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HomeMy WebLinkAboutItem 06.e Item No. RESOLUTION AMENDING THE 2020 GENERAL FUND BUDGET Proposed Action Staff recommends adoption of the following motion: Move to approve a resolution amending the 2020 General Fund Budget. Overview Consistent with the recent City Council approved “Financial Sustainability and Resiliency Policy”, staff desires to develop a long-term financial management plan. The planning models associated with this plan will consider tax-supported funds, growth assumptions, current and projected debt, etc. and it will provide the projected impact on tax levies, tax capacity and tax rates for the Governmental Funds. Staff believes this will be a valuable financial management tool which will help inform the City’s strategic decision-making. The City Council approved a professional services agreement with Northland Securities Inc. as the City’s municipal advisor on January 6, 2020. The agreement included providing general financial consulting services requested by the City. Northland Securities Inc. has provided a memo which articulates the services being requested for the long-term financial management plan and corresponding planning models. It should be noted that Northland had also prepared the Utility Rate Study in 2018 that staff utilizes to recommend rate adjustments to the City Council. The memo is included with this agenda report. Primary Issues to Consider • Budget Impact. The cost of developing the long-term planning model is $20,200. This project was not included in the 2020 budget; therefore, a budget amendment is being requested for the 2020 General Fund using reserves as the funding source. Supporting Information • Northland Securities Inc. Memorandum Financial Impact: $ Budgeted: Y☒ N☐ Source: Related Documents: (CIP, ERP, etc.): Envision Lakeville Community Values: Good Value for Public Services Report Completed by: Jerilyn Erickson, Finance Director March 2, 2020 20,200 General Fund 2020 Budget CITY OF LAKEVILLE RESOLUTION NO. ________ RESOLUTION AMENDING THE 2020 GENERAL FUND BUDGET WHEREAS, the 2020 budget was adopted on December 2, 2019; and WHEREAS, the City approved a professional services agreement with Northland Securities Inc as the City’s municipal advisor on January 6, 2020; and WHEREAS, the City approved a “Financial Sustainability and Resiliency Policy” on January 21, 2020 which articulated the importance of developing a long-term financial management plan to support the concepts of financial sustainability and resilience as overall goals; and WHEREAS, Northland Securities Inc has provided a not-to-exceed cost of $20,200 for the long- term financial management planning models. NOW, THEREFORE, BE IT RESOLVED the 2020 budget is amended as follows: 1) General Fund is amended in the amount of $20,200 using General Fund reserves as the funding source. ADOPTED by the Lakeville City Council this 2nd day of March 2020. CITY OF LAKEVILLE ___________________________ Douglas P. Anderson, Mayor ATTEST: _____________________________ Charlene Friedges, City Clerk Northland Securities, Inc. 150 South Fifth Street, Suite 3300, Minneapolis, MN 55402 Toll Free 1-200-851-2920, Main 612-851-5900,www.northlandsecurities.com Member FINRA and SIPC | Registered with SEC and MSRB MEMORANDUM To:Jerilyn Erickson,Cityof Lakeville From:Tammy Omdal Date:February 12,2020 Re:Servicesfor Financial Planning This memorandum outlines the scope of services pursuant to our discussions to provide financial planning services for developing a long-term financial management plan, through development of planning models, for the City’s Governmental Funds, including planning for operations, capital plans, and debt issuance and management (the “Project”). For purposes of the Project, the Governmental Funds will include the General Fund, the Debt Service Funds, and the Capital Project Funds of the City (the “Funds”). Services to be Provided The scope of work to be performed by Northland (hereinafter “NSI”) is based on the following factors: 1.The Project will project, analyze, and review the source and use of funds, cash, and fund balance for the Governmental Funds to ensure adequate funds are projected to be available to meet the City’s ongoing needs and requirements in the long term. 2.The Project planning horizon will be ten (10) years. 3.The Project will project, analyze, and review the projected tax levy, tax capacity, and tax rate for the Governmental Funds to help inform the City’s decision-making. 4.The Project will consider capital improvement plans and related financing, including plans for debt issuance. The City’s existing debt, reported in the Governmental Funds, and planned future debt that will be reported in the Governmental Funds needs to be analyzed, reviewed, and reported to show impact on tax levy. 5.The Project shall include the deliverable to the City of two planning models (electronic spreadsheets) for the City’s use and maintenance (hereinafter, “Models”). The first model will include pro forma for the General Fund and the Capital Project Funds and the calculation of future projected tax levy, tax capacity, and tax rate for the City. For purpose of the model and the written plan, the City may determine to have NSI combine certain funds for planning purposes. The second model will include pro forma for each of the City’s existing and projected future Debt Service Funds. Scope of Services February 12, 2020 Page 2 6.The Project shall include the deliverable of a written report presenting key information and findings from the Models. 7.The Models and the written report need to be completed and delivered to the City by May 29, 2020. NSI will undertake the following tasks: 1.Conduct kick off meetingwith the City’s projectmanagement team (the “PMT”) to review the objectives for the Project, set meeting schedule and discuss background data. 2.Collect and review background information needed for the financial management plan. The City has the responsibility for collecting and providing NSI with information needed to conduct the review. Information sought by NSI includes but is not limited to the following: a.Annual financial statements for years 2017-2018, and preliminary financial statements for year 2019. b.Plans for capital improvements in years 2020-2029 (ten-year horizon) including type of improvement, estimated cost, and timing. c.2020 adopted budget for the General Fund, Debt Service Funds, and the Capital Project Funds. d.Preliminary 2021 budget plans, if available. e.Projected future changes to the City’s budget for new positions and other significant operational changes for the Funds. f.Projected residential single-family housing units, multi-family housing units, and commercial-industrial space to be added by year for years 2020-2029. g.List of other cities that the City desires to compare against for purpose of tax levy, tax capacity, and tax rate, among other comparisons. h.City financial management policies. 3.Collect relevant data for the comparative cities, as identified by the City, for comparison and evaluation. 4.Develop the Models. The Models will be developed to meet the City’s specific needs and structure for the Governmental Funds. The Models will be prepared to reflect certain assumptions and inputs from the background information collected from the City. 5.Complete data input and assumption development in the Models. 6.Test assumptions and finalize the Models. 7.Meet with PMT. NSI will meet with the PMT to review the preliminary assumptions in the Models and the resulting preliminary pro forma. Scope of Services February 12, 2020 Page 3 8.Update Models based on PMT input and prepare the written report. NSI shall prepare a presentation to summarize the written report and pro forma within. 9.Meet with PMT. NSI will meet with the PMT to review the Models and the draft written report and presentation. 10.Finalize draft written report and presentation and submit to the PMT. 11.Attend a work session of the City Council to present results and findings for the Project. 12.Meet with PMT. NSIwill meet with the PMT to review outcomes of the work session with theCityCouncilandtomakefurtherupdatestotheModelsandwrittenreportsasneeded. 13.Attend a meeting of the City Council to present results and findings for the Project. 14.NSI to submit deliverables to the PMT in final form. 15.Meet with PMT. NSI shall meet with the PMT to provide training on the Models. The scope of work provides for ten hours of training and follow-up on use and maintenance of the Models. The scope of work includes five (5) meetings with the PMT and two (2) meetings with the City Council. Compensation For the services specified, NSI will be paid an amount not to exceed $20,200. The amount is based on the estimated hours required to complete the tasks at an hourly billing rate of $200 per hour. NSI will bill monthly for actual services performed and actual reimbursable expenses. Invoices will detail the work performed, requested compensation for the period and show amounts previously billed. The City may at its discretion authorize NSI to undertake additional tasks, including meeting attendance, beyond the tasks listed above. Additional planning services will be billed monthly at the hourly billing rate.