HomeMy WebLinkAboutcc 10.18.16 Financial Management Plan for Enterprise Funds_2 THE CITY OF
LAKE ELMO MAYOR & COUNCIL COMMUNICATION
DATE: October 18, 2016
REGULAR
ITEM #17
MOTION
AGENDA ITEM: Financial Management Plan for Enterprise Funds
SUBMITTED BY: Cathy Bendel, Finance Director
THROUGH: Tammy Omdal,Northland Securities
REVIEWED BY: Kristina Handt, City Administrator
Julie Fliflet, Finance Committee Chair
Tammy Omdal,Northland Securities
Bernie Bullert, TKDA
SUGGESTED ORDER OF BUSINESS:
- Introduction of Item.................................................................Finance Director
- Report/Presentation............ City Staff, Tammy Omdal,Northland Securities
- Questions from Council to Staff............................................. Mayor Facilitates
- Call for Motion...............................................................Mayor& City Council
- Discussion.......................................................................Mayor& City Council
- Action on Motion.................................................................... Mayor Facilitates
SUMMARY AND ACTION REQUESTED: The City has retained the services of Northland
Services and TKDA to prepare a Financial Management Plan for the City of Lake Elmo
Enterprise Funds. Tammy Omdal of Northland Securities will be presenting the report to the
City Council.
BACKGROUND INFORMATION: The City approved and entered into agreements with
Northland Securities and TKDA to prepare a Financial Management Plan for the City of Lake
Elmo Enterprise Funds. Bernie Bullert from TKDA is an expert in the utility field and was
tasked with compiling a recommendation for the operational costs to be incorporated into the
model. Tammy Omdal of Northland Securities was tasked with preparing a Financial
Management Plan which would become a projection report which could be updated and shared
with the City Council on a quarterly basis. The report being presented is that report.
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City Council Meeting [Consent Agenda Item#17]
October 18,2016
This version was shared with the Finance Committee on October 11, 2016 and some changes and
recommendations came of that review to be incorporated into the next version including the
following:
• The Finance Committee felt the 30% variance on build outs was too high. A 20% has
been recommended for future models.
• The MN DEED grant was identified as something needing to be reviewed closer to be
sure it is properly accounted for in the report.
• In past models, 100% of CIP expenses were funded through bonding. This version
assumed that any CIP items under $500k would be purchased from reserves rather than
funding through bonding to avoid interest and bonding costs since the cash balances
were strong. ($2.5M in the water fund and $2.5M in the sewer fund). The Finance
Committee will be reviewing the reserve policy for the Enterprise Funds to make a
recommendation related to the model assumptions to use related to bonding vs the use
of cash reserves for future capital purchases and the paying down of debt.
• The Inwood water system will not be completed until later in 2017 so the model will need
to be updated to reflect that the City will need to continue to purchase water from
Oakdale through the end of 2017.
• The model needs to be updated for the recent policy changes impacting fees (early
connection incentive plan, longer special assessment repayment terms and allowing
existing residents to defer connection fees).
The Finance Committee recommended that the next version be prepared with preliminary year
end 2016 information which will be ready the middle of February 2017. A draft will be
presented to the Finance Committee at their March 2017 meeting.
RECOMMENDATION: It is recommended that the City Council accept the Financial
Management Plan for the Enterprise Funds dated October 11, 2016.
ATTACHMENT:
1. Memo from Northland Securities
2. Financial Management Plan presentation
3. Detailed Financial Management Plan Report for Water, Sanitary Sewer and Storm Water
Funds (aka The Enterprise Funds)
4. TKDA Report
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