Finance Committee - November 25, 2024
The Regular Meeting of the Finance Committee of the City of Fargo, North Dakota, was held in the Commission Chambers at City Hall at 10:00 a.m., Monday, November 25, 2024.
Commissioners present or absent were as follows:
Present: Kolpack, Piepkorn, Strand, Turnberg, Mahoney.
Absent: None.
Staff attending: Michael Redlinger, Susan Thompson, Brenda Derrig, Jamie Bullock, Julie Bommelman, Shawn Ouradnik, Tom Knakmuhs.
Mayor Mahoney presiding.
Standing Items:
Director of Finance Susan Thompson gave updates on the Enterprise Resource Planning (ERP) implementation and said the Finance Department is working through some challenges with the new system and the hope is the go live date will be June or July 2025. She said the Series 2024H bond sale was held last week for the annual refunding improvement bonds to fund construction projects. She said the $57 million bond will be used to pay for 31 projects. There were seven bidders and the low bidder was JP Morgan, she stated. She originally expected the cost to be about 4 percent, she said; however, it came in at 3.86 percent. As for the 2026 budget development plans, she said, the budget team has had some internal meetings and the team wants to make sure there is feedback and involvement by the Commission right away. She said the Public Safety Sales Tax was passed by voters in November and will be effective April 1, 2025. She said the City will start getting funding from the state in June and the Commission will have to decide how to move forward with that funding. She presented the Year to Date Financial Review and Third Quarter Year End Financial Projection, as well as a sales tax report and budget adjustment requests for Transit and a Core Neighborhood program.
Transit Update:
Ms. Thompson said she has requested some transfers to help shore up this year’s Transit budget and next year there is a General Fund transfer in the budget; however, it is not as much as the projected deficit for the next year. She said Transit Director Julie Bommelman has been working with her team on some options for reducing expenses or increasing revenue. She said the challenge with the system is trying to get it to gel with the new, larger Urbanized Area. She said the new revenue allocation is still conceptual and it has not been formally approved. Some questions are still unanswered, she said, including does the City start with the League of Cities, should the City marry with an existing, already proposed Transit bill, or should the City do something standalone.
Commissioner Piepkorn said the City needs to look at Federal funding and it does not make sense that the City’s funding was reduced just because the City has grown to a certain point.
Ms. Bommelman said she has contacted the offices of Senator Kevin Cramer and Senator John Hoeven; however, hard numbers are needed and when she first talked to them, it was $3 million to $4 million and now it is more like $5 million. She said she is also asking the State for money and perhaps the City has to write a bill or work with the National League of Cities and also work with Bismarck, Minot and Grand Forks to get a formula change in the State.
Mayor Mahoney said what is hurting the City is the $3.5 million this year and it could be $4 million to $5 million next year. He said high priority should be to have a bill in front of the Legislature right away in January.
Commissioner Kolpack said it is important to frame this as a workforce issue with the Legislature.
2025 Fees:
Assistant City Administrator Brenda Derrig said in the past as different departments have needed to increase fees, the Commission might see several requests from different departments. She said this year, as part of the budget, she had everyone evaluate where fees were and if an increase was needed, to bucket them together for presenting to the City Commission.
Shawn Ouradnik said there is a proposed increase to the at-home daycare inspection fee. He said a lot of work goes into those and typically, nothing is collected until the end when a certificate of occupancy is granted. He said it can take up to six hours per application, then an inspector has to be scheduled, and if there is a deficiency, sometimes it can take four or five inspections if owners are not fixing the deficiencies.
Commissioner Piepkorn said he would like to see gradual increases rather than these big catch-ups, otherwise there is pushback.
Ms. Thompson said the City needs to make sure whatever is being charged covers costs, yet are not too high. She said it would be good to look at fees every 3 to 5 years, depending on what it is and how significant it is. She said this was brought up due to fact that daycare is a sensitive issue and she wanted to make sure the Commission could hear the explanation of why the fee is being raised.
Commissioner Strand asked at what point does the City provide this as a community service, where is the balance, and Ms. Thompson said the Commission would have to decide on a policy.
Ms. Derrig said $50.00 is the cost of the permit, plus an average of two onsite inspections for $25.00 apiece, which is still reasonable; therefore, the City is still providing a service. She said it will be a philosophy as the City looks at increasing fees.
Special Assessments Deferrals:
Special Assessments Coordinator Doug Durgin said a deferral allows a property owner to postpone the payment of annual special assessments and there would be different terms and conditions for each property owner that would go into a formal agreement. He said his department is working on a process and policy for these requests to streamline the process for property owners who are looking at requesting assistance with special assessments. He said the hope is that a policy can be created and approved by the City Commission. He said the process would include a property owner requests a deferral from the Special Assessments Department, who would review the request and that request would be presented to the Public Works Project Evaluation Committee (PWPEC). He said if the request does not meet policy criteria, staff would recommend denial to PWPEC, then the applicant can request consideration by the Finance Committee. He said Finance could the bring the request to the Commission for final consideration. Once a policy is created, he said, it will be easy for a property owner to determine if a deferral would work for them or not.
Commissioner Piepkorn said this has been done in the past so he wants to make sure if a deferral is approved, the entity receiving the deferral is still paying interest. He said that is the precedent and he wants to be sure the entity is not told “no charge.”
In response to a question from Mayor Mahoney asking if a request does not meet policy criteria, can it go on appeal to the City Commission, Mr. Durgin said it cannot.
City Engineer Tom Knakmuhs said the intent would be to provide the information to Finance, then in two weeks to City Commission for final determination.
Mr. Durgin said there is a currently a request from Enclave and his department has followed the new process, even though it is not official. He said the request is for a three-year interest-bearing deferral on three parcels in Laverne’s Addition. PWPEC heard the request, he said, and determined it does meet the policy framework; however, PWPEC does not think the request should be granted and that is where it sits today. He said PWPECs reason for denial is the land is platted and developable and this type of land use is in high demand. He said PWPEC also looked at the financial implications to the City, the projects have been bonded and the City makes the payments. He said another concern is the special assessments were developer-requested for new infrastructure projects, not initiated by the City.
Commissioner Piepkorn said the City does have the precedent, it has been done in the past and market conditions have impacted the pace of development; therefore, the City has to be understanding and Enclave is still paying interest.
In response to a question from Commissioner Strand asking if the principal is not paid, who pays it, Mr. Durgin said the City pays and that is a benefit to Enclave.
Ms. Derrig said an example is east of the horse track, the City gave a three-year interest-bearing deferral on 19th Avenue North due to the fact that the City put in a five-lane roadway to support Mid America Steel. She said the City pushed the arterial and that was the basis for that deferral.
2025 Engineering Capital Improvement Plan (CIP):
City Engineer Tom Knakmuhs said the CIP includes preservation, rehabilitation, replacement and new installation of City-owned infrastructure within the public right-of-way. He said some of the infrastructure includes water mains, gate valves, fire hydrants, sewer mains, street lights, traffic signals and signs and fiber optics, asphalt and concrete pavement, bridges, underpass retaining walls and box culverts, sidewalks and shared use paths as well as levees and floodwalls. He outlined the City’s infrastructure assets, including sanitary sewer, storm sewer, water mains and valves as well as traffic and street lights. He also gave an overview of how a project is selected, including collaboration between City departments and taking into consideration various City plans such as Go2030 and Core Neighborhoods. He said project categories within the CIP include locally funded and programmed, Federal aid, Prairie Dog, flood control, new development and alley paving. He said the majority of what the CIP does is for the maintenance and preservation of all infrastructure, such as pavement, storm sewer utility projects, repairing inlets, rehabbing and replacing lift stations, and maintenance and replacement of street lights and traffic utilities. He said there are also sidewalk projects throughout the City, as well as water and sewer rehab and replacement projects. Pavement preservation projects are proactive, low-cost, preventative maintenance treatments to preserve the investment of the roadway network, he stated, and while no pavement will last forever, timely preservation projects can extend the pavement life, resulting in cost savings for the taxpayer. He said safety improvement projects include Safe Routes to School improvements, negative left turn offsets, signal and lighting improvements as well as improvements in signage and striping. Federal aid projects include arterial road reconstruction, pavement rehab, shared use paths, bridge and safety improvements, he stated, and for 2025, arterial reconstruction projects are 32nd Avenue South from 22nd Street to 15th Street South. He said projects through 2028 include: Main Avenue from 25th Street to University Drive, 32nd Avenue South from 15th Street South to the Red River; 17th Avenue South from 25th Street to University Drive; and 1st Avenue North from 10th to 34the Street. Prairie Dog Funds are allocated by the State and come from oil production, he stated, and those funds must only be used to build new infrastructure or replace existing water and wastewater treatment plants, roads, bridges, airports, electrical and natural gas transmission. He said Prairie Dog funds in 2025 will be used to reconstruct NP Avenue from 8th Street to Broadway and in 2026 the funds will be used on NP Avenue from Broadway to 4th Street North and 4th Street North from Main Avenue to 1st Avenue North. With flood control projects, he said, the City oversees in-town projects, and new development projects are developer requested and 100 percent special assessed. He said there are no requests at this time for new developments and as requests come in, they will be added to the CIP. He said the same is true for alley paving projects – those are owner requested and 100 percent special assessed and at this time, there are no requests. He then outlined funding for the CIP, which comes from various sources, including a voter-approved sales tax, utility funds, Prairie Dog funds, Federal funds and special assessments.
Adjourn:
The meeting adjourned at 11:35 o’clock a.m.