02-23-12 SCC0
0a"OF
0
MINNESOTA
TO: Otsego Mayor and City Council
FROM: Gary Groen, Finance Director
DATE: February 23, 2012
Re: Follow up to February 13, 2012 CIP Questions
We got off to a very good start with the CIP discussion on Monday, February 13. As the Council
and staff worked through the Plan, there were some questions raised that required additional staff
research and time to respond. The following discussion items are a follow up to that meeting:
• As part of the introduction there was a discussion of the various capital reserve funds the
City currently has on hand for street construction and reconstruction. There are three
funds (#209, 403, and 440) that have monies set aside and, in the case of fund #418, has a
deficit that needs to be financed. The Council directed the finance department to further
clarify the future use and funding sources related to the four funds. There is a memo
attached with this transmittal that further discusses this issue.
• The finance request (IT -12-001, page 25) is a request to upgrade the finance department
software. The upgrade would include the internal processing of payroll. The Council
requested additional information regarding the current ADP payroll processing
procedures and the cost to further upgrade that service. This analysis will be completed
for discussion on Monday, March 12.
• The administration request (AND -12-001, page 18) is a request for entrance signs to the
City. The Council asked for more specific information as to the locations for the signage.
Additional information will be completed for discussion on Monday, March 12.
• The public utilities CIP request (UTIL-12-082, page 49) was for a `Sidewalk Plow for
East Waste Water Treatment Facility' in 2013 with an estimated cost of $10,000. The
request has been withdrawn.
• The public utilities CIP request (UTIL-12-078 and 12-079, pages 48 and 49) included the
painting of the interior and exterior of water tower #1. The estimated costs were
$170,000 to paint the interior and $45,000 to paint the exterior. The Council asked for
additional analysis from the city engineer regarding the cost and benefit of this
improvement. The city engineer has completed the attached analysis and
recommendation.
The public utilities CIP request (UTIL-12-074, page 48) included the discussion about
the expansion of the west well capacity and the service concerns of the Riverwood
National development area. The Council asked the city engineer for additional analysis
of the options and estimated cost for the west water service. The city engineer has
completed the attached analysis and recommendation.
• The public works CIP request (PW -12-003, page 51) includes a discussion of the
purchase of a `One Ton Dump Truck with Plow' and the transfer and equipping of an
existing vehicle for use as a crane truck for the servicing of the lift stations. The City
currently contracts for lift station pump service that is beyond the limit of the current
crane truck. The estimated cost has been revised to $57,000 with the additional $12,000
to be financed from the sewer operating fund.
• The public works discussion included request for future equipment purchases. PW -12-
001, page 50 and PW -12-008, page 53 included discussion of the purchase of a
`Hydraulic 18" Mill and Blacktop Hot Box" with a total estimated cost of $29,500 in
2012. The Council requested the public works director to provide an analysis of the cost
of contracting for blacktop patching and street sweeping services. This analysis will be
completed for discussion on Monday, March 12.
If you have any questions, please contact me.
2
tsTeF o
MINNESOT9A
TO: Otsego Mayor and City Council
FROM: Gary Groen, Finance Director
DATE: February 23, 2012
RE: Capital Project Reserve Funds for street projects
Background:
The introduction to the CIP presentation included a discussion of the various funds and
monies available for future street construction and reconstruction projects. There are
three separate funds that have money set aside for street projects and one fund that
has a deficit balance. They are as follows:
Fund #209 was established to provide future funding for the City's share of collector
street construction and reconstruction projects. The money in this fund was from
general property tax revenues in 2010 and 2011. No money will be added to this
balance in 2012.
Fund #403 was established at the time the 85th street improvement was completed.
The City bonded for the project, received MSA construction reimbursements and levied
Preliminary Unaudited Balance at
Reserve Fund Name
Reserve Fund Number
December 31, 2011
Collector Street
Reconstruction Fund
209
$260,000
Collector Roads Fund
403
$425,000
78 th Street
Construction Fund
418
$230,000
West Street
Improvements Fund
440
$270,000
Total
$725,000
Fund #209 was established to provide future funding for the City's share of collector
street construction and reconstruction projects. The money in this fund was from
general property tax revenues in 2010 and 2011. No money will be added to this
balance in 2012.
Fund #403 was established at the time the 85th street improvement was completed.
The City bonded for the project, received MSA construction reimbursements and levied
special assessments against the benefitting projects. The money remaining is
unencumbered and is not required to be used in connection with an MSA street project.
Fund #418 is a deficit that remains from the 78th street and Page Avenue projects. The
deficit was intended to be added to the cost for the development to the south of 78th
street. However, several years have passed since the 78th street improvements and the
benefit of the street improvement to a future development is questionable. The deficit
in this fund should be eliminated.
Fund #440 was established for the collection of street access fees for the west side
improvements for collector streets within the public utility service area, generally known
as the area of 70th Street and Kadler Avenue. The street access fees were paid by the
developers in the area. No street access fees will be collected until further development
occurs in the area.
Recommendation:
Based my review of the street funds of the City, I recommend the funds be combined
and described as follows:
Fund 209 will remain as Street Reconstruction Fund and future revenue sources may be
dedicated as determined by the City Council. The fund will provide the City's share of
resources for local, non -collector street construction and reconstruction projects. The
preliminary and unaudited balance as of December 31, 2011 is $260,000.
Fund #403, 418 and 440 will be combined into one fund to be described as the
Collector Street Fund. The deficit in fund 418 will be absorbed in the consolidation of
these three funds. The combined preliminary and unaudited balance as of December
31, 2011 is $465,000 and the funds will be used to finance the City's share of collector
street projects.
Action Requested:
With your approval, the combination of the funds will be approved at a future City
Council meeting and will be effective as of December 31, 2011.
2