Appointed Committees

SALES TAX AD HOC COMMITTEE February 21, 2017 Page 1 Committee Members Present: Dean Frantsvog, Rick Hedberg, Shannon Straight, Stephanie Hoffart, John MacMartin, Robert Schemp Members Absent None Others Present: Tom Barry, Stephan Podrygula, Miranda Schuler, Dan Jonasson, Sue Greenheck, Penny Johnson, Kelly Hendershot, Lisa Jundt, Lance Meyer, Derek Hackett, Ryan Ackerman, Dave Schwengler, Jim Montgomery, Ron Merritt, Mark Lyman, Jill Schramm, Josh Wolsky Chairman Frantsvog called the meeting to order at 12:01 pm. Minutes Alderman Hedberg moved to approve the minutes from the February 6, 2017 Sales Tax meeting, seconded by Alderman Straight and carried unanimously. NAWS- Estimated Revenues and Costs to Completion The City Comptroller explained some scenarios that she assembled to help the committee make a decision. She used the balance of $33M and then plugged in the estimated revenue and expenditures over the next several years. She described two possibilities, first, if the City has to fund the Biota Plant, there would be a negative account balance from 2018 forward assuming the current revenue of 30% of the second penny. The second scenario, if the Biota Plant is funded by Federal and State sources, there would only be two years in which the City would not have enough funds. The deficit would require more sales tax, bonding or the committee could come up with another solution. Upon questioning by the committee, Dan Jonasson stated, the decision on the lawsuit should be made in June but hopefully the advisory committee will discuss the issue sooner. Mr. Schemp, a member of the advisory committee, said, they have held off on taking any action until the judge makes a ruling. He added, even if the decision is made in June, they may not know the outcome until the fall. Alderman Frantsvog asked if all $8M would be spent in 2017, to which Mr. Jonasson replied by saying, the Sundre line and water treatment plant in Minot will require all the available $8M. Upon further questioning, he stated, the scenarios are the best estimate at this time. 2017-2019 includes the expenditures for the Sundre line and Minot water treatment plant. Alderman Straight expressed concerns regarding the availability of federal funds. He worried the City would have to use vital sales tax dollars and then be forced to wait for federal money to be reimbursed. The committee discussed the unknown factors which will delay making any decisions on the matter. They believe it will be difficult to make an informed decision without knowing the outcome of the Biota Plant or how relevant bills will progress through the Legislative Session. Bonding Scenarios Ms. Greenheck described the bonding scenarios that were supplied to the committee. There were several examples which compared different dollar amounts amortized over 10-year, 15-year, and 20-year periods. SALES TAX AD HOC COMMITTEE February 21, 2017 Page 2 She said it is not recommended to exceed a 20-year amortization period. She stated, the most realistic scenario uses $106.7M which would require at least 1.34 penny for 10-year amortization, and 1 penny for 15-years. She clarified, $9.4M was used as the estimated revenue to give a ballpark figure but she said, the actual amount will vary from year to year. She further specified, the scenarios demonstrate the local share of phases 1-4 of the flood control project but to estimate the finished project would be an entirely different scenario. Mr. Foley, from the State Water Commission explained House Bill 1020, the Water Commission bill which is currently under consideration. The bill could potentially award $110M in State funding toward the project but he suggested delaying any decisions until after the session. Upon request for his opinion on the lobbying efforts in favor of the bill, Mr. Foley stated, there is a good response from supporters but there are too many factors that come into play. Alderman Straight thanked Mr. Foley for his work in securing an additional $50M from the State Water Commission last year. Josh Wolsky came forward to share his comments. He asked if there were any cash reserves available from the years where there was a larger than normal growth in revenue. He also suggested creating a special assessment district to use as leverage when bonding. He was concerned the City had not adequately planned for the shortage in funding and is now pursuing a delayed response. He worried the City would use all of its resources on phases 1-4 but future phases of the project may go unfunded. Alderman Frantsvog assured Mr. Wolsky the creation of this committee is not the City’s first conversation about the issue and it has been a concern since the first and second pennies were established. Ms. Greenheck explained how any individual funds with money left over stays as a balance in that fund. She further stated the cash balances of each fund are published annually and will be in the newspaper soon, as required by Century Code. She offered to send a copy of the balances to the committee as well. The committee discussed how difficult it would be to establish a city-wide special assessment district and said voters would deny the suggestion. Alderman Frantsvog asked County Commissioner, Alan Walter, to discuss the county sales tax. He stated, ½ cent will expire in 2022, as was promised to citizens, but there are already discussions about continuing the tax to be used for flood control. On average, the tax brings in about $420,000 per month. Ryan Ackerman explained the portions of the bill that would impact the City of Minot. He said, if it stays intact as the bill is currently written, there could be an additional $180M-$190M in funding for flood control. He added, a new budget forecast will be available March 9th but it is uncertain what will happen until the session concludes. Alderman Podrygula stated, since this is a basin-wide project, all entities should contribute and be part of the discussion. He said there should be an intergovernmental strategy rather than the City having to absorb all of the costs. He agreed that the committee needs more information but stressed the urgency of taking action as soon as possible in order to find a long term solution. SALES TAX AD HOC COMMITTEE February 21, 2017 Page 3 Mr. Schemp said, the City did a good job setting aside funds for the NAWS project for years. He believes there will be enough information available within the next couple months that will enable him to make a decision. Alderman Frantsvog said, the Liaison Committee can meet to discuss the needs of the County, Park Board and School Board. He stated, this committee will temporarily suspend their meetings until the legislative session is further along but will have a recommendation before the 2018 budget deadline. There being no further business, the meeting was adjourned at 12:56 pm. Respectfully Submitted, Kelly Matalka City Clerk