Loading...
2018 BudgetADOPTED BUDGET 2018FISCAL YEAR www.ci.monticello.mn.us CITY OF MONTICELLO . 505 WALNUT STREET . MONTICELLO . MINNESOTA phone: 763.295.2711 fax: 763.295.4404 Table of Contents Directory of Public Officials Distinguished Budget Presentation Award Budget Message Community, Demographic, and Statistical Information Map Core Values Strategic Planning: Vision, Mission, and Goals Planning Process Financial Policies Budget Development & Administration Revenue Collection Expenditures and Payments Debt Administration Reserves and Fund Balances Financial Reporting & Accounting Cash Management & Investment Financial Structure Matrix of Funds and Budget Units Operating Fund Crosswalk The Budget Process (and Calendar) Organization Chart All Funds Summary By Fund Type All Funds Summary By Year Changes in Fund Balance/Working Capital Fund Balance History Balanced Budgets Capital Expenditurs (Recurring vs Nonrecurring) Tax Levy History Tax Capacity History Revenue Sources By Fund Long Range Financial Plans Long-Term Fiscal Objectives Capital Investments and Operating Budgets Legal Debt Limit and Bond Rating Bond Rating Scales Debt Service Levy History G.O. Debt Service G.O. Debt Levels Effect of Debt Levels on Government Operations 5 6 7 20 23 24 25 29 35 35 37 37 39 40 41 42 50 53 54 55 59 60 61 62 63 64 65 66 67 68 70 75 78 81 82 83 84 85 86 Debt Levels By Fund Type Interfund Transfers Staffing Summary Revenue Trends & Analysis Appropriations By Category and Fund-Type General Fund - Summary Mayor and City Council City Administration City Clerk Finance Audit Assessing Legal Human Resources Planning, Zoning & Community Development City Hall Prairie Center Building Law Enforcement Fire & Rescue Fire Relief Building Inspections Civil Defense Animal Control National Guard Public Works - Administration Public Works - Engineering Public Works - Inspections Public Works - Streets, Alleys & Parking Lots Public Works - Ice & Snow Removal Public Works - Shop & Garage Public Works - Stormwater Public Works - Street Lighting Public Works - Refuse Collection Transit Senior Center Park Operations Park Ballfields Shade Tree Library Insurance Special Revenue Funds - Summary Economic Development Authority Fund Cemetery Fund 87 88 89 90 101 103 106 107 109 111 113 114 115 116 118 121 123 124 126 128 129 131 132 134 135 137 139 141 143 144 146 148 149 150 151 153 155 156 158 159 161 162 164 Minnesota Investment Fund Community Center Fund Debt Service Funds (aggregate of sub-funds) - Summary 2010A G.O. Improvement Bond Sub-Fund 2011A G.O. Refunding Bond Sub-Fund 2014A G.O. Judgement Bond Sub-Fund 2015B G.O. Street Reconstruction and Improvement Bond Sub-Fund 2016A G.O. Street Reconstruction and Improvement Bond Sub-Fund 2017A G.O. Improvement and Abatement Bond Sub-Fund Closed Debt Service Funds Capital Project Funds - Summary Capital Project Fund Closed Bond Fund Park & Pathway Dedication Fund Stormwater Access Fund Street Lighting Improvement Fund Street Reconstruction Fund Enterprise Funds - Summary Water Fund Sewage Fund Liquor Fund Deputy Registrar Fund Fiber Optics Fund Internal Service Funds - Summary IT Services Fund Central Equipment Fund Benefit Accrual Fund Capital Improvement Program Capital Improvement Program Introduction Capital Improvement Plan - Funding Source Summary Capital Improvement Plan - Projects & Funding Sources By Department CIP Projects Property Tax Basics Truth-in-Taxation Debt Guide Minnesota Statutes Utility Rates Capitalization Thresholds Tax Capacity, Tax Levy, & Tax Rate History Useful Terms (Glossary) 166 168 171 172 174 176 178 180 182 184 185 186 188 190 192 194 196 199 200 202 206 208 210 213 214 216 219 221 221 228 229 235 241 243 244 252 256 257 258 259 4 DIRECTORY OF PUBLIC OFFICIALS MAYOR & CITY COUNCIL Position Name Term Expires Mayor......................................................................Brian Stumpf 12/31/2018 Council......................................................................Lloyd Hilgart 12/31/2018 Council............................................................... Charlotte Gabler 12/31/2018 Council...............................................................................Bill Fair 12/31/2020 Council.....................................................................Jim Davidson 12/31/2020 CITY STAFF City Administrator.......................................................Jeff O’Neill Finance Director.....................................................Wayne Oberg Public Works Director .......................................................Vacant Community Development Director................. Angela Schumann Community Center Director..................................... Ann Mosack Economic Development Manager...............................Jim Thares City Clerk .........................................................Jennifer Schreiber Human Resource Manager........................................ Tracy Ergen Chief Building Official...................................................John Rued City Engineer .....................................................................Vacant Fire Chief ............................................................Michael Mossey Deputy Registrar Manager.................................Carolyn Granger Liquor Store Manager ........................................Randall Johnsen Finance Manager...........................................Sarah Rathlisberger Street Superintendent..............................................Tom Moores Parks Superintendent................................................Tom Pawelk Water & Sewage Superintendent ...........................Matt Theisen Communications Coordinator............................. Rachel Leonard JOINT CITY/COUNTY/OUTSIDE STAFFING Wright County Sheriff................................................Joe Hagerty WSB Engineering Consultant.................................Shibani Bisson Veolia Environmental Services.................................Chuck Keyes 5 DISTINGUISHED BUDGET PRESENTATION AWARD The Government Finance Officers Association of the United States and Canada (GFOA) presented an award of Distinguished Budget Presentation to the City of Monticello for its annual budget for the fiscalyearbeginningJanuary1,2017.Thecityhasreceivedthisawardforeachbudgetithasprepared for the past six years. In order to receive this award, a governmental unit must publish a budget document that meets program criteriaasa policydocument,asanoperationsguide,asafinancialplanandasacommunicationsdevice. This award is valid for a period of one year only. We believe our current budget continues to conform to programrequirements,andwearesubmittingittoGFOAtodetermineitseligibilityforanotheraward. GOVERNMENT FINANCE OFFICERS ASSOCIATION D istinguished B udget Presentation Award PRESENTED TO City of Monticello Minnesota For the Fiscal Year Beginning January 1, 2017 Executive Director 6 BUDGET MESSAGE INTRODUCTION The budget is a tool. How this versatile tool is used depends on the stakeholder. Policy makers use the budget to provide direction on service levels and place limits on spending. For managers, the budget offers benchmarks for measuring performance and assessing stewardship. To community advocates and activists, the budget conveys visibility as to whether their concerns are being addressed. Universally, the budget is an essential tool for communicating the city's plans, policies, procedures, and objectives regarding the services to be delivered and the assets to be acquired in the upcoming and future fiscal years. Indeed, the budget’s effectiveness is meaningfully influenced by the conviction of the various stakeholders using this dynamic tool. BUDGET POLICY AND STRATEGY This budget document was prepared after analyzing and evaluating requests from various departments and budget units. The content represents the requested financial support for the operation of the city of Monticello for the upcoming fiscal year. Revenue estimates are conservative and realistic. The importance of a sound revenue picture cannot be overstated. Revenue estimates are based on historical trends with greater weight placed on the most current years. The city of Monticello provides a range of services to the community, including police (contracted) and fire protection, street and park maintenance, snow and ice removal, water and sewer utility services, and administrative and planning services. In addition the city owns and operates a community center (MCC), department of motor vehicles (DMV), municipal off-sale liquor store, and a fiber optic network (FiberNet Monticello). The level of service provided by the proposed budget is similar to that currently enjoyed by the community. STRATEGIC OR KEY INITIATIVES The city of Monticello provides a full range of municipal services, as listed in the previous paragraph and as authorized by state statute. Monticello is blessed with many assets, including a beautiful setting, an excellent location, a rich heritage, and a talented population. The city seeks to use, preserve and enhance these assets in building a great, affordable place to live, work and do business. The city will fulfill the goals below to achieve this mission: 1.Continue to maintain the lowest possible tax rate while providing the best possible service. While the 2018 property tax levy exceeded inflation, the city’s tax levy (capacity) rate declined slightly from 2017. 2018 Budget: The city levy increases $397,000 (4.3%) to $9,547,000 and the Housing and Redevelopment (HRA) levy increases $43,000 (15.2%) to $323,000. Combined (city + HRA) tax levy increase: $440,000 (4.7%). The tax levy rate is still nearly 10% less than the next lowest rate for cities in Wright County. 7 2.Continue to develop and provide an unequaled system of parks, trails, and recreational facilities, including the unique assets of the Monticello Community Center, the Mississippi River, and conversion of the Bertram Chain of Lakes (BCOL) property into a regional park. In partnership with the county, the city acquired park land with state grants and local contributions. The city and county evenly split the local contribution, which is roughly 50% for land designated for non-athletic purposes and 50% for land designated for athletic purposes. 2018 Budget: $400,000 2019 Budget: $2,100,000 buildout of BCOL. 3.Continue to maintain the city streets by following an annual seal coat and crack seal program and by overlaying streets before they are beyond repair and need replacing. The city’s pavement management program identifies varying condition levels of every street. The 2018 General Fund includes a robust amount for chip/seal maintenance. This higher maintenance level began in 2014. 2018 Budget: $176,000 4.Develop and adopt a long-range transportation plan which will improve traffic flow around and through the city. Monticello is one of three cities (along with two counties and two townships) taking part in a study to identify an additional or expanded interstate interchange site and Mississippi River crossing. The city is also an active, due paying member of the I-94 Coalition. 2018 Budget: $15,000 – study; $ 6,600 - membership 5.Implement the downtown redevelopment plan which will maintain a downtown area that combines a successful commercial district, community identity and heritage, and connection with the Mississippi River. The 2017 Small Area Study plan for downtown identified various options for re-creating the city’s downtown. The city transferred $300,000 from the General Fund to the Capital Project Fund in 2017 to start implementing the plan. 2018 Budget: $300,000 6.Seek to expand the supply of "move up" housing that allows people to upgrade their home without leaving the community. Staff is facilitating the development of additional residential home lots on the perimeter of the city by working with developers and engineers. Infrastructure needs are regularly assessed and incorporated into the city’s capital improvement plan. 7.Seek to develop and attract a wide range of employment opportunities with a growing emphasis on higher-paying jobs. This concept promotes the city’s competitive advantages (i.e. low taxes, property availability, transportation access, etc.) to businesses looking to move or grow. 2018 Budget for non-study redevelopment activity: $144,000 8 8.Continue to maintain high quality water and sewage treatment facilities. With the some of the lowest water and sewage rates in Minnesota, the city provides excellent services from these two utilities to residents and businesses. The budget includes funds for wastewater treatment facility improvements along with sufficient amounts for additional, ongoing system improvements in each fund. Our water is rated as one of the best tasting in Minnesota. 2018 Budget: Water - $150,000; Sewage - $150,000 and $700,000 wastewater facility control systems 9.Provide unequaled access to information with high speed internet, phone and television through the city-owned fiber optic network. The Fiber Optics Fund will receive a transfer from the Liquor Fund to continue operations in 2018. 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. 2018 Budget: $130,000 Transfer City council and staff used the goals set during the strategic planning process to direct the development of the 2018 budget. TOTAL BUDGET The 2018 budget includes all the funds maintained by the city. Each fund is responsible to account for a particular activity or activities. Each fund-type will be discussed within this message and in the budget document. The following compares the adopted 2017 and 2018 budgets: Fund-type 2017 2018 2017 2018 General Fund 7,842,000$8,287,000$7,842,000$8,287,000$ Special Revenue Funds 2,964,539 2,918,028 2,699,590 3,010,339 Debt Service Funds 3,960,940 2,328,345 4,396,961 2,807,160 Capital Project Funds 5,588,900 7,055,000 7,477,069 10,664,899 Enterprise Funds 12,116,002 11,875,641 11,841,744 12,738,243 Internal Service Funds 492,177 548,800 810,030 711,500 Total 32,964,558$33,012,814$35,067,394$38,219,141$ Revenues Expenditures Total Budget Total revenues increase less than 1% and total expenditures increase nearly 9% in 2018. General Fund revenues and expenditures increased 5.7%. The decrease in debt service expenditures reflects the rapid amortization of existing debt. Capital project funds will incur higher expenditures as the Fallon Avenue overpass and nearby street improvement projects begin. The Water Fund (enterprise fund) includes a $600,000 transfer to the Capital Project Fund for acquisition of a site suitable for a new public works campus. No other enterprise fund has a significant project planned for 2018. 9 The following graphs display the revenues and expenditures attributable to each fund-type in the 2018 Budget: General Fund 25% Special Revenue Funds 9% Debt Service Funds 7% Capital Project Funds 21%Internal Service Funds 2% Enterprise Funds 36% 2018 Revenues by Fund-Type General Fund 22% Special Revenue Funds 8% Debt Service Funds 7% Capital Project Funds 28% Internal Service Funds 2% Enterprise Funds 33% 2018 Expenditures by Fund-Type 10 PROPERTY TAXES The state of Minnesota has granted local municipalities the authority to levy taxes to fund operations and debt payments. For the city of Monticello, the property tax levy accounts for over 80% of revenues in the General Fund and over 30% in the special revenue funds. In 2018, debt services funds will receive $1,787,000 in property taxes for principal and interest payments on general obligation debt, which is much lower than the prior year’s $2,437,000. However, the city levied $783,000 for the Capital Projects Fund as offset and will re-allocate this levy for debt service purposes in the future. For 2018, the city's general (operations and debt) property tax levy will increase to $9,547,000, an increase of $397,000 (4.3%) over the prior year. For the third consecutive year, the city imposed a Housing and Redevelopment Authority (HRA) special benefit levy. The HRA levy increases to $323,000 (+15.4%) from $280,000 in the prior year. The special benefit levy is receipted in the Economic Development Authority Fund. When added together, the two levies represent a 4.7% increase in property taxes. The following table provides a historical view of the tax capacity value, tax capacity rate and tax levy without the HRA levy: Tax Capacity Capacity Tax Capacity Rate Tax Levy Year Value % Change Rate % Change Levy % Change 2008 16,190,597$36.7%42.601 -31.8%7,600,000$16.9% 2009 16,783,843 3.7%46.942 10.2%7,750,000 2.0% 2010 16,691,266 -0.6%46.191 -1.6%7,648,272 -1.3% 2011 16,429,431 -1.6%46.729 1.2%7,677,309 0.4% 2012 15,771,688 -4.0%49.773 6.5%7,850,000 2.2% 2013 18,692,762 18.5%42.262 -15.1%7,900,000 0.6% 2014 18,244,090 18.6%44.672 -15.1%8,150,000 3.2% 2015 23,882,689 30.9%35.737 -20.0%8,535,000 4.7% 2016 25,891,898 8.4%34.470 -3.5%8,925,000 4.6% 2017 27,583,160 6.5%33.172 -3.8%9,150,000 2.5% 2018 29,533,213 7.1%32.326 -2.6%9,547,000 4.3% Under contract, the Wright County assessor values all properties located within the city’s corporate limits. This market value is applied to the class rates assigned by the state to determine a property's tax capacity. The county estimates the city's tax capacity for taxes payable in 2018 at $29,533,213, which is a 7.1% increase. The Xcel Energy nuclear power plant taxable market valued grew 4% in 2018 to $744 million. The value of the plant has risen nearly 3.5 times from its 2012 value of $213 million. The Xcel plant alone accounts for over ½ of the city’s tax capacity. The city's property tax levy is divided by the tax capacity to determine the city's tax capacity rate. The tax capacity rate is applied to each property's tax capacity to determine the tax the city will collect before any credits are applied. For 2018, the city's combined (city + HRA) tax capacity rate is expected to change from 33.420% to 34.188%, a 2.2% increase. 11 The city at this time does not have the authority to levy or collect local sales taxes or other types of taxes under the state's tax system. PERSONNEL SERVICES The city's 2018 budget includes two new position: engineer/public works director and deputy fire chief. Additionally, the budget includes a step increase for employees still moving up in the pay scale system and a 3% wage adjustment (2% in January and 1% in July) for all employees. In 2013, the city re-instituted the step-pay scale plan discontinued in 2010. Many of the full-time employees have reached the last step of their pay scale. Public Works employees belong to a union. The union’s collective bargaining agreement expires December 31, 2019. The city will participate in the union’s health insurance plan in 2018. The union’s plan requires a flat premium for union and non-union full-time employees regardless of participation. Monthly health insurance plan costs increase $77 per employee, with employees paying $43. Staff will continue to explore ways to reduce future premium increases to both the city and its employees. While there are two new positions in the 2018 budget, the city continues to experiment with different staffing scenarios. One such experiment has merged the duties and responsibilities of the city administrator and the public works director. The contribution rates to the Public Employees Retirement Association (PERA) will remain the same in 2018 for both employer and employees. Effective 2018 PERA rates: 7.50% of wages for employer and 6.50% for employee. The budget also estimates FICA and Medicare taxes at 6.20% and 1.45% respectively for 2018. The remainder of this section will describe the major initiatives for 2016 for each of the fund types and their activities. GENERAL FUND Expenditures The following schedule displays 2018 budgeted General Fund expenditures by department compared with the prior year: Department 2017 2018 % Change General Government 1,623,981$1,721,583$6.0% Public Safety 2,194,769 2,363,495 7.7% Public Works 2,883,792 2,995,735 3.9% Transit 5,000 30,000 500.0% Recreation & Culture 1,125,946 1,169,808 3.9% Unallocated 8,512 6,379 -25.1% Operating Transfers ----- Total 7,842,000$8,287,000$5.7% 2018 General Fund Expenditures and Other Uses 12 The 2018 budget increased 5.7% over the 2017 budget. Without the personnel services increase, total expenditures would rise by 3.2%. 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 2018 personnel services budget includes a 2% raise in January and 1% raise in July. It also includes adding an engineer/public works director for the full year and a deputy fire chief beginning in July. The chart below presents the 2018 budgeted expenditures allocated by function/department: General Government 21% Public Safety 29% Public Works 36% Recreation 14% General Fund Expenditures - 2018 The Public Works Department is the largest department in terms of budgeted expenditures and the street and alleys activity budget is the largest activity within the department. The 2018 budget for the Public Works department increased 3.9%. Public works administration (+37%), streets and alleys (+4.6%), refuse collection (+1.7%), storm water (+2%), and public works inspections (+10.3%) are largely responsible for the overall increase. The increase in public works administration is largely attributable to re-instatement of an engineer/public works director position. As with all departments, personnel services increased with wage and benefit inflation. The second largest department based on expenditures is the Public Safety Department. The 2018 Public Safety Department budget increased 7.7%. The fire and rescue activity budget increased 16.4% with gear replacement and the additional full-time fire position. Public safety activities include law enforcement, fire, building inspections, civil defense, National Guard, and animal control. The city contracts with the Wright County Sheriff's department for law enforcement. The 2018 contract includes a $2.50 increase in the hourly service rate. The city will also contract for four additional hours (from 48 to 52) per day, starting in July 2018. 13 The 2018 budget for general government activities increased 6%. The city clerk activity increased significantly because 2018 is an election year. Updating the comprehensive plan contributes to the increase in planning and zoning (+7.4%). The human resources activity increases with the addition of on-line employment licensing. The increase (+24.7%) in city assessing reflects higher charges by the county assessor. Finance increased with wages and benefits. Maintenance at city hall and the Prairie Center building drive the increase in both activities. Recreation and culture increased by 3.9% in 2018. Park operation activities (+2.9%) increased with wage and benefit inflation and additional Bertram costs. The shade tree (+14.7%) activity budget demonstrates a desire to improve Monticello’s livability and more accurately reflect actual costs. Including services for police, assessor, and legal services, other services and charges account for 48% of General Fund appropriations. Appropriations for personnel services follow with 40% of the total and rises with wage and benefit inflation plus the new positions. Capital outlays include the internal rent payments to the Central Equipment Fund. Additional equipment purchases will translate into higher rent payments. The following table and graph provide perspective on expenditures and other uses for the various General Fund expenditure classifications in the 2018 budget: Classification 2017 2018 % Change Personnel Services 3,096,654$3,295,557$6.4% Supplies 731,825 742,050 1.4% Other Services & Charges 3,807,021 4,003,793 5.2% Capital Outlay 206,500 245,600 18.9% Operating Transfers ----- Total 7,842,000$8,287,000$5.7% 2018 General Fund Appropriations Personnel Services 40% Supplies 9% Capital Outlay 3% Other Services & Charges 48% Expendituresand OtherUses - 2018 14 Revenues and other sources Revenues and other sources supporting General Fund expenditures and other uses are classified as follows: Classification 2017 2018 % Change Property Taxes 6,291,000$6,590,000$4.8% Franchise & Other Taxes 283,900 289,500 2.0% Licenses & Permits 379,400 398,750 5.1% Intergovernmental Revenues 346,440 374,440 8.1% Charges for Services 320,470 398,400 24.3% Fines & Forfeits 42,300 36,500 -13.7% Special Assessments 300 300 0.0% Miscellaneous 178,190 199,110 11.7% Operating Transfers ----- Total 7,842,000$8,287,000$5.7% 2018 General Fund Revenues and Other Sources The General Fund’s tax levy increases by 4.8%, while the General Fund’s portion of the combined levy (city + HRA) decreases slightly from 66.7% to 66.0%. Licenses & permits reflect a modest uptick in residential and commercial development, with the rebound beginning in 2013 and continuing through 2017. Intergovernmental revenues improve with more state and county grants and aids. Charges for services reflect the implementation of a city-wide residential garbage charge. The property tax levy generates 80% of the General Fund revenues. Other than franchise fees, the city does not impose other taxes, such as local sales taxes or income taxes. Therefore, the city will continue to be dependent on property tax revenue as its major source of future revenues. SPECIAL REVENUE FUNDS The city of Monticello currently operates special revenue funds for economic development, cemetery, and community center activities. Special revenue funds also include the Minnesota Investment Fund, but it will likely see very little activity in 2018. Like the General Fund, the special revenue fund budgets are set at a level to maintain services. The tax levy supports community center operations ($372,000) and the Economic Development Authority ($323,000). Tax increments support economic development activities but their use is generally restricted to a specific activity in a specific area. Beginning in 2016, operating transfers (in) decreased to zero with initiation of a $280,000 Housing and Redevelopment Authority special benefit levy. Charges for services are the largest revenue source for both the community center (memberships) and the cemetery (plot sales). 15 The following tables display the change in budgeted revenues and other sources and the change in budgeted expenditures and other uses for special revenue funds in 2018: Classification 2017 2018 % Change Property Taxes 652,000$710,000$8.9% Tax Increments 653,564 635,678 -2.7% Charges for Services 1,496,725 1,434,500 -4.2% Miscellaneous 162,250 137,850 -15.0% Operating Transfers ----- Total 2,964,539$2,918,028$-1.6% 2018 Special Revenue Fund Revenues & Other Sources Classification 2017 2018 % Change Personnel Services 1,223,132$1,279,434$4.6% Supplies 198,635 183,435 -7.7% Other Services & Charges 800,904 770,400 -3.8% Capital Outlay 276,919 577,070 108.4% Operating Transfers 200,000 200,000 0.0% Total 2,699,590$3,010,339$11.5% 2018 Special Revenue Fund Appropriations DEBT SERVICE FUND (Aggregate of Sub-Funds) The city's debt service for 2018 is $2,807,160, or $712,523 less than the prior year. Funding for debt service comes from special assessments, tax increments, property taxes and transfers from the stormwater access, water, and sewage funds. Additional resources may be needed in one debt service fund because two parcels with $1.7 million in special assessments received a Green Acres deferral. The reserve in the affected fund were drawn down to make debt service payments. Further transfers from utility funds supplanted transfers from depleted and closed access funds. Outstanding debt: debt service funds - $21,035,000; enterprise funds - $4,278,401; internal service funds - $605,000. The city's bond rating from Moody’s Investors Services is an "A2". CAPITAL PROJECT FUNDS The budget for capital project funds are based on the 2018 project expenditures listed in the city's five-year capital improvement plan. The city's five-year capital improvement plan is included in a later section of this report. The city has three major projects moving forward in 2018: Fallon Avenue overpass, street improvements on 7th Street, and infrastructure improvements on Chelsea Road. Debt was issued in 2017 to start the projects and new debt will be issued in 2018 to provide the financing to complete those three projects. 16 ENTERPRISE FUNDS Total revenues and other sources for the enterprise funds (Water, Sewage, Fiber Optic, DMV, and Liquor) is estimated at $11,875,641 for 2018. The 2018 budget includes no debt proceeds, down from $700,000 in 2017. Operating transfers in of $130,000 are from another enterprise fund: Liquor Fund to Fiber Optics Fund. The change in Sale of Goods represents a conservative budget policy of estimating liquor sales at prior year levels plus the addition of Sunday sales. Classification 2017 2018 % Change Sale of Goods 5,435,194$5,770,784$6.2% Licenses & Permits 200 2,000 900.0% Charges for Services 5,414,861 5,670,207 4.7% Special Assessments 30,000 38,000 26.7% Miscellaneous 165,297 124,200 -24.9% Contributed Capital 140,450 140,450 0.0% Operating Transfers 230,000 130,000 -43.5% Debt Proceeds 700,000 --100.0% Total 12,116,002$11,875,641$-2.0% 2018 Enterprise Fund Revenues & Other Sources Classification 2017 2018 % Change Personnel Services 1,555,441$1,683,446$8.2% Supplies 4,414,130 4,710,245 6.7% Other Services & Charges 3,422,406 3,694,978 8.0% Capital Outlay 1,760,900 1,146,000 -34.9% Debt Service 373,574 373,574 0.0% Operating Transfers 315,293 1,130,000 258.4% Total 11,841,744$12,738,243$7.6% 2018 Enterprise Fund Appropriations Personnel services increase with wage and benefit inflation and additional staffing needed for Sunday liquor sales. Other services and charges increase because Fibernet’s operations are outsourced. A $600,000 operating transfer from the Water Fund to the Capital Project Fund for site acquisition for a public works facility contributes to the large increase in transfer out. A $400,000 transfer from the Liquor Fund to the Park and Pathway Fund will support Bertram Chain of Lakes engineering costs. INTERNAL SERVICE FUNDS Two internal service funds were initiated in 2013: IT (Information Technologies) Services Fund and Central Equipment Fund. These funds operate on a cost-recovery basis but the time horizon for the basis differs greatly. The IT Services Fund is relatively less capital intensive with annual capital 17 outlays in the $20,000 to $30,000 range. IT equipment usually has a shorter replacement cycle. The Central Equipment Fund has incurred debt to make major purchases. Annual rental charges to benefitting budget units recover the equipment purchase costs over 7-10 year periods. Annual depreciation and inflation for each capital asset will be used in calculating annual rental payments, which will provide funds for major equipment replacement through annual operating budgets. Internal service fund charges are recorded as expenditures in other funds. A third internal service fund (Benefit Accrual Fund) was started at the end of 2015. This internal service fund accumulates resources from governmental funds to match the city’s paid leave (paid- time-off, sick leave, and vacation) liability for governmental fund employees. Except for debt proceeds, internal service fund revenues are recorded as expenditures in other funds. FUND BALANCES Fund balances decline when expenditures exceed revenues. The General Fund and Monticello Community Center (MCC) Fund normally have balanced budgets where revenues equal expenditures. In 2018, the city has budgeted to draw down the MCC fund balance to finance improvements of the community center’s mechanical systems. The fund balance in the Debt Service Fund declines nearly $500,000 through normal debt amortization. No early redemptions are planned for 2018. The Debt Service Fund is the aggregation of the sub-funds for each debt issue. The city accumulates money in several debt service sub-funds for debt service payments in the following year. Additionally, the fund balance for the group of capital projects funds declines $3.6 million with the expenditure of prior year debt proceeds. Enterprise fund balances decline by nearly $900,000 with transfers to other funds and capital expenditures. The city adopted a balanced budget for the General Fund in 2018. CHALLENGES IN CONTEXT The preparation of this budget reflects the collision of both short-term and long-term challenges. While the local economy has improved, the commercial and residential tax base is growing by less than 2%. Growth requires additional near term public safety enhancements and long-term transportation improvements. Indeed, the council desires to meet current and future growth needs by maintaining the lowest tax capacity rates in Wright County. Second, the 2014 settlement of the telecommunication bondholder’s class-action lawsuit provided certainty and allowed city leaders to focus on other concerns such as day-to-day operations at Fibernet. Consequently, the city hired a third party to manage the telecommunications utility starting July 1, 2016. Fibernet now requires less support from the Liquor Fund. This will allow the city to redirect liquor store profits to other needs, such as park improvements at Bertram Chain of Lakes. 18 Third, the city is moving ahead with larger capital projects for 2018 and thereafter. All large projects have reimbursement resolutions, meaning the city will likely recover their temporary draw on reserves with debt proceeds. Three of the larger projects include construction of the Fallon Avenue overpass, 7th Street improvements, and Chelsea Road infrastructure improvements. Fourth, changes in leadership occurred in 2017 (first budget – 2018). Two new councilors with different policy outlooks were added when two other councilors did not seek re-election. In addition, one new councilor was seated in 2015. The 2018 budget will be subject to minor modification as priorities change as that year progresses. Growth themes and emphasis on public safety dominated in drafting the 2018 budget. In summary, modest economic improvement, public safety service enhancement, transportation improvements, stabilization in Fibernet operations, park development, and new leadership impacted the decisions made in drafting the 2018 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, 2017. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. This award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. CONCLUSION Conservation of city financial resources continues to be a very important objective. The budget is the prime tool in making sure limited resources are wisely utilized. It is our belief that the 2018 budget allows the city to deliver excellent municipal services in a cost effective and efficient manner at current levels. The 2018 budget is a product of collective efforts by the city council, staff and various other stakeholders. Their commitment, good judgment and expertise are invaluable to the budget process. Sincerely, Wayne W. Oberg Sarah K. Rathlisberger Finance Director Finance Manager 19 COMMUNITY, DEMOGRAPHIC, AND STATISTICAL INFORMATION Classifieda501(a)entityundertheInternalRevenueCode,thecityofMonticellowasorganizedasa municipalityin1856.Monticelloislocatedapproximately45milesnorthwestoftheMinneapolis-St.Paul metropolitanareaalongtheI-94corridorinWrightCounty.The2010U.S.CensusestimatedMonticello's populationat12,759andthecityencompassesanareaof8.94squaremiles.Thecityoperatesundera statutoryformofgovernment.Themayorandfourcouncilors(togetherknownas"citycouncil")governthe city.Thecouncilorsareeachelectedtostaggered,four-yeartermsandthemayoratwo-yearterm.The mayorpresidesoverandisavotingmemberoftheCityCouncil.Themayoristhechiefauthorityfor administeringcitygovernmentandappointsdepartmentheads,variousboardmembersandcommission members.TheCityCouncilisthelegislativebodyandmeetsregularlytwiceamonth.TheCouncil'smain responsibilitiesaretoappropriatefunds,setsalaries,adoptordinances,andapprovebudgets. Monticellohasavariedbusinesscommunitywithahealthymixofretailandmanufacturing.Thecitywashit hardbytherecessionandhasslowlyrecovered.Cityunemploymentratesaresimilartothatofthestate,but thestate’sratehasbeenslightlybetterlately,asshownbelow. Hometooneofthetwostatenucleargenerationplants,Monticello’slargestemployerisXcelEnergy. Agri- giantCargillalsomaintainsastrongpresenceinthecity.Thefollowingtableisthecity’stoptenemployers. Average Employment Year Wright County Wright County State of Minnesota 2008 62,830 7.9%5.4% 2009 61,629 8.8%7.8% 2010 64,739 7.5%7.4% 2011 65,228 6.8%6.5% 2012 66,564 5.6%5.6% 2013 67,224 4.7%4.9% 2014 68,091 4.0%4.1% 2015 38,855 3.8%3.6% 2016 69,254 4.3%4.0% 2017 71,796 3.5%3.1% HISTORICAL EMPLOYMENT/UNEMPLOYMENT DATA (Rates are not compiled for individual communities within counties) Average Unemployment Employer Employees Xcel Energy (Northern States)700 ISD No. 882 (Monticello)544 CentraCare Medical Center 500 Cargill Kitchen Sol. (Sunny Fresh)450 Walmart Supercenter 325 Cub Foods 180 Ultra Machine Corporation 173 Home Depot 160 City of Monticello 150 WSI Industries 100 TOP TEN CITY EMPLOYERS 20 Monticello’spopulationandhouseholdsare.2%ofstate’stotalforbothmeasures.WithaWal-Mart,Target, HomeDepot,andMillsFleetFarm,itisnosurprisethatretailsalesperpersonarehigherthanthestate average. Thefollowingtablecontainsselectedfactsonthecity: Thenuclearplantaccountsforapproximately60%ofcity’snettaxcapacity. Xcel’staxcapacityandthe council’sconservativetaxlevyphilosophyaremainreasonsthecitytaxcapacityrateisthelowestinWright County.Indeed,upgradestotheXcelplantin2011contributedto15%declineinthe2013taxcapacityrate. Likewise,Xcelupgradesin2013produceda20percentdeclineinthe2015taxrate.Thetaxbaseisabout one-thirdresidentialandtwo-thirdscommercial.ThefollowingtableliststhetaxratesforeachcityinWright County,Minnesota: People QuickFacts Monticello Minnesota Population, 2016 estimate July 1 13,429 5,576,606 Population, 2010 12,759 5,303,925 Population, percent change, April 1, 2010 to July 1, 2016 4.9%4.1% Persons under 5 years, percent, 2010 10.1%6.7% Persons under 18 years, percent, 2010 30.8%24.2% Persons 65 years and over, percent, 2010 9.5%12.9% Female persons, percent, 2010 50.8%50.4% White persons, percent, 2010 (a)92.6%85.3% Total number of firms, 2012 1,132 489,494 Retail sales per capita, 2012 $26,746 $14,667 Land area in square miles, 2017 8.94 79,626.74 Persons per square mile, 2010 1,427.2 66.6 Housing units, 2010 4,973 2,347,201 Homeownership rate, 2012-2016 71.5%71.7% Median value of owner-occupied housing units, 2012-2016 $169,400 $186,200 Households, 2012-2016 4,822 2,135,310 Persons per household, 2012-2016 2.7 2.49 Per capita money income in the past 12 months (2016 dollars)$27,101 $33,225 Median household income, 2012-2016 $67,752 $63,217 2014 2015 2016 2017 2018 2017-18 2017-18 City Tax Rate Tax Rate Tax Rate Tax Rate Tax Rate Change Change % City of Monticello 44.709 35.737 34.471 33.172 32.326 -0.846 -2.6% City of Otsego 44.575 41.162 37.921 37.852 35.565 -2.287 -6.0% City of St. Michael 41.843 38.476 37.772 37.496 37.025 -0.471 -1.3% City of Hanover 52.141 48.207 48.395 48.152 44.824 -3.328 -6.9% City of Albertville 51.092 51.273 52.370 51.586 49.125 -2.461 -4.8% City of Delano 56.681 54.081 53.520 53.557 54.056 0.499 0.9% City of Rockford 59.032 57.335 56.620 55.170 54.358 -0.812 -1.5% City of Montrose 60.204 57.218 53.365 55.159 57.144 1.985 3.6% City of Dayton 65.600 56.945 57.150 55.467 57.507 2.040 3.7% City of Annandale 71.525 69.012 67.921 63.955 60.024 -3.931 -6.1% City of Buffalo 49.893 52.456 54.838 59.609 60.060 0.451 0.8% City of Maple Lake 57.733 59.139 59.304 65.459 68.514 3.055 4.7% City of Howard Lake 76.180 72.093 71.649 65.998 71.036 5.038 7.6% City of Clearwater 87.259 75.294 75.857 75.226 75.845 0.619 0.8% City of Waverly 93.137 87.064 83.349 82.131 80.229 -1.902 -2.3% City of Cokato 74.684 80.426 77.853 80.773 80.792 0.019 0.0% City of South Haven 137.657 130.381 134.401 135.237 131.644 -3.593 -2.7% CITY TAX RATES IN WRIGHT COUNTY, MINNESOTA 21 Monticellogrewbyapproximately20%inthelasttenyears.Thecityhasampleundevelopedcommercial andresidentialrealestateandispositionedwelltobenefitfrommoreurbanflightfromtheTwinCities. Accesstomajortransportationcorridorsmakesthecityanideallocationforfuturegrowth. Thefollowing tableincludespopulationstatisticsoverthelasttenyears: TheabovestatisticsreflectamoreaccurateCensuscount,whichisthe2011total.Theothercountsare fromthestatedemographer. Year Polulation Change 2008 11,366 113 2009 11,476 110 2010 11,501 25 2011 12,759 1,258 2012 12,840 81 2013 12,901 61 2014 12,993 92 2015 13,125 132 2016 13,311 186 2017 13,409 98 22 MAP FOR MONTICELLO, MINNESOTA 23 CORE VALUES This documentis preparedbythecity’s finance department.Thecorevaluesofthedepartmentserveas aguide forthewaywedeliverinternalandexternalcustomerservices.Thesecorevaluesare howwe conductourselvesandwhatcreatethecultureofthe finance department. Competent (How well we do our jobs) Be open, hardworking, reliable, innovative, safe, and accountable to the public. Courteous (How well we treat others) Work unselfishly in a positive, polite and professional manner for our community and its citizens. Cooperative (How well we work together) Lead by example and work together to achieve the best result. 24 STRATEGIC PLANNING: VISION, MISSION AND GOALS 25 26 27 28 PLANNING PROCESSES The city plans for the long-term needs of our community through a number of efforts and studies. These documents are usually developed by consultants and staff, with numerous public hearings and advisory board meetings prior to their formal adoption by the City Council. Once adopted, city staff works diligently to implement the recommendations and changes outlined in the plans. Here is the status of our primary planning documents: Plans for service provision, facility expansion & maintenance: 1.Monticello Comprehensive Plan - Adopted 2008. The Comprehensive Plan is a tool for guiding the growth, redevelopment, and improvement of Monticello. The Comprehensive Plan outlines the vision for the community. The current plan update was adopted in 2008. Various chapters of the Comprehensive Plan have been amended in part or full since adoption. The professional services line item, under the 2017 planning and zoning budget, includes funds for interpreting and implementing the comprehensive plan.It is anticipated that amendments to the plan will occur as conditions affecting the plan evolve, including those related to Downtown and the Interchange Planning Area. An update to Chapter 3 – Land Use, is planned for 2018-2019. 2.Transportation Plan - Adopted 2011. The city’s Transportation Plan is a guide that: identifies and characterizes the city’s existing transportation system; identifies and discusses general planning factors pertaining to future transportation needs for the city; identifies potential future roadway deficiencies and assesses improvement options to address the deficiencies; and provides an overall plan addressing capital improvement needs, functional classification, jurisdiction, right-of-way issues, bicycle/pedestrian considerations and transit. The Transportation Plan document will be updated as necessary as growth increases. Ongoing major transportation efforts include: TH 25/CSAH 75 Intersection improvements completed in 2016, Fallon Avenue Overpass construction anticipated in 2018, Regional transportation planning to address the TH 25 corridor in 2018/2019, TH 25/7th Street intersection improvements--completed in 2017, future improvements at various intersections. 3.Parks & Pathways Plan - Adopted 2011. Chapter 4 – Parks of the Monticello Comprehensive Plan was amended in 2011 for the adoption of an updated Park and Pathway Plan. The Monticello Parks and Pathways Plan identifies the City’s objectives for Parks and Pathways planning and development, and building on the existing parks infrastructure. It also provides context for the City’s participation in the acquisition and development of the Bertram Chain of Lakes Regional Park. Major Bertram Chain of Lakes improvements are planned for 2019. The General Fund 29 includes $40,000 for annual improvements to existing pathways, which were previously financed by the Park and Pathway Dedication Fund. The City has recently completed a Pathway Connections map, a planning document related to pathway connections within the larger system in direct response to the objectives identified within the plan. 4.Downtown Small Area Plan – Adopted 2017 Chapter 3 – Land Use of the Monticello Comprehensive Plan was amended in 2017 for the adoption of the Downtown Small Area Plan. The Downtown Small Area Plan is an implementation plan which integrates market, transportation, and land use considerations for the purpose of creating a vibrant downtown district. The City and Economic Development Authority will be asked to consider a number of implementation strategies to realize plan goals. 5.Economic Development Strategic Plan - Updated 2018. In 2016, the city adopted a Housing and Redevelopment Authority property tax levy of $280,000. The HRA levy increasess to $323,000 for 2018. The levy is used for EDA redevelopment activities. The EDA has adopted a strategic work plan for 2018, which has been ratified by the City Council. 6.Natural Resource Inventory & Assessment - Adopted 2008. The purpose of the Natural Resource Inventory and Assessment (NRI/A), adopted in 2008, is to identify existing natural resources within the City of Monticello and its growth area (the Monticello Orderly Annexation Area), inventory these resources, and assess the resource quality. These resources are then considered and evaluated during growth/development. 7.Bertram Chain of Lakes Recreation Plan – Adopted 2016. The 2008 Comprehensive Plan and 2011 Park & Pathway Plan recognize the Bertram Chain of Lakes Regional Park as a significant component of the community’s quality of life initiatives. The concept plan for the full regional park and athletic complex was adopted in 2011 as part of the Park and Pathway plan. A Master Plan for the Bertram Chain of Lakes Regional Athletic Complex was approved in 2016. Land acquisition is complete and major improvements are planned to begin in 2019. 8.Storm Water Pollution Prevention Program - Adopted 2007. In 2005 the City of Monticello was designated as a regulated small municipal separate storm sewer system (MS4) under Minnesota Rules, Chapter 7090. This required the City to obtain a National Pollutant Discharge Elimination System/State Disposal System (NPDES/SDS) storm water permit, and to develop and implement a Storm Water Pollution 30 Prevention Plan (SWPPP) to reduce the discharge of pollutants, including sediments, from our storm sewer system to the maximum extent practicable. The City is continuing to implement the required six minimum control measures (MCM’s) as follows: A.Public Education and Outreach, B.Public Participation and Involvement, C.Illicit Discharge Detection and Elimination, D.Construction Site Stormwater Runoff Control, E.Post-Construction Stormwater Management Measures; and, F.Pollution Prevention/Good Housekeeping Measures. Zoning, subdivision, and illicit discharge ordinances were adopted in 2014 related to grading, drainage, erosion control, and storm water management to meet current MPCA requirements per the city’s new MS4 permit issued on January 16, 2014. The permit expires July 31, 2018. The MPCA will reissue the new permit requirements sometime in 2018. 9.Comprehensive Water Resource Management Plan - Updated 2006. The Comprehensive Water Resource Management Plan was developed to meet local watershed management planning requirements of the Metropolitan Surface Water Management Act and Board of Water and Soil Resources Rules 8410. It was developed to be in conformance with the requirements of Metropolitan Council requirements, and applicable State and Federal laws. The plan and its referenced literature is intended to provide a comprehensive inventory of pertinent water resource related information that affects the City and management of those resources. It is anticipated to update the hydraulic model and plan to conform with new stormwater ponding design requirements as a result of the new NOAAA Atlas 14 standard released by the National Weather Service Hydrometeorlogical Design Studies for rainfall frequency estimates. 10.Plan Requirements and Design Guidelines (“Design Manual”) - Updated 2017. These guidelines were established for developers of property within the City of Monticello. The guidelines provide design standards, specifications, and detail plates for the design of infrastructure improvements, street, utility, and site work construction. These guidelines are now referenced in the city’s zoning and subdivision ordinances that were adopted in 2014 related to grading, drainage, erosion control, and storm water management.The Design Manual will be updated as needed as new design regulations and requirements come forth. 31 11.General Specifications and Standard Detail Plates for Street and Utility Construction - Updated 2017. These specifications represent the City’s requirements for construction of public street and utility systems. This document is anticipated to be updated in 2018 with minor modifications. 12.Water System Plan – Adopted 2004. Awaterdistributionsystemmodelwascreatedin2004toevaluatetheexistingwatersystem. The water system plan was then developed using this model to identify water system capital improvements necessary to serve future land use designations in accordance with the City’s Comprehensive Plan. 13.Sanitary Sewer Comprehensive Plan – Adopted 1995. The sanitary sewer comprehensive plans was adopted in 1995 and identified the existing sanitary sewer system and also projected future wastewater flows and service areas based on future land use designations in accordance with the City’s Comprehensive Plan. Several individual sanitary sewer studies were developed after the adoption of this plan in response to development. Future utility studies will likely be needed in response to development. 14.Interchange Planning Study – Pending (2018/2019). The Interchange planning study will determine a reasonable location or locations for a future I-94 Interchange within the city west of TH 25. The 2008 Comprehensive Plan recognizes that the Northwest Monticello, which includes the CSAH39 to Orchard Road corridor, as a primary focus for future development and further cites the Interchange Planning as a critical component of understanding growth potential and land use in the Northwest Area. A land use analysis component related to this study was completed in 2016. The full Interchange Planning study is on hold until the TH 25 area transportation study is complete. 15.Wellhead Protection Plan (Part 1 and 2) - completed 2016. The goal of the Wellhead Protection Plan is to prevent human-caused contaminants from entering the water supply wells and to protect all who use the water supply from adverse health effects associated with groundwater contamination. The preparation of the City’s was required by Minnesota Rules 4720.5100 to 5720.5590. Part 1 was completed in 2015 and Part 2 was completed in 2016. The plan is anticipated to be updated by 2026 as determined by the Minnesota Department of Health. 32 16.TH 25/Regional Transportation Planning Group – Ongoing. A series of meetings have taken place with representatives invited from the City of Big Lake, Big Lake Township, City of Becker, Becker Township, Wright County, Sherburne County, MnDOT District 3 and the City of Monticello to discuss regional transportation planning. A joint power agreement was adopted by the city in December 2015. The TH 25 area transportation study is scheduled to be complete in 2018 and will identify near and long term improvements to the corridor. Plans for Facility and Infrastructure Maintenance: 1.Wastewater Treatment Facility Biosolids Dewatering, Energy Efficiency, Headworks and Site Improvements Feasibility Report – Adopted 2012. Dewatering facility is complete at year-end 2014. The energy-efficient aeration blowers and piping was completed in 2016. This project is financed by the Sewage Fund. Future improvements identified in the Capital Improvement Plan include SCADA system upgrades, Phase 2 facility and site improvements, solids handling improvements and headworks improvements. 2.Wastewater Treatment Phosphorus Reduction Facility Plan – Adopted 2014. Construction began in 2015 and the project was completed in 2017. The facility plan was amended to include replacement of two digester covers. The digester covers are part of the current construction project. The project’s estimated final cost is $3.3 million, financed by a $2.2 million loan and $1.1 million grant, both from the Minnesota Public Facilities Authority. 3.Overall Street Reconstruction Program – Adopted 2004, ongoing as part of capital improvement plan. The 2018-2022 Capital Improvement Plan includes projects related to the program, with various projects located through the city slated for start in 2018. The city held a street reconstruction plan public hearing in June 2015. The 2018 projects with infrastructure and amenities is estimated at $3 million. 4.Transportation Projects TH25/7th Street Intersection Improvements – This project was completed in 2017 and included traffic signal system improvements, including flashing yellow arrows, (estimated at $250,000), northbound and southbound right turn lanes on TH25 and a westbound 7th 33 Street right turn lane (estimated at $1.5 million). This project is included in the capital improvement plan. Fallon Avenue Overpass- This project includes a new bridge overpass over I-94 and three roundabouts. Right-of-way acquisition and design occurred in 2017 and will continue to occur along with construction in 2018. Financial Plans: 1.Annual Budget - Adopted each December. 2.Capital Improvements Plan - Updated and adopted each year; most recently for 2018 - 2022. 34 FINANCIAL POLICIES Theoverallgoalofthecity'sfinancialpoliciesistoestablishandmaintaineffectivemanagementofthecity's financialresources.Formalpolicystatementsandmajorobjectivesprovidethefoundationforachievingthis goal.Accordingly,this sectionoutlines the policies usedinguidingthe preparation andmanagementofthe city'soverallbudgetandthemajorobjectivestobeaccomplished.Inaddition,therationalewhichledtothe establishmentofthefiscalpolicystatementsisalsoidentified. Budget Development & Administration 1.Acomprehensiveannualbudgetwillbepreparedforallfundsexpendedbythecity. Thecitycouncil shall have full authority over the financial affairs of the city and shall provide for the collection of all revenue and other assets, the auditing and settlement of accounts, and the safekeeping and disbursement of public monies and in the exercise of a sound discretion shall make appropriations for the payment of all liabilities and expenses. Inclusionofallfundsinthebudget enablesthecouncil,theadministration,andthepublictoconsiderallfinancialaspectsofcitygovernment whenpreparing,modifying,andmonitoringthebudget,ratherthandealwiththecity'sfinancesona "piecemeal"basis. 2.The budget will be prepared in such a manner as to facilitate its understanding by citizens and elected officials. Oneofthestatedpurposesofthebudgetistopresentapictureofcitygovernmentoperationsand intentionsfortheyeartothecitizensofMonticello.Presentingabudgetdocumentthatisunderstandable tothecitizensfurthersthegoalofeffectivelycommunicatinglocalgovernmentfinanceissuestoboth electedofficialsandthepublic. 3.Budgetaryemphasiswillfocusonprovidingthosebasicmunicipalserviceswhichprovidethe maximumlevelofservices,tothemostcitizens,inthemostcosteffectivemanner,withdue considerationbeinggiventoallcosts--economic,fiscal,andsocial. Adherence to this basic philosophy provides the citizens of Monticello assurance that their governmentandelectedofficialsareresponsivetothebasicneedsofthecitizensandthatitscitygovernment isoperatedinaneconomicalandefficientmanner. 4.The budget will provide for adequate maintenance of capital, plant, and equipment and for their orderly replacement. Allgovernmentalentitiesexperienceprosperoustimesaswellasperiodsofeconomicdecline.In periodsofeconomicdecline,propermaintenanceandreplacementofcapital,plant,andequipmentis generallypostponedoreliminatedasafirstmeansofbalancingthebudget.Recognitionoftheneedfor adequatemaintenanceandreplacementofcapital,plant,andequipment,regardlessoftheeconomic conditions,willassistinmaintainingthegovernment'sequipmentandinfrastructureingoodoperating condition. 35 5.The city will avoid budgetary practices that balance current expenditures at the expense of meeting future year expenditures. Budgetarypracticessuchaspostponingcapitalexpenditures,accruingfutureyears'revenues,or rollingovershort-termdebtarebudgetarypracticeswhichcansolveshort-termfinancialproblems. However,theycancreatemuchlargerfinancialproblemsforfutureadministrationsandcouncils. Avoidanceofthesebudgetarypracticeswillassurecitizensthatcurrentproblemsarenotsimplybeing delayedtoafutureyear. 6.The city will give highest priority in the use of one-time revenues to the funding of capital assets or other non-recurring expenditures. Utilizing one-time revenues to fund on-going expenditures results in incurring annual expenditure obligations, which may be unfunded in future years. Using one-time revenues to fund capital assets or other non-recurring expenditures better enables future administrations and councils to cope with the financial problems when these revenue sources are discontinued, since these types of expenditures can more easily be eliminated. 7.The citywill maintain abudgetary control systemto helpit adhereto the established budget. Thebudgetpassedbythecouncilestablishesthelegalspendinglimitsforthecity.A budgetarycontrolsystem isessentialinordertoensurelegalcompliancewiththecity'sbudget. 8.The city will exercise budgetary control (maximum spending authority) through city council approval of appropriation authority for each appropriated budget unit. Exercisingbudgetarycontrolforeachappropriatedbudgetunitsatisfies requirementsofstate law.Italsoassiststhecouncilinmonitoringcurrentyearoperationsandactsasanearlywarning mechanismwhendepartments deviate inanysubstantivewayfromtheoriginalbudget. 9.Reports comparing actual revenues and expenditures to budgeted amounts will be prepared monthly. Thecity'sbudgetisineffectivewithoutasystem toregularlymonitoractualspendingand revenuecollectionswiththoseanticipatedatthe beginningofthe year.Monthlyreportscomparing actualrevenuesandexpendituresto budgetamounts providethemechanismforthecouncilandthe administrationto regularlymonitorcompliancewiththeadoptedbudget. 10.State Requirement: Truth-in-Taxation The Truth in Taxation (TNT) law requires the city to hold a series of public hearings in order to present the proposed levy and budget, and to provide an opportunity for the public to comment and make recommendations. The city’s proposed general levy has to be certified to the county auditor by September 30th. The city’s proposed HRA (housing and redevelopment levy) must be certified by September 15th. The final levies for both have to be certified by December 29th. 36 Revenue Collection 1.Thecitywillseektomaintainadiversifiedandstablerevenuebase. Acitydependentuponafewvolatile revenuesources isfrequentlyforcedtosuddenlyadjust taxratesoralterexpenditurelevelstocoincidewithrevenuecollections.Establishmentofadiversified andstable revenue base,however,servestoprotectthecityfromshort-termfluctuationsinanyone majorrevenuesource. 2.The city will estimate revenues in a realistic and conservative manner. Aggressive revenue estimates significantly increase the chances of budgetary shortfalls occurringduringtheyear--resultingineitherdeficitspendingorrequiredspendingreductions. Realisticandconservativerevenueestimates,ontheotherhand,willservetominimizetheadverse impactofrevenueshortfallsandwillalsoreducetheneedformid-yearspendingreductions. 3.Thecitywillpursueanaggressivepolicyofcollectingrevenues. Anaggressive policyofcollectingrevenueswillhelpto ensurethecity's revenue estimatesare met,alltaxpayersare treatedfairlyandconsistently,anddelinquenciesarekepttoaminimum. 4.Thecitywillaggressivelypursueopportunitiesforfederalorstategrantfunding. Anaggressivepolicyofpursuingopportunitiesforfederalorstategrantfundingprovidescitizens assurancethatthecityisstrivingtoobtainallstateandfederalfundstowhichitisentitled--thereby reducingdependenceuponlocaltaxpayersforthesupportoflocalpublicservices. 5.User fees and charges will be used, as opposed to general taxes, when distinct beneficiary populations or interest groups can be identified. Userfeesandchargesarepreferabletogeneraltaxesbecauseuserchargescanprovideclear demandsignalswhichassistindeterminingwhatservicestooffer,theirquantity,andtheirquality.User chargesarealsomoreequitable,sinceonlythosewhousetheservicemustpay--therebyeliminatingthe subsidyprovidedbynonuserstousers,whichisinherentingeneraltaxfinancing. 6.Userfeeswillbecollectedonlyifitiscost-effectiveandadministrativelyfeasibletodoso. User fees are often times costly to administer. Prior to establishing user fees, the costs to establish and administer the fees will be considered in order to provide assurance that the city's collection mechanisms are being operated in an efficient manner. Expenditures and Payments 1.On-goingexpenditureswillbelimitedtolevelswhichcanbesupportedbycurrentrevenues. Utilizationofreservestofundon-goingexpenditureswillproduceabalancedbudget,however, thispracticewilleventuallycauseseverefinancialproblems.Oncereservelevelsaredepleted,thecity wouldfaceeliminationofon-goingcostsinordertobalancethebudget.Therefore,thefundingofon- goingexpenditureswillbelimitedtocurrentrevenues. 37 2.Minor capital projects or recurring capital projects, which primarily benefit current residents, will be financed from current revenues. Minorcapitalprojectsorrecurringcapitalprojectsrepresentrelativelysmallcostsofanon-going nature,andtherefore,shouldbefinancedwithcurrentrevenuesratherthanutilizingdebtfinancing.This policyalsoreflectstheviewthatthosewhobenefitfromacapitalprojectshouldpayfortheproject. 3.Major capital projects, which benefit future as well as current residents, will be financed with current revenues as well as other financing sources (e.g. debt financing). This policy reflects the view that those who benefit from a capital project should pay for the project. 4.Major capital projects, which benefit future residents, will be financed with other financing sources (e.g. debt financing). Majorcapitalprojectsrepresentlargeexpendituresofanon-recurringnaturewhichprimarily benefitfutureresidents.Debtfinancingprovidesameansofgeneratingsufficientfundstopayforthecosts ofmajorprojects.Debtfinancingalsoenablesthecostsoftheprojecttobesupportedbythosewho benefitfromtheproject,sincedebtservicepaymentswillbefundedthroughchargestofutureresidents. 5.Constructionprojectsandcapitalexpendituresof$10,000ormorewillbeincludedinthe CapitalImprovementProgram(CIP);minorcapitaloutlaysoflessthan$10,000willbeincludedin theregularoperatingbudgetassmalltoolsandequipmentorrepairsandmaintenance. TheCapitalImprovementProgram(CIP)differentiatesthefinancingofhighcostlong-livedphysical improvementsfromlowcost"consumable"equipmentitemscontainedintheoperatingbudget.CIPitems maybefundedthroughdebtfinancingorcurrentrevenueswhileoperatingbudgetitemsareannualor routineinnatureandshouldonlybefinancedfromcurrentrevenues. 6.SpendingPolicy:Thecitywillspenditsresourcesinthefollowingorder.Resourceswillbe categorizedaccordingtoGenerallyAcceptedAccountingPrinciples(GAAP)forstateandlocal governments,withthefollowinggeneraldefinitions: Restricted -- Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government) through constitutional provisions or by enabling legislation. Committed--Amountsconstrainedtospecificpurposesbythecitycouncil; tobe reported ascommitted,amountscannotbe usedforanyotherpurposeunlessthecitycouncil takesactionto removeorchange theconstraint. Assigned -- Amounts the city intends to use for a specific purpose; intent can be expressed by the council or by an official or body to which the council delegates the authority. The city council can delegate this authority to the city administrator. Unassigned -- Amounts that are available for any purpose; these amounts are reported only in the General Fund. 38 When both restricted and unrestricted resources are available, spending will occur in the following order, for the identified fund types: FundType Orderof Spending GeneralFund 1.Restricted 2.Committed 3.Assigned 4.Unassigned ThecitycouncilhastheauthoritytoexpressassignmentsintheGeneralFund. Special Revenue Funds 1.Restricted 2.Committed 3.Assigned Thecitycouncilhastheauthoritytoexpressassignmentsinspecial revenue funds. Debt Service Funds 1.Assigned 2.Committed 3.Restricted Thecitycouncilhastheauthoritytoexpressassignmentsindebt service funds. Capital Projects Funds 1.Restricted 2.Committed 3.Assigned Thecitycouncilhastheauthoritytoexpressassignmentsincapital project funds. Debt Administration 1.The city will limit long-term debt to capital improvements which cannot be financed from current revenues. Incurringlong-termdebtservestoobligatefuturetaxpayers.Excessrelianceonlong-termdebt cancausedebtlevelstoreachorexceedthegovernment'sabilitytopay.Therefore,conscientioususeof long-termdebtwillprovideassurancethatfutureresidentswillbeabletoservicethedebtobligationsleft byformerresidents. 2.The city will repay borrowed funds, used for capital projects, within a period not to exceed the expected useful life of the project. Thispolicyreflectstheviewthatthoseresidentswhobenefitfromaprojectshouldpayforthe project.Adherencetothispolicywillalsohelppreventthegovernmentfromover-extendingitselfwith regardtotheincurrenceoffuturedebt. 39 3.Thecitywillnotuselong-termdebtforfinancingcurrentoperations. Thispolicyreflectstheviewthatthoseresidentswhobenefitfromaserviceshouldpayforthe service.Utilizationoflong-termdebttosupportcurrentoperationswouldresultinfutureresidents supportingservicesprovidedtocurrentresidents. 4.ThecityofMonticellowilladheretoapolicyoffullpublicdisclosurewithregardtotheissuanceof debt. Fullpublicdisclosurewithregardtotheissuanceofdebtprovidesassurancethattheincurrenceof debt, for which the public is responsible, is based upon a genuine need and is consistent with underwriter guidelines. Reserves and Fund Balances 1.ReservesandFundBalanceswillbeproperlydesignatedintothefollowingcategories: Nonspendable fundbalance--Amountsthatare notinaspendable form (suchas inventory)orare requiredtobemaintainedintact(suchasthecorpusofan endowmentfund). Restricted fund balance -- Amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government) through constitutional provisions or by enabling legislation. Committed fund balance -- Amounts constrained to specific purposes by the city council; to be reported as committed, amounts cannot be used for any other purpose unless the city council takes action to remove or change the constraint. Assigned fund balance -- Amounts the city intends to use for a specific purpose; intent can be expressed by the council or by an official (city administrator or finance director) or body to which the council delegates the authority. Unassigned fund balance -- Amounts that are available for any purpose; these amounts are reported only in the General Fund or a deficit in other fund types. 2. Aminimumlevelofgeneralfundreserveequalto65%ofannualoperatingexpendituresornoless thansixmonthsofoperatingexpenditureswillbemaintainedbythecity.Thisreserveiscommittedtobe usedforcashflowpurposes,unanticipatedequipmentacquisitionandreplacement,andtootherwise enablethecitytomeetunexpectedexpendituredemands(naturaldisasters,catastrophicevents,etc.)or revenueshortfalls. Propertytaxesrepresentthecity'sprimarysourceofgeneralfundrevenue.Propertytaxesare collectedinJuneandDecemberofeachfiscalyear.Sincethecity'sfiscalyearbeginsonJanuary1st,thecity mustmaintainanadequatecashbalanceinordertomeetitsexpenditureobligationsbetweensemi- annualcollectionsofpropertytaxes. Accrued employee payroll benefits, such as sick leave, vacation or paid-time off, represent a significant obligation of the city. The city will maintain sufficient reserves to meet its annual expenditure obligations. 40 Thecityrecognizestheneedtomaintainadequateequipmentinordertocarryoutrequiredpublic services.Equipmentacquisitionandreplacementrepresenton-goingcostsofarelativelyminornature,as comparedtomajorcapitalpurchases.ThecityplansforequipmentreplacementwithintheCapital ImprovementProgram.However,unforeseenequipmentproblemswillarise.Thereservewillprovide resourcesfortheimmediate,unanticipatedreplacementofcriticalequipment. Thecityissubjecttorevenueshortfallsandunexpectedexpendituredemandsduringthefiscalyear. Anunassignedgeneralfundreservewillbemaintainedtobeabletooffsettheserevenueshortfallsormeet unexpecteddemandsoccurringduringtheyear,withoutsuddenlyadjustingtaxratesorreducing expenditures. Financial Reporting & Accounting 1.ThecitywillmanageandaccountforitsfinancialactivityinaccordancewithGenerallyAccepted AccountingPrinciples(GAAP)assetforthbytheGovernmentalAccountingStandardsBoard(GASB). GASBisrecognizedastheauthoritywithrespecttogovernmentalaccounting.Managingthe city'sfinancesinaccordancewithGAAPandinaccordancewiththerulessetforthbyGASB,providesthe Monticellocitizensassurancethattheirpublicfundsarebeingaccountedforinapropermanner. 2.Thecitywillmaintainitsaccountingrecordsforgeneralgovernmentaloperationsonamodified accrualbasis,withrevenuesrecordedwhenavailableandmeasurable,andexpendituresrecordedwhen servicesorgoodsarereceivedandliabilitiesincurred.Accountingrecordsforproprietaryfundtypesand similartrustfundswillbemaintainedonanaccrualbasis,withallrevenuesrecordedwhenearnedand expensesrecordedatthetimeliabilitiesareincurred,withoutregardtoreceiptorpaymentofcash. Adherencetothispolicywillenablethecitytoprepareitsfinancialstatementsinaccordancewith GenerallyAcceptedAccountingPrinciplesassetforthbytheGovernmentalAccountingStandardsBoard. 3.ThecityofMonticellowillprepareaComprehensiveAnnualFinancialReport(CAFR)inconformity withGenerallyAcceptedAccountingPrinciples(GAAP).Thereportwillbemadeavailabletothegeneral public.TheCAFRshallbepreparedinaccordancewiththestandardsestablishedbytheGFOAforthe CertificateofAchievementforExcellenceinFinancialReportingProgram TheCertificateofAchievementrepresentsasignificantaccomplishmentforagovernmentandits financialleadership.Theprogramencouragesgovernmentstoprepareandpublishaneasilyreadableand understandablecomprehensiveannualfinancialreportcoveringallfundsandfinancialtransactionsofthe governmentduringtheyear.TheCAFRprovidesuserswithawidevarietyofinformationusefulin evaluatingthefinancialconditionofagovernment.Theprogramalsoencouragescontinuedimprovement inthecity'sfinancialreportingpractices. 4.The city will ensure the conduct of timely, effective, and annual audit coverage of all financial records in compliance the Local, State, and Federal law. Auditsofthecity'sfinancialrecordsprovidethepublicassurancethatitsfundsarebeingexpended inaccordancewithLocal,State,andFederallawandinaccordancewithGenerallyAcceptedAccounting 41 Principles.Auditsalsoprovidemanagementandthecitycouncilwithsuggestionsforimprovementinits financialoperationsfromindependentexpertsintheaccountingfield. 5.ThecityofMonticellowillmaintainapolicyoffullandopenpublicdisclosureofallfinancialactivity. Fullandopenpublicdisclosureofallfinancialactivityprovidesthepublicwithassurancethatits electedofficialsandadministratorscommunicatefullyallfinancialmattersaffectingthepublic. 6.Themodifiedaccrualbasisofaccountingandbudgetingisusedforthegovernmentalfunds.Under themodifiedaccrualbasisofaccounting,revenuesarerecordedwhensusceptibletoaccrual,i.e.,both measurableandavailable.Availablemeanscollectiblewithinthecurrentperiodorsoonenough thereaftertobeusedtopayliabilitiesofthecurrentperiod.Expendituresarerecordedwhentherelated liabilityisincurred.Employeecompensatedabsencesandprincipalandinterestonlong-termdebt expendituresarerecordedwhendueinthecurrentperiod.Theaccrualbasisofaccountingisusedfor ProprietaryFunds.Underthismethod,revenuesarerecordedwhenearnedandexpensesarerecorded whentherelatedliabilityisincurred.Forbudgetpreparationandpresentation,theproprietaryfunds’ expensesareconvertedtoexpendituresandfollowthesamebudgetformatasthegovernmentfund types.Capitaloutlaysintheenterprisefundsarepresentedasexpensesforbudgetbasis,butare recordedasassetsalongwithassociateddepreciationexpenseontheGAAPbasis.Debtserviceprincipal paymentsintheenterprisefundsareaccountedforasexpensesforbudgetpurposes,butarereportedas reductionoflong-termdebtliabilityontheGAAPbasis. Recording capital outlays and principal payments on long-term debt as expenditures for budget purposes, presents a clearer picture of the city’s financial operations, is easier to administer for cash flow purposes, and is easier for the lay person to understand. Cash Management & Investment SCOPE This policy applies to all activities with regards to managing and investing the financial assets of the city of Monticello. This policy pertains to the financial assets of all funds including the General Fund, special revenue funds, capital project funds, debt service funds, enterprise funds, and internal service funds. The covered funds are defined in the city’s Comprehensive Annual Financial Report. Except for cash in certain restricted and special funds, the city of Monticello consolidates all cash balances from all funds into one central set of accounts. Each fund’s participation in this cash pool is denoted by its equity-in-pooled-cash account. Investment income is allocated to the various funds based upon the average monthly balance of each fund’s account. Use of this pooling-of-funds method of accounting allows the city of Monticello to manage its cash more efficiently and to maximize its investment earnings. OBJECTIVES The primary objectives, in priority order, of city of Monticello’s investment activities shall be safety, liquidity, and yield: 42 a.Safety Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. 1.Credit Risk The city will minimize credit risk by Limiting investments to the safest types of securities; Pre-qualifying the financial institutions, brokers/dealers, intermediaries, and advisers with which the city of Monticello will do business; and Diversifying the investment portfolio so that potential losses on individual securities will be minimized. 2.Interest Rate Risk The city will minimize interest rate risk by: Structuring the investment portfolio so that securities invested from operating funds mature to meet cash requirements for ongoing operations, thereby minimizing the need to sell securities on the open market prior to maturity; and Investing operating funds primarily in shorter-term maturities, money market funds, or similar investment pools. b.Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This will be accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands (static liquidity). In addition, since all possible cash demands cannot be anticipated, the portfolio shall consist largely of securities with active secondary or resale markets (dynamic liquidity). c.Yield The city of Monticello’s investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, commensurate with Monticello’s investment risk constraints and the cash flow characteristics of the portfolio. Return on investment is of least importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall not be sold prior to maturity with the following exceptions: a declining credit security may be sold early to minimize the loss of principal; a security may be sold to maximize gain, when appropriate; a security swap may be appropriate to improve the quality, yield, or target duration in the portfolio; or a security may be sold based upon liquidity demands of the portfolio. 43 AUTHORITY Management responsibility for the investment program and for ensuring compliance with this policy is hereby delegated to the finance director and is derived from Minnesota statutes and Mayor & Council actions. The finance director shall be responsible for all transactions undertaken and shall establish a system of procedures and internal controls for the operation of the investment program consistent with this policy. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the finance director. All participants in the investment process shall seek to act responsibly as custodians of the public trust. No officer or designee may engage in an investment transaction except as provided under the terms of this policy and supporting procedures. The finance director shall establish written statements of investment policy procedures for the operation of the investment program consistent with this policy. Such procedures shall include explicit delegation of authority for persons responsible for investment and cash management transactions. The finance director is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the city of Monticello are protected from loss, theft, or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to be derived and that the valuation of costs and benefits requires estimates and judgments by management. The internal controls shall address the following points at a minimum: control of collusion, separation of transaction authority from accounting and recordkeeping, custodial safekeeping, avoidance of physical delivery securities, clear delegation of authority to subordinate staff members, written confirmation of transactions for investments and wire transfers, dual authorizations of wire transfers, staff training, and review, maintenance and monitoring of security procedures both manual and automated. The city may engage the services of one or more external investment managers to assist in the management of the city’s investment portfolio in a manner consistent with the city’s objectives. Such external managers may be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. Such managers must be registered under the Investment Advisers Act of 1940. ETHICS & CONFLICTS OF INTEREST The finance director and other employees involved in the investment process shall refrain from personal financial activity that could conflict with the proper execution and management of the investment program, or which could impair their ability to make impartial investment decisions. The finance director and other employees involved in the investment process shall disclose to the Mayor & Council any material financial interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the city’s portfolio. The finance director and other employees involved in the investment process shall subordinate their personal investment transactions to those of the city of Monticello shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the city. 44 PRUDENCE The general investment policies of the city of Monticello will be guided by the "prudent person" standard. Those with investment responsibility for public funds are fiduciaries and, as such, shall exercise the judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The standard of prudence shall be applied in the context of managing the overall portfolio. Investment officers, acting in accordance with this investment policy and exercising due diligence, shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided significant deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. Investment officers acting in good faith are not personally liable for investment or deposit losses. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The finance director shall designate and maintain a list of financial institutions and depositories authorized to provide investment services. In addition, a list will also be maintained of approved security brokers/dealers that maintain an office within the State of Minnesota. These may include "primary" dealers or regional dealers that qualify under Security and Exchange Commission's Uniform Net Capital Rule (Rule 15C3-1). The Mayor & Council shall designate the financial institution for the city’s operating account. All financial institutions and brokers/dealers that wish to become qualified bidders for investment transactions must supply the following: a copy of the latest audited financial statements demonstrating compliance with state and federal capital adequacy guidelines proof of state registration, evidence of adequate insurance coverage, certification of having read, understood, and agree to comply with Monticello’s Cash Management and Investment Policy, proof of National Association of Securities Dealers (NASD) or Financial Industry Regulatory Authority (FINRA) certification (brokers/dealers only), and completed broker/dealer questionnaire (brokers/dealers only). An annual review of the financial condition and registration of qualified financial institutions and broker/dealers may be conducted by the finance director. Financial institutions, which serve as depositories of city funds, shall comply with all prevailing provisions of Minnesota statutes and shall meet the established criteria for overall financial strength, adequate capitalization, appropriate liquidity, and proper collateralization to reasonably ensure the safety and availability of such deposits. To monitor and assess the overall financial strength of current and potential depositories, the city will utilize third-party rating agencies. 45 AUTHORIZED AND SUITABLE INVESTMENTS Authorized investments for municipalities in Minnesota are stipulated in Minnesota State Statutes. Although the following lists of authorized and prohibited investments for the city of Monticello is slightly more restrictive than what is allowed under state law, it is in full compliance with Minnesota State Statutes. The finance director is authorized to invest in the following: Demand deposits, of commercial banks, saving and loan associations, and federal savings banks authorized to do business in the State of Minnesota and authorized as described above, and to the extent that the deposit is fully insured by the Federal Deposit Insurance Corporation or collateralized as required in Minnesota State Statutes. Time deposits and certificates of deposit of commercial banks, saving and loan associations, and federal savings banks authorized to do business in the United States or its territories to the extent that the investment is fully insured by the Federal Deposit Insurance Corporation or collateralized as required in Minnesota State Statutes. Governmental bonds, notes, bills, mortgages, and other securities, which were direct obligations or are guaranteed or insured issues of the United States, its agencies, its instrumentalities, or organizations created by an act of Congress, excluding mortgage-backed securities State and local government obligation as follows: an obligation of the State of Minnesota or any of its municipalities, obligation of other state and local governments that have taxing power, and are rated “A” or better by a national bond rating service. general obligations of the Minnesota Housing Finance Agency that are rated “A” or better by a national bond rating service. 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, 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. 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 and Council is required before the finance director is authorized to enter into a repurchase agreement. 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. 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 46 provide the governmental entity a non-penalized right of withdrawal of the investment if the credit quality of the investment is downgraded. 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. Money market funds consisting of United States Treasury Obligations and/or Federal Agency Issues. PROHIBITED INVESTMENTS The finance director is currently prohibited from investing in securities that are considered highly sensitive, including the following: Purchases on margins or short sales. Derivative securities that are, in effect, a leveraged bet on future movements of interest rates or some price index. Mortgage-backed securities due to their complexity and prepayment rate uncertainty. Reverse repurchase agreements (lending securities with an agreement to buy them back after a stated period of time). COLLATERALIZATION The provisions of Minnesota State Statutes require that banks and savings and loan institutions collateralize all deposits of public funds. The city also requires collateralization of time deposits and repurchase agreements. Banks and savings and loan associations are authorized to use any of the investments as specified by Minnesota State Statutes as collateral. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 110%of the market value of principle and accrued interest. Collateral will always be held by a third party. A clearly marked evidence of ownership (safekeeping receipt) will be supplied to the city and retained. SAFEKEEPING AND CUSTODY Pledged collateral consisting of instruments of the United States Government, U.S. government agencies, and U. S. government sponsored enterprises will be safe kept at a Federal Reserve Bank Branch. Other acceptable collateral that cannot be held by the Federal Reserve shall be held by a non-affiliated, independent, third-party safekeeping institution with whom the city has a current custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) will be supplied to the city and retained. The right of collateral substitution upon prior notification and acceptance by the city is granted. All securities transactions, including collateral for repurchase agreements shall be conducted on a delivery-versus-payment (DVP) basis to ensure that securities are deposited in the city’s safekeeping institution prior to the release of funds. 47 DIVERSIFICATION Diversification of investments reduces overall portfolio risks while attaining market average rates of return. The city of Monticello will diversify its investments by security type, sector (excluding U.S. Treasury securities), maturity, and institution. With the exception of U.S. government securities, U.S. government agency securities, U.S. government sponsored enterprise securities, certificates of deposit, collateralized bank money market accounts, and authorized local government investment pools, no more than 25% of the city of Monticello’s total investment portfolio will be invested in a single security type. To provide assurance that the city will be able to continue financial operations without interruption and dependent upon interest rates, satisfaction with services, and practicality, the city of Monticello may utilize more than one financial institution as its depository. MAXIMUM MATURITIES To the extent possible, the city of Monticello will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the city will not directly invest from operating funds in securities maturing more than five (5) years from the date of purchase. However, the city of Monticello may collateralize its repurchase agreements using longer-dated investments not to exceed fifteen (15) years to maturity. Reserve funds and other funds with longer-term investment horizons may be invested in securities exceeding five (5) years if the maturity of such investments is made to coincide as nearly as practicable with the expected use of funds. No investment shall have a maturity exceeding twenty (20) years from the time of purchase. The intent to invest securities with longer maturities shall be approved by the finance director. Because of the inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio shall be continuously invested in readily available funds such as demand accounts, local government investment pools, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations. The city will not actively buy and sell investments, but realizes the risk of not seeking higher market returns for longer maturities outweighs occasional liquidity demands exceeding cash and money market investments. PERFORMANCE STANDARDS The investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a market average rate of return during a market/economic environment of stable interest rates. The finance director will establish a series of appropriate benchmarks which portfolio performance shall be compared on a regular basis. The benchmarks shall be reflective of the actual securities being purchased and risks undertaken and the benchmarks shall have a similar weighted average maturity and credit profile as the portfolio. REPORTING The finance director will maintain investment reports that provide a clear picture of the status of the current investment portfolio. The report shall include a management summary that will allow the city 48 of Monticello to ascertain whether investment activities during the reporting period have conformed to the investment policy. Information contained within the reports shall include the following: A listing of the individual securities held at the end of the reporting period by authorized investment category. Term and maturity date of all investments listed. Par value and current market value of all investments listed. Yield to maturity or worse call of portfolio investments. Percentage of portfolio represented by each investment category. POLICY CONSIDERATIONS Any investment currently held that does not meet the guidelines of this policy shall be exempted from the requirements of this policy. At maturity or liquidation, such monies shall be reinvested only as provided by this policy. This Statement of Cash Management and Investment Policy shall be adopted by motion/resolution of the city’s Mayor & Council. The finance director and city administrator will review this policy annually. Any modifications made to this policy must be approved by resolution of the Mayor and Council. 49 FINANCIAL STRUCTURE To better understand this budget document, a basic understanding of the structure, often-used terms, and fund types is helpful. The city’s operating expenditures are organized in to the following hierarchical categories: fund department, activity, and budget units. Fund:Funds (specific or general purpose) represents the highest level of summarization used in the city’s financial structure. This level is primarily used for entity-wide financial reporting and for summarization in this budget document. Department: Department is the second level of summarization used in the city’s financial structure. The function classification represents a grouping of related operations and programs aimed at accomplishing a broad goal or providing a major service. Departments (Functions) General Government PublicSafety PublicWorks RecreationandCulture Other Activity:Departmentscanbefurthersplitintodivisionswhichareusuallyassociatedwithfunctioningwork groupsthathavemorelimitedsetsofworkresponsibilities.Theirprimarypurposeisorganizationaland budgetaryaccountability. Budget Unit: Activities may be further subdivided into budget units. A budget unit is used to account for a specific service performed within an activity in the pursuit of individual goals and objectives. A budget unit is aimed at accomplishing a specific service or regulatory program for which a government is responsible. GOVERNMENTAL FUND TYPES General Fund:The general fund is used to account for all financial resources of the city, except for those required to be accounted for in another fund. The general fund supports such basic services as the legislative branch, judicial branch, general administration, police, fire, finance, streets, engineering, recreation, and library services. RevenueSources:Thecity'sGeneralFundisfinancedprimarilybypropertytaxeswhichprovideover 80% of the general fund revenue. Other revenue sources include: licenses and permits, intergovernmental revenue, charges for services, fines and forfeitures, interest on investments, operating transfers, and miscellaneousrevenues. 50 Special Revenue Funds:Special revenue funds are used to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or for major capital projects) that are legally restricted or committed to expenditure for specific purposes. Special revenue funds support economic developmentprograms,designateduserfee basedcommunityactivities,insurance costs,retirementcosts, planningfunctions,andotherserviceslegallyrestrictedforspecificpurposes. Revenue Sources: Special revenue funds are supported either through property taxes or through grants or other restricted revenue sources. An example of a special revenue fund supported by property taxes includes the Monticello Community Center. An examples of a special revenue fund supported by grantsorotherrestrictedrevenuesourcesincludetheEconomicDevelopmentAuthorityFund. DebtServiceFunds:Debtservicefundsare usedtoaccountforthe accumulationofresourcesfor,andthe paymentof,generallong-termdebtprincipalandinterest.Debtservicefundsprovidefinancingforavariety ofthecity'sgeneralobligationimprovementandrevenuebonds. Revenue Sources: Debt service funds are supported with special assessments, access and utility fund transfers, propertytaxes,andinterestoninvestments. Capital Project Funds:Capital project funds are used to account for financial resources to be used for the acquisitionorconstructionofmajorcapitalfacilities(otherthanthosefinancedbyproprietaryfunds). Revenue Sources: Capital project funds are supported by long-term debt proceeds, special assessments, donations, state and federal grants, operating transfers from other funds, and impact fees. PROPRIETARY FUND TYPES Enterprise Funds:Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises--where the intent of the governing body is that the costs (expenses,includingdepreciation)ofprovidinggoodsorservicestothegeneralpubliconacontinuingbasis be financed or recovered primarily through user charges. Enterprise funds account for the city's water, sewage,liquorstore,DMV,andfiberopticsservices. Revenue Sources: Enterprise funds are supported through user charges, sale of goods, penalties, and interest income. InternalServiceFunds:Internalservicefundsareusedtoaccountforthefinancingofgoodsorservices provided by one department to other departments on a cost-reimbursement basis. Internal service funds account for the city's capital equipment internal leasing program and IT Service. These funds were authorized for implementation in 2013. Revenue Sources: Internalservicefunds are supportedthroughcharges tootherbudgetunits based on lease payments or level of provided services. 51 FUND BALANCESINEACHFUND TYPE In governmental funds, fund balance is typically defined as current assets less current liabilities. Unlike governmentalfunds,enterprisefundsfocusonthedeterminationofoperatingincome,changesinnetposition (or cost recovery), financial position, and cash flows. Enterprise funds use an accrual basis of accounting for financial reporting purposes. A modified accrual basis will be used for budgeting purposes in this report. Consequently,thebottomlineforeachenterprisefundislabeledfundbalanceratherthannetposition,which includescapitalassets,long-termdebtandothernoncurrentitems.Fundbalanceinenterprisefundsisroughly thesameasworkingcapital. USEFULTERMS To better assist readers in understanding the budget document, a basic knowledge of the following terms is useful: A FUND isafiscalandaccountingentitywithaself-balancingsetofaccountsrecordingcashandother financialresources,togetherwithallrelatedliabilitiesandresidualequitiesorbalances,andchanges therein.Fundsaresegregatedforthepurposeofcarryingonspecificactivitiesorattainingcertain objectivesinaccordancewithspecialregulations,restrictions,orlimitations.Fundsinthegovernment modelareclassifiedintothreebroadcategories:governmental,proprietary,andfiduciary. The most common reason for establishing a fund is to separately account for restricted-use revenue or to comply with state or federal law. A DEPARTMENT is an organizational or budgetary breakdown which is found within city funds. Each department serves a specific function as a distinct organizational unit of government within the given fund. Its primary purpose is to facilitate organizational and budgetary accountability. An OBJECT OF EXPENDITURE refers to specific, detailed expenditure classification. It relates to a specific typeofitempurchasedorserviceobtained.Examplesofobjectsofexpenditureincludesalaries,supplies, contractedservice,travel,etc. Thecity’sfinancialoperationsandfundstructureconformwithGenerallyAcceptedAccountingPrinciples (GAAP).Thefundsaregroupedbyfundtype(General,SpecialRevenue,DebtService,CapitalProjects, Enterprise,andInternalService).Allofthecity’sfundsarebudgeted. A CAPITALEXPENDITURE occurswhenacapitalassetispurchased.CAPITALASSETS areusedinoperations andhaveinitialusefullivesextendingbeyondasinglereportingperiod.Theseassetsmustalsomeet capitalizationthresholds,whichvarybyassetclassificationandtypicallycostsmorethan$10,000.Land, improvementstoland,vehicles,machinery,equipment,infrastructureandothertangibleandintangible assetsusedinoperationsareexamplesofcapitalassets.Expendituresthatdonotbenefitmorethanone reportingperiodormeetthecapitalizationthresholdsareclassifieda CURRENTEXPENDITURE. 52 MATRIX OF FUNDS AND BUDGET UNITS Allcapitalprojectfundswerecombinedforthis presentation.Parkoperationsis responsibleforthe CemeteryFund,whichisnotincludedintheMatrix.Principalandinterestpaymentsondebtoccurin theDebtServiceFund(comprisedofsubfunds),SewageFund,andCentralEquipmentFund. Community Capital Park &Liquor Deputy Water &Fiber IT Central Benefit EXPENDITURES General Center EDA Projects Pathway Store Registrar Sewage Optics Services Equipment Accrual GENERAL GOVERNMENT Mayor and Council ●●● City Administration ●●● City Clerk ●●● Finance ●●●●●●●● Audit ● City Assessing ● Legal ● Human Resources ●●● Planning & Zoning ●●●●● City Hall ●●● Prairie Center Building ●● Economic Development ●●● PUBLIC SAFETY Law Enforcement ● Fire & Rescue ●●●● Fire Relief ● Building Inspections ●●● Civil Defense ●●● Animal Control ● National Guard ● PUBLIC WORKS PW Administration ●●●● Engineering ●●●●● PW Inspecitons ●●●● Streets & Alleys ●●●● Ice & Snow ●● Shop & Garage ●●●● Stormwater ●●● Street Lighting ●●● Refuse Collection ● Water Utility ●● Sewage Utility ●● TRANSIT Bus ● RECREATION AND CULTURE Senior Center ● Park Operations ●●●● Park Improvements ●●● Park Ballfields ●● Shade Tree ●● Library ● Fiber Optics ●● Community Center ●● OTHER FINANCING USES ●●●●●● FUND 53 OPERATING FUND CROSSWALK OperatingFundCrosswalk Thismatrixshowstherelationshipbetweenfunctionalunitsandfunds.Forexample,thePublic Works DepartmenthassomeauthorizedappropriationsintheGeneralFund,fivecapitalprojectfunds,andtwo enterprisefunds.Public Worksisalso responsibleforthecity’sparks. The city contracts with Wright County for law enforcement services and maintains a volunteer Fire Department. Administration and Finance provide staff support for both functions. Community Development provides staff for building inspections. Public Community Community Operating Fund Administration Finance Works Center Development General Fund x x x x Special Revenue Funds Economic Development x x Cemetery x Minnesota Investment x Monticello Community Center x Debt Service Funds x Capital Project Funds Capital Project x x x x Closed Bond Fund x Park & Pathway Dedication x x Stormwater Access x Street Lighting Improvement x Street Construction x Enterprise Funds Water x Sewage x Liquor x Deputy Registrar x Fiber Optics x Internal Service Funds IT Services x Central Equipment x Benefit Accrual x Administration of Fund 54 THE BUDGET PROCESS ThecityofMonticellobudgetservesseveralpurposes. For the citizens of the city of Monticello, it presents a picture of the city government operations and intentions for the year. Forthe citycouncil,itservesasapolicytoolandasanexpressionofgoalsandobjectives. For citymanagement,itis usedasanoperatingguideandacontrolmechanism. The city'sbudgetencompassesboththeoperatingbudgetandthe capitalimprovementbudget.Each budget unit includes amounts appropriated for both operating expenses and capital items. Accompanying narrative for each budget unit/find briefly explains the items included in the budget. BASISOFBUDGETING Thecity’saccountsareorganizedonthebasisoffunds,eachofwhichisconsideredaseparateentity.The operationsofeachfundareaccountedforwithaseparatesetofself-balancingaccountsthatcompriseits assets,deferredinflow/outflows,liabilities,fundequity,revenuesandexpenditures/expenses. Governmentalfunds(theGeneralFundandspecialrevenue,debtservice,andcapitalprojectfunds)use themodifiedaccrualbasisforbudgetingandaccounting.Revenuesarerecognizedintheaccountingperiod inwhichtheybecomeavailableandmeasurable.Expendituresarerecognizedwhenliabilitiesareincurred. Proprietaryfunds(EnterpriseandInternalServicefunds)usethemodifiedaccrualbasisforbudgetingand theaccrualbasisforaccounting. Forexample,accrualbasisaccountingdifferswiththemodifiedaccrual basisbyrecordingexpensesfordepreciationandcompensatedabsencesbutnotdebtprincipalpayments. Eachproprietaryfund’sfinancialstatements,locatedinthecity’sComprehensiveAnnualFinancialReport (CAFR),arereportedonthefullaccrualbasis.Intheaccrualbasisofaccounting,revenuesarerecognizedin theaccountingperiodinwhichtheyareearned.Expensesarerecognizedintheaccountingperiodinwhich theyareincurred. BUDGET DEVELOPMENT PROCESS AftersubmittingtheCityAdministrator-FinanceDirectorRecommendedBudgetto thecitycouncil,public work sessions are held by the councilors. At this time the city administrator, finance director, and departmentheadsexplainthebudgetrecommendationsandunderlyingjustificationfortherequests.The councilalsoreviewsdepartmentalrequestswhichcouldnotbefunded,as anindicationofun-metneeds. During or following the work sessions, the councilors may make adjustments to the proposed budget. Followinganyadjustmentsto therecommendedbudget,atentativeappropriationresolutionis prepared and a public hearing is held. The Council may again make adjustments to the budget following the public hearing,afterwhichtime,theCouncilpassestheappropriationresolutioninfinalform. Appropriationsareestablishedbybudgetunit.Theaccountingsystem,budgetingsystem,andthebudget document itself, however, break these classes into subclasses--thereby providing more detailed information.Asanexample,operatingsupplies,gasandoil,andsubscriptionsareallclassifiedasoperating expenses. The accounting and budgeting systems provide detail for these specific sub-classes. However, appropriationcontrolisexercisedonlyatthebudgetunitlevel. 55 BUDGET CALENDAR/PROCEDURES The following budget timeline outlines the process the city customarily follows for creation and adoption of the annual budget. Date Activity June12, 2017 2018-2022 capitalequipment/projects (CIP) worksheets and budget worksheets to departmentheads. July 3, 2017 2018-2022 CIP and budgetworksheets dueto financedepartment July 10, 2017 Workshop with city counciland staff to set2018 goals and priorities. July, 2017 Departmentheads meetwith various advisory boards and commissions for inputinto 2018 preliminary budgetand CIP. July, 2017 Departmentheads meetwith city administrator, and financestaff to develop 2018 preliminary budgetand CIP. July 24, 2017 Workshop with city councilto review draftdepartmentbudgets and set2018 goals and priorities. August14, 2017 Financedepartmentdevelops revenueestimates and 2018 preliminary property tax levy. August28, 2017 Councilworkshop to review various departmentgoals, budgets, and CIP continued. September 11, 2017 Budgetworkshop with city counciland staff. September 11, 2017 Counciladopts 2018 preliminary HRA and city property tax levy. (See September 25) September 25, 2017 Lastregular meeting for city councilto consider adopting the2018 preliminary city property taxlevy. September 30, 2017 2018 preliminary property taxlevy certified to WrightCounty auditor. October/November, 2017 Departmentheads meetwith city administrator and financestaff to develop 2018 proposed Budgetand finalproperty tax levy. December 11, 2017 Counciladopts 2018 budgetand property taxlevy. December 27, 2017 City certifies final2018 property taxlevy to WrightCounty auditor. January 1, 2018 2018 fiscalyear begins. 56 WORKLOAD/PERFORMANCEBUDGETING Beginning with the fiscal year 2010 budget, the city of Monticello started the development of a workload/performance budget. The move to this type of budgeting resulted in a shift in emphasis away from describing what will be purchased (inputs) towards describing what will be accomplished (outputs and outcomes). While this budgeting process faces numerous structural and cultural hurdles, this work-in-progress continues today with both an organization-wide and budget-unit specific focus on outcomes. PRESENTATION Thetextofthebudgetdocumentcustomarilycontainssixsectionsofinformationforeachactivity. Someactivitiesalsoincludehighlightsoraccomplishmentsfortheprioryearand/orthecomingyear. The first section provides a description of the activity. The second section describes its major objectives to be accomplished. The third section identifies issues/challenges the activity/division faces. The fourth section lists the workload/performance indicators for the division. The fifth section provides budget commentary. The sixth section provides detailed financial information. Thefinancialinformationincludesexpenditureinformationforthelastcompletedfiscalyear,the appropriatedamountsforthecurrentyear,andtherecommendedamountscoveredbythebudget. Costsaresegregatedintosixbasicclassifications:personnelservices(wage&benefits);supplyexpenses; otherservicesandcharges;capitaloutlay;debtservice;andoperatingtransfers.Appropriationcontrolis exercisedonlyattheactivityunitlevelandnotattheindividualobjectofexpenditurelevel. The narrative information is presented together with the financial detail to assist readers in understanding the planned outcomes for each activity/division, the purpose of each budget unit, and major changes or expenditures for the coming year. MONITORING AND REPORTING PROCESS As the budget year proceeds, individual departments and the finance department have dual responsibility formonitoringthestatusofeachbudgetunit.Departmentstaffhasprimaryresponsibilityformonitoringthe statusofexpendituresagainsttheirbudget.ThisresponsibilityincludesinformingtheFinanceDepartmentof anysignificantdeparturesfromtheplansanticipatedinthebudget. The finance department has overall responsibility for monitoring the status of all departments and funds. This is accomplished primarily through analysis of computerized budget performance reports which compare appropriationamounts onaline-item basis withactualexpenditures throughoutthe year.These reports aid department staff in controlling costs and act as an early warning system for the finance department. Department staff may exercise their judgment in exceeding expenditures by object code, as longastheydonotexceedthetotalamountappropriatedforthebudgetunit. The Finance Department reviews the budget reports on a monthly basis and discusses any variances from expected performance with the department staff. The finance department conducts in-depth quarterly budget reviews of all expenditures and revenues. 57 Significantchangesineitherexpendituresorrevenuesrequireabudgetrevision.Recommendationsarealso madebythefinancedirectorforanycorrectiveactionsthatarebelievednecessary. BUDGET AMENDMENT PROCESS State statute provides a number of different ways to amend the budget. The first involves a reallocationof existingappropriationsamongthelineitemswithinaspecificfund. Theseconddefinesaseriesofscenarios where the governing body has authority to amend the budget without a hearing for donations, land sales, and fee based budgets. All other increases in appropriation authority that are not specifically permitted by statutemustbeapprovedthroughapublicprocess. Thefinancedirectorisresponsibleforinsuringcompliancewithspendinglimitationsimposedbythebudget. Accordingly,thefinancedirectorsubmitsaBudgetStatusReporttothecitycouncilafterthree,six,nine,and twelve month periods. The budget reviews evaluate overall revenues and expenditures in comparison to thebudgetedamounts.Incaseswhereitappearstheoriginalspendingauthorityauthorizedwillnotprove sufficient, transfers of spending authority or additional spending authority are requested together with explanationsfortherequests.Thepublicapprovalprocessforbudgetamendmentsisheldifnecessary. 58 ORGANIZATION CHART CITY OF MONTICELLO Citizens of ORGANIZATIONAL CHART Monticello City Commissions Council & Boards City Administrator Human Finance Community City Public Community City Fire Contracted Resource Director Development Engineer Works Center Clerk Chief Services Manager Director Director Director Finance Economic Construction Streets Community Elections Fire City Department Development Inspectors Department Center Department Attorney Data Building Consulting Parks Sheriffs Processing Inspections Engineer Department Department Audit Receptionist Utilities Animal Department Control Department Consulting Refuse County of Motor Planner Collection Assessor Vehicles Liquor FiberNet Operations Operation 59 ALL FUNDS SUMMARY BY FUND TYPE Special Debt Capital Internal 2018 General Revenue Service Project Enterprise Service Total Fund Funds Funds Funds Funds Funds Budget Fund Balance/Working Capital - Jan. 1 5,976,716$9,199,003$3,110,649$7,967,067$10,292,748$892,108$37,438,291$ Revenues and Other Sources Property Taxes 6,590,000$710,000$1,787,000$783,000$-$-$9,870,000$ Tax Increments -635,678 ----635,678 Franchise & Other Taxes 289,500 --116,000 --405,500 Sale of Goods ----5,770,784 -5,770,784 Licenses & Permits 398,750 ---2,000 -400,750 Intergovernmental Revenues 374,440 -----374,440 Charges for Services 398,400 1,434,500 -50,000 5,670,207 542,688 8,095,795 Fines & Forfeits 36,500 -----36,500 Special Assessments 300 -293,446 54,000 38,000 -385,746 Miscellaneous 199,110 137,850 3,000 52,000 124,200 6,112 522,272 Contributed Capital ----140,450 -140,450 Operating Transfers In --244,899 1,000,000 130,000 -1,374,899 Debt Proceeds ---5,000,000 --5,000,000 Total Revenues and Other Sources 8,287,000$2,918,028$2,328,345$7,055,000$11,875,641$548,800$33,012,814$ Expenditures and Other Uses Personnel Services 3,295,557 1,279,434 --1,683,446 -6,258,437 Supplies 742,050 183,435 --4,710,245 35,000 5,670,730 Other Services & Charges 4,003,793 770,400 --3,694,978 225,400 8,694,571 Capital Outlay 245,600 577,070 -10,620,000 1,146,000 323,000 12,911,670 Debt Service --2,807,160 -373,574 128,100 3,308,834 Operating Transfers Out -200,000 -44,899 1,130,000 -1,374,899 Total Expenditures and Other Uses 8,287,000 3,010,339 2,807,160 10,664,899 12,738,243 711,500 38,219,141 Net Change in Fund Balance/Working Capital -$(92,311)$(478,815)$(3,609,899)$(862,602)$(162,700)$(5,206,327)$ Fund Balance/Working Capital - Dec. 31 5,976,716$9,106,692$2,631,834$4,357,168$9,430,146$729,408$32,231,964$ All FUNDS SUMMARY - BY FUND TYPE In most years, the city adopts a balanced budget for the General Fund and the Monticello Community Center Fund (special revenue fund). In 2018, the community center will draw on reserves for HVAC upgrades. A budget is balanced when revenues and other sources equals (or exceeds) expenditures and other uses. Fund balances/working capital increase with surpluses and decrease with deficits. Capital Project Funds commonly accumulate resources in one budget period and expend those resources over multiple budget periods. Prior year debt proceeds will be used to finish a project in 2018. Debt amortization will lead to a significant decline in fund balance for the Debt Service Fund. Multiple debt service sub-funds are aggregated into one debt service fund for reporting purposes. Internal service funds provide services to other funds and typically function on a cost recovery basis. The city has three: IT Services Fund, Central Equipment Fund, and Benefit Accrual Fund. Central Equipment Fund equipment purchases will exceed lease revenue in 2018. The Benefit Accrual Fund is the only one of the three that is not used for capital asset acquisitons. 60 ALL FUNDS SUMMARY - BY YEAR TOTAL ALL FUNDS 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 8,386,953$8,619,812$9,275,414$9,430,000$9,430,000$9,870,000$4.7% Tax Increments 836,750 727,617 668,352 653,564 653,564 635,678 -2.7% Franchise & Other Taxes 334,726 352,073 432,785 399,900 399,900 405,500 1.4% Sale of Goods 5,165,737 5,489,430 5,448,584 5,435,194 5,635,194 5,770,784 6.2% Licenses & Permits 381,544 465,469 671,602 379,600 379,600 400,750 5.6% Intergovernmental Revenues 733,566 1,413,360 2,041,363 596,440 596,440 374,440 -37.2% Charges for Services 7,303,528 7,854,450 8,091,397 7,786,080 7,764,510 8,095,795 4.0% Fines & Forfeits 48,744 42,474 30,656 42,300 42,300 36,500 -13.7% Special Assessments 1,953,370 3,331,901 984,916 576,666 656,666 385,746 -33.1% Miscellaneous 1,840,271 1,149,501 1,902,367 786,790 858,360 522,272 -33.6% Contributed Capital 966,494 1,435,870 1,993,232 140,450 140,450 140,450 0.0% Operating Transfers 11,298,117 4,937,975 2,588,244 829,362 1,212,562 1,374,899 65.8% Debt Proceeds 6,467,106 2,651,898 6,410,568 5,700,000 5,700,000 5,000,000 -12.3% TOTAL REVENUES 45,716,906$38,471,830$40,539,480$32,756,346$33,469,546$33,012,814$0.8% EXPENDITURES Personnel Services 5,150,066$5,476,611$5,671,244$5,875,227$5,897,127$6,258,437$6.5% Supplies 4,962,837 5,027,255 5,173,563 5,376,790 5,524,744 5,670,730 5.5% Other Services & Charges 8,196,757 7,630,947 7,716,754 8,287,111 8,426,348 8,694,571 4.9% Capital Outlay 3,473,466 4,222,516 10,802,472 9,793,319 9,708,228 12,911,670 31.8% Debt Service 12,075,241 6,032,959 6,984,666 4,905,585 4,905,585 3,308,834 -32.5% Operating Transfers 11,298,117 4,937,975 1,772,502 829,362 1,212,562 1,374,899 65.8% TOTAL EXPENDITURES 45,156,484$33,328,263$38,121,201$35,067,394$35,674,594$38,219,141$9.0% FUND BALANCE - JANUARY 1 31,521,071$32,081,493$37,225,060$39,643,339$39,643,339$37,438,291$ Excess (Deficiency) of Revenues over Expenditures 560,422 5,143,567 2,418,279 (2,311,048)(2,205,048)(5,206,327) FUND BALANCE - DECEMBER 31 32,081,493$37,225,060$39,643,339$37,332,291$37,438,291$32,231,964$ Intergovernmental revenues are projected to decrease in 2018 as the city receives less state/federal aid for street projects. License and permits are anticipated to increase with construction activity. Special assessments will decline because of 2015 prepayments and normal amortization. Operating transfers are higher in 2018 because of the Liquor Fund transfer to the Park & Pathway Fund for Bertram park development. One debt issuance is planned for 2018 to finance the Fallon Avenue overpass. The increase in sale of goods reflects the improvement in liquor store sales. Personnel services increased with the addition of two full-time positions (engineer-public works director and deputy fire chief). A 3% wage and health benefit increase is budgeted for 2018. Capital expenditures (outlay) increase in 2018 with the construction of the Fallon Avenue overpass and reconstruction of Chelsea road. The increase in supplies (mainly inventory) are projected to increase with liquor sales. Capital expenditures reflect disbursements for acquisition or replacement of assets with long-lives (benefit two or more accounting periods) and usually have significant price tags. In contrast, current expenditures only benefit the current or next accounting period and usually have smaller price tags. Capital expenditures can be recurring or non-recurring in nature. The wastewater treatment plant upgrade would be an example of non-recurring capital expenditure. On the other hand, the city budgets annually $200,000-$500,000 to replace or repair streets. This would be an example of a recurring capital expenditure. Recurring capital expenditures usually have a pay-as-you-go funding source (enterprise funds) and non-recurring capital expenditures typically include debt as a funding component. 61 CHANGES IN FUND BALANCE/WORKING CAPITAL Projected Beginning Projected Ending Fund Balance/Estimated Fund Balance/ Working Capital Revenues Appropriations Working Capital General Fund 5,976,716$8,287,000$8,287,000$5,976,716$ Special Revenue Funds Economic Development 7,387,279 1,073,928 903,116 7,558,091 Cemetery 31,726 18,600 27,723 22,603 Minnesota Investment 1,158,164 15,000 -1,173,164 Monticello Community Center 621,834 1,810,500 2,079,500 352,834 Total Special Revenue Funds 9,199,003 2,918,028 3,010,339 9,106,692 Debt Service Funds 2010A G.O. Improvement Bond 937,350 127,614 300,074 764,890 2011A G.O. Refunding Bond 1,662,173 395,375 780,100 1,277,448 2014A G.O. Judgment Bond 62,586 538,586 512,736 88,436 2015B G.O. Street/Improvement 80,702 228,842 216,000 93,544 2016A G.O. Street/Improvement 287,838 517,769 527,900 277,707 2017A G.O. Improvement/Abate 80,000 520,159 470,350 129,809 Total Debt Service Funds 3,110,649 2,328,345 2,807,160 2,631,834 Capital Project Funds Capital Project 3,658,097 6,419,000 9,650,000 427,097 Closed Bond Fund 319,147 59,000 -378,147 Park & Pathway Dedication 454,861 402,000 670,000 186,861 Stormwater Access 1,017,216 65,000 -1,082,216 Street Lighting Improvement 734,319 90,000 300,000 524,319 Street Construction 1,783,427 20,000 44,899 1,758,528 Total Capital Project Funds 7,967,067 7,055,000 10,664,899 4,357,168 Enterprise Funds Water 4,433,929 1,346,341 1,626,673 4,153,597 Sewage 2,959,016 2,386,516 2,860,203 2,485,329 Liquor 1,685,218 5,775,784 5,818,178 1,642,824 Deputy Registrar 868,513 526,400 429,589 965,324 Fiber Optics 346,072 1,840,600 2,003,600 183,072 Total Enterprise Funds 10,292,748 11,875,641 12,738,243 9,430,146 Internal Service Funds IT Services 187,119 276,500 272,900 190,719 Central Equipment 420,770 252,800 438,600 234,970 Benefit Accrual 284,219 19,500 -303,719 Total Internal Service Funds 892,108 548,800 711,500 729,408 Total All Funds 37,438,291$33,012,814$38,219,141$32,231,964$ Fiscal Year 2018 CHANGES IN FUND BALANCE/WORKING CAPITAL The fund balances/working capital for the city’s major operating funds are expected to be relatively stable with balanced (revenues equal expenditures) or nearly-balanced budgets. The Monticello Community Center Fund is expected to draw on reserves for capital improvements, which includes upgrading the HVAC system. However, draws on reserves for debt amortization redemptions in various debt service sub- funds and completion of a debt-funded project in the Capital Project Fund will decrease fund balances. 62 FUND BALANCE HISTORY Amended Adopted Actual Actual Actual Budget Projected Budget 2014 2015 2016 2017 2017 2018 General Fund 4,331,058$4,986,796$6,276,716$6,276,716$5,976,716$5,976,716$ Special Revenue Funds Economic Development 6,911,667 6,512,174 7,142,330 7,387,279 7,387,279 7,558,091 Cemetery 32,047 33,651 31,726 31,726 31,726 22,603 Minnesota Investment 1,104,689 1,120,404 1,138,164 1,158,164 1,158,164 1,173,164 Monticello Community Center 440,828 629,448 761,834 761,834 621,834 352,834 Total Special Revenue Funds 8,489,231 8,295,677 9,074,054 9,339,003 9,199,003 9,106,692 Debt Service Funds 2007A G.O. Improvement (Closed)548,982 470,615 (175,846)2,242 -- 2008A G.O. Revenue (Closed)1,631 ----- 2008B G.O. Sewer (Closed)880,308 1,429,004 1,067,790 50,958 -- 2010A G.O. Improvement Bond 586,511 646,252 1,023,462 937,350 937,350 764,890 2011A G.O. Refunding Bond (2005A)1,730,084 2,825,758 1,466,905 1,662,173 1,662,173 1,277,448 2014A G.O. Judgment Bonds 169,152 7,350 36,519 62,586 62,586 88,436 2015B G.O. Street/Improvement -665 66,414 80,702 80,702 93,544 2016A G.O. Street/Improvement --262,838 287,838 287,838 277,707 2017A G.O. Improvement/Abatement ----80,000 129,809 Total Debt Service Funds 3,916,668 5,379,644 3,748,082 3,083,849 3,110,649 2,631,834 Capital Project Funds Capital Project 89,766 2,722,818 4,822,097 3,358,097 3,658,097 427,097 Closed Bond Fund 1,018,764 882,307 275,047 345,947 319,147 378,147 Park & Pathway Dedication 738,333 1,236,660 620,861 334,861 454,861 186,861 Stormwater Access 873,721 1,174,049 1,220,592 1,017,216 1,017,216 1,082,216 Street Lighting Improvement 922,880 681,660 719,319 734,319 734,319 524,319 Street Construction 1,751,033 1,775,943 1,804,120 1,783,427 1,783,427 1,758,528 Total Capital Project Funds 5,394,497 8,473,437 9,462,036 7,573,867 7,967,067 4,357,168 Enterprise Funds Water 4,751,413 4,785,819 4,396,684 4,433,929 4,433,929 4,153,597 Sewage 3,142,903 2,641,553 3,085,916 2,959,016 2,959,016 2,485,329 Liquor 722,643 1,017,443 1,353,627 1,585,218 1,685,218 1,642,824 Deputy Registrar 333,114 544,987 776,349 868,513 868,513 965,324 Fiber Optics 29,962 508 305,914 346,072 346,072 183,072 Total Enterprise Funds 8,980,035 8,990,310 9,918,490 10,192,748 10,292,748 9,430,146 Internal Service Funds IT Services 58,814 119,347 209,622 187,119 187,119 190,719 Central Equipment 911,190 753,691 690,120 394,770 420,770 234,970 Benefit Accrual -226,158 264,219 284,219 284,219 303,719 Total Internal Service Funds 970,004 1,099,196 1,163,961 866,108 892,108 729,408 Total All Funds 32,081,493$37,225,060$39,643,339$37,332,291$37,438,291$32,231,964$ FUND BALANCE/WORKING CAPITAL HISTORY Fiscal Year Ended December 31, 63 BALANCED BUDGETS A BALANCEDBUDGET canbedefinedasasituationwheretotalrevenuesandotherfinancingsourcesis equalto(orgreaterthan)totalexpendituresandotheruses.Revenuesandotherfinancingsourcesincrease financialresources.Expendituresandotherusesdecreasefinancialresources.Operatingtransfersinand debtissueproceedsareconsideredotherfinancingsources.Operatingtransfersoutareconsideredother financinguses. Abalancedbudgetdoesnotdipintoreservesorfundbalances.However,anunbalancedbudget(deficit)is notnecessarilypoorfinancialmanagement.Forexample,debtservicefundsoftenaccumulateresourcesin theyearpriortoexpenditure.Further,debt-financedcapitalprojectsfrequentlystretchovermultipleyears. Thecityhasneveruseddebttofinancecurrentorongoingexpenditures. Itisthecity’spolicytoadoptbalancedbudgetsfortheGeneralFundandtheCommunityCenterFund. Indeed,bothfundsaresupportedbypropertytaxes. However,thecommunitycenterexpectstodrawon itsreservesforHVACupgradesin2018.Theseupgradesshouldlowerfutureheatingandcoolingcosts. $(3,500)$(3,000)$(2,500)$(2,000)$(1,500)$(1,000)$(500)$-$500 BenefitAccrual Central Equipment IT Services Fiber Optics Deputy Registrar Liquor Sewage Water Street Construction Street Lighting Improvement StormwaterAccess Park & Pathway Dedication Closed Bond Fund Capital Project 2017A G.O. Improvement/Abate 2016A G.O. Street/Improvement 2015B G.O.Street/Improvement 2014A G.O. JudgmentBond 2011A G.O. Refunding Bond 2010A G.O. Improvement Bond Monticello Community Center Minnesota Investment Cemetery Economic Development General Fund Thousands Change in Fund Balances/WorkingCapital 64 CAPITAL EXPENDITURES (Recurring vs Nonrecurring) A CAPITALEXPENDITURE occurswhenacapitalassetispurchased.Capitalassetsareusedinoperations andhaveinitialusefullivesextendingbeyondasinglereportingperiod.Theseassetsmustalsomeet capitalizationthresholds(seeAppendix),whichvarybyassetclassificationandtypicallycostsmorethan $10,000.Land,improvementstoland,vehicles,machinery,equipment,infrastructure,andothertangible andintangibleassetsusedinoperationsareexamplesofcapitalassets. Capitalexpenditures(alsocalledcapitaloutlays)canbeclassifiedaseitherrecurringornon-recurring.Fleet equipmentreplacementisanexampleofrecurringcapitalexpendituresbyassetclass.Thecitybudgetsto replaceaportionofthefleeteveryyearonapay-as-you-gobasisorthroughaleasearrangementwiththe CentralEquipmentFund.Thecityalsobudgetstoreplaceasmallfractionofitswaterandsewer infrastructureonanannualbasis.Largeprojectsaddingtoorreplacinginfrastructureareusuallynon- recurringinnature.Forexample,the2017corestreetreconstructionprojectwasnon-recurringinnature. However,fiveothercorestreetreconstructionprojectswerespreadover15years.TheFallonAvenue overpass,ChelseaRoadimprovements,and7th Streetreconstructionprojectsaccountforthebulkofthe 2018non-recurringprojects.Themulti-yearFallonAvenueoverpassstartedwithlandacquisitionand designworkin2017.PriorlandpurchasesatBertramChainofLakeParkmayhavelookedrecurring,butall thelandneededfortheparkwasacquiredbytheendof2016.FuturedevelopmentofBCOLamenitieswill havearecurringnature.Largenon-recurringprojectsaretypicallyfinancedbydebt,intergovernmental revenue(state/federalgrantsandaids),anddrawsonreservesaccumulatedinanticipationoftheproject. Recurring- currentrevenues 15% Nonrecurring- newdebt 48% Nonrecurring- priordebt 24% Nonrecurring- reserves 13% Capital Expenditures 65 TAX LEVY HISTORY 2014 2015 2016 2017 2018 General Fund 5,497,000$5,882,000$6,177,000$6,291,000$6,590,000$ Percent Change 0.7%7.0%5.0%1.8%4.8% Special Revenue Funds Economic Development (HRA Levy)--280,000 280,000 323,000 Monticello Community Center*1,390,000 1,363,000 364,000 372,000 387,000 Total Special Revenue Funds 1,390,000 1,363,000 644,000 652,000 710,000 Percent Change 20.9%-1.9%-52.8%1.2%8.9% Debt Service Funds 2011AGO Refunding Bonds (2005A)223,000 330,000 330,000 139,783 148,061 2007AGO Improvement Bond 540,000 420,000 420,000 610,000 - 2008B GO Sewer Refunding 500,000 500,000 500,000 500,000 - 2010AGO Improvement Bond -40,000 40,000 40,000 40,000 2014AGO Judgement Bond --544,000 536,929 537,586 2015B GO SR&I Bond --250,000 195,288 203,425 2016AGO SR&I Bond ---415,000 407,769 2017AGO I&ABond ----450,159 Total Debt Service Funds**1,263,000 1,290,000 2,084,000 2,437,000 1,787,000 Percent Change 3.6%2.1%61.6%16.9%-26.7% Capital Project Funds Capital Projects Fund --300,000 50,000 783,000 Total Capital Project Funds --300,000 50,000 783,000 Percent Change ----------83.3%1466.0% Total Tax Levy - All Funds 8,150,000$8,535,000$9,205,000$9,430,000$9,870,000$ Percent Change 4.2%4.7%7.9%2.4%4.7% Levy Summary City General andDebt Levies 8,150,000$8,535,000$8,925,000$9,150,000$9,547,000$ Percent Change 4.2%4.7%4.6%2.5%4.3% HRALevy -$-$280,000$280,000$323,000$ Percent Change ---------0.0%15.4% * MCC levy for debt 890,000$1,040,000$-$-$-$ **Total debt levy withMCC debt 2,153,000$2,330,000$2,084,000$2,437,000$1,787,000$ Percent Change 9.9%8.2%-10.6%16.9%-26.7% TAX LEVY AND TAX CAPACITYHISTORY TAX LEVYHISTORY 66 TAX CAPACITY HISTORY 2014 2015 2016 2017 2018 Tax Capacity 18,289,490$23,882,689$25,891,898$27,583,160$29,533,213$ Percent Change 16.0%30.6%8.4%6.5%7.1% City Levy - Tax Capacity Rate 42.262 44.709 35.737 33.172 32.326 Percent Change -15.1%5.8%-20.1%-7.2%-2.6% HRA Levy - Tax Capacity Rate --1.081 1.015 1.094 Percent Change ----------6.1%7.7% TAX CAPACITY HISTORY The Housing Redevelopment Authority (HRA) special benefit levy is capped at .0185% (or .000185) of the city’s taxable market value. The city’s taxable market value for taxes collected in 2017 totaled $1,746,750,200. HRA levyproceeds canonlybe usedforpurposes includedin 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. The city’s tax capacity increased significantly with improvements at the nuclear power plant. The impact of those uprates on the tax base and tax collections is provided in table below: 2012 2013 2014 2015 2016 2017 2018 Taxable Market Value 213,300,800$377,028,900$346,559,800$597,753,900$680,037,200$714,047,000$743,551,900$ Change over prior year $163,728,100$(30,469,100)$251,194,100$82,283,300$34,009,800$29,504,900$ Change over prior year %77%-8%72%14%5%4% Tax Capacity*4,266,016$7,540,578$6,931,196$11,955,078$13,600,744$14,280,940$14,871,038$ Change over prior year $3,274,562$(609,382)$5,023,882$1,645,666$680,196$590,098$ Change over prior year %77%-8%72%14%5%4% *Tax capacity is calculated at 2% of taxable market value for utility properties and most commercial properties. Residential properties typically have a tax class rate of 1%. Percent of Total Tax Capacity 27%40%38%50%53%52%50% Tax Impact on the City City of Monticello 2,123,324$3,186,799$3,099,226$4,272,386$4,688,312$4,737,273$4,807,212$ Change over prior year $1,063,475$(87,573)$1,173,160$415,926$48,961$69,939$ Change over prior year %50%-3%38%10%1%1% Monticello HRA -$-$-$-$147,024$144,952$162,689$ Northern States Power Company (dba Xcel Energy) 67 REVENUE SOURCES BY FUND Revenue Classifications Property Franchise Tax Licenses/ Intergovern- Charges for Taxes & Other Increments Permits mental Services General Fund 6,590,000$289,500$-$398,750$374,440$398,400$ Special Revenue Funds Economic Development 323,000 -635,678 --- Cemetery -----18,000 Minnesota Investment ------ Monticello Community Center 387,000 ----1,416,500 Total Special Revenue Funds 710,000 -635,678 --1,434,500 Debt Service Funds 2010A G.O. Improvement Bond 40,000 ----- 2011A G.O. Refunding Bond 148,061 ----- 2014A G.O. Judgment Bond 537,586 ----- 2015B G.O. Street/Improvement 203,425 ----- 2016A G.O. Street/Improvement 407,769 ----- 2017A G.O. Improvement/Abate 450,159 ----- Total Debt Service Funds 1,787,000 ----- Capital Project Funds Capital Project 783,000 36,000 ---- Closed Bond Fund ------ Park & Pathway Dedication ------ Stormwater Access -----50,000 Street Lighting Improvement -80,000 ---- Street Construction ------ Total Capital Project Funds 783,000 116,000 ---50,000 Enterprise Funds Water ---2,000 -1,170,841 Sewage -----2,276,066 Liquor ------ Deputy Registrar -----525,300 Fiber Optics -----1,698,000 Total Enterprise Funds ---2,000 -5,670,207 Internal Service Funds IT Services -----276,388 Central Equipment -----249,800 Benefit Accrual -----16,500 Total Internal Service Funds -----542,688 Total All Funds 9,870,000$405,500$635,678$400,750$374,440$8,095,795$ 68 Revenue Classifications Fines &Special Miscell-Sale of Debt Contributed Operating Forfiets Assess aneous Goods Proceeds Capital Transfers Total 36,500$300$199,110$-$-$-$-$8,287,000$ --115,250 ----1,073,928 --600 ----18,600 --15,000 ----15,000 --7,000 ----1,810,500 --137,850 ----2,918,028 -42,715 ----44,899 127,614 -46,314 1,000 ---200,000 395,375 --1,000 ----538,586 -24,417 1,000 ----228,842 -110,000 -----517,769 -70,000 -----520,159 -293,446 3,000 ---244,899 2,328,345 ----5,000,000 -600,000 6,419,000 -54,000 5,000 ----59,000 --2,000 ---400,000 402,000 --15,000 ----65,000 --10,000 ----90,000 --20,000 ----20,000 -54,000 52,000 -5,000,000 -1,000,000 7,055,000 -38,000 55,500 --80,000 -1,346,341 --50,000 --60,450 -2,386,516 --5,000 5,770,784 ---5,775,784 --1,100 ----526,400 --12,600 ---130,000 1,840,600 -38,000 124,200 5,770,784 -140,450 130,000 11,875,641 --112 ----276,500 --3,000 ----252,800 --3,000 ----19,500 --6,112 ----548,800 36,500$385,746$522,272$5,770,784$5,000,000$140,450$1,374,899$33,012,814$ 69 LONG RANGE FINANCIAL PLANS General Fund Community Center EDA Capital Projects Routine Expenditures Expected to rise at the pace of inflation but mitigated by gains in productivity. Some capital expenditures are incorporated as routine through rental charges by internal service funds. Additions to staff and an increase to law enforcement have a large 2018 impact. Expected to rise at the pace of inflation. Routine capital expenditures are set at $50,000 per year. Non-TIF expenditures are expected to rise at the pace of inflation. Non-routine Expenditures Basic level of non-routine items are included in overall budget but vary within each budget unit from year-to-year. Large repair and maintence items and total capital expenditures exceeding $50,000 could be supported by transfers from other funds. 2018: $246,000 HVAC improvements, $48,000 for pool deck restoration. Tax increment financing (TIF) expenditures will vary considerabley from year-to- year in each district as development occurs. Large capital projects usually receive funding from debt issuance. The city usually covers initial project costs with reserves or other revenue sources and reimburses itself with debt proceeds. 2018: Fallon overpass - $8.3M (started in 2017), road and other improvements on 7th Street and Chelsea Road - $3M. 2019-2022: Annual mill/overlay/reconstruct residential streets - $1M. Revenues Property taxes provide over 80% of the revenue for General Fund. Consequently, spending is constrained by growth in the tax levy. The city has resisted developing other revenue sources such as fees for residential refuse collection or stormwater. With the last payment on community center debt service coming in 2015, the property tax levy for this debt declined by $1M in 2016. User fees should cover 85% of on-going expenditures. Tax increment revenues widely vary from district to district but not much from year-to- year. Often reserves, accumulation of prior year increments, are used to fund projects. Transfers from the General Fund were eliminated in 2016 with the initiation of an HRA levy. The 2018 levy is $323,000. Fallon Overpass and TH25/7th Street will receive some federal and state aid in 2020. Debt None: Indirectly supports Central Equipment Fund debt service through annual rental payments. No debt issues are anticipated over next five years. Further, debt for recreational projects either requires voter approval or must be incurred as part of a lease-purchase agreement with the EDA. Intrafund loans from the EDA General Fund sub-fund will finance some TIF activities. No external debt issuance is planned. 2018: $5-$10 million in tax abatement/reconstruction bonds. The debt service for these bonds will be structured to take advantage of the decline in other tax supported debt. 70 Water Sewage Liquor Fiber Optics Central Equipment Expected to riseat the paceof inflation but mitigated by reinvestment in plant and equipment. Annual capital expenditures financed on a pay-as-you-go basis rangebetween $150,000 to $300,000. Expected to riseat the paceof inflation but mitigated by reinvestment in plant and equipment. Annual capital outlays financed on a pay-as-you- go basis rangebetween $150,000 to $300,000. Expected to riseat the paceof inflation and increases in demand. Cost of sales aretypically passed onto customers through higher prices. The Liquor Storemaintains a consistent gross profit margin of 25%-27%. Operating revenues cover non-capital expenditures. Amanagement firmwas hired to run day-to-day operations in 2016. Capital equipment purchases will vary widely every year. Adebt servicescheduleis contained in theInternal Servicesection of this report. All expenditures in this fund areeither for capital equipment purchases or debt service. 2022:$1.2M Well 6.Sewer access fees areno longer need to support debt service. 2018:$700k supervisory controls. 2019:$1.8M phase2 WWTF. 2020: $2.5M Fallon trunk line. 2021: solid wastehandling $2.1M. TheLiquor Fund has $75,000 budgeted for sign replacement in 2018. Coolers arereplaced as needed. Thefund generates sufficient annual revenues to support its needs. Operating revenues are not adequateto support non-routineexpenditures. Consequently, Liquor Fund transfers will provide funding for fund operations. Anticipated future expenditureby year: 2018:$265,000; 2019:$747,000; 2020:$922,000; 2021:$400,000; 2022:$255,000. A$1.4M ladder truck will bepurchased outsideof this fund in 2020. User rates arehigh enough to cover planned expenditures for thenext fiveyears. However, the basechargefor water and sewageservices will increasein advanceof going to monthly billing. User rates areexpected to riseto providefor pay-as- you-go routinesystem replacement and debt financeupgrades to meet new environmental regulations. Aphased ten percent rateincreaseis needed for thephophorus reduction wastewater treatment plant project. Sales haveincreased steadly for thelast five years. Going forward, sales areexpected to level out becauseof space limitations. 2018:$130,000 transfer fromtheLiquor Fund. Transfers fromLiquor Fund could declinewith further operational changes. Rental revenues (expenditures in other funds and budget units) will risewith equipment purchases. Therefore, revenuesources in other funds becometherevenue sourcefor this internal servicefund. No debt issues are anticipated over next five years. TheMinnesota Public Facilities Authority (MPFA) may provide funding for thefuture projects. Revenuebonds may besold as reserves aredrewdown. No debt issues are anticipated over next five years. In 2014, a resolution was reached with telcombond holders, thecity issued $6 million in settlement bonds in 2014. Thecity levies property taxes for debt serviceon these bonds. Debt serviceis not recorded in this fund. No new debt is contemplated for thefuture. Thefund is expected to becomeself-sustaining. Thecity issued $515,000 in bonds to financefuture purchaseof a plowtruck and the2014 purchaseof a firetender. Futuredebt issues may beneeded to makeall theacquistions listed in theCIP. 71 LONG RANGE FINANCIAL PLANS (continued) Prior to the start of the budget process, council and staff review service needs, growth trends, and capital investment requirements. A long-range financial model is developed for the city’s four main operating funds: General, Monticello Community Center, Water, and Sewage. This is done in conjunction with the Capital Improvement Plan (CIP), which is a five-year forecast that includes funding sources. Financial planning is segregated into two components: operations for the four main operating funds and capital investments (CIP). The Municipal Liquor Fund, Deputy Registrar Fund and Fiber Optic Fund are excluded from long range financial plan. The liquor store and DMV are largely retail operations with no major forecasted capital investment needs. The Fiber Optic Fund presents interesting challenges in a dynamic and competitive market where strategies and a business plan need refinement. Items impacting long range financial planning: Current financial position (fund balances) Debt burden Regulatory environment Condition of existing capital assets Growth trends, inflation, and aspirations ThecityannuallyadoptsabalancedbudgetfortheGeneralFund.Consequently,therevenues/sourceslineand theexpenditures/useslinewilloverlapforthe2018budgetandforfutureyearprojections.After2018,annual expendituresareprojectedtoincreaseat3%peryear.Thepropertytaxlevyandallotherrevenuesare projectedtoincreaseatthesamerateasexpenditures/uses.In2012,theGeneralFundtransferredover$2 milliontootherfundstoeliminateinterfundreceivables.Accordingtopolicy,thecityshallmaintainafund balanceof65%ofexpendituresandrecurringuses.Thefollowingchartassumesthecitywillcontinueto providethesamecurrentlevelsofservice. $- $2 $4 $6 $8 $10 $12 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023MillionsGeneral Fund 2014-2023 Fund Balance Revenues/Sources Expenditures/Uses 72 LiketheGeneralFund,theMonticelloCommunityCenterFundnormallyadoptsabalancedbudget.However, in2018and2019,theMCCexpectstodrawdownonitsfundbalancefordeferredmaintenanceitems. Afterward,therevenues/sourceslineandtheexpenditures/useslinewilloverlapforthe2020budgetandfor futureyearprojections.After2018,annualexpendituresareprojectedtoincreaseat3%peryear.Transfersto thefundhavesupportedthecapitalprojectinthepast.Thelastpayment($1,001,000)onpropertytax supporteddebtservice,relatedtotheinitialconstructionofthecommunitycenter,occurredin2015. $- $1 $2 $3 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023MillionsMonticello CommunityCenter 2014-2023 Fund Balance Revenues/Sources Expenditures/Uses The Water Fund is the city’s most self-sustained utility fund. The fund has no direct debt and adequate reserves to cover almost any expenditure for major capital projects, of which none are planned in the next couple years. In 2019, transfers to other debt service funds for water related improvements cease. These transfers supplement water access fees which all but dried up as a result of slower commercial and residential development. The peak in 2016 expenditures reflect the nearly $1 million in water improvements as part of the 2016 Core Street Project. A new well is planned for 2022. Debt and reserves will finance a treatment plant that is tentatively scheduled for 2023. $- $1 $2 $3 $4 $5 $6 $7 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023MillionsWater Fund 2014-2023 Working Capital Revenues/Sources Expenditures/Uses 73 Unlike the Water Fund, the Sewage Fund represents funding challenges. First, sanitary sewer access fees declined significantly with the lack of development. Transfers to other debt service funds supplementing these access fees dropped significantly in 2017 and will cease altogether in 2018. Second, environmental regulatory changes require large investments in the wastewater treatment plant. In 2013, the fund incurred $3 million in debt to improve treatment plant capacity. The city incurred nearly $2.5 million in debt for the wastewater treatment plant phosphorous reduction project and for replacement of two digester covers, both in 2016. Other debt supported treatment plant improvements are planned for 2019 through 2021. $- $1 $2 $3 $4 $5 $6 $7 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022MillionsSewage Fund 2013-2022 WorkingCapital Revenues/Sources Expenditures/Uses 74 LONG-TERM FISCAL OBJECTIVES The city council and staff are committed to expending public resources in the most cost-effective and economical manner possible to ensure the stability of the city property tax levy. In light of changes to tax policy, state aid reductions for various purposes, state imposed levy limits in prior years, and the potential of future levy limits, fiscal strategies will need to be constantly monitored to ensure a balanced approach in providing sufficient revenues to fund services: 1.Employ a strategy aimed at reducing the city’s reliance on the property tax levy to fund basic services through “sustainable” revenue sources such as franchise fees, special revenues, user fees, and charges for services. The city’s property tax levy generates over 80% of the General Fund’s revenue. This overdependence is largely attributable to a healthy tax base, which includes a nuclear power plant. In prior years, the city’s tax levy had not kept pace with inflation. The current council philosophy seems to indicate a willingness to take advantage of the growth in the tax base. While a growth plus inflation tax levy formula would not reduce the dependence on property taxes, it would alleviate the strain placed on city finances by inflation. City services will continue to be evaluated in terms of identifying all relevant funding sources to underwrite specific service expenditures, promoting alternatives to traditional funding methodologies, and encouraging public-private partnerships in service delivery systems. 2.The development and use of appropriate cost accounting structure that will lead to creation of individualcostcentersforallcitydepartmentactivitiestoaccuratelyreflectthetruecostofproviding specific services. The city employs a cost accounting system that is department specific and attempts to accurately reflect service delivery costs at the department and division levels. By including all supplemental services as they relate to personnel, charges and services, supplies, and capital outlays the city will further distinguish the total cost of services provided. The city has the ability to analyze these costs at the sub-category detail levels in support of overall policy goals. 3.The adoption of a financial philosophy that seeks to spread the cost of significant capital outlay expenditures over an extended period of time to ensure that current and future taxpayers share equally in underwriting those costs. The city continues to capitalize the cost of significant capital expenditures over several years to ensure that both existing and future taxpayers share equally in the cost. In addition, the city has dedicated a portion of the tax levy to underwrite the cost of selected capital projects and equipment, avoiding a fiscal environment based on reactive tax and spend policies. The five year capital improvement planning process is critical in achieving these results. 75 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. Thecityisintheprocessofdevelopingandmaintainingafinancialmodelto determinethelong- 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, anddebt ratios.Theproformais utilizedas atoolas partofthebudget planningprocess toensurethat key short-term fiscal targets are in line with long-term fiscal projections. The city will continually update the proforma to ensure that long-term fiscal outcomes remain consistent with council budgetary policies. 5.Thedevelopmentofworkperformancegoalsforeachdepartmenttoascertainandmeasurehow 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 ofspecific serviceoutcomes.Data is reviewed to provide thecounciland general public with a better understanding of the operational demands, resource inputs, and performance outcomes associated with a specific service delivery system. 6.The aggressive and appropriate investment of idle city funds to maximize the generation of interest income, while ensuring adequate cash flow requirements. Investment ofcity funds is controlledby statestatute and managed by thefinance director. Idle funds are invested in a variety of financial instruments such as certificates of deposit, federal agencies (FHLMC, FNMA, etc.), and appropriately rated bonds. Long-term investing is designed to achieve the best yield in the current market, following a strategy that structures long-term investments in ladder format and reinvests short-term investment in rotating terms of up two years. 7.Greater reliance on technology to enhance employee productivity in all areas of city operations and improve customer communications. The city has taken steps to invest additional time and energy on labor saving technology, such as software programming and electronic file storage. Staff has discussed the need to look at optic imagingsolutions.Imagingcityrecordswillenable thecityto reducestorageareas presentlydedicated to paper files and look at more economical and efficient systems of data retrieval. 76 8.Involving all employees in the process of re-engineering the work environment by encouraging cross-training opportunities, reducing and eliminating bureaucratic barriers, streamlining public process requirements, and adopting private sector customer service business values in city operations. City staff is encouraged to identify work practice issues that are inefficient or overly bureaucratic. The management team is committed to involving their employees and fostering an environment that challenges the status quo of city operations. 9.Continuously reviewing opportunities to form partnerships with neighboring communities to share services and equipment, jointlypurchase equipment, and develop strategies to deal withlocal issues using a regional approach. The city has established several equipment and service delivery sharing arrangements with neighboring communities and has several joint powers agreements in place on a variety of local and regional issues in the area of public safety and public works initiatives. Recent steps taken to achieve long-term fiscal objectives The city began monthly billing of water and sewageservices in 2017. Monthly bills allow the city to bill customers for other services, such as residential garbage, recycling, and storm water. There are benefits to the customers: lower monthly bills instead of larger quarterly bills, a payment cycle in line with other customer bills, timely consumption information, and earlier alert to service problems. The Monticello Community Center Fund implemented a new chart of accounts in 2017. This change breaks the fund’s accounts into major costs centers: administration, buildings, aquatics, guest services and concessions, maintenance, and fitness programs. The 2018 budget reflects the new chart of accounts. In 2018, the city will start billing all residential garbage customers with an individual service cart $3.00 plus 9.75% tax per month. This charge replaces a $13.00 monthly fee that was mainly paid by mobile home parks. 77 CAPITAL INVESTMENTS AND OPERATING BUDGETS Capitalinvestments(outlays)toreplaceorimproveexistingassetscanhavesignificantimpactsonoperating budgets.Forexample,capitalinvestmentsreplacingagingequipmentcanreduceannualrepairsand maintenanceexpenditures,andpersonnelservicescosts.Indeed,equipmentnearingtheendofitsusefullife oftenrequiresexpensiverepairswithhard-to-findreplacementparts.Further,personnelservicecostsare impactedintwoways:thecostofthepeoplerepairingtheequipmentandthelossofproductivity.In2013,the cityinitiatedtheCentralEquipmentFundforthepurposeofcreatingarevolvingfundforfutureequipment purchases.Thisfundpurchasesequipmentandleasesitbacktothebenefitingbudgetunits.Theleasepayments assurethatequipmentpurchaseswillreceiveannualfunding,gettingthesamepriorityasotheroperating expenditures.Lastly,newequipmentmaybemoreproductiveandlessexpensivetooperate. Anothertypeofcapitalinvestmentincludesbetterments,whichareimprovementsthatprolonganasset’slifeor increaseitsefficiencyorcapacity.Agreatexample,thecommunitycenterreplacedtheroofovertheaquatics portionofthebuilding,loweringannualenergycosts.Still,thesavingscanbeelusivewhentheenergyproviders consistentlyraisetheirprices. Thecityannuallybudgetsforreplacementofwaterandsewagemainsthrougheachrespectiveenterprisefund. Forpublicutilities,customersatisfactionisdifficulttoquantifyindollars.However,agenerallysatisfiedcustomer maybelesslikelytocomplainabouttherateincreasesneededtosupportthoseservices.Annually,thecity budgetsmoreforwaterandsewermainreplacementthanitdoesforrepairsandmaintenance. Finally,nearly70milesinlength,thestreetsystemisthecity’slargestcapitalasset.In2014,thecityincreased thesealcoatbudgetforroadstoover$180,000. Additionally,thecityannuallybudgetsover$200,000fora moredurablemillandoverlayintheCapitalProjectFund/StreetReconstructionFund. Theseoperatingand capitalexpendituresworkintandemtoforestallenormouslymoreexpensivestreetreconstructionprojects. 78 CAPITAL INVESTMENTS AND OPERATING BUDGETS Department - Operating Fund Fund Amount Year Amount Comment Public Works - General Fund Blacktop hotbox Central Equip.95,000$2018 10,700$CE lease and R&M (-) Rubber melter Central Equip.60,000$2018 6,900$CE lease and R&M (-) Tractor Central Equip.65,000$2018 6,500$CE lease and R&M (+) Fallon Avenue overpass Capital Project 8,300,000$2018 10,500$R&M 7th Street reconstruction Capital Project 650,000$2018 (7,500)$R&M Chelsea Road improvements Capital Project 1,600,000$2018 (7,500)$R&M Walnut Street pedestrian improvements Capital Project 50,000$2018 (1,000)$R&M Downtown street lights Street Lighting 150,000$2018 (3,000)$Electricity and R&M Recreation Culture - General Fund Spirit Hills pathway Park & Pathway 150,000$2018 1,500$Until developed Rolling Woods sidewalk Park & Pathway 40,000$2018 400$R&M Featherstone park Park & Pathway 80,000$2018 4,500$R&M Utility mule Central Equip.15,000$2018 750$CE lease, Gas, R&M (+) Aerator Central Equip.30,000$2018 4,300$CE lease, Gas, R&M (+) Bertram Park buildout Park & Pathway 2,500,000$2019 75,000$CE lease, Gas, R&M (+) Recreation - Community Center HVAC system upgrades Community Ctr.246,000$2018 (24,600)$Electricity and R&M Mississippi Room lighting Community Ctr.35,000$2018 (5,000)$Electricity and R&M Locker room tile restoration Community Ctr.26,300$2018 -$ No impact on expenses Pool deck tile restoration Community Ctr.48,000$2018 -$ No impact on expenses Pool deck tile restoration Community Ctr.48,000$2018 -$ No impact on expenses Public Works - Sewage Fund WWTP phosphorous reduction Sewage 2,300,000$2017 75,000$Chemicals SCADA Sewage 700,000$2018 20,000$R&M, software support Public Works - Water Fund Meter upgrades Water 65,000$2018 (3,250)$R&M Pickup truck Water 45,000$2018 (1,500)$R&M Liquor Fund Sign Liquor 75,000$2018 (2,000)$Electricity and R&M Investment Annual Impact on Operating Expense Central Equipment Fund (CE) leases are set at rates to recover depreciation plus inflation. The lease amounts do not include operating costs such as repairs and maintenance (R&M), gas, or insurance. These expenses are borne by benefiting fund and budget unit. Generally, R&M expenses on old equipment are generally higher than that of newer equipment. Less work is done on equipment that is scheduled for replacement. Items with a (+) are additional equipment, incurring additional R&M. Items with a (-) are replacement equipment with lower R&M in the near term. R&M expenses for roads include estimates for snow removal, boulevard maintenance, street sweeping, crack sealing, and striping. Listed amounts are for expenses in excess of those already being incurred. With no impact on expenses, some are replaced for obsolesces or aesthetics reasons. In reality, some of these amounts may or may not be close to those actually realized. 79 Major Capital Investment Effect on Operating Expenses (Examples) The phosphorous reduction project was undertaken to meet state and federal regulation. Two treatment approaches (natural and chemical) were studied for cost-benefit. Ultimately, the chemical treatment approach was selected. The city’s engineer estimated the additional cost to run the plant at $73,000 starting midway through 2017. Additional costs are built into sewage rates. The wastewater treatment plant SCADA (Supervisory Control and Data Acquisition) system upgrade is long overdue. The old SCADA system lacks vendor support and has outdated features. The new SCADA system would require an annual maintenance support contract whereas the former system function on a pay-as-you-go basis. Because a contractor manages the facility there would not be any offsetting savings from staffing changes. Additional costs are built into sewage rates. The city is replacing two equipment items essential to repair and maintenance to road surfaces, a rubber melter for crack sealing and an asphalt hotbox for surface overlays. The productivity benefits are difficult to quantify but repairs and maintenance costs associated with the old equipment will drop significantly. This equipment will age much like the replaced equipment and require repairs and maintenance as time passes. These two equipment items will be purchased by Central Equipment Fund and leased back to the General Fund. The annual lease payments for the hotbox and rubber melter are $11,700 and $7,400, respectively. Estimated annual maintenance on the hotbox and melter is expected to drop by $1,000 and $500, respectively. Continued development in 2017 at Bertram Chain of Lakes (BCOL) park included a pathway, parking lot, and 20 plus acres of playing fields began in 2016. Maintenance of the area requires people, equipment, and supplies. The area will need an aerator maximizing seeding, fertilizing, and watering activities. The aerator can be used at other parks throughout the city. There are hard-to-measure activity gains because the efficiency gained will be offset by wider use of the equipment. The annual General Fund lease payment to the Central Equipment Fund is $3,700, and repairs and maintenance is estimated at $600 per year. Play equipment and a shelter will be installed at the new Featherstone Park. The park shelter does not have electrical outlets or any other energy consuming features. Maintenance cost consists mainly of ground maintenance and trash collection. Additional costs are built into the park operations activity budget in the General Fund. 80 LEGAL DEBT LIMIT AND BOND RATING DebtLimit:Minnesotacitiesmaynotincurdebtinexcessofthreepercentofthemarketvalueoftaxable propertyinthecity(thelimitis2percentinFirstClasscitiesunlessacharterprovidesahigherrate,withthe higherratecappedbylawat32/3percent).Butexceptedfromthisoverallthreepercentlimitarealmostall debtobligationsforwhichsomeothersourceofrevenueispledgedassecurity.Thus,improvement assessmentbonds,taxincrementbonds,utilityrevenuebonds,purerevenuebonds,capitalimprovement bondsunderanapprovedcapitalimprovementplan,judgmentbonds,andsimilarbondsmaybeissued withoutregardtothestatutorydebtlimit.(Theremaybeotherrequirementsforbondsthatareexemptfrom thedebtlimit;forexample,capitalimprovementbondsmustbeapprovedbyanaffirmativevoteofthree- fifthsofthemembersofafive-membergoverningbody.)Theresultisthat,withonlyafewexceptions,the onlyobligationssubjecttothedebtlimitaregeneralobligationbondspayablesolelyfromadvaloremproperty taxes.Thelegaldebtlimithasnothingtodowiththepracticaldebtlimitofacity,whichisthedebtburden beyondwhichthecredit-worthinessofthecityisputintoquestion.(SeeMinnesotaStatutes,Section475.53) AnticipatedBorrowingthisFiscalYear:ThecityisexpectedtoissueG.O.bondstoreimburseitselffor expendituresonstreetreconstruction,FallonAvenuebridgeconstruction,andotherimprovementsinthe latterhalfof2018. The2018reimbursementamountiscurrentlyestimatedtoexceed$5,000,000. Further, thecityanticipatesissuingdebtforasimilaramountin2019tofinancefirestationimprovementsandother roadprojects. BondRatings:Thecity’sgeneralobligationbondratingwasreviewedinSeptember2017withthesaleof improvementandabatementbonds.Moody’saffirmedthecity’spriorG.O.debtratingof“A2”.The“A2” ratingisan“uppermediumgrade”.Thisisgenerallydescribedas“strong,investmentgrade”creditby Moody’s. Market value (payable 2018)1,828,437,600$ Debt limit (3% of market value)54,853,128$ Debt applicable to limit General obligationdebt 23,920,000 Less general obligationbonds not subject to the limit (14,975,000)$ Total net debt applicable to limit 8,945,000$ Legal debt margin 45,908,128$ Legal Debt Margin Calculation for Fiscal Year 2018 81 BOND RATING SCALES Moody’sMonticellorating: A2forGeneralObligationDebt Moody's S&P Fitch Long- term Short- term Long- term Short- term Long- term Short- term Aaa P-1 AAA A-1+ AAA F1+ Prime Aa1 AA+AA+ High gradeAa2AAAA Aa3 AA-AA- A1 A+A-1 A+F1 Upper medium gradeA2AA A3 P-2 A-A-2 A-F2Baa1BBB+BBB+ Lower medium gradeBaa2P-3 BBB A-3 BBB F3Baa3BBB-BBB- Ba1 Not prime BB+ B BB+ B Non-investment grade speculativeBa2BBBB Ba3 BB-BB- B1 B+B+ Highly speculativeB2BB B3 B-B- Caa1 CCC+ C CCC C Substantial risks Caa2 CCC Extremely speculative Caa3 CCC-Default imminent with little prospect for recoveryCaCC C C D / DDD /In default/DD /D 82 DEBT SERVICE LEVY HISTORY Most of the city’s debt issues are supported on some level by property taxes. The 2013B Wastewater Treatment Bonds and 2015A Minnesota Public Facilities Authority G.O. Note Payable are both supported directly by Sewage Fund revenues. The city issued $6,595,000 in general obligation bonds in 2014. This dual purpose issue had two portions: judgment - $6,080,000 and capital equipment - $515,000. The capital equipment debt is carried in an internal service fund; lease payments from the General Fund provide money for the debt service. In 2015, the city issued $2,605,000 in street reconstruction and improvement bonds. In October 2016, the city issued $4,900,000 for the same purposes. In 2017, the city issued $5,000,000 in improvement and tax abatement bonds. The tax levies for years 2016 through 2018 included amounts for future debt service: $300,000 in 2016; $50,000 in 2017; $783,000 in 2018. Year 2010A Imp 2011A Imp 2007A Imp 2008 Swr 2008A MCC 2014A JE 2015B SRI 2016A SRI 2017A Total 2014 -$ 223,000$540,000$500,000$1,040,000$-$-$-$-$ 2,303,000$ 2015 40,000 330,000 420,000 500,000 1,005,000 ----2,295,000 2016 40,000 330,000 420,000 500,000 -544,000 250,000 --2,084,000 2017 40,000 139,783 610,000 500,000 -536,929 195,288 415,000 -2,437,000 2018 40,000 148,061 ---537,586 203,425 407,769 450,159 1,787,000 2019 25,000 185,000 ---537,244 200,905 409,133 429,781 1,787,063 2020 25,000 185,000 ---535,501 198,385 405,038 427,367 1,776,291 2021 25,000 183,000 ---537,570 201,325 406,089 430,096 1,783,080 2022 25,000 187,000 ---538,226 197,651 406,929 427,367 1,782,173 2023 -185,000 ---537,609 199,436 407,558 424,531 1,754,134 2024 -----536,081 200,223 407,979 426,842 1,571,125 2025 -----538,861 200,879 408,190 428,941 1,576,871 2026 -----540,499 223,990 408,189 430,832 1,603,510 2027 -----535,698 219,135 70,718 425,175 1,250,726 2028 -----540,812 223,808 68,827 258,197 1,091,644 $- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Debt Service Levy (2014 - 2028) 2010AImp 2011AImp 2007AImp 2008 Swr 2008AMCC 2014AJE 2015B SRI 2016ASRI 2017A 83 G.O. DEBT SERVICE Early redemption and normal amortization caused annual general obligation (G.O) debt service to decline sharply in 2016 and 2017. Early redemption occurred for the 2008 sewer bonds in 2016 and 2017. Early redemption for the 2007A improvement bonds occurred in 2016. In 2014, the city issued $6,595,000 in G.O. bonds: judgment ($6,080,000) and capital equipment ($515,000). In 2015, the city issued $2,605,000 in G.O. bonds: street reconstruction ($1,885,000) and improvements ($720,000). In 2016, the city issued $4,900,000 in G.O. bonds: improvements ($4,130,000) and street reconstruction ($770,000). The $5,000,000 2017A bond issue included $2,960,000 in tax abatement bonds for Fallon Avenue overpass construction. Recorded as debt in the sewage enterprise fund, the Minnesota Public Facilities Authority (MPFA) $2.3 million loan is excluded from the schedule and graph below. Year 2010A Imp 2011A Imp 2007A Imp 2008 Swr 2008A MCC 2013 COI 2013 WWT 2014A JE 2015B SRI2016A SRI 2017A Total 2014 360,150$2,880,150$735,600$1,049,841$1,037,360$66,120$254,198$-$-$-$-$ 6,383,419$ 2015 302,399 2,460,250 730,400 1,049,193 1,000,760 65,760 250,598 174,406 ---6,033,766 2016 304,050 2,423,950 1,482,967 1,566,998 -65,250 246,998 580,872 211,969 --6,883,054 2017 304,618 783,650 535,500 1,521,432 -69,590 243,398 576,821 207,500 523,821 -4,766,330 2018 299,324 779,350 ---68,713 244,798 576,759 215,250 527,150 469,511 3,180,855 2019 298,355 428,350 ---67,673 241,098 575,608 212,850 528,450 471,640 2,824,024 2020 301,653 430,650 ---71,470 242,398 572,931 210,450 524,550 469,340 2,823,442 2021 304,050 425,825 ----243,598 578,691 213,050 525,550 471,940 2,762,704 2022 -428,750 ----244,406 577,816 209,750 526,350 469,340 2,456,412 2023 -426,300 ----244,706 575,578 211,450 526,950 466,640 2,451,624 2024 ------244,376 572,384 212,200 527,350 468,840 2,025,150 2025 ------243,600 513,201 212,825 527,550 470,840 1,968,016 2026 ------247,150 514,761 213,325 527,550 472,640 1,975,426 2027 ------245,400 510,189 208,700 67,350 472,140 1,503,779 2028 ------248,040 515,059 213,150 65,550 241,390 1,283,189 $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 G.O. Debt Service Paid/Due (2014 - 2028) 2010A Imp 2011A Imp 2007A Imp 2008 Swr 2008A MCC 2013 COI 2013 WWT 2014A JE 2015B SRI 2017A 84 G.O. DEBT LEVELS The city’s general obligation (G.O.) debt level increased by less than $700,000 with the issuance of $5 million of new debt in 2017. Normal debt amortization and a couple early redemptions nearly offset the addition of new debt. The trend will reverse in 2018 when the planned issuance of $5 million in new debt surpasses redemptions and maturities. Rapid amortization of debt reflects an opportunity for financing new projects included in the capital improvement program (CIP). The schedule below reflects the refinancing of 2005A improvement bonds with 2011A bonds—the two are combined on the schedule less the redemption bond payment. Accounted for in the Sewage Fund, the Minnesota Public Facilities Authority $2.3 million loan is excluded from the schedule and graph below. Year 2010A Imp. 2011A Imp. 2007A Imp. 2008 Sewer 2008A MCC 2013 COI 2013 WWT 2014A J&E 2015B SR&I 2016A SR&I 2017A Outstanding 2014 1,955,000$8,055,000$1,930,000$3,376,000$985,000$385,000$2,820,000$6,595,000$-$-$-$ 26,101,000$ 2015 1,690,000 5,745,000 1,290,000 2,452,000 -325,000 2,640,000 6,595,000 2,605,000 --23,342,000 2016 1,420,000 3,425,000 625,000 1,496,000 -265,000 2,460,000 6,190,000 2,460,000 4,900,000 -23,241,000 2017 1,145,000 2,715,000 ---200,000 2,280,000 5,785,000 2,310,000 4,485,000 5,000,000 23,920,000 2018 870,000 1,995,000 ---135,000 2,095,000 5,375,000 2,150,000 4,050,000 4,660,000 21,330,000 2019 590,000 1,615,000 ---70,000 1,910,000 4,960,000 1,990,000 3,605,000 4,295,000 19,035,000 2020 300,000 1,225,000 ----1,720,000 4,540,000 1,830,000 3,155,000 3,925,000 16,695,000 2021 -830,000 ----1,525,000 4,105,000 1,665,000 2,695,000 3,545,000 14,365,000 2022 -420,000 ----1,325,000 3,660,000 1,500,000 2,225,000 3,160,000 12,290,000 2023 ------1,120,000 3,205,000 1,330,000 1,745,000 2,770,000 10,170,000 2024 ------910,000 2,740,000 1,155,000 1,255,000 2,370,000 8,430,000 2025 ------695,000 2,320,000 975,000 755,000 1,960,000 6,705,000 2026 ------470,000 1,885,000 790,000 245,000 1,540,000 4,930,000 2027 ------240,000 1,440,000 605,000 185,000 1,110,000 3,580,000 2028 -------975,000 410,000 125,000 900,000 2,410,000 $- $5 $10 $15 $20 $25 $30 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028MillionsG.O. Debt Outstanding (2014 - 2028) 2007AImp.2008 Sewer 2008A MCC 2010A Imp.2011AImp.2013 COI 2013 WWT 2014AJ&E 2015B SR&I 2016ASR&I 2017A 85 EFFECT OF DEBT LEVELS ON GOVERNMENT OPERATIONS Debt is carried in three fund types: Governmental Funds, Enterprise Funds, and Internal Service Funds. Consequently, debt has a different impact on the operations of each fund type. Indeed, debt service is a fixed cost that does not vary with activity levels. Debt amortization and redemption reduces fixed costs, freeing resources for other purposes. Governmental Funds Governmental fund debt service is provided through debt service funds, which accumulate money from various sources for principal and interest payments. Those sources include property taxes, special assessments, transfers from enterprise funds, and transfers from capital project funds collecting impact fees. The debt effect on services delivered through governmental funds with current plant and equipment is somewhat diminished because the city is not constrained by state-imposed levy limits for property taxes. When levy limits have been in place, statutes have allowed for special levies for debt service. While there are limits to what taxpayers can bear, Monticello has the lowest tax capacity rate in Wright County because of its large commercial tax base—including the nuclear power plant. In a stable market value environment, the power plant absorbs over half of any tax increase. The General Fund is primarily supported (over 80%) by property taxes and the Monticello Community Center (MCC) Fund is primarily supported by charges for services. The General Fund has other underutilized revenue sources, and the MCC Fund can adjust its fee schedule and reduce costs. Still, one negative consequence of using impact fees for debt services is the city’s reduced ability to finance water and sewer trunk improvements with money on hand. High debt levels lower the city’s ability (debt limit and debt rating) to issue new debt for capital assets, which may improve efficiency or meet a growing need. Enterprise Funds The Sewage Fund is the only enterprise fund with debt. All utility rates are reviewed annually and adjusted to cover operating, capital, and debt service expenditures. Transfers support principal and interest payments in debt service funds where water and sewer impact fees have been deficient. This drain on resources means new debt will need to be issued for Sewage Fund wastewater treatment plant upgrades and trunk improvements. According to an AE2S survey, Monticello has some of the lowest water and sewage rates in the Minnesota. However, the council is aware that the city needs to maintain its competitive position with taxes and utility charges to attract economic development. Internal Service Funds Two debt issues have provided capital for creating a Central Equipment internal service fund. This fund finances governmental fund equipment purchases over $10,000. The equipment is then leased back to the benefitting budget unit for a fixed duration. The lease payments provide for additional future equipment purchases. Currently, the General Fund is the only governmental fund internally leasing equipment. The debt serves as a mechanism for maintaining the fund and its equipment purchases. With over 80% of the General Fund revenue comprised of property taxes, the Central Equipment Fund debt and the related lease payments have a direct effect on the amount of resources available for other uses. Again, this is mitigated by the city’s low tax capacity rate and the lack of a levy limit. In summary, debt is a valid way to match customers with the cost of providing a particular service. Current service customers pay for current service delivery with annual debt service payments supported by user fees and taxes. Future service customers make future debt service payments through future taxes and user fees. 86 DEBT LEVELS BY FUND TYPE The following schedule and chart separate debt by fund type. Governmental funds typically have varying sources of revenue: property taxes, special assessments, impact fees, etc. Enterprise fund debt is usually supported by charges for services. Internal service funds are supported by charges for services to budget units within other funds, which have their own revenue sources (taxes, licenses and permits, charges for services, etc.). Year Governmental Enterprise Internal Service Total 2014 22,421,000$3,295,000$385,000$26,101,000$ 2015 19,532,000 3,030,000 780,000 23,342,000 2016 19,761,000 2,760,000 720,000 23,241,000 2017 21,040,000 2,280,000 600,000 23,920,000 2018 18,755,000 2,095,000 480,000 21,330,000 2019 16,765,000 1,910,000 360,000 19,035,000 2020 14,740,000 1,720,000 235,000 16,695,000 2021 12,550,000 1,525,000 290,000 14,365,000 2022 10,730,000 1,325,000 235,000 12,290,000 2023 8,870,000 1,120,000 180,000 10,170,000 2024 7,400,000 910,000 120,000 8,430,000 2025 5,950,000 695,000 60,000 6,705,000 2026 4,460,000 470,000 -4,930,000 2027 3,340,000 240,000 -3,580,000 2028 2,410,000 --2,410,000 $- $5 $10 $15 $20 $25 $30 MillionsDebt Levels by Fund Type Governmental Enterprise Internal Service 87 INTERFUND TRANSFERS INTERFUND TRANSFERS Operatingtransfers support theoperations ofotherfunds, provide forspecialprojects,and contribute to debtservice payments. The followingschedule provides theoperatingtransfers inthe 2018 Budget: Fund No.Transfer In Fund Amount Fund No.TransferOut Fund Amount 312 2011A GO Improvement Bond 200,000$213 Economic Development 200,000$ 229 Park& Pathway Dedication 400,000 609 Liquor 400,000 317 2010A GO Improvement Bond 44,899 406 Street Reconstruction 44,899 400 Capital Projects Fund 600,000 601 Water 600,000 656 FiberOptics 130,000 609 Liquor 130,000 Total Transfers In 1,374,899$Total Transfers Out 1,374,899$ SCHEDULE OF OPERATINGTRANSFERS Debt Service 18% Enterprise 9% Capital Projects 73% 2018 Transfers In Fund-Type Special Revenue 15% Capital Projects 3% Enterprise 82% 2018 Transfers Out Fund- Type 88 STAFFING SUMMARY STAFFING HISTORY Staffing,as measuredby full-time equivalents, has been relativelystable for thelast five years.Many employees perform across multiple activities/divisions and funds.The table below does not reflect the seasonor part-time communitycenteremployees.The budget includes anew full-time fire positionstartinginJuly2018.Alltheemployees forFiberOptics Fundwereeliminatedwhen the service was outsourced2016. Amended Adopted Actual Actual Actual Budget Projected Budget 2014 2015 2016 2017 2017 2018 General Fund City Administration 1.85 1.85 1.85 2.18 2.18 3.60 Finance 4.00 4.00 4.00 4.00 4.00 4.00 City Clerk 0.35 0.35 0.35 0.35 0.35 1.00 Human Resources 1.00 1.00 1.00 1.00 1.00 1.00 Planning & Zoning 1.30 1.30 1.30 1.30 1.30 1.30 City Hall 1.40 1.40 1.40 1.90 1.90 - Fire & Rescue -----0.50 Building Inspections 3.00 3.00 3.00 4.00 4.00 4.00 Public Works Administration 2.00 2.00 2.00 1.50 1.50 1.80 Engineering 1.60 1.60 ---- Public Works Inspections 1.30 1.30 1.30 1.00 1.00 1.00 Shop & Garage 1.50 1.50 1.50 1.50 1.50 1.50 Streets & Alleys 10.30 10.30 10.30 10.05 10.05 9.80 Ice & Snow 2.20 2.20 2.20 1.70 1.70 1.70 Park Operations 6.85 6.85 6.85 6.85 6.85 6.60 Shade Tree 0.40 0.40 0.40 0.50 0.50 0.75 Total General Fund 39.05 39.05 37.45 37.83 37.83 38.55 Special Revenue Funds Economic Development 0.20 0.20 0.20 1.20 1.20 1.20 Monticello Community Center 8.40 8.40 8.40 8.40 8.40 8.40 Total Special Revenue Funds 8.60 8.60 8.60 9.60 9.60 9.60 Enterprise Funds Water 3.15 3.15 3.15 3.80 3.80 4.00 Sewage 3.15 3.15 3.15 3.80 3.80 4.00 Liquor 10.00 10.00 10.00 10.00 10.00 10.40 Deputy Registrar 6.00 6.00 6.00 6.10 6.10 6.20 Fiber Optics 7.45 7.45 3.75 --- Total Enterprise Funds 29.75 29.75 26.05 23.70 23.70 24.60 Total All Funds 77.40 77.40 72.10 71.13 71.13 72.75 NUMBER OF FULL-TIME EQUIVALENTS Fiscal Year Ended December 31, 89 REVENUE TRENDS & ANALYSIS Revenuesareconservativelyestimatedforeveryfundtype.The belowscheduleofrevenueestimatesis supportedbydetailedrevenueestimatesforeachfundinlatersections.This sectionofthe budget highlights majorrevenue sources forallthecity funds as combinedand formajor governmentaland enterprise funds: GeneralFund andMonticello Community Center Fund(governmental funds),along withthe Water,Sewage,Liquor,DeputyRegistrarand FiberOptics funds (enterprise funds).Trends for these funds andindividualrevenues areshowntogetherwithestimates forthecomingyear. TOTAL CITY REVENUES AND OTHER SOURCES 2014 2015 2016 2017 2017 2018 % TOTAL ALL FUNDS ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes $8,386,953 8,619,812$9,275,414$9,430,000$9,430,000$9,870,000$4.7% Tax Increments 836,750 727,617 668,352 653,564 653,564 635,678 -2.7% Franchise & Other Taxes 334,726 352,073 432,785 399,900 399,900 405,500 1.4% Sale of Goods 5,165,737 5,489,430 5,448,584 5,435,194 5,635,194 5,770,784 6.2% Licenses & Permits 381,544 465,469 671,602 379,600 379,600 400,750 5.6% Intergovernmental Revenues 733,566 1,413,360 2,041,363 596,440 596,440 374,440 -37.2% Charges for Services 7,303,528 7,854,450 8,091,397 7,786,080 7,764,510 8,095,795 4.0% Fines & Forfeits 48,744 42,474 30,656 42,300 42,300 36,500 -13.7% Special Assessments 1,953,370 3,331,901 984,916 576,666 656,666 385,746 -33.1% Miscellaneous 1,840,271 1,149,501 1,902,367 786,790 858,360 522,272 -33.6% Contributed Capital 966,494 1,435,870 1,993,232 140,450 140,450 140,450 0.0% Operating Transfers 11,298,117 4,937,975 2,588,244 829,362 1,212,562 1,374,899 65.8% Debt Proceeds 6,467,106 2,651,898 6,410,568 5,700,000 5,700,000 5,000,000 -12.3% TOTAL REVENUES 45,716,906$38,471,830$40,539,480$32,756,346$33,469,546$33,012,814$0.8% Property taxes account for the single largest revenue source for the city. Other sources such as operating transfers (in) and debt proceeds occasionally surpass property taxes, but they generally do not support day-to-day operations. Tax Increments are the main source of revenue for the Economic Development Fund. This fund accounts for the city’s tax increment financing (TIF) districts and other general economic development activities. One TIF districts was decertified in 2017. Licenses & permits are comprised primarily of building permits, which are conservatively estimated at 2015 levels to smooth the cyclical nature of this revenue category. Intergovernmental revenues are expected to decrease as state aid for some capital projects (Fallon overpass, TH25/CSAH75 improvements, etc.) is distributed over multiple accounting periods. With a strong commercial tax base, the city generally does not qualify for much state aid that is not project specific. Special assessments primarily support debt service funds. Prepayment of future certified assessments in 2015 and 2016 has affected collections in subsequent years. Charges for services do not reflect changes to the fee schedule occurring after adoption of the budget. The city uses conservative revenue budgeting practices to ensure revenues will be sufficient to meet operating needs. 90 Miscellaneous revenues are conservatively estimated to decrease but the investment earnings— the largest portion of this revenue classification—are expected to hold steady. The amount of investible funds is expected to decline as fund balances are drawn down. Overall revenues and other sources lag expenditures and other uses. Operating transfers (in) are expected to increase in 2018 because capital projects will receive more support from internal sources. In 2016 and 2017, operating transfers were largely going to debt service funds for annual principal and interest payments on bonded debt. In 2018, debt proceeds to finance the Fallon Avenue overpass are estimated at $5 million. The city may decide later to issue debt to support Chelsea and 7th Street improvements rather than use reserves. The chart below provides an overall picture of estimated 2018 revenues and other sources. Property Taxes 30% Sale of Goods 17% Charges for Services 25% Operating Transfers 4% Debt 15% All Other 9% Revenueand Other Sources (All Funds) PROPERTY TAXES The city relies on property taxes to support such functions as general government, public safety, public works, recreation and culture, and debt service. For 2018, the council adopted a general levy of $9,547,000, which is $397,000 (4.3%) greater than the prior year. The council also adopted a Housing and Redevelopment Authority (HRA) special benefit levy of $323,000, which is $43,000 (15.4%) greater than the prior year. The HRA levy is recorded in the Economic Development Authority (EDA) Fund. The General Fund discontinued operating transfers—annually about $90,000--to the EDA Fund when the HRA levy was first adopted in 2016. Both levies are combined for graphical and contextual purposes. The tax levy has risen ahead of inflation the last five years. 91 The following chart reflects the changes in the tax levy over the last ten years: $9,430,000 $9,870,000 $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Property TaxLevy History Accounting for a variety of activities, the General Fund will receive slightly less than 70% of the 2018 property tax levy. However, property taxes provide approximately 80% of the General Fund’s revenue. In prior years, the levy for the Monticello Community Center (MCC) had two components: operations and debt service. The MCC’s debt service levy portion dropped off in 2015. The operations component increased $15,000 (4.0%) to $387,000. The following chart represents the distribution of the tax levy for 2018. GeneralFund, $6,590,000,67% MCC Operations, 387,000, 4% HRA Levy, $323,000,3% Debt Service, 2,570,000,26% PropertyTax Levy (Adopted - 2018) 92 When determining the property tax levy, the city council and staff consider the impact the levy will have on various property owners. This impact is then balanced against services provided and service levels. In the past, the city was able to fund services at current levels with a relatively flat levy. The growing economy and increased property values have led to a drop in the tax capacity rate. Still, from 2008 through 2012, property values declined as a result of a weaker national and local economy. Estimated market values are converted to tax capacity by using specific state formulas for various types of properties. In 2013, the tax capacity grew a healthy $2.9 million (18.6%) to $18.7 million. Why? The nuclear power plant located within the city limits added over $160 million in new taxable value with capital equipment upgrades. Consequently, equipment retirements related to the same uprate caused a slight decline in 2014. History repeating itself, the tax capacity for 2015 grew by $5.7 million (31%) to $23.9 million with another uprate at the nuclear power plant. Further, the benefits from the last uprate extended into 2016, adding $80 million in tax market value and nearly $2 million in tax capacity. The tax capacity for 2018 taxes payable is $29.5 million, or 7.1%, higher than 2017. Increases in residential market values and new construction added to tax capacity gains in both 2017 and 2018. In a stable levy environment, tax capacity and tax capacity rates will typically have an inverse relationship. With city and HRA tax capacity rates added together, the following chart demonstrates that relationship over the last 15 years: $11.1M $27.6M $29.6M62.421 34.188 33.420 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 $- $5 $10 $15 $20 $25 $30 $35 TaxCapacityRateTaxCapacityValue(millions)Tax Capacity Values and Tax Capacity Rates Tax Capacity Value Tax Capacity Rate 93 GENERAL FUND The GeneralFund is used to account forallfinancial resources ofthecity,except forthose requiredto be accountedforinanother fund. Majorfunctions supportedby generalfund revenues include:city and finance administration, police andfireservices, public works,and recreation andculture. Revenue is estimatedto be $8,287,000 (+5.7%) forthe 2018 budget year. TheprimaryGeneral Fund sourceof revenue is property taxes at$6,590,000 (+4.8%),whichaccounts for80%of total revenues. No othersinglecategoryofrevenues exceeds 5% oftotalrevenues. TheGeneral Fundis not supported byany transfers (othersources)from other funds. The followingcharts depicts General Fundrevenues as representedin the 2018adopted budget: Property Taxes, 80% General Fund Revenues - 2018 Property Taxes Franchise & Other Taxes Licenses & Permits Intergovernmental Revenues Charges for Services All Other The followingchartrepresentsGeneralFund revenuesoverthe lastten years,with2017 projected and 2018 budgeted: $- $1 $2 $3 $4 $5 $6 $7 $8 $9 2009 2010 2011 2012 2012 2014 2015 2016 2017 2018MillionsGeneral Fund Revenues PropertyTaxes Licenses &Permits All Other 94 GeneralFund revenues peaked in2008 alongwithpropertytaxes andlicenses and permits. Since 2008,licenses andpermits have compriseda relatively less significantportionofthe overall revenues. Licenses andpermits consistmostlyofbuilding-type permits and have rebounded alongwiththe economyandcommercialand residentialconstruction. Peakingin2008 above $1 million,licenses & permits areconservativelyestimatedat$398,750 for2018. WATER AND SEWAGE FUNDS Waterandsewagecharges forservices are primarilycomprisedof providingMonticello residents and businesses withwaterandsewage services.Based partiallyonthe levelofconsumption,these utility funds each have separatecharges for deliveredservices.The citysetrates to coveroperatingcosts,a portionof depreciation,and debtservice.As new developmentslowed, the burdenon infrastructure replacementcostsshiftedto utilityrates from impact(access)charges.Thewater andsewage funds are expected to provide some levelof future supportfor debtservice incurredto make waterand sewage system improvements. Waterandsewage revenue grew from 2008 to 2011as consumptiondropped and rates increased. After peakingin2012 (a dry year),waterconsumption again declinedas waterand sewage rates climbed, pushingup bothwaterandsewage revenues. With2017 projectedand2018 budgeted,the followingchartplots revenues forwater andsewageserviceson the primaryaxis (left)againstwater sales onthe secondary axis (right): - 100 200 300 400 500 600 700 $- $0.5 $1.0 $1.5 $2.0 $2.5 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GallonsSold(Millions)Revenues(Millions)Water & Sewage Revenue Water Revenue Sewage Revenue H2O Sold (Gals) Waterservice charges have two components: base charge withaminimum usage amountand consumptioncharge for usage above theminimum amount. Bothcharges have increasedsteadily overthe lastten years: average base andconsumptioncharge increases were6.0% and6.9%, respectively. For2018,no rate increases were included inthe budget. However,subsequentto budget adoption,thecouncilraised the base charge by $0.50 (7.8%)andthe usage charge by1.7%. Sewage charges,similar towatercharges, have twocomponents: base charge withaminimum usage 95 amountandconsumptioncharge for usage above the minimum amount.Bothcharges have increasedsteadilyoverthe years: average base andconsumptioncharge increaseswere 6.7% and 5.5%,respectively. For2018,no rate increases were includedinthe budget.However,subsequentto budget adoption,thecouncilraised the base charge by $0.70 (8.7%)andthe usage charges by2.7%. The followingchartreflects the waterandsewage base rates overthe lastten years: $- $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018MonthlyChargeSewage and Water Base Rates Sewage Water MONTICELLO COMMUNITY CENTER The Monticello Community Center (MCC)provides afacilitywithspace for avarietyofrecreational, professional,andeducationalopportunities. Aside from its portionofthe property tax levy,the MCC is supportedby avarietyoffees formemberships,activities,rental,andconcessions.Council passeda revenue recoverypolicyalongwithbudgetadoptionthat now requires the MCCtocover85%ofits operatingcosts—includingequipment—with fees and charges. In the followingchart,2014 through2016 are actualamounts and2017 and2018 are estimates. Reflectinga policychange,some activityfeeswere rolledintomembershipfees in 2017 and2018. $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 UserFees Rental Activities Concessions MCC MajorRevenues 2014 2015 2016 2017 2018 96 FIBER OPTICS FUND (FiberNet) Monticello’s telecommunications utility, FiberNetMonticello, provides internet, telephone (voice) and video (TV)services. City residentialandcommercialcustomerscansubscribe toone, two,orall three services.FiberNetcontinues to face competition from two large private providers with deep pockets. As aresult,subscribercounts forvoice andTV have declinedinrecentyears. Internetis showingsome growthwith morecustomers streaming video services. Still,commercialand residentialcustomers are benefitting from lowerbills withFiberNet’s presencein themarketplace eveniftheyare not FiberNetcustomers. The datainthe graphs belowshow astable competitive environment forFiberNetin2017. 1506 1512 1512 1521 1535 1545 1546 1544 1543 1550 1551 1554 643 626 600 589 580 572 567 562 549 543 543 543 465 459 454 448 446 440 437 436 432 433 432 431 0 500 1000 1500 2000 2500 3000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 Total Subscribed Services Total Phone Total Television Total Internet 1512 1514 1508 1520 1531 1535 1537 1536 1530 1530 1533 1536 133 132 134 132 131 131 133 132 132 134 134 135 0 200 400 600 800 1000 1200 1400 1600 1800 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 Residential and Business Customer Counts Business Residential The2018budgetincludesrateincreasesforvariousservices.InJuly2016,thecitycontractedwithArvig tomanageFiberNet.AllFiberNetemployeesarenowArvigemployees.Throughleaneroperationsand sharedresources,thecityexpectstohaveapositivecashflowin2018.Arvigwillcontinuetoassessthe marketplace and service delivery costs and will raise prices as conditions warrant. The 2018 budgeted subsidy to FiberNetfrom other funds (Liquor)is $130,000. 97 DEPUTY REGISTRAR (DMV) The city is authorized bythe State ofMinnesotato operate aDMV. Fees collected from motor vehicle licenses is the DMV’s mainrevenuesource.Fees are regulated bythestate.Anincrease instate approvedfees,startingin2012,alongwith bettereconomic conditions resulted in higher revenues. The followingchartshows the historyofDMVtransactions over afive-yearperiod. Motor vehicle licenses (new and renewals)as percentage oftotal transactions remains relatively constantat88% to 89%. Totaltransactions surpassed two milestoneswithover 70,000 transactions in 2015 andover75,000 in2016.Indeed,the Monticello DMVprocesses1.13% of thestate’s total motorvehicle transactions with .24%of the state’s population,aratioof4.7. With darkershades ofgreen representing higher(better) numbers,the followingchartshows the monthly DMV revenues over the last five years.The chart also provides informationonannual revenues,annual transactions,and revenues pertransaction. DMV Revenue by Month Month 2013 2014 2015 2016 2017 Jan 39,765$40,164$46,375$44,033$55,543$ Feb 40,770 38,911 44,030 48,449 50,185 Mar 36,276 46,503 58,146 51,587 64,926 Apr 44,208 49,621 50,202 48,811 56,859 May 48,814 47,105 45,042 51,480 56,163 Jun 37,904 43,703 47,721 45,794 51,287 Jul 40,822 44,600 46,171 42,991 40,006 Aug 38,530 43,821 42,362 57,346 40,225 Sep 36,622 35,072 40,759 44,186 52,492 Oct 32,969 38,840 37,245 44,178 39,900 Nov 27,357 33,506 32,457 37,700 48,766 Dec 32,140 35,647 40,608 44,803 37,837 Total 456,178$497,493$531,118$561,357$594,188$ % Change 24.9%9.1%6.8%5.7%5.8% Transactions 62,420 67,462 72,135 75,891 78,515 % Change 7.1%8.1%6.9%5.2%3.5% Revenue per Transaction 7.31$7.37$7.36$7.40$7.57$ 98 LIQUORFUND With total2017 sales ofnearly$5.8 million,Monticello’s municipal liquorstore ranks nearthe topof Minnesotacities withonlyonestore.However, revenue growth is expectedtoslow because ofstore size limitations.Totalsaleshave climbedan average of 3.5% forthe lastfive years; liquoris the fastest growthcategory averagingnearly25% over five years. Liquorsales have increased over the last five years and the budgetreflects thistrend. The Liquor Fund hasone retailoutlet: Hi-Way Liquors. This fund provides vitalresources for manycommunity projects includingcommunity center andstreetimprovements.Conservative revenue estimates are usedforbudgeting purposes. However,2018 netcash flow from operations should top$600,000.In prior years,interestearnings contributedsignificantlyto netcashflows. A large operatingtransfer outin2012 depletedcashand subsequentongoingtransfers have curtailedinvestmentearnings. Beeraccounts forapproximately50% oftotalsales; liquorandwine follow at30% and16%, respectively. Non-alcoholitems contribute 4%.Beer typically has the lowestgross marginat26% and wine the highestat32%. Liquor is in the middle atabout30%.The chart belowprovides sales information bycategory: LiquorStore Revenue by Category Category 2013 2014 2015 2016 2017 5 Yr Chg Beer 2,539,167$2,604,942$2,764,583$2,768,394$2,933,853$18% % Change 2.3%2.6%6.1%0.1%6.0% Liquor 1,506,776$1,546,118$1,634,069$1,624,908$1,739,562$25% % Change 7.9%2.6%5.7%-0.6%7.1% Wine 860,817$868,779$927,778$889,082$894,151$10% % Change 5.9%0.9%6.8%-4.2%0.6% Other 138,855$145,902$165,631$171,420$192,616$26% % Change -9.4%5.1%13.5%3.5%12.4% Total Sales 5,045,615$5,165,741$5,492,061$5,453,804$5,760,182$19% % Change 4.1%2.4%6.3%-0.7%5.6% 99 The state law prohibitingSunday sales changedeffective July1,2017. Liquorstores are now allowed to be open from11:00am to 6:00pm on Sunday. The liquorstore is normallyopen from 9:00am to 10:00pm onMonday through Saturday. Sales on the 27 Sundays forthe halfyear totaled$316,280. Fourofthose Sundays accountedfor$108,118 insales. 100 APPROPRIATIONS BY CATEGORY AND FUND-TYPE Expenditures, often called appropriations, are classified under one of six major categories: personnel services (wages & benefits), supplies, other services & charges (professional fees, utilities, etc), capital outlay, debt service, and operating transfers (other financing uses). The graph below shows the relative percentage of FY18 budgeted expenditures for these six major categories for all funds, combined. Personnel Services 16% Supplies 15% Capital Outlay 34% Operating Transfers 3% Other Services& Charges 23% DebtService 9% 2018 Appropriations by Category - All Funds APPROPRIATIONS BY TYPE, GENERAL FUND ONLY— Using those same categories of expenditure type, the relative percentages of budgeted expenditures for the General Fund are shown below. As you can see, the General Fund is comprised of a much higher percentage of personnel services costs compared to all funds, as a whole. The General Fund supports very little capital improvements and no debt service compared to all funds, as a whole. Personnel Services 40% Supplies 9% Capital Outlay 3% Other Services & Charges 48% Expendituresand OtherUses - 2018 101 In governmental agencies, salaries, wages and benefits (personnel services) normally represent the largest of these categories. However, due to the significant investment in infrastructure, cities have a much higher percentage of the budget devoted to operating and capital costs, including debt service, than most other governmental entities. One other factor is that the city contracts (other services and charges) for law enforcement, legal and assessing services. As shown, the General Fund, Debt Service Fund (aggregation of debt service sub-funds) and enterprise funds account for 62%, down from 69% in 2017, of the total expenditures of the city. The General Fund is the city’s primary operating account for general government operations. Debt service funds include only non-enterprise and non-internal service fund debt. These funds are supported with property taxes, special assessments, tax increments, and access fund transfers. Enterprise funds consist of water, sewage, liquor, deputy registrar (DMV), and fiber optics funds. These funds operate on a self-supporting basis. Special revenue funds, totaling 8% of appropriations, include a variety of fee supported funds including the community center and cemetery. Capital project funds total 28% (up from 21% in 2017) of appropriations, which includes financing for street reconstruction, street lighting, and other governmental capital asset acquisitions but excludes capital assets acquired in the enterprise and internal service funds. General Fund 22% Special Revenue Funds 8% Debt Service Funds 7% Internal Service Funds 2% Capital Project Funds 28% Enterprise Funds 33% 2018 Expenditures by Fund-Type 102 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2018 GENERAL FUND GENERAL FUND - SUMMARY FUND DESCRIPTION One of five governmental fund types, the General Fund serves as the chief operating fund of the city. The General Fund is used to account for all financial resources not accounted for in some other fund. The fund uses the modified accrual basis of accounting for budgeting and financial reporting purposes. This means expenditures are recorded when the liability is incurred and revenues are recorded when they become measurable and available. The adopted General Fund budget is a balanced budget--current revenues and other sources equal expenditures and other uses. ISSUES The General Fund’s largest revenue source is property taxes. In 2017 the General Fund’s portion of the levy grew by 1.8% as the city and HRA combined levy grew by 2.4% The Public Works Department has the largest appropriation for 2017. GENERAL FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 5,507,285$5,887,666$6,183,861$6,291,000$6,291,000$6,590,000$4.8% Franchise & Other Taxes 237,173 235,089 284,468 283,900 283,900 289,500 2.0% Licenses & Permits 378,809 460,834 668,602 379,400 379,400 398,750 5.1% Intergovernmental Revenues 321,891 355,729 389,005 346,440 346,440 374,440 8.1% Charges for Services 309,297 347,486 351,297 320,470 320,470 398,400 24.3% Fines & Forfiets 48,744 42,474 30,656 42,300 42,300 36,500 -13.7% Special Assessments 22,808 1,330 275 300 300 300 0.0% Miscellaneous 339,839 337,511 374,568 178,190 178,190 199,110 11.7% Operating Transfers --------- TOTAL REVENUES 7,165,846$7,668,119$8,282,732$7,842,000$7,842,000$8,287,000$5.7% EXPENDITURES BY DEPARTMENT GENERAL GOVERNMENT Mayor and Council 52,182$52,572$54,264$57,350$57,350$57,350$0.0% City Administration 281,033 314,719 332,926 444,313 444,313 448,881 1.0% City Clerk 75,594 29,658 69,966 115,092 115,092 131,409 14.2% Finance 385,662 377,867 393,754 445,375 445,375 467,242 4.9% Audit 53,541 37,798 39,273 42,000 42,000 42,000 0.0% City Assessing 49,832 50,466 50,415 52,115 52,115 65,000 24.7% Legal 29,303 36,946 29,152 38,000 38,000 38,000 0.0% Human Resources 90,565 117,249 116,522 124,288 124,288 133,118 7.1% Planning & Zoning 220,080 244,976 210,173 230,848 230,848 248,020 7.4% City Hall 186,833 183,997 182,990 61,759 61,759 72,810 17.9% Prairie Center Building 14,409 13,327 8,917 12,841 12,841 17,753 38.3% TOTAL GENERAL GOVERNMENT 1,439,034$1,459,575$1,488,352$1,623,981$1,623,981$1,721,583$6.0% Continued… 103 GENERAL FUND 2013 2014 2015 2016 2016 2017 % (Continued)ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE PUBLIC SAFETY Law Enforcement 1,190,441$1,145,247$1,174,439$1,222,627$1,222,627$1,263,948$3.4% Fire & Rescue 222,141 306,779 309,970 333,823 333,823 355,810 6.6% Fire Relief 109,594 108,186 120,027 80,000 80,000 80,000 0.0% Building Inspections 251,007 266,545 304,858 369,663 369,663 384,627 4.0% Civil Defense 9,707 1,661 1,500 3,930 3,930 3,564 -9.3% Animal Control 47,426 49,439 48,754 51,348 51,348 51,520 0.3% National Guard 14,517 14,061 13,438 16,050 16,050 15,300 -4.7% TOTAL PUBLIC SAFETY 1,844,833$1,891,918$1,972,986$2,077,441$2,077,441$2,154,769$3.7% PUBLIC WORKS Public Works Administration 113,882$122,151$124,504$194,771$194,771$147,431$-24.3% Engineering 224,028 195,841 110,555 160,058 160,058 174,900 9.3% Public Works Inspecitons 54,878 36,867 32,084 88,809 88,809 108,766 22.5% Streets & Alleys 692,011 739,443 739,866 976,962 976,962 994,001 1.7% Ice & Snow 210,552 308,387 263,020 284,280 284,280 290,156 2.1% Shop & Garage 186,741 177,644 185,837 204,101 204,101 206,353 1.1% Stormwater 12,064 16,842 26,712 73,121 73,121 72,048 -1.5% Street Lighting 206,005 195,695 226,485 263,900 263,900 273,900 3.8% Refuse Collection 505,996 517,955 563,477 614,437 614,437 616,237 0.3% TOTAL PUBLIC WORKS 2,206,157$2,310,825$2,272,540$2,860,439$2,860,439$2,883,792$0.8% TRANSIT Bus -10,000 40,000 40,000 40,000 5,000 -87.5% TOTAL TRANSIT -10,000 40,000 40,000 40,000 5,000 -87.5% RECREATION AND CULTURE Senior Center 90,219 97,547 97,115 101,672 101,672 102,572 0.9% Ice Arena 75,000 -------- Park Operations 572,985 570,639 706,934 824,997 824,997 891,848 8.1% Park Ballfields 25,517 18,149 16,971 27,300 27,300 27,300 0.0% Shade Tree 53,475 68,891 104,990 63,527 63,527 66,226 4.2% Library 35,395 36,764 36,176 40,526 40,526 38,000 -6.2% TOTAL RECREATION AND CULTURE 852,591$791,990$962,186$1,058,022$1,058,022$1,125,946$6.4% UNALLOCATED Insurance 127,710 12,584 8,082 8,021 8,021 8,512 6.1% TOTAL UNALLOCATED 127,710$12,584$8,082$8,021$8,021$8,512$6.1% OTHER USES --- Operating Tranfers 130,213$293,000$297,012$-$-$-$--- TOTAL OTHER USES 130,213$293,000$297,012$-$-$-$--- TOTAL EXPENDITURES 6,552,289$6,749,351$7,012,381$7,596,000$7,596,000$7,802,000$2.7% FUND BALANCE - JANUARY 1 3,478,507$3,914,563$4,331,058$4,986,796$4,986,796$5,021,796$ Excess (Deficiency) of Revenues over Expenditures 436,056 416,495 655,738 -35,000 - FUND BALANCE - DECEMBER 31 3,914,563$4,331,058$4,986,796$4,986,796$5,021,796$5,021,796$ 104 The previous table summarizes General Fund revenues by classifications and expenditures by activities/divisions and departments. The table below summarizes both revenues and expenditures by classifications. GENERAL FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 5,507,285$5,887,666$6,183,861$6,291,000$6,291,000$6,590,000$4.8% Tax Increments --------- Franchise & Other Taxes 237,173 235,089 284,468 283,900 283,900 289,500 2.0% Licenses & Permits 378,809 460,834 668,602 379,400 379,400 398,750 5.1% Intergovernmental Revenues 321,891 355,729 389,005 346,440 346,440 374,440 8.1% Charges for Services 309,297 347,486 351,297 320,470 320,470 398,400 24.3% Fines & Forfeits 48,744 42,474 30,656 42,300 42,300 36,500 -13.7% Special Assessments 22,808 1,330 275 300 300 300 0.0% Miscellaneous 339,839 337,511 374,568 178,190 178,190 199,110 11.7% Operating Transfers --------- TOTAL REVENUES 7,165,846$7,668,119$8,282,732$7,842,000$7,842,000$8,287,000$5.7% EXPENDITURES Personnel Services 2,555,898$2,624,076$2,785,408$3,096,654$3,096,654$3,295,557$6.4% Supplies 534,178 503,059 494,690 731,825 731,825 742,050 1.4% Other Services & Charges 3,257,375 3,448,434 3,522,614 3,807,021 3,807,021 4,003,793 5.2% Capital Outlay 108,900 139,800 190,100 206,500 206,500 245,600 18.9% Operating Transfers 293,000 297,012 --300,000 ---- TOTAL EXPENDITURES 6,749,351$7,012,381$6,992,812$7,842,000$8,142,000$8,287,000$5.7% FUND BALANCE - JANUARY 1 3,914,563$4,331,058$4,986,796$6,276,716$6,276,716$5,976,716$ Excess (Deficiency) of Revenues over Expenditures 416,495 655,738 1,289,920 -(300,000)- FUND BALANCE - DECEMBER 31 4,331,058$4,986,796$6,276,716$6,276,716$5,976,716$5,976,716$ BUDGET COMMENTARY: Revenues For 2018, budgeted revenues are estimated to increase by 5.7%. The General Fund’s portion of the tax levy is budgeted to increase by 4.8%, which is greater than the total (city & HRA) levy increase of 4.7%. Property taxes account for 80% of General Fund revenues. The General Fund’s allocation of franchise and other taxes is level and largely matches related expenditures (street lighting). The charges for services increase reflects higher residential multi-unit garbage charges. Permits and fees will increase with additional development. Miscellaneous revenues are estimated to fall slightly. Expenditures Expenditures are budgeted to increase 5.7%. Most of the capital outlay amount reflects Capital Equipment Fund purchases, which are charged back through lease payments. The personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. The operating transfer to the Economic Development Authority Fund for $94,900 was eliminated with the implementation of the HRA Levy in 2016. 105 MAYOR AND CITY COUNCIL DEPARTMENT: General Government SUPERVISOR: Mayor & Council FUND #:101 ACTIVITY #: 41110 ACTIVITY SCOPE: The mayor and council provide elected representation to the community with control over policy goals, budget, administration, and operations. Members participate in various committees and direct staff through the city administrator. OBJECTIVES: 1.Adopt policies and ordinances consistent with the council’s positions on growth, zoning, and financial strategies. 2.Examine city facility needs to meet future city operations. ISSUES: 1.Capitalize on the city’s uniqueness by developing a comprehensive vision statement and setting achievable goals. 2.Succession planning of city staff. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Council meetings 24 24 24 24 24 Special meetings/workshops 25 22 19 19 11 BUDGET COMMENTARY: The council’s budget remains consistent with previous years. The mayor earns $700 per month and each councilor earns $600 per month. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % MAYOR& COUNCIL Actual Actual Actual Budget Projected Budget Change Personnel Services 39,835$39,922$39,928$40,500$40,500$40,500$0.0% Supplies --------- Other Services & Charges 12,347 12,650 14,336 16,850 16,850 16,850 0.0% Capital Outlay --------- TOTAL EXPENDITURES 52,182$52,572$54,264$57,350$57,350$57,350$0.0% 106 CITY ADMINISTRATION DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 41310 ACTIVITY SCOPE: City administration provides the overall direction of the city, as determined by the council and mayor. The city administrator serves as the chief administrative officer, ensuring that laws, ordinances, and resolutions are implemented and enforced. The administrator is also responsible for managing the operations of all city departments and providing customer service for general city hall activities, such as reception and meeting room management. OBJECTIVES: 1.Assist city council in setting policies and procedures in accordance with council's position. 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 rolls within the city's organization. 4.Provide friendly, knowledgeable customer service to the public. 5.Provide adequate and consistent hours of business throughout the year. ISSUES: 1.Long-range comprehensive planning. 2.Long-range comprehensive traffic planning. 3.Leading and focusing council on policy matters. 4.Operation of the city's fiber optic network. 5.Continuing to improve internal and external communication systems. 6.Management of Citizen Service Desk with continued growth of inquiries and need to improve response times. 7.Assistance with phone system upgrade and training. 8.Maintaining current, accurate information for all public sources. 107 MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Council meetings agendas 41 49 42 43 40 Records digitally converted 75%75%75%90% 100% Ordinances processed 18 30 27 47 35 Council minutes approved 41 49 42 43 40 Newsletters published 2 2 2 2 2 Utility inserts published 2 2 2 12 12 Park inserts published 4 4 4 4 4 Service desk data entry 280 379 499 557 500 BUDGET COMMENTARY: In 2017, many of the expenditures charged to the city hall budgetary unit were re-allocated to the city administration budgetary unit. The city hall activity is now limited to expenditures for the facility, not providing internal or external services. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % ADMINISTRATION Actual Actual Actual Budget Projected Budget Change Personnel Services 214,085$242,064$250,702$339,721$339,721$348,099$2.5% Supplies 30 234 985 14,300 14,300 14,300 0.0% Other Services & Charges 66,918 72,421 81,239 90,292 90,292 86,482 -4.2% Capital Outlay --------- TOTAL EXPENDITURES 281,033$314,719$332,926$444,313$444,313$448,881$1.0% 108 CITY CLERK DEPARTMENT: General Government SUPERVISOR: City Clerk FUND #:101 ACTIVITY #: 41410 ACTIVITY SCOPE: The city clerk activity is responsible for administering elections, maintaining official records, updating the city code, improving records management and data practices, and serving as the data practices compliance officer and responsible authority. OBJECTIVES: 1.Recruit and train judges for future elections. 2.Upgrade election equipment. 3.Improve data storage practices with digital storage through Laserfiche. 4.Update city code to meet legal requirements and community needs. ISSUES: 1.Antiquated city code. 2.Storage space. 3.Laserfiche training. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Voters, number of 3,714 0 6,161 0 6,000 Register voters,number of 6,394 6,394 6,923 7,079 7,000 Pollingplaces 1 1 1 1 1 Election judges 50 0 46 0 40 Ordinances amendments na na na 41 35 Council resolutions 100 92 94 87 90 BUDGET COMMENTARY: Elections are held in even-numbered years. In 2016, there were primary and general elections for president and a full slate of federal (including president), state, and local offices. Off-year election expenditures are for maintenance contracts on voting equipment. Supplies in 2017 were comprised of election small tools and equipment. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. 109 BUDGET: 2014 2015 2016 2017 2017 2018 % CITY CLERK Actual Actual Actual Budget Projected Budget Change Personnel Services 56,372$26,200$50,964$90,546$90,546$100,808$11.3% Supplies 632 --12,000 12,000 1,500 -87.5% Other Services & Charges 18,590 3,458 19,002 12,546 12,546 29,101 132.0% Capital Outlay --------- TOTAL EXPENDITURES 75,594$29,658$69,966$115,092$115,092$131,409$14.2% 110 FINANCE DEPARTMENT: General Government SUPERVISOR: Finance Director FUND #:101 ACTIVITY #: 41520 ACTIVITY SCOPE: The Finance Department conducts the financial affairs of the city of Monticello in accordance with the Government Accounting Standards Board (GASB) and Generally Accepted Accounting Principles (GAAP). This includes protection of the assets of the city, the initiation of financial plans, investment and debt management, review and implementation of internal controls, and accounting for every financial transaction of the city including accounts payable, accounts receivable, payroll, and accounting control. The preparation of the annual audited financial report and annual budget document are also facilitated through finance. OBJECTIVES: 1.Continue working to develop a financial management plan for the city. 2.Develop financial documents in a format to be eligible for review and award of the Government Finance Officers Association’s (GFOA) award programs. 3.Provide meaningful and timely financial reports and information to council, commissions, and other city departments. 4.Complete financial, payroll, and utility billing software conversions. 5.Coordinate a central purchasing system including developing the use of purchase orders. ISSUES: 1.Complete implementation of new software systems for financial, payroll, and utility billing functions with integration of new processes for purchase orders, web-based applications, and remote time card entry. 2.Implement improved reporting procedures to inform council, commissions, and departments. 3.Develop methods for simplifying data analysis for various stakeholders. 4.Work with other departments to find ways to reduce costs of city operations. 5.Construct a work environment that provides growth through learning, self-determination through autonomy, and relatedness through the creation of enduring work products. 6.Cross-training of finance team members in core functions (payroll, AP, utility billing, and accounts receivable). 111 MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Outcome/Effectiveness: GFOA Budget Award Yes Yes Yes Yes Yes GFOA Certificate of Achievement Yes Yes Yes Yes Yes GFOA Popular Annual Financial Report Yes Yes Yes Bond Rating A2 A2 A2 A2 A2 ACHs as % of total AP activity 45%43%41%42%43% Efficiency: AP & ACHs per FTE (1.5)2,121 2,016 1,998 1,824 1,867 Work Load: AP checks,number of 1,744 1,731 1,755 1,578 1,600 ACH's 1,437 1,293 1,242 1,158 1,200 W-2s 273 290 294 307 315 1099's 56 49 53 47 50 Journal entries 3,003 2,889 2,484 2,496 2,500 BUDGET COMMENTARY: The Finance budget includes funds to handle the financial transactions of the city, in an efficient manner, while maintaining the highest level of internal controls and segregation of duties. The prior year increase in other services and charges reflects the re-allocation of expenses for IT services and insurances (property, liability and vehicle). The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other budget items are expected to remain close to prior year levels. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % FINANCE Actual Actual Actual Budget Projected Budget Change Personnel Services 317,249$313,900$318,445$369,646$369,646$387,712$4.9% Supplies 3,222 1,777 1,952 3,300 3,300 3,200 -3.0% Other Services & Charges 65,191 62,190 73,357 72,429 72,429 76,330 5.4% Capital Outlay --------- TOTAL EXPENDITURES 385,662$377,867$393,754$445,375$445,375$467,242$4.9% 112 AUDIT DEPARTMENT: General Government SUPERVISOR: Finance Director FUND #:101 ACTIVITY #: 41540 ACTIVITY SCOPE: An audit of city finances must be completed on an annual basis for the city to remain in compliance with federal and state accounting practices. OBJECTIVES: 1.Complete the financial audit in a timely fashion. 2.Continue to reduce the number of audit findings and adjustments. ISSUES: 1.Comply with changing reporting requirements and auditing standards. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Audit submittal date 6/30 6/25 6/27 6/20 6/15 Audit findings 2 2 0 2 0 Opinion Unmodified Unmodified Unmodified Unmodified Unmodified GFOA Award Yes Yes Yes Yes Yes BUDGET COMMENTARY: The budget for auditing consists entirely of the expenses associated with the required audit process. In late 2007, a request for proposal (RFP) for audit services was sent to several firms. The RFP guaranteed the cost for audit services for the years ended 2007 through 2009 and resulted in a cost decrease from previous years. This contract was extended for 2018 fiscal year. The finance department prepared the entire financial report for the first time in 2015. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % AUDIT Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 53,541 37,798 39,273 42,000 42,000 42,000 0.0% Capital Outlay --------- TOTAL EXPENDITURES 53,541$37,798$39,273$42,000$42,000$42,000$0.0% 113 ASSESSING DEPARTMENT: General Government SUPERVISOR: Finance Director FUND #:101 ACTIVITY #: 41550 ACTIVITY SCOPE: Property tax assessing requirements are provided through a contract with the Wright County assessor. There are no plans to alter this activity. OBJECTIVES: 1.Assess new and existing parcels within the city as required. ISSUES: 1.Meet state requirements in appraising properties. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 New residential properties 52 73 44 61 60 New commercial properties 2 2 2 7 5 Parcels assessed 4,603 4,611 4,633 4,636 4,714 BUDGET COMMENTARY: Assessing services are provided by contract with Wright County. Estimated costs for assessments are based on the number of existing and new parcels. The city paid $10.50 per parcel for assessment services and $25 for each new permit with an estimated construction value under $499,999 and $100 for values over $500,000 in 2017. Those rates climb to $11.50, $50.00, and $150, respectively, in 2018 and will include parcels not included in the past. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % ASSESSING Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 49,832 50,466 50,415 52,115 52,115 65,000 24.7% Capital Outlay --------- TOTAL EXPENDITURES 49,832$50,466$50,415$52,115$52,115$65,000$24.7% 114 LEGAL DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 41601 ACTIVITY SCOPE: Private legal firms provide all the city’s legal services. Activities include issuance of legal opinions; preparation of ordinances, resolutions, contracts, and agreements; and the conduct of civil litigation. Additional legal expenditures, such as publications, fees, and other costs are accounted for in the benefitting unit. OBJECTIVES: 1.Continue to realize savings by contracting legal services. ISSUES: 1.Rising costs associated with the need for existing and new legal services. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Billed hours: Administration 280.5 344.7 222.3 196.8 200.0 Code enforcement 21.9 14.8 9.0 5.5 8.0 Fiber optics 116.5 56.0 36.5 1.0 1.0 All other 86.9 48.6 105.9 126.9 111.0 Total 505.8 464.1 373.7 330.2 320.0 BUDGET COMMENTARY: The city continues to realize savings from not having full-time counsel. Legal services provided to FiberNet are charged to the Fiber Optics Fund. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % LEGAL Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 29,303 36,946 29,152 38,000 38,000 38,000 0.0% Capital Outlay --------- TOTAL EXPENDITURES 29,303$36,946$29,152$38,000$38,000$38,000$0.0% 115 HUMAN RESOURCES DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 41800 ACTIVITY SCOPE: Human Resources activities support the primary mission of the city through the effective recruitment, selection, development, training, and assessment of appropriate human resource needs. Employee benefits and compensation administration, implementation of and compliance with Federal and State employment laws, labor negotiations, processing of employee grievances, and development of personnel policies are major human resource functions. OBJECTIVES: 1.Provide recruiting, interviewing, and other personnel services for all city departments. 2.Administer classification and compensation system for all employees in compliance with pay equity. 3.Plan and coordinate in-house training programs for city staff 4.Administer city benefit plans. ISSUES: 1.Develop city personnel handbook. 2.Develop various personnel policies. 3.Develop and implement city drug and alcohol testing program. 4.Negotiate new union contract for public works employees. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Workers compensation experience modification 71%69%93%108%100% Full-time positions 55 55 52 51 53 Part-time positions 100 103 111 130 130 Full-time positions filled 7 5 6 6 6 Other positions filled 79 89 92 103 100 Avg,number of employess 155 158 163 181 180 116 BUDGET COMMENTARY: The 2018 budget reflects estimated costs for setting up training, providing city staff with benefit and compensation information, and other expenses based on past experience. The current year increase in other services represents the implementation of NEOGOV, an on-line application tool for government subdivisions. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other budget items are expected to remain close to prior year levels. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % HUMAN RESOURCES Actual Actual Actual Budget Projected Budget Change Personnel Services 70,988$92,213$93,155$99,826$99,826$103,179$3.4% Supplies 356 500 1,121 600 600 600 0.0% Other Services & Charges 19,221 24,536 22,246 23,862 23,862 29,339 23.0% Capital Outlay --------- TOTAL EXPENDITURES 90,565$117,249$116,522$124,288$124,288$133,118$7.1% 117 PLANNING, ZONING & COMMUNITY DEVELOPMENT DEPARTMENT: General Government SUPERVISOR: Community Development Director FUND #:101 ACTIVITY #: 41910 ACTIVITY SCOPE: The Community Development and Planning Department is responsible for long-range and current planning efforts for Monticello. The department is responsible for regulating development and use standards as outlined in the zoning and subdivision ordinance; these standards are aimed at protecting and promoting public health, safety, and welfare. The department oversees coordination with regional planning and service providers including Monticello Township Board, Monticello Orderly Annexation Board, Wright County Planning & Zoning, Sherburne County Planning & Zoning and regional transit entities. The department also provides citizens, business owners, and developers with current, easily accessible information about Monticello's planning process and projects happening in their community. OBJECTIVES: 1.Implementation of Comprehensive Plan objectives. 2.Completion of subdivision ordinance amendments consistent with the “Next Steps” outlined by the Comprehensive Plan. 3.Support for downtown redevelopment and revitalization, including the Embracing Downtown Monticello Project. 4.Involvement in regional transportation planning and its impact on land use and growth objectives. 5.Bertram Chain of Lakes acquisition and master planning. 6.Continued implementation and training on the city's GIS. 7.Continued improvements of the city's development and planning process. 8.Increased support for neighborhood organizations and involvement. ISSUES: 1.Zoning compliance and enforcement. 2.Records management and integration for planning and zoning. 3.Land use and transportation relationships. 4.Emerging technology and land use impacts. 118 MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Outcome/Effectiveness: Grants awarded 2 1 Grant awards $1,163,248 $1,700 Administrative applications (total)16 20 16 4 4 processedwithin5 working days 7 5 5 3 - Site Planreviews processed within14 working days 3 4 -1 1 Change inUse forms --3 4 5 reviewedwithing 5 workingdays --3 1 - SignPermit zoning reviews --5 26 20 processedwithin5 working days --3 21 - Land Use applications processed --23 43 22 within60 working days 32 31 23 42 - Reconciliations processedwithin - 60 days of the decision 18 15 14 7 15 Annexation petitions -1 --- Efficiency: Applications processedper FTE 47 56 49 41 36 Work Load: Planning Applications: Variances 2 1 2 1 1 CUPs 8 5 17 9 10 PUD/Amendments to PUD 6 3 8 14 3 Interim Use permits 2 1 --- CompPlanamendments 1 1 3 1 Mapamendments 3 3 8 12 2 Non-city zoning text amendments 1 10 8 1 2 Plats/adminstrative subdivisions 3 7 7 9 3 Administrative permits 16 20 15 4 4 Site planreviews 3 5 -1 1 Appeals 1 ---- Vacations 1 -1 3 2 Signpermit applicationreview --5 -20 Change in Use review --3 4 5 Total applications 47 56 74 61 54 Planning reconciliations 18 15 14 28 15 Planning Commissionmeetings 15 12 17 12 12 EDAMeetings 12 12 11 11 11 IEDC Meetings 11 11 7 10 10 Grant applications 2 1 1 -- 119 BUDGET COMMENTARY: The 2014 increase in other services and charges reflects the re-allocation of expenses for IT services and insurances (property, liability and vehicle). The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other services and charges includes $10,000 for updating the city’s comprehensive plan. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PLANNING & ZONING Actual Actual Actual Budget Projected Budget Change Personnel Services 115,757$132,710$123,909$135,221$135,221$141,924$5.0% Supplies 16 345 117 200 200 200 0.0% Other Services & Charges 104,307 111,921 86,147 95,427 95,427 105,896 11.0% Capital Outlay --------- TOTAL EXPENDITURES 220,080$244,976$210,173$230,848$230,848$248,020$7.4% 120 CITY HALL DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 41940 ACTIVITY SCOPE: The activity for this department consists of maintenance and upkeep for the building housing city hall. OBJECTIVES: 1.Provide adequate and consistent hours of business throughout the year. 2.Maintain a clean, inviting facility to house meetings and staff. ISSUES: 1.Depreciation of facility and work platforms. 2.Reconfiguring layout to accommodate work flow. 3.Timely maintenance. 4.Utility costs. 5.Building and office security. 6.Re-purposing storage area. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Number of times cleaned 104 104 104 104 104 Utility expenses $28,616 $26,717 $25,073 $23,125 $24,000 BUDGET COMMENTARY: Items budgeted for the city hall activity are commonly shared among all departments operating out of city hall. Much of the costs associated with this activity was transferred to the administration activity in 2017. Personnel services activity was eliminated when custodial services started, and utilities are the main expenditures in other services and charges. 121 BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % CITY HALL Actual Actual Actual Budget Projected Budget Change Personnel Services 114,071$119,954$109,552$7,801$7,801$-$ -100.0% Supplies 12,308 13,140 11,890 --2,500 --- Other Services & Charges 60,454 50,903 61,548 53,958 53,958 70,310 30.3% Capital Outlay --------- TOTAL EXPENDITURES 186,833$183,997$182,990$61,759$61,759$72,810$17.9% 122 PRAIRIE CENTER BUILDING DEPARTMENT: General Government SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 41941 ACTIVITY SCOPE: The city-owned Prairie Center Building leases space to its FiberNet operations. Further, the Wright County Sheriff's Department occupies non-rent paying space in the building. This activity is for the operations of the facility. OBJECTIVES: 1.To provide a well maintained building. ISSUES: 1.Maintain facility with current staff and available funds. 2.Tenant retention. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Tenants 3 2 1 1 1 BUDGET COMMENTARY: The Prairie Center Building was purchased in 2009 to provide FiberNet Monticello with office space. FiberNet is now the building’s only year-round tenant. The 2016 decrease in other services and charges reflected the removal of the Center from the property tax roll after the loss of its only private tenant. The 2018 increase reflects the additional costs for contracted custodial services. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PRAIRIE CENTER BLDG Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies 114 60 313 750 750 750 0.0% Other Services & Charges 14,295 13,267 8,604 12,091 12,091 17,003 40.6% Capital Outlay --------- TOTAL EXPENDITURES 14,409$13,327$8,917$12,841$12,841$17,753$38.3% 123 LAW ENFORCEMENT DEPARTMENT: Public Safety SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 42100 ACTIVITY SCOPE: All law enforcement services are contracted with the Wright County Sheriff's Department. The Sheriff’s Department maintains a local office in the Prairie Center building. The Sheriff sets the hourly rate and the city contracts for the number of hours, typically 17,000 to 19,000 hours annually. Contracted hours change in 4 hour-per-day increments. OBJECTIVES: 1.Protect life and property, and improve the quality of community life. 2.Continue contracting for law enforcement services from Wright County. 3.Provide coverage for commercial and residential growth. ISSUES: 1.Concerns from residents regarding having our own police force. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Outcome/Effectiveness: Arrests 172 207 200 Arrests to crimes ratio 0.19 0.24 0.23 Efficiency: Hours contracted 17,568 17,520 18,256 Calls per hour contracted 0.44 0.45 0.44 Costs per workloadunit $148.55 $138.40 $139.94 Work Load: Life quality calls,number of 3,511 3,470 3,500 Traffic calls,number of 2,981 3,200 3,300 Vehicle crashes,number of 334 387 400 Crimes,number of 904 855 875 *In 2016 the county sheriff implemented a new reporting format making annual comparison difficult. 124 BUDGET COMMENTARY: Law enforcement services are contracted in four-hour-per-day increments from the Wright County Sheriff’s Department. Past hourly rates and contracted hours are presented in the schedule below: The city contracted for 52 hours per day from 2011 through 2013. From 2014 through 2017, the city contracted for 48 hours per day. In July 2018, the city will again contract for 52 hours per day. The leap years of 2012 and 2016 include one more day of coverage (52 hours in 2012 and 48 hours in 2016). BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % LAW ENFORCEMENT Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 1,145,247 1,174,439 1,212,080 1,263,948 1,263,948 1,360,197 7.6% Capital Outlay --------- TOTAL EXPENDITURES 1,145,247$1,174,439$1,212,080$1,263,948$1,263,948$1,360,197$7.6% Hourly Hours Year Rate Contracted 2011 $59.00 18,980 2012 $59.75 19,032 2013 $60.50 18,980 2014 $62.50 17,520 2015 $64.50 17,520 2016 $67.00 17,568 2017 $69.50 17,520 2018 $72.00 18,256 125 FIRE & RESCUE DEPARTMENT: Public Safety SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 42200 ACTIVITY SCOPE: The Fire Department responds to fire, rescue, hazardous materials, medical, and accident incidents within the city and the surrounding townships. The department also provides fire inspection services. Paid-on-call volunteers provide the department’s staffing. OBJECTIVES: 1.Assemble a confined space entry team with personnel and equipment. 2.Develop National Incident Management System (NIMS) training for all city departments. ISSUES: 1.Improve response times. 2.Develop and implement NIMS training for all staff and council. BUDGET COMMENTARY: The Fire Department is staffed with paid-on-call volunteers. Firefighter pay increased $2.00 per hour to $12.00 per hour per response in 2016. Starting in 2014, capital outlay reflects the acquisition of a fire truck through the Central Equipment Fund. The purchase of turn-out gear contributes to the sharp rise in 2018 supplies. Grants may offset some of these expenditures. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % FIRE Actual Actual Actual Budget Projected Budget Change Personnel Services 142,331$132,349$132,913$162,088$162,088$192,069$18.5% Supplies 50,324 54,040 33,836 70,300 70,300 101,200 44.0% Other Services & Charges 72,824 82,281 80,961 82,122 82,122 79,759 -2.9% Capital Outlay 41,300 41,300 41,300 41,300 41,300 41,300 0.0% TOTAL EXPENDITURES 306,779$309,970$289,010$355,810$355,810$414,328$16.4% 126 MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Outcome/Effectiveness: Respondents to fire calls: City 2,918 2,552 2,603 3,385 3,000 Monticello Township 1,318 1,273 1,161 1,627 1,300 Silver Creek Township 509 674 537 409 500 Mutual Aid 486 758 393 363 400 Drills & Maintenance 2,888 2,687 2,410 2,574 2,600 Total 8,119 7,944 7,104 8,358 7,800 Efficiency: Average respondents per call City 15 15 15 16 17 Monticello Township 20 21 18 23 20 Silver Creek Township 18 20 18 16 17 Mutual Aid 29 28 13 26 20 Drills & Maintenance 49 40 46 54 54 Total 22 23 20 22 23 Work Load: Number of fire calls: City 190 165 175 216 180 Monticello Township 67 60 65 70 65 Silver Creek Township 29 33 30 26 30 Mutual Aid 17 27 31 14 20 Drills & Maintenance 59 67 52 48 48 Total 362 352 353 374 343 Firefighters,number of 30 30 30 30 30 127 FIRE RELIEF DEPARTMENT: Public Safety SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 42202 ACTIVITY SCOPE: Providing a retirement benefit to paid-on-call volunteers, the fire relief activity is specifically designed to track the city’s contribution to the Monticello Fire Relief Association. OBJECTIVES: 1.Provide pension funds for the Monticello Fire Relief Association. ISSUES: 1.Pension assets greater than pension liabilities. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Pensionassets 1,053,739$1,026,460$1,198,328$1,286,019$1,300,000$ Pensionliabilities 924,403$1,017,135$1,177,526$1,063,693$1,173,483$ Assets-liabilities ratio 1.14 1.01 1.02 1.21 1.11 Pensionper service year $3,100 $3,300 $3,600 $3,900 $4,200 Fire state aid $108,186 $120,026 $123,656 $125,764 $127,904 State aidper employee $4,007 $4,287 $4,756 $4,658 $4,568 Active firefighters 27 28 26 27 28 Deferredfirefighters 4 3 2 1 1 BUDGET COMMENTARY: The fire relief budget is basically a conduit for distribution of state fire aid to the pension fund for volunteer firefighters. State aid revenue equals the contribution to the relief association and it is conservatively estimated for budgetary purposes. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % FIRE RELIEF Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 108,186 120,027 123,656 120,000 120,000 120,000 0.0% Capital Outlay --------- TOTAL EXPENDITURES 108,186$120,027$123,656$120,000$120,000$120,000$0.0% 128 BUILDING INSPECTIONS DEPARTMENT: Public Safety SUPERVISOR: Community Development Director FUND #:101 ACTIVITY #: 42401 ACTIVITY SCOPE: The Building Department inspects all new and remodeled construction within the city by a state certified building inspector. The department initiates all building permits and oversees the enforcement of all public nuisance and ordinance issues. OBJECTIVES: 1.Continue implementation of the rental licensing program. 2.Continue implementation of zoning ordinance changes. 3.Continue sign ordinance update. 4.Implement yearly contractor, realtor, and rental property owner workshops. 5.Continue public relations contact. Improve city's public perception image. 6.Continue implementation of the building codes. ISSUES: 1.Managing and prioritizing department workloads. 2.Meeting the residential and commercial growth challenges as a regional center. 3.Keeping up with biennial rental license inspections. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Outcome/Effectiveness: Value of permits issued 19,714,895$36,242,742$59,426,683$43,853,123$45,000,000$ Value of permits per FTE 6,571,632$10,355,069$14,856,671$10,963,281$11,250,000$ Efficiency: Departmental FTEs 3 3.5 4 4 4 Rental inspections per FTE (2)692 697 793 782 750 Permits per FTE 240 256 267 304 271 Work Load: Buildingpermits issued 721 768 802 911 950 Nuisance notices issued 156 110 118 109 100,000 Rental units, number of 1,383 1,393 1,586 1,563 1,500 129 BUDGET COMMENTARY: The prior year increase in other services and charges reflects the re-allocation of expenses for IT services and insurances (property, liability and vehicle). The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. One building inspector was added in 2016.Other budget items are expected to remain close to prior year levels. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % BUILDING INSPECTIONS Actual Actual Actual Budget Projected Budget Change Personnel Services 238,627$275,107$320,623$347,990$347,990$363,277$4.4% Supplies 2,942 5,517 3,861 7,000 7,000 6,100 -12.9% Other Services & Charges 24,976 24,234 25,820 29,637 29,637 30,032 1.3% Capital Outlay --------- TOTAL EXPENDITURES 266,545$304,858$350,304$384,627$384,627$399,409$3.8% 130 CIVIL DEFENSE DEPARTMENT: Civil Defense SUPERVISOR: Chief Building Official FUND #:101 ACTIVITY #: 42501 ACTIVITY SCOPE: The civil defense department provides constant defense coverage for all weather and power plant related emergency situations within the city. OBJECTIVES: 1.Implement city hall, community center, and National Guard emergency preparedness. ISSUES: 1.Preparedness - little or no warning when an emergency occurs. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Meetings hours per year 60 72 72 72 72 Sirens,number of 106 106 106 106 106 Tests per year per siren 48 48 48 48 48 BUDGET COMMENTARY: The 2018 budget is based on the 2017 budget. With the retirement of the city's previous building official, much of this activity's responsibilities have been transferred to Wright County. However, the city is an active participant of the emergency management team. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % CIVIL DEFENSE Actual Actual Actual Budget Projected Budget Change Personnel Services -$592$103$1,612$1,612$1,612$0.0% Supplies 490 --100 100 100 0.0% Other Services & Charges 1,171 908 1,131 1,852 1,852 1,553 -16.1% Capital Outlay --------- TOTAL EXPENDITURES 1,661$1,500$1,234$3,564$3,564$3,265$-8.4% 131 ANIMAL CONTROL DEPARTMENT: Animal Control SUPERVISOR: Project Coordinator FUND #:101 ACTIVITY #: 42700 ACTIVITY SCOPE: The city contracts with a private individual for animal control services. The city owns and maintains the animal control facility. The city also contracts with nearby communities, allowing them to use our services and facility. OBJECTIVES: 1.To address issues within the city and surrounding communities in a timely and courteous manner. 2.Continue to improve animal control response time. 3.Continue to improve billing procedures for animal control issues. ISSUES: 1.Provide quick response to residents on animal control concerns. 2.Allocation of service costs based on usage by customers (townships and cities). MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Stray animal reports 496 535 532 413 450 Barking dog reports 190 173 180 199 200 Lost/found reports 1,670 1,568 1,487 1,460 1,500 Feral cat trapping 261 301 245 250 250 Unsanitary condition reports 201 189 223 215 200 Abuse/neglect reports 171 191 149 213 200 Impounds 556 572 563 523 550 Dogbite reports 88 72 78 92 100 Animal control fees $35,169 $38,756 $37,838 $50,519 $45,000 BUDGET COMMENTARY: The professional service contract to handle all animal control issues is the largest budgeted item at $39,015. The remaining budget items are for supplies and other service charges related to operating the animal control facility. 132 BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % ANIMAL CONTROL Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies 3,273 1,168 537 3,300 3,300 3,300 0.0% Other Services & Charges 46,166 47,586 46,406 48,220 48,220 48,496 0.6% Capital Outlay --------- TOTAL EXPENDITURES 49,439$48,754$46,943$51,520$51,520$51,796$0.5% 133 NATIONAL GUARD DEPARTMENT: Public Safety SUPERVISOR: Project Coordinator FUND #:101 ACTIVITY #: 42701 ACTIVITY SCOPE: The National Guard facility is housed in the Monticello Community Center complex. The city will maintain the facility in perpetuity in return for a one-time payment in 1998 that helped fund construction of the community center. The Guard provides no direct services to the city. OBJECTIVES: 1.To maintain a clean, modern facility for use by the National Guard. ISSUES: 1.There are no current issues to maintaining the National Guard facility. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Not Applicable BUDGET COMMENTARY: The National Guard operates a security division within the Monticello Community Center complex. The city maintains the Guard’s site within the complex. The budget for this activity is relatively static. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % NATIONAL GUARD Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies 204 --300 300 --100.0% Other Services & Charges 13,857 13,438 13,550 15,000 15,000 14,500 -3.3% Capital Outlay --------- TOTAL EXPENDITURES 14,061$13,438$13,550$15,300$15,300$14,500$-5.2% 134 PUBLIC WORKS - ADMINISTRATION DEPARTMENT: Public Works SUPERVISOR: Public Works Director FUND #:101 ACTIVITY #: 43110 ACTIVITY SCOPE: Public works (PW) administration activity oversees the daily operations of the street, parks, water, sewer, wastewater treatment plant, and inspection activities. PW administration also manages all large city projects and implements all changes to PW operations and policy. OBJECTIVES: 1.Continue the implementation of a bio-solids management system. 2.Implement the major street lighting project plan. 3.Continue implementing the wellhead protection plan. 4.Manage the development of a new public works facility and expansion of the wastewater treatment plant. 5.Determine location for future wells, utilizing information gathered from various sources including grants. 6.Develop a program to lease antenna space on elevated water towers, thus generating a new revenue source. 7.Implement a new SCADA system as budgeted in the water and sewage operating funds. ISSUES: 1.Balance the public works department needs with available funds. 2.Management of city's water and wastewater treatment systems. 3.Implement a capital improvement program for city infrastructure. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Budget units 15 14 14 14 14 Employees supervised - FT 19 19 20 20 20 135 BUDGET COMMENTARY: The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Personnel services also includes the 2018 re-instatement of a public works director position. The director position is spread over three budgets: General Fund - 60%, Sewage Fund – 20%, and Water Fund 20%. The General Fund share of the total for the position is $72,000. While other budget items have large percentage decreases, the change in dollar terms are relatively insignificant. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PW - ADMINISTRATION Actual Actual Actual Budget Projected Budget Change Personnel Services 96,090$101,190$99,998$115,330$115,330$172,276$49.4% Supplies 4,337 2,070 3,641 3,250 3,250 3,000 -7.7% Other Services & Charges 21,724 21,244 22,688 28,851 28,851 26,679 -7.5% Capital Outlay --------- TOTAL EXPENDITURES 122,151$124,504$126,327$147,431$147,431$201,955$37.0% 136 PUBLIC WORKS - ENGINEERING DEPARTMENT: Public Works SUPERVISOR: City Engineer FUND #:101 ACTIVITY #: 43111 ACTIVITY SCOPE: Engineering assists with the provision, development, and management of the city's street, pathways, public utilities systems, geographic information system (GIS), Storm Water Pollution Prevention Program (SWPPP), improvement projects, and miscellaneous mapping. In addition, engineering responds to residents with issues related to storm water drainage and/or pedestrian, bicycle and vehicular traffic, and reviews. Engineering updates and supports the city's General Specifications and Standard Detail Plates for Street and Utility Construction and the Plan Requirements and Design Guidelines. Engineering also issues driveway, grading, and right-of-way permits. OBJECTIVES: 1.Improve ability to assist other departments with CADD and GIS related requests. 2.Continue to administer and maintain the city's SWPPP. 3.Continue to implement and improve the city's GIS. 4.Continue toeducatethe public onpurposesandpracticesassociatedwithconservationand drainage easements and storm water ponds. 5.Create a one-stop shop for city driveway, grading, and right-of-way permits. 6.Continue to develop an in-house Pavement Management Program. 7.Review development plans and agreements. 8.Continue to work towards improving transportation system, and collaborate with MNDOT and Wright County. 9.Prepare capital infrastructure planning and budgeting. 10.Integrate with other departments on public improvement projects and development plans. 11.Apply for grants and track funding for improvement projects. ISSUES: 1.Increasing restrictions by Minnesota Pollution Control Agency (MPCA) for storm water runoff. 2.Lack of public knowledge regarding purposes and practices associated with conservation and drainage easements and storm water ponds. 3.Increasing phosphorus restrictions by MPCA for wastewater effluent. 4.Reduction in available federal and state funding for transportation improvements. 137 MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Service requests 10 10 10 10 10 On-line service requests 5 11 17 19 25 Active improvement projects 10 10 10 10 13 Driveway permits issued 1 3 1 11 10 Right-of-way permits issued 116 101 130 120 130 Development applications 10 10 7 9 10 Gradingpermits issued 6 2 11 8 10 BUDGET COMMENTARY: The engineering activity predominantly consists of engineering and other professional service fees. These expenditures consist of both reimbursable and non-reimbursable expenditures. For 2014, the engineering budget decreased substantially with the elimination of two positions. Consequently, professional services increased to offset much of savings realized by elimination of those positions. The 2018 budget provides for continued improvements and development of the city's GIS system. Finally, the 2018 budget includes $15,000 for a Mississippi River crossing study. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PW - ENGINEERING Actual Actual Actual Budget Projected Budget Change Personnel Services 38,764$1,500$935$-$-$-$--- Supplies 373 3,167 69 --500 --- Other Services & Charges 156,704 105,888 110,791 174,900 174,900 164,992 -5.7% Capital Outlay --------- TOTAL EXPENDITURES 195,841$110,555$111,795$174,900$174,900$165,492$-5.4% 138 PUBLIC WORKS - INSPECTIONS DEPARTMENT: Public Works SUPERVISOR: City Engineer FUND #:101 ACTIVITY #: 43115 ACTIVITY SCOPE: The public works inspection activity is responsible to design and inspect city infrastructure projects, and to review and approve right-of-way excavation/obstruction permit applications. Personnel are also responsible for managing records retention for plats, city maps, infrastructure data bases, soil borings, development plans, and as-builts. Using various computer software programs including ArcGIS, AutoCADm and CarteGraph, staff provides design and mapping assistance. OBJECTIVES: 1.Improve staff use of the city's GIS system through training. 2.Maintain certifications, and attend appropriate classes and workshops for inspections. 3.Provide support for the engineering activity. 4.Improve communication between public works, engineering, and inspection activities. 5.Improve knowledge, skills, and ability in using CarteGraph software for development of an in-house Pavement Management and Sign Program. 6.Improve knowledge, skills, and ability in using GIS software for assisting other departments with their mapping needs. 7.Assistothercitydepartments inacquiring utilityinformationnotreadilyavailable from other sources, including GIS. 8.Assist with design and implementation of solutions to drainage issues. 9.Complete cost estimates and design for small improvement projects. 10.Complete cost estimates for budgeting purposes for upcoming improvement projects. 11.Complete inspections and documentation for city’s SWPPP. ISSUES: 1.Access to city vehicles housed in cold storage at public works is difficult, limiting ability to quickly respond to issues. 2.Workload and budget issues created by mandatory MPCA compliance requirements in relation to city SWPPP. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Inspection sites 21 20 20 Stormwater inspections 105 100 100 *Data for 2014 and 2015 is not available. 139 BUDGET COMMENTARY: The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Personnel services also reflects the re-allocation of the position back to just this activity. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PW - INSPECTIONS Actual Actual Actual Budget Projected Budget Change Personnel Services 23,021$20,533$47,876$88,488$88,488$103,643$17.1% Supplies 2,416 600 1,400 4,600 4,600 4,100 -10.9% Other Services & Charges 11,430 10,951 12,824 15,678 15,678 12,224 -22.0% Capital Outlay --------- TOTAL EXPENDITURES 36,867$32,084$62,100$108,766$108,766$119,967$10.3% 140 PUBLIC WORKS – STREETS, ALLEYS & PARKING LOTS DEPARTMENT: Public Works SUPERVISOR: Street Superintendent FUND #:101 ACTIVITY #: 43120 ACTIVITY SCOPE: The main responsibility of the streets and alleys activity is to perform the necessary tasks to reduce the depreciation of the city streets and uphold desirable standards of appearance, serviceability, and safety. This includes upkeep such as street sweeping and repair of roadway surface areas, medians, sidewalks, boulevards, alleys, catch basins, and storm sewers. OBJECTIVES: 1.Continue street reconstruction of older road surfaces by evaluating road wear. 2.Increase street chip seal coating projects. 3.Maintain and update equipment and vehicles. 4.Help maintain and use City GIS system. 5.Continue street crack sealing program. ISSUES: 1.Educating the public on what the boulevards are to be used for. 2.Educating the public on storm water operations. 3.Increased costs of fuel and street products due to fuel costs. 4.Educating the public on the value of good maintenance programs for our infrastructure. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Pounds of crack sealer 23,282 29,580 49,039 46,721 47,000 Sq. yards of chip sealing 82,429 102,204 109,708 115,125 116,000 Miles of streets 68.0 69.0 69.0 69.0 69.0 Tons of black top patching 190 293 220 167 170 141 BUDGET COMMENTARY: Contracted street repairs and maintenance, under other services and charges, increased $9,000 to $185,000 for 2018. The renewed emphasis on street maintenance began in 2014. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Increases in street maintenance supplies and small tools and equipment contributed to the 2017 jump in supplies. Gas and diesel fuel is still budgeted at prior market price highs. Other budget items are expected to remain close to prior year levels. The difference between budget and actual can vary widely because the seasonal nature of some departmental expenditures. Capital outlay includes the 2018 addition of two pieces of equipment leased from the Central Equipment Fund. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PW - STREETS & ALLEYS Actual Actual Actual Budget Projected Budget Change Personnel Services 350,888$354,121$382,280$470,578$470,578$489,743$4.1% Supplies 189,295 152,827 154,533 226,550 226,550 220,300 -2.8% Other Services & Charges 162,718 194,124 192,161 218,773 218,773 223,908 2.3% Capital Outlay 35,200 37,500 75,600 76,800 76,800 104,500 36.1% TOTAL EXPENDITURES 738,101$738,572$804,574$992,701$992,701$1,038,451$4.6% 142 PUBLIC WORKS – ICE & SNOW REMOVAL DEPARTMENT: Public Works SUPERVISOR: Street Superintendent FUND #:101 ACTIVITY #: 43125 ACTIVITY SCOPE: The city's ice and snow removal activity is responsible for the control of ice and snow on city streets, sidewalks, and city-owned public parking lots. The activity provides control in a safe and cost- effective manner while keeping in mind safety, budget, personnel, and environmental concerns. OBJECTIVES: 1.Maintain and update equipment and vehicles in a timely manner. 2.Learn ways to effectively use the city's GIS system. ISSUES: 1.Staffing and budgeting for unpredictable circumstances. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Inches of snow 79 40 50 31 40 Plowing events,number of 18 14 16 11 12 Tons of salt used 385 534 525 461 500 Tons of sand used 600 285 300 397 400 BUDGET COMMENTARY: The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Weather variability greatly impacts budget-to-actual comparisons. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PW - ICE & SNOW Actual Actual Actual Budget Projected Budget Change Personnel Services 224,328$174,038$194,874$161,993$161,993$169,002$4.3% Supplies 81,174 86,658 66,996 125,400 125,400 120,600 -3.8% Other Services & Charges 2,885 2,324 2,362 2,763 2,763 2,713 -1.8% Capital Outlay --------- TOTAL EXPENDITURES 308,387$263,020$264,232$290,156$290,156$292,315$0.7% 143 PUBLIC WORKS – SHOP & GARAGE DEPARTMENT: Public Works SUPERVISOR: Street Superintendent FUND #:101 ACTIVITY #: 43127 ACTIVITY SCOPE: Shop & Garage maintains all city vehicles and equipment for the streets, ice & snow, parks, water, and sewage activities in a safe and efficient manner. OBJECTIVES: 1.Maintain equipment and vehicles to maximize efficiencies and safety. 2.Update equipmentand vehicles. ISSUES: 1.Aging equipment. 2.Increased safety regulation for equipment and vehicles. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Service orders 85 88 90 88 90 Service order hours 351 362 369 352 360 Hours per service order 4.1 4.1 4.1 4.0 4.0 Total service order costs $21,576 $22,337 $22,844 $22,600 $23,000 Service cost per order $253.84 $253.83 $253.82 $256.82 $255.56 Repair orders 52 87 95 91 90 Repair hours 205 252 272 268 270 Hours per repair order 3.9 2.9 2.9 2.9 3.0 Total repair order costs $28,719 $37,250 $39,250 $36,100 $37,000 Repair costs per order $552.29 $428.16 $413.16 $396.70 $411.11 BUDGET COMMENTARY: The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other budget items are expected to remain close to prior year levels. The city has a wide variety of talent in the Public Works Department. Most are capable of assisting a true craftsman, the city’s highly-skilled chief mechanic. 144 BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PW - SHOP & GARAGE Actual Actual Actual Budget Projected Budget Change Personnel Services 93,377$95,891$90,597$99,565$99,565$102,805$3.3% Supplies 29,747 45,463 39,151 46,100 46,100 46,900 1.7% Other Services & Charges 54,520 44,483 41,331 60,688 60,688 57,341 -5.5% Capital Outlay --------- TOTAL EXPENDITURES 177,644$185,837$171,079$206,353$206,353$207,046$0.3% 145 PUBLIC WORKS – STORMWATER DEPARTMENT: Public Works SUPERVISOR: Public Works Director FUND #:101 ACTIVITY #: 43130 ACTIVITY SCOPE: Stormwater is responsible for expenditures related to the maintenance of the city's stormwater system. This activity includes inspecting, cleaning, and repairing all stormwater trunk lines, ditches, and ponds. OBJECTIVES: 1.Monitor, repair, and clean storm water trunk lines, laterals, structures, ditches, holding ponds, and structural pollution control devices. ISSUES: 1.Continued deterioration of storm water system, without proper funding for repairs, replacement, or improvements. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Stormwater main miles 1/4 city 1/4 city 1/4 city 1/4 city 1/4 city Clean septor manholes 4 4 4 4 4 GPS storm structures 1/4 city 1/4 city 1/4 city 1/4 city 1/4 city Stormwater manhole maintenance 1/4 city 1/4 city 1/4 city 1/4 city 1/4 city Stormwater main locates 100 100 100 100 100 BUDGET COMMENTARY: The 2018 budget provides for the general maintenance of the city's stormwater system. Other services and charges includes $40,000 for annual repairs and maintenance. Prior to 2015, such expenditures, as well as the cleaning and restoration of the holding ponds, were made from the Stormwater Access Fund. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other budget items are expected to remain close to prior year levels. 146 BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PW - STORMWATER Actual Actual Actual Budget Projected Budget Change Personnel Services 9,817$13,882$16,283$22,748$22,748$23,165$1.8% Supplies 5,752 4,908 12,234 8,500 8,500 9,500 11.8% Other Services & Charges 1,273 7,922 760 40,800 40,800 40,800 0.0% Capital Outlay --------- TOTAL EXPENDITURES 16,842$26,712$29,277$72,048$72,048$73,465$2.0% 147 PUBLIC WORKS – STREET LIGHTING DEPARTMENT: Public Works SUPERVISOR: Street Superintendent FUND #:101 ACTIVITY #: 43160 ACTIVITY SCOPE: The street Iighting activity maintains new and existing street lighting within the city. This includes maintaining installed bulbs and fixtures, as well as the electricity used for keeping the lights on. OBJECTIVES: 1.Work with MNDOT to add battery back-up to signals on TH 25. 2.Draft a new street lighting policy. ISSUES: 1.Increasing electricity costs. 2.Verify lamp and fixtures maintenance by utility companies. 3.Maintenance and upgrades on aging signal systems and streetlights. 4.Lack of assistance from Wright County and MNDOT. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Street lights maintained 150 175 185 185 185 Streetscape lights 60 60 60 60 60 BUDGET COMMENTARY: Electricity for the street lights is the largest expenditure at $181,500. Other services and charges include $30,000 for repainting traffic signals. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PW - STREET LIGHTING Actual Actual Actual Budget Projected Budget Change Personnel Services 4,354$2,689$4,630$-$-$-$--- Supplies 2,532 1,758 3,373 12,000 12,000 12,000 0.0% Other Services & Charges 190,151 223,332 225,497 263,200 263,200 258,500 -1.8% Capital Outlay --------- TOTAL EXPENDITURES 197,037$227,779$233,500$275,200$275,200$270,500$-1.7% 148 PUBLIC WORKS – REFUSE COLLECTION DEPARTMENT: Public Works SUPERVISOR: Refuse Collection FUND #:101 ACTIVITY #: 43230 ACTIVITY SCOPE: The city contracts with a private company for residential refuse collection and recycling services. OBJECTIVES: 1.Research expanding city hauler’s contracted service prices to business and determine the percentage of participation to achieve a desirable rate. ISSUES: 1.Wear and tear on city streets. 2.Increasing recycling efficiency and effectiveness. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Residential refuse collections 52 52 52 52 52 Residential recyclingcollections 26 26 26 26 26 Residential container base 3,772 3,759 3,785 3,859 3,925 Additional containers 603 605 605 600 600 Recycling containers 4,277 4,349 4,378 4,454 4,520 BUDGET COMMENTARY: Nearly the entire budget is based on the city’s contract obligations with its private refuse hauler. The contract expires on the May 31, 2020. The contract extension raised rates by 14% for the last seven months of 2015. The contract increases annually with inflation and the addition of customers. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % REFUSE COLLECTION Actual Actual Actual Budget Projected Budget Change Personnel Services 463$307$1,072$1,037$1,037$576$-44.5% Supplies 184 184 -200 200 200 0.0% Other Services & Charges 517,308 562,986 599,228 615,000 615,000 625,768 1.8% Capital Outlay --------- TOTAL EXPENDITURES 517,955$563,477$600,300$616,237$616,237$626,544$1.7% 149 TRANSIT DEPARTMENT: Transit SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 45178 ACTIVITY SCOPE: The transit service is provided by contract through a subsidized, regional transit provider. OBJECTIVES: 1.Research other less expensive alternatives to existing provider. 2.Evaluate service enhancements within the context of other transportation options, including the Northstar commuter rail system. 3.Review involvement in study for I-94 commuter service options. ISSUES: 1.Relatively low ridership for a city the size of Monticello. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Ridership 7,100 10,083 10,681 18,416 18,000 BUDGET COMMENTARY: The city changed to a regional transit services provider, Wright County Area Transit (WCAT), in 2017. The prior provider charged a flat $40,000 regardless of ridership. WCAT receives significant state and federal subsidies. The 2018 increase reflects uncertainty in WCAT’s funding. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % TRANSIT Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 10,000 40,000 41,250 5,000 5,000 30,000 500.0% Capital Outlay --------- TOTAL EXPENDITURES 10,000$40,000$41,250$5,000$5,000$30,000$500.0% 150 SENIOR CENTER DEPARTMENT: Recreation and Culture SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 45175 ACTIVITY SCOPE: The senior center facility is housed in the Monticello Community Center complex. The facility is maintained by the city, but senior center management is provided by an outside entity. OBJECTIVES: 1.Maintain a clean, modern facility for use by Monticello’s senior citizens. 2.Provide recreational activities to improve mental and physical health. 3.Engage senior citizen participation in other community center activities. 4.Encourage greater social participation by offering discounted lunches. ISSUES: 1.Decline in revenue from sources other than the city. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Outcomes/Effectiveness Volunteers hours 8,022 8,094 7,821 8,524 8,000 Noon meals served 1,988 2,873 3,136 4,011 4,000 Efficiency: Duplicatedparticipants per activity 19 19 18 18 18 Unduplicated participants per activity 170 170 159 146 154 Work Load: Unduplicated participants 2,214 2,298 2,343 2,455 2,400 Duplicatedparticipants 19,325 20,098 20,313 19,504 20,000 Receivedphone calls 4,459 4,507 4,531 4,487 4,500 Activities offered 114 118 128 134 130 151 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 2018 adopted contribution is $60,160, which is $1,600 greater than 2017. The city increased the internal rent paid to the community center by $5,000 (from $30,000 to $35,000) for the space occupied by the senior center in 2015. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % SENIOR CENTER Actual Actual Actual Budget Projected Budget Change Personnel Services 1,442$1,416$1,369$547$547$576$5.3% Supplies --------- Other Services & Charges 96,105 95,699 97,755 102,025 102,025 103,139 1.1% Capital Outlay --------- TOTAL EXPENDITURES 97,547$97,115$99,124$102,572$102,572$103,715$1.1% 152 PARK OPERATIONS DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent FUND #:101 ACTIVITY #: 45201 ACTIVITY SCOPE: The park operations activity maintains the parks and trails within the city. This includes maintaining and improving playground and picnic facilities, fertilizing and mowing of grass, maintaining athletic fields, flooding and maintaining of outdoor ice rinks, snow and ice removal, and tree preservation within the parks system. OBJECTIVES: 1.Continue pathways maintenance. 2.Improve efficiencies through use of the city’s GIS. 3.Progress in implementing plan for the Bertram Chain of Lakes regional park. ISSUES: 1.Increase in maintenance costs with acquisition of more park land. 2.Coordination with other entities regarding park use and design. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Park land acres maintained 180 180 185 320 380 Trail miles maintained 16.5 17.0 20.0 40.0 40.0 Park events held 150 150 150 500 500 Winterskating days 125 128 125 120 135 BUDGET COMMENTARY: The parks budget consists of expenditures needed to maintain city parks and trails. Capital outlay reflects the acquisition of capital equipment through the Central Equipment internal service fund. Additional Central Equipment Fund purchases are planned for 2018. In 2015, financing for annual pathways maintenance improvements were shifted to park operations from the Park and Pathway Dedication Fund. Part of the 2015 increase in other services and charges reflects the re-allocation of expenses for IT services and insurances (property, liability, and vehicle). The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Other budget items are expected to remain close to prior year levels. 153 BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PARK - OPERATIONS Actual Actual Actual Budget Projected Budget Change Personnel Services 351,322$391,007$434,816$488,950$488,950$499,683$2.2% Supplies 111,436 110,433 136,948 159,600 159,600 158,100 -0.9% Other Services & Charges 75,481 144,494 130,774 155,698 155,698 161,272 3.6% Capital Outlay 32,400 61,000 73,200 88,400 88,400 99,800 12.9% TOTAL EXPENDITURES 570,639$706,934$775,738$892,648$892,648$918,855$2.9% 154 PARK BALLFIELDS DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent FUND #:101 ACTIVITY #: 45203 ACTIVITY SCOPE: The park ballfields activity prepares and maintains city athletic fields, including the NSP Ballfield. OBJECTIVES: 1.Prepare and maintain city athletic fields. 2.Improve the structures at the ballfields. 3.Enhance player and visitor experience. ISSUES: 1.Demographic trends. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Ball games played,number of 600 610 615 620 620 Soccer fields maintained 2 2 2 20 20 Lacrosse fields maintained 1 1 1 4 4 Ball fields maintained 7 7 7 7 7 Number of times mowed 50 50 50 50 50 BUDGET COMMENTARY: The 2018 budget is similar to the 2017 budget for field maintenance, concessions, and park activities. Other services and charges include items that do not meet the capitalization threshold. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % PARK - BALLFIELDS Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies 10,531 6,647 11,014 15,800 15,800 15,600 -1.3% Other Services & Charges 7,618 10,324 9,524 11,500 11,500 11,300 -1.7% Capital Outlay --------- TOTAL EXPENDITURES 18,149$16,971$20,538$27,300$27,300$26,900$-1.5% 155 SHADE TREE DEPARTMENT: Recreation and Culture SUPERVISOR: Park Superintendent FUND #:101 ACTIVITY #: 46102 ACTIVITY SCOPE: Shade Tree consists of planting and maintaining trees and shrubbery within the city limits. This activity provides for regulating, developing, planting, maintaining, and removing of trees in any street, park, right-of-way, or other public place. Shade trees aid the larger goal of soil conservation, climate moderation, air quality, noise reduction, etc. The budget provides the mechanisms for funding a uniform program for the purpose of beautifying the community as a whole, and increasing property values. OBJECTIVES: 1.Provide trees for spring tree planting. 2.Continue with Shade Tree Disease Control Program. 3.Replace dead and diseased trees throughout the city and parks. 4.Continue chippingprogram. 5.Continue education program. 6.Begin a boulevard tree planting program. ISSUES: 1.Stress on trees caused by weather and diseases. 2.Funding availability. 3.Chipper replacement. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Trees planted 450 257 280 320 380 Trees removed 200 110 60 40 40 Students in programs 425 500 500 500 500 BUDGET COMMENTARY: A portion of the total time of park employees is allocated to the Shade Tree activity. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage adjustment increase. Part of the personnel services increase reflects the reallocation of wages within Recreation and Culture. Other budget items are expected to remain close to prior year levels. 156 BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % SHADE TREE Actual Actual Actual Budget Projected Budget Change Personnel Services 48,099$84,012$64,959$43,906$43,906$54,908$25.1% Supplies 19,907 8,976 8,514 16,125 16,125 15,500 -3.9% Other Services & Charges 885 12,002 2,327 5,395 5,395 4,642 -14.0% Capital Outlay --------- TOTAL EXPENDITURES 68,891$104,990$75,800$65,426$65,426$75,050$14.7% 157 LIBRARY DEPARTMENT: Recreation and Culture SUPERVISOR: City Administrator FUND #:101 ACTIVITY #: 45501 ACTIVITY SCOPE: Library services are contracted through the Great River Regional Library System. The city owns and maintains the library building and provides programs through the library to residents. OBJECTIVES: 1.Provide residents with quality programs and life-long learning opportunities. 2.Provide access to global information resources. ISSUES: 1.Maintaining a relevant role in the community. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Checkedout items 199,182 195,235 190,433 182,986 175,000 Numberof requests placed 11,168 9,792 8,033 8,037 8,000 Summer readingparticipants 808 823 744 589 525 Winterreadingparticipants --257 149 150 Patrons usingwireless 3,021 3,582 4,071 3,963 3,900 Patrons usinginternet stations 9,002 8,396 7,487 7,304 7,200 Programs offered 169 167 212 290 250 Programattendance 3,788 3,919 4,306 5,336 4,500 BUDGET COMMENTARY: The city contracts with Great River Regional Library System for information sources and operating personnel. The city owns and maintains the library building and funds a number of programs. The 2018 budget includes an increase for contracted custodial services. By statute, the city must annually expend at least $35,160 for the library. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % LIBRARY Actual Actual Actual Budget Projected Budget Change Personnel Services 4,618$8,479$5,425$8,561$8,561$-$-100.0% Supplies 2,583 2,587 2,205 1,550 1,550 2,000 29.0% Other Services & Charges 29,563 25,110 37,193 27,889 27,889 43,288 55.2% Capital Outlay --------- TOTAL EXPENDITURES 36,764$36,176$44,823$38,000$38,000$45,288$19.2% 158 INSURANCE DEPARTMENT: Other SUPERVISOR: Finance Director FUND #:101 ACTIVITY #: 49240 ACTIVITY SCOPE: This activity accounts for a variety of undistributed General Fund insurances costs. OBJECTIVES: 1.To accurately distribute insurance costs to all activities by fund. ISSUES: 1.Purchasing the proper level of insurance coverage with the appropriate deductibles at the lowest possible costs. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Not Applicable BUDGET COMMENTARY: In 2014, other services and charges decreased significantly from the redistribution of insurance costs throughout the various budget units in the General Fund. An effective safety program administered by the human resource manager has resulted in a decline of workers compensation insurance costs. Additionally, liability insurance decreased slightly and property insurance increased slightly. BUDGET: GENERAL FUND 2014 2015 2016 2017 2017 2018 % INSURANCE Actual Actual Actual Budget Projected Budget Change Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 12,584 8,082 7,226 8,512 8,512 6,379 -25.1% Capital Outlay --------- TOTAL EXPENDITURES 12,584$8,082$7,226$8,512$8,512$6,379$-25.1% 159 This page intentionally left blank 160 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2018 SPECIAL REVENUE FUNDS SPECIAL REVENUE FUNDS - SUMMARY DESCRIPTION Thecitycurrentlyhasfouractivespecialrevenuefunds.Specialrevenuefundsareusedtoaccountforthe proceedsofspecificrevenuesourcesthatarerestricted,committed,orassignedtoexpendituresforspecific purposesotherthandebtserviceorcapitalprojects.UnliketheGeneralFund,thebudgetsofspecialrevenue fundsdonotalwaysbalance--revenuesequalexpenditures.Specialrevenuefundsusethemodifiedaccrual basisofaccountingforbothfinancialreportingandbudgetingpurposes. BUDGETISSUES Eachspecialrevenuefundhasspecificchallengesthatwillbeaddressedinthenarrativeforeachfund. BUDGETSUMMARY SPECIAL REVENUE FUNDS 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 1,388,404$1,363,000$643,421$652,000$652,000$710,000$8.9% Tax Increments 836,750 727,617 668,352 653,564 653,564 635,678 -2.7% Licenses & Permits --------- Intergovernmental Revenues -11,875 ------- Charges for Services 1,350,290 1,422,357 1,408,472 1,496,725 1,496,725 1,434,500 -4.2% Fines & Forfeits --------- Special Assessments --------- Miscellaneous 400,096 250,270 517,578 162,250 162,250 137,850 -15.0% Operating Transfers 143,000 94,900 ------- Debt Proceeds --------- TOTAL REVENUES 4,118,540$3,870,019$3,237,823$2,964,539$2,964,539$2,918,028$-1.6% EXPENDITURES Personnel Services 972,801$1,022,382$1,131,101$1,223,132$1,223,132$1,279,434$4.6% Supplies 183,038 174,943 215,057 198,635 198,635 183,435 -7.7% Other Services & Charges 1,181,247 780,611 666,808 800,904 800,904 770,400 -3.8% Capital Outlay 487,306 1,056,591 257,980 276,919 416,919 577,070 108.4% Operating Transfers 1,258,353 1,029,046 188,500 200,000 200,000 200,000 0.0% TOTAL EXPENDITURES 4,082,745$4,063,573$2,459,446$2,699,590$2,839,590$3,010,339$11.5% FUND BALANCE - JANUARY 1 8,453,436$8,489,231$8,295,677$9,074,054$9,074,054$9,199,003$ Excess (Deficiency) of Revenues over Expenditures 35,795 (193,554)778,377 264,949 124,949 (92,311) FUND BALANCE - DECEMBER 31 8,489,231$8,295,677$9,074,054$9,339,003$9,199,003$9,106,692$ 161 ECONOMIC DEVELOPMENT AUTHORITY FUND DEPARTMENT: Economic Development SUPERVISOR: Community Development Director FUND #:213 ACTIVITY #: 46301 ACTIVITY SCOPE: The Monticello Economic Development Authority (EDA) is responsible for the on-going redevelopment efforts within the city. This consists of housing and businesses, including all related public improvements and land acquisitions. These programs are administered, based on direction of the EDA board, by the Director of Economic Development. In addition, all tax increment financing districts are initiated and administered by the EDA. There are currently 9 active tax increment districts. The EDA also administers loans to city businesses, based on local, state, and federal criteria. Businesses who will generate higher paying jobs in the community are prime candidates for these loans. OBJECTIVES: 1.Explore medical manufacturing, food-related, and data center facilities for Monticello. 2.Promote city's fiber optics network to attract and retain businesses. 3.Implement short, intermediate, and long-term objectives outlined in the TIF Analysis and Management Plan. 4.Implement Embracing Downtown Plan. 5.Continue to purchase land that makes sense for redevelopment purposes. 6.Continue to market the Monticello business center. 7.Implement training/education program for existing businesses and future workforce. 8.Utilize Jobz Bill to initiate private development/redevelopment. 9.Work with community development department and developers to create upper-end housing in Monticello to attract CEOs 10.Explore options to generate additional electrical supply to industrial areas. 11.Explore options to relocate electrical substation from Cargill's downtown site to create expansion opportunities. 12.Implement recommendations from consultants regarding uses of funds available in TIF District 1-22. 13.Engage in the Greater MSP organization. 14.Implement monitoring/tracking methods for EDA programs. 15.Continue to build a more robust website and marketing brand. ISSUES: 1.Consistent administration of city policies, plans, ordinances, guidelines, statutes, etc. 2.Need for higher wage jobs in the community. 3.Promotion of city's fiber optic network. 162 MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Tax increments collected 728,618$729,577$668,352$647,826$640,000$ Loans outstanding 1 0 0 1 1 Active TIF districts 12 10 10 9 8 BUDGET COMMENTARY: This budget represents the Monticello Economic Development Authority programs and general administration activities. The detail of each individual tax increment financing district is included in the appendix of this document. The main revenue source for the EDA Fund is tax increments from the various districts. Under Section 469.033, subd. 6, of the HRA Act, the city levied $280,000 special benefit tax for collection in 2016 and 2017 and $323,000 for collection in 2018. This levy against all taxable real property supports redevelopment activities. The special benefit levy is limited to .0185% of the taxable market value. Expenditures include administrative costs, pay-as- you-go payments to various development projects, and a transfer to debt service funds for its share of the 2005 (refunded in 2011) improvement bond, which financed an interchange project in tax increment district 1-34. Without any new TIF districts, tax increments will decline as the result of decertification of entire districts or individual parcels within a district. Much of the fund balance is non-spendable (land held for resale) or restricted to specific activities such as development in tax increment districts and loans to qualifying businesses. BUDGET: EDA FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$279,421$280,000$280,000$323,000$15.4% Tax Increments 836,750 727,617 668,352 653,564 653,564 635,678 -2.7% Licenses & Permits --------- Intergovernmental Revenues -11,875 ------- Charges for Services --------- Fines & Forfeits --------- Special Assessments --------- Miscellaneous 330,833 197,745 470,349 117,250 117,250 115,250 -1.7% Operating Transfers 93,000 94,900 ------- TOTAL REVENUES 1,260,583$1,032,137$1,418,122$1,050,814$1,050,814$1,073,928$2.2% EXPENDITURES Personnel Services 5,932$10,545$68,957$104,216$104,216$110,670$6.2% Supplies 36 65 81 --100 --- Other Services & Charges 752,594 364,429 272,448 271,730 271,730 261,276 -3.8% Capital Outlay 487,306 1,056,591 257,980 229,919 229,919 331,070 44.0% Operating Transfers 218,353 -188,500 200,000 200,000 200,000 0.0% TOTAL EXPENDITURES 1,464,221$1,431,630$787,966$805,865$805,865$903,116$12.1% FUND BALANCE - JANUARY 1 7,115,305$6,911,667$6,512,174$7,142,330$7,142,330$7,387,279$ Excess (Deficiency) of Revenues over Expenditures (203,638)(399,493)630,156 244,949 244,949 170,812 FUND BALANCE - DECEMBER 31 6,911,667$6,512,174$7,142,330$7,387,279$7,387,279$7,558,091$ 163 CEMETERY FUND DEPARTMENT: Recreation and Culture SUPERVISOR: Parks Superintendent FUND #:651 ACTIVITY #: 49010 ACTIVITY SCOPE: The Cemetery Fund sustains itself with revenues from plot sales and from services, such as excavations, staking for monuments, memorial programs, and perpetual care. The city maintains two cemeteries: Riverside and Hillside. Staff assists customers/visitors with memorials and perpetual care for both. Hillside cemetery is no longer open to burial and expenditures are recorded through park operations in the General Fund. OBJECTIVES: 1.Serve the public in a courteous, professional manner. 2.Maintain cemetery grounds and grave markers. ISSUES: 1.Increasing maintenance costs. 2.Competition from cremations. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Plot occupied 3,470 3,497 3,514 3,535 3,555 Plots reserved 765 753 745 743 735 Plots available for sale 1,048 1,029 1,020 1,106 1,080 Number of plots sold 19 17 11 20 20 Number of internments 36 29 18 26 25 Number of markers staked 27 21 14 13 15 BUDGET COMMENTARY: In 2018, expenditures are estimated at prior year levels. Charges for services is conservatively estimated to reflect annual changes in demand. Other service and charges were modestly increased for 2018. 164 BUDGET: CEMETERY 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services 37,465 26,394 14,517 26,325 26,325 18,000 -31.6% Fines & Forfeits --------- Special Assessments --------- Miscellaneous 1,258 465 596 1,000 1,000 600 -40.0% Contributed Capital --------- Operating Transfers --------- Debt Proceeds --------- TOTAL REVENUES 38,723$26,859$15,113$27,325$27,325$18,600$-31.9% EXPENDITURES Personnel Services 3,089$3,975$1,070$4,072$4,072$3,803$-6.6% Supplies 96 1,509 474 1,135 1,135 1,135 0.0% Other Services & Charges 19,200 19,771 15,494 22,118 22,118 22,785 3.0% Capital Outlay --------- Operating Transfers --------- TOTAL EXPENDITURES 22,385$25,255$17,038$27,325$27,325$27,723$1.5% FUND BALANCE - JANUARY 1 15,709$32,047$33,651$31,726$31,726$31,726$ Excess (Deficiency) of Revenues over Expenditures 16,338 1,604 (1,925)--(9,123) FUND BALANCE - DECEMBER 31 32,047$33,651$31,726$31,726$31,726$22,603$ 165 MINNESOTA INVESTMENT FUND DEPARTMENT: Minnesota Investment Fund SUPERVISOR: Community Development Director FUND #:221 ACTIVITY #: 46526-46528 ACTIVITY SCOPE: Following state and federal guidelines, the Minnesota Investment Fund administers loans to local businesses. OBJECTIVES: 1.Match available funds with qualifying businesses in Monticello. ISSUES: 1.Number of qualified businesses in Monticello. 2.Loan program and bank requirements. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Loans outstanding 0 0 0 0 0 BUDGET COMMENTARY: Interest earned on investments, not repayment of loans, is the only activity anticipated in 2018. Effective July 1, 2017, cities with uncommitted money received from repayment of funds may choose to give 20% of the funds back to the state general fund before June 30, 2018. The remaining 80% of the uncommitted funds can then be used for any lawful expenditure. The city has not determined whether it will give back the uncommitted money. Investment earnings are the only source of miscellaneous revenues. 166 BUDGET: MINN INVESTMENT FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments --------- Miscellaneous 53,471 15,715 17,760 20,000 20,000 15,000 -25.0% Operating Transfers --------- TOTAL REVENUES 53,471$15,715$17,760$20,000$20,000$15,000$-25.0% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay --------- Operating Transfers --------- TOTAL EXPENDITURES -$-$-$-$-$-$--- FUND BALANCE - JANUARY 1 1,051,218$1,104,689$1,120,404$1,138,164$1,138,164$1,158,164$ Excess (Deficiency) of Revenues over Expenditures 53,471 15,715 17,760 20,000 20,000 15,000 FUND BALANCE - DECEMBER 31 1,104,689$1,120,404$1,138,164$1,158,164$1,158,164$1,173,164$ 167 COMMUNITY CENTER FUND DEPARTMENT: Community Center SUPERVISOR: Community Center Director FUND #:226 ACTIVITY #: 45XXX ACTIVITY SCOPE: The Monticello Community Center provides space for a variety of recreational, professional, and educational opportunities. Expenditures for the community center are divided into six activities: administration, rentals and events, aquatics, guest services and concessions, maintenance, and programming. OBJECTIVES: 1.Develop a plan for the future use of the area which was used as a wheel park (skateboard, bike, and rollerblade) including design, financing, construction, and marketing. 2.Develop an on-line registration system for program and membership sign up. 3.Provide facility improvements to increase customers. 4.Maintain the community garden. 5.Improve financial controls and budget management. ISSUES: 1.Staff turnover and vacancies. 2.Limitations to facility size, space availability, and parking availability. 3.Competition from other fitness facilities. 4.Segregation of revenues and expenditures to various community center activities. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Customer visits,number of 168,459 190,475 190,000 Gross program sales 199,189$149,821$200,000$ Annual memberships 486 408 500 Monthly memberships 8,921 8,548 9,000 Three-monthmemberships 472 928 500 Ratio of annual memberships to other memberships 0.56 0.43 0.57 Rental revenue 200,964$204,938$198,471$190,342$200,000$ 168 BUDGET COMMENTARY: Starting in 2017, community center revenues are divided by activity. The largest revenue sources for 2018 are memberships ($945,000) and property taxes ($387,000). The 2016 decline in property taxes is offset by the decline in transfers out to support debt service. Other revenues include concession sales, room rentals, and program fees. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. With exception to capital outlays, other budget items are expected to remain close to prior year levels. HVAC capital outlays will result in deficit spending in 2018. Future budgets will segregate revenues and costs to various activities: administration, rentals and events, aquatics, guest services and concessions, maintenance, and programming. BUDGET: COMMUNITY CENTER 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 1,388,404$1,363,000$364,000$372,000$372,000$387,000$4.0% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services 1,312,825 1,395,963 1,393,955 1,470,400 1,470,400 1,416,500 -3.7% Fines & Forfeits --------- Special Assessments --------- Miscellaneous 14,534 36,345 28,873 24,000 24,000 7,000 -70.8% Operating Transfers 50,000 -------- TOTAL REVENUES 2,765,763$2,795,308$1,786,828$1,866,400$1,866,400$1,810,500$-3.0% EXPENDITURES Personnel Services 963,780$1,007,862$1,061,074$1,114,844$1,114,844$1,164,961$4.5% Supplies 182,906 173,369 214,502 197,500 197,500 182,200 -7.7% Other Services & Charges 409,453 396,411 378,866 507,056 507,056 486,339 -4.1% Capital Outlay ---47,000 187,000 246,000 423.4% Operating Transfers 1,040,000 1,029,046 ------- TOTAL EXPENDITURES 2,596,139$2,606,688$1,654,442$1,866,400$2,006,400$2,079,500$11.4% FUND BALANCE - JANUARY 1 271,204$440,828$629,448$761,834$761,834$621,834$ Excess (Deficiency) of Revenues over Expenditures 169,624 188,620 132,386 -(140,000)(269,000) FUND BALANCE - DECEMBER 31 440,828$629,448$761,834$761,834$621,834$352,834$ 169 This page intentionally left blank 170 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2018 DEBT SERVICE FUNDS DEBT SERVICE FUNDS - SUMMARY DESCRIPTION Debtservicesfundsareusedtoaccountfortheaccumulationofresourcesforthepaymentofgenerallong- termdebt,excludingdebtissuedfor,andservicedby,anenterprisefund.Debtservicefundsusethemodified accrualbasisofaccountingforbothfinancialreportingandbudgetingpurposes.Thecityhassixactivedebt service(sub)funds.The(sub)fundsarecombinedintoonedebtservicefundforfinancialreportingpurposes. BUDGETISSUES Thecity'sbondratingwasdowngradedfromAa3toA2in2012byMoody'sInvestorServices.Thisratingwas affirmedwiththesaleofthecity’ssoledebtissuein2017.This$5,000,000G.O.issuehadtwocomponents: $2,040,000improvementbondportionand$2,960,000abatementbondportion.In2016,thecityissued $4,900,000inG.O.bondsforstreetreconstructionandassessableimprovements.Seeindividual(sub)fundsfor thebudgetissuesfacingeachdebtservice(sub)fund.Fundbalancesinsome(sub)fundsdeclinedwithearly bondredemptions.Additionally,thelastlargepaymentononeserialbondreducedtheneedtoaccumulate cashintheprioryearforthenextFebruarypayment.NewbondissuesarestructuredtohaveDecember,rather thanFebruary,principalpayments. BUDGETSUMMARY DEBT SERVICE FUNDS 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 1,262,234$1,290,000$2,084,000$2,437,000$2,437,000$1,787,000$-26.7% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments 1,489,274 2,233,404 812,545 480,466 560,466 293,446 -38.9% Miscellaneous 296,686 238,318 244,326 215,900 215,900 3,000 -98.6% Operating Transfers 3,906,885 3,306,045 1,439,136 599,362 599,362 244,899 -59.1% Debt Proceeds 5,952,106 -------- TOTAL REVENUES 12,907,185$7,067,767$4,580,007$3,732,728$3,812,728$2,328,345$-37.6% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 334 225 208 ------ Capital Outlay --------- Debt Service 5,953,964 5,598,694 6,211,361 4,396,961 4,396,961 2,807,160 -36.2% Operating Transfers 5,783,732 5,872 --53,200 ---- TOTAL EXPENDITURES 11,738,030$5,604,791$6,211,569$4,396,961$4,450,161$2,807,160$-36.2% FUND BALANCE - JANUARY 1 2,747,513$3,916,668$5,379,644$3,748,082$3,748,082$3,110,649$ Excess (Deficiency) of Revenues over Expenditures 1,169,155 1,462,976 (1,631,562)(664,233)(637,433)(478,815) FUND BALANCE - DECEMBER 31 3,916,668$5,379,644$3,748,082$3,083,849$3,110,649$2,631,834$ 171 2010A G.O. IMPROVEMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #:317 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2010A G.O. Improvement and Refinancing Bonds financed capital projects approved and started in 2010 and refinanced the 2002 G.O. Improvement Bonds. The debt service schedule calls for semi- annual payments in February (principal and interest) and August (interest only). The average interest rate is 2.0047%. The revenue sources include a combination of existing city funds, property taxes, and special assessments. The bonds can be called on February 1, 2019. OBJECTIVES: 1.Make scheduled debt payments in a timely manner. 2.Certify or collect deferred special assessments when development occurs. 3.Redeem or refund when feasible. ISSUES: 1.Maintaining sufficient fund balance for early redemption in 2019. 2.City-imposed property tax levy limitations. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Assessment balance $269,829 $216,508 $159,154 $113,579 $80,770 Delinquent balance $12,743 $9,093 $6,607 $320 $0 Prepaidassessments $4,637 $10,000 $16,815 $9,241 $0 Assessment rolls 6 6 6 5 5 Assessedparcels 161 155 149 139 139 BUDGET COMMENTARY: The city issued the $3,255,000 2010 G.O. Improvement and Refunding Bond to finance the reconstruction of West River Street, intersection improvements on the northeast corners of Highway 25 and Broadway and East River Streets, and to refinance the G.O. Improvement Bonds of 2002. The 2010A G.O. Improvement Bond revenue sources are a combination of existing city funds: Water Fund, Sewage Fund and Economic Development Authority Fund. Property taxes and special assessments also support debt service payments. Expenditures consist solely of debt principal and interest payments. 172 BUDGET: 2010A GO IMPROVEMENT BOND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$40,000$40,000$40,000$40,000$40,000$0.0% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments 61,310 70,257 68,483 48,019 113,900 42,715 -11.0% Miscellaneous 26,613 5,775 7,799 ------ Operating Transfers 239,595 246,783 565,636 130,986 130,986 44,899 -65.7% Debt Proceeds --------- TOTAL REVENUES 327,518$362,815$681,918$219,005$219,005$127,614$-41.7% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay --------- Debt Service 360,767 303,074 304,708 305,117 305,117 300,074 -1.7% Operating Transfers --------- TOTAL EXPENDITURES 360,767$303,074$304,708$305,117$305,117$300,074$-1.7% FUND BALANCE - JANUARY 1 619,760$586,511$646,252$1,023,462$1,023,462$937,350$ Excess (Deficiency) of Revenues over Expenditures (33,249)59,741 377,210 (86,112)(86,112)(172,460) FUND BALANCE - DECEMBER 31 586,511$646,252$1,023,462$937,350$937,350$764,890$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 2/1/2018 275,000$13,571$2.05%288,571$ 8/1/2018 10,753 10,753 2/1/2019 280,000 10,753 2.25%290,753 8/1/2019 7,603 7,603 2/1/2020 290,000 7,603 2.45%297,603 8/1/2020 4,050 4,050 2/1/2021 300,000 4,050 2.70%304,050 Total 1,145,000$58,381$1,203,381$ GO Improvement and Refunding Bonds, Series 2010A 173 2011A G.O. REFUNDING BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #:312 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2011A G.O.Refunding Bonds refinanced the 2005A G.O.Improvement Bonds. The debt service schedule calls for semi-annual payments in February (principal and interest) and August (interest only). The average interest rate is 1.6112%. The revenue sources include a combination of impact fees, property taxes, special assessments, and tax increments. The 2011A bonds can be called on February 1, 2020. OBJECTIVES: 1.Make scheduled debt payments in a timely manner. 2.Certify or collect deferred special assessments when development occurs. 3.Redeem or refund when feasible. ISSUES: 1.Balancing the property tax levy for this bond with the needs of other debt. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Assessment balance $3,409,881 $2,386,963 $1,927,740 $2,093,333 $2,085,200 Delinquent balance $1,433,896 $149,230 $117 $0 $0 Prepaidassessments $429,256 $1,489,775 $0 $0 $0 Assessment rolls 11 8 6 3 3 Assessedparcels 121 67 66 6 6 BUDGET COMMENTARY: The city issued $10,735,000 in 2011 G.O. Refunding Bonds to advance refund the 2005A G.O. Improvement Bonds. The 2005A issue was redeemed on February 1, 2013. The 2011A G.O. Refunding Bond's revenue source is a combination of existing city funds, including transfers from three utility access funds and the Economic Development Fund, a property tax levy, and special assessments. Prior year 2005A G.O. revenues and expenditures are included in the schedule presented in the budget section. Escrow payments made in 2013 to redeem the 2005A G.O. Bonds are excluded. The debt is structured to reflect the nature of underlying projects and assessment policy. Consequently, there is large drop in 2017 debt service for this sub fund. 174 BUDGET: 2011A G.O. BOND FUND (2005A)2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 222,865$330,000$330,000$139,783$139,783$148,061$5.9% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments 1,049,370 2,042,331 336,960 162,359 162,359 46,314 -71.5% Miscellaneous 251,357 220,210 212,695 208,900 208,900 1,000 -99.5% Operating Transfers 1,769,953 964,508 188,500 468,376 468,376 200,000 -57.3% Debt Proceeds --------- TOTAL REVENUES 3,293,545$3,557,049$1,068,155$979,418$979,418$395,375$-59.6% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay --------- Debt Service 2,880,767 2,461,375 2,427,008 784,150 784,150 780,100 -0.5% Operating Transfers --------- TOTAL EXPENDITURES 2,880,767$2,461,375$2,427,008$784,150$784,150$780,100$-0.5% FUND BALANCE - JANUARY 1 1,317,306$1,730,084$2,825,758$1,466,905$1,466,905$1,662,173$ Excess (Deficiency) of Revenues over Expenditures 412,778 1,095,674 (1,358,853)195,268 195,268 (384,725) FUND BALANCE - DECEMBER 31 1,730,084$2,825,758$1,466,905$1,662,173$1,662,173$1,277,448$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 2/1/2018 720,000 33,275 2.00%753,275 8/1/2018 26,075 26,075 2/1/2019 380,000 26,075 2.00%406,075 8/1/2019 22,275 22,275 2/1/2020 390,000 22,275 2.00%412,275 8/1/2020 18,375 18,375 2/1/2021 395,000 18,375 3.00%413,375 8/1/2021 12,450 12,450 2/1/2022 410,000 12,450 3.00%422,450 8/1/2022 6,300 6,300 2/1/2023 420,000 6,300 3.00%426,300 Total 2,715,000$204,225$2,919,225$ GO Refunding Bonds, Series 2011A 175 2014A G.O. JUDGMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #:318 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2014A G.O. Judgment Bonds financed the settlement with telecommunications bondholders. The $5,750,000 settlement essentially relieves the city of liability for the $26,445,000 in revenue bonds used to finance its telecommunications utility. The judgment portion of the 2014A bonds totaled $6,080,000. The city borrowed (capitalized interest) the 2015 interest only payments. Thereafter, the city added the annual principal and interest debt service payments to its tax levy. The average interest rate is 3.0696%. The bonds are eligible for ordinary redemption in 2021. OBJECTIVES: 1.Make scheduled debt payments in a timely manner. 2.Redeem or refund when feasible. ISSUES: 1.Maintain adherence to bond covenants and awareness of arbitrage limitations. 2.Balancing the property tax levy for this bond with the needs of other debt. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Not Applicable BUDGET COMMENTARY: The $6,595,000 2014A G.O. bond issue had two components: $6,080,000 judgment portions and $515,000 capital equipment portion. The capital equipment portion is accounted for in the Central Equipment Fund. Beginning in 2016, annual debt service payments were added to the property tax levy. The 2015 interest only payments were added to the bond issue. The final payment on the bonds is in December 2030. The bonds are redeemable in 2021. However, an extraordinary optional redemption provision allows the city to redeem the bonds at any time for 101% of par if the fiber optics system is sold or leased. The settlement proceeds were distributed directly to the trustee for the bondholders. 176 BUDGET: 2014A G.O. JUDGMENT BONDS 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$544,000$536,929$536,929$537,586$0.1% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments --------- Miscellaneous 778 2,077 689 1,000 1,000 1,000 0.0% Operating Transfers --------- Debt Proceeds 5,952,106 -------- TOTAL REVENUES 5,952,884$2,077$544,689$537,929$537,929$538,586$0.1% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay --------- Debt Service -163,879 515,520 511,862 511,862 512,736 0.2% Operating Transfers 5,783,732 -------- TOTAL EXPENDITURES 5,783,732$163,879$515,520$511,862$511,862$512,736$0.2% FUND BALANCE - JANUARY 1 -$169,152$7,350$36,519$36,519$62,586$ Excess (Deficiency) of Revenues over Expenditures 169,152 (161,802)29,169 26,067 26,067 25,850 FUND BALANCE - DECEMBER 31 169,152$7,350$36,519$62,586$62,586$88,436$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2018 -78,493 78,493 12/15/2018 355,000 78,493 1.50%433,493 6/15/2019 -75,831 75,831 12/15/2019 360,000 75,831 1.85%435,831 6/15/2020 -72,501 72,501 12/15/2020 365,000 72,501 2.20%437,501 6/15/2021 -68,486 68,486 12/15/2021 375,000 68,486 2.50%443,486 6/15/2022 -63,798 63,798 12/15/2022 385,000 63,798 2.75%448,798 6/15/2023 -58,504 58,504 12/15/2023 395,000 58,504 2.90%453,504 6/15/2024 -52,777 52,777 12/15/2024 405,000 52,777 3.05%457,777 6/15/2025 -46,600 46,600 12/15/2025 420,000 46,600 3.20%466,600 6/15/2026 -39,881 39,881 12/15/2026 435,000 39,881 3.35%474,881 6/15/2027 -32,594 32,594 12/15/2027 445,000 32,594 3.40%477,594 6/15/2028 -25,029 25,029 12/15/2028 465,000 25,029 3.38%490,029 6/15/2029 -17,182 17,182 12/15/2029 480,000 17,182 3.55%497,182 6/15/2030 -8,663 8,663 12/15/2030 495,000 8,663 3.50%503,663 Total 5,380,000 1,280,678 6,660,678$ GO Bonds, Series 2014A (Judgment Portion) 177 2015B G.O. STREET RECONSTRUCTION-IMPROVEMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #:319 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2015B G.O. Street Reconstruction and Improvement Bonds provided financing for School Boulevard, Fallon Avenue, and 85th Street improvements. This issue also provided financing for street and other infrastructure improvements in the area east of Highway 25 and north of Interstate 94. The $2,605,000 bond issue allocated $1,885,000 for street reconstruction and $720,000 for improvements. The school district was assessed $172,000 for School Boulevard. The city levies for the gap between annual debt service payments and annual assessment collections. The bonds have an average interest rate of 2.5856% and are redeemable in December of 2022. OBJECTIVES: 1.Make scheduled debt payments in a timely manner. 2.Redeem or refund when feasible. ISSUES: 1.Balancing the property tax levy for this bond with the needs of other debt. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Assessment balance $370,350 $154,754 $137,560 $120,365 Delinquent balance $0 $0 $0 $0 Prepaid assessments $0 $0 $0 $0 Assessment rolls 2 1 1 1 Assessed parcels 4 3 3 3 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 plus property taxes. Property taxes will be levied for the gap between assessment revenue and debt service payments. The 2016 $250,000 levy exceeded the bond covenant required levy by $50,000. 178 BUDGET: 2015B G.O. Bonds 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$250,000$195,288$195,288$203,425$4.2% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments --27,855 26,000 26,000 24,417 -6.1% Miscellaneous -665 520 1,000 1,000 1,000 0.0% Operating Transfers --------- Debt Proceeds --------- TOTAL REVENUES -$665$278,375$222,288$222,288$228,842$2.9% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay --------- Debt Service --212,626 208,000 208,000 216,000 3.8% Operating Transfers --------- TOTAL EXPENDITURES -$-$212,626$208,000$208,000$216,000$3.8% FUND BALANCE - JANUARY 1 -$-$665$66,414$66,414$80,702$ Excess (Deficiency) of Revenues over Expenditures -665 65,749 14,288 14,288 12,842 FUND BALANCE - DECEMBER 31 -$665$66,414$80,702$80,702$93,544$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2018 -$27,625$27,625$ 12/15/2018 160,000 27,625 1.50%187,625 6/15/2019 -26,426 26,426 12/15/2019 160,000 26,426 1.50%186,426 6/15/2020 -25,225 25,225 12/15/2020 160,000 25,225 1.50%185,225 6/15/2021 -24,024 24,024 12/15/2021 165,000 24,024 2.00%189,024 6/15/2022 -22,376 22,376 12/15/2022 165,000 22,376 2.00%187,376 6/15/2023 -20,724 20,724 12/15/2023 170,000 20,724 2.50%190,724 6/15/2024 -18,600 18,600 12/15/2024 175,000 18,600 2.50%193,600 6/15/2025 -16,413 16,413 12/15/2025 180,000 16,413 2.50%196,413 6/15/2026 -14,162 14,162 12/15/2026 185,000 14,162 2.50%199,162 6/15/2027 -11,850 11,850 12/15/2027 185,000 11,850 3.00%196,850 6/15/2028 -9,075 9,075 12/15/2028 195,000 9,075 3.00%204,075 6/15/2029 -6,150 6,150 12/15/2029 200,000 6,150 3.00%206,150 6/15/2030 -3,150 3,150 12/15/2030 210,000 3,150 3.00%213,150 Total 2,310,000$451,600$2,761,600$ GO Bonds, Series 2015B 179 2016A G.O. STREET RECONSTRUCTION-IMPROVEMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #:320 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2016A G.O. Street Reconstruction and Improvement Bonds financed improvements included in the 2016 core street project and at the intersection of Highway 25 and 7th Street. The $4,900,000 bond issue allocated $770,000 for street reconstruction and $4,130,000 for improvements. The city levies for the gap between annual debt service payments and annual assessment collections. The bonds have an average interest rate of 2.1034% and are redeemable in December of 2022. OBJECTIVES: 1.Make scheduled debt payments in a timely manner. 2.Redeem or refund when feasible. ISSUES: 1.Balancing the property tax levy for this bond with the needs of other debt. 2.Investment earnings on assessment prepayments will be less than assessed interest rates. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Assessment balance $818,044 $712,355 $632,735 Delinquent balance $0 $176 $0 Prepaid assessments $263,182 $53,682 $0 Assessment rolls 1 2 2 Assessed parcels 102 95 95 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 will be levied for the gap between assessment revenue and debt service payments. The bond issue resolution requires a $407,769 property tax levy for collection year 2018. Future levies will be adjusted to reflect assessment prepayments and the interest earned on prepayments. 180 BUDGET: 2016A G.O. Bonds 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$415,000$415,000$407,769$-1.7% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments --263,182 140,000 140,000 110,000 -21.4% Miscellaneous --456 ------ Operating Transfers --------- Debt Proceeds --------- TOTAL REVENUES -$-$263,638$555,000$555,000$517,769$-6.7% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay --------- Debt Service --800 530,000 530,000 527,900 -0.4% Operating Transfers --------- TOTAL EXPENDITURES -$-$800$530,000$530,000$527,900$-0.4% FUND BALANCE - JANUARY 1 -$-$-$262,838$262,838$287,838$ Excess (Deficiency) of Revenues over Expenditures --262,838 25,000 25,000 (10,131) FUND BALANCE - DECEMBER 31 -$-$262,838$287,838$287,838$277,707$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2018 -$46,075$46,075$ 12/15/2018 435,000 46,075 2.00%481,075 6/15/2019 -41,725 41,725 12/15/2019 445,000 41,725 2.00%486,725 6/15/2020 -37,275 37,275 12/15/2020 450,000 37,275 2.00%487,275 6/15/2021 -32,775 32,775 12/15/2021 460,000 32,775 2.00%492,775 6/15/2022 -28,175 28,175 12/15/2022 470,000 28,175 2.00%498,175 6/15/2023 -23,475 23,475 12/15/2023 480,000 23,475 2.00%503,475 6/15/2024 -18,675 18,675 12/15/2024 490,000 18,675 2.00%508,675 6/15/2025 -13,775 13,775 12/15/2025 500,000 13,775 2.00%513,775 6/15/2026 -8,775 8,775 12/15/2026 510,000 8,775 2.00%518,775 6/15/2027 -3,675 3,675 12/15/2027 60,000 3,675 3.00%63,675 6/15/2028 -2,775 2,775 12/15/2028 60,000 2,775 3.00%62,775 6/15/2029 -1,875 1,875 12/15/2029 60,000 1,875 3.00%61,875 6/15/2030 -975 975 12/15/2030 65,000 975 3.00%65,975 Total 4,485,000$520,050$5,005,050$ GO Bonds, Series 2016A 181 2017A G.O. IMPROVEMENT-ABATEMENT BOND SUB-FUND DEPARTMENT: Debt Service SUPERVISOR: Finance Director FUND #:321 ACTIVITY #: 47000 ACTIVITY SCOPE: The 2017A G.O. Improvement and Abatement Bonds financed improvements to rural outlying roads and various other city street projects. Additionally, the issue provided funding for Fallon Avenue overpass right-of-way acquisition, engineering, and construction. The $5,000,000 bond issue allocated $2,040,000 for street improvements and $2,960,000 for the overpass (Abatement). The city levies for the gap between annual debt service payments and annual assessment collections. The bonds have an average interest rate of 2.443% and are redeemable in December of 2026. OBJECTIVES: 1.Make scheduled debt payments in a timely manner. 2.Redeem or refund when feasible. ISSUES: 1.Balancing the property tax levy for this bond with the needs of other debt. 2.Investment earnings on assessment prepayments will be less than assessed interest rates. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Assessment balance $434,759 $391,563 Delinquent balance $0 $0 Prepaid assessments $102,235 $0 Assessment rolls 2 2 Assessedparcels 72 72 BUDGET COMMENTARY: The $5,000,000 2017A G.O. bond issue has two components: $2,040,000 improvement portion and $2,960,000 abatement portion. Property taxes and assessments support the improvement portion of the debt issue. The abatement portion is supported by abatement tax levy for principal and a debt service levy for interest. Property taxes will be levied for any gap between assessment revenue and debt service payments. The bond issue resolution requires the following 2018 collection year property tax levy: $175,136 for improvements, $92,410 for abatement interest, and $160,000 for abatement principal. Future levies will be adjusted to reflect assessment prepayments and the interest earned on prepayments. 182 BUDGET: 2017A G.O. Bonds 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE PROPERTY TAXES -$-$-$-$-$$450,159 --- LICENSES & PERMITS --------- INTERGOVERNMENTAL REVENUES --------- CHARGES FOR SERVICES --------- FINES & FORFEITS --------- SPECIAL ASSESSMENTS ----80,000 70,000 --- MISCELLANEOUS --------- OPERATING TRANSFERS --------- BOND PROCEEDS --------- TOTAL REVENUES -$-$-$-$80,000$520,159$--- EXPENDITURES PERSONNEL SERVICES -$-$-$-$-$-$--- SUPPIES --------- OTHER SERVICES & CHARGES --------- CAPITAL OUTLAY --------- DEBT SERVICE -----470,350 --- OPERATING TRANSFERS --------- TOTAL EXPENDITURES -$-$-$-$-$470,350$--- FUND BALANCE - JANUARY 1 -$-$-$-$-$80,000$ Excess (Deficiency) of Revenues over Expenditures ----80,000 49,809 FUND BALANCE - DECEMBER 31 -$-$-$-$80,000$129,809$ REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/15/2018 -$72,791$72,791$ 12/15/2018 340,000 56,721 2.00%396,721 6/15/2019 -53,319 53,319 12/15/2019 365,000 53,319 2.00%418,319 6/15/2020 -49,671 49,671 12/15/2020 370,000 49,671 2.00%419,671 6/15/2021 -45,969 45,969 12/15/2021 380,000 45,969 2.00%425,969 6/15/2022 -42,171 42,171 12/15/2022 385,000 42,171 2.00%427,171 6/15/2023 -38,320 38,320 12/15/2023 390,000 38,320 2.00%428,320 6/15/2024 -34,420 34,420 12/15/2024 400,000 34,420 2.00%434,420 6/15/2025 -30,420 30,420 12/15/2025 410,000 30,420 2.00%440,420 6/15/2026 -26,320 26,320 12/15/2026 420,000 26,320 2.50%446,320 6/15/2027 -21,069 21,069 12/15/2027 430,000 21,069 2.50%451,069 6/15/2028 -15,695 15,695 12/15/2028 210,000 15,695 2.50%225,695 6/15/2029 -13,070 13,070 12/15/2029 215,000 13,070 2.60%228,070 6/15/2030 -10,275 10,275 12/15/2030 220,000 10,275 3.00%230,275 6/15/2031 -6,975 6,975 12/15/2031 230,000 6,975 3.00%236,975 6/15/2030 -3,525 3,525 12/15/2030 235,000 3,525 3.00%238,525 Total 5,000,000$911,950$5,911,950$ GO Bonds, Series 2017A 183 CLOSED DEBT SERVICE FUNDS CLOSED FUNDS INCLUDED IN SUMMARY TOTAL: 2007A G.O. Improvement Bond Fund 2008A G.O. Revenue Refunding Bond Fund 2008B G.O. Sewer Revenue Refunding Bond Fund CLOSED FUNDS SUMMARY TOTAL: CLOSED DEBT SERVICE FUNDS 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 1,039,369$920,000$920,000$1,110,000$1,110,000$-$ -100.0% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments 378,594 120,816 116,065 104,088 104,088 --100.0% Miscellaneous 17,938 9,591 22,167 5,000 5,000 --100.0% Operating Transfers 1,897,337 2,094,754 685,000 ------ Debt Proceeds --------- TOTAL REVENUES 3,333,238$3,145,161$1,743,232$1,219,088$1,219,088$-$ -100.0% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 334 225 208 ------ Capital Outlay --------- Debt Service 2,712,430 2,670,366 2,750,699 2,057,832 2,057,832 --100.0% Operating Transfers -5,872 --53,200 ---- TOTAL EXPENDITURES 2,712,764$2,676,463$2,750,907$2,057,832$2,111,032$-$ -100.0% FUND BALANCE - JANUARY 1 810,447$1,430,921$1,899,619$891,944$891,944$-$ Excess (Deficiency) of Revenues over Expenditures 620,474 468,698 (1,007,675)(838,744)(891,944)- FUND BALANCE - DECEMBER 31 1,430,921$1,899,619$891,944$53,200$-$-$ 184 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2018 CAPITAL PROJECT FUNDS BUDGET: CLOSED BOND FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments 241,810 695,738 130,932 65,900 65,900 54,000 -18.1% Miscellaneous 67,631 16,933 15,308 5,000 5,000 5,000 0.0% Operating Transfers -5,872 --53,200 ---- Debt Proceeds --------- TOTAL REVENUES 309,441$718,543$146,240$70,900$124,100$59,000$-16.8% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay --------- Operating Transfers 664,500 855,000 753,500 -80,000 ---- TOTAL EXPENDITURES 664,500$855,000$753,500$-$80,000$-$--- FUND BALANCE - JANUARY 1 1,373,823$1,018,764$882,307$275,047$275,047$319,147$ Excess (Deficiency) of Revenues over Expenditures (355,059)(136,457)(607,260)70,900 44,100 59,000 FUND BALANCE - DECEMBER 31 1,018,764$882,307$275,047$345,947$319,147$378,147$ 189 CAPITAL PROJECT FUNDS - SUMMARY DESCRIPTION Capitalprojectfundsareusedtoaccountforfinancialresourcesthatarerestricted,committed,orassignedto expenditureforcapitaloutlaysincludingtheacquisitionorconstructionofcapitalfacilitiesandothercapital assets—excludingcapitalassetsfinancedbyproprietaryfunds(enterpriseorinternalservice).Capitalproject fundsusethemodifiedaccrualbasisofaccountingforbothfinancialreportingandbudgetingpurposes.Thecity currentlyhassixactivecapitalprojectfunds. BUDGETISSUES Financingcapitalassetadditionsorreplacementshasbeenanongoingchallenge,especiallyinanenvironment wherethefocusisonmaintainingalow,stablepropertytaxlevy,andothertraditionalresources(LiquorFund transfers)aredivertedtootherneeds.Seetheindividualfundsforthebudgetissuesfacingeachcapitalproject fund. BUDGETSUMMARY TOTAL CAPITAL PROJECT 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 229,030$79,146$364,132$50,000$50,000$783,000$1466.0% Tax Increments --------- Franchise & Other Taxes $97,553 $116,984 $148,317 $116,000 $116,000 $116,000 0.0% Licenses & Permits --------- Intergovernmental Revenues 411,675 1,045,756 1,652,358 250,000 250,000 --100.0% Charges for Services 38,494 393,180 285,251 50,000 50,000 50,000 0.0% Fines & Forfeits --------- Special Assessments 400,848 1,084,169 171,602 65,900 65,900 54,000 -18.1% Miscellaneous 333,390 92,863 149,128 57,000 57,000 52,000 -8.8% Operating Transfers 864,500 860,872 799,108 -433,200 1,000,000 --- Debt Proceeds -2,651,898 4,997,503 5,000,000 5,000,000 5,000,000 0.0% TOTAL REVENUES 2,375,490$6,324,868$8,567,399$5,588,900$6,022,100$7,055,000$26.2% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies 18,262 7,135 ------- Other Services & Charges 55,446 145,429 193,695 ------ Capital Outlay 2,147,894 2,238,364 6,350,430 7,163,000 7,123,000 10,620,000 48.3% Operating Transfers 990,800 855,000 1,034,675 314,069 394,069 44,899 -85.7% TOTAL EXPENDITURES 3,212,402$3,245,928$7,578,800$7,477,069$7,517,069$10,664,899$42.6% FUND BALANCE - JANUARY 1 6,231,409$5,394,497$8,473,437$9,462,036$9,462,036$7,967,067$ Excess (Deficiency) of Revenues over Expenditures (836,912)3,078,940 988,599 (1,888,169)(1,494,969)(3,609,899) FUND BALANCE - DECEMBER 31 5,394,497$8,473,437$9,462,036$7,573,867$7,967,067$4,357,168$ 185 CAPITAL PROJECT FUND DEPARTMENT: Capital Project Fund SUPERVISOR: City Engineer FUND #:400 ACTIVITY #: 43300 ACTIVITY SCOPE: The Capital Project Fund is a generic fund of the same type used to account for on-going capital asset additions and replacements. Capital assets acquired through this fund include street improvements or other infrastructure and buildings. OBJECTIVES: 1.Improve city infrastructure. 2.Extend city infrastructure to new developments. ISSUES: 1.Finding adequate resources for various projects while maintaining a low, stable property tax levy. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Projects supported 3 4 4 5 5 BUDGET COMMENTARY: For 2018, notable projects include: Fallon Avenue overpass - $5,950,000; Chelsea from Fallon to Edmonson - $2,200,000. Funding sources include: debt proceeds - $5,000,000; fund balance - $3,200,000 (debt proceeds and other revenues from prior years). Reimbursement resolutions have been passed by council on these projects. These resolutions allow the city to reimburse itself with debt issuance proceeds. The 2018 property tax levy reduces the need for future debt and stabilizes the overall levy to accommodate future debt. 186 BUDGET: CAPITAL PROJECT FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 228,854$79,146$364,132$50,000$50,000$783,000$1466.0% Franchise & Other Taxes 53,933 36,865 70,527 36,000 36,000 36,000 0.0% Intergovernmental Revenues 41,962 945,756 1,652,358 250,000 250,000 --100.0% Charges for Services --------- Fines & Forfeits --------- Special Assessments 159,038 276,023 40,670 ------ Miscellaneous 21,523 8,176 44,476 ------ Operating Transfers 200,000 ---300,000 600,000 --- Debt Proceeds -2,651,898 4,997,503 5,000,000 5,000,000 5,000,000 0.0% TOTAL REVENUES 705,310$3,997,864$7,169,666$5,336,000$5,636,000$6,419,000$20.3% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies 9,497 135 ------- Other Services & Charges 16,615 96,400 112,400 ------ Capital Outlay 893,015 1,268,277 4,957,987 6,800,000 6,800,000 9,650,000 41.9% Operating Transfers --------- TOTAL EXPENDITURES 919,127$1,364,812$5,070,387$6,800,000$6,800,000$9,650,000$41.9% FUND BALANCE - JANUARY 1 303,583$89,766$2,722,818$4,822,097$4,822,097$3,658,097$ Excess (Deficiency) of Revenues over Expenditures (213,817)2,633,052 2,099,279 (1,464,000)(1,164,000)(3,231,000) FUND BALANCE - DECEMBER 31 89,766$2,722,818$4,822,097$3,358,097$3,658,097$427,097$ 187 CLOSED BOND FUND DEPARTMENT: Closed Bond Fund SUPERVISOR: Finance Director FUND #:300 ACTIVITY #: 47000 ACTIVITY SCOPE: The Closed Bond Fund, formerly accounted for in the debt service section, is the combination of multiple closed debt service funds. The fund has no debt obligation. However, special assessments supporting past debt service continue to provide funding for city projects. OBJECTIVES: 1.Provide funding for various city projects, including Bertram Chain of Lakes improvements. 2.Certifyorcollectdeferredspecialassessmentswhendevelopmentoccursafterrelateddebt has been fully amortized. ISSUES: 1.Declining assessment collections on retired debt. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Not Applicable BUDGET COMMENTARY: In 2018, special assessments collected from projects with retired debt will provide funding for Bertram Chain of Lakes, pathway, and park improvements. A transfer to the Park & Pathway Dedication Fund at the end of 2017 provided money for such purposes. Similarly, a supplemental transfer may occur in 2018 to finance 2019 projects. Future assessment collections for 2018 and beyond are estimated at $375,000. 188 PARK & PATHWAY DEDICATION FUND DEPARTMENT: Recreation & Culture SUPERVISOR: Parks Superintendent FUND #:229 ACTIVITY #: 45202 ACTIVITY SCOPE: Activities of the Park and Pathway Dedication Fund include updating and maintaining the city's pathway system, as well as designating funds for future city parks and pathways. OBJECTIVES: 1.Improve pathways and parks systems. 2.Continue the improvement of Bertram Chain of Lakes (formerly the Y.M.C.A.) property. ISSUES: 1.Economic impact on new development and home construction. 2.Time constraints of other projects. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 LandAcquisition 1,163,248$609,614$1,083,500$-$-$ Projects supported 3 2 4 4 4 Dedicationfees -$ 107,929$-$-$-$ BUDGET COMMENTARY: The fund’s major revenue source is normally park dedication fees. However, due to the economic conditions and lack of new development, dedication fees have been an unreliable source. Consequently, the city typically finances projects with transfers from other funds, which are made in the year prior to expenditure. The 2018 budgeted expenditures include the Spirit Hills pathway connection ($150,000), Feather Stone shelter and equipment ($80,000), Bertram Chain of Lakes plans & specifications ($400,000), and Rolling Woods sidewalk ($40,000). Land acquisition at Bertram Chain of Lakes concluded in 2016. 190 BUDGET: PARK & PATHWAY DEDICATION 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues 369,713 100,000 ------- Charges for Services -107,929 ------- Fines & Forfeits --------- Special Assessments -112,408 ------- Miscellaneous 32,870 15,225 36,439 2,000 2,000 2,000 0.0% Operating Transfers 664,500 855,000 753,500 -80,000 400,000 --- TOTAL REVENUES 1,067,083$1,190,562$789,939$2,000$82,000$402,000$20000.0% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies 8,765 7,000 ------- Other Services & Charges 38,539 48,707 62,755 ------ Capital Outlay 1,254,879 636,528 1,342,983 288,000 248,000 670,000 132.6% Operating Transfers --------- TOTAL EXPENDITURES 1,302,183$692,235$1,405,738$288,000$248,000$670,000$132.6% FUND BALANCE - JANUARY 1 973,433$738,333$1,236,660$620,861$620,861$454,861$ Excess (Deficiency) of Revenues over Expenditures (235,100)498,327 (615,799)(286,000)(166,000)(268,000) FUND BALANCE - DECEMBER 31 738,333$1,236,660$620,861$334,861$454,861$186,861$ 191 STORMWATER ACCESS FUND DEPARTMENT: Public Works SUPERVISOR: City Engineer/Public Works Director FUND #:263 ACTIVITY #: 49201 ACTIVITY SCOPE: The Stormwater Access Fund provides resources for major improvements to the storm sewer system. Impact fees are collected on building permits for new construction and lot development. These fees are also used to retire debt service related to improvements to the sanitary sewer system. OBJECTIVES: 1.Maintain and upgrade storm sewer system. 2.Meet changing ponding rules. 3.Retire debt service related to system improvements in a timely manner. ISSUES: 1.Building permits for residential and commercial development are increasing. 2.The economy is recovering. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Not Applicable BUDGET COMMENTARY: The main revenue sources are storm sewer access and trunk fees on new construction or special assessments of past access and trunk fees. The operating transfers are to the 2011A (formerly 2005A) Refunding Improvement Bond--part of the interchange project, and to the 2010A Improvement and Refinancing Bond--its share of the 2010 storm sewer project. For 2016 and beyond, funding for routine pond improvements will come from the General Fund. There are no planned capital outlays for non-routine pond improvements in 2018. Past transfers have supported debt service. No such support is required in 2018. 192 BUDGET: STORMWATER ACCESS FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services 38,494 285,251 285,251 50,000 50,000 50,000 0.0% Fines & Forfeits --------- Special Assessments --------- Miscellaneous 39,638 15,399 15,399 15,000 15,000 15,000 0.0% Operating Transfers --------- Debt Proceeds --------- TOTAL REVENUES 78,132$300,650$300,650$65,000$65,000$65,000$0.0% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges 292 322 18,540 ------ Capital Outlay --------- Operating Transfers 326,300 -235,567 268,376 268,376 --100.0% TOTAL EXPENDITURES 326,592$322$254,107$268,376$268,376$-$ -100.0% FUND BALANCE - JANUARY 1 1,122,181$873,721$1,174,049$1,220,592$1,220,592$1,017,216$ Excess (Deficiency) of Revenues over Expenditures (248,460)300,328 46,543 (203,376)(203,376)65,000 FUND BALANCE - DECEMBER 31 873,721$1,174,049$1,220,592$1,017,216$1,017,216$1,082,216$ 193 STREET LIGHTING IMPROVEMENT FUND DEPARTMENT: Public Works SUPERVISOR: City Engineer/Public Works Director FUND #:245 ACTIVITY #: 43162 ACTIVITY SCOPE: The Street Lighting Improvement Fund provides resources for improvements to the street lighting system. Electric franchise fees are the fund’s primary revenue sources. OBJECTIVES: 1.Upgrade traditional lights to colonial style lights. 2.Collaborate with MNDOT to add battery back-up to signals on TH25. 3.Replace and modify lighting system in the downtown area. 4.Add lighting for pathways and other high use areas. ISSUES: 1.Project scope and timing. 2.Develop a light replacement program with Wright Hennepin and Xcel Energy. 3.Verify lamp and fixture maintenance by utility companies. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Projects supported 0 2 0 1 3 BUDGET COMMENTARY: Electric franchise fees provide resources for lighting projects, often in conjunction with other street improvement projects. Capital outlays for 2018 include $150,000 for downtown re-lighting projects and $150,000 for various currently unspecified projects. 194 BUDGET: STREET LIGHT IMPROVEMENTS 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Franchise & Other Taxes 43,620 80,119 77,790 80,000 80,000 80,000 0.0% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments --------- Miscellaneous 86,976 12,220 9,329 10,000 10,000 10,000 0.0% Operating Transfers --------- Debt Proceeds --------- TOTAL REVENUES 130,596$92,339$87,119$90,000$90,000$90,000$0.0% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay -333,559 49,460 75,000 75,000 300,000 300.0% Operating Transfers --------- TOTAL EXPENDITURES $0 $333,559 $49,460 $75,000 $75,000 $300,000 300.0% FUND BALANCE - JANUARY 1 792,284$922,880$681,660$719,319$719,319$734,319$ Excess (Deficiency) of Revenues over Expenditures 130,596 (241,220)37,659 15,000 15,000 (210,000) FUND BALANCE - DECEMBER 31 922,880$681,660$719,319$734,319$734,319$524,319$ 195 STREET RECONSTRUCTION FUND DEPARTMENT: Public Works SUPERVISOR: City Engineer/Public Works Director FUND #:212 ACTIVITY #: 43121 ACTIVITY SCOPE: The Street Reconstruction Fund was established to track annual improvements to city infrastructure. Improvements are based on an annual reconstruction schedule. OBJECTIVES: 1.Improve city streets in the capital improvement plan. ISSUES: 1.City no longer levies for this fund. 2.Other traditional resources have been diverted to other needs. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Not Applicable BUDGET COMMENTARY: Past revenue sources have included property taxes and operating transfers from the Liquor Fund. Neither the tax nor transfer has been budgeted for 2018. Reimbursement resolutions have been passed by council on various projects that could be supported by the Street Reconstruction Fund. These resolutions allow the city to reimburse itself with debt proceeds. Staff has not made a final determination of the mix of funding sources for 2018 projects. 196 BUDGET: STREET RECONSTRUCTION 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes 176$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments --------- Miscellaneous 84,752 24,910 28,177 25,000 25,000 20,000 -20.0% Operating Transfers --45,608 ------ Debt Proceeds --------- TOTAL REVENUES 84,928$24,910$73,785$25,000$25,000$20,000$-20.0% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay --------- Operating Transfers --45,608 45,693 45,693 44,899 -1.7% TOTAL EXPENDITURES -$-$45,608$45,693$45,693$44,899$-1.7% FUND BALANCE - JANUARY 1 1,666,105$1,751,033$1,775,943$1,804,120$1,804,120$1,783,427$ Excess (Deficiency) of Revenues over Expenditures 84,928 24,910 28,177 (20,693)(20,693)(24,899) FUND BALANCE - DECEMBER 31 1,751,033$1,775,943$1,804,120$1,783,427$1,783,427$1,758,528$ 197 This page intentionally left blank 198 ENTERPRISE FUNDS Adopted 2018 ENTERPRISE FUNDS ENTERPRISE FUNDS - SUMMARY DESCRIPTION Enterprisefundsareusedtoreportanactivityforwhichafeeischargedtoexternalusersforgoodsorservices. Unlikegovernmentalfunds,enterprisefundsfocusonthedeterminationofoperatingincome,changesinnet position(orcostrecovery),financialposition,andcashflows.Enterprisefundsuseanaccrualbasisofaccounting forfinancialreportingpurposes.Amodifiedaccrualbasiswillbeusedforbudgetingpurposesinthisreport. Consequently,thebottomlineforeachenterprisefundislabeledfundbalanceratherthannetposition,which includescapitalassets,long-termdebtandothernoncurrentitems.Fundbalanceinenterprisefundsisroughly thesameasworkingcapital. Thecitycurrentlyhasfiveactiveenterprisefunds:Water,Sewage,Liquor(Hi-Way Liquors),DeputyRegistrar(DMV),andFiberOptics(FiberNet). BUDGETISSUES Eachenterprisefundhasspecificchallengesthatwillbeaddressedinthenarrativeforeachfund. BUDGETSUMMARY TOTAL ENTERPRISE FUNDS 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Sale of Goods 5,165,737 5,489,430 5,448,584 5,435,194 5,635,194 5,770,784 6.2% Licenses & Permits 2,735 4,635 3,000 200 200 2,000 900.0% Intergovernmental Revenues --------- Charges for Services 5,240,839 5,270,527 5,515,535 5,414,861 5,393,291 5,670,207 4.7% Fines & Forfeits --------- Special Assessments 40,440 12,998 494 30,000 30,000 38,000 26.7% Miscellaneous 424,869 213,930 602,792 165,297 236,867 124,200 -24.9% Contributed Capital 966,494 1,435,870 1,993,232 140,450 140,450 140,450 0.0% Operating Transfers 6,383,732 450,000 350,000 230,000 180,000 130,000 -43.5% Debt Proceeds --1,413,065 700,000 700,000 --100.0% TOTAL REVENUES 18,224,846$12,877,390$15,326,702$12,116,002$12,316,002$11,875,641$-2.0% EXPENDITURES Personnel Services 1,621,367$1,830,153$1,754,735$1,555,441$1,577,341$1,683,446$8.2% Supplies 4,204,556 4,320,133 4,406,720 4,414,130 4,562,084 4,710,245 6.7% Other Services & Charges 3,506,438 3,059,414 3,179,969 3,422,406 3,561,643 3,694,978 8.0% Capital Outlay 139,513 548,298 3,865,726 1,760,900 1,601,809 1,146,000 -34.9% Debt Service 6,054,285 358,072 642,045 373,574 373,574 373,574 0.0% Operating Transfers 2,972,232 2,751,045 549,327 315,293 265,293 1,130,000 258.4% TOTAL EXPENDITURES 18,498,391$12,867,115$14,398,522$11,841,744$11,941,744$12,738,243$7.6% FUND BALANCE - JANUARY 1 9,253,580$8,980,035$8,990,310$9,918,490$9,918,490$10,292,748$ Excess (Deficiency) of Revenues over Expenditures (273,545)10,275 928,180 274,258 374,258 (862,602) FUND BALANCE - DECEMBER 31 8,980,035$8,990,310$9,918,490$10,192,748$10,292,748$9,430,146$ 199 WATER FUND DEPARTMENT: Public Works SUPERVISOR: Utilities Superintendent FUND #:601 ACTIVITY #: 49440 ACTIVITY SCOPE: The Water Fund is a self-sustaining city utility fund. The water department manages the water utility, providing a continuous supply of high-quality water to customers at a reasonable cost. The water system is maintained at proper pressure levels, and it is bacteria-free. Further, metering equipment is maintained to account for accurate usage and billing. OBJECTIVES: 1.Continue to add GPS data point to GIS system. 2.Improve well head protection program. 3.Advance installation of radio reading devices on water meters. ISSUES: 1.Additional state and federal regulations. 2.Aging water control system (SCADA). 3.Project demands on staff. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Water customers 4,112 4,148 4,225 4,270 4,350 Meters read*16,099 16,520 16,800 51,240 52,200 Meters replaced 47 44 57 84 125 New meters installed 79 49 57 55 60 Water locates 300 300 300 300 300 Gallons pumped (MG)511 514 519 577 530 Valves maintained 242 436 400 400 400 Hydrants maintained 201 450 400 400 400 Times mains flushed 2 2 2 2 2 Mains/wells rebuilt 1 0 0 0 1 Water towers inspections 2 1 2 2 2 Reservoir inspections 1 0 0 1 1 Water samples to sent 250 250 250 250 250 Radio units installed 0 650 650 650 650 GPS water system 1/8 city 1/8 city 1/8 city 1/8 city 1/8 city Service shut-offs 150 150 150 150 150 * Monthly utility billing started at the beginning of 2017. 200 BUDGET COMMENTARY: The Water Fund’s main source of revenue is user charges. In 2013 and 2015, water customer user rates were increased by 10% and 5%, respectively. Since 2015, rates have increase annually between 3% and 5%. Capital outlays in 2016 were largely attributable to a core street project. Outlays will decline with fewer projects with water components. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage adjustment increase. In 2016, one new full-time operator position was split between the Water Fund and Sewage Fund. The 2018 transfers out will be used acquire land for the next public works building site. Other budget items are expected to remain close to prior year levels. BUDGET: WATER FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits 2,735 4,635 3,000 200 200 2,000 900.0% Intergovernmental Revenues --------- Charges for Services 1,042,343 1,093,984 1,130,260 1,122,299 1,122,299 1,170,841 4.3% Fines & Forfeits --------- Special Assessments 40,440 12,998 494 30,000 30,000 38,000 26.7% Miscellaneous 230,817 84,307 108,524 51,000 51,000 55,500 8.8% Contributed Capital 81,362 256,163 187,358 80,000 80,000 80,000 0.0% Operating Transfers --------- Debt Proceeds --------- TOTAL REVENUES 1,397,697$1,452,087$1,429,636$1,283,499$1,283,499$1,346,341$4.9% EXPENDITURES Personnel Services 188,151$181,810$258,068$327,954$327,954$320,444$-2.3% Supplies 160,665 152,257 181,391 178,150 178,150 199,150 11.8% Other Services & Charges 221,750 256,740 230,153 314,150 314,150 334,579 6.5% Capital Outlay 11,656 35,916 949,832 426,000 426,000 172,500 -59.5% Operating Transfers 631,560 790,958 199,327 --600,000 --- TOTAL EXPENDITURES 1,213,782$1,417,681$1,818,771$1,246,254$1,246,254$1,626,673$30.5% FUND BALANCE - JANUARY 1 4,567,498$4,751,413$4,785,819$4,396,684$4,396,684$4,433,929$ Excess (Deficiency) of Revenues over Expenditures 183,915 34,406 (389,135)37,245 37,245 (280,332) FUND BALANCE - DECEMBER 31 4,751,413$4,785,819$4,396,684$4,433,929$4,433,929$4,153,597$ 201 SEWAGE FUND DEPARTMENT: Public Works SUPERVISOR: Utilities Superintendent FUND #:602 ACTIVITY #: 49480 ACTIVITY SCOPE: The Sewage Fund is a self-sustaining city utility fund. The Sewage Fund has two divisions: sanitary sewer collection operations and treatment plant operations. The water department manages the sanitary sewer system and a private vendor provides treatment plant services. OBJECTIVES: 1.Continue to add GPS data points to GIS system. 2.Research alternative waste disposal options, including costs. 3.Advance long-range planning regarding plant capacity and expansion. 4.Monitor infiltration of ground water in to the sanitary sewer system. ISSUES: 1.Treatment plant is nearing capacity. 2.Aging of control system (SCADA) and other assets. 3.Ground water infiltration. 4.Cost of treatment alternatives. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Collection Sewer mains maintained 17 miles 28 miles 28 miles 26 miles 20 miles Liftstations 7 7 7 7 7 Sewer mainlocates 300 300 300 300 300 GPS sewer system 1/8 city 1/8 city 1/8 city 1/8 city 1/8 city Manholes maintained 356 716 716 716 500 New service hookups 76 51 68 55 60 Sewer services televised 1/8 city 26 Miles 26 Miles 15 Miles 20 miles Treatment Screw press influent flow (gals) 5,345,933 5,117,130 4,430,130 4,420,272 4,425,000 Thickened sludge (wet tons)1,924 1,549 1,449 1,578 1,500 Thickened sludge (dry tons)264 236 216 229 225 Dry ton % of wet ton 13.7%15.2%14.9%14.5%15.0% Raw influent flow (MG)425 417 432 445 450 MG= million gallons 202 BUDGET COMMENTARY: The Sewage Fund’s main source of revenue is user charges. In 2013 and 2015, sewage customer user rates were increased by 10% and 5%, respectively. Since 2015, rates have increased annually between 3% and 5%. Treatment plant capital outlays in 2016 included $2,333,000 for digester cover replacement and phosphorous reduction. The funding mix for these plant upgrades included a loan from the Minnesota Public Facilities Authority. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage adjustment increase. In 2016, a new full-time operator position was split between the Water Fund and Sewage Fund. Operating transfers out were budgeted to retire debt service for system improvements. The city renewed its contract with a third-party provider of wastewater treatment plant management services for five years starting in 2018. Other budget items are expected to remain close to prior year levels. BUDGET: SEWAGE FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services 2,047,789 2,052,311 2,203,729 2,095,892 2,095,892 2,276,066 8.6% Fines & Forfeits --------- Special Assessments --------- Miscellaneous 195,867 61,340 62,168 62,000 62,000 50,000 -19.4% Contributed Capital 885,132 1,179,707 1,805,874 60,450 60,450 60,450 0.0% Operating Transfers --------- Debt Proceeds --1,413,065 700,000 700,000 --100.0% TOTAL REVENUES 3,128,788$3,293,358$5,484,836$2,918,342$2,918,342$2,386,516$-18.2% EXPENDITURES Personnel Services 242,621$280,801$347,720$332,762$332,762$350,137$5.2% Supplies 22,132 15,597 17,831 23,150 23,150 26,550 14.7% Other Services & Charges 1,305,025 1,229,082 1,116,983 1,230,463 1,230,463 1,237,442 0.6% Capital Outlay 127,857 401,069 2,915,894 1,000,000 1,000,000 872,500 -12.8% Debt Service 364,963 358,072 642,045 373,574 373,574 373,574 0.0% Operating Transfers 1,690,672 1,510,087 -85,293 85,293 --100.0% TOTAL EXPENDITURES 3,753,270$3,794,708$5,040,473$3,045,242$3,045,242$2,860,203$-6.1% FUND BALANCE - JANUARY 1 3,767,385$3,142,903$2,641,553$3,085,916$3,085,916$2,959,016$ Excess (Deficiency) of Revenues over Expenditures (624,482)(501,350)444,363 (126,900)(126,900)(473,687) FUND BALANCE - DECEMBER 31 3,142,903$2,641,553$3,085,916$2,959,016$2,959,016$2,485,329$ 203 CONTRACTED WASTEWATER TREATMENT PLANT SERVICES: Schedule of Non-Reimbursables (O&M Services) Year Service Change $Change % 2011 522,281.04$ 2012 544,788.96$22,507.92$4.3% 2013 562,361.04$17,572.08$3.2% 2014 585,096.00$22,734.96$4.0% 2015 582,360.00$(2,736.00)$-0.5% 2016 582,360.00$-$0.0% 2017 593,196.00$10,836.00$1.9% 2018 563,394.00$(29,802.00)$-5.0% 2019 577,479.00$14,085.00$2.5% 2020 591,916.00$14,437.00$2.5% 2021 606,714.00$14,798.00$2.5% 2022 621,882.00$15,168.00$2.5% Schedule of Reimbursable Costs Year R&M Polymer Hauling Landfill Electricity Gas Total 2011 89,899.16$11,427.06$-$-$154,982.64$44,604.29$300,913.15$ 2012 91,406.38 16,303.76 --145,043.48 36,722.51 289,476.13 2013 89,620.47 17,453.23 --170,537.98 46,497.96 324,109.64 2014 57,883.83 62,735.70 32,949.54 33,237.11 160,825.74 68,416.61 416,048.53 2015 50,239.23 35,090.95 25,807.56 28,373.57 145,833.19 44,092.79 329,437.29 2016 52,872.08 32,395.63 20,875.73 30,784.18 --136,927.62 2017 50,004.00 47,028.00 23,856.00 24,492.00 --145,380.00 2018 50,004.00 -23,856.00 24,492.00 --98,352.00 The city will start directly paying for chemicals (polymer) in 2018. Electricity and gas charges were assumed by the city in 2016. The waste disposal biosolids site was abandoned in 2014 when new screw press technology was installed. R&M R&M R&M R&M R&M R&M R&M R&M Electricity Electricity Electricity Electricity Electricity Gas Gas Gas Gas Gas $- $100,000 $200,000 $300,000 $400,000 $500,000 2011 2012 2013 2014 2015 2016 2017 2018 Reimbursable Expenses 2011-2018 R&M Polymer Hauling Landfill Electricity Gas 204 REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 6/1/2018 29,899 29,899 12/1/2018 185,000 29,899 2.00%214,899 6/1/2019 28,049 28,049 12/1/2019 185,000 28,049 2.00%213,049 6/1/2020 26,199 26,199 12/1/2020 190,000 26,199 2.00%216,199 6/1/2021 24,299 24,299 12/1/2021 195,000 24,299 2.15%219,299 6/1/2022 22,203 22,203 12/1/2022 200,000 22,203 2.35%222,203 6/1/2023 19,853 19,853 12/1/2023 205,000 19,853 2.60%224,853 6/1/2024 17,188 17,188 12/1/2024 210,000 17,188 2.75%227,188 6/1/2025 14,300 14,300 12/1/2025 215,000 14,300 3.00%229,300 6/1/2026 11,075 11,075 12/1/2026 225,000 11,075 3.00%236,075 6/1/2027 7,700 7,700 12/1/2027 230,000 7,700 3.20%237,700 6/1/2028 4,020 4,020 12/1/2028 240,000 4,020 3.35%244,020 Total 2,280,000$409,565$2,689,565$ GO Wastewater Treatment Bonds, Series 2013B The optional redemption date on these bonds is December 1, 2021. 205 LIQUOR FUND DEPARTMENT: Liquor Fund SUPERVISOR: Liquor Store Manager/Finance Director FUND #:609 ACTIVITY #: 49750 ACTIVITY SCOPE: The Liquor Fund provides customers with the opportunity to purchase alcohol and other related products. Profits from store operations are used to support other city funds and activities. OBJECTIVES: 1.Improve product selection. 2.Enhance alcohol training program for all liquor store employees. 3.Elevate store attractiveness through customer focused improvements. 4.Boost sales to existing customer. 5.Increase sales per transaction. 6.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.Traffic disruption caused by road construction. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Gross profit 1,289,040$1,519,843$1,407,360$1,498,816$1,450,000$ Gross profit % of sales 25%27%26%26%26% Sales per square foot $587 $624 $624 $654 $644 Wine tastingtickets sold 400 300 252 238 200 Total number of sales 229,375 237,535 235,901 248,044 245,000 Staff hours worked 19,385 19,811 20,104 21,173 21,500 Sales per hour worked 11.8 12.0 11.7 11.7 11.4 Average sale (includingtax) $24.60 $25.24 $25.25 $25.39 $26.00 206 BUDGET COMMENTARY: Hi-Way Liquors has continued to be a self-supporting city enterprise fund, with profits directed toward special projects or other needs. Consequently, this helps keep property taxes lower. Revenues are generated by the sale of alcoholic beverages and merchandise related to the liquor industry. In 2018, the Liquor Fund is slated to transfer $400,000 to the Park & Pathway Fund and $130,000 to the Fiber Optics Fund. Additionally, the bulk of the operating transfers from 2013 through 2016 went to the Fiber Optics Fund. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage increase. Additionally, the 2018 increase in personnel services includes the extra staffing for Sunday sales, which began in July 2017. Capital outlay for 2018 includes a new advertising sign. Budgeted revenues are conservatively estimated. BUDGET: LIQUOR FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Sale of Goods 5,165,737$5,489,430$5,448,584$5,435,194$5,635,194$5,770,784$6.2% Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --------- Fines & Forfeits --------- Special Assessments --------- Miscellaneous 13,709 7,503 14,713 5,000 5,000 5,000 0.0% Contributed Capital --------- Operating Transfers --------- Debt Proceeds --------- TOTAL REVENUES 5,179,446$5,496,933$5,463,297$5,440,194$5,640,194$5,775,784$6.2% EXPENDITURES Personnel Services 455,647$506,042$537,220$570,584$570,584$637,390$11.7% Supplies 3,865,883 4,043,820 4,042,321 4,094,774 4,244,774 4,340,245 6.0% Other Services & Charges 202,811 202,271 197,572 238,245 238,245 235,543 -1.1% Capital Outlay ---75,000 75,000 75,000 0.0% Operating Transfers 600,000 450,000 350,000 230,000 180,000 530,000 130.4% TOTAL EXPENDITURES 5,124,341$5,202,133$5,127,113$5,208,603$5,308,603$5,818,178$11.7% FUND BALANCE - JANUARY 1 667,538$722,643$1,017,443$1,353,627$1,353,627$1,685,218$ Excess (Deficiency) of Revenues over Expenditures 55,105 294,800 336,184 231,591 331,591 (42,394)$ FUND BALANCE - DECEMBER 31 722,643$1,017,443$1,353,627$1,585,218$1,685,218$1,642,824$ 207 DEPUTY REGISTRAR FUND DEPARTMENT: Deputy Registrar (DMV) SUPERVISOR: Finance Director FUND #:217 ACTIVITY #: 41990 ACTIVITY SCOPE: The Deputy Registrar (DMV) is a city-based service entity, which assists customers with the purchase of vehicle license plates/tabs, DNR licenses, and other licenses as required by Minnesota state agencies. The DMV is one of four limited driver’s license agents in Wright County. A limited agent can process change of address and lost license applications for driver’s licenses. OBJECTIVES: 1.Market DMV services to public and dealerships. 2.Expand and improve customer service. 3.Update employee training and certifications. ISSUES: 1.Changes to state licensing regulations. 2.Availability/limitations of state portal for license processing (MNLARS). 3.Providing services with little or no revenue. 4.Competition with other customer options: Other DMVs, on-line, and mail-in. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Motor vehicle transactions 60,051 64,927 67,508 70,605 70,000 DNR transactions 5,949 5,914 6,318 5,873 6,500 Game & Fishtransactions 433 387 600 647 600 Driver's license transactions 1,462 1,294 1,465 1,390 1,500 Total transactions 67,895 72,522 75,891 78,515 78,600 Staff hours 11,606 10,834 9,878 10,931 10,000 Transactions per hour 5.8 6.7 7.7 7.2 7.9 Dealerships serviced 19 19 21 27 27 208 BUDGET COMMENTARY: The main revenue source for the DMV is the fees charged for the issuance of various licenses. In 2009, the DMV began partial driver’s license services. The 2014 operating transfers represented a contribution to community center projects. The 2018 personnel services budget includes a full step increase and a 3% (2% in January and 1% in July) market rate wage adjustment increase. This fund was accounted for as a special revenue fund until 2013. Revenue by service type: DNR licenses = $2- $7; game & fish licenses = $1; driver’s licenses = $8; motor vehicle transactions = $6-$10. Revenues are always estimated conservatively. BUDGET: DEPUTY REGISTRAR 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services 497,709 531,408 561,775 475,100 475,100 525,300 10.6% Fines & Forfeits --------- Special Assessments --------- Miscellaneous 10,825 11,201 10,385 1,000 1,000 1,100 10.0% Operating Transfers --------- TOTAL REVENUES 508,534$542,609$572,160$476,100$476,100$526,400$10.6% EXPENDITURES Personnel Services 254,363$293,179$301,567$324,141$324,141$353,575$9.1% Supplies 10,572 4,294 4,342 16,550 16,010 9,300 -43.8% Other Services & Charges 34,587 33,263 34,889 43,245 43,785 40,714 -5.9% Capital Outlay -----26,000 --- Operating Transfers 50,000 -------- TOTAL EXPENDITURES 349,522$330,736$340,798$383,936$383,936$429,589$11.9% FUND BALANCE - JANUARY 1 174,102$333,114$544,987$776,349$776,349$868,513$ Excess (Deficiency) of Revenues over Expenditures 159,012 211,873 231,362 92,164 92,164 96,811 FUND BALANCE - DECEMBER 31 333,114$544,987$776,349$868,513$868,513$965,324$ 209 FIBER OPTICS FUND DEPARTMENT: Fiber Optics Fund SUPERVISOR: City Administrator FUND #:656 ACTIVITY #: 49870-49877 ACTIVITY SCOPE: As with all enterprise funds, the goal of the Fiber Optics Fund is to become a self-sustaining enterprise. Fiber Optics delivers high speed internet, phone, and cable television services to customers within the city. Residential and commercial customers can subscribe to individual or bundled services. OBJECTIVES: 1.Offer a variety of internet speeds and cable packages to customers. 2.Increase subscribers and subscriptions. 3.Minimize subsidy from other funds. ISSUES: 1.Competition from other service providers. 2.Industry trends (cord cutting, etc.). 3.Various legal aspects of operating a telecommunication business. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Internet subscibers 1,360 1,424 1,487 1,554 1,560 Phone subscribers*582 518 461 431 400 Cable TV subscribers 813 714 641 543 500 BUDGET COMMENTARY: The Fiber Optics Fund began operations in 2009, and construction of the fiber optic network was completed in 2010. Revenues come from charges to subscribers, and expenditures are incurred as a result of operating the system and new customer service installations. The city defaulted on the revenue bonds used to finance construction of the system. Judgment bonds were issued to finance the settlement with revenue bondholders. Property taxes are levied to support debt service on judgment bonds. There is no current debt service recorded in the Fiber Optics Fund. 210 In 2012, the city transferred $4,450,000 to the fund, eliminating the interfund loan balance. In 2013, the Liquor Fund and other city funds transferred $860,000 into the Fiber Optics Fund. In years 2014 through 2017, the Liquor Fund provided $1,580,000 for Fiber Optics operations. The 2014 transfer included $5,783,732 from debt proceeds, which was used to settle a class action lawsuit related to the default on revenue bonds. The 2018 budget includes a $130,000 transfer from the Liquor Fund. Personnel services (employee costs) were eliminated in July of 2016 with the outsourcing of operations to a third party. However, custodial employees still allocate a minimal amount of time to the fund for cleaning. The 2018 budget includes $140,000 in other services and charges for moving existing fiber lines to accommodate construction of the Fallon Avenue overpass. BUDGET: FIBER OPTICS 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services 1,652,998 1,592,824 1,619,771 1,721,570 1,700,000 1,698,000 -1.4% Fines & Forfeits --------- Special Assessments --------- Miscellaneous (26,349)49,579 407,002 46,297 117,867 12,600 -72.8% Contributed Capital --------- Operating Transfers 6,383,732 450,000 350,000 230,000 180,000 130,000 -43.5% Debt Proceeds --------- TOTAL REVENUES 8,010,381$2,092,403$2,376,773$1,997,867$1,997,867$1,840,600$-7.9% EXPENDITURES Personnel Services 480,585$568,321$310,160$-$21,900$21,900$--- Supplies 145,304 104,165 160,835 101,506 100,000 135,000 33.0% Other Services & Charges 1,742,265 1,338,058 1,600,372 1,596,303 1,735,000 1,846,700 15.7% Capital Outlay -111,313 -259,900 100,809 --100.0% Operating Transfers 5,689,322 -------- TOTAL EXPENDITURES 8,057,476$2,121,857$2,071,367$1,957,709$1,957,709$2,003,600$2.3% FUND BALANCE - JANUARY 1 77,057$29,962$508$305,914$305,914$346,072$ Excess (Deficiency) of Revenues over Expenditures (47,095)(29,454)305,406 40,158 40,158 (163,000) FUND BALANCE - DECEMBER 31 29,962$508$305,914$346,072$346,072$183,072$ 211 This page intentionally left blank 212 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2018 INTERNAL SERVICE FUNDS INTERNAL SERVICE FUNDS - SUMMARY DESCRIPTION Internalservicefundsareaproprietaryfundtypethatmaybeusedtoreportanyactivitythatprovidesgoodsor servicetootherfunds,departments,oragenciesoftheprimarygovernmentanditscomponentunits,orto othergovernments,onacost-reimbursementbasis.Internalservicefundsuseanaccrualbasisofaccountingfor financialreportingpurposes.Amodifiedaccrualbasiswillbeusedforbudgetingpurposesinthisreport. Consequently,thebottomlineforeachinternalservicefundislabeledfundbalanceratherthannetposition, whichincludescapitalassets,long-termdebtandothernoncurrentitems.Fundbalanceinaninternalservice fundisroughlythesameasworkingcapital. Thecitycurrentlyhasthreeactiveinternalservicefunds:IT Services,CentralEquipment,andBenefitAccrual.TheBenefitAccrualFundwasstartedinDecember2015. BUDGETISSUES Eachinternalservicefundhasspecificchallengesthatwillbeaddressedinthenarrativeforeachfund. BUDGETSUMMARY TOTAL INTERNAL SERVICE 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services 364,608 420,900 530,842 504,024 504,024 542,688 7.7% Fines & Forfeits --------- Special Assessments --------- Miscellaneous 45,391 16,609 13,975 8,153 8,153 6,112 -25.0% Operating Transfers -226,158 ------- Debt Proceeds 515,000 -------- TOTAL REVENUES 924,999$663,667$544,817$512,177$512,177$548,800$7.2% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies 22,803 21,985 57,096 32,200 32,200 35,000 8.7% Other Services & Charges 195,917 196,834 153,460 256,780 256,780 225,400 -12.2% Capital Outlay 589,853 239,463 138,236 386,000 360,000 323,000 -16.3% Debt Service 66,992 76,193 131,260 135,050 135,050 128,100 -5.1% Operating Transfers --------- TOTAL EXPENDITURES 875,565$534,475$480,052$810,030$784,030$711,500$-12.2% FUND BALANCE - JANUARY 1 920,570$970,004$1,099,196$1,163,961$1,163,961$892,108$ Excess (Deficiency) of Revenues over Expenditures 49,434 129,192 64,765 (297,853)(271,853)(162,700) FUND BALANCE - DECEMBER 31 970,004$1,099,196$1,163,961$866,108$892,108$729,408$ 213 IT SERVICES FUND DEPARTMENT: Finance SUPERVISOR: Finance Director FUND #:702 ACTIVITY #: XXXXX ACTIVITY SCOPE: The IT (Information Technology) Services Fund is a self-sustaining internal service fund. The finance department manages the network of servers and peripheral equipment to provide continuity and accountability for IT related services. The fund’s revenues are derived from service charges to each budget unit receiving IT services. Service charges are adjusted annually to cover all current costs plus a portion of capital outlays. OBJECTIVES: 1.Centralize provision of information technology services into one fund. 2.Improve management of IT resources. 3.Distribute capital costs over multiple annual reporting periods. 4.Provide financial management stability to each budget unit. ISSUES: 1.Appropriate costs distribution. 2.Coordination of service delivery to multiple departments and budget units. 3.Demands on staff. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Outcome/Effectiveness: Network uptime 99%99%99%99%99% Work Load: Number of clients/users 70 102 83 85 85 Number of PC, servers, and network devices 131 145 167 170 170 214 BUDGET COMMENTARY: The IT Services Fund’s main source of revenue is internal user charges. Except for point-of-sale software and hardware, the IT Services Fund accounts for the all activity supporting the city’s information technology infrastructure, including servers, routers, PCs, printers, copiers, phones, and professional services. BUDGET: IT SERVICES 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services 252,708 278,100 298,981 276,324 276,324 276,388 0.0% Fines & Forfeits --------- Special Assessments --------- Miscellaneous 2,864 1,252 1,850 153 153 112 -26.8% Operating Transfers --------- Debt Proceeds --------- TOTAL REVENUES 255,572$279,352$300,831$276,477$276,477$276,500$0.0% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies 22,803 21,985 57,096 32,200 32,200 35,000 8.7% Other Services & Charges 195,917 196,834 153,460 256,780 256,780 225,400 -12.2% Capital Outlay ---10,000 10,000 12,500 25.0% Operating Transfers --------- TOTAL EXPENDITURES 218,720$218,819$210,556$298,980$298,980$272,900$-8.7% FUND BALANCE - JANUARY 1 21,962$58,814$119,347$209,622$209,622$187,119$ Excess (Deficiency) of Revenues over Expenditures 36,852 60,533 90,275 (22,503)(22,503)3,600 FUND BALANCE - DECEMBER 31 58,814$119,347$209,622$187,119$187,119$190,719$ 215 CENTRAL EQUIPMENT FUND DEPARTMENT: Finance SUPERVISOR: Finance Director FUND #:703 ACTIVITY #: XXXXX ACTIVITY SCOPE: The Central Equipment Fund is a self-sustaining internal service fund. The finance department participates along with various department directors and division leaders in the acquisition of capital assets. The acquired capital asset is charged back against the benefitting budget unit through rental charges over a predetermined number of years. The rental charge reflects depreciation plus inflation. Service charges for each asset are fixed for the duration of rental payments. OBJECTIVES: 1.Build mechanism for replacing capital assets into annual budgets. 2.Improve management of capital assets. 3.Distribute capital costs over multiple annual reporting periods. 4.Provide financial management stability to each budget unit. ISSUES: 1.Appropriate cost distribution over multiple accounting periods. 2.Efficient coordination of asset replacement activities. 3.Adequate start-up resources. 4.Demands on staff. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Outcome/Effectiveness: Annual cost recovery 111,900$142,800$204,600$210,700$249,800$ Total costs of assets acquired 656,491$822,619$960,855$1,467,515$1,778,015$ Efficiency: Cost recovery as % of acquired assets.17%17%21%14%14% Work Load: Number of fund assets 9 12 17 24 30 216 BUDGET COMMENTARY: The Central Equipment Fund’s main source of revenue is internal rental charges. The fund was initiated near the beginning of 2013 with the sale of $500,000 in certificates of indebtedness. The city also issued $515,000 in G.O. bonds in 2014 to finance the acquisition of a fire tender and a plow truck. In 2014, the operating transfer resulted from closing the Capital Outlay Revolving Fund. The 2018 budgeted equipment acquisitions: [public works equipment] rubber melter - $60,000; blacktop hot box - $95,000; skid steer - $65,000; [recreation equipment] aerator - $30,000; utility mule - $15,000; tractor - $45,500. BUDGET: CENTRAL EQUIPMENT FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services 111,900 142,800 193,800 210,700 210,700 249,800 18.6% Fines & Forfeits --------- Special Assessments --------- Miscellaneous 42,527 15,357 12,125 5,000 5,000 3,000 -40.0% Operating Transfers --------- Debt Proceeds 515,000 -------- TOTAL REVENUES 669,427$158,157$205,925$215,700$215,700$252,800$17.2% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay 589,853 239,463 138,236 376,000 350,000 310,500 -17.4% Debt Service 66,992 76,193 131,260 135,050 135,050 128,100 -5.1% Operating Transfers --------- TOTAL EXPENDITURES 656,845$315,656$269,496$511,050$485,050$438,600$-14.2% FUND BALANCE - JANUARY 1 898,608$911,190$753,691$690,120$690,120$420,770$ Excess (Deficiency) of Revenues over Expenditures 12,582 (157,499)(63,571)(295,350)(269,350)(185,800) FUND BALANCE - DECEMBER 31 911,190$753,691$690,120$394,770$420,770$234,970$ 217 REMAINING DEBT SERVICE: Payable Principal Interest Rate Total 12/1/2018 65,000$3,713$1.60%68,713$ 12/1/2019 65,000 2,673 1.85%67,673 12/1/2020 70,000 1,470 2.10%71,470 Total 200,000$7,855$207,855$ GO Certificates of Indebtedness, Series 2013A The early redemption date on these certificates is December 1, 2018. Payable Principal Interest Rate Total 6/15/2018 -4,886 4,886 12/15/2018 55,000 4,886 1.50%59,886 6/15/2019 -4,474 4,474 12/15/2019 55,000 4,474 1.85%59,474 6/15/2020 -3,965 3,965 12/15/2020 55,000 3,965 2.20%58,965 6/15/2021 -3,360 3,360 12/15/2021 60,000 3,360 2.50%63,360 6/15/2022 -2,610 2,610 12/15/2022 60,000 2,610 2.75%62,610 6/15/2023 -1,785 1,785 12/15/2023 60,000 1,785 2.90%61,785 6/15/2024 -915 915 12/15/2024 60,000 915 3.05%60,915 Total 405,000$43,990$448,990$ GO Bonds, Series 2014A (Equipment Portion) The early redemption date on these bonds is December 15, 2021. 218 BENEFIT ACCRUAL FUND DEPARTMENT: Finance SUPERVISOR: Finance Director FUND #:704 ACTIVITY #: XXXXX ACTIVITY SCOPE: The Benefit Accrual Fund is a self-sustaining internal service fund. The finance department participates with various department directors, division leaders and the human resources manager in managing vacation, sick leave, and paid-time-off (PTO) benefit. The non-enterprise fund liability for this benefit is recorded in the Benefit Accrual Fund. Enterprise funds (Liquor, DMV, Water & Sewer) maintain the liability for employees involved in enterprise operations. Expenditures in each governmental fund budget unit are adjusted annually to reflect changes to the liability caused by the employees of that budget unit. OBJECTIVES: 1.Build mechanism for recording governmental fund liability for paid leaves. 2.Improve management of vacation, sick, and PTO leave. 3.Distribute accumulating paid leave costs to budget units. 4.Provide financial management stability to each budget unit. ISSUES: 1.Increasing cost of paid leave benefits. 2.Stability of liability based accumulation of additional leave. MEASURABLE WORKLOAD DATA: Measurement 2014 2015 2016 2017 2018 Outcome/Effectiveness: Accured PTO hours ------6,966 8,677 9,875 Accrued vacation hours 6,765 6,846 2,180 1,409 528 Accrued sick leave hours 5,261 5,302 1,443 910 289 Efficiency: Hours accrued per employee: PTO ------145 155 198 Vacation 101 104 136 94 176 Sick leave 84 87 90 61 96 Work Load: Employees accruing hours: PTO employees ------48 56 50 Vacation employees 67 66 16 15 3 Sick leave employees 63 61 16 15 3 City implemented a PTO system in 2016 for non-union employees with fewer than 25 years. Union employees joined the PTO system in July 2017. 219 BUDGET COMMENTARY: The Benefit Accrual Fund’s main source of revenue is internal charges to personnel services in the city’s two main governmental funds: General Fund and Monticello Community Center Fund. Personnel services expenditures in each governmental fund budget unit will be adjusted up or down based on the change in liability caused by each unit. The liability is based on the number of hours accrued multiplied by the hourly compensation for each individual. Employees are allowed to carry- over 320 hours of accrued PTO. This fund was initiated with a $226,158 transfer at the end of 2015. BUDGET: BENEFIT ACCRUAL FUND 2014 2015 2016 2017 2017 2018 % REVENUES ACTUAL ACTUAL ACTUAL BUDGET PROJECTED BUDGET CHANGE Property Taxes -$-$-$-$-$-$--- Licenses & Permits --------- Intergovernmental Revenues --------- Charges for Services --38,061 17,000 17,000 16,500 -2.9% Fines & Forfeits --------- Special Assessments --------- Miscellaneous ---3,000 3,000 3,000 0.0% Operating Transfers -226,158 ------- Debt Proceeds --------- TOTAL REVENUES -$226,158$38,061$20,000$20,000$19,500$-2.5% EXPENDITURES Personnel Services -$-$-$-$-$-$--- Supplies --------- Other Services & Charges --------- Capital Outlay --------- Operating Transfers --------- TOTAL EXPENDITURES -$-$-$-$-$-$--- FUND BALANCE - JANUARY 1 -$-$226,158$264,219$264,219$284,219$ Excess (Deficiency) of Revenues over Expenditures -226,158 38,061 20,000 20,000 19,500 FUND BALANCE - DECEMBER 31 -$226,158$264,219$284,219$284,219$303,719$ 220 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2018 CAPITAL IMPROVEMENT PROGRAM CAPITAL IMPROVEMENT PROGRAM INTRODUCTION The capital improvements presented in this section comprise the 2018-2022 Capital Improvements Program (CIP). The Monticello CIP integrates capital and major noncapital expenditures into a comprehensive plan for forecasting needed future resources for acquiring and maintaining assets used in municipal operations. By integrating major noncapital expenditures, such as maintenance items or asset purchases not meeting specific dollar thresholds, the city can better plan and prepare for future financial challenges. The Monticello integrative CIP has four expenditure categories: capital improvements, vehicles and equipment (Garage), major repair and maintenance items (First Aid Kit), and small tools and equipment (Tool Box). The Capital Improvements category primarily deals with projects that carry high price tags. In the simplest of terms, capital improvements are expansions of, or improvements to, the city's physical structures such as buildings, streets, sidewalks, parking facilities, open space, and utility systems (infrastructure). The Garage category contains capital outlays for vehicles and equipment essential to accomplishing work. Generally, these assets have shorter useful lives and must be replaced on a regularly scheduled basis. The First Aid Kit category includes noncapital repair and maintenance expenditures related to the preservation of existing assets, such as painting a water tank. Additionally, expenditures on projects that do not meet certain capitalization thresholds are considered repairs and maintenance. The Tool Box category is comprised of major noncapital small tool and equipment purchases. For example, the purchase of multiple similar items that individually do not exceed the capitalization threshold would be included in this section. Q&A WHAT IS A CAPITAL IMPROVEMENT PROGRAM? A capital improvement program is a five-year plan for the evaluation of the city's facility, equipment, and infrastructure needs. It serves as a guide for construction, development, and maintenance of the city's infrastructure assets--as well as other less expensive assets--in the most cost-efficient manner possible. It is the result of systematic review of each project, as it relates to the city council goals and the established priority scheme, to maximize the use of all financial resources. 221 While the program serves as a long range plan, it is reviewed annually and revised based on current circumstances and opportunities. Priorities may be changed due to grant opportunities or circumstances that caused a more rapid deterioration of an asset resulting in a liability issue. Projects may be revised for significant costing variances. WHAT ARE THE OBJECTIVES OF A CAPITAL IMPROVEMENT PROGRAM? · To forecast public facilities and improvements that will be needed in the near future. · To anticipate and project financing needs in order to maximize available federal, state, and county funds. · To promote sound financial planning in order to enhance and protect future bond ratings and bonding capacity. · To focus attention on and assist in the implementation of established city council objectives goals as outlined in the “Purpose and Mission”. · To serve as a guide for local officials in making budgetary decisions. · To balance the needs of new development with existing development. · To promote and enhance the economic development of the city of Monticello. · To strike a balance between needed public improvements and the present financial capability of the city to provide for these improvements. · To provide an opportunity for citizens and interest groups to voice opinions on development of city facilities and infrastructure. · To provide for improvements in a timely and systematic manner. Changes have been made to improve the reliability of the capital improvement project estimates and the focus of the funding. Previously the funding effort was focused primarily on the budget year. The new process is intended to change that focus to funding over five years. This will enable decision makers to identify opportunity costs of shifting priorities. It creates a better understanding of the balancing act that is required to allocate scarce resources to the capital improvement effort. WHAT IS THE CAPITAL IMPROVEMENT PROGRAM DEVELOPMENT PROCESS? Assign Project Titles · Make the title descriptive of the work. · TIP: Title the project based on the problem to be solved at a location, rather than titling based on the solution. · Group projects in a meaningful way for your department. A project title of Boomerang Improvements won’t work if it includes everything from the kitchen sink replacement to the cart path overlay. It is a judgment decision. Formulate Project Descriptions · Include the target activities to be completed each year on the project. This should be a brief statement of the work that will be performed and its location. 222 Formulate Project Cost Estimates The costs of each project are broken down into any of the following categories: Land Acquisition Planning/Design/Construction Vehicles/Equipment/Furnishing Assign Priorities Priorities: required on all projects based on the following categories: Priority I: Imperative (MUST-DO)-Projects that cannot reasonably be postponed in order to avoid harmful or otherwise undesirable consequences. _ Corrects a condition dangerous to public health or safety _ Satisfies a legal obligation (law, regulation, court order, contract) _ Alleviates an emergency service disruption or deficiency _ Prevents irreparable damage to a valuable public facility Priority II: Essential (SHOULD-DO)-Projects that address clearly demonstrated needs or objectives. _ Rehabilitates or replaces an obsolete public facility or attachment thereto _ Stimulates economic growth and private capital investment _ Reduces future operating and maintenance costs _ Leverages available State or Federal funding Priority III: Important (COULD-DO)-Projects that benefit the community but may be delayed without detrimental effects to basic services. _ Provides a new or expanded level of service _ Promotes intergovernmental cooperation _ Reduces energy consumption _ Enhances cultural or natural resources Document Project Justifications The following things should be considered: · Reason the project is necessary · Related projects (timing issues) · Coordination efforts required with other agencies (timing issues) · Mandates and deadlines for compliance · Service impact (number of participants impacted) · New fees that could be generated as a result of the completion of the project (community center usage fees, program fees) · Community goal references (refer to your budget document) · Safety requirements 223 Document Operating Impact This is a required field; projects are not accepted without it. Record the costs in the year they will initially occur. It will be assumed that the cost continues from that point on, unless information is provided otherwise. The following possibilities exist: · Maintenance project that doesn’t require any more than is already in the budget for maintenance. · Maintenance project that replaces existing items with a more cost effective material or device that would result in a slight savings in operating dollars. Examples: more energy efficient HVAC unit resulting in an electricity savings. · New project will always have some kind of operating impact. Note Unfunded Projects · All projects not funded are placed on an unfunded list. Present product to the city council for review and final consideration · Five-year funded capital improvements · Ranked list of unfunded needs HOW DOES THE CAPITAL IMPROVEMENT PROGRAM IMPACT THE OPERATING BUDGET? All capital improvement projects are required to show the operating budget impact at the time the projects are submitted for consideration in the Capital Improvement Program. This includes the number of full time equivalent positions that would be needed or could be eliminated and the cost or savings for salaries/benefits, supplies/services, and equipment. It would not be prudent to make funding decisions in favor of a project the city could not afford to maintain, staff, or provide equipment for. Capital improvements can impact the budget by increasing or decreasing revenues and expenditures. Revenues could be increased if the improvement attracts new businesses (building permits, sales tax, or property tax). The improvement could also increase expenditures. Perhaps an expansion requires new employees, additional maintenance services, or additional utility costs. Construction of a new street may require additional costs for police patrol services, snow and ice removal, or street light utility costs. Perhaps new technology could make the operation of a plant more efficient resulting in a reduction in power costs, utility costs, and personnel costs (reduction in overtime or man-hours). Many projects are associated with prevention of future excessive costs that are difficult to measure. The cost of the maintenance should not exceed the benefit of the asset. The projects may have maintenance costs, but the existing maintenance budgets are sufficient. The priority for available capital project funds has been maintenance of existing facilities and infrastructure. Most of Monticello’s projects fall into this category. 224 HOW IS CITIZEN INPUT INCORPORATED IN THE CIP DEVELOPMENT PROCESS? The citizens are involved in the capital improvements plan through participation at council meetings, and through citizen boards, commissions, and participation in public meetings, work sessions, and public hearings. Participation in Citizen Boards and Commissions Several disciplines within the city have a citizen board or commission that helps to identify and prioritize needs within their scope of interest. These priorities are reflected in the department head numeric ranking when the project is initially submitted for consideration. The citizen boards and commissions are particularly influential with regard to the addition of a project to the plan and the priority it has within the scope of needs for the community. Participation in Public Meetings Each year in the spring, a workshop is held to inform the city council and all interested citizens about the proposed budget for the year. A session within this workshop is devoted to capital improvements. Since annual appropriations are required by statute, one required public hearing is held in conjunction with the operating budget each year. Capital improvements typically represent 20% of the total budget and are considered carefully. Beyond participation in boards and public meetings, the city makes a considerable effort to inform the citizens through various publications, news releases, and the website. HOW IS THE CAPITAL IMPROVEMENT PROGRAM FORMULATED? The following time line is a specific listing of the steps used to develop the Capital Improvement Plan: June: The finance department distributes “CIP Budget Request Instructions” along with prior year submissions. December: Existing projects roll forward one year. There is also dialogue reminding departments about the general philosophies mentioned earlier in this discussion. Each project is evaluated by the department head. New projects are then submitted to the Finance Department and entered into the database along with updates or changes to existing projects. April: The budget staff finalizes the plan by shifting funding priorities as necessary and incorporating new projects, particularly in year five. The city administrator determines the overall budget recommendation. October: Work sessions are held to consider budget issues (for operating and for capital improvements). December: The first and second public hearings are held, and the budget is appropriated. 225 HOW IS THE CAPITAL IMPROVEMENT PROGRAM FINANCED? In analyzing the financial viability of the capital improvements in the 2018-2022 CIP, the city has three basic choices for methods of financing: pay-as-you-go,joint power agreement development authority capital leasing, and debt financing. The following sources provide revenue for the three financing methods. General Fund revenues, such as property taxes, local government aid, and service charges are current revenues used to finance relatively small capital outlays. An internal service fund (Central Equipment Fund) has been established to accumulate resources for regularly planned equipment purchases through rental charges to various divisions within benefitting funds. This will reduce the impact of large equipment purchases on annual budget unit expenditures by essentially amortizing the cost of such equipment to the division through rental charges. The rental charges include a small inflation factor to provide for the future replacement of that item. This fund replaced the Capital Outlay Revolving Fund. Similarly, a hybrid of the aforementioned fund has been established for IT Services, which will also include IT-related equipment purchases. Enterprise fund revenues, which are derived from user charges, are used to finance capital improvements and equipment necessary for delivering a specific service. Additionally, accumulated revenues in enterprise funds can be transferred to other funds to provide financing for capital asset acquisitions. Debt issuance is used to finance large capital improvements. General obligation improvement bonds and general obligation revenue bonds are used to finance improvements to the city’s infrastructure. Many of the items identifying the Capital Project Fund as funding source will need some level of debt issuance to come to fruition. Federal and state grants provide funding for various capital improvement projects. Currently, the Fallon Avenue overpass is eligible for post-project federal funding of $2.1 million in 2021. Other sources include grants, donations, reserves, and other governmental units that share boundaries. 226 Items listed on the following pages are typically labeled with prefixes VEQ- for vehicles and equipment, MNC- (major non-capital) repairs & maintenance, STE- for small tools and equipment. All other label prefixes represent capital improvements. The below graph and table provides a breakdown of expenditures within the CIP: $- $4 $8 $12 $16 $20 $24 $28 2018 2019 2020 2021 2022MillionsExpenditures- IntegratedCIPfor FY 2018- 2022 Capital Improvements Garage (Capital Equipment)First Aid Kit (Repairs and Maintenance)Tool Box (Small Tools and Equipment) Expenditure Category 2018 2019 2020 2021 2022 Capital Improvements 10,587,200$24,376,200$14,681,200$7,551,200$4,856,200$ Garage (Capital Equipment)1,006,000 1,246,000 3,667,600 1,100,000 300,000 First Aid Kit (Repairs and Maintenance)725,800 423,000 235,500 350,000 275,500 Tool Box (Small Tools and Equipment)134,000 144,400 54,400 227,600 59,800 12,453,000$26,189,600$18,638,700$9,228,800$5,491,500$ 227 Capital Improvement Plan City of Monticello, Minnesota FUNDING SOURCE SUMMARY 2018 thru 2022 TotalSource20182019202020212022 Capital Equipment Fund 2,589,000265,000 747,000 922,000 400,000 255,000 Capital Project Fund 18,455,0003,600,000 3,990,000 6,215,000 2,850,000 1,800,000 Cemetery Fund 40,00040,000 Community Center Fund 1,108,500375,300 318,700 355,000 44,500 15,000 Debt Proceeds 34,665,0006,650,000 17,450,000 6,565,000 2,850,000 1,150,000 DMV Fund 26,00026,000 General Fund 2,040,500451,700 428,700 345,700 493,700 320,700 IT Services Fund 152,00030,000 30,200 30,400 30,600 30,800 Municipal Liquor Fund 1,770,00075,000 25,000 1,575,000 95,000 Parks & Pathways Fund 810,000195,000 165,000 200,000 250,000 Private Development 135,000135,000 Sewage Fund 4,710,600325,000 675,000 3,050,600 385,000 275,000 State Aid 200,000200,000 Stormwater Access Fund 1,750,00050,000 1,050,000 550,000 50,000 50,000 Street Construction Fund 250,000250,000 Street Lighting Fund 1,110,000150,000 510,000 150,000 150,000 150,000 Water Fund 2,190,000260,000 215,000 215,000 150,000 1,350,000 12,453,000 26,189,600 18,638,700 9,228,800 5,491,500 72,001,600GRAND TOTAL Produced Using the Plan-It Capital Planning Software 228 Capital Improvement Plan City of Monticello, Minnesota PROJECTS & FUNDING SOURCES BY DEPARTMENT 2018 2022thru Total20182019202020212022DepartmentProject # Priority Community Center 1,108,500375,300 318,700 355,000 44,500 15,000Community Center Fund 1,108,500375,300 318,700 355,000 44,500 15,000Community Center Total MCC-13-001 40,00040,000Movable Walls 3 MCC-13-003 20,00020,000City Council Diaz 3 MCC-13-004 100,000100,000Concession Counter Improvements 3 MCC-13-006 15,00015,000Carpet and Terrazo 2 MCC-17-003 30,00030,000Bathroom Accessible Doors 3 MCC-18-001 200,000200,000New Patio - Replaces Skate Park 3 MCC-18-002 35,00035,000Mississippi Room Lighting 3 MCC-18-003 14,00014,000Card Access Reader 3 MNC-13-007 12,00012,000Wood Floor - Mississippi Room 3 MNC-13-008 150,000150,000Water Slide Replacement 2 MNC-13-010 10,00010,000Vanity and Partition Replacement 3 MNC-13-011 5,0002,500 2,500Facility Door Replacement 2 MNC-13-014 246,000246,000Mechanical Improvements 2 MNC-18-001 48,00048,000Pool Deck Tile Restoration 3 MNC-18-002 26,30026,300Locker Room Floor Tile Restoration 3 MNC-18-003 5,0005,000Main Sign Replacement 3 MNC-18-004 5,0005,000Kitchen Flipping Doors 3 STE-13-013 55,00015,000 10,000 10,000 10,000 10,000Recreation Equipment 3 STE-13-014 4,0004,000Table Covers 3 STE-13-015 10,0005,000 5,000Tables3 STE-15-001 63,20063,200Survelliance Camera Upgrade 3 VEQ-13-045 5,0005,000Dishwasher2 VEQ-18-001 10,00010,000Recreation Software 3 1,108,500375,300 318,700 355,000 44,500 15,000Community Center Total DMV - Deputy Registrar 26,00026,000DMV Fund 26,00026,000DMV - Deputy Registrar Total VEQ-13-047 26,00026,000DMV Vehicle 2 26,00026,000DMV - Deputy Registrar Total Fire & Rescue Produced Using the Plan-It Capital Planning Software 229 Total20182019202020212022DepartmentProject # Priority 5,800,0004,000,000 1,100,000 700,000Debt Proceeds 309,00051,000 50,000 7,000 187,000 14,000General Fund 6,109,00051,000 4,050,000 1,107,000 887,000 14,000Fire & Rescue Total FRD-13-002 4,000,0004,000,000New Fire Station 2 STE-13-006 180,000180,000SCBA Packs 2 STE-16-002 79,00051,000 7,000 7,000 14,000Turnout Gear 1 VEQ-13-006 1,100,0001,100,000Fire Ladder Truck 2 VEQ-18-004 50,00050,000SUV - Fire Command Response Vehicle 3 VEQ-18-005 700,000700,000Engine 1 - Replacement 1 6,109,00051,000 4,050,000 1,107,000 887,000 14,000Fire & Rescue Total IT Services 152,00030,000 30,200 30,400 30,600 30,800IT Services Fund 152,00030,000 30,200 30,400 30,600 30,800IT Services Total STE-13-001 78,00015,600 15,600 15,600 15,600 15,600Personal Computers 2 STE-13-005 15,0003,000 3,000 3,000 3,000 3,000Laptops2 STE-13-007 40,0008,000 8,000 8,000 8,000 8,000GIS Hardware and Software 2 STE-13-008 19,0003,400 3,600 3,800 4,000 4,200Pavement Management Software 2 152,00030,000 30,200 30,400 30,600 30,800IT Services Total Municipal Liquor 1,770,00075,000 25,000 1,575,000 95,000Municipal Liquor Fund 1,770,00075,000 25,000 1,575,000 95,000Municipal Liquor Total LIQ-13-002 75,00075,000Parking Lot Improvements 2 LIQ-13-003 1,500,0001,500,000Liquor Store - #2 3 LIQ-13-046 50,00025,000 25,000Liquor Store Coolers 2 LIQ-18-001 50,00050,000Roof1 LIQ-18-002 75,00075,000Electronic Sign Replacement 2 VEQ-13-046 20,00020,000Point of Sale Software 2 1,770,00075,000 25,000 1,575,000 95,000Municipal Liquor Total Public Works MNC-15-004 80,00040,000 40,000Stop Light Painting 3 MNC-15-005 30,00030,000Street Banners 4 PWK-13-001 14,000,00011,000,000 3,000,000Public Works Facility 3 PWK-13-002 600,000600,000PW Facility Land Acquisition 3 STE-13-011 7,0007,000Generator2 VEQ-13-013 65,00065,000One-Ton Truck 2 VEQ-13-014 35,00035,000Truck - Pickup 4X4 2 VEQ-13-015 130,000130,000Bucket Truck 2 Produced Using the Plan-It Capital Planning Software 230 Total20182019202020212022DepartmentProject # Priority 2,044,000220,000 367,000 802,000 400,000 255,000Capital Equipment Fund 600,000600,000Capital Project Fund 14,000,00011,000,000 3,000,000Debt Proceeds 117,00070,000 40,000 7,000General Fund 16,761,000890,000 11,407,000 3,809,000 400,000 255,000Public Works Total VEQ-13-016 80,00080,000Blacktop Paver 2 VEQ-13-019 20,00020,000Concrete Saw 2 VEQ-13-021 95,00095,000Backhoe2 VEQ-13-022 495,000240,000 255,000Plow Truck 2 VEQ-13-023 65,00065,000One-Ton Truck and Plow 2 VEQ-13-025 142,000142,000Snow Go Snow Blower 2 VEQ-13-026 65,00065,000Skid Steere Loader 2 VEQ-13-027 35,00035,000Sign Lab System 2 VEQ-13-028 20,00020,000Paver Trailer 2 VEQ-14-001 235,000235,000Wheel Loader - 3 yd.3 VEQ-14-003 95,00095,000Blacktop Hot Box 3 VEQ-16-004 60,00060,000Hot Rubber Melter - Crack Sealer 2 VEQ-16-005 20,00020,000Mini Tank Tack Trailer 3 VEQ-16-006 70,00070,000Mid Size Loader 2 VEQ-16-007 300,000300,000Grader3 VEQ-18-003 17,00017,000Brush Grapple Hooks 3 16,761,000890,000 11,407,000 3,809,000 400,000 255,000Public Works Total Recreation & Culture MCC-13-002 300,000300,000Splash Park 3 MNC-14-007 206,00041,200 41,200 41,200 41,200 41,200Pathway Maintenance (Annual)2 MNC-17-001 17,5003,500 3,500 3,500 3,500 3,500Planters3 MNC-17-002 10,0002,000 2,000 2,000 2,000 2,000Bike Racks 3 PAR-13-002 80,00080,000Featherstone Park Development 3 PAR-13-003 15,00015,000Sunset Ponds Shelter 3 PAR-13-004 90,00090,000Pioneer Park - Band Shell 3 PAR-13-006 5,0005,000Monti Hill Park Development 2 PAR-13-012 4,600,000400,000 2,100,000 700,000 700,000 700,000BCOL Ball Fields 3 PAR-13-013 250,000250,000Ellison Park Log Shelter 3 PAR-13-014 60,00060,000CSAH 75 Pathway Lighting 3 PAR-15-003 150,000150,000Spirit Hill - Wildwood Pathway Connection 3 PAR-15-004 450,000200,000 250,000Fenning Avenue Pathway Connection 3 PAR-15-006 10,00010,000Park Shop Addition 3 PAR-16-001 6,0006,000Ellison Park Memorial Project 3 PAR-17-005 40,00040,000Rolling Woods Sidewalk 3 PAR-17-006 40,00040,000Riverside Cemetery Columbarium 3 PAR-17-007 25,00025,000Front Street Pier 3 STE-18-001 30,00030,000Aerator3 STE-18-002 32,00032,000Boarding Dock for Ellison 3 STE-18-003 3,0003,000Used ATV 3 Produced Using the Plan-It Capital Planning Software 231 Total20182019202020212022DepartmentProject # Priority 545,00045,000 380,000 120,000Capital Equipment Fund 5,035,000480,000 2,190,000 965,000 700,000 700,000Capital Project Fund 40,00040,000Cemetery Fund 314,50070,700 78,700 71,700 46,700 46,700General Fund 810,000195,000 165,000 200,000 250,000Parks & Pathways Fund 135,000135,000Private Development 60,00060,000Street Lighting Fund 6,939,500790,700 3,008,700 1,396,700 996,700 746,700Recreation & Culture Total STE-18-004 5,0005,000Enclosed Trailer 3 VEQ-13-031 60,00060,000Park Mowers 2 VEQ-13-032 135,00065,000 70,000Trucks2 VEQ-13-033 140,000140,000MT Trackless Sidewalk Machine 2 VEQ-13-037 30,00030,000Cushman Truckster 2 VEQ-13-038 50,00050,000Tractor2 VEQ-13-039 65,00065,000Skid Loader 2 VEQ-13-041 20,00020,000Toro Infield Pro 5040 2 VEQ-15-001 15,00015,000Mule - Kawaski replacement 2 6,939,500790,700 3,008,700 1,396,700 996,700 746,700Recreation & Culture Total Stormwater\Drainage 200,00040,000 40,000 40,000 40,000 40,000General Fund 1,750,00050,000 1,050,000 550,000 50,000 50,000Stormwater Access Fund 1,950,00090,000 1,090,000 590,000 90,000 90,000Stormwater\Drainage Total SWD-13-001 200,00040,000 40,000 40,000 40,000 40,000Stormwater Pond Restoration 2 SWD-13-002 1,000,0001,000,000Stormwater Liftstation (TH 25 Pond)2 SWD-13-004 250,00050,000 50,000 50,000 50,000 50,000Boulevard Drainage Tile 2 SWD-17-001 500,000500,000Fallon Avenue Pond Expansion 3 1,950,00090,000 1,090,000 590,000 90,000 90,000Stormwater\Drainage Total Streets MNC-13-001 200,00040,000 40,000 40,000 40,000 40,000City Street Signs 2 MNC-14-001 900,000180,000 180,000 180,000 180,000 180,000Annual Chip Seal 2 MNC-18-005 10,00010,000Bridge Underpass Pedestrian Improvement 3 MNC-18-006 15,00015,000Sidewalk on 6th Street 3 MNC-18-007 30,00030,000Public Art 3 MNC-18-008 50,00050,000Wayfinding Signage 3 STR-13-001 450,000450,000School Blvd/Cedar Street Signal System 2 STR-13-004 600,000600,000Overlay Rural Outlying Streets 2 STR-13-006 6,600,0005,950,000 650,000Fallon Avenue Overpass 3 STR-13-008 1,500,00050,000 1,300,000 150,000Street Reconstruction - Area 6 3 STR-13-009 1,500,00050,000 1,300,000 150,000Street Reconstruction - Area 7B 2 STR-13-010 750,000150,000 150,000 150,000 150,000 150,000Street Light Improvements 2 STR-15-003 150,000150,000Elm Street Sidewalk - 3rd St Pedestrian Blinker 2 Produced Using the Plan-It Capital Planning Software 232 Total20182019202020212022DepartmentProject # Priority 12,820,0002,520,000 1,800,000 5,250,000 2,150,000 1,100,000Capital Project Fund 8,900,0005,950,000 650,000 1,100,000 50,000 1,150,000Debt Proceeds 1,100,000220,000 220,000 220,000 220,000 220,000General Fund 200,000200,000State Aid 250,000250,000Street Construction Fund 1,050,000150,000 450,000 150,000 150,000 150,000Street Lighting Fund 24,320,0008,840,000 3,570,000 6,720,000 2,570,000 2,620,000Streets Total STR-15-004 500,000100,000 100,000 100,000 100,000 100,000Sidewalk Gap Improvement Project (TBD)2 STR-16-001 1,200,00050,000 1,150,000Extension of 95th Street w/o Noise Wall 3 STR-16-002 300,000300,000Flashing Yellow Arrow Signal 3 STR-17-001 250,000250,000CR 39/Gillard Ave Intersection 3 STR-17-002 1,700,000150,000 1,400,000 150,000Fallon Ave & Trail - Chelsea to School Bvld 3 STR-17-003 1,800,0001,600,000 200,000Chelsea Road Reconst - Fallon to Edmonson 3 STR-17-004 650,000650,0007th St Mill & Overlay & Cedar St Improvements 3 STR-17-005 500,000500,000Collector Road Mill & Overlay 3 STR-17-006 2,000,000500,000 500,000 500,000 500,000Residential Street Mill and Overlay 3 STR-17-007 2,000,000500,000 500,000 500,000 500,000Residential Street Reconstruction Improvements 3 STR-18-001 500,00050,000 450,000TH25/4th Street Signal 3 STR-18-002 115,00015,000 100,000Walnut Street Extention to River Street 3 STR18-003 50,00050,000Walnut Street/CSAH 75 Pedestrian Improvements 2 24,320,0008,840,000 3,570,000 6,720,000 2,570,000 2,620,000Streets Total Utility - Sewage 5,965,000700,000 1,800,000 1,365,000 2,100,000Debt Proceeds 4,710,600325,000 675,000 3,050,600 385,000 275,000Sewage Fund 10,675,6001,025,000 2,475,000 4,415,600 2,485,000 275,000Utility - Sewage Total MNC-17-005 110,000110,000Demo Obsolete WWTP Equipmnet 4 UTS-13-001 750,000150,000 150,000 150,000 150,000 150,000Annnual Sewage Trunk Improvements 2 UTS-13-002 275,600275,600Liftstation - Marvin Road 2 UTS-13-005 1,365,0001,365,000WWTP Solids Handling Improvements 2 UTS-13-006 1,800,0001,800,000WWTP Phase 2 Improvements 3 UTS-16-001 625,000125,000 125,000 125,000 125,000 125,000Annual WWTP Upgrades 2 UTS-17-001 2,100,0002,100,000WWTP Headworks Improvements 3 UTS-17-002 2,550,00050,000 2,500,000Fallon Avenue Trunk Line Extension 3 VEQ-13-001 400,000400,000Sewer Jetter 2 VEQ-13-004 700,000700,000SCADA System - Sewage 2 10,675,6001,025,000 2,475,000 4,415,600 2,485,000 275,000Utility - Sewage Total Utility - Water UTW-13-001 750,000150,000 150,000 150,000 150,000 150,000Annual Water System Improvements 3 UTW-13-003 1,200,0001,200,000Well #6 3 UTW-15-001 195,00065,000 65,000 65,000Water Meter MXUs - System Upgrade 2 VEQ-13-002 45,00045,000Truck - Regular Cab 4X Chasis+Accessories 2 Produced Using the Plan-It Capital Planning Software 233 Total20182019202020212022DepartmentProject # Priority 2,190,000260,000 215,000 215,000 150,000 1,350,000Water Fund 2,190,000260,000 215,000 215,000 150,000 1,350,000Utility - Water Total 2,190,000260,000 215,000 215,000 150,000 1,350,000Utility - Water Total 72,001,60012,453,000 26,189,600 18,638,700 9,228,800 5,491,500Grand Total Produced Using the Plan-It Capital Planning Software 234 CIP PROJECT – FALLON AVENUE OVERPASS (BRIDGE) 235 CIP PROJECT – CHELSEA ROAD 236 CIP PROJECT – AERATOR AND ASPHALT HOTBOX 237 CIP PROJECT – FEATHERSTONE PARK 238 CIP PROJECT – BERTRAM CHAIN OF LAKES 239 This page intentionally left blank 240 ENTERPRISE FUNDS For Fiscal Year 2013 Adopted 2018 APPENDIX PROPERTY TAX BASICS Assessment and classification The property tax system is a continuous cycle, but it effectively begins with the estimation of property market values by local assessors. Assessors attempt to determine the approximate selling price of each parcel of property based on the current market conditions. Along with the market value determination, a property class is ascribed to each parcel of property based on the use of the property. For example, property that is owner-occupied as a personal residence is classified as a residential homestead. The “use class” is important because the Minnesota system, in effect, assigns a weight to each class of property. Generally, properties that are associated with income production (e.g. commercial and industrial properties) have a higher classification weight than other properties. The property classification system defines the tax capacity of each parcel as a percentage of each parcel’s market value. For example, a $75,000 home which is classified as a residential homestead has a class rate of 1.0 percent and therefore has a tax capacity of $75,000 x .01 or $750. (A sample of the class rates is included in the table at the end of this item.) [parcel market value] * [class rate] = [parcel tax capacity] The next step in calculating the tax burden for a parcel involves the determination of each local unit of government’s property tax levy. The city, county, school district, and any special property taxing authorities must establish their levy by December 28 of the year preceding the year in which the levy will be paid by taxpayers. The property tax levy is set after the consideration of all other revenues including state aids such as LGA. [city budget] - [all non-property tax revenues] = [city levy] Local tax rates Local governments do not directly set a tax rate. Instead, the tax rate is a function of the levy and the total tax base. To compute the local tax rate, a county must determine the total tax capacity to be used for spreading the levies. The total tax capacity is computed by first aggregating the tax capacities of all parcels within the city. Several adjustments to this total must be made because not all tax capacity is available for general tax purposes. The result of this calculation produces taxable tax capacity. Taxable tax capacity is used to determine the local tax rates. [city levy] / [taxable tax capacity] = [city tax rate] Parcel tax calculations The property tax bill for each parcel of property is determined by multiplying the parcel’s tax capacity by the total local tax rate. The tax statement for each individual parcel itemizes the taxes for the county, municipality, school district, and any special taxing authorities. [parcel tax capacity] * [total local tax rate] = [tax capacity tax bill] 241 Terms Defined Class rates - The percent of market value set by state law that establishes the property’s tax capacity subject to the property tax. See table below for a sample list of class rates. Local tax rate - The rate used to compute taxes for each parcel of property. Local tax rate is computed by dividing the certified levy (after reduction for fiscal disparities distribution levy and disparity reduction) by the taxable tax capacity. Market value - An assessor’s estimate of what property would be worth on the open market if sold. The market value is set on January 2 of the year before taxes are payable. Homestead Market Value Exclusion (HMVE)– Starting with taxes payable in 2012, eligible homesteads will pay property taxes on only a portion of the value of their homes. The maximum exclusion, 40% of value, occurs at home value of $76,000 and phases out as home value grows Property class - The classification assigned to each parcel of property based on the use of the property. For example, owner-occupied residential property is classified as homestead. Property tax levy - The tax imposed by a local unit of government. The tax is established on or around December 28 of the year preceding the year the levy will be paid by taxpayers. Tax capacity - The valuation of property based on market value and statutory class rates. The property tax for each parcel is based on its tax capacity. Total tax capacity - The amount computed by first totaling the tax capacities of all parcels of property within a city. Adjustments for fiscal disparities, tax increment, and a portion of the powerline value are made to this total since not all tax capacity is available for general tax purposes. Truth-in-Taxation - The “taxation and notification law” which requires local governments to set estimated levies, inform taxpayers about the impacts, and announce which of their regularly scheduled council meetings will include a discussion of the budget and levy. Taxpayer input is taken at that meeting. Property Class Local Taxes Payable 2018 State Tax Payable 2018 Residential Homestead: 1st $500,000 1.00%No state tax >$500,000 1.25% Non-homestead Residential: Single unit: 1st $500,000 1.00%>$500,000 1.25%No state tax 2-3 unit buildings 1.25% Market-rate Apartments:1.25%No state tax Commercial/Industrial:Subject to state 1st $150,000 1.50%levy (commercial- >$150,000 2.00%industrial rate) Seasonal Recreational Subject to state1st $500,000 1.00%levy (seasonal- >$500,000 1.25%recreational rate) 242 TRUTH-IN-TAXATION TNT Summary Chart for Taxes Payable 2018 Date Action On or Before Sept. 30 All cities and special taxing districts (EDAs, HRAs, port authorities, etc.) must adopt any proposed property tax levy and certify the proposed levy to the county auditor. On or Before Sept. 30 At one meeting, the city council adopts the proposed property tax levy and announces the time and place of a future city council meeting at which the budget and levy will be discussed and public input allowed, prior to final budget and levy determination. This public input meeting must occur after Nov. 24 and must start at or after 6 p.m. The time and place of the public input meeting must be included in the minutes but newspaper publication of the minutes is not required. On or before Sept. 30 Cities must provide the county auditor with the following information: The time and place of the meeting at which the budget and levy will be discussed and public input allowed. (Again, meeting must occur after Nov. 24 and must not start before 6 p.m.) A phone number that city tax payers 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. Nov. 11 to Nov. 24 County auditor prepares and sends parcels specific notices. Nov. 25 to Dec.28 City councils hold meeting to discuss the budget and property tax levy and, before a final determination, allows public input. 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. 243 DEBT GUIDE EquipmentCertificates/CapitalNotes A statutory city may issue certificates of indebtedness or capital notes (Section 412.301)to purchase: Public safety equipment, ambulance, and other medical equipment; road construction and main- tenance equipment; and other capital equipment. Computer hardware and software, whether bundled with machinery or equipment or unbundled, together with application development services and training related to the use of the computer hardware or software. The statute does not define “other capital equipment”. Cities seeking to borrow for equipment not specifically listed should work with bond counsel to determine eligibility. The term of the Certificates/Notes cannot exceed 10 years from the dated date of the obligations. This limitation may affect the timing of principal and interest payments.This debt issubjectto thedebtlimit. A reverse referendum provision applies if the amount of the borrowing exceeds 0.25% of the estimated market value of taxable property within the city. An election is required if a petition signed by voters equal to 10% of the voters in the last regular municipal election is submitted to the city clerk within 10 days after publication of the resolution authorizing the issuance of the Certificates/Notes. Different statutory authority exists for home rule charter cities (Section 410.32).Capital Notes issued by charter cities are subject to the same statutory requirements as statutory cities with the following ex- ceptions: The total principal amount of the capital notes issued in a fiscal year shall not exceed 0.03% of the estimated market value of taxable property in the city. No reverse referendum provision applies, but issuance must be approved by a two-thirds vote of the city council. Unlessprohibitedbythecharter,thesecitiesmayalsoissueCapitalNotesundertheauthoritygranted to statutory cities. Tax Abatement Bonds Tax Abatement Bonds (Section 469.1814)may be used to finance a variety of development activities and public improvements. The statute allows proceeds of Tax Abatement Bonds be used to (1) pay for public improvements that benefit the property, (2) to acquire and convey land or other property, as provided under this section, (3) to reimburse the property owner for the cost of improvements made to the property, or (4) to pay the costs of issuance of the bonds. Tax Abatement Bonds are often used to facilitate economic development in ways not allowed by tax increment financing. They have also evolved into a tool for financing community recreation and cultural facilities. The statutory authority creates an abatement levy based on the property value of parcels subject to the abatement. The authority to use tax abatement applies separately to each taxing jurisdiction. If other jurisdictions (county and school district) approve an abatement, this revenue may be pledged to bonds issued by the city. 244 The principal amount of the bonds may not exceed the sum of the authorized abatements. A debt service levymaybe used to pay interest on the bonds. The annual amount of all abatements cannot exceed the greater of 10% net tax capacity value of the jurisdiction or $200,000. The parameters of the abatement and authorization for the bonds are set by resolution. The resolution cannot be approved until after a public hearing is held. StreetReconstructionBonds Street Reconstruction Bonds are an example of debt issuing authority found in unusual places. The statu- toryprovisionsforStreetReconstructionBondsappearintheportionofChapter475dealingwithelection requirements for debt issuance (Section 475.58, Subd. 3b). Street Reconstruction Bonds can be used to finance the reconstruction and bituminous overlay of existing city streets. Eligible improvements may include turn lanes and other improvements having a substantial public safety function, realignments, other modifications to intersect with state and county roads, and the local share of state and county road projects. Except in the case of turn lanes, safety improvements, re- alignments, intersection modifications, and the local share of state and county road projects, street recon- structionandbituminousoverlaysdoesnotincludethe portionofprojectcostallocableto wideningastreet or adding curbs and gutters where none previously existed. The enabling statute sets forth specific requirements for the issuance of Street Reconstruction Bonds: The projects financed under this authority must be described in a street reconstruction plan. The plan mustdescribethestreetreconstructionoroverlaytobefinanced,theestimatedcosts,andanyplanned reconstructionoroverlayofotherstreetsinthemunicipalityoverthenextfiveyears The city must hold a public hearing on the proposed plan and the related issuance of bonds. The plan and the issuance of bonds must be approved by the city council by a vote of all of the members of the governing body present at the meeting. Theissuanceofbondsissubjecttoareversereferendum.Anelectionisrequiredifvotersequalto5% ofthevotescastinthelastmunicipalgeneralelectionfileapetitionwiththecityclerkwithin30days ofthepublichearing.Ifthecitydecidesnottoundertakeanelection,itmaynotproposetheissuance ofStreetReconstructionBondsforthesamepurposeandinthesameamountforaperiodof365days from the date of receipt of the petition. If the question of issuing the bonds is submitted and not approvedbythevoters,the provisionsofsection475.58,subdivision1a,shallapply(noresubmission forsamepurpose/amountfor180days). Street Reconstruction Bonds are subject to the debt limit. Revenue Bonds One exception to the previous statement is the issuance of Revenue Bonds. Chapter 475 authorizes borrowingfor“anyutilityorotherpublicconveniencefrom whicharevenueisormaybederived”.This authorityissufficientwhenthesolesecurityisthepledgeofrevenuefromapublicenterprise.Although thisdebtismostfrequentlyassociatedwithmunicipalutilities,any“publicconvenience” withapledge- ablesourceofrevenuemayusethisauthority.MinnesotacitiesdonotfrequentlyissueRevenueBonds. Most borrowing needs have separate statutory authority that allows a general obligation pledge. The most common Revenue Bonds are for electric utilities, sales taxes, and liquor stores. 245 Improvement Bonds One of the most commonly used tools is General Obligation (G.O.) Improvement Bonds issued pursuant to Chapter 429. Improvement Bonds can be issued for a wide range of public improvements. Eligible Improvements The types of improvements specifically authorized in Chapter 429 can be found in Section 429.021.It is important to read and understand the specific statutory provisions. Some provisions are broader than the basic improvement. For example, a “street improvement” may also include streetscape (beauti- fication), storm sewers and utility connection lines. Other provisions may contain important expansions orlimitationsontheauthority.Sanitaryandstormsewerimprovementsmaybemadeoutsideofthecity limits. The public improvements currently authorized in Chapter 429 include the following: 1.Acquire, open, and widen any street, and improve the same by constructing, reconstructing, and maintaining sidewalks, pavement, gutters, curbs, and vehicle parking strips of any material, or by grading, graveling, oiling, or otherwise improving the same, including the beautification thereof andincludingstormsewersorotherstreetdrainageandconnectionsfromsewer,water,orsimilar mains to curb lines. 2.Acquire, develop, construct, reconstruct, extend, and maintain storm and sanitary sewers and sys- tems, including outlets, holding areas and ponds, treatment plants, pumps, lift stations, service connections,andotherappurtenancesofasewersystem,withinandwithoutthecorporatelimits. 3.Construct, reconstruct, extend, and maintain steam heating mains. 4.Install, replace, extend, and maintain street lights and street lighting systems and special lighting systems. 5.Acquire, improve, construct, reconstruct, extend, and maintain water works systems, including mains,valves,hydrants,serviceconnections,wells,pumps,reservoirs,tanks,treatmentplants,and other appurtenances of a water works system, within and without the corporate limits. 6.Acquire, improve and equip parks, open space areas, playgrounds, and recreational facilities within or without the corporate limits. 7.Plant trees on streets and provide for their trimming, care, and removal. 8.Abate nuisancesand drainswamps,marshes, and ponds on publicorprivate property,and fillthe same. 9.Construct, reconstruct, extend, and maintain dikes and other flood control works. 10.Construct, reconstruct, extend, and maintain retaining walls and area walls. 11.Acquire, construct, reconstruct, improve, alter, extend, operate, maintain, and promote a pe- destrian skyway system. Such improvement may be made upon a petition pursuant to section 429.031, subdivision 3. 12.Acquire, construct, reconstruct, extend, operate, maintain, and promote underground pedestrian concourses. 13.Acquire, construct, improve, alter, extend, operate, maintain, and promote public malls, plazas or courtyards. 14.Construct, reconstruct, extend, and maintain district heating systems. 15.Construct, reconstruct, alter, extend, operate, maintain, and promote fire protection systems in existing buildings, but only upon a petition pursuant to section 429.031, subdivision 3. 16.Acquire, construct, reconstruct, improve, alter, extend, and maintain highway sound barriers. 246 17.Improve,construct,reconstruct,extend,andmaintaingasandelectricdistributionfacilitiesownedby a municipal gas or electric utility. 18.Purchase,install,andmaintainsigns,posts,andothermarkersforaddressingrelatedto theoperation of enhanced 911 telephone service. 19.Improve, construct, extend, and maintain facilities for Internet access and other communications purposes, if the council finds that: (i) the facilities are necessary to make available Internet access or other communications services that are not and will not be available through other providers or the private market in the reasonably foreseeable future; and (ii) the service to be provided by the facilities will not compete with service provided by private entities. 20.Assess affected property owners for all or a portion of the costs agreed to with an electric utility, telecommunications carrier, or cable system operator to bury or alter a new or existing distribution system within the public right-of-way that exceeds the utility’s design and construction standards, or those set by law, tariff, or franchise, but only upon petition under section 429.031, subdivision 3. 21.Assess affected property owners for repayment of voluntary energy improvement financings under section 216C.436, subdivision 7. Other statutes may also authorize the use of special assessments to pay for improvements. For example, authorizedimprovementswithina HousingImprovement Areamaybepaidwithspecialassessments. Minimum Assessment General Obligation Improvement Bonds require a minimum 20% assessment. It is important to under- stand the method for determining the minimum assessment. A common assumption is that assessments must equal or exceed 20% of the amount to be borrowed. While this calculation works for Tax Increment Bonds, the 20% calculation for Improvement Bonds is different: 1.The assessment calculation is based on the cost of theimprovement to the city. This cost may or may not equal the amount of the Improvement Bonds. 2.Thecostoftheimprovementdoesnotincludeactivitiesthatwillnotbeassessedtobenefittedproperty owners and not financed with G.O. Improvement Bonds. These improvements can be made without following the procedures of Chapter 429. This exclusion typically applies to utility (sanitary sewer, watermain, and storm sewer) improvements paid from reserves or bonds issued under Minnesota Statutes, Chapter 444. 3.The cost to the city excludes all monies contributed by other units of government to pay for the improvement. 4.The up-front use of city non-utility reserves (both General Fund and capital improvement) does not reduce the cost to the city. Oneexceptiontothis20%requirementisimprovementsforautomobileparkingfacilities (Section459.14). Bonds issued to finance the construction or maintenance of automobile parking facilities require special assessments in an amount not less than 50% of the amount of the bonds. Assessment Considerations State Law does not prescribe assessment methodology. Some cities have formal assessment policies. Other cities deal with assessments on a project-by-project basis. A guiding factor in setting assessments is the market value test. The amount assessed to a property cannot exceedtheincreaseinmarketvalueofthepropertyasaresultoftheimprovement.Thereisno requirement tomakethisfindingaspartoftheimprovementprocess.Theissuecomesinto playprimarilyinprojectswith larger assessments and greater risk of appeal. 247 Assessments are also constrained by the notice of hearing for the improvement. The total amount assessed cannotexceedtheamountstated inthenotice.Thearea assessedcannotbelarger,butcanbesmaller,than theareareceivingnoticeoftheHearing. The special assessment calculation is based on the “improvement”. An improvement may be more than a single project. There are two ways to manage multiple projects into a single improvement for the purposes ofChapter429.Section429.021, Subd.2 allowsforanimprovementontwoormorestreets,ortwo ormore types of improvements, in or on the same street or streets or different streets may be included in one proceeding and conducted as one improvement. This combining of improvements is typically spelled out in the engineering feasibility report and considered at the improvement hearing. Projects that are instituted separatelymay besubsequentlycombinedundertheauthorityof Section435.56. Revenues to pay debt service on the portion that is not assessed may come from any legally available source including a property tax levy. Bond Issues Planning for the issuance of Improvement Bonds requires a clear understanding of the special assess- ments. In addition to the total amount assessed, several other factors are important: What is the term of repayment? First levy year payable? Total number of years payable? Will the assessments be repaid with level annual installmentsof principalor levelannual payments of principal and interest? What interest rate will be charged on the unpaid balance? Is it tied to the interest rate on the bonds? Will any of the assessments be deferred? If so, when will they be paid? When is the assessment hearing and when will the assessments be certified to the County? What are the expectations for the initial prepayment of assessments? The timing of the improvement process is another important consideration. Improvement Bonds can be issuedanytimeafterthecitycouncilconductsthe improvement hearingandauthorizestheimprovements. No improvement hearing is needed if the parties that petition for the improvement will be assessed 100% ofthecost.Each pointintime hasdifferent implications forissuingbonds: Bonds issued soon after the improvement hearing will be based on estimated construction costs and assumptions about special assessments. Bonds may be issued immediately after the receipt of bids to provide construction financing. The finance plan will rely on assumptions about special assessments. Bondsmaybeissuedaftercompletionoftheassessmentprocess.Thisallowsthefinanceplantobebased onfinalconstructioncostsand actualassessments.Thisapproachcanalso considertheamountofinitial prepayments. Delaying financing until after the assessment process requires city funds to pay for construction and a reimbursement resolution to allow the repayment of these funds with the proceeds oftax-exempt bonds. Forcontroversialprojectswithahigherriskofassessmentappeals,citieswillconducttheassessmentprocess duringtheperiodbetweenthereceiptandawardofconstructionbids.Thisapproachallowsthecitytoknow the appeal risk before committing to undertake the improvement. Improvement Bonds are not subject to the statutory debt limit. 248 UtilityRevenue Bonds MinnesotacitiesrarelyissuepureRevenueBondstofinancesanitarysewer,water,andstormsewerutility improvements.StateLawallowscitiestoadditsgeneralobligationtothepledgeofnetutilityrevenuesfor these improvements (Section 444.075).G.O. Utility Revenue Bonds may be issued to build, construct, reconstruct, repair, enlarge, improve, or in any other manner obtain sanitary sewer, water, and storm sewer facilities, and maintain and operate the facilities inside or outside its corporate limits. These bonds are sometimes called“double barreled”. Theyare secured by both utility revenues andthe city’s generalobligation. The bonds may be secured by a single utilityor by combined utility funds. Debt service on Utility Revenue Bonds is paid from the net revenues of the utilities pledged to secure the bonds. Special assessments may also be levied and pledged to the bonds. Unlike Improvement Bonds, property taxes cannot be a permanent and ongoing source of revenue to pay debt service. Property taxes should only be used on a temporary basis when the other revenues are insufficient to meet the obligations. It is important to understand the nature of the revenues that will be used to support the bonds. Howmuchoftherevenuecomesfromconnectionchargesandotherfeesassociatedwithgrowth? Are rate increases needed? If so, are there any procedural issues (such as a public hearing or ap- proval by the utilities commission)? Are there any large users that constitute a significant portion of the revenue base? Are there special agreements with large users? There are no special procedural requirements for the issuance of Utility Revenue Bonds. Capital Improvement PlanBonds CitiesmayissueCapitalImprovementPlan(CIP)Bondstofinancetheconstructionandmaintenanceofcity hall, town hall, library, public safety facility, and public works facility (Section 475.521).These bonds may not be used to finance any other type of facility or improvement. Expenditures for eligible capital im- provements incurred before adoption of the capital improvement plan are allowed if included in a plan approved at or prior to thepublic hearing on the issuance of bonds. Theprojectsto befinancedmustbeincludedinacapital improvementsplan(CIP)thatmeetsthecriteriaof thestatute.Theplanmustcoveratleastafive-yearperiodbeginningwiththedateofitsadoption.Theplan mustsetforththeestimatedschedule,timing,anddetailsofspecificcapitalimprovementsbyyear,together withtheestimatedcost,theneedfortheimprovement,andsourcesofrevenuetopayfortheimprovement. The CIP should also include information about the factors required by the statute to be considered by the citycouncil.Thesefactorsare: Condition of the municipality’s existing infrastructure, including the projected need for repair or replacement; Likely demand for the improvement; Estimated cost of the improvement; Available public resources; Level of overlapping debt in the municipality; 249 Relative benefits and costs of alternative uses of the funds; Operating costs of the proposed improvements; and Alternatives for providing services most efficiently through shared facilities with other municipali- ties or local government units. The required CIP may be a document prepared specifically for authorizing the issuance of bonds or it may be incorporated into other capital improvement planning by the city. The maximum amount of CIP Bonds is limited. The maximum principal and interest payable in any year for all outstanding CIP Bonds cannot exceed 0.16% of the estimatedmarket value of taxable property in the city. This calculation is made using the estimated market value for the taxes payable year in which thebondsareissuedandsold. The bonds are subject to the debt limit for cities with a population of 2,500 or more. Bothapprovalof the CIP and the issuance of bonds require a public hearing. A single public hearing may be held to meet these requirements. The bonds must be authorized bya three-fifths voteof afive-membercity council. If the city council has morethan five members, two-thirds approval is needed. Issuance of the bonds is subject to reverse referendum. An election is required for the issuance of the bondsifapetitionsignedby votersequalto5%ofthevotescastinthecityinthelastmunicipalgeneral electionisfiledwiththecityclerkwithin30daysafterthepublic hearing.Ifthecitydoesnotsubmitthe questiontothevoters,itmaynotproposetheissuanceofbondsunderthissectionforthesamepurpose andinthesameamountforaperiodof365daysfromthedateofreceiptofthepetition.Ifthequestion of issuing the bonds is submitted and not approved by the voters, the city must wait 180 days before voting on the samequestion again. Lease RevenueBonds Lease Revenue Bonds are used by cities to finance public facilities. There is no specific statutory authority for Lease Revenue Bonds. This form of financing combines two statutory powers. Economic development authorities (EDA) and housing and redevelopment authorities (HRA) have the authority to issue Revenue Bonds for their corporate purposes, including the construction of public facilities. The security for the bonds and the revenue to pay debt service comes from a lease purchase with the city. Not all public facilities are equally suited for the use of Lease Revenue Bonds. As a general rule, the more essential the facility, the better the application of this tool. This is due to the perception of investors that the city is less likelyto not appropriateand walkawayfrom anessential facility. A similar form of financing is Certificates of Participation. The investor receives a certificate secured by a share of the lease payments. The underlying security is the same as Lease Revenue Bonds. The status of the tax levy to make lease payments is another consideration in the use of Lease Revenue Bonds. Under the most recent version of levy limits, the levy for Lease Revenue Bonds can be made of a special levy and outside of levy limits. The special levy authority is to pay debt service of another political subdivision,andtheEDAisapoliticalsubdivision.Leviestomakeleasepaymentsdonotcurrentlyqualify as a special levy and, therefore, are subject to levy limits. The taxing power of the EDA may also be pledged to Lease RevenueBonds. 250 Other Debt Terms BankQualified Issuersthatreasonablyexpectto issue$10,000,000orlessintax-exemptbondsduringacalendaryear may designate bondsas“bank qualified”.The name refersto the fact that banksmay deducta portion of the interest cost on the carry purchased for its portfolio. This preferential tax treatment usually results in lower interest rates than bonds that are not bank qualified. The difference between bank qualified and not bank qualified rates varies over time and is typically higher for longer maturities. Both the direct debt of the issuer and any conduit debt count against the issuer’s$10,000,000 annual cap. Arbitrage Arbitrage regulations govern the ability to invest the proceeds of tax-exempt bonds. The basic rule of arbitrage is that the gross proceeds of a bond issue may not be invested at a rate “materially higher” than the yield on the bonds. The complexities of arbitrage calculation and compliance are not discussed in this guide. Instead, this guide focuses on the three basic arbitrage considerations for most Minnesota cities: construction fund, debt service fund, and arbitrage rebate. Arbitrage Rebate Issuers must pay (rebate) to the federal government income earned in excess of the bond yield unless subjectto thesmallissueror thespenddownexceptions. Thesmallissuerexceptionapplieswhenthetotalprincipalamountoftaxexempt,non-privateactivity bonds does not exceed $5,000,000 in any calendar year. Current refunding bonds up to the amount of the outstanding principal refunded do not count against this limit. There are three options for meeting the spenddown exception: 1.6-monthexception -grossproceedsandinterestearningsareallocatedto expendituresforgovern- mental or qualified purposes that are incurred within 6 months after the date of issuance. 2.18-month exception - gross proceeds and interest earnings are spent within the following schedule from date of issuance: (1) 15% within 6 months; (2) 60% within 12 months; and (3) 100% within 18 months(with a5%reasonableretainagecarryoveramountforanadditional12month period). 3. 2-year spending exception – issue is a “construction issue” (75% of issue is actually spent on construction)andgrossproceedsandinterestearningsarespentwithinthefollowingschedulefrom dateofissuance:(1)10%within6months;(2)45%within12months;(3)75%within18months;and 4) 100% within 24months. 251 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. 252 (10) Obligations issued to pay pension fund or other postemployment benefit liabilities under section 475.52, subdivision 6, or any charter authority. (11) Obligations issued to pay judgments against the municipality under section 475.52, subdivision 6, or any charter authority. (12) All other obligations which under the provisions of law authorizing their issuance are not to be included in computing the net debt of the municipality. PROPERTY TAX LEVY 275.08 AUDITOR TO FIX RATE. Subdivision 1. Generally. The rate percent of all taxes, except the state tax and taxes the rate of which may be fixed by law, shall be calculated and fixed by the county auditor according to the limitations in this chapter hereinafter prescribed; provided, that if any county, city, town, or school district shall return a greater amount than the prescribed rates will raise, the auditor shall extend only such amount of tax as the limited rate will produce. Subd. 1a. Computation of tax capacity. For taxes payable in 1989, the county auditor shall compute the gross tax capacity for each parcel according to the class rates specified in section 273.13. The gross tax capacity will be the appropriate class rate multiplied by the parcel's market value. For taxes payable in 1990 and subsequent years, the county auditor shall compute the net tax capacity for each parcel according to the class rates specified in section 273.13. The net tax capacity will be the appropriate class rate multiplied by the parcel's market value. Subd. 1b. Computation of tax rates. The amounts certified to be levied against net tax capacity under section 275.07 by an individual local government unit shall be divided by the total net tax capacity of all taxable properties within the local government unit's taxing jurisdiction. The resulting ratio, the local government's local tax rate, multiplied by each property's net tax capacity shall be each property's net tax capacity tax for that local government unit before reduction by any credits. 273.032 MARKET VALUE DEFINITION. For the purpose of determining any property tax levy limitation based on market value, any qualification to receive state aid based on market value, or any state aid amount based on market value, the terms "market value," "taxable market value," and "market valuation," whether equalized or unequalized, mean the total taxable market value of property within the local unit of government before any adjustments for tax increment, fiscal disparity, powerline credit, or wind energy values, but after the limited market adjustments under section 273.11, subdivision 1a, and after the market value exclusions of certain improvements to homestead property under section 273.11, subdivision 16. Unless otherwise provided, "market value," "taxable market value," and "market valuation" for purposes of this paragraph, refer to the taxable market value for the previous assessment year. 253 273.13 CLASSIFICATION OF PROPERTY. Subdivision 1. How classified. All real and personal property subject to a general property tax and not subject to any gross earnings or other in-lieu tax is hereby classified for purposes of taxation as provided by this section. Subd. 21a. Class rate. In this section, wherever the "class rate" of a class of property is specified without qualification as to whether it is the property's "net class rate" or its "gross class rate," the "net class rate" and "gross class rate" of that property are the same as its "class rate." Subd. 21b. Tax capacity. (a) Gross tax capacity means the product of the appropriate gross class rates in this section and market values. (b) Net tax capacity means the product of the appropriate net class rates in this section and market values. Subd. 22. Class 1. (a) Except as provided in subdivision 23 and in paragraphs (b) and (c), real estate which is residential and used for homestead purposes is class 1a. In the case of a duplex or triplex in which one of the units is used for homestead purposes, the entire property is deemed to be used for homestead purposes. The market value of class 1a property must be determined based upon the value of the house, garage, and land. The first $500,000 of market value of class 1a property has a net class rate of one percent of its market value; and the market value of class 1a property that exceeds $500,000 has a class rate of 1.25 percent of its market value. (b) Class 1b property includes homestead real estate or homestead manufactured homes used for the purposes of a homestead by: (1) any person who is blind as defined in section 256D.35, or the blind person and the blind person's spouse; (2) any person who is permanently and totally disabled or by the disabled person and the disabled person's spouse; or (3) the surviving spouse of a permanently and totally disabled veteran homesteading a property classified under this paragraph for taxes payable in 2008. Etc. HOUSING AND REDEVELOPMENT AUTHORITY TAX LEVY 469.033 PUBLIC REDEVELOPMENT COST; PROCEEDS; FINANCING. Subd. 6. Operation area as taxing district, special tax. All of the territory included within the area of operation of any authority shall constitute a taxing district for the purpose of levying and collecting special benefit taxes as provided in this subdivision. All of the taxable property, both real and personal, within that taxing district shall be deemed to be 254 benefited by projects to the extent of the special taxes levied under this subdivision. Subject to the consent by resolution of the governing body of the city in and for which it was created, an authority may levy a tax upon all taxable property within that taxing district. The tax shall be extended, spread, and included with and as a part of the general taxes for state, county, and municipal purposes by the county auditor, to be collected and enforced therewith, together with the penalty, interest, and costs. As the tax, including any penalties, interest, and costs, is collected by the county treasurer it shall be accumulated and kept in a separate fund to be known as the "housing and redevelopment project fund." The money in the fund shall be turned over to the authority at the same time and in the same manner that the tax collections for the city are turned over to the city, and shall be expended only for the purposes of sections 469.001 to 469.047. It shall be paid out upon vouchers signed by the chair of the authority or an authorized representative. The amount of the levy shall be an amount approved by the governing body of the city, but shall not exceed 0.0185 percent of estimated market value. The authority shall each year formulate and file a budget in accordance with the budget procedure of the city in the same manner as required of executive departments of the city or, if no budgets are required to be filed, by August 1. The amount of the tax levy for the following year shall be based on that budget. 469.001 PURPOSES. The purposes of sections 469.001 to 469.047 are: (1) to provide a sufficient supply of adequate, safe, and sanitary dwellings in order to protect the health, safety, morals, and welfare of the citizens of this state; (2) to clear and redevelop blighted areas; (3) to perform those duties according to comprehensive plans; (4) to remedy the shortage of housing for low and moderate income residents, and to redevelop blighted areas, in situations in which private enterprise would not act without government participation or subsidies; and (5) in cities of the first class, to provide housing for persons of all incomes. Public participation in activities intended to meet the purposes of sections 469.001 to 469.047 and the exercise of powers confined by sections 469.001 to 469.047 are public uses and purposes for which private property may be acquired and public money spent. 255 UTILITY RATES Residential Water: 10, 12, 16, 17 0 - 1,000 gallons $6.95 1,001 - 10,000 gallons (9,000 gallons)1.70/1,000 gallons 10,001 - 33,000 gallons (23,000 gallons)1.97/1,000 gallons 33,001 gallons and over 2.15/1,000 gallons Commercial Water: 11, 11NT & 11TX, 13, 90 0 - 1,000 gallons $6.95 1,001 - 10,000 gallons (9,000 gallons)1.70/1,000 gallons 10,001 - 33,000 gallons (23,000 gallons)1.97/1,000 gallons 33,001 gallons and over 2.15/1,000 gallons Sprinklers - Res Twnhm & Commercial: 30, 31, 31NT, 32, 32NT, 91, 91NT 0 - 1,000 gallons $6.95 1,001 - 10,000 gallons (9,000 gallons)1.70/1,000 gallons 10,001 - 33,000 gallons (23,000 gallons)1.97/1,000 gallons 33,001 gallons and over 2.15/1,000 gallons Industrial Water: 14 All Water Usage 2.05/1,000 gallons Sewer Rates - Residential & Commercial: 20, 25, 26 0 - 1,000 gallons $8.75 1,001 gallons and over 5.63/1,000 gallons Sewer Special Cases: SW21, SW22 Has well $10 per person Industrial Sewer Rates: 24 All Sewer Usage 3.397/1,000 gallons BOD5 (Biochemical Oxygen Demand)0.366/lb. TSS (Total Suspended Solids)0.504/lb. Testing Actual cost + 10% Sewer Discharge Fee:2% Water On/Off Charge: ON $25 & OFF $25 Water Availability Charge: $40.25/year Final Bill Processing Fee: $20.00 Manual Meter Reading Charge: $20.00 Residential Refuse Charges 1st Individual Residential Cart $3.00 2nd Individual Residential Cart $13.00 Rates for 2018 Utility Billing Increasing Block Rates 256 CAPITALIZATION THRESHOLDS Class of Asset Details Useful Life Threshold Land/land improvements N/A Land - $1, Improvements - $50,000 Building/building improvements:$20,000 Floor cover Construction Interior and Roof Cover Heating Ventilation AC and Lighting Electrical Elevators, Fire, Piping and Plumbing Site Preparation Walls Exterior Floor structure, foundation, roof structure, steel frame Primary Infrastructure and Utility $75,000 Paving Systems Water, Sanitary and Storm Sewer Secondary Infrastructure $25,000 Sidewalk, Boardwalk, Pathways Street lights, Signage Equipment $10,000 Vehicles Machinery Equipment Software and non-tangible $10,000 Purchased and Internally developed Construction Work In Progress Upon completion, per above class Equipment expenditures for items between $500 and $10,000 are recorded as small tools and equipment, which is a supply account. Building and improvement expenditures below the thresholds are recorded as repairs and maintenance. Current revenues finance expenditures for supplies and repairs and maintenance. 257 TAX CAPACITY, TAX LEVY, & TAX RATE HISTORY 258 USEFUL TERMS (GLOSSARY) ACCOUNT:An organizational or budgetary breakdown found within city funds. A term used to identify an individual asset, liability, expenditure (and other uses), revenue (and other sources), or fund balance. ACCOUNTS PAYABLE:Amounts owed to others for goods or services received. ACCOUNTS RECEIVABLE:Amounts due from others for goods furnished or services rendered. ACCOUNTING SYSTEM:The total set of records and procedures which are used to record, classify, and report information on financial status and operations of an entity. ACCRUAL BASIS OF ACCOUNTING:The method of accounting under which revenues are recorded when they are earned and expenditures are recorded when goods and services are received. ACTIVITY:A specific and distinguishable line of work performed by one or more organizational components of a governmental unit for the purpose of accomplishing a function for which the governmental unit is responsible. For example, "Ice & Snow Removal” is an activity performed as part of the "Public Works" function. ADOPTION:Formal action taken by the City Council to authorize or approve the budget. AD VALOREM:In proportion to value. The basis for levying taxes on property. AGENCY FUND:A fiduciary fund used to account for situations where the government’s role is purely custodial. APPROPRIATION:An authorization granted by a legislative body to make expenditures and to incur obligations for specific purposes. An appropriation is limited in amount to the time it may be expended. ASSESSED VALUATION:Value placed upon real estate or other property as a basis for levying taxes. ASSESSMENTS:Charges made upon parties for actual services or benefits received. ASSETS:Property owned by a governmental unit, which has a monetary value. ASSIGNED FUND BALANCE:Resources the government intends to use for specific purposes, but are neither restricted nor committed. AUDIT:The examination of documents, records, reports, systems of internal control, accounting and financial procedures, and other evidence for one or more of the following purposes: a) To attest to whether the statements prepared from the accounts present fairly the financial position and the results of financial operations of the constituent funds and balanced account groups of the 259 governmental unit in accordance with generally accepted accounting principles applicable to governmental units and on a basis consistent with that of the preceding year; b) To determine the propriety, legality, and mathematical accuracy of a governmental unit's financial transactions; c) To ascertain whether all financial transactions have been properly recorded; d) To evaluate the stewardship of public officials who handle and are responsible for the financial resources of a governmental unit. BALANCED BUDGET:A budget in which estimated revenues and other sources equals estimated expenditures and other uses. A balanced budget does not use reserves or retained earnings to fund expenditures. BOND:A written promise, generally under seal, to pay a specified sum of money, called the face value or principal amount, at a fixed time in the future, called the date of maturity, and carrying interest at a fixed rate, usually payable periodically. BONDED INDEBTEDNESS:Outstanding debt by issues of bonds, which are repaid by ad valorem taxes or other revenue. BUDGET:A plan of financial operation embodying an estimate of proposed expenditures for a given period and the proposed means of financing them. BUDGET DOCUMENT:The official written statement prepared by the city’s Finance Department and adopted by the City Council. BUDGET MESSAGE:A general discussion of the proposed budget presented in writing as a part of the budget document. The budget message explains principal budget issues against the background of financial experience in recent years and presents recommendations made by city staff. BUDGET CALENDAR:The schedule of key dates, which a government follows in the preparation and adoption of the budget. BUDGETARY CONTROL:The control or management of a governmental unit or enterprise in accordance with an approved budget for the purpose of keeping expenditures within the limitation of available appropriations and available revenues. CAPITAL ASSETS:Assets with historical acquisition costs (value if donated) above the capitalization threshold, typically $10,000 or more, and a useful life of more than one reporting period. Capital assetsareusedinoperationsandhaveinitialusefullivesextendingbeyondasinglereportingperiod.These assetsmustalsomeetcapitalizationthresholds,whichvarybyassetclassification.Land,improvementsto land,vehicles,machinery,equipment,infrastructure,andothertangibleandintangibleassetsusedin operationsareexamplesofcapitalassetclassifications. CAPITAL EXPENDITURES:Acapitalexpenditure occurswhenacapitalassetispurchased.Expenditures thatdonotbenefitmorethanonereportingperiodormeetthecapitalizationthresholdsareclassifiedas currentexpenditures. 260 CAPITAL IMPROVEMENT BUDGET:A plan of proposed capital expenditures and a means of financing them. The capital improvement budget is enacted as part of the complete annual budget. CAPITAL PROGRAM:A plan for capital expenditures to be incurred each year over a fixed period of years to meet capital needs arising from the long-term work program or otherwise. It sets forth each project or other contemplated expenditure in which the government is to have a part and specifies the full resources estimated to be available to finance the projected expenditures. CAPITAL PROJECTS FUNDS:A governmental fund type used to account for financial resources to be expended for the acquisition or construction of major capital assets. CAPITALIZATION THRESHOLD:The level at which an item is considered either a current expenditure or a capital expenditure. The threshold for equipment is $10,000. CASH BASIS:The method of accounting under which revenues are recorded when received in cash and expenditures are recorded when paid. CHARGES FOR SERVICES:Charges for current services rendered to customers. CHART OF ACCOUNTS:The classification system used by a government entity to organize the accounting for various funds and departments. COMMITTED FUND BALANCE:Resources used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority (i.e. City Council). CONSUMER PRICE INDEX (CPI):A statistical description of price levels provided by the U.S. Department of Labor. The index is used as a measure of the increase in the cost of living (i.e., economic inflation). CONTINGENCY:Budget for expenditures which cannot be placed in departmental budgets, primarily due to uncertainty about the level or timing of expenditures when the budget is adopted. The contingency also serves as a hedge against shortfalls in revenues or unexpected expenditures. CURRENT:A term applied to budgeting and accounting, designating the operations of the present fiscal period as opposed to past or future periods. DEBT:An obligation resulting from borrowing money or purchasing goods and services. DEBT LIMIT:The maximum amount of gross or net debt, which is legally permitted. DEBT MARGIN:The amount of available debt, which may be issued by a governmental unit before reaching its debt limit. DEBT SERVICE FUND:A governmental fund type used to account for the accumulation of resources for the payment of general long-term debt principal and interest. Proprietary fund type 261 debt is accounted for in the enterprise fund or internal service fund receiving the debt issue proceeds. DEPARTMENT:Basic organizational unit of government, responsible for carrying out related functions. Each department serves a specific function as a distinct organizational unit of government within the given fund. Its primary purpose is to facilitate organizational and budgetary accountability. DEPRECIATION:Expiration in the service life of capital assets attributable to wear and tear, deterioration, action of the physical elements, inadequacy, or obsolescence. DEPUTY REGISTRAR (DMV):City service of processing state-issued licenses for motor vehicles and equipment, such as license plates and tabs for cars, trucks, trailers, and recreational vehicles. DISTINGUISHED BUDGET PRESENTATION AWARDS PROGRAM:A voluntary awards program administered by the Government Finance Officers Association to encourage governments to prepare effective budget documents. ENTERPRISE FUND:A proprietary fund type used to report an activity for which a fee is charged to external users for goods or services. In theory, these funds operate in a manner similar to private business enterprises, where the intent of the governing body is to recover the cost of delivering services through user fees or charges (Water, Sewage, Liquor, Deputy Registrar, and Fiber Optic funds). ESTIMATED MARKET VALUE:Represents the selling price of a property if it were on the market. Estimated market value is converted to tax capacity before property taxes are levied. EXPENDITURE:For accounts kept on the accrual or modified accrual basis of accounting, the cost of goods received or services rendered whether cash payment have been made or not. Where accounts are kept on a cash basis, expenditures are recognized only when the cash payments for the above purposes are made. FIBERNET MONTICELLO (FNM):The name of the city-owned fiber optic network, which provides internet, phone, and cable television to residents and businesses of Monticello. FIDUCIARY FUND:A fund classification used to report assets held in a trustee or agency capacity for others and therefore cannot be used in the government’s own programs. FINES:Revenues from penalties imposed for violation of laws or regulations. FISCAL POLICY:A government’s policies with respect to revenues, spending, and debt management as these relate to government services, programs, and capital investment. Fiscal Policy provides an agreed-upon set of principles for the planning and programming of budgets and their funding. FISCAL YEAR:The budget and accounting year that begins on the first day of January and ends on the last day of December of each year. 262 FULL TIME EQUIVALENT (FTE):The number of employee hours (2,080) needed to be equal to one full time employee. Several part time employees may be combined to make one FTE. FUNCTION:A group of related activities aimed at accomplishing a major service or regulatory program for which the government unit is responsible. FUND:A fiscally independent accounting entity with a self-balancing set of accounts recording cash and/or other resources together with all related liabilities, obligations, and reserves, which are segregated for the purpose of carrying on specific activities or attaining certain objectives. FUND BALANCE:Governmental fund assets minus liabilities. GENERAL FUND:Accounts for the general operation of the city and all financial resources except those to be accounted for in another fund. GENERAL GOVERNMENT:A set of accounts, to which the expenditures for operating the city are charged. GENERAL OBLIGATION BONDS:Bonds for which the government pledges its full faith and credit to the repayment of the bonds principal, including interest. GOAL:A statement of broad direction, purpose, or intent based on the need of a community. A goal is general and timeless; that is, it is not concerned with a specific achievement in a given period. GOVERNMENTAL ACCOUNTING:The composite of analyzing, recording, summarizing, reporting, and interpreting the financial transactions of governmental units and agencies. GOVERNMENTAL FUND TYPES:Funds generally used for tax-supported activities. Under current GAAP, there are five governmental fund types in this: general, special revenue, debt service, capital projects, and permanent funds. The city has no permanent funds. GRANT:A contribution of assets by one governmental unit or other organization to another. Grants are usually made for specified purposes. HOMESTEAD AND AGRICULTURAL CREDIT (HACA):A form of state-paid property tax relief for farm property and owner-occupied homes. HOUSING AND REDEVELOPMENT ACT – SPECIAL BENEFIT LEVY:Property tax levied against the city’s taxable market value. The HRA levy limit is .0185% of the taxable market value and must be used solely for redevelopment purposes. IMPROVEMENT BONDS:Bonds payable from the proceeds of special assessments from properties benefiting from an improvement. 263 IMPROVEMENTS:Buildings, structures, and other attachments or annexations to land which are intended to remain so attached or annexed, such as sidewalks, trees, drains, and sewers. INFRASTRUCTURE:The basic physical and organizational structures and facilities (e.g., buildings, roads, bridges) needed for the operation of the city. Infrastructure thus consists of improvements with significant cost to develop or install that return an important value over time to the city. INTERFUND TRANSFERS:See operating transfers. INTERGOVERNMENTAL REVENUES:Revenues from other governments in the form of grants, entitlement, or shared revenues. INTERNAL SERVICE FUNDS:A proprietary fund type used to report activity that provides goods or services to other funds, departments, or agencies of the primary government and its component units, or to other governments, on a cost-reimbursement basis. INVESTMENTS:Securities held for the production of income in the form of interest. LEVY:(Verb) To impose taxes, special assessments, or service charges for the support of governmental activities. (Noun) Taxes, special assessments, or service charges imposed by a governmental unit. LEVY LIMIT:The city’s maximum property tax levy without special authorization as defined by Minnesota State Statue. LICENSE REVENUES:Revenues received from the sale of business and non-business licenses. LINE ITEM:A specific item or group of similar items defined by detail in a unique account in the financial records. LOCAL GOVERNMENT AID (LGA):Intergovernmental revenue from the state to municipalities to help fund general expenditures. LONG-TERM DEBT:Debt with a maturity of more than one year after the date of issuance. MAINTENANCE:The upkeep (repairs and maintenance) of physical properties in condition for use or occupancy. MARKET VALUE:The value a property is worth. MARKET VALUE HOMESTEAD CREDIT (MVHC):State paid property tax reduction on owner occupied homes based on the property’s market value. MARKET VALUE EXCLUSION (MVE):Provision in the state property tax system which exempts or removes a portion of a property’s market value from property taxes. 264 MISCELLANEOUS:Revenues or expenditures not classified in any other revenue or expenditure category. MODIFIED ACCRUAL BASIS:The basis of accounting under which expenditures other than accrued interest on general long-term debt are recorded at the time liabilities are incurred and revenues are recorded when received in cash except for material and/or available revenues, which should be accrued to reflect properly the tax levied and revenue earned. NONSPENDABLE FUND BALANCE:Amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Nonspendable fund balances typically include inventory, prepaid items, and land held for resale. OBJECT OF EXPENDITURE:Expenditure classifications based upon the types or categories of goods and services purchased. OBJECTIVE:Desired output-oriented accomplishments, which can be measured and achieved within a given time frame. OPERATING BUDGET:A financial plan that estimates revenues and expenditures for a specified period. OPERATING EXPENSE:The cost for personnel, materials, and equipment required for a department to function. OPERATING REVENUE:Monies received from ongoing operations. Operating revenues are used to pay for day-to-day services. OPERATING TRANSFERS:Amounts transferred from one fund to another, shown as an expenditure in the originating fund and a revenue in the receiving fund. ORDINANCE:A formal legislative enactment by the City Council. PAY-AS-YOU-GO BASIS:A term used to describe a financial policy by which capital outlays are financed from current revenues rather than through borrowing. PERFORMANCE MEASURE:See Service Levels. PERSONNEL SERVICES:Expenditures for salaries, wages, and fringe benefits of employees. PROGRAM:A group of related activities performed by one or more organizational units for the purpose of accomplishing a function for which the governmental unit is responsible. PROJECT:A plan of work, job assignment, or task. PROPRIETARY FUNDS:Funds focusing on the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. There are two types of proprietary 265 funds: enterprise funds and internal service funds. For this report, these funds have the same budgetary basis as governmental funds. PUBLIC SAFETY:Expenditures related to the protection of persons and property. PUBLIC WORKS:Expenditures for the maintenance of city property and infrastructure. PURPOSE:A broad statement of the goals, in terms of meeting public service needs, that a department is organized to accomplish. REFUNDING BONDS:Bonds issued to redeem outstanding (unpaid) debt. REIMBURSEMENT:Cash or other assets received as a repayment of the cost of work or services performed or of other expenditures made for or on behalf of another governmental unit or department or for an individual, firm, or corporation. RESERVE:An account which records a portion of the fund balance which must be segregated for some future use and which is, therefore, not available for further appropriation or expenditure. RESOLUTION:A special or temporary order of a legislative body; an order of a legislative body requiring less legal formality than an ordinance or statute. RESOURCES:The actual assets of a governmental unit, such as cash, plus contingent assets such as estimated revenues applying to the current fiscal year not accrued or collected, and bonds authorized and not issued. RESTRICTED FUND BALANCE:Fund balance should be reported as restricted when constraints placed on the use of resources are either: a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or b) imposed by law through constitutional provisions or enabling legislation. REVENUE:The term designates an increase to a fund's assets which: 1) does not increase a liability; 2) does not represent a repayment of an expenditure already made; 3) does not represent a cancellation of certain liabilities; and 4) does not represent an increase in contributed capital. REVENUE BOND:A bond that is backed by a particular revenue source such as water user fees, typically accounted for in proprietary fund types. SERVICE LEVELS:Data to determine how effective/efficient a program is in achieving its objective. SPECIAL ASSESSMENT:A compulsory levy made by a local government against certain properties to defray part or all of the cost of a specific improvement or service which is presumed to be of general benefit to the public and of special benefit to such properties. SPECIAL REVENUE FUND:A governmental fund type used to account for revenue derived from specific revenue sources that are legally restricted or committed for specific purposes. 266 TAX CAPACITY:The valuation of property based on market value and statutory class rates. The property tax for each parcel is based on its tax capacity. The total tax capacity of all individual parcels is the basis for determining the tax capacity rate. TAX CAPACITY RATE:Tax rate applied to tax capacity to generate property tax revenue. The rate is obtained by dividing the property tax levy by the available tax capacity. TAX INCREMENT FINANCING (TIF):Financing tool originally intended to combat severe blight in areas, which would not be redeveloped without government subsidies derived from locally generated property tax revenues. TAX LEVY:The total amount to be raised by general property taxes for the purpose stated in the resolution certified to the county auditor. See levy also. TAXABLE MARKET VALUE:The market value of a property less the market value exclusion. This is the value used to calculate property taxes on a property. TAXES:Compulsory charges levied by a governmental unit for the purpose of financing services performed for the common benefit. TOTAL TAX CAPACITY:The amount computed by first totaling the tax capacities of all parcels of property within a city. Adjustments for fiscal disparities, tax increment, and a portion of the powerline value are made to this total since not all tax capacity is available for general tax purposes. TRUST FUND:A fund consisting of resources received and held by the governmental unit as trustee, which is to be expended or invested in accordance with the conditions of the trust. UNASSIGNED FUND BALANCE:This is the residual classification for the General Fund. This is fund balance that has not been reported in any other classification. The General Fund is the only fund that can report a positive unassigned fund balance. Other governmental funds would report deficit fund balances as unassigned. UNBALANCED BUDGET:A budget in which undesignated fund balance or reserves are used or increased, in order to balance estimated revenues to estimated expenditures or expenses. UNRESTRICTED FUND BALANCE:The portion of a fund’s balance that is not restricted for a specific purpose and is available for general appropriation. USER FEE:The service charge for delivering a specific service to one benefiting party. WORKLOAD DATA:A unit of work to be done. 267 ACRONYMS CAFR Comprehensive Annual Financial Report CD Certificate of Deposit CIP Capital Improvement Plan CP Commercial Paper CPI Consumer Price Index DMV Department of Motor Vehicle or Deputy Registrar EDA Economic Development Authority MVE Market Value Exclusion EMV Estimated Market Value FHLB Federal Home Loan Bank FNM FiberNet Monticello FNMA Federal National Mortgage Association FTE Full Time Equivalent GAAP Generally Accepted Accounting Principles GASB Governmental Accounting Standards Board GFOA Government Finance Officers Association GO General Obligation HACA Homestead and Agricultural Credit Aid HRA Housing and Redevelopment Authority HVAC Heating, ventilation, and air conditioning LGA Local Government Aid MCC Monticello Community Center MPFA Minnesota Public Facilities Authority MVHC Market Value Homestead Credit SAC Sewer Availability Charge SY Square Yard TIF Tax Increment Financing WAC Water Availability Charge 268 Back Cover