a new liquor store without going into debt. 1996 Profit Estimate 1996 General Fund and City Hall Transfers Year End Balance for the land/building reserve $280,000 $163,000 $117,000 1/96 Land/Building Reserve (Cash) 1/96 Inventory and Operating Reserve Total Reserve on 1/1/96 $485,000 $250,000 $735,000 A Westbound site of 1.5 to 2 acres could cost the City up to $200,000. A new Northbound building could cost $600,000 for an 8,000 square foot facility based on $65/square foot plus equipment and inventory needs. The value of the old Northbound site is unknown at this time. Page 7 of 13 4~96 CIP FINANCES NSP CONTRIBUTIONS Beginning in 1991, NSP began contributing funds to the City of Elk River. The contribution was negotiated between the City and NSP and was offered by NSP to finance improvements in the City to help offset any negative effects or opinions which may inadvertently be directed at Elk River due to the RDF Plant. The contribution is approximately $200,000 per year. Of this amount, $20,000 goes directly into the City General Fund to help pay for police services associated with monitoring RDF related truck traffic on the highway. Half of the balance, approximately $90,000 per year, is designated for part of the City Hall/Police Station bond repayment plan. Approximately $90,000 per year is available for other activities at the discretion of the City Council. Of the $90,000/year that remains under the discretion of the City Council, the 1991-1994 funds were spent on the Oak Knoll recreation fields, a few park-like improvements at the EDA site, and the purchase of the land at the City Hall site. The 1995 and 1996 funds are planned to be used for the purchase of the Cass property. The City hopes to recapture most of these funds and have them available in the future for City uses at the discretion of the Council. Ideally, NSP money will be saved in a reserve for a few years for future large scale projects. These projects could include the development of youth recreation field or community facilities or structures such as a senior center, teen center, arts facility, etc. Saving this NSP money for a number of years until a larger pool of funds develops could be a significant benefit to the City in the future. Page 8 of 13 4~96 CIP FINANCES SURFACE WATER MANAGEMENT (SWM) In late 1994, the City Council approved its tax levy for calendar year 1995. Included in this tax levy was $210,000 for surface water management activities. This tax levy was continued in 1996 at $240,000 and will have to continue for the long term in order to finance surface water management activities. This amount will most likely have to be increased in future years based on the expenses for the SWM projects that have been approved in 1994 and 1995 and which are anticipated to be approved in the next few years. In 1994, the City authorized over $1 million in bonds for surface water management activities. These activities included work for the Deerfield III, County Roads 12/13, and Highways 10/169 projects. Additional surface water management projects approved by the City Council in 1995 include the Main/Evans project and Western Area Phase II trunk storm drainage pipes. Finally, there were some pre-1994 activities that were charged to the surface water management fund. These were financed internally, but need to be repaid from the SWM levy. This cannot happen in 1996, but should be programmed into the budget over the next few years. The SWM fund is currently over $1.5 million in debt (principal and interest from the 1994 bond) and will be in debt for the foreseeable future. Anticipated SWM projects for 1996 include the north Joplin frontage road, the south end of Ditch 28, and Country Crossing III projects. Even without expenses for future activities for other County ditch work, Western Area Phase III, or east Highway 10, it is estimated that this fund will be in debt an additional $900,000 by late 1996. This is in addition to the bonds that were issued in 1994 and excludes the internally financed projects. Council discussion on issuing another bond for this 1996 SWM debt needs to take place. As noted above, this debt is for under financed 1995 projects and planned 1996 projects. The Council should also consider increasing the required SWM fees on developments that go into this fund. The fee in Elk River is substantially lower than other suburban developing communities and the benefited property owners (the developers) are only paying a fraction of the actual SWM costs that are related to the development project. Finally, the Council also needs to consider using TIF No. 2 funds for some of the 1995 Main and Evans SWM project. These TIF No. 2 funds of approximately $115,000 are from the Guardian Angels project. New development in this Guardian Angels area was the major reason the Main and Evans project was necessary. Page 9 of 13 4/96 CIP FINANCES EXISTING TIF FUNDS Tax Increment Financing (TIF) Districts No. 1 and No. 3 were created to fund the water tower north of the School Administration building along Highway 169. Funds in excess of the repayment commitment are available for any number of activities as outlined by Minnesota State Statutes and as identified in the City development plans. These two districts have been decertified. In the past few years, the City has used TIF No. 1 and No. 3 funds for a variety of activities. These activities include the public improvements in Phase II of the Industrial Park, the purchase of park property, part of the library expansion expenses, the purchase of the downtown redevelopment site, and for the financing of east Main Street redevelopment projects. Additional funds are available in this District. These funds could be used in a similar manner to the above uses or could be used to underwrite the cost of trunk utilities, in either east or west Elk River. Also, as noted on the previous page, TIF No. 2 has some funds available for eligible activities. This District has also been decertified. It should be noted that the State Legislature meets every year and TIF is annually discussed. The Legislature could change TIF rules at any time which could affect planned City uses for TIF funds for existing or future projects. Page 10 of 13 4~96 CIP FINANCES GENERAL FUND OPERATING MONIES, LEASE PURCHASE AGREEMENTS, UTILITIES CONTRIBUTIONS (FOR EQUIPMENT), AND EQUIPMENT CERTIFICATES Annual tax and Utilities monies are spent for building payments and on a number of smaller capital improvement/equipment items. The City averages approximately $300,000 per year on these types of expenditures. Examples of these expenditures include the purchase of emergency preparedness sirens, police vehicles, street/park department equipment and vehicles, copy machines, the annual payments for the public works building, fire hall expansion and the City Hall building. SELF INSURANCE FUND This fund was created through the designation of General Fund monies and through the defeasing of a special assessment bond. This fund is used to pay for unusual legal expenses for activities not covered by the City insurance policy and for the loss of non-insured equipment items. Very limited additional revenues are projected in this fund. Any insurance rebate at the end of the year does flow into this fund. Monies from this fund could be shifted to any other category or used for any other purpose at the discretion of the City Council. 1/96 Balance (Cash and Fund) $318,000 Page 11 of 13 4~96 CIP FINANCES REMAINING FINANCING TOOLS: CONTRIBUTIONS/DONATIONS Limited funds are available through this mechanism and the amount of money is typically for special one-time items. This may be one source of funding for the proposed ice arena project or for park or recreation projects. GRANTS There are a limited amount of grant programs currently available. Possible grant applications could relate to park development through the Outdoor Recreation program or for the riverbank protection from the Sherburne County Soil and Water Conservation District or street projects from ISTEA funds. HRA/EDA Annual revenues are generated through a tax levy as approved by the City Council. Either the EDA or HRA may use its funds on improvement projects such as upgrading the downtown parking lots, or improvement of the riverbank area. Additionally, either agency may approve a TIF project or may issue bonds for appropriate projects provided they are also approved by the City Council. WATER FUND This fund is under the jurisdiction of the Municipal Utilities Commission. Funds are available for water related improvements. The Commission needs to plan for future wells, water towers, and major expansions of the trunk utility system. ELECTRIC UTILITY This fund is under the jurisdiction of the Municipal Utilities Commission. The Electric Fund currently donates cash to the City in the amount of $150,000 annually for General Fund purposes, but about 50 percent of this money is being used for capital equipment needs as noted on the previous page. Additionally, the electric utility finances all of the ongoing City street electrical expenses within its territory, free of charge to the City. It is unlikely, but the electric fund may finance one-time special projects as has happened in the past with the Fire Department equipment van. Page 12 of 13 4~96 CIP FINANCES IMPACT FEES Funds are limited and designated for a specific purpose. For example, the City collects a park dedication fee, which could be considered an impact fee, on all new plats for future park projects. Additionally, the City collects a seal coating impact fee from developers to finance the first seal coat needed in a subdivision. The SWM fee could be considered an impact fee. Impact fees can also be collected from developers for such off site items as new signals. Impact fees are obtained when a project has an impact on City programs, projects, or services. SPECIAL ASSESSMENTS A number of street and utility improvements are assessed out to benefited property owners either in their entirety or as a partial assessment. Projects can be pursued by a petition of benefited property owners or initiated by the City Council. TIF PROJECTS (New) Monies are only available for special projects subject to State law and City Council approval with concurrence with the EDA or HRA. Each project is reviewed on the individual merits of the proposal. BOND REFERENDUM Monies are only available if approved by the citizens through a public vote. Money is typically used for larger scale items such as a major park land purchase or park improvement program, or for a community center. The only recent bond referendum that the City has had relates to the purchase of the aerial platform ladder truck for the Fire Department. WASTE WATER TREATMENT PLANT All WWTP improvements are financed through the WWTP reserves or WWTP revenue bonds (if they are not assessed out to benefited property owners). The City has recently financed some minor plant improvements and the purchase of the WWTP sludge land through the reserve funds. Also, Phase I of the plant expansion project was financed through revenue bonds in 1994. The balance of the major plant expansion ($3.5 million) was approved in early 1996, and this project will be financed through reserves and future revenues. This project will be accommodated through the issuance of G.O. Sewer Revenue Bond. Page 13 of 13 February 25, 1994 File: 230-161-75 1:326 Ene .rg), Por~ Drive ~' ?oul tan 612-6~.Z3~9 ~: 612-6ZZ.9~6 Mr. Pat Klaers City Administrator City of Elk River 13065 Orono Parkway Elk River, MN 55330 RE: STORM SEWER IMPACT FEE Dear Mr. Klaers: This is a follow-uP io my February 24, 1994, memo '~n which I summarized our findings from a survey of seve/-al metr'0i~olitan' con~'/nunities. In that particular memo, I neglected.to include specifics ori the impact fees charged by some of the metropolitan communities. As you will recall, the memo indiczted that four of the communities we contacted in the metro area do have impact fees. We were able to recontact three of them and get the specifics on thom. The following table lisU the costs in dollars per square foot charged by the Cities of Burnsville, I.xkeville, and Lino Lakes. _t:turn~ville ] .~keville T .inn T Single Family $0.11 $0.105 $0.10 Multi-Family 0.15 0.116 --- Churches 0.15 --- --- 0.147 0.14 Commercial/Industrial O. 17 As you c~n' see from these three communities, a typical single family lot of 10,000 to~.~ 15,000 Square feet would pay $1,000 to $1,500. On the other end, commercial/industrial /x4]',. property would pay on the order of $6,000 to $7,500 per acre. These rates are roughlyf ten times higher than those being contemplated by the City of Elk River. ~/ It is our understanding that these communities still require the developer to build lateral facilities within the developments and the'impact fees are used for trunk facilities and/or any oversizing of the internal lateral hcilities. A RESOLUTION OF THE CITY OF ELK RIVER A RESOLUTION ESTABLISHING THE SURFACE WATER MANAGEMENT · , IMPACT FEE RATES WHEREAS, the City of Elk River has a need for surface water management throughout the community; and WHEREAS, the City of Elk River has completed a surface water management study; and WHEREAS, the surface water management study has assisted the City in determining which drainage improvements are necessary to help eliminate the most urgent surface water management problems; and WHEREAS, the City has determined to fund the surface water management improvements through a variety of funding sources including a Surface Water Management Impact Fee; and WHEREAS, the City has determined that this Surface Water Management Impact Fee should be collected from the property owner at the time of platting, or in the case of existing lots, at the time of issuance of a building permit. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Elk River Minnesota: The Surface Water Management Impact Fee for all rural (non-city sewer and water) single-family residential lots shall be $60.00 in 1994. On January I of each succeeding year, the rate shall increase three percent (3%). The Surface Water Management Impact Fee for all urban (city sewer and water) single-family residential lots shall be $120 in 1994. On January 1 of each succeeding year, the rate shall increase by three percent (3%). 3. The Surface Water Management Impact Fee for all non- single-family residential property shall be $720 per acre in 1994. On January 1 of each succeeding year, the rate shall increase by three percent (3%). Passed and adopted by the City Council of the City of Elk River this 24th day of October, 1994.