honor the read. Pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, for liberty and justice for all. Thanks, everybody.
All right. First thing is our consent agenda. Routine stuff. There's no questions on that, so may I make a motion to approve the consent agenda? Motion to approve the consent agenda.
I'll second it. I'll second it. All in favor. I. I opposed. Motion carried. Community comment. Anybody from community who has left? Um. Carlson SV 2025 audit review.
Europe. Do you have some things to hand out for the council? Great efficiency for this. Thank you, sir. Goes for the long term incentive. All right. Well, for those of you who don't know me, my name is Paul. I work for Carlson SV. I'm a senior audit manager with the firm. Uh, formerly
Berkhardt & Berkhardt for those of you that have been here long enough. Uh, so I thank the opportunity to come and present the 2025 audit results to the council. I do have a PowerPoint presentation slide in front of you guys, so we're going to go over this and talk about some different responsibilities of the
city as we have as your audit firm. I'll go over some results of those audit procedures that we've have And then we're just going to go over some brief uh financial highlights for the city. Um kind of looking back at what's happened last several years, look at what's happening right now, and then
hopefully project that into the future. So, we're going to start on the first slide here. There's over some responsibilities for our financial reporting. Uh management responsibilities, and that's you folks up here in the front have various financial responsibilities. Uh basically what we're looking at here
is you're responsible for all of the things financial in the audit report. Uh we're including all of the policies uh that dictate all of those numbers and what goes on here in the city. That is your guys' responsibilities. We have some responsibilities as well as
your audit firm. We issue three different audit opinions over your financial statements. Uh the first one deals with this a basic financial opinion uh using the GASB or generally accepted auditing standards. Um and given the debt that might be coming down, that type of
opinion may be changing once that comes time to pay it off, what your debt is, what the PFA requires. A lot of our PFA cities uh do have what we call a yellow book audit, which does deal with more compliance for regulations and laws, but uh that'll be determined once the project developed finished. So, very
interesting presentation. I've never sat through one of those kind of which interesting. Uh we also issue a opinion over your internal controls. Now, we don't test those controls. Uh we look at them just to help design our audit procedures. Helps us be a little bit more effective, a little bit more efficient. It'll all be into honorous on
the city staff uh to get us information that we need. And so, we will tell you if we see something that may be needs to be tweaked or adjusted or do something that the council needs to be aware of, but we're not testing your controls, so we will not say whether or not they're working effectively. But, like I said, if there is something that may be could
be adjusted or just be looked at, we're definitely going to be talking about that tonight. And our final opinion is over the municipal wheel compliance. We did a lot of different checklists. I think there's seven different checklists we get from the state auditor every year. Uh deal with cash, disbursements,
capital assets, debt. Once you eventually think about debts. And as we go through these various audit areas, we're looking at those checklists and the various Minnesota state statutes that apply, and making sure that the city is complying with the state statutes that you are that you are required to.
So, looking at some summary of those audit results on slide number three, uh your financial opinion changed this year as we're talking about it as you can see on the the bottom slide. Uh we were able to implement uh the Fire Relief Actual Wearer Report into this year's audit
report. So, you no longer have a qualified opinion. You have a clean audit opinion, or what we call in the auditing world, unmodified. Uh so, what that means is that all the numbers in there are fairly stated, and what you're seeing in that audit report can be relied upon. We have audit
evidence for all those numbers that you're seeing in there, and all the commentary in the footnotes, we have audit documentation and support for all those numbers, so they can definitely be relied upon. Some internal control findings we had this year, these are the same as last
year with the material audit adjustments uh because we prepared the financial statements for the city and limited segregation of duties. Uh like I said, same as last year, the function of this is just because you have a small staff. You have a one-person shop running everything. Um 98% of our clients have these kinds
of findings, so nothing to be concerned about. Um but like I said before, something we want to make the council aware of that there are some limitations in your internal control, and the best way to get over these is to stay involved. Make sure you're looking at checks, looking at bank recs, asking questions if something doesn't seem
right. It doesn't mean that you don't understand it. It just mean you just mean you may need a little more information. Uh so, don't be afraid to get your hand up in the air and ask questions uh when things like that arise. And we're definitely happy to report we did not come across any legal compliance findings this year. That can be tough to
do. We all know laws change all the time. There's always new laws and regulations coming down from the state legislature and the state auditor that all the municipalities, whether you are Minneapolis or whether you are good finder that you need to comply with. Um so no small feat to not have legal compliance finding and I think this is
the first one I've presented where there were no legal compliance findings. So definitely a good job making sure you guys are staying in line with those state statutes. Now again, that does not mean that you followed everything. It's not a legal determination. Thankfully, I'm not a lawyer. I am a CPA, but we definitely did not come across anything where you
did not follow the state statutes. Um some more required communications. Uh we do recommend you guys look through the management report that we provide to the city. It's a lot more in-depth information than what I have time to go over tonight. Uh we have recommendations in there for how you can improve things
that we noticed as we were going through the audit. Also, definitely take the time to look through that management report. Uh we spent a lot of time putting that together. Gives a lot of good information analysis and some definitely some good recommendations. And the backside of that report will be all of our adjustments that will be
applied to the city records as well. Um as you will note there in the summary of accounting policies, we did adopt GASB 68 for the fire relief. And that is why we were able to remove the qualified opinion out of the city's audit report and just give you a straight unmodified
opinion this year. Uh some misstatements we did have 26 journal entries. Two of those are what we call audit adjustments and that just means that something was not where it needed to be or it was a large enough adjustment where it met our threshold to be only one of you guys.
Uh both of those adjustments were material to the city's financial statements. And kind of as a gauge, last year we had 33 journal entries and eight audit adjustments. So definitely a good improvement on Sue's part. Uh definitely want to commend her for doing a very good job this year
uh leading to our audit difficulties. They weren't none. She did a great job. I know we had a little absence here, uh but they did a great job getting the records ready for us. The team that showed up, uh things ran very smoothly. We were able to get the information that we needed, and we didn't have any issues getting through uh the audit that we had
to do for the cities. So, I just want to commend the city staff for making our jobs a lot easier. It's always easier when you have the the support of the council and the city staff to get through our procedures. So, Okay. So, now we're going to do some financial trends of the city on slide
number six. What you see here are the historical cash and investment balances for the city. Uh that grayish bar are your governmental activities. So, what that is is everything that is not sewer, water, or refuse. These are general fund
general fund primarily. And so, what we can see here is that those bars are pretty high, averaging over a million dollars. Your governmental activities are going very strong. There was a small dip from '23 into '24. Uh that had to do with some transfers that the
governmental activities had to give over to business like business type activities for some projects where you just need some extra resource to flow over there. Uh but a very nice rebound here in '25. So, uh the overall takeaway for the governmental activities, very strong, very good, and well positioned
moving forward. And really the same flavor with your business type activities. Like I said, that's your water, sewer, and refuse funds. Those are business functions. Uh you can see there's been some steady growth over the last 3 years. Um again, very well positioned there.
And you might say, "Well, we have $548,000 in our ETA funds. What does that mean?" We try to do that and give you guys some kind of ratio with the days of reserves. So, what that says is how long can these funds operate given average expenditures
before they run out of money. And you can see both of these are very well are very well positioned. Both are up in 25 and 651 days for your governmental and over 1,100 for your BTA. So, big takeaway here, plenty of reserves,
very good, strong financial position in your governmental and your BIF. Next couple of slides here, we're going to focus on the general fund. Why the general fund? Are we picking on it? No. That's because the general fund is your main operating fund of the city. Anytime
someone looks at a city, the first place they're going is their general fund because that is your main operating fund where most of your revenue is coming in and most of your expenditures for governmental activities are occurring in your general fund. Uh as you can see, there are some ups
and downs in those bars up there. The red bar is your total fund balance. And fund balance is a funny word. What I want you to think of is what is your net worth? So, if you were to pay all your bills and have nothing left over, what is your net worth? Everyone understands net worth. You know, what do you have
for cash versus your mortgage? Like what I have, US Bank gives me a net worth on my my app or my website when I log in. That's what fund balance is. What is your net worth once you satisfy all of your liabilities? What do you have left over? General fund sitting very well. So, the
green bar is your unassigned fund balance cuz there are various components of your fund balance. So, the unassigned fund balance or net worth is what you have discretion over for whatever spending that you have statutory authority to spend. And as you can see,
uh end of the year at $918,000 and very good, very consistent, some ups and downs there. Uh nothing that is indicative of a structural issue with the general fund. A lot of those are just timing differences with accounts payable, accounts receivable uh that we are required to put in the report that
can bring that fund balance up or down, but nothing to be alarmed about, nothing to be concerned about. Uh you can see over the last 5 years, a very consistent, very good, strong fund balance in the general fund, which bodes well as you're moving into a project here next year. Where would that $117,000
come from from the 801 to the 919 in the uh unassigned? Oh, where does it come from? >> Yeah, where does Where does that Where did that Well, the difference between the bar and the green bar Uh the two green bars, you know, one from the
>> to 2018 801,000, and now it's at 918,000, that's 117,000. Where did that come from? Profit. Profit of the general fund. Return on your That which we're getting to, and you're going to see that on the next slide,
too, Mr. Mayor. So, it's about 115, if you look at the other slide. Um so, just kind of finish up on this slide, but yeah, good question pointing that out. We'll get to that here on the next slide. So, again, what does it mean to have 918,000? How What is that in relation to the city of Good Thunder? Uh
so, what we do is we take your fund balance and you we divide it by your expenditures. Uh the OSA recommends, and they have a statement of position on their website, saying they like to have that to be about 40 50% of your fund balance to be your expenditures. Uh you
guys are well over that, over 120% you know, for all 5 years that we're looking at here. Uh we take the position to have 75% of that ratio. You might say, "Why? Are we meaner than meaner than the OSA?" I like to think we're nicer than the OSA, but the reason why
is because we read a lot of bond rating calls. And when bond companies look at a city's they like to see that general fund ratio to be around 75%. That's why we strive our cities to get to that 75% cuz it just more indicative of a stronger net
worth in the general fund, and you can see you guys are blowing that away the last 5 years, well above our recommended and obviously far exceeding the OSA's recommended fund balance percentage. So, general fund's very strong, very consistent, definitely no issues there.
>> So, now when we go apply for some money for all of our projects, that kind of makes us look better that well, we're we'd be conservative, but we're not a financial risk. I mean, the
finance lady is sitting back there, so this should help everybody, right? Yes. So, the thing that I think that they would look at would be your fund balance your the fund balance of your general fund. Obviously, if we're talking water and sewer funds, they're going to look at how much revenue are you going to be generating, how much cash you put in the
bank, which we'll get into here in the next couple of slides, but definitely how are you doing with your general fund budget? Are you blowing your budget out of the water? We've had some cities where they're over budget by, you know, hundreds of thousands of dollars in a general fund. That leads into fiscal irresponsibility.
But, if you're able to maintain your general fund, if you're fiscally responsible how you spend your money in your general fund, that generally gives bond holders a little bit more comfort level and it it gets your bond rating a little bit higher. It's not that they're not going to give you money for the most part. I don't really get involved with all that and they can probably speak
more to that than I could. Um but it definitely give you a better bond rating and sometimes, you know, where interest rates are, it can give you a little bit lower interest rates on your bond. You know, it depends on the type of bonds being issued, too. So, if it's water and sewer bonds, are they going to look at your general fund?
Yeah, I would think so, but I think there's a lot of factors that go into that when they're looking at how what's your creditworthiness for the city of Are they going to send you a letter? I mean, they have to consider just what the general But, it all it all plays a factor, for sure.
So, on the bottom side here, your budget actual for your general fund, very condensed here. The blue section there is your revenues. As you can see, you were over budget in your revenues by 159,000. A lot of that was just unbudgeted donations and investment earnings that came in.
Uh so, what we're recommending is try to get yourself a 3-4 year average for what your investment earnings and donations are. Let's get some kind of budget in there. Uh is it good to be over budget in your revenue? Of course, it is. Uh but not having any budget in there, probably could do a little better than that and get some kind of, you know,
average mean donations can be hard to budget for, but if you look at a long enough time scale, you probably could get an amount of average amount of donations that you receive every year. And the same thing with your investment earnings, those are a little bit easier to determine, you know, looking at 3, 4, or 5 years what your average investment
earnings and get some kind of budget in there with the general fund for that. Uh the next section down is the orange section, your expenditures. Where is all the money going that you're bringing in? Uh for your current expenditures, you were over budget by $63,000. Uh largely had to do with some seal
coating in your public works departments. Uh very large seal coating project that came in here, so that kind of makes sense. Uh but again, just try to do some more forecasting. Hey, we know that we're going to be doing some seal coating in '27 or '28, maybe try to work that into the city's budget so you're not going over budget.
Uh but your capital outlay was under budget by 32, so you ended up being over budget by 30,000, uh which isn't, you know, you know, it's not bad. And a lot of those extra expenditures were covered by the excess revenue that the city brought in. So, you can see the bottom there,
still had a very nice strong profit in general fund, $115,000 increase, uh which like the mayor said on the previous slide, primarily went into your unassigned fund balance, which again is what you have as discretionary spending authority over. Uh general fund looking really good. Uh
just maybe tweak those revenue budgets a little bit on your next budget season that's coming up here this fall. Uh and as far as expenditures, uh we personally not very concerned about that 3,000, pretty minimal. Uh you know, things here or there can swing that dial, but um the fact that you had a nice strong growth in 2025, I think
bodes well for the city. So. Any questions there? We just how much was our seal coating like a hundred some odd? >> 88,000. Okay. We just We had a change over in our utilities and it just never earned our public works and it just never got
Yeah. So we need to like budget $35,000 a year so when we do seal coating in three more years that evens out. Well, it's not going to even out because that budget is just for that particular fiscal year. So like if you know you're going to be doing seal
coating coming up in 2027, you should be putting that in the budget this year when you're doing your budget for the general fund. We've always been putting like 30,000 I believe in Like he said, it starts over the next year. It doesn't carry on. That's right. Your budget goes away. We were always You don't like it
you don't accumulate your budget over three years. We were always in the impression that you'd do 30 and you name the next year 60 and the following year is 90, but that's that don't work that way. Nope. All your budgets will lapse at year end. Okay. Yep. And so it's getting you know, getting
tuned with your budget or your your department has a what's your capital needs for next year? You know, do you need a new truck or I mean you know, repairs and maintenance are going to happen. Those are what can you do? You know, the engine blows. You can't budget for something like that. You can't budget for a water main break. Those things just happen.
But you know, some of the capital needs I think you certainly could. You know, how old is a public works truck? You know, do you have some seal coating because you know the roads are just going to need or the chip sealing I think is another thing that some cities will do. And if you know that you're going to be doing that like say in 2028,
then the fall of 27, make sure you put that in your budget. So the fire department now is looking at a new what's that? Rescue Rescue truck. Rescue truck. So if they they they were here a month or two ago, whatever it was, and they
said 5,000 If they find something that would fit their needs, you know, we'd have the money. A third of it would be our cost, right? I think you guys built townships for saying So, a third of it So, you know, say if we have
85,000 in there and it cost us 105, that's going to show that we're $20,000 off again, right? Mhm. It will. Now, what some of our cities will do things just like that so you're not blowing up your general fund budget is they will create capital reserve funds
or like a capital outlay fund where they will take money and they will transfer money there every year, have like, you know, like a public works reserve where you're taking, you know, 30,000 every year and you're transferring it over to that fund and that way when you
spend that money for seal coating, it's not going to sit over here in your general fund, it's going to come out here after all. Don't we have some of our Don't we have capital outlay in some of these? Say that again? Don't we have capital outlay in some of this financial
stuff here anymore? I've talked with Carlson SP about creating those um capital outlay accounts and we just haven't I went on leave, so we haven't done it. Yeah. So. Something we can certainly readdress. >> So, it's something that yeah, once I get
a little more direction, um when we kind of know what we're going to do, then I yeah, I was going to contact and >> Reach out to us this summer cuz we're still wrapping up our busy season. We're still flying 100 miles an hour, but we're definitely willing to assist you guys and, you know, getting the entries in and getting ban you set up
for these capital types of funds. That would be a better way to handle it, wouldn't it? Oh, yeah. You're not going to blow up your general fund for your seal coating needs. That way you could actually transfer actual cash to this fund and you say, "Okay, well, what do we have for public safety? What do we cuz right now it's like you really
don't know. You have all this money just sitting in your general fund unless you have a specifically earmarked for something and say like an assigned fund balance, you really don't know. But if you have an actual capital fund where we're going to transfer 30,000 or 20,000 every year and you say, "Well, you know,
the Department of Public Works, what do we got for capital?" Well, let me pull up any. Let's see what your cash balance is in your 410 fund or 425 or you know, whatever fund number that you want to give it or you know, whatever you say, "Okay, well, you guys have $150,000 right now."
Well, we want a truck for $500,000. Well, you better start coming up with some money then. Or the city can transfer money over there, but that way it's not going to it won't I mean, not that it's going to blow up your general fund budget, but it's going to be less impactful to your general fund budget by having these
capital accounts, these capital reserve funds. A very useful tool for cities to maintain and be a little more responsible not as irresponsible. I'm not saying that, but just a little more responsible with the general fund budget. And do a little more fiscal planning,
too. Because it'd be like seal [clears throat] coating the streets and the fire department, it would be great to have those cuz them are big expenditures when they come due. Yeah, especially with the fire department. Our trucks are expensive. Yeah, that's the
current rate. Yeah, they're not cheap. Okay, so now we're going to spend the next couple slides looking at your BPU funds. We talked about these business type activities. So, why do we call them business type activities? That is because the presumption is they will they will run like a business. And what
do businesses do? They generate profit and they generate cash. So, when we're looking at these next several slides, I want you to think that these are businesses, these are stand-alone businesses uh just like any business here in town or any business in Mankato, the primary objective is to
generate a profit and to generate cash. So, we're going to start here with the water fund. Uh a lot of things going on on this slide, so we're going to take a little bit more time on this slide to describe kind of what I want you guys to be looking at and what I want you to be thinking about. Uh the main line I want
you looking at here is that blue line. That's your operating cash flow. And what that represents is what are you are depositing in your bank after you pay suppliers and employees. What is actual cash in the bank? Cuz
your operating income is not how you pay bills with your operating income because there is a lot of accounting entries that we are required to put in your report that is not cash related. Depreciation is a big one. Accounts payable, accounts receivable are non-cash entries. The blue line is cash
in the bank after you've paid all of your vendors and your employees. Now, looking here at the water fund, you can see there's quite a big dip there in 2023. Um some extensive repairs and maintenance were made. Um but what's interesting to note here
and what's important to focus in on is what happened in '23 or in sorry, in '24 and '25. Your cash rebounded. So, what that tells us when we look at this is that big dip there, there's not a structural issue with the water fund. You just had a lot of repairs and
maintenance that year and it ate up a lot of the city's cash. So, the fact that you're able to bounce back and really generate some cash in '24 and '25 in the water fund means that your rates are probably about where they need to be as they sit right here in 2025 and on
into 2026. But with a future project coming up, what you need to be aware of and what the city council needs to be thinking about is when you're making these eventual bond payments with PFA, you need cash to do that. You're not
going to be able to pay that with net income. You pay that with your operating cash flow. And you can see the last couple years it went from 43,000 up to 56,000. So, let's say you're averaging about $50,000 cash in the bank for the water fund. And
what you use that cash for, as you can see in that table down below, you're using it for partially inter fund activity, whether you were borrowing money to another fund, or whether you were accepting money from another fund because you're you don't have cash to you'll be stay afloat.
You also have acquisition of capital assets, i.e. equipment, maintaining the infrastructure of the water fund. And soon, you're going to have debt service requirements. So, what you need to be aware of once these loans and once this financing gets
in place is what is the debt service load on the water fund. And if it's more than $50,000, you're going to need to get your rates up cuz you need to be able to generate enough operating cash flow to just pay your normal expenses, pay your
employees, repairs and maintenance, supplies, utilities, things like that, and have enough to make that PFA bond payment for just the water fund. So, as these bond schedules start coming out and the financing starts getting in place, be looking at what is our cuz they're going
to give you a schedule from, you know, 2028 all 30, 40 years, whatever they, you know, length they do that bond, you know, 20, 30 years pretty typical, but what is that annual bond payment? Not only principal, but interest. You need to make sure you have enough operating
cash flow to make those payments. And this gives you kind of a good idea of where you've been sitting the last couple years, you know, 43, 56, you know, around that $50,000 range just for easy math. So, if your bond payment is less than that, you should be okay, but
you're also going to need to keep in mind other capital and repairs and maintenance that could come out of the water fund that is going to draw off of operating cash flow. That makes sense? So, we're seeing that line kind of going up in the water fund. Um so, just make sure that you're
keeping a good eye on your rates and a good eye on your water cash flow. Especially these big projects, a lot of big numbers were thrown around here. You know, a $10 million and all that's going to the water fund, uh but it looks like a sizable chunk of it is. So, once you start getting on I'm sure that they're
going to help you kind of work through all that. But, something that you guys need to be aware about is that that operating cash flow, you need to have enough money to be able to make your bond payments. Will it be a 20-year or 30-year bond? Yes. What do you think is most feasible for us?
Well, if it's with the public facilities authority, the initial offer will be a 20-year term. If you reach a specific affordability threshold, they'll offer you the opportunity to extend that to 30 years. Like, 20 years is the standard. 30 years
if you hit a certain threshold. Okay. But, you're going to pay more interest on the 30 years, so keep that in mind. So, yeah, just just something to be aware of. I just wanted to kind of point that out. Thanks, guys. Is that 20 years pretty typical? Some go 30. You know, other bonds will go out to 40, but you know, generally you're paying or all that 20-year mark. We don't know how
much money we're going to get from other entities to help pay for this project, but It's pretty early on in the stage, yeah. If you had a guess, you know, what Mark showed us up there, what portion you think we'd be responsible for and
just say the water treatment plant? Point to that level. I can speak a little more Shannon's got a deeper dive into the affordability question, but in a broad level, this this three things I'll bring up on possible funding sources short term.
There was a state funding request that was put in before Valley on board. And think it was 10 million something. On Sunday night at 11:59 the session has to be done. So, it would
be a really good time to contact your representatives at the state level and encourage them to get the Thunder funding. Uh PFA we're going to put in for you in June 1st to get you on the intended use plan.
And their funds don't Uh how am I going to say this? They You don't know what you're getting for grant loan until the bids are in. We can do some affordability uh cyphering for you. Um the last thing
long shot, long term I should say is congressionally directed spending. Uh Finstad and Smith have both forwarded your project at the federal level. So, also encourage them to reach out.
But, if you have more questions, I don't I don't want to take any time away from all of it. There's [laughter] definitely good things we got serving us. So, Um so, I know when we're working with the city of North, where they got some state bonding money. Um they got $10 million.
Different scenario than Good Thunder. It's not apples to apples. So, I'll just you know, keep in mind. But, they're getting a new wastewater treatment plants, a whole bunch of water upgrades. And I think they're bringing on right now um we're actually just wrapping up that water report, too. And they had $2
million in debts. But, you need to keep in mind it has to do with the economic structure of the city. I think that kind of plays into the loan and grant as well. It's what are you going to qualify for? Generally, lower income cities, you're going to get more grant money. For the city of
Mankato, you're probably not going to get so much grant money cuz you're going to you're going to want to give you loan money. And it generally it's kind of a mixed bag. We're getting a little bit of grant, little bit of loan. >> [clears throat] >> So. So, as soon as this
this project ever got going and we knew what we were getting for grant money, we would have to then be able to figure out what our debt will be per year. Yeah, they're going to they
take care of all that for you guys. >> Okay. All right. Just I just wanted to just kind of give you the numbers, kind of give you so that way they come you come and say, "Your debt flow is going to be 20 or 20,000 a year." Well, you're sitting pretty good. You may not have to raise your rates. May should you always be raising rates? Yeah, because supply
salaries need to go up, supplies and inflation goes up, repairs and maintenance goes up. So, you should always be increasing your rates every year. But, if your debt load is under your current cash flow trend, you're probably going to be okay. But, that's it's all going to depend
once all the financing once all the dust kind of settles, cuz it's sounds like it's still very, very preliminary. Um you guys have you know, you're still in design mode. You're not even awarding contracts, you're not securing financing. Um that stuff like that is still months down the road, but just want to kind of you know, give you some
numbers to think about. You know, what can the water fund afford as it stands right now. And that's what this blue line is going to tell you, cuz that blue line is what you're paying bills with. You're not paying it with the orange line. Those have all of our accounting mumbo jumbo
numbers in there. But, that blue line, that's cash in the bank, cash in your account, and what you're writing checks out um out of that after you pay your operating costs. And that's going to be for your debt, your capital, and any type of inter fund activity. Okay. So, now looking down to sewer
fund, kind of same flavor there. Looking at that blue line. Um not quite a big dip in '23, but we did see a little bit of a dip in um 24 just more repairs and maintenance had a little bit of pressure there from the sewer project you guys had back around that time
but overall very strong sewer fund as well as you can see averaging again I'd say probably 60,000 would be kind of your average cash flow operating cash flow for the sewer fund and that table down below is going to
let you know what else is affecting your cash that's not showing up on your P&L on that orange line so again we have some inter-fund activities of acquisition of capital assets and once all the dust settles from the project you're going to include debt service loads in the sewer fund as
well because it looked like the sewer fund was maybe a little bit less than what the water fund is getting but there could potentially be some debt service there as well but the sewer fund is sitting very strong very good cash flows you know very strong year-end cash balance of
325,000 so no real major concerns there with the sewer fund but definitely just some food for thought as these as the debt starts getting you know put on the city start making these payments now you kind of get an idea like what is our average kind of cash flow in the sewer fund and
you're averaging I would say 60,000 is a pretty good number looks like 25 was a little bit above that 64,000 so water and sewer fund definitely generating very good operating cash flow and that is what it's going to be servicing your debt and sometimes that's what
bondholders look at as well PFAs a little bit different in that respect but water and sewer fund sitting very good so that makes sense so far clear as mud let you know in a year and a half when all this gets going
so refuse fund not quite the rosy picture here a lot of ups and downs here a lot of fluctuations we are recommending that the refuse rates go up. Even with the influx of $12,000 from the general fund,
there's still no cash in our refuse fund. The rates got to go up. This is it's not supporting. There was a little bit of operating cash flow, $1,400. But with the with the nets cuz there was some interfund loan that had to get paid back. That essentially was paid back
with the transfer that was brought over. The refuse fund is is basically out of money and is in financial trouble. Not that's going to close down and now we're talking about business type activities. But I think the picture here is the refuse rates need to go up. They need to be able to cash flow the
refuse fund and right now the refuse fund is struggling and is not able to cash flow without help from the general fund and you're putting undue pressure on your general fund but not raising up your refuse rates. So those those need to come up. Are we supposed to make
money on refuse or just make it viable? Make money. Make money? Business type activities make money. Would you want a business that breaks even? Well, I mean it's a service that, you know, we provide or hire to service for the
public. So I didn't know if, you know, we were supposed to make $10,000 a year on it, you know, cuz when we have spring clean up and summer clean up, that's where we probably go backwards on this a little bit.
I would recommend at a minimum break even, ideally make some money. Mhm. By making money in the refuse fund, you're taking the pressure off your general fund and your governmental activities. And that's what you want to be doing. These funds really should just be like I was saying, they should be just
kind of like in a vacuum. They should make money on their own. They shouldn't need, you know, support from other funds to be able to just break even, which is what we did in the financial a because we can't show negative cash in there because of our governmental gap. Um we had to at least have it break even.
Right now it's not breaking even. Yeah. So. If you had a say what percentage you think we should go up right now? I would have no idea. I'd have to go look. I would have no idea. >> Okay. Double? So, do we figure this out or where do we
where do we where do we start to make this viable? Why don't you get a hold of us this summer? That's something I think we could probably take a look at. I think that's outside the scope of what we're doing here with the audits. Um so that would be maybe a separate contract that we would be able to offer the city. If you want us to look at maybe some rate studies here and say,
"Okay, what would it take to cash flow the rec fees for any particular cuz water and sewer can be a little bit different in that regards. And plus those funds are doing fine anyway. Uh but if you want to get a hold of us maybe like July or August um you know, after we get past June 30th cuz that's our big reporting deadline to
the state. Uh I think that's something we definitely could entertain and I can bring that up to the partnership group and see if you know, if we have it for now that we're part of a much larger firm. You know, and I'll get 80 professionals rather than just the handful of professionals we had before. I imagine that'd be something we could help you guys at least figure out. At
least give you a ballpark for what do we need to go up? Do we need to double? Do we just need to maybe go up 50% to make this thing cash flow? What do we need to do to have a little have a little bit better answers. It's not really something I can answer right here right now without doing a little bit more in-depth study on it.
What are your number of connections you have? What are you charging per connection? And different things like that that all would play into it. All right. Okay, well that's what I got for you guys today. You can see our today. You can see our audit team there. Greg is a managing partner. He's a partner of the Mankato branch. Uh we got myself as a
senior audit manager. Then we have Luke and Dane as our senior auditor and staff. So I'd like to put our information out there. If you guys have any questions, certainly as this project starts kicking down, please reach out to us. We will help you set fund accounting up cuz we're going to be probably several different accounts that you're
probably going to need project fund. Um I know you mentioned maybe the county's going to get get involved, so there might be county participating potentially. Uh don't know. Sometimes these projects can depend if it's on a county road. Um we can help you get your fund accounting and your structure set up. So as this money starts coming in,
starts going out, you have the accounts set up and so you're recording it right there in the project fund as it starts coming in. So please reach out to us as things get a little bit more finalized. I don't know if that's going to be later this year or maybe early uh 2027. We can help get your funds and your structure set up
and get that, you know, that basement set up so as you start building a house, everything will just fall into place. So cuz we've been through a lot of these. And so we can definitely I can't handle the financing and engineering part, uh but I can definitely handle the accounting side of it. And we can definitely offer our support to the city
uh to help you guys get through this project cuz it looks like it's going to be expensive and take a, you know, year and a half or more to get this thing done. So definitely like to offer expertise on the accounting side of things uh to help get you guys through this. So
And so first thing it helps us come out of time cuz then uh everything will be generally where it needs to be. So And cuz you've never been something through something like this, it's it's a big undertaking for sure when you're talking a $10 million project. So all right. So all in all, the the city's finances are
good. The the record keeping uh accounting everything is good. overall governmental and business type activities looking very strong. Um and everything was really good this year. Yeah, it was well done. Thank you, Sue. Yeah, thank you. All right, thank you, Paul. Nice to hear
you. Appreciate it. Yep. >> Thank you. >> Have a good night. Have a good night. >> Good night. Okay. Any questions about the audit? No. Anybody? Uh David Drown and Associates.
Yes, it's with David Drown and Associates, yeah. Okay, um municipal advisor. We probably all need some advising. >> [laughter] >> Um I'll tell you a little bit about what I do. I uh
I've for 25 years I've worked for David Drown and Associates. We serve uh cities, counties, and townships in Minnesota in public finance. So, when uh our client communities are borrowing money, we help them with that process. Uh we even provide assistance when
you're accessing uh state and federal grant and loan programs. And so, we do we have a lot of experience in working with those, and we can provide some advice there as well. Uh a lot of times on projects like this, uh small communities in a position where
they're paying significant design costs, and we're assisting with temporary financing to bridge the gap between uh when the project's being designed and when they're able to access state or federal funding. Cuz at the end of the day, uh you're not going to close on PFA funding until
a bid is awarded, and you close out a loan with them. All that time, you're on your own essentially compared to paying those engineering costs and design fees and uh everything related to getting a project through the bidding process. And so,
we work with Minnesota Rural Water. They've developed uh three programs that we administer and advise them on that provide uh varying amounts of money on a temporary or permanent basis for municipal projects.
Uh and so, if there's a need identified, you know, through the estimated budget for getting this project to construction that goes beyond the cash I have available to afford to fund it with, we can assist
with putting temporary financing in place to do that. Done it with lots of your neighbors including the Vernon Center project that we reference to work with Vernon Center for a number of years. So, uh Well, for
No, I think the the good thing I heard from your auditor today is that your your enterprise funds and water and sewer funds are already producing cash surplus which is loan affordability in my world uh meaning that you're already at kind
of head start on being able to afford the financing that you have to pay back. Uh the magic is maximizing the financing that you don't have to pay back and those are the sources that uh they were talking about with regard to the federal earmark,
the state appropriation request, or eligibility directly from the state through public facilities authority based on affordability calculation. Um You know, we can we can get you close to understanding kind of baseline as long
as you have a project that scores well what your loan would be through the public facilities authority cuz they base it on percentage of your median household income. I just saw draft of that calculation and ultimately their affordability threshold is about
136 bucks a month I think I've said that as far as a monthly water user can pay for they be eligible for free >> [clears throat] >> free funding from the state of Minnesota through the public facilities authority.
They indicate that 1.2% of your median household income is what you can afford to pay for water based on the median household income that they're applying that number is about 136,000. So, I suspect you want to improve upon that
and the way that you do that is the state appropriation request, federal earmark, or other programs that, you know, maybe identified, you know, you said small cities wasn't on the table for this project in particular with the 47%
And [clears throat] their LMI is 47% and they need to be 51. We typically don't recommend a income survey at the federal like at least 48. And even that, I'm not sure we've ever I'm not sure we've
actually been able to pull 48 up over the 51. It's It's tough. >> Understood. So, uh your median household income is the barometer that establishes the baseline for people. That's both the federal government and
the state government. It is that barometer for determining what your grant eligibility is. Uh you know, I don't doubt that median household income, they've become more aggressive on monitoring that, updating it. For a number of years they've been
using, for example, at state the 2010 median household income, uh probably for at least 10 years almost past that. And so, affordability thresholds were thus lower for a period of time and now they've got more aggressive as free money is hard to
come by. So, uh ultimately, that's you know, again, just indicating the areas where you can improve upon that. You're already pursuing this. It's not that I'm attacking you, I'm just saying that
Bellingham that this is important and that affordability threshold's been moving in the right direction for a greater Minnesota. How do you get a hold of them or what is the procedure to do that? Just send send an email and tell them or do we tell them the numbers of
our project? The scope of it? Yeah. Do you include numbers or do you just say it's a large undertaking for a small town? Yeah, at this point for this legislative session if you wanted to do anything meaningful, it's probably just going to be an email at this point
or a call uh to your state representatives and just indicate you know, we have this project. We're expanding significant funds in the design process. We need to implement some of these things. Uh we have an appropriation request. Any
amount that you're able to get under that funding because it's a bit of a funding reference. So if they're if they're able to be at the table, you know, at midnight on Saturday or whenever the last day of the legislative session is and if they have
uh that kind of bargaining power, I've seen money move quickly in that last night of the session for state appropriations. So making them aware that you have the you have a project that's more imminent now that you're working on design may help
that cause. So That'd be Born Olsen, right? Yes. And uh did he say something about Finstead Duke? Um that's national. That's national. So once we're um Yeah. So do you get them involved? >> It's the Global Shore, correct? It was
It was Smith and uh Finstead. Smith and Finstead. Yeah. That's for That's for federal. Federal, they've already moved that project forward. And so they've kicked you up to the next level. And so that one, you know, if there's no session that's ending that
makes that one time sensitive. It's the state appropriation right now. So it would be So Born Olsen is our only contact to your only contact to You would have a senator and a house rep. I I know who your senator is. Uh
Is Arnold is your only senator? She's a representative. Representative. So, it'd be your senator receive. Used to be Julie Rosen, perhaps. I'll grab it here quick. Don't know. Yeah, it would have been her, I believe. You're right. >> Yeah, she she was very good at bringing money into
our district. So, Oh, really? Yeah, yeah. She was exceptional. Uh But Those would be the two people then. Yes. Those Used to be senator and your state representative. >> So, just pre- have Sue create a letter and stating This is two Yeah, letter,
email, call. When you just indicate that is to we're in the design process and this is important for us. So, Uh that that the session if there's any push. Draheim, Rich Draheim. Oh, yeah.
Sorry. Mhm. Republican. Yeah, [clears throat] I know. So, we'll see if we have any draft letters that you would like to send. Perfect. Thank you. >> [laughter] >> So, we'll get to a point where we are out of
cash to pay the engineer. And that's where you could fall in and get us some Yes. I would I wouldn't wait till you're out of cash. >> Right. Yeah. But I mean, where do you go to get that money? Again, it's Minnesota Rural Water has three programs.
Uh essentially, they work with uh three or four lenders that are well-versed in working with small cities on projects like this. Uh normally, when we approach a bank, uh they one, are monitoring the bond
market, so they don't know what a reasonable interest rate is. Two, they don't understand the pledge that the city's making for repayment, which is a very solid pledge. You can issue what are called general obligation bonds. Those there's hasn't been a default that we're aware of in the history of
Minnesota on a general obligation bond. So, they're uh so essentially that general obligation pledge means they can compel the county auditor to levy against your taxpayers for repayment of that debt. And so, there just hasn't been a default on one of those because at the end of the day
they can tax your residents for repayment. And so, that gets you a lower interest rate over a typical commercial the risk goes down. Yes. There's Yeah, there's very little risk. And as your auditor mentioned, because of your cash position, even though
you're very you're a small community, uh they would easily see that you accumulate cash and run your books well. You're not running on uh at the very edge. You've you've actually created positive cash flow already to
make debt service payments on projects that are imminent. Those are all very positive things. We can also through the state's public facilities authority get a credit enhancement from the state on utility projects. The state will provide a guarantee for $500. It's a
limited guarantee to step in and make the payments if you don't. And that you know, if by side by the size of your community gives the lender any pause, that guarantee talks them into it, which is available on a
utility project. So, uh you may not even need to use that program, uh but if you did, it's there and would, you know, be something that would provide that additional security that would convince the letter lender to
provide the temporary financing that, you know, you might need. Uh the interest on that temporary financing is eligible uh to be paid by the state uh when you get essentially close on that loan. Uh
and, you know, ultimately it's additional interest expense and it's not going into the ground, so it's not doing anything terribly useful. But, if you need it and you need to preserve cash, that's what it's used for. So, is your firm associated with Bullitt
Finn or involved or do we have to hire you separately or We we work with uh many engineering firms. We're a private we're we're required to act in your financial interest on any decision and any recommendation.
Uh that's our obligation under the federal license that we have. Uh we need to advise you of the lowest overall cost of borrowing that's practical. And so, that's what we work on. So, we hire you Yeah, and ultimately you really aren't
hiring us. We We typically only get paid when we close on a transaction. So, the clock's not ticking when I'm here tonight. Uh it's not ticking as soon as you say we want to work with you, Shannon. It's it you know, ultimately you say, "Uh we
need some temporary financing. Help us size it." We have a standard fee schedule on these loans. I'll give you a copy of the loan application uh for both legal counsel that's been pre-negotiated and for us. And so, you can see what the fees are on
transactions of various sizes. And ultimately, uh that's what we assist with. I think on a project this large, I mean, we need some uh advise
and advisement to make sure we stay on board with our finances and everything. Yeah, I mean Mark? Um I'd like to ask a question on your behalf. You know, they've got a the city
has a cash reserve of X amount. Yes. And in In of paying for the design and bidding, they talked about how much of that would they want to spend or how much of that they would want to preserve? Is there are there factors in terms of like
PFA affordability and grant loan or or is there any consideration to how much they would want to spend that cash down to in order to maximize a potential grant loan or is that not really a factor? I think it
shouldn't be much of a factor. Uh I suppose PFA could step in and say the city should spend some of this cash on the project. I haven't seen them do that. Okay. >> Uh It's they look at all the time. They're going to base their grant
historically on what are our folks paying with respect to the median household income. >> Yeah. Yeah. And uh and they tend not to look at external factors like cash unless it disappeared all of the sudden. Just didn't make any
sense of the project. >> Yeah. Uh but otherwise we can certainly tell them those funds are needed for subsequent street and utility reconstruction works or something like that and we have that earmarked for other, you know, needs within the enterprise.
I'm not concerned about having and and >> [clears throat] >> and in the whole scheme of things, you know, what does a mid-size lift station cost these days? Oh, yeah. It's half a million. I mean
you what feels like a lot of cash quickly becomes not very much cash if you have a lift station that fails. So, uh your levels are you know, great for a community your size, but in the whole scheme of things, when stuff breaks in our business, it's really expensive.
>> go far in this day and age. Yeah. And so, understanding that you need to retain, you know, some of that cash for that purpose. helpful. Uh it's a question I get from cities all the time where, you know, they want to and we want you to like make sure
they're set up to achieve as much grant as possible. So, it's a It's a question. Rural Development, USDA, the federal government will look at your cash and say you need to spend this much of your cash.
>> Yes, which we're not working with here. >> We're not working with those. So, maybe if I may, maybe the for the city and it's whole, how much of that cash do you want to retain for everything else that is you do? Right? I mean, that that's kind of your
decision or however, but That's what we need to be advised on. Just say for easy figuring, we have $1 million. Do we take 500,000 of that and put towards this project or do we just take 250,000 and put towards this project and
keep that for future? Understand that uh at the end of the day, whatever you spend now is on a temporary basis and it's going to get paid back when you close on your PFA loan. It It will all get paid back?
>> Yes. Nearly all of it, yes. And still It's how much can we draw down our reserves for this temporary period of time and still feel like we can adequately cover anything else that's going on in the city?
And so, uh you know, we'd want to just understand what the budget is from here until, you know, a bid date, you know, ultimately PFA closes not long after the bid received. And so, we would understand that that's kind of
our time horizon for having to uh pay for costs and determine if we have a budget for those costs, what they are, and see what we're comfortable in paying in cash versus borrowing. Um if you the amount you borrow is
from Minnesota Rural Water. Depend, you know, how much pay for that loan depends on how much you borrow. You know, so if you borrow 300,000 bucks, it might cost you 15,000 bucks for the loan. If you borrow
800,000 dollars, it might cost you 30,000 dollars. And then I don't know if the interest rate is 4 and 1/2 to 5 and 1/2 percent. So 4 and 1/2 to 5 typically on a temp loan. >> Yeah, on a temp loan, so So we can I'll give you the fee schedule, but
all we do micro loans up to 250,000 dollars at 5,550 dollars and I'll give I'll leave this with you so you can see what the fees are. That's the most efficient program we have is the micro loan, which does up to 250,000 dollars.
And that's legal, fiscal, everything for 5,550. If uh we go above that, you know, then we're getting into the next program, which is called the midi loan. That's anything
over 250,000 to a million. And then our fees are, you know, in that 10,000 to 18,000 dollar range depending on how much you borrow. So But uh those fees are pre-negotiated. The
program gets used a lot because it's lower than if you just hire me not working for Minnesota Rural Water. And so we take a pay cut, the attorney takes a pay cut. We pre-negotiate those fees to basically
help small communities borrow a lot smaller amounts of money more efficiently because otherwise it's a 15 to 20,000 dollar deal every time you needed to borrow a little bit of money. That seemed like too much. So I think this year
I have The other thing we do is we provide advice on rates, you know, utility rates as we're in the service when we're working on a loan, well, you know, I've already looked at your financials, and so you said, you know, what do our rates need to
What's the outcome of our rate increases that are needed in order to afford loans that we think we might have, you know, we dive into that. So property taxes as well. There's a Is there a street construction component?
Yep. We get into that, too. So All right. I think we'll we'll need some advice from people that do this for a living, you know. Well, if I were Yeah, we've worked extensively, like you said, we're separate companies, but
Cannon has helped us with so many communities, and he has a great way of explaining this process and working everyone through it to understand the small community, so we're very appreciative.
Um where we would start is just go through the projects and collect some additional detail, particularly on the street and utility reconstruction with storm sewer, you know, and start working our way through how that gets paid for. So uh
It will tend to be harder than just the water stuff. I know it's a lot more money than I'm just water side of it, but the funding there tends to be a little more straightforward through the state. So You said the 30th is the deadline or something? It's the end of the legislative session.
>> Okay, so does that have an effect whether this project will go, or is that going to give us a yes or no, or If you want to improve upon what PFA can offer, it's uh it's you know, the the next one on the list that is an
opportunity to take you below that affordability threshold potentially. Oh, and we said roughly $136 a month for a water customer. The only way to improve on that would be state appropriation or
uh the federal earmark. USDA is not admittedly saying we don't have much for grant funding and their affordability threshold is now 1.75% statewide, so they'd be you know,
higher than $136 by a good margin again, so they're not the entity of choice at the moment for working with. Uh they were when Vernon Center was doing their project, but uh they've run dry on grant funds and
they've kicked up what they say folks can afford, so Did they have to raise a lot of their rates over there because I mean, man, they got new streets, they got water and sewer, they did a lot. They had uh they did, but the affordability threshold was quite a bit lower that they were operating under.
So, $136 was probably closer to like $55. Oh, really? Yeah. Really? That was you know, that project started years ago. Understand that uh that USDA process is probably 3 to 4 years of just planning before you're
even you know, taking bids, and so In terms of like uh communities, these statistics we're talking about like median household income, percentage of low to moderate income residents, for me, I don't think there's a year
that goes by that I don't go into a new town and go, "Wow, that surprises me." One way or another, it's like some of them it looks there's a few towns it's like it almost feels like a ghost town. And then median household incomes
$88,000 or something. And there's some you go into it's like, "Oh, this pretty nice." And median household income is like, you know, $39,000 or something like that. It's just it's so Yes. Um and and and a lot of them do kind of
I guess make sense for whatever that's worth. Um but I [clears throat] don't know if you find that too. Yeah, I can I can never guess. You There you go. You Can't judge a book by the cover. Yeah. Yeah. Not even close. So, but I don't mean you're
These folks are pursuing the right stuff that's available uh to try to get it as least expensively as they can. And so, you know, I'm I'm not adding anything to the mix with regard to what I think you should be going after cuz it sounds like you're already chasing most of it. And so, at
the end of the day, uh my usefulness is around talking about how those programs get applied, whether or not we need temporary financing in the meantime, and you know, beyond that it's helping process-wise a little bit with
working with the state. So. Sounds good. Okay. All right. Uh as long as we're talking about this whole scope of this project, do you have anything to add to any of this, Mark, or anything I have three pieces, you know, state bonding,
PFA, state bonding is your most immediate. PFA is the next one up in first Friday in June. We'll get you moved on to the IUP, and then federal funding with congressional directed spending from Finstead and Smith is
all there. And you can touch base with them, thank them, maybe. I did get a couple emails, and I just commented if well, I wasn't I hadn't gotten that far yet. Yeah, so. And if you get any information, just send them our way. You know, we have that in the mix. We can
Um Shannon, with with CDS, so they cleared the first hurdle, but there there's more. Yeah. It it it they're the federal hasn't There's a ways to go. Let let's say they make it all the way to an actual award. Yeah. And this water plant is
in the middle of construction. Yeah. Can that $2 million be used on that project or do they have to encumber it before the project start How how do or or is that money for like
future util If they if they get it. Yeah. Can you speak to like the timing of when it Yeah. I or I don't I don't even understand the bidding requirements on the federal funding until if we weren't meeting the
bid requirements or doing it in the initial project, I would guess that we wouldn't be able to use it on that project. Okay. Each each entity has their Yeah. requirements for participating in their program, whether it's American steel or
Yeah. And so uh that would be the first question I have. Uh We would let's assume we would meet those cuz I think we would. We we're not doing funky stuff. I think they I think in one of the communities I serve, they did receive an
earmark. You can't remember if it was after bids were awarded, though. I so I I don't know the answer to your question. Just keep more of an ear out for that. I we would find something to use it on, we hope, because it's written broadly enough to to do that. Historically,
they've written they've accepted a very broad scope. When you want water improvements, >> Yeah. it covers drinking water, waste water, storm water. So, historically they've been generous in their scope.
Um because this is I don't know. What timeline if C federal funds came through, I'd say good timeline would be maybe 2 years. Um in an MSC you're working with, it's going on three plus. Yeah. Till it's finally
Yeah. Sure. Um I'm at 38. What what I would start on now though uh to assist with all of this is I'll put in just the funding sources that we know are immediately in front of
us. PFA. Yeah. >> Right. >> And we'll put together a project cash flow based on everything that's being constructed and likely funding sources based on the rules that they publish and say this is how we look at projects.
And uh we'll have a good understanding of what it means with regard to all of our enterprises and tax levy. And then at that point we'll understand uh if we're ready to proceed or if we need to figure out, you know, a different
scope or if other funding has to kick in before we're willing to implement this stuff. But for today we would just have a an analysis based on the funding that's right in front of us. And so and we'd hope that we could improve upon it between now and implementation, but
you'd at least understand where you're at today. And uh making some decisions based on what you're investing in. So So that's something that you could put together for us. And I Okay. You're going to need some leadership. So
is that something council needs to vote on? I would I would think so. >> obligating yourselves to pay So I I would just do it. So it you can certainly vote on it, but I'm not I'm not going to send you a bill for assisting in that part. So, just so you
understand. I would assume discussion [clears throat] I think it's good idea. PFE representation for sure. Well, all you would be able to I think they just to have backing and help, yes. We would agree. All right.
Uh what I do is I just you know, here's all the loans that I think you're going to have. This is what they cost. I plug it into your cash flow as your auditor was talking about to see where we're at with current rates and supporting that. Uh
you know, you already have some affordability with the balance and surplus cash that you're generating in both your general fund and in your water and sewer funds. And so, you have some affordability in the system already to take on loans. So, we will, you know, I'll give you estimates on what rates would have to do
in order to accommodate everything you're looking at. So. And that will let us know if we need to raise our rates then or if we're okay. Yeah, and ultimately it at this point it's if you implement the project based on these assumptions on funding, this is
what it's going to cost your customers. And so, uh then you make a decision if we're heading in the right direction and all that good stuff. So. Okay. How long of a time frame will this all take, you know, with the numbers that
are up in that board, Mark, and with working with the state Minnesota? I've given you the timeline for the PFE process, which is bidding this fall. Uh I'm going to give you information very
quickly that just says this is what it means if the earmark and the state appropriation don't materialize. We'll know we'll probably know before I'm done on state appropriation for this year. But at the end of the day, we'll have an analysis and
understand if the direction we're taking is the right one. So, we're sitting here thinking about grants and this money to do this project. I wonder if they come in very very short
and can the city afford to all that? That's your decision to make. You know, I want you to have good information when you make that decision, so Because just looking at what Vernon Center did at It's like I myself I couldn't ever think how they
could afford to do what they did over there. They had a different USDA that they were working with at the federal level was would be my response. But they also Senator Rosen got a state appropriation, a significant one for that project as well. And so,
uh you know, in that Could have been some county Could have been some county aid in >> There was county road work that was done, so that was part of >> of some of that someone like with the water and sewer sometimes it's like it's it's the street restoration above there
can, you know, add significantly to. Oh, yeah. It it'll Well, they got all new streets, curb and gutter. Yeah. Yeah. They had a lot of sidewalks. Did they assess anything or No. I don't think they did. They're what? I don't think they assessed anything to the residents, did they?
I don't know. I never asked that question. >> Yeah, the residents have to pay for the new >> Oh, do they? >> to their house. Yeah. I mean, they took down a lot of trees over there. That was a big expense right there. >> street to their house. >> Oh, okay. They had to pay for that. No. But they didn't have to pay any
assessments for the roads or anything. >> No. I didn't think so. Really? Churchill's rings, and that's been in the works for like 3 4 years? 5? >> Oh, it was that project was Now it's I'd have to look back at it, all right. That one's been going on for probably I
bet the planning started on that 10 years ago. Wow. Really? Wow. Yeah. Those R&D projects, that is a marathon. Yes. And and again, I I mean I was just talking to
USDA in the last couple of days for another small community like you that's trying to figure out a path forward and USDA is just clearly not the path forward right now with the funding that they have available. So, uh
the second it changes, you know. >> [clears throat] [laughter] >> If you have If you have like arsenic or radium in your drinking water or if your if your ponds and your plant like can't properly treat sewage and you're releasing sewage into a river, Yeah.
they might have some grant for you. But if if you're like, "Well, our pipe is old. It's like Okay, we'll give you a loan that's a little bit better than a bond, maybe? Maybe. It's pretty close. But I They They're They're dying. There's just
Plus you have the expense of working through the process, which is significant. So. See, our ponds, we were too high on the phosphorus. We didn't have enough time to hold it. And you know, now we're treating it. Yeah. And now we're great shape. >> Yep. But we took that all on ourselves
and paid for all that. We pay for the treatment, you know, the I forget what chemical it is in it. But anyway, now our numbers are fine. So. Radium, is that you say? No, we're not talking Have you been Have you been cash flowing your life? I know your sewer lining
stuff. You've been kind of Had for it some of them. >> I've been putting in paying for Yeah. Some Some dips in that there were probably when we lined a bunch of pipes. So. Water meters, pipeline. Yep, and the water meters, yep. And that's why Mark included the language from in his
presentation to remove it all for small things, you know. For all the funding sources, just in case the funding situation would shift. Then we've held a public hearing. And we're ready to move on that. Do you have a small printout of that
public hearing that of your demonstration by chance? I do. Good. I want to make sure I didn't write something. >> Otherwise, if you have something you can email me, too, just so I can reference it. Be great.
Just want to make sure I didn't make a note. I think you made your notes on the big one. Yeah, you did write it on the little Here you go. You can have this one and all. >> Thank you. Um, I'll forward you the power or the PDF. >> Thanks.
All right. Well, should we make a motion to hire Dave Drone and Associates to Um, what I'll do when I provide that analysis, which is there's no bill that comes with it, but I have what's called an engagement
letter that the feds require me to give to you that tells you my responsibility to act in your best interest. We look for that to be signed. It doesn't obligate you to hire or pay us to do anything. It just it's something we keep on file in case we're audited to say that we made
the city of Good Thunder aware of our obligation to act in your interest. So, All right. I I will send you that, and uh if you want to act on that, you certainly can. >> Okay. Uh but uh for today, uh I'm just telling you I'm going to send you some stuff, and if you like it, you'll probably keep
working with me, and if you don't like it, you probably won't. So, All right. That's fair enough. Thank you. Thank you. That sounds like a handshake agreement. Yes. >> [laughter] >> All right. Anything else then?
These people probably want to head back home. Well, anything we missed or anything we need to know? Well, I think we're going to dive deep in, you know, with the initial analysis to understand, you know, where we're
headed. Uh I think when we get through that process, you know, you'll have a better idea on how to pick direction. So. All right. Well, thanks all of you very much. Appreciate your guidance.
Enjoyed working with you guys. All righty. See you again. Thank you. Thanks. Thank you. >> All righty. Great. Thank you so much. Street update with Eli. Is Eli not Eli isn't here. Um he's teaching. So, he did have his
notes in here. Um and he did Do you guys get the uh the restriping quote for 1428 >> Yeah, that was in our packet. >> Okay. All right. And the restripe what By that it's everything that they did before.
>> That's the crosswalks. Yeah, just going up and retouching all that stuff. Okay. Yep. Um Let me see. Yeah, that was Peter's striping. And then the bid for cars to come out and do the
trees who um We're just going to have cars come out and do that because it was lower. Lower was half. Well, yeah, that's lower. >> Wow. Yeah, that's his eating. They tagged a tree on Main Street. Yeah.
I think he he had it wrote down too for that one homeowner that Yes, yep, that one. Yeah, but I think there was maybe two trees there. The rest Well, they said something about wanting to know if we would do the other one. They didn't know what they meant by
other one. The additional trees needed. So, yeah, it looks like and according to his notes, removing five trees from the boulevard. Um a resident would like considering moving two the remaining two
healthy basswoods. The size of the trees are $1,500 to remove. Size of a tree, so council wants to move forward on that. They needed a bid on the additional tree removal for those two healthy ones.
With council. What do they want to do with it again? That's what I was I don't understand why we should be paying for the We find healthy tree removal. Towns Probably because it's a type of tree that branches fall or something. Down the same property? Yes, the same
same same resident, yes. When she really came up and I don't remember why. I only remember one tree on there. Well, the one that It was one that that we need to take down. That's dead. Dead. Yep, yep, needs to be removed due to the health of the tree. She said there's Which also there's also considering the
resident is also removing the remaining two healthy basswoods so she can plant new they can plant new trees. But if it's on their on their property. So, I I I don't know where the trees are if they're on the I'm assuming they're on the boulevard because of the
note, but I don't know. No, I don't think we take down healthy trees. So, >> I think well, you know, we just got to keep up with the bad ones for now and then they hear too we could do that but right now let's just keep up with the bad ones take them down.
>> Going one on two on a property there. Well, it's on the other side so that's private property. Did Eli have anything about that? re- continuation up there? Um Yeah. Yes, but
that he's still waiting for a bid. He's only got one bid so far and I think he was waiting for another one. Yeah, okay. And they did get a uh uh whatever temporary guideline of what they're going to do or something. Yes,
from uh Peters. Yeah. Well, he got it from or he talked he talked to these guys or something didn't he? Turn Bolick wasn't he get a little uh reference from Balmoral. Yeah. Could be that's That was in I can't I got too many much paperwork
Yeah, you'll have to Oh yeah, it is right here. Yeah, Bolick sent then my typical section design for gravel extension right there. That's just Oh, okay. So he's only got one bid so far There it is. for that.
Um so do we need a motion for the Carr's Tree Service? Yes, we should. >> For the $47.50 that does not include the two healthy trees that the resident wants to be removed. Correct. Is that correct? Yep. Okay, can I get a motion for that, please? Let me make a motion for Carr's Tree Service to remove those
trees five trees. I'll make a motion for Carr's Tree Service to remove the 10 trees. The five. The five boulevard trees. Yep, they're dead. I'll second that. All in favor say aye. Aye. All opposed? Motion carried.
Uh down here it says gravel and oil on Hiller Drive and Milkey. So, yes, um, resident came in and asked about if they're going to oil Hiller and asked if we would put gravel down prior
to oiling to keep it without the rumbles getting ripped up. Um, and then I talked to Eli and he asked me to put this on the agenda because Hiller does need some work I guess on it. The very bottom of it. It hasn't been maintained or I don't know the exact
Usually we have Peterson come over and motor grade it a couple and shape it up for us. Yep. And maybe we need some rock after that point or we need rock before they do it. Well, yeah, according to what I understood was that the resident would like the gravel put down and then oil on
top of it and then that will stay and it won't get all wash forty. Um, so according to Eli he said we had gravel on Hiller last year but it was neglected for a long time so maybe a few loads could be hauled. And he wanted to know he asked we can ask if we're just okay doing oil on
Hiller and Milkey leaving the rest of the town for a year since it's in better shape and has a decent hard surface. So, that's the question. I think the well what we did oil with that good stuff got pretty good hard surfaces Mhm.
that we could probably get by this year. Okay. Um, far as Hiller and uh, Milkey. Milkey, we never did I don't think we put that good oil on there. They never got a firm base like we did on those other ones.
Course, there was recycled on them too, that's right. >> Correct. Um, So, I yeah, do they want to do the same thing we did last year with the oil whatever oil that was? It must have been the same oil we did these other streets with. It must have
been. Oh. Because uh the other one the only other thing was is that chloride from uh that one other company um That kind of washed away. Yeah, that that doesn't hold. No. No. So,
I guess if we're Eli feels the need to do some rock and grading, Okay. get him up there and to get some oil on there, then you know. Okay. We want to have it done prior to August 1st or
after. >> Way before. Cuz that stuff was But you want to get it done as soon as possible because otherwise you went the whole summer with dust. >> So, he's going to So, we'll have him get a hold of Peters. Get it done sometime, yeah. Okay. Did he have any report on how well our
clean-up day went? Um He's got a little Dumpster day was a massive success. Yeah, that I I read that part. >> Yes, um yeah, that's all he said. Somebody getting wider ones this week. >> Well, I guess um there might have been a little confusion. They only brought one
dumpster, then he called for the other one, and it wasn't on their schedule to bring another one. I thought I'm not sure. We've always had two, so I wasn't here either, so there was miscommunication somewhere, and the dumpster the second one they brought was narrower than the first one. So,
Do you have a rough Do you have a dollar amount what that cost us? Um right now I'm sitting at about $900, and that was just from Waste Management. Um where is my For those dumpsters?
Um $125 for the dumpster delivery. And if I can find my mass That was probably just the dump fee itself, not their empty one. Well, that was just to deliver the And then it was like $900 so far for Minnesota Waste
Management. I have not got the one from LJP yet. Okay. So, total we're talking total $800 so Probably somewhere around there. Yeah. But, at least they were it was used. It was Well, right. I don't know if there was anything that shouldn't
have been in there cuz I haven't gotten anything from LJP. And I was reading the community page already, and they had one pop up about when's cleanup days. Uh they were Yeah, I did hear people say that they didn't know about it. Something wasn't in your water bill yet. Yeah, it was I
don't know how it couldn't be on your bill. Yeah. So, anyway. Yes, two different times. I don't know if it's the week before >> That's enough on Elo then? Yes, that's enough for Elo. Just Okay. Water update. Did we get anything from Brian? No. Okay. All right. It's your neighbor. I thought he was supposed to be here,
so. Kirk pressure update? I don't know where my uh I don't even know which one I have. >> I finished the institute. I've got my 3 years in, so I will apply for my certification in November. I have to have 3 years of MCF away, and that'll be in November.
So, then I will get all my certificates together, and I will apply for the certification. Perfect. Right. So, I should have that by first part of next year. Good deal. So, thank you. Uh you got something here, transfer for
M this month or The other part I have is Yes, we need to do something. We need to transfer from 4M fund into our general fund. Um the last bill I got from Ball Lake was $180,000. Um we need to put some money into our
checking account. Okay. So, So, right now we're sitting at what, 900,000 in our 4M fund. How much did Does anybody remember what council had talked about putting pulling from there and then getting the
rest for For the total it was like We were going to take down million, right? It was like a million. >> Even when we talked 900,000, we had talked about taking 400 >> leaving 500. Would we just take it in like say $200,000 increments? You know,
cuz it's gaining interest. We we can. Um however, I think at this point I think we should take no less than 200 250 or 250 to 3. Okay. Cuz you said you already paid out how much? Well >> 100 and
>> I just wrote a check right today for 80,000. [clears throat] Right now our checking account sits at 280. Better take at least three. And then Well, yeah, cuz then when I the bills I wrote out today, just the ones I did um were like 230. So
And I don't think we get our first one until what? June, July? Our first So that'd be at least probably July, wouldn't it? So I would say >> But we won't have any other big bills coming until Well Do you think Bolick will have another one?
So far, according to this, there's 374,000 remaining after I pay the 180. So but I don't know when that'll get billed either. But we also, like I said, talked about or you guys have talked about getting half, borrowing half of it, too.
Yeah, we were going to borrow 500,000. If we were to borrow 750,000, it costs about 18,200. Yeah, but he was talking about uh Shannon was talking about that one there was going to cost uh five
$5,000 for 250,000 bucks. Yeah, something like that. Yeah. A micro loan? Yeah. 250,000 was going to cost 5,500. we're >> a micro We're not a micro loan though. Unless you can do anything. Population says 200 persons.
Our population is 580 580 or 550 or something. So And that's only up to 250,000. Yeah. And they're talking what I've got circled here is 750,000 and I'm not sure who wrote
that. Or maybe I should just take 300,000 out of the dollars out of the forum forum for now. Okay. You know, and if another bill comes in July, we might have our money or we could take either two. Great. Okay. I'm good with that.
All right. Yeah. So probably need a motion on that, I think. Um I motion to approve the resolution. Yes. Cuz I added some extra papers in here. It's got to be brought out by resolution. Yes. Basically provided. And then what happens is I contact 4M and they just shoot it right over.
So Also somebody might can make a motion on the resolution number Resolution 2026-04 2026-04 Yep. It's a resolution to transfer funds from the 4M account to the general fund
in the amount of $300,000. 200 or should we make it three? 300,000 you said. Yeah. I'll make a motion on the resolution to transfer funds from the 4M account to the general fund. Resolution number 2026-04
in the amount of 300,000. All right. Amy made a motion. Someone to second? Second that. All in favor? Aye. I oppose. Motion carried. >> [clears throat] >> That is pretty much all I have. I will be here. I won't be here tomorrow. Um my
hours are going to be a little sporadic. I did 8 hours today which was not a good idea. So. I'll be here as much as I can. All right, sounds good. Any unfinished business anybody? I didn't quite pick that up. I didn't.
Yeah, well I had one of those I had one I had a question on that. They should If this isn't uh a new garage and he's just replacing He didn't need a He didn't need a building permit. We weren't Yeah, John wasn't sure so he had him fill it out.
>> So as long as he filled it out we have it on there. It's crazy. Well this is yeah, that's what I thought it was replacement it's not. >> And that actually yeah, that goes into our consent agenda. Yeah. Okay. Unfinished business anything? New business? Again, we still got other
stuff that we're heading into summer. Uh we still have issues with our yards cars Are we running into a brick wall with that? Um we're been working There's two yards
that we brought over to Kennedy. And he was going to file the abatement process or start that process. And he didn't like the verbage that was used in the reporting. Um it can't be anything that could be construed as probable it
has to be fact. Now you can't get fact cuz you can't go on somebody's private property. So that's where our brick wall is. So like vehicles, I mean we can deal with other things but vehicles that appear to be non-working cannot will not fly.
If they're not currently licensed. It's is non-currently non-licensed is one thing but inoperable or I think doesn't our ordinance say inoperable? What's the difference? I took a picture. Do you have to prove it's I can't We
can't say inoperable unless you can prove it's inoperable. If it sits there with flat tires There's pictures to prove that. Can't prove it's on You can't prove it's not. So, Eli and I we like I said, we've been dealing with
this since last October and November, I think is when the last one and it was then I got then I asked him this spring, I emailed Kennedy and said, "Can we start this?" And he was like I you know, basically, I can print out the the emails from him, but we're kind
of stuck again. So, I I don't know where else to go with this like and it's the vehicles. It's not the um the stuff in the yards. The refuse in yards, it's the vehicle issue that we can't that I haven't been
able to figure out. >> What about a camper that sits in the driveway? >> That's one of them that we're having a problem with. You can't prove it's inoperable. But what about up-to-date licenses? Then well, I I we can go for that, but I don't know if that's I don't remember what our ordinance says. I'm
sorry, but regarding unlicensed vehicles. I thought it said it had to be currently licensed. That should be. Well, I think we'd still need to push that these people need to get it on a hard surface. Well, >> [clears throat] >> and the and then the other part is
the hard surface. That is on a hard surface. Yes, it is. But it is not owned by the resident. But that's neither here nor there. Resident says it's not theirs, the owner
says it's not theirs. So, what are you going to do? >> ask the resident if he's fine with the city hauling it away. City can't haul it away. A resident can offer to haul it away. Yes. What is that is that camper overhanging
city property? Can you tell that resident Can you tell the residents that that needs to be moved because I had one person stop and say there was a small child ran out behind it cuz it's so close to the road that it causes a danger.
>> Yep. It's an easement. It's been like that for a long time. >> I know it. And we can't and then if it was sitting in the middle of the road Yeah, well but it's not. Like I said, any residents could go and ask them.
A resident Maybe a resident could offer to buy it for 100 bucks and have it towed. I don't know. >> it. What was the problem? There's one right down here on the corner that not only do we have a camper, now we have a pontoon and it's right by a stop sign and it's
infringing right on the street. Yeah. So, that's where we're at with that. Um >> That's in City Ordinance 808, probably. To be honest, I'm not going to deal with that stuff right now. Um there's other things I think that we have to do. Yeah, we have a
>> And we also have no mow May, so We don't justify no mow May. Yeah, well, we can't send letters to no mow May people. That is so >> let it go until June 1st. So. Let the bees have their homes. I don't know. Do we have to honor no mow May? We don't
Well, you can send a letter. It's not going to go anywhere. Because they can contest it and then it could turn into a legal, then you turn it into attorney fees and from what I gathered, the institute um we had one of
our um municipal case studies was on that. And some cities tried to pursue it and they ended up in a legal mess. All right. And for 1 month out of the >> And for 1 month and some of the residents are The consensus was it's 1 month.
I mean, unless you get a whole lot of rain and they get a lot of growth, it's 1 month, you know? Okay. So, in other words, you can have a letter on their doorstep the 1st of June stating you got 5 days to get your lawn mowed. >> Yep. Yep. Yep. Well, that's what needs to be done then
because them damn lines are just a mess. Yep. Now, we can't do nothing about it. You can try, but like I said, it's going to end up you got postage, you got then you're going to get lawyer involved and
All it does is we need to stay active. It's Things aren't getting cleaned up and starting to look a little better. We just got to keep on it. We got to keep on that school. Something's If anybody else would like to call the school and try to get a hold of somebody, I would say go for it
because I ran into dead ends. I get a I call the school. Last time I called the school, I couldn't even talk to him. I was told he was in a meeting. I called three or four different times and I got the same response. Um so, I leave a message with person who answers the phone. And the last time
I was put on hold and the person on the phone came back and said, "Well, he said nothing has changed since he talked to the mayor." But, he wouldn't I couldn't talk to him. So, I haven't talked to him in since >> Yes, last year. or deal with them. Yeah. I mean, it's been a long time since he
was sitting here. Yeah. So, I honestly don't know. Well, I hope the intent is to keep moving forward. Mhm. You know, can we ever send them a letter stating, you know, "We haven't seen any activity. Do we need to start a paper trail to say,
you know, we were doing this all in good faith as far as the city of Good Thunder and we hope you honor the deal, you know, if the financing interest rate is what's the hang-up, please contact us, you know."
I don't They can send a letter. Um Paper trail might be a good idea. >> Maybe uh You know. Do we have to ask our attorney what kind of guidance you need to send that letter or It's been Yes. We haven't spent much on lawyer this year. So, I mean, you know, we
could maybe spend a little Next certain certain legal counsel. The budget. Yeah. And then he can do it. Well, yeah. I don't know. Otherwise, they'll say, "Well, we never received a letter." >> Mhm. So, anything sitting on Main Street that
you know alongside of buildings, we can't get much of that done either. Well, you can. I can guarantee you the one property you're talking about is nothing's going to happen. It's going to fall on deaf ears.
>> [clears throat] >> Because I think all that's I'm not sure where that is, actually. >> Well, is it Are we doing our due diligence by just Oh, that's where it is. >> Well, no, I understand that, but what I'm saying is to be honest, I don't have time right now to send out those letters.
I've got 6 weeks of stuff I got to try to figure out. I mean, Don did a lot of stuff, yes. Absolutely, thank goodness he was here to do that. But that right now is not on my radar. If you want it to be on my radar, then we'll have to figure it out. >> Can we do Can we have the lawyer send
it? Can we send him pictures of it and say, "Here, what can you do? This Send a letter." I can ask him. Because, you know, if you're backlogged from that being here, that's we get we know that. But maybe we should spend a
$500 or whatever it may cost to have a legal letter sent and say, "Hey, you know, these items have been sitting here for a number of years. Do you think it's possibly in the realm of your life can clean it up.
Here what you can do without you. Is this under unfinished business here or are we into this? Anybody with new business? Uh we never did go any farther with that uh ballpark warning fence that's down there. Anybody got any views what's
going to happen to that? Would it be taken out? Should it just want to stay there? Yeah, wait for Eli, but I think it should be taken out. I mean, I think that's his suggestion, right? >> Mhm. Yes. Take it out? I think that's his
suggestion. And then have you heard anything from the Pheasant Forever guys? No. Did we have something drawn up, didn't we? We if I can remember correctly, we had some Kennedy did something, didn't he?
>> They sent We sent it to Kennedy. I don't remember. Um I will find out where that is. Cuz we got a letter or something from them. That's what I thought, yeah. And then I Was it Something about a lease
>> Was it that and then it went to uh after Your name? >> Kennedy wanted to know exactly what they wanted and yeah, so they got that. Cuz we were kind of giving them >> Kennedy could have it up by now. I don't know. For the lease 25-year lease or something, wasn't it? >> remember. And they're going to do their
repairs of the building or something. >> Mhm. Yeah. All right, that's what I had under new business. Anybody else? Yeah, that was my idea there, too. Was that one. Uh miscellaneous? Anything, Amy? Miscellaneous, anything?
Anybody? No. thanks. >> Can I make a motion to adjourn? I'll make the motion to adjourn tonight's meeting. Someone to second it? I'll second it. All in favor, say aye. Aye. I oppose. Very good. Thanks, everybody. Thanks.