Rushford Council hears audit report, approves pump station improvement plan

By : 
Scott Bestul

Members of the Rushford City Council learned that city finances were in largely good shape at their May 13 meeting. Jason Boynton, of Smith Schafer and Associates, attended the meeting and walked council members through an extensive written report summarizing his firm’s recent audit. Council members also approved new language for the city’s floodplain ordinance, and awarded a bid for the installation of two new flood-pumping units.

Audit review

The audit by Smith, Schafer & Associations was reviewed prior to this presentation by City Administrator Chladek, Clerk Zacher, Mayor Hallum, and Councilor Benson. Boynton’s report started with a legal description of the audit that stated the findings to be a  “reasonable, but not absolute, assurance that the financial statements are free of material misstatement. Smith Schafer issued an ‘unmodified’ or ‘clean’ opinion on the 2018 financial statements.”  There were “no findings” regarding state Legal Compliance, and there were “no significant issues” noted in the issued auditor’s responsibility letter regarding the 2018 audit.

Among the audit highlights were:

• The city tax levy increased to $913,000 in 2018, up from $867,000 in 2017.

• Local Government Aid (LGA) revenues will see only a nominal increase for 2019. This year’s LGA funds are expected to be $596,977 this year, compared to $596,559 in 2018.

• General government expenditures totaled $117,876 in 2018, a decrease of $11,275 from 2017. This decrease was due to reallocating some employee costs, as well as a reduction in legal and audit fees.

• Police expenditures, which include salaries, benefits, insurance, supplies, gas, training and prosecution services, increased $6,381 to $300,889 in 2018.

• Volunteer fire/Fire Millrate Fund Expenditures totaled $261,262 in 2018. Ambulance fund expenditures totaled $127,998 (2018), up from $122,898. The audit highlighted that ambulances were purchased in 2014 and 2015 without incurring debt.

• Public works expenditures totaled $96,195 (2018), an increase of $10,850 from the previous year. Most expenditures in this area are incurred from salaries/benefits, repairs and maintenance, supplies, fuel and insurance.

• Parks and Recreation expenditures saw an increase of $13,137 to a total of $128,044. Primary expenses were tree removal and increases in swimming pool operations.

• Library expenditures increased only $721 for 2018, for a total of $162,063. Primary expenses were for salaries/benefits, computer line fee, books, supplies, utilities, and printing.

• General fund expenditures were under budget by $85,041, due to  reduced employee costs at city hall and the police department. General fund expenditures were $708,024, compared to $793,065 budgeted.

Fund reserves/balances were as follows:

• General fund: Reserves totaled just under $760,000 and represented a 104% unassigned/unreserved general fund balance.

• Fire department fund balance: increased $68,140 to $581,420, with no outstanding debt.

• Ambulance fund: was $464,218, with no outstanding debt.

• Airport fund balance: Dropped slightly in 2018, to just under $120,00. Due largely to a recently-completed fuel tank project.

• Library fund balance: totaled $170,252, which includes $85,707 of restricted donations for capital improvements.

• EDA fund balance: increased by $31,005 in 2018, to a total of $275,172, largely due to the sale of lands in the past year.

• Debt service highlights included:

• General obligation bonds: GO bonds totaled $5,975,000. All payments are being made in a timely manner.

• Revenue bonds (supported by ratepayers in utilities funds) total $2,834,619 and are being paid in a timely manner.

• Notes payable: Includes a contract for deed for the purchase of Himlie land. As of 12/31/2018 the balance due was $441,140.  

• Net pension liability: this category represents the city’s portion of Public Employees Retirement Association (PERA). 2018 figure was $789,717, down from $970,789.   

Capital projects

• Capital Improvement Fund expenditures totaled $289,202 in 2018, down from $307,855. Among the capital improvement fund expenditures were: engineering fees, street seal coating, vehicle purchases, emergency siren upgrade fire equipment purchases, parks upgrades, Veteran’s Park monuments, and new street signage.

• The Capital Improvement Fund: Balance on 12/31/18 was $1,086,930.

• Levee Improvement Project Fund: Balance for 2018 was $107,638. This figure has increased annually since 2015, when the city began an annual transfer of $35,000 from the Electric Fund to cover costs associated with levee recertification.  Levee mitigation and maintenance work is ongoing and the city will receive mitigation grants from the DNR in 2019. 

• Electric fund: Cash totaled $569,463 at end of 2018, $84,920 of which is restricted by bond covenants for debt service reserves or future capital replacement. Significant projects include Burr Oak St. underground rebuild, Hillcrest Dr. rebuild/lights, and Himlie Manor PUD and substation equipment upgrades.

• Water fund: Bonds outstanding at end of 2018 totaled $1,531,813. Cash totaled $780,191, $225,651 of which is restricted by bond covenants for debt services or future capital replacement.

• Sewer fund: City sewer service is supported by ratepayers. Rate increases were seen in 2015 and 2016, but unchanged in 2017 and 2018. Operating expenses for the year included depreciation expense of $207,704.

The audit summary highlighted a general fund balance of $736,907, which represents 104% of general fund expenditures.

Property taxes are providing more revenue than LGA, which according to Boynton “is not necessarily a bad thing, as LGA funding has been relatively stagnant in recent years.” The city has a capital improvement fund balance of $1,086,930, and “strong reserves for equipment purchases” in both the Fire fund ($581,420) and Ambulance ($464,218).

Payments received on Business Flood Loans continue to be transferred to the EDA revolving loan fund, providing funds for potential new EDA loans. Enterprise Funds (water, sewer, electric) are currently supporting 2.83 million in Revenue Bonds. Improved cash flow has allowed funds to repay all interfund debt other than electric fund advance, which has a repayment schedule.

The council voted unanimously to accept the audit results.

Floodplain Ordinance update

Bolton & Menk engineer Derek Olinger addressed the council regarding the city’s floodplain ordinance. The Federal Emergency Management Agency (FEMA) is currently updating floodplain maps and ordinances in Fillmore County and Rushford’s last version of these documents was completed in 1980. In order for citizens living within the designated floodplain to receive federally-backed floodplain insurance, the city must update both its floodplain map and ordinance.

Olinger presented the council with an updated map, with an explanatory letter noting “generally the same limits outside of the existing flood levee, with the exception of some additional floodplain in the area of Nannestad Lane (north of Brooklyn).

The updated map also includes new areas on the land side of the levee system. In general the extent of floodplain included in the updated maps is greater than previously mapped.

In comparison to previous mapping, the elevations of flood water during the regulatory (100-year) event produces more runoff volume for a number of reasons including: more detailed modelling of the drainage area, more frequent and intense rainfall events in recent years, and changes to runoff characteristics to the overall drainage areas upstream of Rushford.”

Olinger informed the council that, should the council approve this preliminary step, the map and proposed language changes will be submitted the Department of Natural Resources (DNR) for review. Once the DNR has signed off on the documents, they will be returned to the city, which will then hold a public hearing before adopting the updates. The council voted unanimously to adopt the suggested changes.

Elm Street Pump Station improvements

The council reviewed a letter was reviewed from Bolton & Menk’s Jake Pichelmann regarding improvements to the Elm Street Pump station. This project would replace two flood-pumping units with upsized motors and replace electrical controls on the pumps, which have been used for 50 years. 

The letter recommended the acceptance of a bid from Winona Mechanical, one of four bidders on the project. WM’s bid was for $168,000.00. Clerk Zacher noted that this project will be paid for using DNR Flood Mitigation grant funding. The council voted unanimously to accept the bid from Winona Mechanical and proceed with the upgrades.

Landscape partnership

The council reviewed a plan outlining a partnership between the state Department of Transportation (DOT) and the city to plant trees adjacent to Highway 43 from South City limits to 300 feet north of Olson Drive. The DOT would pay up to $8,000 for trees and landscape materials to be planted along this route. The city would be responsible for selecting the trees from an established nursery, and would maintain the trees. The council approved this partnership unanimously.

Other business

In other matters, the council:

• Adopted a resolution acknowledging a $500 donation to the Rushford Ambulance Department in memory of long-time Rushford resident Freddie Arnold.

• Adopted a resolution acknowledging the donation of five accessible picnic tables from the Rushford Lions for use at city parks and shelters.

• Adopted a resolution acknowledging a $250 donation from the Valley Crest Riders to be used by the children’s reading program at the Rushford Public Library.

• Approved resolutions from four micro-grants to area businesses.       

Schedule

The next meeting of the Rushford City Council will be held Tuesday, May 28, at 6:30 p.m. All members of the public are encouraged to attend.