Memorandum 17-125 Mid Year Budget Amendments

Memorandum 17-125

TO:                        Mayor Zak and Homer City Council

FROM:                 Katie Koester, City Manager 

DATE:                   September 20, 2017

SUBJECT:          Midyear budget amendments

Ordinance 17-34 makes necessary adjustments to the 2017 operating budget. The purpose of this memo is to explain to Council the changes in the order they are presented in the Ordinance.

Expenditures from General Fund Reserves:

Repair Library Fire Alarm System $7,380

This authorizes an emergency expenditure from the Library Reserves that was made at the end of August when building maintenance discovered a malfunction with the Library’s fire alarm system control panel. The repairs, required by code, are complete and came out of Library Reserves.

Repairs to City Hall Elevator $6,325

This authorizes an emergency expenditure that was made in July to repair the elevator at City Hall. The State inspector looked at elevator certifications and identified the need to complete a Category 5 inspection (a load test is required every 5 years). He also identified two other minor issues (ADA phone compliance and a faulty key switch). The State inspector gave the City until July 23rd to resolve the load test deficiency, which we met. The expenditure came out of the City Hall Depreciation Reserves.

Purchase and Install Automatic External Defibrillator (AED) at HERC $2,000

An AED has been requested as a safety measure at the HERC where people of all ages and abilities engage in vigorous exercise. A wall mounted AED will ensure that if a cardiac event happens at the HERC volunteers and Good Samaritans can respond quickly. The expenditure will come out of the Old Middle School Depreciation fund.

General Fund Revenue:

Property Tax $278,675

The 2017 General Fund Revenue projected $2,914,354 in revenue from Real Property Taxes.  However, with the assessed value for 2017 finalized, the City anticipates receiving approximately $278,675 more than the 2017 budget projected. As you are aware, the Borough changed the methodology for calculating assessed value in 2017. However, revenue gains are likely mitigated by a general decline in the assessed value of commercial property. Due to the controversy surrounding the 2017 assessed values, it would be prudent to anticipate some changes for 2018. Until the updated methodology settles out, I would recommend using 2016 real property values as the base for estimating revenue for 2018. The following expenditures make prudent use of the extra revenue without depending on it long term.

General Fund Expenditure (from increased property tax revenue)

Mayor/Council Professional Services $62,000

The City had unexpected legal fees in 2017 due to both the extraordinary amount of legal research that was involved with the certification of the recall petition and the ensuing legal defense from American Civil Liberties Union. This adjustment increases the 2017 legal budget (professional services) to cover those costs.

Snow Removal at City Facilities $33,000

The City contracts with a third party to remove snow and sand at public facilities (City Hall, Library, Fire Hall and Police Station). The parking lots and sidewalks have to be cleared or sanded by 8am for the workday, and again throughout the day as needed. Due to a particularly icy winter, we are already nearing budget for snow removal with half the winter season still in front of us. Additionally, the Fire Hall used to pay for snow removal out of professional services. I would like to take this opportunity to correct that and more accurately reflect the expense. The contractor and staff will be taking measures to closely monitor snow removal and sanding efforts. However, at a public facility it is essential that potential hazards and slippery areas are properly sanded and cleared, which can be an expensive endeavor during icy and wet winters.

Mayor/Council Computer Related Items $8,000

On September 19th Apple released iOS 11.  The Homer City Council iPads will not support iOS 11.   Apple does not release security patches for the older iOS versions.  This means that all City Council iPads must be replaced to maintain the security of the City email system and network.  This replacement budget will allow for each council member the choice of an Apple iPad or Windows Surface tablet. Future budgets will have a few thousand dollars in this line item to replace Councilmember tablets with their term.

Office of the City Clerk $9,100

This adjustment includes an amendment to cover a potential special election in October. The City budgets for one special election a year, which has already occurred. A special election will only be necessary in the event of a run off.  The printing and binding budget also increased to purchase a bulk supply of envelops that were necessary to cover absentee voting. This purchase should last the City a few years and the budget can come back down in printing/binding for 2018.

City Hall Reserves $166,575

I recommend the remainder of the anticipated revenue from property taxes be budgeted to City Hall reserves. This will allow sufficient funds for Council to authorize replacing the roof on City Hall during the 2018 budget cycle.

Reduction in General Fund Budget

Delete Library Loan Payment from Operating budget $99,824

Ordinance 17-23 liquidated the Permanent Fund to pay off the Library Loan and partially fund the new police station. This means we no longer need to include the $99,824 payment on the USDA loan for the Library scheduled for September in the 2017 budget. This amendment transfers the $99,824 to the Police Station Fund to remain consistent with Councils intent in Ordinance 17-23.

Non-operating Revenue

Community Assistance Payments $421,023

This amendment accepts the FY2017 and FY2018 community assistance payments from the State of Alaska. As you recall, Ordinance 16-21(S) designated the FY2017 payment to reimburse the General Fund for the City’s contribution to SPARC. The City is scheduled to receive the FY2018 payment soon. City code prohibits community assistance from being used for operating expenses.

Port and Harbor Projects

Waterline at Fish Dock $30,000

The Fish Dock potable water line that serves the fishing boats and fish buyers using the dock needs to be replaced this year. The waterline is constructed of galvanized pipe, heat traced and enclosed in an insulated covering. Researching this issue the Port and Harbor has found that 30 years is about the life span of a galvanized waterline in Homer.  Fish dock employees have worked for the past few years patching the system together but are running out of options.  The plan for this important upgrade is to replace the system with an all new heat traced HDPE pipe that will be professionally installed late this fall so that we will have it in place for the spring start up. If funded, Staff will produce an invitation for bids and solicited bid proposals from Alaskan companies capable of installing a HDPE replacement heat traced waterline system on the fish dock.

Parking Lot at Ramp 2 $25,000

This project will authorize engineering, build up, drainage, delineation, and signage to turn the parking lot between ramps 1 and 2 into a revenue generating fee lot for the 2018 season. A solution to address the drainage issue is to bring in quality crushed rock and seal it all with a hardening product reputed to be Asphalt like. With the construction of the boat house pavilion and proposed restroom replacement, this project will round out a complete refurbishment of one of the busiest spots for visitors on the Spit.

Harbor Fire Cart Refurbish $25,000

The Harbor Maintenance department has successfully completed two of seven fire cart refurbishments. These carts are an essential line of first response during boat fires that occur all too frequently during the cold winter months. Funding this project now will allow the maintenance team to order parts and complete a third cart in the fall of 2017.