The URL can be used to link to this page

Home My WebLink About2.a. Key Financial StrategiesCITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION City Council Work Session Date: April 14, 2004 AGENDA ITEM: KEY FINANCIAL STRATEGIES AGENDA SECTION: PREPARED BY: JAMIE VERBRUGGE, CITY ADMINISTRATOR AGENDA NO. A A. ATTACHMENTS: Financial projections; Draft Text of KFS Plan APPROVED BY: RECOMMENDED ACTION: DISCUSSION ONLY ACTION: ISSUE The City Council has retained the financial advisor consulting firm of Ehlers & Associates to assist with development of Key Financial Strategies (KFS) to analyze immediate and long- term financial planning issues for the City of Rosemount. This meeting is Session #3 of the Key Financial Strategies process. BACKGROUND Jim Prosser and Rebecca Kurtz of Ehlers & Associates will be present to lead the discussion. The purpose of the meeting is to review the initial draft of the KFS plan language, to identify any additional issues, and review the schedule for issues. Staff will be working to develop an issues calendar based on the items identified in the CIP, KFS, and most recent Council goal setting session to chart a schedule for Council and staff review of various issues over the course of the year. Staff hopes to have a preliminary schedule to share with the Council at the Work Session. Following discussion, staff and consultants are hoping for Council direction to proceed toward final revisions in the plan. SUMMARY The KFS process is intended to provide a guide for future financial decisions related to City services and capital planning. The information is not intended to describe in specifics how certain projects may be accomplished but will provide a framework and financial projections necessary to analyze the impact of future policy discussions. Session #4 is scheduled for Wednesday, June 9. CITY OF ROSEMOUNT KEY FINANCIAL STRATEGIES Inflation Assumptions for General Fund Revenue Expenses 3.00 %1 4.00% 2002 2003 2004 2005 2006 2007 2008 2009 GENERAL FUND ACTUAL ADOPTED ADOPTED PROJECTED REVENUE GENERAL PROPERTY TAX 4,556,291 5,005,169 4,839,469 4,984,653 5,134,193 5,288,218 5,446,865 5,610,271 MUNICIPAL STATE AID (MSA) 0 - - - - _ _ TAX INCREMENTS 0 0 - - - - - _ INTERGOVERNMENTAL REVENUE 666,057 834,231 456,889 470,596 484,714 499,255 514,233 529,660 LICENSES AND PERMITS 797,688 516,200 618,400 636,952 656,061 675,742 696,015 716,895 RECREATIONAL FEES 208,800 224,100 230,823 237,748 244,880 252,227 259,793 FINES AND FORFEITS 85,835 90,000 90,000 92,700 95,481 98,345 101,296 104,335 SPECIAL ASSESSMENTS 82,103 - - - - _ _ CHARGES FOR CURRENT SERVICES 702,775 539,400 1,085,200 1,117,756 1,151,289 1,185,827 1,221,402 1,258,044 INVESTMENT INCOME 109,057 130,000 81,000 83,430 85,933 88,511 91,166 93,901 NET INCREASE IN FAIR VALUE OF INVEST. 18,548 - - - - _ _ MISCELLANEOUS 288,437 140,800 91,842 94,597 97,435 100,358 103,369 106,470 TRANSFERS IN 3,500 3,500 3,605 3,713 3,825 3,939 4,057 OTHER REVENUE - - - _ _ TOTAL REVENUE 7,306,791 7,468,100 7,490,400 7,715,112 7,946,565 8,184,962 8,430,511 8,683,427 EXPENSES EXCL. CAPITAL COSTS - GENERAL GOVERNMENT 1,534,134 1,870,200 1,885,600 1,961,024 2,039,465 2,121,044 2,184,675 2,250,215 PUBLIC SAFETY 1,867,375 2,198,000 2,272,500 2,363,400 2,457,936 2,556,253 2,632,941 2,711,929 PUBLIC WORKS 1,834,122 2,334,700 2,302,500 2,394,600 2,490,384 2,589,999 2,667,699 2,747,730 PARKS AND RECREATION 785,226 935,200 948,800 986,752 1,026,222 1,067,271 1,099,289 1,132,268 LEASE PAYMENTS - - - - _ _ _ OTHER - - - - - - CAPITAL OUTLAY 41,200 42,848 44,562 46,344 48,198 50,126 51,630 53,179 DEBT SERVICE - - - _ _ _ PRINCIPAL RETIREMENT gn Need Debt Service INTEREST -4 { schedules J recent OS, - - - FISCAL AGENT FEES - to break d MISCELLANEOUS - - - - _ TOTAL EXPENSES 6,062,057 7,380,948 7,453,962 7,752,120 8,062,205 8,384,693 8,636,234 8,895,321 REVENUE OVER (UNDER) EXPENSES 1,244,734 87,152 36,438 (37,008) (115,640) (199,731) (205,723) (211,895) CITY OF ROSEMOUNT KEY FINANCIAL STRATEGIES Inflation Assumptions for General Fund Revenue 3.00% Expenses 4.00% 2002 2003 2004 2005 2006 2007 2008 2009 GENERAL FUND ACTUAL ADOPTED ADOPTED PROJECTED KEY FINANCIAL STRATEGIES 2003 2004 PRIORITY 1- OPERATING EXPENSES COMMUNITY GOALS & INITIATIVES Council Goal Setting Accept Key Financial Strategies 20,000 Update Risk Management Policy Parks Master Plan Update 1 2007 2008 21 15,000 Analysis of future staffing needs Community Development Department review Public Works Department review Develop customer service feedback systems for key City services Maintain current level of service in Building Division 2,000 Implementation of City's Comprehensive Plan Review Comprehensive Plan Amendments Comprehensive Plan Update Annexation discussions Zoning Ordinance updates Develop plan fer- Alikland -pen 100,099 - LOCAL TAX BASE CONSIDERATIONS Develop and implement Economic Development Marketing Plan Develop plan for type of growth wanted/needed FINANCIAL POSITION Prepare alternate revenue analysis Explore franshise fees in context of financing needs Adjust user fees on annual basis to relect changes in cost of service 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 CITY OF ROSEMOUNT KEY FINANCIAL STRATEGIES Inflation Assumptions for General Fund Revenue 3.00% Expenses 4.00% 2002 2003 2004 2005 2006 2007 2008 2009 GENERAL FUND ACTUAL A DOPTED ADOPTED PR OJECTED Property tax needs review Annually identify a limited number of selected services for competitive Fund balance Evaluate effects of State Budget cuts Review budget option analysis as part of budget process Prepare 5 -year budget forecasts including revenue forecasts Adopt debt service policies as outlined in Credit section of KFS Update Debt Management Plan Update Investment Policy CITY INFRASTRUCTURE Infrastructure Management and Replacement Plan COMPETITIVENESS Develop plan to maintain current service level for future growth CREDIT POSITION ENTERPRISE Develop Utility Rate Policy 10,000 Subtotal - 172,000 40,000 40,000 40,000 55,000 56,650 PROJECTED OPERATING NEEDS 87,152 (135,562) (77,008) (155,640) (239,731) (260,723) (268,545) r CITY OF ROSEMOUNT KEY FINANCIAL STRATEGIES Inflation Assumptions for General Fund Revenue 3.00% Expenses 4.00% 2002 2003 2004 2005 2006 2007 2008 2009 GENERAL FUND ACTUAL ADOPTED ADOPTED PROJECTED PRIORITY 1- CAPITAL EXPENSES Development Plan for Hwy. 52 /Co. Road 42 construction 5,675,000 50,000 Water Treatment Facility 500,000 - - 80,000 (5,810,562) Comprehensive Water Plan (6,655,640) (739,731) (266,723) ; (268,545) Storm Water Outflow 5,000,000 North Central Sewer Study 40,000 City Hall Facilty Needs Study City Hall expansion 500,000 CAPITAL IMPROVEMENT PLAN Pavement Management Program 2,000,000' Develop Plan to address deferred maintenance Pedestrian Facility Maintenance & Improvement Plan 30,000 Fire Station 1,500,000 Replace fire equipment Downtown Redevelopment Acquire land for Library building 500,000 Radio Communications 10,000 500,000 Public Works Facility Needs review 25,000 Develop athletic complex 6,000,000 Public Works Facility expansion Public Works Facility office space expansion Recreation Facility Plan 2,000 City -wide Facility Needs Review Subtotal 5,675,000 3,512,000 6,500,000 500,000 - - PROJECTED CAPITAL NEEDS (5,810,562) (3,589,008) (6,655,640) (739,731) (266,723) ; (268,545) CITY OF ROSEMOUNT KEY FINANCIAL STRATEGIES Inflation Assumptions for General Fund Revenue 3.00% Expenses 4.00% 2002 2003 2004 2005 2006 2007 2008 2009 GENERAL FUND ACTUAL ADOPTED ADOPTED PROJECTED KEY FINANCIAL STRATEGIES 2003 2004 2005 2006 2007 2008 2009 PRIORITY 2 - OPERATING EXPENSES Develop strategies for future land conversions Annexation implementation Subtotal CUMULATIVE PROJECTED OPERATING NEEDS 87,152 (135;562) (77,008) (155,640) (239,731) (260,723) (268;545) PRIORITY 2 - CAPITAL EXPENSES Develop senior center 500;000 Develop arts and culture center 500 ' Develop water park / aquatic facility 2,000,000 Develop teen center 300,000 Develop skate park Acquire additional buildings Subtotal - - - - 2,000,000 2,060,000 CUMULATIVE PROJECTED CAPITAL NEEDS (5,810,562) (3,589,008) (6,655,640) (739,731) 1,739 1,791,455 PRIORITY 3 - OPERATING EXPENSES Subtotal CUMULATIVE PROJECTED OPERATING NEEDS 87,152 (135,562) (77,008) (155,640) (239,731) (260,723) (268,545) CITY OF ROSEMOUNT KEY FINANCIAL STRATEGIES Inflation Assumptions for General Fund Revenue 3.00% Expenses 4.00% 2002 2003 2004 2005 2006 2007 2008 2009 GENERAL FUND ACTUAL ADOPTED ADOPTED PROJECTED PRIORITY 3 - CAPITAL EXPENSES Subtotal CUMULATIVE PROJECTED CAPITAL NEEDS (5,810,562) (3,589,008) (6,655,640) (739,731) 1,739,277 ` 1,791,455 KEY FINANCIAL STRATEGIES 2003 2004 2005 2006 2007 2008 2009 PRIORITY 4 - OPERATING EXPENSES Subtotal - - - - CUMULATIVE PROJECTED OPERATING NEEDS 87,152 (135,562) - (77,008) (155,640) (239 (260,723) (268,545)', PRIORITY 4 - CAPITAL EXPENSES Develop second sheet of ice Subtotal CUMULATIVE PROJECTED', CAPITAL NEEDS (5,810,562) (3,589,008) (6,655,640) (739,731) 1,739,277 '; 1,791,455 IMPROVEMENT PROJECTS EXPENDITURE FUNDING SOURCE JR 4 "" EHLERS & ASSOCIATES INC CVeri & As:sovialces — I)R.4I'T.!' OC 1:.MENC' DRAFT -- KEY FINANCIAL STRATEGIES OVERVIEV Ehlers & Associates was engaged by the City of Rosemount, Minnesota (the "City ") to assist in the preparation of the City's Key Financial Strategies. The need to create a comprehensive financial management plan was identified by the City Mayor, Council, Manager and Staff due to growing demands for financial resources. This strategic financial plan is the result of four workshops with the Council and many hours of staff consultation. Workshop One focused on identifying potential financial needs of the City. In addition the City has conducted goal setting. The results from those sessions have been incorporated into this plan document. OBJECTIVES FOR. THE FINANCIAL PLANNING PROCESS A financial plan is a necessary element of a City strategy to remain competitive in today's demanding environment. Other objectives of the City's Key Financial Strategies are: • Establishing a common understanding among the elected officials and staff of the City's needs and financial capacity. • Developing a comprehensive view of financial resources and options. • Identifying City issues and opportunities. • Creating a framework in which elected officials and staff can make immediate and long -term investment decisions. • Developing a consensus among the elected officials and staff on key actions the City will take to remain competitive. • Meeting the new standard presented in the Governmental Accounting Standards Board Regulation 34 including its capital planning provisions. Through this workshop process we have examined the current and fixture ability to meet these objectives to answer the question "How do we get there ?" The City's Key Financial Strategies will provide a road map into the future and a framework for future decision- making. City of Rosemount — Key Financial Strategies -- DRAFT Ehlers &, Associates -... DRAFT DOCUMENT FINANCIAL ASSESSMENT — FINDINGS The financial assessment conducted of the City was divided into seven areas: 1. Community goals/initiatives 2. Local tax base considerations 3. Financial Position 4. City owned infrastructure 5. Competitiveness 6. Credit position 7. Enterprise funds As part of the financial assessment, a number of findings were presented within the workshops. These findings are outlined in more detail within this report. A summary of these findings is as follows: 1) COMMUNITY GOALSANITIATIVES - Establishing a strategic profile including community vision (purpose), goals (means to achieve the purpose), and strategies (directed at accomplishing goals), which are essential to the efficient and effective use of scarce City resources. A) Important Initiatives -- City Officials have identified several initiatives as part of this financial planning process. Key issues include: • Economic and Community Development • Downtown Redevelopment • Restaurants and other destination uses • Community Activity Center (Senior and/or Youth) • Community marketing • Business incentive program • Maintaining city infrastructure. This includes: • Pavement Management System • Commercial street lighting program • Sewer and Water Infrastructure • Park Pavement Maintenance • Vehicle and Major Equipment Replacement • Water System Improvements • Public Facility Maintenance • Enhance and protect city environment. This includes: • Adopt land use controls based on mining reports • Address land use planning related to Flint Hills Refinery • Open space planning and preservation • Managing growth. This includes: * Future staffing issues * 2005 MUSA * City Trails City of Rosemount — Key Financial Strategies --DRAFT Page 2 Ehlers & , VIEIN , T o Comprehensive Plan Update o Expansion of Public Works Facility o Improving City Services • Explore support for new City facilities. • City Hall expansion • Athletic Complex • Library land • Aquatic Facility • Second ice sheet • DCTC soccer complex Implication: The City has identified a significant agenda for future needs. Developing a mechanism to regularly prioritize needs, develop implementation programs (including resource requirements) and evaluate the City's capacity to implement the programs should be a high priority. Given this aggressive agenda it will be important to manage the time required for the council to make the required policy decisions needed to implement the strategies. A disciplined approach to selecting a manageable number of strategies should be a priority. Financial strategies should also include direction regarding the nature of activities to be undertaken for each issue including: • Assessing need for service or facility. • Studying alternatives, methods and cost and funding sources for implementation. • Implementation. B) Facility Options -- City Officials are looking at options for public facilities city hall expansion, public works facility expansion and a variety of other needs. Implication: Involving the public with this process will be key to progressing this issue to the implementation phase. Careful consideration should be given to the funding options and impacts (including. operating costs). While there are some issues impacting the timing of these decisions, it is essential that public understanding and support be developed. Q Technology -- Ever growing demands for staff services and the need for City departments to work together require ongoing investments in computers and technology. Implication: Further enhancements to the City's information technology systems may require financial support from the City's General Fund. There will be more and better technology products available to cities. Residents, customers and employees will likely create pressure to invest in improved and new technology. This will require the City to develop a disciplined approach to reviewing the requests and needs for technology investments. That approach City of Rosemount — Key Financial Strategies —DRAFT Page 3 Ehlers & 4ssocicates -- DRAFT DOCUMENT 2) LOCAL TAXBASE CONSIDERATIONS - Structure, quality and size of a community's tax base impact its ability to fund services and investments. A) Development -- City land area is approximately ? ?% developed and has reached ? ?% of projected population. How the community completes development will impact its future. Implication: The City will add additional residents and businesses to its population and, in addition, will face new and additional requests for future services as demographics and resident interests change as well as the need to address reinvestment in existing facilities. Understanding the dual impact of new service requests of existing residents and the impact of additional new residents will be a key to future planning. B) Market Value City market value of $1.3 billion has been increasing steadily averaging 14.6 % over the past five years. The City has a good per capita market value of $76,000. Implication: The high per capita market value and strong commercial base provides good opportunity for revenue diversification. The tax rate should be evaluated in terms of what rate creates the outcomes that the City seeks for itself. The tax rate should be set in conjunction with both the budget and the yearly costs identified in the capital plan. D) Diverse tax base -- The City has a tax base with 78% residential and 22% commercial industrial/other. Implication: Tax base diversification is a focus to achieve stability in City services requirements and property tax production. Continued effort should be made to maintain a ratio of residential to commercial /industrial base with a target range of 67% to 75% residential and 25% to 33% commercial /industrial. E) Economic Development Policy — The City has provided economic development incentives in the form of tax increment financing. Implication: Previously the City used economic development incentives to attract targeted development. This strategy is clearly responsible for the level of tax base diversification that exists today. To encourage continued balanced community growth the City will consider appropriate strategies. 3) FINANCIAL POSITION - Availability of funds to meet current and future needs, adequate fund balances for cash flow purposes and to meet emergency needs requires planning and 'discipline. A) Effective past financial management practices has left the City with a solid undesignated, unreserved fund balance within the General Fund, Water and Sewer City of Rosemount — Key Financial Strategies Page 5 Ehlers & Associates DRAFT DOCNIENT Fund and Storm Sewer Fund. Implication: The City's General Fund Balance remains strong. Changes in State tax structure and potential capital projects costs indicate the need to continue to carefully monitor the fund balance. B) The City faces growing demand and cost to provide services with limited ability to increase short-term tax base. Implication: The competitive position of the City tax rate will impact the City's ability to increase operating expenses without an offsetting increase in non - property tax revenues. C) The City has developed effective loss reduction strategies (accident review, safety committee). Additional risk management efforts including review of risk retention levels, deductibles, funding of loss reserves may be warranted. Implication: Additional development of risk management policies will help reduce exposure to financial risks. 4.) CITY INFRASTRUCTURE - Communities need to regularly invest and reinvest in their infrastructure (roads, buildings, parks, etc.). Regular deferral of investment can lead to fiscal stress and community disinvestments. A) The City has maintained a street reconstruction program since 2002. Implication: Overall the streets are in acceptable condition, but continued annual investment will be needed. Progress on maintenance should be carefully monitored. B) The City is reviewing City Hall and Public Works facility needs. It is intended that facility needs will be addressed at the same time as water treatment facilities are addressed. Implication: The City has initiated a plan to review the need for reinvestment in these facilities. City of Rosemount — Key Financial Strategies Page 6 Ehlers & fl ssociates --DRAFT OCUAIEN T C) Potential need for reinvestment in public facilities infrastructure needs may increase the property tax above the normal inflationary increase. The City has major investments in buildings, utility systems, streets, lighting systems and related improvements. Implication: Community involvement will be key to addressing need for major investments. The City should undertake a public participation process to involve the community in understanding and then selecting options. Preparing plans and schedules for anticipated required maintenance and replacement will provide information need for financial planning purposes. D) The City has extensive vehicle replacement requirements for Public Works and Fire equipment. The City does have a schedule of equipment replacement that forecasts these needs for the expected life of the equipment. Implication: Equipment replacement is often deferred as part of budget balancing efforts. In the long term this may increase maintenance costs, increase downtime of equipment and staff and lead to a funding problem in future years. Maintaining the equipment replacement schedule and funding source will help remedy this problem and provide a more accurate measure of services. 5) COMPETITIVENESS - Communities compete for people to live, work and do business. Understanding and responding to the elements of competition is an important role for the City. A) The City's overall City tax rate is relatively high compared with other comparable communities in the metro area. Implication: Given the competitive tax rate and the high level of services, the City is carefully monitoring tax rates. Community growth combined with the need to reinvest inexisting infrastructure will add stress to tax rate concerns. B) The City offers a, full complement of services to residents and businesses. Implication: Services offered by the City appear with surrounding communities. City of Rosemount — Key Financial Strategies Page 7 Ehlers &, Associeves DRAFT DOC'141E4'T C) Rosemount appears to be well maintained with no typical signs of disinvestments or deterioration. Implication: Careful attention should be paid to monitoring the condition of public and private property. D) Rosemount's open space and trail system appear to be equal or greater than many other communities in the metropolitan area. The City does not have some amenities typical for comparable communities including a community center and may face community interest in developing this facility. There is not a funding source in place for maintenance of the extensive trail system. Implication: Planning and investments in these areas has provided a sound foundation for creating a community with amenities that will attract and retain residents, visitors and businesses. Careful attention should be paid to the operating costs of recreation and cultural amenities. Community involvement in discussions regarding the cost to build and maintain new facilities will be a key factor for future considerations. 6) CREDIT POSITION Maintaining a strong credit rating helps reduce the cost of borrowing required to develop and maintain the community. A) The City is rated "Al" by Moody's Investors Service. This is an above average rating reflecting the City's strong property value growth and maintenance of a strong financial position while supporting debt required for future growth and reinvestment in infrastructure. Implication: This strong credit rating has helped the City successfully issue debt at very competitive interest rates in the commercial marketplace. B) The City's debt burden is moderate (1.9 % direct and 3.5% total) considering, but reflects community growth needs and overlapping debt of other governmental units. Eighty -two percent (82 %) of the City's debt will be paid off in ten years. Implication: Careful attention should be paid to "mapping" out future debt issues for the next five to ten years. The aggressive debt repayment schedule will enable the City to continue to invest as needed. C) The City currently has a prudent undesignated fund balance. Implication: This strong fund reserve helps the City to maintain its current rating. The City,should be careful to maintain this strong fund balance. City of Rosemount — Key Financial Strategies Page 8 6 a5td sal2aly lS ppumIj dax - lunousasoy fo dj!D •luamu.aano2 Inaaua2 jo ;soa aqj aanpaa dlaq uua suoilnaado asudaajua autos uoi ;ippu ul •s iaSvdxn; luaaua2 of suoi�tuado jo uap inq aqj 2up.ialsule.ai 2uiptoAU o; Sax si sassauisnq su spunj astad xajua 2ut laad0 '2jSL2Id2Ia.LNg �L jjVgC,'iI: oa,LjV2j Y °° saivioo:scV �) svjg3 Ehlers & -4ssociates .. - DRAFT DOCNIEN'T RECOMMENDATIONS Based on the findings and analysis conducted in the workshops, Ehlers developed a list of recommendations for the City -- their Key Financial Strategies -- listed in the seven categories below 1.0 COMMUNITY GOALS/INITIATIVES 1.1 GOAL SETTING: The Mayor and City Council should continue annual goal setting sessions, prior to budget preparation. The goal setting session should prioritize needs. This information should be used by staff to develop programs, service options and resource requirements, for consideration within the budget process. The goals should specifically address the major issue categories. Financial strategies should be incorporated into the annual goal setting program. 1.2 FACILITY NEEDS: The City should continue the deliberate and careful approach to addressing facility needs for future growth, reinvestment and quality of life services and capital investments. The Mayor and City Council should consider authorizing a study to address future facility needs. 1.3 COMMUNICATION PLAN: A communications plan should be developed in order to inform and seek community feedback on important financial issues including future needs and financial constraints. The plan should also forecast the process that will be used to seek community participation for significant community investment decisions. Conducting a community survey will help identify the types of services vital to attract and retain residents. Consideration should be given to expanding the survey to collect information regarding improving the City's competitive position, economic development, quality of life, school funding inequity and possible intergovernmental tax sharing solutions. Consideration should be given to continuing the use of the "Funding Public Facilities Public Participation Process" model in City facilities planning. 1.4 TECHNOLOGY PLAN: A technology plan has been prepared with projected needs for the next five-year period. The plan should also include a basis for evaluating the requests for technology investments that address cost and benefits (not limited to financial), productivity, training, support and potential obsolescence and funding source. 1.5 IMPLEMENTATION PLAN: Annual budgets should be prepared with budget options of at least 10% of total budget expenditures. Budget presentations should be supported with a balance of input and resources and outcome materials. City of Rosemount — Key Financial Strategies Page 10 Ehlers & Associates DRAFT DOCUMENT _ 2.0 LOCAL TAX BASE 2.1 Growth planning should address continued attention to balancing commercial and residential development. Special attention should be paid to assessing housing types to reflect life cycle, financial ranges and life style choices. 2.2 The use of public subsidies to assist with encouraging the type of development needed to maintain community competitiveness and balanced tax base should be continued. The public assistance policy should be reviewed to assure flexibility to meet broad based community needs. 3.0 FINANCIAL POSITION 3.1 FINANCIAL POLICIES: The Mayor and City Council should consider a Fund Balance Policy for the Special Revenue Funds, Debt Service Funds, Capital Project Funds, Enterprise Funds, and Internal Service Funds. 3.2 City staff should prepare an alternative revenue source report for the City Council. These options should be reviewed annually as part of the Key Financial Strategies update. 3.3 The City should adjust all user fees and utility rates on an annual basis to reflect changes in the cost of services. 3.4 The City should review assessment practices to include pavement management cost recovery through special assessments to benefiting property owners (i.e. increasing assessments to property owners and including street maintenance such as crack sealing) and to address increased cost of pavement management projects. 3.5 The City should establish a schedule for increasing developer fees that is determined annually. The current method of tying fees to increases in construction cost index does not accurately reflect the City's cost of services. 3.6 The City should use this report as part of its annual goal- setting framework. 4.0 CITY OWNED INFRASTRUCTURE / CAPITAL EQUIPMENT 4.1 CAPITAL EQUIPMENT: The Manager and Finance Director should review the final list of items which were recommended as part of the vehicle /equipment replacement program and develop a funding program to provide a more level annual replacement contribution. The City could establish an internally funded equipment rental program to level out annual replacement costs. 4.2 INFRASTRUCTURE: The City staff should enact each annual capital improvement program based on review of the multi -year capital improvement needs. City of Rosemount — Key Financial Strategies Page 11 Ehler-s flssociater .... DRAFT DOCIWEA "T The City staff should coordinate development of the capital improvement budget wi development of the operating budget. Future operating costs associated with th the th new capital improvements will be projected and included in operating budget forecasts. The City should prepare a non - annual recurring maintenance schedule for City facilities. 5.0 COMPETITIVENESS Y ihties. 5.1 PROPERTY TAXES: The City's tax rate is higher than some comparable communities. In Si g property taxes, the City will seek a balance between providing an appropriate level of service, maintaining infrastructure, and affordability for residents. Having the lowest ro e rtY taxes is not always the final measure of this balance. P p Given these limits and demands on property taxes, the City should review and implement a revenue enhancement study for additional revenue options including utility franc utility bill preparation fees and similar alternatives. The information shout his fees, identify options prior to their need, should be prepared to Continued long range financial planning creates the opportunity for and providing the greatest stability in tax rates. Staff should annuall prepare property taxes Projections of tax levies. Community g g p three -year involvement in the ton ran e 1 anning process will p epare allow build support for the development of resources to achieve goals the public ha s supported. The City should continue to meet and confer with (county, schools, etc.) overlapping local government to discuss capital funding issues units operating and ca residents overall taxes. g es that will impact 5.2 BUDGET: The current City practice is to target only an inflationary increase in Operating budget. In order to provide direction to staff, the Mayor and c t y Co C o ing ye uncil should review and select the appropriate items from the Budget Option Impact Worksheets that would be included in next year's budget. This budget should then be constructed b balancing resources with current and future needs. Y The Financial Strategies should be reviewed and updated budget process. annually as part of the City's Annual budgets should include budget option analysis for 5% to 10% o expenditures. f total projected Budget presentations and discu ssions should be supported with a balance and outcome options. of input/resources 5.3 Risk Management The City has initiated development of a risk management program. Additnal reduce risk exposure including review of retentions levels, deductible level funding to g of City of Rosemount - Key Financial Strategies Page 12 Ehlers fissociates - DRAFT Do(,'J.!A. Il A'T reserves for retained risks should be undertaken. 6.0 CREDIT POSITION 6.1 The approval of Key Financial Strategies by the Mayor and City Council will help document the future City plan to Moody's Investors Service. p 6.2 The City should endeavor to keep the total maturity length of general obligation bonds below 20 years and at least 50% of the principal shall be retired within ten years. In all cases, the maturity shall be shorter than the life of the related assets. 6.3 The City should work to minimize the amount of debt supported by property taxes and will seek maximum use of special assessments, utility revenues and other non- tax sources to support debt. 6.4 City staff, working with the City's independent financial advisor, shall monitor outstanding debt and advise the City Council on ways to reduce the debt burden through refinancing at lower interest rates and the early retirement of bonds. 7.0 ENTERPRISE FUNDS 7.1 Annually, the Manager and Finance Director should review and recommend necessary adjustments to water and sewer rates sufficient to recover cost of operations and provide for capital needs for consideration by the Mayor and City Council. 7.2 City staff should annually review the cost of general fund services provided to enterprise activities including insurance, financial and accounting services, management, legal and related expenses. These costs should be evaluated by the City Council for inclusion in the rates for enterprise services. 7.3 City staff should prepare a utility rate policy that addresses the need for fees to recover operating costs and provide for operating cash, reserves, non- annual recurring maintenance, and debt service. 7.4 City staff should identify the costs to meet mandated water quality standards and the impact on water rates. City of Rosemount — Key Financial Strategies Page 13 Elders d, fl.s:soc rratc r -..._ DRAFT DOCL•T IJEA - -7 ACTION PLAN This section describes the actions needed to implement the City's Key Fina ncial Strategies. Actions g fall into two categories: Tasks for immediate action, and tasks that reflect on fin ancial management actions. The following is a recommendation on the tasks that re uire att ention over the next five -year period. Implementation of these Key Financial Strategies requires annual review and updating the Plan and revision of the schedule prior to initiating the budget process. Care should be paid to developing realistic time frames and work plans. fu1 attention Activi 1.0 Community Goals/Initiatives 1.1 Goal setting 1 .2 Develop plan for Hwy 52 /Co. Road 42 construction 1.3 Facility needs study 1.4 Community center 1.5 Athletic complex 1.6 Second ice sheet 1.7 Arts and culture center 1.8 Teen center 1.9 Skate Park 1.10 Water park/aquatic center 1.11 Downtown redevelopment strategy 1.12 Identify funding options for library land 1.13 Prepare financial strategies communication �1 1.14 Develop customer service feedback systems for key City services 1.15 Conduct community survey to assess community knowledge of and support for new initiatives, facilities services and fees. 1.16 Annual CIP 2.0 Local Tax Base 2.1 Prepare plan for MUSA expansion including capital and operating needs to accommodate growth. 2.2 Update Comprehensive Plan 2.3 Update public subsidy policy City of Rosemount — Key Financial Strategies Projected Start Date Level/Status Annual 2008 1/I 1 /I Projected nMletion Date N/A 2009 2006 2/S 2007 2003 2/A 2005 2005 2/A 2006 2008 2/A 2009 2006 2/A 2007 2006 2/A 2007 2005 2004 2004 2/A 1/S Annual 1/1 200 1/S 2008 2/S 2004 4/A 2006 2005 Annual 2005 2009 2004 Page 14 3.0 Financial Position 3.1 Establish/Update Budget Control and Financial Control Policy 3.2 Update fund balance policies 3.3 Update debt management plan 3A Establish/ Update Investment Policy 3.5 Explore franchise fee in context of financing needs 3.6 Establish/Update User Charge Policy 3.7 Review assessment practice to address pavement management. 4.0 Infrastructure/Capital Equipment 4.1 Identify options for funding Pavement Mara ement System 4.2 Prepare non - annual recurring maintenance schedule 4.3 Prepare funding options for major equipment sources 4.4 Radio communications infrastructure 4.5 Prepare fire equipment replacement plan 4.6 Facility needs assessment .5.0 Competitiveness 5.1 Property tax review 5.2 Prepare three year budget forecasts including revenue forecasts 5.3 Prepare alternate revenue analysis 5.4 Identify and fund future staffing requirement to match growth 5.5 Identify a limited number (1 -3) of selected services for potential competitive pricing on annual basis 5.6 Review budget option analysis as part of budget rocess 5.7 Prepare annexation policy 5.8 Develop plans for future land conversions 5.9 Develop plan for Wicklund open space conversion 5.10 Establish/Update Risk Management Policy City of Rosemount — Key Financial Strategies Projected Start Projected Date Level/Status Com letion Date 1 /S I Annual 2004 1 /I 2005 2005 1 /S 2006 2006 1/S 2007 2004 2/S 2005 Annual I /S 2005 Annual 2/S Annual 2004 1/S 2005 Annual 1/S April 2004 Annual 2/S Annual Annual 2/S Annual 2004 1/A 2005 2005 2/A 2006 2004 2/I 2005 2003 2/S 2004 Page 15 6.0 Credit 6.1 Accept Key Financial Strategies 6.2 Adopt debt policies as outlined in Credit section of r-port. 70 Enterprise 7.1 Adjust user fees on annual basis to reflect changes in cost of services. 7.2 Review general fund cost for enterprise services for rate consideration 7.3 Develop utility rate policy 7.4 Evaluate Water Treatment Improvements 7.5 Storm water outfall 7.6 North Central sewer study 7.7 Pedestrian facility maintenance and Projected Start Date t2/1 2003 2003 Annual 2004 1/S 2/S 2003 2004 2004 2004 2004 1/I 1 /A 1 /A 1 /A 2/A Projected npletion Date 2003 2003 Annual 2004 2004 2005 2005 2005 PRIORITY kEEINITIONS: LEVEL 1 Critical to continued operation of city baseline services at present levels. This includes restoration of services identified as baseline. LEVEL 2 Provides opportunity for increased efficiency in baseline level of services. This includes ability to continue to serve existing level of services without staff increases. LEVEL 3 Provides opportunity for expansion of services to meet existing demand as evidenced by Council direction or staff analysis. LEVEL 4 Provides opportunity to increase services that improve quality of life within City. I Implementation S Study Need A Assess Need City of Rosemount — Key Financial Strategies Page 16