08-10-2020 Work Session Agenda W O R K S E S S IO N
V IR T U AL ME E TIN G H E L D V IA W E B E X
AU G U S T 10, 2020
5:45 P M
C all to order
1.P resentation and discussion of staff's recommendation to reimburse eligible costs and consider additional
spending of the C ity's allocation of the federal C A RE s funding. S taff will also present an update and options for
the preliminary 2021 B udget.
A djournment
Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96
hours in advance to the City Clerk at 612-861-9738.
AGENDA SECTION:Work Session Items
AGENDA ITEM #1.
WORK SESSION
8/10/2020
RE P O RT P RE PA RE D B Y: K atie Rodriguez
D E PA RTME NT D IRE C TO R RE V IE W:
O THE R D E PA RTM E NT RE V IE W:
C ITY MA NA G E R RE V IE W: K atie Rodriguez, C ity Manager
8/7/2020
I T E M F O R WO RK S E S S IO N:
Presentation and discussion of staff's recommendation to reimburse eligible costs and consider
additional spending of the City's allocation of the federal C AR Es funding. Staff will also present an
update and options for the preliminary 2021 Budget.
E X E C UT IV E S UM M ARY:
The City received $2,745,098 in federal C A REs Act local funding to assist the response to the C OV I D-19
pandemic. Expenditures must be used for actions taken to respond to the public health emergency, including
expenditures incurred to respond directly to the emergency, as well as expenditures incurred to respond to
second order effects, such as by providing economic support to those suffering from employment or business
interruptions due to C OV I D-19-related business closures.
Staff have documented their costs from March 1, 2020 and estimated costs to maintain current
mitigation until November 15, 2020 which is the eligible time period for the C A REs funding. Director Regis
continues to review the actual and projected costs: initial estimates total $2,985,000 in eligible costs with
existing levels of mitigation and past community assistance programs. Most of the grant revenue will flow to the
general fund and help build reserves. Building reserves is important due to expected ongoing costs to
respond to the pandemic and possible negative financial impacts in 2021.
Staff recommend targeting some of the grant to fund additional programs to directly assist the community,
including community testing, another round(s) of small business assistance programs, and additional
emergency food and rental assistance for residents.
We recommend targeting up to $157,500 in additional emergency food and rental assistance and up to
$117,600 in additional small business assistance. Since we expect to have sufficient other eligible expenses,
we recommend flexible timing and funding for both programs to better address community needs.
For example we may find the need for food and rental assistance is greater than the need for small business
assistance, or the opposite, and adjust accordingly. Staff plan to bring more detailed recommendations for
Council consideration at future work sessions.
Bloomington Public Health has also recommended that we reserve up to $450,000 to provide community
testing and to support long-term care facilities if needed. Combined with the previous donation to V E A P and
small business loan programs, the recommended funding reserved for direct community assistance totals up
to 36% of the total C A REs distribution.
Staff will also provide an update on projected 2021 revenues and reserves. The Minnesota Department of
Revenue recently certified local government aid (L GA) distributions for 2021. Richfield's allocation is
$2,001,686 which is $364,360 less than 2020. The reduction is due to the growth in the City's tax base. The
program is designed to reduce aid if cities can fund operations with property taxes and a stronger tax base.
Minnesota Management and Budget also recently released a budget update for the next biennium (F Y 2022-
23) and project a $4.7B deficit. MMB already projected a $2.4B deficit for the current biennium. Given the
state's deficits, there is risk the city will not receive their full allocation of certified LGA payments. Staff will
present information on how the lower than expected L GA payments and risk of further cuts, and the C A REs
funding could impact the 2021 Budget.
D IRE C T I O N NE E D E D:
Staff request City Council input on the proposed reimbursement and spending plan for the C AR Es
funding. Based on feedback staff will bring a formal recommendation to the City Council at a future
meeting(s).
Staff also need input on possible budget options in order to present the recommended revised 2020
and preliminary 2021 Budgets. The budgets will be presented in detail at the September 10, 2020 work
session.
B AC K G RO UND INF O RM AT I O N:
A.H IS TOR IC AL C ON T E X T
I ncluded in the Executive Summary
B.P OL IC IE S (resolutions, ordinances, regulations, statutes, etc):
N/A
C.C R IT IC AL T IMIN G IS S U E S:
I ncluded in Direction Needed
D.F IN AN C IAL IMPAC T:
The C A REs reimbursement and spending plan, revised 2020 and 2021 Budgets will guide funding for
city operations for the next 17 months.
E.L E GAL C ON S ID E R AT ION:
W hile the overall guidance for the funding is more vague than most federal grants, the City has reviewed
federal, state and League of Minnesota City guidance on eligible costs. Staff have also consulted with
our auditing firm to ensure that we are properly documenting reimbursement requests to prepare for a
smooth audit of the grant.
ALTE R N AT IV E(S):
I ncluded in the Exective Summary
P R IN C IPAL PAR TIE S E X P E C TE D AT ME E TIN G:
AT TAC H ME N T S:
D escription Type
C ares B ackup Material
CARE’s Funding Plan
CARE’s Distribution & Eligible Expenses
•Richfield received $2,745,098 on 7/28/20
•The federal government’s three criteria for
CARE’s expenses are those:
–necessary expenditures incurred due to the public
health emergency with respect to COVID-19;
–not accounted for in the budget most recently
approved as of the date of enactment of this
section for the State or government; and
–incurred during the period that begins on March 1,
2020 and ends on November 15, 2020.
Examples of eligible expenses
Personnel-job duties have changed from their
originally budgeted duties and are substantially
dedicated to mitigating or responding to the
COVID-19 public health emergency.
Examples: Emergency Management
Coordinator, Public Health Coordinator and first
responders.
Personnel-staff that were repurposed due to
the pandemic are also eligible.
Examples: Recreation staff working as park
ambassadors or greeters.
Examples of eligible expenses
•Supplies-cleaning, face masks and
plexiglass.
•Technology-laptops, WebEx and other
upgrades to allow employees to work from
home.
•Communications-Signs, surveys, and
mailings.
•Other-Bloomington Public Health, donation to
VEAP, small business loan program.
Eligible Expenses-Ongoing Mitigations
Fund Total Costs 3/1-
7/31/20
Projected Costs
11/15/20
Total
General $1,500,000 $750,000 $2,250,000
Cable $54,000 $33,000 $87,000
Election $34,000 $34,000
Liquor $40,000 $40,000
Water & Sewer $5,000 $5,000 $10,000
Central Garage $1,000 $1,000 $2,000
IT $110,000 $64,000 $174,000
Building Services $25,000 $41,000 $66,000
HRA $70,000 $55,000 $125,000
EDA $144,000 $7,500 $151,00
Total $2,025,000 $960,000 $2,985,000
Proposed New CV19 Programs
•Additional donation to VEAP or similar nonprofit -up to $157,500
(previous donation of $125,000, $282,500 total)
•Additional small business assistance-up to $117,600 (previous loan
program of $139,900, $257,500 total)
•Community testing-up to $250,000
•Long-term care assistance-up to $200,000
•Technology upgrades, employee testing, supplies and staff time to
manage above programs-$150,000
History of state aid
Certified Change
2011 - Reduction $(995,263)
2012 - $1,218,346 $0
2013 - $1,218,346 $0
2014 - $1,937,907 $719,561
2015 - $2,053,363 $115,456
2016 - $2,084,057 $ 30,694
2017 - $2,094,443 $ 10,386
2018 - $2,229,280 $137,837
2019 - $2,235,643 $ 6,363
2020 - $2,366,046 $130,403
2021 - $2,001,686 $(364,360)
Budget Update
•Lower LGA=budget deficit
•CAREs Funding=increased reserves
•State Forecast=risk of further LGA cuts
•Recent economic indicators=further city &
community financial stress
•Covid-19=further disruptions & uncertainty
•Council priorities=new staff positions
2021 budget options
Tools to solve the budget deficit:
–Personnel-71% of the budget
–Property Tax Levy-70% of revenues
–Reserves-available to stabilize
during economic downturns
Personnel
•Proposal to add 2 positions-Equity
Coordinator (possible 2020 start) and
Video Specialist
•4 of 5 contracts with bargaining groups
settled at 3% for 2021, 5% steps, long
history of consistency for all employee
groups
•Soft hiring freeze-will evaluate open
positions
Levy-growing tax base, declining
tax rate
Levy Year Market Value % Increase Levy
Increase
Tax Rate
2015/16 2,874,179,000 4.51% 2.91% .60992
2016/17 3,091,380,400 7.56% 3.26% .56850
2017/18 3,263,103,600 5.55% 6.11% .57730
2018/19 3,587,736,600 9.95% 4.89% .53275
2019/20 3,846,256,100 7.21% 4.9% .53292
Impact on the average homeowner:
1.77% annual increase
10 Year City of Richfield Tax Look Back
Based on $200,000 Market Value Property
Ten Year
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Average
City 1,016.09 1,191.80 1,186.45 1,249.31
1,313.30 1,255.22 1,220.00 1,230.80 1,178.44 1,121.26 1,196.27
County 847.12 945.33 916.02 968.21
1,013.33 933.43 946.11 912.67 925.97 864.41 927.26
ISD #280 494.51 566.32 574.32 661.59
582.23 592.11 580.58 789.91 737.28 687.12 626.60
ISD #280 Ref. 275.09 302.09 324.95 318.26
334.46 320.04 272.09 370.99 365.56 312.42 319.60
Metro Districts 54.50 60.45 60.04 64.63
65.65 59.66 60.54 57.20 56.23 51.78 59.07
Other Special 115.00 126.20 126.81 140.04
148.05 136.47 139.45 134.10 132.90 121.15 132.02
HRA 33.52 34.44 29.71 33.06
33.37 34.37 33.39 34.22 32.34 30.19 32.86
2,835.83 3,226.63 3,218.30 3,435.10
3,490.39 3,331.30 3,252.16 3,529.89 3,428.72 3,188.33 3,293.67
History of city reserves
Capital Fund Recreation
2013 - $2,074,700 $3,342,746
2014 - $3,718,613 $2,835,705
2015 - $3,841,155 $2,952,516
2016 - $4,325,415 $3,233,214
2017 - $4,851,557 $3,361,118
2018 - $5,452,491 $3,481,487
2019 - $4,682,503 $3,643,018
2020 - $6,000,000 Est. $ 243,018 Est.
* The City’s General Fund has a fund balance policy where the targeted amount of unassigned fund balance shall be an amount not less than 40% of current year end actual General Fund revenues.
Budget Options
5% levy increase:
•Delay body cameras, video & equity
position, $270,310 transfer from reserves
OR
•Implement body cameras, hire video &
equity position, $463,000 transfer from
reserves
Budget Options
5.5% levy increase:
•Delay body cameras, video & equity
positions, $159,660 transfer from reserves
OR
•Implement body cameras, hire video &
equity positions, $353,000 transfer from
reserves
Budget Options
6.0% levy increase:
•Delay body cameras, video & equity
positions, $48,660 transfer from reserves
OR
•Implement body cameras, hire video &
equity positions, $241,000 transfer from
reserves
Gross tax levy history
•2021 - $23,882,744 - 5.00% increase
•2021 - $23,935,652 - 5.50% Increase
•2021 - $24,048,917 - 6.00% Increase
•2020 - $22,687,471 - 4.90% increase
•2019 - $21,626,692 - 4.87% increase
•2018 - $20,621,911 - 6.11% increase
•2017 - $19,434,690 - 3.26% increase
•2016 - $18,820,576 - 2.91% increase
•2015 - $18,288,524 - 1.53% increase
•2014 - $18,012,303 - 1.51% increase
•2013 - $17,744,951 - 4.50% increase
•2012 - $16,980,700 - 3.98% increase
•2011 - $16,330,041 - 6.82% increase
2021 proposed levy
estimated impact 5% Levy
•$250,000 property
–City Portion - Tax 2020 $1,332.28
–City Portion - Tax 2021 $1,342.90
–City Portion - Tax 2021 (1.8% emv) $1,367.07
•$10.62 increase or $.89 per month in City property tax
portion with no change in Market Value
•$34.80 increase or $2.90 per month in City property tax
portion with estimated 1.8% increase in Market Value
2021 proposed levy
estimated impact 5.5% Levy
•$250,000 property
–City Portion - Tax 2020 $1,332.28
–City Portion - Tax 2021 $1,350.35
–City Portion - Tax 2021 (1.8% emv) $1,374.66
•$18.07 increase or $1.51 per month in City property tax
portion with no change in Market Value
•$42.38 increase or $3.53 per month in City property tax
portion with estimated 1.8% increase in Market Value
2021 proposed levy
estimated impact 6% Levy
•$250,000 property
–City Portion - Tax 2020 $1,332.28
–City Portion - Tax 2021 $1,357.85
–City Portion - Tax 2021 (1.8% emv) $1,382.29
•$25.57 increase or $2.13 per month in City property tax
portion with no change in Market Value
•$50.02 increase or $4.17 per month in City property tax
portion with estimated 1.8% increase in Market Value