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08/09/2005 - City Council Special~t,~2 AGENDA SPECIAL COUNCIL MEETING TUESDAY AUGUST 9, 2005 5:30 P.M. EAGAN ROOM-EAGAN MUNICIPAL CENTER I. AGENDA ADOPTION II. VISITORS TO BE HEARD III. REVIEW PROPOSED 2006 PUBLIC ENTERPRISE BUDGETS: p. a ^ Community Center ~ a 3 ^ Civic Arena ~, ~ ~ ^ Cascade Bay p (p(p ~--_ IV. 2006 GENERAL OPERATING BUDGET UPDATE . ~~ V. GENERAL FUND BALANCE UPDATE VI. OTHER BUSINESS VII. ADJOURNMENT Agenda Information Memo August 9, 2005 Eagan City Council Meeting III. REVIEW PROPOSED 2006 PUBLIC ENTERPRISE BUDGETS: • COMMUNITY CENTER • CIVIC ARENA • CASCADE BAY ACTIONS TO BE CONSIDERED: 1. To provide direction to staff on the proposed Community Center membership rate increase, on the 2006 Community Center operating budget, and to direct it be placed on the August 16, 2005 City Council Meeting Consent Agenda for formal ratification. 2. To provide direction to staff on the 2005-06 Civic Arena ice rental rates, on the 2006 Civic Arena operating budget, and on the 2005 purchase of 2006 Capital Outlay items, and to direct that the items be placed on the August 16, 2005 City Council Meeting Consent Agenda for formal ratification. 3. To provide direction to staff on the 2006 Cascade Bay rates, on the 2006 Cascade Bay operating budget, and to direct that the items be placed on the August 16, 2005 City Council Meeting Consent Agenda for formal ratification. FACTS: - Given the various operating seasons of the Community Center, Civic Arena, and Cascade Bay, it has been the City's practice to review the annual budgets for the three enterprise operations in advance of the General Fund operation budget. - The budgets have been prepared by the respective facility managers, with input from Cherryl Mesko, Parks and Recreation Administrative Coordinator, and the staff "budget team", consisting of City Administrator Hedges, Assistant to the City Administrator Miller, Director of Administrative Services VanOverbeke, and Chief Financial Officer Pepper. - The budgets for the three enterprise operations are presented for Council review in order that the Council can consider formally ratifying the three budgets at the August 16, 2005 regular City Council meeting. ATTACHMENTS: - Enclosed on pages 2 through~2 is the 2006 budget proposal and narrative for the Community Center. - Enclosed on pages 23 through ~ is the 2006 budget proposal and narrative for the Civic Arena. L - Enclosed on pages L5 through ~ is the 2006 budget proposal and narrative for Cascade Bay. COMMUNITY CENTER Background The following general parameters were among those listed prior to the adoption of the original 2003/2004 Operating Plan and continue to provide the framework in which the Community Center operates and is the basis from which budgets continue to be prepared. The facility is looked at as a whole. Although, certain areas/programs/operations are relatively independent from an operational standpoint, there is a great deal of interaction among the various components of the building. Items like days and hours of operation, memberships, programming, and rental opportunities and rates have impacts across the entire facility. The challenge of budgeting details while looking at the big picture has constantly been present in preparing and reviewing this material. 2. The facility is being viewed as a community center as opposed to a private sector health club. Community centers provide some programs and community/citizen opportunities that in and of themselves are not self-sustaining from a cost perspective. This is a significantly different model than you see in the private sector where only activities that produce revenue or contribute directly to revenues are offered and a clear bottom line financial analysis drives all decisions. 3. The success of the project will ultimately be determined over the long- term. There is a delicate balance between ashort-term successful opening that impresses participants and makes them want to return and to renew memberships and long-term community acceptance of and support for the facility. 4. The importance of successfully marketing the facility and developing an acceptable market niche to maximize revenues while blending in the community center philosophy cannot be overstated. 5. Although the facility is being operated as an enterprise fund from an accounting standpoint, there is a dependence on other City operating funds incorporated into this plan. Modifications to the original parameters include the following: 1. A renewal or replacement account is being funded beginning in 2005. As part of the construction close out financing package approved by the City Council, the Renewal and Replacement account opened with a starting balance of $315,724. This balance resulted from the City 2 Council direction to reduce original spending on furniture, fixtures and equipment and other construction costs. 2. Operational experience has resulted in necessary modifications to policies and procedures which are reflected in the budget. 3. Start up issues have been mostly resolved and the Community Center is becoming established in its market niche. Revenue and Expenditure Summary The 2006 Community Center Budget is proposed at $1,461,600, an overall increase of $82,400, or 6.0% from the 2005 budget of $1,379,200. Both years include funding for the renewal and replacement account. The proposed 2006 budget includes an allocation of $34,500 for capital outlay while none was budgeted in 2005. Without the capital outlay allocation the increase to the total budget would be 3.5%. Enclosed on page 7" is a table showing a summarized comparison of revenues and expenditures. Revenues There is a significant increase in user revenues projected in the 2006 estimates resulting in a similar reduction in the necessary support form the antenna lease transfer. Excluding interest the revenue estimates increase by $213,500 or nearly 20% over the 2005 estimates. The following areas generate most of the revenue increase: • Other Revenue-Parks: The personal training program continues to prosper and be successful for the Community Center. It is staff's goal to be a leader in Minnesota and take this program "on the road" primarily to local businesses. Staff is estimating that the program will generate an additional $7,000 in revenue. Fitness Membership: We expect to continue to see a steady revenue stream frgm this area due to the strong membership base. The projected revenue number is also higher based on a proposed increase to the monthly membership fee of $1.00. The staff goal is to add 420 new members in 2006 and 250 90-day summer memberships to reach a total membership base of just over 2,000 members at the end of 2006. This is projected to bring in over $132,000 more than our 2005 projected revenue. The turnover rate on membership is staying in line with industry standard of 1/3 of the members. We therefore always need to replace those members who discontinue their membership with new members. 3 Room Rentals: For 2006 staff projects an increase of over $27,000 in banquet, meeting, and gym rentals. A large portion of this is due to the increase in morning and day time rentals. Also, banquet room rentals fees were previously approved by the City Council so the dollar value is slightly higher per rental. As a revenue note, the Blast continues to be a popular attraction for birthday parties and group rentals however, there has been a decline in the number of punch cards and daily admissions being purchased, and revenues may have leveled off in this area. Enclosed on page ~ is a copy of the detailed revenue estimates for 2006 as compared to the budget for 2005 and actual for 2004. Enclosed on pages -l and ~ is a copy of the detailed revenue estimates for 2006 showing the actual calculations for the various revenue components. Enclosed on pages ~ and `~ is a copy of a fact sheet providing Community Center Statistics summarizing activity at the facility and providing a basis for revenue estimates. The revenue estimates, in general, are fairly aggressive, are based on more operational experience than in previous years, and rely on continued extensive and successful marketing of the facility in combination with high customer acceptance and satisfaction. Expenditures Enclosed on pages ~~ through ' 1 is a copy of the proposed line item 2006 budget. On the expenditure side the more significant changes from the 2005 budget to the 2006 budget include the following: Included in the 2006 proposed budget is the addition of two seasonal interns. As memberships, Personal Training, and programs increase, we are finding a need to have additional staff assist the coordinators. It is the goal to provide an opportunity for a near college graduates, or program assistants, to get work related experience in the field, while helping to take some of the ongoing tasks, during peak times, off the fitness coordinator. Seasonal employee costs are increased by approximately $8,600 resulting form these intern positions. • The City Council reviewed policies in 2005 and approved the hiring of additional concession staff to cover the day shifts. Previously, the concessions operation was not open mornings or early afternoon hours. N These part-time hours are filled by Guest Services staff that is crossed trained to work both concessions and the front desk. This change increases the Guest Services budget for 2006 by $15,000. • Total Supplies, Repairs and Maintenance is increasing by approximately $9,000. This results from additional costs in maintaining the fitness equipment, an increase in recreation equipment supplies, and a reduction in cleaning supplies and paper to more accurately reflect actual costs. • Total Other Services and Charges shows a reduction of $52,000. This savings results from $76,000 adjustment in the estimates for electricity and natural gas costs in an effort to reflect actual experience and rate changes. Other contractual services and maintenance contracts increase by $18,700 as equipment ages and warranty periods end. Enclosed on page 2~ is a copy of the Capital Renewal and Replacement schedule for the Community Center. Personnel The proposed complement of regular personnel for 2006 is not changed from 2005 level as demonstrated in the following table: Personnel Community Center Manager Maintenance Engineer Fitness Coordinator Rental Room Coordinator Facility Operations Coordinatc Lead Custodial/Maintenance Custodial Proposed 2003* 2004 2005 2006 0 1 1 1 1 2 3 3 6 8 9 9 * Position titles have changed slightly since 2003 and not all positions were fully budgeted in 2003. Capital Outlay The proposed 2006 budget includes an allocation of $34,000 for capital outlay to purchase the following: 1. $23,000 -New equipment for the fitness center to meet peak time. demands as membership increases. The type of proposed new equipment reflects responses to the 2005 member survey. 2. $8,000 -This allocation would be used to replace the recycled and used office furnishings and equipment that was installed in the office areas when the facility opened in an effort to keep the construction costs down 5 and to allocate available resources to the public areas of the building. In addition to improving office efficiency the new equipment will provide the proper ergonomic environment for employees. This capital outlay is proposed to be funded through operations since the fitness equipment is new and the office equipment it is not included on the renewal and replacement account. Marketing The fourth item listed above under the general parameters around which all budgets and operating plans have been developed and approved states, "The importance of successfully marketing the facility and developing an acceptable market niche to maximize revenues while blending in the community center philosophy cannot be overstated." All City staff and especially those working at the Community Center are committed to this message and have been working diligently from day 1 to implement a comprehensive and well thought out marketing approach supported by specific objectives and expected outcomes. Enclosed on pages ~_ and 'L2 is a copy of a summary of marketing activities that have been undertaken thus far in 2005. The success of this approach and the overall long-term progress that is being made is demonstrated in the membership numbers included in the revenue section of this memo. Conclusion The Community Center is clearly off to a successful beginning and is establishing a niche in the Community. While many challenges have been addressed, many remain and will be aggressively met into the future. This proposed budget incorporates previous City Council direction and is overall a "stay the course" budget with minor modifications. It also allows for continued flexibility as the City goes fonrvard. Looking ahead to next year, staff does not foresee recommending rate increase for 2007; consequently for that budget year, increased revenues would result from utilization increases. Staff feels that rates, after having been increased for 2005 and 2006, have hit their markets for both memberships and room rentals. Direction to be Considered To provide direction to staff on the proposed membership rate increase, on the 2006 Community Center operating budget, and to direct it be placed on the August 16, 2005 City Council Meeting Consent Agenda for formal ratification. REVENUES 2004 2005 2006 Actual Budget Proposed PERSONAL TRAINERS $ 4,282 $ 22,200 $ 37,500 EQUIPMENT RENTAL 5,602 2,000 3,000 PARK PROGRAM REVENUE 74,483 13,900 15,400 CONCESSION SALES 28,637 31,900 33,900 MERCHANDISE SALES 2,910 2,600 3,700 GROUP SALES 69,413 100,500 98,800 DAILY ADMISSION 67,450 96,500 78,100 MEMBERSHIP 352,657 574,200 706,600 VENDING 6,148 5,000 6,000 ROOM RENTALS 131,269 172,300 249,900 FACILITY RENTAL 6,221 1,500 1,500 CONTRACT REVENUE 47,139 55,700 57,000 ECVB Rent 7,333 8,600 9,000 INTEREST 22,292 20,000 Subtotal 825, 835 1,086, 900 1, 320,400 Other Funding Sources ANTENNA LEASES 253,338 292,300 $ 141,000 Total Rev & Other Fd Sources $1,079,173 $ 1,379,200 $ 1,461,400 EXPENDITURES Personal Services Supplies, Repairs and Maint Other Services and Charges Merchandise For Resale Capital Outlay Reserve For R & R Total Expenditures 2004 Actual $ 721,483 48,616 194,136 20,248 31,442 - - 120,800 $1,015,925 $ 1,379,200 2005 Budget $ 826,200 73, 000 339,200 20, 000 2006 Proposed $ 905,000 82,100 287,200 31,000 34, 500 121,600 $ 1,461,400 Community Center Enterprise Fund DETAIL OF REVENUES Revenues Personal Trainers Equipment Rental (taxable) Park Program Revenue (non-taxable) Park Program Revenue (taxable) Concession Sales (taxable) Concession Sales (non-taxable) Merchandise Sales (taxable) Merchandise Sales (non-taxable) Group Sales (taxable) Group Sales (non-taxable) Daily Admission (taxable) Daily Admission (non-taxable) Membership (taxable) Vending (taxable) Vending (non-taxable) Room Rentals (taxable) Facility Rental (taxable) Contract Revenue ECVB Rent Other Interest Subtotal 2004 2005 2006 Actual Budget Proposed $ 4,282 $ 22,200 $ 37,500 5, 602 2, 000 3, 000 74,441 13, 900 15, 400 43 - - 28, 637 31, 900 33, 900 1,189 1,200 3, 000 1,721 1,400 700 63, 903 95, 700 94, 000 5, 510 4, 800 4, 800 55, 885 74, 800 67, 200 11, 565 21, 700 10, 900 352,657 574,200 706,600 3 - - 6,144 5, 000 6, 000 131,268 172,300 249,900 6,221 1, 500 1, 500 47,139 55,700 57,000 7,333 8,600 9,000 22, 292 - 20, 000 825,835 1,086,900 1,320,400 Other Funding Sources Antenna Leases 253,338 292,300 141,000 Total Revenues and Other Funding Sources $ 1,079,173 $ 1,379,200 $ 1,461,400 2006 Community Center - 223 REVENUE PROJECTIONS Amount Total 4300 RECREATION CHARGES 4304 OTHER REVENUE-PARKS (non-taxable) 37,500 -.Personal Training & Heart Healthy Living PT $2,200 month x 12 months 26,400 In Home PT $600 month x 12 months 7,200 3,900 4305 EQUIPMENT RENTAL (taxable) 3,000 -Audio Visual 3,000 4310 PARK PROGRAM REVENUE (non-taxable) 15,350 -Fitness Classes. Punch CarrJs, New Programs Specialized Classes 12/yr x $40.00 x 15 participants 7,200 Punchcards 6 per month x $50.00 x 12 months 3,600 Adult & Youth Fitness Orientations 600 Wedding Workshop 3,000 $5 BOG Day 700 New Programs in Blast 250 4311 PARK PROGRAM REVENUE (taxable) - -Program that is not a class 4312 CONCESSION SALES (taxable) 33,900 Concessions -general 30,000 ECC Food and Beverage 40 meetings x 30 guests x $2.00 2,400 ECC Coffee Service 50 meetings x 30 guests x $1.00 1,500 4313 CONCESSION SALES (taxable) - 4314 MERCHANDISE SALES (taxable) 3,000 Towels/padlocks/batteries and cameras 1,800 Workout journals and Polar HR Monitors 1,200 4315 MERCHANDISE SALES (non-taxable) 745 Socks 200 pairs x $2.00 400 Socks 10 packs x $9.00 90 T-shirts 30 x $8.50 255 4316 GROUP SALES (taxable) 93,984 -Blast Groups and Birthday Parties Birthday Parties 558 x $120.00 66,960 Additional birthday party guests 2x $12.00 x 558 13,392 Groups 80 x 40 youth x $4.26 13,632 4317 GROUP SALES (non-taxable) 4,800 -Groups that are tax exempt 30 groups x 40 youth x $4.00 4,800 G 4318 DAILY ADMISSION (taxable) 67,243 -Blast & Daily Passes/Open Gym/Passport to Play Blast Daily 362 x 25.5 admissions per day x $5.00 46,155 Open Gym 150 per month x $5.00 x 12 months 9,000 Open gym 175 per month x $3.00 x 12 months 6,300 Fitness Daily 362 days x 1.4 admissions per day x $10.00 5,068 $3 BOG Day 450 Kids Night Out 9 programs x 15 kids x $2.00 270 4319 DAILY ADMISSION (non-taxable) 10,860 -Blast Punch Cards 362 days x .75 cards per day x $40.00 10,860 4321 MEMBERSHIP (taxable) 706,585 Memberships for 2006 693,335 Initiation fees 13,250 4322 VENDING (taxable) - 4323 VENDING (non-taxable) 6,000 6, 000 4324 ROOM RENTALS (taxable) 249,900 -Oaks/Meeting Rooms/Board Room/teen Ctr./Gymnasium Recreation Division Room Rental Fees 50,000 Oaks Banquet Facility 123,500 Meeting Rooms 18,000 Board Room 14,500 Lone Oak Room 5,500 Teen Center 4,400 Kids Kare 250 Gymnasium 33,750 4326 FACILITY RENTAL (taxable) 1,500 -GazeboBand Shell 30 hours x $50.00 1,500 4327 FACILITY RENTAL (non-taxable) - 4328 CONTRACT REVENUE 56,950 -Caterers and Contracted Vendors Food Caterers 22,800 Liquor Provider 31,250 Other Caterers 2,900 4621 ECVB Rent 9,000 9,000 TOTAL REVENUE 1,300,317 ~~ Eagan Community Center Yearly Comparisons July 2005 Fitness Memberships 2004 2005 (Jan -July) Current ECC Fitness Members 902 929 9D-Day Summer Promotion 384 357 *Health Partner Members 156 219 **BlueCross BlueShield Members Not offered 16 `Began program in July 2004 `*Beginn ing program Aug. 1, 2005 Total Memberships: 1,442 1,521 Miscellaneous -Fitness related purchases 2003(Aug.-Dec.) 2004 2005 (Jan.-July) Personal Training Sessions 201 772 543 Member Fitness Punch Cards 12 25 included in membership Non-Member Fitness Punch Cards 47 212 97 Fitness Equipment Orientations 89 91 89 Open Gym Programs This includes open volleyball, open basketball, family open gym, youth open gym, adult open gym, preschool open gym, and added in 2005 BOG & BOG's Days. 2004 = 3,070 2005 (Jan.-July) = 3,082 Blast Daily Admissions 2003 (May-Dec.) = 5,586 2004 = 9,278 2005 (Jan.-July) = 5,220 Blast Punch Cards - 10 visit punch cards sold to residents 2003 (May-Dec.) = 428 2004 = 274 2005 (Jan.-July) = 96 2003 (May-Dec.) = 352 2004 = 462 2005 (Jan.-July) = 309 Group Blast Rentals -Average group brings about 40 children 2003 (May-Dec.) = 118 2004 = 129 2005 {Jan.-July) = 69 Weddings 2003 (May-Dec) = 35 2004 = 58 2005 (Jan.-scheduled to year end) = 70 2006 (currently booked) = 35 Meetings Scheduled -Total booked in the ECC (does not include weddings, anniversaries, or special events) 2003 = 350 2004 = 580 2005 (Jan.-scheduled to year end) = 507 Gym Rentals -The " 3-regular" renters and their time used in hours (Fall and winter season> 2003/2004 2004/2005 2005/2006 (allocated) EAA 493 590 576 EVAA 170 200 226 P & R Leagues 419 465 454 Miscellaneous -Merchandise for sale 2003 2004 2005 (Jan.-July) Batteries (for headsets) 1 42 22 Towels 19 43 18 Padlocks 33 77 43 Cameras 9 9 4 Socks 503 223 148 Blast T-shirts 19 20 7 H: CCStatistic/stats 2003, 04, OS 8-1-05 ~z 0 0 N OC) 0 X (7I II N CO N ~ ~ ~ W °a. o ~ w ~ U ~ W cA cp CO O O O O N N ... 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II W 0 it ii c ~ ii N ~ II m II 11 II II N ti M O N J II ~ 11 U II r ~ N r N O c0 O ~ a 11 n u ii ii M o Q ~ II N U ii Q n n ~~ n n u u u II W II ~ ii a ~ i II ii C ~~ ~ 11 o. II N II O ii Z W W ~ W ~ Z ~ O ~? W Z W QO N ~. Q Q. Z ~- ~ W Q 4. ~ W W F- z F- W Q d z O H ~ ~ c~n W O Z m ~ ~ O O o ii V II N N O Q Z m Z m ~ 4 Q1 O r N 00 01 W Q> d' ~ tt ~ CO tD tp CO 19 N N N N a~ c~ Comm Ctr R&R schedule.xls Eagan Community Center Capital Renewal/Replacement Funds Estimated Useful Replacement Year Annual Year to Item Description Life Cost Replaced Amortization Replace BOILERS (3) 35 $ 75,000 NEW 03 $ 2,143 2037 WATER HEATERS (4) 12 16,000 NEW 03 1,333 2014 PLAYSPACE 8 150,000 NEW 03 18,750 2010 CHILLER 20 135,000 NEW 03 6,750 2022 ROOF 20 250,000 NEW 03 12,500 2022 RIDER FLOOR SCRUBBER 5 8,800 NEW 03 1,760 2007 KAIZEN RESTROOM CLEANER 5 2,800 NEW 03 560 2007 HUMIDIFIERS (4) 10 48,000 NEW 03 4,800 2012 CIRC MOTORS (4) 10 4,800 NEW 03 480 2012 AHU SUPPLY/RETURN MOTORS (4) 35 120,000 NEW 03 3,429 2037 BUFFER 7 1,500 NEW 03 214 2009 SWEEPER 5 3,300 NEW 03 660 2007 CARPET EXTRACTOR 5 5,500 NEW 03 1,100 2007 PULL EXTRACTOR 5 2,400 NEW 03 480 2007 WATER SOFTENER (2) 20 9,000 NEW 03 450 2022 CARPET SPOTTER 5 600 NEW 03 120 2007 BURNISHER 5 1,500 NEW 03 300 2007 WALK IN COOLER 8 8,000 NEW 03 1,000 2010 REACH IN REFER/FREEZER 7 4,850 NEW 03 693 2009 REACH IN REFRIDGERATOR 7 4,050 NEW 03 579 2009 REACH IN FREEZER 7 4,050 NEW 03 579 2009 DISPLAY COOLER 7 1,000 NEW 03 143 2009 SANDWICH COOLER 7 3,075 NEW 03 439 2009 WARMING OVENS (4) 7 11,000 NEW 03 1,571 2009 DISHWASHER 10 8,400 NEW 03 840 2012 BOOSTER HEATER 7 1,020 NEW 03 146 2009 PLATE WARMERS /HOLDERS (7) 7 11,320 NEW 03 1,617 2009 ICE MAKER 7 2,600 NEW 03 371 2009 POPCORN MAKER 5 900 NEW 03 180 2007 HOTDOG MAKERNVARMER 5 1,135 NEW 03 227 2007 REFRIDGERATOR (2) 12 800 NEW 03 67 2014 OVAL TABLES (45) 15 15,750 NEW 03 1,050 2017 RECTANGULAR TABLES (90) 15 22,500 NEW 03 1,500 2017 BISTRO TABLES (12) 15 3,600 NEW 03 240 2017 BANQUET CHAIRS (450) 5 37,050 NEW 03 7,410 2007 PLASTIC CHAIRS (175) 5 3,850 NEW 03 770 2007 PODIUMS (3) 12 2,000 NEW 03 167 2014 TENSABARRIERS (16) 12 2,300 NEW 03 192 2014 ATRIUM/LONE OAK FURNITURE 7 8,600 NEW 03 1,229 2009 POND FOUNTAIN 15 7,000 NEW 03 467 2017 BANQUET ROOM AUDIO SYSTEM 8 21,550 NEW 03 2,694 2010 AEROBIC STUDIO AUDIO SYSTEM 8 10,580 NEW 03 1,323 2010 EXERCISE ROOM AUDIO SYSTEM 12 2,700 NEW 03 225 2014 CARDIO FITNESS EQUIPMENT (30) 7 116,040 NEW 03 16,577 2009 FREElSELECTORIZED FIT. EQUIP.(14) 7 7,500 NEW 03 1,071 2009 INDOOR CYCLE BIKES (15) 5 8,625 NEW 03 1,725 2007 TEEN CENTER FURNITURE 5 15,000 NEW 03 3,000 2007 PREFUNCTION /OAKS CARPET 5 40,000 NEW 03 8,000 2007 REMAINING BUILDING CARPET 8 46,000 NEW 03 5,750 2010 BUILDING VCT /VINYL FLOORING 6 19,500 NEW 03 3,250 2008 AED 10 2,000 NEW 04 200 2013 BURNISHER - 2nd 3 1,500 Used 04 500 2006 Total 121,619 8/5/2005 20 Eagan Community Center Marketing - 2005 Below is a summary of how various areas of the Community Center are being marketed in 2005. Fitness Memberships and Classes: • Letter sent to all members to send yearly guest passes, promote personal training & open gym programs and to introduce new Fitness Coordinator. • Ad in special pull out section of the This Week newspaper for January membership special "The Power of Fifiess" • Welcome letter sent to all new members (over 200) who joined during the January promotion. $5.00 off Personal Training coupon enclosed. • Ad in Eagan Telephone Directory • Commercial made and shown on Cable TV • Press releases on complimentary group fitness classes • Powerpoint presentation at all of Eagan's softball managers meeting • Letters to all current members on the Health Partners Frequent Fitness Program and the inclusion of group fitness classes into the membership • Letter to corporate offices on summer membership special • Staff powerpoint presentation for Senior Heart Healthy Day • Staff attendance at three corporate (Buffet Inc., Thomas Lake Apartments, & Wells Fargo) health fairs or open houses 90-Day Membership Special: • Letter sent to all of last years 90-day enrollees • Letter sent to all students who purchased the student membership in December • Posters to area colleges • Information shown on BECT • E-mails to HR departments of several corporate contacts, colleges/schools and the four businesses near our campus • Promo box used on city web page & posted on the city marquee The Blast Indoor Playground: • Booth and staff attendance at Kids Expo at the Minneapolis Convention Center in Feb. Over 900 brochures for the Blast distributed • Coupon - $5.00 off any birthday party package, at any Eagan facility, put in the Discover Brochure • Letters to day care providers in six communities (650 letters sent) • Flyer to all MN Parks and Recreation agencies (nearly 600) for summer group rentals and to all groups who booked in 2004 • Redesigned monthly postcards to include the Blast, Civic Arena,_Cascade Bay & Oasis birthday parties and sent to every child who has had a previous birthday party at the Blast and any of the other city locations • Ad in GO! directory - a special summer edition of MN Parent • LILAGUIDE -Parenting guide for Mpls and St. Paul -advertising the Blast and birthday parties • Write-up & picture sent for the 2006 Community Pages Quest South of the River Telephone Directory • Table/Booth at elementary school open houses 21 Banquet Room and Meeting Rooms: • Ads placed in the Wedding Directory and Wedding Guide • Ad in Minnesota Meeting & Events Resource Guide • Ad in Eagan Telephone Directory • Listing in MSAE (MN Society of Associate Executives) alternative meeting resource guide • Letters to local hotels • Letters to school leaders and coaches who will be planning 2006 sports banquets • Letter to government meeting planners • Staff visits to local business & meetings with sales staff at local hotels • Staff attendance at meeting planners forums at the U of M • Cold calls to several event and meeting planners • Flyers (300) distributed at the 3-day Susan G. Koman Breast Cancer Walk walked • Letter planned for late fall to all regular meeting planners and previous renters to announce our free Internet (included in 2006 rental fees) and including information on our new rates for 2006 • Revising and reprinting banquet and meeting room brochure Specialized Events: • Hosted a national senior health and fitness day • Hosted membership appreciation night • Hosted a wedding workshop • Distributed Blast flyers (1,000) at the Eagan 4`h of July parade • Mailings to church groups on the overnight rental options • Flyers included to all adult leagues containing information on our open gym programs, fitness center, memberships, banquet/meetingrnoms, birthday parties, and indoor playground • Brochures distributed at the P & R booth at the Home and Garden Show . • ECC got it's own web address to make it easier for customers to locate us Regular On-Going Marketing: • Press releases are done on a regular basis for all programs • General information listed on MN Department of Tourism web site • Articles written for Experience Eagan • Promotion in the Discover Brochure • Promotion on City Web Page • Promotions put on BECT • Updates and revisions to the virtual tour (including the virtual tour update this fall) • Marquee at city hall used to promote all programs, memberships, fifiess classes and rental opportunities • Brochures placed on a marketing table near the banquet room when any large group is renting the Oaks • Brochure available at other city facilities 22 2006 Civic Arena Budget Traditionally, the Civic Arena Budget has been acted upon in advance of the other Enterprise Funds and the General Operating Budgets due to the fact that the Civic Arena operations are run on a seasonal basis starting in September as opposed to the calendar year. To provide for proper communication with the various organizations and individuals that are users of the facility, it would be helpful to have rates, revenues and expenditures all formally set by City Council action at the August 16, 2005 regular meeting. Although, no change is recommended, the rates would officially be effective September 1, 2005 while the budget including the revenues, expenditures, and capital improvements covers the calendar year 2006. Approval to begin the purchasing of 2006 capital items during calendar year 2005 will also be scheduled for consideration in formal action at the August 16 meeting. Campus Facilities Manager Vaughan, Superintendent of Operations Mesko, City Administrator Hedges, Assistant to the City Administrator Miller, Director of Administrative Services VanOverbeke, and Chief Financial Officer Pepper recently met and reviewed the proposed rates, revenue estimates, and expenditure requests included in this budget. The budget as presented is balanced, implements the results of the organizational study, provides for the appropriate level of renewal and replacement funds, includes an allocation for capital equipment, and annual debt service. Hourly ice time rental rates are not proposed to change. Eagan's rates remain competitive while slightly below the average of surrounding ice arenas. Revenues The estimated 2006 revenues are at approximately the same level as the 2005 budget. The budget is presented with no increase to the hourly ice time rental rates. There is a slight increase in exempt ice sales due to the increase in hours purchased by the figure skating club. Enclosed on page ~ is a copy of the Civic Arena Revenue Summary including actual revenues for 2003 and 2004, the approved 2005 budget, and the estimated 2006 revenues. Enclosed on page 3o is a copy of the Civic Arena Revenue Detail including actual revenues for 2003 and 2004, the approved 2005 budget, and the estimated 2006 revenues. Enclosed on page ~ ~ is a summary of hourly ice rental rates for the surrounding communities/arenas and a comparison to Eagan's rates for the two seasons, 2004-2005 and 2005-2006. 23 Expenditures Enclosed on pages~z. through is a copy of the detailed line item budget information for the Civic Arena. On a comparative basis the proposed 2006 budget of $850,000 is increased by 1.3% from 2005 budget of $838,900 and is actually $1,235 lower than the final 2004 actual numbers. Enclosed on page ~~' is a reconciliation that allows a comparison of the budget format on a cash basis to the actual financial report which is reported on a full accrual basis. This page has no budget implications; however it helps explain the differences between the budget and the official financial report as certified to by the independent auditors. As a result of the implementation of the organizational study, the personnel section of the Civic Arena budget is changed from previous years. As the City Council will recall, to better utilize resources and to gain efficiencies, the study recommended more consolidation of operations between the two enterprise facilities located on the Municipal Center Campus and the Community Center. The study recommended and the City Council authorized the elimination of the Cascade Bay Manager (vacant) and Civic Arena Manager (Mark Vaughan) positions, and the creation of the Campus Facilities Manager (Mark Vaughan) and the Superintendent of Operations (Cherry) Mesko) positions. This action and the related reallocation of support personnel between the Civic Arena and Cascade Bay are reflected in the following table and in the presentation of the Cascade Bay budget. Finally, with the consolidation of the management of the two campus facilities the need for operational support is reflected in this proposed budget through the addition of an additional clerical/administrative position. The new position is proposed with a one year sunset provision to allow the full implementation of the new operational model and to provide for a management review of organizational. needs and service delivery over the next year. Staff is requesting that the position actually be approved to start in 2005 to undertake the required support services to the management of the enterprise facilities, particularly as the Campus Facilities Manager transitions from peak operations at Cascade Bay to the peak season at the Civic Arena. 2y Proposed Personnel 2003 2004 2005 2006 Civic Arena Manager 1 1 1 - 0 Campus Facilities Manager 0.67 Building Supervisor 1 1 1 0 Skating School Coordinator 0.75 0.75 1 1 Maintenance Worker (2 @ 0.5) 1 1 1 1 Operations/Maintenance Worker (1 @ .67) 0.67 Clerical Technician 0.20 0.20 0.20 0.20 Administrative Coordinator 0.33 3.95 3.95 4.2 3.87 All partial positions are shared with the Cascade Bay and in the case of the clerical technician also with the General Fund. While the total number of staff positions at the Civic Arena essentially doesn't change, the levels do and when combined with the implementation of the organizational study within the Parks and Recreation Department of the General Fund the overall intent of the study is met. At this point the Superintendent of Operations is budgeted within the General Fund operations. That position serves the three recreation enterprise functions as well as park and recreation activities in the General Fund. In addition to the established historical use of seasonal employees this proposed budget reflects a shift of $25,000 from line item 6327 Sporting Event Officials to the seasonal line item account in personnel. That change will account for the City paying those officials directly and will properly place them on the payroll as seasonals. This is the same approach that the Parks and Recreation Department is utilizing in paying for recreation program officials. As a result of the above referenced changes, the personal services budget increases by $21,300 or 5.7%. Without the inclusion of the Sporting Event Officials, thereby reflecting only the organizational changes, the personal services account would actually show a slight decrease of 1.7%. Council also asked for a comparison of personnel costs to the total budget at the Civic Arena compared to other communities. Enclosed on page ~~ is a copy of the completed survey using reasonably similar arenas and situations. As is typically the case with these general surveys, the final results can be and often are skewed by the idiosyncrasies of local operations in the various communities. Such things as differences in operations (ice only/dry floor), services being provided (park and recreation programs/market rent only), actual customers (school districts/independent leagues), free standing facilities versus combined buildings (attached to community centers), management structure (personnel 2S costs in other funds), and a whole host of other factors and how costs and revenues are accounted for influence the results of survey data. Other significant expenditures changes in the proposed 2006 budget include the following: • Line item 6220 Operating Supplies- General is increased by $1,300 to reflect past budgets and to assist with new supplies for programs offered. • Line item 6230 and 6233 both repair/maintenance equipment shows an increase to assist with an aging building and equipment. • Line item 6327 Sporting Event Officials" is decreased $25,000 due to the transfer to seasonal salaries. The Civic Arena now has in-house referees versus contractual services. The $2,000 is remaining to assist with high school game operations. • Line item 6357 General Advertising is increased by $2,000 to promote birthday parties and Civic Arena turf programming. In the past, the ECVB has assisted the Civic Arena with the advertising for the Home and Leisure show and this line item reflects the continuation of the partnership through the ECVB funding of that promotion. • Line item 6491 Debt Services Payments is decreased by $2,950 to reflect changes in the actual debt service schedule. Capital Expenditures The 2006 expenditure line items show an account for a capital outlay allocation with an appropriation of $10,000, continuing the process implemented with the 2004 budget. Civic Arena capital needs can best be addressed by setting aside some money from each year's operations through the operating budget process and combining that with the use of available retained earnings to provide for capital needs to renew and enhance the facility beyond what is available through the renewal and replacement account. This process clearly designates a Civic Arena use for retained earnings while preventing spikes in annual operating budgets caused by fluctuating capital needs. Enclosed on page ~ is a list of proposed 2006 capital items for consideration. Renewal and replacement items are included in the first section of the list and are funded by the annual allocation set aside from operations for that purpose. The second section of the list shows replacement items that are not funded by the renewal and replacement account. The third section includes new items that would either enhance operations at the arena with the goal of increasing utilization of the facility thereby increasing revenues or by maximizing ~/ other revenue opportunities. The second and third sections of the list are funded through the annual capital allocation from the operating budget ($10,000 each in 2004, 2005, and 2006 to date) and from retained earnings as available and appropriate. Enclosed on page ~ is an ex lanation of each of the proposed 2006 capital items. Also enclosed on page ~ is a worksheet showing the infrastructure included in the renewal and replacement funding process. The worksheet shows the cost being recovered and the useful life of each capital item. Enclosed on page ~~- is a copy of the 2005 Civic Arena Capital Improvement List -Status Update showing a current status of each of those capital needs. At the time of final 2006 budget approval staff is recommending that the City Council approve the purchase of the 2006 capital items in the 2005 fiscal year so they are in place for the 2005-2006 operational season. Cash Position Enclosed on page rl ~ is a copy of an analysis showing the cash position of the Civic Arena Fund from inception through the 2005 budget. In summary the analysis shows $312,328 in the official renewal and replacement account and $143,295 of retained earnings over the 11 year period. On a cash basis, results from operations vary annually depending primarily on capital acquisitions. The analysis demonstrates that the facility is on firm financial footing and should be able to sustain similar operations into the future absent any significant change to market forces. On page ~ is a recap of the status of the Eagan Hockey Association commitment to the addition of the East Arena. The commitment will be completely paid off in 2007. Eagan Civic Arena Future During last year's budget cycle, management presented to City Council a process to design a 5-10 year plan for the Civic Arena. After sending letters to all youth groups and running an article in the local newspaper, staff received three responses with ideas on how they would like to see the Civic Arena move in the future. Two of the three responses asked for a third ice arena and the other response would like some workout rooms for dry land training for figure skating. Given the limited number and the nature of the responses, it is difficult to reach any conclusions from that information gathering effort. Presented in this proposed budget is an allocation request for research dollars to get some cost estimates of finishing the upstairs mezzanine. Z'~ In the short-term the implementation of the results of the organizational study as provided for in the proposed 2006 budget is a top priority. Final implementation is expected to help control costs while providing aconstant/increased level of service to meet and exceed customer expectations. It is essential that Eagan stay competitive in this environment of ever increasing market supply of facilities with myriad of customer choices. Summary There is a great deal of material presented with this budget proposal to assist the City Council in its consideration of the 2006 budget. The 2006 budget as presented is balanced, implements the results of the organizational study, provides for the appropriate level of renewal and replacement funds, includes an allocation for capital equipment as well as an allocation for some capital improvements, and the annual installment for the scheduled debt service. Hourly ice time rental rates remain competitive while slightly below the average of surrounding ice arenas. Staff continues to efficiently operate the arenas and to aggressively market the use of the facility to increase revenues and is making every effort to operate a successful business venture per City Council direction. While ice time rental is the basic business of the facility, auxiliary uses account for approximately 23% ($192,000) of the estimated revenues for 2006 and clearly demonstrate management's and staff's commitment to customer service and to expanding revenue opportunities. The continued marketing has attracted some non-ice users, growth of the Home and Leisure Show and extra amenities for our customers. Positive Civic Arena operations continue with the growth of the skate school provided by the City of Eagan and the continuation of a figure skating club at the arena. The cash position is an indicator of previous success as a business. However, the competition from surrounding rinks and customer expectations demonstrate the need to remain efficient and to remain a preferred vendor for the services provided through the arena operations. This proposed operating budget and the proposed capital improvements assist in meeting that objective. Direction to be Considered To provide direction to staff on the 2005-06 ice rental rates, on the 2006 Civic Arena operating budget, and on the 2005 purchase of 2006 Capital Outlay items, and to direct that the items be placed on the August 16, 2005 City Council Meeting Consent Agenda for formal ratification. 2~ CIVIC ARENA REVENUE SUMMARY 2003 2004 2005 2006 Actual Actual Budget Estimated Rentals-Ice $ 424,087 $ 503,402 $ 451,000 $ 465,000 Rentals-Non Ice 26,526 22,287 24,700 20,500 Services 32,419 42,000 40,500 48,500 Programs 152, 527 145,171 157, 500 161, 000 Events 23,672 27,192 20,000 24,000 Sessions 27,888 31,507 32,000 32,500 Sales 81,457 86,431 97,000 93,500 Other 18,955 12,397 20,400 5,000 Total $ 787,531 $ 870,387 $ 843,100 $ 850,000 Z~ J a w W Z W W a' a z W a U U a~ c ~ m •~ ±~. a~ t ~ ~' ~ C 0 ~ a~ ~ v Z N O Y ~ O L ~' Q 7 O LA M ~+ N '~ °O- N t O ~ V Q ~ ~ C C `~ ~ a C ~ Vl X N C O w fQ ` N ~ O O N Q O p O ~ ` ` ~ N 'B ~ ~. r w • C N N O LA ~ ~ >+ a0+ O (6 lII ~ N L Y }, In w ~' 7 7 f0 N~ Q~ Y ~, ~~ N ~' O ~ O O V X 0 0 t17 ~ Y 0 0 ~ ~' o O L L O N to O O O 00 O O O N~ CV M CO ° N~ M D) O N o r ~ (A m 69 ffl 69 f- Efl ffl ffl 69 M Efl EA ffl 69 O O O O O O O O O O O O O O O O O O O O O O O O O 'C O O O O O O O O O O O O O O O O O O O O O O O O O G1 O O In 0 0 0 0 0 0 0 0 0 0 0 t17 O O O Ln 0 ' 0 0 0 0 p R O In (O r <- O N O O N I~ t* In (O a) (O N N N In M M N In Op c r O r r r N r~ r (p N r r N ~:. M r N W 69 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~.. O O~ O~ O O O O O O O O O O O O O N O d' O to O ~ ~ I~ ~ (p ~ O ~ O N O ~ ~ M O (O 00 CO O ~ M ~ M CV lf) p ,~ M M r T N r~ f~ N r r r O ~ N m O) M I~ In M In tt r~ aD O) M M M M M r In r (p (p O r N r r ~ l.f) O N a0 O ~ (D OD I~ M N O O Ln N ~ O ~ ~ r i~ lf) a7 N M O M OD 00 U1 OO ~ l,() 1~ r O n O ~ O ~ ~ O r M ~ (O I~ ~ ~ O ~~ r N (O O O O r O M 0 CD r ap LO O In ~ O N N~ 00 N (O p 0 0 r ~ r N N r ~n N r r N Q ~ N tp N O) (O t0 O O) t!7 I~ O) tf) ~ N o0 ~ N t~ O O O O O In M O) I~ l.[) r (p r l(7 N M r r (p r N i~ ~ O O r~ M O r N M 0 l!1 M lC') Q) M N N N N r (p (p O~ N~ r ' lA M W fh O (O ~ ~C) (O (O ~ OCf '1'> 00 ~ to O ~ N oO ~ u'i ~ p r M M O O V N Q ++ Q N a aw v a ~ ~ E E E °' °' c c a~ ° c c c c m~~ x X o QX rn :co o~Op Ew~TwZ m c > > c~ X o ,N c o a~i c .c .. ,n m m ~ °~ °~ ° ° m ~ ya o v c c c w C ~'' ~' Y +O' "1C m ~ ~ O O ~ O Q O fQ fQ > ~ ~ Q' N c c ~ ~ ° o Y ° a`~i °~ U >, N o ~ ~ ~ aci aci Q .~ `o o ~ N N N N C~ C C a+ a. U~ U (n U "O N~~ fQ Y L.L LL C ~ d ~' ~ `t `t .. N U ~ ++ a+ t. fn O N 7 7 C L C C C ~ C v ocACnJ ~OOQwmmUm»2F-F-Q~oDOU- 3~ O O O O t1~ O Efl 0 o_ M M O M O M M L!7 O 69 lD 0 Proposed 2005/06 Season Rates For Surrounding Communities City/Arena Farmington Apple Valley Rosemount Burnsville Lakeville Inver Grove Heights South St. Paul Richfield St.Thomas Ice Arena Hourly Ice Rental Rates Prime Non-Prime Time Time $145 $165 $150 $160 $170 $165 $160 $155 $190 $115 $110 $115 $115 $135 $130 $135 $125 $120 Average Prime Time Rate Excluding High ($190) and Low ($145): Average Non-Prime Time Rate Excluding High ($135) and Low ($110): User/Use Eagan Association Eastview Association High School Non-Prime Turf Dry floor Eagan Hourly Ice Rental Rates $161 $120 Season Approved Proposed 2004-2005 2005-2006 $155 $155 $157 $157 $165 $165 $112 $112 $75 $75 $40 $40 31 0 0 N O to X rn O 4 0 a crs c aN U ~ ~~ U C4 E cn ~ 0 o ~ N U N rn F- Q c m ~ ~ O m o ~ N ~ U °~ p ~ +~ y ~ II O II O II ~ O O O O O O O O o0 O O 1~ O O I~ O O O O O M O O O O O O O ~ O O 00 ~ ~ II ti ~ r ~ ~ O N M r ~ M r N N ~ ~ II p II W II O 11 O r O O O O O O O O tb O O M O O N O O (p O O O O O O O O O O r f~ O p O p N m II II ~ II r II `_ O ~ ~ N M ~ ~ M ~ tp J Q ~ ~~ ~ II O O O ~ M N ~ O ~ ti ~ O O N rn M (D ~t O co O 1~ ~ M ~t M ao O O ~ ~ ~ ~-- N ~ O O~ O U N 11 00 II ~ I~ ~ N r r N M N ~ O M r to N Q II II J ~~ ti 00 II -~ O u'1 ~- N (O (D I~ N ~ ti M ~ ~ N (D ~ N ~ d' O ~ M to N N O~ N r M 1~ M M N O M O ~ O V N II CO II O II ~ M O .- ~ ~ a> ~ oo .- et 1~ N M of •- Q II i II U O O o a U ~ p N ~ V II II II u ii ii II ~~ II II II 11 11 II II W ~ a Z W Z W ~ Q 7 U N N ~ J ~ ~ w Q ~ p Z (A W ~ J Q (4 r J ~ O WQ' W ~_ ~ W ~ O ~ O a w w Q ~ p Z N W ~ J Q cn p H Q Z p O ~ ~ ~ W ~ Q V i W U Q ~ p Z = ~ Q W = W L J ~ ~ (~ Z O J ~ J m Q fn o O ~ W d ~ O (n W Y ~ O ~ W U > w ~ Q Z O LL' W d W ~ a ~ W U W W O ~ ~ ~ W Q g p ~ Z Q.' W U LL W O J ~ w w J d ~ UJ Z ~ ~ W ~ O O N O N ~ r N ~ !!9 O r O r r M et ~ 47 1A to {C~ r r N r- r r r r r r r r N N N m m cc m co co ~ co ~c co m ~c r N m CC a 3Z 0 0 N et O N X '~ N O a O Q ca ~ r ,,.. N Q N U ~ U ~ E cfl ~ o ~ N ~ r C N ~ II 11 I I II II II O O <A O O ~ O O ~ O O O O O l!') O O ~- O O ~ O O r O O O O O r ' O O Ll7 O O O O O N O O r Q II ~ N r '~t ~ N N r N c6 N ~ II Q II 4'1 I"' W ~ II II II O O O O O ~ O O ~ O O O O O T O O T O O M ' O O !~ O O O ' O O ~ O O O O O N O N ~ II ~ N ~ M u7 ~ N r m II II J II r 'tt N O ti d' M (D M to 'd' r M ~- r ~ O to `ct r O O N N N O O F- U II ~ N CO r N Q II II II M J Q 11 II II O O ~ M I~ O N f0 to r' N CO r N ~ ' N ~ M ~ M 'n I~ 6) O ~' 1~ ' ' O O O~ O (D '.[) N Q 11 u I I I I it II jj W ~ J ' J ~ F- ~ ~ II N Il a d ~ ~ W ~ U d W ~ ~ ~ Z Z (W7 cn ~ Q W t9 p m ii ~ n w II F a ~ ~ W ~ In ~ ~ D Q ~ p ci) U Q U LL. O m N II W W V- fn O J W U W ~ ¢ U Z Q ~ ~ u- ~- F- t0 O ~ II Q W ~ Z Z O Z ~ ~ ~ J ~ = N W J O Z U N N O ~ Q, II u Q ~ ~ w w W F a Z U ~ ~ ~ Q w Z ~ tq II V ~ U d Q ~ ~ ~ O 0 F-- J ~ ~ (~ Z •-' N ~ ~ II V ~~ e- Q U Z ~ Z F- Q Z ~ J J J ~ d U ~ W 0.. ~ LL Z ~ O.' O Fa- O o U I, N II N o W ~ ~ p J a W =~ ~ W ~ Q ~ O 2 w = a. ~ O R' o ~ O d ~ O ~ m U ~ m Il cn cn U to a Q cn a N N N M N N '~ N N O M N tq M N tL~ M N O ~ N r ~ N 'd "d N O r M ~ ~ M 1~ N M t0 '~ M m m m so eo m m ~c co m cO co m N O ca ~3 u~ 0 0 N rb N X U a> rn 0 Q 0 a m C r ~ N Q U ~ .> ~' U ~ cfl ~ N fn II I I I I II O O O O O O O O O O O O O O C +-' II O O O O O O O O O O r O O O (D ~ ~ II O ~ ' '~t CO O I~ O O O ~ r ~ N 00 O ~ 7 II N O r r CMO ~ N M N cII tv II ~ ~ II ^ II ~ ii o 0 0 0 0 0 0 0 0 0 0 0 0 0 W 11 0 0 0 0 0 0 0 0 0 0 0 0 0 0 tl~ (7 II ~ M ' M (O O I~ M O O O r ~ r (p O^ II r (p r (p M 00 N M N = II c0 ~ m II II -~ II r 00 (O 1~ r 'ct O ~ O to O GO tT ~ 00 M I~ M ~ d' O r O CO M O O r Q II (fl ~ M M 00 ~ ~ ~ N ~ r O N N O~ II M ~ ~ O ~ ~ N N N Q II II II u") (D CO N ~ ~ N O O O M (D O CO J II N ~ tb O O O (O O f~ CO O to ~ ti M a II ~ r M N ~- O ~ r I~ ' O r to 0~ II N ~ r ~' ~ ~ r r N U II Q II II 11 II II II II W O W O N 2 U Z a ii ~ U p ~ J Q ~ ~ ii °. w ~ Z Z O cn cn O C7 m ii W Z ~ O W m W O w J Z fA ~ 2 (A Z W A N ~~ Z ~ W (n Y w Z Z U a ~ w O } m ~ tl ~ W 0.. a I- o° c. ~ ii w ~ w ~ ~ a ~ Z w p U Q w U O U c~ a~ ~ II DC W v w F- w w H (~ Z ~ ~ (~ m a~i 11 > Z w W J ~ Q d U ~ O ~ Z Z W ^ ° ~~ ~ ° x ~ o J ~ ~ Q~~ Z g w~ a ~ -o ;; r a ~ w ~ ~ w w ~ v ~ = w ~- Q ~ O U ii ~'' I j Q Q w w w w ~ ~ Q Q ~ O p ~ F- ~ d a U O (~ ? 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O = 11 O U 11 N M ~ ~"~ M ~ ~ N O ti ~ In t0 ~ 00 M c0 M ¢ ii 11 J II M Q 11 ~ `- N N ~ N ~ oD ~ N ~ O O r M ~ O M O r O O O r ti' CO d' M 00 CD M d' CD M ~ II F- O U eN- M ~ ~ ti N N ~ dN' ~ N II ¢ II II ~ Q L ~ F-' U 7 = o N ~ m ~ ~ N ° i O II II II 11 ii ii ~~ ii ~ II °' i vv7 11 ~ II p u a ~~ V II W ~ ~ W Z W ¢ V ~ b ~- N W ~ Q F~_- ~ w ~- (q W Z U J ) ¢ U Y Q m ~ ~ ~ > A U w ...I F=- U ~ Z O U w t- O ~ > W Z O a Z ~ Q ~ ~ W ~ ~ Q ~ - V ~ Z ~ v Z Q z IW- Q ~ n ~ = ~ Q w > ~ W cn W I=- O n W Z ~ z ~ ~.. ¢ W Z m Q ~ Z a ~ z ~ ~.. a a Z m W W tL Z ~' U ~ (n ~ Z m ~ W C7 a O } a A W ~ d w U ~ W cn 00 ~ ~ Q ~ O LL cWn 0 Z ¢ U W ~ ~ Q ~ O IL cWn ~ Z a U W ~ O cD 1~ cp L(1 cD Oi !D Q7 cD ~ ~ pNj ~ ~ ~ N O c6 d ~~ u~ 0 0 N X a~ 0 O ^. c ~- Q N U ~ .> ~' U C° E o ~ o ~ N fn I I I I I I .,-+ cD ~ ~ II 11 O ~ Q N y ~ II ~ II ~ II W II ~n C7 n °o ~ ii N m II I I I ~ ~ II O ~ N U Q II II II o ~ u O ~ it N V Q II II Q W 'a I C7 ~ m w ~ ~ I O °~ ~ C ~ I cO O p. ~ I N N ° I U ~ ~ N 1 ~ I ~ I U ~ I I ~ o I O U O O O O O O ' ' ' ' O O O ~ M d' O O O o O O ' 0 0 0 o m co ~ M ~ 00 oO O O ~ r O O ~ ' ' ~ ' O O O O M M ~ ~ ~ O O O M o0 N ~ ' O O ~ r N O M M I ~ i Z ~ L1J W ~ ~ a d ~~ H II W Q W ~ ~? ~ Z ~ ? W ~ W Z 2 ~ W ~ Z = ~ ~ W W U Z W ~ ~ W ~ W ~ Z w <Z d W Q Q U ~ Q N Q LL H ~ ~ O O ~ O O O ~ O ~ t D c O co so m 3b Z O Q U O J Q F- Z W d w J a Q U z O Q U O J J Q H d U J H O H I I I I I I O II o 00 ~~ M p II ~ ~ II II n O II rn u ~ n M II O II I I ti N II ~ II tb II II ~ II (D II I I ti II II Q Z W Q U >_ U J F O H N O (0 a 0 0 N X a> O a 0 a ca C r ~ N Q Z U C° co ~ o ~ O ~ II II „r f I C ~' II O N ~ II N c~C ~ II ~ ~ II f- II W II ~ (.~ II O ~ II N m II II II O = j N Q II I I II M ~ jj O 11 O ~ II N U II Q II II II II ii Z ~ m C7 ~ m W ~ c ~ 0) W m ~ ~ N ~ U °~ O w ii N a. ii ~ II W c jj z a° L a U p ii ~ u ~? .D O II N O V II N 1~ O O 1~ O ~t Q1 I~ 00 'd' M O O r tl7 O O r -~ O N ~ O O CO N ~ O cD d' ~ r (p L1~ CO O) O 00 O O N M ~ W N W O r ~ pp `--' r O Cp CA ~ N ~ ~ ~ ~ ~ O O ~ t (O ~ O O M N N et M~ N u7 0 O ~ ~ c~ ~ O 0 0 1~ I~ `~ `'~ N 00 -n N O W W O Z Z ~ ~° a a w x n ~ I t1 W Q Q ~ ~ O O w O ~ a r s W a~i X W ~ Z Z H m ~ W ~ a _ W Z W d d ~ ~ ~ a d W ~ (A Z ~ y W ~ Q ~ W W W Z ~ Q W I Z Z Z Q X Z~ •~ o o W oo v~i W ox W a U a ~ o F¢- ~ W~ Z ~ ~~ o O Q w p w~ ? ~ wZ ~. ~ U l m oQ ~ O o. eS •C ty/f 7 OD 0~ ~ ~ a ~~ Of ~~ c~ N O c4 w d m r O H O C m U a R N ~a O V d C C O d a ,tp o OSJ~ 0 \~'/CAS /~ os~~,~ ~~~0~ /~ a6\~.~0 Ja sa a(v~~~~s d /~ a6\~ Jao sa ~JEi a /~S ~~ny as4 a G~9~t~o~a~~ a /~~~~ Sa~~i/,~ p~ o~'oa~r,~a~4~o \ O~ ~~O ~~ s,~ao yS '\ a?i ~~~ a o 0 0 0 0 0 pONI~CONO p 0 0 0 N OO O p p ~ t~ W (h M ~j to N co ~ t~ c0 f~ O ~ r In ~ O C+y '[t d' M ('7 M ~t 0 0 0 0 0 0 0 M M O ~ N d' ~ ~ r r T r r p O M O O O O po~c~~noo poo~ncooo pj O~ h N O O p O f~ a0 M M ~ r r r r r a o 0 0 0 0 0 M O O O O M Cn N N M M •- ~ N p o a00 COO ~ o0O o ~ 0 0 ~ O N O eto~ciaiorno p~ ~ M N O r- ~ e- N M N ~ ~ N p O N ~ (O ~ O p O~ M N 0 0 ~- O r L(7 (O ~ I~ M (D N ~ M o0 ti ~ e- CO 1~ (O M O pp GO b ~ O O O r r m cn v, ~ oooa~oa~a~ C C C >, >. ?. ~, C C C C C C CV N N N N N ch N N C N ~' ~oUYO~o~ 'V Q O N ~ 000 ~ ,, N U (0 N N N N ~ O 0 0 0 0 E rn~,~- 0 0 0 >, z wamm~~a N ~ U C O N . N C U t0 •C a ro ~ rn ~ o ~ ~ U ~ O C Q U O O ~ ~ ~ ~ cXU N co E y ~ v o 0 i ~ "O ~ C ~ c ~ ~ :.~ ~ C O d C N ~ O O O C .-~ . + U ~ O ~ X U N O j ~ O O "O U f0 ~ ~ ` Q p ~ O U .N N O O VJ ~ f0 ~ O 'U ~ U O 'p N 7 N ~ N ~L..' ~ C ~ .V ~ t O C ~ f` D7 to C w- C j > > C C ~ U L O C ~ m ~ C O C O U O O O U~ U ~ 'O O C O rn O N ~ ~, ~ U ~ U O c ' ~ ~ ~ .C Q C ,C ~ ~ O N N N ~ > ^ W O }, ~ ~ ~ 4~ N w C N ~ N f6 Q .~ ~ ~ ` N C ~' ~` O O U O C CuO. N O N C O N O .r L O O L Q a C N V O N U U N O C C ~O (p I6 O N N :~' O C 7 (0 7 ~ O C 0 +.. O C O C O f6 U t L N N O O_ ~ .C Q f- ~- E o O w ~ ,C N v7 Q o 3$ 2006 Civic Arena Capital Improvements List Renewal and Replacement Boiler $ 15,000 Sub-total $ 15,000 Replacement Items Computer $ 2,000 Carpet for Community Room 2,000 Multi Plexer 5,000 Sub-total $ 9,000 New Items Feasibility and Design Options $ 5,000 Rubber Matting Installations 4,000 Computer CPU Only 1,000 Sub-total $ 10,000 Total Capital Improvements $ 34,000 The boiler replacement ($15,000) will be financed from the renewal and replacement account and the replacement items ($10,000) and the new items ($9,000) will be financed from the capital outlay allocation set up with the 2004 budget and being funded annually at $10,000. The cumulative balance in that account is carried forward in the unrestricted retained earnings account for financial reporting purposes. 39 Capital Improvement Descriptions Renewal and Replacement Boiler -The Civic Arena has been working with Harris Companies on a facility audit. The first item for consideration is the replacement and design of the boilers systems for both arenas. The upgrade will give the operations some assistance in heating the East Arena and help with snow melting from the resurfacing operations. Replacement Items Computer -Staff is requesting replacement of the skate school coordinator's computer to assist with operations. Carpet in Community Room -The multi purpose room floor in the East arena needs some upgrade. Staff is proposing carpet verses the to assist with acoustics and visual appeal of the room. Multi- Plexer -Last year the Civic Arena installed new operational cameras. With the increased cost to the system, the multi-plexer was borrowed from the pool and then returned before that season. This leaves both facilities with an incomplete system during their non-peak seasons. New items Rubber Matting - Staff is asking to restore the rubber matting in the West Locker room. After further research, staff believes that dollars allocated to the East rubber matting addition should be directed to assist to the West Lockerooms restoration. Feasibility and Design Options -Staff is asking for an allocation to assist with a feasibility study of various options and costs for the upstairs of West Arena. These numbers wi(I assist in providing the City Council with some options for the Civic Arena future. New Computer, Point of Sale System - To complete the new Point of Sale system, a computer (CPU only) needs to be added. U~ C O :% 7 .B .` ~ O 47 0 0 0 0 0 0 1~ M O 0 0 0 O O N O O O N O to CD M (O O O U co oo~nrnotioc~rno O 1n r M r N r r iC 7 C C Q 0 0 0 0 0 0 0 0 0 0 0 0 O O O O O O O O O O O O O O O~ O O O~ O O O O (p O O N f~ O H O M~~ M O n r ~ ~ N I~ O U .-. N L T N ti O l() t!') tf) I~ O O N~ O n ~ (D w N r r r r r r 3 O fn U CO J O C 'Q i ~ • 0 ~ ~ L L O ~ /\ U '` O N v Q N .N.~ O w N~ ~ E N Q~ O a a m U = i ~ 3 a~ L ~ o o .n ~ ~ ~ ~ .- .,r ~ L.. ~ 3 ' 3 °' o ,_ c ~ c .n n.... o ` ~ o m m a~ . O ~ ~ ~ o c a U~ L L ~ `C ~ L4 ~ CB ~ C - C ~ ~ ~ y U . a- . ~ ~ O O C ~ O O N ~~j~ N N N ~~~ O N O .L' UUUO fII O O O ~C N (n0' 2ULL ~ . i Q V! ? rn rn N O O O O M O r 0 0 0 0 0 0 0 N M O O O O O N O t1') CO M 00 O O O N O CO 1~ O M N U7 ~-" M r (~j r 0 0 0 0 0 0 0 0 0 0 :' 0 0 0 0 0 0 0 0 0 0 ~:~ M O O S N O~ 0 0 Op '>,' (fl N N N t0 (D f~ (~ ~ N 1~ Ch r f"7 r ::: 1~ X1'1 N N ti O O t17 to O r r r r r r ~ ~ ~~ O ~ L L O E .-.> v L O ca ~ ~ U _ 0 7 N` U N L CQ N N O N 3 U U U +~ N C O lC N O ~- ~ i ,.: O N 0 ~? ' O C 7 O ~' O 7 7 . to tq N N N O N O C C V O L O~ O N . O ~:- O ~: ~ ~ ~ ~ ~ U U U O ~<~ .. ca ~ ~ _ Q t0 ~'' F- W rn u~ M d' N O O (~ N t~ M d' r N lQ W i0 N ~n ~ u~ +~::: ~ ch :~?: ch <3;: <`a-:: O :23::5: O >:::>> M ' 3i`>: M Yv$ 1~ `Yii>: ~"" p` Z <I Si W ' ;. :' W '' V 'I'? Q <: ~'; J .: ~': ~~~~ O o ~ <£?>' N z '~>: O 1~t.> ~ ~:.: y :::ice:., Q <~> cv a ::>c> a~ W :f~` ~ ~::~: ~ J :: Q O s3 ~ F- +~ «. O ~' N Z >~: N ~: p ji~'ri f-- 2005 Civic Arena Capital Improvement List- Update Renewal and Replacement Nothing Scheduled Sub-total Replacement Items Office Furniture Sub-total $ 10,000 Completed $ 10,000 New Items East Arena Rubber Matting Check Card Machine Point of Sale Equipment Sub-total $ 5,000 To 2006 Budget 1,000 Purchased 4,500 Completed $ 10,500 Total Capital Improvements $ 20,500 BIZ N O N V a0 00 O 000 O N N NO o0N M N NrN O O O O O O O O) O) N O N O N N N N CO ~ N r- N O~ f~ 0 0 N O N aO N M N c0 ' r r p 0 M N r r 0 (O st O) M of r N (` ) ~ r W ~ N.-C7 m ~ ~ ~ ~ N 3 0 { p 0 M CD . . . ~} f~ 69 (H fA ~ O N OO M O (O N M CO cD N N O q C~ ~O o'> ~O ~ ~t K~O ONO ~D •'- [D N O~ O ONO N Q7O m et Ncp [00~ r N r ~ ~_ p M O M N ~f CO N ~ O CD n a0 Q7 n ~ Q c0 W N vM N cp m N r N M O d= O N ~~ .-- ~ ... O Q Q v> ~ Z 3 cn d ~ rrn oo rnrno o vcor m N O N ~ M N r r t0 O M m (O ~O N o0 O f0 tO N a y ~y I~ ~ N T V O O~ M N I~ y r a} N O (D e- f0 ~ N O to ~ (D O a0 r st ao ~ W N (D ~ M CO (D N m N ( ~ 0' ~ ~ v . - c ~ 4Y ~ eo r to ao O m M O O CD st M ap O O (D M aD 00 O N r M ao N (D cD M c0 N ~ N m CO f~ .- ~ ~ (D (D M N N O ~ m M v ~ N C MO N N'QM W O O 000 N 00 N U M N ~ v M O W N~ N~ ~ N O D 4 7 N V ~ O f~ ~ y y ON r 0070 CO O M ~ r O M N N L N t0 tD tD O O 1~ r O V' (D aD r m O t M O m y r. yr cD arv rn N ~o mN et D v p O N R r rOO O O rrO'i (OOH 4 - fD ~ A N N ~ O Q O .- 07 ~ ''- N N N F N r N ~ v Efl ~ cc o ~c ~n co o ui v m O N eY rn m N N rM0 O r f~ r rnr ~ m N O) N~ `7 'tt O LL9 O CO N N e - C C N ~ ~MN ~ r OCD r O ' ~~ ~ N~M O O 07 r u )O N N .... .~ ~ ~ O~ CD GO O> O .-. N ~t r N W et M N O r ~ ~ O ~ r N N r r N (p R N N O r aD O ao r N O CO ~ ~ N T m rcON r eY ~ ~ M W r N ~ ~ ~ r fD .... M . .M N ~ ~ ~ M r ... . r ~ ~ OD M N 1~ O W r 47 aO ~ O r N N O W O O O O O ~'a'O) N r M N O N ' O f7 Q W V O CO c0 tD ~ Q~ M o~ O O c0 t0 ~t O O O1 'C '7 Q! d' r CO r- M N O M O r N r N M .- ~ N m 69 ~ N ~ ~ O M tt r OD a0 r N h ~ ~ ~ `Q N O ' O r N sT ' '~ ~ ~ A p~ N pj ~ W M M ~D O O CO cD p~ ~~ ` N W N O N CD O (O N ~ 49 U r r O ~n O lf1 7 uO W~ N N ~ OGO N mN r ~ M M MM r ~ ~ M r N ' N r `7 N N ~' ~ N ~ N to Oi m M O ~ cD o0 M M M M CO ~ N M v N M N M M N N ' M N - ~ 69 C_ ~ ^ ^ ~ W ~ N N N N o 0 d' ~ 'p ' (O t0 ' CD N N N ~ M r CD o0 c~ (D CD o~ ~ r ~- EH ~ N L L y ~ d N y N ~ .p 9 ~ N y N N p N ~7 N ' w A y O ~ W C p N a C U y L ~ ~ d y o > N e w _ lC y p ~ N ~ ~ E .~ ~ . •~ V ~~ d ? y E y y c ~ ° o `~ V >.c i a > m a~ s ac a a~ n r y y L ~ Z N~ N 2 _> N N O (O l0 N d y N 7 N y O ~ U r`n U U N m ° ~ E ~ c m o m m m y ~ . y y : w~ N ~ a V > G. L ~ Z L y ~ X' U1 0 L N /0 f x t0 7 ~ ~ C N x ( 6 W U U U ' '~ d Z o~UU W U U J 3 U p H y y ~~ Eagan Hockey Association Contributions to Eagan Civic Arena II 9337.1340.3 $500,000 over 10 year period. Payment# Date 1 02/17/98 2 Ice Resurfacer 3a 05/05/99 3b 05/23/00 4 06/03/01 5 06/03/02 6 05/30/03 7 06/20/04 8 06/09/05 9 10 Amount Paid Balance Due $ 500,000 50,000 450,000 59,500 390,500 25,000 365,500 50,000 315,500 50,000 265,500 50,000 215,500 50,000 165,500 50,000 115,500 50,000 65,500 TOTAL $ 434,500.00 Payments 1 & 2 were deposited directly to the Civic Arena Fund. All additional payments are to be deposited to the CIF. 44 Cascade Bay Traditionally, the Cascade Bay budget has been acted upon later in the fall, after the year's season has been completed. This year due to the increased coordination between the Cascade Bay and the Civic Arena budgets the schedule has been adjusted to consider both budgets at the same time. This change in timing results in less information being available for the current year, but does not hamper the preparation of the budget, especially when no rate changes are proposed. Numerous charts and graphs that were previously provided with the budget material are therefore not available at this time and will be presented after the facility closes as a report on activities for the season including the complete historical perspective. Campus Facilities Manager Vaughan, Superintendent of Operations Mesko, City Administrator Hedges, Assistant to the City Administrator Miller, Director of Administrative Services VanOverbeke, and Chief Financial Officer Pepper recently met and reviewed the proposed rates, revenue estimates, and expenditure requests included in this budget. The budget as presented is balanced, implements the results of the organizational study, provides for the appropriate level of renewal and replacement funds, includes an allocation for capital equipment, and annual debt service. The budget does not include any changes to the existing rates. The proposed 2006 budget is balanced at $1,175,200. This is an increase of approximately 0.4% or $4,500 from the 2005 budget of $1,170,700. More detail is provided in the expenditure section of this memo. Attendance The proposed 2006 budget is based on an estimated attendance of 146,000. The 2005 budget was based on a similar estimated attendance. The actual attendance for 2004 was 104,492. Enclosed on page ~_ is a copy of a table displaying attendance for six years of operation and for two years of budget estimates for Cascade Bay. Enclosed on page ~~ is a copy of a comparison for June and July of 2005 to the full 2004 season. This table clearly demonstrates the weather extremes and the resulting impact on attendance at the facility. As a reminder, the facility was built based on estimated average attendance of 135,000. The average attendance over the six year period (1999-2004) calculates to 145,123. The average for the first five years of operation was 154,049 again showing the impact of the colder year and resulting reduction in attendance. Given the six year operating history and the 2004 experience with a significantly reduced attendance, the breakeven attendance number appears to 45 be a bit less than 135,000 and perhaps in the range of 125,000 to 130,000 at today's user rates. Revenues Enclosed on page 5z^ is a copy of actual revenues for the years 2001 through 2004, the budgeted revenues for 2005 and the estimated revenues for 2006. There are no admission rate changes contemplated in the 2006 revenue estimates. Although the estimated attendance for 2006 is the same as it was for 2005, some revenue line items have been adjusted slightly to arrive at the estimated revenue total of $1,175,200. Enclosed on pagesrJ~J and ~_ is a copy of the facility rates charged to the customers as displayed on the web site. Staff continues to seek ways to generate more revenue and has seen significant gains in revenues from classes and camps. This effort results in additional revenue from time periods where the facility would otherwise not be open. Expenditures Enclosed on pages 55 through l~ 1 is a copy of the proposed line item budget for 2006. As a result of the implementation of the organizational study, the personnel section of the Cascade Bay budget is changed from previous years. As the City Council will recall, to better utilize resources and to gain efficiencies, the study recommended more consolidation of operations between the two enterprise facilities located on the Municipal Center Campus and the Community Center. The study recommended and the City Council authorized the elimination of the Cascade Bay Manager (vacant) and Civic Arena Manager (Mark Vaughan) positions, and the creation of the Campus Facilities Manager (Mark Vaughan) and the Superintendent of Operations (Cherry) Mesko) positions. This action and the related reallocation of support personnel between the Civic Arena and Cascade Bay are reflected in the following table and in the presentation of the Civic Arena budget. Finally, with the consolidation of the management of the two campus facilities the need for operational support is reflected in this proposed budget through the addition of an additional clerical/administrative position. The new position is proposed with a one year sunset provision to allow the full implementation of the new operational model and to provide for a management review of organizational needs and service delivery over the next year. Staff is requesting that the position actually be approved to start in 2005 to undertake the required support services to the management of the enterprise facilities, particularly as the Campus Facilities Manager transitions from peak operations at Cascade Bay to the peak season at the Civic Arena. "7 ~D Personnel Aquatic Facility Manager Campus Facilities Manager Facility Supervisor Maintenance Worker (2 @ 0.5) Maintenance Worker (1 @ .33) Clerical Technician Administrative Coordinator 2003 2004 1 1 0 0 1 1 0.40 0.40 2.4 2.4 Proposed 2005 2006 1 0 0.33 0 0.40 2.4 0.33 0.40 0.67 2.73 All partial positions are shared with the Civic Arena and in the case of the clerical technician also with the General Fund. While the total number of staff positions at Cascade Bay essentially doesn't change, the levels do and when combined with the implementation of the organizational study within the Parks and Recreation Department of the General Fund the overall intent of the study is met. At this point the Superintendent of Operations is budgeted within the General Fund operations. That position serves the three recreation enterprise functions as well as park and recreation activities in the General Fund. The following are the significant adjustments to the various line items included in the proposed 2006 budget: • 6130 -- Seasonal Staffing -There is a $10,000 reduction in this line item as a part of the personnel reallocation and changes. • 6230 -- Repair/Maintenance Supplies -There is a $1,200 increase to assist with maintenance of the facility. This account is expected to increase over the years as the facility ages. • 6236 -- Pool Repair Supplies -Due to the restoration project and warranty, a reduction of $9,000 is proposed for 2006. • 6157 --Signs -Most signs were replaced last year and there is a decrease of $4,000 in this line item. • 6310 -- Professional Services -There is $5,000 set aside for research and renditions for amini- golf course, new water feature, and energy audit and analysis of the facility. The line item shows a reduction of $29,000 for 2006 as no major feasibility investigations are contemplated. 1~' ~' • 6405 & 6406 -Electricity and Gas - In checking with the industry we were advised to increase electricity by 5% and natural Gas by 15%, resulting from increases to suppliers. The two line items together increase by $6,900. 6569 -- Maintenance Contracts -There is a $2,000 increase in this line item to reflect contracting out mechanical duties related to equipment. Utilizing professionals with the right equipment, knowledge, and skills to maintain the larger mechanical system is a better investment for the future. Consistent with previous years, this proposed budget provides for debt service payments totaling $161,500 on the $1,200,000 borrowed from the housing fund and the $800,000 loan from the Community Investment Fund. The proposed budget does not allocate any funds toward eventual repayment of the $1,000,000 advanced from the Community Investment Fund. The repayment of that $1,000,000 was set up to be a balloon payment after 20 years, subject to the availability of cash reserves. Amortization of that advance would require approximately $85,000 per year over the 20 year period. To date no provision has been made to raise rates or to dedicate retained earnings for this purpose. Consideration of this item is proposed for later in the meeting combined with the General Fund fund balance Agenda item. The calculated renewal and replacement account is funded at $64,600 for 2006. Enclosed on pages ADZ.. and ~3 is a copy of the Cascade Bay Renewal and Replacement Schedule. Capital Outlay Included in the preliminary 200 Budget is an allocation of $45,600 for capital outlay. Enclosed on page ~ is a copy of the items proposed to be included in the 2006 budget. All capital is proposed to be financed from current operations as there are no items for which renewal and replacement dollars have been set aside. Revenue/Expenditure Summary Enclosed on page lLlS is a copy of a high level summary of revenues, expenditures, and other disbursements from 1999 through the estimated results of the 2006 budget. The net available component of retained earnings at 12-31- 04 is $807,098 with $370,772 of that in the renewal and replacement account leaving a balance of $436,326. 48 Summary There is a great deal of material presented with this budget proposal to assist the City Council in its consideration of the 2006 budget. The 2006 budget as presented is balanced, implements the results of the organizational study, provides for the appropriate level of renewal and replacement funds, includes an allocation for some capital improvements, and the annual installment for the scheduled debt service. Staff continues to efficiently operate and to aggressively market the use of the facility to increase revenues and is making every effort to operate a successful business venture per City Council direction. The cash position is an indicator of previous success as a business. However, the competition for leisure time dollars and customer expectations demonstrate the need to remain efficient and to remain a preferred vendor for the services provided through the Cascade Bay activities. This proposed operating budget and the proposed capital improvements assist in meeting that objective. Direction to be Considered To provide direction to staff on the 2006 rates, on the 2006 Cascade Bay operating budget, and to direct that the items be placed on the August 16, 2005 City Council Meeting Consent Agenda for formal ratification. 49 H W V Z Q 0 Z W r a Q m W 0 Q U a ~ O O O O O O O O O O ~ O O O ~ I~ t0 ~ Q, O In I~ r ~ p N L r a 0 0 0 0 0 +r ~~ o 0 0 0 0 0 0 o 0 u~ O O ~ N U7 I~ r !r ~ m r M r O N O t0 ~ O d' O O 00 N O ~ N r V O ~ ~ N N ~ O a e- p M OMO r ~ IA N V O N r ~ ~ N ~ O O Q r l17 M ~ N to ~ N M M 00 1f~ r v c N u~ lC) ao CO ~ r ~ ~ co Q r O ~ (O CA O ~ ~ N N O I~ O O O r O O v p N Cfl CJ N 00 O) r ao tD ti a r ~ 1~ O r O ~ 3 0p O M ~ ~ (O M O N = O M +~ o Q N v (D o f~ co r . 1f~ ti N N R ~ u ") OO d' OO N r 00 O r ~ O V ~ ~ ~ a H C O_ d 47 H ~ c ~ ~ m (n ~ Q ~ ~ O d y L ~ Q cv O R a Q O O. O ~ - O io ~+ cy0 N ~ ~ H ~ So Cascade Bay 2005 Season Statistics As of 7-31-05 June & July 2005 2004 Full Season Daily Admissions $349,327 $350,136 • After 5 pm 49,267 39,251 Groups 131,013 Classes/Camps 17,402 22,245 Season Passes 180,777 168,920 Merchandise Sales 5,075 3,549 Concession Sales 177,305 168,957 Attendance 94,740 100,492 Note: These dollar figures are very preliminary but demonstrate the significant difference good weather has on the success of Cascade Bay, which will be open for 39 more days from the compilation of these statistics. 51 O O O O N ~ O O O N p ~ ~ ~ ~ N (D V' N N 1~ O E ~` `- N r N ;~. r N W ~ v> rn ° ° ° ° ° ° ° o o o o o o o o d' ~- N O ~ M N O ti d O ~' CO d' ~ ~ O ti M ~ CD r _ N r .a G N N ~ m ~ d9 fR (p r M O ~ O lf') M M! to ~ ~ ~ ~ O ~ f~ ~ O N O ~ rn O N [t er ~ ~ ~ M N ~ p ~ ~ ~ M M r t0 ~ O 0 00 N Q ~ ~ CD CD O CO O N ~ ~ GO N N CO O ~-- O M M f~ M ~ OD ~ O ~ ~ M M OO r C CO to (D d' N r CO M 00 ~ M lQ M Cfl N M ~ ~ 07 ~ p~ ti ~ N r ~ N Q ~ A lQ m 69 ff? d 'C R V N M O ~ r ~ N ~ M (D V CO O O O c0 O ~O O - ~ O ~ N CO N O l'7 N la (p ~ ~ O ~ 07 p ~3+ CO ~ N O p N V a ~ O O M N ~ N (O O i O a O c 0 N 00 OD N N O O tp - r 01 ~ L() 07 ~ M 00 ~ 1C ~ (O N ~ M O p 7 I~ ~ N N N v a r O u, v, ~tA N N N ~ ~ ~ N ~ c f0 U f0 c ~ .y N Q- ~ ~ Q N L N ~ O C (A N 3 N ~ ~ _ • E ~ O ~ O L U 'p N ~ N 01 O O O ~ 'C d Q Q C7 ~ U > U d~ SZ Cascade Bay Hame ttractions ideo Clips Virtual Tour Directions Hours/Fees Weekly Events Classes/Camps Season Passes Groups/Parties Employee Login Employment Pool Rules FAQs Contact Us Web Cam Return to Citv of Eagan Nome Page ~a~t l~as,~s Page 1 of 2 2005 Season Pass Prices Eagan Non- Resident Resident First family member, all ages $53.00 $63.00 Additional family members $43.00 $53.00 Additional family members <42" tall $29.00 $39.00 Seniors 62 and older $29.00 $39.00 Under 18 months of age FREE* FREE* *Under 18 months of age as of August 28, 2005 eason asses After 5:00 pm Season Pass Prices Eagan Resident Non- Resident First family member, all ages $45.00 $55.00 Additional family members $35.00 $45.00 Additional family members <42" tall $24.00 $34.00 Seniors 62 and older $24.00 $34.00 Under 18 months of age FREE* FREE* *Under 18 months of age as of August 28, 2005 . All, season pass holders will need to have new pictures takes for their 2005 passes. . Purchase season passes at: Eagan Municipal Center, 3830 Pilot Knob Road Monday -Friday: 8:00 a.m. - 4:30 p.m. or Eagan Community Center, 1501 Central Parkway 53 http://www. cascadebay. com/seasonpasses.html 8/4/2005 Page 1 of 1 attractions Video Clips Virtual Tour Directions Hours/ Fees Weekly Events Classes/Camps Season Passes Groups/Parties Employee Login Employment Pool Rules FAQs Contact Us Web Cam Return to City of Eagan Home Page Hours~lF~s Cascade Bay 2005 Schedule Regular Season: Friday, June 10th through Monday, September 5th Hours: Monday-Saturday 11:00 a.m. - 8:30 p.m. Sunday 11:00 a.m. - 6:30 p.m. Of~(YfICCIC11l FPAC Daily Admission: Daytime After 5:00 p.m. Under 18 months* Free Free Guests over 42" ~ $8.00 ~ $6.00 Guests under 42" $6.00 $4.50 Senior 62 and older $6.00 $4.50 *18 months as of August Z8, 2005 Cascade Bay accepts: Cash, Visa and MasterCard 5N file://C:\DOCUME~ 1 \GVANOV~ 1 \LOCALS~ 1 \Temp\PRW6QEA l .htm 8/4/2005 0 0 N IQ C .~ O m a~ c~ N ~+ (13 ~ U ~ N (n I I 11 O O O O O O O O II 0 ~ ~ ~ O O ' 0 0 ll ~ <D 0 ~ II r CD ~ 0 N ~ f~ N r r M O N d ~ I~ I I O O O O O O H II O O W II O O O ~t tD Cf! r O ~ O U' 11 ~ r O (O l!') 1~ r (~ O Q II r L<7 M r r M N r M !f) ~ II m II II II O M M I~ O N N N r ~Y J II M CA r O O O O O CC I~ ~t Q 11 1~ ' aD O N ~ r N ~ ~ O = II ~ tT O H ti ~ N ~ N II M ~ Q II II 00 h O th d' M ~f CO 00 l(> J II OD I~ r r (p 00 O 00 V 00 M Q II O N CO ' O 00 M N N O r- O ~ II M ~ O 00 Q j M M ~ N II M et Z ~ U Q II Q F- -p m W ~ II m ~ ~ II O ~ U N ~ jj ~ ° ~~ g ~ a ii } ~ O ~ ~ OZ ~ ii 11 II V Q w ¢ ~ ~ ~ Q ~ ~ O 0 ~ w z W U ~ W w U C a ii W V O W O w ~ Z ~ ~ O J ~ Q w ~ U II ~ II Q Q Q W _ ~ ~ Q _w ~ O ~ = r r W Q Z ~ ~ II ~~ ~~ o ~ 11 N N N ~ g Q ~' w ~ ~ g Q ~ W ~ U ~ LiJ J a a U l1J m W a ,~ v~ Y ~ o fn ~ W cn O rn O a ~i = ~ ~ ~ a t0 trD tD ~D 10 tp O tG t0 tC 5~ O O O In O r N O O 0 N ~ ~ ti N 1~ 0) t~ ~ N d O ' M 0 w Q ~ w w Q a ~ ~ W ~ W w J H z Cn n. to U U U 0 0 0 O r N ~ tN0 ~ 0 0 N c .~ 0 f3 m m `~ y (0 ~ U E co ~ N (n d II II II O ~ O ~ N d II ~ II II II II W II ~ N ~ I I m II J II II O ~ I N H I Q II II 4 Q II ~ O II N ~ II Q II Q ~ O W ~ II W 0 m II O m ~ II it O _ a U N a~ ~ ~~ o .Q I a~ I I ~ ~ I O O U O O O O O O O O O O O O O O O O O O O O O O O O O O M O ~ In O -n ' O O O In ~ O ' O M M ~ ~ ~t r ~- r O N r M O O O O O O O O O O O O O O O O O O O O O O O O O O M to to O N M ' O O O O r O ' O M ~ et CM r r O O CD ~ ~ I~ CO I~ O tt f~ M O CO O CD ~ O O O O 00 ~ cC ~ r~ M cD N ~A N ~ M ~ O (D M N N ' st h CO r ~ ~i' M O to r r r ~ M O M ~ V r r M O tT O ~ O r O CO CO 00 N OD O ti r M CO N N Q N M O M ~-- N J W LL W ~ ~ W H (A ~ ~ ~ J a w w ~ ~ ~ w ~ C7 a Q O ~ a cn z u' ~ ~ ~ ° g a ~ w z a ~ ~ ~ a o ~ a Q ~ w m ~ w J ,~ -' ~ = ~ W ~ w a W U J H cis c n z ~ ~ a w a w a w Z O Q Z n . 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W W ~ ~ Z Z H H 1!7 O (D N !~ f0 !L W c 0 0 N f6 C .O O A I9 m a~ c>s U to f0 ~ U ~ C° E o ~ N Cn ~~ O O O ~ II O ~ ~ 00 ~ 11 ~ ~ O N d O II II I I W II ~ O ~ II N ~ II m II II II J II N V II a II I I J II a N F' II Z ~ Q II Q o m " m ~ p ii n ° ~ o a U N d 0 ~~ C O a U m N ~ O O U O O O O O ~ ~ CO 0 0 O ~ 0 0 0 0 f 0 f D r O to ~ O ~ •- O O O ti ~ ~ r ° ~ o o ti O ~ ~ O ~ ~ ~ ~ J U LL ~ W Q U a ti m ~ C ~ W .r D Q (17 0- C J N m 0 w ~ 0 Z W w g a w olS J >Q w Z W rY !L W W W O ~~ o N ~ O ti r r O O r J a U Q a J H 0 H 0 Z a~ d G:\Capital Renewal & Replacement\Cascade Bay R&R schedule.xls Cascade Bay RB~R schedule.xls Renewal And Replacement Schedule Item Year Purchased Life C cle Cost Annual Maturi Date Ice Machine 1999 10 $ 3,239 $ 324 2009 Pertect F #1 2004 5 4,150 830 2009 #2 2000 5 4,150 830 2005 #3 2001 5 _5,000 1,000 2006 Turnstiles #1 1999 20 11,500 575 2019 #2 1999 20 - 2019 #3 2002 20 2,222 111 2022 HVAC s stem admin 1999 20 14,000 700 2019 Sand Pla Area Mermaid Fountain 1999 6 3,600 600 2005 Watertall Water la 1999 6 4,700 783 2005 Kom an Sand Tabl 1999 6 700 117 2005 Guard Chairs #1 1999 10 900 90 2009 #2 1999 10 900 90 2009 #3 2001 10 1,360 136 2011 #4 2001 10 1,360 136 2011 Air Conditionin conc. 2000 20 20,000 1,000 2020 Roofin 3 buildin s 1999 20 6,000 300 2019 Shed 2002 20 2,500 125 2022 Funbrellas 0 #1 1999 10 2,257 226 2009 #2 1999 10 2,257 226 2009 #3 1999 10 2,257 226 2009 #4 1999 10 2,257 226 2009 #5 1999 10 2,257 226 2009 #6 1999 10 2,257 226 2009 #7 1999 10 2,257 226 2009 #8 1999 10 2,257 226 2009 #9 1999 10 2,257 226 2009 #10 1999 10 2,257 226 2009 #11 1999 10 2,257 226 2009 #12 Birthda Pa Area 2001 10 2,304 230 2011 Sun Port 2002 10 4,275 428 2012 Walk in Refri erator 1999 20 6,993 350 2019 Walk in Freezer 1999 20 4,017 201 2019 2 door freezer 1999 12 2,604 217 2011 2 door refri erator 1999 12 2,029 169 2011 Refri erator Dis la 1999 12 3,809 317 2011 Sandwich/nacho dis la 1999 7 1,021 146 2006 Mobile Heated Cabinet 1999 10 3,307 331 2009 Undercounter heated cabinet 1999 10 2,498 250 2009 Cash Re isters 5 - #1 1999 5 - 2004 #2 1999 5 - 2004 #3 1999 5 - 2004 #4 1999 5 - 2004 D namtion Monitor air tester 1999 10 1,760 176 2009 HVAC E ui ment 1999 20 4,000 200 2019 Gas Hot Water Heater 1999 20 4,000 200 2019 Video Securi S stem 2002 10 9,625 963 2012 Suitmates 2 1999 5 2,500 500 2004 PAS stem 1999 10 5,000 500 2009 8/5/2005 l02 G:\Capital Renewal & Replacement\Cascade Bay R8~R schedule.xls Cascade Bay R8~R schedule.xls Water FlumelWood $ Steel 1999 10 73,848 7,385 2009 Water Flume/Fiber lass 1999 20 145,000 7,250 2019 Water Flume/Install 1999 20 80,000 4,000 2019 Shi Slide 1999 15 20,800 1,387 2014 Starburst 1999 15 20,500 1,367 2014 Tumblebuckets 1999 15 8,000 533 2014 Deck Chairs Econo 50 $66.0 1999 10 3,300 330 2009 Loun a 200 $156.7 1999 10 31,350 3,135 2009 Econo (40 $66.0 2001 10 2,640 264 2011 Loun a (i0 $156.7 2001 10 1,568 157 2011 Econo 50 $66.0 2002 10 3,300 330 2012 Loun a 40 $160.00 2004 10 6,400 640 2014 Concession Patio Furniture Ladderback Chair (150 $99.2 1999 15 14,885 992 2014 31"Cafe Table 28) $153.0 1999 15 4,286 286 2014 31"Bar hei ht table 12)$163.7 1999 15 1,966 131 2014 46"x85" oval dinin table (2 $553.0 1999 15 1,106 74 2014 Turbines #1 1999 20 13,333 667 2019 #2 1999 20 13,333 667 2019 #3 1999 20 13,333 667 2019 #4 1999 20 13,333 667 2019 #5 1999 20 13,333 667 2019 #6 1999 20 13,333 667 2019 Boilers #1 1999 20 17,500 875 2019 #2 1999 20 17,500 875 2019 #3 1999 20 17,500 875 2019 #4 1999 20 17,500 875 2019 Pum s #1 1999 20 3,950 198 2019 #2 1999 20 3,950 198 2019 #3 1999 20 3,950 198 2019 #4 1999 20 3,950 198 2019 Filters #1 1999 20 25,000 1,250 2019 #2 1999 20 25,000 1,250 2019 Pulsar Chemical E ui men 2002 7 8,000 1,168 2009 Room Heaters 1999 20 3,800 190 2019 Stranco Controllers #1 1999 15 3,000 200 2014 #2 1999 15 3,000 200 2014 Irri ation Control S stem 1999 15 20,000 1,333 2014 LMI Pum s #1 1999 5 1,200 240 2004 #2 1999 5 1,200 240 2004 #3 1999 5 1,200 240 2004 #4 1999 5 1,200 240 2004 #5 1999 5 1,200 240 2004 #6 1999 5 1,200 240 2004 Floorin 2002 20 20,000 1,000 2022 Phone S stem 2001 7 21,000 3,000 2008 Walkie Talkies 2004 5 6,000 1,200 2009 Walk Behind Lawn Mower 2004 8 3,000 375 2012 Total $ 900,597 $ 64,563 8/5/2005 Loa 2006 Proposed Cascade Bay Budget -Capital Outlay • Sprinkler Systems on Hill -The azea were groups gather outside Cascade Bay is not covered by the existing sprinkler system. Staff proposes to extend our current sprinkler system. Park Maintenance staff would install the system which would assist with the turf management. -- $1,000 • Grilling Station -Currently there is an outside grill at Cascade Bay. To make it more functional the following components should be added: a hand washing station, a stainless steel serving table and an awning to draw attention. The complete grilling station will assist in enhancing the products we can offer and help to provide a larger menu option for groups and birthdays. -- $3,500 • Gutter System on Administration Building - Staff is proposing adding a gutter system to re-direct rainfall away from the door entrances of the building. -- $3,000 • Slide Painting -The appearance of the slides which are due for replacement in 2019 per the renewal and replacement schedule is beginning to deteriorate. Staff is recommending that the outside of the slides be painted to restore the appearance and to assist in maintaining the fiberglass unti12019. -- $25,000 • Staff Furniture -Currently staff is using fold up tables and old chairs from City Hall. This allocation would add appropriate and more permanent furniture to the facility. -- $3,000 • Perfect Fry Upgrades - Staff is proposing to add upgrades to our fryers in the concession stand. The upgrades will help staff clean and drain grease in a safer and cleaner manner. -- $500 • Air Compressor -Maintenance staff is requesting a new compressor to assist with inflating up the tubes for the lazy river operations. -- $1,000 • Computers -- Staff is requesting to replace the two computers in the administration building of Cascade Bay. -- $3,600 • Hose Reel and Pool Vacuum -- upgrades and replacements of vacuum and hoses are being proposed. -- $5,000 ~y 000p000 0 0 0 0 0 0 0 O 0000p 0 0 0 6 0 0 0 0 O 0 O 0 O 0 a 0 0 0 OOOOOON N N nlnOmCO ~- O r ~ O N d LC) O O O '7 In r lfi lD ~ O) (V (V LS7 a) 'V P7 In •7 N n ~ M (O aOV ~ tO CO n O O n N r u ,~ ~ r O CV O i a ~ ~ ~ ~ ~ ~ ~ ~ 0000000 0 0 0 00000 0 0 0 0 0 ,,' d oooo$gc°n CDN~N r°~ °o n° °oi°.$c°~m° ~ c°D C°o v° ~ p ricorovn'r N c~i C[7 ~ - o n cooioaor n ~N lri v CO o 0 CO 0 ° 7 ~~N ~ ~ ~ ~ O ~ N m fR 69 69 6q 64 69 69 fR nMnlC10C'~ ' C`') I~ r n Ma0'70 U7 O N N n O 000.- h O lnvvn~ tn In In c nON(~7 m O C7 0 n n00 ap O ~ fhO~NlO~tn ~ K7 n OD to 000M n (D C7 O N C7 MfDOO n Ol ~ 7 0 00 N C7 a ' ~ to lfi O f7 Op N ~t ~ Oi 0 0 [O CO d' tfi m t!) ~ C a. lfl ( 7ON tlD `-'r O R1170M O O n l0 l`7 M Ch (Onn n Q N a lt7 r r 0 m ~ N [O O .. 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(U H O O d 0 '0 'O 7 G! a oC~UU~aU H Z F - F-- w daU(nU F- Q: I- z OO ~- I- x t-Q¢u)z l.L/ Agenda Information Memo August 9, 2005, Eagan City Council Workshop oP~~nF, IV. 2006 GENERAL ~ BUDGET UPDATE ACTION TO BE CONSIDERED: This is an informative/discussion item and no specific action is required. FACTS: • Staff work is continuing on the preparation of the 2006 General Fund Budget. The City Administrator, Director of Administrative Services, Chief Financial Officer, and Assistant to the City Administrator have met with each department director to discuss the 2006 budget requests they have submitted to provide resources to be used to deliver services in their areas of responsibility. Those individual department requests have been reviewed in the context of preparation of the overall City budget and the City Administrator is preparing a recommended budget for consideration by the City Council at its workshop scheduled for August 23, 2005. • Per previous City Council direction the proposed preliminary budget will be laid out in a fashion similar to previous years in which year to year changes will be drawn out and justification provided. The previous City Council decision not to rely on the State to pay Market Value Homestead Credit for the 2005 budget has turned out to be wise. The estimated 2006 Market Value Homestead Credit which the State has already said will not be paid will not be used as a revenue source in balancing the 2006 General Fund Budget. As was done for 2005, the tax levy will be adjusted accordingly for payable 2006. Work has also begun on estimating 2006 revenues including property tax levies and resulting impacts on property owners. • A balanced budget will be provided to the City Council with assumptions and public policy issues highlighted for discussion and direction by the City Council. • The Legislature did not pass the proposed turbocharged TNT "Taxpayer Satisfaction Survey" or the proposed property tax freeze, and official State Levy Limits were not placed in effect so the City Council has local control in setting the levy and budget. The previous truth in taxation process remains in place. (o The City must certify a proposed levy to the County Auditor, adopt a proposed budget, and select dates for the initial and continuation truth in taxation hearings no later than September 15, 2005. Formal City Council action to comply with those requirements is currently scheduled for the regular meeting to be held on September 6, 2005. Material prepared for that meeting will incorporate direction received at the August 23 workshop. ATTACHMENTS: None (o~ Agenda Information Memo August 9, 2005, Eagan City Council Workshop V. GENERAL FUND FUND BALANCE UPDATE ACTION TO BE CONSIDERED: To provide direction to staff regarding the General Fund fund balance and the Cascade Bay Advance from the Community Investment Fund. FACTS: • The City Council has directed as part of the 2005 work program that staff research the issues related to the City's General Fund fund balance and to provide options for potential use of the balance for consideration by the Council. • Staff has completed research covering the background of the fund balance, the target fund balance level, results of operations for 2003 and 2004, historical uses of the fund balance, amounts that maybe available for current appropriation, and possible additional uses of the available balance. • The City Council has also directed that staff research implications of the $1,000,000 advance from the Community Investment Fund to Cascade Bay as part of the original construction financing package for Cascade Bay. • Since there is an option in the use of the General Fund fund balance discussion regarding the Community Investment Fund and Cascade Bay, staff is suggesting that the two issues be considered together under this agenda item. • The advance was originally set up as a balloon repayment depending on circumstances and availability of cash from Cascade Bay operations. • Although extremely sensitive to weather conditions and competition for leisure dollars, Cascade Bay has been a very successful business venture and has generated a positive cash reserve over the years. In an effort to keep rates at a reasonable level for customers and to generate some cash reserves, annual budgets have not provided a specific appropriation to begin the repayment of this advance. • The unexpected repairs to the facility resulting from faulty construction and the resulting litigation have now made the available cash balance more uncertain. ~~ • Staff has prepared the attachment as a continuum from a "don't pay/forgive the loan scenario" on one end to "aggressively repay the loan" scenario on the other end. Included with the continuum are the impacts regarding the ultimate choice as well as a couple of items that would require definition depending on the City Council direction. A wait and see approach may be appropriate given the litigation and the uncertainty of its outcome. ATTACHMENTS: • Enclosed on pages ~ through ~~ is a copy of a memo from Director of Administrative Services VanOverbeke covering the staff research. • Enclosed on page _~(~ is a copy of the continuum of options and potential impacts. ~~ City of Ea~a~ Memo To: City Administrator Hedges From: Director of Administrative Services VanOverbeke Date: July 11, 2005 Subject: General Fund Fund Balance Introduction At the City Council's direction I have reviewed the results of operations for the City's General Fund for the year 2004. As a result of the very successful year of operations we experienced in 2003 followed by another successful year in 2004, the fund balance has become somewhat higher than the overall policy target set by the City Council. A number of factors have contributed to these successful years from a financial perspective. I will address these factors somewhat generally and then look in more detail at the results of operations from 2004. My focus is almost entirely on the General Fund, although the recommendations will involve opportunities in other funds as well. Background The City's Fund Balance can and should be looked at as a savings account and the use of it provides all the same options and opportunities as any other savings account. At the most basic level, the balance will increase anytime the City spends less than it receives in revenues. Historically, the City consistently practiced a couple of philosophies that make that result likely. First, we previously budgeted a contingency account from annual revenues. By its very definition the contingency account will be totally spent in only very extreme cases. For example, an emergency such as a natural disaster or a similar problem would probably cause the entire contingency account to be spent. Naturally, there would be some opportunity to recover some of those expenditures from other governmental agencies over the long run. Second, we use conservative budgeting practices in that we are attempting to minimize the reliance on development related revenues. Because we budget revenues conservatively, variances are generally favorable. On the expenditure side, we try to budget at appropriate levels to carry out desired programs while limiting program expansion or new program introduction. We expect departments to operate within those budgets while allowing for extraordinary circumstances and making adjustments as necessary and as they can be justified. Since we have discontinued the practice of budgeting a contingency account from current ~o revenues, budgeting is somewhat tighter and the fund balance is subject to more volatility as it now also serves as a first line contingency account. Year end 2003 At year-end 2003 the fund balance decreased by $2,529,960 from $12,062,867 to $9,532,907. The ending balance was 43.8% of the 2004 General Fund budget. The decrease was generated when revenues and transfers in came in $88,173 less than budgeted, expenditures came in $338,871 less than budgeted, and a transfer for debt service payments of $2,733,872 was made. Year end 2004 At year-end 2004 the fund balance increased by $1,217,636 from $9,532,907 to $10,750,543. The ending balance is 46.9% of the 2005 General Fund budget. The increase was generated when revenues and transfers in came in $139,199 more than budgeted and expenditures came in $1,078,437 less than budgeted. Target fund balance level The City has historically followed a policy that the fund balance in the General Fund should be at a level of 30% to 35% of the following year's operating budget. That level was determined to be the amount necessary to provide adequate working capital for operations and to provide an additional reserve to deal with any emergencies, revenue shortfalls, or opportunities. That range is probably on the low end at this time absent a budgeted contingency and combined with the ever increasing financial uncertainty related to State budget problems. The City might, as a matter of public policy, want to give consideration to increasing the targeted fund balance level. The State Auditor uses a range of up to 50%; however that includes all governmental funds which seriously distorts the intent in Eagan given the nature of the fund balances in our dedicated special revenue funds such as Cable TV Franchise Fees. 2004 Revenues The positive 2004 revenue variance of $139,199 or 0.6% of the estimated revenues results primarily from the revenue from charges and services exceeding the estimates offset by less interest income than budgeted. 2004 Expenditures On the expenditure side, nearly all operating departments came in under budget. The total expenditures were 95.0% of the budget including the contingency. The actual departments ranged from a low of 86.2% to a high of 110.3% of their individual budgets. Public Safety including Police and Fire was significantly under the budget due to personnel vacancies and a larger than budgeted payment by the State for firefighter pension obligations. Departmental variances are anticipated each year as expenditures vary depending on individual department activities, personnel, and unanticipated changes in circumstances. ~` Historical Uses Beginning with the year 1995 and projected through 2005 commitments, the fund balance has been used as follows: Use: Amount Radio Replacement $ 1,250,000 Equipment Revolving 1,700,000 Debt Service 4,991,704 Emergency Preemption System 170,000 Central Park Land 3,000,000 Generator 769,517 Software Licensing 131,974 Police Systems 389,602 Aerial Fire Truck 813,025 Northeast Eagan Study 60,000 Organizational Study 49,995 Noise Monitoring 39,500 Total $13,365,317 Amount Available at 12-31-04 -- Financial Report Fund Balance The following table illustrates the fund balance amount available for current appropriation at various levels. 12/31/2004 Fund Balance 2005 General Fund Budget (without contingency) If we maintain The amount fund balance available for at ... appropriation is 30% $ 3,877,423 35% 2,731,903 40% 1, 586, 383 45% 440,863 50% (704,657) $ 10,750,543 46.9% $ 22,910,400 Possible Current Uses of the Fund Balance To facilitate analysis and discussion the following narrative explanations are summarized in the attached Exhibit A. Savings Account Given the continued uncertainty at the State, the City could choose to maintain the slightly higher level of fund balance in the General Fund into the near future to be reviewed and/or used periodically as determined by the City Council. It may be prudent to adopt this approach at least through the 2006 budgeting cycle. /~ Debt Service At this time the City has one general obligation bond issue outstanding, the Recreational Facilities Bonds Series 2001A (Community Center), requiring a tax levy for debt service. The City could avoid some future tax levies by using some of the current fund balance to reduce them. The principal amount outstanding for which levies have not been certified is $11,905,000. The payable 2005 tax levy is approximately $1,205,000 and debt service in future years wi(I be fairly consistent with that amount. The amount of the principal balance and the size of the annual debt service payments make it difficult to apply cash balances to this particular bond issue. Any application of cash balances that cause significant changes in the levy from year to year is usually problematic in the year the levy needs to be increased to return to the regular levy cycle. Maintaining a cash balance in the debt service account to allocate over a period of years would cause arbitrage problems as well and would not be beneficial to the City. The nature of the facility seems also to suggest that an on-going tax levy, having been voted on and accepted by the Community may be best left alone into the foreseeable future. Both Cascade Bay and the Civic Arena have debt service requirements; however, since they are enterprise operations, debt service has no tax impact at this time. The $1,000,000 balloon payment for Cascade Bay could perhaps be addressed with the fund balance, although it may be subject to the same problems noted in the paragraph on the Community Investment Fund below. Park Site Acquisition and Development Fund Given the limited amount of park acquisition and development that can be completed from developer contributions a transfer to this fund could supplement those revenues and allow for more park development. This use would not avoid future costs and could be viewed as contrary to the public's desires without a referendum. On the other hand, it could certainly be considered of community-wide benefit and might allow for some development that otherwise probably will not get done in the foreseeable future. Community Investment Fund Again some of the balance could be transferred to this fund for future use on projects of community-wide benefit. Without a specific project in mind, controversy could be generated when the money is actually used. In spite of how the money was received, it may be subject to the argument that it is the wrong use of tax money, if there is any controversy on a subsequent project. This type of transfer may also play into the argument of certain development revenues supporting other City activities even though the ultimate project would be of City wide significance. Post Retirement Health Insurance The City has an undefined liability for payment of post-retirement health insurance premiums related to personnel agreements. The City Council has determined that positions need to remain vacant until savings cover the liability on apay-as-you-go basis. This works reasonably well in positions where there are a number of employees such as ~~ police officers, although multiple retirements cause a problem. It will not work as well for positions where only one employee works and along-term vacancy to accumulate the required money could work against the City's best interests. It also does not match the cost to the benefit in that future taxpayers are paying for a benefit being accrued today which should be part of today's costs. Also, as noted in the Auditor's comments in accordance with GASB Statement No. 45, this liability is required to be reported for Eagan for the fiscal year ending December 31, 2008 with earlier implementation being encouraged. The fund balance could be used to provide some initial funding toward that liability. Recommendations This is clearly a City Council public policy matter. The best options in my opinion include the status quo (increased level of savings) and/or some funding of the post retirement health insurance liability. Continuation of the status quo should probably include a policy change to redefine the target range, however. Please let me know, if you would like any additional information or if you would like to discuss the situation. i Director of Administrative Services VanOverbeke Chief Financial Officer Pepper ~~ EXHIBIT A Option Favorable Unfavorable Retain as savings + Cushion for uncertainty with -- Fund balance percentage State budgeting/control remains relatively high + Keeps options open for future appropriation Debt Service: + Community-wide benefit via -- Causes levy fluctuation Reduce Eagan Community reduction in taxes -- Creates arbitrage issues Center debt -- May be viewed as develop- ment revenues supporting other City amenities Debt Service: + Reduces reliance on -- May be viewed as develop- Reduce Civic Arena and/or operations to pay debt ment revenues supporting Cascade Bay debt service other City amenities -- Reduction has no tax impact Move to Park Site Fund + Augments limited developer -- May be viewed as contrary contributions to public's desire based on + Community-wide benefit no referendum -- May create expectations for particular uses Move tv Community + Community-wide benefit -- May create controversy w/o Investment Fund specific project in mind -- May be viewed as develop- ment revenues supporting other City amenities Fund post-retirement + Funding must come from -- Issue is probably not health insurance somewhere understood by the public + Future taxpayers would not be obligated for current costs ~-~ d c c ~ ~ ~ O J 3 'II t ~ U ~ c ~ ~. ~ ~ y ~ d m y _A ~ C w !~ d ~ o a ~ a tea,.. ~ n• d ~ ai a~tsao Q d .~ a r U N Q f~ a A a 0 D a~ ~ U c ,~ O i0 v_i O ~ • ~ ~ CO y ~ a~ ~ U (O ~ ~ • to 7 N CO d COO ~+ ~ ~ ~ N--~ p O ~C •~ O m ~ ~ p ;~ ~ U ~ L C ~ > 4? ~ CO O ~ L ~ Q ~ L ~ ~ O "'' y ~ O CC U C~ ~ _ CO C6 O~ p~ V N U O~ ° ~ ~ •U c U ~ 0 'a c 'a > o 3 ° • l4 U ~ - a~ ~ ~ ~ c (~ »~ o '~ ~ ~ _U O ~ r ~°~L >, E ~°yZ°" c ~ V ~ m ~ ~ ~ U ~ ~ ~ ~ `~ a> ~ U U o 'Q ~, ~ o ~ ~ c O O :,,, O C6 ~ V cUi~ X m ca ~ ,-. °~ n U ~ ~ ~ ~ ~ v ~ 'cv > ~ ~ o •~ a~ °~ ~ ~ c0 ~ ~ ° v ~ ~ II > d Q c .II .~.~ d 0 N h U O a i .D L N C B O C as y ~.+ ~ ~ ~ ` N >O ~ ~ ~ y N .0 O N •a Y ~ t ~ ~ E ~ a~ ~ v ~ ~ ° 3 c c c ~ ° " 'a U ~ c o ~~ `~ ~ ~ o Q ~ o ~ Q a' ~ ~ a C O J .~ `o N V R Q E c .~ > ._ ca O U O C O c0 to CO ~ t m N ~ U U y ~ H O O ~ ~ +y.. +~ X ~ U T =~ N LL ~ N ~ •O •X C O ~ Q ~ L O N '~ d N c N wL + . 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