yes is uh council member thorson here council member peterson councilmember wong here councilmember cole here mayor furlong here columbus president motion adopt the agenda so moved your honor by councilmember peterson second by councilmember thorson any discussion not all those in favor signify by saying aye aye opposed the agenda is adopted and i'll turn it over to uh city manager stark thank you mayor furlong and council members on tonight's workshop the first three items are related to finance in the city and so i would ask finance director dan winnick to kind of shepherd all three of those forward for us thanks dan thank you senator sydney welcome thank you mayor council members i'm excited tonight we've got some financial uh information that we're going to present today um the one that we've all been waiting for our annual audit exciting i think you're gonna you're gonna see that uh one that the financial position of the city has improved both in the general fund and our enterprise funds um also i think you're going to see that management has taken a stronger hand on some of our deficiencies that we've had in the past yet we're still not quite there we're making some very good improvements and we still have some more improvements to to go forward part of that i want to give recognition to this the city council in one in passing a new purchasing policy in the fall of last year and two in this year in adding a different type of position in the finance department that is going to allow us to be able to implement some more segregation of duties that are vastly over needed so with that i want to introduce jackie heagle from mmkr the auditors i do want to say this was a wonderful experience i've been audited and i can't tell you who audited me in the past because we're a public forum but i i do want to say that i looked at this as a wonderful partnership she has a very very strong team she is an exceptional individual herself she brought together a wonderful team with robert and phillip the finance team received them very very well did not feel intimidated by them at all it was pretty much an open book all the way through it i think we learned things from them and i'm going to turn it over to jackie and let jackie kind of take us through some of the added and the added findings welcome jackie don't feel too intimidated right now well thank you for having me tonight as dan mentioned i am here to present the audit for the year ended december 31st 2021. you should have in front of you a few documents the annual comprehensive financial report which is a city-prepared financial report within that is our independent auditor opinion then there's a separate smaller document called a special purpose report that has separate audit opinions on the internal controls over financial reporting and the legal compliance and then lastly the management report which is our mmkr document and that is the document that i will be walking through tonight i believe you did receive a fort document a corrective action plan that was a city prepared document that dan had prepared so we will be walking through the management report tonight though if you have that in front of you and feel free as we walk through it you can stop me along the way or you can wait till the end too whichever you prefer so starting on page one of that mmkr management report i like to talk just starting out at the top of that audit summary we talk about as auditors our responsibility under auditing standards and with government auditing standards the city is responsible for all the financial information that goes into that annual comprehensive financial report as auditors we issue an opinion on that financial report noting that the balances are fairly stated and then as also as part of our audit you know we're issuing opinions with government auditing standards and with the minnesota legal compliance so the office of the state auditor issues a legal compliance manual every year with specific statutes that as auditors were required to test for so we don't test every statute we test the one specifically that the osa is requiring us to test one item i'll note that's a little different this year comparing the previous year is your city did not have a single audit so that's when you have federal expenditures in excess of 750 000 there's a separate audit of just the federal dollars so if you remember last year the city had the coronavirus relief funds so there was a separate audit of those dollars in the current year the city received some of the arpa funds but those were all unspent in 21 and going to be spent in a future year so those funds will be audited in a future year when they're spent so in your financials you've gotten the cash and it's unearned revenue but you have a couple years to still spend those dollars so in the middle of page one there's the audit opinion and findings so the first bullet there we know we issued an unmodified opinion or that's known as a clean opinion on the city's basic financial statements as part of our testing of the internal controls over financial reporting i did have two findings to report we noted as significant deficiencies to give you just a little background the level of findings of material weakness is a more severe finding a significant deficiency is the lesser of the two so both of these we noted as significant deficiencies the first was with segregation of duty duties just due to the turnover in city staff throughout the year and being down in the accountant position there's areas that i feel could be strengthened and improved i think it's areas dan and i have talked individually you know about i think the city you know eventually adding a position back and kind of restructuring or re-looking at the finance department that would help improve some of the controls throughout the city moving forward the second comment there is with the city policies and procedures so as many of you are aware the city has various written policies and procedures you know various ones so during our testing we did follow up on some of the credit card transaction testing verifying that the city was in compliance to verify if the city was in compliance with the policy we still noted that there were certain purchases that lack the invoices and supporting documentation so you're seeing that again as an internal control deficiency but the one comment i would like to say is that this was very much improved from last year i don't have the exact number in front of me i think dan did and he'll comment on it even since audit and getting this information i believe the city might have even gotten more of those recent receipts in but at the time we had to start moving forward to finalize the documents there is still about 20 or so missing 15 to 20 that we're still missing and like i said dan can probably follow up as we keep moving through on some of the ones they receive then but an area that we still recommend you know the city needs to keep working on obtaining all those receipts each month and following up with individuals and verifying you know even if credit cards need to be turned off or what the policy and procedures are moving forward if the receipts aren't obtained the next bullet there you'll note we did not have any instances of non-compliance under government auditing standard and then lastly like i said we issue an opinion on compliance with minnesota state laws and regulations we did have three comments to note there the first is with claims and disbursements and you also saw this comment last year local governments are required to pay invoices within 35 days of receipt of the goods or the services and there were six of the 40 disbursements tested that were not paid within that 35 day payment period in the current year the second was with broker certifications and just annually your finance department should be obtaining a broker certification form from all the brokers prior to doing any investment type transactions this is an area we're going to look into a little more but we do believe just due to turnover and city staff that it just one of the certifications we couldn't find during the year as part of the audit can you explain that just a little bit more what does that mean so any if we do any buying from a broker we need certificates from there's a office of the state auditor requires what's called a broker certification form that the city fills out a portion of it and then your broker has to sign off saying that they are going to comply with the investment statutes the minnesota statutes that you're going they're going to invest within you know what minnesota statutes requires that local governments can invest in so they're signing off on that and then the city should be keeping those on hand and so for all your for your brokers which i can't remember if you have three or four two okay so one of them we weren't able to find and like i said we believe due to turnover and staff maybe it was obtained but i know the city is working to make sure it's obtained for the 22 year i just assume that if you're going through a broker they're licensed and everything so we have to hold on to that certificate you do and there weren't any investments that were improper so let me clarify that so all your investments were proper there was no concerns with that but there's a certificate that the state auditor requires you to fill out and hold on to with their signature sure yeah so that that certification does two things we give them our investment policy which you have adopted that is in compliance with the state statutes in addition it can have some other city different thresholds that are in there they're given that information we sign off that we've given it to them so they are saying that they have received it and that they will comply with the state statute in our investment policies and so the one that we do i'm going to say over 90 percent of our investments we have could not find the other one um and so you know whether it was an oversight in between you know because they're they're done at the beginning of the year and then the last comment there relates with the credit cards so we've already discussed it it just kind of hits you in two areas it's not following the city policy which results in a significant deficiency internal controls but it's also a minnesota state statute so that finding hits you in two areas so moving on to the top of page two then every year as part of an audit we're required to follow up on any findings in the from the prior year audit so any findings you had last year we go through and we follow up on all those there was one that was cleared that i wanted to make sure and touch base on and that was the quote finding the quotation finding that the city received in the prior year so minnesota statutes require when you're contracting for items between 25 000 and 175 thousand you either need to do it based on sealed bids or based on quotations and obtaining two or more quotations and keeping those on file so for one of four contracts tested in the prior year that was not followed for all of our testing in the current year we did not have any issues so that was cleared for the 2021 audit the other items on page two that i'll walk through these are just some other observations and recommendations coming from me as an auditor these are not necessarily findings just items i want to point out some recommendations for the city every year i just kind of talk through individual fund deficits so there are some funds that have like a negative deficit position at year end so at the year end december of 2021 there was three special revenue funds that had deficit balances those were all in the tif funds and that was a total equity about 4.2 million there was one capital project fund that had a deficit of about 1.7 million that's the msa fund a lot of that one is due to the city advanced funds in the prior year so you advance future allocations so the accounting for that is that you can only recognize revenue based on your current year allocation even though you cash flowed funds in advance so over time that will get eliminated based on your future allocations and then lastly there was the one enterprise fund with the deficit the fiber optic fund so the three special revenue funds with the tax increment district i just want to emphasize too just the importance of the adequate planning and projecting and monitoring those tif funds so future you know with the development there should be future increments coming in for those deficits so just making sure the city is monitoring those also with individual fund deficits the city did make progress on those in 2021 so you'll see you know some of those deficits are smaller deficits on top of i believe there was two internal service funds that had deficits at the year end 2020 that were improved to put them in a positive position at the end of 21. the second observation there is just the fiber optic fun that's something that has just been carried forward from several years it's the same comment that's in there just watching that fun it does have the deficit in that position i believe the city over the last couple of few years has made some small improvements where you're seeing you know a small improvement in that fund every year but we still just want to point that out we're hoping you'd fix it so the third bullet you're seeing there is the deposit in escrow reconciliations this is the same comment that you've seen the last couple of years we still recommend that the city you should be as a city doing some reconciliation and tracking these escrow and deposit reconciliation so all the ins and the outs that are coming as you're collecting the money and as you're having to pay them back out there should truly be a reconciliation you know by vendor coming in and coming out that ties to those liability balances at year end that you know as part of the audit you can hand over but also that you have a tracking mechanism and process and then the last comment there i think this is just a good reminder that i like to point out like i said it's not a finding just good reminder and recommendation just with you know the city has seen a lot of development in recent years the office of the state auditor does provide some best practices on change orders and contractors bonds just making sure that change orders are being approved by city council and then considering whether if you do have any significant change orders whether you need to be changing any of those performance or payment bonds that go with the projects so once again not any issue that we had a finding or anything on but just with all the development i'd like to just bring it up as a good reminder and recommendation for the city is there any specific comments or findings maybe i'll ask at this point these this first part is kind of the compliance any comments we have and then i'll move forward into the financial results of the city any questions for jackie go ahead well i mean sorry so the credit cards you looked at every single credit card transactions for the year not a sample so for the credit cards we did pull all 12 months of credit card statements to verify for all 12 months was there for any transaction was there a receipt how many transactions were there i don't have that number in front of me but we can get you that maybe there were 194 transactions for 2021 at the end of the audit there were 20 um missing invoices subsequent to the in subsequent to the audit i have documentation on nine of those so everything from august of 2021 going forward hezbot is in compliance and there's 11 receipts that are outstanding and those are from former employees of the city okay so current and former employees do we have a signed credit card user agreement from those employees we do for all current employees i can't speak to if there are on record for the past employees uh and the reason i'm asking is just because you know last year this was a huge concern and we were kind of sure that it was going to be resolved and it's troubling to hear that there's still some of these things and i'm looking at the credit card user agreement and you know part of that it says you know you're acknowledging that you've read and understand the purchasing policy um and if you well where's that part oh basically says that if you uh if you're not gonna follow it you're gonna reimburse the city and so we've we have not had any discussion from last year's findings about those unresolved credit card purchases that are still missing and how we're going to deal with that so i don't know if there's you know obviously we have to keep going with this presentation but you know at what point are we going to have discussion about that because we have not had discussion about the last year's findings that's why i'm talking about now because it's a workshop and we're being asked to ask these questions so i don't know if we're directing that towards city manager and your thoughts and how do we resolve this well i i i um council member thorson i agree this this isn't proof from where it was at um the reason why i answered the way i entered so from august of 2021 in current we have we have documentation for everything so your question on the former employees i can't answer whether they signed an agreement or not that's something that'll look to see if we can find if that if that agreement is in existence and there was an agreement that they should pay for anything i think is where you're going on a personal basis or reimburse the city for any purchases that if they can't find if we cannot if they cannot document that purchase that's something we can have a discussion but i think the first part is we're going to end up having to look to see if there's existing agreements i don't know if the policy stated in whether it was followed that part of it was followed i was not here at that point in time but i do know that since that everybody does have an agreement that's signed we have it in record and at this point in time since i joined the city we do have documentation for all the credit card purchases yeah and i just want to so there's so there has been improvements and and and so i i can't correct everything that's happened in the past i think we're moving in in the right direction um but we definitely will look for those and all the purchasing policies have been modified but it was originally adopted for the last adoption that i'm looking at was august 4th 2020. so you know i would imagine that we should have had anyone who has had a credit card we should have on file a signed you know agreement that page with the it's called the credit card user agreement which again states that they acknowledge they've read and understand the policy and they're going to follow and if they fail to follow they need to reimburse the city and i you know this so that's my question is that do we intend to follow up on that and if we don't we should have discussion on why and if it's because we just don't feel it appropriate why do we have it in the policy and then the the segregation of duties quite you know that's just that's been a uh identified issue i think for us as long as i've been on and i think you can attribute that to the size of our city certainly there's been a lot of turnover we're on our third finance director and was it been five years so i think that's just something we're gonna continue to struggle with but do we have any thoughts or plans that are in place that you might be able to share with us to help alleviate this pro concern ongoing concern yes uh absolutely so i think jackie and i have discussed this i think two of the areas that that are probably of more of concern are both accounts payable and payroll and both of them have since i've been here have fallen into one individual's hands um and that's where with this restructuring that's where the checks and balances are going to be brought in and the segregation of duties where the process i'll take payroll whether processing of payroll itself or the actual issuing of the checks will not be done by the person who is entering that information nor has access to a vendor record or an employee record so though we have a new employee beginning on this upcoming monday so we'll start to train that person into on the utility side there's a utility individual that has been doing some of the accounts payable we've been training that person and will take over a part of jackie's responsibility jackie has moved up in classification and she'll be playing more of the oversight role on the encode system which is our financial system we will make some changes and who has authorization for certain things right now because she's been doing the function she has basically from a to z no we do have a lot of checks and balances that are in place i review each and every single payroll and i i review each and every single accounts payable i for an accounts payable i go out and i look at the vendor record to make sure that it matches the invoice i make sure that the invoice was actually approved on laserfiche by the appropriate person meaning a department head i review the account codes that are given onto it the dollar amount so we have checks and balances in place yet from a systematic standpoint we shouldn't have somebody having access a to z because something could go wrong and we want to prevent that and so yes we do have things that are in place it'll probably take us you know let's be realistic if we have somebody coming in on monday it'll take us probably a month month and a half to get that person up to speed they'll be kind of doing dual kind of purposes before we can put them totally into the accounts payable and payroll side to it i would i would say that um we're probably about two months two and a half months out from from being where i would like to see us at in those two areas because he already addressed the brokerage certifications and that just seems like it's a documentation oversight or maybe we do have it here somewhere it's just stuffed in a file folder that no one knows where it is but the the claims and disbursements and we're obligated to pay bills state statutes 35 days you said you tested 40 some random randomly pulled 40 and six of them weren't why why is that happening is it is it a particular type of transaction that's occurring or what can we can we get some additional detail into why that's happening well i can't speak to exact points of why it's happening for sure i think some of the contributing factors to why it happens is that we on basically on checks they come to the city council twice a month to be approved um so if there's like after this after tonight for the city council there will not be another city council meeting for 21 days approximately you've got 35 days per statute to pay a bill if the department head hasn't approved it i'm just going to say it's already been out they have it's been out there for 20 days they haven't paid it um we got 21 days to a city council that's 41 days we're over the 35 day limit that's part of where the city manager mr stark and myself have had the conversation virtually from the day that he came in that we would like to be utilizing the or his authority of using early release in other words we would actually like to and i'd like to implement it when i make the changes for the accounts payable of issuing checks every week i think that will greatly reduce this amount city council will still have the final approval on all you'll still get all your same reports i would just like to be able to speed that process up i think that'll greatly cut down the 35 day you know factor to it where i came from in ramsey county checks were issued three times a week so it's just i think part of it the frequency of of of the check runs that are being done currently today again even in ramsey county everything was always given to the county board same as a city council jack you do find that kind of is it unusual or is it pretty typical for the city our size to have the claims and disbursements i mean just what he just said i mean we got three weeks we're almost where council is not even meeting so i don't want to downplay by any means but i would say this is the most common finding in our local government audits whether we're talking schools or cities probably like you said somewhat due to the process so it is a common finding but um if the city could look for ways to improve it like dan's saying or you know to modify anything you still have to follow state statute of the 35 days if i could just add a couple of things as uh director winik noted in our next city council meetings in three weeks but even beyond that the finance folks have to get the claims package put together and get to jenny to get in the packet um you know usually the the thursday before um tonight for example so there's another five days so now we're at 26 days they probably i think they like to get it done a day or two early from that to run it by dan to do their internal stuff so even with these city council meetings that are three weeks apart it is very difficult the other thing i would say is you know i'm guilty of this one myself that um you know our claims for a new employee our claims numbering system um on the everyday stuff is pretty simple uh the claims numbering system on a payment for a construction project is very complex to me and so when i get these claims it might take me a few days five days to kind of bird dog the correct coding for that claim and i'm sure that as time goes by it will take me less and less time but as we've talked about we've had a lot of turnover and so there are a lot of new employees trying to figure out how to submit these claims okay well i appreciate the response my question was just why is it happening thank you for answering i'll just reiterate that it's state law we pay our bills within 35 days and i hope that we can work towards accomplishing that so that next year this is no longer a finding i i do want to add uh council member thurson that's my intention thank you all right we'll keep moving through the management report then moving over to page five i'm going to skip ahead a couple pages if you're following along the graph on page five there shows a graph of the taxable market value of the city for the past 10 years i'll just note that for the 2020 year your city's taxable market value was up about 10.7 percent and then another 8.8 percent for taxes payable and twenty one and the graph you're seeing there is similar to the graph that every other city looks like so no unusual trends going to the next page top of page six uh that's a graph of the tax capacity for the current year 2021 you're seeing an increase of about 6.6 percent and then at the bottom of that page we show the average tax rate for the city of north st paul you know broken down by the city county school and any special taxing authority so for the 2021 year you can see the total tax rate went down to 130.6 and you can see that the city portion is slightly down in the current year moving forward onto page seven this table here is a snapshot of the governmental fund change in fund balance so this is looking at all the city's governmental funds so that's your general fund any special revenue funds debt service funds and capital project funds now the top part of that table shows up by classification of fund balance so that's your non-spendable your restricted committed assigned and unassigned dollars and then the bottom shows it by the three major funds the city has with all the non-major funds combined into one row so for the 2021 year the city ended with a total governmental fund balance about 10.1 million up about 490 000 from the prior year a lot of that is in the general fund the city saw improved financial condition in the general fund which was up about 844 000 this year and we'll touch base specifically on the general fund as we move forward here the next couple of tables i'm going to touch base on on page 8 it's a table of the governmental fund revenue per capita so we do have some statewide average it's from the 2020 year the statewide information is looking at the city of north saint paul we have three years of information for the 2021 year the governmental fund's revenue per capita was the 941 dollars per capita that's down about 179 dollars from the prior year a couple areas that i'll touch base on majority of that change is in the intergovernmental revenue line which is down about a hundred and eleven dollars per capita that is due to the crf funds so that's the coronavirus relief funds that the city received in the prior year so if you're looking at the intergovernmental revenue line you saw from 19 to 20 it go up and now 20 down to 21 it went back down in the other revenue area you also saw a peak up and then back down a lot of that is due to in the prior year the city had a gain on assets held for resale and so that ran through that other revenue line last year similar information on page nine the table there is just the governmental fund expenditures per capita with some statewide information overall the expenditures per capita were down about 925 dollars you're seeing some of that is in that current area the top part of that table most of that isn't at all other category and that's due to all the economic development activity in the prior year there wasn't as much activity in that area going on in 2021 the other significant change you're seeing there is in the capital outlay and construction once again the city has had a lot of street improvement projects and development the last couple years so a decrease in that area in 2021 starting on page 10 then summarizes specifically drilling down into the general fund so on page 10 the graph there shows the general fund financial position for the past five years showing the fund balance of the general fund the cash balance as well as the expenditures of that fund so for the 2020 year the total fund balance was at about 3.6 million that was an increase of about 845 000 from the prior year compared to a balanced budget as many of you are aware the city does have that fund balance policy of 35 percent of the subsequent year's budgeted expenditures so at year end 21 the unassigned fund balance in the general fund was at that 44 percent moving on to page 11 the top graph there shows a graph of the general fund revenue comparing current year actual to current year budget in my current year i should say 2021. the total general fund revenues were about 7.3 million it was a decrease of about 246 000 from the prior year and about 600 000 over budget some of the budget areas license and permits were over budget due to more development than anticipated and taxes and intergovernmental revenues are also over budget in part due to conservative budgeting and then the bottom of that page shows the general fund revenue by source so it shows each source and some history for the past five years overall the revenues like i said were down about 250 000 most of that was in the intergovernmental revenue area once again due to those coronavirus relief funds received in the prior year next page shows similar graphs just of the general fund expenditures the total general fund expenditures for 2021 were about 7.2 million a decrease of about 225 000 from the prior year and about 215 000 under budget the variance to budget was mainly in the park and recreation area and that was specifically in the parks maintenance department the contractual services were less than anticipated in the budget and then comparing current year to prior year if you're looking at that bottom graph the largest decrease was once again in that park and recreation function mainly in the recreation department due to decreased personnel service costs is that park and rec is that due to lawn mowing service that we were thinking about doing the maintenance portion um yes is due to um that the public works is actually doing the lawn mowing services versus contracting which in this current year budget we've taken out and for the recreation component it was basically the reduction of a position that makes up that difference that was going to be my question i recall it was a budgeted 100 000 for contract and mowing services that we never did see now that has me scared going into this next budget process because that's exactly the dollar amount you that's a comp that was a compliment because you're very well versed and you're paying attention that has to be worried moving on to page 13 then here we start the discussion of those enterprise funds of the city so the electric fund the water fund surface water waste water the fiber optic fun and the solid waste fund also that table on page 13 is a quick snapshot of those enterprise funds and that change in that financial position the top part of that table shows up by classification and then the bottom part of that table shows it by each of the individual funds which you can see all of those funds had a positive improved financial position in 2021 so overall the enterprise funds were up about 2.7 million and as you flip over to page 14 we'll walk through a brief summary of each fund on page 14 shows a couple a graph and a table of the electric fund operations just to show you some trend analysis there overall the change in the net position increased about 950 000 the city saw positive operations the gross profit results in this fund increased by about 190 000 compared to the prior year this fund did have increased rates which had an impact on the fund and flipping over to page 16 shows a table of the water fund for the past five years it summarizes you know the operating revenues operating expenses we detail out that depreciation expense on a separate line there but overall the water fund had an increase in net position of about eight hundred and eighty thousand the operating revenues were up about a hundred and twenty due to increased consumption in 2021 the operating expenses were slightly down about 50 000 primarily in the professional services and materials and supplies areas surface water fund on the next page once again positive operating results overall the change in net position after any transfers was up about 280 000 overall the revenues mainly due to any increase in the customers the one big item there that i'll just point out is if you're looking at that capital contribution line you're seeing there was 930 000 in 2020 nothing in 2021 just a reminder that last year there was that capital contribution for the msa funds as i was saying you advance funds for a street project so when those msa funds were put in to the surface water fund for the capital project it's shown as a capital contribution it gets split out on a separate line so i just wanted to point that out just as a reminder of what happened last year for that 930 000. moving on to the next page the wastewater fund overall had positive operating income and after transfers out end of the year with a change in that position of about 545 000 you know the operating revenues were pretty flat up about five thousand dollars overall the expenses were down about 140 000 and that was mainly in purchase utilities and professional services saw an increase last year then page 19 the fiber optic fund as we already briefly talked about the end of the year with a deficit in that position about 666 000 but did see a slight improvement about 68 000 in the current year you still haven't fixed it and then the last enterprise fund is that solid waste fund once again had positive operating income in the current year and after any transfers out end of the year about 35 34 000 increase in the net position overall the operating revenues increased about 10 000 due to an increase in customers the expenses were up a little bit about 33 000 mainly in the professional service area and then that non-operating revenue area the city has received a grant every year that is credited into this fund so that's at 33 000 you're seeing there but overall a slight increase about 34 000 in the net position and then the last couple pages i'll touch on is the government-wide financial statements so on page 21 the table there the government-wide financial statements is when you as a city you take all your governmental funds which are on a modified accrual basis of accounting and then you add in any capital asset activity of the city any long-term liabilities such as any pensions you have with the pera any opeb liabilities you have and they get all rolled up into what's called the government-wide financial statements one big snapshot of the city with all the governmental activities and the business type activities so that's a what this table is showing so overall the net position when you roll up all those governmental business type include all capital asset activity all long-term liabilities of the city you're seeing an increase of about 6.6 million in the net position of the city for 2021. on the business type activities which is in the middle there is tax exactly aligns with just what we walk through each of the individual funds when you're looking at the governmental activities up about 3.5 million a lot of that is in that net investment in capital assets and that's just due to the continued investment in the infrastructure and the capital assets you know all the street projects and the road projects throughout the years so with that that was all i intended to go through on the financial results overall a good financial year like i said the general fund ended about 845 000 improved financial position compared to a balanced budget for the 2021 year but i can open it up again if there's any other questions on the financial results or if anyone wants to go back to anything else in the report any questions for jackie so you know we're really we're really in the black that means are we charging our residents too much on these different right i suppose that's not an answer we could answer that um yeah so i mean for the enterprise funds you had positive operations as far as what you charge your residents as a city you know discussion to have you know as part of the audit you know we show the results of the audit you know based on what you charged and the expenses funds all the time and i don't know what the answer is well yes i mean this you have to realize that a financial statement is a snapshot in time it's december 31st it is not including whatever your future plans are again we've had a number of discussions in in which we will have a fund balance discussion the one tonight is that we're that i've got on the policy part is just about the general fund and and as jackie had referenced we have a 35 percent pro 35 percent policy right now to maintain that i'm looking at increasing that but that'll be later on we will have a fund balance discussion on our enterprise funds a part that we need to realize is that the infrastructure of the city has a lot of needs later tonight at city council we'll be issuing or hopefully will approve the sale of a bond part of that that bond sale is backed up by revenues um in three of our enterprise funds that's not being reflected here but we're going to be increasing our debt payments in three of those funds right now we're on a we're on a trajectory of every two years that we're two to three years we're going to be going off for additional bond issuances and again based upon past history anything that's related to water and sewer they're going to pay their own way so that's part of that rate that we're charging our customers so as we've seen our fund balance increase in the year in the next 10 year outlook it is going to decrease um and so that's without making any changes in in our rate but we will be having a separate workshop just on fund balance and on the rates coming up this year and coming up probably within about a month month and a half and we'll have that discussion so to answer your question at a year end of 2021 we've increased all the way across the board we're looking good is it time where we say hey we need to potentially reduce our rates let's not get ahead of ourselves at that point in time because we do have some other needs within the city and it does open up some nice options for us again we're going to see that interest rates are going up they're going up fast um i wish we would have had our bond issuance two months ago we would save the city some money that was our original intention if you remember from last year but if we look back this time next year we're probably going to see the interest rates going to be up probably two percent more at least um that may be a time that maybe we want to use some of that fund balance instead of the next time we go for a bond issuance that we do an internal loan um and um you know for the street portion um of our of our instead of bonding the street portion that we use an internal loan the fund balance would help us do that we can also make some interest um for our internal service fund our enterprise funds so let's wait to have that overall discussion on the fund balance to be to to make sure we're comfortable where we're at at least for a 10-year look before we start to jump to the conclusion that we're overcharging our customers or that our fund balances are too high i mean i understand councilmember peterson's question and and appreciate the finance director's uh response but you know naturally you know we open these books and we look at it during this workshop and then the rest of the year we have other topics so it doesn't really get discussed so it's a legitimate question but yeah like he points out if you'll notice on the bottom of all these funds it says income before transfers as a percentage of operating revenue a lot of our enterprise funds have a dedicated amount that they transfer back into the general fund to finance day-to-day operations that number has fluctuated over time i think our goal or the goal has been to transition away from such a large transfer and reliance on enterprise funds because of the things he points out um but you know you look at that and it's essentially you know this number here is in in day to day or regular terms it's your margin it's it's what you're making after your expenses what you're charging and some of these look like they're pretty high so naturally someone may say well you're charging too much for the water fund well as finance director pointed out we have a lot of infrastructure needs and so that traditionally has been the uh you know explanation as to why we're raising rates but the absence of a fund balance policy i think kind of muddies that water i mean we know these things are going to cost money and we're either going to get it through taxes or fees but the question is what do we charge you know and so that's going to be an ongoing thing that we need to look at but i think you know in certain funds such as let's take the solid waste fund for example you know that is something you know that my personal opinion is like it's a pass-through we don't have city trucks collecting trash um we do do the billing but we do that by our own choice i mean we've chosen to in interject and be the middle man out of convenience i suppose is one of the reasonings for it but in a sense you know it's a pass-through and we're marking it up still and we're making money and that fund is continuing to grow what's the plan for that solid waste fund i mean are we saving up to buy new trash bins in 10 years i i hope not but that's certainly something that we should be able to look at and say you know the current trash contract is set to expire we're going to have to look at that soon we have not raised rates since we established that that new hauler and you know we have a substantial fund balance in that fund so that might be one that you know the argument of needing to continue to build up a fund for future capital this is not one of them and so maybe it might make sense to not raise rates or potentially operate at a deficit for a few years as like a discount for the years we've overcharged i mean these are things that we can look at and when we have those discussions hopefully we remember to pull these out and look at this stuff so it's a good question but as finance director pointed out there's a lot more context behind it but yes we're in the black and that's a good position to be in but there's all sorts of uncertainties inflation interest rates the economy you know so thank you no council member thurston you make a very good point in in bringing up the solid fund because it does not have you know a capital need per se versus the other enterprise funds um that is truly the intention of what we're trying to do and that's where you'll see that i think we're we're just entering year three of the contract um they have a three percent annual increase now that goes in for the remainder of the contract i think the contract's five years in addition we're we've been experiencing somewhere between 45 percent increases in tip charges it was not the intention to to raise that rate at all during the time frame of that contract because of the fund balance um that's in there and then you know we can take a look at where that fund balance is after after that point in time but absolutely that the intention of this fund was not to to look at at least for the five years of that contract to raise the the rates on that and then to run negative losses is was a thought anything else for jackie jackie did a great job appreciate it great analysis and with the finance director i think uh at the start of it when we met i knew that things were going to go good this year so i think you've got a good team to work with so thank you dan and your group and your group so thank you thank you we'll do it again next year right exactly cape item number two um giving a quarterly update on uh the general fund and the enterprise funds for um 2022 again there's not a lot of data we haven't received property tax and so forth on the revenue side for the general fund so you're you're going to see that the general fund so first of all we had a a balanced budget is what we adopted for the 2022 of 7.9 million dollars revenue to date is really only 600 000 as of march 31st the bulk of that's in permitting and again just because we haven't gotten you know our the property tax collection yet at this point in time uh the city has very um reliable numbers as far as percentage of collection of property taxes were consistently year after year right around that 99 percent collection rate in the first year which is fantastic so i've taken that information and and kind of done a projection outwards for the revenue for the year and i i think will end up being positive overall revenue for at this point in time looking at it for 2022 compared to what we budget about 255 000 our expenditures for the year i think we're going to be pretty close are on track to where we're at we'll have a little bit of a positive again i think we're keeping that trend moving forward where we end up having a surplus in our general fund i'm estimating it's somewhere around that 300 000 um at this at this point in time again a lot of things can change as the years move as the year moves on again i'm seeing the exact same thing in our in our enterprise funds all of them are i'm projecting for this year at this point in time to be positive again adding to the the fund balance that's in there um again the the debt that we're going to be talking about tonight the new bond is not included in here at this point in time um but uh again we're i think we're sitting very very well the waste water isn't performing as well at this point in time from a budgetary standpoint but again for a year-end we're still looking at a positive fund balance of 175 thousand dollars by year end surface water positive approximately 360 000 solid waste i'm looking at 50 000 at this point in time protecting it for the year still positive and then fiber optics we're looking at that we'll end up with about a hundred and twelve thousand dollars again trying to turn that negative fund balance into a positive i think it's got about a 30-year plan before it actually turns but no it won't be that long but it's it's it's out there away unless jackie really did want to help us out trying to get that fund balance you should fix it so i'm going to try to go a little quick i know we have another item and i'd like to talk about the fund balance a little bit of the general fund so um to sum up kind of where we're at for the first quarter is i think we're looking very good in our general fund in our enterprise funds and really it's no surprise we've been kind of looking that way for a number of years and we just got done seeing how we ended up in at the end of 2021 uh where we're positive across the board so again i do want to i do want to say that a lot of the credit and it actually goes a long way when we go into a bond rating call a lot of the credit has to go to the management of the city um our department heads we have a very frugal group for the most part they're very conscientious um and they really do monitor their budgets on a regular basis and that really is what um you know ends up having a positive results for the city especially we see time and time again we're under expenditures now this year could play out a little bit different different as inflation continues to rise you know we see a lot of it especially in our energy costs um especially when we're talking about fuel costs so we'll we'll keep that under our close eye on that as the year progresses so if there's any questions on the first quarter of 2022 um i'll take those now any questions on the first quarter not move ahead move ahead um i'm gonna spend some time and talk about um a change and i'm not looking for a total re-haul of of our fund balance policy i think we have a very good fund-balance policy i just kind of want to look at the changing of that 35 for the general fund of our fund balance the state auditor recommends 35 to 50 um the city of oakdale um policy thrives or strives to get 50 um maplewood has a minimum of 40 and strives for 50 um i'm proposing um especially with how we ended 2021 where we have 44 percent of our undesignated fund balance in the general fund that we change our policy that we do maintain it at a 40 percent and that we do strive for that 50 percent part of part of and we'll hear a little bit more today when baker tilley is here when we talk about the bonds in the bond call a very uh important component that they look at when they give us our bond rating is our fund balances and are we adequately holding enough of our fund balance there and one of the questions that they specifically had asked was our general fund and again number one do you have a policy yes what is it it's 35 oh you're kind of on the lower end um and that uh you know but but you've got 44 at the end of this year but your policy isn't supporting that component to it this is an item again you know i kind of hit the hit the i didn't give john um or city manager john too much time when he first walked in the door i kind of wanted to have a number of items that we kind of discussed i give him a little bit of time to kind of digest him and then i come back at him again but this was one of them that we had talked about and i and i believe right away he was very supportive of looking into that and i actually think that he had said from where he had come from and we don't mention that that name anymore um that they were they had a fund balance policy of minimum of 40 percent um and so that's really is what is in line um with a lot of the of the cities and part of me as a finance director one of the concerns that i always have is that as councilmember thorson had talked about we do we we transfer 820 000 and the majority of that 820 000 does come from our enterprise funds that is subsidizing our general fund to help reduce taxes for our residents is the bottom line to it but we also have heavy reliance on intergovernmental funds um to the tune of about 1.3 million dollars in in local government aid there has been for a number of years and someday it's not just going to be talk it's actually going to happen they keep talking about reducing that local government aid well that 1.3 percent or that 1.3 million dollars for us on a 7.9 million dollar general fund which we need is going to be a huge impact on to us that right there is one third of our you know fund balance and so i think we we do need to take a prudent and a good fiscal approach to this and and look at the instance we have the opportunity to because we we did finish 2021 very strong that we do look at raising that fund balance policy and move that number up to 40 percent and actually do strive to to move it forward and so i would like to see us move it up in 20 22 to 40 percent um you heard jackie talk about and it was in the management report that we're at 44 and that additional four percent i'd like to to to the city manager and myself will come back with a recommendation on june 7th one with the formalized change in the policy the fund balance policy just on the general fund component to it and in addition some recommendations of utilizing those one-time dollars of that four percent which amounts to approximately i'm just gonna say about three hundred thousand dollars there are some needs that we have um that's been discussed and i think we'd like to bring that those items forth um for the city councils uh consideration so with that i'll entertain any questions and comments questions uh going through everything you know that 800 000 what would you were we very conservative in our budgeting for 2021 that we came up with that number do you think or is there things coming out of kovid that we weren't able to do that we could be doing staffing levels i know possibly i mean that number is you know it's a pretty significant number and um you're asking the question right or yeah no you are um the majority of that 800 000 came from increased revenues really the majority of that was on the permitting side which is something that isn't i'm going to say necessarily reliable moving into the future but it was much much higher than we had anticipated or budgeted the construction yeah um and on the expenditure side um some of that savings one we identified today the hundred thousand dollars um we've already taken that out of the budget for this year um so we won't see that component in there and again based upon my projections and and you know their preliminary and their best guess for where we're at at the end of march our expenditure side was only about seventy thousand dollars under budget it's our revenue side again because of permitting is still doing very well for us above um and again we we do we try to try to do conservative estimates we certainly don't want to put the city in a position where we don't have enough money to do our operation and we end up having to have bigger spikes in tax levies for our residents and i would just like to point out to the new council members that this is probably one of the i would say confusing part uh but it takes years to understand i think the budget you know it's because we get new finance directors and and how it's presented and stuff so it's just a good thing or a bad thing i'm a little confronted well thank you you bet councilmember thorson well i disagree i don't think it's hard to understand but that's just my opinion uh i guess in an ideal world we wouldn't need to transfer any money out of our enterprise funds and we wouldn't be reliant at all on intergovernmental transfers local lemonade there's a lot of cities abandoned heights they don't get a dime um we choose to operate with that um if you know we could explore that i think in the past they have but they've been very uh controversial and upsetting um topics that you know one was contracting the the police services with ramsey county it was never seriously considered it was just a budgetary discussion um but that still gets brought up today because we went you know what what does and the reason why was because it was in 2011 and they were talking about making serious cuts to local government aid and that put us in a position to to say well we need to see what does that look like and we did make some tough decisions closing the community center was one of them building up a lga reserve fund but i know now that's not what it's called but it's essentially fund balance now but that was in anticipation of if from things we can't control they take away 1.3 million dollars um what are we going to do how are we going to react and it gives us some time um but you know i don't think it's a bad thing to have those discussions and no worst case scenario what are we going to do i know i personally don't want to see the police department leave i don't want to see the fire department leave i don't want to see us contract out public works services and we were told that when we when that exercise happened mind you i wasn't on the council at the time but uh you know the washington county ramsey county they both said you're better off having your own police services you have more control and and there's various pros and cons but so you know from a budgetary standpoint i think it's good that we you know raise that balance and then continue on and establish unbalances in the enterprise funds knowing that it's not a requirement but it just makes sense to do because it helps us with the budgeting discussions and then goals and where we want to be because oftentimes in the past that has been used as an excuse to raise funds or raise fees we just we don't have enough money in the fund balance but what does that mean you know we don't have a fund balance policy you know so it it'll be good for conversations moving forward that we explore that but i'm supportive of of what you're proposing 40 with the goal of being near 50. thank you i'm gonna pick your brain didn't we experiment with we like we didn't rely on the lga one year or did we ever do that i don't maybe imagine that no we just had a policy that we're gonna uh we in a way away from it yeah okay that's what it was okay well i know where he's reduced to i mean we get 1.8 million correct uh currently approximately 1.3 well yeah i thought it was higher in that we only allocate the full you know we used to allocate the full percentage that we would get into the general fund yeah we're about 1.5 1.3 comes into the general fund the rest is yes there was a certain amount that we said okay well we're gonna set this aside and yes lga reserve fund got built up then we we no longer did that i think that's what you're talking about correct yeah and the fund is actually i think it's what's known as the capital reserve or capital replacement yeah good one more topic or is that it that's the last finance topic for tonight we do have one more topic for the workshop and that is the proposed sign ordinance changes that have gone through a number of bodies and so i'd ask randy how our planner from wsb to give a presentation on those changes thank you welcome randy thank you mayor and city council thank you dan very much appreciate it thank you i'll try to keep this fairly brief since many of you have already heard this presentation um as was mentioned the city planning commission has been working on the sign ordinance update since about last october and this project came about for a couple of reasons the primary one is to make sure that it's in conformance with the reed versus the town of gilbert supreme court decision which prohibits communities from regulating content and most cities across the country have had to update the ordinances since 2015. in addition the project is um being undertaken to help improve clarity and simplify the ordinance overall and then eliminate regulations that are just unnecessary and then striking strengthen those that the community wants to focus on um so we have taken the ordinance and kind of we're scrapping it and starting over and pulling those main provisions that the plan commission has determined should remain and so those items that are the same are the way that we measure sign area and sign height we are keeping a 10 foot setback for permanent signs all signs must still be maintained in good repair and safe condition and then multi-tenant buildings must always provide a master sign plan as is currently provided or required what's going on here okay so what is different um we've got a side-by-side comparison so the existing ordinance requires uh applicants to get a permit for all sign types whether it's a temporary sign or permanent sign the new ordinance we're only going to require permits for permanent signed structures that are going to be you know put into the ground or attached to a building sign heights are going to be limited based or yep sign heights will be based on the type of sign and before in the current ordinance there's a maximum height of 25 feet in the mu districts so all of your commercial districts and then six feet in the residential districts so we're trying to make it a little bit more streamlined so that it makes um makes sense based on the sign type and then the dimensional standards are pretty close to what they are now but we're lowering the maximum which is required in the mu3 district from 400 square feet down to 300 square feet and in the current ordinance there is no process for appeals and so we have created that and they will be taken to the planning commission and they will provide a recommendation with final decision by the city council so here's an exhibit that shows the existing sign code matrix in comparison to what is proposed and the existing sign code matrix is only for the commercial district so there's a similar one for residential districts so as you can see on the right it's much simpler and it's a little bit easier to administer for staff but in general the maximum aggregate sign area is basically the same we're no longer however referring to the square footage of the buildings or the area of the wall specifically for um dimensional standards and so the next couple of signs will go sorry slides will go sign by sign type in terms of what's old and what's new so roof signs in the existing code are only permitted in your downtown district and they're not addressed in the rules table so height is presumably 25 feet from from grade so the new code we're allowing these in all non-residential districts and we're limiting it to six feet in height from the roof which is based on this love's ice cream store sign illuminated signs are not presently permitted and you're in your code in any district and so we're going to open that up and allow eliminated signs internally illuminated signs in your non-residential districts monument signs are not permitted downtown except for civic uses and anywhere else they have a maximum height of 25 feet in the proposed code we're going to let um let monument signs be allowed in any non-residential district and for multi-family uses in any district and then they can only be eight feet tall instead of 25 feet the existing code has a definition for an electronic message sign but it doesn't have any regulation specific so we have created those and they will be permitted in any non-residential allowed for any non-residential district sorry land use so a school in a residential district could have one and churches too yup exactly um and then they would also be allowed in the non-residential districts we have established uh regulations based on how long the message can dwell uh brightness and then the text size based on the speed with which the street is limited window signs in your existing code are required i'm sorry they are allowed but with a permit and they can have up to 20 percent of the window area covered in the new code we are not requiring permits again for the temporary signs and then the maximum number i'm sorry the maximum percentage of window coverage would be 33 and that would apply to both temporary and permanent signs so neon sandwich board feather signs and political signs um in your old code neon signs would be limited to 20 of the window area and the new code were not specifically regulating neon signs but if they're placed in the window then they would apply to the window window sign regulations sandwich boards we're basically keeping these regulations the same which is one per business and it must must not be bigger than 10 square feet or four feet tall but we're adding that it has to stay out of the right of ways or out of the walking path it can be on the sidewalk though feather signs are not addressed in the existing code and in the new code we're allowing them but with two per site and there has to be at least 100 feet separation between them and then political signs in the existing code they are allowed there is a time limit before and after the election and based on the reid versus gilbert case were not specifically regulating political science but they're treated like a non-permanent sign and you can have it in your yard without any time limit billboard signs they'll continue to be prohibited as will rotating signs inflatable signs are not currently regulated but we've added that as a definition and we will not allow those and off-premise signs are not specifically regulated in the new co or in the old code but we're going to prohibit those in the new code and that is the end of the presentation i will take any questions you might have any questions for brandy uh go ahead just one quick one um is there any provision to the maintenance of the signs that it's in here there there is we do require maintenance that they must be kept in the clean and the typical language um it might even be from your same code [Music] i think uh we went through down at window world where the sign was they moved the road so you couldn't see the sign and they asked for it to be higher than 25 feet so there is a provision in there that could they could appeal to the planning commission oh this is something that did come up last week yes um so i had some conversations with elaine the plan commission chair offline and as we have it proposed right now we were going to pull it pull the sign code out of the zoning ordinance and in doing so that kind of eliminates the option for variances so we're going to discuss that at the next plain commission meeting whether or not to to keep it pulled out or to put a keep it in the ordinate in the zoning ordinance and that way we can have that uh the variance process in addition to the appeal process because i don't know if the appeal would be the route to go after some thought last week in terms of deviation from the regulations i just think there should be provision in there to allow someone who you know doesn't meet the code that there's circumstances within the city that they might be able to appeal and get approval so yep we'll that'll be up for discussion at our plan commission meeting council member with thursday knowing that we were short on time that was also one of my points is just there's some sort of you know a process to request if you're it's kind of a land use issue in the sense that if it's your building and the way it's positioned or located then it's restricting your use and doing a sign if they have a way of a variance process but that's good to hear um i just had nothing jotted down going in this like you know neon signs we don't see many of them and i re i recall a controversial it was the old dental office he wanted to put dentist neon sign and it looked great and it was cool but you know our it was our sign ordinance i obviously must have been that didn't allow it eventually did go in but i just kind of questioned well you know why why would we be so restrictive on something like that and window coverage area too um you know some businesses have a lot of window space and others don't um if they choose to utilize that to do their advertising for their business or their deals i think you know like bars or particular if they put neon signs inside the window or you know two for one deal or whatever they want to do it's their business what what's the criteria for limiting the amount they can cover the window the criteria well um this was a topic that the planned commission planning commission was spent several meetings discussing so it's currently limited to either 20 or 25 percent um and so they're they're increasing that to 33 percent and the you know it's just really based on window area so that's the only criteria that there is the rationale for that baby steps towards less regulation i would assume if that's something that the council would like to see a little bit have less regulation attached to it that could be up for consideration i just i guess i get confused as to you know if we're gonna say you know your business has lots of windows you can only cover 33 of them with signage like why do we care if they want to cover their whole entire window with uh you know graphic wraps or whatever they have window tint semi-visible or transparent i mean if that's what they want to do i mean versus right next door there could be the same building that doesn't have windows and then they put a sign on there you know they don't have the same restrictions just in a sense because it's not a window but just seems to be restrictive but i'm i like everything i've seen there that we're going more towards being less restrictive and more you know because you know other than a few instances i don't ever see signage being a controversial topic in town it can be in some communities but it hasn't been so far here and when it is it's more personal you know i don't like the way that looks okay how do we make a rule and then you know that person moves away or you know it's just kind of you know subjective or you know so it's hard to to make rules based off of certain people's opinions where others may differ but i'm glad to see that this is you know moving along the more flexible area okay any other questions councilmember one yeah i just want to thank you brandi and and the planning commission as well they put a lot a lot a lot of time looking through and thumbing through the entire document um thinking about you know even how compliance will respond to it so they've done a really great job thank you i just have a question brandi could you remind us and i think i know the answer of what comes next with this and the timing of that yep um so the next plane commission meeting will be june 2nd where i will bring them the draft resolution i'm sorry the draft ordinance in the format within which th this body would act on it and then we will hold a public hearing [Music] with the planned commission and at their july meeting and that would come back to you at your third meeting in july sorry your third week meeting in july it's been a long day yeah it's like three weeks it's kind of crazy okay thank you appreciate it that's it any other questions if not uh motion to adjourn by councilmember peterson second by council member cole any discussion all those in favor signify by saying aye you