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HomeMy WebLinkAbout05-21-18 City Commission Packet Materials - A4. FY19 Budget Work Session - Special Revenue Sessions Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Kristin Donald, Finance Director Anna Rosenberry, Assistant City Manager Andrea Surratt, City Manager SUBJECT: Fiscal Year 2019 (FY19) Budget Work Session Special Revenue Funds MEETING DATE: May 21, 2018 AGENDA ITEM TYPE: Action Item – Budget Work Session RECOMMENDATION: Listen to staff presentations, ask questions, give direction, as you see fit. BACKGROUND: Attached are a budget worksheets and other materials regarding a portion of our Special Revenue Funds. One Special Revenues Fund, the Community Development Fund, will be discussed in the budget work session on June 11th. This information has been prepared to assist us in developing the City’s Final Budget, and is based on what is contained in the FY19 City Manager’s Recommended Budget, available at http://www.bozeman.net/government/finance/budget-and-financial-reports. Special Revenue funds are begin on page 32 of the fund summaries section. Based on feedback during this work session, and other work sessions held this spring, we intend to prepare the Final Budget resolution. The hearing for adoption of the Final Budget is scheduled for June 25, 2018. SPECIAL REVENUE FUNDS: We will be reviewing the details of the following four funds tonight: 1. Street Maintenance Fund 2. Arterial and Collector District Fund 3. Street Impact Fee Fund 4. Tree Maintenance (Forestry) Fund 5. Building Inspection Fund 6. Workforce Housing Fund 544 FISCAL EFFECTS: Although the Final Budget adoption has far-reaching fiscal effects, there are no immediate fiscal effects as a result of this work session. The funds discussed tonight have proposed budgets with changes in rates and fees that will affect all property owners in Bozeman. The Worksheets outline these effects in detail. As presented, the City Manager’s Recommended Budget is projected to have the following effects on the typical City residential property, with areas affected by tonight’s Special Revenue Funds highlighted in yellow. Attachments: FY19 Special Revenue Budget Worksheets On File: City Manager’s Recommended Budget for FY19 Report compiled on: May 10, 2018 FY18 Approved FY19 Recommended FY 19 Recommended increase % Change Street Assessment 198.02 207.92 9.90 5.0% Arterial Street Assessment 69.11 51.78 (17.33) -25.1% Tree (Forestry ) Assessment 22.48 23.61 1.13 5.0% Property Taxes 711.10 722.49 11.39 1.6% Storm Water Services 70.92 70.92 - 0.0% Water Service 516.24 TBD TBD Sewer Services 606.72 TBD TBD 5.09$ 0.42$ Total Annual Increase Pending Water/ Sewer rates Monthly Increase 545 Special Revenue Fund Work Session Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specific purposes. The revenue is generated in different ways; some have special assessments on property, some are funded by charges for services, and some are funded through grants or donations. Details for Special Revenue funds begin on page 32 of the Recommended Budget. The City has many special revenue funds. Areas that we will highlight tonight are funded by annual assessments, support a significant number of staff, and/or have relatively large budgets. Street Maintenance Fund The Street Maintenance fund relies on special assessments for revenue generation to pay for street maintenance and reconstruction. Revenue This year we are recommending a 5% increase, resulting in an annual assessment of $207.92 for the average-sized lot. Below is a chart showing the amount of assessment rate increases since FY14: Expenditures The following shows the spending areas in the Recommended Budget for the Street Maintenance Fund. Roughly a third of our spending will be on street maintenance related capital improvements. Operating costs, which include materials related to street maintenance activities, comprise 34% and Personnel (including increases related to Staffing Plan recommendations) total 30% of the recommended expenditures. 546 The following page contains a 5-Year Projection also details the estimated revenues, expenditures, and reserve levels for the Street Maintenance fund. Personnel 29% Staffing Plan 1% Operations34% Debt Service, incl Intercap 6% Approved CIP *with adjustments30% Street Maintenance 547 Street Maintenance District - 5 year Projection FY2019 Budget Preparation Approved Projected Projected Projected Projected Projected Customer Increase - sq ftg 2%2%2%2%2%2% Rate Increase - General 6%5%10%10%5%0% Rate Increase - Added Maintenance 11%0%0%0%0%0% Rate Increase - Street Reconstruction 0%0%0%0%0%0% 17.0%5.0%10.0%10.0%5.0%0.0% General Street Maintenance FY18 FY19 FY20 FY21 FY22 FY23 Proportional Assessment Share 85.0%85.0%85.0%85.0%85.0%85.0% Beginning Fund Balance - Projected 439,721 308,611 138,168 (673,697) (886,389) (189,865) Estimated Revenues: Assessments: Undesignated 3,752,390 4,006,990 4,482,619 5,014,706 5,354,954 5,445,988 Assessments: Added Maintenance 1,026,782 1,026,782 1,026,782 1,026,782 1,026,782 1,026,782 Street Cut Permits 17,500 18,000 18,000 18,000 18,000 18,000 Interest Earnings 10,000 10,000 10,000 10,000 10,000 10,000 Penalty & Interest 11,000 11,500 11,500 11,500 11,500 11,500 Other Revnue 10,000 Total Estimated Revenues:4,817,671 5,083,271 5,548,901 6,080,988 6,421,235 6,512,270 Proposed Expenditures: Personnel 1,563,694 1,539,731 1,570,526 1,601,936 1,633,975 1,666,654 Staffing Plan 55,780 43,500 - - - Staffing plan PW allocation FY20 and 21 79,224 33,507 - - Operations 1,592,207 1,760,397 1,813,209 1,946,829 2,038,741 2,099,903 Debt Service, incl Intercap 295,207 315,207 315,207 315,207 315,207 315,207 Approved CIP *with adjustments 1,497,673 1,582,600 2,539,100 2,396,200 1,736,789 1,291,100 Increase Pavement Mtc Total Proposed Expenditures:4,948,781 5,253,715 6,360,766 6,293,679 5,724,712 5,372,865 Ending Fund Balance - Projected 308,611 138,168 (673,697) (886,389) (189,865) 949,540 Street & Curb Reconstruction FY18 FY19 FY20 FY21 FY22 FY23 Accumulated Assessment Amount 15.0%15.0%15.0%15.0%15.0%15.0% Beginning Designated Fund Balance - Projected 54,743 39,149 40,097 49,971 54,889 61,872 Estimated Revenues: Assessments Designated: Reconstruction & Curbs 684,405 696,426 709,874 724,918 740,983 757,321 Proposed Expenditures: Transfers to Construction Fund 700,000 695,478 700,000 720,000 734,000 734,000 Ending Designated Fund Balance - Projected 39,149$ 40,097$ 49,971$ 54,889$ 61,872$ 85,193$ Reserve Policy: 45 build Day Operating Reserve (15,25,25, 30,45)150,868$ 261,758$ 266,951$ 327,774$ 503,231$ -$ 150,868$ 261,758$ 266,951$ 327,774$ 503,231$ diff -$ 27,397$ (885,484)$ (1,098,451)$ (455,768)$ 531,501$ Total Annual Assessments: Small Lot, 5,000 sq ft.131.99$ 138.59$ 152.45$ 167.69$ 176.07$ 176.07$ Average Lot, 7,500 sq ft.198.02$ 207.92$ 228.71$ 251.58$ 264.16$ 264.16$ Large Lot, 10,000 sq ft.264.02$ 277.22$ 304.95$ 335.44$ 352.21$ 352.21$ Capped Residential, 15,000 sq ft.396.03$ 415.83$ 457.42$ 503.16$ 528.32$ 528.32$ 548 Personnel – We are recommending the reduction of a short-term worker and adding a full time Service Worker. Due to our existing labor contract and medical benefit inflation, we expect personnel costs for existing staff levels to increase slightly in the coming years. Operations- Operational costs have gone up by 10.5% from last year’s budget and the large increase are due to the factors listed below: • Road Supplies 39%, increase of $50,000. Increase in sanding materials. • Repair Equipment 11%, increase of $20,000. Replace a hydraulic system on a 20-year-old dump truck. • Water Service 36%, increase of $4,000. Increase in water use with more sweeping and cleaning. • Contractors 56%, $30,000. Start graffiti removal program using a contractor. • Advertising 48%, $39,200. Increase, and moved some outreach contracted services from prior yrs. • Administrative Overhead: 80%, increase of $210,000, including for Public Works Administration. Capital Expenditures - Capital expenditures are based on the CIP and the CIP shows the Gas tax capital expenditures as well that is managed by the Streets Department but accounted for in the Gas Tax fund. CIP PROJECT FUND PROJECT NUMBER PROJECT NAME FY19 Street Maintenance Fund STR50 Plows $12,000 Street Maintenance Fund STR76 Downtown Bozeman Creek Culvert Assessment $15,000 Street Maintenance Fund STR01 Replace #1539 - 2WD 1990 Ford Ranger $16,000 Street Maintenance Fund PW05 Public Works Shops Master Plan $20,000 Street Maintenance Fund STR20 Annual Bike Path Improvements $25,000 Street Maintenance Fund STR49 Sanders $27,000 Street Maintenance Fund STR83 N. 27th Median Landscaping and Irrigation from Oak to Baxter $40,000 Street Maintenance Fund STR01 Replace #2749 - 1997 Ford 1 Ton Manual Transmission F350 $45,000 Street Maintenance Fund STR80 Utility Terrain Vehicle $55,000 Street Maintenance Fund STR77 Oak and 7th Intersection Upgrade $60,000 Street Maintenance Fund STR82 Lease Motor Grader (170,00 to 35K to lease)$35,000 Street Maintenance Fund STR79 Sign Making Machine $60,000 Street Maintenance Fund STR75 Annual Pedestrian Ramp Replacement Program $100,000 Street Maintenance Fund STR89 Spray Patch Truck $250,000 Street Maintenance Fund STR71-19 Street Improvements - Maintenance & Rehabilitation (Mill & Overlay) - FY19 $554,500 Street Maintenance Fund $1,314,500 549 Street Arterial & Collector District Fund The Arterial & Collector District fund is a relatively new fund created to assist with funding maintenance of Arterial & Collector Streets across town. With the passing of the new gas tax, we are reducing the assessment by the amount of the City’s gas tax allocation. This will reduce the assessment by 28% in FY19. The average lot will see a reduction in their annual fee from $68.97 to $51.78. Based on the Capital Improvement Plan and our projections with growth, there may need to be small increases later in FY22 and FY23 (depending on future the gas tax collections.) Capital Expenditures - Capital expenditures are based on the CIP and are listed in the following table. CIP PROJECT FUND PROJECT NUMBER PROJECT NAME FY19 Arterial & Collector Streets A&C004 Oak & 7th Restriping $60,000 Arterial & Collector Streets SIF109 Oak (Rouse through Cannery District) - Construction*$133,000 Arterial & Collector Streets SIF058 Oak & N 27th (Intersection Improvements) - Design & Construction $200,000 Arterial & Collector Streets SIF108 S 3rd and Graf (Intersection Improvements) - Construction $300,000 Arterial & Collector Streets SIF121 Baxter & Davis (Intersection Improvements) - Roundabout Construction $500,000 Arterial & Collector Streets SIF062 Durston (Fowler to Ferguson) - Construction $760,000 Arterial & Collector Streets SIF085 Baxter (7th to 19th) - Construction $1,500,000 Arterial & Collector Streets Total $3,453,000 550 Street Impact Fee Fund This special revenue fund accounts for the collection and expenditures associated with street-system capacity expansion. Currently there is an impact fee study underway to update the impact fee charges for the City. For budget purposes, revenues are estimated using the same assumptions as the CIP: the average of last three years of revenue trends. Expenditures budgeted are those that were approved in the FY19 Capital Improvement Plan. CIP PROJECT FUND PROJECT NUMBER PROJECT NAME FY19 Impact Fees Streets SIF109 Oak (Rouse through Cannery District) - Construction $133,000 Impact Fees Streets SIF139 Oak (Flanders Mill to Ryun Sun Way) - Design $150,000 Impact Fees Streets SIF140 Oak (Cottonwood to Flanders Mill) - Design $180,000 Impact Fees Streets SIF001 Annual Right Of Way Acquisition $250,000 Impact Fees Streets SIF137 Cottonwood (Durston to Oak) - Design $250,000 Impact Fees Streets SIF141 Cottonwood Road, Oak to Baxter - Design $250,000 Impact Fees Streets SIF133 Griffin (7th to Rouse) - Design $400,000 Impact Fees Streets SIF062 Durston (Fowler to Ferguson) - Construction $760,000 Impact Fees Streets SIF058 Oak & N 27th (Intersection Improvements) - Design & Construction $800,000 Impact Fees Streets SIF108 S 3rd and Graf (Intersection Improvements) - Construction $1,200,000 Impact Fees Streets SIF121 Baxter & Davis (Intersection Improvements) - Roundabout Construction $2,000,000 Impact Fees Streets Total $6,373,000 551 Tree Maintenance (Forestry) Fund The Tree Maintenance fund accounts for special assessment revenues collected and expended for tree maintenance program activities. In previous years, we raised the assessment by 15% increments so that we could achieve some of the goals listed in the Urban Forestry Management Plan. To continue those efforts and to build a reserve for capital items, we are recommending a 5% increase to the assessment in FY19. The following table shows the Tree Maintenance Fund five-year projections, including reserve calculations. We recommend moving towards a higher reserve for capital equipment. Revenues - The 5% increase for the average lost would increase from $22.48 to $23.61. Total revenues are estimated at $692,073. Expenditures- Expenditures for the fund increased by 13% overall. Personnel cost increased by 3% and operations costs increased by 7%. Tree Maintenance District - 5 year Projection FY2019 Budget Preparation Approved Proposed Projected Projected Projected Projected Proposed Rate Increase 15%5%5%2%2%2% Estimated Growth in Assessable Sq Ftg 2%2%2%2%2%2% FY18 FY19 FY20 FY21 FY22 FY23 Beginning Fund Balance - Projected 328,339 313,475 251,119 221,764 321,032 286,570 Estimated Revenues: Assessments 682,373 730,821 782,710 814,331 847,230 881,458 Penalty and Interest 2,100 1,200 1,200 1,200 1,200 1,200 Interest Earnings 1,600 2,200 2,200 2,200 2,200 2,200 Sale of Cost-Share-Trees 6,000 3,000 2,500 2,500 2,500 2,500 Total Estimated Revenues:692,073 737,221 788,610 820,231 853,130 887,358 Proposed Expenditures: Existing Personnel 420,950 435,400 448,462 461,916 475,773 490,047 Operations -- 228,987 244,177 251,502 259,047 266,819 274,823 Capital 57,000 120,000 118,000 - 145,000 - Total Proposed Expenditures:706,937 799,577 817,964 720,963 887,592 764,870 Ending Fund Balance - Projected 313,475 251,119 221,764 321,032 286,570 409,058 Annual Assessments: Small Lot, 5,000 sq ft.14.98 15.73 16.52 16.85 17.19 17.53 Average Lot, 7,500 sq ft.22.48 23.61 24.79 25.28 25.79 26.30 Large Lot, 10,000 sq ft.29.98 31.48 33.05 33.71 34.39 35.08 Extra Large, 15,000 sq ft 44.96 47.21 49.57 50.56 51.58 52.61 Reserve Policy: General Capital reserve 65,000 70,000 85,000 90,000 90,000 Working Capital for Emerald Ash Incidents 100,000 100,000 100,000 100,000 100,000 100,000 45 Days Pers & Ops 80,129 83,783 86,297 88,886 91,552 94,299 180,129 248,783 256,297 273,886 281,552 284,299 552 Capital- The CIP originally planned for $140,000 to purchase a log loader and truck. Forestry has worked to partner with Solid Waste to purchase a truck that would serve both of their needs, reducing the cost to $120,000. 553 Building Inspection Fund The Building Inspection Fund is supported entirely by the revenue from building fees and permits. Revenues and expenditures are statutorily restricted to amounts that support the division. This fund is dependent on construction permits and activity in the City. By State law, we can have no more than 100% of annual expenditures in reserve in the fund at the end of the year. This proposed budget shows the FY19 ending reserve amount at 30% of FY19 annual expenditures. However, FY18 revenues are looking healthier than budgeted, making fund balance most likely higher than 30% at the end of FY19. Revenue- This budget estimate continues to be one of the most difficult to make because the majority of department revenues come from the spring and summer months, and they fluctuate according to actual construction plans. Expenditures- The Recommended Budget includes all of the existing department personnel plus the addition of a Building/Life Safety Specialist position and funding a quarter of the Code Compliance Manager. Excluding personnel costs (which is the largest area of the budget), a total Building Inspection Fund operating budget of $706,608 is proposed. Areas of interest or change this year include: • Moving to the new 2018 Code Cycle – purchase new code books - $15,000 increase • Computer hardware replacements due to age and increased staffing- $20,000 increase • Increased contract plan review due through 3rd party plan reviewers for structural and expedited plan review - $245,000 Capital- The capital projects include a vehicle for the new staff person and a portion of the Stiff Building remodel project (GF199) for a total of $251,681. 554 Community Housing Fund The Community Housing fund supports our affordable housing program. Affordable Housing efforts are part of our Strategic Plan and an identified priority for FY19. To assist in meeting program goals in the future, the City Manager recommends that one-time monies from the General Fund in the amount of $210,488 (2 mill equivalent) be transferred into the fund. Below are the revenues, expenditures and fund balance estimates from FY17 thru FY19: The following is the detail of the graph showing a healthy fund balance that can be further appropriated based on the developing affordable housing plan. For FY19, we are asking that the $200,000 of Down Payment Assistance and Impact Fee Reimbursement incentives be approved administratively by the Community Development Director and the Affordable Housing Coordinator. Currently, we are bringing approval of those payments back to the Commission on a case-by-case (individual property) basis. We believe we now have the staff and a solid Affordable Housing Plan structure that allows for administrative approval of those incentives. 555 Workforce Housing Funding Within the Community Housing Fund Actual Approved Recommended 3 Mills 3 Mills 3 Mills FY17 FY18 FY19 Beginning Balance 583,543 564,724 556,409 Revenues: General Fund Transfer 210,488 Dedication of Tax Revenue 260,687 303,585 315,732 Interest Earnings 4,401 3,000 4,000 Loan Principal Repayments 494 9,500 9,500 Total Estimated Revenues:265,582 316,085 539,720 Expenditures: Road to Home - Administration 40,000 40,000 40,000 HRDC - West Edge Project Downpayment Assistance HRDC Administration of Revolving Loan Fund 14,400 14,400 14,400 Workforce Housing Ordinance Development/Update Support for Low Income Housing Projects (offset Impact Fees) Remainder of CAHAB Support not contained in Fund 121 (to total $14,400/yr) GMD - Project Assistance Administrative Costs 230,001 70,000 87,458 Affordable Housing Action Plan Update 30,000 Impact Fees For Home Purchase Impact Fees For Rental Housing Emergency Shelter Down Payment Assistance 200,000 200,000 Total Proposed Expenditures:284,401 324,400 371,858 Ending Fund Balance 564,724 556,409 724,271 556