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Home My WebLink About06 06 2022 Financial Planning WorksessionFinancial Planning Update June 6, 2022 1 Agenda Five-Year Property Tax Projection Scenarios Debt and Debt Levy Impacts Council Direction on Planning Assumptions Next Steps: Begin 2023 budget process Proceed with financial planning process for full-time fire staffing based on Council direction 2 2 5- Year Projection Assumptions 3 2023 Base Tax Levy Considerations: *The debt service % change is estimated based on the 2023 planned debt issuance. 3 5- Year Projection Assumptions 4 Growth in tax capacity and market value assumptions from 2022 to 2023 Estimated market value has increased 18.4%. Estimated tax capacity has increased 22.5%. Financial plan assumes growth for 2024-2026 of 6% per year. Revenue Assumptions: Building permits of 150/year SMSC aid for Policing – no proposed increase for 2023 budget SAFER Grant revenue for 2023-2025 implementation of Full-time Fire staffing model Fire service contract/City of Credit River and Spring Lake Township – incorporates financial impact of Full-time Fire model in 2026 4 5- Year Projection Assumptions 5 Staffing Changes per Personnel Plan 2023: Police Property Room Manager converted from open CSO role (FTE & budget neutral with retirement savings and conversion of CSO role) Financial Analyst – midyear hire Mechanic converting from part-time to full-time (.3 FTE) Recreation Programmer (.6 FTE) Transition to full-time firefighter staffing model (12 FTE) 2024-2027: Administration: Deputy City Clerk and Communications Specialist (2 FTEs) Police: Patrol Officers (2 FTEs) Public Works: Maintenance, GIS Coordinator, and Recreation Programmer (combined 3 FTEs) 5 5- Year Projection Assumptions 6 Funding to support rising costs of goods and service Commitments to long-term plans (CIP) Debt obligations (existing and proposed) EDA Funding 6 Full-time Fire staffing model 7 Recruitment and retention: Current response times meet the standard only 9% of the time. Not meeting standards for life safety inspections, pre-planning and public education. Fire call volume has grown by 55% in five years from 440 in 2016 to 682 in 2021. Need to plan for continued increase due to rapid growth. Paid-On-Call (POC) firefighters respond to calls for service via pager/phone-challenging deployment model 7 Full-time Fire staffing model 8 Funding Options: Option 1: 2023-2025 (3-year) SAFER grant award Phased tax levy increase from 2023-2026 to fund firefighters by 2026 Since phased tax levy increase is in preparation of our 2026 needs, the city can utilize the funds to pay for capital purchases on a pay go basis, instead of issuing debt. 8 Full-time Fire staffing model 9 Funding Options: Option 2: No SAFER grant award/Fire fighters are not hired until 2026 Phased tax levy increase from 2023-2026 to fund firefighters by 2026 Since phased tax levy increase is in preparation of our 2026 needs, the city will utilize the funds to pay for capital purchases on a pay go basis, instead of issuing debt. 9 Full-time Fire staffing model 10 Funding Options: Option 3: No SAFER grant award/Fire fighters are hired in 2023 Fire contract revenue from the City of Credit River and Spring Lake Township. No transfers to funding for capital projects Estimated tax levy increase for full-time fire in 2023 is 6%. This is half of the estimated tax levy increase of 12% in 2023. (3.5% more than Option 1/Option 2) 10 Property Tax Projection Summary – Option 3 Fire Funding – No SAFER Grant 11 11 Property Tax Projection Option 3 Fire Funding – No SAFER Grant Property owner estimated tax impact Assumes 18.4% increase in estimated market value 12 12 Property Tax Projection Summary – Option 1 Fire Funding with SAFER Grant 13 13 Property Tax Projection - Option 1 Property owner estimated tax impact Assumes 18.4% increase in estimated market value 14 14 Property Tax Projection – Option 1 15 The 2023 tax rate is projected to decrease due to growth in the tax base The tax rate is projected to increase over time due to phased levy increase for full-time firefighters in 2026. Projected tax rates are still lower than the current tax rate of 30.465% 15 5-Year Debt Per Capita Projection 16 Seven County Metro Area Average Tax Capacity Rate: City Levy/Tax Capacity = Tax Rate 16 5-Year Debt Per Capita Projection 17 Scott County Tax Capacity Rate by City: City Levy/Tax Capacity = Tax Rate 17 5-Year Debt Projection – Option 1 18 Debt is projected to decrease from $33.8M at the end of 2021 to $31.1M at the end of 2027. City will utilize the General Fund phased levy increase to pay for capital purchases totaling $2.4M on a pay go basis, instead of issuing debt. Planned new debt in 2026 and 2027 is for two street projects in 2025 (Wilds Pkwy Reclamation and Martindale Area Street projects) and the 2026 bonding for facility work at City Hall and the Police Station 18 5-Year Tax Levy for Debt Service – Option 1 19 Debt service remains constant from 2021-2025 at about $3.6M. Proposed debt service increases significantly in 2026 and 2027 due two street projects in 2025 (Wilds Pkwy Reclamation and Martindale Area Street projects) and the 2026 bonding for facility work at City Hall and the Police Station. Both buildings were built in 2006. The significant facility project costs are replacement of VAV Boxes, Chillers, Air Handlers, and Carpet. 19 5-Year Tax Levy for Debt Service - Option 1 20 Debt service is the annual principal and interest payments on the city’s debt Funding sources are how we pay for the annual debt service. The timing, mix of project types, and pledge of revenue affect the portion of debt service that is tax supported. 20 5-Year Tax Levy for Debt Service 21 Two future street project examples: Fish Pt Rd Ph II Street project – the pledge of revenue to repay debt is assessments/MSA/tax levy Wilds Pkwy Reclamation Street project - the pledge of revenue to repay debt is assessments/tax levy The timing, mix of project types, and pledge of revenue affect the portion of debt service that is tax supported. 21 5-Year Tax Levy for Debt Service 22 Two future Capital Improvement projects: 2024 Facilities Improvements at City Hall and Police Station – Membrane roofing 2026 Facilities Improvements at City Hall and Police Station. Replacement of VAV Boxes, Chillers, Air Handlers, Carpet The timing, mix of project types, and pledge of revenue affects the portion of debt service that is tax supported. 22 5-Year Debt Per Capita Projection – Option 1 23 23 5-Year Projection 24 Future Funding Needs: Parks Master Plan Funding Funding shortfall of $500k/year in 10 yr. CIP for ongoing Park and Trail replacement No funding plan for Sand Point Beach and Lakefront Park major improvements Strategies for the future funding of park needs will be one of the topics at the Council’s 2023 Strategic Planning work Marsh Drive NE road extension Collector road planned to connect to Pike Lake Trail Estimated cost of $800k $400k identified General Fund funding source/$400k unidentified funding source 24 2023 Tax Levy and Budget Schedule 25 Next Steps 25 Council Discussion 26 Does Council support staff recommendation to transition to full-time fire staffing through a phased tax levy increase over four years? Does Council support the financial planning assumptions that are driving the 2023-2027 tax levy and tax rates? 26