Financial PlanCITY OF HOPKINS FINANCE DEPARTMENT
MEMORANDUM
Date: October 4, 2013
To: Mayor & City Council
From: Christine Harkess, Finance Director
Subject: Financial Management Plan
Stacie Kvilvang, Financial Advisor with Ehlers will be here Tuesday to present a draft of the
Financial Management Plan. Attached is the draft presentation — there will be some refinements
to the power point before Tuesday's presentation, however this will give you a good basis for the
discussion. Staff will be meeting at 3 pm to discuss the plan and items from that discussion will
be incorporated into the council discussion at 5 pm.
There is a lot of information to review and process along with policy decisions that will require
discussion before decisions are made. If you have questions prior to the meeting please give me
a call.
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IS EHLERS
1 FADERS IN PUBLIC FINANCE
Financial Management Plan
City of Hopkins
October 8, 2013
n
■
What is a Financial Management Plan?
■ A multi-year fiscal plan for all tax -
supported funds
■ Integrates:
✓ Existing Debt
✓ Capital Improvement Plans
✓ Future Debt
✓ Tax base growth
✓ Future operating expenses
■ Compares entity to standards
✓ Government Finance Officers Association
(GFOA)
✓ Similar entities
0
ErHLERS
10/8/2013
1
What Makes It Practical?
■ Helps to manage expectations
✓ New spending proposals evaluated against other identified
priorities
✓ Weigh proposals vs. predefined affordability parameters
■ Helps to maintain assets
✓ Regular replacements
✓ Large periodic repairs
■ Reduces stress during budget process
✓ Previously agreed spending guidelines
✓ Better understanding of the effect decisions have
■ Rating Agencies like multi-year planning
■ Reduces reactivity amidst an unpredictable fiscal
environment and unfunded mandates
EHLERS
Results
1. Council can focus on big picture and policy issues
— Get away from randomly picking a percent or number increase for
the budget
2. Council can focus on long-term financial health of the
City
— Good roads, facilities, services, reinvestment. etc.
— Not on single -year tax impacts
3. Projects, in the context of multi-year planning, tend to be
less controversial
— Provides background/perspective on issues for discussion
— Provides framework to make informed decisions
4. If there is a plan, projects get done and the City has a
vehicle through which to inform the residents on the
goals of the City
EHLERS
10/8/2013
2
Assumptions In Plan
1. Revenues (market value) increases starting in 2014 by 1%
annually
- Haven't accounted for new development/redevelopment yet
2. Expenses increase at 3% annually
3. All current CIP, parks, equipment, streets, EDA, HCA and ice
arena as requested by department heads (including
staffing needs)
- Park improvements rely on franchise fees to pay for them
4. HCA is no longer funded by EDA fund ($61,000/year) and is
repaying HCA negative fund balance ($140,000/year)
- Total of $201,000 in funding from levy annually
5. Fund balances
- Capital equipment is $750,000 or one year of costs
- Capital improvements is $300,000
- General Fund is 42% + of expenditures per policy
4,1 6. Average value home is $225,000 EHLERS
„.,w 1. _ ,,..
Park Improvement Fund
Expenditures
Revenues (Franchise Fees)
OverlUunder)
Beginning Fund Balance
Ending Fund Balance
2013
Budget
Preliminary
,.
2015
2016,:
Projected
112,0001
177,0001
242,000
222,000
7,000
160,000
$ 150,000 -f-160,000
$
175,000 $
245,620
$ 305,000 $
245,620
$ 38,000 $
17,00
67,000) $
23,620
$ 298,000 $
85,620
$ 82,901 $
$ 120,901 E
12 ,901 E
3,901 $
103,901 $
36,901 $
36,901
60,521
$ 60,521 $
$ 358,521 $
358,521
444,141
Need to use fund
balance Franchise fees
Note: 1. Franchise fees are needed to fund park improvements and keep positive fund
balance
2. To the extent the City receives parked dedication fees from redevelopment, the
fund will rely less on franchise fees
6 EHLERS
10/8/2013
3
EDA Fund
Total Expenditures
Total Revenues
Over/(Under)
Beginning Fund Balance
Ending Fund Balance
2013
Budget
2014
Preliminary
2015
,.
Projected
2017
2018
286,81,60.488
219,488
219.488
219,488
219,488
$ 238.000
$ 280.488 $
288,980
$ 288,980
$ 288.980
$ 288,980
$ (48,814)
$ - $
69,492 V
$ 69,492
$ 69,492
$ 69,492
$ 3.681,063
$ 3,632,249
$ 3,632,249 $
$ 3.632,249 $
3,632,249
3.701,741
$ 3,701,741
$ 3,771.233
$ 3,771,233
$ 3,840,725
$ 3,840,725
$ 3,910,217
$1,064,000 is
restricted so actual Only adding $69,000
cash is approximately to fund balance
$2.6M annually for future
projects
Not 1. Took out $61,000 annual payment to HCA to allow positive cash to the fund
2. Still need to discuss minimum fund balance policy
7 4 EHLERS
Findings
1. Overall financial health of City is good
2. Will likely need to do annual levy increase for
next 8 years (2015 — 2022)
3. Issues to discuss
1. Funding of Hopkins Center for the Arts
How deficit is paid
Replenishment of fund balance
2. Ice area operation and capital needs
3. General Fund balance reserve percentage
EHLERS
10/8/2013
M
City of Hopkins
20,000,000
Taxable Tax Capacity
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000 2008 2009 2010 2011 2012 2013 2014
Taxable Tax Capacity 17,823,585 17,466,343 17,445.985 15,865,506 14,953,670 14,3611863 14,409,835
General Fund Balance
3,996,115 1 4,127,786 1 4,253,260 1 5,032,211 1 5,194,143 5,194,143 5,194,143 5,194,143 5,194,113 5,194,143 1 5,194,143
401 1 4M 1 431 1 491 1 491 49% 471 46%
At or above current policy amount
EHLERS
10/8/2013
5
10/8/2013
What Levy Pays For
■ Majority of levy goes to General Fund
Total Levy by Type
tn,Oal,cxx7
v,cX3O,aw
HCA
10,000,000
A EDA Levy
8,000,000
New Debt
■ Existing Debt
6,000,000r
li
General Fund
f
n.Ono,nnO
� oon,n(x1
EHLERS
General Fund Budget
TOTAL EXPENSES 10.580.329 10.946.129 11,374,313 11.712.139 12.060.203 12,410,710 12.787,971 1].168.310 13,560,059 13.963,561 14,379.168
REVENUE VER (UNDER) EXPENSES - - - - - - - - -
F dir FOnE Balance 5.194.143 5.194,143 5.194.143 5,191.143 5.194.143 5,194.143 5.194,143 5.194.143 5.194.143 5,194.143 5,194.143
F.Balance a� a ^� o(A -' Expense. 49°0 4740 4650 440, 4300 4200 4t o 39°% 38°% 37% 36°i,
TAX RATE ON —PA— 62 414% 62.41200 68 3200;0 72 395°0 74 38940 76 464% &1148% 81 429% M —S 66.743% 83.538%
TAXRATE % CHANGE 6 37-ro 0 W. 917% 5 %w° 2 7300 2 82% 4 820, 1 60% 2 36% 4.071, -3 WI,
all Teaesafler MVHCor Exclusion 51,298 51,298 $1,438 $1.541 51,602 51.860 51.767 51.817 51,801 51,901 81.93:
%.. Increase on e�.era9e Boma (225k) 6.37% 0.W% 10.76% 7.21-, 3.93% 4.021 6.N% 2.83 % 3.54% 5.28% -2.475
A1m1W Tex Increm $78 SP $140 $104 261 S. 5101 550 564 $99 34F
1. 2014-2015 increase due to bonds and HCA Funding
2. 2015-2016 increase due to street bonds
3. 2016-2017 decrease due to market value increase and TIF 2-6 decertifying
4. 2017-2018 decrease due to 20076 bonds being paid off
5. 2018-2019 increase due to equipment certificates and capital improvements
6. 2019-2020 decrease due to capital improvement fund reserve being fully funded &
TIF 2-9 Decertifying
7. 2021-2022 increase due to street bonds
8. 2022-2023 decrease due to 2007A and equipment portion of 20128 bonds being
paid off
9. Average tax increase over next 9 years is 70
EHLERS
100 000
90.000°%
so.0o0%
70.0009/6
60.000.
50.000%
40.000%
30 000%
20.000%
10.000%
0.000%
20'
City Tax Rate 55.
City of Hopkins
Historic and Projected Tax Rates
City of Hopkins
Projected City Impacts
$225,000 Single Family Residence -inflated at 1% Annually
Average City Tax increase of S140
10/8/2013
r�
Existing Debt
Bond Issue
2007B GO Improvement Revolving
Call Date
1 -Feb -2015
First year existing
bond to be paid off
Maturity Currently
Outstanding
1 -Feb -2018 $
1,085,000
2007A Capital Improvement
1 -Feb -2015
1 -Feb -2023
$
6,930,000
2010A GO Improvement
1 -Feb -2018
1 -Feb -2026
$
2,405,000
2010B GO Refunding
1 -Feb -2018
1 -Feb -2023
$
2,330,000
2012B GO Bonds -Improvement Portion
1 -Feb -2021
1 -Feb -2028
$
4,450,000
2012B Bonds -Equip Cert Portion
1 -Feb -2021
1 -Feb -2022
$
915,000
2003 HRA Lease Revenue Bonds -2012A GO Cap Imp Bds
14eb-2020
I 1 -Feb -2023
$
1,765,000
2013A GO Improvement
1 -Feb -2020
1 -Feb -2029
$
3,650,000
TOTAL
$
23,530,000
EHLERS
10/8/2013
I
City of Hopkins
Existing and New Debt
Debt Levies 2014.2023
3AOO,000
2,500,000
Annualrnad
rer,nnstnictia❑
2,000,ODO
r
i
..
1,500,000
1,000,000
500,000
0
2- :2F F...c
10/8/2013
I
30.00%
25.00%
20.00%
City of Hopkins
Debt Levy as Percent of Total Tax Capacity Levy
El
15.00%
10.00%
5.00%
0.00%
2013 2014 2015 2016 2017_2018 2019 2020 2071 2022 2023
Debt Levy Percent 12.68%13.65%13.93%14.77%15.16 15,15%116.621727%17.68%1
What is causing increase
DollarUse
in levy in 2015
General Fund
$
426,099
$
64.32
HCA
$
201,000
$
31.07
2012 & 2013 Bonds
$
163,560
$
25.29
Equipment
$
100,000
$
15.46
Capital
$
25,000
$
3.86
TOTAL
$
915,659
$
140.00
Annual
$140.00
Monthly
$11.67
Dailyqwm.
$0.38
tp EHLERS
10/8/2013
0
2015 Levy
Use
Increase
if we add
Dollar
Ice Arena
General Fund
S
426,099
$
64.32
HCA
S
201,000
$
31.07
2012 & 2013 Bonds
$
163,560
$
25.29
Ice Arena
$
120,000
$18.55
Equipment
$
100,000
$
15.46
Capital
$
25,000
$
3.86
TOTAL
$
915,659
$
158.55
$158.55
$13.21
50.43
EHLERS
Council Direction/Consensus
1. Fund balances
— Capital equipment - $750.000 — one year of costs
— Capital improvements - $300,000
2. General Fund balance reserve percentage
— Currently at 42% + per policy
— Are you okay if in future years we look to increase this to 50% +
EHLERS
10/8/2013
10
HCA Without Funding Assistance
Expenditures
2013 2014 2015 2016 2017 2018
Budget Preliminary Projected
$ 766,310 $ 805,428 $ 663,678 $ 663,678 $ 663,678 $ 663,678
2013 2014 2015 2016 2017 2018
Budget Preliminary Projected
$ 892 $ 50,000 $ (93,750) $ (80,750) $ (84,450) $ (97,850)
$(1,109,099)
$(1,108,207)
$(1,108,207) $(1,058,207) $(1,151,957) $(1,232,707) $(1,317,157)
$(1,058,207) $(1,151,957) $(1,232,707) $(1,317,157) $(1,415,007)
757,428
744,428
748,128
761,528
EHLERS
Revenues
Over/(Under)
Beginning Fund Balance
Ending Fund Balance
765,418 755,428 757,428 744,428 748,128 761,528
$ 766,310 $ 805,428 $ 663,678 $ 663,678 $ 663,678 $ 663,678
2013 2014 2015 2016 2017 2018
Budget Preliminary Projected
$ 892 $ 50,000 $ (93,750) $ (80,750) $ (84,450) $ (97,850)
$(1,109,099)
$(1,108,207)
$(1,108,207) $(1,058,207) $(1,151,957) $(1,232,707) $(1,317,157)
$(1,058,207) $(1,151,957) $(1,232,707) $(1,317,157) $(1,415,007)
HCA With $61,000 Levy and $80,000 From Cable
Fund
2013 2014 2015 2016 2017 2018
Budget Preliminary Projected
Expenditures
765,418
755,428
757,428
744,428
748,128
761,528
Revenues
Over/(Under)
Beginning Fund Balance
Ending Fund
BalanceAO
22Ir' EHLERS
765,418
755,428
757,428
744,428
748,128
761,528
$ 766,310
$ 805,428
$ 805,428 $
805,428
$ 805,428
$ 805,428
$ 892
$ 50,000
$ 48,000 $
61,000
$ 57,300
$ 43,900
$(1,109,099)
$(1,108,207)
$(1,108,2(17)
$(1,058,207)
$(1,058,207) $(1,010,207)
$(1,010,207) $ (949,207)
$(949,207)
$(891,907)
$(891,907)
$(848,007)
10/8/2013
11
-------------
•• for the Arts '
Funding/levy3. Hopkins
$61,000 Annual Tax Levy
301/ 1016 1018 201] 201E 2010 2020 1021 2022 1021
PnBmllury Pegecl.d
B.gi—I.g Fund B.I.—
Ending Fund B.l.n-
$201,000 Annual Tax Levy
301d 3010 3010 3017 2010 20102021 2022 2023
PMlmin.ry Pr J—d
SIN593 $2�1�593 $2 _3 S361793
B.glnning Fund B.InM.S87 0— �— 503 S204 593 S2 1593
EHLERS
Endlnp Fund Gl�n-
Council Direction/Consensus
3. Funding/levy for Hopkins Center for the Arts
— No longer using EDA fund of $61,000 annually — switched to tax
levy
• Annual impact to average value home of $9.43
Have to levy an additional $140,000/year to replenish fund
balance (currently nearly $1.1 M in negative cash)
• Annual impact to average value home of $21.64
• Total impact of both ($201,000) has annual impact to average value home
of $31.07
EHLERS
10/8/2013
12
HCA Funding
HCA EDA Funding $61,000
HCA Fund Balance Replenishment $140,000
Levy increase $201,000
Annual Monthly Daily
lobFREERS
Council Direction/Consensus
I Funding/levy for Hopkins Center for the Arts
— If Council views cost is too much:
Options to repay negative fund balance
• Reduce/write off a portion; or
— Not recommended
• Gradually increase levy to replenish (bigger increases in later
years)
i EHLERS
10/8/2013
13
Council Direction/Consensus
4. Ice area operation and capital needs
— City is funding depreciation
This is a good thing
Average annual deficit with annual capital outlay's for
improvements of approximately $120,000
• Ranges from $20,000 to $272.000
Would likely only need for next 3 years to bring cash balance positive
— Average annual deficit without annual capital outlay's for
improvements of approximately $55,000
• Ranges from $10.000 to $152,000
{
Need to levy approximately $117,000 beginning in 2021 to pay for
$1.3M bond for refrigeration system
• May decrease depending upon how Council funds/levy's in prior years
EHLERS
Council Direction/Consensus
HCA EDA Funding $61,000
HCA Fund Balance Replenishment $140,000
Ice Arena $120,000
Levy increase $321,000
$49.63 1 $4.14 50.14
Note: Ice Arena Impact alone is $18.55/year
EHLERS
10/8/2013
14
Next Steps
1. Refine plan based upon Council direction
2. Future work session to review
3. Presentation at Council meeting on finalized plan
EHLERS
10/8/2013
15