Loading...
HomeMy WebLinkAbout1996 11-14 FCA• AGENDA BROOKLYN CENTER FINANCIAL COMMISSION (November 14, 1996 City Hall Conference Room B 1. Call to Order: 7:00 P.M. 2. Roll call. Approval of Minutes: September 19, 1996 4. Review of Capital Improvements Fund Expenditure Policy. 5. Set Date of Next Meeting. 6. Adjournment: 9:00 P.M. 0 0 MINUTES OF THE PROCEEDINGS OF THE FINANCIAL COMMISSION • OF THE CITY OF BROOKLYN CENTER SEPTEMBER 19, 1996 CITY HALL, CONFERENCE ROOM B CALL TO ORDER Chair Donn Escher called the meeting to order at 7:00 P.M. in Conference Room B. ROLL CALL Present at roll call were Chair Donn Escher, Commissioners: Lee Anderson, Jay Hruska, and Ron Christensen. Also present were Council Member Kathleen Carmody, City Manager Michael McCauley, and Finance Director Charlie Hansen. Commissioners Ned Storla and Larry Peterson were excused. Commissioner Phillip Roche was unexcused. Approval of Minutes Donn Escher noted a correction to the draft minutes. A motion was made by Commissioner Jay Hruska to approve the minutes of the August 13, 1996 meeting as corrected. Chair Donn Escher seconded the motion and all members voted in its favor except for Commissioners Lee Anderson and Ron Christensen abstained from voting. Facilities Tour Scott Kline, Chief of Police, led the Financial Commission on a tour of the Police Station. Discussion of the Status of the Financial Commission Donn Escher distributed minutes of a July 15, 1996 City Council work session at which there had been discussion of whether the Financial Commission should continue as such or be changed to a task force. Extensive discussion followed on the purpose, workload, and benefits of having a Financial Commission verses a task force. Consensus was reached that the City should continue to have a Financial Commission. Reouest for Proposals for Banking and Financial Services Charlie Hansen explained that proposals had been solicited from all banks with offices in Brooklyn Center. First Bank, Norwest Bank, and Marquette Bank had responded. Staff had disqualified First Bank immediately, because we had heard, and First Bank had confirmed, that they were closing their branch office in Brooklyn Center as of October 1, 1996. The banks had been given the opportunity to propose no interest/no fee service, interest bearing/fee charging account, or any other arrangement that they wished. Initial analysis indicated that the proposals for an account which would pay interest on the cash balance in the account and charge fees for the transaction activity would be most beneficial to the City. Norwest's proposal at first appeared to have an advantage because of lower fees on many transactions and higher interest on the cash balance. However the detail analysis showed that Norwest had some charges which Marquette didn't have, the most significant being a collateral • charge, which made their proposal more expensive. Staff still wanted to do some additional analysis to prove out Marquette's proposal, but unless that analysis had results different from what was expected, we are recommending that the City continue its business at Marquette Bank. A motion was made by Commissioner Ron Christensen to recommend the Marquette Bank to the City Council provided this is supported by staff's analysis. Commissioner Jay Hruska seconded • the motion and all members voted in its favor. Review of Capita) Improvements Fund Expenditure Policv Mike McCauley reported that the City's capital and infrastructure needs include remodeling the Fire Stations at a cost of about $3,500,000, and expanding the Police Station. Moving the City Hall to a new addition attached to the upper level of the Community Center and expanding the Police Station upstairs may be the most economical approach while also solving problems with the building entrances. Study of this hasn't progressed very far, but it might cost about $3,000,000 for the total of 6 to 7 million dollars. Mike is concerned that bonding for the total would be too much for the tax levy so he is considering bonding for half and paying for the other half from cash in the Capital Improvements Fund. This fund has a cash balance of about $4.6 million, but using the amount he is talking about would require modifying the Capital Improvements Fund Expenditure Policy. Extensive discussion followed on the advisability of submitting on part of the building package to the voters in a referendum while paying for part of it in cash and on the history of Capital Improvement Fund expenditures and the fund's need for a cash balance. A consensus was reached that there is a need to address the City's building needs and that the Capital Improvement Fund should play some part in financing it. The staff was requested to study the possibilities further and report at the next meeting. • Next Meeting, The next meeting will be Thursday, November 14, 1996 at 7:00 P.M. ADJOURNMENT A motion was made by Commissioner Ron Christensen to adjourn the meeting at 9:20 P.M. Commissioner Lee Anderson seconded the motion and all members voted in its favor. 0 City of Brooklyn Center A great place to start. A great place to stay. • To: Financial Commission From: Michael J. McCauley City Manager Date: November 12, 1996 Re: Capital Improvements Fund Expenditure Policy At the last meeting of the Financial Commission, discussion began on the issue of changing the policy to use accumulated fund balance for upcoming projects. The specific project being targeted for use of funds is the building needs for police and fire. The fund balance requirement in the current policy is $3 Million plus inflation. Mr. Hansen calculated that balance at $3,278,000 as of 12/31/95. The policy issue being suggested for review is the benefit of a large fund balance versus using a major portion of that balance to address major building needs. The interest on $3 Million could be used for minor projects and the inflationary increase in the fund balance required by the policy. I would submit that it may be more productive to convert some of that fund balance into facilities and their renovation, than to have the money accumulate. • If the policy is revisited, the 4/5ths voting requirement and $200,000 limits should also be reviewed as to their efficacy. One of the concepts we will be working on for the 1997 budget process is a 5 year financial plan. That plan may include building fund balance for use in the 2nd or 3rd year of a cycle. For example, a project may exceed the capability to raise revenues in a single year and be scheduled for the 2nd year of a budget cycle. This would work by taking $200,000 from year one of a budget cycle with $200,000 from the second to complete a major project such as a street project. The 4/5th requirement would potentially delay planned projects due to an inability to gain an extraordinary majority. $200,000 is also not a large expenditure in the area of street reconstruction. This has not been an issue where the funding comes from State Aid or the use of bonds, but the course I am pursuing would have us place monies into a capital improvement fund to be accumulated and spent in budget cycles. Thus, monies could be put into the fund for a specific purpose, only to have those fund locked up by the need for an extraordinary majority. One of the possible avenues we briefly explored at the last meeting was to create a working capital fund to receive funds and the release them forprojects and a permanent fund for emergencies or longer range issues. Separating the fund amounts would facilitate an internal savings plan and the goal of having some amount of capital in reserve. • 6301 Shingle Creek Pkwy, Brooklyn Center, MN 55430-2199 • City Hall & TDD Number (612) 569-3300 Recreation and Community Center Phone & TDD Number (612) 569-3400 • FAX (612) 569-3494 An Affirmative Action /Equal Opportunities Employer • . fincommlcappolcy City Council approved by motion on 1-10-94 CITY OF BROOKLYN CENTER CAPITAL IMPROVEMENTS FUND EXPENDITURE POLICY POLICY OBJECTIVE The City of Brooklyn Center makes unrestricted capital expenditures through one of two funds. Generally, small capital expenditures are funded through the general fund and planned for as part of the annual budgeted process for the general fund. Large unrestricted capital expenditures are funded through the capital improvements fund based on resolution 68-246, which was approved in 1968. Capital expenditures are also made through other funds such as the M.S.A. construction fund, the special assessment construction fund, the water fund, the sanitary sewer fund, and the storm drainage fund. These funds each have restrictions in place to guide their expenditures. The objective of this policy is to clarify funding for all unrestricted capital expenditures by specifically defining which capital expenditures are eligible for funding through the capital improvements fund. Unrestricted capital expenditures not meeting the criteria for the capital improvements fund must be made from the general fund operating budget. Specifically excluded from this policy are capital expenditures that are to be reimbursed by insurance proceeds. These may be accounted for through the capital improvements fund at the discretion of the Director of Finance. SOURCE OF FUNDS: The sources are ad-valorem taxes, issuance of bonds, state and federal grants, transfers of unrestricted balances from other funds and investment earnings. USE OF FUNDS: The following defines general expenditure criteria for the utilization of the capital improvements fund balance. A.) Major: Any capital expenditure that exceeds $25,000. Capital expenditures of less than $25,000 are to be made through the general fund operating budget. B.) Permanent: Any capital expenditure that has an estimated useful life of 10 years or longer. C.) Facility: Buildings, improvements to real estate, the acquisition of land for city purposes. This definition excludes the acquisition of land for development or resale and excludes vehicles. • Additionally, the capital improvements fund may be used to provide loans to other funds maintained by the City. However, loans from the capital improvement fund may only be made to proprietary funds which have the ability to generate revenue and repay the loan within 10 years at prevailing interest rates. AUTHORITY TO SPEND: Expenditures meeting the above criteria may be funded through the capital improvements fund based on the following authority limits: A.) Expenditures from $0 to $25,000: Not eligible for funding from the capital improvements fund. Funding is required through the general fund operating budget. B.) Expenditures from $25,001 to $200,000: The City Council may, through simple majority, approve these expenditures. C.) Expenditures over $200,000: Following a public hearing, City Council may, through a 4/5th's majority, approve expenditures in this category. SPENDING LIMITATION/FUND BALANCE REOUIREMENT: The objective as described above and previously defined in Resolution 68-246 requires the capital improvements fund to be a permanent source of funding for planned major expenditures. As such, the following criteria is established to comply with that intent: A.) Planned Expenditures: If the proposed capital expenditure is in excess of $200,000 it must have been included in the five year capital improvements plan for at least two years. Additionally, the five year capital improvements plan must be approved by the City Council at a public hearing on an annual basis. B.) Fund Balance Requirements: A minimum fund balance shall be maintained with a beginning balance of $3,000,000 as of January 1, 1993 and increased by the Consumer Price Index each year thereafter. POLICY AMENDMENT: Amendments to this policy require a 4/5th's majority by City Council vote- 0 . ROLE OF THE FINANCE COMMISSION: If a review of an expenditure is requested by the City Council from the Finance Commission, the Finance Commission will respond on the basis of the following questions: A) Does the expenditure comply with the Capital Improvements Fund Expenditure Policy? B.) Is the expenditure appropriate considering the financial condition of the City? • 0 0 0 0 CITY OF BROOKLYN CENTER CAPITAL IMPROVEMENTS FUND EXPENDITURE POLICY ESTIMATE OF AVAILABLE RESOURCES Liquor Consumer Minimum Loan Price Fund Fiscal Beginning Estimated Principal Estimated Ending Index Balance Year Balance Revenues Repavment Expend. Balance 1/1/93 $2,000,000 12/31/93 2.7% $2,054,000 12/31/94 2.7% $2,109,458 12/31/95 2.8% $2,168,523 1995 12/31/96 3.0% $2,233,579 1996 $4,721,775 $350,441 $24,828 $563,700 $4,533,344 12/31/97 3.0% $2,300,586 1997 $4,533,344 $336,437 $27,023 $2,500,000 $2,396,803 12/31/98 3.0% $2,369,603 1998 $2,396,803 $206,300 $29,412 $260,000 $2,372,515 12/31/99 3.0% $2,440,692 1999 $2,372,515 $202,759 $32,011 $160,000 $2,447,285 12/31/00 3.0% $2,513,912 2000 $2,447,285 $205,064 $22,898 $160,000 $2,515,247 12/31/01 3.0% $2,589,330 2001 $2,515,247 $208,415 $130,000 $2,593,662 $3,773,700 (1) This alternative adjusts the 1/1/93 beginning minimum balance requirement to $2,000,000. (2) Inflation is assumed to continue at a 3% annual rate. (3) Estimated revenues include interest on the fund balance at a rate of 6% plus interest on the golf course loan of $57,500 per year and interest on the liquor loan as scheduled. (4) Estimated expenditures for 1995 include $438,700 of projects approved for 1996 and $125,000 for replacement of underground fuel tanks we are committed to doing in 1997. Expenditures shown for 1997 and later years represents moneys available for commitment to new projects. CIPFDBL.XLS 2mill 11 /12/96 11:08 AM CITY OF BROOKLYN CENTER CAPITAL IMPROVEMENTS FUND EXPENDITURE POLICY ESTIMATE OF AVAILABLE RESOURCES Liquor Consumer Loan Price Minimum Fiscal Beginning Estimated Principal Estimated Ending Index Fd. Bal. Year Balance Revenues ReDavment ExDend. Balance 1/1/93 $3,000,000 12/31/93 2.7% $3,081,000 12/31/94 2.7% $3,164,187 12/31/95 2.8% $3,252,784 1995 12/31/96 3.0% $3,350,368 1996 $4,721,775 $350,441 $24,828 $563,700 $4,533,344 12/31/97 3.0% $3,450,879 1997 $4,533,344 $336,437 $27,023 $1,440,000 $3,456,803 12/31/98 3.0% $3,554,405 1998 $3,456,803 $269,900 $29,412 $200,000 $3,556,115 12/31/99 3.0% $3,661,037 1999 $3,556,115 $273,775 $32,011 $200,000 $3,661,901 12/31/00 3.0% $3,770,868 2000 $3,661,901 $277,941 $22,898 $190,000 $3,772,740 12/31/01 3.0% $3,883,994 2001 $3,772,740 $283,864 $170,000 $3,886,605 $2,763,700 (1) This spreadsheet depicts the current policy. (2) Inflation is assumed to continue at a 3% annual rate. (3) Estimated revenues include interest on the fund balance at a rate of 6% plus interest on the golf course loan of $57,500 per year and interest on the liquor loan as scheduled. (4) Estimated expenditures for 1996 include $438,700 of projects approved for 1996 and $125,000 for replacement of underground fuel tanks we are committed to doing in 1997. Expenditures shown for 1997 and later years represents moneys available for commitment to new projects. CIPFDBL.XLS 94policy 11/12/96 11:06 AM 0 0 0 CITY OF BROOKLYN CENTER CAPITAL IMPROVEMENTS FUND EXPENDITURE POLICY ESTIMATE OF AVAILABLE RESOURCES Liquor Consumer Minimum Loan Price Fund Fiscal Beginning Estimated Principal Estimated Ending Index Balance Year Balance Revenues Repavment Exnend. Balance 1/1/93 $1,000,000 12/31/93 2.7% $1,027,000 12/31/94 2.7% $1,054,729 12/31/95 2.8% $1,084,261 1995 12/31/96 3.0% $1,116,789 1996 $4,721,775 $350,441 $24,828 $563,700 $4,533,344 12/31/97 3.0% $1,150,293 1997 $4,533,344 $336,437 $27,023 $2,500,000 $2,396,803 12/31/98 3.0% $1,184,802 1998 $2,396,803 $206,300 $29,412 $1,440,000 $1,192,515 12/31/99 3.0% $1,220,346 1999 $1,192,515 $131,959 $32,011 $130,000 $1,226,485 12/31/00 3.0% $1,256,956 2000 $1,226,485 $131,816 $22,898 $120,000 $1,261,199 12/31/01 3.0% $1,294,665 2001 $1,261,199 $133,172 $95,000 $1,299,371 $4,848,700 (1) This alternative adjusts the 1/1/93 beginning minimum balance requirement to $1,000,000. (2) Inflation is assumed to continue at a 3% annual rate. (3) Estimated revenues include interest on the fund balance at a rate of 6% plus interest on the golf course loan of $57,500 per year and interest on the liquor loan as scheduled. (4) Estimated expenditures for 1995 include $438,700 of projects approved for 1996 and $125,000 for replacement of underground fuel tanks we are committed to doing in 1997. Expenditures shown for 1997 and later years represents moneys available for commitment to new projects. CIPFDBL.XLS 1 mill 11/12/96 11:25 AM 11/12/96 Capital Im movements Fund 10 1 1 Balance 12131195 $4,727,442 Estimated '96 expenditures by program 6006 1 Central Garage Improvements $ 80,000 60011 Interim City Hall Impr $ 85,000 61181 Playgrounds $ 225,000 6119 1 Retaining wall $ 8,700 61201 Northport park tennis cts $ 30,000 61061 UG storage tanks, CGS $ 5,000 1 Misc I Misc project dev I $ 51000 Estimated balance 12/31/96 1 I $4,288,742 1997 project commitments 61061 UG storage tanks, CGS $ 125,000 1 Balance less estimated 97 commitments $4,163,742 • • Page 1