Memorandum

City of Lawrence

City Manager’s Office

DATE:	6/11/2009
TO:	David L. Corliss, City Manager
FROM:	Casey Toomay, Budget Manager
CC:	Cynthia Boecker, Assistant City Manager Diane Stoddard, Assistant City Manager Jonathan Douglass, Assistant to the City Manager
RE:	Follow up items from Budget Study Sessions

Below is a summary of the action items presented and/or requested by the City Commission at previous Budget Study sessions to date.  Updates will be provided as additional information becomes available or additional requests are made.

City Manager’s Office

· What is the fund balance, undesignated funds which the bioscience authority has available and what are the plans for these unencumbered funds for the future?  Per LaVerne Epp, “As of May 31, 2009, LDCBA's total cash was approximately $1m.  The use of these funds is as follows:

· $500,000 of these funds have been designated for LDCBA's capital contribution to the life science business incubator, currently in the design phase.  We expect this payment to be made later this summer. 

· $168,000 of these funds constitute our FY09 operating budget and will be paid over the course of the current fiscal year.

· $250,000 of these funds have been informally identified as a starter seed capital pool to be used to support the needs of and provide incentives to early stage companies.  We are hoping to leverage these funds to attract larger capital dollars from non-LDCBA sources that will boost the development activity of start-up and emerging companies.

· The remaining funds, approximately $80,000, are being held as contingency funds to assist with financing, if necessary, of the life sciences incubator or to develop a bioscience management talent development program that will generate job activity in the region.” 

· Provide a spreadsheet which shows all outside agency funding. 

· Provide more information on a proposed recreation center – show the underserved west side, debt payment schedule, where money might come from, etc.  Included in the City Manager’s report for the June 16 City Commission meeting is a map showing underserved areas in the community. Staff is working to provide additional information requested.

· Look more closely at City Commission budget and perhaps make some cuts.  The City Commission budget has been reduced by $7,800 to be more in line with 2008 actuals.  A portion of these reductions were moved to a newly created division to separately account for the City Auditor.

· When will all property tax appeals be complete?  Marion Johnson, Douglas County Appraiser reports that, “the informal appeal process basically runs from March 1 through May 15.  We are just now finishing up the informal hearings.  The formal appeal process, appeals to the state, will run over the next two or three months.  Typically, we will have around 200 formal appeals.  The real estate and personal property values for 2009 will be certified to the county clerk by June 15th.” 

· Provide a breakdown of where the 1994 sales tax money goes. 

· Work with departments to address "other" expenditures - especially parks mowing contracts -- use different language or account numbers.  CMO has been working with department and Finance to find existing accounts in the AS400 that more accurately describe the expenditures where appropriate and will require department to provide additional explanation in the “justification” column on budget detail spreadsheets.

· Understand volatility points in commodity costs - utilities -- always hear increases - not decreases. 

· Sustainability coordinator issue.  Creation of a joint City/County position was discussed at the May 26 City Commission meeting as part of the grant application for EECBG funding.  Per City Commission direction, this position will be included in the grant application.  Staff will work with county staff to develop an agreement which outlines funding, oversight and work plan.

Finance

· What is our current debt level for all funds?  As of 12/31/2008, the City’s total debt in all funds was $185,979,404.

· Have we felt any impact from defaults or foreclosures?  The Finance Department has been tracking vacant residential property for over a year.  Vacant residential property is defined as having zero water consumption and does not equate to foreclosed property.  The number of such properties increased to 685 in May 2009 compared to 599 in May 2008.  The financial impact is difficult to quantify.  However, there is a definite impact on the amount of water sold per account.  There has also been an impact on property taxes since the valuations have dropped.  The valuation changes will vary depending upon the property and has not reached the levels seen in the worst hit areas such as California, Arizona, and Florida.  The city has not experienced a significant increase in delinquent property taxes. 

· What impact will falling assessed valuation have on the bond and interest fund in the coming years?  While the lower property valuations negatively impact the bond and interest fund, the impact has been offset by the issuance of less at large debt than projected.  As a result, the latest projection shows the fund will be able to issue $5.0 million in at large general obligation debt and maintain the current debt levy.  The projection assumes that assessed valuation growth will increase by 2% per year beginning in 2012.

· What is the ratio between our debt capacity and our assessed valuation and how will this change in 2010 and 2011?  The ratio of net bonded debt to assessed valuation was 13.68% at the end of 2008.  Since the amount of new debt is not currently known the ratio in 2010 and 2011 cannot be calculated.  It is likely to drop, however, since the city will be retiring over $9.0 million in general obligation debt in both 2009 and 2010.  The city typically issues general obligation debt in September.  In addition, it is expected that the city will issue new revenue bonds on an annual basis.  Moody’s has noted that our debt levels are slightly above the national median.  Moody’s also looks at the overlapping debt, including the county and school district since the same taxpayers are required to retire the debt.  The future debt issuance plans for the county and school district are not known.

When was the last time we received a review and bond rating – are we still OK?  The city’s last Moody’s rating on our general obligation debt was dated September 5, 2008.   The rating on the general obligation debt was Aa2 and the rating on revenue bonds was Aa3.  With the stabilization of our fund balance and moderate new general obligation debt issuance, the rating on our general obligation debt should be secure.  However, the revenue bond rating may be more closely reviewed due to the lack of growth in water sales and new customers and the planned future issuance of new debt.  A significant factor in Moody’s rating of revenue bond debt is the willingness of the governing body to raise rates in order to maintain the coverage ratio.

· Any way to incentivize participation in paperless utility billing?  Finance is working on an analysis and will provide recommendations upon completion of the selection of a bank to provide banking services for the City.

Fire Medical

· What is the impact of cuts to the public education budget?  Fire department will provide a response.

· Follow up on F/M budget - changes from 08 actuals - large increases (in all areas necessary - F/M largest identified in analysis) - focus on electricity costs.  Fire Medical budget request has been reduced to be more in keeping with 2008 actuals.  Further reductions resulting from elimination of CPR classes, school district classes, and the bike helmet program.  The electricity costs have been reduced to include a 10% increase over the 2008 actual (including Station 5.)

Human Resources

· To what is the significant increase in expenditures for recruitment/advertising in 2010 over 2008 actual attributable?  According to human resources staff, there are a number of factors that explain why 2010 budget request has increased significantly over 2008 actual. 

· We experienced an unusually low recruitment year in 2008 due to the elimination of 14 FTE positions

· we did not conduct Firefighter recruitment in 2008

· our turnover was a remarkably low (8.28%) in 2007 which translated into a low 1^st quarter 2008 recruitment period. 

· We significantly reduced the amount of Kansas City Star advertising in 2008 because we did not recruit for many regional positions (management or college level). 

Contrary to popular belief, web based advertising is not inexpensive; it just reaches a vast market and is the preferred tool for most job hunters today.  Web-based advertising generally requires an annual contract typically $6-7,000/year minimum. 

Legal

· How will staff be able to handle the workload if the two Human Relations positions are eliminated?  Staff is developing a response to this question.

Library

· Library will continue monitoring state funding and NEKLS funding issue and will keep us abreast.

· Energy cost savings analysis for library - in terms of EECBG.  At the May 26 City Commission meeting energy upgrades for the library were discussed as part of the EECBG funding application.  Per City Commission direction, replacement of two HVAC systems original to the facility, HVAC controllers and lighting will be included in the grant application.  Tracking of energy savings will be part of the reporting for the grant and is recommended to be part of the job description of the sustainability coordinator.

· Follow up/continued review of HVAC and roof repairs on library.  Ongoing

Parks and Recreation

· What is the impact of the change in minimum wage to recreation funds?  The minimum wage increase will result in $25,000 in additional payroll in the recreation fund, the majority of which is in aquatics with guards and cashiers accounting for $18,000 and facility supervision totaling $7,000.  Eagle Bend Golf Course expenses are estimated to increase by $3,000 as a result of the increase in minimum wage.

· What is the total number of rounds played at Eagle Bend on weekday mornings?  What are the rates at competitor courses on weekday mornings?  Total rounds played from course opening to noon weekdays (Monday through Thursday) were 4,712 in 2008 and 1,598 year to date in 2009.  As morning play is more popular, courses do not have weekday morning pricing separate from regular weekday pricing.  Some may have twilight or after 2 to 3 p.m. pricing specials.  Weekday rates for 18 holes at competitor courses are summarized below:

                                      Falcon Lakes            $50

                                      Alvamar                  $41

                                      Sunflower Hills           $29    

                                      St. Andrews             $27

                                      Overland Park GC      $27

                                      Tomahawk Hills         $22

                                      Heritage Park           $22

                                      Eagle Bend              $20

                                      Lake Shawnee          $17

· Parks budget - fire station 5 utilities pulled out - money still there?  Fire Station 5 was not included in the electricity line item in parks and recreation budget.  2010 request is a reduction from 2008 actual. 

Planning and Development Services

· Confirm number of planners removed from PDS.  Two currently vacant planner positions have been removed for the 2010 budget. 

Police

· Explore ways to send fewer people to county jail – e.g. fingerprinting equipment.  Staff is exploring as option to reduce costs and improve service.

· Provide better analysis/price tag of 2013 costs of COPS grant if we receive -- equipment other infrastructure (actual staffing 4 years later.)  All of the equipment costs for the four COPS Grant officers, except for vehicles, can be absorbed in the 2010 budget ($3,500 per Officer).  The cost of a fully equipped patrol car is about $47,400.00 each.  Staff believes costs can be absorbed into 2009 and 2010 budgets. 

Public Works

• When was Iowa Street, North of 15^th last mill and overlaid and what condition is the street in now?  According to Public Works staff, the section of Iowa from 15^th to Yale received the following maintenance:  mill and overlay (2006); major patching in-house (2008) and crack seal work (2009).  Current PCI (pavement condition index rating) is 51.3.  The section from Yale to 6^th received the following maintenance: mill and overlay (2007) and crack seal (2009).  Current PCI is 49.1. 
• What is the impact to pavement condition of liquid pre-treatment vs. salt and sand for ice control?  The impact varies depending on the type of liquid pretreatment.  Liquid calcium chloride, for instance, has the same impact on streets as salt/sand, with the exception that the liquid version is applied directly to the salt, which activates that salt as it hits the streets shortening the time required to remove the ice, thus reducing the amount of chemical used.  Other types of liquid vary from beet juice to a corn derivative product.  Some of these reduce the impact that a salt-based product creates.  At this time, it is premature to speculate on what we will end up with.  We are working and hoping to have the funds to eventually pursue this process.  It will require start up and equipment retrofitting as well as installation of storage tanks and pumping systems.

• What is the cost per mile (or cost per lane mile) for mill and overlay? Approximately $123,000 per lane mile based on $14.00 per square yard and a 15-foot lane.

• Why do we no longer do painting traffic markings vs. the applied materials?  It has been the city’s practice during 15 years to include plastic pavement marking materials on all new streets and as a part of “mill & overlay” projects.  These materials last much longer and retain reflectivity much longer than paint.  A painting operation requires a significant investment in equipment (a truck-mounted paint striping can cost up to $300,000), facilities (storing of paint, cleaning materials and disposal of hazardous waste) and personnel (a striping operation takes a minimum of three persons).

· What are the quality control processes used to ensure both material and workmanship for curb contractors / subs? Currently all projects have project documents that require testing and compliance with city standards.  We have inspection staff assigned to each project.  Every concrete pour is observed for compliance.  The issue with some older constructed curbs are from a time when the city specified limestone aggregates.  That practice has since been eliminated.  Currently the city specifies granite aggregate, which has proven so far to be superior to the limestone.

· What is the process of equipment replacement and / or replacement program planning for solid waste, given the amount of dollars required?  The Solid Waste Division fleet has an established equipment replacement program.  Units are scheduled for replacement based on type of use, age, condition and repair history.  We have adjusted the rotation of the trucks (life-cycle) because we had found that the costs for engine replacements, transmission replacements, and suspension have increased significantly in the 8^th and 9^th year of operation for the heavy equipment in solid waste.  The repairs themselves are expensive, as is the downtime and service consequences.  We continue to extend the service of vehicles and equipment whenever possible.  In addition to the replacement schedule, equipment is evaluated based on established criteria to ensure that replacement is appropriate to recommend when the budget submittal is being prepared, roughly April of each year.  Equipment is evaluated again in November / December, before actual replacement bid documents and specifications are prepared in January.

· Have we considered alternative fuels in major diesel equipment, such as the solid waste fleet? The alternative fuels task force evaluated a number of options for the transit fleet, and recommended the rest of the city fleet transition to B20 (a 20 percent blend of biodiesel) when the new buses arrive in 2010.  Approximately half the transit fleet is fueled through city fueling facilities.  We are currently pursuing a grant opportunity with the Soybean Council / Commission to off-set some costs of the transition for an initial period of 15 months.  Grant funding awards will not be known until fall 2009.  When B20 is implemented for the transit fleet, we will also transition all other diesel equipment in the fleet to the B20 blend.  The transition of our other diesel equipment will include all the large solid waste vehicles, dump trucks, construction equipment, mowers, tractors, and fire apparatus.  Approximately 200 units in the fleet are diesel-powered engines.

Utilities

• Utilites Department Staff has significantly reduced 2010 budget requests to be at or below 2008 actual levels in most line items.