HomeMy WebLinkAbout~Master - Special Meeting of the Ames City Council 01/29/2010MINUTES OF THE SPECIAL MEETING
OF TH E A M ES C ITY CO UN CIL
AME S, I OWA JANU ARY 29, 2010
The Ames City Council met in special session at 2:00 p.m. on January 29, 2010, in the C oun cil
Cham bers of City Hall, 515 Clark Avenue, pursuant to law with Mayor Campbell presiding and the
following Council members present: Goodman, Larson, O razem, and Wac ha. Cou ncil Mem bers
Davis and Mahayni and ex officio M em ber K epp y w ere abs ent.
FY 2010/11 BUDGET O VE RVIEW: City Manager Steve Schainker, Financ e Director Duane
Pitcher, and Assistant City Manager Sheila Lundt reviewed the documents contained in the
bud get pa cket d istributed to the C ity Co unc il.
City M anag er Sch ainke r advise d that this m eetin g marked the unveiling of the Fiscal Year
2010/11 Prog ram Bu dge t. He an nou nced that this bu dge t actually calls for a reduction in the
City tax rate from $10 .86 to $10 .77/$1,00 0 of tax able valuation. Mr. Schainker stated that the
recommended Fiscal Year 2010/11 budget totals $183,101,741.
Mr. Sch ainke r said that it w as his inten t in deve lopin g this budg et to accom plish two o bjectives:
(1) maintain the same level of service for the numerous programs provided and (2) mitiga te the
impact of property taxe s, user fees, and utility rates on Am es residents. Department Heads have
worked hard to offset the downturn in revenues by holding the expenditure increase to only
2.1%. City M anag er Sch ainke r noted that 7 7% o f the departments’ budgets is driven by
personn el costs, many o f which are set by collective bargaining co ntracts.
According to City Manager Schainker, the financial condition of the Resource Recovery Plant
remains strong. No rate increases are being requ ested for Storm Sew er Utility o r the Ele ctric
Utility. There will be rate increases for Water Utility and Water Pollution Control Utility.
Mr. Schainker ca lled the Cou ncil’s attention to three other prog rams w here expe nditures are
exceedin g revenu es:
(1) Maintaining two municipal cemeteries will require a $26,565 property tax subsidy. A major
decrease in interest revenue is preventing the operations being financed from its own reven ues.
(2) The Park ing F und will require dipping into the available balance by $61,784. It appears that
the decrease in revenue is due to fewer tickets being written. In add ition, the C ity Co unc il
co ntinues to sup port D ow ntow n eve nts by waiv ing p arking regula tions, w hich h as resulted in
$12,00 0 - $19,00 0/year in lost revenu es.
(3) The fede ral funds pro vided to the L eased Ho using Prog ram are inad equ ate to co ver its
expen ses. In 201 0/11 , the sho rtfall will be fin ance d by an av ailable balance; however, within the
next two years, there will be insufficient monies in the fund balan ce to continue this program.
The City could discontinue providing the service; the Dep artment of Housing and U rban
Development (HUD) would then assign another housing authority to administer the Program.
Prop erty Tax L evies for 201 0/11 w ere summ arized by D irector Pitcher. He stated tha t the City
of Am es levy is $10.86/$1,000 valuation (34.27%), School is $13.59 (42.88%), County is $6.67
(21.06%) and D MA CC is 0.57 (1.79%).
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Mr. Pitcher gave a comparison of City P rope rty Tax Valuations and Total Levies to be collected
for fiscal year 2009/10 for the 11 largest cities in Iowa. He rep orted th at Am es is the on ly city
under the $8 .10 lim it. Ames has the second-lowest total city tax levy per $1,000 valuation
($10.86 ); only Dubu que is lower at $9.86. Mr. Pitcher reiterated that for FY 2010/11, the total
tax levy/$1,000 taxable valuation will be $10.77.
According to M r. Pitcher, factors that will impact the FY 2010/11 bud get are:
1.Rate increases for Water and Sanitary Sewer Utilities
2.Storm Sewer, Resource Recovery, and Electric remain flat, although cost of fuel and wind
energy will increase, resulting in an effective rate increase of 5%.
Mr. Pitche r remin ded the C ity Council that, by referendum , 60% of the Local Op tion Tax
proceeds goes to reduce property taxes. The total tax levy for FY 201 0/11 w ould be $12.45
without the infusion of Local Option Tax p roceeds of $1.68/$1 ,000. A ccording to Mr. Pitcher,
ther e was an incr ease in taxable value of 4.7%.
Mr. Pitcher emphasized the large impact on the City’s budget from residential rollback and the
conversion of apartments to condominiums. He also described the budget ramifica tions resulting
from the Fire & Police Trust Fund.
Debt Service for the 2010/11 bu dget was explained by M r. Pitcher. H e note d that $800 ,000 will
be allocated from the Fund Balance. With current valuation, that translates into a Debt Service
Levy of $3.57/$1,000 valuation. Attention was directed to the listing of General Obligation
Bond projects planned for 2010/11.
T he percentage change of total levy by property type was explained by Mr. Pitcher. The net
change is 3.87%. An analysis of that change in tax dollars by property type was also described.
Mr. Pitcher reported on the percentage of taxable valuation by p rope rty type : Resid ential,
71.48%; Co mm ercial, 24 .42%; Indu strial, 3.88%; and U tilities, 0.3 0%. H e gave sample tax
calculations for the th ree pro perty c lassifications. Mr. Pitcher presented a summary of the change
in tax asking for F Y 20 10/11. R evenu es are dow n by $494,90 7, with the bigg est decrease s
coming from interest rev enu es and license an d perm it fees. T he total in crease in expe nses is
$606,134. Combining those, the total change in the General Levy is $1,101,041.
The costs of City services for 2010/11 per residence from property taxes (based on a $100,000
hom e) were sum marized, as follow s:
Streets/T raffic $ 124
Police Protection 116
Fire Protection 76
Recreation and Parks 59
Library 44
Tran sit 29
General Support Services 23
Planning 10
Resou rce Reco very 7
Storm Sew er 6
Animal Control 4
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Inspections/Sanitation 4
Building and G round s/Airport 3
TOTAL $ 505/$100,000
Road Use Tax Revenue was briefly explained by Mr. Pitcher. He noted th at FY 2009/10 and
2010/11 includ e a new sourc e of rev enu e called T IM E-2 1 Fu ndin g. TIME-21 Fu nding w as a
program of the state intend ed to in crease fu ndin g to m ake u p for sh ortfalls in infra structu re
improv emen ts. It was supposed to increm entally in crease o ver the years an d be d istributed with
Road Use Tax funding. H owever, the issue is that Road Use Tax rev enues have decreased
significantly. The C IP reflects the lower projected revenues.
City Man ager Sch ainker said that the estimates received from the S tate for the base amo unt are
flat. It is anticip ated that exp enses will exceed revenues and draw the balance down
significantly. The fund balance policy is to retain 10% of budgeted expenses for operating cash
for main tenan ce pro jects. Th e reserv e wa s redu ced to 5% for FY 2 010/11 . Mr. Schainker noted
that the C ity has n ot historic ally borrow ed to perform road m aintenance; ho wev er, in the future
if Road Use Tax Revenues continue to dec line, funding will have to come from bonds, the
Gen eral Fund , or the Cou ncil could dec ide not to do ro utine mainten ance projects.
C oun cil Mem ber Larson asked if the 4.54 w as last year’s budge ted amo unt or after it wa s
reduced. Mr. Pitcher said that it was the amount adopted; how ever, the City is n ot go ing to get
that and th at is already reflected. Mr. Lar son asked how that amou nt com pares to other years.
Mr. Pitcher said that he wou ld have to brea k out the T IME -21 part. M r. Schainker said that there
is also talk about reallocating Road U se Tax in the future, which wo uld provide further
challenges for the City. Council Mem ber Orazem asked if that was the amount proposed to be
allocated to the H ighw ay P atrol and if an am oun t was k now n. M ayo r Cam pbe ll indicated that
the legislators had responded that the transfer to the Highway Patro l was in doubt. Director
Pitcher will provide the amount to the Council in the near future.
Authorized emp loym ent leve ls [FT Es (fu ll-time eq uivalents)] is up by 1.25. CyRide made
several change s that resulted in an increase of 0.25 FT E in th e Fixe d R oute Program. The Police
Department Emergency Community Center budget includ es an additional 1.00 FTE for an
additional dispatcher position, which will ultim ately reduce costs for part-time positions and
overtime for full-time p osition s. Council Mem ber Larson noted that any additional positions that
might be necessitated by the initiation of a Safe Neighborhoods Program were n ot inclu ded in
the 20 10/1 1 bu dge t.
Fee changes in the Police and Parks and Recreation Departments were highlighted by Director
Pitcher.
City Manager Schainker advised that expenditures will exceed revenues in the Building
Inspections Division. Each year, attempts are made to match building, plumbing, and electric
perm it revenue with expenditures to support inspection activities. In FY 2009/10, it is being
estimated that there will be a shortfall in revenue of over $200,000 and over $100,000 in FY
2010/11. To m itigate the impact of those re venue reduct ions, a vacant Building Inspector
position will not be filled, and a supe rvisory position will be re assign ed to h elp administer capital
improvement projec ts in the E lectric Services and Public Works Departments. Another option
wo uld be to raise permit fees. Mr. Schainker said that to eliminate any mo re inspe ctors from this
program would negatively impact service lev els in an a rea that the City C oun cil has established
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as a primary goal to improve.
Mr. Schainker stated that, after analyzing the impact of the School District’s charging the City
to use their facilities for recreational programs, the actual incremental costs total ap prox imate ly
$3,000/year or $1 .25/p articipan t. That inc rease in $1.25/participant has been built into the fees
for FY 2010/11.
Co unc il Member Goodman asked for the comparison of tax rates to be updated after cities have
certified their budgets on March 15, 2010.
Director Pitcher brought the Council’s attention to the fact that the Gen eral Fund beginning
balance is slightly higher than projected for 2009/10. It was noted that the 2009/10 Ad justed
reflects deficit spending of $1,125,587. Mr. Pitcher said that amount includes $600,000 to be
allocated to the C ity Ha ll Spac e Re -Use Projec t.
The Local Option Tax F und w as explained by Mr. Pitcher. He recalled the Council’s policy that
the fund balance is reserved at 25% of budgeted expenditures less the 60% tax relief. The
unreserved fund balan ce is estimated to be app roxima tely $791 ,295 for 2010/11. Director Pitcher
noted that there were a number of carry-over projects, which drew dow n the fund balance
significantly.
City Manager Schainker explained that one-time projects are generally financed through th e
Ho tel/M otel Ta x. It is estimated that the endin g bala nce in FY 201 0/11 will be a ppro xim ately
$330,000. Cou ncil Mem ber Larso n shar ed information he learned from serving on the Am es
Convention & V isitors Bu reau B oard (AC VB ). It is believed that reve nue s from Ho tel/M ote l
Tax will be 15% lower. City Manager Schainker said staff will be in contact with the Director
of the ACVB.
In the Leased Hou sing Fun d, Mr. Pitche r reported that program revenues are n ot suff icient to
cover expenses. The program has operated with a deficit since FY 2008/09, and it is expected
to operate with a deficit in 2010/11, with the fund being com pletely ex hau ste d during FY
2011/12. If federal funding and City costs continue at the current rate, additional fund ing w ill
ne ed to be identified to continue the program for FY 2011/12. According to City Manager
Schaink er, discus sions w ill occur ab out the future o f this prog ram . Assista nt City Manager Bob
Kindred stated that the federal government has determined that there is a need for this program
in A me s; wh ether the City administers it or another agency does will nee d to be determ ined in
the near future.
City Manag er Schainker briefly described the Community Development Block Grant (CDBG)
revenue accou nt. He noted that it is impo rtant for the City to carry thro ugh with m ajor pro jects
because the federal fu nds m ust be e xpe nde d or the City is at risk of receiving a lower allocation
in the future.
The Fire/Police Retirement fund was explained by Mr. Pitcher. The FY 2010 /11 budget required
that the co ntribu tion rate in crease to 19.9 % of pay roll.
The new TIF District project on South Bell was briefly reviewed by Director Pitche r. He pointed
out that the T IF pro ject of 19 98 h as collec ted ad equ ate reve nue to pay off ou tstanding bo nds, and
the property has been released for general taxation.
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Assistant City Manager Sh eila Lundt described the Library Donations fund. The fund accou nts
for general donations and grants to be used for projects specifically at the Library.
City M anag er Sch ainke r expla ined th e De velop er Pro jects Fu nd, w hich a ccou nts for the
develop ers’ share o f imp rove me nts required by the Development Agreemen t. He also described
the Economic Development fund, which accounts for revolving loans, co mm unity investm ent,
and pass-through state loan activity. The init ial contribution for this Fund came from L ocal
Option Tax proceeds and from the Electric Utility.
Director Pitcher b riefly explained the Special Assessment, Street Construction, and Bond
Proceed s Fund s.
City Manager Schainker told the Council not to be alarmed if they see negative fund balances
in the Utility Funds when large projects are financed. He remin ded that rates are e stablishe d to
cover op erations and cap ital improvem ents.
Mr. Pitcher brought the C oun cil’s attention to Park ing O peratio ns an d Im prov em ent. He noted
that a deficit will occur in FY 2 010/11 in the amount of $61,558 . This is the third year that
exp enses have excee ded reven ues b y a sign ificant am oun t.
The GSB Transit Trust fund can also have a negative balance. The fund balance fluctuates based
on fee app roval, enrollmen t, and service levels.
Mr. Pitcher explained that there is good news for the Ice Arena Capital Reserve and Homewood
Go lf Course because revenues will exc eed ex pen ses. The re is a sm all increase in ice time built
into this budget. Re source R ecovery Op eration s and Imp rove me nts is also h oldin g its own, and
no rate increases are planned for the near future.
Fleet R eplace me nt, Information Technology, Computer Replacement, and the Risk Management
Funds were briefly exp lained by D irector Pitcher. There w ere several large W orker’s C om p
claims last year, and an adjustment to the rates charged to Departments was m ade.
Co unc il Mem ber Larson noted that Director Pitcher often refers to “targets.” He asked if there
is a target on all of the fu nds o r a rang e for a targ et. He sa id som e times staff refers to a goal of
drawing a fund down to a certain point, while there are others that fluctuate a great deal. Mr.
Pitcher replied that the City has general policies. He noted that staff could lay out what policy
is used for each fund. Mr. Larson asked that the target be listed for each fund and an explanation
of what the target is based on. Mr. Pitcher said that could be added to the description of the fund
at the top of each page.
Director Pitcher explained the Health Insurance Fund. Noting that the City is self-insured, an
explanation of how claims are handled was provided.
It was noted that copies of the written requests for funding from outside agencies were included
in the information provided to the May or an d Coun cil. A co py o f the requ est from the M ain
Street Cultural D istrict, which was received today, w as distributed aroun d the dais.
ADJOURNMEN T: Moved by Goodman, seconded by Wacha, to adjourn the meeting at 4:20 p.m.
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Vote on Motion: 4-0. Motion declared carried unanimously.
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Diane V oss, City Clerk An n H. C amp bell, May or