Memorandum

City of Lawrence

City Manager’s Office

TO:	Diane Stoddard, Interim City Manager
CC:	Bryan Kidney, Ashley Lonnberg, Kevyn Gero, Brandon McGuire
From:	Casey Toomay, Assistant City Manager
DATE:	July 13, 2015 – Updated 07/14/15
RE:	City Commission Q&A Memorandum (part 2)

The following memorandum includes requests from City Commissioners for information related to the 2016 budget development process. Staff is still working on some requests, and that is noted following those questions. This is the second Q&A memorandum for the 2016 budget development process and responses to previous questions are found in the July 4, 2015 study session City Commission Q&A memorandum.

1. Q: The Commission requested additional information on the utilization of downtown parking inventory.

A: Parking Enforcement staff conducts periodic counts to develop parking utilization/occupancy and vacancy rates. Overall, the data does not indicate a lack of vacant long-term (10-hour) parking spaces Monday through Friday. The southwest quadrant (south of 9^th Street, west of Mass Street) does lack long-term parking spaces but also lacks short-term spaces. There are currently 120, 5-hour metered parking spaces in downtown that could be converted to 10-hour long-term parking. Motorists commonly refill the meter to park in these spaces all day, so a conversion of 5-hour spaces to 10-hours may not negatively impact parking turnover. For additional information, please see the attached report from Parking Enforcement. The City Commission may wish to have a more focused discussion regarding downtown parking.

2. Q: Commissioners requested information about the tax lid in the context of the 2016 budget.

A: The 2014 tax levy was $27,539,983. Under the tax lid law they City would be able to increase the 2014 tax levy to $29,223,392. The latest proposed 2015 tax levy is $28,167,490. This is $1,055,902 under what the lid would be if it were in place for the 2014 tax levy. No vote would have been needed.

3. Q: Mayor Farmer asked for a comparison of the 2016 baseline budget to the 2016 Recommended Budget.

A: Staff is working on this comparison and will provide the information as soon as it is available.

4. Q: Commissioners asked for an explanation of the budgeted expenditure increase in Code Enforcement Division from 2014 actuals to the 2016 Recommended Budget.

A: Phased expansion of the new rental licensing and inspection program began July 1, 2014. As of July 1, 2015, all non-RS zoned properties are now subject to inspection. Program workloads will increase as inspections of non-RS properties begins in the second half of 2015, and by year-end staff will be able to evaluate the workload when the program is operating at full capacity.

New positions needed to staff the program have been filled in phases as the program expands. The 2015 and 2016 budgets include expenditure authority for the program’s full staffing needs. All new positions needed to staff the program have been filled except for two inspector positions. The last two inspector positions will be filled as workloads increase due to the addition of non-RS property inspections.

5. Q: Commissioners asked why revenue collections in the General Fund Licenses and Permits category are expected to increase in 2015 compared to 2014, but decrease in 2016 compared to 2015.

A: Actual revenue recorded in the in the General Fund Licenses and Permits category totals $974,640 in 2014. Budgeted revenue in that category is $1,506,500 in 2015 and $1,044,819 in 2016.

Program revenue from the Code Enforcement rental licensing and inspection program is a component of the Licenses and Permits revenue category total. The new fee schedule for this program took effect July 1, 2014 for RS properties. Revenue from this program comprises $75,000 of total revenue in the Licenses and Permits category in 2014 actuals. Licensing was expanded to non-RS properties beginning in 2015 and projected revenue from this program is expected to total $300,000 in 2015 and 2016. The 2016 budgeted Licenses and Permits revenue previously included a lower projection for rental inspection program revenue based on that program’s 2014 actual revenue. The 2016 budgeted revenue for this category has been revised based on 2015 projected revenue from the rental licensing and inspection program. The revised 2016 budgeted Licenses and Permits revenue totals $1,294,819 which is a $250,000 increase from previously budgeted revenue in this category.

6. Q: How much revenue did the property valuation growth generate?

A: The Assessed Valuation of $984,944,702 was an increase of $19,934,631, or 2.2%, over the final assessed valuation from the November 1, 2014 Abstract of $875,010,071. Assuming no change in the mill levy rate, this growth in assessed valuation will generate approximately $627,421 of new property tax revenue for 2016. The breakdown across the property tax funds is as follows:

Fund Name	New Revenue for 2016
General Operating Fund	$383,123
Library Fund	$74,854
Bond and Interest Fund	$169,444
Total	$627,421

7. Q: Commissioner Amyx asked for the percentage increase in revenue included in the 2016 baseline budget factoring out additional property tax revenue.

A: Without any increase in the mill levy rate and with the revised projection for licenses and permit revenue, the 2016 projected general fund revenues total $78,852,176, which is an increase of $3,893,925, or 5.2%, over the total revenues in the 2015 budget. The 2016 total is only 2.4%, or $1,812,155, more than the 2015 revised projection for general fund revenues.

8. Q: Commissioner Herbert asked for the historical growth in expenditures for street maintenance and if some of those expenditures could be reallocated to provide property tax relief.

A: The 2016 budget proposal includes $3,610,673 for street maintenance. Additional capital projects (street reconstruction, such as 9th Street, Queens Road, and Bob Billings Parkway) total $10,850,000.

Historic funding levels for street maintenance (not including capital projects) have been are listed below. Please see the attached table for more information on these expenditures.

2013 $3.34 million

2014 $2.74 million

2015 $3.58 million

2016 $3.61 million

At the February 24, 2015, City Commission meeting, the street maintenance program was presented to the City Commission. Staff noted there was an additional $3.5 million need for the maintenance program (2/24/2015 agenda report).

9. Q: Commissioner Boley asked if Rock Chalk Park/Sports Pavilion Lawrence bonds are paid out of the Bond and Interest Fund and if so, are those payments reflected in the budget pages for that fund.

A: Debt service for Rock Chalk Park and Sports Pavilion Lawrence is not paid out of the Bond and Interest Fund. This debt service is funded out of the Sales Tax Reserve Fund. Originally all debt service for this project was budgeted in the Sales Tax Reserve Fund. With the City Commission’s recent direction to fund some debt service for this project out of the Guest Tax Fund, the debt service schedule has now been revised to shift $150,000 in debt service for this project from the Sales Tax Reserve Fund to the Guest Tax fund. For 2016 scheduled debt service for this project, please see the attached debt service schedule in which the 2016 payments for this project are highlighted.

10. Q: Commissioners asked for a schedule of spending in 2016 for non-budgeted funds.

A: Staff is working to update these reports will provide them as soon as they are available.

11. Q: Commissioner Boley asked how airport hangar rental rates are established and if debt service for hangers is factored into those rates.

A: The City owns 30 T-hangars and a few larger facilities leased by the FBO (Fixed Based Operator) and various businesses. The leases differ depending on the use and have different terms as well. Typically the T-hangar leases are on a 2 year term. Lease rates were established based on the cost of the T-hangars when they were constructed and debt financed.

The larger “community hangar” leased by the FBO is reviewed annually and the rate is adjusted based on the CPI.

Attached is the listing of leases for the Airport. Additionally, some other area airport rates, which are factored in to the City’s T-hangar lease rates, are reported in the following table.

Hangar Rates

Lawrence	T-hangar	$200 - $220 / month
Emporia	Large multi aircraft hangar	$85 / space
	T-hangar	$90 - $135 / month
	Large T-hanger	$175 / month
Atchison	Current Rate – T-hangar	$65 / month
	New T-hangar to be built 2015	$190 / month
Wellington	T-hanger	$135 / month
Forbes	T-hanger	$175/ month
Billard	T-hanger	$110 - $150/ month
Ottawa	New T-hanger	$200/ month
	Existing T-hanger	$150/ month
Gardner	T-hanger	$150-200/ month
Salina	See attached schedule
Johnson County	See attached schedule

12. Q: Commissioner Boley requested a report on the total expenditures by department from each fund.

A: The City Budget is presented by Fund because that is how the City’s accounting system is organized. Staff is working on a report of total expenditures by department and will provide it as soon as it is available.

13. Q: Commissioner Boley requested a report on funding recommendations by social service agency, city board, vendor and other outside agencies that provides the total amount requested and the amount from each fund that comprises the total agency request and recommended appropriation. Additionally, the outcome reports from 2014 appropriations were requested.

A: Please see the attached report that provides these funding requests and recommendations by fund. Please also visit the 2014 Outside Agency Annual Reports webpage for the requested 2014 outcome reports.

14. Q: Commissioner Herbert asked if there are other expenditures that can be allocated to the Guest Tax Fund in 2016.

A: State Statutes and a City Ordinance require funds in the Guest Tax Fund be spent to promote tourism and conventions. Because fund balance is one-time money, it should only be spent on one-time expenses. Staff has reviewed the 2016 budget requests and has not identified any one-time expenses that satisfy the statutory requirement for use.

Staff did move approximately 10% of the debt service payments for Sports Pavilion Lawrence to the Guest Tax. By increasing expenditures by $150,000, the 2016 budget for expenditures will now exceed projected revenues for 2016 by $41,354, requiring spending down fund balance.

Guest Tax Fund	2016
Revenue – Guest Tax Proceeds	$1,649,260
2016 Recommended Budget Expenditures	($1,540,614)
Debt Service for SPL	($150,000)
2016 Revenues over Expenditures	($41,354)

15. Q: Commissioner Boley requested the CVB’s balance sheets for 12/31/2013, 12/31/2014 and 6/30/2015, and income statements for 2014 and YTD 2015.

A: Please see the attachments for the requested information

CVB Profit & Loss Statement vs Budget - June 2014 - Added 07/14/15

CVB Profit & Loss Statement vs Budget June 2015 - Added 07/14/15

DMI Profit & Loss Statement June 2014 - Added 07/14/15

DMI Profit & Loss Statement June 2015 - Added 07/14/15

DMI Balance Sheet June 2014 - Added 07/14/15

DMI Balance Sheet DBA CVB Balance Sheet June 2015 - Added 07/14/15

CVB Balance Sheet, December 31, 2013

CVB Balance Sheet, December 31, 2014

CVB Balance Sheet, 2015 YTD

CVB Income Statement, 2015 YTD

DMI Income Statement, 2015 YTD

16. Q: Commissioner Boley requested the line item details of the CVB’s budget request and projections from the prior plan to bring the CVB into the City.

A: The 2016 line item budget has not yet been reviewed nor approved by either of the boards that should review so it is not available as of this memo.

Original analysis of the proposal to bring the CVB under the City projected $55,000 worth of cost savings compared to the CVB being operated by an independent agency. Later meetings with the stakeholders determined that keeping the CVB separate, because of its sales functions would be the best strategy. Information about this issue was presented to the City Commission at the June 23, 2015 study session. In that presentation, an additional $80,000 in the DMI appropriation was requested to fund a second sales position and additional marketing/sales efforts. There was consensus among the Commission to move forward with that plan and discontinue efforts to insource the CVB. While administrative efficiencies would be gained from bringing the CVB in-house, those efficiencies would be offset by the increased need to function as a sales force.

17. Q: Commissioner Boley asked if expenses for the Public Information Office’s expanded interim role overseeing the CVB this year have been reimbursed.

A: Additional costs from work performed by City communications staff for the CVB totals approximately $1,000 through June. Work was performed by communications interns on CVB publications and on video footage for the downtown shotput event. The Communications Director receives acting pay from transient guest tax for her additional work as Interim Director of the CVB.

18. Q: Commissioner Soden asked if budgeted costs for the three school resource officers in the Special Alcohol Fund could be reallocated to the General Fund, and if the budgeted appropriation for the Bert Nash WRAP program could be reallocated from the General Fund to the Special Alcohol Fund.

A: Budget team staff analyzed this requested and revised the 2016 budget accordingly. As a result, $297,085 in personal services for the three SROs was shifted from the Special Alcohol Fund to the General Fund and the $350,000 WRAP appropriation was shifted from the General Fund to the Special Alcohol Fund. This is not a dollar-for-dollar swap. Shifting WRAP funding to the Special Alcohol Fund increases expenditures over revenues and is projected to result in a complete spend down of the Special Alcohol Fund balance by 2018 year-end. Shifting the SROs to the General Fund however, results in a net savings to the General Fund of $52,915 in the 2016 budget.

19. Q: Commissioner Boley asked if there are other needs at the Community Health Building that can be paid for out of the Sales Tax Reserve Fund.

A: The City owns a number of Facilities that need some maintenance. Public Works maintains 30 facilities including the ITC, Fire Stations, City Hall, Community Health Facility, Arts Center, three parking garages, and Public Works facilities. This does not include Parks and Recreation or Utility Facilities.

Please see attached Public Works facility assessment report for the Community Health Facility. Bert Nash submitted the attached letter with its facility maintenance requests for the Health Facility.

Please see the attached facility assessment report for buildings maintained by Public Works and the June 2, 2015 study session agenda report regarding Public Works facility maintenance priorities.

20. Q: Mayor Farmer requested a revised levy chart (p. 29 of the Recommended Budget book) that compares the total mills levied for within the Lawrence against the total mills levied within other first class cities.

A: Please see the attached levy chart for the requested revisions.

21. Q: Commissioners asked if there are budgeted expenditures in the Parking Fund that could be shifted from the Parking Fund to enable the Parking Fund to be dedicated to maintenance of parking infrastructure.

A: Budget team staff analyzed the Parking Fund and determined that non-parking maintenance expenditures – particularly those budgeted in personal services – could not be shifted out of the Parking Fund without a corresponding increase in tax resources. For example, shifting those positions to the General Fund would result in an increase in General Fund expenditures that would need to be offset by additional tax funding. Staff would suggest a future larger discussion regarding the Parking Fund and its revenues.

22. Q: Commissioner Boley requested an analysis of the previous two years’ overtime costs in Police and Fire Medical compared to the cost of additional staffing that might eliminate the need for overtime.

A: Staff is working on this analysis and will provide a report as soon as it is available.

23. Q: Commissioner Boley requested more information on the parking maintenance position.

A: Please see the attached Public Works memo for details about this position.

24. Q: Mayor Farmer requested that the General Fund detailed spreadsheet be provided for the next study session.

A: Staff is working on the updated spreadsheet and will provide it as soon as it is available.

25. Q: Mayor Farmer requested a comparison of the City’s merit increases and range adjustments against those of other cities in the market.

A: Local market cities are granting 2.0% to 2.5% merit increases and range adjustments from 0.0% to 2.0% in 2015. Recommended budgets include merit increases in the range of 2.5% to 3.5% for 2016 (see table below).

A preliminary analysis of market data obtained from the Mid-America Regional Council (MARC) indicates that a 2.5% adjustment to the pay ranges in the City of Lawrence Primary Pay Plan will maintain our competitive market position, and that targeted position adjustments should be considered as well.

Primary Pay Plan MERIT Comparison	Merit Description*	2014	2015	Recommended 2016
Lawrence	Merit Pool, eligible 0%-5%, average merit listed until top of scale, lump sum for top of scale-2015 & 2014 (No GWA)	2.50%	2.00%	3.00%
Lenexa	Average Merit Awarded (GWA 2014-2.5%, 2015-3.0%)	3.00%	2.50%	5% overall/2.5% merit
Olathe	Average Merit Awarded			3.5% 2016 and 4% 2017
Overland Park	Average Merit Awarded (No GWA)	2.19%	2.51%	3%
Shawnee	Merit (2014-targeted market adjustments and lump sum bonuses, 2015-3.3% market adjustment)	0.00%	0.00%	3.3%
Topeka	Do not use Merit (COLAs only)	1.00%	2.00%	* pending numerous union negotiations
UGWCKCK	Merit, Lump Sum Bonus-2014 (GWA 2014-0%, 2015-1.5%)	1.00%	0.00%	1.5% COLA January 1, 2016 and 1.5% COLA July 1, 2016

*With the exception of Topeka, table lists only Merit Awards. COLA or General Wage Adjustments (GWA) in addition to merit programs are listed in the description.