ADMINISTRATION - Joe Huss, Finance Director
Title
ADOPT 2019 FACILITIES MANAGEMENT FUND BUDGET
Background
Staff reviewed the creation of a new Internal Services fund for Facilities Management at two previous Council Workshops - October 18 and November 8. The consensus among was the Council was generally positive, but to bring back a budget proposal that provided greater clarity as to how the new fund would operate.
To provide some background, the new fund is being proposed as part of the city’s efforts to stabilize its General levy and provide a mechanism for ensuring that long-term funding of facilities improvements is in place. The new Facilities Management Fund will be an Internal Service Fund. Internal service funds are used to account for the financing of goods and services provided by one department or activity to other departments or activities of the government on a cost reimbursement basis.
The facilities that would be managed under this fund include all facilities currently accounted for in the General Fund - City Hall and attached garages, Public Works and the PW cold storage facility, the Police training facility and the Senior Center. To help provide some clarity to how the fund would operate, Staff has prepared three worksheets that reconcile how the fund’s establishment would impact the General Fund as well as other operating funds that would be charged the internal fee that funds the Facilities Management operation.
The first worksheet provides a reconciliation of General Fund charges. As can be seen in this worksheet, charges that are currently accounted for in the Public Building Division of the General Fund would be allocated to other operating divisions based upon the division’s respective share of occupied and common space. Thus, the $852,100 that would have been appropriated for building maintenance in 2019 has been removed from the General Fund and reallocated to other operating divisions, not only in the General Fund, but also in other budgeted funds including the four utility funds (Water, Sewer, Storm Drainage and Sanitation) and the Communications and EDA Fund. Adding direct maintenance charges to budgeted funds other than the General Fund also required an adjustment of administrative charges that the General Fund charges to those other operating funds. Thus the net savings to the General Fund amounts to $40,070.
The second worksheet displays the net charges that would be borne by the City’s other budgeted operating funds. The net amount for other funds is $115,090.
The third attached worksheet is the 2019 Proposed Budget for the Buildings Maintenance Fund, detailed by line item. As explained to the City Council in previous workshops, the Fund will require start-up funding to begin operations and staff is proposing that the Council authorize the transfer of $250,000 from unrestricted General Fund reserves to provide those start-up funds. That authorization would come in a separate resolution to be adopted in January 2019. Also in the 2019 proposed budget is a line-item charge for depreciation. While not fully funded at this point, Council will be asked in future budgets to gradually increase fees to cover depreciation in order for funding to be on hand for major capital improvements and unforeseen or emergency system repairs. Staff proposes that this funding plan be part of the Council’s strategic planning initiatives over the next 10 years.
In conclusion, staff recommends the Council adopt the following resolution to provide for the Building Maintenance Fund and establish a 2019 budget.
Recommendation
By motion, approve the following resolution.
Body
WHEREAS, a proposed Facilities Maintenance Fund Budget for the fiscal year commencing January 1, 2019 has been prepared by the City Manager; and
WHEREAS, the City Council has examined, studied, and reviewed said proposed Facilities Maintenance Fund Budget; and
WHEREAS, the City Council has, after due consideration and deliberation, made such amendments and adjustments in the proposed Facilities Maintenance Fund Budget as they consider necessary, desirable, or expedient.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Blaine as follows:
1. That the proposed Facilities Maintenance Fund Budget attached hereto is approved.
2. That the 2019 appropriations attached hereto are approved.
3. That the 2019 funding sources identified and attached hereto are approved, and, if and where indicated, the transfer of excess reserves from the General Fund is approved.
4. That the City Manager is authorized and directed to implement and to administer, within the budgetary funding limits and within adopted City policy and relevant State and City laws and regulations, said approved Facilities Maintenance Fund Budget.
PASSED by the City Council of the City of Blaine this 6th day of December 2018.