Finance Committee - April 28, 2025
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, April 28, 2025.
Commissioners present or absent were as follows:
Present: Kolpack, Piepkorn, Turnberg, Mahoney.
Absent: Strand.
Staff attending: City Administrator Michael Redlinger, Assistant Finance Director Jamie Bullock, Finance Director Susan Thompson, Transit Director Julie Bommelman, Assistant Transit Director Cole Swingin, Fleet and Facilities Manager Jordan Smith, Planning Director Nicole Crutchfield, Assistant Planning Director Mark Williams and City Engineer Tom Knakmuhs.
Mayor Mahoney presiding.
Order of the Agenda:
Commissioner Kolpack moved the Order of the Agenda be approved. Second by Strand. There was unanimous approval.
Minutes:
Commissioner Turnberg moved the Minutes from the February 18, 2025 Finance Committee meeting be approved. Second by Piepkorn. There was unanimous approval.
Finance Updates:
Finance Director Susan Thompson said the year-to-date figures through March show revenues are slightly below budget. She said this is largely attributable to the timing of grant receipts and related expenditures, which are difficult to predict at this point in the year. She said, however, corresponding expenses are also below budget, placing the City in a better financial position year-to-date than initially anticipated. She stated that projecting on a quarterly basis remains challenging this early in the year. It is important to note, she said, that the implementation of the public safety sales tax will significantly alter these figures. She said this change is not expected to impact the overall bottom line, as the generated revenue should offset the associated expenses and the financial statements will present a notably different picture. Currently, she said, there are no apparent concerns, and she anticipates achieving a balanced budget by the end of the year. She said the result on the sales taxes are favorable and year-end growth for 2024 was just under 1% and the January to January comparison was negative. She said this was concerning enough to warrant contacting the Tax Department, which was unable to provide a clear explanation. She said the month-end dates can vary, making month-to-month comparisons unreliable; however, the current news is positive. Comparing year-to-date figures through February for this year against last year, she said, the City is up 9.4% and the County has increased 8.8%.
In response to a question by Commissioner Piepkorn regarding the tax increase approved in November and whether it has begun and would he see that reflected in the financial reports, Ms. Thompson said the tax increase went into effect April 1, 2025 and it will be reflected in the reports. She said the data reports will likely need to be split to account for the change for comparison. Monthly filers have until the end of May to submit returns to the state, she said, meaning the City will not receive those funds until the end of June. For quarterly filers, she said, that revenue will not pick up until the end of August. She said the meeting to talk about and approve the public safety sales tax, the compensation plan and the overall plan is going to be May 14, 2025 in the Commission Chambers. She said with a Cabinet retreat, another round of meetings and another Finance Committee meeting there will be plenty of opportunities for good conversations. She said she will be updating on the public safety sales tax and significant effort has been dedicated to that initiative. She said the objective is to present a cohesive plan addressing five key components: the compensation plan/pay scale, personnel matters, existing public safety facility and equipment obligations, new technology, including body-worn cameras and additional surveillance, and equipment and facility updates. She said the plan will include a proposed implementation timeline and extensive consideration has been given to ensuring the long-term sustainability of this initiative. The financial model employs a conservative sales tax growth estimate of 2%, she said, and a commitment has been made for an annual review and refresh of this plan to maintain market-competitive compensation and assess any changes in sales tax capacity. The aim is to ensure that projected expenditures do not exceed anticipated revenues over a ten-year horizon, she stated, and this detailed projection will be presented at the meeting on May 14th.
City Administrator Michael Redlinger said he appreciates the Commissioners for their effective coordination and communication with the leadership of both public safety departments. He said he affirmed strong support for the collective efforts undertaken to date by the compensation consultant, the Human Resources team and the chiefs and management teams within those organizations. He said he acknowledged that further work is required to effectively communicate the outcomes of their collaborative efforts. He said he outlined two primary objectives: develop a well-considered plan that is clearly communicated to the departments to ensure a successful initial implementation; and prioritize sustainability and durability. The approval this year represents the initial phase of a long-term initiative that necessitates a meticulous and responsible approach for the Commission and the departments, he stated.
In response to a question by Commissioner Piepkorn regarding getting an update on the anticipated revenue for this year, Ms. Thomson said the Finance Department is projecting out for 10 years, using a 2% growth on sales tax and breaking down the different elements.
Mayor Mahoney said the Fire and Police Departments are both working hard to identify and address the complex pay scale issues. He said it is important to review compensation for all the departments annually to stay competitive and avoid losing valuable employees and there are plans to implement a new pay scale in July.
Commissioner Kolpack commended the Police and Fire chiefs, as well as their assistant and division chiefs, for dedicated work in identifying and presenting the pay scale information.
Ms. Thompson said, regarding the budget, one thing she looked at was credit card fee expenses when payments are rendered via credit card. After looking into the many departments taking payments including Auditors, Assessors, Planning, Inspections, Engineering, Health, Library, Public Safety and enterprise funds, the City takes in about $3 million in credit card payments a year and the fee for this is about $90,000.00 annually. She said the implementation of Tyler is in effect right now which allows for more online payments and the payment processing can be configured to add the credit card fees at the bottom of the purchase, she said. A decision needs to be made on the credit card fees, she said.
In response to a question from Commission Piepkorn asking if fees added to bills is already a common practice, it would seem like a straightforward decision that could help the City budget and if there is a way to show the significant revenue generated through credit card payments in the Utility Department, also when listing other cities that do this, can the City also be included in that report, Ms. Thompson said customers will still have the option to pay with checks or cash to avoid the credit card processing fees.
In response to a question from Mayor Mahoney asking if all departments are implementing this fee, Ms. Thompson said not all departments will use Tyler, including Solid Waste and Transit due to their specific needs. Departments that do switch to Tyler, such as the Library and most of Health, could add the credit card fees, she said, and this would help the City recover costs, especially from things such as building permits where people often use credit cards to get rewards.
Transit Updates and Driver Services:
Transit Director Julie Bommelman proposed to make Transit’s 75 drivers City employees, along with 6 senior drivers, 4 road supervisors, management staff, 1 human resources generalist and 6 part-time positions. Currently, a contractor provides these services, she said. The estimate this change would save is about $500,000.00 in the 2026 budget, she said, and potentially up to $2 million with route and cost adjustments. She said efficiencies include eliminating the 6-month RFP process, more flexible scheduling due to less influence from the Teamsters Union and reducing the excessive corporate paperwork currently done by management. The idea would be to convert a clerk position to a Human Resources role, she said, senior drivers would take over some training and new software could reduce the need for 1-2 drivers. She said it is also anticipated avoiding a 25% cost increase for going out with an RFP again and a $200,000.00 rise in insurance costs. The current contractor has a 53% turnover rate, she said, and it is expected this change will improve morale and teamwork. She said she also suggests some service adjustments from the 5-year plan including: additional fixed route service for West Fargo; eliminating low-performing Route 16 and reallocating those resources; expanding time on Route 15 and adjusting Routes 17 and 18; eliminating on-demand industrial park service and Sunday paratransit service. She said she has considered fare increases and compared Fargo’s fares to other cities; however, adjusting fares is complex and impacts ridership. She said Transit also secured an additional $2 million in State funding for urban transit providers. The current contract costs about $100,000.00 per year, she said, and that would go away. Transit is about three-quarters of the way through a 5-year Transit development plan, she said, where everything is reviewed. She said the proposal for Route 16, which goes from Downtown south to West Acres, is not performing well and it is recommended to get rid of it completely. She said other routes still serve those areas and Transit could use those resources for West Fargo to help them add more fixed route service and West Fargo would cover the costs for that change. Another change is to take away Route 15, she said, where it is hard to keep it on schedule due to the fact that it serves too much since the initial plan was to have it to go all the way to WalMart from Downtown, she said, and it is a popular route; however, traffic has made it difficult to stay on time. She said the proposal is to make some changes to it, along with Routes 17 and 18. One of the main issues with Route 18 is it is a long, winding route, she said, and the goal was to reach WalMart on 52nd Avenue South. There are not many stops in between, she said; therefore, the proposal is to change the southern part of the route so it can serve Elliot Place, a senior living complex with high demand for service. She said Transit’s on-demand industrial park service costs about $300,000.00 a year and it does not have many riders. She said the recommendation is to eliminate it if the Commission agrees it is not valuable. For Sunday paratransit service, which is not required by Federal rules since the City does not have Sunday fixed routes, she said, Transit is proposing to eliminate it as a cost-saving measure of about $125,000.00 a year. She said this would affect 10 to 11 riders each Sunday. She said Fargo's population is over 200,000 and the funding is calculated differently, based on ridership, passenger miles and other things. If Transit keeps the service going and people ride it, including in West Fargo, the funding stays the same, she said. It could increase if Transit gets good ridership, she said. Another suggestion is to increase fares, she stated, and Transit received several questions about this when the proposed changes were presented to the North Dakota Legislature. She said Grand Forks recently increased fares and compared to Fargo’s fares and to similar cities, Fargo's fares are in the middle; however, Fargo’s fare structure seems complicated. It is proposed to simplify it, offering fewer choices as long as people's needs are still met, she said. Dilworth, West Fargo, Moorhead and NDSU would need to agree to any fare changes since all are part of the cost-sharing agreements and Valley Senior Services, operated by the Park District, also serves seniors, she said, and many of their riders also use paratransit. She said Transit has tried to keep fares consistent with Valley Senior Services, she said, who are raising fares to $4 in July. After analyzing the raised fares, she said, the industry standard suggests a 10% to 15% decrease in ridership. Transit received another $2 million from the State, she said, which will be split among the four urban transit providers in North Dakota: Fargo, Bismarck, Minot and Grand Forks. It was proposed to the North Dakota Department of Transportation (DOT) a different formula for Fargo's share, based on a flat rate plus a percentage of ridership, she said. Fargo would get about $425,000.00 this year and in 2026, she said. Hopefully, if funded, Transit will also work on a study for a long-term dedicated funding source for fixed route transit, she said. North Dakota is mostly rural, so this was new to the Legislature, she said, and it was a good way to show them the Transit needs in larger areas.
In response to a question from Mayor Mahoney asking if any routes between Fargo and Moorhead were being cut, Mr. Bommelman confirmed that no routes to Moorhead were being cut and added that the proposals do not include adjustments to the Moorhead routes as Moorhead receives enough funding through the State of Minnesota. She said at the beginning of the year, Transit does have a new cost allocation and agreement with Moorhead, Dilworth and West Fargo. She said that identifies how Transit operates within the whole area for the Transit system. A committee meets every month to discuss all of these issues and makes sure everything is equitable across the board, she said, and the balancing act is Moorhead does receive a lot more funding from the State; however, that money does not cross over into North Dakota, so Moorhead is able to provide more Transit service. She said the timetable Transit is considering for route changes align with the Transit development plan and the City budget. It is about three-quarters through the Transit Development Plan, she said, and it should be finished with suggested route adjustments and fare changes brought to the Finance, Administration and Human Resources team (FAHR) and then the City Commission. She said this will require a public hearing and adoption. She said final input will be gathered in early June 2025, and the Commission presentation would be in mid to late June 2025. All of that and the results from the Transit development plan will be combined with the City budget process, she said.
Mayor Mahoney said last year's deficit was significant and it is a good start and the hope is for more State support for Transit in the future. State money is always helpful, he said, and the State will see the need for more support. He is glad Transit is addressing driver issues and the public input on fares is important.
Extra-Territorial Jurisdiction and Growth Plan:
Planning Director Nicole Crutchfield said a bi-weekly meeting occurs between the Planning, Engineering, Water and Wastewater Reclamation Departments, the Finance Director and City Administration. The purpose of these meetings is to specifically discuss Extra-Territorial (ET) coordination and properties within the ET area. She said ET jurisdiction, as defined by Century Code, grants the City zoning powers over a designated land area outside city limits. She referenced previous City Commission discussions from 2021 and 2022 and said a particular property has been under discussion for the past six to seven years, based on email records. She stated the current agenda item was for informational purposes only, aiming to affirm next steps and address potential questions, not to make any definitive decisions. Regarding growth planning, she said discussions with planners and administrators in adjacent jurisdictions have included requests for utility services and annexation into the City. She highlighted a collectively affirmed historical practice of providing services to properties in the ET area; however, she emphasized annexing these properties into City limits is more efficient, citing benefits such as increased property tax value. She said the previous growth plan had a tiered approach to development timelines and the current growth plan focuses on super grids — geographical areas prioritized based on factors such as access to utilities and other efficiencies used as assessment tools. Planning is currently working with developers in super grid A, she stated, specifically in the southern areas near the storm pond, and near 64th Avenue. She said staff time, work within districts, utility allocation and Planning efforts are guided by these super grid designations, contrasting Super Grid One near the Amazon development with Super Grid Two to the west. While acknowledging the complexity of annexation planning, she stressed that the growth plan's key highlights involve multi-coordination and multi-agency collaboration. This requires the involvement of various departments, she said, including Administration, Engineering, Utilities, Police, Fire, Emergency Services, Transit and the Park District. She said this multi-coordination effort began around 2020 with the establishment of bi-weekly multi-department meetings to facilitate communication and address requests. She said regarding the Commerce on I-29 development, the history is lengthy and available for review; however, the City has dedicated significant time to assisting this development with surplus storm sewer needs.
Water Reclamation Director Jim Hausauer provided background on the Commerce on I-29 development, stating the City approved it in 2014 with limited planning for sewer service, relying mainly on a large holding tank. He explained that pumping out and treating the tank's contents was costly, and it occasionally overflowed, requiring involvement from the Health Department and City staff. He noted that in the past, the City collaborated with the Southeast Cass Water Resource District (SECWRD) to address sewer problems in smaller communities, utilizing special assessments to install sewer lines. Their proposed solution for the Commerce development was to collaborate with the District to build a lift station and a force main. He said the SECWRD now requires a signed petition bond, with landowners needing to contribute $75,000.00 to the District before design or legal work can start. He indicated that obtaining the signed bond has been challenging due to frequent ownership changes in the area.
Ms. Crutchfield addressed a request from October 2022 that was presented to the City Commission, where the decision was made not to extend utility services to the west. She mentioned the property development team had proposed paying for a small westward utility expansion to potentially improve the rate of return; however, staff had concerns regarding the annexation plan and the coordination of services and costs. She noted that knowledge of finance and support needs has evolved since 2022 due to the growth plan, and this issue remains a work in progress. She said Planning is currently receiving requests during the Land Development Code (LDC) planning process, as anticipated in the growth plan, with the LDC expected to be finalized around late fall or early next year. She said staff and the development community are currently in a holding pattern.
Commissioner Piepkorn said there will be rapid development in south Fargo within two years following the completion of the Diversion project. He said developers are already pushing for quick approvals and suggested Planning efforts should prioritize the south, with the north being a later focus. He emphasized this prioritization affects planning and budget allocation, noting the two-year timeframe will pass quickly. He stressed the importance of finalizing the LDC to prevent future problems, as developers are eager to build now.
Ms. Crutchfield affirmed the idea of prioritizing developer work, both within and outside the City, particularly concerning utilities, emphasizing the need for clarity for both developers and staff, which was the purpose of the current discussion.
Responding to Commissioner Piepkorn's question about FAHR and engineering budgeting, considering the numerous interchanges and arterials and their budgetary impact, City Engineer Tom Knakmuhs explained the ET map will illustrate growth plan-covered super grids, guiding the allocation of time and resources. He mentioned Fargo's significant investment in grid A's infrastructure, largely through special assessments with delayed payments, emphasizing the priority of recouping the City's investment. He noted that requests in grid C, zone two are time-consuming and requested guidance on whether to prioritize these areas or focus on faster development areas.
In response to a question from Commissioner Piepkorn regarding the Department of Transportation (DOT) and interchanges, noting the DOT's past lack of support but the current need for completion, Mr. Knakmuhs stated that ramps at the 64th Avenue interchange are included in the North Dakota DOT's four-year work plan for 2028. He said the City is responsible for completing the interstate justification and traffic operations reports, which are nearly finished. He said ongoing negotiations with the North Dakota DOT regarding funding splits for that project and noted the DOT's priority of reconstructing the 40th Avenue North interchange. His plan is to initiate discussions with the DOT about the 76th Avenue interchange once the 64th Avenue project progresses.
Commissioner Piepkorn emphasized the need to include interchanges, such as those at 100th Avenue, in their plans to reserve corridors and avoid future property acquisition costs. He explained this is crucial due to the previous Governor's lack of support for such interchanges.
Mayor Mahoney said the City is actively working on engineering plans to expedite the 64th Avenue project from 2028 to 2026, engaging with Federal and State representatives and the DOT. He said the consideration of reconstructing the 12th Avenue Bridge and a grant application for that project; however, he expressed concern about uncertain and decreasing Federal funding, emphasizing the need for lobbying efforts to secure funds. He underscored the importance of the timely completion of the 64th Avenue project, particularly with the growth of the sports complex area, and suggested regular updates to the Commissioners on the progress.
Commissioner Kolpack noted that some final legislation is being processed and that a recent Friday call included a productive discussion about upcoming changes.
In response to a question from Mayor Mahoney regarding the multi-million-dollar cost of extending sewer and water to the 100th Avenue area, Mr. Hausauer provided a realistic estimate of $3 million to $5 million.
Parking Updates and RoCo Garage Doors:
Assistant Planning Director Mark Williams said the NP ramp is expected to be about $600,000.00 under budget, creating an opportunity to address security issues at the RoCo Parking Ramp. He proposed using the surplus funds to install rollup doors and other security measures at the RoCo, which is estimated to cost between $250,000.00 and $300,000.00. He cited the effectiveness of rollup doors at the Island Park ramp and asked the committee to discuss the process for allocating the surplus funds.
Ms. Thompson explained the NP ramp was financed through a combination of sources, including a 2% state loan (up to $9 million), an $8 million debt obligation and upcoming interfund borrowing. She stated there are enough expenses to support the bond and since the project is coming in under the $20 million budget, she suggested using the surplus for a change order to have the same contractor install doors at the RoCo.
In response to a question from Mayor Mahoney asking about the possibility of charging for RoCo parking after an hour of parking, Ms. Crutchfield said the City plans to return in about three to four months with a consultant and Interstate Parking to discuss a comprehensive expense and revenue plan. She said this plan is related to a parking study request on the current agenda. She said Planning is working on a year-end report on costs and spending and noted a current opportunity to purchase and install two more doors with the same contractor by August. She emphasized that broader parking discussions are definitely seen as a need over the next four months.
Adjourn:
The meeting adjourned at 11:04 o’clock a.m.