11/29/2011 - City Council Finance Committee AGENDA
FINANCE COMMITTEE MEETING
NOVEMBER 29, 2011
12:00 -2:00 P.M.
CITY HALL CONFERENCE ROOMS 2A & 2B
f 3 3 I. AGENDA ADOPTION
�• II. FUND BALANCE POLICY
-Q D III. REVIEW RESEARCH ON TWO - TIERED FEE SYSTEM FOR CITY
FACILITIES (FOR PROFIT AND NOT FOR PROFIT)
1 IV. REVIEW 2012 CASCADE BAY BUDGET
-P37 V. FIVE 9'S COLOCATION UPDATE
VI. OTHER BUSINESS
VII. ADJOURNMENT
C!ty of Eaftali Meo
TO: FINANCE COMMITTEE
FROM: CITY ADMINISTRATOR HEDGES
DATE: NOVEMBER 25, 2011
SUBJECT: FINANCE COMMITTEE MEETING / TUESDAY, NOVEMBER 29,
NOON -2 P.M.
A Finance Committee meeting is scheduled for Tuesday, November 29, from 12 -2 p.m. in
Conference Room 2A &B. Also, as a reminder, in keeping with past practice, no plans are being
made to provide lunch on the 29 so, if you could, please plan to eat before the meeting or bring
a "brown bag" lunch.
Enclosed are background memos for each item to be discussed at the meeting. Please feel free to
contact me if you have any questions in advance of the November 29 Finance Committee.
/s /Thomas L. Hedges
City Administrator
Finance Committee
Agenda Information Memo
November 29, 2011
II. Fund Balance Policy
ACTION TO BE CONSIDERED:
To provide input on proposed changes to the City's fund balance policy and direct staff to
place the revised policy on a future regular City Council meeting agenda for approval.
SUMMARY:
There are essentially four things proposed here:
1. Housekeeping changes to the Fund Balance policy to match it up with new GASB
terminology
2. A one -time resolution for existing Special Revenue funds that "restricts" or
"commits" fund balance
3. A process for establishing new Special Revenue funds on the rare occasion that
we need to do that (included as part of the revised policy)
4. Designation of authority to staff to "assign" funds after year -end. This is the only
item with a significant public policy question.
There is NO change proposed to the existing General Fund fund balance target % range.
FACTS:
• As mentioned by KDV, our independent auditing firm, at last June's presentation
of the City's annual financial statements, new reporting requirements related to
fund balance will take effect with the December 31, 2012 financial report.
• The new Government Accounting Standards Board (GASB) Statement No. 54
does away with the restricted /unrestricted and designated /undesignated
categorizations of fund balance and replaces them with five categories (from most
restrictive to least):
o Nonspendable — inventory, prepaid assets, other things not readily
convertible to cash
o Restricted — restricted by outside agencies, such as with debt covenants,
State /Federal grants, etc.
o Committed — restricted for a specific use by formal City Council action
o Assigned — intended for a specific use (a) by the very nature of the fund
(e.g., all of our special revenue funds, capital projects funds, and debt
service funds) or (b) within the General Fund without formal Council
action. ( "Cash flow" or "working capital" do not meet the "specific use"
criteria.)
o Unassigned — applies to fund balance in the General Fund that doesn't fall
into one of the other categories
• GASB 54 also requires that for fund balances to be committed, Council action
must be taken before the reporting year is concluded (i.e., December 31). Prior to
3
Finance Committee
Agenda Information Memo
November 29, 2011
GASB 54, the Council could restrict funds, for financial reporting purposes,
anytime after year -end up until the financial statements were issued.
• We don't know how other interested parties (State Auditor, legislators, etc.) will
interpret these new categories, but generally, the more restrictive the
categorization, the less likely it is to be targeted for use or spend -down by those
interested parties.
• The italicized optional paragraph on the second page of the Fund Balance Policy
would authorize staff to assign a portion of the General Fund fund balance after
year end, when results of the year are known but it is too late to formally commit
the funds for a specific purpose. As the policy states, such assignments would be
made with the acknowledgement of the Council, and would be done for reporting
purposes only. Alternatively, the Council can take formal action anytime after
year end but before the financial reports are printed to assign (but not commit)
fund balance. Including the optional paragraph adds flexibility in the event of
assignment decisions made late in the report preparation process.
ATTACHMENTS:
• Mark -up draft of the proposed Fund Balance Policy revision is on pages S
through 7 .
• Resolution to establish find balance categories for existing Special Revenue funds is
on pages c and
DRAFT amendment — Nov 2011
City of Eagan
FUND BALANCE POLICY
a - _ . . _
I. DEFINITIONS
"Fund balance" is the difference between a fund's assets and its liabilities.
"Nonspendable fund balance" is the portion of fund balance that cannot be spent
because of its form, such as inventory or prepaid expenses.
"Restricted fund balance" is the portion of fund balance subject to externally
enforceable limitations on its use, such as legislative restrictions, debt covenants,
and grant restrictions.
"Committed fund balance" is the portion of fund balance intended for a specific
purpose and set aside by formal action of the City Council.
"Assigned fund balance" is the portion of fund balance intended for a specific
purpose, but is not nonspendable, restricted, or committed fund balance.
"Unassigned fund balance" is the portion of fund balance that is neither
nonspendable, restricted, committed, nor assigned.
II. GENERAL FUND
Purpose
The purpose of this section of the policy is to set out the targeted range of the
undesignated unassigned fund balance in the City's General Fund, and to
delineate the parameters to be considered as the basis for appropriation of the
available fund balance resources, and to establish the process for committing or
assigning fund balance.
Targeted Range
The targeted range for the 4n-designated unassigned fund balance is 40 to 45%
of the next year's general fund expenditure budget (excluding any contingency
appropriations).
C-�
Use Parameters
The parameters for consideration of appropriation of the undes hated
unassigned fund balance are as follows:
1. The fund balance is first and foremost the City's first -line contingency
account and is looked upon as a savings account.
2. Appropriations of the fund balance should be for projects or expenditures
of community -wide benefit. Fund balance should not be spent on projects
that, absent this funding source, would not be considered on their own
merits. Fund balance expenditures should eliminate existing tax levies or
assist in avoiding future tax levies.
3. Appropriations of fund balance should not replace other revenue streams
in support of required ongoing operational programs or service delivery.
Non - replacement of other revenue streams assumes that fees are at
proper levels to support related programs, other revenue sources are
appropriately collected to support related activities, and taxes are at fair
and competitive levels to support the community's desired level of
programs and services. Fund balance appropriations should therefore be
viewed as available for one -time or transitional expenditures only.
Fund Balance Commitment/Assignment
Unassigned or assigned fund balance may be committed for a specific purpose
by formal action of the City Council. For year -end financial reporting purposes,
the commitment must occur prior to December 31 to be reported as a committed
fund balance for that year.
[OPTIONAL PARAGRAPH: The City Council has delegated authority to the
Director of Administrative Services to designate a portion of the unassigned fund
balance as assigned fund balance for an intended use for reporting purposes.
Such designation for year -end reporting may occur subsequent to December 31,
after preliminary results for the year are known. In practice, such designations
will be made with acknowledgment of the City Council.1
III. OTHER FUNDS
Purpose
The purpose of this section of the policy is to set out how special revenue funds
will be established, and how the components of fund balance in other funds are
classified.
/2
Establishment of New Special Revenue Funds
New Special Revenue funds will be established by resolution. The resolution for
the each fund will include the specific revenue sources for that fund, the
purpose(s) for which those revenues and other residual revenue streams (e.g.,
interest income) are intended to be used, and whether the fund balances are
restricted or committed. Generally, all revenue types and related fund balances
that do not comprise restricted fund balance will be established by the resolution
as committed for the purpose of the fund. As such, the fund will not have an
assigned fund balance.
Other Non - Special Revenue Funds
1. Debt Service Funds
a. Fund balances for debt service funds are restricted up to the
amount of the outstanding principal and interest of the bonds for
which the fund was established.
b. Fund balances in excess of the restricted fund balance in special
assessment improvement debt service funds are deemed
committed fund balance as such fund balances, per City Code
Section 2.79, are to be transferred to the Community Investment
Fund upon closing of the debt service fund.
c. Fund balance in excess of the restricted fund balance in other debt
service funds are deemed assigned unless specifically committed
by City Council action.
2. Capital Projects Funds
a. Fund balances for TIF district capital projects funds are subject to
State statutes restrictions and, accordingly, constitute restricted
fund balances.
b. Fund balances for capital projects funds that are funded by grants
from government agencies or other external organizations also
constitute restricted fund balances.
c. Fund balances for other capital projects funds are considered
assigned for the project or purpose for which the fund was
established.
7 3
RESOLUTION
CITY OF EAGAN
COMMITTING SPECIFIC REVENUE SOURCES IN SPECIAL REVENUE FUNDS
WHEREAS, Governmental Accounting Standards Board (GASB) Statement 54 establishes various
components of fund balance, including restricted fund balance, which comprises revenues with external
(non -City) restrictions on their use, and committed fund balance, which comprises revenues committed
to a specified purpose by the City Council; and
WHEREAS, GASB 54 states that special revenue funds are used to account for and report
proceeds of specific revenue sources that are restricted or committed for specified purposes other than
debt service or capital projects; and
WHEREAS, the term "proceeds of specific revenue sources" establishes that one or more specific
restricted or committed revenues should be the foundation for a special revenue fund and comprise a
substantial portion of the fund's revenues; and
WHEREAS, City Council action is required to formalize the commitment of the specific revenue
sources to the specified purposes,
NOW, THEREFORE, BE IT RESOLVED by the Eagan City Council that the specific revenue source(s)
of each special revenue fund and the specific purposes for which they are restricted or committed are as
follows:
Fund Specific Revenue Sources Committed For Restricted For
Housing Bond monitoring fee Housing
Forfeitures DWI Forfeitures Law enforcement
programs per MN Statutes
169A.63
Prostitution forfeitures Law enforcement
programs per MN Statutes
609.5312 and 609.5313
MIF Revolving Loan Payments on existing Repayment to the State
loans coordinated through (80 %) and funds for future
the MN Investment Fund loans (20 %) per MN
Statutes 116J.8731, and
MN Rules Chapter 4300
Cedarvale Special Services Property tax levy Special Services District
District maintenance expenditures
Cable TV Franchise Fees Cable franchise fees Communications - related
expenditures, including
Communications Dept
operating expenditures
accounted for in the
General Fund; non -PEG
eligible expenditures in
the E -TV Fund; certain
fiber installation projects
Fund Specific Revenue Sources Committed For Restricted For
E -TV PEG fees Public, educational and
government programming
per 47 CFR 76.5 and the
1984 Cable Franchise
Policy and Communica-
tions Act
BE IT FURTHER RESOLVED, the foundational revenue source and commitment and restriction of
those sources is stated above, and it is known there will be other residual revenue streams, and it is the
intention that these funds be committed for the same purpose specified for that fund.
Dated: December , 2011 City of Eagan
City Council
By:
Its Mayor
Attest:
Its Clerk
CERTIFICATION
I, Christina Scipioni, Clerk of the City of Eagan, Dakota County, Minnesota, do hereby certify that
the foregoing resolution was duly passed and adopted by the City Council of the City of Eagan, Dakota
County, Minnesota, in a regular meeting thereof assembled on this _ day of December, 2011.
9
Agenda Information Memo
Finance Committee Meeting
November 29, 2011
III. REVIEW RESEARCH ON TWO - TIERED FEE SYSTEM FOR CITY
FACILITIES (FOR PROFIT AND NOT FOR PROFIT).
ACTION TO BE CONSIDERED:
To provide direction to staff regarding further action or study pertaining to rates for the use
of City -owned facilities.
FACTS:
• Members of the Council have been approached by at least one leader from a local non-
profit group requesting that the City consider offering lower "Non- Profit" rates for the
use of City -owned facilities including the Eagan Community Center.
• The Council directed this issue to the Finance Committee for further study at the October
4 Listening Session.
• The attached memo includes information regarding current use and fees charges for City
Facilities and services to non - profit groups.
• The results of a survey of several other metro cities are included along with a list of
Eagan-based non - profit groups.
ATTACHMENTS:
• Enclosed on pages 1 1 through is an informational memo regarding current use
and fees for City Facilities.
• Enclosed on pages 1 (.p through ( - 7 is a survey of several other metro cities.
• Enclosed on pages J' through is a list of Eagan-based non - profit groups.
ID
I I,P l City of Eaaall memo
To: Tom Hedges, City Administrator
From: Juli Seydell Johnson, Director of Parks & Recreation
Date: November 25, 2011
Subject: Non - Profit Facility Fees
The Council directed this issue to the Finance Committee for further study at the October
4 Listening Session. Staff was asked to provide information concerning current use and
fees charged for City facilities and services to non -profit groups. The Council further
asked for information about the fees charged by similar communities.
The first table shows the amount of City of Eagan facility rentals currently being used by
non - profit groups.
of
Rental
2011 YTD Use by
2011 YTD Total Revenue from Non
Facility Rental Revenue Non Profits Profits
Eagan Community Center $ 251,103.00 $ 77,842.00 31%
Eagan Civic Arena $ 589,116.00 $ 477,184.00 81%
Cascade Bay $ 162,416.00 $ 86,080.00 53%
Eagan Room $ 947.00 $ 332.00 35%
Park Shelters & Pavilions $ 41,160.00 $ 2,881.00 7%
Athletic Fields $ 74,271.00 $ 8,913.00 12%
The following fees have been waived or services provided at no cost to non - profit groups
during the previous year:
• 5 Park Shelter Rentals (School District 196, Eagan Garden Club, and Eagan
VFW)
• Athletic Field Use by In -House teams from Eagan and Eastview Athletic
Associations
• Gym Use at the ECC by School District 196
• 6 Temporary Liquor License Fees
• 1 Sound Amplification Permit Fee
• $27,942 in Fireworks, permits and facility use to 4 of July Fun Fest
i 1
• Facility use and staff support to Friends of the Farm and Eagan Art Festival
• $2,952 in Marketing "Donations" such as Cascade Bay Passes and "Baskets" to
various non - profit fund raising events.
CURRENT PRACTICE:
Eagan Community Center:
Current Rate Categories:
• Oaks banquet room — no price differentiation
• All other meeting rooms — Resident and non - resident
• Gymnasium — P &R Programs, Recognized Eagan Civic and Community Service
Non -Profit Organizations (identified as EAA/EVAA), Private
Typical Uses by Non Profits: Banquet and Meeting Room Rentals, Gym Rentals
Exceptions: Athletic Associations, School District, City Hosted Meetings
Total 2011 YTD Rental Revenue: $251,102.61
Approximate Percent Non Profit: 31% ($77,842)
When the ECC was under construction during 2002 -3 the Operations Committee of the
City Council met regularly with City Staff to review how the building would operate.
One of their top priorities was to ensure that the building would be accessible to the
public while remaining financially viable. The discussion about fees for each portion of
the building was based on surveys of other facilities and the intended use for each space
in the building.
Because Eagan residents were paying for a bond that built the park and building, the
Council felt that there should be a resident/non- resident differentiation in many of the
meeting spaces, Blast playground and fitness membership rates. The banquet room was
addressed differently with no reduction in price for residents, but residents had the
opportunity to reserve the banquet space 6 months farther than non - residents.
In looking at gym space the Council approved rates and scheduling priorities. Scheduling
priorities were defined in order of Parks and Recreation programs, recognized Eagan
Civic and Community Service Non - Profit Organizations (specifically identified as EAA
and EVAA) and other private rentals. The rates were also set to match those priorities; in
2003, for example, EAA/EVAA rates were $25/hr /gym whereas private rentals were
$50/hr /gym. Those rates have increased to $32 /hr and $58/hr respectively today.
Civic Arena:
Current Rate Categories:
• Ice time: Prime, non - prime, off -peak
• Meeting Space Rental: Resident, non - resident
• Training space Rental; Prime, non -prime
Typical Uses by Non Profits: Ice Rental, Meeting Room & Training Space Rental
Exceptions: EHA use of Training Space as part of annual construction payment.
Total 2011 YTD Rental Revenue: $589,115.71 (2011 to date)
Approximate Percent Non Profit: 81% ($477,184)
is
Cascade Bay:
Current Rate Categories
• Groups: taxable and non - taxable
• Season Passes — Resident and non - resident
• Private rentals: taxable and non - taxable
Typical Uses by Non Profits: Group Admittance and Private Rentals
Exceptions: Marketing partners; i.e, Dakota County Library, Eagan Hockey Assoc
Total 2011 YTD Rental Revenue: $162,415.94
Approximate Percent Non Profit: 53% ($86,080)
Eagan Room:
Current Rate Categories:
• City Departments
• Youth Groups
• Local Civic Groups
• Local Resident Groups
• Non - Resident Groups
• Profit Making Groups
Typical Uses by Non Profits: Meetings and Trainings
Exceptions: None
Total 2011 YTD Rental Revenue: $947 (29 reservations)
Approximate Percent Non Profit: 34% ($322)
Park Shelters and Pavilions:
Current Rate Categories: Resident and Non - Resident
Typical Uses by Non Profits: Picnics and Meetings
Exceptions: Athletic Associations, School District
Total 2011 Rental Revenue: $41,160 (366 rentals. 5 rentals had fees waived.)
Approximate Percent Non Profit: 7% ($2,881)
Athletic Fields:
Current Rate Categories: Resident and Non - Resident
Typical Uses by Non Profits: Games and Tournaments
Exceptions: In -House Athletic Association sports pay no fees, used approximately
2,800+ hours of athletic fields during summer and fall this year
Total 2011 Rental Revenue: $74,271 (116 Rentals; 1,135 Free Bookings)
Approximate Percent Non Profit: 12% ($8,913)
Temporary Liquor Licenses:
Seven community non - profit groups had fees waived for Temporary Liquor or Sound
Amplification permits during 2010. The total amount of fees waived was $850. Groups
13
that had their permit fees waived were Faithful Shepherd (3), Trinity School at River
Ridge, the Eagan Foundation, Caponi Art Park, and the Eagan Lions Club.
Community Festivals — 4th of July, Eagan Art Festival, and Holz Farm Events
July 4th Fun Fest
• Total fees requested to be waived ($942) include the following:
o Shows License Fee: $25
o Parade Permit Fee: $25
o Fireworks Permit Fee: $25
o Temporary 3.2 percent malt liquor(beer) license $25
o Central Park Pavilion: '/2 day rental $95 *3 days =$285
o Central Park Festival Grounds Pavilion: '/2 day rental =$95
o Central Park Festival Grounds: $154.00 *3 days = $462.00
o Undetermined number of staff hours for Administration, Fire, Parks, Police,
Streets
• The city budgets $27,000 to support the Fireworks
Holz Farm
• There are three(3) jointly managed events with the Friends of the Farm at Holz Farm
• City provides staff support.
• Facility is provided at no cost.
• City funds pay for entertainment and marketing.
• Friends of the Farm raise money through concessions, ticket fees and donations.
• Friends of the Farm provide volunteers.
• Holz Farm also hosts the Eagan Garden Club Plant Sale at no cost to the Garden
Club.
Eagan Arts Festival
• Facility is provided at no cost (Festival Grounds & Pavilion $883)
• Parks & Recreation Stage and sound system use
• Staff support from Parks & Recreation Dept.
• Marketing support from Parks & Rec.
• Dakota Center for the Arts(DCA) pays for city permits for electrical and tents
• DCA shares expenses for the Kid's Art Tent activities and Art Experience Tent
activities
Survey
Fourteen(14) Cities responded to a non - profit rate survey. Of the responding cities, nine
cities offer separate rates and five do not. In addition, many cities waive fees for licenses
and permits for community events offered by certain non - profits. See attachment on
pages /4 to /7 for details.
lL
Marketing "Donations"
ECC, Civic Arena and Cascade Bay get hundreds of requests during the year for
donations for various groups, organizations or individuals. To respond to several
individual requests that began once Cascade Bay opened in 1999, the City Council set a
policy to allow for the distribution of a maximum of 50 sets of daily admissions. This
practice has continued for each of the facilities. The 2011 donation value for Cascade
Bay is $1,000, ECC is $500 and Civic Arena is $600.
In addition, several community groups have asked for larger donations for their
fundraising efforts. Groups tracked from 2007 include Rotary Gala, Eagan Foundation,
Crime Prevention Golf Event, Dakota Center for the Arts, Dakota County Chamber Gala
and YMCA. The 2011 donation value is $852. The total value for these specific group
donations from 2007 -2011 is $3,343.
Eagan Non Profit Groups
The list of Eagan-based non - profit community groups used for the 2011 Showcase Eagan
invitations is included on pages/ e to ap
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Organization Contact 1
360 Communities Doreen L'Allier
Advent United Methodist Church Lori McBride
All Saints Lutheran Church Nancy Hogan
American Cancer Society (Relay for Life) Todd Peterson
American Red Cross Mike Fries
American Red Cross - Platelet Apheresis Alexis Kalae Verdeja
Beautiful Savior Lutheran Church Pastor David Koeplin
Big Brothers & Big Sisters
Boy Scout Troop 510 Ken Loher
Burnsville- Eagan- Savage Area Learning Center Janice Porter
CAP Agency Susan Hilla
Caponi Art Park Molly Swailes
Catholic Community of St. Thomas Becket Karen Maza
Chapel Hill Baptist Church Pastor Paul McVety
Cheerful Givers Karen Kitchel
Christ Lutheran Church and Preschool Claire Haedike
Crossroads Church Michelle Whiting
Dakota Center for the Arts Wanda Borman
Dakota Communications Center (DCC) Jenny Hildebrandt
Dakota County 4 -H Kathy Johnson
Dakota County CDA Sara Swenson
Dakota County Elks Club Dean Haifa
Dakota County Library Mary Wussow
Dakota County Parks (Lebanon Hills) Steven Sullivan
Dakota County Regional Chamber of Commerce Ruthe Batulis
Dakota Woodlands Abigail Webster
DARTS Deborah Tompkins
District 196 Community Ed Lisa Beytien - Carlson
Eagan & Lakeville Resource Centers Lisa Horn
Eagan 4th of July Funfest { Tracy Fahrenkamp
Eagan 55+ /Seniors Margaret Miller
Eagan Airport Commission ................................................................... ............................... ......................
... Miller
............................... ...............................
Eagan American Legion Post 594 Tom Mullon
Eagan Art Festival Barb Graycarek
Eagan Athletic Association (EAA) Dave Unmacht
Eagan Citizens Crime Prevention j Manalee Johnson
Eagan Community Theatre Jim Anderson
Eagan Convention & Visitor's Bureau Brent Cory
Eagan Energy and Environment Commission
Eagan Fire Auxiliary Cathy Sportelli
Eagan Foundation Laurie Halverson
Eagan Garden Club Marianne Adelmann
Eagan High School Dr. Polly Reikowski
Eagan Hills Alliance Church Lynn Hanson
Eagan Hills MOPS (Mothers of Preschoolers)
Eagan Historical Society Joanna Foote
Eagan Hockey Association Thomas Manzella
Eagan Ice Crystal Figure Skating Club Annette Kojetin
Eagan Lioness Becky Hanson
Eagan Lions Wayne Elling
Eagan Men's Chorus David Rokke
Eagan Tribute and Memorial Tom Mullon
Eagan Women of Note Thera Burtt
Eagan Women of Today Sandy Gaffney
Easter Lutheran Church and Preschool Alicia Borman
Eastview Athletic Association (EVAA) Scott Selby
Eastview Hockey Association Jeff Tuthill
Faith in Christ Fellowship Patty Carlson
Faithful Shepherd Catholic School John Boone
Faithful Shepherd Knights of Columbus #7604 Art Henricks
Feed My Starving Children Gwendolyn Cowie
First Calvary Baptist Church Chris Juvinall
Friends of the Eagan Core Greenway Val Jackson
Friends of the Farm Norm Peterson
Friends of the Wescott Library John Elliot
Girl Scouts of MN & WI River Valleys Kristine Parker
Jesus Celebration Center Teri Harmening
HealthEast Care System Kay Baker
Kids 'n Kinship / MOMS Jan Belmore
Lincoln Place Kate Tobin
Lutheran Counseling Center Suzanne Stoltenberg
Living Word Lutheran Church Pastor Tim Skramstad
MICAH South John Slad
Minnesota Family In- Fisherman Club Jeff Rudy
: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . :
Minnesota Valley Exchange Club Jim Nelson
M.O.M.S. Club
Minnesota Valley Transit Authority (MVTA) Robin Selvig
MOMS Club of Eagan - East Jennifer Hooyman
Mount Calvary Lutheran Chaplain David Lillejord
Moms In Touch Cathy Proebstle
Northern Dakota County TriDistrict Community Cori Reynolds
Education
Oak Hills Church Julie Lord
Paideia Academy Mary Hall
: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pathway (ISD 196) Christyna Jarosh
Peace Church Eagan Mark Reynoso
Northern Star Council, Boy Scouts of America Kirk Heimstead
ProAct Carolyn Dobis
Pilot Knob STEM Magnet School Susan Brott
Recycling Zone Laura Villa
: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . :
Rahn Elementary Elaine Mehdizadeh
Saint John Neumann Church Lisa Okoneski
Rotary Club of Eagan John Rhody
Saints Martha and Mary Episcopal Church Al Campell
School District 197 Susan Brott
Simple Steps Susan Mountain
Soldiers' Angels Tina Riner
Science of Spirituality, Minnesota Arvind Naik
Southwest Area YMCA Nyam Smith
Store To Door Molly Kennedy - Lageson
St. Elizabeth Orthodox Church Fr. Marc Boulos
Thrivent Financial Northern Dakota County Karen Dare
Chapter
Toastmasters International Carol Duling
Trinity Lone Oak Lutheran School Sean Martens
Trinity Lone Oak Lutheran Church Pastor James
Kroonblawd
Vale Educational Center Jayne Tiedemann
Woodcrest Church Helen McDonnell
Youth Forum Darby McDonald
Trinity School at River Ridge Peg Louiselle
108 ; 104
19)0
Agenda Information Memo
Finance Committee Meeting
November 29, 2011
IV. REVIEW 2012 CASCADE BAY BUDGET
ACTION TO BE CONSIDERED:
To provide direction to staff regarding final preparation of the 2012 Cascade Bay
Operating Budget.
FACTS:
• A preliminary 2012 Cascade Bay Budget was presented in a brief manner
to the City Council at the Special Meeting on October 11, 2011.
• Acknowledging financial pressures at Cascade Bay and challenges in the
preparation of the 2012 Budget, the budget was directed to the Finance
Committee for further review.
• A November 7, 2011 article in the StarTribune illustrates that Eagan is not
alone in dealing with challenges within certain enterprise operations in
these difficult economic times; whether it be art centers, golf courses,
community centers, or swimming pools.
• Public policy considerations for the Finance Committee are incorporated
in the memo from Director of Administrative Services VanOverbeke.
ATTACHMENTS:
• Enclosed on pages through as is a copy of the memo from
Director of Administrative Services VanOverbeke providing background
information on Cascade Bay and some possible options to address the
situation.
• Enclosed on pages azo through c is a copy of the
StarTribune article referenced above.
• Enclosed on pages 30 through 2' is a copy of the 2012
Cascade Bay Budget as presented at the October Special Meeting.
°9-4
10 Gity of Eapft Meo
To: City Administrator Hedges
From: Director of Administrative Services VanOverbeke
Date: October 14, 2011
Subject: Cascade Bay Budget
At your request I am writing this memo to provide options for consideration regarding the
2012 and ongoing Cascade Bay Budgets. As you are aware, the 2012 Cascade Bay
Budget was presented to the Budget Team with two different scenarios. One option
included $1,167,100 in projected expenditures and $1,167,100 in estimated revenues,
so the budget was technically balanced on paper. This option was presented in the City
Council packet for brief discussion at the Special City Council Meeting on October 11,
2011. The other option which provided for more realistic revenue projections showed
projected expenditures of $1,167,100 and estimated revenues of $1,091,000 meaning
the budget is out of balance by $76,100. Staff is not comfortable reducing the projected
expenditure projections while trying to maintain operations in a manner that is consistent
with previous years. Nor is staff comfortable inflating what are thought to be realistic
revenue projections by $76,100 to achieve a balanced budget that is probably not
achievable, absent a significantly above average attendance year.
Background
Cascade Bay was approved in 1998, constructed in1998 and 1999, and opened to the
public in 1999. The facility was projected to be financially feasible at an annual
attendance of 135,000. The capital financing for the facility was as follows:
Cinnamon Ridge Note $ 1,200,000
C I F Note 800,000
Sub -total Fixed Repayment $ 2,000,000
Advance From C I F Fund 1,000,000
Cash Payment from C I F 4,140,000
Grand Total $ 7,140,000
The Cinnamon Ridge Note (Housing Fund) is payable over a 20 year period (1999 —
2018) and requires annual debt service payments of approximately $96,000. The 12 -31-
2010 outstanding balance was $610,000. The CIF note is also for the same 20 year
period and requires annual debt service payments of approximately $64,000. Therefore
o9�
the total annual debt service is about $160,000. These debt service obligations have
been budgeted and paid annually from operations beginning in 1999. The amount
included in the proposed 2012 for debt service is $157,400.
The $1,000,000 Advance from the CIF was set up as a balloon payment after 20 years,
subject to the availability of cash reserves. The balloon payment required an annual set
aside of approximately $85,000 in order to have the funds available in 2018. Since
annual set aside funds from operations did not materialize, the Eagan City Council in
official action in November of 2006, as part of the 2007 budget approval, eliminated
further consideration of repayment of the advance. This meant that the Cash payment
from the CIF in the above table was increased from $4,140,000 to $5,140,000 and total
debt obligations for Cascade Bay were fixed at $2,000,000.
Also, a decision was made early in the process that Cascade Bay operations would not
be expected to finance annual depreciation which is consistent with other City enterprise
activities. Instead, an annual appropriation would be set aside from operations for future
renewal and replacement of equipment. The annual allocation for renewal and
replacement began at $50,000 and for the 2012 Budget is $69,900. These allocations
have also been budgeted, set aside each year, and used to purchase replacement
equipment.
The long -term financing and operational plan assumed that high attendance years would
increase the cash reserves and make dollars available for the lower attendance years,
acknowledging weather dependence and competition for entertainment dollars.
The following chart demonstrates the actual Cascade Bay attendance for the years 1999
through 2011 along with an average for all 13 years of operations and a five year
average for the most recent five years:
Cascade Bay Attendance
180,000
160,000
—Attendance
140,000 13 yr Avg
120,000 - ��'
5 -yr Avg
100,000 —
80,000 -
60,000
40,000
20,000
7 1 1 1 1 I 1 T 1 —1
01 0 1--1 N M i11 lD N 00 01 0 < - I
al 0 0 0 0 0 0 0 0 0 0 <-1
al 0 0 0 0 0 0 0 0 0 0 0 0
,-1 N N N N N N N N N N N N
Finance staff is undertaking a detailed review to determine the impact of unanticipated
capital and /or repair expenditures that have negatively impacted the current cash
position of the facility. The pool deck repairs at a net cost of nearly $500,000,
construction of the miniature golf course at approximately $150,000, and the recent
c
replacement of the slide for nearly $200,000 are significant examples of cash outlays
that were not part of the original financing plan. The pool repairs were necessary to
maintain a facility that presented itself as a place where guests wanted to visit. The golf
was added as an amenity that would hopefully attract more visitors and to add a feature
other than water while the slide responded to quest desires for something new and
different. It is difficult to definitively determine the effect of any of these changes, but it
appears that they cause a temporary uptick, but do not have a long -term material impact
on the bottom line. In and of themselves they do not overcome demographics and
adverse weather conditions.
Current Situation
At December 31, 2010 Cascade Bay had total cash and investment reserves of
$200,646 and should have had cash set aside for renewal and replacement of $606,586,
meaning the general or operating balance is behind by about $400,000. This behind
number results primarily from the expenditures in the previous paragraph (totaling
$850,000) and our inability to increase operating margins enough annually to replenish
the operating reserves. The stretch to balance the 2012 Budget compounds this
problem and in fact exacerbates the results of the attendance trends.
Staff has consistently increased marketing and added programs and activities to
increase annual revenues while holding the line or reducing expenditures. That effort
has been effective, but has become basically a break even proposition and has not
increased reserve balances over the longer term. Given the community demographics,
competition from other water parks and competition for the entertainment dollar in
general, it is difficult to envision a scenario under basically status quo operations in
which the cash reserves can be replenished. Further, it is more and more challenging
by the year to prepare realistic budgets that are balanced in a conservative fashion with
realistic expenditure appropriations and conservative revenue projections per the City's
desired practices. The significant difference between the 13 year and the 5 year
attendance averages in the above graph highlights the impact of the challenges relating
to demographics and weather considerations. It also calls into question the value of
significant capital expenditures in trying to keep the facility fresh, although there is no
way to measure the impact of not having made the enhancements.
Options to Address the Situation (In no particular order and with no
recommendations)
1. Adiust operations by raising rates and /or reducing services
Consideration might be given to raising rates and /or trying to reduce expenses by more
frequent closing of the facility on days with adverse conditions. There is some concern
that the rates are fairly elastic and if they are increased, attendance will go down making
the overall revenue picture worse. It's hard to know exactly where the sweet spot with
rates is, but it will be a big gamble to push very hard on rates. Similarly, it might be
possible to save some expenses by closing more frequently, but that will be a negative
to the notion that for the most part the facility will be open and there will be no surprise
"closed" signs when patrons show up.
Also, attendance might go up, if patrons were allowed to bring food into the facility, but
concessions will go down and in the end that could result in making the bottom line
worse.
2. Accept the status quo for as lonq as possible
This course of action would probably require acceptance of unbalanced budgets and a
continued drain on reserves until the operating losses could no longer be sustained.
This action could possibly be modified by discontinuing the funding of the renewal &
replacement account, preserving all cash for on -going operations. A future funding
source would need to be identified to provide for the scheduled replacements of the
equipment as it became necessary. This seems to reflect a postponement in dealing
with the issues at hand.
3. Provide for an operating subsidy from other revenue sources
Obviously, other revenue sources are limited and all come with an opportunity cost.
They could be used to balance Cascade Bay annual operations on an on -going basis,
but that would not address the current cash position unless annual subsidies created
more revenues and transfers than expenses each year until the balance is caught back
up to the desired level.
4. Turn the outstanding balances of one or both of the loans into grants
This option provides an opportunity to lower annual expenses by $96,000, $64,000 or
$160,000 while continuing to fund the renewal and replacement account. Eliminating all
annual debt service of approximately $160,000 would provide a favorable budget
variance into the future to replenish the cash balances. The Cinnamon Ridge Note
(Housing Fund) may require some special attention due to where the dollars originated
from. If necessary it could be paid by the CIF, but the details would be worked out with
the City's bond attorney.
All options, but especially number 4, would necessarily assume continued efforts to
increase revenues and control expenditures so as to not just waste the opportunity to
regain solid financial footing for the foreseeable future while striving for long -term
viability.
It should be noted that none of these choices are going to the change the community
demographics and other environmental challenges facing Cascade Bay. They also do
not remove the necessity for continued strong marketing, on -going program
enhancements or creatively looking for ways to increase revenues and reduce costs.
Please let me know if you have questions or other ideas that could be incorporated into
background information.
Directo of A inistrative Services VanOverbeke
cc: Director of Parks and Recreation Seydell Johnson
Superintendent of Operations Mesko
Chief Financial Officer Pepper
Assistant City Administrator Miller
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a
StarTribune � z ��Y -
Cities weigh services dropping along with interest in golf.
that don't pay their way "Ifs a question of whether the model still
works," said Edina City Council member Josh
Sprague. "I'm quite sure a business couldn't
Article by: ,Star Tribune run at 75 percent efficiency."
Updated: November 7, 2011 - 11:08 PM But Edina Mayor Jim Hovland said that view
holds community features like art centers
Increasingly, the "fun stuff' owned and run and pools to an unfair standard.
by cities -- art centers, golf courses,
community centers and swimming pools -- "Business is designed to make a profit;
are no laughing matter. government is designed to deliver a service,"
he said. "These were never designed to make
Some cash - strapped cities have started a profit; they were intended as a benefit to
pulling money from funds intended to residents."
sustain these amenities to pay for other city
needs, causing a cash crunch when a golf From golf to cemeteries
course or ice arena needs updating. Making
matters worse, many of the amenities that By definition, city "enterprise operations" are
are supposed to pay for themselves are usually expected to be self- sustaining
losing money, leaving city officials debating through fees and charges. Those ventures
what kind of financial standards those can include municipal liquor stores, water a
community assets should meet. nd sewer funds and ice arenas. But cities
across Minnesota also are running senior
Edina has hired a consultant to examine the developments, nursing homes, fitness
operations of the city's Art Center and the centers, and even Laundromats and
indoor Edinborough Park, both of which cemeteries as enterprise operations.
recoup less than 80 percent of their cost.
Richfield leased its mini -golf course to a Records collected by the state auditor's
private firm. Brooklyn Park is examining the office show those operations are under
future of golf operations, including increasing pressure from cities with tight
Edinburgh USA, because course income is
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budgets. Since 2006, large cities in the state The City Council decision seemed sound at
have been pulling more of the profits from the time, Kampf said.
enterprise operations to spend on other city
needs. In 2009, large cities transferred 71 "Hindsight is 20/20," he said. "They were
percent of net income, or more than $151 trying to watch taxes.... If we'd retained
million, out of enterprise operations. those earnings, we'd be drawing on them to
deal with the current downturn."
But profits can be hard to come by at ice
arenas and art centers. Bloomington In Richfield, the city's 18 -hole golf course
prohibits use of enterprise funds for other once supported other enterprise operations. W
city needs. hen the course was lost to airport
expansion, the city was compensated with
Lori Economy - Scholler, the city's finance $880,000. That money is used to support
director, said that's because places like ice operations like the city ice arena.
gardens will someday need repairs. Income
from things like sale of city water, she said, The city also had an aging mini -golf course
can soar or plummet depending on the that needed updating and repair. Last
weather. spring, the city contracted those operations
out to a private vendor. The vendor has
"If they have fund balances, they won't need most of the responsibility of running the
any subsidy," she said. "Why would you drain course and city officials expect to go from
that for a one -time property tax fix ?" losing $20,000 a year on the operation to
making a tiny profit -- but a profit -- of $16.
A few years ago, the Brooklyn Park City
Council pulled money from its golf "It's a big improvement to our bottom line,"
enterprise fund to help pay debt service on said Jim Topitzhofer, recreation services
an ice arena. City Finance Director Cory director.
Kampf said golf operations have been
covering their own costs, "but it's been Chaska has been able to keep most of its
tighter in the last two years or so." Golf enterprise funds going without subsidies,
employees were laid off in 2008 and partly because the city has its own electric
equipment purchases were delayed. utility that helps support other ventures. But
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the golf courses and the community center "If they can't achieve 90 percent of cost
are aging and may soon need improvements. recovery, then perhaps they should not be in
operation or they should be merged with
That means balancing value with quality, said others," he said.
City Administrator Matt Podhradsky.
If all enterprise operations met that standard
"We have to face the reality that ... if we don't this year, he said, the city could have shifted
have a top -notch amenity, people have c municipal liquor store profits to the city's
hoices with where they go to get their general fund to avoid a tax increase.
recreation," he said. Sprague said he wants the enterprises to be
successful, but that a more creative
Setting financial standards approach than just raising fees and cutting
staffing needs to be taken.
Indeed, cities are acutely aware that
continuously raising fees will lead residents "Once we get the consultants' evaluation, we
to visit the golf course or art center next can break out of this box we've been in and
door. Edina is wrestling with those issues the path will be clearer," Sprague said. "But in
now. the interim, we cannot continue to subsidize
these at this level. It's not sustainable."
Edina's liquor stores cleared more than $1
million last year and its aquatic center also Hovland agrees that enterprise operations
made money. But Braemar Arena, the golf need to be more efficient. But he bristles at
courses, Centennial Lakes and Edinborough the idea that they should function as
parks and Edina Art Center all lost money. businesses do. He said cities run things like
The Art Center recouped just 71 percent of ice arenas at a loss because residents want
its cost, losing $221,000. Money from liquor them but businesses can't make a profit
store operations filled the gap. from them.
Sprague, the City Council member, believes "We need to figure out reasonable
operations that were intended to be self- performance expectations," Hovland said.
supporting should have a set goal for cost "But what do we do if they don't make a
recovery. profit? Are you going to shut down Braemar,
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or the Art Center?
"These are the things that people think are
important to the fabric of the community."
Mary Jane Smetanka • 612 - 673 -7380
Twitter: @smetan
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2012 Proposed Budget Operating Budget
G'itty of Eapn
Aquatic Facility - Cascade Bay
Responsible Manager: Cherry) Mesko, Superintendent of Operations 7Ntv
PURPOSE & DESCRIPTION
The purpose of the Aquatic Facility is to
ent for residents and guests of all 4 „, � — `° ---�`
• Provide a positive environment g & ,o ,� ;;�. ��
ages to gather.” . .::
• Encourage and help build a sense of community through a wide •- �x ;�=
range of recreational and social opportunities. 44
• Provide a high level of service accessibility and professionalism
to expand revenue options to ensure the viability of this resource to the community.
The Aquatic Facility is responsible for the following functions:
• Provide a wide variety of water - related recreational opportunities for members and non - members.
• Capture a high level of revenue to offset operational costs, debt repayment and expand the retained
earnings capacity to accommodate future growth and expansion.
• Protect the City's community investment by maintaining the integrity and value of the building and its
amenities.
• Create a welcoming atmosphere and solicit input from users to best determine how to meet existing
needs and identify future growth opportunities.
• Ongoing analysis of existing operation and research to find ways to expand the recreational opportunities
beyond the three -month pool season in order to maximize the capital investment.
PERFORMANCE INDICATORS
2009 2010 2011 2012
Description Actual Actual Actual Target
Season passes sold 2,464 2,734 2,673 3,000
Total attendance 95,230 121,055 120,061 123,000
Group admissions 17,640 21,836 18,673 20,000
Days facility is open 88 89 90 89
Rounds of golf 4,662 3,980 4,488 4,500
Private rentals 5 10 9 10
3O
2012 Proposed Budget Operating Budget
City of Balae
Aquatic Facility — Cascade Bay
Responsible Manager: Cherryl Mesko, Superintendent of Operations
HIGHLIGHTS & CHANGES
Expenditure by Category
Reserve for
P Parts and
Renewal & Supplies Overview: The 2012 budget is down in both
Replace. 7% revenues and expenditures. The 2012 budget
6% will build on Cascade Bay's reputation for
being a safe and family - friendly facility;
Debt Services however, the trend for declining patron
Service
` and Other attendance and spending habits while at
14% Charges Cascade Bay creates a challenge. While a 2.5%
a y 17% reduction in operating expenses is proposed,
7% 0% there is a realization that the operating
expenses for Cascade Bay are consistently around $1.1 million, yet the revenues are consistently around $1
million. Although revenues could be modified or estimated higher than $1 million, the reality is that based on past
attendance and spending patterns, revenues will likely hover around the same amount.
The focus for 2012 will be multi- faceted. The first phase will be to market season passes directly to
residents with children in the under 10 age range in Eagan and two surrounding communities. The mailing list has
been secured so that a targeted marketing can occur in November /December 2011. The next phase will be a
targeted focus on groups that have visited Cascade Bay in the past but may not have returned in the last two years.
The purpose would be to generate increased group and season pass revenues as the guaranteed revenue stream.
The solicitation of additional groups sometimes has a negative impact to daily visitors, however.
The experiment in 2011 to bring events and entertainment to the performance stage had some negative
impacts to a neighbor; however, these events brought in a teen population that has been missing in the past. The
focus in 2012 will continue to build on the message that Cascade Bay is much more than a place to swim. Saturday
Night Lights when the park stayed open until 10 pm was very popular and will continue in 2012. The growing
success of private rental opportunities and community partnerships will continue. The idea will be to keep people
coming back in anticipation of their next experience.
Highlight /Change 1: Review of focused changes made in 2011
Following several focus group discussions during the winter of 2010, staff implemented several ideas and
suggestions that came from those meetings:
• Debit /gift card
Staff implemented a debit /gift card in 2011 where guests could put a specific cash value on a card that
could be used for any purchases at Cascade Bay during the summer. Dollars could be added to the card at
any time and this type of card also carries forward for future purchases at Cascade Bay. This
enhancement was well received and used by several guests. The program has been expanded to the Civic
Arena and is also receiving good reviews.
• Twitter
Staff experimented with offering Twitter feeds during the course of the summer. The results of the
experiment reflected limited interest in getting information about Cascade Bay through this avenue.
• Wise Swim School Partnership
The first year partnership with Wise Swim School was very successful. The partnership was designed - to
offer high quality swim lessons during times when portions of Cascade Bay were available and underused.
Wise Swim School cross marketed the lessons to their existing swim school participants and Cascade Bay
marketed the Wise Swim School as providing instructors for the summer program. Participants registered
through Wise and Cascade Bay rented underused space and times to their instructors and swim teams.
This program was extremely successful and resulted in a significant increase to revenue from past years
2012 Proposed Budget Operating Budget
*Gity of Eaton
Aquatic Facility — Cascade Bay
Responsible Manager: Cherryl Mesko, Superintendent of Operations
when Cascade Bay offered the lessons as part of their programs. Swim lessons offered by a well -known
provider resulted in many more participants than had participated in past years. Wise would like to
consider continuing the partnership in 2012 and expects to see more growth in the lessons.
• Birthday Parties and Groups
Birthday parties and groups continue to decline, however Cascade Bay is still the water park of choice for
most groups when other local water facilities were surveyed about their group numbers. Birthday parties
are also on the decline as is consistent with most other facilities. It appears that the trend to have
packaged parties is waning in lieu of home or informal parties. While trying to maintain the volume and
integrity of groups is a high priority, it is also one of the biggest service issues expressed during the
summer. When people pay admission to enter Cascade Bay, there is a preference expressed to not have
to share the space with groups.
• Season Pass Sales
Season pass holders made several suggestions during the focus group discussions. Additional perks like
mini golf included as part of the season pass and the ability to purchase reduced rate admissions for
guests were implemented in 2011 however, that did not increase season pass sales; it actually declined. It
would appear that most people choose to visit a water facility based first on the weather on any given day
coupled with a desire to have variety in their activity. Cascade Bay season passes continue to be a great
value but people seem to be hesitant to part with what seems to be a big expenditure before they know if
or how often they will use it. Season pass holders have been the recipient of multiple perks over the years
in an effort to grow that admission base. Some different options in lieu of season passes might be:
• Look at a different reward system in lieu of season passes; i.e. one free admission after 5 paid.
• Offer a June or August season pass for a reduced rate. Knowing that July is typically the busiest
month, offer a $30/35 June or August season pass (for example).
• No longer offer season passes but offer non - refundable pre - purchased punch cards that must be
purchased before May 15.
• Punch Cards
Punch cards offered only to season pass holders for reduced admissions were very successful in 2011. The
punch cards offered 10 admissions for $50 but could only be used in conjunction with a season pass
holder. If season passes continue without change into 2012, this should be continued. Season pass
holders commented most positively about this benefit. This was experimented with in 2010 and fully
implemented in 2011 as a direct result of the focus group discussions.
• Performance Stage
Finding a way to enhance the Cascade Bay experience had some challenges. The performances scheduled
on the stage in 2011 received great reviews from the guests and also brought in a teen population that
has not often been present in the past. Unfortunately, some of the performances created an issue for a
surrounding neighbor so the future of these opportunities needs to be considered. If they are to continue
in the future, what are the realistic expectations for these performances? This idea was also a result of
the focus groups to offer other non -water activities at Cascade Bay. It was imagined that if people had
other things to do at the park that they would stay longer or simply have more variety.
Highlight /Change 2: The renewal and replacement schedule is reviewed annually to determine which scheduled
items need to be replaced, and which items can be delayed to subsequent years. The only item scheduled for
replacement in 2012 is the upgrade of the PA system in the pool. This was budgeted in 2011; however, the cost is
such that the project would need to be phased in over a period of time. Research has been done to define a
system that will get information to the pool deck with the least impact to surrounding neighbors.
Financial Impact: $10,000 budgeted in 2011 and $10,000 in 2012 (to be combined in 2012)
Service Level Impact: Effectively communicate information to the pool deck and to areas in the park where guests
might be located.
2012 Proposed Budget Operating Budget
ity of Etao
Aquatic Facility - Cascade Bay
Responsible Manager: Cherryl Mesko, Superintendent of Operations
•
REVENUE ESTIMATES
Actual Actual Budget Budget
Acct REVENUES 2009 2010 2011 2012
4160 STATE P ERA AI D $ 404 $ 404 $ 400 $ 400
4304 OTHER REVENUE - NON TAX - 1,283 - -
4310/11 PARK PROGRAM REVENUE 23,148 30,496 24,000 30,000
4312/13 CONCESSION SALES 167,518 206,876 , 225,000 215,000
4314/15 MERCHANDISE SALES 10,204 14,365 11,000 14,500
4316/17 GROUP SALES 120,372 126,268 146,500 140,000
4318/19 DAILY ADMISSI ONS 372,445 514,673 604,300 519,000
4321 MEMBERSHIPS 135,250 125,563 158,500 155,000
4322/23 VENDING 1,598 2,047 2,000 2,000
4326/27 FACIUTYRENTAL 7,362 9,232 10,000 12,000
4331 TRANSIT TAX EXEMPT REVENUE 3,995 2,163 - -
4610 INTEREST INCOME 15,604 5,036 15,000 3,000
4822 OTHER REVENUE -cash short /over (564) (767) - 76,100
TOTAL AQUATIC FACILITY REVENUES $ 857,336 $ 1,037,639 $ 1,196,700 $ 1,167,000
EXPENDITURE SUMMARY
Actual Actual Budget Budget
Expenditure 2009 2010 2011 2012
Personal Services $ 523,945 $ 514,376 $ 588,300 $ 600,600
Parts and Supplies 59,030 70,439 84,600 84,300
Services and Other Charges 179,409 167,619 199,600 182,000
Capital Outlay 15,420 26,791 5,800 2,800
Merchandise for Resale 76,267 91,175 85,500 70,000
Debt Service 161,938 156,875 163,000 157,400
Reserve for Renewal & Replace. 67,100 67,100 69,900 69,900
Total $ 1,083,109 $ 1,094,375 $ 1,196,700 $ 1,167,000
Depreciation Expense $ 311,253 $ 318,899 $ 315,300 $ 315,000
33
2012 Proposed Budget Operating Budget
411 !! ° 'tvity of Eataa
Aquatic Facility - Cascade Bay
Responsible Manager: Cherryl Mesko, Superintendent of Operations
CASCADE BAY POSITION INVENTORY
Personnel 2009 2010 2011 2012 Hours
Campus Facilities Manager 0.33 0.33 0.33 0.33 686
Campus Facilities Operations Coordinator 0.67 0.67 0.67 0.67 1,394
Campus Facilities Maintenance Coordinator 0.50 0.50 0.50 0.50 1,040
Custodian 0.50 0.50 0.50 0.50 1,040
Manager on Duty 0.33 0.33 0.33 0.33 686
Clerical Technician 0.40 0.40 0.40 0.40 832
Total 2.73 2.73 2.73 2.73 5,678
Cascade Bay and the Civic Arena share a number of staff. The Civic Arena staff complement is shown below:
CIVIC ARENA POSITION INVENTORY
Personnel , 2009 1 2010 , 2011 ; 2012 i Hours
'Campus Facilities Manager :..._ 0.67 r w 0.67 0.67 3 ; 0_67.__.. 1,394
Campus Facilities Operations Coordinator _ 0 33 0.33 0 0.33 686
Campus Facilities Maintenance Coordinator 0.50 0 50 , 0.50 0.50 1,040
Custodian 050 0.50 0 50 0.50 1,040
Manager on Duty _.._..... O 67 067 _ 0.67...._... _..0 67 _ 1,394 ;
Clerical Technician 020 0.20 0.20 0.20 416 ..
Skating School Coordinator 1.00 1.00 1.00 ' ' 1.00 2,080
Total 3.87 3.87 3.87 3.87 8,050
(io
2012 WORK PLAN
Routine
1 Respond to public comments or requests via phone or in person
2 Daily mainenance and cleaning of building and pool
3 Manage the building infrastructure to ensure efficient, safe and clean environment
4 Develop promotional materials for seasonal facility
5 Recruit, hire, train and supervise temporary and part time employees
6 Provide work direction to ensure high level of customer service is maintained
7 Develop long range plans and strategies for expanded service
8 Manage staff scheduling and training to meet the demands of the building
Qf� 2012 Proposed Budget Operating Budget
Aquatic Facility - Cascade Bay
Responsible Manager: Cherryl Mesko, Superintendent of Operations
LINE ITEM DETAIL
Actual Actual Budget Budget
Acct PERSONAL SERVICES 2009 2010 2011 2012
6110 SALARIES AND WAGES- REGULAR 104,494 92,308 $ 147,300 $ 152,000
6112 SALARIES AND WAGES- OVERTIME - 57 - -
6130 SALARIES AND WAGES - TEMPORARY 342,920 347,555 350,000 350,000
6131 OVERTIME--TEMPORARY - - - -
6142 PERA- COORDINATED 6,974 6,670 10,300 11,000
6144 FICA 33,569 32,406 38,000 38,400
6151 HEALTH INSURANCE 22,511 21,205 29,600 30,800
6152 LIFE INSURANCE 238 217 - -
6154 DISABIUTY - LONG TERM 416 384 - -
6155 WORKERS COMPENSATION 12,824 13,581 13,100 18,400
6157 RETIREE INSURANCE FUNDING - ( - -
TOTAL PERSONAL SERVICES 523,945 514,376 588,300 600,600
PARTS & SUPPLIES
6210 OFFICE SUPPUES 342 337 500 500
6211 OFFICE PRINTED MATERIAL/FORMS 822 671 1,000 700
6212 OFFICE SMALL EQUIPMENT - - 100 100
6215 REFERENCE MATERIALS - 63 300 300
6220 OPERATING SUPPUES- GENERAL 4,616 7,776 11,000 9,000
6222 MEDICAL/RESCUE /SAFETY SUPPUES 2,237 2,349 2,000 2,000
6223 BUILDING /CLEANING SUPPUES 5,451 5,623 5,700 5,500
6224 CLOTHING /PERSONAL EQUIPMENT 2,446 2,109 4,000 2,500
6230 REPAIR /MAINTENANCESUPP -GENL 4,532 2,347 5,000 5,000
6231 MOBILE EQUIPMENT REPAIR PARTS - 254 500 1,000
6232 SMALL EQUIPMENT REPAIR PARTS 824 738 1,000 1,000
6233 BUILDING REPAIR SUPPUES 688 708 3,000 3,000
6235 FUEL, LUBRICANTS, ADDITIVES - - 100 100
6236 POOL REPAIR SUPPUES 1,128 104 3,500 4,000
6240 SMALL TOOLS - 23 300 100
6243 HEATING OIL, PROPANE AND OTHER FUELS 398 840 1,000 900
6244 CHEMICALS & CHEMICAL PRODUCTS 33,761 45,583 42,100 45,000
6257 SIGNS & STRIPING MATERIALS 1,786 916 3,000 3,000
6270 COMPUTER SOFTWARE - - 500 600
TOTAL PARTS & SUPPU ES 59,030 70,439 84,600 84,300
SERVICES & OTHER CHARGES
6310 PROFESSIONAL SERVICES 7,013 6,163 7,500 7,500
6314 AUDITING 900 1,000 1,000 1,000
6346 POSTAGE 2,346 3,048 3,000 3,000
•
6347 TELEPHONE SERVICE & LINE CHG 1,673 1,165 1,700 1,300
6348 MATRIX SERVICE AND REPAIR - - 500 800
6353 PERSONAL AUTO /PARKING - - 200 200
6355 CELLULAR TELEPHONE SERVICE 1,396 895 1,000 1,000
6357 ADVERTISING /PUBLICITY /PROMOTION 6,010 2,128 7,000 6,000
6370 GENERAL PRINTING AND BINDING 342 210 4,000 2,500
6385 INSURANCE 28,800 28,800 29,500 29,500
6405 ELECTRICITY 45,489 45,739 48,000 48,000
*City of Ellin 2012 Proposed Budget Operating Budget
Aquatic Facility - Cascade Bay
Responsible Manager: Cherryl Mesko, Superintendent of Operations
LINE ITEM DETAIL (CONT'D)
Actual Actual Budget Budget
Acct 2009 2010 2011 2012
6410 NATURAL GAS SERVICE 46,410 33,209 $ 50,000 $ 37,000
6424 POOL REPAIR / LABOR 2,852 5,375 7,000 7,000
6426 SMALL EQUIPMENT REPAIR LABOR 484 79 500 400
6427 BUILDING OPERATIONS REPAIR LABOR 569 613 1,500 1,500
6475 MISCELLANEOUS - 92 500 100
6476 CONFERENCES AND SCHOOLS 445 353 700 500
6477 LOCAL MEETING EXPENSES - - 200 100
6479 DUES AND SUBSCRIPTIONS 197 250 300 300
6480 LICENSES, PERMITS AND TAXES 750 4,003 1,800 1,800
6487 VISA /MC BANK CHARGES 10,129 13,919 12,000 12,000
6535 OTHER CONTRACTUAL SERVICES 9,551 8,411 8,000 9,000
6539 WASTE REMOVAL/SANITATION SERV 2,973 3,196 3,700 3,500
6563 LANDSCAPING 3,950 3,558 5,000 4,000
6569 MAINTENANCE CONTRACTS 7,129 5,413 5,000 4,000
OTHER SERVICES AND CHARGES 179,409 167,619 199,600 182,000
CAPITAL OUTLAY
6630 OTHER IMPROVEMENTS 3,760 - 3,000 -
6640 MACHINERY /EQUIPMENT - 4,223 - -
6650 FURNITURE & FIXTURES - 331 - -
6660 OFFICE FURNISHINGS & EQUIPMENT 0 - 1,323 2,800 2,800
6670 OTHER EQUIPMENT 11,660 5,102 - -
6700 CONSTRUCTION PROJECTS - 15,812 - -
CAPITAL OUTLAY 15,420 26,791 5,800 2,800
MERCHANDISE FOR RESALE
6855 MERCHANDISE FOR RESALE 76,267 91,175 85,500 70,000
MERCHANDISE FOR RESALE 76,267 91,175 85,500 70,000
DEBT SERVICE
6490 PRINCIPAL 100,000 100,000 110,000 110,000
6494 INTEREST ON INTERFUND PAYABLE 61,938 56,875 53,000 47,400
TOTAL DEBT SERVICE 161,938 156,875 163,000 157,400
RESERVE FOR RENEWAL & REPLACEMENT 67,100 67,100 69,900 69,900
TOTAL AQUATIC FACILITY $ 1,083,109 $ 1,094,375 $ 1,196,700 $ 1,167,000
-2.48%
6488 DEPRECIATION & AMORTIZATION $ 311,253 $ 318,899 $ 315,300 $ 315,000
3L
Agenda Information Memo
Finance Committee Meeting
November 29, 2011
V. FIVE 9'S COLOCATION UPDATE
ACTION TO BE CONSIDERED: No action required with today's informational update, but
the Council may wish to provide direction to staff regarding certain matters of public policy
going forward.
FACTS:
• On January 4, 2011, the Eagan City Council adopted resolution 2011 -02 expressing
support for an Eagan Colocation Facility and open access fiber as "critical infrastructure"
in the "public interest and necessity" for Eagan's future. It also accepted
recommendations from the City's broadband consultant and the Eagan Technology
Working Group regarding two initiatives to accomplish those objectives.
• In fulfillment of the City Council's expressed goal of supporting "the evolving
`infostructure' needs of residents and businesses," an RFP was prepared to conduct a
feasibility study for attracting a Colocation Facility to Eagan. The RFP received national
interest from approximately 11 firms, 8 of whom submitted proposals, and 5 of which
were interviewed.
• On April 5, 2011, the Eagan City Council approved a contract with a team led by Five 9s
Digital to conduct the first of a two -phase feasibility study for the attraction and
placement of a privately -owned Colocation Facility in Eagan. Phase II was subsequently
approved on July 5, 2011. Cost for the study, with both phases, is $185,000 and the
executive summary of that study will be finalized early next week.
• At the City Council's September 13, 2011, work session Five 9s gave an overview of its
preliminary findings and indicated that several sites in Eagan meet the rigorous selection
criteria for a mission critical data center, and that there appears to be a strong market
interest in a Tier III Colocation and data center.
• Exercising its contractual right to carry the project through to construction, Five 9s has
acquired 11 acres of property on Yankee Doodle Road west of Pilot Knob, and
announced to the media on November 16 the planned development of a new 138,000 sq.
ft. carrier neutral data center dubbed "The Connexion."
• Communications Director Garrison, the City's lead on this initiative will give an
overview on what can be expected next on the development.
• The main public policy question at this point, which does not need to be decided today,
but to make the Finance Committee aware, is whether to seek repayment of the City's
investment in the feasibility study. Director Garrison can explore the pro's and con's of
those options.
• If time allows, an update may also be given on the progress of the open access fiber
installation and what can be anticipated next.
ATTACHMENTS:
• City of Eagan press release, November 16, 2011 on pages 3c? "
• Five 9s Digital status and timing letter on pages 4 1 -
4 1/1° City of Eagan
Free Release
November 16, 2011
Contact:
Tom Garrison
Communications Director
City of Eagan
651- 675 -5008
tgarrisonacityofeagan.com
Doug Hollidge
CEO
Five 9s Digital
DougCa.Five9sDigital.com
704 - 651 -2210
Eagan Announces Major Data Center Development
Just seven months after embarking on a feasibility study to help establish Eagan as a
major telecommunications hub in Minnesota, the City of Eagan is proud to announce
the planned development of a new 138,000 square foot carrier neutral data center
called The Connexion.
The specialized data center, known as a colocation facility, will be open to all
telecommunications and internet service providers, as well as local and regional
companies needing offsite data storage or disaster recovery options. The facility will be
privately owned and operated and located along Yankee Doodle Road west of Pilot
Knob, building upon an already fiber optic rich environment in Eagan. The Connexion
will be developed and owned by Five 9s Digital, LLC, a North Carolina firm experienced
in the site selection and development of mission critical multi- tenant facilities.
"The City of Eagan, MN is a community that gets it," says Five 9s CEO, Doug Hollidge.
"From government to business, Eagan understands the importance and long term
benefits of having a highly connected and redundant data center in their city to serve
not just the city's robust business community, but The Connexion will provide a
tremendous asset for the Upper Midwest."
"Customers tell us there is a current lack of high quality data center options in the
marketplace," Hollidge adds. "In our solution, The Connexion will provide high
connectivity, private data suites, route redundancy and environmental efficiencies."
A task force, called the Eagan Technology Working Group made up of top technical and
business talent from some of Eagan's largest companies along with City and Chamber of
Commerce staff have been studying Eagan's broadband needs and challenges since
2005.
3�
"We're tremendously excited that the hard work of our Eagan companies and the
Technology Working Group has led to this important advancement," said Eagan Mayor Mike
Maguire. Eagan's role, he emphasizes, was not to own or run such a facility, but rather, to
act as a tipping point to help bring the technical analysis and market forces together to
make investment happen.
Overall private investment in the project is estimated to be between $75 -$100M between
the initial development of the facility and the subsequent tenant investment and
installation of its mission critical equipment.
The Eagan area stands to attract additional data center end -users due to one of the key
benefits of the Upper Midwest location of the Connexion —the extended cool climate which
allows data centers to utilize "free cooling." Minnesota also has a relatively low risk of
natural disasters, compared with other areas of the country.
The Mission Critical team of Jones, Lang, LaSalle has been assisting on the project, and its
study reveals "Minnesota is an excellent and growing data center marketplace," says JLL's
Senior Associate of Mission Critical Brokerage, Brett Severson. "The Greater Minneapolis -St.
Paul region has a relative dearth of viable data center options currently, and because The
Connexion Data Center will be the first multi- tenant, LEED- certified, Tier 3 facility of its kind
that is purpose -built to accommodate the latest needs of data center users, we think it will
drive market demand" says Severson.
The Connexion will also definitively solve what is perceived as a single - point -of- failure issue
facing the region. Many high capacity fiber networks in the area offer some route diversity
for fiber optic lines and self - healing networks, and yet often funnel through one facility in
the region before transmitting to the rest of the country or world. This issue was first
recognized in a 2009 report by the Minnesota Ultra High Speed Broadband Task Force.
XO Communcations is committing to be one of the fiber service providers in The Connexion
offering high capacity connectivity via an alternate Southern long haul fiber route which will
connect to a transwestern fiber link. This alternate route will offer other fiber providers and
data center end users another level of redundant service to provide to their customers in
the region.
"XO Communications has worked very closely with the City of Eagan and the Tech Working
Group in developing a solution to address the lack of Internet redundancy in the Twin Cities
metro area," said Mark Feil, general manager for Minnesota at XO Communications. "With
our nationwide fiber optic network running directly through Eagan, we are able to provide
another major route for Internet traffic into and out of the Upper Midwest for businesses' IP
connectivity needs."
Due to the current demand for such a facility in the region, and the determination of a
strongly suitable data center in Eagan, Five 9s Digital has announced plans to proceed with
the development of the project with a scheduled completion of 3rd quarter 2012.
3 1
The design and development team for The Connexion includes Five 9s Digital, Jones
Lang LaSale, McGough General Contractors, Pope Architecture, elopment team possess
substantial data center experience. Jones La ng LaSalle's Mission Critical Division
as the Project M and Leasing Associate for the project.
"McGough is extremely prou to be a part of this exciting partnership with Five 9
D ig i tal , Jones Lang LaSalle and the City of Eagan for the development of the Connexion.
In a ddition to providing the business community with a Tier III reliable an d secure new
fac ilit y , it will also provide up to 50 construction jobs," said Tim Nagle of Mc
which will be the general contractor for the data center.
Tier III classification is important, because estimates are that 70% of the U.S. market
demand • for Tier III space, and because of the under supp of advanced colocation
space, demand is growing. Some analysts put the 2012 Colo market in North America at
$5 billion.
"The Connexion is an excellent example o f repre sentatives from private companies and
public sector leaders working together to create opportunities to drive economic
growth. They saw a need quickly took advantage of the opp ortunity to create an asset
for the region. This type of collaboration will be critical to our region's success," said
Michael Langley, CEO of GREATE MSP.
THE CONNEXION
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40
m
'4W FIVE 9s
DIGITAL
Mission Critical Realty Solutions
November 21, 2011
To: Tom Garrison
From: Doug Hollidge
Re: The Connexion Status and Timing Expectations
Tom:
Now that The Connexion is officially "On The Market," our team will be spending
the vast majority of its time pursuing interested parties and marketing the project
locally, regionally and nationally in anticipation of signing leases.
Upon obtaining a certain threshold of committed interest, we will then begin the
next phase of the construction process which will include:
• Finalization of the site plan and overall design components
• Progress and completion of civil engineering drawings
• Submission for subdivision
• Submission for zoning •
• Completion of construction documents
• Submission for construction permit
Although we currently continue with pre - development design and engineering
components while working with specific prospects, we anticipate proceeding to
submission of the subdivision and zoning process by the end of February, if not
sooner pending commitments. This timeline is only an estimate based upon the
current interest and communications with prospective data center end users.
As we proceed with the marketing, we shall keep you informed of any adjustments
to the anticipated schedule.
41
Overall Draft Project Timeline:
Time Frame: Occurrence:
November 16 Press Release /Announcement
November- March Marketing /Pre - Commitments
December (TBD) Reception /Open House
February 15 Submit for Subdivision /Zoning
February 20 Continue with Construction Documents
April -May Ground Breaking pending timing of the above
September -Oct Shell completion of Phase I
All dates subject to revision subject to scope of pre- commitments.
Please let me know if you should have any questions.
Sincerely,
c ,�, .4 . --'_
Douglas G. Hollidge
Five 9s Digital, LLC
4L