Regular Meeting
September 7, 2010
The Mayor and Council
of the City of Fairbury met in regular session in the Council Chambers
located at 612 D Street, Fairbury, Nebraska, on the 7th day of
September 2010, at 7:30 p.m. Mayor Homer L. Ward called the meeting to
order.
Notice of meeting was
given in advance thereof by publication in the Fairbury Journal News,
Fairbury, Nebraska, the designated method of giving notice, as shown by
affidavit of publication. The Open Meetings Act was posted in the meeting
room and pointed out by Mayor Ward as required by law.
Roll call found the
following Council Members present: Doug Brown, Ed Friesen, Roger Bailey, Tim
Polson, Phil Rogge, Brad Kuzelka, and Kelly Davis. Absent: Shirley Bender.
Mayor Ward called for
the submittal of forms to request future agenda items. No forms were
submitted during the meeting.
Mayor Ward read the
Consent Agenda:
1.
Approval of the minutes of the
regular meeting of August 17, 2010.
2.
Approval of claims.
Rogge moved to approve
the Consent Agenda. Motion seconded by Davis. On roll call, Brown,
Friesen, Bailey, Polson, Rogge, Kuzelka, and Davis voted “yes.” Bender
absent. Motion carried.
Mayor Ward opened the
Budget Hearing and Budget Summary for the 2010-2011 Fiscal Year.
Brian Blobaum of
Blobaum & Busboom, P.C. explained the budget process has two legal items
that it addresses. One is setting the dollar amount of property tax request
that we will be levying on properties for the coming year for the General
Fund and the Bond Fund; and the other is, setting an overall expenditure
limit for the City for the entire year. Blobaum stated this hearing will be
the City’s final chance to ask for property tax – we can not change this
request following this hearing. Blobaum stated all the extra data of
spreadsheets and line items are internal numbers that are put together. The
total of those creates a legal limit; so we’re not limited by line item or
by fund, we’re limited by the total. Blobaum stated the overall property
tax asking for this budget, which was published, in the General Fund for the
2010-2011 Fiscal Year is $509,427.00 and in the Bond Fund is $252,748.00.
This is a total tax asking of $762,175.00, which compared with the prior
year of $753,962.00, this is a 1.1% total increase. (Last year the tax
asking in the General Fund was $503,952.00 and in the Bond Fund was
$250,000.00.) The tax levy request for the General Fund is .472¢, which is
the maximum amount we can ask for the General Fund, because we allocated the
remainder of the 50¢ to the Airport Authority. The municipal levy limit is
45¢ plus 5¢ for interlocal agreements. The Bond Fund is not limited and the
City has chosen to leave it at the same levy as last year with a slight
valuation increase which resulted in $2,700.00 more tax. The overall limits
of expenditures that are set up in this budget are the cash balances that we
have on hand, plus anticipated revenues, less normal operating
expenditures. Then we have budgeted basically all of the money that we have
generated plus our cash reserves to be able to be spent as capital outlay
items. The expenditure limits in the General Fund for 2010-2011 we’re
budgeting $6,431,824.00, in the Bond Fund for 2010-2011 we’re budgeting
$671,692.00 and in the Keno Fund for 2010-2011 we’re budgeting $53,732.00.
Blobaum stated the fluctuation of the expenditure amounts in the Bond Fund
the previous four years – in 2007-2008 and 2009-2010 this shows bond
refinancing. Blobaum stated in the Bond Fund the expenditure limit is
budgeted at $671,692.00; the actual bond payment will be about half of that
amount in the coming year. Blobaum stated he budgeted the remaining
$335,483.00 to be spent; so potentially there could be a prepayment however
should have approximately $100,000.00 left in the Bond Fund on October 1,
2011 as we build up towards the December 2011 bond payment – so at the end
of September 30, 2011 we should have about $230,000.00 extra money in this
fund. Blobaum continued with an overview of cash positions historically and
for the upcoming year, stating that in comparing the General Fund budget to
prior years budgets – he looks at budgeted reduction in cash reserves and
adjusts for rebudgeted funds such as LB840 (which really isn’t our money to
spend on anything); so subtracts that out of the reduction. In comparison,
in 2008-2009 we budgeted to reduce cash reserves with those adjustments by
$113,629.00 and actually increased the cash reserves by $283,480.00, in
2009-2010, the current year, we budgeted to reduce cash reserves by
$118,854.00 and estimating we will actually increase by approximately
$108,303.00 and for 2010-2011 we have budgeted to reduce cash reserves by
$54,854.00. However, we don’t know how the current year will turn out; if
we will have an increase or decrease; usually we come out better than what
we have said. The estimated year end cash reserves, on October 1, 2010, in
the governmental funds (not utility funds) should be approximately
$1,783,000.00 of which about $723,000.00 is reserved; not available for
general purposes such as salaries, etc. The reserved funds, which we can
not touch, are LB840 of $620,000.00, fire equipment of $22,000.00 and the
remainder is grants and trust funds. In the early 80’s the expendable cash
reserve was as low as about $400,000.00 and in the 90’s the reserve reached
as high as $1.5 million. Blobaum stated the current accessible cash
reserves of about $1,060,000.00, of the City, have reached a thirty year
historical average; we’re in a pretty good position. No one else addressed
the Council during the public hearing. Mayor Ward declared the hearing
closed.
Mayor Ward opened the
Public Hearing setting of the final tax request for the
2010-2011 Fiscal Year
at $509,427.00 for the General Fund and $252,748.00 for the Bond Fund. Blobaum stated this hearing is a special hearing that is required when
the dollar amount of property tax request has changed from the prior year;
we have to set the new dollar amounts.
No one else addressed the Council during
the public hearing. Mayor Ward declared the hearing closed.
Mayor Ward opened the
Public Hearing concerning LB840 funds for a “Performance Based Grant” in the
amount of $20,000.00 for the “Sweet Creations” project. Craig Eberle with
Southeast Nebraska Development District (SENDD) office in Lincoln, Program
Administrator for the Fairbury LB840 Program, addressed the Council. Eberle
stated the purpose of this public hearing concerns using $20,000.00 of the
LB840 Local Option Sales Tax funds for financing under the approved Economic
Development Plan; if approved by the City Council, funds would be provided
to Sweet Creations, owned by Carmen Ragland, in the amount of $20,000.00 as
a performance based grant to assist with purchasing equipment and fixtures
to complete start-up costs of this new bakery and catering business. Eberle
stated this business has secured an additional $25,000.00 of project funding
for working capital, supplies, inventory, fixtures, and other equipment.
Eberle stated this business will be required to create at least one full
time equivalent job position within twelve months of this agreement, and
retain that position for at least twenty-four months thereafter from closing
of the grant fund distribution. Eberle stated this business will provide a
wide range of baked goods (including homemade cinnamon rolls, hamburger
buns, cakes, pies, cupcakes, donuts, brownies, cookies, and kolaches) as
well as a full catering menu for large or small functions. Eberle stated
this project meets the LB840 criteria and the Economic Development Review
Committee recommends the City Council approve obligating $20,000.00 as a
performance based grant from the LB840 Economic Development Plan for this
application under the conditions of the final Grant Conditions Agreement.
Eberle stated Ragland plans to lease an existing commercial kitchen space in
the lower level of the Pinecrest Apartment Complex located at 1011 K Street
in Fairbury. Linda Knight addressed the Council. Knight stated she has no
problems with the catering but does with the cakes. Knight doesn’t feel the
City is big enough for another bakery – we already have Ray’s and
Schroeder’s – we don’t have enough people in this town to support that many
bakeries making cakes for weddings, etc. Knight stated her daughter, who
owns the Country Cottage at Prairie Pointe Plaza (which she also received
funding from the LB840 program), has worked very hard to keep her business
going; this will hurt her business. No one else addressed the Council
during the public hearing. Mayor Ward declared the hearing closed.
Rogge moved to approve
the 2010-2011 Fiscal Year Budget as presented. Motion seconded by Kuzelka.
On roll call, Brown, Friesen, Bailey, Polson, Rogge, Kuzelka, and Davis
voted “yes.” Bender absent. Motion carried.
Blobaum presented the
City of Fairbury Enterprise Funds (utility funds) Financial Statements and
Schedules for Year Ending April 30, 2010. Blobaum stated the Enterprise
Funds are eventually included in the City of Fairbury Financial Statements
on September 30, but the April 30th numbers are used. Blobaum
stated every audit they do for government entities, they perform their audit
in accordance with auditing standards generally accepted in the United
States and the standards applicable to financial audits contained in the GAO
yellow book (auditing book). The GAO requires additional steps regarding
the analysis of internal controls over compliance. These standards require
they perform the audit to obtain reasonable assurance about whether the
financial statements are materially correct. Blobaum stated his firm is
issuing a clean audit opinion but that he is required to report internal
control deficiencies. Blobaum stated one significant internal control
deficiency is the lack of separation of duties, which they report in every
governmental entity they audit; as small governmental entities do not have
enough people to perform every financial duty separately. Blobaum stated
another control deficiency is the accounting cut off each year – not a big
issue, but the monthly financial statements are presented as if the power
payables is a reduction in cash rather than a payable – doesn’t actually get
paid until the 20th of the following month; they suggest these be
estimated and the financial statements be prepared in a more timely manner
for the Board of Public Works (BOPW); and another deficiency is a small
interfund balance in the amount of $15,000.00 – they suggest this be
eliminated. Blobaum continued with an overview stating in the cash balance
and cash flow data for the year 2010 – had a beginning cash balance of
$4,824,151.00, with a net income of $897,559.00 and with the depreciation
expense and fixed assets and long-term debt adjustments – ended with a cash
balance of $5,581.464.00 – compared to 2007 the beginning cash balance was
$2,721,010.00 and the end of 2010 was $5,581,464.00 – this shows have had
some very good years in between. Blobaum stated the biggest item involved
in the utility funds is the purchase and sale of electricity. Blobaum
stated the total power sales for the 2010 Fiscal Year ended with an increase
of $268,671.00 which is a 5% increase. Blobaum stated the total power cost
for the 2010 Fiscal Year, which includes the purchase of electricity, power
for water pumping and power for the sewer plant, ended with an increase of
$217,791.00 which is a 7% increase. Blobaum stated the overall power margin
for 2010 was 48.3% compared to last year which was 49.7% which is a 1.3%
decrease from last year showing purchases versus sales of electricity.
Blobaum stated something to be watched would be, if we’re creating
$700,000.00 of cash – the 1% less margin may not be an issue; but 1% of
margin is basically $200,000.00. Blobaum stated i.e. if we have a 5%
increase of the purchase of power, we probably can’t just eat that – would
probably have to pass on power increases. Blobaum stated the BOPW is
currently working on an electric rate study. Blobaum stated the total cost
of labor for the light and water department actually decreased by 2% this
fiscal year compared to an increase of 6% last year; which shows a good
record of holding down the line of labor costs. The total cost of labor for
the sewer department shows a huge increase this year as have very few
employees in this department and one employee also retired this year so
having to train someone new this will fluctuate based on those issues; this
department shows a 36% greater payroll cost for this year. Blobaum stated
the labor costs were increasing faster, back in 2002 through 2006, than what
the increases in utility revenues were; this was reaching a very thin margin
between the gross profit between the utilities that we were selling versus
the labor costs. In the 2007 year their were some power and utility rate
hikes that went into affect and also a policy instated to hold labor costs
down – do some early retirements and try to hold replacements to a minimum
of retiring employees. The light & water department has really held the
line since then with the payroll costs and thus we’ve created that margin of
$600,000.00 - $800,000.00 of increases in cash the last three years.
Blobaum stated the light & water department shows a net income at the year
ending April 30, 2010 of $772,561.00 versus $712,260.00 last year; and the
sewer disposal department shows a net income of $124,998.00 versus
$119,712.00 last year. Blobaum stated in 2007, 2008, and 2009 have had
definite increases in gross profit which has contributed to strong net
incomes. Bailey moved to approve the City of Fairbury Enterprise Funds
Financial Statements and Schedules for Year Ending April 30, 2010. Motion
seconded by Rogge. On roll call, Brown, Friesen, Bailey, Polson, Rogge,
Kuzelka and Davis voted “yes.” Bender absent. Motion carried.
Mayor Ward read from
the agenda “consider City purchasing property located at 415 West 8th
Street”. City Administrator Joseph Parker stated at the last Council
meeting he had suggested the Council members check this property out to see
if they would be interested in purchasing this property which is located
across the street from the Girl Scout Cabin and the City Park. Parker stated
he had contacted the owner to see if she would be willing to sell this
property to the City; and she is. Parker stated she would sell the property
to the City for $200.00 plus property taxes of approximately $155.00.
Parker stated the City would demo the house. Council member Doug Brown
asked Parker if the City would demo the house themselves and if we’re good
to go with the asbestos and everything. Parker stated the asbestos testing
will need to be done – it is a small house so hopefully this wouldn’t be
much; but we will have that expense also. Parker stated he wanted to wait
on that to make sure the Council wants to go ahead with the purchase before
he did anything further. Parker stated the City would demo the house
themselves. Brown moved to approve giving the City Administrator the
authority to pursue purchasing the property located at 415 West 8th
Street. Motion seconded by Friesen. On roll call, Brown, Friesen, Bailey,
Polson, Rogge, Kuzelka and Davis voted “yes.” Bender absent. Motion
carried.
Mayor Ward read from
the agenda “consideration of the distribution of $10,000.00 of funding to
“Discs N Dat” project”. Parker stated the contract that had to be reviewed
has not been reviewed adequately by the attorney representing Discs N Dat
and they requested this be postponed until the next Council meeting. Bailed
moved to postpone agenda item E4 - consideration of the distribution of
$10,000.00 of funding to “Discs N Dat” project until the next Council
meeting. Motion seconded by Rogge. On roll call, Brown, Friesen, Bailey,
Polson, Rogge, Kuzelka and Davis voted “yes.” Bender absent. Motion
carried.
Polson moved to adopt
Resolution No. 788 setting the 2010-2011 property tax request at $509,427.00
for the General Fund and $252,748.00 for the Bond Fund. Motion seconded by
Rogge. On roll call, Brown, Friesen,
Bailey, Polson, Rogge, Kuzelka, and Davis voted “yes.” Bender absent.
Motion carried.
Brown moved to adopt
Resolution No. 789 obligating LB840 Funds to “Sweet Creations” for a
“Performance Based Grant” in the amount of $20,000.00. Motion seconded by
Davis. On roll call, Brown, Friesen,
Bailey, Rogge, Kuzelka, and Davis voted “yes.” Polson abstained since he
works for a company that has a bakery. Bender absent. Motion carried.
Within the City
Administrators report, Joseph Parker stated he received an email from Deb
Hellbusch inviting everyone to attend a meeting on Thursday, September 9,
2010 at 1:00 p.m. at the lower level of Union Bank to discuss lead-based
paint.
Brown stated Deb
Hellbusch has been working on a grant for healthy homes/lead paint in the
amount of $2.3 million; if we were the recipient of this grant, Hellbusch
feels we could identify and rectify between 120-140 homes. She needs help
with representation to try to get this grant. The meeting is with Public
Health Solutions.
Rogge moved to adjourn
the meeting. Motion seconded by Friesen. On roll call, Brown, Friesen,
Bailey, Polson, Rogge, Kuzelka, and Davis voted “yes.” Bender absent.
Motion carried. Meeting adjourned at 8:05 p.m.
Homer L. Ward,
Mayor
ATTEST:
Sharyl Preston, City Clerk
