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ITEM 5.1 Annual Operating BudgetOt Te F _.o MINNESOTA V DEPARTMENT INFORMATION Request for City Council Action ORIGINATING DEPARTMENT: REQUESTOR: MEETING DATE: Administration Adam Flaherty, Finance Director December 12, 2016 PRESENTER(s): REVIEWED BY: ITEM #: Adam Flaherty, Finance Director 5.1 AGENDA ITEM DETAILS RECOMMENDATION: It is recommended by staff that the City Council approve the attached resolutions: 1) Adopting the 2017 Annual Operating Budgets (General, Utilities, Debt Service, Special Revenue) 2) Setting a Final Property Tax Levy for Taxes Payable 2017 3) Adopting the 2017-2026 Capital Improvement Plan ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? No Yes — December 12, 2016 BACKGROUNDMUSTIFICATION: The City Council and staff began the budgeting process back in May, and have met in nine work session settings in preparation and review of the operating budgets, property tax levy, and capital improvement plan. The proposed General fund budget is a balanced budget, with expenditures totaling $5,040,565. When compared with 2016, this is an increase of 6% (transfers not included). These expenditures are funded with property taxes being the primary source of revenue, which accounts for 75% of all revenues. The Public Utility budgets include the Water, Sanitary Sewer and Storm Water funds. The primary sources of revenues for these funds are from charges for services to customers of the public utilities. The expenses are comprehensive, and include operating expenses, depreciation, capital outlay, debt service and interfund transfers. The utility funds have cash flow projections which are monitored and updated multiple times per year. The proposed utility fund budgets are not balanced budgets for 2017, as the cash flow projections have identified that using reserves is warranted. The rates for those charges have been analyzed, and current recommendations for increases have been included in the budgets. The respective rates will be analyzed further when the end of the year financial information is available. Staff will make a final recommendation to the Council for the 2017 rates sometime in February, with any rate changes becoming effective with the March billing. The Debt Service Funds budget includes revenues and expenditures for each of the City's seven outstanding bond issues. The primary sources of revenues include property taxes, special assessments and utility availability/connection charges. These revenues along with fund balance will repay the principal and interest on the respective bond issues. The Special Revenue Funds budget includes activity for the City's Economic Development Revolving and Above Standard Street Lighting Funds. The expenditures within these funds are for tax abatement agreements and electricity charges, respectively. These expenditures are funded through a property tax levy and charges to parcels within the above standard street lighting district. The proposed property tax levy accounts for General fund revenues, Capital fund reserves, Debt Service repayments and Tax Abatements. The total proposed levy is $5,629,745. The most recent information available from Wright County shows the City's tax capacity increased to a total of $14,879,709 (12% from 2016). All of this calculates to an estimated City tax rate of 37.835, which is down (0.23%) from the prior year rate of 37.921. In the end, this means that any increase in the City's portion of property taxes is driven by that respective properties increase in market value. The proposed Capital Improvement Plan (CIP) covers the years of 2017-2026. A summary of the CIP is included and is organized by funding source. Inclusion of an item within the CIP does not commit final approval by the City Council, rather it directs staff to plan towards and gather necessary information for an educated final approval on each respective item. Each individual item is planned, researched and brought back to City Council for final approval when the respective item is ready to move forward. SUPPORTING DOCUMENTS: ATTACHED NONE • Resolution 2016-102: Adopting the 2017 Annual Operating Budgets o General Fund — Budget Summary o Public Utility Funds — Budget Summary o Debt Service Funds — Budget Summary o Special Revenue Funds— Budget Summary Resolution 2016-103: Setting a Final Property Tax Levy for Taxes Payable 2017 o Tax Levy Calculations Resolution 2016-104: Adopting the 2017-2026 Capital Improvement Plan o Projects by Funding Source Summa POSSIBLE MOTION word motion as you would like it to appear in the minutes. 3 Separate Motions Needed A] Motion to approve Resolution 2016-102, Adopting the 2017 Annual Operating Budgets. B] Motion to approve Resolution 2016-103, Setting a Final Property Tax Levy for Taxes Payable 2017. C] Motion to approve Resolution 2016-104, Adopting the 2017-2026 Capital Improvement Plan. Rl1DGET INFORMATION FUNDING: BUDGETED: n/a n/a CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2016-102 ADOPTING THE 2017 ANNUAL OPERATING BUDGETS WHEREAS, the Otsego City Council has on December 12, 2016, held a public meeting to allow for public comment before adopting a final budget and certifying a final property tax levy; and WHEREAS, the Otsego City Council has reviewed the proposed General, Public Utility, Debt Service and Special Revenue fund budgets and has determined the budget is adequate to fund the respective fund operations for the year 2017. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA: That the following revenues and expenditures (summarized) be authorized as the final budget for the operation of the General fund for 2017 as follows: Revenues Property Taxes $3,763,273 Cable Franchise Fees 132,000 Licenses and Permits 788,900 Intergovernmental 56,800 Charges for Services 105,550 Miscellaneous 194,042 Total Revenues $5,040,565 Expenditures General Government $1,334,349 Public Safety 1,875,138 Public Works 1,136,728 Parks and Recreation 584,490 Economic Development 109,860 Total Expenditures $5,040,565 2. 3. 9 That the following revenues and expenses (summarized) be authorized as the final budget for the operation of the Public Utility funds for 2017 as follows: Revenues Operating $2,824,426 Non -Operating 196,588 Total Revenues 3 021 014 Expenses Operating $1,824,589 Capital Outlay 1,993,015 Depreciation 1,458,000 Debt Service 200,000 Transfers to Other Funds 209,042 Total Expenses $5,684,646 That the following revenues and expenditures (summarized) be authorized as the final budget for the operation of the Debt Service funds for 2017 as follows: Revenues Property Taxes $655,000 Special Assessments 438,681 Utility Availability & Connection Charges 1,726,000 Transfers from Other Funds 49,000 Total Revenues $2,868,681 Expenditures Principal $3,160,000 Interest, Fiscal Agent Fee's & Amortizations 1,098,727 Total Expenditures $4,258, 727 That the following revenues and expenditures (summarized) be authorized as the final budget for the operation of the Special Revenue funds for 2017 as follows: Revenues Property Taxes $81,385 Charges for Services 10,000 Total Revenues $91,385 Expenditures Services & Other Charges $91,385 Total Expenditures $91,385 2 ADOPTED by the Otsego City Council this 12th day of December, 2016. ATTEST: CITY OF OTSEGO Jessica Stockamp, Mayor Tami Loff, City Clerk MOTION made by Council Member and SECONDED by Council Member IN FAVOR: OPPOSED: 3 C E E U w Z n n N o m W N 00 o m o tO m m m m umi n 0 nj V1 N 0 1130 m 06 W m O 16 m rcm 0000�no oo ' uOOiommv`"i oo c m N [V ui um io" m u•. ni N O u O o' ' O' w M O u m O O r oavuni voi m m m m m M N N m V N cw a) at N V '7 V V N a O M v�i tMO. W, N V N Ol rl ul N M N M N l0 m Ol O a) O .-I tL V r .Mi M l0 � at V N r um aS om uma mZ a of r c-1 N n Ol n N N m l ni ri � tip N n b M 0 cn-I t�tt taL m mmn.�.-+oocoa N ON m m m n a m N r M e-V N m ti c+i .ti 09 0 0 N ti 0 U Q O a] V o.n 0 o c + U t' U G C o C o o o U U n U U < 0 0 o m m V n ui um m w0000 m o M n m W 0 V N M N 00 t0 a vi r V of m n v m o m coti�N V M N a1 t0 Om N m Om Om m�v aoo m m N m ti I m ouNi�om norninMm m- m m o N N n O ut N N T O 20 D a M D w ionmv um io' ui n ri O O m Ol a) ri e-1 m N m N m O lD [t r l0 Q1 c-i �i ri c-i m .-i voom n.�mwn ui �ri v v ni ri ri ri City of Otsego Public Utility Fund Budget - 2017 Revenue & Expenditure Summary Revenues Operating Non -Operating Description Subtotal Expenditures Personal Services Supplies Services & Other Charges Capital Outlay Depreciation Debt Service Interfund Transfers Subtotal Excess (Deficiency) of Revenues over (Under) Expenditures Actual Actual Year -to -Date Budget Budget 2014 2015 2016 2016 2017 $ 2,421,005 $ 2,607,024 $ 2,551,581 $ 2,509,940 $ 2,824,426 367,990 273,236 240,158 173,480 196,588 2,788,995 2,880,260 2,791,738 2,683,420 3,021,014 252,745 271,163 308,266 334,472 378,061 244,681 273,485 294,231 311,624 399,689 559,152 840,165 1,006,919 816,969 1,046,839 - (84,737) 1,798,644 2,811,900 1,993,015 1,313,666 1,319,533 - 1,390,000 1,458,000 - - - - 200,000 122,632 284,586 186,755 183,755 209,042 2,492,877 2,904,194 3,594,817 5,848,720 5,684,646 $ 296,118 $ (23,934) $ (803,078) $ (3,165,300) $ (2,663,632) City of Otsego Debt Service Fund Budget - 2017 Revenue & Expenditure Summary Actual Actual Year -to -Date Budget Budget Description 2014 2015 2016 2016 2017 Revenues Taxes $ 303,035 $ 610,000 $ 320,000 $ $ 655,000 Special Assessments 682,089 539,160 568,177 438,681 Utility Availability+Connection Charges 2,402,922 1,760,425 3,226,881 1,726,000 Investment Earnings 145,095 47,219 - - Interfund Transfers - 154,000 50,000 49,000 Subtotal 3,533,142 3,110,804 4,165,058 2,868,681 Expenditures Principal 6,575,000 1,130,000 3,210,000 - 3,160,000 Interest 1,368,571 1,263,180 1,239,608 - 1,172,859 Fiscal Agent Fee's 2,866 4,630 2,475 - 4,750 Debt Service Amortizations - (78,882) - - (78,882) Subtotal 7,946,437 2,318,928 4,452,083 - 4,258,727 Excess (Deficiency) of Revenues Over (Under) Expenditures $ (4,413,295) $ 791,877 $ (287,025) $ - $ (1,390,046) City of Otsego Special Revenue Fund Budget - 2017 Revenue & Expenditure Summary F; Description Revenues Taxes Charges for Services Investment Earnings Miscellaneous Subtotal Expenditures Services & Other Charges Subtotal Excess (Deficiency) of Revenues Over (Under) Expenditures Actual Actual Year -to -Date Budget Budget 2014 2015 2016 2016 2017 $ 22,911 $ 23,000 $ 44,407 $ $ 81,385 117,476 27,006 12,007 10,000 4,953 2,333 - - - 26,371 - - - 145,339 78,710 56,414 91,385 50,612 59,060 48,426 91,385 50,612 59,060 48,426 91,385 $ 94,727 $ 19,651 $ 7,988 $ - $ CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2016-103 SETTING A FINAL PROPERTY TAX LEVY FOR TAXES PAYABLE IN 2017 WHEREAS, the Otsego City Council has on December 12, 2016, held a public meeting to allow for public comment before adopting a final budget and certifying a final property tax levy; and WHEREAS, the Otsego City Council is required by State Statute to establish a final property tax levy for taxes payable in 2017 by December 28, 2016 and certify the final property tax levy to the Wright County Auditor; and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA: That a tax is hereby levied for collection in 2017 upon all taxable properties in the City of Otsego for the purpose and sums as follows: General Revenue $4,893,360 Tax Abatement 81,385 GO Improvement Bonds, 2010B 430,000 GO Improvement Bonds, 201OD 109,255 GO Improvement Bonds, 2011A 115,745 Total Tax Levy 5 629 745 ADOPTED by the Otsego City Council this 12th day of December, 2016. ATTEST: CITY OF OTSEGO Jessica Stockamp, Mayor Tami Loff, City Clerk MOTION made by Council Member and SECONDED by Council Member IN FAVOR: OPPOSED: w E E 0 T c G y N O C O N ELO i% O O U y p ao w o Po ✓ U N >: E .y y O N 3 v v H c U C Rm E R N -p U m v C O m 0 O 0 O C O O u Y, CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2016-104 ADOPTING THE 2017-2026 CAPITAL MPROVEMENT PLAN WHEREAS, the Otsego City Council has determined it is fiscally responsible and necessary to develop a capital improvement plan that identifies items that may require significant capital investment; and WHEREAS, the Otsego City Council has reviewed the details and estimated cost of each item included within the capital improvement plan; and WHEREAS, the Otsego City Council has identified probable funding sources for each item included within the capital improvement plan; and WHEREAS, the inclusion of an item within the capital improvement plan does not commit final approval for each respective item, rather each item will be presented to the Otsego City Council with final expenditure amounts and a detailed funding plan to gain final approval. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA: That the 2017-2026 Capital Improvement Plan, as set forth in summary, attached as Exhibit A to this Resolution is adopted. ADOPTED by the Otsego City Council this 12th day of December, 2016. 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