02/19/2008 - City Council Finance Committee
AGENDA
FINANICE COMMITTEE MEEETING
TUESDAY, FEBRUARY 19, 2008
4 P.M.
CONFERENCE ROOMS 2A&B
1. AGENDA ADOPTION
II. NORTHWOOD PARKWAY OVERPASS FUNDING
III. UPDATE ON CIVIC ARENA OPTIONS
IV. LAND ACQUISITION FOR FIRE STATION
V. OTHER BUSINESS
VI. ADJORNMENT
FINANCE COMMITTEE MEETING NOTES
TUESDAY, FEBRUARY 19, 2008
4:00 P.M.
CONFERENCE ROOMS 2A & 2B
Finance Committee members present: Mayor Maguire and Councilmember Carlson
City staff present: City Administrator Hedges, Assistant to the City Administrator Miller,
Director of Administrative Services VanOverbeke, Public Works Director Colbert, Parks and
Recreation Director Johnson. City Attorney Dougherty was also present.
NORTHWOOD PARKWAY OVERPASS FUNDING
City Administrator Hedges introduced the item noting that the City Council directed the
Finance Committee to review the potential financing for the construction of the Northwood
Parkway Overpass in 2008. Hedges reminded the Committee that the Northwood Overpass is
part of the 2008 bonding bill for the ring-road project. Hedges also reminded the Committee that
they have additional time to discuss the funding as the bids are not scheduled for consideration
until April 15, 2008. The Committee and staff discussed the use of the $600,000 in Federal
Highway Administration (FHA) Funding. Colbert noted that the City could not use the $600,000
towards the Northwood Project if they wanted to begin the project in 2008. However, Colbert
added that the $600,000 could be used for the future Duckwood portion of the ring-road instead.
The Committee, represented by Mayor Maguire as Councilmember Carlson was not yet
present, concluded that the Committee should continue to review the details of the financing for
the Northwood Overpass, and dual track that review with going out for bids for the 2008
construction of the overpass. The Committee also voiced their satisfaction with utilizing some
combination of municipal state aid bonding and the previously approved $1 million levy increase
to be used for the funding of the overpass construction. Lastly, the Committee noted that they
were comfortable forgoing the use of the $600,000 in FHA funding for Northwood Overpass,
and instead allocate those funds towards the Duckwood portion of the ring-road.
Committee member Carlson arrived at 4:35 p.m.
UPDATE ON CIVIC ARENA OPTIONS
City Administrator Hedges noted that Parks and Recreation Director Johnson will be
meeting with a representative of the Eagan Hockey Association regarding some concepts they
have developed for consideration by the Eagan City Council. Hedges noted that the Council
directed this item to the Finance Committee at the February 12, 2008 Workshop. The Finance
Committee reviewed three options recommended by the Eagan Hockey Association, including
dry land training space in the mezzanine level of the Civic Arena, a studio rink that would be
added to the Civic Arena, and an outdoor refrigerated rink within the City. Parks and Recreation
Director Johnson noted that the Eagan Hockey Association has expressed an interest in
allocating proceeds from their gambling operations to one of these three options.
The Committee discussed the options and both Committee members offered their
consensus that they prefer the first option, which would be dry land training space within the
Civic Arena. The Committee asked Director Johnson to inquire with the EHA on the following
issues:
• What are the growth projections for the Eagan Hockey Association in the coming years?
• What do they see as the need for a studio rink?
• How much money will the EHA allocate to the City to complete one of these projects?
The Committee recommended that the City do additional research as to the
financing/business plan for the creation of the dry land training space on the mezzanine level of
the Civic Arena. The Committee also noted they would like to see the glass on the mezzanine
retained so it can still be used as a viewing area for hockey games. The Committee requested
that the financial research be brought back to the Committee prior to going to the City Council
for a formal recommendation.
LAND ACQUISITION FOR FIRE STATION
City Administrator Hedges introduced the item noting that the Council directed the
Finance Committee to review the financing of the proposed land acquisition for the purpose of
relocating Fire Station No. 2.
Director of Administrative Services VanOverbeke reviewed options that have historically
been considered as funding options by the City for this type of expenditure, including: bonding,
General Fund fund balance, and the Community Investment Fund. VanOverbeke made the point
that it is legally possible for the City to reimburse itself later from bond proceeds actually
approved and sold after the purchase has been made. VanOverbeke also noted that the City has a
plan in place for the sale of equipment certificates for the purchase of fire equipment, which has
been approved by the City Council.
Fire Chief Scott presented the Committee with a letter received from the Dakota County
CDA stating that they value the Northwood property at $725,000, which would allow for the
creation of 29 housing units.
The Committee discussed the possible partnership with the CDA. City Attorney
Dougherty noted that a joint powers agreement would be likely with the CDA as buying partners
of the property.
There was Committee consensus to recommend to the City Council that for the purchase
of the land, the City use $600,000 from the General Fund fund balance and the balance from the
Community Investment Fund. There was also Committee consensus that the City go to
referendum to fund the construction of a fire station building that would be located on the
property.
Committee member Carlson noted that the Committee and the Council would need to see
specifics on the building plans before going to a referendum.
City Administrator Hedges suggested that the Finance Committee's recommendation on
the financing of the land purchase be forwarded to the City Council and that the City Council
would need to discuss what the City should do with regard to current Fire Station No. 2,
including where the funding proceeds of a potential sale of Fire Station No. 2 would be allocated.
The Finance Committee recommended that the City move forward in discussions with the
CDA regarding the joint purchase of the land, with the City using the combined fund balance and
Community Investment Fund allocations to purchase the City's portion of the land. The Finance
Committee also recommended the City go to the current land owner to negotiate a price for the
property. The Committee recommended that the City Council go to Closed Session at the
February 18, 2008 City Council meeting to discuss the Committee's recommendation with
regard to the land negotiation.
The meeting adjourned at 5:20 p.m.
AGENDA
FINANCE COMMITTEE MEEETING
TUESDAY, FEBRUARY 19, 2008
4 P.M.
CONFERENCE ROOMS 2A&B
1. AGENDA ADOPTION
II. NORTHWOOD PARKWAY OVERPASS FUNDING
P4 III. UPDATE ON CIVIC ARENA OPTIONS
IV. LAND ACQUISITION FOR FIRE STATION
V. OTHER BUSINESS
VI. ADJORNMENT
Finance Committee Information Memo
February 18, 2008 Finance Committee Meeting
II. NORTHWOOD PARKWAY OVERPASS FUNDING
DIRECTION TO BE CONSIDERED: Provide a recommendation to the City Council on
the financing for the construction of the Northwood Parkway Overpass in 2008.
FACTS:
• In early June of 2007, the City's Finance Committee, as directed by the City
Council, reviewed funding options for the seven major Collector and Arterial road
projects identified in the draft 2008-2012 Public Works CIP.
• The review included potential new revenue sources, the process of saving for
future projects combined with the impact of inflation on project costs, the
appropriate use of available bonding options, and finally, community
understanding and support for tax increases to support designated road
infrastructure improvements.
• The Finance Committee recommended and the City Council subsequently
approved that a new subsection titled "Overpasses and Interchanges" be added
to the Street and Highways Section of the 2008-2012 CIP.
• As part of the 2008 budget and tax levy review and adoption, the City Council
increased the tax levy for the Major Street Fund by an additional $1,000,000 and
generally designated those new dollars toward projects included in the new
category of Overpasses and Interchanges in the Public Works CIP.
• At the February 12, 2008 City Council workshop, there was City Council
consensus to advance construction of the Northwood Parkway Overpass from
the 2009 construction season to 2008, resulting from a review of the cost and
bidding environment as conducted by Director of Public Works Colbert.
• In addition to directing that an item be placed on the February 19, 2008 regular
City Council agenda to approve the plans and authorize advertisement for bids
for the overpass, the Council also directed that the Finance Committee to
concurrently review the financing alternatives associated with the construction of
the overpass.
• Resulting from the work that was done in June of 2007, it was the staff's
suggestion for the February 12 workshop that some combination of Municipal
State Aid bonding and the previously approved $1 million levy increase be used
to fund the overpass construction.
• This suggestions meets the following parameters:
o For all practical purposes, it is the only type of bonding available for this
type of project.
o Maximum flexibility is maintained on current and future use of the $1
million levy.
o This approach will minimize the cash flow impact on other Street and
Highway projects not proposed to be funded from the dedicated tax levy.
O O O O 0 0 0 0 {4 0. O LO O C) 0 0 0 0
O
0 CD F U O 0 M h 0 69 Co
U') 0 It N
O
69 t}j 69
C 0 O O O 0 C) 0 0 CD
O O 0 O O O O O O
0 O O r- h N
O U. 00 00 00) O O 0 0 O
O 69, C') M N- O . O CL d to E lCf N
6q ER 69
V)
t6
d
3 LL 691 691
O W
U)
c
. m
o' 01
E C) O O Off! OEE3 Of13 O
d 0 ER ff-J V3 ~*+t
Q d
0
0
U-
0
0
U) O 00
W N LO
C O U
m O C '0 O
W E tq :o m
z •0 co
Z N h C C O 0 N v
W e- M J m .a M > m
W Q W N otS '0 U
DLL }>Co o d O 0 O D U) O t4 U
L N ¢ ) a)a z cc a c
0) a) 0
D D L Z
C. a) c N
Z z
0
U U
a>
Z
O S O O
o
0 LL
V R O O
.9? 15
0 a U o N
U ~ - o -C
in U
'D
m ai as
Q I- o Q N cn
ai E m
a Q o
Cl)
x U
O
E c 0 " 0
N Y N N c
O
o E
O v C LL
O O D-
Cf >
o
J . Q O •a 0
a
d C C t7 n`
c Y Y c a 0
cv 0 a O
0
v 4 O 0
C C)
'C 'a Y ~s a _C N N 0 m
C CC d co
m N D. D a .a O O O. 0. O O
C) 00 0 0 U V 0 0
Q J= < < < L) 'a a a a
N O C
c a Z Z Z of c Cl) cl S 0 Gl S a LL
c 0 1
> N LL CV M
0 c nj Crj N N Z N Z
Z Z N
3
o The funding options will be the same regardless if the project is
constructed in 2008 or 2009. The only difference being that 2009 would
be the second year of the additional levy rather than the first year and
funding costs are expected to be higher based on inflation and an
expected increase in bridge projects competing for contractors.
• The final funding decision does not need to be made until firm bids are received
and a contract is presented for consideration of award, which is tentatively
targeted for the April 15, 2008 Council meeting.
• Assuming the Finance Committee recommends this suggested funding plan to
the full City Council and the project proceeds in 2008, a meeting or meetings will
be held in advance of April 15 with the City's fiscal consultant, MSA experts and
City staff to generate the following details related to this type of financing:
o The relationships between existing advances from the City's MSA
account, new bonding, future increases in MSA revenues, and debt
service obligations.
o The appropriate term and expected interest rate for new bonds.
o The appropriate relationships among the new debt service obligations,
the new levy, MSA revenues, and future projects within both the
Overpasses and Interchanges subsection and more broadly in the overall
Streets and Highways section of the Public Works CIP.
ENCLOSURES:
• Enclosed on page is a copy of the approved 2008 -2012 CIP for
Overpasses and Interchanges.
Agenda Memo
February 19, 2008 Finance Committee Meeting
UPDATE ON CIVIC ARENA OPTIONS
BACKGROUND:
• Staff has had some discussions in the recent past with the Eagan Hockey Association's president to
better understand their long-terms needs to help evaluate how they could fit into changes or
enhancements that might occur at the Civic Arena. In 2007 the hockey association made their last
payment to the City of Eagan for their financial commitment to the construction of the east rink.
While the focus of any enhancement would be broader to encourage multiple users in the building,
the EHA brought forward some interesting concepts.
• Three distinct areas surfaced for discussion:
• Dry land training space
o This is a rapidly growing trend where teams are focusing on dry land cardio/strength training
that will enhance their on-ice performance.
Options
• Mezzanine could be partitioned off to accommodate not only dry land training for skating
but it might offer programmatic opportunities for youth fitness, clinics/camps or a satellite
location for fitness classes.
• Balance of mezzanine could still be used for birthday parties, private rentals or open
viewing of games/events.
• Studio rink
o This has been defined as the addition of a smaller sheet of ice adjacent to the east arena that
would have a second floor space for programmatic/rental opportunities.
Options
• This option offers a much broader range of opportunities to enhance skating in the
community; i.e. skate school lessons, hockey practice, open skating, birthday parties, or
growth opportunity for skate club.
• A second floor to the studio rink could provide an option for dry land training, fitness
programming, clinics/camps, or rentable meeting/party/event space.
• This option provides more flexibility for use and is more inclusionary.
• This would still preserve the use of the mezzanine for viewing events, birthday parties,
rentals or other opportunities that might present themselves.
• Outdoor refrigerated rink
o This was identified by EHA as a way to mitigate the prime time ice crunch that they've
indicated is a concern
Options
• This consideration would require significant thought about location, maintenance, and
cost to operate.
STAFF DIRECTION
• Staff is seeking Council direction as to whether or not these options should be pursued for further
review, analysis and discussion. If so, is there a priority or timeline for these enhancement
considerations?
ATTACHMENTS:
• None
1
Finance Committee Information Memo
February 18, 2008 Finance Committee Meeting
IV. LAND ACQUISITION FOR FIRE STATION
DIRECTION TO BE CONSIDERED: To provide a recommendation to the City
Council regarding the financing of the proposed land acquisition for the purpose
of relocating fire station #2.
FACTS:
• At the February 12, 2008 City Council workshop, the Council discussed
the possible acquisition of land to relocate Fire Station #2.
• Following a closed session to discuss the land negotiations regarding the
parcel located at Lexington Avenue and Northwood Drive, the Council
directed that the Finance Committee review possible funding alternatives
for the acquisition of land.
• The following options have historically been considered as funding options
by the City for this type of expenditure:
o Bonding:
¦ General Obligation Bonds: Using general obligation bonds
for a land purchase and/or fire station construction would
require a referendum granting the City the authority to issue
the bonds.
¦ EDA Bonds: The City used EDA bonds to purchase Central
Park; however, the City's bond counsel is not optimistic that
EDA bonds would be an option in this instance.
¦ Capital Improvement Bonds: The City could issue Capital
Improvement Bonds sold without a referendum to buy the
land and/or to construct the fire station. However, there are
numerous legal requirements to use this option. These
bonds cannot be used to purchase equipment.
It is legally possible for the City to reimburse itself later from bond
proceeds actually approved and sold after the purchase has been
made. There is a specified period and certain other steps, but that
is an option. That approach assumes temporary internal borrowing
and a successful bond referendum. A decision to use Capital
Improvement Bonds or General Obligation Bonds in advance would
require an exit strategy, to deal with owning the land, if the project
does not proceed.
o General Fund Fund Balance: Staff is projecting that approximately
$1,000,000 will be added to the Fund Balance resulting from 2007
operations. That is a $500,000 favorable variance on both
revenues and expenditures. While $1,000,000 is a large number,
the $500,000 represents only a 2% variance from budget for
revenues and expenditures so the budgeting is pretty close. The
addition to fund balance will bring the total to 42.3% of the 2008
budgeted expenditures. The City's current target range in the Fund
Balance Policy is 40 to 45%. Drawing the balance down to 40%
would free up approximately $600,000, if the City Council chose to
do so.
o Community Investment Fund: Staff, Finance Committee, and the
City Council spent a considerable amount of time reviewing
available balances in the CIF over the summer of 2007, primarily as
it related to open space. Given the lengthy list of potential future
needs with no alternate sources of revenue, the Finance
Committee concluded that no additional resources beyond the
$60,000 are available in the CIF to provide for acquisition of open
space, but did not analyze the other projects further. The list of
potential future needs while not prioritized totaled over $13 million
including $600,000 to remodel fire station 2 to accommodate 6
resident dorms and $5.0 million to add fire station 6. The estimated
cash balance in the CIF at December 31, 2007 is $2,664,000.
• No effort has been made to determine potential tax impact of any of these
options, no provisions have been made to manage the stacking of the
potential obligations onto other impacts that currently exist or will exist in
the future, and no other projects have been reviewed to determine a
priority status.
FACTS:
(None)
i„'7
Finance Committee Information Memo
February 18, 2008 Finance Committee Meeting
IV. LAND ACQUISITION FOR FIRE STATION
DIRECTION TO BE CONSIDERED: To provide a recommendation to the City
Council regarding the financing of the proposed land acquisition for the purpose
of relocating fire station #2.
FACTS:
• At the February 12, 2008 City Council workshop, the Council discussed
the possible acquisition of land to relocate Fire Station #2.
• Following a closed session to discuss the land negotiations regarding the
parcel located at Lexington Avenue and Northwood Drive, the Council
directed that the Finance Committee review possible funding alternatives
for the acquisition of land.
• The following options have historically been considered as funding options
by the City for this type of expenditure:
o Bonding:
¦ General Obligation Bonds: Using general obligation bonds
for a land purchase and/or fire station construction would
require a referendum granting the City the authority to issue
the bonds.
¦ EDA Bonds: The City used EDA bonds to purchase Central
Park; however, the City's bond counsel is not optimistic that
EDA bonds would be an option in this instance.
¦ Capital Improvement Bonds: The City could issue Capital
Improvement Bonds sold without a referendum to buy the
land and/or to construct the fire station. However, there are
numerous legal requirements to use this option. These
bonds cannot be used to purchase equipment.
It is legally possible for the City to reimburse itself later from bond
proceeds actually approved and sold after the purchase has been
made. There is a specified period and certain other steps, but that
is an option. That approach assumes temporary internal borrowing
and a successful bond referendum. A decision to use Capital
Improvement Bonds or General Obligation Bonds in advance would
require an exit strategy, to deal with owning the land, if the project
does not proceed.
o General Fund Fund Balance: Staff is projecting that approximately
$1,000,000 will be added to the Fund Balance resulting from 2007
operations. That is a $500,000 favorable variance on both
revenues and expenditures. While $1,000,000 is a large number,
the $500,000 represents only a 2% variance from budget for
revenues and expenditures so the budgeting is pretty close. The
addition to fund balance will bring the total to 42.3% of the 2008
budgeted expenditures. The City's current target range in the Fund
Balance Policy is 40 to 45%. Drawing the balance down to 40%
would free up approximately $600,000, if the City Council chose to
do so.
o Community Investment Fund: Staff, Finance Committee, and the
City Council spent a considerable amount of time reviewing
available balances in the CIF over the summer of 2007, primarily as
it related to open space. Given the lengthy list of potential future
needs with no alternate sources of revenue, the Finance
Committee concluded that no additional resources beyond the
$60,000 are available in the CIF to provide for acquisition of open
space, but did not analyze the other projects further. The list of
potential future needs while not prioritized totaled over $13 million
including $600,000 to remodel fire station 2 to accommodate 6
resident dorms and $5.0 million to add fire station 6. The estimated
cash balance in the CIF at December 31, 2007 is $2,664,000.
• No effort has been made to determine potential tax impact of any of these
options, no provisions have been made to manage the stacking of the
potential obligations onto other impacts that currently exist or will exist in
the future, and no other projects have been reviewed to determine a
priority status.
FACTS:
(None)
Finance Committee Information Memo
February 18, 2008 Finance Committee Meeting
II. NORTHWOOD PARKWAY OVERPASS FUNDING
DIRECTION TO BE CONSIDERED: Provide a recommendation to the City
Council on the financing for the construction of the Northwood Parkway
Overpass in 2008.
FACTS:
• In early June of 2007, the City's Finance Committee, as directed by the
City Council, reviewed funding options for the seven major Collector and
Arterial road projects identified in the draft 2008-2012 Public Works CIP.
• The review included potential new revenue sources, the process of
saving for future projects combined with the impact of inflation on project
costs, the appropriate use of available bonding options, and finally,
community understanding and support for tax increases to support
designated road infrastructure improvements.
• The Finance Committee recommended and the City Council
subsequently approved that a new subsection titled "Overpasses and
Interchanges" be added to the Street and Highways Section of the 2008-
2012 CIP.
• As part of the 2008 budget and tax levy review and adoption, the City
Council increased the tax levy for the Major Street Fund by an additional
$1,000,000 and generally designated those new dollars toward projects
included in the new category of Overpasses and Interchanges in the
Public Works CIP.
• At the February 12, 2008 City Council workshop, there was City Council
consensus to advance construction of the Northwood Parkway Overpass
from the 2009 construction season to 2008 construction season, resulting
from a review of the cost and bidding environment as conducted by
Director of Public Works Colbert.
• In addition to directing that an item be placed on the February 19, 2008
regular City Council agenda to approve the plans and authorize
advertisement for bids for the overpass, the Council also directed that the
Finance Committee review the financing alternatives associated with the
construction of the overpass.
• Resulting from the work that was done in June of 2007, it was the staff's
suggestion for the February 12 workshop that some combination of
Municipal State Aid bonding and the previously approved $1 million levy
increase be used to fund the overpass construction.
• This suggestions meets the following parameters:
o For all practical purposed it is the only type of bonding available for
this type of project.
o Maximum flexibility is maintained on current and future use of the
$1 million levy.
o This approach will limit the cash flow impact on other Street and
Highway projects not proposed to be funded from the dedicated
tax levy.
o The funding options will be the same regardless if the project is
constructed in 2008 or 2009. The only difference being that 2009
would be the second year of the additional levy rather than the first
year.
• The final funding decision does not need to be made until the potential
contract is awarded by the City Council, which is tentatively targeted for
April 15, 2008.
• Assuming the Finance Committee recommends this suggested funding
plan to the full City Council and the project proceeds in 2008, a meeting
or meetings will be held in advance of April 15 with the City's fiscal
consultant, MSA experts and City staff to generate the following details
related to this type of financing:
o The relationships between existing advances from the City's MSA
account, new bonding, future increases in MSA revenues, and
debt service obligations.
o The appropriate term and expected interest rate for new bonds.
o The appropriate relationships among the new debt service
obligations, the new levy, MSA revenues, and future projects within
both the Overpasses and Interchanges subsection and more
broadly in the overall Streets and Highways section of the Public
Works CIP.
ENCLOSURES:
• Enclosed on page is a copy of the approved 2008 -2012 CIP for
Overpasses and Interchanges.
Agenda Memo
February 19, 2008 Finance Committee Meeting
UPDATE ON CIVIC ARENA OPTIONS
BACKGROUND:
• Staff has had some discussions in the recent past with the Eagan Hockey Association's president to
better understand their long-terms needs to help evaluate how they could fit into changes or
enhancements that might occur at the Civic Arena. In 2007 the hockey association made their last
payment to the City of Eagan for their financial commitment to the construction of the east rink. While
the focus of any enhancement would be broader to encourage multiple users in the building, the EHA
brought forward some interesting concepts.
• Three distinct areas surfaced for discussion:
• Dry land training space
o This is a rapidly growing trend where teams are focusing on dry land cardio/strength training
that will enhance their on-ice performance.
Options
• Mezzanine could be partitioned off to accommodate not only dry land training for skating
but it might offer programmatic opportunities for youth fitness, clinics/camps or a satellite
location for fitness classes.
• Balance of mezzanine could still be used for birthday parties, private rentals or open viewing
of games/events.
• Studio rink
o This has been defined as the addition of a smaller sheet of ice adjacent to the east arena that
would have a second floor space for programmatic/rental opportunities.
Options
• This option offers a much broader range of opportunities to enhance skating in the
community; i.e. skate school lessons, hockey practice, open skating, birthday parties, or
growth opportunity for skate club.
• A second floor to the studio rink could provide an option for dry land training, fitness
programming, clinics/camps, or rentable meeting/party/event space.
• This option provides more flexibility for use and is more inclusionary.
• This would still preserve the use of the mezzanine for viewing events, birthday parties,
rentals or other opportunities that might present themselves.
• Outdoor refrigerated rink
o This was identified by EHA as a way to mitigate the prime time ice crunch that they've
indicated is a concern
Options
• This consideration would require significant thought about location, maintenance, and cost
to operate.
STAFF DIRECTION
• Staff is seeking Council direction as to whether or not these options should be pursued for further
review, analysis and discussion. If so, is there a priority or timeline for these enhancement
considerations?
ATTACHMENTS:
• None