HomeMy WebLinkAboutCC WORKSESSION 08012005City of St. Anthony
Work Session
August 1, 2005
6:00 PM Council Chambers
Sandwiches from Jersey Mike's available at 5:45 pm
1. Call to Order by Mayor
2. 2006 Budget Update /MM
3. Park Dedication Fee Report/ MM
4. Key Financial Strategies Update /M
October 4, 2005
7:00 PM
5. Strategic Planning Session on Wireless Technologies /KMS
Vinchow /Krause
07/15/05
St. Anthony Budget Schedule for 2006 Budget
March 14 005- Budget Work Session Discuss /Review 2006 Budgeting Goals
April 263 Public Hearing /Provide Residents with an Opportunity to have
Input in the process.
May _Iilly. City Manager & Staff Meetings to discuss /draft 2006 Budget.
Aug sf I Work Session to Discuss 2006 Budget (Department Heads Present),
1) Resolution passed setting Proposed 2006
Tax Levy and Budget
2) Resolution passed setting Public Hearing
and reconvening dates.
November 30, 2005
December 20 2nos-
City must conduct a public hearing, which cannot conflict with
Hennepin County, Ramsey County, Independent School District
#282 or the Special Taxing Districts hearing dates.
DecembprS 005: (1 s' Monday -Set Aside for Cities)
Public Hearing Date /approval of final 2006
Property Tax Levy and Budget.
Final Adoption will be set for the second Council Meeting of
December.
"'Please note: The public hearing must be held between November 30th and
December 20th. The City's initial ubl' h
Hennepin or Ramsey Counties Initial Hearing rDates, I.S.D• #282dInitial Heaari g Daday as
te or
Metro Special Taxing Districts Hearing Date.
MEMORANDUM
DATE: July 22, 2005
TO: City Council
FROM: Mike Morrison, City Manager
Roger Larson, Finance Director
ITEM: FINANCIAL PLAN — PROPERTY TAXES 2006
At our January 2005 goal setting, the City Council asked staff to develop a financial plan
to review alternatives to offset the imact of the 2006 tax levy. Those alternatives were
presented to Council at the March 14'. work session
At that meeting, Council established a goal to balance the 2006 - operating budget without
increasing the 2006 levy. The attached proposed operating budget totaling $4,177,500
($208,500 increase) represents a balanced budget without an increase the general fund
levy for 2006.
The proposed increase in 2006 operating expenditures represents a 3.5% increase in
employee wages, pension contributions and other related benefits, a $30.00 increase in
the employer health insurance contribution and additional costs for fuel, utilities and
inflation.
Offsetting the Impact without increasing the levy
1) Some of our current capital equipment revenue line items were restructured and
transferred to the general fund. They included:
➢ Lauderdale Police Contract
➢ Falcon Heights Police Contract
➢ Water /Sewer Transfer
➢ Water Filtration Interest
2) In addition, New Line Items were added:
➢ Liquor Licenses
➢ Communications Lease
These sources of revenue are considered permanent revenues that are available each year.
The transfer of the line items represents a permanent restructure of the annual General
Fund Budget operating revenues.
The following represents a review of the 2006 Levy /Compared to the 2005 Levy:
General Fund Levy (Operations)
Road Improvement Levy
Public Facilities (P/W — Fire Station)
HRA (Administration Levy)
Certificate of Indebtedness - Fire Truck
Tax Abatement Levy — Central Park
PERA Levy — State Increase for PERA rates
2005
2006
Increase
$2,488,357
$2,488,357
$ - 0-
$ 627,312
$
751,492
$ 124,180
$ 391,477
$
392,737
$ 1,260
$ 55,500
$
55,500
$ - 0 -
$ 89,600
$
88,100
($ 1,500)
$ 30,013
$
29,271
($ 742)
$ 7,500
$
7,500
$ - 0 -
$3,689,759
$3,812,957
$ 123,198
Also, discussed at the March 140' work session were additional alternatives to offsetting
the levy. After reviewing the alternatives, Council approved the recommendation to
decertify the Hellickson TIF District. The goal in this process was to add additional tax
capacity and offset the impact of the road improvement levy.
With the addition of the TIF tax capacity and other increases to our tax base, the City
should be very close to achieving its goal of keeping the increase in "2006 Property
Taxes" to a minimum while maintaining the current service levels.
Final analysis will be presented to the City Council when the City is provided with our
proposed tax rate and tax capacity numbers from Hennepin and Ramsey Counties. This
information is available the later part of October.
GENERALFUND
REVENUES
2005
2006
BUDGET
BUDGET
Property Tax - Levy
$2,488,357
$2,488,357
0.00%
Penalties, Interest, Tax Forfeitures
$3,000
$3,000
0.00%
PERA Levy (Rate Increase)
$7,500
$7,500
0.00%
Licenses
$12,000
$39,400
228.33%
Permits
$127,200
$144,400
13.52%
Intergovernmental Revenue
$214,700
$210,900
-1.77%
Contract Revenue (Lauderdale /Falcon Heights)
$688,043
$747,675
8.67%
Charges for Service (Fines)
$95,000
$92,500
-2.63%
Miscellaneous Revenues
$130,700
$131,268
0.43%
Transfers & Miscellaneous Revenues
$202,500
$312,500
54.32%
GENERAL FUND TOTAL REVENUES
$3,969,000
$4,177,500
5.25%
EXPENDITURES
2005
2006
BUDGET
BUDGET
Mayor/ City Council
$48,300
$55,400
14.70%
Public /Intergovernmental Relations
$22,700
$23,900
5.29%
Cable Franchise
$23,100
$24,300
5.19%
General Management
$82,600
$87,500
5.93%
Elections
$26,200
$30,500
16.41%
Finance, Insurance / Accounting
$233,300
$246,100
5.49%
Finance, Assessing
$43,500
$45,700
5.06%
Legal
$87,800
$92,200
5.01%
Engineering, Planning /Zoning
$2,700
$2,900
7.41%
City Building
$127,300
$134,300
5.50%
Civil Defense /Emergency Management
$47,500
$50,200
5.68%
Police Protection
$1,128,200
$1,186,000
5.12%
Lauderdale /Falcon Heights Contracts
$603,800
$634,000
5.00%
Fire Protection
$608,900
$641,300
5.32%
Inspections, Building /Plumbing /Heating /Health
$78,900
$83,000
5.20%
Animal Control
$4,200
$4,300
2.38%
Public Works
$435,600
$454,300
4.29%
Public Works, Maintenance /Repair Equipment
$130,100
$137,600
5.76%
Tree and Weed Care
$29,700
$31,400
5.72%
Parks
$150,600
$158,600
5.31%
Transfers to Community Services
$54,000
$54,000
0.00%
GENERAL FUND TOTAL EXPENDITURES
$3,969,000
$4,177,500
5.25%
Budget Increase $208,500
Levy Increase $ -0.
MEMORANDUM
DATE: July 22, 2005
TO: City Council
FROM: Mike Morrison, City Manager
Roger Larson, Finance Director
ITEM: PARK DEDICATION FEES
Based on discussions and a recommendation from Stacie Kvilvang from Ehlers &
Associates, staff conducted a comparison of St. Anthony's park dedication fees to the
fees charged by other cities.
Attached for Council review are the results of the survey for 24 metro communities. A
summary is as follows:
St. Anthony: Single Family $750 Unit
Duplex $650 Unit
Townhouse Development $500 Unit
Mobile Home $500 Unit
Apartment $350 Unit
Commercial None
Industrial None
Average per unit for 24 Metro Communities:
Single Family
$2,400 Unit
Duplex
$2,300 Unit
Townhouse Development
$2,200 Unit
Mobile Home
$ 800 Unit
Apartment
$2,100 Unit
Commercial $5,000 Acre
Industrial $3,850 Acre
When looking at the statistics, St Anthony's park dedication fees are the lowest in the
Metro area. The goal of our fee structure has been to keep our fees, charges and rates
competitive to what other cities charge. With that respect, it seems prudent that Council
consider increasing the established park dedication fees and implement a reasonable fee
for future commercial and industrial development.
Council does need to be aware that Minnesota Statutes requires that an increase in
dedication fees must comply with the "Nexus Test." The requirement of the Statute
establishes that a municipality must reserve park
related public purpose such as parks, recreational facilities �streets�oads, sethe fee
storm
water improvements and cannot be excessive beyond the scope of the intended
improvements. The Statute also prevents cities from redirecting or the intend
for other uses and the funds collected through dedicated fees must be used for their
intended purpose. g the funds
Based on St. Anthony's use of current park dedication fees the City is in compliance with
the Statute (100% of the monies are going to
the current fee structure is much lower than the fair arket Orlaverage fee charged
However,
In addition, staff contacted Jerry Gilligan from Dorsey & Whitney.
mgiven the amount that the City has paid in park improvements, the costs necessary to
maintain those Y He indicated that
fees, parks and our current fee structure the City can easily justify an increase
Recommendation:
Council discusses and directs staff to amend ordinance Section 1500, Subsection 12 (Park
Dedication Fees). A proposed fee schedule is as follows:
Single Family
Duplex
$1,500 Unit
Townhouse Develo
Mobile Home pment
$1,300 Unit
$1,000 Unit
Apartment
$1,000 Unit
$ 700 Unit
Commercial /Industrial
$2,500 Per Acre
Park Dedication Fees:
Single Family
Duplex
Townhouse Development
Mobile Home
Multi Family Aparment/Condo
Commercial
Intlustrial
St. Anthony
$750.00
$650.00
$500.00
$500.00
$350,00
None
None
Unit
Unit
Unit
Unit
Unit
Acre
Acre
New HOOe
$1,500.00
$750.00
$500.00
N/A
$500.00
$2.500.00
$2,500.00
Unit
Unit
Unit
Unit
Unit
Acre
Acre
Elk Rive
$2,800.00
$2,800.00
$2,800.00
N/A
$2.800.00
$ewit oo
$2,000.00
Unit
Unit
Unit
Unit
Unit
Acre
Acre
Prior Lake
$3,750.00
$3,750.00
$3,750.00
WA
$8,40D.00
KADD.00
$6,400.00
Unit
Unit
Unit
Unit
Acre
Acre
Acre
Antlover
$2,325.00
$2,325.00
$2,325.00
N/A
$2,325.00
10%
10%
White Bear Lake
Unit $1,000.00
Unit $750.00
Unit 8750.00
Unit N/A
Unit $500.00
Market Value $3,500.00
Market Value $3,500.00
Single Family
St. Cloud
$1,196.00
Unit
Shakopee
$4,632.00
Unit
Rosemount
$3,000.00
Unii
Ram
$2,200.00
Unit
Mound
$1,100.00
Lot
Duplex
Townhouse Development
Mobile Home
$792.00
$792.00
N/A
Unit
Unit
Unit
$4,632.00
$3,860.00
N/A
Unit
Unit
Unit
$3,000.00
$3,000.00
N/A
Unit
Unit
Unit
$2,200.00
$2,200.00
$2,200.00
Unit
Unit
Unit
$1,10000
$1,100.00
N/A
LoVOr l0 %of ValuelWnichever Greeter
Lot/or 10 %of ValueNMichever Greater
Unit
Multi Family AparimentlCondo
Commercial
Industrial
$792.00
None
None
Unit
Acre
Acre
$3,860.00
$6,277.00
$8,277.00
Unit
Acre
Acre
$3,000.00
$9,000,00
$5,000.00
Unit
Are
Acre
$2.200,00
$4,356.00
$4,356.00
Unit
Acre
Acre
$1,100.00
$1,100.00
$1,100.00
Lovor 10 %of Value/Whichever Greeter
Lovor l0 %of VelueNVhichever Greater
Lovor 1 0 %of ValuaNMichever Greater
Unit
Unit
Unit
Unit
Unit
Acre
Acre
Single Family
Duplex
Townhouse Development
Mobile Home
Multi Family Aparlment/Condo
Commercial
Industrial
Lakeville
$3,665.00
$3,200.00
$3,200100
N/A
$3,200.00
$5,940.00
$3,520.00
Unit
Unit
Unit
Unit
Unit
Acre
Ace
Ham Lake
52,100.00
$2,100.00
$2,100.00
N/A
$2,100.00
None
None
New Brighton
Unit $1,500.00 Unit
Unit $1,500.00 Unit
Unit $1,500.0 Unit
Unit WA Unit
Unit $1,500.00 Unit
Acre None Age
Acre Nona Are
Moole Grove
Unit
Unit
Unit
Unit
Unit
Acre
Acre
Cottage 3.000.00 Grove
$3,000.00
$3,000.00
N/A
$3,000.00
4% of Land Value
4% of Land Value
lelne
Unit $2,057.00 Unit
Unit 32,05700 Unit
Unit 82,05700 Unit
Unit N/A Unit
Unit $2,057.00 Unit
$6,050.00 Acre
$4,114.00 Acre
$4,500.00
$4,000.00
$4,000.00
N/A
$4,000.00
$7,500.00
$5,950.00
Single Family
9 Y
Duplex
Townhouse Development
Mobile Home
Hopkins
$1,00000
$800.00
$800.00
$80000
Unit
Unit
Unit
Unit
Moundsview
of Fair Markel Land Value
of Fair Market Land Value
of Fair Market Land Value
Unit
St. Michael
M' el
$2,075,00
62,075.00
$2,075.00
N/A
Unit
Unit
Unit
Unit
Columbia HelaMs
10%
10%
10%
WA
of Fair Market Land Value
of Fair Market Land Value
of Fair Mallet Land Value
Und
10%
10%
10%
N/A
Multi Famlly ApartmenVCondo
Commercial
Intlustrial
$80000
4% of Land Value
4% of Land Value
Unit
10%
10%
10%
of Fair Markel Land Value
of Fair Market Land Value
of Fair Market Land Value
82,075.00
92,0 000.0
Unit
Acre
10%
10%
of Fair Markel Land Value
of Fair Markel Land Value
Single Family
Duplex
Townhouse Development
Mobile Home
Multi Family AparhnentlCondo
Commercial
Industrial
Seven.
00
$4,632.00
$3,860.00
N/A
$3,860.00
$6,277.00
$6,277.00
Unit
Unit
Unit
Unit
Unit
Acre
Acre
Plymouth
Unit C stal
$1,000.00 Unit
Unit 51,000.00 Unit
Unit $1,000.00 Unit
Unit N/A Unit
Unit 51,000.00 Unit
Acre $1,000.00 Acre
Acre $1,000.00 Acre
AI erivllle
$2,500.00
$2,500.00
$2,500.00
N/A
$2,500.00
$7,500.00
$2,500.00
Unit
Unit
Unit
Unit
Unit
Ace
Acre
Centerville
$3,000.00
$3,000.00
$3,000.00
WA
$3,00000
$2,175.00
82,175.00
UnIVOr 10% of Fair Market Value of All Property
Dnll/griD %o /Fair Market Value of All Property
UniVor 10% of Fair Markel Value of All Property
Unit
UniVor 10% of Fair Market Value of All Property
Acre
Acre
$ 00.00
$3,400.00
$3,400.00
N/A
$3,400.00
$7,100.00
$7,100.00
6 -14
inspection
fee
19 1655.04 Planned Unit Development
$150.00
20 1650.02 Garage Setback Permit
$60.00
21 1165 Right -of -way management:
Registration Fee
$40.00
Excavation Permit Fee:
a) Hole
$125.00
b) Trench
$70.00 /100 lineal foot
(plus hole fee)
Obstruction Permit Base Fee:
$50.00 plus .05/lineal
foot
Permit Extension Fee:
$55.00
User Fee:
$20.00 .
Plus adjacent to Residential property:
$0.1375 /lineal foot
Plus adjacent to Commercial property:
$0.30/lineal foot
Degradation Fee
City's cost to return
-
structural integrity to
right -of -way
Delay Penalty:
Total penalty charge:
$60.00
(up to 3 days late)
Each day late over 3 days:
$60.00 plus
$10.00 /day
22 1500.12 Park contribution
Single family lot
$750 /unit
Duplex lot
$650 /unit
Townhouse Development
$500 /unit
Mobile Home
$500 /unit
Multiple family; apartment,
$350 /unit
6 -14
VirchOwKrause
Wonwny
April 29, 2005
Sent via email - kmoore(a)ci saint- anthonv mn us
Ms. Kim Moore -Sykes
Assistant City Manager
Saint Anthony Village
3301 Silver Lake Road NE
Saint Anthony Village, MN 55418 -1699
Dear Ms. Moore - Sykes:
Pursuant to your conversation with Cheryl Johnson of our firm, we are following up with
additional information on our firm and how we can assist you with your wireless network and
technology planning efforts.
Planning Workshop
We propose conducting a strategic planning work session with
selected Saint Anthony Village staff and elected officials. The
planning session will be designed to review applications that may
be enabled via wireless technology and their potential benefits.
During the strategic planning session, we will focus on:
• Reviewing wireless opportunities in Saint Anthony Village.
• Using wireless for public safety.
• Exploring applications enabled with wireless technologies.
• Understanding the current telecommunications
environment in Saint Anthony Village.
• Exploring perceived service and availability_gaps.
• Exploring fit of wireless with Saint Anthony Village's
overall connectivity strategy.
• Outlining potential next steps.
The starting point in
exploring wireless is
understanding new
applications that are
enabled by wireless
technologies and that will
transform the way
government conducts
business. Focusing on the
enabled applications allow
choices to be driven by
needs, not the
technology.
We will also provide educational information and insights regarding wireless and other
technologies in this session. We have conducted similar strategic planning sessions for
numerous other communities as they examine WiFi and other wireless solutions. We find that
sessions like this lead to clarity, purpose, and help to define the next steps in the planning
process.
Per your discussion with Ms. Johnson, the fees for conducting this session will be $1,500 to
cover our time and expenses.
Ten Terrace Court • PO Box 7398 • Madison, WI 53707 -7398 • Tel 608.249.6622 • Fax 608.249.8532 • www.virchowkrause.com
Virchow, Krause & Company, LLP
Certified Public Accountants & Consultants • An Independent Member of Baker Tilly International
Ms. Kim Moore -Sykes
Assistant City Manager
Saint Anthony Village, MN
April 29, 2005
Page 2
Business Plan Development
Following the work session, we will recommend the next steps to examine wireless opportunities.
One possible step is development of a Wireless Business Plan. For reference, we have included
a "draft" business plan scope in Attachment A. In refining the business plan steps, we will
incorporate the information and connectivity strategy plans derived from the work session.
Virchow Krause Experience
Virchow Krause has a combination of market assessment experience and technological
expertise. The Virchow Krause team has served similar municipal utilities in various capacities
over the years; therefore, our firm has insights to offer Saint Anthony Village that other advisors
do not have. Our team are experts in voice, data, fiber optics, wireless, and technology
planning, offering a unique mix of technical, financial, and planning resources. We will work
carefully, but quickly, to get this job done to meet your schedule. We have also included some
examples of recent project and work session experiences as Attachment B to this letter.
In addition, we offer:
• Independence – As a member of the Securities Exchange Commission (SEC) Practice
Section of the American Institute of Certified Public Accountants, we have successfully
passed all peer reviews, where independent firms review our work and practices. This
can give you the highest level of confidence of Virchow Krause meeting the latest
industry professional standards. Our ongoing internal quality control program is a critical
component associated with our ability to continue to provide the highest quality services
to our clients. You can be confident that our methods and practices uphold the highest
ethical standards and ensure complete independence.
• Commitment and Company Strength – Virchow Krause maintains a solid reputation for
providing high quality, consulting services to the public sector. Our Public Sector
Consulting Group works with governments and utilities exclusively. Virchow Krause is
the 13th largest public accounting firm in the country with more than 1,000 employees in
14 offices.
• Technology Understanding – Our experience and background in utilities and networks
will ensure that Saint Anthony Village will be able to review wireless solutions that will
meet its objectives now and in the future. Our recommendations will be unbiased and
independent assessments of both technology and vendors.
• Solid Solutions Based on Solid Research — Our team members have rich experience
in many areas of converged services and especially in wireless and other connectivity
services. We are very comfortable with return on investment (ROI) analysis, Monte -Carlo
simulation, and market gap analysis. We are good listeners and we've learned that every
utility has unique needs. We know, from experience, that all recommendations start with
a solid needs analysis. We will learn what features are considered critical and what
features are currently unavailable and desired. Our goal is to ensure that Saint Anthony
Village's end -users (internal and external customers) needs are met and job productivity
is enhanced.
Additional information on Virchow Krause and other services is contained in Attachment C.
Ms. Kim Moore -Sykes
Assistant City Manager
Saint Anthony Village, MN
April 29, 2005
Page 3
If this letter conforms to your understanding of our agreement, please sign a copy of the letter
and fax it to my attention at 608.249.8532.
We look forward to working with you and the scheduling of the workshop. If you have any
questions or need additional information, please contact me at 800.362.7301, ext. 2613,
tasp(o)virchowkrause.com; or Cheryl Johnson, at 952.351.4633, cliohnson(cDvirchowkrause.com.
Sincerely,
VIRCHOW, KRAUSE & COMPANY, LLP
Thomas Asp, Partner
TJAfjas
Attachments
c: Cheryl Johnson
i ##ttt# *F *Ftt#FF t #itt# *Ri#
Accepted By: c]
Date: 7 rM ®0
Connectivity Planning Workshop
For
Saint Anthony Village, Minnesota
August 1, 2005
9
VirchowKrause
&company
Ten Terrace Court
P.O. Box 7398
Madison, WI 53707 -7398
7900 Xerxes Avenue S., Suite 2400
Minneapolis, MN 55431 -1152
800.362.7301
virchowkrause.com
1. OVERVIEW OF WORKSHOP
2. STAFF INTRODUCTIONS.
3. RELATED EXPERIENCE ................................... ..............................4
4. STATEMENT OF QUALIFICATIONS AND EXPERIENCE ................6
ATTACHMENTS
A. FEASIBILITY STUDY SCOPE
Pq
VrchowKrause
&company
9
VirchowKrause
&company
The strategic planning workshop is developed to review applications and
services that may be enabled via wireless technology and their potential benefits.
During the strategic planning session, we will focus on:
• Reviewing wireless opportunities in Saint Anthony Village.
• Using wireless for public safety.
• Exploring applications enabled with wireless technologies.
• Understanding -the current telecommunications environment in
Saint Anthony Village.
• Exploring perceived service and availability gaps.
• Exploring fit of wireless with Saint Anthony Village's overall
connectivity strategy.
• Understand potential goals and objectives.
• Understand existing infrastructure and communication assets.
• Review potential alliances.
• Review potential next steps.
We will also provide educational information and insights regarding
wireless and other technologies in this session. We have conducted
similar strategic planning sessions for numerous other communities as
they examine WiFi and other wireless solutions. We find that sessions
like this lead to clarity, purpose, and help to define the next steps in the
planning process.
Following the workshop Saint Anthony Village may decide to examine
the wireless opportunity in more detail. A draft work scope of a detailed
study is included in Attachment A.
Your Most Valued Advisor vimhowkrause. c.m
IN
VirchowKrause
&company
The August workshop will be conducted by:
Thomas Asp, Partner, has been serving municipalities for over 20
years. Mr. Asp's experience includes wireless and fiber network
design, cable television system evaluation, as well as evaluating the
financial impact of projects on utility and municipal operations, and
providing expert testimony. He is recognized as an expert in evaluating
and offering recommendations regarding municipal broadband
communications systems. Mr. Asp has been actively involved with
telecommunication market research and feasibility analysis for over 10
years. In addition, Tom has 10 years of product management
experience in the Cellular Mobile Telephone, Automatic Meter
Reading, and Distribution Automation industries.
Tom earned a Bachelor of Science in Electrical Engineering from
North Dakota State University and a Masters in Business
Administration from University of St. Thomas - St. Paul, MN
Cheryl Johnson, Senior Consultant, has been with the Public Sector
Practice Group since 2003. Her experience includes consulting with
local governments and enterprises for over 20 years. She has expertise
in: broadband network feasibility studies; management of broadband
networks; cable television franchise development and negotiation; PEG
access development and review; VOIP telephone system
implementation/ management, and community needs assessments.
Cheryl has a degree in mass communications from Western Illinois
University - Macomb, IL
Following the workshop, in addition to Tom Asp and Cheryl Johnson, the
feasibility analysis team will include:
Lynn Nordin, Manager, has been active in the telecommunications
industry for over 30 years. Lynn has specialized in the design of all
areas of telecommunications including outside plant, fiber optic
facilities, central office equipment engineering and transmission
equipment engineering. He has extensive project management
experience in the deployment of telecommunications system's and is
experienced in telecommunications network operations.
Lynn attended the University of Wisconsin — Eau Claire and is certified
in project management by George Washington University / ESI
International.
Your Most Valued Advisor • virchowkrause.com
Bob Herbst, MBA, Senior Manager, specializes in
telecommunication system design, project management, competitive
analysis, market planning, market research, and new product
development. He has extensive experience consulting with and selling
to Fortune 500 and Fortune 1000 service providers and equipment
vendors. Bob has worked with service providers to review product and
service bundling and packaging strategies, reduce chum, and increase
revenues. He has directed major primary, secondary research (due
diligence) projects, focus groups, and primary research for new
software and hardware product development for VOIP and IP
technology firms. Bob also worked with start-up technology
companies to launch their products, build distribution channels, and
build relationships with prospective partners.
• Megan Steiner, Consultant, has been with the firm since 2004. She
provides key support for numerous market research, benchmarking, and
process re- engineering projects involving municipal utilities. Megan
has experience in quantitative and qualitative data analysis.
Mike Johnson, Senior Consultant has been active in the electric
industry for almost a decade. Mike has a vast array of experience in
preparing electric cost of service studies and rate designs. He also has
extensive automation experience from evaluation of AMR systems to
project management of installations. Mike has prepared and evaluated
business plans and cost benefit analyses for several cooperatives and
municipal utilities considering implementing load management and
AMR systems. His experiences also include developing the most
recent version of the Virchow Krause unbundling electric revenue
requirement and cost of service model that was used on nearly 20
studies in the past year.
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The Virchow, Krause team has experience in assisting communities like Saint
Anthony Village in analyzing and reviewing the existing telecommunications
and connectivity landscape in their community, as well as the development of
business models that meet identified needs and demands. Our process is
designed to identify which connectivity services residents and businesses desire,
what cost they are willing to pay, and what technologies are appropriate. Some
recent examples of communities where we have completed similar projects
include:
Moorhead Public Service (MPS) in Moorhead, MN was interested in
exploring whether offering broadband services was a viable option. After
completing a thorough study in 2002, we recommended that MPS should
not pursue offering broadband services at that time. In the meantime, the
technology available and the costs have changed. Our team conducted
another study in 2004 in which we researched the marketplace and
developed a business plan. MPS is now beginning an offering of wireless
high -speed Internet access to residents, college students, and businesses in
the community. Moorhead has leamed from and improved upon the
experiences of communities like Chaska, MN and Corpus Christi, TX in
offering wireless Internet access.
• Our team has also assisted the Pulaski Electric System in Pulaski, TN in
developing a fiber -to- the - premises (FTTP) business plan that includes the
preparation of business models, cost analysis, and probabilistic outcome
analysis. In addition, we have previously conducted residential market
research to assess the interest in Intemet, cable TV, and telephone services
in Pulaski.
We assisted the City of Sturgis Electric Department in Sturgis, MI with a
broadband wireless business plan. Our team has analyzed the possibility of
the City of Sturgis developing, constructing, providing, and selling wireless
broadband services (retail or wholesale) to businesses and residents. In
addition, our team previously conducted a market analysis for the need for
high -speed Internet and data connectivity for businesses located in Sturgis.
• Our team assisted North Aurora, IL with a commercial broadband
feasibility study. This study provides an analysis of current
telecommunications issues and opportunities in and around the community,
and develops recommendations and strategies designed to advance available
connectivity options.
• Virchow Krause was selected by Public Technology Institute (PTI) as the
firm to assist the organization in educating cities, counties, and other local
govemment entities on wireless technology and wireless business planning.
PTI serves as the technology advisor to the National League of Cities,
National Association of Counties, the US Conference of Mayors, and other
Virchow ause major government associations. Our team has been involved in the planning
&N and teaching of a number of seminars and conferences across the country on
company wireless and other technologies that are of importance to local government.
We are always happy to share our knowledge and expertise.
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In addition, we are in the process of performing projects for:
• St. Louis Park, MN — Wireless Internet Feasibility Study
• Woodbury, MN — Telecommunications and Technology Study
• Taunton, MA — Fiber -to- the -Home Electronic Assessment
• Dubuque, IA — Fiber -to- the -Home Business Plan
Vour Most Valued Adlisor • v irchowkrause.com
At Virchow, Krause & Company, LLP, our commitment is to help our clients
succeed in meeting their strategic goals.
Virchow, Krause & Company, LLP, a partnership, was established in 1931 and
today consists of over 1,000 associates in 14 locations. We are ranked as one of
the largest consulting and accounting firms in the United States. Our depth of
staff ensures that we will meet your financial and consulting needs, yet we
cultivate and retain the entrepreneurial mindset that all organizations need to
keep them fresh and focused on client service and in delivering innovative
ideas.
Virchow, Krause & Company, LLP is a partnership headquartered in Madison,
Wisconsin. Our headquarters are located at:
Virchow, Krause & Company, LLP
Ten Terrace Court
P.O. Box 7398
Madison, WI 53707 -7398
800.362.7301
You will be served by Virchow, Krause & Company, LLP's Public Sector and
Non -Profit Practice Group which consists of over 120 professionals. We
provide services to nearly 330 utilities and 330 municipalities nationwide. Over
the past three years, we have provided services to counties and communities in
26 states in the United States.
Included in this practice is a group of professionals that provide consulting
services to municipal utilities of all types throughout the nation. The specialized
focus of this Public Sector Consulting Group gives our staff the understanding
of the issues your organization faces and gives them the experience to find
effective solutions.
Independent - --
Services that our Public Sector Consulting Group provides to our clients
Review
include:
Independent - --
• Advanced communication business plans and feasibility studies
Assurance
• Market research
Independent - --
• Community needs assessments
• Competitive analysis and risk management
Recommendations
• Strategic planning
• Cable television franchising support services
• Electric unbundling studies
• Power supply evaluation and contract negotiation
• Cost of service and rate design for water, wastewater, stormwater,
FOR
landfill, and gas utilities
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• Assessing Automatic Meter Reading System needs and benefits
• Operational and organizational reviews
• Information systems analysis
• Customized workshop training sessions for management and board
members
• Human resources consulting, including analysis of employee benefits,
compensation and pay- for - performance based systems
• Utility valuation services
Our Public Sector Practice Group is required to maintain complete
independence in our evaluations, analysis, and reporting. This assures our
evaluation will be far, objective, and intended to serve the best interest of your
organization and the taxpayers in your community.
Virchow, Krause chooses not to offer construction services, nor do we
endorse equipment and network vendors. This is a critical component that
separates us from other firms and will assure management that we will identify
all pertinent issues involved in this venture.
As a member of the Securities Exchange Commission (SEC) Practice Section of
the American Institute of Certified Public Accountants, we have successfully
passed all peer reviews, where independent firms review our work and practices.
This can give you the highest level of confidence of Virchow Krause meeting
the latest industry professional standards. Our ongoing internal quality control
program is a critical component associated with our ability to continue to
provide the highest quality services to our clients. You can be confident that our
methods and practices uphold the highest ethical standards and ensure
complete independence.
If you would like more information on our services, articles and industry
involvement, please view our website at www.virchowkrause.com.
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Attachment A
Scope of Services
Wireless Internet Service Feasibility Study
The V rchow, Krause & Company, LLP (Virchow Krause) team will conduct
the feasibility study by executing the following steps:
1. Conduct an On -Site Strategy Session (The majority of tasks under this step
will he accomplished in the workshop.)
Our project team will meet with Saint Anthony Village representatives to
discuss project objectives necessary to complete the study. Specific discussion
points may include:
• Establish standard terminology to be used in the project.
• Understand the goals and objectives of the studies and research
methodology.
• . Define the drivers for going forward with this project.
• Review information analysis procedures and required resources.
• Review the scope of work to be performed, develop an appropriate
timetable, and discuss any changes to the Scope of Services.
• Define any existing community connectivity plans or project analyses
completed or underway.
• Review the identified stakeholders and potential required services.
• Review project schedule and key milestones.
• Brainstorm on community partner ideas.
• Understand existing Saint Anthony Village infrastructure, if any, such as
fiber, water towers, and lamp posts.
Z Conduct Market Research
Our research program will produce important insights for Saint Anthony Village
with regard to the region's connectivity environment, including, but not limited
to:
• What types of connectivity and broadband service do residences, business
and public sector customers currently use? And for what types of
services, systems, programs etc.?
• What do they see as the limitations of their current situation?
• What additional capabilities are they currently interested in adding? In
order to do what? For example, is their goal faster data transfer, more in-
depth data transfer, etc.
• What are their expectations for their current and future high -speed needs
and how well does the current provider meet those needs (Gap analysis).
• How aware are respondents of current high -speed options?
• Considering future needs, which of the products and services do the
customers have plans to add in the next year or two?
• Considering future needs, how likely would respondents be to purchase
communications services from new providers if they were available?
Support and wholesale infrastructure utility?
• With demographic and some psychographic questions answered for the
various populations — residential, business and public sector — an in -depth
analysis will be possible.
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Methodology
Data collection methodology for this market study will include randomly
sampled surveys of residential and business decision makers. The interviews
will be conducted by telephone for residences, and by written surveys for
businesses. We estimate that each survey will be designed to be approximately
15 minutes in duration.
Survey Instrument
We will develop all survey instruments in collaboration with the Virchow
Krause team and Saint Anthony Village. The surveys will be scrutinized for
objectivity and for their ability to gain answers to all questions at hand. After
the surveys are approved, we will move to field- testing.
Field Test
Field- testing is standard practice at Virchow Krause. We will plan to conduct a
small sample field test (for telephone surveys) to ensure that the purpose of the
surveys are clear, that the questions are clear and unbiased and the mechanics of
the survey are smooth. Once we complete the field tests we will make a report
on any recommended changes prior to continuing data collection. Pending input
from the clients, modifications to the survey instruments will be made,
researchers will be retrained on the modified instruments, and actual data
collection will then begin.
Data Collection
Telephone interviews will be the data collection method for the residential.
Trained interviewers in a supervised setting using a computer- assisted
telephone- interviewing program will conduct all interviews.
The written surveys will include postage return, and be designed to allow early
navigation.
Sampling Plan
We will conduct a random sampling of Saint Anthony Village residences to
obtain 350 responses. We will make three or more attempts on each contact
randomly reached. Computers will record the call dispositions so that we will
have a statistical record of attempts, completes, refusals, etc. After the entire
sample is gained, analysis of the data will begin.
Each identified business (approximately 300) in Saint Anthony Village will be
mailed a written survey.
Interview Selected Users
We will conduct personal interviews with up to ten (10) representatives from the
city department, school districts, medical, and other institutional users in Saint
Anthony Village. These users may have significant unmet needs, therefore,
determining their requirements is important. Given this, it is not recommended
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to solely rely on a survey, nor to solely rely on interviews to estimate the
market potential. Data gathered in this stage can be further leveraged at a later
Virchow Krause
time for marketing purposes. Results will yield qualitative data.
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Your Most Valued Advisor 9 virchowkrause.com
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Analysis of Data
Upon completion of the data collection processes, we will conduct a thorough
analysis of all data and create an in depth report of findings, conclusions and
recommendations for application of the findings.
Our general analysis will focus on discerning patterns and trends characteristic
of the total sample. In addition, we will individually examine any subgroups of
interest (e.g., demographics) to illuminate areas of similarities and differences.
Statistical tests appropriate to the research questions and format of data will be
used to identify significant relationships between variables and significant
differences between subgroups. We will also code and tabulate open -ended
responses.
Reporting Research Results
Virchow Krause will synthesize all studies to yield the findings, present
conclusions and make recommendations for future courses of action relating to
current and future demand for telecommunications and broadband services in
this market area. We will prepare a complete client package for every study
conducted that includes findings, condensed conclusions, and a full set of
recommendations for a wide range of management, marketing and
communications strategies.
We find it can be helpful to make both preliminary and final presentations of
findings, in case additional questions arise from the initial meeting that can be
explored through alternative forms of analysis. In addition, we will be available
for consultation and insights after each study is completed.
3. Perform a Competitive Assessment
We will document the accessibility, type, capacity, and use of advanced
connectivity services in Saint Anthony Village.
• Develop list of current providers including generic coverage areas and
costs for services provided.
• Determine location, condition and type of current infrastructure access
points.
• Identify providers of telecommunication used by the residential and
small business markets (phone, video, and Internet access).
• Identify the local offerings of the existing CATV, Internet, and
telephone providers. Review the pricing of current service offerings.
• Identify providers of high capacity transport services (TI and above) in
the region.
• Identify the current service offerings of the telecommunications
companies serving the high capacity transport needs of businesses in
each region.
• Perform a comparative evaluation of the incumbent systems, with
available data, to determine its capability of meeting the broadband
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needs of the area.
Service characteristics (speed, other)
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Monthly recovery costs
- One -time costs
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Limitations and issues
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• Assess competitive environment and customer satisfaction.
• Understand community ties and loyalty.
Provide a comparative analysis of the offerings between companies
providing the same type of services.
- Nature of services, including speed
- Monthly recurring costs
- One -time costs
Provider's likelihood of success
4. Conduct Conceptual Network Design and Costing Review
Virchow Krause will look at a variety of wireless solutions (Wi -Fi, WiMAX,
Phased Array, BRS, EBS, and MMDS) and the tradeoffs of cost and
performance. In addition, the network models can be applied to the business
case to assist in determining which approach best serves the needs of Saint
Anthony Village in the long -term. This allows Saint Anthony Village to make
an informed decision on what network to pursue.
A review of advantages and disadvantages of the technologies will be provided
in this step. In addition, we will provide an estimate of the number of nodes
required to provide full coverage of Saint Anthony Village. We will also
provide backhaul requirements based on both wireless and fiber transport and
the topology of Saint Anthony Village. The results of this step will provide a
conceptual high -level design and projected implementation costs for the
involvement models identified. This conceptual design will include installation
requirements and costs.
S. Assess Operation Issues
Plans will be inclusive for a phased build out, beginning with internal needs and
progressing with recommendations for the phasing in of the remainder of the
system.
We will also review operational and other costs associated with the project that
can directly impact the feasibility of the project including:
•
Staffing levels, associated benefits and salaries
•
Billing issues including development and interface with existing
systems
•
Network management based on type of network
•
Legal and consulting fees
•
Business initiation costs
•
Franchise expenses
•
Network maintenance and insurance
•
Pole attachment and/or Right of Way access and fees
•
Make ready costs
•
Marketing
•
Office expenses
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•
Facility expenses (lease vs, purchase)
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These issues will be discussed in the report and quantified in the cost/benefit
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analysis.
4
6 Provide Insights on Financing Options
It may be possible and essential for Saint Anthony Village to receive a grant to
help assist in the costs of establishing an advanced communications business.
We will provide an overview of potential grant sources including:
• State and Federal advanced communication initiative grants
• Corporate and foundation grants
• Home Security project grants
• Education grants (FCC's a -rate etc.)
• Other
In addition, how Saint Anthony Village obtains authorization to enter the
business will impact the various financing alternatives.
In addition, we will present a range of financing options and their impact to the
business model.
• Revenue Bonds
• Revenue Bond/Letter of Credit
• General Obligation Bonds
• Special Condition Loans
• Vendor Financing
• Equity Partners
• Other
Grants typically require filing in the 4th or I st quarter of each year.
7. Outline Potential Partnership (Alliance) Opportunities
Alliances will be sought that may foster the development of connectivity
services and improve the overall benefits, enable new business models, and
encourage stakeholder alternatives.
We will review the advantages and disadvantages of various forms of
partnering, how it could be done, with whom it might be done with (names of
potential partners if available) and estimated costs and expectations of both
parties in a partnership mode. These relationships can lower the cost of
constructing the infrastructure and offer expertise that can assist Saint Anthony
Village in meeting its goals and objectives. Potential alliances include
Competitive Local Exchange Carriers (CLEC's), Internet Service Providers, and
other municipalities.
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8. Outline Business Models and Develop Cost Benefits Analysis
From the results of the previous steps, we will provide insights and
recommendations on the appropriate business models to address the identified
needs.
Potential business models may include:
• Internal Services Network which supports public safety and other needs
• Retail business which includes staff Help Desk and ISP Hosting
• Modified Retail which has minimum staff and outsources Help Desk
and ISP Hosting
• Open Access Network (allows multiple providers to deliver services
over the infrastructure)
• Hybrid Open Access Network — Selected business "partners" are
sought to deliver retail services over the infrastructure
• Encourage private providers to offer lower cost service through select
infrastructures
Included is a review of any opportunities for partnerships with both end users
and service providers. Our recommendation of approaches will be based upon a
balance of the identified opportunities and risks, economic developed benefits
and the likelihood of success.
We will prepare a cost/benefit analysis, which will include pricing and market
penetration assumptions for broadband Internet, specialty services, and other
identified markets. Our cost/benefit analysis will also provide working capital
projections.
In addition to providing cost/benefit analysis for individual service offerings, the
model will include an overall analysis for viable potential services detailed in
this proposal and identified in the market research.
The financial analysis will leverage the results of the market research
and provide:
- Sensitivities of key assumptions including, but not limited to:
• Market penetration
• Pricing
• Tiered revenue structures
• Operating fees
• System construction
• Staffing levels
Base, best, and worst case analysis.
The cost/benefit analysis will follow accounting standards and will not rely on
Incross - subsidization or off balance sheet debt to skew results.
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The analysis will also provide schedules that detail:
• Operating income and cash flow
• Net present value analysis
• Subscriber revenue by service
• Subscriber revenue by customer /customer class
• Debt service analysis
• Reserve fund requirements
• Uses and sources of funds
• Operating expenses
• Operational savings
• Depreciation summary
• Projected construction costs summary for network, hardware, buildings
and other equipment
• Return on investment (ROI)
Additional appendices for each service will further analyze the costs and
revenues associated with the project.
One of the most critical components of a financial analysis is to determine the
impact that varying assumptions will have on the project. We will perform a
sensitivity analysis of the factors used in the cost/benefit analysis. The
sensitivity and breakeven analysis will assist the city in assessing the downside
risks of the project. For example, if the analysis assumed a 35% market
penetration for Internet, what would occur if the penetration were reduced to
250/o? What happens if Internet pricing is reduced 100/o? 200/o?
Our recommendation
This portion of the analysis will quantify the breakeven point of the project; i.e.,
at what point will this new venture recover the project's capital costs and
will be based upon
provide an adequate retain to Saint Anthony Village. In addition, this task will
use the Monte Carlo simulation as stated in our Statement of Qualifications
what is best for Saint
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Anthony Village and
9. Provide a Schedule of Activities & Tasks
thee/
We will discuss the preliminary steps that will be necessary to initiate the
citizens.
recommendations.
10. Develop Report and Recommendations
Our recommendations will include:
Your Most Valued Advisor • virchowkrause.com ii
• What is needed?
• What is doable?
• What is practical?
• What alliances would enhance community objectives?
• How public - private "partnerships" might asset the community.
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We will provide Saint Anthony Village with one (1) written copy and one (1)
electronic copy in .pdf format on CD of the draft written report documenting all
of our findings and recommendations including an executive summary. Once the
draft report has been reviewed and approved by management, Saint Anthony
Village will be provided with one (1) hard copy of the final report and up to
twenty (20) electronic copies in .pdf format on CO.
We will also conduct an in- person presentation of our final findings and
recommendations in summary form.
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