03/08/2007 - City Council Finance CommitteeAGENDA
FINANCE COMMITTEE
THURSDAY
MARCH 8, 2007
7:30 A.M.
I. AGENDA ADOPTION
a. Review meeting notes from 2/20/07 meeting
II. MAJOR STREET INFRASTRUCTURE FUNDING OPTIONS
III. UPDATE ON CIVIC ARENA PROPOSAL
IV. OTHER BUSINESS
V. ADJOURNMENT
City of Eagan demo
TO: FINANCE COMMITTEE (MAYOR MAGUIRE AND COUNCILMEMBER
CARLSON)
FROM: CITY ADMINISTRATOR HEDGES
DATE: MARCH 5, 2007
SUBJECT: FINANCE COMMITTEE MEETING/MARCH 8, 2007
A Finance Committee Meeting has been scheduled for Thursday, March 8 at 7:30 a.m. The
following items are scheduled for discussion.
I. Agenda Adoption/Review 2-20-07 Meeting
Enclosed on pages ~ throug)~ are the meeting notes from the February 20, 2007 Finance
Committee meeting. The notes are included for the Committee's review.
II. Major Street Infrastructure Funding Options
Enclosed on pag~ through ~ is a memo from Director of Administrative Services
VanOverbeke highlighting the mayor street infrastructure funding options available to the City.
III. Update on Civic Arena Proposal
Enclosed on pages ~ through ~ is a memo from Director of Administrative Services
VanOverbeke and Parks and Recreation Director Seydell Johnson regarding the proposed
expansion at the Civic Arena.
IV. Other Business
If the City Council chooses to refer the public financing assistance request of Thomson West to
the Finance Committee, this item could be added to the March 8 Finance Committee agenda for
committee discussion.
/s/Thomas L. Hedges
City Administrator
Meeting Notes
Finance Committee Meeting
February 20, 2007
Attendance: Mayor Maguire, Councilmember Carlson, City Administrator
Hedges, Director of Public Works Colbert, City Engineer Matthys, Transportation
Engineer Plath, and Director of Administrative Services VanOverbeke.
Councilmember Carlson opened the meeting at 4:50pm requesting some
background on the Highway 149 project, specifically regarding the reasons for
the significant increase in the City's financial obligation to the project. Director of
Public Works Colbert explained how the increased cost of materials and right of
way along with increased project scope, combined with the State and Federal
contribution caps are the primary factors in the increasing City share.
Preliminary cost estimates also became outdated as the project progressed over
the 4 year time frame.
Mr. Colbert also reported on his meetings earlier in the day with Legislative
Representatives at the State Capitol attempting to gain additional financial
support for the project. Inclusion in the Governor's transportation bonding bill
appears to hold the most hope for an increased State contribution. Staff was
directed to continue pursuit of additional funding and is attempting to schedule a
meeting with Department of Transportation officials.
Councilmember Carlson noted concerns about the precedent of the City
spending its resources on State highway needs thereby encouraging the State to
continue to ignore its obligations and to transfer the financial responsibility for
more projects to local units of government.
In response to a question about future similar needs Director Colbert noted other
similar projects outlined in the TINA study including Highway 55 to 6 lanes,
Highway 149 to 8 lanes, Highway 149/Interstate 494 interchange, a new
interchange on Interstate 494 in coordination with Inver Grove Heights, Highway
3 to 4 lanes and Highway 13 (balance to 4 lanes).
Staff was directed to outline a menu of options to provide funding for the City's
additional cost for Highway 149 and to bring projected long-term revenues into
balance with transportation improvement needs.
It was suggested that a policy be developed that addresses long-term needs and
provides the same long-term financial stability that the City has experienced
historically. The long-term policy should encompass the larger picture including
the CIP and not rely on reappropriating other dedicated City resources. An
increase to the dedicated ad valorem tax levy may very well need to be a
01,
component of the long-term financing plan. Staff noted the likely potential of
other City initiatives competing for the same City resources.
The Finance Committee desires to review the big picture and the menu options
before consideration is given to approving the contract for the Highway 149
project. The contract is scheduled for consideration on April 5, 2007.
The Finance Committee will meet again during the first week of March to
continue its fact finding in preparation for making a funding recommendation to
the full City Council.
City of Eagan bcmo
To: City Administrator Hedges
From: Director of Administrative Services VanOverbeke
Date: March 2, 2007
Subject: Major Street Infrastructure Funding Options
It is my understanding that staff was directed to undertake two activities resulting
from the Finance Committee meeting of February 20, 2007.
First, a menu of options is to be presented to pay for the significant cost increase
($2.5 more than budgeted in the 2007 CIP) to the City's obligation for Highway
149. I believe we might have created the misunderstanding that dollars are not
available in the Major Street Fund to actually make the payment. The dollars are
available and can be used for this obligation. The deficit that is created is in the
5-year CIP currently programmed through 2011. For all practical purposes there
is no short-term problem in proceeding with the project and in making the
payment from the Major Street Fund. The problem is long-term in getting
projected revenues and expenditures into balance within future CIP's. That will
probably require a combination of new revenues and reduced expenditures.
The following table illustrates the five year CIP including the additional $2.5
million in Highway 149 costs added in 2007.
Major Street Fund 2007 -- 2011 CIP Presentation
2007 2008 2009 2010 2011 Totals
Beginning Cash Balance $11,461 $ 1,921 $ (1,677) $ (2,670) $ (2,846) $11,461
Additons:
Property Taxes
Municipal State Aid
Total Receipts
1,188 1,188 1,188 1,188 1,188 5,940
755 755 755 1, 555 1, 555 5, 375
1,943 1,943 1,943 2,743 2,743 11,315
Subtractions:
Financing Obligations 11,483 5,541 2,936 .2,919 2,736 25,615
Total Expenditures 11,483 5,541 2,936 2,919 2,736 25,615
Ending Cash Balance $ 1,921 $ (1,677) $ (2,670) $ (2,846) $ (2,839) $ (2,839)
4
Using the increased 2007 costs, adjusting the 2007 tax levy to the actual amount,
and including a 5% increase in the tax levy for the years 2008 through 2011
results in the following CIP Presentation:
2007 -- 2011 CIP With 5% Tax Increase and $2.5 Million Additional 2007 Costs
2007 2008 2009 2010 2011 Totals
Beginning Cash Balance $11,461 $ 1,981 $ (1,457) $ (2,262) $ (2,181) $11,461
Additons:
Property Taxes 1,248 1,310 1,376 1,445 1,517 6,896
Municipal State Aid 755 793 755 1,555 1,555 5,413
Total Receipts 2,003 2,103 2,131 3,000 3,072 12,309
Subtractions:
Financing Obligations 11,483 5,541 2,936 2,919 2,736 25,615
Total Expenditures 11,483 5,541 2,936 2,919 2,736 25,615
Ending Cash Balance $ 1,981 $ (1,457 $ (2,262) $ (2,181) $ (1,845) $ (1,845
A long-term increase in the ad valorem tax levy beginning in payable 2008 of
$1.0 million (also increased 5% per year) with no other changes in the projected
expenditures (except the additional $2.5 million in 2007) results in the following
5-year CIP projection.
2007 -- 2011 CIP With 5% Tax Increase and $2.5 Million Additional 2007 Costs
With Tax Increase Beginning in Payable 2008
2007 2008 2009 2010 2011 Totals
Beginning Cash Balance $11,461 $1,981 $(457) $(212) $ 971 $11,461
Additons:
Property Taxes 1,248 1,310 1,376 1,445 1,517 6,896
Tax Increase 1,000 1,050 1,103 1,158 4,310
Municipal State Aid 755 793 755 1,555 1,555 5,413
Total Receipts 2,003 3,103 3,181 4,102 4,230 16,619
Subtractions:
Financing Obligations 11,483 5,541 2,936 2,919 2,736 25,615
Total Expenditures 11,483 5,541 2,936 2,919 2,736 25,615
Ending Cash Balance $ 1,981 $ (457) $(212) $ 971 $2,465 $ 2,465
The following table which is a summary of the currently approved 5-year CIP
illustrates the impact of State and County projects on City resources. See
particularly the "Summary by Primary Jurisdiction" section of the table.
2007 -- 2011 CIP By Street Type
Total Project Costs
2007 2008 2009 2010 2011 Totals
Arterial & Collector
State 4,928,400 1,450,500 6,378,900
County 470,000 1,900,000 1,200,000 3,570,000
City 750,000 805,000 1,555,000
Total 5,398,400 3,350,500 750,000 805,000 1,200,000 11,503,900
Local Streets
City 1,505,500 2,636,700 2,691,000 2,321,000 1,945,000 11,099,200
Trails
City 331,155 156,870 138,500 41,500 234,000 902,025
Sealcoating
City .366,589 314,808 203,873 174,736 180,632 1,240,638
Intersection Improvements
State 150,000 650,000 800,000
County 1,125,000 125,000 500,000 1,750,000
City 800,000 800,000
Total 1,925,000 275,000 650,000 500,000 - 3,350,000
Summary By Primary Jurisdiction
State 4,928,400 1,600,500 650,000 - - 7,178,900
County 1,595,000 2,025,000 - 500,000 1,200,000 5,320,000
City 3,003,244 3,108,378 3,783,373 3,342,236 2,359,632 15,596,863
Total 9,526,644 6,733,878 4,433,373 3,842,236 3,559,632 28,095,763
Major Street Fund Share
Arterial & Collector 5,363,400 3,098,500 490,000 665,000 1,000,000 10,616,900
Local Streets 1,007,000 1,695,460 1,454,000 1,538,000 1,321,000 7,015,460
Trails 321,155 156,870 138,500 41,500 234,000 892,025
Sealcoating 366,589 314,808 203,873 174,736 180,632 1,240,638
Intersection Improvements 1,925,000 275,000 650,000 500,000 - 3,350,000
Total Major Street Fund 8,983,144 5,540,638 2,936,373 2,919,236 2,735,632 23,115,023
The table demonstrates $7,178,900 of City Cost related to State Highways
before the additional $2,500,000 is included bringing the new total to $9,678,900.
Any long-term solution will probably require a review of the City's commitment to
cost sharing on State and/or County projects; with review of the impact related to
timing at a minimum.
If delaying and/or reducing City obligations to State and/or County projects are
options, the tax increase programmed above is probably the only required City
action at this time. In the event the City desires to proceed with State and/or
County projects on the schedule of the existing CIP and TINA study other
revenue sources will be required. The twenty year shortfall noted in the TINA
report is $35 to $50 million or $1.75 to $2.5 million per year. After the $1 million
increase noted above the shortfall remains at $.75 to $1.5 million per year in that
time frame. Doubling the tax increase to $2 million per year would for all
practical purposes eliminate the projected deficits. However, additional cost
increases to projects included in this and future CIP's would also increase the
problem of balancing the CIP's on an on-going basis.
The following chart demonstrates the impact of adding a $1 million additional levy
to property taxes on the 2007 payable average market value house in Eagan.
Tax Impact Per $1,000,000 Levy Increase
Total
MSFund City
MSFund Tax Tax Estimated Taxes
Payable Capacity Capacity $278,021 House Value
Levy Rate Rate Amount Increase
2007 Actual 1,247,812 0.01533 0.25239 42.62
$1,OOO,OOOIncrease 1,000,000 0.01229 0.26468 34.17
Total 2,247,812 0.02762 76.79 34.17
Attached to this memo is a matrix outlining potential methods of increasing
revenues for the Major Street Fund including both short-term cash infusions and
long-term changes in the revenue stream. The matrix is broken down to
differentiate between potential revenues that are primarily controlled by the City
and those that would require or result from some State action. The estimated
fund balances noted on the matrix are very preliminary and additional work is
necessary to both confirm the dollar amounts and to review other commitments
already in place or contemplated in the future. For example, some of the
General Fund balance is in place for working capital, but not officially designated
as such within the statements. Payment for the newly approved replacement
ladder apparatus for the Fire Department will also require dollars from one or
more of these sources.
The matrix does not include bonding options or any other methods to advance
funding, since they only change the timing and there is no increase in overall
resources available in total.
Further, the matrix does not account for other potential City projects/initiatives
noted in the recently approved City goals that may compete for funding from the
same revenue sources, both long-term and short-term. Since little definitive work
has been completed on these potential projects/initiatives, I am not including any
estimated cost numbers. The preliminary list is as follows:
1. Open space acquisition
2. Fire stations
3. Fiber project
4. Cedar Grove Redevelopment
5. Retiree health insurance
6. Other public utilities infrastructure
7
The second activity regarding the development of a policy that addresses long-
term needs and provides the same long-term financial stability that the City has
experienced historically will continue and become formalized upon direction
resulting from this meeting.
Please let me know, if you would like any additional information or if you would
like to discuss any of this material.
Director dministrative Services VanOverbeke
cc: Director of Public Works Colbert
Chief Financial Officer Pepper
City Engineer Matthys
Transportation Engineer Plath
8
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City of Ea~aa Ncmu
To: City Administrator Hedges
From: Director of Administrative Services VanOverbeke
Director of Parks and Recreation Seydell Johnson
Date: March 2, 2007
Subject: Minnesota Wild Eagan Civic Arena Expansion Proposal
In 2003-04 the Minnesota Wild franchise was discussing an idea to possibly use
the Civic Arena for their practices. The discussions were preliminary but there
appeared to be an interest in pursuing the possibility. The NHL strike that
followed quickly ended any further discussion.
Representatives of the Wild approached staff again last spring to see if there
might be an interest by the City of Eagan in having the Wild use the Civic Arena
as their training facility. Staff has been working with the Wild's representatives to
determine parameters of the project including feasibility of construction, impact of
current and future bonding and potential changes to the public use of the facility.
There are two parts to the Wild's proposed use of the facility -renting ice time
and constructing a training facility.
First, the Wild would rent ice time on the east rink. They would use the east rink
as it is sized to NHL dimensions. The west rink is Olympic size. Our
understanding is that the bulk of the rental hours would be mid-day Monday-
Friday. During this time there is limited use by the public. There may also be
some use by the Wild on weekends. This could be problematic based on current
use.
The Wild would require use of the ice from approximately Labor Day through the
end of the team's playoff bid which could extend into June. The spring ice rental
could present a problem as the dry floor activities typically held in the east arena
have grown and become more popular with users in the past year.
The Wild may also wish to rent the Civic Arena's Community Room to use as a
press headquarters. They would likely wish to update this room's furnishings and
decor for this use. The room would be available for community use when the
Wild was not practicing. The Wild's use of this room would likely not impact
community use of the space since it is primarily used on evenings and
weekends.
~~
Secondly, the Wild wish to construct a new "state of the art" training room/locker
room and office space. This facility would add approximately 10,000 square feet
to the Civic Arena. It would be constructed on the south side of the building
between the two sheets of ice. The addition would include a locker room,
player's lounge, physical therapy/medical treatment space, and office space.
The Wild would require 24 hour / 7 day a week access to this space. They would
also require designated parking spaces for players close to a "player's entrance".
In the course of discussions with Mr. Frank Jirik representing the Minnesota Wild,
staff has consistently noted that the public policy issues related to any proposed
partnership with the Wild need to be reviewed and discussed with the City's
Finance Committee and then brought before the full City Council.
To try to bring some definition to the process, staff has outlined the following
general parameters to Mr. Jirik as background information:
1. The expansion property (Wild utilized new construction) as understood at
this time by staff would become subject to property taxes, since the Wild
are a for profit entity.
2. If the Wild lease significant ice time, existing arena bonds will become
taxable, even if there is no new bonding.
3. The contemplated use by the Wild will probably make all existing and
future bonds related to the Civic Arena taxable bonds, thereby increasing
the interest rate.
As a result of those general parameters, staff has further represented, pending
the public policy determinations, that the following is a list of City interests that
would probably need to be addressed in any agreement:
1. Any increase in debt service costs resulting from taxable bonds would
become an obligation of the Wild.
2. Property taxes resulting from any Dakota County determination of taxable
property would bean obligation of the Wild.
3. Any debt service obligations resulting from City bonding for the Wild would
need to be contractually guaranteed by the Wild and may require a letter
of credit or financial guarantee of equal value.
4. The City may desire to expend additional capital funds for arena
enhancements and will require that accommodation within any new
financing at the City's tax exempt cost.
These City interests attempt to delineate/manage City costs and do not factor
into the equation the more "soft" community benefits promoted by the Wild.
Determining the appropriate combination between the hard financial numbers
and the soft benefits is a matter of public policy for the elected officials to
determine.
Staff has also asked for a Wild practice schedule for a typical season to be used
to gage the potential impact upon existing City programs. Mr. Jirik has
responded only that the Wild will typically be practicing in non-peak periods
which would have no impact on Eagan programs. He also has noted the
requirement to have ice available from the end of training camp through playoff
participation. Although it has not been discussed, staff is concerned about the
potential desire to have ice time available for injured players and other purposes
on a less regular and non-scheduled basis. Again, the response to concerns
about Eagan programs potentially being displaced/interrupted is a matter of
public policy for the elected officials to address.
Further, staff has also internally discussed attempting to mitigate potential
negative consequences to Eagan programs (ice and dry floor alike), address
Eagan Hockey Association desires, and move toward a potential win-win
situation through consideration of the construction of a City owned and operated
studio rink as new construction coordinated with the construction for the Wild.
Again, consideration is a public policy matter for the City Council.
In the most recent meeting Mr. Jirik responded generally to the City's list of
interests and continued to ask for more clarity from the City without clearly
articulating the Wild's interests/expectations. Further, he seemed to be generally
okay with guaranteeing the City a certain amount of revenue from advertising,
although advertising parameters have not been discussed, e.g. limitations on
content, potential conflicts, etc. He did note that naming rights are important to
the Wild, but we did not discuss exactly what that means to the Wild. We do not
know if that is primarily a financial interest or is important more for marketing
purposes.
At Mr. Jirik's request staff has again followed upon the property tax question.
There is no doubt that the property will be taxable, however, the valuation
question and exact mechanics of the property taxation process will need to be
worked out with the appropriate County officials.
In summary staff is asking the Finance Committee to provide direction in the
following areas:
1. Is the staff list of City financial interests appropriate as presented or
should it be modified?
2. To what extent does the Finance Committee want to try to objectively
evaluate the "soft" community benefits and if so, how should it be
undertaken?
3. How much risk is the City willing to accept in regard to potential
displacement/interruption of current City programming?
4. Should the City consider construction of a studio rink to perhaps more
clearly lay out a mutually beneficial scenario?
5. What advertising parameters are important to the City?
~o~
6. What is the City's position on naming rights, is there a significant
difference between the building name and an internal/marketing name?
Upon receipt of direction resulting from this meeting a letter would be written to
Mr. Jirik further outlining the level of City interest, potential °deal points", and
other City considerations; all combined with an invitation for Wild representatives
to attend a meeting with the Finance Committee to further discuss a potential
partnership. We believe this is the desire of Mr. Jirik.
We are available to meet with you to further discuss this information or to provide
any additional information that you determine would be helpful for the Finance
Committee.
Director of Administrative Services r ctor of Par an ecreation
~3
AGENDA
FINANCE COMMITTEE
THURSDAY
MARCH 8, 2007
7:30 A.M.
I. AGENDA ADOPTION
a. Review meeting notes from 2/20/07 meeting
II. MAJOR STREET INFRASTRUCTURE FUNDING OPTIONS
III. UPDATE ON CIVIC ARENA PROPOSAL
IV. OTHER BUSINESS
V. ADJOURNMENT
A I
lk�
City of Eap demo
TO: FINANCE COMMITTEE (MAYOR MAGUIRE AND COUNCILMEMBER
CARLSON)
FROM: CITY ADMINISTRATOR HEDGES
DATE: MARCH 5, 2007
SUBJECT: FINANCE COMMITTEE MEETING/MARCH 8, 2007
A Finance Committee Meeting has been scheduled for Thursday, March 8 at 7:30 a.m. The
following items are scheduled for discussion.
I. Agenda Adoption/Review 2-20-07 Meeting Notes
Enclosed on pages A throug� are the meeting notes from the February 20, 2007 Finance
Committee meeting. The notes are included for the Committee's review.
II. Major Street Infrastructure Funding Options
Enclosed on pag through is a memo from Director of Administrative Services
VanOverbeke highlighting the mayor street infrastructure funding options available to the City.
III. Update on Civic Arena Proposal
Enclosed on pages IC)� through L.J_ is a memo from Director of Administrative Services
VanOverbeke and Parks and Recreation Director Seydell Johnson regarding the proposed
expansion at the Civic Arena.
IV. Other Business
If the City Council chooses to refer the public financing assistance request of Thomson West to
the Finance Committee, this item could be added to the March 8 Finance Committee agenda for
committee discussion.
/s/Thomas L. Hedges
City Administrator
Meeting Notes
Finance Committee Meeting
February 20, 2007
Attendance: Mayor Maguire, Councilmember Carlson, City Administrator
Hedges, Director of Public Works Colbert, City Engineer Matthys, Transportation
Engineer Plath, and Director of Administrative Services VanOverbeke.
Councilmember Carlson opened the meeting at 4:50pm requesting some
background on the Highway 149 project, specifically regarding the reasons for
the significant increase in the City's financial obligation to the project. Director of
Public Works Colbert explained how the increased cost of materials and right of
way along with increased project scope, combined with the State and Federal
contribution caps are the primary factors in the increasing City share.
Preliminary cost estimates also became outdated as the project progressed over
the 4 year time frame.
Mr. Colbert also reported on his meetings earlier in the day with Legislative
Representatives at the State Capitol attempting to gain additional financial
support for the project. Inclusion in the Governor's transportation bonding bill
appears to hold the most hope for an increased State contribution. Staff was
directed to continue pursuit of additional funding and is attempting to schedule a
meeting with Department of Transportation officials.
Councilmember Carlson noted concerns about the precedent of the City
spending its resources on State highway needs thereby encouraging the State to
continue to ignore its obligations and to transfer the financial responsibility for
more projects to local units of government.
In response to a question about future similar needs Director Colbert noted other
similar projects outlined in the TINA study including Highway 55 to 6 lanes,
Highway 149 to 8 lanes, Highway 149/Interstate 494 interchange, a new
interchange on Interstate 494 in coordination with Inver Grove Heights, Highway,
3 to 4 lanes and Highway 13 (balance to 4 lanes).
Staff was directed to outline a menu of options to provide funding for the City's
additional cost for Highway 149 and to bring projected long-term revenues into
balance with transportation improvement needs.
It was suggested that a policy be developed that addresses long-term needs and
provides the same long-term financial stability that the City has experienced
historically. The long-term policy should encompass the larger picture including
the CIP and not rely on reappropriating other dedicated City resources. An
increase to the dedicated ad valorem tax levy may very well need to be a
N
component of the long-term financing plan. Staff noted the likely potential of
other City initiatives competing for the same City resources.
The Finance Committee desires to review the big picture and the menu options
before consideration is given to approving the contract for the Highway 149
project. The contract is scheduled for consideration on April 5, 2007,
The Finance Committee will meet again during the first week of March to
continue its fact finding in preparation for making a funding recommendation to
the full City Council.
City of Eagan Memo
To: City Administrator Hedges
From: Director of Administrative Services VanOverbeke
Date: March 2, 2007
Subject: Major Street Infrastructure Funding Options
It is my understanding that staff was directed to undertake two activities resulting
from the Finance Committee meeting of February 20, 2007.
First, a menu of options is to be presented to pay for the significant cost increase
($2.5 more than budgeted in the 2007 CIP) to the City's obligation for Highway
149. 1 believe we might have created the misunderstanding that dollars are not
available in the Major Street Fund to actually make the payment. The dollars are
available and can be used for this obligation. The deficit that is created is in the
5 -year CIP currently programmed through 2011. For all practical purposes there
is no short-term problem in proceeding with the project and in making the
payment from the Major Street Fund. The problem is long-term in getting
projected revenues and expenditures into balance within future CIP's. That will
probably require a combination of new revenues and reduced expenditures.
The following table illustrates the five year CIP including the additional $2.5
million in Highway 149 costs added in 2007.
Major Street Fund 2007 -- 2011 CIP Presentation
2007 2008 2009 2010 2011 Totals
Beginning Cash Balance $11,461 $ 1,921 $ (1,677) $ (2,670) $ (2,846) $11,461
Additons:
Property Taxes 1,188 1,188 1,188 1,188 1,188 5,940
Municipal State Aid 755 755 755 1,555 1,555 5,375
Total Receipts 1,943 1,943 1,943 2,743 2,743 11,315
Subtractions:
Financing Obligations 11,483 5,541 2,936 .2,919 2,736 25,615
Total Expenditures 11,483 5,541 2,936 2,919 2,736 25,615
Ending Cash Balance $ 1,921 $ (1,677) $ (2,670) _$_(2,846) $ (2,839)
Using the increased 2007 costs, adjusting the 2007 tax levy to the actual amount,
and including a 5% increase in the tax levy for the years 2008 through 2011
results in the following CIP Presentation:
2007 -- 2011 CIP With 5% Tax Increase and $2.5 Million Additional 2007 Costs
2007 2008 2009 2010 2011 Totals
Beginning Cash Balance $11,461 $ 1,981 $ (1,457) $ (2,262) $ (2,181) $11,461
Additons:
Property Taxes 1,248 1,310 1,376 1,445 1,517 6,896
Municipal State Aid 755 793 755 1,555 1,555 5,413
Total Receipts 2,003 2,103 2,131 3,000 3,072 12,309
Subtractions:
Financing Obligations 11,483 5,541 2,936 2,919 2,736 25,615
Total Expenditures 11,483 5,541 2,936 2,919 2,736 25,615
Ending Cash Balance $ 1,981 $ (1,457) _L(2,262) $$ (2T181) $ (1,845) $ (1,845)
A long-term increase in the ad valorem tax levy beginning in payable 2008 of
$1.0 million (also increased 5% per year) with no other changes in the projected
expenditures (except the additional $2.5 million in 2007) results in the following
5 -year CIP projection.
2007 -- 2011 CIP With 5% Tax Increase and $2.5 Million Additional 2007 Costs
With Tax Increase Beginning in Payable 2008
2007 2008 2009 2010 2011 Totals
Beginning Cash Balance $11,461 $1,981 $ (457) $ (212) $ 971 $11,461
Additons:
Property Taxes 1,248 1,310 1,376 1,445 1,517 6,896
Municipal State Aid 755 793 755 1,555 1,555 5,413
Total Receipts
2,003
3,103
3,181 4,102
4,230
16,619
Subtractions:
Financing Obligations 11,483 5,541 2,936 2,919 2,736 25,615
Total Expenditures 11,483 5,541 2,936 2,919 2,736 25,615
Ending Cash Balance $ 1,981 $ (457) $ (212) $ 971 $ 2,465 $ 2,465
IT
The following table which is a summary of the currently approved 5 -year CIP
illustrates the impact of State and County projects on City resources. See
particularly the "Summary by Primary Jurisdiction" section of the table.
2007 -- 2011 CIP By Street Type
2,691,000
2,321,000
1,945,000
Total Project Costs
2007
2008
2009 2010 2011 Totals
Arterial & Collector
2,025,000
- 500,000 1,200,000
3,783,373 3,342,236 2,359,632
6,378,900
State
4,928,400
1,450,500
1,200,000 3,570,000
County
470,000
1,900,000
750,000 805,000 1,555,000
City
Total
5,398,400
3,350,500
750,000 805,000 1,200.,000 11,503,90
Local Streets
City
Trails
City
Sealcoating
City
Intersection Improvements
State
County
City
1,505,500
331,155
2,636,700
2,691,000
2,321,000
1,945,000
156,870
138,500
41,500
234,000
,366,589 314,808 203,873 174,736 180,632
150,000 650,000
1,125,000 125,000 500,000
800,000
650 000 500 000 -
11,099,200
902,025
1,240,638
800,000
1,750,000
800,000
3,350,000
Total 1,925,000
275,000
3,098,500
490,000
Summary By Primary Jurisdiction
4,928,400
1,600,500
_
650,000
7,178,900
State
County 1,595,000
2,025,000
- 500,000 1,200,000
3,783,373 3,342,236 2,359,632
5,320,000
596,863
15095,763
City 3,003,244
3,108,378
6,733,878
4,433,373 3,842,236 3,559,632
28,
Total 9,526,644
234,000
Trails
Sealcoating
366,589
Major Street Fund Share
5,363,400
3,098,500
490,000
665,000
1,000,000
Arterial & Collector
1,007,000
1,695,460
1,454,000
1,538,000
1,321,000
Local Streets
321,155
156,870
138,500
41,500
234,000
Trails
Sealcoating
366,589
314,808
203,873
174,736
180,632
Intersection Improvements
1,925,000
275,000
5,540,638
650,000
2,936,373
500,000
2,919,236
2,735,632
Total Major Street Fund
8,983,144
The table demonstrates $7,178,900 of City Cost related to State Highways
before the additional $2,500,000 is included bringing the new total to $9,678,900.
Any long-term solution will probably require a review of the City's commitment to
cost sharing on State and/or County projects; with review of the impact related to
timing at a minimum.
If delaying and/or reducing City obligations to State and/or County projects are
options, the tax increase programmed above is probably the only required City
action at this time. In the event the City desires to proceed with State and/or
County projects on the schedule of the existing CIP and TINA study other
revenue sources will be required. The twenty year shortfall noted in the TINA
report is $35 to $50 million or shortfall $1.7Tema ns at $.75 on po $1 5 million er year. feper year in lion
increase noted above thethat
0
10,616,900
7,015,460
892,025
1,240,638
3,350,000
23,115,023
time frame. Doubling the tax increase to $2 million per year would for all
practical purposes eliminate the projected deficits. However, additional cost
increases to projects included in this and future CIP's would also increase the
problem of balancing the CIP's on an on-going basis.
The following chart demonstrates the impact of adding a $1 million additional levy
to property taxes on the 2007 payable average market value house in Eagan.
Tax Impact Per $1,000,000 Levy Increase
2007 Actual
$1,000,000 Increase
Total
1,000,000 0.01229
2,247,812 0.02762
Total
MSFund
MSFund
Tax
Payable
Capacity
Levy
Rate
1,247,812
0.01533
1,000,000 0.01229
2,247,812 0.02762
Total
City
Tax
Estimated Taxes
Capacity
$278,021 House Value
Rate
Amount Increase
0.25239
42.62
0.26468 34.17
76.79 34.17
Attached to this memo is a matrix outlining potential methods of increasing
revenues for the Major Street Fund including both short-term cash infusions and
long-term changes in the revenue stream. The matrix is broken down to
differentiate between potential revenues that are primarily controlled by the City
and those that would require or result from some State action. The estimated
fund balances noted on the matrix are very preliminary and additional work is
necessary to both confirm the dollar amounts and to review other commitments
already in place or contemplated in the future. For example, some of the
General Fund balance is in place for working capital, but not officially designated
as such within the statements. Payment for the newly approved replacement
ladder apparatus for the Fire Department will also require dollars from one or
more of these sources.
The matrix does not include bonding options or any other methods to advance
funding, since they only change the timing and there is no increase in overall
resources available in total.
Further, the matrix does not account for other potential City projects/initiatives
noted in the recently approved City goals that may compete for funding from the
same revenue sources, both long-term and short-term. Since little definitive work
has been completed on these potential projects/initiatives, I am not including any
estimated cost numbers. The preliminary list is as follows:
1. Open space acquisition
2. Fire stations
3. Fiber project
4. Cedar Grove Redevelopment
5. Retiree health insurance
6. Other public utilities infrastructure
The second activity regarding the development of a policy that addresses long-
term needs and provides the same long-term financial stability that the City has
experienced historically will continue and become formalized upon direction
resulting from this meeting.
Please let me know, if you would like any additional information or if you would
like to discuss any of this material.
Director o dministrative Services VanOverbeke
cc: Director of Public Works Colbert
Chief Financial Officer Pepper
City Engineer Matthys
Transportation Engineer Plath
5
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City of Evan Memo
To: City Administrator Hedges
From: Director of Administrative Services VanOverbeke
Director of Parks and Recreation Seydell Johnson
Date: March 2, 2007
Subject: Minnesota Wild Eagan Civic Arena Expansion Proposal
In 2003-04 the Minnesota Wild franchise was discussing an idea to possibly use
the Civic Arena for their practices. The discussions were preliminary but there
appeared to be an interest in pursuing the possibility. The NHL strike that
followed quickly ended any further discussion.
Representatives of the Wild approached staff again last spring to see if there
might be an interest by the City of Eagan in having the Wild use the Civic Arena
as their training facility. 'Staff has been working with the Wild's representatives to
determine parameters of the project including feasibility of construction, impact of
current and future bonding and potential changes to the public use of the facility.
There are two parts to the Wild's proposed use of the facility — renting ice time
and constructing a training facility.
First, the Wild would rent ice time on the east rink. They would use the east rink
as it is sized to NHL dimensions. The west rink is Olympic size. Our
understanding is that the bulk of the rental hours would be mid-day Monday -
Friday. During this time there is limited use by the public. There may also be
some use by the Wild on weekends. This could be problematic based on current
use.
The Wild would require use of the ice from approximately Labor Day through the
end of the team's playoff bid which could extend into June. The spring ice rental
could present a problem as the dry floor activities typically held in the east arena
have grown and become more popular with users in the past year.
The Wild may also wish to rent the Civic Arena's Community Room to use as a
press headquarters. They would likely wish to update this room's furnishings and
decor for this use. The room would be available for community use when the
Wild was not practicing. The Wild's use of this room would likely not impact
community use of the space since it is primarily used on evenings and
weekends.
N
Secondly, the Wild wish to construct a new "state of the art" training room/locker
room and office space. This facility would add approximately 10,000 square feet
to the Civic Arena. It would be constructed on the south side of the building
between the two sheets of ice. The addition would include a locker room,
player's lounge, physical therapy/medical treatment space, and office space.
The Wild would require 24 hour / 7 day a week access to this space. They would
also require designated parking spaces for players close to a "player's entrance".
In the course of discussions with Mr. Frank Jirik representing the Minnesota Wild,
staff has consistently noted that the public policy issues related to any proposed
partnership with the Wild need to be reviewed and discussed with the City's
Finance Committee and then brought before the full City Council.
To try to bring some definition to the process, staff has outlined the following
general parameters to Mr. Jirik as background information:
1. The expansion property (Wild utilized new construction) as understood at
this time by staff would become subject to property taxes, since the Wild
are a for profit entity.
2. If the Wild lease significant ice time, existing arena bonds will become
taxable, even if there is no new bonding.
3. The contemplated use by the Wild will probably make all existing and
future bonds related to the Civic Arena taxable bonds, thereby increasing
the interest rate.
As a result of those general parameters, staff has further represented, pending
the public policy determinations, that the following is a list of City interests that
would probably need to be addressed in any, agreement:
1. Any increase in debt service costs resulting from taxable bonds would
become an obligation of the Wild.
2. Property taxes resulting from any Dakota County determination of taxable
property would be an obligation of the Wild.
3. Any debt service obligations resulting from City bonding for the Wild would
need to be contractually guaranteed by the Wild and may require a letter
of credit or financial guarantee of equal value.
4. The City may desire to expend additional capital funds for arena
enhancements and will require that accommodation within any new
financing at the City's tax exempt cost.
These City interests attempt to delineate/manage City costs and do not factor
into the equation the more "soft" community benefits promoted by the Wild.
Determining the appropriate combination between the hard financial numbers
and the soft benefits is a matter of public policy for the elected officials to
determine.
Staff has also asked for a Wild practice schedule for a typical season to be used
to gage the potential impact upon existing City programs. Mr. Jirik has
responded only that the Wild will typically be practicing in non -peak periods
which would have no impact on Eagan programs. He also has noted the
requirement to have ice available from the end of training camp through playoff
participation. Although it has not been discussed, staff is concerned about the
potential desire to have ice time available for injured players and other purposes
on a less regular and non-scheduled basis. Again, the response to concerns
about Eagan programs potentially being displaced/interrupted is a matter of
public policy for the elected officials to address.
Further, staff has also internally discussed attempting to mitigate potential
negative consequences to Eagan programs (ice and dry floor alike), address
Eagan Hockey Association desires, and move toward a potential win-win
situation through consideration of the construction of a City owned and operated
studio rink as new construction coordinated with the construction for the Wild.
Again, consideration is a public policy matter for the City Council.
In the most recent meeting Mr. Jirik responded generally to the City's list of
interests and continued to ask for more clarity from the City without clearly
articulating the Wild's interests/expectations. Further, he seemed to be generally
okay with guaranteeing the City a certain amount of revenue from advertising,
although advertising parameters have not been discussed, e.g. limitations on
content, potential conflicts, etc. He did note that naming rights are important to
the Wild, but we did not discuss exactly what that means to the Wild. We do not
know if that is primarily a financial interest or is important more for marketing
purposes.
At Mr. Jirik's request staff has again followed up on the property tax question.
There is no doubt that the property will be taxable, however, the valuation
question and exact mechanics of the property taxation process will need to be
worked out with the appropriate County officials.
In summary staff is asking the Finance Committee to provide direction in the
following areas:
1. Is the staff list of City financial interests appropriate as presented or
should it be modified?
2. To what extent does the Finance Committee want to try to objectively
evaluate the "soft" community benefits and if so, how should it be
undertaken?
3. How much risk is the City willing to accept in regard to potential
displacement/interruption of current City programming?
4. Should the City consider construction of a studio rink to perhaps more
clearly lay out a mutually beneficial scenario?
5. What advertising parameters are important to the City?
I -ON
6. What is the City's position on naming rights, is there a significant
difference between the building name and an internal/marketing name?
Upon receipt of direction resulting from this meeting a letter would be written to
Mr. Jirik further outlining the level of City interest, potential "deal points", and
other City considerations; all combined with an invitation for Wild representatives
to attend a meeting with the Finance Committee to further discuss a potential
partnership. We believe this is the desire of Mr. Jirik.
We are available to meet with you to further discuss this information or to provide
any additional information that you determine would be helpful for the Finance
Committee.
Director of Administrative Services r ctor of Par an ecreation
13
Meeting Notes
Finance Committee Meeting
March 8, 2007
Attendance:
Mayor Maguire, Councilmember Carlson, City Administrator
Hedges, Director of Public Works Colbert, City Engineer Matthys, Transportation
Engineer Plath, Director of Parks and Recreation Seydell Johnson, Director of
Community Development Hohenstein, and Director of Administrative Services
VanOverbeke.
Agenda/Meeting Notes
City Administrator Hedges opened the meeting at 7:30 a.m. requesting feedback
on the Finance Committee meeting notes for the February 20, 2007 meeting.
Members responded that the notes were good and helpful and appropriate to
forward to the full City Council. Administrator Hedges also outlined the need to
keep the full Council informed of all of the actions resulting from the various
committee meetings.
He asked that presentation of the background material on the Thomson
expansion proposal be added to the Committee agenda based on the City
Council direction at the regular meeting on March 6. The agenda was revised to
consider the Thomson item first.
Other Business
Thomson Expansion Proposal
Director of Community Development Hohenstein provided background
information on the meetings and discussions that have taken place since
Thomson representatives first approached City staff in August of 2006. Director
Hohenstein noted the challenge of respecting Thomson?s request for
confidentiality with the need to inform the City Council of the discussions, and to
make sure all public policy determinations and formal agreements are discussed
in a public forum. He also outlined the State Department of Economic
Development?s role as the first contact with the proposal and Thomson?s desire
to deal directly with the County and School District in regard to any approvals
required from those entities.
The Finance Committee directed staff to stay the present course with the City?s
primary role being to assist Thomson in their efforts at the State Capitol to
achieve the necessary special legislation and then in the consideration of the
creation of a TIF District at the appropriate time. The Committee noted a desire
to fully understand the complete incentive package being requested by Thomson
and observed the potential requirement for the same information at the State
Legislature.
Director Hohenstein also presented a memo presenting an overview of the
process to date and outlining potential components of the assistance package as
they are currently known to City staff.
Update on Civic Arena Proposal
City Administrator Hedges and Director of Parks and Recreation Seydell Johnson
provided background on discussions with the representative of the Wild Hockey
Team. These discussions have been on and off since the spring of 2006;
however, there seems to be more interest from the Wild in moving the discussion
to a definitive conclusion at this time.
The Finance Committee reviewed the list of City interests contained in the packet
memo and provided the following responses:
?
The financial interests are okay as presented. The City should not incur
any additional bonding or operational costs as a result of any construction
or use resulting from the potential partnership with the Wild.
?
It is difficult to balance the community benefits as envisioned by the Wild
against potential displacement/interruption to current City programming.
Certain potential challenges/conflicts e.g. relocation of dry floor activities,
could be worked around especially with the inclusion of a studio rink in the
overall project. However, last minute requests for ice time cannot be
allowed to displace games and/or other previous commitments to other
stakeholders or users such as the Eagan Hockey Association, the School
District, and community open skate sessions. Last minute ice time
requests for Saturdays and Sundays would be problematic and probably
would not be entertained. The Finance Committee would like to see more
information on typical schedule requests from the Wild, primarily those
that might impact the City?s scheduling of prime time ice at the facility.
?
The City needs more detailed information regarding the expectations of
the Wild for both advertising and naming rights before City parameters
can be developed. In general the Finance Committee is open to having
the discussion, but is not committing to anything without more information.
?
The Finance Committee would like to participate in subsequent meetings
with Wild officials at the decision making level to move the discussions to
a conclusion.
?
It is important that the Eagan Hockey Association receives an answer to
their interests regarding facility expansion and use.
Major Street Infrastructure Funding Options
Director of Public Works Colbert opened the discussion by reporting that as a
result of the meetings that have been held, staff has concluded that the chance
of getting any additional money from either the State or Federal government is
nil, after the bid is awarded for the Highway 149 project. State elected officials
and Minnesota Department of Transportation staff are sympathetic to the City?s
problem, but no additional dollars are likely to be secured, if the City is willing to
proceed with the project at this time.
One potential option is for the City to reject the bids on the project thereby
sending the message that the City is not prepared to make an increased financial
commitment to a State highway project. The result of rejecting the bids would
likely be to delay the project for at least one year. A one year delay would likely
cause an inflationary cost increase; however, that may be somewhat offset by
better bids resulting from bidding in the fall rather than in the spring.
It was noted that the State commitment to this project is held through September
of 2010 and the Federal money is not available until October of 2007 so a delay
would not immediately impact the availability of those dollars. City Engineer
Matthys also noted that the temporary construction easements are in place for
three years so a one year delay should not cause a problem with easements.
In the event the project is delayed it will be important to have calls directed to
State elected officials and MNDoT as the responsible governmental entities and
that the media is properly informed of responsibility. A preliminary list of potential
costs resulting from a delay include: efficiency of travel, safety, increased project
costs, deteriorating road conditions, and impact on Thomson expansion.
It was noted that continuing efforts need to be made to consolidate City efforts
with those of Thomson in requesting funding assistance so we are not in
competition with each other for the same potential dollars.
Councilmember Carlson requested more detailed information listing which future
State Highway projects are actually included in the 5-Year CIP. She also asked
how we can develop a mechanism to determine the advisability of moving ahead
or delaying other County and State projects that might place too great a financial
burden on City resources thereby limiting the City?s ability to take care of its own
street obligations. Director of Administrative Services VanOverbeke responded
that the response to this question is ultimately the CIP process itself; however,
that review may require a longer time frame. City Engineer Matthys added that
the TINA study is designed to help with the long-term obligations and should
assist in addressing this question.
Councilmember Carlson suggested that it might be appropriate for the City to set
aside and dedicate some Major Street Fund reserves in another fund to be
specifically set aside and ear marked for defined future projects e.g. bridges.
The intent would be to more clearly match on-going revenue streams and
reserves against both short-term and long-term project costs.
A Finance Committee Meeting was scheduled for 7:30 a.m. on Thursday March
29 with the agenda to include at least the following:
1. Additional review of the financial commitment related to the Highway 149
project. The bids will be opened on March 22 and the City Council is
scheduled to take action on the bid award at its meeting on April 5.
2. A response to the bid alternate for fiber conduit related to this same bid
opening.
M
CityEapof ma
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TO: TOM HEDGES, CITY ADMINISTRATOR
GENE VANOVERBEKE, DIRECTOR OF ADMINISTRATIVE SERVICES
FROM: JON HOHENSTEIN, COMMUNITY DEVELOPMENT DIRECTOR 1
DATE: MARCH 7, 2007
SUBJECT: FINANCE COMMITTEE — THOMSON EXPANSION PROPOSAL
BACKGROUkD
The City Council has received briefings on the scale and employment of the Thomson
Legal and Regulatory expansion project in the past. The Council received its first formal
presentation and took action to pursue adoption of special legislation to permit
consideration of a TIF district last night. With that formal action of initial support, we can
begin to discuss more specific parameters of the possible local funding package with the
Finance Committee and City Council
Thomson Request — As the Council is aware, last August, Thomson officials asked City
staff to work with DEED and Thomson to outline programs and financing tools that might be
available to support an expansion of their facilities if it were to occur in Minnesota.
Discussions were held with the understanding that no commitments regarding local
assistance could be made except by the City Council. With this understanding, Thomson
advised its board that TIF could be available and apparently ascribed a value of
approximately $1.5 million to that possibility.
Economic Development TIF District — DEED suggested and Thomson requested that the
City consider a special law TIF district similar to that which permitted a TIF district to be
created for the Medtronic facility in Mounds View. Special law was necessary because
office facilities are not eligible uses in economic development districts and because they
proposed a term of 25 years in lieu of the standard 9 year economic development district.
Special laws that only expand eligibility can be implemented with legislative approval and
City approval. Special laws that expand the term of a district also require approval by the
County and School District.
County Position — At this point, Thomson has not secured support from the County for a
longer term district and has not approached the School District in that regard. So they are
pursuing, and the City action supports, the request to make the project eligible for a 9 year
district. The shorter term district will necessarily generate a smaller amount of TIF than the
longer term district would have generated.
Next Steps — The next steps in the process include the formal consideration of a TIF district
if the special legislation is passed and the terms of the deal will need to be structured.
POTENTIAL COMPONENTS OF ASSISTANCE PACKAGE
THOMSON LEGAL AND REGULATORY EXPANSION — 2007
Economic Development TIF — The amount available from this source is highly
assumption driven and Thomson enjoys a taxable market value that is adjusted
down from construction or replacement costs due to the large size and unusual
nature of its facilities. The value combined with Eagan's low tax rates mean that a
TIF district for the project will generate less TIF revenue than a comparable scale
project elsewhere. On the basis of conservative, but realistic, assumptions, the 9
year district on the office building could generate $1.1 million. Thomson
representatives have asked the City and County to consider defining additional
funding to meet the target amount in the proposal to their board. The Committee
and Council will need to address this request.
• Minnesata Investment Fund — The City will be asked to act as a conduit for up to $1
million of a forgivable loan to Thomson from the Minnesota Investement Fund. Up
to $300,000 of this amount is earmarked for the costs of undergrounding the electric
power lines between TH 149 and the Thomson Headquarters. The Company has
assumed this funding on the basis of the State commitments and it is not identified
as part of the TIF support.
• Dakota Eleptric — Dakota Electric has authorized its staff to cover the costs of
undergrounding the electric power lines that exceed $300,000.
• State Fundinci Proposal — DEED staff and the Governor's office have prepared a
package of possible financing assistance that is currently under discussion with
various legislative committees. The package included consideration of sales tax
exemptions, training grants, the MIF loan/grant noted above and other funding
totaling more than $10 million.
Trunk Hwy 149 —While it is not explicitly noted as a part of the prospective
assistance to the project, the TH 149 improvement is a substantial benefit to
Thomson and meets a number of needs associated with traffic congestion, traffic
capacity and employee access to the campus. The Finance Committee is currently
dealing with alternatives to close a $4 million gap for TH 149 and Thomson is
pursuing state funding to cover the $1.5 million cost for the Opperman Drive
intersection improvement they had previously petitioned the City to consider. The
City will need to consider how the TH 149 gap, the competition between the base
project and the Opperman intersection project for state funding and the City's level
of TIF or other assistance to the expansion project relate.
To:
City Administrator Hedges
From:
Director of Administrative Services VanOverbeke
Date:
March 2, 2007
Subject:
Major Street Infrastructure Funding Options
It is my understanding that staff was directed to undertake two activities resulting
from the Finance Committee meeting of February 20, 2007.
First, a menu of options is to be presented to pay for the significant cost increase
($2.5 more than budgeted in the 2007 CIP) to the City?s obligation for Highway
149. I believe we might have created the misunderstanding that dollars are not
available in the Major Street Fund to actually make the payment. The dollars are
available and can be used for this obligation. The deficit that is created is in the
5-year CIP currently programmed through 2011. For all practical purposes there
is no short-term problem in proceeding with the project and in making the
payment from the Major Street Fund. The problem is long-term in getting
projected revenues and expenditures into balance within future CIP?s. That will
probably require a combination of new revenues and reduced expenditures.
The following table illustrates the five year CIP including the additional $2.5
million in Highway 149 costs added in 2007.
Major Street Fund 2007 -- 2011 CIP Presentation
20072008200920102011Totals
Beginning Cash Balance$ 11,461$ 1,921$ (1,677)$ (2,670)$ (2,846)$ 11,461
Additons:
Property Taxes 1,188 1,188 1,188 1,188 1,188 5,940
Municipal State Aid 755 755 755 1,555 1,555 5,375
Total Receipts 1,943 1,943 1,943 2,743 2,743 11,315
Subtractions:
Financing Obligations 11,483 5,541 2,936 2,919 2,736 25,615
Total Expenditures 11,483 5,541 2,936 2,919 2,736 25,615
Ending Cash Balance$ 1,921$ (1,677)$ (2,670)$ (2,846)$ (2,839)$ (2,839)
Using the increased 2007 costs, adjusting the 2007 tax levy to the actual amount,
and including a 5% increase in the tax levy for the years 2008 through 2011
results in the following CIP Presentation:
2007 -- 2011 CIP With 5% Tax Increase and $2.5 Million Additional 2007 Costs
20072008200920102011Totals
Beginning Cash Balance$ 11,461$ 1,981$ (1,457)$ (2,262)$ (2,181)$ 11,461
Additons:
Property Taxes 1,248 1,310 1,376 1,445 1,517 6,896
Municipal State Aid 755 793 755 1,555 1,555 5,413
Total Receipts 2,003 2,103 2,131 3,000 3,072 12,309
Subtractions:
Financing Obligations 11,483 5,541 2,936 2,919 2,736 25,615
Total Expenditures 11,483 5,541 2,936 2,919 2,736 25,615
Ending Cash Balance$ 1,981$ (1,457)$ (2,262)$ (2,181)$ (1,845)$ (1,845)
A long-term increase in the ad valorem tax levy beginning in payable 2008 of
$1.0 million (also increased 5% per year) with no other changes in the projected
expenditures (except the additional $2.5 million in 2007) results in the following
5-year CIP projection.
2007 -- 2011 CIP With 5% Tax Increase and $2.5 Million Additional 2007 Costs
With Tax Increase Beginning in Payable 2008
20072008200920102011Totals
Beginning Cash Balance$ 11,461$ 1,981$ (457)$ (212)$ 971$ 11,461
Additons:
Property Taxes 1,248 1,310 1,376 1,445 1,517 6,896
Tax Increase 1,000 1,050 1,103 1,158 4,310
Municipal State Aid 755 793 755 1,555 1,555 5,413
Total Receipts 2,003 3,103 3,181 4,102 4,230 16,619
Subtractions:
Financing Obligations 11,483 5,541 2,936 2,919 2,736 25,615
Total Expenditures 11,483 5,541 2,936 2,919 2,736 25,615
Ending Cash Balance$ 1,981$ (457)$ (212)$ 971$ 2,465$ 2,465
The following table which is a summary of the currently approved 5-year CIP
illustrates the impact of State and County projects on City resources. See
particularly the ?Summary by Primary Jurisdiction? section of the table.
2007 -- 2011 CIP By Street Type
Total Project Costs
20072008200920102011Totals
Arterial & Collector
State 4,928,400 1,450,500 6,378,900
County 470,000 1,900,000 1,200,000 3,570,000
City 750,000 805,000 1,555,000
Total 5,398,400 3,350,500 750,000 805,000 1,200,000 11,503,900
Local Streets
City 1,505,500 2,636,700 2,691,000 2,321,000 1,945,000 11,099,200
Trails
City 331,155 156,870 138,500 41,500 234,000 902,025
Sealcoating
City 366,589 314,808 203,873 174,736 180,632 1,240,638
Intersection Improvements
State 150,000 650,000 800,000
County 1,125,000 125,000 500,000 1,750,000
City 800,000 800,000
Total 1,925,000 275,000 650,000 500,000 - 3,350,000
Summary By Primary Jurisdiction
State 4,928,400 1,600,500 650,000 - - 7,178,900
County 1,595,000 2,025,000 - 500,000 1,200,000 5,320,000
City 3,003,244 3,108,378 3,783,373 3,342,236 2,359,632 15,596,863
Total 9,526,644 6,733,878 4,433,373 3,842,236 3,559,632 28,095,763
Major Street Fund Share
Arterial & Collector 5,363,400 3,098,500 490,000 665,000 1,000,000 10,616,900
Local Streets 1,007,000 1,695,460 1,454,000 1,538,000 1,321,000 7,015,460
Trails 321,155 156,870 138,500 41,500 234,000 892,025
Sealcoating 366,589 314,808 203,873 174,736 180,632 1,240,638
Intersection Improvements 1,925,000 275,000 650,000 500,000 - 3,350,000
Total Major Street Fund 8,983,144 5,540,638 2,936,373 2,919,236 2,735,632 23,115,023
The table demonstrates $7,178,900 of City Cost related to State Highways
before the additional $2,500,000 is included bringing the new total to $9,678,900.
Any long-term solution will probably require a review of the City?s commitment to
cost sharing on State and/or County projects; with review of the impact related to
timing at a minimum.
If delaying and/or reducing City obligations to State and/or County projects are
options, the tax increase programmed above is probably the only required City
action at this time. In the event the City desires to proceed with State and/or
County projects on the schedule of the existing CIP and TINA study other
revenue sources will be required. The twenty year shortfall noted in the TINA
report is $35 to $50 million or $1.75 to $2.5 million per year. After the $1 million
increase noted above the shortfall remains at $.75 to $1.5 million per year in that
time frame. Doubling the tax increase to $2 million per year would for all
practical purposes eliminate the projected deficits. However, additional cost
increases to projects included in this and future CIP?s would also increase the
problem of balancing the CIP?s on an on-going basis.
The following chart demonstrates the impact of adding a $1 million additional levy
to property taxes on the 2007 payable average market value house in Eagan.
Tax Impact Per $1,000,000 Levy Increase
Total
MSFundCity
MSFundTaxTaxEstimated Taxes
Payable CapacityCapacity$278,021 House Value
LevyRateRateAmountIncrease
2007 Actual 1,247,812 0.015330.25239 42.62
$1,000,000 Increase 1,000,000 0.012290.26468 34.17
Total 2,247,812 0.02762 76.7934.17
Attached to this memo is a matrix outlining potential methods of increasing
revenues for the Major Street Fund including both short-term cash infusions and
long-term changes in the revenue stream. The matrix is broken down to
differentiate between potential revenues that are primarily controlled by the City
and those that would require or result from some State action. The estimated
fund balances noted on the matrix are very preliminary and additional work is
necessary to both confirm the dollar amounts and to review other commitments
already in place or contemplated in the future. For example, some of the
General Fund balance is in place for working capital, but not officially designated
as such within the statements. Payment for the newly approved replacement
ladder apparatus for the Fire Department will also require dollars from one or
more of these sources.
The matrix does not include bonding options or any other methods to advance
funding, since they only change the timing and there is no increase in overall
resources available in total.
Further, the matrix does not account for other potential City projects/initiatives
noted in the recently approved City goals that may compete for funding from the
same revenue sources, both long-term and short-term. Since little definitive work
has been completed on these potential projects/initiatives, I am not including any
estimated cost numbers. The preliminary list is as follows:
1. Open space acquisition
2. Fire stations
3. Fiber project
4. Cedar Grove Redevelopment
5. Retiree health insurance
6. Other public utilities infrastructure
The second activity regarding the development of a policy that addresses long-
term needs and provides the same long-term financial stability that the City has
experienced historically will continue and become formalized upon direction
resulting from this meeting.
Please let me know, if you would like any additional information or if you would
like to discuss any of this material.
_______________________________________
Director of Administrative Services VanOverbeke
cc: Director of Public Works Colbert
Chief Financial Officer Pepper
City Engineer Matthys
Transportation Engineer Plath