Loading...
4. Ehlers Financial Planning ProposalPROPOSAL TO PROVIDE FINANCIAL MANAGEMENT PLANNING SERVICES TO: Ehlers 3060 Centre Point Drive Roseville, MN 55113 Municipal Advisor Registration Number: K0165 SEC CIK Number: 0001604197 ehlers-inc.com City of Scandia, Minnesota AUGUST 27, 2020 EHLERS ADVISOR: Jason Aarsvold Senior Municipal Advisor jaarsvold@ehlers-inc.com 651-697-8512 August 27, 2020 Ken Cammilleri City Administrator City of Scandia 14727 209th Street N. Scandia, MN 55073 RE: Proposal to Provide a Long-term Financial Management Plan Dear Ken, On behalf of Ehlers, I am pleased to present this proposal to prepare a customized long-term financial planning tool for the City of Scandia. We understand the City is considering its capital needs and is looking to develop long-term financial plans to identify sustainable funding mechanisms for future facilities, streets, equipment, and other infrastructure improvements. Ehlers can assist the City in developing its funding strategy by undertaking a Financial Management Plan. For over 60 years, Ehlers has helped municipal clients build strong and vibrant communities through financial planning, debt issuance and management and economic development consulting services. In the last five years alone, our firm has completed 75+ long-term financial plans. We believe the following factors set us apart and position us as the advisor most qualified to deliver a strategic and useful Financial Management Plan: Our Expertise. Ehlers is well-known and highly regarded in the markets we serve for leveraging our knowledge of municipal credit and financial planning to create a dynamic plan that gives leaders a “roadmap” to help determine needs and viable options and make strategic decisions. Ehlers’ goal in financial planning is not to find a single solution, but to facilitate a decision- making process that gives you confidence to complete projects and provide services to your constituents while understanding the long-term fiscal impacts. Our Independence. Independence is simply another way of saying we only work with your best interests at heart. Our Integrated Approach. Ehlers is here to help you realize a vision and act as an extension of your organization in all aspects of financial planning and funding projects. Our integrated, best-practice, high-value client service model empowers clients to: »Plan capital financing initiatives & ensure project & financing feasibility »Unite public officials, project partners & constituents in support of initiatives We rely on our deep and knowledgeable bench strength when creating client teams. Our Senior Municipal Advisors lead each client relationship, leveraging the specialty expertise of our Financial Specialists to deliver exactly the right solution - exactly when needed. Client-First Values. Ehlers prides itself on transparent communication, proactive service and an unwavering dedication to deploying client resources in the most efficient, prudent and effective way possible. Thank you for engaging with us in your financial planning discussion. We appreciate your consideration and look forward to discussing how Ehlers can best serve the City. Sincerely, Jason Aarsvold Senior Municipal Advisor jaarsvold@ehlers-inc.com 651-697-8512 Proposal to the City of Scandia, Minnesota Submitted by Ehlers - August 27, 2020 4 Proposal for a Financial Management Plan A Financial Management Plan (“FMP”) is a long-term operating budget and capital improvement plan with a funding strategy developed through facilitated discussions with City staff and Council. It will guide the City’s financial future and determine how the City can meet its capital needs. The FMP will also analyze the debt levy needed to pay debt service on existing obligations taking into consideration all anticipated revenue sources. By combining the City’s future needs and existing obligations into one projection, the FMP will measure the total tax impact of the City’s operations and capital projects. In addition, we will look at the two sewer systems and evaluate whether sewer revenues are adequate to meet future needs in those systems. This comprehensive fiscal plan will integrate the City’s: »Policy priorities »Capital Improvement Plans »Capital equipment needs »Existing and future debt and bond rating criteria »Tax base changes »Future operating expenses, including staffing and facilities needs »Alternative revenue sources Ehlers will build a customized Excel model for the City of Scandia with cashflow projections for each fund that roll up into a summary forecast. 1 2 3MODEL INPUTS DECISION MAKING RESULTS Base financial information, capital needs and growth Fund cashflow projections Master model showing impact of financial decisions Proposal to the City of Scandia, Minnesota Submitted by Ehlers - August 27, 2020 5 We preliminarily propose the following funds to include in the study: »General Fund »Capital Improvement Fund »Local Road Improvement Fund »Debt Service Funds (two equipment certificates and one bond issue) »Equipment Replacement Fund »Park Capital Improvement Fund »EDA Fund »Sewer Funds (2) A more detailed description of the FMP is attached in Appendix A. As part of developing the FMP, Ehlers will engage the Council in facilitated discussions to describe the projections and develop consensus. By understanding the financial impacts of decisions, the Council can establish spending priorities and develop consensus about an acceptable level of property taxes and other revenues. The FMP will provide the Council and the public with an understanding how decisions that are made now will affect constituents in the future. Project Team The Project Manager for the FMP will be Jason Aarsvold assisted by Elizabeth Diaz and Kristina Norquist. Jason will attend the Council meetings, as well as attend meetings with the City staff, and oversee the project. Elizabeth and Kristina will complete the numerical analysis. Proposed Cost Ehlers will perform the Financial Management Plan identified in the scope of service (Appendix A) for the not-to-exceed cost of $15,000. We propose that the project will be billed hourly at the hourly rate of $250, for actual hours worked so that the final costs may be less. As the project unfolds, Ehlers will invoice monthly for work completed in the prior month with descriptions of project activities and the time expended. Ehlers is committed to delivering, and showing, value in our work.   Project Schedule The FMP is typically developed and finalized over a 3-4 month period, depending on the availability of capital improvement plans and timing of Council workshop and meeting schedules. Proposal to the City of Scandia, Minnesota Submitted by Ehlers - August 27, 2020 6 Staff & Council Meetings Ehlers’ Scope of Work anticipates two meetings with staff and two meetings with the City Council. During the initial staff meeting, we will discuss policy issues in order to prepare a baseline model of the City’s financial condition that incorporates existing operations plus all proposed capital expenditures. The baseline model will show financial impacts related to fund balances, tax impacts, and apparent trends. This is the starting place for the conversation with Council where we show the financial impact of accomplishing all of the City’s goals and determine if priorities need to be set between competing funding demands. Based on staff and Council direction, we will then refine the FMP with up to two scenarios that alter the timing of capital projects and alternative revenue sources. Based on this feedback, we will develop a fiscal strategy and also make recommendations on additional or revised policies at a second Council meeting or work session. We recommend this process take place early in the year to lead into summer budget discussions. Financial Management Plan Project Deliverables The FMP will deliver an achievable, comprehensive financial plan covering the next 10 years that has been reviewed by and agreed upon by the City Council. It will result in a financial planning tool that provides: »The financial impact of planned projects throughout the forecast period »A framework to review future capital projects and keep the plan updated The FMP includes: »Annual projected budget numbers for each of the next 10 years »Inclusion of all capital improvements identified by the City »Inventory of current and potential financial resources »Expected changes in the tax base from residential & commercial development »Facilitated Council discussions to reach consensus on prioritization of projects »Presentation materials for Council & city use   Proposal to the City of Scandia, Minnesota Submitted by Ehlers - August 27, 2020 7 Appendix A Scope of Work: Financial Management Plan The Financial Management Plan (“FMP”) will be completed in the following steps. Step 1 Review Scandia’s current financial position, policies and practices. Step 2 Aggregate and outline all future capital needs and program requests from the city’s departments. A comprehensive list of major capital items and operational needs will be developed with the staff leadership. Step 3 Assist in identifying other policy issues to be discussed and establish a framework for such discussion. Step 4 Evaluate the impact of any tax base changes. Potential changes in the tax base due to growth, redevelopment or anticipated business closures will be included in the FMP model as well as the impact of future TIF Districts. Step 5 Create the FMP Base Model that shows the impact of including all capital requests. Step 6 Analyze options to best meet the City’s needs. Options might include varying the timing of capital projects, changing capital funding policies, or modeling alternative revenue sources. The financial impact, including determining bond rating impact(s), of up to two scenarios will be shown. Step 7 Prepare an achievable, comprehensive financial plan that helps the City fund capital and operating priorities and builds Council consensus.