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Home My WebLink About2020-08-26 Handout @ Meeting Memorandum Date: August 24, 2020 To: Honorable Mayor and City Council Members Through: Mark R. Statz, City Administrator/City Engineer From: Bruce DeJong, Finance Director Item: City Hall Renovation Finance Plan General Fund Î Fund Balance Policy A few months ago, the City Council decided on an amendment to its General Fund, Fund Balance Policy which aligned with recent practice to maintain between 40 and 50% of the cluding transfers out, as a fund balance. This policy now means that, based on the 2019 audit results, and the 2021 Proposed General Fund Budget have $247,265 beyond the top end of the targeted range, in fund balance. This is higher than the amount shown during the discussion on fund balance policy due to a calculation error. Below is the proper calculation. NewFundBalancePolicy $1,652,471123119FundBalance ($3,254)LessNonSpendable $1,649,217AUnassignedFundBalance $2,493,7032021Expenditures $310,2002021Transfers $2,803,9032021TotalExpendituresandTransfers $1,401,952B50%ofTotalExpenditures $247,265AB=AvailableFundsover50%Policyamount Project Costs A rough budget of $300,000 (excluding Audio-Visual upgrades) was established for a limited scope renovation of City Hall. Bids have now been received and the project can be constructed within that budget. However, it is helpful to look at the wholistic budget for the project, adding in the A/V upgrades, construction contingencies, furnishings and a few COVID and security related expenses not part of the original bid. Therefore, a total project budget of $400,000 is contemplated. ProjectCostSummary ConstructionBaseBid$215,300 AddAlternates(1,2,4,6&7)$41,300 Architect/EngineeringFees$59,466 ConstructionContingency(10%)$25,660 Furniture$2,000 SecuritySystem$10,000 A/VUpgrades$46,273 TotalProjectCost$399,999 Financing Plan The Council has also discussed a City Hall Renovation Project Financing Plan, although a final plan was not adopted and was to be revisited upon receipt of bids for the work. From our previous discussion: An analysis of employee hours allocated to activities in the Water, Sewer, and Storm Water funds shows that it would be appropriate, at a minimum, for 26% of the remodel costs to be paid from these enterprise funds. Additionally, the water department occupies, wholly, a space representing about 10% of the entire building (excluding the Fire Hall bay area). This space is for chemical feed, metering, SCADA and other water-only functions. Therefore, an additional 10% contribution from the Water Fund is proposed. The Capital Equipment Fund has a current balance of roughly $250,000. It is important to remember that this balance Balance. This fund originally had items such as City Hall HVAC, carpet and other similar items programmed into it. Therefore, it would be very appropriate to take money from that fund to pay for the parts of this renovation project which were specifically enumerated in our former Capital Improvement Plans (CIPs). However, in our more recent updates to that those items out, assuming they would come from general fund excess fund balance. Therefore, if we use the Capital Equipment Fund to help pay for any of the renovation project, we will need to adjust its CIP, and therefore, our annual contribution to it, accordingly. This would be a sensible strategy, if the Council felt that the city hall project pushed us too close to our general fund cash balance minimum. Based on our previous discussion, below is Renovation Project Financing Plan. Proposed FundingSourceFunding%ofFunding Wouldleave51.1%balance inGeneralFund(4050% GeneralFundBalance>%50$216,80754%policy) Nocontributionneeded. GeneralFundCapitalOutlayFund$00%ThismaintainsCIPintegrity Contributionbasedonstaff SewerUtility$38,91010%time(11%ofnonA/Vitems) Contributionbasedonstaff time(11%ofnonA/V items+10%forWater WaterUtility$74,28219%TreatmentSpace) DirectiontoeliminateStorm Fundcontributiontoprotect StormwaterUtility$00%fundbalance OSHAGrant$10,0003%$10,000maxgrant CARESAct$10,0003%Estimatedeligibleexpenses A/VContract+Related ExpensesinBase CableFranchiseFees$50,00013%ConstructionContract TotalProposedFunding$399,999 100% During the last Council workshop, some discussion revolved around whether or not the Stromwater Fund was healthy enough to contribute to the project, given its low fund balance and the recent expenditures related to the downtown street project. The plan above, eliminates a contribution from the Stormwater Utility. This, along with recent deposits from development fees, will have a positive effect on the fund. Staff is in the process of applying for an OSHA Grant to help defer some of the costs related to safety. The maximum grant is $10,000. If the grant is not received, staff suggests that portion of the project costs come from the General Fund. As we begin to log expenses related to COVID-19, there are certainly elements of this project which relate to the pandemic, such as providing enhanced separation at the front desk, etc. We are estimating $10,000 of COVID related expenses. These funds, will come from the General Fund, but will be reimbursed through the CARES Act money the city has already received. Staff is glad to discuss, in more detail, the project and its proposed financing plan at our upcoming City Council meeting.