2018-05-30 Council Workshop PacketCITY COUNCIL WORK SESSION
mAGENDA
Wednesday, May 30, 2018
Immediately following Special Council Meeting
1. Call to Order
2. Discussion of Fire Station Project and Bonds
3. Discussion of FY 2019 Budget
4. Adjourn
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1101 Victoria Curve I Mendota Heights, MN 55118
651.452.1850 phone 1 651.452.8940 fax
www.mendota-heights.com
m{ CITY OF
MENDDTA HEIGHTS
To: Mayor and City Council
From: Dave Dreelan, Fire Chief
Mark McNeill, City Administrator
Subject: Fire Station Construction Bond Issuance Discussion
Date: May 30, 2018
COMMENT.
INTRODUCTION:
At the May 30 workshop meeting of the City Council, staff will present information relating to the
possible use of City -issued General Obligation Capital Improvements Bonds, which would be used to
finance a substantial remodeling of, and an addition to, the current Mendota Heights fire station.
There will also be the presentation of a draft "fact sheet" information, which would be used to help
educate the public as to the reason for the building improvements.
BACKGROUND:
In December, the City Council hired CNH Architects to do concept plans and preliminary budgets for
proposed improvements to the existing 1984 -era fire station building. It would be a combination of an
addition and a remodeling, so that the station could continue to operate while construction was taking
place.
On February 7th, the Council met at the Fire Station to review the plans and budget. The decision at that
time was to table further consideration of this issue until after the results of the ISD 197 bond issue were
known.
At the May 30th workshop meeting, Fire Chief Dave Dreelan will be present to review with the Council
the preliminary plans and budget.
BOND ISSUANCE
Discussed at the February meeting included the possible issuance of the bonds to fund this project.
Instead of a traditional referendum, the Council could instead opt to use a provision in State Law which
allows for the direct issuance of General Obligation Capital Improvements bonds. There is a specific
process to be followed for this.
If decided by the Council, at the June 5th Council meeting, a Public Hearing would be called for the
regular (rescheduled) City Council meeting of Monday, July 2nd. A specific Capital Improvements Plan
El
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would need to be adopted. Once the Public Hearing has been held, the decision would need to be made as
to whether to proceed with the issuance of bonds, without a referendum.
If the determination is made to proceed, a thirty day period of time for a citizen -initiated petition would
commence. If a petition requesting that a referendum be held is submitted, and is signed by at least 5% of
the registered voters in the most recent general election of the City, a referendum on the bond sale would
either need to be held, or the issue would have to be withdrawn. If the latter option is chosen, no
reconsideration could take place for at least a year. The deadline for submittal of that would be August
1 Si
In Mendota Heights, the 5% would mean signatures of at least 401 voters, based on the most recent 2016
election.
Anticipated Schedules:
Bond Sale:
The following dates assume the Public Hearing is held at the City Council meeting of July 2nd:
CC Calls for hearing on CIP and issuance of bonds
June 5
Send Public Hearing Notice to Newspaper
June 11
Public Hearing Notice Published
June 15*
Public Hearing on CIP
July 2
Reverse Referendum on CIP Period Expires
August 1
Call for Sale of Bonds
August 7
Rating Call
Week of August 27
Sale of Bonds
September 4
Closing on Bond Sales
Last week of September
*At least 14 days, but not more than 28 days (16 days prior and on a weekday --Friday)
If proceeds of the bonds are needed prior to the last week of September, the City could pay those costs,
and the get reimbursed later, if a Resolution of reimbursement has been passed prior to the expenditure.
Staff is also investigating with Ehlers the possibility of combining the bond sale for this project, with the
2018 street improvement bond sale. Proceeds for the street improvements will be needed at
approximately the same time. If it is feasible to do both, combining the bond sales could save some
issuance costs.
Design and Bid Schedule:
If the project proceeds with the non -referendum issuance of bonds, the plan preparation and bid schedule
would be as follows (dates approximate):
August 7—CNH is directed to proceed with design and bid documents
November 7—Plans and Specifications are accepted, and the solicitation of bids is
ordered
December 18—Bids opened
February 5, 2019—Contract awarded
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April 22—Construction Starts
Construction of the addition is estimated to take 9 months. Following that completion, the remodeling of
the existing building should take an additional four months.
FINANCIAL IMPACT:
The City's financial consultant, Ehlers and Associates, was asked to project what the combined impact of
the issuance of the Fire Station General Obligation Capital Improvements bonds would be on local tax
payers, if it was combined with the approved ISD 197 referendum, and a proposed 5% levy increase to
the City's FY 2019 operating levy.
Projections assumed a $6 million construction budget. The related issuance costs would bring the overall
amount of the CIP bonds to be issued to the $6.125 million.
As shown on the attached sheet from Ehlers, the fire bonds themselves would increase the City levy by
6.6%, or $91 annually on a median -valued home of $356,000. This assumes a 15 year repayment.
Should a 20 year bond term be used, the annual impact would be somewhat less—an increase of 5.5%,
and adding instead about $70 annually.
The approved school district taxes will add $138 per year, which is 18.5% increased on the school district
portion of the property taxes.
A 5% increase to the City's 2019 operating levy increases by $70 annually. Note that 5% is being used
for estimating purposes—the actual amount will be set by the City Council later this summer, and will be
impacted in part by larger capital expenditures—equipment purchases, improvements to Wentworth Park,
etc).
It should not be interpreted that taxpayers' overall tax increase will be the sum total of the each of the
percent increases -6.6% + 5%+18.5%. As shown on the attached projections sheet from Ehlers, the
overall increase in properly taxes for 2019 would be 7.85%, for the median -valued home in Mendota
Heights of $356,000. Overall, the City's operating budget increase accounts for an overall increase in
property taxes of about 1.8%; and the Fire Bonds would be an additional 2.4%
Put another way, if all three increases are put in place, the monthly increase in property taxes would be
about $26 per month.
Note that this assumes no increase in property values. While the overall rate will inevitably go up, the
rate of increase in property taxes would proportionately go down, assuming that the same amount of taxes
are to be generated.
It should also be made clear that these Ehler's projections do not include operating levy increases for ISD
197, Dakota County, and any other special taxing jurisdictions. With those, it could increase the overall
property tax rate increase to double digits.
ACTION REQUIRED:
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No formal action is needed at the workshop. However, the Council should give direction as to what
additional information it may need at the June 5t' meeting, in order to decide whether to call for a July 2" d
Public Hearing.
Mark McNeill
City Administrator
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1101 Victoria Curve I Mendota Heights, MN 55118
651.452.1850 phone 1 651.452.8440 fax
www.mendota-heights.com
* CITY OF
m MENDOTA HEIGHTS
3
To: Mayor and City Council
From: Mark McNeill, City Administrator
Subject: FY 2019 Budget Preparation Discussions
Date: May 30, 2018
COMMENT:
INTRODUCTION:
At the City Council workshop, the Council will be asked to give direction on things that it would
like to see incorporated into the FY 2019 City operating budget.
DISCUSSION
Attached is a draft instruction sheet which will go to staff members who are involved in the City
operating budget preparation for FY 2019. It is similar to previous year preparation.
The Council is asked to specifically to check their individual calendars and review the proposed
schedule for workshop meetings. They are proposed to be Monday, August 13th and Wednesday,
August 15th. A third budget review workshop meeting would be held Monday, August 201h, if
necessary.
Staff would also like Council's feedback on items which it would like to see included in the
budget, and the scope of any overall increases. Given the discussion of the school referendum
and fire improvements, directives of any preliminary levy increases should be made.
Known issues for next year:
• Labor contracts for next year are set at 2.75% increases. We do not yet know insurance
increases.
• No new additional personnel positions are contemplated. However, there will need to
budget three additional months of the Engineering (Natural Resources) Technician
position which was budgeted to start 4/1/18, and six months of a Police Officer position,
which is budgeted to start 7/1/18.
• Public Works general levy -funded equipment needs will probably be two mowers, and
two trucks. Round number estimates of those pieces of equipment are in the $250,000
range.
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We may also discuss how or if to accommodate other major capital expenditures, such as the
improvements to Wentworth Park, which were identified as being of high priority as a result of
the joint City Council/ Parks and Recreation Commission joint meeting held May 91n
Mark McNeill
City Administrator
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Impact of ISD 197 Bond Referendum, projected FY19 City Levy, and Proposed Fire Station Improvement Bond Sale on House valued at $356,000, for property taxes payable 2019:
Estimated Monthly Property Tax Payment $116 $8 $6 $129 $78 $62 $12 $74 $11 $50 $317 $25 $342
Notes:
*Estimated property tax increase from $6,125,000 of CIP Bonds
** Estimated property tax increase from recently approved school referendum for ISD NO. 197
All estimates are subject to change.
5/24/2018
CITY OF D• -••HOME
Example: Single Family Home assessed at $356,000 with
City of Mendota Heights
Dakota
School District #ISD 197
Misc Market
Total Property Taxes
Pay 2018 Proposed Potential Estimated
County
Pay 2018 Approved Estimated
Taxes Value Taxes
Estimated
homestead status
Current Taxes CIP Bonds* 2019 Budget Total
Pay 2018
Current Taxes Referendum** Total
Pay 2018 Pay 2018
Current Increase Future
Estimated Property Taxes
$1,391 $91 $70 $1,552
$932
$745 $138 $883
$136 $604
$3,808 $299 $4,107
Change in %
- 6.5% 5.0% 11.6%
- - 18.5%
- -
- - 7.85%
Estimated Monthly Property Tax Payment $116 $8 $6 $129 $78 $62 $12 $74 $11 $50 $317 $25 $342
Notes:
*Estimated property tax increase from $6,125,000 of CIP Bonds
** Estimated property tax increase from recently approved school referendum for ISD NO. 197
All estimates are subject to change.
5/24/2018
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CITY OF
MENDOTA HEIGHTS
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1101 Victoria Curve I Mendota Heights, MN 55118
651.452.1850 phone 1 651.452.8940 fax
www.mendota-heights.com
To: Personnel Involved With Budget Preparation
From: Mark McNeill, City Administrator
Subject: Budget Instructions for FY 2019
Date: June 1, 2018
COMMENT:
Attached please find budget preparation sheets for the fiscal year starting January 1, 2019.
Operating Budget --As with previous budgets for Mendota Heights, you are being provided with
information containing the actual expenditures for 2017, this year's (2018) approved budget,
and space to make your budget requests for FY19.
Base Budget—In the "Base Budget", you should list only the line item expenditures needed to
provide the same level of service in FY 18 as your department/division is providing currently; in
effect, the same number of personnel or amount of services. Do not add any new programs.
You should factor in known increases due to contracted increases, or anticipated inflationary
amounts. The Finance Director and the Assistant City Administrator will fill in personnel costs
for you; leave those blank.
You should briefly note reasons for any major line item variations by adding an object code and
explanation as a footnote at the bottom of the sheet; i.e. "4400 -Conferences and Schools—
Attendance at State Invasive Species Conference".
Improvement Package --Beyond the Base Budget, if you have an idea or proposal which would
add something different than what your department/division is currently providing in FY 18, a
separate sheet will need to be completed—any additional service or program will need be able
to be considered as a "stand alone" proposal. For example, if the Recreation Division wants to
have the City Council consider adding a full-time staff member to offer year-round lessons and
recreation support, an "Improvement Package" listing what is being requested (i.e. a FT
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Recreation Programmer) along with personnel costs, supplies and any capital investments will
need to be completed. In it, you will need to describe the source of funding, and impacts of
funding/not funding the proposal.
This is not to be interpreted that every increase in a line item over FY18 will need to have an
Improvement Package sheet completed. For example, if Public Works wants the Council to
approve an increase in their budgeted sand and salt purchases in FY19 from 1800 Tons to 2200
tons, that should only be listed in the base level line item request. The level of service is not
changing—the City is still doing snow removal on the streets.
Those proposing to eliminate a service or position should discuss this with the City
Administrator.
Capital Budget—Those of you having responsibility for preparation of the City's capital budget
(life expectancy of 5 years or more, and a cost of greater than $5000), need to update the CIP
sheets for FY18.
Schedule—Budget Workshops will start at 1:00 PM. Please be aware of the following dates:
Week of June 25 Budget Worksheets Distributed
July 13 Worksheets Due to Finance
July 26—July 27 Review of Dept. Requests with Finance/Administration
August 13 (Monday) Council holds workshops to review
15 (Wednesday)
20 (If Needed --Monday)
September 4 (or 18) Preliminary Levy Set by September 30
Please contact either Kristin Schabacker or me with any questions.
Mark McNeill
City Administrator