5.16. SR 08-05-1996ity of
MEMORANDUM
iver
FROM:
DATE:
SUBJECT:
Mayor & City Council
Pat Klaers, City Ad~]a/~r
August 5, 1996
Update on Finance~ for Capital
Improvements
A number of financial issues need to be reviewed in the near future either
just before or after the city budget is considered by the council. Currently the
assistant administrator and I are busy working with department heads in
putting the 1997 budget proposal together so there is limited background
material included with this memo regarding the finances for some of the
recently discussed capital improvement projects. Depending on our schedule
and the availability of information, there may be some material handed out
at this 8/5/96 meeting.
The issues that I would like to briefly review with the council vary from
somewhat simple to rather complex. These issues include the following:
· Library re-roofing project
· Financing of the fire department pumper truck
· City contribution of $50,000 to the ice area project
· Update on liquor store projects and finances
· Funding of the Cass property recreation fields
· City participation in street projects
Attached for your review are the relevant audit pages that show the status of
the funds that the city needs to access to do some of the above projects.
The library proiect is relatively simple. The total cost of the re-roofing project
is in the $55-60,000 range. The city has sufficient reserves in the library
fund to pay for this project. The repayment plan to pay off the debt for the
library expansion project is still valid, but the city will now have less
flexibility to use its reserves for emergencies (like this re-roofing project) or
for potential revenue shortfalls.
Financing of the fire department pumper truck is also relatively simple. It is
proposed that the city use some of the additional contribution from the
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
Capital Improvement Finances
Page 2
Municipal Utilities for the payment of this truck on a lease/purchase plan. In
the 1996 budget, the city allocated $24,000 of this contribution for this truck
purchase. This amount is again proposed to be $24,000 in 1997. The amount
is projected to go to $41,000 in the years 1998-2004. Accordingly, this truck
expenditure is already "in the system", but the amount is an increase from
what was planned. Initially it was my goal to have this purchased a year
later, and therefore have less annual debt to pay off. However, the total
amount is still the same regardless if this pumper is purchased in 1997 or
1998. This expenditure reduces the city's flexibility to purchase equipment
for city departments and/or special needs.
There are a limited number of sources of funds for the city's contribution to
the ice arena project. The city has committed $50,000 for the capital costs
associated with the construction of this project. The only real undesignated
reserves for this type of expenditure is the liquor store fund. Another source
of funds could be the NSP contribution to the city. (A lot of these NSP funds
have been spent on the Cass recreation field land purchase.) The
expenditure of liquor store or NSP funds for this recreation use seems
appropriate.
The use of liquor store reserves for the ice arena project will reduce the
available funds for the liquor enterprise fund to accomplish its short term
and long term goals. Liquor Store Manager Fritz Dolejs will be in attendance
at this meeting to review with the council his recommendations for municipal
liquor store priorities. In brief, these recommendations for city priorities for
the liquor enterprise funds are to first obtain a Westbound liquor store site
before all of the best sites are gone, and secondly, to construct a new
Northbound store. In the long range plans of the city, I strongly agree with
the recommendations from the manager. Nonetheless, plans are still moving
forward on the new Northbound store and, on Monday, Fritz will review with
the council the plans that we have to date from the architects, Tushie
Montgomery Associates, Inc.
Regarding the liquor store funds that are available for projects, it should be
noted that the city has a balance of $737,000 as of 1/1/96. Additionally, we
will be adding about $150-200,000 in profits and interest revenue (after
transfers to the general fund) to this total by the end of the year. Please note
that an issue affecting liquor store funds is the King and Main project. The
city took an internal loan from the liquor store fund for this project as this is
our only real available source for internal funding. This internal loan was
needed because the city or HRA could not sell bonds or get a loan for this
expense, which was the early acquisition of land, due to no TIF project being
Capital Improvement Finances
Page 3
approved. It is expected that a TIF project will be approved next year and
that by July, 1997, the city will recapture $225,000 of its $450,000
expenditure when the property is sold to a developer. The plan to recapture
the remaining $225,000 will be finalized at the time the plan is adopted.
This very important King and Main project further reduces the flexibility of
the liquor enterprise fund to do its necessary projects unless the liquor
operation wants to go into debt.
As noted above, at the end of the year the city liquor fund should have about
$900,000 available. Subtracted from this total should be the ice arena
contribution and the King and Main "loan". Ultimately, on the positive side
of this ledger, will be revenue from the selling of the old Northbound liquor
store. The Westbound land purchase is expected to be approximately
$300,000 for 1¼ - 1½ acres. The construction costs for a new Northbound
store, which includes 8,000 square feet on one level and a 4,000 square foot
basement, is slightly under $1 million. The furniture, £L~ture, and equipment
and inventory for the store is another $.25 million. Westbound land and a
new Northbound store will be about $1.5 million and this is more than we
currently have available.
The development of the recreation fields on the Cass property is a more
challenging project than some of the projects noted above. While the city has
expenditures of $200,000 in the next two years, it is really a net of $120,000
that the city must locate in the long term. Sources of funds for this project
include park dedication monies, park equipment reserve monies, other
reserves and a city tax levy. All of the existing park dedication monies and
park equipment reserve monies would come close to the city's net
requirement, but would not cover the initial total expense of $200,000.
Additionally, if all of these funds went for this project, there would be very
little flexibility for the park and recreation commission in the future for new
projects.
The funding of this recreation field land came from NSP contributions. The
goal of the city was to recapture this contribution through the selling of home
sites on Jarvis and 165th. The balance of the funds for this purchase came
from the Wastewater Treatment Plant (WWTP) as the WWTP was going to
use 25-30 acres for sludge disposal. The city was then going to convert this
WWTP property into recreation fields in 15 or 20 years. However, if the city
is going to consider allowing the Minnesota Sports Federation (MSF) long
term use of this land, then the city is going to need to repay the WWTP its
$107,000 land acquisition expense. Furthermore, with some of this property
possibly going to MSF, it makes the city and the park and recreation
commission reevaluate the selling of land for home sites. This of course is
Capital Improvement Finances
Page 4
then less revenue coming back to the city, which makes the funding of any
development of fields even more difficult. The council may want to consider
committing NSP funds for these recreation fields for the years 1997-1999, but
understand that this commitment of funds will further reduce the city's
flexibility in doing capital projects of any type until the year 2000.
The city has a number of street projects either approved or planned in 1996
and 1997 that require a city contribution. The city's contribution comes from
its capital projects fund which has a 1/1/96 cash balance of $300,000 and its
street improvement reserve which has a 1/1/96 cash balance of $129,000.
The known street projects on the horizon include:
· Joplin Street south of County Road 30
· Joplin intersection and north frontage road
· Jarvis Street
· Ulysses Street
· Lowell Avenue
The city is committed to 100 percent of the cost for Ulysses Street between
Rail 10 and 171st, 50 percent of Joplin south of County Road 30, 50 percent of
Jarvis, $95,000 for the Joplin frontage road and intersection, and the city's
share of the Lowell Avenue project is unknown. Additionally, this city is a
financial participant in the three projects that are having City Council public
hearings earlier on 8/5/96. Very limited additional revenues are projected on
an annual basis into the capital projects and street funds, although $.5
million is projected into the capital projects fund over the next 10 years.
One additional source of funds that the Council should have available in 1997
is the profit from selling the commercial site at Jackson Avenue and Holt.
However, in obtaining a release of some of this land from previous property
owners, I indicated that staff would recommend to the Council that 50% of
the net profit goes toward business or industrial park development.
ity of
ITEM 5.16.
MEMORANDUM
iver
Mayor & City Council
FROM: Pat Klaers, City Administrator
DATE:
August 5, 1996
SUBJECT: Update on Finances for Capital
Improvements
A number of financial issues need to be reviewed in the near future either
just before or after the city budget is considered by the council. Currently the
assistant administrator and I are busy working with department heads in
putting the 1997 budget proposal together so there is limited background
material included with this memo regarding the finances for some of the
recently discussed capital improvement projects. Depending on our schedule
and the availability of information, there may be some material handed out
at this 8/5/96 meeting.
The issues that I would like to briefly review with the council vary from
somewhat simple to rather complex. These issues include the following:
· Library re-roofing project
· Financing of the fire department pumper truck
· City contribution of $50,000 to the ice area project
· Update on liquor store projects and finances
· Funding of the Cass property recreation fields
· City participation in street projects
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUNDS
COMBINING BALANCE SHEET
December 31, 1995
(With comparative totals for December 31, 1994)
ASSETS
Cash and investments
Receivables:
Delinquent taxes
Notes
Accounts
Interest
Due from other funds
Due from other governments
Prepaid items
TOTALASSETS
Drug
Forfeiture ~.. ~ibrary
Reserve
$10,673
1,593
105 14,521
364 3,715
11,142
Park
Dedication
$102,306
6,264
Senior
Citizen
Special
Account
$ 5,852
3O
2O3
1,562
128,644 108,570 6,085
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable
Salaries payable
Due to other governments
Due to other funds
Deferred revenue
TOTAL LIABILITIES
FUND BALANCE
Reserved for prepaid items
Reserved for interfund receivable
Reserved for development projects
Unreserved
Designated for capital outlay
Undesignated
TOTAL FUND BALANCE
TOTAL LIABILITIES AND
FUND BALANCE
11,087
11,087
11,142
55 2,082 450 132
696 -
55 2,778 450 132
1,562
125,866
128,644
108,120
5,953
108,120 5,953
108,570 6,085
43
CITY OF ELK RIVER, MINNESOTA
SPECIAL REVENUE FUNDS
COMBINING BALANCE SHEET
December 31, 1995
(With comparative totals for December 31, 1994)
ASSETS
Cash and investments
Receivables:
Delinquent taxes
Notes
Accounts
Interest
Due from other funds
Due from other governments
Prepaid items
TOTAL ASSETS
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable
Salaries payable
Due to other governments
Due to other funds
Deferred revenue
Safe &
Sober Grant
$ 1,147
4,048
~' /RD~F Government
(/Nsp Buildings
~.._Reserve~./ Reserve
(~$327,322) $ 64,295
provement, j
46,49O 22,340
11,345 2,230 4,495
5,195 338,667 113,015 156,436
4,482 ~...~.~ 223
713
TOTAL LIABILITIES
FUND BALANCE
Reserved for prepaid items
Reserved for interfund receivable
Reserved for development projects
Unreserved
Designated for capital outlay
Undesignated
TOTAL FUND BALANCE
TOTAL LIABILITIES AND
FUND BALANCE
5,195 200,472 223
138,195
112,792
112,792
113,015
5,195 338,667
1~56,436 /)
156,436
156,436
4.5
CITY OF ELK RIVER, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 1995
(With comparative totals for December 31, 1994)
ASSETS
Cash and investments
Receivables Taxes
Special assessments v
Accounts
Interest
Due from other funds
Due from other governments
TOTAL ASSETS
Trunk
Utilities
Expansion
287
509,393
11,436 4,416
115,034',/ -
Storm
Sewer
Project
$
5,569
520
Western
Area
Utility
32,418
940,534 131,745 6,089 32,418
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts and contracts payable
Due to other funds
Deferred revenue
TOTAL LIABILITIES
FUND BALANCE (DEFICIT)
Unreserved -
Designated for capital projects
Undesignated
TOTAL FUND BALANCE (DEFICIT)
TOTAL LIABILITIES AND
FUND BALANCE
8,409
509,635
518,044
422,490 131,745
422,490 131,745
940,534 131,745
62,962 144,260
820,390 721,346
1,953
885,305 865,606
(879,216) (833,188)
(879,216) (833,188)
6,089 32,418
58
CITY OF ELK RI~ER, MINNESOTA
COMPARATIVE BALANCE SHEET
DECEMBER 31, 1995 AND 1994
Exhibit E-7
ASSETS
Current Assets:
Cash and investments
Other receivables
I Inventorie~.~..J
Prepaid items
Total Current Assets
Property and Equipment:
Land and improvements
Buildings
Equipment, furniture and fixtures
Total Property and Equipment, Cost
Less Accumulated Depreciation
Total Property and Equipment, Net
TOTALASSETS
1995
25,566
191,152
2,365
956,407
458,358
217,765
131,885
808,008
247,332
560,676
1,517,083
1994
$ 974,002
23,434
192,746
3,316
1,193,498
69,800
217,765
128,218
415,783
232,955
182,828
1,376,326
LIABILITIES AND FUND EQUITY
Current Liabilities:
Accounts payable
Salaries and benefits payable
TOTAL LIABILITIES
Fund Equity:
Retained earnings-
Unreserved
TOTAL LIABILITIES AND FUND EQUITY
120,588
14,084
134,672
1,382,411
1,517,083
117,419
12,045
129,464
1,246,862
1,376,326
?9