Finance Committee (Meets 4th Tuesday of each month at 4:30 p.m.)

Finance Committee Proceedings City of Superior November 18, 2021 Members Present: Jack Sweeney, Tylor Elm and Keith Kern Staff Present: Ashley Puetz, Deb Kamunen, Linda Cadotte, Todd Janigo, Steve Roberts, and Scott Gordon Others Present: Jon Winter, Shelley Nelson, Vincent Dodge, Patti Soliday, Taylor Pedersen, Tom Beaudry, Jenny Van Sickle, Lindsey Graskey, Steve Loomis Members Excused: Brent Fennessey Jack Sweeney called the meeting to order at 4:30 p.m. with a quorum present. Attendance was done by sign in and virtual meeting. 1. Approval of October 14, 2021 Finance Committee meeting minutes. Motion was made by Tylor Elm, seconded by Keith Kern and carried to approve the October 14, 2021 Finance Committee meeting minutes. Sweeney asked that it be noted that the second agenda item – Application for Sewage Billing Adjustment for Thomas Sawyer - from the November 10, 2021 Finance Committee Meeting which was rescheduled to today’s November 18, 2021 Finance Committee Meeting – was presented and approved at the November 16, 2021 City Council Meeting and was not included in today’s Finance Committee meeting agenda. 2. Taylor Pedersen to report on the 3rd Quarter 2021 Financial Reports from Travel Superior and TDF – receive and file. Taylor Pedersen, President/CEO of Travel Superior, stated that tourism is looking good for 2021 and, in fact, is seeing that 2021 is the best year for tourism yet. Elm stated that the Chicago search results were interesting. Pedersen responded that they market externally with Chicago being a small part of the budget as the Minneapolis/St. Paul area is the main market. Motion was made by Tylor Elm, seconded by Keith Kern and carried to receive and file the 3rd Quarter 2021 Financial Reports from Travel Superior and TDF. 3. 3rd Quarter 2021 Financial Report from the Bong Center – receive and file. Motion was made by Keith Kern, seconded by Tylor Elm and carried to receive and file the 3rd Quarter 2021 Financial Report from the Bong Center. 4. 2022 Grant Application – Douglas County Historical Society. Jon Winter, Business Manager of the Douglas County Historical Society, presented a brief description of the organization’s building and staffing needs, revenue streams, membership and overall financial overview including budget detail. Winter stated that the grant request is for $15,000 due to utility expenses increasing and looking at increasing a part-time staff’s hours three hours per week. A question and answer period followed. Sweeney stated that with the $147,000 in a rainy day investment fund that he had difficulty in helping when others did not have nearly the same amount in reserves and he recommended that the funding should remain at $10,000.  Elm asked Finance Director Ashley Puetz where the awarded city funds would come from. Puetz responded that the funds would come from the revolving grant fund which has money set aside for nonprofits which has a total of $70,000 to allocate. Another question and answer period followed. Motion was made by Jack Sweeney, seconded by Keith Kern and carried to approve the 2022 Grant Application – Douglas County Historical Society - for a grant of $10,000.00 for one year. 5. Request from Director Puetz for approval of the 2022 Golf Course Budget and season rates. Tom Beaudry, General Manager/Head Golf Professional of KemperSports at Nemadji Golf Course, stated that Nemadji Golf Course had the largest gains in the driving range by adding a new system to pay at the machine and merchandise with the number of people in the building affecting food and beverage receipts. Beaudry stated that 2021 was a solid year. Beaudry stated that the rounds will finish ahead of last year, but he doesn’t know in 2022 if the weather can be repeated like the weather in the last two years. Beaudry stated that they are budgeting conservatively and the ADR – Average Daily Rate – to increase by 6% across the board. Beaudry stated that they are projecting rounds to be down a little bit due to the weather and the staffing model will be similar to this year. Beaudry stated that the capital needs include a golf simulator, tee signage, cart path renovation and a Sand Pro bunker rake. Sweeney asked what the payback would be if the simulator were purchased. Beaudry stated the payback would be three years and he was being conservative. Elm asked what the life expectancy of the simulator would be. Beaudry stated that with upgrade options, conservatively, it was ten years. A question and answer period followed. Motion was made by Tylor Elm, seconded by Keith Kern and carried to approve the 2022 Golf Course Budget and season rates. Sweeney asked if next year there could be a line item on the financials for the amount of bonus paid. Beaudry responded that the financials currently contain this and that they will do that for next year too. 6. Request from Director Puetz for approval of the 2022 Landfill Budget. Todd Janigo, Director of Public Works, stated that he had met with Chair Sweeney and he would address the questions Sweeney had asked of him. Janigo stated that the first question was to look at the billing and how to distribute the costs. Janigo stated that it was not a perfect distribution, but in the ballpark as they did do a survey and it was pretty close. Janigo stated that the second question was the gate rate. Janigo stated that it was $54.00 a ton and the last change was in 2017. Janigo stated that it was not consistent how the rates were increased and need to review after the first of the year. Sweeney stated that we should not be waiting five years. Sweeney stated that it should come back to the Finance Committee. Janigo stated that he will bring back in January to the Finance Committee meeting. Janigo stated the third question was the hazardous waste which was not increased by the City Council this past year, but the City Council did approve another year extension for the rate of $45.00 per drop.  Janigo stated that the fourth question was the WLSSD contract which will end in June of 2024. Janigo stated that he is confident that WLSSD is committed to staying until 2024. Janigo stated that the fifth question concerned the two rates – residential and business. Janigo stated that they did counts of all routes of the number of residential and businesses pickups and have weight tickets which averaged over time to the weights of over 48 for businesses and almost 20 for residential. Sweeney asked if the cost to pick up is the same. Janigo replied, yes, that was correct. Sweeney stated that the tonnage was different and should look at that and come back in January to report to the Committee. Janigo replied that he would. Janigo stated that recycling was the sixth question. Janigo stated that the revenue versus rates will have an almost $5,000 deficit in 2025 and will grow through 2029. Janigo stated that the contract will end in June of 2024 and the rates may need to increase in 2025. Sweeney stated that the contract needs to go out to bid in late 2023 and to get a RFP. Elm stated that the spreadsheet with the different scenarios with the staggered increases was very helpful. Puetz stated she included five scenarios of the rate increases which adjusted the cash balances which was hard to predict. Puetz stated that at some point we will have to increase fees and these were basic examples, but wanted to illustrate different scenarios. Janigo stated that the biggest assumption was the capping project as it was an educated guess. Sweeney stated that he has to overestimate and asked when is the landfill projected to be full. Janigo responded that the latest projected date to be full is in mid-2026. Elm asked if the pandemic impacted the rate. Janigo stated that he would look at it and report in January. Motion was made by Tylor Elm, seconded by Keith Kern and carried to approve the 2022 Landfill Budget. Motion was made by Keith Kern, seconded by Tylor Elm and carried to move item ten to the seventh position. 7. Discussion of the renewal of the Village of Superior Fire Protection Agreement for 2022. Scott Gordon, Fire Chief, stated that he had never seen this contract before. Sweeney stated that it did come to the Finance Committee three years ago. Sweeney asked Gordon if it were a deficit to operate based on the rate being paid in the contract and how many trips to go to the village. Gordon stated that yes, it does operate at a deficit, as it locks in the price for three years and there have been 211 calls this year to the Village which was about 5% of the calls. Gordon stated that if they were on the call to the Village, then they would not be available so this is a risk for residents. Elm asked if we have been increasing the rate. Gordon replied that yes, we have been. Kern asked if state statute dictates the formula that the City must use. Puetz stated she is not aware of that statue and does not know where this formula came from. Elm asked what would happen if this were not signed. Puetz stated that this was revenue for the general fund and because we have fixed costs, by not signing this contract, this would be creating a whole in the general fund. Sweeney stated that he would like to see the state statute. Kern stated that he would like to see if the City is locked in statutorily and if so, it should be put on the agenda for Superior Days to address in the future. Kern asked if the City could do a one year contract. Elm stated that he would like the Village to participate in this conversation. Motion was made by Keith Kern, seconded by Tylor Elm and carried to table for clarification of a one year contract versus a three year contract. 8. Request from Director Puetz for approval of the 2022 Wastewater Budget.  Janigo stated that we have not had a rate increase since 2014 and the way they did that was to adjust the capital improvement budget rather than ask for an increase to further expand the capital improvements. Janigo stated that the group has been going on two years without an effluent violation. Janigo stated that the lower cost improvements that they have done there – that kind of thinking and ingenuity – has been incredible and kept the rates stable. Sweeney stated that the rates are one thing and that capital balances are another and asked Janigo if the capital improvements were adequate or excessive. Janigo stated that they were under for some of the improvements, but Cenuvus’s revenue stream is something we will have in the future to offset it for stormwater. Steve Roberts, Environmental Services Director, stated that the investments we have made have created higher standards of effluence so we were ahead of the game, but we were facing significant costs because of the age of the buildings so we were behind. Sweeney stated that they were adequate, but behind and asked Roberts if it was an adequate statement. Roberts stated that yes, they were adequate, but with the new money from Cenuvus, we will catch up with time and that although some of the buildings need to have improvements, he did not think we need to raise rates. Roberts stated that over the five to six years we are caught up on the performance side and in five to six years more years we will be caught up on the structure/mechanical/capital side. Sweeney asked Roberts for a timeframe of when we would be caught up as he believes it is critical to know. Roberts stated that it difficult to answer, but seven to ten years we should be caught up on the structure side without raising rates based upon the added revenue streams coming into the City. Sweeney asked if it were a fair statement that we will be caught up in five to seven years without raising rates. Roberts answered absolutely and that it was a fair statement. Janigo stated that they look at this annually. Kern left the meeting at 6:20 p.m. Motion was made by Tylor Elm, seconded by Jack Sweeney and carried to approve the 2022 Wastewater Budget. 9. Request from Director Puetz for approval of the 2022 Stormwater Budget. Janigo stated that Hammond Ave and East 5th Street are some of the bigger projects and in looking at the ARPA funding of $600,000 to offset it, and they were adequate going forward with projects. Janigo stated they were slowly making improvements. Sweeney asked when they would be caught up. Roberts stated that they were in a better place on the stormwater side of being caught up as they do not have the mechanical systems and buildings that they have on the wastewater side as they have newer infrastructure, some of which in the last fifteen years has been quality, so they are in a better place. Roberts stated that there were several projects that enhanced the performance side so they were much more caught up. Elm asked what being caught up was based on and was it a state standard or the perspective of the departments here and asked for a comparison of other cities and asked for perspective from Roberts. Roberts stated in calendar year 2020, and if they make it through Monday of next week, it will be two periods of 356 days that they did not have any effluent violations, but if you went back to 2014, there were 4-5 each year, so they have gone from being way on the wrong side to being on the right side of the balance of what is the compliance line. Roberts stated that in 2014 they were on the wrong side, and, if you go back further to 2012, there were 50 or 60 effluent violations which was a result of a change of their permit and not having the infrastructure and they went from being way out of compliance to being on the right side of the balance. Roberts stated that they were recognized by the state and went from being a bad actor to now an award  winner. Sweeney asked Roberts if we are on track as to replacing things as we need to be. Roberts responded that has definitely improved in the last several years. Roberts stated that in 2012 to 2014 they went through a reorganization and changed some of their business processes, and from then to now, the ongoing maintenance and the in-house maintenance has improved significantly and they are doing the things they need to do to the keep the mechanical assets working. Sweeney stated that what he is hearing is that they are adequate in their funding, rates and capital improvements and that they have enough money without raising rates for the upcoming year. Roberts stated that absolutely they were. Sweeney asked what the Sustain our Great Lakes was. Janigo stated that it was the SOGL project which was the Barker’s Island green infrastructure project which improves the water runoff coming off the parking lot which improved the water quality. Motion was made by Tylor Elm, seconded by Jack Sweeney and carried to approve the 2022 Stormwater Budget. 10. Request from Director Puetz for approval of the 2022 Tax Increment District Budgets. Director Puetz stated she had a handout and she had one correction to TID 15’s budget so that way when it is forwarded to Council it would be correct so she would verbally state what it was. Puetz stated that the Contribution Payment to RACS for P & R Plumbing per the development agreement which had a couple of figures in it, she had listed $209,409, but the correct payment amount is $211,039. Puetz stated that for the TID’s, in general, there is not a lot of decisions in creating the budgets and the activity in them are payments the Council has already approved. Puetz stated that in ways it was a formality each year of being presented here and last year was the first year that the TID Budgets were presented to the Finance and to Council. Puetz stated that the piece that is important is the appropriation statement so for TID 13 and TID 15 the Pay as You Go payments do need annual approval from the Council. Sweeney asked if TID 8 will be done in 2021 and since this is the final year of the tax increment, transferring to the affordable housing fund the remaining money, have we moved that money yet. Puetz stated that the transfer has not happened as she is working with our auditors from WIPFLI, who we will have them prepare the final accounting in December, and with that there will be several things happening with journal entries - one being a transfer to the affordable housing fund, but the other big item happening is that the remaining money will transfer to the four taxing districts - with the City being one of them. Motion was made by Tylor Elm, seconded by Jack Sweeney and carried to approve the 2022 Tax Increment District Budgets. 11. Golf Course Financials – receive and file. Motion was made by Tylor Elm, seconded by Jack Sweeney and carried to receive and file the Golf Course Financials. 12. Review October, 2021 check register. Motion was made by Tylor Elm, seconded by Jack Sweeney and carried to receive and file the  October, 2021 check register. 13. Review General Fund Financial Statements – 2021 Expenditure vs. Budget Analysis as of October 29, 2021. Puetz indicated the expenses are trending normally and overall looking good. Motion was made by Tylor Elm, seconded by Jack Sweeney and carried to receive and file the General Fund Financial Statements – 2021 Expenditure vs. Budget Analysis as of October 29, 2021. 14. General Financial Overview a. General updates. 1. At the October meeting, Finance agreed to split the Hotel/Motel Tax bill with the couple that called in and that has been taken care of. 2. Positively Superior contract has signed the agreement. 3. The Top Value Procedures that the Council approved at the last Finance Committee meeting has been implemented and our health insurance carrier has added it to our plan and it is now live. b. Update on top 3 financial concerns or updates. 1. Budgets are wrapping up. 2. Levy tax work. 3. TCP continues to be a top priority with more departments live than not. 15. Other financial matters. 16. Agenda items for next month. Having no other business, the Finance Committee meeting adjourned at 6:41 p.m. Minutes respectfully submitted by Deb Kamunen