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2023 Monticello Budget 2023 Adopted Budget City of Monticello, Minnesota 505 Walnut Street • 763-295-2711 • ci.monticello.mn.us Table of Contents Introduction and Overview Directory of Public Officials .......................................................................................................... 1 Distinguished Budget Presentation Award ................................................................................... 2 Strategic Goals & Strategies ......................................................................................................... 3 Priorities & Issues ....................................................................................................................... 11 Budget Overview ........................................................................................................................ 15 Organization Chart ..................................................................................................................... 27 Financial Structure, Policy & Process Fund Descriptions & Structure ................................................................................................... 28 Departments & Funds Relationship ........................................................................................... 31 Basis of Budgeting ...................................................................................................................... 32 Financial Policies ........................................................................................................................ 33 Budget Development & Administration ............................................................................... 33 Revenue Collection .............................................................................................................. 35 Expenditures and Payments ................................................................................................. 35 Debt Administration ............................................................................................................ 37 Reserves and Fund Balances ................................................................................................ 37 Financial Reporting & Accounting ........................................................................................ 38 Cash Management & Investment......................................................................................... 40 Balanced Budgets ................................................................................................................. 47 The Budget Process .................................................................................................................... 49 Financial Summaries Consolidated Financial Schedules All Funds Summary By Fund Type ........................................................................................ 53 Revenues By Category and Fund Type ................................................................................ 55 Appropriations By Category and Fund Type ......................................................................... 57 Interfund Transfers .............................................................................................................. 59 Three Year Consolidated and Fund Financial Schedules All Funds Summary By Year .................................................................................................. 60 Fund Balance/Working Capital ................................................................................................... 62 Changes in Fund Balance/Working Capital ........................................................................... 63 Fund Balance/Working Capital History ................................................................................ 64 Revenue Sources By Fund Revenue Trends & Analysis .................................................................................................. 65 Tax Levy History ................................................................................................................... 73 Tax Capacity History ............................................................................................................. 74 Largest Property Taxpayer ................................................................................................... 75 Revenues Sources By Fund .................................................................................................. 76 Long Range Financial Plans ........................................................................................................ 78 Long-Term Fiscal Objectives ................................................................................................. 83 Capital & Debt Capital Expenditures & Capital Improvement Plan .................................................................... 86 Funding Source Summary .................................................................................................... 93 Projects By Funding Sources And Department ..................................................................... 94 Debt ......................................................................................................................................... 100 Departmental Information Staffing Summary ..................................................................................................................... 103 General Fund – Summary ......................................................................................................... 105 General Government Mayor and City Council (101-41110) ............................................................................... 108 City Administration (101-41310) ..................................................................................... 109 City Clerk (101-41410) .................................................................................................... 111 Finance (101-41520) ....................................................................................................... 112 Assessing (101-41550) .................................................................................................... 114 Legal (101-41610) ........................................................................................................... 115 Human Resources (101-41800) ....................................................................................... 116 Planning, Zoning & Community Development (101-41910) ............................................ 118 City Hall (101-41940) ...................................................................................................... 121 Public Safety Law Enforcement (101-42100) ........................................................................................ 122 Fire & Rescue (101-42200) .............................................................................................. 124 Fire Relief (101-42202).................................................................................................... 126 Building Inspections (101-42400) .................................................................................... 127 Emergency Management (101-42500) ............................................................................ 129 Animal Control (101-42700) ............................................................................................ 130 National Guard (101-42800) ........................................................................................... 131 Public Works Public Works Administration (101-43110) ...................................................................... 132 Engineering (101-43111) ................................................................................................. 133 Engineering & Inspections (101-43115) .......................................................................... 134 Streets & Alleys (101-43120) .......................................................................................... 136 Ice & Snow Removal (101-43125) ................................................................................... 137 Shop & Garage (101-43127) ............................................................................................ 138 Street Lighting (101-43160) ............................................................................................ 139 Refuse Collection (101-43230) ........................................................................................ 140 Recreation and Culture Senior Center (101-45175) .............................................................................................. 141 Park Operations (101-45201) .......................................................................................... 142 Park Ballfields (101-45203) ............................................................................................. 143 Public Arts (101-45204) .................................................................................................. 144 Library (101-45501) ........................................................................................................ 145 Shade Tree (101-46102) .................................................................................................. 146 Special Revenue Funds – Summary .......................................................................................... 147 Economic Development Authority Fund (213-46301) ........................................................ 148 Cemetery Fund (215-49010) .............................................................................................. 150 Small Cities Development Program (SCDP) Fund (221-46500) ........................................... 152 Community Center Fund (226-4512x) ................................................................................ 153 Debt Service Funds – Summary ................................................................................................ 155 2015B G.O. Bond Sub-Fund (319-47000) ........................................................................... 156 2016A G.O. Bond Sub-Fund (320-47000) ........................................................................... 158 2017A G.O. Bond Sub-Fund (321-47000) ........................................................................... 160 2018A G.O. Bond Sub-Fund (322-47000) ........................................................................... 162 2019A G.O. Bond Sub-Fund (323-47000) ........................................................................... 164 2020A G.O. Bond Sub-Fund (324-47000) ........................................................................... 166 Closed Debt Service Funds ................................................................................................. 168 Capital Project Funds – Summary ............................................................................................. 169 Capital Project Fund (400-4xxxx) ........................................................................................ 170 Street Lighting Improvement Fund (403-43162) ................................................................ 172 Park & Pathway Improvement Fund (404-45202) .............................................................. 173 Park Dedication Fund (405-45202) ..................................................................................... 174 Closed Capital Projects Funds ............................................................................................ 175 Enterprise Funds – Summary ................................................................................................... 177 Water Fund (601-4944x) .................................................................................................... 178 Sewer Fund (602-49480 & 602-4949x) ............................................................................... 180 Stormwater Fund (652-4948x) ........................................................................................... 184 Liquor Fund (609-4975x) .................................................................................................... 186 Deputy Registrar Fund (653-41990) ................................................................................... 188 Fiber Optics Fund (656-4987x) ........................................................................................... 190 Internal Service Funds – Summary ........................................................................................... 193 Facilities Maintenance Fund (701-00000) .......................................................................... 194 IT Services Fund (702-00000) ............................................................................................. 196 Central Equipment Fund (703-00000) ................................................................................ 198 Benefit Accrual Fund (704-00000) ..................................................................................... 200 Community, Demographic, and Statistical Information ................................................................. 203 Appendix Property Tax Basics .................................................................................................................. 206 Truth-in-Taxation (TNT) ............................................................................................................ 208 Debt Guide ............................................................................................................................... 209 Minnesota Statutes .................................................................................................................. 218 Utility Rates .............................................................................................................................. 222 Capitalization Thresholds ......................................................................................................... 223 Tax Capacity, Tax Levy, & Tax Rate History .............................................................................. 224 Useful Terms (Glossary) ........................................................................................................... 225 Acronyms ................................................................................................................................. 233 DIRECTORY OF PUBLIC OFFICIALS MAYOR & CITY COUNCIL Position Name Term Expires Contact Information Mayor Lloyd Hilgart 12/31/2024 Lloyd.Hilgart@ci.monticello.mn.us Council Bill Fair 12/31/2022 Bill.Fair@ci.monticello.mn.us Council Charlotte Gabler 12/31/2026 Charlotte.Gabler@ci.monticello.mn.us Council Lee Martie 12/31/2024 Lee.Martie@ci.monticello.mn.us Council Sam Murdoff 12/31/2024 Sam.Murdoff@ci.monticello.mn.us CITY STAFF City Administrator ............................................................ Rachel Leonard Public Works Director/City Engineer ................................... Matt Leonard Finance Director ......................................................... Sarah Rathlisberger Community Development Director .............................. Angela Schumann Parks, Arts & Recreation Director .......................................... Tom Pawelk City Clerk ...................................................................... Jennifer Schreiber Human Resources Manager ................................................... Tracy Ergen Communications & Marketing Specialist .............................. Haley Foster Street Superintendent ........................................................ Mike Haaland Parks Superintendent .................................................... Josh Berthiaume Utilities Superintendent ............................................................ Mat Stang Finance Manager ..................................................................... Liz Lindrud Deputy Registrar Manager .............................................. Carolyn Granger Liquor Store Manager ..................................................... Randall Johnsen Economic Development Manager ............................................ Jim Thares Chief Building Official ................................................. Ron Hackenmueller Fire Chief .............................................................................. Mike Mossey EXTERNAL CONSULTANTS Wright County Sheriff ........................................................ Sean Deringer NAC Planning Consultant .................................................. Steve Grittman Northland Securities Financial Advisor ............................... Tammy Omdal Veolia Environmental Services ............................................ Chris Gardner Fibernet Management Services ............................ Arvig Communications 1 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, 2022. The city has submitted its budget for consideration since 2009 and has received this award each year. 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 Distinguished Budget Presentation Award PRESENTED TO City of Monticello Minnesota For the Fiscal Year Beginning January 1, 2022 Executive Director 2 STRATEGIC GOALS & STRATEGIES The City of Monticello continues to use strategic planning as an important mechanism for balancing the needs and wants of the community with sound fiscal management. Strategic planning is also the first step in the annual budget process. The City Council, with two new members, met in February of 2021 to discuss projects in process, projects on the horizon, and the ongoing effects of the COVID-19 pandemic. With two new Councilmembers, this exercise will be completed again in early 2023 to reinforce or redirect the city’s strategic direction. Leadership staff developed the city’s Mission Statement, Strategic Goals, and Core Values, which were affirmed by the Council at the worksession. •The mission of the City of Monticello is to responsibly use our resources to provide quality services and programs that foster a dynamic community rooted in history and preparing for a vibrant future. Mission Statement 1.Create & Preserve Sustainable Livability 2.Build a Connected Community 3.Strengthen our Image as a Destination 4.Support a Vibrant Economy 5.Be a Regional Leader 6.Invest in People Strategic Goals •Leadership •Stewardship •Responsiveness •Integrity •Community Core Values 3 Furthermore, this worksession brought about the idea of the “Big 6”: • Improvements to the city’s downtown with a focus on Block 52 • A new operations, maintenance, and storage facility for the Public Works department • The Pointes at Cedar (formerly known as Chelsea Commons) 100-acre development & recreation area • Bertram Chain of Lakes Regional Park, a joint venture with Wright County of which the city is responsible for the athletic park area • A Water Treatment Facility to treat the city’s water supply • Fallon Avenue Improvements, including trunk lines that are necessary for future development to the South and for increased pedestrian safety Through the 2023 budget process, Council and staff considered the impacts these projects would have on the next 10 years. While these are long-term projects, the city’s 2023 budget supports continuation of four of these projects, while others are on hold until triggered by development or external funding. A desire for sustainable growth, as highlighted in the city’s Monti:2040 Comprehensive Plan, continues to drive decision making along with a funding approach that will avoid large impacts to the property tax levy each year. The city has completed numerous plans to help guide future growth and spending priorities. A chance to develop additional planning for the future decommissioning of the Xcel Energy Nuclear Generating Plant, which makes up about half of the city’s tax base, became a reality in 2021 when the city was awarded a grant from the MN Department of Employment and Economic Development as part of its Community Energy Transitions (CET) grant program. In 2021 and 2022, the city completed: • The Pointes at Cedar stormwater, grading, and water management plan • The Pointes at Cedar traffic analysis Downtown Revitalization New Public Works Facility The Pointes at Cedar Bertram Chain of Lakes Regional Park Development Fallon Avenue Improvements Water Treatment Facility 4 • Comprehensive water and sewer studies • A formal long-term financial plan and model • A strategic transition plan summary • Predesign for Otter Creek Industrial Park grading, drainage, wetland, and stormwater • Survey for platting the Otter Creek Industrial Park • Shovel-Ready Certification of vacant lots in Otter Creek Industrial Park • Cost-Benefit Analysis of the areas Northwest and East of city limits for future annexation and development • Related marketing plans The city previously adopted plans that were incorporated with the CET grant studies, including: Plans for service provision, facility expansion & maintenance: 1. Monti:2040 Comprehensive Plan - Adopted 2020. The Comprehensive Plan is a tool for guiding the growth, redevelopment, and improvement of Monticello. The Comprehensive Plan outlines the vision for the community. Development of the Monti:2040 Vision and Comprehensive Plan, began with the visioning phase in 2019 and concluded in 2020 with the plan formation based on the visioning. The city’s Transportation Plan, now Chapter 4 of the Monti:2040 Comprehensive Plan, is a guide that outlines the goals, policies, and transportation strategies to improve mobility and connectivity in Monticello by continuing to build a safe and efficient multimodal transportation system that strengthens the economy and enhances quality of life. Ongoing major transportation efforts include: • Continued evaluation of collector street network improvements for safety, intersection, and congestion improvements. • Progress on mobility and connectivity improvements outlined within the Downtown Small Area Plan, including the connection of Walnut to River Street. • Work with regional and state partners on alternatives and projects related to Highway 25 congestion relief and I-94 capacity expansion. • Extension of School Boulevard west from current terminus. • Installation of new roundabout locations throughout the city. • Street improvements from rural to urban standards for certain streets including Fenning Ave, Fallon Ave. and Edmonson Ave, among others. 2. Parks & Pathways Plan – Adopted 2011. The Monticello Parks and Pathways Plan identifies the city’s objectives for Parks and Pathways planning and development and for building on the existing parks infrastructure. The city has 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 2040 Plan provides updates but does not duplicate the detailed analysis in this plan. A Parks Master Plan is recommended by the Monticello2040 Plan to update the detailed portion of this plan, which is included in the 2023 with planning beginning in late 2022. 5 3. Bertram Chain of Lakes Recreation Plan – Adopted 2016. The Monti:2040 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. 4. Downtown Small Area Plan – Adopted 2017. 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 several implementation strategies to realize plan goals. The Downtown Small Area Plan is incorporated in the Monti:2040 Vision & Comprehensive Plan. 5. Economic Development Strategic Plan - Updated 2018. The EDA adopts a strategic work plan annually, which directs EDA staff focus and resources over the following three years. 6. Natural Resource Inventory & Assessment - Adopted 2008. The purpose of the Natural Resource Inventory and Assessment (NRI/A) 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. 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 related to grading, drainage, erosion control, and storm water management to meet current MPCA requirements per the city’s new MS4 permit issued on October 29, 2021. 6 8. 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 are 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 because of the new NOAAA Atlas 14 standard released by the National Weather Service Hydrometeorological Design Studies for rainfall frequency estimates. 9. 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 referenced in the city’s zoning and subdivision ordinances related to grading, drainage, erosion control, and storm water management. The Design Manual is updated as needed for new design regulations and requirements. 10. General Specifications and Standard Detail Plates for Street and Utility Construction - Updated 2017. These specifications represent the city’s requirements for construction of public streets and utility systems. 11. Comprehensive Water System Plan – Updated 2022. A water distribution system model was created to evaluate the existing water system. 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. In 2022, the City conducted an analysis of its water system to determine improvements necessary for future expansion of the City. These improvements include necessary water main improvements, trunk lines, additional storage, and other water distribution assets. 12. Comprehensive Sanitary Sewer System Plan – Updated 2022. The sanitary sewer comprehensive plan identifies the existing sanitary sewer system and 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. The Sanitary Sewer Plan was updated in 2022 as a concentrated effort to provide the City of Monticello with working knowledge of the flow characteristics of the sanitary sewer system, identify issues, concerns or deficiencies with the collection system, and recommend changes or improvements that would address issues and benefit system operation for the long term. 7 13. Interchange Planning Study – Ongoing. 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 Monti:2040 Comprehensive Plan recognizes that Northwest Monticello, which includes the CSAH39 to Orchard Road corridor, is a primary focus for future development and further cites the Future Interchange as a critical component of understanding growth potential and land use in the Northwest Area. However, CET grant funds were used to study the feasibility of development to the East side of city limits as well. 14. 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 plan was required by Minnesota Rules 4720.5100 to 5720.5590. Part 1 was completed in 2015 and Part 2 was completed in 2016. The plan is anticipated to be updated by 2026 as determined by the Minnesota Department of Health. 15. Central Mississippi River Regional Planning Partnership (CMRP) – Ongoing. A series of meetings have taken place with representatives invited from area jurisdictions to discuss regional planning and economic development. A joint power agreement was adopted by the city in December 2015, with a shift in focus from strictly transportation to broader regional planning taking place a few years later. A 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. Future wastewater improvements identified in the Capital Improvement Plan include SCADA system upgrades, Phase 2 facility and site improvements, solids handling improvements and headworks improvements. 2. Overall Street Reconstruction Program – Adopted 2004, ongoing as part of capital improvement plan. The 2023-2027 Capital Improvement Plan includes projects related to the program, with various projects planned throughout the city, which typically occur in even-numbered years. 3. New Public Works Facility The city completed a study of the public works facility in 2007 which identified the need for additional storage and more efficient configuration of the public works department. Due to the recession shortly thereafter, the project never gained traction, but was recently revived because of need. Concept plans have been drafted, and land was purchased in 2021 for the future facility. An architect was hired in late 2022 with designs, specifications and beginning construction included in the 2023 budget. Construction is anticipated to be complete in 2024 or early 2025. 8 4. Transportation Projects TH25 Safety and Lighting Improvements – MnDOT is proposing an interim improvement project that mixes permanent and temporary elements to promote traffic calming and accessibility. MnDOT is also installing additional streetlights along TH25. The new lighting will be added at neighborhood entrances south of School Boulevard as well as at the J-turn located approximately a quarter of a mile down the road. The Monticello EDA sold 10 parcels in downtown’s Block 52 in 2022 and entered into a final development agreement with a developer to redevelop the central block next to the only Mississippi River crossing within 20 miles. While much of the interior block redevelopment will be handled by private investment, the city included a street improvement project to River and Walnut streets in the 2023 budget. Wright County planned for an improvement project to County Road 75 (Broadway), which is adjacent to Block 52 in 2023, and the city budgeted funds for additional improvements to the vital connection to downtown. The city was successful in securing Safe-Routes-To-Schools grant funding for School Boulevard and Elm Street. Both projects include improvements to streets and sidewalks to improve safety and accessibility for those traveling near school areas. While some funding will not be available until 2025, the city has budgeted to complete the projects in 2023. The city also secured funding from the State of Minnesota and Wright County for flashing yellow arrows to be installed a various intersections along State Highway 25 and County Road 75. This project is budgeted for 2023. Financial Plans: 1. Annual Budget - Adopted each December. 2. Capital Improvement Plan - Updated and adopted each year; most recently for 2023 -2027. 3. Long-term Financial Management Plan – Model was approved in 2022 and will be updated annually. 9 This first phase of the Comprehensive Plan process, the Visioning phase, included a community engagement process to identify common values, growth aspirations and a vision to inform the planning direction for the next 20 years. The vision, value statements and preferred development scenario will serve as the foundation for creating the new Comprehensive Plan during the second phase of the planning process. The Comprehensive Plan provides a set of goals, policies and strategies for achieving Monticello’s vision for the future. PHASE ONE | JANUARY 2020 In 2040 the City of Monticello is an inclusive community focused around sustainable growth while maintaining its small-town character. Monticello is a Mississippi River town known for its schools, parks, biking and walking trails and vibrant downtown. Monticello is an evolving, friendly and safe community that respects the quality of its environment, fosters a sense of belonging and connection, encourages a healthy and active lifestyle and supports innovation to promote a prosperous economy. A balanced land use and transportation framework that provides options and connectivity. A range of attainable housing options in terms of type, cost, and location. A respected school and education system serving the community. A healthy community focused on physical and mental health and wellness of its residents. A safe, clean, and beautiful community supported by caring and helpful residents. A network of parks, open space and trail connections that provide recreation opportunities. An inclusive community welcoming people of all ages, races, religions and ethnic backgrounds. A diversified and strong local economy competitive at regional, state and national levels. A vibrant downtown that embraces the River and provides a focal point for the community. A thriving arts and culture scene that reflects the creativity of the community and supports a sense of place. VISION STATEMENT VALUE STATEMENTS VISIT CI.MONTICELLO.MN.US/MONTI2040 TO LEARN MORE! PREFERRED SCENARIO PRIORITYGREENWAYSMIXED RESIDENTIAL/COMMERCIAL INDUSTRIALCOMMERCIAL PLANNED DETACHED RESIDENTIAL DEVELOPMENT INTERCHANGE LEGEND:DETACHED RESIDENTIAL MIXED COMMERCIAL/OFFICE/LIGHT INDUSTRIALATTACHED RESIDENTIAL RIVER ACCESS • Sustainability - Focus on sustainability, open space and wetland preservation throughout City. • Infill Development - New service commercial and light industrial infill. • Conservation Neighborhoods - Single-family housing developed as conservation subdivisions in a clustered fashion mitigating impacts to sensitive areas. • Industrial Expansion - Full build out and expansion of Otter Creek Industrial Park and growth around future Interchange. • Multi-Family Housing - New multi-family infill development near core of downtown and other focus areas. • New School - New elementary and middle school campus with environmental focus. • Downtown - Downtown plan implementation thriving with new commercial, mixed-use and public realm improvements. • Mississippi River - Focus on River with new access, connections and riverfront trail. • New Employment Center - New industrial business park developed around new interchange with green technology, renewable energy, manufacturing and other uses. • Xcel Facility - The Xcel Monticello Nuclear Generating Plant is licensed through 2030 and will seek relicensing to 2040. • Annexation Area - Portions of the Orderly Annexation Area are designated as an Urban Reserve for future development. Development would likely include conservation single-family cluster subdivisions. Note: The Preferred Scenario guidance and mapping provided in the Vision Report will be further refined during the Comprehensive Plan process. This map is not the City of Monticello’s final Land Use Plan. This map provides initial guidance for the next phase of the project, the Comprehensive Plan, and will be further detailed and refined. The preferred development scenario is the result of community feedback on the four previous scenarios and the community’s vision. The community envisions Monticello in 2040 as an environmentally and economically sustainable community that has experienced strong, balanced growth. A B C D E F G H I J K PHASE ONE | JANUARY 2020 Development Assumptions Key Preferred Scenario Aspects URBANRESERVE INCREMENTAL, SUSTAINABLE Growth Scenario Downtown Focus New School Industrial and Employment Conservation Neighborhoods Retail and Commercial Trails and Open Space VISIT CI.MONTICELLO.MN.US/MONTI2040 TO LEARN MORE! 0 1,300 2,600650 1 inch = 2,500 feet !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! !! ! ! ! ! ! ! ! !! ! ! ! ! !!!! ! ! ! !!!!!!! ! ! ! ! ! !!!!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! !!! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!! ! ! ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!! ! ! ! ! !!! ! ! ! ! !!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! !!!!! ! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!!! ! ! !!! ! ! ! !!! ! ! ! !!!! ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ! ! !!!!!!! ! ! ! ! !!!!!!!!!!!!!!!!!!!!! !!!!!!!!! ! ! ! ! ! ! ! ! ! !!!!!!!!!!NORTHSTARLINE BIG LAKE 25 68 131 43 14 10 SCHOOL BLVDSCHOOL BLVD CHE L S E A R D CHE L S E A R D EDMONSON AVEEDMONSON AVEFENNING AVEFENNING AVEPINE STPINE STELM STELM STBRO A D W A Y S T BRO A D W A Y S T 172ND ST NW172ND ST NW165TH AVE SE165TH AVE SELAKE ST SLAKE ST SJEFFERSON BLVDJEFFERSON BLVD 157TH S T S E 157TH S T S E LABEAUX AVE NELABEAUX AVE NECOU N T Y R D 3 9 N E COU N T Y R D 3 9 N E 80TH S T N E 80TH S T N E JA S O N A V E N E JA S O N A V E N E 9494 9494 COUNTY R D 3 7 N E COUNTY R D 3 7 N EBRIARWOOD AVEBRIARWOOD AVEBERTRAMCHAIN OFLAKES BERTRAMCHAIN OFLAKES 85TH ST NE85TH ST NE COUNTY RD 39 NECOUNTY RD 39 NE COUNTY R D 3 7 N E COUNTY R D 3 7 N E MI S S I S S I P P I R I V E R MI S S I S S I P P I R I V E R Downtown Mixed Use10-18 Unit/Acre10-18 Unit/Acre Service Commercial and Light Industrial Infill Regional Oriented Commercial Multi-Family10-18 Unit/Acre10-18 Unit/Acre Medium and Small Lot Conservation Developments4-10 Units/Acre4-10 Units/Acre Potential School Site withEnvironmental Focus Medium and Small Lot Conservation Developments4-10 Units/Acre4-10 Units/Acre Otter Creek Industrial Park Commercial/Residential Mix (Neo Traditional) Development Residential (South) Residential (South) 8-10 Units/Acre8-10 Units/Acre A B CC C D E F G H H I J K K K Technology, Renewable Energy, Manufacturing & Distribution Warehousing 10 PRIORITIES & ISSUES The city’s priorities were redefined in the Monti:2040 Comprehensive Plan adopted in 2020. This Comprehensive Plan highlights the city’s desire to grow from within before expanding out by focusing on three key themes: Sustainability, Community Health and Sense of Place. The Comprehensive Plan is the primary influence in financial planning. Monticello, like all other levels of government, had to learn how to operate in the unprecedented time of the COVID-19 pandemic. The basic services a government offers cannot be eliminated or postponed, so operations shifted greatly and unexpectedly. Fortunately, 2021 and 2022 were years spent learning about and responding to the spread of the virus, and the 2023 budget reflects a more routine approach to operations while at the same time retaining efficiencies and other opportunities discovered during the height of the pandemic. While the city as a whole has mostly returned to pre-pandemic levels of service and funding, the Community Center Fund has been slower to return to normal. The ongoing effects of the pandemic can be hard to forecast, but revenues are budgeted conservatively, and expenditures are estimated liberally to ensure sound financial position. The American Rescue Plan Act of 2021 (ARPA) provided just over $1.5 million directly to the city. Of these funds, $715,000 were used in 2021 and $385,718 were used in 2022 for wages and benefits at the Monticello Community Center. Staff and Council are working to ensure the remaining funds are used in achieving strategic goals in the community. An additional $533,799 is available for water or sewer infrastructure improvements through Wright County, of which $228,700 was used in 2022 for the SCADA Upgrade project. The city changed its strategy for budgeting in 2021 from a department-by-department approach to an entity-wide “bucket” approach including the following areas: Notable changes in service levels and fees include: Personnel: • Public Safety: Shift vacant Fire Marshal position from the Fire Department to the Building Department. Budget impact: $0. Personnel Facilities Maintenance Information Technology Equipment Capital Projects 11 • Public Safety: Increase police hours (contracted with Wright County Sheriffs Office) from 52 hours/day to 60 hours/day beginning May 1, 2023. Budget impact: $170,030. • Streets: Add an additional operator to assist with growing department needs due to development within the city beginning April 1, 2023. Budget impact: $73,300. • Deputy Registrar: Replace one part-time clerk with a full-time clerk, which entails 10 additional hours per week plus benefits. Budget impact: $45,000. • Hi-Way Liquors Store: Hire one additional full-time clerk to strengthen scheduling shortages. Budget impact: $65,000. • Overall: A cost of living adjustment (COLA) was applied to the wage scales in 2023. Budget impact: $228,000. Facilities Maintenance: • Community Center: Install new fire alarm system. Budget impact: $45,000. • Animal Shelter: Replace HVAC system. Budget impact: $30,000. • Library: Replace boiler unit. Budget impact: $60,000. • Parks Shop: Upgrade lights to LED and install new garage door openers. Budget impact: $20,000. • Water System: Re-paint well houses 1 & 2 and add gutters on Well 5. Budget impact: $20,000. • Hi-Way Liquors Store: Replace coolers as existing have reached end of life. Budget impact: $130,000. Information Technology: • Zoning Code Update: Update the zoning code and upgrade to the same out-sourced vendor as City’s code. Budget impact: $12,000. • Software Upgrades and Training: The city is investing in various software packages to assist with staff efficiency and cybersecurity. o Springbrook upgrade: The finance department relies on Springbrook as its enterprise resource planning (ERP) software for everything from paying invoices and payroll checks to utility billing and cash receipts. The city implemented version 7.16 in 2009 and will upgrade to the newest cloud-based version. Budget impact: $37,600. o NeoGov onboarding module: The human resources department using NeoGov for employee recruitment and to tracking the application and interview process. A module for the onboarding process, including electronic completion of employee paperwork is scheduled for 2023. Budget impact: $6,100. o Laserfiche training hours: Laserfiche is the city’s official electronic document storage platform. Additional users and training are needed to use the software to its maximum potential. Budget impact: $20,000. o Cartegraph training hours: The public works and facilities maintenance departments implemented Cartegraph for work order tracking in 2020. The parks department will be using the software now and need to be trained in using it. Budget impact: $5,000. 12 o Email archiving system: The city transitioned from an on-premise email server to Microsoft 365 in 2021. To assist with records retention and data requests, an archiving system is planned for implementation in 2023. Budget impact: $8,000. Equipment: • Vehicles: Replacement vehicles for the building, streets, and utilities departments are included for 2023. Budget impact: $170,000. • Streets: The Streets Department, through the Central Equipment Fund, budgeted for a plow truck, wheel loader, and forklift. Budget impact: $658,000. • PAR: The parks operations department, through the Central Equipment Fund, budgeted for a Bobcat grader blade attachment, Cushman Trakster, Bobcat Toolcat, and trailer. Budget impact: $168,000. • Carryover: Due to supply chain issues, the city has not received some equipment ordered in 2022. With anticipated delivery in 2023, these items were included in the 2023 budget, including a Streets plow truck and Parks Isuzu. Capital Projects: • Downtown Roadway & Pedestrian Improvement Projects: Connect Walnut and River Streets, improve sidewalks and landscaping on Broadway, improve traffic flow at the Hwy 25 & Broadway Intersection and relocate utilities in and around Block 52 underground. Budget impact: $5,250,000. • Public Works Facility: The city hired an architect in 2022to begin plans and specifications on a new Public Works Facility in 2022 with anticipated construction in 2023 and 2024. Budget impact: $5,000,000. • The Pointes at Cedar: A 100-acre area in the middle of the city has been relatively untouched until the past few years. To create a unique community space, The Pointes at Cedar project envisions a large, shared pond (serving stormwater purposes) with public park space surrounded by mixed-use residential and commercial development. Continued planning and design is included for 2023. Budget impact: $510,000. • Bertram Chain of Lakes Improvements: The Bertram Chain of Lakes Regional Park improvements will build on the base infrastructure constructed in 2019. The project is the next phase in a long-term full park buildout which includes parking, safety, and accessibility improvements along with minor amenities such as benches and landscaping. Budget impact: $1,000,000. • SCADA System Upgrade: The Water and Sewer utilities use a Supervisory Control and Data Acquisition (SCADA) system to collect and analyze data. The project began in 2021 and will be completed in 2023. Budget impact: $400,000. • School Boulevard & Elm Street Improvements: Safe Routes to Schools grant funding will be used to complete safety improvements on trails and sidewalks. Budget impact: $1,625,000. Furthermore, the city analyzes utility rates annually. The following increases were adopted in the 2023 Fee Schedule and incorporated into the 2023 budget. 13 • Water: Usage charges were increased by 8% in anticipation of large upcoming capital improvements and a new water treatment facility. Commercial rates were separated from the residential/irrigation rates to encourage water conservation by residents when watering their lawn. • Sewer: Usage charges increase 2% for base and usage charges. Access and trunk charges increased 3%. • Stormwater: Stormwater fees increase 12.5% in 2023, from $4.00/drainage unit to $4.50/drainage unit to fund significant capital costs coming up in the next couple years. • Garbage & recycling: Garbage and recycling fees increase in 2023. Prior to the implementation of fees in 2018, residential garbage and recycling services were wholly subsidized by the tax levy. Since then, the city has phased in the charges. In 2023, fees will completely offset the cost of residential garbage and recycling services for the first time. 14 BUDGET OVERVIEW 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, 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. 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, based on historical trends with greater weight placed on the most current years. The importance of a sound revenue picture cannot be overstated. The City of Monticello provides a range of services to the community, including police (contracted) and fire protection; street maintenance; snow and ice removal; water, sewer and stormwater utility services; parks, arts, and recreation amenities (including community center facility) and programming; and administrative and planning services. In addition, the city owns and operates a department of motor vehicles (DMV), municipal off-sale liquor store (Hi-Way Liquors), and a fiber optic network (FiberNet Monticello). The level of service provided by the proposed budget is as 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 fortunate to have 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, recreate, and do business. The city will fulfill the goals below to achieve this mission: 1. Continue to maintain a low tax rate while providing the best possible service. While the 2023 property tax levy increase was greater than in prior years, the tax levy (capacity) rate decreased from 2022 due to a large increase in property values, most notably residential. 2023 Budget: The city levy increases $697,000 (6.1%) to $12,050,000 and the Housing and Redevelopment (HRA) levy increases $14,000 (3.6%) to $402,000. Combined (city + HRA) tax levy increase: $711,000 (6.1%). The tax levy rate is the third lowest of the 17 cities in Wright County. 2. Continue to develop and provide an unmatched 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. 15 In partnership with the county, the city acquired park land, which is roughly 50% designated for non-athletic purposes and 50% designated for athletic purposes. The city also maintains 365 acres of park land and 42.0 miles of trails. 2023 Budget: $1,000,000 BCOL improvements, $525,000 School Boulevard pathway improvements and lighting, and $175,000 Fenning Avenue pathway lighting. 3. Continue to maintain the city sidewalks and streets by following an annual seal coat and crack seal program and by overlaying streets before they are beyond repair and need replacing. Emphasis is placed on safety by ensuring stoplights are functioning optimally. The city’s pavement management program identifies varying condition levels of every street. The 2023 General Fund includes a modest amount for striping, and the Capital Projects fund is utilized for improvement projects. The installation of yellow flashing arrows at a number of intersections is one priority. 2023 Budget: $1,960,000. 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 four townships) taking part in regional planning and economic development initiatives, including 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. 2022 Budget: $18,750 – memberships. 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. A major redevelopment is taking place on Block 52 in 2023, and the city is completing the Downtown Roadway and Safety Improvement project to supplement the investment from the private developer. 2023 Budget: $5,250,000. 6. Seek to expand the supply of "step 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. A housing needs and market demand study was completed in 2020. 2022 Budget: $0; however, the Economic Development Authority (EDA) has been working on various new TIF districts related to affordable housing. 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. 2023 Budget: $0; however, the EDA continues to prioritize new development opportunities through TIF districts, Greater Monticello Enterprise Fund (GMEF) low-interest loans, and other inventive packages via State funding. 16 8. Continue to maintain high quality water and sewer treatment facilities. With some of the lowest water and sewer 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 enough for additional, ongoing system improvements in each fund. Monticello’s water is rated as one of the best tasting in Minnesota. 2023 Budget: Water - $760,000 annual improvements, $165,000 building & systems maintenance; Sewer - $250,000 annual improvements, $125,000 wastewater facility repair and maintenance, and $400,000 SCADA system update. 9. Provide unsurpassed access to information with high-speed internet, phone, and television through the city-owned fiber optic network. 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. The contract with Arvig Enterprises was extended in July of 2021 for an additional five years. 2023 Budget: $200,000 system expansion to new neighborhood developments. City Council and city staff used the goals set during the strategic planning process to direct the development of the 2023 budget. TOTAL BUDGET The 2023 budget includes all the funds maintained by the city. Each fund is responsible to account for a particular activity or activities. Each fund-type will be discussed within this message and/or in the budget document. The following compares the adopted 2022 and 2023 budgets: Total revenues decrease 34.0% and total expenditures increase about 37.8% in 2023. General Fund revenues and expenditures increase 9.0%, almost two-thirds of which is due to the property tax levy increase. The increase in special revenue activity reflects increased activity for the Community Center Fund and the planned use of pooled tax increment in the Economic Development Authority (EDA) Fund. The decrease in debt service expenditures reflects the final payoff of the 2011A bonds. Capital project funds will incur higher expenditures due projects for the Downtown Area, Public Works Facility, The Pointes at Cedar development area planning and design, and Bertram Chain of Lakes Park improvements. Deputy registrar and liquor funds Fund Type 2022 2023 2022 2023 General 10,530,000$ 11,480,000$ 10,530,000$ 11,480,000$ Special Revenue 2,934,000 3,159,000 2,720,000 3,976,000 Debt Service 2,739,000 2,268,000 2,925,000 2,607,000 Capital Project 2,702,000 12,540,000 7,290,000 15,375,000 Enterprise 14,898,000 15,962,000 15,519,000 20,409,000 Internal Service 1,345,000 1,705,000 1,800,000 2,356,000 Total 35,148,000$ 47,114,000$ 40,784,000$ 56,203,000$ Total Budget Revenues Expenditures 17 will transfer out a combined $4,000,000 to pay for the Downtown project. The Central Equipment internal service fund is funding $1,337,000 of equipment acquisitions in 2023. The following graphs display the revenues and expenditures attributable to each fund-type in the 2023 Budget: 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 70% of revenues in the General Fund and 24% in the special revenue funds. In 2023, debt service funds will receive $1,999,581 in property taxes for principal and interest payments on general obligation debt, which is $311,819 (18%) lower than the prior year due the payoff of the 2011A bond issue. With the available levy capacity, the city levied $393,819 more for the Capital Projects Fund in 2023. For 2023, the city's general property tax levy will increase to $12,050,000, by $697,000 (6.1%) over the prior year. For the eighth consecutive year, the Economic Development Authority Fund levied a Housing and Redevelopment Authority (HRA) special benefit levy. The HRA levy increases to $402,000 (3.6%) from $388,000 in the prior year. When added together, the two levies represent a 6.1% increase in property taxes. The following table is a historical view of the tax capacity value, tax capacity rate and tax levy: General 24% Special Revenue 7%Debt Service 5% Capital Project 26% Enterprise 34% Internal Service 4% 2023 Revenues by Fund Type General 21% Special Revenue 7%Debt Service 5% Capital Project 27% Enterprise 36% Internal Service 4% 2023 Expenditures by Fund Type Tax Capacity Capacity Tax Capacity Rate City Tax HRA Levy Year Value % Change Rate % Change Levy Levy % Change 2014 $18,244,090 -2.4% 44.672 5.7% $8,150,000 $0 3.2% 2015 $23,882,689 30.9% 35.737 -20.0% $8,535,000 $0 4.7% 2016 $25,891,898 8.4% 34.470 -3.5% $8,925,000 $280,000 4.6% 2017 $27,583,160 6.5% 33.172 -3.8% $9,150,000 $280,000 2.5% 2018 $29,528,145 7.1% 32.332 -2.5% $9,547,000 $323,000 4.3% 2019 $29,076,227 -1.5% 34.262 6.0% $9,962,000 $348,000 4.3% 2020 $29,870,392 2.7% 34.968 2.1% $10,445,000 $355,000 4.8% 2021 $31,026,583 3.9% 35.659 2.0% $11,063,700 $355,000 5.9% 2022 $31,073,603 0.2% 36.536 2.5% $11,353,000 $388,000 2.6% 2023 $34,925,732 12.4% 34.502 -5.6% $12,050,000 $402,000 6.1% 18 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 2022 at $34,925,732, a 12.4% increase. The Xcel Energy nuclear power plant taxable market value increased 3.7% for 2023 to $780 million. The Xcel plant alone accounts for just under half 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, which is then applied to each property's tax capacity to determine the city’s tax. For 2023, the city's tax capacity rate is expected to decrease 5.6% to 34.502. The city currently does not have the authority to levy or collect local sales taxes or other types of taxes under the state's tax system. PERSONNEL SERVICES The 2023 budget includes a few staffing changes. One additional full-time clerk was added to both the Liquor Fund and Deputy Registrar Fund. A new streets operator is all included in the 2023 with a projected start date of April 1. A 4.0% wage adjustment for all employees is included in the 2023 budget. Public Works employees belong to a union, and their collective bargaining agreement was renegotiated in late 2022 for the three years from January 1, 2023 through December 31, 2025. Union and non-union employees participate in separate health benefit plans. The union health benefit is $1,253.58 per participant, and the non-union health benefit is $922.51 for single plan and $1,711.93 for family plan participants. The union’s plan requires a flat premium for union employees regardless of participation. Staff will continue to explore ways to reduce future premium increases to both the city and its employees. The contribution rates to the Public Employees Retirement Association (PERA) will remain the same in 2023 for both employer and employees. PERA rates: 7.50% of wages for employer and 6.50% for employee. The budget also calculates FICA and Medicare taxes at 6.20% and 1.45% respectively for 2023. GENERAL FUND Expenditures The following schedule displays 2023 budgeted General Fund expenditures by department compared with the prior year budget: Department 2022 2023 % Change General Government 2,501,429$ 2,613,701$ 4.5% Public Safety 3,010,890 3,278,367 8.9% Public Works 3,403,902 3,667,863 7.8% Recreation & Culture 1,607,779 1,914,069 19.1% Operating Transfers Out 6,000 6,000 0.0% Total 10,530,000$ 11,480,000$ 9.0% General Fund Expenditures and Other Uses 19 The 2023 budget increased 9.0% over the 2022 budget. Personnel service includes wages and benefits for all full-time, part-time, and seasonal employees. This cost category rises with wage and benefit inflation and additions to staff. The chart below presents the 2023 budgeted expenditures allocated by function/department: The Public Works Department, which also includes Sanitation, is the largest department in terms of budgeted expenditures and the streets & alleys activity budget is the largest activity within the department. The 2023 budget for the Public Works department increased 7.8%. Streets & alleys (+11.2%), ice & snow (+11.4%), and street lighting (+23.2%) budgeted expenditures vary the largest due to the addition of a full-time streets operator, which is split between streets & alleys and ice & snow. The street lighting department increased due to an increase in utility costs. The city’s contract with its residential garbage hauler ends on May 31, 2025. The second largest department based on expenditures is the Public Safety Department. The 2023 Public Safety Department budget increased 8.9%. Public safety activities include law enforcement, fire, building inspections, emergency management, National Guard, and animal control. The city contracts with the Wright County Sheriff's department for law enforcement. The 2023 contract includes a $2.55 increase in the hourly service rate for 52 hours per day from January through April and 60 hours per day from May through December. The fire and rescue activity budget increased 12.6% and the building inspections activity increased 19.8% due to a shift in the fire inspection program, which is no longer managed by a Fire Marshal. While emergency management shows a 12.7% decrease, the decrease simply reflects a lower budgeted use of a State Preparedness grant, which is offset by budgeted grant revenues. The 2023 budget for general government activities increases 4.5%. The city clerk activity increased 9.8%, the finance activity increased 23.7%, and the human resources activity increased 11.1% due to investment in software packages to promote efficiencies and a shift away from paper-based document storage. The planning & zoning activity increased because the new administrative assistant position was re-allocated for 2023 from the administration department to the city clerk and planning & zoning departments. The city hall activity increased with the anticipated replacement of a conference room table and chairs. General Fund Expenditures & Transfers -2023 General Government (23%) Public Safety (29%) Public Works (32%) Recreation & Culture (16%) Operating Transfer to EDA (0.1%) 20 Recreation and culture expenditures increase by 19.1% in 2023. Public art (+140.2%) increased with additional consulting time and budgeted use of successful grant applications. The parks operations (+16.1%) budget reflects professional services for a parks needs study along with anticipated inflation of costs. Including services for police, assessor, and legal services, other services, and charges account for 52% of General Fund appropriations, mostly due to the increase in contracted police patrol hours. Appropriations for personnel services follow at 37% of the total, which can be contributed to a general 4.0% wage and benefit inflation plus the new streets operator position. 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 2022 and 2023 budgets: Department 2022 2023 % Change Personnel Services 3,897,421$ 4,091,941$ 5.0% Supplies 874,870 1,020,200 16.6% Other Services & Charges 5,173,309 5,728,859 10.7% Capital Outlay 578,400 633,000 9.4% Operating Transfers Out 6,000 6,000 0.0% Total 10,530,000$ 11,480,000$ 9.0% General Fund Appropriations Personnel Services 37%Supplies 7% Other Services & Charges 52% Capital Outlay 4% 2023 Appropriations -General Fund 21 Revenues and other sources Revenues and other sources supporting General Fund expenditures and other uses are classified as follows: The General Fund’s tax levy increases by 7.8%, while the General Fund’s portion of the combined levy (city + HRA) increases from 63.7% to 64.7%. Franchise & Other Taxes increase to offset the increased cost of street lighting due to inflation Increases in Intergovernmental Revenues and Fines & Forfeits are due to budgeting more closely with trends from the previous years. The increase in Charges for Services reflects higher residential garbage and recycling charges. In 2023, the city will fully cover its cost of garbage service for the first time. Miscellaneous Revenues are projected higher due to an increased number of anticipated donations. The property tax levy generates 70% of the General Fund revenues. Other than franchise fees, the city does not impose other taxes, such as local option sales taxes or income taxes. Therefore, the city will continue to be dependent on property tax revenue as its major source of future revenues. Classification 2022 2023 % Change Property Taxes 7,475,000$ $8,060,000 7.8% Franchise & Other Taxes 258,000 316,500 22.7% Licenses & Permits 471,100 484,000 2.7% Intergovernmental Revenues 463,000 513,895 11.0% Charges for Services 1,118,600 1,246,779 11.5% Fines & Forfeits 51,600 51,600 0.0% Special Assessments 100 100 0.0% Miscellaneous 692,600 807,126 16.5% Total 10,530,000$ 11,480,000$ 9.0% General Fund Revenues and Other Sources 70.2% 2.8% 4.2% 4.5% 10.9% 0.4%7.0% 2023 Revenues -General Fund Property Taxes Franchise & Other Taxes Licenses & Permits Intergovernmental Revenues Charges for Services Fines & Forfeits 22 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 Small Cities Development Program (SCDP) Fund, which will likely see little activity in 2023 outside of one loan to a local business. In 2021, the Economic Development Authority (EDA) Fund was reclassified from a blended component unit (special revenue fund) to a discretely presented component unit in the city’s Annual Comprehensive Financial Report. However, it is still presented as a special revenue fund for budget purposes. Like the General Fund, the special revenue fund budgets are set at a level to maintain services. The tax levy supports community center operations ($515,000) and the Economic Development Authority ($402,000). Tax increments support economic development activities, but their use is generally restricted to a specific activity in a specific area. Charges for services are the largest revenue source for both the community center (memberships) and the cemetery (plot sales). Community center charges were budgeted with added conservatism due to the uncertain nature of discretionary spending in the current economic environment. The city’s final $400,000 in American Rescue Plan Act (ARPA) funding is budgeted to be used in the community center fund in 2023. 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: DEBT SERVICE FUND (Aggregate of Sub-Funds) The city's debt service for 2023 is $2,605,800, or $207,200 less than the prior year due to routine amortization of outstanding bond issues. Funding for debt service comes from special assessments and property taxes. Outstanding debt at January 1, 2023: debt service funds - $18,795,000; Sewer enterprise fund - $2,810,000; Central Equipment internal service fund - $120,000. The city's bond rating from Moody’s Investors Services is "A1." Classification 2022 2023 % Change Property Taxes 873,000$ 917,000$ 5.0% Tax Increments 630,344 529,000 -16.1% Intergovernmental Revenues 425,000 400,000 -5.9% Charges for Services 931,900 1,228,300 31.8% Miscellaneous 67,756 78,700 16.2% Operating Transfers In 6,000 6,000 0.0% Total 2,934,000$ 3,159,000$ 7.7% Special Revenue Funds Revenues and Other Sources Department 2022 2023 % Change Personnel Services 1,246,373$ 1,375,157$ 10.3% Supplies 120,900 119,100 -1.5% Other Services & Charges 962,826 2,139,893 122.3% Capital Outlay 191,976 341,850 78.1% Operating Transfers Out 197,925 - -100.0% Total 2,720,000$ 3,976,000$ 46.2% Special Revenue Funds Appropriations 23 CAPITAL PROJECT FUNDS The budgets for capital project funds are based on the 2023 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. $5,000,000 in one debt issuance are planned for 2023, which will be used to fund the beginning phases of construction on a new Public Works Facility. ENTERPRISE FUNDS Total revenues and other sources for the enterprise funds (Water, Sewer, Stormwater, Liquor, DMV, and Fiber Optics) is estimated at $15,962,000 for 2023. The change in Sale of Goods represents a conservative budgeting policy. Charges for services increases with higher rates charged on enterprise fund customers. Special assessments decrease to remain conservative. Personnel services increase with wage and benefit inflation of 4.0%, additional full-time clerks at the liquor store and DMV as well as a new streets operator effective April 1. 2023 operating transfers out are from the Liquor Store and DMV to fund the Downtown Pedestrian & Roadways Improvements project and improvements at the Bertram Chain of Lakes Regional Athletic Park (BCOL). INTERNAL SERVICE FUNDS The City of Monticello operates four internal service funds: Facilities Maintenance, Information Technologies (IT) Services, Central Equipment Fund, and Benefits Accrual. These funds operate on a cost-recovery basis, but the time horizon differs greatly. Internal service fund charges are recorded as expenditures in other funds. The Facilities Maintenance and IT Services funds are not capital intensive with annual small tools and equipment purchases in the $20,000 to $30,000 range. IT equipment usually has a shorter replacement cycle. The Facilities Maintenance Fund focuses on proactive monitoring Classification 2022 2023 % Change Sale of Goods 7,013,000$ 7,357,694$ 4.9% Licenses & Permits 2,000 2,000 0.0% Intergovernmental Revenues - 300,000 --- Charges for Services 7,634,757 8,076,101 5.8% Special Assessments 38,000 10,000 -73.7% Miscellaneous 135,243 141,205 4.4% Contributed Capital 75,000 75,000 0.0% Total 14,898,000$ 15,962,000$ 7.1% Enterprise Funds Revenues and Other Sources Department 2022 2023 % Change Personnel Services 2,278,593$ 2,503,619$ 9.9% Supplies 5,699,100 6,027,117 5.8% Other Services & Charges 3,942,490 4,975,273 26.2% Capital Outlay 3,237,500 2,535,000 -21.7% Debt Service 361,317 367,991 1.8% Operating Transfers Out - 4,000,000 --- Total 15,519,000$ 20,409,000$ 31.5% Enterprise Funds Appropriations 24 and repairs & maintenance of existing city buildings. Major capital improvements or replacements are funded through the appropriate capital projects fund or enterprise fund. The Central Equipment Fund is funded through annual rental charges to benefitting budget units to recover equipment purchase costs over 7–10-year periods. Annual depreciation and inflation for each capital asset are used in calculating annual rental payments. The Benefits Accrual 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. FUND BALANCES Fund balances decline when expenditures exceed revenues. The General Fund and Monticello Community Center (MCC) Fund generally have balanced budgets where revenues equal expenditures. The Economic Development Authority (EDA)’s fund balance is projected to decrease with the use of pooled TIF for development related projects in 2023. The fund balance in the Debt Service Fund declines through normal debt amortization. Additionally, the fund balance for the capital projects funds declines with anticipated use of existing resources for various projects. Enterprise fund balances decline by roughly $4,447,000, largely the result of transfers to capital projects funds. CHALLENGES IN CONTEXT The preparation of this budget reflects the need to meet both short-term and long-term challenges. While the local economy is stable, inflation has been extremely high and levels of unemployment in upcoming months and years are uncertain. The commercial and residential tax base grew at a rapid pace in 2023 while the Monticello Nuclear Generating Plant still represents a significant portion of the tax base, but grew at a much slower rate. 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 a low tax capacity rate. Second, in 2021, the city paid off the judgment bonds related to the 2014 settlement of the telecommunication bondholder’s class-action lawsuit, which further allows the city to put the bond default behind it. The city renewed its contract with Arvig Enterprises through June of 2026. Since 2019, Fibernet has had positive cash flow from operations and is situated to cover the majority, if not all, of the capital investment into new neighborhoods in the coming years. Third, the city is moving ahead with several capital projects. Most large projects have reimbursement resolutions, meaning the city can recover their temporary draw on reserves with debt proceeds. Major Council initiatives in the next few years include improvements to downtown with a focus on Block 52, a new public works facility, the Pointes at Cedar development area, and additional phases for improvements at the Bertram Chain of Lakes (BCOL) Regional Park. Other large projects further on the horizon include safety and utility improvements on Fallon Avenue and construction of a Water Treatment Plant. Fourth, stable leadership is requires long term planning, but council seats are not as long as planning efforts require. The mayor was re-elected for a second two-year term, one existing councilmember was re-elected for an additional four-year term, and two new councilmembers 25 began their terms; one was elected to a vacant four-year term and the other was appointed to fill the remaining two years of a vacated four-year term. The mayor and two councilmembers have terms expiring at the end of 2024. While policy perspectives still exist, the mayor and council are looking at ways to meet future challenges through increased public participation. In summary, the uncertain economic environment, public safety service enhancement, transportation improvements, stabilization in Fibernet operations, and economic and park development impacted the decisions made in drafting the 2023 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, 2022. 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 the city’s belief that the 2023 budget allows the city to deliver excellent municipal services in a cost effective and efficient manner at current levels. The 2023 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, Sarah Rathlisberger Finance Director 26 ORGANIZATION CHART Residents City Council City Administrator Human Resources Manager Communications & Marketing Finance Director Finance & Audit Deputy Registrar Liquor Operations Information Technology Community Development Director Economic Development Building Inspections Consulting Planner CIty Engineer Project Engineer Construction Inspections Consulting Engineer Public Works Director Streets Department Water & Sewer Department Refuse Collection Parks, Art & Recreation Director Community Center Parks Department MontiArts City Clerk Elections Reception Contracted Animal Control Fire Chief Fire Department Contracted Services City Attorney Sheriffs Department County Assessor FiberNet Operation Commissions & Boards 27 FUND DESCRIPTIONS & STRUCTURE BUDGETED FUNDS The city has legally adopted budgets for the General Fund and all special revenue funds. Expenditures may not legally exceed budgeted appropriations at the total fund level. Monitoring of budgets is maintained at the department level. Any amounts over budget would need to be approved by the city council through the disbursement process. Although the city is not legally required to adopt an annual budget for the nonmajor special revenue funds, the debt service funds, capital projects funds, enterprise funds, and internal service funds, it does so as a means of implementing an entity-wide view of the city’s finances, all of which are included in the city’s Annual Comprehensive Financial Report (ACFR). Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Budgeted amounts are as originally adopted or amended by the city council. All annual appropriations lapse at year-end. MAJOR FUNDS A fund is considered major if its revenues or expenditures, excluding other financing sources and uses, constitute more than 10% of the revenues or expenditures of the appropriated budget. Major funds are bolded in the hierarchy on the following pages and do not necessarily match the major funds presented in the city’s ACFR because the calculation for purposes of the ACFR differ slightly and are based on actual rather than budgeted revenues and expenditures. General Fund - The General Fund is used to account for all financial resources except those required to be accounted for in another fund. Capital Projects - The Capital Projects (capital project) Fund is used to account for all capital acquisition and construction activities of the city not accounted for in another capital project, enterprise, or internal service fund. Liquor - The Liquor (enterprise) Fund is used to account for the operations of the city’s liquor store. Details on the purposes of the nonmajor funds are included with each fund later in this report. 28 GovernmentalGeneral Special Revenue Economic Development Authority Fund Cemetery Fund Small Cities Development Program (SCDP) Fund Community Center Fund Debt Service 2015B GO Bond Sub-Fund 2016A GO Bond Sub-Fund 2017A GO Bond Sub-Fund 2018A GO Bond Sub-Fund 2019A GO Bond Sub-Fund 2020A GO Bond Sub-Fund Capital Projects Capital Project Fund Street Lighting Improvement Fund Park & Pathway Dedication Fund Park Dedication Fund 29 ProprietaryEnterprise Water Fund Sewer Fund Stormwater Fund Liquor Fund Deputy Registrar Fund Fiber Optics Fund Internal Service Facilities Maintenance Fund IT Services Fund Central Equipment Fund Benefit Accrual Fund 30 DEPARTMENTS & FUNDS RELATIONSHIP The departments within each fund’s budget are noted in the matrix below: All capital project funds, except the Parks & Pathway Improvement Fund, were combined for this presentation. Principal and interest payments on debt occur in the Debt Service Fund (comprised of subfunds), Sewer Fund, and Central Equipment Fund. Community Capital Park &Water, Sewer Liquor Deputy Fiber Facilities IT Central Benefit General EDA Cemetery Center Projects Pathway & Stormwater Store Registrar Optics Maintenance Services Equipment Accrual GENERAL GOVERNMENT Mayor and Council ●● City Administration ●●●● City Clerk ●●● Finance & Audit ●●●●●●●● City Assessing ● Legal ● Human Resources ●●● Planning & Zoning ● ●●●● City Hall ●●● Economic Development ●●● PUBLIC SAFETY Law Enforcement ● Fire & Rescue ● ●●●● Fire Relief ● Building Inspections ● ●● Emergency Management ● ●● Animal Control ● ● National Guard ● PUBLIC WORKS PW Administration ● ●●● Engineering ● ●●●● PW Inspecitons ● ●●● Streets & Alleys ● ●●● Ice & Snow ● ● Shop & Garage ● ●●●● Street Lighting ● ● ● Refuse Collection ● Water Utility ●●● Sewage Utility ●●● Stormwater Utility ●● RECREATION AND CULTURE Senior Center ● ● Park Operations ● ●●● Park Improvements ● ● Park Ballfields ● Shade Tree ● Library ● ● Cemetery ●● Community Center ●●● Fiber Optics ●●● FUND 31 BASIS OF BUDGETING The City of Monticello budget serves several purposes: • For the residents, it presents a picture of the city government operations and intentions for the year. • For the city council, it serves as a policy tool and as an expression of goals and objectives. • For city management, it is used as an operating guide and a control mechanism. The city's budget encompasses both the operating budget and the capital improvement budget. Each budget unit includes amounts appropriated for both operating expenditures and capital acquisitions and improvements. Accompanying narrative for each budget unit briefly explains the items included. BASIS OF BUDGETING The city’s accounts are categorized by funds, each of which is accounted for as an individual entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred inflow/outflows, liabilities, fund equity, revenues, and expenditures. Governmental funds (the General Fund, special revenue, debt service, and capital project funds) use the modified accrual basis for budgeting and accounting. Revenues are recognized in the accounting period in which they become measurable and available. Expenditures are recognized when liabilities are incurred. Proprietary funds (enterprise and internal service funds) use the modified accrual basis for budgeting and the full accrual basis for accounting for financial reporting. In the full accrual basis of accounting, revenues are recognized in the accounting period in which they are earned, and expenses are recognized in the accounting period in which they are incurred, regardless of when the actual cash flow occurs. For example, the full accrual basis accounting differs from the modified accrual basis by recording expenses for depreciation and compensated absences but not debt principal payments, whereas the modified accrual basis of accounting would classify the original capital cost as an expenditure (and would therefore have nothing to depreciate), the compensated absence payment as an expenditure at the time of payment rather than when earned, and debt proceeds as revenue when received and expenditures when repaid. Each proprietary fund’s financial statements, located in the city’s Annual Comprehensive Financial Report (ACFR), are reported on the full accrual basis. WORKLOAD/PERFORMANCE BUDGETING For many years, the City of Monticello started the development of a workload/performance budget. The type of budgeting shifts the 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. 32 FINANCIAL POLICIES The overall goal of the city's financial policies is to establish and maintain effective management of the city's financial resources. Formal policy statements and major objectives provide the foundation for achieving this goal. Accordingly, this section outlines the policies used in guiding the preparation and management of the city's overall budget and the major objectives to be accomplished. In addition, the rationale which led to the establishment of the fiscal policy statements is also identified. Budget Development & Administration 1. A comprehensive annual budget will be prepared for all funds expended by the city. The City Council 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, 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. Inclusion of all funds in the budget enables the council, administration, and the public to consider all financial aspects of city government when preparing, modifying, and monitoring the budget, rather than deal with the city's finances on a "piece meal" basis. 2. The budget will be prepared in such a manner as to facilitate its understanding by residents and elected officials. One of the stated purposes of the budget is to present a picture of city government operations and intentions for the year to the residents of Monticello. Presenting a budget document that is understandable to the residents furthers the goal of effectively communicating local government finance issues to both elected officials and the public. 3. Budgetary emphasis will focus on providing those basic municipal services that provide the maximum level of services, to the most residents, in the most cost-effective manner, with consideration being given to all costs - economic, fiscal, and social. Adherence to this basic philosophy provides the residents of Monticello assurance that their government and elected officials are responsive to the basic needs of the residents and that their city government is operated in an economical and efficient manner. 4. The budget will provide for adequate maintenance of capital, plant, and equipment and for their orderly replacement. All governmental entities experience prosperous times as well as periods of economic decline. In periods of economic decline, proper maintenance and replacement of capital, plant, and equipment is generally postponed or eliminated as a first means of balancing the budget. Recognition of the need for adequate maintenance and replacement of capital, plant, and equipment, regardless of the economic conditions, will assist in maintaining the government's equipment and infrastructure in good operating condition. 5. The city will avoid budgetary practices that balance current expenditures at the expense of meeting future year expenditures. 33 Budgetary practices such as postponing capital expenditures, accruing future years' revenues, or rolling over short-term debt are budgetary practices which can solve short-term financial problems. However, they can create much larger financial problems for future administrations and councils. Avoidance of these budgetary practices will assure residents that current problems are not simply being delayed to a future year. 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 city will maintain a budgetary control system to help it adhere to the established budget. The budget passed by the council establishes the legal spending limits for the city. A budgetary control system is essential to ensure legal compliance with the city's budget. 8. The city will exercise budgetary control (maximum spending authority) through City Council approval of appropriation authority for each appropriated budget unit. Exercising budgetary control for each appropriated budget unit satisfies requirements of state law. It also assists the council in monitoring current year operations and acts as an early warning mechanism when departments deviate in any substantive way from the original budget. 9. Reports comparing actual revenues and expenditures to budgeted amounts will be prepared monthly as practical and formally reported to City Council quarterly. The city's budget is ineffective without a system to regularly monitor actual spending and revenue collections with those anticipated at the beginning of the year. Monthly and quarterly reports comparing actual revenues and expenditures to budget amounts provide the mechanism for the council and administration to regularly monitor compliance with the adopted budget. 10. State Requirement: Truth-in-Taxation The Truth in Taxation (TNT) law requires the city to hold a series of public hearings 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 and the EDA (economic development authority)’s proposed HRA (housing and redevelopment authority) levy must be certified to the county auditor by September 30th. The final levies for both must be certified by December 29th. 34 Revenue Collection 1. The city will seek to maintain a diversified and stable revenue base. A city dependent upon a few volatile revenue sources is frequently forced to suddenly adjust tax rates or alter expenditure levels to coincide with revenue collections. Establishment of a diversified and stable revenue base, however, serves to protect the city from short-term fluctuations in any one major revenue source. 2. The city will estimate revenues in a realistic and conservative manner. Aggressive revenue estimates significantly increase the chances of budgetary shortfalls occurring during the year--resulting in either deficit spending or required spending reductions. Realistic and conservative revenue estimates, on the other hand, will serve to minimize the adverse impact of revenue shortfalls and will also reduce the need for mid-year spending reductions. 3. The city will pursue an aggressive policy of collecting revenues. An aggressive policy of collecting revenues will help to ensure the city's revenue estimates are met, all taxpayers are treated fairly and consistently, and delinquencies are kept to a minimum. 4. The city will aggressively pursue opportunities for federal or state grant funding. An aggressive policy of pursuing opportunities for federal or state grant funding provides residents assurance that the city is striving to obtain all state and federal funds to which it is eligible--thereby reducing dependence upon local taxpayers for the support of local public services. 5. User fees and charges will be used, as opposed to general taxes, when distinct beneficiary populations or interest groups can be identified. User fees and charges are preferable to general taxes because user charges can provide clear demand signals which assist in determining what services to offer, their quantity, and their quality. User charges are also more equitable, since only those who use the service must pay--thereby eliminating the subsidy provided by nonusers to users, which is inherent in general tax financing. 6. User fees will be collected only if it is cost-effective and administratively feasible to do so. User fees are often costly to administer. Prior to establishing user fees, the costs to establish and administer the fees will be considered to provide assurance that the city's collection mechanisms are being operated in an efficient manner. Expenditures and Payments 1. Ongoing expenditures will be limited to levels which can be supported by ongoing revenues. Utilization of reserves to fund on-going expenditures will produce a balanced budget, however, this practice will eventually cause severe financial problems. Once reserve levels are 35 depleted, the city would face elimination of on-going costs to balance the budget. Therefore, the funding of on-going expenditures will be limited to current revenues. 2. Minor capital projects or recurring capital projects, which primarily benefit current residents, will be financed from current revenues. Minor capital projects or recurring capital projects represent relatively small costs of an on-going nature, and therefore, should be financed with current revenues rather than utilizing debt financing. 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) as appropriate. Major capital projects represent large expenditures of a non-recurring nature which primarily benefit future residents. Debt financing provides a means of generating sufficient funds to pay for the costs of major projects. Debt financing also enables the costs of the project to be supported by those who benefit from the project, since debt service payments will be funded through charges to future residents. 5. Construction projects and capital expenditures of $10,000 or more will be included in the Capital Improvement Plan (CIP) and related capital outlay line item; minor capital outlays (less than $10,000) will be included in the operating budget as small tools & equipment or repairs & maintenance. The Capital Improvement Plan (CIP) differentiates the financing of high-cost, long-lived physical improvements from low cost "consumable" equipment items contained in the operating budget. CIP items may be funded through debt financing, a planned buildup of reserves, or current revenues while operating budget items are annual or routine in nature and should only be financed from current revenues. 6. Spending Policy: The city will spend its resources in the following order. Resources will be categorized according to Generally Accepted Accounting Principles (GAAP) for state and local governments, with the following general definitions: • 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: Amounts constrained to specific purposes by the City Council by Resolution; 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 also by Resolution. • Assigned: Amounts the city intends to use for a specific purpose; intent can be expressed by the council or by a designee to which the council delegates the authority. The City Council delegated this authority to itself, City Administrator, or Finance Director. • Unassigned: Amounts that are available for any purpose; these amounts are reported only in the General Fund. When both restricted and unrestricted resources are available, spending will occur in the following order: Restricted, Committed, Assigned, Unassigned. 36 Debt Administration 1. The city will limit long-term debt to capital improvements which cannot be financed from current revenues. Incurring long-term debt serves to obligate future taxpayers. Excess reliance on long- term debt can cause debt levels to reach or exceed the government's ability to pay. Therefore, conscientious use of long-term debt will provide assurance that future residents will be able to service the debt obligations left by former residents. 2. The city will repay borrowed funds within a period not to exceed the expected useful life of the asset. This policy reflects the view that those residents who benefit from a project should pay for the project. Adherence to this policy will also help prevent the government from over- extending itself regarding the incurrence of future debt. 3. The city will not use long-term debt for financing current operations. This policy reflects the view that those residents who benefit from a service should pay for the service. Utilization of long-term debt to support current operations would result in future residents supporting services provided to current residents. 4. The city will adhere to a policy of full public disclosure regarding the issuance of debt. Full public disclosure regarding the issuance of debt provides assurance that the incurrence of debt, for which the public is responsible, is based upon a genuine need and is consistent with underwriter guidelines. Reserves and Fund Balances 1. Reserves and Fund Balances will be properly designated into the following categories: • Nonspendable fund balance: Amounts that are not in a spendable form (such as inventory) or are required to be maintained intact (such as the principal of an endowment fund). • 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 by Resolution; 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 also by Resolution. • Assigned fund balance: Amounts the city intends to use for a specific purpose. The City Council, City Administrator, or Finance Director can express intent. • 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. A minimum level of general fund reserve of 60-75% of annual operating expenditures will be maintained. This reserve is committed to be used for cash flow purposes, unanticipated equipment acquisition and replacement, and to otherwise enable the city to meet 37 unexpected expenditure demands (natural disasters, catastrophic events, etc.) or revenue shortfalls. Property taxes represent the city's primary source of general fund revenue. Property taxes are collected in June and December of each fiscal year. Since the city's fiscal year begins on January 1st, the city must maintain an adequate cash balance to meet its expenditure obligations between semi-annual collections of property taxes. 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 in the Benefit Accrual internal service fund. The city recognizes the need to maintain adequate equipment to carry out required public services. Equipment acquisition and replacement represent on-going costs of a minor nature, as compared to major capital purchases. The city plans for equipment replacement within the Capital Improvement Plan. However, unforeseen equipment problems will arise. The reserve will provide resources for the immediate, unanticipated replacement of critical equipment. The city is subject to revenue shortfalls and unexpected expenditure demands during the fiscal year. An unassigned general fund reserve will be maintained to be able to offset these revenue shortfalls or meet unexpected demands occurring during the year, without suddenly adjusting tax rates or reducing expenditures. Financial Reporting & Accounting 1. The city will manage and account for its financial activity in accordance with Generally Accepted Accounting Principles (GAAP) as set forth by the Governmental Accounting Standards Board (GASB). GASB is recognized as the authority with respect to governmental accounting. Managing the city's finances in accordance with GAAP and in accordance with the rules set forth by GASB provides the Monticello residents assurance that their public funds are being accounted for in a proper manner. 2. The city will maintain its accounting records for general governmental operations on a modified accrual basis, with revenues recorded when available and measurable, and expenditures recorded when services or goods are received, and liabilities incurred. Accounting records for proprietary fund types and similar trust funds will be maintained on an accrual basis, with all revenues recorded when earned and expenses recorded when liabilities are incurred, without regard to timing of cash receipt or payment. Adherence to this policy will allow the city to prepare its financial statements in accordance with Generally Accepted Accounting Principles as set by the Governmental Accounting Standards Board. 3. The city of Monticello will prepare an Annual Comprehensive Financial Report (ACFR) in conformity with Generally Accepted Accounting Principles (GAAP). The report will be made available to the public. The ACFR shall be prepared in accordance with the standards 38 established by the GFOA for the Certificate of Achievement for Excellence in Financial Reporting Program. The Certificate of Achievement represents a significant accomplishment for a government and its financial leadership. The program encourages governments to prepare and publish an easily readable and understandable comprehensive annual financial report covering all funds and financial transactions of the government during the year. The ACFR provides users with a wide variety of information useful in evaluating the financial condition of a government. The program also encourages continued improvement in the city's financial reporting practices. 4. The city will ensure the conduct of timely, effective, and annual audit coverage of all financial records in compliance with Local, State, and Federal laws. Audits of the city's financial records provide the public assurance that its funds are being expended in accordance with Local, State, and Federal laws and in accordance with Generally Accepted Accounting Principles. Audits also provide management and the City Council with suggestions for improvement in its financial operations from independent experts in the accounting field. 5. The city of Monticello will maintain a policy of full and open public disclosure of all financial activity. Full and open public disclosure of all financial activity provides the public with assurance that its elected officials and administrators communicate fully all financial matters affecting the public. 6. The modified accrual basis of accounting and budgeting is used for the governmental funds. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related liability is incurred. Employee compensated absences and principal and interest on long-term debt expenditures are recorded when due in the current period. 7. The full accrual basis of accounting is used for Proprietary Funds for financial reporting purposes. Under this method, revenues are recorded when earned and expenses are recorded when the related liability is incurred. For budget preparation and presentation, the proprietary funds’ expenses are converted to expenditures and follow the same budget format as the governmental fund types. Capital outlays in the enterprise funds are presented as expenditures for budget basis but are recorded as assets along with associated depreciation expense on the GAAP basis. Debt service principal payments in the enterprise funds are accounted for as expenditures for budget purposes but are reported as reduction of long-term debt liability on the GAAP basis. 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. 39 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 Annual Comprehensive Financial Report. Except for cash in certain restricted 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: 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). 40 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. 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 41 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. 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, 42 • 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. 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. 43 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 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 44 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. 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 45 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 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 was 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. 46 BALANCED BUDGETS A BALANCED BUDGET is 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 financing uses decrease financial resources. A balanced budget does not dip into reserves or fund balances. However, an unbalanced budget (deficit) is not necessarily poor fiscal management. For example, debt service funds often accumulate resources in the year prior to expenditure, and 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. Both funds are supported, to some extent, by property taxes. Property Taxes 8,060,000$ Personnel Services $4,091,941 Franchise & Other Taxes 316,500 Supplies 1,020,200 Licenses & Permits 484,000 Other Services & Charges 5,728,859 Intergovernmental Revenues 513,895 Capital Outlay 633,000 Charges for Services 1,246,779 Debt Service - Fines & Forfeits 51,600 Operating Transfers 6,000 Special Assessments 100 Miscellaneous 807,126 Total $11,480,000 Total $11,480,000 General Fund Revenues and Other Sources Expenditures and Other Uses B A L A N C E D Surplus Revenues and Other Sources GREATER than Expenditures and Other Uses Deficit Revenues and Other Sources LESS than Expenditures and Other Uses 47 Absence of a line in the above chart is due to the fund having a balanced budget (zero effect on Fund Balance/Working Capital) for 2023. Deficits reflect planned use of fund balance or future bond issuance to reimburse for upfront costs. $(1,800) $(1,400) $(1,000) $(600) $(200) $200 $600 $1,000 Benefit Accrual Central Equipment IT Services Facilities Maintenance Fiber Optics Deputy Registrar Liquor Stormwater Sewer Water Park Dedication Park & Pathway Improvement Street Lighting Improvement Capital Projects 2020A G.O. Bonds 2019A G.O. Bonds 2018A G.O. Abatement 2017A G.O. Improvement/Abate 2016A G.O. Street/Improvement 2015B G.O. Street/Improvement 2011A G.O. Refunding Bond Monticello Community Center Minnesota Investment Cemetery Economic Development General Fund Thousands Budgeted Change in Fund Balances/Working Capital 48 THE BUDGET PROCESS BUDGET DEVELOPMENT PROCESS To initiate the budget process, the Finance Director distributes budget request worksheets to all department heads and supervisors. The Finance Director and City Administrator then meet with each department director and supervisor to review the requests made. Requests are separated into “buckets” including staffing, IT and facilities maintenance, equipment, and capital expenditures. Each “bucket” is discussed at the public budget workshops along with a comprehensive draft budget and projected changes to the city’s tax capacity and levy. Significant increases or decreases from the previous budget are highlighted to focus on high- level goals for the upcoming year. The council then gives feedback for staff to research and present at the next public budget workshop. Following any adjustments to the proposed budget, a preliminary tax levy resolution is prepared, and a public hearing is held in September. The Council may again adjust the budget following the public hearing, after which time, the Council adopts the final tax levy and final budget resolutions. BUDGET CALENDAR/PROCEDURES The following budget timeline outlines the process the city customarily follows for creation and adoption of the 2023 budget. Date Activity May 3, 2022 1. 2023-2027 capital equipment/projects (CIP) worksheets and 2023 budget worksheets to department heads. 2. Department heads meet with various advisory boards and commissions for input into 2023 preliminary budget and CIP. May 25, 2022 2023-2027 CIP and 2023 budget worksheets due to finance department June 1, 2022 1. Department directors and supervisors meet with city administrator and finance staff to develop 2023 preliminary budget and CIP. 2. Finance department develops revenue estimates and 2023 preliminary property tax levy. July 11, 2022 Public City Council Budget Workshop #1. Workshops with city council, which are open to the public, are held to set 2023 goals and priorities and review draft department budgets and CIP. July 25, 2022 Public City Council Budget Workshop #2 August 22, 2022 Public City Council Budget Workshop #3. September 12, 2022 Public City Council Budget Workshop #4. September 26, 2022 Council adopts 2023 preliminary city and HRA property tax levies. (See September 30) September 30, 2022 2023 preliminary property tax levy certification due to Wright County auditor. October/November 2022 Department heads meet with city administrator and finance staff to refine 2023 proposed budget and final property tax levy. County mails TNT notices. December 12, 2022 Council adopts 2023 budget and property tax levy. (Due December 28) December 13, 2022 City certifies final 2023 property tax levy to Wright County auditor and files TNT Compliance and Tax Levy forms with the MN Department of Revenue. January 1, 2023 2023 fiscal year begins. 49 PRESENTATION The text of the budget document customarily contains six sections of information for each activity. Some activities also include highlights or accomplishments for the prior year and/or the coming year. • 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 detailed financial information. • The sixth section provides budget commentary. The financial information includes expenditure information for the last two completed fiscal years, the budgeted and draft yearend amounts for the current year, and the proposed amounts for the budget year. Costs are segregated into six basic classifications: personnel services (wage & benefits); supplies; other services and charges; capital outlay; debt service; and operating transfers. Appropriation control is exercised only at the activity unit level and not at the individual object of expenditure level. 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 for monitoring the status of each budget unit. Department staff has primary responsibility for monitoring the status of expenditures against their budget. This responsibility includes informing the finance department of any significant departures from the plans anticipated in the budget. The finance department has overall responsibility for monitoring the budget-to-actual status of all departments and funds. This is accomplished primarily through analysis of computerized budget performance reports which compare appropriation amounts on a line-item basis with actual expenditures throughout the year. These reports aid department staff in controlling 50 costs and function as an early warning system for the finance department. Department staff may exercise their judgment in exceeding expenditures by object code, provided they do not exceed the total amount appropriated for the budget unit. The finance department reviews the budget reports and discusses any variances from expected performance with the department staff. The finance department conducts in-depth budget reviews of all expenditures and revenues in its quarterly report to the council. Significant changes in either expenditures or revenues may require a budget revision. Recommendations are also made by the Finance Director for any recommended corrective actions. It is the practice of the City of Monticello not to amend the budget unless absolutely necessary. BUDGET AMENDMENT PROCESS State statute provides various ways to amend the budget. This first involves a reallocation of existing appropriations among the line items within a specific fund. The second defines a series of scenarios 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 statute must be approved through a public process. The Finance Director is responsible for ensuring compliance with spending limitations imposed by the budget. Accordingly, the Finance Director submits a quarterly financial report to the City Council after three-, six-, nine-, and twelve-month periods. The budget reviews evaluate overall revenues and expenditures in comparison to the budgeted amounts. In cases where it appears the original spending authority authorized will not prove sufficient, transfers of spending authority or additional spending authority are requested together with explanations for the requests. The public approval process for budget amendments is held if necessary. 51 This page intentionally left blank. 52 2023 Adopted Budget Financial Summaries ALL FUNDS SUMMARY BY FUND TYPE The city adopts a balanced budget for the General Fund and the Monticello Community Center Fund (MCC), a special revenue fund. A budget is balanced when revenues and other sources equal expenditures and other uses. Fund balances/working capital increase with surpluses and decrease with deficits. The Economic Development Authority (EDA) special revenue fund is budgeting a use in 2023 of previously collected tax increment for qualifiying development- related projects. Debt amortization and early redemption of issues can 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. Prepaid assessments collected in prior years, included in the Jan 1 beginning fund balance, will be used in 2023 as a way to keep the property tax levy manageable. Capital Project Funds commonly accumulate resources in one budget period and expend those resources over multiple budget periods. Expenditures of fund balance are anticipated in 2022, including prior years’ electric franchise fees. Enterprise funds budget debt service and capital acquisitions as expenditures under the modified accural basis. While that typically contributes to a budgeted negative net change in fund balance/working capital, the large decrease budgeted in 2023 is for the use of accumulated funds in the Liquor and Deputy registrar funds that will be transferred out to the Special Debt Capital Internal 2023 General Revenue Service Project Enterprise Service Total Fund Funds Funds Funds Funds Funds Budget Fund Balance/Working Capital - Jan. 1 7,164,324$ 8,555,941$ 974,306$ 12,979,777$ 29,240,380$ 4,343,980$ 63,258,709$ Revenues and Other Sources Property Taxes 8,060,000$ 917,000$ 1,999,581$ 1,475,419$ -$ -$ 12,452,000$ Tax Increments - 529,000 - - - - 529,000 Franchise & Other Taxes 316,500 - - 190,000 - - 506,500 Sale of Goods - - - - 7,357,694 - 7,357,694 Licenses & Permits 484,000 - - - 2,000 - 486,000 Intergovernmental Revenues 513,895 400,000 - 1,559,500 300,000 - 2,773,395 Charges for Services 1,246,779 1,228,300 - - 8,076,101 1,552,008 12,103,188 Fines & Forfeits 51,600 - - - - - 51,600 Special Assessments 100 - 259,275 128,549 10,000 - 397,924 Miscellaneous 807,126 78,700 9,144 186,532 141,205 43,992 1,266,699 Contributed Capital - - - - 75,000 109,000 184,000 Operating Transfers In - 6,000 - 4,000,000 - - 4,006,000 Debt Proceeds - - - 5,000,000 - - 5,000,000 Total Revenues and Other Sources 11,480,000$ 3,159,000$ 2,268,000$ 12,540,000$ 15,962,000$ 1,705,000$ 47,114,000$ Expenditures and Other Uses Personnel Services 4,091,941 1,375,157 - - 2,503,619 252,350 8,223,067 Supplies 1,020,200 119,100 - - 6,027,117 93,932 7,260,349 Other Services & Charges 5,728,859 2,139,893 1,200 - 4,975,273 581,938 13,427,163 Capital Outlay 633,000 341,850 - 15,375,000 2,535,000 1,361,780 20,246,630 Debt Service - - 2,605,800 - 367,991 66,000 3,039,791 Operating Transfers Out 6,000 - - - 4,000,000 - 4,006,000 Total Expenditures and Other Uses 11,480,000 3,976,000 2,607,000 15,375,000 20,409,000 2,356,000 56,203,000 Net Change in Fund Balance/Working Capital -$ (817,000)$ (339,000)$ (2,835,000)$ (4,447,000)$ (651,000)$ (9,089,000)$ Fund Balance/Working Capital - Dec. 31 7,164,324$ 7,738,941$ 635,306$ 10,144,777$ 24,793,380$ 3,692,980$ 54,169,709$ All FUNDS SUMMARY - BY FUND TYPE 53 Capital Projects fund as a means to fund the Downtown Pedestrian & Roadway Improvements project. Internal service funds provide services to other funds and typically function on a cost recovery basis. The city has four: Facilities Maintenance Fund, IT Services Fund, Central Equipment Fund, and Benefit Accrual Fund. Central Equipment Fund equipment purchases will exceed lease revenue in 2023 due to delayed delivery of items ordered in 2021 and 2022. The Benefit Accrual Fund is the only internal service fund that does not record capital asset acquisitons. 54 REVENUES BY CATEGORY AND FUND TYPE Revenues are classified under one of thirteen major categories: property taxes, tax increments, franchise & other taxes, sale of goods, licenses & permits, intergovernmental revenues, charges for services, fines & forfeits, special assessments, miscellaneous, contributed capital, operating transfers in, and debt proceeds. The chart below shows the relative percentage of 2023 budgeted revenues for these major categories for all funds combined. Fines & forfeits and contributed capital show in the chart as 0%, which represents less than 0.5%, but each category has budgeted revenues. REVENUES BY TYPE, GENERAL FUND ONLY— Using those same categories of revenue type, the relative percentages for the General Fund are shown below. The General Fund is comprised of a much higher percentage of property taxes compared to all funds, levying 65% of the total city and HRA combined tax levy. Property Taxes 26%Tax Increments 1% Franchise & Other Taxes 1% Sale of Goods 16% Licenses & Permits 1% Intergovernmental Revenues 6% Charges for Services 26% Fines & Forfeits 0% Special Assessments 1% Miscellaneous 3% Contributed Capital 0% Operating Transfers In 8% Debt Proceeds 11% 2023 Revenues by Category -All Funds Property Taxes 68% Franchise & Other Taxes 2%Licenses & Permits 6% Intergovernmental Revenues 5% Charges for Services 10% Fines & Forfeits 0%Special Assessments 0%Miscellaneous 9% 2023 Revenues by Category -General Fund 55  The General Fund is the city’s primary property tax levying fund, and it accounts for 24% of the overall budgeted revenues of the city. This is a decrease from 30% in 2022.  Special revenue funds, totaling 7% of appropriations (remaining consistent from 7% in 2022), rely mainly on property taxes, tax increments, and charges for services.  The Debt Service Fund includes only non-enterprise and non-internal service fund debt. These funds represent 5% of the city’s 2023 budgeted revenues and are supported with property taxes and special assessments. This is a decrease from 8% in 2022.  Capital project funds total 26% (up from 8% in 2022) of budgeted revenues, which includes financing from bond proceeds (if applicable), property taxes, special assessments, operating transfers in, franchise fees and intergovernmental revenues (grants) for capital projects and acquisitions.  Enterprise funds consist of water, sewer, stormwater, liquor, deputy registrar (DMV), and fiber optics funds. These funds operate on a self-supporting basis, mostly from the sale of goods and charges for services. They are responsible for 34% of the overall revenue appropriations, which is a decrease from 42% in 2022.  Internal Service funds consist of facilities maintenance, IT services, central equipment, and benefits accrual. These funds are supported by staff allocation or rental charges from other funds of the city. Appropriations are 4% of the city’s 2023 budget, which is consistent with 2023. General 24%Special Revenue 7% Debt Service 5% Capital Projects 26%Enterprise 34% Internal Service 4% 2023 Revenues by Fund Type 56 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 out (other financing uses). The chart below shows the relative percentage of 2023 budgeted expenditures for these six major categories for all funds, combined. 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. The General Fund supports very little capital improvements and no debt service compared to all funds overall. Personnel Services 15% Supplies 13% Other Services & Charges 24% Capital Outlay 36%Debt Service 5% Operating Transfers Out 7% 2023 Appropriations by Category -All Funds Personnel Services 37%Supplies 7% Other Services & Charges 52% Capital Outlay 4% 2023 Appropriations by Category -General Fund 57 In governmental agencies, personnel services (salaries, wages, and benefits) 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 the city’s contracts (other services and charges) for law enforcement, legal, and assessing services.  The General Fund is the city’s primary operating fund for general government operations, and it accounts for 21% of the overall appropriations of the city in 2023. This is a decrease from 26% in 2022.  Special revenue funds, totaling 7% of 2023 appropriations (consistent with 2022), include a variety of fee-supported funds including the community center and cemetery.  The Debt Service Fund includes only non-enterprise and non-internal service fund debt. These funds represent 5% of the city’s 2023 appropriations for bond principal and interest payments. This is a decrease from 7% in 2022.  Capital project funds total 27% (up from 18% in 2022) of appropriations, which includes costs for street construction, street lighting and park improvements, and other governmental capital asset acquisitions excluding internal service funds. The city has several large projects on the horizon, including the Downtown Pedestrian & Roadway Improvement Project, construction of a new Public Works facility, planning for development in the Pointes at Cedar area, and improvements at the Bertram Chain of Lakes Regional Park.  Enterprise funds consist of water, sewer, stormwater, liquor, deputy registrar (DMV), and fiber optics funds. These funds operate on a self-supporting basis and are responsible for 36% of the overall appropriations. This is down from 38% in 2022.  Internal Service funds consist of facilities maintenance, IT services, central equipment, and benefits accrual. These funds operate to provide services to the other internal departments of the city. Appropriations are 4% of the city’s 2023 budget, which is consistent with 2022. General 21% Special Revenue 7% Debt Service 5% Capital Projects 27% Enterprise 36% Internal Service 4% 2023 Appropriations by Fund Type 58 INTERFUND TRANSFERS Operating transfers support the operations of other funds, provide for special projects, and contribute to debt service payments. The following schedule provides the 2023 budgeted operating transfers: Fund No.Transfer Out Fund Amount Fund No.Transfer In Fund Amount 101 General 6,000$ 213 Economic Development Authority 6,000$ 609 Liquor 1,000,000 400 Capital Projects 1,000,000 609 Liquor 250,000 403 Street Lighting Improvement 250,000 609 Liquor 1,000,000 404 Park & Pathway Improvement 1,000,000 653 Deputy Registrar 1,750,000 400 Capital Projects 1,750,000 Total Transfers Out 4,006,000$ Total Transfers In 4,006,000$ SCHEDULE OF BUDGETED OPERATING TRANSFERS IN 2023 59 ALL FUNDS SUMMARY BY YEAR Tax increments will decrease in 2023 due to newly decertified districts. Franchise & other taxes increase to better match prior year trends. Intergovernmental revenues are projected to increase in 2023 due to grants received to offset project costs for four projects: Downtown Pedestrian & Roadway Improvements, School Boulevard Improvements, and Elm Street Improvements, and Yellow Flashing Arrow Intersection Upgrades. Special assessments decrease due to regular amortization, which is accelerated by prepayments when properties change ownership. The increase in contributed capital is caused by projections of development. Operating transfers are from the Liquor and Deputy Registrar funds to the Capital Projects Fund to pay for the Downtown Pedestrian & Roadway Improvements Project. Debt is projected to be issued for the beginning stages of construction of a new Public Works Facility; additional debt will be issued in 2024 to complete the project. Personnel services budget increased by a 4.0% wage and health benefit increase budgeted in 2023. A new streets operator is budgeted for beginning 4/1/23. The Liquor and Deputy Registrar funds each added a full-time employee in 2022, adding to the 2023 budget. Other TOTAL ALL FUNDS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 10,836,757$ 11,540,278$ 11,741,000$ 11,798,194$ 12,452,000$ 6.1% Tax Increments 707,824 732,688 630,344 720,301 529,000 -16.1% Franchise & Other Taxes 441,584 461,898 398,000 410,299 506,500 27.3% Sale of Goods 7,404,955 7,104,357 7,013,000 7,168,374 7,357,694 4.9% Licenses & Permits 524,464 810,239 473,100 615,185 486,000 2.7% Intergovernmental Revenues 1,641,228 4,007,667 1,788,000 1,815,699 2,773,395 55.1% Charges for Services 9,974,480 11,747,161 11,015,657 12,788,488 12,103,188 9.9% Fines & Forfeits 31,852 49,566 51,600 34,221 51,600 0.0% Special Assessments 647,195 1,797,837 468,243 1,000,511 397,924 -15.0% Miscellaneous 1,565,605 1,064,694 1,179,131 118,489 1,266,699 7.4% Contributed Capital 1,142,944 981,521 75,000 646,137 184,000 145.3% Operating Transfers In 2,760,000 8,952,690 314,925 461,626 4,006,000 1172.0% Debt Proceeds 2,256,280 - - - 5,000,000 --- TOTAL REVENUES 39,935,168$ 49,250,597$ 35,148,000$ 37,577,526$ 47,114,000$ 34.0% EXPENDITURES Personnel Services 6,152,627$ 6,449,844$ 7,666,235$ 7,377,135$ 8,223,067$ 7.3% Supplies 6,672,104 6,463,849 6,867,290 6,655,548 7,260,349 5.7% Other Services & Charges 10,314,137 10,031,711 10,363,277 11,451,971 13,427,163 29.6% Capital Outlay 5,221,894 7,888,500 12,332,156 3,398,771 20,246,630 64.2% Debt Service 4,274,436 7,314,973 3,240,117 2,857,810 3,039,791 -6.2% Operating Transfers Out 2,760,000 8,952,690 314,925 461,627 4,006,000 1172.0% TOTAL EXPENDITURES 35,395,198$ 47,101,566$ 40,784,000$ 32,202,862$ 56,203,000$ 37.8% FUND BALANCE - JANUARY 1 51,195,044$ 55,735,014$ 57,884,045$ 57,884,045$ 63,258,709$ Excess (Deficiency) of Revenues over Expenditures 4,539,970 2,149,031 (5,636,000) 5,374,664 (9,089,000) FUND BALANCE - DECEMBER 31 55,735,014$ 57,884,045$ 52,248,045$ 63,258,709$ 54,169,709$ 60 services & charges expenditures increase in 2023 due to anticipated repairs needed, most notably in the utilities (water, sewer, and stormwater) enterprise funds. Estimated capital outlay expenditures increase due to construction on several large projects the have been in the planning stages for a few years. These projects include Downtown Pedestrian & Roadways Improvements, a new Public Works Facility, The Pointes at Cedar development area, Bertram Chain of Lakes Regional Park Improvements, and School Boulevard & Elm Street Safety Improvements. Debt service decreases in 2023 due to amortization of existing debt and no new debt issued. The early redemption of one bond issue in 2021 caused a one-time large payment. Operating transfers are from the Liquor and Deputy Registrar funds to the Capital Projects Fund to pay for the Downtown Pedestrian & Roadway Improvements Project. More detailed information on each fund, including the major funds, is included later in this document. 61 FUND BALANCE/WORKING CAPITAL FUND BALANCE is calculated as governmental fund assets minus liabilities. WORKING CAPITAL is the modified accrual balance of resources in enterprise funds after factoring out long-term assets and liabilities that do not impact current, near-term operations. The Economic Development Authority Fund is planning to use pooled tax increment from previous years to fund development related incentives in 2023, which will decrease the fund balance. The fund balances in most debt service subfunds, including the 2015B, 2016A, and 2017A issuances, are projected to decrease due to the planned spend down of accumulated fund balance, most notably from prepaid assessment revenues received. The Capital Projects Fund, Street Lighting Improvement Fund, and Park & Pathway Improvement Fund are budgeted to decrease by more than 10% due to the planned use of fund balance to support projects. Reimbursement resolutions have been passed for activity related to the Public Works Facility, which allows the City to bond in 2023 and 2024 for project costs expended on the project. The Liquor and Deputy Registrar funds’ working capital balances are estimated to decrease by more than 10%, which reflects transfers out to the Capital Projects and Park & Pathway Improvements funds to finance capital improvements paid with existing monies. The Central Equipment Fund is expected to decrease by more than 10% in 2023, which reflects the use of fund balance (transferred from the General Fund in 2021 & 2022) for a number of acquisitions that will not be received until 2023 due to supply chain issues. 62 Projected Beginning Projected Ending Fund Balance/Estimated Estimated Fund Balance/ Working Capital Revenues Appropriations Working Capital General Fund 7,164,324$ 11,480,000$ 11,480,000$ 7,164,324$ Special Revenue Funds Economic Development Authority 7,020,352 987,000 1,823,000 6,184,352 Cemetery 117,844 42,000 31,000 128,844 Small Community Development Grant 898,209 8,000 - 906,209 Monticello Community Center 519,536 2,122,000 2,122,000 519,536 Total Special Revenue Funds 8,555,941 3,159,000 3,976,000 7,738,941 Debt Service Funds 2015B G.O. Bonds 121,706 186,000 213,000 94,706 2016A G.O. Bonds 313,731 357,000 528,000 142,731 2017A G.O. Bonds 274,359 340,000 468,000 146,359 2018A G.O. Bonds 79,500 446,000 448,000 77,500 2019A G.O. Bonds 48,734 712,000 712,000 48,734 2020A G.O. Bonds 136,277 227,000 238,000 125,277 Total Debt Service Funds 974,306 2,268,000 2,607,000 635,306 Capital Project Funds Capital Projects 10,416,582 10,615,000 11,870,000 9,161,582 Street Lighting Improvement 1,254,883 922,000 2,130,000 46,883 Park & Pathway Improvement 1,207,608 1,002,000 1,375,000 834,608 Park Dedication 100,705 1,000 - 101,705 Total Capital Project Funds 12,979,777 12,540,000 15,375,000 10,144,777 Enterprise Funds Water 7,733,540 1,760,000 2,242,000 7,251,540 Sewer 11,606,592 3,119,000 3,679,000 11,046,592 Stormwater 3,287,089 962,000 986,000 3,263,089 Liquor 2,862,566 7,370,000 9,010,000 1,222,566 Deputy Registrar 2,371,303 871,000 2,542,000 700,303 Fiber Optics 1,379,290 1,880,000 1,950,000 1,309,290 Total Enterprise Funds 29,240,380 15,962,000 20,409,000 24,793,380 Internal Service Funds (1) (1) Facilities Maintenance 36,544 403,000 403,000 36,544 IT Services 242,719 538,000 538,000 242,719 Central Equipment 3,704,738 752,000 1,403,000 3,053,738 Benefit Accrual 359,980 12,000 12,000 359,980 Total Internal Service Funds 4,343,979 1,705,000 2,356,000 3,692,979 Total All Funds 63,258,709$ 47,114,000$ 56,203,000$ 54,169,709$ CHANGES IN FUND BALANCE/WORKING CAPITAL - FISCAL YEAR 2023 63 Adopted Actual Actual Budget Estimated Budget 2020 2021 2022 2022 2023 General Fund 6,640,235$ 6,624,782$ 6,624,782$ 7,164,324$ 7,164,324$ Special Revenue Funds Economic Development Authority 6,518,705 7,008,094 7,214,094 7,020,352 6,184,352 Cemetery 55,339 80,184 80,184 117,844 128,844 Small Community Development Grant 924,538 924,622 932,622 898,209 906,209 Monticello Community Center 52,357 389,738 389,738 519,536 519,536 Total Special Revenue Funds 7,550,939 8,402,638 8,616,638 8,555,941 7,738,941 Debt Service Funds 2011A G.O. Refunding Bonds (2005A)111,460 109,552 (2,448) - - 2014A G.O. Bonds 148,714 - - - - 2015B G.O. Bonds 121,687 135,877 140,877 121,706 94,706 2016A G.O. Bonds 399,967 368,684 327,684 313,731 142,731 2017A G.O. Bonds 278,557 280,978 279,978 274,359 146,359 2018A G.O. Bonds 79,719 80,503 85,503 79,500 77,500 2019A G.O. Bonds 39,494 49,780 54,780 48,734 48,734 2020A G.O. Bonds 124,934 98,836 51,836 136,277 125,277 Total Debt Service Funds 1,304,532 1,124,210 938,210 974,306 635,306 Capital Project Funds (1) Capital Project 16,243,546 11,862,620 7,919,620 10,416,582 9,161,582 Street Lighting Improvement 995,928 1,180,207 905,207 1,254,883 46,883 Park & Pathway Improvement 717,478 1,100,572 727,572 1,207,608 834,608 Park Dedication - 41 3,041 100,705 101,705 Closed Bond Fund 914,050 - - - - Streets Reconstruction 1,667,656 - - - - Total Capital Project Funds 20,538,658 14,143,440 9,555,440 12,979,777 10,144,777 Enterprise Funds Water 5,280,477 6,511,005 6,436,005 7,733,540 7,251,540 Sewer 7,285,407 9,601,117 9,175,117 11,606,592 11,046,592 Stormwater 2,284,845 2,800,863 1,866,863 3,287,089 3,263,089 Liquor 1,014,600 2,032,400 2,822,400 2,862,566 1,222,566 Deputy Registrar 1,848,750 2,195,481 2,289,481 2,371,303 700,303 Fiber Optics 401,584 698,071 628,071 1,379,290 1,309,290 Total Enterprise Funds 18,115,663 23,838,937 23,217,937 29,240,380 24,793,380 Internal Service Funds (1) Facilities Maintenance - (33,854) (33,854) 36,544 36,544 IT Services 267,384 260,444 260,444 242,719 242,719 Central Equipment 962,590 3,170,333 2,715,333 3,704,738 3,053,738 Benefit Accrual 355,013 353,116 353,116 359,980 359,980 Total Internal Service Funds 1,584,987 3,750,039 3,295,039 4,343,979 3,692,980 Total All Funds 55,735,014$ 57,884,045$ 52,248,045$ 63,258,709$ 54,169,709$ FUND BALANCE/WORKING CAPITAL HISTORY Fiscal Year Ended December 31, 64 REVENUE TRENDS & ANALYSIS Revenues are conservatively estimated for every fund type. The schedule of revenue estimates below is supported by detailed revenue estimates for each fund in subsequent sections. This section of the budget highlights major revenue sources for all the city funds as combined and for key governmental and enterprise funds: General Fund and Monticello Community Center Fund (governmental funds), along with the Water, Sewer, Stormwater, Liquor, Deputy Registrar and Fiber Optics funds (enterprise funds). Trends for these funds and individual revenues are shown together with estimates for the coming year. TOTAL CITY REVENUES AND OTHER SOURCES Property taxes, charged to all non-exempt parcels in city limits, account for the single largest revenue source for the city. Property taxes are levied for the following funds: General, Monticello Community Center, Debt Service, Capital Projects, and Economic Development Authority. Budget estimates are based off the final levy certified. Tax increments are the main source of revenue for the Economic Development Fund accounting for 54% of 2023 budgeted revenues. This fund accounts for the city’s tax increment financing (TIF) districts and other general economic development activities of the Monticello Economic Development Authority. Budget estimates are taken from the prior year’s TIF collections and adjusted for known changes to each TIF district. Franchise & other taxes increase to better match prior year trends. Sales of goods reflect sales at the city’s Hi-Way Liquors off-sale store. Budget estimates are calculated using analysis of the actual sales trends over the past 3-5 years. Intergovernmental revenues are projected to increase in 2023 due to grants received to offset project costs for four projects: Downtown Pedestrian & Roadway Improvements, School Boulevard Improvements, and Elm Street Improvements, and Yellow Flashing Arrow Intersection Upgrades. Charges for services reflect increases in the city’s fee schedule, including refuse and recycling charges and community center membership and day pass fees. The city uses conservative TOTAL ALL FUNDS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 10,836,757$ 11,540,278$ 11,741,000$ 11,798,194$ 12,452,000$ 6.1% Tax Increments 707,824 732,688 630,344 720,301 529,000 -16.1% Franchise & Other Taxes 441,584 461,898 398,000 410,299 506,500 27.3% Sale of Goods 7,404,955 7,104,357 7,013,000 7,168,374 7,357,694 4.9% Licenses & Permits 524,464 810,239 473,100 615,185 486,000 2.7% Intergovernmental Revenues 1,641,228 4,007,667 1,788,000 1,815,699 2,773,395 55.1% Charges for Services 9,974,480 11,747,161 11,015,657 12,788,488 12,103,188 9.9% Fines & Forfeits 31,852 49,566 51,600 34,221 51,600 0.0% Special Assessments 647,195 1,797,837 468,243 1,000,511 397,924 -15.0% Miscellaneous 1,565,605 1,064,694 1,179,131 118,489 1,266,699 7.4% Contributed Capital 1,142,944 981,521 75,000 646,137 184,000 145.3% Operating Transfers In 2,760,000 8,952,690 314,925 461,626 4,006,000 1172.0% Debt Proceeds 2,256,280 - - - 5,000,000 --- TOTAL REVENUES 39,935,168$ 49,250,597$ 35,148,000$ 37,577,526$ 47,114,000$ 34.0% 65 revenue budgeting practices to ensure revenues will be sufficient to meet operating needs. The effects of the COVID-19 pandemic made projecting charges for services at the Monticello Community Center especially challenging. Special assessments decrease due to regular amortization, which is accelerated by prepayments when properties change ownership. Miscellaneous revenues, including donations, interest earned on investments, and rebates related to a solar farm investment, are conservatively estimated based on prior year trends. Known factors, such as the number of kilowatt-hours (kWh) subscribed in the solar program, are factored into the 2023 budget. While the investment earnings—the largest portion of this revenue classification—are expected to hold steady, adjustments to market value create volatility that makes estimating difficult. However, 2022’s market value adjustment was larger than interest received, which led to negative investments earnings reported. Operating transfers are expected to increase in 2022 because the Liquor and Deputy Registrar funds will transfer monies to the Capital Projects Fund to pay for the Downtown Pedestrian & Roadway Improvements Project. Debt is projected to be issued for the beginning stages of construction of a new Public Works Facility; additional debt will be issued in 2024 to complete the project. The chart below provides an overall picture of estimated 2023 revenues and other sources. PROPERTY TAXES The city relies on property taxes to support functions such as general government, public safety, public works, recreation and culture, capital outlay and debt service. For 2023, the council adopted a general levy of $12,050,000, which is $697,000 (6.1%) greater than the prior Property Taxes 26%Tax Increments 1% Franchise & Other Taxes 1% Sale of Goods 16% Licenses & Permits 1% Intergovernmental Revenues 6% Charges for Services 26% Fines & Forfeits 0% Special Assessments 1% Miscellaneous 3% Contributed Capital 0% Operating Transfers In 8% Debt Proceeds 11% 2023 Revenues by Category -All Funds 66 year. The EDA and council also adopted a Housing and Redevelopment Authority (HRA) special benefit levy of $402,000, which is $14,000 (3.6%) greater than 2022. The HRA levy is recorded in the Economic Development Authority (EDA) Fund. The following chart reflects the changes in the tax levy over the last ten years: Accounting for a variety of activities, the General Fund will receive 65% of the 2023 property tax levy. However, property taxes provide 70% of the General Fund’s revenue. The levy for the Monticello Community Center (MCC) increased $30,000 (6.2%) to $515,000. The following chart represents the distribution of the tax levy for 2023. 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. Estimated market values are converted to tax capacity by using specific state formulas for various types of properties. GENERAL FUND The General Fund is used to account for all financial resources of the city, except for those $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 City & HRA Property Tax Levies City Tax Levy HRA Levy General Fund $8,060,000 65% MCC Operations $515,000 4% HRA Levy $402,000 3% Capital $1,475,419 12% Debt Service $1,999,581 16% Property Tax Levy (Proposed 2023) 67 required to be accounted for in another fund. Major functions supported by General Fund revenues include administration and finance, police and fire services, public works, and recreation and culture. Revenue is estimated to be $11,480,000 (+9.0%) for the 2023 budget year. The primary General Fund source of revenue is property taxes at $8,060,000 (+7.8%), which accounts for 70% of total revenues. At 11% and 7%, charges for services and miscellaneous revenues are the only other categories to exceed 5% of total revenues. The following charts depicts General Fund revenues as represented in the 2023 adopted budget: The following chart represents General Fund revenues trends. MONTICELLO COMMUNITY CENTER The Monticello Community Center (MCC) provides a facility with space for a variety of recreational, professional, and educational opportunities. Aside from its portion of the property tax levy, the MCC is supported by a variety of fees for memberships, activities, rentals, and concessions. Council passed a revenue policy that requires the MCC to cover 85% of its General Fund Revenues -2023 Property Taxes (70%) Franchise & Other Taxes (3%) Licenses & Permits (4%) Intergovernmental Revenues (5%) Charges for Services (11%) All Other (7%) $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 ACTUAL ACTUAL BUDGET BUDGET 2020 2021 2022 2023 Revenues -General Fund Miscellaneous Fines & Forfeits Charges for Services Intergovernmental Revenues Licenses & Permits Franchise & Other Taxes Property Taxes 68 operating costs—including equipment—with fees and charges. The effects of the COVID-19 pandemic have affected the ability of this fund to meet that threshold. American Rescue Plan Act (ARPA) funds have been and will be used to supplement the reduction of charges for services revenues in 2021 – 2023. In the following chart, 2020 and 2021 are actual amounts and 2022 and 2023 are estimates. WATER AND SEWER FUNDS Water and sewer charges for services are primarily comprised of providing Monticello residents and businesses with water and sewer services. Based partially on the level of consumption, these utility funds each have separate charges for delivered services. The city sets rates to cover operating costs, a portion of depreciation, and debt service. The water and sewer funds are expected to provide some level of future support for debt service incurred to make water and sewer system improvements. In 2018, the sewer fund shows increased revenue because the city sold a parcel of property that had been used for storage and a bio-solids site. With 2022 and 2023 shown as a projected amount, the following chart plots revenues for water and sewer services on the primary axis (left) against gallons of water sold on the secondary axis (right): Water service charges have two components: base charge with a minimum usage amount and consumption charge for usage above the minimum amount. Rates have increased steadily over the last ten years: average annual base and consumption charge increases were 6.0%. Sewer $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 $2,200,000 ACTUAL ACTUAL BUDGET BUDGET 2020 2021 2022 2023 Revenues -Community Center Fund Operating Transfers In Miscellaneous Charges for Services Intergovernmental Revenues Property Taxes 0 100 200 300 400 500 600 700 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Gallons Sold (Millions)Revenues (Millions)Water & Sewer Revenues Water Revenue Sewer Revenue H20 Sold (Gallons) 69 charges, like water charges, have two components: base charge with a minimum usage amount and consumption charge for usage above the minimum amount. Rates have increased steadily over the years: average annual base and consumption charge increases were 5.0%. For 2023, increases of 8% for water and 2% for sewer, for both the base rate and usage rates, were included in the budget for both funds. The following chart reflects the water and sewer base rates over the last ten years: STORMWATER FUND The Stormwater Fund was established in 2019 along with the creation of a per drainage unit user charge. Each residential dwelling is equivalent to one drainage unit, and non-residential properties are equivalent to 7 drainage units per rounded impervious surface area. The fee increases to $4.50/month in 2023. Expenses in this fund were accounted for in the General fund prior to 2020. DEPUTY REGISTRAR (DMV) The city is authorized by the State of Minnesota to operate a DMV. Fees collected from motor vehicle licenses are the DMV’s main revenue source. Fees are regulated by the state. The following chart shows the history of DMV revenues by transaction type over a five-year period. The State transitioned to the MNLARS system in 2019 and to MNDrive in 2020. All three systems measured transactions differently which creates skewed numbers in the graph below. However, 2020 and 2021 were incredibly busy years for the DMV as the COVID-19 pandemic caused changes in operations and increased car sales contributed to increased workload. Motor vehicle licenses (new and renewals) as percentage of total transactions decreased slightly from 87% in 2021 to 85% in 2022. $- $2 $4 $6 $8 $10 $12 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Monthly ChargeWater and Sewer Base Rates Water Sewer $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 2018 2019 2020 2021 2022 DMV Transactions by Type & Annual Revenues Drivers License ($8) Game & Fish ($1) DNR ($2-$7) Motor vehicle ($6-$10) Annual Revenue 70 LIQUOR FUND With total 2022 sales of $7.18 million, Monticello’s municipal liquor store ranks in the top 3 of Minnesota cities with only one store. While the COVID-19 pandemic caused a rapid increase in sales in 2020, revenue growth slowed in 2021 and remained steady in 2022, as stay-at-home orders only occurred in 2020 and more people returned to dining out and enjoying on-sale venues once again. Total sales have climbed an average of 4.7% for the last five years (16.2% alone in 2020); liquor is the fastest growth category averaging 6.3% over five years. The 2023 Liquor Fund budget reflects a steady increasing sales trend. The Liquor Fund has one retail outlet: Hi-Way Liquors. This fund provides vital resources for many community projects including Bertram Chain of Lakes and other capital improvements. Conservative revenue estimates are used for budgeting purposes. However, 2023 net cash flow from operations should remain stable around $750,000. Beer accounts for approximately 51% of total sales; liquor and wine follow at 33% and 12%, respectively. Non-alcohol items contribute 4%. Beer typically has the lowest gross margin at 23% and wine the highest at 39%. Liquor is in the middle at about 30%. The chart below provides sales information by category: Beer 51% Liquor 33% Wine 12% Misc. 4% Hi-Way Sales by Category -2022 Liquor Store Revenue by Category Category 2018 2019 2020 2021 2022 5 Yr Chg Beer 3,074,408$ 3,252,142$ 3,838,912$ 3,665,223$ 3,695,976$ 20% % Change 6.0% 5.8% 18.0% -4.5% 0.8% Liquor 1,909,953$ 2,019,096$ 2,351,072$ 2,276,808$ 2,340,709$ 23% % Change 7.1% 5.7% 16.4% -3.2% 2.8% Wine 904,385$ 894,005$ 982,113$ 915,444$ 882,772$ -2% % Change 0.6% -1.1% 9.9% -6.8% -3.6% Other 201,462$ 211,687$ 235,777$ 253,775$ 257,966$ 28% % Change 12.4% 5.1% 11.4% 7.6% 1.7% Total Sales 6,090,208$ 6,376,930$ 7,407,874$ 7,111,250$ 7,177,423$ 18% % Change 5.6% 4.7% 16.2% -4.0% 0.9% 71 FIBER OPTICS FUND (FiberNet) Monticello’s telecommunications utility, FiberNet Monticello, provides internet, voice (telephone) and video (TV) services. City residential and commercial customers can subscribe to one, two, or all three services. FiberNet continues to face competition from two large private providers with significant resources and challenges with the societal shift away from traditional telephone and television services. As a result, subscriber counts for voice and video have declined in recent years. Internet has shown occasional growth with more customers streaming video services. The data in the graphs below show a stable competitive environment for FiberNet in 2022. In July 2016, the city contracted with Arvig to manage FiberNet. The contract was renewed for an additional 5 years in 2021. Through leaner operations, shared resources, and economies of scale, the Fiber Optics Fund has had positive cash flow from operations since 2019. However, potential new service areas will cause increases in capital costs. Arvig will continue to assess the marketplace and service delivery costs and will raise prices as needed. 1,815 1,817 1,809 1,806 1,801 1,788 1,781 1,771 1,769 1,770 1,761 1,752 285 283 281 280 267 266 265 267 264 261 256 256 293 295 295 295 291 287 284 278 277 276 275 275 0 500 1,000 1,500 2,000 2,500 2022 Total Subscribed Services Phone Television Internet 72 TAX LEVY HISTORY 2020 2021 2022 2023 General Fund $6,788,000 $7,169,000 $7,475,000 $8,060,000 Percent Change 1.8% 5.6% 4.3% 7.8% Special Revenue Funds Economic Development (HRA Levy)355,000 366,300 388,000 402,000 Monticello Community Center 417,000 485,000 485,000 515,000 Total Special Revenue Funds 772,000 851,300 873,000 917,000 Percent Change 2.9% 10.3% 2.5% 5.0% Debt Service Fund 2011A GO Refunding Bonds 172,641 - - - 2014A GO Judgement Bonds 535,501 513,570 - - 2015B GO Bonds 198,385 201,115 192,650 164,435 2016A GO Bonds 405,039 406,089 406,929 282,559 2017A GO Bonds 427,367 430,097 427,367 299,532 2018A GO Bonds 472,434 448,077 451,812 444,232 2019A GO Bonds 728,620 714,945 709,446 697,133 2020A GO Bonds - 117,586 123,196 111,690 Total Debt Service Fund 2,939,987 2,831,479 2,311,400 1,999,581 Percent Change 32.0% -3.7% -18.4% -13.5% Capital Project Funds Capital Projects Fund 300,013 578,221 1,081,600 1,475,419 Percent Change -54.7% 92.7% 87.1% 36.4% Total Tax Levy - All Funds 10,800,000$ 11,430,000$ 11,741,000$ 12,452,000$ Percent Change 4.8% 5.8% 2.7% 6.1% Levy Summary City General and Debt Levies 10,445,000$ 11,063,700$ 11,353,000$ 12,050,000$ Percent Change 4.8% 5.9% 2.6% 6.1% HRA Levy 355,000$ 366,300$ 388,000$ 402,000$ Percent Change 2.0% 3.2% 5.9% 3.6% TAX LEVY HISTORY 73 TAX CAPACITY HISTORY The Housing Redevelopment Authority (HRA) special benefit levy is capped at 0.0185% of the city’s taxable market value. The city’s taxable market value for taxes collected in 2022 totaled $2,134,994,875. HRA levy proceeds can only be used for purposes included in the HRA Act (Minnesota Statutes, Section 469.033, subd. 6). Those purposes include redevelopment to correct or prevent blight and development of, or assistance to, housing for low- or moderate- income persons. In 2022, Northern States Power (dba Xcel Energy), the city’s largest taxpayer, succeeded in getting the Minnesota Department of Revenue to lower the estimated market value of its nuclear power plant. Xcel’s estimated market value only increased by 3.7%, and because residential and commercial tax base grew significantly, the city’s tax capacity increased overall, but the tax burden shifted away from Xcel to the other taxpayers. The graph below reflects the annual change in the city’s property tax levy and the annual change in Xcel’s property taxes owed. If the green column is larger than the blue column, Xcel absorbed the entire levy and lowered the taxes paid by others. In the case where the green column is negative, other taxpayers paid for the entire levy increase plus the amount Xcel’s taxes declined. 2020 2021 2022 2023 Tax Capacity 29,870,392$ 31,026,583$ 31,073,603$ 34,925,732$ Percent Change 2.7% 3.9% 0.2% 12.4% City Levy - Tax Capacity Rate 34.968 35.659 36.536 34.502 Percent Change 2.1% 2.0% 2.5% -5.6% HRA Levy - Tax Capacity Rate 1.188 1.181 1.249 1.151 Percent Change -0.7% -0.7% 5.8% -7.8% TAX CAPACITY HISTORY $(400,000) $(200,000) $- $200,000 $400,000 $600,000 $800,000 2019 2020 2021 2022 2023 City Levy and Xcel Property Tax Change City Levy Increase Xcel Change in City Taxes 74 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 increases for tax collection years 2013 and 2015. Current year property taxes are calculated on the taxable market value on January 2 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: The plant’s percentage of the city’s total tax capacity (and its share of the annual property tax levies) has been significant for many years. In 2015 the percentage rose above 60% and remained there until 2019, when it dropped to 56%. The percentage has continued to decline, and 2023 estimates calculate Xcel’s percentage of tax base at 46%. This tax capacity decline means the city’s other taxpayers absorbed more of the tax levy. Tax Year Amount $ Change Amount $ Change % Chg.Amount $ Change % Chg. 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 789,572,500$ (88,282,600)$ 15,791,450$ (1,765,652)$ -10% 5,410,467$ (266,029)$ -5% 2020 780,422,700$ (9,149,800)$ 15,608,454$ (182,996)$ -1% 5,457,964$ 47,497$ 1% 2021 806,039,800$ 25,617,100$ 16,120,796$ 512,342$ 3% 5,748,515$ 290,551$ 5% 2022 751,329,900$ (54,709,900)$ 15,026,598$ (1,094,198)$ -7% 5,490,118$ (258,397)$ -4% 2023 779,500,000$ 28,170,100$ 15,590,000$ 563,402$ 4% 5,378,862$ (111,256)$ -2% Northern States Power (dba Xcel Energy) Taxable Market Value Tax Capacity City Property Tax on Plant $448 $707 $780 $832 $878 $790 $780 $806 $751 $780 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023MillionsXcel Power Plant -Taxable Market Value 75 REVENUE SOURCES BY FUND Property Tax Franchise Sale of Licenses/ Taxes Increments & Other Taxes Goods Permits Intergovernmental General Fund 8,060,000$ -$ 316,500$ -$ 484,000$ 513,895$ Special Revenue Funds Economic Development Authority 402,000 529,000 - - - - Cemetery - - - - - - Small Cities Development Program - - - - - - Monticello Community Center 515,000 - - - - 400,000 Total Special Revenue Funds 917,000 529,000 - - - 400,000 Debt Service Funds 2015B G.O. Bonds 164,435 - - - - - 2016A G.O. Bonds 282,559 - - - - - 2017A G.O. Bonds 299,532 - - - - - 2018A G.O. Bonds $444,232 - - - - - 2019A G.O. Bonds 697,133 - - - - - 2020A G.O. Bonds 111,690 - - - - - Total Debt Service Funds 1,999,581 - - - - - Capital Project Funds Capital Project 1,475,419 - - - - 1,087,000 Street Lighting Improvement - - 190,000 - - 472,500 Park & Pathway Improvement - - - - - - Park Dedication - - - - - - Total Capital Project Funds 1,475,419 - 190,000 - - 1,559,500 Enterprise Funds Water - - - - 2,000 - Sewer - - - - - - Stormwater - - - - - 300,000 Liquor - - - 7,357,694 - - Deputy Registrar - - - - - - Fiber Optics - - - - - - Total Enterprise Funds - - - 7,357,694 2,000 300,000 Internal Service Funds Facilities Maintenance - - - - - - IT Services - - - - - - Central Equipment - - - - - - Benefit Accrual - - - - - - Total Internal Service Funds - - - - - - Total All Funds 12,452,000$ 529,000$ 506,500$ 7,357,694$ 486,000$ 2,773,395$ Revenue Classifications 76 Charges for Fines &Special Miscell-Contributed Operating Debt Services Forfiets Assessments aneous Capital Transfers Proceeds Total General Fund 1,246,779$ 51,600$ 100$ 807,126$ -$ -$ -$ 11,480,000$ Special Revenue Funds Economic Development Authority - - - 50,000 - 6,000 - 987,000 Cemetery 41,700 - - 300 - - - 42,000 Small Cities Development Program - - - 8,000 - - - 8,000 Monticello Community Center 1,186,600 - - 20,400 - - - 2,122,000 Total Special Revenue Funds 1,228,300 - - 78,700 - 6,000 - 3,159,000 Debt Service Funds 2015B G.O. Bonds - - 19,903 1,662 - - - 186,000 2016A G.O. Bonds - - 73,063 1,378 - - - 357,000 2017A G.O. Bonds - - 39,098 1,370 - - - 340,000 2018A G.O. Bonds - - - 1,768 - - - 446,000 2019A G.O. Bonds - - 13,299 1,568 - - - 712,000 2020A G.O. Bonds - - 113,912 1,398 - - - 227,000 Total Debt Service Funds - - 259,275 9,144 - - - 2,268,000 Capital Project Funds Capital Project - - 127,734 174,847 - 2,750,000 5,000,000 10,615,000 Street Lighting Improvement - - - 9,500 - 250,000 - 922,000 Park & Pathway Improvement - - - 2,000 - 1,000,000 - 1,002,000 Park Dedication - - 815 185 - - - 1,000 Total Capital Project Funds - - 128,549 186,532 - 4,000,000 5,000,000 12,540,000 Enterprise Funds Water 1,677,049 - 10,000 55,951 15,000 - - 1,760,000 Sewer 3,089,344 - - 29,656 - - - 3,119,000 Stormwater 600,000 - - 2,000 60,000 - - 962,000 Liquor - - - 12,306 - - - 7,370,000 Deputy Registrar 840,000 - - 31,000 - - - 871,000 Fiber Optics 1,869,708 - - 10,292 - - - 1,880,000 Total Enterprise Funds 8,076,101 - 10,000 141,205 75,000 - - 15,962,000 Internal Service Funds Facilities Maintenance 378,000 - - 25,000 - - - 403,000 IT Services 529,008 - - 8,992 - - - 538,000 Central Equipment 633,000 - - 10,000 109,000 - - 752,000 Benefit Accrual 12,000 - - - - - - 12,000 Total Internal Service Funds 1,552,008 - - 43,992 109,000 - - 1,705,000 Total All Funds 12,103,188$ 51,600$ 397,924$ 1,266,699$ 184,000$ 4,006,000$ 5,000,000$ 47,114,000$ Revenue Classifications (continued) 77 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 the law enforcement rate and patrol have an impact going forward. Expected to rise at the pace of inflation. Routine capital expenditures vary by year, but are being completed modestly and strategicly as the current ecomony continues to affect discretionary spending such as fitness memberships. Non-TIF expenditures are expected to rise at the pace of inflation. N/A 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 R&M items and capital expenditures could be supported by transfers from other funds. The only CIP purchases budgeted in 2023 are for small tools and equipment or building repairs run through the operating budget. Tax increment financing (TIF) expenditures will vary considerably from year-to- year in each district as development occurs. Large capital projects may receive funding from debt issuance, typically as a reimbursement of spent reserves. Major projects in 2023 include improvements in the Downtown, Pointes at Cedar, and Bertram Chain of Lakes (BCOL) Regional Park. Additionally, construction of a PW Facility will begin. Revenues Property taxes provide 70% of General Fund revenue. The budget is somewhat limited by sustainable growth in the tax levy. The city looks to diversify revenues by implementing more charges for services, as applicable. Additional revenue is earned from a solar farm investment that began in 2020. The property tax levy is set at $515K in 2023. Ideally, user fees will cover 85% on-going expenditures. However, the current ecomony continues to affect discretionary spending such as fitness memberships. The fund has been kept solvent by American Rescue Plan Act (ARPA) Federal grant dollars. 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. The 2023 levy is $402,000. In the past, state street aid has been used as temporary financing and later replaced with debt proceeds. The city is analyzing a greater use of reserves or other sources to control its debt levels. Debt None: Indirectly supports Central Equipment Fund debt service through annual rental payments. No debt issues are anticipated over the 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 sub-fund will finance some TIF activities. No external debt issuance is planned. 2023: $5M planned. The city has a new Public Works Facility included in the CIP. The debt needed to finance this project will be a significant amount of the city's debt capacity and is planned for 202 and 2024. Payments on these bonds will be structured to take advantage of the decline in other tax supported debt. 78 Water Sewer Liquor Fiber Optics Central Equipment Routine Expenditures 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 are estimated at $760,000. 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 estimated at $200,000. 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%. Since the management agreement with Arvig began in 2016, FiberNet has seen significant improvement in operations due to lower costs from economies of scale. Routine expenditures are now fully covered by operating revenues. Capital equipment purchases will vary widely every year. All expenditures in this fund are either for capital equipment purchases or debt service. Non-routine Expenditures 2026 & 2029: $1.8M trunk line improvements with Fallon Avenue street improvement project. 2026: $1.2M Well 6. 2028: $28M water treatment facility. 2023: $400k SCADA systems & $500k CSAH 39 extension. 2024: $750k Marvin Rd lift station. 2025: $2.5M WWTP improvements. 2026 & 2029: $5.5M trunk line improvements with Fallon Avenue street improvement project. 2031: $5M WWTP improvements. The fund generates sufficient annual revenues to support its needs. 2024: $75k for parking lot improvements. 2025: $50K for roof repairs. 2026: $2M construction of second store. This will change based on activity and necessity. Operating revenues are currently adequate to support non-routine expenditures. However, non-routine expenditures are tied to development, which is unpredictable. Reserves from recent operating revenues have been sufficient. Anticipated future expenditure by year: 2023: $1.34M; 2024: $1.08M; 2025: $671k; 2026: $660k; 2022: $1.16M. The CIP reflects ideal timing for replacement of equipment, but will be adjusted as financing allows. Revenues User rates are high enough to cover planned expenditures for the next five years. In anticipation of a new water treatment plant in 2028, the city is projecting 8% rate increases over the next 5 years to fund capital and operating costs related to the plant. 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. Anticipated rate increases are 3% annually. Sales have increased steadily. 2020 was a record year for sales at a 16.2% increase. Sales cooled, and the 2021 decreased 3.5%. 2022 sales were only 0.8% higher than 2021. Sales are expected to return to normal annual increases around 5% in the Revenues mainly consist of charges for services to those subscribers to FiberNet's services. The original agreement with Arvig expired on June 30, 2021, and the contract was re- negotiated for an additional 5 years term through mid-2026. Rental revenues (expenditures in other funds, funded by revenues sources in other funds) rise with equipment purchases. Excess fund balance in the General Fund at the end of 2021 was transferred in for future purchases. Debt No debt issues or Minnesota Public Facilities Authority (MPFA) loans are anticipated unless external funding is received related to construction of a Water Treatment Facility (if so, construction is tentatively projected in 2028). The Minnesota Public Facilities Authority (MPFA) may provide funding for the future projects. Revenue bonds may be sold if reserves are depleted. No debt issues are anticipated over next five years. No new debt is planned for the future. However, the requirement to install service to all new developments could call for issuing debt in the future. The 2014A Equipment Bonds are paid out of this fund. Future debt issues will not be needed if acquisitions listed in the CIP are adjusted to provide for more level purchases from year to year. A debt service schedule is contained in the Internal Service section of this report. 79 As part of the budget process, council and staff review service needs, growth trends, and capital investment requirements. A long-term financial plan (LTFP) model was developed by the city’s financial advisor in 2022 for all city funds. However, the following discussion with focus on the city’s four main operating funds: General, Monticello Community Center, Water, and Sewer. This is done in conjunction with the Capital Improvement Plan (CIP), which is a five- to 10-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 Stormwater Fund, Liquor Fund, Deputy Registrar Fund, and Fiber Optic Fund are excluded from the discussion. The Stormwater Fund is in its infancy, and the capital needs and planning are still somewhat unknown. The liquor store and DMV are retail operations with no major forecasted capital investment needs. The Fiber Optic Fund presents challenges in a dynamic and competitive market where the strategies and business plan need consistent refinement. Items impacting long range financial planning: • Current financial position (fund balances) and growth trends, inflation, and aspirations • Debt burden • Tax base considerations and concentration • Regulatory environment • Condition of existing capital assets The city annually adopts a balanced budget for the General Fund. Consequently, the expenditures line matches the revenue bar height each year. After 2022, 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. According to policy, the city shall maintain a fund balance of 60-75% of the following year’s budgeted expenditures. The following charts assume the city will continue to provide the same current levels of service. Like the General Fund, the Monticello Community Center (MCC) Fund adopts a balanced budget. Changes caused by the COVID-19 pandemic created budgetary challenges for the fund, relying on American Rescue Plan Act (ARPA) funding from 2021 – 2023 to support the MCC Fund. The following charts assume a modest return of patrons while providing the same current levels of service, although some may be altered to meet safety regulations. Future planning and budgets will address the negative cash and fund balance issue identified in the LTFP. $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031MillionsChart 33. General Fund Expenditures and Revenues All other revenues Property tax Expenditures $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031MillionsChart 32. General Fund Ending fund balance is projected to continue to be at levels above the minimum required Ending Fund Balance Ending Cash Balance 80 The Water Fund is the city’s most self-sustained utility fund in the short-term. The fund has no direct debt and has adequate reserves to cover almost any expenditure for major capital projects, with none scheduled in the next couple years. A new well is planned for 2026. A new water treatment plant is tentatively projected for 2028 construction, depending on receipt of external funding sources. The city’s share of costs would likely require the issuance of debt. While the budget focuses on working capital, the LTFP presents net position which includes long-term assets and debt as applicable. Rates will be adjusted beginning in 2023 to prevent the negative net position projected in 2028 – 2031. $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031MillionsCommunity Center Fund Expenditures and Revenues All other revenues Property tax Expenditures ($3.0) ($2.5) ($2.0) ($1.5) ($1.0) ($0.5) $0.0 $0.5 $1.0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031MillionsCommunity Center Fund Ending fund balance is projected to continue to be at levels above the minimum required Ending Fund Balance Ending Cash Balance -1200% -1000% -800% -600% -400% -200% 0% 200% 400% 600% 800% 1000% ($12.0) ($10.0) ($8.0) ($6.0) ($4.0) ($2.0) $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Ending unrestricted Net Position as % of ExpensesMillionsChart 43. Water Fund Unrestricted Net Position Ending Unrestricted Net Position Ending Unrestricted Net Position as % of Expenses $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031MillionsChart 42. Water Fund Ending Cash Balance by Purpose Cash available for future capital / unassigned Cash for 3-months operating reserve Cash for next year debt service Cash for next year planned capital $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031MillionsChart44. Water Fund Revenues and Expenses Revenues Expenses 81 The Sewer Fund has its own funding challenges. Environmental regulatory changes require large investments in the wastewater treatment plant. Wastewater treatment plant improvements are planned for 2024 and 2025. However, the model shows the Sewer Fund’s current projections are sustainable. Along with the water fund, the LTFP presents net position which includes long-term assets and debt as applicable rather than working capital which is reported in the budget. 0% 100% 200% 300% 400% 500% 600% 700% $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Ending unrestricted Net Position as % of ExpensesMillionsChart 47. Sewer Fund Unrestricted Net Position Ending Unrestricted Net Position Ending Unrestricted Net Position as % of Expenses $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031MillionsChart 46. Sewer Fund Ending Cash Balance by Purpose Cash available for future capital / unassigned Cash for 3-months operating reserve Cash for next year debt service Cash for next year planned capital $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031MillionsChart 48. Sewer Fund Revenues and Expenses Revenues Expenses 82 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 and financial position. Considering 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 70% 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 been above inflation. The increase in assessed value at the nuclear power plant was lower than other property tax classes, which caused a tax shift to other property taxpayers in the city. Accordingly, the levy was set at a 6.1% increase, which responds to the city’s increased costs due to inflation while still aiming to control the impact to property taxpayers who are also feeling the effects of inflation. The current council philosophy indicates a desire to balance the impacts to taxpayers while not delaying necessary spending. 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 the 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 analyzes 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 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. 83 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 contracted with Northland Securities, Inc. in 2022 to develop a financial model, which is used 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 will be 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 update the proforma annually 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 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. While volatility from year to year is seen as interest rates fluctuate, investing brings solid returns in the long run. 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. 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. 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, prioritizing transparency with the public, 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 other community stakeholders and neighboring communities to share services and equipment, jointly contract 84 with vendors and 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 other community stakeholders and neighboring communities and has several joint powers agreements in place on a variety of local and regional issues in planning, public safety and public works initiatives. Recent steps taken to achieve long-term fiscal objectives: The city has shifted its focus from issuing debt for all street projects in the Pavement Preservation Program to funding those projects on a pay-as-you-go basis due to the relatively routine nature of road improvements in the city. The debt level and debt levy capacities are reserved for major projects that are truly unique such as the Bertram Chain of Lakes Regional Park, Public Works Facility construction, and The Pointes at Cedar development area. In 2018, the city started billing all residential garbage customers with an individual service cart a flat fee plus 9.75% garbage tax per month. In 2023, the garbage and recycling charges will be sufficient to recover all costs paid for the hauler’s service contract for the first time. In 2021, the city created the Facilities Maintenance internal service fund. This allows costs for city facility repairs and maintenance to be viewed across the board while also seeing each department’s impact through the internal charges paid by each cost center. A new software program, Cartegraph, was implemented to track work orders to provide the breakdown of costs to each facility and department. In 2022, the city completed a long-term financial planning model. This was a city initiative for many years and was finally accomplished through the use of Community Energy Transition (CET) grant funds from the Minnesota Department of Employment and Economic Development (DEED). 85 CAPITAL EXPENDITURES & CAPITAL IMPROVEMENT PLAN INTRODUCTION Capital expenditures (also called capital outlays) are the purchases of capital assets, which 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. Capital expenditures can be classified as either recurring or non-recurring. Large projects adding to or replacing infrastructure are usually non-recurring in nature. Pedestrian and roadway improvements in the downtown, design and grading work at the Pointes at Cedar development area, design and construction of a new Public Works Facility, and the School Boulevard and Elm Street safety improvements projects account for the bulk of the 2023 non- recurring projects. 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. The capital improvements presented in this section comprise the 2023-2027 Capital Improvements Plan (CIP). The Monticello CIP identifies capital and select major noncapital expenditures in a comprehensive plan to forecast future resources needed to acquire or build 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. WHAT IS A CAPITAL IMPROVEMENT PLAN? A capital improvement plan is a five-year projection for the evaluation of the city's capital 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. The Monticello CIP has four expenditure categories: capital improvements, vehicles and major equipment, major repair and maintenance items, and small tools and equipment. Capital asset classes also include land acquisitions. While the plan serves as a long-range plan, it is reviewed annually and revised based on current circumstances and opportunities. Priorities may change due to grant opportunities or circumstances that caused a more rapid deterioration of an asset. Projects may be revised for significant cost variances. WHAT ARE THE OBJECTIVES OF A CAPITAL IMPROVEMENT PLAN? · To forecast public facilities and improvements in a timely and systematic manner while providing an opportunity for residents and interest groups to provide input. · To strike a balance between needed public improvements and the present financial capability of the city to provide for these improvements. 86 · To anticipate and project financing needs in order to maximize available federal, state, and county funds, and enhance and protect future bond ratings and bonding capacity. · To implement city council objectives as outlined in the “Purpose and Mission” and serve as a guide for local officials in making budgetary decisions. · To promote and enhance the economic development of the city of Monticello while balancing the needs of new development with existing development. The CIP is developed with the intent of improving the reliability of cost estimates and funding forecasts by focusing on five years rather than only the upcoming year. 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 capital improvement efforts. WHAT IS THE CAPITAL IMPROVEMENT PLAN DEVELOPMENT PROCESS? Assign Project Titles Make the title descriptive of the nature and scope work. Group projects in a meaningful way by department. A project title of ABC Improvements will not work if it includes everything from the kitchen sink replacement to the pathway overlay. 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. 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 to avoid harmful or otherwise undesirable consequences. 1. Corrects a condition dangerous to public health or safety 2. Satisfies a legal obligation (law, regulation, court order, contract) 3. Alleviates an emergency service disruption or deficiency 4. Prevents irreparable damage to a valuable public facility Priority II: Essential (SHOULD-DO) - Projects that address clearly demonstrated needs or objectives. 5. Rehabilitates or replaces an obsolete public facility or attachment thereto 6. Stimulates economic growth and private capital investment 87 7. Reduces future operating and maintenance costs 8. 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. 9. Provides a new or expanded level of service 10. Promotes intergovernmental cooperation 11. Reduces energy consumption 12. 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 (timing issues) · Service impact (number of participants impacted) · New fees that could be generated because of the completion of the project (funding/cost recovery) · Community goal references (refer to Strategic Goals & Strategies section) · Safety requirements 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 an 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 88 HOW DOES THE CAPITAL IMPROVEMENT PLAN 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 Plan. 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, for example by attracting new businesses; by requiring new employees or additional maintenance or utility costs; or by reducing maintenance costs, utility costs, or personnel costs (reduction in overtime or man-hours). Specifically, new equipment may be more productive and less expensive to operate. 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. One capital asset that requires a delicate balance of operating maintenance and capital replacement is the city’s more than 80-mile street system. For more durable mill and overlay, the city budgets every other year for chip sealing and each year for crack sealing. These operating and capital expenditures work together to prevent more expensive street reconstruction projects. Finally, the city annually budgets for replacement of water and sewer 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. 89 Investment Department - Operating Fund Amount Starting Year Amount Comment Public Safety - General Fund Building Inspector Vehicle #1 35,000$ 2023 5,500$ CE lease (+) and R&M (-) Animal Shelter HVAC 30,000$ 2023 (350)$ Utilities and R&M Public Works - General Fund Dump Truck 328,000$ 2023 39,220$ CE lease (+) and R&M (-) Plow Truck 328,000$ 2023 39,220$ CE lease (+) and R&M (-) Forklift 50,000$ 2023 6,000$ CE lease (+) and R&M (-) Wheel Loader 280,000$ 2023 33,600$ CE lease (+) and R&M (-) One-Ton Pickup w/ Dump Box 85,000$ 2023 10,150$ CE lease (+) and R&M (-) School Boulevard Improvements 550,000$ 2024 11,000$ Utilities and R&M Elm Street Improvements 700,000$ 2024 14,000$ Utilities and R&M Downtown Roadway & Pedestrian Improvements 5,250,000$ 2024 78,750$ R&M The Pointes at Cedar Planning & Design 510,000$ 2024 -$ Plans and design only New Public Works Facility 5,000,000$ 2024 (75,000)$ Utilities and R&M Yellow Flashing Arrow Signal Improvements 700,000$ 2024 3,500$ Utilities Sidewalk Gap & Pavement Preservation 550,000$ 2024 5,500$ R&M West 7th Street Retaining Wall 400,000$ 2024 2,000$ R&M Recreation & Culture - General Fund 2021 Isuzu 63,000$ 2023 7,570$ CE lease (+) and R&M (-) Bobcat Grader Blade 96" Attachment 25,000$ 2023 2,950$ CE lease (+) and R&M (-) Cushman TRKSTR S660K6AT 61,000$ 2023 7,290$ CE lease (+) and R&M (-) Bobcat Toolcat 70,000$ 2023 8,400$ CE lease (+) and R&M (-) Danko Plus Trailer 12,000$ 2023 1,480$ CE lease (+) and R&M (-) Parks Shop Garage Door Openers 20,000$ 2023 (500)$ R&M BCOL Safety Improvements 1,000,000$ 2024 10,000$ R&M School Boulevard Pathway 375,000$ 2024 3,750$ R&M Fenning Avenue Pathway Lighting 175,000$ 2024 2,625$ Utilities and R&M Library Boiler Replacement 60,000$ 2024 (300)$ R&M Recreation - Community Center MCC Fire Alarm System 45,000$ 2023 (225)$ R&M Vanity and Partition Replacement 22,000$ 2023 -$ Cleaning and R&M Recreation Equipment & Spin Bikes 47,000$ 2023 (2,350)$ R&M Hallway & Pool Blinds 20,000$ 2023 (2,000)$ Utilities and R&M Pool Stairs 70,000$ 2023 (1,400)$ R&M Public Works - Water Fund Cast Iron Watermain Replacement 460,000$ 2023 7,150$ R&M Trunk Water Improvements 300,000$ 2023 3,000$ R&M 1/2 Ton Pickup 50,000$ 2023 (500)$ R&M Well Repairs 20,000$ 2023 (200)$ R&M Public Works - Sewer Fund SCADA System 400,000$ 2023 7,000$ R&M, software support East CSAH 39 Utility Extension 500,000$ 2023 10,000$ R&M WWTP Native Grass Conversion 75,000$ 2023 (3,750)$ R&M Public Works - Stormwater Fund Otter Creek Industrial Park - Karlsburger Outlet 120,000$ 2023 3,000$ R&M Ditch 33 Upgrades 300,000$ 2023 7,500$ R&M Liquor Fund Liquor Store Coolers 130,000$ 2023 (3,250)$ R&M Fiber Optics Fund Expansion to New Neighborhoods 200,000$ 2023 2,000$ R&M Impact on Operating Expense 90 In the table above, items with an increase in operating costs are additional equipment or new projects/improvements. Items with a decrease in operating costs are replacement equipment with lower R&M in the near term. Items with both increases and decreases to operating costs are noted with (+) and (-) in the Comment column. R&M expenses for roads include estimates for snow removal, boulevard maintenance, street sweeping, crack sealing, and striping. Listed amounts are for expenses more than those already being incurred. With no impact on expenses, some are replaced due to obsolescence or aesthetics reasons. The amounts listed are estimates; many of these amounts may or may not be close to those actually incurred. HOW IS INPUT FROM RESIDENTS INCORPORATED IN THE CIP DEVELOPMENT PROCESS? Residents are involved in the capital improvements plan through participation at council meetings, participation in public meetings, work sessions, and public hearings, and through boards, commissions. 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 along with holding public input meetings for major projects and setting up booths at various city events to garner feedback from residents and regular community visitors. HOW IS THE CAPITAL IMPROVEMENT PLAN FINANCED? In analyzing the financial viability of the capital improvements in the 2023-2027 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 (not applicable to the City of Monticello), and service charges are current revenues used to finance relatively small capital outlays.  The Central Equipment Fund, created for the purpose of establishing a revolving fund for future equipment purchases, reduces the impact of large equipment purchases on annual budget unit expenditures. This fund purchases equipment and leases it back to the benefiting budget units. The lease payments assure that equipment purchases will receive annual funding and are set at rates to recover depreciation plus inflation, but not operating costs such as repairs and maintenance (R&M), gas, or insurance. Similarly, internal service funds have been established for Facilities Maintenance and IT Services, which will also include equipment purchases related to each respective fund.  Enterprise fund revenues, 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, specifically the Capital Projects Fund, to provide financing for capital asset acquisitions.  Federal and state grants provide funding for various capital improvement projects. Other sources include local grants, donations, reserves, and other governmental units.  Debt issuance is used to finance large, non-recurring 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. 91 The below graphs provide a breakdown of expenditures and funding sources within the CIP: The large increase of capital activity in 2023 is attributable to the following projects: Downtown Pedestrian & Roadway, Public Works Facility, and the School Boulevard and Elm Street Improvements. 2024 expenditures are related to the completion of the construction of a new Public Works building and improvements in the Pointes at Cedar recreation and development area. 2025’s capital activity portrays additional work on the Pointes at Cedar recreation and development area along with trail and pathway improvements, water trunk line improvements, and upgrades to the influent lift station and grit removal at the wastewater treatment plant. Notable capital expenditures in 2026 include street and utility improvements, including deep water and sewer trunk lines, on Fallon Avenue from Chelsea Road to School Boulevard. In addition, an additional phase of upgrades at the Bertram Chain of Lakes Regional Athletic Park. 2027 capital outlays consist of projects and acquisitions recurring in nature. $- $5 $10 $15 $20 $25 $30 $35 $40 2020 Actual 2021 Actual 2022 Projected 2023 Budgeted 2024 Budgeted 2025 Budgeted 2026 Budgeted 2027 BudgetedMillionsCIP -Expenditures for FY 2020 -2027 Buildings Infrastructure - Streets Infrastructure - Utilities Improvements - Parks Vehicles & Equipment Land $- $5 $10 $15 $20 $25 $30 $35 $40 2020 Actual 2021 Actual 2022 Projected 2023 Budgeted 2024 Budgeted 2025 Budgeted 2026 Budgeted 2027 BudgetedMillionsCIP -Funding Sources for FY 2020 -2027 Capital Projects Fund Central Equipment Fund Enterprise Funds Other Funds 92 Capital Improvement Plan City of Monticello, Minnesota FUNDING SOURCE SUMMARY 2023 thru 2027 TotalSource20232024202520262027 Capital Equipment Fund 4,905,1851,337,000 1,080,773 670,779 660,339 1,156,294 Capital Project Fund 31,031,9546,870,000 9,150,000 8,885,000 3,376,954 2,750,000 Community Center Fund 2,025,000204,000 729,000 264,000 314,000 514,000 Debt Proceeds 19,000,0005,000,000 14,000,000 DMV Fund 150,000105,000 15,000 15,000 15,000 Facility Maintenance Fund 40,00040,000 Fibernet Fund 1,041,592200,000 210,398 210,398 210,398 210,398 General Fund 952,96420,000 263,241 223,241 223,241 223,241 Municipal Liquor Fund 2,349,500130,000 106,500 50,000 2,031,500 31,500 Parks & Pathways Fund 11,037,0001,375,000 2,437,000 2,025,000 5,200,000 Sewer Fund 1,301,225475,000 458,196 186,000 182,029 Sewer Trunk Fund 9,244,295500,000 1,292,000 3,358,260 3,501,777 592,258 Stormwater Trunk Fund 5,319,000420,000 3,730,000 560,000 609,000 Street Lighting Fund 2,115,0002,055,000 60,000 Water Fund 2,480,000530,000 460,000 570,000 460,000 460,000 Water Trunk Fund 11,425,605300,000 2,236,540 2,236,540 4,279,780 2,372,745 19,416,000 36,358,648 19,254,218 21,064,018 8,325,436 104,418,320GRAND TOTAL Produced Using the Plan-It Capital Planning Software 93 Capital Improvement Plan City of Monticello, Minnesota PROJECTS BY FUNDING SOURCE AND DEPARTMENT 2023 2027thru TotalSourceProject #Priority 2023 2024 2025 2026 2027 Capital Equipment Fund Community Development - Bldg VEQ-22-037 35,00035,000Building Inspector Vehicle n/a VEQ-22-038 35,00035,000Building Inspector Vehicle n/a 70,00035,000 35,000Community Development - Bldg Total Fire & Rescue VEQ-18-006 200,000200,000Utility 11 - Replacement 1 VEQ-21-002 450,000450,000Tender 11 - Replacement 1 650,000200,000 450,000Fire & Rescue Total Public Works VEQ-21-997 1,937,136558,008 150,009 104,732 1,124,387Fleet Replacement - PW 3 VEQ-22-004 328,000328,000Dump Truck n/a VEQ-23-001 328,000328,000Plow Truck 2 VEQ-23-002 50,00050,000Forklift2 VEQ-23-003 280,000280,000Wheel Loader 2 VEQ-23-004 85,00085,000One-Ton Pickup w/ Dump Box 2 VEQ-24-001 40,00040,000Tack Wagon 2 VEQ-24-002 165,000165,000Backhoe2 VEQ-24-003 55,00055,000Asphalt Roller 2 VEQ-24-004 22,00022,000Tilt Bed Trailer 2 3,290,1361,071,000 840,008 150,009 104,732 1,124,387Public Works Total Recreation & Culture PAR-22-021 63,00063,0002021 Isuzu n/a VEQ-21-998 594,049135,765 320,770 105,607 31,907Fleet Replacement - Parks 3 VEQ-23-005 25,00025,000Bobcat Grader Blade 96" Attachment 2 VEQ-23-006 61,00061,000Cushman TRKSTR S660K6AT 2 VEQ-23-007 70,00070,000Bobcat Toolcat 2 VEQ-23-008 12,00012,000Danko Plus Trailer 2 VEQ-24-005 70,00070,000Ford 1-Ton Dump w/plow 2 895,049231,000 205,765 320,770 105,607 31,907Recreation & Culture Total 4,905,1851,337,000 1,080,773 670,779 660,339 1,156,294Capital Equipment Fund Total Capital Project Fund Downtown STR-19-004 25,00025,000Broadway Corridor Parklets 3 STR-20-005 2,100,0002,100,000Walnut River Street Connection 3 STR-21-001 1,500,0001,500,000Broadway Sidewalk & Landscaping Improvements 3 STR-22-007 650,000650,000Hwy25/Broadway Intersection Improvements 2 4,275,0004,250,000 25,000Downtown Total Facilities Maintenance FAM-23-001 30,00030,000Animal Shelter HVAC 2 FAM-23-002 60,00060,000Library Boiler Replacement 1 Produced Using the Plan-It Capital Planning Software 94 TotalSourceProject #Priority 2023 2024 2025 2026 2027 90,00090,000Facilities Maintenance Total Fallon Avenue Improvements STR-17-002 2,026,954100,000 1,776,954 150,000Fallon Avenue & Trail - Chelsea to School Bvld 3 2,026,954100,000 1,776,954 150,000Fallon Avenue Improvements Total Pointes at Cedar STR-20-002 935,000100,000 835,000School Blvd/Cedar Roundabout 3 STR-23-005 835,000835,000School Blvd/Edmonson Roundabout 1 SWD-22-013 9,800,000510,000 4,690,000 4,600,000The Pointes at Cedar Pond n/a 11,570,000510,000 4,790,000 6,270,000Pointes at Cedar Total Recreation & Culture STR-20-001 400,000400,000School Blvd Pedestrian Improvements 1 400,000400,000Recreation & Culture Total Streets STR-15-003 670,000670,000Elm Street Sidewalk - 3rd St Pedestrian Blinker 3 STR-15-004 550,000150,000 100,000 100,000 100,000 100,000Sidewalk Gap Improvement Project (TBD)2 STR-19-001 4,650,000400,000 2,750,000 1,500,000Pavement Management Program 1 STR-20-003 500,00050,000 450,000School Blvd/Fallon Roundabout 3 STR-20-007 2,500,0002,500,00090th St Reconstruction - Chelsea to City Limits 2 STR-20-008 840,000200,000 640,000School Blvd Extension - Redford Ln to 90th St 3 STR-22-009 1,000,0001,000,000Dalton Way Extension and Industrial Park Grading 2 STR-23-002 400,000400,000West 7th Street Retaining Wall 1 STR-23-003 60,00060,000River Terrace Secondary Access Culvert Replacement 1 STR-23-004 1,500,000200,000 1,300,000CSAH 39 Pedestrian Improvements - Elm to Chelsea 2 12,670,0001,620,000 4,360,000 2,490,000 1,600,000 2,600,000Streets Total 31,031,9546,870,000 9,150,000 8,885,000 3,376,954 2,750,000Capital Project Fund Total Community Center Fund Community Center MCC-13-001 40,00040,000Movable Walls 3 MCC-13-003 20,00020,000City Council Dais Top 3 MCC-13-004 100,000100,000Concession Counter Improvements 3 MCC-18-001 250,000250,000New Patio - Replaces Skate Park 2 MCC-23-001 465,000465,000MCC Pavement & Sidewalk Improvements 2 MCC-23-002 10,00010,000MCC Hallway Blinds 2 MCC-23-003 10,00010,000MCC Pool Blinds 2 MCC-23-004 70,00070,000Pool Stairs 2 MNC-13-006 60,00020,000 40,000Carpet and Terrazo Replace/Repair 2 MNC-13-010 22,00022,000Vanity and Partition Replacement 3 MNC-19-001 35,00035,000Climbing Wall Resurfacing 2 STE-13-013 107,00047,000 60,000Recreation Equipment 2 STE-18-005 15,00015,000Floor Scrubber 2 VEQ-13-045 20,00020,000Dishwasher3 VEQ-18-001 35,00035,000Recreation Software 3 1,259,000159,000 600,000 160,000 90,000 250,000Community Center Total Facilities Maintenance FAM-23-003 45,00045,000MCC Fire Alarm System 1 FAM-99-991 721,000129,000 104,000 224,000 264,000Facility Repairs - MCC 2 766,00045,000 129,000 104,000 224,000 264,000Facilities Maintenance Total 2,025,000204,000 729,000 264,000 314,000 514,000Community Center Fund Total Produced Using the Plan-It Capital Planning Software 95 TotalSourceProject #Priority 2023 2024 2025 2026 2027 Debt Proceeds Public Works PWK-13-001 19,000,0005,000,000 14,000,000Public Works Facility 3 19,000,0005,000,000 14,000,000Public Works Total 19,000,0005,000,000 14,000,000Debt Proceeds Total DMV Fund DMV - Deputy Registrar DMV-23-001 90,00090,000DMV Parking Lot Improvements 2 90,00090,000DMV - Deputy Registrar Total Facilities Maintenance FAM-99-994 60,00015,000 15,000 15,000 15,000Facility Repairs - DMV Building 2 60,00015,000 15,000 15,000 15,000Facilities Maintenance Total 150,000105,000 15,000 15,000 15,000DMV Fund Total Facility Maintenance Fund Facilities Maintenance VEQ-22-039 40,00040,000Facility Maintenance Vehicle 3 40,00040,000Facilities Maintenance Total 40,00040,000Facility Maintenance Fund Total Fibernet Fund Facilities Maintenance FAM-99-997 41,59210,398 10,398 10,398 10,398Facility Repairs - Head End 2 41,59210,398 10,398 10,398 10,398Facilities Maintenance Total Fibernet FNM-22-045 1,000,000200,000 200,000 200,000 200,000 200,000Capital Expansion 2 1,000,000200,000 200,000 200,000 200,000 200,000Fibernet Total 1,041,592200,000 210,398 210,398 210,398 210,398Fibernet Fund Total General Fund Facilities Maintenance FAM-22-041 40,00040,000Carpet - Library 2 FAM-23-004 20,00020,000Parks Shop Garage Door Openers 2 FAM-99-993 112,00028,000 28,000 28,000 28,000Facility Repairs - Library 2 FAM-99-995 420,000105,000 105,000 105,000 105,000Facility Repairs - PW Building 2 FAM-99-996 100,00025,000 25,000 25,000 25,000Facility Repairs - Parks Shop 2 FAM-99-998 14,8323,708 3,708 3,708 3,708Facility Repairs - Animal Shelter 2 FAM-99-999 246,13261,533 61,533 61,533 61,533Facility Repairs - Fire Station 2 952,96420,000 263,241 223,241 223,241 223,241Facilities Maintenance Total 952,96420,000 263,241 223,241 223,241 223,241General Fund Total Municipal Liquor Fund Facilities Maintenance FAM-99-992 94,50031,500 31,500 31,500Facility Repairs - Liquor Store 2 LIQ-13-046 130,000130,000Liquor Store Coolers 1 224,500130,000 31,500 31,500 31,500Facilities Maintenance Total Produced Using the Plan-It Capital Planning Software 96 TotalSourceProject #Priority 2023 2024 2025 2026 2027 Municipal Liquor LIQ-13-002 75,00075,000Parking Lot Improvements 1 LIQ-13-003 2,000,0002,000,000Liquor Store - #2 3 LIQ-18-001 50,00050,000Roof1 2,125,00075,000 50,000 2,000,000Municipal Liquor Total 2,349,500130,000 106,500 50,000 2,031,500 31,500Municipal Liquor Fund Total Parks & Pathways Fund Downtown PAR-15-005 1,500,0001,500,000West Bridge Park Improvements 3 1,500,0001,500,000Downtown Total Recreation & Culture MNC-22-016 12,00012,000Bike Route Map 2 PAR-13-007 675,00075,000 600,000Pathway Improvements (Annual)2 PAR-13-012 5,700,0001,000,000 200,000 4,500,000BCOL Ball Fields 3 PAR-17-004 100,000100,000Pioneer Park Playground Structure 3 PAR-17-007 30,00030,000Front Street Pier 3 PAR-20-003 200,000200,000Briarwood Trail Connection 3 PAR-20-004 25,00025,000BCOL Road Improvements 2 PAR-20-006 425,000425,0004th St Park Improvements 2 PAR-20-007 125,000125,000Ellison Playground Equipment 3 PAR-21-005 50,00050,000Welcome Sign for Monticello 3 PAR-21-006 70,00070,000Columbarium-Riverside Cemetery 3 PAR-21-008 1,000,000500,000 500,000Great River Regional Trail 3 PAR-22-015 500,000500,000BCOL County/City Maintenance Facility n/a PAR-23-001 250,000250,000Pickleball Court 3 STR-20-001 375,000375,000School Blvd Pedestrian Improvements 1 9,537,0001,375,000 937,000 2,025,000 5,200,000Recreation & Culture Total 11,037,0001,375,000 2,437,000 2,025,000 5,200,000Parks & Pathways Fund Total Sewer Fund Facilities Maintenance FAM-23-005 16,00016,000WWTP Comp Bldg Lower Roof Replacement 2 FAM-23-006 46,00046,000WWTP Digester Bldg Roof Replacement 2 FAM-23-007 30,00030,000WWTP Garage Roof Replacement 2 FAM-23-008 26,00026,000WWTP Influent Bldg Roof Replacement 2 118,00042,000 76,000Facilities Maintenance Total Utility - Sewer MNC-17-005 110,000110,000Demo Obsolete WWTP Equipment 3 MNC-23-002 75,00075,000WWTP Native Grass Conversion 3 UTS-20-001 100,000100,000Vactor Dump Station 1 VEQ-13-004 400,000400,000SCADA System - Sewage 2 VEQ-21-999 498,225316,196 182,029Fleet Replacement - Sewage 2 1,183,225475,000 416,196 110,000 182,029Utility - Sewer Total 1,301,225475,000 458,196 186,000 182,029Sewer Fund Total Sewer Trunk Fund Fallon Avenue Improvements UTS-17-002 3,226,769300,000 2,926,769Fallon Avenue Trunk Line Extension - Sewer 3 3,226,769300,000 2,926,769Fallon Avenue Improvements Total Produced Using the Plan-It Capital Planning Software 97 TotalSourceProject #Priority 2023 2024 2025 2026 2027 Utility - Sewer UTS-13-001 2,267,526542,000 558,260 575,008 592,258Annnual Sewer Trunk Improvements 1 UTS-13-002 750,000750,000Liftstation - Marvin Road 3 UTS-13-003 2,500,0002,500,000WWTP Influent Wetwell and Grit Chamber 1 VEQ-22-035 500,000500,000West CSAH 39 Utility Extension 3 6,017,526500,000 1,292,000 3,058,260 575,008 592,258Utility - Sewer Total 9,244,295500,000 1,292,000 3,358,260 3,501,777 592,258Sewer Trunk Fund Total Stormwater Trunk Fund Stormwater\Drainage SWD-13-002 1,060,0001,060,000Stormwater Liftstation (TH 25 Pond)1 SWD-17-001 1,059,000450,000 609,000Chelsea/Fallon Avenue Pond Expansion 3 SWD-20-001 480,000480,000Otter Creek - Pond A Construction 3 SWD-20-002 560,000560,000Otter Creek - Pond D Construction 3 SWD-20-003 120,000120,000Otter Creek - Karlsburger Pond Outlet 2 SWD-20-005 40,00040,000Chelsea Road Outlet Control - HB07 2 SWD-22-014 2,000,000300,000 1,700,000Ditch 33 Upgrades 2 5,319,000420,000 3,730,000 560,000 609,000Stormwater\Drainage Total 5,319,000420,000 3,730,000 560,000 609,000Stormwater Trunk Fund Total Street Lighting Fund Downtown PAR-13-014 60,00060,000CSAH 75 Pathway Lighting 3 STR-23-006 1,000,0001,000,000Block 52 Utility Relocates 2 1,060,0001,000,000 60,000Downtown Total Recreation & Culture PAR-15-004 175,000175,000Fenning Avenue Pathway Lighting 3 STR-20-001 150,000150,000School Blvd Pedestrian Improvements 1 325,000325,000Recreation & Culture Total Streets STR-15-003 30,00030,000Elm Street Sidewalk - 3rd St Pedestrian Blinker 3 STR-16-002 700,000700,000Flashing Yellow Arrow Signal 1 730,000730,000Streets Total 2,115,0002,055,000 60,000Street Lighting Fund Total Water Fund Utility - Water MNC-23-001 20,00020,000Well Repairs 2 UTW-13-005 110,000110,000Booster Station Upgrade 3 UTW-22-033 2,300,000460,000 460,000 460,000 460,000 460,000Cast Iron Watermain Replacement 2 VEQ-22-034 50,00050,0001/2 Ton Pickup 2 2,480,000530,000 460,000 570,000 460,000 460,000Utility - Water Total 2,480,000530,000 460,000 570,000 460,000 460,000Water Fund Total Water Trunk Fund Fallon Avenue Improvements UTW-17-002 1,076,144300,000 776,144Fallon Avenue Trunk Line Improvements - Water 3 1,076,144300,000 776,144Fallon Avenue Improvements Total Utility - Water Produced Using the Plan-It Capital Planning Software 98 TotalSourceProject #Priority 2023 2024 2025 2026 2027 UTW-13-001 9,149,461300,000 2,236,540 1,936,540 2,303,636 2,372,745Trunk Water System Improvements 1 UTW-13-003 1,200,0001,200,000Well #6 1 10,349,461300,000 2,236,540 1,936,540 3,503,636 2,372,745Utility - Water Total 11,425,605300,000 2,236,540 2,236,540 4,279,780 2,372,745Water Trunk Fund Total 104,418,32019,416,000 36,358,648 19,254,218 21,064,018 8,325,436GRAND TOTAL Produced Using the Plan-It Capital Planning Software 99 DEBT 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. However, 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, and transfers from enterprise funds collecting development 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 one of the lowest tax capacity rates in Wright County because of its large commercial tax base—including the Xcel Energy nuclear power plant. In a stable market value environment, the power plant absorbs roughly half of any tax increase. The General Fund is primarily supported (roughly 70%) by property taxes and the Monticello Community Center (MCC) Fund is primarily supported by charges for services and supplemented by a property tax levy. High debt levels lower the city’s ability to issue new debt for capital assets, which may improve efficiency or meet a growing need. Enterprise Funds The Sewer Fund is the only enterprise fund with debt, the 2013B G.O. revenue bonds, and a Public Facilities Authority (PFA) G.O. Sewer Revenue Note. All utility rates are reviewed annually and adjusted to cover operating, capital, and debt service expenses. According to a survey by engineering firm, AE2S, Monticello has some of the lowest water and sewer rates in 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 One outstanding debt issue (2014A) provided financing 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 about 70% 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. 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. 100 Anticipated Borrowing this Fiscal Year The City of Monticello anticipates issuing $5 million of General Obligation Capital Improvement Plan (CIP) Bonds in 2023 to begin construction on a new Public Works facility. Because interest rates and maturities are not yet known, no payment schedules for 2023A bonds (which will begin in 2024) are included in this budget document. Bond Rating The city’s general obligation bond rating was reviewed in August 2020 with the sale of the 2020A general obligation bonds. Moody’s affirmed the city’s prior G.O. debt rating of A1, which can be described as “strong, investment grade”. Legal Debt Limit Most Minnesota cities may not incur debt more than three percent of the market value of taxable property in the city. Excepted from this overall three percent limit are almost all debt obligations for which some other source of revenue is pledged as security. The result is that, with only a few exceptions, the only obligations subject to the debt limit are general obligation (G.O.) bonds payable solely from ad valorem property taxes. The legal debt limit has nothing to do with the practical debt limit of a city, which is the debt burden beyond which the creditworthiness of the city is put into question. (See Minnesota Statutes, Section 475.53) Moody's S&P Fitch Aaa AAA AAA Prime Aa1 AA+AA+ Aa2 AA AA Aa3 AA-AA- A1 A+A+ A2 A A A3 A-A- Baa1 BBB+BBB+ Baa2 BBB BBB Baa3 BBB-BBB- High grade Upper medium grade Lower medium grade Market value (payable 2022)*2,134,994,875$ Debt limit (3% of market value)64,049,846$ Total net debt applicable to limit (12,135,000)$ Legal debt margin 51,914,846$ *Final Payable 2023 not yet available. Legal Debt Margin Calculation for Fiscal Year 2023 101 G.O. Debt Service Levies: Most city debt issues are supported on some level by property taxes. Annual debt service levies are as follows: G.O. Debt Service Payments: Annual debt service payments are as follows: G.O. Debt Outstanding as of 12/31: Projected balances of outstanding debt are as follows: $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 G.O. Debt Service Levies 2015B 2016A 2017A 2018A 2019A 2020A 2023A $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 G.O. Debt Service Payments 2013B 2014A 2015B 2016A 2017A 2018A 2019A 2020A $- $2 $4 $6 $8 $10 $12 $14 $16 $18 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035MillionsG.O. Debt Outstanding as of 12/31 2013B 2014A 2015B 2016A 2017A 2018A 2019A 2020A 102 STAFFING SUMMARY Staffing, as measured by full-time equivalents, decreased in 2020 due to the COVID-19 pandemic and has been increasing each year, now above pre-pandemic levels. Many employees perform across multiple activities/divisions and funds. The budget reflects updates to the allocation of time spent in various departments by all staff. The Liquor Fund and Deputy Registrar Fund each added an additional full-time employee in 2022. These positions along with a new Streets Operator, beginning on April 1, are included in the 2023 budget. Adopted Actual Actual Actual Budget 2020 2021 2022 2023 General Fund City Administration 3.60 3.60 3.60 2.90 Finance 3.35 3.80 3.85 3.75 City Clerk 1.00 1.00 1.85 1.50 Human Resources 1.00 1.00 1.00 1.00 Planning & Zoning 1.30 1.10 1.40 1.90 Fire & Rescue 1.00 1.00 1.00 - Building Inspections 3.00 3.00 4.20 5.20 Public Works Administration 1.80 1.90 1.10 1.10 Engineering & Inspections 0.90 1.35 1.55 1.55 Streets & Alleys 3.55 4.40 3.90 4.30 Shop & Garage 0.80 0.80 1.30 1.35 Ice & Snow 1.60 2.10 2.30 2.45 Park Operations 8.60 8.85 9.40 9.40 Shade Tree 0.60 0.75 0.90 0.90 Total General Fund 32.10 34.65 37.35 37.30 Special Revenue Funds Economic Development 1.20 1.20 1.50 1.60 Monticello Community Center 13.95 13.40 18.05 18.05 Total Special Revenue Funds 15.15 14.60 19.55 19.65 Enterprise Funds Water 3.15 3.80 3.60 3.80 Sewer 3.15 3.75 3.75 3.55 Stormwater 1.00 1.10 1.40 1.55 Liquor 10.80 10.20 10.95 11.95 Deputy Registrar 7.50 7.50 8.35 9.35 Total Enterprise Funds 25.60 26.35 28.05 30.20 Internal Service Funds Facilities Maintenance - 0.50 1.10 1.10 IT Services - 0.40 1.00 1.00 Total Internal Service Funds - 0.90 2.10 2.10 Total All Funds 72.85 76.50 87.05 89.25 NUMBER OF FULL-TIME EQUIVALENTS 103 This page intentionally left blank. 104 2023 Adopted Budget 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 another fund and uses the modified accrual basis of accounting for budgeting and financial reporting purposes. The adopted General Fund budget is a balanced budget--current revenues and other sources equal expenditures and other uses. SUMMARY GENERAL FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 6,774,776$ 7,208,949$ 7,475,000$ 7,461,349$ 8,060,000$ 7.8% Franchise & Other Taxes 216,864 217,833 258,000 250,593 316,500 22.7% Licenses & Permits 521,369 804,889 471,100 613,015 484,000 2.7% Intergovernmental Revenues 737,650 625,382 463,000 606,826 513,895 11.0% Charges for Services 885,951 1,214,288 1,118,600 1,162,311 1,246,779 11.5% Fines & Forfeits 31,852 49,566 51,600 34,221 51,600 0.0% Special Assessments 166 468 100 418 100 0.0% Miscellaneous 621,431 712,287 692,600 773,493 807,126 16.5% TOTAL REVENUES 9,790,059$ 10,833,663$ 10,530,000$ 10,902,227$ 11,480,000$ 9.0% GENERAL FUND 2020 2021 2022 2022 2023 % EXPENDITURES BY DEPT ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE GENERAL GOVERNMENT Mayor and Council 52,589$ 57,171$ 59,262$ 55,262$ 59,462$ 0.3% City Administration 789,820 949,428 1,075,361 906,677 1,045,775 -2.8% City Clerk 180,824 125,285 195,337 225,698 214,549 9.8% Finance 491,378 500,647 537,515 625,522 664,739 23.7% City Assessing 70,115 77,600 78,000 - - -100.0% Legal 29,340 25,883 27,500 24,524 27,500 0.0% Human Resources 142,232 131,467 148,810 139,335 165,336 11.1% Planning & Zoning 339,005 685,171 308,957 421,238 354,158 14.6% City Hall 60,501 68,095 70,687 75,956 82,182 16.3% General City Buildings 14,857 16,315 - - - --- TOTAL GENERAL GOVERNMENT 2,170,661$ 2,637,060$ 2,501,429$ 2,474,212$ 2,613,701$ 4.5% PUBLIC SAFETY Law Enforcement 1,524,150$ 1,602,877$ 1,650,816$ 1,633,774$ 1,869,245$ 13.2% Fire & Rescue 414,399 459,591 553,127 522,527 483,309 -12.6% Fire Relief 131,638 134,691 140,000 146,181 140,000 0.0% Building Inspections 354,251 599,567 567,751 583,076 680,289 19.8% Emergency Management 257,565 13,725 25,225 6,936 22,032 -12.7% Animal Control 49,522 50,586 59,971 59,080 63,992 6.7% National Guard 12,429 13,143 14,000 14,398 19,500 39.3% TOTAL PUBLIC SAFETY 2,743,954$ 2,874,179$ 3,010,890$ 2,965,973$ 3,278,367$ 8.9% PUBLIC WORKS Public Works Administration 221,881$ 244,353$ 157,673$ 140,020$ 166,456$ 5.6% Engineering 80,432 93,846 - - - --- Engineering & Inspections 102,110 107,586 359,683 262,695 340,801 -5.2% Streets & Alleys 777,633 919,551 1,124,296 1,141,178 1,250,020 11.2% Ice & Snow 326,120 294,313 407,126 299,230 453,741 11.4% Shop & Garage 199,310 269,192 315,246 294,814 320,948 1.8% Street Lighting 191,829 195,055 237,000 226,690 292,000 23.2% TOTAL PUBLIC WORKS 1,899,315$ 2,123,896$ 2,601,024$ 2,364,626$ 2,823,966$ 8.6% 105 The previous table summarizes General Fund expenditures by activities/divisions and departments. The table below summarizes expenditures by classifications. BUDGET COMMENTARY: Revenues For 2023, budgeted revenues are estimated to increase by 9.0%. The General Fund portion of the tax levy is budgeted to increase by 7.8%, which is more than the total (city & HRA) levy increase of 6.1%. Property taxes account for 70% of General Fund revenues. Franchise & Other Taxes increase to offset the increased cost of street lighting due to inflation. Increases in Intergovernmental Revenues and Fines & Forfeits are due to budgeting more closely with trends from the previous years. The increase in Charges for Services reflects higher residential garbage and recycling charges. In 2023, the city will fully cover its cost of garbage service for the GENERAL FUND 2020 2021 2022 2022 2023 % EXP ENDITURES BY DEPT ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE SANITATION Refuse Collection 681,948$ 754,132$ 802,878$ 718,236$ 843,897$ 5.1% TOTAL SANITATION 681,948$ 754,132$ 802,878$ 718,236$ 843,897$ 5.1% RECREATION AND CULTURE Senior Center 103,662$ 105,689$ 106,363$ 108,123$ 101,863$ -4.2% Park Operations 1,040,665 1,098,442 1,230,204 1,234,381 1,428,756 16.1% Park Ballfields 23,685 28,072 27,400 59,737 26,200 -4.4% Public Arts 36,092 93,246 72,241 139,940 173,528 140.2% Shade Tree 79,024 87,526 118,175 94,217 145,707 23.3% Library 48,068 44,506 53,396 48,339 38,015 -28.8% TOTAL RECREATION AND CULTURE 1,331,196$ 1,457,480$ 1,607,779$ 1,684,737$ 1,914,069$ 19.1% Operating Transfers 1,000,000$ 1,002,368$ 6,000$ 154,900$ 6,000$ 0.0% TOTAL EXPENDITURES 9,827,074$ 10,849,116$ 10,530,000$ 10,362,685$ 11,480,000$ 9.0% GENERAL FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 6,774,776$ 7,208,949$ 7,475,000$ 7,461,349$ 8,060,000$ 7.8% Franchise & Other Taxes 216,864 217,833 258,000 250,593 316,500 22.7% Licenses & Permits 521,369 804,889 471,100 613,015 484,000 2.7% Intergovernmental Revenues 737,650 625,382 463,000 606,826 513,895 11.0% Charges for Services 885,951 1,214,288 1,118,600 1,162,311 1,246,779 11.5% Fines & Forfeits 31,852 49,566 51,600 34,221 51,600 0.0% Special Assessments 166 468 100 418 100 0.0% Miscellaneous 621,431 712,287 692,600 773,493 807,126 16.5% TOTAL REVENUES 9,790,059$ 10,833,663$ 10,530,000$ 10,902,227$ 11,480,000$ 9.0% EXPENDITURES Personnel Services 3,306,432$ 3,433,833$ 3,897,421$ 3,739,051$ 4,091,941$ 5.0% Supplies 620,101 748,686 874,870 792,320 1,020,200 16.6% Other Services & Charges 4,569,741 5,111,861 5,173,309 5,098,014 5,728,859 10.7% Capital Outlay 330,800 552,369 578,400 578,400 633,000 9.4% Operating Transfers Out 1,000,000 1,002,368 6,000 154,900 6,000 0.0% TOTAL EXPENDITURES 9,827,074$ 10,849,116$ 10,530,000$ 10,362,685$ 11,480,000$ 9.0% FUND BALANCE - JANUARY 1 6,677,250$ 6,640,235$ 6,624,782$ 6,624,782$ 7,164,324$ Excess (Deficiency) of Revenues over Expenditures (37,015) (15,453) - 539,542 - FUND BALANCE - DECEMBER 31 6,640,235$ 6,624,782$ 6,624,782$ 7,164,324$ 7,164,324$ 106 first time. Miscellaneous Revenues are projected higher due to an increased number of anticipated donations. Expenditures Expenditures are budgeted to increase 9.0%. City Clerk department expenditures increase due to investments in the City’s electronic document storage software. The Finance department budget increased due to absorbing the City Assessing department expenditures and an upgrade to the department software, Springbrook. A software investment in the Human Resources department contributes to that department’s increase. Planning & Zoning expenditures increase to better reflect spending in response to development in recent years. The City Hall budget increased due to an anticipated increase in maintenance costs of the facility. The General City Buildings (formerly Prairie Center Building) department was eliminated in 2021 because the DMV relocated, and the building costs are now accounted for in the DMV enterprise fund. The Law Enforcement department increase reflects an increase in the contracted hourly rate and the number of patrol hours per day from 52 to 60 effective May 1. The Fire & Rescue and Building Inspections department budgets were both impacted by a shift in staffing where the Fire Marshal position was eliminated, but fire inspections were absorbed by building department personnel. National Guard expenditures increase to better reflect the portion of the Community Center building’s use and expenditure allocation. The Engineering and Engineering & Inspections departments were combined in 2022. The Streets & Alley and Ice & Snow budgets increased with the addition of an additional streets operator effective April 1. The Street Lighting department increased to reflect the increases in the costs of gas and electricity. Park Operations increased due to a parks needs study and repairs to the parks shop building. Public Arts increased the hours worked by the main arts consultant, higher building rent, and anticipated additional projects in 2023. Shade Tree expenditures increased as Emerald Ash Borer (EAB) was found spreading in some trees in the City. Library expenditures decrease due to cleaning services transitioning to internal staff rather than contracted out. The 2023 personnel services budget includes a full step increase, where applicable, and a 4.0% market rate wage increase. Supplies are projected to increase due to inflation, and Other Services & Charges increase from increased professional costs, such as the parks needs study. All the capital outlay amount reflects Capital Equipment Fund purchases, which are charged back through lease payments. The 2020 operating transfers were to the Capital Project Fund for future year capital expenditures, and the 2021 operating transfer was to the Central Equipment Fund for future acquisitions. The operating transfer out in 2022 is to build a healthy reserve in the new Facilities Maintenance internal service fund. The $6,000 budgeted in 2023 is to the EDA Fund for board member stipends. 107 MAYOR AND CITY COUNCIL (101-41110) DEPARTMENT: General Government SUPERVISOR: City Clerk 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. 3. Provide opportunities for public input in decision making. ISSUES: 1. Capitalize on the city’s uniqueness by communicating a comprehensive vision statement and setting achievable goals. 2. Succession planning of city staff. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: The council’s budget remains consistent with previous years. The mayor earns $700 per month and each councilmember earns $600 per month. Other services and charges are mainly comprised of rental charges for the meeting room at the Monticello Community Center. Measurement 2020 2021 2022 2023 Council meetings 22 23 23 23 Special meetings/workshops 13 23 21 17 GENERAL FUND 2020 2021 2022 2022 2023 % MAYOR & COUNCIL Actual Actual Budget Estimated Budget Change Personnel Services 42,223$ 45,952$ 43,023$ 41,739$ 42,012$ -2.3% Supplies - - - - - --- Other Services & Charges 10,366 11,219 16,239 13,523 17,450 7.5% Capital Outlay - - - - - --- TOTAL EXPENDITURES 52,589$ 57,171$ 59,262$ 55,262$ 59,462$ 0.3% 108 CITY ADMINISTRATION (101-41310) DEPARTMENT: General Government SUPERVISOR: City Administrator ACTIVITY SCOPE: City administration provides the overall direction of the city, as determined by the mayor and council. 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. 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. 6. Communicate mission, vision, and values along with city services and events to the public. ISSUES: 1. Long-range comprehensive planning, including for development and traffic. 2. Leading and focusing council on policy matters. 3. Continuing to improve internal and external communication systems. 4. Management of Citizen Service Desk with continued growth of inquiries and need to improve response times. MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Counc il meetings agendas 35 46 44 40 Ordinances processed 22 20 26 20 Council minutes approved 35 46 44 40 Newsletters published 2 2 2 2 Monthly newletters sent*0 0 9 12 Utility inserts published*4 8 3 0 Park inserts published* 1 3 2 0 All other inserts published*11 12 5 0 Service desk data entry**775 351 143 150 *Individual inserts with utility bills were combined into one monthly newsletter **Entries reduced with the implementation of an online resident reporting system for Public Works issues 109 BUDGET: BUDGET COMMENTARY: The city administration activity is limited to expenditures for daily operations in providing services and does not include upkeep of the city hall facility. The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. However, re- allocation of a portion of the new administrative assistant position to the City Clerk and Planning & Zoning departments results in a decrease. Other services and charges have steadily increased due to the increased capacity of the city’s investments in a solar farm. The city is given credit on its electric bill as a return on investment in the solar farm. GENERAL FUND 2020 2021 2022 2022 2023 % ADMINISTRATION Actual Actual Budget Estimated Budget Change Personnel Services 376,883$ 377,760$ 386,660$ 304,433$ 321,078$ -17.0% Supplies 8,830 9,445 13,000 19,136 12,000 -7.7% Other Services & Charges 404,107 562,223 675,701 583,108 712,697 5.5% Capital Outlay - - - - - --- TOTAL EXPENDITURES 789,820$ 949,428$ 1,075,361$ 906,677$ 1,045,775$ -2.8% 110 CITY CLERK (101-41410) DEPARTMENT: General Government SUPERVISOR: City Clerk 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. ISSUES: 1. Storage space. 2. Laserfiche training. 3. Identify and organize decades of files. 4. Maintaining current, accurate information for all public sources. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: Elections are held in even-numbered years. In 2020, there was a Presidential Nominating Primary election in Minnesota for the first time since 1992. 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 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase along with a re-allocation of the administrative assistant position. Measurement 2020 2021 2022 2023 Voters, number of 7,110 0 5,175 0 Register voters, number of 7,895 8,101 8,791 8,791 Polling places 2 2 4 4 Election judges 35 0 59 0 Ordinances amendments 22 20 26 20 Council resolutions 99 99 142 100 GENERAL FUND 2020 2021 2022 2022 2023 % CITY CLERK Actual Actual Budget Estimated Budget Change Personnel Services 151,816$ 110,706$ 153,703$ 187,127$ 172,967$ 12.5% Supplies 3,797 308 5,750 5,145 3,000 -47.8% Other Services & Charges 25,211 14,271 35,884 33,425 38,582 7.5% Capital Outlay - - - - - --- TOTAL EXPENDITURES 180,824$ 125,285$ 195,337$ 225,698$ 214,549$ 9.8% 111 FINANCE (101-41520) DEPARTMENT: General Government SUPERVISOR: Finance Director 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. 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. Keeping the long-term financial management plan updated annually 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 transactions. 5. Complete the financial audit in a timely fashion. 6. Continue to reduce the number of audit findings and adjustments. 7. Assess new and existing parcels within the city as required. ISSUES: 1. Complete implementation of software systems for financial, payroll, and utility billing functions with integration of new processes for web-based applications, and remote timecard 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, accounts payable, utility billing, and accounts receivable). 7. Comply with changing reporting requirements and auditing standards. 8. Meet state requirements in appraising properties. 112 MEASURABLE WORKLOAD DATA: BUDGET: 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 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. Other Services & Charges expenditures increase with the combining of the finance and assessing departments. Measurement 2020 2021 2022 2023 Outcome/Effectiveness: GFOA Budget Awards 12 13 14 15 GFOA Certificates of Achievement 12 13* 14* 15 GFOA Popular Annual Financial Report Awards 6 7*8*9 Bond Rating A1 A1 A1 A1 Audit submittal date 5/18 5/14 6/8 6/7 Audit findings 0 0 0 0 Opinion Unmodified Unmodified Unmodified Unmodified Efficiency: AP & ACHs per FTE (1.5)1,835 2,027 2,020 2,067 ACHs as % of total AP activity 45% 45% 48% 48% Work Load: AP checks, number of 1,526 1,685 1,568 1,600 AP ACHs, number of 1,227 1,355 1,462 1,500 Invoices processed 4,788 5,376 5,106 5,250 1099's 87 77 70 70 Paychecks issued 3,706 3,830 4,569 4,500 W-2s 287 255 322 275 Utility bills generated 52,918 53,647 54,898 56,000 Non-utility charges billed 294 243 262 275 Cash receipts entered 37,772 37,707 38,091 38,250 Journal entries 2,355 2,501 2,500* 2,500 *Not yet available. Value is an estimate. GENERAL FUND 2020 2021 2022 2022 2023 % FINANCE Actual Actual Budget Estimated Budget Change Personnel Services 390,695$ 387,444$ 415,481$ 408,605$ 432,098$ 4.0% Supplies 1,431 859 2,500 1,701 2,300 -8.0% Other Services & Charges 99,252 112,344 119,534 215,217 230,341 92.7% Capital Outlay - - - - - --- TOTAL EXPENDITURES 491,378$ 500,647$ 537,515$ 625,522$ 664,739$ 23.7% 113 ASSESSING (101-41550) DEPARTMENT: General Government SUPERVISOR: Finance Director 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. See finance department. ISSUES: 1. See finance department. MEASURABLE WORKLOAD DATA: BUDGET: 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 will pay $15.00 per parcel for assessment services and $50 for each new permit with an estimated construction value under $499,999 and $150 for values over $500,000 in 2023. Those rates have climbed slightly each year. The department was combined with the finance department in 2022. Measurement 2020 2021 2022 2023 New residential properties 59 68 95 100 New commercial properties 6 5 8 5 Tax exempt parcels 349 355 357 360 Taxable parcels assessed 4,714 4,732 4,821 4,850 GENERAL FUND 2020 2021 2022 2022 2023 % ASSESSING Actual Actual Budget Estimated Budget Change Personnel Services -$ -$ -$ -$ -$ --- Supplies - - - - - --- Other Services & Charges 70,115 77,600 78,000 - - -100.0% Capital Outlay - - - - - --- TOTAL EXPENDITURES 70,115$ 77,600$ 78,000$ -$ -$ -100.0% 114 LEGAL (101-41610) DEPARTMENT: General Government SUPERVISOR: City Administrator ACTIVITY SCOPE: Private legal firms provide all the city’s legal services. Activities include issuance of legal opinions; preparation and/or review 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. Potentially rising costs associated with the need for existing and new legal services. MEASURABLE WORKLOAD DATA: BUDGET: 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 while those performed related to planning and development projects are passed through to the applicant. Measurement 2020 2021 2022 2023 Billed hours: Administration 252.8 237.5 232.4 240.0 Code enforcement 6.4 19.6 23.4 25.0 Fiber optics 0.0 2.0 0.0 2.0 City Construction Projects 90.4 174.2 98.4 125.0 All other, including development 70.9 78.5 86.1 75.0 Total 420.5 511.8 440.3 467.0 GENERAL FUND 2020 2021 2022 2022 2023 % LEGAL Actual Actual Budget Estimated Budget Change Personnel Services -$ -$ -$ -$ -$ --- Supplies - - - - - --- Other Services & Charges 29,340 25,883 27,500 24,524 27,500 0.0% Capital Outlay - - - - - --- TOTAL EXPENDITURES 29,340$ 25,883$ 27,500$ 24,524$ 27,500$ 0.0% 115 HUMAN RESOURCES (101-41800) DEPARTMENT: General Government SUPERVISOR: City Administrator 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 union contracts for public works employees. MEASURABLE WORKLOAD DATA: BUDGET: Measurement 2020 2021 2022 2023 Full-time positions 55 56 60 61 Part-time positions 116 116 133 133 Full-time positions filled 12 9 11 11 Other positions filled 51 85 93 93 Terminations processed 80 93 69 69 Job Postings 33 34 30 30 Application count - all city 408 491 511 511 Avg. number of employees 171 172 186 186 GENERAL FUND 2020 2021 2022 2022 2023 % HUMAN RESOURCES Actual Actual Budget Estimated Budget Change Personnel Services 106,981$ 110,914$ 117,865$ 113,327$ 126,160$ 7.0% Supplies 104 1,223 700 1,384 750 7.1% Other Services & Charges 35,147 19,330 30,245 24,624 38,426 27.0% Capital Outlay - - - - - --- TOTAL EXPENDITURES 142,232$ 131,467$ 148,810$ 139,335$ 165,336$ 11.1% 116 BUDGET COMMENTARY: The 2023 budget reflects estimated costs for setting up training, providing city staff with benefit and compensation information, and other expenses based on experience. The 2020 increase in other services and charges represented expenditures on professional services to update the city’s pay scale. The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. With the exception of contributions to the IT Services fund for the addition of an onboarding module in NeoGov, budget items are expected to remain close to prior year levels. 117 PLANNING, ZONING & COMMUNITY DEVELOPMENT (101-41910) DEPARTMENT: General Government SUPERVISOR: Community Development Director ACTIVITY SCOPE: The Planning & Zoning and Community Development 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 residents, 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 Implementation Chart outlined by the Comprehensive Plan. 3. Support for downtown redevelopment and revitalization, including the Embracing Downtown Monticello Project. 4. Involvement in regional planning and its impact on land use and growth objectives. 5. Bertram Chain of Lakes 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. 118 MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Outcome/Effectiveness: Grants awarded 1 1 0 1 Administrative applications (total)7 7 8 7 processed within 5 working days 7 7 5 7 Site Plan reviews processed within 14 working days 4 0 2 2 Change in Use forms 3 8 6 5 reviewed withing 5 working days 3 5 6 5 Zoning Confirmation/Request Ltrs --10 10 processed within 10 working days --10 10 Sign Permit zoning reviews 17 20 23 20 processed within 5 working days 16 20 10 20 Land Use applications processed 66 94 95 50 within 60 working days 65 90 87 48 Reconciliations processed 20 16 31 30 Annexation petitions 2 1 0 1 Efficiency: Applications processed per FTE 44 47 48 33 Work Load: Planning Applications: Variances 3 5 0 1 CUPs 7 15 8 5 PUD/Amendments to PUD 11 15 15 5 Interim Use permits 1 1 2 0 Comp Plan amendments 3 0 1 1 Map amendments 3 2 6 5 Non-city zoning text amendments 2 1 1 2 Plats/adminstrative subdivisions 5 11 16 7 Administrative permits 7 7 8 10 Site plan reviews 2 2 2 2 Appeals 0 3 0 0 Vacations 2 4 7 2 Sign permit application review 17 20 23 20 Change in Use review 3 8 6 5 Total applications 66 94 95 65 Planning reconciliations 25 16 31 30 Planning Commission meetings 18 20 29 15 BCOL Advisory Meetings 4 4 1 2 PARC Meetings (Report Prep)3 3 4 4 EDA Meetings 21 18 33 24 IEDC Meetings 12 8 11 11 119 BUDGET: BUDGET COMMENTARY: The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. Additionally, the new administrative assistant position was re-allocated for 2023 from the Administration department to the City Clerk and Planning, Zoning & Community Development departments. Other services & charges in 2020 include amounts for a comprehensive plan update, and the receipt of a Community Energy Transitions (CET) grant from the State of Minnesota’s Department of Employment and Economic Development (DEED) in 2021 and 2022 led to expenditures well over budget. The Monti:2040 Comprehensive Plan was adopted in 2020. GENERAL FUND 2020 2021 2022 2022 2023 % PLANNING & ZONING Actual Actual Budget Estimated Budget Change Personnel Services 163,455$ 168,500$ 181,845$ 217,645$ 234,095$ 28.7% Supplies 53 168 200 745 300 50.0% Other Services & Charges 175,497 516,503 126,912 202,848 119,763 -5.6% Capital Outlay - - - - - --- TOTAL EXPENDITURES 339,005$ 685,171$ 308,957$ 421,238$ 354,158$ 14.6% 120 CITY HALL (101-41940) DEPARTMENT: General Government SUPERVISOR: City Administrator ACTIVITY SCOPE: The activity for this department consists of maintenance and upkeep for the city hall suite. 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 workflow. 3. Timely maintenance. 4. Utility costs. 5. Building and office security. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: Items budgeted in the city hall activity are commonly shared among all departments operating out of city hall. Personnel services costs were eliminated when contracted custodial services started, and that contract plus utilities are the main expenditures in other services & charges. Supplies increased with a budgeted replacement of conference room table and chairs. Measurement 2020 2021 2022 2023 Number of times cleaned 51 104 104 104 Utility expenses $18,327 $21,321 $26,713 $24,000 GENERAL FUND 2020 2021 2022 2022 2023 % CITY HALL Actual Actual Budget Estimated Budget Change Personnel Services 9,280$ 2,579$ -$ 4,894$ -$ --- Supplies 921 - 2,000 1,694 7,000 250.0% Other Services & Charges 50,300 65,516 68,687 69,368 75,182 9.5% Capital Outlay - - - - - --- TOTAL EXPENDITURES 60,501$ 68,095$ 70,687$ 75,956$ 82,182$ 16.3% 121 LAW ENFORCEMENT (101-42100) DEPARTMENT: Public Safety SUPERVISOR: City Administrator ACTIVITY SCOPE: All law enforcement services are contracted with the Wright County Sheriff's Department. The Sheriff’s Department uses space at the new Fire Station for staff break time and other officing uses. 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 have changed to 5 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 the city not having its own police force. MEASURABLE WORKLOAD DATA: BUDGET: Measurement 2020 2021 2022 2023 Outcome/Effectiveness: Arrests 262 204 230 235 Arrests to crimes ratio 0.34 0.26 0.34 0.34 Efficiency: Hours contracted 19,032 18,980 18,980 20,940 Calls per hour contracted 0.43 0.41 0.50 0.43 Costs per workload unit $180.04 $197.36 $168.06 $199.62 Work Load: Life quality calls, number of 3,178 2,693 4,774 4,000 Traffic calls, number of 4,051 4,074 3,683 4,000 Vehicle crashes, number of 270 325 371 400 Crimes, number of 773 770 681 700 GENERAL FUND 2020 2021 2022 2022 2023 % LAW ENFORCEMENT Actual Actual Budget Estimated Budget Change Personnel Services -$ -$ -$ -$ -$ --- Supplies - - - - - --- Other Services & Charges 1,524,150 1,602,877 1,650,816 1,633,774 1,869,245 13.2% Capital Outlay - - - - - --- TOTAL EXPENDITURES 1,524,150$ 1,602,877$ 1,650,816$ 1,633,774$ 1,869,245$ 13.2% 122 BUDGET COMMENTARY: Law enforcement services are contracted in five-hour-per-day increments from the Wright County Sheriff’s Office (WCSO) Department. Prior to 2023, the WCSO contract was handled in four-hour-per-day increments. Past hourly rates and contracted hours are presented in the schedule below: The city contracted for 52 hours per day 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 2016 and 2020 include one more day of coverage (48 hours in 2016 and 52 hours in 2020). The city and WCSO updated the contract for 2023 to 60 hours per day. Hourly Hours Year Rate Contracted 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 2020 $78.25 19,032 2021 $81.75 18,980 2022 $84.20 18,980 2023 $86.75 20,940 123 FIRE & RESCUE (101-42200) DEPARTMENT: Public Safety SUPERVISOR: City Administrator ACTIVITY SCOPE: The Fire Department responds to fire, rescue, hazardous materials, medical, and accident incidents within the city and the surrounding townships. Paid-on-call volunteers provide the department’s staffing. OBJECTIVES: 1. Assemble a confined space entry team with personnel and equipment. 2. Improve response times. ISSUES: 1. Training and retention of paid-on-call personnel. MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Outcome/Effectiveness: Respondent-hours on fire calls: City 2,433 2,903 3,443 3,500 Monticello Township 937 1,183 1,138 1,100 Silver Creek Township 434 385 562 550 Mutual Aid 636 406 130 250 Drills & Maintenance 2,053 2,310 2,396 2,400 Total 6,493 7,187 7,669 7,800 Efficiency: Average respondent-hours per call City 14 11 13 14 Monticello Township 17 15 15 15 Silver Creek Township 18 17 19 18 Mutual Aid 27 25 19 17 Drills & Maintenance 35 37 43 40 Total 20 16 17 18 Work Load: Number of fire calls: City 168 254 273 250 Monticello Township 56 80 74 75 Silver Creek Township 24 23 30 30 Mutual Aid 24 16 7 15 Drills & Maintenance 59 63 56 60 Total 331 436 440 430 Firefighters, number of 29 30 30 30 124 BUDGET: BUDGET COMMENTARY: The Fire Department is staffed with paid-on-call volunteers. The purchase of turn-out gear contributed to the higher supplies budget in 2023. Grants and donations may offset some of these expenditures. Other services & charges increased to due inflated gas and electric rates. Capital outlay reflects lease payments to the Central Equipment Fund for the acquisition of a fire tender truck in 2014, a fire half-ton truck in 2019, and a new chief squad vehicle in 2021 through the Central Equipment Fund. GENERAL FUND 2020 2021 2022 2022 2023 % FIRE & RESCUE Actual Actual Budget Estimated Budget Change Personnel Services 207,551$ 212,845$ 258,259$ 208,445$ 147,061$ -43.1% Supplies 48,070 45,909 62,300 59,604 71,300 14.4% Other Services & Charges 109,178 138,137 169,868 191,777 202,248 19.1% Capital Outlay 49,600 62,700 62,700 62,700 62,700 0.0% TOTAL EXPENDITURES 414,399$ 459,591$ 553,127$ 522,527$ 483,309$ -12.6% 125 FIRE RELIEF (101-42202) DEPARTMENT: Public Safety SUPERVISOR: Finance Director 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. Balancing pension assets with pension liabilities. MEASURABLE WORKLOAD DATA: BUDGET: 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. Measurement 2020 2021 2022* 2023 Pension assets 1,472,948$ 1,712,617$ 1,793,203$ 1,850,000$ Pension liabilities 1,073,956$ 1,459,556$ 1,222,830$ 1,361,221$ Assets-liabilities ratio 1.37 1.17 1.47 1.36 Pension per service year $4,200 $5,100 $5,100 $5,100 Fire state aid $131,638 $134,691 $146,181 $140,000 State aid per employee $4,875 $4,490 $4,873 $4,667 Active firefighters 27 30 30 30 Deferred firefighters 6 6 6 6 *2022 assets and liabilities estimated per Form SC-22 GENERAL FUND 2020 2021 2022 2022 2023 % FIRE RELIEF Actual Actual Budget Estimated Budget Change Personnel Services -$ -$ -$ -$ -$ --- Supplies - - - - - --- Other Services & Charges 131,638 134,691 140,000 146,181 140,000 0.0% Capital Outlay - - - - - --- TOTAL EXPENDITURES 131,638$ 134,691$ 140,000$ 146,181$ 140,000$ 0.0% 126 BUILDING INSPECTIONS (101-42400) DEPARTMENT: Public Safety SUPERVISOR: Community Development Director 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. Beginning in 2022, the department also provides fire inspection services, which used to be handled by the Fire & Rescue department. 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 2020 2021 2022 2023 Outcome/Effectiveness: Value of permits issued 32,453,366$ 66,827,121$ 41,989,848$ 50,000,000$ Value of permits per FTE 10,817,789$ 22,275,707$ 10,497,462$ 12,500,000$ Efficiency: Departmental FTEs 3 3 4 4 Rental inspections per FTE 179 385 159 188 Permits per FTE 319 336 227 223 Work Load: Building permits issued 957 1008 909 890 Nuisance notices issued 71 82 142 75 Rental inspections 537 1,156 636 750 Rental units, number of 1,616 1,776 1,895 1,800 127 BUDGET: BUDGET COMMENTARY: The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase along with an additional staff member. The fire marshal position, previously reported in the fire & rescue department, was eliminated in 2022 and the building department budgeted for an additional position because the fire inspections have been absorbed by the department. Supplies increase with enforcement of lock boxes throughout the city and additional office furniture as needed for the additional position. Other services & charges reflect higher costs for code enforcement. Capital outlay reflects the replacement of one building inspector vehicle. GENERAL FUND 2020 2021 2022 2022 2023 % BUILDING INSPECTIONS Actual Actual Budget Estimated Budget Change Personnel Services 299,690$ 367,552$ 462,137$ 466,452$ 592,885$ 28.3% Supplies 4,412 41,500 5,500 12,974 9,000 63.6% Other Services & Charges 45,949 74,746 30,114 33,651 43,404 44.1% Capital Outlay 4,200 115,769 70,000 70,000 35,000 -50.0% TOTAL EXPENDITURES 354,251$ 599,567$ 567,751$ 583,076$ 680,289$ 19.8% 128 EMERGENCY MANAGEMENT (101-42500) DEPARTMENT: Public Safety SUPERVISOR: Emergency Management Coordinator ACTIVITY SCOPE: The emergency management 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. 2. Develop National Incident Management System (NIMS) training for all city departments. ISSUES: 1. Preparedness - little or no warning when an emergency occurs. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: The 2023 budget is based on the 2022 budget with a slight decrease in expenditures for supplies and other services & charges related to a state grant received through Wright County. Much of this activity's responsibilities had been transferred to Wright County. However, the city is an active participant of the emergency management team. Measurement 2020 2021 2022 2023 Data under development GENERAL FUND 2020 2021 2022 2022 2023 % EMERGENCY MANAGEMENT Actual Actual Budget Estimated Budget Change Personnel Services 587$ 1,615$ 3,224$ 2,126$ 3,225$ 0.0% Supplies 104,835 8,781 9,000 3,906 6,500 -27.8% Other Services & Charges 152,143 3,329 13,001 904 12,307 -5.3% Capital Outlay - - - - - --- TOTAL EXPENDITURES 257,565$ 13,725$ 25,225$ 6,936$ 22,032$ -12.7% 129 ANIMAL CONTROL (101-42700) DEPARTMENT: Public Safety SUPERVISOR: City Clerk 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 the city’s services and facility. OBJECTIVES: 1. 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: BUDGET: BUDGET COMMENTARY: The professional service contract to handle all animal control issues is the largest budgeted item. The remaining budget items are for supplies and other service charges related to operating the animal control facility. Rate increases cause the budgeted increase in animal control fee. Measurement 2020 2021 2022 2023 Stray animal reports 488 432 501 550 Barking dog reports 181 206 241 200 Lost/found reports 1,613 1,732 2,117 2,200 Feral cat trapping 282 284 313 300 Unsanitary condition reports 193 197 157 200 Abuse/neglect reports 176 186 206 200 Impounds 501 440 524 600 Dog bite reports 73 67 51 70 Animal control fees $41,863 $52,482 $58,544 $60,000 GENERAL FUND 2020 2021 2022 2022 2023 % ANIMAL CONTROL Actual Actual Budget Estimated Budget Change Personnel Services 3,901$ -$ -$ -$ -$ --- Supplies 1,117 260 2,000 2,172 1,750 -12.5% Other Services & Charges 44,504 50,326 57,971 56,908 62,242 7.4% Capital Outlay - - - - - --- TOTAL EXPENDITURES 49,522$ 50,586$ 59,971$ 59,080$ 63,992$ 6.7% 130 NATIONAL GUARD (101-42800) DEPARTMENT: Public Safety SUPERVISOR: Project Coordinator ACTIVITY SCOPE: The National Guard (NG) 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. However, the NG will contribute to capital improvements made to the building. 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. None. MEASURABLE WORKLOAD DATA: BUDGET: 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, consisting only of building rent and utilities. However, the budget was increased in 2023 to reflect higher gas and electric rates and to properly reflect the time the NG uses certain amenities of the facility for their training purposes. Measurement 2020 2021 2022 2023 Not Applicable GENERAL FUND 2020 2021 2022 2022 2023 % NATIONAL GUARD Actual Actual Budget Estimated Budget Change Personnel Services -$ -$ -$ -$ -$ --- Supplies - - - - - --- Other Services & Charges 12,429 13,143 14,000 14,398 19,500 39.3% Capital Outlay - - - - - --- TOTAL EXPENDITURES 12,429$ 13,143$ 14,000$ 14,398$ 19,500$ 39.3% 131 PUBLIC WORKS ADMINISTRATION (101-43110) DEPARTMENT: Public Works SUPERVISOR: Public Works Director ACTIVITY SCOPE: The public works (PW) administration activity oversees the daily operations of the street, water, sewer, wastewater treatment plant, stormwater, 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, expansion of the wastewater treatment plant, and future construction of a water 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. ISSUES: 1. Balance the public works department needs with available funds. 2. Manage city's water and wastewater treatment systems and SCADA system. 3. Implement the capital improvement plan for city infrastructure. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. The public works director/engineering position is spread over four budgets: General Fund (split between PW Administration and Engineering & Inspections) - 60%, Sewer Fund – 20%, Water Fund – 15%, and Stormwater Fund – 5%. Other services & charges increase to support the IT internal service fund for increased use of software packages for operations. Measurement 2020 2021 2022 2023 Budget units 16 15 15 15 Employees supervised - FT 21 16 16 16 GENERAL FUND 2020 2021 2022 2022 2023 % PW - ADMINISTRATION Actual Actual Budget Estimated Budget Change Personnel Services 193,099$ 209,417$ 114,579$ 113,560$ 118,819$ 3.7% Supplies 6,423 6,118 7,000 4,692 7,000 0.0% Other Services & Charges 22,359 28,818 36,094 21,767 40,637 12.6% Capital Outlay - - - - - --- TOTAL EXPENDITURES 221,881$ 244,353$ 157,673$ 140,020$ 166,456$ 5.6% 132 ENGINEERING (101-43111) DEPARTMENT: Public Works SUPERVISOR: City Engineer ACTIVITY SCOPE: Engineering assists with the provision, development, and management of the city's streets, 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. This department was combined with the Engineering & Inspections (101- 43115) department beginning in 2022 because the departments share the same staff and overlap significantly. OBJECTIVES: 1. See Engineering & Inspections Department. ISSUES: 1. See Engineering & Inspections Department. MEASURABLE WORKLOAD DATA: See Engineering & Inspections Department. BUDGET: BUDGET COMMENTARY: See Engineering & Inspections Department. GENERAL FUND 2020 2021 2022 2022 2023 % PW - ENGINEERING Actual Actual Budget Estimated Budget Change Personnel Services -$ -$ -$ -$ -$ --- Supplies 33 327 - - - --- Other Services & Charges 80,399 93,520 - - - --- Capital Outlay - - - - - --- TOTAL EXPENDITURES 80,432$ 93,846$ -$ -$ -$ --- 133 ENGINEERING & INSPECTIONS (101-43115) DEPARTMENT: Public Works SUPERVISOR: City Engineer 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 along with the items noted in the Engineering (101-43111) department. OBJECTIVES: 1. Maintain certifications and attend appropriate classes and workshops for inspections. 2. Improve knowledge, skills, and ability in GIS system and in using CarteGraph software for development of an in-house Pavement Management and Sign Program. 3. Assist other city departments in acquiring utility information not readily available from other sources, including GIS. 4. Complete cost estimates (capital infrastructure planning and budgeting) and design for all improvement projects and continue to develop an in-house Pavement Management Program. 5. Assist with design and implementation of solutions to drainage issues. 6. Complete inspections, documentation, and administration of city’s SWPPP. 7. Continue to educate the public on purposes and practices associated with conservation and drainage easements and storm water ponds. 8. Create a one-stop shop for city driveway, grading, and right-of-way permits. 9. Continue to work towards improving transportation system and collaborate with MNDOT and Wright County. 10. Work with other departments on public improvements and review development plans and agreements. 11. Apply for grants and track funding for improvement projects. ISSUES: 1. Workload is unevenly distributed throughout the year. 2. Increasing restrictions by Minnesota Pollution Control Agency (MPCA) for storm water runoff. 3. Lack of public knowledge regarding purposes and practices associated with conservation and drainage easements and storm water ponds. 4. Increasing phosphorus restrictions by MPCA for wastewater effluent. 5. Volatility in available federal and state funding for transportation improvements. 134 MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. The engineering activity predominantly consists of engineering and other professional service fees. These expenditures consist of both reimbursable and non-reimbursable expenditures. The 2023 budget provides for continued improvements and development of the city's GIS system and reduces reliance on consulting services, but supplies and other services & charges were reduced to better reflect prior year trends in activity. Measurement 2020 2021 2022 2023 Improvement projects 14 16 17 15 Driveway permits issued 8 3 15 8 Right-of-way permits issued 88 87 59 70 Development applications 6 7 7 6 Grading permits issued 4 4 5 5 NPDES Inspections 327 383 394 350 Outfall Inspections 2 10 1 5 Stormwater Inspections 50 50 50 50 Pond Inspections 0 0 31 32 Inspection revenue $13,695 $31,339 $45,864 $46,000 Inspection hours billed 123.38 259.00 385.50 400.00 GENERAL FUND 2020 2021 2022 2022 2023 % PW - ENG. & INSPECTIONS Actual Actual Budget Estimated Budget Change Personnel Services 95,811$ 95,509$ 195,211$ 188,966$ 208,696$ 6.9% Supplies 635 1,751 21,000 9,597 16,500 -21.4% Other Services & Charges 5,664 10,325 137,472 58,132 109,605 -20.3% Capital Outlay - - 6,000 6,000 6,000 0.0% TOTAL EXPENDITURES 102,110$ 107,586$ 359,683$ 262,695$ 340,801$ -5.2% 135 STREETS & ALLEYS (101-43120) DEPARTMENT: Public Works SUPERVISOR: Street Superintendent 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 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 and on the value of good maintenance programs for our infrastructure. 2. Increased costs of fuel and street products. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. A new streets operator, effective April 1, was added to the budget in 2023. This budget unit also shares staff with the Ice & Snow activity, which can create significant fluctuations from year to year. Increases in capital outlay reflects purchases in the Central Equipment Fund for equipment leased to the streets department. Other services & charges continues to decrease with much of the preventative maintenance being handled internally. Measurement 2020 2021 2022 2023 Pounds of crack sealer 44,456 18,276 0* 20,000 Sq. yards of chip sealing 103,000 0 0 75,000 Miles of streets 70.0 70.0 81.0 81.0 Tons of black top patching 443 527 664 675 *0 lbs of crackfiller used due to crack filler kettle out of service. GENERAL FUND 2020 2021 2022 2022 2023 % PW - STREETS & ALLEYS Actual Actual Budget Estimated Budget Change Personnel Services 267,333$ 376,850$ 378,240$ 352,831$ 425,071$ 12.4% Supplies 96,826 219,967 263,500 317,643 287,000 8.9% Other Services & Charges 249,874 75,635 184,656 172,805 156,349 -15.3% Capital Outlay 163,600 247,100 297,900 297,900 381,600 28.1% TOTAL EXPENDITURES 777,633$ 919,551$ 1,124,296$ 1,141,178$ 1,250,020$ 11.2% 136 ICE & SNOW REMOVAL (101-43125) DEPARTMENT: Public Works SUPERVISOR: Street Superintendent 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: BUDGET: BUDGET COMMENTARY: The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. Weather variability greatly impacts budget-to-actual comparisons. Measurement 2020 2021 2022 2023 Inches of snow 29 26 48 55 Plowing events, number of 22 34 28 30 Tons of salt used 730 700 600 600 Tons of sand used 400 0 24 100 GENERAL FUND 2020 2021 2022 2022 2023 % PW - ICE & SNOW Actual Actual Budget Estimated Budget Change Personnel Services 232,200$ 154,847$ 244,828$ 161,455$ 268,232$ 9.6% Supplies 90,158 133,850 155,000 110,532 156,000 0.6% Other Services & Charges 3,762 5,617 7,298 27,243 29,509 304.3% Capital Outlay - - - - - --- TOTAL EXPENDITURES 326,120$ 294,313$ 407,126$ 299,230$ 453,741$ 11.4% 137 SHOP & GARAGE (101-43127) DEPARTMENT: Public Works SUPERVISOR: Street Superintendent ACTIVITY SCOPE: Shop & Garage maintains all city vehicles and equipment for the streets, ice & snow, water, and sewer activities in a safe and efficient manner. The department also assists with equipment maintenance of other city departments as needed. 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: BUDGET: BUDGET COMMENTARY: The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase along with allocation adjustments for staff in the Public Works department. The slight increase in Other services & charges is due to increases rate for electricity and gas. Measurement 2020 2021 2022 2023 Service orders 87 100 85 100 Service order hours 270 401 114 150 Hours per service order 3.1 4.0 1.3 1.5 Total service order costs $8,438 $27,000 $14,367 $16,000 Service cost per order $96.99 $270.00 $169.02 $160.00 Repair orders 62 70 28 30 Repair hours 303 420 127 125 Hours per repair order 4.9 6.0 4.5 4.2 Total repair order costs $30,267 $40,000 $16,513 $20,000 Repair costs per order $488.18 $571.43 $589.75 $666.67 GENERAL FUND 2020 2021 2022 2022 2023 % PW - SHOP & GARAGE Actual Actual Budget Estimated Budget Change Personnel Services 110,655$ 130,946$ 160,308$ 160,499$ 161,965$ 1.0% Supplies 47,563 48,723 74,500 47,329 74,000 -0.7% Other Services & Charges 41,092 89,523 80,438 86,987 84,983 5.7% Capital Outlay - - - - - --- TOTAL EXPENDITURES 199,310$ 269,192$ 315,246$ 294,814$ 320,948$ 1.8% 138 STREET LIGHTING (101-43160) DEPARTMENT: Public Works SUPERVISOR: Street Superintendent 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 lights with high-powered, energy efficient LED lights. 2. Draft a new street lighting policy. ISSUES: 1. Verify lamp and fixtures maintenance by utility companies. 2. Maintenance and upgrades on aging signal systems and streetlights. 3. Lack of assistance from Wright County and MNDOT. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: The supplies budget increased by $50,000 to replace the city’s holiday lights. Electricity for the streetlights is the largest expenditure at $185,000, in Other services and charges, which also includes, $35,000 for repairs and maintenance of traffic signals. Measurement 2020 2021 2022 2023 Street lights maintained*973 973 973 973 Utility expenses $170,241 $177,026 $201,145 $185,000 *Includes those owned by the city and Xcel Energy. GENERAL FUND 2020 2021 2022 2022 2023 % PW - STREET LIGHTING Actual Actual Budget Estimated Budget Change Personnel Services 5,278$ 2,218$ -$ 882$ -$ --- Supplies 4,778 3,219 20,000 5,083 70,000 250.0% Other Services & Charges 181,773 189,619 217,000 220,724 222,000 2.3% Capital Outlay - - - - - --- TOTAL EXPENDITURES 191,829$ 195,055$ 237,000$ 226,690$ 292,000$ 23.2% 139 REFUSE COLLECTION (101-43230) DEPARTMENT: Public Works SUPERVISOR: Refuse Collection ACTIVITY SCOPE: The city contracts with a private hauler for residential refuse and recycling collection services. OBJECTIVES: 1. Research expanding city hauler’s contracted service prices to businesses 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: BUDGET: BUDGET COMMENTARY: Nearly the entire budget is based on the city’s contract obligations with its private refuse hauler. The contract includes fixed rates for the five-year term, which expires on May 31, 2025. The contract increases annually with inflation and the addition of residents/customers. Measurement 2020 2021 2022 2023 Residential refuse collections 52 52 52 52 Residential recycling collections 26 26 26 26 Residential container base 3,992 4,091 4,159 4,200 Additional containers 627 644 652 650 Recycling containers 4,581 4,680 4,757 4,900 GENERAL FUND 2020 2021 2022 2022 2023 % REFUSE COLLECTION Actual Actual Budget Estimated Budget Change Personnel Services -$ -$ 576$ -$ -$ -100.0% Supplies - - - - - --- Other Services & Charges 681,948 754,132 802,302 718,236 843,897 5.2% Capital Outlay - - - - - --- TOTAL EXPENDITURES 681,948$ 754,132$ 802,878$ 718,236$ 843,897$ 5.1% 140 SENIOR CENTER (101-45175) DEPARTMENT: Recreation and Culture SUPERVISOR: City Administrator 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: BUDGET: 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 2023 adopted contribution is $65,000, which is the same as 2021 and 2022. Measurement 2020 2021 2022 2023 Outcomes/Effectiveness Volunteers hours 3,511 5,631 7,004 7,100 Noon meals served 919 1,799 3,108 3,200 Work Load: Unduplicated participants 1,579 1,762 2,450 2,500 Duplicated participants 8,072 16,225 24,795 25,200 Received phone calls 2,748 3,439 3,875 3,900 Activities offered 89 104 127 130 GENERAL FUND 2020 2021 2022 2022 2023 % SENIOR CENTER Actual Actual Budget Estimated Budget Change Personnel Services 980$ 635$ 863$ 1,220$ 863$ 0.0% Supplies 82 - - 501 - --- Other Services & Charges 102,600 105,054 105,500 106,402 101,000 -4.3% Capital Outlay - - - - - --- TOTAL EXPENDITURES 103,662$ 105,689$ 106,363$ 108,123$ 101,863$ -4.2% 141 PARK OPERATIONS (101-45201) DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent ACTIVITY SCOPE: The park operations activity maintains the parks and trails within the city and at the city’s area of the Bertram Chain of Lakes Regional Park (BCOL). This includes maintaining and improving playground and picnic facilities, fertilizing and mowing grass, maintaining athletic fields, flooding and maintaining outdoor ice rinks, snow and ice removal on pathways, and tree preservation within the parks system. OBJECTIVES: 1. Maintain a high-quality parks and trails system. 2. Continue pathways maintenance. 3. Improve efficiencies through use of the city’s GIS. 4. 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: BUDGET: BUDGET COMMENTARY: The parks budget consists of expenditures needed to maintain city parks and trails. The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. Supplies increase due to higher costs for purchases, notably fertilizer and motor fuels. Other services & charges increase to complete a parks needs study. Capital outlay reflects the acquisition of capital equipment through the Central Equipment internal service fund. Additional Central Equipment Fund purchases are planned for 2023. Measurement 2020 2021 2022 2023 Park land acres maintained 360 365 365 365 Trail miles maintained 41.0 42.0 43.0 43.0 Park events held 63 100 215 215 Winter skating days 120 120 120 120 GENERAL FUND 2020 2021 2022 2022 2023 % PARK - OPERATIONS Actual Actual Budget Estimated Budget Change Personnel Services 575,682$ 601,077$ 692,576$ 733,894$ 740,623$ 6.9% Supplies 177,195 197,544 185,000 149,105 243,500 31.6% Other Services & Charges 174,388 173,021 210,828 209,582 296,933 40.8% Capital Outlay 113,400 126,800 141,800 141,800 147,700 4.2% TOTAL EXPENDITURES 1,040,665$ 1,098,442$ 1,230,204$ 1,234,381$ 1,428,756$ 16.1% 142 PARK BALLFIELDS (101-45203) DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent ACTIVITY SCOPE: The park ballfields activity prepares and maintains city athletic fields, including the NSP (Xcel) Ballfields. 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: BUDGET: BUDGET COMMENTARY: The 2023 budget is consistent with the budget in prior years. An act of vandalism in 2022 increased Other services & charges. However, the increases expenditures were offset by insurance claim proceeds. Measurement 2020 2021 2022 2023 Ball games played, number of 100 650 650 650 Soccer fields maintained 32 35 24 24 Lacrosse fields maintained 10 10 10 10 Ball fields maintained 7 7 8 8 Number of times mowed 50 50 50 50 GENERAL FUND 2020 2021 2022 2022 2023 % PARK - BALLFIELDS Actual Actual Budget Estimated Budget Change Personnel Services -$ -$ -$ -$ -$ --- Supplies 10,536 10,126 10,600 3,481 10,600 0.0% Other Services & Charges 13,149 17,946 16,800 56,256 15,600 -7.1% Capital Outlay - - - - - --- TOTAL EXPENDITURES 23,685$ 28,072$ 27,400$ 59,737$ 26,200$ -4.4% 143 PUBLIC ARTS (101-45204) DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent 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: BUDGET: BUDGET COMMENTARY: Other services and charges include contracting for two creative consultants with increased participation of the community, and the 2023 budget increases to reflect additional time spent by one of the consultants. Anticipated projects funded through Central Minnesota Arts Board (CMAB) grants are difficult to predict, and the increase in Other services & charges is also caused by budgeting based on prior year success in obtaining grant funding for projects. This budget unit is also responsible for utilities and repairs at the MontiArts building. Measurement 2020 2021 2022 2023 Projects 7 15 32 40 Events 31 45 242 260 GENERAL FUND 2020 2021 2022 2022 2023 % PARK - PUBLIC ARTS Actual Actual Budget Estimated Budget Change Personnel Services -$ -$ -$ 220$ -$ --- Supplies 3,047 6,010 6,800 14,797 7,200 5.9% Other Services & Charges 33,045 87,235 65,441 124,923 166,328 154.2% Capital Outlay - - - - - --- TOTAL EXPENDITURES 36,092$ 93,246$ 72,241$ 139,940$ 173,528$ 140.2% 144 LIBRARY (101-45501) DEPARTMENT: Recreation and Culture SUPERVISOR: City Administrator 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: BUDGET: 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 handful of programs. Total 2023 estimated expenditures are lower than prior year levels due to efficiencies gained with the Facilities Maintenance internal service fund and bringing custodial services in-house rather than contracting out. By state statute, the city must annually expend at least $35,160 for the library. Measurement 2020 2021 2022 2023 Checked out items 112,334 143,223 138,428 140,000 Number of requests placed 7,375 4,997 4,754 4,750 Summer reading participants 148 377 829 900 Winter reading participants 209 55 237 300 Patrons using wireless 1,355 1,933 2,201 2,500 Internet sessions used 160 208 176 200 Programs offered 102 104 133 150 Program attendance 4,810* 1,772 3,317 3,500 * Some programs offered after March 17, 2020 were virtual and offered only on Facebook. Counts include the number of views on FB. GENERAL FUND 2020 2021 2022 2022 2023 % LIBRARY Actual Actual Budget Estimated Budget Change Personnel Services 1,901$ 1,848$ -$ -$ -$ --- Supplies 1,725 1,517 2,500 295 1,500 -40.0% Other Services & Charges 44,442 41,141 50,896 48,044 36,515 -28.3% Capital Outlay - - - - - --- TOTAL EXPENDITURES 48,068$ 44,506$ 53,396$ 48,339$ 38,015$ -28.8% 145 SHADE TREE (101-46102) DEPARTMENT: Recreation and Culture SUPERVISOR: Park Superintendent 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, and noise reduction. 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 and education programs. 5. Begin a boulevard tree planting program. ISSUES: 1. Stress on trees caused by weather and diseases. 2. Funding availability. 3. Managing Emerald Ash Borer (EAB) disease discovered in 2022. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: A portion of the total time of park employees is allocated to the Shade Tree activity. The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage increase. Part of the personnel services change reflects the reallocation of wages within recreation and culture activities. Supplies budgets increased with a greater focus on prioritizing new plantings, especially to replace trees infected with EAB. Measurement 2020 2021 2022 2023 Trees planted 220 300 75 75 Trees removed 6 25 15 15 Students in programs 500 0 0 0 Trees with Emerald Ash Borer ----25 25 GENERAL FUND 2020 2021 2022 2022 2023 % SHADE TREE Actual Actual Budget Estimated Budget Change Personnel Services 70,496$ 74,621$ 88,043$ 70,802$ 96,091$ 9.1% Supplies 8,418 10,824 26,020 20,802 33,000 26.8% Other Services & Charges 110 2,081 4,112 2,613 16,616 304.1% Capital Outlay - - - - - --- TOTAL EXPENDITURES 79,024$ 87,526$ 118,175$ 94,217$ 145,707$ 23.3% 146 2023 Adopted Budget 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. Special revenue funds use the modified accrual basis of accounting for both financial reporting and budgeting purposes. In 2021, the Economic Development Authority (EDA) Fund was reclassified from a blended component unit (special revenue fund) to a discretely-presented component unit in the city’s Annual Comprehensive Financial Report. However, it is still presented as a special revenue fund for budget purposes. BUDGET ISSUES Each special revenue fund has specific challenges that will be addressed in the narrative for each fund. BUDGET SUMMARY TOTAL SPECIAL REVENUE FUNDS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 771,390$ 852,765$ 873,000$ 871,970$ 917,000$ 5.0% Tax Increments 707,824 732,688 630,344 720,301 529,000 -16.1% Franchise & Other Taxes 690 662 - 1,322 - --- Intergovernmental Revenues 227,827 715,000 425,000 761,265 400,000 -5.9% Charges for Services 540,071 828,981 931,900 1,112,025 1,228,300 31.8% Miscellaneous 172,626 340,379 67,756 727,941 78,700 16.2% Operating Transfers In 425,000 2,368 6,000 4,900 6,000 0.0% TOTAL REVENUES 2,845,428$ 3,472,843$ 2,934,000$ 4,199,723$ 3,159,000$ 7.7% EXPENDITURES Personnel Services 1,008,315$ 911,689$ 1,246,373$ 1,196,717$ 1,375,157$ 10.3% Supplies 96,372 56,259 120,900 98,629 119,100 -1.5% Other Services & Charges 2,069,919 997,979 962,826 2,226,140 2,139,893 122.3% Capital Outlay 403,069 31,516 191,976 327,009 341,850 78.1% Operating Transfers Out 200,000 623,700 197,925 197,925 - -100.0% TOTAL EXPENDITURES 3,777,675$ 2,621,144$ 2,720,000$ 4,046,420$ 3,976,000$ 46.2% FUND BALANCE - JANUARY 1 8,483,186$ 7,550,939$ 8,402,638$ 8,402,638$ 8,555,941$ Excess (Deficiency) of Revenues over Expenditures (932,247) 851,699 214,000 153,303 (817,000) FUND BALANCE - DECEMBER 31 7,550,939$ 8,402,638$ 8,616,638$ 8,555,941$ 7,738,941$ 147 ECONOMIC DEVELOPMENT AUTHORITY FUND (213-46301) DEPARTMENT: Economic Development SUPERVISOR: Economic Development Manager 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 Economic Development Manager. In addition, all tax increment financing districts are initiated and administered by the EDA. There are currently 8 active tax increment districts and 2 decertified, active districts. 5 additional TIF districts have been authorized by the EDA Board, but not certified to the Office of the State Auditor (OSA). 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. Continue to 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. 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, especially 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. 148 MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: Under Section 469.033, subd. 6, of the HRA Act, the HRA’s special benefit tax is levied annually and is limited to 0.0185% of the taxable market value. The main revenue source for the EDA Fund is tax increments from the various districts. One district decertified in 2022 and will have no increment in 2023. The 2022 intergovernmental revenues were a pass-through Minnesota Investment Fund (MIF) grant passed through from the state to a private developer. The increase in miscellaneous revenues in 2022 from a land sale. Expenditures include administrative costs, pay-as-you-go payments to various development projects, and a transfer to debt service funds for 2011A bond payment. Other services & charges in 2022 reflect use of pooled TIF for a land sale to a private developer associated with a new TIF district that will be certified in 2023. Measurement 2020 2021 2022 2023 Properties acquired 4 1 1 1 Properties sold 0 0 11 1 GMEF loans outstanding 2 3 3 3 GMEF loans originated 0 1 0 1 Façade loans originated 1 0 2 1 Façade loans outstanding 1 0 0 3 Misc. other ED subsidy loans/g 0 0 3 3 Misc. other ED subsidy loans/g 0 0 2 5 TIF Districts newly created 0 0 5 1 Active TIF districts 8 9 8 12 EDA FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 354,390$ 367,765$ 388,000$ 386,970$ 402,000$ 3.6% Tax Increments 707,824 732,688 630,344 720,301 529,000 -16.1% Franchise & Other Taxes 690 662 - 1,322 - --- Intergovernmental Revenues 185,000 - 25,000 375,547 - -100.0% Charges for Services 2,275 26,951 - 8,700 - --- Miscellaneous 82,465 304,007 43,656 718,441 50,000 14.5% Operating Transfers In - 2,368 6,000 4,900 6,000 0.0% TOTAL REVENUES 1,332,644$ 1,434,441$ 1,093,000$ 2,216,181$ 987,000$ -9.7% EXPENDITURES Personnel Services 134,190$ 119,333$ 172,135$ 171,262$ 189,639$ 10.2% Supplies - 54 200 374 300 50.0% Other Services & Charges 1,757,517 595,449 324,764 1,560,593 1,418,211 336.7% Capital Outlay 35,496 31,516 191,976 273,769 214,850 11.9% Operating Transfers Out 200,000 198,700 197,925 197,925 - -100.0% TOTAL EXPENDITURES 2,127,203$ 945,052$ 887,000$ 2,203,923$ 1,823,000$ 105.5% FUND BALANCE - JANUARY 1 7,313,264$ 6,518,705$ 7,008,094$ 7,008,094$ 7,020,352$ Excess (Deficiency) of Revenues over Expenditures (794,559) 489,389 206,000 12,258 (836,000) FUND BALANCE - DECEMBER 31 6,518,705$ 7,008,094$ 7,214,094$ 7,020,352$ 6,184,352$ 149 CEMETERY FUND (215-49010) DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent 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. An ossuary- columbarium was purchased in 2019, which is also accounted for in this 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 2020 2021 2022 2023 Plot occupied 3,598 3,626 3,650 3,675 Plots reserved 683 683 696 700 Plots available for sale 1,119 1,092 1,062 1,030 Number of plots sold 11 23 32 32 Number of internments 22 28 25 25 Number of markers staked 15 9 17 20 Columbarium slots occupied 6 9 16 20 Columbarium slots reserved 2 3 8 10 Columbarium slots available 88 84 80 75 Columbarium slots sold 6 4 6 5 Ossuary slots occupied 0 0 3 5 Ossuary slots reserved 50 50 52 55 Ossuary slots available 265 265 268 266 Ossuary slots sold 0 0 2 2 150 BUDGET: BUDGET COMMENTARY: Burial plot and ossuary-columbarium slot sales continue to increase but are budgeted conservatively. Market value adjustments in the city’s investment portfolio created negative miscellaneous revenues. CEMETERY 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Charges for Services 40,884$ 53,891$ 32,900$ 67,838$ 41,700$ 26.7% Miscellaneous 15,701 (282) 100 (3,518) 300 200.0% TOTAL REVENUES 56,585$ 53,609$ 33,000$ 64,320$ 42,000$ 27.3% EXPENDITURES Personnel Services 2,982$ 3,628$ 2,228$ 386$ 2,228$ 0.0% Supplies 60 1,314 1,100 106 1,100 0.0% Other Services & Charges 24,279 23,823 29,672 26,169 27,672 -6.7% TOTAL EXPENDITURES 27,321$ 28,764$ 33,000$ 26,660$ 31,000$ -6.1% FUND BALANCE - JANUARY 1 26,075$ 55,339$ 80,184$ 80,184$ 117,844$ Excess (Deficiency) of Revenues over Expenditures 29,264 24,845 - 37,660 11,000 FUND BALANCE - DECEMBER 31 55,339$ 80,184$ 80,184$ 117,844$ 128,844$ 151 SMALL CITIES DEVELOPMENT PROGRAM (SCDP) FUND (221-46500) DEPARTMENT: Small Cities Development Program Fund SUPERVISOR: Community Development Director ACTIVITY SCOPE: Following state and federal guidelines, the SCDP 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: BUDGET: BUDGET COMMENTARY: Repayment of loans and interest earned on investments make up the anticipated activity in 2023. The city’s pooled investment market value adjustment was negative in 2022, more than fully offsetting the interest earned on the outstanding loan. Measurement 2020 2021 2022 2023 Loans outstanding 1 1 1 1 SCDP FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Miscellaneous 20,173$ 84$ 8,000$ (26,413)$ 8,000$ 0.0% FUND BALANCE - JANUARY 1 904,365$ 924,538$ 924,622$ 924,622$ 898,209$ Excess (Deficiency) of Revenues over Expenditures 20,173 84 8,000 (26,413) 8,000 FUND BALANCE - DECEMBER 31 924,538$ 924,622$ 932,622$ 898,209$ 906,209$ 152 COMMUNITY CENTER FUND (226-4512x) DEPARTMENT: Community Center SUPERVISOR: Parks, Arts & Recreation Director ACTIVITY SCOPE: The Monticello Community Center (MCC) 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 area previously used as a wheel park (skateboard, bike, and rollerblade) including design, financing, construction, and marketing. 2. Develop an online 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. 5. Residual impacts from the COVID-19 pandemic and subsequent inflation. MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Custo mer visits, number of 71,632 94,448 117,942 122,642 Gross program sales 17,930$ 44,937$ 62,485$ 73,000$ Annual memberships 1,150 343 416 437 Monthly memberships 1,433 843 1,166 1,283 Three-month memberships 308 153 186 195 Ratio of annual memberships to other memberships 0.66 0.34 0.31 0.30 Rental revenue 73,096$ 127,144$ 167,003$ 196,400$ Numbers dropped significantly in 2020 due to the COVID-19 pandemic. 2023 amounts are estimated conservatively as local operations restrictions are subject to change. 153 BUDGET: BUDGET COMMENTARY: The MCC’s largest revenue sources are charges for services (memberships and day passes) and property taxes. Other revenues include concession sales, room rentals, and program fees. While charges for services are typically the largest source of revenue, the COVID-19 pandemic forced closure of the facility for 4 months in 2020. The closure created great financial burden on the Community Center which caused an increased reliance on property taxes and a transfer from the Liquor Fund to avoid a negative fund balance. Activities in the facility increased in 2021, while still impacted by the pandemic. Use of $715,000 of American Rescue Plan Act (ARPA) funding in 2021 brought back stability to the fund balance. The current labor market necessitated a wage increase for many of the part time positions. Uncertainty over how inflation will affect patron levels, the 2023 budget is conservative in estimating revenues and liberal in estimating potential costs. Capital expenditures were halted when the pandemic began and were delayed to conserve resources. However, in thinking long- term, methodical investments in the facility to engage patrons took place in 2022 and are planned for 2023. COMMUNITY CENTER 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 417,000$ 485,000$ 485,000$ 485,000$ 515,000$ 6.2% Intergovernmental Revenues 42,827 715,000 400,000 385,718 400,000 0.0% Charges for Services 496,912 748,139 899,000 1,035,486 1,186,600 32.0% Miscellaneous 54,287 36,570 16,000 39,431 20,400 27.5% Operating Transfers In 425,000 - - - - --- TOTAL REVENUES 1,436,026$ 1,984,709$ 1,800,000$ 1,945,635$ 2,122,000$ 17.9% EXPENDITURES Personnel Services 871,143$ 788,729$ 1,072,010$ 1,025,069$ 1,183,290$ 10.4% Supplies 96,312 54,891 119,600 98,150 117,700 -1.6% Other Services & Charges 288,123 378,708 608,390 639,378 694,010 14.1% Capital Outlay 367,573 - - 53,240 127,000 --- Operating Transfers Out - 425,000 - - - --- TOTAL EXPENDITURES 1,623,151$ 1,647,328$ 1,800,000$ 1,815,837$ 2,122,000$ 17.9% FUND BALANCE - JANUARY 1 239,482$ 52,357$ 389,738$ 389,738$ 519,536$ Excess (Deficiency) of Revenues over Expenditures (187,125) 337,381 - 129,798 - FUND BALANCE - DECEMBER 31 52,357$ 389,738$ 389,738$ 519,536$ 519,536$ 154 2023 Adopted Budget 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 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 six active debt service (sub)funds that are combined into one debt service fund for financial reporting. BUDGET ISSUES The city's bond rating was downgraded from Aa3 to A2 by Moody's Investor Services in 2012. This rating was upgraded to A1 with the sale of the city’s 2019A debt issue in 2019 and affirmed with the city’s 2020A debt issue. See individual (sub)funds for the purpose and budget issues facing each debt service (sub)fund. Fund balances in some (sub)funds declined with planned use of fund balances built up over time due to items such as prepaid assessments. BUDGET SUMMARY TOTAL DEBT SERVICE FUNDS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 2,939,987$ 2,831,479$ 2,311,400$ 2,311,400$ 1,999,581$ -13.5% Special Assessments 469,028 272,950 222,472 317,270 259,275 16.5% Miscellaneous 15,864 (7,195) 7,203 (53,739) 9,144 26.9% Operating Transfers In 200,000 3,975,237 197,925 197,925 - -100.0% TOTAL REVENUES 3,624,879$ 7,072,472$ 2,739,000$ 2,772,856$ 2,268,000$ -17.2% EXPENDITURES Other Services & Charges 1,372$ 8,850$ 1,200$ 7,250$ 1,200$ 0.0% Debt Service 4,140,536 7,243,943 2,812,800 2,806,708 2,605,800 -7.4% Operating Transfers Out - - 111,000 108,802 - -100.0% TOTAL EXPENDITURES 4,141,908$ 7,252,793$ 2,925,000$ 2,922,759$ 2,607,000$ -10.9% FUND BALANCE - JANUARY 1 1,821,561$ 1,304,532$ 1,124,210$ 1,124,210$ 974,306$ Excess (Deficiency) of Revenues over Expenditures (517,029) (180,322) (186,000) (149,904) (339,000) FUND BALANCE - DECEMBER 31 1,304,532$ 1,124,210$ 938,210$ 974,306$ 635,306$ 155 2015B G.O. BOND SUB-FUND (319-47000) DEPARTMENT: Debt Service SUPERVISOR: Finance Director 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 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 were 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. Accumulating resources for early redemption. MEASURABLE WORKLOAD DATA: BUDGET: Measurement 2020 2021 2022 2023 Assessment balance $92,013 $68,780 $51,585 $34,390 Deferred assessments $0 $0 $0 $0 Deferred % of balance 0% 0% 0% 0% Delinquent balance $0 $0 $0 $0 Prepaid assessments $0 $4,629 $0 $0 Assessment rolls 1 2 1 1 Assessed parcels 1 28 1 1 2015B G.O. Bonds 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTI MATED BUDGET CHANGE Property Taxes 198,385$ 201,115$ 192,650$ 192,650$ 164,435$ -14.6% Special Assessments 23,416 27,767 21,776 10,403 19,903 -8.6% Miscellaneous 2,557 (785) 1,574 (6,508) 1,662 5.6% TOTAL REVENUES 224,358$ 228,097$ 216,000$ 196,545$ 186,000$ -13.9% EXPENDITURES Other Services & Charges 196$ 357$ 200$ 417$ 200$ 0.0% Debt Service 211,891 213,550 210,800 210,300 212,800 0.9% TOTAL EXPENDITURES 212,087$ 213,907$ 211,000$ 210,717$ 213,000$ 0.9% FUND BALANCE - JANUARY 1 109,416$ 121,687$ 135,877$ 135,877$ 121,706$ Excess (Deficiency) of Revenues over Expenditures 12,271 14,190 5,000 (14,171) (27,000) FUND BALANCE - DECEMBER 31 121,687$ 135,877$ 140,877$ 121,706$ 94,706$ 156 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 $175,000 on school district property and property taxes. The tax levy covers the gap between assessment revenue and debt service payments. Developer fees were assessed to the platted parcels in 2021 causing an increase in assessment rolls and assessed parcels related to the bond issue. REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2023 -$ 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 1,500,000$ 200,248$ 1,700,248$ GO Bonds, Series 2015B 157 2016A G.O. BOND SUB-FUND (320-47000) DEPARTMENT: Debt Service SUPERVISOR: Finance Director 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 7th Street. 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 2023. 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: BUDGET: Measurement 2020 2021 2022 2023 Assessment balance $396,383 $316,688 $246,567 $185,457 Deferred assessments $0 $0 $0 $0 Deferred % of balance 0% 0% 0% 0% Delinquent balance $0 $0 $0 $0 Prepaid assessments $46,478 $9,621 $7,209 $0 Assessment rolls 2 2 2 2 Assessed parcels 76 76 66 66 2016A G.O. Bonds 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTI MATED BUDGET CHANGE Property Taxes 405,039$ 406,089$ 406,929$ 406,929$ 282,559$ -30.6% Special Assessments 145,564 91,510 78,800 83,117 73,063 -7.3% Miscellaneous 8,875 (2,525) 1,271 (17,733) 1,378 8.4% TOTAL REVENUES 559,478$ 495,074$ 487,000$ 472,313$ 357,000$ -26.7% EXPENDITURES Other Services & Charges 196$ 357$ 200$ 417$ 200$ 0.0% Debt Service 525,941 526,000 527,800 526,850 527,800 0.0% TOTAL EXPENDITURES 526,137$ 526,357$ 528,000$ 527,267$ 528,000$ 0.0% FUND BALANCE - JANUARY 1 366,626$ 399,967$ 368,684$ 368,684$ 313,731$ Excess (Deficiency) of Revenues over Expenditures 33,341 (31,283) (41,000) (54,954) (171,000) FUND BALANCE - DECEMBER 31 399,967$ 368,684$ 327,684$ 313,731$ 142,731$ 158 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 $1,143,000 in the core street reconstruction area. Property taxes are levied for the gap between assessment revenue and debt service payments. Future levies will be adjusted to reflect assessment prepayments, interest earned on the prepayments and interest foregone on the prepayments. REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2023 -$ 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 2,225,000$ 148,000$ 2,373,000$ GO Bonds, Series 2016A 159 2017A G.O. BOND SUB-FUND (321-47000) DEPARTMENT: Debt Service SUPERVISOR: Finance Director 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 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. Accumulating resources for early redemption. MEASURABLE WORKLOAD DATA: BUDGET: Measurement 2020 2021 2022 2023 Assessment balance $226,644 $191,502 $150,373 $120,298 Deferred assessments $0 $0 $0 $0 Deferred % of balance 0% 0% 0% 0% Delinquent balance $0 $0 $0 $0 Prepaid assessments $3,442 $2,763 $9,211 $0 Assessment rolls 2 2 2 2 Assessed parcels 57 57 52 52 2017A G.O. Bonds 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTI MATED BUDGET CHANGE Property Taxes 427,367$ 430,097$ 427,367$ 427,367$ 299,532$ -29.9% Special Assessments 47,347 46,859 41,120 49,837 39,098 -4.9% Miscellaneous 6,141 (1,788) 1,513 (13,567) 1,370 -9.5% TOTAL REVENUES 480,855$ 475,168$ 470,000$ 463,637$ 340,000$ -27.7% EXPENDITURES Other Services & Charges 196$ 357$ 200$ 417$ 200$ 0.0% Debt Service 470,731 472,390 470,800 469,840 467,800 -0.6% TOTAL EXPENDITURES 470,927$ 472,747$ 471,000$ 470,257$ 468,000$ -0.6% FUND BALANCE - JANUARY 1 268,629$ 278,557$ 280,978$ 280,978$ 274,359$ Excess (Deficiency) of Revenues over Expenditures 9,928 2,421 (1,000) (6,619) (128,000) FUND BALANCE - DECEMBER 31 278,557$ 280,978$ 279,978$ 274,359$ 146,359$ 160 BUDGET COMMENTARY: The $5,000,000 2017A G.O. bond issue has two components: $2,040,000 improvement portion and $2,960,000 abatement portion. Property taxes and assessments support the improvement portion of the debt issue. The abatement portion is supported by an abatement tax levy for bond principal and a debt service levy for bond interest. Property taxes will be levied for any gap between assessment revenue and debt service. REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2023 -$ 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 3,160,000$ 400,178$ 3,560,178$ GO Bonds, Series 2017A 161 2018A G.O. ABATEMENT BOND SUB-FUND (322-47000) DEPARTMENT: Debt Service SUPERVISOR: Finance Director 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 bonds have an average interest rate of 3.151% and are redeemable in December of 2026. Abatement bonds were 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: BUDGET: BUDGET COMMENTARY: The $5,000,000 2018A G.O. bond issue has only one component: Abatement. Property taxes are levied for annual principal and interest payments. A debt service levy covers the annual bond interest payment, and an abatement levy covers the annual bond principal payment. Measurement 2020 2021 2022 2023 Not Applicable 2018A G.O. Bonds 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 472,434$ 448,077$ 451,812$ 451,812$ 444,232$ -1.7% Miscellaneous 1,817 (648) 1,188 (5,361) 1,768 48.8% TOTAL REVENUES 474,251$ 447,429$ 453,000$ 446,451$ 446,000$ -1.5% EXPENDITURES Other Services & Charges 196$ 357$ 200$ 417$ 200$ 0.0% Debt Service 451,379 446,288 447,800 447,038 447,800 0.0% TOTAL EXPENDITURES 451,575$ 446,645$ 448,000$ 447,454$ 448,000$ 0.0% FUND BALANCE - JANUARY 1 57,043$ 79,719$ 80,503$ 80,503$ 79,500$ Excess (Deficiency) of Revenues over Expenditures 22,676 784 5,000 (1,003) (2,000) FUND BALANCE - DECEMBER 31 79,719$ 80,503$ 85,503$ 79,500$ 77,500$ 162 REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2023 -$ 58,443$ 58,443$ 12/15/2023 330,000 58,443 3.00% 388,443 6/15/2024 - 53,494 53,494 12/15/2024 340,000 53,494 3.00% 393,494 6/15/2025 - 48,394 48,394 12/15/2025 350,000 48,394 3.00% 398,394 6/15/2026 - 43,143 43,143 12/15/2026 360,000 43,143 3.00% 403,143 6/15/2027 - 37,744 37,744 12/15/2027 370,000 37,744 3.00% 407,744 6/15/2028 - 32,194 32,194 12/15/2028 385,000 32,194 3.00% 417,194 6/15/2029 - 26,419 26,419 12/15/2029 395,000 26,419 3.00% 421,419 6/15/2030 - 20,494 20,494 12/15/2030 405,000 20,494 3.13% 425,494 6/15/2031 - 14,165 14,165 12/15/2031 420,000 14,165 3.25% 434,165 6/15/2032 - 7,341 7,341 12/15/2032 435,000 7,341 3.38% 442,341 Total 3,790,000$ 683,662$ 4,473,662$ GO Bonds, Series 2018A Abatement Bonds 163 2019A G.O. BOND SUB-FUND (323-47000) DEPARTMENT: Debt Service SUPERVISOR: Finance Director ACTIVITY SCOPE: The 2019A bonds financed the completion of the Fallon Avenue overpass, purchase of a fire ladder truck, construction of a new fire hall, and street improvements. The bonds have an average interest rate of 2.0825% and are redeemable in December of 2027. 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: BUDGET: Measurement 2020 2021 2022 2023 Assessment balance $81,840 $71,610 $61,380 $51,150 Deferred assessments $0 $0 $0 $0 Deferred % of balance 0% 0% 0% 0% Delinquent balance $0 $0 $0 $0 Prepaid assessments $0 $0 $0 $0 Assessment rolls 1 1 1 1 Assessed parcels 9 9 9 9 2019A GO BONDS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTI MATED BUDGET CHANGE Property Taxes 728,620$ 714,945$ 709,446$ 709,446$ 697,133$ -1.7% Special Assessments 14,833 14,322 13,810 13,811 13,299 -3.7% Miscellaneous 912 (536) 744 (5,948) 1,568 110.8% TOTAL REVENUES 744,365$ 728,731$ 724,000$ 717,309$ 712,000$ -1.7% EXPENDITURES Other Services & Charges 196$ 4,357$ 200$ 417$ 200$ 0.0% Debt Service 709,686 714,088 718,800 717,938 711,800 -1.0% TOTAL EXPENDITURES 709,882$ 718,445$ 719,000$ 718,354$ 712,000$ -1.0% FUND BALANCE - JANUARY 1 5,011$ 39,494$ 49,780$ 49,780$ 48,734$ Excess (Deficiency) of Revenues over Expenditures 34,483 10,286 5,000 (1,046) - FUND BALANCE - DECEMBER 31 39,494$ 49,780$ 54,780$ 48,734$ 48,734$ 164 BUDGET COMMENTARY: The 2019A G.O. Bonds are comprised of four components: $1,040,000 abatement, $1,290,000 equipment, $5,350,000 CIP, and $320,000 street improvement. The revenue sources include a combination of existing city funds, property taxes, and special assessments. REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2023 -$ 65,444$ 65,444$ 12/15/2023 580,000 65,444 2.00% 645,444 6/15/2024 - 59,643 59,643 12/15/2024 590,000 59,643 2.00% 649,643 6/15/2025 - 53,744 53,744 12/15/2025 605,000 53,744 2.00% 658,744 6/15/2026 - 47,694 47,694 12/15/2026 615,000 47,694 2.00% 662,694 6/15/2027 - 41,544 41,544 12/15/2027 630,000 41,544 2.00% 671,544 6/15/2028 - 35,244 35,244 12/15/2028 645,000 35,244 2.00% 680,244 6/15/2029 - 28,793 28,793 12/15/2029 455,000 28,793 2.00% 483,793 6/15/2030 - 24,244 24,244 12/15/2030 465,000 24,244 2.00% 489,244 6/15/2031 - 19,593 19,593 12/15/2031 475,000 19,593 2.10% 494,593 6/15/2032 - 14,606 14,606 12/15/2032 485,000 14,606 2.20% 499,606 6/15/2033 - 9,271 9,271 12/15/2033 405,000 9,271 2.25% 414,271 6/15/2034 - 4,715 4,715 12/15/2034 410,000 4,715 2.30% 414,715 Total 6,360,000$ 809,070$ 7,169,070$ GO Bonds, Series 2019A 165 2020A G.O. BOND SUB-FUND (324-47000) DEPARTMENT: Debt Service SUPERVISOR: Finance Director ACTIVITY SCOPE: The 2020A bonds financed the 2020 and 2022 Street Improvement projects. The revenue sources include property taxes and special assessments. The city levies for the gap between annual debt service payments and annual assessment collections. The bonds have an average interest rate of 1.5067% and are redeemable in December of 2028. 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: BUDGET: Measurement 2020 2021 2022 2023 Assessment balance $508,813 $435,493 $387,104 $301,768 Deferred assessments $0 $0 $0 $0 Deferred % of balance 0% 0% 0% 0% Delinquent balance $0 $0 $0 $0 Prepaid assessments $124,520 $22,831 $96,838 $0 Assessment rolls 1 1 2 2 Assessed parcels 251 251 437 437 2020A GO BONDS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTI MATED BUDGET CHANGE Property Taxes -$ 117,586$ 123,196$ 123,196$ 111,690$ -9.3% Special Assessments 124,520 92,491 66,966 160,103 113,912 70.1% Miscellaneous 414 (836) 838 (4,623) 1,398 66.8% TOTAL REVENUES 124,934$ 209,241$ 191,000$ 278,675$ 227,000$ 18.8% EXPENDITURES Other Services & Charges -$ 357$ 200$ 4,417$ 200$ 0.0% Debt Service - 234,982 237,800 236,818 237,800 0.0% TOTAL EXPENDITURES -$ 235,339$ 238,000$ 241,234$ 238,000$ 0.0% FUND BALANCE - JANUARY 1 -$ 124,934$ 98,836$ 98,836$ 136,277$ Excess (Deficiency) of Revenues over Expenditures 124,934 (26,098) (47,000) 37,441 (11,000) FUND BALANCE - DECEMBER 31 124,934$ 98,836$ 51,836$ 136,277$ 125,277$ 166 BUDGET COMMENTARY: The city issued the $2,155,000 2020A G.O. Bonds to finance the 2020 and 2022 Street Improvement projects. Property taxes and special assessments also support debt service payments. Expenditures consist of debt principal and interest payments and fiscal agent fees. REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2023 -$ 13,609$ 13,609$ 12/15/2023 210,000 13,609 2.00% 223,609 6/15/2024 - 11,509 11,509 12/15/2024 210,000 11,509 2.00% 221,509 6/15/2025 - 9,409 9,409 12/15/2025 215,000 9,409 0.45% 224,409 6/15/2026 - 8,925 8,925 12/15/2026 215,000 8,925 2.00% 223,925 6/15/2027 - 6,775 6,775 12/15/2027 220,000 6,775 2.00% 226,775 6/15/2028 - 4,575 4,575 12/15/2028 225,000 4,575 2.00% 229,575 6/15/2029 - 2,325 2,325 12/15/2029 230,000 2,325 1.00% 232,325 6/15/2030 - 1,175 1,175 12/15/2030 235,000 1,175 1.00% 236,175 Total 1,760,000$ 116,603$ 1,876,603$ GO Bonds, Series 2020A 167 CLOSED DEBT SERVICE FUNDS CLOSED FUNDS PRESENTED: • 2011A G.O. Refunding Bond Sub-Fund (312-47000) • 2014A G.O. Judgement Bond Sub-Fund (318-47000) CLOSED FUNDS BUDGETS: 2011A G.O. BOND FUND (2005A)2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 172,641$ -$ -$ -$ -$ --- Special Assessments 113,348 - - - - --- Miscellaneous (8,015) (76) 75 - - -100.0% Operating Transfers In 200,000 198,700 197,925 197,925 - -100.0% TOTAL REVENUES 477,974$ 198,624$ 198,000$ 197,925$ -$ -100.0% EXPENDITURES Other Services & Charges 196$ 1,357$ -$ 750$ -$ --- Debt Service 1,259,466 199,175 199,000 197,925 - -100.0% Operating Transfers Out - - 111,000 108,802 - -100.0% TOTAL EXPENDITURES 1,259,662$ 200,532$ 310,000$ 307,477$ -$ -100.0% FUND BALANCE - JANUARY 1 893,148$ 111,460$ 109,552$ 109,552$ -$ Excess (Deficiency) of Revenues over Expenditures (781,688) (1,908) (112,000) (109,552) - FUND BALANCE - DECEMBER 31 111,460$ 109,552$ (2,448)$ -$ -$ 2014A G.O. JUDGMENT BONDS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 535,501$ 513,570$ -$ -$ -$ --- Miscellaneous 3,163 - - - - --- Operating Transfers In - 3,776,537 - - - --- TOTAL REVENUES 538,664$ 4,290,107$ -$ -$ -$ --- EXPENDITURES Other Services & Charges 196$ 1,350$ -$ -$ -$ --- Debt Service 511,442 4,437,471 - - - --- TOTAL EXPENDITURES 511,638$ 4,438,821$ -$ -$ -$ --- FUND BALANCE - JANUARY 1 121,688$ 148,714$ -$ -$ -$ Excess (Deficiency) of Revenues over Expenditures 27,026 (148,714) - - - FUND BALANCE - DECEMBER 31 148,714$ -$ -$ -$ -$ 168 2023 Adopted Budget 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 four 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. See the individual funds for the budget issues facing each capital project fund. BUDGET SUMMARY TOTAL CAPITAL PROJECTS FUNDS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 350,604$ 647,085$ 1,081,600$ 1,153,476$ 1,475,419$ 36.4% Franchise & Other Taxes 224,030 189,460 140,000 158,384 190,000 35.7% Intergovernmental Revenues 675,751 2,571,685 900,000 150,000 1,559,500 73.3% Charges for Services - 23,492 - 171,697 - --- Special Assessments 163,822 1,425,724 207,671 401,086 128,549 -38.1% Miscellaneous 434,396 6,119 261,729 (539,654) 186,532 -28.7% Contributed Capital 333,550 271,840 - - - --- Operating Transfers In 2,135,000 3,201,427 111,000 108,801 4,000,000 3503.6% Debt Proceeds 2,256,280 - - - 5,000,000 --- TOTAL REVENUES 6,573,433$ 8,336,831$ 2,702,000$ 1,603,791$ 12,540,000$ 364.1% EXPENDITURES Other Services & Charges 66,888$ 100,814$ -$ 294,687$ -$ --- Capital Outlay 4,476,428 7,304,615 7,290,000 2,472,266 15,375,000 110.9% Debt Service 53,475 - - 500 - --- Operating Transfers Out - 7,326,622 - - - --- TOTAL EXPENDITURES 4,596,791$ 14,732,050$ 7,290,000$ 2,767,453$ 15,375,000$ 110.9% FUND BALANCE - JANUARY 1 18,562,016$ 20,538,658$ 14,143,440$ 14,143,440$ 12,979,777$ Excess (Deficiency) of Revenues over Expenditures 1,976,642 (6,395,219) (4,588,000) (1,163,662) (2,835,000) FUND BALANCE - DECEMBER 31 20,538,658$ 14,143,440$ 9,555,440$ 12,979,777$ 10,144,777$ 169 CAPITAL PROJECT FUND (400-4xxxx) DEPARTMENT: Capital Project Fund SUPERVISOR: City Engineer/Public Works Director ACTIVITY SCOPE: The Capital Project Fund is a generic fund of the same type used to account for capital asset construction and acquisitions. Capital assets accounted for in this fund include street improvements and 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) that the Central Equipment internal service fund cannot support. ISSUES: 1. Funding growth and replacement improvements in a stable debt and property tax levy environment. MEASURABLE WORKLOAD DATA: BUDGET: Measurement 2020 2021 2022 2023 Projects supported 4 5 9 5 CAPITAL PROJECT FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Property Taxes 350,604$ 647,085$ 1,081,600$ 1,153,476$ 1,475,419$ 36.4% Franchise & Other Taxes 33,694 - - - - --- Intergovernmental Revenues 675,751 2,571,685 900,000 - 1,087,000 20.8% Charges for Services - 23,492 - 26,865 - --- Special Assessments 58,039 667,337 205,575 400,235 127,734 -37.9% Miscellaneous 316,439 26,090 248,825 (452,158) 174,847 -29.7% Contributed Capital 333,550 271,840 - - - --- Operating Transfers In 1,900,000 2,088,430 111,000 108,801 2,750,000 2377.5% Debt Proceeds 2,256,280 - - - 5,000,000 --- TOTAL REVENUES 5,924,357$ 6,295,959$ 2,547,000$ 1,237,220$ 10,615,000$ 316.8% EXPENDITURES Other Services & Charges 66,888$ 100,814$ -$ 294,187$ -$ --- Capital Outlay 3,969,151 6,599,533 6,490,000 2,388,571 11,870,000 82.9% Debt Service 53,475 - - 500 - --- Operating Transfers Out - 3,976,538 - - - --- TOTAL EXPENDITURES 4,089,514$ 10,676,885$ 6,490,000$ 2,683,258$ 11,870,000$ 82.9% FUND BALANCE - JANUARY 1 14,408,703$ 16,243,546$ 11,862,620$ 11,862,620$ 10,416,582$ Excess (Deficiency) of Revenues over Expenditures 1,834,843 (4,380,926) (3,943,000) (1,446,038) (1,255,000) FUND BALANCE - DECEMBER 31 16,243,546$ 11,862,620$ 7,919,620$ 10,416,582$ 9,161,582$ 170 BUDGET COMMENTARY: Lower required debt service levies have created capacity for the capital projects fund to levy about $500,000 more than it previously could in previous years. The 2023 property tax levy reduces the need for future debt and stabilizes the overall levy to accommodate future debt. Intergovernmental revenues of $2.1 million were received in 2021 but are related to the Fallon Avenue Overpass project that was completed in 2018. The 2021 transfer in is from the closure of the Closed Bond fund, which had previously been presented in conjunction with the Capital Projects fund, so the city formally combined them in 2021. 2023 transfers are from the Liquor and Deputy Registrar funds for the improvement project in Monticello’s core downtown. Budgeted debt proceeds will be used to fund the beginning stages of construction of a new Public Works Facility, which additional debt anticipated to be issued in 2024. For 2023, notable projects include: Downtown Pedestrian & Roadways Improvements, a new Public Works Facility, The Pointes at Cedar development area, Bertram Chain of Lakes Regional Park Improvements, and School Boulevard & Elm Street Safety Improvements. Some funding is budgeted to come from fund balance. 171 STREET LIGHTING IMPROVEMENT FUND (403-43162) DEPARTMENT: Public Works SUPERVISOR: City Engineer/Public Works Director 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 Electric and Xcel Energy. 3. Verify lamp and fixture maintenance by utility companies. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: Intergovernmental revenues in 2023 include a grant from the State for a Flashing Yellow Arrow project. A transfer from the Liquor Fund and fund balance will be used for undergrounding electric lines as part of the Downtown Pedestrian & Roadways Improvements. Measurement 2020 2021 2022 2023 Projects supported 0 0 1 2 STREET LIGHT IMPROVEMENTS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Franchise & Other Taxes 190,336$ 189,460$ 140,000$ 158,384$ 190,000$ 35.7% Intergovernmental Revenues - - - - 472,500 --- Miscellaneous 17,709 (5,181) 10,000 (45,716) 9,500 -5.0% Operating Transfers In - - - - 250,000 --- TOTAL REVENUES 208,045$ 184,279$ 150,000$ 112,668$ 922,000$ 514.7% EXPENDITURES Capital Outlay 621$ -$ 425,000$ 37,993$ 2,130,000$ 401.2% TOTAL EXPENDITURES 621$ -$ 425,000$ 37,993$ 2,130,000$ 401.2% FUND BALANCE - JANUARY 1 788,504$ 995,928$ 1,180,207$ 1,180,207$ 1,254,883$ Excess (Deficiency) of Revenues over Expenditures 207,424 184,279 (275,000) 74,675 (1,208,000) FUND BALANCE - DECEMBER 31 995,928$ 1,180,207$ 905,207$ 1,254,883$ 46,883$ 172 PARK & PATHWAY IMPROVEMENT FUND (404-45202) DEPARTMENT: Recreation & Culture SUPERVISOR: Parks Superintendent ACTIVITY SCOPE: Activities of the Park & Pathway Improvement Fund include updating and maintaining the city's pathway system. OBJECTIVES: 1. Improve pathways and parks systems. 2. Development of Bertram Chain of Lakes Park. ISSUES: 1. Time constraints of other projects. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: Transfers from other funds typically surpass all other revenue sources. When possible, the city transfers money into this fund prior to the year of expenditure. 2021 transfers were due to the closure of the unused Streets Reconstruction Fund as street improvement projects are funded through the Capital Projects Fund. 2023 transfers are budgeted to come from the Liquor Fund, which will provide funding for the Bertram Chain of Lakes (BCOL) Pedestrian and Safety Improvements project. The BCOL project and pathways as part of the School Boulevard and Elm Street projects make up the capital outlay budget. Measurement 2020 2021 2022 2023 Projects supported 4 2 1 2 PARK & PATHWAY IMPROVEMENT 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTI MATED BUDGET CHANGE Intergovernmental Revenues -$ -$ -$ 150,000$ -$ --- Special Assessments 1,033 - - - - --- Miscellaneous 48,760 (14,831) 2,000 (42,464) 2,000 0.0% Operating Transfers In 235,000 1,094,000 - - 1,000,000 --- TOTAL REVENUES 284,793$ 1,079,169$ 2,000$ 107,536$ 1,002,000$ 50000.0% EXPENDITURES Other Services & Charges -$ -$ -$ 500$ -$ --- Capital Outlay 506,656 677,078 375,000 - 1,375,000 266.7% Operating Transfers Out - 18,997 - - - --- TOTAL EXPENDITURES 506,656$ 696,075$ 375,000$ 500$ 1,375,000$ 266.7% FUND BALANCE - JANUARY 1 939,341$ 717,478$ 1,100,572$ 1,100,572$ 1,207,608$ Excess (Deficiency) of Revenues over Expenditures (221,863) 383,094 (373,000) 107,036 (373,000) FUND BALANCE - DECEMBER 31 717,478$ 1,100,572$ 727,572$ 1,207,608$ 834,608$ 173 PARK DEDICATION FUND (405-45202) DEPARTMENT: Public Works SUPERVISOR: Community Development Director ACTIVITY SCOPE: The Park Dedication Fund is used to account for funds charged to developers for future city park areas. OBJECTIVES: 1. Provide quality park area within walkable distance to all residential parcels in the City. ISSUES: 1. Economic impact on new development and home construction. MEASURABLE WORKLOAD DATA: BUDGET: BUDGET COMMENTARY: The Park Dedication Fund was created in 2021 to properly account for restricted park dedication fees received from developers for the construction of park areas within new developments. Park dedication fees are an irregular source of revenue because of unpredictable economic conditions and sporadic new development. Measurement 2020 2021 2022 2023 Acres deeded to city 1.96 0.00 1.02 2.00 Fees collected*-$ -$ 144,832$ 110,000$ *Land may be donated by developer in lieu of paying a park dedication fee. PARK DEDICATION 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Charges for Services -$ -$ -$ 144,832$ -$ --- Special Assessments - 9,006 2,096 850 815 -61.1% Miscellaneous - 41 904 684 185 -79.5% Operating Transfers In - 18,997 - - - --- TOTAL REVENUES -$ 28,044$ 3,000$ 146,366$ 1,000$ -66.7% EXPENDITURES Capital Outlay -$ 28,003$ -$ 45,702$ -$ --- TOTAL EXPENDITURES -$ 28,003$ -$ 45,702$ -$ --- FUND BALANCE - JANUARY 1 -$ -$ 41$ 41$ 100,705$ Excess (Deficiency) of Revenues over Expenditures - 41 3,000 100,664 1,000 FUND BALANCE - DECEMBER 31 -$ 41$ 3,041$ 100,705$ 101,705$ 174 CLOSED CAPITAL PROJECTS FUNDS CLOSED FUNDS PRESENTED: • Closed Bond Fund (402-00000) • Streets Reconstruction Fund (212-43121) CLOSED FUNDS BUDGETS: CLOSED BOND FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Special Assessments 104,750$ 749,380$ -$ -$ -$ --- Miscellaneous 17,602 - - - - --- TOTAL REVENUES 122,352$ 749,380$ -$ -$ -$ --- EXPENDITURES Operating Transfers Out -$ 1,663,430$ -$ -$ -$ --- TOTAL EXPENDITURES -$ 1,663,430$ -$ -$ -$ --- FUND BALANCE - JANUARY 1 791,698$ 914,050$ -$ -$ -$ Excess (Deficiency) of Revenues over Expenditures 122,352 (914,050) - - - FUND BALANCE - DECEMBER 31 914,050$ -$ -$ -$ -$ STREET RECONSTRUCTION FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Miscellaneous 33,886$ -$ -$ -$ -$ --- EXPENDITURES Operating Transfers Out -$ 1,667,656$ -$ -$ -$ --- FUND BALANCE - JANUARY 1 1,633,770$ 1,667,656 -$ -$ -$ Excess (Deficiency) of Revenues over Expenditures 33,886 (1,667,656) - - - FUND BALANCE - DECEMBER 31 1,667,656$ -$ -$ -$ -$ 175 This page intentionally left blank. 176 2023 Adopted Budget 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 six active enterprise funds: Water, Sewer, Stormwater, 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 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Franchise & Other Taxes -$ 53,942$ -$ -$ -$ --- Sale of Goods 7,404,955 7,104,357 7,013,000 7,168,374 7,357,694 4.9% Licenses & Permits 3,095 5,350 2,000 2,170 2,000 0.0% Intergovernmental Revenues - 95,601 - 297,608 300,000 --- Charges for Services 7,986,117 8,717,242 7,634,757 8,895,152 8,076,101 5.8% Special Assessments 14,179 98,695 38,000 281,738 10,000 -73.7% Miscellaneous 296,319 (27,667) 135,243 (775,326) 141,205 4.4% Contributed Capital 809,394 664,726 75,000 612,608 75,000 0.0% Operating Transfers In - 200,000 - - - --- TOTAL REVENUES 16,514,059$ 16,912,246$ 14,898,000$ 16,482,324$ 15,962,000$ 7.1% EXPENDITURES Personnel Services 1,831,339$ 2,016,660$ 2,278,593$ 2,204,110$ 2,503,619$ 9.9% Supplies 5,856,726 5,592,137 5,699,100 5,659,127 6,027,117 5.8% Other Services & Charges 3,370,925 3,515,803 3,942,490 3,172,003 4,975,273 26.2% Capital Outlay - - 3,237,500 190 2,535,000 -21.7% Debt Service 70,257 64,371 361,317 45,451 367,991 1.8% Operating Transfers Out 1,560,000 - - - 4,000,000 --- TOTAL EXPENDITURES 12,689,247$ 11,188,972$ 15,519,000$ 11,080,881$ 20,409,000$ 31.5% FUND BALANCE - JANUARY 1 14,290,851$ 18,115,663$ 23,838,937$ 23,838,937$ 29,240,380$ Excess (Deficiency) of Revenues over Expenditures 3,824,812 5,723,274 (621,000) 5,401,443 (4,447,000) FUND BALANCE - DECEMBER 31 18,115,663$ 23,838,937$ 23,217,937$ 29,240,380$ 24,793,380$ 177 WATER FUND (601-4944x) DEPARTMENT: Public Works SUPERVISOR: Utilities Superintendent 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 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. 4. Elevated manganese levels. MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Water customers 4,458 4,547 4,621 4,700 Meters read 53,496 54,564 56,402 57,000 Meters replaced 52 58 75 75 New meters installed 62 100 92 100 Water locates 2,018 2,289 1,820 1,800 Gallons pumped (MG)601 674 627 650 Valves maintained 120 533 479 475 Hydrants maintained 153 216 225 225 Times mains flushed 2 2 2 2 Mains/wells rebuilt 2 0 0 0 Water towers inspections 1 2 2 2 Reservoir inspections 1 1 1 1 Water samples sent 190 191 190 190 Radio units installed 125 197 167 175 Service shut-offs 25 30 26 25 178 BUDGET: BUDGET COMMENTARY: The Water Fund’s main source of revenue is user charges. Rates increase 8% for the base charge and usage charges in 2023 in anticipation of the need to fund a future water treatment plant. The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage adjustment, and an updated allocation of utilities staff time leads to an increase in wages in the Water Fund. Supplies expenditures increase as staff looked to resume meter updates now that the concerns of the pandemic have waned. Other services & charges increase due to additional engineering services and anticipated repairs and maintenance needed on equipment. Capital outlays in 2023 are for watermain replacements as necessary. The 2020 transfers out was used in 2021 to acquire land for a new public works facility site. WATER FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Licenses & Permits 3,095$ 5,350$ 2,000$ 2,170$ 2,000$ 0.0% Intergovernmental Revenues - 17,491 - 76,233 - --- Charges for Services 1,750,503 1,815,365 1,559,049 1,780,794 1,677,049 7.6% Special Assessments 13,960 37,421 38,000 192,821 10,000 -73.7% Miscellaneous 141,264 38,128 55,951 (205,140) 55,951 0.0% Contributed Capital 34,602 78,430 15,000 184,921 15,000 0.0% TOTAL REVENUES 1,943,424$ 1,992,186$ 1,670,000$ 2,031,799$ 1,760,000$ 5.4% EXPENDITURES Personnel Services 250,345$ 264,499$ 357,798$ 310,435$ 401,193$ 12.1% Supplies 104,801 130,598 224,150 163,866 281,000 25.4% Other Services & Charges 339,048 366,561 513,052 334,963 749,807 46.1% Capital Outlay - - 650,000 - 810,000 24.6% Operating Transfers Out 900,000 - - - - --- TOTAL EXPENDITURES 1,594,194$ 761,658$ 1,745,000$ 809,263$ 2,242,000$ 28.5% FUND BALANCE - JANUARY 1 4,931,247$ 5,280,477$ 6,511,005$ 6,511,005$ 7,733,540$ Excess (Deficiency) of Revenues over Expenditures 349,230 1,230,528 (75,000) 1,222,536 (482,000) FUND BALANCE - DECEMBER 31 5,280,477$ 6,511,005$ 6,436,005$ 7,733,540$ 7,251,540$ 179 SEWER FUND (602-49480 & 602-4949x) DEPARTMENT: Public Works SUPERVISOR: Utilities Superintendent ACTIVITY SCOPE: The Sewer Fund is a self-sustaining city utility fund. The Sewer Fund has three divisions: sanitary sewer administration, 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 into 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 2020 2021 2022 2023 Collection Sewer mains maintained (miles)28 21 16 20 Liftstations 7 7 7 7 Sewer main locates 2,018 2,289 1,820 2,000 Manholes maintained*344 385 389 390 New service hookups 62 105 85 100 Treatment Screw press influent flow (gals)5,778,250 7,226,500 5,848,200 6,000,000 Thickened sludge (wet tons)2,072 2,207 2,231 2,250 Thickened sludge (dry tons)314 336 317 325 Dry ton % of wet ton 15.2% 15.2% 14.2% 14.4% Raw influent flow (million gals)446 482 425 425 * Manholes are maintained by quadrants. Fewer manholes in one quadrant allows more time for cleaning longer main sewer lines. 180 BUDGET: BUDGET COMMENTARY: The Sewer Fund’s main source of revenue is user charges. Rates increase 2% for the base charge and usage charges in 2023. 2021 and 2022 experienced larger unfavorable market value adjustments in the city’s investment portfolio than interest earned, resulting in negative miscellaneous revenues. Operating transfers in were budgeted in 2021 to the sewer access charges sub-fund to replenish use of charges for debt service in prior years. The 2023 personnel services budget includes a full step increase and a 4.0% market rate wage adjustment. However, an updated allocation of utilities staff time leads to an overall decrease in budgeted wages in 2023. The city renewed its contract with a third-party provider of wastewater treatment plant management services for five years for 2023 - 2027. Capital outlays in 2023 include $400,000 for completion of a SCADA upgrade, $500,000 for potential new sewer line extensions related to new development and $75,000 for native grass conversion at the wastewater treatment plant. SEWER FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Intergovernmental Revenues -$ 38,978$ -$ 166,458$ -$ --- Charges for Services 3,346,053 3,658,444 3,020,000 3,729,466 3,089,344 2.3% Special Assessments 219 39,124 - 56,410 - --- Miscellaneous 74,575 (37,099) 30,000 (334,401) 29,656 -1.1% Contributed Capital 84,521 257,766 - 249,385 - --- Operating Transfers In - 200,000 - - - --- TOTAL REVENUES 3,505,368$ 4,157,212$ 3,050,000$ 3,867,317$ 3,119,000$ 2.3% EXPENDITURES Personnel Services 354,812$ 419,721$ 383,531$ 426,651$ 367,996$ -4.1% Supplies 154,593 151,227 176,000 151,579 198,000 12.5% Other Services & Charges 1,153,829 1,206,183 1,338,152 1,238,161 1,770,013 32.3% Capital Outlay - - 1,217,000 - 975,000 -19.9% Debt Service 70,257 64,371 361,317 45,451 367,991 1.8% TOTAL EXPENDITURES 1,733,491$ 1,841,502$ 3,476,000$ 1,861,842$ 3,679,000$ 5.8% FUND BALANCE - JANUARY 1 5,513,530$ 7,285,407$ 9,601,117$ 9,601,117$ 11,606,592$ Excess (Deficiency) of Revenues over Expenditures 1,771,877 2,315,710 (426,000) 2,005,475 (560,000) FUND BALANCE - DECEMBER 31 7,285,407$ 9,601,117$ 9,175,117$ 11,606,592$ 11,046,592$ 181 REMAINING DEBT SERVICE: Payable Principal Interest Rate Total Payable Principal Interest Rate Total 6/1/2023 -$ 19,853$ 19,853$ 2/20/2023 -$ 7,893$ 7,893$ 12/1/2023 205,000 19,853 2.60% 224,853 8/20/2023 107,000 7,893 1.06% 114,893 6/1/2024 - 17,188 17,188 2/20/2024 - 7,324 7,324 12/1/2024 210,000 17,188 2.75% 227,188 8/20/2024 108,000 7,324 1.06% 115,324 6/1/2025 - 14,300 14,300 2/20/2025 - 6,750 6,750 12/1/2025 215,000 14,300 3.00% 229,300 8/20/2025 109,000 6,750 1.06% 115,750 6/1/2026 - 11,075 11,075 2/20/2026 - 6,171 6,171 12/1/2026 225,000 11,075 3.00% 236,075 8/20/2026 111,000 6,171 1.06% 117,171 6/1/2027 - 7,700 7,700 2/20/2027 - 5,581 5,581 12/1/2027 230,000 7,700 3.20% 237,700 8/20/2027 112,000 5,581 1.06% 117,581 6/1/2028 - 4,020 4,020 2/20/2028 - 4,985 4,985 12/1/2028 240,000 4,020 3.35% 244,020 8/20/2028 113,000 4,985 1.06% 117,985 Total 1,325,000$ 148,270$ 1,473,270$ 2/20/2029 - 4,385 4,385 *Original redemption date was December 1, 2021.8/20/2029 114,000 4,385 1.06% 118,385 2/20/2030 - 3,779 3,779 8/20/2030 115,000 3,779 1.06% 118,779 2/20/2031 - 3,168 3,168 8/20/2031 117,000 3,168 1.06% 120,168 2/20/2032 - 2,546 2,546 8/20/2032 118,000 2,546 1.06% 120,546 2/20/2033 - 1,919 1,919 8/20/2033 119,000 1,919 1.06% 120,919 2/20/2034 - 1,286 1,286 8/20/2034 120,000 1,286 1.06% 121,286 2/20/2035 - 648 648 8/20/2035 122,000 648 1.06% 122,648 Total 1,485,000$ 112,870$ 1,597,870$ MPFA-15-0004-R-FY16GO Wastewater Treatment Bonds, Series 2013B 182 CONTRACTED WASTEWATER TREATMENT PLANT SERVICES: The city started directly paying for chemicals (polymer) in 2018. Electricity and gas charges were assumed by the city in 2016 and are not reported above as a contract cost. Year Service Change $ Change % 2014 585,096$ 22,735$ 4.0% 2015 582,360$ (2,736)$ -0.5% 2016 582,360$ -$ 0.0% 2017 593,196$ 10,836$ 1.9% 2018 563,394$ (29,802)$ -5.0% 2019 577,476$ 14,082$ 2.5% 2020 591,913$ 14,437$ 2.5% 2021 606,711$ 14,798$ 2.5% 2022 621,714$ 15,003$ 2.5% 2023 643,474$ 21,760$ 3.5% Schedule of Non-Reimbursables (O&M Services) $- $100 $200 $300 $400 $500 $600 $700 2014201520162017201820192020202120222023ThousandsO&M Services Costs Year R&M Polymer Hauling Landfill Electricity Gas Total 2014 57,884$ 62,736$ 32,949$ 33,237$ 160,826$ 68,417$ 416,049$ 2015 50,239 35,091 25,808 28,374 145,833 44,093 329,438 2016 52,872 32,396 20,876 30,784 - - 136,928 2017 54,705 33,019 23,145 51,057 - - 161,926 2018 61,020 - 39,249 67,654 - - 167,923 2019 43,570 - 34,073 70,871 - - 148,514 2020 56,583 - 28,842 67,993 - - 153,418 2021 71,362 - 32,571 74,783 - - 178,716 2022* 55,500 - 37,200 51,300 - - 144,000 2023* 75,000 - 45,000 60,000 - - 180,000 *Budgeted Schedule of Reimbursable Costs $- $100 $200 $300 $400 2014 2015 2016 2017 2018 2019 2020 2021 2022*2023*ThousandsReimbursable Costs 2014-2023 R&M Polymer Hauling Landfill Electricity Gas 183 STORMWATER FUND (652-4948x) DEPARTMENT: Public Works SUPERVISOR: Utilities Superintendent ACTIVITY SCOPE: The Stormwater Fund, established in 2019, is a self-sustaining city utility fund. The streets and engineering department manages the water quality utility, which includes street sweeping, MS4 management, storm sewer televising and cleaning, pond maintenance, and system enhancements. 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. 2. Educating the public on storm water operations. MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Sto rmwater main miles 73.0 73.5 73.8 74.0 Number of manholes 1,655 1,631 1,632 1,632 Number of ponds 109 112 112 112 Number of outfalls 31 29 29 29 Number of stormwater BMPs*50 50 50 50 *BMPs = best management practices 184 BUDGET: BUDGET COMMENTARY: The Stormwater Fund’s main source of revenue is user charges in the form of a stormwater fee, which is based on 1 drainage unit per residence and 7 drainage units per impervious acre for non-residential properties. The rate increases and new development contribute to the increases in revenue. 2021 and 2022 experienced larger unfavorable market value adjustments in the city’s investment portfolio than interest earned, resulting in negative miscellaneous revenues. Contributed capital is from development access and trunk charges. Due to the unknown nature of development, these revenues are budgeted conservatively. Personnel services consists of wages previously allocated to the streets and engineering departments. Other services & charges include engineering fees and licenses & permits. Capital outlay consists of expenditures for stormwater improvements. STORMWATER FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Intergovernmental Revenues -$ 39,132$ -$ 54,917$ 300,000$ --- Charges for Services 241,873 356,457 386,000 522,852 600,000 55.4% Special Assessments - 22,150 - 32,507 - --- Miscellaneous 2,030 (7,723) 2,000 (54,240) 2,000 0.0% Contributed Capital 690,271 328,530 60,000 178,302 60,000 0.0% TOTAL REVENUES 934,174$ 738,546$ 448,000$ 734,339$ 962,000$ 114.7% EXPENDITURES Personnel Services 127,167$ 156,640$ 143,044$ 171,201$ 161,188$ 12.7% Supplies 641 418 21,000 2,089 21,000 0.0% Other Services & Charges 10,468 65,470 40,956 74,633 383,812 837.1% Capital Outlay - - 1,177,000 190 420,000 -64.3% TOTAL EXPENDITURES 138,276$ 222,528$ 1,382,000$ 248,113$ 986,000$ -28.7% FUND BALANCE - JANUARY 1 1,488,947$ 2,284,845$ 2,800,863$ 2,800,863$ 3,287,089$ Excess (Deficiency) of Revenues over Expenditures 795,898 516,018 (934,000) 486,226 (24,000) FUND BALANCE - DECEMBER 31 2,284,845$ 2,800,863$ 1,866,863$ 3,287,089$ 3,263,089$ 185 LIQUOR FUND (609-4975x) DEPARTMENT: Liquor Fund SUPERVISOR: Liquor Store Manager 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 customers. 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. Proposed legislative action to allow liquor sales in retail stores, thereby causing more competition. 5. Balancing sharp increase in demand with staffing levels and physical space of the store. MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Gross profit 1,903,732$ 1,909,014$ 1,811,123$ 1,962,500$ Gross profit % of sales 26% 27% 25%26% Sales per square foot $842 $808 $815 $838 Total number of sales 260,957 250,894 249,604 250,000 Staff hours worked 21,828 21,641 21,571 21,750 Sales per hour worked 12.0 11.6 11.6 11.5 Average sale (including tax)$31.19 $31.14 $31.58 $31.86 186 BUDGET: 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. 2021 and 2022 experienced larger unfavorable market value adjustments in the city’s investment portfolio than interest earned, resulting in negative miscellaneous revenues. The 2023 personnel services budget includes a full step increase, a 4.0% market rate wage increase for existing staff and the addition of one full-time clerk. An increase in budgeted other services & charges reflects increases in utilities costs. Capital outlay includes new liquor store coolers. The 2020 transfers out included $235,000 to the Parks and Pathway Improvement Fund for installation of a turn lane on Briarwood by BCOL and $425,000 to the Community Center Fund for roof repairs and operating shortfalls because of the COVID-19 pandemic. The budgeted 2023 operating transfers out are to capital projects funds, most notably for the Downtown Pedestrian & Roadways Improvements project and the Bertram Chain of Lakes (BCOL) Pedestrian and Safety Improvements project. LIQUOR FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Sale of Goods 7,404,955$ 7,104,357$ 7,013,000$ 7,168,374$ 7,357,694$ 4.9% Miscellaneous 23,827 (8,044) 12,000 (78,822) 12,306 2.6% TOTAL REVENUES 7,428,782$ 7,096,313$ 7,025,000$ 7,089,553$ 7,370,000$ 4.9% EXPENDITURES Personnel Services 628,667$ 647,423$ 757,420$ 743,585$ 877,711$ 15.9% Supplies 5,477,861 5,189,566 5,167,350 5,246,272 5,415,117 4.8% Other Services & Charges 247,714 241,524 300,230 269,529 337,172 12.3% Capital Outlay - - 10,000 - 130,000 1200.0% Operating Transfers Out 660,000 - - - 2,250,000 --- TOTAL EXPENDITURES 7,014,242$ 6,078,513$ 6,235,000$ 6,259,386$ 9,010,000$ 44.5% FUND BALANCE - JANUARY 1 600,060$ 1,014,600$ 2,032,400$ 2,032,400$ 2,862,566$ Excess (Deficiency) of Revenues over Expenditures 414,540 1,017,800 790,000 830,166 (1,640,000) FUND BALANCE - DECEMBER 31 1,014,600$ 2,032,400$ 2,822,400$ 2,862,566$ 1,222,566$ 187 DEPUTY REGISTRAR FUND (653-41990) DEPARTMENT: Deputy Registrar (DMV) SUPERVISOR: DMV Manager 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 but cannot process routine license renewals. Furthermore, the DMV facility leases space to FiberNet operations and the Community Center. OBJECTIVES: 1. Market DMV services to public and dealerships. 2. Expand and improve customer service. 3. Update employee training and certifications. 4. To provide a well-maintained building. ISSUES: 1. Changes to state licensing regulations. 2. Providing some services with little or no revenue. 3. Competition with other customer options: other DMVs, on-line, and mail-in. MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Outcome/Effectiveness: License Revenue $800,666 $936,870 $882,432 $840,000 Revenue per staff hour $49.51 $52.06 $58.46 $54.19 Net revenue per staff hour $16.87 $20.14 $16.28 $16.50 Efficiency: Transactions per hour 7.9 5.7 6.0 6.0 Work Load: Total transactions 127,128 101,784 91,078 93,750 115,466 88,875 77,515 80,000 DNR transactions 8,424 8,759 9,984 10,000 Game & Fish transactions 311 265 245 250 Driver's license transactions 2,927 3,885 3,334 3,500 Staff hours 16,172 17,997 15,094 15,500 Dealerships serviced 32 41 47 48 *The transition to the State's new MNDrive system in late 2020 creates skewed transaction numbers due to the differences in how transactions are counted. Motor vehicle transactions* 188 BUDGET: BUDGET COMMENTARY: The main revenue source for the DMV is the fees charged for the issuance of various licenses. Revenue by service type: DNR licenses = $2-$7; game & fish licenses = $1; driver’s licenses = $8; motor vehicle transactions = $6-$10. Revenues are always estimated conservatively. 2021 and 2022 experienced larger unfavorable market value adjustments in the city’s investment portfolio than interest earned, resulting in negative miscellaneous revenues. The 2023 personnel services budget includes a full step increase, a 4.0% market rate wage adjustment, and the addition of one full-time clerk. The budgeted 2023 operating transfers out is to the Capital Projects funds for the Downtown Pedestrian & Roadways Improvements project. DEPUTY REGISTRAR 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Charges for Services 800,954$ 941,759$ 800,000$ 883,451$ 840,000$ 5.0% Miscellaneous 40,622 (10,954) 25,000 (66,343) 31,000 24.0% TOTAL REVENUES 841,576$ 930,805$ 825,000$ 817,108$ 871,000$ 5.6% EXPENDITURES Personnel Services 466,262$ 526,113$ 630,525$ 552,239$ 689,256$ 9.3% Supplies 7,109 10,977 10,600 7,806 12,000 13.2% Other Services & Charges 47,183 46,983 89,875 81,241 90,744 1.0% Operating Transfers Out - - - - 1,750,000 --- TOTAL EXPENDITURES 520,554$ 584,074$ 731,000$ 641,286$ 2,542,000$ 247.7% FUND BALANCE - JANUARY 1 1,527,728$ 1,848,750$ 2,195,481$ 2,195,481$ 2,371,303$ Excess (Deficiency) of Revenues over Expenditures 321,022 346,731 94,000 175,821 (1,671,000) FUND BALANCE - DECEMBER 31 1,848,750$ 2,195,481$ 2,289,481$ 2,371,303$ 700,303$ 189 FIBER OPTICS FUND (656-4987x) DEPARTMENT: Fiber Optics Fund SUPERVISOR: City Administrator/Finance Director ACTIVITY SCOPE: As with all enterprise funds, the goal of the Fiber Optics Fund is to be 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: BUDGET: Measurement 2020 2021 2022 2023 Internet subscibers 1,801 1,808 1,752 1,750 Phone subscribers 315 297 275 275 Cable TV subscribers 323 289 256 250 FIBER OPTICS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Franchise & Other Taxes -$ 53,942$ -$ -$ -$ --- Charges for Services 1,846,734 1,945,217 1,869,708 1,978,589 1,869,708 0.0% Miscellaneous 14,001 (1,975) 10,292 (36,380) 10,292 0.0% TOTAL REVENUES 1,860,735$ 1,997,184$ 1,880,000$ 1,942,209$ 1,880,000$ 0.0% EXPENDITURES Personnel Services 4,086$ 2,264$ 6,275$ -$ 6,275$ 0.0% Supplies 111,721 109,351 100,000 87,515 100,000 0.0% Other Services & Charges 1,572,683 1,589,081 1,660,225 1,173,475 1,643,725 -1.0% Capital Outlay - - 183,500 - 200,000 9.0% TOTAL EXPENDITURES 1,688,490$ 1,700,697$ 1,950,000$ 1,260,990$ 1,950,000$ 0.0% FUND BALANCE - JANUARY 1 229,339$ 401,584$ 698,071$ 698,071$ 1,379,290$ Excess (Deficiency) of Revenues over Expenditures 172,245 296,487 (70,000) 681,219 (70,000) FUND BALANCE - DECEMBER 31 401,584$ 698,071$ 628,071$ 1,379,290$ 1,309,290$ 190 BUDGET COMMENTARY: Revenues in the Fiber Optics Fund come from charges to subscribers, and expenditures are incurred in operating the system. Projections remain consistent with prior years. 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 2022 budget includes $200,000 in capital outlay for system extensions to new service areas. 191 This page intentionally left blank. 192 2023 Adopted Budget Internal Service Funds INTERNAL SERVICE FUNDS - SUMMARY DESCRIPTION Internal service funds are a proprietary fund type that may be used to report any activity that provides goods or services to other funds, departments, or agencies of the primary government and its component units, or to other governments, on a cost-reimbursement basis. Internal service funds use an accrual basis of accounting for financial reporting purposes. A modified accrual basis will be used for budgeting purposes in this report. Consequently, the bottom line for each fund is labeled fund balance rather than net position, which includes capital assets, long-term debt, and other noncurrent items. Fund balance in an internal service fund is roughly the same as working capital. The city currently has four active internal service funds: Facilities Maintenance, IT Services, Central Equipment, and Benefit Accrual. BUDGET ISSUES Each internal service fund has specific challenges that will be addressed in the narrative for each fund. BUDGET SUMMARY TOTAL INTERNAL SERVICE FUNDS 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Charges for Services 562,341$ 963,159$ 1,330,400$ 1,447,303$ 1,552,008$ 16.7% Miscellaneous 24,969 40,771 14,600 (14,226) 43,992 201.3% Contributed Capital - 44,955 - 33,529 109,000 --- Operating Transfers In - 1,573,658 - 150,000 - --- TOTAL REVENUES 587,310$ 2,622,542$ 1,345,000$ 1,616,606$ 1,705,000$ 26.8% EXPENDITURES Personnel Services 6,541$ 87,662$ 243,848$ 237,257$ 252,350$ 3.5% Supplies 98,905 66,767 172,420 105,472 93,932 -45.5% Other Services & Charges 235,292 296,404 283,452 653,878 581,938 105.3% Capital Outlay 11,597 - 1,034,280 20,906 1,361,780 31.7% Debt Service 10,168 6,658 66,000 5,151 66,000 0.0% TOTAL EXPENDITURES 362,503$ 457,491$ 1,800,000$ 1,022,664$ 2,356,000$ 30.9% FUND BALANCE - JANUARY 1 1,360,180$ 1,584,987$ 3,750,039$ 3,750,039$ 4,343,980$ Excess (Deficiency) of Revenues over Expenditures 224,807 2,165,052 (455,000) 593,942 (651,000) FUND BALANCE - DECEMBER 31 1,584,987$ 3,750,039$ 3,295,039$ 4,343,980$ 3,692,980$ 193 FACILITIES MAINTENANCE FUND (701-00000) DEPARTMENT: Public Works SUPERVISOR: Facilities Maintenance Manager ACTIVITY SCOPE: The Facilities Maintenance Fund is a self-sustaining internal service fund. The Public Works Director oversees a Facilities Maintenance Manager who manages the city’s various facilities. The fund’s revenues are derived from service charges to the budget unit of each facility that receives services. Service charges are adjusted annually to cover all operating maintenance costs. OBJECTIVES: 1. Centralize and standardize management of city facilities. 2. Provide financial management stability to each budget unit. ISSUES: 1. Appropriate costs distribution. 2. Coordination of service delivery to multiple departments and budget units. MEASURABLE WORKLOAD DATA: BUDGET: Measurement 2020 2021 2022 2023 Buildings maintained -18 21 23 R&M orders -318 799 800 R&M order hours -209 474 475 Ho urs per R&M service order -0.7 0.6 0.6 Total R&M service order costs $- $91,704 $307,638 $310,000 R&M service cost per order $- $288.38 $385.03 $387.50 Note: The Facilities Maintenance department was created in 3rd quarter 2021. FACILITIES MAINTENANCE 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Charges for Services -$ 160,139$ 325,000$ 419,827$ 378,000$ 16.3% Miscellaneous - - - 53,656 25,000 --- Operating Transfers In - - - 150,000 - --- TOTAL REVENUES -$ 160,139$ 325,000$ 623,483$ 403,000$ 24.0% EXPENDITURES Personnel Services -$ 74,340$ 134,103$ 131,379$ 135,858$ 1.3% Supplies - 21,885 123,000 64,595 70,000 -43.1% Other Services & Charges - 97,768 27,897 357,112 197,142 606.7% Capital Outlay - - 40,000 - - -100.0% TOTAL EXPENDITURES -$ 193,993$ 325,000$ 553,086$ 403,000$ 24.0% FUND BALANCE - JANUARY 1 -$ -$ (33,854)$ (33,854)$ 36,544$ Excess (Deficiency) of Revenues over Expenditures - (33,854) - 70,398 - FUND BALANCE - DECEMBER 31 -$ (33,854)$ (33,854)$ 36,544$ 36,544$ 194 BUDGET COMMENTARY: The Facilities Maintenance Fund’s main source of revenue is internal user charges, and the fund accounts for all activity supporting the city’s facilities, including the Community Center/City Hall, Public Works, Fire station, Hi-Way Liquors, the DMV, FM facility, animal control facility, and Library. Transfers in from the General Fund in 2022 helped the fund establish a stable fund balance. As the balance of work between the Facilities Maintenance Manager and the staff at each city facility is determined, the fund will see more stable year-to-year budgets and actual amounts. 195 IT SERVICES FUND (702-00000) DEPARTMENT: Finance SUPERVISOR: Finance Director ACTIVITY SCOPE: The IT (Information Technology) Services Fund is a self-sustaining internal service fund. The IT Technician 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. Increasing threats to cyber security. MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Work Load: Number of employees 0 1 1 1 Number of users 91 88 109 109 Number of PC, servers, and network devices 122 126 ---- Number of computers & phones ----207 207 Number of back-end support network devices ----62 62 Network availability (estimate)99% 98% 99% 99% An audit of the city's IT inventory found previously uncounted users and devices in 2022. 196 BUDGET: BUDGET COMMENTARY: The IT Services Fund’s main source of revenue is internal user charges. The IT Services Fund accounts for all activity supporting the city’s information technology infrastructure, including servers, routers, PCs, printers, copiers, phones, and professional services. The city added an internal staff position in 2021. A large number of devices were purchased in 2020 due to the Federal CARES Act grant providing a funding source for upgrading the city’s IT environment with the need to telework during the COVID-19 pandemic. A desire to account for all departments’ IT-related purchases, managed by the IT Technician, through this internal service fund led to an increased budget in 2023. IT SERVICES 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Charges for Services 225,000$ 270,566$ 421,000$ 421,000$ 529,008$ 25.7% Miscellaneous 5,621 (751) 4,000 (4,529) 8,992 124.8% TOTAL REVENUES 230,621$ 269,815$ 425,000$ 416,471$ 538,000$ 26.6% EXPENDITURES Personnel Services -$ 33,237$ 97,745$ 96,553$ 104,492$ 6.9% Supplies 98,905 44,882 49,420 40,877 23,932 -51.6% Other Services & Charges 235,292 198,636 255,555 296,766 384,796 50.6% Capital Outlay 11,597 - 22,280 - 24,780 11.2% TOTAL EXPENDITURES 345,794$ 276,755$ 425,000$ 434,196$ 538,000$ 26.6% FUND BALANCE - JANUARY 1 382,557$ 267,384$ 260,444$ 260,444$ 242,719$ Excess (Deficiency) of Revenues over Expenditures (115,173) (6,940) - (17,725) - FUND BALANCE - DECEMBER 31 267,384$ 260,444$ 260,444$ 242,719$ 242,719$ 197 CENTRAL EQUIPMENT FUND (703-00000) DEPARTMENT: Finance SUPERVISOR: Finance Director 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 set 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 a 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. Demands on staff. MEASURABLE WORKLOAD DATA: Measurement 2020 2021 2022 2023 Outcome/Effectiveness: Annual cost recovery 330,800$ 552,369$ 578,400$ 633,000$ Total costs of assets acquired 375,450$ 1,269,093$ 560,113$ 1,337,000$ Efficiency: Cost recovery as % of acquired assets 88% 44% 103% 47% Work Load: Number of fund assets 37 51 61 71 198 BUDGET: BUDGET COMMENTARY: The Central Equipment Fund’s main source of revenue is internal rental charges. The city issued $515,000 in G.O. bonds in 2014 to finance the acquisition of a fire tender and a plow truck. The 2021 operating transfers came from the closure of the Streets Reconstruction capital projects fund and excess fund balance in the General Fund, which will help the fund with future equipment purchases. The 2023 budgeted equipment acquisitions: [public works equipment] plow trucks (2) - $656,000; wheel loader - $280,000; 1-ton truck - $85,000; forklift - $50,000; [recreation equipment] Bobcat Toolcat - $70,000; Isuzu - $63,000; Cushman Trakster - $61,000; Bobcat Grader Blade Attachment - $25,000; Trailer - $12,000; [public safety] building inspection vehicle - $35,000. REMAINING DEBT SERVICE: CENTRAL EQUIPMENT FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Charges for Services 330,800$ 552,369$ 572,400$ 578,400$ 633,000$ 10.6% Miscellaneous 12,421 43,420 10,600 (51,468) 10,000 -5.7% Contributed Capital - 44,955 - 33,529 109,000 --- Operating Transfers In - 1,573,658 - - - --- TOTAL REVENUES 343,221$ 2,214,401$ 583,000$ 560,461$ 752,000$ 29.0% EXPENDITURES Capital Outlay -$ -$ 972,000$ 20,906$ 1,337,000$ 37.6% Debt Service 10,168 6,658 66,000 5,151 66,000 0.0% TOTAL EXPENDITURES 10,168$ 6,658$ 1,038,000$ 26,057$ 1,403,000$ 35.2% FUND BALANCE - JANUARY 1 629,537$ 962,590$ 3,170,333$ 3,170,333$ 3,704,738$ Excess (Deficiency) of Revenues over Expenditures 333,053 2,207,743 (455,000) 534,405 (651,000) FUND BALANCE - DECEMBER 31 962,590$ 3,170,333$ 2,715,333$ 3,704,738$ 3,053,738$ Payable Principal Interest Rate Total 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 120,000$ 5,400$ 125,400$ GO Bonds, Series 2014A (Equipment Portion) 199 BENEFIT ACCRUAL FUND (704-00000) DEPARTMENT: Finance SUPERVISOR: Finance Director ACTIVITY SCOPE: The Benefit Accrual Fund is a self-sustaining internal service fund. The finance department, supervisors and the human resources manager oversee vacation, sick leave, and paid-time-off (PTO) benefits. The non-enterprise fund liability for this benefit is recorded in the Benefit Accrual Fund. Enterprise funds 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 2020 2021 2022 2023 Outcome/Effectiveness: Annual hours accrued: PTO 8,719 9,391 10,373 10,500 Comp Time 946 1,134 1,246 1,250 Vacation & Sick Leave 613 272 272 272 Balance of accrued hours: PTO 9,134 9,127 9,320 9,500 Comp Time 669 749 768 750 Vacation & Sick Leave 1,907 647 689 750 Efficiency: Annual hours accrued per employee: PTO 156 168 176 175 Comp Time 28 33 34 33 Vacation & Sick Leave 307 272 272 272 Work Load: Employees accruing hours: PTO employees 56 56 59 60 Full-time hourly employees 34 34 37 38 Vacation & Sick Leave employees (pre-1990)2 1 1 1 200 BUDGET: BUDGET COMMENTARY: The Benefit Accrual Fund’s main source of revenue is internal charges to personnel services in three of the city’s main governmental funds: General Fund, Economic Development Authority 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 can carry-over up to 320 hours of accrued PTO. BENEFIT ACCRUAL FUND 2020 2021 2022 2022 2023 % REVENUES ACTUAL ACTUAL BUDGET ESTIMATED BUDGET CHANGE Charges for Services 6,541$ (19,915)$ 12,000$ 28,075$ 12,000$ 0.0% Miscellaneous 6,927 (1,898) - (11,886) - --- TOTAL REVENUES 13,468$ (21,813)$ 12,000$ 16,190$ 12,000$ 0.0% EXPENDITURES Personnel Services 6,541$ (19,915)$ 12,000$ 9,325$ 12,000$ 0.0% TOTAL EXPENDITURES 6,541$ (19,915)$ 12,000$ 9,325$ 12,000$ 0.0% FUND BALANCE - JANUARY 1 348,086$ 355,013$ 353,116$ 353,116$ 359,980$ Excess (Deficiency) of Revenues over Expenditures 6,927 (1,897) - 6,865 - FUND BALANCE - DECEMBER 31 355,013$ 353,116$ 353,116$ 359,980$ 359,980$ 201 This page intentionally left blank. 202 COMMUNITY, DEMOGRAPHIC, AND STATISTICAL INFORMATION Classified as a 501(a) entity under the Internal Revenue Code, the city of Monticello was organized as a municipality in 1856. Monticello is located approximately 45 miles northwest of the Minneapolis-St. Paul metropolitan area along the I-94 corridor in Wright County. The 2020 U. S. Census estimated Monticello's population at 14,455, and the city encompasses an area of 8.87 square miles. The city operates under a statutory form of government. The mayor and four councilmembers (together known as "City Council") govern the city. The councilmembers are each elected to staggered, four-year terms and the mayor a two-year term. The mayor presides over and is a voting member of the City Council. The mayor is the chief authority for administering city government and appoints department heads, various board members and commission members. The City Council is the legislative body and meets twice per month. The City Council's main responsibilities are guiding the growth and development of the City using the Monti 2040 Comprehensive Plan, appropriating funds, setting salaries, adopting ordinances and resolutions, and approving the budget. Monticello has a varied business community with a healthy mix of retail and manufacturing. City unemployment rates are like that of the state, but from 2015 to 2019, the state’s rate was slightly lower, as shown below. Wright County’s average unemployment was lower than the State average through November of 2022, but an uptick in December 2022 created a higher unemployment rate. Home to one of the two nuclear generation plants in Minnesota, Monticello’s second largest employer is Xcel Energy, not far behind the Monticello School District. Regional medical provider, CentraCare, and Agri-giant Cargill also maintain a strong presence in the city. Average Employment Year Wright County Wright County State of Minnesota 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 72,455 3.4%3.2% 2019 73,088 3.8%3.5% 2020 69,972 4.4%4.4% 2021 72,474 2.7%3.0% 2022 75,573 3.2%2.5% HISTORICAL EMPLOYMENT/UNEMPLOYMENT DATA (Rates are not compiled for individual communities within counties) Average Unemployment 203 Monticello’s population and households are roughly 0.25% of the state’s total for both measures. With Target, Walmart, Home Depot, Runnings, and Mills Fleet Farm, it is no surprise that retail sales per person are higher than the state average. The following table contains selected facts about the city: The nuclear plant accounts for approximately 45% of the city’s net tax capacity. Xcel’s tax capacity and the council’s conservative tax levy philosophy are the main reasons the city tax capacity rate is the third lowest in Wright County. Large residential property valuation increases in 2022 contributed to a 2023 tax rate decrease. The overall tax base is about one-third residential and two-thirds commercial. Employer Employees ISD No. 882 (Monticello)684 Xcel Energy (Northern States)650 CentraCare Health - Monticello 577 Cargill Kitchen Sol. (Sunny Fresh)425 Target 307 Walmart Supercenter 225 Ultra Machining Corporation 215 City of Monticello 176 Home Depot 157 WSI Industries 120 TOP TEN CITY EMPLOYERS People QuickFacts Monticello Minnesota Population, 2022 estimate July 1 14,619 5,717,184 Population, Census, April 1, 2020 14,455 5,706,494 Population, percent change, April 1, 2020 to July 1, 2022 1.1% 0.2% Persons under 5 years, percent 8.5% 5.9% Persons under 18 years, percent 27.7% 23.1% Persons 65 years and over, percent 9.9% 16.7% Female persons, percent 52.6% 49.9% White persons, percent 90.9% 83.0% Hispanic or Latino, percent 8.5% 5.8% Housing units, July 1, 2021 X 2,517,248 Homeownership rate, 2017-2021 70.1% 72.3% Median value of owner-occupied housing units, 2017-2021 $230,600 $250,200 Households, 2017-2021 5,379 2,229,100 Persons per household, 2017-2021 2.62 2.49 Retail sales per capita, 2017 $33,121 $16,518 Median household income, 2017-2021 $73,651 $77,706 Per capita money income in the past 12 months, 2017-2021 $30,796 $41,204 Population per square mile, 2020 1,629.8 71.7 Land area in square miles, 2020 8.87 79,626.68 204 Monticello grew by approximately 14% in the last ten years. The city has undeveloped commercial and residential real estate and is positioned well to benefit from more urban flight from the Twin Cities. Access to major transportation corridors makes the city an ideal location for future growth. The following table includes population statistics over the last ten years: 2020 2021 2022 2023 2022-23 2022-23 City Tax Rate Tax Rate Tax Rate Tax Rate Change Change % City of St. Michael 36.691 35.817 33.909 27.149 -6.760 -24.9% City of Otsego 35.099 34.653 34.545 29.397 -5.148 -17.5% City of Monticello 34.967 35.659 36.536 34.794 -1.742 -5.0% City of Dayton 54.139 51.378 47.733 35.082 -12.651 -36.1% City of Hanover 44.889 46.491 43.569 38.213 -5.356 -14.0% City of Rockford 48.674 44.345 43.836 40.916 -2.920 -7.1% City of Delano 52.913 49.369 49.061 42.644 -6.417 -15.0% City of Albertville 47.067 46.801 46.355 42.737 -3.618 -8.5% City of Waverly 64.252 60.997 57.262 44.560 -12.702 -28.5% City of Annandale 55.706 54.571 54.606 48.290 -6.316 -13.1% City of Buffalo 55.811 54.256 55.034 50.910 -4.124 -8.1% City of Montrose 50.952 51.607 51.719 51.692 -0.027 -0.1% City of Howard Lake 70.889 72.596 67.661 61.715 -5.946 -9.6% City of Maple Lake 65.428 61.994 62.164 62.607 0.443 0.7% City of Cokato 71.410 68.015 68.079 62.711 -5.368 -8.6% City of Clearwater 72.662 69.513 69.978 63.489 -6.489 -10.2% City of South Haven 105.298 91.707 90.696 81.082 -9.614 -11.9% CITY TAX RATES IN WRIGHT COUNTY, MINNESOTA Year Population Change 2013 12,901 61 2014 12,993 92 2015 13,125 132 2016 13,311 186 2017 13,409 98 2018 13,553 144 2019 13,782 229 2020 13,886 104 2021 14,455 569 2022 14,619 164 205 2023 Adopted Budget 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 assigned 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 on the next page.) [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 taxpayers will pay the levy. 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] = [parcel property tax bill] 206 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. 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. 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. 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 2023 State Tax Payable 2023 Residential Homestead: No state tax 1st $500,000 1.00% >$500,000 1.25% Non-homestead Residential: No state tax Single unit: 1st $500,000 1.00% >$500,000 1.25% 2–3-unit buildings 1.25% Market-rate Apartments: 1.25% No state tax Commercial/Industrial: 1st $150,000 1.50% Subject to state levy >$150,000 2.00% (Commercial-industrial rate) Seasonal Recreational 1st $500,000 1.00% Subject to state levy >$500,000 1.25% (Commercial-industrial rate) 207 TRUTH-IN-TAXATION (TNT) Summary Chart for Taxes Payable 2023 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. (September 26, 2022) 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. (September 26, 2022) 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. (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.) • 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 27, 2022) Nov. 11 - Nov. 24 County auditor prepares and sends parcels specific notices. Nov. 25 - Dec. 28 City council holds meeting to discuss the budget and property tax levy and, before a final determination, allows public input. (December 12, 2022) 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 13, 2022) **The date an activity occurred is highlighted. 208 DEBT GUIDE Equipment Certificates/Capital Notes 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 maintenance equipment; and other capital equipment.  Computer hardware and software, whether bundled with machinery or equipment or un- bundled, 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 is subject to the debt limit. 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 exceptions:  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.  Unless prohibited by the charter, these cities may also issue Capital Notes under the authority granted 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 209 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.  The principal amount of the bonds may not exceed the sum of the authorized abatements. A debt service levy may be 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 statutory provisions for Street Reconstruction Bonds appear in the portion of Chapter 475 dealing with election 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, realignments, intersection modifications, and the local share of state and county road projects, street reconstruction and bituminous overlays does not include the portion of project cost allocable to widening a street 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 must describe the street reconstruction or overlay to be financed, the estimated costs, and any planned reconstruction or overlay of other streets in the municipality over the next five years  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 the members of the governing body present at the meeting.  The issuance of bonds is subject to a reverse referendum. An election is required if voters equal to 5% of the votes cast in the last municipal general election file a petition with the city clerk within 30 days of the public hearing. If the city decides not to undertake an election, it may not propose the issuance of Street Reconstruction Bonds for the same purpose and in the same amount for a period of 365 days from the date of receipt of the petition. If the question of issuing the bonds is submitted and not approved by the voters, the provisions of section 475.58, subdivision 1a, shall apply (no resubmission for same purpose/ amount for 180 days).  Street Reconstruction Bonds are subject to the debt limit. 210 Revenue Bonds One exception to the previous statement is the issuance of Revenue Bonds. Chapter 475 authorizes borrowing for “any utility or other public convenience from which a revenue is or may be derived”. This authority is sufficient when the sole security is the pledge of revenue from a public enterprise. Although this debt is most frequently associated with municipal utilities, any “public convenience” with a pledge-able source of revenue may use this authority. Minnesota cities do not frequently issue Revenue Bonds. 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. Improvement Bonds One of the most 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 (beautification), storm sewers and utility connection lines. Other provisions may contain important expansions or limitations on the authority. Sanitary and storm sewer improvements may be made outside of the city 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 and including storm sewers or other street drainage and connections from sewer, water, or similar mains to curb lines. 2. Acquire, develop, construct, reconstruct, extend, and maintain storm and sanitary sewers and systems, including outlets, holding areas and ponds, treatment plants, pumps, lift stations, service connections, and other appurtenances of a sewer system, within and without the corporate limits. 3. Construct, reconstruct, extend, and maintain steam heating mains. 4. Install, replace, extend, and maintain streetlights and street lighting systems and special lighting systems. 5. Acquire, improve, construct, reconstruct, extend, and maintain water works systems, including mains, valves, hydrants, service connections, wells, pumps, reservoirs, tanks, treatment plants, 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. 211 7. Plant trees on streets and provide for their trimming, care, and removal. 8. Abate nuisances and drain swamps, marshes, and ponds on public or private property, and fill the 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 pedestrian 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. 17. Improve, construct, reconstruct, extend, and maintain gas and electric distribution facilities owned by a municipal gas or electric utility. 18. Purchase, install, and maintain signs, posts, and other markers for addressing related to the operation 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, authorized improvements within a Housing Improvement Area may be paid with special assessments. 212 Minimum Assessment General Obligation Improvement Bonds require a minimum 20% assessment. It is important to understand 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 the improvement to the city. This cost may or may not equal the amount of the Improvement Bonds. 2. The cost of the improvement does not include activities that will not be assessed to benefitted property 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) im- provements 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. One exception to this 20% requirement is improvements for automobile parking facilities (Section 459.14). 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 exceed the increase in market value of the property because of the improvement. There is no requirement to make this finding as part of the improvement process. The issue comes into play primarily in projects with larger assessments and greater risk of appeal. Assessments are also constrained by the notice of hearing for the improvement. The total amount assessed cannot exceed the amount stated in the notice. The area assessed cannot be larger, but can be smaller, than the area receiving notice of the Hearing. 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 of Chapter 429. Section 429.021, Subd. 2 allows for an improvement on two or more streets, or two or more 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 separately may be subsequently combined under the authority of Section 435.56. Revenues to pay debt service on the portion that is not assessed may come from any legally available source including a property tax levy. 213 Bond Issues Planning for the issuance of Improvement Bonds requires a clear understanding of the special assessments. 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 installments of principal or level annual 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 issued any time after the city council conducts the improvement hearing and authorizes the improvements. No improvement hearing is needed if the parties that petition for the improvement will be assessed 100% of the cost. Each point in time has different implications for issuing bonds:  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.  Bonds may be issued after completion of the assessment process. This allows the finance plan to be based on final construction costs and actual assessments. This approach can also consider the number of initial 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 of tax-exempt bonds. For controversial projects with a higher risk of assessment appeals, cities will conduct the assessment process during the period between the receipt and award of construction bids. This approach allows the city to know the appeal risk before committing to undertake the improvement. Improvement Bonds are not subject to the statutory debt limit. Utility Revenue Bonds Minnesota cities rarely issue pure Revenue Bonds to finance sanitary sewer, water, and storm sewer utility improvements. State Law allows cities to add its general obligation to the pledge of net utility revenues for 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.” They are secured by both utility revenues and the city’s general obligation. The bonds may be secured by a single utility or by combined 214 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.  How much of the revenue comes from connection charges and other fees associated with growth?  Are rate increases needed? If so, are there any procedural issues (such as a public hearing or approval 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 Cities may issue Capital Improvement Plan (CIP) Bonds to finance the construction and maintenance of city 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 improvements incurred before adoption of the capital improvement plan are allowed if included in a plan approved at or prior to the public hearing on the issuance of bonds. The projects to be financed must be included in a capital improvements plan (CIP) that meets the criteria of the statute. The plan must cover at least a five-year period beginning with the date of its adoption. The plan must set forth the estimated schedule, timing, and details of specific capital improvements by year, together with the estimated cost, the need for the improvement, and sources of revenue to pay for the improvement. The CIP should also include information about the factors required by the statute to be considered by the city council. These factors are:  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;  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 municipalities or local government units. 215 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 estimated market value of taxable property in the city. This calculation is made using the estimated market value for the taxes payable year in which the bonds are issued and sold. The bonds are subject to the debt limit for cities with a population of 2,500 or more. Both approval of 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 by a three-fifths vote of a five-member city council. If the city council has more than 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 bonds if a petition signed by voters equal to 5% of the votes cast in the city in the last municipal general election is filed with the city clerk within 30 days after the public hearing. If the city does not submit the question to the voters, it may not propose the issuance of bonds under this section for the same purpose and in the same amount for a period of 365 days from the date of receipt of the petition. If the question of issuing the bonds is submitted and not approved by the voters, the city must wait 180 days before voting on the same question again. Lease Revenue Bonds 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 likely to not appropriate and walk away from an essential 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, and the EDA is a political subdivision. Levies to make lease payments do not currently qualify as a special levy and, therefore, are subject to levy limits. The taxing power of the EDA may also be pledged to Lease Revenue Bonds. 216 Other Debt Terms Bank Qualified Issuers that reasonably expect to issue $10,000,000 or less in tax-exempt bonds during a calendar year may designate bonds as “bank qualified”. The name refers to the fact that banks may deduct a 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 subject to the small issuer or the spenddown exceptions. The small issuer exception applies when the total principal amount of tax exempt, non-private activity 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-month exception - gross proceeds and interest earnings are allocated to expenditures for governmental 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 a 5% reasonable retainage carryover amount for an additional 12 month period). 3. 2-year spending exception – issue is a “construction issue” (75% of issue is actually spent on construction) and gross proceeds and interest earnings are spent within the following schedule from date of issuance: (1) 10% within 6 months; (2) 45% within 12 months; (3) 75% within 18 months; and 4) 100% within 24 months. 217 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. 218 (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. The county auditor shall compute the net tax capacity for each parcel according to the classification rates specified in section 273.13. The net tax capacity will be the appropriate classification rate multiplied by the parcel's market value. Subd. 1b. Computation of tax rates. (a) 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 or any limit on net debt, the issuance of bonds, certificates of indebtedness, or capital notes 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," "estimated market value," and "market valuation," whether equalized or unequalized, mean the estimated market value of taxable 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," "estimated market value," and "market valuation" for purposes of this paragraph, refer to the taxable market value for the previous assessment year. 219 273.13 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. 21b. Tax capacity. "Net tax capacity" means the product of the appropriate classification rates in this section and taxable 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 classification rate of one percent of its market value; and the market value of class 1a property that exceeds $500,000 has a classification 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 person who is blind and the spouse of the person who is blind; (2) any person who is permanently and totally disabled or by the person with a disability and the spouse of the person with a disability; or (3) the surviving spouse of a veteran who was permanently and totally disabled homesteading a property classified under this paragraph for taxes payable in 2008. 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 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 220 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. 221 UTILITY RATES Residential Water & Sprinklers: 10, 12, 16, 17, 30 0 - 1,000 gallons $8.68 1,001 - 6,500 gallons (5,500 gallons)$2.03/1,000 gallons 6,501 - 11,500 gallons (5,000 gallons)$2.35/1,000 gallons 11,501 - 16,500 gallons (5,000 gallons)$2.58/1,000 gallons 16,501 - 33,000 gallons (16,500 gallons)$2.80/1,000 gallons 33,001 gallons and over $3.00/1,000 gallons Commercial Water & Sprinklers: 11, 13, 90, 31, 32, 90, 91, 92, 93 0 - 1,000 gallons $8.68 1,001 - 6,500 gallons (5,500 gallons)$2.03/1,000 gallons 6,501 - 33,000 gallons (26,500 gallons)$2.35/1,000 gallons 33,001 gallons and over $2.58/1,000 gallons Industrial Water: 14 (effective 7/1/23) All Water Usage $2.47/1,000 gallons State Water Service Connection Fee: 18 Per Connection $0.81/mo. Sewer Rates - Residential & Commercial: 20, 25, 26 0 - 1,000 gallons $10.61 1,001 gallons and over $6.51/1,000 gallons Sewer Special Cases: SW21, SW22 Has own well $10 per person Industrial Sewer Rates: 24 (effective 7/1/23) All Sewer Usage $4.04/1,000 gallons BOD5 (Biochemical Oxygen Demand)$0.436/lb. TSS (Total Suspended Solids)$0.599/lb. Testing Actual cost + 10% Stormwater Rates: Residential: 40 $4.50 Non-Residential (7 drainage units per impervious acre): 41 $4.50 Residential Garbage Charges - Taxable (effective 2/1/23) 1st Individual Residential Cart $10.06 2nd Individual Residential Cart $13.00 Residential Recycling Charges (effective 2/1/23) Per Cart $5.17 Other: Water On/Off Charge $25/each Water Availability Charge: 15 $42/year Final Bill Processing Fee $25.00 Refusal of Equipment (manual read) Charge $50.00 222 CAPITALIZATION THRESHOLDS Class of Asset Details Useful Life (Yrs) Threshold Land N/A $1 Land improvements 10-20 $50,000 Building/building improvements: 12-40 $20,000 Construction Interior & Roof Cover Heating Ventilation AC & Lighting Electrical Elevators, Fire, Piping & Plumbing Site Preparation Floor Structure & Cover, Foundation, Roof Structure, Steel Frame, Walls Exterior Primary Infrastructure and Utility 10-40 $75,000 Paving Systems Water, Sanitary & Stormwater Secondary Infrastructure 10-40 $25,000 Sidewalk, Boardwalk, Pathways Streetlights, Signage Equipment 5-20 $10,000 Vehicles Machinery Software and non-tangible 5-20 $10,000 Purchased and internally developed Construction Work in Progress Upon completion, per above class Equipment expenditures for items between $500 and $10,000 are recorded as small tools and equipment, which is a supply account. Building and improvement expenditures below the thresholds are recorded as repairs and maintenance. Current revenues finance expenditures for supplies, repairs, and maintenance. 223 TAX CAPACITY, TAX LEVY, & TAX RATE HISTORY Tax Capacity City Tax HRA Tax Total Tax City Tax Year Value Levy Levy Levy Capacity Rate 2014 18,244,090$ 8,150,000$ -$ 8,150,000$ 44.672 2015 23,882,689$ 8,535,000$ -$ 8,535,000$ 35.737 2016 25,891,898$ 8,925,000$ 280,000$ 9,205,000$ 34.470 2017 27,583,160$ 9,150,000$ 280,000$ 9,430,000$ 33.172 2018 29,528,145$ 9,547,000$ 323,000$ 9,870,000$ 32.332 2019 29,076,227$ 9,962,000$ 348,000$ 10,310,000$ 34.262 2020 29,870,392$ 10,445,000$ 355,000$ 10,800,000$ 34.968 2021 31,026,583$ 11,063,700$ 366,300$ $11,430,000 35.659 2022 31,073,603$ 11,353,000$ 388,000$ $11,741,000 36.536 2023 34,925,732$ 12,050,000$ 402,000$ $12,452,000 34.502 $- $5 $10 $15 $20 $25 $30 $35 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023MillionsTax Levies and Tax Capacity History City Tax Levy HRA Tax Levy Tax Capacity Value 224 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. 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. AMERICAN RESCUE PLAN ACT (ARPA): Signed into law on March 11, 2021, this $1.9 trillion funding program provided resources for a wide variety of recipients and for an extensive list of uses. $350 billion of the funds were provided to state and local governments for emergency funding in response to the COVID-19 pandemic. AMORTIZATION: The action or process of gradually writing off the initial cost of an asset. 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. ARBITRAGE: The simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset's listed price. In governments, this typically refers to the investment of funds received as proceeds from bond issuances. 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 225 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 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 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 used in operations and have initial useful lives extending beyond a single reporting period. These assets must also meet capitalization thresholds, 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: A capital expenditure occurs when a capital asset is purchased. Expenditures that do not benefit more than one reporting period or meet the capitalization thresholds are classified as current expenditures. 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 226 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. 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 including expenditures that do not benefit more than one reporting period or meet the capitalization thresholds. 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 debt is accounted for in the enterprise fund or internal service fund receiving the debt issue proceeds. DEFICIT: An excess of expenditure or liabilities over income or assets in a given period. 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. 227 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, Sewer, 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. 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. Funds in the government model are classified into three broad categories: governmental, 228 proprietary, and fiduciary. The most common reason for establishing a fund is to separately account for restricted-use revenue or to comply with state or federal law. FUND BALANCE: Governmental fund assets and deferred outflows of resources minus liabilities and deferred inflows of resources. 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 bond’s principal, including interest. 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. 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. 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 OPERATING TRANSFERS: Amounts transferred from one fund to another, shown as an expenditure in the originating fund and a revenue in the receiving fund. 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. LEVY: (Verb) To impose taxes, special assessments, or service charges for the support of 229 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. LINE ITEM: A specific item or group of related 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. MAJOR FUND: For budgetary purposes, a fund whose revenues or expenditures, excluding other financing sources and uses, constitute more than 10% of the revenues or expenditures of the appropriated budget. 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. 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. 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. NON-MAJOR FUND: For budgetary purposes, a fund whose revenues and expenditures, excluding other financing sources and uses, are less than 10% of the revenues and expenditures of the appropriated budget. 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 of items purchased or services obtained. Examples of objects of expenditure include salaries, supplies, contracted service, etc. OBJECTIVE: Desired output-oriented accomplishments, which can be measured and achieved within a given period. OPERATING BUDGET: A financial plan that estimates revenues and expenditures for a specified period. 230 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. 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. 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. PROPERTY TAX LEVY: The total amount to be raised by general property taxes for the purpose stated in the resolution certified to the county auditor by December 28th. Also see levy. 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 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. 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 231 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. SPECIAL ASSESSMENT: A compulsory levy made by a local government against certain properties to defray part or all 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. 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. 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, 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. WORKING CAPITAL: Current assets less current liabilities. The modified accrual balance of resources in enterprise funds after factoring out long-term assets and liabilities that do not impact current, near-term operations. 232 ACRONYMS ACFR Annual Comprehensive Financial Report ARPA American Rescue Plan Act BCOL Bertram Chain of Lakes CARES Coronavirus Aid, Relief & Economic Security Act CIP Capital Improvement Plan CPI Consumer Price Index DMV Department of Motor Vehicle 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 GIS Geographic Information System GO General Obligation HACA Homestead and Agricultural Credit Aid HRA Housing and Redevelopment Authority HVAC Heating, ventilation, and air conditioning IEDC Industrial & Economic Development Committee LGA Local Government Aid MCC Monticello Community Center MCM Minimum Control Measures MVE Market Value Exclusion PTO Paid Time Off SAC Sewer Availability Charge SCADA Supervisory Control and Data Acquisition SCDP Small Cities Development Program TIF Tax Increment Financing WAC Water Availability Charge 233 2023 Adopted Budget