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HomeMy WebLinkAboutBudget Discussion - Enterprise and Special Revenue Funds COMMISSION MEMORANDUM REPORT TO: Honorable Mayor and City Commission FROM: Anna Rosenberry, Finance Director Chris Kukulski, City Manager SUBJECT: FY10 Budget Discussion – Enterprise and Special Revenue Funds MEETING DATE: July 20, 2009 AGENDA ITEM TYPE: Action Item, 4-6pm RECOMMENDATION: Give staff direction on any changes to City Manager’s Recommended Budget for FY10, including changes to advertised rates for Water, Sewer, Streets, and Tree assessments. Rate hearings will be scheduled and any changes will be finalized in the Approved Budget for FY10. BACKGROUND: The City Manager’s Recommended Budget for FY2009-2010 (FY10) was made available to the Commission and the public on June 1, 2009 and a formal presentation was made on June 15, 2009. During that presentation, it was determined that a number of additional meetings would be held during the summer to better understand the elements of the proposed spending plans for the year. Attached is a more detailed discussion list for your review prior to the meeting. The presentation by staff will be brief and will primarily focus on the following funds: · Water Fund · Wastewater Fund · Solid Waste Fund · Parking Fund · Street Maintenance Fund · Tree Maintenance Fund · Planning Fund · Building Inspection Fund · Community Housing Fund · Recovery Act - ARRA Fund Questions regarding other city enterprise or special revenue funds are welcome. If those are forwarded to us prior to the meeting, we will be best prepared with answers that night. However, answers can be prepared for presentation at a later date, if necessary. 5 The City has received notice from the Montana Department of Revenue that taxable values will be delayed by at least 3 weeks this year. They estimate delivery of certified values in the last week of August. Based on this information, we estimate Final Appropriation and Tax Levy resolutions will adopted on September 14, 2009. FISCAL EFFECTS: The Approved Budget for FY10 has far-reaching fiscal effects. This discussion is meant to verify proposed rate increases and we move forward with rate hearing this summer. It is also meant to review the elements of Enterprise and Special Revenue Fund proposed budgets, prior to their final approval in September 2009. ALTERNATIVES: As suggested by the City Commission. Attachments: July 20, 2009 Budget Discussion List Street Curb/Ramp Work Summary Curb Condition Map Parking Commission “Increasing Parking Revenue” Memo Road Home Funding Request HB645 Local Government Grant Program Information ON FILE: City Manager’s Recommended Budget for FY10 Report compiled on: July 15, 2009 6 1 July 20, 2009 - FY 10 BUDGET DISCUSSION List 1. Water Fund – FY10 Expenditure Total $5.4 Million The CM Recommended Budget includes a proposed rate increase for FY10 = 3.2%. This amount is based on an updated rate study with a $40.7 million Treatment Plant project that begins in April 2011. The study tracks on what we have referred to as “Moderate” growth; 1% growth in accounts/sales and approximately $400,000 annually in impact fee revenues. Other budget-related factors: a. Teamster contract has not been finalized. b. The plant costs included in the rate study are based on our most recent project engineer’s estimate. For instance, if the project actually cost $45 million, rates should be set at 4.5% increases each year (assuming no other sources of revenue are found.) c. The rate study includes funding for the Vehicle Maintenance shop project at $451,000, plus $330,000 in FY09 Fill Station costs. d. Water sales were down this spring by approximately 3% total, due to wet weather in April, May and June. e. Impact fee revenues were more than twice what was estimated in the Moderate growth scenario. We will be asking the commission to adopt a 2-year rate resolution, FY10 increase of 3.2% and FY11 increase of additional 3.2%. Notices will be distributed in the utility bills in July and the Hearing will be on August 17th. 2. Wastewater Fund - FY10 Expenditure Total $20.7 Million (including construction) The CM Recommended Budget includes a proposed rate increase for FY10 = 10.2%. Like for the water fund, the study tracks on what we have referred to as “Moderate” growth. It also includes the effects of the following grants: · FFY09 Army Corps of Engineers - $178,000 · State of MT - TSEP - $500,000 · SRF Stimulus - $400,000 (partial loan, partial grant) Other budget-related factors: a. Teamster contract has not been finalized. b. We have not determined if any of the HB645 stimulus money will go towards this project. (See below, item #10.) c. Like the water fund, rates include funding for the Vehicle Maintenance shop project at $451,000. d. Impact fee revenues were more than twice what was estimated in the Moderate growth scenario. We will be asking the commission to adopt a 2-year rate resolution, FY10 increase of 10.2% and FY11 increase of additional 10.2%. Adopting two years of rate increases supports our 7 2 loan coverage requirements with the State Revolving Loan Fund. Notices will be distributed in the utility bills in July and the Hearing will be on August 17th. 3. Solid Waste Fund – FY10 Expenditure Total $2.7 Million Last year, we adopted a two-year rate resolution for solid waste fees. For FY10, solid waste fees increase 5% (implemented for July 1, 2009.) Also adding to revenues for FY10 (and in FY09, midyear) are revenues from servicing of the County Solid Waste District recycling sites. There was no proposed increase to curbside recycling fees at that time. Despite the rate increase and additional recycling program revenue from the County, we are estimating a small decline in total revenues collected in FY10, due to the low demand for roll-off container and dumpster rentals. Other budget-related factors: a. Teamster contract has not been finalized. b. Request for routing software has been removed for FY10. We are working internally on using our existing software for better customer management and route tracking. Depending on the results of the project, we may/may not recommend that that project be included for FY11. c. The curbside recycling program continues to be subsidized by the collection efforts in the following areas: administrative overhead (legal, IT, finance, commission, etc), insurance premium, building and vehicle storage space, and a subsidy of director, superintendent, and foreman, and substitute labor costs. d. By the end of FY09, total revenues were down, owing to declines in the demand for roll-off container services and rentals, and the late timing of the curbside recycling program start. 4. Parking Fund (City Parking Districts, including the Parking Garage facility) – FY10 Expenditure Total $444,000 Without assuming any operational changes, the CM Recommended Budget has the Parking Fund with an operating deficit of ($66,690) for FY10. They have also ended FY09 with an operating deficit of a similar amount. Given the uncertainty of Garage operational costs and demand for space in the facility, we knew that the first years of budgeting would be difficult. At the time that budget was presented, we committed to working with the Parking Manager and the Parking Commission on finding ways to address this financial problem and bring forward a balanced budget for final approval. Problems that continue to significantly affect the finances of the Parking Fund are: a. Turnover of Parking Enforcement Officers. b. Recent significant decrease in demand for downtown parking permits. c. Operating Expenses of the Garage, difficult to estimate with only 3 months of spring- time operation. 8 3 At their July 9, 2009 meeting, the Parking Commission discussed a detailed list of changes to parking operations, which is attached for your review. They scheduled a meeting on July 23, 2009 to take further action on the items listed. 5. Street Maintenance Fund – FY10 Expenditure Total $2.1 Million The CM Recommended Budget includes a proposed assessment increase for FY10 = 2%. During budget presentations, the Commission requested more information on funding a plan for replacing deteriorating curbs and boulevards/medians around town. Attached is a report of the curb and ramp replacements that have been completed in since FY04, totaling over $355,000 in improvements. In FY09, curbs and ramps along S. 9th and Alderson were repaired as well as some miscellaneous repairs on S. Bozeman, S. Black, and E. Lincoln. The 2001 Pavement Management Survey identified 9.78 miles rated in poor condition, and nearly as much (8.24 miles) in fair condition. Curbs have a long useful life, easily over 50 years. The curb condition map is attached. Replacement of the curb on both sides of a street width (600 lineal feet) and the associated pedestrian ramps costs approximately $40,000/block. The proposed budget includes the following for curb/ramp replacement: Source Amount Street Maintenance Fund $20,000 Gas Tax Fund $50,000 TOTAL FY10 Recommended Budget $70,000 Or 1.75 blocks curbs/ramps (1,050 lineal feet) For each additional 1% increase is Street Maintenance Assessments, $21,000 will be raised in FY10. If an additional 2% ($42,000) were added in FY10, it would take us over 31 years to replace all of the curbs in poor condition (not including keeping up with inflation in construction costs.) If an additional 2% was also added in FY11, that calculation would drop to 22 years to replace. Curb in Poor Condition: 9.78 miles 51,638.40 lineal feet of curb $ 66.66 FY10 cost per lineal foot $ 3,442,215.74 Total FY10 cost to repair $ 112,000.00 FY10 with Additional Funding of 2% 31 Years to repair w/o inflation costs 9 4 Streets and Engineering would suggest focusing on streets that are snow routes or other important arterial, collector or local streets that function like collectors (i.e. Olive, Lamme, Story) that are in need of re-paving. Areas in need of sewer or water re-hab would need to be bypassed. Street Maintenance Assessment increases will be noticed in July and August, with the public hearing scheduled for August 10th. (Statutes require an annual assessment hearing, so we are not able to adopt multi-year rate resolutions.) 6. Tree Maintenance Fund – FY10 Expenditure Total $596,000 The CM Recommended Budget recommends no increase for Tree Maintenance Assessments. This includes $100,000 for the Vehicle Maintenance/Shop project. Tree Maintenance Assessment amounts will be noticed in July and August, with the public hearing scheduled for August 10th. (Statutes require an annual assessment hearing, so we are not able to adopt multi-year rate resolutions.) 7. Planning Fund – FY10 Expenditure Total $777,000 The CM Recommended Budget includes Planning Fee revenues of $213,000, or $17,750/month. It also includes a General Fund subsidy of $348,000, down from the FY09 subsidy of $398,000. Planning has proposed to maintain current staffing levels, which were decreased by 1.5 FTE during FY09 and 4.0 FTE in FY08. During FY09 budget preparation, the issue of the workload related to administration of the Workforce Housing Ordinance was discussed due to the fact that the work had shifted when the Workforce Housing Administrator position was eliminated. Planning staff committed to monitor the actual related work during the year. During FY09, there was very little existing planning staff time spent on implementation of the Workforce Housing Ordinance. This was due primarily to the fact that no applications were received that qualified under the ordinance. It is anticipated that in FY10 there may be some level of WHO effort if the Norton East Ranch submits their final plat. Planning Fund FY09 Actual* FY10 Budget Revenues $880,000 $790,000 Expenditures $746,000 $777,000 Surplus/(Deficit) $134,000 $13,000 *estimated year-end. Related issues: a. Due to the fact that the FY09 General Fund contribution of $398,000 covered 54% of the costs of the Planning Department, and covered a $78,000 deficit from FY08, we recommend transferring any surplus in the Planning Fund to the General Fund in the process of closing the books for FY09. 10 5 b. We propose that Quarterly Reports for the Planning Fund continue to be presented for Fiscal Year 2010; unless operational/budget problems are encountered, the report will be put on the Commission’s Consent agenda. c. Planning Fees were set based on a cost study performed by AZ & Company in mid- 2008. With increases in the hourly cost of personnel, an increase in the fees should be considered this August or September. 8. Building Inspection Fund – FY10 Expenditure Total $861,000 The CM Recommended Budget includes Building Inspection revenue of $869,100, or $72,425/month. This closely mirrors the average monthly revenue for FY09. The Building Inspection Division has laid-off additional workers since March, and will be submitting a 4th Quarter Report to the Commission soon. Building Inspection Fund FY09 Actual* FY10 Budget Revenues $870,000 $869,000 Expenditures $1,021,000 $861,000 Surplus/(Deficit) ($151,000) $8,000 Related issues: a. During the FY09, the desired level of Building Inspection Fund reserve was discussed at length. We were targeting a reserve no less than 50% of annual expenditures. For FY10, that amount would be $430,500. The reserve is estimated at $587,000 at the end of FY09 (which was 57% of FY09 expenditures.) b. Quarterly Reports will be prepared and submitted in the same manner as Planning Fund reports, as described above. 9. Community Housing Fund – FY10 Expenditure Total $40,000 The CM Recommended Budget includes 1 mill (estimated at $76,403) for Workforce Housing efforts. We have received one request for funding from Road to Home, in the amount of $40,000 (letter attached.) 10. Recovery Act, ARRA Fund – FY10 Expenditure Total $796,500 This fund was established to account for stimulus (American Reinvestment and Recovery Act) dollars that are not accounted for in other project funds. This fund includes: Recovery Act, ARRA Fund Energy Efficiency & Conservation Block Grants (EECBG) $175,500 Montana HB645 Allocation – Dedicated to City Vehicle Maintenance/Shop Project $277,000 Montana HB 645 Allocation – Undetermined $344,000 Total – FY10 $796,500 EECBG: The plan for spending EECBG dollars has been submitted to the State, according to our public hearing that was held in June. 11 6 MT HB645: The Commission instructed staff to move forward with the City Vehicle Maintenance/Shop project, which included $277,000 in HB645 funding. We need to determine where the final $344,000 of that allocation will be spent. The money must be spent by September 30, 2010 or it reverts back to the State General Fund. The Governor’s office has agreed to let us amend our original projects, since those proposals were submitted under a VERY tight timeframe. A full listing of eligible projects can be found on the HB645 Local Infrastructure Grant Program (attached, page 2 of 4) Bozeman eligible projects currently include: water system treatment project, water reclamation facility -- water treatment plant design, recreation facility improvements, sidewalks and restroom upgrades in parks, and debris removal. 12 Curb/Ramp Work 2005‐2009Description Total Cost (curbs/ramps only) LF of Curb Replaced Ped. Ramps installed (# of corners)FY 2004 Curb/Ramp Project $68,546 590 20(E. Olive/S. Black)FY 2006 Curb/Ramp Project $77,962 1332 10(Westlake Park, S. Tracy, W. Cleveland) (Note: 740 LF was newcurb along N. 5th)FY 2007 Curbs and Walks Project $58,920 724 4(Curtiss St.)FY 2009 Curb/Ramp Project $78,575 1526 9(S. 9th and Alderson)2009 Misc. Curbs/Ramps $27,167 240 10(S. Black, S. Bozeman, E. Lincoln)S. Willson $18,136 286 0(Downtowner Mall)W. Olive/Tamarack & Wallace $20,126 247 3Miscellaneous Spot Repairs 2005‐2008 $6,090 118 2Totals $355,522 5,063 5813 14 15 16 GOVERNOR BRIAN SCHWEITZER Home » Commerce » Local Government Grant Program House Bill 645 Local Government Infrastructure Grant Program House Bill 645, the Montana Reinvestment Act passed by the 2009 Legislature, provided: z $10 million in infrastructure grants for counties and z $10 million for cities and towns You can click on the appropriate link above to read the list of authorized projects and grant amounts for counties, cities, and towns as authorized in HB 645. All of us at the Department of Commerce are anxious to make these funds available as soon as possible for local projects that will put Montanans back to work addressing critical local needs, while stimulating both Montana's and the Nation's economy. We look forward to working with you to make your infrastructure project a success. Click on the links for other topics: z Procedure Used to Calculate Grant Amounts z Preparation of Contracts z Incurring Costs z Financial Management z Changing the Scope of a Project z Applicable State Laws and Regulations z Budget and Implementation Schedule z Name and Title of Signatory for the Grant z Reporting Requirements Applicable State Laws and Regulations All the standard state statutes and regulations will apply to the use of these funds, such as current laws for bidding thresholds and procedures, as well as applicable state prevailing wage laws. If local officials have questions on compliance issues, such as procurement, we suggest that they refer to the Administrative Manual for Treasure State Endowment Program (TSEP) projects, which provides a summary of the state requirements that apply to local infrastructure projects that are using state funds only. Please see: http://comdev.mt.gov/CDD_TSEP_AM.asp for the text of the TSEP Administrative Manual. Procedure Used to Calculate Grant Amounts There has been some confusion among local officials caused by the changes in the bill as it worked its way through the Legislature. As HB 645 left the House, it included a list of projects for all counties and municipalities with a specific dollar amount listed for the grant for each local government. The Senate struck the specific amount for each project and instead substituted alternate language that tied the allocations to each local government to the formula used by the Montana Department of Transportation to distribute gasoline taxes. The amounts of the final allocations for cities and towns and counties shown on this webpage may be different from the amounts that were included in earlier versions of HB 645 because of the application of this formula. In addition, HB 645 was amended to provide that “The department (of Commerce) may retain 1.13% of the amount of the grants to counties, cities, towns, tribal governments, and school districts for administrative purposes.” As a result, the initial allocation for each local government using the gas tax formula was reduced by 1.13% to provide funding for the administration of the local government grant program. The final figures in the Excel spreadsheets on this webpage reflect the adjustments for program administration by the Department of Commerce, as calculated by the Governor’s Office of Budget and Program Planning. Preparation of Contracts between Department of Commerce and Local Page 1 of 4Local Government Grants Program 7/15/2009http://recovery.mt.gov/commerce/localgrant/default.mcpx 17 Government The Department will need to prepare a contract with each local government prior to disbursing the funds. The contract will lay out all the financial and job creation reporting and compliance issues consistent with the requirements of the American Recovery and Reinvestment Act (ARRA). Each local government will need to provide a budget breakdown and implementation schedule using the fill-in the-blanks templates provided on this website). While these funds are not technically federal "stimulus" money but rather "freed-up state general fund" money, the Governor intends to assure that all the Montana Recovery Act projects comply with the spirit and intent of the American Recovery and Reinvestment Act (ARRA) for transparency and accountability. The contract will include required the monthly financial and job creation reporting and compliance issues consistent with the requirements of the ARRA. Department of Commerce staff hope to keep the contracting process as simple as we can since Department staff will have to prepare contracts for 185 counties and municipalities. Incurring Costs Department of Commerce Director, Anthony J. Preite, has authorized local governments to begin incurring eligible costs for their HB 645 projects as of May 14th, the date Governor Brian Schweitzer signed HB 645 and the law became effective. No costs related to a HB 645 local government grant can be incurred or reimbursed for activities that take place prior to that date. Funds will be provided to local governments once a contract for the grant is signed between the local government and the Department of Commerce. Financial Management A standard requirement for receipt of federal funds is that the recipient entity's financial management system must meet generally accepted accounting principles. For all local governments that are in compliance with the State's audit and annual financial reporting requirements, the Department of Commerce intends to disburse the HB 645 local government grant funds on a 90/10 basis: 90% of the local government’s HB 645 grant amount will be provided to the local government upon the signing of the contract by both parties: the balance will be sent when the local government has provided all the final reporting information required by the ARRA requirements. We believe that this is consistent with the Obama Administration's emphasis on transparency and accountability for the use of stimulus funds and Governor Schweitzer’s commitment to comply with the spirit of the ARRA. Changing the Scope of a HB 645 Infrastructure Project If local governments need to change the scope of work for their grant project from that specified in HB 645 (see Section 57 (3)(2)(c)i-vii, pages 45-48) the law outlines the procedure for that: 3) The governing body of a county, city, or town may choose to propose to the department of commerce an alternate project to those listed in subsections (2)(a) and (2)(b) based on the criteria in subsection (2) (c). If the alternate project meets the criteria in subsection (2)(c), the Department shall approve the project. The criteria of subsection (2)(c) include: (i) designing, erecting, repairing, and remodeling public buildings or making energy efficiency improvements to public buildings; (ii) designing, constructing, and repairing sewers, storm sewers, sewage treatment and disposal plants, waterworks, and reservoirs; (iii) designing, constructing, and repairing bridges, docks, wharves, breakwaters, and piers; (iv) designing, constructing, reconstructing, improving, maintaining, and repairing roads; (v) acquiring, opening, or widening any street and improving the street by designing, constructing, reconstructing, and repairing pavement, gutters, sidewalks, curbs, and vehicle parking strips; (vi) designing, building, renovating, and equipping parks and other recreation facilities; and (vii) installing street lighting. If a local government needs to change the scope of work for their Local Government Infrastructure Grant project from that specified in HB 645, they should submit a request for the change on their local government's letterhead. The letter should describe the basis of the need for the change in the scope of work and how the alternate scope of work is consistent with one of the seven criteria listed above, i through vii. The letter should be signed by the local government’s chief elected official or chief executive officer. The letter will become an attachment to the contract. Requests should be Page 2 of 4Local Government Grants Program 7/15/2009http://recovery.mt.gov/commerce/localgrant/default.mcpx 18 submitted to Dave Cole, Administrator of the Community Development Division, at the address shown below. Budget and Implementation Schedule Below are links to the formats for the HB 645 Local Government Infrastructure Grant Budget and the Implementation Schedule that local officials can download, fill out, and e-mail back to us so we can prepare the contract for their project. House Bill 645 Project Budget And Implementation Schedule Formats(pdf) House Bill 645 Project Budget And Implementation Schedule Formats (Word) Regarding the implementation schedule, please be aware that HB 645 states: A recipient of funds under this section must expend the funds by September 30, 2010. Unexpended funds must revert to the state and be deposited in the state general fund. Name and Title of Signatory for the Grant Contract In addition, please provide the proper legal name and title of your local government’s chief elected official or chief executive officer who will be signing the contract for your grant. This will be incorporated in the signature block for the contract. Copies of your budget, implementation, and the proper legal name and title of your local government’s chief elected official or chief executive officer who will be signing the contract for your grant should be either e-mailed to: DOCLocalGrant@mt.gov or mailed to: HB 645 Local Government Infrastructure Grants Community Development Division Montana Department of Commerce PO Box 200523 301 South Park Avenue Helena, MT 59620-0523 Reporting Requirements (a) Quarterly Progress Reports. During the term of their HB 645 Local Government Infrastructure Grant projects, grant recipients will need to submit periodic project progress reports to the Department within 30 days of the end of each calendar quarter. These reports will describe the status of the activities set forth in Section 7 of their contract, SCOPE OF WORK, including, at a minimum, the percentage completed, costs incurred, funds remaining, and projected completion date. The report must also describe any significant problems encountered in carrying out the Project and the scope of any necessary modifications the grant recipient is requesting in the SCOPE OF WORK, BUDGET, or Project Implementation Schedule. Timely quarterly reports are extremely important to the Department’s ability to submit its reports to the Governor’s Office of Budget and Program Planning for the reporting requirements of the Montana Reinvestment Act funds. The Department, at its discretion, may decline to honor the final 10% Request for Payment if the required quarterly progress report has not been submitted to or approved by the Department. (b) Recovery Funds Reports. No later than the first Friday of each month during the term of this Agreement, grant recipients must report, at a minimum, for itself and all contractors, subcontractors, and subrecipient entities, the following information: (1) The dollar amount of all contractor invoices; (2) The supplies delivered and the services performed; (3) An assessment of the completion status of the work; (4) An estimate of the number of jobs created and the number of jobs retained as a result of the Recovery funds. “Jobs created” means the cumulative new positions created and filled, or previously existing unfilled positions that are filled, for each project, as a running total over the life of the project, expressed as “full time equivalent” (FTE), calculated cumulatively as all hours worked (jobs created cumulative work hours) divided by the total number of hours in a full time schedule, as defined by the grant recipient. “Jobs retained” means the cumulative previously existing filled positions that are saved/retained for each project, as a running total over the life of the project, expressed as FTE, calculated cumulatively as all hours worked (jobs saved cumulative work hours) divided Page 3 of 4Local Government Grants Program 7/15/2009http://recovery.mt.gov/commerce/localgrant/default.mcpx 19 by the total number of hours in a full time schedule, as defined by the Grant recipient. Job counts should be converted to full-time equivalents. Temporary construction jobs should also be converted to annualized full-time equivalents. For example, 20 full time jobs on a three month project count as 5 full-time equivalent annualized jobs; and (5) Name and physical location of all contractors, subcontractors, and subrecipient entities engaged in any of the activities described in Section 7 of the contract, SCOPE OF WORK. (c) Project Completion Report. Upon completion of the final Project, the grant recipient will submit a final Project Completion Report to the Department. The Project Completion Report will describe the total costs incurred for the Project, identify the final completion date, summarize any significant problems encountered in carrying out the Project, and provide the final Recovery Funds information for each item set forth in paragraph (b) in this Section. Within 15 days of receiving the Project Completion Report, the Department will issue the Notice of Project Close-out. If you have any questions regarding the HB 645 Local Government Grants, contact: Dave Cole, Administrator Community Development Division Phone: 406.841.2776 FAX: 406.841.2771 e-mail: DOCLocalGrant@mt.gov http://recovery.mt.gov/commerce/LocalGrant/ Page 4 of 4Local Government Grants Program 7/15/2009http://recovery.mt.gov/commerce/localgrant/default.mcpx 20