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2019 BudgetTable of Contents Directory of Public Officials Distinguished Budget Presentation Award Budget Message Community, Demographic, and Statistical Information Map Core Values Strategic Planning: Vision, Mission, and Goals Planning Process Financial Policies Budget Development & Administration Revenue Collection Debt Administration Reserves and Fund Balances Financial Reporting & Accounting Cash Management & Investment Financial Structure Matrix of Funds and Budget Units Operating Fund Crosswalk The Budget Process (and Calendar) Organization Chart All Funds Summary By Fund Type All Funds Summary By Year Changes in Fund Balance/Working Capital Fund Balance History Balanced Budgets Balanced Budget - General Fund Staffing Summary Tax Levy History Tax Capacity History Largest Property Taxpayer Revenue Sources By Fund Long Range Financial Plans Long-Term Fiscal Objectives Capital Expenditures (Recurring vs Nonrecurring) Capital Investments and Operating Budgets Legal Debt Limit and Bond Rating Bond Rating Scales Debt Service Levy History G.O. Debt Service G.O. Debt Levels 5 6 7 20 23 24 25 29 35 35 37 39 40 41 42 50 53 54 55 59 60 61 62 63 64 65 66 67 68 69 70 72 77 80 81 84 85 86 87 88 Debt Levels By Fund Type Effect of Debt Levels on Government Operations Interfund Transfers Service Level Changes Revenue Trends & Analysis Appropriations By Category and Fund-Type General Fund - Summary Mayor and City Council City Administration City Clerk Finance Audit Assessing Legal Human Resources Planning, Zoning & Community Development City Hall Prairie Center Building Law Enforcement Fire & Rescue Fire Relief Building Inspections Civil Defense Animal Control National Guard Public Works - Administration Public Works - Engineering Public Works - Inspections Public Works - Streets, Alleys & Parking Lots Public Works - Ice & Snow Removal Public Works - Shop & Garage Public Works - Stormwater Public Works - Street Lighting Public Works - Refuse Collection Transit Senior Center Park Operations Park Ballfields Public Arts Shade Tree Library Insurance Special Revenue Funds - Summary 89 90 91 92 94 105 107 110 111 113 115 117 118 119 120 122 125 127 128 130 132 133 135 136 138 139 141 143 145 147 148 150 152 153 154 155 157 159 160 161 163 164 165 Economic Development Authority Fund Cemetery Fund Minnesota Investment Fund Community Center Fund Debt Service Funds - Summary 2010A G.O. Improvement Bond Sub-Fund 2011A G.O. Refunding Bond Sub-Fund 2014A G.O. Judgment Bond Sub-Fund 2015B G.O. Street Reconstruction-Improvement Bond Sub-Fund 2016A G.O. Street Reconstruction-Improvement Bond Sub-Fund 2017A G.O. Improvement-Abatement Bond Sub-Fund 2018A G.O. Abatement Bond Sub-Fund Closed Debt Service Funds Capital Project Funds - Summary Capital Project Fund Closed Bond Fund Park & Pathway Dedication Fund Stormwater Access Fund Street Lighting Improvement Fund Street Reconstruction Fund Enterprise Funds - Summary Water Fund Sewage Fund Liquor Fund Deputy Registrar Fund Fiber Optics Fund Internal Service Funds - Summary IT Services Fund Central Equipment Fund Benefit Accrual Fund Capital Improvement Program Capital Improvement Program Introduction Capital Improvement Program - Funding Source Summary Capital Improvement Program - Projects & Funding Sources By Department Capital Improvement Program - Projects Appendix - Property Tax Basics Appendix - Truth-in-Taxation Appendix - Debt Guide Appendix - Minnesota Statutes Appendix - Utility Rates Appendix - Capitalization Thresholds Appendix - Tax Capacity, Tax Levy, & Tax Rate History Appendix - Useful Terms (Glossary) 166 168 170 172 175 176 178 180 182 184 186 188 190 191 192 194 196 198 200 202 205 206 208 212 214 216 219 220 222 225 227 227 234 235 241 249 251 252 260 264 265 266 267 DIRECTORY OF PUBLIC OFFICIALS MAYOR & CITY COUNCIL Position Name Term Expires Mayor ...................................................................... Brian Stumpf 12/31/2020 Council ...................................................................... Lloyd Hilgart 12/31/2022 Council ............................................................... Charlotte Gabler 12/31/2022 Council ...............................................................................Bill Fair 12/31/2020 Council ..................................................................... Jim Davidson 12/31/2020 CITY STAFF City Administrator ....................................................... Jeff O’Neill Public Works Director/City Engineer ...................... Matt Leonard Finance Director ..................................................... Wayne Oberg Community Development Director ................. Angela Schumann Community Center Director ..................................... Ann Mosack Economic Development Manager ............................... Jim Thares City Clerk ......................................................... Jennifer Schreiber Human Resource Manager ........................................ Tracy Ergen Chief Building Official .................................... Ron Hackenmueller Fire Chief ............................................................ Michael Mossey Deputy Registrar Manager ................................. Carolyn Granger Liquor Store Manager ........................................ Randall Johnsen Finance Manager ........................................... Sarah Rathlisberger Street Superintendent .............................................. Tom Moores Parks Superintendent ................................................ Tom Pawelk Water & Sewage Superintendent ................................ Mat Stang Communications Coordinator ............................. Rachel Leonard JOINT CITY/COUNTY/OUTSIDE STAFFING Wright County Sheriff ............................................. Sean Deringer WSB Engineering Consultant ................................. Shibani Bisson NAC Planning Consultant ..................................... Steve Grittman Northland Securities Financial Advisor ................. Tammy Omdal Veolia Environmental Services .................................... Larry Cook Fibernet Management Services ........................................... Arvig 5 DISTINGUISHED BUDGET PRESENTATION AWARD The Government Finance Officers Association of the United States and Canada (GFOA) presented an award of Distinguished Budget Presentation to the City of Monticello for its annual budget for the fiscal year beginning January 1, 2018. The city has received this award for each budget it has prepared for the past seven years. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. This award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. GOVERNMENT FINANCE OFFICERS ASSOCIATION D istinguished B udget Presentation Award PRESENTED TO City of Monticello Minnesota For the Fiscal Year Beginning January 1, 2018 Executive Director 6 BUDGET MESSAGE INTRODUCTION The budget is a tool. How this versatile tool is used depends on the stakeholder. Policy makers use the budget to provide direction on service levels and place limits on spending. For managers, the budget offers benchmarks for measuring performance and assessing stewardship. To community advocates and activists, the budget conveys visibility as to whether their concerns are being addressed. Universally, the budget is an essential tool for communicating the city's plans, policies, procedures, and objectives regarding the services to be delivered and the assets to be acquired in the upcoming and future fiscal years. Indeed, the budget’s effectiveness is meaningfully influenced by the conviction of the various stakeholders using this dynamic tool. BUDGET POLICY AND STRATEGY This budget document was prepared after analyzing and evaluating requests from various departments and budget units. The content represents the requested financial support for the operation of the city of Monticello for the upcoming fiscal year. Revenue estimates are conservative and realistic. The importance of a sound revenue picture cannot be overstated. Revenue estimates are based on historical trends with greater weight placed on the most current years. The city of Monticello provides a range of services to the community, including police (contracted) and fire protection, street and park maintenance, snow and ice removal, water and sewer utility services, and administrative and planning services. In addition, the city owns and operates a community center (MCC), department of motor vehicles (DMV), municipal off-sale liquor store, and a fiber optic network (FiberNet Monticello). The level of service provided by the proposed budget is similar to that currently enjoyed by the community. STRATEGIC OR KEY INITIATIVES The city of Monticello provides a full range of municipal services, as listed in the previous paragraph and as authorized by state statute. Monticello is blessed with many assets, including a beautiful setting, an excellent location, a rich heritage, and a talented population. The city seeks to use, preserve and enhance these assets in building a great, affordable place to live, work and do business. The city will fulfill the goals below to achieve this mission: 1. Continue to maintain the lowest possible tax rate while providing the best possible service. The 2019 property tax levy exceeded inflation and the tax levy (capacity) rate increased over 2018 with the lower power plant valuation. 2019 Budget: The city levy increases $415,000 (4.3%) to $9,962,000 and the Housing and Redevelopment (HRA) levy increases $25,000 (7.7%) to $348,000. Combined (city + HRA) tax levy increase: $440,000 (4.5%). The tax levy rate is nearly 6% less than the next lowest for cities in Wright County. 7 2. Continue to develop and provide an unequaled system of parks, trails, and recreational facilities, including the unique assets of the Monticello Community Center, the Mississippi River, and conversion of the Bertram Chain of Lakes (BCOL) property into a regional park. In partnership with the county, the city acquired park land with state grants and local contributions. The city and county evenly split the local contribution, which is roughly 50% for land designated for non-athletic purposes and 50% for land designated for athletic purposes. 2019 Budget: $2,300,000 buildout of BCOL. 3. Continue to maintain the city streets by following an annual seal coat and crack seal program and by overlaying streets before they are beyond repair and need replacing. The city’s pavement management program identifies varying condition levels of every street. The 2019 General Fund includes a robust amount for chip/seal maintenance. This higher maintenance level began in 2014. 2019 Budget: $185,000 4. Develop and adopt a long-range transportation plan which will improve traffic flow around and through the city. Monticello is one of three cities (along with two counties and two townships) taking part in a study to identify an additional or expanded interstate interchange site and Mississippi River crossing. The city is also an active, due-paying member of the I-94 Coalition. 2019 Budget: $15,000 – study; $ 6,600 - membership 5. Implement the downtown redevelopment plan which will maintain a downtown area that combines a successful commercial district, community identity and heritage , and connection with the Mississippi River. The 2017 Small Area Study plan for downtown identified various options for re-creating the city’s downtown. The city transferred $300,000 from the General Fund to the Capital Project Fund in 2017 to start implementing the plan. 2019 Budget: $370,000 6. Seek to expand the supply of "move up" housing that allows people to upgrade their home without leaving the community. Staff is facilitating the development of additional residential home lots on the perimeter of the city by working with developers and engineers. Infrastructure needs are regularly assessed and incorporated into the city’s capital improvement plan. 7. Seek to develop and attract a wide range of employment opportunities with a growing emphasis on higher-paying jobs. This concept promotes the city’s competitive advantages (i.e. low taxes, property availability, transportation access, etc.) to businesses looking to move or grow. 2019 Budget for non-study redevelopment activity: $123,000 8 8. Continue to maintain high quality water and sewage treatment facilities. With the some of the lowest water and sewage rates in Minnesota, the city provides excellent services from these two utilities to residents and businesses. The budget includes funds for wastewater treatment facility improvements along with sufficient amounts for additional, ongoing system improvements in each fund. Our water is rated as one of the best tasting in Minnesota. 2019 Budget: Water - $150,000; Sewage - $250,000, $100,000 wastewater facility parking lot improvements, and $450,000 for a sewer vactor. 9. Provide unequaled access to information with high speed internet, phone and television through the city-owned fiber optic network. The Fiber Optics Fund will receive a transfer from the Liquor Fund to continue operations in 2019. With settlement of the bondholder’s 2014 class-action lawsuit, the mission of the city’s telecommunications utility will continue to adapt to competitive market conditions. The city hired a third party to run FiberNet in July 2016. 2019 Budget: $100,000 Transfer City Council and city staff used the goals set during the strategic planning process to direct the development of the 2019 budget. TOTAL BUDGET The 2019 budget includes all the funds maintained by the city. Each fund is responsible to account for a particular activity or activities. Each fund-type will be discussed within this message and in the budget document. The following compares the adopted 2018 and 2019 budgets: Fund-type 2018 2019 2018 2019 General Fund 8,287,000$ 8,586,000$ 8,287,000$ 8,586,000$ Special Revenue Funds 2,918,028 3,123,000 3,010,339 3,035,000 Debt Service Funds 2,067,075 2,835,522 2,807,160 3,497,223 Capital Project Funds 7,055,000 11,795,000 10,664,899 13,875,000 Enterprise Funds 11,875,641 12,612,778 12,738,645 14,988,977 Internal Service Funds 529,300 574,700 711,500 780,800 Total 32,732,044$ 39,527,000$ 38,219,543$ 44,763,000$ Revenues Expenditures Total Budget Total revenues increase nearly 21% and total expenditures increase about 17% in 2019. General Fund revenues and expenditures increase 3.6%. The increase in debt service expenditures reflects the rapid amortization of existing debt and total redemption of one issue. Capital project funds will incur higher expenditures with the construction of a fire station, purchase of a fire ladder truck, Bertram park development, and completion of prior year projects. The Water Fund (enterprise 9 fund) includes a $500,000 transfer to the Capital Project Fund for acquisition of a site suitable for a new public works campus. No other enterprise fund has a significant project planned for 2019. The following graphs display the revenues and expenditures attributable to each fund-type in the 2019 Budget: General Fund 22% Special Revenue Funds 8% Debt Service Funds 7% Capital Project Funds 30% Internal Service Funds 1% Enterprise Funds 32% 2019 Revenues by Fund-Type General Fund 19%Special Revenue Funds 7% Debt Service Funds 8% Capital Project Funds 31% Internal Service Funds 2% Enterprise Funds 33% 2019 Expenditures by Fund-Type 10 PROPERTY TAXES The state of Minnesota has granted local municipalities the authority to levy taxes to fund operations and debt payments. For the city of Monticello, the property tax levy accounts for over 78% of revenues in the General Fund and over 24% in the special revenue funds. In 2019, debt services funds will receive $2,227,646 in property taxes for principal and interest payments on general obligation debt, which is 25% higher than the prior year’s $1,787,000. The city levied $662,354, down from prior year $783,000, for the Capital Projects Fund in 2019 and will re-allocate this levy for debt service purposes in the future. For 2019, the city's general (operations and debt) property tax levy will increase to $9,962,000, an increase of $415,000 (4.3%) over the prior year. For the fourth consecutive year, the city imposed a Housing and Redevelopment Authority (HRA) special benefit levy. The HRA levy increases to $348,000 (+7.7%) from $323,000 in the prior year. The special benefit levy is receipted in the Economic Development Authority Fund. When added together, the two levies represent a 4.5% increase in property taxes. The following table provides a historical view of the tax capacity value, tax capacity rate and tax levy without the HRA levy: Tax Capacity Capacity Tax Capacity Rate Tax Levy Year Value % Change Rate % Change Levy % Change 2009 16,783,843$ 3.7%46.942 10.2%7,750,000$ 2.0% 2010 16,691,266 -0.6%46.942 0.0%7,648,272 -1.3% 2011 16,429,431 -1.6%46.191 -1.6%7,677,309 0.4% 2012 15,771,688 -4.0%49.773 7.8%7,850,000 2.2% 2013 18,692,762 18.5%42.262 -15.1%7,900,000 0.6% 2014 18,244,090 -2.4%44.672 5.7%8,150,000 3.2% 2015 23,882,689 18.6%35.737 -15.1%8,535,000 4.7% 2016 25,891,898 8.4%34.470 -3.5%8,925,000 4.6% 2017 27,583,160 6.5%33.172 -3.8%9,150,000 2.5% 2018 29,528,145 7.1%32.332 -2.5%9,547,000 4.3% 2019 29,065,103 -1.6%34.275 6.0%9,962,000 4.3% Under contract, the Wright County assessor values all properties located within the city’s corporate limits. This market value is applied to the class rates assigned by the state to determine a property's tax capacity. The county estimates the city's tax capacity for taxes payable in 2019 at $29,065,103, a 1.6% decrease. The Xcel Energy nuclear power plant taxable market valued dropped 9% in 2019 to $797 million. The value of the plant is still 2.7 times greater than its 2012 value of $298 million. The Xcel plant alone accounts for over ½ of the city’s tax capacity. The city's property tax levy is divided by the tax capacity to determine the city's tax capacity rate. The tax capacity rate is applied to each property's tax capacity to determine the tax the city will collect before any credits are applied. For 2019, the city's combined (city + HRA) tax capacity rate is expected to change from 33.426% to 35.472%, a 6.1% increase. The city, at this time, does not have the authority to levy or collect local sales taxes or other types of taxes under the state's tax system. 11 PERSONNEL SERVICES The 2019 budget includes a whole year of wages and benefits for two new positions: engineer/public works director and fire marshal/emergency management coordinator. Both positions were budgeted to start midyear 2018. While there were two new positions added over the 2018-2019 time period, the city continues to experiment with different staffing scenarios. Additionally, the budget includes a step increase for employees still moving up in the pay scale system and a 3% wage adjustment (2% in January and 1% in July) for all employees. In 2013, the city re-instituted the step-pay scale plan discontinued in 2010. Many of the full-time employees have reached the last step of their pay scale. Public Works employees belong to a union. Their collective bargaining agreement expires December 31, 2019. Union and non-union employees participate in separate health benefit plans. The union health benefit is $1,151 per participant, and the non-union health benefit is $752 for single plan and $1,410 for family plan participants. The union’s plan requires a flat premium for union employees regardless of participation. Monthly health insurance plan costs did not increase in 2019. Staff will continue to explore ways to reduce future premium increases to both the city and its employees. The contribution rates to the Public Employees Retirement Association (PERA) will remain the same in 2019 for both employer and employees. Effective 2018 PERA rates: 7.50% of wages for employer and 6.50% for employee. The budget also calculates FICA and Medicare taxes at 6.20% and 1.45% respectively for 2019. The remainder of this section will describe the major initiatives for 2019 for each of the fund types and their activities. GENERAL FUND Expenditures The following schedule displays 2019 budgeted General Fund expenditures by department compared with the prior year: Department 2018 2019 % Change General Government 1,721,583$ 1,778,772$ 3.3% Public Safety 2,363,495 2,487,285 5.2% Public Works 2,995,735 3,033,696 1.3% Transit 30,000 5,000 -83.3% Recreation & Culture 1,169,808 1,274,583 9.0% Unallocated 6,379 6,664 4.5% Operating Transfers - - --- Total 8,287,000$ 8,586,000$ 3.6% 2019 General Fund Expenditures and Other Uses The 2019 budget increased 3.6% over the 2018 budget. Personnel service includes wages and benefits for all full-time, part-time, and seasonal employees. This cost category rises with wage and 12 benefit inflation and additions to staff. The 2019 personnel services budget includes a 2% raise in January and 1% raise in July. It also includes adding an engineer/public works director and a deputy fire chief for the full year. The chart below presents the 2019 budgeted expenditures allocated by function/department: General Government 21% Public Safety 29% Public Works 35% Recreation 15% General Fund Expenditures -2019 The Public Works Department is the largest department in terms of budgeted expenditures and the street and alleys activity budget is the largest activity within the department. The 2019 budget for the Public Works department increased 1.3%. Public works administration (+4.9%), streets and alleys (+4.7%), refuse collection (+2.3%), and storm water (+16.9), are largely responsible for the overall increase. The increase in public works administration is largely attributable to re- instatement of a public works director/engineer position, starting in 2018. As with all departments, personnel services increased with wage and benefit inflation. The second largest department based on expenditures is the Public Safety Department. The 2019 Public Safety Department budget increased 5.2%. The fire and rescue activity budget increased 1.4% with the additional full-time fire position, starting midyear 2018. Public safety activities include law enforcement, fire, building inspections, civil defense, National Guard, and animal control. The city contracts with the Wright County Sheriff's department for law enforcement. The 2019 contract includes a $2.50 increase in the hourly service rate. Further, the city contracted for four additional hours (from 48 to 52) per day, which started in July 2018. The 2019 budget for general government activities increased 3.3%. The city clerk activity decreases because 2019 is not an election year. Updating the comprehensive plan contributes to the increase in planning and zoning (+12.2%). The human resources activity increases for professional services needed to prepare a new pay equity report. The increase (+4.6%) in city assessing reflects higher 13 charges by the county assessor. Finance increased with wages and benefits. Lower maintenance and utilities costs at city hall drive the decrease for this activity. Recreation and culture increased by 9% in 2019. Park operation activities (+6.2%) increased with wage and benefit inflation. The shade tree (+20%) activity budget demonstrates a desire to improve Monticello’s livability and more accurately reflect actual costs. A new activity, Public Arts will contribute to total departmental costs. Including services for police, assessor, and legal services, other services and charges account for 49% of General Fund appropriations. Appropriations for personnel services follow with 40% of the total and rises with wage and benefit inflation plus the new positions. Capital outlays include the internal rent payments to the Central Equipment Fund. Additional equipment purchases will translate into higher rent payments. The following table and graph provide perspective on expenditures and other uses for the various General Fund expenditure classifications in the 2019 budget: Classification 2018 2019 % Change Personnel Services 3,295,557$ 3,417,837$ 3.7% Supplies 742,050 671,900 -9.5% Other Services & Charges 3,999,593 4,197,363 4.9% Capital Outlay 249,800 298,900 19.7% Operating Transfers - - --- Total 8,287,000$ 8,586,000$ 3.6% 2019 General Fund Appropriations Personnel Services 40% Supplies 8% Capital Outlay 3% Other Services & Charges 49% Expenditures and Other Uses - 2019 14 Revenues and other sources Revenues and other sources supporting General Fund expenditures and other uses are classified as follows: Classification 2018 2019 % Change Property Taxes 6,590,000$ 6,670,000$ 1.2% Franchise & Other Taxes 289,500 266,500 -7.9% Licenses & Permits 398,750 405,700 1.7% Intergovernmental Revenues 374,440 364,500 -2.7% Charges for Services 421,000 636,800 51.3% Fines & Forfeits 36,500 36,500 0.0% Special Assessments 300 500 66.7% Miscellaneous 176,510 180,500 2.3% Operating Transfers - 25,000 --- Total 8,287,000$ 8,586,000$ 3.6% 2019 General Fund Revenues and Other Sources The General Fund’s tax levy increases by 1.2%, while the General Fund’s portion of the combined levy (city + HRA) decreases from 66.8% to 64.7%. Licenses & permits reflect a modest uptick in residential and commercial development, with the rebound beginning in 2013 and continuing through 2018. Intergovernmental revenues trend modestly downward with less grants and aids from county, state, or federal sources. Charges for services reflect the $4 addition to the $3 city- wide residential monthly garbage charge. The property tax levy generates 78% of the General Fund revenues. Other than franchise fees, the city does not impose other taxes, such as local sales taxes or income taxes. Therefore, the city will continue to be dependent on property tax revenue as its major source of future revenues. SPECIAL REVENUE FUNDS The city of Monticello currently operates special revenue funds for economic development, cemetery, and community center activities. Special revenue funds also include the Minnesota Investment Fund, which will likely see little activity in 2019. Like the General Fund, the special revenue fund budgets are set at a level to maintain services. The tax levy supports community center operations ($402,000) and the Economic Development Authority ($348,000). Tax increments support economic development activities but their use is generally restricted to a specific activity in a specific area. Beginning in 2016, operating transfers (in) decreased to zero with initiation of a $280,000 Housing and Redevelopment Authority special benefit levy. Charges for services are the largest revenue source for both the community center (memberships) and the cemetery (plot sales). 15 The following tables display the change in budgeted revenues and other sources and the change in budgeted expenditures and other uses for special revenue funds in 2019: Classification 2018 2019 % Change Property Taxes 710,000$ 750,000$ 5.6% Tax Increments 635,678 617,344 -2.9% Charges for Services 1,432,900 1,624,000 13.3% Miscellaneous 139,450 131,656 -5.6% Operating Transfers - - --- Total 2,918,028$ 3,123,000$ 7.0% 2019 Special Revenue Fund Revenues & Other Sources Classification 2018 2019 % Change Personnel Services 1,279,434$ 1,336,090$ 4.4% Supplies 183,435 219,535 19.7% Other Services & Charges 770,400 745,649 -3.2% Capital Outlay 577,070 508,726 -11.8% Operating Transfers 200,000 225,000 12.5% Total 3,010,339$ 3,035,000$ 0.8% 2019 Special Revenue Fund Appropriations DEBT SERVICE FUND (Aggregate of Sub-Funds) The city's debt service for 2019 is $3,497,223, or $690,063 less than the prior year. Funding for debt service comes from special assessments, tax increments, property taxes and transfers from the stormwater access, water, and sewage funds. Additional resources may be needed in one debt service fund because two parcels with $1.7 million in special assessments received a Green Acres deferral. The reserves in the affected fund were drawn down to make debt service payments. Further transfers from utility funds supplanted transfers from depleted and closed access funds. Outstanding debt: debt service funds - $23,750,000; enterprise funds - $3,998,000; internal service funds - $485,000. The city's bond rating from Moody’s Investors Services is an "A2". CAPITAL PROJECT FUNDS The budgets for capital project funds are based on the 2019 project expenditures listed in the city's five-year capital improvement plan. The city's five-year capital improvement plan is included in a later section of this report. The city has three major expenditures moving forward in 2019: new fire station construction on Chelsea Road, Bertram Chain of Lakes Park athletic field and related improvements, and fire ladder truck purchase. Additionally, Fallon Avenue overpass construction will be completed in 2019. Debt will be issued in 2019 for the fire hall, ladder truck, and overpass. 16 ENTERPRISE FUNDS Total revenues and other sources for the enterprise funds (Water, Sewage, Fiber Optic, DMV, and Liquor) is estimated at $12,612,778 for 2019. Charges for services increases with higher rates charged on enterprise fund customers. Operating transfers in of $100,000 are from another enterprise fund: Liquor Fund to Fiber Optics Fund. The change in Sale of Goods represents a conservative budget policy of estimating liquor sales at the prior year level. Classification 2018 2019 % Change Sale of Goods 5,770,784$ 5,979,220$ 3.6% Licenses & Permits 2,000 2,000 0.0% Charges for Services 5,670,107 6,228,363 9.8% Special Assessments 38,000 38,000 0.0% Miscellaneous 124,300 124,300 0.0% Contributed Capital 140,450 140,895 0.3% Operating Transfers 130,000 100,000 -23.1% Debt Proceeds - - --- Total 11,875,641$ 12,612,778$ 6.2% 2019 Enterprise Fund Revenues & Other Sources Classification 2018 2019 % Change Personnel Services 1,683,848$ 1,703,198$ 1.1% Supplies 4,710,245 4,853,245 3.0% Other Services & Charges 3,694,978 3,785,960 2.5% Capital Outlay 1,146,000 1,573,000 37.3% Debt Service 373,574 373,574 0.0% Operating Transfers 1,130,000 2,700,000 138.9% Total 12,738,645$ 14,988,977$ 17.7% 2019 Enterprise Fund Appropriations Personnel services increase with wage and benefit inflation offset by non-replacement of one full- time DMV employee. Other services and charges increase because Fibernet and wastewater treatment operations are outsourced. A $500,000 operating transfer from the Water Fund to the Capital Project Fund for site acquisition for a public works facility contributes to the large increase in transfer out. A $2,100,000 transfer (increased from $400,000 in 2018) from the Liquor Fund to the Park and Pathway Fund will support Bertram Chain of Lakes engineering costs. INTERNAL SERVICE FUNDS Two internal service funds were initiated in 2013: IT (Information Technologies) Services Fund and Central Equipment Fund. These funds operate on a cost-recovery basis but the time horizon for the basis differs greatly. The IT Services Fund is relatively less capital intensive with annual capital outlays in the $20,000 to $30,000 range. IT equipment usually has a shorter replacement cycle. The 17 Central Equipment Fund has incurred debt to make major purchases. Annual rental charges to benefitting budget units recover the equipment purchase costs over 7-10 year periods. Annual depreciation and inflation for each capital asset will be used in calculating annual rental payments, which will provide funds for major equipment replacement through annual operating budgets. Internal service fund charges are recorded as expenditures in other funds. A third internal service fund (Benefit Accrual Fund) was started at the end of 2015. This internal service fund accumulates resources from governmental funds to match the city’s paid leave (paid- time-off, sick leave, and vacation) liability for governmental fund employees. Except for debt proceeds, internal service fund revenues are recorded as expenditures in other funds. FUND BALANCES Fund balances decline when expenditures exceed revenues. The General Fund and Monticello Community Center (MCC) Fund normally have balanced budgets where revenues equal expenditures. In 2019, the city has budgeted to draw down the MCC fund balance to finance improvement to the community center pool slide. The fund balance in the Debt Service Fund declines through normal debt amortization and the early redemption of one bond issue. The Debt Service Fund is the aggregation of the sub-funds for each debt issue. The city accumulates money in several debt service sub-funds for debt service payments in the following year. Additionally, the fund balance for the group of capital projects funds declines $2.1 million with the expenditure of prior year debt proceeds and a stormwater project. Enterprise fund balances decline by nearly $2.4 million, largely the result of a Liquor Fund operating transfer to the Parks & Pathway Fund for Bertram improvements. The city adopted a balanced budget for the General Fund in 2019. CHALLENGES IN CONTEXT The preparation of this budget reflects the need to meet both short-term and long-term challenges. While the local economy has improved, the commercial and residential tax base is growing by less than 2%. What is more, the growth was offset by a huge decline in market value for the city’s largest taxpayer. Growth requires additional near-term public safety enhancements and long-term transportation improvements. Indeed, the City Council desires to meet current and future growth needs by maintaining the lowest tax capacity rate in Wright County. Second, the 2014 settlement of the telecommunication bondholder’s class-action lawsuit provided certainty and allowed city leaders to focus on other concerns such as day-to-day operations at Fibernet. Consequently, the city hired a third party to manage the telecommunications utility starting July 1, 2016. Fibernet now requires less support from the Liquor Fund. This will allow the city to redirect liquor store profits to other needs, such as park improvements at Bertram Chain of Lakes. 18 Third, the city is moving ahead with larger capital projects for 2019 and thereafter. All large projects have reimbursement resolutions, meaning the city will likely recover their temporary draw on reserves with debt proceeds. Three of the larger projects include construction of a new fire station on Chelsea Road, Bertram Chain of Lakes Park athletic field and related improvements, and afire ladder truck purchase. The Fallon Avenue overpass construction will be completed in 2019 also. Fourth, stable leadership is taking a longer view. The mayor and two councilors were re-elected in 2018. While policy perspectives still exist, the mayor and council are looking at ways to meet future challenges through increased public participation. In 2019, the city will start a two-year process for developing a vision for the future and creating a new comprehensive plan. The 2019 budget will be subject to minor modification as priorities change as that year progresses. Growth themes and emphasis on public safety dominated in drafting the 2019 budget. In summary, modest economic improvement, public safety service enhancement, transportation improvements, stabilization in Fibernet operations, and park development impacted the decisions made in drafting the 2019 budget. DISTINGUISHED BUDGET PRESENTATION AWARD The Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to the City of Monticello, Minnesota for its annual budget for the fiscal year beginning January 1, 2018. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. This award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. CONCLUSION Conservation of city financial resources continues to be a very important objective. The budget is the prime tool in making sure limited resources are wisely utilized. It is our belief that the 2019 budget allows the city to deliver excellent municipal services in a cost effective and efficient manner at current levels. The 2019 budget is a product of collective efforts by the city council, staff and various other stakeholders. Their commitment, good judgment, and expertise are invaluable to the budget process. Sincerely, Wayne W. Oberg Sarah K. Rathlisberger Finance Director Finance Manager 19 COMMUNITY, DEMOGRAPHIC, AND STATISTICAL INFORMATION Classifieda501(a)entityundertheInternalRevenueCode,thecityofMonticellowasorganizedasa municipalityin1856.Monticelloislocatedapproximately45milesnorthwestoftheMinneapolis-St.Paul metropolitanareaalongtheI-94corridorinWrightCounty.The2010U.S.CensusestimatedMonticello's populationat12,759andthecityencompassesanareaof8.94squaremiles.Thecityoperatesundera statutoryformofgovernment.Themayorandfourcouncilors(togetherknownas"CityCouncil")governthe city.Thecouncilorsareeachelectedtostaggered,four-yeartermsandthemayoratwo-yearterm.The mayorpresidesoverandisavotingmemberoftheCityCouncil.Themayoristhechiefauthorityfor administeringcitygovernmentandappointsdepartmentheads,variousboardmembersandcommission members.TheCityCouncilisthelegislativebodyandmeetsregularlytwiceamonth.TheCouncil'smain responsibilitiesaretoappropriatefunds,setsalaries,adoptordinances,andapprovebudgets. Monticellohasavariedbusinesscommunitywithahealthymixofretailandmanufacturing.Thecitywashit hardbytherecessionandhasslowlyrecovered.Cityunemploymentratesaresimilartothatofthestate,but thestate’sratehasbeenslightlybetterlately,asshownbelow. Hometooneofthetwostatenucleargenerationplants,Monticello’slargestemployerisXcelEnergy. Agri- giantCargillalsomaintainsastrongpresenceinthecity.Thefollowingtableisthecity’stoptenemployers. Average Employment Year Wright County Wright County State of Minnesota 2009 61,629 8.8%7.8% 2010 64,739 7.5%7.4% 2011 65,228 6.8%6.5% 2012 66,564 5.6%5.6% 2013 67,224 4.7%4.9% 2014 68,091 4.0%4.1% 2015 38,855 3.8%3.6% 2016 69,254 4.3%4.0% 2017 71,796 3.5%3.1% 2018 72,693 3.4%3.2% HISTORICAL EMPLOYMENT/UNEMPLOYMENT DATA (Rates are not compiled for individual communities within counties) Average Unemployment Employer Employees Xcel Energy (Northern States)700 ISD No. 882 (Monticello)576 CentraCare Medical Center 500 Cargill Kitchen Sol. (Sunny Fresh)433 Walmart Supercenter 325 City of Monticello 188 Home Depot 160 Target 150 Ultra Machine Corporation 140 Cub Foods 100 TOP TEN CITY EMPLOYERS 20 Monticello’spopulationandhouseholdsare0.2%ofstate’stotalforbothmeasures.WithaWal-Mart,Target, HomeDepot,andMillsFleetFarm,itisnosurprisethatretailsalesperpersonarehigherthanthestate average. Thefollowingtablecontainsselectedfactsonthecity: Thenuclearplantaccountsforapproximately60%ofthecity’snettaxcapacity. Xcel’staxcapacityandthe council’sconservativetaxlevyphilosophyaremainreasonsthecitytaxcapacityrateisthelowestinWright County.Indeed,upgradestotheXcelplantin2011contributedto15%declineinthe2013taxcapacityrate. Likewise,Xcelupgradesin2013produceda20percentdeclineinthe2015taxrate.A2018plantvaluation declinecontributedtoa2019taxrateincrease. Thetaxbaseisaboutone-thirdresidentialandtwo-thirds commercial.ThefollowingtableliststhetaxratesforeachcityinWrightCounty,Minnesota: People QuickFacts Monticello Minnesota Population, 2017 estimate July 1 13,599 5,611,179 Population, 2010 12,759 5,303,925 Population, percent change, April 1, 2010 to July 1, 2017 6.3%5.1% Persons under 5 years, percent, 2010 9.9%6.4% Persons under 18 years, percent, 2010 30.4%23.3% Persons 65 years and over, percent, 2010 11.5%15.4% Female persons, percent, 2010 49.6%50.2% White persons, percent, 2010 (a)92.1%84.4% Total number of firms, 2012 1,132 489,494 Retail sales per capita, 2012 $26,746 $14,667 Land area in square miles, 2018 8.94 79,626.74 Persons per square mile, 2010 1,427.2 66.6 Housing units, 2010 4,973 2,347,201 Homeownership rate, 2013-2017 72.5%71.6% Median value of owner-occupied housing units, 2013-2017 $184,600 $199,700 Households, 2013-2017 4,806 2,153,202 Persons per household, 2013-2017 2.73 2.49 Per capita money income in the past 12 months (2017 dollars)$26,358 $34,712 Median household income, 2013-2017 $66,478 $65,699 2015 2016 2017 2018 2019 2018-19 2018-19 City Tax Rate Tax Rate TaxRate TaxRate TaxRate Change Change % City of Monticello 35.737 34.471 33.172 32.333 34.274 1.941 5.7% City of Otsego 41.162 37.921 37.973 36.556 36.210 -0.346 -1.0% City of St. Michael 38.476 37.772 37.484 37.060 37.256 0.196 0.5% City of Hanover 48.207 48.395 51.928 44.841 43.925 -0.916 -2.1% City of Albertville 51.273 52.370 51.566 49.158 47.284 -1.874 -4.0% City of Rockford 57.335 56.620 56.746 52.999 50.901 -2.098 -4.1% City of Delano 54.081 53.520 53.895 53.980 53.367 -0.613 -1.1% City of Dayton 56.945 57.150 55.047 55.664 55.621 -0.043 -0.1% City of Montrose 57.218 53.365 55.141 57.213 56.381 -0.832 -1.5% City of Buffalo 52.456 54.838 59.604 60.079 57.147 -2.932 -5.1% City of Annandale 69.012 67.921 63.884 60.107 58.894 -1.213 -2.1% City of Maple Lake 59.139 59.304 65.441 65.992 65.743 -0.249 -0.4% City of Waverly 87.064 83.349 83.676 78.880 68.804 -10.076 -14.6% City of Howard Lake 72.093 71.649 65.941 68.520 70.442 1.922 2.7% City of Clearwater 75.294 75.857 75.189 74.272 74.380 0.108 0.1% City of Cokato 80.426 77.853 80.740 80.816 77.081 -3.735 -4.8% City of South Haven 130.381 134.401 148.770 132.047 113.063 -18.984 -16.8% CITY TAX RATES IN WRIGHT COUNTY, MINNESOTA 21 Monticellogrewbyapproximately20%inthelasttenyears.Thecityhasampleundevelopedcommercial andresidentialrealestateandispositionedwelltobenefitfrommoreurbanflightfromtheTwinCities. Accesstomajortransportationcorridorsmakesthecityanideallocationforfuturegrowth. Thefollowing tableincludespopulationstatisticsoverthelasttenyears: TheabovestatisticsreflectamoreaccurateCensuscount,whichisthe2011total.Theothercountsare fromthestatedemographer. Year Polulation Change 2009 11,476 110 2010 11,501 25 2011 12,759 1,258 2012 12,840 81 2013 12,901 61 2014 12,993 92 2015 13,125 132 2016 13,311 186 2017 13,409 98 2018 13,553 144 22 MAP FOR MONTICELLO, MINNESOTA 23 CORE VALUES This documentis preparedbythecity’s finance department.Thecorevaluesofthedepartmentserveas aguide forthewaywedeliverinternalandexternalcustomerservices.Thesecorevaluesare howwe conductourselvesandwhatcreatesthecultureofthe financedepartment. Competent (How well we do our jobs) Be open, hardworking, reliable, innovative, safe, and accountable to the public. Courteous (How well we treat others) Work unselfishly in a positive, polite and professional manner for our community and its citizens. Collaborative (How well we work together) Lead by example and work together to achieve the best result. 24 STRATEGIC PLANNING: VISION, MISSION AND GOALS 25 26 27 28 PLANNING PROCESSES The city plans for the long-term needs of our community through a number of efforts and studies. These documents are usually developed by consultants and staff, with numerous public hearings and advisory board meetings prior to their formal adoption by the City Council. Once adopted, city staff works diligently to implement the recommendations and changes outlined in the plans. Here is the status of our primary planning documents: Plans for service provision, facility expansion & maintenance: 1.Monticello Comprehensive Plan - Adopted 2008. The Comprehensive Plan is a tool for guiding the growth, redevelopment, and improvement of Monticello. The Comprehensive Plan outlines the vision for the community. The current plan update was adopted in 2008. Various chapters of the Comprehensive Plan have been amended in part or full since adoption. The professional services line item, under the 2019 planning and zoning budget, includes funds for interpreting and implementing the current comprehensive plan. A full update to the Comprehensive Plan, the 2040 Monticello Vision and Comprehensive Plan, is planned for 2019-2021. 2.Transportation Plan - Adopted 2011. The city’s Transportation Plan is a guide that: identifies and characterizes the city’s existing transportation system; identifies and discusses general planning factors pertaining to future transportation needs for the city; identifies potential future roadway deficiencies and assesses improvement options to address the deficiencies; and provides an overall plan addressing capital improvement needs, functional classification, jurisdiction, right-of-way issues, bicycle/pedestrian considerations and transit. The Transportation Plan document will be updated as necessary as growth increases. Ongoing major transportation efforts include: TH 25/CSAH 75 Intersection improvements completed in 2016, Fallon Avenue Overpass construction started in 2018 with completion in 2019, Regional transportation planning to address the TH 25 corridor in 2018/2019, TH 25/7th Street intersection improvements completed in 2017, and future improvements at various intersections. The City will be updating the Transportation Plan with the 2040 Monticello Vision & Comprehensive Plan process. 3.Parks & Pathways Plan - Adopted 2011. Chapter 4 – Parks of the Monticello Comprehensive Plan was amended in 2011 for the adoption of an updated Park and Pathway Plan. The Monticello Parks and Pathways Plan identifies the City’s objectives for Parks and Pathways planning and development, and building on the existing parks infrastructure. It also provides context for the City’s participation in the acquisition and development of the Bertram Chain of Lakes Regional 29 Park. Major Bertram Chain of Lakes improvements are planned for 2019. The General Fund includes $40,000 for annual improvements to existing pathways, which were previously financed by the Park and Pathway Dedication Fund. The City has recently completed a Pathway Connections map, a planning document related to pathway connections within the larger system in direct response to the objectives identified within the plan. The City will be updating the Park & Pathway Plan with the 2040 Monticello Vision & Comprehensive Plan process. 4.Downtown Small Area Plan – Adopted 2017 Chapter 3 – Land Use of the Monticello Comprehensive Plan was amended in 2017 for the adoption of the Downtown Small Area Plan. The Downtown Small Area Plan is an implementation plan which integrates market, transportation, and land use considerations for the purpose of creating a vibrant downtown district. The City and Economic Development Authority will be asked to consider a number of implementation strategies to realize plan goals. The Downtown Small Area Plan will be incorporated into the 2040 Monticello Vision & Comprehensive Plan process. 5.Economic Development Strategic Plan - Updated 2018. In 2016, the city adopted a Housing and Redevelopment Authority property tax levy of $280,000. The HRA levy increases to $348,000 for 2019. The levy is used for EDA redevelopment activities. The EDA has adopted a strategic work plan for 2019, which requires ratification by the City Council. 6.Natural Resource Inventory & Assessment - Adopted 2008. The purpose of the Natural Resource Inventory and Assessment (NRI/A), adopted in 2008, is to identify existing natural resources within the City of Monticello and its growth area (the Monticello Orderly Annexation Area), inventory these resources, and assess the resource quality. These resources are then considered and evaluated during growth/development. 7.Bertram Chain of Lakes Recreation Plan – Adopted 2016. The 2008 Comprehensive Plan and 2011 Park & Pathway Plan recognize the Bertram Chain of Lakes Regional Park as a significant component of the community’s quality of life initiatives. The concept plan for the full regional park and athletic complex was adopted in 2011 as part of the Park and Pathway plan. A Master Plan for the Bertram Chain of Lakes Regional Athletic Complex was approved in 2016. Land acquisition is complete and major improvements are planned to begin in 2019. 30 8.Storm Water Pollution Prevention Program - Adopted 2007. In 2005 the City of Monticello was designated as a regulated small municipal separate storm sewer system (MS4) under Minnesota Rules, Chapter 7090. This required the City to obtain a National Pollutant Discharge Elimination System/State Disposal System (NPDES/SDS) storm water permit, and to develop and implement a Storm Water Pollution Prevention Plan (SWPPP) to reduce the discharge of pollutants, including sediments, from our storm sewer system to the maximum extent practicable. The City is continuing to implement the required six minimum control measures (MCM’s) as follows: A.Public Education and Outreach, B.Public Participation and Involvement, C.Illicit Discharge Detection and Elimination, D.Construction Site Stormwater Runoff Control, E.Post-Construction Stormwater Management Measures; and, F.Pollution Prevention/Good Housekeeping Measures. Zoning, subdivision, and illicit discharge ordinances were adopted in 2014 related to grading, drainage, erosion control, and storm water management to meet current MPCA requirements per the city’s new MS4 permit issued on January 16, 2014. The permit expires July 31, 2018. The MPCA will reissue the new permit requirements sometime in 2018. 9.Comprehensive Water Resource Management Plan - Updated 2006. The Comprehensive Water Resource Management Plan was developed to meet local watershed management planning requirements of the Metropolitan Surface Water Management Act and Board of Water and Soil Resources Rules 8410. It was developed to be in conformance with the requirements of Metropolitan Council requirements, and applicable State and Federal laws. The plan and its referenced literature is intended to provide a comprehensive inventory of pertinent water resource related information that affects the City and management of those resources. It is anticipated to update the hydraulic model and plan to conform with new stormwater ponding design requirements as a result of the new NOAAA Atlas 14 standard released by the National Weather Service Hydrometeorlogical Design Studies for rainfall frequency estimates. 10.Plan Requirements and Design Guidelines (“Design Manual”) - Updated 2017. These guidelines were established for developers of property within the City of Monticello. The guidelines provide design standards, specifications, and detail plates for the design of infrastructure improvements, street, utility, and site work construction. These guidelines are now referenced in the city’s zoning and subdivision ordinances that were adopted in 2014 related to grading, drainage, erosion control, and storm water 31 management.The Design Manual will be updated as needed as new design regulations and requirements come forth. 11.General Specifications and Standard Detail Plates for Street and Utility Construction - Updated 2017. These specifications represent the City’s requirements for construction of public street and utility systems. This document is anticipated to be updated in 2018 with minor modifications. 12.Water System Plan – Adopted 2004. Awaterdistributionsystemmodelwascreatedin2004toevaluatetheexistingwatersystem. The water system plan was then developed using this model to identify water system capital improvements necessary to serve future land use designations in accordance with the City’s Comprehensive Plan. 13.Sanitary Sewer Comprehensive Plan – Adopted 1995. The sanitary sewer comprehensive plan was adopted in 1995 and identified the existing sanitary sewer system and also projected future wastewater flows and service areas based on future land use designations in accordance with the City’s Comprehensive Plan. Several individual sanitary sewer studies were developed after the adoption of this plan in response to development. Future utility studies will likely be needed in response to development. 14.Interchange Planning Study – Pending (2018/2019). The Interchange planning study will determine a reasonable location or locations for a future I-94 Interchange within the city west of TH 25. The 2008 Comprehensive Plan recognizes that the Northwest Monticello, which includes the CSAH39 to Orchard Road corridor, as a primary focus for future development and further cites the Interchange Planning as a critical component of understanding growth potential and land use in the Northwest Area. A land use analysis component related to this study was completed in 2016. The full Interchange Planning study is on hold until the TH 25 area transportation study is complete. 15.Wellhead Protection Plan (Part 1 and 2) - completed 2016. The goal of the Wellhead Protection Plan is to prevent human-caused contaminants from entering the water supply wells and to protect all who use the water supply from adverse health effects associated with groundwater contamination. The preparation of the City’s was required by Minnesota Rules 4720.5100 to 5720.5590. Part 1 was completed in 2015 32 and Part 2 was completed in 2016. The plan is anticipated to be updated by 2026 as determined by the Minnesota Department of Health. 16.TH 25/Regional Transportation Planning Group – Ongoing. A series of meetings have taken place with representatives invited from the City of Big Lake, Big Lake Township, City of Becker, Becker Township, Wright County, Sherburne County, MnDOT District 3 and the City of Monticello to discuss regional transportation planning. A joint power agreement was adopted by the city in December 2015. The TH 25 area transportation study was completed in 2018 and identified options for near-term and long- term improvements to the corridor. Plans for Facility and Infrastructure Maintenance: 1.Wastewater Treatment Facility Biosolids Dewatering, Energy Efficiency, Headworks and Site Improvements Feasibility Report – Adopted 2012. Dewatering facility is complete at year-end 2014. The energy-efficient aeration blowers and piping was completed in 2016. This project is financed by the Sewage Fund. Future improvements identified in the Capital Improvement Plan include SCADA system upgrades, Phase 2 facility and site improvements, solids handling improvements and headworks improvements. 2.Wastewater Treatment Phosphorus Reduction Facility Plan – Adopted 2014. Construction began in 2015 and the project was completed in 2017. The facility plan was amended to include replacement of two digester covers. The digester covers are part of the current construction project. The project final cost was $3.3 million, financed by a $2.2 million loan and $1.1 million grant, both from the Minnesota Public Facilities Authority. 3.Overall Street Reconstruction Program – Adopted 2004, ongoing as part of capital improvement plan. The 2019-2023 Capital Improvement Plan includes projects related to the program, with various projects located through the city slated for start in 2019 and beyond. The city held a street reconstruction plan public hearing in June 2015. No major projects are set for construction in 2019. Design will begin in 2019 for 2020 projects, which are estimated at $2.5 million. 33 4.Transportation Projects TH25/7th Street Intersection Improvements – This project was completed in 2017 and included traffic signal system improvements, including flashing yellow arrows, (estimated at $250,000), northbound and southbound right turn lanes on TH25 and a westbound 7th Street right turn lane (estimated at $1.5 million). This project was included in the capital improvement plan. Fallon Avenue Overpass- This project includes a new bridge overpass over I-94 and three roundabouts. Right-of-way acquisition and design occurred in 2017, construction, started in 2018, and will stretch into 2019. Final costs are estimated to exceed $8.5 million. Financial Plans: 1.Annual Budget - Adopted each December. 2.Capital Improvements Plan - Updated and adopted each year; most recently for 2019 - 2023. 34 FINANCIAL POLICIES Theoverallgoalofthecity'sfinancialpoliciesistoestablishandmaintaineffectivemanagementofthecity's financialresources.Formalpolicystatementsandmajorobjectivesprovidethefoundationforachievingthis goal.Accordingly,this sectionoutlines the policies usedinguidingthe preparation andmanagementofthe city'soverallbudgetandthemajorobjectivestobeaccomplished.Inaddition,therationalewhichledtothe establishmentofthefiscalpolicystatementsisalsoidentified. Budget Development & Administration 1.Acomprehensiveannualbudgetwillbepreparedforallfundsexpendedbythecity. Thecitycouncil shall have full authority over the financial affairs of the city and shall provide for the collection of all revenue and other assets, the auditing and settlement of accounts, and the safekeeping and disbursement of public monies and in the exercise of a sound discretion shall make appropriations for the payment of all liabilities and expenses. Inclusionofallfundsinthebudget enablesthecouncil,theadministration,andthepublictoconsiderallfinancialaspectsofcitygovernment whenpreparing,modifying,andmonitoringthebudget,ratherthandealwiththecity'sfinancesona "piecemeal"basis. 2.The budget will be prepared in such a manner as to facilitate its understanding by citizens and elected officials. Oneofthestatedpurposesofthebudgetistopresentapictureofcitygovernmentoperationsand intentionsfortheyeartothecitizensofMonticello.Presentingabudgetdocumentthatisunderstandable tothecitizensfurthersthegoalofeffectivelycommunicatinglocalgovernmentfinanceissuestoboth electedofficialsandthepublic. 3.Budgetaryemphasiswillfocusonprovidingthosebasicmunicipalserviceswhichprovidethe maximumlevelofservices,tothemostcitizens,inthemostcosteffectivemanner,withdue considerationbeinggiventoallcosts--economic,fiscal,andsocial. Adherence to this basic philosophy provides the citizens of Monticello assurance that their governmentandelectedofficialsareresponsivetothebasicneedsofthecitizensandthatitscitygovernment isoperatedinaneconomicalandefficientmanner. 4.The budget will provide for adequate maintenance of capital, plant, and equipment and for their orderly replacement. Allgovernmentalentitiesexperienceprosperoustimesaswellasperiodsofeconomicdecline.In periodsofeconomicdecline,propermaintenanceandreplacementofcapital,plant,andequipmentis generallypostponedoreliminatedasafirstmeansofbalancingthebudget.Recognitionoftheneedfor adequatemaintenanceandreplacementofcapital,plant,andequipment,regardlessoftheeconomic conditions,willassistinmaintainingthegovernment'sequipmentandinfrastructureingoodoperating condition. 35 5.The city will avoid budgetary practices that balance current expenditures at the expense of meeting future year expenditures. Budgetarypracticessuchaspostponingcapitalexpenditures,accruingfutureyears'revenues,or rollingovershort-termdebtarebudgetarypracticeswhichcansolveshort-termfinancialproblems. However,theycancreatemuchlargerfinancialproblemsforfutureadministrationsandcouncils. Avoidanceofthesebudgetarypracticeswillassurecitizensthatcurrentproblemsarenotsimplybeing delayedtoafutureyear. 6.The city will give highest priority in the use of one-time revenues to the funding of capital assets or other non-recurring expenditures. Utilizing one-time revenues to fund on-going expenditures results in incurring annual expenditure obligations, which may be unfunded in future years. Using one-time revenues to fund capital assets or other non-recurring expenditures better enables future administrations and councils to cope with the financial problems when these revenue sources are discontinued, since these types of expenditures can more easily be eliminated. 7.The citywill maintain abudgetary control systemto helpit adhereto the established budget. Thebudgetpassedbythecouncilestablishesthelegalspendinglimitsforthecity.A budgetarycontrolsystem isessentialinordertoensurelegalcompliancewiththecity'sbudget. 8.The city will exercise budgetary control (maximum spending authority) through city council approval of appropriation authority for each appropriated budget unit. Exercisingbudgetarycontrolforeachappropriatedbudgetunitsatisfies requirementsofstate law.Italsoassiststhecouncilinmonitoringcurrentyearoperationsandactsasanearlywarning mechanismwhendepartments deviate inanysubstantivewayfromtheoriginalbudget. 9.Reports comparing actual revenues and expenditures to budgeted amounts will be prepared monthly. Thecity'sbudgetisineffectivewithoutasystem toregularlymonitoractualspendingand revenuecollectionswiththoseanticipatedatthe beginningofthe year.Monthlyreportscomparing actualrevenuesandexpendituresto budgetamounts providethemechanismforthecouncilandthe administrationto regularlymonitorcompliancewiththeadoptedbudget. 10.State Requirement: Truth-in-Taxation The Truth in Taxation (TNT) law requires the city to hold a series of public hearings in order to present the proposed levy and budget, and to provide an opportunity for the public to comment and make recommendations. The city’s proposed general levy has to be certified to the county auditor by September 30th. The city’s proposed HRA (housing and redevelopment levy) must be certified by September 15th. The final levies for both have to be certified by December 29th. 36 Revenue Collection 1.Thecitywillseektomaintainadiversifiedandstablerevenuebase. Acitydependentuponafewvolatile revenuesources isfrequentlyforcedtosuddenlyadjust taxratesoralterexpenditurelevelstocoincidewithrevenuecollections.Establishmentofadiversified andstable revenue base,however,servestoprotectthecityfromshort-termfluctuationsinanyone majorrevenuesource. 2.The city will estimate revenues in a realistic and conservative manner. Aggressive revenue estimates significantly increase the chances of budgetary shortfalls occurringduringtheyear--resultingineitherdeficitspendingorrequiredspendingreductions. Realisticandconservativerevenueestimates,ontheotherhand,willservetominimizetheadverse impactofrevenueshortfallsandwillalsoreducetheneedformid-yearspendingreductions. 3.Thecitywillpursueanaggressivepolicyofcollectingrevenues. Anaggressive policyofcollectingrevenueswillhelpto ensurethecity's revenue estimatesare met,alltaxpayersare treatedfairlyandconsistently,anddelinquenciesarekepttoaminimum. 4.Thecitywillaggressivelypursueopportunitiesforfederalorstategrantfunding. Anaggressivepolicyofpursuingopportunitiesforfederalorstategrantfundingprovidescitizens assurancethatthecityisstrivingtoobtainallstateandfederalfundstowhichitisentitled--thereby reducingdependenceuponlocaltaxpayersforthesupportoflocalpublicservices. 5.User fees and charges will be used, as opposed to general taxes, when distinct beneficiary populations or interest groups can be identified. Userfeesandchargesarepreferabletogeneraltaxesbecauseuserchargescanprovideclear demandsignalswhichassistindeterminingwhatservicestooffer,theirquantity,andtheirquality.User chargesarealsomoreequitable,sinceonlythosewhousetheservicemustpay--therebyeliminatingthe subsidyprovidedbynonuserstousers,whichisinherentingeneraltaxfinancing. 6.Userfeeswillbecollectedonlyifitiscost-effectiveandadministrativelyfeasibletodoso. User fees are often times costly to administer. Prior to establishing user fees, the costs to establish and administer the fees will be considered in order to provide assurance that the city's collection mechanisms are being operated in an efficient manner. Expenditures and Payments 1.On-goingexpenditureswillbelimitedtolevelswhichcanbesupportedbycurrentrevenues. Utilizationofreservestofundon-goingexpenditureswillproduceabalancedbudget,however, thispracticewilleventuallycauseseverefinancialproblems.Oncereservelevelsaredepleted,thecity wouldfaceeliminationofon-goingcostsinordertobalancethebudget.Therefore,thefundingofon- goingexpenditureswillbelimitedtocurrentrevenues. 37 2.Minor capital projects or recurring capital projects, which primarily benefit current residents, will be financed from current revenues. Minorcapitalprojectsorrecurringcapitalprojectsrepresentrelativelysmallcostsofanon-going nature,andtherefore,shouldbefinancedwithcurrentrevenuesratherthanutilizingdebtfinancing.This policyalsoreflectstheviewthatthosewhobenefitfromacapitalprojectshouldpayfortheproject. 3.Major capital projects, which benefit future as well as current residents, will be financed with current revenues as well as other financing sources (e.g. debt financing). This policy reflects the view that those who benefit from a capital project should pay for the project. 4.Major capital projects, which benefit future residents, will be financed with other financing sources (e.g. debt financing). Majorcapitalprojectsrepresentlargeexpendituresofanon-recurringnaturewhichprimarily benefitfutureresidents.Debtfinancingprovidesameansofgeneratingsufficientfundstopayforthecosts ofmajorprojects.Debtfinancingalsoenablesthecostsoftheprojecttobesupportedbythosewho benefitfromtheproject,sincedebtservicepaymentswillbefundedthroughchargestofutureresidents. 5.Constructionprojectsandcapitalexpendituresof$10,000ormorewillbeincludedinthe CapitalImprovementProgram(CIP);minorcapitaloutlaysoflessthan$10,000willbeincludedin theregularoperatingbudgetassmalltoolsandequipmentorrepairsandmaintenance. TheCapitalImprovementProgram(CIP)differentiatesthefinancingofhighcostlong-livedphysical improvementsfromlowcost"consumable"equipmentitemscontainedintheoperatingbudget.CIPitems maybefundedthroughdebtfinancingorcurrentrevenueswhileoperatingbudgetitemsareannualor routineinnatureandshouldonlybefinancedfromcurrentrevenues. 6.SpendingPolicy:Thecitywillspenditsresourcesinthefollowingorder.Resourceswillbe categorizedaccordingtoGenerallyAcceptedAccountingPrinciples(GAAP)forstateandlocal governments,withthefollowinggeneraldefinitions: Restricted -- Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government) through constitutional provisions or by enabling legislation. Committed--Amountsconstrainedtospecificpurposesbythecitycouncil; tobe reported ascommitted,amountscannotbe usedforanyotherpurposeunlessthecitycouncil takesactionto removeorchange theconstraint. Assigned -- Amounts the city intends to use for a specific purpose; intent can be expressed by the council or by an official or body to which the council delegates the authority. The city council can delegate this authority to the city administrator. Unassigned -- Amounts that are available for any purpose; these amounts are reported only in the General Fund. 38 When both restricted and unrestricted resources are available, spending will occur in the following order, for the identified fund types: FundType Orderof Spending GeneralFund 1.Restricted 2.Committed 3.Assigned 4.Unassigned ThecitycouncilhastheauthoritytoexpressassignmentsintheGeneralFund. Special Revenue Funds 1.Restricted 2.Committed 3.Assigned Thecitycouncilhastheauthoritytoexpressassignmentsinspecial revenue funds. Debt Service Funds 1.Assigned 2.Committed 3.Restricted Thecitycouncilhastheauthoritytoexpressassignmentsindebt service funds. Capital Projects Funds 1.Restricted 2.Committed 3.Assigned Thecitycouncilhastheauthoritytoexpressassignmentsincapital project funds. Debt Administration 1.The city will limit long-term debt to capital improvements which cannot be financed from current revenues. Incurringlong-termdebtservestoobligatefuturetaxpayers.Excessrelianceonlong-termdebt cancausedebtlevelstoreachorexceedthegovernment'sabilitytopay.Therefore,conscientioususeof long-termdebtwillprovideassurancethatfutureresidentswillbeabletoservicethedebtobligationsleft byformerresidents. 2.The city will repay borrowed funds, used for capital projects, within a period not to exceed the expected useful life of the project. Thispolicyreflectstheviewthatthoseresidentswhobenefitfromaprojectshouldpayforthe project.Adherencetothispolicywillalsohelppreventthegovernmentfromover-extendingitselfwith regardtotheincurrenceoffuturedebt. 39 3.Thecitywillnotuselong-termdebtforfinancingcurrentoperations. Thispolicyreflectstheviewthatthoseresidentswhobenefitfromaserviceshouldpayforthe service.Utilizationoflong-termdebttosupportcurrentoperationswouldresultinfutureresidents supportingservicesprovidedtocurrentresidents. 4.Thecitywilladheretoapolicyoffullpublicdisclosurewithregardtotheissuanceofdebt. Fullpublicdisclosurewithregardtotheissuanceofdebtprovidesassurancethattheincurrenceof debt, for which the public is responsible, is based upon a genuine need and is consistent with underwriter guidelines. Reserves and Fund Balances 1.ReservesandFundBalanceswillbeproperlydesignatedintothefollowingcategories: Nonspendable fundbalance--Amountsthatare notinaspendable form (suchas inventory)orare requiredtobemaintainedintact(suchasthecorpusofan endowmentfund). Restricted fund balance -- Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government) through constitutional provisions or by enabling legislation. Committed fund balance -- Amounts constrained to specific purposes by the city council; to be reported as committed, amounts cannot be used for any other purpose unless the city council takes action to remove or change the constraint. Assigned fund balance -- Amounts the city intends to use for a specific purpose; intent can be expressed by the council or by an official (city administrator or finance director) or body to which the council delegates the authority. Unassigned fund balance -- Amounts that are available for any purpose; these amounts are reported only in the General Fund or a deficit in other fund types. 2. Aminimumlevelofgeneralfundreserveequalto75%ofannualoperatingexpenditureswillbe maintainedbythecity.Thisreserveiscommittedtobeusedforcashflowpurposes,unanticipated equipmentacquisitionandreplacement,andtootherwiseenablethecitytomeetunexpected expendituredemands(naturaldisasters,catastrophicevents,etc.)orrevenueshortfalls. Propertytaxesrepresentthecity'sprimarysourceofgeneralfundrevenue.Propertytaxesare collectedinJuneandDecemberofeachfiscalyear.Sincethecity'sfiscalyearbeginsonJanuary1st,thecity mustmaintainanadequatecashbalanceinordertomeetitsexpenditureobligationsbetweensemi- annualcollectionsofpropertytaxes. Accrued employee payroll benefits, such as sick leave, vacation or paid-time off, represent a significant obligation of the city. The city will maintain sufficient reserves to meet its annual expenditure obligations to the Benefit Accrual internal service fund. Thecityrecognizestheneedtomaintainadequateequipmentinordertocarryoutrequiredpublic services.Equipmentacquisitionandreplacementrepresenton-goingcostsofarelativelyminornature,as 40 comparedtomajorcapitalpurchases.ThecityplansforequipmentreplacementwithintheCapital ImprovementProgram.However,unforeseenequipmentproblemswillarise.Thereservewillprovide resourcesfortheimmediate,unanticipatedreplacementofcriticalequipment. Thecityissubjecttorevenueshortfallsandunexpectedexpendituredemandsduringthefiscalyear. Anunassignedgeneralfundreservewillbemaintainedtobeabletooffsettheserevenueshortfallsormeet unexpecteddemandsoccurringduringtheyear,withoutsuddenlyadjustingtaxratesorreducing expenditures. Financial Reporting & Accounting 1.ThecitywillmanageandaccountforitsfinancialactivityinaccordancewithGenerallyAccepted AccountingPrinciples(GAAP)assetforthbytheGovernmentalAccountingStandardsBoard(GASB). GASBisrecognizedastheauthoritywithrespecttogovernmentalaccounting.Managingthe city'sfinancesinaccordancewithGAAPandinaccordancewiththerulessetforthbyGASBprovidesthe Monticellocitizensassurancethattheirpublicfundsarebeingaccountedforinapropermanner. 2.Thecitywillmaintainitsaccountingrecordsforgeneralgovernmentaloperationsonamodified accrualbasis,withrevenuesrecordedwhenavailableandmeasurable,andexpendituresrecordedwhen servicesorgoodsarereceivedandliabilitiesincurred.Accountingrecordsforproprietaryfundtypesand similartrustfundswillbemaintainedonanaccrualbasis,withallrevenuesrecordedwhenearnedand expensesrecordedatthetimeliabilitiesareincurred,withoutregardtoreceiptorpaymentofcash. Adherencetothispolicywillenablethecitytoprepareitsfinancialstatementsinaccordancewith GenerallyAcceptedAccountingPrinciplesassetforthbytheGovernmentalAccountingStandardsBoard. 3.ThecityofMonticellowillprepareaComprehensiveAnnualFinancialReport(CAFR)inconformity withGenerallyAcceptedAccountingPrinciples(GAAP).Thereportwillbemadeavailabletothegeneral public.TheCAFRshallbepreparedinaccordancewiththestandardsestablishedbytheGFOAforthe CertificateofAchievementforExcellenceinFinancialReportingProgram TheCertificateofAchievementrepresentsasignificantaccomplishmentforagovernmentandits financialleadership.Theprogramencouragesgovernmentstoprepareandpublishaneasilyreadableand understandablecomprehensiveannualfinancialreportcoveringallfundsandfinancialtransactionsofthe governmentduringtheyear.TheCAFRprovidesuserswithawidevarietyofinformationusefulin evaluatingthefinancialconditionofagovernment.Theprogramalsoencouragescontinuedimprovement inthecity'sfinancialreportingpractices. 4.The city will ensure the conduct of timely, effective, and annual audit coverage of all financial records in compliance the Local, State, and Federal law. Auditsofthecity'sfinancialrecordsprovidethepublicassurancethatitsfundsarebeingexpended inaccordancewithLocal,State,andFederallawandinaccordancewithGenerallyAcceptedAccounting Principles.Auditsalsoprovidemanagementandthecitycouncilwithsuggestionsforimprovementinits financialoperationsfromindependentexpertsintheaccountingfield. 41 5.ThecityofMonticellowillmaintainapolicyoffullandopenpublicdisclosureofallfinancialactivity. Fullandopenpublicdisclosureofallfinancialactivityprovidesthepublicwithassurancethatits electedofficialsandadministratorscommunicatefullyallfinancialmattersaffectingthepublic. 6.Themodifiedaccrualbasisofaccountingandbudgetingisusedforthegovernmentalfunds.Under themodifiedaccrualbasisofaccounting,revenuesarerecordedwhensusceptibletoaccrual,i.e.,both measurableandavailable.Availablemeanscollectiblewithinthecurrentperiodorsoonenough thereaftertobeusedtopayliabilitiesofthecurrentperiod.Expendituresarerecordedwhentherelated liabilityisincurred.Employeecompensatedabsencesandprincipalandinterestonlong-termdebt expendituresarerecordedwhendueinthecurrentperiod.Theaccrualbasisofaccountingisusedfor ProprietaryFunds.Underthismethod,revenuesarerecordedwhenearnedandexpensesarerecorded whentherelatedliabilityisincurred.Forbudgetpreparationandpresentation,theproprietaryfunds’ expensesareconvertedtoexpendituresandfollowthesamebudgetformatasthegovernmentalfund types.Capitaloutlaysintheenterprisefundsarepresentedasexpensesforbudgetbasis,butare recordedasassetsalongwithassociateddepreciationexpenseontheGAAPbasis.Debtserviceprincipal paymentsintheenterprisefundsareaccountedforasexpensesforbudgetpurposes,butarereportedas reductionoflong-termdebtliabilityontheGAAPbasis. Recording capital outlays and principal payments on long-term debt as expenditures for budget purposes, presents a clearer picture of the city’s financial operations, is easier to administer for cash flow purposes, and is easier for the lay person to understand. Cash Management & Investment SCOPE This policy applies to all activities with regards to managing and investing the financial assets of the city of Monticello. This policy pertains to the financial assets of all funds including the General Fund, special revenue funds, capital project funds, debt service funds, enterprise funds, and internal service funds. The covered funds are defined in the city’s Comprehensive Annual Financial Report. Except for cash in certain restricted and special funds, the city of Monticello consolidates all cash balances from all funds into one central set of accounts. Each fund’s participation in this cash pool is denoted by its equity-in-pooled-cash account. Investment income is allocated to the various funds based upon the average monthly balance of each fund’s account. Use of this pooling-of-funds method of accounting allows the city of Monticello to manage its cash more efficiently and to maximize its investment earnings. OBJECTIVES The primary objectives, in priority order, of city of Monticello’s investment activities shall be safety, liquidity, and yield: 42 a.Safety Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. 1.Credit Risk The city will minimize credit risk by Limiting investments to the safest types of securities; Pre-qualifying the financial institutions, brokers/dealers, intermediaries, and advisers with which the city of Monticello will do business; and Diversifying the investment portfolio so that potential losses on individual securities will be minimized. 2.Interest Rate Risk The city will minimize interest rate risk by: Structuring the investment portfolio so that securities invested from operating funds mature to meet cash requirements for ongoing operations, thereby minimizing the need to sell securities on the open market prior to maturity; and Investing operating funds primarily in shorter-term maturities, money market funds, or similar investment pools. b.Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This will be accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands (static liquidity). In addition, since all possible cash demands cannot be anticipated, the portfolio shall consist largely of securities with active secondary or resale markets (dynamic liquidity). c.Yield The city of Monticello’s investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, commensurate with Monticello’s investment risk constraints and the cash flow characteristics of the portfolio. Return on investment is of least importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall not be sold prior to maturity with the following exceptions: a declining credit security may be sold early to minimize the loss of principal; a security may be sold to maximize gain, when appropriate; a security swap may be appropriate to improve the quality, yield, or target duration in the portfolio; or a security may be sold based upon liquidity demands of the portfolio. 43 AUTHORITY Management responsibility for the investment program and for ensuring compliance with this policy is hereby delegated to the finance director and is derived from Minnesota statutes and mayor & council actions. The finance director shall be responsible for all transactions undertaken and shall establish a system of procedures and internal controls for the operation of the investment program consistent with this policy. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the finance director. All participants in the investment process shall seek to act responsibly as custodians of the public trust. No officer or designee may engage in an investment transaction except as provided under the terms of this policy and supporting procedures. The finance director shall establish written statements of investment policy procedures for the operation of the investment program consistent with this policy. Such procedures shall include explicit delegation of authority for persons responsible for investment and cash management transactions. The finance director is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the city of Monticello are protected from loss, theft, or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to be derived and that the valuation of costs and benefits requires estimates and judgments by management. The internal controls shall address the following points at a minimum: control of collusion, separation of transaction authority from accounting and recordkeeping, custodial safekeeping, avoidance of physical delivery securities, clear delegation of authority to subordinate staff members, written confirmation of transactions for investments and wire transfers, dual authorizations of wire transfers, staff training, and review, maintenance and monitoring of security procedures both manual and automated. The city may engage the services of one or more external investment managers to assist in the management of the city’s investment portfolio in a manner consistent with the city’s objectives. Such external managers may be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. Such managers must be registered under the Investment Advisers Act of 1940. ETHICS & CONFLICTS OF INTEREST The finance director and other employees involved in the investment process shall refrain from personal financial activity that could conflict with the proper execution and management of the investment program, or which could impair their ability to make impartial investment decisions. The finance director and other employees involved in the investment process shall disclose to the mayor & council any material financial interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the city’s portfolio. The finance director and other employees involved in the investment process shall subordinate their personal investment transactions to those of the city of Monticello shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the city. 44 PRUDENCE The general investment policies of the city of Monticello will be guided by the "prudent person" standard. Those with investment responsibility for public funds are fiduciaries and, as such, shall exercise the judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The standard of prudence shall be applied in the context of managing the overall portfolio. Investment officers, acting in accordance with this investment policy and exercising due diligence, shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided significant deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. Investment officers acting in good faith are not personally liable for investment or deposit losses. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The finance director shall designate and maintain a list of financial institutions and depositories authorized to provide investment services. In addition, a list will also be maintained of approved security brokers/dealers that maintain an office within the State of Minnesota. These may include "primary" dealers or regional dealers that qualify under Security and Exchange Commission's Uniform Net Capital Rule (Rule 15C3-1). The mayor & council shall designate the financial institution for the city’s operating account. All financial institutions and brokers/dealers that wish to become qualified bidders for investment transactions must supply the following: a copy of the latest audited financial statements demonstrating compliance with state and federal capital adequacy guidelines proof of state registration, evidence of adequate insurance coverage, certification of having read, understood, and agree to comply with Monticello’s Cash Management and Investment Policy, proof of National Association of Securities Dealers (NASD) or Financial Industry Regulatory Authority (FINRA) certification (brokers/dealers only), and completed broker/dealer questionnaire (brokers/dealers only). An annual review of the financial condition and registration of qualified financial institutions and broker/dealers may be conducted by the finance director. Financial institutions, which serve as depositories of city funds, shall comply with all prevailing provisions of Minnesota statutes and shall meet the established criteria for overall financial strength, adequate capitalization, appropriate liquidity, and proper collateralization to reasonably ensure the safety and availability of such deposits. To monitor and assess the overall financial strength of current and potential depositories, the city will utilize third-party rating agencies. 45 AUTHORIZED AND SUITABLE INVESTMENTS Authorized investments for municipalities in Minnesota are stipulated in Minnesota State Statutes. Although the following lists of authorized and prohibited investments for the city of Monticello is slightly more restrictive than what is allowed under state law, it is in full compliance with Minnesota State Statutes. The finance director is authorized to invest in the following: Demand deposits, of commercial banks, saving and loan associations, and federal savings banks authorized to do business in the State of Minnesota and authorized as described above, and to the extent that the deposit is fully insured by the Federal Deposit Insurance Corporation or collateralized as required in Minnesota State Statutes. Time deposits and certificates of deposit of commercial banks, saving and loan associations, and federal savings banks authorized to do business in the United States or its territories to the extent that the investment is fully insured by the Federal Deposit Insurance Corporation or collateralized as required in Minnesota State Statutes. Governmental bonds, notes, bills, mortgages, and other securities, which were direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress, excluding mortgage-backed securities State and local government obligation as follows: o an obligation of the State of Minnesota or any of its municipalities, o obligation of other state and local governments that have taxing power, and are rated “A” or better by a national bond rating service. o general obligations of the Minnesota Housing Finance Agency that are rated “A” or better by a national bond rating service. o general obligations of housing finance agencies of other states, provided that they include a moral obligation of the state, and they are rated “A” or better by a national bond rating service, o general revenue obligation of any agency or authority of the State of Minnesota other than those found already mentioned above that are rated “AA” or better by a national bond rating service. o Repurchase agreements whose underlying purchased securities consist of U.S. government obligations, U.S. government agency obligations, or U.S. government instrumentality (including government sponsored enterprises) obligations. Adoption of a master repurchase agreement by the mayor & council is required before the finance director is authorized to enter into a repurchase agreement. o Banker’s Acceptances of United States Corporation or their Canadian subsidiaries that are rated “A1” by Moody’s Investors Service and/or P1 by Standard and Poor’s Corporation and matures in 270 days or less. Banker’s Acceptances can only be purchased if the yield is greater than the United States Treasury obligations or Federal Agency issues. o Guaranteed investment contracts if issued and guaranteed by a United States commercial bank or a United States insurance company. The credit quality of the issuer and guarantor shall be rated in the highest category by the major national rating services. The contract shall provide the governmental entity a non-penalized 46 right of withdrawal of the investment if the credit quality of the investment is downgraded. o Commercial Paper issued by United States corporations or their Canadian subsidiaries that are rated “A1” by Moody’s Investors Service and/or “P1” by Standard and Poor’s Corporation and matures in 270 days or less. o Money market funds consisting of United States Treasury Obligations and/or Federal Agency Issues. PROHIBITED INVESTMENTS The finance director is currently prohibited from investing in securities that are considered highly sensitive, including the following: Purchases on margins or short sales. Derivative securities that are, in effect, a leveraged bet on future movements of interest rates or some price index. Mortgage-backed securities due to their complexity and prepayment rate uncertainty. Reverse repurchase agreements (lending securities with an agreement to buy them back after a stated period of time). COLLATERALIZATION The provisions of Minnesota State Statutes require that banks and savings and loan institutions collateralize all deposits of public funds. The city also requires collateralization of time deposits and repurchase agreements. Banks and savings and loan associations are authorized to use any of the investments as specified by Minnesota State Statutes as collateral. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 110%of the market value of principle and accrued interest. Collateral will always be held by a third party. A clearly marked evidence of ownership (safekeeping receipt) will be supplied to the city and retained. SAFEKEEPING AND CUSTODY Pledged collateral consisting of instruments of the United States Government, U.S. government agencies, and U. S. government sponsored enterprises will be safe kept at a Federal Reserve Bank Branch. Other acceptable collateral that cannot be held by the Federal Reserve shall be held by a non-affiliated, independent, third-party safekeeping institution with whom the city has a current custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) will be supplied to the city and retained. The right of collateral substitution upon prior notification and acceptance by the city is granted. All securities transactions, including collateral for repurchase agreements shall be conducted on a delivery-versus-payment (DVP) basis to ensure that securities are deposited in the city’s safekeeping institution prior to the release of funds. 47 DIVERSIFICATION Diversification of investments reduces overall portfolio risks while attaining market average rates of return. The city of Monticello will diversify its investments by security type, sector (excluding U.S. Treasury securities), maturity, and institution. With the exception of U.S. government securities, U.S. government agency securities, U.S. government sponsored enterprise securities, certificates of deposit, collateralized bank money market accounts, and authorized local government investment pools, no more than 25% of the city of Monticello’s total investment portfolio will be invested in a single security type. To provide assurance that the city will be able to continue financial operations without interruption and dependent upon interest rates, satisfaction with services, and practicality, the city of Monticello may utilize more than one financial institution as its depository. MAXIMUM MATURITIES To the extent possible, the city of Monticello will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the city will not directly invest from operating funds in securities maturing more than five (5) years from the date of purchase. However, the city of Monticello may collateralize its repurchase agreements using longer-dated investments not to exceed fifteen (15) years to maturity. Reserve funds and other funds with longer-term investment horizons may be invested in securities exceeding five (5) years if the maturity of such investments is made to coincide as nearly as practicable with the expected use of funds. No investment shall have a maturity exceeding twenty (20) years from the time of purchase. The intent to invest securities with longer maturities shall be approved by the finance director. Because of the inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio shall be continuously invested in readily available funds such as demand accounts, local government investment pools, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations. The city will not actively buy and sell investments, but realizes the risk of not seeking higher market returns for longer maturities outweighs occasional liquidity demands exceeding cash and money market investments. PERFORMANCE STANDARDS The investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a market average rate of return during a market/economic environment of stable interest rates. The finance director will establish a series of appropriate benchmarks which portfolio performance shall be compared on a regular basis. The benchmarks shall be reflective of the actual securities being purchased and risks undertaken and the benchmarks shall have a similar weighted average maturity and credit profile as the portfolio. REPORTING The finance director will maintain investment reports that provide a clear picture of the status of the current investment portfolio. The report shall include a management summary that will allow the city 48 of Monticello to ascertain whether investment activities during the reporting period have conformed to the investment policy. Information contained within the reports shall include the following: A listing of the individual securities held at the end of the reporting period by authorized investment category. Term and maturity date of all investments listed. Par value and current market value of all investments listed. Yield to maturity or worse call of portfolio investments. Percentage of portfolio represented by each investment category. POLICY CONSIDERATIONS Any investment currently held that does not meet the guidelines of this policy shall be exempted from the requirements of this policy. At maturity or liquidation, such monies shall be reinvested only as provided by this policy. This Statement of Cash Management and Investment Policy shall be adopted by motion/resolution of the city’s mayor & council. The finance director and city administrator will review this policy annually. Any modifications made to this policy must be approved by resolution of the mayor& council. 49 FINANCIAL STRUCTURE To better understand this budget document, a basic understanding of the structure, often-used terms, and fund types is helpful. The city’s operating expenditures are organized into the following hierarchical categories: fund, department, activity, and budget units. Fund:Funds (specific or general purpose) represents the highest level of summarization used in the city’s financial structure. This level is primarily used for entity-wide financial reporting and for summarization in this budget document. Department: Department is the second level of summarization used in the city’s financial structure. The function classification represents a grouping of related operations and programs aimed at accomplishing a broad goal or providing a major service. Departments (Functions) General Government PublicSafety PublicWorks RecreationandCulture Other Activity:Departmentscanbefurthersplitintodivisionswhichareusuallyassociatedwithfunctioningwork groupsthathavemorelimitedsetsofworkresponsibilities.Theirprimarypurposeisorganizationaland budgetaryaccountability. Budget Unit: Activities may be further subdivided into budget units. A budget unit is used to account for a specific service performed within an activity in the pursuit of individual goals and objectives. A budget unit is aimed at accomplishing a specific service or regulatory program for which a government is responsible. GOVERNMENTAL FUND TYPES General Fund:The general fund is used to account for all financial resources of the city, except for those required to be accounted for in another fund. The general fund supports such basic services as the legislative branch, judicial branch, general administration, police, fire, finance, streets, engineering, recreation, and library services. Revenue Sources: The city's General Fund is financed primarily by property taxes which provide almost 80% of the general fund revenue. Other revenue sources include: licenses and permits, intergovernmental revenue, charges for services, fines and forfeitures, interest on investments, operating transfers,andmiscellaneousrevenues. 50 Special Revenue Funds:Special revenue funds are used to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or for major capital projects) that are legally restricted or committed to expenditure for specific purposes. Special revenue funds support economic developmentprograms,designateduserfee basedcommunityactivities,insurance costs,retirementcosts, planningfunctions,andotherserviceslegallyrestrictedforspecificpurposes. Revenue Sources: Special revenue funds are supported either through property taxes or through grants or other restricted revenue sources. An example of a special revenue fund supported by property taxesincludestheMonticelloCommunityCenter.Anexampleofaspecialrevenuefundsupportedbygrants orotherrestrictedrevenuesourcesincludetheEconomicDevelopmentAuthorityFund. DebtServiceFunds:Debtservicefundsare usedtoaccountforthe accumulationofresourcesfor,andthe paymentof,generallong-termdebtprincipalandinterest.Debtservicefundsprovidefinancingforavariety ofthecity'sgeneralobligationimprovementandrevenuebonds. Revenue Sources: Debt service funds are supported with special assessments, access and utility fund transfers, propertytaxes,andinterestoninvestments. Capital Project Funds:Capital project funds are used to account for financial resources to be used for the acquisitionorconstructionofmajorcapitalfacilities(otherthanthosefinancedbyproprietaryfunds). Revenue Sources: Capital project funds are supported by long-term debt proceeds, special assessments, donations, state and federal grants, operating transfers from other funds, and impact fees. PROPRIETARY FUND TYPES Enterprise Funds:Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises--where the intent of the governing body is that the costs (expenses,includingdepreciation)ofprovidinggoodsorservicestothegeneralpubliconacontinuingbasis be financed or recovered primarily through user charges. Enterprise funds account for the city's water, sewage,liquorstore,DMV,andfiberopticsservices. Revenue Sources: Enterprise funds are supported through user charges, sale of goods, penalties, and interest income. InternalServiceFunds:Internalservicefundsareusedtoaccountforthefinancingofgoodsorservices provided by one department to other departments on a cost-reimbursement basis. Internal service funds account for the city's capital equipment internal leasing program and IT Service (created in 2013) and the city’s accrued benefit liability to employees (created in 2015). Revenue Sources: Internalservicefunds are supportedthroughcharges tootherbudgetunits based on lease payments or level of provided services. 51 FUND BALANCESINEACHFUND TYPE In governmental funds, fund balance is typically defined as current assets less current liabilities. Unlike governmentalfunds,enterprisefundsfocusonthedeterminationofoperatingincome,changesinnetposition (or cost recovery), financial position, and cash flows. Enterprise funds use an accrual basis of accounting for financial reporting purposes. A modified accrual basis will be used for budgeting purposes in this report. Consequently,thebottomlineforeachenterprisefundislabeledfundbalanceratherthannetposition,which includescapitalassets,long-termdebt,andothernoncurrentitems.Fundbalanceinenterprisefundsisroughly thesameasworkingcapital. USEFULTERMS To better assist readers in understanding the budget document, a basic knowledge of the following terms is useful: A FUND isafiscalandaccountingentitywithaself-balancingsetofaccountsrecordingcashandother financialresources,togetherwithallrelatedliabilitiesandresidualequitiesorbalances,andchanges therein.Fundsaresegregatedforthepurposeofcarryingonspecificactivitiesorattainingcertain objectivesinaccordancewithspecialregulations,restrictions,orlimitations.Fundsinthegovernment modelareclassifiedintothreebroadcategories:governmental,proprietary,andfiduciary. The most common reason for establishing a fund is to separately account for restricted-use revenue or to comply with state or federal law. A DEPARTMENT is an organizational or budgetary breakdown which is found within city funds. Each department serves a specific function as a distinct organizational unit of government within the given fund. Its primary purpose is to facilitate organizational and budgetary accountability. An OBJECT OF EXPENDITURE refers to specific, detailed expenditure classification. It relates to a specific typeofitempurchasedorserviceobtained.Examplesofobjectsofexpenditureincludesalaries,supplies, contractedservice,travel,etc. Thecity’sfinancialoperationsandfundstructureconformwithGenerallyAcceptedAccountingPrinciples (GAAP).Thefundsaregroupedbyfundtype(General,SpecialRevenue,DebtService,CapitalProjects, Enterprise,andInternalService).Allofthecity’sfundsarebudgeted. A CAPITALEXPENDITURE occurswhenacapitalassetispurchased.CAPITALASSETS areusedinoperations andhaveinitialusefullivesextendingbeyondasinglereportingperiod.Theseassetsmustalsomeet capitalizationthresholds,whichvarybyassetclassificationandtypicallycostsmorethan$10,000.Land, improvementstoland,vehicles,machinery,equipment,infrastructure,andothertangibleandintangible assetsusedinoperationsareexamplesofcapitalassets.Expendituresthatdonotbenefitmorethanone reportingperiodormeetthecapitalizationthresholdsareclassifiedasa CURRENTEXPENDITURE. 52 MATRIX OF FUNDS AND BUDGET UNITS Allcapitalprojectfundswerecombinedforthis presentation.Parkoperationsis responsible forthe CemeteryFund,whichisnotincludedintheMatrix.Principalandinterestpaymentsondebtoccurin theDebtServiceFund(comprisedofsubfunds),SewageFund,andCentralEquipmentFund. Community Capital Park &Liquor Deputy Water &Fiber IT Central Benefit EXPENDITURES General Center EDA Projects Pathway Store Registrar Sewage Optics Services Equipment Accrual GENERAL GOVERNMENT Mayor and Council ●●● City Administration ●●● City Clerk ●●● Finance ●●●●●●●● Audit ● City Assessing ● Legal ● Human Resources ●●● Planning & Zoning ●●●●● City Hall ●●● Prairie Center Building ●● Economic Development ●●● PUBLIC SAFETY Law Enforcement ● Fire & Rescue ●●●● Fire Relief ● Building Inspections ●●● Civil Defense ●●● Animal Control ● National Guard ● PUBLIC WORKS PW Administration ●●●● Engineering ●●●●● PW Inspecitons ●●●● Streets & Alleys ●●●● Ice & Snow ●● Shop & Garage ●●●● Stormwater ●●● Street Lighting ●●● Refuse Collection ● Water Utility ●● Sewage Utility ●● TRANSIT Bus ● RECREATION AND CULTURE Senior Center ● Park Operations ●●●● Park Improvements ●●● Park Ballfields ●● Shade Tree ●● Library ● Fiber Optics ●● Community Center ●● OTHER FINANCING USES ●●●●●● FUND 53 OPERATING FUND CROSSWALK Thismatrixshowstherelationshipbetweenfunctionalunitsandfunds.Forexample,thePublic Works DepartmenthassomeauthorizedappropriationsintheGeneralFund,fivecapitalprojectfunds,andtwo enterprisefunds.Public Worksisalso responsibleforthecity’sparks. The city contracts with Wright County for law enforcement services and maintains a volunteer Fire Department. Administration and Finance provide staff support for both functions. Community Development provides staff for building inspections. Public Community Community Operating Fund Administration Finance Works Center Development General Fund x x x x Special Revenue Funds Economic Development x x Cemetery x Minnesota Investment x Monticello Community Center x Debt Service Funds x Capital Project Funds Capital Project x x x x Closed Bond Fund x Park & Pathway Dedication x x Stormwater Access x Street Lighting Improvement x Street Construction x Enterprise Funds Water x Sewage x Liquor x Deputy Registrar x Fiber Optics x Internal Service Funds IT Services x Central Equipment x Benefit Accrual x Administration of Fund 54 THE BUDGET PROCESS ThecityofMonticellobudgetservesseveralpurposes: For the citizens of the city of Monticello, it presents a picture of the city government operations and intentions for the year. Forthe citycouncil,itservesasapolicytoolandasanexpressionofgoalsandobjectives. For citymanagement,itis usedasanoperatingguideandacontrolmechanism. The city'sbudgetencompassesboththeoperatingbudgetandthe capitalimprovementbudget.Each budget unit includes amounts appropriated for both operating expenses and capital items. Accompanying narrative for each budget unit/find briefly explains the items included in the budget. BASISOFBUDGETING Thecity’saccountsareorganizedonthebasisoffunds,eachofwhichisconsideredaseparateentity.The operationsofeachfundareaccountedforwithaseparatesetofself-balancingaccountsthatcompriseits assets,deferredinflow/outflows,liabilities,fundequity,revenuesandexpenditures/expenses. Governmentalfunds(theGeneralFundandspecialrevenue,debtservice,andcapitalprojectfunds)use themodifiedaccrualbasisforbudgetingandaccounting.Revenuesarerecognizedintheaccountingperiod inwhichtheybecomeavailableandmeasurable.Expendituresarerecognizedwhenliabilitiesareincurred. Proprietaryfunds(EnterpriseandInternalServicefunds)usethemodifiedaccrualbasisforbudgetingand theaccrualbasisforaccounting. Forexample,accrualbasisaccountingdifferswiththemodifiedaccrual basisbyrecordingexpensesfordepreciationandcompensatedabsencesbutnotdebtprincipalpayments. Eachproprietaryfund’sfinancialstatements,locatedinthecity’sComprehensiveAnnualFinancialReport (CAFR),arereportedonthefullaccrualbasis.Intheaccrualbasisofaccounting,revenuesarerecognizedin theaccountingperiodinwhichtheyareearned.Expensesarerecognizedintheaccountingperiodinwhich theyareincurred. BUDGET DEVELOPMENT PROCESS AftersubmittingtheCityAdministrator-FinanceDirectorRecommendedBudgetto thecitycouncil,public work sessions are held by the councilors. At this time the city administrator, finance director, and departmentheadsexplainthebudgetrecommendationsandunderlyingjustificationfortherequests.The councilalsoreviewsdepartmentalrequestswhichcouldnotbefunded,as anindicationofun-metneeds. During or following the work sessions, the councilors may make adjustments to the proposed budget. Followinganyadjustmentsto therecommendedbudget,atentativeappropriationresolutionis prepared and a public hearing is held. The Council may again make adjustments to the budget following the public hearing,afterwhichtime,theCouncilpassestheappropriationresolutioninfinalform. Appropriationsareestablishedbybudgetunit.Theaccountingsystem,budgetingsystem,andthebudget document itself, however, break these classes into subclasses--thereby providing more detailed information.Asanexample,operatingsupplies,gasandoil,andsubscriptionsareallclassifiedasoperating expenses. The accounting and budgeting systems provide detail for these specific sub-classes. However, appropriationcontrolisexercisedonlyatthebudgetunitlevel. 55 BUDGET CALENDAR/PROCEDURES The following budget timeline outlines the process the city customarily follows for creation and adoption of the annual budget. Date Activity June8, 2018 2019-2023 capitalequipment/projects (CIP) worksheets and budget worksheets to departmentheads. July 2, 2018 2019-2023 CIP and budgetworksheets dueto financedepartment July 9, 2018 Workshop with city counciland staff to set2019 goals and priorities. July, 2018 Departmentheads meetwith various advisory boards and commissions for inputinto 2019 preliminary budgetand CIP. July, 2018 Departmentheads meetwith city administrator, and financestaff to develop 2019 preliminary budgetand CIP. July 23, 2018 Workshop with city councilto review draftdepartmentbudgets and set2019 goals and priorities. August13, 2018 Financedepartmentdevelops revenueestimates and 2019 preliminary property tax levy. August27, 2018 Councilworkshop to review various departmentgoals, budgets, and CIP continued. September 10, 2018 Budgetworkshop with city counciland staff. September 10, 2018 Counciladopts 2019 preliminary HRA and city property tax levy. (See September 24) September 24, 2018 Lastregular meeting for city councilto consider adopting the2019 preliminary city property taxlevy. September 30, 2018 2019 preliminary property taxlevy certified to WrightCounty auditor. October/November, 2018 Departmentheads meetwith city administrator and financestaff to develop 2019 proposed budgetand finalproperty tax levy. December 10, 2018 Counciladopts 2019 budgetand property taxlevy. December 28, 2018 City certifies final2019 property taxlevy to WrightCounty auditor and files FormTNTwith theMNDepartmentof Revenue. January 1, 2019 2019 fiscalyear begins. 56 WORKLOAD/PERFORMANCEBUDGETING Beginning with the fiscal year 2010 budget, the city of Monticello started the development of a workload/performance budget. The move to this type of budgeting resulted in a shift in emphasis away from describing what will be purchased (inputs) towards describing what will be accomplished (outputs and outcomes). While this budgeting process faces numerous structural and cultural hurdles, this work-in-progress continues today with both an organization-wide and budget-unit specific focus on outcomes. PRESENTATION Thetextofthebudgetdocumentcustomarilycontainssixsectionsofinformationforeachactivity. Someactivitiesalsoincludehighlightsoraccomplishmentsfortheprioryearand/orthecomingyear. The first section provides a description of the activity. The second section describes its major objectives to be accomplished. The third section identifies issues/challenges the activity/division faces. The fourth section lists the workload/performance indicators for the division. The fifth section provides budget commentary. The sixth section provides detailed financial information. Thefinancialinformationincludesexpenditureinformationforthelastcompletedfiscalyear,the appropriatedamountsforthecurrentyear,andtherecommendedamountscoveredbythebudget. Costsaresegregatedintosixbasicclassifications:personnelservices(wage&benefits);supplyexpenses; otherservicesandcharges;capitaloutlay;debtservice;andoperatingtransfers.Appropriationcontrolis exercisedonlyattheactivityunitlevelandnotattheindividualobjectofexpenditurelevel. The narrative information is presented together with the financial detail to assist readers in understanding the planned outcomes for each activity/division, the purpose of each budget unit, and major changes or expenditures for the coming year. MONITORING AND REPORTING PROCESS As the budget year proceeds, individual departments and the finance department have dual responsibility formonitoringthestatusofeachbudgetunit.Departmentstaffhasprimaryresponsibilityformonitoringthe statusofexpendituresagainsttheirbudget.ThisresponsibilityincludesinformingtheFinanceDepartmentof anysignificantdeparturesfromtheplansanticipatedinthebudget. The finance department has overall responsibility for monitoring the status of all departments and funds. This is accomplished primarily through analysis of computerized budget performance reports which compare appropriationamounts onaline-item basis withactualexpenditures throughoutthe year.These reports aid department staff in controlling costs and act as an early warning system for the finance department. Department staff may exercise their judgment in exceeding expenditures by object code, as longastheydonotexceedthetotalamountappropriatedforthebudgetunit. The Finance Department reviews the budget reports on a monthly basis and discusses any variances from expected performance with the department staff. The finance department conducts in-depth quarterly budget reviews of all expenditures and revenues. 57 Significantchangesineitherexpendituresorrevenuesrequireabudgetrevision.Recommendationsarealso madebythefinancedirectorforanycorrectiveactionsthatarebelievednecessary. BUDGET AMENDMENT PROCESS State statute provides a number of different ways to amend the budget. The first involves a reallocationof existingappropriationsamongthelineitemswithinaspecificfund. Theseconddefinesaseriesofscenarios where the governing body has authority to amend the budget without a hearing for donations, land sales, and fee based budgets. All other increases in appropriation authority that are not specifically permitted by statutemustbeapprovedthroughapublicprocess. Thefinancedirectorisresponsibleforinsuringcompliancewithspendinglimitationsimposedbythebudget. Accordingly,thefinancedirectorsubmitsaBudgetStatusReporttothecitycouncilafterthree,six,nine,and twelve month periods. The budget reviews evaluate overall revenues and expenditures in comparison to thebudgetedamounts.Incaseswhereitappearstheoriginalspendingauthorityauthorizedwillnotprove sufficient, transfers of spending authority or additional spending authority are requested together with explanationsfortherequests.Thepublicapprovalprocessforbudgetamendmentsisheldifnecessary. 58 ORGANIZATION CHART CITY OF MONTICELLO Citizens of ORGANIZATIONAL CHART Monticello City Commissions Council & Boards City Administrator Human Finance Community Public Works Community City Fire Contracted Resource Director Development Director/Center Clerk Chief Services Manager Director Engineer Director Finance Economic Streets Community Elections Fire City Department Development Department Center Department Attorney Data Building Parks Sheriff's Processing Inspections Department Department Audit Receptionist Utilities Animal Department Control Department Consulting Refuse County of Motor Planner Collection Assessor Vehicles Liquor Construction FiberNet Operations Inspectors Operation Consulting Engineer 59 ALL FUNDS SUMMARY BY FUND TYPE Special Debt Capital Internal 2019 General Revenue Service Project Enterprise Service Total Fund Funds Funds Funds Funds Funds Budget Fund Balance/Working Capital - Jan. 1 6,329,093$ 8,436,510$ 2,327,166$ 10,352,730$ 11,863,946$ 858,838$ 40,168,283$ Revenues and Other Sources Property Taxes 6,670,000$ 750,000$ 2,227,646$ 662,354$ -$ -$ 10,310,000$ Tax Increments - 617,344 - - - - 617,344 Franchise & Other Taxes 266,500 - - 116,000 - - 382,500 Sale of Goods - - - - 5,979,220 - 5,979,220 Licenses & Permits 405,700 - - - 2,000 - 407,700 Intergovernmental Revenues 364,500 - - 150,000 - - 514,500 Charges for Services 636,800 1,624,000 - 60,000 6,228,363 567,603 9,116,766 Fines & Forfeits 36,500 - - - - - 36,500 Special Assessments 500 - 268,376 64,000 38,000 - 370,876 Miscellaneous 180,500 131,656 4,500 142,646 124,300 7,097 590,699 Contributed Capital - - - - 140,895 - 140,895 Operating Transfers In 25,000 - 335,000 2,600,000 100,000 - 3,060,000 Debt Proceeds - - - 8,000,000 - - 8,000,000 Total Revenues and Other Sources 8,586,000$ 3,123,000$ 2,835,522$ 11,795,000$ 12,612,778$ 574,700$ 39,527,000$ Expenditures and Other Uses Personnel Services 3,417,837 1,336,090 - - 1,703,198 - 6,457,125 Supplies 671,900 219,535 - - 4,853,245 35,000 5,779,680 Other Services & Charges 4,197,363 745,649 - - 3,785,960 199,700 8,928,672 Capital Outlay 298,900 508,726 - 13,740,000 1,573,000 414,500 16,535,126 Debt Service - - 3,497,223 - 373,574 131,600 4,002,397 Operating Transfers Out - 225,000 - 135,000 2,700,000 - 3,060,000 Total Expenditures and Other Uses 8,586,000 3,035,000 3,497,223 13,875,000 14,988,977 780,800 44,763,000 Net Change in Fund Balance/Working Capital -$ 88,000$ (661,701)$ (2,080,000)$ (2,376,199)$ (206,100)$ (5,236,000)$ Fund Balance/Working Capital - Dec. 31 6,329,093$ 8,524,510$ 1,665,465$ 8,272,730$ 9,487,747$ 652,738$ 34,932,283$ All FUNDS SUMMARY - BY FUND TYPE In most years, the city adopts a balanced budget for the General Fund and the Monticello Community Center Fund (MCC), a special revenue fund. Like 2018, the MCC will draw on reserves in 2019 to make facility improvements. A budget is balanced when revenues and other sources equals (or exceeds) expenditures and other uses. Fund balances/working capital increase with surpluses and decrease with deficits. Capital Project Funds commonly accumulate resources in one budget period and expend those resources over multiple budget periods. Prior year debt proceeds will be used to finish a projects in 2019. Debt amortization and early redemption of issue will lead to a significant decline in fund balance for the Debt Service Fund. Multiple debt service sub-funds are aggregated into one debt service fund for reporting purposes. Internal service funds provide services to other funds and typically function on a cost recovery basis. The city has three: IT Services Fund, Central Equipment Fund, and Benefit Accrual Fund. Central Equipment Fund equipment purchases will exceed lease revenue in 2019. The Benefit Accrual Fund is the only one of the three that is not used for capital asset acquisitons. 60 ALL FUNDS SUMMARY - BY YEAR TOTAL ALL FUNDS 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 8,619,812$ 9,275,414$ 9,556,742$ 9,870,000$ 9,870,000$ 10,310,000$ 4.5% Tax Increments 727,617 668,352 648,031 635,678 635,678 617,344 -2.9% Franchise & Other Taxes 352,073 432,785 471,926 405,500 405,500 382,500 -5.7% Sale of Goods 5,489,430 5,448,584 5,751,197 5,770,784 5,770,784 5,979,220 3.6% Licenses & Permits 465,469 671,602 603,223 400,750 400,750 407,700 1.7% Intergovernmental Revenues 1,400,435 2,041,363 1,340,094 374,440 374,440 514,500 37.4% Charges for Services 7,864,167 8,290,396 8,561,045 8,116,695 8,114,075 9,116,766 12.3% Fines & Forfeits 42,474 30,656 36,702 36,500 36,500 36,500 0.0% Special Assessments 3,331,901 984,916 960,696 385,746 385,746 370,876 -3.9% Miscellaneous 1,152,709 1,672,272 1,102,912 501,372 1,301,372 590,699 17.8% Contributed Capital 1,435,870 1,993,232 1,330,370 140,450 140,450 140,895 0.3% Operating Transfers 4,937,975 2,542,636 1,209,628 1,374,899 2,512,845 3,060,000 122.6% Debt Proceeds 2,651,898 6,410,568 5,258,366 5,000,000 5,000,000 8,000,000 60.0% TOTAL REVENUES 38,471,830$ 40,462,776$ 36,830,932$ 33,012,814$ 34,948,140$ 39,527,000$ 19.7% EXPENDITURES Personnel Services 5,476,611$ 5,671,244$ 5,759,652$ 6,258,839$ 6,280,944$ 6,457,125$ 3.2% Supplies 5,027,255 5,173,563 5,312,317 5,670,730 5,670,730 5,779,680 1.9% Other Services & Charges 7,627,947 7,712,853 8,359,928 8,690,371 8,912,988 8,928,672 2.7% Capital Outlay 4,225,516 10,036,239 6,931,102 12,915,870 13,824,870 16,535,126 28.0% Debt Service 6,032,959 6,983,866 4,880,042 3,308,834 3,312,834 4,002,397 21.0% Operating Transfers 4,937,975 2,542,636 1,209,628 1,374,899 2,512,845 3,060,000 122.6% TOTAL EXPENDITURES 33,328,263$ 38,120,401$ 32,452,669$ 38,219,543$ 40,515,211$ 44,763,000$ 17.1% FUND BALANCE - JANUARY 1 33,871,149$ 39,014,716$ 41,357,091$ 45,735,354$ 45,735,354$ 40,168,283$ Excess (Deficiency) of Revenues over Expenditures 5,143,567 2,342,375 4,378,263 (5,206,729) (5,567,071) (5,236,000) FUND BALANCE - DECEMBER 31 39,014,716$ 41,357,091$ 45,735,354$ 40,528,625$ 40,168,283$ 34,932,283$ Intergovernmental revenues are projected to increase in 2019 as the city receives more state/federal aid for street projects. Special assessments will decline because of 2015 prepayments and normal amortization. Operating transfers are higher in 2019 because of a larger Liquor Fund transfer to the Park & Pathway Fund for Bertram park development. One debt issuance is planned in 2019 to finance Fallon Avenue overpass and fire station construction and a new fire ladder truck. Charges for services reflect higher garbage and utility charges. Personnel services increased with the addition of two full-time positions (engineer-public works director and deputy fire chief) in the middle of 2018. A 3% wage and health benefit increase are budgeted for 2019. Capital expenditures (outlay) increase in 2019 with fire station and Bertram Park construction and the purchase of a ladder truck. Debt service increases with the early redemption of one bond issue. Capital expenditures reflect disbursements for acquisition or replacement of assets with long-lives (benefit two or more accounting periods) and usually have significant price tags. In contrast, current expenditures only benefit the current or next accounting period and usually have smaller price tags. Capital expenditures can be recurring or non-recurring in nature. The wastewater treatment plant upgrade would be an example of non-recurring capital expenditure. On the other hand, the city budgets annually $200,000-$500,000 to replace or repair streets. This would be an example of a recurring capital expenditure. Recurring capital expenditures usually have a pay-as-you-go funding source (enterprise funds) and non-recurring capital expenditures typically include debt as a funding component. 61 CHANGES IN FUND BALANCE/WORKING CAPITAL Projected Beginning Projected Ending Fund Balance/Estimated Fund Balance/ Working Capital Revenues Appropriations Working Capital General Fund 6,329,093$8,586,000$8,586,000$6,329,093$ Special Revenue Funds Economic Development 7,205,390 1,061,000 899,000 7,367,390 Cemetery 41,823 52,000 91,000 2,823 Minnesota Investment 877,776 10,000 -887,776 Monticello Community Center 311,521 2,000,000 2,045,000 266,521 Total Special Revenue Funds 8,436,510 3,123,000 3,035,000 8,524,510 Debt Service Funds 2010A G.O. Improvement Bond 787,240 171,523 889,156 69,607 2011A G.O. Refunding Bond 876,237 395,817 429,150 842,904 2014A G.O. Judgment Bond 88,664 538,244 512,462 114,446 2015B G.O. Street/Improvement 93,042 224,516 213,652 103,906 2016A G.O. Street/Improvement 324,629 514,056 529,250 309,435 2017A G.O. Improvement/Abate 152,354 491,366 472,438 171,282 2018A G.O. Abatement 5,000 500,000 451,115 53,885 Total Debt Service Funds 2,327,166 2,835,522 3,497,223 1,665,465 Capital Project Funds Capital Project 5,847,933 9,389,000 10,175,000 5,061,933 Closed Bond Fund 515,048 69,000 -584,048 Park & Pathway Dedication 630,102 2,162,000 2,605,000 187,102 Stormwater Access 1,139,888 65,000 800,000 404,888 Street Lighting Improvement 507,972 90,000 160,000 437,972 Street Construction 1,711,787 20,000 135,000 1,596,787 Total Capital Project Funds 10,352,730 11,795,000 13,875,000 8,272,730 Enterprise Funds Water 5,039,001 1,561,747 1,513,113 5,087,635 Sewage 3,634,606 2,570,411 3,303,190 2,901,827 Liquor 1,829,236 5,984,220 7,622,065 191,391 Deputy Registrar 1,115,933 551,400 451,609 1,215,724 Fiber Optics 245,170 1,945,000 2,099,000 91,170 Total Enterprise Funds 11,863,946 12,612,778 14,988,977 9,487,747 Internal Service Funds IT Services 77,796 253,300 249,200 81,896 Central Equipment 503,903 301,900 531,600 274,203 Benefit Accrual 277,139 19,500 -296,639 Total Internal Service Funds 858,838 574,700 780,800 652,738 Total All Funds 40,168,283$39,527,000$44,763,000$34,932,283$ Fiscal Year 2019 CHANGES IN FUND BALANCE/WORKING CAPITAL The fund balances/working capital for the city’s major operating funds are expected to be relatively stable with balanced (revenues equal expenditures) or nearly-balanced budgets. The Monticello Community Center Fund is expected to draw on reserves for capital improvements, which includes upgrading the pool slide. Debt amortization and redemption (2010A) in various debt service sub-funds, completion of a debt- funded project in the Capital Project Fund, park development with liquor proceeds, and sewage improvements and equipment purchases will decrease fund balances. 62 FUND BALANCE HISTORY Amended Adopted Actual Actual Actual Budget Projected Budget 2015 2016 2017 2018 2018 2019 General Fund 4,986,796$6,276,716$7,029,093$7,029,093$6,329,093$6,329,093$ Special Revenue Funds - Economic Development 6,512,174 7,142,330 7,468,105 7,638,917 7,205,390 7,367,390 Cemetery 33,651 31,726 50,946 41,823 41,823 2,823 Minnesota Investment 1,120,404 1,138,164 1,153,959 1,168,959 877,776 887,776 Monticello Community Center 629,448 761,834 580,521 311,521 311,521 266,521 Total Special Revenue Funds 8,295,677 9,074,054 9,253,531 9,161,220 8,436,510 8,524,510 Debt Service Funds 2007A G.O. Improvement (Closed)470,615 (175,846)---- 2008B G.O. Sewer (Closed)1,429,004 1,067,790 ---- 2010A G.O. Improvement Bond 646,252 1,023,462 959,700 787,240 787,240 69,607 2011A G.O. Refunding Bond (2005A) 2,828,329 1,261,576 1,260,962 876,237 876,237 842,904 2014A G.O. Judgment Bonds 7,350 36,519 62,814 88,664 88,664 114,446 2015B G.O. Street/Improvement 665 66,414 80,200 93,042 93,042 103,906 2016A G.O. Street/Improvement -263,638 334,760 324,629 324,629 309,435 2017A G.O. Improvement/Abatement --102,545 152,354 152,354 171,282 2018A G.O. Improvement/Abatement ----5,000 53,885 Total Debt Service Funds 5,382,215 3,543,553 2,800,981 2,322,166 2,327,166 1,665,465 Capital Project Funds Capital Project 4,533,131 6,632,410 8,017,460 4,786,460 5,847,933 5,061,933 Closed Bond Fund 859,079 251,819 456,048 515,048 515,048 584,048 Park & Pathway Dedication 1,236,660 620,861 508,102 240,102 630,102 187,102 Stormwater Access 1,174,049 1,397,396 1,241,888 1,306,888 1,139,888 404,888 Street Lighting Improvement 681,660 719,319 842,972 632,972 507,972 437,972 Street Construction 1,775,943 1,758,512 1,736,686 1,711,787 1,711,787 1,596,787 Total Capital Project Funds 10,260,522 11,380,317 12,803,156 9,193,257 10,352,730 8,272,730 Enterprise Funds - Water 4,785,819 4,396,684 5,341,438 5,061,106 5,039,001 5,087,635 Sewage 2,641,553 3,085,916 4,308,695 3,834,606 3,634,606 2,901,827 Liquor 1,017,443 1,353,627 1,871,630 1,829,236 1,829,236 191,391 Deputy Registrar 544,987 776,349 990,502 1,087,313 1,115,933 1,215,724 Fiber Optics 508 305,914 408,170 245,170 245,170 91,170 Total Enterprise Funds 8,990,310 9,918,490 12,920,435 12,057,431 11,863,946 9,487,747 Internal Service Funds IT Services 119,347 209,622 276,816 280,416 77,796 81,896 Central Equipment 753,691 690,120 393,703 207,903 503,903 274,203 Benefit Accrual 226,158 264,219 257,639 277,139 277,139 296,639 Total Internal Service Funds 1,099,196 1,163,961 928,158 765,458 858,838 652,738 Total All Funds 39,014,716$41,357,091$45,735,354$40,528,625$40,168,283$34,932,283$ FUND BALANCE/WORKING CAPITAL HISTORY Fiscal Year Ended December 31, 63 BALANCED BUDGETS A BALANCED BUDGET can be defined as a situation where total revenues and other financing sources is equal to (or greater than) total expenditures and other uses. Revenues and other financing sources increase financial resources. Expenditures and other uses decrease financial resources. Operating transfers in and debt issue proceeds are considered other financing sources. Operating transfers out are considered other financing uses. A balanced budget does not dip into reserves or fund balances. However, an unbalanced budget (deficit) is not necessarily poor financial management. For example, debt service funds often accumulate resources in the year prior to expenditure. Further, debt-financed capital projects frequently stretch over multiple years. The city has never used debt to finance current or ongoing expenditures. It is the city’s policy to adopt balanced budgets for the General Fund and the Community Center Fund. Indeed, both funds are supported by property taxes. However, the community center expects to again draw on reserves for 2019 facility upgrades, lowering operating costs, and enhancing customer experiences. $(1,800) $(1,600) $(1,400) $(1,200) $(1,000) $(800) $(600) $(400) $(200) $- $200 $400 Benefit Accrual Central Equipment IT Services Fiber Optics Deputy Registrar Liquor Sewage Water Street Construction Street Lighting Improvement Stormwater Access Park & Pathway Dedication Closed Bond Fund Capital Project 2018A G.O. Abatement 2017A G.O. Improvement/Abate 2016A G.O. Street/Improvement 2015B G.O. Street/Improvement 2014A G.O. Judgment Bond 2011A G.O. Refunding Bond 2010A G.O. Improvement Bond Monticello Community Center Minnesota Investment Cemetery Economic Development General Fund Thousands Budgeted Change in Fund Balances/Working Capital 64 BALANCED BUDGET – GENERAL FUND General Fund A BALANCED BUDGET can be defined as a situation where total revenues and other financing sources is equal to (or greater than) total expenditures and other uses. Revenues and other financing sources increase financial resources. Expenditures and other uses decrease financial resources. Operating transfers in and debt issue proceeds are considered other financing sources. Operating transfers out are considered other financing uses. Revenues and Other Sources: Property Taxes 6,670,000$ Franchise & Other Taxes 266,500$ Licenses & Permits 405,700$ Intergovernmental Revenues 364,500$ Charges for Services 636,800$ Fines & Forfeits 36,500$ Special Assessments 500$ Miscellaneous 180,500$ Operating Transfers 25,000$ Total 8,586,000$ Expenditures and Other Uses: General Government 1,778,772$ Public Safety 2,487,285$ Public Works 3,033,696$ Transit 5,000$ Recreation & Culture 1,274,583$ Unallocated 6,664$ Operating Transfers -$ Total 8,586,000$ Deficit Surplus B A L A N C E D Revenues and Other Sources GREATER than Expenditures and Other Uses Revenues and Other Sources LESS than Expenditures and Other Uses 65 STAFFING SUMMARY STAFFING HISTORY Staffing,as measuredby full-time equivalents, has been relativelystable for thelast five years.Many employees perform across multiple activities/divisions and funds.The table below does not reflect the seasonalorpart-timecommunitycenteremployees.The budgetincludes a new full-time fire positionstartinginJuly2018.Alltheemployees forFiberOptics Fundwereeliminatedwhen the service was outsourced2016. Amended Adopted Actual Actual Actual Budget Projected Budget 2015 2016 2017 2018 2018 2019 General Fund City Administration 1.85 1.85 2.18 3.60 3.60 3.60 Finance 4.00 4.00 4.00 4.00 4.00 4.00 City Clerk 0.35 0.35 0.35 1.00 1.00 1.00 Human Resources 1.00 1.00 1.00 1.00 1.00 1.00 Planning & Zoning 1.30 1.30 1.30 1.30 1.30 1.30 City Hall 1.40 1.40 1.90 --- Fire & Rescue ---0.50 0.50 1.00 Building Inspections 3.00 3.00 4.00 4.00 4.00 4.00 Public Works Administration 2.00 2.00 1.50 1.80 1.80 1.80 Engineering 1.60 ----- Public Works Inspections 1.30 1.30 1.00 1.00 1.00 1.00 Shop & Garage 1.50 1.50 1.50 1.50 1.50 1.50 Streets & Alleys 10.30 10.30 10.05 9.80 9.80 9.80 Ice & Snow 2.20 2.20 1.70 1.65 1.65 1.65 Park Operations 6.85 6.85 6.85 6.00 6.00 6.00 Shade Tree 0.40 0.40 0.50 0.60 0.60 0.60 Total General Fund 39.05 37.45 37.83 37.75 37.75 38.25 Special Revenue Funds Economic Development 0.20 0.20 1.20 1.20 1.20 1.20 Monticello Community Center 8.40 8.40 8.40 8.40 8.40 8.40 Total Special Revenue Funds 8.60 8.60 9.60 9.60 9.60 9.60 Enterprise Funds Water 3.15 3.15 3.80 4.00 4.00 4.00 Sewage 3.15 3.15 3.80 4.00 4.00 4.00 Liquor 10.00 10.00 10.00 10.00 10.00 10.00 Deputy Registrar 6.00 6.00 6.10 6.20 6.20 6.20 Fiber Optics 7.45 3.75 ---- Total Enterprise Funds 29.75 26.05 23.70 24.20 24.20 24.20 Total All Funds 77.40 72.10 71.13 71.55 71.55 72.05 NUMBER OF FULL-TIME EQUIVALENTS Fiscal Year Ended December 31, 66 TAX LEVY HISTORY 2015 2016 2017 2018 2019 GeneralFund 5,882,000$6,177,000$6,291,000$6,590,000$6,670,000$ Percent Change 7.0%5.0%1.8%4.8%1.2% Special Revenue Funds Economic Development (HRA Levy)-280,000 280,000 323,000 348,000 Monticello Community Center*1,363,000 364,000 372,000 387,000 402,000 Total SpecialRevenue Funds 1,363,000 644,000 652,000 710,000 750,000 Percent Change -1.9%-52.8%1.2%8.9%5.6% Debt Service Funds 2011AGO RefundingBonds (2005A)330,000 330,000 139,783 148,061 150,581 2007AGO Improvement Bond 420,000 420,000 610,000 -- 2008B GO Sewer Refunding 500,000 500,000 500,000 -- 2010AGO Improvement Bond 40,000 40,000 40,000 40,000 - 2014AGO Judgement Bond -544,000 536,929 537,586 537,244 2015B GO SR&I Bond -250,000 195,288 203,425 200,905 2016AGO SR&I Bond --415,000 407,769 409,134 2017AGO I&A Bond ---450,159 429,782 2018AGO Abatement Bond ----500,000 Total Debt Service Funds**1,290,000 2,084,000 2,437,000 1,787,000 2,227,646 Percent Change 2.1%61.6%16.9%-26.7%24.7% CapitalProject Funds Capital Projects Fund -300,000 50,000 783,000 662,354 Total Capital Project Funds -300,000 50,000 783,000 662,354 Percent Change -------83.3%1466.0%-15.4% Total Tax Levy - All Funds 8,535,000$9,205,000$9,430,000$9,870,000$10,310,000$ Percent Change 4.7%7.9%2.4%4.7%4.5% Levy Summary City General and Debt Levies 8,535,000$8,925,000$9,150,000$9,547,000$9,962,000$ Percent Change 4.7%4.6%2.5%4.3%4.3% HRA Levy -$280,000$280,000$323,000$348,000$ Percent Change ------0.0%15.4%7.7% * MCC levy for debt 1,040,000$-$-$-$-$ **Total debt levy with MCC debt 2,330,000$2,084,000$2,437,000$1,787,000$2,227,646$ Percent Change 18.9%-10.6%16.9%-26.7%24.7% TAX LEVY AND TAX CAPACITY HISTORY TAX LEVY HISTORY 67 TAX CAPACITY HISTORY 2015 2016 2017 2018 2019 Tax Capacity 23,882,689$ 25,891,898$ 27,583,160$ 29,528,145$ 29,065,103$ Percent Change 30.6%8.4%6.5%7.1%-1.6% City Levy - Tax Capacity Rate 35.737 34.470 33.172 32.332 34.275 Percent Change -15.4%-3.5%-3.8%-2.5%6.0% HRA Levy - Tax Capacity Rate - - 1.015 1.094 1.197 Percent Change --- --- --- 7.8%9.5% TAX CAPACITY HISTORY The Housing Redevelopment Authority (HRA) special benefit levy is capped at .0185% (or .000185) of the city’s taxable market value. The city’s taxable market value for taxes collected in 2018 totaled $1,883,565,600. HRA levy proceeds can only be used for purposes included in the HRA Act (Minnesota Statutes, Section 469.033, subd. 6). Those purposes include redevelopment to correct or prevent blight and development of, or assistance to, housing for low- or moderate-income persons. In 2019, Northern States Power (dba Xcel Energy), the city’s largest taxpayer, succeeded in getting the Minnesota Department of Revenue to lower the estimated market value of its nuclear power plant. Xcel’s estimated market value drop exceeded residential and commercial tax base growth, causing the city’s total tax capacity to decline. The graph below reflects the annual change in the city’s property tax levy and the annual change in Xcel’s property taxes owed. When the green column is larger than the blue column, Xcel absorbed the entire levy and lowered the taxes paid by others. In 2019, the green column is in negative territory. In this case, other taxpayers picked up the entire levy increase plus the amount Xcel’s taxes declined. $(400,000) $(200,000) $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 2015 2016 2017 2018 2019 City Levy and Xcel Property Tax Change City Levy Xcel Change More information on the city’s largest taxpayer can be found on the following page. 68 LARGEST PROPERTY TAXPAYER The city’s largest property taxpayer is Northern States Power (dba Xcel Energy). In 2011, Xcel completed the first of two major uprates (energy producing improvements) at its nuclear power plant, which is located just inside the western boundary of the city. The second uprate was completed in 2013. The uprates resulted in major tax capacity increa ses for tax collection years 2013 and 2015. Current year property taxes are calculated on the taxable market value on January 1 of the prior year. For tax year 2019, Xcel was successful in getting the Minnesota Department of Revenue to change the valuation method for the plant. As a result, the plant valuation dropped by nearly $81 million. The below schedule and graph reflect the importance of the plant to the city’s tax base: Tax Year Amount Change $$Amount $$ Change % Chg.Amount $$ Change % Chg. 2012 298,023,900$ 5,960,478$ 2,966,335$ 2013 479,449,000$ 181,425,100$ 9,588,980$ 3,628,502$ 61%4,052,178$ 1,085,843$ 37% 2014 448,484,200$ (30,964,800)$ 8,969,684$ (619,296)$ -6%4,010,278$ (41,900)$ -1% 2015 706,645,500$ 258,161,300$ 14,132,910$ 5,163,226$ 58%5,050,410$ 1,040,132$ 26% 2016 779,539,900$ 72,894,400$ 15,590,798$ 1,457,888$ 10%5,374,045$ 323,635$ 6% 2017 832,073,500$ 52,533,600$ 16,641,470$ 1,050,672$ 7%5,520,059$ 146,014$ 3% 2018 877,855,100$ 45,781,600$ 17,557,102$ 915,632$ 6%5,676,496$ 156,437$ 3% 2019 797,167,200$ (80,687,900)$ 15,943,344$ (1,613,758)$ -9%5,464,164$ (212,332)$ -4% Northern States Power (dba Xcel Energy) Taxable Market Value Tax Capacity City Property Tax on Plant The green line is the plant’s percentage of the city’s total tax capacity and consequently its share of the annual property tax levy. In 2015 the percentage rose above 60% and remained there until 2019, when it dropped to just above 56%. This tax capacity decline means the city’s other taxpayers will absorb more of the tax levy. The power plant also pays a significant portion of the HRA levy: 2016 2017 2018 2019 HRA Levy 280,000$ 280,000$ 323,000$ 348,000$ NSP Paid 168,528$ 168,904$ 192,066$ 190,833$ % NSP Paid 60%60%59%55% 69 REVENUE SOURCES BY FUND Revenue Classifications Property Franchise Tax Licenses/ Intergovern- Charges for Taxes & Other Increments Permits mental Services General Fund 6,670,000$266,500$-$405,700$364,500$636,800$ Special Revenue Funds Economic Development 348,000 -617,344 --- Cemetery -----51,500 Minnesota Investment ------ Monticello Community Center 402,000 ----1,572,500 Total Special Revenue Funds 750,000 -617,344 --1,624,000 Debt Service Funds 2010A G.O. Improvement Bond ------ 2011A G.O. Refunding Bond 150,581 ----- 2014A G.O. Judgment Bond 537,244 ----- 2015B G.O. Street/Improvement 200,905 ----- 2016A G.O. Street/Improvement 409,134 ----- 2017A G.O. Improvement/Abate 429,782 ----- 2018A G.O. Abatement 500,000 ----- Total Debt Service Funds 2,227,646 ----- Capital Project Funds Capital Project 662,354 36,000 --150,000 - Closed Bond Fund ------ Park & Pathway Dedication ------ Stormwater Access -----60,000 Street Lighting Improvement -80,000 ---- Street Construction ------ Total Capital Project Funds 662,354 116,000 --150,000 60,000 Enterprise Funds Water ---65,000 -1,384,247 Sewage -----2,459,516 Liquor ------ Deputy Registrar -----1,100 Fiber Optics -----1,832,400 Total Enterprise Funds ---65,000 -5,677,263 Internal Service Funds IT Services -----252,203 Central Equipment -----298,900 Benefit Accrual -----16,500 Total Internal Service Funds -----567,603 Total All Funds 10,310,000$382,500$617,344$470,700$514,500$8,565,666$ 70 Revenue Classifications Fines &Special Miscell-Sale of Debt Contributed Operating Forfiets Assess aneous Goods Proceeds Capital Transfers Total 36,500$500$180,500$-$-$-$25,000$8,586,000$ --95,656 ----1,061,000 --500 ----52,000 --10,000 ----10,000 --25,500 ----2,000,000 --131,656 ----3,123,000 -36,523 ----135,000 171,523 -44,236 1,000 ---200,000 395,817 --1,000 ----538,244 -22,611 1,000 ----224,516 -103,922 1,000 ----514,056 -61,084 500 ----491,366 -------500,000 -268,376 4,500 ---335,000 2,835,522 --40,646 -8,000,000 -500,000 9,389,000 -64,000 5,000 ----69,000 --62,000 ---2,100,000 2,162,000 --5,000 ----65,000 --10,000 ----90,000 --20,000 ----20,000 -64,000 142,646 -8,000,000 -2,600,000 11,795,000 -25,000 68,500 --19,000 -1,561,747 --50,000 --60,895 -2,570,411 --5,000 5,979,220 ---5,984,220 --550,300 ----551,400 --12,600 ---100,000 1,945,000 -25,000 686,400 5,979,220 -79,895 100,000 12,612,778 --1,097 ----253,300 --3,000 ----301,900 --3,000 ----19,500 --7,097 ----574,700 36,500$357,876$1,152,799$5,979,220$8,000,000$79,895$3,060,000$39,527,000$ 71 LONG RANGE FINANCIAL PLANS General Fund Community Center EDA Capital Projects Routine Expenditures Expected to rise at the pace of inflation but mitigated by gains in productivity. Some capital expenditures are incorporated as routine through rental charges by internal service funds. Additions to staff and an increase to law enforcement have a large impact in 2018 and 2019. Expected to rise at the pace of inflation. Routine capital expenditures are set at $75,000 per year. Non-TIF expenditures are expected to rise at the pace of inflation. Non-routine Expenditures Basic level of non-routine items are included in overall budget but vary within each budget unit from year-to-year. Large repair and maintence items and total capital expenditures exceeding $75,000 could be supported by transfers from other funds. 2019: $150,000 pool slide. Tax increment financing (TIF) expenditures will vary considerabley from year-to- year in each district as development occurs. Large capital projects usually receive funding from debt issuance. The city usually covers initial project costs with reserves or other sources and reimburses itself with debt proceeds. 2019: Fallon overpass - $1M (started in 2017), Fire station - $5.6M, fire truck - $1.3M. Park and Pathways Fund BCOL buildout - $2.3M Revenues Property taxes provide nearly 80% of General Fund revenue. Consequently, spending is constrained by growth in the tax levy. The city started diversifying revenue with residential refuse charges in 2018/2019. With the last payment on community center debt service coming in 2015, the property tax levy for this debt declined by $1M in 2016. User fees should cover 85% on-going expenditures. Tax increment revenues widely vary from district to district but not much from year-to- year. Often reserves, accumulation of prior year increments, are used to fund projects. Transfers from the General Fund were eliminated in 2016 with the initiation of an HRA levy. The 2019 levy is $348,000. Fallon Overpass will receive some federal aid in 2020. State street aid is used as temporary financing and later replaced with debt proceeds. Debt None: Indirectly supports Central Equipment Fund debt service through annual rental payments. No debt issues are anticipated over next five years. Further, debt for recreational projects either requires voter approval or must be incurred as part of a lease-purchase agreement with the EDA. Intrafund loans from the EDA General Fund sub-fund will finance some TIF activities. No external debt issuance is planned. 2019: $8M tax abatement, capital improvement, and equipment bonds. The debt service for these bonds will be structured to take advantage of the decline in other tax supported debt. 72 Water Sewage Liquor Fiber Optics Central Equipment Expected to rise at the pace of inflation but mitigated by reinvestment in plant and equipment. Annual capital expenditures financed on a pay-as-you-go basis range between $150,000 to $300,000. Expected to rise at the pace of inflation but mitigated by reinvestment in plant and equipment. Annual capital outlays financed on a pay- as-you-go basis range between $150,000 to $300,000. Expected to rise at the pace of inflation and increases in demand. Cost of sales are typically passed onto customers through higher prices. The Liquor Store maintains a consistent gross profit margin of 25%-27%. Operating revenues cover non-capital expenditures. A management firm was hired to run day-to-day operations in 2016. Capital equipment purchases will vary widely every year. A debt service schedule is contained in the Internal Service section of this report. All expenditures in this fund are either for capital equipment purchases or debt service. 2022: $1.2M Well 6. 2023: $4.5M water treatment facility. Sewer access fees are no longer need to support debt service. 2019: $100K parking lot repairs. 2020: $500k SCADA systems. 2020: $1.8M phase 2 WWTF. 2021: $2.4M trunk line. 2022: $2.11M WWTF headworks improvements. The Liquor Fund has $25,000 budgeted for cooler replacement in 2019. Coolers are replaced as needed. The fund generates sufficient annual revenues to support its needs. Operating revenues are not adequate to support non- routine expenditures. Consequently, Liquor Fund transfers will provide funding for fund operations. Anticipated future expenditure by year: 2019: $400,000; 2020: $852,000; 2021: $665,000; 2022: $345,000; 2023: $615,000. A $1.3M ladder truck will be purchased outside of this fund in 2019. User rates are high enough to cover planned expenditures for the next five years. However, the base charge for water and sewage services will increase in advance of going to monthly billing. User rates are expected to rise to provide for pay-as- you-go routine system replacement and debt finance upgrades to meet new environmental regulations. A phased ten percent rate increase is needed for the phophorus reduction wastewater treatment plant project. Sales have increased steadly for the last five years. Going forward, sales are expected to level out because of space limitations. 2019: $100,000 transfer from the Liquor Fund. Transfers from Liquor Fund could decline with further operational changes. Rental revenues (expenditures in other funds and budget units) will rise with equipment purchases. Therefore, revenue sources in other funds become the revenue source for this internal service fund. The city transferred $300K into the fund in 2018. No debt issues are anticipated over next five years. The Minnesota Public Facilities Authority (MPFA) may provide funding for the future projects. Revenue bonds may be sold as reserves are depleted. No debt issues are anticipated over next five years. In 2014, a resolution was reached with telcom bond holders, the city issued $6 million in settlement bonds in 2014. The city levies property taxes for debt service on these bonds. Debt service is not recorded in this fund. No new debt is contemplated for the future. The fund is expected to become self-sustaining. The city issued $515,000 in bonds to finance future purchase of a plow truck and the 2014 purchase of a fire tender. Future debt issues may be needed to make all the acquistions listed in the CIP. 73 LONG RANGE FINANCIAL PLANS (continued) Prior to the start of the budget process, council and staff review service needs, growth trends, and capital investment requirements. A long-range financial model is developed for the city’s four main operating funds: General, Monticello Community Center, Water, and Sewage. This is done in conjunction with the Capital Improvement Plan (CIP), which is a five-year forecast that includes funding sources. Financial planning is segregated into two components: operations for the four main operating funds and capital investments (CIP). The Municipal Liquor Fund, Deputy Registrar Fund and Fiber Optic Fund are excluded from long range financial plan. The liquor store and DMV are largely retail operations with no major forecasted capital investment needs. The Fiber Optic Fund presents interesting challenges in a dynamic and competitive market where strategies and a business plan need refinement. Items impacting long range financial planning: Current financial position (fund balances) Debt burden Regulatory environment Condition of existing capital assets Growth trends, inflation, and aspirations The city annually adopts a balanced budget for the General Fund. Consequently, the revenues/sources line and the expenditures/uses line will overlap for the 2019 budget and for future year projections. After 2019, annual expenditures are projected to increase at 3% per year. The property tax levy and all other revenues are projected to increase at the same rate as expenditures/uses. According to policy, the city shall maintain a fund balance of 75% of expenditures and recurring uses. The following chart assumes the city will continue to provide the same current levels of service. $- $2 $4 $6 $8 $10 $12 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024MillionsGeneral Fund 2015-2024 Fund Balance Revenues/Sources Expenditures/Uses 74 Like the General Fund, the Monticello Community Center Fund normally adopts a balanced budget. However, in 2019 and 2020, the MCC expects to draw down on its fund balance for deferred maintenance items. Afterward, the revenues/sources line and the expenditures/uses line will overlap for the 2021 budget and for future year projections. After 2019, annual expenditures are projected to increase at 3% per year. Transfers to the fund have supported the capital project in the past. The last payment ($1,001,000) on property tax supported debt service, related to the initial construction of the community center, occurred in 2015. $- $1 $2 $3 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024MillionsMonticello Community Center 2015-2024 Fund Balance Revenues/Sources Expenditures/Uses The Water Fund is the city’s most self-sustained utility fund. The fund has no direct debt and adequate reserves to cover almost any expenditure for major capital projects, of which none are planned in the next couple years. In 2019, transfers to debt service funds for water related improvements cease. These transfers supplement water access fees which all but dried up as a result of slower commercial and residential development. The peak in 2016 expenditures reflect the nearly $1 million in water improvements as part of the 2016 Core Street Projec t. A new well is planned for 2022. Debt and reserves will finance a treatment plant that is tentatively scheduled for 2023. $- $1 $2 $3 $4 $5 $6 $7 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024MillionsWater Fund 2015-2024 Working Capital Revenues/Sources Expenditures/Uses 75 Unlike the Water Fund, the Sewage Fund represents funding challenges. First, sanitary sewer access fees declined significantly with the lack of development. Transfers to debt service funds supplementing these access fees dropped significantly in 2017 and ceased altogether in 2018. Second, environmental regulatory changes require large investments in the wastewater treatment plant. The city incurred nearly $2.5 million in debt for the wastewater treatment plant phosphorous reduction project and for replacement of two digester covers, both in 2016. Other debt supported treatment plant improvements are planned for 2020 through 2022. $- $1 $2 $3 $4 $5 $6 $7 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024MillionsSewage Fund 2015-2024 Working Capital Revenues/Sources Expenditures/Uses 76 LONG-TERM FISCAL OBJECTIVES The city council and staff are committed to expending public resources in the most cost-effective and economical manner possible to ensure the stability of the city property tax levy. In light of changes to tax policy, state aid reductions for various purposes, state imposed levy limits in prior years, and the potential of future levy limits, fiscal strategies will need to be constantly monitored to ensure a balanced approach in providing sufficient revenues to fund services: 1. Employ a strategy aimed at reducing the city’s reliance on the property tax levy to fund basic services through “sustainable” revenue sources such as franchise fees, special revenues, user fees, and charges for services. The city’s property tax levy generates nearly 80% of the General Fund’s revenue. This overdependence is largely attributable to a healthy tax base, which includes a nuclear power plant. In recent years, the city’s tax levy has kept pace with inflation. The current council philosophy seems to indicate a willingness to take advantage of the growth in the tax base. While a growth plus inflation tax levy formula would not reduce the dependence on property taxes, it would alleviate the strain placed on city finances by inflation. City services will continue to be evaluated in terms of identifying all relevant funding sources to underwrite specific service expenditures, promoting alternatives to traditional funding methodologies, and encouraging public-private partnerships in service delivery systems. 2. The development and use of appropriate cost accounting structure that will lead to creation of individual cost centers for all city department activities to accurately reflect the true cost of providing specific services. The city employs a cost accounting system that is department specific and attempts to accurately reflect service delivery costs at the department and division levels. By including all supplemental services as they relate to personnel, charges and services, supplies, and capital outlays the city will further distinguish the total cost of services provided. The city has the ability to analyze these costs at the sub-category detail levels in support of overall policy goals. 3. The adoption of a financial philosophy that seeks to spread the cost of significant capital outlay expenditures over an extended period of time to ensure that current and future taxpayers share equally in underwriting those costs. The city continues to capitalize the cost of significant capital expenditures over several years to ensure that both existing and future taxpayers share equally in the cost. In addition, the city has dedicated a portion of the tax levy to underwrite the cost of selected capital projects and equipment, avoiding a fiscal environment based on reactive tax and spend policies. The five-year capital improvement planning process is critical in achieving these results. 77 4. The development of a long-term financial model (proforma) that identifies anticipated trends in community growth and establishes a link between fiscal targets and budgetary expenditures. The city is in the process of developing and maintaining a financial model to determine the long- term impacts of present day expenditures and financing decisions. Fiscal assumptions are based upon a complex set of financial data including growth factors, tax capacity valuations, per capita spending, and debt ratios. The proforma is utilized as a tool as part of the budget planning process to ensure that key short-term fiscal targets are in line with long-term fiscal projections. The city will continually update the proforma to ensure that long-term fiscal outcomes remain consistent with council budgetary policies. 5. The development of work performance goals for each department to ascertain and measure how each operating division contributes to the city’s overall public service mission. Each department is responsible for identifying relevant performance data to allow for an independent analysis of specific service outcomes. Data is reviewed to provide the council and general public with a better understanding of the operational demands, resource inputs, and performance outcomes associated with a specific service delivery system. 6. The aggressive and appropriate investment of idle city funds to maximize the generation of interest income, while ensuring adequate cash flow requirements. Investment of city funds is controlled by state statute and managed by the finance director. Idle funds are invested in a variety of financial instruments such as certificates of deposit, federal agencies (FHLMC, FNMA, etc.), and appropriately rated bonds. Long-term investing is designed to achieve the best yield in the current market, following a strategy that structures long-term investments in ladder format and reinvests short-term investment in rotating terms of up two years. 7. Greater reliance on technology to enhance employee productivity in all areas of city operations and improve customer communications. The city has taken steps to invest additional time and energy on labor saving technology, such as software programming and electronic file storage. Staff has discussed the need to look at optic imaging solutions. Imaging city records will enable the city to reduce storage areas presently dedicated to paper files and look at more economical and efficient systems of data retrieval. 78 8. Involving all employees in the process of re-engineering the work environment by encouraging cross-training opportunities, reducing and eliminating bureaucratic barriers, streamlining public process requirements, and adopting private sector customer service business values in city operations. City staff is encouraged to identify work practice issues that are inefficient or overly bureaucratic. The management team is committed to involving their employees and fostering an environment that challenges the status quo of city operations. 9. Continuously reviewing opportunities to form partnerships with neighboring communities to share services and equipment, jointly purchase equipment, and develop strategies to deal with local issues using a regional approach. The city has established several equipment and service delivery sharing arrangements with neighboring communities and has several joint powers agreements in place on a variety of local and regional issues in the area of public safety and public works initiatives. Recent steps taken to achieve long-term fiscal objectives The city began monthly billing of water and sewage services in 2017. Monthly bills allow the city to bill customers for other services, such as residential garbage, recycling, and storm water. Other charges may be added in the future. There are benefits to the customers: lower monthly bills instead of larger quarterly bills, a payment cycle in line with other customer bills, timely consumption information, and earlier alert to service problems. The Monticello Community Center Fund implemented a new chart of accounts in 2017. This change breaks the fund’s accounts into major costs centers: administration, buildings, aquatics, guest services and concessions, maintenance, and fitness programs. The 2019 budget reflects the new chart of accounts. In 2018, the city started billing all residential garbage customers with an individual service cart $3.00 plus 9.75% tax per month. This charge replaces a $13.00 monthly fee that was mainly paid by mobile home parks. In 2019, the $3.00 charge rises to $7.00. The city is planning to implement a storm water utility charge in the middle of 2019. A storm water utility fund will be established recording revenues and expenses, with full implementation occurring in budget year 2020. Some General Fund expenditures, such as street sweeping and storm water pond maintenance, will be accounted for in the new fund. 79 CAPITAL EXPENDITURES (Recurring vs Nonrecurring) A CAPITAL EXPENDITURE occurs when a capital asset is purchased. Capital assets are used in operations and have initial useful lives extending beyond a single reporting period. These assets must also meet capitalization thresholds (see Appendix), which vary by asset classification and typically costs more than $10,000. Land, improvements to land, vehicles, machinery, equipment, infrastructure, and other tangible and intangible assets used in operations are examples of capital assets. Capital expenditures (also called capital outlays) can be classified as either recurring or non-recurring. Fleet equipment replacement is an example of recurring capital expenditures by asset class. The city budgets to replace a portion of the fleet every year on a pay-as-you-go basis or through a lease arrangement with the Central Equipment Fund. The city also budgets to replace a small fraction of its water and sewer infrastructure on an annual basis. Large projects adding to or replacing infrastructure are usually non- recurring in nature. For example, the 2017 core street reconstruction project was non-recurring in nature. However, five other core street reconstruction projects were spread over 15 years. The Fallon Avenue overpass, fire station construction, Bertram Chain of Lakes Park improvements, and fire ladder truck purchase account for the bulk of the 2019 non-recurring projects. The multi-year Fallon Avenue overpass started with land acquisition and design work in 2017. Future development of BCOL amenities will have a recurring nature. Large non-recurring projects are typically financed by debt, intergovernmental revenue (state/federal grants and aids), and draws on reserves accumulated in anticipation of the project. Recurring - current revenues 14% Nonrecurring - new debt 49% Nonrecurring - prior debt 9% Nonrecurring - reserves 28% Capital Expenditures 80 CAPITAL INVESTMENTS AND OPERATING BUDGETS Capital investments (outlays) to replace or improve existing assets can have significant impacts on operating budgets. For example, capital investments replacing aging equipment can reduce annual repairs and maintenance expenditures, and personnel services costs. Indeed, equipment nearing the end of its useful life often requires expensive repairs with hard-to-find replacement parts. Further, personnel service costs are impacted in two ways: the cost of the people repairing the equipment and the loss of productivity. In 2013, the city initiated the Central Equipment Fund for the purpose of creating a revolving fund for future equipment purchases. This fund purchases equipment and leases it back to the benefiting budget units. The lease payments assure that equipment purchases will receive annual funding, getting the same priority as other operating expenditures. Lastly, new equipment may be more productive and less expensive to operate. Another type of capital investment includes betterments, which are improvements that prolong an asset’s life or increase its efficiency or capacity. A great example, the community center replaced the roof over the aquatics portion of the building, lowering annual energy costs. Still, the savings can be elusive when the energy providers consistently raise their prices. The city annually budgets for replacement of water and sewage mains through each respective enterprise fund. For public utilities, customer satisfaction is difficult to quantify in dollars. However, a generally satisfied customer may be less likely to complain about the rate increases needed to support those services. Annually, the city budgets more for water and sewer main replacement than it does for repairs and maintenance. Finally, nearly 70 miles in length, the street system is the city’s largest capital asset. In 2019, the city increased the sealcoat budget for roads to $185,000. Additionally, the city annually budgets over $200,000 for a more durable mill and overlay in the Capital Project Fund/Street Reconstruction Fund. These operating and capital expenditures work in tandem to forestall enormously more expensive street reconstruction projects. 81 CAPITAL INVESTMENTS AND OPERATING BUDGETS Department - Operating Fund Fund Amount Year Amount Comment Public Works - General Fund Sidewalk tractor Central Equip.150,000$ 2019 19,500$ CE lease and R&M (-) Bucket truck Central Equip.135,000$ 2019 17,350$ CE lease and R&M (-) Fallon Avenue overpass Capital Project 9,400,000$ 2019 13,500$ R&M Otter Creek pond improvement Stormwater 800,000$ 2020 2,000$ R&M Walnut corridor improvements Capital Project 370,000$ 2019 3,700$ R&M Recreation Culture - General Fund CSAH 39 pathway Park & Pathway 140,000$ 2019 1,400$ R&M Rolling Woods sidewalk Park & Pathway 40,000$ 2019 400$ R&M Riverwalk/Trail connection Park & Pathway 90,000$ 2019 900$ R&M Skid loader Central Equip.15,000$ 2019 8,000$ CE lease, Gas, R&M (+) Public Arts shop Central Equip.15,000$ 2019 3,000$ Utilities and R&M Bertram Park buildout Park & Pathway 2,300,000$ 2019 75,000$ Utilities and R&M Recreation - Community Center Vanitiy and partition replacement Community Ctr.20,000$ 2019 (1,000)$ R&M Carpet and terrazo floor replacement Community Ctr.12,000$ 2019 (600)$ R&M Landscaping Community Ctr.12,000$ 2019 -$ No impact on expenses Waterslide replacement Community Ctr.150,000$ 2019 (1,500)$ R&M Cario-equipment Community Ctr.40,000$ 2019 (4,000)$ R&M Public Works - Sewage Fund WWTP parking lot improvements Sewage 100,000$ 2019 (2,000)$ R&M SCADA Sewage 500,000$ 2020 20,000$ R&M, software support Public Works - Water Fund Meter upgrades Water 65,000$ 2019 (3,250)$ R&M SCADA Water 500,000$ 2020 20,000$ R&M, software support Fire Response pickup truck Fire 50,000$ 2019 8,300$ R&M Fire Ladder Truck Fire 1,300,000$ 2019 (7,000)$ R&M Fire Station Fire 5,700,000$ 2020 25,000$ Utilities and R&M Investment Annual Impact on Operating Expense Central Equipment Fund (CE) leases are set at rates to recover depreciation plus inflation. The lease amounts do not include operating costs such as repairs and maintenance (R&M), gas, or insurance. These expenses are borne by benefiting fund and budget unit. Generally, R&M expenses on old equipment are generally higher than that of newer equipment. Less work is done on equipment that is scheduled for replacement. Items with a (+) are additional equipment, incurring additional R&M. Items with a (-) are replacement equipment with lower R&M in the near term. R&M expenses for roads include estimates for snow removal, boulevard maintenance, street sweeping, crack sealing, and striping. Listed amounts are for expenses in excess of those already being incurred. With no impact on expenses, some are replaced for obsolesces or aesthetics reasons. In reality, some of these amounts may or may not be close to those actually realized. 82 Major Capital Investment Effect on Operating Expenses (Examples) The buildout of Bertram Chain of Lakes Park (athletic fields and amenities) will occur in 2019. Bertram will require more maintenance as the park experiences additional usage. Maintenance includes seeding, fertilizing, irrigating and mowing more space. The full-year increase in personnel services, supplies, equipment, and other services is estimated to increase by $75,000 in 2020. The wastewater treatment plant SCADA (Supervisory Control and Data Acquisition) system upgrade is long overdue. The old SCADA system lacks vendor support and has outdated features. The new SCADA system would require an annual maintenance support contract whereas the former system function on a pay-as-you-go basis. Because a contractor manages the facility there would not be any offsetting savings from staffing changes. Additional costs are built into sewage rates. The city is replacing two equipment items essential to repair and maintenance to road surfaces, a rubber melter for crack sealing and an asphalt hotbox for surface overlays. The productivity benefits are difficult to quantify but repairs and maintenance costs associated with the old equipment will drop significantly. This equipment will age much like the replaced equipment and require repairs and maintenance as time passes. These two equipment items will be purchased by Central Equipment Fund and leased back to the General Fund. The annual lease payments for the sidewalk tractor and bucket truck are $18,500 and $16,600, respectively. Estimated annual maintenance on the hotbox and melter is expected to drop by $1,000 and $750, respectively. The new fire station will require less maintenance to start, but the city utilities costs will increase significantly in the later part of 2019. Utility costs are estimated at $2,000 per month more because the new building will be larger than the current station. Further, the current station will be repurposed for other uses, moving existing building costs to other parts of the budget. The new fire ladder truck replaces an aging, repair and maintenance dinosaur. Higher insurance costs on the new truck will offset some of the R&M savings. 83 LEGAL DEBT LIMIT AND BOND RATING Debt Limit: Minnesota cities may not incur debt in excess of three percent of the market value of taxable property in the city (the limit is 2 percent in First Class cities unless a charter provides a higher rate, with the higher rate capped by law at 3 2/3 percent). Excepted from this overall three percent limit are almost all debt obligations for which some other source of revenue is pledged as security. Thus, improvement assessment bonds, tax increment bonds, utility revenue bonds, pure revenue bonds, capital improvement bonds under an approved capital improvement plan, judgment bonds, and similar bonds may be issued without regard to the statutory debt limit. (There may be other requirements for bonds that are exempt from the debt limit; for example, capital improvement bonds must be approved by an affirmative vote of three-fifths of the members of a five-member governing body.) The result is that, with only a few exceptions, the only obligations subject to the debt limit are general obligation (G.O.) bonds payable solely from ad valorem property taxes. The legal debt limit has nothing to do with the practical debt limit of a city, which is the debt burden beyond which the credit-worthiness of the city is put into question. (See Minnesota Statutes, Section 475.53) Anticipated Borrowing this Fiscal Year: The city is expected to issue G.O. bonds to reimburse itself for expenditures on street reconstruction, Fallon Avenue bridge construction, fire station construction, utility improvements, and fire truck acquisition in the latter half of 2019. The 2019 reimbursement amount is currently estimated at $8,000,000. Further, the city anticipates issuing debt for a lesser amount in 2020 to finance road projects and other improvements. Bond Ratings: The city’s general obligation bond rating was reviewed in September 2018 with the sale of improvement and abatement bonds. Moody’s affirmed the city’s prior G.O. debt rating of “A2.” The “A2” rating is an “upper medium grade.” This is generally described as “strong, investment grade” credit by Moody’s. Market value (payable 2019)1,962,020,100$ Debt limit (3% of market value)58,860,603$ Debt applicable to limit General obligation debt 26,330,000 Less general obligation bonds not subject to the limit (13,020,000)$ Total net debt applicable to limit 13,310,000$ Legal debt margin 45,550,603$ Legal Debt Margin Calculation for Fiscal Year 2019 84 BOND RATING SCALES Moody’sMonticellorating: A2forGeneralObligationDebt Moody's S&P Fitch Long- term Short- term Long- term Short- term Long- term Short- term Aaa P-1 AAA A-1+ AAA F1+ Prime Aa1 AA+AA+ High gradeAa2AAAA Aa3 AA-AA- A1 A+A-1 A+F1 Upper medium gradeA2AA A3 P-2 A-A-2 A-F2Baa1BBB+BBB+ Lower medium gradeBaa2P-3 BBB A-3 BBB F3Baa3BBB-BBB- Ba1 Not prime BB+ B BB+ B Non-investment grade speculativeBa2BBBB Ba3 BB-BB- B1 B+B+ Highly speculativeB2BB B3 B-B- Caa1 CCC+ C CCC C Substantial risks Caa2 CCC Extremely speculative Caa3 CCC-Default imminent with little prospect for recoveryCaCC C C D / DDD /In default/DD /D 85 DEBT SERVICE LEVY HISTORY Most city debt issues are supported on some level by property taxes. The 2013B Wastewater Treatment Bonds and 2015A Minnesota Public Facilities Authority G.O. Note Payable are both supported directly by Sewage Fund revenues. The city issued $6,595,000 in general obligation bonds in 2014. This dual purpose issue had two portions: judgment - $6,080,000 and capital equipment - $515,000. The capital equipment debt is carried in an internal service fund; lease payments from the General Fund provide money for the debt service. In 2015, the city issued $2,605,000 in street reconstruction and improvement bonds. In October 2016, the city issued $4,900,000 for the same purposes. In 2017, the city issued $5,000,000 in improvement and tax abatement bonds. In 2018, the city issued $5,000,000 in tax abatement bonds. The tax levies for years 2016 through 2019 included amounts for future debt service: $300,000 in 2016; $50,000 in 2017; $783,000 in 2018; $662,354 in 2019. Year 2010A Imp 2011A Imp 2007A Imp 2008 Swr 2008A MCC 2014A JE 2015B SRI 2016A SRI 2017A 2018A Total 2015 40,000$330,000$420,000$500,000$1,005,000$-$-$-$-$-$ 2,295,000$ 2016 40,000 330,000 420,000 500,000 -544,000 250,000 ---2,084,000 2017 40,000 139,783 610,000 500,000 -536,929 195,288 415,000 --2,437,000 2018 40,000 148,061 ---537,586 203,425 407,769 450,159 -1,787,000 2019 -150,581 ---537,244 200,905 409,133 429,781 500,000 2,227,644 2020 -185,000 ---535,501 198,385 405,038 427,367 472,434 2,223,725 2021 -183,000 ---537,570 201,325 406,089 430,096 468,077 2,226,157 2022 -187,000 ---538,226 197,651 406,929 427,367 468,812 2,225,985 2023 -185,000 ---537,609 199,436 407,558 424,531 469,232 2,223,366 2024 -----536,081 200,223 407,979 426,842 469,337 2,040,462 2025 -----538,861 200,879 408,190 428,941 469,127 2,045,998 2026 -----540,499 223,990 408,189 430,832 468,602 2,072,112 2027 -----535,698 219,135 70,718 425,175 467,762 1,718,488 2028 -----540,812 223,808 68,827 258,197 471,857 1,563,501 2029 222,915 66,938 262,577 470,229 1,022,659 $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Debt Service Levy (2015 - 2029) 2010AImp 2011AImp 2007AImp 2008 Swr 2008AMCC 2014AJE 2015B SRI 2016ASRI 2017A 2018A 86 G.O. DEBT SERVICE Early redemptions and normal amortization caused annual general obligation (G.O) debt service to decline sharply in 2016 and 2017. Early redemption of the 2010A G.O. bonds will cause the small peak in 2019 debt service paid. In 2014, the city issued $6,595,000 in G.O. bonds: judgment ($6,080,000) and capital equipment ($515,000). In 2015, the city issued $2,605,000 in G.O. bonds: street reconstruction ($1,885,000) and improvements ($720,000). In 2016, the city issued $4,900,000 in G.O. bonds: improvements ($4,130,000) and street reconstruction ($770,000). The $5,000,000 2017A bond issue included $2,960,000 in tax abatement bonds for Fallon Avenue overpass construction. In 2018, the city issued an additional $5,000,000 in G.O. Abatement Bonds for the Fallon overpass. Recorded as debt in the sewage enterprise fund, the Minnesota Public Facilities Authority (MPFA) $2.3 million loan is excluded from the schedule and graph below. Year 2010A Imp 2011A Imp 2007A Imp 2008 Swr 2008A MCC 2014A JE 2015B SRI 2016A SRI 2017A 2018A Total 2015 40,000$ 330,000$ 420,000$ 500,000$ 1,005,000$ -$ -$ -$ -$ -$ 2,295,000$ 2016 40,000 330,000 420,000 500,000 - 544,000 250,000 - - - 2,084,000 2017 40,000 139,783 610,000 500,000 - 536,929 195,288 415,000 - - 2,437,000 2018 40,000 148,061 - - - 537,586 203,425 407,769 450,159 - 1,787,000 2019 - 150,581 - - - 537,244 200,905 409,133 429,781 500,000 2,227,644 2020 - 185,000 - - - 535,501 198,385 405,038 427,367 472,434 2,223,725 2021 - 183,000 - - - 537,570 201,325 406,089 430,096 468,077 2,226,157 2022 - 187,000 - - - 538,226 197,651 406,929 427,367 468,812 2,225,985 2023 - 185,000 - - - 537,609 199,436 407,558 424,531 469,232 2,223,366 2024 - - - - - 536,081 200,223 407,979 426,842 469,337 2,040,462 2025 - - - - - 538,861 200,879 408,190 428,941 469,127 2,045,998 2026 - - - - - 540,499 223,990 408,189 430,832 468,602 2,072,112 2027 - - - - - 535,698 219,135 70,718 425,175 467,762 1,718,488 2028 - - - - - 540,812 223,808 68,827 258,197 471,857 1,563,501 2029 222,915 66,938 262,577 470,229 1,022,659 - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 G.O. Debt Service Paid/Due (2015 -2029) 2010A Imp 2011A Imp 2007A Imp 2008 Swr 2008A MCC 2013 COI 2013 WWT 2014A JE 2015B SRI 2016A SRI 2017A RTA 2018A TA 87 G.O. DEBT LEVELS The city’s general obligation (G.O.) debt level increased by $2,410,000 with the issuance of $5 million of new debt in 2018. Normal debt amortization offset about half of the 2018 added debt. New debt of $8,000,000 in 2019 will be about three times annual debt amortization. Rapid amortization of debt reflects an opportunity for financing new projects included in the capital improvement program (CIP). The schedule below reflects the refinancing of 2005A improvement bonds with 2011A bonds—the two are combined on the schedule less the redemption bond payment. Accounted for in the Sewage Fund, the Minnesota Public Facilities Authority $2.3 million loan is excluded from the schedule and graph below. Year 2010A Imp. 2011A Imp. 2007A Imp. 2008 Sewer 2013 COI 2013 WWT 2014A J&E 2015B SR&I 2016A SR&I 2017A 2018A Outstanding 2015 1,690,000$5,745,000$1,290,000$2,452,000$325,000$2,640,000$6,595,000$2,605,000$-$-$-$ 23,342,000$ 2016 1,420,000 3,425,000 525,000 1,496,000 265,000 2,460,000 6,190,000 2,460,000 4,900,000 --23,141,000 2017 1,145,000 2,715,000 --200,000 2,280,000 5,785,000 2,310,000 4,485,000 5,000,000 -23,920,000 2018 870,000 1,995,000 --135,000 2,095,000 5,375,000 2,150,000 4,050,000 4,660,000 5,000,000 26,330,000 2019 -1,615,000 --70,000 1,910,000 4,960,000 1,990,000 3,605,000 4,295,000 4,725,000 23,170,000 2020 -1,225,000 ---1,720,000 4,540,000 1,830,000 3,155,000 3,925,000 4,420,000 20,815,000 2021 -830,000 ---1,525,000 4,105,000 1,665,000 2,695,000 3,545,000 4,110,000 18,475,000 2022 -420,000 ---1,325,000 3,660,000 1,500,000 2,225,000 3,160,000 3,790,000 16,080,000 2023 -----1,120,000 3,205,000 1,330,000 1,745,000 2,770,000 3,460,000 13,630,000 2024 -----910,000 2,740,000 1,155,000 1,255,000 2,370,000 3,120,000 11,550,000 2025 -----695,000 2,320,000 975,000 755,000 1,960,000 2,770,000 9,475,000 2026 -----470,000 1,885,000 790,000 245,000 1,540,000 2,410,000 7,340,000 2027 -----240,000 1,440,000 605,000 185,000 1,110,000 2,040,000 5,620,000 2028 ------975,000 410,000 125,000 900,000 1,655,000 4,065,000 2029 495,000 210,000 65,000 685,000 1,260,000 2,715,000 $- $5 $10 $15 $20 $25 $30 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029MillionsG.O. Debt Outstanding (2015 - 2029) 2007AImp.2008 Sewer 2010AImp.2011AImp.2013 COI 2013 WWT 2014AJ&E 2015B SR&I 2016ASR&I 2017A 2018A 88 DEBT LEVELS BY FUND TYPE The following schedule and chart separate debt by fund type. Governmental funds typically have varying sources of revenue: property taxes, special assessments, impact fees, etc. Enterprise fund debt is usually supported by charges for services. Internal service funds are supported by charges for services to budget units within other funds, which have their own revenue sources (taxes, licenses and permits, charges for services, etc.). Year Governmental Enterprise Internal Service Total 2015 19,432,000$ 3,030,000$ 780,000$ 23,242,000$ 2016 19,661,000 2,760,000 720,000 23,141,000 2017 21,035,000 2,280,000 605,000 23,920,000 2018 23,750,000 2,095,000 485,000 26,330,000 2019 20,895,000 1,910,000 365,000 23,170,000 2020 18,855,000 1,720,000 240,000 20,815,000 2021 16,770,000 1,525,000 180,000 18,475,000 2022 14,635,000 1,325,000 120,000 16,080,000 2023 12,450,000 1,120,000 60,000 13,630,000 2024 10,640,000 910,000 - 11,550,000 2025 8,780,000 695,000 - 9,475,000 2026 6,870,000 470,000 - 7,340,000 2027 5,380,000 240,000 - 5,620,000 2028 4,065,000 - - 4,065,000 2029 2,715,000 - - 2,715,000 89 EFFECT OF DEBT LEVELS ON GOVERNMENT OPERATIONS Debt is carried in three fund types: Governmental Funds, Enterprise Funds, and Internal Service Funds. Consequently, debt has a different impact on the operations of each fund type. Indeed, debt service is a fixed cost that does not vary with activity levels. Debt amortization and redemption reduces fixed costs, freeing resources for other purposes. Governmental Funds Governmental fund debt service is provided through debt service funds, which accumulate money from various sources for principal and interest payments. Those sources include property taxes, special assessments, transfers from enterprise funds, and transfers from capital project funds collecting impact fees. The debt effect on services delivered through governmental funds with current plant and equipment is somewhat diminished because the city is not constrained by state-imposed levy limits for property taxes. When levy limits have been in place, statutes have allowed for special levies for debt service. While there are limits to what taxpayers can bear, Monticello has the lowest tax capacity rate in Wright County because of its large commercial tax base—including the nuclear power plant. In a stable market value environment, the power plant absorbs over half of any tax increase. The General Fund is primarily supported (nearly 80%) by property taxes and the Monticello Community Center (MCC) Fund is primarily supported by charges for services. The General Fund has other underutilized revenue sources, and the MCC Fund can adjust its fee schedule and reduce costs. Still, one negative consequence of using impact fees for debt services is the city’s reduced ability to finance water and sewer trunk improvements with money on hand. High debt levels lower the city’s ability (debt limit and debt rating) to issue new debt for capital assets, which may improve efficiency or meet a growing need. Enterprise Funds The Sewage Fund is the only enterprise fund with debt. All utility rates are reviewed annually and adjusted to cover operating, capital, and debt service expenditures. Transfers support principal and interest payments in debt service funds where water and sewer impact fees have been deficient. This drain on resources means new debt will need to be issued for Sewage Fund wastewater treatment plant upgrades and trunk improvements. According to an AE2S survey, Monticello has some of the lowest water and sewage rates in the Minnesota. However, the council is aware that the city needs to maintain its competitive position with taxes and utility charges to attract economic development. Internal Service Funds Two debt issues have provided capital for creating a Central Equipment internal service fund. This fund finances governmental fund equipment purchases over $10,000. The equipment is then leased back to the benefitting budget unit for a fixed duration. The lease payments provide for additional future equipment purchases. Currently, the General Fund is the only governmental fund internally leasing equipment. The debt serves as a mechanism for maintaining the fund and its equipment purchases. With nearly 80% of the General Fund revenue comprised of property taxes, the Central Equipment Fund debt and the related lease payments have a direct effect on the resources available for other uses. Again, this is mitigated by the city’s low tax capacity rate and the lack of a levy limit. In summary, debt is a valid way to match customers with the cost of providing a particular service. Current service customers pay for current service delivery with annual debt service payments supported by user fees and taxes. Future service customers make future debt service payments through future taxes and user fees. 90 INTERFUND TRANSFERS INTERFUND TRANSFERS Operatingtransfers support theoperations ofotherfunds, provide forspecialprojects,and contribute to debtservice payments. The followingschedule provides the2019 budgetedoperating transfers: Fund No.Transfer In Fund Amount Fund No.Transfer Out Fund Amount 101 General Fund 25,000$213 Economic Development 25,000$ 312 2011A GO Improvement Bond 200,000 213 Economic Development 200,000 229 Park & Pathway Dedication 2,100,000 609 Liquor 2,100,000 317 2010A GO Improvement Bond 135,000 406 Street Reconstruction 135,000 400 Capital Project Fund 500,000 601 Water 500,000 656 Fiber Optics 100,000 609 Liquor 100,000 Total Transfers In 3,060,000$Total Transfers Out 3,060,000$ SCHEDULE OF OPERATING TRANSFERS Debt Service 11% Enterprise 3% General Fund 1% Capital Projects 85% 2019 Transfers In by Fund-Type Special Revenue 7% Capital Projects 5% Enterprise 88% 2019 Transfers Out by Fund-Type 91 SERVICE LEVEL CHANGES Law Enforcement: The city contracts with the Wright County Sheriff’s Office for law enforcement services. In 2014, the city reduced the number daily hours of coverage from 52 to 48. The reduction in hours did not result in more calls for services as the nation-wide, decades-long crime trend continued to decline. With the addition of more retail and multifamily housing in 2017, the city anticipated an increase in demand for law enforcement services. Starting in July 2018, the city increased the number of hours coverage back to 52 hours per day. The 2019 budget reflects the effect of the four additional hours for the entire year, whereas the 2018 budget included the additional hours for six months. Full-year cost: $108,770 (half-year = $54,385) Fire and Rescue: In 2018, the city hired a fire marshal/emergency services coordinator. The position was created to enhance the services delivered by the city’s paid-on-call fire department. The 2018 budget reflected a start date in July and the 2019 budget includes the position for the entire year. The city will likely see an increase in grant application activity and a corresponding increase in expenditures. Full-year cost: $92,134 (half-year = $46,067) Public Works Director/Engineer: Reducing dependence on outside engineering services and providing in- house professional management, the city hired a public works director/engineer in midyear 2018. Consequently, the city expects to further develop staff for delivering services to internal and external customers. The 2019 budget includes this position’s wages and benefits for the entire year. Full-year cost: General Fund - $92,699 (all funds = $154,497) Public Arts: The Arts Initiative is a focused use of arts and culture as a catalyst for economic and community development. While art in and of itself can be valuable, our purpose is to harness the creative energy within the community and channel it into revitalizing downtown and creating connections between people and the community. Cost: $30,000 Recreation and Culture: The first phase of the Bertram Chain of Lakes buildout will occur in 2019 with the construction of athletic fields and related improvements. Construction cost: $2.3 million in 2019. Annual operating cost: $75,000 starting in 2020 Community Vision and Comprehensive Plan: The Comprehensive Plan reflects the community’s vision and articulates the goals for how Monticello will grow and develop. The plan update will address the transformational issues at work in the community and region, shaping Monticello over the next 20 years. In Monticello’s case, the need to update this plan is amplified by significant changes on the horizon, which include major transportation and utility infrastructure improvements, potential tax base and land use transitions as related to the nuclear plant, and land use questions left unresolved with the last plan update. The visioning process will gather input from the community’s many stakeholders. The following page provides the framework for the community vision and comprehensive plan process. Cost: $90,000 over two years 92 SERVICE LEVEL CHANGES (continued) This process supports and informs Land Use Economic Development Parks, Pathways & Open Space Community Identity & Culture Transportation Plan Utility Plan 93 REVENUE TRENDS & ANALYSIS Revenuesareconservativelyestimatedforeveryfundtype.Thescheduleofrevenueestimatesbelowis supportedbydetailedrevenueestimatesforeachfundinsubsequentsections.This sectionofthe budget highlights majorrevenue sources forallthecity funds as combinedand formajorgovernmental and enterprise funds: GeneralFund andMonticello CommunityCenterFund (governmentalfunds), alongwiththe Water,Sewage,Liquor,DeputyRegistrar andFiberOptics funds (enterprise funds). Trends for these funds andindividualrevenues areshowntogetherwithestimates for the coming year. TOTAL CITY REVENUES AND OTHER SOURCES 2015 2016 2017 2018 2018 2019 % TOTAL ALL FUNDS ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes $8,619,812 9,275,414$9,556,742$9,870,000$9,870,000$10,310,000$4.5% Tax Increments 727,617 668,352 648,031 635,678 635,678 617,344 -2.9% Franchise & Other Taxes 352,073 432,785 471,926 405,500 405,500 382,500 -5.7% Sale of Goods 5,489,430 5,448,584 5,751,197 5,770,784 5,770,784 5,979,220 3.6% Licenses & Permits 465,469 671,602 603,223 400,750 400,750 407,700 1.7% Intergovernmental Revenues 1,400,435 2,041,363 1,340,094 374,440 374,440 514,500 37.4% Charges for Services 7,864,167 8,290,396 8,561,045 8,116,695 8,114,075 9,080,466 11.9% Fines & Forfeits 42,474 30,656 36,702 36,500 36,500 36,500 0.0% Special Assessments 3,331,901 984,916 960,696 385,746 385,746 370,876 -3.9% Miscellaneous 1,152,709 1,672,272 1,102,912 501,372 1,301,372 590,699 17.8% Contributed Capital 1,435,870 1,993,232 1,330,370 140,450 140,450 140,895 0.3% Operating Transfers 4,937,975 2,542,636 1,209,628 1,374,899 2,512,845 3,060,000 122.6% Debt Proceeds 2,651,898 6,410,568 5,258,366 5,000,000 5,000,000 8,000,000 60.0% TOTAL REVENUES 38,471,830$40,462,776$36,830,932$33,012,814$34,948,140$39,527,000$19.7% Property taxes account for the single largest revenue source for the city. Other sources such as debt proceeds occasionally surpass property taxes, but they do not support day-to-day operations. Tax increments are the main source of revenue for the Economic Development Fund. This fund accounts for the city’s tax increment financing (TIF) districts and other general economic development activities. Two TIF districts were decertified in 2018. Licenses & permits are comprised primarily of building permits, which are conservatively estimated at 2015 levels to smooth the cyclical nature of this revenue category. Intergovernmental revenues are expected to increase with the addition of state aid for left-turn signal betterments for traffic lights. With a strong commercial tax base, the city generally does not qualify for state aid that is not project specific. Special assessments primarily support debt service funds. Prepayment of future certified assessments in 2015 has affected collections in subsequent years. Charges for services reflect some changes to the fee schedule occurring prior to adoption of the budget. The city uses conservative revenue budgeting practices to ensure revenues will be sufficient to meet operating needs. 94 Miscellaneous revenues are conservatively estimated to increase, but the investment earnings— the largest portion of this revenue classification—are expected to hold steady. The city expects to receive a private party contribution for a pathway project. The amount of investible funds is expected to decline as fund balances are drawn down. Overall revenues and other sources lag expenditures and other uses. Operating transfers (in) are expected to increase in 2019 because capital projects will receive more support from internal sources. In 2016 and 2017, operating transfers were largely going to debt service funds for annual principal and interest payments on bonded debt. In 2019, debt proceeds to finance the overpass completion, fire station construction, and acquisition of fire ladder truck are estimated at $8 million. The chart below provides an overall picture of estimated 2019 revenues and other sources. Property Taxes 26% Sale of Goods 15%Charges for Services 23% Operating Transfers 8% Debt 20% All Other 8% Revenueand Other Sources (All Funds) PROPERTY TAXES The city relies on property taxes to support functions such as general government, public safety, public works, recreation and culture, and debt service. For 2019, the council adopted a general levy of $9,962,000, which is $415,000 (4.3%) greater than the prior year. The council also adopted a Housing and Redevelopment Authority (HRA) special benefit levy of $348,000, which is $25,000 (7.7%) greater than the prior year. The HRA levy is recorded in the Economic Development Authority (EDA) Fund. The General Fund discontinued operating transfers—annually about $90,000--to the EDA Fund when the HRA levy was first adopted in 2016. Both levies are combined for graphical and contextual purposes. The tax levy has risen ahead of inflation the last six years. 95 The following chart reflects the changes in the tax levy over the last ten years: $9,430,000$9,870,000$10,310,000 $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Property TaxLevy History Accounting for a variety of activities, the General Fund will receive slightly less than 70% of the 2019 property tax levy. However, property taxes provide approximately 80% of the General Fund’s revenue. In prior years, the levy for the Monticello Community Center (MCC) had two components: operations and debt service. The MCC’s debt service levy portion dropped off in 2015. The operations component increased $15,000 (4.0%) to $387,000. The following chart represents the distribution of the tax levy for 2019. GeneralFund, $6,670,000,65%MCC Operations, $402,000,4% HRA Levy, $348,000,3% Debt Service, $2,890,000,28% PropertyTax Levy (Adopted 2019) 96 When determining the property tax levy, city council and staff consider the impact the levy will have on various property owners. This impact is then balanced against services provided and service levels. In the past, the city was able to fund services at current levels with a relatively flat levy. The growing economy and increased property values have led to a drop in the tax capacity rate. Still, from 2008 through 2012, property values declined as a result of a weaker national and local economy. Estimated market values are converted to tax capacity by using specific state formulas for various types of properties. In 2013, the tax capacity grew a healthy $2.9 million (18.6%) to $18.7 million. Why? The nuclear power plant located within the city limits added over $160 million in new taxable value with capital equipment upgrades. Consequently, equipment retirements related to the same uprate caused a slight decline in 2014. History repeating itself, the tax capacity for 2015 grew by $5.7 million (31%) to $23.9 million with another uprate at the nuclear power plant. Further, the benefits from the last uprate extended into 2016, adding $80 million in tax market value and nearly $2 million in tax capacity. The tax capacity for 2018 taxes payable is $29.5 million, or 7.1%, higher than 2017. Increases in residential market values and new construction added to tax capacity gains in both 2017 and 2018. In a stable levy environment, tax capacity and tax capacity rates will typically have an inverse relationship. With city and HRA tax capacity rates added together, the following chart demonstrates that relationship over the last 15 years: $11.8M $29.1M58.651 35.472 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 $- $5 $10 $15 $20 $25 $30 $35 TaxCapacityRateTaxCapacityValue(millions)Tax Capacity Values and Tax Capacity Rates Tax Capacity Value Tax Capacity Rate 97 GENERAL FUND The GeneralFund is used to account forallfinancial resources ofthecity,except forthose requiredto be accountedforinanother fund. Majorfunctions supportedbyGeneralFund revenues include: city and finance administration, police andfireservices, public works,and recreation andculture. Revenue is estimatedto be $8,586,000 (+3.6%) forthe 2019 budget year. TheprimaryGeneral Fund sourceof revenue is property taxes at$6,670,000 (+1.2%),whichaccounts for78%of total revenues. At7%,charges forservices is the onlyothercategoryto exceed5%of totalrevenues. TheGeneral Fund willreceive a$25,000 transfer from the EDA Fund in2019 tosupportjointactivities,butitis not otherwisesupported bytransfers (othersources)from other funds. The followingcharts depicts General Fundrevenues as representedin the 2019adopted budget: Property Taxes, 78% General Fund Revenues - 2019 Property Taxes Franchise& OtherTaxes Licenses & Permits Intergovernmental Revenues Charges for Services All Other The followingchartrepresentsGeneralFund revenuesoverthe lastten years,with2018 projected and 2019 budgeted: $- $1 $2 $3 $4 $5 $6 $7 $8 $9 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019MillionsGeneral Fund Revenues PropertyTaxes Licenses &Permits All Other 98 In recentyears,GeneralFund revenues have beenbolstered byanincreasingproperty tax levy and higher license and permit fee collections.Typically,license and permitfees are arelativelysmall portionofoverallrevenues. Licenses and permits consistmostlyofbuilding-type permits and have reboundedalongwith the economyandcommercialand residentialconstruction. Peakingin2008 above$1million, licenses& permits are conservatively estimatedat$405,700 for2019. WATER AND SEWAGE FUNDS Waterandsewagecharges forservices are primarilycomprisedof providingMonticello residents and businesses withwaterandsewage services.Based partiallyonthe levelofconsumption,these utility funds each have separatecharges for deliveredservices.The citysetrates to coveroperatingcosts,a portionof depreciation,and debtservice.As new developmentslowed, the burdenon infrastructure replacementcostsshiftedto utilityrates from impact(access)charges.Thewater andsewage funds are expected to provide some levelof future supportfor debtservice incurredto make waterand sewage system improvements. Waterandsewage revenue grew from 2008 to 2011as consumptiondropped and rates increased. After peakingin2012 (a dry year),waterconsumption again declinedas waterand sewage rates climbed, pushingup bothwaterandsewage revenues. With2018 projectedand2019 budgeted,the followingchartplots revenues forwater andsewageserviceson the primaryaxis (left)againstwater sales onthe secondary axis (right): - 100 200 300 400 500 600 700 $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 GallonsSold(Millions)Revenues(Millions)Water & Sewage Revenue Water Revenue Sewage Revenue H2O Sold (Gals) Waterservice charges have two components: base charge withaminimum usage amountand consumptioncharge for usage above theminimum amount. Bothcharges have increasedsteadily overthe lastten years: average base andconsumptioncharge increases were5.5% and5.3%, respectively. For2019,no rate increases were included inthe budget. However, thecouncilraised the base charge by$0.15 (2.2%)andthe usage charge by2.4% prior to yearend. Sewage charges, similar to watercharges,have two components: base charge withaminimumusage amountand consumptioncharge for usage above theminimum amount.Bothcharges haveincreasedsteadily 99 overthe years: average base andconsumptioncharge increases were 6.4% and5.3%,respectively. For2019,no rate increases were includedinthe budget.However, the council raised the base charge by $0.25 (2.9%)andthe usage charges by2.5% priorto yearend. The followingchartreflects the waterandsewage base rates overthe lastten years: $- $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019MonthlyChargeSewage and Water BaseRates Sewage Water MONTICELLO COMMUNITY CENTER The Monticello Community Center (MCC)provides afacilitywithspace for avarietyofrecreational, professional,andeducationalopportunities. Aside from its portionofthe property tax levy,the MCC is supportedby avarietyoffees formemberships,activities,rentals,andconcessions.Council passed a revenue recovery policyalongwithbudgetadoption thatnow requires the MCC to cover85% ofits operatingcosts—includingequipment—with fees and charges. In the followingchart,2015 through2017 are actualamounts and2018 and2019 are estimates. Reflectinga policychange,some activityfeeswere rolledintomembershipfees in 2017 and2018. $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 UserFees Rental Activities Concessions MCC MajorRevenues 2015 2016 2017 2018 2019 100 FIBER OPTICS FUND (FiberNet) Monticello’s telecommunications utility, FiberNetMonticello, provides internet, voice (telephone) and video (TV)services. City residentialandcommercialcustomerscansubscribe toone, two,orall three services.FiberNetcontinues to face competition from two large private providers with significant resources. As aresult,subscribercounts for voice and video have declined inrecent years. Internethas shownoccasionalgrowthwithmorecustomers streaming video services. Still, commercialand residentialcustomers are benefittingfrom lower bills withFiberNet’s presence inthe marketplace even ifthey are notFiberNetcustomers. The datainthe graphs belowshow astable competitive environment forFiberNetin2018. 1545 1552 1544 1539 1526 1518 1529 1518 1520 1529 1552 1544 526 521 506 496 490 484 478 469 466 463 461 458 427 426 425 423 420 420 419 412 403 401 392 386 0 500 1000 1500 2000 2500 3000 Jan18 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 Total Subscribed Services Total Phone Total Television Total Internet 1526 1533 1522 1517 1501 1491 1500 1487 1490 1498 1517 1509 133 134 133 133 130 132 132 134 130 131 131 130 0 200 400 600 800 1000 1200 1400 1600 1800 Jan18 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 Residential and Business Customer Counts Business Residential In July2016, the citycontractedwithArvig to manage FiberNet.All FiberNetemployees are nowArvig employees. Through leaner operations, shared resources, and economies of scale, the city expects to haveapositivecashflowin2019fromdailyoperations.However,potentialnewserviceareaswillcause increases in capital costs. Arvig will continue to assess the marketplace and service delivery costs and will raise prices as conditions warrant. The 2019 budgeted subsidy to FiberNet from other funds (Liquor)is $100,000. 101 DEPUTY REGISTRAR (DMV) The city is authorized bythe State ofMinnesotato operate aDMV. Fees collected from motor vehicle licenses are the DMV’smain revenue source.Fees are regulatedby the state.Anincrease instate approvedfees,startingin2012,alongwith bettereconomic conditions resulted in higher revenues. The followingchartshows the historyofDMVtransactions over afive-yearperiod. Motor vehicle licenses (new and renewals)as percentage oftotal transactions remainedrelatively constantat88% to 89% from 2013 to2017.A new state licensingsystem (MNLARS)counts vehicle transactions differently,skewing transactioncomparisons with prior years.Nevertheless,2018 was an incrediblybusyyear forthe DMV. With darkershades ofgreen representing higher(better) numbers,the followingchartshows the monthly DMV revenues over the last five years.The chart also provides informationonannual revenues,annual transactions,and revenues pertransaction. DMV Revenue by Month Month 2014 2015 2016 2017 2018 Jan 40,164$46,375$44,033$55,543$70,671$ Feb 38,911 44,030 48,449 50,185 52,069 Mar 46,503 58,146 51,587 64,926 65,795 Apr 49,621 50,202 48,811 56,859 61,523 May 47,105 45,042 51,480 56,163 61,440 Jun 43,703 47,721 45,794 51,287 68,194 Jul 44,600 46,171 42,991 40,006 60,012 Aug 43,821 42,362 57,346 40,225 59,421 Sep 35,072 40,759 44,186 52,492 49,448 Oct 38,840 37,245 44,178 39,900 51,622 Nov 33,506 32,457 37,700 48,766 44,136 Dec 35,647 40,608 44,803 37,837 47,497 Total 497,493$531,118$561,357$594,188$691,829$ % Change 9.1%6.8%5.7%5.8%16.4% Transactions 67,462 72,135 75,891 78,515 119,543 % Change 8.7%6.9%5.2%3.5%52.3% Revenue per Transaction 7.37$7.36$7.40$7.57$5.79$ 102 LIQUORFUND With total2018 sales ofnearly$6.1 million,Monticello’s municipal liquorstore ranks nearthe topof Minnesotacities withonlyonestore.However, revenue growth is expectedtoslow because ofstore size limitations.Totalsaleshave climbedan average of 3.9% forthe lastfive years; liquoris the fastest growthcategory averagingnearly20% over five years. Liquorsales have increased over the last five years and the budgetreflects thistrend. The Liquor Fund hasone retailoutlet: Hi-Way Liquors. This fund provides vitalresources for manycommunity projects includingcommunity center andstreetimprovements.Conservative revenue estimates are usedforbudgeting purposes. However,2019 netcash flow from operations should top$600,000.In prior years,interestearnings contributedsignificantlyto netcashflows. A large operatingtransfer outin2012 depletedcashand subsequentongoingtransfers have curtailedinvestmentearnings. Beeraccounts forapproximately50% oftotalsales; liquorandwine follow at31% and15%, respectively. Non-alcoholitems contribute 4%.Beer typically has the lowestgross marginat26% and wine the highestat32%. Liquor is in the middle atabout30%.The chart belowprovides sales information bycategory: LiquorStore Revenue by Category Category 2014 2015 2016 2017 2018 5 Yr Chg Beer 2,604,942$2,764,583$2,768,394$2,933,853$3,074,408$21% % Change 2.6%6.1%0.1%6.0%4.8% Liquor 1,546,118$1,634,069$1,624,908$1,739,562$1,909,953$27% % Change 2.6%5.7%-0.6%7.1%9.8% Wine 868,779$927,778$889,082$894,151$904,385$5% % Change 0.9%6.8%-4.2%0.6%1.1% Other 145,902$165,631$171,420$192,616$201,481$45% % Change 5.1%13.5%3.5%12.4%4.6% Total Sales 5,165,741$5,492,061$5,453,804$5,760,182$6,090,227$21% % Change 2.4%6.3%-0.7%5.6%5.7% 103 The state law prohibitingSunday sales changedeffective July1,2017. Liquorstores are allowedto be openfrom 11:00 a.m.to 6:00 p.m.onSunday. The liquorstore is normallyopenfrom 9:00 a.m.to 10:00 p.m. Mondaythrough Saturday. In2017,saleson the 27 Sundays forthehalf year totaled $316,280.Fourof those Sundays,includingChristmasEve andNew Year’s Eve accounted for $108,118 insales.Those holidays fellondifferent days in2018,but the weekends associatedwith both producedexceptionalsales.The MinnesotaVikings playoff games onSundays were also good forsales.Sundaysales totaled$592,335 in2018. The liquorstore is closed for two Sundays during the year,forinventoryandEaster. 104 APPROPRIATIONS BY CATEGORY AND FUND-TYPE Expenditures, often called appropriations, are classified under one of six major categories: personnel services (wages & benefits), supplies, other services & charges (professional fees, utilities, etc.), capital outlay, debt service, and operating transfers (other financing uses). The graph below shows the relative percentage of FY19 budgeted expenditures for these six major categories for all funds, combined. Personnel Services 14% Supplies 13% Capital Outlay 37% Operating Transfers 7% Other Services& Charges 20% DebtService 9% 2019 Appropriations by Category - All Funds APPROPRIATIONS BY TYPE, GENERAL FUND ONLY— Using those same categories of expenditure type, the relative percentages of budgeted expenditures for the General Fund are shown below. As you can see, the General Fund is comprised of a much higher percentage of personnel services costs compared to all funds, as a whole. The General Fund supports very little capital improvements and no debt service compared to all funds, as a whole. Personnel Services 40% Supplies 8% Capital Outlay 3% Other Services & Charges 49% Expendituresand OtherUses - 2019 105 In governmental agencies, salaries, wages and benefits (personnel services) normally represent the largest of these categories. However, due to the significant investment in infrastructure, cities have a much higher percentage of the budget devoted to operating and capital costs, including debt service, than most other governmental entities. One other factor is that the city contracts (other services and charges) for law enforcement, legal and assessing services. As shown, the General Fund, Debt Service Fund (aggregation of debt service sub-funds) and enterprise funds account for 60%, down from 62% in 2018, of the total expenditures of the city. The General Fund is the city’s primary operating fund for general government operations. The Debt Service fund includes only non-enterprise and non-internal service fund debt. These funds are supported with property taxes, special assessments, tax increments, and utility access fund transfers. Enterprise funds consist of water, sewage, liquor, deputy registrar (DMV), and fiber optics funds. These funds operate on a self-supporting basis. Special revenue funds, totaling 7% of appropriations, include a variety of fee supported funds including the community center and cemetery. Capital project funds total 31% (up from 28% in 2018) of appropriations, which includes financing for street construction, street lighting and park improvements, and other governmental capital asset acquisitions but excludes capital assets acquired in the enterprise and internal service funds. General Fund 19%Special Revenue Funds 7% Debt Service Funds 7% Internal Service Funds 2% Capital Project Funds 31% Enterprise Funds 34% 2019 Expendituresby Fund-Type 106 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2019 GENERAL FUND GENERAL FUND - SUMMARY FUND DESCRIPTION One of five governmental fund types, the General Fund serves as the chief operating fund of the city. The General Fund is used to account for all financial resources not accounted for in some other fund. The fund uses the modified accrual basis of accounting for budgeting and financial reporting purposes. This means expenditures are recorded when the liability is incurred and revenues are recorded when they become measurable and available. The adopted General Fund budget is a balanced budget--current revenues and other sources equal expenditures and other uses. ISSUES The General Fund’s largest revenue source is property taxes. In 2019 the General Fund’s portion of the levy grew by 1.2% as the city and HRA combined levy grew by 4.5% The Public Works Department has the largest appropriation for 2019. GENERAL FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 5,887,666$ 6,183,861$ 6,348,766$ 6,590,000$ 6,590,000$ 6,670,000$ 1.2% Franchise & Other Taxes 235,089 284,468 285,678 289,500 289,500 266,500 -7.9% Licenses & Permits 460,834 668,602 600,733 398,750 398,750 405,700 1.7% Intergovernmental Revenues 354,679 389,005 429,697 374,440 374,440 364,500 -2.7% Charges for Services 352,286 374,046 419,397 421,000 421,000 636,800 51.3% Fines & Forfiets 42,474 30,656 36,702 36,500 36,500 36,500 0.0% Special Assessments 1,330 275 2,289 300 300 500 66.7% Miscellaneous 333,761 351,819 371,812 176,510 176,510 180,500 2.3% Operating Transfers - - - - - 25,000 --- TOTAL REVENUES 7,668,119$ 8,282,732$ 8,495,074$ 8,287,000$ 8,287,000$ 8,586,000$ 3.6% EXPENDITURES BY DEPARTMENT GENERAL GOVERNMENT Mayor and Council 52,572$ 54,264$ 54,123$ 57,350$ 57,350$ 58,639$ 2.2% City Administration 314,719 332,926 482,039 448,881 448,881 465,631 3.7% City Clerk 29,658 69,966 102,422 131,409 131,409 127,861 -2.7% Finance 377,867 393,754 425,247 467,242 467,242 475,957 1.9% Audit 37,798 39,273 44,745 42,000 42,000 44,000 4.8% City Assessing 50,466 50,415 51,972 65,000 65,000 68,000 4.6% Legal 36,946 29,152 35,714 38,000 38,000 38,000 0.0% Human Resources 117,249 116,522 123,206 133,118 133,118 137,412 3.2% Planning & Zoning 244,976 210,173 216,007 248,020 248,020 278,269 12.2% City Hall 183,997 182,990 62,953 72,810 72,810 67,033 -7.9% Prairie Center Building 13,327 8,917 17,202 17,753 17,753 17,970 1.2% TOTAL GENERAL GOVERNMENT 1,459,575$ 1,488,352$ 1,615,630$ 1,721,583$ 1,721,583$ 1,778,772$ 3.3% Continued… 107 GENERAL FUND 2015 2016 2017 2018 2018 2019 % (Continued)ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE PUBLIC SAFETY Law Enforcement 1,174,439$ 1,212,080$ 1,257,194$ 1,360,197$ 1,360,197$ 1,457,430$ 7.1% Fire & Rescue 309,970 289,010 350,891 414,328 414,328 420,078 1.4% Fire Relief 120,027 123,656 125,764 120,000 120,000 124,000 3.3% Building Inspections 304,858 350,304 381,260 399,409 399,409 415,885 4.1% Civil Defense 1,500 1,234 1,933 3,265 3,265 3,054 -6.5% Animal Control 48,754 46,943 48,166 51,796 51,796 52,838 2.0% National Guard 13,438 13,550 13,520 14,500 14,500 14,000 -3.4% TOTAL PUBLIC SAFETY 1,972,986$ 2,036,777$ 2,178,728$ 2,363,495$ 2,363,495$ 2,487,285$ 5.2% GENERAL FUND 2015 2016 2017 2018 2018 2019 % ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE PUBLIC WORKS Public Works Administration 124,504$ 126,327$ 120,785$ 201,955$ 201,955$ 211,857$ 4.9% Engineering 110,555 111,795 130,325 165,492 165,492 145,589 -12.0% Public Works Inspecitons 32,084 62,100 62,882 119,967 119,967 111,913 -6.7% Streets & Alleys 738,572 804,574 846,575 1,038,451 1,038,451 1,086,814 4.7% Ice & Snow 263,020 264,232 267,095 292,315 292,315 294,410 0.7% Shop & Garage 185,837 171,079 200,690 207,046 207,046 209,692 1.3% Stormwater 26,712 29,277 30,743 73,465 73,465 85,850 16.9% Street Lighting 227,779 233,500 245,296 270,500 270,500 246,500 -8.9% Refuse Collection 563,477 600,300 614,328 626,544 626,544 641,071 2.3% TOTAL PUBLIC WORKS 2,272,540$ 2,403,184$ 2,518,719$ 2,995,735$ 2,995,735$ 3,033,696$ 1.3% TRANSIT Bus 40,000 41,250 3,191 30,000 30,000 5,000 -83.3% TOTAL TRANSIT 40,000 41,250 3,191 30,000 30,000 5,000 -83.3% RECREATION AND CULTURE Senior Center 97,115 99,124 103,161 103,715 103,715 105,952 2.2% Park Operations 706,934 775,738 871,121 918,855 918,855 975,591 6.2% Park Ballfields 16,971 20,538 21,936 26,900 26,900 26,900 0.0% Public Arts - - - - - 30,000 --- Shade Tree 104,990 75,800 80,922 75,050 75,050 90,027 20.0% Library 36,176 44,823 42,203 45,288 45,288 46,113 1.8% TOTAL RECREATION AND CULTURE 962,186$ 1,016,023$ 1,119,343$ 1,169,808$ 1,169,808$ 1,274,583$ 9.0% UNALLOCATED Insurance 8,082 7,226 7,086 6,379 6,379 6,664 4.5% TOTAL UNALLOCATED 8,082$ 7,226$ 7,086$ 6,379$ 6,379$ 6,664$ 4.5% OTHER USES Operating Tranfers 297,012$ -$ 300,000$ -$ 700,000$ -$ --- TOTAL OTHER USES 297,012$ -$ 300,000$ -$ 700,000$ -$ --- TOTAL EXPENDITURES 7,012,381$ 6,992,812$ 7,742,697$ 8,287,000$ 8,987,000$ 8,586,000$ 3.6% FUND BALANCE - JANUARY 1 4,331,058$ 4,986,796$ 6,276,716$ 7,029,093$ 7,029,093$ 6,329,093$ Excess (Deficiency) of Revenues over Expenditures 655,738 1,289,920 752,377 - (700,000) - FUND BALANCE - DECEMBER 31 4,986,796$ 6,276,716$ 7,029,093$ 7,029,093$ 6,329,093$ 6,329,093$ 108 The previous table summarizes General Fund revenues by classifications and expenditures by activities/divisions and departments. The table below summarizes both revenues and expenditures by classifications. GENERAL FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 5,887,666$ 6,183,861$ 6,348,766$ 6,590,000$ 6,590,000$ 6,670,000$ 1.2% Tax Increments - - - - - - --- Franchise & Other Taxes 235,089 284,468 285,678 289,500 289,500 266,500 -7.9% Licenses & Permits 460,834 668,602 600,733 398,750 398,750 405,700 1.7% Intergovernmental Revenues 354,679 389,005 429,697 374,440 374,440 364,500 -2.7% Charges for Services 352,286 374,046 419,397 421,000 421,000 636,800 51.3% Fines & Forfeits 42,474 30,656 36,702 36,500 36,500 36,500 0.0% Special Assessments 1,330 275 2,289 300 300 500 66.7% Miscellaneous 333,761 351,819 371,812 176,510 176,510 180,500 2.3% Operating Transfers - - - - - 25,000 --- TOTAL REVENUES 7,668,119$ 8,282,732$ 8,495,074$ 8,287,000$ 8,287,000$ 8,586,000$ 3.6% EXPENDITURES Personnel Services 2,624,076$ 2,785,408$ 2,988,500$ 3,295,557$ 3,295,557$ 3,417,837$ 3.7% Supplies 503,059 494,690 555,135 742,050 742,050 671,900 -9.5% Other Services & Charges 3,445,434 3,518,914 3,688,362 3,999,593 3,999,593 4,197,363 4.9% Capital Outlay 142,800 193,800 210,700 249,800 249,800 298,900 19.7% Operating Transfers 297,012 - 300,000 - 700,000 - --- TOTAL EXPENDITURES 7,012,381$ 6,992,812$ 7,742,697$ 8,287,000$ 8,987,000$ 8,586,000$ 3.6% FUND BALANCE - JANUARY 1 4,331,058$ 4,986,796$ 6,276,716$ 7,029,093$ 7,029,093$ 6,329,093$ Excess (Deficiency) of Revenues over Expenditures 655,738 1,289,920 752,377 - (700,000) - FUND BALANCE - DECEMBER 31 4,986,796$ 6,276,716$ 7,029,093$ 7,029,093$ 6,329,093$ 6,329,093$ BUDGET COMMENTARY: Revenues For 2019, budgeted revenues are estimated to increase by 3.6%. The General Fund portion of the tax levy is budgeted to increase by 1.2%, which is less than the total (city & HRA) levy increase of 4.5%. Property taxes account for 78% of General Fund revenues. The General Fund’s allocation of franchise and other taxes is level and largely matches related expenditures (street lighting). The charges for services increase reflects higher residential garbage charges. Permits and fees will increase with additional development. The operating transfer is from the EDA. Expenditures Expenditures are budgeted to increase 3.6%. Most of the capital outlay amount reflects Capital Equipment Fund purchases, which are charged back through lease payments. The personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. The 2017 and 2018 operating transfers were to the Capital Project Fund for ensuing year capital expenditures. 109 MAYOR AND CITY COUNCIL DEPARTMENT: General Government SUPERVISOR: Mayor & Council FUND #: 101 ACTIVITY #: 41110 ACTIVITY SCOPE: The mayor and council provide elected representation to the community with control over policy, goals, budget, administration, and operations. Members participate in various committees and direct staff through the city administrator. OBJECTIVES: 1. Adopt policies and ordinances consistent with the council’s positions on growth, zoning, and financial strategies. 2. Examine city facility needs to meet future city operations. ISSUES: 1. Capitalize on the city’s uniqueness by developing a comprehensive vision statement and setting achievable goals. 2. Succession planning of city staff. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Council meetings 24 24 24 24 24 Special meetings/workshops 22 19 19 14 15 BUDGET COMMENTARY: The council’s budget remains consistent with previous years. The mayor earns $700 per month and each councilor earns $600 per month. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % MAYOR & COUNCIL Actual Actual Actual Budget Projected Budget Change Personnel Services 39,922$ 39,928$ 40,004$ 40,500$ 40,500$ 41,339$ 2.1% Supplies - - - - - - --- Other Services & Charges 12,650 14,336 14,119 16,850 16,850 17,300 2.7% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 52,572$ 54,264$ 54,123$ 57,350$ 57,350$ 58,639$ 2.2% 110 CITY ADMINISTRATION DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 41310 ACTIVITY SCOPE: City administration provides the overall direction of the city, as determined by the council and mayor. The city administrator serves as the chief administrative officer, ensuring that laws, ordinances, and resolutions are implemented and enforced. The administrator is also responsible for managing the operations of all city departments and providing customer service for general city hall activities, such as reception and meeting room management. OBJECTIVES: 1. Assist city council in setting policies and procedures in accordance with council positions. 2. Provide direction and leadership on major city projects and budget management; oversee performance evaluation and long-range planning. 3. Continue with proactive succession planning regarding key staffing roles within the organization. 4. Provide friendly, knowledgeable customer service to the public. 5. Provide adequate and consistent hours of business throughout the year. ISSUES: 1. Long-range comprehensive planning. 2. Long-range comprehensive traffic planning. 3. Leading and focusing council on policy matters. 4. Continuing to improve internal and external communication systems. 5. Management of Citizen Service Desk with continued growth of inquiries and need to improve response times. 6. Assistance with phone system upgrade and training. 7. Maintaining current, accurate information for all public sources. 111 MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Council meetings agendas 49 42 43 37 40 Records digitally converted 75%75%90% 100%100% Ordinances processed 30 27 47 13 20 Council minutes approved 49 42 43 37 40 Newsletters published 2 2 2 2 2 Utility inserts published 2 2 12 8 8 Park inserts published 4 4 4 3 3 All other inserts published ---13 10 Service desk data entry 379 499 557 625 600 BUDGET COMMENTARY: In 2017, many of the expenditures charged to the city hall budgetary unit were re-allocated to the city administration budgetary unit. The city hall activity is now limited to expenditures for the facility, not providing internal or external services. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % ADMINISTRATION Actual Actual Actual Budget Projected Budget Change Personnel Services 242,064$ 250,702$ 360,662$ 348,099$ 348,099$ 362,852$ 4.2% Supplies 234 985 15,231 14,300 14,300 14,500 1.4% Other Services & Charges 72,421 81,239 106,146 86,482 86,482 88,279 2.1% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 314,719$ 332,926$ 482,039$ 448,881$ 448,881$ 465,631$ 3.7% 112 CITY CLERK DEPARTMENT: General Government SUPERVISOR: City Clerk FUND #: 101 ACTIVITY #: 41410 ACTIVITY SCOPE: The city clerk activity is responsible for administering elections, maintaining official records , updating the city code, improving records management and data practices, and serving as the data practices compliance officer and responsible authority. OBJECTIVES: 1. Recruit and train judges for future elections. 2. Upgrade election equipment. 3. Improve data storage practices with digital storage through Laserfiche. 4. Update city code to meet legal requirements and community needs. ISSUES: 1. Antiquated city code. 2. Storage space. 3. Laserfiche training. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Voters, number of 0 6,161 0 7,112 0 Register voters, number of 6,394 6,923 7,079 7,520 7,600 Polling places 1 1 1 1 1 Election judges 0 46 0 38 0 Ordinances amendments na na 41 13 15 Council resolutions 92 94 87 100 95 BUDGET COMMENTARY: Elections are held in even-numbered years. In 2016, there were primary and general elections for president and a full slate of federal (including president), state, and local offices. Off-year election expenditures are for maintenance contracts on voting equipment. Other service and charges reflect increased IT Services expenditures for the Laserfiche document management system. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. 113 BUDGET: 2015 2016 2017 2018 2018 2019 % CITY CLERK Actual Actual Actual Budget Projected Budget Change Personnel Services 26,200$ 50,964$ 90,677$ 100,808$ 100,808$ 108,869$ 8.0% Supplies - - 1,164 1,500 1,500 1,300 -13.3% Other Services & Charges 3,458 19,002 10,581 29,101 29,101 17,692 -39.2% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 29,658$ 69,966$ 102,422$ 131,409$ 131,409$ 127,861$ -2.7% 114 FINANCE DEPARTMENT: General Government SUPERVISOR: Finance Director FUND #: 101 ACTIVITY #: 41520 ACTIVITY SCOPE: The Finance Department conducts the financial affairs of the city of Monticello in accordance with the Government Accounting Standards Board (GASB) and Generally Accepted Accounting Principles (GAAP). This includes protection of the assets of the city, the initiation of financial plans, investment and debt management, review and implementation of internal controls, and accounting for every financial transaction of the city including accounts payable, accounts receivable, payroll, and accounting control. The preparation of the annual audited financial report and annual budget document are also facilitated through finance. OBJECTIVES: 1. Continue working to develop a financial management plan for the city. 2. Develop financial documents in a format to be eligible for review and award of the Government Finance Officers Association’s (GFOA) award programs. 3. Provide meaningful and timely financial reports and information to council, commissions, and other city departments. 4. Complete financial, payroll, and utility billing software conversions. 5. Coordinate a central purchasing system including developing the use of purchase orders. ISSUES: 1. Complete implementation of new software systems for financial, payroll, and utility billing functions with integration of new processes for purchase orders, web-based applications, and remote time card entry. 2. Implement improved reporting procedures to inform council, commissions, and departments. 3. Develop methods for simplifying data analysis for various stakeholders. 4. Work with other departments to find ways to reduce costs of city operations. 5. Construct a work environment that provides growth through learning, self-determination through autonomy, and relatedness through the creation of enduring work products. 6. Cross-training of finance team members in core functions (payroll, AP, utility billing, and accounts receivable). 115 MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcome/Effectiveness: GFOA Budget Award Yes Yes Yes Yes Yes GFOA Certificate of Achievement Yes Yes Yes Yes Yes GFOA Popular Annual Financial Report Yes Yes Yes Yes Bond Rating A2 A2 A2 A2 A2 Efficiency: AP & ACHs per FTE (1.5)2,016 1,998 1,824 1,949 1,967 ACHs as % of total AP activity 43%41%42%43%44% Work Load: AP checks, number of 1,731 1,755 1,578 1,668 1,650 AP ACHs, number of 1,293 1,242 1,158 1,255 1,300 W-2s 290 294 307 315 310 1099's 49 53 47 67 70 Journal entries 2,889 2,484 2,496 2,542 2,550 BUDGET COMMENTARY: The Finance budget includes funds to handle the financial transactions of the city, in an efficient manner, while maintaining the highest level of internal controls and segregation of duties. The prior year increase in other services and charges reflects the re-allocation of expenses for IT services and insurances (property, liability and vehicle). The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other budget items are expected to remain close to prior year levels. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % FINANCE Actual Actual Actual Budget Projected Budget Change Personnel Services 313,900$ 318,445$ 339,765$ 387,712$ 387,712$ 390,096$ 0.6% Supplies 1,777 1,952 2,786 3,200 3,200 3,100 -3.1% Other Services & Charges 62,190 73,357 82,696 76,330 76,330 82,761 8.4% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 377,867$ 393,754$ 425,247$ 467,242$ 467,242$ 475,957$ 1.9% 116 AUDIT DEPARTMENT: General Government SUPERVISOR: Finance Director FUND #: 101 ACTIVITY #: 41540 ACTIVITY SCOPE: An audit of city finances must be completed on an annual basis for the city to remain in compliance with federal and state accounting practices. OBJECTIVES: 1. Complete the financial audit in a timely fashion. 2. Continue to reduce the number of audit findings and adjustments. ISSUES: 1. Comply with changing reporting requirements and auditing standards. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Audit submittal date 6/25 6/27 6/20 6/14 6/15 Audit findings 2 0 2 0 0 Opinion Unmodified Unmodified Unmodified Unmodified Unmodified GFOA Award Yes Yes Yes Yes Yes BUDGET COMMENTARY: The budget for auditing consists entirely of the expenses associated with the required audit process. In late 2007, a request for proposal (RFP) for audit services was sent to several firms. The RFP guaranteed the cost for audit services for the years ended 2007 through 2009 and resulted in a cost decrease from previous years. This contract was extended for 2019 fiscal year. The finance department prepared the entire financial report for the first time in 2015. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % AUDIT Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 37,798 39,273 44,745 42,000 42,000 44,000 4.8% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 37,798$ 39,273$ 44,745$ 42,000$ 42,000$ 44,000$ 4.8% 117 ASSESSING DEPARTMENT: General Government SUPERVISOR: Finance Director FUND #: 101 ACTIVITY #: 41550 ACTIVITY SCOPE: Property tax assessing requirements are provided through a contract with the Wright County assessor. There are no plans to alter this activity. OBJECTIVES: 1. Assess new and existing parcels within the city as required. ISSUES: 1. Meet state requirements in appraising properties. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 New residential properties 73 44 61 64 60 New commercial properties 2 2 7 3 5 Tax exempt parcels 333 335 BUDGET COMMENTARY: Assessing services are provided by contract with Wright County. Estimated costs for assessments are based on the number of existing and new parcels. The city paid $10.50 per parcel for assessment services and $25 for each new permit with an estimated construction value under $499,999 and $100 for values over $500,000 in 2017. Those rates climbed to $11.50, $50.00, and $150 in 2018 and will include parcels not included in the past. In 2019, the per parcel rate rises to $12. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % ASSESSING Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 50,466 50,415 51,972 65,000 65,000 68,000 4.6% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 50,466$ 50,415$ 51,972$ 65,000$ 65,000$ 68,000$ 4.6% 118 LEGAL DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 41601 ACTIVITY SCOPE: Private legal firms provide all the city’s legal services. Activities include issuance of legal opinions; preparation of ordinances, resolutions, contracts, and agreements; and the conduct of civil litigation. Additional legal expenditures, such as publications, fees, and other costs are accounted for in the benefitting unit. OBJECTIVES: 1. Continue to realize savings by contracting legal services. ISSUES: 1. Rising costs associated with the need for existing and new legal services. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Billed hours: Administration 344.7 222.3 196.8 192.6 200.0 Code enforcement 14.8 9.0 5.5 20.4 15.0 Fiber optics 56.0 36.5 1.0 City Construction Projects 13.5 40.1 39.5 192.5 50.0 All other 35.1 65.8 87.4 21.2 100.0 Total 464.1 373.7 330.2 426.7 365.0 BUDGET COMMENTARY: The city continues to realize savings from not having full-time counsel. Legal services provided to FiberNet are charged to the Fiber Optics Fund. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % LEGAL Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 36,946 29,152 35,714 38,000 38,000 38,000 0.0% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 36,946$ 29,152$ 35,714$ 38,000$ 38,000$ 38,000$ 0.0% 119 HUMAN RESOURCES DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 41800 ACTIVITY SCOPE: Human Resources activities support the primary mission of the city through the effective recruitment, selection, development, training, and assessment of appropriate human resource needs. Employee benefits and compensation administration, implementation of and compliance with Federal and State employment laws, labor negotiations, processing of employee grievances, and development of personnel policies are major human resource functions. OBJECTIVES: 1. Provide recruiting, interviewing, and other personnel services for all city departments. 2. Administer classification and compensation system for all employees in compliance with pay equity. 3. Plan and coordinate in-house training programs for city staff 4. Administer city benefit plans. ISSUES: 1. Update personnel policies to accommodate changing employment law. 2. Communicate benefit changes to employees. 3. Develop and implement city drug and alcohol testing program. 4. Negotiate new union contract for public works employees. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Workers compensation experience modification 69%93%108%100%100% Full-time positions 55 52 51 53 53 Part-time positions 103 111 130 120 120 Full-time positions filled 5 6 6 11 5 Other positions filled 89 92 103 104 100 Terminations processed 98 89 100 115 100 Job Postings 20 18 37 42 25 Application count - all city 212 224 408 656 600 Avg, number of employess 158 163 181 196 190 120 BUDGET COMMENTARY: The 2019 budget reflects estimated costs for setting up training, providing city staff with benefit and compensation information, and other expenses based on past experience. The 2019 increase in other services and charges represent expenditures on professional services to update the city’s pay equity plan. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other budget items are expected to remain close to prior year levels. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % HUMAN RESOURCES Actual Actual Actual Budget Projected Budget Change Personnel Services 92,213$ 93,155$ 100,426$ 103,179$ 103,179$ 98,029$ -5.0% Supplies 500 1,121 687 600 600 600 0.0% Other Services & Charges 24,536 22,246 22,093 29,339 29,339 38,783 32.2% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 117,249$ 116,522$ 123,206$ 133,118$ 133,118$ 137,412$ 3.2% 121 PLANNING, ZONING & COMMUNITY DEVELOPMENT DEPARTMENT: General Government SUPERVISOR: Community Development Director FUND #: 101 ACTIVITY #: 41910 ACTIVITY SCOPE: The Community Development and Planning Department is responsible for long-range and current planning efforts for Monticello. The department is responsible for regulating development and use standards as outlined in the zoning and subdivision ordinance; these standards are aimed at protecting and promoting public health, safety, and welfare. The department oversees coordination with regional planning and service providers including Monticello Township Board, Monticello Orderly Annexation Board, Wright County Planning & Zoning, Sherburne County Planning & Zoning and regional transit entities. The department also provides citizens, business owners, and developers with current, easily accessible information about Monticello's planning process and projects happening in their community. OBJECTIVES: 1. Implementation of Comprehensive Plan objectives. 2. Completion of subdivision ordinance amendments consistent with the “Next Steps” outlined by the Comprehensive Plan. 3. Support for downtown redevelopment and revitalization, including the Embracing Downtown Monticello Project. 4. Involvement in regional transportation planning and its impact on land use and growth objectives. 5. Bertram Chain of Lakes acquisition and master planning. 6. Continued implementation and training on the city's GIS. 7. Continued improvements of the city's development and planning process. 8. Increased support for neighborhood organizations and involvement. ISSUES: 1. Zoning compliance and enforcement. 2. Records management and integration for planning and zoning. 3. Land use and transportation relationships. 4. Emerging technology and land use impacts. 122 MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcome/Effectiveness: Grants awarded Grant awards Administrative applications (total)20 16 4 8 5 processed within 5 working days 5 5 3 7 - Site Plan reviews processed within 14 working days 4 -1 1 1 Change in Use forms -3 4 11 5 reviewed withing 5 working days -3 1 9 - Sign Permit zoning reviews -5 26 30 25 processed within 5 working days -3 21 30 25 Land Use applications processed -23 43 33 35 within 60 working days 31 23 42 33 35 Reconciliations processed 15 14 7 21 15 Annexation petitions 1 --1 1 Efficiency: Applications processed per FTE 56 49 41 57 44 Work Load: Planning Applications: Variances 1 2 1 6 5 CUPs 5 17 9 10 10 PUD/Amendments to PUD 3 8 14 12 10 Interim Use permits 1 ---- Comp Plan amendments 1 3 1 2 Map amendments 3 8 12 3 5 Non-city zoning text amendments 10 8 1 -- Plats/adminstrative subdivisions 7 7 9 3 5 Administrative permits 20 15 4 8 6 Site plan reviews 5 -1 1 1 Appeals ---1 1 Vacations -1 3 -1 Sign permit application review -5 -30 10 Change in Use review -3 4 11 10 Total applications 56 74 61 86 66 Planning reconciliations 15 14 28 21 25 Planning Commission meetings 12 17 12 13 12 EDA Meetings 12 11 11 14 14 IEDC Meetings 11 7 10 11 11 Grant applications 1 1 --1 123 BUDGET COMMENTARY: The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other services and charges include $45,000 for visioning and comprehensive plan update. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PLANNING & ZONING Actual Actual Actual Budget Projected Budget Change Personnel Services 132,710$ 123,909$ 136,761$ 141,924$ 141,924$ 147,386$ 3.8% Supplies 345 117 29 200 200 200 0.0% Other Services & Charges 111,921 86,147 79,217 105,896 105,896 130,683 23.4% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 244,976$ 210,173$ 216,007$ 248,020$ 248,020$ 278,269$ 12.2% 124 CITY HALL DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 41940 ACTIVITY SCOPE: The activity for this department consists of maintenance and upkeep for the building housing city hall. OBJECTIVES: 1. Provide adequate and consistent hours of business throughout the year. 2. Maintain a clean, inviting facility to house meetings and staff. ISSUES: 1. Depreciation of facility and work platforms. 2. Reconfiguring layout to accommodate work flow. 3. Timely maintenance. 4. Utility costs. 5. Building and office security. 6. Re-purposing storage area. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Number of times cleaned 104 104 104 104 104 Utility expenses $26,717 $25,073 $23,125 $24,064 $24,000 BUDGET COMMENTARY: Items budgeted for the city hall activity are commonly shared among all departments operating out of city hall. Much of the costs associated with this activity was transferred to the administration activity in 2017. Personnel services activity was eliminated when custodial services started, and utilities are the main expenditures in other services and charges. 125 BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % CITY HALL Actual Actual Actual Budget Projected Budget Change Personnel Services 119,954$ 109,552$ 8,651$ -$ -$ -$ --- Supplies 13,140 11,890 - 2,500 2,500 2,500 0.0% Other Services & Charges 50,903 61,548 54,302 70,310 70,310 64,533 -8.2% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 183,997$ 182,990$ 62,953$ 72,810$ 72,810$ 67,033$ -7.9% 126 PRAIRIE CENTER BUILDING DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 41941 ACTIVITY SCOPE: The city-owned Prairie Center Building leases space to its FiberNet operations. Further, the Wright County Sheriff's Department occupies non-rent paying space in the building. This activity is for the operations of the facility. OBJECTIVES: 1. To provide a well-maintained building. ISSUES: 1. Maintain facility with current staff and available funds. 2. Tenant retention. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Tenants 2 1 1 1 1 BUDGET COMMENTARY: The Prairie Center Building was purchased in 2009 to provide FiberNet Monticello with office space. FiberNet is now the building’s only year-round tenant. The 2016 decrease in other services and charges reflected the removal of the Center from the property tax roll after the loss of its only private tenant. The 2019 budget reflects prior year levels. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PRAIRIE CENTER BLDG Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies 60 313 601 750 750 750 0.0% Other Services & Charges 13,267 8,604 16,601 17,003 17,003 17,220 1.3% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 13,327$ 8,917$ 17,202$ 17,753$ 17,753$ 17,970$ 1.2% 127 LAW ENFORCEMENT DEPARTMENT: Public Safety SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 42100 ACTIVITY SCOPE: All law enforcement services are contracted with the Wright County Sheriff's Department. The Sheriff’s Department maintains a local office in the Prairie Center building. The Sheriff sets the hourly rate and the city contracts for the number of hours, typically 17,000 to 19,000 hours annually. Contracted hours change in 4 hour-per-day increments. OBJECTIVES: 1. Protect life and property, and improve the quality of community life. 2. Continue contracting for law enforcement services from Wright County. 3. Provide coverage for commercial and residential growth. ISSUES: 1. Concerns from residents regarding having our own police force. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcome/Effectiveness: Arrests -172 207 236 215 Arrests to crimes ratio -0.19 0.24 0.24 0.22 Efficiency: Hours contracted -17,568 17,520 18,256 18,980 Calls per hour contracted - 0.44 0.45 0.47 0.46 Costs per workload unit -$152.27 $153.90 $153.64 $163.47 Work Load: Life quality calls, number of -3,511 3,470 3,589 3,600 Traffic calls, number of -2,981 3,200 3,651 3,700 Vehicle crashes, number of - 334 387 337 350 Crimes, number of - 904 855 978 1,000 *In 2016 the county sheriff implemented a new reporting format making annual comparison difficult. 128 BUDGET COMMENTARY: Law enforcement services are contracted in four-hour-per-day increments from the Wright County Sheriff’s Department. Past hourly rates and contracted hours are presented in the schedule below: Hourly Hours Year Rate Contracted 2011 $59.00 18,980 2012 $59.75 19,032 2013 $60.50 18,980 2014 $62.50 17,520 2015 $64.50 17,520 2016 $67.00 17,568 2017 $69.50 17,520 2018 $72.00 18,256 2019 $74.50 18,980 The city contracted for 52 hours per day from 2011 through 2013. From 2014 through 2017, the city contracted for 48 hours per day. In July 2018, the city returned to contracting for 52 hours per day. The leap years of 2012 and 2016 include one more day of coverage (52 hours in 2012 and 48 hours in 2016). BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % LAW ENFORCEMENT Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 1,174,439 1,212,080 1,257,194 1,360,197 1,360,197 1,457,430 7.1% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 1,174,439$ 1,212,080$ 1,257,194$ 1,360,197$ 1,360,197$ 1,457,430$ 7.1% 129 FIRE & RESCUE DEPARTMENT: Public Safety SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 42200 ACTIVITY SCOPE: The Fire Department responds to fire, rescue, hazardous materials, medical, and accident incidents within the city and the surrounding townships. The department also provides fire inspection services. Paid-on-call volunteers provide the department’s staffing. OBJECTIVES: 1. Assemble a confined space entry team with personnel and equipment. 2. Improve response times. 3. Develop National Incident Management System (NIMS) training for all city departments. ISSUES: 1. Training and retention of paid-on-call personnel. BUDGET COMMENTARY: The Fire Department is staffed with paid-on-call volunteers. Firefighter pay increased $2.00 per hour to $12.00 per hour per response in 2016. The purchase of turn-out gear contributed to the sharp rise in 2018 supplies. Grants may offset some of these expenditures. Capital outlay reflects the acquisition of a fire tender truck in 2014 and a fire half-ton truck in 2019 through the Central Equipment Fund. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % FIRE Actual Actual Actual Budget Projected Budget Change Personnel Services 132,349$ 132,913$ 150,821$ 192,069$ 192,069$ 228,018$ 18.7% Supplies 54,040 33,836 53,187 101,200 101,200 51,050 -49.6% Other Services & Charges 82,281 80,961 105,583 79,759 79,759 91,410 14.6% Capital Outlay 41,300 41,300 41,300 41,300 41,300 49,600 20.1% TOTAL EXPENDITURES 309,970$ 289,010$ 350,891$ 414,328$ 414,328$ 420,078$ 1.4% 130 MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcome/Effectiveness: Respondents to fire calls: City 2,552 2,603 3,385 3,050 3,000 Monticello Township 1,273 1,161 1,627 1,104 1,100 Silver Creek Township 674 537 409 585 550 Mutual Aid 758 393 363 292 300 Drills & Maintenance 2,687 2,410 2,574 3,295 2,800 Total 7,944 7,104 8,358 8,326 7,750 Efficiency: Average respondents per call City 15 15 16 16 16 Monticello Township 21 18 23 23 22 Silver Creek Township 20 18 16 22 22 Mutual Aid 28 13 26 37 30 Drills & Maintenance 40 46 54 57 54 Total 23 20 22 25 24 Work Load: Number of fire calls: City 165 175 216 195 190 Monticello Township 60 65 70 47 50 Silver Creek Township 33 30 26 27 25 Mutual Aid 27 31 14 8 10 Drills & Maintenance 67 52 48 58 52 Total 352 353 374 335 327 Firefighters, number of 30 30 30 30 30 131 FIRE RELIEF DEPARTMENT: Public Safety SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 42202 ACTIVITY SCOPE: Providing a retirement benefit to paid-on-call volunteers, the fire relief activity is specifically designed to track the city’s contribution to the Monticello Fire Relief Association. OBJECTIVES: 1. Provide pension funds for the Monticello Fire Relief Association. ISSUES: 1. Pension assets greater than pension liabilities. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Pension assets 1,026,460$ 1,200,706$ 1,286,019$ 1,354,939$ 1,400,000$ Pension liabilities 1,017,135$ 1,177,526$ 1,154,458$ 1,098,915$ 1,125,000$ Assets-liabilities ratio 1.01 1.02 1.11 1.23 1.24 Pension per service year $3,300 $3,600 $3,900 $4,200 $4,200 Fire state aid $120,026 $123,656 $125,764 $130,874 $130,000 State aid per employee $4,287 $4,756 $4,658 $5,034 $5,000 Active firefighters 28 26 27 26 26 Deferred firefighters 3 2 1 5 5 BUDGET COMMENTARY: The fire relief budget is basically a conduit for distribution of state fire aid to the pension fund for volunteer firefighters. State aid revenue equals the contribution to the relief association and it is conservatively estimated for budgetary purposes. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % FIRE RELIEF Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 120,027 123,656 125,764 120,000 120,000 124,000 3.3% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 120,027$ 123,656$ 125,764$ 120,000$ 120,000$ 124,000$ 3.3% 132 BUILDING INSPECTIONS DEPARTMENT: Public Safety SUPERVISOR: Community Development Director FUND #: 101 ACTIVITY #: 42401 ACTIVITY SCOPE: The Building Department inspects all new and remodeled construction within the city by a state certified building inspector. The department initiates all building permits and oversees the enforcement of all public nuisance and ordinance issues. OBJECTIVES: 1. Continue implementation of the rental licensing program. 2. Continue implementation of zoning ordinance changes. 3. Continue sign ordinance update. 4. Implement yearly contractor, realtor, and rental property owner workshops. 5. Continue public relations contact. Improve city's public perception image. 6. Continue implementation of the building codes. ISSUES: 1. Managing and prioritizing department workloads. 2. Meeting the residential and commercial growth challenges as a regional center. 3. Keeping up with biennial rental license inspections. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcome/Effectiveness: Value of permits issued 36,242,742$ 59,426,683$ 43,853,123$ 33,125,788$ 30,000,000$ Value of permits per FTE 10,355,069$ 14,856,671$ 10,963,281$ 9,464,511$ 10,000,000$ Efficiency: Departmental FTEs 3.5 4 4 3.5 3 Rental inspections per FTE (2)697 793 782 787 788 Permits per FTE 256 267 304 245 229 Work Load: Building permits issued 768 802 911 856 800 Nuisance notices issued 110 118 109 116 115 Rental units, number of 1,393 1,586 1,563 1,573 1,575 133 BUDGET COMMENTARY: The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. One building inspector was added in 2016. The added position became vacant in 2018 and went unfilled as staff re-evaluates departmental needs. The other budget items are expected to remain close to prior year levels. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % BUILDING INSPECTIONS Actual Actual Actual Budget Projected Budget Change Personnel Services 275,107$ 320,623$ 344,422$ 363,277$ 363,277$ 378,272$ 4.1% Supplies 5,517 3,861 5,910 6,100 6,100 7,300 19.7% Other Services & Charges 21,234 22,120 26,728 25,832 25,832 26,113 1.1% Capital Outlay 3,000 3,700 4,200 4,200 4,200 4,200 0.0% TOTAL EXPENDITURES 304,858$ 350,304$ 381,260$ 399,409$ 399,409$ 415,885$ 4.1% 134 CIVIL DEFENSE DEPARTMENT: Civil Defense SUPERVISOR: Chief Building Official FUND #: 101 ACTIVITY #: 42501 ACTIVITY SCOPE: The civil defense department provides constant defense coverage for all weather and power plant related emergency situations within the city. OBJECTIVES: 1. Implement city hall, community center, and National Guard emergency preparedness. ISSUES: 1. Preparedness - little or no warning when an emergency occurs. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Meetings hours per year 72 72 72 72 72 Sirens, number of 106 106 106 106 106 Annual successful siren tests 48 48 48 48 48 BUDGET COMMENTARY: The 2019 budget is based on the 2018 budget. With the retirement of the city's previous building official, much of this activity's responsibilities had been transferred to Wright County. However, the city is an active participant of the emergency management team, and, with the new Fire Marshal/Emergency Management Coordinator position, this budget unit will likely see more activity in the future. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % CIVIL DEFENSE Actual Actual Actual Budget Projected Budget Change Personnel Services 592$ 103$ 1,123$ 1,612$ 1,612$ 1,612$ 0.0% Supplies - - - 100 100 100 0.0% Other Services & Charges 908 1,131 810 1,553 1,553 1,342 -13.6% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 1,500$ 1,234$ 1,933$ 3,265$ 3,265$ 3,054$ -6.5% 135 ANIMAL CONTROL DEPARTMENT: Animal Control SUPERVISOR: Project Coordinator FUND #: 101 ACTIVITY #: 42700 ACTIVITY SCOPE: The city contracts with a private individual for animal control services. The city owns and maintains the animal control facility. The city also contracts with nearby communities, allowing them to use our services and facility. OBJECTIVES: 1. To address issues within the city and surrounding communities in a timely and courteous manner. 2. Continue to improve animal control response time. 3. Continue to improve billing procedures for animal control issues. ISSUES: 1. Provide quick response to residents on animal control concerns. 2. Allocation of service costs based on usage by customers (townships and cities). MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Stray animal reports 535 532 413 496 500 Barking dog reports 173 180 199 190 190 Lost/found reports 1,568 1,487 1,460 1,670 1,600 Feral cat trapping 301 245 250 261 250 Unsanitary condition reports 189 223 215 201 200 Abuse/neglect reports 191 149 213 171 175 Impounds 572 563 523 556 550 Dog bite reports 72 78 92 78 80 Animal control fees $38,756 $37,838 $50,519 $46,497 $46,000 BUDGET COMMENTARY: The professional service contract to handle all animal control issues is the largest budgeted item at $39,015. The remaining budget items are for supplies and other service charges related to operating the animal control facility. 136 BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % ANIMAL CONTROL Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies 1,168 537 2,016 3,300 3,300 3,300 0.0% Other Services & Charges 47,586 46,406 46,150 48,496 48,496 49,538 2.1% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 48,754$ 46,943$ 48,166$ 51,796$ 51,796$ 52,838$ 2.0% 137 NATIONAL GUARD DEPARTMENT: Public Safety SUPERVISOR: Project Coordinator FUND #: 101 ACTIVITY #: 42701 ACTIVITY SCOPE: The National Guard facility is housed in the Monticello Community Center complex. The city will maintain the facility in perpetuity in return for a one-time payment in 1998 that helped fund construction of the community center. The Guard provides no direct services to the city. OBJECTIVES: 1. To maintain a clean, modern facility for use by the National Guard. ISSUES: 1. There are no current issues to maintaining the National Guard facility. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Not Applicable BUDGET COMMENTARY: The National Guard operates a security division within the Monticello Community Center complex. The city maintains the Guard’s site within the complex. The budget for this activity is relatively static. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % NATIONAL GUARD Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 13,438 13,550 13,520 14,500 14,500 14,000 -3.4% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 13,438$ 13,550$ 13,520$ 14,500$ 14,500$ 14,000$ -3.4% 138 PUBLIC WORKS - ADMINISTRATION DEPARTMENT: Public Works SUPERVISOR: Public Works Director FUND #: 101 ACTIVITY #: 43110 ACTIVITY SCOPE: Public works (PW) administration activity oversees the daily operations of the street, parks, water, sewer, wastewater treatment plant, and inspection activities. PW administration also manages all large city projects and implements all changes to PW operations and policy. OBJECTIVES: 1. Continue the implementation of a bio-solids management system. 2. Implement the major street lighting project plan. 3. Continue implementing the wellhead protection plan. 4. Manage the development of a new public works facility and expansion of the wastewater treatment plant. 5. Determine location for future wells, utilizing information gathered from various sources including grants. 6. Develop a program to lease antenna space on elevated water towers, thus generating a new revenue source. 7. Implement a new SCADA system as budgeted in the water and sewage operating funds. ISSUES: 1. Balance the public works department needs with available funds. 2. Management of city's water and wastewater treatment systems. 3. Implement a capital improvement program for city infrastructure. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Budget units 14 14 14 14 14 Employees supervised - FT 19 20 20 20 20 139 BUDGET COMMENTARY: The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Personnel services also included the 2018 re-instatement of a public works director/engineering position. The director position is spread over three budgets: General Fund - 60%, Sewage Fund – 20%, and Water Fund 20%. While other budget items may have large percentage changes, in dollar terms they are relatively insignificant. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PW - ADMINISTRATION Actual Actual Actual Budget Projected Budget Change Personnel Services 101,190$ 99,998$ 102,601$ 172,276$ 172,276$ 179,582$ 4.2% Supplies 2,070 3,641 1,666 3,000 3,000 3,000 0.0% Other Services & Charges 21,244 22,688 16,518 26,679 26,679 29,275 9.7% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 124,504$ 126,327$ 120,785$ 201,955$ 201,955$ 211,857$ 4.9% 140 PUBLIC WORKS - ENGINEERING DEPARTMENT: Public Works SUPERVISOR: City Engineer FUND #: 101 ACTIVITY #: 43111 ACTIVITY SCOPE: Engineering assists with the provision, development, and management of the city's street, pathways, public utilities systems, geographic information system (GIS), Storm Water Pollution Prevention Program (SWPPP), improvement projects, and miscellaneous mapping. In addition, engineering responds to residents with issues related to storm water drainage and/or pedestrian, bicycle and vehicular traffic, and reviews. Engineering updates and supports the city's General Specifications and Standard Detail Plates for Street and Utility Construction and the Plan Requirements and Design Guidelines. Engineering also issues driveway, grading, and right-of-way permits. OBJECTIVES: 1. Improve ability to assist other departments with CADD and GIS related requests. 2. Continue to administer and maintain the city's SWPPP. 3. Continue to implement and improve the city's GIS. 4. Continue to educate the public on purposes and practices associated with conservation and drainage easements and storm water ponds. 5. Create a one-stop shop for city driveway, grading, and right-of-way permits. 6. Continue to develop an in-house Pavement Management Program. 7. Review development plans and agreements. 8. Continue to work towards improving transportation system, and collaborate with MNDOT and Wright County. 9. Prepare capital infrastructure planning and budgeting. 10. Integrate with other departments on public improvement projects and development plans. 11. Apply for grants and track funding for improvement projects. ISSUES: 1. Increasing restrictions by Minnesota Pollution Control Agency (MPCA) for storm water runoff. 2. Lack of public knowledge regarding purposes and practices associated with conservation and drainage easements and storm water ponds. 3. Increasing phosphorus restrictions by MPCA for wastewater effluent. 4. Reduction in available federal and state funding for transportation improvements. 141 MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Service requests 10 10 10 70 50 On-line service requests 11 17 19 17 15 Active improvement projects 10 10 10 10 10 Driveway permits issued 3 1 11 7 5 Right-of-way permits issued 101 130 120 86 90 Development applications 10 7 9 8 8 Grading permits issued 2 11 8 5 5 BUDGET COMMENTARY: The engineering activity predominantly consists of engineering and other professional service fees. These expenditures consist of both reimbursable and non-reimbursable expenditures. The 2019 budget provides for continued improvements and development of the city's GIS system and reduces reliance on consulting services with the re-instatement of the City Engineer position in 2018. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PW - ENGINEERING Actual Actual Actual Budget Projected Budget Change Personnel Services 1,500$ 935$ -$ -$ -$ -$ --- Supplies 3,167 69 429 500 500 500 0.0% Other Services & Charges 105,888 110,791 129,896 164,992 164,992 145,089 -12.1% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 110,555$ 111,795$ 130,325$ 165,492$ 165,492$ 145,589$ -12.0% 142 PUBLIC WORKS - INSPECTIONS DEPARTMENT: Public Works SUPERVISOR: City Engineer FUND #: 101 ACTIVITY #: 43115 ACTIVITY SCOPE: The public works inspection activity is responsible to design and inspect city infrastructure projects, and to review and approve right-of-way excavation/obstruction permit applications. Personnel are also responsible for managing records retention for plats, city maps, infrastructure data bases, soil borings, development plans, and as-builts. Using various computer software programs including ArcGIS, AutoCADm and CarteGraph, staff provides design and mapping assistance. OBJECTIVES: 1. Improve staff use of the city's GIS system through training. 2. Maintain certifications, and attend appropriate classes and workshops for inspections. 3. Provide support for the engineering activity. 4. Improve communication between public works, engineering, and inspection activities. 5. Improve knowledge, skills, and ability in using CarteGraph software for development of an in-house Pavement Management and Sign Program. 6. Improve knowledge, skills, and ability in using GIS software for assisting other departments with their mapping needs. 7. Assist other city departments in acquiring utility information not readily available from other sources, including GIS. 8. Assist with design and implementation of solutions to drainage issues. 9. Complete cost estimates and design for small improvement projects. 10. Complete cost estimates for budgeting purposes for upcoming improvement projects. 11. Complete inspections and documentation for city’s SWPPP. ISSUES: 1. Workload is unevenly distributed throughout the year. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 NPDES Inspections -106 220 252 225 Outfall Inspections -30 1 1 5 Stormwater Inspections -47 47 47 47 Pond Inspections -0 70 37 25 Inspection revenue --$16,610 $14,300 $14,375 Inspection hours billed --151 130 125 *Data for 2015 is not available. NPDES is National Pollutant Discharge Elimination System. 143 BUDGET COMMENTARY: The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Personnel services also reflects the re-allocation of the position back to only this activity. Small reductions in IT Services and training caused the drop in other service & charges. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PW - INSPECTIONS Actual Actual Actual Budget Projected Budget Change Personnel Services 20,533$ 47,876$ 53,397$ 103,643$ 103,643$ 98,579$ -4.9% Supplies 600 1,400 665 4,100 4,100 4,000 -2.4% Other Services & Charges 10,951 12,824 8,820 12,224 12,224 9,334 -23.6% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 32,084$ 62,100$ 62,882$ 119,967$ 119,967$ 111,913$ -6.7% 144 PUBLIC WORKS – STREETS, ALLEYS & PARKING LOTS DEPARTMENT: Public Works SUPERVISOR: Street Superintendent FUND #: 101 ACTIVITY #: 43120 ACTIVITY SCOPE: The main responsibility of the streets and alleys activity is to perform the necessary tasks to reduce the depreciation of the city streets and uphold desirable standards of appearance, serviceability, and safety. This includes upkeep such as street sweeping and repair of roadway surface areas, medians, sidewalks, boulevards, alleys, catch basins, and storm sewers. OBJECTIVES: 1. Continue street reconstruction of older road surfaces by evaluating road wear. 2. Increase street chip seal coating projects. 3. Maintain and update equipment and vehicles. 4. Help maintain and use City GIS system. 5. Continue street crack sealing program. ISSUES: 1. Educating the public on what the boulevards are to be used for. 2. Educating the public on storm water operations. 3. Increased costs of fuel and street products due to fuel costs. 4. Educating the public on the value of good maintenance programs for our infrastructure. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Pounds of crack sealer 29,580 49,039 46,721 46,868 47,000 Sq. yards of chip sealing 102,204 109,708 115,125 102,487 105,000 Miles of streets 69.0 69.0 69.0 70.0 70.0 Tons of black top patching 293 220 167 164 170 145 BUDGET COMMENTARY: Contracted street repairs and maintenance, under other services and charges, increased $38,000 to $223,000 for 2019. The renewed emphasis on street maintenance began in 2014. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. The decline in gas/diesel prices contributed to the 2019 drop in supplies cost. Other budget items are expected to remain close to prior year levels. The difference between budget and actual can vary widely because the seasonal nature of some departmental expenditures. Capital outlay includes the 2019 addition of two pieces of equipment leased from the Central Equipment Fund. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PW - STREETS & ALLEYS Actual Actual Actual Budget Projected Budget Change Personnel Services 354,121$ 382,280$ 378,578$ 489,743$ 489,743$ 493,091$ 0.7% Supplies 152,827 154,533 170,977 220,300 220,300 195,100 -11.4% Other Services & Charges 194,124 192,161 220,220 223,908 223,908 261,323 16.7% Capital Outlay 37,500 75,600 76,800 104,500 104,500 137,300 31.4% TOTAL EXPENDITURES 738,572$ 804,574$ 846,575$ 1,038,451$ 1,038,451$ 1,086,814$ 4.7% 146 PUBLIC WORKS – ICE & SNOW REMOVAL DEPARTMENT: Public Works SUPERVISOR: Street Superintendent FUND #: 101 ACTIVITY #: 43125 ACTIVITY SCOPE: The city's ice and snow removal activity is responsible for the control of ice and snow on city streets, sidewalks, and city-owned public parking lots. The activity provides control in a safe and cost- effective manner while keeping in mind safety, budget, personnel, and environmental concerns. OBJECTIVES: 1. Maintain and update equipment and vehicles in a timely manner. 2. Learn ways to effectively use the city's GIS system. ISSUES: 1. Staffing and budgeting for unpredictable circumstances. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Inches of snow 40 50 31 72 60 Plowing events, number of 14 16 11 15 15 Tons of salt used 534 525 461 585 550 Tons of sand used 285 300 397 329 350 BUDGET COMMENTARY: The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Weather variability greatly impacts budget-to-actual comparisons. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PW - ICE & SNOW Actual Actual Actual Budget Projected Budget Change Personnel Services 174,038$ 194,874$ 184,594$ 169,002$ 169,002$ 171,485$ 1.5% Supplies 86,658 66,996 79,376 120,600 120,600 120,200 -0.3% Other Services & Charges 2,324 2,362 3,125 2,713 2,713 2,725 0.4% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 263,020$ 264,232$ 267,095$ 292,315$ 292,315$ 294,410$ 0.7% 147 PUBLIC WORKS – SHOP & GARAGE DEPARTMENT: Public Works SUPERVISOR: Street Superintendent FUND #: 101 ACTIVITY #: 43127 ACTIVITY SCOPE: Shop & Garage maintains all city vehicles and equipment for the streets, ice & snow, parks, water, and sewage activities in a safe and efficient manner. OBJECTIVES: 1. Maintain equipment and vehicles to maximize efficiencies and safety. 2. Update equipment and vehicles. ISSUES: 1. Aging equipment. 2. Increased safety regulation for equipment and vehicles. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Service orders 88 90 88 92 90 Service order hours 362 369 352 396 375 Hours per service order 4.1 4.1 4.0 4.3 4.2 Total service order costs $22,337 $22,844 $22,600 $20,017 $22,000 Service cost per order $253.83 $253.82 $256.82 $217.58 $244.44 Repair orders 87 95 91 85 90 Repair hours 252 272 268 455 400 Hours per repair order 2.9 2.9 2.9 5.4 4.4 Total repair order costs $37,250 $39,250 $36,100 $35,493 $36,000 Repair costs per order $428.16 $413.16 $396.70 $417.56 $400.00 BUDGET COMMENTARY: The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other budget items are expected to remain close to prior year levels. The city has a wide variety of talent in the Public Works Department. Most are capable of assisting a true craftsman, the city’s highly-skilled chief mechanic. 148 BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PW - SHOP & GARAGE Actual Actual Actual Budget Projected Budget Change Personnel Services 95,891$ 90,597$ 103,706$ 102,805$ 102,805$ 105,914$ 3.0% Supplies 45,463 39,151 42,635 46,900 46,900 47,100 0.4% Other Services & Charges 44,483 41,331 54,349 57,341 57,341 56,678 -1.2% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 185,837$ 171,079$ 200,690$ 207,046$ 207,046$ 209,692$ 1.3% 149 PUBLIC WORKS – STORMWATER DEPARTMENT: Public Works SUPERVISOR: Public Works Director FUND #:101 ACTIVITY #: 43130 ACTIVITY SCOPE: Stormwater is responsible for expenditures related to the maintenance of the city's stormwater system. This activity includes inspecting, cleaning, and repairing all stormwater trunk lines, ditches, and ponds. OBJECTIVES: 1.Monitor, repair, and clean storm water trunk lines, laterals, structures, ditches, holding ponds, and structural pollution control devices. ISSUES: 1.Continued deterioration of storm water system, without proper funding for repairs, replacement, or improvements. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Stormwater main miles ---72 72 Number of manholes ---1,613 1,613 Number of ponds ---107 107 Number of outfalls ---31 31 Number of stormwater BMPS ---47 40 Gopher 1 utility locates ---1,892 1,800 *Started using GIS data in 2018. BUDGET COMMENTARY: The 2019 budget provides for the general maintenance of the city's stormwater system. Other services and charges includes $40,000 for annual repairs and maintenance. Prior to 2015, such expenditures, as well as the cleaning and restoration of the holding ponds, were made from the Stormwater Access Fund. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other budget items are expected to remain close to prior year levels. 150 BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PW - STORMWATER Actual Actual Actual Budget Projected Budget Change Personnel Services 13,882$16,283$27,322$23,165$23,165$25,550$10.3% Supplies 4,908 12,234 2,061 9,500 9,500 9,500 0.0% Other Services & Charges 7,922 760 1,360 40,800 40,800 50,800 24.5% Capital Outlay --------- TOTAL EXPENDITURES 26,712$29,277$30,743$73,465$73,465$85,850$16.9% 151 PUBLIC WORKS – STREET LIGHTING DEPARTMENT: Public Works SUPERVISOR: Street Superintendent FUND #: 101 ACTIVITY #: 43160 ACTIVITY SCOPE: The street Iighting activity maintains new and existing street lighting within the city. This includes maintaining installed bulbs and fixtures, as well as the electricity used for keeping the lights on. OBJECTIVES: 1. Replace inefficient, sodium-based lights with high-powered, energy efficient LED lights. 2. Draft a new street lighting policy. ISSUES: 1. Increasing electricity costs. 2. Verify lamp and fixtures maintenance by utility companies. 3. Maintenance and upgrades on aging signal systems and streetlights. 4. Lack of assistance from Wright County and MNDOT. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Street lights maintained 889 889 889 937 950 BUDGET COMMENTARY: Electricity for the street lights is the largest expenditure at $181,500. Other services and charges include $30,000 for repainting traffic signals. In 2018, the city assumed the maintenance on those streetlights previously maintained by Wright-Hennepin Electric under service agreements. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PW - STREET LIGHTING Actual Actual Actual Budget Projected Budget Change Personnel Services 2,689$ 4,630$ 5,157$ -$ -$ -$ --- Supplies 1,758 3,373 5,275 12,000 12,000 15,000 25.0% Other Services & Charges 223,332 225,497 234,864 258,500 258,500 231,500 -10.4% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 227,779$ 233,500$ 245,296$ 270,500$ 270,500$ 246,500$ -8.9% 152 PUBLIC WORKS – REFUSE COLLECTION DEPARTMENT: Public Works SUPERVISOR: Refuse Collection FUND #: 101 ACTIVITY #: 43230 ACTIVITY SCOPE: The city contracts with a private company for residential refuse collection and recycling services. OBJECTIVES: 1. Research expanding city hauler’s contracted service prices to business and determine the percentage of participation to achieve a desirable rate. ISSUES: 1. Wear and tear on city streets. 2. Increasing recycling efficiency and effectiveness. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Residential refuse collections 52 52 52 52 52 Residential recycling collections 26 26 26 26 26 Residential container base 3,759 3,785 3,859 3,892 3,925 Additional containers 605 605 600 601 600 Recycling containers 4,349 4,378 4,454 4,483 4,516 BUDGET COMMENTARY: Nearly the entire budget is based on the city’s contract obligations with its private refuse hauler. The contract expires on May 31, 2020. The contract extension raised rates by 14% for the last seven months of 2015. The contract increases annually with inflation and the addition of customers. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % REFUSE COLLECTION Actual Actual Actual Budget Projected Budget Change Personnel Services 307$ 1,072$ 1,181$ 576$ 576$ 576$ 0.0% Supplies 184 - - 200 200 200 0.0% Other Services & Charges 562,986 599,228 613,147 625,768 625,768 640,295 2.3% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 563,477$ 600,300$ 614,328$ 626,544$ 626,544$ 641,071$ 2.3% 153 TRANSIT DEPARTMENT: Transit SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 45178 ACTIVITY SCOPE: The transit service is provided by contract through a subsidized, regional transit provider. OBJECTIVES: 1. Research other less expensive alternatives to existing provider. 2. Evaluate service enhancements within the context of other transportation options, including the Northstar commuter rail system. 3. Review involvement in study for I-94 commuter service options. ISSUES: 1. Relatively low ridership for a city the size of Monticello. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Ridership 10,083 10,681 18,416 18,465 18,500 BUDGET COMMENTARY: The city changed to a regional transit services provider, Wright County Area Transit (WCAT), in 2017. The prior provider charged a flat $40,000 regardless of ridership. WCAT received significant state and federal subsidies. The 2018 budget reflected uncertainty in WCAT’s funding. The 2019 decrease reflects the final obligations toward the dissolution of the WCAT joint powers agreement. Wright County is the provider of transit starting in 2019. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % TRANSIT Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 40,000 41,250 3,191 30,000 30,000 5,000 -83.3% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 40,000$ 41,250$ 3,191$ 30,000$ 30,000$ 5,000$ -83.3% 154 SENIOR CENTER DEPARTMENT: Recreation and Culture SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 45175 ACTIVITY SCOPE: The senior center facility is housed in the Monticello Community Center complex. The facility is maintained by the city, but senior center management is provided by an outside entity. OBJECTIVES: 1. Maintain a clean, modern facility for use by Monticello’s senior citizens. 2. Provide recreational activities to improve mental and physical health. 3. Engage senior citizen participation in other community center activities. 4. Encourage greater social participation by offering discounted lunches. ISSUES: 1. Decline in revenue from sources other than the city. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcomes/Effectiveness Volunteers hours 8,094 7,821 8,524 8,266 8,200 Noon meals served 2,873 3,136 4,011 3,378 3,300 Efficiency: Duplicated participants per activity 19 18 18 18 19 Unduplicated participants per activity 170 159 146 148 148 Work Load: Unduplicated participants 2,298 2,343 2,455 2,509 2,500 Duplicated participants 20,098 20,313 19,504 20,171 20,000 Received phone calls 4,507 4,531 4,487 4,456 4,500 Activities offered 118 128 134 136 135 155 BUDGET COMMENTARY: The senior center rents space within the community center complex. The city maintains and insures the senior center. Additionally, the city gives an annual contribution to the group managing the senior center. The 2019 adopted contribution is $61,800, which is $1,640 greater than 2018. The city increased the internal rent paid to the community center by $5,000 (from $30,000 to $35,000) for the space occupied by the senior center in 2015. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % SENIOR CENTER Actual Actual Actual Budget Projected Budget Change Personnel Services 1,416$ 1,369$ 1,437$ 576$ 576$ 863$ 49.8% Supplies - - - - - - --- Other Services & Charges 95,699 97,755 101,724 103,139 103,139 105,089 1.9% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 97,115$ 99,124$ 103,161$ 103,715$ 103,715$ 105,952$ 2.2% 156 PARK OPERATIONS DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent FUND #: 101 ACTIVITY #: 45201 ACTIVITY SCOPE: The park operations activity maintains the parks and trails within the city. This includes maintaining and improving playground and picnic facilities, fertilizing and mowing of grass, maintaining athletic fields, flooding and maintaining of outdoor ice rinks, snow and ice removal, and tree preservation within the parks system. OBJECTIVES: 1. Continue pathways maintenance. 2. Improve efficiencies through use of the city’s GIS. 3. Progress in implementing plan for the Bertram Chain of Lakes regional park. ISSUES: 1. Increase in maintenance costs with acquisition of more park land. 2. Coordination with other entities regarding park use and design. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Park land acres maintained 180 185 320 320 360 Trail miles maintained 17.0 20.0 40.0 40.5 41.0 Park events held 150 150 500 515 520 Winter skating days 128 125 120 78 120 BUDGET COMMENTARY: The parks budget consists of expenditures needed to maintain city parks and trails. Capital outlay reflects the acquisition of capital equipment through the Central Equipment internal service fund. Additional Central Equipment Fund purchases are planned for 2019. In 2015, financing for annual pathways maintenance improvements were shifted to park operations from the Park and Pathway Dedication Fund. Part of the 2015 increase in other services and charges reflects the re-allocation of expenses for IT services and insurances (property, liability, and vehicle). The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other services and charges include $10,000 more in contracted services for work currently done internally. Other budget items are expected to remain close to prior year levels. 157 BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PARK - OPERATIONS Actual Actual Actual Budget Projected Budget Change Personnel Services 391,007$ 434,816$ 478,198$ 499,683$ 499,683$ 526,143$ 5.3% Supplies 110,433 136,948 154,104 158,100 158,100 149,500 -5.4% Other Services & Charges 144,494 130,774 150,419 161,272 161,272 192,148 19.1% Capital Outlay 61,000 73,200 88,400 99,800 99,800 107,800 8.0% TOTAL EXPENDITURES 706,934$ 775,738$ 871,121$ 918,855$ 918,855$ 975,591$ 6.2% 158 PARK BALLFIELDS DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent FUND #: 101 ACTIVITY #: 45203 ACTIVITY SCOPE: The park ballfields activity prepares and maintains city athletic fields, including the NSP Ballfield. OBJECTIVES: 1. Prepare and maintain city athletic fields. 2. Improve the structures at the ballfields. 3. Enhance player and visitor experience. ISSUES: 1. Demographic and activity trends. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Ball games played, number of 610 615 620 625 625 Soccer fields maintained 2 2 20 20 27 Lacrosse fields maintained 1 1 4 4 8 Ball fields maintained 7 7 7 7 7 Number of times mowed 50 50 50 50 50 BUDGET COMMENTARY: The 2019 budget is similar to the 2018 budget for field maintenance, concessions, and park activities. Other services and charges include items that do not meet the capitalization threshold. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PARK - BALLFIELDS Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies 6,647 11,014 10,823 15,600 15,600 15,600 0.0% Other Services & Charges 10,324 9,524 11,113 11,300 11,300 11,300 0.0% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 16,971$ 20,538$ 21,936$ 26,900$ 26,900$ 26,900$ 0.0% 159 PUBLIC ARTS DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent FUND #: 101 ACTIVITY #: 45204 ACTIVITY SCOPE: The public arts activity is a focused use of arts and culture as a catalyst for economic and community development. While art in and of itself can be valuable, the purpose is to harness the creative energy within the community and channel it into revitalizing downtown and creating connections between people and community. OBJECTIVES: 1. Enhance the community aesthetics and revitalize downtown. 2. Engage the community in creating public art. 3. Connect people to the community. ISSUES: 1. Perception of need. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Projects ---1 1 1 2 BUDGET COMMENTARY: The 2019 represents the inaugural, stand-alone budget for the public arts initiative. Other services and charges include contracting for an artist. Encompassing the downtown, public arts is supported with a $15,000 operating transfer from the EDA Fund. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % PARK - PUBLIC ARTS Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - 30,000 --- Capital Outlay - - - - - - --- TOTAL EXPENDITURES -$ -$ -$ -$ -$ 30,000$ --- 160 SHADE TREE DEPARTMENT: Recreation and Culture SUPERVISOR: Park Superintendent FUND #: 101 ACTIVITY #: 46102 ACTIVITY SCOPE: Shade Tree consists of planting and maintaining trees and shrubbery within the city limits. This activity provides for regulating, developing, planting, maintaining, and removing of trees in any street, park, right-of-way, or other public place. Shade trees aid the larger goal of soil conservation, climate moderation, air quality, noise reduction, etc. The budget provides the mechanisms for funding a uniform program for the purpose of beautifying the community as a whole, and increasing property values. OBJECTIVES: 1. Provide trees for spring tree planting. 2. Continue with Shade Tree Disease Control Program. 3. Replace dead and diseased trees throughout the city and parks. 4. Continue chipping program. 5. Continue education program. 6. Begin a boulevard tree planting program. ISSUES: 1. Stress on trees caused by weather and diseases. 2. Funding availability. 3. Chipper replacement. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Trees planted 257 280 320 305 264 Trees removed 110 60 40 12 15 Students in programs 500 500 500 500 500 BUDGET COMMENTARY: A portion of the total time of park employees is allocated to the Shade Tree activity. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage adjustment increase. Part of the personnel services increase reflects the reallocation of wages within Recreation and Culture. Supplies includes $10,000 for Chelsea Road landscaping. Other budget items are expected to remain close to prior year levels. 161 BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % SHADE TREE Actual Actual Actual Budget Projected Budget Change Personnel Services 84,012$ 64,959$ 75,518$ 54,908$ 54,908$ 59,581$ 8.5% Supplies 8,976 8,514 2,654 15,500 15,500 25,500 64.5% Other Services & Charges 12,002 2,327 2,750 4,642 4,642 4,946 6.5% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 104,990$ 75,800$ 80,922$ 75,050$ 75,050$ 90,027$ 20.0% 162 LIBRARY DEPARTMENT: Recreation and Culture SUPERVISOR: City Administrator FUND #: 101 ACTIVITY #: 45501 ACTIVITY SCOPE: Library services are contracted through the Great River Regional Library System. The city owns and maintains the library building and provides programs through the library to residents. OBJECTIVES: 1. Provide residents with quality programs and life-long learning opportunities. 2. Provide access to global information resources. ISSUES: 1. Maintaining a relevant role in the community. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Checked out items 195,235 190,433 182,986 182,691 182,000 Number of requests placed 9,792 8,033 8,037 8,220 8,100 Summer reading participants 823 744 589 824 800 Winter reading participants -257 149 284 275 Patrons using wireless 3,582 4,071 3,963 3,224 3,000 Patrons using internet stations 8,396 7,487 7,304 6,211 6,000 Programs offered 167 212 290 287 285 Program attendance 3,919 4,306 5,336 5,059 5,200 BUDGET COMMENTARY: The city contracts with Great River Regional Library System for information sources and operating personnel. The city owns and maintains the library building and funds a number of programs. Total 2019 estimated expenditures are consistent with prior year levels. By statute, the city must annually expend at least $35,160 for the library. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % LIBRARY Actual Actual Actual Budget Projected Budget Change Personnel Services 8,479$ 5,425$ 3,499$ -$ -$ -$ --- Supplies 2,587 2,205 2,859 2,000 2,000 2,000 0.0% Other Services & Charges 25,110 37,193 35,845 43,288 43,288 44,113 1.9% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 36,176$ 44,823$ 42,203$ 45,288$ 45,288$ 46,113$ 1.8% 163 INSURANCE DEPARTMENT: Other SUPERVISOR: Finance Director FUND #: 101 ACTIVITY #: 49240 ACTIVITY SCOPE: This activity accounts for a variety of undistributed General Fund insurances costs. OBJECTIVES: 1. To accurately distribute insurance costs to all activities by fund. ISSUES: 1. Purchasing the proper level of insurance coverage with the appropriate deductibles at the lowest possible costs. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Not Applicable BUDGET COMMENTARY: Other services and charges remain fairly steady with minor fluctuations due to changes in allocation of overall premiums throughout the various budget units in the General Fund. An effective safety program administered by the human resource manager helps to keep the cost of workers compensation insurance low. Additionally, liability insurance decreased slightly and property insurance increased slightly. BUDGET: GENERAL FUND 2015 2016 2017 2018 2018 2019 % INSURANCE Actual Actual Actual Budget Projected Budget Change Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 8,082 7,226 7,086 6,379 6,379 6,664 4.5% Capital Outlay - - - - - - --- TOTAL EXPENDITURES 8,082$ 7,226$ 7,086$ 6,379$ 6,379$ 6,664$ 4.5% 164 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2019 SPECIAL REVENUE FUNDS SPECIAL REVENUE FUNDS - SUMMARY DESCRIPTION The city currently has four active special revenue funds. Special revenue funds are used to account for the proceeds of specific revenue sources that are restricted, committed, or assigned to expenditures for specific purposes other than debt service or capital projects. Unlike the General Fund, the budgets of special revenue funds do not always balance--revenues equal expenditures. Special revenue funds use the modified accrual basis of accounting for both financial reporting and budgeting purposes. BUDGET ISSUES Each special revenue fund has specific challenges that will be addressed in the narrative for each fund. BUDGET SUMMARY SPECIAL REVENUE FUNDS 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 1,363,000$ 643,421$ 651,567$ 710,000$ 710,000$ 750,000$ 5.6% Tax Increments 727,617 668,352 648,031 635,678 635,678 617,344 -2.9% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 1,427,412 1,409,430 1,401,616 1,432,900 1,432,900 1,624,000 13.3% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 257,090 516,620 278,169 139,450 139,450 131,656 -5.6% Operating Transfers 94,900 - - - 116,473 - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 3,870,019$ 3,237,823$ 2,979,383$ 2,918,028$ 3,034,501$ 3,123,000$ 7.0% EXPENDITURES Personnel Services 1,022,382$ 1,131,101$ 1,218,008$ 1,279,434$ 1,279,434$ 1,336,090$ 4.4% Supplies 174,943 215,057 164,250 183,435 183,435 219,535 19.7% Other Services & Charges 780,611 666,607 956,036 770,400 828,637 745,649 -3.2% Capital Outlay 1,056,591 258,181 261,612 577,070 1,127,070 508,726 -11.8% Operating Transfers 1,029,046 188,500 200,000 200,000 432,946 225,000 12.5% TOTAL EXPENDITURES 4,063,573$ 2,459,446$ 2,799,906$ 3,010,339$ 3,851,522$ 3,035,000$ 0.8% FUND BALANCE - JANUARY 1 8,489,231$ 8,295,677$ 9,074,054$ 9,253,531$ 9,253,531$ 8,436,510$ Excess (Deficiency) of Revenues over Expenditures (193,554) 778,377 179,477 (92,311) (817,021) 88,000 FUND BALANCE - DECEMBER 31 8,295,677$ 9,074,054$ 9,253,531$ 9,161,220$ 8,436,510$ 8,524,510$ 165 ECONOMIC DEVELOPMENT AUTHORITY FUND DEPARTMENT: Economic Development SUPERVISOR: Community Development Director FUND #: 213 ACTIVITY #: 46301 ACTIVITY SCOPE: The Monticello Economic Development Authority (EDA) is responsible for the on-going redevelopment efforts within the city. This consists of housing and businesses, including all related public improvements and land acquisitions. These programs are administered, based on direction of the EDA board, by the Director of Economic Development. In addition, all tax increment financing districts are initiated and administered by the EDA. There are currently 9 active tax increment districts. The EDA also administers loans to city businesses, based on local, state, and federal criteria. Businesses who will generate higher paying jobs in the community are prime candidates for these loans. OBJECTIVES: 1. Explore medical manufacturing, food-related, and data center facilities for Monticello. 2. Promote city's fiber optics network to attract and retain businesses. 3. Implement short, intermediate, and long-term objectives outlined in the TIF Analysis and Management Plan. 4. Implement Embracing Downtown Plan. 5. Continue to purchase land that makes sense for redevelopment purposes. 6. Continue to market the Monticello business center. 7. Implement training/education program for existing businesses and future workforce. 8. Utilize Jobz Bill to initiate private development/redevelopment. 9. Work with community development department and developers to create upper-end housing in Monticello to attract CEOs 10. Explore options to generate additional electrical supply to industrial areas. 11. Explore options to relocate electrical substation from Cargill's downtown site to create expansion opportunities. 12. Implement recommendations from consultants regarding uses of funds available in TIF District 1-22. 13. Engage in the Greater MSP organization. 14. Implement monitoring/tracking methods for EDA programs. 15. Continue to build a more robust website and marketing brand. ISSUES: 1. Consistent administration of city policies, plans, ordinances, guidelines, statutes, etc. 2. Need for higher wage jobs in the community. 3. Promotion of city's fiber optic network. 166 MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Property acquisitions 0 0 1 4 2 Loans outstanding 0 0 1 2 2 Active TIF districts 10 10 9 9 8 BUDGET COMMENTARY: This budget represents the Monticello Economic Development Authority programs and general administration activities. The main revenue source for the EDA Fund is tax increments from the various districts. Under Section 469.033, subd. 6, of the HRA Act, the city levied $280,000 special benefit tax for collection in 2016 and 2017, $323,000 for 2018 , and $348,000 for 2019 . This levy against all taxable real property supports redevelopment activities. The special benefit levy is limited to .0185% of the taxable market value. Expenditures include administrative costs, pay-as- you-go payments to various development projects, and a transfer to debt service funds for its share of the 2005 (refunded in 2011) improvement bond, which financed an interchange project in tax increment district 1-34. Without any new TIF districts, tax increments will decline as the result of decertification of entire districts or individual parcels within a district. Much of the fund balance is non-spendable (land held for resale) or restricted to specific activities such as development in tax increment districts and loans to qualifying businesses. BUDGET: EDA FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ 279,421$ 279,567$ 323,000$ 323,000$ 348,000$ 7.7% Tax Increments 727,617 668,352 648,031 635,678 635,678 617,344 -2.9% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 209,620 470,349 211,951 115,250 115,250 95,656 -17.0% Operating Transfers 94,900 - - - 116,473 - --- TOTAL REVENUES 1,032,137$ 1,418,122$ 1,139,549$ 1,073,928$ 1,190,401$ 1,061,000$ -1.2% EXPENDITURES Personnel Services 10,545$ 68,957$ 104,374$ 110,670$ 110,670$ 121,702$ 10.0% Supplies 65 81 79 100 100 100 0.0% Other Services & Charges 364,429 272,448 419,103 261,276 261,276 253,472 -3.0% Capital Outlay 1,056,591 257,980 90,218 331,070 881,070 298,726 -9.8% Operating Transfers - 188,500 200,000 200,000 200,000 225,000 12.5% TOTAL EXPENDITURES 1,431,630$ 787,966$ 813,774$ 903,116$ 1,453,116$ 899,000$ -0.5% FUND BALANCE - JANUARY 1 6,911,667$ 6,512,174$ 7,142,330$ 7,468,105$ 7,468,105$ 7,205,390$ Excess (Deficiency) of Revenues over Expenditures (399,493) 630,156 325,775 170,812 (262,715) 162,000 FUND BALANCE - DECEMBER 31 6,512,174$ 7,142,330$ 7,468,105$ 7,638,917$ 7,205,390$ 7,367,390$ 167 CEMETERY FUND DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent FUND #: 651 ACTIVITY #: 49010 ACTIVITY SCOPE: The Cemetery Fund sustains itself with revenues from plot sales and from services, such as excavations, staking for monuments, memorial programs, and perpetual care. The city maintains two cemeteries: Riverside and Hillside. Staff assists customers/visitors with memorials and perpetual care for both. Hillside cemetery is no longer open to burial and expenditures are recorded through park operations in the General Fund. OBJECTIVES: 1. Serve the public in a courteous, professional manner. 2. Maintain cemetery grounds and grave markers. ISSUES: 1. Increasing maintenance costs. 2. Competition from cremations. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Plot occupied 3,497 3,514 3,535 3,553 3,573 Plots reserved 753 745 743 739 735 Plots available for sale 1,029 1,020 1,106 1,097 1,088 Number of plots sold 17 11 20 13 20 Number of internments 29 18 26 22 20 Number of markers staked 21 14 13 13 15 Columbarium slots occupied --------------- Columbarium slots reserved --------------- Columbarium slots available ------------96 Columbarium slots sold --------------- Ossuary slots occupied --------------- Ossuary slots reserved ------------50 Ossuary slots available ------------265 Ossuary slots sold ------------50 Installed in 2019, the Columbarium-Ossuary will have 96 columbarium and 315 ossuary slots. 168 BUDGET COMMENTARY: In 2019, the city will acquire an ossuary-columbarium for an estimated $60,000. Other expenditures are estimated near prior year levels. Charges for services includes the sale of 50 ossuary slots to a local hospital for $20,000. BUDGET: CEMETERY 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 26,394 14,517 36,907 18,000 18,000 51,500 186.1% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 465 596 653 600 600 500 -16.7% Contributed Capital - - - - - - --- Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 26,859$ 15,113$ 37,560$ 18,600$ 18,600$ 52,000$ 179.6% EXPENDITURES Personnel Services 3,975$ 1,070$ 1,394$ 3,803$ 3,803$ 3,803$ 0.0% Supplies 1,509 474 669 1,135 1,135 1,135 0.0% Other Services & Charges 19,771 15,494 16,277 22,785 22,785 26,062 14.4% Capital Outlay - - - - - 60,000 --- Operating Transfers - - - - - - --- TOTAL EXPENDITURES 25,255$ 17,038$ 18,340$ 27,723$ 27,723$ 91,000$ 228.2% FUND BALANCE - JANUARY 1 32,047$ 33,651$ 31,726$ 50,946$ 50,946$ 41,823$ Excess (Deficiency) of Revenues over Expenditures 1,604 (1,925) 19,220 (9,123) (9,123) (39,000) FUND BALANCE - DECEMBER 31 33,651$ 31,726$ 50,946$ 41,823$ 41,823$ 2,823$ 169 MINNESOTA INVESTMENT FUND DEPARTMENT: Minnesota Investment Fund SUPERVISOR: Community Development Director FUND #: 221 ACTIVITY #: 46526-46528 ACTIVITY SCOPE: Following state and federal guidelines, the Minnesota Investment Fund administers loans to local businesses. OBJECTIVES: 1. Match available funds with qualifying businesses in Monticello. ISSUES: 1. Number of qualified businesses in Monticello. 2. Loan program and bank requirements. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Loans outstanding 0 0 0 0 0 BUDGET COMMENTARY: Interest earned on investments, not repayment of loans, is the only activity anticipated in 2019. Effective July 1, 2017, cities with uncommitted money received from repayment of funds may choose to give 20% of the funds back to the state general fund before June 30, 2018. The remaining 80% of the uncommitted funds can then be used for any lawful expenditure. The city chose to take advantage of this change in statute. Consequently, 2018 other services and charges reflect the amount returned to the state. Operating transfers included a 50-50 split with the EDA for the portion retained by the city. Investment earnings are the only source of miscellaneous revenues. 170 BUDGET: MINN INVESTMENT FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 15,715 17,760 15,795 15,000 15,000 10,000 -33.3% Operating Transfers - - - - - - --- TOTAL REVENUES 15,715$ 17,760$ 15,795$ 15,000$ 15,000$ 10,000$ -33.3% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - 58,237 - --- Capital Outlay - - - - - - --- Operating Transfers - - - - 232,946 - --- TOTAL EXPENDITURES -$ -$ -$ -$ 291,183$ -$ --- FUND BALANCE - JANUARY 1 1,104,689$ 1,120,404$ 1,138,164$ 1,153,959$ 1,153,959$ 877,776$ Excess (Deficiency) of Revenues over Expenditures 15,715 17,760 15,795 15,000 (276,183) 10,000 FUND BALANCE - DECEMBER 31 1,120,404$ 1,138,164$ 1,153,959$ 1,168,959$ 877,776$ 887,776$ 171 COMMUNITY CENTER FUND DEPARTMENT: Community Center SUPERVISOR: Community Center Director FUND #: 226 ACTIVITY #: 45XXX ACTIVITY SCOPE: The Monticello Community Center provides space for a variety of recreational, professional, and educational opportunities. Expenditures for the community center are divided into six activities: administration, rentals and events, aquatics, guest services and concessions, maintenance, and programming. OBJECTIVES: 1. Develop a plan for the future use of the area which was used as a wheel park (skateboard, bike, and rollerblade) including design, financing, construction, and marketing. 2. Develop an on-line registration system for program and membership sign up. 3. Provide facility improvements to increase customers. 4. Improve financial controls and budget management. ISSUES: 1. Staff turnover and vacancies. 2. Limitations to facility size and parking availability. 3. Competition from other fitness facilities. 4. Segregation of revenues and expenditures to various community center activities. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Customer visits, number of - 168,459 190,475 182,486 185,000 Gross program sales -199,189$ 149,821$ 183,194$ 175,300$ Annual memberships -486 408 467 475 Monthly memberships -743 712 651 675 Three-month memberships -118 232 158 175 Ratio of annual memberships - to other memberships -5.31 3.48 4.98 4.75 Rental revenue 204,938$ 198,471$ 190,342$ 199,201$ 212,200$ 172 BUDGET COMMENTARY: Starting in 2017, community center revenues are divided by activity. The largest revenue sources for 2019 are memberships ($787,500) and property taxes ($402,000). The 2016 decline in property taxes is offset by the decline in transfers out to support debt service. Other revenues include concession sales, room rentals, and program fees. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. With exception to capital outlays, other budget items are expected to remain close to prior year levels. Pool slide replacement (capital outlay) and cardio-equipment (supplies) will result in deficit spending in 2019. Future budgets will segregate revenues and costs to various activities: administration, rentals and events, aquatics, guest services and concessions, maintenance, and programming. BUDGET: COMMUNITY CENTER 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 1,363,000$ 364,000$ 372,000$ 387,000$ 387,000$ 402,000$ 3.9% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 1,401,018 1,394,913 1,364,709 1,414,900 1,414,900 1,572,500 11.1% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 31,290 27,915 49,770 8,600 8,600 25,500 196.5% Operating Transfers - - - - - - --- TOTAL REVENUES 2,795,308$ 1,786,828$ 1,786,479$ 1,810,500$ 1,810,500$ 2,000,000$ 10.5% EXPENDITURES Personnel Services 1,007,862$ 1,061,074$ 1,112,240$ 1,164,961$ 1,164,961$ 1,210,585$ 3.9% Supplies 173,369 214,502 163,502 182,200 182,200 218,300 19.8% Other Services & Charges 396,411 378,665 520,656 486,339 486,339 466,115 -4.2% Capital Outlay - 201 171,394 246,000 246,000 150,000 -39.0% Operating Transfers 1,029,046 - - - - - --- TOTAL EXPENDITURES 2,606,688$ 1,654,442$ 1,967,792$ 2,079,500$ 2,079,500$ 2,045,000$ -1.7% FUND BALANCE - JANUARY 1 440,828$ 629,448$ 761,834$ 580,521$ 580,521$ 311,521$ Excess (Deficiency) of Revenues over Expenditures 188,620 132,386 (181,313) (269,000) (269,000) (45,000) FUND BALANCE - DECEMBER 31 629,448$ 761,834$ 580,521$ 311,521$ 311,521$ 266,521$ 173 This page intentionally left blank 174 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2019 DEBT SERVICE FUNDS DEBT SERVICE FUNDS - SUMMARY DESCRIPTION Debt services funds are used to account for the accumulation of resources for the payment of general long- term debt, excluding debt issued for, and serviced by, an enterprise or internal service fund. Debt service funds use the modified accrual basis of accounting for both financial reporting and budgeting purposes. The city has seven active debt service (sub) funds. The (sub) funds are combined into one debt service fund for financial reporting purposes. BUDGET ISSUES The city's bond rating was downgraded from Aa3 to A2 in 2012 by Moody's Investor Services. This rating was affirmed with the sale of the city’s sole debt issue in 2018: 2018A $5,000,000 G.O. Abatement Bonds. In 2017, the city issued $5,000,000 in G. O. bonds with two components: $2,040,000 improvement bond portion and $2,960,000 abatement bond portion. In 2016, the city issued $4,900,000 in G.O. bonds for street reconstruction and assessable improvements. See individual (sub) funds for the budget issues facing each debt service (sub) fund. Fund balances in some (sub) funds declined with early bond redemptions. Additionally, the last large payment on one serial bond reduced the need to accumulate cash in the prior year for the next February payment. New bond issues are structured to have December, rather than February, principal payments. BUDGET SUMMARY DEBT SERVICE FUNDS 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 1,290,000$ 2,084,000$ 2,437,000$ 1,787,000$ 1,787,000$ 2,227,646$ 24.7% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments 2,233,404 812,545 631,946 293,446 293,446 268,376 -8.5% Miscellaneous 238,318 36,426 30,895 3,000 3,000 4,500 50.0% Operating Transfers 3,306,045 1,439,136 599,362 244,899 249,899 335,000 36.8% Debt Proceeds - - - - - - --- TOTAL REVENUES 7,067,767$ 4,372,107$ 3,699,203$ 2,328,345$ 2,333,345$ 2,835,522$ 21.8% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 225 208 - - - - --- Capital Outlay - - - - - - --- Debt Service 5,598,694 6,210,561 4,391,509 2,807,160 2,807,160 3,497,223 24.6% Operating Transfers 5,872 - 50,266 - - - --- TOTAL EXPENDITURES 5,604,791$ 6,210,769$ 4,441,775$ 2,807,160$ 2,807,160$ 3,497,223$ 24.6% FUND BALANCE - JANUARY 1 3,919,239$ 5,382,215$ 3,543,553$ 2,800,981$ 2,800,981$ 2,327,166$ Excess (Deficiency) of Revenues over Expenditures 1,462,976 (1,838,662) (742,572) (478,815) (473,815) (661,701) FUND BALANCE - DECEMBER 31 5,382,215$ 3,543,553$ 2,800,981$ 2,322,166$ 2,327,166$ 1,665,465$ 175 2010A G.O. IMPROVEMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #: 317 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2010A G.O. Improvement and Refinancing Bonds financed capital projects approved and started in 2010 and refinanced the 2002 G.O. Improvement Bonds. The debt service schedule calls for semi- annual payments in February (principal and interest) and August (interest only). The average interest rate is 2.0047%. The revenue sources include a combination of existing city funds, property taxes, and special assessments. The bonds will be fully redeemed on February 1, 2019. OBJECTIVES: 1. Make scheduled debt payments in a timely manner. 2. Certify or collect deferred special assessments when development occurs. 3. Redeem or refund when feasible. ISSUES: 1. Maintaining sufficient fund balance for early redemption in 2019. 2. City-imposed property tax levy limitations. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Assessment balance $216,508 $159,154 $113,579 $77,383 $45,507 Deferred assessments --------------- Deferred % of balance --------------- Delinquent balance $9,093 $6,607 $320 $59 $0 Prepaid assessments $10,000 $16,815 $9,241 $2,626 $0 Assessment rolls 6 6 5 5 5 Assessed parcels 155 149 139 131 131 BUDGET COMMENTARY: The city issued the $3,255,000 2010 G.O. Improvement and Refunding Bond to finance the reconstruction of West River Street, intersection improvements on the northeast corners of Highway 25 and Broadway and East River Streets, and to refinance the G.O. Improvement Bonds of 2002. Property taxes and special assessments also support debt service payments. Expenditures consist of debt principal and interest payments and fiscal agent fees. 176 BUDGET: 2010A GO IMPROVEMENT BOND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 40,000$ 40,000$ 40,000$ 40,000$ 40,000$ -$ -100.0% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments 70,257 68,483 59,846 42,715 42,715 36,523 -14.5% Miscellaneous 5,775 7,799 10,749 - - - --- Operating Transfers 246,783 565,636 130,986 44,899 44,899 135,000 200.7% Debt Proceeds - - - - - - --- TOTAL REVENUES 362,815$ 681,918$ 241,581$ 127,614$ 127,614$ 171,523$ 34.4% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Debt Service 303,074 304,708 305,343 300,074 300,074 889,156 196.3% Operating Transfers - - - - - - --- TOTAL EXPENDITURES 303,074$ 304,708$ 305,343$ 300,074$ 300,074$ 889,156$ 196.3% FUND BALANCE - JANUARY 1 586,511$ 646,252$ 1,023,462$ 959,700$ 959,700$ 787,240$ Excess (Deficiency) of Revenues over Expenditures 59,741 377,210 (63,762) (172,460) (172,460) (717,633) FUND BALANCE - DECEMBER 31 646,252$ 1,023,462$ 959,700$ 787,240$ 787,240$ 69,607$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 2/1/2019 280,000$ 10,753$ 2.25%290,753$ 8/1/2019 7,603 7,603 2/1/2020 290,000 7,603 2.45%297,603 8/1/2020 4,050 4,050 2/1/2021 300,000 4,050 2.70%304,050 Total 870,000$ 34,058$ 904,058$ Note: The 2/1/2020 and 2/1/2021 bonds will be redeemed on 2/1/2019. GO Improvement and Refunding Bonds, Series 2010A 177 2011A G.O. REFUNDING BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #: 312 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2011A G.O. Refunding Bonds refinanced the 2005A G.O. Improvement Bonds. The debt service schedule calls for semi-annual payments in February (principal and interest) and August (interest only). The average interest rate is 1.6112%. The revenue sources include a combination of impact fees, property taxes, special assessments, and tax increments. The 2011A bonds can be called on February 1, 2020. OBJECTIVES: 1. Make scheduled debt payments in a timely manner. 2. Certify or collect deferred special assessments when development occurs. 3. Redeem or refund when feasible. ISSUES: 1. Balancing the property tax levy for this bond with the needs of other debt. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Assessment balance $2,386,963 $1,927,740 $2,093,333 $2,570,679 $2,535,161 Assessment balance deferred $1,827,660 $1,798,022 $1,741,746 $2,258,015 $2,258,015 Deferred % of balance 77%93%83%88%89% Delinquent balance $149,230 $117 --------- Prepaid assessments $1,489,775 ------$2,270 --- Assessment rolls 8 6 3 3 3 Assessed parcels 67 66 6 7 7 BUDGET COMMENTARY: The city issued $10,735,000 in 2011 G.O. Refunding Bonds to advance refund the 2005A G.O. Improvement Bonds. The 2005A issue was redeemed on February 1, 2013. The 2011A G.O. Refunding Bond revenue sources are a combination of transfers from the Economic Development Fund, a property tax levy, and special assessments. The debt is structured to reflect the nature of underlying projects and assessment policy. Consequently, there is large drop in 2017 debt service for this sub fund. 178 BUDGET: 2011A G.O. BOND FUND (2005A)2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 330,000$ 330,000$ 139,783$ 148,061$ 148,061$ 150,581$ 1.7% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments 2,042,331 336,960 164,937 46,314 46,314 44,236 -4.5% Miscellaneous 220,210 4,795 10,665 1,000 1,000 1,000 0.0% Operating Transfers 964,508 188,500 468,376 200,000 200,000 200,000 0.0% Debt Proceeds - - - - - - --- TOTAL REVENUES 3,557,049$ 860,255$ 783,761$ 395,375$ 395,375$ 395,817$ 0.1% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Debt Service 2,461,375 2,427,008 784,375 780,100 780,100 429,150 -45.0% Operating Transfers - - - - - - --- TOTAL EXPENDITURES 2,461,375$ 2,427,008$ 784,375$ 780,100$ 780,100$ 429,150$ -45.0% FUND BALANCE - JANUARY 1 1,732,655$ 2,828,329$ 1,261,576$ 1,260,962$ 1,260,962$ 876,237$ Excess (Deficiency) of Revenues over Expenditures 1,095,674 (1,566,753) (614) (384,725) (384,725) (33,333) FUND BALANCE - DECEMBER 31 2,828,329$ 1,261,576$ 1,260,962$ 876,237$ 876,237$ 842,904$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 2/1/2019 380,000$ 26,075$ 2.00%406,075$ 8/1/2019 22,275 22,275 2/1/2020 390,000 22,275 2.00%412,275 8/1/2020 18,375 18,375 2/1/2021 395,000 18,375 3.00%413,375 8/1/2021 12,450 12,450 2/1/2022 410,000 12,450 3.00%422,450 8/1/2022 6,300 6,300 2/1/2023 420,000 6,300 3.00%426,300 Total 1,995,000$ 144,875$ 2,139,875$ GO Refunding Bonds, Series 2011A 179 2014A G.O. JUDGMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #: 318 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2014A G.O. Judgment Bonds financed the settlement with telecommunications bondholders. The $5,750,000 settlement essentially relieves the city of liability for the $26,445,000 in revenue bonds used to finance its telecommunications utility. The judgment portion of the 2014A bonds totaled $6,080,000. The city borrowed (capitalized interest) the 2015 interest only payments. Thereafter, the city added the annual principal and interest debt service payments to its tax levy. The average interest rate is 3.0696%. The bonds are eligible for ordinary redemption in 2021. OBJECTIVES: 1. Make scheduled debt payments in a timely manner. 2. Redeem or refund when feasible. ISSUES: 1. Maintain adherence to bond covenants and awareness of arbitrage limitations. 2. Balancing the property tax levy for this bond with the needs of other debt. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Not Applicable BUDGET COMMENTARY: The $6,595,000 2014A G.O. bond issue had two components: $6,080,000 judgment portions and $515,000 capital equipment portion. The capital equipment portion is accounted for in the Central Equipment Fund. Beginning in 2016, annual debt service payments were added to the property tax levy. The 2015 interest only payments were added to the bond issue. The final payment on the bonds is in December 2030. The bonds are redeemable in 2021. However, an extraordinary optional redemption provision allows the city to redeem the bonds at any time for 101% of par if the fiber optics system is sold or leased. The settlement proceeds were distributed directly to the trustee for the bondholders. 180 BUDGET: 2014A G.O. JUDGMENT BONDS 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ 544,000$ 536,929$ 537,586$ 537,586$ 537,244$ -0.1% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 2,077 689 1,452 1,000 1,000 1,000 0.0% Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 2,077$ 544,689$ 538,381$ 538,586$ 538,586$ 538,244$ -0.1% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Debt Service 163,879 515,520 512,086 512,736 512,736 512,462 -0.1% Operating Transfers - - - - - - --- TOTAL EXPENDITURES 163,879$ 515,520$ 512,086$ 512,736$ 512,736$ 512,462$ -0.1% FUND BALANCE - JANUARY 1 169,152$ 7,350$ 36,519$ 62,814$ 62,814$ 88,664$ Excess (Deficiency) of Revenues over Expenditures (161,802) 29,169 26,295 25,850 25,850 25,782 FUND BALANCE - DECEMBER 31 7,350$ 36,519$ 62,814$ 88,664$ 88,664$ 114,446$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2019 -$ 75,831$ 75,831$ 12/15/2019 360,000 75,831 1.85%435,831 6/15/2020 - 72,501 72,501 12/15/2020 365,000 72,501 2.20%437,501 6/15/2021 - 68,486 68,486 12/15/2021 375,000 68,486 2.50%443,486 6/15/2022 - 63,798 63,798 12/15/2022 385,000 63,798 2.75%448,798 6/15/2023 - 58,504 58,504 12/15/2023 395,000 58,504 2.90%453,504 6/15/2024 - 52,777 52,777 12/15/2024 405,000 52,777 3.05%457,777 6/15/2025 - 46,600 46,600 12/15/2025 420,000 46,600 3.20%466,600 6/15/2026 - 39,881 39,881 12/15/2026 435,000 39,881 3.35%474,881 6/15/2027 - 32,594 32,594 12/15/2027 445,000 32,594 3.40%477,594 6/15/2028 - 25,029 25,029 12/15/2028 465,000 25,029 3.38%490,029 6/15/2029 - 17,182 17,182 12/15/2029 480,000 17,182 3.55%497,182 6/15/2030 - 8,663 8,663 12/15/2030 495,000 8,663 3.50%503,663 Total 5,025,000 1,123,692 6,148,692$ GO Bonds, Series 2014A (Judgment Portion) 181 2015B G.O. STREET RECONSTRUCTION-IMPROVEMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #: 319 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2015B G.O. Street Reconstruction and Improvement Bonds provided financing for School Boulevard, Fallon Avenue, and 85th Street improvements. This issue also provided financing for street and other infrastructure improvements in the area east of Highway 25 and north of Interstate 94. The $2,605,000 bond issue allocated $1,885,000 for street reconstruction and $720,000 for improvements. The school district was assessed $172,000 for School Boulevard. The city levies for the gap between annual debt service payments and annual assessment collections. The bonds have an average interest rate of 2.5856% and are redeemable in December of 2022. OBJECTIVES: 1. Make scheduled debt payments in a timely manner. 2. Redeem or refund when feasible. ISSUES: 1. Balancing the property tax levy for this bond with the needs of other debt. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Assessment balance $370,350 $154,754 $137,560 $120,365 $103,170 Deferred assessments --------------- Deferred % of balance --------------- Delinquent balance --------------- Prepaid assessments --------------- Assessment rolls 1 1 1 1 1 Assessed parcels 1 1 1 1 1 BUDGET COMMENTARY: The $2,605,000 2015B G.O. bond issue has two components: $1,885,000 street reconstruction portion and $720,000 improvement portion. Property taxes support the reconstruction portion of the debt issue. The improvement portion is supported by a single assessment of $175,000 on school district property and property taxes. The tax levy covers the gap between assessment revenue and debt service. The 2016 $250,000 levy exceeded the bond covenant required levy by $50,000. 182 BUDGET: 2015B G.O. Bonds 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ 250,000$ 195,288$ 203,425$ 203,425$ 200,905$ -1.2% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - 27,855 25,320 24,417 24,417 22,611 -7.4% Miscellaneous 665 520 1,403 1,000 1,000 1,000 0.0% Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 665$ 278,375$ 222,011$ 228,842$ 228,842$ 224,516$ -1.9% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Debt Service - 212,626 208,225 216,000 216,000 213,652 -1.1% Operating Transfers - - - - - - --- TOTAL EXPENDITURES -$ 212,626$ 208,225$ 216,000$ 216,000$ 213,652$ -1.1% FUND BALANCE - JANUARY 1 -$ 665$ 66,414$ 80,200$ 80,200$ 93,042$ Excess (Deficiency) of Revenues over Expenditures 665 65,749 13,786 12,842 12,842 10,864 FUND BALANCE - DECEMBER 31 665$ 66,414$ 80,200$ 93,042$ 93,042$ 103,906$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2019 -$ 26,426$ 26,426$ 12/15/2019 160,000 26,426 1.50%186,426 6/15/2020 - 25,225 25,225 12/15/2020 160,000 25,225 1.50%185,225 6/15/2021 - 24,024 24,024 12/15/2021 165,000 24,024 2.00%189,024 6/15/2022 - 22,376 22,376 12/15/2022 165,000 22,376 2.00%187,376 6/15/2023 - 20,724 20,724 12/15/2023 170,000 20,724 2.50%190,724 6/15/2024 - 18,600 18,600 12/15/2024 175,000 18,600 2.50%193,600 6/15/2025 - 16,413 16,413 12/15/2025 180,000 16,413 2.50%196,413 6/15/2026 - 14,162 14,162 12/15/2026 185,000 14,162 2.50%199,162 6/15/2027 - 11,850 11,850 12/15/2027 185,000 11,850 3.00%196,850 6/15/2028 - 9,075 9,075 12/15/2028 195,000 9,075 3.00%204,075 6/15/2029 - 6,150 6,150 12/15/2029 200,000 6,150 3.00%206,150 6/15/2030 - 3,150 3,150 12/15/2030 210,000 3,150 3.00%213,150 Total 2,150,000$ 396,350$ 2,546,350$ GO Bonds, Series 2015B 183 2016A G.O. STREET RECONSTRUCTION-IMPROVEMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #: 320 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2016A G.O. Street Reconstruction and Improvement Bonds financed improvements included in the 2016 core street project and at the intersection of Highway 25 and 7 th Street. The $4,900,000 bond issue allocated $770,000 for street reconstruction and $4,130,000 for improvements. The city levies for the gap between annual debt service payments and annual assessment collections. The bonds have an average interest rate of 2.1034% and are redeemable in December of 2022. OBJECTIVES: 1. Make scheduled debt payments in a timely manner. 2. Redeem or refund when feasible. ISSUES: 1. Balancing the property tax levy for this bond with the needs of other debt. 2. Investment earnings on assessment prepayments will be less than assessed interest rates. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Assessment balance ---$818,044 $712,355 $614,712 $538,245 Deferred assessments --------------- Deferred % of balance --------------- Delinquent balance ------$176 ------ Prepaid assessments ---$263,182 $53,682 $18,023 $0 Assessment rolls ---1 2 2 2 Assessed parcels ---102 95 89 89 BUDGET COMMENTARY: The $4,900,000 2016A G.O. bond issue has two components: $770,000 street reconstruction portion and $4,130,000 improvement portion. Property taxes support the reconstruction portion of the debt issue. The improvement portion is supported by assessments of $1,143,000 in the core street reconstruction area. Property taxes are levied for the gap between assessment revenue and debt service. The bond issue resolution requires a $409,134 property tax levy for collection year 2019. Future levies will be adjusted to reflect assessment prepayments, interest earned on the prepayments and interest foregone on the prepayments. 184 BUDGET: 2016A G.O. Bonds 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ 415,000$ 407,769$ 407,769$ 409,134$ 0.3% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - 263,182 174,352 110,000 110,000 103,922 -5.5% Miscellaneous - 456 6,316 - - 1,000 --- Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES -$ 263,638$ 595,668$ 517,769$ 517,769$ 514,056$ -0.7% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Debt Service - - 524,546 527,900 527,900 529,250 0.3% Operating Transfers - - - - - - --- TOTAL EXPENDITURES -$ -$ 524,546$ 527,900$ 527,900$ 529,250$ 0.3% FUND BALANCE - JANUARY 1 -$ -$ 263,638$ 334,760$ 334,760$ 324,629$ Excess (Deficiency) of Revenues over Expenditures - 263,638 71,122 (10,131) (10,131) (15,194) FUND BALANCE - DECEMBER 31 -$ 263,638$ 334,760$ 324,629$ 324,629$ 309,435$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2019 -$ 41,725$ 41,725$ 12/15/2019 445,000 41,725 2.00%486,725 6/15/2020 - 37,275 37,275 12/15/2020 450,000 37,275 2.00%487,275 6/15/2021 - 32,775 32,775 12/15/2021 460,000 32,775 2.00%492,775 6/15/2022 - 28,175 28,175 12/15/2022 470,000 28,175 2.00%498,175 6/15/2023 - 23,475 23,475 12/15/2023 480,000 23,475 2.00%503,475 6/15/2024 - 18,675 18,675 12/15/2024 490,000 18,675 2.00%508,675 6/15/2025 - 13,775 13,775 12/15/2025 500,000 13,775 2.00%513,775 6/15/2026 - 8,775 8,775 12/15/2026 510,000 8,775 2.00%518,775 6/15/2027 - 3,675 3,675 12/15/2027 60,000 3,675 3.00%63,675 6/15/2028 - 2,775 2,775 12/15/2028 60,000 2,775 3.00%62,775 6/15/2029 - 1,875 1,875 12/15/2029 60,000 1,875 3.00%61,875 6/15/2030 - 975 975 12/15/2030 65,000 975 3.00%65,975 Total 4,050,000$ 427,900$ 4,477,900$ GO Bonds, Series 2016A 185 2017A G.O. IMPROVEMENT-ABATEMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #: 321 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2017A G.O. Improvement and Abatement Bonds financed improvements to rural outlying roads and various other city street projects. Additionally, the issue provided funding for Fallon Avenue overpass right-of-way acquisition, engineering, and construction. The $5,000,000 bond issue allocated $2,040,000 for street improvements and $2,960,000 for the overpass (Abatement). The city levies for the gap between annual debt service payments and annual assessment collections. The bonds have an average interest rate of 2.443% and are redeemable in December of 2026. OBJECTIVES: 1. Make scheduled debt payments in a timely manner. 2. Redeem or refund when feasible. ISSUES: 1. Balancing the property tax levy for this bond with the needs of other debt. 2. Investment earnings on assessment prepayments may be less than assessed interest rates. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Assessment balance ------$434,759 $382,993 $340,438 Deferred assessments --------------- Deferred % of balance --------------- Delinquent balance ---------$702 --- Prepaid assessments ------$102,235 $8,290 --- Assessment rolls ------2 2 2 Assessed parcels ------ 72 69 69 BUDGET COMMENTARY: The $5,000,000 2017A G.O. bond issue has two components: $2,040,000 improvement portion and $2,960,000 abatement portion. Property taxes and assessments support the improvement portion of the debt issue. The abatement portion is supported by abatement tax levy for bond principal and a debt service levy for bond interest. Property taxes will be levied for any gap between assessment revenue and debt service. The bond issue resolution requires the following 2019 collection year property tax levy: $175,456 for improvements, $79,326 for abatement interest, and $175,000 for abatement principal. 186 BUDGET: 2017A G.O. Bonds 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ 450,159$ 450,159$ 429,782$ -4.5% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - - 102,235 70,000 70,000 61,084 -12.7% Miscellaneous - - 310 - - 500 --- Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES -$ -$ 102,545$ 520,159$ 520,159$ 491,366$ -5.5% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Debt Service - - - 470,350 470,350 472,438 0.4% Operating Transfers - - - - - - --- TOTAL EXPENDITURES -$ -$ -$ 470,350$ 470,350$ 472,438$ 0.4% FUND BALANCE - JANUARY 1 -$ -$ -$ 102,545$ 102,545$ 152,354$ Excess (Deficiency) of Revenues over Expenditures - - 102,545 49,809 49,809 18,928 FUND BALANCE - DECEMBER 31 -$ -$ 102,545$ 152,354$ 152,354$ 171,282$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2019 -$ 53,319$ 53,319$ 12/15/2019 365,000 53,319 2.00%418,319 6/15/2020 - 49,671 49,671 12/15/2020 370,000 49,671 2.00%419,671 6/15/2021 - 45,969 45,969 12/15/2021 380,000 45,969 2.00%425,969 6/15/2022 - 42,171 42,171 12/15/2022 385,000 42,171 2.00%427,171 6/15/2023 - 38,320 38,320 12/15/2023 390,000 38,320 2.00%428,320 6/15/2024 - 34,420 34,420 12/15/2024 400,000 34,420 2.00%434,420 6/15/2025 - 30,420 30,420 12/15/2025 410,000 30,420 2.00%440,420 6/15/2026 - 26,320 26,320 12/15/2026 420,000 26,320 2.50%446,320 6/15/2027 - 21,069 21,069 12/15/2027 430,000 21,069 2.50%451,069 6/15/2028 - 15,695 15,695 12/15/2028 210,000 15,695 2.50%225,695 6/15/2029 - 13,070 13,070 12/15/2029 215,000 13,070 2.60%228,070 6/15/2030 - 10,275 10,275 12/15/2030 220,000 10,275 3.00%230,275 6/15/2031 - 6,975 6,975 12/15/2031 230,000 6,975 3.00%236,975 6/15/2032 - 3,525 3,525 12/15/2032 235,000 3,525 3.00%238,525 Total 4,660,000$ 782,438$ 5,442,438$ GO Bonds, Series 2017A 187 2018A G.O. ABATEMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #: 322 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2018A G.O. Abatement Bonds provided funding for Fallon Avenue overpass right-of-way acquisition, engineering, and construction. This $5,000,000 issue does not provide financing for any other project types (improvement, street reconstruction, etc.). The city levies for the entire annual principal and interest payments. The bonds have an average interest rate of 3.151% and are redeemable in December of 2026. Abatement bonds will be issued in 2019 to reimburse the city for the remaining costs on the overpass project. All three abatement issues (2017, 2018, and 2019) will have the same redemption date and term, with the last payment occurring in 2032. OBJECTIVES: 1. Make scheduled debt payments in a timely manner. 2. Redeem or refund when feasible. ISSUES: 1. Balancing the property tax levy for this bond with the needs of other debt. 2. Accumulating resources for early redemption. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Not Applicable BUDGET COMMENTARY: Unlike the 2017A bond issue, the $5,000,000 2018A G.O. bond issue has only one component: Abatement. Property taxes are levied for annual principal and interest payments. A debt service levy covers the annual bond interest payment and an abatement levy covers the annual bond principal payment. Required 2019 collection year property tax levy: $197,830 for abatement interest and $275,000 for abatement principal. Expenditures consist of debt principal and interest payments and fiscal agent fees. 188 BUDGET: 2018A G.O. Bonds 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes $0 $0 $0 $0 $0 $500,000 --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous - - - - - - --- Operating Transfers - - - - 5,000 - --- Debt Proceeds - - - - - - --- TOTAL REVENUES -$ -$ -$ -$ 5,000$ 500,000$ --- EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Debt Service - - - - - 451,115 --- Operating Transfers - - - - - - --- TOTAL EXPENDITURES -$ -$ -$ -$ -$ 451,115$ --- FUND BALANCE - JANUARY 1 -$ -$ -$ -$ -$ 5,000$ Excess (Deficiency) of Revenues over Expenditures - - - - 5,000 48,885 FUND BALANCE - DECEMBER 31 -$ -$ -$ -$ 5,000$ 53,885$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2019 -$ 98,721$ 98,721$ 12/15/2019 275,000 76,593 3.000%351,593 6/15/2020 - 72,469 72,469 12/15/2020 305,000 72,469 3.000%377,469 6/15/2021 - 67,894 67,894 12/15/2021 310,000 67,894 3.000%377,894 6/15/2022 - 63,244 63,244 12/15/2022 320,000 63,244 3.000%383,244 6/15/2023 - 58,443 58,443 12/15/2023 330,000 58,443 3.000%388,443 6/15/2024 - 53,494 53,494 12/15/2024 340,000 53,494 3.000%393,494 6/15/2025 - 48,394 48,394 12/15/2025 350,000 48,394 3.000%398,394 6/15/2026 - 43,143 43,143 12/15/2026 360,000 43,143 3.000%403,143 6/15/2027 - 37,744 37,744 12/15/2027 370,000 37,744 3.000%407,744 6/15/2028 - 32,194 32,194 12/15/2028 385,000 32,194 3.000%417,194 6/15/2029 - 26,419 26,419 12/15/2029 395,000 26,419 3.000%421,419 6/15/2030 - 20,494 20,494 12/15/2030 405,000 20,494 3.125%425,494 6/15/2031 - 14,165 14,165 12/15/2031 420,000 14,165 3.250%434,165 6/15/2032 - 7,341 7,341 12/15/2032 435,000 7,341 3.375%442,341 Total 5,000,000$ 1,266,190$ 6,266,190$ GO Bonds, Series 2018A Abatement Bonds 189 CLOSED DEBT SERVICE FUNDS CLOSED FUNDS INCLUDED IN SUMMARY TOTAL: 2007A G.O. Improvement Bond Fund 2008A G.O. Revenue Refunding Bond Fund 2008B G.O. Sewer Revenue Refunding Bond Fund CLOSED FUNDS SUMMARY TOTAL: CLOSED DEBT SERVICE FUNDS 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 920,000$ 920,000$ 1,110,000$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments 120,816 116,065 105,256 - - - --- Miscellaneous 9,591 22,167 - - - - --- Operating Transfers 2,094,754 685,000 - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 3,145,161$ 1,743,232$ 1,215,256$ -$ -$ -$ --- EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 225 208 - - - - --- Capital Outlay - - - - - - --- Debt Service 2,670,366 2,750,699 2,056,934 - - - --- Operating Transfers 5,872 - 50,266 - - - --- TOTAL EXPENDITURES 2,676,463$ 2,750,907$ 2,107,200$ -$ -$ -$ --- FUND BALANCE - JANUARY 1 1,430,921$ 1,899,619$ 891,944$ -$ -$ -$ Excess (Deficiency) of Revenues over Expenditures 468,698 (1,007,675) (891,944) - - - FUND BALANCE - DECEMBER 31 1,899,619$ 891,944$ -$ -$ -$ -$ 190 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2019 CAPITAL PROJECT FUNDS CAPITAL PROJECT FUNDS - SUMMARY DESCRIPTION Capital project funds are used to account for financial resources that are restricted, committed, or assigned to expenditure for capital outlays including the acquisition or construction of capital facilities and other capital assets—excluding capital assets financed by proprietary funds (enterprise or internal service). Capital project funds use the modified accrual basis of accounting for both financial reporting and budgeting purposes. The city currently has six active capital project funds. BUDGET ISSUES Financing capital asset additions or replacements has been an ongoing challenge, especially in an environment where the focus is on maintaining a low, stable property tax levy, and other traditional resources (Liquor Fund transfers) are diverted to other needs. See the individual funds for the budget issues facing each capital project fund. BUDGET SUMMARY TOTAL CAPITAL PROJECT 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 79,146$ 364,132$ 119,409$ 783,000$ 783,000$ 662,354$ -15.4% Tax Increments - - - - - - --- Franchise & Other Taxes $116,984 $148,317 $186,248 $116,000 $116,000 $116,000 0.0% Licenses & Permits - - - - - - --- Intergovernmental Revenues 1,045,756 1,652,358 910,397 - - 150,000 --- Charges for Services 393,180 460,683 107,166 50,000 50,000 60,000 20.0% Fines & Forfeits - - - - - - --- Special Assessments 1,084,169 171,602 312,433 54,000 54,000 64,000 18.5% Miscellaneous 92,863 150,500 130,635 52,000 52,000 142,646 174.3% Operating Transfers 860,872 753,500 430,266 1,000,000 1,716,473 2,600,000 160.0% Debt Proceeds 2,651,898 4,997,503 5,078,814 5,000,000 5,000,000 8,000,000 60.0% TOTAL REVENUES 6,324,868$ 8,698,595$ 7,275,368$ 7,055,000$ 7,771,473$ 11,795,000$ 67.2% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies 7,135 - - - - - --- Other Services & Charges 145,429 193,695 199,582 - 167,000 - --- Capital Outlay 2,238,364 6,350,430 5,258,878 10,620,000 10,005,000 13,740,000 29.4% Operating Transfers 855,000 1,034,675 394,069 44,899 49,899 135,000 200.7% TOTAL EXPENDITURES 3,245,928$ 7,578,800$ 5,852,529$ 10,664,899$ 10,221,899$ 13,875,000$ 30.1% FUND BALANCE - JANUARY 1 7,181,582$ 10,260,522$ 11,380,317$ 12,803,156$ 12,803,156$ 10,352,730$ Excess (Deficiency) of Revenues over Expenditures 3,078,940 1,119,795 1,422,839 (3,609,899) (2,450,426) (2,080,000) FUND BALANCE - DECEMBER 31 10,260,522$ 11,380,317$ 12,803,156$ 9,193,257$ 10,352,730$ 8,272,730$ 191 CAPITAL PROJECT FUND DEPARTMENT: Capital Project Fund SUPERVISOR: City Engineer FUND #: 400 ACTIVITY #: 43300 ACTIVITY SCOPE: The Capital Project Fund is a generic fund of the same type used to account for on-going capital asset additions and replacements. Capital assets acquired through this fund include street improvements or other infrastructure and buildings. OBJECTIVES: 1. Improve city infrastructure. 2. Extend city infrastructure to new developments. 3. Acquire large, non-proprietary fund, capital equipment (e.g. fire ladder truck). ISSUES: 1. Funding growth and replacement improvements in a stable debt and property tax levy environment. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Projects supported 4 4 5 5 10 BUDGET COMMENTARY: For 2019, notable projects include: Fallon Avenue overpass completion - $1,000,000; new fire station - $5,600,000; fire ladder truck - $1,300,000; small area downtown improvements - $400,000. Funding sources include: debt proceeds - $8,000,000; fund balance - $780,000 (debt proceeds and other revenues from prior years). Reimbursement resolutions have been passed by council on these projects. These resolutions allow the city to reimburse itself with debt issuance proceeds. The 2019 property tax levy reduces the need for future debt and stabilizes the overall levy to accommodate future debt. 192 BUDGET: CAPITAL PROJECT FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 79,146$ 364,132$ 119,409$ 783,000$ 783,000$ 662,354$ -15.4% Franchise & Other Taxes 36,865 70,527 77,057 36,000 36,000 36,000 0.0% Intergovernmental Revenues 945,756 1,652,358 910,397 - - 150,000 --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments 276,023 40,670 67,743 - - - --- Miscellaneous 8,176 44,476 67,569 - - 40,646 --- Operating Transfers - - 300,000 600,000 1,316,473 500,000 -16.7% Debt Proceeds 2,651,898 4,997,503 5,078,814 5,000,000 5,000,000 8,000,000 60.0% TOTAL REVENUES 3,997,864$ 7,169,666$ 6,620,989$ 6,419,000$ 7,135,473$ 9,389,000$ 46.3% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies 135 - - - - - --- Other Services & Charges 96,400 112,400 186,550 - - - --- Capital Outlay 1,268,277 4,957,987 5,049,389 9,650,000 9,300,000 10,175,000 5.4% Operating Transfers - - - - 5,000 - --- TOTAL EXPENDITURES 1,364,812$ 5,070,387$ 5,235,939$ 9,650,000$ 9,305,000$ 10,175,000$ 5.4% FUND BALANCE - JANUARY 1 1,900,079$ 4,533,131$ 6,632,410$ 8,017,460$ 8,017,460$ 5,847,933$ Excess (Deficiency) of Revenues over Expenditures 2,633,052 2,099,279 1,385,050 (3,231,000) (2,169,527) (786,000) FUND BALANCE - DECEMBER 31 4,533,131$ 6,632,410$ 8,017,460$ 4,786,460$ 5,847,933$ 5,061,933$ 193 CLOSED BOND FUND DEPARTMENT: Closed Bond Fund SUPERVISOR: Finance Director FUND #: 300 ACTIVITY #: 47000 ACTIVITY SCOPE: The Closed Bond Fund, formerly accounted for in the debt service section, is the combination of multiple closed debt service funds. The fund has no debt obligation. However, special assessments supporting past debt service continue to provide funding for city projects. OBJECTIVES: 1. Provide funding for various city projects, including Bertram Chain of Lakes improvements. 2. Certify or collect deferred special assessments when development occurs after related debt has been fully amortized. ISSUES: 1. Declining assessment collections on retired debt. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Not Applicable BUDGET COMMENTARY: This fund is used to accumulate special assessment collections from discontinued debt service funds. The debts related to these special assessments have matured or been redeemed early. In years prior years, this fund primarily financed Bertram Chain of Lakes land acquisitions. Other smaller transfers were used for park and pathway improvements. Yearend transfers to the Park & Pathway Dedication Fund would finance projects in the following year. Future assessment collections for 2019 and beyond are estimated at $300,000. 194 BUDGET: CLOSED BOND FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments 695,738 130,932 244,690 54,000 54,000 64,000 18.5% Miscellaneous 16,933 15,308 (10,727) 5,000 5,000 5,000 0.0% Operating Transfers 5,872 - 50,266 - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 718,543$ 146,240$ 284,229$ 59,000$ 59,000$ 69,000$ 16.9% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Operating Transfers 855,000 753,500 80,000 - - - --- TOTAL EXPENDITURES 855,000$ 753,500$ 80,000$ -$ -$ -$ --- FUND BALANCE - JANUARY 1 995,536$ 859,079$ 251,819$ 456,048$ 456,048$ 515,048$ Excess (Deficiency) of Revenues over Expenditures (136,457) (607,260) 204,229 59,000 59,000 69,000 FUND BALANCE - DECEMBER 31 859,079$ 251,819$ 456,048$ 515,048$ 515,048$ 584,048$ 195 PARK & PATHWAY DEDICATION FUND DEPARTMENT: Recreation & Culture SUPERVISOR: Parks Superintendent FUND #: 229 ACTIVITY #: 45202 ACTIVITY SCOPE: Activities of the Park and Pathway Dedication Fund include updating and maintaining the city's pathway system, as well as designating funds for future city parks and pathways. OBJECTIVES: 1. Improve pathways and parks systems. 2. Development of Bertram Chain of Lakes Park. ISSUES: 1. Economic impact on new development and home construction. 2. Time constraints of other projects. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Land Acquisition 609,614$ 1,083,500$ -$ -$ -$ Projects supported 2 4 4 2 4 Dedication fees 107,929$ -$ -$ 18,997$ -$ BUDGET COMMENTARY: The Parks & Pathway Dedication Fund was initially set-up as a special revenue fund. However, park dedication fees became an irregular source of revenue because of weak economic conditions and sporadic new development. Consequently, the city reclassified the fund to a capital projects fund. Transfers from other funds typically surpasses all other revenue sources. When possible, the city transfers money into this fund prior to the year of expenditure. The 2019 budgeted expenditures include the CSAH 39 pathway ($140,000), Riverwalk trail ($90,000), Bertram Chain of Lakes development ($2,100,000), and Fourth Street playground equipment ($20,000). Land acquisition at Bertram Chain of Lakes concluded in 2016. 196 BUDGET: PARK & PATHWAY DEDICATION 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues 100,000 - - - - - --- Charges for Services 107,929 - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments 112,408 - - - - - --- Miscellaneous 15,225 36,439 17,922 2,000 2,000 62,000 3000.0% Operating Transfers 855,000 753,500 80,000 400,000 400,000 2,100,000 425.0% TOTAL REVENUES 1,190,562$ 789,939$ 97,922$ 402,000$ 402,000$ 2,162,000$ 437.8% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies 7,000 - - - - - --- Other Services & Charges 48,707 62,755 1,192 - - - --- Capital Outlay 636,528 1,342,983 209,489 670,000 280,000 2,605,000 288.8% Operating Transfers - - - - - - --- TOTAL EXPENDITURES 692,235$ 1,405,738$ 210,681$ 670,000$ 280,000$ 2,605,000$ 288.8% FUND BALANCE - JANUARY 1 738,333$ 1,236,660$ 620,861$ 508,102$ 508,102$ 630,102$ Excess (Deficiency) of Revenues over Expenditures 498,327 (615,799) (112,759) (268,000) 122,000 (443,000) FUND BALANCE - DECEMBER 31 1,236,660$ 620,861$ 508,102$ 240,102$ 630,102$ 187,102$ 197 STORMWATER ACCESS FUND DEPARTMENT: Public Works SUPERVISOR: City Engineer/Public Works Director FUND #: 263 ACTIVITY #: 49201 ACTIVITY SCOPE: The Stormwater Access Fund provides resources for major improvements to the storm sewer system. Impact fees are collected on building permits for new construction and lot development. These fees are also used to retire debt service related to improvements to the sanitary sewer system. OBJECTIVES: 1. Maintain and upgrade storm sewer system. 2. Meet changing ponding rules. 3. Retire debt service related to system improvements in a timely manner. ISSUES: 1. Building permits for residential and commercial development are increasing. 2. The economy is recovering. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Not Applicable BUDGET COMMENTARY: The main revenue sources are storm sewer access and trunk fees on new construction or special assessments of past access and trunk fees. Past operating transfers have supported debt service incurred to finance stormwater improvements. The debt service funds include the 2011A (formerly 2005A) Refunding Improvement Bond--part of the interchange project, and the 2010A Improvement and Refinancing Bond--its share of the 2010 storm sewer project. For 2016 and beyond, funding for routine stormwater pond maintenance improvements will come from the General Fund. Small stormwater improvements were made in 2016 and 2017. In 2019, there is one planned capital outlay for non-routine pond improvements in the Otter Creek commercial development. Past transfers have supported debt service. 198 BUDGET: STORMWATER ACCESS FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 285,251 460,683 107,166 50,000 50,000 60,000 20.0% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 15,399 16,771 17,542 15,000 15,000 5,000 -66.7% Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 300,650$ 477,454$ 124,708$ 65,000$ 65,000$ 65,000$ 0.0% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges 322 18,540 11,840 - 167,000 - --- Capital Outlay - - - - - 800,000 --- Operating Transfers - 235,567 268,376 - - - --- TOTAL EXPENDITURES 322$ 254,107$ 280,216$ -$ 167,000$ 800,000$ --- FUND BALANCE - JANUARY 1 873,721$ 1,174,049$ 1,397,396$ 1,241,888$ 1,241,888$ 1,139,888$ Excess (Deficiency) of Revenues over Expenditures 300,328 223,347 (155,508) 65,000 (102,000) (735,000) FUND BALANCE - DECEMBER 31 1,174,049$ 1,397,396$ 1,241,888$ 1,306,888$ 1,139,888$ 404,888$ 199 STREET LIGHTING IMPROVEMENT FUND DEPARTMENT: Public Works SUPERVISOR: City Engineer/Public Works Director FUND #: 245 ACTIVITY #: 43162 ACTIVITY SCOPE: The Street Lighting Improvement Fund provides resources for improvements to the street lighting system. Electric franchise fees are the fund’s primary revenue sources. OBJECTIVES: 1. Upgrade traditional lights to colonial style lights. 2. Collaborate with MNDOT to add battery back-up to signals on TH25. 3. Replace and modify lighting system in the downtown area. 4. Add lighting for pathways and other high use areas. ISSUES: 1. Project scope and timing. 2. Develop a light replacement program with Wright Hennepin and Xcel Energy. 3. Verify lamp and fixture maintenance by utility companies. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Projects supported 2 0 1 3 2 BUDGET COMMENTARY: Electric franchise fees provide resources for lighting projects, often in conjunction with other street improvement projects. Capital outlays for 2019 include $100,000 for downtown re-lighting projects and $60,000 for pathway lighting. 200 BUDGET: STREET LIGHT IMPROVEMENTS 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Franchise & Other Taxes 80,119 77,790 109,191 80,000 80,000 80,000 0.0% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 12,220 9,329 14,462 10,000 10,000 10,000 0.0% Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 92,339$ 87,119$ 123,653$ 90,000$ 90,000$ 90,000$ 0.0% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay 333,559 49,460 - 300,000 425,000 160,000 -46.7% Operating Transfers - - - - - - --- TOTAL EXPENDITURES $333,559 $49,460 $0 $300,000 $425,000 $160,000 -46.7% FUND BALANCE - JANUARY 1 922,880$ 681,660$ 719,319$ 842,972$ 842,972$ 507,972$ Excess (Deficiency) of Revenues over Expenditures (241,220) 37,659 123,653 (210,000) (335,000) (70,000) FUND BALANCE - DECEMBER 31 681,660$ 719,319$ 842,972$ 632,972$ 507,972$ 437,972$ 201 STREET RECONSTRUCTION FUND DEPARTMENT: Public Works SUPERVISOR: City Engineer/Public Works Director FUND #: 212 ACTIVITY #: 43121 ACTIVITY SCOPE: The Street Reconstruction Fund was established to track annual improvements to city infrastructure. Improvements are based on an annual reconstruction schedule. OBJECTIVES: 1. Improve city streets in the capital improvement plan. ISSUES: 1. City no longer levies for this fund. 2. Other traditional resources have been diverted to other needs. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Not Applicable BUDGET COMMENTARY: Past revenue sources have included property taxes and operating transfers from the Liquor Fund. Neither the tax nor transfer has been budgeted for 2019. Reimbursement resolutions have been passed by council on various projects that could be supported by the Street Reconstruction Fund. These resolutions allow the city to reimburse itself with debt proceeds. Staff has not made a final determination of the mix of funding sources for 2019 projects. All the operating transfers in the budget schedule below are to a debt service fund. 202 BUDGET: STREET RECONSTRUCTION 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 24,910 28,177 23,867 20,000 20,000 20,000 0.0% Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 24,910$ 28,177$ 23,867$ 20,000$ 20,000$ 20,000$ 0.0% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Operating Transfers - 45,608 45,693 44,899 44,899 135,000 200.7% TOTAL EXPENDITURES -$ 45,608$ 45,693$ 44,899$ 44,899$ 135,000$ 200.7% FUND BALANCE - JANUARY 1 1,751,033$ 1,775,943$ 1,758,512$ 1,736,686$ 1,736,686$ 1,711,787$ Excess (Deficiency) of Revenues over Expenditures 24,910 (17,431) (21,826) (24,899) (24,899) (115,000) FUND BALANCE - DECEMBER 31 1,775,943$ 1,758,512$ 1,736,686$ 1,711,787$ 1,711,787$ 1,596,787$ 203 This page intentionally left blank 204 ENTERPRISE FUNDS Adopted 2019 ENTERPRISE FUNDS ENTERPRISE FUNDS - SUMMARY DESCRIPTION Enterprise funds are used to report an activity for which a fee is charged to external users for goods or services. Unlike governmental funds, enterprise funds focus on the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. Enterprise funds use an accrual basis of accounting for financial reporting purposes. A modified accrual basis will be used for budgeting purposes in this report. Consequently, the bottom line for each enterprise fund is labeled fund balance rather than net position, which includes capital assets, long-term debt and other noncurrent items. Fund balance in enterprise funds is roughly the same as working capital. The city currently has five active enterprise funds: Water, Sewage, Liquor (Hi-Way Liquors), Deputy Registrar (DMV), and Fiber Optics (FiberNet). BUDGET ISSUES Each enterprise fund has specific challenges that will be addressed in the narrative for each fund. BUDGET SUMMARY TOTAL ENTERPRISE FUNDS 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Sale of Goods 5,489,430 5,448,584 5,751,197 5,770,784 5,770,784 5,979,220 3.6% Licenses & Permits 4,635 3,000 2,490 2,000 2,000 2,000 0.0% Intergovernmental Revenues - - - - - - --- Charges for Services 5,270,389 5,515,395 6,157,134 5,670,107 5,670,107 6,228,363 9.8% Fines & Forfeits - - - - - - --- Special Assessments 12,998 494 14,028 38,000 38,000 38,000 0.0% Miscellaneous 214,068 602,932 226,658 124,300 924,300 124,300 0.0% Contributed Capital 1,435,870 1,993,232 1,330,370 140,450 140,450 140,895 0.3% Operating Transfers 450,000 350,000 180,000 130,000 130,000 100,000 -23.1% Debt Proceeds - 1,413,065 179,552 - - - --- TOTAL REVENUES 12,877,390$ 15,326,702$ 13,841,429$ 11,875,641$ 12,675,641$ 12,612,778$ 6.2% EXPENDITURES Personnel Services 1,830,153$ 1,754,735$ 1,553,144$ 1,683,848$ 1,705,953$ 1,703,198$ 1.1% Supplies 4,320,133 4,406,720 4,563,602 4,710,245 4,710,245 4,853,245 3.0% Other Services & Charges 3,059,414 3,179,969 3,362,996 3,694,978 3,692,358 3,785,960 2.5% Capital Outlay 548,298 3,095,592 741,626 1,146,000 2,120,000 1,573,000 37.3% Debt Service 358,072 642,045 352,823 373,574 373,574 373,574 0.0% Operating Transfers 2,751,045 1,319,461 265,293 1,130,000 1,130,000 2,700,000 138.9% TOTAL EXPENDITURES 12,867,115$ 14,398,522$ 10,839,484$ 12,738,645$ 13,732,130$ 14,988,977$ 17.7% FUND BALANCE - JANUARY 1 8,980,035$ 8,990,310$ 9,918,490$ 12,920,435$ 12,920,435$ 11,863,946$ Excess (Deficiency) of Revenues over Expenditures 10,275 928,180 3,001,945 (863,004) (1,056,489) (2,376,199) FUND BALANCE - DECEMBER 31 8,990,310$ 9,918,490$ 12,920,435$ 12,057,431$ 11,863,946$ 9,487,747$ 205 WATER FUND DEPARTMENT: Public Works SUPERVISOR: Utilities Superintendent FUND #: 601 ACTIVITY #: 49440 ACTIVITY SCOPE: The Water Fund is a self-sustaining city utility fund. The water department manages the water utility, providing a continuous supply of high-quality water to customers at a reasonable cost. The water system is maintained at proper pressure levels, and it is bacteria-free. Further, metering equipment is maintained to account for accurate usage and billing. OBJECTIVES: 1. Continue to add GPS data point to GIS system. 2. Improve well head protection program. 3. Advance installation of radio reading devices on water meters. ISSUES: 1. Additional state and federal regulations. 2. Aging water control system (SCADA). 3. Project demands on staff. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Water customers 4,148 4,225 4,270 4,341 4,400 Meters read*16,520 16,800 51,240 52,092 52,800 Meters replaced 44 57 84 64 65 New meters installed 49 57 55 81 80 Water locates 300 300 300 300 300 Gallons pumped (MG)514 519 577 592 600 Valves maintained 436 400 400 401 401 Hydrants maintained 450 400 400 172 180 Times mains flushed 2 2 2 2 2 Mains/wells rebuilt 0 0 0 2 2 Water towers inspections 1 2 2 2 2 Reservoir inspections 0 0 1 0 1 Water samples to sent 250 250 250 190 200 Radio units installed 650 650 650 584 600 Service shut-offs 150 150 150 150 150 * Monthly utility billing started at the beginning of 2017. 206 BUDGET COMMENTARY: The Water Fund’s main source of revenue is user charges. Since 2015, rates have increase annually between 2% and 5%. Capital outlays in 2016 were largely attributable to a core street project. Outlays will decline with fewer projects with water components. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage adjustment increase. In 2016, one new full-time operator position was split between the Water Fund and Sewage Fund. The 2018 and 2019 transfers out will be used acquire land for the next public works building site. Other budget items are expected to remain close to prior year levels. BUDGET: WATER FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits 4,635 3,000 2,490 2,000 2,000 2,000 0.0% Intergovernmental Revenues - - - - - - --- Charges for Services 1,093,846 1,130,120 1,376,492 1,170,741 1,170,741 1,386,147 18.4% Fines & Forfeits - - - - - - --- Special Assessments 12,998 494 14,028 38,000 38,000 38,000 0.0% Miscellaneous 84,445 108,664 97,938 55,600 55,600 55,600 0.0% Contributed Capital 256,163 187,358 102,070 80,000 80,000 80,000 0.0% Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 1,452,087$ 1,429,636$ 1,593,018$ 1,346,341$ 1,346,341$ 1,561,747$ 16.0% EXPENDITURES Personnel Services 181,810$ 258,068$ 253,566$ 320,444$ 342,549$ 329,016$ 2.7% Supplies 152,257 181,391 142,492 199,150 199,150 199,150 0.0% Other Services & Charges 256,740 230,153 240,276 334,579 334,579 334,947 0.1% Capital Outlay 35,916 949,832 11,930 172,500 172,500 150,000 -13.0% Operating Transfers 790,958 199,327 - 600,000 600,000 500,000 -16.7% TOTAL EXPENDITURES 1,417,681$ 1,818,771$ 648,264$ 1,626,673$ 1,648,778$ 1,513,113$ -7.0% FUND BALANCE - JANUARY 1 4,751,413$ 4,785,819$ 4,396,684$ 5,341,438$ 5,341,438$ 5,039,001$ Excess (Deficiency) of Revenues over Expenditures 34,406 (389,135) 944,754 (280,332) (302,437) 48,634 FUND BALANCE - DECEMBER 31 4,785,819$ 4,396,684$ 5,341,438$ 5,061,106$ 5,039,001$ 5,087,635$ 207 SEWAGE FUND DEPARTMENT: Public Works SUPERVISOR: Utilities Superintendent FUND #: 602 ACTIVITY #: 49480 ACTIVITY SCOPE: The Sewage Fund is a self-sustaining city utility fund. The Sewage Fund has two divisions: sanitary sewer collection operations and treatment plant operations. The water department manages the sanitary sewer system and a private vendor provides treatment plant services. OBJECTIVES: 1. Continue to add GPS data points to GIS system. 2. Research alternative waste disposal options, including costs. 3. Advance long-range planning regarding plant capacity and expansion. 4. Monitor infiltration of ground water in to the sanitary sewer system. ISSUES: 1. Treatment plant is nearing capacity. 2. Aging of control system (SCADA) and other assets. 3. Ground water infiltration. 4. Cost of treatment alternatives. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Collection Sewer mains maintained 28 miles 28 miles 26 miles 20 Miles 20 Miles Liftstations 7 7 7 7 7 Sewer main locates 300 300 300 300 300 Manholes maintained 716 716 716 400 400 New service hookups 51 68 55 78 70 Treatment Screw press influent flow (gals)5,117,130 4,430,130 4,420,272 6,540,105 6,000,000 Thickened sludge (wet tons)1,549 1,449 1,578 2,115 1,940 Thickened sludge (dry tons)236 216 229 333 305 Dry ton % of wet ton 15.2%14.9%14.5%15.7%15.7% Raw influent flow (MG)417 432 445 434 435 MG = million gallons 208 BUDGET COMMENTARY: The Sewage Fund’s main source of revenue is user charges. Since 2015, rates have increased annually between 2% and 5%. Treatment plant capital outlays in 2016 included $2,333,000 for digester cover replacement and phosphorous reduction. The funding mix for these plant upgrades included a loan from the Minnesota Public Facilities Authority. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage adjustment increase. In 2016, a new full-time operator position was split between the Water Fund and Sewage Fund. Operating transfers out were budgeted to retire debt service for system improvements. The city renewed its contract with a third-party provider of wastewater treatment plant management services for five years starting in 2018. Other budget items are expected to remain close to prior year levels. BUDGET: SEWAGE FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 2,052,311 2,203,729 2,446,046 2,276,066 2,276,066 2,459,516 8.1% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 61,340 62,168 70,126 50,000 850,000 50,000 0.0% Contributed Capital 1,179,707 1,805,874 1,228,300 60,450 60,450 60,895 0.7% Operating Transfers - - - - - - --- Debt Proceeds - 1,413,065 179,552 - - - --- TOTAL REVENUES 3,293,358$ 5,484,836$ 3,924,024$ 2,386,516$ 3,186,516$ 2,570,411$ 7.7% EXPENDITURES Personnel Services 280,801$ 347,720$ 338,722$ 350,539$ 350,539$ 347,255$ -0.9% Supplies 15,597 17,831 24,639 26,550 26,550 26,550 0.0% Other Services & Charges 1,229,082 1,116,983 1,170,072 1,237,442 1,237,442 1,235,811 -0.1% Capital Outlay 401,069 2,145,760 729,696 872,500 1,872,500 1,320,000 51.3% Debt Service 358,072 642,045 352,823 373,574 373,574 373,574 0.0% Operating Transfers 1,510,087 770,134 85,293 - - - --- TOTAL EXPENDITURES 3,794,708$ 5,040,473$ 2,701,245$ 2,860,605$ 3,860,605$ 3,303,190$ 15.5% FUND BALANCE - JANUARY 1 3,142,903$ 2,641,553$ 3,085,916$ 4,308,695$ 4,308,695$ 3,634,606$ Excess (Deficiency) of Revenues over Expenditures (501,350) 444,363 1,222,779 (474,089) (674,089) (732,779) FUND BALANCE - DECEMBER 31 2,641,553$ 3,085,916$ 4,308,695$ 3,834,606$ 3,634,606$ 2,901,827$ 209 CONTRACTED WASTEWATER TREATMENT PLANT SERVICES: Schedule of Non-Reimbursables (O&M Services) Year Service Change $Change % 2011 522,281.04$ 2012 544,788.96$ 22,507.92$ 4.3% 2013 562,361.04$ 17,572.08$ 3.2% 2014 585,096.00$ 22,734.96$ 4.0% 2015 582,360.00$ (2,736.00)$ -0.5% 2016 582,360.00$ -$ 0.0% 2017 593,196.00$ 10,836.00$ 1.9% 2018 563,394.00$ (29,802.00)$ -5.0% 2019 577,479.00$ 14,085.00$ 2.5% 2020 591,916.00$ 14,437.00$ 2.5% 2021 606,714.00$ 14,798.00$ 2.5% 2022 621,882.00$ 15,168.00$ 2.5% Schedule of Reimbursable Costs Year R&M Polymer Hauling Landfill Electricity Gas Total 2011 89,899.16$ 11,427.06$ -$ -$ 154,982.64$ 44,604.29$ 300,913.15$ 2012 91,406.38 16,303.76 - - 145,043.48 36,722.51 289,476.13 2013 89,620.47 17,453.23 - - 170,537.98 46,497.96 324,109.64 2014 57,883.83 62,735.70 32,949.54 33,237.11 160,825.74 68,416.61 416,048.53 2015 50,239.23 35,090.95 25,807.56 28,373.57 145,833.19 44,092.79 329,437.29 2016 52,872.08 32,395.63 20,875.73 30,784.18 - - 136,927.62 2017 54,704.50 33,019.20 23,144.50 51,057.37 - - 161,925.57 2018 50,004.00 - 23,856.00 24,492.00 - - 98,352.00 2019 50,004.00 - 43,020.00 51,000.00 - - 144,024.00 The city started directly paying for chemicals (polymer) in 2018. Electricity and gas charges were assumed by the city in 2016. The waste disposal biosolids site was abandoned in 2014 when new screw press technology was installed. 210 REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/1/2019 -$ 28,049$ 28,049$ 12/1/2019 185,000 28,049 2.00%213,049 6/1/2020 - 26,199 26,199 12/1/2020 190,000 26,199 2.00%216,199 6/1/2021 - 24,299 24,299 12/1/2021 195,000 24,299 2.15%219,299 6/1/2022 - 22,203 22,203 12/1/2022 200,000 22,203 2.35%222,203 6/1/2023 - 19,853 19,853 12/1/2023 205,000 19,853 2.60%224,853 6/1/2024 - 17,188 17,188 12/1/2024 210,000 17,188 2.75%227,188 6/1/2025 - 14,300 14,300 12/1/2025 215,000 14,300 3.00%229,300 6/1/2026 - 11,075 11,075 12/1/2026 225,000 11,075 3.00%236,075 6/1/2027 - 7,700 7,700 12/1/2027 230,000 7,700 3.20%237,700 6/1/2028 - 4,020 4,020 12/1/2028 240,000 4,020 3.35%244,020 Total 2,095,000$ 349,768$ 2,444,768$ GO Wastewater Treatment Bonds, Series 2013B The optional redemption date on these bonds is December 1, 2021. Payable Principal Interest Rate Total 2/20/2019 -$ 10,115$ 10,115$ 8/20/2019 103,000 10,115 1.063%113,115 2/20/2020 - 9,567 9,567 8/20/2020 104,000 9,567 1.063%113,567 2/20/2021 - 9,014 9,014 8/20/2021 105,000 9,014 1.063%114,014 2/20/2022 - 8,456 8,456 8/20/2022 106,000 8,456 1.063%114,456 2/20/2023 - 7,893 7,893 8/20/2023 107,000 7,893 1.063%114,893 2/20/2024 - 7,324 7,324 8/20/2024 108,000 7,324 1.063%115,324 2/20/2025 - 6,750 6,750 8/20/2025 109,000 6,750 1.063%115,750 2/20/2026 - 6,171 6,171 8/20/2026 111,000 6,171 1.063%117,171 2/20/2027 - 5,581 5,581 8/20/2027 112,000 5,581 1.063%117,581 2/20/2028 - 4,985 4,985 8/20/2028 113,000 4,985 1.063%117,985 2/20/2029 - 4,385 4,385 8/20/2029 114,000 4,385 1.063%118,385 2/20/2030 - 3,779 3,779 8/20/2030 115,000 3,779 1.063%118,779 2/20/2031 - 3,168 3,168 8/20/2031 117,000 3,168 1.063%120,168 2/20/2032 - 2,546 2,546 8/20/2032 118,000 2,546 1.063%120,546 2/20/2033 - 1,919 1,919 8/20/2033 119,000 1,919 1.063%120,919 2/20/2034 - 1,286 1,286 8/20/2034 120,000 1,286 1.063%121,286 2/20/2035 - 648 648 8/20/2035 122,000 648 1.063%122,648 Total 1,903,000$ 187,174$ 2,090,174$ MPFA-15-0004-R-FY16 211 LIQUOR FUND DEPARTMENT: Liquor Fund SUPERVISOR: Liquor Store Manager/Finance Director FUND #: 609 ACTIVITY #: 49750 ACTIVITY SCOPE: The Liquor Fund provides customers with the opportunity to purchase alcohol and other related products. Profits from store operations are used to support other city funds and activities. OBJECTIVES: 1. Match product selection to changes in demand. 2. Enhance alcohol training program for all liquor store employees. 3. Elevate store attractiveness through customer focused improvements. 4. Boost sales to existing customer. 5. Increase sales per transaction. 6. Improve gross profit margin [1 – (cost/price)]. 7. Grow customer base and sales by aggressively marketing the store. ISSUES: 1. Promote and control the safe and responsible sale of alcohol. 2. Competitive pricing. 3. Staff turnover. 4. Store traffic disruptions caused by road construction. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Gross profit 1,519,843$ 1,407,360$ 1,498,816$ 1,551,755$ 1,600,000$ Gross profit % of sales 27%26%26%26%26% Sales per square foot $624 $624 $654 $691 $700 Wine tasting tickets sold*300 252 238 105 125 Total number of sales 237,535 235,901 248,044 261,071 270,000 Staff hours worked 19,811 20,104 21,173 22,318 22,000 Sales per hour worked 12.0 11.7 11.7 11.7 12.3 Average sale (including tax)$25.24 $25.25 $25.39 $25.59 $25.70 * The liquor stored reduced wine tasting events from two to one in 2018. 212 BUDGET COMMENTARY: Hi-Way Liquors is a profitable city enterprise fund, with excess cash directed toward special projects or other needs. Revenues are generated by the sale of alcoholic beverages and liquor-industry related merchandise. In 2018, the Liquor Fund transferred $400,000 to the Park & Pathway Fund and $130,000 to the Fiber Optics Fund. The 2019 transfers out include $2,100,000 to the Parks and Pathway Fund for Bertram park development and $100,000 to the Fiber Optics Fund. The operating transfers from 2015 through 2017 went to the Fiber Optics Fund. Since 2012, the Liquor Fund has transferred $5,610,000 to support Fibernet. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Additionally, the 2018 increase in personnel services includes the extra staffing for Sunday sales, which began in July 2017. Capital outlay for 2018 includes a new advertising sign. Budgeted revenues are conservatively estimated. BUDGET: LIQUOR FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Sale of Goods 5,489,430$ 5,448,584$ 5,751,197$ 5,770,784$ 5,770,784$ 5,979,220$ 3.6% Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - - - - - - --- Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 7,503 14,713 23,769 5,000 5,000 5,000 0.0% Contributed Capital - - - - - - --- Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 5,496,933$ 5,463,297$ 5,774,966$ 5,775,784$ 5,775,784$ 5,984,220$ 3.6% EXPENDITURES Personnel Services 506,042$ 537,220$ 594,639$ 637,390$ 637,390$ 628,927$ -1.3% Supplies 4,043,820 4,042,321 4,256,732 4,340,245 4,340,245 4,483,245 3.3% Other Services & Charges 202,271 197,572 225,592 235,543 235,543 234,893 -0.3% Capital Outlay - - - 75,000 75,000 75,000 0.0% Operating Transfers 450,000 350,000 180,000 530,000 530,000 2,200,000 315.1% TOTAL EXPENDITURES 5,202,133$ 5,127,113$ 5,256,963$ 5,818,178$ 5,818,178$ 7,622,065$ 31.0% FUND BALANCE - JANUARY 1 722,643$ 1,017,443$ 1,353,627$ 1,871,630$ 1,871,630$ 1,829,236$ Excess (Deficiency) of Revenues over Expenditures 294,800 336,184 518,003 (42,394) (42,394) (1,637,845)$ FUND BALANCE - DECEMBER 31 1,017,443$ 1,353,627$ 1,871,630$ 1,829,236$ 1,829,236$ 191,391$ 213 DEPUTY REGISTRAR FUND DEPARTMENT: Deputy Registrar (DMV) SUPERVISOR: Finance Director FUND #: 217 ACTIVITY #: 41990 ACTIVITY SCOPE: The Deputy Registrar (DMV) is a city-based service entity, which assists customers with the purchase of vehicle license plates/tabs, DNR licenses, and other licenses as required by Minnesota state agencies. The DMV is one of four limited driver’s license agents in Wright County. A limited agent can process change of address and lost license applications for driver’s licenses. OBJECTIVES: 1. Market DMV services to public and dealerships. 2. Expand and improve customer service. 3. Update employee training and certifications. ISSUES: 1. Changes to state licensing regulations. 2. Availability/limitations of state portal for license processing (MNLARS). 3. Providing services with little or no revenue. 4. Competition with other customer options: Other DMVs, on-line, and mail-in. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcome/Effectiveness: License Revenue $535,931 $561,775 $594,701 $693,862 $600,000 Revenue per staff hour $49.47 $56.87 $54.40 $50.87 $52.17 Net revenue per staff hour $20.35 $23.44 $19.08 $19.09 $20.00 Efficiency: Transactions per hour 6.7 7.7 7.2 8.8 9.4 Work Load: Total transactions 72,522 75,891 78,515 119,543 108,500 Motor vehicle transactions 64,927 67,508 70,605 110,574 100,000 DNR transactions 5,914 6,318 5,873 7,009 6,500 Game & Fish transactions 387 600 647 549 600 Driver's license transactions 1,294 1,465 1,390 1,411 1,400 Staff hours 10,834 9,878 10,931 13,640 11,500 Dealerships serviced 19 21 27 28 28 214 BUDGET COMMENTARY: The main revenue source for the DMV is the fees charged for the issuance of various licenses. The 2019 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage adjustment increase. Revenue by service type: DNR licenses = $2-$7; game & fish licenses = $1; driver’s licenses = $8; motor vehicle transactions = $6 -$10. Revenues are always estimated conservatively. BUDGET: DEPUTY REGISTRAR 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 531,408 561,775 594,701 525,300 525,300 550,300 4.8% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 11,201 10,385 13,096 1,100 1,100 1,100 0.0% Operating Transfers - - - - - - --- TOTAL REVENUES 542,609$ 572,160$ 607,797$ 526,400$ 526,400$ 551,400$ 4.7% EXPENDITURES Personnel Services 293,179$ 301,567$ 347,851$ 353,575$ 353,575$ 376,100$ 6.4% Supplies 4,294 4,342 5,132 9,300 9,300 9,300 0.0% Other Services & Charges 33,263 34,889 40,661 40,714 38,094 38,209 -6.2% Capital Outlay - - - 26,000 - 28,000 7.7% Operating Transfers - - - - - - --- TOTAL EXPENDITURES 330,736$ 340,798$ 393,644$ 429,589$ 400,969$ 451,609$ 5.1% FUND BALANCE - JANUARY 1 333,114$ 544,987$ 776,349$ 990,502$ 990,502$ 1,115,933$ Excess (Deficiency) of Revenues over Expenditures 211,873 231,362 214,153 96,811 125,431 99,791 FUND BALANCE - DECEMBER 31 544,987$ 776,349$ 990,502$ 1,087,313$ 1,115,933$ 1,215,724$ 215 FIBER OPTICS FUND DEPARTMENT: Fiber Optics Fund SUPERVISOR: City Administrator FUND #: 656 ACTIVITY #: 49870-49877 ACTIVITY SCOPE: As with all enterprise funds, the goal of the Fiber Optics Fund is to become a self-sustaining enterprise. Fiber Optics delivers internet, phone, and cable television services to customers within the city. Residential and commercial customers can subscribe to individual or bundled services. OBJECTIVES: 1. Offer a variety of internet speeds and cable packages to customers. 2. Increase subscribers and subscriptions. 3. Minimize subsidy from other funds. ISSUES: 1. Competition from other service providers. 2. Industry trends (cord cutting, etc.). 3. Various legal aspects of operating a telecommunication business. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Internet subscibers 1,424 1,487 1,554 1,544 1,530 Phone subscribers 518 461 431 386 325 Cable TV subscribers 714 641 543 458 375 BUDGET COMMENTARY: The Fiber Optics Fund began operations in 2009, and construction of the fiber optic network was completed in 2010. Revenues come from charges to subscribers, and expenditures are incurred as a result of operating the system and new customer service installations. The city defaulted on the revenue bonds used to finance construction of the system. Judgment bonds were issued to finance the settlement with revenue bondholders. Property taxes are levied to support debt service on judgment bonds. There is no current debt service recorded in the Fiber Optics Fund. In 2012, the city transferred $4,450,000 to the fund, eliminating the interfund loan balance. In 2013, the Liquor Fund and other city funds transferred $860,000 into the Fiber O ptics Fund. In years 2014 through 2018, the Liquor Fund provided $1,710,000 for Fiber Optics operations. The 2019 budget includes a $100,000 transfer from the Liquor Fund. By the end of 2018, Fibernet operations and debt 216 service had consumed a total of $8,365,231. The Liquor Fund contributed $5,610,000 of the $7,020,000 total transfers to the Fiber Optics Fund since 2012. Personnel services (employee costs) were eliminated in July of 2016 with the outsourcing of operations to a third party. There are some minor employee costs still allocated the fund. The 2019 budget includes $150,000 in other services and charges for system improvements to new service areas. BUDGET: FIBER OPTICS 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 1,592,824 1,619,771 1,739,895 1,698,000 1,698,000 1,832,400 7.9% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 49,579 407,002 21,729 12,600 12,600 12,600 0.0% Contributed Capital - - - - - - --- Operating Transfers 450,000 350,000 180,000 130,000 130,000 100,000 -23.1% Debt Proceeds - - - - - - --- TOTAL REVENUES 2,092,403$ 2,376,773$ 1,941,624$ 1,840,600$ 1,840,600$ 1,945,000$ 5.7% EXPENDITURES Personnel Services 568,321$ 310,160$ 18,366$ 21,900$ 21,900$ 21,900$ 0.0% Supplies 104,165 160,835 134,607 135,000 135,000 135,000 0.0% Other Services & Charges 1,338,058 1,600,372 1,686,395 1,846,700 1,846,700 1,942,100 5.2% Capital Outlay 111,313 - - - - - --- Operating Transfers - - - - - - --- TOTAL EXPENDITURES 2,121,857$ 2,071,367$ 1,839,368$ 2,003,600$ 2,003,600$ 2,099,000$ 4.8% FUND BALANCE - JANUARY 1 29,962$ 508$ 305,914$ 408,170$ 408,170$ 245,170$ Excess (Deficiency) of Revenues over Expenditures (29,454) 305,406 102,256 (163,000) (163,000) (154,000) FUND BALANCE - DECEMBER 31 508$ 305,914$ 408,170$ 245,170$ 245,170$ 91,170$ 217 This page intentionally left blank 218 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2019 INTERNAL SERVICE FUNDS INTERNAL SERVICE FUNDS - SUMMARY DESCRIPTION Internal service funds are a proprietary fund type that may be used to report any activity that provides goods or service to other funds, departments, or agencies of the primary government and its component units, or to other governments, on a cost-reimbursement basis. Internal service funds use an accrual basis of accounting for financial reporting purposes. A modified accrual basis will be used for budgeting purposes in this report. Consequently, the bottom line for each internal service fund is labeled fund balance rather than net position, which includes capital assets, long-term debt and other noncurrent items. Fund balance in an internal service fund is roughly the same as working capital. The city currently has three active internal service funds: IT Services, Central Equipment, and Benefit Accrual. The Benefit Accrual Fund was started in 2015. BUDGET ISSUES Each internal service fund has specific challenges that will be addressed in the narrative for each fund. BUDGET SUMMARY TOTAL INTERNAL SERVICE 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 420,900 530,842 475,732 539,257 539,257 567,603 5.3% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 16,609 13,975 64,743 6,112 6,112 7,097 16.1% Operating Transfers 226,158 - - - 300,000 - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 663,667$ 544,817$ 540,475$ 545,369$ 845,369$ 574,700$ 5.4% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies 21,985 57,096 29,330 35,000 35,000 35,000 0.0% Other Services & Charges 196,834 153,460 152,952 225,400 225,400 199,700 -11.4% Capital Outlay 239,463 138,236 458,286 323,000 323,000 414,500 28.3% Debt Service 76,193 131,260 135,710 128,100 132,100 131,600 2.7% Operating Transfers - - - - 200,000 - --- TOTAL EXPENDITURES 534,475$ 480,052$ 776,278$ 711,500$ 915,500$ 780,800$ 9.7% FUND BALANCE - JANUARY 1 970,004$ 1,099,196$ 1,163,961$ 928,158$ 928,158$ 858,027$ Excess (Deficiency) of Revenues over Expenditures 129,192 64,765 (235,803) (166,131) (70,131) (206,100) FUND BALANCE - DECEMBER 31 1,099,196$ 1,163,961$ 928,158$ 762,027$ 858,027$ 651,927$ 219 IT SERVICES FUND DEPARTMENT: Finance SUPERVISOR: Finance Director FUND #: 702 ACTIVITY #: XXXXX ACTIVITY SCOPE: The IT (Information Technology) Services Fund is a self-sustaining internal service fund. The finance department manages the network of servers and peripheral equipment to provide continuity and accountability for IT related services. The fund’s revenues are derived from service charges to each budget unit receiving IT services. Service charges are adjusted annually to cover all current costs plus a portion of capital outlays. OBJECTIVES: 1. Centralize provision of information technology services into one fund. 2. Improve management of IT resources. 3. Distribute capital costs over multiple annual reporting periods. 4. Provide financial management stability to each budget unit. ISSUES: 1. Appropriate costs distribution. 2. Coordination of service delivery to multiple departments and budget units. 3. Demands on staff. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcome/Effectiveness: Network uptime 99%99%99%99%99% Work Load: Number of clients/users 102 83 85 87 87 Number of PC, servers, and network devices 145 167 170 180 180 220 BUDGET COMMENTARY: The IT Services Fund’s main source of revenue is internal user charges. Except for point-of-sale software and hardware and surveillance equipment, the IT Services Fund accounts for the all activity supporting the city’s information technology infrastructure, including servers, routers, PCs, printers, copiers, phones, and professional services. BUDGET: IT SERVICES 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 278,100 298,981 271,612 272,957 272,957 252,203 -7.6% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 1,252 1,850 3,667 112 112 1,097 879.5% Operating Transfers - - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 279,352$ 300,831$ 275,279$ 273,069$ 273,069$ 253,300$ -7.2% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies 21,985 57,096 29,330 35,000 35,000 35,000 0.0% Other Services & Charges 196,834 153,460 152,952 225,400 225,400 199,700 -11.4% Capital Outlay - - 25,803 12,500 12,500 14,500 16.0% Operating Transfers - - - - 200,000 - --- TOTAL EXPENDITURES 218,819$ 210,556$ 208,085$ 272,900$ 472,900$ 249,200$ -8.7% FUND BALANCE - JANUARY 1 58,814$ 119,347$ 209,622$ 276,816$ 276,816$ 76,985$ Excess (Deficiency) of Revenues over Expenditures 60,533 90,275 67,194 169 (199,831) 4,100 FUND BALANCE - DECEMBER 31 119,347$ 209,622$ 276,816$ 276,985$ 76,985$ 81,085$ 221 CENTRAL EQUIPMENT FUND DEPARTMENT: Finance SUPERVISOR: Finance Director FUND #: 703 ACTIVITY #: XXXXX ACTIVITY SCOPE: The Central Equipment Fund is a self-sustaining internal service fund. The finance department participates along with various department directors and division leaders in the acquisition of capital assets. The acquired capital asset is charged back against the benefitting budget unit through rental charges over a predetermined number of years. The rental charge reflects depreciation plus inflation. Service charges for each asset are fixed for the duration of rental payments. OBJECTIVES: 1. Build mechanism for replacing capital assets into annual budgets. 2. Improve management of capital assets. 3. Distribute capital costs over multiple annual reporting periods. 4. Provide financial management stability to each budget unit. ISSUES: 1. Appropriate cost distribution over multiple accounting periods. 2. Efficient coordination of asset replacement activities. 3. Adequate start-up resources. 4. Demands on staff. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcome/Effectiveness: Annual cost recovery 142,800$ 204,600$ 210,700$ 249,800$ 298,900$ Total costs of assets acquired 822,619$ 960,855$ 1,467,515$ 1,631,889$ 2,031,889$ Efficiency: Cost recovery as % of acquired assets 17%21%14%15%15% Work Load: Number of fund assets 12 17 24 27 31 222 BUDGET COMMENTARY: The Central Equipment Fund’s main source of revenue is internal rental charges. The fund was initiated near the beginning of 2013 with the sale of $500,000 in certificates of indebtedness. The city also issued $515,000 in G.O. bonds in 2014 to finance the acquisition of a fire tender and a plow truck. The 2018 operating transfers came from the General Fund ($100,000) and IT Services Fund ($200,000). These transfers will help the fund with future equipment purchases. The 2019 budgeted equipment acquisitions: [public works equipment] bucket truck - $135,000; sidewalk snow machine - $150,000; [recreation equipment] skid loader - $65,000; [fire & rescue] truck - $50,000. BUDGET: CENTRAL EQUIPMENT FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services 142,800 193,800 210,700 249,800 249,800 298,900 19.7% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous 15,357 12,125 61,076 3,000 3,000 3,000 0.0% Operating Transfers - - - - 300,000 - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 158,157$ 205,925$ 271,776$ 252,800$ 552,800$ 301,900$ 19.4% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay 239,463 138,236 432,483 310,500 310,500 400,000 28.8% Debt Service 76,193 131,260 135,710 128,100 132,100 131,600 2.7% Operating Transfers - - - - - - --- TOTAL EXPENDITURES 315,656$ 269,496$ 568,193$ 438,600$ 442,600$ 531,600$ 21.2% FUND BALANCE - JANUARY 1 911,190$ 753,691$ 690,120$ 393,703$ 393,703$ 503,903$ Excess (Deficiency) of Revenues over Expenditures (157,499) (63,571) (296,417) (185,800) 110,200 (229,700) FUND BALANCE - DECEMBER 31 753,691$ 690,120$ 393,703$ 207,903$ 503,903$ 274,203$ 223 REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 12/1/2019 65,000$ 2,673$ 1.85%67,673$ 12/1/2020 70,000 1,470 2.10%71,470 Total 135,000$ 4,143$ 139,143$ GO Certificates of Indebtedness, Series 2013A The early redemption date on these certificates is December 1, 2018. Payable Principal Interest Rate Total 6/15/2019 -$ 4,474$ 4,474$ 12/15/2019 55,000 4,474 1.85%59,474 6/15/2020 - 3,965 3,965 12/15/2020 55,000 3,965 2.20%58,965 6/15/2021 - 3,360 3,360 12/15/2021 60,000 3,360 2.50%63,360 6/15/2022 - 2,610 2,610 12/15/2022 60,000 2,610 2.75%62,610 6/15/2023 - 1,785 1,785 12/15/2023 60,000 1,785 2.90%61,785 6/15/2024 - 915 915 12/15/2024 60,000 915 3.05%60,915 Total 350,000$ 34,218$ 384,218$ GO Bonds, Series 2014A (Equipment Portion) The early redemption date on these bonds is December 15, 2021. 224 BENEFIT ACCRUAL FUND DEPARTMENT: Finance SUPERVISOR: Finance Director FUND #: 704 ACTIVITY #: XXXXX ACTIVITY SCOPE: The Benefit Accrual Fund is a self-sustaining internal service fund. The finance department participates with various department directors, division leaders and the human resources manager in managing vacation, sick leave, and paid-time-off (PTO) benefit. The non-enterprise fund liability for this benefit is recorded in the Benefit Accrual Fund. Enterprise funds (Liquor, DMV, Water & Sewer) maintain the liability for employees involved in enterprise operations. Expenditures in each governmental fund budget unit are adjusted annually to reflect changes to the liability caused by the employees of that budget unit. OBJECTIVES: 1. Build mechanism for recording governmental fund liability for paid leaves. 2. Improve management of vacation, sick, and PTO leave. 3. Distribute accumulating paid leave costs to budget units. 4. Provide financial management stability to each budget unit. ISSUES: 1. Increasing cost of paid leave benefits. 2. Stability of liability based on accumulation of additional leave. MEASURABLE WORKLOAD DATA: Measurement 2015 2016 2017 2018 2019 Outcome/Effectiveness: Annual hours accrued: PTO ---6,966 8,677 9,007 9,200 Vacation 6,846 2,180 1,409 528 530 Sick leave 5,302 1,443 910 289 288 Balance of accrued hours: PTO ---4,405 7,485 7,828 8,000 Vacation 6,501 2,454 732 693 700 Sick leave 7,869 8,121 1,952 1,976 1,976 Efficiency: Annual hours accrued per employee: PTO ---145 170 170 174 Vacation 104 136 94 176 177 Sick leave 87 90 61 96 96 Work Load: Employees accruing hours: PTO employees ---48 51 53 53 Vacation employees 66 16 15 3 3 Sick leave employees 61 16 15 3 3 City implemented a PTO system in 2016 for non-union employees with fewer than 25 years. Union employees joined the PTO system in July 2017. 225 BUDGET COMMENTARY: The Benefit Accrual Fund’s main source of revenue is internal charges to personnel services in the city’s two main governmental funds: General Fund and Monticello Community Center Fund. Personnel services expenditures in each governmental fund budget unit will be adjusted up or down based on the change in liability caused by each unit. The liability is based on the number of hours accrued multiplied by the hourly compensation for each individual. Employees are allowed to carry- over 320 hours of accrued PTO. This fund was initiated with a $226,158 transfer at the end of 2015. BUDGET: BENEFIT ACCRUAL FUND 2015 2016 2017 2018 2018 2019 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$ -$ -$ -$ -$ -$ --- Licenses & Permits - - - - - - --- Intergovernmental Revenues - - - - - - --- Charges for Services - 38,061 (6,580) 16,500 16,500 16,500 0.0% Fines & Forfeits - - - - - - --- Special Assessments - - - - - - --- Miscellaneous - - - 3,000 3,000 3,000 0.0% Operating Transfers 226,158 - - - - - --- Debt Proceeds - - - - - - --- TOTAL REVENUES 226,158$ 38,061$ (6,580)$ 19,500$ 19,500$ 19,500$ 0.0% EXPENDITURES Personnel Services -$ -$ -$ -$ -$ -$ --- Supplies - - - - - - --- Other Services & Charges - - - - - - --- Capital Outlay - - - - - - --- Operating Transfers - - - - - - --- TOTAL EXPENDITURES -$ -$ -$ -$ -$ -$ --- FUND BALANCE - JANUARY 1 -$ 226,158$ 264,219$ 257,639$ 257,639$ 277,139$ Excess (Deficiency) of Revenues over Expenditures 226,158 38,061 (6,580) 19,500 19,500 19,500 FUND BALANCE - DECEMBER 31 226,158$ 264,219$ 257,639$ 277,139$ 277,139$ 296,639$ 226 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2019 CAPITAL IMPROVEMENT PROGRAM CAPITAL IMPROVEMENT PROGRAM INTRODUCTION The capital improvements presented in this section comprise the 2018-2022 Capital Improvements Program (CIP). The Monticello CIP integrates capital and major noncapital expenditures into a comprehensive plan for forecasting needed future resources for acquiring and maintaining assets used in municipal operations. By integrating major noncapital expenditures, such as maintenance items or asset purchases not meeting specific dollar thresholds, the city can better plan and prepare for future financial challenges. The Monticello integrative CIP has four expenditure categories: capital improvements, vehicles and equipment (Garage), major repair and maintenance items (First Aid Kit), and small tools and equipment (Tool Box). The Capital Improvements category primarily deals with projects that carry high price tags. In the simplest of terms, capital improvements are expansions of, or improvements to, the city's physical structures such as buildings, streets, sidewalks, parking facilities, open space, and utility systems (infrastructure). The Garage category contains capital outlays for vehicles and equipment essential to accomplishing work. Generally, these assets have shorter useful lives and must be replaced on a regularly scheduled basis. The First Aid Kit category includes noncapital repair and maintenance expenditures related to the preservation of existing assets, such as painting a water tank. Additionally, expenditures on projects that do not meet certain capitalization thresholds are considered repairs and maintenance. The Tool Box category is comprised of major noncapital small tool and equipment purchases. For example, the purchase of multiple similar items that individually do not exceed the capitalization threshold would be included in this section. Q&A WHAT IS A CAPITAL IMPROVEMENT PROGRAM? A capital improvement program is a five-year plan for the evaluation of the city's facility, equipment, and infrastructure needs. It serves as a guide for construction, development, and maintenance of the city's infrastructure assets--as well as other less expensive assets--in the most cost-efficient manner possible. It is the result of systematic review of each project, as it relates to the city council goals and the established priority scheme, to maximize the use of all financial resources. 227 While the program serves as a long-range plan, it is reviewed annually and revised based on current circumstances and opportunities. Priorities may be changed due to grant opportunities or circumstances that caused a more rapid deterioration of an asset resulting in a liability issue. Projects may be revised for significant costing variances. WHAT ARE THE OBJECTIVES OF A CAPITAL IMPROVEMENT PROGRAM? · To forecast public facilities and improvements that will be needed in the near future. · To anticipate and project financing needs in order to maximize available federal, state, and county funds. · To promote sound financial planning in order to enhance and protect future bond ratings and bonding capacity. · To focus attention on and assist in the implementation of established city council objectives goals as outlined in the “Purpose and Mission”. · To serve as a guide for local officials in making budgetary decisions. · To balance the needs of new development with existing development. · To promote and enhance the economic development of the city of Monticello. · To strike a balance between needed public improvements and the present financial capability of the city to provide for these improvements. · To provide an opportunity for citizens and interest groups to voice opinions on development of city facilities and infrastructure. · To provide for improvements in a timely and systematic manner. Changes have been made to improve the reliability of the capital improvement project estimates and the focus of the funding. Previously the funding effort was focused primarily on the budget year. The new process is intended to change that focus to funding over five years. This will enable decision makers to identify opportunity costs of shifting priorities. It creates a better understanding of the balancing act that is required to allocate scarce resources to the capital improvement effort. WHAT IS THE CAPITAL IMPROVEMENT PROGRAM DEVELOPMENT PROCESS? Assign Project Titles · Make the title descriptive of the work. · TIP: Title the project based on the problem to be solved at a location, rather than titling based on the solution. · Group projects in a meaningful way for your department. A project title of Boomerang Improvements won’t work if it includes everything from the kitchen sink replacement to the cart path overlay. It is a judgment decision. Formulate Project Descriptions · Include the target activities to be completed each year on the project. This should be a brief statement of the work that will be performed and its location. 228 Formulate Project Cost Estimates The costs of each project are broken down into any of the following categories: Land Acquisition Planning/Design/Construction Vehicles/Equipment/Furnishing Assign Priorities Priorities: required on all projects based on the following categories: Priority I: Imperative (MUST-DO)-Projects that cannot reasonably be postponed in order to avoid harmful or otherwise undesirable consequences. _ Corrects a condition dangerous to public health or safety _ Satisfies a legal obligation (law, regulation, court order, contract) _ Alleviates an emergency service disruption or deficiency _ Prevents irreparable damage to a valuable public facility Priority II: Essential (SHOULD-DO)-Projects that address clearly demonstrated needs or objectives. _ Rehabilitates or replaces an obsolete public facility or attachment thereto _ Stimulates economic growth and private capital investment _ Reduces future operating and maintenance costs _ Leverages available State or Federal funding Priority III: Important (COULD-DO)-Projects that benefit the community but may be delayed without detrimental effects to basic services. _ Provides a new or expanded level of service _ Promotes intergovernmental cooperation _ Reduces energy consumption _ Enhances cultural or natural resources Document Project Justifications The following things should be considered: · Reason the project is necessary · Related projects (timing issues) · Coordination efforts required with other agencies (timing issues) · Mandates and deadlines for compliance · Service impact (number of participants impacted) · New fees that could be generated as a result of the completion of the project (community center usage fees, program fees) · Community goal references (refer to your budget document) · Safety requirements 229 Document Operating Impact This is a required field; projects are not accepted without it. Record the costs in the year they will initially occur. It will be assumed that the cost continues from that point on, unless information is provided otherwise. The following possibilities exist: · Maintenance project that doesn’t require any more than is already in the budget for maintenance. · Maintenance project that replaces existing items with a more cost-effective material or device that would result in a slight savings in operating dollars. Examples: more energy efficient HVAC unit resulting in an electricity savings. · New project will always have some kind of operating impact. Note Unfunded Projects · All projects not funded are placed on an unfunded list. Present product to the city council for review and final consideration · Five-year funded capital improvements · Ranked list of unfunded needs HOW DOES THE CAPITAL IMPROVEMENT PROGRAM IMPACT THE OPERATING BUDGET? All capital improvement projects are required to show the operating budget impact at the time the projects are submitted for consideration in the Capital Improvement Program. This includes the number of full-time equivalent positions that would be needed or could be eliminated and the cost or savings for salaries/benefits, supplies/services, and equipment. It would not be prudent to make funding decisions in favor of a project the city could not afford to maintain, staff, or provide equipment for. Capital improvements can impact the budget by increasing or decreasing revenues and expenditures. Revenues could be increased if the improvement attracts new businesses (building permits, sales tax, or property tax). The improvement could also increase expenditures. Perhaps an expansion requires new employees, additional maintenance services, or additional utility costs. Construction of a new street may require additional costs for police patrol services, snow and ice removal, or street light utility costs. Perhaps new technology could make the operation of a plant more efficient resulting in a reduction in power costs, utility costs, and personnel costs (reduction in overtime or man-hours). Many projects are associated with prevention of future excessive costs that are difficult to measure. The cost of the maintenance should not exceed the benefit of the asset. The projects may have maintenance costs, but the existing maintenance budgets are sufficient. The priority for available capital project funds has been maintenance of existing facilities and infrastructure. Most of Monticello’s projects fall into this category. 230 HOW IS CITIZEN INPUT INCORPORATED IN THE CIP DEVELOPMENT PROCESS? The citizens are involved in the capital improvements plan through participation at council meetings, and through citizen boards, commissions, and participation in public meetings, work sessions, and public hearings. Participation in Citizen Boards and Commissions Several disciplines within the city have a citizen board or commission that helps to identify and prioritize needs within their scope of interest. These priorities are reflected in the department head numeric ranking when the project is initially submitted for consideration. The citizen boards and commissions are particularly influential with regard to the addition of a project to the plan and the priority it has within the scope of needs for the community. Participation in Public Meetings Each year in the spring, a workshop is held to inform the city council and all interested citizens about the proposed budget for the year. A session within this workshop is devoted to capital improvements. Since annual appropriations are required by statute, one required public hearing is held in conjunction with the operating budget each year. Capital improvements typically represent 20% of the total budget and are considered carefully. Beyond participation in boards and public meetings, the city makes a considerable effort to inform the citizens through various publications, news releases, and the website. HOW IS THE CAPITAL IMPROVEMENT PROGRAM FORMULATED? The following time line is a specific listing of the steps used to develop the Capital Improvement Plan: June: The finance department distributes “CIP Budget Request Instructions” along with prior year submissions. December: Existing projects roll forward one year. There is also dialogue reminding departments about the general philosophies mentioned earlier in this discussion. Each project is evaluated by the department head. New projects are then submitted to the Finance Department and entered into the database along with updates or changes to existing projects. April: The budget staff finalizes the plan by shifting funding priorities as necessary and incorporating new projects, particularly in year five. The city administrator determines the overall budget recommendation. October: Work sessions are held to consider budget issues (for operating and for capital improvements). December: The first and second public hearings are held, and the budget is appropriated. 231 HOW IS THE CAPITAL IMPROVEMENT PROGRAM FINANCED? In analyzing the financial viability of the capital improvements in the 2018-2022 CIP, the city has three basic choices for methods of financing: pay-as-you-go,joint power agreement development authority capital leasing, and debt financing. The following sources provide revenue for the three financing methods. General Fund revenues, such as property taxes, local government aid, and service charges are current revenues used to finance relatively small capital outlays. An internal service fund (Central Equipment Fund) has been established to accumulate resources for regularly planned equipment purchases through rental charges to various divisions within benefitting funds. This will reduce the impact of large equipment purchases on annual budget unit expenditures by essentially amortizing the cost of such equipment to the division through rental charges. The rental charges include a small inflation factor to provide for the future replacement of that item. This fund replaced the Capital Outlay Revolving Fund. Similarly, a hybrid of the aforementioned fund has been established for IT Services, which will also include IT-related equipment purchases. Enterprise fund revenues, which are derived from user charges, are used to finance capital improvements and equipment necessary for delivering a specific service. Additionally, accumulated revenues in enterprise funds can be transferred to other funds to provide financing for capital asset acquisitions. Debt issuance is used to finance large capital improvements. General obligation improvement bonds and general obligation revenue bonds are used to finance improvements to the city’s infrastructure. Many of the items identifying the Capital Project Fund as funding source will need some level of debt issuance to come to fruition. Federal and state grants provide funding for various capital improvement projects. Currently, the Fallon Avenue overpass is eligible for post-project federal funding of $2.1 million in 2020. Other sources include grants, donations, reserves, and other governmental units that share boundaries. 232 Items listed on the following pages are typically labeled with prefixes VEQ- for vehicles and equipment, MNC- (major non-capital) repairs & maintenance, STE- for small tools and equipment. All other label prefixes represent capital improvements. The below graph and table provide a breakdown of expenditures within the CIP: $- $4 $8 $12 $16 $20 $24 $28 2019 2020 2021 2022 2023MillionsExpenditures - Integrated CIP for FY 2019 - 2023 Capital Improvements Garage (Capital Equipment)First Aid Kit (Repairs and Maintenance)Tool Box (Small Tools and Equipment) Expenditure Category 2019 2020 2021 2022 2023 Capital Improvements 13,497,000$9,776,000$19,745,000$13,880,000$9,140,000$ Garage (Capital Equipment)2,323,000 2,056,600 2,810,000 460,000 615,000 First Aid Kit (Repairs and Maintenance)481,000 378,500 362,500 300,000 212,500 Tool Box (Small Tools and Equipment)79,200 127,600 228,100 61,800 45,000 16,380,200$12,338,700$23,145,600$14,701,800$10,012,500$ 233 Capital Improvement Plan City of Monticello, Minnesota FUNDING SOURCE SUMMARY 2019 thru 2023 TotalSource20192020202120222023 Capital Equipment Fund 2,887,000400,000 862,000 665,000 345,000 615,000 Capital Project Fund 20,113,0003,997,000 5,576,000 4,400,000 3,840,000 2,300,000 Cemetery Fund 60,00060,000 Community Center Fund 940,700255,000 395,700 262,500 15,000 12,500 Debt Proceeds 34,265,0007,900,000 2,400,000 13,115,000 6,250,000 4,600,000 DMV Fund 28,00028,000 General Fund 1,956,500365,000 339,000 672,500 316,000 264,000 IT Services Fund 178,00030,200 55,400 30,600 30,800 31,000 Municipal Liquor Fund 1,695,00025,000 75,000 95,000 1,500,000 Parks & Pathways Fund 805,000355,000 200,000 250,000 Private Development 60,00060,000 Sewage Fund 6,660,6001,275,000 1,450,600 2,885,000 675,000 375,000 State Aid 250,00050,000 200,000 Stormwater Access Fund 2,825,000925,000 250,000 50,000 1,550,000 50,000 Stormwater Fund 160,00040,000 40,000 40,000 40,000 Street Construction Fund 250,000250,000 Street Lighting Fund 835,000460,000 100,000 100,000 100,000 75,000 Water Fund 2,610,000245,000 715,000 150,000 1,350,000 150,000 16,380,200 12,433,700 23,145,600 14,606,800 10,012,500 76,578,800GRAND TOTAL Produced Using the Plan-It Capital Planning Software 234 Capital Improvement Plan City of Monticello, Minnesota PROJECTS & FUNDING SOURCES BY DEPARTMENT 2019 2023thru Total20192020202120222023DepartmentProject # Priority Community Center 940,700255,000 395,700 262,500 15,000 12,500Community Center Fund 940,700255,000 395,700 262,500 15,000 12,500Community Center Total MCC-13-001 40,00040,000Movable Walls 3 MCC-13-003 20,00020,000City Council Diaz 3 MCC-13-004 100,000100,000Concession Counter Improvements 3 MCC-13-006 15,00015,000Carpet and Terrazo 2 MCC-17-003 30,00030,000East/West Handicap Doors 3 MCC-18-001 200,000200,000New Patio - Replaces Skate Park 3 MCC-18-003 14,00014,000Card Access Reader 3 MNC-13-008 150,000150,000Water Slide Replacement 2 MNC-13-010 30,00020,000 10,000Vanity and Partition Replacement 3 MNC-13-011 7,5002,500 2,500 2,500Facility Door Replacement 2 MNC-18-001 48,00048,000Pool Deck Tile Restoration 3 MNC-18-002 40,00040,000Locker Room Floor Tile Restoration 3 MNC-18-003 4,0004,000Main Sign Replacement 3 MNC-19-001 28,00028,000Climbing Wall Resurfacing 2 MNC-19-002 5,0005,000Childcare Countertop Replacement 2 MNC-19-003 12,00012,000Landscaping3 STE-13-013 80,00040,000 10,000 10,000 10,000 10,000Recreation Equipment 3 STE-13-014 4,0004,000Table Covers 3 STE-13-015 10,0005,000 5,000Tables3 STE-15-001 63,20063,200Survelliance Camera Upgrade 3 VEQ-13-045 20,00020,000Dishwasher2 VEQ-18-001 10,00010,000Recreation Software 3 VEQ-19-001 10,00010,000Interactive Light Play Structure 3 940,700255,000 395,700 262,500 15,000 12,500Community Center Total DMV - Deputy Registrar 28,00028,000DMV Fund 28,00028,000DMV - Deputy Registrar Total VEQ-13-047 28,00028,000DMV Vehicle 2 28,00028,000DMV - Deputy Registrar Total Fire & Rescue Produced Using the Plan-It Capital Planning Software 235 Total20192020202120222023DepartmentProject # Priority 170,00050,000 120,000Capital Equipment Fund 7,600,0006,900,000 700,000Debt Proceeds 289,5007,000 262,500 16,000 4,000General Fund 8,059,5006,950,000 7,000 962,500 16,000 124,000Fire & Rescue Total FRD-13-002 5,600,0005,600,000New Fire Station 2 STE-13-006 180,000180,000SCBA Packs 2 STE-16-002 34,5007,000 7,500 16,000 4,000Turnout Gear 1 VEQ-13-006 1,300,0001,300,000Fire Ladder Truck 2 VEQ-18-004 50,00050,000SUV - Fire Command Response Vehicle 3 VEQ-18-005 700,000700,000Engine 1 - Replacement 1 VEQ-18-006 120,000120,000Utility 1 - Replacement 1 VEQ-19-004 75,00075,000Squad 5 - Replacement 2 8,059,5006,950,000 7,000 962,500 16,000 124,000Fire & Rescue Total IT Services 178,00030,200 55,400 30,600 30,800 31,000IT Services Fund 178,00030,200 55,400 30,600 30,800 31,000IT Services Total STE-13-001 78,00015,600 15,600 15,600 15,600 15,600Personal Computers 2 STE-13-005 15,0003,000 3,000 3,000 3,000 3,000Laptops2 STE-13-007 40,0008,000 8,000 8,000 8,000 8,000GIS Hardware and Software 2 STE-13-008 20,0003,600 3,800 4,000 4,200 4,400Pavement Management Software 2 VEQ-19-003 25,00025,000Laserfiche Upgrade 2 178,00030,200 55,400 30,600 30,800 31,000IT Services Total Municipal Liquor 1,695,00025,000 75,000 95,000 1,500,000Municipal Liquor Fund 1,695,00025,000 75,000 95,000 1,500,000Municipal Liquor Total LIQ-13-002 75,00075,000Parking Lot Improvements 2 LIQ-13-003 1,500,0001,500,000Liquor Store - #2 3 LIQ-13-046 50,00025,000 25,000Liquor Store Coolers 2 LIQ-18-001 50,00050,000Roof1 VEQ-13-046 20,00020,000Point of Sale Software 2 1,695,00025,000 75,000 95,000 1,500,000Municipal Liquor Total Public Works MNC-15-004 160,00040,000 40,000 40,000 40,000Stop Light Painting 3 PWK-13-001 14,500,000500,000 11,000,000 3,000,000Public Works Facility 3 PWK-13-002 600,000600,000PW Facility Land Acquisition 3 STE-13-011 7,0007,000Generator2 VEQ-13-013 65,00065,000One-Ton Truck 2 Produced Using the Plan-It Capital Planning Software 236 Total20192020202120222023DepartmentProject # Priority 2,202,000285,000 592,000 510,000 320,000 495,000Capital Equipment Fund 1,100,0001,100,000Capital Project Fund 14,000,00011,000,000 3,000,000Debt Proceeds 167,00040,000 47,000 40,000 40,000General Fund 17,469,0001,425,000 639,000 11,550,000 3,360,000 495,000Public Works Total VEQ-13-014 35,00035,000Truck - Pickup 4X4 2 VEQ-13-015 135,000135,000Bucket Truck 2 VEQ-13-016 80,00080,000Blacktop Paver 2 VEQ-13-019 20,00020,000Concrete Saw 2 VEQ-13-021 95,00095,000Backhoe2 VEQ-13-022 495,000240,000 255,000Plow Truck 2 VEQ-13-023 65,00065,000One-Ton Truck and Plow 2 VEQ-13-025 142,000142,000Snow Go Snow Blower 2 VEQ-13-027 35,00035,000Sign Lab System 2 VEQ-13-028 20,00020,000Paver Trailer 2 VEQ-14-001 475,000235,000 240,000Wheel Loader - 3 yd.3 VEQ-16-005 20,00020,000Mini Tank Tack Trailer 3 VEQ-16-006 70,00070,000Mid Size Loader 2 VEQ-16-007 300,000300,000Grader3 VEQ-19-007 150,000150,000Sidewalk Tractor - Snow Machine 2 17,469,0001,425,000 544,000 11,550,000 3,455,000 495,000Public Works Total Recreation & Culture MNC-14-007 250,00050,000 50,000 50,000 50,000 50,000Pathway Maintenance (Annual)2 MNC-16-002 10,00010,000Park Gazebo(s)3 MNC-19-004 15,00015,000Renovate Freds Auto into Public Arts 3 MNC-19-005 15,00015,000Great River Trails Planning 3 MNC-19-006 10,00010,000Chelsea Road Landscaping (trees)3 PAR-13-003 16,00016,000Sunset Ponds Shelter 3 PAR-13-004 90,00090,000Pioneer Park - Band Shell 3 PAR-13-012 5,100,0002,300,000 700,000 700,000 700,000 700,000BCOL Ball Fields 3 PAR-13-013 250,000250,000Ellison Park Log Shelter 3 PAR-13-014 60,00060,000CSAH 75 Pathway Lighting 3 PAR-15-004 450,000200,000 250,000Fenning Avenue Pathway Connection 3 PAR-17-002 100,000100,000West Bridge Playground Structure 3 PAR-17-003 20,00020,0004th Street Playground Equipment 3 PAR-17-005 40,00040,000Rolling Woods Sidewalk 3 PAR-17-006 60,00060,000Riverside Cemetery Columbarium 3 PAR-17-007 25,00025,000Front Street Pier 3 PAR-19-001 140,000140,000CSAH 39 Pathway (Mississippi-Broadway)3 PAR-19-002 90,00090,000Riverwalk Trail Connection 3 PAR-19-003 90,00090,000Pathways and Sidewalks - Various 2018 3 VEQ-13-031 140,00080,000 60,000Park Mowers 2 VEQ-13-032 135,00065,000 70,000Trucks2 VEQ-13-037 30,00030,000Cushman Truckster 2 Produced Using the Plan-It Capital Planning Software 237 Total20192020202120222023DepartmentProject # Priority 440,00065,000 245,000 130,000Capital Equipment Fund 5,456,0002,300,000 966,000 700,000 790,000 700,000Capital Project Fund 60,00060,000Cemetery Fund 410,00075,000 75,000 160,000 50,000 50,000General Fund 805,000355,000 200,000 250,000Parks & Pathways Fund 60,00060,000Private Development 60,00060,000Street Lighting Fund 7,291,0002,975,000 1,486,000 1,240,000 840,000 750,000Recreation & Culture Total VEQ-13-038 50,00050,000JD Tractor 2 VEQ-13-039 65,00065,000Skid Loader 2 VEQ-13-041 20,00020,000Toro Infield Pro 5040 2 VEQ-19-005 20,00020,000Park and Field Reservation Software 3 7,291,0002,975,000 1,486,000 1,240,000 840,000 750,000Recreation & Culture Total Stormwater\Drainage 40,00040,000General Fund 2,825,000925,000 250,000 50,000 1,550,000 50,000Stormwater Access Fund 160,00040,000 40,000 40,000 40,000Stormwater Fund 3,025,000965,000 290,000 90,000 1,590,000 90,000Stormwater\Drainage Total SWD-13-001 200,00040,000 40,000 40,000 40,000 40,000Stormwater Pond Restoration 2 SWD-13-002 1,000,0001,000,000Stormwater Liftstation (TH 25 Pond)2 SWD-13-004 250,00050,000 50,000 50,000 50,000 50,000Boulevard Drainage Tile 2 SWD-17-001 500,000500,000Fallon Avenue Pond Expansion 3 SWD-19-001 1,000,000800,000 200,000Otter Creek Pond Improvements 2 SWD-19-002 75,00075,000Maple Street Outfall Enhancement 2 3,025,000965,000 290,000 90,000 1,590,000 90,000Stormwater\Drainage Total Streets MNC-13-001 125,00025,000 25,000 25,000 25,000 25,000City Street Signs 2 MNC-14-001 925,000185,000 185,000 185,000 185,000 185,000Annual Chip Seal 2 STR-13-001 500,00050,000 450,000School Blvd/Cedar Street Signal System 2 STR-13-004 600,000600,000Overlay Rural Outlying Streets 2 STR-13-006 1,000,0001,000,000Fallon Avenue Overpass 3 STR-13-008 1,500,00050,000 1,300,000 150,000Street Reconstruction - Area 6 3 STR-13-009 1,500,00050,000 1,300,000 150,000Street Reconstruction - Area 7B 2 STR-13-010 475,000100,000 100,000 100,000 100,000 75,000Street Light Improvements 2 STR-13-013 27,00027,000School Zone - Pedestrian Crossings 2 STR-15-003 150,000150,000Elm Street Sidewalk - 3rd St Pedestrian Blinker 2 STR-15-004 500,000100,000 100,000 100,000 100,000 100,000Sidewalk Gap Improvement Project (TBD)2 STR-16-001 1,300,00050,000 1,150,000 100,000Extension of 95th Street w/o Noise Wall 3 STR-16-002 300,000300,000Flashing Yellow Arrow Signal 3 STR-17-002 2,000,000150,000 1,700,000 150,000Fallon Ave & Trail - Chelsea to School Bvld 3 STR-17-004 900,00050,000 850,0007th St Mill & Overlay & Cedar St Improvements 3 Produced Using the Plan-It Capital Planning Software 238 Total20192020202120222023DepartmentProject # Priority 75,00025,000 25,000 25,000Capital Equipment Fund 13,557,000597,000 4,610,000 3,700,000 3,050,000 1,600,000Capital Project Fund 2,900,0001,000,000 600,000 50,000 1,150,000 100,000Debt Proceeds 1,050,000210,000 210,000 210,000 210,000 210,000General Fund 250,00050,000 200,000State Aid 250,000250,000Street Construction Fund 775,000400,000 100,000 100,000 100,000 75,000Street Lighting Fund 18,857,0002,207,000 5,595,000 4,535,000 4,535,000 1,985,000Streets Total STR-18-001 500,00050,000 450,000TH25/4th Street Signal 3 STR-18-002 370,000370,000Walnut Street Corridor to River Street 3 STR-19-001 6,000,0001,500,000 1,500,000 1,500,000 1,500,000Pavement Management Projects 3 STR-19-003 110,000110,000Noise Barrier - I94 on westside 3 STR-19-004 75,00025,000 25,000 25,000Broadway Corridor Parklets 3 18,857,0002,207,000 5,595,000 4,535,000 4,535,000 1,985,000Streets Total Utility - Sewage 5,265,0001,800,000 1,365,000 2,100,000Debt Proceeds 6,660,6001,275,000 1,450,600 2,885,000 675,000 375,000Sewage Fund 11,925,6001,275,000 3,250,600 4,250,000 2,775,000 375,000Utility - Sewage Total MNC-17-005 110,000110,000Demo Obsolete WWTP Equipmnet 4 UTS-13-001 1,250,000250,000 250,000 250,000 250,000 250,000Annnual Sewage Trunk Improvements 2 UTS-13-002 275,600275,600Liftstation - Marvin Road 2 UTS-13-005 1,365,0001,365,000WWTP Solids Handling Improvements 2 UTS-13-006 1,800,0001,800,000WWTP Phase 2 Improvements 3 UTS-16-001 625,000125,000 125,000 125,000 125,000 125,000Annual WWTP Upgrades 2 UTS-17-001 2,100,0002,100,000WWTP Headworks Improvements 3 UTS-17-002 3,300,000300,000 300,000 2,400,000 300,000Fallon Avenue Trunk Line Extension 3 UTS-19-001 100,000100,000WWTP Parkig Lot Improvements 2 VEQ-13-001 450,000450,000Sewer Jetter 2 VEQ-13-004 530,00030,000 500,000SCADA System - Sewage 2 VEQ-19-002 20,00020,000Mule - WWTP 2 11,925,6001,275,000 3,250,600 4,250,000 2,775,000 375,000Utility - Sewage Total Utility - Water 4,500,0004,500,000Debt Proceeds 2,610,000245,000 715,000 150,000 1,350,000 150,000Water Fund UTW-13-001 750,000150,000 150,000 150,000 150,000 150,000Annual Water System Improvements 3 UTW-13-002 4,500,0004,500,000Water Treatment Facility 3 UTW-13-003 1,200,0001,200,000Well #6 3 UTW-15-001 130,00065,000 65,000Water Meter MXUs - System Upgrade 2 VEQ-13-003 530,00030,000 500,000SCADA System - Water 2 7,110,000245,000 715,000 150,000 1,350,000 4,650,000Utility - Water Total Produced Using the Plan-It Capital Planning Software 239 Total20192020202120222023DepartmentProject # Priority 7,110,000245,000 715,000 150,000 1,350,000 4,650,000Utility - Water Total 76,578,80016,380,200 12,338,700 23,145,600 14,701,800 10,012,500Grand Total Produced Using the Plan-It Capital Planning Software 240 CIP PROJECT – FALLON AVENUE OVERPASS (BRIDGE) 241 CIP PROJECT – BERTRAM CHAIN OF LAKES 242 CIP PROJECT – RIVERWALK TRAIL CONNECTION 243 CIP PROJECT – WALNUT PEDESTRIAN IMPROVEMENTS 244 CIP PROJECT – FIRE LADDER TRUCK Price: $1,300,000 245 CIP PROJECT – SIDEWALK MACHINE AND SEWER VACTOR(JETTER). Price: $150,000 Price: $450,000 246 CIP PROJECT – SKID LOADER AND BUCKET TRUCK Price: $65,000 Price: $135,000 247 This page intentionally left blank 248 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2019 APPENDIX PROPERTY TAX BASICS Assessment and classification The property tax system is a continuous cycle, but it effectively begins with the estimation of property market values by local assessors. Assessors attempt to determine the approximate selling price of each parcel of property based on the current market conditions. Along with the market value determination, a property class is ascribed to each parcel of property based on the use of the property. For example, property that is owner-occupied as a personal residence is classified as a residential homestead. The “use class” is important because the Minnesota system, in effect, assigns a weight to each class of property. Generally, properties that are associated with income production (e.g. commercial and industrial properties) have a higher classification weight than other properties. The property classification system defines the tax capacity of each parcel as a percentage of each parcel’s market value. For example, a $75,000 home which is classified as a residential homestead has a class rate of 1.0 percent and therefore has a tax capacity of $75,000 x .01 or $750. (A sample of the class rates is included in the table at the end of this item.) [parcel market value] * [class rate] = [parcel tax capacity] The next step in calculating the tax burden for a parcel involves the determination of each local unit of government’s property tax levy. The city, county, school district, and any special property taxing authorities must establish their levy by December 28 of the year preceding the year in which the levy will be paid by taxpayers. The property tax levy is set after the consideration of all other revenues including state aids such as LGA. [city budget] - [all non-property tax revenues] = [city levy] Local tax rates Local governments do not directly set a tax rate. Instead, the tax rate is a function of the levy and the total tax base. To compute the local tax rate, a county must determine the total tax capacity to be used for spreading the levies. The total tax capacity is computed by first aggregating the tax capacities of all parcels within the city. Several adjustments to this total must be made because not all tax capacity is available for general tax purposes. The result of this calculation produces taxable tax capacity. Taxable tax capacity is used to determine the local tax rates. [city levy] / [taxable tax capacity] = [city tax rate] Parcel tax calculations The property tax bill for each parcel of property is determined by multiplying the parcel’s tax capacity by the total local tax rate. The tax statement for each individual parcel itemizes the taxes for the county, municipality, school district, and any special taxing authorities. [parcel tax capacity] * [total local tax rate] = [tax capacity tax bill] 249 Terms Defined Class rates - The percent of market value set by state law that establishes the property’s tax capacity subject to the property tax. See table below for a sample list of class rates. Local tax rate - The rate used to compute taxes for each parcel of property. Local tax rate is computed by dividing the certified levy (after reduction for fiscal disparities distribution levy and disparity reduction) by the taxable tax capacity. Market value - An assessor’s estimate of what property would be worth on the open market if sold. The market value is set on January 2 of the year before taxes are payable. Homestead Market Value Exclusion (HMVE)– Starting with taxes payable in 2012, eligible homesteads will pay property taxes on only a portion of the value of their homes. The maximum exclusion, 40% of value, occurs at home value of $76,000 and phases out as home value grows Property class - The classification assigned to each parcel of property based on the use of the property. For example, owner-occupied residential property is classified as homestead. Property tax levy - The tax imposed by a local unit of government. The tax is established on or around December 28 of the year preceding the year the levy will be paid by taxpayers. Tax capacity - The valuation of property based on market value and statutory class rates. The property tax for each parcel is based on its tax capacity. Total tax capacity - The amount computed by first totaling the tax capacities of all parcels of property within a city. Adjustments for fiscal disparities, tax increment, and a portion of the powerline value are made to this total since not all tax capacity is available for general tax purposes. Truth-in-Taxation - The “taxation and notification law” which requires local governments to set estimated levies, inform taxpayers about the impacts, and announce which of their regularly scheduled council meetings will include a discussion of the budget and levy. Taxpayer input is taken at that meeting. Property Class Local Taxes Payable 2019 State Tax Payable 2019 Residential Homestead: 1st $500,000 1.00%No state tax >$500,000 1.25% Non-homestead Residential: Single unit: 1st $500,000 1.00%>$500,000 1.25%No state tax 2-3 unit buildings 1.25% Market-rate Apartments:1.25%No state tax Commercial/Industrial:Subject to state 1st $150,000 1.50%levy (commercial- >$150,000 2.00%industrial rate) Seasonal Recreational Subject to state1st $500,000 1.00%levy (seasonal- >$500,000 1.25%recreational rate) 250 TRUTH-IN-TAXATION TNT Summary Chart for Taxes Payable 2019 Date Action On or Before Sept. 30 All cities and special taxing districts (EDAs, HRAs, port authorities, etc.) must adopt any proposed property tax levy and certify the proposed levy to the county auditor. On or Before Sept. 30 At one meeting, the city council adopts the proposed property tax levy and announces the time and place of a future city council meeting at which the budget and levy will be discussed and public input allowed, prior to final budget and levy determination. This public input meeting must occur after Nov. 24 and must start at or after 6 p.m. The time and place of the public input meeting must be included in the minutes but newspaper publication of the minutes is not required. (September 10, 2018) On or before Sept. 30 Cities must provide the county auditor with the following information: The time and place of the meeting at which the budget and levy will be discussed and public input allowed. (Again, meeting must occur after Nov. 24 and must not start before 6 p.m.) A phone number that city taxpayers may call if they have questions related to the auditor’s property tax notice; this does not require listing a private phone number. An address where comments will be received by mail; this does not require listing a private address. (September 12, 2018) Nov. 11 to Nov. 24 County auditor prepares and sends parcels specific notices. Nov. 25 to Dec.28 City council holds meeting to discuss the budget and property tax levy and, before a final determination, allows public input.(December 10, 2018) On or before Dec. 28 Cities must certify final property tax levy to the county auditor. Cities must also file the certificate of compliance (Form TNT) with the Department of Revenue by December 28th. (December 11, 2018) **The date an activity occurred is highlighted. 251 DEBT GUIDE EquipmentCertificates/CapitalNotes A statutory city may issue certificates of indebtedness or capital notes (Section 412.301)to purchase: Public safety equipment, ambulance, and other medical equipment; road construction and main- tenance equipment; and other capital equipment. Computer hardware and software, whether bundled with machinery or equipment or unbundled, together with application development services and training related to the use of the computer hardware or software. The statute does not define “other capital equipment”. Cities seeking to borrow for equipment not specifically listed should work with bond counsel to determine eligibility. The term of the Certificates/Notes cannot exceed 10 years from the dated date of the obligations. This limitation may affect the timing of principal and interest payments.This debt issubjectto thedebtlimit. A reverse referendum provision applies if the amount of the borrowing exceeds 0.25% of the estimated market value of taxable property within the city. An election is required if a petition signed by voters equal to 10% of the voters in the last regular municipal election is submitted to the city clerk within 10 days after publication of the resolution authorizing the issuance of the Certificates/Notes. Different statutory authority exists for home rule charter cities (Section 410.32).Capital Notes issued by charter cities are subject to the same statutory requirements as statutory cities with the following ex- ceptions: The total principal amount of the capital notes issued in a fiscal year shall not exceed 0.03% of the estimated market value of taxable property in the city. No reverse referendum provision applies, but issuance must be approved by a two-thirds vote of the city council. Unlessprohibitedbythecharter,thesecitiesmayalsoissueCapitalNotesundertheauthoritygranted to statutory cities. Tax Abatement Bonds Tax Abatement Bonds (Section 469.1814)may be used to finance a variety of development activities and public improvements. The statute allows proceeds of Tax Abatement Bonds be used to (1) pay for public improvements that benefit the property, (2) to acquire and convey land or other property, as provided under this section, (3) to reimburse the property owner for the cost of improvements made to the property, or (4) to pay the costs of issuance of the bonds. Tax Abatement Bonds are often used to facilitate economic development in ways not allowed by tax increment financing. They have also evolved into a tool for financing community recreation and cultural facilities. The statutory authority creates an abatement levy based on the property value of parcels subject to the abatement. The authority to use tax abatement applies separately to each taxing jurisdiction. If other jurisdictions (county and school district) approve an abatement, this revenue may be pledged to bonds issued by the city. 252 The principal amount of the bonds may not exceed the sum of the authorized abatements. A debt service levymaybe used to pay interest on the bonds. The annual amount of all abatements cannot exceed the greater of 10% net tax capacity value of the jurisdiction or $200,000. The parameters of the abatement and authorization for the bonds are set by resolution. The resolution cannot be approved until after a public hearing is held. Street Reconstruction Bonds Street Reconstruction Bonds are an example of debt issuing authority found in unusual places. The statu- toryprovisionsforStreetReconstructionBondsappearintheportionofChapter475dealingwithelection requirements for debt issuance (Section 475.58, Subd. 3b). Street Reconstruction Bonds can be used to finance the reconstruction and bituminous overlay of existing city streets. Eligible improvements may include turn lanes and other improvements having a substantial public safety function, realignments, other modifications to intersect with state and county roads, and the local share of state and county road projects. Except in the case of turn lanes, safety improvements, re- alignments, intersection modifications, and the local share of state and county road projects, street recon- structionandbituminousoverlaysdoesnotincludethe portionofprojectcostallocableto wideningastreet or adding curbs and gutters where none previously existed. The enabling statute sets forth specific requirements for the issuance of Street Reconstruction Bonds: The projects financed under this authority must be described in a street reconstruction plan. The plan mustdescribethestreetreconstructionoroverlaytobefinanced,theestimatedcosts,andanyplanned reconstructionoroverlayofotherstreetsinthemunicipalityoverthenextfiveyears The city must hold a public hearing on the proposed plan and the related issuance of bonds. The plan and the issuance of bonds must be approved by the city council by a vote of all of the members of the governing body present at the meeting. Theissuanceofbondsissubjecttoareversereferendum.Anelectionisrequiredifvotersequalto5% ofthevotescastinthelastmunicipalgeneralelectionfileapetitionwiththecityclerkwithin30days ofthepublichearing.Ifthecitydecidesnottoundertakeanelection,itmaynotproposetheissuance ofStreetReconstructionBondsforthesamepurposeandinthesameamountforaperiodof365days from the date of receipt of the petition. If the question of issuing the bonds is submitted and not approvedbythevoters,the provisionsofsection475.58,subdivision1a,shallapply(noresubmission forsamepurpose/amountfor180days). Street Reconstruction Bonds are subject to the debt limit. Revenue Bonds One exception to the previous statement is the issuance of Revenue Bonds. Chapter 475 authorizes borrowingfor“anyutilityorotherpublicconveniencefrom whicharevenueisormaybederived”.This authorityissufficientwhenthesolesecurityisthepledgeofrevenuefromapublicenterprise.Although thisdebtismostfrequentlyassociatedwithmunicipalutilities,any“publicconvenience” withapledge- ablesourceofrevenuemayusethisauthority.MinnesotacitiesdonotfrequentlyissueRevenueBonds. Most borrowing needs have separate statutory authority that allows a general obligation pledge. The most common Revenue Bonds are for electric utilities, sales taxes, and liquor stores. 253 Improvement Bonds One of the most commonly used tools is General Obligation (G.O.) Improvement Bonds issued pursuant to Chapter 429. Improvement Bonds can be issued for a wide range of public improvements. Eligible Improvements The types of improvements specifically authorized in Chapter 429 can be found in Section 429.021.It is important to read and understand the specific statutory provisions. Some provisions are broader than the basic improvement. For example, a “street improvement” may also include streetscape (beauti- fication), storm sewers and utility connection lines. Other provisions may contain important expansions orlimitationsontheauthority.Sanitaryandstormsewerimprovementsmaybemadeoutsideofthecity limits. The public improvements currently authorized in Chapter 429 include the following: 1.Acquire, open, and widen any street, and improve the same by constructing, reconstructing, and maintaining sidewalks, pavement, gutters, curbs, and vehicle parking strips of any material, or by grading, graveling, oiling, or otherwise improving the same, including the beautification thereof andincludingstormsewersorotherstreetdrainageandconnectionsfromsewer,water,orsimilar mains to curb lines. 2.Acquire, develop, construct, reconstruct, extend, and maintain storm and sanitary sewers and sys- tems, including outlets, holding areas and ponds, treatment plants, pumps, lift stations, service connections,andotherappurtenancesofasewersystem,withinandwithoutthecorporatelimits. 3.Construct, reconstruct, extend, and maintain steam heating mains. 4.Install, replace, extend, and maintain street lights and street lighting systems and special lighting systems. 5.Acquire, improve, construct, reconstruct, extend, and maintain water works systems, including mains,valves,hydrants,serviceconnections,wells,pumps,reservoirs,tanks,treatmentplants,and other appurtenances of a water works system, within and without the corporate limits. 6.Acquire, improve and equip parks, open space areas, playgrounds, and recreational facilities within or without the corporate limits. 7.Plant trees on streets and provide for their trimming, care, and removal. 8.Abate nuisancesand drainswamps,marshes, and ponds on publicorprivate property,and fillthe same. 9.Construct, reconstruct, extend, and maintain dikes and other flood control works. 10.Construct, reconstruct, extend, and maintain retaining walls and area walls. 11.Acquire, construct, reconstruct, improve, alter, extend, operate, maintain, and promote a pe- destrian skyway system. Such improvement may be made upon a petition pursuant to section 429.031, subdivision 3. 12.Acquire, construct, reconstruct, extend, operate, maintain, and promote underground pedestrian concourses. 13.Acquire, construct, improve, alter, extend, operate, maintain, and promote public malls, plazas or courtyards. 14.Construct, reconstruct, extend, and maintain district heating systems. 15.Construct, reconstruct, alter, extend, operate, maintain, and promote fire protection systems in existing buildings, but only upon a petition pursuant to section 429.031, subdivision 3. 16.Acquire, construct, reconstruct, improve, alter, extend, and maintain highway sound barriers. 254 17.Improve,construct,reconstruct,extend,andmaintaingasandelectricdistributionfacilitiesownedby a municipal gas or electric utility. 18.Purchase,install,andmaintainsigns,posts,andothermarkersforaddressingrelatedto theoperation of enhanced 911 telephone service. 19.Improve, construct, extend, and maintain facilities for Internet access and other communications purposes, if the council finds that: (i) the facilities are necessary to make available Internet access or other communications services that are not and will not be available through other providers or the private market in the reasonably foreseeable future; and (ii) the service to be provided by the facilities will not compete with service provided by private entities. 20.Assess affected property owners for all or a portion of the costs agreed to with an electric utility, telecommunications carrier, or cable system operator to bury or alter a new or existing distribution system within the public right-of-way that exceeds the utility’s design and construction standards, or those set by law, tariff, or franchise, but only upon petition under section 429.031, subdivision 3. 21.Assess affected property owners for repayment of voluntary energy improvement financings under section 216C.436, subdivision 7. Other statutes may also authorize the use of special assessments to pay for improvements. For example, authorizedimprovementswithina HousingImprovement Areamaybepaidwithspecialassessments. Minimum Assessment General Obligation Improvement Bonds require a minimum 20% assessment. It is important to under- stand the method for determining the minimum assessment. A common assumption is that assessments must equal or exceed 20% of the amount to be borrowed. While this calculation works for Tax Increment Bonds, the 20% calculation for Improvement Bonds is different: 1.The assessment calculation is based on the cost of theimprovement to the city. This cost may or may not equal the amount of the Improvement Bonds. 2.Thecostoftheimprovementdoesnotincludeactivitiesthatwillnotbeassessedtobenefittedproperty owners and not financed with G.O. Improvement Bonds. These improvements can be made without following the procedures of Chapter 429. This exclusion typically applies to utility (sanitary sewer, watermain, and storm sewer) improvements paid from reserves or bonds issued under Minnesota Statutes, Chapter 444. 3.The cost to the city excludes all monies contributed by other units of government to pay for the improvement. 4.The up-front use of city non-utility reserves (both General Fund and capital improvement) does not reduce the cost to the city. Oneexceptiontothis20%requirementisimprovementsforautomobileparkingfacilities (Section459.14). Bonds issued to finance the construction or maintenance of automobile parking facilities require special assessments in an amount not less than 50% of the amount of the bonds. Assessment Considerations State Law does not prescribe assessment methodology. Some cities have formal assessment policies. Other cities deal with assessments on a project-by-project basis. A guiding factor in setting assessments is the market value test. The amount assessed to a property cannot exceedtheincreaseinmarketvalueofthepropertyasaresultoftheimprovement.Thereisno requirement tomakethisfindingaspartoftheimprovementprocess.Theissuecomesinto playprimarilyinprojectswith larger assessments and greater risk of appeal. 255 Assessments are also constrained by the notice of hearing for the improvement. The total amount assessed cannotexceedtheamountstated inthenotice.Thearea assessedcannotbelarger,butcanbesmaller,than theareareceivingnoticeoftheHearing. The special assessment calculation is based on the “improvement”. An improvement may be more than a single project. There are two ways to manage multiple projects into a single improvement for the purposes ofChapter429.Section429.021, Subd.2 allowsforanimprovementontwoormorestreets,ortwo ormore types of improvements, in or on the same street or streets or different streets may be included in one proceeding and conducted as one improvement. This combining of improvements is typically spelled out in the engineering feasibility report and considered at the improvement hearing. Projects that are instituted separatelymay besubsequentlycombinedundertheauthorityof Section435.56. Revenues to pay debt service on the portion that is not assessed may come from any legally available source including a property tax levy. Bond Issues Planning for the issuance of Improvement Bonds requires a clear understanding of the special assess- ments. In addition to the total amount assessed, several other factors are important: What is the term of repayment? First levy year payable? Total number of years payable? Will the assessments be repaid with level annual installmentsof principalor levelannual payments of principal and interest? What interest rate will be charged on the unpaid balance? Is it tied to the interest rate on the bonds? Will any of the assessments be deferred? If so, when will they be paid? When is the assessment hearing and when will the assessments be certified to the County? What are the expectations for the initial prepayment of assessments? The timing of the improvement process is another important consideration. Improvement Bonds can be issuedanytimeafterthecitycouncilconductsthe improvement hearingandauthorizestheimprovements. No improvement hearing is needed if the parties that petition for the improvement will be assessed 100% ofthecost.Each pointintime hasdifferent implications forissuingbonds: Bonds issued soon after the improvement hearing will be based on estimated construction costs and assumptions about special assessments. Bonds may be issued immediately after the receipt of bids to provide construction financing. The finance plan will rely on assumptions about special assessments. Bondsmaybeissuedaftercompletionoftheassessmentprocess.Thisallowsthefinanceplantobebased onfinalconstructioncostsand actualassessments.Thisapproachcanalso considertheamountofinitial prepayments. Delaying financing until after the assessment process requires city funds to pay for construction and a reimbursement resolution to allow the repayment of these funds with the proceeds oftax-exempt bonds. Forcontroversialprojectswithahigherriskofassessmentappeals,citieswillconducttheassessmentprocess duringtheperiodbetweenthereceiptandawardofconstructionbids.Thisapproachallowsthecitytoknow the appeal risk before committing to undertake the improvement. Improvement Bonds are not subject to the statutory debt limit. 256 UtilityRevenue Bonds MinnesotacitiesrarelyissuepureRevenueBondstofinancesanitarysewer,water,andstormsewerutility improvements.StateLawallowscitiestoadditsgeneralobligationtothepledgeofnetutilityrevenuesfor these improvements (Section 444.075).G.O. Utility Revenue Bonds may be issued to build, construct, reconstruct, repair, enlarge, improve, or in any other manner obtain sanitary sewer, water, and storm sewer facilities, and maintain and operate the facilities inside or outside its corporate limits. These bonds are sometimes called“double barreled”. Theyare secured by both utility revenues andthe city’s generalobligation. The bonds may be secured by a single utilityor by combined utility funds. Debt service on Utility Revenue Bonds is paid from the net revenues of the utilities pledged to secure the bonds. Special assessments may also be levied and pledged to the bonds. Unlike Improvement Bonds, property taxes cannot be a permanent and ongoing source of revenue to pay debt service. Property taxes should only be used on a temporary basis when the other revenues are insufficient to meet the obligations. It is important to understand the nature of the revenues that will be used to support the bonds. Howmuchoftherevenuecomesfromconnectionchargesandotherfeesassociatedwithgrowth? Are rate increases needed? If so, are there any procedural issues (such as a public hearing or ap- proval by the utilities commission)? Are there any large users that constitute a significant portion of the revenue base? Are there special agreements with large users? There are no special procedural requirements for the issuance of Utility Revenue Bonds. Capital Improvement Plan Bonds CitiesmayissueCapitalImprovementPlan(CIP)Bondstofinancetheconstructionandmaintenanceofcity hall, town hall, library, public safety facility, and public works facility (Section 475.521).These bonds may not be used to finance any other type of facility or improvement. Expenditures for eligible capital im- provements incurred before adoption of the capital improvement plan are allowed if included in a plan approved at or prior to thepublic hearing on the issuance of bonds. Theprojectsto befinancedmustbeincludedinacapital improvementsplan(CIP)thatmeetsthecriteriaof thestatute.Theplanmustcoveratleastafive-yearperiodbeginningwiththedateofitsadoption.Theplan mustsetforththeestimatedschedule,timing,anddetailsofspecificcapitalimprovementsbyyear,together withtheestimatedcost,theneedfortheimprovement,andsourcesofrevenuetopayfortheimprovement. The CIP should also include information about the factors required by the statute to be considered by the citycouncil.Thesefactorsare: Condition of the municipality’s existing infrastructure, including the projected need for repair or replacement; Likely demand for the improvement; Estimated cost of the improvement; Available public resources; Level of overlapping debt in the municipality; 257 Relative benefits and costs of alternative uses of the funds; Operating costs of the proposed improvements; and Alternatives for providing services most efficiently through shared facilities with other municipali- ties or local government units. The required CIP may be a document prepared specifically for authorizing the issuance of bonds or it may be incorporated into other capital improvement planning by the city. The maximum amount of CIP Bonds is limited. The maximum principal and interest payable in any year for all outstanding CIP Bonds cannot exceed 0.16% of the estimatedmarket value of taxable property in the city. This calculation is made using the estimated market value for the taxes payable year in which thebondsareissuedandsold. The bonds are subject to the debt limit for cities with a population of 2,500 or more. Bothapprovalof the CIP and the issuance of bonds require a public hearing. A single public hearing may be held to meet these requirements. The bonds must be authorized bya three-fifths voteof afive-membercity council. If the city council has morethan five members, two-thirds approval is needed. Issuance of the bonds is subject to reverse referendum. An election is required for the issuance of the bondsifapetitionsignedby votersequalto5%ofthevotescastinthecityinthelastmunicipalgeneral electionisfiledwiththecityclerkwithin30 daysafterthepublic hearing.Ifthecitydoesnotsubmitthe questiontothevoters,itmaynotproposetheissuanceofbondsunderthissectionforthesamepurpose andinthesameamountforaperiodof365daysfromthedateofreceiptofthepetition.Ifthequestion of issuing the bonds is submitted and not approved by the voters, the city must wait 180 days before voting on the samequestion again. Lease RevenueBonds Lease Revenue Bonds are used by cities to finance public facilities. There is no specific statutory authority for Lease Revenue Bonds. This form of financing combines two statutory powers. Economic development authorities (EDA) and housing and redevelopment authorities (HRA) have the authority to issue Revenue Bonds for their corporate purposes, including the construction of public facilities. The security for the bonds and the revenue to pay debt service comes from a lease purchase with the city. Not all public facilities are equally suited for the use of Lease Revenue Bonds. As a general rule, the more essential the facility, the better the application of this tool. This is due to the perception of investors that the city is less likelyto not appropriateand walkawayfrom anessential facility. A similar form of financing is Certificates of Participation. The investor receives a certificate secured by a share of the lease payments. The underlying security is the same as Lease Revenue Bonds. The status of the tax levy to make lease payments is another consideration in the use of Lease Revenue Bonds. Under the most recent version of levy limits, the levy for Lease Revenue Bonds can be made of a special levy and outside of levy limits. The special levy authority is to pay debt service of another political subdivision,andtheEDAisapoliticalsubdivision.Leviestomakeleasepaymentsdonotcurrentlyqualify as a special levy and, therefore, are subject to levy limits. The taxing power of the EDA may also be pledged to Lease RevenueBonds. 258 Other Debt Terms Bank Qualified Issuersthatreasonablyexpectto issue$10,000,000orlessintax-exemptbondsduringacalendaryear may designate bondsas“bank qualified”.The name refersto the fact that banksmay deducta portion of the interest cost on the carry purchased for its portfolio. This preferential tax treatment usually results in lower interest rates than bonds that are not bank qualified. The difference between bank qualified and not bank qualified rates varies over time and is typically higher for longer maturities. Both the direct debt of the issuer and any conduit debt count against the issuer’s$10,000,000 annual cap. Arbitrage Arbitrage regulations govern the ability to invest the proceeds of tax-exempt bonds. The basic rule of arbitrage is that the gross proceeds of a bond issue may not be invested at a rate “materially higher” than the yield on the bonds. The complexities of arbitrage calculation and compliance are not discussed in this guide. Instead, this guide focuses on the three basic arbitrage considerations for most Minnesota cities: construction fund, debt service fund, and arbitrage rebate. Arbitrage Rebate Issuers must pay (rebate) to the federal government income earned in excess of the bond yield unless subjectto thesmallissueror thespenddownexceptions. Thesmallissuerexceptionapplieswhenthetotalprincipalamountoftaxexempt,non-privateactivity bonds does not exceed $5,000,000 in any calendar year. Current refunding bonds up to the amount of the outstanding principal refunded do not count against this limit. There are three options for meeting the spenddown exception: 1.6-monthexception -grossproceedsandinterestearningsareallocatedto expendituresforgovern- mental or qualified purposes that are incurred within 6 months after the date of issuance. 2.18-month exception - gross proceeds and interest earnings are spent within the following schedule from date of issuance: (1) 15% within 6 months; (2) 60% within 12 months; and (3) 100% within 18 months(with a5%reasonableretainagecarryoveramountforanadditional12month period). 3. 2-year spending exception – issue is a “construction issue” (75% of issue is actually spent on construction)andgrossproceedsandinterestearningsarespentwithinthefollowingschedulefrom dateofissuance:(1)10%within6 months;(2)45%within12months;(3)75%within18months;and 4) 100% within 24 months. 259 MINNESOTA STATUTES DEBT LIMIT 475.53 LIMIT ON NET DEBT Subdivision 1.Terms. For the purposes of this chapter, the terms defined in this section shall have the meanings given them. Subd. 2. Municipality. "Municipality" means a city of any class, county, town, or school district. Subd. 3. Obligation. "Obligation" means any promise to pay a stated amount of money at a fixed future date or upon demand of the obligee, regardless of the source of funds to be used for its payment, made for the purpose of incurring debt, including the purchase of property through an installment purchase contract or any other deferred payment agreement, for which funds are not appropriated in the current year's budget. Subd. 4. Net debt. "Net debt" means the amount remaining after deducting from its gross debt the amount of current revenues which are applicable within the current fiscal year to the payment of any debt and the aggregate of the principal of the following: (1) Obligations issued for improvements which are payable wholly or partly from the proceeds of special assessments levied upon property specially benefited thereby, including those which are general obligations of the municipality issuing them, if the municipality is entitled to reimbursement in whole or in part from the proceeds of the special assessments. (2) Warrants or orders having no definite or fixed maturity. (3) Obligations payable wholly from the income from revenue producing conveniences. (4) Obligations issued to create or maintain a permanent improvement revolving fund. (5) Obligations issued for the acquisition and betterment of public waterworks systems and public lighting, heating or power systems, and of any combination thereof or for any other public convenience from which a revenue is or may be derived. (6) Debt service loans and capital loans made to a school district under the provisions of sections 126C.68 and 126C.69. (7) Amount of all money and the face value of all securities held as a debt service fund for the extinguishment of obligations other than those deductible under this subdivision. (8) Obligations to repay loans made under section 216C.37. (9) Obligations to repay loans made from money received from litigation or settlement of alleged violations of federal petroleum pricing regulations. 260 (10) Obligations issued to pay pension fund or other postemployment benefit liabilities under section 475.52, subdivision 6, or any charter authority. (11) Obligations issued to pay judgments against the municipality under section 475.52, subdivision 6, or any charter authority. (12) All other obligations which under the provisions of law authorizing their issuance are not to be included in computing the net debt of the municipality. PROPERTY TAX LEVY 275.08 AUDITOR TO FIX RATE. Subdivision 1. Generally. The rate percent of all taxes, except the state tax and taxes the rate of which may be fixed by law, shall be calculated and fixed by the county auditor according to the limitations in this chapter hereinafter prescribed; provided, that if any county, city, town, or school district shall return a greater amount than the prescribed rates will raise, the auditor shall extend only such amount of tax as the limited rate will produce. Subd. 1a. Computation of tax capacity. For taxes payable in 1989, the county auditor shall compute the gross tax capacity for each parcel according to the class rates specified in section 273.13. The gross tax capacity will be the appropriate class rate multiplied by the parcel's market value. For taxes payable in 1990 and subsequent years, the county auditor shall compute the net tax capacity for each parcel according to the class rates specified in section 273.13. The net tax capacity will be the appropriate class rate multiplied by the parcel's market value. Subd. 1b. Computation of tax rates. The amounts certified to be levied against net tax capacity under section 275.07 by an individual local government unit shall be divided by the total net tax capacity of all taxable properties within the local government unit's taxing jurisdiction. The resulting ratio, the local government's local tax rate, multiplied by each property's net tax capacity shall be each property's net tax capacity tax for that local government unit before reduction by any credits. 273.032 MARKET VALUE DEFINITION. For the purpose of determining any property tax levy limitation based on market value, any qualification to receive state aid based on market value, or any state aid amount based on market value, the terms "market value," "taxable market value," and "market valuation," whether equalized or unequalized, mean the total taxable market value of property within the local unit of government before any adjustments for tax increment, fiscal disparity, powerline credit, or wind energy values, but after the limited market adjustments under section 273.11, subdivision 1a, and after the market value exclusions of certain improvements to homestead property under section 273.11, subdivision 16. Unless otherwise provided, "market value," "taxable market value," and "market valuation" for purposes of this paragraph, refer to the taxable market value for the previous assessment year. 261 273.13 CLASSIFICATION OF PROPERTY. Subdivision 1. How classified. All real and personal property subject to a general property tax and not subject to any gross earnings or other in-lieu tax is hereby classified for purposes of taxation as provided by this section. Subd. 21a. Class rate. In this section, wherever the "class rate" of a class of property is specified without qualification as to whether it is the property's "net class rate" or its "gross class rate," the "net class rate" and "gross class rate" of that property are the same as its "class rate." Subd. 21b. Tax capacity. (a) Gross tax capacity means the product of the appropriate gross class rates in this section and market values. (b) Net tax capacity means the product of the appropriate net class rates in this section and market values. Subd. 22. Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b) and (c), real estate which is residential and used for homestead purposes is class 1a. In the case of a duplex or triplex in which one of the units is used for homestead purposes, the entire property is deemed to be used for homestead purposes. The market value of class 1a property must be determined based upon the value of the house, garage, and land. The first $500,000 of market value of class 1a property has a net class rate of one percent of its market value; and the market value of class 1a property that exceeds $500,000 has a class rate of 1.25 percent of its market value. (b) Class 1b property includes homestead real estate or homestead manufactured homes used for the purposes of a homestead by: (1) any person who is blind as defined in section 256D.35, or the blind person and the blind person's spouse; (2) any person who is permanently and totally disabled or by the disabled person and the disabled person's spouse; or (3) the surviving spouse of a permanently and totally disabled veteran homesteading a property classified under this paragraph for taxes payable in 2008. Etc. HOUSING AND REDEVELOPMENT AUTHORITY TAX LEVY 469.033 PUBLIC REDEVELOPMENT COST; PROCEEDS; FINANCING. Subd. 6. Operation area as taxing district, special tax. All of the territory included within the area of operation of any authority shall constitute a taxing district for the purpose of levying and collecting special benefit taxes as provided in this subdivision. All of the taxable property, both real and personal, within that taxing district shall be deemed to be 262 benefited by projects to the extent of the special taxes levied under this subdivision. Subject to the consent by resolution of the governing body of the city in and for which it was created, an authority may levy a tax upon all taxable property within that taxing district. The tax shall be extended, spread, and included with and as a part of the general taxes for state, county, and municipal purposes by the county auditor, to be collected and enforced therewith, together with the penalty, interest, and costs. As the tax, including any penalties, interest, and costs, is collected by the county treasurer it shall be accumulated and kept in a separate fund to be known as the "housing and redevelopment project fund." The money in the fund shall be turned over to the authority at the same time and in the same manner that the tax collections for the city are turned over to the city, and shall be expended only for the purposes of sections 469.001 to 469.047. It shall be paid out upon vouchers signed by the chair of the authority or an authorized representative. The amount of the levy shall be an amount approved by the governing body of the city, but shall not exceed 0.0185 percent of estimated market value. The authority shall each year formulate and file a budget in accordance with the budget procedure of the city in the same manner as required of executive departments of the city or, if no budgets are required to be filed, by August 1. The amount of the tax levy for the following year shall be based on that budget. 469.001 PURPOSES. The purposes of sections 469.001 to 469.047 are: (1) to provide a sufficient supply of adequate, safe, and sanitary dwellings in order to protect the health, safety, morals, and welfare of the citizens of this state; (2) to clear and redevelop blighted areas; (3) to perform those duties according to comprehensive plans; (4) to remedy the shortage of housing for low and moderate income residents, and to redevelop blighted areas, in situations in which private enterprise would not act without government participation or subsidies; and (5) in cities of the first class, to provide housing for persons of all incomes. Public participation in activities intended to meet the purposes of sections 469.001 to 469.047 and the exercise of powers confined by sections 469.001 to 469.047 are public uses and purposes for which private property may be acquired and public money spent. 263 UTILITY RATES Residential Water: 10, 12, 16, 17 0 - 1,000 gallons $7.10 1,001 - 10,000 gallons (9,000 gallons)1.74/1,000 gallons 10,001 - 33,000 gallons (23,000 gallons)2.02/1,000 gallons 33,001 gallons and over 2.21/1,000 gallons Commercial Water: 11, 11NT & 11TX, 13, 90 0 - 1,000 gallons $7.10 1,001 - 10,000 gallons (9,000 gallons)1.74/1,000 gallons 10,001 - 33,000 gallons (23,000 gallons)2.02/1,000 gallons 33,001 gallons and over 2.21/1,000 gallons Sprinklers - Res Twnhm& Commercial: 30, 31, 31NT, 32, 32NT, 91, 91NT 0 - 1,000 gallons $7.10 1,001 - 10,000 gallons (9,000 gallons)1.74/1,000 gallons 10,001 - 33,000 gallons (23,000 gallons)2.02/1,000 gallons 33,001 gallons and over 2.21/1,000 gallons Industrial Water: 14 All Water Usage 2.11/1,000 gallons Sewer Rates - Residential & Commercial: 20, 25, 26 0 - 1,000 gallons $9.00 1,001 gallons and over 5.77/1,000 gallons Sewer Special Cases: SW21, SW22 Has well $10 per person Industrial Sewer Rates: 24 All Sewer Usage 3.485/1,000 gallons BOD5 (Biochemical Oxygen Demand)0.376/lb. TSS (Total Suspended Solids)0.517/lb. Testing Actual cost + 10% Sewer Discharge Fee:2% Water On/Off Charge: ON $25 & OFF $25 Water AvailabilityCharge: $41/year Final Bill Processing Fee: $20.00 Manual Meter Reading Charge: $20.00 Residential Refuse Charges 1st Individual Residential Cart $7.00 2nd Individual Residential Cart $13.00 Rates for 2019 Utility Billing Increasing Block Rates 264 CAPITALIZATION THRESHOLDS Class of Asset Details Useful Life Threshold Land/land improvements N/A Land - $1, Improvements - $50,000 Building/building improvements:$20,000 Floor cover Construction Interior and Roof Cover Heating Ventilation AC and Lighting Electrical Elevators, Fire, Piping and Plumbing Site Preparation Walls Exterior Floor structure, foundation, roof structure, steel frame Primary Infrastructure and Utility $75,000 Paving Systems Water, Sanitary and Storm Sewer Secondary Infrastructure $25,000 Sidewalk, Boardwalk, Pathways Street lights, Signage Equipment $10,000 Vehicles Machinery Equipment Software and non-tangible $10,000 Purchased and Internally developed Construction Work In Progress Upon completion, per above class Equipment expenditures for items between $500 and $10,000 are recorded as small tools and equipment, which is a supply account. Building and improvement expenditures below the thresholds are recorded as repairs and maintenance. Current revenues finance expenditures for supplies and repairs and maintenance. 265 TAX CAPACITY, TAX LEVY, & TAX RATE HISTORY Tax Capacity City Tax HRA Tax Total Tax Tax Capacity Year Value Levy Levy Levy Rate 1998 14,413,597$3,883,013$-$3,883,013$27.001 1999 13,123,681$4,617,725$-$4,617,725$35.186 2000 13,066,057$4,739,325$-$4,739,325$36.272 2001 13,641,431$5,067,342$-$5,067,342$37.146 2002 9,606,212$6,498,079$-$6,498,079$67.645 2003 10,344,950$6,782,018$-$6,782,018$65.218 2004 11,141,052$6,957,915$-$6,957,915$62.421 2005 11,840,000$6,957,915$-$6,957,915$58.651 2006 13,224,144$6,750,000$-$6,750,000$51.028 2007 15,257,996$6,500,000$-$6,500,000$42.458 2008 16,190,597$7,600,000$-$7,600,000$46.942 2009 16,783,843$7,750,000$-$7,750,000$46.191 2010 16,691,266$7,648,272$-$7,648,272$45.822 2011 16,429,431$7,677,309$-$7,677,309$46.729 2012 15,771,688$7,850,000$-$7,850,000$49.773 2013 18,692,762$7,900,000$-$7,900,000$42.262 2014 18,289,491$8,150,000$-$8,150,000$44.561 2015 23,882,689$8,535,000$-$8,535,000$35.737 2016 25,891,898$8,925,000$280,000$9,205,000$35.552 2017 27,583,160$9,150,000$280,000$9,430,000$34.188 2018 29,528,145$9,547,000$323,000$9,870,000$33.426 2019 29,065,103$9,962,000$348,000$10,310,000$35.472 Tax Capacity, Tax Levy, and Tax Rate History 266 USEFUL TERMS (GLOSSARY) ACCOUNT:An organizational or budgetary breakdown found within city funds. A term used to identify an individual asset, liability, expenditure (and other uses), revenue (and other sources), or fund balance. ACCOUNTS PAYABLE:Amounts owed to others for goods or services received. ACCOUNTS RECEIVABLE:Amounts due from others for goods furnished or services rendered. ACCOUNTING SYSTEM:The total set of records and procedures which are used to record, classify, and report information on financial status and operations of an entity. ACCRUAL BASIS OF ACCOUNTING:The method of accounting under which revenues are recorded when they are earned and expenditures are recorded when goods and services are received. ACTIVITY:A specific and distinguishable line of work performed by one or more organizational components of a governmental unit for the purpose of accomplishing a function for which the governmental unit is responsible. For example, "Ice & Snow Removal” is an activity performed as part of the "Public Works" function. ADOPTION:Formal action taken by the City Council to authorize or approve the budget. AD VALOREM:In proportion to value. The basis for levying taxes on property. AGENCY FUND:A fiduciary fund used to account for situations where the government’s role is purely custodial. APPROPRIATION:An authorization granted by a legislative body to make expenditures and to incur obligations for specific purposes. An appropriation is limited in amount to the time it may be expended. ASSESSED VALUATION:Value placed upon real estate or other property as a basis for levying taxes. ASSESSMENTS:Charges made upon parties for actual services or benefits received. ASSETS:Property owned by a governmental unit, which has a monetary value. ASSIGNED FUND BALANCE:Resources the government intends to use for specific purposes, but are neither restricted nor committed. AUDIT:The examination of documents, records, reports, systems of internal control, accounting and financial procedures, and other evidence for one or more of the following purposes: a) To attest to whether the statements prepared from the accounts present fairly the financial position and the results of financial operations of the constituent funds and balanced account groups of the 267 city in accordance with generally accepted accounting principles applicable to city and on a basis consistent with that of the preceding year; b) To determine the propriety, legality, and mathematical accuracy of a governmental unit's financial transactions; c) To ascertain whether all financial transactions have been properly recorded; d) To evaluate the stewardship of public officials who handle and are responsible for the financial resources of a governmental unit. BALANCED BUDGET:A budget in which estimated revenues and other sources equals estimated expenditures and other uses. A balanced budget does not use reserves or retained earnings to fund expenditures. BOND:A written promise, generally under seal, to pay a specified sum of money, called the face value or principal amount, at a fixed time in the future, called the date of maturity, and carrying interest at a fixed rate, usually payable periodically. BONDED INDEBTEDNESS:Outstanding debt by issues of bonds, which are repaid by ad valorem taxes or other revenue. BUDGET:A plan of financial operation embodying an estimate of proposed expenditures for a given period and the proposed means of financing them. BUDGET DOCUMENT:The official written statement prepared by the city’s Finance Department and adopted by the City Council. BUDGET MESSAGE:A general discussion of the proposed budget presented in writing as a part of the budget document. The budget message explains principal budget issues against the background of financial experience in recent years and presents recommendations made by city staff. BUDGET CALENDAR:The schedule of key dates, which a government follows in the preparation and adoption of the budget. BUDGETARY CONTROL:The control or management of a governmental unit or enterprise in accordance with an approved budget for the purpose of keeping expenditures within the limitation of available appropriations and available revenues. CAPITAL ASSETS:Assets with historical acquisition costs (value if donated) above the capitalization threshold, typically $10,000 or more, and a useful life of more than one reporting period. Capital assetsareusedinoperationsandhaveinitialusefullivesextendingbeyondasinglereportingperiod.These assetsmustalsomeetcapitalizationthresholds,whichvarybyassetclassification.Land,improvementsto land,vehicles,machinery,equipment,infrastructure,andothertangibleandintangibleassetsusedin operationsareexamplesofcapitalassetclassifications. CAPITAL EXPENDITURES:Acapitalexpenditure occurswhenacapitalassetispurchased.Expenditures thatdonotbenefitmorethanonereportingperiodormeetthecapitalizationthresholdsareclassifiedas currentexpenditures. 268 CAPITAL IMPROVEMENT BUDGET:A plan of proposed capital expenditures and a means of financing them. The capital improvement budget is enacted as part of the complete annual budget. CAPITAL PROGRAM:A plan for capital expenditures to be incurred each year over a fixed period of years to meet capital needs arising from the long-term work program or otherwise. It sets forth each project or other contemplated expenditure in which the government is to have a part and specifies the full resources estimated to be available to finance the projected expenditures. CAPITAL PROJECTS FUNDS:A governmental fund type used to account for financial resources to be expended for the acquisition or construction of major capital assets. CAPITALIZATION THRESHOLD:The level at which an item is considered either a current expenditure or a capital expenditure. The threshold for equipment is $10,000. CASH BASIS:The method of accounting under which revenues are recorded when received in cash and expenditures are recorded when paid. CHARGES FOR SERVICES:Charges for current services rendered to customers. CHART OF ACCOUNTS:The classification system used by a government entity to organize the accounting for various funds and departments. COMMITTED FUND BALANCE:Resources used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority (i.e. City Council). CONSUMER PRICE INDEX (CPI):A statistical description of price levels provided by the U.S. Department of Labor. The index is used as a measure of the increase in the cost of living (i.e., economic inflation). CONTINGENCY:Budget for expenditures which cannot be placed in departmental budgets, primarily due to uncertainty about the level or timing of expenditures when the budget is adopted. The contingency also serves as a hedge against shortfalls in revenues or unexpected expenditures. CURRENT:A term applied to budgeting and accounting, designating the operations of the present fiscal period as opposed to past or future periods. DEBT:An obligation resulting from borrowing money or purchasing goods and services. DEBT LIMIT:The maximum amount of gross or net debt, which is legally permitted. DEBT MARGIN:The amount of available debt, which may be issued by a governmental unit before reaching its debt limit. DEBT SERVICE FUND:A governmental fund type used to account for the accumulation of resources for the payment of general long-term debt principal and interest. Proprietary fund type 269 debt is accounted for in the enterprise fund or internal service fund receiving the debt issue proceeds. DEPARTMENT:Basic organizational unit of government, responsible for carrying out related functions. Each department serves a specific function as a distinct organizational unit of government within the given fund. Its primary purpose is to facilitate organizational and budgetary accountability. DEPRECIATION:Expiration in the service life of capital assets attributable to wear and tear, deterioration, action of the physical elements, inadequacy, or obsolescence. DEPUTY REGISTRAR (DMV):City service of processing state-issued licenses for motor vehicles and equipment, such as license plates and tabs for cars, trucks, trailers, and recreational vehicles. DISTINGUISHED BUDGET PRESENTATION AWARDS PROGRAM:A voluntary awards program administered by the Government Finance Officers Association to encourage governments to prepare effective budget documents. ENTERPRISE FUND:A proprietary fund type used to report an activity for which a fee is charged to external users for goods or services. In theory, these funds operate in a manner similar to private business enterprises, where the intent of the governing body is to recover the cost of delivering services through user fees or charges (Water, Sewage, Liquor, Deputy Registrar, and Fiber Optic funds). ESTIMATED MARKET VALUE:Represents the selling price of a property if it were on the market. Estimated market value is converted to tax capacity before property taxes are levied. EXPENDITURE:For accounts kept on the accrual or modified accrual basis of accounting, the cost of goods received or services rendered whether cash payment have been made or not. Where accounts are kept on a cash basis, expenditures are recognized only when the cash payments for the above purposes are made. FIBERNET MONTICELLO (FNM):The name of the city-owned fiber optic network, which provides internet, phone, and cable television to residents and businesses of Monticello. FIDUCIARY FUND:A fund classification used to report assets held in a trustee or agency capacity for others and therefore cannot be used in the government’s own programs. FINES:Revenues from penalties imposed for violation of laws or regulations. FISCAL POLICY:A government’s policies with respect to revenues, spending, and debt management as these relate to government services, programs, and capital investment. Fiscal Policy provides an agreed-upon set of principles for the planning and programming of budgets and their funding. FISCAL YEAR:The budget and accounting year that begins on the first day of January and ends on the last day of December of each year. 270 FULL TIME EQUIVALENT (FTE):The number of employee hours (2,080) needed to be equal to one full time employee. Several part time employees may be combined to make one FTE. FUNCTION:A group of related activities aimed at accomplishing a major service or regulatory program for which the government unit is responsible. FUND:A fiscally independent accounting entity with a self-balancing set of accounts recording cash and/or other resources together with all related liabilities, obligations, and reserves, which are segregated for the purpose of carrying on specific activities or attaining certain objectives. FUND BALANCE:Governmental fund assets minus liabilities. GENERAL FUND:Accounts for the general operation of the city and all financial resources except those to be accounted for in another fund. GENERAL GOVERNMENT:A set of accounts, to which the expenditures for operating the city are charged. GENERAL OBLIGATION BONDS:Bonds for which the government pledges its full faith and credit to the repayment of the bonds principal, including interest. GOAL:A statement of broad direction, purpose, or intent based on the need of a community. A goal is general and timeless; that is, it is not concerned with a specific achievement in a given period. GOVERNMENTAL ACCOUNTING:The composite of analyzing, recording, summarizing, reporting, and interpreting the financial transactions of governmental units and agencies. GOVERNMENTAL FUND TYPES:Funds generally used for tax-supported activities. Under current GAAP, there are five governmental fund types in this: general, special revenue, debt service, capital projects, and permanent funds. The city has no permanent funds. GRANT:A contribution of assets by one governmental unit or other organization to another. Grants are usually made for specified purposes. HOMESTEAD AND AGRICULTURAL CREDIT (HACA):A form of state-paid property tax relief for farm property and owner-occupied homes. HOUSING AND REDEVELOPMENT ACT – SPECIAL BENEFIT LEVY:Property tax levied against the city’s taxable market value. The HRA levy limit is .0185% of the taxable market value and must be used solely for redevelopment purposes. IMPROVEMENT BONDS:Bonds payable from the proceeds of special assessments from properties benefiting from an improvement. 271 IMPROVEMENTS:Buildings, structures, and other attachments or annexations to land which are intended to remain so attached or annexed, such as sidewalks, trees, drains, and sewers. INFRASTRUCTURE:The basic physical and organizational structures and facilities (e.g., buildings, roads, bridges) needed for the operation of the city. Infrastructure thus consists of improvements with significant cost to develop or install that return an important value over time to the city. INTERFUND TRANSFERS:See operating transfers. INTERGOVERNMENTAL REVENUES:Revenues from other governments in the form of grants, entitlement, or shared revenues. INTERNAL SERVICE FUNDS:A proprietary fund type used to report activity that provides goods or services to other funds, departments, or agencies of the primary government and its component units, or to other governments, on a cost-reimbursement basis. INVESTMENTS:Securities held for the production of income in the form of interest. LEVY:(Verb) To impose taxes, special assessments, or service charges for the support of governmental activities. (Noun) Taxes, special assessments, or service charges imposed by a governmental unit. LEVY LIMIT:The city’s maximum property tax levy without special authorization as defined by Minnesota State Statue. LICENSE REVENUES:Revenues received from the sale of business and non-business licenses. LINE ITEM:A specific item or group of similar items defined by detail in a unique account in the financial records. LOCAL GOVERNMENT AID (LGA):Intergovernmental revenue from the state to municipalities to help fund general expenditures. LONG-TERM DEBT:Debt with a maturity of more than one year after the date of issuance. MAINTENANCE:The upkeep (repairs and maintenance) of physical properties in condition for use or occupancy. MARKET VALUE:The value a property is worth. MARKET VALUE HOMESTEAD CREDIT (MVHC):State paid property tax reduction on owner occupied homes based on the property’s market value. MARKET VALUE EXCLUSION (MVE):Provision in the state property tax system which exempts or removes a portion of a property’s market value from property taxes. 272 MISCELLANEOUS:Revenues or expenditures not classified in any other revenue or expenditure category. MODIFIED ACCRUAL BASIS:The basis of accounting under which expenditures other than accrued interest on general long-term debt are recorded at the time liabilities are incurred and revenues are recorded when received in cash except for material and/or available revenues, which should be accrued to reflect properly the tax levied and revenue earned. NONSPENDABLE FUND BALANCE:Amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Nonspendable fund balances typically include inventory, prepaid items, and land held for resale. OBJECT OF EXPENDITURE:Expenditure classifications based upon the types or categories of goods and services purchased. OBJECTIVE:Desired output-oriented accomplishments, which can be measured and achieved within a given time frame. OPERATING BUDGET:A financial plan that estimates revenues and expenditures for a specified period. OPERATING EXPENSE:The cost for personnel, materials, and equipment required for a department to function. OPERATING REVENUE:Monies received from ongoing operations. Operating revenues are used to pay for day-to-day services. OPERATING TRANSFERS:Amounts transferred from one fund to another, shown as an expenditure in the originating fund and a revenue in the receiving fund. ORDINANCE:A formal legislative enactment by the City Council. PAY-AS-YOU-GO BASIS:A term used to describe a financial policy by which capital outlays are financed from current revenues rather than through borrowing. PERFORMANCE MEASURE:See Service Levels. PERSONNEL SERVICES:Expenditures for salaries, wages, and fringe benefits of employees. PROGRAM:A group of related activities performed by one or more organizational units for the purpose of accomplishing a function for which the governmental unit is responsible. PROJECT:A plan of work, job assignment, or task. PROPRIETARY FUNDS:Funds focusing on the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. There are two types of proprietary 273 funds: enterprise funds and internal service funds. For this report, these funds have the same budgetary basis as governmental funds. PUBLIC SAFETY:Expenditures related to the protection of persons and property. PUBLIC WORKS:Expenditures for the maintenance of city property and infrastructure. PURPOSE:A broad statement of the goals, in terms of meeting public service needs, that a department is organized to accomplish. REFUNDING BONDS:Bonds issued to redeem outstanding (unpaid) debt. REIMBURSEMENT:Cash or other assets received as a repayment of the cost of work or services performed or of other expenditures made for or on behalf of another governmental unit or department or for an individual, firm, or corporation. RESERVE:An account which records a portion of the fund balance which must be segregated for some future use and which is, therefore, not available for further appropriation or expenditure. RESOLUTION:A special or temporary order of a legislative body; an order of a legislative body requiring less legal formality than an ordinance or statute. RESOURCES:The actual assets of a governmental unit, such as cash, plus contingent assets such as estimated revenues applying to the current fiscal year not accrued or collected, and bonds authorized and not issued. RESTRICTED FUND BALANCE:Fund balance should be reported as restricted when constraints placed on the use of resources are either: a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or b) imposed by law through constitutional provisions or enabling legislation. REVENUE:The term designates an increase to a fund's assets which: 1) does not increase a liability; 2) does not represent a repayment of an expenditure already made; 3) does not represent a cancellation of certain liabilities; and 4) does not represent an increase in contributed capital. REVENUE BOND:A bond that is backed by a particular revenue source such as water user fees, typically accounted for in proprietary fund types. SERVICE LEVELS:Data to determine how effective/efficient a program is in achieving its objective. SPECIAL ASSESSMENT:A compulsory levy made by a local government against certain properties to defray part or all of the cost of a specific improvement or service which is presumed to be of general benefit to the public and of special benefit to such properties. SPECIAL REVENUE FUND:A governmental fund type used to account for revenue derived from specific revenue sources that are legally restricted or committed for specific purposes. 274 TAX CAPACITY:The valuation of property based on market value and statutory class rates. The property tax for each parcel is based on its tax capacity. The total tax capacity of all individual parcels is the basis for determining the tax capacity rate. TAX CAPACITY RATE:Tax rate applied to tax capacity to generate property tax revenue. The rate is obtained by dividing the property tax levy by the available tax capacity. TAX INCREMENT FINANCING (TIF):Financing tool originally intended to combat severe blight in areas, which would not be redeveloped without government subsidies derived from locally generated property tax revenues. TAX LEVY:The total amount to be raised by general property taxes for the purpose stated in the resolution certified to the county auditor. See levy also. TAXABLE MARKET VALUE:The market value of a property less the market value exclusion. This is the value used to calculate property taxes on a property. TAXES:Compulsory charges levied by a governmental unit for the purpose of financing services performed for the common benefit. TOTAL TAX CAPACITY:The amount computed by first totaling the tax capacities of all parcels of property within a city. Adjustments for fiscal disparities, tax increment, and a portion of the powerline value are made to this total since not all tax capacity is available for general tax purposes. TRUST FUND:A fund consisting of resources received and held by the governmental unit as trustee, which is to be expended or invested in accordance with the conditions of the trust. UNASSIGNED FUND BALANCE:This is the residual classification for the General Fund. This is fund balance that has not been reported in any other classification. The General Fund is the only fund that can report a positive unassigned fund balance. Other governmental funds would report deficit fund balances as unassigned. UNBALANCED BUDGET:A budget in which undesignated fund balance or reserves are used or increased, in order to balance estimated revenues to estimated expenditures or expenses. UNRESTRICTED FUND BALANCE:The portion of a fund’s balance that is not restricted for a specific purpose and is available for general appropriation. USER FEE:The service charge for delivering a specific service to one benefiting party. WORKLOAD DATA:A unit of work to be done. 275 ACRONYMS BMP Best Management Practices BCOL Bertram Chain of Lakes CAFR Comprehensive Annual Financial Report CD Certificate of Deposit CIP Capital Improvement Plan CP Commercial Paper CPI Consumer Price Index DMV Department of Motor Vehicle or Deputy Registrar EDA Economic Development Authority MVE Market Value Exclusion EMV Estimated Market Value FHLB Federal Home Loan Bank FNM FiberNet Monticello FNMA Federal National Mortgage Association FTE Full Time Equivalent GAAP Generally Accepted Accounting Principles GASB Governmental Accounting Standards Board GFOA Government Finance Officers Association GO General Obligation HACA Homestead and Agricultural Credit Aid HRA Housing and Redevelopment Authority HVAC Heating, ventilation, and air conditioning LGA Local Government Aid MCC Monticello Community Center MPFA Minnesota Public Facilities Authority MVHC Market Value Homestead Credit SAC Sewer Availability Charge SY Square Yard TIF Tax Increment Financing WAC Water Availability Charge 276 Back Cover