Informational Meeting

MINUTES Informational Meeting Tuesday, April 20, 2021 at 4:00 PM Carnegie Town Hall, 235 West 10th St., Sioux Falls, SD 57104 1. Call To Order Council Members Present: Janet Brekke, Christine M. Erickson, Alex Jensen, Rick Kiley, Greg Neitzert, Marshall Selberg, Curt Soehl, Pat Starr Council Members Absent: None City Council Chair Greg Neitzert called the meeting to order at 4 p.m. He acknowledged that all Council members were present. 2. Councilor Remarks There was none. 3. Presentations A. External Audit Results: Public Parking Enterprise Risk Assessment by Derek Flanagan, Eide Bailly, Partner; Joy Feige, Eide Bailly, Partner; and Kristin Taffe, Eide Bailly, Manager Presentation: Approximately 15 minutes followed by discussion Feige introduced and presented some background information on Flanagan and Taffe, who were the primary auditors working on the financial modeling project for the Public Parking Enterprise Fund. Flanagan said this will be the same presentation that was recently presented to the Audit Committee. He explained how they came up with their analysis, which was in response to a Risk Assessment RFP (Request for Proposals). They developed three financial models, portraying a five-year projection for the Parking Enterprise, including one that would reflect a breakeven scenario. Flanagan said that this was done using cash basis accounting and does not include noncash items, such as depreciation. The information provided for the project came from management and historical data. When the analysis was completed it was formatted as a memo and distributed. Taffe explained the different scenarios that they used, which were: Scenario 1, Lower Usage; Scenario 2, Higher Usage; and Scenario 3, Breakeven. Scenarios 1 and 2 were based on historical occupancy data. She said the scenario development was driven largely by revenue inputs. Taffe spoke about and explained the five revenue generating line inputs, which are: ramp and lot revenue; known rate  increases; other parking lot leases; metered parking; and enforcement. The biggest factor was ramp and lot revenue based on occupancy. In regards to expenses, this was based on management projections and historical data. Taffe reviewed the five- year financial model for each of the three scenarios and included notable findings. Flanagan concluded the presentation and stated that parking does not operate in a static environment and that modifications can be made when necessary. Flanagan used an example of if they are in a period of low usage, then cost cutting measures could be used. During high usage times, additional projects may be undertaken in terms of repairs and maintenance. There were no questions from the Council. B. March 2021 Financial Results by Shawn Pritchett, Director of Finance Presentation: Approximately 10 minutes followed by discussion Pritchett presented the first monthly financial statement for 2021. He began by speaking about economic indicators. In regards to the Labor Force and Employment, there has been a rise of about .74% in the labor force since this time last year. Unemployment remains low at 3.2%, which was the same in February 2020 and 2019. The peak of 10% was reached in April 2020. Inflation is at 2.6% and Pritchett cautioned that the rise was due to a spike in energy. Building Permits YTD Building Valuations continue on a record setting trend and are at $213M through March, which is $109M ahead of where we were last year. He said this is being driven primarily by the new commercial values which are up 138%, the majority of this is related to apartments. Sioux Falls YTD Residential Permits (Units) for new housing was up overall by 290%. Through March there have been 187 single family housing permits, compared to 78 at the same time last year; and 463 multi-family housing permits, up by 448 from last year. Sales Tax Collections w/out Audits is at 3.3%, with the 12 month rolling average at -0.8%. Numbers were down due to the pandemic. Pritchett expects to see a turnaround and said there has been positive activity and we are up 6% in the first quarter. Entertainment Tax Collections w/out Audits is at -8.6%. Pritchett said we should be seeing fairly significant increases in the next few months. The February transactions reflected in the Industry Taxable Sales Data indicates that industries are doing fairly well. Pritchett presented some new data to the Council based on a new piloting source based on credit card data, which is updated on a daily and weekly basis. The data was presented as: All Spend Categories; Retail Trending; Restaurants and Bars Trending; Airline, Hospitality and Car Rentals Trending; and Entertainment and Recreation Trending. Next he spoke about the Lodging Tax Receipts, which are at - 22.1% for March. Pritchett said that there are no major changes and it's just very slow. He concluded his presentation by speaking about Lodging BID Tax Receipts; the General Fund - Revenues YTD; and General Fund - Expenditures YTD. Discussion followed, regarding: what is pushing the retail trends (online or in person shopping); cost of hotel rooms and Lodging Taxes; and online sales analysis. 4. Public Comment There was none. 5. Adjournment City Council Chair Greg Neitzert adjourned the meeting at 4:39 p.m. Denise D. Tucker, MMC, Assistant City Clerk