04 Capital Financial Plan - Laserfiche WebLink

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The project is offset by park donations of$265,000. 3. East Sibley Street near Trailside Park- The City anticipates bonding for street and utility work adjacent to the Trailside park project. Water,sewer,and tax levies are pledged to the repayment on the debt. 2019 The City has identified the purchase of equipment,along with a street and utility project. Specifically: 1. The plan identifies the purchase of a front-end loader and a fire truck. Both issued using general obligation debt. The equipment is estimated at$225,000 and$230,000, respectively. Tax levies are the primary source of repayment for the equipment debt. 2. Myers Road and Sluetter Road will be improved in 2019. The$500,000 estimated project will be financed through general obligation debt. Currently,we dedicate water,sewer,and tax levies to the repayment of the debt. 2032 At this point,the plan calls for the major reconstruction of Patriot Avenue with an estimated cost of $2,500,000. The City intends to use cash to pay for the project for fund 402(the replenished funds for the internal loans issued in 2018 described above). The impact of taking on all of these projects as described will result in the following impacts: • Tax rates will elevate: The City will need to increase its tax rate to cover the debt obligations. The model projects the tax levy to jump to nearly 66%in 2020 before decreasing in the following years and stabilizing back at 56%in the closing years of this plan. • Water and Sewer rate increases are necessary: Sewer rate adjustments might not be necessary, but advised nonetheless. It is always best to stay"ahead of the game"when it comes to Enterprise Funds. Perhaps a 1%annual increase in Sewer rates would be appropriate. Water rates are a bit more complicated due to the need to develop"conservation rates"in order to comply with new rules regarding demand reduction measures. • Debt levels remain low: Due to the fact that a significant portion of project costs will be funded by internal loans(cash provided by County payments for road turn-backs),the City's official debt ratios will remain low(we are contemplating actual General Obligation Bonds for only a fraction of the identified costs). We don't anticipate any adverse effects on the City's credit rating due to the proposed projects. • Long term costs will increase slightly: Long term taxes and utility costs for a typical resident are expected to rise only slightly, and at a lower pace than the historic rate of inflation. At stated earlier, the City of Pequot Lakes is positioned very well strategically to take on new projects. Water Rate Recommendations All public water suppliers in Minnesota that serve more than 1,000 people must have a water supply plan approved by the Department of Natural Resources(DNR).Water supply plans must be updated and submitted to the DNR for approval every ten years.This requirement,in place since the 1990s, is designed