08/09/2006 Council Minutes - Laserfiche WebLink

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COUNCIL FINANCIAL RETREAT AUGUST 9, 2006 APPROVED Finance Director Rolek advised following the Pavement Management Plan (PMP) for maintenance and reconstruction of the City's road infrastructure would save $11,000,000 over the next 10 years. Following the plan would also improve the average condition of the road system and spread the costs of maintenance and replacement more gradually though the use of debt financing. This has been an area that has been among the first to cut out in the annual budgets when the City is looking for effective areas to cut; however, it is also among the greatest future cost impacts if not addressed as needed. The Charter provisions relative to funding street reconstruction further inhibit the Council's ability to initiate and complete these projects. Finance Director Rolek advised the Council should recognize road maintenance and repair as a priority to avoid sharp increases in cost and tax impact in the future. Staff recommends budgeting annual road maintenance (seal coating, overlay, etc.) at the recommended level stated in the PMP, and to take a proactive approach to addressing necessary reconstruction projects, perhaps through a strong education and communication effort. Finance Director Rolek reviewed the history of the SAC Revolving Fund. He stated the potential impact of this liability on the City in the future would be quite heavy at over one-half million dollars. The only sources available to relieve the liability are utility fees or property tax revenue. In any case, it falls on all other residents of the City to pay the difference in SAC costs attributable to these properties. Staff recognizes that residents were given an option in the past, that properties have changed ownership over time, and that it may be many years before sewer service is available for these properties, or maybe never. However, given the potential magnitude of this liability, staff recommends that these property owners be made aware of the situation and that a refund be issued to the affected property owners, thereby eliminating the potential liability. The Council directed staff to obtain an opinion from the City Attorney regarding issuing refunds. If there are no legal issues, staff should proceed with the refunds with a one-year option for the affected residents. Finance Director Rolek advised in terms of the Dedicated Parks Fund, staff is recommending establishing a repayment plan for the interfund loan for the 67 -acre parcel of property purchased for a recreational facility. An outright transfer of the funds would not be an appropriate use of the Area and Unit Funds, which were collected to implement trunk sewer and water facilities. In addition, the Area and Unit Fund is having its own financial challenges. Therefore, a repayment plan seems to fit best. The loan can be repaid over a 10-15 year period with a moderate rate of interest. There will be an impact on the rate of park development over this time frame due to this plan. If, at some point in the future, it is determined that the City should divest itself of this property, the proceeds would flow to the Dedicated Parks Fund for use of repaying any unpaid loan balance or in any of the remaining City parks. •