2015 Audit

The annual audit was presented at the April City Council meeting.  The audit showed we were in good shape as we received a very favorable outcome.  On the revenue side we saw a positive variance of $76,990 in revenues.  The largest portion of the variance was in funds granted to the city by the state for road improvements.  This was not budgeted as it was appropriated after the final budget was adopted.  Other significant positive variances were property taxes and special assessment revenues.  These increases were likely due to delinquent property taxes being paid. 

On the expenditure side of the budget we had a positive variance of $114,231.  This is the result of under spending the budgeted amounts.  The largest variance here was funds that were budgeted for road improvements.  We had anticipated a larger project than what was approved for completion.  Another large variance was in public works for future equipment purchases.  

With the city having only one debt service instrument, the debt of the city has been decreased substantially.  Other good news about debt was the collection of past due amounts that were collected in taxes.  Rather than run somewhat in deficit with a historical collection rate of about 93%, we collected amounts in excess of those budgeted and certified.  This resulted in a positive variance of $8,916.  

Our ability to manage expenses rests in the annual budget and levy but also in an account created to address long term and large expenses.  This account is called the Revolving Capital Fund.  Within this fund we have assigned revenues for future use by category or department.  Each year we deposit or spend funds in this account as they are budgeted and are available.  This fund grew $339,273 this past year.  The majority of this increase were from funds made available for road improvements that went unspent this year to be used in future years.  

All said the balance for the city general fund at year end was $1,098,546.  With the policy to maintain an undesignated fund balance at 45% of the following years budget it results in a “surplus” that can be assigned to the Future Improvement line item in the Revolving Capital Fund.  With this transfer the fund balance is increased by $191,903.  

The sewer fund was also audited with good results.  Operating revenues and disbursements showed a positive fund balance of $151,729.  Non-operating revenues show an additional income of $125,590.  All told the balance of the sewer fund is $3,184,543.  This balance positions us well for the future expansion of the wastewater treatment faculties when the time comes.  This allows us to continue to keep user rates low by anticipating the future.  

The auditors were able to give the city an unqualified opinion on the regulatory basis of accounting.  That’s a good thing! It’s nice to have a great outcome but it’s also nice to get your auditors blessings. 

Capital Improvements for Parks in Breezy Point

The Park and Recreation Committee have been working on the renewal/update of their 5-year Comprehensive Improvement Plan which provides for the development of park improvements.  This plan is reviewed annually but periodically is changed to better reflect the desires of the committee in terms of what improvements will be established and when.  

The plan proposes a number of things to be accomplished this year.  The most pressing of them is the completion of the back nine of the Disc Golf Course.  Nine holes were established in 2105 and nine additional holes are proposed for 2016 making it one of the few 18 hole Disc Golf courses in the area.  Also proposed for the disc golf course is the installation of some benches.  

Other things on the list include concrete pads for under the bleachers at the ball field in City Park.  This will clean things up there but also will deal with some safety issues when mowing.  Two additional benches will be purchased for installation at the trail head of the Four-Seasons Trail.  

The most expensive project proposed is to move the Fishing Boardwalk.  The plan contemplates a worst case approach in terms of costs with the conversion of the boardwalk to a floating dock. It is hoped an alternate solution can be found to move the structure out over the water without the floats.  This has been requested as fishing cannot be accomplished directly below the structure.  Currently the edge of the structure has water depths of less than a foot.  Moving the structure out from the edge of the bank has been hampered by the peat/muck bottom requiring a different solution.  It is still hoped that longer poles, a different location along the channel, or other option can be found to limit the expense of making this change.  This additional cost of the worst case solution was not without controversy as one council member voted against the plan because of this issue.  That being said all options are on the table to see if a different, less expensive solution can’t be found. 

The plan is a five year plan that contemplates additional park improvements in the following years.  In the plan there are references to additional park instruments, extending the paved trail in the city park, and the development of a slightly smaller ballfield for Little League play. 

We look forward to finishing the Disc Golf Course and getting some of the other park improvements done this year.  The Boardwalk changes will take some time to consider our best option so may not be completed this year but action will occur to determine how we may proceed.  

  

Construction for 2016

With bids in hand and assessment hearings completed the city council ordered the project and awarded the contract for paving the gravel portions of Winter Trail and Scenic Overlook this summer.  This was accomplished at the March City Council meeting. 

 

Both of these roadways were partially paved.  The goal was to pave the gravel portions of these roadways.  In doing so, the project will also correct some drainage issues.  The current paved portions of the streets have a pavement width of 20 feet.  Our current standard for a local road is 22 feet.  Making a portion of the roadway wider didn’t make a lot of sense.  It would have required the current gravel base to be widened to provide for the additional width of the pavement.  Doing so would have required the reconstruction of the road beds as adding materials to both sides of the road would not have provided a satisfactory base.  Paving the roadway as a continued 20 foot wide street was the most practical and economical approach and what will be accomplished.  

Bids were received on January 28^th from 4 bidders.  They included Tri-City Asphalt, Anderson Brothers, DeChantel Excavating, and Pratts Affordable Excavating.  The bids ranged from a high bid of $119,040.00 to a low bid of $95,495.85.   The low bid was received from DeChantel Excavating of Brainerd.  The schedule for construction hasn’t been determined as of yet but it is assumed the project will start when weather permits.  Completion of the contract, including restoration and seeding, is to be accomplished no later than the end of September. 

These improvements were assessed to abutting property owners.  With the work on the two streets having different requirements the costs for each were different.  For Scenic Overlook the assessment amount is $3,550.35 per lot.  For Winter Trail the amount is $4,734.16 per lot.  These costs were assessed over a period of 15 years at a rate of 4.25%.   

We look forward to seeing additional streets in Breezy Point paved with improved drainage.  Not only do they look nice they function better for residents and users. 

Year End Transfers

Each year before the annual audit the city reviews it financial statements to assign funds anticipated to be spent in the future for things like capital equipment purchases.  With this review funds are earmarked to be placed in the Revolving Capital Fund which is a separate section of the general fund of the city.  By earmarking these funds we save them for anticipated expenditure in the future.  Doing this allows for a leveling of both expenditures and levies by moderating the highs and lows that could occur as larger expenditures are made. 

To make this all work there needs to be some planning involved which anticipates future expenditures.  There is some degree of frugalness that also occurs. We may budget for the purchase of a piece of equipment at an amount that makes sense but when it comes down to the purchase, the cost is further researched to see if it can be purchased at a lower price.  Those unspent funds do not get involved in a “use it or lose it” mentality as the difference is saved for a future need.  

The largest transfer this year was that of revenues for road improvements.  We had anticipated doing some road paving projects that didn’t occur and we had budgeted for seal coating that was put off until 2016.  Some of the budgeted amount was used for a paving project but the remainder was unspent and earmarked for road improvements, making that transfer $226,691.10.  Added to road improvements was some state funding we received in the amount of $62,145.  Funds were also set aside for public works equipment, future land acquisition, employee liabilities, administrative needs, and sewer improvements.  

The transfers also provide for the use of funds already established in the Revolving Capital Fund to offset expenditures that exceed the annual budget. This year a transfer was made to balance the expenditure of a squad car.  This was a planned transfer that lowered the amount of the levy as we had funds set aside for this purpose.  

It may seem obvious that having these funds set aside are of benefit for planned expenditures but they also are a benefit for unplanned expenditures such as a need to replace a failing piece of equipment.  In addition the lack of financing reduces costs.  If we have cash on hand to make a purchase we’re not spending resources on interest expense.  It only makes sense that if a plow truck costs in excess of $250,000 that planning for that expenditure is easier to handle when some or all of the resources are available to make that happen.  

There is the reality that not all things can be anticipated or fully funded upfront but having a plan of sorts certainly mitigates our needs.  The Revolving Capital Fund is not fully funded but it does serve a purpose for most things.  With constant attention to details, needs, and budgeting we’re getting closer to that goal. 

Property Values?

The county assessor, on an annual basis, holds a meeting to address questions of property values assigned to individual properties.  This meeting is called the Board of Appeal and Equalization.  This meeting is held at city hall with the city council present.  Property owners are given the opportunity to talk with the assessor about their property value.  An appeal can be made to the city council to consider whether or not an adjustment would be made to the assigned property value. 

This meeting will be held on April 14, 2016 at 10:00 am.  Appointments will be available for the meeting but property owners can attend on a first come first serve basis.  Property owners may also meet with the assessor prior to the meeting to discuss their properties value.  The Crow Wing County Assessor can be reached at 218-824-1016. 

A New Sewer Truck

Sometimes you just need to replace something that was worn out.  This is the case with the equipment box on the sewer truck.  This box is on its third chassis and is literally falling apart.  We had holes rusted through that had been patched with various materials but continued to lose some tools along the road as the openings enlarge.  It was time to get a new utility equipment box.  

In thinking about this, a broader picture emerged.  The existing sewer truck is in good shape, a 2008 vehicle with only about 45,000 miles on it.  We have a 2000 one-ton truck that was replaced a couple of years ago but was kept as a backup vehicle.  It has a plow and dump box installed on it.  It was felt it would be good to recycle the dump box and plow equipment sending the chassis down the road from this 2000 truck.  With the purchase of a new vehicle the utility equipment box could be installed on a new vehicle.  The 2008 vehicle, with the utility equipment box removed, would be a good candidate for the dump box and plow. 

So the plan that emerged is a new sewer truck will be purchased along with a utility equipment box, including a crane for removing sewer lift pumps.  The existing sewer truck has a utility equipment box which will be scraped and recycled.  The truck and chassis will be reused with the dump box and plow installed from the 2000 truck.  The 2000 truck and chassis will be sold.  This effort would be undertaken by the public works crew.  The plan could change if the economies of making the switch and sale of 2000 truck would carry a better price with some of the equipment remaining.  This has to be weighed against the purchase of new equipment for the 2008 chassis. 

In any event the purchase of a new truck and utility equipment box was approved.  The price was obtained through state bidding.  The truck is a 2016 GMC Sierra 3500 for $28,915.28.  The utility equipment box comes to $35,562 making the total cost $64,477.28.  Funds for purchase of this equipment come out of the sewer fund.  $68,000 was budgeted for this purpose.